<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1999
COMMISSION FILE NO. 1-10403
TEPPCO PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0291058
(STATE OF INCORPORATION (I.R.S. EMPLOYER
OR ORGANIZATION) IDENTIFICATION NUMBER)
2929 ALLEN PARKWAY
P.O. BOX 2521
HOUSTON, TEXAS 77252-2521
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(713) 759-3636
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
===============================================================================
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TEPPCO PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
---------- ------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents ................................. $ 49,200 $ 47,423
Short-term investments .................................... 3,909 3,269
Accounts receivable, trade ................................ 153,349 113,541
Inventories ............................................... 21,517 20,434
Other ..................................................... 3,958 3,909
---------- ----------
Total current assets ................................... 231,933 188,576
---------- ----------
Property, plant and equipment, at cost (Net of accumulated
depreciation and amortization of $207,761 and $193,858) ... 699,446 671,611
Investments ................................................. 4,246 6,490
Intangible assets ........................................... 35,884 36,842
Other assets ................................................ 12,008 11,450
---------- ----------
Total assets ........................................... $ 983,517 $ 914,969
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable and accrued liabilities .................. $ 146,687 $ 117,933
Accounts payable, general partner ......................... 5,549 2,815
Accrued interest .......................................... 13,226 13,039
Other accrued taxes ....................................... 7,309 6,739
Other ..................................................... 9,016 7,699
---------- ----------
Total current liabilities .............................. 181,787 148,225
---------- ----------
Senior Notes ................................................ 389,737 389,722
Other long-term debt ........................................ 68,000 38,000
Other liabilities and deferred credits ...................... 3,352 3,407
Minority interest ........................................... 3,445 3,393
Redeemable Class B Units held by related party .............. 106,102 105,036
Partners' capital:
General partner's interest .................................. 137 (380)
Limited partners' interests ................................. 230,957 227,566
---------- ----------
Total partners' capital ................................ 231,094 227,186
---------- ----------
Total liabilities and partners' capital ................ $ 983,517 $ 914,969
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
2
<PAGE> 3
TEPPCO PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenues:
Sales of crude oil and petroleum products ............................ $ 398,156 $ -- $ 620,530 $ --
Transportation - Refined products .................................... 33,353 32,755 58,949 55,217
Transportation - LPGs ................................................ 10,094 9,762 36,689 31,577
Transportation - Crude oil and NGLs .................................. 2,970 -- 5,536 --
Mont Belvieu operations .............................................. 3,358 2,418 6,255 5,088
Other - Net .......................................................... 7,420 6,625 13,482 9,883
---------- ---------- ---------- ----------
Total operating revenues ........................................... 455,351 51,560 741,441 101,765
---------- ---------- ---------- ----------
Costs and expenses:
Purchases of crude oil and petroleum products ........................ 391,333 -- 608,030 --
Operating, general and administrative ................................ 24,090 16,972 45,303 32,816
Operating fuel and power ............................................. 8,094 6,575 14,987 12,765
Depreciation and amortization ........................................ 8,154 6,625 16,293 12,705
Taxes - other than income taxes ...................................... 2,664 2,459 5,343 5,036
---------- ---------- ---------- ----------
Total costs and expenses ........................................... 434,335 32,631 689,956 63,322
---------- ---------- ---------- ----------
Operating income ................................................... 21,016 18,929 51,485 38,443
Interest expense ..................................................... (7,780) (7,521) (15,322) (14,677)
Interest capitalized ................................................. 347 233 489 517
Other income - net ................................................... 590 1,033 1,131 1,680
---------- ---------- ---------- ----------
Income before minority interest and extraordinary loss on debt
extinguishment .................................................... 14,173 12,674 37,783 25,963
Minority interest ...................................................... (144) (128) (382) (262)
---------- ---------- ---------- ----------
Income before extraordinary loss on debt extinguishment ............ 14,029 12,546 37,401 25,701
---------- ---------- ---------- ----------
Extraordinary loss on debt extinguishment, net of minority interest .... -- -- -- (72,767)
---------- ---------- ---------- ----------
Net income (loss) .................................................. $ 14,029 $ 12,546 $ 37,401 $ (47,066)
========== ========== ========== ==========
Basic and diluted income (loss) per Limited Partner and Class B Unit:
Income before extraordinary loss ................................... $ 0.38 $ 0.39 $ 1.02 $ 0.80
Extraordinary loss on debt extinguishment .......................... -- -- -- (2.28)
---------- ---------- ---------- ----------
Net income (loss) .................................................. $ 0.38 $ 0.39 $ 1.02 $ (1.48)
========== ========== ========== ==========
Weighted average Limited Partner and Class B Units outstanding ......... 32,917 29,000 32,917 29,000
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE> 4
TEPPCO PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1999 1998
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) .......................................................... $ 37,401 $ (47,066)
Adjustments to reconcile net income (loss) to cash provided by operating
activities:
Extraordinary loss on early extinguishment of debt, net of
minority interest ....................................................... -- 72,767
Depreciation and amortization ............................................. 16,293 12,705
Gain on sale of property, plant and equipment ............................. -- (356)
Equity in loss of affiliate ............................................... 149 94
Decrease (increase) in accounts receivable, trade ......................... (39,808) 5,993
Increase in inventories ................................................... (1,083) (1,052)
Decrease (increase) in other current assets ............................... (49) 984
Increase (decrease) in accounts payable and accrued expenses .............. 33,562 (874)
Other ..................................................................... (1,081) (519)
---------- ----------
Net cash provided by operating activities ............................... 45,384 42,676
---------- ----------
Cash flows from investing activities:
Proceeds from cash investments ............................................ 3,840 2,105
Purchases of cash investments ............................................. (2,235) --
Purchase of fractionator assets and related intangible assets ............. -- (40,000)
Proceeds from the sale of property, plant and equipment ................... -- 525
Purchase of crude oil system .............................................. (2,250) --
Capital expenditures ...................................................... (40,313) (9,530)
---------- ----------
Net cash used in investing activities ................................... (40,958) (46,900)
---------- ----------
Cash flows from financing activities:
Principal payment, First Mortgage Notes ................................... -- (326,512)
Prepayment premium, First Mortgage Notes .................................. -- (70,093)
Issuance of Senior Notes .................................................. -- 389,694
Debt issuance costs, Senior Notes ......................................... -- (3,651)
Proceeds from term loan ................................................... 25,000 38,000
Proceeds from revolving credit agreement .................................. 5,000 --
Distributions ............................................................. (32,649) (27,420)
---------- ----------
Net cash provided by (used in) financing activities ..................... (2,649) 18
---------- ----------
Net increase (decrease) in cash and cash equivalents ........................ 1,777 (4,206)
Cash and cash equivalents at beginning of period ............................ 47,423 43,961
---------- ----------
Cash and cash equivalents at end of period .................................. $ 49,200 $ 39,755
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS:
Interest paid during the period (net of capitalized interest) ............... $ 14,455 $ 12,292
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE> 5
TEPPCO PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
TEPPCO Partners, L.P. (the "Partnership"), a Delaware limited
partnership, was formed in March 1990. The Partnership operates through TE
Products Pipeline Company, Limited Partnership (the "Products OLP") and TCTM,
L.P. (the "Crude Oil OLP"). Collectively the Products OLP and the Crude Oil OLP
are referred to as "the Operating Partnerships." The Partnership owns a 99%
interest as the sole limited partner interest in both the Products OLP and the
Crude Oil OLP. Texas Eastern Products Pipeline Company (the "Company" or
"General Partner"), an indirect wholly-owned subsidiary of Duke Energy
Corporation ("Duke Energy"), owns a 1% general partner interest in the
Partnership and 1% general partner interest in each Operating Partnership. The
Company, as general partner, performs all management and operating functions
required for the Partnership pursuant to the Agreements of Limited Partnership
of TEPPCO Partners, L.P. and TE Products Pipeline Company, Limited Partnership
and TCTM, L.P. (the "Partnership Agreements"). The general partner is
reimbursed by the Partnership for all reasonable direct and indirect expenses
incurred in managing the Partnership.
The accompanying unaudited consolidated financial statements reflect
all adjustments, which are, in the opinion of management, of a normal and
recurring nature and necessary for a fair statement of the financial position
of the Partnership as of June 30, 1999, and the results of operations and cash
flows for the periods presented. The results of operations for the six months
ended June 30, 1999, are not necessarily indicative of results of operations
for the full year 1999. The interim financial statements should be read in
conjunction with the Partnership's consolidated financial statements and notes
thereto presented in the TEPPCO Partners, L.P. Annual Report on Form 10-K for
the year ended December 31, 1998. Certain amounts from the prior year have been
reclassified to conform to current presentation.
The Partnership operates in two industry segments: refined products and
liquefied petroleum gases ("LPGs") transportation, and crude oil and natural gas
liquids ("NGLs") transportation and marketing. The Partnership's reportable
segments offer different products and services and are managed separately
because each requires different business strategies. The crude oil and NGLs
transportation segment was acquired as a unit, and the management at the time of
the acquisition was retained. The interstate transportation operations of both
segments, including rates charged to customers, are subject to regulations
prescribed by the Federal Energy Regulatory Commission ("FERC"). Refined
products, LPGs, crude oil and NGLs are referred to herein, collectively, as
"petroleum products" or "products."
Basic net income per Unit is computed by dividing net income, after
deduction of the general partner's interest, by the weighted average number of
Limited Partner and Class B Units outstanding (a total of 32,916,547 Units and
29,000,000 Units as of June 30, 1999 and 1998, respectively). The general
partner's percentage interest in net income is based on its percentage of cash
distributions from Available Cash for each period (see Note 7. Cash
Distributions). The general partner was allocated $3.8 million (10.18%) of the
net income for the six months ended June 30, 1999, and $4.1 million (8.78%) of
the net loss for the six months ended June 30, 1998.
Diluted net income per Unit is similar to the computation of basic net
income per Unit above, except that the denominator was increased to include the
dilutive effect of outstanding Unit options by application of the treasury
stock method. For the quarters ended June 30, 1999 and 1998, the denominator
was increased by 27,963 Units and 50,896 Units, respectively. For the six
months ended June 30, 1999 and 1998, the denominator was increased by 25,242
Units and 48,732 Units, respectively.
5
<PAGE> 6
TEPPCO PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 2. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes
standards for and disclosures of derivative instruments and hedging activities.
In July 1999, the FASB issued SFAS No. 137 to delay the effective date of SFAS
No. 133 until fiscal years beginning after June 15, 2000. The Partnership
expects to adopt this standard effective January 1, 2001, and does not expect
the adoption of this statement to have a material impact on its financial
condition or results of operations.
NOTE 3. RELATED PARTY TRANSACTIONS
As of March 31, 1998, TEPPCO Colorado, LLC ("TEPPCO Colorado"), a
wholly-owned subsidiary of the Products OLP, purchased two fractionation
facilities located in Weld County, Colorado, from Duke Energy Field Services,
Inc. ("DEFS"), a wholly-owned subsidiary of Duke Energy. TEPPCO Colorado and
DEFS entered into a twenty year Fractionation Agreement, whereby TEPPCO
Colorado will receive a variable fee for all fractionated volumes delivered to
DEFS. The purchase price of these transactions was $40 million. Intangible
assets include $38 million of value assigned to the Fractionation Agreement,
which will be amortized on a straight-line method over the term of the
Fractionation Agreement. The remaining purchase price of $2.0 million was
allocated to the fractionator facilities purchased. TEPPCO Colorado and DEFS
also entered into a Operations and Management Agreement, whereby DEFS will
operate and maintain the fractionation facilities. TEPPCO Colorado will pay
DEFS a set volumetric rate for all fractionated volumes delivered to DEFS.
Effective November 1, 1998, the Crude Oil OLP, through its
wholly-owned subsidiary TEPPCO Crude Oil, LLC ("TCO"), acquired substantially
all of the assets of Duke Energy Transport and Trading Company ("DETTCO") from
Duke Energy for approximately $106 million. In consideration for such assets,
Duke Energy received 3,916,547 Class B Limited Partnership Units ("Class B
Units"). The Class B Units are substantially identical to the 29,000,000
Limited Partner Units, except they are not listed on the New York Stock
Exchange. The Class B Units will be convertible into Limited Partner Units upon
approval by the Limited Partner Unitholders. The Company intends to seek
approval for conversion, however, if conversion is not approved before March
2000, the holder of the Class B Units will have the right to sell them to the
Partnership at 95.5% of the market price of the Limited Partner Units at the
time of sale. As a result of such option, the Class B Units were not included
in partners' capital at June 30, 1999. Collectively, the Limited Partner Units
and Class B Units are referred to as "Units." The transaction was accounted for
under the purchase method of accounting. Accordingly, the results of the
acquisition are included in the consolidated statements of income for periods
from November 1, 1998.
NOTE 4. INVESTMENTS
SHORT-TERM INVESTMENTS
The Partnership routinely invests cash in liquid short-term
investments as part of its cash management program. Investments with maturities
at date of purchase of 90 days or less are considered cash equivalents. At June
30, 1999, short-term investments included $3.9 million of investment-grade
corporate notes, which mature within one year. Such investments at June 30,
1999 included a $0.9 million investment in Duke Power Company corporate notes.
All short-term investments are classified as held-to-maturity securities and
are stated at amortized cost. The aggregate fair value of such securities
approximates amortized cost at June 30, 1999.
6
<PAGE> 7
TEPPCO PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
LONG-TERM INVESTMENTS
At June 30, 1999, the Partnership had $4.2 million invested in
investment-grade corporate notes, which have varying maturities through 2004.
These securities are classified as held-to-maturity securities and are stated
at amortized cost. The aggregate fair value of such securities approximates
amortized cost at June 30, 1999.
NOTE 5. INVENTORIES
Inventories are carried at the lower of cost (based on weighted
average cost method) or market. The major components of inventories were as
follows (in thousands):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
---------- ----------
<S> <C> <C>
Gasolines ................. $ 1,677 $ 4,224
Propane ................... 655 1,503
Butanes ................... 2,333 1,654
Fuel oil .................. 579 564
Crude oil ................. 8,762 5,517
Other products ............ 3,633 3,306
Materials and supplies .... 3,878 3,666
---------- ----------
Total ........... $ 21,517 $ 20,434
========== ==========
</TABLE>
The costs of inventories were lower than market at June 30, 1999, and
December 31, 1998.
NOTE 6. LONG TERM DEBT
SENIOR NOTES
On January 27, 1998, the Products OLP completed the issuance of $180
million principal amount of 6.45% Senior Notes due 2008, and $210 million
principal amount of 7.51% Senior Notes due 2028 (collectively the "Senior
Notes"). The 6.45% Senior Notes due 2008 are not subject to redemption prior to
January 15, 2008. The 7.51% Senior Notes due 2028 may be redeemed at any time
after January 15, 2008, at the option of the Products OLP, in whole or in part,
at a premium. Net proceeds from the issuance of the Senior Notes totaled
approximately $386 million and was used to repay in full the $61.0 million
principal amount of the 9.60% Series A First Mortgage Notes, due 2000, and the
$265.5 million principal amount 10.20% Series B First Mortgage Notes, due 2010.
The premium for the early redemption of the First Mortgage Notes totaled $70.1
million. The Partnership recorded an extraordinary charge of $73.5 million
during the first quarter of 1998 (including $0.7 million allocated to minority
interest), which represents the redemption premium of $70.1 million and
unamortized debt issue costs related to the First Mortgage Notes of $3.4
million.
The Senior Notes do not have sinking fund requirements. Interest on
the Senior Notes is payable semiannually in arrears on January 15 and July 15
of each year. The Senior Notes are unsecured obligations of the Products OLP
and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Products OLP. The indenture governing the Senior Notes
contains covenants, including, but not limited to, covenants limiting (i) the
creation of liens securing indebtedness and (ii) sale and leaseback
transactions. However, the indenture does not limit the Partnership's ability
to incur additional indebtedness.
7
<PAGE> 8
TEPPCO PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
OTHER LONG TERM DEBT
In connection with the purchase of the fractionation assets from DEFS
as of March 31, 1998, TEPPCO Colorado received a $38 million bank loan from
SunTrust Bank. Proceeds from the loan were received on April 21, 1998. TEPPCO
Colorado paid interest to DEFS at a per annum rate of 5.75% on the amount of
the total purchase price outstanding for the period from March 31, 1998 until
April 21, 1998. The SunTrust loan bears interest at a rate of 6.53%, which is
payable quarterly beginning in July 1998. The principal balance of the loan is
payable in full on April 21, 2001. The Products OLP is guarantor on the loan.
On May 17, 1999, the Products OLP entered into a $75 million term loan
agreement to finance construction of three new pipelines between the
Partnership's terminal in Mont Belvieu, Texas and Port Arthur, Texas. The term
loan agreement has a term of five years. SunTrust Bank is the administrator of
the loan. Approximately $28.0 million of construction cost was included in
capital expenditures during the first six months of 1999, with a total of
approximately $44.5 million expected to be incurred in 1999, and the remainder
in 2000. At June 30, 1999, $25 million has been borrowed under the term loan
agreement. Principal will be paid quarterly as follows, with the remaining
principal balance payable on May 17, 2004.
<TABLE>
<CAPTION>
QUARTERLY PERIODS ENDING PAYMENT AMOUNT
------------------------ --------------
<S> <C>
June 2001 through March 2002 $2.50 million
June 2002 through March 2003 $3.75 million
June 2003 through March 2004 $5.00 million
</TABLE>
The interest rate for the $75 million term loan is based on the
borrower's option of either SunTrust Bank's prime rate, the federal funds rate
or LIBOR rate in effect at the time of the borrowings and is adjusted monthly,
bimonthly, quarterly or semi-annually. Interest is payable quarterly from the
time of borrowing. The current interest rate for amounts outstanding under the
term loan is 6.33%. Commitment fees for the term loan totaled approximately
$15,000 for the quarter ended June 30, 1999.
WORKING CAPITAL FACILITIES
On May 17, 1999, the Products OLP entered into a $25 million revolving
credit agreement and TCO entered into a $30 million revolving credit agreement.
SunTrust Bank is the administrative agent on both revolving credit agreements.
The $25 million revolving credit agreement has a five year term and the $30
million revolving credit agreement has a three year term. The interest rate on
both agreements is based on the borrower's option of either SunTrust Bank's
prime rate, the federal funds rate or LIBOR rate in effect at the time of the
borrowings and is payable quarterly. Interest rates are adjusted monthly,
bimonthly, quarterly or semi-annually. The Products OLP has not made any
borrowings under this revolving credit facility. TCO borrowed $5 million under
its revolving credit agreement on June 30, 1999. Such amount was repaid in July
1999. Commitment fees for the revolving credit agreement totaled approximately
$17,000 for the quarter ended June 30, 1999.
In connection with the purchase of the DETTCO assets by TCO, Duke
Capital also agreed to guarantee the payment by TCO and its subsidiaries under
certain commercial contracts between TCO and its subsidiaries and third
parties. Duke Capital will provide up to $100 million of guarantee credit to
TCO and its subsidiaries for a period of three years from November 30, 1998.
Pursuant to this agreement, the Partnership has agreed to pay Duke Capital a
commitment fee of $100,000 per year.
8
<PAGE> 9
TEPPCO PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE 7. CASH DISTRIBUTIONS
The Partnership makes quarterly cash distributions of all of its
Available Cash, generally defined as consolidated cash receipts less
consolidated cash disbursements and cash reserves established by the general
partner in its sole discretion.
On May 7, 1999, the Partnership paid the first quarter cash
distribution of $0.45 per Limited Partner Unit and Class B Unit to Unitholders
of record on April 30, 1998. Additionally, on July 19, 1999, the Partnership
declared a cash distribution of $0.475 per Limited Partner Unit and Class B
Unit for the quarter ended June 30, 1999, which represents an annualized
increase of $0.10 per Unit. The distribution was paid on August 6, 1999, to
Unitholders of record on July 30, 1999.
The Company receives incremental incentive distributions of 15%, 25%
and 50% of the amount by which quarterly distributions of Available Cash exceed
$0.275, $0.325 and $0.45 per Limited Partner Unit and Class B Unit,
respectively. During the six months ended June 30, 1999 and 1998, incentive
distributions paid to the Company totaled $3.0 million and $2.3 million,
respectively.
NOTE 8. SEGMENT DATA
The Partnership operates in two industry segments: refined products
and LPGs transportation, which operates through the Products OLP; and crude oil
and NGLs transportation and marketing, which operates through the Crude Oil
OLP.
Operations of the Products OLP consist of interstate transportation,
storage and terminaling of petroleum products; short-haul shuttle
transportation of LPGs at the Mont Belvieu, Texas complex; sale of product
inventory; fractionation of natural gas liquids and other ancillary services.
The Products OLP is one of the largest pipeline common carriers of refined
petroleum products and LPGs in the United States. The Partnership owns and
operates an approximate 4,300-mile pipeline system extending from southeast
Texas through the central and midwestern United States to the northeastern
United States.
The Crude Oil OLP gathers, stores, transports and markets crude oil,
principally in Oklahoma and Texas; operates two trunkline NGL pipelines in
South Texas; and distributes lube oil to industrial and commercial accounts.
The Crude Oil OLP's gathering, transportation and storage assets include
approximately 2,200 miles of pipeline and 1.3 million barrels of storage. The
crude oil and NGLs transportation and marketing segment was added with the
acquisition from DETTCO effective November 1, 1998.
9
<PAGE> 10
TEPPCO PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
The below table includes interim financial information by business
segment for the quarter and six months ended June 30, 1999. Comparative data
has not been included as the Partnership operated as one business segment prior
to November 1, 1998.
<TABLE>
<CAPTION>
PRODUCTS CRUDE OIL
(in thousands): OLP OLP CONSOLIDATED
---------- ---------- ------------
<S> <C> <C> <C>
Three Months Ended June 30, 1999:
Unaffiliated revenues ....................... $ 54,225 $ 401,126 $ 455,351
Operating expenses, including power ......... 28,854 397,327 426,181
Depreciation and amortization expense ....... 6,770 1,384 8,154
---------- ---------- ----------
Operating income ...................... 18,601 2,415 21,016
Interest expense, net ....................... (7,417) (16) (7,433)
Other income, net ........................... 386 60 446
---------- ---------- ----------
Net income ............................ $ 11,570 $ 2,459 $ 14,029
========== ========== ==========
Six Months Ended June 30, 1999:
Unaffiliated revenues ....................... $ 115,375 $ 626,066 $ 741,441
Operating expenses, including power ......... 55,043 618,620 673,663
Depreciation and amortization expense ....... 13,533 2,760 16,293
---------- ---------- ----------
Operating income ...................... 46,799 4,686 51,485
Interest expense, net ....................... (14,811) (22) (14,833)
Other income, net ........................... 574 175 749
---------- ---------- ----------
Net income ............................ $ 32,562 $ 4,839 $ 37,401
========== ========== ==========
As of June 30, 1999:
Identifiable assets ......................... $ 721,373 $ 262,144 $ 983,517
Accounts receivable, trade .................. 16,783 136,566 153,349
Accounts payable and accrued liabilities .... $ 6,740 $ 139,947 $ 146,687
</TABLE>
NOTE 9. COMMITMENTS AND CONTINGENCIES
The Partnership is involved in various claims and legal proceedings
incidental to its business. In the opinion of management, these claims and
legal proceedings will not have a material adverse effect on the Partnership's
consolidated financial position or results of operations.
The operations of the Partnership are subject to federal, state and
local laws and regulations relating to protection of the environment. Although
the Partnership believes the operations of the pipeline system are in material
compliance with applicable environmental regulations, risks of significant
costs and liabilities are inherent in pipeline operations, and there can be no
assurance that significant costs and liabilities will not be incurred.
Moreover, it is possible that other developments, such as increasingly strict
environmental laws and regulations and enforcement policies thereunder, and
claims for damages to property or persons resulting from the operations of the
pipeline system, could result in substantial costs and liabilities to the
Partnership. The Partnership does not anticipate that changes in environmental
laws and regulations will have a material adverse effect on its financial
position, operations or cash flows in the near term.
The Partnership and the Indiana Department of Environmental Management
("IDEM") have entered into an Agreed Order that will ultimately result in a
remediation program for any on-site and off-site groundwater contamination
attributable to the Partnership's operations at the Seymour, Indiana, terminal.
A Feasibility Study,
10
<PAGE> 11
TEPPCO PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
which includes the Partnership's proposed remediation program, has been
approved by IDEM. IDEM will issue a Record of Decision formally approving the
remediation program. After the Record of Decision has been issued, the
Partnership will enter into an Agreed Order for the continued operation and
maintenance of the program. The Partnership will evaluate the conditions of the
Record of Decision and make adjustments to the program as required. The amount
accrued for the program was approximately $0.5 million at June 30, 1999. In the
opinion of the Company, the completion of the remediation program being
proposed by the Partnership, if such program is approved by IDEM, will not have
a material adverse impact on the Partnership's financial condition, results of
operations or liquidity.
In 1997, the Company initiated a program to prepare the Partnership's
process controls and business computer systems for the "Year 2000" issue.
Process controls are the automated equipment including hardware and software
systems which run operational activities. Business computer systems are the
computer hardware and software used by the Partnership. The Partnership is
utilizing both internal and external resources to identify, test, remediate or
replace all critical known or discovered non-compliant computerized systems and
applications. The Company continues to evaluate appropriate courses of
corrective action, including replacement of certain systems whose associated
costs would be recorded as assets and amortized. The Partnership has incurred
approximately $2.8 million of costs related to the Year 2000 issue. The Company
estimates the remaining amounts required to address the Year 2000 issue will be
as much as approximately $3.4 million. A portion of such costs would have been
incurred as part of normal system and application upgrades. In certain cases,
the timing of expenditures has been accelerated due to the Year 2000 issue.
Although the Company believes this estimate to be reasonable, due to the
complexities of the Year 2000 issue, there can be no assurance that the actual
costs related to the Year 2000 issue will not be significantly greater.
The Partnership has adopted a three-phase Year 2000 program consisting
of: Phase I - Preliminary Assessment; Phase II - Detailed Assessment and
Remediation Planning; and Phase III - Remediation Activities and Testing. The
Products OLP has completed Phase I; Phase II is 99% complete; and Phase III is
84% complete. The Crude Oil OLP has completed 95% of Phase I; Phase II is 83%
complete; and Phase III is 60% complete. Remediation Activities and Testing of
all process controls and business computer systems are scheduled to be
completed by mid-fourth quarter of 1999.
With respect to its third-party relationships, the Partnership has
contacted its primary vendors, suppliers and service providers to assess their
software and hardware products previously sold to the Partnership and other
aspects of their state of Year 2000 readiness. Information continues to be
updated regularly, thus the Partnership anticipates receiving additional
information in the near future that will assist in determining the extent to
which the Partnership may be vulnerable to those third parties' failure to
identify and remediate their Year 2000 issues. However, there can be no
assurance that the systems or products of other companies, on which the
Partnership's systems rely, will be timely converted, or converted in a manner
that is compatible with the Partnership's systems, or that any such failures by
other companies would not have a material adverse effect on the Partnership.
Despite the Partnership's determined efforts to address and remediate
its Year 2000 issue, there can be no assurance that all process controls and
business computer systems will continue without interruption through January 1,
2000, and beyond. The complexity of identifying and testing all embedded
microprocessors that are installed in hardware throughout the products pipeline
system and crude oil system used for process or flow control, transportation,
security, communication and other systems may result in unforeseen operational
system shutdowns. Although the amount of potential liability and lost revenue
cannot be estimated, failures that result in substantial disruptions of
business activities could have a material adverse effect on the Partnership. In
order to mitigate potential disruptions, the Partnership will prepare
contingency plans for its critical systems, processes and external
relationships by mid-fourth quarter of 1999.
11
<PAGE> 12
TEPPCO PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
Substantially all of the petroleum products transported and stored by
the Partnership are owned by the Partnership's customers. At June 30, 1999, the
Partnership had approximately 15.6 million barrels of products in its custody
owned by customers. The Partnership is obligated for the transportation,
storage and delivery of such products on behalf of its customers. The
Partnership maintains insurance adequate to cover product losses through
circumstances beyond its control.
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Through its ownership of the Products OLP and the Crude Oil OLP, the
Partnership operates in two industry segments - refined products and LPGs
transportation; and crude oil and NGLs transportation and marketing. The
Partnership's reportable segments offer different products and services and are
managed separately because each requires different business strategies.
The Products OLP segment is involved in the transportation, storage
and terminaling of petroleum products and the fractionation of NGLs. Revenues
are derived from the transportation of refined products and LPGs, the storage
and short-haul shuttle transportation of LPGs at the Mont Belvieu, Texas,
complex, sale of product inventory and other ancillary services. Labor and
electric power costs comprise the two largest operating expense items of the
Products OLP. Operations are somewhat seasonal with higher revenues generally
realized during the first and fourth quarters of each year. Refined products
volumes are generally higher during the second and third quarters because of
greater demand for gasolines during the spring and summer driving seasons. LPGs
volumes are generally higher from November through March due to higher demand
in the Northeast for propane, a major fuel for residential heating.
The Crude Oil OLP segment is involved in the transportation and
marketing of crude oil and NGLs. Revenues are earned from the gathering,
storage, transportation and marketing of crude oil, NGLs and lube oils
principally in Oklahoma and Texas. Operations of this segment are included from
November 1, 1998, upon the acquisition from Duke Energy.
The following information is provided to facilitate increased
understanding of the 1999 and 1998 interim consolidated financial statements
and accompanying notes presented in Item 1. Material period-to-period variances
in the consolidated statements of income are discussed under "Results of
Operations." The "Financial Condition and Liquidity" section analyzes cash
flows and financial position. Discussion included in "Other Matters" addresses
key trends, future plans and contingencies. Throughout these discussions,
management addresses items that are reasonably likely to materially affect
future liquidity or earnings.
RESULTS OF OPERATIONS
Summarized below is financial data by business segment (in thousands):
<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------- -------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenues:
Refined Products and LPGs Transportation .......... $ 54,225 $ 51,560 $ 115,375 $ 101,765
Crude Oil and NGLs Transportation and Marketing ... 401,126 -- 626,066 --
---------- ---------- ---------- ----------
Total operating revenues ....................... 455,351 51,560 741,441 101,765
---------- ---------- ---------- ----------
Operating income:
Refined Products and LPGs Transportation ........... 18,601 18,929 46,799 38,443
Crude Oil and NGLs Transportation and Marketing .... 2,415 -- 4,686 --
---------- ---------- ---------- ----------
Total operating income ......................... 21,016 18,929 51,485 38,443
---------- ---------- ---------- ----------
Income before extraordinary item:
Refined Products and LPGs Transportation .......... 11,570 12,546 32,562 25,701
Crude Oil and NGLs Transportation and Marketing ... 2,459 -- 4,839 --
---------- ---------- ---------- ----------
Total income before extraordinary item .......... $ 14,029 $ 12,546 $ 37,401 $ 25,701
---------- ---------- ---------- ----------
</TABLE>
13
<PAGE> 14
RESULTS OF OPERATIONS - (CONTINUED)
Net income for the quarter ended June 30, 1999 was $14.0 million,
compared with net income of $12.5 million for the 1998 second quarter. The
increase in net income resulted primarily from $2.5 million of net income
contributed by the crude oil and NGLs transportation and marketing segment,
which was acquired effective November 1, 1998, partially offset by $1.0 million
decrease of net income by the refined products and LPGs transportation segment.
The decrease in net income of the refined products and LPGs transportation
segment was primarily due to a $3.0 million increase in costs and expenses and
a $0.5 million decrease in other income - net, partially offset by a $2.7
million increase in operating revenues.
For the six months ended June 30, 1999, the Partnership reported net
income of $37.4 million, compared with a net loss of $47.1 million for the
first six months of 1998. The net loss in 1998 included an extraordinary charge
of $72.8 million for early extinguishment of debt, net of $0.7 million
allocated to minority interest. Excluding the extraordinary loss, net income
would have been $25.7 million for the first six months of 1998. The $11.7
million increase in income before the loss on debt extinguishment resulted from
a $6.9 million increase of net income by the refined products and LPGs
transportation segment and $4.8 million of net income contributed by the crude
oil and NGLs transportation and marketing segment, which was acquired effective
November 1, 1998. The increase in net income of the refined products and LPGs
transportation segment resulted primarily from a $13.6 million increase in
operating revenues, partially offset by a $5.3 million increase in costs and
expenses, a $0.6 million increase in interest expense and a $0.8 million
decrease in other income - net. See discussion below of factors affecting net
income for the comparative periods by business segment.
REFINED PRODUCTS AND LPGS TRANSPORTATION SEGMENT
See volume and average tariff information below:
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, PERCENTAGE JUNE 30, PERCENTAGE
------------------------- INCREASE ------------------------ INCREASE
1999 1998 (DECREASE) 1999 1998 (DECREASE)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
VOLUMES DELIVERED
(in thousands of barrels)
Refined products 35,818 35,183 2% 63,973 59,694 7%
LPGs 6,367 5,660 12% 19,539 15,811 24%
Mont Belvieu operations 5,882 5,518 7% 12,767 11,462 11%
---------- ---------- ---------- ---------- ---------- ----------
Total 48,067 46,361 4% 96,279 86,967 11%
========== ========== ========== ========== ========== ==========
AVERAGE TARIFF PER BARREL
Refined products $ 0.93 $ 0.93 -- $ 0.92 $ 0.93 (1%)
LPGs 1.59 1.72 (8%) 1.88 2.00 (6%)
Mont Belvieu operations 0.15 0.15 -- 0.16 0.16 --
Average system tariff $ 0.92 $ 0.94 (2%) $ 1.01 $ 1.02 (1%)
========== ========== ========== ========== ========== ==========
</TABLE>
Refined products transportation revenues increased $0.6 million for
the quarter ended June 30, 1999, compared with the prior-year quarter, due to a
2% increase in total refined products volumes delivered. Deliveries of jet fuel
and distillates in the Indianapolis, Chicago and Ohio markets served by the
Partnership increased as a result of strong demand and favorable price
differentials. Partially offsetting these increases were lower deliveries of
motor fuel as a result of reduced refinery production received into the
Ark-La-Tex system and decreased gasoline blending demand for methyl tertiary
butyl ether ("MTBE").
LPGs transportation revenues increased $0.3 million for the quarter
ended June 30, 1999, compared with the second quarter of 1998, due primarily to
increased feed stock deliveries of isobutane to a Midwest refinery that was on
a turnaround during the second quarter of 1998 and increased propane demand
from petrochemical facilities along the upper Texas Gulf Coast and in the
Midwest market areas. These increases were partially offset by lower propane
demand in the Northeast due to unfavorable price differentials. The decrease in
the average tariff per barrel resulted from the increased percentage of
short-haul deliveries in the Midwest and Gulf Coast market areas in 1999.
14
<PAGE> 15
RESULTS OF OPERATIONS - (CONTINUED)
For the six months ended June 30, 1999, refined products
transportation revenues increased $3.7 million, or 7%, compared with the
corresponding period in 1998. Lower refinery production and strong economic
demand for motor fuel, distillates and jet fuel resulted in increased volumes
delivered in the Midwest market areas. Offsetting these increases was decreased
demand for gasoline blend stocks, primarily MTBE, and gasoline feed stocks,
primarily natural gasoline. Additionally, jet fuel deliveries increased as a
result of new military supply agreements that became effective in the fourth
quarter of 1998.
LPGs transportation revenues increased $5.1 million, or 16%, during
the six months ended June 30, 1999, compared with the same period in 1998, due
to a 24% increase in volumes delivered, partially offset by a 6% decrease in
the average tariff per barrel. Propane deliveries in the Northeast and upper
Midwest increased from higher weather-related demand in the first quarter of
1999. Additionally, increased petrochemical demand throughout the first and
second quarters resulted in increased propane deliveries along the upper Texas
Gulf Coast and the Midwest market areas. The 6% decrease in the average tariff
per barrel resulted from the increased percentage of short-haul deliveries in
the Midwest and Gulf Coast market areas in 1999.
Revenues generated from Mont Belvieu operations increased during both
the quarter and six months ended June 30, 1999, compared with the corresponding
periods in 1998, due primarily to increased storage revenue and increased
petrochemical demand for shuttle deliveries.
Other operating revenues increased $0.8 million during the second
quarter of 1999, as compared with the second quarter of 1998, due primarily to
a $1.2 million increase in gains on the sale of product inventory attributable
to favorable market prices, partially offset by lower refined products rental
revenue and lower amounts of butane received for summer storage.
During the six months ended June 30, 1999, other operating revenues
increased $3.6 million, as compared to the same period in 1998, due primarily
to a $1.8 million increase in operating revenues from the fractionator
facilities acquired on March 31, 1998, a $1.1 million increase due to higher
product inventory volumes sold and a $0.3 million increase due to higher
propane imports received at the marine terminal at Providence, Rhode Island.
Costs and expenses increased $3.0 million for the quarter ended June
30, 1999, compared with the second quarter of 1998, primarily due to a $1.6
million increase in operating, general and administrative expenses and a $1.2
million increase in operating fuel and power expense. The increase in
operating, general and administrative expenses was primarily attributable to a
$0.6 million increase in expenses associated with Year 2000 activities, a $0.5
million increase in rental fees from higher volume through the connection from
Colonial Pipeline at Beaumont, increased operating supplies and expenses and
insurance reimbursement of past litigation costs related to the Partnership's
Seymour, Indiana, terminal received in June 1998. These increases were
partially offset by the $0.5 million of expense to write down the book-value of
product inventory to market-value at June 30, 1998. The increase in operating
fuel and power expense reflects the increased refined products and LPGs volumes
delivered in the second quarter of 1999, compared to the prior year second
quarter.
Costs and expenses increased $5.3 million for the six-months ended
June 30, 1999, compared with the same period in 1998, due to a $2.9 million
increase in operating, general and administrative expenses, a $1.6 million
volume-related increase in operating fuel and power expense and a $0.8 million
increase in depreciation and amortization expense. The increase in operating,
general and administrative expenses was primarily attributable to a $1.1
million increase in expenses associated with Year 2000 activities, a $0.9
million increase in rental fees from higher volume through the connection from
Colonial Pipeline at Beaumont, increased product measurement losses, higher
labor costs in 1999, six months of fractionation fees in 1999 related to the
facilities acquired on March 31, 1998 and the factors occurring in the second
quarter noted previously. Depreciation and amortization expense increased as a
result of the completion of capital projects, coupled with six-months of
expense in 1999 for amortization of the value assigned to the Fractionation
Agreement.
15
<PAGE> 16
RESULTS OF OPERATIONS - (CONTINUED)
Other income decreased during both the quarter and six-months ended
June 30, 1999, compared with the corresponding periods in 1998, due primarily
to a $0.4 million gain on the disposition of non-carrier assets in June 1998,
and lower interest income earned on cash investments in 1999.
Interest expense increased during the six-months ended June 30, 1999,
compared with the prior year period, due primarily to six months of interest
expense in 1999 on the $38 million term-loan used to finance the purchase of
the fractionation assets on March 31, 1998.
CRUDE OIL AND NGLS TRANSPORTATION AND MARKETING SEGMENT
Margin and volume information is presented below:
<TABLE>
<CAPTION>
SIX MONTHS
QUARTER ENDED ENDED
JUNE 30, 1999 JUNE 30, 1999
------------- -------------
<S> <C> <C>
Margins (dollars in thousands):
Crude oil transportation ....... $ 4,653 $ 8,950
Crude oil marketing ............ 2,993 4,989
NGL transportation ............. 1,556 2,962
LSI ............................ 591 1,135
---------- ----------
Total margin .............. $ 9,793 $ 18,036
========== ==========
Barrels per day:
Crude oil transportation ....... 94,397 92,508
Crude oil marketing ............ 253,213 246,229
NGL transportation ............. 13,205 12,054
LSI volume (total gallons): ....... 2,150,415 4,109,331
Margin per barrel:
Crude oil transportation ....... $ 0.542 $ 0.535
Crude oil marketing ............ $ 0.130 $ 0.112
NGL transportation ............. $ 1.295 $ 1.358
LSI margin (per gallon): .......... $ 0.275 $ 0.276
</TABLE>
The crude oil and NGLs transportation and marketing segment was added
to the Partnership's operations with the acquisition of the DETTCO assets
effective November 1, 1998. The acquisition was accounted for as a purchase for
accounting purposes. Net income contributed by the crude oil transportation and
marketing segment for the quarter and six-month periods ended June 30, 1999
totaled $2.5 million and $4.8 million, respectively.
Margin is a more meaningful measure of financial performance than
operating revenues and operating expenses due to the significant fluctuations
in revenues and expense that may occur with changes in the level of marketing
activity. Margin is calculated as revenues generated from crude oil and lube
oil sales and crude oil and NGLs transportation less the cost of crude oil and
lube oil purchases. During the three months ended June 30, 1999, crude oil
transportation and NGL transportation contributed 47% and 16% of the margin,
respectively, while crude oil marketing operations accounted for 31% of the
margin. Operations of LSI contributed $0.6 million, or 6%, of the margin for
the three month period ended June 30, 1999. During the six months ended June
30, 1999, crude oil transportation and NGL transportation contributed 50% and
16% of the margin, respectively, while crude oil marketing operations accounted
for 28% of the margin. Operations of LSI contributed $1.1 million, or 6%, of
the margin for the six month period ended June 30, 1999.
16
<PAGE> 17
RESULTS OF OPERATIONS - (CONTINUED)
For the quarter ended June 30, 1999, operating, general and
administrative expenses, including operating fuel and power, of the crude oil
and NGLs transportation and marketing segment totaled $5.8 million, or 59% of
the margin. Depreciation and amortization expenses and taxes - other than
income totaled $1.6 million, or 16% of the margin for the second quarter. For
the six months ended June 30, 1999, operating, general and administrative
expenses, including operating fuel and power, of the crude oil and NGLs
transportation and marketing segment totaled $10.2 million, or 57% of the
margin. Depreciation and amortization expenses and taxes - other than income
totaled $3.1 million, or 17% of the margin during the six months ended June 30,
1999.
FINANCIAL CONDITION AND LIQUIDITY
Net cash from operations for the six-month period ended June 30, 1999,
totaled $45.4 million, comprised of $53.7 million of income before charges for
depreciation and amortization, partially offset by $8.3 million of cash used
for working capital changes. This compares with cash flows from operations of
$42.7 million for the corresponding period in 1998, comprised of $38.4 million
of income before extraordinary loss on early extinguishment of debt and charges
for depreciation and amortization and $4.3 million provided by working capital
changes. The increase in cash used for working capital changes during the six
month period ended June 30, 1999, as compared with the same period in 1998,
resulted primarily from timing of payments related to crude oil marketing
activity. Net cash from operations for the six months ended June 30, 1999
included interest payments related to the Senior Notes and the term loan of
$14.9 million. Net cash from operations for the six months ended June 30, 1998
included interest payments related to the First Mortgage Notes of $12.8 million
paid on January 27, 1998 in connection with repayment of the outstanding
balance of the First Mortgage Notes.
Cash flows used in investing activities during the first six months of
1999 included $40.3 million of capital expenditures, $2.3 million for the
purchase of a 125-mile crude oil system in Southeast Texas, and $2.2 million of
additional cash investments. These decreases of cash were offset by $3.8
million from investment maturities. Cash flows used in investing activities
during the first six months of 1998 included $40.0 million for the purchase
price of the fractionation assets and related intangible assets and $9.5
million of capital expenditures, partially offset by $2.1 million from
investment maturities and $0.5 million received from the sale of non-carrier
assets.
In February 1999, the Partnership announced plans to construct three
new pipelines between the Partnership's terminal in Mont Belvieu, Texas and
Port Arthur, Texas. The project includes three 12-inch diameter common-carrier
pipelines and associated facilities. Each pipeline will be approximately 70
miles in length. Upon completion, the new pipelines will transport ethylene,
propylene and natural gasoline. The anticipated completion date is the fourth
quarter of 2000. The Partnership has entered into an agreement for turnkey
construction of the pipelines and related facilities and has separately entered
into agreements for guaranteed throughput commitments. The cost of this project
is expected to total approximately $74.5 million. Approximately $28.0 million
of construction cost was included in capital expenditures during the six month
period ended June 30, 1999, with a total of approximately $44.5 million
expected to be incurred in 1999, and the remainder in 2000.
Exclusive of the pipeline construction between Mont Belvieu and Port
Arthur, the Partnership estimates that capital expenditures for 1999 will total
approximately $42 million. Approximately $22 million is expected to be used for
the Products OLP and $20 million is expected to be used for the Crude Oil OLP.
Approximately $20 million of planned expenditures of the Products OLP are
expected to be used for life-cycle replacements and to upgrade current
facilities, with the remaining $2 million expected to be used for
revenue-generating projects. Approximately $14 million of planned expenditures
of the Crude Oil OLP are expected to be used in revenue-generating and
cost-reduction projects, with the remainder to be used to maintain existing
operations. The Partnership revises capital spending estimates periodically in
response to changes in cash flows and operations.
17
<PAGE> 18
FINANCIAL CONDITION AND LIQUIDITY - (CONTINUED)
On January 27, 1998, the Products OLP completed the issuance of $180
million principal amount of 6.45% Senior Notes due 2008, and $210 million
principal amount of 7.51% Senior Notes due 2028 (collectively the "Senior
Notes"). The 6.45% Senior Notes due 2008 are not subject to redemption prior to
January 15, 2008. The 7.51% Senior Notes due 2028 may be redeemed at any time
after January 15, 2008, at the option of the Products OLP, in whole or in part,
at a premium. Net proceeds from the issuance of the Senior Notes totaled
approximately $386 million and was used to repay in full the $61.0 million
principal amount of the 9.60% Series A First Mortgage Notes, due 2000, and the
$265.5 million principal amount of the 10.20% Series B First Mortgage Notes,
due 2010. The premium for the early redemption of the First Mortgage Notes
totaled $70.1 million. The repayment of the First Mortgage Notes and the
issuance of the Senior Notes reduced the level of cash required for debt
service until 2008. The Partnership recorded an extraordinary charge of $73.5
million during the first quarter of 1998 (including $0.7 million allocated to
minority interest), which represents the redemption premium of $70.1 million
and unamortized debt issue costs related to the First Mortgage Notes of $3.4
million.
The Senior Notes do not have sinking fund requirements. Interest on
the Senior Notes is payable semiannually in arrears on January 15 and July 15
of each year, commencing July 15, 1998. The Senior Notes are unsecured
obligations of the Products OLP and rank on a parity with all other unsecured
and unsubordinated indebtedness of the Products OLP. The indenture governing
the Senior Notes contains covenants, including, but not limited to, covenants
limiting (i) the creation of liens securing indebtedness and (ii) sale and
leaseback transactions. However, the indenture does not limit the Partnership's
ability to incur additional indebtedness.
In connection with the purchase of the fractionation assets from DEFS
as of March 31, 1998, TEPPCO Colorado received a $38 million bank loan from
SunTrust Bank. Proceeds from the loan were received on April 21, 1998. The loan
bears interest at a rate of 6.53%, which is payable quarterly. The principal
balance of the loan is payable in full on April 21, 2001. The Products OLP is
guarantor on the loan.
On May 17, 1999, the Products OLP entered into a $75 million term loan
agreement to finance construction of three new pipelines between the
Partnership's terminal in Mont Belvieu, Texas and Port Arthur, Texas. The term
loan agreement has a term of five years. SunTrust Bank is the administrator of
the loan. At June 30, 1999, $25 million has been borrowed under the term loan
agreement. Principal will be paid quarterly beginning in 2001. The interest
rate for the $75 million term loan is based on the borrower's option of either
SunTrust Bank's prime rate, the federal funds rate or LIBOR rate in effect at
the time of the borrowings and is adjusted monthly, bimonthly, quarterly or
semi-annually. Interest is payable quarterly from the time of borrowing. The
current interest rate for amounts outstanding under the term loan is 6.33%.
Commitment fees for the term loan agreement totaled approximately $15,000 for
the quarter ended June 30, 1999.
On May 17, 1999, the Products OLP entered into a $25 million revolving
credit agreement and TCO entered into a $30 million revolving credit agreement.
SunTrust Bank is the administrative agent on both revolving credit agreements.
The $25 million revolving credit agreement has a five year term and the $30
million revolving credit agreement has a three year term. The interest rate on
both agreements is based on the borrower's option of either SunTrust Bank's
prime rate, the federal funds rate or LIBOR rate in effect at the time of the
borrowings and is payable quarterly. Interest rates are adjusted monthly,
bimonthly, quarterly or semi-annually. The Products OLP has not borrowed any
amounts under the revolving credit facility. TCO borrowed $5 million under its
revolving credit agreement on June 30, 1999. Such amount was repaid in July
1999. Commitment fees for the revolving credit agreement totaled approximately
$17,000 for the quarter ended June 30, 1999.
In connection with the purchase of the DETTCO assets by TCO, Duke
Capital also agreed to guarantee the payment by TCO and its subsidiaries under
certain commercial contracts between TCO and its subsidiaries and third
parties. Duke Capital will provide up to $100 million of guarantee credit to
TCO and its subsidiaries for a period of three years from November 30, 1998.
Pursuant to this agreement, the Partnership has agreed to pay Duke Capital a
commitment fee of $100,000 per year.
18
<PAGE> 19
FINANCIAL CONDITION AND LIQUIDITY - (CONTINUED)
The Partnership paid cash distributions of $32.6 million during the
six months ended June 30, 1999. Additionally, on July 19, 1999, the Partnership
declared a cash distribution of $0.475 per Limited partner and Class B Unit.
This distribution increases the annualized distribution to $1.90 per Unit from
$1.80 per Unit. The second quarter cash distribution was paid on August 6, 1999
to Unitholders of record on July 30, 1999.
OTHER MATTERS
Environmental
The operations of the Partnership are subject to federal, state and
local laws and regulations relating to protection of the environment. Although
the Partnership believes the operations of the Pipeline System are in material
compliance with applicable environmental regulations, risks of significant
costs and liabilities are inherent in pipeline operations, and there can be no
assurance that significant costs and liabilities will not be incurred.
Moreover, it is possible that other developments, such as increasingly strict
environmental laws and regulations and enforcement policies thereunder, and
claims for damages to property or persons resulting from the operations of the
Pipeline System, could result in substantial costs and liabilities to the
Partnership. The Partnership does not anticipate that changes in environmental
laws and regulations will have a material adverse effect on it financial
position, operations or cash flows in the near term.
The Partnership and the Indiana Department of Environmental Management
("IDEM") have entered into an Agreed Order that will ultimately result in a
remediation program for any on-site and off-site groundwater contamination
attributable to the Partnership's operations at the Seymour, Indiana, terminal.
A Feasibility Study, which includes the Partnership's proposed remediation
program, has been approved by IDEM. IDEM will issue a Record of Decision
formally approving the remediation program. After the Record of Decision has
been issued, the Partnership will enter into an Agreed Order for the continued
operation and maintenance of the program. The Partnership will evaluate the
conditions of the Record of Decision and make adjustments to the program as
required. The amount accrued for the program was approximately $0.5 million at
June 30, 1999. In the opinion of the Company, the completion of the remediation
program being proposed by the Partnership, if such program is approved by IDEM,
will not have a material adverse impact on the Partnership's financial
condition, results of operations or liquidity.
Year 2000 Issues
In 1997, the Company initiated a program to prepare the Partnership's
process controls and business computer systems for the "Year 2000" issue.
Process controls are the automated equipment including hardware and software
systems which run operational activities. Business computer systems are the
computer hardware and software used by the Partnership. The Partnership is
utilizing both internal and external resources to identify, test, remediate or
replace all critical known or discovered non-compliant computerized systems and
applications. The Company continues to evaluate appropriate courses of
corrective action, including replacement of certain systems whose associated
costs would be recorded as assets and amortized. The Partnership has incurred
approximately $2.8 million of costs related to the Year 2000 issue. The Company
estimates the remaining amounts required to address the Year 2000 issue will be
as much as approximately $3.4 million. A portion of such costs would have been
incurred as part of normal system and application upgrades. In certain cases,
the timing of expenditures has been accelerated due to the Year 2000 issue.
Although the Company believes this estimate to be reasonable, due to the
complexities of the Year 2000 issue, there can be no assurance that the actual
costs related to the Year 2000 issue will not be significantly greater.
The Partnership has adopted a three-phase Year 2000 program consisting
of: Phase I - Preliminary Assessment; Phase II - Detailed Assessment and
Remediation Planning; and Phase III - Remediation Activities and Testing. The
Products OLP has completed Phase I; Phase II is 99% complete; and Phase III is
84% complete. The Crude Oil OLP has completed 95% of Phase I; Phase II is 83%
complete; and Phase III is 60% complete.
19
<PAGE> 20
OTHER MATTERS - (CONTINUED)
Remediation Activities and Testing of all process controls and business
computer systems are scheduled to be completed by mid-fourth quarter of 1999.
With respect to its third-party relationships, the Partnership has
contacted its primary vendors, suppliers and service providers to assess their
software and hardware products previously sold to the Partnership and other
aspects of their state of Year 2000 readiness. Information continues to be
updated regularly, thus the Partnership anticipates receiving additional
information in the near future that will assist in determining the extent to
which the Partnership may be vulnerable to those third parties' failure to
identify and remediate their Year 2000 issues. However, there can be no
assurance that the systems or products of other companies, on which the
Partnership's systems rely, will be timely converted, or converted in a manner
that is compatible with the Partnership's systems, or that any such failures by
other companies would not have a material adverse effect on the Partnership.
Despite the Partnership's determined efforts to address and remediate
its Year 2000 issue, there can be no assurance that all process controls and
business computer systems will continue without interruption through January 1,
2000, and beyond. The complexity of identifying and testing all embedded
microprocessors that are installed in hardware throughout the products pipeline
system and crude oil system used for process or flow control, transportation,
security, communication and other systems may result in unforeseen operational
system shutdowns. Although the amount of potential liability and lost revenue
cannot be estimated, failures that result in substantial disruptions of
business activities could have a material adverse effect on the Partnership. In
order to mitigate potential disruptions, the Partnership will prepare
contingency plans for its critical systems, processes and external
relationships by mid-fourth quarter of 1999.
Market and Regulatory Environment
In July 1999, the Partnership announced plans to build a new 360-mile
pipeline from Beaumont, Texas, to Little Rock, Arkansas. The new pipeline will
parallel the Partnership's two existing pipelines and will increase delivery
capability of refined petroleum products by 100,000 barrels per day. The
expansion will also include construction of additional storage tanks,
connections to other pipelines to increase volumes entering the pipeline system
and increased delivery capability in the Partnership's Midwest market areas.
The expansion is scheduled to be completed in 18 to 24 months. The Partnership
currently anticipates finalizing the cost and size of the pipeline by the end
of the third quarter of 1999.
Rates of interstate oil pipeline companies, like the Products OLP, are
currently regulated by the FERC, primarily through an index methodology,
whereby a pipeline company is allowed to change its rates based on the change
from year-to-year in the Producer Price Index for finished goods less 1% ("PPI
Index"). In the alternative, interstate oil pipeline companies may elect to
support rate filings by using a cost-of-service methodology, competitive market
showings ("Market Based Rates") or agreements between shippers and the oil
pipeline company that the rate is acceptable ("Settlement Rates").
In May 1999, the Products OLP filed an application with the FERC to
charge Market Based Rates for substantially all refined products transportation
tariffs. On June 30, 1999, the FERC approved a previously filed request of the
Products OLP waiving the requirement to adjust refined products transportation
tariffs pursuant to the PPI Index while its Market Based Rates application is
under review. Under the PPI Index, refined products transportation rates in
effect on June 30, 1999 would have been reduced by approximately 1.83%
effective July 1, 1999. In July 1999, certain shippers filed protests with the
FERC on the Products OLP's application for Market Based Rates in certain origin
and destination markets. If all or any portion of the Market Based Rates
application is denied by the FERC, the Products OLP has agreed to refund, with
interest, all amounts collected under the tariff rates in excess of the PPI
Index with respect to those markets the FERC does not find competitive.
Effective July 1, 1999, the Products OLP established Settlement Rates
with all shippers that utilize certain LPGs transportation tariff rates,
whereby such rates in effect on June 30, 1999, would not be adjusted for a
period of either two or three years. Other LPGs transportation tariff rates
under which such agreements could not be reached
20
<PAGE> 21
OTHER MATTERS - (CONTINUED)
with all shippers were reduced pursuant to the PPI Index effective July 1,
1999. Effective July 1, 1999, the Products OLP canceled its tariff for
deliveries of MTBE into the Chicago market area reflecting reduced demand for
transportation of MTBE into such area.
Other
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes
standards for and disclosures of derivative instruments and hedging activities.
In July 1999, the FASB issued SFAS No. 137 to delay the effective date of SFAS
No. 133 until fiscal years beginning after June 15, 2000. The Partnership
expects to adopt this standard effective January 1, 2001, and does not expect
the adoption of this statement to have a material impact on its financial
condition or results of operations.
The matters discussed herein include "forward-looking statements"
within the meaning of various provisions of the Securities Act of 1933 and the
Securities Exchange Act of 1934. All statements, other than statements of
historical facts, included in this document that address activities, events or
developments that the Partnership expects or anticipates will or may occur in
the future, including such things as estimated future capital expenditures
(including the amount and nature thereof), business strategy and measures to
implement strategy, competitive strengths, goals, expansion and growth of the
Partnership's business and operations, plans, references to future success,
references to intentions as to future matters and other such matters are
forward-looking statements. These statements are based on certain assumptions
and analyses made by the Partnership in light of its experience and its
perception of historical trends, current conditions and expected future
developments as well as other factors it believes are appropriate under the
circumstances. However, whether actual results and developments will conform
with the Partnership's expectations and predictions is subject to a number of
risks and uncertainties, including general economic, market or business
conditions, the opportunities (or lack thereof) that may be presented to and
pursued by the Partnership, competitive actions by other pipeline companies,
changes in laws or regulations, and other factors, many of which are beyond the
control of the Partnership. Consequently, all of the forward-looking statements
made in this document are qualified by these cautionary statements and there
can be no assurance that actual results or developments anticipated by the
Partnership will be realized or, even if substantially realized, that they will
have the expected consequences to or effect on the Partnership or its business
or operations. For additional discussion of such risks and uncertainties, see
TEPPCO Partners, L.P.'s 1998 Annual Report on Form 10-K.
21
<PAGE> 22
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership may be exposed to market risk through changes in
commodity prices and interest rates as discussed below. The Partnership has no
foreign exchange risks.
The Partnership mitigates exposure to commodity price fluctuations by
maintaining a balanced position between crude oil purchases and sales. As a
hedging strategy to manage crude oil price fluctuations, the Partnership
occasionally enters into futures contracts on the New York Mercantile Exchange,
and makes limited use of other derivative instruments. It is the Partnership's
policy not to acquire crude oil, futures contracts or other derivative products
for the purpose of speculating on price changes. Market risks associated with
commodity derivatives were not material at June 30, 1999.
At June 30, 1999, the Products OLP had outstanding $180 million
principal amount of 6.45% Senior Notes due 2008, and $210 million principal
amount of 7.51% Senior Notes due 2028 (collectively the "Senior Notes").
Additionally, the Products OLP had a $38 million bank loan outstanding from
SunTrust Bank. The SunTrust loan bears interest at a fixed rate of 6.53% and is
payable in full in April 2001. At June 30, 1999, the estimated fair value of
the Senior Notes and the SunTrust loan was approximately $372.1 million and
$37.8 million, respectively.
At June 30, 1999, the Products OLP had $25 million outstanding under a
variable interest rate term loan and the Crude Oil OLP had $5 million
outstanding under its revolving credit agreement. The interest rates for these
credit facilities are based on the borrower's option of either SunTrust
Bank's prime rate, the federal funds rate or LIBOR rate in effect at the time
of the borrowings and is adjusted monthly, bimonthly, quarterly or
semi-annually. Utilizing the balances of variable interest rate debt
outstanding at June 30, 1999, and assuming market interest rates increase 1%,
the potential annual increase in interest expense is approximately $0.3
million.
22
<PAGE> 23
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit
Number Description
------- -----------
3.1 Certificate of Limited Partnership of the
Partnership (Filed as Exhibit 3.2 to the
Registration Statement of TEPPCO Partners, L.P.
(Commission File No. 33-32203) and incorporated
herein by reference).
3.2 Certificate of Formation of TEPPCO Colorado, LLC
(Filed as Exhibit 3.2 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 1998 and incorporated herein
by reference).
3.3 Second Amended and Restated Agreement of Limited
Partnership of TEPPCO Partners, L.P., dated November
30, 1998 (Filed as Exhibit 3.3 to Form 10-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403)
for the year ended December 31, 1998 and
incorporated herein by reference).
3.4 Amended and Restated Agreement of Limited
Partnership of TE Products Pipeline Company, Limited
Partnership, effective July 21, 1998 (Filed as
Exhibit 3.2 to Form 8-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) dated July 21, 1998
and incorporated herein by reference).
3.5 Agreement of Limited Partnership of TCTM, L.P.,
dated November 30, 1998 (Filed as Exhibit 3.3 to
Form 10-K of TEPPCO Partners, L.P. (Commission File
No. 1-10403) for the year ended December 31, 1998
and incorporated herein by reference).
4.1 Form of Certificate representing Limited Partner
Units (Filed as Exhibit 4.1 to the Registration
Statement of TEPPCO Partners, L.P. (Commission File
No. 33-32203) and incorporated herein by reference).
4.2 Form of Indenture between TE Products Pipeline
Company, Limited Partnership and The Bank of New
York, as Trustee, dated as of January 27, 1998
(Filed as Exhibit 4.3 to TE Products Pipeline
Company, Limited Partnership's Registration
Statement on Form S-3 (Commission File No.
333-38473) and incorporated herein by reference).
4.3 Form of Certificate representing Class B Units
(Filed as Exhibit 3.3 to Form 10-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
year ended December 31, 1998 and incorporated herein
by reference).
10.1 Assignment and Assumption Agreement, dated March 24,
1988, between Texas Eastern Transmission Corporation
and the Company (Filed as Exhibit 10.8 to the
Registration Statement of TEPPCO Partners, L.P.
(Commission File No. 33-32203) and incorporated
herein by reference).
10.2 Texas Eastern Products Pipeline Company 1997
Employee Incentive Compensation Plan executed on
July 14, 1997 (Filed as Exhibit 10 to Form 10-Q of
TEPPCO Partners, L.P. (Commission File No. 1-10403)
for the quarter ended September 30, 1997 and
incorporated herein by reference).
10.3 Agreement Regarding Environmental Indemnities and
Certain Assets (Filed as Exhibit 10.5 to Form 10-K
of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the year ended December 31, 1990 and
incorporated herein by reference).
10.4 Texas Eastern Products Pipeline Company Management
Incentive Compensation Plan executed on January 30,
1992 (Filed as Exhibit 10 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 1992 and incorporated herein
by reference).
23
<PAGE> 24
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - (CONTINUED)
10.5 Texas Eastern Products Pipeline Company Long-Term
Incentive Compensation Plan executed on October 31,
1990 (Filed as Exhibit 10.9 to Form 10-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
year ended December 31, 1990 and incorporated herein
by reference).
10.6 Form of Amendment to Texas Eastern Products Pipeline
Company Long-Term Incentive Compensation Plan (Filed
as Exhibit 10.7 to the Partnership's Form 10-K
(Commission File No. 1-10403) for the year ended
December 31, 1995 and incorporated herein by
reference).
10.7 Employees' Savings Plan of Panhandle Eastern
Corporation and Participating Affiliates (Effective
January 1, 1991) (Filed as Exhibit 10.10 to the
Partnership's Form 10-K (Commission File No.
1-10403) for the year ended December 31, 1990 and
incorporated herein by reference).
10.8 Retirement Income Plan of Panhandle Eastern
Corporation and Participating Affiliates (Effective
January 1, 1991) (Filed as Exhibit 10.11 to Form
10-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the year ended December 31, 1990 and
incorporated herein by reference).
10.9 Panhandle Eastern Corporation Key Executive
Retirement Benefit Equalization Plan, adopted
December 20, 1993; effective January 1, 1994 (Filed
as Exhibit 10.12 to Form 10-K of Panhandle Eastern
Corporation (Commission File No. 1-8157) for the
year ended December 31, 1993 and incorporated herein
by reference).
10.10 Employment Agreement with William L. Thacker, Jr.
(Filed as Exhibit 10 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
quarter ended September 30, 1992 and incorporated
herein by reference).
10.11 Texas Eastern Products Pipeline Company 1994 Long
Term Incentive Plan executed on March 8, 1994 (Filed
as Exhibit 10.1 to Form 10-Q of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the quarter
ended March 31, 1994 and incorporated herein by
reference).
*10.12 Texas Eastern Products Pipeline Company 1994 Long
Term Incentive Plan, Amendment 1, effective January
16, 1995.
10.13 Panhandle Eastern Corporation Key Executive Deferred
Compensation Plan established effective January 1,
1994 (Filed as Exhibit 10.2 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 1994 and incorporated herein
by reference).
10.14 Asset Purchase Agreement between Duke Energy Field
Services, Inc. and TEPPCO Colorado, LLC, dated March
31, 1998 (Filed as Exhibit 10.14 to Form 10-Q of
TEPPCO Partners, L.P. (Commission File No. 1-10403)
for the quarter ended March 31, 1998 and
incorporated herein by reference).
10.15 Credit Agreement between TEPPCO Colorado, LLC,
SunTrust Bank, Atlanta, and Certain Lenders, dated
April 21, 1998 (Filed as Exhibit 10.15 to Form 10-Q
of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the quarter ended March 31, 1998 and
incorporated herein by reference).
10.16 First Amendment to Credit Agreement between TEPPCO
Colorado, LLC, SunTrust Bank, Atlanta, and Certain
Lenders, effective June 29, 1998 (Filed as Exhibit
10.15 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended
June 30, 1998 and incorporated herein by reference).
10.17 Contribution Agreement between Duke Energy Transport
and Trading Company and TEPPCO Partners, L.P., dated
October 15, 1998 (Filed as Exhibit 3.3 to Form 10-K
of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the year ended December 31, 1998 and
incorporated herein by reference).
10.18 Guaranty Agreement by Duke Energy Natural Gas
Corporation for the benefit of TEPPCO Partners,
L.P., dated November 30, 1998, effective November 1,
1998 (Filed as
24
<PAGE> 25
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - (CONTINUED)
Exhibit 3.3 to Form 10-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the year ended
December 31, 1998 and incorporated herein by
reference).
10.19 Revolving Credit Agreement between TCTM, L.P. as
Borrower and Duke Capital Corporation as Lender,
dated November 30, 1998 (Filed as Exhibit 3.3 to
Form 10-K of TEPPCO Partners, L.P. (Commission File
No. 1-10403) for the year ended December 31, 1998
and incorporated herein by reference).
10.20 Letter Agreement regarding Payment Guarantees of
Certain Obligations of TCTM, L.P. between Duke
Capital Corporation and TCTM, L.P., dated November
30, 1998 (Filed as Exhibit 3.3 to Form 10-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403)
for the year ended December 31, 1998 and
incorporated herein by reference).
10.21 Form of Employment Agreement between the Company and
O. Horton Cunningham, Ernest P. Hagan, Thomas R.
Harper, David L. Langley, Charles H. Leonard and
James C. Ruth, dated December 1, 1998 (Filed as
Exhibit 3.3 to Form 10-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the year ended
December 31, 1998 and incorporated herein by
reference).
10.22 Agreement Between Owner and Contractor between TE
Products Pipeline Company, Limited Partnership and
Eagleton Engineering Company, dated February 4,
1999. (Filed as Exhibit 10.21 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 1999 and incorporated herein
by reference).
10.23 Services and Transportation Agreement between TE
Products Pipeline Company, Limited Partnership and
Fina Oil and Chemical Company, BASF Corporation and
BASF Fina Petrochemical Limited Partnership, dated
February 9, 1999. (Filed as Exhibit 10.22 to
Form 10-Q of TEPPCO Partners, L.P. (Commission
File No. 1-10403) for the quarter ended March 31,
1999 and incorporated herein by reference).
10.24 Call Option Agreement, dated February 9, 1999.
(Filed as Exhibit 10.23 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for
the quarter ended March 31, 1999 and incorporated
herein by reference).
10.25 Texas Eastern Products Pipeline Company Retention
Incentive Compensation Plan, effective January 1,
1999. (Filed as Exhibit 10.24 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 1999 and incorporated herein
by reference).
*10.26 Credit Agreement between TE Products Pipeline
Company, Limited Partnership, SunTrust Bank,
Atlanta, and Certain Lenders, dated May 17, 1999.
*10.27 Credit Agreement between TEPPCO Crude Oil, LLC,
SunTrust Bank, Atlanta, and Certain Lenders, dated
May 17, 1999.
*10.28 Second Amendment to Credit Agreement between TEPPCO
Colorado, LLC, SunTrust Bank, Atlanta, and Certain
Lenders, effective May 17, 1999.
22.1 Subsidiaries of the Partnership (Filed as Exhibit
22.1 to the Registration Statement of TEPPCO
Partners, L.P. (Commission File No. 33-32203) and
incorporated herein by reference).
*27 Financial Data Schedule as of and for the six months
ended June 30, 1999.
-------------------
* Filed herewith.
(b) Reports on Form 8-K: None
Items 1, 2, 3, 4 and 5 of Part II were not applicable and have been omitted.
25
<PAGE> 26
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized officer and principal financial officer.
TEPPCO Partners, L.P.
(Registrant)
By: Texas Eastern Products Pipeline Company,
General Partner
\S\ CHARLES H. LEONARD
----------------------------------------------
Charles H. Leonard
Senior Vice President, Chief Financial Officer
and Treasurer
Date: August 9, 1999
26
<PAGE> 27
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
3.1 Certificate of Limited Partnership of the
Partnership (Filed as Exhibit 3.2 to the
Registration Statement of TEPPCO Partners, L.P.
(Commission File No. 33-32203) and incorporated
herein by reference).
3.2 Certificate of Formation of TEPPCO Colorado, LLC
(Filed as Exhibit 3.2 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 1998 and incorporated herein
by reference).
3.3 Second Amended and Restated Agreement of Limited
Partnership of TEPPCO Partners, L.P., dated November
30, 1998 (Filed as Exhibit 3.3 to Form 10-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403)
for the year ended December 31, 1998 and
incorporated herein by reference).
3.4 Amended and Restated Agreement of Limited
Partnership of TE Products Pipeline Company, Limited
Partnership, effective July 21, 1998 (Filed as
Exhibit 3.2 to Form 8-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) dated July 21, 1998
and incorporated herein by reference).
3.5 Agreement of Limited Partnership of TCTM, L.P.,
dated November 30, 1998 (Filed as Exhibit 3.3 to
Form 10-K of TEPPCO Partners, L.P. (Commission File
No. 1-10403) for the year ended December 31, 1998
and incorporated herein by reference).
4.1 Form of Certificate representing Limited Partner
Units (Filed as Exhibit 4.1 to the Registration
Statement of TEPPCO Partners, L.P. (Commission File
No. 33-32203) and incorporated herein by reference).
4.2 Form of Indenture between TE Products Pipeline
Company, Limited Partnership and The Bank of New
York, as Trustee, dated as of January 27, 1998
(Filed as Exhibit 4.3 to TE Products Pipeline
Company, Limited Partnership's Registration
Statement on Form S-3 (Commission File No.
333-38473) and incorporated herein by reference).
4.3 Form of Certificate representing Class B Units
(Filed as Exhibit 3.3 to Form 10-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
year ended December 31, 1998 and incorporated herein
by reference).
10.1 Assignment and Assumption Agreement, dated March 24,
1988, between Texas Eastern Transmission Corporation
and the Company (Filed as Exhibit 10.8 to the
Registration Statement of TEPPCO Partners, L.P.
(Commission File No. 33-32203) and incorporated
herein by reference).
10.2 Texas Eastern Products Pipeline Company 1997
Employee Incentive Compensation Plan executed on
July 14, 1997 (Filed as Exhibit 10 to Form 10-Q of
TEPPCO Partners, L.P. (Commission File No. 1-10403)
for the quarter ended September 30, 1997 and
incorporated herein by reference).
10.3 Agreement Regarding Environmental Indemnities and
Certain Assets (Filed as Exhibit 10.5 to Form 10-K
of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the year ended December 31, 1990 and
incorporated herein by reference).
10.4 Texas Eastern Products Pipeline Company Management
Incentive Compensation Plan executed on January 30,
1992 (Filed as Exhibit 10 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 1992 and incorporated herein
by reference).
</TABLE>
<PAGE> 28
<TABLE>
<S> <C>
10.5 Texas Eastern Products Pipeline Company Long-Term
Incentive Compensation Plan executed on October 31,
1990 (Filed as Exhibit 10.9 to Form 10-K of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
year ended December 31, 1990 and incorporated herein
by reference).
10.6 Form of Amendment to Texas Eastern Products Pipeline
Company Long-Term Incentive Compensation Plan (Filed
as Exhibit 10.7 to the Partnership's Form 10-K
(Commission File No. 1-10403) for the year ended
December 31, 1995 and incorporated herein by
reference).
10.7 Employees' Savings Plan of Panhandle Eastern
Corporation and Participating Affiliates (Effective
January 1, 1991) (Filed as Exhibit 10.10 to the
Partnership's Form 10-K (Commission File No.
1-10403) for the year ended December 31, 1990 and
incorporated herein by reference).
10.8 Retirement Income Plan of Panhandle Eastern
Corporation and Participating Affiliates (Effective
January 1, 1991) (Filed as Exhibit 10.11 to Form
10-K of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the year ended December 31, 1990 and
incorporated herein by reference).
10.9 Panhandle Eastern Corporation Key Executive
Retirement Benefit Equalization Plan, adopted
December 20, 1993; effective January 1, 1994 (Filed
as Exhibit 10.12 to Form 10-K of Panhandle Eastern
Corporation (Commission File No. 1-8157) for the
year ended December 31, 1993 and incorporated herein
by reference).
10.10 Employment Agreement with William L. Thacker, Jr.
(Filed as Exhibit 10 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
quarter ended September 30, 1992 and incorporated
herein by reference).
10.11 Texas Eastern Products Pipeline Company 1994 Long
Term Incentive Plan executed on March 8, 1994 (Filed
as Exhibit 10.1 to Form 10-Q of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the quarter
ended March 31, 1994 and incorporated herein by
reference).
*10.12 Texas Eastern Products Pipeline Company 1994 Long
Term Incentive Plan, Amendment 1, effective January
16, 1995.
10.13 Panhandle Eastern Corporation Key Executive Deferred
Compensation Plan established effective January 1,
1994 (Filed as Exhibit 10.2 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 1994 and incorporated herein
by reference).
10.14 Asset Purchase Agreement between Duke Energy Field
Services, Inc. and TEPPCO Colorado, LLC, dated March
31, 1998 (Filed as Exhibit 10.14 to Form 10-Q of
TEPPCO Partners, L.P. (Commission File No. 1-10403)
for the quarter ended March 31, 1998 and
incorporated herein by reference).
10.15 Credit Agreement between TEPPCO Colorado, LLC,
SunTrust Bank, Atlanta, and Certain Lenders, dated
April 21, 1998 (Filed as Exhibit 10.15 to Form 10-Q
of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the quarter ended March 31, 1998 and
incorporated herein by reference).
10.16 First Amendment to Credit Agreement between TEPPCO
Colorado, LLC, SunTrust Bank, Atlanta, and Certain
Lenders, effective June 29, 1998 (Filed as Exhibit
10.15 to Form 10-Q of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the quarter ended
June 30, 1998 and incorporated herein by reference).
10.17 Contribution Agreement between Duke Energy Transport
and Trading Company and TEPPCO Partners, L.P., dated
October 15, 1998 (Filed as Exhibit 3.3 to Form 10-K
of TEPPCO Partners, L.P. (Commission File No.
1-10403) for the year ended December 31, 1998 and
incorporated herein by reference).
10.18 Guaranty Agreement by Duke Energy Natural Gas
Corporation for the benefit of TEPPCO Partners,
L.P., dated November 30, 1998, effective November 1,
1998 (Filed as
</TABLE>
<PAGE> 29
<TABLE>
<S> <C>
Exhibit 3.3 to Form 10-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the year ended
December 31, 1998 and incorporated herein by
reference).
10.19 Revolving Credit Agreement between TCTM, L.P. as
Borrower and Duke Capital Corporation as Lender,
dated November 30, 1998 (Filed as Exhibit 3.3 to
Form 10-K of TEPPCO Partners, L.P. (Commission File
No. 1-10403) for the year ended December 31, 1998
and incorporated herein by reference).
10.20 Letter Agreement regarding Payment Guarantees of
Certain Obligations of TCTM, L.P. between Duke
Capital Corporation and TCTM, L.P., dated November
30, 1998 (Filed as Exhibit 3.3 to Form 10-K of
TEPPCO Partners, L.P. (Commission File No. 1-10403)
for the year ended December 31, 1998 and
incorporated herein by reference).
10.21 Form of Employment Agreement between the Company and
O. Horton Cunningham, Ernest P. Hagan, Thomas R.
Harper, David L. Langley, Charles H. Leonard and
James C. Ruth, dated December 1, 1998 (Filed as
Exhibit 3.3 to Form 10-K of TEPPCO Partners, L.P.
(Commission File No. 1-10403) for the year ended
December 31, 1998 and incorporated herein by
reference).
10.22 Agreement Between Owner and Contractor between TE
Products Pipeline Company, Limited Partnership and
Eagleton Engineering Company, dated February 4,
1999 (Filed as Exhibit 10.21 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 1999 and incorporated herein
by reference).
10.23 Services and Transportation Agreement between TE
Products Pipeline Company, Limited Partnership and
Fina Oil and Chemical Company, BASF Corporation and
BASF Fina Petrochemical Limited Partnership, dated
February 9, 1999 (Filed as Exhibit 10.22 to
Form 10-Q of TEPPCO Partners, L.P. (Commission File
No. 1-10403) for the quarter ended March 31, 1999
and incorporated herein by reference).
10.24 Call Option Agreement, dated February 9, 1999 (Filed
as Exhibit 10.23 to Form 10-Q of TEPPCO Partners,
L.P. (Commission File No. 1-10403) for the quarter
ended March 31, 1999 and incorporated herein by
reference).
10.25 Texas Eastern Products Pipeline Company Retention
Incentive Compensation Plan, effective January 1,
1999 (Filed as Exhibit 10.24 to Form 10-Q of TEPPCO
Partners, L.P. (Commission File No. 1-10403) for the
quarter ended March 31, 1999 and incorporated herein
by reference).
*10.26 Credit Agreement between TE Products Pipeline
Company, Limited Partnership, SunTrust Bank,
Atlanta, and Certain Lenders, dated May 17, 1999.
*10.27 Credit Agreement between TEPPCO Crude Oil, LLC,
SunTrust Bank, Atlanta, and Certain Lenders, dated
May 17, 1999.
*10.28 Second Amendment to Credit Agreement between TEPPCO
Colorado, LLC, SunTrust Bank, Atlanta, and Certain
Lenders, effective May 17, 1999.
22.1 Subsidiaries of the Partnership (Filed as Exhibit
22.1 to the Registration Statement of TEPPCO
Partners, L.P. (Commission File No. 33-32203) and
incorporated herein by reference).
*27 Financial Data Schedule as of and for the six months
ended June 30, 1999.
</TABLE>
-------------------
* Filed herewith.
<PAGE> 1
EXHIBIT 10.12
TEXAS EASTERN PRODUCTS PIPELINE COMPANY
1994 LONG TERM INCENTIVE PLAN
AMENDMENT 1
Pursuant to its authority under Section 8 of the Texas Eastern
Products Pipeline Company 1994 Long Term Incentive Plan (the "Plan"), the
Committee, identified in Section 2 of the Plan, hereby amends, effective
January 1, 1995, Section 6(a) of the Plan in its entirety to read as follows:
"(a) Nature. Each Award shall be subject to all the terms and
conditions of the Plan, and shall consist of: (i) the right and option
to purchase from the Company the aggregate number of L.P. Units
specified by the Committee and set forth on the respective Award
Certificate (the "Certificate") at the per unit price set forth on the
Certificate, which shall be equal to 100% of the Fair Market Value of
an L.P. Unit on the date the Award is granted (the "Option Price"),
subject to the adjustment provision set forth in Section 9
(collectively, the "Option"), and (ii) related performance units
described in Subsection (c) in a number set forth on the Certificate,
which shall be equal to twice the aggregate number of L.P. Units
covered by the Option or such lesser number specified by the
Committee, subject to the adjustment provision set forth in Section 9
(collectively, "Performance Units"), provided, that the Committee may
specify that an Award shall not include Performance Units. In no event
shall the aggregate Awards to any Grantee result in more than one
hundred thousand (100,000) L.P. Units being issued, or two hundred
thousand (200,000) Performance Units being granted, to any Grantee,
subject to the adjustment provision set forth in Section 9."
IN WITNESS WHEREOF, this amendment to the Plan is executed this 16th day of
January, 1995 on behalf of the Committee.
COMMITTEE
By: W. L. Thacker
<PAGE> 1
EXHIBIT 10.26
CREDIT AGREEMENT
between
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP,
as Borrower,
SUNTRUST BANK, ATLANTA,
as Administrative Agent,
SUNTRUST EQUITABLE SECURITIES CORPORATION,
as Sole Lead Arranger,
THE FIRST NATIONAL BANK OF CHICAGO,
as Syndication Agent,
FIRST UNION NATIONAL BANK,
as Documentation Agent,
and
CERTAIN LENDERS,
as Lenders
$75,000,000 TERM LOAN
$25,000,000 REVOLVING FACILITY
MAY 17, 1999
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
PREPARED BY HAYNES AND BOONE, L.L.P.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1 DEFINITIONS AND TERMS...........................................................................1
1.1 Definitions............................................................................1
1.2 Time References.......................................................................12
1.3 Other References......................................................................12
1.4 Accounting Principles.................................................................13
SECTION 2 COMMITMENT.....................................................................................13
2.1 Term Loan.............................................................................13
2.2 Revolving Facility....................................................................13
2.3 Borrowing Procedure...................................................................13
2.4 Effect of Requests....................................................................14
2.5 Termination...........................................................................14
SECTION 3 PAYMENT TERMS..................................................................................14
3.1 Notes and Payments....................................................................14
3.2 Interest and Principal Payments.......................................................15
3.3 Interest Options......................................................................16
3.4 Quotation of Rates....................................................................16
3.5 Default Rate..........................................................................16
3.6 Interest Recapture....................................................................16
3.7 Interest Calculations.................................................................17
3.8 Maximum Rate..........................................................................17
3.9 Interest Periods......................................................................17
3.10 Conversions...........................................................................17
3.11 Order of Application..................................................................18
3.12 Sharing of Payments, Etc..............................................................18
3.13 Offset................................................................................18
3.14 Booking Borrowings....................................................................19
3.15 Basis Unavailable or Inadequate for LIBOR Rate........................................19
3.16 Additional Costs......................................................................19
3.17 Change in Legal Requirements..........................................................20
3.18 FUNDING LOSS..........................................................................20
3.19 Foreign Lenders, Participants, and Assignees..........................................20
3.20 Discharge and Reinstatement...........................................................21
SECTION 4 FEES...........................................................................................21
4.1 Treatment of Fees.....................................................................21
4.2 Commitment Fee........................................................................21
SECTION 5 CONDITIONS PRECEDENT...........................................................................21
SECTION 6 GUARANTIES.....................................................................................22
SECTION 7 REPRESENTATIONS AND WARRANTIES.................................................................22
7.1 Purpose...............................................................................22
7.2 Subsidiaries..........................................................................22
7.3 Existence, Authority, and Good Standing...............................................22
7.4 Authorization and Contravention.......................................................22
7.5 Binding Effect........................................................................23
7.6 Current Financials....................................................................23
7.7 Solvency..............................................................................23
7.8 Litigation............................................................................23
</TABLE>
CREDIT AGREEMENT
(i)
<PAGE> 3
<TABLE>
<S> <C>
7.9 Taxes.................................................................................23
7.10 Environmental Matters.................................................................23
7.11 Employee Plans........................................................................23
7.12 Debt..................................................................................24
7.13 Properties; Liens.....................................................................24
7.14 Government Regulations................................................................24
7.15 Transactions with Affiliates..........................................................24
7.16 Leases................................................................................24
7.17 Labor Matters.........................................................................24
7.18 Intellectual Property.................................................................24
7.19 FINA/BASF Contracts...................................................................25
7.20 Y2K Issue.............................................................................25
7.21 Full Disclosure.......................................................................25
SECTION 8 AFFIRMATIVE COVENANTS..........................................................................25
8.1 Certain Items Furnished...............................................................25
8.2 Use of Credit.........................................................................27
8.3 Books and Records.....................................................................27
8.4 Inspections...........................................................................27
8.5 Taxes.................................................................................27
8.6 Payment of Obligation.................................................................27
8.7 Expenses..............................................................................27
8.8 Maintenance of Existence, Assets, and Business........................................27
8.9 Insurance.............................................................................28
8.10 Environmental Matters.................................................................28
8.11 FINA/BASF Contracts...................................................................28
8.12 INDEMNIFICATION.......................................................................28
SECTION 9 NEGATIVE COVENANTS.............................................................................29
9.1 Debt..................................................................................29
9.2 Prepayments...........................................................................29
9.3 Liens.................................................................................30
9.4 Employee Plans........................................................................31
9.5 Transactions with Affiliates..........................................................31
9.6 Compliance with Legal Requirements and Documents......................................31
9.7 Investments...........................................................................32
9.8 Distributions.........................................................................32
9.9 Disposition of Assets.................................................................32
9.10 Mergers, Consolidations, and Dissolutions.............................................32
9.11 Amendment of Constituent Documents....................................................33
9.12 FINA/BASF Contracts...................................................................33
9.13 Assignment............................................................................33
9.14 Fiscal Year and Accounting Methods....................................................33
9.15 New Businesses........................................................................33
9.16 Government Regulations................................................................33
9.17 Senior Notes..........................................................................33
9.18 Strict Compliance.....................................................................33
SECTION 10 FINANCIAL COVENANTS............................................................................33
10.1 Minimum Net Worth.....................................................................33
10.2 Maximum Funded Debt to EBITDA.........................................................33
10.3 Fixed Charge Coverage Ratio...........................................................34
SECTION 11 EVENTS OF DEFAULT..............................................................................34
11.1 Payment of Obligation.................................................................34
</TABLE>
CREDIT AGREEMENT
(ii)
<PAGE> 4
<TABLE>
<S> <C>
11.2 Covenants.............................................................................34
11.3 Debtor Relief.........................................................................34
11.4 Judgments and Attachments.............................................................35
11.5 Government Action.....................................................................35
11.6 Misrepresentation.....................................................................35
11.7 Change of Control.....................................................................35
11.8 Other Debt............................................................................35
11.9 FINA/BASF Contracts...................................................................35
11.10 Validity and Enforceability...........................................................35
SECTION 12 RIGHTS AND REMEDIES............................................................................36
12.1 Remedies Upon Event of Default........................................................36
12.2 Company Waivers.......................................................................36
12.3 Not in Control........................................................................36
12.4 Course of Dealing.....................................................................37
12.5 Cumulative Rights.....................................................................37
12.6 Application of Proceeds...............................................................37
12.7 Expenditures by Lenders...............................................................37
12.8 Limitation of Liability...............................................................37
SECTION 13 ADMINISTRATIVE AGENT AND LENDERS...............................................................37
13.1 Administrative Agent..................................................................37
13.2 Expenses..............................................................................39
13.3 Proportionate Absorption of Losses....................................................39
13.4 Delegation of Duties; Reliance........................................................39
13.5 Limitation of Administrative Agent's Liability........................................40
13.6 Event of Default......................................................................41
13.7 Limitation of Liability...............................................................41
13.8 Other Agents..........................................................................41
13.9 Relationship of Lenders...............................................................41
13.10 Benefits of Agreement.................................................................41
SECTION 14 MISCELLANEOUS..................................................................................41
14.1 Nonbusiness Days......................................................................41
14.2 Communications........................................................................41
14.3 Form and Number.......................................................................41
14.4 Exceptions............................................................................42
14.5 Survival..............................................................................42
14.6 Governing Law.........................................................................42
14.7 Invalid Provisions....................................................................42
14.8 Amendments, Supplements, Waivers, Consents, and Conflicts.............................42
14.9 Counterparts..........................................................................43
14.10 Parties...............................................................................43
14.11 Venue, Service of Process, and Jury Trial.............................................45
14.12 NON-RECOURSE TO TEXAS EASTERN.........................................................45
14.13 Confidentiality.......................................................................46
14.14 Entirety..............................................................................46
</TABLE>
CREDIT AGREEMENT
(iii)
<PAGE> 5
SCHEDULES AND EXHIBITS
Schedule 2 - Lenders and Commitments
Schedule 5 - Closing Documents
Schedule 7.2 - Companies and Names
Schedule 7.8 - Litigation
Schedule 7.10 - Environmental Matters
Schedule 7.11 - Employee-Plan Matters
Schedule 7.12 - Existing Debt
Schedule 7.13 - Existing Liens
Schedule 7.15 - Affiliate Transactions
Exhibit A-1 - Term Note
Exhibit A-2 - Revolving Note
Exhibit B - Guaranty
Exhibit C-1 - Borrowing Request
Exhibit C-2 - Conversion Notice
Exhibit C-3 - Compliance Certificate (Borrower)
Exhibit C-4 - Compliance Certificate (TEPPCO Partners)
Exhibit D - Opinion of Counsel
Exhibit E - Assignment and Assumption Agreement
CREDIT AGREEMENT
(iv)
<PAGE> 6
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of May 17, 1999, between TE PRODUCTS
PIPELINE COMPANY, LIMITED PARTNERSHIP, a Delaware limited partnership
("BORROWER"), Lenders (defined below), SUNTRUST BANK, ATLANTA, as
Administrative Agent for Lenders, THE FIRST NATIONAL BANK OF CHICAGO, as
Syndication Agent for Lenders, and FIRST UNION NATIONAL BANK, as Documentation
Agent for Lenders.
Borrower has requested that Lenders extend to Borrower (A) a
$75,000,000 term loan (the "TERM LOAN") to be funded by Lenders from time to
time until the Term Loan Conversion Date (defined below) and used by Borrower
as provided in SECTION 7.1, and (B) a revolving credit facility (the "REVOLVING
FACILITY") not to exceed at any one time outstanding $25,000,000 (as that
amount may be reduced or canceled pursuant to this agreement) to be funded by
Lenders from time to time and used by Borrower as provided in SECTION 7.1.
Lenders are willing to extend the requested loans on the terms and conditions
of this agreement.
ACCORDINGLY, for adequate and sufficient consideration, Borrower,
Lenders, and Administrative Agent agree as follows:
SECTION 1 DEFINITIONS AND TERMS.
1.1 DEFINITIONS. As used in the Credit Documents:
"ACQUISITION" by any Person means any transaction or series of
transactions on or after the Closing Date pursuant to which that Person
directly or indirectly -- whether in the form of a capital expenditure, an
Investment, a merger, a consolidation, or otherwise and whether through a
solicitation of tender of equity securities, one or more negotiated block,
market, private, other transactions, or any combination of the foregoing --
purchases (a) all or substantially all of the business or assets of any other
individual or entity or operating division or business unit of any other
individual or entity, or (b) more than 25% of the equity interest in any other
individual or entity.
"ADMINISTRATIVE AGENT" means, at any time, SunTrust Bank, Atlanta (or
its successor appointed under SECTION 13), acting as administrative agent for
Lenders under the Credit Documents.
"AFFILIATE" of a Person means any other individual or entity who
directly or indirectly controls, is controlled by, or is under common control
with that Person. For purposes of this definition (a) "control," "controlled
by," and "under common control with" mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of voting securities or other interests, by contract, or
otherwise), and (b) Texas Eastern, TEPPCO Partners, and all of the Subsidiaries
of TEPPCO Partners are Affiliates with each other.
"APPLICABLE MARGIN" means, for any day, the margin of interest over
the Base Rate, or the LIBOR Rate, as the case may be, that is applicable when
the Base Rate or LIBOR Rate, as applicable, is determined under this agreement.
CREDIT AGREEMENT
<PAGE> 7
(a) The Applicable Margin is subject to adjustment (upwards
or downwards, as appropriate) based on the ratio of the Companies'
Funded Debt to EBITDA as stated in the table below.
(b) From the Closing Date through the date six calendar
months following the Closing Date, the Applicable Margin shall not be
lower than 1.25% for LIBOR-Rate Borrowings and 0.25% for Base-Rate
Borrowings.
(c) For purposes of the definitions of "Applicable Margin"
and "Applicable Percentage," EBITDA and Funded Debt are calculated for
the Companies' most recently completed fiscal quarter.
(d) The Applicable Margin and Applicable Percentage in effect
at any time (whether in the middle of an Interest Period or otherwise)
are based upon the ratio of the Companies' Funded Debt to EBITDA as
determined from the Current Financials and related Compliance
Certificate then most recently received by Administrative Agent,
effective as of the date received by Administrative Agent.
(e) If Borrower fails to timely furnish to Administrative
Agent any Financials and related Compliance Certificate as required by
this agreement, then the maximum Applicable Margin and Applicable
Percentage apply from the date those Financials and related Compliance
Certificate are required to be delivered and remain in effect until
Borrower furnishes them to Administrative Agent.
<TABLE>
<CAPTION>
==================================== ================ =================
APPLICABLE APPLICABLE
MARGIN FOR MARGIN FOR
RATIO OF FUNDED DEBT TO EBITDA BASE-RATE LIBOR-RATE
BORROWINGS BORROWINGS
==================================== ================ =================
<S> <C> <C>
Less than or equal to 3.00 to 1.00 0.000% 0.875%
- ------------------------------------ ---------------- -----------------
Greater than 3.00 to 1.00 and less 0.000% 1.000%
than or equal to 3.75 to 1.00
- ------------------------------------ ---------------- -----------------
Greater than 3.75 to 1.00 and less 0.250% 1.250%
than or equal to 4.25 to 1.00
- ------------------------------------ ---------------- -----------------
Greater than 4.25 to 1.00 0.500% 1.500%
==================================== ================ =================
</TABLE>
"APPLICABLE PERCENTAGE" means, for any day, a commitment-fee
percentage applicable under SECTION 4.2, subject to adjustment (upwards or
downwards, as appropriate), based on the ratio of the Companies' Funded Debt to
EBITDA, as follows:
CREDIT AGREEMENT
2
<PAGE> 8
<TABLE>
<CAPTION>
=================================== ==========
RATIO OF FUNDED DEBT TO APPLICABLE
EBITDA PERCENTAGE
=================================== ==========
<S> <C>
Less than or equal to 3.00 to 1.00 0.200%
----------------------------------- ----------
Greater than 3.00 to 1.00 and less 0.250%
than or equal to 3.75 to 1.00
----------------------------------- ----------
Greater than 3.75 to 1.00 and less 0.250%
than or equal to 4.25 to 1.00
----------------------------------- ----------
Greater than 4.25 to 1.00 0.375%
=================================== ==========
</TABLE>
From the Closing Date through the date six calendar months following the
Closing Date, the Applicable Percentage shall be 0.25%. The Applicable
Percentage is calculated and determined as further provided in the definition
of the term "Applicable Margin."
"ASSIGNEE" is defined in SECTION 14.10(d).
"ASSIGNMENT" is defined in SECTION 14.10(d).
"BASE RATE" means, for any day, the greater of either (a) the annual
interest rate most recently announced by Administrative Agent as its prime
lending rate (which may not necessarily represent the lowest or best rate
actually charged to any customer, as Administrative Agent may make commercial
loans or other loans at interest rates higher or lower than that prime lending
rate) in effect at its principal office in Atlanta, Georgia, which rate may
automatically increase or decrease without notice to Borrower or any other
Person, or (b) the sum of the Fed-Funds Rate plus 0.5%.
"BASE-RATE BORROWING" means a Borrowing bearing interest at the sum of
the Base Rate plus the Applicable Margin.
"BORROWER" is defined in the preamble to this agreement.
"BORROWING" means any amount disbursed under the Credit Documents by
one or more Lenders to or on behalf of Borrower under the Credit Documents,
either as an original disbursement of funds, a renewal, extension, or
continuation of an amount outstanding.
"BORROWING DATE" is defined in SECTION 2.3(a).
"BORROWING REQUEST" means a request, subject to SECTION 2.3(a),
substantially in the form of EXHIBIT C-1.
"BUSINESS DAY" means (a) for purposes of any LIBOR-Rate Borrowing, a
day when commercial banks are open for international business in London,
England, and (b) for all other purposes, any day other than Saturday, Sunday,
and any other day that commercial banks are authorized by Legal Requirement to
be closed in Georgia or New York.
CREDIT AGREEMENT
3
<PAGE> 9
"CAPITAL LEASE" means any capital lease or sublease that is required
by GAAP to be capitalized on a balance sheet.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Section 9601 et seq.
"CLOSING DATE" means the date agreed to by Borrower and Administrative
Agent for disbursement of the initial Borrowing under this agreement, which
must be a Business Day occurring no later than June 1, 1999, but not before all
of the conditions precedent in this agreement for that disbursement have been
satisfied.
"COMMITMENT" means, at any time and for any Lender, the amounts stated
beside that Lender's name on the most-recently amended SCHEDULE 2 for the
Revolving Facility (which amount is subject to reduction and cancellation as
provided in this agreement) and the Term Loan.
"COMMITMENT PERCENTAGE" means, for any Lender and at any time, the
proportion (stated as a percentage) that its Commitment bears to the total
Commitments of all Lenders.
"COMPANIES" means, at any time, Borrower and each of its Subsidiaries.
"COMPLETION DATE" means, in respect of the FINA/BASF Project, the date
on which all of the "Completion Standards" set forth in Exhibit 2.1 to the
Services Agreement have been satisfied.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of EXHIBIT C-3 and signed by a Responsible Officer on behalf of Borrower or the
form of EXHIBIT C-4 signed by a Responsible Officer on behalf of TEPPCO
Partners.
"CONSTITUENT DOCUMENTS" means, for any Person, the documents for its
formation and organization, which, for example, for a (a) corporation are its
corporate charter and bylaws, (b) for a partnership is its partnership
agreement, (c) for a limited-liability company are its certificate of
organization and regulations, and (d) for a trust is the trust agreement or
indenture under which it is created.
"CONVERSION NOTICE" means a request, subject to SECTION 3.10,
substantially in the form of EXHIBIT C-2.
"CREDIT DOCUMENTS" means (a) this agreement, certificates and reports
delivered by or on behalf of any Company, TEPPCO Partners, or Texas Eastern
under this agreement, and exhibits and schedules to this agreement, (b) all
agreements, documents, and instruments in favor of Administrative Agent or
Lenders (or Administrative Agent on behalf of Lenders) ever delivered by or on
behalf of any Company, TEPPCO Partners, or Texas Eastern in connection with or
under this agreement or otherwise delivered by or on behalf of any Company,
TEPPCO Partners, or Texas Eastern in connection with all or any part of the
Obligation, and (c) all renewals, extensions, and restatements of, and
amendments and supplements to, any of the foregoing.
"CURRENT FINANCIALS" means, unless otherwise specified, either (a)
Borrower's consolidated Financials for the year ended December 31, 1998, or (b)
at any time after annual Financials are first delivered under SECTION 8.1,
Borrower's annual Financials then most recently delivered to Lenders under
CREDIT AGREEMENT
4
<PAGE> 10
SECTION 8.1(b), together with Borrower's quarterly Financials then most
recently delivered to Lenders under SECTION 8.1(c).
"DEBT" means -- for any Person, at any time, and without duplication
- -- the sum of (a) all Funded Debt of that Person, plus (b) all obligations
arising under acceptance facilities or facilities for the discount or sale of
accounts receivable, plus (c) all direct or contingent obligations in respect
of letters of credit, plus (d) each obligation for Hedging Exposure of
$10,000,000 or more, plus (e) all guaranties, endorsements, and other
contingent obligations for the obligations in respect of obligations of other
persons or entities of the nature described in CLAUSES (a) through (d) above.
"DEBTOR LAWS" means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments, or similar Legal Requirements affecting creditors'
Rights.
"DEFAULT PERCENTAGE" means, for any Lender and at any time, the
proportion (stated as a percentage) that the Principal Debt owed to it bears to
the Principal Debt owed all Lenders.
"DEFAULT RATE" means, for any day, an annual interest rate equal from
day to day to the lesser of either (a) the sum of the Base Rate plus 2% or (b)
the Maximum Rate.
"DISTRIBUTION" means, with respect to any shares of any capital stock,
other equity securities, or ownership interests issued by a Person (a) the
retirement, redemption, purchase, or other acquisition for value of those
securities or interests, (b) the declaration or payment of any dividend on or
with respect to those securities or interests, (c) any Investment by that
Person in the holder of any of those securities or interests, and (d) any other
payment by that Person with respect to those securities or interests.
"EBITDA" means:
(a) For any period consisting of four consecutive fiscal
quarters taken as a single accounting period, for any Person, and
without duplication, the sum of (i) Net Income plus (ii) to the extent
actually deducted in determining Net Income, Interest Expense, Tax
Expense, depreciation, and amortization; and
(b) For purposes of calculating EBITDA in respect of any
entity that became a Subsidiary of that Person or was merged with or
consolidated into that Person during that period, EBITDA of that
Person shall include the EBITDA of that entity during that period and
before the date of that acquisition, merger, or consolidation for a
total period of four consecutive fiscal quarters.
"EMPLOYEE PLAN" means any employee-pension-benefit plan covered by
Title IV of ERISA and established or maintained by Guarantor or any ERISA
Affiliate (other than a Multiemployer Plan).
"ENVIRONMENTAL LAW" means any applicable Legal Requirement that
relates to protection of the environment or to the regulation of any Hazardous
Substances, including CERCLA, the Hazardous Materials Transportation Act (49
U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), the Emergency
Planning and Community Right-to-Know Act (42
CREDIT AGREEMENT
5
<PAGE> 11
U.S.C. Section 11001 et seq.), the Safe Drinking Water Act (42 U.S.C. Section
201 and Section 300f et seq.), the Rivers and Harbors Act (33 U.S.C. Section
401 et seq.), the Oil Pollution Act (33 U.S.C. Section 2701 et seq.), analogous
state local Legal Requirements, and any analogous future enacted or adopted
Legal Requirement.
"ENVIRONMENTAL LIABILITY" means any liability, loss, fine, penalty,
charge, lien, damage, cost, or expense of any kind to the extent that it
results (a) from the violation of any Environmental Law, (b) from the Release
or threatened Release of any Hazardous Substance, or (c) from actual or
threatened damages to natural resources.
"ENVIRONMENTAL PERMIT" means any permit, or license, from any Person
defined in CLAUSE (a) of the definition of Governmental Authority that is
required under any Environmental Law for the lawful conduct of any business,
process, or other activity.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" means any Person that, for purposes of Title IV of
ERISA, is a member of any Company's controlled group or is under common control
with any Company within the meaning of Section 414 of the IRC.
"EVENT OF DEFAULT" is defined in SECTION 11.
"FED-FUNDS RATE" means, for any day, the annual rate (rounded upwards,
if necessary, to the nearest 0.01%) determined (which determination is
conclusive and binding, absent manifest error) by Administrative Agent to be
equal to (a) the weighted average of the rates on overnight federal-funds
transactions with member banks of the Federal Reserve System arranged by
federal-funds brokers on that day, as published by the Federal Reserve Bank of
New York on the next Business Day, or (b) if those rates are not published for
any day, the average of the quotations at approximately 10:00 a.m. received by
Administrative Agent from three federal-funds brokers of recognized standing
selected by Administrative Agent in its sole discretion.
"FINA/BASF CONTRACTS" means, collectively: (a) the Services Agreement;
(b) the Call Option Agreement dated February 9, 1999, between Borrower, BASF
Fina Petrochemicals Limited Partnership, BASF Corporation, and FINA Oil and
Chemical Company; (c) the Agreement between Owner and Contractor dated February
4, 1999, between Borrower and Eagleton Engineering Company; and (d) the Parent
Company Guaranty dated February 4, 1999, between Babcock International Group
PLC and Borrower.
"FINA/BASF PROJECT" means Borrower's construction of pipelines from
Mont Belvieu, Texas to Port Arthur, Texas.
"FINANCIALS" of a Person means balance sheets, profit and loss
statements, reconciliations of capital and surplus, and statements of cash flow
prepared (a) according to GAAP (subject to year end audit adjustments with
respect to interim Financials) and (b) except as stated in SECTION 1.4, in
comparative form to prior year-end figures or corresponding periods of the
preceding fiscal year or other relevant period, as applicable.
"FUNDED DEBT" means -- for any Person, at any time, and without
duplication -- the sum of (a) the unpaid principal amount or component of all
obligations for borrowed money, plus (b) the unpaid principal
CREDIT AGREEMENT
6
<PAGE> 12
amount or component of all obligations evidenced by bonds, debentures, notes or
similar instruments, plus (c) the unpaid principal amount or component of all
obligations to pay the deferred purchase price of property or service except
trade accounts payable arising in the ordinary course of business, plus (d) in
respect of all obligations that are secured (or for which the holder of any
such obligation has an existing Right, contingent or otherwise, to be so
secured) by any Lien on property owned or acquired by that Person, the lesser
of either the unpaid amount of all of those obligations from time to time
outstanding or the fair-market value of the property securing all of those
obligations, liabilities secured (or for which the holder of such obligations
has an existing Right, contingent or otherwise, to be so secured) by any Lien
existing on property owned or acquired by that Person, plus (e) all Capital
Lease obligations, plus (f) the unpaid principal amount or component of all
obligations under synthetic leases, plus (g) the unpaid principal amount or
component of all guaranties, endorsements, and other contingent obligations in
respect of obligations of other persons or entities of the nature described in
CLAUSES (a) through (f) above.
"FUNDING LOSS" means any loss, expense, or reduction in yield (but not
any Applicable Margin) that (a) any Lender reasonably incurs because (i)
Borrower fails or refuses (for any reason whatsoever other than a default by
Administrative Agent or the Lender claiming that loss, expense, or reduction in
yield) to take any Borrowing that it has requested under this agreement, or
(ii) Borrower voluntarily or involuntarily prepays or pays any LIBOR-Rate
Borrowing or converts any LIBOR-Rate Borrowing to a Borrowing of another Type,
in each case, other than on the last day of the applicable Interest Period, and
(b) shall be determined by the relevant Lender to be the excess, if any, of (i)
the amount of interest which would have accrued on the principal amount of such
Borrowing had such event not occurred, at the LIBOR Rate, for the period from
the date of the event to the last day of the then current Interest Period (or,
in the case of a failure to borrow, convert, or continue, for the period that
would have been the Interest Period for that Borrowing), over (ii) the amount
of interest which would accrue on that principal amount for that period at the
interest rate which that Lender would bid were it to bid, at the commencement
of that period, for dollar deposits of a comparable amount and period from
other banks in the London interbank market.
"GAAP" means generally accepted accounting principles of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board that are applicable
from time to time.
"GOVERNMENTAL AUTHORITY" means any (a) local, state, territorial,
federal, or foreign judicial, executive, regulatory, administrative,
legislative, or governmental agency, board, bureau, commission, department, or
other instrumentality, (b) private arbitration board or panel, or (c) central
bank.
"GUARANTOR" means TEPPCO Partners and each other Person delivering a
Guaranty as required by SECTION 6.
"GUARANTY" means a guaranty substantially in the form of EXHIBIT B.
"HAZARDOUS SUBSTANCE" means any substance that is designated, defined,
classified, or regulated as a hazardous waste, hazardous material, pollutant,
contaminant, explosive, corrosive, flammable, infectious, carcinogenic,
mutagenic, radioactive, or toxic or hazardous substance under any Environmental
Law, including, without limitation, any hazardous substance within the meaning
of Section 101(14) of CERCLA.
"HEDGING AGREEMENT" means, for any Person, any present or future,
whether master or single, agreement, document or instrument providing for, or
constituting an agreement to enter into (a) commodity
CREDIT AGREEMENT
7
<PAGE> 13
hedges in the normal course of business in accordance with practices of that
Person for hedging material purchases, (b) arrangement for
foreign-currency-exchange protection, (c) Rate-Protection Arrangement, and (d)
interest-rate-hedging products involving payment premium for which that Person
has no future liability.
"HEDGING EXPOSURE" means at any time (a) for a Rate-Protection
Arrangement, the related Rate-Protection Exposure, and (b) for any other
Hedging Agreement, the amount, if any, that would be payable to the counter
party to that Hedging Agreement if it were terminated at that time.
"INTEREST EXPENSE" means, for any Person and any period, all interest
expense (including all amortization of debt discount and expenses and reported
interest) on all Funded Debt of that Person.
"INTEREST PERIOD" is defined in SECTION 3.9.
"INVESTMENT" means, in respect of any Person, any loan, advance,
extension of credit, or capital contribution to that Person, any other
investment in that Person, or any purchase or commitment to purchase any equity
securities or Debt issued by that Person or substantially all of the assets or
a division or other business unit of that Person. However, the term investment
does not include any extension of trade debt in the ordinary course of business
or, as a result of collection efforts, the receipt of any equity in or property
of a Person.
"IRC" means the Internal Revenue Code of 1986.
"LEGAL REQUIREMENTS" means all applicable statutes, laws, treaties,
ordinances, rules, regulations, orders, writs, injunctions, decrees, judgments,
opinions, and interpretations of any Governmental Authority.
"LENDERS" means the financial institutions (including, without
limitation, Administrative Agent, in its capacity as a Lender, in respect of
its Commitment) initially named on SCHEDULE 2 or, to the extent they constitute
permitted assignees pursuant to the terms of this agreement, on the
most-recently-amended SCHEDULE 2, if any, delivered by Administrative Agent
under this agreement, and, subject to this agreement, their respective
successors and permitted assigns (but not any Participant who is not otherwise
a party to this agreement in the capacity as Lenders).
"LIBOR RATE" means, for a LIBOR-Rate Borrowing and its Interest
Period, the quotient of (a) the annual interest rate for deposits in United
States dollars of amounts equal or comparable to the principal amount of that
LIBOR-Rate Borrowing offered for a term comparable to that Interest Rate, which
rate appears on the Telerate Page 3750 as of 11:00 a.m. (London, England time)
two Business Days before the beginning of that Interest Period or, if no such
offered rates appear on such page, then the rate used for that Interest Period
shall be the arithmetic average (rounded upwards, if necessary, to the next
higher 0.001%) of rate offered by Lender to not less than two major banks in
New York, New York at approximately 10:00 a.m. (Atlanta, Georgia time) two
Business Days before the beginning of that Interest Period for deposits in
United States dollars in the London interbank market of the principal amount of
that LIBOR Borrowing offered for a term comparable to that Interest Period,
divided by (b) a number equal to 1.00 minus the LIBOR Reserve Percentage. The
rate so determined in accordance herewith shall be rounded upwards to the
nearest multiple of 0.001%, and the term "TELERATE PAGE 3750" means the display
designated as "Page 3750" on the Dow Jones Markets Service, Inc. (or such other
page as may replace Page 3750 on that service or another service as may be
nominated by the British Bankers' Association as the information vendor for the
purpose of displaying British Bankers' Association Interest Settlement Rates
for United States dollars).
CREDIT AGREEMENT
8
<PAGE> 14
"LIBOR-RATE BORROWING" means a Borrowing bearing interest at the sum
of the LIBOR Rate plus the Applicable Margin.
"LIBOR RESERVE PERCENTAGE" means, for any Interest Period with respect
to a LIBOR-Rate Borrowing, the reserve percentage applicable to that Interest
Period (or, if more than one such percentage shall be so applicable, then the
daily average of such percentages for those days in that Interest Period during
which any such percentage shall be applicable) under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including any
emergency, supplemental, or other marginal reserve requirement) for Lenders
with respect to liabilities or assets consisting of or including "eurocurrency
liabilities" (as defined in Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time) having a term equal to
that Interest Period.
"LIEN" means any lien, mortgage, security interest, pledge,
assignment, charge, title retention agreement, or encumbrance of any kind and
any other arrangement for a creditor's claim to be satisfied from assets or
proceeds prior to the claims of other creditors or the owners (other than title
of the lessor under an operating lease).
"LITIGATION" means any action by or before any Governmental Authority.
"MATERIAL-ADVERSE EVENT" means any circumstance or event that,
individually or collectively, is, or is reasonably expected to result in, any
(a) material impairment of (i) the ability of Borrower or any Guarantor to
perform any of their respective payment or other material obligations under any
Credit Document, or (ii) the ability of Administrative Agent or any Lender to
enforce any of those obligations or any of their respective Rights under the
Credit Documents (other than as a result of its own act or omission), (b)
material and adverse effect on the financial condition of Borrower
individually, or TEPPCO Partners and its Subsidiaries as a whole, as
represented to Lenders in the Current Financials most recently delivered before
the date of this agreement, or (c) Event of Default or Potential Default.
"MAXIMUM AMOUNT" and "MAXIMUM RATE" respectively mean, for a Lender,
the maximum non-usurious amount and the maximum non-usurious rate of interest
that, under applicable Legal Requirement, that Lender is permitted to contract
for, charge, take, reserve, or receive on the Obligation.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the IRC to which any Company
or any ERISA Affiliate is making, or has made, or is accruing, or has accrued,
an obligation to make contributions.
"NET INCOME" means, for any Person and any period, that Person's
profit or loss (a) after deducting all of its operating expenses, provision for
Taxes, and reserves (including reserves for deferred income Taxes), and all
other deductions in accordance with GAAP, but (b) excluding (i) extraordinary
items, and (ii) the profit or loss of any entity accrued before the date that
(A) it becomes a Subsidiary of such Person, (B) it is merged with such Person
or any of its Subsidiaries, or (C) its assets are acquired by such Person of
any of its Subsidiaries.
"NOTES" means the Revolving Notes and Term Notes.
CREDIT AGREEMENT
9
<PAGE> 15
"OBLIGATION" means all present and future (a) Debts, liabilities, and
obligations of Borrower to Administrative Agent or any Lender that arises under
any Credit Document, whether principal, interest, fees, costs, attorneys' fees,
or otherwise, (b) Rate-Protection Exposure of any Rate-Protection Party that is
a Lender or an Affiliate (with whom Borrower has contractually entered into
that Hedging Agreement in connection with this agreement) of a Lender, and (c)
renewals, extensions, and modifications of any of the foregoing.
"OSHA" means the Occupational Safety and Health Act of 1970, 29 U.S.C.
Section 651 et seq.
"OTHER CREDIT AGREEMENTS" means the TEPPCO Colorado Credit Agreement
and the TEPPCO Crude Credit Agreement.
"PARTICIPANT" is defined in SECTION 14.10(c).
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITTED DEBT" is defined in SECTION 9.1.
"PERMITTED LIENS" is defined in SECTION 9.3.
"PERMITTED INVESTMENT" is defined in SECTION 9.7.
"PERSON" means any individual, entity, or Governmental Authority.
"POTENTIAL DEFAULT" means any event, occurrence, or circumstance, the
existence of which upon any required notice, time lapse, or both, would become
an Event of Default.
"PREDECESSOR" means any Person for whose obligations and liabilities
any Company is reasonably expected to be liable as the result of any merger, de
facto merger, stock purchase, asset purchase or divestiture, combination, joint
venture, investment, reclassification, or other similar business transaction.
"PRINCIPAL DEBT" means, at any time, the unpaid principal balance of
all Borrowings.
"RATE-PROTECTION ARRANGEMENT" means any interest-rate swap, cap,
collar, or similar arrangement.
"RATE-PROTECTION EXPOSURE" means, for any Rate-Protection Arrangement
and at any time, the amount, if any, that would be payable to the
Rate-Protection Party in that Rate-Protection Arrangement for any "agreement
value" as though that Rate-Protection Arrangement were terminated at that time,
in each case (a) calculated as provided in the International Swap Dealers
Association Inc. Code of Standard Wording, Assumptions, and Provisions for
SWAPS in effect on the date such arrangement is entered into, and (b)
determined by Administrative Agent in good faith in reliance upon any
information (including any information provided by the Rate-Protection Party)
that Administrative Agent believes (with no obligation to verify accuracy) to
be accurate.
"RATE-PROTECTION PARTY" means, at any time, any party that has entered
into a Rate-Protection Arrangement with Borrower.
CREDIT AGREEMENT
10
<PAGE> 16
"REAL PROPERTY" means any land, buildings, fixtures, and other
improvements to land now or in the future directly or indirectly owned by any
Company, leased to or otherwise operated by any Company, or subleased by any
Company to any other Person.
"RELEASE" means any "release" as defined under any Environmental Law.
"REPRESENTATIVES" means officers, directors, employees, accountants,
attorneys, and agents.
"REQUIRED LENDERS" means, at any time, any combination of Lenders
holding (directly or indirectly) at least 662/3% of either (a) the total
Commitments while there is no Principal Debt or (b) the Principal Debt while
there is any Principal Debt.
"RESPONSIBLE OFFICER" means the chairman, president, vice president,
chief executive officer, chief financial officer, treasurer, or corporate
secretary of Texas Eastern.
"REVOLVING FACILITY" is defined in the recitals to this agreement.
"REVOLVING NOTE" means one of the promissory notes substantially in
the form of EXHIBIT A-2.
"RIGHTS" means rights, remedies, powers, privileges, and benefits.
"SENIOR NOTES" means the 6.45% Senior Notes Due 2008 in the original
aggregate principal amount of $180,000,000 and the 7.51% Senior Notes Due 2028
in the original aggregate principal amount of $210,000,000 each case issued by
Borrower under the Indenture dated as of January 27, 1998, between Borrower and
The Bank of New York, Trustee.
"SERVICES AGREEMENT" means the Services and Transportation Agreement
dated February 9, 1999, between Borrower, BASF Fina Petrochemicals Limited
Partnership, BASF Corporation, and FINA Oil and Chemical Company
"SOLVENT" means, as to any Person, that (a) the aggregate fair market
value of its assets exceeds its liabilities, (b) it has sufficient cash flow to
enable it to pay its Debts as they mature, and (c) it does not have
unreasonably small capital to conduct its businesses.
"STATED-TERMINATION DATE" means May 17, 2004.
"SUBSIDIARY" of any Person means any corporation, limited liability
company, general or limited partnership, or other entity of which more than 50%
(in number of votes) of the stock (or equivalent interests) is owned of record
or beneficially, directly or indirectly, by that Person.
"TAXES" means, for any Person, taxes, assessments, or other
governmental charges or levies imposed upon it, its income, or any of its
properties, franchises, or assets.
"TAX EXPENSE" means, for any Person and any period, the taxes on
income of that Person accrued during that period.
"TEPPCO COLORADO" means TEPPCO Colorado, LLC, a Delaware limited
liability company.
CREDIT AGREEMENT
11
<PAGE> 17
"TEPPCO COLORADO CREDIT AGREEMENT" means the Credit Agreement dated as
of April 21, 1998, between TEPPCO Colorado, certain lenders, and SunTrust Bank,
Atlanta, as agent for those lenders.
"TEPPCO CRUDE" means TEPPCO Crude Oil, LLC, a Delaware limited
liability company.
"TEPPCO CRUDE CREDIT AGREEMENT" means the Credit Agreement dated as of
the date of this agreement, between TEPPCO Crude, certain lenders, SunTrust
Bank, Atlanta, as agent for those lenders, and certain other agents for those
lenders.
"TEPPCO PARTNERS" means TEPPCO Partners, L.P., a Delaware limited
partnership.
"TERM LOAN" is defined in the recitals to this agreement.
"TERM LOAN CONVERSION DATE" means the earlier of either (a) April 30,
2001 or (b) the Completion Date.
"TERM NOTE" means one of the promissory notes substantially in the
form of EXHIBIT A-1.
"TERMINATION DATE" means the earlier of either (a) the
Stated-Termination Date or (b) the effective date that Lenders' commitments to
lend under this agreement are fully canceled or terminated.
"TEXAS EASTERN" means Texas Eastern Products Pipeline Company, a
Delaware corporation.
"TYPE" means any type of Borrowing determined with respect to the
applicable interest option.
"Y2K ISSUE" means the risk that computer applications used by the
Companies or by any of their respective suppliers or vendors may be unable
properly to recognize and perform date-sensitive functions.
1.2 TIME REFERENCES. Unless otherwise specified, in the Credit
Documents (a) time references (e.g., 10:00 a.m.) are to time in Atlanta,
Georgia, on the applicable date, and (b) in calculating a period from one date
to another, the word "from" means "from and including" and the word "to" or
"until" means "to but excluding."
1.3 OTHER REFERENCES. Unless otherwise specified, in the Credit
Documents (a) where appropriate, the singular includes the plural and vice
versa, and words of any gender include each other gender, (b) where
appropriate, words include their respective cognate expressions, (c) heading
and caption references may not be construed in interpreting provisions, (d)
monetary references are to currency of the United States of America, (e)
section, paragraph, annex, schedule, exhibit, and similar references are to the
particular Credit Document in which they are used, (f) references to
"telecopy," "facsimile," "fax," or similar terms are to facsimile or telecopy
transmissions, (g) references to "including" mean including without limiting
the generality of any description preceding that word, (h) the rule of
construction that references to general items that follow references to
specific items are limited to the same type or character of those specific
items is not applicable in the Credit Documents, (i) references to "writing"
include printing, typing, lithography, and other means of reproducing words in
a tangible, visible form, (j) references to any Person include that Person's
heirs, personal representatives, successors, trustees, receivers, and permitted
assigns, (k) references to any Legal Requirement include every amendment or
supplement to it, rule and regulation adopted under it, and successor or
replacement for it, (l) references to any Governmental Authority
CREDIT AGREEMENT
12
<PAGE> 18
include any Person succeeding to its relevant function, and (m) references to
any Credit Document or other document include (to the extent not prohibited by
the terms of the Credit Documents) every renewal and extension of it, amendment
and supplement to it, and replacement or substitution for it.
1.4 ACCOUNTING PRINCIPLES. Unless otherwise specified, in the Credit
Documents (a) GAAP determines all accounting and financial terms and compliance
with financial covenants, (b) GAAP in effect on the date of this agreement
determines compliance with financial covenants, (c) otherwise, all accounting
principles applied in a current period must be comparable in all material
respects to those applied during the preceding comparable period, and (d) all
financial terms and compliance with reporting and financial covenants must be
on a consolidated basis, as applicable.
SECTION 2 COMMITMENT. Subject to the provisions in the Loan Documents, each
Lender severally but not jointly agrees to extend credit to Borrower under the
Term Loan and under the Revolving Facility in accordance with the following
provisions.
2.1 TERM LOAN. Each Borrowing under the Term Loan is subject to all of
the provisions on the Credit Documents, including: (a) Each Borrowing may occur
only on a Business Day on or after the Closing Date and before the earlier of
the Termination Date or the Term Loan Conversion Date; (b) each Borrowing may
only be $500,000 or a greater integral multiple of $100,000; (c) the aggregate
amount of Borrowings under the Term Loan may never exceed $75,000,000; and (d)
Borrower may not reborrow any portion of the Term Loan once repaid.
2.2 REVOLVING FACILITY. Each Borrowing under the Revolving Facility is
subject to all of the provisions in the Credit Documents, including the
following: (a) each Borrowing may only occur on a Business Day on or after the
Closing Date and before the Termination Date; (b) each Borrowing may only be
$500,000 or a greater integral multiple of $100,000; and (c) the Principal Debt
may never exceed the total Commitments.
2.3 BORROWING PROCEDURE. The following procedures apply to Borrowings:
(a) BORROWING REQUEST. Borrower may request a Borrowing under
the Term Loan or Revolving Facility by making or delivering a
Borrowing Request to Administrative Agent, which is irrevocable and
binding on Borrower, stating the Type, amount, and Interest Period for
each Borrowing and which must be received by Administrative Agent no
later than (i) 10:00 a.m. on the second Business Day before the date
on which funds are requested (the "BORROWING DATE") for any LIBOR-Rate
Borrowing, or (ii) 11:00 a.m. on the Borrowing Date for any Base-Rate
Borrowing. Administrative Agent shall promptly on the day received
notify each Lender of any Borrowing Request.
(b) FUNDING. Each Lender shall remit its Commitment
Percentage of each requested Borrowing to Administrative Agent's
principal office in Atlanta, Georgia, in funds that are available for
immediate use by Administrative Agent by 2:00 p.m. on the applicable
Borrowing Date. Subject to receipt of those funds, Administrative
Agent shall (unless to its actual knowledge any of the applicable
conditions precedent have not been satisfied by Borrower or waived by
the requisite Lenders) make those funds available to Borrower by
wiring the funds to or for the account of Borrower.
CREDIT AGREEMENT
13
<PAGE> 19
(c) FUNDING ASSUMED. Absent contrary written notice from a
Lender, Administrative Agent may assume that each Lender has made its
Commitment Percentage of the requested Borrowing available to
Administrative Agent on the applicable Borrowing Date, and
Administrative Agent may, in reliance upon such assumption (but shall
not be required to), make available to Borrower a corresponding
amount. If a Lender fails to make its Commitment Percentage of any
requested Borrowing available to Administrative Agent on the
applicable Borrowing Date, Administrative Agent may recover the
applicable amount on demand (i) from that Lender together with
interest, commencing on the Borrowing Date and ending on (but
excluding) the date Administrative Agent recovers the amount from that
Lender, at an annual interest rate equal to the Fed-Funds Rate, or
(ii) if that Lender fails to pay its amount upon demand, then from
Borrower, together with interest at the rate applicable to that
Borrowing. No Lender is responsible for the failure of any other
Lender to make its Commitment Percentage of any Borrowing available as
required by SECTION 2.3(B); however, failure of any Lender to make its
Commitment Percentage of any Borrowing so available does not excuse
any other Lender from making its Commitment Percentage of any
Borrowing so available.
2.4 EFFECT OF REQUESTS. Each Borrowing Request constitutes a
representation and warranty by Borrower that as of the Borrowing Date all of
the applicable conditions precedent in SECTION 5 have been satisfied.
2.5 TERMINATION. Borrower may, upon giving at least five Business Days
prior written and irrevocable notice to Administrative Agent, terminate all or
part of the Revolving Facility. Each partial termination must be in an amount
of not less than $5,000,000 or a greater integral multiple of $1,000,000 and
must be ratable in accordance with each Lender's Commitment Percentage. At the
time of any termination, Borrower shall pay to Administrative Agent, for the
account of each Lender, as applicable, all accrued and unpaid fees under this
agreement, the interest attributable to the amount of that reduction, and any
related Funding Loss. Any part of the Revolving Facility that is terminated may
not be reinstated.
SECTION 3 PAYMENT TERMS.
3.1 NOTES AND PAYMENTS. The Term Loan is evidenced by the Term Notes,
one payable to each Lender in the stated amount of its Commitment for the Term
Loan. Principal Debt under the Revolving Facility is evidenced by the Revolving
Notes, one payable to each Lender in the stated amount of its Commitment for
the Revolving Facility. Borrower must make each payment and prepayment on the
Obligation to Administrative Agent's principal office in Atlanta, Georgia, in
immediately available funds by 1:00 p.m. on the day due; otherwise, but subject
to SECTION 3.6, those funds continue to accrue interest as if they were
received on the next Business Day. Administrative Agent shall promptly pay to
each Lender the part of any payment or prepayment to which that Lender is
entitled under this agreement on the same day Administrative Agent receives the
funds from Borrower. Unless Administrative Agent has received notice from
Borrower before the date on which any payment is due under this agreement that
Borrower will not make that payment in full, then on the date that payment is
due Administrative Agent may assume that Borrower has made the full payment due
and Administrative Agent may, in reliance upon that assumption, cause to be
distributed to each Lender on that date the amount then due to each Lender. If
and to the extent Borrower does not make the full payment due to Administrative
Agent, each Lender shall repay to Administrative Agent on demand the amount
distributed to that Lender by Administrative Agent together with interest for
each day from the date that Lender received payment from Administrative Agent
until the
CREDIT AGREEMENT
14
<PAGE> 20
date that Lender repays Administrative Agent (unless such repayment is made on
the same day as such distribution), at an interest rate equal to the Fed-Funds
Rate.
3.2 INTEREST AND PRINCIPAL PAYMENTS.
(a) INTEREST. Accrued interest on each LIBOR-Rate Borrowing
is due and payable on the last day of its respective Interest Period.
If any Interest Period for a LIBOR-Rate Borrowing is greater than
three months, then accrued interest is also due and payable on the
date three months after the commencement of the Interest Period.
Accrued interest on each Base-Rate Borrowing is due and payable in
arrears on the last day of each calendar month, commencing on the
first of those dates that follows the Closing Date, and on the
Termination Date.
(b) REVOLVING-FACILITY PRINCIPAL. The Principal Debt under
the Revolving Facility is due and payable on the Termination Date.
Before that date, Borrower may at any time prepay, without penalty and
in whole or in part, the Principal Debt under the Revolving Facility
so long as (i) each voluntary partial prepayment must be in a
principal amount not less than $500,000 or a greater integral multiple
of $100,000 and (ii) Borrower shall pay the related Funding Loss, if
any, upon demand. Conversions under SECTION 3.10 are not prepayments.
(c) TERM-LOAN PRINCIPAL. The Principal Debt under the Term
Loan is due and payable in installments on the last day of each March,
June, September, and December, commencing on the first of those dates
following the Term Loan Conversion Date, and in accordance with the
following amortization table unless the Principal Debt under the Term
Loan as of the Term Loan Conversion Date is less than $75,000,000, in
which case, in accordance with the following table only until paid in
full.
<TABLE>
<CAPTION>
QUARTER(S) ENDING QUARTERLY INSTALLMENT
================= =====================
<S> <C>
06/30/1999 $ 0
---------- ----------
09/30/1999 $ 0
---------- ----------
12/31/1999 $ 0
---------- ----------
03/31/2000 $ 0
---------- ----------
06/30/2000 $ 0
---------- ----------
09/30/2000 $ 0
---------- ----------
12/31/2000 $ 0
---------- ----------
03/31/2001 $ 0
---------- ----------
06/30/2001 $2,500,000
---------- ----------
09/30/2001 $2,500,000
---------- ----------
12/31/2001 $2,500,000
---------- ----------
03/31/2002 $2,500,000
---------- ----------
06/30/2002 $3,750,000
---------- ----------
09/30/2002 $3,750,000
========== ==========
</TABLE>
CREDIT AGREEMENT
15
<PAGE> 21
<TABLE>
<CAPTION>
Quarter(s) Ending Quarterly Installment
====================== =====================
<S> <C>
12/31/2002 $ 3,750,000
---------------------- -----------
03/31/2003 $ 3,750,000
---------------------- -----------
06/30/2003 $ 5,000,000
---------------------- -----------
09/30/2003 $ 5,000,000
---------------------- -----------
12/31/2003 $ 5,000,000
---------------------- -----------
03/31/2004 $ 5,000,000
---------------------- -----------
Stated-Termination Date $30,000,000
---------------------- -----------
TOTAL $75,000,000
====================== ===========
</TABLE>
(d) TERM-LOAN-VOLUNTARY PREPAYMENTS. Borrower may, by giving
notice to Administrative Agent no later than three Business Days
before the date of the prepayment, prepay, without penalty and in
whole or part, the Principal Debt under the Term Loan so long as (i)
the notice by Borrower specifies the amount to be prepaid, (ii) each
voluntary partial prepayment must be in a principal amount of not less
than $500,000, or a greater integral multiple of $100,000, plus
accrued interest, on the amount prepaid, to the date of the
prepayment, and (iii) Borrower shall pay the Funding Loss, if any,
upon demand. Conversions under SECTION 3.10 are not prepayments. No
voluntary prepayment of the Term Loan may be reborrowed. Voluntary
prepayments of the Term Loan shall be applied ratably to the principal
amount due at maturity and then to the remaining installments of
Principal Debt of the Term Loan in inverse order of maturity.
3.3 INTEREST OPTIONS. Except that the LIBOR-Rate may not be selected
when an Event of Default or Potential Default exists and except as otherwise
provided in this agreement Borrowings bear interest at an annual rate equal to
the lesser of either (a) the Base Rate or the LIBOR Rate plus the Applicable
Margin, in each case as designated or deemed designated by Borrower or (b) the
Maximum Rate.
3.4 QUOTATION OF RATES. Borrower may contact Administrative Agent
prior to delivering a Borrowing Request to receive an indication of the
interest rates then in effect, but the indicated rates do not bind
Administrative Agent or Lenders or affect the interest rate that is actually in
effect when Borrower makes a Borrowing Request or on the Borrowing Date.
3.5 DEFAULT RATE. To the extent lawful, all past-due Principal Debt
and past-due interest accruing on any Principal Debt bears interest from the
date due (stated or by acceleration) at the Default Rate until paid, regardless
whether payment is made before or after entry of a judgment.
3.6 INTEREST RECAPTURE. If the designated interest rate applicable to
any amount exceeds the Maximum Rate, the interest rate on that amount is
limited to the Maximum Rate, but any subsequent reductions in the designated
rate shall not reduce the interest rate thereon below the Maximum Rate until
the total amount of accrued interest equals the amount of interest that would
have accrued if that designated rate had always been in effect. If at maturity
(stated or by acceleration), or at final payment of the Notes, the total
interest paid or accrued is less than the interest that would have accrued if
the designated rates had always been in effect, then, at that time and to the
extent lawful, Borrower shall pay an amount equal to the difference between (a)
the lesser of either the amount of interest that would have accrued if the
designated
CREDIT AGREEMENT
16
<PAGE> 22
rates had always been in effect or the amount of interest that would have
accrued if the Maximum Rate had always been in effect, and (b) the amount of
interest actually paid or accrued on the Notes.
3.7 INTEREST CALCULATIONS. Interest will be calculated on the basis of
actual number of days (including the first day but excluding the last day)
elapsed but computed as if each calendar year consisted of 360 days (unless the
calculation would result in an interest rate greater than the Maximum Rate, or
in the case of Base-Rate Borrowing in which event interest will be calculated
on the basis of a year of 365 or 366 days, as the case may be). All interest
rate determinations and calculations by Administrative Agent are conclusive and
binding absent manifest error.
3.8 MAXIMUM RATE. Regardless of any provision contained in any Credit
Document, no Lender is entitled to contract for, charge, take, reserve,
receive, or apply, as interest on all or any part of the Obligation, any amount
in excess of the Maximum Rate, and, if any Lender ever does so, then any excess
shall be treated as a partial prepayment of principal (without regard to
SECTION 3.9) and any remaining excess shall be refunded to Borrower. In
determining if the interest paid or payable exceeds the Maximum Rate, Borrower
and Lenders shall, to the maximum extent lawful, (a) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest,
(b) exclude voluntary prepayments and their effects, and (c) amortize, prorate,
allocate, and spread the total amount of interest throughout the entire
contemplated term of the Principal Debt. However, if the Obligation is paid in
full before the end of its full contemplated term, and if the interest received
for its actual period of existence exceeds the Maximum Amount, then Lenders
shall refund any excess (and Lenders may not, to the extent lawful, be subject
to any penalties provided by any Legal Requirements for contracting for,
charging, taking, reserving, or receiving interest in excess of the Maximum
Amount). If the Legal Requirements of the State of Texas are applicable for
purposes of determining the "Maximum Rate" or the "Maximum Amount," then those
terms mean the "indicated rate ceiling" from time to time in effect under
Article 5069-1D.001, Revised Civil Statutes of Texas. Borrower agrees that
Chapter 346, Revised Civil Statutes of Texas (which regulates certain revolving
credit loan accounts and revolving triparty accounts) does not apply to any
Borrowings.
3.9 INTEREST PERIODS. When Borrower requests a LIBOR-Rate Borrowing,
Borrower may elect the applicable interest period (each an "INTEREST PERIOD"),
which may be, at Borrower's option, one, two, three, or six months for
LIBOR-Rate Borrowings, subject to SECTION 14.1 and the following conditions:
(a) the initial Interest Period for a LIBOR-Rate Borrowing commences on the
applicable Borrowing Date or conversion date, and each subsequent Interest
Period applicable to any Borrowing commences on the day when the next preceding
applicable Interest Period expires; (b) if any Interest Period for a LIBOR-Rate
Borrowing begins on a day for which no numerically corresponding Business Day
in the calendar month at the end of the Interest Period exists, then the
Interest Period ends on the last Business Day of that calendar month; (c) if
Borrower is required to pay any portion of a LIBOR-Rate Borrowing before the
end of its Interest Period in order to comply with the payment provisions of
the Credit Documents, Borrower shall also pay any related Funding Loss; and (d)
no more than six Interest Periods may be in effect at one time.
3.10 CONVERSIONS. Subject to the dollar limits of SECTIONS 2.1(b) and
2.2(b) and provided that Borrower may not convert to or select a new Interest
Period for a LIBOR-Rate Borrowing at any time when an Event of Default or
Potential Default exists, Borrower may (a) convert a LIBOR-Rate Borrowing on
the last day of the applicable Interest Period to a Base-Rate Borrowing, (b)
convert a Base-Rate Borrowing at any time to a LIBOR-Rate Borrowing, and (c)
elect a new Interest Period for a LIBOR-Rate Borrowing to commence upon
expiration of the then-current Interest Period. That election may be made by
telephonic request to Administrative Agent no later than 10:00 a.m. on the
second Business Day before the conversion
CREDIT AGREEMENT
17
<PAGE> 23
date or the last day of the Interest Period, as the case may be (for conversion
to a LIBOR-Rate Borrowing or election of a new Interest Period), and no later
than 11:00 a.m. on the last day of the Interest Period (for conversion to a
Base-Rate Borrowing). Borrower shall provide a Conversion Notice to
Administrative Agent no later than two days after the date of the conversion or
election. Absent Borrower's telephonic request for conversion or election of a
new Interest Period or if an Event of Default or Potential Default exists,
then, a LIBOR-Rate Borrowing shall be deemed converted to a Base-Rate Borrowing
effective when the applicable Interest Period expires.
3.11 ORDER OF APPLICATION. Each payment (including proceeds from the
exercise of any Rights) of the Obligation shall be applied either (a) if no
Event of Default or Potential Default exists, then in the order and manner as
Borrower directs, or (b) if an Event of Default or Potential Default exists or
if Borrower fails to give direction, then in the following order: (i) To all
fees, expenses, and indemnified amounts for which Administrative Agent has not
been paid or reimbursed in accordance with the Credit Documents and -- except
while an Event of Default under SECTION 11.1 exists -- as to which Borrower has
been invoiced and has failed to pay within ten Business Days of that invoice;
(ii) to all fees, expenses, and indemnified amounts for which any Lender has
not been paid or reimbursed in accordance with the Credit Documents (and if any
payment is less than all unpaid or unreimbursed fees and expenses, then that
payment shall be paid against unpaid and unreimbursed fees and expenses in the
order of incurrence or due date) and -- except while an Event of Default under
SECTION 11.1 exists -- as to which Borrower has been invoiced and has failed to
pay within ten Business Days of that invoice; (iii) to accrued interest on the
Principal Debt; (iv) to the Principal Debt in the order as Required Lenders may
elect (but Required Lenders agree to apply proceeds in an order that will
minimize any Funding Loss); and (v) to the remaining Obligation in the order
and manner Required Lenders deem appropriate.
3.12 SHARING OF PAYMENTS, ETC. Except as otherwise specifically
provided (a) principal and interest payments shall be shared by Lenders in
accordance with their respective Commitment Percentages while no Event of
Default exists or their respective Default Percentages while an Event of
Default exists, and (b) each other payment on the Obligation shall be shared by
Lenders in the proportion that the Obligation is owed to Lenders on the date of
the payment. If any Lender obtains any payment or prepayment with respect to
the Obligation (whether voluntary, involuntary, or otherwise, including,
without limitation, as a result of exercising its Rights under the SECTION
3.13) that exceeds the part of that payment or prepayment that it is then
entitled to receive under the Credit Documents, then that Lender shall purchase
from the other Lenders participations that will cause the purchasing Lender to
share the excess payment or prepayment ratably with each other Lender. If all
or any portion of any excess payment or prepayment is subsequently recovered
from the purchasing Lender, then the purchase shall be rescinded and the
purchase price restored to the extent of the recovery. Borrower agrees that any
Lender purchasing a participation from another Lender under this section may,
to the fullest extent lawful, exercise all of its Rights of payment (including
the Right of offset) with respect to that participation as fully as if that
Lender were the direct creditor of Borrower in the amount of that
participation.
3.13 OFFSET. If an Event of Default exists, each Lender is entitled to
exercise (for the benefit of all Lenders) the Rights of offset and banker's
Lien against each and every account and other property, or any interest
therein, that the Borrower or any Guarantor may now or hereafter have with, or
which is now or hereafter in the possession of, that Lender to the extent of
the full amount of the Obligation then matured and owed (directly or
participated) to it.
CREDIT AGREEMENT
18
<PAGE> 24
3.14 BOOKING BORROWINGS. To the extent lawful, any Lender may make,
carry, or transfer its Borrowings at, to, or for the account of any of its
branch offices or the office or branch of any of its Affiliates. However, no
Affiliate or branch is entitled to receive any greater payment under SECTION
3.15 than the transferor Lender would have been entitled to receive with
respect to those Borrowings, and a transfer may not be made if, as a direct
result of it, SECTION 3.15 or 3.17 would apply to any of the Obligation. If any
of the conditions of SECTIONS 3.16 or 3.17 ever apply to a Lender, that Lender
shall, to the extent possible, carry or transfer its Borrowings at, to, or for
the account of any of its branch offices or the office or branch of any of its
Affiliates so long as the transfer is consistent with the other provisions of
this section, does not create any burden or adverse circumstance for that
Lender that would not otherwise exist, and eliminates or ameliorates the
conditions of SECTIONS 3.16 or 3.17 as applicable.
3.15 BASIS UNAVAILABLE OR INADEQUATE FOR LIBOR RATE. If, on or before
any date when a LIBOR Rate is to be determined for a Borrowing, Administrative
Agent reasonably determines that the basis for determining the applicable rate
is not available or any Lender reasonably determines that the resulting rate
does not accurately reflect the cost to that Lender of making or converting
Borrowings at that rate for the applicable Interest Period, then Administrative
Agent shall promptly notify Borrower and Lenders of that determination (which
is conclusive and binding on Borrower absent manifest error) and the applicable
Borrowing shall bear interest at the sum of the Base Rate plus the Applicable
Margin. Until Administrative Agent notifies Borrower that those circumstances
no longer exist, Lenders' commitments under this agreement to make, or to
convert to, LIBOR-Rate Borrowings, as the case may be, are suspended.
3.16 ADDITIONAL COSTS.
(a) RESERVES. With respect to any LIBOR-Rate Borrowing (i) if
any change in any present Legal Requirement, any change in the
interpretation or application of any present Legal Requirement, or any
future Legal Requirement imposes, modifies, or deems applicable (or if
compliance by any Lender with any requirement of any Governmental
Authority results in) any requirement that any reserves (including,
without limitation, any marginal, emergency, supplemental, or special
reserves) be maintained (other than any reserve included in the
Reserve Requirement), and (ii) if those reserves reduce any sums
receivable by that Lender under this agreement or increase the costs
incurred by that Lender in advancing or maintaining any portion of any
LIBOR-Rate Borrowing, then (iii) that Lender (through Administrative
Agent) shall deliver to Borrower a certificate setting forth in
reasonable detail the calculation of the amount necessary to
compensate it for its reduction or increase (which certificate is
conclusive and binding absent manifest error), and (iv) Borrower shall
pay that amount to that Lender within five Business Days after demand.
The provisions of and undertakings and indemnification in this CLAUSE
(A) survive the satisfaction and payment of the Obligation and
termination of this agreement.
(b) CAPITAL ADEQUACY. With respect to any Borrowing, if any
change in any present Legal Requirement (whether or not having the
force of law), any change in the interpretation or application of any
present Legal Requirement (whether or not having the force of law), or
any future Legal Requirement (whether or not having the force of law)
regarding capital adequacy, or if compliance by any Lender with any
request, directive, or requirement imposed in the future by any
Governmental Authority regarding capital adequacy, or if any change by
any Lender, its holding company, or its applicable lending office in
its written policies or in the risk category of this transaction, in
any of the foregoing events or circumstances, reduces the rate of
return on its capital as a consequence of its obligations under this
agreement to a level below that which it otherwise
CREDIT AGREEMENT
19
<PAGE> 25
could have achieved (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by it to be material
(and it may, in determining the amount, utilize reasonable assumptions
and allocations of costs and expenses and use any reasonable averaging
or attribution method), then (unless the effect is already reflected
in the rate of interest then applicable under this agreement)
Administrative Agent or that Lender (through Administrative Agent)
shall notify Borrower and deliver to Borrower a certificate setting
forth in reasonable detail the calculation of the amount necessary to
compensate it (which certificate is conclusive and binding absent
manifest error), and Borrower shall pay that amount to Administrative
Agent or that Lender within five Business Days after demand. The
provisions of and undertakings and indemnification in this CLAUSE (B)
shall survive the satisfaction and payment of the Obligation and
termination of this agreement.
(c) TAXES. Subject to SECTION 3.19, any Taxes payable by
Administrative Agent or any Lender or ruled (by a Governmental
Authority) payable by Administrative Agent or any Lender in respect of
this agreement or any other Credit Document shall, if permitted by
Legal Requirement, be paid by Borrower, together with interest and
penalties, if any, except for Taxes payable on or measured by the
overall net income or capital of Administrative Agent or that Lender
(or Administrative Agent or that Lender, as the case may be, together
with any other Person with whom Administrative Agent or that Lender
files a consolidated, combined, unitary, or similar Tax return) and
except for interest and penalties incurred as a result of the gross
negligence or willful misconduct of Administrative Agent or any
Lender. Administrative Agent or that Lender (through Administrative
Agent) shall notify Borrower and deliver to Borrower a certificate
setting forth in reasonable detail the calculation of the amount of
payable Taxes, which certificate is conclusive and binding (absent
manifest error), and Borrower shall pay that amount to Administrative
Agent for its account or the account of that Lender, as the case may
be within five Business Days after demand. If Administrative Agent or
that Lender subsequently receives a refund of the Taxes paid to it by
Borrower, then the recipient shall promptly pay the refund to
Borrower.
3.17 CHANGE IN LEGAL REQUIREMENTS. If any Legal Requirement makes it
unlawful for any Lender to make or maintain LIBOR-Rate Borrowings, then that
Lender shall promptly notify Borrower and Administrative Agent, and (a) as to
undisbursed funds, that requested Borrowing shall be made as a Base- Rate
Borrowing, and (b) as to any outstanding Borrowing (i) if maintaining the
Borrowing until the last day of the applicable Interest Period is unlawful,
then the Borrowing shall be converted to a Base-Rate Borrowing as of the date
of notice, in which event Borrower will not be required to pay any related
Funding Loss, or (ii) if not prohibited by Legal Requirement, then the
Borrowing shall be converted to a Base-Rate Borrowing as of the last day of the
applicable Interest Period, or (iii) if any conversion will not resolve the
unlawfulness, then Borrower shall promptly prepay the Borrowing, without
penalty but with related Funding Loss.
3.18 FUNDING LOSS. BORROWER SHALL INDEMNIFY EACH LENDER AGAINST, AND
PAY TO IT UPON DEMAND, ANY FUNDING LOSS OF THAT LENDER. WHEN ANY LENDER DEMANDS
THAT BORROWER PAY ANY FUNDING LOSS, THAT LENDER SHALL DELIVER TO BORROWER AND
ADMINISTRATIVE AGENT A CERTIFICATE SETTING FORTH IN REASONABLE DETAIL THE BASIS
FOR IMPOSING FUNDING LOSS AND THE CALCULATION OF THE AMOUNT, WHICH CALCULATION
IS CONCLUSIVE AND BINDING ABSENT MANIFEST ERROR. THE PROVISIONS OF AND
UNDERTAKINGS AND INDEMNIFICATION IN THIS SECTION SURVIVE THE SATISFACTION AND
PAYMENT OF THE OBLIGATION AND TERMINATION OF THIS AGREEMENT.
CREDIT AGREEMENT
20
<PAGE> 26
3.19 FOREIGN LENDERS, PARTICIPANTS, AND ASSIGNEES. Each Lender,
Participant (by accepting a participation interest under this agreement), and
Assignee (by executing an Assignment) that is not organized under the Legal
Requirements of the United States of America or one of its states (a)
represents to Administrative Agent and Borrower that (i) no Taxes are required
to be withheld by Administrative Agent or Borrower with respect to any payments
to be made to it in respect of the Obligation and (ii) it has furnished to
Administrative Agent and Borrower two duly completed copies of either U.S.
Internal Revenue Service Form 4224, Form 1001, Form W-8, or any other form
acceptable to Administrative Agent and Borrower that entitles it to a complete
exemption from U.S. federal withholding Tax on all interest or fee payments
under the Credit Documents, and (b) covenants to (i) provide Administrative
Agent and Borrower a new Form 4224, Form 1001, Form W-8, or other form
acceptable to Administrative Agent and Borrower upon the expiration or
obsolescence according to Legal Requirement of any previously delivered form,
duly executed and completed by it, entitling it to a complete exemption from
U.S. federal withholding Tax on all interest and fee payments under the Credit
Documents, and (ii) comply from time to time with all Legal Requirements with
regard to the withholding Tax exemption. If any of the foregoing is not true at
any time or the applicable forms are not provided, then Borrower and
Administrative Agent (without duplication) may deduct and withhold from
interest and fee payments under the Credit Documents any Tax at the maximum
rate under the IRC or other applicable Legal Requirement, and amounts so
deducted and withheld shall be treated as paid to that Lender, Participant, or
assignee, as the case may be, for all purposes under the Credit Documents.
3.20 DISCHARGE AND REINSTATEMENT. Each Company's obligations under the
Credit Documents remain in full force and effect until no Lender has any
commitment to extend credit under the Credit Documents and the Obligation is
fully paid (except for provisions under the Credit Documents which by their
terms expressly survive payment of the Obligation and termination of the Credit
Documents). If any payment under any Credit Document is ever rescinded or must
be restored or returned for any reason, then all Rights and obligations under
the Credit Documents in respect of that payment are automatically reinstated as
though the payment had not been made when due.
SECTION 4 FEES.
4.1 TREATMENT OF FEES. The fees described in this SECTION 4 (a) are
not compensation for the use, detention, or forbearance of money, (b) are in
addition to, and not in lieu of, interest and expenses otherwise described in
this agreement, (c) are payable in accordance with SECTION 3.1, (d) are
non-refundable, (e) to the fullest extent permitted by Legal Requirement, bear
interest, if not paid when due, at the Default Rate, and (f) are calculated on
the basis of a year of 365 or 366 days, as the case may be.
4.2 COMMITMENT FEE. Borrower shall pay to Administrative Agent (solely
for their respective accounts) a commitment fee for Lenders according to each
Lender's Commitment Percentage. The fee is payable as it accrues on the last
day of each March, June, September, and December (commencing on the first of
those dates that follows the date of this agreement) and as it accrues on the
Termination Date. Each payment of the fee is equal to the following, determined
for the calendar quarter (or portion of a calendar quarter commencing on the
date of this agreement or ending on the Termination Date) preceding and
including the date it is due: From the date of this agreement until the
Termination Date, the product of (i) the Applicable Percentage, times (ii) the
amount by which the average-daily total Commitments exceed the average-daily
Principal Debt, times (iii) a fraction with the number of days in the
applicable quarter or portion of it as the numerator and 365 or 366, as
applicable, as the denominator.
CREDIT AGREEMENT
21
<PAGE> 27
SECTION 5 CONDITIONS PRECEDENT. No Lender is obligated to fund the initial
Borrowing unless Administrative Agent has received all of the items described
in SCHEDULE 5. In addition, no Lender is obligated to fund (as opposed to
continue or convert) any Borrowing unless on the applicable Borrowing Date (and
after giving effect to the requested Borrowing): (a) Administrative Agent has
timely received a properly completed and duly executed Borrowing Request; (b)
all of the representations and warranties of TEPPCO Partners and the Companies
in the Credit Documents are true and correct in all material respects (unless
they speak to a specific date or are based on facts which have changed by
transactions contemplated or expressly permitted by this agreement); (c) no
Material-Adverse Event, Event of Default, or Potential Default exists; and (d)
no limitation in SECTIONS 2.1 or 2.2 is exceeded. Each Borrowing Request,
however delivered, constitutes Borrower's representation and warranty that the
conditions in CLAUSES (b) through (d) above are satisfied. Upon Administrative
Agent's or any Lender's reasonable request, Borrower shall deliver to
Administrative Agent or such Lender evidence substantiating any of the matters
in the Credit Documents that are necessary to enable Borrower to qualify for
the Borrowing. Each condition precedent in this agreement (including, without
limitation, those on SCHEDULE 5) is material to the transactions contemplated
by this agreement, and time is of the essence with respect to each condition
precedent.
SECTION 6 GUARANTIES. Borrower shall cause TEPPCO Partners and each of
Borrower's Subsidiaries (other than TEPPCO Colorado), whether now existing or
in the future formed or acquired as permitted by the Credit Documents, to
unconditionally guarantee the full payment and performance of the Obligation by
execution of a Guaranty.
SECTION 7 REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Administrative Agent and Lenders as follows:
7.1 PURPOSE. (a) Borrower will only use the proceeds of (i) the Term
Loan, for the initial construction costs of the FINA/BASF Project, and (ii) the
Revolving Facility, for general working capital purposes, including
acquisitions and capital expenditures, and (b) no Company is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, as amended and no part of the proceeds of any Borrowing will be
used, directly or indirectly, for a purpose that violates any Governmental
Requirement, including Regulation U.
7.2 SUBSIDIARIES. SCHEDULE 7.2 describes TEPPCO Partners' and Borrower
and all of its direct and indirect Subsidiaries.
7.3 EXISTENCE, AUTHORITY, AND GOOD STANDING. Each Guarantor and each
Company is duly organized, validly existing, and in good standing under the
Legal Requirements of its jurisdiction of formation. Except where not a
Material-Adverse Event, each Guarantor and each Company is duly qualified to
transact business and is in good standing in each jurisdiction where the nature
and extent of its business and properties require due qualification and good
standing (each of which jurisdictions is identified on SCHEDULE 7.2). Each
Guarantor and each Company possesses all requisite authority and power to
conduct its business as is now being conducted and as proposed under the Credit
Documents to be conducted and to own and operate its assets as now owned and
operated and as proposed to be owned and operated under the Credit Documents.
7.4 AUTHORIZATION AND CONTRAVENTION. The execution and delivery by
each Guarantor and each Company of each Credit Document to which it is a party
and the performance by it of its obligations under
CREDIT AGREEMENT
22
<PAGE> 28
those Credit Documents (a) are within its corporate, partnership, or comparable
organizational powers, (b) have been duly authorized by all necessary
corporate, partnership, or comparable organizational action, (c) require no
notice to, consents or approval of, action by or filing with, any Governmental
Authority (except any action or filing that has been taken or made on or before
the Closing Date), (d) do not violate any provision of any of its Constituent
Documents, and (e) except violations that individually or collectively are not
a Material-Adverse Event, do not violate any provision of Legal Requirement
applicable to it or any material agreement to which it is a party.
7.5 BINDING EFFECT. Upon execution and delivery by all parties to it,
each Credit Document will constitute a legal and binding obligation of each
Guarantor and each Company party to it, enforceable against it in accordance
with that Credit Document's terms except as that enforceability may be limited
by Debtor Laws and general principles of equity.
7.6 CURRENT FINANCIALS. The Current Financials were prepared in
accordance with GAAP and present fairly, in all material respects, the
consolidated financial condition, results of operations, and cash flows of the
Companies as of, and for the portion of the fiscal year ending on their dates
(subject only to normal year-end adjustments for interim statements). Except
for transactions directly related to, specifically contemplated by, or
expressly permitted by the Credit Documents, no material adverse changes have
occurred in such consolidated financial condition from that shown in the
Current Financials.
7.7 SOLVENCY. Each of Borrower and each Guarantor is Solvent.
7.8 LITIGATION. Except as disclosed on SCHEDULE 7.8 and matters
covered (subject to reasonable and customary deductible and retention) by
insurance or indemnification agreements as to which the insurer or indemnifying
party, as applicable, has acknowledged liability (a) no Guarantor or Company is
subject to, or aware of the threat of, any Litigation that is reasonably likely
to be determined adversely to any Guarantor or Company and, if so adversely
determined, is a Material-Adverse Event, and (b) no outstanding and unpaid
judgments against any Guarantor or Company exist that would be a
Material-Adverse Event.
7.9 TAXES. Except where not a Material-Adverse Event (a) all Tax
returns of each Guarantor and each Company required to be filed have been filed
(or extensions have been granted) before delinquency, and (b) all Taxes imposed
upon each Guarantor and Company that are due and payable have been paid before
delinquency except as being contested as permitted by SECTION 8.5.
7.10 ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE 7.10(a)
no Guarantor or Company has received notice from any Governmental Authority
that it has actual or potential Environmental Liability and no Guarantor or
Company has knowledge that it has any Environmental Liability, which actual or
potential Environmental Liability in either case constitutes a Material-Adverse
Event, and (b) no Guarantor or Company has received notice from any
Governmental Authority that any Real Property is affected by, and no Guarantor
or Company has knowledge that any Real Property is affected by, any Release of
any Hazardous Substance which constitutes a Material-Adverse Event.
7.11 EMPLOYEE PLANS. Except as disclosed on SCHEDULE 7.11 or where not
a Material-Adverse Event (a) no Employee Plan subject to ERISA has incurred an
"accumulated funding deficiency" (as defined in Section 302 of ERISA or Section
512 of the IRC), (b) neither Borrower nor any ERISA Affiliate has incurred
liability -- except for liabilities for premiums that have been paid or that
are not past due -- under ERISA to the PBGC in connection with any Employee
Plan, (c) neither Borrower nor any ERISA Affiliate
CREDIT AGREEMENT
23
<PAGE> 29
has withdrawn in whole or in part from participation in a Multiemployer Plan in
a manner that has given rise to a withdrawal liability under Title IV of ERISA,
(d) neither Borrower nor any ERISA Affiliate has engaged in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the IRC),
(e) no "reportable event" (as defined in Section 4043 of ERISA) has occurred
excluding events for which the notice requirement is waived under applicable
PBGC regulations, (f) neither Borrower nor any ERISA Affiliate has any
liability, or is subject to any Lien, under ERISA or the IRC to or on account
of any Employee Plan, (g) each Employee Plan subject to ERISA and the IRC
complies in all material respects, both in form and operation, with ERISA and
the IRC, and (h) no Multiemployer Plan subject to the IRC is in reorganization
within the meaning of Section 418 of the IRC. None of the matters disclosed on
SCHEDULE 7.11 give rise to any other "reportable events," as defined above.
7.12 DEBT. No Guarantor or Company has any Debt except as described on
SCHEDULE 7.12.
7.13 PROPERTIES; LIENS. Each Company has good and indefeasible title
to all of its property reflected on the Current Financials as being owned by it
except for property that is obsolete or that has been disposed of in the
ordinary course of business between the date of the Current Financials and the
date of this agreement or, after the date of this agreement, as permitted by
SECTIONS 9.9 and 9.10. No Lien exists on any property of any Company except as
described on SCHEDULE 7.13 and other Permitted Liens. No Company is party or
subject to any agreement, instrument, or order which in any way restricts any
Company's ability to allow Liens to exist upon any of its assets except
relating to Permitted Liens.
7.14 GOVERNMENT REGULATIONS. No Guarantor or Company is subject to
regulation under the Investment Company Act of 1940 or the Public Utility
Holding Company Act of 1935.
7.15 TRANSACTIONS WITH AFFILIATES. Except as otherwise disclosed on
SCHEDULE 7.15 or permitted by SECTION 9.5, no Guarantor or Company is a party
to a material transaction with any of its Affiliates.
7.16 LEASES. Except where not a Material-Adverse Event (a) each
Company enjoys peaceful and undisturbed possession under all leases necessary
for the operation of its properties and assets, and (b) all material leases
under which any Company is a lessee are in full force and effect.
7.17 LABOR MATTERS. Except where not a Material-Adverse Event (a) no
actual or threatened strikes, labor disputes, slow downs, walkouts, work
stoppages, or other concerted interruptions of operations that involve any
employees employed at any time in connection with the business activities or
operations at the Real Property exist, (b) hours worked by and payment made to
the employees of any Company or any Predecessor have not been in violation of
the Fair Labor Standards Act or any other applicable Legal Requirements
pertaining to labor matters, (c) all payments due from any Company for employee
health and welfare insurance, including, without limitation, workers
compensation insurance, have been paid or accrued as a liability on its books,
(d) the business activities and operations of each Company are in compliance
with OSHA and other applicable health and safety Legal Requirements.
7.18 INTELLECTUAL PROPERTY. Except where not a Material-Adverse Event
(a) each Company owns or has the right to use all material licenses, patents,
patent applications, copyrights, service marks, trademarks, trademark
applications and trade names necessary to continue to conduct its businesses as
presently conducted by it and proposed to be conducted by it immediately after
the date of this agreement, (b) each Company is conducting its business without
infringement or claim of infringement of any license, patent, copyright,
service mark, trademark, trade name, trade secret or other intellectual
property right of
CREDIT AGREEMENT
24
<PAGE> 30
others, and (c) no infringement or claim of infringement by others of any
material license, patent, copyright, service mark, trademark, trade name, trade
secret or other intellectual property of any Company exists.
7.19 FINA/BASF CONTRACTS. The FINA/BASF Contracts are in full force
and effect on the date of this agreement, no default (nor any event,
occurrence, or circumstance, the existence of which upon any required notice,
time lapse, or both, would become a default) has occurred and is continuing
under any FINA/BASF Contract, and each FINA/BASF Contract evidences the valid,
binding, and enforceable obligations of the parties to it.
7.20 Y2K ISSUE. Each Guarantor and each Company has (a) initiated a
review and assessment of all areas within businesses and operations (including
those affected by suppliers and vendors) that could be adversely affected by
the Y2K Issue, (b) developed a plan and time line for addressing the Y2K Issue
on a timely basis, and (c) to date implemented in all material respects that
plan in accordance with that timetable.
7.21 FULL DISCLOSURE. Each fact or condition relating to any
Guarantor's or any Company's financial condition, business, or property that is
a Material-Adverse Event has been disclosed in writing to Administrative Agent.
All information previously furnished by any Guarantor or Company to
Administrative Agent in connection with the Credit Documents was (and all
information furnished in the future by any Company to Administrative Agent will
be) true and accurate in all material respects or based on reasonable estimates
on the date the information is stated or certified.
SECTION 8 AFFIRMATIVE COVENANTS. As long as any Lender is committed to lend
under this agreement and until the Obligation has been fully paid and
performed, Borrower covenants and agrees with Administrative Agent and Lenders
that, without first obtaining Required Lenders' consent to the contrary:
8.1 CERTAIN ITEMS FURNISHED. Borrower shall cause the following to be
furnished to each Lender:
(a) ANNUAL FINANCIALS OF TEPPCO PARTNERS. Promptly after
preparation but no later than 90 days after the last day of each
fiscal year of TEPPCO Partners, Financials showing the consolidated
and consolidating financial condition and results of operations of
TEPPCO Partners and its Subsidiaries as of, and for the year ended on,
that last day setting forth in comparative form the figures for the
previous fiscal year, accompanied by (i) the opinion, without material
qualification, of KPMG LLP or other firm of nationally-recognized
independent certified public accountants reasonably acceptable to
Required Lenders, based on an audit using generally accepted auditing
standards, that those Financials were prepared in accordance with GAAP
and present fairly, in all material respects, the consolidated and
consolidating financial condition and results of operations of TEPPCO
Partners and its Subsidiaries, and (ii) a related Compliance
Certificate from a Responsible Officer, on behalf of TEPPCO Partners.
(b) ANNUAL FINANCIALS OF BORROWER. Promptly after preparation
but no later than 90 days after the last day of each fiscal year of
Borrower, Financials showing the consolidated and consolidating
financial condition and results of operations of Borrower and its
Subsidiaries as of, and for the year ended on, that last day setting
forth in comparative form the figures for the previous fiscal year,
accompanied by a Compliance Certificate, together with a completed
copy of the schedule to that certificate, from a Responsible Officer,
on behalf of Borrower.
CREDIT AGREEMENT
25
<PAGE> 31
(c) QUARTERLY REPORTS. Promptly after preparation but no
later than 45 days after the last day of (i) each of the first three
fiscal quarters of TEPPCO Partners and the Companies each year,
Financials showing the consolidated and consolidating financial
condition and results of operations of TEPPCO Partners and its
Subsidiaries, and of Borrower and its Subsidiaries for that fiscal
quarter and for the period from the beginning of the current fiscal
year to the last day of that fiscal quarter setting forth in each case
in comparative form the figures for the corresponding quarter and the
corresponding portion of the previous fiscal quarter, accompanied in
each case by a related Compliance Certificate, together with a
completed copy of the schedule to that certificate, signed by a
Responsible Officer, on behalf of TEPPCO Partners or Borrower, as the
case may be, and (ii) each fiscal quarter of Borrower prior to the
Completion Date, a report detailing the progress of the FINA/BASF
Project, in form and substance satisfactory to Administrative Agent.
(d) OTHER REPORTS. Promptly after preparation and
distribution, accurate and complete copies of all reports and other
material communications about material financial matters or material
corporate plans or projections by or for any Guarantor or any Company
for distribution to any Governmental Authority or any creditor, other
than credit, trade, and other reports prepared and distributed in the
ordinary course of business and information otherwise furnished to
Administrative Agent and Lenders under this agreement.
(e) EMPLOYEE PLANS. As soon as possible and within 30 days
after any Guarantor or any Company knows that any event which would
constitute a reportable event under Section 4043(b) of Title IV of
ERISA with respect to any Employee Plan subject to ERISA has occurred,
or that the PBGC has instituted or will institute proceedings under
ERISA to terminate that plan, deliver a certificate of a Responsible
Officer of Borrower setting forth details as to that reportable event
and the action which Borrower or an ERISA Affiliate, as the case may
be, proposes to take with respect to it, together with a copy of any
notice of that reportable event which may be required to be filed with
the PBGC, or any notice delivered by the PBGC evidencing its intent to
institute those proceedings or any notice to the PBGC that the plan is
to be terminated, as the case may be. For all purposes of this
section, each Guarantor and any Company is deemed to have all
knowledge of all facts attributable to the plan administrator under
ERISA.
(f) OTHER NOTICES. Notice, promptly after Borrower knows, of
(i) the existence and status of any Litigation that is reasonably
likely to be adversely determined and, if determined adversely to any
Guarantor or any Company, would be a Material-Adverse Event, (ii) any
change in any material fact or circumstance represented or warranted
by any Guarantor or any Company in any Credit Document, (iii) an Event
of Default or Potential Default, specifying the nature thereof and
what action the Companies have taken, are taking, or propose to take,
(iv) a default or potential default under the FINA/BASF Contracts, and
(v) the Completion Date of the FINA/BASF Project.
(g) Y2K. Notice promptly after either Borrower or any
Guarantor discovers or determines that any computer applications
(including those of suppliers and vendors to any Guarantor or any
Company) that are material to the businesses or operations of any
Guarantor or any Company will not be compliant in timely resolving the
Y2K Issue if that failure could reasonably be expected to be a
Material-Adverse Event.
CREDIT AGREEMENT
26
<PAGE> 32
(h) OTHER INFORMATION. Promptly when reasonably requested by
Administrative Agent or any Lender, such reasonable information (not
otherwise required to be furnished under this agreement) about any
Guarantor or any Company's business affairs, assets, and liabilities.
8.2 USE OF CREDIT. Borrower shall use the proceeds of Borrowings only
for the purposes represented in this agreement.
8.3 BOOKS AND RECORDS. Each Guarantor and Company shall maintain
books, records, and accounts necessary to prepare Financials in accordance with
GAAP.
8.4 INSPECTIONS. Upon reasonable request and subject to compliance
with applicable safety standards, with contractual privilege and non-disclosure
agreements, and with the same conditions applicable to any Guarantor or any
Company in respect of property of that Guarantor or Company on the premises of
other Persons, each Guarantor and Company shall allow Administrative Agent or
any Lender (or their respective Representatives) to inspect any of its
properties, to review reports, files, and other records and to make and take
away copies thereof, to conduct reasonable tests or investigations, and to
discuss any of its affairs, conditions, and finances with its other creditors,
directors, officers, employees, or representatives from time to time, during
reasonable business hours.
8.5 TAXES. Each Guarantor and Company shall promptly pay when due any
and all Taxes except Taxes that are being contested in good faith by lawful
proceedings diligently conducted, against which reserve or other provision
required by GAAP has been made, and in respect of which levy and execution of
any Lien sufficient to be enforced has been and continues to be stayed.
8.6 PAYMENT OF OBLIGATION. Each Guarantor and Company shall promptly
pay (or renew and extend) all of its material obligations as they become due
(unless the obligations are being contested in good faith by, if required,
appropriate proceedings).
8.7 EXPENSES. Within ten Business Days after demand accompanied by an
invoice describing the costs, fees, and expenses in reasonable detail (and
subject to any limitations separately agreed to in writing by Borrower and
Administrative Agent in respect of costs, fees, and expenses of Administrative
Agent or any of its Representatives), Borrower shall pay (a) all costs, fees,
and reasonable expenses paid or incurred by Administrative Agent incident to
any Credit Document (including the reasonable fees and expenses of
Administrative Agent's counsel in connection with the negotiation, preparation,
delivery, and execution of the Credit Documents and any related amendment,
waiver, or consent) and (b) all reasonable costs and expenses incurred by
Administrative Agent or any Lender in connection with the enforcement of the
obligations of any Company under the Credit Documents or the exercise of any
Rights under the Credit Documents (including reasonable attorneys' fees and
court costs), all of which are part of the Obligation, bearing interest, (if
not paid within ten Business Days after demand accompanied by an invoice
describing the costs, fees, and expenses in reasonable detail) on the portion
thereof from time to time unpaid at the Default Rate until paid.
8.8 MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Each Guarantor and
Company shall (a) except in connection with dispositions permitted under
SECTION 9.9 and mergers, consolidations, and dissolutions permitted under
SECTION 9.10, maintain its existence and good standing in its state of
formation, and (b) except where not a Material-Adverse Event (i) maintain its
authority to transact business and good standing in all other states, (ii)
maintain all licenses, permits, and franchises (including Environmental
CREDIT AGREEMENT
27
<PAGE> 33
Permits) necessary for its business, and (iii) keep all of its material assets
that are useful in and necessary to its business in good working order and
condition (ordinary wear and tear excepted) and make all necessary repairs and
replacements.
8.9 INSURANCE. Each Guarantor and Company shall, at its cost and
expense, maintain with financially sound, responsible, and reputable insurance
companies or associations (or, as to workers' compensation or similar
insurance, with an insurance fund or by self-insurance authorized by the
jurisdictions in which it operates) insurance concerning its properties and
businesses against casualties and contingencies and of types and in amounts
(and with co-insurance and deductibles) as is customary in the case of similar
businesses.
8.10 ENVIRONMENTAL MATTERS. Each Guarantor and Company shall (a)
operate and manage its businesses and otherwise conduct its affairs in
compliance with all Environmental Laws and Environmental Permits except to the
extent noncompliance does not constitute a Material-Adverse Event, (b) promptly
deliver to Administrative Agent a copy of any notice received from any
Governmental Authority alleging that Guarantor or any Company is not in
compliance with any Environmental Law or Environmental Permit if the allegation
constitutes a Material-Adverse Event, and (c) promptly deliver to
Administrative Agent a copy of any notice received from any Governmental
Authority alleging that any Guarantor or any Company has any potential
Environmental Liability if the allegation constitutes a Material-Adverse Event.
8.11 FINA/BASF CONTRACTS. Borrower shall maintain each FINA/BASF
Contract in full force and effect until its completion.
8.12 INDEMNIFICATION.
(a) AS USED IN THIS SECTION: (I) "INDEMNITEE" MEANS
ADMINISTRATIVE AGENT, EACH LENDER, EACH PRESENT AND FUTURE AFFILIATE
(WITH WHOM BORROWER OR A GUARANTOR HAS ENTERED INTO A WRITTEN
CONTRACTUAL ARRANGEMENT) OF ADMINISTRATIVE AGENT OR ANY LENDER, EACH
PRESENT AND FUTURE REPRESENTATIVE OF ADMINISTRATIVE AGENT, ANY LENDER,
OR ANY OF THOSE AFFILIATES, AND EACH PRESENT AND FUTURE SUCCESSOR AND
PERMITTED ASSIGN OF ADMINISTRATIVE AGENT, ANY LENDER, OR ANY OF THOSE
AFFILIATES OR REPRESENTATIVES; AND (II) "INDEMNIFIED LIABILITIES"
MEANS ALL KNOWN AND UNKNOWN, FIXED AND CONTINGENT, ADMINISTRATIVE,
INVESTIGATIVE, JUDICIAL, AND OTHER CLAIMS, DEMANDS, ACTIONS, CAUSES OF
ACTION, INVESTIGATIONS, SUITS, PROCEEDINGS, AMOUNTS PAID IN
SETTLEMENT, DAMAGES, JUDGMENTS, PENALTIES, COURT COSTS, LIABILITIES,
AND OBLIGATIONS -- AND ALL COSTS AND REASONABLE EXPENSES, AND
DISBURSEMENTS (INCLUDING ALL REASONABLE ATTORNEYS' FEES AND EXPENSES
WHETHER OR NOT SUIT OR OTHER PROCEEDING EXISTS OR ANY INDEMNITEE IS
PARTY TO ANY SUIT OR OTHER PROCEEDING) IN ANY WAY RELATED TO ANY OF
THE FOREGOING -- THAT MAY AT ANY TIME BE IMPOSED ON, INCURRED BY, OR
ASSERTED AGAINST ANY INDEMNITEE AND IN ANY WAY ARISING OUT OF ANY (A)
CREDIT DOCUMENT, TRANSACTION CONTEMPLATED BY ANY CREDIT DOCUMENT, OR
REAL PROPERTY, (B) ENVIRONMENTAL LIABILITY IN ANY WAY RELATED TO ANY
GUARANTOR OR ANY COMPANY, PREDECESSOR, REAL PROPERTY, OR ACT,
OMISSION, STATUS, OWNERSHIP, OR OTHER RELATIONSHIP, CONDITION, OR
CIRCUMSTANCE CONTEMPLATED BY, CREATED UNDER, OR ARISING PURSUANT TO OR
IN CONNECTION WITH ANY CREDIT DOCUMENT, OR (C) INDEMNITEE'S SOLE OR
CONCURRENT ORDINARY NEGLIGENCE.
CREDIT AGREEMENT
28
<PAGE> 34
(b) BORROWER SHALL INDEMNIFY EACH INDEMNITEE FROM AND
AGAINST, PROTECT AND DEFEND EACH INDEMNITEE FROM AND AGAINST, HOLD
EACH INDEMNITEE HARMLESS FROM AND AGAINST, AND ON DEMAND PAY OR
REIMBURSE EACH INDEMNITEE FOR, ALL INDEMNIFIED LIABILITIES.
(c) THE FOREGOING PROVISIONS (I) ARE NOT LIMITED IN AMOUNT
EVEN IF THAT AMOUNT EXCEEDS THE OBLIGATION, (II) INCLUDE, WITHOUT
LIMITATION, REASONABLE FEES AND EXPENSES OF ATTORNEYS AND OTHER COSTS
AND EXPENSES OF LITIGATION OR PREPARING FOR LITIGATION AND DAMAGES OR
INJURY TO PERSONS, PROPERTY, OR NATURAL RESOURCES ARISING UNDER ANY
STATUTORY OR COMMON LEGAL REQUIREMENT, PUNITIVE DAMAGES, FINES, AND
OTHER PENALTIES, AND (III) ARE NOT AFFECTED BY THE SOURCE OR ORIGIN OF
ANY HAZARDOUS SUBSTANCE, AND (IV) ARE NOT AFFECTED BY ANY INDEMNITEE'S
INVESTIGATION, ACTUAL OR CONSTRUCTIVE KNOWLEDGE, COURSE OF DEALING, OR
WAIVER.
(d) HOWEVER, NO INDEMNITEE IS ENTITLED TO BE INDEMNIFIED
UNDER THE CREDIT DOCUMENTS FOR ITS OWN SOLE GROSS NEGLIGENCE OR SOLE
WILFUL MISCONDUCT.
(e) THE PROVISIONS OF AND INDEMNIFICATION AND OTHER
UNDERTAKINGS UNDER THIS SECTION SURVIVE THE SALE OR OTHER TRANSFER OF
ANY REAL PROPERTY TO ANY PERSON, THE SATISFACTION OF THE OBLIGATION,
AND THE TERMINATION OF THE CREDIT DOCUMENTS FOR ONE YEAR.
SECTION 9 NEGATIVE COVENANTS. As long as any Lender is committed to lend under
this agreement and until the Obligation has been fully paid and performed,
Borrower covenants and agrees with Administrative Agent and Lenders that,
without first obtaining Required Lenders' consent (which consent shall not be
unreasonably withheld) to the contrary the Persons designated in the following
sections of this SECTION 9 may not directly or indirectly do any of the
following or commit (other than a commitment that is not binding on any such
Person until any prior written consent of Required Lenders is first obtained)
to do any of the following:
9.1 DEBT. No Company may have any Debt except the following (the
"PERMITTED DEBT"):
(a) OBLIGATION. The Obligation and any Guaranty under this
agreement.
(b) EXISTING DEBT. The Debt described on SCHEDULE 7.12 (other
than any such Debt that is described on that schedule as to be paid
with the proceeds of Borrowings), together with all renewals,
extensions, amendments, modifications, and refinancings of (but not
any principal increases to) any of that Debt.
(c) HEDGING AGREEMENTS. Hedging Agreements.
9.2 PREPAYMENTS. No Company may prepay or redeem or cause to be
prepaid or redeemed any principal of, or any interest on, any of its Debt
except (a) the Obligation and (b) any of its other Debt if (i) no Event of
Default or Potential Default exists immediately before, or will occur as a
result of (or otherwise will exist immediately after), the prepayment or
redemption, and (ii) in respect of any prepayment or redemption of the Senior
Notes, Borrower concurrently prepays to Lenders an amount of Principal Debt
that is in the same proportion to the amount of Principal Debt concurrent with
or before that prepayment as the
CREDIT AGREEMENT
29
<PAGE> 35
amount of principal of the Senior Notes then being prepaid or redeemed bears to
the total principal amount of the Senior Notes immediately before that
prepayment or redemption.
9.3 LIENS. No Company may (a) create, incur, or suffer or permit to be
created or incurred or to exist any Lien upon any of its assets except
Permitted Liens or (b) enter into or permit to exist any arrangement or
agreement that directly or indirectly prohibits any Company from creating or
incurring any Lien on any of its assets except (i) the Credit Documents, (ii)
the Other Credit Agreements and related loan documents, (iii) any lease that
places a Lien prohibition on only the property subject to that lease, and (iv)
arrangements and agreements that apply only to property subject to Permitted
Liens. The following are "PERMITTED LIENS":
(a) EXISTING LIENS. The existing Liens that are described on
SCHEDULE 7.13 and all renewals, extensions, amendments, and
modifications of any of them to the extent that the total-principal
amount each individually secures never exceeds the total-principal
amount secured by it on the date of this agreement.
(b) THIS TRANSACTION. Liens, if any, ever granted to
Administrative Agent in favor of Lenders to secure all of any part of
the Obligation.
(c) BONDS. Liens securing any industrial development,
pollution control, or similar revenue bonds that never exceed a total
principal amount of $15,000,000.
(d) FORECLOSED PROPERTIES. Liens existing on any property
acquired by a Company in connection with the foreclosure or other
exercise of its Lien on the property.
(e) SETOFFS. Subject to any limitations imposed upon them in
the Credit Documents, rights of set off or recoupment and banker's
Liens.
(f) INSURANCE. Pledges or deposits made to secure payment of
workers' compensation, unemployment insurance, or other forms of
governmental insurance or benefits or to participate in any fund in
connection with workers' compensation, unemployment insurance,
pensions, or other social security programs.
(g) BIDS AND BONDS. Good-faith pledges or deposits (i) for
10% or less of the amounts due under (and made to secure) any
Company's performance of bids, tenders, contracts (except for the
repayment of borrowed money), (ii) in respect of any operating lease,
that are for up to but not more than the greater of either 10% of the
total rental obligations for the term of the lease or 50% of the total
rental obligations payable during the first year of the lease, or
(iii) made to secure statutory obligations, surety or appeal bonds, or
indemnity, performance, or other similar bonds benefitting any Company
in the ordinary course of its business.
(h) PERMITS. Conditions in any permit, license, or order
issued by a Governmental Authority for the ownership and operation of
a pipeline that do not materially impair the ownership or operation of
the pipeline.
(i) PROPERTY RESTRICTIONS. Zoning and similar restrictions on
the use of, and easements, restrictions, covenants, title defects, and
similar encumbrances on, any Real Property or
CREDIT AGREEMENT
30
<PAGE> 36
pipeline right-of-way that (i) do not materially impair the Company's
use of the Real Property or pipeline right-of-way and (ii) are not
violated by existing structures (including the pipeline) or current
land use.
(j) EMINENT DOMAIN. The Right reserved to, or vested in, any
Governmental Authority (or granted by a Governmental Authority to
another Person) by the terms of any Right, franchise, grant, license,
permit, or Legal Requirements to purchase or recapture, or to
designate a purchaser of, any property.
(k) INCHOATE LIENS. If no Lien has been filed in any
jurisdiction or agreed to (i) claims and Liens for Taxes not yet due
and payable, (ii) mechanic's Liens and materialman's Liens for
services or materials and similar Liens incident to construction and
maintenance of real property, in each case for which payment is not
yet due and payable, (iii) landlord's Liens for rental not yet due and
payable, and (iv) Liens of warehousemen and carriers and similar Liens
securing obligations that are not yet due and payable.
(l) MISCELLANEOUS. Any of the following to the extent that
the validity or amount is being contested in good faith and by
appropriate and lawful proceedings diligently conducted, reserve or
other appropriate provision (if any) required by GAAP has been made,
levy and execution has not issued or continues to be stayed, and they
do not individually or collectively detract materially from the value
of the property of the Company in question or materially impair the
use of that property in the operation of its business: (i) Claims and
Liens for Taxes; (ii) claims and Liens upon, and defects of title to,
real or personal property, including any attachment of personal or
real property or other legal process before adjudication of a dispute
on the merits; (iii) claims and Liens of mechanics, materialmen,
warehousemen, carriers, landlords, or other like Liens; (iv) Liens
incident to construction and maintenance of real property; and (v)
adverse judgments, attachments, or orders on appeal for the payment of
money.
9.4 EMPLOYEE PLANS. Except as disclosed on SCHEDULE 7.11 or where not
a Material-Adverse Event, no Company may permit any of the events or
circumstances described in SECTION 7.11 to exist or occur.
9.5 TRANSACTIONS WITH AFFILIATES. No Company may enter into any
material transaction with any of its Affiliates except (a) those described on
SCHEDULE 7.15, (b) transactions between Borrower and a Guarantor, (c)
transactions permitted under SECTIONS 9.1 or 9.7, (d) transactions in the
ordinary course of business and upon fair and reasonable terms not materially
less favorable than it could obtain or could become entitled to in an
arm's-length transaction with a Person that was not its Affiliate, and (e)
compensation arrangements in the ordinary course of business with directors and
officers of the Companies.
9.6 COMPLIANCE WITH LEGAL REQUIREMENTS AND DOCUMENTS. No Company may
(a) violate the provisions of any Legal Requirements (including, without
limitation, OSHA and Environmental Laws) applicable to it or of any material
agreement to which it is a party if that violation alone, or when aggregated
with all other violations, would be a Material-Adverse Event, (b) violate in
any material respect any provision of its Constituent Documents, or (c) repeal,
replace, or amend any provision of its Constituent Documents if that action
would be a Material-Adverse Event.
CREDIT AGREEMENT
31
<PAGE> 37
9.7 INVESTMENTS. No Company may make any Investments except the
following (the "PERMITTED INVESTMENTS"):
(a) INVESTMENT POLICY. Investments specifically permitted by
Texas Eastern's short-term cash and long-term investment policies,
true and correct copies of which have been provided to Administrative
Agent as they are from time to time in effect.
(b) PERMITTED ACQUISITIONS. Any Acquisition so long as (i) no
Event of Default or Potential Default exists immediately before, or
will occur as a result of (or otherwise will exist immediately after),
that Acquisition, (ii) that Acquisition will not cause any of the
representations or warranties (unless they speak to a specific date or
are based on facts which have changed by transactions contemplated or
expressly permitted by this agreement) in the Credit Documents to be
materially incorrect, (iii) that Acquisition is within the same or
substantially the same type of business as the Companies as of the
Closing Date, (iv) the board of directors (or similar governing body)
of the Person to be acquired has not notified any Company or any
Lender that it opposes the offer by any Company to acquire that Person
and that opposition has not been withdrawn, (v) if structured as a
merger or consolidation, SECTION 9.10 is complied with, and (vi)
promptly after that Acquisition is completed, Borrower gives to
Lenders a written description of the acquired entity and of its
business and operations.
For purposes of this SECTION 9, the total amount outstanding of any Investment
by any Person in any other Person is to be determined net of repayments and
dividends to, and sales of securities of the second Person by, the first
Person.
9.8 DISTRIBUTIONS. No Guarantor or Company may:
(a) enter into or permit to exist any arrangement or
agreement (other than this agreement and the Other Credit Agreements)
that prohibits it from paying Distributions to its equity holders; or
(b) declare, make, or pay any Distribution other than (i)
Distributions from any Subsidiary of Borrower to its parent
corporation, (ii) Distributions from Borrower to TEPPCO Partners at
any time when no Potential Default or Event of Default exists or would
exist immediately after that Distribution, and (iii) Distributions by
TEPPCO Partners that (A) will not violate its Constituent Documents
and (B) do not exceed "Available Cash" as defined in TEPPCO Partners'
Agreement of Limited Partnership, in each case, so long as no Event of
Default or Potential Default exists or will exist as a result of it.
9.9 DISPOSITION OF ASSETS. No Company may sell, assign, lease,
transfer, or otherwise dispose of any of its assets (including equity interests
in any other Company) other than (a) dispositions in the ordinary course of
business for a fair and adequate consideration and (b) dispositions of assets
that are obsolete or are no longer in use and are not significant to the
continuation of that Company's business.
9.10 MERGERS, CONSOLIDATIONS, AND DISSOLUTIONS. No Guarantor or
Company may merge or consolidate with any other Person or dissolve except (a)
if no Event of Default or Potential Default exists or will exist as a result of
it, any merger or consolidation, involving one or more Guarantors or Companies
(so long as, if TEPPCO Partners is involved, it is the survivor, and if
Borrower is involved other than with
CREDIT AGREEMENT
32
<PAGE> 38
TEPPCO Partners, it is the survivor), and (b) dissolution of any Guarantor or
Company (other than TEPPCO Partners) if substantially all of its assets have
been conveyed to any other Guarantor or Company or disposed of as permitted in
SECTION 9.9.
9.11 AMENDMENT OF CONSTITUENT DOCUMENTS. No Guarantor or Company shall
materially amend or modify (or permit the material amendment or modification
of) its Constituent Documents.
9.12 FINA/BASF CONTRACTS. Borrower shall neither materially alter,
modify, or change the terms of, or surrender, cancel, or terminate, nor permit
any such material alteration, modification, change, surrender, cancellation, or
termination of, any FINA/BASF Contract.
9.13 ASSIGNMENT. No Guarantor or Company may assign or transfer any of
its Rights, duties, or obligations under any of the Credit Documents.
9.14 FISCAL YEAR AND ACCOUNTING METHODS. No Company may change its
fiscal year for accounting purposes or any material aspect of its method of
accounting except to conform any new Subsidiary's accounting methods to
Borrower's accounting methods.
9.15 NEW BUSINESSES. No Guarantor or Company may engage in any
business except the businesses in which it is presently engaged and any other
reasonably related business.
9.16 GOVERNMENT REGULATIONS. No Guarantor or Company may conduct its
business in a way that it becomes regulated under the Investment Company Act of
1940 or the Public Utility Holding Company Act of 1935.
9.17 SENIOR NOTES. No Company may materially amend or modify the terms
of the Senior Notes or the related Indenture except as permitted by the express
terms thereof.
9.18 STRICT COMPLIANCE. No Guarantor or Company may indirectly do
anything that it may not directly do under any covenant in any Credit Document.
SECTION 10 FINANCIAL COVENANTS. As long as any Lender is committed to lend
under this agreement and until the Obligation has been fully paid and
performed, Borrower covenants and agrees with Administrative Agent and Lenders
that, without first obtaining Required Lenders' consent to the contrary, the
following may not occur or exist as applicable to the Companies and as
determined as of the last day of each fiscal quarter of Borrower:
10.1 MINIMUM NET WORTH. The Companies' stockholders' equity may never
be less than the sum of (a) $187,648,000, plus (b) 15% of the Companies'
cumulative, quarterly Net Income (without deduction for losses) after December
31, 1998, plus (c) 100% of all equity contributions to Borrower after December
31, 1998.
10.2 MAXIMUM FUNDED DEBT TO EBITDA. The ratio of the Companies' Funded
Debt to the Companies' EBITDA may never exceed the following, as applicable:
CREDIT AGREEMENT
33
<PAGE> 39
<TABLE>
<CAPTION>
QUARTER(S) ENDING RATIO
========================= ============
<S> <C>
06/30/99 through 03/31/01 4.50 to 1.00
- ------------------------- ------------
06/30/01 through 12/31/02 4.00 to 1.00
- ------------------------- ------------
03/31/03 and thereafter 3.75 to 1.00
========================= ============
</TABLE>
10.3 FIXED CHARGE COVERAGE RATIO. The ratio of (a) the Companies'
EBITDA to (b) the Companies' Interest Expense and expenditures for the
maintenance or repair of capital assets may never be less than the following,
as applicable:
<TABLE>
<CAPTION>
QUARTER(S) ENDING RATIO
========================= ============
<S> <C>
06/30/99 through 12/31/00 1.75 to 1.00
- ------------------------- ------------
03/31/01 and thereafter 2.00 to 1.00
========================= ============
</TABLE>
SECTION 11 EVENTS OF DEFAULT. The term "EVENT OF DEFAULT" means the occurrence
of any one or more of the following:
11.1 PAYMENT OF OBLIGATION. Borrower's failure or refusal to pay (a)
principal of any Note on or before the date due or (b) any other part of the
Obligation (including fees due under the Credit Documents) on or before three
Business Days after the date due.
11.2 COVENANTS. Any Guarantor's or Company's failure or refusal to
punctually and properly perform, observe, and comply with any covenant (other
than covenants to pay the Obligation) applicable to it:
(a) In SECTIONS 9 or 10; or
(b) In SECTION 8.1, and that failure or refusal continues for
ten days after the earlier of either any Guarantor or any Company
knows of it or any Guarantor or any Company is notified of it by
Administrative Agent or any Lender; or
(c) In any other provision of any Credit Document, and that
failure or refusal continues for 30 days after the earlier of either
any Guarantor or any Company knows of it or any Guarantor or any
Company is notified of it by Administrative Agent or any Lender.
11.3 DEBTOR RELIEF. Any Guarantor or Company (a) is not Solvent, (b)
fails to pay its Debts generally as they become due, (c) voluntarily seeks,
consents to, or acquiesces in the benefit of any Debtor Law, or (d) becomes a
party to or is made the subject of any proceeding (except as a creditor or
claimant) provided for by any Debtor Law (unless, if the proceeding is
involuntary, the applicable petition is dismissed within 60 days after its
filing).
CREDIT AGREEMENT
34
<PAGE> 40
11.4 JUDGMENTS AND ATTACHMENTS. Where the amounts in controversy or of
any judgments, as the case may be, exceed (from and after the Closing Date and
individually or collectively) $25,000,000 for TEPPCO Partners or Borrower or
$1,000,000 for any other Guarantor or Company, such entity fails (a) to have
discharged, within 60 days after its commencement, any attachment,
sequestration, or similar proceeding against any of its assets or (b) to pay
any money judgment against it within ten days before the date on which any of
its assets may be lawfully sold to satisfy that judgment.
11.5 GOVERNMENT ACTION. Where it is a Material-Adverse Event (a) a
final non-appealable order is issued by any Governmental Authority (including
the United States Justice Department) seeking to cause any Guarantor or Company
to divest a significant portion of its assets under any antitrust, restraint of
trade, unfair competition, industry regulation, or similar Legal Requirements,
or (b) any Governmental Authority condemns, seizes, or otherwise appropriates,
or takes custody or control of all or any substantial portion of any
Guarantor's or Company's assets.
11.6 MISREPRESENTATION. Any representation or warranty made by any
Guarantor or Company in any Credit Document at any time proves to have been
materially incorrect when made.
11.7 CHANGE OF CONTROL. Any one or more of the following occurs or
exists: (a) TEPPCO Partners ceases to be the managing member of Borrower; (b)
TEPPCO Partners ceases to own at least 98.9899% of the limited partner
interests in Borrower; or (c) Texas Eastern or any other subsidiary of Duke
Energy Corporation ceases to be the sole general partner of TEPPCO Partners or
Borrower or both.
11.8 OTHER DEBT.
(a) OTHER CREDIT AGREEMENTS. The existence of an "Event of
Default" under either of the Other Credit Agreements.
(b) OTHER. In respect of the Senior Notes or any other Debt
owed by any Guarantor or Company (other than the Obligation)
individually or collectively of at least $10,000,000 (a) any Guarantor
or Company fails to make any payment when due (inclusive of any grace,
extension, forbearance, or similar period), or (b) any default or
other event or condition occurs or exists beyond the applicable grace
or cure period, the effect of which is to cause or to permit any
holder of that Debt to cause (whether or not it elects to cause) any
of that Debt to become due before its stated maturity or regularly
scheduled payment dates, or (c) any of that Debt is declared to be due
and payable or required to be prepaid by any Guarantor or Company
before its stated maturity.
11.9 FINA/BASF CONTRACTS. The existence of any default or other
condition or event under any FINA/BASF Contract that constitutes a
Material-Adverse Event.
11.10 VALIDITY AND ENFORCEABILITY. Once executed, this agreement, any
Note or Guaranty ceases to be in full force and effect in any material respect
or is declared to be null and void or its validity or enforceability is
contested in writing by any Guarantor or Company party to it or any Guarantor
or Company party to it denies in writing that it has any further liability or
obligations under it except in accordance with that document's express
provisions or as the appropriate parties under SECTION 14.8 below may otherwise
agree in writing.
CREDIT AGREEMENT
35
<PAGE> 41
SECTION 12 RIGHTS AND REMEDIES.
12.1 REMEDIES UPON EVENT OF DEFAULT.
(a) DEBTOR RELIEF. If an Event of Default exists under
SECTION 11.3, the commitment to extend credit under this agreement
automatically terminates, the entire unpaid balance of the Principal
Debt and an accrued and unpaid portion of the remaining Obligation
automatically becomes due and payable without any action of any kind
whatsoever.
(b) OTHER EVENTS OF DEFAULT. If any Event of Default exists,
subject to the terms of SECTION 13.5(b), Administrative Agent may
(with the consent of, and must, upon the request of, Required
Lenders), upon notice to Borrower, do any one or more of the
following: (i) If the maturity of the Obligation has not already been
accelerated under SECTION 12.1(a), declare the entire unpaid balance
of all or any part of the Principal Debt and an accrued and unpaid
portion of the remaining Obligation immediately due and payable,
whereupon it is due and payable; (ii) terminate the commitments of
Lenders to extend credit under this agreement; (iii) reduce any claim
to judgment; and (iv) exercise any and all other legal or equitable
Rights afforded by the Credit Documents, by applicable Legal
Requirements, or in equity.
(c) OFFSET. If an Event of Default exists, to the extent
lawful, upon notice to Borrower, each Lender may exercise the Rights
of offset and banker's lien against each and every account and other
property, or any interest therein, which Borrower may now or hereafter
have with, or which is now or hereafter in the possession of, that
Lender to the extent of the full amount of the Obligation then matured
and owed to that Lender.
12.2 COMPANY WAIVERS. To the extent lawful, Borrower waives all other
presentment and demand for payment, protest, notice of intention to accelerate,
notice of acceleration, and notice of protest and nonpayment, and agrees that
its liability with respect to all or any part of the Obligation is not affected
by any renewal or extension in the time of payment of all or any part of the
Obligation, by any indulgence, or by any release or change in any security for
the payment of all or any part of the Obligation.
12.3 NOT IN CONTROL. Nothing in any Credit Documents gives or may be
deemed to give to Administrative Agent or any Lender the Right to exercise
control over any Company's Real Property, other assets, affairs, or management
or to preclude or interfere with any Company's compliance with any Legal
Requirement or require any act or omission by any Company that may be harmful
to Persons or property. Any "Material-Adverse Event" or other materiality or
substantiality qualifier of any representation, warranty, covenant, agreement,
or other provision of any Credit Document is included for credit documentation
purposes only and does not imply or be deemed to mean that Administrative Agent
or any Lender acquiesces in any non-compliance by any Company with any Legal
Requirement, document, or otherwise or does not expect the Companies to
promptly, diligently, and continuously carry out all appropriate removal,
remediation, compliance, closure, or other activities required or appropriate
in accordance with all Environmental Laws. Administrative Agent's and Lenders'
power is limited to the Rights provided in the Credit Documents. All of those
Rights exist solely (and may be exercised in manner calculated by
Administrative Agent or Lenders in their respective good faith business
judgment) to assure payment and performance of the Obligation.
CREDIT AGREEMENT
36
<PAGE> 42
12.4 COURSE OF DEALING. The acceptance by Administrative Agent or
Lenders of any partial payment on the Obligation is not a waiver of any Event
of Default then existing. No waiver by Administrative Agent, Required Lenders,
or Lenders of any Event of Default is a waiver of any other then-existing or
subsequent Event of Default. No delay or omission by Administrative Agent,
Required Lenders, or Lenders in exercising any Right under the Credit Documents
impairs that Right or is a waiver thereof or any acquiescence therein, nor will
any single or partial exercise of any Right preclude other or further exercise
thereof or the exercise of any other Right under the Credit Documents or
otherwise.
12.5 CUMULATIVE RIGHTS. All Rights available to Administrative Agent,
Required Lenders, and Lenders under the Credit Documents are cumulative of and
in addition to all other Rights granted to Administrative Agent, Required
Lenders, and Lenders at law or in equity, whether or not the Obligation is due
and payable and whether or not Administrative Agent, Required Lenders, or
Lenders have instituted any suit for collection, foreclosure, or other action
in connection with the Credit Documents.
12.6 APPLICATION OF PROCEEDS. Any and all proceeds ever received by
Administrative Agent or Lenders from the exercise of any Rights pertaining to
the Obligation shall be applied to the Obligation according to SECTION 3.
12.7 EXPENDITURES BY LENDERS. Any costs and reasonable expenses spent
or incurred by Administrative Agent or any Lender in the exercise of any Right
under any Credit Document is payable by Borrower to Administrative Agent within
ten Business Days after it has given demand and copies of supporting invoices
or statements (if any), becomes part of the Obligation, and bears interest at
the Default Rate from the date spent until the date repaid.
12.8 LIMITATION OF LIABILITY. No Administrative Agent or Lender shall
be liable to any Company for any amounts representing indirect, special, or
consequential damages suffered by any Company, except where such amounts are
based substantially on willful misconduct by that Administrative Agent or that
Lender, but then only to the extent any damages resulting from such wilful
misconduct are covered by that Administrative Agent's and that Lenders'
fidelity bond or other insurance.
SECTION 13 ADMINISTRATIVE AGENT AND LENDERS.
13.1 ADMINISTRATIVE AGENT.
(a) APPOINTMENT. Each Lender appoints Administrative Agent
(including, without limitation, each successor Administrative Agent in
accordance with this SECTION 13) as its nominee and agent to act in
its name and on its behalf (and Administrative Agent and each such
successor accepts that appointment): (i) To act as its nominee and on
its behalf in and under all Credit Documents; (ii) to arrange the
means whereby its funds are to be made available to Borrower under the
Credit Documents; (iii) to take any action that it properly requests
under the Credit Documents (subject to the concurrence of other
Lenders as may be required under the Credit Documents); (iv) to
receive all documents and items to be furnished to it under the Credit
Documents; (v) to be the secured party, mortgagee, beneficiary,
recipient, and similar party in respect of collateral, if any, for the
benefit of Lenders; (vi) to promptly distribute to it all material
information, requests, documents, and items received from Borrower
under the Credit Documents; (vii) to promptly distribute to it its
ratable part of each payment or prepayment (whether voluntary, as
proceeds of collateral upon or after foreclosure, as proceeds of
insurance thereon, or otherwise) in accordance with the terms of
CREDIT AGREEMENT
37
<PAGE> 43
the Credit Documents; and (viii) to deliver to the appropriate Persons
requests, demands, approvals, and consents received from it. However,
Administrative Agent may not be required to take any action that
exposes it to personal liability or that is contrary to any Credit
Document or applicable Legal Requirement.
(b) SUCCESSOR. Administrative Agent may, subject to
Borrower's prior written consent that may not be unreasonably
withheld, assign all of its Rights and obligations as Administrative
Agent under the Credit Documents to any of its Affiliates, which
Affiliate shall then be the successor Administrative Agent under the
Credit Documents. Administrative Agent may also, upon 30 days prior
notice to Borrower, voluntarily resign. If the initial or any
successor Administrative Agent ever ceases to be a party to this
agreement or if the initial or any successor Administrative Agent ever
resigns then Required Lenders shall (which, if no Event of Default or
Potential Default exists, is subject to Borrower's approval that may
not be unreasonably withheld) appoint the successor Administrative
Agent from among Lenders (other than the resigning Administrative
Agent). If Required Lenders fail to appoint a successor Administrative
Agent within 30 days after the resigning Administrative Agent has
given notice of resignation, then the resigning Administrative Agent
may, on behalf of Lenders, upon 30 days prior notice to Borrower,
appoint a successor Administrative Agent, which must be a commercial
bank having a combined capital and surplus of at least $1,000,000,000
(as shown on its most recently published statement of condition). Upon
its acceptance of appointment as successor Administrative Agent, the
successor Administrative Agent succeeds to and becomes vested with all
of the Rights of the prior Administrative Agent, and the prior
Administrative Agent is discharged from its duties and obligations of
Administrative Agent under the Credit Documents, and each Lender shall
execute the documents that any Lender, the resigning Administrative
Agent, or the successor Administrative Agent reasonably request to
reflect the change. After any Administrative Agent's resignation as
Administrative Agent under the Credit Documents, the provisions of
this section inure to its benefit as to any actions taken or not taken
by it while it was Administrative Agent under the Credit Documents.
(c) RIGHTS AS LENDER. Administrative Agent, in its capacity
as a Lender, has the same Rights under the Credit Documents as any
other Lender and may exercise those Rights as if it were not acting as
Administrative Agent. The term "Lender", unless the context otherwise
indicates, includes Administrative Agent. Administrative Agent's
resignation or removal does not impair or otherwise affect any Rights
that it has or may have in its capacity as an individual Lender. Each
Lender and Borrower agree that Administrative Agent is not a fiduciary
for Lenders or for Borrower but is simply acting in the capacity
described in this agreement to alleviate administrative burdens for
Borrower and Lenders, that Administrative Agent has no duties or
responsibilities to Lenders or Borrower except those expressly set
forth in the Credit Documents, and that Administrative Agent in its
capacity as a Lender has the same Rights as any other Lender.
(d) OTHER ACTIVITIES. Administrative Agent or any Lender may
now or in the future be engaged in one or more loan, letter of credit,
leasing, or other financing transactions with Borrower, act as trustee
or depositary for Borrower, or otherwise be engaged in other
transactions with Borrower (collectively, the "OTHER ACTIVITIES") not
the subject of the Credit Documents. Without limiting the Rights of
Lenders specifically set forth in the Credit Documents, neither
Administrative Agent nor any Lender is responsible to account to the
other Lenders for those other activities, and no Lender shall have any
interest in any other Lender's activities, any present or future
guaranties by or for the account of Borrower that are not contemplated
by or included in the Credit Documents, any present or future offset
exercised by Administrative Agent or any Lender in respect of those
CREDIT AGREEMENT
38
<PAGE> 44
other activities, any present or future property taken as security for
any of those other activities, or any property now or hereafter in
Administrative Agent's or any other Lender's possession or control
that may be or become security for the obligations of Borrower arising
under the Credit Documents by reason of the general description of
indebtedness secured or of property contained in any other agreements,
documents, or instruments related to any of those other activities
(but, if any payments in respect of those guaranties or that property
or the proceeds thereof is applied by Administrative Agent or any
Lender to reduce the Obligation, then each Lender is entitled to share
ratably in the application as provided in the Credit Documents).
13.2 EXPENSES. Each Lender shall pay its Commitment Percentage of any
reasonable expenses (including court costs, reasonable attorneys' fees and
other costs of collection) incurred by Administrative Agent or in connection
with any of the Credit Documents if Administrative Agent is not reimbursed from
other sources within 30 days after incurrence. Each Lender is entitled to
receive its Commitment Percentage of any reimbursement that it makes to
Administrative Agent if Administrative Agent is subsequently reimbursed from
other sources.
13.3 PROPORTIONATE ABSORPTION OF LOSSES. Except as otherwise provided
in the Credit Documents, nothing in the Credit Documents gives any Lender any
advantage over any other Lender insofar as the Obligation is concerned or
relieves any Lender from ratably absorbing any losses sustained with respect to
the Obligation (except to the extent unilateral actions or inactions by any
Lender result in Borrower or any other obligor on the Obligation having any
credit, allowance, setoff, defense, or counterclaim solely with respect to all
or any part of that Lender's part of the Obligation).
13.4 DELEGATION OF DUTIES; RELIANCE. Lenders may perform any of their
duties or exercise any of their Rights under the Credit Documents by or through
Administrative Agent, and Lenders and Administrative Agent may perform any of
their duties or exercise any of their Rights under the Credit Documents by or
through their respective Representatives. Administrative Agent, Lenders, and
their respective Representatives (a) are entitled to rely upon (and shall be
protected in relying upon) any written or oral statement believed by it or them
to be genuine and correct and to have been signed or made by the proper Person
and, with respect to legal matters, upon opinion of counsel selected by
Administrative Agent or that Lender (but nothing in this CLAUSE (a) permits
Administrative Agent to rely on (i) oral statements if a writing is required by
this agreement or (ii) any other writing if a specific writing is required by
this agreement), (b) are entitled to deem and treat each Lender as the owner
and holder of its portion of the Obligation for all purposes until, written
notice of the assignment or transfer is given to and received by Administrative
Agent (and any request, authorization, consent, or approval of any Lender is
conclusive and binding on each subsequent holder, assignee, or transferee of or
Participant in that Lender's portion of the Obligation until that notice is
given and received), (c) are not deemed to have notice of the occurrence of an
Event of Default unless a responsible officer of Administrative Agent, who
handles matters associated with the Credit Documents and transactions
thereunder, has actual knowledge or Administrative Agent has been notified by a
Lender or Borrower, and (d) are entitled to consult with legal counsel
(including counsel for Borrower), independent accountants, and other experts
selected by Administrative Agent and are not liable for any action taken or not
taken in good faith by it in accordance with the advice of counsel,
accountants, or experts.
CREDIT AGREEMENT
39
<PAGE> 45
13.5 LIMITATION OF ADMINISTRATIVE AGENT'S LIABILITY.
(a) EXCULPATION. Neither Administrative Agent nor any of its
Affiliates or Representatives will be liable to any Lender for any
action taken or omitted to be taken by it or them under the Credit
Documents in good faith and believed by it or them to be within the
discretion or power conferred upon it or them by the Credit Documents
or be responsible for the consequences of any error of judgment
(except for gross negligence or willful misconduct), and neither
Administrative Agent nor any of its Affiliates or Representatives has
a fiduciary relationship with any Lender by virtue of the Credit
Documents (but nothing in this agreement negates the obligation of
Administrative Agent to account for funds received by it for the
account of any Lender).
(b) INDEMNITY. Unless indemnified to its satisfaction against
loss, cost, liability, and expense, Administrative Agent may not be
compelled to do any act under the Credit Documents or to take any
action toward the execution or enforcement of the powers thereby
created or to prosecute or defend any suit in respect of the Credit
Documents. If Administrative Agent requests instructions from Lenders,
or Required Lenders, as the case may be, with respect to any act or
action in connection with any Credit Document, Administrative Agent is
entitled to refrain (without incurring any liability to any Person by
so refraining) from that act or action unless and until it has
received instructions. In no event, however, may Administrative Agent
or any of its Representatives be required to take any action that it
or they determine could incur for it or them criminal or onerous civil
liability. Without limiting the generality of the foregoing, no Lender
has any right of action against Administrative Agent as a result of
Administrative Agent's acting or refraining from acting under this
agreement in accordance with instructions of Required Lenders.
(c) RELIANCE. Administrative Agent is not responsible to any
Lender or any Participant for, and each Lender represents and warrants
that it has not relied upon Administrative Agent in respect of, (i)
the creditworthiness of Partners or any Company and the risks involved
to that Lender, (ii) the effectiveness, enforceability, genuineness,
validity, or the due execution of any Credit Document, (iii) any
representation, warranty, document, certificate, report, or statement
made therein or furnished thereunder or in connection therewith, (iv)
the adequacy of any collateral now or hereafter securing the
Obligation or the existence, priority, or perfection of any Lien now
or hereafter granted or purported to be granted on the collateral
under any Credit Document, or (v) observation of or compliance with
any of the terms, covenants, or conditions of any Credit Document on
the part of Partners or any Company. EACH LENDER AGREES TO INDEMNIFY
ADMINISTRATIVE AGENT AND ITS REPRESENTATIVES AND HOLD THEM HARMLESS
FROM AND AGAINST (BUT LIMITED TO SUCH LENDER'S COMMITMENT PERCENTAGE
OF) ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE EXPENSES, AND REASONABLE
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER THAT MAY BE IMPOSED ON,
ASSERTED AGAINST, OR INCURRED BY THEM IN ANY WAY RELATING TO OR
ARISING OUT OF THE CREDIT DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY
THEM UNDER THE CREDIT DOCUMENTS IF ADMINISTRATIVE AGENT AND ITS
REPRESENTATIVES ARE NOT REIMBURSED FOR SUCH AMOUNTS BY ANY COMPANY.
ALTHOUGH ADMINISTRATIVE AGENT AND ITS REPRESENTATIVES HAVE THE RIGHT
TO BE INDEMNIFIED UNDER THIS AGREEMENT BY LENDERS FOR ITS OR THEIR OWN
ORDINARY NEGLIGENCE, ADMINISTRATIVE AGENT AND ITS REPRESENTATIVES DO
NOT HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR ITS OR
THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
CREDIT AGREEMENT
40
<PAGE> 46
13.6 EVENT OF DEFAULT. While an Event of Default exists, Lenders agree
to promptly confer in order that Required Lenders or Lenders, as the case may
be, may agree upon a course of action for the enforcement of the Rights of
Lenders. Administrative Agent is entitled to act or refrain from taking any
action (without incurring any liability to any Person for so acting or
refraining) unless and until it has received instructions from Required
Lenders. In actions with respect to any Company's property, Administrative
Agent is acting for the ratable benefit of each Lender.
13.7 LIMITATION OF LIABILITY. No Lender or any Participant will incur
any liability to any other Lender or Participant except for acts or omissions
in bad faith, and neither Administrative Agent nor any Lender or Participant
will incur any liability to any other Person for any act or omission of any
other Lender or any Participant.
13.8 OTHER AGENTS. Two Lenders are named on the cover page, in the
introductory paragraph of this agreement, and on the signature page of this
agreement as "Syndication Agent" or "Documentation Agent," respectively.
Neither of them, in those capacities, assumes any responsibility or obligation
under this agreement for syndication, documentation, servicing, enforcement, or
collection of any of the Obligation, nor any other duties, as agents for
Lenders.
13.9 RELATIONSHIP OF LENDERS. The Credit Documents do not create a
partnership or joint venture among Administrative Agent and Lenders or among
Lenders.
13.10 BENEFITS OF AGREEMENT. None of the provisions of this section
inure to the benefit of any Company or any other Person except Administrative
Agent and Lenders. Therefore, no Company or any other Person is responsible or
liable for, entitled to rely upon, or entitled to raise as a defense, in any
manner whatsoever, the failure of Administrative Agent or any Lender to comply
with these provisions.
SECTION 14 MISCELLANEOUS.
14.1 NONBUSINESS DAYS. Any payment or action that is due under any
Credit Document on a non-Business Day may be delayed until the next-succeeding
Business Day (but interest accrues on any payment until it is made). However,
if the payment concerns a LIBOR-Rate Borrowing and if the next-succeeding
Business Day is in the next calendar month, then that payment must be made on
the next-preceding Business Day.
14.2 COMMUNICATIONS. Unless otherwise specified, any communication
from one party to another under any Credit Document must be in writing (which
may be by fax) to be effective and is deemed given (a) if by fax, when
transmitted to the appropriate fax number (which, without affecting the date
when deemed given, must be promptly confirmed by telephone), (b) if by mail, on
the third Business Day after it is enclosed in an envelope and properly
addressed, stamped, sealed, and deposited in the appropriate official postal
service, or (c) if by any other means, when actually delivered. Until changed
by notice under this agreement, the address, fax number, and telephone number
for Borrower and Administrative Agent are stated beside their respective
signatures to this agreement and for each Lender are stated beside its name on
SCHEDULE 2.
14.3 FORM AND NUMBER. The form, substance, and number of counterparts
of each writing to be furnished under this agreement must be satisfactory to
Administrative Agent and Borrower.
CREDIT AGREEMENT
41
<PAGE> 47
14.4 EXCEPTIONS. An exception to any Credit Document covenant or
agreement does not permit violation of any other Credit Document covenant or
agreement.
14.5 SURVIVAL. All Credit Document provisions survive all closings and
are not affected by any investigation by any party.
14.6 GOVERNING LAW. Unless otherwise specified, each Credit Document
must be construed, and its performance enforced, under the Laws of the State of
Texas and the United States of America.
14.7 INVALID PROVISIONS. If any provision of a Credit Document is
judicially determined to be unenforceable, then all other provisions of it
remain enforceable. If the provision determined to be unenforceable is a
material part of that Credit Document, then, to the extent lawful, it shall be
replaced by a judicially-construed provision that is enforceable but otherwise
as similar in substance and content to the original provision as the context of
it reasonably allows.
14.8 AMENDMENTS, SUPPLEMENTS, WAIVERS, CONSENTS, AND CONFLICTS.
(a) ALL LENDERS. Any amendment or supplement to, or waiver or
consent under, any Credit Document that purports to accomplish any of
the following must be by a writing executed by Borrower and executed
(or approved in writing, as the case may be) by all Lenders: (i)
Extends the due date for, decreases the amount or rate of calculation
of, or waives the late or non-payment of, any scheduled payment or
mandatory prepayment of principal or interest of any of the Obligation
or any fees payable ratably to Lenders under the Credit Documents,
except, in each case, any adjustments or reductions that are
contemplated by any Credit Document; (ii) changes the definition of
"Commitment," "Commitment Percentage," "Default Percentage," or
"Required Lenders," (iii) increases any part of any Lender's
Commitment; (iv) fully or partially releases or amends the Guaranty,
except, in each case, as expressly provided by any Credit Document or
as a result of a merger, consolidation, or dissolution expressly
permitted in the Credit Documents; (v) consents to any assignment by
Borrower under SECTION 14.10(A); or (vi) changes this CLAUSE (A) or
any other matter specifically requiring the consent of all Lenders
under any Credit Document.
(b) ADMINISTRATIVE AGENT. Any amendment or supplement to, or
waiver or consent under, any Credit Document that purports to
accomplish any of the following must be by a writing executed by
Borrower and executed (or approved in writing, as the case may be) by
Administrative Agent: (i) Extends the due date for, decreases the
amount or rate of calculation of, or waives the late or non-payment
of, any fees payable to Administrative Agent under any Credit
Document, except, in each case, any adjustments or reductions that are
contemplated by any Credit Document; (ii) increases Administrative
Agent's obligations beyond its agreements under any Credit Document;
or (iii) changes this CLAUSE (B) or any other matter specifically
requiring the consent of Administrative Agent under any Credit
Document.
(c) REQUIRED LENDERS. Except as specified above (i) the
provisions of this agreement may be amended and supplemented, and
waivers and consents under it may be given, in writing executed by
Borrower and Required Lenders and otherwise supplemented only by
documents delivered in accordance with the express terms of this
agreement, and (ii) each other Credit Document may only be amended and
supplemented, and waivers and consents under it may be given, in a
writing executed by the parties to that Credit Document that is also
executed or approved by
CREDIT AGREEMENT
42
<PAGE> 48
Required Lenders and otherwise supplemented only by documents
delivered in accordance with the express terms of that other Credit
Document.
(d) WAIVERS. No course of dealing or any failure or delay by
Administrative Agent, any Lender, or any of their respective
Representatives with respect to exercising any Right of Administrative
Agent or any Lender under any Credit Document operates as a waiver of
that Right. A waiver must be in writing and signed by the parties
otherwise required by this SECTION 14.8 to be effective and will be
effective only in the specific instance and for the specific purpose
for which it is given.
(e) CONFLICTS. Although this agreement and other Credit
Documents may contain additional and different terms and provisions,
any conflict or ambiguity between the express terms and provisions of
this agreement and express terms and provisions in any other Credit
Document is controlled by the express terms and provisions of this
agreement.
14.9 COUNTERPARTS. Any Credit Document may be executed in a number of
identical counterparts (including, at Administrative Agent's discretion,
counterparts or signature pages executed and transmitted by fax) with the same
effect as if all signatories had signed the same document. All counterparts
must be construed together to constitute one and the same instrument. Certain
parties to this agreement may execute multiple signature pages to this
agreement as well as one or more complete counterparts of it, and Borrower and
Administrative Agent are authorized to execute, where applicable, those
separate signature pages and insert them, along with signature pages of other
parties to this agreement, into one or more complete counterparts of this
agreement that contain signatures of all parties to it.
14.10 PARTIES.
(a) PARTIES AND BENEFICIARIES. Each Credit Document binds and
inures to the parties to it and each of their respective successors
and permitted assigns. Only those Persons may rely upon or raise any
defense about this agreement. No Company may assign or transfer any
Rights or obligations under any Credit Document without first
obtaining all Lenders' consent, and any purported assignment or
transfer without all Lenders' consent is void. No Lender may transfer,
pledge, assign, sell any participation in, or otherwise encumber its
portion of the Obligation except as permitted by CLAUSES (c) or (d)
below, neither of which provisions permit any Lender to transfer,
pledge, assign, sell any participation in, or otherwise encumber any
of its portion of the Obligation for consideration that, directly or
indirectly, reflects a discount from face value (i.e., full principal
amount involved plus accrued and unpaid interest and fees related to
it) without first having offered that transfer, pledge, assignment,
participation, or encumbrance to all other Lenders ratably according
to their Commitment Percentages or Default Percentages, as the case
may be.
(b) RELATIONSHIP OF PARTIES. The relationship between each
Lender and each applicable Company is that of creditor/secured party
and obligor, respectively. Financial covenant and reporting provisions
in the Credit Documents are intended solely for the benefit of each
Lender to protect its interest as a creditor/secured party. Nothing in
the Credit Documents may be construed as (i) permitting or obligating
any Lender to act as a financial or business advisor or consultant to
any Company, (ii) permitting or obligating any Lender to control any
Company or conduct its operations, (iii) creating any fiduciary
obligation of any Lender to any Company, or (iv) creating any
CREDIT AGREEMENT
43
<PAGE> 49
joint venture, agency, or other relationship between the parties
except as expressly specified in the Credit Documents.
(c) PARTICIPATIONS. Any Lender may (subject to the provisions
of this section, in accordance with applicable Legal Requirement, in
the ordinary course of its business, at any time, and with notice to
Borrower) sell to one or more Persons (each a "PARTICIPANT")
participating interests in its portion of the Obligation so long as
the minimum amount of such participating interest is $5,000,000. The
selling Lender remains a "Lender" under the Credit Documents, the
Participant does not become a "Lender" under the Credit Documents, and
the selling Lender's obligations under the Credit Documents remain
unchanged. The selling Lender remains solely responsible for the
performance of its obligations and remains the holder of its share of
the Principal Debt for all purposes under the Credit Documents.
Borrower and Administrative Agent shall continue to deal solely and
directly with the selling Lender in connection with that Lender's
Rights and obligations under the Credit Documents, and each Lender
must retain the sole right and responsibility to enforce due
obligations of the Companies. Participants have no Rights under the
Credit Documents except as provided in the except clause of the last
sentence of this SECTION 14.10(c). Subject to the following, each
Lender may obtain (on behalf of its Participants) the benefits of
SECTION 3 with respect to all participations in its part of the
Obligation outstanding from time to time so long as Borrower is not
obligated to pay any amount in excess of the amount that would be due
to that Lender under SECTION 3 calculated as though no participations
have been made. No Lender may sell any participating interest under
which the Participant has any Rights to approve any amendment,
modification, or waiver of any Credit Document except as to matters in
SECTION 14.8(a)(i) and (ii).
(d) ASSIGNMENTS. Each Lender may make assignments to the
Federal Reserve Bank, provided that any related costs, fees, and
expenses incurred by such Lender in connection with such assignment or
the re-assignment back to it free of any interests of the Federal
Reserve Bank, shall be for the sole account of Lender. Each Lender may
also assign to one or more assignees (each an "ASSIGNEE") all or any
part of its Rights and obligations under the Credit Documents so long
as (i) the assignor Lender and Assignee execute and deliver to
Administrative Agent and Borrower for their consent and acceptance
(that may not be unreasonably withheld in any instance and is not
required by Borrower if an Event of Default exists) an assignment and
assumption agreement in substantially the form of EXHIBIT E (an
"ASSIGNMENT") and pay to Administrative Agent a processing fee of
$3,500 (which payment obligation is the sole liability, joint and
several, of that Lender and Assignee), (ii) the assignment must be for
a minimum total Commitment of $5,000,000, and, if the assigning Lender
retains any Commitment, it must be a minimum total Commitment of
$10,000,000, and (iii) the conditions for that assignment set forth in
the applicable Assignment are satisfied. The Effective Date in each
Assignment must (unless a shorter period is agreeable to Borrower and
Administrative Agent) be at least five Business Days after it is
executed and delivered by the assignor Lender and the Assignee to
Administrative Agent and Borrower for acceptance. Once that Assignment
is accepted by Administrative Agent and Borrower, and subject to all
of the following occurring, then, on and after the Effective Date
stated in it (i) the Assignee automatically becomes a party to this
agreement and, to the extent provided in that Assignment, has the
Rights and obligations of a Lender under the Credit Documents, (ii) in
the case of an Assignment covering all of the remaining portion of the
assignor Lender's Rights and obligations under the Credit Documents,
the assignor Lender ceases to be a party to the Credit Documents,
(iii) Borrower shall execute and deliver to the assignor Lender and
the Assignee the appropriate Notes in accordance
CREDIT AGREEMENT
44
<PAGE> 50
with this agreement following the transfer, (iv) upon delivery of the
Notes under CLAUSE (III) preceding, the assignor Lender shall return
to Borrower all Notes previously delivered to that Lender under this
agreement, and (v) SCHEDULE 2 is automatically deemed to be amended to
reflect the name, address, telecopy number, and Commitment of the
Assignee and the remaining Commitment (if any) of the assignor Lender,
and Administrative Agent shall prepare and circulate to Borrower and
Lenders an amended SCHEDULE 2 reflecting those changes.
Notwithstanding the foregoing, no Assignee may be recognized as a
party to the Credit Documents (and the assigning Lender shall continue
to be treated for all purposes as the party to the Credit Documents)
with respect to the Rights and obligations assigned to that Assignee
until the actions described in CLAUSES (iii) and (iv) have occurred.
The Obligation is registered on the books of Borrower as to both
principal and any stated interest, and transfers of (as opposed to
participations in) principal and interest of the Obligation may only
be made in accordance with this section.
14.11 VENUE, SERVICE OF PROCESS, AND JURY TRIAL. BORROWER IN EACH CASE
FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, IRREVOCABLY (A) SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS IN TEXAS, (B) WAIVES,
TO THE FULLEST EXTENT LAWFUL, ANY OBJECTION THAT IT MAY NOW OR IN THE FUTURE
HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION
WITH ANY CREDIT DOCUMENT AND THE OBLIGATION BROUGHT IN THE DISTRICT COURTS OF
DALLAS COUNTY, TEXAS, OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF TEXAS, DALLAS DIVISION, (C) WAIVES ANY CLAIMS THAT ANY LITIGATION
BROUGHT IN ANY OF THE FOREGOING COURTS HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM, (D) CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THOSE COURTS IN ANY
LITIGATION BY THE MAILING OF COPIES OF THAT PROCESS BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, POSTAGE PREPAID, BY HAND DELIVERY, OR BY DELIVERY BY A
NATIONALLY-RECOGNIZED COURIER SERVICE, AND SERVICE SHALL BE DEEMED COMPLETE
UPON DELIVERY OF THE LEGAL PROCESS AT ITS ADDRESS FOR PURPOSES OF THIS
AGREEMENT, (E) AGREES THAT ANY LEGAL PROCEEDING AGAINST ANY PARTY TO ANY CREDIT
DOCUMENT ARISING OUT OF OR IN CONNECTION WITH THE CREDIT DOCUMENTS OR THE
OBLIGATION MAY BE BROUGHT IN ONE OF THE FOREGOING COURTS, AND (F) IRREVOCABLY
WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY CREDIT
DOCUMENT. The scope of each of the foregoing waivers is intended to be all
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including, without
limitation, contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. BORROWER ACKNOWLEDGES THAT THESE WAIVERS ARE A
MATERIAL INDUCEMENT TO ADMINISTRATIVE AGENT'S AND EACH LENDER'S AGREEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT ADMINISTRATIVE AGENT AND EACH LENDER
HAS ALREADY RELIED ON THESE WAIVERS IN ENTERING INTO THIS AGREEMENT, AND THAT
ADMINISTRATIVE AGENT AND EACH LENDER WILL CONTINUE TO RELY ON EACH OF THESE
WAIVERS IN RELATED FUTURE DEALINGS. BORROWER FURTHER WARRANTS AND REPRESENTS
THAT IT HAS REVIEWED THESE WAIVERS WITH ITS LEGAL COUNSEL, AND THAT IT
KNOWINGLY AND VOLUNTARILY AGREES TO EACH WAIVER FOLLOWING CONSULTATION WITH
LEGAL COUNSEL. The waivers in this section are irrevocable, meaning that they
may not be modified either orally or in writing, and these waivers apply to any
future renewals, extensions, amendments, modifications, or replacements in
respect of the applicable Credit Document. In connection with any Litigation,
this agreement may be filed as a written consent to a trial by the court.
14.12 NON-RECOURSE TO TEXAS EASTERN. NEITHER TEXAS EASTERN NOR ANY
DIRECTOR, OFFICER, EMPLOYEE, STOCKHOLDER, OR AGENT OF TEXAS EASTERN SHALL HAVE
ANY LIABILITY FOR ANY
CREDIT AGREEMENT
45
<PAGE> 51
OBLIGATIONS OF BORROWER OR A GUARANTOR UNDER THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT OR FOR ANY CLAIM BASED ON, IN RESPECT OF OR BY REASON OF, SUCH
OBLIGATIONS OR THEIR CREATION, INCLUDING ANY LIABILITY BASED UPON, OR ARISING
BY OPERATION OF LAW AS A RESULT OF, THE STATUS OR CAPACITY OF TEXAS EASTERN AS
THE "GENERAL PARTNER" OF TEPPCO PARTNERS AND BORROWER. BY EXECUTING THIS
AGREEMENT, ADMINISTRATIVE AGENT AND EACH LENDER, EXPRESSLY WAIVES AND RELEASES
ALL SUCH LIABILITY. THIS WAIVER AND RELEASE SHALL BE A PART OF THE
CONSIDERATION FOR TEPPCO PARTNERS' EXECUTION AND DELIVERY OF ITS GUARANTY.
14.13 CONFIDENTIALITY. Administrative Agent and each Lender agrees (on
behalf of itself and each of its Affiliates, and its and each of their
respective Representatives) to keep and maintain any non-public information
supplied to it by or on behalf of any Company which is identified as being
confidential and shall not use any such information for any purpose other than
in connection with the administration or enforcement of this transaction.
However, nothing herein shall limit the disclosure of any such information (a)
to the extent required by Legal Requirement, (b) to counsel of Administrative
Agent or any Lender in connection with the transactions provided for in this
agreement, (c) to bank examiners, auditors and accountants, or (d) any Assignee
or Participant (or prospective Assignee or Participant) so long as such
Assignee or Participant (or prospective Assignee or Participant) first enters
into a confidentiality agreement with Administrative Agent or such Lender.
14.14 ENTIRETY. THE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN BORROWER, LENDERS, AND ADMINISTRATIVE AGENT WITH RESPECT TO THEIR
SUBJECT MATTER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE FOLLOWS.
CREDIT AGREEMENT
46
<PAGE> 52
EXECUTED as of the date first stated in this Credit Agreement.
<TABLE>
<S> <C>
TE Products Pipeline Company, TE PRODUCTS PIPELINE COMPANY,
Limited Partnership LIMITED PARTNERSHIP, as Borrower
America Tower Bldg.
2929 Allen Parkway, Suite 3200 By: TEXAS EASTERN PRODUCTS
Houston, TX 77019 PIPELINE COMPANY, as General
Attn: Charles H. Leonard, Partner
Senior Vice President, Chief Financial
Officer, & Treasurer By /s/ CHARLES H. LEONARD
Phone: 713-759-3999 -------------------------------
Fax: 713-759-3957 Charles H. Leonard, Senior Vice
President, Chief Financial
Officer, and Treasurer
SunTrust Bank, Atlanta SUNTRUST BANK, ATLANTA, as
303 Peachtree Street, N.E. Administrative Agent and a Lender
3rd Floor
Atlanta, GA 30308
Attn: Steve Newby By /s/ RYAN SIMMONS
Assistant Vice President ----------------------------------
Phone: 404-658-4916 Name: Ryan Simmons
Fax: 404-827-6270 -----------------------------
Title: Officer
----------------------------
By /s/ DEBORAH S. ARMSTRONG
----------------------------------
Name: Deborah S. Armstrong
-----------------------------
Title: Vice President
----------------------------
THE FIRST NATIONAL BANK OF FIRST UNION NATIONAL BANK, as
CHICAGO, as Syndication Agent and a Lender Documentation Agent and a Lender
By /s/ JOSEPH C. GIAMPETRONI By /s/ RUSSELL CLINGMAN
---------------------------------- ----------------------------------
Name: Joseph C. Giampetroni Name: Russell Clingman
----------------------------- -----------------------------
Title: Vice President Title: Vice President
---------------------------- ----------------------------
THE BANK OF NEW YORK, as a Lender HIBERNIA NATIONAL BANK, as a Lender
By /s/ RAYMOND J. PALMER By /s/ TAMMY ANGELETY
---------------------------------- ----------------------------------
Name: Raymond J. Palmer Name: Tammy Angelety
----------------------------- -----------------------------
Title: Vice President Title: Assistant Vice President
---------------------------- ----------------------------
THE FUJI BANK, LIMITED, as a Lender
By /s/ RAYMOND VENTURA
----------------------------------
Name: Raymond Ventura
-----------------------------
Title: Vice President and Manager
----------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.27
CREDIT AGREEMENT
between
TEPPCO CRUDE OIL, LLC,
as Borrower,
SUNTRUST BANK, ATLANTA,
as Administrative Agent,
SUNTRUST EQUITABLE SECURITIES CORPORATION,
as Sole Lead Arranger,
THE FIRST NATIONAL BANK OF CHICAGO,
as Syndication Agent,
FIRST UNION NATIONAL BANK,
as Documentation Agent,
and
CERTAIN LENDERS,
as Lenders
$30,000,000
MAY 17, 1999
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
PREPARED BY HAYNES AND BOONE, L.L.P.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1 DEFINITIONS AND TERMS...........................................................................1
1.1 Definitions.....................................................................................1
1.2 Time References................................................................................11
1.3 Other References...............................................................................11
1.4 Accounting Principles..........................................................................12
SECTION 2 COMMITMENT.....................................................................................12
2.1 Conditions.....................................................................................12
2.2 Borrowing Procedure............................................................................12
2.3 Effect of Requests.............................................................................13
2.4 Termination....................................................................................13
SECTION 3 PAYMENT TERMS..................................................................................13
3.1 Notes and Payments.............................................................................13
3.2 Interest and Principal Payments................................................................13
3.3 Interest Options...............................................................................14
3.4 Quotation of Rates.............................................................................14
3.5 Default Rate...................................................................................14
3.6 Interest Recapture.............................................................................14
3.7 Interest Calculations..........................................................................14
3.8 Maximum Rate...................................................................................14
3.9 Interest Periods...............................................................................15
3.10 Conversions....................................................................................15
3.11 Order of Application...........................................................................15
3.12 Sharing of Payments, Etc.......................................................................16
3.13 Offset.........................................................................................16
3.14 Booking Borrowings.............................................................................16
3.15 Basis Unavailable or Inadequate for LIBOR Rate.................................................16
3.16 Additional Costs...............................................................................17
3.17 Change in Legal Requirements...................................................................18
3.18 Funding Loss...................................................................................18
3.19 Foreign Lenders, Participants, and Assignees...................................................18
3.20 Discharge and Reinstatement....................................................................18
SECTION 4 FEES...........................................................................................19
4.1 Treatment of Fees..............................................................................19
4.2 Commitment Fee.................................................................................19
SECTION 5 CONDITIONS PRECEDENT...........................................................................19
SECTION 6 GUARANTIES.....................................................................................19
SECTION 7 REPRESENTATIONS AND WARRANTIES.................................................................19
7.1 Purpose........................................................................................20
7.2 Subsidiaries...................................................................................20
7.3 Existence, Authority, and Good Standing........................................................20
7.4 Authorization and Contravention................................................................20
7.5 Binding Effect.................................................................................20
7.6 Current Financials.............................................................................20
</TABLE>
CREDIT AGREEMENT
(i)
<PAGE> 3
<TABLE>
<S> <C>
7.7 Solvency.......................................................................................20
7.8 Litigation.....................................................................................20
7.9 Taxes..........................................................................................21
7.10 Environmental Matters..........................................................................21
7.11 Employee Plans.................................................................................21
7.12 Debt...........................................................................................21
7.13 Properties; Liens..............................................................................21
7.14 Government Regulations.........................................................................21
7.15 Transactions with Affiliates...................................................................22
7.16 Leases.........................................................................................22
7.17 Labor Matters..................................................................................22
7.18 Intellectual Property..........................................................................22
7.19 Y2K Issue......................................................................................22
7.20 Full Disclosure................................................................................22
SECTION 8 AFFIRMATIVE COVENANTS..........................................................................22
8.1 Certain Items Furnished........................................................................22
8.2 Use of Credit..................................................................................24
8.3 Books and Records..............................................................................24
8.4 Inspections....................................................................................24
8.5 Taxes..........................................................................................24
8.6 Payment of Obligation..........................................................................25
8.7 Expenses.......................................................................................25
8.8 Maintenance of Existence, Assets, and Business.................................................25
8.9 Insurance......................................................................................25
8.10 Environmental Matters..........................................................................25
8.11 INDEMNIFICATION................................................................................25
SECTION 9 NEGATIVE COVENANTS.............................................................................26
9.1 Debt...........................................................................................27
9.2 Prepayments....................................................................................27
9.3 Liens..........................................................................................27
9.4 Employee Plans.................................................................................28
9.5 Transactions with Affiliates...................................................................28
9.6 Compliance with Legal Requirements and Documents...............................................28
9.7 Investments....................................................................................29
9.8 Distributions..................................................................................29
9.9 Disposition of Assets..........................................................................29
9.10 Mergers, Consolidations, and Dissolutions......................................................29
9.11 Amendment of Constituent Documents.............................................................30
9.12 Assignment.....................................................................................30
9.13 Fiscal Year and Accounting Methods.............................................................30
9.14 New Businesses.................................................................................30
9.15 Government Regulations.........................................................................30
9.16 Strict Compliance..............................................................................30
SECTION 10 FINANCIAL COVENANTS............................................................................30
10.1 Minimum Net Worth..............................................................................30
10.2 Maximum Funded Debt to EBITDA..................................................................30
10.3 Fixed Charge Coverage Ratio....................................................................30
SECTION 11 EVENTS OF DEFAULT..............................................................................30
</TABLE>
CREDIT AGREEMENT
(ii)
<PAGE> 4
<TABLE>
<S> <C>
11.1 Payment of Obligation..........................................................................30
11.2 Covenants......................................................................................31
11.3 Debtor Relief..................................................................................31
11.4 Judgments and Attachments......................................................................31
11.5 Government Action..............................................................................31
11.6 Misrepresentation..............................................................................31
11.7 Change of Control..............................................................................31
11.8 Other Debt.....................................................................................31
11.9 Validity and Enforceability....................................................................32
SECTION 12 RIGHTS AND REMEDIES............................................................................32
12.1 Remedies Upon Event of Default.................................................................32
12.2 Company Waivers................................................................................32
12.3 Not in Control.................................................................................33
12.4 Course of Dealing..............................................................................33
12.5 Cumulative Rights..............................................................................33
12.6 Application of Proceeds........................................................................33
12.7 Expenditures by Lenders........................................................................33
12.8 Limitation of Liability........................................................................33
SECTION 13 ADMINISTRATIVE AGENT AND LENDERS...............................................................34
13.1 Administrative Agent...........................................................................34
13.2 Expenses.......................................................................................35
13.3 Proportionate Absorption of Losses.............................................................35
13.4 Delegation of Duties; Reliance.................................................................35
13.5 Limitation of Administrative Agent's Liability.................................................36
13.6 Event of Default...............................................................................37
13.7 Limitation of Liability........................................................................37
13.8 Other Agents...................................................................................37
13.9 Relationship of Lenders........................................................................37
13.10 Benefits of Agreement..........................................................................37
SECTION 14 MISCELLANEOUS..................................................................................37
14.1 Nonbusiness Days...............................................................................37
14.2 Communications.................................................................................38
14.3 Form and Number................................................................................38
14.4 Exceptions.....................................................................................38
14.5 Survival.......................................................................................38
14.6 Governing Law..................................................................................38
14.7 Invalid Provisions.............................................................................38
14.8 Amendments, Supplements, Waivers, Consents, and Conflicts......................................38
14.9 Counterparts...................................................................................39
14.10 Parties........................................................................................39
14.11 Venue, Service of Process, and Jury Trial......................................................41
14.12 NON-RECOURSE TO TEXAS EASTERN..................................................................42
14.13 Confidentiality................................................................................42
14.14 Entirety.......................................................................................42
</TABLE>
CREDIT AGREEMENT
(iii)
<PAGE> 5
SCHEDULES AND EXHIBITS
Schedule 2 - Lenders and Commitments
Schedule 5 - Closing Documents
Schedule 7.2 - Companies and Names
Schedule 7.8 - Litigation
Schedule 7.10 - Environmental Matters
Schedule 7.11 - Employee-Plan Matters
Schedule 7.12 - Existing Debt
Schedule 7.13 - Existing Liens
Schedule 7.15 - Affiliate Transactions
Exhibit A - Note
Exhibit B - Guaranty
Exhibit C-1 - Borrowing Request
Exhibit C-2 - Conversion Notice
Exhibit C-3 - Compliance Certificate (TCTM)
Exhibit C-4 - Compliance Certificate (other)
Exhibit D - Opinion of Counsel
Exhibit E - Assignment and Assumption Agreement
CREDIT AGREEMENT
(iv)
<PAGE> 6
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of May 17, 1999, between TEPPCO
CRUDE OIL, LLC, a Delaware limited liability company ("BORROWER"), Lenders
(defined below), SUNTRUST BANK, ATLANTA, as Administrative Agent for Lenders,
THE FIRST NATIONAL BANK OF CHICAGO, as Syndication Agent for Lenders, and FIRST
UNION NATIONAL BANK, as Documentation Agent for Lenders.
Borrower has requested that Lenders from time to time extend revolving
credit loans to Borrower not to exceed a total outstanding principal amount of
$30,000,000 (as that amount may be reduced or cancelled pursuant to this
agreement) to be used by Borrower as provided in SECTION 7.1. Lenders are
willing to extend the requested loans on the terms and conditions of this
agreement.
ACCORDINGLY, for adequate and sufficient consideration, Borrower,
Lenders, and Administrative Agent agree as follows:
SECTION 1 DEFINITIONS AND TERMS.
1.1 DEFINITIONS. As used in the Credit Documents:
"ADMINISTRATIVE AGENT" means, at any time, SunTrust Bank, Atlanta (or
its successor appointed under SECTION 13), acting as administrative agent for
Lenders under the Credit Documents.
"AFFILIATE" of a Person means any other individual or entity who
directly or indirectly controls, is controlled by, or is under common control
with that Person. For purposes of this definition (a) "control," "controlled
by," and "under common control with" mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of voting securities or other interests, by contract, or
otherwise), and (b) Texas Eastern, TEPPCO Partners, and all of the Subsidiaries
of TEPPCO Partners are Affiliates with each other.
"APPLICABLE MARGIN" means, for any day, the margin of interest over
the Base Rate, or the LIBOR Rate, as the case may be, that is applicable when
the Base Rate or LIBOR Rate, as applicable, is determined under this agreement.
(a) The Applicable Margin is subject to adjustment (upwards
or downwards, as appropriate) based on the ratio of the Companies'
Funded Debt to EBITDA as stated in the table below.
(b) For purposes of the definitions of "Applicable Margin"
and "Applicable Percentage," EBITDA and Funded Debt are calculated for
the Companies' most recently completed fiscal quarter.
(c) The Applicable Margin and Applicable Percentage in effect
at any time (whether in the middle of an Interest Period or otherwise)
are based upon the ratio of the Companies' Funded Debt to EBITDA as
determined from the Current Financials and related Compliance
Certificate then
CREDIT AGREEMENT
<PAGE> 7
most recently received by Administrative Agent, effective as of the
date received by Administrative Agent.
(d) If Borrower fails to timely furnish to Administrative
Agent any Financials and related Compliance Certificate as required by
this agreement, then the maximum Applicable Margin and Applicable
Percentage apply from the date those Financials and related Compliance
Certificate are required to be delivered and remain in effect until
Borrower furnishes them to Administrative Agent.
<TABLE>
<CAPTION>
APPLICABLE APPLICABLE
MARGIN FOR MARGIN FOR
RATIO OF FUNDED DEBT TO EBITDA BASE-RATE LIBOR-RATE
BORROWINGS BORROWINGS
================================== ========== ==========
<S> <C> <C>
Greater than 1.00 to 1.00 0.500% 1.500%
- ---------------------------------- ------ -----
Less than or equal to 1.00 to 1.00 0.250% 1.250%
================================== ====== =====
</TABLE>
"APPLICABLE PERCENTAGE" means, for any day, a commitment-fee
percentage applicable under SECTION 4.2, subject to adjustment (upwards or
downwards, as appropriate), based on the ratio of the Companies' Funded Debt to
EBITDA, as follows:
<TABLE>
<CAPTION>
RATIO OF FUNDED DEBT TO APPLICABLE
EBITDA PERCENTAGE
================================== ===========
<S> <C>
Greater than 1.00 to 1.00 0.375%
- ---------------------------------- -----
Less than or equal to 1.00 to 1.00 0.250%
================================== ======
</TABLE>
The Applicable Percentage is calculated and determined as further provided in
the definition of the term "Applicable Margin."
"ASSIGNEE" is defined in SECTION 14.10(d).
"ASSIGNMENT" is defined in SECTION 14.10(d).
"BASE RATE" means, for any day, the greater of either (a) the annual
interest rate most recently announced by Administrative Agent as its prime
lending rate (which may not necessarily represent the lowest or best rate
actually charged to any customer, as Administrative Agent may make commercial
loans or other loans at interest rates higher or lower than that prime lending
rate) in effect at its principal office in Atlanta, Georgia, which rate may
automatically increase or decrease without notice to Borrower or any other
Person, or (b) the sum of the Fed-Funds Rate plus 0.5%.
"BASE-RATE BORROWING" means a Borrowing bearing interest at the sum of
the Base Rate plus the Applicable Margin.
"BORROWER" is defined in the preamble to this agreement.
CREDIT AGREEMENT
2
<PAGE> 8
"BORROWING" means any amount disbursed under the Credit Documents by
one or more Lenders to or on behalf of Borrower under the Credit Documents,
either as an original disbursement of funds, a renewal, extension, or
continuation of an amount outstanding.
"BORROWING DATE" is defined in SECTION 2.2(a).
"BORROWING REQUEST" means a request, subject to SECTION 2.2(a),
substantially in the form of EXHIBIT C-1.
"BUSINESS DAY" means (a) for purposes of any LIBOR-Rate Borrowing, a
day when commercial banks are open for international business in London,
England, and (b) for all other purposes, any day other than Saturday, Sunday,
and any other day that commercial banks are authorized by Legal Requirement to
be closed in Georgia or New York.
"CAPITAL LEASE" means any capital lease or sublease that is required
by GAAP to be capitalized on a balance sheet.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. ss.ss.9601 et seq.
"CLOSING DATE" means the date agreed to by Borrower and Administrative
Agent for disbursement of the initial Borrowing under this agreement, which
must be a Business Day occurring no later than June 1, 1999, but not before all
of the conditions precedent in this agreement for that disbursement have been
satisfied.
"COMMITMENT" means, at any time and for any Lender, the amount stated
beside that Lender's name on the most-recently amended SCHEDULE 2.
"COMMITMENT PERCENTAGE" means, for any Lender and at any time, the
proportion (stated as a percentage) that its Commitment bears to the total
Commitments of all Lenders.
"COMPANIES" means, at any time, TCTM and each of its Subsidiaries.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of EXHIBIT C-3 and signed by a Responsible Officer on behalf of TCTM or the
form of EXHIBIT C-4 signed by a Responsible Officer on behalf of TEPPCO
Partners or Borrower, as the case may be.
"CONSTITUENT DOCUMENTS" means, for any Person, the documents for its
formation and organization, which, for example, for a (a) corporation are its
corporate charter and bylaws, (b) for a partnership is its partnership
agreement, (c) for a limited-liability company are its certificate of
organization and regulations, and (d) for a trust is the trust agreement or
indenture under which it is created.
"CONVERSION NOTICE" means a request, subject to SECTION 3.10,
substantially in the form of EXHIBIT C-2.
"CREDIT DOCUMENTS" means (a) this agreement, certificates, and reports
delivered by or on behalf of any Company, TEPPCO Partners, or Texas Eastern
under this agreement, and exhibits and schedules to
CREDIT AGREEMENT
3
<PAGE> 9
this agreement, (b) all agreements, documents, and instruments in favor of
Administrative Agent or Lenders (or Administrative Agent on behalf of Lenders)
ever delivered by or on behalf of any Company, TEPPCO Partners, or Texas
Eastern in connection with or under this agreement or otherwise delivered by or
on behalf of any Company, TEPPCO Partners, or Texas Eastern in connection with
all or any part of the Obligation, and (c) all renewals, extensions, and
restatements of, and amendments and supplements to, any of the foregoing.
"CURRENT FINANCIALS" means, unless otherwise specified, either (a)
TEPPCO Partners's consolidated Financials for the year ended December 31, 1998,
or (b) at any time after annual Financials are first delivered under SECTION
8.1, TEPPCO Partners's annual Financials then most recently delivered to
Lenders under SECTION 8.1(a), together with TEPPCO Partners's quarterly
Financials then most recently delivered to Lenders under SECTION 8.1(b).
"DEBT" means -- for any Person, at any time, and without duplication
- -- the sum of (a) all Funded Debt of that Person, plus (b) all obligations
arising under acceptance facilities or facilities for the discount or sale of
accounts receivable, plus (c) all direct or contingent obligations in respect
of letters of credit, plus (d) each obligation for Hedging Exposure of
$10,000,000 or more, plus (e) all guaranties, endorsements, and other
contingent obligations for the obligations in respect of obligations of other
persons or entities of the nature described in CLAUSES (a) through (d) above.
"DEBTOR LAWS" means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments, or similar Legal Requirements affecting creditors' Rights.
"DEFAULT PERCENTAGE" means, for any Lender and at any time, the
proportion (stated as a percentage) that the Principal Debt owed to it bears to
the Principal Debt owed all Lenders.
"DEFAULT RATE" means, for any day, an annual interest rate equal from
day to day to the lesser of either (a) the sum of the Base Rate plus 2% or (b)
the Maximum Rate.
"DISTRIBUTION" means, with respect to any shares of any capital stock,
other equity securities, or ownership interests issued by a Person (a) the
retirement, redemption, purchase, or other acquisition for value of those
securities or interests, (b) the declaration or payment of any dividend on or
with respect to those securities or interests, (c) any Investment by that
Person in the holder of any of those securities or interests, and (d) any other
payment by that Person with respect to those securities or interests.
"EBITDA" means:
(a) For any period consisting of four consecutive fiscal
quarters taken as a single accounting period, for any Person, and
without duplication -- the sum of (i) Net Income plus (ii) to the
extent actually deducted in determining Net Income, Interest Expense,
Tax Expense, depreciation, and amortization;
(b) For purposes of calculating EBITDA in respect of any
entity that became a Subsidiary of that Person or was merged with or
consolidated into that Person during that period, EBITDA of that
Person shall include the EBITDA of that entity during that period and
before the
CREDIT AGREEMENT
4
<PAGE> 10
date of that acquisition, merger, or consolidation for a total period
of four consecutive fiscal quarters; and
(c) For purposes of calculating EBITDA in respect of Borrower
(i) Borrower's EBITDA for the two fiscal quarters ending June 30,
1999, shall be multiplied by two, and (ii) Borrower's EBITDA for the
three consecutive fiscal quarters ending September 30, 1999, shall be
multiplied by four-thirds.
"EMPLOYEE PLAN" means any employee-pension-benefit plan covered by
Title IV of ERISA and established or maintained by Guarantor or any ERISA
Affiliate (other than a Multiemployer Plan).
"ENVIRONMENTAL LAW" means any applicable Legal Requirement that
relates to protection of the environment or to the regulation of any Hazardous
Substances, including CERCLA, the Hazardous Materials Transportation Act (49
U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. Section 11001 et seq.), the
Safe Drinking Water Act (42 U.S.C. Section 201 and Section 300f et seq.), the
Rivers and Harbors Act (33 U.S.C. Section 401 et seq.), the Oil Pollution Act
(33 U.S.C. Section 2701 et seq.), analogous state and local Legal Requirements,
and any analogous future enacted or adopted Legal Requirement.
"ENVIRONMENTAL LIABILITY" means any liability, loss, fine, penalty,
charge, lien, damage, cost, or expense of any kind to the extent that it
results (a) from the violation of any Environmental Law, (b) from the Release
or threatened Release of any Hazardous Substance, or (c) from actual or
threatened damages to natural resources.
"ENVIRONMENTAL PERMIT" means any permit, or license, from any Person
defined in CLAUSE (a) of the definition of Governmental Authority that is
required under any Environmental Law for the lawful conduct of any business,
process, or other activity.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" means any Person that, for purposes of Title IV of
ERISA, is a member of any Company's controlled group or is under common control
with any Company within the meaning of Section 414 of the IRC.
"EVENT OF DEFAULT" is defined in SECTION 11.
"FED-FUNDS RATE" means, for any day, the annual rate (rounded upwards,
if necessary, to the nearest 0.01%) determined (which determination is
conclusive and binding, absent manifest error) by Administrative Agent to be
equal to (a) the weighted average of the rates on overnight federal-funds
transactions with member banks of the Federal Reserve System arranged by
federal-funds brokers on that day, as published by the Federal Reserve Bank of
New York on the next Business Day, or (b) if those rates are not published for
any day, the average of the quotations at approximately 10:00 a.m. received by
Administrative Agent from three federal-funds brokers of recognized standing
selected by Administrative Agent in its sole discretion.
CREDIT AGREEMENT
5
<PAGE> 11
"FINANCIALS" of a Person means balance sheets, profit and loss
statements, reconciliations of capital and surplus, and statements of cash flow
prepared (a) according to GAAP (subject to year end audit adjustments with
respect to interim Financials) and (b) except as stated in SECTION 1.4, in
comparative form to prior year-end figures or corresponding periods of the
preceding fiscal year or other relevant period, as applicable.
"FUNDED DEBT" means -- for any Person, at any time, and without
duplication -- the sum of (a) the unpaid principal amount or component of all
obligations for borrowed money, plus (b) the unpaid principal amount or
component of all obligations evidenced by bonds, debentures, notes or similar
instruments, plus (c) the unpaid principal amount or component of all
obligations to pay the deferred purchase price of property or service except
trade accounts payable arising in the ordinary course of business, plus (d) in
respect of all obligations that are secured (or for which the holder of any
such obligation has an existing Right, contingent or otherwise, to be so
secured) by any Lien on property owned or acquired by that Person, the lesser
of either the unpaid amount of all of those obligations from time to time
outstanding or the fair- market value of the property securing all of those
obligations, liabilities secured (or for which the holder of such obligations
has an existing Right, contingent or otherwise, to be so secured) by any Lien
existing on property owned or acquired by that Person, plus (e) all Capital
Lease obligations, plus (f) the unpaid principal amount or component of all
obligations under synthetic leases, plus (g) the unpaid principal amount or
component of all guaranties, endorsements, and other contingent obligations in
respect of obligations of other persons or entities of the nature described in
CLAUSES (A) through (F) above.
"FUNDING LOSS" means any loss, expense, or reduction in yield (but not
any Applicable Margin) that (a) any Lender reasonably incurs because (i)
Borrower fails or refuses (for any reason whatsoever other than a default by
Administrative Agent or the Lender claiming that loss, expense, or reduction in
yield) to take any Borrowing that it has requested under this agreement, or
(ii) Borrower voluntarily or involuntarily prepays or pays any LIBOR-Rate
Borrowing or converts any LIBOR-Rate Borrowing to a Borrowing of another Type,
in each case, other than on the last day of the applicable Interest Period, and
(b) shall be determined by the relevant Lender to be the excess, if any, of (i)
the amount of interest which would have accrued on the principal amount of such
Borrowing had such event not occurred, at the LIBOR Rate, for the period from
the date of the event to the last day of the then current Interest Period (or,
in the case of a failure to borrow, convert, or continue, for the period that
would have been the Interest Period for that Borrowing), over (ii) the amount
of interest which would accrue on that principal amount for that period at the
interest rate which that Lender would bid were it to bid, at the commencement
of that period, for dollar deposits of a comparable amount and period from
other banks in the London interbank market.
"GAAP" means generally accepted accounting principles of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board that are applicable
from time to time.
"GOVERNMENT SECURITIES" means (to the extent they mature within one
year from the date in question) readily marketable (a) direct full faith and
credit obligations of the United States of America or obligations guaranteed by
the full faith and credit of the United States of America, and (b) obligations
of an agency or instrumentality of, or corporation owned, controlled, or
sponsored by, the United States of America that are generally considered in the
securities industry to be implicit obligations of the United States of America.
CREDIT AGREEMENT
6
<PAGE> 12
"GOVERNMENTAL AUTHORITY" means any (a) local, state, territorial,
federal, or foreign judicial, executive, regulatory, administrative,
legislative, or governmental agency, board, bureau, commission, department, or
other instrumentality, (b) private arbitration board or panel, or (c) central
bank.
"GUARANTORS" means TEPPCO Partners, TCTM, and each other TCTM
Subsidiary delivering a Guaranty as required by SECTION 6.
"GUARANTY" means a guaranty substantially in the form of EXHIBIT B.
"HAZARDOUS SUBSTANCE" means any substance that is designated, defined,
classified, or regulated as a hazardous waste, hazardous material, pollutant,
contaminant, explosive, corrosive, flammable, infectious, carcinogenic,
mutagenic, radioactive, or toxic or hazardous substance under any Environmental
Law, including, without limitation, any hazardous substance within the meaning
of Section 101(14) of CERCLA.
"HEDGING AGREEMENT" means, for any Person, any present or future,
whether master or single, agreement, document or instrument providing for, or
constituting an agreement to enter into (a) commodity hedges in the normal
course of business in accordance with practices of that Person for hedging
material purchases, (b) arrangement for foreign-currency-exchange protection,
(c) Rate-Protection Arrangement, and (d) interest-rate-hedging products
involving payment premium for which that Person has no future liability.
"HEDGING EXPOSURE" means at any time (a) for a Rate-Protection
Arrangement, the related Rate- Protection Exposure, and (b) for any other
Hedging Agreement, the amount, if any, that would be payable to the counter
party to that Hedging Agreement if it were terminated at that time.
"INTEREST EXPENSE" means, for any Person and any period, all interest
expense (including all amortization of debt discount and expenses and reported
interest) on all Funded Debt of that Person.
"INTEREST PERIOD" is defined in SECTION 3.9.
"INVESTMENT" means, in respect of any Person, any loan, advance,
extension of credit, or capital contribution to that Person, any other
investment in that Person, or any purchase or commitment to purchase any equity
securities or Debt issued by that Person or substantially all of the assets or
a division or other business unit of that Person. However, the term investment
does not include any extension of trade debt in the ordinary course of business
or, as a result of collection efforts, the receipt of any equity in or property
of a Person.
"IRC" means the Internal Revenue Code of 1986.
"LEGAL REQUIREMENTS" means all applicable statutes, laws, treaties,
ordinances, rules, regulations, orders, writs, injunctions, decrees, judgments,
opinions, and interpretations of any Governmental Authority.
"LENDERS" means the financial institutions (including, without
limitation, Administrative Agent, in its capacity as a Lender, in respect of
its Commitment) initially named on SCHEDULE 2 or, to the extent they constitute
permitted assignees pursuant to the terms of this agreement, on the
most-recently-amended SCHEDULE 2, if any, delivered by Administrative Agent
under this agreement, and, subject to this agreement, their respective
successors and permitted assigns (but not any Participant who is not otherwise
a party to this agreement in the capacity as Lenders).
CREDIT AGREEMENT
7
<PAGE> 13
"LIBOR RATE" means, for a LIBOR-Rate Borrowing and its Interest
Period, the quotient of (a) the annual interest rate for deposits in United
States dollars of amounts equal or comparable to the principal amount of that
LIBOR-Rate Borrowing offered for a term comparable to that Interest Rate, which
rate appears on the Telerate Page 3750 as of 11:00 a.m. (London, England time)
two Business Days before the beginning of that Interest Period or, if no such
offered rates appear on such page, then the rate used for that Interest Period
shall be the arithmetic average (rounded upwards, if necessary, to the next
higher 0.001%) of rate offered by Lender to not less than two major banks in
New York, New York at approximately 10:00 a.m. (Atlanta, Georgia time) two
Business Days before the beginning of that Interest Period for deposits in
United States dollars in the London interbank market of the principal amount of
that LIBOR Borrowing offered for a term comparable to that Interest Period,
divided by (b) a number equal to 1.00 minus the LIBOR Reserve Percentage. The
rate so determined in accordance herewith shall be rounded upwards to the
nearest multiple of 0.001%, and the term "TELERATE PAGE 3750" means the display
designated as "Page 3750" on the Dow Jones Markets Service, Inc. (or such other
page as may replace Page 3750 on that service or another service as may be
nominated by the British Bankers' Association as the information vendor for the
purpose of displaying British Bankers' Association Interest Settlement Rates
for United States dollars).
"LIBOR-RATE BORROWING" means a Borrowing bearing interest at the sum
of the LIBOR Rate plus the Applicable Margin.
"LIBOR RESERVE PERCENTAGE" means, for any Interest Period with respect
to a LIBOR-Rate Borrowing, the reserve percentage applicable to that Interest
Period (or, if more than one such percentage shall be so applicable, then the
daily average of such percentages for those days in that Interest Period during
which any such percentage shall be applicable) under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including any
emergency, supplemental, or other marginal reserve requirement) for Lenders
with respect to liabilities or assets consisting of or including "eurocurrency
liabilities" (as defined in Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time) having a term equal to
that Interest Period.
"LIEN" means any lien, mortgage, security interest, pledge,
assignment, charge, title retention agreement, or encumbrance of any kind and
any other arrangement for a creditor's claim to be satisfied from assets or
proceeds prior to the claims of other creditors or the owners (other than title
of the lessor under an operating lease).
"LITIGATION" means any action by or before any Governmental Authority.
"LSI" means Lubrication Services, LLC, a Delaware limited liability
company and wholly owned Subsidiary of Borrower.
"MATERIAL-ADVERSE EVENT" means any circumstance or event that,
individually or collectively, is, or is reasonably expected to result in, any
(a) material impairment of (i) the ability of Borrower or any Guarantor to
perform any of their respective payment or other material obligations under any
Credit Document, or (ii) the ability of Administrative Agent or any Lender to
enforce any of those obligations or any of their respective Rights under the
Credit Documents (other than as a result of its own act or omission), (b)
material and adverse effect on the financial condition of Borrower or TCTM,
individually, or TEPPCO Partners and its Subsidiaries, as a whole, as
represented to Lenders in the Current Financials most recently delivered before
the date of this agreement, or (c) Event of Default or Potential Default.
CREDIT AGREEMENT
8
<PAGE> 14
"MAXIMUM AMOUNT" and "MAXIMUM RATE" respectively mean, for a Lender,
the maximum non- usurious amount and the maximum non-usurious rate of interest
that, under applicable Legal Requirement, that Lender is permitted to contract
for, charge, take, reserve, or receive on the Obligation.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the IRC to which any Company
or any ERISA Affiliate is making, or has made, or is accruing, or has accrued,
an obligation to make contributions.
"NET INCOME" means, for any Person and any period, that Person's
profit or loss (a) after deducting all of its operating expenses, provision for
Taxes, and reserves (including reserves for deferred income Taxes), and all
other deductions in accordance with GAAP, but (b) excluding (i) extraordinary
items, and (ii) the profit or loss of any entity accrued before the date that
(A) it becomes a Subsidiary of such Person, (B) it is merged with such Person
or any of its Subsidiaries, or (C) its assets are acquired by such Person of
any of its Subsidiaries.
"NOTE" means a Note substantially in the form of EXHIBIT A.
"OBLIGATION" means all present and future (a) Debts, liabilities, and
obligations of Borrower to Administrative Agent or any Lender that arises under
any Credit Document, whether principal, interest, fees, costs, attorneys' fees,
or otherwise, (b) Rate-Protection Exposure of any Rate-Protection Party that is
a Lender or an Affiliate (with whom Borrower has contractually entered into
that Hedging Agreement in connection with this agreement) of a Lender, and (c)
renewals, extensions, and modifications of any of the foregoing.
"OSHA" means the Occupational Safety and Health Act of 1970, 29 U.S.C.
Section 651 et seq.
"PARTICIPANT" is defined in SECTION 14.10(c).
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITTED DEBT" is defined in SECTION 9.1.
"PERMITTED LIENS" is defined in SECTION 9.3.
"PERMITTED INVESTMENT" is defined in SECTION 9.7.
"PERSON" means any individual, entity, or Governmental Authority.
"POTENTIAL DEFAULT" means any event, occurrence, or circumstance, the
existence of which upon any required notice, time lapse, or both, would become
an Event of Default.
"PREDECESSOR" means any Person for whose obligations and liabilities
any Company is reasonably expected to be liable as the result of any merger, de
facto merger, stock purchase, asset purchase or divestiture, combination, joint
venture, investment, reclassification, or other similar business transaction.
"PRINCIPAL DEBT" means, at any time, the unpaid principal balance of
all Borrowings.
CREDIT AGREEMENT
9
<PAGE> 15
"RATE-PROTECTION ARRANGEMENT" means any interest-rate swap, cap,
collar, or similar arrangement.
"RATE-PROTECTION EXPOSURE" means, for any Rate-Protection Arrangement
and at any time, the amount, if any, that would be payable to the
Rate-Protection Party in that Rate-Protection Arrangement for any "agreement
value" as though that Rate-Protection Arrangement were terminated at that time,
in each case (a) calculated as provided in the International Swap Dealers
Association Inc. Code of Standard Wording, Assumptions, and Provisions for
SWAPS in effect on the date such arrangement is entered into, and (b)
determined by Administrative Agent in good faith in reliance upon any
information (including any information provided by the Rate-Protection Party)
that Administrative Agent believes (with no obligation to verify accuracy) to
be accurate.
"RATE-PROTECTION PARTY" means, at any time, any party that has entered
into a Rate-Protection Arrangement with Borrower.
"REAL PROPERTY" means any land, buildings, fixtures, and other
improvements to land now or in the future directly or indirectly owned by any
Company, leased to or otherwise operated by any Company, or subleased by any
Company to any other Person.
"RELEASE" means any "release" as defined under any Environmental Law.
"REPRESENTATIVES" means officers, directors, employees, accountants,
attorneys, and agents.
"REQUIRED LENDERS" means, at any time, any combination of Lenders
holding (directly or indirectly) at least 66 2/3% of either (a) the total
Commitments while there is no Principal Debt or (b) the Principal Debt while
there is any Principal Debt.
"RESPONSIBLE OFFICER" means the chairman, president, vice president,
chief executive officer, chief financial officer, treasurer, or corporate
secretary of Texas Eastern.
"RIGHTS" means rights, remedies, powers, privileges, and benefits.
"SOLVENT" means, as to any Person, that (a) the aggregate fair market
value of its assets exceeds its liabilities, (b) it has sufficient cash flow to
enable it to pay its Debts as they mature, and (c) it does not have
unreasonably small capital to conduct its businesses.
"STATED-TERMINATION DATE" means May 17, 2002.
"SUBSIDIARY" of any Person means any corporation, limited liability
company, general or limited partnership, or other entity of which more than 50%
(in number of votes) of the stock (or equivalent interests) is owned of record
or beneficially, directly or indirectly, by that Person.
"TAXES" means, for any Person, taxes, assessments, or other
governmental charges or levies imposed upon it, its income, or any of its
properties, franchises, or assets.
"TAX EXPENSE" means -- for any Person, for any period, and without
duplication -- the Taxes on income accrued during that period.
CREDIT AGREEMENT
10
<PAGE> 16
"TCTM" means TCTM, L.P., a Delaware limited partnership.
"TE PRODUCTS" means TE Products Pipeline Company, Limited Partnership,
a Delaware limited partnership.
"TE PRODUCTS CREDIT AGREEMENT" means the Credit Agreement dated as of
the date of this agreement, between TE Products, certain lenders, and SunTrust
Bank, Atlanta, as agent for those lenders, and certain other agents for those
lenders.
"TEPPCO PIPELINE" means TEPPCO Crude Pipeline, LLC, a Delaware limited
liability company and wholly owned Subsidiary of Borrower.
"TEPPCO PARTNERS" means TEPPCO Partners, L.P., a Delaware limited
partnership.
"TERMINATION DATE" means the earlier of either (a) the
Stated-Termination Date or (b) the effective date that Lenders' commitments to
lend under this agreement are fully canceled or terminated.
"TEXAS EASTERN" means Texas Eastern Products Pipeline Company, a
Delaware corporation.
"TYPE" means any type of Borrowing determined with respect to the
applicable interest option.
"Y2K ISSUE" means the risk that computer applications used by the
Companies or by any of their respective suppliers or vendors may be unable
properly to recognize and perform date-sensitive functions.
1.2 TIME REFERENCES. Unless otherwise specified, in the Credit
Documents (a) time references (e.g., 10:00 a.m.) are to time in Atlanta,
Georgia, on the applicable date, and (b) in calculating a period from one date
to another, the word "from" means "from and including" and the word "to" or
"until" means "to but excluding."
1.3 OTHER REFERENCES. Unless otherwise specified, in the Credit
Documents (a) where appropriate, the singular includes the plural and vice
versa, and words of any gender include each other gender, (b) where
appropriate, words include their respective cognate expressions, (c) heading
and caption references may not be construed in interpreting provisions, (d)
monetary references are to currency of the United States of America, (e)
section, paragraph, annex, schedule, exhibit, and similar references are to the
particular Credit Document in which they are used, (f) references to
"telecopy," "facsimile," "fax," or similar terms are to facsimile or telecopy
transmissions, (g) references to "including" mean including without limiting
the generality of any description preceding that word, (h) the rule of
construction that references to general items that follow references to
specific items are limited to the same type or character of those specific
items is not applicable in the Credit Documents, (i) references to "writing"
include printing, typing, lithography, and other means of reproducing words in
a tangible, visible form, (j) references to any Person include that Person's
heirs, personal representatives, successors, trustees, receivers, and permitted
assigns, (k) references to any Legal Requirement include every amendment or
supplement to it, rule and regulation adopted under it, and successor or
replacement for it, (l) references to any Governmental Authority include any
Person succeeding to its relevant function, and (m) references to any Credit
Document or other document include (to the extent not prohibited by the terms
of the Credit Documents) every renewal and extension of it, amendment and
supplement to it, and replacement or substitution for it.
CREDIT AGREEMENT
11
<PAGE> 17
1.4 ACCOUNTING PRINCIPLES. Unless otherwise specified, in the Credit
Documents (a) GAAP determines all accounting and financial terms and compliance
with financial covenants, (b) GAAP in effect on the date of this agreement
determines compliance with financial covenants, (c) otherwise, all accounting
principles applied in a current period must be comparable in all material
respects to those applied during the preceding comparable period, and (d) all
financial terms and compliance with reporting and financial covenants must be
on a consolidated basis, as applicable.
SECTION 2 COMMITMENT. Subject to the provisions in the Credit Documents, each
Lender severally but not jointly agrees to lend to Borrower that Lender's
Commitment Percentage of requested Borrowings, which Borrower may borrow,
repay, and reborrow under this agreement subject to the provisions in the
Credit Documents.
2.1 CONDITIONS. Each Borrowing is subject to all of the provisions in
the Credit Documents, including the following: (a) each Borrowing may only
occur on a Business Day on or after the Closing Date and before the Termination
Date; (b) each Borrowing may only be $500,000 or a greater integral multiple of
$100,000; and (c) the Principal Debt may never exceed the total Commitments.
2.2 BORROWING PROCEDURE. The following procedures apply to Borrowings:
(a) BORROWING REQUEST. Borrower may request a Borrowing by
making or delivering a Borrowing Request to Administrative Agent,
which is irrevocable and binding on Borrower, stating the Type,
amount, and Interest Period for each Borrowing and which must be
received by Administrative Agent no later than (i) 10:00 a.m. on the
second Business Day before the date on which funds are requested (the
"BORROWING DATE") for any LIBOR-Rate Borrowing, or (ii) 11:00 a.m. on
the Borrowing Date for any Base-Rate Borrowing. Administrative Agent
shall promptly on the day received notify each Lender of any Borrowing
Request.
(b) FUNDING. Each Lender shall remit its Commitment
Percentage of each requested Borrowing to Administrative Agent's
principal office in Atlanta, Georgia, in funds that are available for
immediate use by Administrative Agent by 2:00 p.m. on the applicable
Borrowing Date. Subject to receipt of those funds, Administrative
Agent shall (unless to its actual knowledge any of the applicable
conditions precedent have not been satisfied by Borrower or waived by
the requisite Lenders) make those funds available to Borrower by
wiring the funds to or for the account of Borrower.
(c) FUNDING ASSUMED. Absent contrary written notice from a
Lender, Administrative Agent may assume that each Lender has made its
Commitment Percentage of the requested Borrowing available to
Administrative Agent on the applicable Borrowing Date, and
Administrative Agent may, in reliance upon such assumption (but shall
not be required to), make available to Borrower a corresponding
amount. If a Lender fails to make its Commitment Percentage of any
requested Borrowing available to Administrative Agent on the
applicable Borrowing Date, Administrative Agent may recover the
applicable amount on demand (i) from that Lender together with
interest, commencing on the Borrowing Date and ending on (but
excluding) the date Administrative Agent recovers the amount from that
Lender, at an annual interest rate equal to the Fed-Funds Rate, or
(ii) if that Lender fails to pay its amount upon demand, then from
Borrower, together with interest at the rate applicable to that
Borrowing. No Lender is responsible for the failure of any other
Lender to make its Commitment Percentage of any Borrowing available as
CREDIT AGREEMENT
12
<PAGE> 18
required by SECTION 2.2 (b); however, failure of any Lender to make
its Commitment Percentage of any Borrowing so available does not
excuse any other Lender from making its Commitment Percentage of any
Borrowing so available.
2.3 EFFECT OF REQUESTS. Each Borrowing Request constitutes a
representation and warranty by Borrower that as of the Borrowing Date all of
the applicable conditions precedent in SECTION 5 have been satisfied.
2.4 TERMINATION. Borrower may, upon giving at least five Business Days
prior written and irrevocable notice to Administrative Agent, terminate all or
part of the Commitment. Each partial termination must be in an amount of not
less than $5,000,000 or a greater integral multiple of $1,000,000 and must be
ratable in accordance with each Lender's Commitment Percentage. At the time of
any termination, Borrower shall pay to Administrative Agent, for the account of
each Lender, as applicable, all accrued and unpaid fees under this agreement,
the interest attributable to the amount of that reduction, and any related
Funding Loss. Any part of the Commitment that is terminated may not be
reinstated.
SECTION 3 PAYMENT TERMS.
3.1 NOTES AND PAYMENTS. The Principal Debt is evidenced by the Notes,
one payable to each Lender in the stated amount of its Commitment. Borrower
must make each payment and prepayment on the Obligation to Administrative
Agent's principal office in Atlanta, Georgia, in immediately available funds by
1:00 p.m. on the day due; otherwise, but subject to SECTION 3.6, those funds
continue to accrue interest as if they were received on the next Business Day.
Administrative Agent shall promptly pay to each Lender the part of any payment
or prepayment to which that Lender is entitled under this agreement on the same
day Administrative Agent receives the funds from Borrower. Unless
Administrative Agent has received notice from Borrower before the date on which
any payment is due under this agreement that Borrower will not make that
payment in full, then on the date that payment is due Administrative Agent may
assume that Borrower has made the full payment due and Administrative Agent
may, in reliance upon that assumption, cause to be distributed to each Lender
on that date the amount then due to each Lender. If and to the extent Borrower
does not make the full payment due to Administrative Agent, each Lender shall
repay to Administrative Agent on demand the amount distributed to that Lender
by Administrative Agent together with interest for each day from the date that
Lender received payment from Administrative Agent until the date that Lender
repays Administrative Agent (unless such repayment is made on the same day as
such distribution), at an interest rate equal to the Fed-Funds Rate.
3.2 INTEREST AND PRINCIPAL PAYMENTS.
(a) INTEREST. Accrued interest on each LIBOR-Rate Borrowing
is due and payable on the last day of its respective Interest Period.
If any Interest Period for a LIBOR-Rate Borrowing is greater than
three months, then accrued interest is also due and payable on the
date three months after the commencement of the Interest Period.
Accrued interest on each Base-Rate Borrowing is due and payable in
arrears on (i) the last day of each calendar month, commencing on the
first of those dates that follows the Closing Date, and (ii) the
Termination Date.
(b) PRINCIPAL DEBT. The Principal Debt is due and payable on
the Termination Date. Before that date, Borrower may at any time
prepay, without penalty and in whole or in part, the Principal Debt so
long as (i) each voluntary partial prepayment must be in a principal
amount not
CREDIT AGREEMENT
13
<PAGE> 19
less than $500,000 or a greater integral multiple of $100,000 and (ii)
Borrower shall pay the related Funding Loss, if any, upon demand.
Conversions under SECTION 3.10 are not prepayments.
3.3 INTEREST OPTIONS. Except that the LIBOR-Rate may not be selected
when an Event of Default or Potential Default exists and except as otherwise
provided in this agreement Borrowings bear interest at an annual rate equal to
the lesser of either (a) the Base Rate or the LIBOR Rate plus the Applicable
Margin, in each case as designated or deemed designated by Borrower or (b) the
Maximum Rate.
3.4 QUOTATION OF RATES. Borrower may contact Administrative Agent
prior to delivering a Borrowing Request to receive an indication of the
interest rates then in effect, but the indicated rates do not bind
Administrative Agent or Lenders or affect the interest rate that is actually in
effect when Borrower makes a Borrowing Request or on the Borrowing Date.
3.5 DEFAULT RATE. To the extent lawful, all past-due Principal Debt
and past-due interest accruing on any Principal Debt bears interest from the
date due (stated or by acceleration) at the Default Rate until paid, regardless
whether payment is made before or after entry of a judgment.
3.6 INTEREST RECAPTURE. If the designated interest rate applicable to
any amount exceeds the Maximum Rate, the interest rate on that amount is
limited to the Maximum Rate, but any subsequent reductions in the designated
rate shall not reduce the interest rate thereon below the Maximum Rate until
the total amount of accrued interest equals the amount of interest that would
have accrued if that designated rate had always been in effect. If at maturity
(stated or by acceleration), or at final payment of the Notes, the total
interest paid or accrued is less than the interest that would have accrued if
the designated rates had always been in effect, then, at that time and to the
extent lawful, Borrower shall pay an amount equal to the difference between (a)
the lesser of either the amount of interest that would have accrued if the
designated rates had always been in effect or the amount of interest that would
have accrued if the Maximum Rate had always been in effect, and (b) the amount
of interest actually paid or accrued on the Notes.
3.7 INTEREST CALCULATIONS. Interest will be calculated on the basis of
actual number of days (including the first day but excluding the last day)
elapsed but computed as if each calendar year consisted of 360 days (unless the
calculation would result in an interest rate greater than the Maximum Rate, or
in the case of Base-Rate Borrowing in which event interest will be calculated
on the basis of a year of 365 or 366 days, as the case may be). All interest
rate determinations and calculations by Administrative Agent are conclusive and
binding absent manifest error.
3.8 MAXIMUM RATE. Regardless of any provision contained in any Credit
Document, no Lender is entitled to contract for, charge, take, reserve,
receive, or apply, as interest on all or any part of the Obligation, any amount
in excess of the Maximum Rate, and, if any Lender ever does so, then any excess
shall be treated as a partial prepayment of principal (without regard to
SECTION 3.9) and any remaining excess shall be refunded to Borrower. In
determining if the interest paid or payable exceeds the Maximum Rate, Borrower
and Lenders shall, to the maximum extent lawful, (a) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest,
(b) exclude voluntary prepayments and their effects, and (c) amortize, prorate,
allocate, and spread the total amount of interest throughout the entire
contemplated term of the Principal Debt. However, if the Obligation is paid in
full before the end of its full contemplated term, and if the interest received
for its actual period of existence exceeds the Maximum Amount, then Lenders
shall refund any excess (and Lenders may not, to the extent lawful, be subject
to any penalties provided by any Legal Requirements for contracting for,
charging, taking, reserving, or receiving interest in
CREDIT AGREEMENT
14
<PAGE> 20
excess of the Maximum Amount). If the Legal Requirements of the State of Texas
are applicable for purposes of determining the "Maximum Rate" or the "Maximum
Amount," then those terms mean the "indicated rate ceiling" from time to time
in effect under Article 5069-1D.001, Revised Civil Statutes of Texas. Borrower
agrees that Chapter 346, Revised Civil Statutes of Texas (which regulates
certain revolving credit loan accounts and revolving triparty accounts) does
not apply to any Borrowings.
3.9 INTEREST PERIODS. When Borrower requests a LIBOR-Rate Borrowing,
Borrower may elect the applicable interest period (each an "INTEREST PERIOD"),
which may be, at Borrower's option, one, two, three, or six months for
LIBOR-Rate Borrowings, subject to SECTION 14.1 and the following conditions:
(a) the initial Interest Period for a LIBOR-Rate Borrowing commences on the
applicable Borrowing Date or conversion date, and each subsequent Interest
Period applicable to any Borrowing commences on the day when the next preceding
applicable Interest Period expires; (b) if any Interest Period for a LIBOR-Rate
Borrowing begins on a day for which no numerically corresponding Business Day
in the calendar month at the end of the Interest Period exists, then the
Interest Period ends on the last Business Day of that calendar month; (c) if
Borrower is required to pay any portion of a LIBOR-Rate Borrowing before the
end of its Interest Period in order to comply with the payment provisions of
the Credit Documents, Borrower shall also pay any related Funding Loss; and (d)
no more than six Interest Periods may be in effect at one time.
3.10 CONVERSIONS. Subject to the dollar limits of SECTION 2.1(b) and
provided that Borrower may not convert to or select a new Interest Period for a
LIBOR-Rate Borrowing at any time when an Event of Default or Potential Default
exists, Borrower may (a) convert a LIBOR-Rate Borrowing on the last day of the
applicable Interest Period to a Base-Rate Borrowing, (b) convert a Base-Rate
Borrowing at any time to a LIBOR-Rate Borrowing, and (c) elect a new Interest
Period for a LIBOR-Rate Borrowing to commence upon expiration of the
then-current Interest Period. That election may be made by telephonic request
to Administrative Agent no later than 10:00 a.m. on the second Business Day
before the conversion date or the last day of the Interest Period, as the case
may be (for conversion to a LIBOR-Rate Borrowing or election of a new Interest
Period), and no later than 11:00 a.m. on the last day of the Interest Period
(for conversion to a Base-Rate Borrowing). Borrower shall provide a Conversion
Notice to Administrative Agent no later than two days after the date of the
conversion or election. Absent Borrower's telephonic request for conversion or
election of a new Interest Period or if an Event of Default or Potential
Default exists, then, a LIBOR-Rate Borrowing shall be deemed converted to a
Base-Rate Borrowing effective when the applicable Interest Period expires.
3.11 ORDER OF APPLICATION. Each payment (including proceeds from the
exercise of any Rights) of the Obligation shall be applied either (a) if no
Event of Default or Potential Default exists, then in the order and manner as
Borrower directs, or (b) if an Event of Default or Potential Default exists or
if Borrower fails to give direction, then in the following order: (i) To all
fees, expenses, and indemnified amounts for which Administrative Agent has not
been paid or reimbursed in accordance with the Credit Documents and -- except
while an Event of Default under SECTION 11.1 exists -- as to which Borrower has
been invoiced and has failed to pay within ten Business Days of that invoice;
(ii) to all fees, expenses, and indemnified amounts for which any Lender has
not been paid or reimbursed in accordance with the Credit Documents (and if any
payment is less than all unpaid or unreimbursed fees and expenses, then that
payment shall be paid against unpaid and unreimbursed fees and expenses in the
order of incurrence or due date) and -- except while an Event of Default under
SECTION 11.1 exists -- as to which Borrower has been invoiced and has failed to
pay within ten Business Days of that invoice; (iii) to accrued interest on the
Principal Debt; (iv) to the Principal Debt in the order as Required Lenders may
elect (but Required Lenders agree to apply proceeds in an order
CREDIT AGREEMENT
15
<PAGE> 21
that will minimize any Funding Loss); and (v) to the remaining Obligation in
the order and manner Required Lenders deem appropriate.
3.12 SHARING OF PAYMENTS, ETC. Except as otherwise specifically
provided (a) principal and interest payments shall be shared by Lenders in
accordance with their respective Commitment Percentages while no Event of
Default exists or their respective Default Percentages while an Event of
Default exists, and (b) each other payment on the Obligation shall be shared by
Lenders in the proportion that the Obligation is owed to Lenders on the date of
the payment. If any Lender obtains any payment or prepayment with respect to
the Obligation (whether voluntary, involuntary, or otherwise, including,
without limitation, as a result of exercising its Rights under the SECTION
3.13) that exceeds the part of that payment or prepayment that it is then
entitled to receive under the Credit Documents, then that Lender shall purchase
from the other Lenders participations that will cause the purchasing Lender to
share the excess payment or prepayment ratably with each other Lender. If all
or any portion of any excess payment or prepayment is subsequently recovered
from the purchasing Lender, then the purchase shall be rescinded and the
purchase price restored to the extent of the recovery. Borrower agrees that any
Lender purchasing a participation from another Lender under this section may,
to the fullest extent lawful, exercise all of its Rights of payment (including
the Right of offset) with respect to that participation as fully as if that
Lender were the direct creditor of Borrower in the amount of that
participation.
3.13 OFFSET. If an Event of Default exists, each Lender is entitled to
exercise (for the benefit of all Lenders) the Rights of offset and banker's
Lien against each and every account and other property, or any interest
therein, that Borrower or any Guarantor may now or hereafter have with, or
which is now or hereafter in the possession of, that Lender to the extent of
the full amount of the Obligation then matured and owed (directly or
participated) to it.
3.14 BOOKING BORROWINGS. To the extent lawful, any Lender may make,
carry, or transfer its Borrowings at, to, or for the account of any of its
branch offices or the office or branch of any of its Affiliates. However, no
Affiliate or branch is entitled to receive any greater payment under SECTION
3.15 than the transferor Lender would have been entitled to receive with
respect to those Borrowings, and a transfer may not be made if, as a direct
result of it, SECTION 3.15 or 3.17 would apply to any of the Obligation. If any
of the conditions of SECTIONS 3.16 or 3.17 ever apply to a Lender, that Lender
shall, to the extent possible, carry or transfer its Borrowings at, to, or for
the account of any of its branch offices or the office or branch of any of its
Affiliates so long as the transfer is consistent with the other provisions of
this section, does not create any burden or adverse circumstance for that
Lender that would not otherwise exist, and eliminates or ameliorates the
conditions of SECTIONS 3.16 or 3.17 as applicable.
3.15 BASIS UNAVAILABLE OR INADEQUATE FOR LIBOR RATE. If, on or before
any date when a LIBOR Rate is to be determined for a Borrowing, Administrative
Agent reasonably determines that the basis for determining the applicable rate
is not available or any Lender reasonably determines that the resulting rate
does not accurately reflect the cost to that Lender of making or converting
Borrowings at that rate for the applicable Interest Period, then Administrative
Agent shall promptly notify Borrower and Lenders of that determination (which
is conclusive and binding on Borrower absent manifest error) and the applicable
Borrowing shall bear interest at the sum of the Base Rate plus the Applicable
Margin. Until Administrative Agent notifies Borrower that those circumstances
no longer exist, Lenders' commitments under this agreement to make, or to
convert to, LIBOR-Rate Borrowings, as the case may be, are suspended.
CREDIT AGREEMENT
16
<PAGE> 22
3.16 ADDITIONAL COSTS.
(a) RESERVES. With respect to any LIBOR-Rate Borrowing (i) if
any change in any present Legal Requirement, any change in the
interpretation or application of any present Legal Requirement, or any
future Legal Requirement imposes, modifies, or deems applicable (or if
compliance by any Lender with any requirement of any Governmental
Authority results in) any requirement that any reserves (including,
without limitation, any marginal, emergency, supplemental, or special
reserves) be maintained (other than any reserve included in the
Reserve Requirement), and (ii) if those reserves reduce any sums
receivable by that Lender under this agreement or increase the costs
incurred by that Lender in advancing or maintaining any portion of any
LIBOR-Rate Borrowing, then (iii) that Lender (through Administrative
Agent) shall deliver to Borrower a certificate setting forth in
reasonable detail the calculation of the amount necessary to
compensate it for its reduction or increase (which certificate is
conclusive and binding absent manifest error), and (iv) Borrower shall
pay that amount to that Lender within five Business Days after demand.
The provisions of and undertakings and indemnification in this CLAUSE
(a) survive the satisfaction and payment of the Obligation and
termination of this agreement.
(b) CAPITAL ADEQUACY. With respect to any Borrowing, if any
change in any present Legal Requirement (whether or not having the
force of law), any change in the interpretation or application of any
present Legal Requirement (whether or not having the force of law), or
any future Legal Requirement (whether or not having the force of law)
regarding capital adequacy, or if compliance by any Lender with any
request, directive, or requirement imposed in the future by any
Governmental Authority regarding capital adequacy, or if any change by
any Lender, its holding company, or its applicable lending office in
its written policies or in the risk category of this transaction, in
any of the foregoing events or circumstances, reduces the rate of
return on its capital as a consequence of its obligations under this
agreement to a level below that which it otherwise could have achieved
(taking into consideration its policies with respect to capital
adequacy) by an amount deemed by it to be material (and it may, in
determining the amount, utilize reasonable assumptions and allocations
of costs and expenses and use any reasonable averaging or attribution
method), then (unless the effect is already reflected in the rate of
interest then applicable under this agreement) Administrative Agent or
that Lender (through Administrative Agent) shall notify Borrower and
deliver to Borrower a certificate setting forth in reasonable detail
the calculation of the amount necessary to compensate it (which
certificate is conclusive and binding absent manifest error), and
Borrower shall pay that amount to Administrative Agent or that Lender
within five Business Days after demand. The provisions of and
undertakings and indemnification in this CLAUSE (B) shall survive the
satisfaction and payment of the Obligation and termination of this
agreement.
(c) TAXES. Subject to SECTION 3.19, any Taxes payable by
Administrative Agent or any Lender or ruled (by a Governmental
Authority) payable by Administrative Agent or any Lender in respect of
this agreement or any other Credit Document shall, if permitted by
Legal Requirement, be paid by Borrower, together with interest and
penalties, if any, except for Taxes payable on or measured by the
overall net income or capital of Administrative Agent or that Lender
(or Administrative Agent or that Lender, as the case may be, together
with any other Person with whom Administrative Agent or that Lender
files a consolidated, combined, unitary, or similar Tax return) and
except for interest and penalties incurred as a result of the gross
negligence or willful misconduct of Administrative Agent or any
Lender. Administrative Agent or that Lender (through
CREDIT AGREEMENT
17
<PAGE> 23
Administrative Agent) shall notify Borrower and deliver to Borrower a
certificate setting forth in reasonable detail the calculation of the
amount of payable Taxes, which certificate is conclusive and binding
(absent manifest error), and Borrower shall pay that amount to
Administrative Agent for its account or the account of that Lender, as
the case may be within five Business Days after demand. If
Administrative Agent or that Lender subsequently receives a refund of
the Taxes paid to it by Borrower, then the recipient shall promptly
pay the refund to Borrower.
3.17 CHANGE IN LEGAL REQUIREMENTS. If any Legal Requirement makes it
unlawful for any Lender to make or maintain LIBOR-Rate Borrowings, then that
Lender shall promptly notify Borrower and Administrative Agent, and (a) as to
undisbursed funds, that requested Borrowing shall be made as a Base- Rate
Borrowing, and (b) as to any outstanding Borrowing (i) if maintaining the
Borrowing until the last day of the applicable Interest Period is unlawful,
then the Borrowing shall be converted to a Base-Rate Borrowing as of the date
of notice, in which event Borrower will not be required to pay any related
Funding Loss, or (ii) if not prohibited by Legal Requirement, then the
Borrowing shall be converted to a Base-Rate Borrowing as of the last day of the
applicable Interest Period, or (iii) if any conversion will not resolve the
unlawfulness, then Borrower shall promptly prepay the Borrowing, without
penalty but with related Funding Loss.
3.18 FUNDING LOSS. BORROWER SHALL INDEMNIFY EACH LENDER AGAINST, AND
PAY TO IT UPON DEMAND, ANY FUNDING LOSS OF THAT LENDER. WHEN ANY LENDER DEMANDS
THAT BORROWER PAY ANY FUNDING LOSS, THAT LENDER SHALL DELIVER TO BORROWER AND
ADMINISTRATIVE AGENT A CERTIFICATE SETTING FORTH IN REASONABLE DETAIL THE BASIS
FOR IMPOSING FUNDING LOSS AND THE CALCULATION OF THE AMOUNT, WHICH CALCULATION
IS CONCLUSIVE AND BINDING ABSENT MANIFEST ERROR. THE PROVISIONS OF AND
UNDERTAKINGS AND INDEMNIFICATION IN THIS SECTION SURVIVE THE SATISFACTION AND
PAYMENT OF THE OBLIGATION AND TERMINATION OF THIS AGREEMENT.
3.19 FOREIGN LENDERS, PARTICIPANTS, AND ASSIGNEES. Each Lender,
Participant (by accepting a participation interest under this agreement), and
Assignee (by executing an Assignment) that is not organized under the Legal
Requirements of the United States of America or one of its states (a)
represents to Administrative Agent and Borrower that (i) no Taxes are required
to be withheld by Administrative Agent or Borrower with respect to any payments
to be made to it in respect of the Obligation and (ii) it has furnished to
Administrative Agent and Borrower two duly completed copies of either U.S.
Internal Revenue Service Form 4224, Form 1001, Form W-8, or any other form
acceptable to Administrative Agent and Borrower that entitles it to a complete
exemption from U.S. federal withholding Tax on all interest or fee payments
under the Credit Documents, and (b) covenants to (i) provide Administrative
Agent and Borrower a new Form 4224, Form 1001, Form W-8, or other form
acceptable to Administrative Agent and Borrower upon the expiration or
obsolescence according to Legal Requirement of any previously delivered form,
duly executed and completed by it, entitling it to a complete exemption from
U.S. federal withholding Tax on all interest and fee payments under the Credit
Documents, and (ii) comply from time to time with all Legal Requirements with
regard to the withholding Tax exemption. If any of the foregoing is not true at
any time or the applicable forms are not provided, then Borrower and
Administrative Agent (without duplication) may deduct and withhold from
interest and fee payments under the Credit Documents any Tax at the maximum
rate under the IRC or other applicable Legal Requirement, and amounts so
deducted and withheld shall be treated as paid to that Lender, Participant, or
assignee, as the case may be, for all purposes under the Credit Documents.
3.20 DISCHARGE AND REINSTATEMENT. Each Company's obligations under the
Credit Documents remain in full force and effect until no Lender has any
commitment to extend credit under the Credit Documents and the Obligation is
fully paid (except for provisions under the Credit Documents which by their
CREDIT AGREEMENT
18
<PAGE> 24
terms expressly survive payment of the Obligation and termination of the Credit
Documents). If any payment under any Credit Document is ever rescinded or must
be restored or returned for any reason, then all Rights and obligations under
the Credit Documents in respect of that payment are automatically reinstated as
though the payment had not been made when due.
SECTION 4 FEES.
4.1 TREATMENT OF FEES. The fees described in this SECTION 4 (a) are
not compensation for the use, detention, or forbearance of money, (b) are in
addition to, and not in lieu of, interest and expenses otherwise described in
this agreement, (c) are payable in accordance with SECTION 3.1, (d) are
non-refundable, (e) to the fullest extent permitted by Legal Requirement, bear
interest, if not paid when due, at the Default Rate, and (f) are calculated on
the basis of a year of 365 or 366 days, as the case may be.
4.2 COMMITMENT FEE. Borrower shall pay to Administrative Agent (solely
for their respective accounts) a commitment fee for Lenders according to each
Lender's Commitment Percentage. The fee is payable as it accrues on the last
day of each March, June, September, and December (commencing on the first of
those dates that follows the date of this agreement) and as it accrues on the
Termination Date. Each payment of the fee is equal to the following, determined
for the calendar quarter (or portion of a calendar quarter commencing on the
date of this agreement or ending on the Termination Date) preceding and
including the date it is due: From the date of this agreement until the
Termination Date, the product of (i) the Applicable Percentage, times (ii) the
amount by which the average-daily total Commitments exceed the average-daily
Principal Debt, times (iii) a fraction with the number of days in the
applicable quarter or portion of it as the numerator and 365 or 366, as
applicable, as the denominator.
SECTION 5 CONDITIONS PRECEDENT. No Lender is obligated to fund the initial
Borrowing unless Administrative Agent has received all of the items described
in SCHEDULE 5. In addition, no Lender is obligated to fund (as opposed to
continue or convert) any Borrowing unless on the applicable Borrowing Date (and
after giving effect to the requested Borrowing): (a) Administrative Agent has
timely received a properly completed and duly executed Borrowing Request; (b)
all of the representations and warranties of TEPPCO Partners and the Companies
in the Credit Documents are true and correct in all material respects (unless
they speak to a specific date or are based on facts which have changed by
transactions contemplated or expressly permitted by this agreement); (c) no
Material-Adverse Event, Event of Default, or Potential Default exists; and (d)
no limitation in SECTION 2.1 is exceeded. Each Borrowing Request, however
delivered, constitutes Borrower's representation and warranty that the
conditions in CLAUSES (b) through (e) above are satisfied. Upon Administrative
Agent's or any Lender's reasonable request, Borrower shall deliver to
Administrative Agent or such Lender evidence substantiating any of the matters
in the Credit Documents that are necessary to enable Borrower to qualify for
the Borrowing. Each condition precedent in this agreement (including, without
limitation, those on SCHEDULE 5) is material to the transactions contemplated
by this agreement, and time is of the essence with respect to each condition
precedent.
SECTION 6 GUARANTIES. Borrower shall cause TEPPCO Partners, TCTM, and TCTM's
Subsidiaries (other than Borrower), whether now existing or in the future
formed or acquired as permitted by the Credit Documents, to unconditionally
guarantee the full payment and performance of the Obligation by execution of a
Guaranty.
SECTION 7 REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Administrative Agent and Lenders as follows:
CREDIT AGREEMENT
19
<PAGE> 25
7.1 PURPOSE. (a) Borrower will only use the proceeds of Borrowings for
general working capital purposes, including acquisitions and capital
expenditures, and (b) no Company is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any "margin stock" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System, as amended and no part of
the proceeds of any Borrowing will be used, directly or indirectly, for a
purpose that violates any Governmental Requirement, including, without
limitation, Regulation U.
7.2 SUBSIDIARIES. SCHEDULE 7.2 describes TEPPCO Partners' and TCTM and
all of its direct and indirect Subsidiaries.
7.3 EXISTENCE, AUTHORITY, AND GOOD STANDING. Each Guarantor and each
Company is duly organized, validly existing, and in good standing under the
Legal Requirements of its jurisdiction of formation. Except where not a
Material-Adverse Event, each Guarantor and each Company is duly qualified to
transact business and is in good standing in each jurisdiction where the nature
and extent of its business and properties require due qualification and good
standing (each of which jurisdictions is identified on SCHEDULE 7.2). Each
Guarantor and each Company possesses all requisite authority and power to
conduct its business as is now being conducted and as proposed under the Credit
Documents to be conducted and to own and operate its assets as now owned and
operated and as proposed to be owned and operated under the Credit Documents.
7.4 AUTHORIZATION AND CONTRAVENTION. The execution and delivery by
each Guarantor and each Company of each Credit Document to which it is a party
and the performance by it of its obligations under those Credit Documents (a)
are within its corporate, partnership, or comparable organizational powers, (b)
have been duly authorized by all necessary corporate, partnership, or
comparable organizational action, (c) require no notice to, consents or
approval of, action by or filing with, any Governmental Authority (except any
action or filing that has been taken or made on or before the Closing Date),
(d) do not violate any provision of any of its Constituent Documents, and (e)
except violations that individually or collectively are not a Material-Adverse
Event, do not violate any provision of Legal Requirement applicable to it or
any material agreement to which it is a party.
7.5 BINDING EFFECT. Upon execution and delivery by all parties to it,
each Credit Document will constitute a legal and binding obligation of each
Guarantor and each Company party to it, enforceable against it in accordance
with that Credit Document's terms except as that enforceability may be limited
by Debtor Laws and general principles of equity.
7.6 CURRENT FINANCIALS. The Current Financials were prepared in
accordance with GAAP and present fairly, in all material respects, the
consolidated financial condition, results of operations, and cash flows of the
Companies as of, and for the portion of the fiscal year ending on their dates
(subject only to normal year-end adjustments for interim statements). Except
for transactions directly related to, specifically contemplated by, or
expressly permitted by the Credit Documents, no material adverse changes have
occurred in such consolidated financial condition from that shown in the
Current Financials.
7.7 SOLVENCY. Each of Borrower and each Guarantor is Solvent.
7.8 LITIGATION. Except as disclosed on SCHEDULE 7.8 and matters
covered (subject to reasonable and customary deductible and retention) by
insurance or indemnification agreements as to which the insurer
CREDIT AGREEMENT
20
<PAGE> 26
or indemnifying party, as applicable, has acknowledged liability (a) no
Guarantor or Company is subject to, or aware of the threat of, any Litigation
that is reasonably likely to be determined adversely to any Guarantor or
Company and, if so adversely determined, is a Material-Adverse Event, and (b)
no outstanding and unpaid judgments against any Guarantor or Company exist that
would be a Material-Adverse Event.
7.9 TAXES. Except where not a Material-Adverse Event (a) all Tax
returns of each Guarantor and each Company required to be filed have been filed
(or extensions have been granted) before delinquency, and (b) all Taxes imposed
upon each Guarantor and Company that are due and payable have been paid before
delinquency except as being contested as permitted by SECTION 8.5.
7.10 ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE 7.10 (a)
no Guarantor or Company has received notice from any Governmental Authority
that it has actual or potential Environmental Liability and no Guarantor or
Company has knowledge that it has any Environmental Liability, which actual or
potential Environmental Liability in either case constitutes a Material-Adverse
Event, and (b) no Guarantor or Company has received notice from any
Governmental Authority that any Real Property is affected by, and no Guarantor
or Company has knowledge that any Real Property is affected by, any Release of
any Hazardous Substance which constitutes a Material-Adverse Event.
7.11 EMPLOYEE PLANS. Except as disclosed on SCHEDULE 7.11 or where not
a Material-Adverse Event (a) no Employee Plan subject to ERISA has incurred an
"accumulated funding deficiency" (as defined in Section 302 of ERISA or Section
512 of the IRC), (b) neither Borrower nor any ERISA Affiliate has incurred
liability -- except for liabilities for premiums that have been paid or that
are not past due -- under ERISA to the PBGC in connection with any Employee
Plan, (c) neither Borrower nor any ERISA Affiliate has withdrawn in whole or in
part from participation in a Multiemployer Plan in a manner that has given rise
to a withdrawal liability under Title IV of ERISA, (d) neither Borrower nor any
ERISA Affiliate has engaged in any "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the IRC), (e) no "reportable event" (as
defined in Section 4043 of ERISA) has occurred excluding events for which the
notice requirement is waived under applicable PBGC regulations, (f) neither
Borrower nor any ERISA Affiliate has any liability, or is subject to any Lien,
under ERISA or the IRC to or on account of any Employee Plan, (g) each Employee
Plan subject to ERISA and the IRC complies in all material respects, both in
form and operation, with ERISA and the IRC, and (h) no Multiemployer Plan
subject to the IRC is in reorganization within the meaning of Section 418 of
the IRC. None of the matters disclosed on SCHEDULE 7.11 give rise to any other
"reportable events," as defined above.
7.12 DEBT. No Guarantor or Company has any Debt except as described on
SCHEDULE 7.12.
7.13 PROPERTIES; LIENS. Each Company has good and indefeasible title
to all of its property reflected on the Current Financials as being owned by it
except for property that is obsolete or that has been disposed of in the
ordinary course of business between the date of the Current Financials and the
date of this agreement or, after the date of this agreement, as permitted by
SECTIONS 9.9 and 9.10. No Lien exists on any property of any Company except as
described on SCHEDULE 7.13 and other Permitted Liens. No Company is party or
subject to any agreement, instrument, or order which in any way restricts any
Company's ability to allow Liens to exist upon any of its assets except
relating to Permitted Liens.
7.14 GOVERNMENT REGULATIONS. No Guarantor or Company is subject to
regulation under the Investment Company Act of 1940 or the Public Utility
Holding Company Act of 1935.
CREDIT AGREEMENT
21
<PAGE> 27
7.15 TRANSACTIONS WITH AFFILIATES. Except as otherwise disclosed on
SCHEDULE 7.15 or permitted by SECTION 9.5, no Guarantor or Company is a party
to a material transaction with any of its Affiliates.
7.16 LEASES. Except where not a Material-Adverse Event (a) each
Company enjoys peaceful and undisturbed possession under all leases necessary
for the operation of its properties and assets, and (b) all material leases
under which any Company is a lessee are in full force and effect.
7.17 LABOR MATTERS. Except where not a Material-Adverse Event (a) no
actual or threatened strikes, labor disputes, slow downs, walkouts, work
stoppages, or other concerted interruptions of operations that involve any
employees employed at any time in connection with the business activities or
operations at the Real Property exist, (b) hours worked by and payment made to
the employees of any Company or any Predecessor have not been in violation of
the Fair Labor Standards Act or any other applicable Legal Requirements
pertaining to labor matters, (c) all payments due from any Company for employee
health and welfare insurance, including, without limitation, workers
compensation insurance, have been paid or accrued as a liability on its books,
(d) the business activities and operations of each Company are in compliance
with OSHA and other applicable health and safety Legal Requirements.
7.18 INTELLECTUAL PROPERTY. Except where not a Material-Adverse Event
(a) each Company owns or has the right to use all material licenses, patents,
patent applications, copyrights, service marks, trademarks, trademark
applications and trade names necessary to continue to conduct its businesses as
presently conducted by it and proposed to be conducted by it immediately after
the date of this agreement, (b) each Company is conducting its business without
infringement or claim of infringement of any license, patent, copyright,
service mark, trademark, trade name, trade secret or other intellectual
property right of others, and (c) no infringement or claim of infringement by
others of any material license, patent, copyright, service mark, trademark,
trade name, trade secret or other intellectual property of any Company exists.
7.19 Y2K ISSUE. Each Guarantor and each Company has (a) initiated a
review and assessment of all areas within businesses and operations (including
those affected by suppliers and vendors) that could be adversely affected by
the Y2K Issue, (b) developed a plan and time line for addressing the Y2K Issue
on a timely basis, and (c) to date implemented in all material respects that
plan in accordance with that timetable.
7.20 FULL DISCLOSURE. Each fact or condition relating to any
Guarantor's or any Company's financial condition, business, or property that is
a Material-Adverse Event has been disclosed in writing to Administrative Agent.
All information previously furnished by any Guarantor or Company to
Administrative Agent in connection with the Credit Documents was (and all
information furnished in the future by any Company to Administrative Agent will
be) true and accurate in all material respects or based on reasonable estimates
on the date the information is stated or certified.
SECTION 8 AFFIRMATIVE COVENANTS. As long as any Lender is committed to lend
under this agreement and until the Obligation has been fully paid and
performed, Borrower covenants and agrees with Administrative Agent and Lenders
that, without first obtaining Required Lenders' consent to the contrary:
8.1 CERTAIN ITEMS FURNISHED. Borrower shall cause the following to be
furnished to each Lender:
CREDIT AGREEMENT
22
<PAGE> 28
(a) ANNUAL FINANCIALS OF TEPPCO PARTNERS. Promptly after
preparation but no later than 90 days after the last day of each
fiscal year of TEPPCO Partners, Financials showing the consolidated
and consolidating financial condition and results of operations of
TEPPCO Partners and its Subsidiaries as of, and for the year ended on,
that last day setting forth in comparative form the figures for the
previous fiscal year, accompanied by (i) the opinion, without material
qualification, of KPMG LLP or other firm of nationally-recognized
independent certified public accountants reasonably acceptable to
Required Lenders, based on an audit using generally accepted auditing
standards, that those Financials were prepared in accordance with GAAP
and present fairly, in all material respects, the consolidated and
consolidating financial condition and results of operations of TEPPCO
Partners and its Subsidiaries, and (ii) a related Compliance
Certificate, together with a completed copy of the schedule to that
certificate, from a Responsible Officer, on behalf of TEPPCO Partners.
(b) ANNUAL FINANCIALS OF THE COMPANIES AND OF BORROWER.
Promptly after preparation but no later than 90 days after the last
day of each fiscal year of the Companies, Financials showing the
consolidated and consolidating financial condition and results of
operations of the Companies and of Borrower and its Subsidiaries as
of, and for the year ended on, that last day setting forth in
comparative form the figures for the previous fiscal year, accompanied
by (i) a letter from KPMG LLP or other firm of nationally-recognized
independent certified public accountants reasonably acceptable to
Required Lenders stating that, in connection with the audit of TEPPCO
Partners, such firm reviewed such Financials of the Companies and of
Borrower and its Subsidiaries, and (ii) related Compliance
Certificates, together with, in respect of TCTM only, a completed copy
of the schedule to its certificate, from a Responsible Officer, on
behalf of TCTM and Borrower, respectively.
(c) QUARTERLY FINANCIALS. Promptly after preparation but no
later than 45 days after the last day of each of the first three
fiscal quarters of TEPPCO Partners and the Companies each year,
Financials showing the consolidated and consolidating financial
condition and results of operations of TEPPCO Partners and its
Subsidiaries, of the Companies, and of Borrower and its Subsidiaries
for that fiscal quarter and for the period from the beginning of the
current fiscal year to the last day of that fiscal quarter setting
forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the previous
fiscal quarter, accompanied in each case by a related Compliance
Certificate, together with a completed copy of the schedule to that
certificate, signed by a Responsible Officer, on behalf of TEPPCO
Partners, TCTM, and Borrower, as the case may be.
(d) OTHER REPORTS. Promptly after preparation and
distribution, accurate and complete copies of all reports and other
material communications about material financial matters or material
corporate plans or projections by or for any Guarantor or any Company
for distribution to any Governmental Authority or any creditor, other
than credit, trade, and other reports prepared and distributed in the
ordinary course of business and information otherwise furnished to
Administrative Agent and Lenders under this agreement.
(e) EMPLOYEE PLANS. As soon as possible and within 30 days
after any Guarantor or any Company knows that any event which would
constitute a reportable event under Section 4043(b) of Title IV of
ERISA with respect to any Employee Plan subject to ERISA has occurred,
or that the PBGC has instituted or will institute proceedings under
ERISA to terminate that plan, deliver a
CREDIT AGREEMENT
23
<PAGE> 29
certificate of a Responsible Officer on behalf of Borrower setting
forth details as to that reportable event and the action which
Borrower or an ERISA Affiliate, as the case may be, proposes to take
with respect to it, together with a copy of any notice of that
reportable event which may be required to be filed with the PBGC, or
any notice delivered by the PBGC evidencing its intent to institute
those proceedings or any notice to the PBGC that the plan is to be
terminated, as the case may be. For all purposes of this section, each
Guarantor and any Company is deemed to have all knowledge of all facts
attributable to the plan administrator under ERISA.
(f) OTHER NOTICES. Notice, promptly after Borrower knows, of
(i) the existence and status of any Litigation that is reasonably
likely to be adversely determined and, if determined adversely to any
Guarantor or any Company, would be a Material-Adverse Event, (ii) any
change in any material fact or circumstance represented or warranted
by any Guarantor or any Company in any Credit Document, (iii) an Event
of Default or Potential Default, specifying the nature thereof and
what action the Companies have taken, are taking, or propose to take.
(g) Y2K. Notice promptly after either of Borrower or any
Guarantor discovers or determines that any computer applications
(including those of suppliers and vendors to any Guarantor or any
Company) that are material to the businesses or operations of any
Guarantor or any Company will not be compliant in timely resolving the
Y2K Issue if that failure could reasonably be expected to be a
Material-Adverse Event.
(h) OTHER INFORMATION. Promptly when reasonably requested by
Administrative Agent or any Lender, such reasonable information (not
otherwise required to be furnished under this agreement) about any
Guarantor or any Company's business affairs, assets, and liabilities.
8.2 USE OF CREDIT. Borrower shall use the proceeds of Borrowings only
for the purposes represented in this agreement.
8.3 BOOKS AND RECORDS. Each Guarantor and Company shall maintain
books, records, and accounts necessary to prepare Financials in accordance with
GAAP.
8.4 INSPECTIONS. Upon reasonable request and subject to compliance
with applicable safety standards, with contractual privilege and non-disclosure
agreements, and with the same conditions applicable to any Guarantor or any
Company in respect of property of that Guarantor or Company on the premises of
other Persons, each Guarantor and Company shall allow Administrative Agent or
any Lender (or their respective Representatives) to inspect any of its
properties, to review reports, files, and other records and to make and take
away copies thereof, to conduct reasonable tests or investigations, and to
discuss any of its affairs, conditions, and finances with its other creditors,
directors, officers, employees, or representatives from time to time, during
reasonable business hours.
8.5 TAXES. Each Guarantor and Company shall promptly pay when due any
and all Taxes except Taxes that are being contested in good faith by lawful
proceedings diligently conducted, against which reserve or other provision
required by GAAP has been made, and in respect of which levy and execution of
any Lien sufficient to be enforced has been and continues to be stayed.
CREDIT AGREEMENT
24
<PAGE> 30
8.6 PAYMENT OF OBLIGATION. Each Guarantor and Company shall promptly
pay (or renew and extend) all of its material obligations as they become due
(unless the obligations are being contested in good faith by, if required,
appropriate proceedings).
8.7 EXPENSES. Within ten Business Days after demand accompanied by an
invoice describing the costs, fees, and expenses in reasonable detail (and
subject to any limitations separately agreed to in writing by Borrower and
Administrative Agent in respect of costs, fees, and expenses of Administrative
Agent or any of its Representatives), Borrower shall pay (a) all costs, fees,
and reasonable expenses paid or incurred by Administrative Agent incident to
any Credit Document (including the reasonable fees and expenses of
Administrative Agent's counsel in connection with the negotiation, preparation,
delivery, and execution of the Credit Documents and any related amendment,
waiver, or consent) and (b) all reasonable costs and expenses incurred by
Administrative Agent or any Lender in connection with the enforcement of the
obligations of any Company under the Credit Documents or the exercise of any
Rights under the Credit Documents (including reasonable attorneys' fees and
court costs), all of which are part of the Obligation, bearing interest, (if
not paid within ten Business Days after demand accompanied by an invoice
describing the costs, fees, and expenses in reasonable detail) on the portion
thereof from time to time unpaid at the Default Rate until paid.
8.8 MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Each Guarantor and
Company shall (a) except in connection with dispositions permitted under
SECTION 9.9 and mergers, consolidations, and dissolutions permitted under
SECTION 9.10, maintain its existence and good standing in its state of
formation, and (b) except where not a Material-Adverse Event (i) maintain its
authority to transact business and good standing in all other states, (ii)
maintain all licenses, permits, and franchises (including Environmental
Permits) necessary for its business, and (iii) keep all of its material assets
that are useful in and necessary to its business in good working order and
condition (ordinary wear and tear excepted) and make all necessary repairs and
replacements.
8.9 INSURANCE. Each Guarantor and Company shall, at its cost and
expense, maintain with financially sound, responsible, and reputable insurance
companies or associations (or, as to workers' compensation or similar
insurance, with an insurance fund or by self-insurance authorized by the
jurisdictions in which it operates) insurance concerning its properties and
businesses against casualties and contingencies and of types and in amounts
(and with co-insurance and deductibles) as is customary in the case of similar
businesses.
8.10 ENVIRONMENTAL MATTERS. Each Guarantor and Company shall (a)
operate and manage its businesses and otherwise conduct its affairs in
compliance with all Environmental Laws and Environmental Permits except to the
extent noncompliance does not constitute a Material-Adverse Event, (b) promptly
deliver to Administrative Agent a copy of any notice received from any
Governmental Authority alleging that Guarantor or any Company is not in
compliance with any Environmental Law or Environmental Permit if the allegation
constitutes a Material-Adverse Event, and (c) promptly deliver to
Administrative Agent a copy of any notice received from any Governmental
Authority alleging that any Guarantor or any Company has any potential
Environmental Liability if the allegation constitutes a Material-Adverse Event.
8.11 INDEMNIFICATION.
(a) AS USED IN THIS SECTION: (I) "INDEMNITEE" MEANS
ADMINISTRATIVE AGENT, EACH LENDER, EACH PRESENT AND FUTURE AFFILIATE
(WITH WHOM BORROWER OR A
CREDIT AGREEMENT
25
<PAGE> 31
GUARANTOR HAS ENTERED INTO A WRITTEN CONTRACTUAL ARRANGEMENT) OF
ADMINISTRATIVE AGENT OR ANY LENDER, EACH PRESENT AND FUTURE
REPRESENTATIVE OF ADMINISTRATIVE AGENT, ANY LENDER, OR ANY OF THOSE
AFFILIATES, AND EACH PRESENT AND FUTURE SUCCESSOR AND PERMITTED ASSIGN
OF ADMINISTRATIVE AGENT, ANY LENDER, OR ANY OF THOSE AFFILIATES OR
REPRESENTATIVES; AND (II) "INDEMNIFIED LIABILITIES" MEANS ALL KNOWN
AND UNKNOWN, FIXED AND CONTINGENT, ADMINISTRATIVE, INVESTIGATIVE,
JUDICIAL, AND OTHER CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION,
INVESTIGATIONS, SUITS, PROCEEDINGS, AMOUNTS PAID IN SETTLEMENT,
DAMAGES, JUDGMENTS, PENALTIES, COURT COSTS, LIABILITIES, AND
OBLIGATIONS -- AND ALL COSTS AND REASONABLE EXPENSES, AND
DISBURSEMENTS (INCLUDING ALL REASONABLE ATTORNEYS' FEES AND EXPENSES
WHETHER OR NOT SUIT OR OTHER PROCEEDING EXISTS OR ANY INDEMNITEE IS
PARTY TO ANY SUIT OR OTHER PROCEEDING) IN ANY WAY RELATED TO ANY OF
THE FOREGOING -- THAT MAY AT ANY TIME BE IMPOSED ON, INCURRED BY, OR
ASSERTED AGAINST ANY INDEMNITEE AND IN ANY WAY ARISING OUT OF ANY (A)
CREDIT DOCUMENT, TRANSACTION CONTEMPLATED BY ANY CREDIT DOCUMENT, OR
REAL PROPERTY, (B) ENVIRONMENTAL LIABILITY IN ANY WAY RELATED TO ANY
GUARANTOR OR ANY COMPANY, PREDECESSOR, REAL PROPERTY, OR ACT,
OMISSION, STATUS, OWNERSHIP, OR OTHER RELATIONSHIP, CONDITION, OR
CIRCUMSTANCE CONTEMPLATED BY, CREATED UNDER, OR ARISING PURSUANT TO OR
IN CONNECTION WITH ANY CREDIT DOCUMENT, OR (C) INDEMNITEE'S SOLE OR
CONCURRENT ORDINARY NEGLIGENCE.
(b) BORROWER SHALL INDEMNIFY EACH INDEMNITEE FROM AND
AGAINST, PROTECT AND DEFEND EACH INDEMNITEE FROM AND AGAINST, HOLD
EACH INDEMNITEE HARMLESS FROM AND AGAINST, AND ON DEMAND PAY OR
REIMBURSE EACH INDEMNITEE FOR, ALL INDEMNIFIED LIABILITIES.
(c) THE FOREGOING PROVISIONS (i) ARE NOT LIMITED IN AMOUNT
EVEN IF THAT AMOUNT EXCEEDS THE OBLIGATION, (ii) INCLUDE, WITHOUT
LIMITATION, REASONABLE FEES AND EXPENSES OF ATTORNEYS AND OTHER COSTS
AND EXPENSES OF LITIGATION OR PREPARING FOR LITIGATION AND DAMAGES OR
INJURY TO PERSONS, PROPERTY, OR NATURAL RESOURCES ARISING UNDER ANY
STATUTORY OR COMMON LEGAL REQUIREMENT, PUNITIVE DAMAGES, FINES, AND
OTHER PENALTIES, AND (iii) ARE NOT AFFECTED BY THE SOURCE OR ORIGIN OF
ANY HAZARDOUS SUBSTANCE, AND (iv) ARE NOT AFFECTED BY ANY INDEMNITEE'S
INVESTIGATION, ACTUAL OR CONSTRUCTIVE KNOWLEDGE, COURSE OF DEALING, OR
WAIVER.
(d) HOWEVER, NO INDEMNITEE IS ENTITLED TO BE INDEMNIFIED
UNDER THE CREDIT DOCUMENTS FOR ITS OWN SOLE GROSS NEGLIGENCE OR SOLE
WILFUL MISCONDUCT.
(e) THE PROVISIONS OF AND INDEMNIFICATION AND OTHER
UNDERTAKINGS UNDER THIS SECTION SURVIVE THE SALE OR OTHER TRANSFER OF
ANY REAL PROPERTY TO ANY PERSON, THE SATISFACTION OF THE OBLIGATION,
AND THE TERMINATION OF THE CREDIT DOCUMENTS FOR ONE YEAR.
SECTION 9 NEGATIVE COVENANTS. As long as any Lender is committed to lend under
this agreement and until the Obligation has been fully paid and performed,
Borrower covenants and agrees with Administrative Agent and Lenders that,
without first obtaining Required Lenders' consent (which shall not be
unreasonably withheld) to the contrary the Persons designated in the following
sections of this SECTION 9 may not directly or indirectly do any of the
following or commit (other than a commitment that is not binding
CREDIT AGREEMENT
26
<PAGE> 32
on any such Person until any prior written consent of Required Lenders is first
obtained) to do any of the following:
9.1 DEBT. No Company may have any Debt except the following (the
"PERMITTED DEBT"):
(a) OBLIGATION. The Obligation and any Guaranty under this
agreement.
(b) EXISTING DEBT. The Debt described on SCHEDULE 7.12 (other
than any such Debt that is described on that schedule as to be paid
with the proceeds of Borrowings), together with all renewals,
extensions, amendments, modifications, and refinancings of (but not
any principal increases to) any of that Debt.
(c) INTERCOMPANY. Debt of Borrower to TCTM or of any of
Borrower's or TCTM's Subsidiaries to Borrower or TCTM.
(d) HEDGING AGREEMENTS. Hedging Agreements.
9.2 PREPAYMENTS. No Company may prepay or redeem or cause to be
prepaid or redeemed any principal of, or any interest on, any of its Debt
except (a) any of its other Debt if no Event of Default or Potential Default
exists immediately before, or will occur as a result of (or otherwise will
exist immediately after), the prepayment or redemption and (b) the Obligation.
9.3 LIENS. No Company may (a) create, incur, or suffer or permit to be
created or incurred or to exist any Lien upon any of its assets except
Permitted Liens or (b) enter into or permit to exist any arrangement or
agreement that directly or indirectly prohibits any Company from creating or
incurring any Lien on any of its assets except (i) the Credit Documents, (ii)
the TE Products Credit Agreement and related loan documents, (iii) any lease
that places a Lien prohibition on only the property subject to that lease, and
(iv) arrangements and agreements that apply only to property subject to
Permitted Liens. The following are "PERMITTED LIENS":
(a) EXISTING LIENS. The existing Liens that are described on
SCHEDULE 7.13 and all renewals, extensions, amendments, and
modifications of any of them to the extent that the total- principal
amount each individually secures never exceeds the total-principal
amount secured by it on the date of this agreement.
(b) THIS TRANSACTION. Liens, if any, ever granted to
Administrative Agent in favor of Lenders to secure all of any part of
the Obligation.
(c) SETOFFS. Subject to any limitations imposed upon them in
the Credit Documents, rights of set off or recoupment and banker's
Liens.
(d) INSURANCE. Pledges or deposits made to secure payment of
workers' compensation, unemployment insurance, or other forms of
governmental insurance or benefits or to participate in any fund in
connection with workers' compensation, unemployment insurance,
pensions, or other social security programs.
CREDIT AGREEMENT
27
<PAGE> 33
(e) BIDS AND BONDS. Good-faith pledges or deposits (i) for
10% or less of the amounts due under (and made to secure) any
Company's performance of bids, tenders, contracts (except for the
repayment of borrowed money), (ii) in respect of any operating lease,
that are for up to but not more than the greater of either 10% of the
total rental obligations for the term of the lease or 50% of the total
rental obligations payable during the first year of the lease, or
(iii) made to secure statutory obligations, surety or appeal bonds, or
indemnity, performance, or other similar bonds benefitting any Company
in the ordinary course of its business.
(f) PROPERTY RESTRICTIONS. Zoning and similar restrictions on
the use of, and easements, restrictions, covenants, title defects, and
similar encumbrances on, Real Property that do not materially impair
the use of the Real Property and that are not violated by existing or
proposed structures or land use.
(g) INCHOATE LIENS. If no Lien has been filed in any
jurisdiction or agreed to (i) claims and Liens for Taxes not yet due
and payable, (ii) mechanic's Liens and materialman's Liens for
services or materials and similar Liens incident to construction and
maintenance of real property, in each case for which payment is not
yet due and payable, (iii) landlord's Liens for rental not yet due and
payable, and (iv) Liens of warehousemen and carriers and similar Liens
securing obligations that are not yet due and payable.
(h) MISCELLANEOUS. Any of the following to the extent that
the validity or amount is being contested in good faith and by
appropriate and lawful proceedings diligently conducted, reserve or
other appropriate provision (if any) required by GAAP has been made,
levy and execution has not issued or continues to be stayed, and they
do not individually or collectively detract materially from the value
of the property of the Person in question or materially impair the use
of that property in the operation of its business: (i) Claims and
Liens for Taxes; (ii) claims and Liens upon, and defects of title to,
real or personal property, including any attachment of personal or
real property or other legal process before adjudication of a dispute
on the merits; (iii) claims and Liens of mechanics, materialmen,
warehousemen, carriers, landlords, or other like Liens; (iv) Liens
incident to construction and maintenance of real property; and (v)
adverse judgments, attachments, or orders on appeal for the payment of
money.
9.4 EMPLOYEE PLANS. Except as disclosed on SCHEDULE 7.11 or where not
a Material-Adverse Event, no Company may permit any of the events or
circumstances described in SECTION 7.11 to exist or occur.
9.5 TRANSACTIONS WITH AFFILIATES. No Company may enter into any
material transaction with any of its Affiliates except (a) those described on
SCHEDULE 7.15, (b) transactions between Borrower and a Guarantor, (c)
transactions permitted under SECTIONS 9.1 or 9.7, (d) transactions in the
ordinary course of business and upon fair and reasonable terms not materially
less favorable than it could obtain or could become entitled to in an
arm's-length transaction with a Person that was not its Affiliate, and (e)
compensation arrangements in the ordinary course of business with directors and
officers of the Companies.
9.6 COMPLIANCE WITH LEGAL REQUIREMENTS AND DOCUMENTS. No Company may
(a) violate the provisions of any Legal Requirements (including, without
limitation, OSHA and Environmental Laws) applicable to it or of any material
agreement to which it is a party if that violation alone, or when aggregated
with all other violations, would be a Material-Adverse Event, (b) violate in
any material respect any
CREDIT AGREEMENT
28
<PAGE> 34
provision of its Constituent Documents, or (c) repeal, replace, or amend any
provision of its Constituent Documents if that action would be a
Material-Adverse Event.
9.7 INVESTMENTS. No Company may make any Investments except the
following (the "PERMITTED INVESTMENTS"):
(a) INVESTMENT POLICY. Investments specifically permitted by
Texas Eastern's short-term cash and long-term investment policies,
true and correct copies of which have been provided to Administrative
Agent as they are from time to time in effect.
(b) INTERCOMPANY. Investments by TCTM in any of its
Subsidiaries that are also Guarantors, or by those Subsidiaries in any
other of its Subsidiaries that are also Guarantors.
For purposes of this SECTION 9, the total amount outstanding of any Investment
by any Person in any other Person is to be determined net of repayments and
dividends to, and sales of securities of the second Person by, the first
Person.
9.8 DISTRIBUTIONS. No Guarantor or Company may:
(a) enter into or permit to exist any arrangement or
agreement (other than this agreement and the TE Products Credit
Agreement) that prohibits it from paying Distributions to its equity
holders; or
(b) declare, make, or pay any Distribution other than (i)
Distributions from any Subsidiary of TCTM to its parent corporation,
(ii) Distributions from TCTM to TEPPCO Partners at any time when no
Potential Default or Event of Default exists or would exist
immediately after that Distribution, and (iii) Distributions by TEPPCO
Partners that (A) will not violate its Constituent Documents and (B)
do not exceed "Available Cash" as defined in TEPPCO Partners'
Agreement of Limited Partnership, in each case, so long as no Event of
Default or Potential Default exists or would exist as a result of it.
9.9 DISPOSITION OF ASSETS. No Company may sell, assign, lease,
transfer, or otherwise dispose of any of its assets (including equity interests
in any other Company) other than (a) dispositions in the ordinary course of
business for a fair and adequate consideration, (b) dispositions of assets that
are obsolete or are no longer in use and are not significant to the
continuation of that Company's business, and (c) dispositions from TCTM or
Borrower to their respective Subsidiaries that are also Guarantors, or by those
Subsidiaries to any other of their Subsidiaries that are also Guarantors.
9.10 MERGERS, CONSOLIDATIONS, AND DISSOLUTIONS. No Guarantor or
Company may merge or consolidate with any other Person or dissolve except (a)
if no Event of Default or Potential Default exists or will exist as a result of
it, any merger or consolidation, involving one or more Guarantors or Companies
(so long as, if TEPPCO Partners is involved, it is the survivor, and if
Borrower is involved other than with TEPPCO Partners, it is the survivor), and
(b) dissolution of any Guarantor or Company (other than TEPPCO Partners) if
substantially all of its assets have been conveyed to any other Guarantor or
Company or disposed of as permitted in SECTION 9.9.
CREDIT AGREEMENT
29
<PAGE> 35
9.11 AMENDMENT OF CONSTITUENT DOCUMENTS. No Guarantor or Company shall
materially amend or modify (or permit the material amendment or modification
of) its Constituent Documents.
9.12 ASSIGNMENT. No Guarantor or Company may assign or transfer any of
its Rights, duties, or obligations under any of the Credit Documents.
9.13 FISCAL YEAR AND ACCOUNTING METHODS. No Company may change its
fiscal year for accounting purposes or any material aspect of its method of
accounting except to conform any new Subsidiary's accounting methods to TCTM's
accounting methods.
9.14 NEW BUSINESSES. No Guarantor or Company may engage in any
business except the businesses in which it is presently engaged and any other
reasonably related business.
9.15 GOVERNMENT REGULATIONS. No Guarantor or Company may conduct its
business in a way that it becomes regulated under the Investment Company Act of
1940 or the Public Utility Holding Company Act of 1935.
9.16 STRICT COMPLIANCE. No Guarantor or Company may indirectly do
anything that it may not directly do under any covenant in any Credit Document.
SECTION 10 FINANCIAL COVENANTS. As long as any Lender is committed to lend
under this agreement and until the Obligation has been fully paid and
performed, Borrower covenants and agrees with Administrative Agent and Lenders
that, without first obtaining Required Lenders' consent to the contrary, the
following may not occur or exist as applicable to the Companies and as
determined as of the last day of each fiscal quarter of TCTM:
10.1 MINIMUM NET WORTH. The Companies' stockholders' equity may never
be less than the sum of (a) $88,773,000, plus (b) 25% of the Companies'
quarterly, cumulative Net Income (without deduction for losses) after December
31, 1998, plus (c) 100% of all equity contributions to TCTM after December 31,
1998.
10.2 MAXIMUM FUNDED DEBT TO EBITDA. The ratio of the Companies' Funded
Debt to the Companies' EBITDA may never exceed 2.0 to 1.0.
10.3 FIXED CHARGE COVERAGE RATIO. The ratio of (a) the Companies'
EBITDA to (b) the Companies' Interest Expense and expenditures for the
maintenance or repair of capital assets may never be less than 2.0 to 1.0.
SECTION 11 EVENTS OF DEFAULT. The term "EVENT OF DEFAULT" means the occurrence
of any one or more of the following:
11.1 PAYMENT OF OBLIGATION. Borrower's failure or refusal to pay (a)
principal of any Note on or before the date due or (b) any other part of the
Obligation (including fees due under the Credit Documents) on or before three
Business Days after the date due.
CREDIT AGREEMENT
30
<PAGE> 36
11.2 COVENANTS. Any Guarantor's or Company's failure or refusal to
punctually and properly perform, observe, and comply with any covenant (other
than covenants to pay the Obligation) applicable to it:
(a) In SECTIONS 9 or 10; or
(b) In SECTION 8.1, and that failure or refusal continues for
ten days after the earlier of either any Guarantor or any Company
knows of it or any Guarantor or any Company is notified of it by
Administrative Agent or any Lender; or
(c) In any other provision of any Credit Document, and that
failure or refusal continues for 30 days after the earlier of either
any Guarantor or any Company knows of it or any Guarantor or any
Company is notified of it by Administrative Agent or any Lender.
11.3 DEBTOR RELIEF. Any Guarantor or Company (a) is not Solvent, (b)
fails to pay its Debts generally as they become due, (c) voluntarily seeks,
consents to, or acquiesces in the benefit of any Debtor Law, or (d) becomes a
party to or is made the subject of any proceeding (except as a creditor or
claimant) provided for by any Debtor Law (unless, if the proceeding is
involuntary, the applicable petition is dismissed within 60 days after its
filing).
11.4 JUDGMENTS AND ATTACHMENTS. Where the amounts in controversy or of
any judgments, as the case may be, exceed (from and after the Closing Date and
individually or collectively) $25,000,000 for TEPPCO Partners or $1,000,000 for
any other Guarantor or Company, such entity fails (a) to have discharged,
within 60 days after its commencement, any attachment, sequestration, or
similar proceeding against any of its assets or (b) to pay any money judgment
against it within ten days before the date on which any of its assets may be
lawfully sold to satisfy that judgment.
11.5 GOVERNMENT ACTION. Where it is a Material-Adverse Event (a) a
final non-appealable order is issued by any Governmental Authority (including
the United States Justice Department) seeking to cause any Guarantor or Company
to divest a significant portion of its assets under any antitrust, restraint of
trade, unfair competition, industry regulation, or similar Legal Requirements,
or (b) any Governmental Authority condemns, seizes, or otherwise appropriates,
or takes custody or control of all or any substantial portion of any
Guarantor's or Company's assets.
11.6 MISREPRESENTATION. Any representation or warranty made by any
Guarantor or Company in any Credit Document at any time proves to have been
materially incorrect when made.
11.7 CHANGE OF CONTROL. Any one or more of the following occurs or
exists: (a) TCTM ceases to be the managing member of Borrower; (b) TEPPCO
Partners ceases to own at least 98.9899% of the limited partner interests in
TCTM; or (c) Texas Eastern or any other subsidiary of Duke Energy Corporation
ceases to be the sole general partner of TEPPCO Partners or TCTM or both.
11.8 OTHER DEBT.
(a) TE PRODUCTS CREDIT AGREEMENT. The existence of an "Event
of Default" under the TE Products Credit Agreement.
CREDIT AGREEMENT
31
<PAGE> 37
(b) OTHER. In respect of any other Debt owed by any Guarantor
or Company (other than the Obligation) individually or collectively of
at least $5,000,000 (a) any Guarantor or Company fails to make any
payment when due (inclusive of any grace, extension, forbearance, or
similar period), or (b) any default or other event or condition occurs
or exists beyond the applicable grace or cure period, the effect of
which is to cause or to permit any holder of that Debt to cause
(whether or not it elects to cause) any of that Debt to become due
before its stated maturity or regularly scheduled payment dates, or
(c) any of that Debt is declared to be due and payable or required to
be prepaid by any Guarantor or Company before its stated maturity.
11.9 VALIDITY AND ENFORCEABILITY. Once executed, this agreement, any
Note or Guaranty ceases to be in full force and effect in any material respect
or is declared to be null and void or its validity or enforceability is
contested in writing by any Guarantor or Company party to it or any Guarantor
or Company party to it denies in writing that it has any further liability or
obligations under it except in accordance with that document's express
provisions or as the appropriate parties under SECTION 14.8 below may otherwise
agree in writing.
SECTION 12 RIGHTS AND REMEDIES.
12.1 REMEDIES UPON EVENT OF DEFAULT.
(a) DEBTOR RELIEF. If an Event of Default exists under
SECTION 11.3, the commitment to extend credit under this agreement
automatically terminates, the entire unpaid balance of the Principal
Debt and an accrued and unpaid portion of the remaining Obligation
automatically becomes due and payable without any action of any kind
whatsoever.
(b) OTHER EVENTS OF DEFAULT. If any Event of Default exists,
subject to the terms of SECTION 13.5(B), Administrative Agent may
(with the consent of, and must, upon the request of, Required
Lenders), upon notice to Borrower, do any one or more of the
following: (i) If the maturity of the Obligation has not already been
accelerated under SECTION 12.1(A), declare the entire unpaid balance
of all or any part of the Principal Debt and an accrued and unpaid
portion of the remaining Obligation immediately due and payable,
whereupon it is due and payable; (ii) terminate the commitments of
Lenders to extend credit under this agreement; (iii) reduce any claim
to judgment; and (iv) exercise any and all other legal or equitable
Rights afforded by the Credit Documents, by applicable Legal
Requirements, or in equity.
(c) OFFSET. If an Event of Default exists, to the extent
lawful, upon notice to Borrower, each Lender may exercise the Rights
of offset and banker's lien against each and every account and other
property, or any interest therein, which Borrower may now or hereafter
have with, or which is now or hereafter in the possession of, that
Lender to the extent of the full amount of the Obligation then matured
and owed to that Lender.
12.2 COMPANY WAIVERS. To the extent lawful, Borrower waives all other
presentment and demand for payment, protest, notice of intention to accelerate,
notice of acceleration, and notice of protest and nonpayment, and agrees that
its liability with respect to all or any part of the Obligation is not affected
by any renewal or extension in the time of payment of all or any part of the
Obligation, by any indulgence, or by any release or change in any security for
the payment of all or any part of the Obligation.
CREDIT AGREEMENT
32
<PAGE> 38
12.3 NOT IN CONTROL. Nothing in any Credit Documents gives or may be
deemed to give to Administrative Agent or any Lender the Right to exercise
control over any Company's Real Property, other assets, affairs, or management
or to preclude or interfere with any Company's compliance with any Legal
Requirement or require any act or omission by any Company that may be harmful
to Persons or property. Any "Material-Adverse Event" or other materiality or
substantiality qualifier of any representation, warranty, covenant, agreement,
or other provision of any Credit Document is included for credit documentation
purposes only and does not imply or be deemed to mean that Administrative Agent
or any Lender acquiesces in any non-compliance by any Company with any Legal
Requirement, document, or otherwise or does not expect the Companies to
promptly, diligently, and continuously carry out all appropriate removal,
remediation, compliance, closure, or other activities required or appropriate
in accordance with all Environmental Laws. Administrative Agent's and Lenders'
power is limited to the Rights provided in the Credit Documents. All of those
Rights exist solely (and may be exercised in manner calculated by
Administrative Agent or Lenders in their respective good faith business
judgment) to assure payment and performance of the Obligation.
12.4 COURSE OF DEALING. The acceptance by Administrative Agent or
Lenders of any partial payment on the Obligation is not a waiver of any Event
of Default then existing. No waiver by Administrative Agent, Required Lenders,
or Lenders of any Event of Default is a waiver of any other then-existing or
subsequent Event of Default. No delay or omission by Administrative Agent,
Required Lenders, or Lenders in exercising any Right under the Credit Documents
impairs that Right or is a waiver thereof or any acquiescence therein, nor will
any single or partial exercise of any Right preclude other or further exercise
thereof or the exercise of any other Right under the Credit Documents or
otherwise.
12.5 CUMULATIVE RIGHTS. All Rights available to Administrative Agent,
Required Lenders, and Lenders under the Credit Documents are cumulative of and
in addition to all other Rights granted to Administrative Agent, Required
Lenders, and Lenders at law or in equity, whether or not the Obligation is due
and payable and whether or not Administrative Agent, Required Lenders, or
Lenders have instituted any suit for collection, foreclosure, or other action
in connection with the Credit Documents.
12.6 APPLICATION OF PROCEEDS. Any and all proceeds ever received by
Administrative Agent or Lenders from the exercise of any Rights pertaining to
the Obligation shall be applied to the Obligation according to SECTION 3.
12.7 EXPENDITURES BY LENDERS. Any costs and reasonable expenses spent
or incurred by Administrative Agent or any Lender in the exercise of any Right
under any Credit Document is payable by Borrower to Administrative Agent within
ten Business Days after it has given demand and copies of supporting invoices
or statements (if any), becomes part of the Obligation, and bears interest at
the Default Rate from the date spent until the date repaid.
12.8 LIMITATION OF LIABILITY. No Administrative Agent or Lender shall
be liable to any Company for any amounts representing indirect, special, or
consequential damages suffered by any Company, except where such amounts are
based substantially on willful misconduct by that Administrative Agent or that
Lender, but then only to the extent any damages resulting from such wilful
misconduct are covered by that Administrative Agent's and that Lenders'
fidelity bond or other insurance.
CREDIT AGREEMENT
33
<PAGE> 39
SECTION 13 ADMINISTRATIVE AGENT AND LENDERS.
13.1 ADMINISTRATIVE AGENT.
(a) APPOINTMENT. Each Lender appoints Administrative Agent
(including, without limitation, each successor Administrative Agent in
accordance with this SECTION 13) as its nominee and agent to act in
its name and on its behalf (and Administrative Agent and each such
successor accepts that appointment): (i) To act as its nominee and on
its behalf in and under all Credit Documents; (ii) to arrange the
means whereby its funds are to be made available to Borrower under the
Credit Documents; (iii) to take any action that it properly requests
under the Credit Documents (subject to the concurrence of other
Lenders as may be required under the Credit Documents); (iv) to
receive all documents and items to be furnished to it under the Credit
Documents; (v) to be the secured party, mortgagee, beneficiary,
recipient, and similar party in respect of collateral, if any, for the
benefit of Lenders; (vi) to promptly distribute to it all material
information, requests, documents, and items received from Borrower
under the Credit Documents; (vii) to promptly distribute to it its
ratable part of each payment or prepayment (whether voluntary, as
proceeds of collateral upon or after foreclosure, as proceeds of
insurance thereon, or otherwise) in accordance with the terms of the
Credit Documents; and (viii) to deliver to the appropriate Persons
requests, demands, approvals, and consents received from it. However,
Administrative Agent may not be required to take any action that
exposes it to personal liability or that is contrary to any Credit
Document or applicable Legal Requirement.
(b) SUCCESSOR. Administrative Agent may, subject to
Borrower's prior written consent that may not be unreasonably
withheld, assign all of its Rights and obligations as Administrative
Agent under the Credit Documents to any of its Affiliates, which
Affiliate shall then be the successor Administrative Agent under the
Credit Documents. Administrative Agent may also, upon 30 days prior
notice to Borrower, voluntarily resign. If the initial or any
successor Administrative Agent ever ceases to be a party to this
agreement or if the initial or any successor Administrative Agent ever
resigns then Required Lenders shall (which, if no Event of Default or
Potential Default exists, is subject to Borrower's approval that may
not be unreasonably withheld) appoint the successor Administrative
Agent from among Lenders (other than the resigning Administrative
Agent). If Required Lenders fail to appoint a successor Administrative
Agent within 30 days after the resigning Administrative Agent has
given notice of resignation, then the resigning Administrative Agent
may, on behalf of Lenders, upon 30 days prior notice to Borrower,
appoint a successor Administrative Agent, which must be a commercial
bank having a combined capital and surplus of at least $1,000,000,000
(as shown on its most recently published statement of condition). Upon
its acceptance of appointment as successor Administrative Agent, the
successor Administrative Agent succeeds to and becomes vested with all
of the Rights of the prior Administrative Agent, and the prior
Administrative Agent is discharged from its duties and obligations of
Administrative Agent under the Credit Documents, and each Lender shall
execute the documents that any Lender, the resigning Administrative
Agent, or the successor Administrative Agent reasonably request to
reflect the change. After any Administrative Agent's resignation as
Administrative Agent under the Credit Documents, the provisions of
this section inure to its benefit as to any actions taken or not taken
by it while it was Administrative Agent under the Credit Documents.
(c) RIGHTS AS LENDER. Administrative Agent, in its capacity
as a Lender, has the same Rights under the Credit Documents as any
other Lender and may exercise those Rights as if it were
CREDIT AGREEMENT
34
<PAGE> 40
not acting as Administrative Agent. The term "Lender", unless the
context otherwise indicates, includes Administrative Agent.
Administrative Agent's resignation or removal does not impair or
otherwise affect any Rights that it has or may have in its capacity as
an individual Lender. Each Lender and Borrower agree that
Administrative Agent is not a fiduciary for Lenders or for Borrower
but is simply acting in the capacity described in this agreement to
alleviate administrative burdens for Borrower and Lenders, that
Administrative Agent has no duties or responsibilities to Lenders or
Borrower except those expressly set forth in the Credit Documents, and
that Administrative Agent in its capacity as a Lender has the same
Rights as any other Lender.
(d) OTHER ACTIVITIES. Administrative Agent or any Lender may
now or in the future be engaged in one or more loan, letter of credit,
leasing, or other financing transactions with Borrower, act as trustee
or depositary for Borrower, or otherwise be engaged in other
transactions with Borrower (collectively, the "OTHER ACTIVITIES") not
the subject of the Credit Documents. Without limiting the Rights of
Lenders specifically set forth in the Credit Documents, neither
Administrative Agent nor any Lender is responsible to account to the
other Lenders for those other activities, and no Lender shall have any
interest in any other Lender's activities, any present or future
guaranties by or for the account of Borrower that are not contemplated
by or included in the Credit Documents, any present or future offset
exercised by Administrative Agent or any Lender in respect of those
other activities, any present or future property taken as security for
any of those other activities, or any property now or hereafter in
Administrative Agent's or any other Lender's possession or control
that may be or become security for the obligations of Borrower arising
under the Credit Documents by reason of the general description of
indebtedness secured or of property contained in any other agreements,
documents, or instruments related to any of those other activities
(but, if any payments in respect of those guaranties or that property
or the proceeds thereof is applied by Administrative Agent or any
Lender to reduce the Obligation, then each Lender is entitled to share
ratably in the application as provided in the Credit Documents).
13.2 EXPENSES. Each Lender shall pay its Commitment Percentage of any
reasonable expenses (including court costs, reasonable attorneys' fees and
other costs of collection) incurred by Administrative Agent or in connection
with any of the Credit Documents if Administrative Agent is not reimbursed from
other sources within 30 days after incurrence. Each Lender is entitled to
receive its Commitment Percentage of any reimbursement that it makes to
Administrative Agent if Administrative Agent is subsequently reimbursed from
other sources.
13.3 PROPORTIONATE ABSORPTION OF LOSSES. Except as otherwise provided
in the Credit Documents, nothing in the Credit Documents gives any Lender any
advantage over any other Lender insofar as the Obligation is concerned or
relieves any Lender from ratably absorbing any losses sustained with respect to
the Obligation (except to the extent unilateral actions or inactions by any
Lender result in Borrower or any other obligor on the Obligation having any
credit, allowance, setoff, defense, or counterclaim solely with respect to all
or any part of that Lender's part of the Obligation).
13.4 DELEGATION OF DUTIES; RELIANCE. Lenders may perform any of their
duties or exercise any of their Rights under the Credit Documents by or through
Administrative Agent, and Lenders and Administrative Agent may perform any of
their duties or exercise any of their Rights under the Credit Documents by or
through their respective Representatives. Administrative Agent, Lenders, and
their respective Representatives (a) are entitled to rely upon (and shall be
protected in relying upon) any written or oral statement believed by it or them
to be genuine and correct and to have been signed or made by the
CREDIT AGREEMENT
35
<PAGE> 41
proper Person and, with respect to legal matters, upon opinion of counsel
selected by Administrative Agent or that Lender (but nothing in this CLAUSE (A)
permits Administrative Agent to rely on (i) oral statements if a writing is
required by this agreement or (ii) any other writing if a specific writing is
required by this agreement), (b) are entitled to deem and treat each Lender as
the owner and holder of its portion of the Obligation for all purposes until,
written notice of the assignment or transfer is given to and received by
Administrative Agent (and any request, authorization, consent, or approval of
any Lender is conclusive and binding on each subsequent holder, assignee, or
transferee of or Participant in that Lender's portion of the Obligation until
that notice is given and received), (c) are not deemed to have notice of the
occurrence of an Event of Default unless a responsible officer of
Administrative Agent, who handles matters associated with the Credit Documents
and transactions thereunder, has actual knowledge or Administrative Agent has
been notified by a Lender or Borrower, and (d) are entitled to consult with
legal counsel (including counsel for Borrower), independent accountants, and
other experts selected by Administrative Agent and are not liable for any
action taken or not taken in good faith by it in accordance with the advice of
counsel, accountants, or experts.
13.5 LIMITATION OF ADMINISTRATIVE AGENT'S LIABILITY.
(a) EXCULPATION. Neither Administrative Agent nor any of its
Affiliates or Representatives will be liable to any Lender for any
action taken or omitted to be taken by it or them under the Credit
Documents in good faith and believed by it or them to be within the
discretion or power conferred upon it or them by the Credit Documents
or be responsible for the consequences of any error of judgment
(except for gross negligence or willful misconduct), and neither
Administrative Agent nor any of its Affiliates or Representatives has
a fiduciary relationship with any Lender by virtue of the Credit
Documents (but nothing in this agreement negates the obligation of
Administrative Agent to account for funds received by it for the
account of any Lender).
(b) INDEMNITY. Unless indemnified to its satisfaction against
loss, cost, liability, and expense, Administrative Agent may not be
compelled to do any act under the Credit Documents or to take any
action toward the execution or enforcement of the powers thereby
created or to prosecute or defend any suit in respect of the Credit
Documents. If Administrative Agent requests instructions from Lenders,
or Required Lenders, as the case may be, with respect to any act or
action in connection with any Credit Document, Administrative Agent is
entitled to refrain (without incurring any liability to any Person by
so refraining) from that act or action unless and until it has
received instructions. In no event, however, may Administrative Agent
or any of its Representatives be required to take any action that it
or they determine could incur for it or them criminal or onerous civil
liability. Without limiting the generality of the foregoing, no Lender
has any right of action against Administrative Agent as a result of
Administrative Agent's acting or refraining from acting under this
agreement in accordance with instructions of Required Lenders.
(c) RELIANCE. Administrative Agent is not responsible to any
Lender or any Participant for, and each Lender represents and warrants
that it has not relied upon Administrative Agent in respect of, (i)
the creditworthiness of Partners or any Company and the risks involved
to that Lender, (ii) the effectiveness, enforceability, genuineness,
validity, or the due execution of any Credit Document, (iii) any
representation, warranty, document, certificate, report, or statement
made therein or furnished thereunder or in connection therewith, (iv)
the adequacy of any collateral now or hereafter securing the
Obligation or the existence, priority, or perfection of any Lien now
or hereafter granted or purported to be granted on the collateral
under any Credit Document, or
CREDIT AGREEMENT
36
<PAGE> 42
(v) observation of or compliance with any of the terms, covenants, or
conditions of any Credit Document on the part of Partners or any
Company. EACH LENDER AGREES TO INDEMNIFY ADMINISTRATIVE AGENT AND ITS
REPRESENTATIVES AND HOLD THEM HARMLESS FROM AND AGAINST (BUT LIMITED
TO SUCH LENDER'S COMMITMENT PERCENTAGE OF) ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, REASONABLE EXPENSES, AND REASONABLE DISBURSEMENTS OF ANY KIND
OR NATURE WHATSOEVER THAT MAY BE IMPOSED ON, ASSERTED AGAINST, OR
INCURRED BY THEM IN ANY WAY RELATING TO OR ARISING OUT OF THE CREDIT
DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THEM UNDER THE CREDIT
DOCUMENTS IF ADMINISTRATIVE AGENT AND ITS REPRESENTATIVES ARE NOT
REIMBURSED FOR SUCH AMOUNTS BY ANY COMPANY. ALTHOUGH ADMINISTRATIVE
AGENT AND ITS REPRESENTATIVES HAVE THE RIGHT TO BE INDEMNIFIED UNDER
THIS AGREEMENT BY LENDERS FOR ITS OR THEIR OWN ORDINARY NEGLIGENCE,
ADMINISTRATIVE AGENT AND ITS REPRESENTATIVES DO NOT HAVE THE RIGHT TO
BE INDEMNIFIED UNDER THIS AGREEMENT FOR ITS OR THEIR OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
13.6 EVENT OF DEFAULT. While an Event of Default exists, Lenders agree
to promptly confer in order that Required Lenders or Lenders, as the case may
be, may agree upon a course of action for the enforcement of the Rights of
Lenders. Administrative Agent is entitled to act or refrain from taking any
action (without incurring any liability to any Person for so acting or
refraining) unless and until it has received instructions from Required
Lenders. In actions with respect to any Company's property, Administrative
Agent is acting for the ratable benefit of each Lender.
13.7 LIMITATION OF LIABILITY. No Lender or any Participant will incur
any liability to any other Lender or Participant except for acts or omissions
in bad faith, and neither Administrative Agent nor any Lender or Participant
will incur any liability to any other Person for any act or omission of any
other Lender or any Participant.
13.8 OTHER AGENTS. Two Lenders are named on the cover page, in the
introductory paragraph of this agreement, and on the signature page of this
agreement as "Syndication Agent" or "Documentation Agent," respectively.
Neither of them, in those capacities, assumes any responsibility or obligation
under this agreement for syndication, documentation, servicing, enforcement, or
collection of any of the Obligation, nor any other duties, as agents for
Lenders.
13.9 RELATIONSHIP OF LENDERS. The Credit Documents do not create a
partnership or joint venture among Administrative Agent and Lenders or among
Lenders.
13.10 BENEFITS OF AGREEMENT. None of the provisions of this section
inure to the benefit of any Company or any other Person except Administrative
Agent and Lenders. Therefore, no Company or any other Person is responsible or
liable for, entitled to rely upon, or entitled to raise as a defense, in any
manner whatsoever, the failure of Administrative Agent or any Lender to comply
with these provisions.
SECTION 14 MISCELLANEOUS.
14.1 NONBUSINESS DAYS. Any payment or action that is due under any
Credit Document on a non-Business Day may be delayed until the next-succeeding
Business Day (but interest accrues on any payment until it is made). However,
if the payment concerns a LIBOR-Rate Borrowing and if the next-succeeding
CREDIT AGREEMENT
37
<PAGE> 43
Business Day is in the next calendar month, then that payment must be made on
the next-preceding Business Day.
14.2 COMMUNICATIONS. Unless otherwise specified, any communication
from one party to another under any Credit Document must be in writing (which
may be by fax) to be effective and is deemed given (a) if by fax, when
transmitted to the appropriate fax number (which, without affecting the date
when deemed given, must be promptly confirmed by telephone), (b) if by mail, on
the third Business Day after it is enclosed in an envelope and properly
addressed, stamped, sealed, and deposited in the appropriate official postal
service, or (c) if by any other means, when actually delivered. Until changed
by notice under this agreement, the address, fax number, and telephone number
for Borrower and Administrative Agent are stated beside their respective
signatures to this agreement and for each Lender are stated beside its name on
SCHEDULE 2.
14.3 FORM AND NUMBER. The form, substance, and number of counterparts
of each writing to be furnished under this agreement must be satisfactory to
Administrative Agent and Borrower.
14.4 EXCEPTIONS. An exception to any Credit Document covenant or
agreement does not permit violation of any other Credit Document covenant or
agreement.
14.5 SURVIVAL. All Credit Document provisions survive all closings and
are not affected by any investigation by any party.
14.6 GOVERNING LAW. Unless otherwise specified, each Credit Document
must be construed, and its performance enforced, under the Laws of the State of
Texas and the United States of America.
14.7 INVALID PROVISIONS. If any provision of a Credit Document is
judicially determined to be unenforceable, then all other provisions of it
remain enforceable. If the provision determined to be unenforceable is a
material part of that Credit Document, then, to the extent lawful, it shall be
replaced by a judicially-construed provision that is enforceable but otherwise
as similar in substance and content to the original provision as the context of
it reasonably allows.
14.8 AMENDMENTS, SUPPLEMENTS, WAIVERS, CONSENTS, AND CONFLICTS.
(a) ALL LENDERS. Any amendment or supplement to, or waiver or
consent under, any Credit Document that purports to accomplish any of
the following must be by a writing executed by Borrower and executed
(or approved in writing, as the case may be) by all Lenders: (i)
Extends the due date for, decreases the amount or rate of calculation
of, or waives the late or non-payment of, any scheduled payment or
mandatory prepayment of principal or interest of any of the Obligation
or any fees payable ratably to Lenders under the Credit Documents,
except, in each case, any adjustments or reductions that are
contemplated by any Credit Document; (ii) changes the definition of
"Commitment," "Commitment Percentage," "Default Percentage," or
"Required Lenders," (iii) increases any part of any Lender's
Commitment; (iv) fully or partially releases or amends the Guaranty,
except, in each case, as expressly provided by any Credit Document or
as a result of a merger, consolidation, or dissolution expressly
permitted in the Credit Documents; (v) consents to any assignment by
Borrower under SECTION 14.10(a); or (vi) changes this CLAUSE (a) or
any other matter specifically requiring the consent of all Lenders
under any Credit Document.
CREDIT AGREEMENT
38
<PAGE> 44
(b) ADMINISTRATIVE AGENT. Any amendment or supplement to, or
waiver or consent under, any Credit Document that purports to
accomplish any of the following must be by a writing executed by
Borrower and executed (or approved in writing, as the case may be) by
Administrative Agent: (i) Extends the due date for, decreases the
amount or rate of calculation of, or waives the late or non-payment
of, any fees payable to Administrative Agent under any Credit
Document, except, in each case, any adjustments or reductions that are
contemplated by any Credit Document; (ii) increases Administrative
Agent's obligations beyond its agreements under any Credit Document;
or (iii) changes this CLAUSE (b) or any other matter specifically
requiring the consent of Administrative Agent under any Credit
Document.
(c) REQUIRED LENDERS. Except as specified above (i) the
provisions of this agreement may be amended and supplemented, and
waivers and consents under it may be given, in writing executed by
Borrower and Required Lenders and otherwise supplemented only by
documents delivered in accordance with the express terms of this
agreement, and (ii) each other Credit Document may only be amended and
supplemented, and waivers and consents under it may be given, in a
writing executed by the parties to that Credit Document that is also
executed or approved by Required Lenders and otherwise supplemented
only by documents delivered in accordance with the express terms of
that other Credit Document.
(d) WAIVERS. No course of dealing or any failure or delay by
Administrative Agent, any Lender, or any of their respective
Representatives with respect to exercising any Right of Administrative
Agent or any Lender under any Credit Document operates as a waiver of
that Right. A waiver must be in writing and signed by the parties
otherwise required by this SECTION 14.8 to be effective and will be
effective only in the specific instance and for the specific purpose
for which it is given.
(e) CONFLICTS. Although this agreement and other Credit
Documents may contain additional and different terms and provisions,
any conflict or ambiguity between the express terms and provisions of
this agreement and express terms and provisions in any other Credit
Document is controlled by the express terms and provisions of this
agreement.
14.9 COUNTERPARTS. Any Credit Document may be executed in a number of
identical counterparts (including, at Administrative Agent's discretion,
counterparts or signature pages executed and transmitted by fax) with the same
effect as if all signatories had signed the same document. All counterparts
must be construed together to constitute one and the same instrument. Certain
parties to this agreement may execute multiple signature pages to this
agreement as well as one or more complete counterparts of it, and Borrower and
Administrative Agent are authorized to execute, where applicable, those
separate signature pages and insert them, along with signature pages of other
parties to this agreement, into one or more complete counterparts of this
agreement that contain signatures of all parties to it.
14.10 PARTIES.
(a) PARTIES AND BENEFICIARIES. Each Credit Document binds and
inures to the parties to it and each of their respective successors
and permitted assigns. Only those Persons may rely upon or raise any
defense about this agreement. No Company may assign or transfer any
Rights or obligations under any Credit Document without first
obtaining all Lenders' consent, and any purported assignment or
transfer without all Lenders' consent is void. No Lender may transfer,
CREDIT AGREEMENT
39
<PAGE> 45
pledge, assign, sell any participation in, or otherwise encumber its
portion of the Obligation except as permitted by CLAUSES (c) or (d)
below, neither of which provisions permit any Lender to transfer,
pledge, assign, sell any participation in, or otherwise encumber any
of its portion of the Obligation for consideration that, directly or
indirectly, reflects a discount from face value (i.e., full principal
amount involved plus accrued and unpaid interest and fees related to
it) without first having offered that transfer, pledge, assignment,
participation, or encumbrance to all other Lenders ratably according
to their Commitment Percentages or Default Percentages, as the case
may be.
(b) RELATIONSHIP OF PARTIES. The relationship between each
Lender and each applicable Company is that of creditor/secured party
and obligor, respectively. Financial covenant and reporting provisions
in the Credit Documents are intended solely for the benefit of each
Lender to protect its interest as a creditor/secured party. Nothing in
the Credit Documents may be construed as (i) permitting or obligating
any Lender to act as a financial or business advisor or consultant to
any Company, (ii) permitting or obligating any Lender to control any
Company or conduct its operations, (iii) creating any fiduciary
obligation of any Lender to any Company, or (iv) creating any joint
venture, agency, or other relationship between the parties except as
expressly specified in the Credit Documents.
(c) PARTICIPATIONS. Any Lender may (subject to the provisions
of this section, in accordance with applicable Legal Requirement, in
the ordinary course of its business, at any time, and with notice to
Borrower) sell to one or more Persons (each a "PARTICIPANT")
participating interests in its portion of the Obligation so long as
the minimum amount of such participating interest is $5,000,000. The
selling Lender remains a "Lender" under the Credit Documents, the
Participant does not become a "Lender" under the Credit Documents, and
the selling Lender's obligations under the Credit Documents remain
unchanged. The selling Lender remains solely responsible for the
performance of its obligations and remains the holder of its share of
the Principal Debt for all purposes under the Credit Documents.
Borrower and Administrative Agent shall continue to deal solely and
directly with the selling Lender in connection with that Lender's
Rights and obligations under the Credit Documents, and each Lender
must retain the sole right and responsibility to enforce due
obligations of the Companies. Participants have no Rights under the
Credit Documents except as provided in the except clause of the last
sentence of this SECTION 14.10(c). Subject to the following, each
Lender may obtain (on behalf of its Participants) the benefits of
SECTION 3 with respect to all participations in its part of the
Obligation outstanding from time to time so long as Borrower is not
obligated to pay any amount in excess of the amount that would be due
to that Lender under SECTION 3 calculated as though no participations
have been made. No Lender may sell any participating interest under
which the Participant has any Rights to approve any amendment,
modification, or waiver of any Credit Document except as to matters in
SECTION 14.8(a)(i) and (ii).
(d) ASSIGNMENTS. Each Lender may make assignments to the
Federal Reserve Bank, provided that any related costs, fees, and
expenses incurred by such Lender in connection with such assignment or
the re-assignment back to it free of any interests of the Federal
Reserve Bank, shall be for the sole account of Lender. Each Lender may
also assign to one or more assignees (each an "ASSIGNEE") all or any
part of its Rights and obligations under the Credit Documents so long
as (i) the assignor Lender and Assignee execute and deliver to
Administrative Agent and Borrower for their consent and acceptance
(that may not be unreasonably withheld in any instance and is not
required by Borrower if an Event of Default exists) an assignment and
assumption agreement in
CREDIT AGREEMENT
40
<PAGE> 46
substantially the form of EXHIBIT E (an "ASSIGNMENT") and pay to
Administrative Agent a processing fee of $3,500 (which payment
obligation is the sole liability, joint and several, of that Lender
and Assignee), (ii) the assignment must be for a minimum total
Commitment of $5,000,000, and, if the assigning Lender retains any
Commitment, it must be a minimum total Commitment of $5,000,000, and
(iii) the conditions for that assignment set forth in the applicable
Assignment are satisfied. The Effective Date in each Assignment must
(unless a shorter period is agreeable to Borrower and Administrative
Agent) be at least five Business Days after it is executed and
delivered by the assignor Lender and the Assignee to Administrative
Agent and Borrower for acceptance. Once that Assignment is accepted by
Administrative Agent and Borrower, and subject to all of the following
occurring, then, on and after the Effective Date stated in it (i) the
Assignee automatically becomes a party to this agreement and, to the
extent provided in that Assignment, has the Rights and obligations of
a Lender under the Credit Documents, (ii) in the case of an Assignment
covering all of the remaining portion of the assignor Lender's Rights
and obligations under the Credit Documents, the assignor Lender ceases
to be a party to the Credit Documents, (iii) Borrower shall execute
and deliver to the assignor Lender and the Assignee the appropriate
Notes in accordance with this agreement following the transfer, (iv)
upon delivery of the Notes under CLAUSE (iii) preceding, the assignor
Lender shall return to Borrower all Notes previously delivered to that
Lender under this agreement, and (v) SCHEDULE 2 is automatically
deemed to be amended to reflect the name, address, telecopy number,
and Commitment of the Assignee and the remaining Commitment (if any)
of the assignor Lender, and Administrative Agent shall prepare and
circulate to Borrower and Lenders an amended SCHEDULE 2 reflecting
those changes. Notwithstanding the foregoing, no Assignee may be
recognized as a party to the Credit Documents (and the assigning
Lender shall continue to be treated for all purposes as the party to
the Credit Documents) with respect to the Rights and obligations
assigned to that Assignee until the actions described in CLAUSES (iii)
and (iv) have occurred. The Obligation is registered on the books of
Borrower as to both principal and any stated interest, and transfers
of (as opposed to participations in) principal and interest of the
Obligation may only be made in accordance with this section.
14.11 VENUE, SERVICE OF PROCESS, AND JURY TRIAL. BORROWER IN EACH CASE
FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, IRREVOCABLY (A) SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS IN TEXAS, (B) WAIVES,
TO THE FULLEST EXTENT LAWFUL, ANY OBJECTION THAT IT MAY NOW OR IN THE FUTURE
HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION
WITH ANY CREDIT DOCUMENT AND THE OBLIGATION BROUGHT IN THE DISTRICT COURTS OF
DALLAS COUNTY, TEXAS, OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF TEXAS, DALLAS DIVISION, (C) WAIVES ANY CLAIMS THAT ANY LITIGATION
BROUGHT IN ANY OF THE FOREGOING COURTS HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM, (D) CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THOSE COURTS IN ANY
LITIGATION BY THE MAILING OF COPIES OF THAT PROCESS BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, POSTAGE PREPAID, BY HAND DELIVERY, OR BY DELIVERY BY A
NATIONALLY-RECOGNIZED COURIER SERVICE, AND SERVICE SHALL BE DEEMED COMPLETE
UPON DELIVERY OF THE LEGAL PROCESS AT ITS ADDRESS FOR PURPOSES OF THIS
AGREEMENT, (E) AGREES THAT ANY LEGAL PROCEEDING AGAINST ANY PARTY TO ANY CREDIT
DOCUMENT ARISING OUT OF OR IN CONNECTION WITH THE CREDIT DOCUMENTS OR THE
OBLIGATION MAY BE BROUGHT IN ONE OF THE FOREGOING COURTS, AND (F) IRREVOCABLY
WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY CREDIT
DOCUMENT. The scope of each of the foregoing waivers is intended to be all
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including, without
limitation, contract claims, tort claims,
CREDIT AGREEMENT
41
<PAGE> 47
breach of duty claims, and all other common law and statutory claims. BORROWER
ACKNOWLEDGES THAT THESE WAIVERS ARE A MATERIAL INDUCEMENT TO ADMINISTRATIVE
AGENT'S AND EACH LENDER'S AGREEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
ADMINISTRATIVE AGENT AND EACH LENDER HAS ALREADY RELIED ON THESE WAIVERS IN
ENTERING INTO THIS AGREEMENT, AND THAT ADMINISTRATIVE AGENT AND EACH LENDER
WILL CONTINUE TO RELY ON EACH OF THESE WAIVERS IN RELATED FUTURE DEALINGS.
BORROWER FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THESE WAIVERS
WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY AGREES TO EACH
WAIVER FOLLOWING CONSULTATION WITH LEGAL COUNSEL. The waivers in this section
are irrevocable, meaning that they may not be modified either orally or in
writing, and these waivers apply to any future renewals, extensions,
amendments, modifications, or replacements in respect of the applicable Credit
Document. In connection with any Litigation, this agreement may be filed as a
written consent to a trial by the court.
14.12 NON-RECOURSE TO TEXAS EASTERN. NEITHER TEXAS EASTERN NOR ANY
DIRECTOR, OFFICER, EMPLOYEE, STOCKHOLDER, OR AGENT OF TEXAS EASTERN SHALL HAVE
ANY LIABILITY FOR ANY OBLIGATIONS OF BORROWER OR GUARANTORS UNDER THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR FOR ANY CLAIM BASED ON, IN RESPECT OF
OR BY REASON OF, SUCH OBLIGATIONS OR THEIR CREATION, INCLUDING ANY LIABILITY
BASED UPON, OR ARISING BY OPERATION OF LAW AS A RESULT OF, THE STATUS OR
CAPACITY OF TEXAS EASTERN AS THE "GENERAL PARTNER" OF TEPPCO PARTNERS. BY
EXECUTING THIS AGREEMENT, ADMINISTRATIVE AGENT AND EACH LENDER, EXPRESSLY
WAIVES AND RELEASES ALL SUCH LIABILITY. THIS WAIVER AND RELEASE SHALL BE A PART
OF THE CONSIDERATION FOR TEPPCO PARTNERS' EXECUTION AND DELIVERY OF ITS
GUARANTY.
14.13 CONFIDENTIALITY. Administrative Agent and each Lender agrees (on
behalf of itself and each of its Affiliates, and its and each of their
respective Representatives) to keep and maintain any non-public information
supplied to it by or on behalf of any Company which is identified as being
confidential and shall not use any such information for any purpose other than
in connection with the administration or enforcement of this transaction.
However, nothing herein shall limit the disclosure of any such information (a)
to the extent required by Legal Requirement, (b) to counsel of Administrative
Agent or any Lender in connection with the transactions provided for in this
agreement, (c) to bank examiners, auditors and accountants, or (d) any Assignee
or Participant (or prospective Assignee or Participant) so long as such
Assignee or Participant (or prospective Assignee or Participant) first enters
into a confidentiality agreement with Administrative Agent or such Lender.
14.14 ENTIRETY. THE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN BORROWER, LENDERS, AND ADMINISTRATIVE AGENT WITH RESPECT TO THEIR
SUBJECT MATTER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE FOLLOWS.
CREDIT AGREEMENT
42
<PAGE> 48
EXECUTED as of the date first stated in this Credit Agreement.
<TABLE>
<S> <C>
TEPPCO Crude Oil, LLC TEPPCO CRUDE OIL, LLC, as Borrower
370 17th Street, Suite 2300
Denver, CO 80202 By: TCTM, L.P., as Sole Member
Attn: William S. Dickey
Senior Vice President By: TEXAS EASTERN PRODUCTS
Phone: 303-389-1953 PIPELINE COMPANY, as
Fax: 303-389-1968 General Partner
By /s/ CHARLES H. LEONARD
---------------------------
Name: Charles H. Leonard
----------------------
Title: Sr. V.P., CFO
and Treasurer
---------------------
SunTrust Bank, Atlanta SUNTRUST BANK, ATLANTA, as
303 Peachtree Street, N.E. Administrative Agent and a Lender
3rd Floor
Atlanta, GA 30308
Attn: Steve Newby By /s/ RYAN SIMMONS
Assistant Vice President -------------------------------
Phone: 404-658-4916 Name: Ryan Simmons
Fax: 404-827-6270 --------------------------
Title: Officer
-------------------------
By /s/ DEBORAH S. ARMSTRONG
-------------------------------
Name: Deborah S. Armstrong
--------------------------
Title: Vice President
-------------------------
THE FIRST NATIONAL BANK OF FIRST UNION NATIONAL BANK, as
CHICAGO, as Syndication Agent and a Lender Documentation Agent and a Lender
By /s/ JOSEPH C. GIAMPETRONI By /s/ RUSSELL CLINGMAN
------------------------------- -------------------------------
Name: Joseph C. Giampetroni Name: Russell Clingman
-------------------------- --------------------------
Title: Vice President Title: Vice President
------------------------- -------------------------
</TABLE>
SIGNATURE PAGE TO TEPPCO CRUDE OIL LLC CREDIT AGREEMENT
<PAGE> 1
EXHIBIT 10.28
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS DOCUMENT is entered into as of May 17, 1999, between TEPPCO
COLORADO, LLC, a Delaware limited liability company ("BORROWER"), the Required
Lenders listed on the signature page to this document, and SUNTRUST BANK,
ATLANTA, as Agent for Lenders ("AGENT").
Borrower, Lenders, and Agent are party to the Credit Agreement (as it
may have been renewed, extended, and amended through the date of this document,
the "CREDIT AGREEMENT") dated as of April 21, 1998, providing for a $38,000,000
term loan to Borrower. Borrower, Required Lenders, and Agent have agreed, upon
the following terms and conditions, to amend the Credit Agreement as provided
in PARAGRAPH 2 below. Accordingly, for adequate and sufficient consideration,
Borrower, Required Lenders, and Agent agree as follows:
1. TERMS AND REFERENCES. Unless otherwise stated in this document (A)
terms defined in the Credit Agreement have the same meanings when used in this
document and (B) references to "SECTIONS," "SCHEDULES," and "EXHIBITS" are to
the Credit Agreement's sections, schedules, and exhibits.
2. AMENDMENTS. The Credit Agreement is amended as follows:
(A) SECTION 1.1 is amended by entirely amending or adding the
following definitions in alphabetical order with the other definitions in that
section:
"ACQUISITION" by any Person means any transaction or series
of transactions on or after the Closing Date pursuant to which that
Person directly or indirectly -- whether in the form of a capital
expenditure, an Investment, a merger, a consolidation, or otherwise
and whether through a solicitation of tender of equity securities, one
or more negotiated block, market, private, other transactions, or any
combination of the foregoing -- purchases (a) all or substantially all
of the business or assets of any other individual or entity or
operating division or business unit of any other individual or entity,
or (b) more than 25% of the equity interest in any other individual or
entity.
"DEBT" means -- for any Person, at any time, and without
duplication -- the sum of (a) all Funded Debt of that Person, plus (b)
all obligations arising under acceptance facilities or facilities for
the discount or sale of accounts receivable, plus (c) all direct or
contingent obligations in respect of letters of credit, plus (d) each
obligation for Hedging Exposure of $10,000,000 or more, plus (e) all
guaranties, endorsements, and other contingent obligations for the
obligations in respect of obligations of other persons or entities of
the nature described in CLAUSES (A) through (D) above.
"EBITDA" means:
(a) For any period consisting of four consecutive
fiscal quarters taken as a single accounting period, for any
Person, and without duplication, the sum of (i) Net Income
plus (ii) to the extent actually deducted in determining Net
Income, Interest Expense, Tax Expense, depreciation, and
amortization; and
(b) For purposes of calculating EBITDA in
respect of any entity that became a Subsidiary of that Person
or was merged with or consolidated into that Person during
that period, EBITDA of that Person shall include the EBITDA
of that entity during that period and before the date of that
acquisition, merger, or consolidation for a total period of
four consecutive fiscal quarters.
SECOND AMENDMENT
<PAGE> 2
"FUNDED DEBT" means -- for any Person, at any time, and
without duplication -- the SUM of (a) the unpaid principal amount or
component of all obligations for borrowed money, PLUS (b) the unpaid
principal amount or component of all obligations evidenced by bonds,
debentures, notes or similar instruments, PLUS (c) the unpaid
principal amount or component of all obligations to pay the deferred
purchase price of property or service except trade accounts payable
arising in the ordinary course of business, PLUS (d) in respect of all
obligations that are secured (or for which the holder of any such
obligation has an existing Right, contingent or otherwise, to be so
secured) by any Lien on property owned or acquired by that Person, the
lesser of EITHER the unpaid amount of all of those obligations from
time to time outstanding OR the fair-market value of the property
securing all of those obligations, liabilities secured (or for which
the holder of such obligations has an existing Right, contingent or
otherwise, to be so secured) by any Lien existing on property owned or
acquired by that Person, PLUS (e) all Capital Lease obligations, PLUS
(f) the unpaid principal amount or component of all obligations under
synthetic leases, PLUS (g) the unpaid principal amount or component of
all guaranties, endorsements, and other contingent obligations in
respect of obligations of other persons or entities of the nature
described in CLAUSES (A) through (F) above.
"GUARANTOR CREDIT AGREEMENT" means the Credit Agreement dated
as of May 17, 1999, between Guarantor, certain lenders, and SunTrust
Bank, Atlanta, as administrative agent for those lenders.
"INTEREST EXPENSE" means, for any Person and any period, all
interest expense (including all amortization of debt discount and
expenses and reported interest) on all Funded Debt of that Person.
"MATERIAL-ADVERSE EVENT" means any circumstance or event
that, individually or collectively, is, or is reasonably expected to
result (at any time before the Commitments are fully cancelled or
terminated and the Obligation is fully paid and performed) in, any (a)
material impairment of (i) the ability of Borrower or Guarantor to
perform any of their respective payment or other material obligations
under any Credit Document, or (ii) the ability of Agent or any Lender
to enforce any of those obligations or any of their respective Rights
under the Credit Documents (OTHER THAN as a result of its own act or
omission), (b) material and adverse effect on the financial condition
of Guarantor individually, or Parent and its Subsidiaries as a whole
as represented to Lenders in the Current Financials most recently
delivered before the date of this agreement, or (c) Event of Default
or Potential Default.
"NET INCOME" means, for any Person and any period, that
Person's profit or loss (a) after deducting all of its operating
expenses, provision for Taxes, and reserves (including reserves for
deferred income Taxes), and all other deductions in accordance with
GAAP, but (b) excluding (i) extraordinary items, and (ii) the profit
or loss of any entity accrued before the date that (A) it becomes a
Subsidiary of such Person, (B) it is merged with such Person or any of
its Subsidiaries, or (C) its assets are acquired by such Person of any
of its Subsidiaries.
"OTHER CREDIT AGREEMENTS" means the Guarantor Credit
Agreement and the TEPPCO Crude Credit Agreement.
"RESPONSIBLE OFFICER" means the chairman, president, vice
president, chief executive officer, chief financial officer,
treasurer, or corporate secretary of General Partner.
"TEPPCO CRUDE" means TEPPCO Crude Oil, LLC, a Delaware
limited liability company.
2 SECOND AMENDMENT
<PAGE> 3
"TEPPCO CRUDE CREDIT AGREEMENT" means the Credit Agreement
dated as of the date of this agreement, between TEPPCO Crude, certain
lenders, and SunTrust Bank, Atlanta, as administrative agent for those
lenders.
"Y2K ISSUE" means the risk that computer applications used by
the Companies or by any of their respective suppliers or vendors may
be unable properly to recognize and perform date-sensitive functions.
(B) A new SECTION 5.20 is added as follows:
5.20 Y2K ISSUE. Each Company has (a) initiated a review and
assessment of all areas within businesses and operations (including
those affected by suppliers and vendors) that could be adversely
affected by the Y2K Issue, (b) developed a plan and time line for
addressing the Y2K Issue on a timely basis, and (c) to date
implemented in all material respects that plan in accordance with that
timetable.
(C) SECTIONS 6.1(a) and 6.1(b) are entirely amended as follows:
(a) ANNUAL FINANCIALS. Promptly after preparation but no
later than 90 days after the last day of each fiscal year of: (i)
Parent, Financials showing the consolidated and consolidating
financial condition and results of operations of Parent and its
Subsidiaries as of, and for the year ended on, that last day,
accompanied by (A) the opinion, without material qualification, of
KPMG LLP or other firm of nationally-recognized independent certified
public accountants reasonably acceptable to Required Lenders, based on
an audit using generally accepted auditing standards, that those
Financials were prepared in accordance with GAAP and present fairly,
in all material respects, the consolidated and consolidating financial
condition and results of operations of Parent and its Subsidiaries,
and (B) a related Compliance Certificate from a Responsible Officer,
on behalf of Parent; and (ii) Guarantor, Financials showing the
consolidated and consolidating financial condition and results of
operations of Guarantor and its Subsidiaries as of, and for the year
ended on, that last day, accompanied by a Compliance Certificate,
together with a completed copy of the schedule to that certificate,
from a Responsible Officer, on behalf of Guarantor.
(b) QUARTERLY REPORTS. Promptly after preparation but no
later than 45 days after the last day of each of the first three
fiscal quarters of Parent and the Companies each year, Financials
showing the consolidated and consolidating financial condition and
results of operations of Parent and its Subsidiaries, and of Guarantor
and its Subsidiaries for that fiscal quarter and for the period from
the beginning of the current fiscal year to the last day of that
fiscal quarter, accompanied in each case by a related Compliance
Certificate, together with a completed copy of the schedule to that
certificate, signed by a Responsible Officer, on behalf of Parent or
Guarantor, as the case may be.
(D) A new SECTION 6.1(h) is added as follows:
(h) Y2K. Notice promptly after any Company discovers or
determines that any computer applications (including those of
suppliers and vendors to any Company) that are material to the
businesses or operations of any Company will not be compliant in
timely resolving the Y2K Issue if that failure could reasonably be
expected to be a Material-Adverse Event.
(E) The first sentence of SECTION 7 is amended by inserting the
following parenthetical immediately after the 37th word in that sentence:
"(which shall not be unreasonably withheld)"
3 SECOND AMENDMENT
<PAGE> 4
(F) SECTION 7.1 is entirely amended as follows:
7.1 DEBT. No Company may have any Debt except the
following (the "PERMITTED DEBT"):
(a) OBLIGATION. The Obligation and Guaranty
under this agreement.
(b) EXISTING DEBT. The Debt described on SCHEDULE
5.12 (other than any such Debt that is described on that
schedule as to be paid with the proceeds of the Term Loan),
together with all renewals, extensions, amendments,
modifications, and refinancings of (but not any principal
increases to) any of that Debt.
(c) DEBT OF GUARANTOR. Debt of Guarantor incurred
pursuant to the Guarantor Credit Agreement.
(d) HEDGING AGREEMENTS. Solely in respect of
Guarantor, Hedging Agreements.
(G) SECTION 7.2 is entirely amended as follows:
7.2 SENIOR NOTES. No Company may materially amend or
modify the terms of the Senior Notes or the related Indenture except
as permitted by the express terms thereof.
(H) SECTION 7.4 is entirely amended as follows:
7.4 LIENS. No Company may (a) create, incur, or suffer
or permit to be created or incurred or to exist any Lien upon any of
its assets except Permitted Liens or (b) enter into or permit to exist
any arrangement or agreement that directly or indirectly prohibits any
Company from creating or incurring any Lien on any of its assets
EXCEPT (i) the Credit Documents, (ii) the Other Credit Agreements and
related loan documents, (iii) any lease that places a Lien prohibition
on only the property subject to that lease, and (iv) arrangements and
agreements that apply only to property subject to Permitted Liens. The
following are "PERMITTED LIENS":
(a) EXISTING LIENS. The existing Liens that are
described on SCHEDULE 5.13 and all renewals, extensions, amendments,
and modifications of any of them to the extent that the total-
principal amount each individually secures never exceeds the
total-principal amount secured by it on the date of this agreement.
(b) THIS TRANSACTION. Liens, if any, ever granted to
Agent in favor of Lenders to secure all of any part of the Obligation.
(c) BONDS. Liens securing any industrial development,
pollution control, or similar revenue bonds that never exceed a total
principal amount of $15,000,000.
(d) FORECLOSED PROPERTIES. Liens existing on any
property acquired by a Company in connection with the foreclosure or
other exercise of its Lien on the property.
(e) SETOFFS. Subject to any limitations imposed upon
them in the Credit Documents, rights of set off or recoupment and
banker's Liens.
(f) INSURANCE. Pledges or deposits made to secure
payment of workers' compensation, unemployment insurance, or other
forms of governmental insurance or benefits or to participate in
4 SECOND AMENDMENT
<PAGE> 5
any fund in connection with workers' compensation, unemployment
insurance, pensions, or other social security programs.
(g) BIDS AND BONDS. Good-faith pledges or deposits (i)
for 10% or less of the amounts due under (and made to secure) any
Company's performance of bids, tenders, contracts (EXCEPT for the
repayment of borrowed money), (ii) in respect of any operating lease,
that are for up to but not more than the greater of EITHER 10% of the
total rental obligations for the term of the lease OR 50% of the total
rental obligations payable during the first year of the lease, or
(iii) made to secure statutory obligations, surety or appeal bonds, or
indemnity, performance, or other similar bonds benefitting any Company
in the ordinary course of its business.
(h) PERMITS. Conditions in any permit, license, or order
issued by a Governmental Authority for the ownership and operation of
a pipeline that do not materially impair the ownership or operation of
the pipeline.
(i) PROPERTY RESTRICTIONS. Zoning and similar
restrictions on the use of, and easements, restrictions, covenants,
title defects, and similar encumbrances on, any Real Property or
pipeline right-of-way that (i) do not materially impair the Company's
use of the Real Property or pipeline right-of-way and (ii) are not
violated by existing or proposed structures (including the pipeline)
or land use.
(j) EMINENT DOMAIN. The Right reserved to, or vested in,
any Governmental Authority (or granted by a Governmental Authority to
another Person) by the terms of any Right, franchise, grant, license,
permit, or Legal Requirements to purchase or recapture, or to
designate a purchaser of, any property.
(k) INCHOATE LIENS. If no Lien has been filed in any
jurisdiction or agreed to (i) claims and Liens for Taxes not yet due
and payable, (ii) mechanic's Liens and materialman's Liens for
services or materials and similar Liens incident to construction and
maintenance of real property, in each case for which payment is not
yet due and payable, (iii) landlord's Liens for rental not yet due and
payable, and (iv) Liens of warehousemen and carriers and similar Liens
securing obligations that are not yet due and payable.
(l) MISCELLANEOUS. Any of the following to the extent
that the validity or amount is being contested in good faith and by
appropriate and lawful proceedings diligently conducted, reserve or
other appropriate provision (if any) required by GAAP has been made,
levy and execution has not issued or continues to be stayed, and they
do not individually or collectively detract materially from the value
of the property of the Company in question or materially impair the
use of that property in the operation of its business: (i) Claims and
Liens for Taxes; (ii) claims and Liens upon, and defects of title to,
real or personal property, including any attachment of personal or
real property or other legal process before adjudication of a dispute
on the merits; (iii) claims and Liens of mechanics, materialmen,
warehousemen, carriers, landlords, or other like Liens; (iv)
Liens incident to construction and maintenance of real property; and
(v) adverse judgments, attachments, or orders on appeal for the
payment of money.
(I) SECTION 7.8 is entirely amended as follows:
7.8 INVESTMENTS. No Company may make any Investments
except the following (the "PERMITTED INVESTMENTS"):
5 SECOND AMENDMENT
<PAGE> 6
(a) INVESTMENT POLICY. Investments specifically
permitted by General Partner's short-term cash and long-term
investment policies, true and correct copies of which have
been provided to Agent as they are from time to time in
effect.
(b) PERMITTED ACQUISITIONS. Any Acquisition so
long as (i) no Event of Default or Potential Default exists
immediately before, or will occur as a result of (or
otherwise will exist immediately after), that Acquisition,
(ii) that Acquisition will not cause any of the
representations or warranties (unless they speak to a
specific date or are based on facts which have changed by
transactions contemplated or expressly permitted by this
agreement) in the Credit Documents to be materially
incorrect, (iii) that Acquisition is within the same or
substantially the same type of business as the Companies as
of the Closing Date, (iv) the board of directors (or similar
governing body) of the Person to be acquired has not notified
any Company or any Lender that it opposes the offer by any
Company to acquire that Person and that opposition has not
been withdrawn, (v) if structured as a merger or
consolidation, SECTION 7.11 is complied with, and (vi)
promptly after that Acquisition is completed, Borrower gives
to Lenders a written description of the acquired entity and
of its business and operations.
For purposes of this SECTION 7, the total amount outstanding of any
Investment by any Person in any other Person is to be determined net
of repayments and dividends to, and sales of securities of the second
Person by, the first Person.
6 SECOND AMENDMENT
<PAGE> 7
(J) SECTION 7.9 is entirely amended as follows:
7.9 DISTRIBUTIONS. No Company may:
(a) enter into or permit to exist any arrangement
or agreement (other than this agreement and the Other Credit
Agreements) that prohibits it from paying Distributions to
its equity holders; or
(b) declare, make, or pay any Distribution other
than (i) Distributions from any Subsidiary of Borrower to its
parent corporation and (ii) Distributions from Borrower to
Guarantor at any time when no Potential Default or Event of
Default exists or would exist immediately after that
Distribution.
(K) SECTION 7.10(b) is entirely amended as follows:
(b) Guarantor may not sell, assign, lease,
transfer, or otherwise dispose of any of its assets
(including equity interests in any other Company) OTHER THAN
(a) dispositions in the ordinary course of business for a
fair and adequate consideration and (b) dispositions of
assets that are obsolete or are no longer in use and are not
significant to the continuation of Guarantor's business.
(L) A new SECTION 7.17 is added as follows:
7.17 AMENDMENT OF CONSTITUENT DOCUMENTS. No Company shall
materially amend or modify (or permit the material amendment or
modification of) its Constituent Documents.
(M) SECTION 8 is entirely amended as follows:
SECTION 8. FINANCIAL COVENANTS. As long as any Lender is
committed to lend under this agreement and until the Obligation has
been fully paid and performed, Borrower covenants and agrees with
Administrative Agent and Lenders that, without first obtaining
Required Lenders' consent to the contrary, the following may not occur
or exist as applicable to the Companies and as determined as of the
last day of each fiscal quarter of Borrower:
8.1 MINIMUM NET WORTH. The Companies' stockholders'
equity may never be less than the sum of (a) $187,648,000,
plus (b) 15% of the Companies' cumulative, quarterly Net
Income (without deduction for losses) after December 31,
1998, plus (c) 100% of all equity contributions to Guarantor
after December 31, 1998.
8.2 MAXIMUM FUNDED DEBT TO EBITDA. The ratio of the
Companies' Funded Debt to the Companies' EBITDA may never
exceed the following, as applicable:
<TABLE>
<CAPTION>
===========================================
QUARTER(S) ENDING RATIO
===========================================
<S> <C>
06/30/99 through 03/31/01 4.50 to 1.00
06/30/01 through 12/31/02 4.00 to 1.00
03/31/03 and thereafter 3.75 to 1.00
===========================================
</TABLE>
7 SECOND AMENDMENT
<PAGE> 8
8.3 FIXED CHARGE COVERAGE RATIO. The ratio of (a)
the Companies' EBITDA to (b) the Companies' Interest Expense
and expenditures for the maintenance or repair of capital
assets may never be less than the following, as applicable:
<TABLE>
<CAPTION>
===========================================
QUARTER(S) ENDING RATIO
===========================================
<S> <C>
06/30/99 through 12/31/00 1.75 to 1.00
03/31/01 and thereafter 2.00 to 1.00
===========================================
</TABLE>
(N) SECTION 9.3 is entirely amended as follows:
9.3 DEBTOR RELIEF. Any Company (a) is not Solvent, (b)
fails to pay its Debts generally as they become due, (c) voluntarily
seeks, consents to, or acquiesces in the benefit of any Debtor Law, or
(d) becomes a party to or is made the subject of any proceeding
(except as a creditor or claimant) provided for by any Debtor Law
(unless, if the proceeding is involuntary, the applicable petition is
dismissed within 60 days after its filing).
(O) SECTION 9.4 is entirely amended as follows:
9.4 JUDGMENTS AND ATTACHMENTS. Where the amounts in
controversy or of any judgments, as the case may be, exceed (from and
after the Closing Date and individually or collectively) $25,000,000
for Parent or Guarantor or $1,000,000 for any other Company, such
entity fails (a) to have discharged, within 60 days after its
commencement, any attachment, sequestration, or similar proceeding
against any of its assets or (b) to pay any money judgment against it
within ten days before the date on which any of its assets may be
lawfully sold to satisfy that judgment.
(P) SECTION 9.8 is entirely amended as follows:
9.8 OTHER DEBT.
(a) OTHER CREDIT AGREEMENTS. The existence of
an "Event of Default" under either of the Other Credit
Agreements.
(b) OTHER. In respect of any Senior Notes or in
respect of any other Debt owed by any Company (other than the
Obligation) individually or collectively of at least
$10,000,000 (a) any Company fails to make any payment when
due (inclusive of any grace, extension, forbearance, or
similar period), or (b) any default or other event or
condition occurs or exists beyond the applicable grace or
cure period, the effect of which is to cause or to permit any
holder of that Debt to cause (whether or not it elects to
cause) any of that Debt to become due before its stated
maturity or regularly scheduled payment dates, or (c) any of
that Debt is declared to be due and payable or required to be
prepaid by any Company before its stated maturity.
(Q) EXHIBIT C is entirely amended in the form of, and all
references in the Credit Agreement to that exhibit are changed to, the attached
AMENDED EXHIBIT C.
8 SECOND AMENDMENT
<PAGE> 9
3. CONDITIONS PRECEDENT. Notwithstanding any contrary provision, the
foregoing paragraph in this document is not effective unless and until (A) the
representations and warranties in this document are true and correct and (B)
Agent receives counterparts of this document executed by each party named on
the signature page of this document.
4. REPRESENTATIONS. To induce Lenders and Agent to enter into this
document, Borrower represents and warrants to Lenders and Agent that as of the
date of this document (A) Borrower has all requisite authority and power to
execute, deliver, and perform its obligations under this document, which
execution, delivery, and performance have been duly authorized by all necessary
corporate action, require no action by or filing with any Governmental
Authority, do not violate any of its Constituent Documents or (except where not
a Material-Adverse Event) violate any Legal Requirements applicable to it or
any material agreement to which it or its assets are bound, (B) upon execution
and delivery by all parties to it, this document will constitute Borrower's
legal and binding obligation, enforceable against it in accordance with this
document's terms except as that enforceability may be limited by Debtor Laws
and general principles of equity, (C) all other representations and warranties
in the Credit Documents are true and correct in all material respects except to
the extent that (1) any of them speak to a different specific date or (2) the
facts on which any of them were based have been changed by transactions
contemplated or permitted by the Credit Agreement, and (D) no Material-Adverse
Event, Event of Default, or Potential Default exists.
5. EXPENSES. Borrower shall pay all costs, fees, and expenses paid or
incurred by Agent incident to this document, including, without limitation, the
reasonable fees and expenses of Agent's special counsel in connection with the
negotiation, preparation, delivery, and execution of this document and any
related documents.
6. MISCELLANEOUS. All references in the Credit Documents to the "Credit
Agreement" refer to the Credit Agreement as amended by this document. This
document is a "Credit Document" referred to in the Credit Agreement; therefore,
the provisions relating to Credit Documents in SECTIONS 1 and 12 are
incorporated in this document by reference. Except as specifically amended and
modified in this document, the Credit Agreement is unchanged and continues in
full force and effect. This document may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document. All counterparts must be construed together to constitute one and the
same instrument. This document binds and inures to each of the undersigned and
their respective successors and permitted assigns, subject to SECTION 12.10.
THIS DOCUMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES IN RESPECT OF THE MATTERS COVERED BY THE CREDIT DOCUMENTS
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE FOLLOWS.
9 SECOND AMENDMENT
<PAGE> 10
EXECUTED as of the date first stated in this Second Amendment to
Credit Agreement.
<TABLE>
<CAPTION>
TEPPCO COLORADO, LLC, as Borrower SUNTRUST BANK, ATLANTA, as
Agent and a Lender
<S> <C>
By: TE PRODUCTS PIPELINE COMPANY,
LIMITED PARTNERSHIP, as Sole
Member
By /s/ John A. Fields, Jr.
By: TEXAS EASTERN PRODUCTS ------------------------------------
PIPELINE COMPANY, as General Name: John A. Fields, Jr.
Partner -----------------------------
Title: Vice President
-----------------------------
By /s/ Charles H. Leonard By /s/ F. McClellan Deaver, III
----------------------------------- -------------------------------------
Charles H. Leonard, Senior Vice Name: F. McClellan Deaver, III
-----------------------------
President, Chief Financial Officer, Title: Group Vice President
and Treasurer -----------------------------
</TABLE>
BANK ONE, TEXAS, N.A., as a Lender
By /s/ Joseph Giampetroni
-----------------------------------
Joseph Giampetroni, Vice President
CONSENT AND AGREEMENT
To induce Required Lenders to enter into this document, the
undersigned (a) consents and agrees to this document's execution and delivery,
(b) ratifies and confirms that the guaranty granted to Agent and Lenders under
the Credit Documents (as it may have been renewed, extended, and amended) is
not released, diminished, impaired, reduced, or otherwise adversely affected by
this document and continues to guarantee, the full payment and performance of
all present and future Obligation, and (c) waives notice of acceptance of this
consent and agreement, which consent and agreement binds the undersigned and
its successors and permitted assigns and inures to Agent and Required Lenders
and their respective successors and permitted assigns.
TE PRODUCTS PIPELINE COMPANY, LIMITED
PARTNERSHIP, as Guarantor
By: TEXAS EASTERN PRODUCTS PIPELINE
COMPANY, as General Partner
By /s/ Charles H. Leonard
-----------------------------------
Charles H. Leonard, Senior Vice
President, Chief Financial Officer,
and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 49,200
<SECURITIES> 3,909
<RECEIVABLES> 153,349
<ALLOWANCES> 0
<INVENTORY> 21,517
<CURRENT-ASSETS> 231,933
<PP&E> 907,207
<DEPRECIATION> 207,761
<TOTAL-ASSETS> 983,517
<CURRENT-LIABILITIES> 181,787
<BONDS> 389,737
0
106,102
<COMMON> 0
<OTHER-SE> 231,094
<TOTAL-LIABILITY-AND-EQUITY> 983,517
<SALES> 620,530
<TOTAL-REVENUES> 741,441
<CGS> 608,030
<TOTAL-COSTS> 689,956
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,322
<INCOME-PRETAX> 37,783
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,401
<EPS-BASIC> 1.02
<EPS-DILUTED> 1.02
</TABLE>
