SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1 - 10568
LG&E ENERGY CORP.
(Exact name of registrant as specified in its charter)
Kentucky 61 - 1174555
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 West Main Street 40232
P.O. Box 32030 (Zip Code)
Louisville, KY
(Address of principal executive offices)
(502) 627-2000
(Registrant's telephone number)
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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 66,287,294 shares, without
par value, as of April 30, 1996.
LG&E Energy Corp. and Subsidiaries
Amendment to Form 10-Q for the Quarter Ended March 31, 1996
The Company is filing this amendment to its Form 10-Q for the quarter ended
March 31, 1996 (the "Form 10-Q"), to (i) amend the description of Exhibits
10.01, 10.03 and 10.05 that appeared under Item 6(a) of the Form 10-Q to delete
all references to confidential treatment requests filed with the Securities and
Exchange Commission on behalf of the Company and its principal subsidiary,
Louisville Gas and Electric Company, and (ii) to file Exhibits 10.01 and 10.03
in complete and unredacted form. The amended version of Item 6 is set forth
below.
Item 6(a). Exhibits.
Exhibit
Number Description
3.01 Copy of Articles of Incorporation, as amended, dated May
10, 1996.
10.01 Copy of the Credit Agreement, dated as of January 29, 1996,
among LG&E Energy Systems Inc. as Borrower, the Banks named
therein, Citibank, N.A. as Agent and Bank of Montreal as
Co-Agent.
10.02 Copy of the Support Agreement dated as of December 6, 1995,
between the Company and LG&E Energy Systems Inc.
10.03 Copy of the Credit Agreement, dated as of May 12, 1995,
among LG&E Gas Systems Inc. as Borrower, the Banks named
therein as Lenders and Bank of Montreal, as Agent.
10.04 Copy of the Support Agreement, dated as of May 12, 1995,
between the Company and LG&E Gas Systems Inc.
10.05 Copy of the Credit Agreement by and among Louisville Gas
and Electric Company, dated December 18, 1995, the Banks
party thereto, PNC Bank, Kentucky, Inc. as Agent and Bank
of Montreal as Co-Agent. [Filed as Exhibit 10.01 to LG&E's
Quarterly Report on Form 10-Q/A filed on July 19, 1996, for
the quarter ended March 31, 1996, and incorporated by
reference herein]
27 Financial Data Schedule.
99.01 Description of Common Stock.
Item 6(b). Reports on Form 8-K.
On March 7, 1996, a report on Form 8-K was filed announcing a two-for-one split
of its common stock, without par value, effective April 15, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LG&E ENERGY CORP.
Registrant
Date: July 19, 1996 /s/ Walter Z. Berger
Walter Z. Berger
Executive Vice President and
Chief Financial Officer
(On behalf of the registrant in his capac-
ity as Principal Accounting Officer)
EXHIBIT 3.01
ARTICLES OF INCORPORATION
OF
LG&E ENERGY, CORP.
I, the undersigned, acting as incorporator of a corporation under the Kentucky
Business Corporation Act adopt the following Articles of Incorporation for such
corporation:
FIRST. The corporate name is:
LG&E ENERGY, CORP.
SECOND. The address of the initial registered office of LG&E Energy, Corp.
(herein, the "Company") is 311 West Chestnut Street, P.O. Box 32010,
Louisville, Kentucky 40232 and the name of the Company's initial registered
agent at that office is Charles A. Markel, III.
THIRD. The mailing address of the principal office of the Company is 311
West Chestnut Street, P.O. Box 32010, Louisville, Kentucky 40232.
FOURTH. The aggregate number of shares which the Company is authorized to
issue is 10. The designations, number of shares and par value, if any, of the
shares are as follows:
Par Value per Share or
Number of Series Statement that Shares
Shares Class (if any) are Without Par Value
10 Common None Without Par Value
FIFTH. The purpose of the Company is the transaction of any or all lawful
business for which corporations may be incorporated under the Business
Corporation Law of Kentucky, as amended.
SIXTH. The period of the Company's duration shall be perpetual.
SEVENTH. The name and mailing address of the sole incorporator is:
Charles A. Markel, III
311 West Chestnut Street
P.O. Box 32010
Louisville, Kentucky 40232
EIGHTH. The number of directors constituting the initial Board of Directors
of the Company is two and the names and addresses of the persons who are to
serve as directors until the first annual meeting of stockholders of the
Company or until their successors are elected and shall qualify are:
Roger W. Hale 311 West Chestnut Street
P.O. Box 32010
Louisville, Kentucky 40232
Charles A. Markel, III 311 West Chestnut Street
P.O. Box 32010
Louisville, Kentucky 40232
Dated: ___________, 1989
______________________
Charles A. Markel, III
Incorporator
STATE OF KENTUCKY )
) SS
COUNTY OF JEFFERSON )
I, the undersigned, a notary public, do hereby certify that on this _____ day
of ________, 1989, personally appeared before me, Charles A. Markel, III, who
being by me first duly sworn, severally declared that he is the person who
signed the foregoing document as incorporator, and that the statements therein
contained are true.
________________, Notary Public
________________
(NOTARIAL SEAL) My Commission expires:
_____________________
The foregoing instrument was prepared by:
Charles G. Middleton, III
Attorney-at-Law
Middleton & Reutlinger
2500 Brown & Williamson Tower
Louisville, KY 40202-3410
(502) 584-1135
_________________________
Charles G. Middleton, III
ARTICLES OF CORRECTION
OF
ARTICLES OF INCORPORATION
OF
LG&E ENERGY CORP.
Pursuant to KRS 271B.1-240, I, the undersigned, acting as original incorporator
of LG&E Energy Corp., under the Kentucky Business Corporation Act, do hereby
adopt the following Articles of Correction for such corporation.
1. The original Articles of Incorporation for LG&E Energy Corp., filed on
November 14, 1989, are attached hereto.
2. The corporate name, LG&E Energy, Corp., as listed in the original
Articles of Incorporation is incorrect in that there should be no comma between
the words Energy and Corp.
3. The correct corporate name is LG&E Energy Corp.
4. All other provisions of the Articles of Incorporation are correct.
IN WITNESS WHEREOF, I have made, signed and acknowledged these Articles of
Correction, this _____ day of March, 1990.
______________________
Charles A. Markel, III
COMMONWEALTH OF KENTUCKY )
) SS
COUNTY OF JEFFERSON )
On this _____ day of March, 1990, personally appeared Charles A. Markel, III,
to me known, and known to me to be the person described in and who executed the
foregoing Articles of Correction, and who duly acknowledged to me that he had
executed the same. Witness my hand this _____ day of _________, 1990.
My Commission expires: __________________________
__________________________
Notary Public
State of Kentucky at Large
THIS INSTRUMENT WAS PREPARED BY:
_________________________
Charles G. Middleton, III
Middleton & Reutlinger
2500 Brown & Williamson Tower
Louisville, Kentucky 40202
Telephone (502) 584-1134
ARTICLES OF SHARE EXCHANGE
OF
LG&E ENERGY CORP.
AND
LOUISVILLE GAS AND ELECTRIC COMPANY
WHEREBY SHARES OF COMMON STOCK OF
LOUISVILLE GAS AND ELECTRIC COMPANY
WERE EXCHANGED FOR SHARES OF
LG&E ENERGY CORP.
Pursuant to the provisions of Section 271B.11-050 of the Kentucky Revised
Statutes, the undersigned corporations adopt the following articles of share
exchange:
1. The plan of share exchange is set forth as Exhibit A.
2. The plan of share exchange was approved by the shareholders and:
(i) the designation, number of outstanding shares, and number of votes
entitled to be cast by each voting group entitled to vote
separately on the plan as to each corporation were:
Number of
Name of Outstanding Number of Votes
Corporation Designation Shares Entitled To Be Cast
LG&E Energy Corp. Common Stock 10 10
Louisville Gas and (a) Common 21,122,888 21,122,888
Electric Company Stock
(b) Common 22,842,888 22,842,888
Stock and
Preferred
Stock (par
value $25
per share)
(ii) the total number of undisputed votes cast for the plan separately
by each voting group was:
Total Number of
Name of Undisputed Votes Cast
Corporation Voting Group For the Plan
LG&E Energy Corp. Common Stock 10
Louisville Gas and (a) Common 15,522,355
Electric Company Stock
(b) Common 16,866,077
Stock and
Preferred
Stock (par
value $25
per share)
and the number cast for the plan by each voting group was
sufficient for approval by that group.
3. The effective time and date of these Articles of Share Exchange and the
share exchange effectuated hereby is 4:00 p.m., E.D.T., on August 17, 1990.
Dated: ___________ LG&E ENERGY CORP.
______________________
Charles A. Markel, III
Vice President, Secretary and Treasurer
Dated: ___________ LOUISVILLE GAS AND ELECTRIC COMPANY
___________________
Christine A. Hansen
Vice President, General Counsel and Secretary
Prepared by:
Middleton & Reutlinger
2500 Brown & Williamson Tower
Louisville, Kentucky 40202
_________________________
Charles G. Middleton, III
EXHIBIT "A"
AGREEMENT AND PLAN OF EXCHANGE
THIS AGREEMENT AND PLAN OF EXCHANGE (this "Agreement") is between LOUISVILLE
GAS AND ELECTRIC COMPANY, a Kentucky corporation ("LG&E"), the Company whose
shares will be acquired pursuant to the Exchange described herein, and LG&E
ENERGY CORP., a Kentucky corporation (the "Company"), the acquiring company.
LG&E and the Company are hereinafter referred to, collectively, as the
"Companies."
W I T N E S S E T H:
WHEREAS, the authorized capital stock of LG&E consists of (a) 75,000,000 shares
of Common Stock without par value ("LG&E Common Stock"), of which more than
21,000,000 shares are issued and outstanding, (b) 6,750,000 shares of Preferred
Stock, without par value but with a maximum aggregate stated value not to
exceed $225,000,000 ("LG&E Preferred Stock, without par value"), of which
750,000 shares are issued and outstanding and (c) 1,720,000 shares of Preferred
Stock, par value $25 per share ("LG&E $25 Preferred Stock"), of which 1,720,000
shares are issued and outstanding;
WHEREAS, the Company is a wholly-owned subsidiary of LG&E with authorized
capital stock consisting of (a) 75,000,000 shares of Common Stock, without par
value ("Company Common Stock"), of which 10 shares are issued and outstanding
and owned of record by LG&E and (b) 3,000,000 shares of Preferred Stock,
without par value, of which no shares are issued and outstanding;
WHEREAS, the Boards of Directors of the respective Companies deem it desirable
and in the best interests of the Companies and their shareholders that the
Company acquire each share of issued and outstanding LG&E Common Stock and that
such LG&E Common Stock be exchanged for a share of Company Common Stock with
the result that the Company becomes the owner of all outstanding LG&E Common
Stock, all on the terms and conditions hereinafter set forth;
WHEREAS, the execution and delivery of this Agreement by LG&E and the Company
and the Exchange (as hereinafter defined) and the related transactions have
been approved, to the extent required, by orders, authorizations or approvals,
of the Public Service Commission of Kentucky and the Federal Energy Regulatory
Commission under the Federal Power Act;
WHEREAS, the Internal Revenue Service has issued a ruling with respect to the
federal income tax consequences of the Exchange and related transactions;
WHEREAS, LG&E has obtained all necessary regulatory and other approvals to
reduce its share ownership of Ohio Valley Electric Corporation ("OVEC") to
below 5% of the total outstanding shares of OVEC and to merge Ohio Valley
Transmission Corporation into LG&E; and
WHEREAS, the Board of Directors of LG&E and the Company have recommended that
their respective shareholders approve the Exchange and this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the agreements,
covenants and conditions hereinafter contained, the parties hereto agree with
respect to the acquisition and exchange provided for herein (the "Exchange")
that at the Effective Time (as hereinafter defined) each share of LG&E Common
Stock issued and outstanding immediately prior to the Effective Time will be
acquired by the Company and exchanged for one share of Company Common Stock,
and that the terms and conditions of the Exchange and the method of carrying
the same into effect are as follows:
ARTICLE I
Subject to the satisfaction of the conditions and obligations of the parties
hereto, the Exchange will be effective upon the filing with the Secretary of
State of Kentucky (the "Secretary of State") of Articles of Share Exchange
("Articles") with respect to the Exchange or at such later time as may be
stated in the Articles (the time at which the Exchange becomes effective being
referred to herein as the "Effective Time").
ARTICLE II
At the Effective Time:
(1) subject to the provisions of (4) below, each share of LG&E Common Stock
issued and outstanding immediately prior to the Effective Time shall be
acquired by the Company and shall be exchanged for one share of Company Common
Stock, which shall thereupon be fully paid and non-assessable;
(2) the Company shall become the owner and holder of each issued and
outstanding share of LG&E Common Stock so exchanged;
(3) each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time shall be canceled and shall thereupon constitute an
authorized and unissued share of Company Common Stock; and
(4) the former owners of LG&E Common Stock shall be entitled only to receive
shares of Company Common Stock as provided herein or to their dissenters'
rights under KRS 271B.13-010 through KRS 271B.13-310.
Shares of LG&E $25 Preferred Stock (other than shares held by holders who have
perfected their dissenters' rights under KRS 271B.13-010 through KRS 271B.13-
310) and shares of LG&E Preferred Stock, without par value shall not be
exchanged or otherwise affected in connection with the Exchange. Each share of
LG&E Preferred Stock, without par value issued and outstanding immediately
prior to the Effective Time shall continue to be issued and outstanding
following the Exchange and to be a share of LG&E Preferred Stock, without par
value of the applicable series designation. Each share of LG&E $25 Preferred
Stock issued and outstanding immediately prior to the Effective Time (other
than shares held by holders who have perfected their dissenters' rights under
KRS 271B.13-010 through KRS 271B.13-310) shall continue to be issued and
outstanding following the Exchange and to be a share of LG&E $25 Preferred
Stock of the applicable series designation. Holders of shares of LG&E $25
Preferred Stock who have perfected their dissenters' rights under KRS 271B.13-
010 through KRS 271B.13-310 shall have the rights specified in such Sections.
ARTICLE III
The consummation of the Exchange is subject to the following conditions
precedent:
(1) the satisfaction of the respective obligations of the parties hereto in
accordance with the terms and conditions herein contained;
(2) the adoption of this Agreement by the requisite vote of the holders of
the LG&E Common Stock and LG&E $25 Preferred Stock and by the requisite vote of
the shareholder of the Company pursuant to the Kentucky Business Corporation
Act (the "Act");
(3) the execution and filing of the Articles with the Secretary of State
pursuant to the Act;
(4) the approval for listing, upon official notice of issuance, by the New
York Stock Exchange and the Midwest Stock Exchange, of the Company Common Stock
to be issued in accordance with this Agreement;
(5) the consummation of the transactions referred to in the sixth Whereas
clause hereof; and
(6) the receipt of such orders, authorizations, approvals or waivers from all
jurisdictive regulatory bodies, boards or agencies, in addition to the orders
or approvals referred to in the fourth Whereas clause hereof, which are
required in connection with the Exchange and related transactions.
ARTICLE IV
This Agreement may be amended, modified or supplemented, or compliance with any
provision or condition hereof may be waived, at any time, before or after the
approval by the shareholders of either or both of the Companies, by the mutual
consent of the Boards of Directors of LG&E and the Company; provided, however,
that no such amendment, modification, supplement or waiver shall be made or
effected subsequent to approval by the shareholders of this Agreement, if such
amendment, modification, supplement or waiver would, in the judgment of the
Board of Directors of LG&E materially and adversely affect the shareholders of
LG&E.
This Agreement may be terminated and the Exchange and related transactions
abandoned at any time prior to the time the Articles are filed with the
Secretary of State, if the Board of Directors of the Company determines, in its
sole discretion, that consummation of the Exchange would be inadvisable or not
in the best interests of the Company or its shareholders.
ARTICLE V
This Agreement shall be submitted to the holders of LG&E Common Stock and LG&E
$25 Preferred Stock and to the shareholder of the Company for approval as
provided by the Act. The affirmative vote of the holders of a majority of the
outstanding LG&E Common Stock and LG&E $25 Preferred Stock voting together as
one voting group and the affirmative vote of the holders of a majority of the
LG&E Common Stock voting as a separate voting group are required for the
adoption of this Agreement. The affirmative vote of the holder of a majority
of the outstanding shares of the Company Common Stock is required for the
adoption of this Agreement.
ARTICLE VI
Following the Effective Time, other than holders of certificates theretofore
representing shares of LG&E Common Stock who perfect their dissenters' rights
under KRS 271B.13-010 through KRS 271B.13-310, each holder of an outstanding
certificate or certificates theretofore representing shares of LG&E Common
Stock may, but shall not be required to, surrender the same to the Company for
cancellation and reissuance of a certificate or certificates in such holder's
name or for cancellation and transfer, and each such holder or transferee will
be entitled to receive a certificate or certificates representing the same
number of shares of the Company Common Stock as the shares of LG&E Common Stock
previously represented by the certificate or certificates surrendered. Until
so surrendered or presented for transfer, each outstanding certificate which,
immediately prior to the Effective Time, represented LG&E Common Stock (other
than certificates held by holders of LG&E Common Stock who have perfected their
dissenters' rights under KRS 271B.13-010 through KRS 271B.13-310), shall be
deemed and treated for all corporate purposes to represent the ownership of the
same number of shares of Company Common Stock as though such surrender or
transfer and exchange had taken place. The holders of LG&E Common Stock at the
Effective Time shall have no right to have their shares of LG&E Common Stock
transferred on the stock transfer books of LG&E, and such stock transfer books
shall be deemed to be closed for this purpose at the Effective Time.
IN WITNESS WHEREOF, both LG&E and the Company, pursuant to authorization given
by the Boards of Directors, have caused this Agreement to be executed by the
Presidents and the corporate seals to be affixed hereto and attested by the
Secretaries as of August 10, 1990.
LOUISVILLE GAS AND ELECTRIC COMPANY
By: __________________
President
ATTEST:
_____________
Secretary
(SEAL)
LG&E ENERGY CORP.
By: ______________________
President
ATTEST:
__________________
Secretary
(SEAL)
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
LG&E ENERGY CORP.
The following Amended and Restated Articles of Incorporation of LG&E Energy
Corp., a Kentucky corporation (the "Company"), were recommended by the Board of
Directors and adopted by the sole shareholder of the Company by unanimous
written consent on June 6, 1990. The First, Second, Third and Sixth Articles
remain unchanged. The Fourth, Fifth and Eighth Articles have been amended.
The former Seventh Article is now the Thirteenth Article. The Seventh Article
and the Ninth through Twelfth Articles have been added to these Articles. All
amendments and additions to the Articles were voted upon and unanimously
approved by the sole shareholder of the Company. The number of shares cast for
the amendments was sufficient for approval of the amendments.
"FIRST. The corporate name is
LG&E ENERGY CORP.
SECOND. The address of the registered office of LG&E Energy Corp. (herein, the
"Company") is 311 West Chestnut Street, P.O. Box 32010, Louisville, Kentucky
40232 and the name of the Company's registered agent at that office is Charles
A. Markel, III.
THIRD. The mailing address of the principal office of the Company is 311 West
Chestnut Street, P.O. Box 32010, Louisville, Kentucky 40232.
FOURTH. A. AUTHORIZED CAPITAL STOCK. The total number of shares which the
Company shall have the authority to issue shall be 80,000,000 shares, of which
75,000,000 shares shall be Common Stock, without par value, and 3,000,000
shares shall be Preferred Stock, without par value.
B. COMMON STOCK. The Board of Directors is hereby authorized to cause shares
of Common Stock, without par value, to be issued from time to time for such
consideration as may be fixed from time to time by the Board of Directors, or
by way of stock split pro rata to the holders of the Common Stock. The Board
of Directors may also determine the proportion of the proceeds received from
the sale of such stock which shall be credited upon the books of the Company to
Capital or Capital Surplus.
Each share of the Common Stock shall be equal to all respects to every other
share of the Common Stock. Subject to any special voting rights of the holders
of Preferred Stock fixed by or pursuant to the provisions of Paragraph C of
this Article Fourth, the shares of Common Stock shall entitle the holders
thereof to one vote for each share upon all matters upon which shareholders
have the right to vote and, to the extent required by law, to cumulative voting
in all elections of directors by shareholders.
No holder of shares of Common Stock shall be entitled as such as a matter of
right to subscribe for or purchase any part of any new or additional issue of
stock, or securities convertible into stock, of any class whatsoever, whether
now or hereafter authorized, and whether issued for cash, property, services or
otherwise.
After the requirements with respect to preferential dividends on Preferred
Stock (fixed by or pursuant to the provisions of Paragraph C of this Article
Fourth), if any, shall have been met and after the Company shall have complied
with all the requirements, if any, with respect to the setting aside of sums as
sinking funds or redemption or purchase accounts (fixed by or pursuant to the
provisions of Paragraph C of this Article Fourth) and subject further to any
other conditions which may be fixed by or pursuant to the provisions of
Paragraph C of this Article Fourth, then, but not otherwise, the holders of
Common Stock shall be entitled to receive dividends, if any, as may be declared
from time to time by the Board of Directors.
After distribution in full of the preferential amount (fixed by or pursuant to
the provisions of Paragraph C of this Article Fourth), if any, to be
distributed to the holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets, dissolution or winding
up of the Company, the holders of the Common Stock shall be entitled to receive
all the remaining assets of the Company, tangible and intangible, of whatever
kind available for distribution to shareholders, ratably in proportion to the
number of shares of Common Stock held by each.
C. PREFERRED STOCK. Shares of Preferred Stock may be divided into and issued
in such series, on such terms and for such consideration as may from time to
time be determined by the Board of Directors of the Company. Each series shall
be so designated as to distinguish the shares thereof from the shares of all
other series and classes. All shares of Preferred Stock shall be identical,
except as to variations between different series in the relative rights and
preferences as permitted or contemplated by the next succeeding sentence.
Authority is hereby vested in the Board of Directors of the Company to
establish out of shares of Preferred Stock which are authorized and unissued
from time to time one or more series thereof and to fix and determine the
following relative rights and preferences of shares of each such series:
(1) The distinctive designation of, and the number of shares which shall
constitute, the series and the "stated value" or "nominal value," if any,
thereof;
(2) The rate of dividend applicable to shares of such series;
(3) The price at and the terms and conditions on which shares of such series
may be redeemed;
(4) The amount payable upon shares of such series in the event of the
involuntary liquidation of the Company;
(5) The amount payable upon shares of such series in the event of the
voluntary liquidation of the Company;
(6) Sinking fund provisions for the redemption or purchase of shares of such
series;
(7) The terms and conditions on which shares of such series may be converted,
if such shares are issued with the privilege of conversion;
(8) The voting powers, if any, of the holders of shares of the series which
may, without limiting the generality of the foregoing, include (i) the right to
one or less than one vote per share on any or all matters voted upon by the
shareholders and (ii) the right to vote, as a series by itself or together with
other series of Preferred Stock or together with all series of Preferred Stock
as a class, upon such matters, under such circumstances and upon such
conditions as the Board of Directors may fix, including, without limitation,
the right, voting as a series by itself or together with other series of
Preferred Stock or together with all series of Preferred Stock as a class, to
elect one or more directors of this Company in the event there shall have been
a failure to pay dividends on any one or more series of Preferred Stock or
under such other circumstances and upon such conditions as the Board of
Directors may determine; provided, however, that in no event shall a share of
Preferred Stock have more than one vote; and
(9) Any other such rights and preferences as are not inconsistent with the
Kentucky Business Corporation Act.
No holder of any share of any series of Preferred Stock shall be entitled to
vote for the election of directors or in respect of any other matter except as
may be required by the Kentucky Business Corporation Act, as amended, or as is
permitted by the resolution or resolutions adopted by the Board of Directors
authorizing the issue of such series of Preferred Stock.
D. OTHER PROVISIONS.
(1) The relative powers, preferences, and rights of each series of Preferred
Stock in relation to the powers, preferences and rights of each other series of
Preferred Stock shall, in each case, be as fixed from time to time by the Board
of Directors in the resolution or resolutions adopted pursuant to authority
granted in Paragraph C of this Article Fourth, and the consent by class or
series vote or otherwise, of the holders of the Preferred Stock or such of the
series of the Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other series of
Preferred Stock whether the powers, preferences and rights of such other series
shall be fixed by the Board of Directors as senior to, or on a parity with,
powers, preferences and rights of such outstanding series, or any of them,
provided, however, that the Board of Directors may provide in such resolution
or resolutions adopted with respect to any series of Preferred Stock that the
consent of the holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
(2) Subject to the provisions of Section 1 of this Paragraph D, shares of any
series of Preferred Stock may be issued from time to time as the Board of
Directors shall determine and on such terms and for such consideration as shall
be fixed by the Board of Directors.
(3) Common Stock may be issued from time to time as the Board of Directors
shall determine and on such terms and for such consideration as shall be fixed
by the Board of Directors.
(4) No holder of any of the shares of any class or series of shares or
securities convertible into such shares of any class or series of shares, or of
options, warrants or other rights to purchase or acquire shares of any class or
series of shares or of other securities of the Company shall have any
preemptive right to purchase, acquire, subscribe for any unissued shares of any
class or series or any additional shares of any class or series to be issued by
reason of any increase of the authorized capital stock of the Company of any
class or series, or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for shares of any class or series,
or carrying any right to purchase or acquire shares of any class or series, but
any such unissued shares, additional authorized issue of shares of any class or
series of shares or securities convertible into or exchangeable for shares, or
carrying any right to purchase or acquire shares, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations, and upon such terms, as may be deemed advisable
by the Board of Directors in the exercise of its sole discretion.
(5) The Company reserves the right to increase or decrease its authorized
capital shares, or any class or series thereof or to reclassify the same and to
amend, alter, change or repeal any provision contained in the Articles of
Incorporation or in any amendment thereto, in the manner now or hereafter
prescribed by law, but subject to such conditions and limitations as are
hereinbefore prescribed, and all rights conferred upon shareholders in the
Articles of Incorporation of this Company, or any amendment thereto, are
granted subject to this reservation.
FIFTH. The purpose of the Company is the transaction of any or all lawful
business for which corporations may be incorporated under the Kentucky Business
Corporation Act.
SIXTH. The period of the Company's duration shall be perpetual.
SEVENTH. A. CERTAIN DEFINITIONS. For purposes of this Article Seventh:
(1) "Affiliate," including the term "affiliated person," means a person who
directly, or indirectly through one (1) or more intermediaries, controls, or is
controlled by, or is under common control with, a specified person.
(2) "Associate," when used to indicate a relationship with any person, means:
(a) Any corporation or organization (other than the Company or a Subsidiary),
of which such person is an officer, director or partner or is, directly or
indirectly, the Beneficial Owner of ten percent (10%) or more of any class of
Equity Securities;
(b) Any trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee or in a
similar fiduciary capacity; and
(c) Any relative or spouse of such person, or any relative of such spouse, any
one (1) of whom has the same home as such person or is a director or officer of
the corporation or any of its Affiliates.
(3) "Beneficial Owner," when used with respect to any Voting Stock, means a
person:
(a) Who, individually or with any of its Affiliates or Associates, beneficially
owns Voting Stock, directly or indirectly; or
(b) Who, individually or with any of its Affiliates or Associates, has:
1. The right to acquire Voting Stock, whether such right is exercisable
immediately or only after the passage of time and whether or not such right is
exercisable only after specified conditions are met, pursuant to any agreement,
arrangement, or understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise;
2. The right to vote Voting Stock pursuant to any agreement, arrangement, or
understanding; or
3. Any agreement, arrangement, or understanding for the purpose of acquiring,
holding, voting or disposing of Voting Stock with any other person who
beneficially owns, or whose Affiliates or Associates beneficially owns,
directly or indirectly, such shares of Voting Stock.
(4) "Business Combination" means:
(a) Any merger or consolidation of the Company or any Subsidiary with any
Interested Shareholder, or any other corporation, whether or not itself an
Interested Shareholder, which is, or after the merger or consolidation would
be, an Affiliate of an Interested Shareholder who was an Interested Shareholder
prior to the transaction;
(b) Any sale, lease, transfer, or other disposition, other than in the
ordinary course of business, in one (1) transaction or a series of transactions
in any twelve-month period, to any Interested Shareholder or any Affiliate of
any Interested Shareholder, other than the Company or any Subsidiary, of any
assets of the Company or any Subsidiary having, measured at the time the
transaction or transactions are approved by the Board of Directors of the
Company, an aggregate book value as of the end of the Company's most recently
ended fiscal quarter of five percent (5%) or more of the total Market Value of
the outstanding stock of the Company or of its net worth as of the end of its
most recently ended fiscal quarter;
(c) The issuance or transfer by the Company, or any Subsidiary, in one
transaction or a series of transactions in any twelve-month period, of any
Equity Securities of the Company or any Subsidiary which have an aggregate
Market Value of five percent (5%) or more of the total Market Value of the
outstanding stock of the Company, determined as of the end of the Company's
most recently ended fiscal quarter prior to the first such issuance or
transfer, to any Interested Shareholder or any Affiliate of any Interested
Shareholder, other than the Company or any of its Subsidiaries, except pursuant
to the exercise of warrants or rights to purchase securities offered pro rata
to all holders of the Company's Voting Stock or any other method affording
substantially proportionate treatment to the holders of Voting Stock;
(d) The adoption of any plan or proposal for the liquidation or dissolution of
the Company in which anything other than cash will be received by an Interested
Shareholder or any Affiliate of any Interested Shareholder; or
(e) Any reclassification of securities, including any reverse stock split; or
recapitalization of the Company; or any merger or consolidation of the Company
with any of its Subsidiaries; or any other transaction which has the effect,
directly or indirectly, in one transaction or a series of transactions, of
increasing by five percent (5%) or more the proportionate amount of the
outstanding shares of any class of Equity Securities of the Company or any
Subsidiary which is directly or indirectly beneficially owned by any Interested
Shareholder or any Affiliate of any Interested Shareholder.
(5) "Common Stock" means any stock of the Company other than preferred or
preference stock of the Company.
(6) "Continuing Director" means any member of the Company's Board of Directors
who is not an Interested Shareholder or an Affiliate or Associate of an
Interested Shareholder or any of its Affiliates, other than the Company or any
of its Subsidiaries, and who was a director of the Company prior to the time
the Interested Shareholder became an Interested Shareholder, and any successor
to such Continuing Director who is not an Interested Shareholder or an
Affiliate or Associate of an Interested Shareholder or any of its Affiliates,
other than the Company or any of its Subsidiaries, and was recommended or
elected by a majority of the Continuing Directors at a meeting at which a
quorum consisting of a majority of the Continuing Directors is present.
(7) "Control," including the term "controlling," "controlled by" and "under
common control with," means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract, or
otherwise, and the beneficial ownership of ten percent (10%) or more of the
votes entitled to be cast by a corporation's Voting Stock creates a presumption
of control.
(8) "Equity Security" means:
(a) Any stock or similar security, certificate of interest, or participation
in any profit-sharing agreement, voting trust certificate, or certificate of
deposit for the foregoing;
(b) Any security convertible, with or without consideration, into an Equity
Security, or any warrant or other security carrying any right to subscribe to
or purchase an Equity Security; or
(c) Any put, call, straddle, or other option, right or privilege of acquiring
an Equity Security from or selling an Equity Security to another without being
bound to do so.
(9) "Interested Shareholder" means any person, other than the Company or any
of its Subsidiaries, who:
(a) Is the Beneficial Owner, directly or indirectly, of ten percent (10%) or
more of the voting power of the outstanding Voting Stock of the Company; or is
an Affiliate of the Company and at any time within the two-year period
immediately prior to the date in question was the Beneficial Owner, directly or
indirectly, of ten percent (10%) or more of the voting power of the then
outstanding Voting Stock of the Company.
(b) For the purpose of determining whether a person is an Interested
Shareholder, the number of shares of Voting Stock deemed to be outstanding
shall include shares deemed owned by the person through application of
Subsection (3) of this Paragraph A of Article Seventh but shall not include any
other shares of Voting Stock which may be issuable pursuant to any agreement,
arrangement, or understanding, or upon exercise of conversion rights, warrants
or options or otherwise.
(10) "Market Value" means:
(a) In the case of stock, the highest closing sale price during the thirty-day
period immediately preceding the date in question of a share of such stock on
the composite tape for New York Stock Exchange listed stocks, or, if such stock
is not quoted on the composite tape, on the New York Stock Exchange, or if such
stock is not listed on such exchange, on the principal United States securities
exchanges registered under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such stock during the
thirty-day period preceding the date in question on the National Association of
Securities Dealers, Inc., Automated Quotation System or any system then in use,
or if no such quotations are available, the fair market value on the date in
question of a share of such stock as determined by a majority of the Continuing
Directors at a meeting of the Board of Directors at which a quorum consisting
of at least a majority of the Continuing Directors is present; and
(b) In the case of property other than cash or stock, the fair market value of
such property on the date in question as determined by a majority of the
Continuing Directors at a meeting of the Board of Directors at which a quorum
consisting of at least a majority of the Continuing Directors is present.
(11) "Subsidiary" means any corporation of which Voting Stock having a
majority of the votes entitled to be cast is owned, directly or indirectly, by
the Company.
(12) "Voting Stock" means shares of capital stock of a corporation entitled to
vote generally in the election of its directors.
B. MINIMUM SHARE VOTE REQUIREMENTS FOR APPROVAL OF BUSINESS COMBINATIONS.
(1) In addition to any vote otherwise required by law or these Articles of
Incorporation, a Business Combination shall be recommended by the Board of
Directors of the Company and approved by the affirmative vote of at least:
(a) Eighty percent (80%) of the votes entitled to be cast by outstanding
shares of Voting Stock of the Company, voting together as a single voting
group, and
(b) Two-thirds of the votes entitled to be cast by holders of Voting Stock
other than Voting Stock beneficially owned by the Interested Shareholder who
is, or whose Affiliate is, a party to the Business Combination or by an
Affiliate or Associate of such Interested Shareholder, voting together as a
single voting group.
(2) Unless a Business Combination is exempted from the operation of this
Paragraph B in accordance with Paragraph C of this Article Seventh, the failure
to comply with the voting requirements of Subsection (1) of this Paragraph B
shall render such Business Combination void.
C. EXEMPTIONS FROM MINIMUM SHARE VOTE REQUIREMENTS.
(1) For purposes of Section (2) of this Paragraph C
(a) "Announcement Date" means the first general public announcement of the
proposal or intention to make a proposal of the Business Combination or the
first communication generally to shareholders of the Company, whichever is
earlier.
(b) "Determination Date" means the date on which an Interested Shareholder
first became an Interested Shareholder, and
(c) "Valuation Date" means:
1. For a Business Combination voted upon by shareholders, the latter of the
day prior to the date of the shareholders' vote or the date twenty (20) days
prior to the consummation of the Business Combination; and
2. For a Business Combination not voted upon by shareholders, the date of the
consummation of the Business Combination.
(2) The vote required by Paragraph B of this Article Seventh does not apply to
a Business Combination if each of the following conditions is met:
(a) The aggregate amount of the cash and the Market Value as of the Valuation
Date of consideration other than cash to be received per share by holders of
Common Stock in such Business Combination is at least equal to the highest of
the following:
1. The highest per share price (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid by the Interested Shareholder for any
shares of Common Stock of the same class or series acquired by it:
a. Within the two-year period immediately prior to the Announcement Date of
the proposal of the Business Combination; or
b. In the transaction in which it became an Interested Shareholder, whichever
is higher; or
2. The Market Value per share of Common Stock of the same class or series on
the Announcement Date or on the Determination Date, whichever is higher; or
3. The price per share equal to the Market Value per share of Common Stock of
the same class or series determined pursuant to clause 2 of this Subsection
(a), multiplied by the fraction of:
a. The highest per share price, including any brokerage commissions, transfer
taxes and soliciting dealers' fees, paid by the Interested Shareholder for any
shares of Common Stock of the same class or series acquired by it within the
two-year period immediately prior to the Announcement Date ever.
b. The Market Value per share of Common Stock of the same class or series on
the first day in such two-year period on which the Interested Shareholder
acquired any shares of Common Stock.
(b) The aggregate amount of the cash and the Market Value as of the Valuation
Date of consideration other than cash to be received per share by holders of
shares of any class or series of outstanding stock other than Common Stock is
at least equal to the highest of the following, whether or not the Interested
Shareholder has previously acquired any shares of a particular class or series
of stock:
1. The highest per share price, including any brokerage commissions, transfer
taxes and soliciting dealers' fees, paid by the Interested Shareholder for any
shares of such class of stock acquired by it.
a. Within the two-year period immediately prior to the Announcement Date of
the proposal of the Business Combination; or
b. In the transaction in which it became an Interested Shareholder, whichever
is higher; or
2. The highest preferential amount per share to which the holders of shares of
such class of stock are entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company; or
3. The Market Value per share of such class of stock on the Announcement Date
or on the Determination Date, whichever is higher; or
4. The price per share equal to the Market Value per share of such class of
stock determined pursuant to clause 3 of this Subsection (b), multiplied by the
fraction of:
a. The highest per share price, including any brokerage commissions, transfer
taxes and soliciting dealers' fees, paid by the Interested Shareholder for any
shares of any class of Voting Stock acquired by it within the two-year period
immediately prior to the Announcement Date, over
b. The Market Value per share of the same class of Voting Stock on the first
day in such two-year period on which the Interested Shareholder acquired any
shares of the same class of Voting Stock.
(c) In making any price calculation under Section (2) of this Paragraph C,
appropriate adjustments shall be made to reflect any reclassification,
including any reverse stock split; recapitalization; reorganization; or any
similar transaction which has the effect of reducing the number of outstanding
shares of the stock. The consideration to be received by holders of any class
or series of outstanding stock is to be in cash or in the same form as the
Interested Shareholder has previously paid for shares of the same class or
series of stock. If the Interested Shareholder has paid for shares of any
class of stock with varying forms of consideration, the form of consideration
for such class of stock shall be either cash or the form used to acquire the
largest number of shares of such class or series of stock previously acquired
by it.
(d) 1. After the Interested Shareholder has become an Interested Shareholder
and prior to the consummation of such Business Combination.
a. There shall have been no failure to declare and pay at the regular date
therefor any full period dividends, whether or not cumulative, on any
outstanding preferred stock of the Company;
b. There shall have been no reduction in the annual rate of dividends paid on
any class or series of stock of the Company that is not preferred stock, except
as necessary to reflect any subdivision of the stock, and an increase in such
annual rate of dividends as necessary to reflect any reclassification,
including any reverse stock split, recapitalization, reorganization, or any
similar transaction which has the effect of reducing the number of outstanding
shares of the stock;
c. The Interested Shareholder shall not become the Beneficial Owner of any
additional shares of stock of the Company except as part of the transaction
which resulted in such Interested Shareholder becoming an Interested
Shareholder or by virtue of proportionate stock splits or stock dividends.
2. The provisions of subclauses a and b of clause 1 do not apply if no
Interested Shareholder or an Affiliate or Associate of the Interested
Shareholder voted as a director of the Company in a manner inconsistent with
such subclauses and the Interested shareholder, within ten (10) days after any
act or failure to act inconsistent with such subclauses, notifies the Board of
Directors of the Company in writing that the Interested Shareholder disapproves
thereof and requests in good faith that the Board of Directors rectify such act
or failure to act.
(e) After the Interested Shareholder has become an Interested Shareholder, the
Interested Shareholder may not have received the benefit, directly or
indirectly, except proportionately as a shareholder, of any loans, advances,
guarantees, pledges or other financial assistance provided by the Company or
any Subsidiary, whether in anticipation of or in connection with such Business
Combination or otherwise.
(3) (a) The vote required by Paragraph B of this Article Seventh does not
apply to any Business Combination that is approved by a majority of Continuing
Directors at a meeting of the Board of Directors at which a quorum consisting
of at least a majority of the Continuing Directors is present.
(b) Unless by its terms a resolution adopted under the foregoing subsection
(a) of this Section (3) is made irrevocable, it may be altered or repealed by
the Board of Directors, but this shall not affect any Business Combinations
that have been consummated, or are the subject of an existing agreement entered
into, prior to the alteration or repeal.
D. POWERS OF THE BOARD OF DIRECTORS. A majority of the Continuing Directors
of the Company shall have the power and duty to determine, on the basis of
information known to them after reasonable inquiry, all facts necessary to
determine compliance with this Article Seventh, including without limitation,
(a) whether a person is an Interested Shareholder, (b) the number of shares of
Voting Stock beneficially owned by any person, (c) whether a person is an
Affiliate or Associate of another, (d) whether the assets which are the subject
of any Business Combination have, or the consideration to be received for the
issuance or transfer of securities by the Company or any Subsidiary in any
Business Combination has, an aggregate book value or Market Value of five
percent (5%) or more of the total Market Value of the outstanding stock of the
Company or of its net worth, and (e) whether the requirements of Paragraph C of
this Article Seventh have been met.
E. NO EFFECT ON FIDUCIARY OBLIGATIONS OF INTERESTED SHAREHOLDERS. Nothing
contained in this Article Seventh shall be construed to relieve any Interested
Shareholder from any fiduciary obligation imposed by law.
F. AMENDMENT OR REPEAL. Notwithstanding any other provisions of this Article
Seventh or of any other Article hereof, or of the By-Laws of the Company (and
notwithstanding the fact that a lesser percentage may be specified from time to
time by law, this Article Seventh, any other Article hereof, or the By-Laws of
the Company), the provisions of this Article Seventh may not be altered,
amended or repealed in any respect, nor may any provision inconsistent
therewith be adopted, unless such alteration, amendment, repeal or adoption is
approved by the affirmative vote of the holders of at least: (i) 80% of the
combined voting power of the then outstanding Voting Stock of the Company,
voting together as a single class and (ii) 66 2/3% of the combined voting power
of the then outstanding Voting Stock (which is not beneficially owned by an
Interested Shareholder), voting together as a single class.
EIGHTH. A. NUMBER, ELECTION AND TERMS OF DIRECTORS. The business of the
Company shall be managed by a Board of Directors. The number of directors of
the Company shall be fixed from time to time by or pursuant to the By-Laws of
the Company. Except as otherwise provided in or fixed by or pursuant to the
provisions of Article Fourth hereof relating to the rights of the holders of
any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect directors under specified circumstances,
the directors shall be classified, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
possible, as shall be provided in the manner specified in the By-Laws of the
Company. One class shall be originally elected for a term expiring at the
annual meeting of shareholders to be held in 1991, another class shall be
originally elected for a term expiring at the annual meeting of shareholders to
be held in 1992, and another class shall be originally elected for a term
expiring at the annual meeting of shareholders to be held in 1993, with each
member of each class to hold office until a successor is elected and qualified.
At each annual meeting of shareholders of the Company and except as otherwise
provided in or fixed by or pursuant to the provisions of Article Fourth hereof
relating to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation to elect
directors under specified circumstances, the successors of the class of
directors whose term expires at that meeting shall be elected to hold office
for a term of three years.
B. SHAREHOLDER NOMINATION OF DIRECTOR CANDIDATES AND INTRODUCTION OF BUSINESS.
Advance notice of shareholder nominations for the election of directors, and
advance notice of business to be brought by shareholders before an annual
meeting of shareholders, shall be given in the manner provided in the By-Laws
of the Company.
C. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Except as otherwise required by
law and except as otherwise provided in or fixed by or pursuant to the
provisions of Article Fourth hereof relating to the rights of the holders of
any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect directors under specified circumstances:
(i) newly created directorships resulting from any increase in the number of
directors and any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors; (ii) any director elected
in accordance with the preceding clause (i) shall hold office for the remainder
of the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified; and (iii) no decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
D. REMOVAL. Except as otherwise provided in or fixed by or pursuant to the
provisions of Article Fourth hereof relating to the rights of the holders of
any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect directors under specified circumstances,
any director may be removed from office, with or without cause, only by the
affirmative vote of the holders of at least 80% of the combined voting power of
the then outstanding shares of the Company's stock entitled to vote generally,
voting together as a single class. Notwithstanding the foregoing provisions of
this Paragraph D, if at any time any shareholders of the Company have
cumulative voting rights with respect to the election of directors and less
than the entire Board of Directors is to be removed, no director may be removed
from office if the votes cast against removal would be sufficient to elect the
person as a director if cumulatively voted at an election of the class of
directors of which such person is a part. Whenever in this Article Eighth or
in Article Ninth hereof or in Article Tenth hereof, the phrase, "the then
outstanding shares of the Company's stock entitled to vote generally" is used,
such phrase shall mean each then outstanding share of any class or series of
the Company's stock that is entitled to vote generally in the election of the
Company's directors.
E. AMENDMENT OR REPEAL. Notwithstanding any other provisions of this Article
Eighth or of any other Article hereof or of the By-Laws of the Company (and
notwithstanding the fact that a lesser percentage may be specified from time to
time by law, this Article Eighth, any other Article hereof, or the By-Laws of
the Company), the provisions of this Article Eighth may not be altered, amended
or repealed in any respect, nor may any provision inconsistent therewith be
adopted, unless such alteration, amendment, repeal or adoption is approved by
the affirmative vote of at least 80% of the combined voting power of the then
outstanding shares of the Company's stock entitled to vote generally, voting
together as a single class.
NINTH. Any action required or permitted to be taken by the shareholders of the
Company at a meeting of such holders may be taken without such a meeting only
by written consent by all of the shareholders entitled to vote on the subject
matter thereof. Except as otherwise mandated by Kentucky law and except as
otherwise provided in or fixed by or pursuant to the provisions of Article
Fourth hereof relating to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances, special meetings
of shareholders of the Company may be called only by the Board of Directors
pursuant to a resolution approved by a majority of the entire Board of
Directors or by the President of the Company. Notwithstanding any other
provisions of this Article Ninth or of any other Article hereof or of the By-
Laws of the Company (and notwithstanding the fact that a lesser percentage may
be specified from time to time by law, this Article Ninth, any other Article
hereof, or the By-Laws of the Company), the provisions of this Article Ninth
may not be altered, amended or repealed in any respect, nor may any provision
inconsistent therewith be adopted, unless such alteration, amendment, repeal or
adoption is approved by the affirmative vote of the holders of at least 80% of
the combined voting power of the then outstanding shares of the Company's stock
entitled to vote generally, voting together as a single class.
TENTH. The Board of Directors shall have power to adopt, amend and repeal the
By-Laws of the Company to the maximum extent permitted from time to time by
Kentucky law; provided, however, that any By-Laws adopted by the Board of
Directors under the powers conferred hereby may be amended or repealed by the
Board of Directors or by the holders of at least a majority of the combined
voting power of the outstanding shares of the Company's stock entitled to vote
generally, voting together as a single class, except that, and notwithstanding
any other provisions of this Article Tenth or of any other Article hereof or of
the By-Laws of the Company (and notwithstanding the fact that a lesser
percentage may be specified from time to time by law, this Article Tenth, any
other Article hereof or the By-Laws of the Company), no provision of Section 2,
Section 5 or Section 6 of Article I of the By-Laws or of Section 1 of Article
II of the By-Laws or of Article VIII of the By-Laws may be altered, amended or
repealed in any respect, nor may any provision inconsistent therewith be
adopted, unless such alteration, amendment, repeal or adoption is approved by
the affirmative vote of the holders of at least 80% of the combined voting
power of the then outstanding shares of the Company's stock entitled to vote
generally, voting together as a single class. Notwithstanding any other
provisions of this Article Tenth or of any other Article hereof or of the By-
Laws of the Company (and notwithstanding the fact that a lesser percentage may
be specified from time to time by law, this Article Tenth, any other Article
hereof, or the By-Laws of the Company), the provisions of this Article Tenth
may not be altered, amended or repealed in any respect, nor may any provision
inconsistent therewith be adopted, unless such alteration, amendment, repeal or
adoption is approved by the affirmative vote of the holders of at least 80% of
the combined voting power of the then outstanding shares of the Company's stock
entitled to vote generally, voting together as a single class.
ELEVENTH. A director of the Company shall not be personally liable to the
Company or its shareholders for monetary damages for breach of his duties as a
director, except for liability (i) for any transaction in which the director's
personal financial interest is in conflict with the financial interests of the
Company or its shareholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or are known to the director to be a
violation of law, (iii) under Kentucky Revised Statutes 271B.8-330, or (iv) for
any transaction from which the director derived any improper personal benefit.
If the Kentucky Business Corporation Act as amended after approval by the
shareholders of this Article to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the Company shall be eliminated or limited to the fullest extent
permitted by the Kentucky Business Corporation Act, as so amended.
Any repeal or modification of the foregoing paragraph by the shareholders of
the Company shall not adversely affect any right or protection of a director of
the Company existing at the time of such repeal or modification.
TWELFTH. A. RIGHT TO INDEMNIFICATION. Each person who was or is a director
of the Company and who was or is made a party or is threatened to be made a
party to or as otherwise involved (including, without limitation, as a witness)
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she is or was a director or officer of the Company or is or was serving at the
request of the Company as a director, officer, partner, trustee, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "Indemnified Director"), whether the basis of such proceeding
is alleged action in an official capacity as a director or officer or in any
other capacity while serving as a director or officer, shall be indemnified and
held harmless by the Company to the fullest extent permitted by the Kentucky
Business Corporation Act, as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the Company to provide broader indemnification rights than such law
permitted the Company to provide prior to such amendment), against all
liability, all reasonable expense and all loss (including, without limitation,
judgments, fines, reasonable attorneys' fees, ERISA excise taxes or penalties
and amounts paid in settlement) incurred or suffered by such Indemnified
Director in connection therewith and such indemnification shall continue as to
an Indemnified Director who has ceased to be a director and shall inure to the
benefit of the Indemnified Director's heirs, executors and administrators.
Each person who was or is an officer of the Company and not a director of the
Company and who was or is made a party or is threatened to be made a party to
or is otherwise involved (including, without limitation, as a witness) in any
proceeding, by reason of the fact that he or she is or was an officer of the
Company or is or was serving at the request of the Company as a director,
officer, partner, trustee, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan (hereinafter an "Indemnified Officer"),
whether the basis of such proceeding is alleged action in an official capacity
as an officer or in any other capacity while serving as an officer, shall be
indemnified and held harmless by the Company against all liability, all
reasonable expense and all loss (including, without limitation, judgments,
fines, reasonable attorneys' fees, ERISA excise taxes or penalties and amounts
paid in settlement) incurred or suffered by such Indemnified Officer to the
same extent and under the same conditions that the Company must indemnify an
Indemnified Director pursuant to the immediately preceding sentence and to such
further extent as is not contrary to public policy and such indemnification
shall continue as to an Indemnified Officer who has ceased to be an officer and
shall inure to the benefit of the Indemnified Officer's heirs, executors and
administrators. Notwithstanding the foregoing and except as provided in
Paragraph B of this Article Twelfth with respect to proceedings to enforce
rights to indemnification, the Company shall indemnify any Indemnified Director
or Indemnified Officer in connection with a proceeding (or part thereof)
initiated by such Indemnified Director or Indemnified Officer only if such
proceeding (or part thereof) was authorized by the Board of Directors of the
Company. As hereinafter used in this Article Twelfth, the term "indemnitee"
means any Indemnified Director or Indemnified Officer. Any person who is or
was a director or officer of a subsidiary of the Company shall be deemed to be
serving in such capacity at the request of the Company for purposes of this
Article Twelfth. The right to indemnification conferred in this Article shall
include the right to be paid by the Company the expenses incurred in defending
any such proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"); provided, however, that, if the Kentucky Business
Corporation Act requires, an advancement of expenses incurred by an indemnitee
who at the time of receiving such advance is a director of the Company shall be
made only upon: (i) delivery to the Company of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter, a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Article or otherwise; (ii) delivery to the Company of a written
affirmation of the indemnitee's good faith belief that he or she has met the
standard of conduct that makes indemnification by the Company permissible under
the Kentucky Business Corporation Act; and (iii) a determination that the facts
then known to those making the determination would not preclude indemnification
under the Kentucky Business Corporation Act. The right to indemnification and
advancement of expenses conferred in this Paragraph A shall be a contract
right.
B. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Paragraph A of this
Article Twelfth is not paid in full by the Company within sixty days after a
written claim has been received by the Company (except in the case of a claim
for an advancement of expenses, in which case the applicable period shall be
twenty days), the indemnitee may at any time thereafter bring suit against the
Company to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit or in a suit brought by the Company to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
also shall be entitled to be paid the expense of prosecuting or defending such
suit. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (other than a suit to enforce a right to an
advancement of expenses brought by an indemnitee who will not be a director of
the Company at the time such advance is made) it shall be a defense that, and
in (ii) any suit by the Company to recover an advancement of expenses pursuant
to the terms of an undertaking the Company shall be entitled to recover such
expenses upon a final adjudication that, the indemnitee has not met the
standard that makes it permissible hereunder or under the Kentucky Business
Corporation Act (the "applicable standard") for the Company to indemnify the
indemnitee for the amount claimed. Neither the failure of the Company
(including its Board of Directors, a committee of the Board of Directors,
independent legal counsel or its shareholders) to have made a determination
prior to the commencement of such suit that indemnification of the indemnitee
is proper in the circumstances because the indemnitee has met the applicable
standard, nor an actual determination by the Company (including its Board of
Directors, a committee of the Board of Directors, independent legal counsel or
its shareholders) that the indemnitee has not met the applicable standard,
shall create a presumption that the indemnitee has not met the applicable
standard or, in the case of such a suit brought by the indemnitee, shall be a
defense to such suit. In any suit brought by the indemnitee to enforce a right
to indemnification or to an advancement of expenses hereunder, or by the
Company to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is not entitled to be
indemnified or to such advancement of expenses under this Article Twelfth or
otherwise shall be on the Company.
C. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and to the
advancement of expenses conferred in this Article Twelfth shall not be
exclusive of any other right which any person may have or hereinafter acquire
under any statute, these Restated Articles of Incorporation, any By-Law, any
agreement, any vote of shareholders or disinterested directors or otherwise.
D. INSURANCE. The Company may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Company or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such person against such expense, liability or loss under the
Kentucky Business Corporation Act.
E. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Company may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification and to the advancement of expenses to any employee or agent of
the Company and to any person serving at the request of the Company as an agent
or employee of another corporation or of a joint venture, trust or other
enterprise to the fullest extent of the provisions of this Article Twelfth with
respect to the indemnification and advancement of expenses of either directors
or officers of the Company.
F. REPEAL OR MODIFICATION. Any repeal or modification of any provision of
this Article Twelfth shall not adversely affect any rights to indemnification
and to advancement of expenses that any person may have at the time of such
repeal or modification with respect to any acts or omissions occurring prior to
such repeal or modification.
G. SEVERABILITY. In case any one or more of the provisions of this Article
Twelfth, or any application thereof, shall be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions in this Article Twelfth, and any other application thereof, shall
not in any way be affected or impaired thereby.
THIRTEENTH. The name and mailing address of the sole incorporator is:
Charles A. Markel III
311 West Chestnut Street
P.O. Box 32010
Louisville, KY 40232
The undersigned hereby certifies that the Amended and Restated Articles of
Incorporation correctly set forth the corresponding Articles of Incorporation
as amended and that these Amended and Restated Articles of Incorporation
supersede the original Articles of Incorporation and any amendments and
corrections thereto.
LG&E ENERGY CORP.
By: _________________
Charles A. Markel, III
Vice President, Secretary and Treasurer
COMMONWEALTH OF KENTUCKY )
) SS
COUNTY OF JEFFERSON )
I, the undersigned notary public in and for the state and county aforesaid, do
hereby certify that on this _____ day of August, 1990, personally appeared
before me Charles A. Markel, III, being by me first duly sworn, and who
declared that he is the Vice President, Secretary and Treasurer of LG&E Energy
Corp., that he signed the foregoing Amended and Restated Articles of
Incorporation as Vice President, Secretary and Treasurer of the Company, and
that the statements therein contained are true.
My Commission expires: ____________________
__________________________
Notary Public
State of Kentucky at Large
THIS INSTRUMENT PREPARED BY:
_________________________
Charles G. Middleton, III
Middleton & Reutlinger
2500 Brown & Williamson Tower
Louisville, Kentucky 40202
Telephone (502) 584-1135
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
LG&E ENERGY CORP.
To the Secretary of State of Kentucky:
Pursuant to the provisions of Chapter 271B of the Kentucky Revised Statutes,
the undersigned corporation hereby amends its Articles of Incorporation, and
for that purpose, submits the following statement:
1. The name of the corporation is LG&E Energy Corp.
2. On December 5, 1990, the board of directors, acting on behalf of the
corporation, duly adopted the following Amendments of its Articles of
Incorporation. A copy of the text of the Amendments is attached hereto
as Exhibit A and incorporated by reference herein as the text of a new
Article Fourteenth.
3. If not contained in the amendment itself, the manner in which any
exchange, reclassification, or cancellation of issued shares provided
for in the Amendment shall be implemented as follows:
Not Applicable.
4. The amendment is to be effective upon the filing of these articles by
the Secretary of State.
5. The amendment was duly adopted by the board of directors without
shareholder approval pursuant to 271B.10-020 and 271B.6-020 of the
Kentucky Revised Statutes, and shareholder action was not required.
Dated: December 5, 1990
LG&E Energy Corp.
______________________
Charles A. Markel, III
Vice President - Finance
and Treasurer
EXHIBIT "A"
FOURTEENTH. SERIES A PREFERRED STOCK.
Designation and Amount. There shall be a series of the Preferred Stock
designated as "Series A Preferred Stock". The number of shares constituting
such series shall be 750,000 and such series shall have the preferences,
limitations and relative rights set forth below.
Section 1. Dividends and Distributions.
(A) Subject to the possible prior and superior rights of the holders of any
shares of any other series of Preferred Stock or any other shares of preferred
stock of the Company ranking prior and superior to the shares of Series A
Preferred Stock with respect to dividends, each holder of Series A Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for that purpose: (i) quarterly
dividends payable in cash on the first day of January, April, July, and October
in each year (each such date being a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of such share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $5.00 or (b) subject
to the provision for adjustment hereinafter set forth, 100 times the aggregate
per share amount of all cash dividends declared on shares of the Common Stock
of the Company, without par value (the "Common Stock"), since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of a share of Series
A Preferred Stock, and (ii) subject to the provision for adjustment hereinafter
set forth, quarterly distributions (payable in kind) on each Quarterly Dividend
Payment Date in an amount per share equal to 100 times the aggregate per share
amount of all non-cash dividends or other distributions (other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock, by reclassification or otherwise) declared on shares of Common
Stock since the immediately preceding Quarterly Dividend Payment Date, or with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of a share of Series A Preferred Stock. If the Quarterly Dividend Payment Date
is a Saturday, Sunday or legal holiday, then such Quarterly Dividend Payment
Date shall be the first immediately preceding calendar day which is not a
Saturday, Sunday or legal holiday. In the event that the Company shall at any
time after December 5, 1990, (the "Rights Declaration Date") (i) declare any
dividend on outstanding shares of Common Stock payable in shares of Common
Stock (ii) subdivide outstanding shares of Common Stock, or (iii) combine
outstanding shares of Common Stock into a smaller number of shares, then in
each such case, the amount to which the holder of a share of Series A Preferred
Stock was entitled immediately prior to such event pursuant to the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which shall be the number of shares of Common Stock that are
outstanding immediately after such event, and the denominator of which shall be
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Company shall declare a dividend or distribution on shares of Series A
Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the shares of Common Stock (other than a
dividend payable in shares of Common Stock); provided, however, that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $5.00 per share on
the Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and shall be cumulative on each
outstanding share of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issuance of such share of Series A
Preferred Stock, unless the date of issuance of such share is prior to the
record date for the first Quarterly Dividend Payment Date, in which case,
dividends on such share shall begin to accrue from the date of issuance of such
share, or unless the date of issuance is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
shares of Series A Preferred Stock in an amount less than the aggregate amount
of all such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all shares of Series A
Preferred Stock at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 60 days prior to the date
fixed for the payment thereof.
(D) Dividends payable on the Series A Preferred Stock for the initial dividend
period and for any period less than a full quarterly period, shall be computed
on the basis of a 360-day year of 30-day months.
Section 2. Voting Rights. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the holder thereof to
one vote on all matters submitted to a vote of the shareholders of the Company
and, to the extent required by law, to cumulative voting in all elections of
directors by shareholders.
(B) Except as otherwise provided herein or by law, the holders of shares of
Series A Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of shareholders of
Company.
(C) If at the time of any annual meeting of shareholders for the election of
directors a "default in preference dividends" on the Series A Preferred Stock
shall exist, the holders of the Series A Preferred Stock shall have the right
at such meeting, voting together as a single class, to the exclusion of the
holders of Common Stock, to elect two (2) directors of the Company. Such right
shall continue until there are no dividends in arrears upon the Series A
Preferred Stock. Either or both of the two directors to be elected by the
holders of the Series A Preferred Stock may be to fill a vacancy or vacancies
created by an increase by the Board of Directors in the number of directors
constituting the Board of Directors. Each director elected by the holders of
Preferred Stock (a "Preferred Director") shall continue to serve as such
director for the full term for which he or she shall have been elected,
notwithstanding that prior to the end of such term a default in preference
dividends shall cease to exist. Any Preferred Director may be removed by, and
shall not be removed except by, the vote of the holders of record of the
outstanding Series A Preferred Stock voting together as a single class, at a
meeting of the shareholders or of the holders of Preferred Stock called for the
purpose. So long as a default in preference dividends on the Series A
Preferred Stock shall exist, (i) any vacancy in the office of a Preferred
Director may be filled (except as provided in the following clause (ii)) by an
instrument in writing signed by the remaining Preferred Director and filed with
the Company and (ii) in the case of the removal of any Preferred Director, the
vacancy may be filled by the vote of the holders of the outstanding Series A
Preferred Stock voting together as a single class, at the same meeting at which
such removal shall be voted. Each director appointed as aforesaid by the
remaining Preferred Director shall be deemed, for all purposes hereof, to be a
Preferred Director. For the purposes hereof, a "default in preference
dividends" on the Preferred Stock shall be deemed to have occurred whenever the
amount of accrued and unpaid dividends upon the Series A Preferred Stock shall
be equivalent to six (6) full quarterly dividends or more, and having so
occurred, such default shall be deemed to exist thereafter until, but only
until, all accrued dividends on all Series A Preferred Stock then outstanding
shall have been paid to the end of the last preceding quarterly dividend
period. The provisions of this paragraph (C) shall govern the election of
Directors by holders of Series A Preferred Stock during any default in
preference dividends notwithstanding any provisions of these Articles of
Incorporation to the contrary.
(D) Except as set forth herein, holders of shares of Series A Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of shares of
Common Stock as set forth herein) for taking any corporate action.
Section 3. Certain Restrictions.
(A) Until all accrued and unpaid dividends and distributions, whether or not
declared, on outstanding shares of Series A Preferred Stock shall have been
paid in full, the Company shall not:
(i) Declare or pay dividends on, make any other distributions on, or redeem or
purchase or otherwise acquire for consideration any shares of junior stock;
(ii) Declare or pay dividends on or make any other distributions on any shares
of parity stock, except dividends paid ratably on shares of Series A Preferred
Stock and shares of all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of such Series
A Preferred Stock and all such shares are then entitled;
(iii) Redeem or purchase or otherwise acquire for consideration shares of any
junior stock, provided, however, that the Company may at any time redeem,
purchase or otherwise acquire shares of any such junior stock in exchange for
shares of any other junior stock;
(iv) Purchase or otherwise acquire for consideration any shares of Series A
Preferred Stock or any shares of parity stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to purchase or
otherwise acquire for consideration any shares of stock of the Company unless
the Company could, under paragraph (A) of this Section 3, purchase or otherwise
acquire such shares at such time and in such manner.
Section 4. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and canceled promptly after the acquisition thereof. All such
shares shall, upon their cancellation, become authorized but unissued Preferred
Stock and may be reissued as part of a new series of Preferred Stock subject to
the conditions and restrictions on issuance set forth in the Articles of
Incorporation of the Company creating a series of Preferred Stock or any
similar shares or as otherwise required by law.
Section 5. Liquidation, Dissolution or Winding Up.
(A) Upon any voluntary or involuntary liquidation, dissolution or winding up
of the Company, no distributions shall be made (i) to the holders of shares of
junior stock unless the holders of Series A Preferred Stock shall have
received, subject to adjustment as hereinafter provided in paragraph (B), the
greater of either (a) $100.00 per share plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, or (b) an amount per share equal to 100 times the
aggregate per share amount to be distributed to holders of shares of Common
Stock or (ii) to the holders of shares of parity stock, unless simultaneously
therewith distributions are made ratably on shares of Series A Preferred Stock
and all other shares of such parity stock in proportion to the total amounts to
which the holders of shares of Series A Preferred Stock are entitled under
clause (i)(a) of this sentence and to which the holders of shares of such
parity stock are entitled, in each case, upon such liquidation, dissolution or
winding up.
(B) In the event the Company shall at any time after the Rights Declaration
Date (i) declare any dividend on outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, or
(iii) combine outstanding shares of Common Stock into a smaller number of
shares, then in each such case, the aggregate amount to which holders of Series
A Preferred Stock were entitled immediately prior to such event pursuant to
clause (i)(b) of paragraph (A) of this Section 5 shall be adjusted by
multiplying such amount by a fraction, the numerator of which shall be the
number of shares of Common Stock that are outstanding immediately after such
event, and the denominator of which shall be the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 6. Consolidation, Merger, etc. In case the Company shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or converted into other stock or securities,
cash and/or any other property, then in any such case, shares of Series A
Preferred Stock shall at the same time be similarly exchanged for or converted
into an amount per share (subject to the provision for adjustment hereinafter
set forth) equal to the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is converted or exchanged. In the event the Company
shall at any time after the Rights Declaration Date (i) declare any dividend on
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide outstanding shares of Common Stock, or (iii) combine outstanding
shares of Common Stock into a smaller number of shares, then in each such case,
the amount set forth in the immediately preceding sentence with respect to the
exchange or conversion of shares of Series A Preferred Stock shall be adjusted
by multiplying such amount by a fraction, the numerator of which shall be the
number of shares of Common Stock that are outstanding immediately after such
event, and the denominator of which shall be the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 7. Redemption. The shares of Series A Preferred Stock shall not be
redeemable.
Section 8. Ranking. The shares of Series A Preferred Stock shall rank junior
to all other series of the Preferred Stock and to any other class of preferred
stock that hereafter may be issued by the Company as to the payment of
dividends and the distribution of assets, unless the terms of any such series
or class shall provide otherwise.
Section 9. Amendment. These Restated Articles of Incorporation shall not
hereafter be amended, either directly or indirectly, or through merger or
consolidation with another corporation, in any manner that would alter or
change the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least a majority of the outstanding shares of Series A Preferred
Stock, voting separately as a class.
Section 10. Fractional Shares. The Series A Preferred Stock may be issued in
fractions of a share, which fractions shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions, and to have the benefit of all other
rights of holders of Series A Preferred Stock.
Section 11. Certain Definitions. As used herein with respect to the Series A
Preferred Stock, the following terms shall have the following meanings:
(A) The term "junior stock" (i) as used in Section 3, shall mean the Common
Stock and any other class or series of capital stock of the Company hereafter
authorized or issued over which the Series A Preferred Stock has preference or
priority as to the payment of dividends, and (ii) as used in Section 5, shall
mean the Common Stock and any other class or series of capital stock of the
Company over which the Series A Preferred Stock has preference or priority in
the distribution of assets on any liquidation, dissolution or winding up of the
Company.
(B) The term "parity stock" (i) as used in Section 3, shall mean any class or
series of stock of the Company hereafter authorized or issued ranking pari
passu with the Series A Preferred Stock as to dividends, and (ii) as used in
Section 5, shall mean any class or series of stock of the Company ranking pari
passu with the Series A Preferred Stock in the distribution of assets on any
liquidation, dissolution or winding up.
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
LG&E ENERGY CORP.
Pursuant to the provisions of KRS 271B.10-030 and KRS 271B.10-060, the
following Articles of Amendment to the Articles of Incorporation of LG&E Energy
Corp., a Kentucky corporation (the "Corporation"), are hereby adopted:
FIRST: The name of the Corporation is LG&E Energy Corp.
SECOND: Article Fourth A. of the Corporation's Articles of
Incorporation is hereby deleted in its entirety and
replaced with the following:
"FOURTH A. AUTHORIZED CAPITAL STOCK. The total number of
shares which the Company shall have the authority to issue
shall be 130,000,000 shares, of which 125,000,000 shares
shall be Common Stock, without par value, and 5,000,000
shares shall be Preferred Stock, without par value.
THIRD: The above designated amendment does not provide for an
exchange, reclassification or cancellation of issued shares
of stock of the Corporation.
FOURTH: The designated amendment was adopted by the Corporation's
Board of Directors on December 6, 1995, and submitted to
the Corporation's shareholders for approval on April 23,
1996. As of the record date of the 1996 Annual Meeting of
Shareholders, the Corporation had 33,122,674 outstanding
shares of common stock, having no par value per share, each
such share entitled to vote on the amendment. 27,790,513
of the common shares were indisputably represented on the
proposal to amend the Articles of Incorporation at the
Annual Meeting, duly called in accordance with the Kentucky
Business Corporation Act, with 26,623,394 votes
indisputably cast in favor of the amendment, such votes
being sufficient for approval of the amendment.
Dated: April 23, 1996.
LG&E ENERGY CORP.
By: _______________________
John R. McCall
Title: Executive Vice President, General Counsel
and Corporate Secretary
EXHIBIT 10.01 EXECUTION COPY
U.S. $150,000,000
CREDIT AGREEMENT
Dated as of January 29, 1996
Among
LG&E ENERGY SYSTEMS INC.
as Borrower
THE BANKS NAMED HEREIN
as Banks,
CITIBANK, N.A.
as Agent
and
BANK OF MONTREAL
as Co-Agent
T A B L E O F C O N T E N T S
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS 1
1.01. Certain Defined Terms 1
1.02. Computation of Time Periods 16
1.03. Accounting Terms 16
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES 16
2.01. The Extensions of Credit 16
2.02. The Contract Advances 17
2.03. The Competitive Bid Advances 19
2.04. Fees 23
2.05. Reduction of the Commitments 24
2.06. Repayment of Contract Advances 24
2.07. Interest on Contract Advances 24
2.08. Additional Interest on Contract Advances 25
2.09. Interest Rate Determination 25
2.10. Conversion of Contract Advances 26
2.11. Prepayments 27
2.12. Increased Costs 29
2.13. Illegality 30
2.14. Payments and Computations 31
2.15. Taxes 32
2.16. Sharing of Payments, Etc 35
2.17. Extension of Termination Date 35
ARTICLE III
LETTERS OF CREDIT 36
3.01. LC Banks 36
3.02. Letters of Credit 36
3.03. Letter of Credit Fees 37
3.04. Reimbursement to LC Banks 38
3.05. Obligations Absolute 39
3.06. Liability of LC Banks and the Lenders 40
ARTICLE IV
CONDITIONS OF EXTENSIONS OF CREDIT 41
4.01. Conditions Precedent to Initial Extensions of Credit 41
4.02. Condition Precedent to Each Extension of Credit 43
4.03. Condition Precedent to Certain Conversions 43
ARTICLE V
REPRESENTATIONS AND WARRANTIES 44
5.01. Representations and Warranties of the Borrower 44
ARTICLE VI
COVENANTS OF THE BORROWER 46
6.01. Affirmative Covenants 46
6.02. Negative Covenants 49
ARTICLE VII
EVENTS OF DEFAULT 52
7.01. Events of Default 52
ARTICLE VIII
THE AGENT 55
8.01. Authorization and Action 55
8.02. Agent's Reliance, Etc 55
8.03. Citibank and Affiliates 56
8.04. Lender Credit Decision 56
8.05. Indemnification 56
8.06. Successor Agent 57
ARTICLE IX
MISCELLANEOUS 57
9.01. Amendments, Etc 57
9.02. Notices, Etc 58
9.03. No Waiver; Remedies 58
9.04. Costs and Expenses; Indemnification 59
9.05. Right of Set-off 60
9.06. Binding Effect 60
9.07. Assignments and Participations 60
9.08. GOVERNING LAW 64
9.09. WAIVER OF JURY TRIAL 64
9.10. Execution in Counterparts 64
9.11. Confidentiality 64
Schedule I - List of Applicable Lending Offices
Schedule II - List of Existing Letters of Credit
Exhibit A-1 - Form of Contract Note
Exhibit A-2 - Form of Competitive Bid Note
Exhibit B-1 - Form of Notice of Contract Borrowing
Exhibit B-2 - Form of Notice of Competitive Bid Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of LC Bank Agreement
Exhibit E - Form of Opinion of Special Counsel for the Borrower and
the Parent
Exhibit F - Form of Opinion of Corporate Attorney for the Borrower
and the Parent
Exhibit G - Form of Opinion of Special New York Counsel to the Agent
CREDIT AGREEMENT
Dated as of January 29, 1996
LG&E Energy Systems Inc., a Kentucky corporation (the "Borrower"), the banks
(the "Banks") listed on the signature pages hereof, Citibank, N.A. ("Citi-
bank"), as agent (the "Agent") for the Lenders hereunder, and Bank of Montreal,
as co-agent (the "Co-Agent"), agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Adjusted CD Rate" means, for any Interest Period for each Adjusted CD Rate
Advance made as part of the same Contract Borrowing, an interest rate per annum
equal to the sum of:
(a) the rate per annum obtained by dividing (i) the rate of interest deter-
mined by the Agent to be the average (rounded upward to the nearest whole
multiple of 1/100 of 1% per annum, if such average is not such a multi-
ple) of the consensus bid rate determined by each of the Reference Banks
for the bid rates per annum, at 9:00 A.M. (New York City time) (or as
soon thereafter as practicable) on the first day of such Interest Period,
of New York certificate of deposit dealers of recognized standing select-
ed by such Reference Bank for the purchase at face value of certificates
of deposit of such Reference Bank in an amount substantially equal to
such Reference Bank's Adjusted CD Rate Advance made as part of such
Contract Borrowing and with a maturity equal to such Interest Period, by
(ii) a percentage equal to 100% minus the Adjusted CD Rate Reserve
Percentage for such Interest Period, plus
(b) the Assessment Rate for such Interest Period.
The Adjusted CD Rate for the Interest Period for each Adjusted CD Rate Advance
made as part of the same Contract Borrowing shall be determined by the Agent on
the basis of applicable rates furnished to and received by the Agent from the
Reference Banks on the first day of such Interest Period, subject, however, to
the provisions of Section 2.09.
"Adjusted CD Rate Advance" means a Contract Advance that bears interest as
provided in Section 2.07(b).
"Adjusted CD Rate Reserve Percentage" for the Interest Period for each Adjusted
CD Rate Advance made as part of the same Contract Borrowing means the reserve
percentage applicable on the first day of such Interest Period under regula-
tions 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, but not limited to, any emergency, supplemental or other marginal
reserve requirement) for a member bank of the Federal Reserve System in New
York City with deposits exceeding one billion dollars with respect to liabili-
ties consisting of or including (among other liabilities) U.S. dollar nonper-
sonal time deposits in the United States with a maturity equal to such Interest
Period.
"Adjusted Debt" means Debt of the Parent and its consolidated Subsidiaries
minus (or plus in the case of a deficit) Excess Liquidity.
"Adjusted Net Working Capital" means the excess of the current assets of the
Parent and its consolidated Subsidiaries other than the Utility over current
liabilities of the Parent and its consolidated Subsidiaries other than the
Utility, computed on a consolidated basis in accordance with GAAP except that
any Debt otherwise included in such consolidated current liabilities shall be
excluded if the same is due within twelve months of its incurrence.
"Advance" means a Contract Advance or a Competitive Bid Advance.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person.
"Applicable Lending Office" means, with respect to each Lender, such Lender's
Domestic Lending Office in the case of a Base Rate Advance, such Lender's CD
Lending Office in the case of an Adjusted CD Rate Advance, and such Lender's
Eurodollar Lending Office in the case of a Eurodollar Rate Advance and, in the
case of a Competitive Bid Advance, the office of such Lender notified by such
Lender to the Agent as its Applicable Lending Office with respect to such
Competitive Bid Advance.
"Applicable Margin" means, on any date of determination, for any Contract
Advance, the interest rate per annum set forth below, determined by reference
to the Moody's Implied Rating and the S&P Implied Rating:
Level I Level II Level III Level IV
Basis for Ap- If the S&P If Level I If Level II If Level III
plicable Mar- Implied status has status has status has
gin Rating is not been at- not been at- not been at-
greater than tained, but tained, but tained, but
or equal to the S&P Im- the S&P Im- the S&P Im-
A-, and/or plied Rating plied Rating plied Rating
the Moody's is greater is greater is less than
Implied than BBB-, than BB+, BBB-, or the
Rating is and/or the and/or the Moody's Im-
greater than Moody's Im- Moody's Im- plied Rating is
Type of Ad- or equal to plied Rating plied Rating less than
vance A3. is greater is greater Baa3.
than Baa3. than Ba1.
Advance 0.0% 0.0% .125% .25%
Base Rate
Eurodol- .20% .30% .35% .50%
lar Rate
Advance
Adjusted .35% .425% .475% .625%
CD Rate
Advance
In the event of a split rating, the higher rating will determine the appropri-
ate pricing level.
Any change in the Applicable Margins for such Eurodollar Rate Advances or
Adjusted CD Rate Advances will be effective as of the date of any change in the
S&P Implied Rating or the Moody's Implied Rating, as the case may be. The
Borrower agrees to notify the Agent promptly upon any change in the S&P Implied
Rating or the Moody's Implied Rating. Notwithstanding anything to the contrary
set forth herein, if and for so long as an Event of Default shall have occurred
and be continuing, each Applicable Margin shall be increased by 200 basis
points per annum (unless waived by the Lenders) and, with respect to any
Eurodollar Rate Advance or Adjusted CD Rate Advance, such Advance will convert
to a Base Rate Advance at the end of the applicable Interest Period then in
effect with respect to such Advance.
"Assessment Rate" for the Interest Period for each Adjusted CD Rate Advance
made as part of the same Contract Borrowing means the annual assessment rate
estimated by the Agent on the first day of such Interest Period for determining
the then current annual assessment payable by Citibank to the Federal Deposit
Insurance Corporation (or any successor) for insuring U.S. dollar deposits of
Citibank in the United States.
"Assignment and Acceptance" means an assignment and acceptance entered into by
a Lender and an Eligible Assignee, and accepted by the Agent, in substantially
the form of Exhibit C hereto.
"Base Rate" means, for any period, a fluctuating interest rate per annum as
shall be in effect from time to time which rate per annum shall at all times be
equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New York, New
York, from time to time, as Citibank's base rate;
(b) 1/2 of one percent per annum above the latest three-week moving average
of secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money market
banks, such three-week moving average being determined weekly by Citibank
on the basis of such rates reported by certificate of deposit dealers to
and published by the Federal Reserve Bank of New York or, if such publi-
cation shall be suspended or terminated, on the basis of quotations for
such rates received by Citibank from three New York certificate of
deposit dealers of recognized standing selected by Citibank, in either
case rounded upward to the nearest 1/16 of one percent; and
(c) 1/2 of one percent per annum above the Federal Funds Rate in effect from
time to time.
"Base Rate Advance" means a Contract Advance that bears interest as provided in
Section 2.07(a).
"Borrowing" means a Contract Borrowing or a Competitive Bid Borrowing.
"Business Day" means a day of the year on which banks are not required or
authorized to close in New York City and, if the applicable Business Day
relates to any Eurodollar Rate Advances or LIBOR Competitive Bid Advances, on
which dealings are carried on in the London interbank market.
"Capitalization Ratio" means the ratio of Adjusted Debt of the Parent and its
consolidated Subsidiaries to the sum of Adjusted Debt plus capital stock
(including capital in excess of par and any other capital surplus) accounts
(net of treasury shares) plus (or minus in the case of a deficit) the retained
earnings of the Parent and its consolidated Subsidiaries, all computed in
accordance with GAAP.
"Cash Escrow Account" has the meaning specified in Section 2.11(c).
"CD Lending Office" means, with respect to any Lender, the office of such
Lender specified as its "CD Lending Office" opposite its name on Schedule I
hereto or in the Assignment and Acceptance pursuant to which it became a Lender
(or, if no such office is specified, its Domestic Lending Office), or such
other office of such Lender as such Lender may from time to time specify to the
Borrower and the Agent.
"Commitment" has the meaning specified in Section 2.01.
"Competitive Bid Advance" means an advance by a Lender to the Borrower as part
of a Competitive Bid Borrowing resulting from the competitive bidding procedure
described in Section 2.03.
"Competitive Bid Borrowing" means a borrowing consisting of simultaneous
Competitive Bid Advances from each of the Lenders whose offer to make one or
more Competitive Bid Advances as part of such borrowing has been accepted by
the Borrower under the competitive bidding procedure described in Section 2.03.
"Competitive Bid Note" means a promissory note of the Borrower payable to the
order of any Lender, in substantially the form of Exhibit A-2 hereto, evidenc-
ing the indebtedness of the Borrower to such Lender resulting from a Competi-
tive Bid Advance made by such Lender.
"Competitive Bid Reduction" has the meaning specified in Section 2.01.
"Consolidated Net Worth" means, as to any Person, the Net Worth of such Person
and its Subsidiaries determined on a consolidated basis after appropriate
deduction for any minority interests in Subsidiaries.
"Contract Advance" means an advance by a Lender to the Borrower as part of a
Contract Borrowing and refers to an Adjusted CD Rate Advance, a Base Rate
Advance or a Eurodollar Rate Advance, each of which shall be a "Type" of
Contract Advance.
"Contract Borrowing" means a borrowing consisting of simultaneous Contract
Advances of the same Type made by each of the Lenders pursuant to Section 2.01
or Converted pursuant to Section 2.09 or 2.10.
"Contract Note" means a promissory note of the Borrower payable to the order of
any Lender, in substantially the form of Exhibit A-1 hereto, evidencing the
aggregate indebtedness of the Borrower to such Lender resulting from the
Contract Advances made by such Lender.
"Convert," "Conversion" and "Converted" each refers to a conversion of Advances
of one Type into Advances of another Type or the selection of a new, or the
renewal of the same, Interest Period for Eurodollar Rate Advances or Adjusted
CD Rate Advances, as the case may be, pursuant to Section 2.09 or 2.10.
"Debt of any Person" means (without duplication) all liabilities, obligations
and indebtedness of such Person (i) for borrowed money, (ii) evidenced by
bonds, indentures, notes, or other similar instruments, (iii) to pay the
deferred purchase price of property or services, (iv) as lessee under leases
that shall have been or should be, in accordance with GAAP, recorded as capital
leases, (v) under reimbursement agreements or similar agreements with respect
to the issuance of letters of credit (other than obligations in respect of
letters of credit opened to provide for the payment of goods or services
purchased in the ordinary course of business), (vi) in respect of equity or
debt commitments to the extent reasonably quantifiable, (vii) arising as a
result of a default or failure to perform by such Person or any of its Subsid-
iaries or any third party under any guaranty or other contract or agreement
(including liabilities for liquidated damages) but only to the extent that any
such liabilities or obligations are then due and payable and are not subject to
a good faith dispute, (viii) under direct guaranties and indemnities in respect
of, and to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, or to assure an obligee against failure to make
payment in respect of, liabilities, obligations or indebtedness of others of
the kinds referred to in clauses (i) through (vii) above, in each case to the
extent reasonably quantifiable, and (ix) liabilities in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; provided, however,
that "Debt" shall not include any Nonrecourse Debt.
"Domestic Lending Office" means, with respect to any Lender, the office of such
Lender specified as its "Domestic Lending Office" opposite its name on Schedule
I hereto or in the Assignment and Acceptance pursuant to which it became a
Lender, or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.
"Eligible Assignee" means (i) a commercial bank organized under the laws of the
United States, or any State thereof; (ii) a commercial bank organized under the
laws of any other country that is a member of the OECD or has concluded special
lending arrangements with the International Monetary Fund associated with its
General Arrangements to Borrow, or a political subdivision of any such country,
provided that such bank is acting through a branch or agency located in the
United States; (iii) a finance company, insurance company or other financial
institution or fund (whether a corporation, partnership or other entity)
engaged generally in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business; (iv) the central bank of any
country that is a member of the OECD; or (v) any Lender or any Affiliate of any
Lender; provided, however, that (A) any such Person described in clause (i),
(ii), (iii) or (iv) above shall also (x) have outstanding unsecured indebted-
ness that is rated A- or better by S&P or A3 or better by Moody's (or an
equivalent rating by another nationally recognized credit rating agency of
similar standing if neither such corporations is in the business of rating
unsecured indebtedness of entities engaged in such businesses) and (y) have
combined capital and surplus (as established in its most recent report of
condition to its primary regulator) of not less than $250,000,000 (or its
equivalent in foreign currency), and (B) any Person described in clause (ii),
(iii) or (iv) above shall, on the date on which it is to become a Lender
hereunder, be entitled to receive payments hereunder without deduction or
withholding of any United States Federal income taxes (as contemplated by
Section 2.15(d)).
"Environmental Laws" means any federal, state or local laws, ordinances or
codes, rules, orders, or regulations relating to pollution or protection of the
environment, including, without limitation, laws relating to hazardous sub-
stances, laws relating to reclamation of land and waterways and laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata) or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, dispos-
al, transport or handling of pollution, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued thereun-
der, each as in effect and amended and modified from time to time.
"ERISA Affiliate" of a person or entity means any trade or business (whether or
not incorporated) that is a member of a group of which such person or entity is
a member and that is under common control with such person or entity within the
meaning of Section 414 of the Internal Revenue Code of 1986, and the regula-
tions promulgated and rulings issued thereunder, each as in effect and amended
or modified from time to time.
"ERISA Plan" means an employee benefit plan maintained for employees of any
Person or any ERISA Affiliate of such Person subject to Title IV of ERISA.
"ERISA Termination Event" means (i) a Reportable Event described in Section
4043 of ERISA and the regulations issued thereunder (other than a Reportable
Event not subject to the provision for 30-day notice to PBGC), or (ii) the
withdrawal of the Borrower or any of its ERISA Affiliates from an ERISA Plan
during a plan year in which the Borrower or any of its ERISA Affiliates was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the
filing of a notice of intent to terminate an ERISA Plan or the treatment of an
ERISA Plan amendment as a termination under Section 4041 of ERISA, or (iv) the
institution of proceedings to terminate an ERISA Plan by the PBGC or to appoint
a trustee to administer any ERISA Plan, or (v) any other event or condition
that would constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer any ERISA Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in Regulation
D of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the office of
such Lender specified as its "Eurodollar Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar Rate
Advance made as part of the same Contract Borrowing, an interest rate per annum
equal to the average (rounded upward to the nearest whole multiple of 1/16 of
1% per annum, if such average is not such a multiple) of the rate per annum at
which deposits in U.S. dollars are offered by the principal office of each of
the Reference Banks in London, England, to prime banks in the London interbank
market at 11:00 A.M. (London time) two Business Days before the first day of
such Interest Period in an amount substantially equal to such Reference Bank's
Eurodollar Rate Advance made as part of such Contract Borrowing and for a
period equal to such Interest Period. The Eurodollar Rate for the Interest
Period for each Eurodollar Rate Advance made as part of the same Contract
Borrowing shall be determined by the Agent on the basis of applicable rates
furnished to and received by the Agent from the Reference Banks two Business
Days before the first day of such Interest Period, subject, however, to the
provisions of Section 2.09.
"Eurodollar Rate Advance" means a Contract Advance that bears interest as
provided in Section 2.07(c).
"Eurodollar Rate Reserve Percentage of any Lender for the Interest Period for
any Eurodollar Rate Advance" means the reserve percentage applicable during
such Interest Period (or if more than one such percentage shall be so applica-
ble, the daily average of such percentages for those days in such Interest
Period during which any such percentage shall be so applicable) under regula-
tions 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, without limitation, any emergency, supplemental or other marginal
reserve requirement) for such Lender with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities having a term equal to such
Interest Period.
"Events of Default" has the meaning specified in Section 7.01.
"Excess Liquidity" means, for the Parent and its consolidated Subsidiaries
other than the Utility, the lesser of cash and marketable securities (deter-
mined in accordance with GAAP, but valued at their market value) or Adjusted
Net Working Capital.
"Exchange Act" means the Securities Exchange Act of 1934, and the regulations
promulgated thereunder, in each case as amended from time to time.
"Existing Letter of Credit" means a letter of credit listed on Schedule II
hereto.
"Extension of Credit" means (i) the making of a Borrowing (including, without
limitation, any Conversion), (ii) the issuance of a Letter of Credit, or
(iii) the amendment of any Letter of Credit having the effect of extending the
stated termination date thereof or increasing LC Outstandings thereunder.
"Facility Fee" means, on any date of determination for any Lender, a fee
payable on the average daily aggregate amount of such Lender's Commitment
(without regard to the amount of any Advances outstanding or any LC Outstan-
dings and without giving effect to any Competitive Bid Reduction), at the rate
per annum set forth below, determined by reference to the Moody's Implied
Rating and the S&P Implied Rating:
Level I Level II Level III Level IV
Basis for If the S&P If Level I If Level II If Level III
Facility Implied status has status has status has
Fee Rating is not been at- not been at- not been at-
greater than tained, but tained, but tained, but
or equal to the S&P Im- the S&P Im- the S&P Im-
A-, and/or plied Rating plied Rating plied Rating
the Moody's is greater is greater is less than
Implied than BBB-, than BB+, BBB-, or the
Rating is and/or the and/or the Moody's Im-
greater than Moody's Im- Moody's Im- plied Rating is
or equal to plied Rating plied Rating less than
A3. is greater is greater Baa3.
than Baa3. than Ba1.
Facility .10% .15% .20% .35%
Fee
In the event of a split rating, the higher rating will determine the appropri-
ate pricing level.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"First Mortgage Bonds" means the bonds issued from time to time pursuant to the
Trust Indenture, dated November 1, 1949, between the Utility and Harris Trust
and Savings Bank, as Trustee, as amended and supplemented from time to time.
"GAAP" means generally accepted accounting principles, applied on a basis
consistent with those applied in the preparation of the financial statements
referred to in Section 5.01(f), as modified from time to time in filings made
in accordance with applicable regulations issued by the Securities and Exchange
Commission regarding changes in accounting principles.
"Interest Period" means, for each Contract Advance made as part of the same
Contract Borrowing, the period commencing on the date of such Contract Advance
or the date of the Conversion of any Contract Advance into such a Contract
Advance and ending on the last day of the period selected by the Borrower
pursuant to the provisions below and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below. The duration of each such Interest Period shall be 30, 60,
90 or 180 days in the case of an Adjusted CD Rate Advance, and 1, 2, 3 or
6 months in the case of a Eurodollar Rate Advance, in each case as the Borrower
may select, upon notice received by the Agent not later than 11:00 A.M. (New
York City time) on the third Business Day prior to the first day of such
Interest Period; provided, however, that:
(i) the Borrower may not select any Interest Period that ends after the
Termination Date;
(ii) Interest Periods commencing on the same date for Contract Advances made
as part of the same Contract Borrowing shall be of the same duration; and
(iii) whenever the last day of any Interest Period would otherwise occur on a
day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, provid-
ed, in the case of any Interest Period for a Eurodollar Rate Advance,
that if such extension would cause the last day of such Interest Period
to occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day.
"LC Bank" means Bank of Montreal and any other Lender designated by the
Borrower, and acceptable to the Agent, in accordance with Section 3.01 as the
issuer of a Letter of Credit pursuant to an LC Bank Agreement.
"LC Bank Agreement" means an agreement between an LC Bank and the Borrower in
the form and substance satisfactory to the Agent, providing for the issuance of
one or more Letters of Credit, in substantially the form of Exhibit D hereto,
in support of general corporate activity of the Borrower.
"LC Fee" means, as of any date of determination, a fee payable on the average
daily undrawn amount of each Letter of Credit outstanding on such date, at the
rate per annum set forth below, determined by reference to the Moody's Implied
Rating and the S&P Implied Rating:
Level I Level II Level III Level IV
Basis for If the S&P If Level I If Level II If Level III
LC Implied status has status has status has
Fee Rating is not been at- not been at- not been at-
greater than tained, but tained, but tained, but
or equal to the S&P Im- the S&P Im- the S&P Im-
A-, and/or plied Rating plied Rating plied Rating
the Moody's is greater is greater is less than
Implied than BBB-, than BB+, BBB-, or the
Rating is and/or the and/or the Moody's Im-
greater than Moody's Im- Moody's Im- plied Rating is
or equal to plied Rating plied Rating less than
A3. is greater is greater Baa3.
than Baa3. than Ba1.
LC .20% .30% .35% .50%
Fee
In the event of a split rating, the higher rating will determine the appropri-
ate pricing level.
"LC Outstandings" means, for any Letter of Credit on any date of determination,
the maximum amount available to be drawn under such Letter of Credit (assuming
the satisfaction of all conditions for drawing enumerated therein); provided,
however, that with respect to any Existing Letter of Credit that is denominated
in a currency other than U.S. Dollars, "LC Outstandings" shall mean 150% of
such maximum amount available to be drawn as of the date hereof and set forth
on Schedule II hereto under the column "Stated Amount".
"LC Payment Notice" has the meaning specified in Section 3.04(b).
"Lenders" means the Banks listed on the signature pages hereof and each
Eligible Assignee that shall become a party hereto pursuant to Section 9.07.
"Letter of Credit" means an Existing Letter of Credit or a letter of credit
issued by an LC Bank pursuant to Section 3.02 hereof, as such letter of credit
may from time to time be amended, modified or extended in accordance with the
terms of this Agreement and the LC Bank Agreement to which it relates.
"LIBOR Competitive Bid Advance" means a Competitive Bid Advance with respect to
which interest is calculated based on reference to rates quoted in the London
interbank market for U.S. dollar deposits.
"Majority Lenders" means, at any time prior to the Termination Date, Lenders
having at least 66-2/3% of the Commitments (without giving effect to any
termination in whole of the Commitments pursuant to Section 7.01) and at any
time on or after the Termination Date, Lenders having at least 66-2/3% of the
Extensions of Credit outstanding, (provided that, for purposes hereof, neither
the Borrower, nor any of its Affiliates, if a Lender, shall be included in (i)
the Lenders having such amount of the Commitments or the Advances or (ii)
determining the total amount of the Commitments or the Advances).
"Moody's" means Moody's Investors Service, Inc. or any successor thereto.
"Moody's Implied Rating" means, as of any date of determination, the rating
assigned by Moody's to the outstanding unsecured long-term senior indebtedness
of the Parent, or if such debt is not then rated, the rating two levels below
the rating assigned by Moody's to the First Mortgage Bonds. For purposes of
this definition, a rating level shall include any refinement or gradation
within a major rating category by a numerical modifier or a plus (+) or a minus
(-) symbol.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preced-
ing three plan years made or accrued an obligation to make contributions.
"Net Worth" means, with respect to any Person, the excess of such Person's
total assets over its total liabilities, with total assets and total liabili-
ties each to be determined in accordance with GAAP consistently applied,
excluding, however, from the determination of total assets (i) goodwill,
organizational expenses, research and development expenses, trademarks, trade
names, copyrights, patents, patent applications, licenses and rights in any
thereof, and other similar intangibles, (ii) cash held in a sinking or other
analogous fund established for the purpose of redemption, retirement or
prepayment of capital stock or Debt (provided that the corresponding liability
is excluded from the calculation of Net Worth) and (iii) any items not included
in clause (i) or (ii) above that are treated as intangibles in conformity with
GAAP.
"Nonrecourse Debt" means all liabilities, obligations and indebtedness of any
Person of the types described in clauses (i) through (ix) of the definition of
"Debt" (such liabilities, obligations and indebtedness being hereinafter
referred to as "Obligations"), which Obligations are nonrecourse to such Person
(unless such Person is a special-purpose entity) and any Affiliate of such
Person, other than with respect to the interest of such Person in the collater-
al, if any, securing such Obligations.
"Note" means a Contract Note or a Competitive Bid Note.
"Notice of Competitive Bid Borrowing" has the meaning specified in Section
2.03(a).
"Notice of Contract Borrowing" has the meaning specified in Section 2.02(a).
"OECD" means the Organization for Economic Cooperation and Development.
"Parent" means LG&E Energy Corp., a Kentucky corporation.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity succeeding
to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association, joint venture
or other entity, or a government or any political subdivision or agency
thereof.
"Reference Banks" means Citibank, Bank of Montreal and The Chase Manhattan
Bank, N.A., and any Lender designated as a successor or replacement Reference
Bank pursuant to Section 2.09(a).
"Register" has the meaning specified in Section 9.07(c).
"Reportable Event" has the meaning assigned to that term in Title IV of ERISA.
"Request for Issuance" has the meaning specified in Section 3.02(a).
"S&P" means Standard & Poor's Ratings Services, a division of the McGraw-Hill
Companies, Inc., or any successor thereto.
"S&P Implied Rating" means, as of any date of determination, the rating
assigned by S&P to the outstanding unsecured long-term senior indebtedness of
the Parent, or if such debt is not then rated, the rating two levels below the
rating assigned by S&P to the First Mortgage Bonds. For purposes of this
definition, a rating level shall include any refinement or gradation within a
major rating category by a numerical modifier or a plus (+) or a minus (-)
symbol.
"Subsidiary" means, with respect to any Person, any corporation or other entity
of which more than 50% of (i) the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time capital stock of any other class or
classes of such corporation shall or might have voting power upon the occur-
rence of any contingency) or (ii) other comparable equity interest, is at the
time directly or indirectly owned by such Person, by such Person and one or
more of its Subsidiaries, or by one or more other Subsidiaries.
"Support Agreement" means that certain Support Agreement, dated as of Decem-
ber 6, 1995, between the Parent and the Borrower, as the same may be amended or
modified from time to time in accordance with the terms thereof and of this
Agreement.
"Termination Date" means the fifth anniversary of the date of this Agreement,
or such later date that may be established pursuant to Section 2.17 hereof, or,
in either case, the earlier date of termination in whole of the Commitments
pursuant to Section 2.05 or Section 7.01 hereof.
"U.S. Dollars" means the lawful currency of the United States of America.
"U.S. Dollar Equivalent" means, with respect to any amount specified in a
currency other than U.S. Dollars, an amount in U.S. Dollars equal to such
amount specified in a currency other than U.S. Dollars determined by reference
to the quoted spot rate of exchange at which the LC Bank's principal office in
the United States offers to purchase such other currency with the equivalent in
U.S. Dollars in the United States, at 1:00 P.M. (New York City time) on the
date on which such equivalent is to be determined.
"Utility" means Louisville Gas and Electric Company, a Kentucky corporation,
and any successor thereto.
"Yield" means, for any Competitive Bid Advance, the effective rate per annum at
which interest on such Competitive Bid Advance is payable, computed on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest
is payable.
SECTION 1.02. Computation of Time Periods. In this Agreement in the computa-
tion of periods of time from a specified date to a later specified date, the
word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Extensions of Credit. Each Lender severally agrees, on the
terms and conditions hereinafter set forth, to make Contract Advances to the
Borrower and to participate in the issuance of Letters of Credit (and the LC
Outstandings thereunder) from time to time on any Business Day during the
period from the date hereof until the Termination Date in an aggregate amount
not to exceed at any time outstanding the amount set opposite such Lender's
name on the signature pages hereof or, if such Lender has entered into any
Assignment and Acceptance, set forth for such Lender in the Register maintained
by the Agent pursuant to Section 9.07(c), as such amount may be reduced
pursuant to Section 2.05(a) or (b) (such Lender's "Commitment"), provided that
the aggregate amount of the Commitments of the Lenders shall be deemed used
from time to time to the extent of the aggregate amount of the Competitive Bid
Advances then outstanding, and such deemed use of the aggregate amount of the
Commitments shall be applied to the Lenders ratably according to their respec-
tive Commitments (such deemed use of the aggregate amount of the Commitments
being a "Competitive Bid Reduction"); provided further, that, at no time may
the sum of the aggregate principal amount of all Advances outstanding hereunder
plus the LC Outstandings exceed the aggregate Commitments. Each Contract
Borrowing shall be in an aggregate amount not less than $5,000,000 or an
integral multiple of $500,000 in excess thereof and shall consist of Contract
Advances of the same Type and having the same Interest Period made or Converted
on the same day by the Lenders ratably according to their respective Commit-
ments. Within the limits of each Lender's Commitment, after giving effect to
any Competitive Bid Reduction, the Borrower may from time to time request
Extensions of Credit, prepay Advances pursuant to Section 2.11, or reduce or
cancel Letters of Credit, and use the resulting increase in unused Commitments
for further Extensions of Credit in accordance with the terms hereof. Subject
to the restriction set forth in Section 2.02(e), more than one Extension of
Credit may be made on any Business Day; provided, however, that at no time may
the sum of LC Outstandings plus the aggregate principal amount of outstanding
Advances deemed made pursuant to Section 3.04(d) with respect to which the
Borrower could not have satisfied the condition set forth in Section 4.02 on
the date such Advances were deemed made exceed $50,000,000.
SECTION 2.02. The Contract Advances. (a) Each Contract Borrowing shall be
made on notice, given not later than 11:00 A.M. (New York City time) on the
third Business Day prior to the date of any proposed Contract Borrowing
comprising Eurodollar Rate Advances or Adjusted CD Rate Advances, and on the
date of any proposed Contract Borrowing comprising Base Rate Advances, by the
Borrower to the Agent, which shall give to each Lender prompt notice thereof.
Each such notice of a Contract Borrowing (a "Notice of Contract Borrowing")
shall be by telecopier, telex or cable, confirmed immediately in writing, in
substantially the form of Exhibit B-1 hereto, specifying therein the requested
(i) date of such Contract Borrowing, (ii) Type of Contract Advances to be made
in connection with such Contract Borrowing, (iii) aggregate amount of such
Contract Borrowing, and (iv) in the case of a Contract Borrowing comprising
Adjusted CD Rate Advances or Eurodollar Rate Advances, initial Interest Period
for each such Contract Advance. Each Lender shall, before 12:00 noon (New York
City time) on the date of such Contract Borrowing, make available for the
account of its Applicable Lending Office to the Agent at its address referred
to in Section 9.02, in same day funds, such Lender's ratable portion (according
to the Lenders' respective Commitments) of such Contract Borrowing. After the
Agent's receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article IV, the Agent will make such funds available to the
Borrower at the Agent's aforesaid address. The Notice of Contract Borrowing
dated January 24, 1996 delivered by the Borrower to the Agent shall constitute
a "Notice of Contract Borrowing" under this Agreement and each Lender shall
make available to the Agent such Lender's ratable portion of such Contract
Borrowing on January 29, 1996.
(b) Each Notice of Contract Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Contract Borrowing that the related Notice of
Contract Borrowing specifies is to comprise Adjusted CD Rate Advances or
Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any
loss (excluding any loss of anticipated profits), cost or expense incurred by
such Lender as a result of any failure to fulfill on or before the date
specified in such Notice of Contract Borrowing for such Contract Borrowing the
applicable conditions set forth in Article IV, including, without limitation,
any such loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Contract Advance to be made by such Lender as part of such Contract Borrowing
when such Contract Advance, as a result of such failure, is not made on such
date.
(c) Unless the Agent shall have received notice from a Lender prior to the
date of any Contract Borrowing that such Lender will not make available to the
Agent such Lender's ratable portion of such Contract Borrowing, the Agent may
assume that such Lender has made such portion available to the Agent on the
date of such Contract Borrowing in accordance with subsection (a) of this
Section 2.02 and the Agent may, in reliance upon such assumption, make avail-
able to the Borrower on such date a corresponding amount. If and to the extent
that such Lender shall not have so made such ratable portion available to the
Agent, such Lender and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Agent, at (i) in the case of the Borrow-
er, the interest rate applicable at the time to Contract Advances made in
connection with such Contract Borrowing and (ii) in the case of such Lender,
the Federal Funds Rate. If such Lender shall repay to the Agent such corre-
sponding amount, such amount so repaid shall constitute such Lender's Contract
Advance as part of such Contract Borrowing for purposes of this Agreement.
Nothing in this subsection shall be deemed to relieve any Lender from its
obligation to make any Contract Advance required to be made by such Lender
hereunder or to prejudice any rights the Borrower may have against any Lender
as a result of any default by such Lender hereunder.
(d) The failure of any Lender to make the Contract Advance to be made by it
as part of any Contract Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Contract Advance on the date of such
Contract Borrowing, but no Lender shall be responsible for the failure of any
other Lender to make the Contract Advance to be made by such other Lender on
the date of any Contract Borrowing.
(e) Notwithstanding anything to the contrary contained herein, no more than
eight Contract Borrowings may be outstanding at any time.
SECTION 2.03. The Competitive Bid Advances. (a) Each Lender severally agrees
that the Borrower may request Competitive Bid Borrowings under this Section
2.03 from time to time on any Business Day during the period from the date
hereof until the date occurring seven days prior to the Termination Date in the
manner set forth below; provided that, following the making of each Competitive
Bid Borrowing, the aggregate amount of the Advances then outstanding shall not
exceed the aggregate amount of the Commitments of the Lenders (computed without
regard to any Competitive Bid Reduction). Each Competitive Bid Borrowing shall
be in an aggregate amount of not less than $10,000,000 or an integral multiple
of $1,000,000 in excess thereof.
(i) The Borrower may request a Competitive Bid Borrowing by delivering to the
Agent (A) by telecopier, telex or cable, confirmed immediately in writing, a
notice of a Competitive Bid Borrowing (a "Notice of Competitive Bid Borrow-
ing"), in substantially the form of Exhibit B-2 hereto, specifying the date and
aggregate amount of the proposed Competitive Bid Borrowing, the maturity date
for repayment of each Competitive Bid Advance to be made as part of such
Competitive Bid Borrowing (which maturity date may be (1) with respect to a
Competitive Bid Borrowing in respect of which interest is payable at a fixed
rate, any date occurring from 7 to (and including) 180 days after the date of
such Competitive Bid Borrowing, or (2) in the case of a LIBOR Competitive Bid
Borrowing, a date occurring one, two, three or six months after the date of
such LIBOR Competitive Bid Borrowing; provided that, in no event will such date
be later than the Termination Date), the interest payment date or dates
relating thereto (which shall occur at least every 90 days or, in the case of a
LIBOR Competitive Bid Advance, at least every three months), the interest rate
basis to be used by the Lenders in bidding, and any other terms to be applica-
ble to such Competitive Bid Borrowing, not later than 10:00 A.M. (New York City
time) at least one Business Day prior to the date of any proposed Competitive
Bid Borrowing comprising Competitive Bid Advances with respect to which
interest is payable at a fixed rate and at least four Business Days prior to
the date of any proposed Competitive Bid Borrowing comprising LIBOR Competitive
Bid Advances and (B) payment in full to the Agent of the aggregate competitive
bid administration fee specified in Section 2.04(b) hereof. The Agent shall in
turn promptly notify each Lender of each request for a Competitive Bid Borrow-
ing received by it from the Borrower by sending such Lender a copy of the
related Notice of Competitive Bid Borrowing.
(ii) Each Lender may, if, in its sole discretion, it elects to do so, irrevo-
cably offer to make one or more Competitive Bid Advances to the Borrower as
part of such proposed Competitive Bid Borrowing at a rate or rates of interest
specified by such Lender in its sole discretion, by notifying the Agent (which
shall give prompt notice thereof to the Borrower), before 10:00 A.M. (New York
City time) on the date of any such proposed Competitive Bid Borrowing that is
to to comprise Competitive Bid Advances with respect to which interest is
payable at a fixed rate, or three Business Days prior to the date of any such
proposed Competitive Bid Borrowing that is to comprise LIBOR Competitive Bid
Advances, of the minimum amount and maximum amount of each Competitive Bid
Advance that such Lender would be willing to make as part of such proposed
Competitive Bid Borrowing (which amounts may, subject to the proviso to the
first sentence of this Section 2.03(a), exceed such Lender's Commitment), the
rate or rates of interest therefor and the Yield (if different from such rate
or rates) with respect thereto, the interest period relating thereto and such
Lender's Applicable Lending Office with respect to such Competitive Bid
Advance; provided that if the Agent in its capacity as a Lender shall, in its
sole discretion, elect to make any such offer, it shall notify the Borrower of
such offer before 9:00 A.M. (New York City time) on the date on which notice of
such election is to be given to the Agent by the other Lenders. If any Lender
shall elect not to make such an offer, such Lender shall so notify the Agent,
before 10:00 A.M. (New York City time) on the date on which notice of such
election is to be given to the Agent by the other Lenders, and such Lender
shall not be obligated to, and shall not, make any Competitive Bid Advance as
part of such Competitive Bid Borrowing; provided that the failure by any Lender
to give such notice shall not cause such Lender to be obligated to make any
Competitive Bid Advance as part of such proposed Competitive Bid Borrowing.
(iii) The Borrower shall, in turn, before 11:00 A.M. (New York City time) on
the date of any such proposed Competitive Bid Borrowing that is to comprise
Competitive Bid Advances with respect to which interest is payable at a fixed
rate, or three Business Days prior to the date of any such proposed Competitive
Bid Borrowing that is to comprise LIBOR Competitive Bid Advances, either
(A) cancel such Competitive Bid Borrowing by giving the Agent notice to that
effect, or
(B) irrevocably accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in its sole discretion, subject only
to the provisions of this paragraph (iii), by giving notice to the Agent of the
amount of each Competitive Bid Advance (which amount shall be equal to or
greater than the minimum amount, and equal to or less than the maximum amount,
notified to the Borrower by the Agent on behalf of such Lender for such
Competitive Bid Advance pursuant to paragraph (ii) above) to be made by each
Lender as part of such Competitive Bid Borrowing, and reject any remaining
offers made by Lenders pursuant to paragraph (ii) above by giving the Agent
notice to that effect; provided, however, that (w) the Borrower shall not
accept bids in excess of the requested Competitive Bid Borrowing for any
maturity, (x) bids will be accepted in order of lowest to highest Yield and the
Borrower shall not accept an offer made pursuant to paragraph (ii) above, at
any Yield if the Borrower shall have, or shall be deemed to have, rejected any
other offer made pursuant to paragraph (ii) above, at a lower Yield, (y) if the
Borrower declines to accept, or is otherwise restricted by the provisions of
this Agreement from accepting, the maximum aggregate principal amount of
Competitive Bid Borrowings offered at the same Yield pursuant to paragraph (ii)
above, then the Borrower shall accept a pro rata portion of each offer made at
such Yield, based as nearly as possible on the ratio of the aggregate principal
amount of such offers to be accepted by the Borrower to the maximum aggregate
principal amount of such offers made pursuant to paragraph (ii) above (rounding
up or down to the next higher or lower multiple of $1,000,000), and (z) no
offer made pursuant to paragraph (ii) above shall be accepted unless the
Competitive Bid Borrowing in respect of such offer is in an integral multiple
of $1,000,000 and the aggregate amount of such offers accepted by the Borrower
is equal to at least $10,000,000.
Any offer or offers made pursuant to paragraph (ii) above not expressly
accepted or rejected by the Borrower in accordance with this paragraph (iii)
shall be deemed to have been rejected by the Borrower.
(iv) If the Borrower notifies the Agent that such Competitive Bid Borrowing is
canceled pursuant to clause (A) of paragraph (iii) above, the Agent shall give
prompt notice thereof to the Lenders and such Competitive Bid Borrowing shall
not be made.
(v) If the Borrower accepts one or more of the offers made by any Lender or
Lenders pursuant to clause (B) of paragraph (iii) above, the Agent shall in
turn promptly notify (A) each Lender that has made an offer as described in
paragraph (ii) above, of the date and aggregate amount of such Competitive Bid
Borrowing and whether or not any offer or offers made by such Lender pursuant
to paragraph (ii) above have been accepted by the Borrower, (B) each Lender
that is to make a Competitive Bid Advance as part of such Competitive Bid
Borrowing of the amount of each Competitive Bid Advance to be made by such
Lender as part of such Competitive Bid Borrowing, and (C) each Lender that is
to make a Competitive Bid Advance as part of such Competitive Bid Borrowing,
upon receipt, that the Agent has received forms of documents appearing to
fulfill the applicable conditions set forth in Article IV. Each Lender that is
to make a Competitive Bid Advance as part of such Competitive Bid Borrowing
shall, before 12:00 noon (New York City time) on the date of such Competitive
Bid Borrowing specified in the notice received from the Agent pursuant to
clause (A) of the preceding sentence or any later time when such Lender shall
have received notice from the Agent pursuant to clause (C) of the preceding
sentence, make available for the account of its Applicable Lending Office to
the Agent at its address referred to in Section 9.02 such Lender's portion of
such Competitive Bid Borrowing, in same day funds. Upon fulfillment of the
applicable conditions set forth in Article IV and after receipt by the Agent of
such funds, the Agent will make such funds available to the Borrower at the
Agent's aforesaid address. Promptly after each Competitive Bid Borrowing the
Agent will notify each Lender of the amount of the Competitive Bid Borrowing,
the consequent Competitive Bid Reduction and the dates upon which such Competi-
tive Bid Reduction commenced and will terminate.
(vi) The acceptance by the Borrower of any offer made by any Lender pursuant
to paragraph (iii)(B) above shall be irrevocable and binding on the Borrower.
In the case of any Competitive Bid Borrowing comprising LIBOR Competitive Bid
Advances, the Borrower shall indemnify such Lender against any loss (excluding
any loss of anticipated profits), cost or expense incurred by such Lender as a
result of any failure to fulfill on or before the date specified in the related
Notice of Competitive Bid Borrowing for such Competitive Bid Borrowing the
applicable conditions set forth in Article IV, including, without limitation,
any such loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
LIBOR Competitive Bid Advance to be made by such Lender as part of such
Competitive Bid Borrowing when such LIBOR Competitive Bid Advance, as a result
of such failure, is not made on such date.
(b) Within the limits and on the conditions set forth in this Section 2.03
(including, without limitation, the condition set forth in the proviso to the
first sentence of subsection (a) above), the Borrower may from time to time
borrow under this Section 2.03, repay or prepay pursuant to subsection (c)
below, and reborrow under this Section 2.03, provided that no Competitive Bid
Borrowing may be made within three Business Days of the date of any other
Competitive Bid Borrowing.
(c) The Borrower shall repay to the Agent for the account of each Lender that
has made a Competitive Bid Advance, or each other holder of a Competitive Bid
Note, on the maturity date of each Competitive Bid Advance (such maturity date
being that specified by the Borrower for repayment of such Competitive Bid
Advance in the related Notice of Competitive Bid Borrowing delivered pursuant
to subsection (a)(i) above and provided in the Competitive Bid Note evidencing
such Competitive Bid Advance), the then unpaid principal amount of such
Competitive Bid Advance. The Borrower shall have no right to prepay any
principal amount of any Competitive Bid Advance unless, and then only on the
terms, specified by the Borrower for such Competitive Bid Advance in the
related Notice of Competitive Bid Borrowing delivered pursuant to subsection
(a)(i) above and set forth in the Competitive Bid Note evidencing such Competi-
tive Bid Advance.
(d) The Borrower shall pay interest on the unpaid principal amount of each
Competitive Bid Advance from the date of such Competitive Bid Advance to the
date the principal amount of such Competitive Bid Advance is repaid in full, at
the rate of interest for such Competitive Bid Advance specified by the Lender
making such Competitive Bid Advance in its notice with respect thereto deliv-
ered pursuant to subsection (a)(ii) above, payable on the interest payment date
or dates specified by the Borrower for such Competitive Bid Advance in the
related Notice of Competitive Bid Borrowing delivered pursuant to subsection
(a)(i) above, as provided in the Competitive Bid Note evidencing such Competi-
tive Bid Advance.
(e) The indebtedness of the Borrower resulting from each Competitive Bid
Advance made to the Borrower as part of a Competitive Bid Borrowing shall be
evidenced by a separate Competitive Bid Note of the Borrower payable to the
order of the Lender making such Competitive Bid Advance.
SECTION 2.04. Fees. (a) The Borrower agrees to pay to the Agent for the
account of each Lender the Facility Fee for such Lender calculated from the
date hereof in the case of each Bank and from the effective date specified in
the Assignment and Acceptance pursuant to which it became a Lender in the case
of each other Lender until the Termination Date, payable quarterly in arrears
on the last day of each March, June, September and December during such period,
and on the Termination Date.
(b) The Borrower agrees to pay to the Agent for its own account a competitive
bid administration fee in the amount of $1,000 in respect of each Competitive
Bid Borrowing requested by the Borrower pursuant to Section 2.03(a)(i), payable
on the date of such request.
SECTION 2.05. Reduction of the Commitments. (a) Reduction at Borrower's
Option. The Borrower shall have the right, upon at least two Business Days'
notice to the Agent, to terminate in whole or reduce ratably in part the unused
portions (taking into account Competitive Bid Reductions) of the respective
Commitments of the Lenders, provided that the aggregate amount of the Commit-
ments of the Lenders shall not be reduced to an amount that is less than the
sum of the aggregate principal amount of the Advances then outstanding plus the
LC Outstandings and provided, further, that each partial reduction shall be in
the aggregate amount of $1,000,000 or an integral multiple thereof. Any
portion of the Commitments of the Lenders so terminated may not thereafter be
reinstated.
(b) Mandatory Reduction. The respective Commitments of the Lenders shall
automatically reduce ratably upon each disposition of assets described in
clause (A) of Section 6.02(a) by an amount equal, in the aggregate, to the
amount of consideration (as defined in Section 6.02(a)) received by the
Borrower in respect of such assets.
SECTION 2.06. Repayment of Contract Advances. The Borrower shall repay the
principal amount of each Contract Advance made by each Lender on the Termina-
tion Date in accordance with the Contract Note payable to the order of such
Lender.
SECTION 2.07. Interest on Contract Advances. The Borrower shall pay interest
on the unpaid principal amount of each Contract Advance made by each Lender
from the date of such Contract Advance until such principal amount shall be
paid in full, at the following rates per annum:
(a) Base Rate Advances. If such Contract Advance is a Base Rate Advance, a
rate per annum equal at all times to the sum of the Base Rate in effect from
time to time plus the Applicable Margin for such Base Rate in effect from time
to time, payable quarterly on the last day of each March, June, September and
December during such periods and on the date such Base Rate Advance shall be
Converted or paid in full.
(b) Adjusted CD Rate Advances. If such Contract Advance is an Adjusted CD
Rate Advance, a rate equal at all times during the Interest Period for such
Contract Advance to the sum of the Adjusted CD Rate for such Interest Period
plus the Applicable Margin for such Adjusted CD Rate in effect from time to
time, payable on the last day of each Interest Period for such Adjusted CD Rate
Advance (and, in the case of any Interest Period of 180 days, on the 90th day
of such Interest Period) and on the date such Adjusted CD Rate Advance shall be
Converted or paid in full.
(c) Eurodollar Rate Advances. Subject to Section 2.08, if such Contract
Advance is a Eurodollar Rate Advance, a rate per annum equal at all times
during the Interest Period for such Contract Advance to the sum of the Eurodol-
lar Rate for such Interest Period plus the Applicable Margin for such Eurodol-
lar Rate Advance in effect from time to time, payable on the last day of each
Interest Period for such Eurodollar Rate Advance (and, in the case of any
Interest Period of six months, on the last day of the third month of such
Interest Period) and on the date such Eurodollar Rate Advance shall be Convert-
ed or paid in full.
SECTION 2.08. Additional Interest on Contract Advances. The Borrower shall
pay to each Lender, so long as such Lender shall be required under regulations
of the Board of Governors of the Federal Reserve System to maintain reserves
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities, additional interest on the unpaid principal amount of each
Eurodollar Rate Advance of such Lender, from the date of such Contract Advance
until such principal amount is paid in full, at an interest rate per annum
equal at all times to the remainder obtained by subtracting (i) the Eurodollar
Rate for the Interest Period for such Contract Advance from (ii) the rate
obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus
the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period,
payable on each date on which interest is payable on such Contract Advance.
Such additional interest shall be determined by such Lender and notified to the
Borrower through the Agent, and such determination shall be conclusive and
binding for all purposes, absent manifest error.
SECTION 2.09. Interest Rate Determination. (a) Each Reference Bank agrees to
furnish to the Agent timely information for the purpose of determining each
Adjusted CD Rate or Eurodollar Rate, as applicable. If any one or more of the
Reference Banks shall not furnish such timely information to the Agent for the
purpose of determining any such interest rate, the Agent shall determine such
interest rate on the basis of timely information furnished by the remaining
Reference Banks. If any Reference Bank shall no longer be a Lender hereunder,
shall no longer wish to serve as a Reference Bank hereunder or shall fail to
perform hereunder, the Agent and the Borrower may appoint another Lender to
serve as a successor or replacement Reference Bank hereunder.
(b) The Agent shall give prompt notice to the Borrower and the Lenders of the
applicable interest rate determined by the Agent for purposes of Section
2.07(a), (b) or (c), and the applicable rate, if any, furnished by each
Reference Bank for the purpose of determining the applicable interest rate
under Section 2.07(b) or (c).
(c) If fewer than two Reference Banks furnish timely information to the Agent
for determining the Adjusted CD Rate for any Adjusted CD Rate Advances, or the
Eurodollar Rate for any Eurodollar Rate Advances,
(i) the Agent shall forthwith notify the Borrower and the Lenders that the
interest rate cannot be determined for such Adjusted CD Rate Advances or
Eurodollar Rate Advances, as the case may be,
(ii) each such Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance (or if such
Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and
(iii) the obligation of the Lenders to make, or to Convert Contract Advances
into, Adjusted CD Rate Advances or Eurodollar Rate Advances, as the case may
be, shall be suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist.
(d) If, with respect to any Eurodollar Rate Advances, the Majority Lenders
notify the Agent that the Eurodollar Rate for any Interest Period for such
Advances will not adequately reflect the cost to such Majority Lenders of
making, funding or maintaining their respective Eurodollar Rate Advances for
such Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon
(i) each Eurodollar Rate Advance will automatically, on the last day of the
then existing Interest Period therefor, Convert into a Base Rate Advance
(unless, with respect to any Eurodollar Rate Advance, the Borrower shall have
delivered to the Agent a timely notice of Conversion specifying that such
Eurodollar Rate Advance shall be Converted to an Adjusted CD Rate Advance on
the last day of the then existing Interest Period therefor), and
(ii) the obligation of the Lenders to make, or to Convert Contract Advances
into, Eurodollar Rate Advances shall be suspended until the Agent shall notify
the Borrower and the Lenders that the circumstances causing such suspension no
longer exist.
SECTION 2.10. Conversion of Contract Advances. (a) Voluntary. The Borrower
may on any Business Day, upon notice given to the Agent not later than 11:00
A.M. (New York City time) on the third Business Day prior to the date of any
proposed Conversion into Eurodollar Rate Advances or Adjusted CD Rate Advances,
and on the date of any proposed Conversion into Base Rate Advances, and subject
to the provisions of Sections 2.09 and 2.13, Convert all Contract Advances of
one Type made in connection with the same Contract Borrowing into Advances of
another Type or Types or Advances of the same Type having the same or a new
Interest Period; provided, however, that any Conversion of, or with respect to,
any Adjusted CD Rate Advances or Eurodollar Rate Advances into Advances of
another Type or Advances of the same Type having the same or new Interest
Periods shall be made on, and only on, the last day of an Interest Period for
such Adjusted CD Rate Advances or Eurodollar Rate Advances, unless the Borrower
shall also reimburse the Lenders in respect thereof pursuant to Section 9.04(b)
on the date of such Conversion. Each such notice of a Conversion shall, within
the restrictions specified above, specify (i) the date of such Conversion, (ii)
the Contract Advances to be Converted, and (iii) if such Conversion is into, or
with respect to, Adjusted CD Rate Advances or Eurodollar Rate Advances, the
duration of the Interest Period for each such Contract Advance.
(b) Mandatory. If the Borrower shall fail to select the Type of any Contract
Advance or the duration of any Interest Period for any Contract Borrowing
comprising Adjusted CD Rate Advances or Eurodollar Rate Advances in accordance
with the provisions contained in the definition of "Interest Period" in Section
1.01 and Section 2.10(a), or if any proposed Conversion of a Contract Borrowing
that is to comprise Adjusted CD Rate Advances or Eurodollar Rate Advances upon
Conversion shall not occur as a result of the circumstances described in
paragraph (c) below, the Agent will forthwith so notify the Borrower and the
Lenders and such Advances will automatically, on the last day of the then
existing Interest Period therefor, Convert into Base Rate Advances.
(c) Failure to Convert. Each notice of Conversion given pursuant to subsec-
tion (a) above shall be irrevocable and binding on the Borrower. In the case
of any Contract Borrowing that is to comprise Adjusted CD Rate Advances or
Eurodollar Rate Advances upon Conversion, the Borrower shall indemnify each
Lender against any loss (excluding any loss of anticipated profits), cost or
expense incurred by such Lender as a result of any failure to fulfill on the
date specified for such Conversion the applicable conditions set forth in
Article IV, including, without limitation, any such loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by such Lender to fund such Adjusted CD Rate Advances or
Eurodollar Rate Advances, as the case may be, upon such Conversion, when such
Conversion, as a result of such failure, does not occur.
SECTION 2.11. Prepayments. (a) Optional. The Borrower may, upon at least two
Business Days' notice (or same day notice not later than 11:00 A.M. in the case
of any prepayment of Base Rate Advances) to the Agent stating the proposed date
and aggregate principal amount of the prepayment, and if such notice is given
the Borrower shall, prepay the outstanding principal amounts of the Contract
Advances made as part of the same Contract Borrowing in whole or ratably in
part, together with accrued interest to the date of such prepayment on the
principal amount prepaid; provided, however, that (i) each partial prepayment
of any Contract Borrowing shall be in an aggregate principal amount not less
than $10,000,000 or an integral multiple of $1,000,000 in excess thereof and
(ii) in the case of any such prepayment of an Adjusted CD Rate Advance or
Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 9.04(b) on the date of such
prepayment.
(b) Mandatory. (i) If and to the extent that the aggregate principal amount
of Advances outstanding plus the LC Outstandings on any date hereunder shall
exceed the aggregate amount of the Commitments hereunder on such date, the
Borrower shall prepay on such date a principal amount of Advances, and/or cash
collateralize the LC Outstandings, in an aggregate amount at least equal to
such excess (provided that the LC Outstandings shall in no event exceed
$50,000,000), together with accrued interest to the date of such prepayment on
such principal amount and, in the case of any such prepayment of Adjusted CD
Rate Advances or Eurodollar Rate Advances, the Borrower shall be obligated to
reimburse the Lenders in respect thereof pursuant to Section 9.04(b) on the
date of such prepayment. (ii) If and to the extent that the LC Outstandings on
any date hereunder shall exceed $50,000,000, the Borrower shall cash collater-
alize the LC Outstandings in the manner described in clause fourth of subsec-
tion (c) below.
(c) Application. Upon each prepayment of the principal amount of Advances
hereunder and/or cash collateralization of LC Outstandings pursuant to Sec-
tion 2.11(b)(i) or 6.02(a), the Agent shall apply amounts received from the
Borrower to the prepayment of the principal amount of Advances outstanding
hereunder and to the cash collateralization of LC Outstandings in the following
order of priority:
First, to the prepayment in whole or ratably in part of the principal amount of
all outstanding Base Rate Advances,
Second, to the prepayment in whole or ratably in part of the principal amount
of outstanding Adjusted CD Rate Advances and Eurodollar Rate Contract Advances,
in such order of maturity as will, in the reasonable judgment of the Agent,
minimize to the fullest extent practicable amounts payable by the Borrower in
respect of such prepayment pursuant to Section 9.04(b),
Third, to the prepayment in whole or ratably in part of the principal amount of
outstanding Competitive Bid Advances, in such order of maturity as will, in the
reasonable judgment of the Agent, minimize to the fullest extent practicable
amounts payable by the Borrower in respect of such prepayment pursuant to
Section 9.04(b), and
Fourth, to the cash collateralization of LC Outstandings by depositing such
amounts in a special interest-bearing escrow account maintained by the Agent at
the Agent's office (the "Cash Escrow Account") and pledged to the Agent for the
benefit of each LC Bank and the Lenders pursuant to documentation reasonably
satisfactory to the Agent and each LC Bank, which documentation shall set
forth, among other things, the terms for the application of amounts on deposit
in the Cash Escrow Account toward payment of the obligations of the Borrower
under this Agreement, the Notes and any LC Bank Agreement.
SECTION 2.12. Increased Costs. (a) If, due to either (i) the introduction of
or any change (other than any change by way of imposition or increase of
reserve requirements included in the Adjusted CD Rate Reserve Percentage, or
any Assessment Rate, in the case of Adjusted CD Rate Advances, or, in the case
of Eurodollar Rate Advances, included in the Eurodollar Rate Reserve Percent-
age) in or in the interpretation of any law or regulation or (ii) the compli-
ance with any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) issued, promulgated or made,
as the case may be, after the date hereof, there shall be any increase in
(A) the cost to any Lender of agreeing to make or making, funding or maintain-
ing Adjusted CD Rate Advances, Eurodollar Rate Advances or any other Advances,
or (B) the cost to any LC Bank of issuing, maintaining or funding any Letter of
Credit, then the Borrower shall from time to time, upon demand by such Lender
or LC Bank (as the case may be) (with a copy of such demand to the Agent), pay
to the Agent for the account of such Lender or LC Bank additional amounts
sufficient to compensate such Lender or LC Bank for such increased cost.
Without prejudice to any other agreement of the Borrower hereunder, the
agreements and obligations of the Borrower contained in this Section 2.12(a)
shall survive the payment in full of principal and interest hereunder and under
the Notes; provided, that no Lender or LC Bank shall be entitled to demand such
compensation more than 90 days following the last day of the Interest Period or
stated expiry date of the Letter of Credit in respect of which such demand is
made; provided further, however, that the foregoing proviso shall in no way
limit the right of any Lender or LC Bank to demand or receive such compensation
to the extent that such compensation relates to the retroactive application of
any law, regulation, guideline or request described in clause (i) or (ii) above
if such demand is made within 90 days after the implementation of such retroac-
tive law, interpretation, guideline or request. A certificate as to the nature
and amount of such increased cost, submitted to the Borrower and the Agent by
such Lender or LC Bank in good faith, shall be conclusive and binding for all
purposes, absent manifest error.
(b) If any Lender or LC Bank determines that compliance with any law or
regulation or any guideline or request from any central bank or other govern-
mental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender or LC Bank or any corporation controlling such Lender or LC Bank and
that the amount of such capital is increased by or based upon the existence of
such Lender's commitment to lend hereunder and other commitments of this type
or the Advances or to issue or participate in any Letter of Credit, then, upon
demand by such Lender or LC Bank (as the case may be) (with a copy of such
demand to the Agent), the Borrower shall immediately pay to the Agent for the
account of such Lender or LC Bank, from time to time as specified by such
Lender or LC Bank, additional amounts sufficient to compensate such Lender or
LC Bank or such corporation in the light of such circumstances, to the extent
that such Lender or LC Bank determines such increase in capital to be allocable
to the existence of such Lender's commitment to lend hereunder or the partici-
pation in or issuance or maintenance of any Letter of Credit or Advance or
other commitments of the type hereunder. Without prejudice to any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.12(b) shall survive the payment in full of
principal and interest hereunder and under the Notes; provided, that no Lender
or LC Bank shall be entitled to demand such compensation more than one year
following the last day of the fiscal year of such Lender or LC Bank during
which such capital requirement was applicable and in respect of which such
Lender or LC Bank is seeking compensation; provided further, however, that the
foregoing proviso shall in no way limit the right of any Lender or LC Bank to
demand or receive such compensation to the extent that such compensation
relates to the retroactive application of any law, regulation, guideline or
request described above if such demand is made within one year after the
implementation of such retroactive law, interpretation, guideline or request.
A certificate as to such amounts submitted to the Borrower and the Agent by
such Lender or LC Bank in good faith shall be conclusive and binding for all
purposes, absent manifest error.
(c) Notwithstanding the foregoing, no Lender or LC Bank shall give notice or
demand for payment of any increased costs or compensation under this Section
2.12 unless such Lender or LC Bank, as the case may be, is generally imposing
such increased costs on its similarly situated customers.
SECTION 2.13. Illegality. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlaw-
ful, for any Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar
Rate Advances hereunder, (i) the obligation of the Lenders to make, or to
Convert Contract Advances into, Eurodollar Rate Advances shall be suspended
until the Agent shall notify the Borrower and the Lenders that the circumstanc-
es causing such suspension no longer exist and (ii) the Borrower shall forth-
with prepay in full all Eurodollar Rate Advances of all Lenders then outstand-
ing, together with interest accrued thereon, unless the Borrower, within five
Business Days of notice from the Agent, Converts all Eurodollar Rate Advances
of all Lenders then outstanding into Advances of another Type in accordance
with Section 2.10. Any Lender that has notified the Agent of any illegality
under this Section 2.13 shall use its best efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the jurisdic-
tion of its Applicable Lending Office if the making of such change would avoid
or eliminate such illegality and would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender.
SECTION 2.14. Payments and Computations. (a) Except as otherwise expressly
provided herein or in any LC Bank Agreement, the Borrower shall make each
payment hereunder and under the Notes not later than 12:00 noon (New York City
time) on the day when due in U.S. dollars to the Agent at its address referred
to in Section 9.02 in same day funds, and any such payment to the Agent shall
constitute payment by the Borrower hereunder or under the Notes, as the case
may be, for all purposes, and upon such payment the Lenders shall look solely
to the Agent for their respective interests in such payment. The Agent will
promptly after any such payment cause to be distributed like funds relating to
the payment of principal, interest, Facility Fees or LC Fees ratably (other
than amounts payable pursuant to Section 2.02(c), 2.03, 2.08, 2.12, 2.15 or
9.04(b)) (according to the Lenders' respective Commitments) to the Lenders for
the account of their respective Applicable Lending Offices, and like funds
relating to the payment of any other amount payable to any Lender to such
Lender for the account of its Applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement. Upon its acceptance of
an Assignment and Acceptance and recording of the information contained therein
in the Register pursuant to Section 9.07(d), from and after the effective date
specified in such Assignment and Acceptance, the Agent shall make all payments
hereunder and under the Notes in respect of the interest assigned thereby to
the Lender assignee thereunder, and the parties to such Assignment and Accep-
tance shall make all appropriate adjustments in such payments for periods prior
to such effective date directly between themselves.
(b) The Borrower hereby authorizes each Lender, if and to the extent payment
owed to such Lender is not made when due hereunder or under any Note held by
such Lender, to charge from time to time against any or all of the Borrower's
accounts with such Lender any amount so due.
(c) All computations of Facility Fees, LC Fees and interest based on the Base
Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as
the case may be, and all computations of interest based on the Adjusted CD
Rate, the Eurodollar Rate or the Federal Funds Rate and of interest payable on
Competitive Bid Advances shall be made by the Agent, and all computations of
interest pursuant to Section 2.08 shall be made by a Lender, on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or fees are payable. Each determination by the Agent (or, in the case
of Section 2.08, by a Lender) of an interest rate or fee hereunder shall be
conclusive and binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fees, as the
case may be; provided, however, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day, and such reduction of time shall in such case be taken into
account in the computation of interest or Facility Fees, as the case may be.
(e) Unless the Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Lenders hereunder that the Borrower
will not make such payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent that the Borrower shall not have so made such payment in full to the
Agent, each Lender shall repay to the Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from
the date such amount is distributed to such Lender until the date such Lender
repays such amount to the Agent, at the Federal Funds Rate.
(f) Except as otherwise provided in the definition of "Applicable Margin",
any amount payable by the Borrower hereunder that is not paid when due (whether
at stated maturity, by acceleration or otherwise) shall (to the fullest extent
permitted by law) bear interest from the date when due until paid in full at a
rate per annum equal at all times to the Base Rate plus 2%, payable upon
demand.
SECTION 2.15. Taxes. (a) Any and all payments by the Borrower hereunder or
under the Contract Notes shall be made, in accordance with Section 2.14, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent, taxes
imposed on its income and any withholdings in connection therewith, and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Lender or the Agent (as the case may be) is organized or any political subdivi-
sion thereof and, in the case of each Lender, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction of such Lender's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder or under
any Note to any Lender or the Agent, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.15) such
Lender or the Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.
(b) In addition, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Notes or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Notes (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Agent for the full amount
of Taxes or Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section 2.15)
paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses, other than those arising from such
Lender's gross negligence) arising therefrom or with respect thereto, whether
or not such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date such Lender or the
Agent (as the case may be) makes written demand therefor.
(d) Prior to the date of the initial Borrowing in the case of each Bank, and
on the date of the Assignment and Acceptance pursuant to which it became a
Lender in the case of each other Lender, and from time to time thereafter if
requested by the Borrower or the Agent, each Lender organized under the laws of
a jurisdiction outside the United States shall provide the Agent and the
Borrower with the forms prescribed by the Internal Revenue Service of the
United States certifying that such Lender is exempt from United States with-
holding taxes with respect to all payments to be made to such Lender hereunder
and under the Notes. If for any reason during the term of this Agreement, any
Lender becomes unable to submit the forms referred to above or the information
or representations contained therein are no longer accurate in any material
respect, such Lender shall promptly notify the Agent and the Borrower in
writing to that effect. Unless the Borrower and the Agent have received forms
or other documents satisfactory to them indicating that payments hereunder or
under any Note are not subject to United States withholding tax, the Borrower
or the Agent shall withhold taxes from such payments at the applicable statuto-
ry rate in the case of payments to or for any Lender organized under the laws
of a jurisdiction outside the United States.
(e) Any Lender claiming any additional amounts payable pursuant to this
Section 2.15 shall use its best efforts (consistent with its internal policy
and legal and regulatory restrictions) to change the jurisdiction of its
Applicable Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts which may thereafter
accrue and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.
(f) If the Borrower makes any additional payment to any Lender pursuant to
this Section 2.15 in respect of any Taxes or Other Taxes, and such Lender
determines that it has received (i) a refund of such Taxes or Other Taxes or
(ii) a credit against or relief or remission for, or a reduction in the amount
of, any tax or other governmental charge solely as a result of any deduction or
credit for any Taxes or Other Taxes with respect to which it has received
payments under this Section 2.15, such Lender shall, to the extent that it can
do so without prejudice to the retention of such refund, credit, relief,
remission or reduction, pay to the Borrower such amount as such Lender shall
have determined to be attributable to the deduction or withholding of such
Taxes or Other Taxes. If such Lender later determines that it was not entitled
to such refund, credit, relief, remission or reduction to the full extent of
any payment made pursuant to the first sentence of this Section 2.15(f), the
Borrower shall upon demand of such Lender promptly repay the amount of such
overpayment. Any determination made by such Lender pursuant to this Section
2.15(f) shall in the absence of bad faith or manifest error be conclusive, and
nothing in this Section 2.15(f) shall be construed as requiring any Lender to
conduct its business or to arrange or alter in any respect its tax or financial
affairs so that it is entitled to receive such a refund, credit or reduction or
as allowing any person to inspect any records, including tax returns, of any
Lender.
(g) Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower contained in this
Section 2.15 shall survive the payment in full of principal and interest
hereunder and under the Notes; provided, that no Lender shall be entitled to
demand any payment under this Section 2.15 more than one year following the
last day of the fiscal year of such Lender during which the liability in
respect of such Taxes or Other Taxes was incurred; provided further, however,
that the foregoing proviso shall in no way limit the right of any Lender to
demand or receive any payment under this Section 2.15 to the extent that such
payment relates to the retroactive application of any Taxes or Other Taxes if
such demand is made within one year after the implementation of such Taxes or
Other Taxes.
SECTION 2.16. Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Contract Advances made by it (other
than pursuant to Section 2.02(c), 2.08, 2.12, 2.15 or 9.04(b)) in excess of its
ratable share of payments on account of the Contract Advances obtained by all
the Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Contract Advances made by them as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of
them, provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each
Lender shall be rescinded and such Lender shall repay to the purchasing Lender
the purchase price to the extent of such recovery together with an amount equal
to such Lender's ratable share (according to the proportion of (i) the amount
of such Lender's required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.16 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
SECTION 2.17. Extension of Termination Date. On an annual basis but no more
than twice, unless the Termination Date shall have occurred, at least 90 but
not more than 180 days prior to each date that is one year prior to the then-
effective Termination Date, the Borrower may request the Lenders, by written
notice to the Agent, to consent to a one-year extension of the Termination
Date. Each Lender shall, in its sole discretion, determine whether to consent
to such request and shall notify the Agent of its determination within 60 days
of such Lender's receipt of notice of such request. If any Lender shall not
have consented to such request during such 60-day period, the Agent shall
promptly so notify the Borrower and the other Lenders, whereupon each other
Lender may, during the 30-day period following receipt of such notice from the
Agent, revoke any consent to such extension previously given by such Lender
unless within such 30-day period the Borrower shall have replaced such non-
consenting Lender pursuant to Section 9.07(i). If such request shall have been
consented to by all the Lenders (as determined after giving effect to the
replacement of any Lender pursuant to Section 9.07(i)), the Agent shall notify
the Borrower in writing of such consent, and such extension shall become
effective upon the delivery by the Borrower to the Agent and each Lender, on or
prior to the then-effective Termination Date, of (i) a certificate of a duly
authorized officer of the Borrower, dated such date, as to the accuracy, both
before and after giving effect to such proposed extension, of the representa-
tions and warranties set forth in Section 5.01 and as to the absence, both
before and after giving effect to such proposed extension, of any Event of
Default or event that with the giving of notice or the passage of time or both
would constitute an Event of Default, (ii) certified copies of all corporate
and governmental approvals, if any, required to be obtained by the Borrower in
connection with such extension and (iii) an opinion or opinions of counsel to
the Borrower as to the matters set forth in paragraph (3) of Exhibit E and
paragraphs (1) through (7) of Exhibit F after giving effect to such extension
and such other matters as any Lender, through the Agent, may reasonably
request.
ARTICLE III
LETTERS OF CREDIT
SECTION 3.01. LC Banks. As of the date of this Agreement, the Borrower has
designated Bank of Montreal to act as an LC Bank hereunder, and the Agent has
approved such designation. Bank of Montreal, pursuant to an LC Bank Agreement,
has agreed to act as an LC Bank hereunder and, subject to the terms and
conditions hereof and of such LC Bank Agreement, to issue Letters of Credit in
an aggregate face amount not to exceed $50,000,000. Subject to the terms and
conditions hereof, the Borrower may from time to time arrange for one or more
other Lenders to act as an LC Bank hereunder. The Borrower shall notify the
Agent of any such designation at least five Business Days prior to the first
date upon which the Borrower proposes that such LC Bank issue its first Letter
of Credit, so as to provide adequate time for such proposed LC Bank to be
approved by the Agent hereunder; provided, that nothing contained herein shall
be deemed to require any Lender to agree to act as an LC Bank, if it does not
so desire. Within two Business Days following the receipt of any such designa-
tion of a proposed LC Bank, the Agent shall notify the Borrower as to whether
such designee is reasonably acceptable to the Agent.
SECTION 3.02. Letters of Credit. (a) Each Letter of Credit shall be issued
(other than the Existing Letters of Credit) and the stated maturity of each
Letter of Credit (including the Existing Letters of Credit) shall be extended
or terms thereof modified or amended on or prior to the Termination Date on not
less than five Business Days' prior written notice thereof to the Agent (which
shall promptly distribute copies thereof to the Lenders) and the relevant LC
Bank. The notice of extension of an Existing Letter of Credit dated January
24, 1995 delivered by the Borrower to the Agent and the LC Bank shall be deemed
a "Request for Issuance" under this Agreement, and upon such extension, if any,
such letter of credit shall constitute a Letter of Credit for all purposes of
this Agreement. Each such notice (a "Request for Issuance") shall specify
(i) the date (which shall be a Business Day) of issuance of such Letter of
Credit (or the date of effectiveness of such extension, modification or
amendment) and the stated expiry date thereof (which shall be no later than the
earlier to occur of the second anniversary of the date of issuance thereof and
the Termination Date), (ii) the proposed stated amount of such Letter of Credit
(which shall not be less than $5,000), expressed in U.S. Dollars, and (iii)
such other information as shall demonstrate compliance by such Letter of Credit
with the requirements specified therefor in this Agreement, (including, without
limitation, Sections 2.05(b) and 2.11(b)). Each Request for Issuance shall be
irrevocable unless modified or rescinded by the Borrower not less than one
Business Day prior to the proposed date of issuance (or effectiveness) speci-
fied therein. Notwithstanding any provision of this Agreement, any LC Bank
Agreement or any Letter of Credit to the contrary, (i) no Letter of Credit may
be extended or renewed without prior satisfaction of the applicable conditions
precedent to an Extension of Credit (including, without limitation, the
requirements regarding the delivery of a Request for Issuance to the Agent and
the relevant LC Bank) set forth in this Section 3.02(a), (ii) no "evergreen"
letter of credit may be issued hereunder and (iii) the maximum amount available
to be drawn under each Letter of Credit (other than an Existing Letter of
Credit) that is denominated in a currency other than U.S. Dollars shall be
expressed in U.S. Dollars, which amount shall be used in calculating LC
Outstandings hereunder. Not later than 1:00 P.M. (New York City time) on the
proposed date of issuance (or effectiveness) specified in such Request for
Issuance, and upon fulfillment of the applicable conditions precedent and the
other requirements set forth herein, such LC Bank shall issue (or extend, amend
or modify) such Letter of Credit and provide notice and a copy thereof to the
Agent, which shall promptly furnish copies thereof to the Lenders. Unless the
LC Bank shall have received notice in writing from the Agent or the Borrower to
the contrary prior to the date of the issuance, extension, amendment or
modification of a Letter of Credit, the LC Bank may assume that the conditions
precedent to an Extension of Credit set forth in Article IV of this Agreement
have been satisfied and the LC Bank may, in reliance on such assumption, issue,
extend, amend or modify on such date such Letter of Credit.
(b) Each Lender severally agrees to participate in each Existing Letter of
Credit and the execution of this Agreement shall be deemed to be a confirmation
by the LC Bank and each Lender of such participation. In addition, each Lender
severally agrees with each LC Bank to participate in the Extension of Credit
resulting from the issuance (or extension, modification or amendment) of
Letters of Credit in accordance with the terms hereof, in the manner and the
amount provided in Section 3.04(b), and the issuance of such Letter of Credit
shall be deemed to be a confirmation by such LC Bank and each Lender of such
participation in such amount.
SECTION 3.03. Letter of Credit Fees. (a) The Borrower shall pay to the Agent
for the account of each Lender, ratably in accordance with their respective
Commitments, the LC Fee, payable quarterly in arrears on the last day of each
March, June, September and December to and including, and on, the Termination
Date.
(b) The Borrower shall pay directly to each LC Bank the fees, if any,
specified to be paid pursuant to the terms of the LC Bank Agreement to which
such LC Bank is a party at the times and in the manner specified in such LC
Bank Agreement.
SECTION 3.04. Reimbursement to LC Banks. (a) The Borrower hereby agrees to
pay to the Agent for the account of each LC Bank, on demand made by such LC
Bank to the Borrower and the Agent, on the date on which such LC Bank shall pay
any amount under the Letter of Credit issued by such LC Bank, a sum equal to
the amount so paid plus interest on such amount from the date so paid by such
LC Bank until repayment to such LC Bank in full at a fluctuating interest rate
per annum equal at all times to the interest rate hereunder for Base Rate
Advances; provided, that, with respect to any Letter of Credit issued hereunder
and denominated in a currency other than U.S. Dollars, the amount the Borrower
shall pay to the Agent for the account of each LC Bank in respect of any
payment made thereunder by such LC Bank, shall be an amount in U.S. Dollars
equal to the U.S. Dollar Equivalent of the amount of any such payment.
(b) If any LC Bank shall not have been reimbursed in full for any payment
made by such LC Bank under the Letter of Credit issued by such LC Bank on the
date of such payment, such LC Bank shall give the Agent and each Lender notice
thereof (an "LC Payment Notice") no later than 12:00 noon (New York City time)
on the Business Day immediately succeeding the date of such payment by such LC
Bank; provided, however, that failure to give such notice shall not impair the
rights of the relevant LC Bank hereunder. The LC Payment Notice shall specify
such unreimbursed amount in U.S. Dollars. Each Lender severally agrees to
purchase a participation in the reimbursement obligation of the Borrower to
such LC Bank under subsection (a) above by paying to the Agent for the account
of such LC Bank an amount equal to such Lender's pro rata share (measured in
accordance with the Lenders' respective Commitments) of such unreimbursed
amount paid by such LC Bank, plus interest on such amount at a rate per annum
equal to the Federal Funds Rate from the date of such payment by such LC Bank
to the date of payment to such LC Bank by such Lender; provided, that, with
respect to any Letter of Credit issued hereunder and denominated in a currency
other than U.S. Dollars, the amount paid by each Lender to purchase a partici-
pation in the reimbursement obligation of the Borrower to such LC Bank under
subsection (a) above shall be an amount in U.S. Dollars equal to the U.S.
Dollar Equivalent of the purchase amount for such participation. Each such
payment by a Lender shall be made not later than 3:00 P.M. (New York City time)
on the later to occur of (i) the Business Day immediately following the date of
such payment by such LC Bank and (ii) the Business Day on which such Lender
shall have received an LC Payment Notice from such LC Bank. Each Lender's
obligation to make each such payment to the Agent for the account of such LC
Bank shall be several and shall not be affected by the occurrence or continu-
ance of an Event of Default or any event that with the giving of notice or
passage of time or both would constitute an Event of Default, or the failure of
any other Lender to make any payment under this Section 3.04. Each Lender
further agrees that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.
(c) The failure of any Lender to make any payment to the Agent for the
account of an LC Bank in accordance with subsection (b) above shall not relieve
any other Lender of its obligation to make payment, but no Lender shall be
responsible for the failure of any other Lender. If any Lender shall fail to
make any payment to the Agent for the account of an LC Bank in accordance with
subsection (b) above within five Business Days after the LC Payment Notice
relating thereto, then, for so long as such failure shall continue, such LC
Bank shall be deemed, for purposes of Section 2.16 and Article VII hereof to be
a Lender hereunder owed a Contract Advance in an amount equal to the outstand-
ing principal amount due and payable by such Lender to the Agent for the
account of such LC Bank pursuant to subsection (b) above.
(d) Each participation purchased by a Lender under subsection (b) (including,
without limitation, any such participation purchased by any Lender (in such
capacity) that is also an LC Bank) above shall constitute a Base Rate Advance
deemed made by such Lender to the Borrower on the date of such payment by the
relevant LC Bank under the Letter of Credit issued by such LC Bank (irrespec-
tive of the Borrower's noncompliance, if any, with the conditions precedent for
Contract Advances hereunder); and all such payments by the Lenders in respect
of any one such payment by such LC Bank shall constitute a single Contract
Borrowing hereunder.
(e) Notwithstanding anything to the contrary in this Agreement, any failure
of the Borrower to make any payment upon demand in accordance with subsection
(a) above shall not constitute an Event of Default hereunder, provided,
however, that any failure of the Borrower to make any payment of principal of
or interest due under the applicable Notes on any Base Rate Advance deemed to
have been made hereunder pursuant to subsection (d) above shall constitute an
Event of Default (after any applicable grace period set forth in Section
7.01(a) or (b)).
SECTION 3.05. Obligations Absolute. The payment obligations of each Lender
under Section 3.04(b) and of the Borrower under this Agreement in respect of
any payment under any Letter of Credit and any Contract Advance made under
Section 3.04(d) shall be unconditional and irrevocable, and shall to the
fullest extent permitted by law be paid strictly in accordance with the terms
of this Agreement under all circumstances, including, without limitation, the
following circumstances:
(i) any lack of validity or enforceability of this Agreement, such Letter of
Credit or any other agreement or instrument relating thereto;
(ii) any amendment or waiver of, or any consent to departure from, this
Agreement, such Letter of Credit or any other agreement or instrument
relating thereto in accordance with the terms thereof;
(iii) the existence of any claim, set-off, defense or other right that the
Borrower may have at any time against any beneficiary, or any transfer-
ee, of such Letter of Credit (or any Persons for whom any such benefi-
ciary or any such transferee may be acting), any LC Bank, or any other
Person, whether in connection with this Agreement, the transactions
contemplated herein or by such Letter of Credit, or any unrelated
transaction;
(iv) payment in good faith by any LC Bank against presentation of any document
presented under such Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect; or
(v) payment in good faith by any LC Bank under the Letter of Credit issued by
such LC Bank against presentation of a draft or certificate which does
not comply with the terms of such Letter of Credit.
SECTION 3.06. Liability of LC Banks and the Lenders. The Borrower assumes all
risks of the acts and omissions of any beneficiary or transferee of any Letter
of Credit. Neither the Lenders, other than the LC Bank that has issued the
applicable Letter of Credit, nor any of their respective officers, directors,
employees, agents or Affiliates shall be liable or responsible for (i) the use
that may be made of such Letter of Credit or any acts or omissions of any
beneficiary or transferee thereof in connection therewith; (ii) the validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (iii) payment by such LC Bank against presentation of
documents that do not comply with the terms of such Letter of Credit, including
failure of any documents to bear any reference or adequate reference to such
Letter of Credit; or (iv) any other circumstances whatsoever in making or
failing to make payment under such Letter of Credit. No Lender, other than the
LC Bank that has issued the applicable Letter of Credit, shall be obligated to
indemnify the Borrower for damages caused by any LC Bank's wilful misconduct or
gross negligence, and the obligation of the Borrower to reimburse the Lenders
hereunder shall be absolute and unconditional, notwithstanding the gross
negligence or wilful misconduct of any LC Bank.
ARTICLE IV
CONDITIONS OF EXTENSIONS OF CREDIT
SECTION 4.01. Conditions Precedent to Initial Extensions of Credit. The
obligation of each Lender to make its initial Extension of Credit is subject to
the satisfaction, prior to or concurrently with the making of such initial
Extension of Credit, of each of the following conditions precedent:
(a) Documents and Other Agreements. The Agent shall have received on or
before the day of the initial Extension of Credit the following, each dated the
same date, in form and substance satisfactory to the Agent and (except for the
Notes) with one copy for each Lender:
(i) The Contract Notes payable to the order of each of the Lenders, respec-
tively;
(ii) A true and correct copy of the Support Agreement, together with (1) a
schedule of all "Obligations" thereunder and (2) a letter from the Parent
to the Agent and the Lenders confirming that the obligations of the
Borrower hereunder and under the Notes constitute "Obligations" under the
Support Agreement and that the Lenders constitute "Lenders" under the
Support Agreement;
(iii) Certified copies of the resolutions of the Board of Directors of the
Borrower approving this Agreement, the Notes and the Support Agreement
and of all documents evidencing other necessary corporate action with
respect to this Agreement, the Notes and the Support Agreement;
(iv) A certificate of the Secretary or an Assistant Secretary of the Borrower
certifying (A) the names and true signatures of the officers of the
Borrower authorized to sign this Agreement, the Notes and the Support
Agreement and the other documents to be delivered hereunder; (B) that
attached thereto are true and correct copies of the Articles of Incorpo-
ration and the By-laws of the Borrower, in each case as in effect on such
date; (C) that attached thereto are true and correct copies of all
governmental and regulatory authorizations and approvals required for the
due execution, delivery and performance by the Borrower of this Agree-
ment, the Notes and the Support Agreement;
(v) Certified copies of the minutes of the Board of Directors of the Parent
approving the Support Agreement;
(vi) A certificate of the Secretary or an Assistant Secretary of the Parent
certifying (A) the names and true signatures of the officers of the
Parent authorized to sign the Support Agreement and the other documents
to be delivered by the Parent hereunder; (B) that attached thereto are
true and correct copies of the Articles of Incorporation and By-laws of
the Parent, in each case as in effect on such date; and (C) that attached
thereto are true and correct copies of all governmental and regulatory
authorizations and approvals required for the due execution, delivery and
performance by the Parent of the Support Agreement;
(vii) A certificate of the chief financial officer or treasurer of the
Borrower, or such other officer of the Borrower acceptable to the
Agent, stating that (A) the representations and warranties contained in
Section 5.01 of this Agreement are correct in all material respects on
and as of the date of such certificate as though made on and as of such
date and (B) no Event of Default, and no event that with the giving of
notice or the passage of time, or both, would constitute an Event of
Default, has occurred and is continuing;
(viii) A favorable opinion of Gardner, Carton & Douglas, special counsel for
the Borrower and the Parent, substantially in the form of Exhibit E
hereto and as to such other matters as any Lender through the Agent may
reasonably request;
(ix) A favorable opinion of James K. Murphy, Esq., Associate Corporate Attor-
ney, substantially in the form of Exhibit F hereto and to such other
matters as any Lender through the Agent may reasonably request;
(x) A favorable opinion of King & Spalding, counsel for the Agent, substan-
tially in the form of Exhibit G hereto;
(xi) The balance sheets of the Parent and its Subsidiaries as at December 31,
1994, and the related statements of income and retained earnings of the
Parent and its Subsidiaries for the fiscal year then ended, certified by
Arthur Andersen & Co., and the unaudited balance sheets of the Parent and
its Subsidiaries as at September 30, 1995 and the related statements of
income and retained earnings of the Parent and its Subsidiaries for the
nine-month period then ended, accompanied by a certificate of the chief
financial officer or treasurer of the Borrower stating that (A) such
financial statements fairly present (subject, in the case of such finan-
cial statements as at September 30, 1995, to year-end adjustments) the
financial condition of the Parent and its Subsidiaries for the periods
ended on such dates, all in accordance with GAAP, and (B) there has been
no material adverse change in the financial condition, operations,
business or prospects of the Borrower or the Parent and its Subsidiaries,
taken as a whole, as reflected in such financial statements for the
fiscal year ended December 31, 1994.
(b) Termination of Other Facilities. The Agent shall have received evidence
satisfactory to it that all obligations of the Borrower under that certain
Credit Agreement, dated as of March 11, 1992, as amended, among the Borrower,
the banks named therein and Citibank, as agent, shall have been paid in full,
and that the commitments of the "Lenders" thereunder have been terminated.
SECTION 4.02. Condition Precedent to Each Extension of Credit. The obligation
of each Lender or LC Bank, as the case may be, to make an Extension of Credit
(including the initial Extension of Credit, but excluding Conversions) shall be
subject to the further condition precedent that on the date of such Extension
of Credit the following statements shall be true (and each of the giving of the
applicable notice or request with respect thereto and the making of such
Extension of Credit shall constitute a representation and warranty by the
Borrower that on the date of such Extension of Credit such statements are
true):
(i) The representations and warranties contained in Section 5.01 are correct
in all material respects on and as of the date of such Extension of
Credit, before and after giving effect to such Extension of Credit and to
the application of the proceeds therefrom, as though made on and as of
such date, except to the extent that any such representation or warranty
relates solely to an earlier date and except that the references set
forth in Section 5.01(f) to the December 31, 1994 financial statements of
the Parent and its Subsidiaries shall be deemed a reference to the
financial statements of the Parent and its Subsidiaries most recently
submitted to the Lenders; and
(ii) No event has occurred and is continuing, or would result from such
Extension of Credit or from the application of the proceeds therefrom,
that constitutes an Event of Default or would constitute an Event of
Default but for the requirement that notice be given or time elapse or
both.
SECTION 4.03. Condition Precedent to Certain Conversions. The obligation of
each Lender to Convert any Contract Borrowing that, upon such Conversion, is to
comprise Adjusted CD Rate Advances or Eurodollar Rate Advances is subject to
the condition precedent that on the date of such Conversion no Event of Default
shall have occurred and be continuing, and the giving by the Borrower of the
applicable notice of Conversion described in Section 2.10(a) shall constitute a
representation and warranty by the Borrower that no Event of Default has
occurred and is continuing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:
(a) Each of the Borrower and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the juris-
diction of its incorporation and is duly qualified to do business as a foreign
corporation in each jurisdiction in which the nature of the business conducted
or the property owned, operated or leased by it requires such qualification,
except where failure to so qualify would not materially adversely affect the
financial condition, operations, business, properties, or prospects of the
Borrower or the Borrower and its Subsidiaries, taken as a whole.
(b) The execution, delivery and performance by the Borrower of this Agreement
and the Notes are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene (i) the
Borrower's Articles of Incorporation or By-laws, (ii) any law applicable to the
Borrower or (iii) any contractual or legal restriction binding on or affecting
the Borrower or its properties.
(c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body (each, a "Governmen-
tal Approval") is required as of the date of this Agreement for the due
execution, delivery and performance by the Borrower of this Agreement or the
Notes or by the Parent of the Support Agreement; and no Governmental Approval
will be required after the date of this Agreement for the due execution and
delivery by the Borrower of the Competitive Bid Notes, the performance by the
Borrower of this Agreement or the Notes or the performance of the Support
Agreement by the Parent except for such Governmental Approvals (notice of each
of which shall be promptly given to the Lenders) that shall be in full force
and effect as and when required and not subject to appeal.
(d) This Agreement is, and the Notes when delivered hereunder will be, legal,
valid and binding obligations of the Borrower enforceable against the Borrower
in accordance with their respective terms, except as the enforceability thereof
may be limited by equitable principles or bankruptcy, insolvency, reorganiza-
tion, moratorium or similar laws affecting the enforcement of creditors' rights
generally.
(e) The Support Agreement is in full force and effect and has not been
amended, modified, waived or terminated, except in accordance with the terms
hereof and thereof, and the Parent is not in default of any of its obligations
thereunder.
(f) The balance sheets of the Parent and its Subsidiaries as at December 31,
1994, and the related statements of income and retained earnings of the Parent
and its Subsidiaries for the fiscal year then ended, certified by Arthur
Andersen & Co., and the unaudited balance sheets of the Parent and its Subsid-
iaries as at September 30, 1995 and the related statements of income and
retained earnings of the Parent and its Subsidiaries for the nine-month period
then-ended, copies of each of which have been furnished to each Bank, fairly
present (subject, in the case of such financial statements as at September 30,
1995, to year-end adjustments) the financial condition of the Parent and its
Subsidiaries as at such dates and the results of the operations of the Parent
and its Subsidiaries for the periods ended on such dates, all in accordance
with GAAP (except as otherwise noted therein), and since December 31, 1994,
there has been no material adverse change in the financial condition, opera-
tions, business or prospects of the Borrower or the Parent and its Subsidiar-
ies, taken as a whole, as reflected in such financial statements.
(g) Except as disclosed in the Parent's Annual Report to Stockholders for the
year ended December 31, 1994, and in the Parent's Quarterly Reports on Form 10-
Q filed with the Securities and Exchange Commission for the fiscal quarters
ended March 31, 1995, June 30, 1995 and September 30, 1995, there is no pending
or threatened action or proceeding affecting the Borrower, the Parent or any of
its Subsidiaries before any court, governmental agency or arbitrator that could
reasonably be expected to have a material adverse effect on the financial
condition, operations, business or prospects of the Borrower or the Parent and
its Subsidiaries, taken as a whole, or that purports to affect the legality,
validity, binding effect or enforceability of this Agreement, any Note or the
Support Agreement. There has been no change in any such matter disclosed in
such Annual Report the effect of which could reasonably be expected to cause
any such material adverse effect.
(h) Without the prior consent of the Agent, the Lenders and each LC Bank, no
proceeds of any Advance have been or will be used directly or indirectly in
connection with any transaction subject to the requirements of Section 14 of
the Exchange Act with respect to which proxies, consents or authorizations are
being sought by any person (as defined in the Exchange Act) other than the
majority of the board of directors of the issuer in respect of which such
proxies, consents or authorizations, as the case may be, are being sought.
(i) The Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regula-
tion U issued by the Board of Governors of the Federal Reserve System). Not
more than 25% of the value of the assets of the Parent or of the Borrower and
its Subsidiaries is, on the date hereof, represented by margin stock.
(j) The Borrower (i) is not a "public utility holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended, and (ii)
is not an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or an "investment advisor" within the meaning of the Investment Company Act of
1940, as amended.
(k) No ERISA Termination Event has occurred, or is reasonably expect to
occur, with respect to any ERISA Plan that may materially and adversely affect
the financial condition, operations, business or prospects of the Borrower or
of the Parent and its Subsidiaries, taken as a whole.
(l) The Borrower is in compliance in all material respects with all applica-
ble laws, rules, regulations and orders, including, without limitation, all
Environmental Laws.
ARTICLE VI
COVENANTS OF THE BORROWER
SECTION 6.01. Affirmative Covenants. Unless the Majority Lenders shall
otherwise consent in writing, so long as any Note or any amount payable by the
Borrower hereunder shall remain unpaid, any Letter of Credit shall remain
outstanding or any Lender shall have any Commitment hereunder, the Borrower
will, and, in the case of Section 6.01(b), will cause its Subsidiaries to:
(a) Reporting Requirements. Furnish to the Lenders:
(i) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Borrower,
consolidated and consolidating (showing each direct Subsidiary of the
Parent) balance sheets of the Parent and its Subsidiaries as of the end
of such quarter, consolidated and consolidating (showing each direct
Subsidiary of the Parent) statements of income and retained earnings of
the Parent and its Subsidiaries for the period commencing at the end of
the previous fiscal year and ending with the end of such quarter, consol-
idated balance sheets of the Borrower as of the end of such quarter and
consolidated statements of income and retained earnings of the Borrower
for the period commencing at the end of the previous fiscal year and
ending with the end of such quarter, each certified by the chief finan-
cial officer or treasurer of the Borrower, or such other officer of the
Borrower acceptable to the Agent;
(ii) as soon as available and in any event within 120 days after the end of
each fiscal year of the Borrower, a copy of the annual report for such year for
the Parent and its Subsidiaries, containing consolidated financial statements
for such year, certified by Arthur Andersen & Co. or another nationally
recognized firm of independent public accountants, and a copy of the unaudited
consolidating (showing each direct Subsidiary of the Parent) financial state-
ments of the Parent and its Subsidiaries and the consolidated financial
statements of the Borrower for such year;
(iii) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Borrower and within
120 days after the end of the fiscal year of the Borrower, a certificate of the
chief financial officer or treasurer of the Borrower, or such other officer of
the Borrower acceptable to the Agent, (A) demonstrating, in reasonable detail
and with supporting calculations, compliance with the ratio set forth in
Section 7.01(k) hereof and (B) stating that no Event of Default and no event
that, with the giving of notice or lapse of time or both, will constitute an
Event of Default has occurred and is continuing, or if an Event of Default or
such event has occurred and is continuing, a statement setting forth details of
such Event of Default or event and the action that the Borrower has taken and
proposes to take with respect thereto;
(iv) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Parent and within
120 days after the end of the fiscal year of the Parent, a certificate of the
chief financial officer or treasurer of the Parent, or such other officer of
the Parent acceptable to the Agent, (A) demonstrating, in reasonable detail and
with supporting calculations, compliance by the Parent with the financial
covenants set forth in Sections 4 and 6 of the Support Agreement and (B)
stating that the Parent is not in default in the performance or observance of
any term, covenant or agreement contained in the Support Agreement;
(v) as soon as possible and in any event within five days after the occur-
rence of each Event of Default and each event that, with the giving of notice
or lapse of time or both, would constitute an Event of Default, continuing on
the date of such statement, a statement of the chief financial officer or
treasurer of the Borrower, or such other officer of the Borrower acceptable to
the Agent, setting forth details of such Event of Default or event and the
actions that the Borrower has taken and proposes to take with respect thereto;
(vi) as soon as possible and in any event within five days after the commence-
ment of litigation against the Borrower or any of its Subsidiaries, or the
receipt of a notice of default by the Borrower or any of its Subsidiaries, in
either case, that could reasonably be expected to have a material adverse
effect on the Borrower and its Subsidiaries taken as a whole, notice of such
litigation or notice of default describing in reasonable detail the facts and
circumstances concerning such litigation or default and the Borrower's or such
Subsidiary's proposed actions in connection therewith;
(vii) promptly after the sending or filing thereof, copies of annual,
quarterly or current reports on Forms 10-K, 10-Q or 8-K (or any successor forms
thereto) and registration statements (other than any registration statement on
Form S-8 and any registration statement in connection with a dividend reinvest-
ment plan) that the Parent or the Borrower or any other Subsidiary of the
Parent files with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, or the Exchange Act, or with any national
securities exchange; and
(viii) such other information respecting the condition or operations, finan-
cial or otherwise, of the Parent, the Utility, the Borrower or any of the
Parent's other Subsidiaries as any Lender through the Agent may from time to
time reasonably request.
(b) Keep Books; Corporate Existence; Maintenance of Properties; Compliance
with Laws; Insurance; Rights of Inspection; Payment of Material Obligations.
(i) keep proper books of record and account, all in accordance with GAAP;
(ii) preserve and keep in full force and effect its existence (except in each
instance to the extent otherwise permitted pursuant to Section 6.02(c)) and
preserve and keep in full force and effect its licenses, rights and franchises
to the extent necessary to carry on its business;
(iii) maintain and keep, or cause to be maintained and kept, its properties
in good repair, working order and condition, and from time to time make or
cause to be made all needful and proper repairs, renewals, replacements and
improvements, in each case to the extent such properties are not obsolete and
are necessary to carry on its business;
(iv) comply in all material respects with all applicable laws, rules, regula-
tions and orders, such compliance to include, without limitation, paying before
the same become delinquent all taxes, assessments and governmental charges
imposed upon it or its property, except to the extent being contested in good
faith by appropriate proceedings, and compliance with ERISA and Environmental
Laws, except in each case to the extent that any noncompliance could not
reasonably be expected to have a material adverse effect on the financial
condition, operations, business or prospects of the Borrower or the Borrower
and its Subsidiaries, taken as a whole;
(v) maintain insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which it operates;
(vi) subject to the requirements of laws or regulations applicable to the
Borrower and in effect at the time, at any time and from time to time upon
reasonable notice and during normal business hours, the Borrower shall permit
(A) the Agent, any Lender, and their respective agents and representatives to
examine and make copies of and abstracts from the records and books of account
of, and the properties of, the Borrower and (B) the Agent, each of the Lenders,
and their respective agents and representatives to discuss the affairs,
finances and accounts of the Borrower with the Borrower and its officers,
directors and accountants; and
which the failure to pay when due could have a material adverse effect on the
financial condition, results of operations, business or prospects of the
Borrower or its ability to perform under this Agreement or any Note.
(c) Use of Proceeds. Use the proceeds of each Borrowing hereunder exclusive-
ly for general corporate purposes, acquisitions and working capital require-
ments in connection with energy-related businesses.
SECTION 6.02. Negative Covenants. Unless the Majority Lenders shall otherwise
consent in writing, so long as any Note or any amount payable by the Borrower
hereunder shall remain unpaid or any Lender shall have any Commitment hereun-
der, the Borrower will not:
(a) Disposition of Assets. Sell, lease, transfer, convey or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to
any Person, or permit any of its Subsidiaries to do so, except that, (i) any
such Subsidiary may transfer assets to any other such Subsidiary or to the
Borrower, (ii) any such Subsidiary may sell, lease, transfer, convey or
otherwise dispose of all or substantially all of its assets to a Person other
than the Borrower and its Subsidiaries (each a "Disposition") if the aggregate
book value of all such assets sold, leased, transferred, conveyed or disposed
of by such Subsidiaries in Dispositions, after giving effect to such Disposi-
tion, during any fiscal year do not exceed $10,000,000, (iii) any such Subsid-
iary may transfer its assets to any other Person in connection with a sale and
leaseback financing entered into by such Subsidiary, (iv) the Borrower and any
of its Subsidiaries may sell its assets in a cash transaction, provided, in the
case of any transaction described in clause (iii) or (iv), the consideration
(as hereinafter defined) received for such assets is at least equal to the fair
value (as determined in good faith by the board of directors of the Borrower)
thereof, and (A) such consideration is delivered immediately to the Agent to be
applied in accordance with Section 2.11(c) to the prepayment of the principal
amount of Advances then outstanding and/or the cash collateralization of LC
Outstandings, together with accrued interest to the date of such prepayment (if
any) and any other amounts payable hereunder, with the remainder, if any, to be
returned to the Borrower, (B) such consideration is reinvested, or held in cash
or cash equivalents for reinvestment, in other energy-related projects owned or
to be owned by the Borrower or any of its Subsidiaries, or (C) such consider-
ation is applied immediately to the payment or prepayment of debt incurred by
the Borrower or such Subsidiary in connection with the project comprising such
assets, provided further in each case, that immediately after giving effect to
any such transaction, no Event of Default or event that with the giving of
notice or the passage of time, or both, would constitute an Event of Default
shall have occurred and be continuing. As used in this Section 6.02(a), the
term "consideration" shall mean cash consideration or the fair value of non-
cash consideration (as determined in good faith by the board of directors of
the Borrower).
(b) Liens, Etc. Create or suffer to exist, or permit any of its direct or
indirect Subsidiaries to create or suffer to exist, any lien, security interest
or other charge or encumbrance, or any other type of preferential arrangement,
upon or with respect to any of its properties, whether now owned or hereafter
acquired, or assign, or permit any of its direct or indirect Subsidiaries to
assign, any right to receive income, in each case to secure or provide for the
payment of any Debt, other than (i) liens or security interests existing on
such property at the time of its acquisition (other than any such lien or
security interest created in the contemplation of such acquisition), (ii) liens
created by purchase money mortgages or other security interests upon or in any
property acquired or held by the Borrower or any Subsidiary in the ordinary
course of business to secure the purchase price of such property or to secure
indebtedness incurred solely for the purpose of financing the acquisition of
such property, (iii) liens or security interests upon or with respect to any of
the Borrower's interests in its Subsidiaries (other than direct Subsidiaries of
the Borrower) or any of the Borrower's Subsidiaries' assets incurred solely to
secure repayment of project financing for, or utility obligations of, such
Subsidiary, (iv) liens imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's liens and other similar liens arising in
the ordinary course of business, securing obligations that are not overdue for
a period of more than 30 days after the filing of any notice with respect to,
or the Borrower's otherwise having notice of, such lien or that are being
contested in good faith, (v) liens or security interests on assets of a
Subsidiary securing Debt of such Subsidiary, provided that the aggregate
principal amount of Debt of Subsidiaries secured by liens or security interests
incurred pursuant to this subsection (v) shall not exceed $10,000,000 at any
time, (vi) liens on any assets of any Subsidiary of the Borrower in favor of
the Borrower or any Subsidiary of the Borrower, and (vii) extensions and
renewals of any lien or security interest described in clauses (i) through (vi)
above, provided that (A) any such extension or renewal shall be limited to the
property theretofore subject to such lien or security interest and (B) the
principal amount of the Debt secured by such lien or security interest shall
not be increased.
(c) Mergers and Consolidations. Merge or consolidate with or into any
Person, or permit any of its Subsidiaries to do so, except (i) any Subsidiary
of the Borrower may merge or consolidate with or into any other Subsidiary of
the Borrower, (ii) any Subsidiary of the Borrower may merge with the Borrower
and (iii) the Borrower may merge with the Parent, provided in each case that,
immediately after giving effect to such proposed transaction, (A) no Event of
Default or event that, with the giving of notice or lapse of time, or both,
would constitute an Event of Default would exist and (B) in the case of any
such transaction to which the Borrower is a party, the Borrower is the surviv-
ing corporation or the survivor shall have expressly assumed the obligations of
the Borrower hereunder and under the Notes pursuant to an assumption agreement
in form and substance satisfactory to the Majority Lenders.
(d) Modification of Support Agreement. Amend, modify, terminate or waive any
provision of the Support Agreement, or consent to any of the foregoing, except
in each case in accordance with the terms of the Support Agreement.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. If any of the following events (each, an
"Event of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Advance when the same
becomes due and payable, or interest thereon or any other amount payable under
this Agreement within two Business Days after the same becomes due and payable;
or
(b) Any representation or warranty made by the Borrower herein or by the
Borrower (or any of its officers) in connection with this Agreement or by the
Parent (or any of its officers) in connection with this Agreement or the
Support Agreement shall prove to have been incorrect in any material respect
when made; or
(c) (i) The Borrower shall fail to perform or observe any term, covenant or
agreement contained in Section 6.02, (ii) the Parent shall fail to perform or
observe any term, covenant or agreement contained in the Support Agreement or
(iii) the Borrower shall fail to perform or observe any other term, covenant or
agreement contained in this Agreement on its part to be performed or observed
if the failure to perform or observe such other term, covenant or agreement
shall remain unremedied for 20 days after written notice thereof shall have
been given to the Borrower by the Agent or any Lender; or
(d) (i) The Borrower, the Parent, the Utility or LG&E Gas Systems, Inc.
("Gas Systems") shall fail to pay any principal of or premium or interest on
any Debt which is outstanding in a principal amount in excess of $10,000,000 in
the aggregate (but excluding Debt evidenced by the Notes) of the Borrower, the
Parent, the Utility or Gas Systems, as the case may be, when the same becomes
due and payable (whether by scheduled maturity, required prepayment, accelera-
tion, demand or otherwise), and such failure shall continue after the applica-
ble grace period, if any, specified in the agreement or instrument relating to
such Debt; or (ii) any other event shall occur or condition shall exist under
any agreement or instrument relating to any such Debt and shall continue after
the applicable grace period, if any, specified in such agreement or instrument,
if the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or (iii) any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof;
provided, however, that clauses (ii) and (iii) above shall not apply to any
Debt described in clause (vi) of the definition of "Debt" or any Debt described
in clause (viii) of the definition of "Debt" in respect of Debt of others of
the kind referred to in clause (vi) of the definition of "Debt"; or
(e) The Borrower, the Parent, the Utility or Gas Systems shall generally not
pay its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or against the Borrower,
the Parent, the Utility or Gas Systems seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 90 days, or any of the actions sought in such proceed-
ing (including, without limitation, the entry of an order for relief against,
or the appointment of a receiver, trustee, custodian or other similar official
for, it or for any substantial part of its property) shall occur; or the
Borrower, the Parent, the Utility or Gas Systems shall take any corporate
action to authorize or to consent to any of the actions set forth above in this
subsection (e); or
(f) Any judgment or order for the payment of money in excess of $10,000,000
shall be rendered against the Borrower, the Parent, the Utility or Gas Systems
and shall remain unpaid and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall be
any period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(g) (i) An ERISA Plan of the Borrower or any ERISA Affiliate of the Borrower
shall fail to maintain the minimum funding standards required by Section 412 of
the Internal Revenue Code of 1986, as amended from time to time (the "Code"),
for any plan year or a waiver of such standard is sought or granted under
Section 412(d) of the Code, or (ii) an ERISA Plan of the Borrower or any ERISA
Affiliate of the Borrower shall have been terminated or the subject of termina-
tion proceedings under ERISA, or (iii) the Borrower or any ERISA Affiliate of
the Borrower shall have incurred a liability to or on account of an ERISA Plan
under Section 4062, 4063 or 4064 of ERISA and there shall result from such
event either a liability or a material risk of incurring a liability to the
PBGC or an ERISA Plan, or (iv) any ERISA Termination Event with respect to an
ERISA Plan of the Borrower or any ERISA Affiliate of the Borrower shall have
occurred, and in the case of any event described in clauses (i) through (iv) of
this subsection (g), (A) such event (if correctable) shall not have been
corrected and (B) the then-present value of such ERISA Plan's vested benefits
exceeds the then-current value of assets accumulated in such ERISA Plan by more
than the amount of $10,000,000 (or in the case of an ERISA Termination Event
involving the withdrawal of a "substantial employer" (as defined in Section
4001(a)(2) of ERISA), the withdrawing employer's proportionate share of such
excess shall exceed such amount); or
(h) Any provision of the Support Agreement shall for any reason (except
pursuant to the terms thereof) cease to be valid and binding on any party
thereto or any party thereto shall so state in writing; or
(i) Any authorization or approval or other action by any governmental
authority or regulatory body required for the execution, delivery or perfor-
mance of (i) this Agreement, the Notes or the Support Agreement by the Borrower
or (ii) the Support Agreement by the Parent shall be terminated, revoked or
rescinded or shall otherwise no longer be in full force and effect; or
(j) Failure by the Borrower to maintain a Consolidated Net Worth of $25,000,-
000 or more for any reason at any time; or
(k) The Capitalization Ratio of the Parent shall exceed 60% for any reason at
any time;
then, and in any such event, the Agent shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrower (i) declare the
obligation of each Lender to make Advances (other than Advances under Section
3.04(b)) and of any LC Bank to issue any Letter of Credit to be terminated,
whereupon the same shall forthwith terminate, (ii) declare the Notes, all
interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby express-
ly waived by the Borrower, and (iii) make demand upon the Borrower to, and
forthwith upon such demand, the Borrower shall, deposit with the Agent in same
day funds in the Cash Escrow Account, an amount equal to the aggregate LC
Outstandings, such cash escrow to be held for the benefit of the LC Banks and
the Lenders for payment of obligations of the Borrower under this Agreement,
the Notes and any LC Bank Agreements and Letters of Credit outstanding;
provided, however, that in the event of an actual or deemed entry of an order
for relief with respect to the Borrower or any of its Subsidiaries under the
Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances and
of each LC Bank to issue any Letter of Credit shall automatically be terminated
and (B) the Notes, all such interest and all such amounts shall automatically
become and be due and payable, without presentment, demand, protest or any
notice of any kind, all of which are hereby expressly waived by the Borrower.
Notwithstanding anything to the contrary contained herein, no notice given or
declaration made by the Agent pursuant to this Section 7.01 shall affect (i)
the obligations of any LC Bank to make any payment under any Letter of Credit
issued by such LC Bank in accordance with the terms of such Letter of Credit or
(ii) the participatory interest of each Lender in each such payment thereunder.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. Each Lender and LC Bank hereby
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the Agent
by the terms hereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement or collection of the Notes), the
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protect-
ed in so acting or refraining from acting) upon the instructions of the
Majority Lenders, and such instructions shall be binding upon all Lenders and
all holders of Notes; provided, however, that the Agent shall not be required
to take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or applicable law. The Agent agrees to give to each
Lender prompt notice of each notice given to it by the Borrower pursuant to the
terms of this Agreement.
SECTION 8.02. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to any Lender, any LC
Bank or the Borrower for any action taken or omitted to be taken by it or them
under or in connection with this Agreement, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Agent: (i) may treat the payee of any Note as the holder
thereof until the Agent receives and accepts an Assignment and Acceptance
entered into by the Lender which is the payee of such Note, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 9.07; (ii) may consult
with legal counsel (including counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement; (iv) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement on the part of the Borrower or to inspect the
property (including the books and records) of the Borrower; (v) shall not be
responsible to any Lender for the due execution, legality, validity, enforce-
ability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecop-
ier, telegram, cable or telex) believed by it to be genuine and signed or sent
by the proper party or parties.
SECTION 8.03. Citibank and Affiliates. With respect to its Commitment, the
Extensions of Credit made by it and the Notes issued to it, Citibank shall have
the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include Citibank in its
individual capacity. Citibank and its Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in any
kind of business with, the Borrower, any of its Subsidiaries and any Person who
may do business with or own securities of the Borrower or any such Subsidiary,
all as if Citibank were not the Agent and without any duty to account therefor
to the Lenders.
SECTION 8.04. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements referred to in Section 5.01(f) and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also acknowl-
edges that it will, independently and without reliance upon the Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 8.05. Indemnification. The Lenders agree to indemnify the Agent and
each LC Bank (to the extent not reimbursed by the Borrower), ratably according
to (i) at any time on or prior to the Termination Date, the respective princi-
pal amounts of the Contract Notes then held by each of them (or if no Contract
Notes are at the time outstanding or if any Contract Notes are held by Persons
which are not Lenders, ratably according to the respective amounts of their
Commitments) and (ii) at any time after the Termination Date, the respective
principal amounts of the Notes then held by each of them (or if any Notes are
held by Persons that are not Lenders, ratably according to the respective
unpaid principal amounts of the Extensions of Credit made by each Lender), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Agent or any LC Bank in any way relating to or arising out of this Agreement
or any action taken or omitted by the Agent or any LC Bank under this Agree-
ment, provided that no Lender shall be liable for any portion of such liabili-
ties, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's or any LC Bank's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender agrees to reimburse the Agent and each LC Bank promptly upon demand
for its ratable share of any out-of-pocket expenses (including reasonable
counsel fees) incurred by the Agent or such LC Bank, as the case may be, in
connection with the preparation, execution, delivery, administration, modifica-
tion, amendment or enforcement (whether through negotiations, legal proceedings
or otherwise) of, or legal advice in respect of rights or responsibilities
under, this Agreement, to the extent that such expenses are reimbursable by the
Borrower but for which the Agent or the relevant LC Bank is not reimbursed by
the Borrower.
SECTION 8.06. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed at
any time with or without cause by the Majority Lenders. Upon any such resigna-
tion or removal, the Majority Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a commercial bank
described in clause (i) or (ii) of the definition of "Eligible Assignee" and
having a combined capital and surplus of at least $150,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
Notwithstanding the foregoing, if no Event of Default, and no event that with
the giving of notice or the passage of time, or both, would constitute an Event
of Default, shall have occurred and be continuing, then no successor Agent
shall be appointed under this Section 8.06 without the prior written consent of
the Borrower, which consent shall not be unreasonably withheld or delayed.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Contract Notes, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Majority Lenders (and, in the case of any amendment
or waiver, the Borrower), and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by all the Lenders (other than any Lender that is the
Borrower or an Affiliate of the Borrower), do any of the following: (a) waive
any of the conditions specified in Section 4.01 or 4.02, (b) increase the
Commitments of the Lenders or subject the Lenders to any additional obliga-
tions, (c) reduce the principal of, or interest on, the Contract Notes or
reduce any Applicable Margin or any fees or other amounts payable hereunder,
(d) postpone any date fixed for any payment of principal of, or interest on,
the Contract Notes or any fees or other amounts payable hereunder, (e) change
the percentage of the Commitments or of the aggregate unpaid principal amount
of the Contract Notes, or the number of Lenders, which shall be required for
the Lenders or any of them to take any action hereunder or (f) amend Section
2.17 hereof or this Section 9.01; and provided, further, that no amendment,
waiver or consent shall, unless in writing and signed by the Agent in addition
to the Lenders required above to take such action, affect the rights or duties
of the Agent under this Agreement or any Note; and provided, further, that no
amendment, waiver or consent, unless in writing and signed by each LC Bank in
addition to the Lenders required above to take such action, shall affect the
rights or duties of any LC Bank under Article III hereof.
SECTION 9.02. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including telecopier, telegraphic, telex or
cable communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Borrower, at its address at 220 W. Main Street, Louis-
ville, Kentucky 40202, Attention: Treasurer, if to any Bank, at its Domestic
Lending Office specified opposite its name on Schedule I hereto; if to any
other Lender, at its Domestic Lending Office specified in the Assignment and
Acceptance pursuant to which it became a Lender; and if to the Agent, at its
address at 399 Park Avenue, New York, New York 10043, Attention: Utilities
Department, North American Finance Group; or, as to each party, at such other
address as shall be designated by such party in a written notice to the other
parties. All such notices and communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback
or delivered to the cable company, respectively, except that notices and
communications to the Agent pursuant to Article II or VIII shall not be
effective until received by the Agent.
SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lender, any
LC Bank or the Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 9.04. Costs and Expenses; Indemnification. (a) The Borrower agrees to
pay on demand all costs and expenses incurred by the Agent in connection with
the preparation, execution, delivery, syndication administration, modification
and amendment of this Agreement, the Notes, the Support Agreement and the other
documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Agent with
respect thereto and with respect to advising the Agent as to its rights and
responsibilities under this Agreement. The Borrower further agrees to pay on
demand all costs and expenses, if any (including, without limitation, counsel
fees and expenses of outside counsel and of internal counsel), incurred by the
Agent and the Lenders in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Notes, the
Support Agreement and the other documents to be delivered hereunder, including,
without limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 9.04(a).
(b) If any payment of principal of, or Conversion of, any Adjusted CD Rate
Advance or Eurodollar Rate Advance is made other than on the last day of the
Interest Period for such Contract Advance, as a result of a payment or Conver-
sion pursuant to Section 2.10 or 2.13 or a prepayment pursuant to Section 2.11
or acceleration of the maturity of the Notes pursuant to Section 7.01 or for
any other reason, the Borrower shall, upon demand by any Lender (with a copy of
such demand to the Agent), pay to the Agent for the account of such Lender any
amounts required to compensate such Lender for any additional losses (excluding
any loss of anticipated profits), costs or expenses which it may reasonably
incur as a result of such payment or Conversion, including, without limitation,
any such loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such Contract Advance.
(c) The Borrower hereby agrees to indemnify and hold each Lender, each LC
Bank, the Agent and their respective Affiliates and their respective officers,
directors, employees and professional advisors (each, an "Indemnified Person")
harmless from and against any and all claims, damages, losses, liabilities,
costs or expenses (including reasonable attorney's fees and expenses, whether
or not such Indemnified Person is named as a party to any proceeding or is
otherwise subjected to judicial or legal process arising from any such proceed-
ing) that any of them may incur or which may be claimed against any of them by
any person or entity by reason of or in connection with the execution, delivery
or performance of this Agreement, the Notes, each LC Bank Agreement or any
transaction contemplated thereby, or the use by the Borrower or any of its
Subsidiaries of the proceeds of any Extension of Credit, except to the extent
such claim, damage, loss, liability, cost or expense is found in a final, non-
appealable judgment by a court of competent jurisdiction to have resulted from
such Indemnified Person's gross negligence or willful misconduct. The Borrow-
er's obligations under this Section 9.04(c) shall survive the repayment of all
amounts owing to the Lenders, the LC Banks and the Agent under this Agreement,
the Notes and any LC Bank Agreement and the termination of the Commitments. If
and to the extent that the obligations of the Borrower under this Sec-
tion 9.04(c) are unenforceable for any reason, the Borrower agrees to make the
maximum contribution to the payment and satisfaction thereof which is permissi-
ble under applicable law.
SECTION 9.05. Right of Set-off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 7.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 7.01,
each Lender and LC Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender or LC Bank to or
for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement and
any Note held by such Lender or the LC Bank Agreement to which such LC Bank is
a party, as the case may be, irrespective of whether or not such Lender or LC
Bank shall have made any demand under this Agreement or such Note or such LC
Bank Agreement and although such obligations may be unmatured. Each Lender and
LC Bank agrees promptly to notify the Borrower after any such set-off and
application made by such Lender or LC Bank, provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of each Lender and LC Bank under this Section 9.05 are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which such Lender and LC Bank may have.
SECTION 9.06. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and the Agent and when the Agent shall
have been notified by each Bank that such Bank has executed it and thereafter
shall be binding upon and inure to the benefit of the Borrower, the Agent and
each Lender and their respective successors and permitted assigns, except that
the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lenders.
SECTION 9.07. Assignments and Participations. (a) Each Lender may, with the
prior written consent of the Borrower (which consent shall not be unreasonably
withheld or delayed) and each LC Bank (which consent shall not be unreasonably
withheld or delayed), assign to one or more banks or other entities all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Contract Advances owing to
it and the Contract Note or Notes held by it); provided, however, that (i) each
such assignment shall be of a constant, and not a varying, percentage of all
rights and obligations under this Agreement (other than any Competitive Bid
Advances or Competitive Bid Notes), (ii) the amount of the Commitment of the
assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $10,000,000 (or if less, the entire amount of
such Lender's Commitment) and shall be an integral multiple of $1,000,000,
(iii) each such assignment shall be to an Eligible Assignee, and (iv) the
parties to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance,
together with any Contract Note or Notes subject to such assignment and a
processing and recordation fee of $3,000. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto).
(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement together with copies of the financial statements referred to in
Section 5.01(f) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, upon such assigning Lender or upon any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in Section 9.02 a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Contract Advances owing to each
Lender from time to time (the "Register"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and an assignee representing that it is an Eligible Assignee, together
with any Contract Note or Notes subject to such assignment, the Agent shall, if
such Assignment and Acceptance has been completed and is in substantially the
form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Borrower. Within five Business Days after its receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Agent in exchange for the surrendered Contract Note or Notes a new Contract
Note to the order of such Eligible Assignee in an amount equal to the Commit-
ment assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a Commitment hereunder, a new Contract Note to
the order of the assigning Lender in an amount equal to the Commitment retained
by it hereunder. Such new Contract Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Contract Note or Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of Exhibit A-1
hereto.
(e) Each Lender may assign to one or more banks or other entities any
Competitive Bid Note or Notes held by it.
(f) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement, the Contract Notes and any LC Bank Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it, the
Note or Notes held by it and any Letter of Credit issued by it); provided,
however, that (i) such Lender's obligations under this Agreement, the Contract
Notes, any LC Bank Agreement and any Letter of Credit issued by it, (including,
without limitation, its Commitment to the Borrower hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender shall
remain the holder of any such Note for all purposes of this Agreement, the
Contract Notes and any LC Bank Agreement, (iv) such Lender shall remain the
issuer of any Letter of Credit issued by it, and (v) the Borrower, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, the Contract Notes and any LC Bank Agreement.
(g) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 9.07, disclose to
the assignee or participant or proposed assignee or participant, any informa-
tion relating to the Borrower furnished to such Lender by or on behalf of the
Borrower; provided that, prior to any such disclosure, the assignee or partici-
pant or proposed assignee or participant shall agree in writing to preserve the
confidentiality of any confidential information relating to the Borrower
received by it from such Lender.
(h) Notwithstanding anything to the contrary set forth herein, any Lender may
assign, as collateral or otherwise, any of its rights hereunder and under the
Notes (including, without limitation, its rights to receive payments of
principal and interest hereunder and under the Notes) to any Federal Reserve
Bank without notice to or consent of the Borrower or the Agent.
(i) If any Lender shall (A) fail to consent to the extension of the Termina-
tion Date within 60 days of receipt by such Lender of notice of any request
pursuant to Section 2.17 or (B) make demand for payment under Section 2.12(a),
2.12(b) or 2.15, or shall deliver any notice to the Agent pursuant to Sec-
tion 2.13 resulting in the suspension of certain obligations of the Lenders
with respect to Eurodollar Rate Advances, then upon termination of such 60-day
period or within 60 days of such demand (if, and only if, such payment demanded
under Section 2.12(a), 2.12(b) or 2.15, as the case may be, shall have been
made by the Borrower) or such notice (if such suspension is still in effect),
as the case may be, the Borrower, with the prior written consent of each LC
Bank (which consent shall not be unreasonably withheld or delayed), may demand
that such Lender assign in accordance with this Section 9.07 to one or more
Eligible Assignees designated by the Borrower all (but not less than all) of
such Lender's Commitment and the Contract Advances owing to it within the next
30 days. If any such Eligible Assignee designated by the Borrower shall fail
to consummate such assignment on terms reasonably acceptable to such Lender, or
if the Borrower shall fail to designate any such Eligible Assignee for all of
such Lender's Commitment or Advances, then such Lender may assign such Commit-
ment and Advances to any other Eligible Assignee in accordance with this
Section 9.07 during such 30-day period.
SECTION 9.08. GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.09. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT, THE LENDERS AND
THE LC BANKS HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
NOTE OR LC BANK AGREEMENT OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED
HEREUNDER OR THEREUNDER.
SECTION 9.10. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate counter-
parts, each of which when so executed shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.
SECTION 9.11. Confidentiality. In connection with this Agreement and the
transactions contemplated hereby (including, without limitation, Section
6.01(b)(vi) hereof), the Borrower may provide the Agent, the LC Bank or any
Lender with certain confidential, non-public or proprietary written information
concerning the Borrower's business ("Confidential Borrower Information"). The
Agent, the LC Bank and each Lender agree to hold any Confidential Borrower
Information provided to it hereunder in confidence and agree that except as
otherwise expressly provided herein, they will not disclose to any Person any
portion of the Confidential Borrower Information so provided without the prior
written consent of the Borrower. It is understood however, that Confidential
Borrower Information shall not include information that is or becomes publicly
available, information that was available to the Agent, the LC Bank or any
Lender prior to disclosure by the Borrower hereunder or information which
becomes available to the Agent, the LC Bank or any Lender on a non-confidential
basis from a source that is not known to such Person to be subject to a
confidentiality agreement with the Borrower. It is further understood that
Confidential Borrower Information may be disclosed by the Agent, the LC Bank or
any Lender (i) to such Person's directors, officers, employees, affiliates,
agents, advisors and consultants on a "need to know" and confidential basis in
connection with this Agreement and the transactions contemplated hereby, (ii)
to other Lenders and prospective Lenders who have agreed in writing to maintain
the confidentiality of such Confidential Borrower Information (it being
understood that any prospective Lenders shall be required to enter into an
agreement to maintain the confidentiality of any Confidential Borrower Informa-
tion to be provided to them), (iii) at the request of any regulatory or
examining authority having jurisdiction over such Person, (iv) pursuant to
subpoena or other legal process or as otherwise required by law, in which case,
the Agent, the LC Bank or any Lender, as the case may be, shall provide the
Borrower with notice of such disclosure promptly so that the Borrower may seek
a protective order or appropriate remedy if available, unless provision of any
such notice would result in a violation of any such subpoena or order of a
court of competent jurisdiction, and (v) in their respective banking relation-
ships with the Borrower. The respective obligations of the Agent, the LC Bank
and each Lender hereunder with respect to Confidential Borrower Information
shall survive the Termination Date but shall terminate on the date one year
subsequent thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
LG&E ENERGY SYSTEMS INC.
By _____________________
C.A. Markel
Treasurer
CITIBANK, N.A.,
as Agent
By _____________________
Name:
Title:
BANK OF MONTREAL
as Co-Agent
By _____________________
Name:
Title:
Commitment CITIBANK, N.A.,
$30,000,000 as Lender
By _____________________
Name:
Title:
Commitment BANK OF MONTREAL,
$25,000,000 as Lender
By _____________________
Name:
Title:
Commitment THE CHASE MANHATTAN
$25,000,000 BANK, N.A.
By _____________________
Name:
Title:
Commitment THE BANK OF NEW YORK
$20,000,000
By _____________________
Name:
Title:
Commitment PNC BANK,
$20,000,000 KENTUCKY, INC.
By _____________________
Name:
Title:
Commitment CIBC INC.
$15,000,000
By _____________________
Name:
Title:
Commitment THE SANWA BANK LIMITED,
$15,000,000 ATLANTA AGENCY
By _____________________
Name:
Title:
$150,000,000 TOTAL OF THE COMMITMENTS
SCHEDULE I
LG&E ENERGY SYSTEMS INC.
$150,000,000 Credit Agreement
Eurodollar Domestic CD Lending
Name of Bank Lending Office Lending Office Office
Bank of Montreal 115 S. La Salle Same as Euro- Same as Euro-
Street dollar dollar
Chicago, IL Lending Lending
60603 Office Office
Contact: J.
Michael Linton
Tel: (312)
750-4370
Fax: (312)
750-4314
CIBC Inc. 200 W. Madison Same as Euro- Same as Euro-
Street dollar dollar
Suite 2300 Lending Lending
Chicago, IL Office Office
60606
Tel: (312)
855-3252
Fax: (312)
750-0927
Att: Margaret
E. McTigue
Citibank, N.A. 399 Park Avenue Same as Euro- Same as Euro-
4th Floor dollar dollar
New York, NY Lending Lending
10043 Office Office
Tel: (212)
559-1282
Fax: (212)
852-9852
Att: Utilities
Dept.
PNC Bank, 500 W. Jeff- Same as Euro- Same as Euro-
Kentucky, Inc. erson dollar dollar
Louisville, Lending Lending
KY 40296 Office Office
Tel: (502)
581-3022
Fax: (502)
581-2302
Contact: Brennan
T. Danile
The Bank of One Wall Street Same as Euro- Same as Euro-
New York New York, NY dollar dollar
10286 Lending Lending
Tel: (212) Office Office
635-7547
Fax: (212)
635-7923
Att: Dennis
Pidherny
The Chase Manhat- Two Chase Same as Euro- Same as Euro-
tan Bank, N.A. Manhattan dollar dollar
Plaza Lending Lending
5th Floor Office Office
Tel: (212)
552-3017
Fax: (212)
552-4455
Att: Joselin
Fernandes
The Sanwa Bank 133 Peachtree Same as Euro- Same as Euro-
Atlanta Agency Street NE dollar dollar
Georgia Pacif- Lending Lending
ic Center Office Office
Suite 4750
Atlanta, GA
30303
Tel: (404)
586-6880
Fax: (404)
589-1629
Telex: 4611830
Answerback: SANWATL
Operations Con-
tact: Kristie
Hartrampf
(404)
586-6893
SCHEDULE II
LG&E ENERGY SYSTEMS INC.
$150,000,000 Credit Agreement
EXISTING LETTERS OF CREDIT
IRREVOCABLE STANDBY
LETTER OF CREDIT STATED AMOUNT
Number SLCDC/3896/91499 dated January 31, US$5,000,00.00
1995 issued for the account of LG&E Energy
Systems Inc. by Bank of Montreal in favor
of Credit Suisse, as Agent, as amended by
Amendment dated December 29, 1995
Number SLCDC/3896/911541 dated March 21, US$5,000,000.00
1995 issued for the account of LG&E Energy
Systems Inc. by Bank of Montreal in favor
of Credit Suisse, as Cash Collateral Agent
Number SLCDC/3896/911571 dated March 31, US$2,918,272.00
1995 issued for the account of LG&E Energy
Systems Inc. by Bank of Montreal in favor
of Credit Suisse, as Agent
Number SLCDC3896/911672 dated August 1, US$1,353,765.29
1995 issued for the account of LG&E Energy
Systems Inc. by Bank of Montreal in favor
of Banco Central Hispanoamericano, S.A.,
as Agent
Number SLCDC3896/911673 dated August 1, US$220,284.48
1995 issued for the account of LG&E Energy
Systems Inc. by Bank of Montreal in favor
of KW Groningen, B.V., as Subordinated
Lender
EXHIBIT A-1
FORM OF CONTRACT NOTE
U.S.$______________ Dated: _________, 19__
FOR VALUE RECEIVED, the undersigned, LG&E Energy Systems Inc., a Kentucky
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of _________-
__________________ (the "Lender") for the account of its Applicable Lending
Office (such term and other capitalized terms herein being used as defined in
the Credit Agreement referred to below) the principal sum of U.S.$[amount of
the Lender's Commitment in figures] or, if less, the aggregate principal amount
of the Contract Advances made by the Lender to the Borrower pursuant to the
Credit Agreement outstanding on the Termination Date, payable on the Termina-
tion Date.
The Borrower promises to pay interest on the unpaid principal amount of each
Contract Advance from the date of such Contract Advance until such principal
amount is paid in full, at such interest rates, and payable at such times, as
are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United States of
America to Citibank, N.A., as Agent, at 399 Park Avenue, New York, New York
10043, in same day funds. Each Contract Advance made by the Lender to the
Borrower pursuant to the Credit Agreement, and all payments made on account of
principal thereof, shall be recorded by the Lender and, prior to any transfer
hereof, endorsed on the grid attached hereto which is part of this Promissory
Note.
This Promissory Note is one of the Contract Notes referred to in, and is
entitled to the benefits of, the Credit Agreement, dated as of Jan-
uary ___, 1996 (the "Credit Agreement"), among the Borrower, the Lender and
certain other banks parties thereto, and Citibank, N.A., as Agent for the
Lender and such other banks, and Bank of Montreal, as Co-Agent. The Credit
Agreement, among other things, (i) provides for the making of Contract Advances
by the Lender to the Borrower from time to time in an aggregate amount not to
exceed at any time outstanding the U.S. dollar amount first above mentioned,
the indebtedness of the Borrower resulting from each such Contract Advance
being evidenced by this Promissory Note, and (ii) contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
The Borrower hereby waives presentment, demand, protest and notice of any kind.
No failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
LG&E ENERGY SYSTEMS INC.
By ____________________
Name:
Title:
ADVANCES, INTEREST PERIODS AND PAYMENTS OF PRINCIPAL
Interest Amount of
Period (if Principal Unpaid
Amount of any) of Paid or Principal Notation
Date Advance Advance Prepaid Balance Made By
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
EXHIBIT A-2
FORM OF COMPETITIVE BID NOTE
U.S.$______________ Dated: __________, 19__
FOR VALUE RECEIVED, the undersigned, LG&E Energy Systems Inc., a Kentucky
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of _________-
_____________________ (the "Lender") for the account of its Applicable Lending
Office (as defined in the Credit Agreement referred to below), on __________,
19__, the principal amount of _____________ Dollars ($___________).
The Borrower promises to pay interest on the unpaid principal amount hereof
from the date hereof until such principal amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:
Interest Rate: ____% per annum (calculated on the basis of a year of ____ days
for the actual number of days elapsed).
Interest Payment Date or Dates: _______________________
Both principal and interest are payable in lawful money of the United States of
America to ___________________ or the account of the Lender at the office of
Citibank, N.A., as Agent, at 399 Park Avenue, New York, New York 10043, in same
day funds, free and clear of and without any deduction, with respect to the
payee named above, for any and all present and future taxes, deductions,
charges or withholdings, and all liabilities with respect thereto to the extent
and in the manner provided in the Credit Agreement.
This Promissory Note is one of the Competitive Bid Notes referred to in, and is
entitled to the benefits of, the Credit Agreement, dated as of January ___,
1996 (the "Credit Agreement"), among the Borrower, the Lender and certain other
banks parties thereto, and Citibank, N.A., as Agent for the Lender and such
other banks, and Bank of Montreal, as Co-Agent. The Credit Agreement, among
other things, contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events.
The Borrower hereby waives presentment, demand, protest and notice of any kind.
No failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
LG&E ENERGY SYSTEMS INC.
By ____________________
Name:
Title:
EXHIBIT B-1
FORM OF NOTICE OF CONTRACT BORROWING
Citibank, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
399 Park Avenue
New York, New York 10043
[Date]
Attention: Utilities Department
North American Finance Group
Ladies and Gentlemen:
The undersigned, LG&E Energy Systems Inc., refers to the Credit Agreement,
dated as of January ___, 1996 (the "Credit Agreement", the terms defined
therein being used herein as therein defined), among the undersigned, certain
Lenders parties thereto and Citibank, N.A., as Agent for said Lenders, and Bank
of Montreal, as Co-Agent, and hereby gives you notice, irrevocably, pursuant to
Section 2.02 of the Credit Agreement that the undersigned hereby requests a
Contract Borrowing under the Credit Agreement, and in that connection sets
forth below the information relating to such Contract Borrowing (the "Proposed
Contract Borrowing") as required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Contract Borrowing is ________________-
__, 19__.
(ii) The Type of Contract Advances to be made in connection with the Proposed
Contract Borrowing is [Adjusted CD Rate Advances] [Base Rate Advances] [Euro-
dollar Rate Advances].
(iii) The aggregate amount of the Proposed Contract Borrowing is $__________-
__.
(iv) The Interest Period for each Contract Advance made as part of the
Proposed Contract Borrowing is [____ days] [____ month[s]].
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Contract Borrowing:
(A) the representations and warranties contained in Section 5.01 are correct
in all material respects, before and after giving effect to the Proposed
Contract Borrowing and to the application of the proceeds therefrom, as though
made on and as of such date, except to the extent that any such representation
or warranty relates solely to an earlier date and except that the references
set forth in Section 5.01 to the December 31, 1994 financial statements of the
Parent and its Subsidiaries shall be deemed a reference to the quarterly or
annual financial statements of the Parent and its Subsidiaries most recently
submitted to the Lenders; and
(A) no event has occurred and is continuing, or would result from such
Proposed Contract Borrowing or from the application of the proceeds therefrom,
that constitutes an Event of Default or would constitute an Event of Default
but for the requirement that notice be given or time elapse or both.
Very truly yours,
LG&E ENERGY SYSTEMS INC.
By ____________________
Name:
Title:
EXHIBIT B-2
FORM OF NOTICE OF COMPETITIVE BID BORROWING
Citibank, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
399 Park Avenue
New York, New York 10043
[Date]
Attention: Utilities Department
North American Finance Group
Ladies and Gentlemen:
The undersigned, LG&E Energy Systems Inc., refers to the Credit Agreement,
dated as of January ___, 1996 (the "Credit Agreement", the terms defined
therein being used herein as therein defined), among the undersigned, certain
Lenders parties thereto and Citibank, N.A., as Agent for said Lenders and Bank
of Montreal, as Co-Agent, and hereby gives you notice pursuant to Section 2.03
of the Credit Agreement that the undersigned hereby requests a Competitive Bid
Borrowing under the Credit Agreement, and in that connection sets forth the
terms on which such Competitive Bid Borrowing (the "Proposed Competitive Bid
Borrowing") is requested to be made:
(A) Date of Competitive Bid Borrowing _______________________
(B) Amount of Competitive Bid Borrowing _____________________
(C) Maturity Date _________________________
(D) Interest Payment Date(s) ______________________
(E) Interest Index (i.e., fixed rate or
LIBOR-based) ______________________________
(F) __________________ _____________________
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Competitive Bid
Borrowing:
(in all material respects, before and after giving effect to the Proposed
Competitive Bid Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date, except to the extent that any such repre-
sentation or warranty relates solely to an earlier date and except that the
references set forth in Section 5.01 to the December 31, 1994 financial
statements of the Parent and its Subsidiaries shall be deemed a reference to
the quarterly or annual financial statements of the Parent and its Subsidiaries
most recently submitted to the Lenders;
(b) no event has occurred and is continuing, or would result from the
Proposed Competitive Bid Borrowing or from the application of the proceeds
therefrom, which constitutes an Event of Default or would constitute an Event
of Default but for the requirement that notice be given or time elapse or both;
and
(c) the aggregate amount of the Proposed Competitive Bid Borrowing and all
other Borrowings to be made on the same day under the Credit Agreement is
within the aggregate amount of the unused Commitments of the Lenders.
The undersigned hereby confirms that the Proposed Competitive Bid Borrowing is
to be made available to it in accordance with Section 2.03(a)(v) of the Credit
Agreement.
Very truly yours,
LG&E ENERGY SYSTEMS INC.
By ________________________
Name:
Title:
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated ___________, 19__
Reference is made to the Credit Agreement, dated as of January ___, 1996 (the
"Credit Agreement"), among LG&E Energy Systems Inc., a Kentucky corporation
(the "Borrower"), the Lenders (as defined in the Credit Agreement) and Citi-
bank, N.A., as Agent for the Lenders (the "Agent"), and Bank of Montreal, as
Co-Agent. Terms defined in the Credit Agreement are used herein with the same
meaning.
_____________ (the "Assignor") and ____________ (the "Assignee") agree as
follows:
1. The Assignor hereby sells and assigns without recourse to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, that interest in
and to all of the Assignor's rights and obligations under the Credit Agreement
as of the date hereof (other than in respect of Competitive Bid Advances and
Competitive Bid Notes) which represents the percentage interest specified on
Schedule 1 of all outstanding rights and obligations under the Credit Agreement
(other than in respect of Competitive Bid Advances and Competitive Bid Notes),
including, without limitation, such interest in the Assignor's Commitment, the
Contract Advances owing to the Assignor, and the Contract Note[s] held by the
Assignor. After giving effect to such sale and assignment, the Assignee's
Commitment and the amount of the Contract Advances owing to the Assignee will
be as set forth in Section 2 of Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and benefi-
cial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agree-
ment or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement or any other instrument or
document furnished pursuant thereto; (iii) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under the Credit Agreement or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Contract Note[s] referred to
in paragraph 1 above and requests that the Agent exchange such Contract Note[s]
for a new Contract Note payable to the order of the Assignee in an amount equal
to the Commitment assumed by the Assignee pursuant hereto or new Contract Notes
payable to the order of the Assignee in an amount equal to the Commitment
assumed by the Assignee pursuant hereto and the Assignor in an amount equal to
the Commitment retained by the Assignor under the Credit Agreement, respective-
ly, as specified on Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 5.01 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
(v) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; [and] (vi) specifies as its CD Lending Office,
Domestic Lending Office (and address for notices) and Eurodollar Lending Office
the offices set forth beneath its name on the signature pages hereof [and (vii)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying that it is exempt from United States withholding taxes with
respect to all payments to be made to the Assignee under the Credit Agreement
and the Notes]. If the Assignee is organized under the laws of a jurisdiction
outside the United States.
4. Following the execution of this Assignment and Acceptance by the Assignor
and the Assignee, it will be delivered to the Agent for acceptance and record-
ing by the Agent. The effective date of this Assignment and Acceptance shall
be the date of acceptance thereof by the Agent, unless otherwise specified on
Schedule 1 hereto (the "Effective Date").
5. Upon such acceptance and recording by the Agent, as of the Effective Date,
(i) the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of
a Lender thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement
and the Contract Notes in respect of the interest assigned hereby (including,
without limitation, all payments of principal, interest and facility fees with
respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement and the Contract
Notes for periods prior to the Effective Date directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Accep-
tance to be executed by their respective officers thereunto duly authorized, as
of the date first above written, such execution being made on Schedule 1
hereto.
[NAME OF ASSIGNOR]
By ________________
Name:
Title:
[NAME OF ASSIGNEE]
By _______________
Name:
Title:
CD Lending Office:
[Address]
Domestic Lending Office (and
address for notices):
[Address]
Eurodollar Lending Office:
[Address]
Accepted this ____ day
of ____________, 19__
[NAME OF AGENT]
By __________________
Name:
Title:
Schedule 1
Assignment and Acceptance
Dated __________, 19__
Section 1.
Percentage Interest: __________%
Section 2.
Assignee's Commitment: $_________
Aggregate Outstanding Principal
Amount of Contract Advances owing
to the Assignee: $_________
A Contract Note payable to the order of the Assignee
Dated: _________, 19__
Principal amount: $_________
A Contract Note payable to the order of the Assignor
Dated: _________, 19__
Principal amount: $_________
Section 3.
Effective Date (this date should be no earlier
than the date of acceptance by the Agent): _________, 19__
EXHIBIT D
FORM OF LC BANK AGREEMENT
LETTER OF CREDIT BANK AGREEMENT (the "Agreement"), dated as of __________,
_____, between LG&E ENERGY SYSTEMS, INC., a Kentucky corporation (the "Borrow-
er"), and _____________________ (the "LC Bank").
PRELIMINARY STATEMENTS
1. The Borrower has entered into a Credit Agreement, dated as of January ___,
1996 (said agreement, as amended, modified or supplemented from time to time,
being the "Credit Agreement"), with certain lenders named therein and from time
to time parties thereto (the "Lenders") and Citibank, N.A., as Agent and the
Bank of Montreal, as Co-Agent. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings assigned to such terms in the Credit
Agreement.
2. [PURPOSE OF THE LETTERS OF CREDIT TO BE ISSUED HEREUNDER OR OTHER RELEVANT
MATTERS.]
3. The Borrower has requested the LC Bank to issue one or more irrevocable
letters of credit in favor of each beneficiary to be named in each such letter
of credit (each, a "Beneficiary") in an aggregate face amount not to exceed
$__________ at any time (the "LC Commitment").
NOW, THEREFORE, in consideration of the premises and in order to induce the LC
Bank to issue the Letters of Credit, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Beneficiary" has the meaning assigned to that term in Preliminary Statement
(3).
["Existing Letter of Credit" means each letter of credit described on Schedule
I hereto, as in effect on the date hereof.] Insert in Bank of Montreal LC Bank
Agreement Only.
"Issuance Termination Date" has the meaning assigned to that term in Section
3.01 hereof.
"LC Commitment" has the meaning assigned to that term in Preliminary Statement
(3).
"Letter of Credit" means each letter of credit issued by the LC Bank pursuant
to Section 3.02 hereof [(including, without limitation, the Existing Letters of
Credit)] (insert in Bank of Montreal LC Bank Agreement only), as such letter of
credit may from time to time be amended, modified or extended in accordance
with the terms of the Credit Agreement and this Agreement, in form and sub-
stance reasonably satisfactory to the LC Bank, the Borrower and the Agent.
"Stated Termination Date" means, with respect to each Letter of Credit, the
expiry or termination date stated therein; provided, that the Stated Termina-
tion Date of each Letter of Credit upon its date of issuance shall be no later
than the earlier to occur of the second anniversary of the date of issuance of
such Letter of Credit and the then-scheduled Termination Date.
SECTION 1.2. Computation of Time Periods. Computation of a period of time
from a specified date to a later specified date shall be made in accordance
with the Credit Agreement.
SECTION 1.3. Accounting Terms. All accounting terms not specifically defined
herein or in the Credit Agreement shall be construed in accordance with
generally accepted United States accounting principles as in effect as of the
date hereof consistently applied, except as otherwise stated herein.
ARTICLE II
THE CREDIT AGREEMENT
SECTION 2.1. Credit Agreement. (a) The parties hereto acknowledge and
agree that this Agreement is an "LC Bank Agreement" under the Credit Agreement,
and that the parties hereto shall be entitled to the rights and remedies, and
bound by the obligations, accorded to the parties in interest to an "LC Bank
Agreement" as so provided in the Credit Agreement. The parties hereto hereby
further acknowledge and agree that the Agent and the Lenders are intended
third-party beneficiaries hereof and are entitled (acting through the Agent, in
the case of the Lenders) to the rights and benefits accorded hereunder.
(b) The LC Bank hereby acknowledges and agrees that it is an "LC Bank" under
the Credit Agreement.
(c) In the event of any conflict between the terms of this Agreement and the
Credit Agreement (unless such conflict arises solely as a result of an amend-
ment to the Credit Agreement made after the date hereof without the written
consent of the LC Bank thereto), the terms of the Credit Agreement shall
control and such conflicting terms hereunder shall be of no force or effect.
[(d) Bank of Montreal has heretofore issued the Existing Letters of Credit for
the account of the Borrower pursuant to applications and agreements executed by
the Borrower (the "Applications"). From and after the execution and delivery
of this Agreement, (i) the Existing Letters of Credit shall constitute "Letters
of Credit" and the execution and delivery of this Agreement shall constitute
the issuance of the Existing Letters of Credit, in each case for all purposes
of this Agreement and the Credit Agreement, and (ii) the Applications shall be
terminated and of no further force and effect.] (insert in Bank of Montreal LC
Bank Agreement only)
ARTICLE III
AMOUNT AND TERMS OF THE LETTERS
OF CREDIT
SECTION 3.1. The Letters of Credit. The LC Bank agrees, on the terms and
conditions hereinafter set forth, and subject, at all times, to Section 2.05(b)
of the Credit Agreement, to issue one or more Letters of Credit for the account
of the Borrower on any Business Day during the period from the date hereof to
and including ________________, ______ (the "Issuance Termination Date"),
provided that the aggregate face amount of all Letters of Credit outstanding
hereunder shall not at any time exceed the LC Commitment; and provided,
further, that unless the LC Bank shall expressly consent thereto, the LC Bank
shall not be obligated to issue any Letters of Credit which are issued to
support public debt or any debt rated by a rating agency. Each Letter of
Credit shall expire on or before its Stated Termination Date. [For purposes of
determining the face amount of any Letter of Credit denominated in a currency
other than U.S. Dollars, shall equal the U.S. Dollar Equivalent of the face
amount of such Letter of Credit as of the most recent date on which any Letter
of Credit is issued hereunder (or if no Letter of Credit is issued hereunder,
the date of this Agreement) shall be used.] (insert in Bank of Montreal LC Bank
Agreement only)
SECTION 3.2. Issuing the Letters of Credit. Each Letter of Credit shall be
issued (or the stated maturity thereof extended or terms thereof modified or
amended) on not less than three Business Days' prior written notice thereof to
the Agent and the LC Bank pursuant to, and in accordance with, Section 3.02 of
the Credit Agreement.
SECTION 3.3. Fees. [INSERT AS APPROPRIATE]
(a) The Borrower hereby agrees to pay to the LC Bank, upon the issuance of
each Letter of Credit hereunder, an issuance fee in an amount equal to ____ %
of the initial stated amount thereof.
(b) The Borrower hereby agrees to pay to the LC Bank, upon each drawing made
by a Beneficiary under a Letter of Credit, a drawing fee in an amount equal to
$_______.
(c) The Borrower hereby agrees to pay to the LC Bank, upon each amendment to
any Letter of Credit, an amendment fee in an amount equal to $________.
(d) The Borrower hereby agrees to pay to the LC Bank a fronting fee equal to
___% of the average daily amount of the stated amount of each Letter of Credit
from the date of issuance of such Letter of Credit until the date of expiry of
such Letter of Credit, payable on the last day of each __________, __________,
__________ and __________ during such period and on such date of expiry.
SECTION 3.4. Payments and Computations. [(a)] (insert in Bank of Montreal LC
Bank Agreement only) The Borrower shall make each payment hereunder not later
than 1:00 P.M. (New York City time) on any day when due in U.S. Dollars. Any
such payment shall be made to the LC Bank at _______________. The Borrower
hereby authorizes the LC Bank, if and to the extent payment is not made when
due hereunder, to charge from time to time against any or all of the Borrower's
accounts with the LC Bank any amount so due. Computations of the fees hereun-
der shall be made by the LC Bank on the basis of a year of 360 days for the
actual number of days (including the first day but excluding the last day)
elapsed.
[(b) if any Letter of Credit issued hereunder shall be denominated in a
currency other than U.S. Dollars, the Borrower shall reimburse the LC Bank upon
each drawing made by a Beneficiary under any such Letter of Credit in U.S.
Dollars in an amount equal to the U.S. Dollar Equivalent of such draw as of the
date on which payment is made.] (insert in Bank of Montreal LC Bank Agreement
only)
SECTION 3.5. Extension of the Stated Termination Date. At least 5 but not
more than 90 days before the Stated Termination Date of any Letter of Credit,
and in any event no later than the Termination Date, the Borrower may request
the LC Bank in writing (with a copy of each such request to the Agent) to
extend the Stated Termination Date of such Letter of Credit for purposes of
this Agreement and the Letter of Credit to any date not later than the then-
scheduled Termination Date. If the Borrower shall make such a request, the LC
Bank shall, on or before the 5th Business Day after its receipt of such
request, notify the Borrower in writing whether or not the LC Bank consents to
such request and, if the LC Bank does so consent, the conditions of such
consent (including conditions relating to legal documentation and the consent
of the Beneficiary thereof). If the LC Bank shall not so notify the Borrower,
the LC Bank shall be deemed not to have consented to such request. Any such
extension shall be effective only if and when made in accordance with Arti-
cles III and IV of the Credit Agreement.
SECTION 3.6. Liability of the LC Bank. [INSERT AS APPROPRIATE]
ARTICLE IV
CONDITIONS OF ISSUANCE
SECTION 4.1. Conditions Precedent to Issuance of the Letter of Credit. The
obligation of the LC Bank to issue any Letter of Credit is subject to the
satisfaction of the applicable conditions precedent set forth in Article IV of
the Credit Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1. Representations and Warranties of the Borrower. The Borrower
hereby represents and warrants for the benefit of the LC Bank that the repre-
sentations and warranties of the Borrower set forth in Article V of the Credit
Agreement are true and correct in all material respects on the date hereof, on
each date of issuance of a Letter of Credit and on each date on which the term
thereof is extended in accordance with Section 3.05 hereof, as if made on and
as of such date, except to the extent that any such representation or warranty
relates solely to an earlier date and except that the references set forth in
Section 5.01 of the Credit Agreement to the December 31, 1994 financial
statements of the Parent and its Subsidiaries shall be deemed a reference to
the most recent quarterly or annual financial statements of the Parent and its
Subsidiaries submitted to the Lenders.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Amendments, Etc. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by the Borrower therefrom, shall in any
event be effective unless the same shall be in writing, signed by the LC Bank
and the Borrower and (unless such amendment, waiver or consent relates solely
to the provisions of Section 3.03 or 3.04) consented to by the Agent on behalf
of the Majority Lenders, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 6.2. Notices, Etc. All notices and other communications provided for
hereunder shall be made in accordance with Section 9.02 of the Credit Agreement
and sent, if to the LC Bank, at its address set forth on the signature page
hereof.
SECTION 6.3. No Waiver; Remedies. No failure on the part of the Borrower or
LC Bank to exercise, and no delay in exercising, any right hereunder or under
the Credit Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein and therein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 6.4. Costs, Expenses and Taxes. The Borrower agrees to pay to the LC
Bank on demand all costs and expenses incurred by the LC Bank in connection
with the preparation, execution, delivery and administration of this Agreement
and any other documents that may be delivered in connection with this Agreement
and any proposed modification, amendment or consent relating to this Agreement,
including, without limitation, reasonable counsel fees and out-of-pocket
expenses of counsel for the LC Bank with respect hereto, and with respect to
advising the LC Bank as to its rights and responsibilities under this Agree-
ment. The Borrower further agrees to pay on demand all costs and expenses, if
any, (including, without limitation, counsel fees and expenses of outside
counsel and of internal counsel) incurred by the LC Bank in connection with
(i) the enforcement (whether through negotiations, legal proceedings or
otherwise) of this Agreement and such other documents that may be delivered in
connection with this Agreement and (ii) any action or proceeding relating to a
court order, injunction, or other process or decree restraining or seeking to
restrain the LC Bank from paying any amount under any Letter of Credit. In
addition, the Borrower shall pay any and all stamp and other taxes and fees
payable or determined to be payable in connection with the execution and
delivery of this Agreement or any Letter of Credit or any such other documents,
and agrees to save the LC Bank harmless from and against any and all liabili-
ties with respect to or resulting from any delay in paying or omission to pay
such taxes and fees.
SECTION 6.5. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and the LC Bank and consented to in
writing by the Agent (for itself as the Agent and on behalf of the Lenders);
and thereafter shall be binding upon and inure to the benefit of the Borrower,
the LC Bank, the Agent, the Lenders and their respective successors and
assigns, except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the LC
Bank and the Lenders and the LC Bank shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of
the Lenders and the Borrower.
SECTION 6.6. Severability. Any provision of this Agreement which is prohibit-
ed, unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceabil-
ity or non-authorization without invalidating the remaining provisions hereof
or affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
SECTION 6.7. WAIVER OF JURY TRIAL. EACH OF THE LC BANK AND THE BORROWER
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE LETTER OF
CREDIT, OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.
SECTION 6.8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CON-
STRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6.9. Headings. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
SECTION 6.10. Execution in Counterparts. This Agreement may be executed and
consented to in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed or consented to shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.
LG&E ENERGY SYSTEMS, INC.
By ____________________
Name:
Title:
[INSERT LC BANK], as LC Bank
By ____________________
Name:
Title:
Consented to as of the date
first above written:
CITIBANK, N.A., as the Agent
on behalf of the Lenders
By ________________________
Name:
Title:
EXHIBIT E
FORM OF OPINION OF SPECIAL COUNSEL
FOR THE BORROWER AND THE PARENT
[Date]
To each of the Banks which is a party to the Credit Agreement, dated as of
January ___, 1996, among LG&E Energy Systems Inc., said Banks and Citibank,
N.A., as Agent for said Banks
LG&E Energy Systems Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01 of the Credit
Agreement, dated as of January ___, 1996 (the "Credit Agreement"), among LG&E
Energy Systems Inc., a Kentucky corporation (the "Borrower"), the Banks named
therein and Citibank, N.A., as Agent for said Banks, and Bank of Montreal, as
Co-Agent. Terms defined in the Credit Agreement are used herein as therein
defined.
We have acted as counsel to LG&E Energy Corp., a Kentucky corporation (the
"Parent"), and have served as counsel to the Parent and the Borrower in
connection with the preparation, execution and delivery of the Credit Agree-
ment, the Contract Notes and the Support Agreement.
In that connection, we have examined:
(1) the Credit Agreement;
(2) the Contract Notes executed and delivered on the date hereof;
(3) the form of the Competitive Bid Notes to be delivered by the Borrower in
connection with any Competitive Bid Borrowing;
(4) the Support Agreement;
(5) the documents furnished by the Borrower and the Parent pursuant to
Section 4.01 of the Credit Agreement;
(6) the Articles of Incorporation of the Borrower and all amendments thereto
(the "Borrower Charter");
(7) the by-laws of the Borrower and all amendments thereto (the "Borrower By-
laws");
(8) a certificate of the Secretary of Commonwealth of Kentucky, dated January
___, 1996, attesting to the continued corporate existence and good standing of
the Borrower in that State;
(9) the Articles of Incorporation of the Parent and all amendments thereto
(the "Parent Charter");
(10) the by-laws of the Parent and all amendments thereto (the "Parent By-
laws"); and
(11) a certificate of the Secretary of Commonwealth of Kentucky, dated January
___, 1996, attesting to the continued corporate existence and good standing of
the Parent in that State.
We have also examined the originals, or copies certified to our satisfaction,
of such other corporate records of the Borrower and the Parent, certificates of
public officials and of officers of the Borrower and the Parent, and agree-
ments, instruments and other documents, as we have deemed necessary as a basis
for the opinions expressed below. As to questions of fact material to such
opinions, we have, when relevant facts were not independently established by
us, relied upon certificates of the Borrower or the Parent, or their respective
officers, or of public officials. We have assumed the due execution and
delivery, pursuant to due authorization, of the Credit Agreement by the Banks
and the Agent.
We are qualified to practice law in the State of Illinois and do not purport to
be expert on any laws other than the laws of the State of Illinois and the
Federal laws of the United States. With your permission, we have relied
without independent investigation upon the opinion being delivered to you of
James K. Murphy, Esq., a member of the Kentucky Bar, as to all matters of
Kentucky law involved in opinions set forth below. In our opinion, you and we
are justified in so relying upon the opinion of James K. Murphy, Esq.
Based upon the foregoing and upon such investigation as we have deemed neces-
sary, we are of the following opinion:
1. Each of the Borrower and the Parent is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Kentucky.
2. The execution, delivery and performance by the Borrower of the Credit
Agreement, the Notes and the Support Agreement are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate action,
and do not contravene (i) the Borrower Charter or the Borrower By-laws or (ii)
any Federal law, rule or regulation applicable to the Borrower (including,
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System) or (iii) any contractual or legal restriction contained in any
indenture, loan or credit agreement, mortgage or note of the Borrower or, to
our knowledge, contained in any other similar agreement or instrument to which
the Borrower is a party.
3. No authorization, approval or other action by, and no notice to or filing
with, any agency or instrumentality of the government of the United States is
required for the due execution, delivery and performance by the Borrower of the
Credit Agreement, the Notes and the Support Agreement or by the Parent of the
Support Agreement.
4. The Credit Agreement and the Contract Notes have been duly executed and
delivered on behalf of the Borrower.
5. The execution, delivery and performance by the Parent of the Support
Agreement are within the Parent's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene (i) the Parent Charter
or the Parent By-laws or (ii) any Federal law, rule or regulation applicable to
the Parent (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System) or (iii) any contractual or legal
restriction contained in any indenture, loan or credit agreement, mortgage or
note of the Parent or, to our knowledge, contained in any other similar
agreement or instrument to which the Parent is a party.
6. The Support Agreement has been duly executed and delivered by the Parent
and the Borrower. The Support Agreement is the legal, valid and binding
obligation of the Parent and the Borrower enforceable against the Parent and
the Borrower, respectively, in accordance with its terms.
The opinions set forth above are subject to the following qualifications:
(a) Our opinion in paragraph 6 above is subject to the effect of any applica-
ble bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally.
(b) Our opinion in paragraph 6 above is subject to the effect of general
principles of equity, including (without limitation) concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered
in a proceeding in equity or at law).
The foregoing opinion is furnished solely for the benefit of the addressees
hereof and, except as set forth in the immediately succeeding sentence, may not
be relied upon by any other Person (other than any Person that may become a
Lender under the Credit Agreement after the date hereof) or for any other
purpose without our prior written consent. We are aware that King & Spalding
will rely upon the opinions set forth herein in rendering their opinion
furnished pursuant to Section 4.01 of the Credit Agreement.
Very truly yours,
EXHIBIT F
FORM OF OPINION OF CORPORATE ATTORNEY
FOR THE BORROWER AND THE PARENT
[Date]
To each of the Banks which is a party to the Credit Agreement, dated as of
January ___, 1996, among LG&E Energy Systems Inc., said Banks and Citibank,
N.A., as Agent for said Banks
LG&E Energy Systems Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01 of the Credit
Agreement, dated as of January ___, 1996 (the "Credit Agreement"), among LG&E
Energy Systems Inc., a Kentucky corporation (the "Borrower"), the Banks named
therein and Citibank, N.A., as Agent for said Banks, and Bank of Montreal, as
Co-Agent. Terms defined in the Credit Agreement are used herein as therein
defined.
I am Associate Corporate Attorney for LG&E Energy Corp., a Kentucky corporation
(the "Parent") and have served as counsel to the Parent and the Borrower in
connection with the preparation, execution and delivery of the Credit Agree-
ment, the Contract Notes and the Support Agreement.
In that connection, I have examined:
(1) the Credit Agreement;
(2) the Contract Notes executed and delivered on the date hereof;
(3) the form of the Competitive Bid Notes to be delivered by the Borrower in
connection with any Competitive Bid Borrowing;
(4) the Support Agreement;
(5) the documents furnished by the Borrower and the Parent pursuant to
Section 4.01 of the Credit Agreement;
(6) the Articles of Incorporation of the Borrower and all amendments thereto
(the "Borrower Charter");
(7) the by-laws of the Borrower and all amendments thereto (the "Borrower By-
laws");
(8) a certificate of the Secretary of Commonwealth of Kentucky, dated
January___, 1996, attesting to the continued corporate existence and good
standing of the Borrower in that State;
(9) the Articles of Incorporation of the Parent and all amendments thereto
(the "Parent Charter");
(10) the by-laws of the Parent and all amendments thereto (the "Parent By-
laws"); and
(11) a certificate of the Secretary of Commonwealth of Kentucky, dated January
___, 1996, attesting to the continued corporate existence and good standing of
the Parent in that State.
I have also examined the originals, or copies certified to my satisfaction, of
such other corporate records of the Borrower and the Parent, certificates of
public officials and of officers of the Borrower and the Parent, and agree-
ments, instruments and other documents, as I have deemed necessary as a basis
for the opinions expressed below. As to questions of fact material to such
opinions, I have, when relevant facts were not independently established by me,
relied upon certificates of the Borrower or the Parent, or their respective
officers, or of public officials. I have assumed the due execution and
delivery, pursuant to due authorization, of the Credit Agreement by the Banks
and the Agent.
I am qualified to practice law in the Commonwealth of Kentucky and do not
purport to be expert on any laws other than the laws of the Commonwealth of
Kentucky.
Based upon the foregoing and upon such investigation as I have deemed neces-
sary, I am of the following opinion:
1. Each of the Borrower and the Parent is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Kentucky.
2. The execution, delivery and performance of the Borrower of the Credit
Agreement, the Notes and the Support Agreement are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate action,
and do not contravene (i) the Borrower Charter or the Borrower By-laws or (ii)
any law, rule or regulation of the Commonwealth of Kentucky or (iii) any
contractual or legal restriction contained in any indenture, loan or credit
agreement, mortgage or note of the Borrower or, to my knowledge, contained in
any other similar agreement or instrument to which the Borrower is a party.
3. No authorization, approval or other action by, and no notice to or filing
with, any agency or instrumentality of the government of the Commonwealth of
Kentucky is required for the due execution, delivery and performance by the
Borrower of the Credit Agreement, the Notes and the Support Agreement or by the
Parent of the Support Agreement.
4. The Credit Agreement and the Contract Notes have been duly executed and
delivered on behalf of the Borrower. In any action or proceeding arising out
of or relating to the Credit Agreement or any Notes in any court of the
Commonwealth of Kentucky or in any federal court sitting in the Commonwealth of
Kentucky, such court would recognize and give effect to the provisions of
Section 9.08 of the Credit Agreement and the Notes shall be governed by, and
construed in accordance with, the laws of the State of New York. Without
limiting the generality of the foregoing, a court of the Commonwealth of
Kentucky or a federal court sitting in the Commonwealth of Kentucky would apply
the usury law of the State of New York, and would not apply the usury law of
the Commonwealth of Kentucky, to the Credit Agreement and the Notes. However,
if a court were to hold that the Credit Agreement and the Notes are governed
by, and to be construed in accordance with, the laws of the Commonwealth of
Kentucky, the Credit Agreement and the Contract Notes and the Competitive Bid
Notes, when duly executed and delivered by the Borrower in accordance with the
terms of the Credit Agreement, would be, under the laws of the Commonwealth of
Kentucky, legal, valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their respective terms.
5. The execution, delivery and performance by the Parent of the Support
Agreement are within the Parent's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene (i) the Parent Charter
or the Parent By-laws or (ii) any law, rule or regulation of the Commonwealth
of Kentucky applicable to the Parent or (iii) any contractual or legal restric-
tion contained in any indenture, loan or credit agreement, mortgage or note of
the Parent or, to my knowledge, contained in any other similar agreement or
instrument to which the Parent is a party.
6. The Support Agreement has been duly executed and delivered by the Parent
and the Borrower. The Support Agreement is the legal, valid and binding
obligation of the Parent and the Borrower enforceable against the Parent and
the Borrower, respectively, in accordance with its terms.
7. There are no pending or, to my knowledge, overtly threatened actions or
proceedings against the Borrower, the Parent or any of their respective
Subsidiaries before any court, governmental agency or arbitrator that purport
to effect the legality, validity, binding effect or enforceability of the
Credit Agreement, any Note or the Support Agreement or, except as disclosed in
the Annual Report to Stockholders for the fiscal year ended December 31, 1994
of the Parent or in the Parents' 1O-Q Reports filed with the Securities and
Exchange Commission on March 31, 1995, and September 30, 1995, all previously
furnished to you, that could reasonably be expected to have a material adverse
effect upon the financial condition, operations, business or prospects of the
Borrower or the Parent and its Subsidiaries, taken as a whole.
The opinions set forth above are subject to the following qualifications:
(a) The opinions in the last sentence of paragraph 4 and paragraph 6 above
are subject to the effect of any applicable bankruptcy, insolvency, reorganiza-
tion, moratorium or similar law affecting creditors' rights generally.
(b) The opinions in the last sentence of paragraph 4 and paragraph 6 above
are subject to the effect of general principles of equity, including (without
limitation) concepts of materiality, reasonableness, good faith and fair
dealing (regardless of whether considered in a proceeding in equity or at law).
The foregoing opinion is furnished solely for the benefit of the addressees
hereof and, except as set forth in the immediately succeeding sentence, may not
be relied upon by any other Person (other than any Person that may become a
Lender under the Credit Agreement after the date hereof) or for any other
purpose without my prior written consent. I am aware that King & Spalding will
rely upon the opinions set forth herein in rendering their opinion furnished
pursuant to Section 4.01 of the Credit Agreement.
Very truly yours,
__________________________
James K. Murphy
Associate Corporate Attorney
EXHIBIT G
FORM OF OPINION OF SPECIAL
NEW YORK COUNSEL TO THE AGENT
[Date]
To the Banks listed on
Exhibit A hereto and to
Citibank, N.A., as Agent
LG&E Energy Systems Inc.
Ladies and Gentlemen:
We have acted as special New York counsel to Citibank, N.A., individually and
as agent, in connection with the preparation, execution and delivery of the
Credit Agreement, dated as of January ___, 1996 (the "Credit Agreement"), among
LG&E Energy Systems Inc. (the "Borrower"), the banks parties thereto (the
"Banks"), Citibank, N.A., as Agent for the Banks, and Bank of Montreal, as Co-
Agent. Unless otherwise defined herein, terms defined in the Credit Agreement
are used herein as therein defined.
In that connection, we have examined (i) counterparts of the Credit Agreement,
executed by the Borrower, the Banks, the Agent and the Co-Agent, (ii) the
Contract Notes, executed by the Borrower, (iii) the form of the Competitive Bid
Notes to be delivered by the Borrower in connection with any Competitive Bid
Borrowing and (iv) the other documents listed on Exhibit B hereto, including
the opinion of James K. Murphy, Esq., Associate Corporate Attorney for the
Borrower (the "Borrower's Counsel Opinion"), and the opinion of Gardner, Carton
& Douglas, special counsel for the Borrower and the Parent (the "Special
Counsel Opinion"), each furnished to the Agent pursuant to Section 4.01(a) of
the Credit Agreement.
In our examination of the documents referred to above, we have assumed the
authenticity of all such documents submitted to us as originals, the genuine-
ness of all signatures, the due authority of the parties executing such
documents and the conformity to the originals of all such documents submitted
to us as copies. We have also assumed that each of the Banks, the Agent and
the Co-Agent have duly executed and delivered, with all necessary power and
authority (corporate and otherwise), the Credit Agreement.
To the extent that our opinions expressed below involve conclusions as to
matters governed by law other than the law of the State of New York, we have
relied upon the Borrower's Counsel Opinion and the Special Counsel Opinion and
have assumed without independent investigation the correctness of the matters
set forth therein, our opinions expressed below being subject to the assump-
tions, qualifications and limitations set forth in the Borrower's Counsel
Opinion and the Special Counsel Opinion. As to matters of fact, we have relied
solely upon the documents we have examined.
Based upon the foregoing, and subject to the qualifications set forth below, we
are of the opinion that:
(i) The Credit Agreement and each of the Contract Notes are, and the Competi-
tive Bid Notes, when duly executed and delivered by the Borrower in accordance
with the terms of the Credit Agreement, will be, the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
their respective terms.
(ii) While we have not independently considered the matters covered by the
Borrower's Counsel Opinion and the Special Counsel Opinion to the extent
necessary to enable us to express the conclusions stated therein, each of the
Borrower's Counsel Opinion, the Special Counsel Opinion and the other documents
listed in Exhibit B hereto are substantially responsive to the corresponding
requirements set forth in Section 4.01 of the Credit Agreement pursuant to
which the same have been delivered.
Our opinions are subject to the following qualifications:
(a) Our opinion in paragraph (i) above is subject to the effect of any
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar law affecting creditors' rights generally.
(b) Our opinion in paragraph (i) above is subject to the effect of general
principles of equity, including (without limitation) concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered
in a proceeding in equity or at law).
(c) We note further that, in addition to the application of equitable
principles described above, courts have imposed an obligation on contracting
parties to act reasonably and in good faith in the exercise of their contractu-
al rights and remedies, and may also apply public policy considerations in
limiting the right of parties seeking to obtain indemnification under circum-
stances where the conduct of such parties in the circumstances in question is
determined to have constituted negligence.
(d) We express no opinion herein as to (i) Section 9.05 of the Credit
Agreement, (ii) the enforceability of provisions purporting to grant to a party
conclusive rights of determination, (iii) the availability of specific perfor-
mance or other equitable remedies, (iv) the enforceability of rights to
indemnity under Federal or state securities laws and (v) the enforceability of
waivers by parties of their respective rights and remedies under law.
(e) Our opinions expressed above are limited to the law of the State of New
York and the Federal law of the United States, and we do not express any
opinion herein concerning any other law. Without limiting the generality of
the foregoing, we express no opinion as to the effect of the law of any
jurisdiction other than the State of New York wherein any Lender may be located
or wherein enforcement of the Credit Agreement or the Notes may be sought that
limits the rates of interest legally chargeable or collectible.
The foregoing opinion is solely for your benefit and may not be relied upon by
any other Person other than any Person that may become a Lender under the
Credit Agreement after the date hereof.
Very truly yours,
MEO:PKS:pfc
EXHIBIT A
CITIBANK, N.A.
BANK OF MONTREAL
THE CHASE MANHATTAN BANK
THE BANK OF NEW YORK
PNC BANK, KENTUCKY, INC.
CIBC INC.
THE SANWA BANK LIMITED, ATLANTA AGENCY
EXHIBIT B
(Terms used herein are used as defined in the Credit Agreement, dated as of
January 29, 1996, among LG&E Energy Systems Inc., the Banks named therein,
Citibank, N.A., as Agent, and Bank of Montreal, as Co-Agent. All section
references are to Sections of the Credit Agreement.)
(1) Support Agreement, delivered pursuant to Section 4.01(ii).
(2) Certified copies of the resolutions of the Board of Directors of the
Borrower, delivered pursuant to Section 4.01(iii).
(3) Certificate of the Secretary of the Borrower as to (i) the names, true
signatures and incumbency of the officers of the Borrower authorized to
sign the Credit Agreement, the Notes and the Support Agreement, (ii) true
and correct copies of the Articles of Incorporation and the By-laws of
the Borrower and (iii) certain regulatory approvals, delivered pursuant
to Section 4.01(iv).
(4) Certified copy of the minutes of the Board of Directors of the Parent,
delivered pursuant to Section 4.01(v).
(5) Certificate of the Secretary of the Parent as to (i) the names, true
signatures and incumbency of the officers of the Parent authorized to
sign the Support Agreement and the other documents to be delivered by the
Parent under the Credit Agreement, (ii) true and correct copies of the
Articles of Incorporation and By-laws of the Parent and (iii) certain
regulatory approvals, delivered pursuant to Section 4.01(vi).
(6) Certificate of the Treasurer of the Borrower as to (i) the representa-
tions and warranties contained in Section 5.01 of the Credit Agreement,
(i) the absence of Events of Default and events that with the giving of
notice or the passage of time, or both, would constitute Events of
Default, (i) the accuracy of certain financial information relating to
the Parent and its Subsidiaries, and (i) the absence of any material
adverse change in the financial condition, operations, business or
prospects of the Borrower of the Parent and its Subsidiaries, taken as a
whole, delivered pursuant to Sections 4.01(vii) and (xi).
(7) Opinion of Gardner, Carton & Douglas, special counsel for the Borrower
and the Parent, delivered pursuant to Section 4.01(viii).
(8) Opinion of James K. Murphy, Esq., Associate Corporate Attorney, delivered
pursuant to Section 4.01(ix).
(9) Certain financial statements of the Borrower and its Subsidiaries,
delivered pursuant to Section 4.01(x).
(10) Copy of the Parent's 1994 Annual Report.
(11) Copy of the Consolidating Balance Sheet of the Parent and Subsidiaries
dated as at September 30, 1995.
(12) Form 10-Q for the period ended September 30, 1995 filed by the Parent
with the Securities and Exchange Commission.
(13) Form 10-K for the fiscal year ended December 31, 1994 filed by the Parent
with the Securities and Exchange Commission.
Exhibit 10.02
SUPPORT AGREEMENT BETWEEN
LG&E ENERGY CORP.
AND
LG&E ENERGY SYSTEMS INC.
This Support Agreement, dated as of December 6, 1995, is between LG&E Energy
Corp., a Kentucky corporation ("Energy Corp.") and LG&E Energy Systems Inc., a
Kentucky corporation ("LES").
WHEREAS, Energy Corp. is the owner of 100% of the outstanding capital stock of
LES;
WHEREAS, LES intends from time to time to make borrowings from Lenders (as
hereinafter defined), issue debt securities to Lenders, guarantee loans to its
subsidiaries from Lenders and guarantee other obligations of its subsidiaries
to Lenders (such borrowings, debt securities and guarantees being hereinafter
referred to as "Obligations");
WHEREAS, Energy Corp. and LES desire to take certain actions to enhance and
maintain the financial condition of LES as hereinafter set forth in order to
enable LES and its subsidiaries to incur indebtedness on more advantageous and
reasonable terms; and
WHEREAS, the Lenders will rely upon this Support Agreement ("Agreement") in
making loans or extending credit to LES and its subsidiaries.
NOW, THEREFORE, in consideration of the premises, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):
"Adjusted Debt" shall mean Debt of Energy Corp. and its Consolidated
Subsidiaries minus (or plus in the case of a deficit) Excess Liquidity.
"Adjusted Net Working Capital" means the excess of the current assets of
Energy Corp. and its Consolidated Subsidiaries other than the Utility over
the current liabilities of Energy Corp. and its Consolidated Subsidiaries
other than the Utility, computed on a consolidated basis in accordance with
GAAP except that any Debt otherwise included in such consolidated current
liabilities shall be excluded if the same is due within twelve (12) months
of its incurrence.
"Consolidated Subsidiary" means each Subsidiary of Energy Corp. (whether
now existing or hereafter created or acquired) the financial statements of
which shall be (or should have been) consolidated on the financial
statements of Energy Corp. in accordance with GAAP.
"Debt" shall mean with respect to any person (without duplication) (A) all
liabilities, obligations and indebtedness of such person (i) for borrowed
money, (ii) evidenced by bonds, indentures, notes or similar instruments,
(iii) to pay the deferred purchase price of property or services, (iv) as
lessee under leases that shall have been or should be, in accordance with
GAAP recorded as capital leases, (v) under reimbursement agreements or
similar agreements with respect to the issuance of letters of credit (other
than obligations in respect of undrawn letters of credit which are opened
to provide for the payment of goods or services purchased in the ordinary
course of business), (vi) in respect of equity or debt commitments to the
extent reasonably quantifiable, (vii) arising as a result of a default or
failure to perform by such person or any of its Subsidiaries or any third
party under any guaranty or other contract or agreement (including
liabilities for liquidated damages) but only to the extent that any such
liabilities or obligations are then due and payable and are not subject to
good faith dispute, (viii) under direct guarantees or indemnities in
respect of, and to purchase or otherwise acquire, or otherwise assure a
creditor against loss in respect of, or to assure an obligee against
failure to make payment in respect of, liabilities, obligations or
indebtedness of others of the kinds referred to in clauses (i) through
(vii) above, in each case to the extent reasonably quantifiable, and (ix)
liabilities in respect of unfunded vested benefits under plans covered by
Title IV of ERISA; provided however, that "Debt" shall not include any
Nonrecourse Debt.
"Excess Liquidity" means, for Energy Corp. and its Consolidated
Subsidiaries other than the Utility, the lesser of cash and marketable
securities (determined in accordance with GAAP but valued at their market
value) or Adjusted Net Working Capital.
"GAAP" means generally accepted accounting principles consistently applied.
"Nonrecourse Debt" means all liabilities, obligations and indebtedness of
any Person of the types described in clauses (i) through (ix) of the
definition of "Debt" (such liabilities, obligations and indebtedness being
hereinafter referred to as "Obligations"), which Obligations are
nonrecourse to such Person (unless such Person is a special-purpose entity)
and any Affiliate of such Person, other than with respect to the interest
of such Person in the collateral, if any, securing such Obligations.
"Utility" means Louisville Gas and Electric Company, a Kentucky
corporation.
"Subsidiary" means for Energy Corp., any corporation, partnership or other
entity of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions of said corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any
other class or classes of such corporation, partnership or other entity
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by
Energy Corp. or one of more Subsidiaries of Energy Corp. or by Energy Corp.
and one or more Subsidiaries of Energy Corp.
2. Stock Ownership. While this Agreement remains in effect, Energy Corp.
will own, directly or indirectly, all of the capital stock of LES and
will obtain the prior written consent of each Lender before selling or
transferring any common stock of the Utility that it now owns or may
hereafter acquire. Each person, firm, corporation or other entity
designated as a Lender pursuant to Section 9 of this Agreement
acknowledges and agrees that, in consideration for it being designated as
a Lender, it will not (after consideration of those factors that it deems
relevant, including the manner in which the proceeds from any such sale
or transfer by Energy Corp. of the Utility's common stock are to be used
to satisfy Obligations, whether contingent or otherwise, owed to the
Lenders) unreasonably withhold its consent to such sale or transfer.
3. Negative Pledge. During the term of this Agreement, Energy Corp. will
not create or suffer to exist any lien, security interest or other charge
or encumbrance, upon or with respect to any common stock of the Utility
from time to time owned by Energy Corp. or any capital stock of LES from
time to time owned by Energy Corp.
4. Net Worth. Energy Corp. agrees that it shall cause LES to have at all
times a net worth (total assets less liabilities less intangible assets,
if any) of $25 million, as determined in accordance with generally
accepted accounting principles.
5. Liquidity Provision. If, during the term of this Agreement, LES is
unable to make timely payment of interest, principal or premium, if any,
or any other obligation on any Obligation owing to any Lender by LES,
Energy Corp. promptly shall provide to LES, at its request such funds (in
the form of cash or liquid assets in an amount sufficient to permit LES
to make timely payment in respect of such Obligation) as equity. Any
request for payment pursuant to this Section 5 shall specifically
identify the Obligation in respect of which LES is unable to make timely
payment and with respect to which LES seeks funds. LES, Energy Corp. and
each Lender hereby acknowledge that any funds provided by Energy Corp.
pursuant hereto shall be used solely to make payment with respect to such
identified Obligation and not for any other purposes. Without limiting
any obligations hereunder, in the event that a request is made with
respect to two or more identified Obligations and the funds provided by
Energy Corp. are not sufficient to pay the amounts owing on each such
identified Obligations, the funds provided by Energy Corp. shall be
applied pro rata (in proportion to the amounts then due and owing on such
Obligations) to such identified Obligations. Each of the parties hereto
acknowledges that Energy Corp.'s obligations hereunder do not constitute
a guarantee by Energy Corp. of the Obligations of LES. This Agreement
shall continue to be effective or be reinstated with respect to any
payment of an Obligation which is rescinded or must otherwise be returned
upon the insolvency, bankruptcy, reorganization, dissolution or
liquidation of LES, all as though such payment had not been made.
6. Capitalization of Energy Corp. Energy Corp. agrees to maintain a ratio of
the Adjusted Debt of Energy Corp. and its Consolidated Subsidiaries to
the sum of Adjusted Debt of Energy Corp. and its Consolidated
Subsidiaries plus capital stock (including capital in excess of par and
any other capital surplus) accounts (net of treasury shares) plus (or
minus in the case of a deficit) the retained earnings of Energy Corp. and
its Consolidated Subsidiaries, all computed in accordance with GAAP, not
to exceed 60%.
7. Waivers. Energy Corp. hereby waives any failure or delay on the part of
LES or any Lender in asserting or enforcing any of its rights or in
making any claims or demands hereunder. LES or any Lender may at any
time, without Energy Corp.'s consent, without notice to Energy Corp. and
without affecting or impairing LES's or such Lender's rights, or
impairing Energy Corp.'s obligations, hereunder, do any of the following
with respect to any Obligation: (a) make changes, modifications,
amendments or alternations, by operation of law or otherwise, including
without limitation, any increase in the principal amount of such
Obligation or the rate of interest payable thereon or any change in the
method of calculating the rate of interest payable thereon, (b) grant
renewals and extensions and extensions of time, for payment or otherwise,
(c) accept new or additional documents, instruments or agreements
relating to or in substitution of said Obligation, or (d) otherwise
handle the enforcement of their respective rights and remedies in
accordance with their business judgment.
8. Suspensions; Amendment. The Agreement may be amended or terminated at
any time by written amendment or agreement signed by both parties;
provided, however, that except as set forth in the next succeeding
sentence, (i) no amendment to this Agreement which adversely affects the
rights of LES or any Lender shall be effective as to any Lender until the
earlier to occur of (x) all Obligations owing to any Lender by LES on the
date of such amendment shall be discharged, (y) such Lender shall
consent in writing to such amendment or (z) in the event that such Lender
is bound with one or more other Lenders by an instrument, agreement or
other document pursuant to which the Obligation was issued, the requisite
consent of the Lenders to an amendment to this Agreement set forth in
such instrument, agreement or other document is obtained or such
amendment shall have been consented to by the requisite Lenders in
respect of such Obligation as shall be authorized pursuant to such
instrument, agreement or other document to authorize a similar amendment
in respect of such Obligation and (ii) no termination of this Agreement
shall be effective as to LES or any Lender until such time as all
Obligations owing to such Lender by LES on the date of such termination
shall have been discharged in full unless such Lender shall consent in
writing to the contrary. Notwithstanding the foregoing, and at the
election of Energy Corp., in the event that the LES shall maintain a
long-term debt rating (public or private) of not less than "A-" from
Standard & Poor's Ratings Service, a division of McGraw-Hill, Inc. or its
successor ("S&P") or a long-term debt rating of not less than "A3" from
Moody's Investor Service or its successor ("Moody's") for twelve (12)
consecutive months, then Energy Corp.'s obligations under this Agreement
shall be suspended and shall be of no force or effect as to the parties
hereto and as to all Lenders for so long as such rating of not less than
"A-" or "A3" is maintained.
9. Rights of Lenders. LES hereby assigns and pledges to Lenders for the
ratable benefit of each Lender, LES's rights under Sections 2, 3, 4, 5
and 6 of this Agreement, and, if LES fails or refuses to take timely
action to enforce its rights under Sections 2, 3, 4, 5 and 6 of this
Agreement, any Lender may enforce such rights on behalf of LES directly
against Energy Corp. Energy Corp. hereby consents to such assignment and
pledge and enforcement by the Lenders. The term "Lender" as used in this
Agreement shall mean any person, firm, corporation or other entity (i) to
which LES is indebted for money borrowed or to which LES otherwise owes
any Obligations or which is acting as trustee or authorized
representative on behalf of such person, firm, corporation or other
entity and (ii) which Energy Corp. has expressly designated in writing to
LES and to such Lender as being a Lender for purposes of this Agreement
and entitled to the rights and privileges hereof. Any designation of any
person, firm, corporation or other entity as a Lender for purposes of
this Agreement may provide that such person, firm, corporation or other
entity shall be a Lender only as to a specific, identified Obligation
owing to such person, firm, corporation or other entity by LES or that
such person, firm, corporation or other entity shall be a Lender as to
all Obligations at any time owing to such Lender by LES. LES and Energy
Corp. agree, for the benefit of Lenders, to execute and deliver all
further instruments and documents, and take all further action that
Lenders may reasonably request in order to perfect and protect any
security interest purported to be granted hereby.
10. Notices. Any notice, instruction, request, consent, demand or other
communication required or contemplated by this Agreement shall be in
writing, shall be given or made by United States first class mail, telex,
facsimile transmission or hand delivery addressed as follows:
If to Energy Corp.: LG&E Energy Corp.
220 W. Main Street (P.O. Box 32030)
Louisville, Kentucky 40232
Attention: Treasurer
If to LES: LG&E Energy Systems Inc.
220 W. Main Street (P.O. Box 32030)
Louisville, Kentucky 40232
Attention: Treasurer
11. Successors. This Agreement shall be binding upon the parties hereto and
their respective successors and assigns and is also intended for the
benefit of the Lenders, and, notwithstanding that such Lenders are not
parties hereto, each Lender shall be entitled to the full benefits of
this Agreement and to enforce the covenants and agreements contained
herein as set forth in Section 9. This Agreement is not intended for the
benefit of any person other than Lenders, and shall not confer or be
deemed to confer upon any such person any benefits, rights or remedies
hereunder.
12. Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Kentucky.
LG&E ENERGY CORP.
____________________________
Charles A. Markel III
Title: Treasurer
LG&E ENERGY SYSTEMS INC.
____________________________
Charles A. Markel III
Title: Treasurer
EXHIBIT 10.03
U.S. $200,000,000
Credit Agreement
Dated as of May 12, 1995
Among
LG&E Gas Systems Inc.
as Borrower
The Banks Named Herein
as Lenders
and
Bank of Montreal
as Agent
Table of Contents
Section Description Page
Article I Definitions and Accounting Terms 1
Section 1.01 .Certain Defined Terms 1
Section 1.02 .Computation of Time Periods 13
Section 1.03 .Accounting Terms 13
Article II Amounts and Terms of the Advances 13
Section 2.01 .The Contract Advances 13
Section 2.02 .Making the Contract Advances 13
Section 2.03 .Letters of Credit 15
Section 2.04 .The Auction Advances 20
Section 2.05 .Fees 24
Section 2.06 .Reduction of the Commitments 24
Section 2.07 .Repayment of Contract Advances 25
Section 2.08 .Interest on Contract Advances 25
Section 2.09 .Additional Interest on Eurodollar
Rate Advances and Eurodollar Rate
Auction Advances 25
Section 2.10 .Interest Rate Determination 26
Section 2.11 .Conversion of Contract Advances 27
Section 2.12 .Prepayments 28
Section 2.13 .Increased Costs 29
Section 2.14 .Illegality 30
Section 2.15 .Payments and Computations 30
Section 2.16 .Taxes 32
Section 2.17 .Sharing of Payments, Etc. 33
Article III Conditions of Lending 34
Section 3.01 .Conditions Precedent to Initial Advances 34
Section 3.02 .Condition Precedent to Each Contract
Borrowing and each Letter of Credit 37
Section 3.03 .Conditions Precedent to Each
Auction Borrowing 37
Section 3.04 .Condition Precedent to Certain Conversions 38
Article IV Representations and Warranties 38
Section 4.01 .Representations and Warranties
of the Borrower 38
Article V Covenants of the Borrower 41
Section 5.01 .Affirmative Covenants 41
Section 5.02 .Negative Covenants 43
Article VI Events of Default 47
Section 6.01 .Events of Default 47
Section 6.02 .The Letters of Credit 50
Article VII The Agent 50
Section 7.01 .Authorization and Action 50
Section 7.02 .Agent's Reliance, Etc 51
Section 7.03 .Bank of Montreal and Affiliates 51
Section 7.04 .Lender Credit Decision 51
Section 7.05 .Indemnification 51
Section 7.06 .Successor Agent 52
Article VIII Miscellaneous 53
Section 8.01 .Amendments, Etc 53
Section 8.02 .Notices, Etc 53
Section 8.03 .No Waiver, Remedies 53
Section 8.04 .Costs and Expenses; Indemnification 54
Section 8.05 .Right of Set-off 55
Section 8.06 .Binding Effect 55
Section 8.07 .Assignments and Participations 55
Section 8.08 .Discretion of Lender as to Manner of Funding 58
Section 8.09 .Governing Law 58
Section 8.10 .Waiver of July Trial 58
Section 8.11 .Execution in Counterparts 58
Signatures 59
Schedule I- List of Applicable Lending Offices
Exhibit A-1- Form of Contract Note
Exhibit A-2- Form of Auction Note
Exhibit B-1- Form of Notice of Contract Borrowing
Exhibit B-2- Form of Notice of Auction Borrowing
Exhibit C- Form of Assignment and Acceptance
Exhibit D- Form of Opinion of Special Counsel for the Borrower and
the Parent
Exhibit E- Form of Opinion of Corporate Attorney for the Borrower and
the Parent
Exhibit F- Form of Opinion of Special Illinois Counsel to the Agent
Exhibit G- Form of Support Agreement
Exhibit H- Existing Letters of Credit
Credit Agreement
Dated as of May 12, 1995
LG&E Gas Systems Inc., a Delaware corporation (the "Borrower"), the banks (the
"Banks") listed on the signature pages hereof and Bank of Montreal as agent
(the "Agent") for the Lenders hereunder, agree as follows:
Article I
Definitions and Accounting Terms
Section 1.01. Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Acquisition" shall mean (i) the acquisition by the Borrower or a Wholly Owned
Subsidiary of the Borrower of 8% senior secured notes due 2003 of Hadson and
the release of the collateral security therefor, (ii) the acquisition by the
Borrower or a Wholly Owned Subsidiary of the Borrower of all preferred stock of
Hadson other than its Junior Exercisable Convertible Preferred Stock Series B,
(iii) the acquisition by the Borrower or a Wholly Owned Subsidiary of the
Borrower of the 9% junior notes of Hadson, and (iv) the merger of a Wholly
Owned Subsidiary of the Borrower with and into Hadson in a merger which results
in not less than 65% (on a fully diluted basis) of the common stock of Hadson
being owned by a Wholly Owned Subsidiary of the Borrower.
"Adjusted CD Rate" means, for any Interest Period for each Adjusted CD Rate
Advance made as part of the same Contract Borrowing, an interest rate per annum
equal to the sum of:
(a) the rate per annum obtained by dividing (i) the rate of interest deter-
mined by the Agent to be the average (rounded upward to the nearest whole
multiple of 1/100 of 1% per annum if such average is not such a multiple)
of the consensus bid rate determined by each of the Reference Banks for
the bid rates per annum, at 9:00 A.M. (Chicago time) (or as soon thereaf-
ter as practicable) on the first day of such Interest Period, of Chicago
or New York certificate of deposit dealers of recognized standing select-
ed by such Reference Bank for the purchase at face value of certificates
of deposit of such Reference Bank in an amount substantially equal to
such Reference Bank's Adjusted CD Rate Advance made as part of such
Contract Borrowing and with a maturity equal to such Interest Period, by
(ii) a percentage equal to 100% minus the Adjusted CD Rate Reserve
Percentage for such Interest Period, plus
(b) the Assessment Rate for such Interest Period.
The Adjusted CD Rate for the Interest Period for each Adjusted CD Rate Advance
made as part of the same Contract Borrowing shall be determined by the Agent on
the basis of applicable rates furnished to and received by the Agent from the
Reference Banks on the first day of such Interest Period, subject, however, to
the provisions of Section 2.10.
"Adjusted CD Rate Advance" means a Contract Advance that bears interest as
provided in Section 2.08(b).
"Adjusted CD Rate Reserve Percentage" for the Interest Period for each Adjusted
CD Rate Advance made as part of the same Contract Borrowing means the reserve
percentage applicable on the first day of such Interest Period under regula-
tions 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, but not limited to, any emergency, supplemental or other marginal
reserve requirement) for a member bank of the Federal Reserve System in New
York City with deposits exceeding one billion dollars with respect to liabili-
ties consisting of or including (among other liabilities) U.S. dollar
nonpersonal time deposits in the United States with a maturity equal to such
Interest Period.
"Adjusted Debt" means Debt of the Parent and its Consolidated Subsidiaries
minus (or plus in the case of a deficit) Excess Liquidity.
"Adjusted Net Working Capital" means the excess of the current assets of the
Parent and its Consolidated Subsidiaries other than the Utility over current
liabilities of the Parent and its Consolidated Subsidiaries other than the
Utility, computed on a consolidated basis in accordance with GAAP except that
any Debt otherwise included in such consolidated current liabilities shall be
excluded if the same is due within 12 months of its incurrence.
"Advance" means a Contract Advance or an Auction Advance.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person.
"Applicable Lending Office" means, with respect to each Lender, such Lender's
Domestic Lending Office in the case of a Base Rate Advance, such Lender's CD
Lending Office in the case of an Adjusted CD Rate Advance, and such Lender's
Eurodollar Lending Office in the case of a Eurodollar Rate Advance and, in the
case of an Auction Advance, the office of such Lender notified by such Lender
to the Agent as its Applicable Lending Office with respect to such Auction
Advance.
"Applicable Margin" means, for any Contract Advance, the interest rate per
annum set forth below in the column entitled "Base Rate", "CD Rate", or
"Eurodollar Rate," as appropriate:
Base Eurodollar
Level Rate CD Rate Rate
For each day 0% 0.35% 0.20%
Level I status
exists
For each day 0% 0.425% 0.30%
Level II status
exists
For each day 0.125% 0.475% 0.35%
Level III status
exists
For each day 0.25% 0.625% 0.50%
Level IV status
exists
"Applications" has the meaning specified in Section 2.03(b).
"Assessment Rate" for the Interest Period for each Adjusted CD Rate Advance
made as part of the same Contract Borrowing means the annual assessment rate
estimated by the Agent on the first day of such Interest Period for determining
the then current annual assessment payable by a member of the Bank Insurance
Fund classified as adequately capitalized and within supervisory subgroup "A"
(or a comparable successor assessment risk classification) within the meaning
of 12 C.F.R. Section 327.3(d) (or any successor provision) to the Federal
Deposit Insurance Corporation (or such successor's) insuring time deposits at
offices of such institution in the United States. The Adjusted CD Rate shall
be adjusted automatically on and as of the effective date of any change in the
Assessment Rate.
"Assignment and Acceptance" means an assignment and acceptance entered into by
a Lender and an Eligible Assignee, and accepted by the Agent, in substantially
the form of Exhibit C hereto.
"Auction Advance" means an advance by a Lender to the Borrower as part of an
Auction Borrowing resulting from the auction bidding procedure described in
Section 2.04.
"Auction Borrowing" means a borrowing consisting of simultaneous Auction
Advances from each of the Lenders whose offer to make one or more Auction
Advances as part of such borrowing has been accepted by the Borrower under the
auction bidding procedure described in Section 2.04.
"Auction Note" means a promissory note of the Borrower payable to the order of
any Lender, in substantially the form of Exhibit A-2 hereto, evidencing the
indebtedness of the Borrower to such Lender resulting from an Auction Advance
made by such Lender.
"Base Rate" means, for any period, a fluctuating interest rate per annum as
shall be in effect from time to time which rate per annum shall at all times be
equal to the higher of:
(a) the rate of interest announced by the Agent from time to time as its
prime commercial rate, or equivalent, for U.S. Dollar loans to borrowers
located in the United States, with any change in the Base Rate resulting
from a change in said prime commercial rate to be effective as of the
date of the relevant change in said prime commercial rate; and
(b) 1/2 of 1% per annum above the Federal Funds Rate in effect from time to
time.
"Base Rate Advance" means a Contract Advance that bears interest as provided in
Section 2.08(a).
"Borrowing" means a Contract Borrowing or an Auction Borrowing.
"Business Day" means a day of the year on which banks are not required or
authorized to close in Chicago, Illinois and, if the applicable Business Day
relates to any Eurodollar Rate Advances or Eurodollar Rate Auction Advances, on
which dealings are carried on in the interbank market for eurodollars.
"Capitalization Ratio" means the ratio of Adjusted Debt of the Parent and its
Consolidated Subsidiaries to the total for the Parent and such Consolidated
Subsidiaries of Adjusted Debt and the sum of capital stock (including capital
in excess of par and any other capital surplus) accounts (net of treasury
shares) plus (or minus in the case of a deficit) the retained earnings of the
Parent and its Consolidated Subsidiaries, all computed in accordance with GAAP.
"CD Lending Office" means, with respect to any Lender, the office of such
Lender specified as its "CD Lending Office" opposite its name on Schedule I
hereto or in the Assignment and Acceptance pursuant to which it became a Lender
(or, if no such office is specified, its Domestic Lending Office), or such
other office of such Lender as such Lender may from time to time specify to the
Borrower and the Agent.
"Closing Date" means the first date on which all conditions set forth
inSection 3.01 hereof have been satisfied or waived in writing by the Agent.
"Commitment" has the meaning specified in Section 2.01.
"Consolidated Net Income" for any period shall mean the net earnings of the
Borrower and its Consolidated Subsidiaries for such period computed on a
consolidated basis in accordance with GAAP, and excluding undistributed
earnings of entities which are not Consolidated Subsidiaries and without
limiting the foregoing, after the deduction from gross income of all charges
and reserves (including charges and reserves for all taxes on or measured by
income), but excluding any profits or losses (as determined in accordance with
GAAP) on the sale or other disposition of fixed or capital assets or on the
acquisition, retirement, sale or other disposition of stock or securities of
the Borrower or any Consolidated Subsidiary, and also excluding any taxes on
such profits and any tax deductions or credits on account of any such losses.
"Consolidated Subsidiary" means for any Person, each Subsidiary of such Person
(whether now existing or hereafter created or acquired) the financial state-
ments of which shall be (or should have been) consolidated with the financial
statements of such Person in accordance with GAAP.
"Contract Advance" means an advance by a Lender to the Borrower as part of a
Contract Borrowing and refers to an Adjusted CD Rate Advance, a Base Rate
Advance or a Eurodollar Rate Advance, each of which shall be a "Type" of
Contract Advance.
"Contract Borrowing" means a borrowing consisting of simultaneous Contract
Advances of the same Type made by each of the Lenders pursuant to Section 2.01
or Converted pursuant to Section 2.10 or 2.11.
"Contract Note" means a promissory note of the Borrower payable to the order of
any Lender, in substantially the form of Exhibit A-1 hereto, evidencing the
aggregate indebtedness of the Borrower to such Lender resulting from the
Contract Advances made by such Lender.
"Convert", "Conversion" and "Converted" each refers to a conversion of Advances
of one Type into Advances of another type or the selection of a new, or the
renewal of the same, Interest Period for Eurodollar Rate Advances or Adjusted
CD Rate Advances, as the case may be, pursuant to Section 2.10 or 2.11.
"Debt" means with respect to any Person (without duplication), all liabilities,
obligations and indebtedness of such Person (i) for borrowed money, (ii) evi-
denced by bonds, indentures, notes, or other similar instruments, (iii) to pay
the deferred purchase price of property or services, (iv) as lessee under
leases that shall have been or should be, in accordance with GAAP, recorded as
capital leases, (v) under reimbursement agreements or similar agreements with
respect to the issuance of letters of credit (other than obligations in respect
of undrawn letters of credit which are opened to provide for the payment of
goods or services purchased in the ordinary course of business), (vi) in
respect of equity or debt commitments to the extent reasonably quantifiable,
(vii) arising as a result of a default or failure to perform by such Person or
any of its Subsidiaries or any third party under any guaranty or other contract
or agreement (including liabilities for liquidated damages) but only to the
extent that any such liabilities or obligations are then due and payable and
are not subject to a good faith dispute, (viii) under direct guaranties and
indemnities in respect of, and to purchase or otherwise acquire, or otherwise
to assure a creditor against loss in respect of, or to assure an obligee
against failure to make payment in respect of, liabilities, obligations or
indebtedness of others of the kinds referred to in clauses (i) through (vii)
above, in each case to the extent reasonably quantifiable, and (ix) liabilities
in respect of unfunded vested benefits under plans covered by Title IV of
ERISA.
"Domestic Lending Office" means, with respect to any Lender, the office of such
Lender specified as its "Domestic Lending Office" opposite its name on Sched-
ule I hereto or in the Assignment and Acceptance pursuant to which it became a
Lender, or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.
"EBITDA" means with reference to any period, Consolidated Net Income for such
period plus all amounts deducted in arriving at such Consolidated Net Income in
respect of (i) Interest Expense, (ii) taxes imposed on or measured by income or
excess profits and (iii) depreciation, depletion and amortization, all computed
in accordance with GAAP.
"Eligible Assignee" means (i) a commercial bank organized under the laws of the
United States, or any State thereof; (ii) a commercial bank organized under the
laws of any other country that is a member of the OECD or has concluded special
lending arrangements with the International Monetary Fund associated with its
General Arrangements to Borrow, or a political subdivision of any such country,
provided that such bank is acting through a branch or agency located in the
United States; (iii) a finance company, insurance company or other financial
institution or fund (whether a corporation, partnership or other entity)
engaged generally in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business; (iv) the central bank of any
country that is a member of the OECD; or (v) any Bank; provided, however, that
(A) any such Person described in clause (i), (ii), (iii) or (iv) above shall
also (x) have outstanding unsecured indebtedness that is rated A- or better by
S&P or A3 or better by Moody's (or an equivalent rating by another nationally
recognized credit rating agency of similar standing if neither such corporation
is in the business of rating unsecured indebtedness of entities engaged in such
businesses) and (y) have combined capital and surplus (as established in its
most recent report of condition to its primary regulator) of not less than
$250,000,000 (or its equivalent in foreign currency), and (B) any Person
described in clause (ii), (iii) or (iv) above shall, on the date on which it is
to become a Lender hereunder, be entitled to receive payments hereunder without
deduction or withholding of any United States Federal income taxes (as contem-
plated by Section 2.16(d)).
"Environmental Laws" means any federal, state or local laws, ordinances or
codes, rules, orders, or regulations relating to pollution or protection of the
environment, including, without limitation, laws relating to hazardous sub-
stances, laws relating to reclamation of land and waterways and laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata) or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, dispos-
al, transport or handling of pollution, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued thereun-
der, each as in effect and amended and modified from time to time.
"ERISA Affiliate" of a person or entity means any trade or business (whether or
not incorporated) that is a member of a group of which such person or entity is
a member and that is under common control with such person or entity within the
meaning of Section 414 of the Internal Revenue Code of 1986, and the regula-
tions promulgated and rulings issued thereunder, each as in effect and amended
or modified from time to time.
"ERISA Plan" means an employee benefit plan maintained for employees of any
Person or any ERISA Affiliate of such Person subject to Title IV of ERISA.
"ERISA Termination Event" means (i) a Reportable Event described in Sec-
tion 4043 of ERISA and the regulations issued thereunder (other than a Report-
able Event not subject to the provision for 30-day notice to PBGC), or (ii) the
withdrawal of the Borrower or any of its ERISA Affiliates from an ERISA Plan
during a plan year in which the Borrower or any of its ERISA Affiliates was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the
filing of a notice of intent to terminate an ERISA Plan or the treatment of an
ERISA Plan amendment as a termination under Section 4041 of ERISA, or (iv) the
institution of proceedings to terminate an ERISA Plan by the PBGC or to appoint
a trustee to administer any ERISA Plan, or (v) any other event or condition
that would constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer any ERISA Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in Regulation
D of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the office of
such Lender specified as its "Eurodollar Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar Rate
Advance made as part of the same Contract Borrowing or for the term of each
Eurodollar Rate Auction Advance made as part of the same Auction Borrowing, an
interest rate per annum equal to the average (rounded upward to the nearest
whole multiple of 1/16 of 1% per annum, if such average is not such a multiple)
of the rate per annum at which deposits in U.S. dollars are offered by the
principal office of each of the Reference Banks to prime banks in the interbank
market at 9:00 A.M. (Chicago time) two Business Days before the first day of
such Interest Period or such Auction Borrowing, as the case may be, in an
amount substantially equal to such Reference Bank's Eurodollar Rate Advance
made as part of such Contract Borrowing or, in the case of an Auction Borrow-
ing, in an amount substantially equal to such Auction Borrowing and for a
period equal to such Interest Period or such term, as the case may be. The
Eurodollar Rate for the Interest Period for each Eurodollar Rate Advance made
as part of the same Contract Borrowing or for the term of each Eurodollar Rate
Auction Advance comprising part of the same Auction Borrowing shall be deter-
mined by the Agent on the basis of applicable rates furnished to and received
by the Agent from the Reference Banks two Business Days before the first day of
such Interest Period or such Auction Borrowing, subject, however, to the
provisions of Section 2.10.
"Eurodollar Rate Advance" means a Contract Advance that bears interest as
provided in Section 2.08(c).
"Eurodollar Rate Auction Advances" means an Auction Advance in connection with
which the Eurodollar Rate shall be the basis used by the Lenders in determining
the rates of interest to be offered by them pursuant to Section 2.04 and with a
term of 1, 2, 3 or 6 months; provided, if the last day of the term of any
Eurodollar Rates Auction Advance would occur on a day other than a Business Day
the last day of such term shall be extended to occur on the next succeeding
Business Day unless such extension would cause the last day of such term to
occur in the next following calendar month, the last day of such term shall
occur on the next preceding Business Day.
"Eurodollar Rate Reserve Percentage" of any Lender for the Interest Period for
any Eurodollar Rate Advance or Eurodollar Rate Auction Advance means the
reserve percentage applicable during such Interest Period or such term, as the
case may be (or if more than one such percentage shall be so applicable, the
daily average of such percentages for those days in such Interest Period during
which any such percentage shall be so 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, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for such Lender with respect to liabilities or assets consisting of or includ-
ing Eurocurrency Liabilities having a term equal to such Interest Period or
such term, as the case may be.
"Events of Default" has the meaning specified in Section 6.01.
"Excess Liquidity" means, for the Parent and its Consolidated Subsidiaries
other than the Utility, the lesser of cash and marketable securities (deter-
mined in accordance with GAAP but valued at their market value) or Adjusted Net
Working Capital.
"Exchange Act" means the Securities Exchange Act of 1934, and the regulations
promulgated thereunder, in each case as amended from time to time.
"Existing Applications" means the applications for the Existing Letters of
Credit.
"Existing Letters of Credit" means the letters of credit listed on Exhibit H
hereto and any other letters of credit issued under the Hadson Credit Agreement
which are outstanding on the Closing Date or which have been drawn on and Bank
of Montreal has not received reimbursement therefor.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"First Mortgage Bonds" means the bonds issued from time to time pursuant to the
Trust Indenture, dated November 1, 1949, between the Utility and Harris Trust
and Savings Bank, as Trustee, as amended and supplemented from time to time.
"Fixed Rate Auction Advance" means an Auction Advance in connection with which
the rates of interest offered by the Lenders pursuant to Section 2.04 shall be
fixed rates per annum and with a term of 7 to 180 days.
"GAAP" means generally accepted accounting principles applied on a basis
consistent with those used in the preparation of the audit report referred to
in Section 4.01(f) hereof.
"Guaranteed Obligations" has the meaning specified in Section 2.03(g).
"Hadson" means Hadson Corporation, a Delaware corporation.
"Hadson Credit Agreement" has the meaning specified in Section 3.01(c).
"Initial Borrowing" means the time at which the Lenders make the initial
Advances to the Borrower hereunder in accordance with the terms hereof.
"Interest Expense" means with reference to any period all interest charges
(including amortization of debt discount and expense) and letter of credit fees
accrued for such period, whether or not paid, all computed on a consolidated
basis for the Borrower and its Consolidated Subsidiaries in accordance with
GAAP.
"Interest Period" means, for each Contract Advance made as part of the same
Contract Borrowing, the period commencing on the date of such Contract Advance
or the date of the Conversion of any Contract Advance into such a Contract
Advance and ending on the last day of the period selected by the Borrower
pursuant to the provisions below and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below. The duration of each such Interest Period shall be 30, 60,
90 or 180 days in the case of an Adjusted CD Rate Advance, and 1, 2, 3 or 6
months in the case of a Eurodollar Rate Advance, in each case as the Borrower
may select, upon notice received by the Agent not later than 10:00 A.M.
(Chicago time) on the third Business Day prior to the first day of such
Interest Period; provided, however, that:
(i) the Borrower may not select any Interest Period that ends after the
Termination Date;
(ii) Interest Periods commencing on the same date for Contract Advances made
as part of the same Contract Borrowing shall be of the same duration; and
(iii) whenever the last day of any Interest Period would otherwise occur on a
day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, provid-
ed, in the case of any Interest Period for a Eurodollar Rate Advance,
that if such extension would cause the last day of such Interest Period
to occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day.
"Lenders" means the Banks listed on the signature pages hereof and each
Eligible Assignee that shall become a party hereto pursuant to Section 8.07.
"Letters of Credit" means all letters of credit issued pursuant to Section 2.03
together with the Existing Letters of Credit.
"Level I Status" means the S&P Rating is A- or higher and/or the Moody's Rating
is A3 or higher.
"Level II Status" means Level I Status does not exist but the S&P Rating is BBB
or higher and/or the Moody's Rating is Baa2 or higher.
"Level III Status" means neither Level I Status nor Level II Status exists, but
the S&P Rating is BBB- and/or the Moody's Rating is Baa3.
"Level IV Status" means the S&P Rating is BB+ or lower and the Moody's Rating
is Ba1 or lower or both ratings have been suspended, withdrawn or otherwise not
provided.
"L/C Commitment" means $100,000,000.
"L/C Documents" means the Letters of Credit, any draft or other document
presented in connection with a drawing thereunder, the Applications and this
Agreement.
"L/C Obligations" means the aggregate undrawn face amount of all outstanding
Letters of Credit (including the Existing Letters of Credit) and all outstand-
ing Reimbursement Obligations.
"Majority Lenders" means Lenders having at least 66-2/3% of the Commitments or
if the Commitments have terminated in whole, the holders of 66 2/3% or more of
the Advances and the credit risk incident to the Letters of Credit, (provided
that, for purposes hereof, neither the Borrower, nor any of its Affiliates, if
a Lender, shall be included in (i) the Lenders having such amount of the
Commitments or the Advances or credit risk incident to the Letters of Credit or
(ii) determining the total amount of the Commitments or the Advances).
"Material Consolidated Subsidiary" means for any Person any Consolidated
Subsidiary of such Person the assets, net income or net worth of which consti-
tuted 10% or more of the consolidated assets, net income or net worth of such
Person and all of its Subsidiaries computed as of the last day of the fiscal
quarter most recently completed prior to the determination of whether such
Consolidated Subsidiary is a Material Consolidated Subsidiary (in the case of
assets and net worth) or for the twelve months ended as of the close of such
calendar quarter (in the case of net income).
"Moody's" means Moody's Rating Group or any successor thereto.
"Moody's Rating" means at any time the rating assigned by Moody's to the
outstanding unsecured long-term senior indebtedness of the Parent, or if such
debt is not then rated, the rating two levels below the rating assigned by
Moody's to the First Mortgage Bonds.
"Multiemployer Plan" means a "multiemployer plan" as defined in Sec-
tion 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making
or accruing an obligation to make contributions, or has within any of the
preceding three plan years made or accrued an obligation to make contributions.
"Note" means a Contract Note or an Auction Note.
"Notice of Contract Borrowing" has the meaning specified in Section 2.02(a).
"Notice of Auction Borrowing" has the meaning specified in Section 2.04(a).
"OECD" means the Organization for Economic Cooperation and Development.
"Oil and Gas Business" means the business of acquiring oil and/or gas proper-
ties, exploring for and/or producing and/or marketing and/or transporting,
processing or storing oil and/or natural gas and/or natural gas liquids and/or
other hydrocarbons and/or dealing in oil and/or gas properties, including as
part of the Oil and Gas Business the sale of natural gas, natural gas liquids
and other hydrocarbons at wholesale or retail and the ownership and operation
of pipelines, gathering and storage systems and gas processing plants.
"Parent" means LG&E Energy Corp., a Kentucky corporation.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity succeeding
to any or all of its functions under ERISA.
"Permitted Subsidiaries" means those subsidiaries of the Borrower which are
permitted to apply for Letters of Credit pursuant to Section 2.03 hereof.
"Person" means an individual, partnership, limited liability company, corpora-
tion (including a business trust), joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
"Reference Banks" means Bank of Montreal, such of the other Lenders (not
exceeding two) as shall be designated as such by the Agent and the Borrower and
any Lender designated as a successor or replacement Reference Bank pursuant to
Section 2.10(a).
"Register" has the meaning specified in Section 8.07(c).
"Reimbursement Obligations" has the meaning specified in Section 2.03(c).
"Reportable Event" has the meaning assigned to that term in Title IV of ERISA.
"S&P" means Standard & Poor's Corporation or any successor thereto.
"S&P Rating" means at any time the rating assigned by S&P to the outstanding
unsecured long-term senior indebtedness of the Parent, or if such debt is not
then rated, the rating two levels below the rating assigned by S&P to the First
Mortgage Bonds.
"Subsidiary" means, for any Person, any corporation, partnership or other
entity of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at the
time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.
"Wholly Owned Subsidiary" shall mean any such corporation, partnership or other
entity of which all of the equity securities or other ownership interests
(other than, in the case of a corporation, directors' qualifying shares) are so
owned or controlled.
"Support Agreement" means the Support Agreement, dated as of May 12, 1995,
between the Parent and the Borrower in the form annexed hereto as Exhibit G ,
as the same may be amended or modified from time to time in accordance with the
terms thereof and of this Agreement together with the letter dated May 12, 1995
from the Parent to the Agent designating the Debt arising hereunder as entitled
to the benefit thereof.
"Systems" means LG&E Energy Systems Inc., a Kentucky corporation and any
successors thereto.
"Termination Date" means the fifth anniversary of the date of this Agreement or
the earlier date of termination in whole of the Commitments pursuant to
Section 2.06 or Section 6.01 hereof.
"Utility" means Louisville Gas and Electric Company, a Kentucky corporation,
and any successor thereto.
"Yield" means, for any Auction Advance, the effective rate per annum at which
interest on such Auction Advance is payable, computed on the basis of a year of
360 days for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest is payable.
Section 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
Section 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(f) hereof.
Article II
Amounts and Terms of the Advances
Section 2.01. The Contract Advances. Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make Contract Advances to
the Borrower from time to time on any Business Day during the period from the
date hereof until the Termination Date in an aggregate amount not to exceed at
any time outstanding the amount set opposite such Lender's name on the signa-
ture pages hereof or, if such Lender has entered into any Assignment and
Acceptance, set forth for such Lender in the Register maintained by the Agent
pursuant to Section 8.07(c), as such amount may be reduced pursuant to Sec-
tion 2.06 (such Lender's "Commitment"), provided that the aggregate amount of
the Commitments of the Lenders shall be deemed used from time to time to the
extent of the aggregate amount of the Auction Advances then outstanding and the
aggregate amount of the L/C Obligations then outstanding, and such deemed use
of the aggregate amount of the Commitments shall be applied to the Lenders
ratably according to their respective Commitments. Each Contract Borrowing
shall be in an aggregate amount not less than $5,000,000 or an integral
multiple of $500,000 in excess thereof and shall consist of Contract Advances
of the same Type and having the same Interest Period made or Converted on the
same day by the Lenders ratably according to their respective Commitments.
Within the limits of each Lender's Commitment, the Borrower may from time to
time borrow, prepay pursuant to Section 2.12 and reborrow under this Sec-
tion 2.01. Subject to the restriction set forth in Section 2.02(e), more than
one Contract Borrowing may be made on any Business Day.
Section 2.02. Making the Contract Advances. (a) Each Contract Borrowing
shall be made on notice, given not later than (i) 10:00 A.M. (Chicago time) on
the third Business Day prior to the date of any proposed Contract Borrowing
comprising Eurodollar Rate Advances or Adjusted CD Rate Advances, and (ii) 9:00
A.M. (Chicago time) on the date of any proposed Contract Borrowing comprising
Base Rate Advances, by the Borrower to the Agent, which shall give to each
Lender prompt notice thereof; provided, that the Lenders will, to the extent
feasible, fund the initial Contract Borrowing on less notice in order to
accommodate the needs of the Borrower in funding the Acquisition. Each such
notice of a Contract Borrowing (a "Notice of Contract Borrowing") shall be by
telecopier, telex or cable, confirmed immediately in writing, in substantially
the form of Exhibit B-1 hereto, specifying therein the requested (i) date of
such Contract Borrowing, (ii) Type of Contract Advances to be made in connec-
tion with such Contract Borrowing, (iii) aggregate amount of such Contract
Borrowing, and (iv) in the case of a Contract Borrowing comprising Adjusted CD
Rate Advances or Eurodollar Rate Advances, initial Interest Period for each
such Contract Advance. Each Lender shall, before 11:00 A.M. (Chicago time) on
the date of such Contract Borrowing, make available for the account of its
Applicable Lending Office to the Agent at its address referred to in Sec-
tion 8.02, in same day funds, such Lender's ratable portion (according to the
Lenders' respective Commitments) of such Contract Borrowing. After the Agent's
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Article III, the Agent will make such funds available to the Borrower
at the Agent's aforesaid address.
(b) Each Notice of Contract Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Contract Borrowing that the related Notice of
Contract Borrowing specifies is to comprise Adjusted CD Rate Advances or
Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified in such Notice of Contract Borrowing
for such Contract Borrowing the applicable conditions set forth in Article III,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Contract Advance to be made by such Lender as part of such
Contract Borrowing when such Contract Advance, as a result of such failure, is
not made on such date.
(c) Unless the Agent shall have received notice from a Lender prior to the
date of any Contract Borrowing that such Lender will not make available to the
Agent such Lender's ratable portion of such Contract Borrowing, the Agent may
assume that such Lender has made such portion available to the Agent on the
date of such Contract Borrowing in accordance with subsection (a) of this
Section 2.02 and the Agent may, in reliance upon such assumption, make avail-
able to the Borrower on such date a corresponding amount. If and to the extent
that such Lender shall not have so made such ratable portion available to the
Agent, such Lender and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Agent, at (i) in the case of the Borrow-
er, the interest rate applicable at the time to Contract Advances made in
connection with such Contract Borrowing and (ii) in the case of such Lender,
the Federal Funds Rate. If such Lender shall repay to the Agent such corre-
sponding amount, such amount so repaid shall constitute such Lender's Contract
Advance as part of such Contract Borrowing for purposes of this Agreement.
Nothing in this subsection shall be deemed to relieve any Lender from its
obligation to make any Contract Advance required to be made by such Lender
hereunder or to prejudice any rights the Borrower may have against any Lender
as a result of any default by such Lender hereunder.
(d) The failure of any Lender to make the Contract Advance to be made by it
as part of any Contract Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Contract Advance on the date of such
Contract Borrowing, but no Lender shall be responsible for the failure of any
other Lender to make the Contract Advance to be made by such other Lender on
the date of any Contract Borrowing.
(e) Notwithstanding anything to the contrary contained herein, no more than
eight Contract Borrowings may be outstanding at any time.
Section 2.03. Letters of Credit. (a) General Terms. Subject to the
terms and conditions hereof, the Agent shall issue Letters of Credit at the
request of the Borrower or any Permitted Subsidiary in an aggregate undrawn
face amount up to the amount of the L/C Commitment, provided that the aggregate
L/C Obligations at any time outstanding shall in no event exceed the difference
between the Commitments in effect at such time and the aggregate principal
amount of Advances then outstanding and no Letter of Credit shall be issued to
support payment of Debt of any Person (other than Debt of the type described in
clause (vii) of the definition of Debt) absent the written consent of the
Lenders. Each Letter of Credit shall have an expiry date which is not later
than the Termination Date or two years from the date of issuance, if earlier,
shall be a letter of credit the Agent may lawfully issue and shall conform to
the general requirements of the Agent for letters of credit it issues. Each
Letter of Credit shall be issued by the Agent, but each Lender shall be
obligated to reimburse the Agent for its pro rata share of the amount of each
drawing thereunder and, accordingly, the undrawn face amount of each Letter of
Credit shall constitute usage of the Commitment of each Lender pro rata in
accordance with each Lender's Commitment.
(b) Applications. At any time before the Termination Date, the Agent shall,
at the request of the Borrower or any Permitted Subsidiary, issue one or more
Letters of Credit, in a form satisfactory to the Agent, in an aggregate face
amount as set forth above, upon the receipt of a duly executed application for
the relevant Letter of Credit in the form customarily prescribed by the Agent
for the type of Letter of Credit requested or through the Agent's system for
electronically applying for Letters of Credit (each an "Application" and
collectively when taken together with the Existing Applications, the "Applica-
tions"). This Agreement supersedes any terms of the Applications which are
irreconcilably inconsistent with the terms hereof. Notwithstanding anything
contained in any Application to the contrary (i) the Borrower's obligation to
pay fees in connection with each Letter of Credit shall be as exclusively set
forth in Section 2.05, (ii) except during the continuance of an Event of
Default, the Agent will not call for the funding by the Borrower or any
Permitted Subsidiary of any amount under a Letter of Credit, or any other form
of collateral security for the Borrower's or a Permitted Subsidiary's obliga-
tions in connection with such Letter of Credit, before being presented with a
drawing thereunder, and (iii) if the Agent is not timely reimbursed for the
amount of any drawing under a Letter of Credit on the date such drawing is
paid, the obligation to reimburse the Agent for the amount of such drawing
shall bear interest (which the Borrower hereby promises to pay) from and after
the date such drawing is paid at a rate per annum equal to the sum of 2% plus
the Base Rate from time to time in effect.
Absent any gross negligence or willful misconduct on the part of the Agent or
any of its agents, neither the Agent nor its correspondents shall be responsi-
ble for (i) the validity, sufficiency, truthfulness or genuineness of any
documents even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged or (ii) for errors,
interruptions or delays in transmission or delivery of any message, by mail,
cable, telegraph, wireless or otherwise, whether or not they be in cipher, or
(iii) payment by the Agent under any Letter of Credit against presentation of a
sight draft or certificate which does not comply with terms of the Letter of
Credit; and absent any gross negligence or willful misconduct on the part of
the Agent or its correspondent, none of the above shall affect, impair or
prevent the vesting of any of the Agent's rights or powers hereunder. In
furtherance and extension and not in limitation of the specific provisions
hereinbefore set forth, the Borrower agrees that any action, inaction or
omission by the Agent or by any correspondent of the Agent under or in connec-
tion with any Letter of Credit or the related drafts or documents, if taken in
good faith and without gross negligence or willful misconduct, shall be binding
on the Borrower and the applicable Permitted Subsidiary and shall not put the
Agent or its correspondent under any resulting liability to the Borrower or the
Permitted Subsidiaries. The foregoing provisions shall supersede the provi-
sions of the Applications dealing with the same subject matter.
If the Agent issues any Letters of Credit with expiration dates that are
automatically extended unless the Agent gives notice that the expiration date
will not so extend beyond its then scheduled expiration date, the Agent will
give such notice of non-renewal before the time necessary to prevent such
automatic extension if before such required notice date (i) the expiration date
of such Letter of Credit if so extended would be after the Termination Date,
(ii) the Commitments have been terminated or (iii) an Event of Default exists
and the Majority Lenders have given the Agent instructions not to so permit the
extension of the expiration date of such Letter of Credit. The Agent agrees to
issue amendments to the Letter(s) of Credit increasing the amount, or extending
the expiration date, thereof at the request of the Borrower or a Permitted
Subsidiary subject to the conditions of Article III and the other terms of this
Section 2.03. Without limiting the generality of the foregoing, the Agent's
obligation to issue, amend or extend the expiration date of a Letter of Credit
is subject to the conditions of Article III and the other terms of this
Section 2.03 and the Agent will not issue, amend or extend the expiration date
of any Letter of Credit if any Lender notifies the Agent of any failure to
satisfy or otherwise comply with such conditions and terms and directs the
Agent not to take such action.
(c) The Reimbursement Obligations. Subject to Section 2.03(b), the obliga-
tion of the Borrower or the applicable Permitted Subsidiary to reimburse the
Agent for all drawings under a Letter of Credit (a "Reimbursement Obligation")
shall be governed by the Application related to such Letter of Credit, except
that reimbursement of each drawing shall be made in immediately available funds
at the Agent's principal office in Chicago, Illinois by no later than 11:00
A.M. (Chicago time) on the date when such drawing is paid or, if drawing was
paid after 10:30 A.M. (Chicago time), by the end of such day. If the Borrower
or the applicable Permitted Subsidiary does not make any such reimbursement
payment on the date due and the Participating Lenders fund their participations
therein in the manner set forth in Section 2.03(d) below, then all payments
thereafter received by the Agent in discharge of any of the relevant Reimburse-
ment Obligations shall be distributed in accordance with Section 2.03(d) below.
(d) The Participating Interests. Each Lender (other than the Agent), by its
acceptance hereof, severally agrees to purchase from the Agent, and the Agent
hereby agrees to sell to each such Lender (a "Participating Lender"), an
undivided percentage participating interest (a "Participating Interest"), in
each Letter of Credit (including, without limitation, the Existing Letters of
Credit) issued by, and each Reimbursement Obligation owed to, the Agent. Upon
any failure by the Borrower or the applicable Permitted Subsidiary to pay any
Reimbursement Obligation at the time required on the date the related drawing
is paid, as set forth in Section 2.03(c) above, or if the Agent is required at
any time to return to the Borrower or a Permitted Subsidiary or to a trustee,
receiver, liquidator, custodian or other Person any portion of any payment of
any Reimbursement Obligation, each Participating Lender shall, not later than
the Business Day it receives a demand from the Agent to such effect, if such
demand is made before 12:00 noon (Chicago time), or not later than the follow-
ing Business Day, if such demand is made after such time, pay to the Agent an
amount equal to its pro rata share of such unpaid or recaptured Reimbursement
Obligation together with interest on such amount accrued from the date the
related payment was made by the Agent to the date of such payment by such
Participating Lender at a rate per annum equal to (i) from the date the related
payment was made by the Agent to the date two (2) Business Days after payment
by such Participating Lender is due hereunder, the Federal Funds Rate for each
such day and (ii) from the date two (2) Business Days after the date such
payment is due from such Participating Lender to the date such payment is made
by such Participating Lender, the Base Rate in effect for each such day. Each
such Participating Lender shall thereafter be entitled to receive its pro rata
share of each payment received in respect of the relevant Reimbursement
Obligation and of interest paid thereon, with the Agent retaining its pro rata
share as a Lender hereunder.
The several obligations of the Participating Lenders to the Agent under this
Section 2.03 shall be absolute, irrevocable and unconditional under any and all
circumstances whatsoever (except, without limiting the Borrower's and Permitted
Subsidiaries' obligations under each Application, to the extent the Borrower or
the applicable Permitted Subsidiary is relieved from its obligation to reim-
burse the Agent for a drawing under a Letter of Credit because of the Agent's
gross negligence or willful misconduct in determining that documents received
under the Letter of Credit comply with the terms thereof) and shall not be
subject to any set-off, counterclaim or defense to payment which any Partici-
pating Lender may have or have had against the Borrower, a Permitted Subsid-
iary, the Agent, any other Lender or any other Person whatsoever. Without
limiting the generality of the foregoing, such obligations shall not be
affected by any Event of Default or event with which the passage of time or the
giving of notice or both, would constitute an Event of Default or by any
reduction or termination of any Commitment of any Lender, and each payment by a
Participating Lender under this Section 2.03 shall be made without any offset,
abatement, withholding or reduction whatsoever. The Agent shall be entitled to
offset amounts received for the account of a Lender under this Agreement
against unpaid amounts due from such Lender to the Agent hereunder (whether as
fundings of participations, indemnities or otherwise).
(e) Indemnification. The Participating Lenders shall indemnify the Agent (to
the extent not reimbursed by the Borrower or a Permitted Subsidiary) against
any cost, expense (including reasonable counsel fees and disbursements), claim,
demand, action, loss or liability (except such as result from the Agent's gross
negligence or willful misconduct) that the Agent may suffer or incur in
connection with any Letter of Credit. The obligations of the Participating
Lenders under this Section 2.03(e) and all other parts of this Section 2.03
shall survive termination of this Agreement and of all other L/C Documents.
(f) The Existing Letters of Credit. Bank of Montreal has heretofore issued
letters of credit for the account of Hadson and certain of its Subsidiaries
pursuant to the terms of the Hadson Credit Agreement (the "Existing Letters of
Credit"), the Existing Letters of Credit having been issued pursuant to
applications and agreements executed by Hadson or its Subsidiaries or through
the Agent's system for electronically applying for letters of credit (the
"Existing Applications"). From and after the Initial Borrowing the Existing
Applications shall constitute "Applications" for all purposes hereof and of the
L/C Documents and the Existing Letters of Credit issued pursuant thereto shall
constitute "Letters of Credit" for all purposes hereof and of the L/C Docu-
ments.
(g) The Permitted Subsidiaries. The Permitted Subsidiaries shall, from and
after the Initial Borrowing, initially be Hadson, Hadson Gas Systems, Inc., an
Oklahoma corporation, and Western Natural Gas & Transmission Corp., a Colorado
corporation. The Borrower may from time to time designate additional Subsid-
iaries of the Borrower as Permitted Subsidiaries hereunder upon written notice
to the Agent and upon causing such Permitted Subsidiaries to deliver to the
Agent such resolutions and incumbency certificates as the Agent may reasonably
require in connection with the issuance of Letters of Credit for the account of
such Permitted Subsidiaries. Likewise, the Borrower may upon written notice to
the Agent, terminate the status of any Subsidiary as a Permitted Subsidiary
hereunder but no such termination shall affect or impair the liability of the
Borrower with respect to Letters of Credit issued for the account of such
Permitted Subsidiary prior to receipt by the Agent of such notice of termina-
tion and all such Letters of Credit and the Applications therefor shall
continue to constitute "Letters of Credit" and "Applications" hereunder.
(i) Guarantee. The Borrower hereby absolutely, irrevocably and uncondi-
tionally guarantees the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the L/C Obligations in respect of
the Existing Letters of Credit and in respect of all other Letters of Credit
issued hereunder at the request of the Permitted Subsidiaries including all
such obligations arising under the Applications therefor (such obligations
being herein collectively called the "Guaranteed Obligations"). The Borrower
hereby further agrees that if any Permitted Subsidiary shall fail to pay in
full when due (whether by stated maturity, by acceleration or otherwise) any of
the Guaranteed Obligations, the Borrower will promptly pay the same, without
any demand or notice whatsoever, and that in the case of any extension of time
of payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration
or otherwise) in accordance with the terms of such extension or renewal.
(ii) Obligations Unconditional. The obligations of the Borrower under
clause (i) hereof are absolute, irrevocable and unconditional irrespective of
the value, genuineness, validity, regularity or enforceability of the Guaran-
teed Obligations or any agreement or instrument evidencing same, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by applica-
ble law, irrespective of any other circumstance whatsoever which might other-
wise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this clause that the obligations of the
Borrower hereunder shall be absolute and unconditional under any and all
circumstances; provided, however, that notwithstanding the foregoing the
Borrower shall have any defenses to nonpayment of the Guaranteed Obligations
which would have been available to it had it been the applicant for the Letter
of Credit in question. Without limiting the generality of the foregoing, it is
agreed that the occurrence of any one or more of the following shall not alter
or impair the liability of the Borrower hereunder which shall remain absolute,
irrevocable and unconditional as described above:
(aa) at any time or from time to time, without notice to the Borrower, the
time for any performance of or compliance with any of the Guaranteed Obliga-
tions shall be extended, or such performance or compliance shall be waived;
(ab) the creation and existence of the Guaranteed Obligations (notice to the
Borrower of same being hereby waived); or
(ac) the maturity of any of the Guaranteed Obligations shall be accelerated,
or any of the Guaranteed Obligations shall be modified, supplemented or amended
in any respect not inconsistent with the terms of this Agreement, or any right
in respect of the Guaranteed Obligations shall be waived or any other guarantee
of any of the Guaranteed Obligations or any security therefor shall be released
or exchanged in whole or in part or otherwise dealt with.
The Borrower hereby expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Agent or any
Lender exhaust any right, power or remedy or proceed against a Permitted
Subsidiary, or against any other Person under any other guarantee of, or
security for, any of the Guaranteed Obligations.
(iii) Reinstatement. The obligations of the Borrower hereunder shall be
automatically reinstated if and to the extent that for any reason any payment
by or on behalf of a Permitted Subsidiary in respect of the Guaranteed Obliga-
tions is rescinded or must be otherwise restored by any holder of any of the
Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise and the Borrower agrees that it will indemnify the
Agent and each Lender on demand for all reasonable costs and expenses (includ-
ing, without limitation, fees of counsel) incurred by the Agent or such Lender
in connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
(iv) Subrogation. The Borrower hereby waives all rights of subrogation or
contribution, whether arising by contract or operation of law (including,
without limitation, any such right arising under the Federal Bankruptcy Code)
or otherwise by reason of any payment by it of the Guaranteed Obligations of
any Permitted Subsidiary pursuant to the provisions hereof until all Guaranteed
Obligations of such Permitted Subsidiary are paid in full.
(v) Remedies. The Borrower agrees that, as between the Borrower and the
Agent and the Lenders, the obligations of the Borrower hereunder may be
declared to be forthwith due and payable as provided in Article VI hereof (and
shall be deemed to have become automatically due and payable in the circum-
stances provided in said Article VI) for purposes hereof notwithstanding any
stay, injunction or other prohibition preventing such declaration (or such
obligation from becoming automatically due and payable) as against any Permit-
ted Subsidiary and that, in the event of such declaration (or such obligations
being deemed to have become automatically due and payable), such obligations
(whether or not due and payable by any Permitted Subsidiary) shall forthwith
become due and payable by the Borrower.
(vi) Continuing Guarantee. The guarantee herein is a continuing guarantee,
and shall apply to all Guaranteed Obligations whenever arising.
(vii) No Liability until Initial Borrowing The Borrower shall have no
liability under this Section 2.03(g) unless and until the Initial Borrowing
occurs.
Section 2.04. The Auction Advances. (a) Each Lender severally agrees
that the Borrower may request Auction Borrowings comprised of either Fixed Rate
Auction Advances or Eurodollar Rate Auction Advances under this Section 2.04
from time to time on any Business Day during the period from the date hereof
until the date occurring seven days prior to the Termination Date, in the case
of an Auction Borrowing comprised of Fixed Rate Auction Advances, or the date
occurring one month prior to the Termination Date, in the case of an Auction
Borrowing comprised of Eurodollar Rate Auction Advances in the manner set forth
below; provided that, following the making of each Auction Borrowing, the
aggregate amount of the Advances then outstanding plus the aggregate amount of
the L/C Obligations then outstanding shall not exceed the aggregate amount of
the Commitments of the Lenders. Each Auction Borrowing shall be in an aggre-
gate amount not less than $10,000,000 or an integral multiple of $1,000,000 in
excess thereof.
(i) The Borrower may request an Auction Borrowing by delivering to the Agent
(A) by telecopier, telex or cable, confirmed immediately in writing, a notice
of an Auction Borrowing (a "Notice of Auction Borrowing"), in substantially the
form of Exhibit B-2 hereto, specifying the date and aggregate amount of the
proposed Auction Borrowing, the maturity date for repayment of each Auction
Advance to be made as part of such Auction Borrowing (which maturity date may
be the date occurring one, two, three or six months after the date of such
Auction Borrowing in the case of Eurodollar Rate Auction Advances, or the date
occurring between seven and 180 days after the date of such Auction Borrowing
in the case of Fixed Rate Auction Advances and in any case no later than the
Termination Date), the interest payment date or dates relating thereto (which
shall occur at least every three months, in the case of a Eurodollar Rate
Auction Advance, and every 90 days, in the case of Fixed Rate Auction Advanc-
es), and any other terms to be applicable to such Auction Borrowing, not later
than 9:00 A.M. (Chicago time) (x) at least one Business Day prior to the date
of the proposed Auction Borrowing, in the case of a Fixed Rate Auction Advance,
and (y) at least four Business Days prior to the date of the proposed Auction
Borrowing, in the case of a Eurodollar Rate Auction Advance and (B) payment in
full to the Agent of the aggregate auction administration fee specified in
Section 2.05(b) hereof. The Agent shall in turn promptly notify each Lender of
each request for an Auction Borrowing received by it from the Borrower by
sending such Lender a copy of the related Notice of Auction Borrowing.
(ii) Each Lender may, if, in its sole discretion, it elects to do so, irrevo-
cably offer to make one or more Auction Advances to the Borrower as part of
such proposed Auction Borrowing at a rate or rates of interest specified by
such Lender in its sole discretion, by notifying the Agent (which shall give
prompt notice thereof to the Borrower), before 9:00 A.M. (Chicago time) (A) on
the date of such proposed Auction Borrowing, in the case of a Fixed Rate
Auction Advance and (B) three Business Days prior to the date of such proposed
Auction Borrowing, in the case of a Eurodollar Rate Auction Advance, of the
minimum amount and maximum amount of each Auction Advance that such Lender
would be willing to make as part of such proposed Auction Borrowing (which
amounts may, subject to the proviso to the first sentence of this Sec-
tion 2.04(a), exceed such Lender's Commitment), the rate or rates of interest
therefor and the Yield (if different from such rate or rates) with respect
thereto, the interest period relating thereto and such Lender's Applicable
Lending Office with respect to such Auction Advance; provided that if the Agent
in its capacity as a Lender shall, in its sole discretion, elect to make any
such offer, it shall notify the Borrower of such offer before 8:45 A.M.
(Chicago time) on the date on which notice of such election is to be given to
the Agent by the other Lenders. If any Lender shall elect not to make such an
offer, such Lender shall so notify the Agent, before 9:00 A.M. (Chicago time)
on the date on which notice of such election is to be given to the Agent by the
other Lenders, and such Lender shall not be obligated to, and shall not make
any Auction Advance as part of such Auction Borrowing; provided that the
failure by any Lender to give such notice shall not cause such Lender to be
obligated to make any Auction Advance as part of such proposed Auction Borrow-
ing.
(iii) The Borrower shall, in turn, before 10:00 A.M. (Chicago time) (A) on
the date of such proposed Auction Borrowing, in the case of a Fixed Rate
Auction Advance and (B) three Business Days before the date of such proposed
Auction Borrowing, in the case of a Eurodollar Rate Auction Advance, either
(A) cancel such Auction Borrowing by giving the Agent notice to that effect,
or
(B) irrevocably accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in its sole discretion, subject only
to the provisions of this paragraph (iii), by giving notice to the Agent of the
amount of each Auction Advance (which amount shall be equal to or greater than
the minimum amount and equal to or less than the maximum amount, notified to
the Borrower by the Agent on behalf of such Lender for such Auction Advance
pursuant to paragraph (ii) above) to be made by each Lender as part of such
Auction Borrowing, and reject any remaining offers made by Lenders pursuant to
paragraph (ii) above by giving the Agent notice to that effect; provided,
however, that (x) the Borrower shall not accept an offer made pursuant to
paragraph (ii) above, at any Yield if the Borrower shall have, or shall be
deemed to have, rejected any other offer made pursuant to paragraph (ii) above,
at a lower Yield, (y) if the Borrower declines to accept, or is otherwise
restricted by the provisions of this Agreement from accepting, the maximum
aggregate principal amount of Auction Borrowings offered at the same Yield
pursuant to paragraph (ii) above, then the Borrower shall accept a pro rata
portion of each offer made at such Yield, based as nearly as possible on the
ratio of the aggregate principal amount of such offers to be accepted by the
Borrower to the maximum aggregate principal amount of such offers made pursuant
to paragraph (ii) above (rounding up or down to the next higher or lower
multiple of $1,000,000), and (z) no offer made pursuant to paragraph (ii) above
shall be accepted unless the Auction Borrowing in respect of such offer is in
an integral multiple of $1,000,000 and the aggregate amount of such offers
accepted by the Borrower is equal to at least $10,000,000.
Any offer or offers made pursuant to paragraph (ii) above not expressly
accepted or rejected by the Borrower in accordance with this paragraph (iii)
shall be deemed to have been rejected by the Borrower.
(iv) If the Borrower notifies the Agent that such Auction Borrowing is
canceled pursuant to clause (A) of paragraph (iii) above, the Agent shall give
prompt notice thereof to the Lenders and such Auction Borrowing shall not be
made.
(v) If the Borrower accepts one or more of the offers made by any Lender or
Lenders pursuant to clause (B) of paragraph (iii) above, the Agent shall in
turn promptly notify (A) each Lender that has made an offer as described in
paragraph (ii) above, of the date and aggregate amount of such Auction Borrow-
ing and whether or not any offer or offers made by such Lender pursuant to
paragraph (ii) above have been accepted by the Borrower, (B) each Lender that
is to make an Auction Advance as part of such Auction Borrowing of the amount
of each Auction Advance to be made by such Lender as part of such Auction
Borrowing, and (C) each Lender that is to make an Auction Advance as part of
such Auction Borrowing, upon receipt, that the Agent has received forms of
documents appearing to fulfill the applicable conditions set forth in Arti-
cle III. Each Lender that is to make an Auction Advance as part of such
Auction Borrowing shall, before 11:00 A.M. (Chicago time) on the date of such
Auction Borrowing specified in the notice received from the Agent pursuant to
clause (A) of the preceding sentence or any later time when such Lender shall
have received notice from the Agent pursuant to clause (C) of the preceding
sentence, make available for the account of its Applicable Lending Office to
the Agent at its address referred to in Section 8.02 such Lender's portion of
such Auction Borrowing, in same day funds. Upon fulfillment of the applicable
conditions set forth in Article III and after receipt by the Agent of such
funds, the Agent will make such funds available to the Borrower at the Agent's
aforesaid address. Promptly after each Auction Borrowing the Agent will notify
each Lender of the amount of the Auction Borrowing and the maturities thereof.
(vi) The acceptance by the Borrower of any offer made by any Lender pursuant
to paragraph (iii) (B) above shall be irrevocable and binding on the Borrower.
In the case of any Auction Borrowing comprised of Eurodollar Rate Auction
Advances, the Borrower shall indemnify such Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill on or
before the date specified in the related Notice of Auction Borrowing for such
Auction Borrowing the applicable conditions set forth in Article III, includ-
ing, without limitation, any loss (excluding any loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Eurodollar Rate
Auction Advance to be made by such Lender as part of such Auction Borrowing
when such Eurodollar Rate Auction Advance, as a result of such failure, is not
made on such date.
(b) Within the limits and on the conditions set forth in this Section 2.04
(including, without limitation, the condition set forth in the proviso to the
first sentence of subsection (a) above), the Borrower may from time to time
borrow under this Section 2.04, repay or prepay pursuant to subsection (c)
below, and reborrow under this Section 2.04, provided that no Auction Borrowing
may be made within three Business Days of the date of any other Auction
Borrowing.
(c) The Borrower shall repay to the Agent for the account of each Lender that
has made an Auction Advance, or each other holder of an Auction Note, on the
maturity date of each Auction Advance (such maturity date being that specified
by the Borrower for repayment of such Auction Advance in the related Notice of
Auction Borrowing delivered pursuant to subsection (a)(i) above and provided in
the Auction Note evidencing such Auction Advance), the then unpaid principal
amount of such Auction Advance. The Borrower shall have no right to prepay any
principal amount of any Auction Advance unless, and then only on the terms,
specified by the Borrower for such Auction Advance in the related Notice of
Auction Borrowing delivered pursuant to subsection (a)(i) above and set forth
in the Auction Note evidencing such Auction Advance.
(d) The Borrower shall pay interest on the unpaid principal amount of each
Auction Advance from the date of such Auction Advance to the date the principal
amount of such Auction Advance is repaid in full, at the rate of interest for
such Auction Advance specified by the Lender making such Auction Advance in its
notice with respect thereto delivered pursuant to subsection (a)(ii) above,
payable on the interest payment date or dates specified by the Borrower for
such Auction Advance in the related Notice of Auction Borrowing delivered
pursuant to subsection (a)(i) above, as provided in the Auction Note evidencing
such Auction Advance.
(e) The indebtedness of the Borrower resulting from each Auction Advance made
to the Borrower as part of an Auction Borrowing shall be evidenced by a
separate Auction Note of the Borrower payable to the order of the Lender making
such Auction Advance.
Section 2.05. Fees. (a) Facility Fees. The Borrower agrees to pay to
the Agent for the account of each Lender a facility fee on the average daily
aggregate amount of such Lender's Commitment (whether or not used) from the
date hereof in the case of each Lender and from the effective date specified in
the Assignment and Acceptance pursuant to which it became a Lender in the case
of each other Lender until the Termination Date, payable on the 15th day of
each August, November, February and May during such period, and on the Termina-
tion Date at a rate of (i) 0.10% per annum for each day Level I Status exists,
(ii) 0.15% per annum for each day Level II Status exists, (iii) 0.20% per annum
for each day Level III Status exists, and (iv) 0.35% per annum for each day
Level IV Status exists.
(b) Facing Fees. The Borrower shall pay to the Agent for its own account
fees at the rate of 0.0625% per annum on the average daily undrawn amount of
the Letters of Credit for any period during which any Letters of Credit are
outstanding, such fees to be payable in arrears on the 15th day of each August,
November, February and May to and including, and on, the Termination Date. The
Borrower shall also pay to the Agent such issuing, processing and transaction
fees and charges as the Agent may from time to time customarily impose in
connection with the issuance, negotiation and payment of letters of credit and
drafts drawn thereunder.
(c) Letter of Credit Fees. The Borrower shall pay to the Agent for the
ratable benefit of the Banks a Letter of Credit usage fee for each Letter of
Credit outstanding hereunder on the average daily undrawn amount of each Letter
of Credit for any period during which any Letters of Credit are outstanding,
such fees to be payable in arrears on the 15th day of each August, November,
February and May to and including, and on, the Termination Date at a rate of
(i) 0.20% per annum for each day Level I Status exists, (ii) 0.30% per annum
for each day Level II Status exists, (iii) 0.35% per annum for each day
Level III Status exists, and (iv) 0.50% per annum for each day Level IV Status
exists.
(d) Other Fees. The Borrower shall pay to the Agent for its own use and
benefit such agency and/or other fees as the Borrower and the Agent may
mutually agree.
(e) The Borrower agrees to pay to the Agent for its own account an auction
administration fee in the amount of $1,000 in respect of each Auction Borrowing
requested by the Borrower pursuant to Section 2.04(a)(i), payable on the date
of such request.
Section 2.06. Reduction of the Commitments. The Borrower shall have the
right, upon at least two Business Days' notice to the Agent, to terminate in
whole or reduce ratably in part the unused portions of the respective Commit-
ments of the Lenders, provided that the aggregate amount of the Commitments of
the Lenders shall not be reduced to an amount that is less than the aggregate
principal amount of the Advances then outstanding plus the aggregate amount of
the L/C Obligations outstanding and provided, further, that each partial
reduction shall be in the aggregate amount of $1,000,000 or an integral
multiple thereof.
Section 2.07. Repayment of Contract Advances. The Borrower shall repay
the principal amount of each Contract Advance made by each Lender on the
Termination Date in accordance with the Contract Note to the order of such
Lender.
Section 2.08. Interest on Contract Advances. The Borrower shall pay
interest on the unpaid principal amount of each Contract Advance made by each
Lender from the date of such Contract Advance until such principal amount shall
be paid in full, at the following rates per annum:
(a) Base Rate Advances. If such Contract Advance is a Base Rate Advance, a
rate per annum equal at all times to the sum of the Base Rate in effect from
time to time plus the Applicable Margin for such Base Rate in effect from time
to time, payable quarterly on the 15th day of each August, November, February
and May during such periods and on the date such Base Rate Advance shall be
Converted or paid in full.
(b) Adjusted CD Rate Advances. If such Contract Advance is an Adjusted CD
Rate Advance, a rate per annum equal at all times during the Interest Period
for such Contract Advance to the sum of the Adjusted CD Rate for such Interest
Period plus the Applicable Margin for such Adjusted CD Rate in effect from time
to time, payable on the last day of each Interest Period for such Adjusted CD
Rate Advance (and, in the case of any Interest Period of 180 days, on the 90th
day of such Interest Period) and on the date such Adjusted CD Rate Advance
shall be Converted or paid in full.
(c) Eurodollar Rate Advances. Subject to Section 2.09, if such Contract
Advance is a Eurodollar Rate Advance, a rate per annum equal at all times
during the Interest Period for such Contract Advance to the sum of the Eurodol-
lar Rate for such Interest Period plus the Applicable Margin for such Eurodol-
lar Rate Advance in effect from time to time, payable on the last day of each
Interest Period for such Eurodollar Rate Advance (and, in the case of any
Interest Period of six months, on the last day of the third month of such
Interest Period) and on the date such Eurodollar Rate Advance shall be Convert-
ed or paid in full.
Section 2.09. Additional Interest on Eurodollar Rate Advances and
Eurodollar Rate Auction Advances. The Borrower shall pay to each Lender, so
long as such Lender shall be required under regulations of the Board of
Governors of the Federal Reserve System to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities,
additional interest on the unpaid principal amount of each Eurodollar Rate
Advance and each Eurodollar Rate Auction Advance of such Lender, from the date
of such Advance until such principal amount is paid in full, at an interest
rate per annum equal at all times to the remainder obtained by subtracting
(i) the Eurodollar Rate for the Interest Period for such Contract Advance or
term for such Auction Advance from (ii) the rate obtained by dividing such
Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage of such Lender for such Interest Period or term, as applicable,
payable on each date on which interest is payable on such Advance. Such
additional interest shall be determined by such Lender and notified to the
Borrower through the Agent, and such determination shall be conclusive and
binding for all purposes, absent manifest error.
Section 2.10. Interest Rate Determination. (a) Each Reference Bank
agrees to furnish to the Agent timely information for the purpose of determin-
ing each Adjusted CD Rate or Eurodollar Rate, as applicable. If any one or
more of the Reference Banks shall not furnish such timely information to the
Agent for the purpose of determining any such interest rate, the Agent shall
determine such interest rate on the basis of timely information furnished by
the remaining Reference Banks. If any Reference Bank shall no longer be a
Lender hereunder, shall no longer wish to serve as a Reference Bank hereunder
or shall fail to perform hereunder, the Agent and the Borrower may appoint
another Lender to serve as a successor or replacement Reference Bank hereunder.
(b) The Agent shall give prompt notice to the Borrower and the Lenders of the
applicable interest rate determined by the Agent for purposes of Section 2.08(-
a), (b) or (c), and the applicable rate, if any, furnished by each Reference
Bank for the purpose of determining the applicable interest rate under Sec-
tion 2.08(b) or (c).
(c) If fewer than two Reference Banks (or such lesser number of Lenders as
shall then be acting as Reference Banks) furnish timely information to the
Agent for determining the Adjusted CD Rate for any Adjusted CD Rate Advances,
or the Eurodollar Rate for any Eurodollar Rate Advances or Eurodollar Rate
Auction Advances,
(i) the Agent shall forthwith notify the Borrower and the Lenders that the
interest rate cannot be determined for such Adjusted CD Rate Advances, Eurodol-
lar Rate Advances or Eurodollar Rate Auction Advances, as the case may be,
(ii) each such Contract Advance will automatically, on the last day of the
then existing Interest Period therefor, Convert into a Base Rate Advance (or if
such Advance is then a Base Rate Advance, will continue as a Base Rate Ad-
vance), and
(iii) the obligation of the Lenders to make, or to Convert Contract Advances
into, Adjusted CD Rate Advances or Eurodollar Rate Advances, as the case may
be, shall be suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist.
(d) If with respect to any Eurodollar Rate Advances, the Majority Lenders
notify the Agent that the Eurodollar Rate for any Interest Period for such
Advances will not adequately reflect the cost to such Majority Lenders of
making, funding or maintaining their respective Eurodollar Rate Advances for
such Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon
(i) each Eurodollar Rate Advance will automatically, on the last day of the
then existing Interest Period therefor, Convert into a Base Rate Advance
(unless, with respect to any Eurodollar Rate Advance, the Borrower shall have
delivered to the Agent a timely notice of Conversion specifying that such
Eurodollar Rate Advance shall be Converted to an Adjusted CD Rate Advance on
the last day of the then existing Interest Period therefor), and
(ii) the obligation of the Lenders to make, or to Convert Contract Advances
into, Eurodollar Rate Advances shall be suspended until the Agent shall notify
the Borrower and the Lenders that the circumstances causing such suspension no
longer exist.
Section 2.11. Conversion of Contract Advances. (a) Voluntary. The
Borrower may on any Business Day, upon notice given to the Agent not later than
10:00 A.M. (Chicago time) on the third Business Day prior to the date of any
proposed Conversion into Eurodollar Rate Advances or Adjusted CD Rate Advances,
and on the date of any proposed Conversion into Base Rate Advances, and subject
to the provisions of Sections 2.10 and 2.14, Convert all Contract Advances of
one Type made in connection with the same Contract Borrowing into Advances of
another Type or Types or Advances of the same Type having the same or a new
Interest Period; provided, however, that any Conversion of, or with respect to,
any Adjusted CD Rate Advances or Eurodollar Rate Advances into Advances of
another Type or Advances of the same Type having the same or new Interest
Periods shall be made on, and only on, the last day of an Interest Period for
such Adjusted CD Rate Advances or Eurodollar Rate Advances, unless the Borrower
shall also reimburse the Lenders in respect thereof pursuant to Section 8.04(b)
on the date of such Conversion. Each such notice of a Conversion shall, within
the restrictions specified above, specify (i) the date of such Conversion,
(ii) the Contract Advances to be Converted, and (iii) if such Conversion is
into, or with respect to, Adjusted CD Rate Advances or Eurodollar Rate Advanc-
es, the duration of the Interest Period for each such Contract Advance.
(b) Mandatory. If the Borrower shall fail to select the Type of any Contract
Advance or the duration of any Interest Period for any Contract Borrowing
comprising Adjusted CD Rate Advances or Eurodollar Rate Advances in accordance
with the provisions contained in the definition of "Interest Period" in
Section 1.01 and Section 2.11(a), or if any proposed Conversion of a Contract
Borrowing that is to comprise Adjusted CD Rate Advances or Eurodollar Rate
Advances upon Conversion shall not occur as a result of the circumstances
described in paragraph (c) below, the Agent will forthwith so notify the
Borrower and the Lenders and such Advances will automatically, on the last day
of the then existing Interest Period therefor, Convert into Base Rate Advances.
(c) Failure to Convert. Each notice of Conversion given pursuant to subsec-
tion (a) above shall be irrevocable and binding on the Borrower. In the case
of any Contract Borrowing that is to comprise Adjusted CD Rate Advances or
Eurodollar Rate Advances upon Conversion, the Borrower shall indemnify each
Lender against any loss, cost or expense incurred by such Lender as a result of
any failure to fulfill on the date specified for such Conversion the applicable
conditions set forth in Article III, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund such Adjusted CD Rate
Advances or Eurodollar Rate Advances, as the case may be, upon such Conversion,
when such Conversion, as a result of such failure, does not occur.
Section 2.12. Prepayments. (a) Optional. The Borrower may, upon at
least two Business Days' notice (or same day notice in the case of any prepay-
ment of Base Rate Advances) to the Agent stating the proposed date and aggre-
gate principal amount of the prepayment, and if such notice is given the
Borrower shall, prepay the outstanding principal amounts of the Advances made
as part of the same Contract Borrowing in whole or ratably in part, together
with accrued interest to the date of such prepayment on the principal amount
prepaid; provided, however, that (i) each partial prepayment of any Contract
Borrowing shall be in an aggregate principal amount not less than $5,000,000
and (ii) in the case of any such prepayment of an Adjusted CD Rate Advance or
Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 8.04(b) on the date of such
prepayment.
(b) Mandatory. If and to the extent that the aggregate principal amount of
Advances outstanding on any date hereunder plus the aggregate principal amount
of L/C Obligations outstanding on such date shall exceed the aggregate amount
of the Commitments hereunder on such date, the Borrower shall pay to the Agent
on such date an amount at least equal to such excess, together with accrued
interest to the date of such prepayment on such amount and, in the case of any
such payment which is to be applied to Adjusted CD Rate Advances, Eurodollar
Rate Advances or Auction Advances, the Borrower shall be obligated to reimburse
the Lenders in respect thereof pursuant to Section 8.04(b) on the date of such
prepayment.
(c) Application. Upon each payment pursuant to Sections 2.12(b) or 5.02(b),
the Agent shall apply amounts received from the Borrower in the following order
of priority:
First, to the prepayment in whole or ratably in part of the principal amount of
all outstanding Base Rate Advances,
Second, to the prepayment in whole or ratably in part of the principal amount
of outstanding Adjusted CD Rate Advances and Eurodollar Rate Advances, in such
order of maturity as will, in the reasonable judgment of the Agent, minimize to
the fullest extent practicable amounts payable by the Borrower in respect of
such prepayment pursuant to Section 8.04(b), and
Third, to the prepayment in whole or ratably in part of the principal amount of
outstanding Auction Advances, in such order of maturity as will, in the
reasonable judgment of the Agent, minimize to the fullest extent practicable
amounts payable by the Borrower in respect of such prepayment pursuant to
Section 8.04(b).
Fourth, to be held by the Agent as collateral security for the L/C Obligations
pursuant to the terms of Section 6.02.
Section 2.13. Increased Costs. (a) If, due to either (i) the introduc-
tion of or any change (other than any change by way of imposition or increase
of reserve requirements included in the Adjusted CD Rate Reserve Percentage, or
any Assessment Rate, in the case of Adjusted CD Rate Advances, or, in the case
of Eurodollar Rate Advances, included in the Eurodollar Rate Reserve Percent-
age) in or in the interpretation of any law or regulation or (ii) the compli-
ance with any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) issued, promulgated or made,
as the case may be, after the date hereof, there shall be any increase in the
cost to any Lender of agreeing to make or making, funding or maintaining
Adjusted CD Rate Advances, Eurodollar Rate Advances or any other Advances or
agreeing to issue any Letter of Credit or obligation to participate therein,
then the Borrower shall from time to time, upon demand by such Lender (with a
copy of such demand to the Agent), pay to the Agent for the account of such
Lender additional amounts sufficient to compensate such Lender for such
increased cost; provided, that no Lender shall be entitled to demand such
compensation more than 90 days following the last day of the Interest Period in
respect of which such demand is made; provided further, however, that the
foregoing proviso shall in no way limit the right of any Lender to demand or
receive such compensation to the extent that such compensation relates to the
retroactive application of any law, regulation, guideline or request described
in clause (i) or (ii) above if such demand is made within 90 days after the
implementation of such retroactive law, interpretation, guideline or request.
A certificate as to the nature and amount of such increased cost, submitted to
the Borrower and the Agent by such Lender in good faith, shall be conclusive
and binding for all purposes, absent manifest error.
(b) If any Lender determines that compliance with any law or regulation or
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by such Lender or any corporation
controlling such Lender and that the amount of such capital is increased by or
based upon the existence of such Lender's Commitment hereunder and other
commitments of this type or the Advances or Letters of Credit, then, upon
demand by such Lender (with a copy of such demand to the Agent), the Borrower
shall immediately pay to the Agent for the account of such Lender, from time to
time as specified by such Lender, additional amounts sufficient to compensate
such Lender or such corporation in the light of such circumstances, to the
extent that such Lender determines such increase in capital to be allocable to
the existence of such Lender's Commitment hereunder or the Advances made by
such Lender or Letters of Credit issued by the Agent, provided, that no Lender
shall be entitled to demand such compensation more than one year following the
last day of the fiscal year of such Lender during which such capital require-
ment was applicable and in respect of which such Lender is seeking compensa-
tion; provided further, however, that the foregoing proviso shall in no way
limit the right of any Lender to demand or receive such compensation to the
extent that such compensation relates to the retroactive application of any
law, regulation, guideline or request described above if such demand is made
within one year after the implementation of such retroactive law, interpreta-
tion, guidelines or request. A certificate as to such amounts submitted to the
Borrower and the Agent by such Lender in good faith shall be conclusive and
binding for all purposes, absent manifest error.
Section 2.14. Illegality. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlaw-
ful, for any Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar
Rate Advances hereunder, (i) the obligation of the Lenders to make, or to
Convert Contract Advances into, Eurodollar Rate Advances shall be suspended
until the Agent shall notify the Borrower and the Lenders that the circumstanc-
es causing such suspension no longer exist and (ii) the Borrower shall forth-
with prepay in full all Eurodollar Rate Advances of all Lenders then outstand-
ing, together with interest accrued thereon, unless the Borrower, within five
Business Days of notice from the Agent, Converts all Eurodollar Rate Advances
of all Lenders then outstanding into Advances of another Type in accordance
with Section 2.11. Any Lender that has notified the Agent of any illegality
under this Section 2.14 shall use its best efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the jurisdic-
tion of its Applicable Lending Office if the making of such change would avoid
or eliminate such illegality and would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender.
Section 2.15. Payments and Computations. (a) The Borrower shall make
each payment hereunder and under the Notes not later than 11:00 A.M. (Chicago
time) on the day when due in U.S. dollars to the Agent at its address referred
to in Section 8.02 in same day funds, and any such payment to the Agent shall
constitute payment by the Borrower hereunder or under the Notes, as the case
may be, for all purposes, and upon such payment the Lenders shall look solely
to the Agent for their respective interests in such payment. The Agent will
promptly after any such payment cause to be distributed like funds relating to
the payment of principal or interest or fees ratably (other than amounts
payable pursuant to Section 2.02(c), 2.04, 2.05(b), 2.05(d), 2.05(e), 2.09,
2.13, 2.16 or 8.04(b)) (according to the Lenders' respective Commitments) to
the Lenders for the account of their respective Applicable Lending Offices, and
like funds relating to the payment of any other amount payable to any Lender to
such Lender for the account of its Applicable Lending Office, in each case to
be applied in accordance with the terms of this Agreement. Upon its acceptance
of an Assignment and Acceptance and recording of the information contained
therein in the Register pursuant to Section 8.07(d), from and after the
effective date specified in such Assignment and Acceptance, the Agent shall
make all payments hereunder and under the Notes in respect of the interest
assigned thereby to the Lender assignee thereunder, and the parties to such
Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) The Borrower hereby authorizes each Lender, if and to the extent payment
owed to such Lender is not made when due hereunder or under any Note held by
such Lender, to charge from time to time against any or all of the Borrower's
accounts with such Lender any amount so due.
(c) All computations of interest based on the Base Rate and of facility fees
and Letter of Credit fees shall be made by the Agent on the basis of a year of
365 or 366 days, as the case may be, and all computations of interest based on
the Adjusted CD Rate, the Eurodollar Rate or the Federal Funds Rate and of
interest payable on Auction Advances shall be made by the Agent, and all
computations of interest pursuant to Section 2.09 shall be made by a Lender, on
the basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period
for which such interest or facility fees are payable. Each determination by
the Agent (or, in the case of Section 2.09, by a Lender) of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(d) Whenever any payment hereunder or under the Notes shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fees, as the
case may be; provided, however, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day, and such reduction of time shall in such case be taken into
account in the computation of interest or fees, as the case may be.
(e) Unless the Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Lenders hereunder that the Borrower
will not make such payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent that the Borrower shall not have so made such payment in full to the
Agent, each Lender shall repay to the Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from
the date such amount is distributed to such Lender until the date such Lender
repays such amount to the Agent, at the Federal Funds Rate.
(f) Notwithstanding anything to the contrary contained herein, if any payment
of principal on any Advance is not made when due (whether by acceleration or
otherwise), such principal shall bear interest (computed on the same basis as
in effect thereon at the time of such default) from the date such payment was
due until paid in full, payable on demand, at a rate per annum equal to:
(a) with respect to any Base Rate Advance, the sum of two percent (2%) per
annum plus the Base Rate from time to time in effect plus the Applicable Margin
for such Base Rate; and
(b) with respect to any Eurodollar Rate Advance, Adjusted CD Rate Advance and
Auction Advance, the sum of two percent (2%) per annum plus the rate of
interest in effect thereon at the time of such default until the end of the
Interest Period or term applicable thereto and, thereafter, at a rate per annum
equal to the sum of two percent (2%) per annum plus the Base Rate from time to
time in effect plus the Applicable Margin for such Base Rate.
Section 2.16. Taxes. (a) Any and all payments by the Borrower hereunder
or under the Notes shall be made, in accordance with Section 2.15, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, taxes imposed on
its income and any withholdings in connection therewith, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such Lender or the
Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Lender, taxes imposed on its income, and franchise
taxes imposed on it, by the jurisdiction of such Lender's Applicable Lending
Office or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder or under
any Note to any Lender or the Agent, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.16) such
Lender or the Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.
(b) In addition, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Notes or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Notes (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Agent for the full amount
of Taxes or Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section 2.16)
paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses, other than those arising from such
Lender's gross negligence) arising therefrom or with respect thereto, whether
or not such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date such Lender or the
Agent (as the case may be) makes written demand therefor.
(d) Prior to the Closing Date in the case of each Bank, and on the date of
the Assignment and Acceptance pursuant to which it became a Lender in the case
of each other Lender, and from time to time thereafter if requested by the
Borrower or the Agent, each Lender organized under the laws of a jurisdiction
outside the United States shall provide the Agent and the Borrower with the
forms prescribed by the Internal Revenue Service of the United States certify-
ing that such Lender is exempt from United States withholding taxes with
respect to all payments to be made to such Lender hereunder and under the
Notes. If for any reason during the term of this Agreement, any Lender becomes
unable to submit the forms referred to above or the information or representa-
tions contained therein are no longer accurate in any material respect, such
Lender shall promptly notify the Agent and the Borrower in writing to that
effect. Unless the Borrower and the Agent have received forms or other
documents satisfactory to them indicating that payments hereunder or under any
Note are not subject to United States withholding tax, the Borrower or the
Agent shall withhold taxes from such payments at the applicable statutory rate
in the case of payments to or for any Lender organized under the laws of a
jurisdiction outside the United States.
(e) Any Lender claiming any additional amounts payable pursuant to this
Section 2.16 shall use its best efforts (consistent with its internal policy
and legal and regulatory restrictions) to change the jurisdiction of its
Applicable Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts which may thereafter
accrue and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.
(f) If the Borrower makes any additional payment to any Lender pursuant to
this Section 2.16 in respect of any Taxes or Other Taxes, and such Lender
determines that it has received (i) a refund of such Taxes or Other Taxes or
(ii) a credit against or relief or remission for, or a reduction in the amount
of, any tax or other governmental charge solely as a result of any deduction or
credit for any Taxes or Other Taxes with respect to which it has received
payments under this Section 2.16, such Lender shall, to the extent that it can
do so without prejudice to the retention of such refund, credit, relief,
remission or reduction, pay to the Borrower such amount as such Lender shall
have determined to be attributable to the deduction or withholding of such
Taxes or Other Taxes. If such Lender later determines that it was not entitled
to such refund, credit, relief, remission or reduction to the full extent of
any payment made pursuant to the first sentence of this Section 2.16(f), the
Borrower shall upon demand of such Lender promptly repay the amount of such
overpayment. Any determination made by such Lender pursuant to this Sec-
tion 2.16(f) shall in the absence of bad faith or manifest error be conclusive,
and nothing in this Section 2.16(f) shall be construed as requiring any Lender
to conduct its business or to arrange or alter in any respect its tax or
financial affairs so that it is entitled to receive such a refund, credit or
reduction or as allowing any person to inspect any records, including tax
returns, of any Lender.
(g) Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower contained in this
Section 2.16 shall survive the payment in full of principal, interest and all
other amounts hereunder and under the Notes; provided, that no Lender shall be
entitled to demand any payment under this Section 2.16 more than one year
following the last day of the fiscal year of such Lender during which the
liability in respect of such Taxes or Other Taxes was incurred; provided
further, however, that the foregoing proviso shall in no way limit the right of
any Lender to demand or receive any payment under this Section 2.16 to the
extent that such payment relates to the retroactive application of any Taxes or
Other Taxes if such demand is made within one year after the implementation of
such Taxes or Other Taxes.
Section 2.17. Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off or otherwise) on account of the Contract Advances made by it or Letters
of Credit issued by it or participated in by it (other than pursuant to
Section 2.02(c), 2.05(b), 2.05(d), 2.05(e), 2.09, 2.13, 2.16 or 8.04(b)) in
excess of its ratable share of payments on account of the Contract Advances or
Letters of Credit obtained by all the Lenders, such Lender shall forthwith
purchase from the other Lenders such participations in the Contract Advances
made by them or Letters of Credit issued by it or participated in by them as
shall be necessary to cause such purchasing Lender to share the excess payment
ratably with each of them, provided, however, that if all or any portion of
such excess payment is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and such Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Lender's ratable share (according to the propor-
tion of (i) the amount of such Lender's required repayment to (ii) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 2.17 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.
Article III
Conditions of Lending
Section 3.01. Conditions Precedent to Initial Advances. The obligations
of each Lender to make its initial Advance and of the Agent to issue the
initial Letter of Credit is subject to the satisfaction, prior to or concur-
rently with, the making of such initial Advance or the issuance of such initial
Letter of Credit, of each of the following conditions precedent:
(a) Documents and Other Agreements. The Agent shall have received on or
before the day of the initial Borrowing or, if earlier, the date of issuance of
the initial Letter of Credit the following, each properly dated and completed,
in form and substance satisfactory to the Agent and (except for the Notes) with
one copy for each Lender:
(i) The Contract Notes payable to the order of each of the Lenders, respec-
tively;
(ii) A true and correct copy of the Support Agreement, together with (A) a
schedule of all "Debt" thereunder and (B) a letter from the Parent to the Agent
and the Lenders confirming that the obligations of the Borrower hereunder,
under the Notes and under the Applications constitute "Debt" under the Support
Agreement and that the Lenders constitute "Lenders" under the Support Agree-
ment;
(iii) Pro forma consolidated balance sheets of the Borrower and its Consoli-
dated Subsidiaries and of Hadson and its Subsidiaries prepared as of a date
reasonably close to the date the Acquisition is consummated and showing the
consolidated financial condition of the Borrower and its Consolidated Subsid-
iaries (including Hadson and its Consolidated Subsidiaries) immediately after
giving effect to the consummation of the Acquisition and the retirement of the
senior secured notes being acquired by the Borrower as part of the Acquisition;
(iv) Certified copies of the resolutions of the Board of Directors of the
Borrower approving this Agreement, the Notes, the Applications and the Support
Agreement and of all documents evidencing other necessary corporate action with
respect to this Agreement, the Notes, the Applications and the Support Agree-
ment;
(v) A certificate of the Secretary or an Assistant Secretary of the Borrower
certifying (A) the names and true signatures of the officers of the Borrower
authorized to sign this Agreement, the Notes, the Applications and the Support
Agreement and the other documents to be delivered hereunder; (B) that attached
thereto are true and correct copies of the Certificate of Incorporation and the
By-laws of the Borrower, in each case as in effect on such date; (C) that
attached thereto are true and correct copies of all governmental and regulatory
authorizations and approvals required for the due execution, delivery and
performance by the Borrower of this Agreement, the Notes and the Support
Agreement;
(vi) A certificate of the Secretary or an Assistant Secretary of the Parent
certifying that the execution, delivery and performance by the Parent of the
Support Agreement and the designation by the Parent of the obligations of the
Borrower hereunder as "Debt" under the Support Agreement and the Lenders as
"Lenders" under the Support Agreement have been duly authorized by the Board of
Directors of the Parent pursuant to resolutions duly adopted at a meeting duly
called;
(vii) A certificate of the Secretary or an Assistant Secretary of the Parent
certifying (A) the names and true signatures of the officers of the Parent
authorized to sign the Support Agreement and the other documents to be deliv-
ered by the Parent hereunder; (B) that attached thereto are true and correct
copies of the Certificate of Incorporation and By-laws of the Parent, in each
case as in effect on such date; and (C) that attached thereto are true and
correct copies of all governmental and regulatory authorizations and approvals
required for the due execution, delivery and performance by the Parent of the
Support Agreement and the other documents to be delivered by the Parent
hereunder;
(viii) A certificate of the chief financial officer of the Borrower, or such
other officer of the Borrower acceptable to the Agent, stating that (A) the
representations and warranties contained in Section 4.01 of this Agreement are
correct on and as of the date of such certificate as though made on and as of
such date and (B) no Event of Default, and no event that with the giving of
notice or the passage of time, or both, would constitute an Event of Default,
has occurred and is continuing;
(ix) A favorable opinion of Gardner, Carton & Douglas, special counsel for the
Borrower and the Parent, substantially in the form of Exhibit D hereto and as
to such other matters as any Lender through the Agent may reasonably request;
(x) A favorable opinion of John R. McCall, General Counsel of the Parent,
substantially in the form of Exhibit E hereto and to such other matters as any
Lender through the Agent may reasonably request;
(xi) A favorable opinion of Chapman and Cutler, counsel for the Agent,
substantially in the form of Exhibit F hereto; and
(xii) Certified copies of the resolutions of the Boards of Directors of each
initial Permitted Subsidiary authorizing the execution and delivery of Applica-
tions under this Agreement together with the certificate of the secretary or
assistant secretary of each such initial Permitted Subsidiary certifying the
names and true signatures of the officers authorized to execute and deliver
such Applications provided that such resolutions may be delivered subsequent to
the Closing Date (and the failure to deliver same on the Closing Date shall not
cause the Closing Date to fail to occur, but a Permitted Subsidiary must
deliver such resolutions and certificates prior to the issuance of any Letters
of Credit hereunder for the account of such Permitted Subsidiary if such
Letters of Credit are not Existing Letters of Credit).
(b) Payment of Fees. The Agent shall have received from the Borrower for its
own account, any fees payable to the Agent, as set forth in any written
agreement between Bank of Montreal and the Borrower.
(c) Equity. The Borrower shall have received equity capital from the Parent
of not less than $80,000,000.
(d) Consummation of Acquisition. The Agent shall have received evidence
satisfactory to it that promptly upon funding the initial Advance (i) the
Acquisition will be consummated and (ii) the Commitments under the Credit
Agreement dated as of December 14, 1993, as amended by and between Hadson and
certain of its Subsidiaries, Bank of Montreal, as Agent (the "Hadson Credit
Agreement") and the banks from time to time party thereto shall have terminated
and the indebtedness for borrowed money outstanding thereunder shall have been
retired.
Upon the Initial Borrowing, the Borrower shall without further action on its
part be deemed to have guaranteed the prompt payment and performance of all
indebtedness, obligations and liabilities of Hadson and its Subsidiaries
arising under or in respect of the Existing Letters of Credit, pursuant to and
as provided in Section 2.03(g) hereof, each of the Existing Letters of Credit
shall constitute "Letters of Credit" for all purposes of this Agreement and
each of the Existing Applications shall constitute "Applications" for all
purposes of this Agreement.
Section 3.02. Condition Precedent to Each Contract Borrowing and each
Letter of Credit. The obligation of each Lender to make a Contract Advance on
the occasion of each Contract Borrowing (including the initial Contract
Borrowing) and of the obligation of the Agent to issue, amend or extend each
Letter of Credit (including the initial Letter of Credit) shall be subject to
the further condition precedent that on the date of such Contract Borrowing or
issuance, amendment or extension of such Letter of Credit the following
statements shall be true (and each of the giving of the applicable Notice of
Contract Borrowing and request for the issuance, amendment or extension of a
Letter of Credit and the acceptance by the Borrower of the proceeds of such
Contract Borrowing shall constitute a representation and warranty by the
Borrower that on the date of such Contract Borrowing or issuance, amendment or
extension of such Letter of Credit such statements are true):
(i) The representations and warranties contained in Section 4.01 are correct
on and as of the date of such Contract Borrowing or issuance, amendment or
extension of such Letter of Credit, before and after giving effect to such
Contract Borrowing and issuance, amendment or extension of such Letter of
Credit and to the application of the proceeds therefrom, as though made on and
as of such date except to the extent any such representation or warranty
expressly relates solely to an earlier date and except that the reference to
the December 31, 1994 financial statements of the Parent and its Consolidated
Subsidiaries in Section 4.01(f) shall be deemed a reference to the most recent
quarterly or annual financial statements of the Parent and its Consolidated
Subsidiaries submitted to the Lenders pursuant to Section 5.01(a) hereof; and
(ii) No event has occurred and is continuing, or would result from such
Contract Borrowing or issuance of such Letter of Credit or from the application
of the proceeds therefrom, that constitutes an Event of Default or would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.
In addition, in the case of the issuance of each Letter of Credit the Agent
shall have received a duly completed Application therefor and, in the case of
an amendment to, extension of, or increase in, the amount of a Letter of
Credit, a written request therefor, in a form acceptable to the Agent.
Section 3.03. Conditions Precedent to Each Auction Borrowing. The
obligation of each Lender that is to make an Auction Advance on the occasion of
an Auction Borrowing (including the initial Auction Borrowing) to make such
Auction Advance as part of such Auction Borrowing is subject to the conditions
precedent that (i) the Agent shall have received the written confirmatory
Notice of Auction Borrowing with respect thereto, (ii) on or before the date of
such Auction Borrowing, but prior to such Auction Borrowing, the Agent shall
have received an Auction Note payable to the order of such Lender for each of
the Auction Advances to be made by such Lender as part of such Auction Borrow-
ing, in a principal amount equal to the principal amount of the Auction Advance
to be evidenced thereby and otherwise on such terms as were agreed to for such
Auction Advance in accordance with Section 2.04, and (iii) on the date of such
Auction Borrowing the following statements shall be true (and each of the
giving of the applicable Notice of Auction Borrowing and the acceptance by the
Borrower of the proceeds of such Auction Borrowing shall constitute a represen-
tation and warranty by the Borrower that on the date of such Auction Borrowing
such statements are true):
(A) The representations and warranties contained in Section 4.01 are correct
on and as of the date of such Auction Borrowing, before and after giving effect
to such Auction Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date except to the extent any such representation
or warranty expressly relates solely to an earlier date and except that the
reference to the December 31, 1994 financial statements of the Parent and its
Consolidated Subsidiaries in Section 4.01(f) shall be deemed a reference to the
most recent quarterly or annual financial statements of the Parent and its
Consolidated Subsidiaries submitted to the Lenders pursuant to Section 5.01(a)
hereof, and
(B) No event has occurred and is continuing, or would result from such
Auction Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default or which would constitute an Event of Default
but for the requirement that notice be given or time elapse or both.
Section 3.04. Condition Precedent to Certain Conversions. The obliga-
tion of each Lender to Convert any Contract Borrowing that, upon such Conver-
sion, is to comprise Adjusted CD Rate Advances or Eurodollar Rate Advances is
subject to the condition precedent that on the date of such Conversion no Event
of Default shall have occurred and be continuing, and the giving by the
Borrower of the applicable notice of Conversion described in Section 2.11(a)
shall constitute a representation and warranty by the Borrower that no Event of
Default has occurred and is continuing.
Article IV
Representations and Warranties
Section 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) The Borrower and each of its Material Consolidated Subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and is duly qualified to do
business as a foreign corporation in each jurisdiction in which the nature of
the business conducted or the property owned, operated or leased by it requires
such qualification, except where failure to so qualify would not materially
adversely affect the financial condition, operations, business, properties, or
prospects of the Borrower or the Borrower and its Material Consolidated
Subsidiaries, taken as a whole.
(b) The execution, delivery and performance by the Borrower of this Agree-
ment, the Applications and the Notes are within the Borrower's corporate
powers, have been duly authorized by all necessary corporate action, and do not
contravene (i) the Borrower's Certificate of Incorporation or By-laws, (ii) law
or (iii) any contractual or legal restriction binding on or affecting the
Borrower or its properties.
(c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body (each, a "Govern-
mental Approval") is required as of the date of this Agreement for the due
execution, delivery and performance by the Borrower of this Agreement or the
Notes or by the Parent of the Support Agreement; and no Governmental Approval
will be required after the date of this Agreement for the due execution and
delivery by the Borrower of the Auction Notes or Applications the performance
by the Borrower of this Agreement, the Applications or the Notes or the
performance of the Support Agreement by the Parent except for such Governmental
Approvals (notice of each of which shall be promptly given to the Lenders) that
shall be in full force and effect as and when required and not subject to
appeal.
(d) This Agreement is, and the Notes and Applications when delivered hereun-
der will be, legal, valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their respective terms, except as the
enforceability thereof may be limited by equitable principles or bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforce-
ment of creditors' rights generally.
(e) The Support Agreement is in full force and effect and has not been
amended, modified, waived or terminated, except in accordance with the terms
hereof and thereof, and the Parent is not in default of any of its obligations
thereunder.
(f) The balance sheets of the Parent and its Consolidated Subsidiaries as at
December 31, 1994, and the related statements of income and retained earnings
of the Parent and its Consolidated Subsidiaries for the fiscal periods then
ended, certified by Arthur Andersen & Co., copies of which have been furnished
to each Bank, fairly present the financial condition of the Parent and its
Consolidated Subsidiaries as at such date and the results of the operations of
the Parent and its Consolidated Subsidiaries for the period ended on such date,
all in accordance with generally accepted accounting principles consistently
applied, and since December 31, 1994, and except as otherwise disclosed in
written materials furnished to the Lenders there has been no material adverse
change in the financial condition, operations, business or prospects of the
Parent and its Consolidated Subsidiaries, taken as a whole, as reflected in
such financial statements.
(g) Except as disclosed in the Parent's Annual Report to Stockholders for the
year ended December 31, 1994 or otherwise disclosed in written materials
furnished to the Lenders, there is as of the date hereof and will be as of the
Closing Date no pending or threatened action or proceeding affecting the
Borrower, the Parent or any of its Consolidated Subsidiaries before any court,
governmental agency or arbitrator that could reasonably be expected to have a
material adverse effect on the financial condition, operations, business or
prospects of the Borrower or the Parent and its Consolidated Subsidiaries,
taken as a whole, and there is not and will not be any such pending or threat-
ened action or proceeding that purports to affect the legality, validity,
binding effect or enforceability of this Agreement, the Applications, any Note
or the Support Agreement.
(h) No proceeds of any Advance have been or will be used directly or indi-
rectly in connection with any transaction subject to the requirements of
Section 14 of the Exchange Act with respect to which proxies, consents or
authorizations are being sought by any person (as defined in the Exchange Act)
other than the majority of the board of directors of the issuer in respect of
which such proxies, consents or authorizations, as the case may be, are being
sought.
(i) The Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regula-
tion U issued by the Board of Governors of the Federal Reserve System). Not
more than 25% of the value of the assets of the Parent or of the Borrower and
its Subsidiaries is, on the date hereof, represented by margin stock.
(j) The Borrower (i) is not a "public utility holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended, and
(ii) is not an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or an "investment advisor" within the meaning of the Investment Company Act of
1940, as amended.
(k) No ERISA Termination Event has occurred, or is reasonably expect to
occur, with respect to any ERISA Plan that may materially and adversely affect
the financial condition, operations, business or prospects of the Borrower or
of the Parent and its Subsidiaries, taken as a whole.
(l) The pro-forma consolidated balance sheets of the Borrower and its
Consolidated Subsidiaries and of Hadson and its Subsidiaries delivered to the
Lenders pursuant to Section 3.01(a)(iii) fairly present in all material
respects the financial condition of the Borrower and its Consolidated Subsid-
iaries (including Hadson and its Consolidated Subsidiaries) as of the Initial
Borrowing but after giving effect to the Acquisition.
Article V
Covenants of the Borrower
Section 5.01. Affirmative Covenants. Unless the Majority Lenders shall
otherwise consent in writing, so long as any Note or any amount payable by the
Borrower hereunder shall remain unpaid or any Lender shall have any Commitment
hereunder, the Borrower will, and, in the case of Section 5.01(b), will cause
its Consolidated Subsidiaries to:
(a) Reporting Requirements. Furnish to the Lenders:
(i) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Parent, consolidat-
ed and consolidating balance sheets of the Parent and its Consolidated Subsid-
iaries as of the end of such quarter, consolidated and consolidating statements
of income, cash flow and retained earnings of the Parent and its Consolidated
Subsidiaries for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, consolidated balance sheets of the
Borrower and its Consolidated Subsidiaries as of the end of such quarter and
consolidated statements of income and retained earnings of the Borrower and its
Consolidated Subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, each certified by the
chief financial officer of the Borrower, or such other officer of the Borrower
acceptable to the Agent;
(ii) as soon as available and in any event within 120 days after the end of
each fiscal year of the Parent, a copy of the annual report for such year for
the Parent and its Consolidated Subsidiaries, containing consolidated financial
statements for such year, certified by Arthur Andersen & Co. or another
nationally recognized firm of independent public accountants, and a copy of the
unaudited consolidating financial statements of the Parent and its Consolidated
Subsidiaries and the consolidated financial statements of the Borrower for such
year;
(iii) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Borrower and within
120 days after the end of the fiscal year of the Borrower, a certificate of the
chief financial officer of the Borrower, or such other officer of the Borrower
or Parent acceptable to the Agent, (A) demonstrating, in reasonable detail and
with supporting calculations, compliance with the financial covenants set forth
in Section 5.02(a) hereof and (B) stating that no Event of Default and no event
that, with the giving of notice or lapse of time or both, will constitute an
Event of Default has occurred and is continuing, or if an Event of Default or
such event has occurred and is continuing, a statement setting forth details of
such Event of Default or event and the action that the Borrower has taken and
proposes to take with respect thereto;
(iv) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Parent and within
120 days after the end of the fiscal year of the Parent, a certificate of the
chief financial officer of the Parent, or such other officer of the Parent
acceptable to the Agent, (A) demonstrating, in reasonable detail and with
supporting calculations, compliance by the Parent with the financial covenants
set forth in Sections 3 and 5 of the Support Agreement and the calculation of
the Parent's Capitalization Ratio as of the last day of such fiscal period and
(B) stating that the Parent is not in default in the performance or observance
of any term, covenant or agreement contained in the Support Agreement;
(v) as soon as possible and in any event within five days after the occur-
rence of each Event of Default and each event that, with the giving of notice
or lapse of time or both, would constitute an Event of Default, continuing on
the date of such statement, a statement of the chief financial officer of the
Borrower, or such other officer of the Borrower acceptable to the Agent,
setting forth details of such Event of Default or event and the actions that
the Borrower has taken and proposes to take with respect thereto;
(vi) as soon as possible and in any event within five days after the commence-
ment of litigation against the Borrower or any of its Material Consolidated
Subsidiaries, or the receipt of a notice of default by the Borrower or any of
its Material Consolidated Subsidiaries, that could reasonably be expected to
have a material adverse effect on the Borrower or any of its Material Consoli-
dated Subsidiaries, notice of such litigation or notice of default describing
in reasonable detail the facts and circumstances concerning such litigation or
default and the Borrower's or such Material Consolidated Subsidiary's proposed
actions in connection therewith;
(vii) promptly after the sending or filing thereof, copies of annual,
quarterly or current reports on Forms 10-K, 10-Q or 8-K (or any successor forms
thereto) and registration statements (other than any registration statement on
Form S-8 and any registration statement in connection with a dividend reinvest-
ment plan) that the Parent or the Borrower or any other Consolidated Subsidiary
of the Parent files with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, or the Exchange Act, or with any national
securities exchange; and
(viii) such other information respecting the condition or operations, finan-
cial or otherwise, of the Parent, the Utility, the Borrower or any of the
Parent's other Consolidated Subsidiaries as any Lender through the Agent may
from time to time reasonably request.
(b) Keep Books; Corporate Existence; Maintenance of Properties; Compliance
with Laws; Insurance.
(i) keep proper books of record and account, all in accordance with generally
accepted accounting principles;
(ii) preserve and keep in full force and effect its existence (except in each
instance to the extent otherwise permitted pursuant to Section 5.02(d)) and
preserve and keep in full force and effect its licenses, rights and franchises
to the extent necessary to carry on its business;
(iii) maintain and keep, or cause to be maintained and kept, its properties
in good repair, working order and condition, and from time to time make or
cause to be made all needful and proper repairs, renewals, replacements and
improvements, in each case to carry on its business;
(iv) comply in all material respects with all applicable laws, rules, regula-
tions and orders, such compliance to include, without limitation, paying before
the same become delinquent all taxes, assessments and governmental charges
imposed upon it or its property, except to the extent being contested in good
faith by appropriate proceedings, and compliance with ERISA and Environmental
Laws, except in each case to the extent that any noncompliance could not
reasonably be expected to have a material adverse effect on the financial
condition, operations, business or prospects of the Borrower and its Subsidiar-
ies, taken as a whole; and
(v) maintain insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which it operates.
(c) Use of Proceeds. Use the proceeds of each Borrowing hereunder exclu-
sively for general corporate purposes, acquisitions and working capital
requirements in connection with energy related businesses including without
limitation the Oil and Gas Business.
Section 5.02. Negative Covenants. Unless the Majority Lenders shall
otherwise consent in writing, so long as any Note or any amount payable by the
Borrower hereunder shall remain unpaid or any Lender shall have any Commitment
hereunder, the Borrower will not:
(a) Interest Coverage Ratio. As of the last day of any calendar quarter
(commencing with the calendar quarter ended June 30, 1996) have a ratio of
EBITDA to Interest Expense for the four quarters then ending of less than that
shown for such period below:
Ratio of EBITDA to
Interest Expense
For Computation periods ending: shall not be less than:
6/31/96 through 9/30/96 1.75 to 1.0
12/31/96 through 9/30/97 2.00 to 1.0
12/31/97 and thereafter 2.25 to 1.0
(b) Disposition of Assets. Sell lease, transfer, convey or otherwise dispose
of (whether in one transaction or in a series of transactions) all or substan-
tially all of its assets (whether now owned or hereafter acquired) to any
Person, or permit any of its Consolidated Subsidiaries to do so, except that,
(i) any such Consolidated Subsidiary may transfer assets to any other such
Consolidated Subsidiary or to the Borrower, (ii) any such Consolidated Subsid-
iary may transfer its assets to any other Person in connection with a sale and
leaseback financing entered into by such Consolidated Subsidiary and (iii) the
Borrower and any of its Consolidated Subsidiaries may sell its assets in a cash
transaction, provided, in the case of any transaction described in clause (ii)
or (iii), the consideration (as hereinafter defined) received for such assets
is at least equal to the fair value (as determined in good faith by the board
of directors of the Borrower) thereof and (A) such consideration is delivered
immediately to the Agent to be applied in accordance with Section 2.12(c), with
the remainder, if any, to be returned to the Borrower and held and used in
accord with clauses (B) or (C) below; (B) such consideration is reinvested, or
held in cash or cash equivalents for reinvestment, in other energy-related
assets and businesses, including, without limitation, the Oil and Gas Business,
owned by the Borrower or any of its Consolidated Subsidiaries, or (C) such
consideration is applied immediately to the payment or prepayment of debt
incurred by the Borrower or such Consolidated Subsidiary in connection with the
project comprising such assets, with the remainder held and used or applied in
accordance with clauses (A) or (B) above, provided further in each case, that
immediately after giving effect to any such transaction, no Event of Default or
event that with the giving of notice or the passage of time, or both, would
constitute an Event of Default shall have occurred and be continuing. As used
in this Section 5.02(b), the term "consideration" shall mean cash consideration
or the fair value of non-cash consideration (as determined in good faith by the
board of directors of the Borrower).
(c) Liens, Etc. Create or suffer to exist, or permit any of its Consolidated
Subsidiaries to create or suffer to exist, any lien, security interest or other
charge or encumbrance, or any other type of preferential arrangement, upon or
with respect to any of its properties, whether now owned or hereafter acquired,
or assign, or permit any of its Consolidated Subsidiaries to assign, any right
to receive income, in each case to secure or provide for the payment of any
Debt, other than (i) liens or security interests existing on such property at
the time of its acquisition (other than any such lien or security interest
created in the contemplation of such acquisition), (ii) liens created by
purchase money mortgages or other security interests upon or in any property
acquired or held by the Borrower or any Consolidated Subsidiary in the ordinary
course of business to secure the purchase price of such property or to secure
indebtedness incurred solely for the purpose of financing the acquisition of
such property, (iii) margin deposits of up to $5,000,000 at any one time
outstanding supporting obligations in connection with ordinary course of
business hydrocarbon price hedging activities, (iv) liens reserved in leases,
easements, grants, franchises or permits for rent and fees or for compliance
with the terms of such leases, easements, grants, franchises or permits,
(v) liens securing obligations neither assumed by the Borrower or any Consoli-
dated Subsidiary nor on account of which the Borrower or any Consolidated
Subsidiary customarily pays interest upon real estate upon or under which the
Borrower or any Consolidated Subsidiary has a right-of-way, easement, franchise
or other servitude or of which the Borrower or any Consolidated Subsidiary is
the lessee of the whole thereof or any interest therein for the purpose of
locating pipe lines, substations, measuring stations, tanks or pumping or
delivery equipment, (vi) liens imposed by law, such as materialmen's, mechan-
ics', carriers', workmen's, repairmen's producers', suppliers' and operators'
liens and other similar liens arising in the ordinary course of business,
securing obligations that are not overdue for a period of more than 30 days
after the filing of any notice with respect to, or the Borrower or the affected
Consolidated Subsidiaries otherwise having notice of, such lien or that are
being contested in good faith, and (vii) extensions and renewals of any lien or
security interest described in clauses (i) and (ii) above, provided that
(A) any such extension or renewal shall be limited to the property theretofore
subject to such lien or security interest and (B) the principal amount of the
Debt secured by such lien or security interest shall not be increased.
(d) Mergers and Consolidations. Merge or consolidate with or into any
Person, or permit any of its Consolidated Subsidiaries to do so, except (i) any
Consolidated Subsidiary of the Borrower may merge or consolidate with or into
any Person if after giving effect thereto the survivor is a Consolidated
Subsidiary of the Borrower, (ii) any Consolidated Subsidiary of the Borrower
may merge with the Borrower, (iii) the Borrower may merge with the Parent and
(iv) any Consolidated Subsidiary may merge into any other corporation if after
giving effect thereto the survivor is no longer a Subsidiary hereunder and the
assets of such Consolidated Subsidiary could have been sold under Sec-
tion 5.02(b) hereof for the consideration to be received or retained by the
Borrower and its other Consolidated Subsidiaries on account of such merger (and
any such transaction referred to in this clause (iv) shall be accounted for and
treated as a disposition of assets for purposes of Section 5.02(b) hereof);
provided in each case that, immediately after giving effect to such proposed
transaction, (A) no Event of Default or event that with the giving of notice or
lapse of time, or both, would constitute an Event of Default would exist and
(B) in the case of any such transaction to which the Borrower is a party, the
Borrower is the surviving corporation or the survivor shall have expressly
assumed the obligations of the Borrower hereunder and under the Notes and
Applications pursuant to an assumption agreement in form and substance satis-
factory to the Majority Lenders.
(e) Modification of Support Agreement. Amend, modify, terminate or waive any
provision of the Support Agreement, or consent to any of the foregoing, except
in each case in accordance with the terms of the Support Agreement.
(f) Certain Restrictions during Defaults on Systems' Debt. If Systems shall
fail to pay any principal of or premium or interest on any Debt of Systems in
excess of $10,000,000 when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) or
any other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt the effect of which is to accelerate the
maturity of such Debt or Systems has received a notice from the holder or
holders of such Debt notifying Systems of a default thereon which will permit
the acceleration of the maturity thereof if such default is not cured within an
applicable period of grace or a default has occurred of a character such that
no such notice is required as a condition to an acceleration or exercise of a
right to accelerate (other than defaults requiring no notice where no responsi-
ble officer of the Borrower, Systems or the Parent is aware of the default
after reasonable inquiry) (collectively, "Systems Defaults") then and in any
such event unless and until any such Systems Default has been cured or effec-
tively waived by the holders of the Debt in question, the Borrower will not
declare or pay any dividend, either in cash or property, on any share of its
capital stock of any series or class or purchase, redeem or otherwise acquire
or retire any such capital stock or any warrants, rights or options to purchase
or acquire any such capital stock or make any other payment or distribution
either directly or indirectly in respect of its capital stock, make or permit
any Subsidiary to make any investment in or loan or advance to the Parent or
any Subsidiaries thereof (other than Subsidiaries of the Borrower) or otherwise
directly or indirectly in any manner make or permit any Subsidiary to make any
payment to, or transfer of any cash or any other asset to, the Parent or any
such Subsidiary; provided, however, that the foregoing shall not preclude the
Borrower and its Subsidiaries during the pendency of any Systems Defaults, from
making payments to the Parent or any such Subsidiary under any equitable tax
sharing arrangements or in respect of goods or services then being provided by
the Parent or any Subsidiary thereof to the Borrower or its Subsidiaries at
fair and reasonable terms or in repayment of Debt of the Borrower or its
Subsidiaries owing to the Parent on its regularly scheduled due date if but
only if there is no Debt then owing from the Parent to the Borrower or its
Subsidiaries (in which event Borrower may nonetheless offset any Debt of
Borrower or its Subsidiaries owing to the Parent against any Debt from the
Parent to the Borrower or its Subsidiaries).
(g) Certain Restrictions during Defaults Hereunder. If an Event of Default
has occurred and is continuing hereunder or an event has occurred which will
constitute such an Event of Default upon the passage of a period of grace (and
any notice the giving of which is a condition to the commencement of such
period of grace has been given) then and in any such event and without in any
manner limiting the remedies available to the Lenders upon the occurrence of a
Default, the Borrower will not declare or pay any dividend, either in cash or
property, on any share of its capital stock or any series or class or purchase,
redeem or otherwise acquire or retire any such capital stock or any warrants,
rights or options to purchase or acquire any such capital stock or make any
other payment or distribution either directly or indirectly in respect of its
capital stock, make or permit any Subsidiary to make any investment in or loan
or advance to the Parent or any Subsidiaries thereof (other than Subsidiaries
of the Borrower) or otherwise directly or indirectly in any manner make or
permit any Subsidiary to make any payment to, or transfer any cash or any other
asset to, the Parent or any such Subsidiary; provided, however, that the
foregoing shall not preclude the Borrower and its Subsidiaries during the
pendency of any such Default, from making payments to the Parent under any
equitable tax sharing arrangements or in respect of goods or services then
being provided by the Parent or any Subsidiary thereof to the Borrower or its
Subsidiaries at fair and reasonable terms.
Article VI
Events of Default
Section 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Advance or any
Reimbursement Obligation when the same becomes due and payable, or interest
thereon or any other amount payable under this Agreement or any Application
within two days after the same becomes due and payable; or
(b) Any representation or warranty made by the Borrower herein or by the
Borrower (or any of its officers) in connection with this Agreement or by the
Parent (or any of its officers) in connection with this Agreement or the
Support Agreement shall prove to have been incorrect in any material respect
when made; or
(c) (i) The Borrower shall fail to perform or observe any term, covenant or
agreement contained in Section 5.02, (ii) the Parent shall fail to perform or
observe any term, covenant or agreement contained in the Support Agreement,
(iii) the Capitalization Ratio shall at any time exceed 60% or (iv) the
Borrower shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement on its part to be performed or observed if the
failure to perform or observe such other term, covenant or agreement shall
remain unremedied for 20 days after written notice thereof shall have been
given to the Borrower by the Agent or any Lender, or
(d) The Borrower, the Parent, the Utility or any Material Consolidated
Subsidiary of the Borrower, shall fail to pay any principal of or premium or
interest on any Debt which is outstanding in a principal amount in excess of
$10,000,000 in the aggregate (but excluding Debt evidenced by the Notes and the
Reimbursement Obligations) of the Borrower, the Parent, the Utility or any
Material Consolidated Subsidiary of the Borrower, as the case may be, when the
same becomes due and payable (whether by scheduled maturity, required prepay-
ment, acceleration, demand or otherwise), and such failure shall continue after
the applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other event shall occur or condition shall exist
under any agreement or instrument relating to any such Debt and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any such Debt shall
be declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof;
or
(e) Systems shall fail to pay in excess of $10,000,000 of principal, premium
and/or interest on Debt of Systems when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Debt; or
(f) The maturity of in excess of $10,000,000 of Debt of Systems (other than
Debt of the type described in clauses (vi) and (vii) of the definition of that
term or under clause (viii) of such definition insofar as clause (viii) relates
to Debt of others described in clauses (vi) or (vii)) is accelerated as a
consequence of a default, event of default, change of control or other event
and such acceleration has neither been duly waived by the holders of such Debt
nor cured (other than by payment of such Debt in an amount in excess of
$10,000,000 (in any year) from cash or assets provided directly or indirectly
(and whether in the form of capital contributions, loans, asset purchases (not
in the ordinary course of business), or otherwise by the Parent or the Borrow-
er); or
(g) The Parent makes payments in any calendar year in excess of $10,000,000
as a result of demands made upon it under support or maintenance agreements or
guaranties or in respect of Debt of the Parent of the type described in
clause (viii) of the definition of that term; or
(h) The Borrower, the Parent, Systems, the Utility or any Material Consoli-
dated Subsidiary of the Borrower, shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Borrower, the Parent,
Systems, the Utility or any Material Consolidated Subsidiary of the Borrower,
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 90 days,
or any of the actions sought in such proceeding (including, without limitation,
the entry of an order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or for any substantial
part of its property) shall occur; or the Borrower, the Parent, Systems, the
Utility or any Material Consolidated Subsidiary of the Borrower, shall take any
corporate action to authorize or to consent to any of the actions set forth
above in this subsection (h); or
(i) Any judgment or order for the payment of money in excess of $10,000,000
shall be rendered against the Borrower, the Parent, the Utility or any Material
Consolidated Subsidiary of the Borrower, or any other direct Subsidiary of the
Parent and shall remain unpaid and either (i) enforcement proceedings shall
have been commenced by any creditor upon such judgment or order or (ii) there
shall be any period of 30 consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(j) (i) An ERISA Plan of the Borrower or any ERISA Affiliate of the Borrower
shall fail to maintain the minimum funding standards required by Section 412 of
the Internal Revenue Code of 1986, as amended from time to time (the "Code"),
for any plan year or a waiver of such standard is sought or granted under
Section 412(d) of the Code, or (ii) an ERISA Plan of the Borrower or any ERISA
Affiliate of the Borrower shall have been terminated or the subject of termina-
tion proceedings under ERISA, or (iii) the Borrower or any ERISA Affiliate of
the Borrower shall have incurred a liability to or on account of an ERISA Plan
under Section 4062, 4063 or 4064 of ERISA and there shall result from such
event either a liability or a material risk of incurring a liability to the
PBGC or an ERISA Plan, or (iv) any ERISA Termination Event with respect to an
ERISA Plan of the Borrower or any ERISA Affiliate of the Borrower shall have
occurred, and in the case of any event described in clauses (i) through (iv) of
this subsection (g), (A) such event (if correctable) shall not have been
corrected and (B) the then-present value of such ERISA Plan's vested benefits
exceeds the then-current value of assets accumulated in such ERISA Plan by more
than the amount of $10,000,000 (or in the case of an ERISA Termination Event
involving the withdrawal of a "substantial employer" (as defined in Sec-
tion 4001(a)(2) of ERISA), the withdrawing employer's proportionate share of
such excess shall exceed such amount); or
(k) Any provision of the Support Agreement shall for any reason (except
pursuant to the terms thereof) cease to be valid and binding on any party
thereto or any party thereto shall so state in writing; or
(l) Any authorization or approval or other action by any governmental
authority or regulatory body required for the execution, delivery or perfor-
mance of (i) this Agreement, the Applications, the Notes or the Support
Agreement by the Borrower or (ii) the Support Agreement by the Parent shall be
terminated, revoked or rescinded or shall otherwise no longer be in full force
and effect;
then, and in any such event, the Agent (i) shall at the request, or may with
the consent, of the Majority Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances and of the Agent to issue, amend or
extend Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request or may with the consent, of the
Majority Lenders, by notice to the Borrower, declare the Notes, all interest
thereon and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that in the event of an actual or deemed entry of
an order for relief with respect to the Borrower under the Federal Bankruptcy
Code, (A) the obligation of each Lender to make Advances and of the Agent to
issue, amend or extend Letters of Credit shall automatically be terminated and
(B) the Notes, or such interest and all such amounts shall automatically become
and be due and payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by the Borrower.
Section 6.02. The Letters of Credit. When any Event of Default has
occurred and is continuing, the Borrower shall, upon demand of the Agent or the
Majority Lenders, and in the event of an actual or deemed entry of an order for
relief with respect to the Borrower under the Federal Bankruptcy Code, the
Borrower shall, without notice or demand from the Agent or the Majority
Lenders, immediately deposit with the Agent the full amount of each Letter of
Credit, each deposit to be invested in such interest bearing deposit accounts
of the Agent or high-grade debt securities as the Borrower and the Agent shall
agree (all such deposits to be and constitute collateral security for the
Borrower's obligations in respect of the Letters of Credit) the Borrower
agreeing to immediately make each such deposit and acknowledging and agreeing
that the Agent would not have an adequate remedy at law for failure of the
Borrower to honor any such demand and that the Agent shall have the right to
require the Borrower to specifically perform such undertaking whether or not
any draws had been made under the Letters of Credit.
Article VII
The Agent
Section 7.01. Authorization and Action. Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Agent shall not be required to take any action
which exposes the Agent to personal liability or which is contrary to this
Agreement or applicable law. The Agent agrees to give to each Lender prompt
notice of each notice given to it by the Borrower pursuant to the terms of this
Agreement.
Section 7.02. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to any Lender or the
Borrower for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or the Applications, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality
of the foregoing, the Agent: (i) may treat the payee of any Note as the holder
thereof until the Agent receives and accepts an Assignment and Acceptance
entered into by the Lender which is the payee of such Note, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 8.07; (ii) may consult
with legal counsel (including counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement; (iv) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement on the part of the Borrower or to inspect the
property (including the books and records) of the Borrower; (v) shall not be
responsible to any Lender for the due execution, legality, validity, enforce-
ability, genuineness, sufficiency or value of this Agreement, the Applications,
the Notes or any other instrument or document furnished pursuant hereto or
thereto; and (vi) shall incur no liability under or in respect of this Agree-
ment by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier, telegram, cable or telex) believed by it
to be genuine and signed or sent by the proper party or parties.
Section 7.03. Bank of Montreal and Affiliates. With respect to its
Commitment, the Advances made by it and the Notes issued to it, Bank of
Montreal shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though it were not the Agent; and the
term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include
Bank of Montreal in its individual capacity. Bank of Montreal and its affili-
ates may accept deposits from, lend money to, act as trustee under indentures
of, and generally engage in any kind of business with, the Borrower, any of its
subsidiaries and any Person who may do business with or own securities of the
Borrower or any such subsidiary, all as if Bank of Montreal were not the Agent
and without any duty to account therefor to the Lenders.
Section 7.04. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender and
based on the financial statements referred to in Section 4.01(f) and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also acknowl-
edges that it will, independently and without reliance upon the Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
Section 7.05. Indemnification. The Lenders agree to indemnify the Agent
(to the extent not reimbursed by the Borrower), ratably according to (i) at any
time on or prior to the Termination Date, the respective principal amounts of
the Contract Notes and credit risk incident to the Letters of Credit then held
by each of them (or if no Contract Notes or Letters of Credit are at the time
outstanding or if any Contract Notes are held by Persons which are not Lenders,
ratably according to the respective amounts of their Commitments) and (ii) at
any time after the Termination Date, the respective principal amounts of the
Notes and credit risk incident to the Letters of Credit then held by each of
them (or if any Notes are held by Persons that are not Lenders, ratably
according to the respective unpaid principal amounts of the Advances and credit
risk incident to the Letters of Credit made by each Lender), from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against the Agent
in any way relating to or arising out of this Agreement or the Applications or
any action taken or omitted by the Agent under this Agreement or the Applica-
tions, provided that no Lender shall be liable for any portion of such liabili-
ties, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of any out-of-
pocket expenses (including reasonable counsel fees) incurred by the Agent in
connection with the preparation, execution, delivery, administration, modifica-
tion, amendment or enforcement (whether through negotiations, legal proceedings
or otherwise) of, or legal advice in respect of rights or responsibilities
under, this Agreement or the Applications, to the extent that such expenses are
reimbursable by the Borrower but for which the Agent is not reimbursed by the
Borrower.
Section 7.06. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower and may be
removed at any time with or without cause by the Majority Lenders. Upon any
such resignation or removal, the Majority Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed
by the Majority Lenders, and shall have accepted such appointment, within 30
days after the retiring Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a commercial bank
described in clause (i) or (ii) of the definition of "Eligible Assignee" and
having a combined capital and surplus of at least $150,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
Notwithstanding the foregoing (i) if no Event of Default, and no event that
with the giving of notice or the passage of time, or both, would constitute an
Event of Default, shall have occurred and be continuing, then no successor
Agent shall be appointed under this Section 7.06 without the prior written
consent of the Borrower, which consent shall not be unreasonably withheld or
delayed and (ii) if the Agent is removed or resigns, then the resigning or
removed Agent shall retain all rights, powers and duties with respect to
Letters of Credit issued by it hereunder prior to its resignation becoming
effective.
Article VIII
Miscellaneous
Section 8.01. Amendments, Etc. No amendment or waiver of any provision
of this Agreement or the Contract Notes, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Majority Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by all the Lenders (other than any Lender that is
the Borrower or an Affiliate of the Borrower), do any of the following:
(a) waive any of the conditions specified in Section 3.01, 3.02 or 3.03,
(b) increase the Commitments of the Lenders or subject the Lenders to any
additional obligations, (c) reduce the principal of, or interest on, the
Contract Notes or Reimbursement Obligations or any fees or other amounts
payable hereunder, (d) postpone any date fixed for any payment of principal of,
or interest on, the Contract Notes or any fees or other amounts payable
hereunder, (e) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Contract Notes, or the number of Lenders, which
shall be required for the Lenders or any of them to take any action hereunder,
(f) amend or waive compliance with Section 5.02(e) (except that Sections 3 and
5 of the Support Agreement may be amended or compliance therewith waived by
Lenders having at least 85% of the Commitments or if the Commitments have
terminated in whole, the holders of 85% or more of the Advances and the credit
risk incident to the Letters of Credit (subject to the same parenthetical
proviso as appears in the definition of the term "Majority Lenders")) or
(g) amend this Section 8.01; and provided, further, that no amendment, waiver
or consent shall, unless in writing and signed by the Agent in addition to the
Lenders required above to take such action, affect the rights or duties of the
Agent under this Agreement, the Applications or any Note.
Section 8.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to the Borrower, at its address at 220 W. Main Street,
Louisville, Kentucky 40202, Attention: Treasurer, if to any Bank, at its
Domestic Lending Office specified opposite its name on Schedule I hereto; if to
any other Lender, at its Domestic Lending Office specified in the Assignment
and Acceptance pursuant to which it became a Lender; and if to the Agent, at
its address at 115 South LaSalle Street, Chicago, Illinois 60603, Attention:
Natural Resources; or, as to each party, at such other address as shall be
designated by such party in a written notice to the other parties. All such
notices and communications shall, when mailed, telecopied, telegraphed, telexed
or cabled, be effective when deposited in the mails, telecopied, delivered to
the telegraph company, confirmed by telex answerback or delivered to the cable
company, respectively, except that notices and communications to the Agent
pursuant to Article II or VII shall not be effective until received by the
Agent.
Section 8.03. No Waiver, Remedies. No failure on the part of any Lender
or the Agent to exercise, and no delay in exercising, any right hereunder or
under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 8.04. Costs and Expenses; Indemnification. (a) The Borrower
agrees to pay on demand all costs and expenses incurred by the Agent in
connection with the preparation, execution, delivery, syndication administra-
tion, modification and amendment of this Agreement, the Applications, the
Notes, the Support Agreement and the other documents to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket expenses
of counsel for the Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities under this Agreement. The Borrower
further agrees to pay on demand all costs and expenses, if any (including,
without limitation, counsel fees and expenses of outside counsel and of
internal counsel), incurred by the Agent and the Lenders in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement, the Applications, the Notes, the Support Agreement and the
other documents to be delivered hereunder, including, without limitation,
reasonable counsel fees and expenses in connection with the enforcement of
rights under this Section 8.04(a).
(b) If any payment of principal of, or Conversion of, any Adjusted CD Rate
Advance, Eurodollar Rate Advance or Eurodollar Rate Auction Advance is made
other than on the last day of the Interest Period or term, as applicable for
such Advance, as a result of a payment or Conversion pursuant to Section 2.11
or 2.14 or a prepayment pursuant to Section 2.12 or acceleration of the
maturity of the Notes pursuant to Section 6.01 or for any other reason, the
Borrower shall, upon demand by any Lender (with a copy of such demand to the
Agent), pay to the Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses which it
may reasonably incur as a result of such payment or Conversion, including,
without limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by any Lender
to fund or maintain such Advance.
(c) The Borrower hereby agrees to indemnify and hold each Lender, the Agent
and their respective Affiliates and their respective officers, directors,
employees and professional advisors (each, an "Indemnified Person") harmless
from and against any and all claims, damages, losses, liabilities, costs or
expenses (including reasonable attorney's fees and expenses, whether or not
such Indemnified Person is named as a party to any proceeding or is otherwise
subjected to judicial or legal process arising from any such proceeding) that
any of them may incur or which may be claimed against any of them by any person
or entity by reason of or in connection with the execution, delivery or
performance of this Agreement, the Applications, the Notes or any transaction
contemplated thereby, or the use by the Borrower or any of its subsidiaries of
the proceeds of any Advance, except to the extent such claim, damage, loss,
liability, cost or expense is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified Person's
gross negligence or willful misconduct. The Borrower's obligations under this
Section 8.04(c) shall survive the repayment of all amounts owing to the Lenders
and the Agent under this Agreement, the Applications and the Notes and the
termination of the Commitments. If and to the extent that the obligations of
the Borrower under this Section 8.04(c) are unenforceable for any reason, the
Borrower agrees to make the maximum contribution to the payment and satisfac-
tion thereof which is permissible under applicable law.
Section 8.05. Right of Set-off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement, any Application and any Note
held by such Lender, whether or not such Lender shall have made any demand
under this Agreement, such Application or such Note and although such obliga-
tions may be unmatured. Each Lender agrees promptly to notify the Borrower
after any such set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 8.05 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) which such Lender may have.
Section 8.06. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Agent and when the
Agent shall have been notified by each Bank that such Bank has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Agent and each Lender and their respective successors and permitted assigns,
except that the Borrower shall not have the right to assign its rights hereun-
der or any interest herein without the prior written consent of the Lenders.
Section 8.07. Assignments and Participations. (a) Each Lender may, with
the prior written consent of the Borrower and the Agent (which consent shall
not be unreasonably withheld or delayed), assign to one or more banks or other
entities all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, its rights
and obligations in respect of the Letters of Credit, the Contract Advances
owing to it and the Contract Note or Notes held by it); provided, however, that
(i) each such assignment shall be of a constant, and not a varying, percentage
of all such rights and obligations, (ii) unless both parties to the assignment
are Lenders immediately prior to giving effect to the assignment, the amount of
the Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall not be less than $5,000,000 (or if less, the
entire amount of such Lender's Commitment) and shall be an integral multiple of
$1,000,000, (iii) each such assignment shall be to an Eligible Assignee, and
(iv) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Contract Note or Notes subject to such assignment
and a processing and recordation fee of $1,000. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto).
(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee acknowledges that it has received a copy
of this Agreement, together with copies of the financial statements referred to
in Section 4.01(f) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, upon such assigning Lender or upon any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in Section 8.02 a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Contract Advances owing to, each
Lender from time to time (the "Register"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and an assignee representing that it is an Eligible Assignee, together
with any Contract Note or Notes subject to such assignment, the Agent shall, if
such Assignment and Acceptance has been completed and is in substantially the
form of Exhibit C hereto, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register and (iii) give
prompt notice thereof to the Borrower. Within five Business Days after its
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Agent in exchange for the surrendered Contract Note or Notes a
new Contract Note to the order of such Eligible Assignee in an amount equal to
the Commitment assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Lender has retained a Commitment hereunder, a new Contract Note
to the order of the assigning Lender in an amount equal to the Commitment
retained by it hereunder. Such new Contract Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Contract Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit A-1 hereto.
(e) Each Lender may assign to one or more banks or other entities any Auction
Note or Notes held by it.
(f) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the Advances owing to it and the Note or Notes held by it); provided, however,
that (i) such Lender's obligations under this Agreement (including, without
limitation, its Commitment to the Borrower hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) such Lender shall remain the
holder of any such Note for all purposes of this Agreement, and (iv) the
Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and obliga-
tions under this Agreement.
(g) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 8.07, disclose to
the assignee or participant or proposed assignee or participant any information
relating to the Borrower furnished to such Lender by or on behalf of the
Borrower; provided that, prior to any such disclosure, the assignee or partici-
pant or proposed assignee or participant shall agree to preserve the confiden-
tiality of any confidential information relating to the Borrower received by it
from such Lender.
(h) Notwithstanding anything to the contrary set forth herein, any Lender may
assign, as collateral or otherwise, any of its rights hereunder and under the
Notes (including, without limitation, its rights to receive payments of
principal and interest hereunder and under the Notes) to any Federal Reserve
Bank without notice to or consent of the Borrower or the Agent.
(i) If any Lender shall make demand for payment under Section 2.13(a),
2.13(b) or 2.16, or shall deliver any notice to the Agent pursuant to Sec-
tion 2.14 resulting in the suspension of certain obligations of the Lenders
with respect to Eurodollar Rate Advances, then upon termination of such 60-day
period or within 60 days of such demand (if, and only if, such payment demanded
under Section 2.13(a), 2.13(b) or 2.16, as the case may be, shall have been
made by the Borrower) or such notice (if such suspension is still in effect),
as the case may be, the Borrower may demand that such Lender assign in accor-
dance with this Section 8.07 to one or more Eligible Assignees designated by
the Borrower and approved by the Agent (which approval will not be unreasonably
withheld or delayed) all (but not less than all) of such Lender's Commitment,
its rights and obligations in respect of Letters of Credit and the Contract
Advances owing to it within the next 30 days but such Lender shall be entitled
to any amount which would have been due to it under Section 8.04(b) hereof if
such Contract Advances had been prepaid rather than assigned. If any such
Eligible Assignee designated by the Borrower shall fail to consummate such
assignment on terms acceptable to such Lender, or if the Borrower shall fail to
designate any such Eligible Assignee for all of such Lender's Commitment or
Advances, then such Lender may assign such Commitment and Advances to any other
Eligible Assignee in accordance with this Section 8.07 during such 30-day
period.
Section 8.08. Discretion of Lender as to Manner of Funding. Notwith-
standing any other provision of this Agreement, each Lender shall be entitled
to fund and maintain its funding of all or any part of its Advances in any
manner it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if each Lender had
actually funded and maintained each Eurocurrency Rate Advance and each Eurodol-
lar Rate Auction Advance through the purchase of deposits in the eurocurrency
interbank market having a maturity corresponding to such Advance's Interest
Period or term, as applicable, and bearing an interest rate equal to the
Eurodollar Rate for such Interest Period or term, as applicable.
Section 8.09. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of
Illinois.
Section 8.10. Waiver of July Trial. The Borrower, the Agent and the
Lenders hereby irrevocably waive all right to trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement or any
note, or any other instrument or document hereunder or thereunder.
Section 8.11. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Section 8.12. One Bank. If and so long as Bank of Montreal is the only
Lender hereunder, Bank of Montreal shall have all rights, powers and privileges
afforded the Agent, the Lenders or the Majority Lenders hereunder.
In Witness Whereof, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
LG&E Gas Systems Inc.
By
Name:
Title:
Bank of Montreal, as Agent
By
Name:
Title:
Commitment Bank of Montreal, as Bank
$200,000,000
By
Name:
Title:
Schedule I
LG&E Gas Systems Inc.
$200,000,000 Credit Agreement
Eurodollar Domestic CD
Lending Lending Lending
Name of Bank Office Office Office
Bank of Montreal 115 S. LaSalle Same as Same as
Street Eurodollar Eurodollar
Notices other than Chicago, IL Lending Lending
for Borrowings and 60603 Office Office
Repayments: Contact:
115 S. LaSalle Angela Cor-
Street bett
Chicago, IL Tel: (312)
60603 750-4363
Contact: J. Fax: (312)
Michael Linton 750-3798
Tel: (312)
750-4370
Fax: (312)
750-4314
Exhibit A-1
Form of Contract Note
U.S. $_______________ Dated: May 12, 1995
For Value Received, the undersigned, LG&E Gas Systems Inc., a Delaware corpora-
tion (the "Borrower"), hereby promises to pay to the order of _______________
(the "Lender") for the account of its Applicable Lending Office (such term and
other capitalized terms herein being used as defined in the Credit Agreement
referred to below) the principal sum of U.S. $[amount of the Lender's Commit-
ment in figures] or, if less, the aggregate principal amount of the Contract
Advances made by the Lender to the Borrower pursuant to the Credit Agreement
outstanding on the Termination Date, payable on the Termination Date.
The Borrower promises to pay interest on the unpaid principal amount of each
Contract Advance from the date of such Contract Advance until such principal
amount is paid in full, at such interest rates, and payable at such times, as
are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United States of
America to Bank of Montreal, as Agent, at 115 South LaSalle Street, Chicago,
Illinois 60603, in same day funds. Each Contract Advance made by the Lender
to the Borrower pursuant to the Credit Agreement, and all payments made on
account of principal thereof, shall be recorded by the Lender and, prior to any
offer hereof endorsed on the grid attached hereto which is part of this
Promissory Note.
This Promissory Note is one of the Contract Notes referred to in, and is
entitled to the benefits of, the Credit Agreement, dated as of May 12, 1995
(the "Credit Agreement"), among the Borrower, the Lender and certain other
banks parties thereto, and Bank of Montreal, as Agent for the Lender and such
other banks. The Credit Agreement, among other things, (i) provides for the
making of Contract Advances by the Lender to the Borrower from time to time in
an aggregate amount not to exceed at any time outstanding the U.S. dollar
amount first above mentioned, the indebtedness of the Borrower resulting from
each such Contract Advance being evidenced by this Promissory Note, and
(ii) contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
The Borrower hereby waives presentment, demand, protest and notice of any kind.
No failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
This Promissory Note shall be governed by, and construed in accordance with,
the laws of the State of Illinois.
LG&E Gas Systems Inc.
By
Name:
Title:
Advances, Interest Periods and Payments of Principal
___________________________________________________________________________
Interest Amount of
Period (if Principal Unpaid Notation
Amount of any) of Paid or Principal Made
Date Advance Advance Prepaid Balance By
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
Exhibit A-2
Form of Auction Note
U.S. $_______________ Dated: ___________, _____
For Value Received, the undersigned, LG&E Gas Systems Inc., a Delaware corpora-
tion (the "Borrower"), hereby promises to pay to the order of _______________
(the "Lender") for the account of its Applicable Lending Office (as defined in
the Credit Agreement referred to below), on _______________________, _____, the
principal amount of _________________________________________ Dollars
($___________).
The Borrower promises to pay interest on the unpaid principal amount hereof
from the date hereof until such principal amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:
Interest Rate: ______% per annum (calculated on the basis of a year of _____
days for the actual number of days elapsed).
Interest Payment Date or Dates: ______________________
Both principal and interest are payable in lawful money of the United States of
America to ________________________________ for the account of the Lender at
the office of Bank of Montreal, as Agent, at 115 South LaSalle Street, Chicago,
Illinois 60603, in same day funds, free and clear of and without any deduc-
tion, with respect to the payee named above, for any and all present and future
taxes, deductions, charges or withholdings, and all liabilities with respect
thereto to the extent and in the manner provided in the Credit Agreement.
This Promissory Note is one of the Auction Notes referred to in, and is
entitled to the benefits of, the Credit Agreement, dated as of May 12, 1995
(the "Credit Agreement"), among the Borrower, the Lender and certain other
banks parties thereto, and Bank of Montreal, as Agent for the Lender and such
other banks. The Credit Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated
events.
The Borrower hereby waives presentment, demand, protest and notice of any kind.
No failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
This Promissory Note shall be governed by, and construed in accordance with,
the laws of the State of Illinois
LG&E Gas Systems Inc.
By
Name:
Title:
Exhibit B-1
Form of Notice of Contract Borrowing
Bank of Montreal, as Agent for the Lenders parties to the Credit Agreement
referred to below
115 South LaSalle Street
Chicago, Illinois 60603
[Date]
Attention:
Ladies and Gentlemen:
The undersigned, LG&E Gas Systems Inc., refers to the Credit Agreement, dated
as of May 12, 1995 (the "Credit Agreement", the terms defined therein being
used herein as therein defined), among the undersigned, certain Lenders parties
thereto and Bank of Montreal, as Agent for said Lenders, and hereby gives you
notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests a Contract Borrowing under the Credit Agreement,
and in that connection sets forth below the information relating to such
Contract Borrowing (the "Proposed Contract Borrowing") as required by Sec-
tion 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Contract Borrowing is _________, 19____.
(ii) The Type of Contract Advances to be made in connection with the Proposed
Contract Borrowing is [Adjusted CD Rate Advances] [Base Rate Advances] [Euro-
dollar Rate Advances].
(iii) The aggregate amount of the Proposed Contract Borrowing is $________-
_______________.
(iv) The Interest Period for each Contract Advance made as part of the
Proposed Contract Borrowing is [__________ days] [___________ month[s]].
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Contract Borrowing:
(A) the representations and warranties contained in Section 4.01 are correct,
before and after giving effect to the Proposed Contract Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date
except to the extent any such representation or warranty expressly relates
solely to an earlier date and except that the reference to the December 31,
1994 financial statements of the Parent and its Consolidated Subsidiaries in
Section 4.01(f) shall be deemed a reference to the most recent quarterly or
annual financial statements of the Parent and its Consolidated Subsidiaries
submitted to the Lenders pursuant to Section 5.01(a) hereof; and
(B) no event has occurred and is continuing, or would result from such
Proposed Contract Borrowing or from the application of the proceeds therefrom,
that constitutes an Event of Default or would constitute an Event of Default
but for the requirement that notice be given or time elapse or both.
Very truly yours,
LG&E Gas Systems Inc.
By
Name:
Title:
Exhibit B-2
Form of Notice of Auction Borrowing
Bank of Montreal, as Agent for the Lenders parties to the Credit Agreement
referred to below
115 South LaSalle Street
Chicago, Illinois 60603
[Date]
Attention:
Ladies and Gentlemen:
The undersigned, LG&E Gas Systems Inc., refers to the Credit Agreement, dated
as of May 12, 1995 (the "Credit Agreement," the terms defined therein being
used herein as therein defined), among the undersigned, certain Lenders parties
thereto and Bank of Montreal, as Agent for said Lenders, and hereby gives you
notice pursuant to Section 2.04 of the Credit Agreement that the undersigned
hereby requests an Auction Borrowing under the Credit Agreement, and in that
connection sets forth the terms on which such Auction Borrowing (the "Proposed
Auction Borrowing") is requested to be made:
(A) Date of Auction Borrowing _________________
(B) Amount of Auction Borrowing _________________
(C) Maturity Date _________________
(D) Interest Payment Date(s) _________________
(E) Type of Auction Borrowing (either fixed rate auction borrowing or
eurodollar rate auction borrowing) _________________
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Auction Borrowing:
(a) the representations and warranties contained in Section 4.01 are correct,
before and after giving effect to the Proposed Auction Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date
except to the extent any such representation or warranty expressly relates
solely to an earlier date and except that the reference to the December 31,
1994 financial statements of the Parent and its Consolidated Subsidiaries in
Section 4.01(f) shall be deemed a reference to the most recent quarterly or
annual financial statements of the Parent and its Consolidated Subsidiaries
submitted to the Lenders pursuant to Section 5.01(a) hereof;
(b) no event has occurred and is continuing, or would result from the
Proposed Auction Borrowing or from the application of the proceeds therefrom,
which constitutes an Event of Default or would constitute an Event of Default
but for the requirement that notice be given or time elapse or both; and
(c) the aggregate amount of the Proposed Auction Borrowing and all other
Borrowings to be made on the same day under the Credit Agreement is within the
aggregate amount of the unused Commitments of the Lenders.
The undersigned hereby confirms that the Proposed Auction Borrowing is to be
made available to it in accordance with Section 2.04(a)(v) of the Credit
Agreement.
Very truly yours,
LG&E Gas Systems Inc.
By
Name:
Title:
Exhibit C
Form of Assignment and Acceptance
Dated ________________, 19___
Reference is made to the Credit Agreement, dated as of May 12, 1995 (the
"Credit Agreement"), among LG&E Gas Systems Inc., a Delaware corporation (the
"Borrower"), the Lenders (as defined in the Credit Agreement) and Bank of
Montreal, as Agent for the Lenders (the "Agent"). Terms defined in the Credit
Agreement are used herein with the same meaning.
__________________________ (the "Assignor") and _______________________ (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns without recourse to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, that interest in
and to all of the Assignor's rights and obligations under the Credit Agreement
as of the date hereof (other than in respect of Auction Advances and Auction
Notes) which represents the percentage interest specified on Schedule 1 of all
outstanding rights and obligations under the Credit Agreement (other than in
respect of Auction Advances and Auction Notes), including, without limitation,
such interest in the Assignor's Commitment, the Contract Advances owing to the
Assignor, the outstanding Letters of Credit, the Contract Note[s] held by the
Assignor and the rights and obligations of the Assignor with respect to the
Letters of Credit. After giving effect to such sale and assignment, the
Assignee's Commitment and the amount of the Contract Advances owing to the
Assignee will be as set forth in Section 2 of Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and benefi-
cial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agree-
ment or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement or any other instrument or
document furnished pursuant thereto; (iii) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under the Credit Agreement or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Contract Note[s] referred to
in paragraph 1 above and requests that the Agent exchange such Contract Note[s]
for a new Contract Note payable to the order of the Assignee in an amount equal
to the Commitment assumed by the Assignee pursuant hereto or new Contract Notes
payable to the order of the Assignee in an amount equal to the Commitment
assumed by the Assignee pursuant hereto and the Assignor in an amount equal to
the Commitment retained by the Assignor under the Credit Agreement, respective-
ly, as specified on Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.01 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
(v) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender [and] (vi) specifies as its CD Lending Office,
Domestic Lending Office (and address for notices) and Eurodollar Lending Office
the offices set forth beneath its name on the signature pages hereof [and
(vi) attaches the forms prescribed by the Internal Revenue Service of the
United States certifying that it is exempt from United States withholding taxes
with respect to all payments to be made to the Assignee under the Credit
Agreement and the Notes]. (If the Assignee is organized under the laws of a
jurisdiction outside the United States)
4. Following the execution of this Assignment and Acceptance by the Assignor
and the Assignee, it will be delivered to the Agent for acceptance and record-
ing by the Agent. The effective date of this Assignment and Acceptance shall be
the date of acceptance thereof by the Agent, unless otherwise specified on
Schedule 1 hereto (the "Effective Date").
5. Upon such acceptance and recording by the Agent, as of the Closing Date,
(i) the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of
a Lender thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the Closing
Date, the Agent shall make all payments under the Credit Agreement and the
Contract Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and facility fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Contract Notes for
periods prior to the Closing Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
In Witness Whereof, the parties hereto have caused this Assignment and Accep-
tance to be executed by their respective officers thereunto duly authorized, as
of the date entered above written, such execution being made on Schedule 1
hereto.
[Name of Assignor]
By
Name:
Title:
[Name of Assignee]
By
Name:
Title:
CD Lending Office:
[Address]
Domestic Lending Office (and address for notices):
[Address]
Eurodollar Lending Office:
[Address]
Accepted this day
of ____________, ______
Contact for notices other than Borrowings and Repayments:
[Name of Agent]
By_______________________________
Name:
Title:
Schedule 1
to
Assignment and Acceptance
Dated _____________, 19___
Section 1.
Percentage Interest: _______%
Section 2.
Assignee's Commitment: $___________
Aggregate Outstanding Principal
Amount of Contract Advances owing to the Assignee: $___________
A Contract Note payable to the order of the Assignee
Dated: _____________, 19___
Principal amount: $___________
A Contract Note payable to the order of the Assignor
Dated: _____________, 19___
Principal amount: $_________
Section 3.
Closing Date (this date should be no earlier than the date of acceptance by the
Agent): ______________, 19___
Exhibit D
Form of Opinion of Special Counsel
for the Borrower and the Parent
May 12, 1995
To each of the Banks which is a party to the Credit Agreement, dated as of
May 12, 1995, among LG&E Gas Systems Inc., said Banks and Bank of Montreal, as
Agent for said Banks
Re: LG&E Gas Systems, Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01 of the Credit
Agreement, dated as of May 12, 1995 (the "Credit Agreement"), among LG&E Gas
Systems Inc., a Delaware corporation (the "Borrower"), the Banks named therein
and Bank of Montreal, as Agent for said Banks. Terms defined in the Credit
Agreement are used herein as therein defined.
We have served as counsel to LG&E Energy Corp., a Kentucky corporation (the
"Parent"), and the Borrower in connection with the preparation, execution and
delivery of the Credit Agreement, the Contract Notes and the Support Agreement.
In that connection, we have examined:
(1) the Credit Agreement;
(2) the Contract Notes executed and delivered on the date hereof;
(3) the form of the Auction Notes to be delivered by the Borrower in connec-
tion with any Auction Borrowing;
(4) the Support Agreement;
(5) the documents furnished by the Borrower and the Parent pursuant to
Section 3.01 of the Credit Agreement;
(6) the Certificate of Incorporation of the Borrower and all amendments
thereto (the "Borrower Charter");
(7) the by-laws of the Borrower and all amendments thereto (the "Borrower By-
laws");
(8) a certificate of the Secretary of the State of Delaware, dated May 5,
1995, attesting to the continued corporate existence and good standing of the
Borrower in that State;
(9) the Articles of Incorporation of the Parent and all amendments thereto
(the "Parent Charter"); and
(10) the by-laws of the Parent and all amendments thereto (the "Parent By-
laws"); and
Collectively, the documents identified in clauses (1), (2) and (4) above are
referred to herein as the "Documents".
We have also examined the originals, or copies certified to our satisfaction,
of such other corporate records of the Borrower and the Parent, certificates of
public officials and of officers of the Borrower and the Parent, and agree-
ments, instruments and other documents, as we have deemed necessary as a basis
for the opinions expressed below. As to questions of fact material to such
opinions, we have, when relevant facts were not independently established by
us, relied upon certificates of the Borrower or the Parent, or their respective
officers, or of public officials.
We have assumed the genuineness of all signatures, the legal capacity of all
individuals who have executed the Documents and all other documents we have
reviewed, the authenticity of all documents submitted to us as originals and
the conformity to original documents of all documents submitted to us as
certified, photostatic, reproduced or conformed copies. We have also assumed
that the Credit Agreement has been duly authorized, executed and delivered by
the Agent and each of the Banks and is enforceable in accordance with its terms
against such parties and that the execution, delivery and performance of the
Credit Agreement by the Agent and each of the Banks does not and will not
result in a breach of, or constitute a default under, any agreement, instrument
or other document to which such party is a party or any order, judgment, writ
or decree applicable to such party to which such party's property is subject.
The opinions expressed herein are limited to the Federal laws of the United
States, the laws of the State of Illinois and the General Corporation Law of
the State of Delaware. Please be advised that no member of this firm is
admitted to practice in the State of Delaware. With your permission, we have
relied without independent investigation upon the opinion being delivered to
you of John R. McCall, Esq., a member of the Kentucky Bar, as to all matters of
Kentucky law involved in opinions set forth below. In our opinion, you and we
are justified in so relying upon the opinion of John R. McCall, Esq.
Based upon the foregoing and upon such investigation as we have deemed neces-
sary, we are of the following opinion:
1. The Borrower is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware.
2. The Parent is a corporation duly incorporated, validly existing and in good
standing under the laws of the Commonwealth of Kentucky.
3. The execution, delivery and performance by the Borrower of the Credit
Agreement, the Notes and the Support Agreement are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate action,
and do not contravene (i) the Borrower Charter or the Borrower By-Laws or
(ii) any Federal law, rule or regulation applicable to the Borrower (including,
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System) or (iii) any contractual or legal restriction contained in any
indenture, loan or credit agreement, mortgage or note of the Borrower or, to
our knowledge, contained in any other similar agreement or instrument to which
the Borrower is a party.
4. No authorization, approval or other action by, and no notice to or filing
with, any agency or instrumentality of the government of the United States is
required for the due execution, delivery and performance by the Borrower of the
Credit Agreement, the Notes and the Support Agreement or by the Parent of the
Support Agreement.
5. The Credit Agreement and the Contract Notes have been duly executed and
delivered on behalf of the Borrower. The Credit Agreement and the Contract
Notes are the legal, valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their respective terms.
6. The execution, delivery and performance by the Parent of the Support
Agreement are within the Parent's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene (i) the Parent Charter
or the Parent By-laws or (ii) any Federal law, rule or regulation applicable to
the Parent (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System) or (iii) any contractual or legal
restriction contained in any indenture, loan or credit agreement, mortgage or
note of the Parent or, to our knowledge, contained in any other similar
agreement or instrument to which the Parent is a party.
7. The Support Agreement has been duly executed and delivered by the Parent
and the Borrower. The Support Agreement is the legal, valid and binding
obligation of the Parent and the Borrower enforceable against the Parent and
the Borrower, respectively, in accordance with its terms.
The opinions set forth above are subject to the following qualifications:
(a) Our opinions in paragraphs 5 and 7 above are subject to the effect of any
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws of general application relating to or affecting the
enforcement of the rights of creditors.
(b) Our opinions in paragraphs 5 and 7 above are subject to the effect of
general principles of equity, including (without limitation) concepts of
materiality, reasonableness, good faith and fair dealing (regardless of whether
considered in a proceeding in equity or at law).
(c) Except as set forth below, we express no opinion herein as to the
validity or enforceability of any provision regarding choice of law to govern
the Documents or of any provision of the Documents for indemnification.
However, we understand that this transaction was principally negotiated in
Illinois and the Documents were delivered by the Borrower in Illinois and the
monetary obligations of the Borrower are payable in Illinois. Accordingly, we
believe that an Illinois court would have a reasonable basis to and should
recognize and give effect to the provisions of Section 8.08 of the Credit
Agreement wherein the parties thereto agree that the Credit Agreement and the
Notes shall be governed by, and construed in accordance with, the laws of the
State of Illinois.
(d) We express no opinion as to whether the execution, delivery and perfor-
mance of the Documents will constitute a breach of, or constitute a default
under, any covenant or provision with respect to financial ratios or tests or
any aspect of the financial condition or results of operations of the Parent or
the Borrower contained in an agreement to which the Parent or the Borrower is a
party.
This opinion is rendered only with respect to the laws and the regulations
which are in effect as of the date hereof. We assume no responsibility for
updating this opinion to take into account any event, action, interpretation or
change of law occurring subsequent to the date hereof that may affect the
validity of any of the opinions expressed herein.
The foregoing opinion is furnished solely for the benefit of the addresses
hereof in connection with the Documents and the transactions contemplated
thereby, and, except as set forth in the immediately succeeding sentence, may
not be relied upon by any other Person (other than any Person that may become a
Lender under the Credit Agreement after the date hereof) or for any other
purpose without our prior written consent. We are aware that Chapman and
Cutler will rely upon the opinions set forth herein in rendering their opinion
furnished pursuant to Section 3.01 of the Credit Agreement.
Very truly yours,
Exhibit E
Form of Opinion of Corporate Attorney
for the Borrower and the Parent
May 12, 1995
To each of the Banks which is a party to the Credit Agreement, dated as of May
12, 1995, among LG&E Gas Systems Inc., said Banks and Bank of Montreal, as
Agent for said Banks
Re: LG&E Gas Systems Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01 of the Credit
Agreement, dated as of May 12, 1995 (the "Credit Agreement"), among LG&E Gas
Systems Inc., a Delaware corporation (the "Borrower"), the Banks named therein
and Bank of Montreal, as Agent for said Banks. Terms defined in the Credit
Agreement are used herein as therein defined.
I am General Counsel for LG&E Energy Corp., a Kentucky corporation (the
"Parent"), and have served as counsel to the Parent and the Borrower in
connection with the preparation, execution and delivery of the Credit Agree-
ment, the Contract Notes and the Support Agreement.
In that connection, I have examined:
(1) the Credit Agreement;
(2) the Contract Notes executed and delivered on the date hereof;
(3) the form of the Auction Notes to be delivered by the Borrower in connec-
tion with any Auction Borrowing;
(4) the Support Agreement;
(5) the documents furnished by the Borrower and the Parent pursuant to
Section 3.01 of the Credit Agreement;
(6) the Certificate of Incorporation of the Borrower and all amendments
thereto (the "Borrower Charter");
(7) the by-laws of the Borrower and all amendments thereto (the "Borrower By-
laws");
(8) the Articles of Incorporation of the Parent and all amendments thereto
(the "Parent Charter"); and
(9) the by-laws of the Parent and all amendments thereto (the "Parent By-
Laws").
Collectively, the documents identified in clauses (1), (2) and (4) above are
referred to herein as the "Documents".
I have also examined the originals, or copies certified to my satisfaction, of
such other corporate records of the Borrower and the Parent, certificates of
public officials and of officers of the Borrower and the Parent, and agree-
ments, instruments and other documents, as I have deemed necessary as a basis
for the opinions expressed below. As to questions of fact material to such
opinions, I have, when relevant facts were not independently established by me,
relied upon certificates of the Borrower or the Parent, or their respective
officers, or of public officials.
I have assumed the genuineness of all signatures (other than those of officers
of the Parent and the Borrower), the legal capacity of all individuals (other
than the officers of the Parent and the Borrower) who have executed the
Documents and all other documents I have reviewed, the authenticity of all
documents submitted to me as originals and the conformity to original documents
of all documents submitted to me as certified, photostatic, reproduced or
conformed copies. I have also assumed that the Credit Agreement has been duly
authorized, executed and delivered by the Agent and each of the Banks and is
enforceable in accordance with its terms against such parties and that the
execution, delivery and performance of the Credit Agreement by the Agent and
each of the Banks does not and will not result in a breach of, or constitute a
default under, any agreement, instrument or other document to which such party
is a party or any order, judgment, writ or decree applicable to such party or
to which such party's property is subject.
I am qualified to practice law in the Commonwealth of Kentucky and do not
purport to be expert on any laws other than the laws of the commonwealth of
Kentucky.
Based upon the foregoing and upon such investigation as I have deemed neces-
sary, I am of the following opinion:
1. The Parent is a corporation duly incorporated, validly existing and in good
standing under the laws of the Commonwealth of Kentucky.
2. The execution, delivery and performance of the Borrower of the Credit
Agreement, the Notes and the Support Agreement are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate action,
and do not contravene (i) the Borrower Charter or the Borrower By-Laws or
(ii) any law, rule or regulation of the Commonwealth of Kentucky or (iii) any
contractual or legal restriction contained in any indenture, loan or credit
agreement, mortgage or note of the Borrower or, to my knowledge, contained in
any other similar agreement or instrument to which the Borrower is a party.
3. No authorization, approval or other action by, and no notice to or filing
with, any agency or instrumentality of the government of the Commonwealth of
Kentucky is required for the due execution, delivery and performance by the
Borrower of the Credit Agreement, the Notes and the Support Agreement or by the
Parent of the Support Agreement.
4. The Credit Agreement and the Contract Notes have been duly executed and
delivered on behalf of the Borrower. I believe that in any action or proceed-
ing arising out of or relating to the Credit Agreement or the Notes in any
court of the Commonwealth of Kentucky or in any federal court sitting in the
Commonwealth of Kentucky, such court would have a reasonable basis to and
should recognize and give effect to the provisions of Section 8.08 of the
Credit Agreement wherein the parties thereto agree that the Credit Agreement
and the Notes shall be governed by, and construed in accordance with, the laws
of the State of Illinois, including the usury law of the State of Illinois.
However, if a court were to hold that the Credit Agreement and the Notes are
governed by, and to be construed in accordance with, the laws of the Common-
wealth of Kentucky, the Credit Agreement, the Contract Notes and the Auction
Notes, when duly executed and delivered by the Borrower in accordance with the
terms of the Credit Agreement, would be, under the laws of the Commonwealth of
Kentucky, legal, valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their respective terms.
5. The execution, delivery and performance by the Parent of the Support
Agreement are within the Parent's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene (i) the Parent Charter
or the Parent By-Laws or (ii) any law, rule or regulation of the Commonwealth
of Kentucky or (iii) any contractual or legal restriction contained in any
indenture, loan or credit agreement, mortgage or note of the Parent or, to my
knowledge, contained in any other similar agreement or instrument to which the
Parent is a party.
6. The Support Agreement has been duly executed and delivered by the Parent
and the Borrower. The Support Agreement is the legal, valid and binding
obligation of the Parent and the Borrower enforceable against the Parent and
the Borrower, respectively, in accordance with its terms.
7. There are no pending or, to my knowledge, overtly threatened actions or
proceedings against the Borrower, the Parent or any of their respective
subsidiaries before any court, governmental agency or arbitrator that purport
to effect the legality, validity, binding effect or enforceability of the
Credit Agreement, any Note or the Support Agreement or, except as disclosed to
the Banks in writing, that could reasonably be expected to have a material
adverse effect upon the financial condition, operations, business or prospects
of the Parent and its subsidiaries, taken as a whole.
The opinions set forth above are subject to the following qualifications:
(a) My opinions in paragraph 4 and 6 above are subject to the effect of any
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws of general application relating to or affecting the
enforcement of the rights of creditors.
(b) My opinions in paragraph 4 and 6 above are subject to the effect of
general principles of equity, including (without limitation) concepts of
materiality, reasonableness, good faith and fair dealing (regardless of whether
considered in a proceeding in equity or at law).
(c) Except as expressly set forth herein, I express no opinion herein as to
the validity or enforceability of any provision regarding choice of law to
govern the Documents or of any provision of the Documents for Indemnification.
(d) I express no opinion as to whether the execution, delivery and perfor-
mance of the Documents will constitute a breach of, or constitute a default
under, any covenant or provision with respect to financial ratios or tests or
any aspect of the financial condition or results of operations of the Parent or
the Borrower contained in an agreement to which the Parent or the Borrower is a
party.
This opinion is rendered only with respect to the laws and the regulations
which are in effect as of the date hereof. I assume no responsibility for
updating this opinion to take into account any event, action, interpretation or
change of law occurring subsequent to the date hereof that may affect the
validity of any of the opinions expressed herein.
The foregoing opinion is furnished solely for the benefit of the addressees
hereof in connection with the Documents and the transactions contemplated
thereby, and, except as set forth in the immediately succeeding sentence, may
not be relied upon by any other Person (other than any Person that may become a
Lender under the Credit Agreement after the date hereof) or for any other
purpose without my prior written consent. I am aware that Chapman and Cutler
will rely upon the opinions set forth herein in rendering their opinion
furnished pursuant to Section 3.01 of the Credit Agreement.
Very truly yours,
Exhibit F
Form of Opinion of Special
Illinois Counsel to the Agent
May 12, 1995
To each of the Banks which is a party to the Credit Agreement, dated as of
May 12, 1995, among LG&E Gas Systems Inc., said Banks and Bank of Montreal, as
Agent for said Banks
Re: LG&E Gas Systems Inc.
Ladies and Gentlemen:
We have acted as special Illinois counsel to Bank of Montreal, individually and
as agent, in connection with the preparation, execution and delivery of the
Credit Agreement, dated as of May 12, 1995 (the "Credit Agreement"), among LG&E
Gas Systems Inc. (the "Borrower"), the banks parties thereto (the "Banks") and
Bank of Montreal, as agent for the Banks. Unless otherwise defined herein,
terms defined in the Credit Agreement are used herein as therein defined.
In that connection, we have examined (i) counterparts of the Credit Agreement,
executed by the Borrower, the Banks and the Agent (ii) the Contract Notes,
executed by the Borrower and (iii) the form of the Auction Notes to be deliv-
ered by the Borrower in connection with any Auction Borrowing (the "Credit
Documents") as well as the opinion of John R. McCall, Esq., General Counsel for
LG&E Energy Corp., a Kentucky corporation and counsel for the Borrower (the
"Borrower's Counsel Opinion"), and the opinion of Gardner, Carton & Douglas,
special counsel for the Borrower and the Parent (the "Special Counsel Opin-
ion"), each furnished to the Agent pursuant to Section 3.01(a) of the Credit
Agreement.
In our examination of the documents referred to above, we have assumed the
authenticity of all such documents submitted to us as originals, the genuine-
ness of all signatures, the due authority of the parties executing such
documents and the conformity to the originals of all such documents submitted
to us as copies. We have also assumed that each of the Banks and the Agent
have duly executed and delivered, with all necessary power and authority
(corporate and otherwise), the Credit Agreement.
To the extent that our opinions expressed below involve conclusions as to
matters governed by law other than the law of the State of Illinois, we have
relied upon the Borrower's Counsel Opinion and the Special Counsel Opinion and
have assumed without independent investigation the correctness of the matters
set forth therein, our opinions expressed below being subject to the assump-
tions, qualifications and limitations set forth in the Borrower's Counsel
Opinion and the Special Counsel Opinion. As to matters of fact, we have relied
solely upon the documents we have examined.
Based upon the foregoing, and subject to the qualifications and assumptions set
forth below, we are of the opinion that:
(i) The Credit Agreement and each of the Contract Notes are, and the Auction
Notes, when duly executed and delivered by the Borrower in accordance with the
terms of the Credit Agreement, will be, the legal, valid and binding obliga-
tions of the Borrower enforceable against the Borrower in accordance with their
respective terms.
(ii) While we have not independently considered the matters covered by the
Borrower's Counsel Opinion and the Special Counsel Opinion to the extent
necessary to enable us to express the conclusions stated therein, each of the
Borrower's Counsel Opinion, the Special Counsel Opinion are substantially
responsive to the corresponding requirements set forth in Section 3.01 of the
Credit Agreement pursuant to which the same have been delivered.
Our opinions are subject to the following qualifications and assumptions:
(a) We have assumed the due authorization, execution and delivery of the
Credit Documents in accord with all relevant legal requirements applicable to
the Borrower.
(b) The enforceability of the Credit Documents may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, preference or
similar laws affecting creditors' rights.
(c) The enforceability of the Credit Documents may be limited by general
principles of materiality, reasonableness, good faith and fair dealing, the
availability of the remedies of specific performance or injunction relief may
be subject to the discretion of the court and certain remedial provisions may
be limited by applicable law; however such limitations do not in our opinion
make the remedies afforded by the Credit Documents taken as a whole inadequate.
(d) The Credit Documents provide that they are to be governed by the laws of
the State of Illinois. We understand that this transaction was principally
negotiated in Illinois and the Credit Documents were delivered by the Borrower
in Illinois and the monetary obligations of the Borrower are payable in
Illinois. Accordingly, we believe that an Illinois court would respect the
choice of law of the parties.
(e) We express no opinion herein as to (i) the enforceability of provisions
purporting to grant to a party conclusive rights of determination, (ii) the
availability of specific performance or other equitable remedies, (iii) the
enforceability of rights to indemnity under Federal or state securities laws
and (iv) the enforceability of waivers by parties of their respective rights
and remedies under law.
(f) Our opinions expressed above are limited to the law of the State of
Illinois and the Federal law of the United States, and we do not express any
opinion herein concerning any other law. Without limiting the generality of
the foregoing, we express no opinion as to the effect of the law of any
jurisdiction other than the State of Illinois wherein any Lender may be located
or wherein enforcement of the Credit Agreement or the Notes may be sought that
limits the rates of interest legally chargeable or collectible.
The foregoing opinion is solely for your benefit and may not be relied upon by
any other Person other than any Person that may become a Lender under the
Credit Agreement after the date hereof.
Very truly yours,
Exhibit 10.04
SUPPORT AGREEMENT BETWEEN
LG&E ENERGY CORP.
AND
LG&E GAS SYSTEMS INC.
This Support Agreement, dated as of May 12, 1995, is between LG&E Energy Corp.,
a Kentucky corporation ("Parent") and LG&E Gas Systems Inc., a Delaware
corporation ("Subsidiary").
WHEREAS, Parent is the owner of 100% of the outstanding capital stock of
Subsidiary;
WHEREAS, Subsidiary intends from time to time to make borrowings from Lenders
(as hereinafter defined), issue debt securities to Lenders, guarantee loans to
its subsidiaries from Lenders and guarantee other obligations of its
subsidiaries to Lenders (such borrowings, debt securities and guarantees being
hereinafter referred to as "Debt");
WHEREAS, Parent and Subsidiary desire to take certain actions to enhance and
maintain the financial condition of Subsidiary as hereinafter set forth in
order to enable Subsidiary and its subsidiaries to incur indebtedness on more
advantageous and reasonable terms; and
WHEREAS, the Lenders will rely upon this Support Agreement ("Agreement") in
making loans or extending credit to Subsidiary and its subsidiaries;
NOW, THEREFORE, in consideration of the premises, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Stock Ownership. During the term of this Agreement, Parent will own,
directly or indirectly, all of the capital stock of Subsidiary and will
obtain the prior written consent of each Lender before selling or
transferring any common stock of Louisville Gas and Electric Company
("LG&E") that it now owns or may hereafter acquire. Each person, firm,
corporation or other entity designated as a Lender pursuant to Section 8
of this Agreement acknowledges and agrees that, in consideration for it
being designated as a Lender, it will not (after consideration of those
factors that it deems relevant, including the manner in which the
proceeds from any such sale or transfer by Parent of LG&E's common stock
are to be used to satisfy Debt, whether contingent or otherwise, owed to
the Lenders) unreasonably withhold its consent to such sale or transfer.
2. Negative Pledge. During the term of this Agreement, Parent will not
create or suffer to exist any lien, security interest or other charge or
encumbrance, upon or with respect to any common stock of LG&E from time
to time owned by Parent or any capital stock of Subsidiary from time to
time owned by Parent.
3. Net Worth. Parent agrees that it shall cause Subsidiary to have at all
times a net worth (total assets less liabilities less intangible assets,
if any) of $25 million, as determined in accordance with generally
accepted accounting principles.
4. Liquidity Provision. If, during the term of this Agreement, Subsidiary
is unable to make timely payment of interest, principal or premium, if
any, or any other obligation on any Debt owing to any Lender by
Subsidiary, Parent promptly shall provide to Subsidiary, at its request
such funds (in the form of cash or liquid assets in an amount sufficient
to permit Subsidiary to make timely payment in respect of such Debt) as
equity. Any request for payment pursuant to this Section 4 shall
specifically identify the Debt in respect of which Subsidiary is unable
to make timely payment and with respect to which Subsidiary seeks funds.
Subsidiary, Parent and each Lender hereby acknowledge that any funds
provided by Parent pursuant hereto shall be used solely to make payment
with respect to such identified Debt and not for any other purposes.
Without limiting any obligations hereunder, in the event that a request
is made with respect to two or more identified Debts and the funds
provided by Parent are not sufficient to pay the amounts owing on each
such identified Debts, the funds provided by Parent shall be applied pro
rata (in proportion to the amounts then due and owing on such Debts) to
such identified Debts. Each of the parties hereto acknowledges that
Parent's obligations hereunder do not constitute a guarantee by Parent of
Debt of Subsidiary. This Agreement shall continue to be effective or be
reinstated with respect to any payment of Debt which is rescinded or must
otherwise be returned upon the insolvency, bankruptcy, reorganization,
dissolution or liquidation of Subsidiary, all as though such payment had
not been made.
5. Capitalization of Parent. Parent agrees to maintain the sum of
consolidated short-term debt for money borrowed and consolidated long-
term debt (excluding, however, any such short-term or long-term debt
which is non-recourse debt) in an amount not to exceed 55% of the sum of
consolidated short-term debt for money borrowed, consolidated long-term
debt (excluding, however, any such short-term or long-term debt which is
non-recourse debt), common equity and preferred stock, in each case as
shown on the consolidated balance sheet of Parent prepared in accordance
with generally accepted accounting principles.
6. Waivers. Parent hereby waives any failure or delay on the part of
Subsidiary or any Lender in asserting or enforcing any of its rights or
in making any claims or demands hereunder. Subsidiary or any Lender may
at any time, without Parent's consent, without notice to Parent and
without affecting or impairing Subsidiary's or such Lender's rights, or
impairing Parent's obligations, hereunder, do any of the following with
respect to any Debt: (a) make changes, modifications, amendments or
alterations, by operation of law or otherwise, including without
limitation, any increase in the principal amount of such Debt or the rate
of interest payable thereon or any change in the method of calculating
the rate of interest payable thereon, (b) grant renewals and extensions
and extensions of time, for payment or otherwise, (c) accept new or
additional documents, instruments or agreements relating to or in
substitution of said Debt, or (d) otherwise handle the enforcement of
their respective rights and remedies in accordance with their business
judgment.
7. Suspensions; Amendment. This Agreement may be amended or terminated at
any time by written amendment or agreement signed by both parties;
provided, however, that except as set forth in the next succeeding
sentence, (i) no amendment to this Agreement which adversely affects the
rights of Subsidiary or any Lender shall be effective as to any Lender
until the earlier to occur of (x) all Debt owing to such Lender by
Subsidiary on the date of such amendment shall be discharged, (y) such
Lender shall consent in writing to such amendment or (z) in the event
that such Lender is bound with one or more other Lenders by an
instrument, agreement or other document pursuant to which the Debt was
issued, the requisite consent of the Lenders to an amendment to this
Agreement set forth in such instrument, agreement or other document is
obtained or such amendment shall have been consented to by the requisite
Lenders in respect of such Debt as shall be authorized pursuant to such
instrument, agreement or other document to authorize a similar amendment
in respect of such Debt and (ii) no termination of this Agreement shall
be effective as to Subsidiary or any Lender until such time as all Debt
owing to such Lender by Subsidiary on the date of such termination shall
have been discharged in full unless such Lender shall consent in writing
to the contrary. Notwithstanding the foregoing, and at the election of
Parent, in the event that the Subsidiary shall maintain a long-term debt
rating (public or private) of not less than "A-" from Standard & Poor's
Corporation or its successor ("S&P") or a long-term debt rating of not
less than "A3" from Moody's Rating Group or its successor ("Moody's") for
twelve consecutive months, then Parent's obligations under this Agreement
shall be suspended and shall be of no force or effect as to the parties
hereto and as to all Lenders for so long as such rating of not less than
"A-" or "A3" is maintained.
8. Rights of Lenders. Subsidiary hereby assigns and pledges to Lenders for
the ratable benefit of each Lender, Subsidiary's rights under Sections 1,
2, 3, 4 and 5 of this Agreement, and, if Subsidiary fails or refuses to
take timely action to enforce its rights under Sections 1, 2, 3, 4, and 5
of this Agreement, any Lender may enforce such rights on behalf of
Subsidiary directly against Parent. Parent hereby consents to such
assignment and pledge and enforcement by the Lenders. The term "Lender"
as used in this Agreement shall mean any person, firm, corporation or
other entity (i) to which Subsidiary is indebted for money borrowed or to
which Subsidiary otherwise owes any Debt or which is acting as trustee or
authorized representative on behalf of such person, firm, corporation or
other entity and (ii) which Parent has expressly designated in writing to
Subsidiary and to such Lender as being a Lender for purposes of this
Agreement and entitled to the rights and privileges hereof. Any
designation of any person, firm, corporation or other entity as a Lender
for purposes of this Agreement may provide that such person, firm,
corporation or other entity shall be a Lender only as to specific,
identified Debt owing to such person, firm, corporation or other entity
by Subsidiary or that such person, firm, corporation or other entity
shall be a Lender as to all Debt at any time owing to such Lender by
Subsidiary. Subsidiary and Parent agree, for the benefit of Lenders, to
execute and deliver all further instruments and documents, and take all
further action that Lenders may reasonably request in order to perfect
and protect any security interest purported to be granted hereby.
9. Notices. Any notice, instruction, request, consent, demand or other
communication required or contemplated by this Agreement shall be in
writing, shall be given or made by United States first class mail, telex,
facsimile transmission or hand delivery addressed as follows:
If to Parent: LG&E Energy Corp.
220 W. Main Street (P.O. Box 32030)
Louisville, Kentucky 40232
Attention: Treasurer
If to Subsidiary: LG&E Gas Systems Inc.
220 W. Main Street (P.O. Box 32030)
Louisville, Kentucky 40232
Attention: Treasurer
10. Successors. This Agreement shall be binding upon the parties hereto
and their respective successors and assigns and is also intended for
the benefit of the Lenders, and, notwithstanding that such Lenders are
not parties hereto, each Lender shall be entitled to the full benefits
of this Agreement and to enforce the covenants and agreements contained
herein as set forth in Section 8. This Agreement is not intended for
the benefit of any person other than Lenders, and shall not confer or
be deemed to confer upon any such person any benefits, rights or
remedies hereunder.
11. Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Kentucky.
LG&E ENERGY CORP.
By:
Title:
LG&E GAS SYSTEMS INC.
By:
Title:
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,661,581
<OTHER-PROPERTY-AND-INVEST> 320,319
<TOTAL-CURRENT-ASSETS> 614,902
<TOTAL-DEFERRED-CHARGES> 112,279
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,709,081
<COMMON> 464,354 <F1>
<CAPITAL-SURPLUS-PAID-IN> (42)<F2>
<RETAINED-EARNINGS> 320,070
<TOTAL-COMMON-STOCKHOLDERS-EQ> 784,382
0
95,328
<LONG-TERM-DEBT-NET> 646,842
<SHORT-TERM-NOTES> 158,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 16,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,008,529
<TOT-CAPITALIZATION-AND-LIAB> 2,709,081
<GROSS-OPERATING-REVENUE> 865,897
<INCOME-TAX-EXPENSE> 13,934
<OTHER-OPERATING-EXPENSES> 816,369 <F3>
<TOTAL-OPERATING-EXPENSES> 830,303
<OPERATING-INCOME-LOSS> 35,594
<OTHER-INCOME-NET> (14)
<INCOME-BEFORE-INTEREST-EXPEN> 35,580
<TOTAL-INTEREST-EXPENSE> 12,889
<NET-INCOME> 22,691
1,156
<EARNINGS-AVAILABLE-FOR-COMM> 21,535
<COMMON-STOCK-DIVIDENDS> 18,395
<TOTAL-INTEREST-ON-BONDS> 10,150
<CASH-FLOW-OPERATIONS> 71,652
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.33
<FN>
<F1>Includes common stock expense of $935.
<F2>Represents unrealized loss on marketable securities,
net of taxes.
<F3>Includes equity in earnings of affiliates of
$4,600.
</FN>
</TABLE>
EXHIBIT 99.01
DESCRIPTION OF COMMON STOCK
The information under this caption is a succinct summary of certain provisions
and is subject to the detailed provisions of the Company's Articles of
Incorporation, as amended, and of its By-Laws, which have been filed (or
incorporated by reference) as exhibits to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996 and Annual Report on Form 10-K
for the year ended December 31, 1995, respectively, and which are incorporated
herein by this reference.
Authorized Stock
Under the Company's Articles of Incorporation, the Company is authorized to
issue 125,000,000 shares of Common Stock, without par value (the "Common
Stock"), of which approximately 66,287,294 shares were outstanding on April 30,
1996.
The Company is also authorized to issue 5,000,000 shares of preferred stock,
without par value (the "Preferred Stock"). As discussed below under the
caption "Rights to Purchase Series A Preferred Stock," the Company has created
a series of Preferred Stock designated as "Series A Preferred Stock," and the
number of shares constituting such series is 750,000. No shares of such Series
A Preferred Stock and no shares of any other Preferred Stock are currently
outstanding. Preferred Stock may be issued in the future in such series as may
be designated by the Company's Board of Directors. In creating any such
series, the Company's Board of Directors has the authority to fix the rights
and preferences of each series with respect to, among other things, the
dividend rate, redemption provisions, liquidation preferences, and sinking fund
provisions.
Dividend Rights
Subject to the prior payment in full of all accrued and unpaid dividends on the
Series A Preferred Stock and possible prior rights of holders of other
Preferred Stock that may be issued in the future, holders of the Company's
Common Stock are entitled to receive such dividends as may be declared from
time to time by the Board of Directors of the Company out of funds legally
available therefor.
The funds required by the Company to enable it to pay dividends on its Common
Stock are expected to be derived principally from dividends paid by Louisville
Gas and Electric Company, the Company's principal subsidiary ("LG&E"), on
LG&E's Common Stock. The Company's ability to receive dividends on LG&E's
Common Stock is subject to the prior rights of the holders of LG&E's preferred
stock and the covenants of debt instruments limiting the ability of LG&E to pay
dividends.
The only existing covenant limiting LG&E's ability to pay dividends is in
LG&E's trust indenture, as supplemented, securing LG&E's first mortgage bonds.
It provides in substance that retained income of LG&E equal to the amount by
which the aggregate of (a) provisions for retirement and depreciation and (b)
expenditures for maintenance, for the period from January 1, 1978, to the end
of the last preceding month for which a balance sheet of LG&E is available, is
less than 2.25% of depreciable property, including construction work in
progress, as of the end of that period, shall not be available for the payment
of cash dividends on the Common Stock of LG&E. No portion of retained income
of LG&E is presently restricted by this provision.
Voting Rights
Every holder of Common Stock and every holder of Series A Preferred Stock that
may be issued in the future is entitled to one vote per share for the election
of directors and upon all other matters on which such holder is entitled to
vote. At all elections of directors, any eligible shareholder may vote
cumulatively. The Board of Directors of the Company has the authority to fix
conversion and voting rights for any new series of Preferred Stock (including
the right to elect directors upon a failure to pay dividends), provided that no
share of Preferred Stock can have more than one vote per share.
Notwithstanding the foregoing, if any Series A Preferred Stock is issued in the
future and if and when dividends payable on such Series A Preferred Stock that
may be issued in the future shall be in default for six full quarterly
dividends and thereafter until all defaults shall have been paid, the holders
of the Series A Preferred Stock, voting separately as one class, to the
exclusion of the holders of Common Stock, will be entitled to elect two (2)
directors of the Company.
The Company's Articles of Incorporation contain "fair price" provisions, which
require that mergers and certain other business combinations or transactions
involving the Company and any substantial (10% or more) holder of the Company's
Voting Stock (as defined below) must be approved by the holders of at least 80%
of the voting power of the Company's outstanding Voting Stock and by the
holders of at least 66-2/3% of the voting power of the Company's Voting Stock
not beneficially owned by the 10% owner unless the transaction is either
approved by a majority of the members of the Board of Directors who are
unaffiliated with the substantial holder or certain minimum price and
procedural requirements are met. Any amendment to the foregoing provisions
must be approved by the holders of at least 80% of the voting power of the
Company's outstanding Voting Stock and by the holders of at least 66-2/3% of
the voting power of the Company's Voting Stock not beneficially owned by any
10% owner. The Company's Voting Stock consists of all outstanding shares of
the Company generally entitled to vote in the election of directors and
currently consists of the Company's Common Stock.
Subject to the rights of the Series A Preferred Stock (if any are issued) to
elect directors under certain circumstances described above and any voting
rights of the holders of the Company's Preferred Stock that may be issued in
the future, the Company's Articles and By-Laws contain provisions stating that:
(a) the Board of Directors shall be divided into three classes, as nearly equal
in number as possible, each of which, after an interim arrangement, will serve
for three years, with one class being elected each year, (b) directors may be
removed only with the approval of the holders of at least 80% of the voting
power of the shares of the Company generally entitled to vote, except that so
long as cumulative voting applies no director may be removed if the votes cast
against removal would be sufficient to elect the director if cumulatively voted
at an election of the class of directors of which such director is a part, (c)
any vacancy on the Board of Directors shall be filled by the remaining
directors then in office, though less than a quorum, (d) advance notice of
introduction by shareholders of business at annual shareholders' meetings and
of shareholder nominations for the election of directors shall be given and
that certain information be provided with respect to such matters, (e)
shareholder action may be taken only by unanimous written consent or at an
annual meeting of shareholders or a special meeting of shareholders called by
the President, the Board of Directors or, to the extent required by Kentucky
law, shareholders, and (f) the foregoing provisions may be amended only by the
approval of the holders of at least 80% of the voting power of the shares of
the Company generally entitled to vote. These provisions along with the "fair
price" provisions and cumulative voting provisions discussed above and the
Rights described below, may deter attempts to change control of the Company (by
proxy contest, tender offer or otherwise) and will make more difficult a change
in control of the Company that is opposed by the Company's Board of Directors.
Liquidation Rights
Subject to the prior rights of the holders of the Series A Preferred Stock that
may be issued in the future and the possible prior rights of holders of other
Preferred Stock that may be issued in the future, in the event of liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary, the
holders of the Common Stock are entitled to the remaining assets.
Other Provisions
No holder of Common Stock or any future holder of Preferred Stock has the
preemptive right to subscribe for and purchase any part of any new or
additional issue of stock or securities convertible into stock. The Common
Stock is not subject to redemption and does not have any conversion or sinking
fund provisions. The issued and outstanding shares of Common Stock are fully
paid and nonassessable shares of Common Stock of the Company.
Under the Company's Articles of Incorporation, the Board of Directors may issue
additional shares of authorized but unissued Common Stock for such
consideration as it may from time to time determine.
Rights to Purchase Series A Preferred Stock
On December 5, 1990, the Board of Directors of the Company: (i) declared a
dividend distribution of one Preferred Stock purchase right (a "Right" or
"Rights") for each outstanding share of Common Stock to shareholders of record
on December 19, 1990, and issuable as of such Record Date and (ii) further
authorized the issuance of one Right with respect to each share of Common Stock
of the Company that becomes outstanding after such Record Date and before the
Distribution Date (as defined below).
The Company declared a three-for-two split of the Common Stock to shareholders
of record on April 30, 1992. As a result of the stock split and in accordance
with the terms of the Rights, the number of Rights associated with a share of
Common Stock was reduced, effective May 15, 1992, from one Right per share to
two-thirds of a Right per share. The Company declared a two-for-one split of
the Common Stock to shareholders of record on April 1, 1996. As a result of
the two-for-one split and in accordance with the terms of the Rights, the
number of Rights associated with a share of Common Stock was reduced from two-
thirds of a Right per share to one-third of a Right per share, effective April
15, 1996.
On June 7, 1995, the Board of Directors approved the First Amendment to Rights
Agreement, whereby the definition of "Acquiring Person" (see below) was
modified to provide that an "Acquiring Person" shall be any person who has
acquired, or obtained the rights to acquire, beneficial ownership of 15% or
more of the outstanding Common Stock of the Company. The previous ownership
threshold was 20%.
Each whole Right entitles the holder of record to purchase from the Company one
one-hundredth of a share of Series A Preferred Stock, without par value, of the
Company ("Series A Preferred Stock") at a price of $110 per one one-hundredth
of a share (the "Purchase Price"). The description and terms of the Rights are
set forth in the Rights Agreement, as amended (the "Rights Agreement").
Initially the Rights will not be exercisable, certificates will not be sent to
shareholders and the rights will automatically trade with the Common Stock.
The Rights will be evidenced by the Common Stock certificates until the close
of business on the earlier to occur of the tenth day following (i) a public
announcement (or, if earlier, the date a majority of the Board of Directors of
the Company becomes aware) that a person or group of affiliated or associated
persons has become an "Acquiring Person", which is defined as a person who has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding Common Stock of the Company (the "Stock Acquisition Date"),
or (ii) the commencement of, or public announcement of an intention to
commence, a tender or exchange offer the consummation of which would result in
the ownership of 15% or more of the outstanding Common Stock (the earlier of
the dates in clause (i) or (ii) being called the "Distribution Date").
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a person who would otherwise be an "Acquiring
Person," has become such inadvertently and without any intention of changing or
influencing control of the Company, and such person, as promptly as practicable
after being advised of such determination, divests himself or itself of
beneficial ownership of a sufficient number of shares of Common Stock so that
such person would no longer be an "Acquiring Person," then such person shall
not be deemed to be an "Acquiring Person" for any purposes of the Rights
Agreement. Until the Distribution Date, (i) the Rights will be evidenced by
the Common Stock certificates and will be transferred with and only with such
Common Stock certificates, (ii) new Common Stock certificates will contain a
notation incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any certificates for Common Stock outstanding will
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the Company's Common Stock as of the close of business on the
Distribution Date, and such separate certificates alone will evidence the
rights from and after the Distribution Date.
Each of the following persons (an "Exempt Person") will not be deemed to be an
Acquiring Person, even if they have acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding Common Stock of the
Company: (i) the Company, any subsidiary of the Company, any employee benefit
plan or employee stock plan of the Company or of any subsidiary of the Company;
and (ii) any person who becomes an Acquiring Person solely by virtue of a
reduction in the number of outstanding shares of Common Stock, unless and until
such person shall become the beneficial owner of, or make a tender offer for,
any additional shares of Common Stock.
The Rights are not exercisable until the Distribution Date. The Rights will
expire at the close of business on December 19, 2000, unless earlier redeemed
or exchanged by the Company as described below.
The Purchase Price payable, and the number of shares of Series A Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Series A Preferred Stock, (ii) upon the grant to holders of the Series A
Preferred Stock of certain rights or warrants to subscribe for Series A
Preferred Stock or convertible securities at less than the current market price
of the Series A Preferred Stock or (iii) upon the distribution to holders of
the Series A Preferred Stock of evidences of indebtedness or assets (excluding
dividends payable in Series A Preferred Stock) or of subscription rights or
warrants (other than those referred to above). The number of Rights associated
with a share of the Company's Common Stock is subject to adjustment from time
to time in the event of a stock dividend on, or a subdivision or combination
of, the Common Stock.
In the event any Person (other than an Exempt Person) becomes the beneficial
owner of 15% or more of the then outstanding shares of Common Stock (except
pursuant to an offer for all outstanding shares of Common Stock that the
independent directors determine to be fair to and otherwise in the best
interest of the Company and its shareholders) or any Exempt Person who is the
beneficial owner of 15% or more of the outstanding Common Stock fails to
continue to qualify as an Exempt Person, then each holder of record of a whole
Right, other than the Acquiring Person, will thereafter have the right to
receive, upon payment of the Purchase Price, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a
market value at the time of the transaction equal to twice the Purchase Price.
However, Rights are not exercisable following such event until such time as the
Rights are no longer redeemable by the Company as set forth below. Any Rights
that are or were at any time, on or after the Distribution Date, beneficially
owned by an Acquiring Person shall become null and void.
For example, at an exercise price of $110 per Right, each whole Right not owned
by an Acquiring Person (or by certain related parties) following an event set
forth in the preceding paragraph would entitle its holder to purchase $220
worth of Common Stock (or other consideration, as noted above) for $110.
Assuming that the Common Stock had a per share value of $22 at such time, the
holder of each valid Right would be entitled to purchase 10 shares of Common
Stock for $110.
After the Rights have become exercisable, if the Company is acquired in a
merger or other business combination (in which any shares of the Company's
Common Stock are changed into or exchanged for other securities or assets) or
more than 50% of the assets or earning power of the Company and its
subsidiaries (taken as a whole) are sold or transferred in one or a series of
related transactions, the Rights Agreement provides that proper provision shall
be made so that each holder of record of a whole Right will have the right to
receive, upon payment of the Purchase Price, that number of shares of common
stock of the acquiring company having a market value at the time of such
transaction equal to two times the Purchase Price.
After any such event, to the extent that insufficient shares of Common Stock
are available for the exercise in full of the Rights, holders of Rights will
receive upon exercise shares of Common Stock to the extent available and then
other securities of the Company, including units of shares of Series A
Preferred Stock with rights substantially comparable to those of the Common
Stock, property, or cash, in proportions determined by the Company, so that the
aggregate value received is equal to twice the Purchase Price. The Company,
however, shall not be required to issue any cash, property or debt securities
upon exercise of the Rights to the extent their aggregate value would exceed
the amount of cash the Company would otherwise be entitled to receive upon
exercise in full of the then exercisable Rights.
No fractional shares of Series A Preferred Stock or Common Stock will be
required to be issued upon exercise of the Rights and, in lieu thereof, a
payment in cash may be made to the holder of such Rights equal to the same
fraction of the current market value of a share of Series A Preferred Stock or,
if applicable, Common Stock.
At any time until ten days after the Stock Acquisition Date (subject to
extension by the Board of Directors), the Company may redeem the Rights in
whole, but not in part, at a price of $0.01 per Right (subject to certain anti-
dilution adjustments) (the "Redemption Price"). After such redemption period,
the Company's right of redemption may be reinstated, under certain
circumstances, if an Acquiring Person reduces his beneficial ownership of
Common Stock to below 10% and there is no other Acquiring Person. Immediately
upon the action of the Board of Directors of the Company authorizing redemption
of the Rights, the right to exercise the rights will terminate, and the only
right of the holders of Rights will be to receive the Redemption Price without
any interest thereon.
The Board of Directors may, at its option, at any time after any Person becomes
an Acquiring Person, exchange all or part of the outstanding Rights (other than
Rights held by the Acquiring Person and certain related parties) for shares of
Common Stock at an exchange ratio of three (3) shares of Common Stock per Right
(subject to certain anti-dilution adjustments). However, the Board may not
effect such an exchange at any time any Person or group owns 50% or more of the
shares of Common Stock then outstanding. Immediately after the Board orders
such an exchange, the right to exercise the Rights shall terminate and the
holders of Rights shall thereafter only be entitled to receive shares of Common
Stock at the applicable exchange ratio.
The Board of Directors of the Company may amend the Rights Agreement. After
the Distribution Date, however, the provisions of the Rights Agreement may be
amended by the Board only to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person or an affiliate or associate of an Acquiring Person), or
to shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable. In addition, no
supplement or amendment may be made which changes the Redemption Price, the
final expiration date, the Purchase Price or the number one one-hundredths of a
share of Series A Preferred Stock for which a Right is exercisable, unless at
the time of such supplement or amendment there has been no occurrence of a
Stock Acquisition Date and such supplement or amendment does not adversely
affect the interests of the holders of Rights (other than an Acquiring Person
or an associate or affiliate of an Acquiring Person).
Until a Right is exercised, the holder, as such, will have no rights as a
shareholder of the Company, including, without limitation, the right to vote or
to receive dividends.
The issuance of the Rights is not taxable to the Company or to shareholders
under presently existing federal income tax law, and will not change the way in
which shareholders can presently trade the Company's shares of Common Stock.
If the Rights should become exercisable, shareholders, depending on then
existing circumstances, may recognize taxable income.
The rights may have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors and, accordingly, will make
more difficult a change of control that is opposed by the Company's Board of
Directors. However, the Rights should not interfere with a proposed change of
control (including a merger or other business combination) approved by a
majority of the Board of Directors since the Rights may be redeemed by the
Company at the Redemption Price at any time until ten days after the Stock
Acquisition Date (subject to extension by the Board of Directors). Thus, the
Rights are intended to encourage persons who may seek to acquire control of the
Company to initiate such an acquisition through negotiations with the Board of
Directors. Nevertheless, the Rights also may discourage a third party from
making a partial tender offer or otherwise attempting to obtain a substantial
equity position in, or seeking to obtain control of, the Company. To the
extent any potential acquirors are deterred by the Rights, the Rights may have
the effect of preserving incumbent management in office.
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to the Company's Registration Statement on Form S-8,
Registration No. 33-38557. A copy of the First Amendment to Rights Agreement
has been filed with the SEC as an Exhibit to the Company's Registration
Statement on Form 8-A/A, Registration No. 1-10568, filed on June 20, 1995.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated in this summary description herein by reference.
Miscellaneous
The Company's outstanding Common Stock is listed on the New York and Chicago
Stock Exchanges.
Transfer Agents and Registrar
The Transfer Agents for the Common Stock are the Company and Norwest Bank
Minnesota, N.A., Minneapolis, Minnesota. Registrar for the Common Stock is PNC
Bank, Kentucky, Inc., Louisville, Kentucky.
