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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Earliest Event Reported: June 27, 1997
NGC CORPORATION
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(Exact Name of Registrant As Specified In Its Charter)
Delaware 1-11156 94-3248415
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification Number)
1000 Louisiana, Suite 5800
Houston, Texas 77002
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(Address of Principal Executive Offices)
Registrant's Telephone Number:
(713) 507-6400
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ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
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ACQUISITION OF DESTEC ENERGY, INC.
DESTEC STOCKHOLDER APPROVAL OF MERGER AGREEMENT/CONSUMMATION OF
THE MERGER - At the 1997 Annual Meeting of Stockholders of Destec
Energy, Inc. ("Destec") held on June 4, 1997, holders of approximately
eighty-eight percent (88%) of the authorized, issued and outstanding
shares of the common stock, par value $.01 per share, of Destec (the
"Destec Common Stock"), either in person or by proxy, adopted and
approved that certain Agreement and Plan of Merger, dated as of
February 17, 1997 (the "Merger Agreement"), by and among Destec, The
Dow Chemical Company, the holder of approximately eighty percent (80%)
of the Destec Common Stock ("Dow"), NGC Corporation ("NGC" or the
"Company") and NGC Acquisition Corporation II, a wholly-owned
subsidiary of NGC (the "Purchaser"), pursuant to which, among other
things, the Purchaser merged with and into Destec (the "Merger") and
Destec, as the surviving corporation after the Merger, became a
wholly-owned subsidiary of NGC. The Merger was consummated on June 27,
1997. Pursuant to the Merger Agreement, NGC paid $21.65 in cash for
each outstanding share of Destec Common Stock or approximately $1.27
billion in the aggregate.
The amount of consideration paid in connection with the
acquisition of Destec was determined through an auction process. In
connection with NGC's evaluation of a potential bid to acquire Destec,
NGC engaged in a due diligence process pursuant to which NGC was
provided with access to confidential information, management and
facilities of Destec. Following this due diligence process, NGC
submitted a joint proposal (the "Joint Proposal") with The AES
Corporation ("AES"). The Joint Proposal, as accepted by the Board of
Directors of Destec, provided that NGC would offer $21.65 per share of
Destec Common Stock and sell Destec's international projects and
operations to AES (the "AES Sale") upon consummation of the Merger.
Through the Merger, NGC acquired a large independent producer of
electricity. Destec is in the business of (i) developing, operating
and managing projects which produce electricity, thermal energy and
syngas; (ii) marketing and selling electricity, thermal energy,
natural gas and lignite; and (iii) investing in projects, entities and
natural resources which support its strategic objectives. Destec has
interests in twenty-five (25) operating facilities, twenty (20) of
which are located in the United States and five(5) of which are
located outside of the United States.
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Four (4) of Destec's twenty-four (24) operating facilities are located
outside the United States.
In connection with the acquisition of Destec, NGC guaranteed
certain obligations of Destec and certain of its subsidiaries relating
to two (2) operating leases: the CoGen Lyondell Lease (approximately
$164.4 million) and the Wabash Lease (approximately $193.3 million),
which lease obligations were formerly guaranteed by Destec and Dow,
respectively. A copy of the CoGen Guaranty is attached hereto as
Exhibit 4.1 and incorporated herein by reference. A copy of the Wabash
Guaranty is attached hereto as Exhibit 4.2 and incorporated herein by
reference.
SOURCE OF FUNDS - An aggregate of $1.27 billion in cash was
required to pay for the approximately 56 million shares of Destec
Common Stock purchased in connection with the Merger (the "Merger
Consideration"). The Company furnished $680 million from borrowings
under its existing credit facility (the "Credit Facility") between the
Company and the First National Bank of Chicago ("First Chicago") as
Agent, The Chase Manhattan Bank National Association and NationsBank
of Texas, N.A., as Co-Agents, and certain other lenders named therein,
which was amended to provide for the transactions contemplated by the
Merger. The Company had previously raised $200 million through a Rule
144A offering of trust preferred securities by NGC Corporation Capital
Trust I, the proceeds of which were used to repay bank debt pending
closing of the Merger. The Credit Facility is attached hereto as
Exhibit 4.3 and is hereby incorporated herein by reference. An
additional $436 million of the Merger Consideration was received from
AES in connection with NGC's sale to AES of certain international
assets of Destec following consummation of the Merger as described
below. The remaining cash needed to fund the Merger Consideration was
provided by cash-on-hand at NGC and Destec.
DISPOSITION OF CERTAIN INTERNATIONAL ASSETS
AES SALE - NGC entered into an Asset Purchase Agreement on
February 17, 1997 (the "AES Asset Purchase Agreement") with AES in
connection with the Joint Proposal pursuant to which NGC agreed to
sell most of Destec's international projects and operations to AES for
approximately $407 million, subject to adjustment (the "AES Sale").
The AES Sale closed on June 30, 1997. NGC received $436 million
from AES in connection with such sale. A copy of the AES Asset
Purchase Agreement and the
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amendment thereto are attached hereto as Exhibits 2.2 and 2.3,
respectively, and are incorporated herein by reference.
A copy of the press release relating to the Destec Merger and the
AES Sale is attached hereto as Exhibit 99.1 and incorporated herein by
reference.
ITEM 5: OTHER EVENTS
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On July 10, 1997, NGC announced that it had entered into an
agreement with ECT EOCENE Enterprises, Inc., an indirect subsidiary of
Enron Corp., to sell certain oil, gas and lignite reserves owned by
Destec for $149 million, subject to adjustments. A copy of the Asset
Purchase Agreement dated July 1, 1997 (the "Enron Purchase Agreement")
is attached hereto as Exhibit 2.4 and incorporated herein by
reference. A copy of the press release regarding the signing of the
Enron Purchase Agreement is attached hereto as Exhibit 99.2 and
incorporated herein by reference.
ITEM 7: FINANCIAL STATEMENTS, PRO-FORMA FINANCIAL INFORMATION AND EXHIBITS
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(A) FINANCIAL STATEMENTS - Financial Statements required by this
item, if any, will be filed by amendment no later than sixty (60)
days after the date that the initial report on this Form 8-K was
required to be filed.
(B) PRO-FORMA FINANCIAL INFORMATION - Pro-Forma Financial Information
required by this item, if any, will be filed by amendment no
later than sixty (60) days after the date that the initial report
on this Form 8-K was required to be filed.
(C) EXHIBITS -
2.1 Agreement and Plan of Merger by and among Destec Energy,
Inc., The Dow Chemical Company, NGC Corporation and NGC
Acquisition Corporation II dated as of February 17, 1997.
(1)
2.2 Asset Purchase Agreement by and between NGC Corporation and
The AES Corporation dated as of February 17, 1997. (1)
+ 2.3 First Amendment to Asset Purchase Agreement and the related
schedules dated as of June 29, 1997.
+ 2.4 Asset Purchase Agreement between Destec Energy, Inc. and ECT
EOCENE Enterprises, Inc. dated July 1, 1997.
+ 4.1 NGC Corporation Guaranty dated as of June 27, 1997 (CoGen).
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+ 4.2 NGC Corporation Guaranty dated as of June 27, 1997 (Wabash).
+ 4.3 Amended and Restated Credit Agreement dated as of June 27,
1997, among NGC Corporation and The First National Bank of
Chicago, individually and as Agent, The Chase Manhattan Bank
and NationsBank of Texas N.A., individually and as Co-
Agents, and the Lenders named therein.
+ 4.4 First Amendment to Letter of Credit Facility Agreement dated
as of April 23, 1997.
+ 99.1 Press Release dated June 30, 1997, relating to the closing
of the Destec Merger and the AES Sale.
+ 99.2 Press Release dated July 10, 1997, relating to the Enron
Purchase Agreement.
________________________
+ Filed herewith.
(1) Incorporated by reference to exhibits to the Annual Report on Form 10-K of
NGC Corporation for the Fiscal Year Ended December 31, 1996, Commission
File No. 1-11156.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NGC CORPORATION
By: /s/ Lisa Q. Metts
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Lisa Q. Metts,
Assistant General Counsel
DATE: July 14, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
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<C> <S>
2.1 Agreement and Plan of Merger by and among Destec Energy, Inc., The
Dow Chemical Company, NGC Corporation and NGC Acquisition Corporation
II dated as of February 17, 1997.
2.2 Asset Purchase Agreement by and between NGC Corporation and The AES
Corporation dated as of February 17, 1997.
2.3 First Amendment to Asset Purchase Agreement and the related schedules
dated as of June 29, 1997
2.4 Asset Purchase Agreement between Destec Energy, Inc. and ECT EOCENE
Enterprises, Inc. dated July 1, 1997
4.1 NGC Corporation Guaranty dated as of June 27, 1997 (CoGen)
4.2 NGC Corporation Guaranty dated as of June 27, 1997 (Wabash)
4.3 Amended and Restated Credit Agreement dated as of June 27, 1997,
among NGC Corporation and The First National Bank of Chicago,
individually and as Agent, The Chase Manhattan Bank and Nations Bank
of Texas N.A., individually and as Co-Agents, and the Lenders named
therein
4.4 First Amendment to Letter of Credit Facility Agreement dated as of
April 23, 1997
99.1 Press Release dated June 30, 1997 relating to the closing of the
Destec Merger and the AES Sale
99.2 Press Release dated July 10, 1997 relating to the Enron Purchase
Agreement
</TABLE>
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EXHIBIT ___
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT ("Amendment"), dated June 29,
1997, by and between NGC Corporation, a Delaware corporation ("NGC"), and The
AES Corporation, a Delaware corporation ("Parent").
WHEREAS, NGC and Parent are parties to that certain Asset Purchase
Agreement dated as of February 17, 1997 (the "Asset Purchase Agreement"); and
WHEREAS, NGC and Parent desire to amend the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements set forth
herein, NGC and Parent hereby agree as follows:
1. The Disclosure Schedule to the Asset Purchase Agreement is deleted in
its entirety and the Disclosure Schedule attached hereto is substituted in lieu
thereof.
2. The first recital to the Asset Purchase Agreement is deleted in its
entirety and the following is substituted in lieu thereof:
WHEREAS, simultaneously with the execution and delivery hereof, NGC,
NGC Acquisition Corporation II, a Delaware corporation and subsidiary of
NGC, Destec Energy, Inc., a Delaware corporation (the "Company"), and The
Dow Chemical Company, a Delaware corporation ("Dow"), are entering into an
agreement and plan of merger (the "Merger Agreement") pursuant to which the
Company has agreed to merge with NGC Acquisition Corporation II (the
"Merger").
3. The third recital to the Asset Purchase Agreement is deleted in its
entirety and the following is substituted in lieu thereof:
WHEREAS, Parent desires to, or to cause one or more wholly-owned
subsidiaries to (Parent and such subsidiaries, collectively, "Purchaser"),
buy, and on the next business day following the Merger, NGC desires to
cause the Company to sell the international businesses and assets of the
Company and its subsidiaries, and Purchaser is willing to assume certain
related liabilities and obligations of the Company and its subsidiaries,
all upon the terms and conditions hereinafter set forth; and
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4. The first paragraph of Section 1.1 of the Asset Purchase Agreement is
deleted in its entirety and the following is substituted in lieu thereof:
Section 1.1 Purchase and Sale of the International Assets. Subject
to the terms and conditions of this Agreement, on the Closing Date (as
hereinafter defined), NGC shall cause the Company to sell, convey, assign,
transfer and deliver (or cause to be sold, conveyed, transferred and
delivered) to Purchaser, and the Purchaser shall purchase and acquire the
international assets of the Company as of the Closing Date, including,
without limitation, all of the Company's or its Subsidiaries' (as defined
in the Merger Agreement) right, title and interest in and to the following:
5. Subparagraph (i) of Section 1.1 of the Asset Purchase Agreement is
deleted in its entirety and the following is substituted in lieu thereof:
(i) all of the issued and outstanding shares of capital stock (or
their equivalent under local law) (the "Purchased Shares") as set forth in
Part I-A of Schedule 1.1 of the disclosure schedule attached hereto (the
"Disclosure Schedule") (provided that the Purchased Shares set forth in
clause (B) of said Part I-A shall not be conveyed until after the Purchased
Shares set forth in clause (A) thereof have been conveyed to Purchaser),
which when delivered to Purchaser at the Closing (as hereinafter defined)
(x) will be free and clear of any liens, claims, security interests,
charges, leases, licenses or sublicenses created by, through or under (A)
NGC or (B) the Company or any of its affiliates (other than the
International Entities) from and after the Effective Time ("Liens"), and
(y) will cause all of the issued and outstanding shares of capital stock
(or their equivalent under local law) of each of the entities (the
"International Entities") set forth in Part I-B of Schedule 1.1 of the
Disclosure Schedule to be (directly or indirectly) sold, conveyed,
transferred and delivered to Purchaser.
6. Subparagraph (ii) of Section 1.1 of the Asset Purchase Agreement is
deleted in its entirety and the following is substituted in lieu thereof:
(ii) all rights, options and other interests in projects or projects
in development outside of the United States, including those set forth in
Part II of Schedule 1.1 of the Disclosure Schedule; provided, however, that
this clause (ii) shall not include (x) any and all rights, options and
other interests in those projects or projects in development outside of the
United States known as Kingsnorth, EEA BOOT -Egypt, CAES Morocco,
Petrobras, Cogera, and
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Egasa/Egesur (provided that with respect to the project in development
known as Egasa/Egesur, the only rights and interests that are included in
this clause (x) are the right to bid as a prequalified entity, the stock of
Destec Norperu, S.A., Destec Piura, S.A., and Destec Electropiura, S.A.,
and the right to retain a copy of all files (the "Peru Files") with
relation to such project; provided further that with respect to the Peru
Files to be conveyed to Purchaser hereunder, the Company may redact from
the Board presentation included therein any proprietary financial
information relating to its targeted rate of return requirements and
similar proprietary financial information) and (y) any and all rights,
options and other interests relating to (1) the provision of operation and
maintenance services for gas turbine power generation facilities in India
resulting from the activities and operations of Destec Operating Company,
including, but not limited to, those projects or projects in development
known as Guna/STI,. Power Ltd., Arvind Mills, RPG, Reliance, Peeraj, Larsen
& Toubro, and Coastal and (2) the stock of Destec Australian Investments,
Inc. and Destec Holdings, Inc.(collectively, the "Excluded Projects"), all
rights with relation to which shall be retained by the Company and none of
which shall be deemed International Assets or International Businesses as
such term is defined below) except for the project known as Kingsnorth,
which shall be deemed an International Asset for purposes of Sections
1.6(c) and (d) only; and provided further that in the event any right,
option, or other interest in any Excluded Project is currently held by any
entity listed on Part I of Schedule 1.1 of the Disclosure Schedule, such
right, option or other interest shall be transferred to the Company, or one
or more of its Subsidiaries that are not listed on Part I of Schedule 1.1
of the Disclosure Schedule, without warranty or recourse of any kind as
between Purchaser and the International Entities, on the one hand, and the
Company and such Subsidiaries, on the other hand except as to liens and
encumbrances first created by through or under Purchaser or any of the
International Entities from and after the later of the Closing Date and the
date of such transfer, prior to the Closing, provided that (x) the Company
shall be responsible for obtaining all consents and approvals necessary for
such transfer, and (y) in no event shall the Closing be delayed because of
the Company's failure to obtain any consents or approvals necessary to
allow transfer of such right, option or other interest to the Company or
such Subsidiary.
7. Section 1.3 of the Asset Purchase Agreement is deleted in its entirety
and the following is substituted in lieu thereof:
Section 1.3 Assumed Liabilities. (a) At the Closing, Purchaser shall
deliver to the Company an
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undertaking (the "Assumption Agreement") in the form to be agreed upon
whereby Purchaser, on and as of the Closing Date, assumes and agrees to
pay, perform and discharge when due (or promptly reimburse the Company to
the extent the Company or its affiliates are required to make payments
after the Closing Date on account of) (i) the liabilities and obligations
of the Company and its Subsidiaries primarily attributable to the
International Assets including, without limitation, the liabilities and
obligations listed on Schedule 1.3 of the Disclosure Schedule, (ii) with
respect to any corporate liabilities of the Company unknown to NGC or
Parent that are not primarily attributable to the International Assets or
to the Company's domestic assets, a pro rata portion of such corporate
liabilities calculated based on a fraction the numerator of which is the
Purchase Price and the denominator of which is the Merger Consideration (as
defined in the Merger Agreement), (iii) all liabilities and obligations
with respect to the International Employees described in Section 6.2,
including, without limitation, all liabilities and obligations relating to
the International Employees under (a) the Destec Energy, Inc. 1996 Variable
Pay Plan, (b) the Destec Energy, Inc. 1995 Variable Pay Plan, (c) the
Destec Special Recognition Award (SRA) Program, (d) the Destec Energy, Inc.
Amended and Restated 1990 Award and Option Plan, and (e) the Destec Foreign
Service Policy, (iv) all severance costs, obligations under employment
agreements and consulting agreements, and employee benefit liabilities
arising as a result of (I) the termination of employment of any
International Employees from and after the Closing Date or (II) the
transactions consummated under this Agreement in respect of the
International Employees (the cost, obligations and liabilities under this
clause (iv) are collectively the "International Employee Obligations"), (v)
each liability or obligation relating to any International Employee (with
respect to employee benefit plans, in excess of any assets owned by the
Company or the Subsidiaries and directly related to such plan or held by
any trust with respect thereto sponsored or maintained by the Company or
the Subsidiaries (other than the International Assets) which are available
to satisfy or otherwise offset such liability or obligation), relating to
any bonus, deferred compensation, incentive compensation, stock purchase,
stock option, restricted stock, deferred stock, stock appreciation right,
vacation policy, superannuation, severance or termination pay,
hospitalization or other medical, life or other insurance, flexible
benefit, cafeteria plan, supplemental unemployment benefits, profit
sharing, pension, or retirement plan, program, agreement or arrangement,
employment agreements, consulting agreements and each other employee
benefit plan, program, agreement or arrangement, sponsored, maintained or
contributed to by the Company or its Subsidiaries (the "International
Employee Plans"), (vi) 50% of all severance costs, obligations under
employment agreements, and employee benefit liabilities, including, without
limitation, under any employee benefit plan,
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program, agreement or arrangement sponsored, maintained or contributed to
by the Company or its Subsidiaries (collectively, "Severance Costs")
arising as a result of the termination of Keys A. Curry, Jr., the Company's
President and Chief Operating Officer, such amount to be increased, on a
dollar-for-dollar basis (to a maximum of 100% of all Severance Costs
arising as a result of the termination of Keys A. Curry, Jr.) by the
Severance Costs avoided by Purchaser as a result of NGC's (or any of its
affiliates') hiring any of the International Employees, and (vii) all
obligations and liabilities with respect to transfer stamp taxes or similar
taxes arising in connection with the purchase of the International Assets
by Purchaser. The liabilities and obligations assumed by Purchaser in
accordance with this Section 1.3 are hereinafter referred to as the
"Assumed Liabilities."
(b) Notwithstanding anything above to the contrary, the parties agree
that, with respect to that certain Settlement Agreement dated May 6, 1994,
between Ontario Hydro, a corporation continued pursuant to the Power
Corporation Act, R.S.O. 1990 c. P-18 amended, Kingston CoGen Limited
Partnership, an Ontario limited partnership ("KCLP") and the Company (the
"Settlement Agreement"), (i) any liabilities arising under the Settlement
Agreement as a result of KCLP entering into an Additional PPA (as such term
is defined in the Settlement Agreement) from and after the Closing shall be
deemed Assumed Liabilities, and (ii) any liabilities arising under the
Settlement Agreement as a result of the Company entering into an Additional
PPA from and after the Closing shall be deemed Excluded Liabilities.
8. Section 1.5 of the Asset Purchase Agreement is deleted in its entirety
and the following is substituted in lieu thereof:
Section 1.5 Closing. Unless this Agreement shall have been
terminated and the transactions contemplated herein shall have been
abandoned pursuant to Section 8.1 hereof prior to the Effective Time (as
defined in the Merger Agreement), the closing of the transactions
contemplated by this Agreement (the "Closing") will take place after all of
the conditions herein or incorporated herein are satisfied or waived (which
satisfaction or waiver shall be determined prior to the Effective Time) on
the next business day following the Effective Time (as defined in the
Merger Agreement), at
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the offices of Vinson & Elkins L.L.P., 2300 First City Tower, 1001 Fannin
St., Houston, Texas 77002-6760, unless an earlier date or place is agreed
to in writing by the parties hereto. The date on which the Closing occurs
is referred to herein as the "Closing Date."
9. Section 1.6(a) of the Asset Purchase Agreement is deleted in its
entirety and the following is substituted in lieu thereof:
(a) In consideration for the International Assets and subject to the
terms and conditions of this Agreement, Purchaser shall (i) on the Closing
Date, assume the Assumed Liabilities as provided in Section 1.3 hereof
pursuant to the Assumption Agreement, and (ii) on the date of closing under
the Merger Agreement (the "Merger Closing Date"), transfer to or to the
order of the Company in immediately available funds in New York City an
amount equal to U.S. 407,055,000 (the "Original Base Purchase Price"), as
adjusted in accordance with the provisions of this Section 1.6 (the
"Purchase Price"). In addition, based upon the parties' preliminary
analysis of the allocation of net cash flow between the Company and its
Subsidiaries (other than the International Assets) and the International
Assets for the period from January 1, 1997 to the Closing Date, Purchaser
shall pay to the Company on the Closing Date, a preliminary adjustment
equal to U.S. $29,000,000 by wire transfer of immediately available funds
(the "Preliminary Adjustment Amount"; the Original Base Purchase Price plus
the Preliminary Adjustment Amount hereinafter referred to as the "Base
Purchase Price").
10. Section 1.6(b) of the Asset Purchase Agreement is deleted in its
entirety and the following is substituted in lieu thereof:
(b) One business day prior to the proposed Effective Time, Purchaser
shall deposit the Original Base Purchase Price in trust with the Paying
Agent (as defined in the Merger Agreement) in a segregated account (the
"AES Fund"). The Paying Agent shall be authorized to release the AES Fund
upon the occurrence of the Effective Time. If the Effective Time has not
occurred by 12:00 noon on the second business day after the AES Fund was
initially deposited, or such later date or time as Parent in its sole
discretion may agree, NGC shall instruct the Paying Agent to return the AES
Fund to Purchaser including all interest earned thereon. Upon release of
the AES Fund other than to Purchaser, NGC shall instruct the Paying Agent
to promptly pay the interest earned on the AES Fund until the Effective
Time of the Merger to Purchaser.
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11. Section 1.6(c) of the Asset Purchase Agreement is hereby amended by
adding the following phrase at the end of the first sentence thereof:
For purposes of determining net cash flow, overhead costs that are not
primarily attributable to either the Company's domestic assets or the
International Assets shall be allocated in the proportion of 2/3 to the
Company's domestic assets and 1/3 to the International Assets.
12. The following provision shall be inserted at the end of Section 1.6 of
the Asset Purchase Agreement:
(e) In the event NGC or the Company is able to cause the project in
development known as Kingsnorth, which project is being retained by the
Company pursuant to the provisions of Section 1.1(ii), either (A) to
achieve financial closing, or (B) to be sold to a third party, NGC shall
pay Parent, or cause Parent to be paid, the sum of (i) U.S. $1,000,000 plus
(ii) all unreimbursed costs and expenses incurred by the Company and its
Subsidiaries relating to the project known as Kingsnorth for the period
from and including January 1, 1997 to and excluding the Closing Date less
U.S. $500,000, as an adjustment to the Purchase Price; provided, that in
the event of a sale of such project under clause (B) above, the payment NGC
is required to make to Parent under this clause (e) shall not exceed the
amount of any proceeds received by NGC, the Company or any of their
respective affiliates as a result of such sale. It is agreed and
understood that all matters relating to the development of the Kingsnorth
project shall be at the sole discretion of the Company and NGC, and that,
in the event the Company and NGC elect not to proceed with the development
of the Kingsnorth project (including the financial closing thereof) for any
reason, neither NGC, the Company, nor any of their respective affiliates
shall have any liability to Parent or any of its affiliates with respect
thereto.
13. Section 1.8(a) of the Asset Purchase Agreement is amended by deleting
the first sentence and substituting the following in lieu thereof and by
deleting the entirety of such Section after the fifth sentence:
(a) Anything contained in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement or an
attempted agreement to transfer, sublease or assign any contract, license,
lease, commitment, purchase order, sales order or other agreement or any
claim, right, benefit, license, permit or authorization arising thereunder
or resulting therefrom if a transfer, sublease or assignment or an
attempted transfer, sublease or assignment thereof, without the consent of
any
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other party thereto, would be ineffective, would constitute a breach
thereof, would violate any confidentiality obligations with respect
thereto, or would in any way affect the rights of the Purchaser thereunder.
14. Section 1.8(c) of the Asset Purchase Agreement is amended by changing
it to Section 1.8(h).
15. Sections 1.8(b) of the Asset Purchase Agreement is deleted in its
entirety and the following is substituted in lieu thereof:
(b) After the Closing, Parent, Purchaser, the Company and NGC shall
continue to use their reasonable best efforts to (i) cooperate to attempt
to obtain any required consents or approvals to transfer of the Deferred
Assets (the "Consents") as soon as possible, and (ii) to transfer to Parent
or Purchaser pursuant to reasonable and lawful arrangements the benefits
and liabilities with respect to the Deferred Assets effective as of the
Closing. After the Closing, such efforts shall include, without
limitation, the enforcement for the benefit of the Purchaser (at
Purchaser's cost) of any and all rights of NGC, the Company and their
subsidiaries against third parties to any contract or agreement and the
transfer or sale of such Deferred Asset to any person or entity designated
by the Purchaser (and the net proceeds from any such transfer or sale shall
be for Purchaser's account).
(c) Without limiting the generality of paragraph (b) above, with
respect to any Deferred Assets for which Consents have not been obtained
prior to the Closing, after the Closing,
(i) the Company shall cause its subsidiaries that are operators,
managers, engineers or other service providers with respect to any
such Deferred Assets (collectively, the "Operators") to continue to
operate, manage, or provide engineering or other services, as
applicable, pursuant to the terms of the applicable operating,
management, engineering or other service agreements, if any
(collectively, "Operating Agreements") and to provide Purchaser with
copies of all material correspondence received by the Operators in
connection with such Operating Agreements, and
(ii) with respect to any other written contracts and agreements
to which the Company or any of its subsidiaries is a party
(collectively, the "Developers") and that relate to the development of
any Deferred Asset (collectively, the "Development Agreements"), the
Company shall cause the Developers to continue to provide services and
performance pursuant to the terms of the Development Agreements and to
provide Purchaser with copies of all material
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correspondence received by the Developers in connection with such
Development Agreements;
provided that, because such subsidiaries will be performing services with
respect to such Deferred Assets for the benefit of Purchaser pending
receipt of Consents, Purchaser shall direct the Operators or Developers as
to all aspects of their performance and shall, upon request by any Operator
or Developer, provide written instructions regarding such performance as a
condition to such Operator's or Developer's taking any action (including,
without limitation, granting or agreeing to any consents or waivers
thereunder), and provided further that, notwithstanding anything contained
herein to the contrary, if any of the Developers is required to make any
significant expenditure pursuant to the terms of any Development Agreement
and reasonable prior notice thereof is given to Parent, Parent shall
advance to the Company or such affiliate the funds necessary to make such
expenditure.
(d) If, between the Closing and the date upon which any and all
Consents to the transfer of the Elsta project, the Kingston project, the
Hazelwood project and the other Deferred Assets have been obtained (such
period is referred to as the "Interim Period"), any of the Deferred Assets
is damaged, destroyed, or is subject to condemnation, eminent domain,
governmental appropriation or any similar proceeding or action
(collectively, "Loss Events"), the risk of such Loss Events shall be borne
entirely by Parent and Purchaser. In addition, Parent and Purchaser
acknowledge and agree that they are assuming the sole risk of any and all
other loss or diminution in value to the Deferred Assets for whatsoever
reason (collectively, "Other Events"), and neither Parent nor Purchaser
shall be entitled to, or shall seek, any recourse or remedy against NGC,
the Company or its affiliates with respect to Loss Events or Other Events,
including, without limitation, rescission or any reduction in, or return
of, the Purchase Price, and each of Parent and Purchaser agrees that it
shall not institute any action or proceeding seeking any such recourse or
remedy against NGC, the Company, its affiliates or any of their respective
officers, directors, shareholders, employees, representatives or agents.
(e) Without limiting the generality of Section 6.3 hereof, Parent
shall indemnify, defend and hold harmless each of NGC, the Company, and
their respective affiliates, and each of their respective officers,
directors, shareholders, employees, representatives and agents
(collectively, the "Indemnified Parties") from and against any and all
claims, actions, proceedings, suits, demands, losses, taxes, penalties,
fines, costs, damages and expenses, including, without limitation,
reasonable attorneys' fees and expenses and costs of
-9-
<PAGE>
investigation, of whatsoever nature or kind, whether based on tort,
contract, strict liability or otherwise (including, without limitation,
claims with respect to personal injury, property damage, or breach of
contract by any of the Operators or environmental matters) (collectively,
"Losses"), and regardless of by whom asserted (including Losses arising out
of claims asserted by third parties or by Parent, Purchaser or their
affiliates or by the employees, representatives or agents of Parent,
Purchaser, the Company or their respective affiliates) arising out of,
relating to, or in connection with (i) an Indemnified Party's performance
or nonperformance under the Operating Agreements or its operation or
ownership of the Elsta project or the Kingston Project or the ownership of
the Hazelwood project or any other Deferred Asset during the Interim
Period, (ii) an Indemnified Party's performance or nonperformance under the
Development Agreements, (iii) Loss Events or Other Events, or (iv) without
limiting NGC's obligations under Section 1.8(b), the failure to obtain any
consents, approvals and waivers necessary to transfer the International
Assets and Businesses, except, with respect to clauses(i)-(iii)above only,
for any Losses attributable to such Indemnified Party's willful misconduct
in the performance of services thereunder, as finally and judicially
determined. Parent shall reimburse the Indemnified Parties for all expenses
(including, without limitation, reasonable attorneys' fees and expenses) as
they are incurred in connection with the investigation of, preparation for
or defense of any pending or threatened claim or any action or proceeding
arising therefrom, prior to the determination hereunder of such Indemnified
Party's right to indemnification hereunder, whether or not such Indemnified
Party is a party and whether or not such claim, action or proceeding is
initiated or brought by or on behalf of Parent, Purchaser or their
affiliates.
(f) Upon receipt of all Consents with respect to any Deferred Asset,
NGC shall cause the Company to transfer such Deferred Asset (and the
liabilities related thereto) to Parent or Purchaser, without recourse
except as to encumbrances in each case created by, through or under NGC,
the Company or their affiliates from and after the Closing. Any such
transfer shall to the extent possible be effective as of the Closing, and
arrangements will be made to transfer the net cash flow between the
Deferred Assets, on the one hand, and the Company and the Subsidiaries
(excluding the International Assets), on the other hand, attributable to
projects so transferred for the period from the date of Closing through the
date of transfer, to the extent they were not theretofore transferred.
-10-
<PAGE>
(g) THE PROVISIONS OF THIS SECTION 1.8 AND SECTION 6.3 SHALL APPLY
NOTWITHSTANDING THE SOLE, JOINT OR CONCURRENT NEGLIGENCE, GROSS NEGLIGENCE,
STRICT LIABILITY OR OTHER FAULT OF ANY INDEMNIFIED PARTY.
16. Section 3.4 of the Asset Purchase Agreement is amended by changing it
to Section 3.5.
17. The following provision is inserted in Article III of the Asset
Purchase Agreement:
Section 3.4 Merger. To NGC's knowledge, the Merger was consummated
without the amendment, modification or waiver of any representation,
warranty, condition, covenant or other term contained in the Merger
Agreement, which amendment, modification or waiver could reasonably be
expected to have a material adverse effect on the International Assets.
18. The first sentence of Section 6.2(a) of the Asset Purchase Agreement
is deleted in its entirety and the following is substituted in lieu thereof:
(a) For purposes of this Agreement, the term "International Employees"
means those employees of the Company and the Subsidiaries and those
consultants set forth in Schedule 6.2 of the Disclosure Schedule.
19. Section 6.3(b) of the Asset Purchase Agreement is deleted in its
entirety and the following is substituted in lieu thereof:
(b) Parent shall, and Parent shall cause the Purchaser to, jointly and
severally indemnify, defend and hold NGC, the Company and their affiliates
harmless against and in respect of (i) claims asserted by third parties
with respect to the Assumed Liabilities, (ii) all credit support
obligations, guarantees and contribution obligations relating to the
International Assets, including but not limited to those listed on Schedule
6.3(b) of the Disclosure Schedule with respect to which the Company and its
Subsidiaries have not been fully released by the Closing to the reasonable
satisfaction of NGC and (iii) all costs and expenses (including expenses of
investigation, settlement, negotiation and attorneys' fees) incurred by the
Company, NGC and their affiliates in connection with any action, suit,
proceeding, demand, claim, investigation, assessment or judgment incident
to any of the matters indemnified against in this Section 6.3(b).
20. Section 6.12(g) of the Asset Purchase Agreement is amended by adding
the following new sentence at the end thereof:
-11-
<PAGE>
With respect to any Tax Return relating to Transfer Taxes that Parent is
responsible for pursuant to Section 12(c), but which under applicable law
the Company or any of its Subsidiaries (other than the International
Entities) is responsible for filing, the Company or such Subsidiary, as the
case may be, shall not file any such Tax Return without the prior written
consent of Parent, which consent shall not be unreasonably withheld.
21. Article VI of the Asset Purchase Agreement is amended by inserting the
following provision:
6.14 Documents; Closing Agreements. Subject to Section 1.8, NGC
shall cause Company to deliver to Parent (to the extent not previously
provided) (x) all documents in its possession or in the possession of its
subsidiaries related to the International Assets and International
Businesses as soon as practicable after the Closing, but in no event later
than 45 days after the Closing Date, and (y)the Peru Files no later than 14
days after the Closing. Without limiting the generality of the foregoing,
NGC shall cause the Company to deliver all documents in its possession or
in the possession of any of its subsidiaries that are necessary to allow
Parent or any of its subsidiaries to transfer to ELSTA B.V. & Co., C.V.
("Elsta") within 30 days following the "Substantial Completion Date" with
respect to the Elsta project all material project documentation, including,
without limitation, all warranties, specifications, construction drawings,
piping, instrument and electrical drawings, purchase orders, stress
calculations, etc., directly relating to the Elsta project and as listed in
Appendix H to AES Business Plan for the Elsta project dated June 30, 1997.
On or before the Closing Date, NGC shall execute and deliver (or cause to
be executed and delivered) that certain Consulting Agreement between Destec
Operating Company, Terneuzen Operating Company, et al., Parent and the
Company shall execute and deliver that certain Secondment Agreement dated
as of June 26, 1997, and Parent and Destec Operating Company shall execute
and deliver the Indemnification and Agreement dated as of June 26, 1997.
20. Section 7.1 of the Asset Purchase Agreement is deleted in its entirety
and the following is substituted in lieu thereof:
Section 7.1 Conditions to Purchaser's Obligation to Purchase the
International Assets. The obligation of Purchaser to purchase the
International Assets hereunder shall be subject to the satisfaction or
waiver by Purchaser at or prior to the Effective Time of the following: (a)
the representations and warranties of NGC and the Company set forth in this
Agreement shall be true and correct (except in the case
-12-
<PAGE>
of any representation and warranty made as of a specified date, which need
only be true as of such date) as of the Effective Time as if such
representations and warranties were made on such date except for such
representations and warranties the failure of which to be true and correct
would not have a material adverse effect on the transactions contemplated
by this Agreement; (b) no representation, warranty, condition, covenant or
other term in the Merger Agreement relating to the International Assets
shall be amended, modified or waived, which amendment, modification or
waiver could reasonably be expected to have a material adverse effect on
the International Assets taken as a whole, without the prior written
consent of Parent or Purchaser; (c) the Merger shall have been consummated,
without waiver of any of the conditions contained in the Merger Agreement,
which waiver could reasonably be expected to have a material adverse effect
on the International Assets taken as a whole, without the written consent
of Parent or Purchaser.
22. Section 7.2 of the Asset Purchase Agreement is deleted in its entirety
and the following is substituted in lieu thereof:
Section 7.2 Conditions to NGC's Obligation to Sell the International
Assets. The obligation of NGC to sell the International Assets hereunder
shall be subject to the satisfaction or waiver by NGC at or prior to the
Effective Time of the following: (a) the Merger shall have been
consummated, (b) the representations and warranties of the Parent and
Purchaser set forth in this Agreement shall be true and correct (except in
the case of any representation and warranty made as of a specified date,
which need only be true as of such date) as of the Effective Time as if
such representations and warranties were made on such date except for such
representations and warranties the failure of which to be true and correct
would not have a material adverse effect on the transactions contemplated
by this Agreement and (c) Purchaser shall have complied with Section 1.6(b)
hereof.
23. The first paragraph of Section 8.1 of the Asset Purchase Agreement is
deleted in its entirety and the following is substituted in lieu thereof:
Section 8.1 Termination. Notwithstanding anything herein to the
contrary, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Effective
Time:
24. Full Force and Effect. As amended by this Amendment, the Asset
Purchase Agreement shall remain in full force and effect.
-13-
<PAGE>
25. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original but all of which shall
be considered one and the same instrument.
26. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to principles
of conflicts of law.
-14-
<PAGE>
IN WITNESS WHEREOF, Parent and NGC have caused this Amendment to be signed
by their respective officers thereunto duly authorized as of the date first
written above.
NGC CORPORATION
By: /s/ Kenneth E. Randolph
---------------------------
Name: Kenneth E. Randolph
Title: Senior Vice President
and General Counsel
THE AES CORPORATION
By: /s/ Barry J. Sharp
---------------------------
Name: Barry J. Sharp
Title: Vice President and Chief
Financial Officer
-15-
<PAGE>
Schedule 1.1 of Disclosure Schedule
-----------------------------------
(Part I-A)
I-A. International Entities -- Shares to be Conveyed
- ---- -----------------------------------------------
<TABLE>
<CAPTION>
Entity to be Transferred Transferor Transferee
- ------------------------ ---------- ----------
<S> <C> <C>
A. Elsta-related
Terneuzen Cogen B.V. European Power Holdings AES Global Power
B.V. ("EPH") Holdings B.V. ("Global
Power")
Terneuzen Operating EPH Global Power
Company B.V.
Elsta B.V. EPH (50% interest) Global Power
B. Hazelwood-related
Destec Australian Energy Piedmont (L.P.) Inc. AES Piedmont, Inc. ("AES
Finance Pty Ltd. Piedmont")
European Power Holdings Destec Energy, Inc. AES Piedmont
B.V. ("DEI") (80%); Destec
Australia Investments, Inc.
(20%)
C. Kingston-related
Destec Energy DEI Global Power
Canada, Inc.
Destec Constructors, Inc. DEI The AES Corporation
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Entity to be Transferred Transferor Transferee
- ------------------------ ---------- ----------
<S> <C> <C>
D. Los Mina-related
Destec Caribbean DEI AES Los Mina Holdings,
Holdings, Inc. Inc. ("AES Los Mina")
Destec Caribbean DEI AES Los Mina
Services, Inc.
Destec Cayman Islands DEI AES Los Mina
Holdings, Ltd.
Dominican Power DEI AES Los Mina
Metering Ltd.
E. Indian Queens-related
UK Energy Holdings DEI AES UK Holdings, Ltd.
Limited
F. Other
Demex, Inc. DEI AES
Demsa, Inc. DEI AES
Destec Colombia Ltd. DEI AES
Destec Energy (Asia) Pte. DEI AES
Ltd.
Destec Energy DEI AES
Mexico, Inc.
Destec Energy of DEI AES
Columbia, Inc.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Entity to be Transferred Transferor Transferee
- ------------------------ ---------- ----------
<S> <C> <C>
Destec Engineering Destec Holdings, Inc. Destec Engineering, Inc.
Kingston, Inc. (Cayman Islands company)
[TO BE ACQUIRED THROUGH A
MERGER TO OCCUR AS SOON
AS PRACTICABLE AFTER THE
CLOSING DATE.]
Destec Engineering, Inc. Destec Holdings, Inc. AES
(Cayman Islands company)
Destec Europe, S.A. DEI AES
Destec FSC Corporation Destec Engineering, Inc. AES
(Texas corporation)
Destec International DEI AES
Holdings, Inc.
Destec Latin America, Inc. DEI AES
Destec Miskolc, Inc. DEI AES
Destec Operadora S.A. DEI AES
Destec Santander Ltd. DEI AES
Destec Taiwan, Inc. DEI AES
Electrica Norperu S.R. DEI AES
Ltda.
Hispaniola Power DEI AES
Ventures, Ltd.
</TABLE>
3
<PAGE>
Schedule 1.1 of Disclosure Schedule
-----------------------------------
(Part I-B)
I-B. International Entities -- Companies to be Transferred (Directly and
- ---- -------------------------------------------------------------------
Indirectly)
- -----------
<TABLE>
<CAPTION>
Current Destec Ownership
Entity Jurisdiction Interest
------ ------------ ------------------------
<S> <C> <C>
A. Elsta-related
TERNEUZEN COGEN B.V. Amsterdam, The 100% owned by EPH (see
Netherlands I.A. above)
TERNEUZEN OPERATING Amsterdam, The 100% owned by EPH
COMPANY B.V. Netherlands
ELSTA B.V. Netherlands limited 50% owned by EPH
liability company
Elsta B.V. & Co. C.V. Netherlands limited 49.5% limited partner
liability company interest held by Terneuzen
Cogen B.V., & 1% general
partner interest held by
Elsta B.V.
B. Hazelwood-related
DESTEC AUSTRALIAN Victoria, Australia 100% owned by Piedmont
ENERGY FINANCE PTY LTD. (L.P.) Inc.
("DAEFPL")
Hazelwood Finance Victoria, Australia 12.55% limited partnership
Limited Partnership interest held by DAEFPL
("HFLP")
Morwell Financial Victoria, Australia 100% owned by HFLP
Services Pty Ltd.
Gippsland Ventures Pty. Victoria, Australia 100% owned by HFLP
Ltd.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction Current Destec Ownership
Entity ------------ Interest
------ ------------------------
<S> <C> <C>
EUROPEAN POWER Amsterdam, The 80% owned by DEI & 20%
HOLDINGS B.V. Netherlands owned by Destec
Australian
Investments, Inc.
Australian Power Amsterdam, The 100% owned by EPH
Holdings B.V. ("APH") Netherlands
Australian Power Partners Amsterdam, The 0.5% general partner
B.V. ("APP") Netherlands interest held by APH &
99.5% limited partner
interest held by EPH
Hazelwood Power Victoria, Australia 20% partnership interest
Partnership ("HPP") held by APP
Hazelwood Power Victoria, Australia 100% owned by HPP
Corporation Limited
C. Kingston-related
DESTEC ENERGY Ontario, Canada 100% owned by DEI
CANADA, INC. ("DEC")
DESTEC CONSTRUCTORS, Delaware 100% owned by DEI
INC.
Kingston Northern Ontario, Canada 100% owned by DEC
Lights, Inc. ("KNLI")
Kingston Power Ontario, Canada 100% owned by DEC
Partners, Inc. ("KPPI")
Kingston Cogen Limited Ontario limited partnership 37% general partner
Partnership interest and 0.5% limited
partner interest held by
KNLI & 12.5% general
partner interest held by
KPPI
</TABLE>
[BOLD=International Entities of which the stock is to be conveyed -- See
Schedule 1.1, Part I-A]
5
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction Current Destec Ownership
Entity ------------ Interest
------ ------------------------
<S> <C> <C>
Destec Operating Ontario, Canada 100% owned by DEC
Canada, Inc.
D. Los Mina-related
DESTEC CARIBBEAN Delaware 100% owned by DEI
HOLDINGS, INC.
("DCHI")
DESTEC CARIBBEAN Delaware 100% owned by DEI
SERVICES, INC. ("DCSI")
DESTEC CAYMAN ISLANDS Cayman Islands 100% owned by DEI
HOLDINGS, LTD.
("DCIHL")
DOMINICAN POWER Cayman Islands 100% owned by DEI
METERING LTD.
D.O.C. Dominicana, S.A. Dominican Republic 99.4% owned by DCHI
Dominican Power Cayman Islands 99% owned by DCIHL
Partners LDC
E. Indian Queens-related
UK ENERGY HOLDINGS England 100% owned by DEI
LIMITED ("UKEHL")
Indian Queens Power England 100% owned by UKEHL
Limited
UK Asset Management England 100% owned by UKEHL
Services Ltd.
UK Power Finance Ltd. England 100% owned by UKEHL
</TABLE>
[BOLD=International Entities of which the stock is to be conveyed -- See
Schedule 1.1, Part I-A]
6
<PAGE>
<TABLE>
<CAPTION>
Current Destec Ownership
Entity Jurisdiction Interest
------ ------------ ------------------------
<S> <C> <C>
F. Other
Chiahui Power Corp. Taiwan 30% owned by Destec
Taiwan, Inc.
DEMEX, INC. Delaware 100% owned by DEI
DEMSA, INC. Delaware 100% owned by DEI
DESTEC COLOMBIA LTD. Cayman Islands 100% owned by DEI
Destec Energia de Mexico Mexico 50% owned by Demsa, Inc.
S.A. de CV & 50% owned by
Demex, Inc.
DESTEC ENERGY (ASIA) Singapore 100% owned by DEI
PTE. LTD.
DESTEC ENERGY Delaware 100% owned by DEI
MEXICO, INC.
DESTEC ENERGY OF Delaware 100% owned by DEI
COLUMBIA, INC.
DESTEC ENGINEERING, INC. Cayman Islands 100% owned by Destec
Holdings, Inc.
DESTEC ENGINEERING Texas 100% owned by Destec
KINGSTON, INC. Holdings, Inc.
DESTEC EUROPE, S.A. France 100% owned by DEI
DESTEC FSC CORPORATION Barbados 100% owned by Destec
Engineering, Inc.
(Texas corporation)
DESTEC INTERNATIONAL Delaware 100% owned by DEI
HOLDINGS, INC.
Destec Investment Ltd. Cayman Islands 100% owned by Destec
Cayman Islands Holdings
Ltd.
</TABLE>
[BOLD=International Entities of which the stock is to be conveyed -- See
Schedule 1.1, Part I-A]
7
<PAGE>
<TABLE>
<CAPTION>
Current Destec Ownership
Entity Jurisdiction Interest
------ ------------ ------------------------
<S> <C> <C>
DESTEC LATIN Delaware 100% owned by DEI
AMERICA, INC.
DESTEC MISKOLC, INC. Delaware 100% owned by DEI
DESTEC OPERADORA S.A. Peru 99.9% owned by DEI;
0.1% owned nominally by
local attorneys
DESTEC SANTANDER LTD. Cayman Islands 100% owned by DEI
DESTEC TAIWAN, INC. Delaware 100% owned by DEI
Destec Termoriente Cayman Islands 1% owned by Destec
L.D.C. Columbia Ltd. & 99%
owned by Destec
Santander Ltd.
DOC Guatemala, S.A. Guatemala 99.8% owned by DCHI &
0.2% owned by DCSI
ELECTRICA NORPERU S.R. Peru 99% owned by DEI; 1%
LTDA. owned nominally by local
attorneys
HISPANIOLA POWER Cayman Islands 100% owned by DEI
VENTURES, LTD.
</TABLE>
[BOLD=International Entities of which the stock is to be conveyed -- See
Schedule 1.1, Part I-A]
8
<PAGE>
Schedule 1.1 of Disclosure Schedule
-----------------------------------
(Part II)
II. Projects and Projects Under Development Outside of the United States.
--------------------------------------------------------------------
A. All right, title, and interest of Destec Energy, Inc. and its
Subsidiaries in and to the following projects and projects in
development outside of the United States:
1. Advance Energy 350 MW CCGT (Australia)
2. Cebu 260 MW Coal (Philippines)
3. Chiahui 450-670 MW CCGT (Taiwan)
4. Austa Repowering 350 MW CCGT (Australia)
5. Kingstream 350 MW CCGT (Australia)
6. Gujarat Power 1000 MW Coal (India)
7. Gujarat Power 600 MW CCGT (India)
8. ESTA Repowering 360 MW CCGT (Australia)
9. Balmoral 170 MW CCGT (Australia)
10. Mineralogy/Austeel 200-600 MW CCGT (Australia)
11. Dow Western Australia 200-600 MW CCGT (Australia)
12. HEQU 2 x 300 MW Coal (China)
13. Lien Yuen 2 x 125 MW Coal (China)
14. Zuen Hua 2 x 50 MW Coal (China)
15. Wuan 2 x 50 MW Coal (China)
16. Chashu 2 x 300 MW Coal (China)
17. Adapazari #1322 740 MW CCGT (Turkey)
18. Rades 350-500 MW CCGT (Tunisia)
19. Dow Stade 675 MW CCGT (Germany)
20. Abidjan 300-450 MW CCGT (Cote d'Ivorie)
21. Office Cherifien de 150 MW Cogen Coal (Morocco)
Phosphates
22. Barqa #1344 350 MW CCGT (Oman)
23. General (South Africa)
24. PBB Cogen (Dow-YPF-Solvay) 160 MW (Argentina)
25. Dow Aratu (Candeias, Bahia) 110 MW (Brazil)
26. Merida III 440 MW (Mexico)
27. Monterrey 300 MW (Mexico)
28. Cuiba 450 MW (Brazil)
29. Macae Plant 150 MW (Brazil)
30. Termosantander 100 MW (Colombia)
31. Compressed Air Energy Storage (England)
32. Tangshan Harbor (China)
33. BIN County, Shanxi (China)
9
<PAGE>
34. PUQI (China)
35. WUHUAN (China)
36. New Saga Power Corporation (Phillippines)
37. Any other projects and projects under development outside of the
United States in which Destec Energy, Inc. or any of its
Subsidiaries has any right, title, or interest (other than Excluded
Projects).
10
<PAGE>
B. All right, title, and interest of Destec Energy, Inc. and its Subsidiaries
in and to the following contracts and other agreements related to projects
under development outside of the United States:
1. ASIA
a. Office Lease, dated 11/23/95, between Everbilt Developers Pte. Ltd. and
Destec Energy (Asia) Pte. Ltd. (for office space at 04-04 Lane Crawford
Place, Singapore).
b. Loan Agreement, dated 5/13/96, between Destec Taiwan, Inc. and Chiahui
Power Corp.
c. Promissory Note, dated 6/5/96, in the amount of $664,084 by Chiahui
Power Corp. payable to Destec Taiwan, Inc.
d. Joint Development Agreement, dated 2/16/96, between Destec Taiwan, Inc.
and Sunford Management Consultants, Inc.
e. Memorandum of Understanding ("MOU"), dated 3/7/96, among Destec Energy
(Asia) Pte. Ltd., Luvimin Cebu Mining Corp., and VALCO Piping Service,
Inc.
f. MOU, dated 3/7/96, between Destec Energy (Asia) Pte. Ltd. and Luvimin
Cebu Mining Corp.
g. Local Area Network (LAN) Support Services Agreement, dated 1/1/96,
between Destec Energy (Asia) Pte. Ltd. and Omnes Ltd.
h. Development Services Agreement, dated 4/1/95, between Destec Energy
(Asia) Pte. Ltd. and Destec Energy, Inc.
i. MOU, dated 4/15/96, among Austeel Pty. Ltd., Asia Pacific Power
Pty. Ltd., and Destec Energy (Asia) Pte. Ltd.
j. MOU, dated 11/21/96, between Destec Energy (Asia) Pte. Ltd. and
Asia Pacific Power Pty. Ltd.
k. Independent Contractor Agreement, dated 5/1/95, between Vimokas
Consultants and Engineers Prt. Ltd. and Destec Energy (Asia) Pte. Ltd.
l. Independent Contractor Agreement, dated 6/1/95, between J. Iqbal,
Consultant, and Destec Energy (Asia) Pte. Ltd.
11
<PAGE>
m. Independent Contractor Agreement, dated 5/1/96, between Shazil
International Consulting Engineers and Destec Energy (Asia) Pte. Ltd.
n. Consulting Agreement, dated 9/1/96, between Nortech Services Pty. Ltd.
and Destec Energy (Asia) Pte. Ltd.
o. Letter of Intent ("LOI"), dated 6/16/95 between Dirati Inc. and Destec
Energy (Asia) Pte. Ltd. regarding power project in Maharashtra, India.
p. Lease Agreement, dated 3/17/95, between Servcorp Services Offices
Private Limited and Destec Energy (Asia) Pte. Ltd. for #3, 37 Shell
Tower, 50 Raffles Place, Singapore 0104.
q. Lease Agreement, dated 6/2/95, between Pontiac Land Private Ltd. and
Destec Energy (Asia) Pte. Ltd. (for #19-02, 82 Grange Road, Singapore
1024).
r. Tenancy Agreement, dated 2/10/95, between MDM Shindrayani and Destec
Energy (Asia) Pte. Ltd. (for 18 Angullia Park #07-04, Angullia Mansion,
Singapore).
s. Tenancy Agreement, dated 11/21/95, between MP-Bilt Pte. Ltd. and Destec
Energy (Asia) Pte. Ltd. (for #05-08 Langkawij Ardmore Park, Singapore).
t. MOU, dated 3/22/95, between Destec Energy (Asia) Pte. Ltd. and Sunford
Management Consulting Co.
u. Joint Development Agreement, dated as of 12/94, between Destec Energy
(Asia) Pte. Ltd. and SAAMIA Development Company, Inc.
v. MOU, dated 11/96, between Destec Energy, Inc. and Shanxi Planning
Commission (HEQU Project).
w. MOU, dated 10/96, between Destec Energy, Inc. and Hebei Provincial
Government (WUAN Project).
x. MOU, dated 11/1/96, between Destec Energy, Inc. and Hebei Provincial
Government (ZUENHUUA Project).
y. MOU, dated 11/96, between Destec Energy, Inc. and City of Lianyuan
(LIANYUAN Project).
12
<PAGE>
z. MOU, dated 11/96, between Destec Energy, Inc. and Anhui Provincial
Government (CHAOHU Project).
aa. MOU, dated 12/96, between Destec Energy, Inc. and Shanxi Provincial
Government (LIULIN Project).
bb. Confidentiality Agreement between Fellows Engineers and Destec Energy,
Inc. regarding the Wellgrow Industrial Estate project in Bangkok,
Thailand.
cc. Confidentiality Agreement between Fellows Engineers and Destec Energy,
Inc. regarding the Natural Gas Cogeneration Plant in Bangkok, Thailand.
dd. Confidentiality Agreement between State Investment and Destec Energy,
Inc. regarding the State Investment Trust project in Mindanao,
Phillippines.
2. LATIN AMERICA
a. LOI, dated 12/9/96, between Total Power International S.A. and Destec
Energy, Inc. (DEI assigned its interest therein to Destec Latin America,
Inc. by letter dated 3/6/97.)
b. Joint Development Agreement, dated 3/7/96, among Progelec, Essa, and
Destec Energy of Colombia, Inc.
3. OTHER
a. Pakistan
i. Independent Contractor Agreement, dated effective 5/1/96, between
Shazil International Consulting Engineers and Destec Energy (Asia)
Pte. Ltd.
b. South Africa
i. Independent Contractor Agreement, dated effective 3/1/96, between HSA
and Destec Europe S.A. (as amended)
c. Oman
i. MOU, dated effective 11/1/95, among Destec Energy, Inc., John Brown
Engineering, Sasakura, and Sumitomo.
13
<PAGE>
d. Sulcis
i. Indemnification Agreement, dated 7/26/96, among Destec Energy, Inc.,
Ansaldo Energia S.p.A., and Sondel.
ii. MOU, dated 12/14/95, among Destec Energy, Inc., Ansaldo Energia
S.p.A., Sondel, Techint, and Montan.
iii. Contract of Temporary Association of Companies, dated 12/15/95,
between Destec Energy, Inc. and Ansaldo.
iv. Amended and Restated MOU, dated 9/17/95 among Destec Energy, Inc.,
Ansaldo Energia S.p.A., and Constad States Energy Co.
v. Concession Contract, dated 9/18/96, between the Coordination
Committee and Ansaldo Energia S.p.A., as group leader and proxy
holder for the Temporary Association of Companies.
vi. Agreement (undated) regarding indemnification of Destec Energy, Inc.
among Destec Energy, Ansaldo Energia S.p.A., Sondel, Techint, and
Montan.
e. Arco project (The Netherlands)
i. MOU, dated 11/15/95, between Destec Energy, Inc. and B.V. Energie-
Zuid Nederland EZN.
f. APP Australia
i. MOU between Destec Energy (Asia) Pte. Ltd. and Asia Pacific Power Pty
Ltd.
g. Consulting Agreement -- United Kingdom
i. Independent Contractor Agreement, dated 1/1/97, between CSE Wendover
Ltd. and Destec Europe S.A.
h. Tunisia
i. MOU dated 6/12/96, among Destec Energy, Inc., SNC Lavalin Inc., Elyo
S.A., and GE International, Inc.
14
<PAGE>
i. Cote d'Ivoire
i. MOU, dated 7/22/96, among Destec Energy, Inc., SNC Lavalin Inc., Elyo
S.A., and GE International, Inc.
ii. Termination Agreement, dated 4/22/97, among Destec Energy, Inc., SNC
Lavalin Inc., Elyo S.A., and GE International, Inc.
j. Turkey
i. Asset Purchase Agreement, dated 7/31/95 between Destec Energy, Inc.
and Trinity Partners (as amended).
ii. Amended and Restated MOU, dated 9/11/95, among Destec Energy, Inc.,
Mobil Power Inc., and Trinity Partners.
iii. Asset Purchase Agreement, dated 1/2/96, among Destec Energy, Inc.,
Mobil Power Inc., and Trinity Partners (as amended).
iv. MOU, dated 7/1/96, among Destec Energy, Inc., Mobil Power Inc.,
Trinity Partners, and Genel Enerji A.S.
v. Asset Purchase Agreement, dated 7/30/96, among Destec Energy, Inc.,
Mobil Power Inc., and Trinity Partners (as amended).
vi. Indemnification Agreement, dated February 27, 1997, between Destec
Energy, Inc. and Mobil Power Inc.
vii. Agreement, dated 2/27/97, among Destec Energy, Inc., Mobil Power
Inc., GE International, Inc., and Genel Enerji A.S.
viii. Letter Agreement, dated 7/11/96, between Mobil Power Inc. and Destec
Energy, Inc. regarding terms of Letter of Credit/Bid Bond.
ix. MOU, dated 5/11/95, between Destec Energy, Inc. and Trinity Partners.
k. Stade, Germany
i. MOU, dated 1/29/97, between Destec Energy, Inc. and Dow Deutschland
Inc.
15
<PAGE>
l. United Kingdom
i. Letter Agreement for Cooperation on United Kingdom Compressed Air
Energy Storage Projects, dated 11/3/95, between Destec Energy, Inc.
and Westinghouse Electric Corp.
m. Italy
i. MOU, dated 11/11/94, between Destec Energy, Inc. and WTI
International Energy, Inc. detailing terms of joint bid to
acquire controlling stake and minority stake in Ilva Servizi
Energie SRI ("ISE") and for the joint management of ISE projects
at the Tarantio, Piombino, and Terni steel mills.
n. Destec
i. Employee Services Agreement dated 2/15/94, between Destec Europe
S.A. and Destec Energy, Inc.
ii. Development Services Agreement dated 2/15/94, between Destec
Europe S.A. and Destec Energy, Inc.
o. Any other written contracts or agreements in which Destec Energy,
Inc. or any of its Subsidiaries has right, title, or interest
relating to projects and projects in development outside of the
United States (other than Excluded Projects and to the Tenancy
Agreement dated 12/26/95 between Tobyn Pte Ltd. and Destec Energy
(Asia) Pte Ltd. (for 61 Grange Road #22-03, Beverly Hills,
Singapore)).
16
<PAGE>
Schedule 1.1 of Disclosure Schedule
-----------------------------------
(Part III)
III. Contracts and Other Agreements Relating to the Projects
-------------------------------------------------------
A. All right, title, and interest of the International Entities in and to
all contracts and other agreements listed in the following Sections of
the Destec Energy, Inc. Data Room Master Index: (i) Section V.B.1.c
Indian Queens; (ii) Section V.B.1.d. Los Mina; (iii) Section V.B.2.i.
Elsta; (iv) Section V.B.2.k. Hazelwood; (v) Section V.B.2.n. Kingston;
and any other written contracts and agreements relating to any of the
foregoing projects entered into by any of the International Entities
prior to the Closing Date.
B. All right, title, and interest of Destec Energy, Inc. and its
Subsidiaries (other than the International Entitities) in and to the
following contracts and agreements:
1. Hazelwood:
---------
1.1 Guarantee Agreement, dated 8/2/96, among Destec Energy,
Inc., National Power Australia Investments Limited,
Hazelwood Pacific Pty Ltd. CV and CISL (Hazelwood) Pty Ltd.
1.2 Share Sale Agreement, dated 8/4/96, among State Electricity
Commission of Victoria, Destec Energy, Inc., et al.
1.3 Deed of Covenant per clause 5.4(f) of Share Sale Agreement,
dated 9/13/96, between Destec Energy, Inc. and the State of
Victoria
1.4 Guarantee & Indemnity, dated 9/13/96, among Destec Energy,
Inc., Hazelwood Pacific Pty Ltd., et al.
1.5 Loan Agreement, dated 6/25/97, between Destec Energy, Inc.
and European Power Holdings, B.V. [TO BE ASSIGNED TO AES
PIEDMONT II, INC.]
1.6 Agreement Date Advanced Note, dated 6/25/97, by European
Power Holdings, B.V. to Destec Energy, Inc. (as of 6/30/97
outstanding principal (acquisition): A$184,300,000;
outstanding principal (capex and capitalized interest):
A$20,486,841; accrued interest: A$34,433,000) [TO BE
ASSIGNED TO AES PIEDMONT II, INC.]
17
<PAGE>
1.7 Agreement Date Unadvanced Note, dated 6/25/97, by European
Power Holdings, B.V. to Destec Energy, Inc. [TO BE ASSIGNED
TO AES PIEDMONT II, INC.]
1.8 Any other notes, debt, dividend receivables, or any other
receivables from any of the International Entities relating
to the Hazelwood Project payable to Destec or any other
affiliate (other than the International Entities)
1.9 Any escrow agreements, bank accounts, cash, or other
security or assets pledged in connection with any of the
International Entities relating to the Hazelwood project
1.10 Any other contracts and agreements in which Destec Energy,
Inc. or any of its Subsidiaries has rights, title, or
interest relating to the Hazelwood Project
2. Indian Queens:
-------------
2.1 Equity Contribution Agreement, dated 8/27/96, among Indian
Queens Power Limited, UK Energy Holdings Limited, Destec
Energy, Inc. and Barclays Bank PLC
2.2 Intercreditor Agreement, dated 8/27/96, among Indian Queens
Power Limited, UK Energy Holdings Limited, Destec Energy,
Inc. and Barclays Bank PLC and BLAF (No. 3) Limited
2.3 Engineering and Services Agreement, dated 6/30/94, between
Indian Queens Power Limited and Destec Engineering, Inc.
[TO BE ASSIGNED TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]
2.4 Funding Agreement dated 8/7/96 between Destec Energy, Inc.
and UK Energy Holdings Limited (as of 6/30/97 -- outstanding
principal: US$15,683,607; accrued interest: US$2,909,405)
[TO BE ASSIGNED TO AES GLOBAL POWER HOLDINGS B.V.]
2.5 Any other notes, debt, dividend receivables, or any other
receivables from any of the International Entities relating
to the Indian Queens project payable to Destec or any other
affiliate (other than the International Entities)
2.6 Any escrow agreements, bank accounts, cash, or other
security or assets pledged in connection with any of the
International Entities
18
<PAGE>
relating to the Indian Queens project, including without
limitation any cash or other security pledged to
collateralize the Destec-provided LOC or the related equity
contribution obligation relating to Indian Queens
2.7 Any other contracts and agreements in which Destec Energy,
Inc. or any of its Subsidiaries has rights, title, or
interest relating to the Indian Queens project
3. Kingston:
--------
3.1 Letter Agreement, dated 10/13/95, among Kingston CoGen
Limited Partnership, The Bank of Nova Scotia, Credit Suisse
Canada and Destec Energy, Inc.
3.2 Letter Agreement, dated 3/1/96, between Kingston CoGen
Limited Partnership and Destec Energy, Inc.
3.3 Equity Guaranty, dated 6/30/95, executed by Destec Energy,
Inc. for the benefit of The Bank of Nova Scotia, as
Administrative Agent (re: Equity Contribution Agreement
executed by Kingston Northern Lights, Inc.)
3.4 Amended & Restated Equity Guaranty, dated 12/29/95, executed
by Destec Energy, Inc. for the benefit of The Bank of Nova
Scotia, as Administrative Agent (re: Amended and Restated
Equity Contribution Agreement executed by Kingston Northern
Lights, Inc.)
3.5 EPC Guaranty, dated 6/30/95, between Destec Energy, Inc. and
The Bank of Nova Scotia
3.6 Contingent Equity Reimbursement Guaranty, dated 2/29/95,
between Destec Energy, Inc. and Pacific Kingston Energy,
Inc.
3.7 Engineering and Procurement Agreement dated March 28, 1995
between Kingston CoGen Limited Partnership and Destec
Engineering, Inc., as amended by Amendment No. 1 to
Engineering and Procurement Agreement (June 26, 1995) and
Amendment No. 2 to Engineering and Procurement Agreement
(June 29, 1995), and as amended by various Change Orders
[TO BE ASSIGNED TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]
19
<PAGE>
3.8 Consent and Agreement dated June 30, 1995 executed by Destec
Engineering, Inc. and Kingston CoGen Limited Partnership in
favor of The Bank of Nova Scotia as Administrative Agent
[TO BE ASSIGNED TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]
3.9 Letter dated June 29, 1995 from General Electric Company to
The Bank of Nova Scotia as Administrative Agent, accepted
and agreed to by Destec Engineering, Inc. [TO BE ASSIGNED
TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)]
3.10 Letter Agreement dated January 23, 1997 from Destec
Engineering, Inc. and Destec Constructors, Inc., and
accepted and agreed to by Kingston CoGen Limited
Partnership on January 31, 1997 (re: Substantial
Completion) [TO BE ASSIGNED TO DESTEC ENGINEERING, INC.
(CAYMAN ISLANDS COMPANY)]
3.11 Engineering, Procurement and Construction Agreement dated
May 5, 1995 between Destec Engineering, Inc. and Destec
Constructors, Inc., on the one hand, and J.A. Jones
Construction Company and Jones Power Company, Ltd., on the
other hand, as amended from time to time [TO BE ASSIGNED TO
DESTEC ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)]
3.12 Major Subcontractor Consent and Agreement dated June 30,
1995, executed by J.A. Jones Construction Company, Jones
Power Company, Ltd., Destec Constructors, Inc., Destec
Engineering, Inc. and Kingston CoGen Limited Partnership,
in favor of The Bank of Nova Scotia as Administrative Agent
[TO BE ASSIGNED TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]
3.13 Letter of Credit in favor of Destec Engineering, Inc.
issued August 21, 1995 by Royal Bank of Canada in the
original amount of $59,552.00 (ICMS Reference LCD00001) [TO
BE ASSIGNED TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]
3.14 Letter of Credit in favor of Destec Engineering, Inc.
issued September 26, 1995 by Boatmans in the original
amount of $2,938.00 (ICMS Reference LCD00002) [TO BE
ASSIGNED TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]
3.15 Letter of Credit in favor of Destec Engineering, Inc.
issued September 20, 1995 by Core States Bank in the
original amount of $1,373.80
20
<PAGE>
(ICMS Reference LCD00004) [TO
BE ASSIGNED TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]
3.16 Letter of Credit in favor of Destec Engineering, Inc.
issued October 23, 1995 by Bank One in the original amount
of $9,600.00 (ICMS Reference LCD00005) [TO BE ASSIGNED TO
DESTEC ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)]
3.17 Letter of Credit in favor of Destec Engineering, Inc.
issued September 22, 1995 by Chubb Insurance Company of
Canada in the original amount of $69,742.00 (ICMS Reference
LCD00006) [TO BE ASSIGNED TO DESTEC ENGINEERING, INC.
(CAYMAN ISLANDS COMPANY)]
3.18 Letter of Credit in favor of Destec Engineering, Inc.
issued November 22, 1995 by PNC Bank in the original amount
of $6,801.10 (ICMS Reference LCD00007) [TO BE ASSIGNED TO
DESTEC ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)]
3.19 Letter of Credit in favor of Destec Engineering, Inc.
issued November 22, 1995 by PNC Bank in the original amount
of $28,336.80 (ICMS Reference LCD00008) [TO BE ASSIGNED TO
DESTEC ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)]
3.20 Letter of Credit in favor of Destec Engineering, Inc.
issued December 24, 1996 by BNS in the original amount of
$12,565.90 (ICMS Reference LCD00009) [TO BE ASSIGNED TO
DESTEC ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)]
3.21 Letter of Credit in favor of Destec Engineering, Inc.
issued December 7, 1995 by BNP Canada in the original
amount of $2,470.40 (ICMS Reference LCD00010) [TO BE
ASSIGNED TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]
3.22 Letter of Credit in favor of Destec Engineering, Inc.
issued November 30, 1995 by Northern Indemnity in the
original amount of $140,966.20 (ICMS Reference LCD00011)
[TO BE ASSIGNED TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]
3.23 Letter of Credit in favor of Destec Engineering, Inc.
issued April 10, 1996 by Bank of Nova Scotia in the
original amount of $87,926.97 (ICMS Reference LCD00012) [TO
BE ASSIGNED TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]
21
<PAGE>
3.24 Letter of Credit in favor of Destec Engineering, Inc.
issued November 9, 1995 by Whitney in the original amount
of $15,336.00 (ICMS Reference LCD00013) [TO BE ASSIGNED TO
DESTEC ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)]
3.25 Letter of Credit in favor of Destec Engineering, Inc.
issued November 9, 1995 by Commerzbank in the original
amount of $104,427.00 (ICMS Reference LCD00014) [TO BE
ASSIGNED TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]
3.26 Letter of Credit in favor of Destec Engineering, Inc.
issued July 19, 1996 by Toronto Dominion in the original
amount of $24,735.00 (ICMS Reference LCD00016) [TO BE
ASSIGNED TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]
3.27 Letter of Credit in favor of Destec Engineering, Inc.
issued October 8, 1996 by Citibank in the original amount
of $738,153.00 (ICMS Reference LCD00017) [TO BE ASSIGNED TO
DESTEC ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)]
3.28 Purchase Agreement, dated 12/29/95, among Destec Energy
Inc., Kingston Power Partners, Inc., Pacific Kingston, Inc.
and Pacific Generation Company
3.29 First Amended and Restated Side Agreement #2, dated
2/23/95, among PanCanadian Petroleum Limited, Destec
Energy, Inc., Kingston Northern Lights, Inc., Kingston
Power Partners, Inc., and PCP (KLP) Cogeneration Ltd.
3.30 Settlement Agreement, dated 5/6/94, among Ontario Hydro,
Kingston CoGen Limited Partnership, and Destec Energy, Inc.
3.31 Release Agreement, dated 5/6/94, among Ontario Hydro,
Kingston CoGen Limited Partnership, and Destec Energy, Inc.
3.32 Each purchase order or other document listed in Attachment
A to this Schedule 1.1 [TO BE ASSIGNED TO DESTEC
ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)]
3.33 Any notes, debt, dividend receivables, or any other
receivables from any of the International Entities relating
to the Kingston project payable to Destec or any other
affiliate (other than the International Entities)
22
<PAGE>
3.34 Any escrow agreements, bank accounts, cash, or other
security or assets pledged in connection with any of the
International Entities relating to the Kingston project
3.35 Any other contracts and agreements in which Destec Energy,
Inc. or any of its Subsidiaries has rights, title, or
interest relating to the Kingston project
4. Elsta
-----
4.1 Restated Joint Development Agreement, dated 2/28/94, among
Dow Benelux NV, Destec Energy, Inc., et al.
4.2 Guaranty Agreement, dated 2/26/96, between Destec Operating
Company and Elsta B.V. & Co. C.V.
4.3 Engineering Services Agreement, dated 6/1/94 and as
amended, between Elsta B.V. & Co. C.V. and Destec
Engineering, Inc. [TO BE ASSIGNED TO DESTEC ENGINEERING,
INC. (CAYMAN ISLANDS COMPANY)]
4.4 Guaranty Agreement, dated 2/28/96, between Destec Energy,
Inc. and Elsta B.V. & Co. C.V.
4.5 Project Memorandum, dated 11/15/94, between Destec
Engineering, Inc. and Dow Engineering Company [TO BE
ASSIGNED TO DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]
4.6 Facility Management Services Agreement, dated 2/28/96,
between Elsta B.V. and Destec Management Services, Inc. [TO
BE ASSIGNED TO AES TERNEUZEN MANAGEMENT SERVICES B.V.]
4.7 Restated & Amended Testing Services Agreement, dated
6/4/96, between KEMA Nederland, B.V. and Elsta B.V. & Co.
C.V., and joined in by Destec Engineering, Inc. and
Terneuzen Operating Co. [TO BE ASSIGNED TO DESTEC
ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)]
4.8 Consultant Services Agreements, dated 9/15/93, between
Destec Energy, Inc. and each of N.V. Kema, B.V. DGMR, and
Tauw Infra Consult B.V.
23
<PAGE>
4.9 Joint Development Agreement Termination & Restated Joint
Development Agreement, dated 11/8/95, among Dow Benelux
N.V., Destec Energy, Inc. et al.
4.10 Side Agreement, regarding Electricity Sale Agreement &
Steam & Electric Power Sales Agreement, dated _________,
among Destec Energy, Inc., Dow Benelux N.V. and N.V.
Provinciale Noordbrabantse Energie Maatschappij
4.11 Supplemental Agreement, dated 12/19/95, by and among
Shareholders and Partners of Elsta V.B. and Elsta E.V. &
Co. C.V. [TO BE ASSIGNED TO AES GLOBAL POWER HOLDINGS B.V.]
4.12 Any notes, debts, dividend receivables, or any other
receivables from any of the International Entities relating
to the Elsta project payable to Destec or any other
affiliate (other than the International Entities)
4.13 Any escrow agreements, bank accounts, cash, or other
security or assets pledged in connection with any of the
International Entities relating to the Elsta project
4.14 Any other contracts and agreements in which Destec Energy,
Inc. or any of its Subsidiaries has rights, title or
interest relating to the Elsta project
5. Los Mina
--------
5.1 Amended and Restated Loan Agreement dated 6/25/97, between
Destec Energy, Inc. and Dominican Power Partners LDC (as of
6/30/97--outstanding principal: US$72,588,157; accrued
interest: US$2,898,743 [TO BE ASSIGNED TO AES LOS MINA
HOLDINGS, INC.]
5.2 Replacement Repayment Obligation Note dated 6/25/97, by
Dominican Power Partners LDC to Destec Energy, Inc. [TO BE
ASSIGNED TO AES LOS MINA HOLDINGS, INC.]
5.3 Contractual right of Destec Energy, Inc. to purchase the 1%
interest in Dominican Power Partners LDC not currently held
by Destec Cayman Islands Holdings, Ltd. and/or to purchase
the stock of Turbine Energy, Inc. [TO BE ASSIGNED TO AES
LOS MINA HOLDINGS, INC.]
24
<PAGE>
5.4 Any other notes, debts, dividend receivables, or any other
receivables from any of the International Entities relating
to the Los Mina project payable to Destec or any other
affiliate (other than the International Entities)
5.5 Any escrow agreements, bank accounts, cash, or other
security or assets pledged in connection with any of the
International Entities relating to the Los Mina project
5.6 Any other contracts and agreements in which Destec Energy,
Inc. or any of its Subsidiaries has rights, title, or
interest relating to the Los Mina project
6. Other
-----
6.1 Any and all confidentiality or similar agreements the
Company or its Subsidiaries have with any third party to
the extent that such agreement relates to the International
Assets
6.2 Any bank accounts of Destec Engineering, Inc. relating to
the International Assets [TO BE ASSIGNED TO DESTEC
ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)]
6.3 Non-exclusive, royalty-free licenses to any intellectual
property rights of Destec Energy, Inc. and its Subsidiaries
necessary to own, construct, operate, or maintain the
International Assets in the manner owned, constructed,
operated or maintained on the Closing Date or, with respect
to International Assets under construction as of the
Closing Date, in the manner contemplated as of the Closing
Date to be owned, constructed, operated or maintained
(excluding in each case trademarks and service marks
relating to the Destec Energy, Inc. name and logo and
excluding intellectual property rights related to coal
gasification technology) [TO BE ASSIGNED TO DESTEC
ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)]
6.4 Any notes, debts, dividend receivables, or any other
receivables from any Person relating to the International
Assets and payable to Destec Engineering, Inc.
25
<PAGE>
Schedule 1.3 of Disclosure Schedule
-----------------------------------
Assumed Liabilities
- -------------------
A. All liabilities and obligations of the International Entities arising
under or otherwise related to the contracts and other agreements listed in the
following Sections of the Destec Energy, Inc. Data Room Master Index: (i)
Section V.B.1.c Indian Queens; (ii) Section V.B.1.d. Los Mina; (iii) Section
V.B.2.i. Elsta; (iv) Section V.B.2.k. Hazelwood; (v) Section V.B. 2.n. Kingston;
and any other written contracts and agreements entered into by any of the
International Entities prior to the Closing Date or listed on Schedule 1.1 of
the Disclosure Schedule (excluding the Excluded Projects).
B. All liabilities and obligations of Destec Energy, Inc. and its
Subsidiaries (other than the International Entitities) arising under or
otherwise related to the following agreements [UNLESS OTHERWISE NOTED, THE
FOLLOWING AGREEMENTS ARE TO BE ASSIGNED TO, AND ASSUMED BY, PARENT]:
1. Each of the following agreements relating to the Hazelwood project
(each as more fully defined in the noted paragraph of Part III.B.1 of
Schedule 1.1 of the Disclosure Schedule):
1.1 Guarantee Agreement, dated 8/2/96 (see (P) 1.1 of Part III.B.1 of
Schedule 1.1);
1.2 Share Sale Agreement, dated 8/4/96 (see (P) 1.2 of Part III.B.1
of Schedule 1.1);
1.3 Deed of Covenant, dated 9/13/96 (see (P) 1.3 of Part III.B.1 of
Schedule 1.1);
1.4 Guarantee and Indemnity, dated 9/13/96 (see (P) 1.4 of Part
III.B.1 of Schedule 1.1);
1.5 Loan Agreement, dated 6/25/97 (see (P) 1.5 of Part III.B.1 of
Schedule 1.1) [TO BE ASSUMED BY AES PIEDMONT II, INC.];
1.6 Agreement Date Advanced Note, dated 6/25/97 (see (P) 1.6 of Part
III.B.1 of Schedule 1.1) [TO BE ASSUMED BY AES PIEDMONT II,
INC.]; and
1.7 Agreement Date Unadvanced Note, dated 6/25/97 (see (P) 1.7 of
Part III.B.1 of Schedule 1.1) [TO BE ASSUMED BY AES PIEDMONT II,
INC.].
<PAGE>
2. Each of the following agreements relating to the Indian Queens project
(each as more fully defined in the noted paragraph of Part III.B.2 of
Schedule 1.1 of the Disclosure Schedule):
2.1 Equity Contribution Agreement, dated [8/27/96] (see (P) 2.1 of
Part III.B.2 of Schedule 1.1);
2.2 Intercreditor Agreement, dated [8/27/96] (see (P) 2.2 of Part
III.B.2 of Schedule 1.1);
2.3 Engineering and Services Agreement, dated 6/30/94 (see (P) 2.3 of
Part III.B.2 of Schedule 1.1) [TO BE ASSUMED BY DESTEC
ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)]; and
2.4 Funding Agreement, dated 8/7/96 (see (P) 2.4 of Part III.B.2 of
Schedule 1.1) [TO BE ASSUMED BY AES GLOBAL POWER HOLDINGS B.V.].
3. Each of the following agreements relating to the Kingston project
(each as more fully defined in the noted paragraph of Part III.B.3
of Schedule 1.1 of Disclosure Schedule):
3.1 Letter Agreement, dated 10/31/95 (see (P) 3.1 of Part III.B.3 of
Schedule 1.1);
3.2 Letter Agreement, dated 3/1/96 (see (P) 3.2 of Part III.B.3 of
Schedule 1.1);
3.3 Equity Guaranty, dated 6/30/95 (see (P) 3.3 of Part III.B.3 of
Schedule 1.1);
3.4 Amended & Restated Equity Guaranty, dated 12/29/95 (see (P) 3.4
of Part III.B.3 of Schedule 1.1);
3.5 EPC Guaranty, dated 6/30/95 (see (P) 3.5 of Part III.B.3 of
Schedule 1.1);
3.6 Contingent Equity Reimbursement Guaranty, dated 2/29/95 (see (P)
3.6 of Part III.B.3 of Schedule 1.1);
3.7 Engineering and Procurement Agreement dated March 28, 1995 (see
(P) 3.7 of Part III.B.3 of Schedule 1.1) [TO BE ASSUMED BY DESTEC
ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)];
3.8 Consent and Agreement dated June 30, 1995 (see (P) 3.8 of Part
III.B.3 of Schedule 1.1) [TO BE ASSUMED BY DESTEC ENGINEERING,
INC. (CAYMAN ISLANDS COMPANY)];
-2-
<PAGE>
3.9 Letter dated June 29, 1995 (see (P) 3.9 of Part III.B.3 of
Schedule 1.1) [TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN
ISLANDS COMPANY)];
3.10 Letter Agreement dated January 23, 1997 (see (P) 3.10 of Part
III.B.3 of Schedule 1.1) [TO BE ASSUMED BY DESTEC ENGINEERING,
INC. (CAYMAN ISLANDS COMPANY)];
3.11 Engineering, Procurement and Construction Agreement dated May 5,
1995 (see (P) 3.11 of Part III.B.3 of Schedule 1.1) [TO BE
ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)];
3.12 Major Subcontractor Consent and Agreement dated June 30, 1995
(see (P) 3.12 of Part III.B.3 of Schedule 1.1) [TO BE ASSUMED BY
DESTEC ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)];
3.13 Letter of Credit in favor of Destec Engineering, Inc. issued
August 21, 1995 (see (P) 3.13 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.14 Letter of Credit in favor of Destec Engineering, Inc. issued
September 26, 1995 (see (P) 3.14 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.15 Letter of Credit in favor of Destec Engineering, Inc. issued
September 20, 1995 (see (P) 3.15 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.16 Letter of Credit in favor of Destec Engineering, Inc. issued
October 23, 1995 (see (P) 3.16 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.17 Letter of Credit in favor of Destec Engineering, Inc. issued
September 22, 1995 (see (P) 3.17 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.18 Letter of Credit in favor of Destec Engineering, Inc. issued
November 22, 1995 (see (P) 3.18 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.19 Letter of Credit in favor of Destec Engineering, Inc. issued
November 22, 1995 (see (P) 3.19 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
-3-
<PAGE>
3.20 Letter of Credit in favor of Destec Engineering, Inc. issued
December 24, 1996 (see (P) 3.20 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.21 Letter of Credit in favor of Destec Engineering, Inc. issued
December 7, 1995 (see (P) 3.21 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.22 Letter of Credit in favor of Destec Engineering, Inc. issued
November 30, 1995 (see (P) 3.22 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.23 Letter of Credit in favor of Destec Engineering, Inc. issued
April 10, 1996 (see (P) 3.23 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.24 Letter of Credit in favor of Destec Engineering, Inc. issued
November 9, 1995 (see (P) 3.24 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.25 Letter of Credit in favor of Destec Engineering, Inc. issued
November 9, 1995 (see (P) 3.25 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.26 Letter of Credit in favor of Destec Engineering, Inc. issued
July 19, 1996 (see (P) 3.26 of Part III.B.3 of Schedule 1.1) [TO
BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)];
3.27 Letter of Credit in favor of Destec Engineering, Inc. issued
October 8, 1996 (see (P) 3.27 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.28 Purchase Agreement, dated 12/29/95 (see (P) 3.28 of Part III.B.3
of Schedule 1.1);
3.29 First Amended and Restated Side Agreement #2, dated 2/23/95 (see
(P) 3.29 of Part III.B.3 of Schedule 1.1);
3.30 Settlement Agreement, dated 5/6/94 (see (P) 3.30 of Part III.B.3
of Schedule 1.1);
3.31 Release Agreement, dated 5/6/94 (see (P) 3.31 of Part III.B.3 of
Schedule 1.1);
-4-
<PAGE>
3.32 Each purchase order or other document listed in Attachment A to
Schedule 1.1 (see (P) 3.32 of Part III.B.3 of Schedule 1.1) [TO
BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)];
and
3.33 Litigation --
i. Statement of Claim filed by LaFarge Canada, Inc. against
Kingston Northern Lights, Inc., Destec Energy, Inc.,
Kingston CoGen Limited Partnership, Jones Power Company
Limited, E.S. Fox Limited, and C&M Construction (Kingston)
Limited;
ii. Statement of Claim filed by Muttart Builders' Supplies
Limited against Kingston Northern Lights, Inc., C&M
Construction (Kingston) Limited, Paul Cupido, and E.S. Fox
Limited;
iii. Statement of Claim filed by Inspec-Sol (Ontario) Ltd.
against Kingston Northern Lights, Inc., C&M Construction
(Kingston) Limited, Jones Power Company Limited, and E.S.
Fox Limited;
iv. Statement of Claim filed by Robert LaFramboise Mechanical
Limited against Kingston Northern Lights, Inc., Jones Power
Company Limited, and The Bank of Nova Scotia;
v. Statement of Claim filed by Coad Rentals, Inc. against
Kingston Northern Lights, Inc. and C&M Construction
(Kingston) Limited;
vi. Statement of Claim filed by C&M Construction (Kingston)
Limited against Kingston Northern Lights, Inc., Destec
Energy, Inc., Jones Power Company Limited, and E.S. Fox
Limited;
vii. Statement of Claim filed by E.S. Fox Limited against
Kingston Northern Lights, Inc., Destec Constructors, Inc.,
Jones Power Company Limited, and Destec Engineering, Inc.;
and
viii. Statement of Claim filed by Jones Power Company Limited
and J.A. Jones Construction Company against Kingston
Northern Lights, Inc., Destec Constructors, Inc., Kingston
CoGen Limited Partnership, and Destec Engineering, Inc.
-5-
<PAGE>
4. Each of the following agreements relating to the Elsta project (each
as more fully defined in the noted paragraph of Part III.B.4 of
Schedule 1.1 of Disclosure Schedule):
4.1 Restated Joint Development Agreement, dated 2/28/94 (see (P) 4.1
of Part III.B.4 of Schedule 1.1);
4.2 Guaranty Agreement, dated 2/26/96 (see (P) 4.2 of Part III.B.4 of
Schedule 1.1);
4.3 Engineering Services Agreement, dated 6/1/94 and as amended (see
(P) 4.3 of Part III.B.4 of Schedule 1.1) [TO BE ASSUMED BY DESTEC
ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)];
4.4 Guaranty Agreement, dated 2/28/96 (see (P) 4.4 of Part III.B.4 of
Schedule 1.1);
4.5 Project Memorandum, dated 11/15/94 (see (P) 4.5 of Part III.B.4
of Schedule 1.1) [TO BE ASSUMED BY DESTEC ENGINEERING, INC.
(CAYMAN ISLANDS COMPANY)];
4.6 Facility Management Services Agreement, dated 2/28/96 (see (P)
4.6 of Part III.B.4 of Schedule 1.1);
4.7 Restated & Amended Testing Services Agreement, dated 6/4/96 (see
(P) 4.7 of Part III.B.4 of Schedule 1.1) [TO BE ASSUMED BY DESTEC
ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)];
4.8 Consultant Services Agreements, dated 9/15/93 (see (P) 4.8 of
Part III.B.4 of Schedule 1.1);
4.9 Joint Development Agreement Termination & Restated Joint
Development Agreement, dated 11/8/95 (see (P) 4.9 of Part III.B.4
of Schedule 1.1);
4.10 Side Agreement, regarding Electricity Sale Agreement & Steam &
Electric Power Sales Agreement, dated _________ (see (P) 4.10 of
Part III.B.4 of Schedule 1.1); and
4.11 Supplemental Agreement, dated 12/19/95 (see (P) 4.11 of Part
III.B.4 of Schedule 1.1) [TO BE ASSUMED BY AES GLOBAL POWER
HOLDINGS B.V.].
-6-
<PAGE>
5. Each of the following agreements relating to the Los Mina project
(each as more fully defined in the noted paragraph of Part III.B.5 of
Schedule 1.1 of Disclosure Schedule):
5.1 Amended and Restated Loan Agreement dated 6/25/97 (see (P) 5.1 of
Part III.B.5 of Schedule 1.1) [TO BE ASSUMED BY AES LOS MINA
HOLDINGS]; and
5.2 Replacement Repayment Obligation Note dated 6/25/97 (see (P) 5.2
of Part III.B.5 of Schedule 1.1) [TO BE ASSUMED BY AES LOS
MINA HOLDINGS].
-7-
<PAGE>
Schedule 6.2 of Disclosure Schedule
-----------------------------------
Employees
- ----------
AES will assume the severance and related employee benefits costs for the
following international personnel:
John Anderson 100%
Valerie Burton 100%
Dennis Colligan 100%
Harold Faire 100%
Betty Heinauer 100%
Ed Jackowski 100%
Freeman Kirby 100%
Leslie Laughter 100%
Darlene McPherson 100%
Donna Mills 100%
Brent Newton 100%
Richard Printy 100%
E. Spencer 100%
Ann Vineyard 100%
<PAGE>
Schedule 6.3(b) of Disclosure Schedule
--------------------------------------
Credit Support Obligations, Guarantees, and Contribution Obligations
- --------------------------------------------------------------------
A. All credit support obligations, guarantees, and contribution
obligations of the International Entities arising under or otherwise related to
the contracts and other agreements listed in the following Sections of the
Destec Energy, Inc. Data Room Master Index: (i) Section V.B.1.c Indian Queens;
(ii) Section V.B.1.d. Los Mina; (iii) Section V.B.2.i. Elsta; (iv) Section
V.B.2.k. Hazelwood, and (v) Section V.B.2.n. Kingston.
B. All liabilities and obligations of Destec Energy, Inc. and its
Subsidiaries (other than the International Entitities) arising under or
otherwise related to the following specified agreements:
1. Each of the following agreements relating to the Hazelwood project
(each as more fully defined in the noted paragraph of Part III.B.1 of
Schedule 1.1 of the Disclosure Schedule):
1.1 Guarantee Agreement, dated 8/2/96 (see (P) 1.1 of Part III.B.1 of
Schedule 1.1);
1.2 Share Sale Agreement, dated 8/4/96 (see (P) 1.2 of Part III.B.1
of Schedule 1.1);
1.3 Guarantee and Indemnity, dated 9/13/96 (see (P) 1.4 of Part
III.B.1 of Schedule 1.1); and
1.4 Any other credit support obligations, guarantees, and
contribution obligations of Destec Energy, Inc. or its
Subsidiaries relating to the Hazelwood Project.
2. Each of the following agreements relating to the Indian Queens Project
(each as more fully defined in the noted paragraph of Part III.B.2 of
Schedule 1.1 of the Disclosure Schedule):
2.1 Equity Contribution Agreement, dated 8/27/96 (see (P) 2.1 of Part
III.B.2 of Schedule 1.1); and
2.2 Any other credit support obligations, guarantees, and
contribution obligations of Destec Energy, Inc. or its
Subsidiaries relating to the Indian Queens Project.
<PAGE>
3. Each of the following agreements relating to the Kingston Cogen
Project (each as more fully defined in the noted paragraph of Part
III.B.3 of Schedule 1.1 of the Disclosure Schedule):
3.1 Letter Agreement, dated 10/13/95 (see (P) 3.1 of Part III.B.3 of
Schedule 1.1);
3.2 Equity Guaranty, dated 6/30/95 (see (P) 3.3 of Part III.B.3 of
Schedule 1.1);
3.3 Amended and Restated Equity Guaranty, dated 12/29/95 (see (P) 3.4
of Part III.B.3 of Schedule 1.1);
3.4 EPC Guaranty, dated 6/30/95 (see (P) 3.5 of Part III.B.3 of
Schedule 1.1);
3.5 Contingent Equity Reimbursement Guaranty, dated 2/29/95 (see (P)
3.6 of Part III.B.3 of Schedule 1.1);
3.6 Letter of Credit in favor of Destec Engineering, Inc. issued
August 21, 1995 (see (P) 3.13 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.7 Letter of Credit in favor of Destec Engineering, Inc. issued
September 26, 1995 (see (P) 3.14 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.8 Letter of Credit in favor of Destec Engineering, Inc. issued
September 20, 1995 (see (P) 3.15 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.9 Letter of Credit in favor of Destec Engineering, Inc. issued
October 23, 1995 (see (P) 3.16 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.10 Letter of Credit in favor of Destec Engineering, Inc. issued
September 22, 1995 (see (P) 3.17 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.11 Letter of Credit in favor of Destec Engineering, Inc. issued
November 22, 1995 (see (P) 3.18 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.12 Letter of Credit in favor of Destec Engineering, Inc. issued
November 22, 1995 (see (P) 3.19 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
-2-
<PAGE>
3.13 Letter of Credit in favor of Destec Engineering, Inc. issued
December 24, 1996 (see (P) 3.20 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.14 Letter of Credit in favor of Destec Engineering, Inc. issued
December 7, 1995 (see (P) 3.21 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.15 Letter of Credit in favor of Destec Engineering, Inc. issued
November 30, 1995 (see (P) 3.22 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.16 Letter of Credit in favor of Destec Engineering, Inc. issued
April 10, 1996 (see (P) 3.23 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.17 Letter of Credit in favor of Destec Engineering, Inc. issued
November 9, 1995 (see (P) 3.24 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.18 Letter of Credit in favor of Destec Engineering, Inc. issued
November 9, 1995 (see (P) 3.25 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)];
3.19 Letter of Credit in favor of Destec Engineering, Inc. issued
July 19, 1996 (see (P) 3.26 of Part III.B.3 of Schedule 1.1) [TO
BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS COMPANY)];
3.29 Letter of Credit in favor of Destec Engineering, Inc. issued
October 8, 1996 (see (P) 3.27 of Part III.B.3 of Schedule 1.1)
[TO BE ASSUMED BY DESTEC ENGINEERING, INC. (CAYMAN ISLANDS
COMPANY)]; and
3.21 Any other credit support obligations, guarantees and contribution
obligations of Destec Energy, Inc. or its Subsidiaries relating
to the Kingston Cogen Project.
4. Each of the following agreements relating to the Elsta Project (each
as more fully described in the noted paragraph of Part III.B.4 of
Schedule 1.1):
4.1 Guaranty Agreement, dated 2/26/96 (see (P) 4.2 of Part III.B.4 of
Schedule 1.1);
-3-
<PAGE>
4.2 Guaranty Agreement, dated 2/28/96 (see (P) 4.3 of Part III.B.4 of
Schedule 1.1);
4.3 Supplemental Agreement, dated 12/95 (see (P) 4.12 of Part III.B.4
of Schedule 1.1) [TO BE ASSUMED BY GLOBAL POWER HOLDINGS B.V.];
and
4.4 Any other credit support obligations, guarantees, and
contribution obligations of Destec Energy, Inc. or its
Subsidiaries relating to the Elsta Project.
5. Any other credit support obligations, guarantees, and contribution
obligations of Destec Energy, Inc. or its Subsidiaries (other than the
International Entities) relating to the International Assets and
International Businesses.
-4-
<PAGE>
ASSET PURCHASE AGREEMENT
BETWEEN
DESTEC ENERGY, INC.
AND
ECT EOCENE ENTERPRISES, INC.
DATED
JULY 1, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS........................................................... 2
1.1 Definitions................................................................ 2
ARTICLE II. SALE AND TRANSFER OF ASSETS..........................................12
2.1 Transfer of the Assets.....................................................12
2.2 Purchase Price and Payment.................................................17
2.3 Adjustment to Purchase Price...............................................17
2.4 Lignite Property Tax Litigation............................................20
2.5 Sonat Litigation...........................................................20
2.6 Ad Valorem and Personal Property Taxes.....................................20
2.7 Letters in Lieu and Notices to Operators...................................21
ARTICLE III. REPRESENTATIONS OF THE PARTIES......................................21
3.1 Representations of Seller..................................................21
3.2 Seller Representations Regarding the Assets, Companies and Partnerships....22
3.3 Representations by Seller Relating to Option Agreement;
Environmental Matters......................................................28
3.4 Representations of Buyer...................................................30
ARTICLE IV. COVENANTS............................................................30
4.1 Certain Covenants of Seller Pending Closing................................30
4.2 Restrictions on Certain Actions............................................32
4.3 Assumed Liabilities; Retained Liabilities..................................33
ARTICLE V. DEFECT PROVISIONS.....................................................34
5.1 Due Diligence Reviews......................................................34
5.2 Certain Price Adjustments..................................................36
5.3 Casualty Loss and Condemnation.............................................38
ARTICLE VI. CONDITIONS PRECEDENT TO OBLIGATIONS..................................39
6.1 Conditions Precedent to the Obligations of Buyer...........................39
6.2 Conditions Precedent to the Obligations of Seller..........................41
ARTICLE VII. TERMINATION.........................................................42
7.1 Termination................................................................42
7.2 Effect of Termination......................................................42
7.3 Effect of Termination......................................................43
7.4 Cure Period................................................................43
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE VIII. CLOSING............................................................43
8.1 Location of Closing........................................................43
8.2 Deliveries by Seller.......................................................43
8.3 Deliveries by Buyer........................................................44
ARTICLE IX. INDEMNIFICATION, AND WAIVERS.........................................44
9.1 Survival...................................................................44
9.2 Indemnification of Seller..................................................45
9.3 Indemnification of Buyer...................................................45
9.4 Procedure for Indemnification..............................................46
9.5 Other Indemnities..........................................................46
9.6 Disclaimer of Warranties...................................................47
9.7 Waiver of Punitive and Consequential Damages...............................47
9.8 Seller Party Indemnification...............................................47
ARTICLE X. ACCESS TO INFORMATION..................................................47
10.1 Access to Information......................................................47
ARTICLE XI. MISCELLANEOUS........................................................48
11.1 Commissions................................................................48
11.2 Notices....................................................................48
11.3 Further Assurances.........................................................49
11.4 Assignments................................................................49
11.5 DTPA Waiver................................................................50
11.6 Preservation of Books and Records..........................................50
11.7 Governing Law..............................................................50
11.8 Expenses...................................................................50
11.9 Entire Agreement...........................................................50
11.10 Public Announcements.......................................................50
11.11 Subrogation................................................................51
11.12 No Third Party Beneficiary.................................................51
</TABLE>
-ii-
<PAGE>
EXHIBITS
--------
Exhibit A Allocated Value
Exhibit B Assets
Exhibit C Easement
Exhibit D-1 Freestone County Escrow Agreement
Exhibit D-2 Leon County Escrow Agreement
Exhibit E Lignite Tax Litigation Letter
Exhibit F Sonat Litigation Letter
Exhibit G Preferential Right Properties Values
Exhibit H-1 Conveyance Form (DGPP)
Exhibit H-2 Conveyance Form (DFR)
Exhibit H-3 Conveyance Form (Joint Venture Interest)
Exhibit H-4 Conveyance Form (General and Limited Partner Interest)
Exhibit I Opinion of Counsel of Seller
Exhibit J Transition Services Agreement
Exhibit K Opinion of Counsel of Buyer
SCHEDULES
---------
Schedule 1(a) Knowledge of Seller
Schedule 1(b) Destec Persons
Schedule 2.3 Underproduction/Overproduction
Schedule 3.1(c) Consents and Approvals
Schedule 3.2(c) Conduct of Business
Schedule 3.2(d) Litigation/Proceedings
Schedule 3.2(e) Other Liabilities
Schedule 3.2(f) Permits
Schedule 3.2(g) Compliance with Law
Schedule 3.2(i) Insurance
Schedule 3.2(l) Government Approvals
Schedule 3.2(m) Rentals, Properties, etc.
Schedule 3.2(n) Pipeline Imbalances, etc.
Schedule 3.2(q) Payout Balances
Schedule 3.2(r) Material Contracts
Schedule 3.2(u) Tax Partnership Agreements
Schedule 3.3(a)(iii) Option Agreement
Schedule 3.3(a)(v) Royalty Payment Schedule
Schedule 3.3(b)(i) Environmental Law
Schedule 5.1(s) Title Defects
-iii-
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
This ASSET PURCHASE AGREEMENT (this "Agreement"), is made and entered
into on July 1, 1997, by and between DESTEC ENERGY, INC., a Texas corporation
(hereinafter called "Seller"), and ECT EOCENE ENTERPRISES, INC., a Delaware
corporation (hereinafter called "Buyer").
WITNESSETH:
WHEREAS, pursuant to the terms of that certain Agreement and Plan of
Merger dated as of February 17, 1997 (hereinafter called the "NGC/Destec
Agreement"), by and among Seller, The Dow Chemical Company ("Dow"), NGC
Corporation ("NGC") and NGC Acquisition Corporation II, a Delaware corporation
("NGC Acquisition"), Seller and NGC agreed upon terms and conditions under which
NGC would merge with and into Seller, with the company surviving such merger to
be wholly owned by NGC; and
WHEREAS, as a consequence of the consummation of the transaction
contemplated by the NGC/Destec Agreement (hereinafter called the "Merger
Closing"), Seller became a wholly-owned subsidiary of NGC and has become the
owner of all the issued and outstanding shares of stock of (i) Destec Holdings,
Inc., a Delaware corporation (hereinafter called "Holdings", which in turn is
the owner of all the issued and outstanding shares of Destec Fuel Resources,
Inc., a Texas corporation ("DFR"), (ii) Destec Properties, Inc., a Delaware
corporation ("DPI"), (iii) Destec Gas Properties, Inc., a Delaware corporation
(hereinafter called "DGPI"), and (iv) Destec Ventures, Inc., a Delaware
corporation ("DVI"); and
WHEREAS, DFR is the sole general partner, and DGPI is the sole limited
partner, of Destec Gas Properties L.P., a Texas limited partnership ("DGPP"),
and DPI is the sole general partner, and DVI is the sole limited partner, of
Destec Properties Limited Partnership, a Nevada limited partnership (hereinafter
called "DPLP"); and
WHEREAS, Seller and certain of its subsidiaries and affiliates desire
to sell, transfer, convey, assign and deliver to Buyer, and Buyer desires to
purchase and accept from Seller and such subsidiaries and affiliates, certain
oil and gas assets, lignite assets and properties and related assets on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, Seller and Buyer have agreed that if the Merger Closing
occurs, immediately following the Merger Closing, (i) Seller will cause DFR to
and DFR will sell, transfer, convey, assign and deliver to Buyer (or its
designee) the DFR Assets, (ii) Seller will cause DGPP to and DGPP will sell,
transfer, convey, assign and deliver to Buyer or its designee the DGPP Assets,
(iii) Seller will cause DPI to and DPI will sell, transfer, convey, assign and
deliver to Buyer (or its designee) the DPLP General Partner Interest, and (iv)
Seller will cause DVI to and DVI will sell, transfer, convey, assign and deliver
to Buyer (or its designee) the DPLP Limited Partner Interest.
<PAGE>
NOW THEREFORE, in consideration of the respective mutual agreements
and covenants of the Parties contained herein, the parties do hereby agree as
follows:
ARTICLE I. DEFINITIONS
------------------------
1.1 Definitions. In this Agreement, the following terms have the
meanings specified or referred to in this Section 1.1 and shall be equally
applicable to both the singular and plural forms, as appropriate.
"AAA" means the American Arbitration Association.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person.
"Agreed Rate" has the meaning given it in Section 2.3(d)(ii).
"Agreement" means this Asset Purchase Agreement, as it may be amended
from time to time.
"Allocated Value" means the amount, for each Basic Property, set forth
under the column "Allocated Value" on Exhibit A.
"Applicable Law" means any statute, law, rule, or regulation or any
judgment, order, writ, injunction, or decree of any Governmental Entity to which
a specified Person or property is subject.
"Arbitration Notice" has the meaning given it in Section 5.2(b)(vi).
"Asserted Defects" has the meaning given it in Section 5.1(a).
"Assets" shall collectively mean the DFR Assets, the DGPP Assets, the
DPLP Limited Partner Interest and the DPLP General Partner Interest.
"Assumed Liabilities" has the meaning given it in Section 4.3.
"Base Purchase Price" has the meaning given it in Section 2.2.
"Basic Properties" means the Oil and Gas Properties, the Lignite
Assets, the Gathering Joint Venture Interest and the Gathering System.
"Books and Records" means all (i) abstracts, title opinions, title
reports, title policies, lease and land files, surveys, analyses, compilations,
correspondence, filings with and reports to
-2-
<PAGE>
regulatory agencies, and other documents and instruments; (ii) computer records,
manuals, and databases that are owned or licensed; (iii) geological,
geophysical, engineering, exploration, production, and other technical data,
logs, magnetic field recordings, digital processing tapes, field prints,
summaries, reports, and maps, whether written or in electronically reproducible
form; and (iv) all other books, records, files, magnetic tapes, and other media
containing financial, title, operational or other information relating to DPLP
(excluding the books and records relating solely to the DPLP Oil and Gas
Properties), any of the Assets, the Lignite Assets or the Gathering System,
provided that with respect to seismic and geological data the transfer of such
assets shall be qualified to the extent that Seller may transfer the same to
Buyer without breach or violation of any agreement, provision or limitation
relating to the transfer of the same. Seller agrees to use its best efforts to
disclose any such restrictive agreements, provisions or limitations affecting
seismic and geological data to Buyer as soon as possible after Seller has
knowledge thereof, and, if possible, prior to the Closing Date.
"Business Day" means any day excluding Saturday, Sunday and any day on
which banks in Houston, Texas, as authorized by law or other governmental action
are closed.
"Buyer" has the meaning given it in the introductory paragraph of this
Agreement.
"Buyer Indemnified Person" has the meaning given it in Section 9.2.
"Closing" has the meaning given it in Section 8.1.
"Closing Date" has the meaning given it in Section 8.1.
"Closing Time" has the meaning given it in Section 8.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Companies" means DFR, DPI, and DVI; "Company" means any of DFR, DPI,
or DVI.
"Conveyance(s)" has the meaning given it in Section 8.2(a).
"Damages" has the meaning given it in Section 9.2.
"Debt" means, for any Person, all indebtedness, liabilities and
obligations of such Person: (i) for the repayment of money borrowed (whether or
not represented by bonds, debentures, notes, securities or other evidences of
indebtedness); (ii) representing deferred payment of the purchase price for
goods, services, assets or properties; (iii) under any lease which, in
conformity with GAAP, is required to be capitalized for balance sheet purposes;
(iv) under guaranties, endorsements (other than for collection or deposit in the
ordinary course of business) or assumptions of, or other contingent obligations
in respect of, or to purchase or otherwise acquire, any indebtedness,
liabilities or other obligations of any other Person; (v) in respect of letters
of credit;
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and/or (vi) secured by a lien existing on assets and properties owned
by such Person, whether or not the indebtedness, liabilities or obligations
secured thereby shall have been assumed by such Person.
"Defaulting Party" has the meaning given it in Section 7.2.
"Defect" has the meaning given it in Section 5.l(b).
"Defect Date" has the meaning given it in Section 5.1(a).
"Defect Notice" has the meaning given it in Section 5.1(a).
"DFR" means Destec Fuel Resources, Inc., a Delaware corporation.
"DFR Assets" has the meaning given it in Section 2.1(a).
"DFR Leases" has the meaning given it in Section 2.1(a)(i).
"DFR Oil and Gas Properties" has the meaning given it in Section
2.1(a)(i).
"DGPI" means Destec Gas Properties, Inc., a Delaware corporation.
"DGPP" means Destec Gas Properties, L.P., a Texas limited partnership.
"DGPP Assets" has the meaning specified in Section 2.1(b).
"DGPP Leases" has the meaning given it in Section 2.1(b)(i).
"DGPP Oil and Gas Properties" has the meaning specified in Section
2.1(b)(i).
"Dow" means The Dow Chemical Company, a Delaware corporation.
"DPI" means Destec Properties, Inc., a Texas corporation.
"DPLP" means Destec Properties Limited Partnership, a Nevada limited
partnership.
"DPLP General Partner Interest" means the 1% general partner interest
in DPLP owned of record and beneficially by DPI.
"DPLP Limited Partner Interest" means the 99% limited partner interest
in DPLP owned of record and beneficially by DVI.
"DPLP Oil and Gas Properties" means the oil and gas properties and
related assets owned by DPLP described in Part IV of Exhibit B and any other
right, title and interest of DPLP in
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and to oil and gas and other liquid or gaseous hydrocarbons owned by DPLP prior
to the Effective Date; excluding, however, any oil, gas or other liquid or
gaseous hydrocarbons that are ancillary to or otherwise recovered in DPLP's
lignite mining operations.
"DVI" means Destec Ventures, Inc., a Delaware corporation.
"Effective Date" means 7 o'clock a.m., local time, at the locations of
the Basic Properties, respectively, on July 1, 1997.
"Encumbrances" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on voting,
sale, transfer, disposition, or otherwise), easements, and other encumbrances of
every type and description, whether imposed by law, agreement, understanding, or
otherwise.
"Environmental Laws" means all federal, state or local laws, rules,
orders or regulations pertaining to health or the environment, including but not
limited to those relating to waste materials and/or hazardous substances.
"Fatal Consent" has the meaning given it in Section 5.1(b).
"Final Settlement Statement" has the meaning given it in Section
2.3(d).
"GAAP" means U.S. generally accepted accounting principles.
"Gathering Joint Venture" shall mean the Southeast Piceance Pipeline
Joint Venture, formed pursuant to that certain Southeast Piceance Pipeline Joint
Venture Agreement dated as of May 2, 1996, by and between DFR and Snyder Oil
Corporation.
"Gathering Joint Venture Interest" shall mean the joint venture
interest of DFR in the Gathering Joint Venture.
"Gathering System" means the gas gathering system of the Gathering
Joint Venture and all related assets (including, without limitation, all liquid
and gas main, trunk, gathering, lateral, and feeder lines, together with all
tanks, pumps, valves, meters, regulators, cathodic protection facilities, and
other associated fixtures, structures, equipment, facilities, and properties,
whether real, personal or mixed, together with all fixtures, accessions,
additions, and attachments thereto, which are used or held for use in the
gathering, storage, and transportation of Substances; and all of the related
rights of way and easements and all other related assets) described in Item
(iii) of Part I of Exhibit B hereto.
"Governmental Entity" means any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental, or regulatory body, agency,
department, commission, board, bureau, or other authority or instrumentality
(domestic or foreign).
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"HL&P" means Houston Lighting & Power Company, a Texas corporation.
"Holdings" means Destec Holdings, Inc., a Delaware corporation.
"IRS" means the Internal Revenue Service.
"Jewett Mine Litigation" has the meaning given it in Section 2.4.
"Knowledge" when used in relation to Seller or any Affiliate of
Seller, shall mean the actual knowledge as of the Closing Date of the Persons
listed on Schedule 1(a) hereto, after reasonable inquiry with respect to the
representations and warranties of Seller made in this Agreement directed by such
Persons to the Destec personnel listed on Schedule 1(b) hereto provided
reasonable inquiry with respect to the representations and warranties qualified
to knowledge shall be fully satisfied by Seller's delivery, solicitation of and
receipt (prior to Closing) of responses to the written diligence questionnaire
provided to Seller by Buyer. In no event will the Persons listed on Schedule
1(a) hereto be deemed to have constructive knowledge of acts or information
known to the Persons listed on Schedule 1(b) hereto (or any other person or
entity). Buyer acknowledges that it shall not have recourse against the Destec
personnel completing the questionnaire with respect to the responses in said
questionnaire.
"Lignite Assets" means all of the right, title and interest of DPLP in
and to the following:
(a) the coal and lignite leases, fee interests, fee mineral
interests (other than the DPLP Oil and Gas Properties) and coal and/or
lignite interests and other interests in and to the lignite and other
similar minerals in and under or that may be produced from the lands
described in Part III of Exhibit B hereto;
(b) all overriding royalty payments, minimum annual overriding
royalty payments and other rights, arising under the Option Agreement or
any of the lands, leases or properties subject to such Option Agreement
(other than the DPLP Oil and Gas Properties); and
(c) all rights, titles and interests of DPLP in and to, or
otherwise derived from, all presently existing and valid coal and/or
lignite unitization, pooling, and/or communitization agreements,
declarations and/or orders, including, without limitation, all units formed
under orders, rules, regulations, or other official acts of any federal,
state, or other authority having jurisdiction, and voluntary unitization
agreements, designations and/or declarations, and all easements, rights-of-
way, permits, licenses, surface leases, use agreements, and servitudes,
relating to the properties described in subparagraph (a) above, to the
extent, and only to the extent, such rights, titles and interests are
attributable to the properties described in subparagraph (a) above.
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"Material Adverse Effect" means with respect to any Person (i) a
material adverse effect on the business, assets, properties, operations or
condition (financial or otherwise) of such Person to the extent such business,
assets, properties, operations or Person are included in the Assets, the Lignite
Assets or the Gathering System, (ii) a material adverse effect on the ability of
such Person to perform its obligations under the Agreement or any of the
Operative Documents or to consummate the transactions contemplated thereby or,
(iii) any matter which involves an adverse economic effect with respect to the
Assets, the Lignite Assets or the Gathering System in excess of $750,000 with
respect to any individual matter or $5,000,000 with respect to all matters in
the aggregate.
"Merger Closing" has the meaning given it in the recitals to this
Agreement.
"Merger Consideration" has the meaning given it in Section 2.4.
"Net Revenue Interest" means that percentage of the proceeds of
production from a well, unit or lands which any Property Owner is entitled to
receive as a result of its rights in and to an Oil and Gas Property or Lignite
Asset pertaining to such well, unit or lands.
"NGC" means NGC Corporation, a Delaware corporation.
"NGC/Destec Agreement" has the meaning given it in the recitals to
this Agreement.
"Oil and Gas Properties" means the DFR Oil and Gas Properties and the
DGPP Oil and Gas Properties.
"Option Agreement" means that certain Option and Agreement dated
effective May 1, 1979 between Dow and HL&P.
"Operative Documents" means all agreements, instruments and documents
which are, pursuant to the terms hereof, to be executed by or on behalf of any
Seller Party or Buyer or any of their respective Affiliates in connection with
or relating to this Agreement, together with all agreements, instruments and
documents referred to therein or contemplated thereby.
"Partnerships" means DPLP, DGPP, and the Gathering Joint Venture.
"Permitted Encumbrance" means any and all of the following:
(a) The terms, conditions, restrictions, exceptions,
reservations, limitations and other matters contained in the agreements,
instruments and other documents which create or reserve to any Property
Owner its interest in any Basic Property, provided that the same do not
reduce the Net Revenue Interest of the Property Owner in the Basic Property
affected thereby to less than that set forth on Exhibit B attached hereto;
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(b) Royalties, overriding royalties, division orders,
reversionary interests, production payments, net profits interests and
similar burdens affecting any Basic Property if the net cumulative effect
of such burdens does not operate to reduce the Net Revenue Interest in the
Basic Property affected thereby to less than that set forth beside the same
on Exhibit B hereto;
(c) Preferential rights to purchase and required third party
consents to assignment and similar agreements with respect to which waivers
or consents shall have been obtained from the appropriate parties, or for
which appropriate notices have been provided to the holders of such rights
and the appropriate time period for asserting such rights shall have
expired without an exercise of such rights;
(d) Inchoate liens for Taxes and assessments which are not yet
delinquent or which are being contested by a Seller Party in good faith,
have been fully and adequately reserved against by such Seller Party and
funds in the amount of such reserve are transferred by such Seller Party to
Buyer at Closing;
(e) Inchoate liens securing the payment of obligations incurred
in the operation of the Basic Properties which obligations are not yet
delinquent or which have been fully and adequately reserved against by a
Seller Party and funds in the amount of such reserve are transferred by
such Seller Party to Buyer at Closing;
(f) Easements, rights-of-way, servitudes, permits, surface leases
and other rights in respect to surface operations, pipelines, logging,
canals, ditches, reservoirs or the like; conditions, covenants or other
restrictions; easements of streets, alleys, highways, pipelines, telephone
lines, power lines, railways and other easements or rights-of-way on over
or with respect of any Basic Property which do not materially and adversely
affect the Basic Property or its use for oil and gas development or lignite
recovery purposes;
(g) Any obligations or duties to any municipality or public
authority affecting a Basic Property with respect to any franchise, grant,
license or permit and all Applicable Laws of any Governmental Entity;
(h) Existing operating agreements, unit agreements, gas purchase
contracts and any and all other agreements which are customary in the oil
and gas exploration, development, production or extraction business or in
the business of processing of gas and gas condensate or production for the
extraction of products therefrom, to the extent that the same do not reduce
the Net Revenue Interest of the applicable Property Owner in the Basic
Property affected thereby below that set forth on Exhibit B hereto, to the
extent set forth on item (v) of Part I or Part II of Exhibit B;
(i) All rights to consent by, required notices to, filings with
or other action by Governmental Entities in connection with the sale or
conveyance of oil and gas
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leases, permits, or interests therein, if the same are customarily obtained
contemporaneously with or subsequent to such sale or conveyance;
(j) Conventional right of reassignment arising upon surrender or
abandonment of any Basic Property requiring less than 60 days notice to the
holder of such rights; and
(k) Any other matter waived or deemed to be waived by Buyer
pursuant to the provisions of Section 5.1(a).
"Permits" means, franchises, licenses, permits, approvals, consents,
privileges, certificates and other authorizations granted by Governmental
Entities and including certificates of convenience or necessity, privileges,
grants and other rights.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise, unincorporated
organization, or Governmental Entity.
"Plan" means any pension benefit plan subject to title IV of the
Employment Retirement Income Security Act of 1974, as amended.
"Preliminary Settlement Statement" has the meaning given it in Section
2.3(c).
"Property Owners" means, collectively, DFR and the Partnerships.
"Purchase Price" has the meaning given it in Section 2.2.
"Retained Liabilities" means the liabilities and obligations of
Seller, any of the Companies or any of the Partnerships or their respective
Affiliates (including, without limitation, obligations to properly plug and
abandon, or replug and re-abandon, wells located on assets which are not
conveyed from the Seller Parties to Buyer as described below, to restore the
surface of such assets, and to comply with, or to bring such assets into
compliance with applicable Environmental Laws, including conducting any
remediation activities which may be required on or otherwise in connection with
activities on the excluded assets) to the extent, but only to the extent, that
the same arise from or are related to the following:
(a) The sale of oil and gas assets or properties, lignite assets
or properties or other assets or properties by any of the Seller Parties
(including all liabilities and obligations of such disposed of assets), any
Company or Partnership or their respective Affiliates occurring prior to
the Effective Date, including, without limitation, (i) the ownership or the
sale of certain lignite properties by DPLP to Dow pursuant to that certain
Notice of Exercise of Option to Purchase dated February 17, 1997 and (ii)
the ownership or the sale of the DPLP Oil and Gas Properties by DPLP to
Seller or its designee prior to the Closing;
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(b) Any and all power marketing alliances, arrangements, ventures
or agreements entered into by any of the Seller Parties, any Company or
Partnership or their respective Affiliates prior to the Effective Date;
(c) Any assets, properties or agreements owned or used by any of
the Seller Parties, the Company, the Partnerships or their respective
Affiliates other than the assets, properties and agreements included in the
Assets, the Lignite Assets and the Gathering System;
(d) Any business activities conducted by any of the Seller
Parties, by any Company or Partnership or any of their respective
Affiliates which do not involve the Assets;
(e) Any obligations or liabilities which are owed or alleged to
be owing by any Seller Party, Company or Partnership under any Plan or with
respect to wages, bonuses, severance or other payments, of any kind or
nature, to employees, consultants or agents of any Seller Party, any
Company or Partnership or any of their respective Affiliates other than
arrangements expressly entered into by Buyer with such employees,
consultants, or agents, with respect to the period following the Closing;
(f) The obligations or liabilities of any Seller Party, any
Company or Partnership or any of their respective Affiliates to manage any
oil and gas assets or properties, lignite assets or properties or other
assets or properties on behalf of any third party except to the extent such
obligations are expressly referenced in the Schedules to this Agreement and
assumed by Buyer;
(g) The First Amended Lease Agreement dated January 1, 1990
between DVI and Dow as assigned to DPLP and the Termination Agreement
concerning the First Amended Lease Agreement signed February 11, 1997
between DPLP and Dow;
(h) The First Amended Lignite Properties Maintenance Agreement
dated January 1, 1990 between DVI and Dow as assigned to DPLP and the
Termination Agreement concerning the First Amended Lignite Properties
Maintenance Agreement signed February 17, 1997, between DPLP and Dow;
(i) Any activity perpetrated by any Company or Partnership that
constitutes criminal or fraudulent activity under applicable federal or
state law; and
(j) Any intercompany or related party obligations or liabilities
owing from any of the Companies or Partnerships to Seller, any Company,
Partnership, Dow or any of their respective Affiliates, which were
Affiliates prior to the Merger Closing except to the extent that such
obligation or liability is specifically listed on a schedule attached
hereto, assumed by Buyer pursuant to the express terms of this Agreement.
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"Retained Rights" means an easement for the construction of a natural
gas gathering system across the lands described on Part I of Exhibit C hereto,
which shall be granted in accordance with the form of right-of-way agreement
attached hereto as Part II of Exhibit C.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning given it in the introductory paragraph of
this Agreement.
"Seller Indemnified Person" has the meaning given it in Section 9.1.
"Seller Party" means, collectively, Seller, DFR, DGPP, DPI and DVI.
"Subsidiaries" has the meaning given it in Section 3.2(g).
"Substances" means any crude oil, petroleum, natural gas, casinghead
gas, drip condensate, condensate, natural gasoline, natural gas liquids, and
other liquid, liquefiable, or gaseous hydrocarbons (including methane, ethane,
propane, butane and other such gases regardless of their source), helium,
sulfur, carbon dioxide, linefill, and inventory, together with all products
extracted, separated or processed therefrom, or other minerals.
"Supporting Information" has the meaning given it in Section 2.3(d).
"Taxes" means any income taxes or similar assessments or any sales,
excise, occupation, use, ad valorem, property, production, severance,
transportation, employment, payroll, franchise, or other tax imposed by any
United States federal, state, or local (or any foreign or provincial) taxing
authority, including any interest, penalties, or additions attributable thereto.
"Termination Date" has the meaning given it in Section 6.1.
"Treasury Regulations" means one or more treasury regulations
promulgated under the Code by the Treasury Department of the United States.
ARTICLE II. SALE AND TRANSFER OF ASSETS
2.1 Transfer of the Assets. Subject to the terms and conditions set
forth in this Agreement, on the Closing Date but effective for all purposes as
of the Effective Date:
(a) The Seller will cause DFR to and DFR shall sell, assign,
convey, and deliver to Buyer all of its right, title and interest in and to
certain assets less and except the Retained Rights, to the extent
applicable (the "DFR Assets"), free and clear of all Encumbrances other
than Permitted Encumbrances, as follows:
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(i) Oil and Gas Properties. (A) All of the undivided
interests described in Item (i) of Part I of Exhibit B in and to the
leasehold estates created by the leases described in Item (i) of Part
I of Exhibit B hereto (the "DFR Leases") together with all other
right, title and interest of DFR in and to the DFR Leases and the
lands covered thereby; (B) all of DFR's right, title and interest in
and to all oil, gas and other minerals on, in, and under lands covered
by the DFR Leases, including any such interests in and to any oil, gas
and/or mineral leases, leasehold interests, mineral fee interests,
royalty interests, overriding royalty interests, production payments,
other non-working or carried interests, and any other right, title or
interest evidencing or creating a right or interest in, or any right
to produce or receive the proceeds of production of, any Substances or
other minerals on, in and under the lands covered by the DFR Leases,
including all interests therein which DFR is entitled to receive by
reason of any participation, joint venture, farm-in, farm-out,
operating or other agreement; and (C) all rights and interests
attributable or allocable to the DFR Leases and any lands pooled,
unitized, communitized or consolidated therewith by virtue of any
pooling, unitization, communitization, production sharing or similar
agreement, order or declaration, including from any and all units
formed under orders, regulations, rules and other official acts of the
Governmental Entity having jurisdiction thereof, together with any
right, title and interest created thereby in the DFR Leases, the
Substances or the interests therein and all rights of ingress and
egress and appurtenances thereto (the "DFR Oil and Gas Properties");
(ii) Wells. All of DFR's interest in and to all of the oil,
condensate, natural gas, water injection or disposal, and other wells
located on the lands covered by the DFR Oil and Gas Properties or used
or held for use in connection therewith, whether producing, operating
or temporarily shut-in or abandoned, including, without limitation,
the wells described on Item (ii) of Part I of Exhibit B hereto;
(iii) Gathering System Joint Venture. All of DFRs'
interest in and to the Gathering Joint Venture and the Gathering
System.
(iv) Equipment. All of DFR's interests in and to the
equipment, machinery, goods, vehicles, materials and other personal
property (including inventories of tubular goods, supplies, tools, and
other oil and gas field equipment), fixtures and improvements on the
DFR Oil and Gas Properties, appurtenant thereto or used or obtained in
connection with them or with the ownership, operation, use,
possession, maintenance or occupancy of the DFR Oil and Gas
Properties, or with the exploration, development, production,
gathering, storage, transportation, treatment, processing, marketing,
purchase, sale, disposal, or other disposition of Substances or other
minerals or waste produced therefrom or attributable thereto and all
other appurtenances thereunto belonging, wherever located; and all of
DFR's (or DFR's interest as lessee in) fixtures, equipment and other
personal property located
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on or held for use in connection with the DFR Oil and Gas Properties
including, without limitation, the equipment described on Item (iii)
of Part I of Exhibit B;
(v) Surface Contracts. All surface leases, easements,
privileges, rights of way, licenses, or other real property agreements
relating to the use or ownership of surface and subsurface properties
and structures thereon that are used or held for use in connection
with exploring, developing, producing, treating, or processing
Substances from the DFR Oil and Gas Properties or for gathering,
storing, or transporting Substances produced from DFR Oil and Gas
Properties, including, without limitation, the interests described on
Item (iv) of Part I of Exhibit B;
(vi) Property Records and Data. All Books and Records
relating to the DFR Assets;
(vii) Contracts. All contracts, commitments, agreements,
and arrangements of DFR that in any way relate to any of the purchased
assets, including the exploration, development, production, operation,
gathering, storage, treatment, transportation, processing, marketing,
purchase, sale, disposal, or other disposition of Substances therefrom
or in connection therewith and any and all amendments, ratifications,
or extensions of the foregoing, together with (A) all rights,
privileges, and benefits of DFR thereunder arising on or after the
Effective Date; (B) all rights of DFR thereunder to audit the records
of any party thereto and to receive refunds of any nature thereunder
relating to periods on or after the Effective Date; (C) all claims of
DFR for take-or-pay or other similar payments arising on or after the
Effective Date; and (D) all oil and gas sale, purchase, exchange,
gathering, storage, transportation, treating, and processing contracts
and all joint venture agreements, operating agreements, pooling
agreements, unit agreements, participation agreements, farm-out
agreements, farm-in agreements, joint operating agreements, water
rights agreements, exploration agreements, bottomhole agreements,
dryhole agreements, support agreements, acreage contribution
agreements, bidding agreements, advance payment agreements, and all
other agreements relating to any of the DFR Assets or any part
thereof, including all amendments, ratifications, or extensions
thereof, and all agreements settling claims asserted thereunder to the
extent such claims are attributable to matters or periods of time
after the Effective Date, including, without limitation, the
contracts, commitments, agreements and arrangements described in Item
(v) of Part I of Exhibit B;
(viii) Permits. All Permits (except those that by their
nature or express terms are not assignable) that relate to any of the
DFR Assets or the ownership, operation, use, possession, maintenance,
occupancy, or enjoyment of any part thereof including, without
limitation, the Permits described in Item (vi) of Part I of Exhibit B;
and
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(ix) Miscellaneous Rights and Interests. The DFR Assets
shall also include all of the following with respect to the foregoing
assets: (A) any accounts, instruments, and general intangibles in
favor of DFR attributable under generally GAAP or COPAS to the
purchased assets with respect to any period of time on or after the
Effective Date; and (B) any and all suspense accounts or suspense
funds held by DFR and payable to third parties in connection with
DFR's ownership or operation of the DFR assets.
(b) Seller will cause DGPP to and DGPP shall sell, assign,
convey, and deliver to Buyer all of its right, title, and interest, in and
to certain assets and properties subject to the Retained Rights, to the
extent applicable (the "DGPP Assets") free and clear of all Encumbrances
other than Permitted Encumbrances as follows:
(i) Oil and Gas Properties. (A) All of the undivided
interests described in Item (i) of Part II of Exhibit B in and to the
leasehold estates created by the leases described in Item (i) of Part
II hereto (the "DGPP Leases") together with all other right, title and
interest of DGPP in and to the DGPP Leases and the lands covered
thereby; (B) all of DGPP's right, title and interest in and to all
oil, gas and other minerals on, in, and under lands covered by the
DGPP Leases, including any such interests in and to any oil, gas
and/or mineral leases, leasehold interests, mineral fee interests,
royalty interests, overriding royalty interests, production payments,
other non-working or carried interests, and any other right, title or
interest evidencing or creating a right or interest in, or any right
to produce or receive the proceeds of production of, any Substances or
other minerals on, in and under the lands covered by the DGPP Leases,
including all interests therein which DGPP is entitled to receive by
reason of any participation, joint venture, farm-in, farm-out,
operating or other agreement; and (C) all rights and interests
attributable or allocable to the DGPP Leases and any lands pooled,
unitized, communitized or consolidated therewith by virtue of any
pooling, unitization, communitization, production sharing or similar
agreement, order or declaration, including from any and all units
formed under orders, regulations, rules and other official acts of the
Governmental Entity having jurisdiction thereof, together with any
right, title and interest created thereby in the DGPP Leases, the
Substances or the interests therein and all rights of ingress and
egress and appurtenances thereto (the "DGPP Oil and Gas Properties");
(ii) Wells. All of DGPP's interest in and to all of the
oil, condensate, natural gas, water injection or disposal, and other
wells located on the lands covered by the DGPP Oil and Gas Properties
or used or held for use in connection therewith, whether producing,
operating or temporarily shut-in or abandoned, including, without
limitation, the wells described on Item (ii) of Part II of Exhibit B;
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(iii) Equipment. All of DGPP's interest in and to the
equipment, machinery, goods, vehicles, materials and other personal
property (including inventories of tubular goods, supplies, tools, and
other oil and gas field equipment), fixtures and improvements on the
DGPP Oil and Gas Properties, appurtenant thereto or used or obtained
in connection with them or with the ownership, operation, use,
possession, maintenance or occupancy of the DGPP Oil and Gas
Properties, or with the exploration, development, production,
gathering, storage, transportation, treatment, processing, marketing,
purchase, sale, disposal, or other disposition of Substances or other
minerals or waste produced therefrom or attributable thereto and all
other appurtenances thereunto belonging, wherever located; and all of
DGPP's (or DGPP's interest as lessee in) fixtures, equipment and other
personal property located on or held for use in connection with the
Oil and Gas Properties, including, without limitation, the equipment
described on Item (iii) of Part II of Exhibit B;
(iv) Surface Contracts. All surface leases, easements,
privileges, rights of way, licenses, or other real property agreements
relating to the use or ownership of surface and subsurface properties
and structures thereon that are used or held for use in connection
with exploring, developing, producing, treating, or processing
Substances from the DGPP Oil and Gas Properties or for gathering,
storing, or transporting Substances produced from the DGPP Oil and Gas
Properties, including the interests described on Item (iv) of Part II
of Exhibit B;
(v) Property Records and Data. All Books and Records
relating to the DGPP Assets;
(vi) Contracts. All contracts, commitments, agreements, and
arrangements of DGPP that in any way relate to any of the DGPP Assets,
including the exploration, development, production, operation,
gathering, storage, treatment, transportation, processing, marketing,
purchase, sale, disposal, or other disposition of Substances therefrom
or in connection therewith and any and all amendments, ratifications,
or extensions of the foregoing, together with (A) all rights,
privileges, and benefits of DGPP thereunder arising on or after the
Effective Date (as defined below); (B) all rights of DGPP thereunder
to audit the records of any party thereto and to receive refunds of
any nature thereunder relating to periods on or after the Effective
Date; (C) all claims of DGPP for take-or-pay or other similar payments
arising on or after the Effective Date; and (D) all oil and gas sale,
purchase, exchange, gathering, storage, transportation, treating, and
processing contracts and all joint venture agreements, operating
agreements, pooling agreements, unit agreements, participation
agreements, farm-out agreements, farm-in agreements, joint operating
agreements, water rights agreements, exploration agreements,
bottomhole agreements, dryhole agreements, support agreements, acreage
contribution agreements, bidding agreements, advance payment
agreements, and all other agreements relating to any of the DGPP
Assets or any part thereof, including all
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amendments, ratifications, or extensions thereof, and all agreements
settling claims asserted thereunder to the extent such claims are
attributable to matters or periods of time after the Effective Date,
including the contracts, commitments, agreements and arrangements
described in Item (v) of Part II of Exhibit B;
(vii) Permits. All Permits (except those that by their
nature or express terms are not assignable) that relate to any of the
DGPP Assets or the ownership, operation, use, possession, maintenance,
occupancy, or enjoyment of any part thereof, including, without
limitation, the Permits described in Item (vi) of Part II of Exhibit
B; and
(viii) Miscellaneous Rights and Interests. The DGPP Assets
shall also include all of the following with respect to the foregoing
assets: (A) any accounts, instruments, and general intangibles in
favor of DGPP attributable under GAAP or COPAS to the DGPP Assets with
respect to any period of time on or after the Effective Date; and (B)
any and all suspense accounts or suspense funds held by DGPP and
payable to third parties in connection with DGPP's ownership or
operation of the DGPP Assets.
(c) Seller shall cause DPI and DPI shall sell, assign, convey and
deliver to Buyer (or its designee) the DPLP General Partner Interest free
and clear of all Encumbrances.
(d) Seller shall cause DVI and DVI shall sell, assign, convey and
deliver to Buyer (or its designee) the DPLP Limited Partner Interest free
and clear of all Encumbrances.
(e) Seller shall cause the appropriate Seller Parties and their
respective Affiliates to transfer to Buyer the office furniture and
equipment, computers, software and other assets described in Part V of
Exhibit B hereto.
2.2 Purchase Price and Payment. The aggregate purchase price for the
Assets shall be One Hundred Forty-Nine Million Dollars ($149,000,000) (herein
called the "Base Purchase Price"). Such Base Purchase Price may be adjusted as
hereinafter provided (the Base Purchase Price, as so adjusted, and as the same
may otherwise be adjusted by mutual agreement of the parties, being herein
called the "Purchase Price"). The Purchase Price shall be allocated among and
paid to DFR, DGPP, DPI and DVI in accordance with the Allocated Values of the
assets and partnership interests being sold to Buyer by such entities. Subject
to the terms and conditions set forth in this Agreement, in reliance on the
representations, warranties, covenants and agreements of the Seller contained
herein and in consideration of the sale, assignment, transfer and delivery by
the Seller Parties of the Assets on the Closing Date, the Purchase Price shall
be paid in cash by wire transfer on the Closing Date of immediately available
funds to the bank accounts for each of DFR, DGPP, DPI and DVI
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specified by Seller on behalf of DFR, DGPP, DPI and DVI in writing at least two
(2) Business Days prior to Closing.
2.3 Adjustment to Purchase Price. Seller and Buyer acknowledge and
agree that the transactions contemplated herein shall be effective as of the
Effective Date and, subject to the other terms and provisions of this Agreement,
(i) Buyer shall be entitled to receive all revenues with respect to the Assets
for the period from and after the Effective Date and shall be responsible for
all expenses incurred in the ordinary course of business and in compliance with
the terms of this Agreement with respect to the Assets for the period from and
after the Effective Date and (ii) Seller and the Seller Parties shall be
entitled to receive all revenues with respect to the Assets for the period prior
to the Effective Date and shall be responsible for all expenses incurred with
respect to the Assets for the period prior to the Effective Date. In this
connection:
(a) The Base Purchase Price shall be adjusted upward by the
following:
(i) an amount equal to all prepaid expenses attributable to the
Assets that are paid by or on behalf of any Seller Party prior to the
Closing Date that are, in accordance with GAAP, attributable to the period
on or after the Effective Date, including, without limitation, prepaid
utility charges, prepaid Taxes (but not including income taxes or Taxes
which are subject to the provisions of Section 2.6 hereof) based upon or
measured by the ownership of property or the production of Substances or
the receipt of proceeds therefrom;
(ii) the amount of all expenditures other than prepaid expenses
(including, without limitation, capital expenditures, royalties, rentals,
charges, and Taxes other than Taxes subject to the provisions of Section
2.6 hereof) based upon or measured by the ownership of property or the
production or marketing of Substances or the receipt of proceeds therefrom
paid by or on behalf of a Seller Party, in connection with the operations
of the Assets after the Effective Date, except to the extent such
expenditures violate the provisions hereof;
(iii) an amount equal to the value of the underproduction as of
the Effective Date under any operating agreement, gas balancing and storage
agreement, gas processing or dehydration agreement or similar agreement to
the extent such underproduction is greater than the amount set forth on
Schedule 2.3, or an amount equal to the value of the overproduction as of
the Effective Date under any such agreement to the extent that the volume
of the overproduction as of the Effective Date under any such agreement to
the extent that the volume of the overproduction is less than the volume
set forth on Schedule 2.3.
(iv) any other amount agreed upon in writing by Seller and Buyer.
(b) The Base Purchase Price shall be adjusted downward by the
following:
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(i) proceeds which have been received by any Seller Party prior
to the Closing Date attributable to the Assets that are, in accordance with
GAAP, attributable to the period of time on or after the Effective Date;
(ii) adjustments to the Base Purchase Price specified in Section
5.1 for Defects;
(iii) the aggregate value of all Assets as to which third
parties have exercised preferential purchase rights to purchase such
Assets;
(iv) an amount equal to the value of the overproduction as of the
Effective Date under any operating agreement, gas balancing and storage
agreement, gas processing or dehydration agreement or similar agreement to
the extent such overproduction is greater than the amount set forth on
Schedule 2.3, or an amount equal to the value of the underproduction as of
the Effective Date under any such agreement to the extent that the volume
of the underproduction is less than the volume set forth on Schedule 2.3.
(v) any other amount agreed upon in writing by Seller and Buyer.
(c) The Seller and Buyer shall execute and deliver a settlement
statement (the "Preliminary Settlement Statement") prepared by Seller and agreed
to by Buyer that shall set forth the calculations used in the determination of
the Purchase Price at Closing, and there shall be attached to the Preliminary
Settlement Statement such supporting documentation and other data as is
reasonably necessary to provide a basis for the adjustments and the calculation
of such adjustments as shown therein.
(d) (i) As soon as reasonably practicable, and in any event within
120 days after Closing, Seller will prepare and deliver to Buyer a final
settlement statement containing its proposed statement of final reconciliation
of the adjustments to the Purchase Price specified in subsections 2.3(a) and (b)
above together with such supporting information (the "Supporting Information"),
including data, calculations, and documents, as are required to verify such
reconciliation (the "Final Settlement Statement"). Buyer will have twenty (20)
days after receipt of the Final Settlement Statement in which to request any
other Supporting Information reasonably necessary to evaluate the Final
Settlement Statement. Seller will within twenty (20) days after receiving
Buyer's request provide such additional Supporting Information to Buyer to the
extent same is available to Seller. Buyer will have 45 days after receiving
Seller's Final Settlement Statement in which to provide Seller with its written
exceptions to any items in the Final Settlement Statement that Buyer disputes in
good faith, including any items Buyer disputes due to insufficient Supporting
Information (whether or not Buyer has previously requested such Supporting
Information). All items in the Final Settlement Statement to which Buyer does
not make an exception within the 45-day review period will be deemed correct.
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(ii) Upon the resolution of or agreement to all adjustments to
the Purchase Price paid at Closing, all adjustments will be offset against
each other so that only one reconciliation payment is required. The party
owing payment will pay the other party the net post-Closing adjustment to
the Purchase Price within ten (10) days after the later of (i) expiration
of Buyer's 45-day review period for the Final Settlement Statement or (ii)
resolution of all disputes pursuant to subsection (iii)(c) below. Such
payment shall include interest at ten percent (10%) per annum (the "Agreed
Rate") from the Closing Date until paid.
(iii) After the completion and delivery of Seller's proposed
Final Settlement Statement, the parties agree to negotiate in good faith to
attempt to reach agreement on the amount due with respect to all disputed
Purchase Price adjustments. If the parties are unable to agree on the
amount due with respect to all disputed items with 60 days after Seller
receives Buyer's written exceptions to the Final Settlement Statement, then
either Buyer or Seller may submit the issue to Arthur Andersen & Co., or
such other Person as the parties may agree, who shall have the power and
authority to resolve all such disputes. The decision of such third party
shall be final and binding upon Buyer and Seller, and is nonappealable.
(e) the parties shall take all necessary action to ensure that all
revenues attributable in accordance with GAAP to the period of time (i) prior to
the Effective Date are and shall be paid to Seller (or to its designee), and
(ii) on or subsequent to the Effective Date are and shall be paid to Buyer,
including, without limitation, causing cash available for distribution to be
distributed prior to the Closing by DPLP and the Gathering Joint Venture to
Seller to the extent such cash available for distribution results from revenues
attributable in accordance with GAAP to the period of time prior to the
Effective Date. Seller and the Seller Parties shall retain liability and
responsibility for payment of expenses billed after the Closing which are
attributable in accordance with GAAP to the period of time prior to the
Effective Date, regardless of the date received, including, without limitation,
payments for services to Snyder Oil Corporation in connection with the Gathering
Joint Venture or the Gathering System.
(f) Notwithstanding the foregoing, it is the intent of the parties
hereto that the Purchase Price be increased by any amounts paid by DFR prior to
the Closing with respect to AFE # 95013-000-C in the amount of $1,800,000
regarding an expansion to the Gathering System.
(g) Buyer and Seller agree to enter into a letter or agreement
respecting the allocation of the Purchase Price among the Assets for tax
purposes within ten (10) days after the Final Settlement Statement is agreed to
by Buyer and Seller.
2.4 Lignite Property Tax Litigation. The Seller acknowledges that
DPLP is a plaintiff in certain ad valorem tax dispute litigation styled Destec
Properties L.P., Plaintiff v.
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Freestone County Appraisal District, Freestone County Appraisal Review Board,
Defendants, Cause No. 92-373-B, District Court of Freestone County, Texas 87th
Judicial District and Destec Ventures, Inc. et al v. Leon County Central
Appraisal District et al, originally pending as Cause No. 10,717, in the 12th
District Court, Leon County, Texas (the "Jewett Mine Litigation"). In connection
with the Jewett Mine Litigation, Seller shall cause $4,763,335.50 of the
Purchase Price to be deposited into escrow pursuant to an Escrow Agreement in
the form of Exhibit D-1 attached hereto and $2,041,429.50 to be deposited into
escrow pursuant to an Escrow Agreement in the form of Exhibit D-2 attached
hereto and shall enter into a Tax Litigation Letter in the form of Exhibit E
attached hereto. The Escrow and Tax Litigation Letter will address among other
things (1) the release to Buyer or Seller of the escrowed funds depending upon
the outcome of any final unappealable decision (2) the responsibility of Seller
to prosecute and pay the costs of such tax litigation (3) the ability of and
limitations upon Seller to settle the tax litigation and (4) restrictions upon
Seller taking any action in such proceedings which would have an adverse impact
on Buyer, the Companies or the Partnerships in the future.
2.5 Sonat Litigation. The Seller acknowledges that DPLP is a
plaintiff in certain title dispute litigation styled Destec Properties Limited
Partnership, Plaintiff v. Sonat Exploration Company, et al., Defendant, Cause
No. 97-001-B, District Court of Freestone County, Texas, 87th Judicial District
(the "Sonat Litigation"). In connection with the Sonat Litigation, Seller and
Buyer shall enter into a Sonat Litigation Letter in the form of Exhibit F
attached hereto.
2.6 Ad Valorem and Personal Property Taxes. The ad valorem and
personal property taxes applicable to the Assets (as well as DPLP's portion of
taxes applicable to the Lignite Assets and DFR's portion of the taxes applicable
to the Gathering System) for calendar year 1996 to the extent unpaid at Closing
shall be the responsibility and obligation of the Seller and Seller Parties and
the apportionment of ad valorem and personal property taxes applicable to the
Assets (and the Lignite Assets and the Gathering System) for calendar year 1997
shall be based upon actual tax statements rendered by the respective taxing
authorities.
(a) Personal property taxes levied against the Assets (and the
Lignite Assets and Gathering System) for calendar year 1997 shall be
prorated between Seller and Buyer based upon the Effective Time. Seller
shall be invoiced for its pro rata share of such taxes at such time as
Buyer, DPLP or the Gathering Joint Venture is billed for such taxes.
(b) The parties acknowledge and agree that the ad valorem taxes
on the Assets (and the Lignite Assets and Gathering System) for calendar
year 1997 shall be prorated between Seller and Buyer based upon the
relative time occurring before and after the Effective Time for which such
taxes are assessed, regardless of the basis on which such taxes are
computed. Buyer and Seller acknowledge that the final settlement of ad
valorem taxes and other taxes measured by the production for the calendar
year 1997 will not occur until approximately the first quarter of 1998.
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(c) Buyer and Seller shall equally split all applicable sales
taxes or similar taxes imposed by any state, county, municipal or other
governmental entity as a result of the sale of the Assets. Seller shall be
entitled to review and approve Buyer's method of determining sales taxes
prior to filing any required return.
(d) Any payment of taxes requested by Buyer from Seller pursuant
to this Section 2.6 shall be paid by Seller within ten (10) days following
this request from Buyer. Such payment not timely paid will bear interest at
the Agreed Rate until payment is made by Seller.
2.7 Letters in Lieu and Notices to Operators.
(a) Buyer shall prepare, and Seller shall and shall cause each
Seller Party to execute and deliver to Buyer, on or prior to the Closing
Date, Letters in Lieu of Division and Transfer Orders in form reasonably
satisfactory to Seller relating to the Assets as necessary to reflect the
transactions contemplated hereby.
(b) Buyer shall prepare, and Seller shall and shall cause each
Seller Party to execute and deliver to Buyer on or prior to the Closing
Date all notices required by operating agreements and other contracts or
leases requested by Buyer to which Seller or any Seller Party is a party
covering any of the Assets or portions thereof to the effect that Seller or
any Seller Party has assigned to Buyer all of its respective interest in
the Assets subject to such agreements.
ARTICLE III. REPRESENTATIONS OF THE PARTIES
3.1 Representations of Seller. The Seller represents and warrants to
Buyer that:
(a) Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Texas.
(b) Seller has full power to enter into and perform its
obligations under this Agreement and has taken all proper action necessary
to authorize entering into this Agreement and the Operative Documents and
performance of its obligations hereunder and thereunder.
(c) Except as disclosed in Schedule 3.1(c) hereto, no filing or
registration with, notification to, or authorization, consent or approval
of, any Governmental Entity is required in connection with the execution
and delivery of this Agreement by Seller or the consummation by Seller,
DFR, DGPP, DVI or DPI of the transactions contemplated hereby, except
consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings required as a result of the regulatory status of
Buyer.
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(d) This Agreement constitutes, and the Operative Documents
provided for herein to be delivered at Closing will, when executed and
delivered, constitute, the legal, valid and binding obligations of Seller,
DFR, DGPP, DVI and DPI, as the case may be, enforceable in accordance with
its terms, except as limited by bankruptcy or other laws applicable
generally to creditor's rights and as limited by general equitable
principles.
(e) There are no pending, or to the Knowledge of Seller
threatened, suits, actions, or other proceedings in which any Seller Party
is a party or to which any Seller Party is subject which affect the
execution and delivery of this Agreement, any Operative Document or the
consummation of the transactions contemplated hereby.
3.2 Seller Representations Regarding the Assets, Companies and
Partnerships. Seller represents and warrants to Buyer that:
(a) Seller has previously delivered to Buyer a true and correct
copy of the charter and bylaws of each of the Companies and true and
correct copies of the agreement of limited partnership of each of the
Partnerships and the joint venture agreement of the Gathering Joint
Venture, all as amended to date and as currently in force and effect;
(b) (i) Each of DPI and DVI is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware and qualified to do business under the laws of each jurisdiction
in which its assets or properties or the nature of its business conducted
by it makes such qualification necessary or where failure to qualify would
have a Material Adverse Effect on such Person, and DFR is duly
incorporated, validly existing and in good standing under the laws of the
State of Texas and qualified to do business under the laws of each
jurisdiction in which its assets or properties or the nature of its
business conducted by it makes such qualification necessary or where
failure to qualify would have a Material Adverse Effect on such Person;
(ii) DPLP is a limited partnership duly organized and
validly existing under the laws of the State of Nevada, and DGPP is a
limited partnership duly organized and validly existing under the laws
of the State of Texas, and each of DPLP and DGPP is duly qualified to
do business under the laws of each jurisdiction in which its assets or
properties or the nature of its business conducted by it makes such
qualification necessary or where failure to qualify would have a
Material Adverse Effect on such Partnership and it is treated as a
partnership for federal income tax purposes;
(iii) The Gathering Joint Venture is a joint venture formed
and validly existing under the laws of the State of Colorado and is
duly qualified to do business under the laws of each jurisdiction in
which its assets or properties or the nature of its business conducted
by it makes such qualification necessary or where
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failure to qualify would have a Material Adverse Effect on such
Partnership and each is treated as a partnership for federal income
tax purposes; and
(iv) Each of DPLP and the Gathering Joint Venture has all
requisite partnership authority, as the case may be, to own, lease and
operate its assets and properties and conduct its business as now
being conducted.
(c) Except as disclosed in Schedule 3.2(c) hereto, from December
31, 1996 until the date of this Agreement, there has not been a Material
Adverse Effect with respect to any of the Companies or Partnerships and
each of DPLP and the Gathering Joint Venture has:
(i) conducted its business only in the ordinary and usual
course and consistent with past practice;
(ii) not amended or proposed to amend its charter or bylaws,
partnership agreement or joint venture agreement;
(iii) not (A) created, incurred, assumed, guaranteed or
become contingently liable with respect to any Debt, (B) purchased,
acquired or leased or disposed of any assets or properties other than
in the ordinary course of business consistent with past practice, (C)
made any capital expenditure or commitment therefor other than in the
ordinary course of business, consistent with past practice, (D)
purchased or acquired any businesses or the securities or Debt or
equity interests of any Person, (E) made any loan or advance to, or
any investment in, any Person, or (F) entered into any contract, or
amended, modified or terminated any contract, other than in the
ordinary course of business consistent with past practice;
(iv) maintained its financial Books and Records in
accordance with GAAP and not made any change in its accounting
systems, methods or practices; and
(v) maintained with financially responsible insurance
companies insurance on its tangible assets and properties and its
businesses in such amounts and against such risks and losses as are
consistent with past practice.
(d) Except as set forth in Schedule 3.2(d) hereto, there is no
(i) suit, claim, action, proceeding or investigation pending or, to the
Knowledge of Seller, threatened, against (A) any of the Companies or
Partnerships with respect to the Assets, the Lignite Assets or the
Gathering System (or any material portion thereof) or (B) DPLP or the
Gathering Joint Venture or (ii) judgment, decree, injunction, rule or order
of a Governmental Entity or arbitrator outstanding against (A) any Seller
Party with respect to or affecting the Assets, the Lignite Assets or the
Gathering System (or any material portion thereof) or (B) otherwise against
DPLP or the Gathering Joint Venture.
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(e) Except as disclosed in Schedule 3.2(e) hereto, since the date
of the NGC/Destec Agreement, none of the Companies or Partnerships (to the
extent relating to the Assets and to be assumed by Buyer) and neither DPLP
nor the Gathering Joint Venture has incurred any liabilities that would be
required to be reflected or reserved against in a consolidated balance
sheet of the Companies and Partnerships prepared in accordance with GAAP,
except for liabilities and obligations resulting from the execution and
delivery of the NGC/Destec Agreement or relating to the transactions
contemplated thereby or this Agreement or relating to the transactions
contemplated hereby.
(f) Except as disclosed in Schedule 3.2(f), the Property Owners
hold all Permits, variances and approvals of Governmental Entities
necessary for the ownership and operation of the Assets, the Lignite Assets
and the Gathering System and the lawful conduct of their respective
businesses as currently conducted. The Companies and the Partnerships are
in material compliance with the terms of such licenses, Permits, variances
and approvals. Seller is not aware of any reason why such Permits would not
be readily transferable to the Buyer.
(g) Except as set forth in Schedule 3.2(g), the Companies and the
Partnerships: (i) have not committed a violation of any material
requirement of any law and are in compliance in all material respects with
such laws, to the extent that the same are applicable to or relating to the
Assets, the Lignite Assets or the Gathering System; (ii) have not been
given notice or been charged with the violation of any material requirement
of any law applicable to or relating to the Assets, the Lignite Assets or
the Gathering System; and (iii) are not subject to any material liability
for past or continuing violation of any law applicable to or relating to
the Assets, the Lignite Assets or the Gathering System.
(h) Each of the Companies and Partnerships has correctly prepared
and filed all federal, state, local and foreign Tax returns and other
reports that such entity is required by law to file and has paid all Taxes
that are due and payable pursuant to such returns and reports or are
otherwise due and payable under applicable law, except to the extent that
any of the same are being contested in good faith by appropriate
proceedings promptly initiated and diligently pursued and with respect to
which adequate reserves have been set aside on the books and records of
such entities in accordance with GAAP and which are reflected in the
Financial Statements. No installment or deferred payments of Taxes and no
deficiency or assessment of Taxes has been proposed, asserted or assessed
or, to the knowledge of Seller, been threatened to be proposed, asserted or
assessed, with respect to the business of such entities by any Governmental
Entity or any other Person which has not been fully paid or finally
settled. There are no ongoing administrative or judicial proceedings
concerning Taxes or any audits or examinations of any of the Tax returns of
DPLP or the Gathering Joint Venture. No closing agreement or similar
contract with any Governmental Entity or final determination exists with
respect to such entities or their business relating to Taxes for any
taxable year or period after the date hereof.
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(i) Schedule 3.2(i) sets forth a true, complete and correct list
and description of all policies of fire, liability, environmental,
pollution, product liability, workers compensation, health and other forms
of insurance currently, or within the last three years, in effect with
respect to each Company and Partnership or its respective assets and
properties (and any programs of self insurance).
(j) No Company or Partnership is a "holding company," a
"subsidiary company" of a "holding company," an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company" or a "public
utility," as such terms are defined in the Public Utility Holding Company
Act of 1935 and the rules and regulations thereunder.
(k) Except for this Agreement and the NGC/Destec Agreement,
neither Seller nor any of the Companies or the Partnerships is a party to
any contract, including any letter of intent or term sheet, in connection
with, related to or providing for the acquisition of all or any substantial
part of the business or assets and properties of any Company or Partnership
or any capital stock or equity interest of any Company or Partnership,
whether by merger, purchase of assets and properties, tender offer or
otherwise, and whether for cash, securities or any other consideration.
(l) Except as set forth in Schedule 3.2(l), no governmental
approvals and no notifications, filings or registrations to or with any
Governmental Entity or any other Person is or will be necessary for the
valid execution and delivery by the Seller or any Seller Party of this
Agreement and the Operative Documents to which it is a party or the
consummation of the transactions contemplated hereby or thereby, or the
enforceability hereof or thereof, other than those which have been obtained
or made and are in full force and effect.
(m) Except as set forth on Schedule 3.2(m), (i) all rentals,
royalties, excess royalty, overriding royalty interests, production
payments, and other payments due and/or payable on or prior to the Closing
Date under or with respect to the wells and leases affecting the Basic
Properties, and the Substances produced therefrom or attributable thereto,
have been properly and timely paid, (ii) all rentals, payments, and
obligations due and payable or performable on or prior to the Closing Date
under or on account of any of the Basic Properties have been duly paid,
performed, or provided for prior to the Closing Date, (iii) all ad valorem,
property, production, transportation, sales, gross receipts, excise, use,
severance, employee, income, franchise and other Taxes, including Taxes
based on or measured by the ownership or operation of the Basic Properties
or the production or mining of Substances, as well as all assessments and
other governmental charges, penalties, interest and fines, which have
become due and payable on or prior to the Closing Date with respect to the
Basic Properties, or any Company's or Partnership's ownership or operation
thereof, or which have been collected by such Company or Partnership in
connection with the Basic Properties on behalf of some governmental entity,
have been properly paid prior to becoming delinquent, and all returns and
reports with respect to such matters have been duly and timely filed, (iv)
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neither Seller, nor any Company, nor any Partnership is obligated under any
contract or agreement for the sale of gas containing a take-or-pay, advance
payment, prepayment, or similar provision, or under any gathering,
transmission, or any other contract or agreement with respect to any of the
Basic Properties (A) to pay for and take any gas if the purchase of such
gas becomes unprofitable or (B) to gather, deliver, process, or transport
any gas without then receiving full payment therefor, (v) all suspense
accounts, or other similar accounts holding the funds of others, with
respect to the Basic Properties, or any of them, are fully funded and such
accounts and funds have been transferred to Buyer and (vi) all wells which
are required to be drilled in order to maintain such leases in force and
effect have in fact been drilled under the leases comprising a portion of
the Assets.
(n) Schedule 3.2(n) accurately sets forth all pipeline and
production imbalances and penalties as of the Closing Date arising with
respect to the Basic Properties. Except as disclosed in Schedule 3.2(n),
(i) no purchaser is entitled to "make-up" or otherwise take or receive
deliveries of Substances attributable to the Seller Party's or DPLP's
interest in the wells and leases without paying at the time of such
deliveries the full contract price therefor, (ii) no Person is entitled to
receive any portion of the Substances or to receive cash or other payments
to "balance" any disproportionate allocation of Substances produced from
any of the Basic Properties under any operating agreement, gas balancing or
storage agreement, gas processing or dehydration agreement, gas
transportation agreement, gas purchase agreement, or other agreements,
whether similar or dissimilar, (iii) no Company or Partnership is obligated
to deliver any quantities of gas, or to pay any penalties or other amounts,
in connection with the violation of any of the terms of any gas
transportation contract or other agreement with shippers, (iv) no claim,
notice, or order from any Governmental Entity has been received by Seller
or any Company or Partnership due to Substances production from any of the
Basic Properties being in excess of allowables or similar violations which
could result in curtailment of production from such properties after
Closing; and (v) no Company nor any Partnership is obligated to pay any
penalties or other payments under any gas transportation or other agreement
as a result of the delivery of quantities of gas in excess of the contract
requirements.
(o) The Assets, the Lignite Assets and the Gathering System
represent all of the assets, properties and rights necessary to conduct the
oil and gas development activities, lignite recovery activities and other
related activities with respect to the Assets as same are being conducted
by DFR, DGPP, DPLP and/or the Gathering Joint Venture prior to the Closing.
(p) Seller has no Knowledge or notice of any actual or threatened
taking (whether permanent, temporary, whole or partial) of any part of the
Assets, the Lignite Assets or the Gathering System, by reason of
condemnation or the threat of condemnation.
(q) Schedule 3.2(q) contains a complete and accurate list of the
status of any "payout" balance, as of the Effective Date, for each well and
lease included in the Assets
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that is subject to a reversion or other adjustment at some level of cost
recovery or payout (or passage of time or other event, other than cessation
of production).
(r) Schedule 3.2(r) sets forth a listing of all of the contracts
and agreements material to the ownership, operation, development,
maintenance or use of any of the Assets, the Lignite Assets or the
Gathering System. Schedule 3.2(r) includes, among other things, a list of
all of the following contracts, agreements, and commitments to which any of
the Assets, the Lignite Assets or the Gathering System are bound: (i) any
agreement with Seller or any Company or Partnership or any Affiliate of
Seller or any Company or Partnership that has not been released; (ii) any
agreement or contract for the sale, exchange, or other disposition of
hydrocarbons produced from or attributable to the Assets or Lignite Assets
that is not cancelable without penalty or other material payment on not
more than 60 days prior written notice; (iii) any agreement to sell, lease,
farmout, or otherwise dispose of any interest in any of the Assets, the
Lignite Assets or the Gathering System, other than conventional rights of
reassignment arising in connection with the Company's or Partnership's
surrender or release of any of the properties; (iv) any operating agreement
to which any of the Assets, the Lignite Assets or the Gathering System are
subject; (v) any contract that will require the Buyer to expend after
Closing more than $100,000 in any year in connection with any of the
Assets, the Lignite Assets or the Gathering System; (vi) any contract that
relates to the Assets, the Lignite Assets or the Gathering System that
contains an indemnity with respect to environmental and health and safety
matters; (vii) any hedge, exchange, swap, option to purchase, or call on
the funds of others, and pipeline and production imbalances relating to the
Assets, the Lignite Assets or the Gathering System; (viii) any
confidentiality agreements which would purport to bind Buyer, DPLP, the
Gathering Joint Venture and/or their respective Affiliates following the
Closing; (ix) any non-competition agreement, which would purport to bind
Buyer, DPLP, the Gathering Joint Venture and/or their respective Affiliates
following the Closing and (x) any contracts or agreements between DPLP or
the Gathering Joint Venture on the one hand and any Seller Party or
Affiliate of a Seller Party on the other hand.
(s) To the Knowledge of Seller, no Seller Party nor any other
party to or bound by any agreement, contract or instrument which is herein
being assigned to Buyer (i) is in breach of or default, or with the lapse
of time or the giving of notice, or both, would be in breach or default,
with respect to any of its material obligations thereunder, to the extent
that such breaches or defaults have an adverse impact on any of the Assets,
the Lignite Assets or the Gathering System or (ii) has given or, has
threatened to give notice of any material default under, or made inquiry
into any possible default under, or action to alter, terminate, rescind or
procure a judicial reformation of any agreement or instrument.
(t) There are no wells on any of the Oil and Gas Properties that
have been permanently plugged and abandoned, but have not been plugged in
accordance in all material respects with all applicable requirements of
each regulatory authority having jurisdiction over such properties.
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(u) Except as set forth in Schedule 3.2(u), none of the Assets,
the Lignite Assets or the Gathering System are subject to or affected by
any tax partnership agreement.
3.3 Representations by Seller Relating to Option Agreement;
Environmental Matters.
(a) With respect to the Option Agreement (capitalized terms used
in this Section 3.3 that are not otherwise defined in this Agreement shall
have the meaning assigned to such term in the Option Agreement), Seller
represents, to its Knowledge, that there are no facts or other matters that
would cause the following statements to be untrue or incorrect in any
material respect:
(i) DPLP has valid title to the Option Agreement and is the
sole owner of the interest of Dow in the Option Agreement and such
interest is free and clear of any and all Encumbrances;
(ii) There is no valid offset, defense or counterclaim or
right of rescission to HL&P to pay the amounts presently due and owing
under the Option Agreement, including royalty payments thereunder;
(iii) The form of Option Agreement with all amendments and
modifications to date is as set forth on Schedule 3.3(a)(iii) hereto.
HL&P has not been released, in whole or in part, from its obligations
under the Option Agreement. The Option Agreement has not been assigned
by Dow or HL&P except as reflected on the documents listed on Schedule
3.3(a)(iii) attached hereto, true, correct and complete copies of
which have been delivered to Buyer. No reassignment of the Option
Agreement pursuant to Section 6.02 of the Option Agreement has been
effected;
(iv) There is no default, breach or violation existing under
the Option Agreement by Dow or HL&P, neither Seller nor its
predecessors under the Option Agreement have waived any such default,
breach or violation, and, no event has occurred which, with the
passing of time or the giving of notice, would constitute such a
default, breach or violation;
(v) The information set forth on the royalty payment
schedule attached as Schedule 3.3(a)(v) hereto is complete, true and
correct in all material respects as of the date or dates respecting
which the information is furnished;
(vi) $17,821,244.57 of the Advance Overriding Royalty has
been recovered by HL&P through 3/31/97;
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(vii) The overburden has been removed from eighty percent
of the Parcels such that no reduction may be made from the Lump Sum
Payment for each of the remaining Parcels from which no overburden has
been removed;
(viii) No title failure has occurred under Section 8.01 of
the Option Agreement with respect to title to the coal and lignite
such that the one hundred million tons on which the Overriding Royalty
Payment and the Minimum Annual Overriding Royalty Payment are to be
computed and the number of tons related to the Parcels have been
reduced, and Seller has no knowledge of any title defect that could
cause a title failure under Section 8.01 of the Option Agreement in
the future;
(ix) the Coordinates of the Parcels have not been modified
pursuant to Section 6.04 of the Option Agreement or otherwise;
(x) HL&P has not delivered the written notice required by
Section 6.03 of the Option Agreement exercising its right to reassign
to Dow the leases assigned in the Assignment and to release all tracts
included in the Dow Lease.
(xi) HL&P has not delivered any notice of any change in its
mining plan from the 1997 Mining Plan that has been submitted to the
Texas Railroad Commission.
(b) (i) Except as set forth in Schedule 3.3(b)(i), there is no
violation of any Environmental Laws in connection with the conduct of
business with respect to the Assets, the Lignite Assets or the Gathering
System, where such violation or non-compliance would a Material Adverse
Effect on the Assets, the Lignite Assets or the Gathering System.
(ii) Seller has not received any written notice of any
violation of, non-compliance with, or remedial obligation under,
Environmental Laws, relating to the conduct of business with respect
to the Assets, where such violation or non-compliance would materially
adversely affect the Assets.
3.4 Representations of Buyer. Buyer represents to Seller
that:
(a) Buyer is a corporation duly incorporated and legally existing
and under the laws of the State of Delaware, and is qualified to do
business in and in good standing under the laws of, each of the states in
which the Assets are located, except where the failure to so qualify would
not have a material adverse effect on the ability of the Buyer to perform
its obligations under this Agreement.
(b) Buyer has full corporate power to enter into and perform its
obligations under this Agreement and has taken all proper action necessary
to authorize
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entering into this Agreement and the Operative Documents to which it is a
party and performance of its obligations hereunder and thereunder.
(c) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, nor the compliance
with the terms hereof, will result in any material default under any
agreement or instrument to which Buyer is a party or violate in any
material respect any Applicable Law applicable to Buyer.
(d) This Agreement constitutes, and the Operative Documents to
which Buyer is a party provided for herein to be delivered at Closing will,
when executed and delivered, constitute, the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms, except as limited by bankruptcy or other laws applicable generally
to creditor's rights and as limited by general equitable principles.
(e) There are no pending suits, actions, or other proceedings in
which Buyer is a party which impair or affect the ability of Buyer to
execute and deliver this Agreement or consummate the transactions
contemplated hereby.
(f) Buyer will have sufficient funds available at the Closing to
pay the Purchase Price and to perform its obligations hereunder in
connection with the Closing and thereafter.
ARTICLE IV. COVENANTS
4.1 Certain Covenants of Seller Pending Closing. Between the date of
this Agreement and the Closing Date:
(a) Seller agrees to give Buyer and its attorneys and other
representatives access, at all reasonable times and upon reasonable
notice, to the Companies, Partnerships and their respective assets and
properties, and to the Seller Parties' records pertaining to the
Companies, the Partnerships, the Assets, the Lignite Assets and the
Gathering System and to the ownership and/or operation of the Assets,
the Lignite Assets and the Gathering System, including, without
limitation, title files, division order files, well files, production
records, equipment inventories, and production, severance, and ad
valorem tax records applicable thereto. Seller shall not be obligated
to provide Buyer with access to any records or data which Seller
cannot legally provide to Buyer without breaching, confidentiality
agreements with other parties, provided such confidentiality
agreements shall be affirmatively disclosed in writing by Seller to
Buyer. Buyer recognizes and agrees that all materials made available
to it (whether pursuant to this Section or otherwise) in connection
with the transaction contemplated hereby are made available to it as
an accommodation, and without representation or warranty of any kind
as to the accuracy and completeness of such materials.
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(b) Seller agrees to cause the Companies and Partnerships
(i) to continue the operation of the Basic Properties and Assets in
the ordinary course of its business (or, where a Company is not the
operator of a Basic Property, to continue its actions as a non-
operator in the ordinary course of its business), and (ii) except as
otherwise approved by Buyer, not to sell or otherwise dispose of any
portion of the Basic Properties or the Assets, the Lignite Assets or
the Gathering System, and (iii) to otherwise comply with its
obligations under the NGC/Destec Agreement.
(c) Seller agrees to provide Buyer full access to all of the
records of the Companies and Partnerships as may be necessary to allow
Buyer to identify (i) all preferential rights to purchase and all
rights to require that consents to assignment be obtained which would
be applicable to the transactions contemplated hereby and (ii) the
parties holding such rights. Upon the identification of such
preferential purchase rights and consent requirements, Seller will
request, or shall request the Companies or Partnerships to request,
from the parties so identified, and in accordance with the documents
creating such rights, waivers of the preferential rights to purchase
and requirements that consent to assignment be obtained which were so
identified. Seller shall have no obligation hereunder other than to
aid Buyer in its attempts to identify such preferential rights and
requirements for consent to assignment and to so request such waivers.
Without limiting the foregoing, Seller shall specifically have no
obligation to assure that such waivers are obtained nor to expend any
sums to obtain such waivers. If a party from whom a waiver of a
preferential right to purchase is requested refuses to give such
waiver, Seller will request the Companies to tender the required
interest in the Basic Property affected by such unwaived preferential
right to the holder, or holders, of such right who have elected not to
waive such preferential right to purchase. The tender of such
required interest would be made at a price equal to the amount
specified in Exhibit G hereto for the wells located on, or lands
comprising, such Basic Property and for any units in which such Basic
Property may participate, reduced appropriately, as determined by
Seller, if less than the entire Basic Property must be tendered. If,
and to the extent that, such preferential right to purchase is
exercised by such party or parties, and such interest in such Basic
Property is actually sold to such party or parties so exercising such
right, such interest in such Basic Property will be transferred to the
holder of such right by the appropriate Property Owner, and the Base
Purchase Price will be reduced by the amount paid to Seller or to the
Companies by the party or parties exercising such right.
(d) If requested by Buyer prior to Closing, Seller agrees to
cause DPI and DVI to cause DPLP to make an election under Section 754
of the Code effective prior to the Closing.
4.2 Restrictions on Certain Actions. Without limiting the generality
of the foregoing, and except as otherwise expressly provided in this Agreement
or the NGC/Destec
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Agreement, or except as required by Applicable Law, any Significant Agreement
(as defined in the NGC/Destec Agreement) or without the prior written consent of
Buyer, prior to the Closing, Seller shall prevent:
(a) DPLP or the Gathering Joint Venture from:
(i) amending its partnership agreement, joint venture
agreement or other governing instruments; or
(ii) (A) creating, incurring, guaranteeing, or assuming any
Debt or otherwise becoming liable or responsible for the obligations
of any other Person; or (B) making any loans, advances, or capital
contributions to, or investments in, any other Person; and
(b) any Property Owner, DVI and DPI from:
(i) disposing of or mortgaging or pledging any of the
Assets, Lignite Assets or any part of the Gathering System, tangible
or intangible, or creating or suffering to exist any Encumbrance
thereupon, other than matters which would constitute a Permitted
Encumbrance;
(ii) releasing or waiving any material right relating to any
of the Assets, Lignite Assets or Gathering System; or
(iii) releasing or abandoning any of the Assets, Lignite
Assets or Gathering System without Buyer's prior written consent; or
(iv) entering into, assigning, terminating or amending, in
any material respect, any contract or agreement by which the Assets,
Lignite Assets or Gathering System are bound; or
(v) taking any action affecting the Assets, Lignite Assets
or Gathering System which action is not in the ordinary course of
business;
provided, however, that notwithstanding any other provision hereof, DPLP and the
Gathering Joint Venture may prior to the Closing (and Buyer shall take all
necessary steps after the Closing to authorize) distribute to its partners and
joint venturers, as the case may be, all cash available for distribution of DPLP
and the Gathering Joint Venture which are, in accordance with GAAP, attributable
to revenues for the period of time prior to the Effective Date.
4.3 Assumed Liabilities; Retained Liabilities.
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(a) Subject to the provisions of Section 2.3 and 2.6 hereof and
the Seller's agreement to retain all Retained Liabilities, Buyer, on the
date of Closing, agrees to and shall assume, and timely pay and perform all
obligations and liabilities of the Seller Parties relating directly to the
Assets and to DPLP and the Gathering Joint Venture and their respective
properties and interests, and to the ownership and/or operation by the
Seller Parties of the Assets. In connection with (but not in limitation
of) the foregoing, it is specifically understood and agreed that matters
arising out of or otherwise relating to the ownership and/or operation by
the Seller Parties of the Assets shall include all matters relating to any
damage to property, or injury or death to persons or arising out of the
condition of the Assets, including, without limitation, within such matters
all obligations to properly plug and abandon, or replug and re-abandon,
wells located on the Assets, to restore the surface of the Assets, and to
comply with, or to bring the Assets into compliance with, applicable
Environmental Laws, including conducting any remediation activities which
may be required on or otherwise in connection with activities on the
Assets, regardless of when the events occurred which give rise to such
condition (and regardless of whether Seller, or any other Seller Party, or
their respective officers, employees, agents or other representatives, were
negligent but excluding gross negligence and willful misconduct) and the
above provided for assumptions and indemnifications by Buyer shall
expressly cover and include such matters so arising out of such condition
(the "Assumed Liabilities").
(b) Except as otherwise provided in Section 4.3(a), Buyer does
not assume or agree to pay, perform or discharge, and shall not be
responsible for, any Retained Liabilities or any other liabilities or
obligations of any Seller Party whether accrued, absolute, contingent or
otherwise.
(c) Seller shall and shall cause each applicable Seller Party,
from and after the Closing Date, to the extent necessary to hold Buyer
harmless therefrom, timely pay and perform all obligations and liabilities
included in the Retained Liabilities.
ARTICLE V. DEFECT PROVISIONS
5.1 Due Diligence Reviews.
(a) Buyer may, to the extent it deems appropriate, conduct, at
its sole cost, such title examination or investigation, and other
examinations and investigations, as it may choose to conduct with respect
to the Assets. Should, as a result of such examinations and
investigations, or otherwise, matters come to Buyer's attention which would
constitute "Defects" (as below defined), and should there be one or more of
such Defects which Buyer is unwilling to waive and close the transaction
contemplated hereby so long as such Defects exist, Buyer shall notify
Seller in writing of such Defects no later than 5:00 p.m. Houston, Texas
time, on July 15, 1997, with respect to matters other than Defects
affecting the Lignite Assets or Option Agreement and on July 25, 1997 with
respect to Defects affecting the Lignite Assets or Option Agreement
(hereinafter collectively called the "Defect Date"). To
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be effective, Buyer's notice of Defects (herein called a "Defect Notice")
must include (i) a brief description of the matter constituting the Defect
so asserted, (ii) reference to the title opinion, other reports of experts,
or other documentation on which Buyer's assertion of a Defect is based,
(iii) such supporting documents reasonably necessary for Seller (or a title
attorney retained by Seller) to verify the existence of any such Defect,
and (iv) Buyer's estimate of the diminution in the sum to be paid at
Closing resulting from such alleged Defect. Such Defects of which Buyer so
provides a Defect Notice on or before the Defect Date are herein called
"Asserted Defects". All matters which would constitute Defects with respect
to which Buyer fails to so give Seller notice on or before the applicable
Defect Date will be deemed waived for all purposes other than the special
warranty of title which will be contained in each Conveyance from a Seller
Party. In the event that Buyer notifies Seller of Asserted Defects, Seller
(i) shall have the right (but not the obligation) to attempt (or request
the Companies to attempt) to cure, prior to Closing, such Asserted Defects,
and (ii) shall also have the right (which may be exercised at any time
before the Closing Date) to postpone the Closing by designating a new
Closing Date not later than September 30, 1997, if Seller desires
additional time to attempt to cure (including determining if it will
attempt to cure) one or more Asserted Defects.
(b) The term "Defect" as used in this Section 5.1 shall mean
that, based on the documentation of record in the applicable county or
otherwise, any of the following:
(i) The interest of the Property Owners in a Basic Property
(other than the Gathering Joint Venture or Gathering System) is such
that, with respect to a well, unit or lands described on Exhibit B
hereto, (A) the Buyer, as successor to the applicable Property Owner
will be entitled to receive a decimal share of (1) all oil, gas and
other hydrocarbons with respect to an Oil and Gas Property or (2) all
lignite with respect to a Lignite Asset, produced from, or allocated
to, such well, unit or lands after the Effective Date which is less
than the decimal share set forth on Exhibit B in connection with such
well, unit or lands described therein, in the column headed "Net
Revenue Interest" or (B) the Property Owner is obligated to bear a
decimal share of the cost of operation of such well, unit or lands
after the Effective Date which is greater than the decimal share set
forth on Exhibit B in connection with such well, unit or lands in the
column headed "Operating Interest"; with respect to the Gathering
System, DFR is the owner of less than a 45% interest in the Gathering
Joint Venture, or the Gathering Joint Venture shall be the owner of
less than 100% of the Gathering System; or
(ii) The applicable Property Owner's ownership of a Basic
Property is subject to an Encumbrance other than (A) a lien reflected
on Exhibit B, (B) a lien for Taxes not yet delinquent, (C) a
mechanic's or materialmen's lien (or other similar lien), or a lien
under an operating agreement or similar agreement, to the extent the
same relates to expenses incurred in the ordinary course of business
which are not yet due or (D) a Permitted Encumbrance; or
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(iii) The applicable Property Owner's ownership of a Basic
Property is subject to a preferential right or consent to assignment
for which the failure to obtain such consent would cause the
assignment of such Basic Property to be void or entitle a third Person
to purchase such Basic Property (such consent herein referred to as a
"Fatal Consent") which is applicable to the transaction contemplated
hereby, other than such preferential purchase rights or Fatal Consents
with respect to which a waiver of such right or consent has been
obtained with respect to the transaction contemplated hereby or, in
the case of a preferential right to purchase, an appropriate tender of
the applicable interest has been made to the party holding such right,
and such party has either declined to exercise such right, or the
period of time required for such party to exercise such right has
expired without such right being exercised; or
(iv) The applicable Property Owner's ownership of a Basic
Property does not include any easement, Permit, right-of-way,
authorization or other right necessary (A) in the case of an Oil and
Gas Property, for the exploration for and production and marketing of
oil and gas, (B) in the case of a Lignite Asset, for the extraction
and transportation of lignite, or (C) in the case of the Gathering
System, for the ownership and operation of the Gathering System on,
over and across the lands on which the Gathering System is currently
situated, or a default exists with respect to any such right that
could materially interfere with the Property Owner's exercise of such
right; or
(v) The applicable Property Owner's ownership of a Basic
Property is subject to an imperfection in title which, if asserted,
would cause a Defect, as defined in clause 5.1(b) above, to exist,
provided, however, that none of the matters which are set forth on
Schedule 5.1(b) hereto, shall constitute an Asserted Defect
hereunder, Buyer having accepted such disclosed matters in connection
with its execution of this Agreement; or
(vi) A Basic Property is in violation of applicable
Environmental Laws in any material respect; or
(vii) The title to any of the lignite properties referenced
in the Option Agreement or otherwise supporting the payments from HL&P
under the Option Agreement shall be defective (i.e. lien, encumbrance
or other imperfection in title) and such defect is of such nature that
it could (A) adversely impact the payments payable by HL&P under the
Option Agreement or the magnitude of such payments or (B) result in a
title failure under Section 8.01 of the Option Agreement that could
reduce the Overriding Royalty Payment and/or the Minimum Annual
Overriding Royalty Payment under the Option Agreement.
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(c) Buyer waives and releases all claims against Seller, and the
other Seller Parties and their respective parent or subsidiary companies or
other Affiliates, and its and their directors, officers, employees and
agents, for injury to, or death of, persons or for damage to property
arising in any way from the conduct by Buyer of the investigations and
examinations contemplated by this Section or the conduct of Buyer's
employees, agents or contractors in connection with such investigations and
examinations (or the exercise of such rights of access). Buyer shall
indemnify Seller, and the other Seller Parties, and their respective parent
and subsidiary companies and other Affiliates, and its and their directors,
officers, employees and agents from and against any and all claims,
actions, liabilities, losses, damages, costs or expenses (including court
costs and attorneys fees) whatsoever arising out of the exercise of such
rights of investigation and examination (or exercise of such rights of
access) except for claims, actions, liabilities, losses, damages, costs or
expenses caused by Seller and/or the other Seller Parties and/or their
agents.
(d) Upon request therefor by Seller, Buyer agrees to promptly
provide to Seller a copy of the results of any investigations or
examinations of the compliance of any Basic Property with applicable
environmental law which may be conducted pursuant to the provisions of this
Section 5.1.
5.2 Certain Price Adjustments. If, as a part of the due diligence
reviews provided for in Section 5.1 above, Asserted Defects are presented to
Seller and Seller is unable (or unwilling) to cure such Asserted Defects prior
to Closing, then
(a) Buyer and Seller shall, with respect to each Basic Property
affected by an Asserted Defect, attempt to agree upon an appropriate
adjustment to the Purchase Price to account for such Asserted Defect,
(b) with respect to each Basic Property as to which Buyer and
Seller are unable to agree upon an appropriate adjustment with respect to
all such matters affecting such Basic Property, then:
(i) If the Asserted Defect is a mortgage, lien, encumbrance
or other charge which is undisputed and liquidated in amount, then
(subject to the provisions of paragraph (v) below) the adjustment
shall be the amount necessary to be paid to remove the Asserted Defect
from the affected Basic Property;
(ii) If there shall be an Asserted Defect affecting an Oil
and Gas Property or a Lignite Asset which (A) represents a discrepancy
between (1) the Net Revenue Interest to which the Property Owners are
entitled to receive from such Property and (2) the Net Revenue
Interest stated on Exhibit B, and (B) there is a Working Interest
change proportionate to the change in the Net Revenue Interest
resulting from the Asserted Defect, then the amount of the adjustment
shall be the product of the Allocated Value to such Property as set
forth on Exhibit A multiplied
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by a fraction, the numerator of which shall be the change in the Net
Revenue Interest and the denominator of which shall be the Net Revenue
Interest set forth on Exhibit B;
(iii) If there shall be an Asserted Defect affecting the
interest of DFR in the Gathering Joint Venture or the interest of the
Gathering Joint Venture in the Gathering System which represents a
discrepancy between the ownership interest of DFR or the Gathering
Joint Venture in such property and that interest as set forth on
Exhibit B, then the amount of the adjustment shall be such amount as
may be agreed upon by Buyer and Seller to refer to such diminution in
value;
(iv) If the Asserted Defect represents an obligation,
encumbrance, burden, discrepancy or charge upon or other defect in
title to the affected Basic Property of a type not described in
paragraphs (i), (ii) or (iii) above, the adjustment amount shall be
determined by taking into account the Allocated Value of the Basic
Property so affected, the portion of the Basic Property affected by
the Asserted Defect, the legal effect of the Asserted Defect, the
potential economic effect of the Asserted Defect over the life of the
affected Basic Property and such other factors as are necessary to
make a proper evaluation of the value of the Asserted Defect;
(v) Notwithstanding any other provision contained herein,
the aggregate adjustment attributable to the effect of all Asserted
Defects related to a given Basic Property shall not exceed the
Allocated Value of such Property, provided, however, that Buyer may
elect to exclude a property affected by an environmental claim if the
value adjustments would exceed the Allocated Value of such property;
(vi) Should the parties be unable to agree upon an
appropriate adjustment, in light of the factors set forth above,
within 30 days after the delivery of the Defect Notice, either party
may refer the matter for resolution by arbitration conducted in the
City of Houston, Texas, in accordance with the further provisions
hereof by giving notice to the other party of its election to do so
(an "Arbitration Notice"). Such arbitration shall be before a panel
of three persons experienced in oil and gas title issues in accordance
with the then applicable rules of the AAA. Such arbitrators shall be
authorized to retain whatever experts they may deem necessary to
adequately decide the matters to be presented. Within 20 days after
receipt of such Arbitration Notice, each of Buyer and Seller will
appoint one arbitrator, and those two arbitrators will appoint a third
arbitrator. In the event that the two arbitrators cannot agree on a
third arbitrator within 10 days following the appointment of the
second arbitrator, then the third arbitrator shall be appointed by the
AAA in accordance with its then applicable rules. If either Buyer or
Seller fails to appoint an arbitrator within the 20 day period
provided for such appointment, the arbitrator chosen by that other
party shall act as the sole arbitrator. All determinations made
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by a majority of the arbitrators (or the sole arbitrator) shall be
final, conclusive and binding on Buyer and Seller. Each of Buyer and
Seller will pay one-half of the fees of the third arbitrator and all
other arbitration fees and expenses and the fees of their respective
arbitrators and experts retained by same (if required). If the Closing
occurs prior to the resolution of the matter, the Assets affected by
the Defect shall not be excluded from the transaction, and the
Purchase Price at Closing shall be reduced by the adjustment amount
proposed by Seller in good faith after consultation with Buyer,
subject to revision in the Final Settlement.
(c) Should Seller determine (or should the title opinions or
other title review conducted by Buyer reflect ) that the ownership of the
Basic Properties by the applicable Property Owner entitles such Property
Owner to a decimal share of the production from a well, unit or lands
listed on Exhibit B greater than the decimal share shown for such well,
unit or lands under the column headed "Net Revenue Interest" on Exhibit B,
then such increase in NRI may be offset against any decrease in NRI alleged
hereunder in order to determine whether a Defect has occurred.
(d) If the Purchase Price reduction which would result from the
above provided for procedure does not exceed two hundred thousand dollars
($200,000) in the aggregate, then the Purchase Price shall not be adjusted.
If the Purchase Price reduction which would result from the above provided
for procedure exceeds two hundred thousand dollars ($200,000), the Purchase
Price shall be adjusted by the amount by which such reduction exceeds two
hundred thousand dollars ($200,000).
5.3 Casualty Loss and Condemnation. If, prior to the Closing Date,
all or any portion of the Assets is destroyed by fire or other casualty, or is
taken in condemnation or under the right of eminent domain, or if proceedings
for such purposes shall be pending or threatened and: (a) any such destruction,
taking or proceeding or any threat thereof involves, or if more than one in the
aggregate involve, an amount in excess of $5,000,000, Buyer shall have the
right, in its sole discretion, to terminate this Agreement by providing Seller
written notice of its election to do so; or (b) any such destruction, taking or
proceeding or any threat thereof involves, or if more than one in the aggregate
involve, an amount less than or equal to $5,000,000, or involves an amount in
excess thereof and Buyer does not elect to terminate this Agreement pursuant to
Section 5.3(a), Buyer shall purchase the Assets notwithstanding any such
destruction, taking or proceeding or threat thereof (without reduction of the
Purchase Price therefor) and Seller shall, on the Closing Date: (i) pay to Buyer
all sums paid to Seller or any Company or Partnership by third parties by reason
of the destruction or taking of such assets and properties; and (ii) assign,
transfer and set over unto Buyer, all of the rights, title and interests of
Seller, any Company or Partnership in and to any unpaid awards or other payments
(including insurance proceeds not expended or committed to expenditure by Seller
or any Company or Partnership to repair or restore such destruction) from third
parties arising out of the destruction or taking of such assets and properties.
ARTICLE VI. CONDITIONS PRECEDENT TO OBLIGATIONS
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6.1 Conditions Precedent to the Obligations of Buyer. The
obligations of Buyer under this Agreement are subject to each of the following
conditions being met:
(a) Each and every representation of Seller in Sections 3.1 and
3.2(a) of this Agreement shall be true and accurate in all respects as of
the date when made and shall be deemed to have been made again at and as of
the time of Closing and shall at and as of such time of Closing be true and
accurate except as to changes which are specifically contemplated by this
Agreement or consented to, in writing, by Buyer.
(b) Each and every representation of Seller in Sections 3.2
(other than 3.2(a)), and 3.3 of this Agreement shall be true and accurate
in all respects as of the date when made and shall be deemed to have been
made again at and as of the time of Closing and shall at and as of such
time of Closing be true and accurate except as to (i) changes which are
specifically contemplated by this Agreement or consented to, in writing, by
Buyer and (ii) any untrue or inaccurate representation which does not have
a Material Adverse Effect; provided, however, that solely for the purposes
of the condition to Buyer's obligations set forth in this Section 6.1(b),
the provision set forth in such Sections 3.2 and 3.3 limiting the
representations contained therein to Seller's "knowledge" or "Knowledge"
(or the like) shall be deemed not written.
(c) Seller shall have performed and complied in all material
respects with (or compliance therewith shall have been waived by Buyer)
each and every covenant, agreement and condition required by this Agreement
to be performed or complied with by Seller prior to or at the Closing.
(d) No suit, action or other proceedings shall, on the date of
Closing, be pending or threatened before any court or Governmental Entity
seeking to restrain, prohibit, or obtain damages or other relief in
connection with the consummation of the transactions contemplated by this
Agreement.
(e) The Purchase Price adjustment pursuant to Section 2.3b(ii)
herein, if any, does not exceed five percent (5%) of the Base Purchase
Price.
(f) All other conveyance documents reasonably required to
transfer, convey and assign the Assets to Buyer shall have been entered
into by the applicable Seller Parties.
(g) The Buyer shall have approved the form and substance of the
conveyance instruments pursuant to which DPLP transfers, conveys and
assigns the DPLP Oil and Gas Assets held by it to Seller or its designee.
(h) Snyder Oil Corporation shall (a) have consented in writing to
the substitution of Buyer's designee for DFR as the 45% venturer in the
Gathering Joint Venture
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in form reasonably acceptable to Buyer, including, without limitation, the
right in favor of Buyer's designee to cause the Gathering Joint Venture to
make an election under Section 754 of the Code effective prior to the
Closing and (b) execute the Agreement and Assignment of Joint Venture
Interest, Substitution of Venturer and Amendment to Joint Venture Agreement
attached as Exhibit H-3 hereto.
(i) Seller shall have corrected and Buyer shall have approved the
correction of all incorrect recording references set forth in the schedules
for the leases which comprise a portion of the Oil and Gas Properties
contained in item (i) of Parts I and II of Exhibit B.
(j) Seller shall use its good faith efforts to obtain the
agreement by Dow to release DPLP from its indemnity obligations under the
conveyance instruments executed in connection with the conveyance to Dow of
those certain lignite properties pursuant to that certain Notice of
Exercise of Option to Purchase dated February 17, 1997 in exchange for a
replacement indemnity from Seller.
(k) Seller shall have conveyed all of its right, title and
interest in and to the LandPro 6.0 PC-based software system and the
PC/CORES software system manufactured by Mentor Consultants, Inc. to DPLP
pursuant to a bill of sale approved as to form and substance by Buyer.
(l) Seller shall have provided Buyer true and correct copies of
the contracts and agreements listed on Schedule 6.1(l) hereto and such
contracts and agreements shall not, in the reasonable good faith opinion of
Buyer (i) materially and adversely affect the value, usefulness, operations
or marketability of the Assets subject thereto, (ii) unduly restrict the
Buyer or any of its Affiliates or their ability to conduct their respective
businesses, or (iii) subject Buyer or its Affiliates to any material
obligation or liability not customarily incurred in the oil and gas
industry, or (iv) contain any other unduly and materially burdensome
provision.
(m) Upon Buyer's written request, Seller shall have made, and
Seller shall have caused the applicable Seller Parties to make an election
under Section 754 of the Code effective prior to the Closing with respect
to any of the Assets, the Lignite Assets or the Gathering System that is or
are subject to or affected by any tax partnership agreement.
If any such condition on the obligations of Buyer under this Agreement
is not met as of the Closing Date, or in the event the Closing does not occur on
or before September 30, 1997 ("Termination Date"), and in either case Buyer is
not in breach of its obligations hereunder in the absence of Seller also being
in breach, this Agreement may, at the option of Buyer, be terminated.
6.2 Conditions Precedent to the Obligations of Seller. The
obligations of Seller under this Agreement are subject to each of the following
conditions being met:
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(a) Each and every representation of Buyer under this Agreement
shall be true and accurate in all respects as of the date when made and
shall be deemed to have been made again at and as of the time of Closing
and shall at and as of such time of Closing be true and accurate in all
respects except as to changes which are specifically contemplated by this
Agreement or consented to, in writing, by Seller.
(b) Buyer shall have performed and complied in all material
respects with (or compliance therewith shall have been waived by Seller)
each and every covenant, agreement and condition required by this Agreement
to be performed or complied with by Buyer prior to or at the Closing.
(c) The Purchase Price adjustment pursuant to Section 2.3(b)(ii)
herein, if any, does not exceed five percent (5%) percent of the Base
Purchase Price.
(d) no suit, action or other proceedings shall, on the date of
Closing, be pending or threatened before any court or Governmental Entity
seeking to restrain, prohibit, or obtain damages or other relief in
connection with the consummation of the transactions contemplated by this
Agreement.
If any such condition on the obligations of Seller under this
Agreement is not met as of the Closing Date, or in the event the Closing does
not occur on or before the Termination Date and (in either case) Seller is not
in breach of its obligations hereunder in the absence of Buyer also being in
breach of its obligations hereunder, this Agreement may, at the option of
Seller, be terminated.
ARTICLE VII. TERMINATION
7.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by the mutual written consent of Seller and Buyer;
(b) by Seller if (i) the Buyer or any of its Affiliates fails to
satisfy in any material respect any term, covenant, agreement or condition
required to be satisfied by it on or before the Termination Date, or (ii)
there has been a breach of any representation, warranty, term, covenant or
agreement made to or for the benefit of Seller or any of its Affiliates in
this Agreement, which breach has not been cured as of the Termination Date;
(c) by Buyer if (i) Seller or any of its Affiliates fails to
satisfy in any material respect any term, covenant, agreement or condition
required to be satisfied by it on or before the Termination Date, or (ii)
there has been a breach of any representation or warranty contained in
Sections 3.1 and 3.2(a) of this Agreement, in any other term, covenant or
agreement made to or for the benefit of Buyer or any of its Affiliates in
this Agreement,
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which breach has not been cured as of the Termination Date, or (iii) there
has been a breach of any representation or warranty contained in Sections
3.2 (other than 3.2(a)) and 3.3 of this Agreement which has a Material
Adverse Effect which breach has not been cured as of the Termination Date;
provided, however, that solely for purposes of this subparagraph
7.1(c)(iii), the provision set forth in such Sections 3.2 and 3.3. limiting
the representations contained therein to Seller's "knowledge" or
"Knowledge" (or the like) shall be deemed not written.
(d) by either Seller or Buyer if the Closing has not occurred on
or prior to September 30, 1997; provided, however, that the right to
terminate this Agreement shall not be available to any party whose failure,
or the failure of any of its Affiliates, to fulfill an obligation under
this Agreement has been the cause of or resulted in the failure of the
Closing Date to occur on or before such date; or
(e) by either Seller or Buyer upon the issuance of an injunction,
stay or restraining order issued by any court of competent jurisdiction
enjoining or preventing consummation of the purchase and sale of the Assets
or the other transactions contemplated by this Agreement or any of the
Operative Documents beyond September 30, 1997, which injunction, stay or
order has not been reversed, vacated or expired so as to permit the Closing
Date to occur on or before September 30, 1997.
7.2 Effect of Termination. In order to elect to terminate this
Agreement pursuant to Section 7.1, written notice of such election must be given
by the terminating party to the other party and, upon receipt of such notice by
the non-terminating party, this Agreement shall terminate and have no further
effect, and the transactions contemplated hereby shall be abandoned without any
further action by either of the parties, except that (i) the provisions of
Sections 5.1(c), 11.1, 11.9 and 11.11 and (ii) any provision in this Agreement
which expressly provides that it survives the termination of this Agreement
shall survive the termination of this Agreement; provided, however, that if this
Agreement is terminated by a party under circumstances in which another party or
any of its Affiliates has willfully or in bad faith failed or refused to satisfy
a covenant or condition to the obligations of either party to consummate the
transactions contemplated by this Agreement (the "Defaulting Party"), the
Defaulting Party shall be and remain liable for all Damages imposed on, incurred
by or asserted against the non-defaulting party, directly or indirectly, arising
out of or resulting from such failure.
7.3 Effect of Termination. Upon the termination of this Agreement,
whether pursuant to Sections 7.1 or 7.2 above, Seller shall be free to sell the
Assets (or any portion thereof) to any other party without any limitation under
or by reason of this Agreement, unless at such time Seller shall have willfully
and wrongfully failed to close the transaction contemplated hereby under
circumstances in which all conditions precedent to Seller's obligations as set
forth in Section 6.2 shall have been performed or satisfied or Buyer is
otherwise unable to close the transaction contemplated hereby due to a willful
and wrongful breach of the Agreement by Seller. Buyer shall cooperate with
Seller in effectuating any such sale and shall promptly execute any instrument
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evidencing the termination of Buyer's right to acquire the Assets as may be
reasonably requested by Seller. Buyer shall also immediately return to Seller
all data and other information (and all copies thereof) furnished to Buyer by or
on behalf of Seller in connection with this transaction.
7.4 Cure Period. In the event that Buyer elects to terminate this
Agreement due to a representation or warranty having been breached as of the
Closing Date and such representation or warranty can be cured, Buyer agrees to
provide Seller a thirty day (30) period commencing on the date of notice of such
breach by Buyer to Seller in which Seller can cure such breach. If such breach
is not fully cured to Buyer's reasonable satisfaction within such thirty (30)
day period, then the Buyer may terminate this Agreement pursuant to the
provisions of this Article 7.
ARTICLE VIII. CLOSING
8.1 Location of Closing. (A) The closing (herein called the
"Closing") of the transaction contemplated hereby shall take place in the
offices of Andrews & Kurth L.L.P. at 4200 Texas Commerce Tower, at 10:00 a.m.,
Houston Time, on the earlier to occur of (i) August 1, 1997 or (ii) five (5)
business days after the later Defect Date or at such other date and time as the
Buyer and Seller may mutually agree upon (such date and time being herein called
the "Closing Date"). The time and date on which the Closing is actually held is
referred to herein as the "Closing Time."
8.2 Deliveries by Seller. At or prior to the Closing, the Seller
shall deliver or cause to be delivered to Buyer the following:
(a) Conveyance, Assignment, and Bill of Sale documents
("Conveyances") from the Seller Parties, in substantially the forms of
Exhibits H-1 through H-4 (as the case may be), transferring the applicable
Assets specified herein to Buyer. Seller and the Seller Parties shall
execute, acknowledge, and deliver to Buyer multiple originals of the
Conveyances to facilitate recordation;
(b) all other previously undelivered documents required pursuant
to this Agreement to be delivered by Seller to Buyer at or prior to the
Closing in connection with the transactions contemplated hereby;
(c) all Books and Records;
(d) an opinion of counsel to Seller, in the form attached hereto
as Exhibit I;
(e) an affidavit or other certification (as permitted by such
code) that neither Seller, nor any Company or Partnership is a "foreign
person" within the meaning of Section 1445 (or similar provisions) of the
Code;
(f) a Transition Services Agreement in the form of Exhibit J;
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(g) such other conveyance agreements or instruments as may be
reasonably required to convey, transfer and assign the Assets to the Buyer;
and
(h) The Seller Party indemnification agreements as referenced in
Section 9.8 hereof.
8.3 Deliveries by Buyer. At or prior to the Closing, Buyer shall
deliver or cause to be delivered to Seller:
(a) the Purchase Price; and
(b) an opinion of Buyer's counsel, in the form attached
hereto as Exhibit K.
ARTICLE IX. INDEMNIFICATION, AND WAIVERS
9.1 Survival. The representations and warranties made herein by
Buyer and Seller shall expire at the Closing hereof and shall be of no further
force or effect thereafter except that the representations and warranties set
forth in Sections 3.1 and 3.3 shall survive Closing for a period of four years
following the Closing. Notwithstanding the foregoing, nothing contained in this
Section 9.1 shall alter, limit or otherwise affect the rights and obligations of
the parties set forth in Articles VIII, IX, X and XI, inclusive, which shall
survive the Closing.
9.2 Indemnification of Seller. Subject to the terms and conditions
of this Article IX, Buyer agrees to indemnify, defend and hold harmless Seller,
and the other Seller Parties, and their respective parent and subsidiary
companies and other Affiliates, and its and their directors, officers, employees
and agents, heirs, executors, personal representatives, administrators,
successors and assigns (the "Seller Indemnified Persons"), from and against any
and all damages, losses, liabilities, payments, obligations, penalties, claims,
litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses (including, without limitation, fees, disbursements
and expenses of attorneys, accountants and other professional advisors) of any
kind or nature ("Damages") which may be imposed on, incurred by or asserted
against any Seller Indemnified Person, arising out of or resulting from,
directly or indirectly:
(a) the inaccuracy of any representation or breach of any
warranty of Buyer contained in or made pursuant to this Agreement or any of
the Operative Documents which survive the Closing; or
(b) the breach of any covenant or agreement of Buyer contained in
this Agreement or in any of the Operative Documents;
(c) the Assumed Liabilities.
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PROVIDED, HOWEVER, THAT BUYER SHALL NOT BE LIABLE FOR ANY PORTION OF ANY DAMAGES
RESULTING FROM A MATERIAL BREACH BY SELLER OF ITS OBLIGATIONS UNDER THIS
AGREEMENT OR ANY OF THE OPERATIVE DOCUMENTS OR FROM A SELLER INDEMNIFIED
PERSON'S GROSS NEGLIGENCE, FRAUD OR WILLFUL MISCONDUCT.
No assumption of any portion of the Assumed Liabilities by Seller as
to third parties shall in any way affect or reduce Buyer's indemnification
obligations for all of the Assumed Liabilities.
9.3 Indemnification of Buyer. Subject to the terms and conditions of
this Article IX, from and after the Closing Date, Seller agrees to and will
cause each Seller Party to indemnify, defend and hold harmless Buyer, DPLP, the
Gathering Joint Venture, and their respective Affiliates, their respective
present and former directors, officers, shareholders, partners, employees and
agents and their respective heirs, executors, personal representatives,
administrators, successors and assigns (the "Buyer Indemnified Persons"), from
and against any and all Damages which may be imposed on, incurred by or asserted
against any Buyer Indemnified Person, arising out of or resulting from, directly
or indirectly:
(a) the inaccuracy of any representation or breach of any
warranty of Seller contained in or made pursuant to this Agreement or any
of the Operative Documents which survives the Closing; or
(b) the breach of any covenant or agreement of Seller contained
in this Agreement or any of the Operative Documents; or
(c) the Retained Liabilities.
PROVIDED, HOWEVER, THAT SELLER SHALL NOT BE LIABLE FOR ANY PORTION OF ANY
DAMAGES RESULTING FROM A MATERIAL BREACH BY BUYER OF ITS OBLIGATIONS UNDER THIS
AGREEMENT OR ANY OF THE OPERATIVE DOCUMENTS OR FROM A BUYER INDEMNIFIED PERSON'S
GROSS NEGLIGENCE, FRAUD OR WILLFUL MISCONDUCT.
No assumption of any portion of the Retained Liabilities by Buyer or
its designees as to third parties shall in any way affect or reduce Seller's or
the Seller Parties' indemnification obligations for all of the Retained
Liabilities.
9.4 Procedure for Indemnification. Promptly after receipt by an
indemnified party under Section 9.2 or 9.3 of a notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under such Section, give written notice to
the indemnifying party of the commencement thereof. The failure so to notify
the indemnifying party shall not relieve it of any liability that it may have to
any indemnified party with respect to such action, except to the extent that the
indemnifying party shall have been actually prejudiced by the failure to give
such notice. In case any such action shall be brought against an
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indemnified party and it shall give written notice to the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it may wish, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party. If the
indemnifying party elects to assume the defense of such action, the indemnified
party shall have the right to employ separate counsel at its own expense and to
participate in the defense thereof. If the indemnifying party elects not to
assume (or fails to assume) the defense of such action, the indemnified party
shall be entitled to assume the defense of such action with counsel of its own
choice, at the expense of the indemnifying party. If the action is asserted
against both the indemnifying party and the indemnified party and there is a
conflict of interests which renders it inappropriate for the same counsel to
represent both the indemnifying party and the indemnified party, the
indemnifying party shall be responsible for paying for separate counsel for the
indemnified party. If the indemnifying party elects to assume the defense of
such action, (a) no compromise or settlement thereof may be effected by the
indemnifying party without the indemnified party's written consent (which shall
not be unreasonably withheld) unless the sole relief provided is monetary
damages that are paid in full by the indemnifying party and (b) the indemnifying
party shall have no liability with respect to any compromise or settlement
thereof effected without its written consent (which shall not be unreasonably
withheld).
9.5 Other Indemnities. The indemnities provided in Sections 9.2 and
9.3 are in addition to, and not in lieu of, other indemnification obligations of
the parties specifically set forth in this Agreement. Notice of a claim
relating to a breach of a representation or warranty must be delivered by a
Buyer Indemnified Person to Seller, or a Seller Indemnified Person to Buyer, as
the case may be, prior to the expiration of the specified survival period, or it
shall be deemed to be waived. Any claim delivered to the indemnifying party
prior to the expiration of the survival period shall survive following such
period solely with respect to such claim until such claim is resolved. The right
to indemnification provided in this Article IX shall be the exclusive remedy of
any Buyer Indemnified Person or Seller Indemnified Person with respect to the
inaccuracy of any representation or the breach of any warranty made by any party
in this Agreement.
9.6 Disclaimer of Warranties. Seller hereby expressly disclaims, on
its own behalf and on behalf of the other Seller Parties, any and all
representations or warranties (other than those expressly set out in Sections
3.1, 3.2 and 3.3 above) with respect to the Assets or the transaction
contemplated hereby. Specifically as a part of (but not a limitation of) the
foregoing, Buyer acknowledges that neither Seller nor any other Seller Party has
made, and Seller hereby expressly disclaims, on its own behalf and on behalf of
the other Seller Parties, any representation or warranty (express, implied,
under common law, by statute or otherwise) relating to the condition of the
properties (INCLUDING WITHOUT LIMITATION, SELLER DISCLAIMS ANY IMPLIED OR
EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS) the extent of oil, gas, lignite
and/or other mineral reserves, the recoverability of or the cost of recovering
any of such reserves, the value of reserves, prices (or anticipated prices) at
which production has been or will be sold and the ability to sell oil, gas,
lignite or other production from the Assets.
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9.7 Waiver of Punitive and Consequential Damages. In no event shall
Seller and Buyer be liable to the other party hereto for any lost or prospective
profits or any other special, punitive, exemplary, consequential, incidental or
indirect losses or damages (in tort, contract or otherwise) under or in respect
of this Agreement or for any failure of performance related hereto howsoever
caused, whether or not arising from such parties sole, joint or concurrent
negligence.
9.8 Seller Party Indemnification. At or prior to Closing, each
Seller Party will enter into an acknowledgment of indemnification, in form
reasonably satisfactory to Buyer whereby the Seller Parties agree to be bound by
and subject to the indemnification obligations of Seller set forth in this
Article IX.
ARTICLE X. ACCESS TO INFORMATION
10.1 Access to Information. Buyer and the Companies shall
reasonably cooperate with Seller, make available their personnel and provide
testimony as shall be reasonably necessary to enable Seller to defend against
any assessments by or prosecute claims against any taxing authority relating to
the Companies. With respect to the Companies, Seller shall provide access to
Buyer and the Companies and their representatives to the records of Seller to
enable Buyer and the Companies to prepare all tax returns filed by Buyer and the
Companies and to enable Buyer and the Companies to respond to any audits,
inquiries, assessments, or similar items by any taxing authority. In such
regard, the Seller shall reasonably cooperate with Buyer and the Companies, make
available its personnel and provide testimony as shall be reasonably necessary
to enable Buyer and the Companies to defend against any assessments by or
prosecute any claims against any taxing authority. Until the expiration of the
applicable three-year statute of limitations period (including extensions
thereof of which Buyer has actual notice), Buyer shall cause the Companies to
retain all pertinent tax and accounting records necessary or useful for
determining the tax liability of Seller for periods prior to and through the
Closing Date, which records shall be the property of the Companies.
ARTICLE XI. MISCELLANEOUS
11.1 Commissions. Seller agrees to indemnify and hold harmless
Buyer from and against any and all claims, obligations, actions, liabilities,
losses, damages, costs or expenses (including court costs and attorneys fees) of
any kind or character arising out of or resulting from any agreement,
arrangement or understanding alleged to have been made by, or on behalf of,
Seller or the other Seller Parties with any broker or finder in connection with
this Agreement or the transaction contemplated hereby. Buyer agrees to
indemnify and hold harmless Seller and the other Seller Parties from and against
any and all claims, obligations, actions, liabilities, losses, damages, costs or
expenses (including court costs and attorneys fees) of any kind or character
arising out of or resulting from any agreement, arrangement or understanding
alleged to have been made by, or on behalf of, Buyer with any broker or finder
in connection with this Agreement or the transaction contemplated hereby.
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11.2 Notices. All notices and other communications required
under this Agreement shall (unless otherwise specifically provided herein) be in
writing and be delivered personally, by recognized commercial courier or
delivery service (which provides a receipt), by telex or telecopier (with
receipt acknowledged), or by registered or certified mail (postage prepaid), at
the following addresses:
If to Buyer:
ECT Eocene Enterprises, Inc.
c/o Enron Capital & Trade Resources Corp.
1400 Smith Street, Suite 3826
Houston, Texas 77002
Telecopy (713) 646-4043
Attention: Mr. C. Kevin Garland
With copies to:
ECT Eocene Enterprises, Inc.
c/o Enron Capital & Trade Resources Corp.
1400 Smith Street, Suite 3826
Houston, Texas 77002
Telecopy (713) 646-3393
Attention: Deborah S. Culver, Esquire
and
Mr. David Runnels, Esquire
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Telecopy (713) 220-4285
If to Seller or the Companies:
Destec Energy, Inc.
c/o NGC Corporation
1000 Louisiana, Suite 5800
Houston, Texas 77002-5050
Telecopy (713) 507-6808
Attention: Mr. Kenneth E. Randolph, Esquire
Senior Vice President and General Counsel
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With a copy to:
Mr. Robert B. Allen, Esquire
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, Texas 75201-4618
Telecopy (214) 969-4343
and shall be considered delivered on the date of receipt. Either Buyer or
Seller may specify as its proper address any other post office address within
the continental limits of the United States by giving notice to the other party,
in the manner provided in this Section, at least ten (10) days prior to the
effective date of such change of address.
11.3 Further Assurances. After the Closing, each Seller and the
other Seller Parties, and Buyer and its Affiliates shall execute and deliver,
and shall otherwise cause to be executed and delivered, from time to time, such
further instruments, notices, division orders, transfer orders and other
documents, and do such other and further acts and things, as may be reasonably
necessary to more fully and effectively grant, convey and assign the Assets to
Buyer, and the DPLP Oil and Gas Assets to Seller's designee and consummate the
transactions contemplated by this Agreement.
11.4 Assignments. Neither party shall have the right to assign
its rights under this Agreement, without the prior written consent of the other
party first having been obtained.
11.5 DTPA Waiver. To the extent applicable to the transaction
contemplated hereby or any portion thereof, Buyer waives the provisions of the
Texas Deceptive Trade Practices Act, Chapter 17, Subchapter E, Sections 17.41
through 17.63, inclusive (other than Section 17.555 which is not waived), Texas
Business and Commerce Code. In connection with such waiver, Buyer hereby
represents and warrants to Seller that Buyer (a) is in the business of seeking
or acquiring by purchase or lease, goods, or services, for commercial or
business use, (b) will immediately prior to the Closing, have assets of
$5,000,000 or more according to its most recent financial statement, (c) has
knowledge and experience in financial and business matters that enable it to
evaluate the merits and risks of the transaction contemplated hereby and (d) is
not in a significantly disparate bargaining position.
11.6 Preservation of Books and Records. For a period of three
(3) years after the date of Closing, Buyer will retain the Books and Records
delivered to it pursuant hereto, and will make such Books and Records available
to Seller upon reasonable notice at Buyer's headquarters (or at such other
location in the United States as Buyer may designate in writing to Seller) at
reasonable times and during regular office hours. In the event Seller is
required to produce the original of any document or documents in any judicial or
administrative proceeding, Buyer shall use
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all reasonable efforts to provide such original documents to Seller. Seller
agrees to return such original documents as soon as possible thereafter.
11.7 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Texas. The venue for
resolving any disputes hereunder will be in the Courts of Harris County, Texas.
All assignments and instruments executed in accordance with this Agreement shall
be governed by and interpreted in accordance with the laws of the state where
the Assets conveyed thereby are located.
11.8 Expenses. Each party shall bear and pay all expenses
incurred by it in connection with the transaction contemplated by this
Agreement.
11.9 Entire Agreement. This Agreement and the documents to be
delivered at Closing contains the entire understanding of the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations, and discussions among the parties with respect to
such subject matter. The descriptive headings contained in this Agreement are
for convenience only and shall not control or affect the meaning or construction
of any provision of this Agreement. Within this Agreement words of any gender
shall be held and construed to cover any other gender, and words in the singular
shall be held and construed to cover the plural, unless the context otherwise
requires. Time is of the essence in this Agreement.
11.10 Public Announcements. Except as required by law or by the
rules or regulations of the national securities exchange on which the shares of
any Party are listed, without the prior written approval of the other party,
neither Seller nor Buyer will, and Seller shall cause the Companies and
Partnerships to not, issue, or permit any agent or Affiliate thereof to issue,
any press release or otherwise make or permit any agent or Affiliate thereof to
make, any public statement or announcement with respect to this Agreement, or
the transactions contemplated hereby and thereby; provided, however, that to the
extent that, in the opinion of their respective counsels, any public statements
are required to be made by any Person pursuant to any law, the parties shall
endeavor to consult with each other prior to issuing any such press release or
written public statement. All such press releases by the parties (whether or
not required by law or by the rules or regulations of a national securities
exchange) will be submitted to the other party for a reasonable period for
review and comment.
11.11 Subrogation. The Seller and each Seller Party hereby give
and grant to Buyer, its successors and assigns full power and right of
substitution and subrogation in and to all covenants and warranties (including
warranties of title) by preceding owners, vendors, or others, given or made with
respect to the Assets or any part thereof prior to the Effective Date of this
Agreement. In the event that any of such covenants and warranties by such
preceding owners, vendors or others are not enforceable by Buyer due to the non-
assignability of such covenants or warranties or otherwise, Seller shall, or
shall cause the Seller Parties to, as applicable, upon Buyer's written request,
assert a claim under Seller or such Seller Party's rights under the applicable
agreement on Buyer's behalf at Buyer's sole cost and expense.
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11.12 No Third Party Beneficiary. The provisions of this
Agreement are enforceable solely by the parties to this Agreement, and no other
entity or person shall have the right to enforce any provision of this
Agreement or to compel any party to this Agreement to comply with the terms of
this Agreement.
* * * * *
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WITNESS THE EXECUTION hereof the 1st day of July, 1997.
DESTEC ENERGY, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
ECT EOCENE ENTERPRISES, INC.
By:
---------------------------
Stephen Horn
Vice President
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EXHIBIT ___
COGEN LYONDELL
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NGC CORPORATION
----------------------------------------
GUARANTY
----------------------------------------
Dated as of June 27, 1997
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<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I
GUARANTY
Section 1.1 Definitions and Interpretations.................... 2
Section 1.2 Agreement.......................................... 10
Section 1.3 Agreement to be Absolute........................... 10
ARTICLE II
GENERAL PROVISIONS REGARDING GUARANTY
Section 2.1 Nature of Guaranty................................. 11
Section 2.2 Limitation on NGC's Rights; Waiver of Subrogation.. 11
Section 2.3 Events of Default.................................. 12
Section 2.4 Lease Terminated................................... 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Corporate Existence................................ 13
Section 3.2 Authorization and Validity......................... 13
Section 3.3 No Conflict; Government Consent.................... 13
Section 3.4 Financial Information.............................. 14
Section 3.5 Litigation......................................... 14
Section 3.6 Subsidiaries....................................... 14
Section 3.7 Ownership.......................................... 14
ARTICLE IV
COVENANTS OF THE GUARANTOR
Section 4.1 Net Worth.......................................... 15
Section 4.2 Leverage Ratio..................................... 15
Section 4.3 Coverage Ratio..................................... 15
Section 4.4 Information........................................ 15
ARTICLE V
MISCELLANEOUS
Section 5.1 NGC's Waivers...................................... 16
Section 5.2 Third Party Beneficiaries.......................... 17
Section 5.3 No Waiver; Consents; Cumulative Remedies........... 17
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Section 5.4 Successors and Assigns; Participations............. 18
Section 5.5 Notices............................................ 18
Section 5.6 Rights to Deal with the Lessee..................... 18
Section 5.7 Payments........................................... 18
Section 5.8 Survival of Representations, Warranties, etc....... 18
Section 5.9 Termination or Replacement of NGC Guaranty......... 19
Section 5.10 Governing Law...................................... 20
Section 5.11 Costs and Expenses................................. 20
Section 5.12 Miscellaneous...................................... 20
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GUARANTY
THIS GUARANTY ("Agreement") dated as of June 27, 1997, is by NGC
CORPORATION, a Delaware corporation ("NGC" or the "Guarantor") in favor of COGEN
FUNDING, LIMITED PARTNERSHIP, a Delaware limited partnership (the "Lessor" and a
"Beneficiary"), and in favor of CREDIT SUISSE FIRST BOSTON, as AGENT and as
COLLATERAL AGENT for the benefit of the Banks (the "Banks") now or hereafter
parties to the Credit Agreement (defined below) (in such capacity, the "Agent"
and a "Beneficiary", and collectively with the Lessor, the "Beneficiaries").
RECITALS
A. CoGen Lyondell, Inc., a Texas corporation ("CoGen" or "Lessee") which
is a wholly owned subsidiary of Destec Holdings, Inc., which is a wholly owned
subsidiary of Destec Energy, Inc. ("Destec"), which is a majority-owned
subsidiary of The Dow Chemical Company ("Dow"), entered into that certain
Amended and Restated Lease Agreement dated as of August 11, 1995, (as amended,
modified or supplemented from time to time, the "Lease") with the Lessor.
B. In order to induce the Lessor to enter into the Lease, Dow entered
into that certain Guaranty dated as of August 11, 1995 (the "Original Guaranty")
for the benefit of the Lessor to guarantee the performance by CoGen of its
covenants and agreements under the Lease.
C. NGC and NGC Acquisition Corporation II, a wholly-owned subsidiary of
NGC ("NACII"), have entered into that certain Agreement and Plan of Merger dated
as of February 17, 1997 (the "Destec Contract") with Destec and Dow, whereby at
the closing of the transactions contemplated thereby NGC will acquire the stock
of Destec pursuant to the merger of NACII with and into Destec (the "Acquisition
Transactions").
D. Section 4.9(b) of the Original Guaranty provides that Dow may
terminate the Original Guaranty if Dow shall provide at least thirty days notice
to the Lessor, or any person or entity to whom the Lessor has assigned or
granted a security interest in the Original Guaranty, that Dow will be selling
its interest in Destec as of the date specified in such notice and the purchaser
of Dow's interest in Destec is acceptable to Credit Suisse First Boston
(formerly Credit Suisse), such acceptance not to be unreasonably withheld.
E. NGC and CoGen have requested that Credit Suisse First Boston, as
Agent, consent to the Acquisition Transactions and indicate its acceptance of
NGC as the purchaser of Dow's interest in Destec.
F. Credit Suisse First Boston, as Agent, has agreed to provide such
consent and indicate such acceptance pursuant to that certain Consent and
Agreement, dated as of June 27, 1997 (the "Consent and Agreement"), among the
Lessor, CoGen, NGC, Destec, Credit Suisse First Boston, as
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Agent, and the Banks, subject to the terms and conditions set forth in the
Consent and Agreement, including without limitation, the delivery by NGC of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, NGC agrees as follows:
ARTICLE I
GUARANTY
Section 1.1 Definitions and Interpretations.
(a) The table of contents and article and section headings of this
Agreement are included herein for convenience of reference purposes only and
shall not constitute a part of this Agreement or affect its interpretation in
any respect. Except where the context otherwise requires, (i) words imparting
the singular number shall include the plural number, and vice versa, and shall
be construed to be of such gender or number as the context requires; (ii) the
words "herein," "hereof," "hereunder" and other words of similar import when
used in this Agreement refer to this Agreement as a whole, and not to any
particular article, section or subsection; (iii) pronouns, wherever used in this
Agreement and of whatever gender, shall include natural persons, corporations
and associations of every kind and character; (iv) the gender of all words used
in this Agreement shall include the masculine, feminine and neuter; (v) the
words "includes" or "including" shall mean "including without limitation"; (vi)
the word "or" shall mean "and/or"; and (vii) in the computation of interest and
fees payable from a specified date to a later specified date, unless otherwise
indicated the word "from" means "from and including" and the words "to" and
"until" both mean "to but not including".
(b) Unless expressly stated otherwise, any reference in this Agreement to a
document or instrument shall mean such document or instrument, together with all
exhibits thereto, as amended, extended, supplemented, or otherwise modified from
time to time, as permitted by the Related Documents. Any reference in this
Agreement to any Person as a party to any document or instrument shall include
its successors and assigns to such person's status as a party, to the extent
permitted by the Related Documents.
(c) Each capitalized term used herein and not otherwise defined herein
shall have the meanings given such term in the Lease, or if not defined therein,
in the Credit Agreement. In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the following meanings:
"AES" means The AES Corporation, a Delaware corporation.
"AES Contract" means that certain Asset Purchase Agreement dated February
17, 1997 between NGC and AES.
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"AES Transaction" means the sale by NGC of the International Assets (as
defined in the AES Contract) of Destec pursuant to the AES Contract.
"Assets" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person, and includes, without limitation, stock, partnership
and limited liability company interests owned or held in any other Person by
such Person.
"Authorized Officer" means any of the President, the Chief Financial
Officer, the Senior Vice President-General Counsel, the Vice President-Finance,
the Controller or the Treasurer of NGC.
"Capitalized Lease" of a Person means any lease of Assets by such Person as
lessee which would be capitalized on a balance sheet of such Person prepared in
accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person as a lessee under Capitalized Leases which would be
shown as a liability on a balance sheet of such Person prepared in accordance
with GAAP.
"CoGen Obligations" shall have the meaning ascribed to such term in Section
1.2.
"Commission" means the Securities and Exchange Commission of the United
States of America.
"Consolidated Debt" means, as of any date of determination thereof, the
aggregate principal amount of all then outstanding Debt of NGC and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP as of
such date.
"Consolidated EBITD" of NGC and its Subsidiaries means, for any period, the
sum of (a) Consolidated Net Income (excluding income taxes) determined for such
period; provided that there shall be excluded (i) the income (or loss) of any
Person (other than a Subsidiary of NGC) in which NGC or any Subsidiary of NGC
has an interest but in which any other Person (not NGC or any of its
Subsidiaries) has a joint interest with respect to which the equity method of
accounting is utilized, except to the extent of the amount of dividends or other
distributions actually paid to NGC, or any of its Subsidiaries, by such Person
during such period, (ii) the income (or loss) of any Person (other than a Person
that is consolidated as a result of the Merger) accrued prior to the date it
becomes a Subsidiary of NGC or is merged into or consolidated with NGC or any of
its Subsidiaries or that such Person's Assets are acquired by NGC or any of its
Subsidiaries, and (iii) the income of any Subsidiary of NGC to the extent that
the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement (other than the Existing Warren Indentures as in
effect on November 1, 1994), instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Subsidiary, plus (b) the
Consolidated Interest Expense for such period, plus (c) to the extent taken into
account in calculating Consolidated Net Income (excluding income taxes) referred
to in clause
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(a) of this definition, the aggregate amount of all costs and expenses incurred
as a result of the Acquisition Transactions, and the Newco Combination,
respectively, plus (d) depreciation, depletion and amortization expense of NGC
and its Subsidiaries determined for such period on a consolidated basis plus (e)
without duplication, the amount of dividends or other distributions actually
paid to NGC or any of its Subsidiaries during such period to the extent
attributable to income from another period excluded pursuant to clause (i)
above; provided, however, for purposes of this definition, extraordinary gains
and losses shall excluded from the calculation of Consolidated Net Income.
"Consolidated Interest Expense" means, for any Rolling Period, the total
interest expense, whether paid or accrued (including, without limitation, that
attributable to Capitalized Leases), of NGC and its Subsidiaries determined for
such period on a consolidated basis in accordance with GAAP, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing plus or minus net
amounts paid or payable or received or receivable pursuant to interest rate
swap, exchange, cap or similar agreements.
"Consolidated Net Income" means, for any period, the consolidated net
income of a Person and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Worth" means at any date the stockholders' equity of NGC
and its Subsidiaries determined on a consolidated basis in accordance with GAAP
as of such date.
"Consolidated Tangible Net Worth" means at any date the stockholders'
equity of NGC and its Subsidiaries less their consolidated Intangible Assets,
all determined on a consolidated basis in accordance with GAAP as of such date.
For purposes of this definition, "Intangible Assets" means the amount (to the
extent reflected in determining such stockholders' equity) of (a) all net write-
ups (other than write-ups resulting from foreign currency translations and
write-ups of assets of a going concern business made within twelve months after
the acquisition of such business) subsequent to December 31, 1993, in the book
value of any Assets owned by NGC or any of its Consolidated Subsidiaries and (b)
all unamortized debt discount and expense, goodwill, patents, trademarks,
service marks, trade names, copyrights, and organization or developmental
expenses.
"Credit Agreement" means that certain Amended and Restated Credit Agreement
dated as of the date hereof, among the Lessor, the Agent, and the Banks parties
thereto.
"CUSA" means Chevron U.S.A. Inc., a Pennsylvania corporation.
"CUSA Assumed Debt" means the $155,373,000 aggregate principal amount of
CUSA's obligations under the CUSA Note, the payment of which was assumed by
Newco under the CUSA Assumption Agreement.
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"CUSA Assumption Agreement" means the agreement dated as of the closing of
the Newco Combination pursuant to which Newco assumed CUSA's payment obligation
for the CUSA Assumed Debt.
"CUSA Note" means the demand promissory note dated August 25, 1994 payable
by CUSA to Chevron Capital U.S.A. Inc.
"Debt" means, with respect to any Person, (a) all indebtedness and other
obligations of such Person for the repayment of money borrowed, whether or not
represented by acceptances, bonds, debentures, notes, or other instruments or
securities, (b) all indebtedness and other obligations of such Person for the
deferred payment of the purchase price of any property or assets (other than
accounts payable on terms customary in the trade), (c) all Capitalized Lease
Obligations of such Person, and (d) all indebtedness and other obligations,
whether or not assumed by such Person, secured by any Lien (other than (i)
utility easements, building restrictions and such other encumbrances or charges
against real property as are of a nature generally existing with respect to
properties of a similar character and which do not materially affect the
marketability of the same or interfere with the use thereof in the business of
the Guarantor or its Subsidiaries, (ii) Permitted Liens, (iii) Liens on cash and
short-term investments (a) deposited by the Guarantor or any of its Subsidiaries
in margin accounts with futures contract brokers authorized to trade on the New
York Mercantile Exchange to secure the Guarantor's obligations with respect to
futures contracts for the purchase or sale of natural gas, natural gas liquids,
domestic crude, Brent crude, propane, heating oil, unleaded gasoline and/or jet
fuel or (b) pledged by the Guarantor or any of its Subsidiaries to secure the
Guarantor's obligations pursuant to one or more Fixed Price Contracts or other
such contracts with respect to other commodities or interest rate or currency
rate management contracts, and (iv) extensions, renewals or replacements of any
Lien referred to in (i) through (iii), provided that the principal amount of the
Debt or obligation secured thereby is not increased and that any such extension,
renewal or replacement Lien is limited to the Assets originally encumbered
thereby) on, or payable out of the proceeds of or production from, any Assets of
such Person; provided, however that in no event shall Debt described in any of
the foregoing categories (i) be duplicative of any Debt described in any other
such category, (ii) include Guaranties, or (iii) include any Project Financing
that would not be shown as a liability on the financial statements of NGC and
its Subsidiaries on a consolidated basis; provided further, that for purposes of
the foregoing clauses (a), (b), (c), and (d), Debt shall include, in the case of
NGC and its Subsidiaries, only such obligations as are shown as a liability on a
consolidated balance sheet of NGC and its Subsidiaries in accordance with GAAP;
and provided further that the Institutionally Targeted Capital Securities shall
not constitute Debt.
"Dollars" means the lawful currency of the United States of America.
"Existing Warren Indentures" means each of (i) the Indenture dated to be
effective as of September 9, 1993 between Warren NGL, Inc., as Issuer, and
Ameritrust Texas National Association, Trustee, for $65,000,000 14% Senior
Subordinated Notes due 2001 and (ii) the Indenture dated to be effective as of
April 15, 1993 between Warren NGL, Inc., as Issuer, and the First National Bank
of Boston, Trustee, for $105,000,000 10 1/4% Subordinated Notes due 2003.
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"Fixed Price Contract" means, as of any date of determination, a contract
(including, without limitation, physical delivery, option (whether cash or
financial), exchange, swap and futures contracts) entered into by the Guarantor
or any of its Subsidiaries for the purchase or sale of all gaseous hydrocarbons
including, but not limited to oil well gas, gas well gas, and casinghead gas,
but excluding any natural gas liquids ("Natural Gas"), other than (i) such a
contract which has a remaining term of thirty (30) days or less from such date
of determination, or (ii) such a contract under which the purchase or sale price
of any portion of Natural Gas delivered or to be delivered on or after such date
of determination is calculated by reference to (a) the spot price for Natural
Gas current on each date of delivery at the place of delivery specified in such
contract, (b) the spot price for Natural Gas current on each date of delivery at
a place of delivery other than the place of delivery specified in such contract
provided that such spot price is adjusted to reflect the cost of transporting
Natural Gas to the place of delivery specified in such contract, (c) a basket of
price indices similar to the spot price for Natural Gas current on each date of
delivery at the place of delivery, or (d) a basket of price indices similar to
the then current spot price for Natural Gas at a place of delivery other than
the place of delivery specified in such contract provided that each such price
index is adjusted to reflect the cost of transporting Natural Gas to the place
of delivery specified in such contract; provided, however, that for purposes of
this Agreement a Fixed Price Contract shall not include any contract (including,
without limitation, physical delivery, option (whether cash or financial),
exchange, swap and futures contracts) entered into by the Guarantor or any of
its Subsidiaries in the ordinary course of business for the purpose of managing
the impact of price fluctuations on Natural Gas supply costs related to any
Natural Gas processing activity conducted by the Guarantor or any of its
Subsidiaries.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time, applied on a basis consistent with the most recent financial
statements of NGC and its Subsidiaries delivered pursuant hereto.
"Guaranty" means, with respect to any Person, (a) all indebtedness and
other obligations, contingent or otherwise, of such Person under or in respect
of any letter of credit issued for its own account, and (b) all indebtedness and
other obligations of such Person under any agreement, undertaking or other
arrangement by which such Person (i) assumes, guarantees, endorses (other than
the endorsement of instruments for collection in the ordinary course of
business), commits or agrees (whether or not such commitment or agreement is
contingent or subject to the occurrence of a specified event or events) to
purchase or otherwise acquire or provide funds for the payment of any obligation
or liability of any other Person or (ii) agrees to maintain the net worth,
working capital or any other financial condition of any other Person; provided,
however, in no event shall Guaranties described in any of the foregoing
categories include any Guaranties by a Project Financing Subsidiary that would
not be shown as a liability on the financial statements of NGC and its
Subsidiaries on a consolidated basis.
"Insolvency Proceeding" means (a) any case, action or proceeding before any
court or other governmental authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
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composition, marshaling of assets for creditors, or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors; in each case undertaken under the federal bankruptcy laws of the
United States from time to time in effect.
"Institutionally Targeted Capital Securities" means the capital securities
to be issued in an aggregate amount of up to $200,000,000 by a Delaware business
trust, the proceeds of which will be loaned to NGC or one or more of its
Subsidiaries all on the terms set forth in the Offering Memorandum dated May 22,
1997, a copy of which has been delivered to the Agent.
"Leverage Ratio" means the ratio, expressed as a percentage, of
Consolidated Debt to the sum of Consolidated Debt plus Consolidated Net Worth.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, security interest, encumbrance or preference,
priority or other security agreement or any interest in Assets to secure payment
of a debt or performance of an obligation (including the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Maintenance Capital Expenditure" means, for any Rolling Period, any
capital expenditure to maintain the Assets of NGC and its Subsidiaries in good
working condition in accordance with industry standards.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Assets, financial condition or results of operations of NGC and its
Subsidiaries taken as a whole, or (ii) the ability of NGC to perform its payment
obligations under this Agreement.
"Material Agreement" means any contract or agreement to which NGC or any of
its Subsidiaries is a party which is material to the consolidated financial
condition or operations of NGC and its Subsidiaries, and includes the Existing
Warren Indentures.
"Merger" means the merger, consolidation or combination of NGC's partners
into or with NGC, with NGC being the surviving corporation pursuant to the
Merger Agreement.
"Merger Agreement" means the Combination Agreement and Plan of Merger by
and among Natural Gas Clearinghouse and Trident NGL Holding, Inc. and others,
dated as of October 21, 1994.
"Newco" means Midstream Combination Corp., a Delaware corporation.
"Newco Combination" means the merger of a predecessor in interest to NGC
into Newco pursuant to that certain Combination Agreement and Plan of Merger
dated as of May 22, 1996 between CUSA and Newco, whereby at the closing of the
transaction contemplated thereby, CUSA contributed certain assets to Newco, and
upon consummation of such transactions, the separate existence of such
predecessor in interest to NGC ceased, Newco became the surviving Person and
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successor to such predecessor in interest to NGC and Newco was renamed NGC
Corporation. NGC is the surviving Person of, and successor to, Newco.
"NGC Revolver" means, at any time, the revolving credit agreement of NGC
with the largest commitment then in effect, as the same may be amended,
extended, supplemented, renewed, restated, replaced or otherwise modified from
time to time or if no such revolving credit agreement is then in effect, the
revolving credit agreement of NGC most recently in effect. As of the date
hereof, that certain Amended and Restated Credit Agreement dated as of June 27,
1997, among NGC, The First National Bank of Chicago, as Agent, The Chase
Manhattan Bank and NationsBank of Texas, N.A., as Co-Agents, and each of the
lenders signatory thereto constitutes the NGC Revolver.
"Permitted Liens" means any one or more of the following: (a) Liens for
taxes, assessments or other governmental charges or levies either not yet
delinquent or which are being contested in good faith by appropriate proceedings
diligently prosecuted and as to which adequate reserves shall have been set
aside in conformity with GAAP, (b) deposits or pledges to secure the payment of
workers' compensation, unemployment insurance, social security benefits or
obligations arising under similar legislation, or to secure the performance of
public or statutory obligations, surety or appeal bonds, and other obligations
of a like nature incurred in the ordinary course of business, (c) materialmen's,
mechanics', workmen's, repairmen's, employee's, landlord's, lessor's or other
like Liens arising in the ordinary course of business to secure obligations not
more than 30 days past due or being contested in good faith and as to which
adequate reserves shall have been set aside in conformity with GAAP or as to
which adequate bonds shall have been obtained, (d) Liens arising under Section
9.319 of the Texas Uniform Commercial Code or similar statutes of states other
than Texas, (e) zoning restrictions, easements, rights-of-way, restrictions,
servitudes, permits, reservations, encroachments, exceptions, conditions,
covenants, and any other restrictions on the use of real property none of which
materially impairs the use of such Assets by the owner of such Assets in the
operation of its business, (f) liens in favor of The First National Bank of
Chicago, as Agent under the NGC Revolver for the pro rata benefit of the lenders
thereunder, or to the lenders thereunder to secure the Obligations (as defined
in the NGC Revolver), (g) inchoate Liens arising under ERISA, (h) Liens reserved
in customary oil, gas and/or mineral leases for bonus or rental payments and for
compliance with the terms of such leases and Liens reserved in customary
operating agreements, farm-out and farm-in agreements, exploration agreements,
development agreements and other similar agreements for compliance with the
terms of such agreements, (i) any obligations or duties affecting any of the
Assets of any Person to any municipality or public authority with respect to any
franchise, grant, license or permit which do not materially impair the use of
such Assets for the purposes for which such Assets are held, (j) defects,
irregularities and deficiencies in title to any Assets of any Person which in
the aggregate do not materially impair the use of such Assets for the purposes
for which such Assets are held by such Person, and defects, irregularities and
deficiencies in title to any Assets of the Guarantor which defects,
irregularities or deficiencies have been cured by possession under applicable
statutes of limitation, (k) royalties, overriding royalties, revenue interests,
net revenue interests, production payments (other than royalties, overriding
royalties, revenue interests, net revenue interests or production payments
granted or created by such
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Person or any of its Subsidiaries in the ordinary course of business in
connection with, or having the effect of, the borrowing of money), advance
payment obligations (other than obligations in respect of advance payment
received by such Person or any of its Subsidiaries in connection with, or having
the effect of, the borrowing of money) and other similar burdens now existing on
Assets now owned or, as to Assets hereafter acquired, at the time of acquisition
by such Person, (l) Liens arising out of all presently existing and future
division and transfer orders, advance payment agreements, processing contracts,
gas processing plant agreements, operating agreements, gas balancing or deferred
production agreements, pooling, unitization or communitization agreements,
pipeline, gathering or transportation agreements, platform agreements, drilling
contracts, injection or repressuring agreements, cycling agreements,
construction agreements, salt water or other disposal agreements, leases or
rental agreements (but only as otherwise permitted by this Agreement), farm-out
and farm-in agreements, exploration and development agreements, and any and all
other contracts or agreements covering, arising out of, used or useful in
connection with or pertaining to the exploration, development, operation,
production, sale, use, purchase, exchange, storage, separation, dehydration,
treatment, compression, gathering, transportation, processing, improvement,
marketing, disposal or handling of any Assets of a Person, provided such
agreements are entered into the ordinary course of business and contain terms
customary for such agreements in the industry, and (m) in the case of the
Guarantor and its Subsidiaries, other minor liens or encumbrances none of which
interferes materially with the use of the Assets affected in the ordinary
conduct of the Guarantor's and/or its Subsidiaries business and which
individually or in the aggregate do not have a Material Adverse Effect.
"Project Financing" means any Debt or obligations under leases that do not
constitute Capitalized Lease Obligations at the time such leases are entered
into, in each case that are incurred to finance a project (including any
construction financing) and that do not permit recourse to NGC or any of its
Subsidiaries (other than a Project Financing Subsidiary) or any of their
respective Assets (other than the Assets of a Project Financing Subsidiary).
"Project Financing Subsidiary" means (i) any Subsidiary of NGC or (ii) any
other Person in which NGC owns a 50% or less interest, in each case described in
clause (i) or (ii), whose principal purpose is to incur Project Financing or to
become an owner of interests in a Person so created to conduct the business
activities for which such Project Financing was incurred, and substantially all
of the fixed assets of which Subsidiary or Person are those fixed assets being
financed (or to be financed) in whole or in part by one or more Project
Financings.
"Rolling Period" means for each calendar quarter, such quarter and the
three preceding calendar quarters.
"Scheduled Debt Service" means, for any Rolling Period, the sum of all
scheduled, required and mandatory principal payments of NGC and its Subsidiaries
on a consolidated basis in accordance with GAAP plus Consolidated Interest
Expense for such Rolling Period; provided, further that for purposes of this
definition, principal owing in respect of the CUSA Assumed Debt as a result of a
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demand for payment thereof being made by CUSA prior to the stated maturity
thereof shall not be a scheduled, required, or mandatory principal payment of
NGC and its Subsidiaries.
"Subsidiary" of any Person, means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall, at the time,
be owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any
partnership, association, joint venture, limited liability company or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall, at the time, be so owned. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a direct
or indirect Subsidiary of NGC.
"Substantial Portion" means, with respect to the Assets of the Guarantor
and its Subsidiaries, Assets which (i) represent more than 15% of the
consolidated Assets of the Guarantor and its Subsidiaries as shown in the
consolidated financial statements of the Guarantor and its Subsidiaries most
recently delivered to the Agent pursuant to Section 4.4 (or, if no such
statements have been delivered, the statements referred to in Section 3.4(a)) or
(ii) is responsible for more than 15% of the Consolidated EBITD for the Rolling
Period ending with the calendar quarter immediately prior to the quarter in
which such determination is made.
Section 1.2 Agreement. NGC hereby irrevocably and unconditionally
guarantees to the Beneficiaries the punctual payment when due, in Dollars,
whether at stated maturity, by acceleration or otherwise, of all obligations of
CoGen now or hereafter existing under the Lease, whether for rent, principal,
interest, fees, obligations, liabilities, indebtedness, and other amounts
required to be paid by CoGen under or in respect of the Lease, and all other
present and future payment obligations and payment liabilities (whether
absolute, fixed or contingent, matured or unmatured, joint, several or
independent and howsoever acquired) of CoGen arising out of or in any way
relating to the Lease or the transactions contemplated thereby (such obligations
being the "CoGen Obligations"), and agrees to pay any and all reasonable out-of-
pocket expenses incurred by the Beneficiaries in enforcing any rights under this
Agreement. Any payment required to be made by NGC under this Agreement must be
preceded by a written demand.
Section 1.3 Agreement to be Absolute. NGC guarantees that the CoGen
Obligations will be paid strictly in accordance with the terms of the Lease,
irrespective of any law, regulation, order, court decision, or other
Governmental Rule now or hereafter in effect in any jurisdiction purporting to
prohibit payment of the obligations by CoGen or any change in the time, manner,
or place of payment of, or in any other term of, all or any of the CoGen
Obligations, or any other amendment or waiver of or any consent to departure
from the Lease.
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ARTICLE II
GENERAL PROVISIONS REGARDING GUARANTY
Section 2.1 Nature of Guaranty. The liability of NGC under this
Agreement is and shall be a continuing, absolute, unconditional and irrevocable
guaranty of payment by CoGen (and not of collectibility from CoGen).
Section 2.2 Limitation on NGC's Rights; Waiver of Subrogation.
(a) NGC further agrees that nothing contained herein shall prevent the
Beneficiaries from suing on the CoGen Obligations or exercising any rights
available to them under the Lease and that the exercise of any of the aforesaid
rights shall not constitute a legal or equitable discharge of NGC in respect of
the CoGen Obligations or otherwise. NGC hereby waives any right, claim or
remedy of subrogation, reimbursement, contribution or any similar right which
NGC may now have or hereafter acquire against CoGen in respect of the CoGen
Obligations, including any right, claim or remedy of the Beneficiaries against
CoGen until such time as all CoGen Obligations have been paid in full. Without
limiting the generality of the foregoing, NGC hereby expressly agrees that it
shall remain fully liable to the Beneficiaries under the terms hereof
notwithstanding (i) the voluntary or involuntary liquidation, dissolution,
merger, consolidation, sale or other disposition of all or substantially all of
the assets, marshaling of the assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition with creditors or readjustment of, or other similar
proceedings affecting CoGen; or (ii) the failure of the Beneficiaries to
mitigate damages resulting from any default by CoGen under the Lease.
(b) Regardless of whether NGC may have made any payments to either
Beneficiary, NGC hereby subordinates to all rights the Beneficiaries may have
against CoGen, including all rights to enforce any remedy that either
Beneficiary may have against CoGen, including: (i) all of NGC's rights of
subrogation, if any, of indemnity, and to collect reimbursement from CoGen for
any sums paid to either Beneficiary, whether such rights are contractual or
arise by operation of law (including the United States Bankruptcy Code or any
successor or similar statute) or otherwise, and (ii) all rights to enforce any
remedy that NGC may have against CoGen. NGC agrees that no payment made by it
or for its account pursuant to the provisions hereof to either Beneficiary shall
entitle it, by subrogation, indemnification, exoneration, contribution,
reimbursement or otherwise to the rights of such party in respect of which such
payment is made or otherwise, to any payment by CoGen or from or out of any
property of CoGen, and NGC hereby expressly waives, to the fullest extent
possible, and shall not exercise rights or remedies it has or may in the future
have with respect to any of the foregoing, unless (a) no Event of Default shall
have occurred and be continuing at the time of the exercise by NGC of such right
or remedy, (b) the CoGen Obligations have been paid and performed in full and
(c) at the time of such payment by NGC pursuant to the provisions hereof, NGC is
not an "insider" of CoGen with respect to which such payment by NGC is made,
within the meaning of said section 101(31) of the Bankruptcy Reform Act of 1978,
as now or hereafter in effect, or any successor provision. If, and to the
extent that, any such rights or remedies against CoGen or its property may not
be waived under applicable law, NGC (if at the time of such payment
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by NGC, CoGen is such an "insider" within the meaning of said section 101(31),
or any successor provisions) shall be deemed to have contributed any such rights
to CoGen effective immediately upon the arising of such rights or remedies. If
NGC receives any reimbursement from CoGen in contradiction of the foregoing, NGC
shall hold such payment in trust for, and shall promptly deliver such payment to
the Agent.
Section 2.3 Events of Default. The following are "Events of Default"
under this Agreement:
(a) any default by NGC in the payment of any amount due under this
Agreement shall occur;
(b) other than as set forth in Sections 2.3(a), any default by NGC in the
performance or observance of any other covenant or agreement contained herein
and such default shall continue unremedied for 30 days after the earlier to
occur of (i) the date on which an Authorized Officer of NGC becomes aware of
such default or (ii) written notice thereof has been given to NGC by the Lessor
or the Agent;
(c) any representation, warranty, certification or statement made or deemed
made by NGC in this Agreement, the Consent and Agreement, or any document to
which NGC is a party that is contemplated hereby or thereby or in any
certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material respect when made
(or deemed made);
(d) the Guarantor or any of its Subsidiaries (other than any Project
Financing Subsidiary) shall (i) have an order for relief entered with respect to
it under the federal bankruptcy laws as now or hereafter in effect, (ii) make an
assignment for the benefit of creditors, (iii) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it, or any Substantial Portion of its Assets,
(iv) institute any proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking an order for relief
under the Federal bankruptcy laws as now or hereafter in effect or seeking to
adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (v) take any
corporate action to authorize or effect any of the foregoing actions set forth
in this Section (d), (vi) not pay, or admit in writing its inability to pay, its
debts generally as they become due, or (vii) fail to contest in good faith any
appointment or proceeding described in Section 2.3(e);
(e) without the application, approval or consent of the Guarantor or any of
its Subsidiaries (other than any Project Financing Subsidiary), a receiver,
trustee, examiner, liquidator or similar official shall be appointed for the
Guarantor or such Subsidiary, or any Substantial Portion of the Assets of the
Guarantor or such Subsidiary, or a proceeding described in Section 2.3(d) shall
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be instituted against the Guarantor or any of its Subsidiaries (other than any
Project Financing Subsidiary) and such appointment continues undischarged or
such proceeding continues undismissed or unstayed for a period of 60 consecutive
days; or
(f) any "Default" as defined in the NGC Revolver shall have occurred and be
continuing.
Section 2.4 Lease Terminated. In case the Lease shall be terminated as
a result of the rejection thereof by any trustee, receiver or liquidating agent
of the Lessee or any of its properties in any bankruptcy, insolvency,
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar proceeding, NGC's obligations hereunder shall continue to the same
extent as if such agreement had not been so rejected. NGC agrees that this
Agreement shall continue to be effective or be reinstated, as the case may be,
if any payment to the Lessor or the Agent in respect of the CoGen Obligations
or any part thereof is rescinded or must otherwise be returned by the Lessor or
the Agent upon the insolvency, bankruptcy or reorganization of the Lessee, or
otherwise, as though such payment to the Lessor or the Agent had not been made.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
NGC hereby represents and warrants to the Beneficiaries that the following
shall be true and correct as of the date of this Agreement:
Section 3.1 Corporate Existence. NGC (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and (ii) is in good standing and has all requisite authority to
conduct its business in each jurisdiction in which its business is conducted,
except where the failure to have such authority would not have a Material
Adverse Effect.
Section 3.2 Authorization and Validity. NGC has the corporate power and
authority to execute this Agreement and to perform its obligations hereunder.
Except to the extent that the failure to so qualify would not have a Material
Adverse Effect, NGC has all requisite power, and is in all respects duly
qualified and licensed under all applicable laws to own its Assets as now owned
and to carry on its business as now conducted. The execution and delivery by
NGC of this Agreement and the performance of its obligations hereunder have been
duly authorized by proper corporate proceedings, and this Agreement constitutes
the legal, valid and binding obligation of NGC, enforceable against NGC in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
Section 3.3 No Conflict; Government Consent. Neither the execution and
delivery by NGC of this Agreement, nor consummation of the transactions herein
contemplated, nor compliance with the provisions hereof will violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
NGC or NGC's articles of incorporation or by-laws or the provisions of any
indenture, instrument or agreement to which NGC is a party or is subject, or by
which it, or its Assets, is bound, or conflict with or constitute a default
thereunder, or result in the creation or
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imposition of any Lien in, of or on the Assets of NGC pursuant to the terms of
such indenture, instrument or agreement that is a Material Agreement. No order,
consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any governmental or public body
or authority, or any subdivision thereof, is required to authorize, or is
required in connection with the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, this Agreement, or to
the extent that any such consent or other action may be required, it has been
validly procured and all waiting periods with respect thereto have expired.
Section 3.4 Financial Information.
(a) The March 31, 1997 consolidated financial statements of NGC and its
Subsidiaries (set forth in NGC's quarterly report for the fiscal quarter ended
March 31, 1997 as filed with the Commission on Form 10-Q) heretofore delivered
to the Banks were prepared in accordance with generally accepted accounting
principles as in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of NGC and its
Subsidiaries as of such date and the consolidated results of their operations
for the period then ended.
(b) Since March 31, 1997, there has been no change in the business, Assets,
financial condition, or results of operations of NGC and its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect.
Section 3.5 Litigation. There is no litigation, arbitration,
governmental investigation, proceeding or inquiry pending or, to the knowledge
of any of its officers, threatened against or affecting NGC or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect.
Section 3.6 Subsidiaries. Each of NGC's Subsidiaries is duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, except where the failure
to be so qualified could reasonably be expected to have a Material Adverse
Effect.
Section 3.7 Ownership. NGC owns and holds directly or indirectly
through one or more wholly-owned Subsidiaries, the entire legal title to and
beneficial interest in 100% of all outstanding shares of capital stock of the
Lessee, and is benefitted by the Lease and the transactions contemplated by the
Related Documents.
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ARTICLE IV
COVENANTS OF THE GUARANTOR
Section 4.1 Net Worth. NGC will maintain at all times, Consolidated
Tangible Net Worth of not less than the sum of (i) $400 million, plus (ii) 50%
of NGC's Consolidated Net Income, if positive, for each fiscal quarter ending
after March 14, 1995, plus (iii) 50% of the aggregate net proceeds of all
issuances of equity securities made by NGC after March 14, 1995; provided that
for purposes of this Section 4.1, the Institutionally Targeted Capital
Securities will not constitute equity of NGC and its Subsidiaries.
Section 4.2 Leverage Ratio. NGC will not permit its Leverage Ratio to
exceed 60%; provided that notwithstanding the foregoing, until the earlier of
(i) the end of the quarter which ends the quarter containing the date which is
18 months from the effective date of the Acquisition Transactions, and (ii) the
effective date of the AES Transaction, the foregoing 60% shall be 65%; provided
further that for purposes of determining the Leverage Ratio for purposes of this
Section 4.2, the Institutionally Targeted Capital Securities are deemed to be
included in stockholders' equity.
Section 4.3 Coverage Ratio. NGC will maintain for each Rolling Period
ending as of the last day of each calendar quarter a ratio of (i) Consolidated
EBITD minus Maintenance Capital Expenditures to (ii) Scheduled Debt Service of
not less than 2.0 to 1.0.
Section 4.4 Information. NGC will deliver to the Lessor and to the
Agent for distribution to the Banks:
(a) as soon as available and in any event within 120 days after the end of
each fiscal year of NGC, a consolidated balance sheet of NGC and its
Subsidiaries as of the end of such fiscal year and the related consolidated
statements of income and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on in a manner acceptable to the Commission by independent public accountants of
nationally recognized standing (it being understood that delivery of NGC's
annual report on form 10-K in respect of such fiscal year as filed pursuant to
Section 13(a) of the Securities Exchange Act of 1934 shall constitute compliance
herewith, provided that such report otherwise meets the requirements of this
subsection (a)), together with a certificate of an Authorized Officer setting
forth in reasonable detail the calculations of the financial tests set forth in
Sections 4.1, 4.2 and 4.3.
(b) as soon as available and in any event within sixty (60) days after the
end of each of the first three quarters of each fiscal year of NGC, a
consolidated balance sheet of NGC and its Subsidiaries as of the close of
business for such quarter and the related consolidated statement of income for
such quarter and the related consolidated statements of income and cash flows
for the period commencing with the beginning of NGC's fiscal year to the end of
such quarter, setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of NGC's previous fiscal
year, (it being understood that delivery of NGC's quarterly report on form 10-Q
in respect of such period as filed pursuant to Section 13(a) of the Securities
Exchange
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Act of 1934 shall constitute compliance herewith, provided that such report
otherwise meets the requirements of this subsection (b)), and a computation of
the ratios and amounts required to be maintained by Sections 4.1, 4.2 and 4.3,
all in reasonable detail, prepared in each case in accordance with generally
accepted accounting principles and certified by an Authorized Officer to the
effect that they present fairly the financial condition and results of the
operations of NGC at the date and for the period indicated therein, subject to
changes resulting from year end adjustments.
(c) other than for the fiscal year 1996, at the same time as it delivers or
is required to deliver the statements described in clause (a) above, certificate
of an Authorized Officer of NGC stating whether there exists on or as of the
date of such certificate any Potential Default or Event of Default hereunder or
under any Related Document to which NGC is a party, and, if a Potential Default
or Event of Default then exists, setting forth the details thereof and the
action, if any, NGC has taken, is taking or proposes to take with respect
thereto;
(d) promptly upon the mailing thereof to the shareholders of NGC generally,
copies of all financial statements, proxy statements and reports so mailed; and
(e) promptly upon the filing thereof, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or
its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents)
which NGC shall have filed with the Commission.
ARTICLE V
MISCELLANEOUS
Section 5.1 NGC's Waivers. NGC waives:
(a) all statutes of limitation that would bar any action or proceeding
brought against NGC under this Agreement by either Beneficiary where such
Beneficiary was unable to commence or prosecute such action or proceeding prior
to the expiration of the applicable period(s) of limitation due to any stay,
such as the automatic stay in bankruptcy, or due to the necessity of completing
or exhausting remedies against another Person or other collateral before
proceeding against NGC or due to any other cause wholly or partially beyond the
control of such Beneficiary, to the fullest extent permitted by law;
(b) any right NGC may have, if any, to require the Beneficiaries to proceed
against CoGen, to proceed against or exhaust any security or collateral held
from CoGen, or to pursue any other remedy in either Beneficiary's power to
pursue;
(c) any defense based on any claim that NGC's obligations exceed or are
more burdensome than those of CoGen;
(d) any defense based on: (i) any legal disability of CoGen, and (ii) any
release, discharge, modification, impairment or limitation of the liability of
CoGen to either Beneficiary from
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any cause, whether consented to by either Beneficiary or arising by operation of
law or from any Insolvency Proceeding or otherwise;
(e) any defense based on any action taken or omitted by the Beneficiaries
in any Insolvency Proceeding involving CoGen, including any extension of credit
by either Beneficiary to CoGen in any Insolvency Proceeding, and the taking and
holding by either Beneficiary of any security or collateral for any such
extension of credit;
(f) all presentments, demands for performance or payment, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Agreement and of the existence, creation, or incurrence of
new or additional indebtedness, and demands and notices of every kind except for
any demand upon NGC expressly provided for in Section 1.2;
(g) any defense based on or arising out of any defense that CoGen may have
to the CoGen Obligations;
(h) all notices to NGC and, on behalf of NGC only, all notices to CoGen,
including notices of the acceptance of this Agreement or the creation, renewal,
extension or modification of the CoGen Obligations, or of default in the
performance of the CoGen Obligations (or any portion thereof) and of enforcement
of any right or remedy with respect thereto or notice of any other matters
relating to the CoGen Obligations or to this Agreement;
(i) diligence and demand or performance in respect of the CoGen
Obligations; and
(j) all principles or provisions of law which conflict with the terms of
this Agreement.
NGC further agrees that the Beneficiaries may enforce this Agreement upon
CoGen's failure to perform the CoGen Obligations, notwithstanding the existence
of any dispute between CoGen, NGC or either Beneficiary with respect to the
performance of the CoGen Obligations (or any portion thereof) or any
counterclaim, set-off or other claim which CoGen may allege against either
Beneficiary. NGC further agrees that its obligations in respect of the CoGen
Obligations shall not be affected by any circumstances which constitute a legal
or equitable discharge of a guarantor or surety.
Section 5.2 Third Party Beneficiaries. This Agreement is solely for the
benefit of the Beneficiaries and is not intended to nor shall it be deemed to be
for the benefit of any other third party.
Section 5.3 No Waiver; Consents; Cumulative Remedies. Each waiver by
the Beneficiaries must be in writing, and no waiver shall be construed as a
continuing waiver. No waiver shall be implied from either Beneficiary's delay
in exercising or failure to exercise any right or remedy against CoGen or NGC.
Consent by the Beneficiaries to any act or omission by CoGen or NGC shall not be
construed as a consent to any other or subsequent act or omission, or as a
waiver
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of the requirement for any Beneficiary's consent to be obtained in any future or
other instance. All remedies of the Beneficiaries against CoGen and NGC are
cumulative.
Section 5.4 Successors and Assigns; Participations. The terms of this
Agreement shall bind and benefit the successors and assigns of the
Beneficiaries; provided, however, that, subject to the provisions of Section
5.9, NGC may not assign this Agreement, or assign or delegate any of its rights
or obligations under this Agreement without the written consent of the
Beneficiaries. Upon notice to NGC, the Beneficiaries and their successors,
assigns and transferees may assign their rights and benefits under this
Agreement to any financial institutions providing financing to the Lessor in
connection with the Lease or any agent for such financial institutions.
Section 5.5 Notices. All notices, requests and other communications
given under this Agreement must be given in the manner and shall be effective as
provided in Section 23 of the Lease. All notices to NGC shall be sent to the
address specified on the signature page hereof.
Section 5.6 Rights to Deal with the Lessee. At any time and from time
to time, without terminating, affecting or impairing the validity of this
Agreement or the obligations of NGC hereunder, the Beneficiaries may deal with
CoGen in the same manner and as fully and as if this Agreement did not exist and
shall be entitled, among other things, to grant CoGen, without notice or demand
and without affecting NGC's liability hereunder, such extension or extensions of
time to perform, renew, compromise, accelerate or otherwise change the time for
payment of or otherwise change the terms of payment or any part thereof
contained in or arising under the Lease, or to waive any CoGen Obligation of
CoGen to perform any act or acts as the Beneficiaries may deem advisable.
Section 5.7 Payments. Each payment by NGC to either Beneficiary under
this Agreement shall be made by transferring the amount thereof in immediately
available funds without setoff or counterclaim; provided that, no such payment
shall be deemed a waiver of any rights NGC may have. The Lessor hereby
irrevocably instructs NGC, at all times that the Credit Agreement is in effect
or any amounts are due and owing thereunder, to pay any and all amounts payable
to the Lessor under this Agreement to the Agent by depositing the same into the
Collateral Account. NGC agrees to pay all such amounts in accordance with the
foregoing instructions, free and clear of any set-off, counterclaim or defense
that NGC may have with respect thereto, other than counterclaims required by
law, if any; provided, however, that no payment by NGC to the Agent shall be
deemed a waiver of any rights NGC may have.
Section 5.8 Survival of Representations, Warranties, etc. All
representations, warranties made herein and in statements or certificates
delivered pursuant hereto shall survive any investigation or inspection made by
or on behalf of the Beneficiaries and shall continue in full force and effect
until all of the obligations of NGC under this Agreement shall be fully
performed in accordance with the terms hereof, and, subject to Section 5.9
hereof, until the payment and performance in full of all obligations.
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Section 5.9 Termination or Replacement of NGC Guaranty.
(a) This Agreement may be (i) terminated, subject to the provisions of
Subsections 5.9(b) and (c), on any anniversary of the date of this Agreement if
NGC shall, on any Business Day that is at least 91 days before such anniversary,
notify each of the Beneficiaries that this Agreement will be so terminated on
such anniversary date, or (ii) replaced to the extent provided herein, subject
to the provisions of Subsection 5.9(b), if either (A) another Person acceptable
to the Lessor, each of the Banks, and if the rights, obligations, or duties of
the Agent are affected thereby, the Agent, such acceptance not to be
unreasonably withheld, executes a guaranty in form and substance substantially
similar to this Agreement, including any changes approved by the Lessor, each of
the Banks, and if the rights, obligations, or duties of the Agent are affected
thereby, the Agent, (B) another Person obtains from a bank with assets of $60
billion or more and whose long-term, unsecured debt is rated A or better by S&P
or A2 or better by Moody's, or any successor rating agency, a letter of credit
naming the Beneficiaries as the beneficiaries thereunder, in form and substance,
and in an amount, satisfactory to the Lessor, each of the Banks and if the
rights, obligations, or duties of the Agent are affected thereby, the Agent, or
(C) NGC obtains from a Bank whose long-term, unsecured debt is rated A or better
by S&P or A2 or better by Moody's or any successor rating agency, a letter of
credit naming the Beneficiaries as the beneficiaries thereunder in form and
substance, and in an amount, satisfactory to the Lessor, the Majority Banks, and
if the rights, obligations, or duties of the Agent are affected thereby, the
Agent.
(b) Upon delivery of such other guaranty or such letter of credit, this
Agreement shall be replaced to the extent, but only to the extent, the
obligations hereunder are replaced by such other guaranty or such letter of
credit, and this Agreement shall continue in full force and effect with respect
to all other obligations hereunder. In addition, no termination or replacement
of any portion of this Agreement pursuant to the provisions of Subsection 5.9(a)
shall be effective to terminate or replace the obligations and liabilities of
NGC, or to affect the Beneficiaries' rights, powers, and remedies, under this
Agreement (i) with respect to any of the obligations hereunder that become due
and payable either (A) prior to or concurrently with such termination or prior
to such replacement or (B) as a result of such termination and CoGen's purchase
of the Facility pursuant to Subsection 5.9(c) hereof and Section 14(b) of the
Lease, or (ii) with respect to any payment made prior to such termination or
replacement which is rescinded or must otherwise be returned after such
termination or replacement.
(c) Following each Beneficiary's receipt of notice as required by
subsection 5.9(a)(i), CoGen shall be required to purchase the Facility as
provided in Section 14(b) of the Lease, and this Agreement and NGC's obligations
hereunder shall continue with respect to all of the CoGen Obligations (including
CoGen's obligation to purchase the Facility) that become due and payable prior
to or concurrently with the termination of this Agreement provided for in
Subsection 5.9(a)(i), until all such CoGen Obligations have been fully satisfied
and performed. Following satisfaction of either clause (A) or clause (B) of
Subsection 5.9(a)(ii), CoGen shall not be required to purchase the Facility
solely as a result of the replacement of this Guaranty pursuant to Subsection
5.9(a)(ii).
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Section 5.10 Governing Law. This Agreement shall be governed by, and
constructed in accordance with, the laws of the State of New York. NGC HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE
OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THE GUARANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY
OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT
THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR
ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF
MAY NOT BE LITIGATED IN OR BY SUCH COURTS. NGC AGREES THAT SERVICE OF PROCESS
MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES
SET FORTH IN THIS AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.
Section 5.11 Costs and Expenses. If any lawsuit, including any
Insolvency Proceeding, is commenced which arises out of, or which relates to
this Agreement, the Beneficiaries shall be entitled to recover from NGC such
sums as the court may adjudge to be reasonable attorneys' fees and expenses in
the action or proceeding, in addition to reasonable out-of-pocket costs and
expenses otherwise allowed by law. NGC agrees to pay all of the Beneficiaries'
reasonable out-of-pocket costs and expenses, including reasonable attorneys'
fees and expenses which may be incurred, all such sums shall bear interest at
the rate per annum equal to the Base Rate plus 1% until paid in full.
Section 5.12 Miscellaneous. The illegality or unenforceability of one or
more provisions of this Agreement shall not affect any other provision. Time is
of the essence in the performance of this Agreement by NGC.
[SIGNATURES BEGIN NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
GUARANTOR:
NGC CORPORATION
By:\s\ Robert D. Doty, Jr.
-----------------------
Robert D. Doty, Jr.
Vice President and Treasurer
Address Where Notices to NGC are to be Sent:
1000 Louisiana
Suite 5800
Houston, Texas 77002
Telecopy No.: (713) 767-8322
Telephone No. (713) 507-6400
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EXHIBIT ____
WABASH
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NGC CORPORATION
----------------------------------------
PARENT GUARANTY
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Dated as of June 27, 1997
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<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I
GUARANTY
Section 1.1 Definitions and Interpretations.................... 2
Section 1.2 Agreement.......................................... 10
Section 1.3 Guaranty to be Absolute............................ 10
ARTICLE II
GENERAL PROVISIONS REGARDING GUARANTY
Section 2.1 Nature of Guaranty................................. 11
Section 2.2 Limitation on NGC's Rights; Waiver of Subrogation.. 11
Section 2.3 Events of Default.................................. 12
Section 2.4 Guaranteed Agreements Terminated................... 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Corporate Existence................................ 13
Section 3.2 Authorization and Validity......................... 13
Section 3.3 No Conflict; Government Consent.................... 13
Section 3.4 Financial Information.............................. 14
Section 3.5 Litigation......................................... 14
Section 3.6 Subsidiaries....................................... 14
Section 3.7 Ownership.......................................... 14
ARTICLE IV
COVENANTS OF THE GUARANTOR
Section 4.1 Net Worth.......................................... 15
Section 4.2 Leverage Ratio..................................... 15
Section 4.3 Coverage Ratio..................................... 15
Section 4.4 Information........................................ 15
Section 4.5 Performance........................................ 16
ARTICLE V
MISCELLANEOUS
Section 5.1 NGC's Waivers...................................... 16
Section 5.2 Third Party Beneficiaries.......................... 18
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Section 5.3 No Waiver; Consents; Cumulative Remedies.......... 18
Section 5.4 Successors and Assigns; Participations............ 18
Section 5.5 Notices........................................... 18
Section 5.6 Rights to Deal with the Lessee.................... 18
Section 5.7 Payments.......................................... 18
Section 5.8 Survival of Representations, Warranties, etc...... 19
Section 5.9 Replacement of Guaranty........................... 19
Section 5.10 Governing Law..................................... 19
Section 5.11 Costs and Expenses................................ 20
Section 5.12 Miscellaneous..................................... 20
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GUARANTY
THIS PARENT GUARANTY ("Guaranty") dated as of June 27, 1997, is by NGC
CORPORATION, a Delaware corporation ("NGC" or the "Guarantor") in favor of
WABASH RIVER ASSETS PARTNERSHIP, L.P., a Delaware limited partnership (the
"Lessor" and a "Beneficiary"), and in favor of CREDIT SUISSE FIRST BOSTON, as
Administrative Agent to the Banks now or hereafter parties to the Credit
Agreement (the "Banks"), for the benefit of the Banks (in such capacity, the
"Administrative Agent" and a "Beneficiary", and collectively with the Lessor,
the "Beneficiaries").
RECITALS
A. On the Financing Closing Date, State Street Bank and Trust Company of
Connecticut, National Association, not in its individual capacity but solely as
Trustee under the Declaration of Trust dated as of August 31, 1993 (the
"Trustee"), assigned to the Partnership (i) the Trustee's right, title and
interest in and to the Ground Lease, dated August 31, 1993, between Gasification
Services, Inc., a Delaware corporation (the "Lessee"), as sublessor thereunder,
and the Trustee, as sublessee thereunder, including a subleasehold interest in
the Parcel and an assignment of the Easements and (ii) title to the Improvements
and Personalty. Subsequent to such assignment, the Partnership subleased its
leasehold interest in the Parcel, assigned the Easements and leased the
Improvements and Personalty to the Lessee, pursuant to the Lease Agreement dated
as of June 7, 1996 (the "Lease"), between the Partnership and the Lessee. The
Lease replaced that certain Lease dated as of August 31, 1993, between the
Trustee and the Lessee.
B. The Partnership financed its acquisition of the Property through the
issuance of the Notes pursuant to the Credit Agreement and from the capital
contributions of its partners.
C. As an inducement for the Partnership and the Administrative Agent to
enter into the transactions contemplated by the Credit Agreement and the other
Related Documents ("Transactions") and for the Banks to advance the Borrowings
in accordance with the Credit Agreement as evidenced by the Notes, all of which
the Partnership, the Administrative Agent, and the Banks would have been
otherwise unwilling to do, Destec Energy, Inc. ( "Destec") entered into that
certain Parent Guaranty, dated as of June 7, 1996 (the "Original Guaranty") to
the Partnership and the Administrative Agent, for the benefit of the Banks.
D. NGC and NGC Acquisition Corporation II, a wholly-owned subsidiary of
NGC ("NACII"), have entered into that certain Agreement and Plan of Merger dated
as of February 17, 1997 (the "Destec Contract") with Destec and The Dow Chemical
Corporation ("Dow"), whereby at the closing of the transactions contemplated
thereby NGC will acquire the stock of Destec pursuant to the merger of NACII
with and into Destec (the "Acquisition Transactions").
E. The failure of Dow to own at least a majority of the outstanding
shares of each class of capital stock of Destec is a Termination Event under the
Lease.
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F. The Guarantor and Destec have requested that the Lessor, the
Administrative Agent, and the Banks consent to the Acquisition Transactions.
G. The Lessor, the Administrative Agent, and the Banks have agreed to
provide such consent pursuant to that certain Consent and Agreement, dated as of
June 27, 1997 (the "Consent and Agreement"), among the Lessee, the Guarantor,
Destec, the Lessor, the Administrative Agent, and the Banks, subject to certain
terms and conditions, including without limitation, the delivery by the
Guarantor of this Guaranty.
NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, NGC agrees as follows:
ARTICLE I
GUARANTY
Section 1.1 Definitions and Interpretations.
(a) The table of contents and article and section headings of this Guaranty
are included herein for convenience of reference purposes only and shall not
constitute a part of this Guaranty or affect its interpretation in any respect.
Except where the context otherwise requires, (i) words imparting the singular
number shall include the plural number, and vice versa, and shall be construed
to be of such gender or number as the context requires; (ii) the words "herein,"
"hereof," "hereunder" and other words of similar import when used in this
Guaranty refer to this Guaranty as a whole, and not to any particular article,
section or subsection; (iii) pronouns, wherever used in this Guaranty and of
whatever gender, shall include natural persons, corporations and associations of
every kind and character; (iv) the gender of all words used in this Guaranty
shall include the masculine, feminine and neuter; (v) the words "includes" or
"including" shall mean "including without limitation"; (vi) the word "or" shall
mean "and/or"; and (vii) in the computation of interest and fees payable from a
specified date to a later specified date, unless otherwise indicated the word
"from" means "from and including" and the words "to" and "until" both mean "to
but not including".
(b) Unless expressly stated otherwise, any reference in this Guaranty to a
document or instrument shall mean such document or instrument, together with all
exhibits thereto, as amended, extended, supplemented, or otherwise modified from
time to time, as permitted by the Related Documents. Any reference in this
Guaranty to any Person as a party to any document or instrument shall include
its successors and assigns to such person's status as a party, to the extent
permitted by the Related Documents.
(c) Each capitalized term used herein and not otherwise defined herein
shall have the meanings given such term in the Lease, or if not defined therein,
in the Credit Agreement. In addition to the terms defined elsewhere in this
Guaranty, the following terms shall have the following meanings:
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"AES" means The AES Corporation, a Delaware corporation.
"AES Contract" means that certain Asset Purchase Agreement dated February
17, 1997 between NGC and AES.
"AES Transaction" means the sale by NGC of the International Assets (as
defined in the AES Contract) of Destec pursuant to the AES Contract.
"Assets" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person, and includes, without limitation, stock, partnership
and limited liability company interests owned or held in any other Person by
such Person.
"Authorized Officer" means any of the President, the Chief Financial
Officer, the Senior Vice President-General Counsel, the Vice President-Finance,
the Controller or the Treasurer of NGC.
"Capitalized Lease" of a Person means any lease of Assets by such Person as
lessee which would be capitalized on a balance sheet of such Person prepared in
accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person as a lessee under Capitalized Leases which would be
shown as a liability on a balance sheet of such Person prepared in accordance
with GAAP.
"Commission" means the Securities and Exchange Commission of the United
States of America.
"Consolidated Debt" means, as of any date of determination thereof, the
aggregate principal amount of all then outstanding Debt of NGC and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP as of
such date.
"Consolidated EBITD" of NGC and its Subsidiaries means, for any period, the
sum of (a) Consolidated Net Income (excluding income taxes) determined for such
period; provided that there shall be excluded (i) the income (or loss) of any
Person (other than a Subsidiary of NGC) in which NGC or any Subsidiary of NGC
has an interest but in which any other Person (not NGC or any of its
Subsidiaries) has a joint interest with respect to which the equity method of
accounting is utilized, except to the extent of the amount of dividends or other
distributions actually paid to NGC, or any of its Subsidiaries, by such Person
during such period, (ii) the income (or loss) of any Person (other than a Person
that is consolidated as a result of the Merger) accrued prior to the date it
becomes a Subsidiary of NGC or is merged into or consolidated with NGC or any of
its Subsidiaries or that such Person's Assets are acquired by NGC or any of its
Subsidiaries, and (iii) the income of any Subsidiary of NGC to the extent that
the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement (other than the Existing Warren Indentures as in
effect on November 1, 1994),
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instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, plus (b) the Consolidated Interest Expense for
such period, plus (c) to the extent taken into account in calculating
Consolidated Net Income (excluding income taxes) referred to in clause (a) of
this definition, the aggregate amount of all costs and expenses incurred as a
result of the Acquisition Transactions, and the Newco Combination, respectively,
plus (d) depreciation, depletion and amortization expense of NGC and its
Subsidiaries determined for such period on a consolidated basis plus (e) without
duplication, the amount of dividends or other distributions actually paid to NGC
or any of its Subsidiaries during such period to the extent attributable to
income from another period excluded pursuant to clause (i) above; provided,
however, for purposes of this definition, extraordinary gains and losses shall
excluded from the calculation of Consolidated Net Income.
"Consolidated Interest Expense" means, for any Rolling Period, the total
interest expense, whether paid or accrued (including, without limitation, that
attributable to Capitalized Leases), of NGC and its Subsidiaries determined for
such period on a consolidated basis in accordance with GAAP, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing plus or minus net
amounts paid or payable or received or receivable pursuant to interest rate
swap, exchange, cap or similar agreements.
"Consolidated Net Income" means, for any period, the consolidated net
income of a Person and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Worth" means at any date the stockholders' equity of NGC
and its Subsidiaries determined on a consolidated basis in accordance with GAAP
as of such date.
"Consolidated Tangible Net Worth" means at any date the stockholders'
equity of NGC and its Subsidiaries less their consolidated Intangible Assets,
all determined on a consolidated basis in accordance with GAAP as of such date.
For purposes of this definition, "Intangible Assets" means the amount (to the
extent reflected in determining such stockholders' equity) of (a) all net write-
ups (other than write-ups resulting from foreign currency translations and
write-ups of assets of a going concern business made within twelve months after
the acquisition of such business) subsequent to December 31, 1993, in the book
value of any Assets owned by NGC or any of its Consolidated Subsidiaries and (b)
all unamortized debt discount and expense, goodwill, patents, trademarks,
service marks, trade names, copyrights, and organization or developmental
expenses.
"Credit Agreement" means that certain Amended and Restated Credit Agreement
dated as of the date hereof, among the Lessor, the Administrative Agent, and the
Banks parties thereto.
"CUSA" means Chevron U.S.A. Inc., a Pennsylvania corporation.
"CUSA Assumed Debt" means the $155,373,000 aggregate principal amount of
CUSA's obligations under the CUSA Note, the payment of which was assumed by
Newco under the CUSA Assumption Agreement.
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"CUSA Assumption Agreement" means the agreement dated as of the closing of
the Newco Combination pursuant to which Newco assumed CUSA's payment obligation
for the CUSA Assumed Debt.
"CUSA Note" means the demand promissory note dated August 25, 1994 payable
by CUSA to Chevron Capital U.S.A. Inc.
"Debt" means, with respect to any Person, (a) all indebtedness and other
obligations of such Person for the repayment of money borrowed, whether or not
represented by acceptances, bonds, debentures, notes, or other instruments or
securities, (b) all indebtedness and other obligations of such Person for the
deferred payment of the purchase price of any property or assets (other than
accounts payable on terms customary in the trade), (c) all Capitalized Lease
Obligations of such Person, and (d) all indebtedness and other obligations,
whether or not assumed by such Person, secured by any Lien (other than (i)
utility easements, building restrictions and such other encumbrances or charges
against real property as are of a nature generally existing with respect to
properties of a similar character and which do not materially affect the
marketability of the same or interfere with the use thereof in the business of
the Guarantor or its Subsidiaries, (ii) Permitted Liens, (iii) Liens on cash and
short-term investments (a) deposited by the Guarantor or any of its Subsidiaries
in margin accounts with futures contract brokers authorized to trade on the New
York Mercantile Exchange to secure the Guarantor's obligations with respect to
futures contracts for the purchase or sale of natural gas, natural gas liquids,
domestic crude, Brent crude, propane, heating oil, unleaded gasoline and/or jet
fuel or (b) pledged by the Guarantor or any of its Subsidiaries to secure the
Guarantor's obligations pursuant to one or more Fixed Price Contracts or other
such contracts with respect to other commodities or interest rate or currency
rate management contracts, and (iv) extensions, renewals or replacements of any
Lien referred to in (i) through (iii), provided that the principal amount of the
Debt or obligation secured thereby is not increased and that any such extension,
renewal or replacement Lien is limited to the Assets originally encumbered
thereby) on, or payable out of the proceeds of or production from, any Assets of
such Person; provided, however that in no event shall Debt described in any of
the foregoing categories (i) be duplicative of any Debt described in any other
such category, (ii) include Guaranties, or (iii) include any Project Financing
that would not be shown as a liability on the financial statements of NGC and
its Subsidiaries on a consolidated basis; provided further, that for purposes of
the foregoing clauses (a), (b), (c), and (d), Debt shall include, in the case of
NGC and its Subsidiaries, only such obligations as are shown as a liability on a
consolidated balance sheet of NGC and its Subsidiaries in accordance with GAAP;
and provided further that the Institutionally Targeted Capital Securities shall
not constitute Debt.
"Dollars" means the lawful currency of the United States of America.
"Existing Warren Indentures" means each of (i) the Indenture dated to be
effective as of September 9, 1993 between Warren NGL, Inc., as Issuer, and
Ameritrust Texas National Association, Trustee, for $65,000,000 14% Senior
Subordinated Notes due 2001 and (ii) the
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Indenture dated to be effective as of April 15, 1993 between Warren NGL, Inc.,
as Issuer, and the First National Bank of Boston, Trustee, for $105,000,000 10
1/4% Subordinated Notes due 2003.
"Fixed Price Contract" means, as of any date of determination, a contract
(including, without limitation, physical delivery, option (whether cash or
financial), exchange, swap and futures contracts) entered into by the Guarantor
or any of its Subsidiaries for the purchase or sale of all gaseous hydrocarbons
including, but not limited to oil well gas, gas well gas, and casinghead gas,
but excluding any natural gas liquids ("Natural Gas"), other than (i) such a
contract which has a remaining term of thirty (30) days or less from such date
of determination, or (ii) such a contract under which the purchase or sale price
of any portion of Natural Gas delivered or to be delivered on or after such date
of determination is calculated by reference to (a) the spot price for Natural
Gas current on each date of delivery at the place of delivery specified in such
contract, (b) the spot price for Natural Gas current on each date of delivery at
a place of delivery other than the place of delivery specified in such contract
provided that such spot price is adjusted to reflect the cost of transporting
Natural Gas to the place of delivery specified in such contract, (c) a basket of
price indices similar to the spot price for Natural Gas current on each date of
delivery at the place of delivery, or (d) a basket of price indices similar to
the then current spot price for Natural Gas at a place of delivery other than
the place of delivery specified in such contract provided that each such price
index is adjusted to reflect the cost of transporting Natural Gas to the place
of delivery specified in such contract; provided, however, that for purposes of
this Guaranty a Fixed Price Contract shall not include any contract (including,
without limitation, physical delivery, option (whether cash or financial),
exchange, swap and futures contracts) entered into by the Guarantor or any of
its Subsidiaries in the ordinary course of business for the purpose of managing
the impact of price fluctuations on Natural Gas supply costs related to any
Natural Gas processing activity conducted by the Guarantor or any of its
Subsidiaries.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time, applied on a basis consistent with the most recent financial
statements of NGC and its Subsidiaries delivered pursuant hereto.
"Guaranteed Agreements" shall have the meaning ascribed to such term in
Section 1.2.
"Guaranteed Obligations" shall have the meaning ascribed to such term in
Section 1.2.
"Guaranty" means, with respect to any Person, (a) all indebtedness and
other obligations, contingent or otherwise, of such Person under or in respect
of any letter of credit issued for its own account, and (b) all indebtedness and
other obligations of such Person under any agreement, undertaking or other
arrangement by which such Person (i) assumes, guarantees, endorses (other than
the endorsement of instruments for collection in the ordinary course of
business), commits or agrees (whether or not such commitment or agreement is
contingent or subject to the occurrence of a specified event or events) to
purchase or otherwise acquire or provide funds for the payment of any obligation
or liability of any other Person or (ii) agrees to maintain the net worth,
working capital or any other financial condition of any other Person; provided,
however, in no event shall Guaranties
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described in any of the foregoing categories include any Guaranties by a Project
Financing Subsidiary that would not be shown as a liability on the financial
statements of NGC and its Subsidiaries on a consolidated basis.
"Insolvency Proceeding" means (a) any case, action or proceeding before any
court or other governmental authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors; in each case undertaken under the federal bankruptcy laws of the
United States from time to time in effect.
"Institutionally Targeted Capital Securities" means the capital securities
to be issued in an aggregate amount of up to $200,000,000 by a Delaware business
trust, the proceeds of which will be loaned to NGC or one or more of its
Subsidiaries all on the terms set forth in the Offering Memorandum dated May 22,
1997, a copy of which has been delivered to the Administrative Agent.
"Leverage Ratio" means the ratio, expressed as a percentage, of
Consolidated Debt to the sum of Consolidated Debt plus Consolidated Net Worth.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, security interest, encumbrance or preference,
priority or other security agreement or any interest in Assets to secure payment
of a debt or performance of an obligation (including the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Maintenance Capital Expenditure" means, for any Rolling Period, any
capital expenditure to maintain the Assets of NGC and its Subsidiaries in good
working condition in accordance with industry standards.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Assets, financial condition or results of operations of NGC and its
Subsidiaries taken as a whole, or (ii) the ability of NGC to perform its payment
obligations under this Guaranty.
"Material Agreement" means any contract or agreement to which NGC or any of
its Subsidiaries is a party which is material to the consolidated financial
condition or operations of NGC and its Subsidiaries, and includes the Existing
Warren Indentures.
"Merger" means the merger, consolidation or combination of NGC's partners
into or with NGC, with NGC being the surviving corporation pursuant to the
Merger Agreement.
"Merger Agreement" means the Combination Agreement and Plan of Merger by
and among Natural Gas Clearinghouse and Trident NGL Holding, Inc. and others,
dated as of October 21, 1994.
"Newco" means Midstream Combination Corp., a Delaware corporation.
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"Newco Combination" means the merger of a predecessor in interest to NGC
into Newco pursuant to that certain Combination Agreement and Plan of Merger
dated as of May 22, 1996 between CUSA and Newco, whereby at the closing of the
transaction contemplated thereby, CUSA contributed certain assets to Newco, and
upon consummation of such transactions, the separate existence of such
predecessor in interest to NGC ceased, Newco became the surviving Person and
successor to such predecessor in interest to NGC and Newco was renamed NGC
Corporation. NGC is the surviving Person of, and successor to, Newco.
"NGC Revolver" means, at any time, the revolving credit agreement of NGC
with the largest commitment then in effect, as the same may be amended,
extended, supplemented, renewed, restated, replaced or otherwise modified from
time to time or if no such revolving credit agreement is then in effect, the
revolving credit agreement of NGC most recently in effect. As of the date
hereof, that certain Amended and Restated Credit Agreement dated as of June 27,
1997, among NGC, The First National Bank of Chicago, as Agent, The Chase
Manhattan Bank and NationsBank of Texas, N.A., as Co-Agents, and each of the
lenders signatory thereto constitutes the NGC Revolver.
"Permitted Liens" means any one or more of the following: (a) Liens for
taxes, assessments or other governmental charges or levies either not yet
delinquent or which are being contested in good faith by appropriate proceedings
diligently prosecuted and as to which adequate reserves shall have been set
aside in conformity with GAAP, (b) deposits or pledges to secure the payment of
workers' compensation, unemployment insurance, social security benefits or
obligations arising under similar legislation, or to secure the performance of
public or statutory obligations, surety or appeal bonds, and other obligations
of a like nature incurred in the ordinary course of business, (c) materialmen's,
mechanics', workmen's, repairmen's, employee's, landlord's, lessor's or other
like Liens arising in the ordinary course of business to secure obligations not
more than 30 days past due or being contested in good faith and as to which
adequate reserves shall have been set aside in conformity with GAAP or as to
which adequate bonds shall have been obtained, (d) Liens arising under Section
9.319 of the Texas Uniform Commercial Code or similar statutes of states other
than Texas, (e) zoning restrictions, easements, rights-of-way, restrictions,
servitudes, permits, reservations, encroachments, exceptions, conditions,
covenants, and any other restrictions on the use of real property none of which
materially impairs the use of such Assets by the owner of such Assets in the
operation of its business, (f) liens in favor of The First National Bank of
Chicago, as Agent under the NGC Revolver for the pro rata benefit of the lenders
thereunder, or to the lenders thereunder to secure the Obligations (as defined
in the NGC Revolver), (g) inchoate Liens arising under ERISA, (h) Liens reserved
in customary oil, gas and/or mineral leases for bonus or rental payments and for
compliance with the terms of such leases and Liens reserved in customary
operating agreements, farm-out and farm-in agreements, exploration agreements,
development agreements and other similar agreements for compliance with the
terms of such agreements, (i) any obligations or duties affecting any of the
Assets of any Person to any municipality or public authority with respect to any
franchise, grant, license or permit which do not materially impair the use of
such Assets for the purposes for which such Assets are held, (j) defects,
irregularities and deficiencies in title to any Assets of any Person which in
the aggregate do not materially impair the use of such
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Assets for the purposes for which such Assets are held by such Person, and
defects, irregularities and deficiencies in title to any Assets of the Guarantor
which defects, irregularities or deficiencies have been cured by possession
under applicable statutes of limitation, (k) royalties, overriding royalties,
revenue interests, net revenue interests, production payments (other than
royalties, overriding royalties, revenue interests, net revenue interests or
production payments granted or created by such Person or any of its Subsidiaries
in the ordinary course of business in connection with, or having the effect of,
the borrowing of money), advance payment obligations (other than obligations in
respect of advance payment received by such Person or any of its Subsidiaries in
connection with, or having the effect of, the borrowing of money) and other
similar burdens now existing on Assets now owned or, as to Assets hereafter
acquired, at the time of acquisition by such Person, (l) Liens arising out of
all presently existing and future division and transfer orders, advance payment
agreements, processing contracts, gas processing plant agreements, operating
agreements, gas balancing or deferred production agreements, pooling,
unitization or communitization agreements, pipeline, gathering or transportation
agreements, platform agreements, drilling contracts, injection or repressuring
agreements, cycling agreements, construction agreements, salt water or other
disposal agreements, leases or rental agreements (but only as otherwise
permitted by this Guaranty), farm-out and farm-in agreements, exploration and
development agreements, and any and all other contracts or agreements covering,
arising out of, used or useful in connection with or pertaining to the
exploration, development, operation, production, sale, use, purchase, exchange,
storage, separation, dehydration, treatment, compression, gathering,
transportation, processing, improvement, marketing, disposal or handling of any
Assets of a Person, provided such agreements are entered into the ordinary
course of business and contain terms customary for such agreements in the
industry, and (m) in the case of the Guarantor and its Subsidiaries, other minor
liens or encumbrances none of which interferes materially with the use of the
Assets affected in the ordinary conduct of the Guarantor's and/or its
Subsidiaries business and which individually or in the aggregate do not have a
Material Adverse Effect.
"Project Financing" means any Debt or obligations under leases that do not
constitute Capitalized Lease Obligations at the time such leases are entered
into, in each case that are incurred to finance a project (including any
construction financing) and that do not permit recourse to NGC or any of its
Subsidiaries (other than a Project Financing Subsidiary) or any of their
respective Assets (other than the Assets of a Project Financing Subsidiary).
"Project Financing Subsidiary" means (i) any Subsidiary of NGC or (ii) any
other Person in which NGC owns a 50% or less interest, in each case described in
clause (i) or (ii), whose principal purpose is to incur Project Financing or to
become an owner of interests in a Person so created to conduct the business
activities for which such Project Financing was incurred, and substantially all
of the fixed assets of which Subsidiary or Person are those fixed assets being
financed (or to be financed) in whole or in part by one or more Project
Financings.
"Rolling Period" means for each calendar quarter, such quarter and the
three preceding calendar quarters.
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"Scheduled Debt Service" means, for any Rolling Period, the sum of all
scheduled, required and mandatory principal payments of NGC and its Subsidiaries
on a consolidated basis in accordance with GAAP plus Consolidated Interest
Expense for such Rolling Period; provided, further that for purposes of this
definition, principal owing in respect of the CUSA Assumed Debt as a result of a
demand for payment thereof being made by CUSA prior to the stated maturity
thereof shall not be a scheduled, required, or mandatory principal payment of
NGC and its Subsidiaries.
"Subsidiary" of any Person, means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall, at the time,
be owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any
partnership, association, joint venture, limited liability company or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall, at the time, be so owned. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a direct
or indirect Subsidiary of NGC.
"Substantial Portion" means, with respect to the Assets of the Guarantor
and its Subsidiaries, Assets which (i) represent more than 15% of the
consolidated Assets of the Guarantor and its Subsidiaries as shown in the
consolidated financial statements of the Guarantor and its Subsidiaries most
recently delivered to the Administrative Agent pursuant to Section 4.4 (or, if
no such statements have been delivered, the statements referred to in Section
3.4(a)) or (ii) is responsible for more than 15% of the Consolidated EBITD for
the Rolling Period ending with the calendar quarter immediately prior to the
quarter in which such determination is made.
Section 1.2 Agreement. The Guarantor unconditionally guarantees and
agrees with the Beneficiaries that (i) all sums stated in the Lease and the
other Related Documents, the Site Lease, the Gasification Services Agreement,
the Process Control Agreement and the Air Products License (collectively, the
"Guaranteed Agreements") to be payable by the Lessee will be promptly paid in
full when the same shall become due and payable in accordance with the terms
thereof (including any applicable grace periods) and (ii) the Lessee will
perform, comply with and observe all other obligations, covenants, terms,
conditions and undertakings of the Lessee contained in the Guaranteed Agreements
in accordance with the terms and conditions thereof (collectively, the
"Guaranteed Obligations"), and agrees to pay any and all reasonable out-of-
pocket expenses incurred by the Beneficiaries in enforcing any rights under this
Guaranty. Any payment required to be made by NGC under this Guaranty must be
preceded by a written demand.
Section 1.3 Guaranty to be Absolute. NGC guarantees that the Guaranteed
Obligations will be paid and performed strictly in accordance with the terms of
the Guaranteed Agreements, irrespective of any law, regulation, order, court
decision, or other Legal Requirement now or hereafter in effect in any
jurisdiction purporting to prohibit payment of the obligations by Lessee or any
change in the time, manner, or place of payment of, or in any other term of, all
or any of the Guaranteed Obligations, or any other amendment or waiver of or any
consent to departure from the Guaranteed Agreements.
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ARTICLE II
GENERAL PROVISIONS REGARDING GUARANTY
Section 2.1 Nature of Guaranty. The liability of NGC under this
Guaranty is and shall be a continuing, absolute, unconditional and irrevocable
guaranty of payment and performance by Lessee (and not of collectibility from
Lessee).
Section 2.2 Limitation on NGC's Rights; Waiver of Subrogation.
(a) NGC further agrees that nothing contained herein shall prevent the
Beneficiaries from suing on the Guaranteed Obligations or exercising any rights
available to them under the Guaranteed Agreements and that the exercise of any
of the aforesaid rights shall not constitute a legal or equitable discharge of
NGC in respect of the Guaranteed Obligations or otherwise. NGC hereby waives
any right, claim or remedy of subrogation, reimbursement, contribution or any
similar right which NGC may now have or hereafter acquire against Lessee in
respect of the Guaranteed Obligations, including any right, claim or remedy of
the Beneficiaries against Lessee until such time as all Guaranteed Obligations
have been paid in full. Without limiting the generality of the foregoing, NGC
hereby expressly agrees that it shall remain fully liable to the Beneficiaries
under the terms hereof notwithstanding (i) the voluntary or involuntary
liquidation, dissolution, merger, consolidation, sale or other disposition of
all or substantially all of the assets, marshaling of the assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition with creditors or
readjustment of, or other similar proceedings affecting Lessee; or (ii) the
failure of the Beneficiaries to mitigate damages resulting from any default by
Lessee under the Lease or under any other Guaranteed Agreements.
(b) Regardless of whether NGC may have made any payments to either
Beneficiary, NGC hereby subordinates to all rights the Beneficiaries may have
against Lessee, including all rights to enforce any remedy that either
Beneficiary may have against Lessee, including: (i) all of NGC's rights of
subrogation, if any, of indemnity, and to collect reimbursement from Lessee for
any sums paid to either Beneficiary, whether such rights are contractual or
arise by operation of law (including the United States Bankruptcy Code or any
successor or similar statute) or otherwise, and (ii) all rights to enforce any
remedy that NGC may have against Lessee. NGC agrees that no payment made by it
or for its account pursuant to the provisions hereof to either Beneficiary shall
entitle it, by subrogation, indemnification, exoneration, contribution,
reimbursement or otherwise to the rights of such party in respect of which such
payment is made or otherwise, to any payment by Lessee or from or out of any
property of Lessee, and NGC hereby expressly waives, to the fullest extent
possible, and shall not exercise rights or remedies it has or may in the future
have with respect to any of the foregoing, unless (a) no Event of Default shall
have occurred and be continuing at the time of the exercise by NGC of such right
or remedy, (b) the Guaranteed Obligations have been paid and performed in full
and (c) at the time of such payment by NGC pursuant to the provisions hereof,
NGC is not an "insider" of Lessee with respect to which such payment by NGC is
made, within the meaning of said section 101(31) of the Bankruptcy Reform Act of
1978, as now or hereafter in effect, or any successor provision. If, and to the
extent that, any such rights or remedies against
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Lessee or its respective property may not be waived under applicable law, NGC
(if at the time of such payment by NGC, Lessee is such an "insider" within the
meaning of said section 101(31), or any successor provisions) shall be deemed to
have contributed any such rights to Lessee, effective immediately upon the
arising of such rights or remedies. If NGC receives any reimbursement from
Lessee in contradiction of the foregoing, NGC shall hold such payment in trust
for, and shall promptly deliver such payment to the Administrative Agent.
Section 2.3 Events of Default. The following are "Events of Default"
under this Guaranty:
(a) any default by NGC in the payment of any amount due under this Guaranty
shall occur;
(b) other than as set forth in Sections 2.3(a), any default by NGC in the
performance or observance of any other covenant or agreement contained herein
and such default shall continue unremedied for 30 days after the earlier to
occur of (i) the date on which an Authorized Officer of NGC becomes aware of
such default or (ii) written notice thereof has been given to NGC by the Lessor
or the Administrative Agent;
(c) any representation, warranty, certification or statement made or deemed
made by NGC in this Guaranty, the Consent and Agreement, or any document to
which NGC is a party that is contemplated hereby or thereby or in any
certificate, financial statement or other document delivered pursuant to this
Guaranty shall prove to have been incorrect in any material respect when made
(or deemed made);
(d) the Guarantor or any of its Subsidiaries (other than any Project
Financing Subsidiary) shall (i) have an order for relief entered with respect to
it under the federal bankruptcy laws as now or hereafter in effect, (ii) make an
assignment for the benefit of creditors, (iii) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it, or any Substantial Portion of its Assets,
(iv) institute any proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking an order for relief
under the Federal bankruptcy laws as now or hereafter in effect or seeking to
adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (v) take any
corporate action to authorize or effect any of the foregoing actions set forth
in this Section (d), (vi) not pay, or admit in writing its inability to pay, its
debts generally as they become due, or (vii) fail to contest in good faith any
appointment or proceeding described in Section 2.3(e);
(e) without the application, approval or consent of the Guarantor or any of
its Subsidiaries (other than any Project Financing Subsidiary), a receiver,
trustee, examiner, liquidator or similar official shall be appointed for the
Guarantor or such Subsidiary, or any Substantial Portion of the Assets of the
Guarantor or such Subsidiary, or a proceeding described in Section 2.3(d) shall
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be instituted against the Guarantor or any of its Subsidiaries (other than any
Project Financing Subsidiary) and such appointment continues undischarged or
such proceeding continues undismissed or unstayed for a period of 60 consecutive
days; or
(f) any "Default" as defined in the NGC Revolver shall have occurred and be
continuing.
Section 2.4 Guaranteed Agreements Terminated. In case any Guaranteed
Agreement shall be terminated as a result of the rejection thereof by any
trustee, receiver or liquidating agent of the Lessee or any of its properties in
any bankruptcy, insolvency, reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar proceeding, NGC's obligations
hereunder shall continue to the same extent as if such agreement had not been so
rejected. NGC agrees that this Guaranty shall continue to be effective or be
reinstated, as the case may be, if any payment to the Lessor or the
Administrative Agent in respect of the Guaranteed Obligations or any part
thereof is rescinded or must otherwise be returned by the Lessor or the
Administrative Agent upon the insolvency, bankruptcy or reorganization of the
Lessee, or otherwise, as though such payment to the Lessor or the Administrative
Agent had not been made.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
NGC hereby represents and warrants to the Beneficiaries that the following
shall be true and correct as of the date of this Guaranty:
Section 3.1 Corporate Existence. NGC (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and (ii) is in good standing and has all requisite authority to
conduct its business in each jurisdiction in which its business is conducted,
except where the failure to have such authority would not have a Material
Adverse Effect.
Section 3.2 Authorization and Validity. NGC has the corporate power and
authority to execute this Guaranty and to perform its obligations hereunder.
Except to the extent that the failure to so qualify would not have a Material
Adverse Effect, NGC has all requisite power, and is in all respects duly
qualified and licensed under all applicable laws to own its Assets as now owned
and to carry on its business as now conducted. The execution and delivery by
NGC of this Guaranty and the performance of its obligations hereunder have been
duly authorized by proper corporate proceedings, and this Guaranty constitutes
the legal, valid and binding obligation of NGC, enforceable against NGC in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
Section 3.3 No Conflict; Government Consent. Neither the execution and
delivery by NGC of this Guaranty, nor consummation of the transactions herein
contemplated, nor compliance with the provisions hereof will violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
NGC or NGC's articles of incorporation or by-laws or the provisions of any
indenture, instrument or agreement to which NGC is a party or is subject, or by
which it, or its
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Assets, is bound, or conflict with or constitute a default thereunder, or result
in the creation or imposition of any Lien in, of or on the Assets of NGC
pursuant to the terms of such indenture, instrument or agreement that is a
Material Agreement. No order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with the execution, delivery
and performance of, or the legality, validity, binding effect or enforceability
of, this Guaranty, or to the extent that any such consent or other action may be
required, it has been validly procured and all waiting periods with respect
thereto have expired.
Section 3.4 Financial Information.
(a) The March 31, 1997 consolidated financial statements of NGC and its
Subsidiaries (set forth in NGC's quarterly report for the fiscal quarter ended
March 31, 1997 as filed with the Commission on Form 10-Q) heretofore delivered
to the Banks were prepared in accordance with generally accepted accounting
principles as in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of NGC and its
Subsidiaries as of such date and the consolidated results of their operations
for the period then ended.
(b) Since March 31, 1997, there has been no change in the business, Assets,
financial condition, or results of operations of NGC and its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect.
Section 3.5 Litigation. There is no litigation, arbitration,
governmental investigation, proceeding or inquiry pending or, to the knowledge
of any of its officers, threatened against or affecting NGC or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect.
Section 3.6 Subsidiaries. Each of NGC's Subsidiaries is duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, except where the failure
to be so qualified could reasonably be expected to have a Material Adverse
Effect.
Section 3.7 Ownership. NGC owns and holds directly or indirectly
through one or more wholly-owned Subsidiaries, the entire legal title to and
beneficial interest in 100% of all outstanding shares of capital stock of the
Lessee, and is benefitted by the Lease and the transactions contemplated by the
Related Documents.
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ARTICLE IV
COVENANTS OF THE GUARANTOR
Section 4.1 Net Worth. NGC will maintain at all times, Consolidated
Tangible Net Worth of not less than the sum of (i) $400 million, plus (ii) 50%
of NGC's Consolidated Net Income, if positive, for each fiscal quarter ending
after March 14, 1995, plus (iii) 50% of the aggregate net proceeds of all
issuances of equity securities made by NGC after March 14, 1995; provided that
for purposes of this Section 4.1, the Institutionally Targeted Capital
Securities will not constitute equity of NGC and its Subsidiaries.
Section 4.2 Leverage Ratio. NGC will not permit its Leverage Ratio to
exceed 60%; provided that notwithstanding the foregoing, until the earlier of
(i) the end of the quarter which ends the quarter containing the date which is
18 months from the effective date of the Acquisition Transactions, and (ii) the
effective date of the AES Transaction, the foregoing 60% shall be 65%; provided
further that for purposes of determining the Leverage Ratio for purposes of this
Section 4.2, the Institutionally Targeted Capital Securities are deemed to be
included in stockholders' equity.
Section 4.3 Coverage Ratio. NGC will maintain for each Rolling Period
ending as of the last day of each calendar quarter a ratio of (i) Consolidated
EBITD minus Maintenance Capital Expenditures to (ii) Scheduled Debt Service of
not less than 2.0 to 1.0.
Section 4.4 Information. NGC will deliver to the Lessor and to the
Administrative Agent for distribution to the Banks:
(a) as soon as available and in any event within 120 days after the end of
each fiscal year of NGC, a consolidated balance sheet of NGC and its
Subsidiaries as of the end of such fiscal year and the related consolidated
statements of income and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on in a manner acceptable to the Commission by independent public accountants of
nationally recognized standing (it being understood that delivery of NGC's
annual report on form 10-K in respect of such fiscal year as filed pursuant to
Section 13(a) of the Securities Exchange Act of 1934 shall constitute compliance
herewith, provided that such report otherwise meets the requirements of this
subsection (a)), together with a certificate of an Authorized Officer setting
forth in reasonable detail the calculations of the financial tests set forth in
Sections 4.1, 4.2 and 4.3.
(b) as soon as available and in any event within sixty (60) days after the
end of each of the first three quarters of each fiscal year of NGC, a
consolidated balance sheet of NGC and its Subsidiaries as of the close of
business for such quarter and the related consolidated statement of income for
such quarter and the related consolidated statements of income and cash flows
for the period commencing with the beginning of NGC's fiscal year to the end of
such quarter, setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of NGC's previous fiscal
year, (it being understood that delivery of NGC's quarterly report on form 10-Q
in respect of such period as filed pursuant to Section 13(a) of the Securities
Exchange
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Act of 1934 shall constitute compliance herewith, provided that such report
otherwise meets the requirements of this subsection (b)), and a computation of
the ratios and amounts required to be maintained by Sections 4.1, 4.2 and 4.3,
all in reasonable detail, prepared in each case in accordance with generally
accepted accounting principles and certified by an Authorized Officer to the
effect that they present fairly the financial condition and results of the
operations of NGC at the date and for the period indicated therein, subject to
changes resulting from year end adjustments.
(c) other than for the fiscal year 1996, at the same time as it delivers or
is required to deliver the statements described in clause (a) above, certificate
of an Authorized Officer of NGC stating whether there exists on or as of the
date of such certificate any Potential Default or Event of Default hereunder or
under any Related Document to which NGC is a party, and, if a Potential Default
or Event of Default then exists, setting forth the details thereof and the
action, if any, NGC has taken, is taking or proposes to take with respect
thereto;
(d) promptly upon the mailing thereof to the shareholders of NGC generally,
copies of all financial statements, proxy statements and reports so mailed; and
(e) promptly upon the filing thereof, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or
its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents)
which NGC shall have filed with the Commission.
Section 4.5 Performance. NGC shall cause Destec to observe and perform
all provisions to be observed or performed by Destec contained in (a) each
Related Document to which Destec is a party and (b) the PSI Agreements, in each
case in accordance with the terms thereof and within the times permitted thereby
(including any grace or cure periods provided thereby) so as to prevent the
occurrence and continuance of an Event of Default, and will cause Destec to
maintain validity and effectiveness as to Destec of each Related Document and
PSI Agreement to which Destec is a party.
ARTICLE V
MISCELLANEOUS
Section 5.1 NGC's Waivers. NGC waives:
(a) all statutes of limitation that would bar any action or proceeding
brought against NGC under this Guaranty by either Beneficiary where such
Beneficiary was unable to commence or prosecute such action or proceeding prior
to the expiration of the applicable period(s) of limitation due to any stay,
such as the automatic stay in bankruptcy, or due to the necessity of completing
or exhausting remedies against another Person or other collateral before
proceeding against NGC or due to any other cause wholly or partially beyond the
control of such Beneficiary, to the fullest extent permitted by law;
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(b) any right NGC may have, if any, to require the Beneficiaries to proceed
against Lessee or Destec, to proceed against or exhaust any security or
collateral held from Lessee or Destec, or to pursue any other remedy in either
Beneficiary's power to pursue;
(c) any defense based on any claim that NGC's obligations exceed or are
more burdensome than those of Lessee or Destec;
(d) any defense based on: (i) any legal disability of Lessee or Destec,
and (ii) any release, discharge, modification, impairment or limitation of the
liability of Lessee, to either Beneficiary from any cause, whether consented to
by either Beneficiary or arising by operation of law or from any Insolvency
Proceeding or otherwise;
(e) any defense based on any action taken or omitted by the Beneficiaries
in any Insolvency Proceeding involving Lessee or Destec, including any extension
of credit by either Beneficiary to Lessee or Destec in any Insolvency
Proceeding, and the taking and holding by either Beneficiary of any security or
collateral for any such extension of credit;
(f) all presentments, demands for performance or payment, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty and of the existence, creation, or incurrence of new
or additional indebtedness, and demands and notices of every kind, except for
any demand upon NGC expressly provided for in Section 1.2;
(g) any defense based on or arising out of any defense that Lessee may have
to the Guaranteed Obligations;
(h) all notices to NGC and, on behalf of NGC only, all notices to Lessee,
including notices of the acceptance of this Guaranty or the creation, renewal,
extension or modification of the Guaranteed Obligations, or of default in the
performance of the Guaranteed Obligations (or any portion thereof) and of
enforcement of any right or remedy with respect thereto or notice of any other
matters relating to the Guaranteed Obligations or to this Guaranty;
(i) diligence and demand or performance in respect of the Guaranteed
Obligations; and
(j) all principles or provisions of law which conflict with the terms of
this Guaranty.
NGC further agrees that the Beneficiaries may enforce this Guaranty upon
Lessee's failure to perform the Guaranteed Obligations, notwithstanding the
existence of any dispute between Lessee, NGC or either Beneficiary with respect
to the performance of the Guaranteed Obligations (or any portion thereof) or any
counterclaim, set-off or other claim which Lessee, or NGC may allege against
either Beneficiary. NGC further agrees that its obligations in respect of the
Guaranteed Obligations shall not be affected by any circumstances which
constitute a legal or equitable discharge of a guarantor or surety.
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Section 5.2 Third Party Beneficiaries. This Guaranty is solely for the
benefit of the Beneficiaries and is not intended to nor shall it be deemed to be
for the benefit of any other third party.
Section 5.3 No Waiver; Consents; Cumulative Remedies. Each waiver by
the Beneficiaries must be in writing, and no waiver shall be construed as a
continuing waiver. No waiver shall be implied from either Beneficiary's delay
in exercising or failure to exercise any right or remedy against Lessee or NGC.
Consent by the Beneficiaries to any act or omission by Lessee or NGC shall not
be construed as a consent to any other or subsequent act or omission, or as a
waiver of the requirement for any Beneficiary's consent to be obtained in any
future or other instance. All remedies of the Beneficiaries against Lessee and
NGC are cumulative.
Section 5.4 Successors and Assigns; Participations. The terms of this
Guaranty shall bind and benefit the successors and assigns of the Beneficiaries;
provided, however, that subject to the provisions of Section 5.9, NGC may not
assign this Guaranty, or assign or delegate any of its rights or obligations
under this Guaranty without the written consent of the Beneficiaries. Upon
notice to NGC, the Beneficiaries and their successors, assigns and transferees
may assign their rights and benefits under this Guaranty to any financial
institutions providing financing to the Lessor in connection with the Lease or
any agent for such financial institutions.
Section 5.5 Notices. All notices, requests and other communications
given under this Guaranty must be given in the manner and shall be effective as
provided in Section 11.02 of the Lease. All notices to NGC shall be sent to the
address specified on the signature page hereof.
Section 5.6 Rights to Deal with the Lessee. At any time and from time
to time, without terminating, affecting or impairing the validity of this
Guaranty or the obligations of NGC hereunder, the Beneficiaries may deal with
Lessee in the same manner and as fully and as if this Guaranty did not exist and
shall be entitled, among other things, to grant Lessee, without notice or demand
and without affecting NGC's liability hereunder, such extension or extensions of
time to perform, renew, compromise, accelerate or otherwise change the time for
payment of or otherwise change the terms of payment or any part thereof
contained in or arising under the Lease or the other Guaranteed Agreements, or
to waive any Guaranteed Obligation of Lessee to perform any act or acts as the
Beneficiaries may deem advisable.
Section 5.7 Payments. Each payment by NGC to either Beneficiary under
this Guaranty shall be made by transferring the amount thereof in immediately
available funds without setoff or counterclaim; provided that, no such payment
shall be deemed a waiver of any rights NGC may have. The Lessor hereby
irrevocably instructs the Guarantor, at all times that the Credit Agreement is
in effect or any amounts are due and owing thereunder, to pay any and all
amounts payable to the Lessor under this Guaranty to the Administrative Agent by
depositing the same into the Collateral Account. The Guarantor agrees to pay
all such amounts in accordance with the foregoing instructions, free and clear
of any set-off, counterclaim or defense that the Guarantor may have with respect
thereto, other than counterclaims required by law, if any; provided, however,
that no payment
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by the Guarantor to the Administrative Agent shall be deemed a waiver of any
rights the Guarantor may have.
Section 5.8 Survival of Representations, Warranties, etc. All
representations, warranties made herein and in statements or certificates
delivered pursuant hereto shall survive any investigation or inspection made by
or on behalf of the Beneficiaries and shall continue in full force and effect
until all of the obligations of NGC under this Guaranty shall be fully performed
in accordance with the terms hereof, and, subject to Section 5.9 hereof, until
the payment and performance in full of all obligations.
Section 5.9 Replacement of Guaranty.
(a) This Guaranty may be replaced to the extent provided herein, subject to
the provisions of Subsection 5.9(b), if either (A) another Person acceptable to
the Lessor, each of the Banks, and if the rights, obligations, or duties of the
Administrative Agent are affected thereby, the Administrative Agent, such
acceptance not to be unreasonably withheld, executes a guaranty in form and
substance substantially similar to this Guaranty, including any changes thereto
approved by the Lessor, each of the Banks, and if the rights, obligations, or
duties of the Administrative Agent are affected thereby, the Administrative
Agent, (B) another Person obtains from a bank with assets of $60 billion or more
and whose long-term, unsecured debt is rated A or better by S&P or A2 or better
by Moody's, or any successor rating agency, a letter of credit naming the
Beneficiaries as the beneficiaries thereunder, in form and substance, and in an
amount, satisfactory to the Lessor, each of the Banks, and if the rights,
obligations, or duties of the Administrative Agent are affected thereby, the
Administrative Agent, or (C) NGC obtains from a bank whose long-term, unsecured
debt is rated A or better by S&P or A2 or better by Moody's, or any successor
rating agency, a letter of credit naming the Beneficiaries as the beneficiaries
thereunder in form and substance, and in an amount, satisfactory to the Lessor,
the Majority Banks, and if the rights, obligations, or duties of the
Administrative Agent are affected thereby, the Administrative Agent.
(b) Upon delivery of such other guaranty or such letter of credit, this
Guaranty shall be replaced to the extent, but only to the extent, the
obligations hereunder are replaced by such other guaranty or such letter of
credit, and this Guaranty shall continue in full force and effect with respect
to all other obligations hereunder. In addition, no replacement of any portion
of this Guaranty pursuant to the provisions of Subsection 5.9(a) shall be
effective to replace the obligations and liabilities of the Guarantor, or to
affect the Beneficiaries' rights, powers, and remedies, under this Guaranty (i)
with respect to any of the obligations hereunder that become due and payable
prior to such replacement or (ii) with respect to any payment made prior to such
replacement that is rescinded or must otherwise be returned after such
replacement.
Section 5.10 Governing Law. This Guaranty shall be governed by, and
constructed in accordance with, the laws of the State of New York. NGC HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE
OF
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NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS GUARANTY
OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE GUARANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT
THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS GUARANTY OR
ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF
MAY NOT BE LITIGATED IN OR BY SUCH COURTS. NGC AGREES THAT SERVICE OF PROCESS
MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES
SET FORTH IN THIS GUARANTY OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.
Section 5.11 Costs and Expenses. If any lawsuit, including any
Insolvency Proceeding, is commenced which arises out of, or which relates to
this Guaranty, the Beneficiaries shall be entitled to recover from NGC such sums
as the court may adjudge to be reasonable attorneys' fees and expenses in the
action or proceeding, in addition to reasonable out-of-pocket costs and expenses
otherwise allowed by law. NGC agrees to pay all of the Beneficiaries'
reasonable out-of-pocket costs and expenses, including reasonable attorneys'
fees and expenses which may be incurred, all such sums shall bear interest at
the rate per annum equal to the Base Rate plus 1% until paid in full.
Section 5.12 Miscellaneous. The illegality or unenforceability of one or
more provisions of this Guaranty shall not affect any other provision. Time is
of the essence in the performance of this Guaranty by NGC.
[SIGNATURES BEGIN NEXT PAGE]
-20-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Guaranty as of
the date first above written.
GUARANTOR:
NGC CORPORATION
By:\s\ Robert D. Doty, Jr.
-----------------------
Robert D. Doty, Jr.
Vice President and Treasurer
Address Where Notices to NGC are to be sent:
1000 Louisiana
Suite 5800
Houston, Texas 77002
Telecopy No.: (713) 767-8322
Telephone No. (713) 507-6400
-21-
<PAGE>
EXHIBIT ___
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of June 27, 1997
AMONG
NGC CORPORATION
and
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and As Agent
THE CHASE MANHATTAN BANK
and
NATIONSBANK OF TEXAS, N.A.,
Individually and as Co-Agents
and
THE LENDERS NAMED HEREIN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..................................................... 2
1.1 Defined Terms................................................... 2
1.2 Accounting Terms and Other Determinations....................... 29
1.3 Currency References............................................. 29
ARTICLE II THE FACILITY.................................................... 30
2.1 The Facilities.................................................. 30
2.1.1 Description of the Tranche A Revolving Facility......... 30
2.1.2 Availability of Tranche A Revolving Facility............ 31
2.1.3 Tranche A Committed Advances............................ 31
2.1.4 Description of Tranche B Facility...................... 31
2.1.5 Availability of Tranche B Facility...................... 31
2.1.6 Tranche B Committed Advances............................ 31
2.2 Letters of Credit............................................... 31
2.2.1 Issuance of Letters of Credit........................... 31
2.2.2 Aggregate Amount Available under Letters of Credit...... 32
2.2.3 Reimbursement of Issuer; Automatic Advances............. 33
2.2.4 Lender Participation.................................... 34
2.2.5 Letter of Credit Fees................................... 35
2.2.6 Issuer Fees............................................. 35
2.2.7 Verification............................................ 36
2.2.8 Irrevocable Obligations and Commercial Practices........ 37
2.2.9 [Intentionally Omitted.................................. 38
2.2.10 Letter of Credit Collateral Account..................... 38
2.2.11 Currency Fluctuation.................................... 38
2.3 Competitive Bid Advances........................................ 39
2.3.1 Competitive Bid Option.................................. 39
2.3.2 Competitive Bid Quote Request........................... 39
2.3.3 Invitation for Competitive Bid Quotes................... 40
2.3.4 Submission and Contents of Competitive Bid Quotes....... 40
2.3.5 Notice to the Borrower.................................. 42
2.3.6 Acceptance and Notice by the Borrower................... 42
2.3.7 Allocation by the Agent................................. 43
2.3.8 Administration Fees..................................... 43
2.4 Required Payments; Termination.................................. 43
2.5 Types of Committed Advances..................................... 44
2.6 Facility Fees, Commitment Fees and Designation of the
Tranche A Active Aggregate Revolving Commitment................. 44
i
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
2.6.1 Designation of Tranche A Active and Tranche A
Inactive Aggregate Revolving Commitment................. 44
2.6.2........................................................... 44
Commitment Fees................................................. 44
2.6.3 Cancellation of Tranche A............................... 45
2.7 Minimum Amount of Each Advance.................................. 46
2.8 Optional Principal Payments..................................... 46
2.9 Method of Selecting Types and Interest Periods for New
Advances........................................................ 46
2.10 Conversion and Continuation of Outstanding Advances............. 47
2.11 Changes in Interest Rate, etc................................... 47
2.12 Rates Applicable After Default.................................. 48
2.13 Method of Payment............................................... 48
2.14 Notes; Notices.................................................. 48
2.15 Interest Payment Dates; Interest and Fee Basis.................. 49
2.16 Notification of Tranche A Advances, Tranche B Advances,
Interest Rates, Prepayments and Commitment Reductions........... 49
2.17 Lending Installations........................................... 50
2.18 Non-Receipt of Funds by the Agent............................... 50
2.19 Withholding Tax Exemption....................................... 50
2.20 Maximum Interest Rate........................................... 51
2.21 Agent's Fees.................................................... 51
2.22 Procedures with respect to the Tranche A Aggregate
Revolving Commitment............................................ 51
ARTICLE III CHANGE IN CIRCUMSTANCES......................................... 54
3.1 Yield Protection................................................ 54
3.2 Changes in Capital Adequacy Regulations......................... 55
3.3 Availability of Types of Advances............................... 56
3.4 Funding Indemnification......................................... 56
3.5 Lender Statements; Survival of Indemnity........................ 56
3.6 Replacement of Lenders.......................................... 57
3.7 Currency........................................................ 58
ARTICLE IV CONDITIONS PRECEDENT............................................ 59
4.1 Conditions Precedent to Effectiveness........................... 59
4.2 Additional Condition to Effectiveness........................... 61
4.3 Each Advance.................................................... 61
ARTICLE V REPRESENTATIONS AND WARRANTIES.................................. 62
ii
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
5.1 Corporate or Partnership Existence and Standing................. 62
5.2 Authorization and Validity...................................... 62
5.3 No Conflict; Government Consent................................. 62
5.4 Financial Statements............................................ 63
5.5 Material Adverse Change......................................... 63
5.6 Taxes........................................................... 63
5.7 Litigation and Contingent Obligations........................... 63
5.8 Subsidiaries.................................................... 64
5.9 ERISA........................................................... 64
5.10 Accuracy of Information......................................... 64
5.11 Regulation U.................................................... 65
5.12 Compliance With Laws............................................ 65
5.13 Environmental Matters........................................... 65
5.14 Ownership of Properties; Liens.................................. 66
5.15 Investment Company Act.......................................... 66
5.16 Public Utility Holding Company Act.............................. 66
5.17 Insurance....................................................... 66
5.18 Solvency........................................................ 66
5.19 Default......................................................... 67
ARTICLE VI COVENANTS....................................................... 67
6.1 Affirmative Covenants........................................... 67
6.1.1 Financial Reporting..................................... 67
6.1.2 Use of Proceeds......................................... 69
6.1.3 Additional Subsidiary Guaranties........................ 69
6.1.4 Conduct of Business..................................... 71
6.1.5 Taxes and Other Charges................................. 71
6.1.6 Insurance............................................... 71
6.1.7 Compliance with Laws.................................... 71
6.1.8 Maintenance of Properties............................... 72
6.1.9 Inspection.............................................. 72
6.1.10 Maintenance of Books and Records........................ 72
6.1.11 Compliance with ERISA................................... 72
6.2 Negative Covenants.............................................. 73
6.2.1 [Intentionally Omitted]................................. 73
6.2.2 Debt.................................................... 73
6.2.3 Merger.................................................. 74
6.2.4 Sale of Assets.......................................... 74
6.2.5 Sale of Accounts........................................ 75
iii
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
6.2.6 [Intentionally Omitted]................................. 76
6.2.7 Investments and Acquisitions............................ 76
6.2.8 Contingent Obligations.................................. 77
6.2.9 Liens................................................... 78
6.2.10 Consolidated Net Fixed Price Book Deficit............... 80
6.2.11 [Intentionally omitted.]................................ 80
6.2.12 Affiliates.............................................. 80
6.2.13 Judgments............................................... 80
6.3 Financial Covenants............................................ 80
6.3.1 Net Worth.............................................. 80
6.3.2 Leverage Ratio......................................... 81
6.3.3 Coverage Ratio......................................... 81
ARTICLE VII DEFAULTS....................................................... 81
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES................. 84
8.1 Acceleration................................................... 84
8.2 Amendments..................................................... 86
8.3 Preservation of Rights......................................... 87
ARTICLE IX GENERAL PROVISIONS............................................. 87
9.1 Survival of Representations; Obligations....................... 87
9.2 Governmental Regulation........................................ 87
9.3 Taxes.......................................................... 87
9.4 Headings....................................................... 87
9.5 Entire Agreement............................................... 88
9.6 Several Obligations; Benefits of this Agreement................ 88
9.7 Expenses; Indemnification of Agent, Issuers and Lenders........ 88
9.8 Numbers of Documents........................................... 89
9.9 [Intentionally Omitted]........................................ 89
9.10 Severability of Provisions..................................... 89
9.11 Nonliability of Lenders........................................ 89
9.12 CHOICE OF LAW.................................................. 89
9.13 CONSENT TO JURISDICTION........................................ 89
9.14 WAIVER OF JURY TRIAL........................................... 90
9.15 Confidential Information....................................... 90
ARTICLE X THE AGENT...................................................... 91
10.1 Appointment and Authority of Agent and Issuers................. 91
iv
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
10.2 Capacity of the Agent and each Issuer.......................... 92
10.3 No Liability of the Agent or Issuers and Indemnity............. 92
10.4 Employees of Agent and Issuers................................. 93
10.5 Reliance....................................................... 93
10.6 Several Commitments............................................ 94
10.7 Notice of Default.............................................. 94
10.8 Lender Credit Decision......................................... 95
10.9 Successor Agent................................................ 95
10.10 The Co-Agents have no duties hereunder in their
capacities as Co-Agents........................................ 96
ARTICLE XI SETOFF; RATABLE PAYMENTS....................................... 96
11.1 Setoff......................................................... 96
11.2 Ratable Payments............................................... 96
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.............. 97
12.1 Successors and Assigns......................................... 97
12.2 Participations................................................. 97
12.2.1 Permitted Participants; Effect......................... 97
12.2.2 Voting Rights.......................................... 97
12.2.3 Benefit of Setoff...................................... 98
12.3 Assignments.................................................... 98
12.3.1 Permitted Assignments.................................. 98
12.3.2 Effect; Effective Date................................. 99
12.4 Dissemination of Information................................... 99
12.5 Tax Treatment................................................. 100
ARTICLE XIII NOTICES....................................................... 100
13.1 Giving Notice................................................. 100
13.2 Change of Address............................................. 100
ARTICLE XIV COUNTERPARTS.................................................. 100
v
<PAGE>
SCHEDULES
EXHIBIT "A-1" TRANCHE A COMMITTED NOTE
EXHIBIT "A-2" TRANCHE B NOTE
EXHIBIT "A-3" COMPETITIVE BID NOTE
EXHIBIT "B-1" FORM OF OPINION OF BORROWERS COUNSEL
EXHIBIT "B-2" FORM OF OPINION OF VINSON & ELKINS
EXHIBIT "C" COMPLIANCE CERTIFICATE
EXHIBIT "C-1" ISSUANCE REQUEST
EXHIBIT "C-2" FORM OF NOTICE OF COMMITMENT INCREASE
EXHIBIT "D" ASSIGNMENT AGREEMENT
EXHIBIT "E" LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
EXHIBIT "F" COMPETITIVE BID QUOTE REQUEST
EXHIBIT "G" INVITATION FOR COMPETITIVE BID QUOTES
EXHIBIT "H" COMPETITIVE BID QUOTE
EXHIBIT "I" FORM OF OPINION OF MAYER, BROWN & PLATT
EXHIBIT "J-1" FORM OF GUARANTY
EXHIBIT "J-2" FORM OF WARREN GUARANTY
EXHIBIT "K" FORM OF CONSENT, ACKNOWLEDGMENT AND AMENDMENT
SCHEDULE "1" SUBSIDIARIES AND OTHER INVESTMENTS
SCHEDULE "2" DEBT AND LIENS
SCHEDULE "3" OUTSTANDING LETTERS OF CREDIT
SCHEDULE "4" LITIGATION
SCHEDULE "5" WARREN EXISTING GUARANTIES
vi
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement, dated as of June 27, 1997 is
among NGC Corporation, a Delaware corporation, as Borrower (the "Borrower"), the
Lenders (hereinafter defined), The First National Bank of Chicago, as Agent, and
The Chase Manhattan Bank (successor by merger to The Chase Manhattan Bank
National Association) and NationsBank of Texas, N.A., as Co-Agents (the "Co-
Agents"). The parties hereto agree as follows:
W I T N E S S E T H:
WHEREAS, the Borrower, certain Lenders, the Issuers, the Agent and the Co-
Agents have entered into that certain Credit Agreement, dated as of March 14,
1995 as amended by an amendment dated October 4, 1995 (the "First Amendment"),
the Consent and Second Amendment to Credit Agreement dated July 26, 1996 (the
"Second Amendment"), the Third Amendment to Credit Agreement dated January 22,
1997 (the "Third Amendment"), and the Fourth Amendment to Credit Agreement dated
April 23, 1997 (the "Fourth Amendment") (as amended the "Original Credit
Agreement"); and
WHEREAS, the predecessor to the Borrower entered into that certain
Combination Agreement and Plan of Merger dated as of May 22, 1996 (the "Newco
Combination Agreement") with Chevron U.S.A. Inc. ("CUSA") and Midstream
Combination Corp. ("Newco") whereby at the closing of the transaction
contemplated thereby (the "Newco Combination") CUSA contributed certain assets
to Newco and the predecessor to the Borrower merged into Newco and upon
consummation of such transactions the separate existence of the predecessor to
the Borrower ceased and Newco became the surviving Person; and
WHEREAS, upon the effective date of the Newco Combination, Newco continued
its existence as NGC Corporation and assumed the obligations of the Borrower
under the Credit Agreement; and
WHEREAS, the Borrower and NGC Acquisition Corporation II, a wholly-owned
subsidiary of the Borrower ("NACII"), have entered into that certain Agreement
and Plan of Merger dated as of February 17, 1997 (the "Destec Contract") with
Destec Energy, Inc., ("Destec") and The Dow Chemical Company, whereby at the
closing of the transaction contemplated thereby (the "Destec Transaction"),
Borrower will acquire the stock of Destec and NACII shall be merged with and
into Destec; and
WHEREAS, the Borrower, the Lenders, the Issuers, the Agent and the Co-
Agents intend to amend and restate the Original Credit Agreement in its entirety
as hereinafter set forth; and
WHEREAS, the Borrower intends to sell the International Assets (as defined
below) of Destec pursuant to the AES Contract (as defined below); and
1
<PAGE>
WHEREAS, the parties hereto intend that upon the effectiveness hereof
pursuant to Article IV, the Commitments, outstanding Notes, Revolving Advances,
and Competitive Bid Loans and Letters of Credit under the Original Credit
Agreement shall become Tranche A Commitments, Tranche A Committed Notes, Tranche
A Revolving Advances, Competitive Bid Loans and Letters of Credit, respectively,
hereunder; and
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Borrower, the Lenders, the Issuers, the Agent and the Co-
Agents hereby agree that the Original Credit Agreement is hereby amended and
restated in its entirety as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms.
As used in this Agreement:
"Absolute Rate" means, with respect to a Loan made by a particular Tranche
A Lender for the relevant Absolute Rate Interest Period, the rate of interest
per annum (rounded to the nearest 1/100 of 1%) offered by such Tranche A Lender
and accepted by the Borrower pursuant to Section 2.3.6(ii).
"Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Tranche A Lenders to the Borrower at the same time and for the same Absolute
Rate Interest Period.
"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to Section 2.3.
"Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance or an Absolute Rate Loan, a period of not less than 30 and not more than
270 days commencing on a Business Day selected by the Borrower pursuant to this
Agreement. If such Absolute Rate Interest Period would end on a day which is
not a Business Day, such Absolute Rate Interest Period shall end on the next
succeeding Business Day.
"Absolute Rate Loan" means a Loan which bears interest at an Absolute Rate.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after March 14, 1995, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or division thereof,
whether through purchase of assets, merger or otherwise or (ii) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) at least a majority (in number
2
<PAGE>
of votes) of the securities of a corporation which have ordinary voting power
for the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage or voting
power) of the outstanding partnership interests of a partnership.
"Additional Guaranty" is defined in Section 6.1.3.
"Advance" means a Tranche A Advance or a Tranche B Advance.
"AES" means The AES Corporation, a Delaware corporation.
"AES Contract" means the Asset Purchase Agreement dated February 17, 1997
between the Borrower and AES.
"AES Transaction" means the sale by Borrower of the International Assets
(as defined in the AES Contract) of Destec pursuant to the AES Contract.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means The First National Bank of Chicago in its capacity as agent
for the Lenders pursuant to Article X, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article X.
"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders, as reduced from time to time pursuant to the terms hereof.
"Agreement" means this Credit Agreement, as it may be amended or modified
and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied on a basis consistent with
the most recent financial statements of the Borrower and its Subsidiaries
delivered to the Lenders pursuant hereto.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day and (ii) the sum
of Federal Funds Effective Rate for such day plus 1/2% per annum.
"Alternative Currency" means Pounds Sterling or Canadian Dollars.
3
<PAGE>
"Applicable Commitment Fee" means on any date (subject to clause (iii) of
the definition of "Applicable Rating Level") the rate per annum set forth below
opposite the Applicable Rating Level:
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------------------------------------------------------------
Applicable Rating Level Applicable Commitment Fee
- -----------------------------------------------------
Tranche A Active Aggregate Tranche A Inactive Aggregate
Revolving Commitment Revolving Commitment
- ---------------------------------------------------------------------------------------
Level I 0.1000% 0.0800%
Level II 0.1250% 0.1000%
Level III 0.1500% 0.1250%
Level IV 0.2000% 0.1500%
- ---------------------------------------------------------------------------------------
</TABLE>
"Applicable Documentary Margin" means on any date and with respect to each
Documentary Letter of Credit (subject to clause (iii) of the definition of
"Applicable Rating Level"), the applicable margin set forth below based on the
Applicable Rating Level on such date:
Applicable
Applicable Documentary
Rating Level Margin
------------ ------
Level I 0.1800%
Level II 0.2150%
Level III 0.2500%
Level IV 0.3250%
"Applicable Margin" means on any date (subject to clause (iii) of the
definition of "Applicable Rating Level"), the applicable margin set forth below
based on the Applicable Rating Level on such date:
---------------------------------
Applicable Applicable
Rating Level Margin
---------------------------------
Level I 0.3000%
---------------------------------
Level II 0.3750%
---------------------------------
Level III 0.4500%
---------------------------------
Level IV 0.6500%
---------------------------------
"Applicable Rating Level" means the highest level set forth below that
corresponds to the rating issued from time to time by S&P or Moody's as
applicable to the Borrower's senior unsecured long-term debt:
4
<PAGE>
----------------------------
Moody's S&P
----------------------------
Level I Level I *Baa1 *BBB+
----------------------------
Level II Baa2 BBB
----------------------------
Level III Baa3 BBB-
----------------------------
Level IV **Baa3 **BBB-
----------------------------
For example, if the Moody's rating is Baa1 and the S&P rating is BBB, Level I
shall apply.
For purposes of the foregoing, (i) "*" means a rating equal to or more
favorable than; "**" means a rating less favorable than; (ii) if ratings for the
Borrower's senior unsecured long-term debt shall not be available from S&P or
Moody's, Level IV shall be deemed applicable; (iii) if determinative ratings
shall change (other than as a result of a change in the rating system used by
any applicable Rating Agency) such that a change in Applicable Rating Level
would result, such change shall effect a change in Applicable Rating Level as of
the day on which it is first announced by the applicable Rating Agency, and any
change in the Applicable Margin or percentage used in calculating fees due
hereunder shall apply commencing on the effective date of such change and ending
on the date immediately preceding the effective date of the next such change;
and (iv) if the rating system of any of the Rating Agencies shall change prior
to the date all obligations hereunder have been paid and the relevant
Commitments canceled, the Borrower and the Lenders shall negotiate in good faith
to amend the references to specific ratings in this definition to reflect such
changed rating system, and pending such amendment, if no Applicable Rating Level
is otherwise determinable based upon the foregoing, the last Applicable Rating
Level shall apply.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the President, the Chief Financial
Officer, the Senior Vice President-General Counsel, the Vice President-Finance,
the Controller or the Treasurer of the Borrower.
"Authorized Representative" means any Authorized Officer, the Borrower's
Assistant Treasurer or the Borrower's Director, Treasury Operations.
"Borrower" means NGC Corporation, a Delaware corporation, successor by
merger to Newco pursuant to the Newco Combination Agreement and its successors
and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" means a Committed Borrowing Notice or a Competitive Bid
Borrowing Notice, or both, as the context may require.
_______________
* equal to or greater than
** less than
5
<PAGE>
"British Gas" means BG plc, a corporation incorporated under the laws of
England and Wales, and its successors and assigns.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances or Eurodollar Bid Rate Advances, a day (other
than a Saturday or Sunday) on which banks generally are open in Chicago, New
York and London for the conduct of substantially all of their commercial lending
activities and on which dealings in United States dollars are carried on in the
London interbank market (ii) with respect to the determination of any Dollar
Equivalent for purposes hereof, a day (other than a Saturday or Sunday) on which
banks generally are open in Chicago, New York and London for dealings in
foreign exchange involving U.S. Dollars, Canadian Dollars and Pounds Sterling,
and (iii) for all other purposes, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York City for the conduct of
substantially all of their commercial lending activities.
"Canadian Dollars" and "C$" each mean lawful money of Canada.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person as a lessee under Capitalized Leases which would be
shown as a liability on a balance sheet of such Person prepared in accordance
with Agreement Accounting Principles.
"Change" is defined in Section 3.2.
"Change in Control" means NOVA Corporation, British Gas, Chevron
Corporation, and/or the shareholders of the PEP Partners (as defined in the
Merger Agreement) including David C. Feldman, Inc. shall cease to own, directly
or indirectly (i) at least 50% in the aggregate of the outstanding shares of
voting stock of the Borrower without giving effect to any equity issues by the
Borrower after the Closing Date (but after giving effect to any equity issued by
the Borrower to any one or more of NOVA Corporation, British Gas, Chevron
Corporation, the shareholders of the PEP Partners, and their successors,
including David C. Feldman, Inc., or their respective Subsidiaries) or (ii) at
least 40% in the aggregate of the outstanding shares of voting stock of the
Borrower.
"Closing Date" means June 27, 1997.
"Co-Agent" means each of The Chase Manhattan Bank and NationsBank of Texas,
N.A. in their capacity as Co-Agents, and not in their respective individual
capacities as Lender.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
6
<PAGE>
"Collateral Shortfall Amount" is defined in Sections 2.4 and 8.1(a).
"Commitment" means, for each Lender, the obligation of such Lender to make
Committed Loans of a particular Type not exceeding the amount set forth opposite
its signature below or as set forth in any Notice of Assignment relating to any
assignment that has become effective pursuant to Section 12.3.2 for such Type of
Loan, as such amount may be modified from time to time pursuant to the terms
hereof.
"Commitment Increase Effective Date" is defined in Section 2.22.
"Committed Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Committed Loans made by the relevant Lenders to the
Borrower at the same time, at the same Rate Option, for the same Interest Period
and of the same Type.
"Committed Borrowing Notice" is defined in Section 2.9.
"Committed Loan" means a Tranche A Committed Revolving Loan or a Tranche B
Loan.
"Competitive Bid Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of the
Tranche A Lenders to the Borrower at the same time, at the same interest basis,
and for the same Interest Period.
"Competitive Bid Borrowing Notice" is defined in Section 2.3.6.
"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute Rate
Loan, as the case may be.
"Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurodollar Base Rate.
"Competitive Bid Note" means a promissory note in substantially the form of
Exhibit "A-2" hereto, with appropriate insertions, duly executed and delivered
to the Agent by the Borrower for the account of a Tranche A Lender and payable
to the order of such Tranche A Lender, including any amendment, modification,
renewal or replacement of such promissory note.
"Competitive Bid Quote" means a Competitive Bid Quote substantially in the
form of Exhibit "H" hereto completed and delivered by a Tranche A Lender to the
Agent in accordance with Section 2.3.4.
"Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of Exhibit "F" hereto completed and delivered by the
Borrower to the Agent in accordance with Section 2.3.2.
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"Compliance Certificate" is defined in Section 6.1.1(iii).
"Consent, Acknowledgment and Amendment" means a Consent, Acknowledgment and
Amendment substantially in the form of Exhibit K hereto.
"Consolidated Debt" means, as of any date of determination thereof, the
aggregate principal amount of all then outstanding Debt of the Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with Agreement
Accounting Principles as of such date.
"Consolidated EBITD" means, for any period, the sum of (a) Consolidated Net
Income (excluding income taxes) determined for such period; provided that there
shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of the Borrower) in which the Borrower or any Subsidiary of the
Borrower has an interest but in which any other Person (not the Borrower or any
of its Subsidiaries) has a joint interest with respect to which the equity
method of accounting is utilized, except to the extent of the amount of
dividends or other distributions actually paid to the Borrower, or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person (other than a Person that is consolidated as a result of the Merger)
accrued prior to the date it becomes a Subsidiary of the Borrower or is merged
into or consolidated with the Borrower or any of its Subsidiaries or that
Person's Properties are acquired by the Borrower or any of its Subsidiaries, and
(iii) the income of any Subsidiary of the Borrower to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that income is not at the time permitted by operation of the terms of its
charter or any agreement (other than the Existing Warren Indentures as in effect
on November 1, 1994), instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, plus (b) the Consolidated
Interest Expense for such period, plus (c) to the extent taken into account in
calculating Consolidated Net Income (excluding income taxes) referred to in
clause (a) of this definition, the aggregate amount of all costs and expenses
incurred as a result of the Destec Transaction, and of the Newco Combination,
respectively, plus (d) depreciation, depletion and amortization expense of the
Borrower and its Subsidiaries determined for such period on a consolidated basis
plus (e) without duplication, the amount of dividends or other distributions
actually paid to the Borrower or any of its Subsidiaries during such period to
the extent attributable to income from another period excluded pursuant to
clause (i) above; provided, however, for purposes of this definition,
extraordinary gains and losses shall be excluded from the calculation of
Consolidated Net Income.
"Consolidated Interest Expense" means, for any Rolling Period, the total
interest expense, whether paid or accrued (including, without limitation, that
attributable to Capitalized Leases), of the Borrower and its Subsidiaries
determined for such period on a consolidated basis in accordance with Agreement
Accounting Principles, including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing plus or minus net amounts paid or payable or received or
receivable pursuant to interest rate swap, exchange, cap or similar agreements.
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"Consolidated Net Fixed Price Book Deficit" means, as of any date of
determination for any specified period, (i) if the Natural Gas Projected
Contract Exposure for such period is a negative number, the absolute value of
such negative number, and (ii) otherwise, zero.
"Consolidated Net Income" means, for any period, the consolidated net
income of a Person and its Subsidiaries for such period as determined on a
consolidated basis in accordance with Agreement Accounting Principles.
"Consolidated Net Worth" means at any date the stockholders' equity of the
Borrower and its Subsidiaries determined on a consolidated basis in accordance
with Agreement Accounting Principles as of such date.
"Consolidated Tangible Net Worth" means at any date the stockholders'
equity of the Borrower and its Subsidiaries less their consolidated Intangible
Assets, all determined on a consolidated basis in accordance with Agreement
Accounting Principles as of such date. For purposes of this definition
"Intangible Assets" means the amount (to the extent reflected in determining
such stockholders' equity) of (a) all net write-ups (other than write-ups
resulting from foreign currency translations and write-ups of assets of a going
concern business made within twelve months after the acquisition of such
business) subsequent to December 31, 1993 in the book value of any Property
owned by the Borrower or any of its consolidated Subsidiaries and (b) all
unamortized debt discount and expense, goodwill, patents, trademarks, service
marks, trade names, copyrights, and organization or developmental expenses.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.10.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when and
as said corporate base rate changes.
"CUSA" is defined in the second recital.
"CUSA Assumed Debt" means the $155,373,000 aggregate principal amount of
CUSA's obligations under the CUSA Note, the payment of which was assumed by
Newco under the CUSA Assumption Agreement.
"CUSA Assumption Agreement" means the agreement dated as of the closing of
the Newco Combination pursuant to which Newco assumed CUSA's payment obligation
for the CUSA Assumed Debt.
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"CUSA Note" means the demand promissory note dated August 25, 1994 payable
by CUSA to Chevron Capital U.S.A. Inc.
"Debt" means, with respect to any Person, (a) all indebtedness and other
obligations of such Person for the repayment of money borrowed, whether or not
represented by acceptances, bonds, debentures, notes, or other instruments or
securities, (b) all indebtedness and other obligations of such Person for the
deferred payment of the purchase price of any property or assets (other than
accounts payable on terms customary in the trade), (c) all Capitalized Lease
Obligations of such Person, and (d) all indebtedness and other obligations,
whether or not assumed by such Person, secured by any Lien (other than a Lien
permitted pursuant to Section 6.2.9 (other than clauses (iv), (vi) and (vii)
thereof)) on, or payable out of the proceeds of or production from, any Property
of such Person; provided, however, that in no event shall Debt described in any
of the foregoing categories (i) be duplicative of any Debt described in any
other such category, (ii) include Guaranties or (iii) include any Project
Financing that would not be shown as a liability on the financial statements of
the Borrower and its Subsidiaries on a consolidated basis; provided further,
that for purposes of the foregoing clauses (a), (b), (c) and (d), Debt shall
include, in the case of the Borrower and its Subsidiaries, only such obligations
as are shown as a liability on a consolidated balance sheet of the Borrower and
its Subsidiaries in accordance with Agreement Accounting Principles; provided
further that the Institutionally Targeted Capital Securities shall not
constitute Debt.
"Default" means an event described in Article VII.
"Destec" is defined in the fourth recital.
"Destec Contract" is defined in the fourth recital.
"Destec Transaction" is defined in the fourth recital.
"Documentary Letter of Credit" means a Letter of Credit which is a short
term, self-liquidating trade-related contingency.
"Dollar Equivalent" means on any day (a) with respect to any amount
denominated in U.S. Dollars, such amount and (b) with respect to any amount
denominated in an Alternative Currency, the amount of U.S. Dollars into which
such amount may be converted at the spot rate at which U.S. Dollars are offered
to the Agent in London for the Alternative Currency in which such amount is
denominated at approximately 11:00 a.m. (London time) on such day or if such day
is not a Business Day, on the immediately preceding Business Day.
"Draw Amount" is defined in Section 2.2.4.
"Draw Date" is defined in Section 2.2.4.
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"Environmental Laws" means all applicable federal, state or local statutes,
laws, ordinances, codes, rules and regulations (including consent decrees and
administrative orders directed to the Borrower or any of its Subsidiaries)
relating to the protection of the environment and in effect in any and all
jurisdictions in which the Borrower or its Subsidiaries are conducting or at any
time have conducted business, or where any Property of the Borrower or any of
its Subsidiaries is located, or where any Hazardous Material generated by or
disposed of by the Borrower or any of its Subsidiaries is located, to the extent
applicable to each such business activity, Property or generation or disposal.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means an Advance which bears interest at a Eurodollar
Rate.
"Eurodollar Auction" means a solicitation of Competitive Bid Quotes setting
forth Competitive Bid Margins pursuant to Section 2.3.
"Eurodollar Base Rate" means, with respect to any Eurodollar Interest
Period for any Eurodollar Loan, the lesser of (A) the rate per annum equal to
the average of the offered quotations appearing on Telerate Page 3750 (or if
such Telerate Page shall not be available, any successor or similar service as
may be selected by the Agent and the Borrower) as of 11:00 a.m., London time,
(or as soon thereafter as practicable) on the day two Business Days prior to the
first day of such Eurodollar Interest Period for dollar deposits having a term
comparable to such Eurodollar Interest Period or (B) the maximum interest rate
permitted pursuant to Section 2.20. If none of such Telerate Page 3750 nor any
successor or similar service is available, then the "Eurodollar Base Rate" shall
mean, with respect to any Eurodollar Interest Period for any applicable
Eurodollar Loan, the lesser of (A) the rate per annum determined by the Agent to
be the average of the rates quoted by the Reference Banks at approximately 11:00
a.m., London time, (or as soon thereafter as practicable) on the day two
Business Days prior to the first day of such Eurodollar Interest Period for the
offering by such Reference Banks to leading banks in the interbank market of
U.S. dollar deposits having a term comparable to such Eurodollar Interest Period
and in an amount comparable to the principal amount of the Eurodollar Loan of
such respective Reference Bank to which such Eurodollar Interest Period relates
or (B) the maximum interest rate permitted pursuant to Section 2.20. If any
Reference Bank does not furnish a timely quotation, the Agent shall determine
the relevant interest rate on the basis of the quotation or quotations furnished
by the remaining Reference Bank or Banks. Each determination of the Eurodollar
Base Rate shall be conclusive and binding, absent manifest error.
"Eurodollar Bid Rate" means, with respect to a Loan made by a given Tranche
A Lender for the relevant Eurodollar Interest Period, the sum of (i) the
Eurodollar Base Rate and (ii) the Competitive Bid Margin offered by such Tranche
A Lender and accepted by the Borrower pursuant to Section 2.3.6(i).
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which bears
interest at a Eurodollar Bid Rate.
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"Eurodollar Bid Rate Loan" means a Competitive Bid Loan which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Committed Advance" means a Tranche A Committed Advance or
Tranche B Advance, as the case may be, which bears interest at a Eurodollar Rate
requested by the Borrower pursuant to Section 2.1 or 2.10.
"Eurodollar Committed Loan" means a Tranche A Committed Revolving Loan or
Tranche B Loan, as the case may be, which bears interest at a Eurodollar Rate
requested by the Borrower pursuant to Section 2.1 or 2.10.
"Eurodollar Interest Period" means, with respect to a Eurodollar Committed
Advance, a Eurodollar Committed Loan, a Eurodollar Bid Rate Advance or a
Eurodollar Bid Rate Loan, a period of one, two, three, six, or (subject to
availability by each applicable Lender) nine or twelve months commencing on a
Business Day selected by the Borrower pursuant to this Agreement. Such
Eurodollar Interest Period shall end on (but exclude) the day which corresponds
numerically to such date one, two, three, six, nine or twelve months thereafter,
provided, however, that if there is no such numerically corresponding day in
such next, second, third, sixth, ninth or twelfth succeeding month, such
Eurodollar Interest Period shall end on the last Business Day of such next,
second, third, sixth, ninth or twelfth succeeding month. If a Eurodollar
Interest Period would otherwise end on a day which is not a Business Day, such
Eurodollar Interest Period shall end on the next succeeding Business Day,
provided, however, that if said next succeeding Business Day falls in a new
month, such Eurodollar Interest Period shall end on the immediately preceding
Business Day.
"Eurodollar Loan" means a Eurodollar Committed Loan or a Eurodollar Bid
Rate Loan, as applicable.
"Eurodollar Rate" means, with respect to a Eurodollar Committed Advance or
a Eurodollar Committed Loan for the relevant Eurodollar Interest Period, the sum
of (i) the quotient of (a) the Eurodollar Base Rate applicable to such
Eurodollar Interest Period, divided by (b) one minus the Reserve Requirement, if
any, (expressed as a decimal) applicable to such Eurodollar Interest Period plus
(ii) the Applicable Margin. The Eurodollar Rate shall be rounded, if necessary,
to the next higher 1/16 of 1%.
"Excess Exposure" is defined in Section 2.4.
"Existing Warren Subordinated Debt" means Debt of Warren under the Existing
Warren Indentures as amended to the date hereof, and hereafter as amended
consistent with Warren's Subsidiary Guaranty.
"Existing Warren Indentures" means each of (i) the Indenture dated to be
effective as of September 9, 1993 between Warren NGL, Inc., Issuer, and
Ameritrust Texas National Association, Trustee, for $65,000,000 14% Senior
Subordinated Notes due 2001 and (ii) the Indenture dated to
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be effective as of April 15, 1993 between Warren NGL, Inc., Issuer, and the
First National Bank of Boston, Trustee, for $105,000,000 10 1/4% Subordinated
Notes due 2003.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately 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 at approximately 10 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"First Amendment" is defined in the first recital.
"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.
"Fixed Price Contract" means, as of any date of determination, a contract
(including, without limitation, physical delivery, option (whether cash or
financial), exchange, swap and futures contracts) entered into by the Borrower
or any Subsidiary of the Borrower for the purchase or sale of Natural Gas, other
than (i) such a contract which has a remaining term of thirty (30) days or less
from such date of determination, or (ii) such a contract under which the
purchase or sale price of any portion of Natural Gas delivered or to be
delivered on or after such date of determination is calculated by reference to
(a) the spot price for Natural Gas current on each date of delivery at the place
of delivery specified in such contract, (b) the spot price for Natural Gas
current on each date of delivery at a place of delivery other than the place of
delivery specified in such contract provided that such spot price is adjusted to
reflect the cost of transporting Natural Gas to the place of delivery specified
in such contract, (c) a basket of price indices similar to the spot price for
Natural Gas current on each date of delivery at the place of delivery, or (d) a
basket of price indices similar to the then current spot price for Natural Gas
at a place of delivery other than the place of delivery specified in such
contract provided that each such price index is adjusted to reflect the cost of
transporting Natural Gas to the place of delivery specified in such contract;
provided, however, that no Processing Supply Contract shall be considered a
Fixed Price Contract for purposes of this Agreement.
"Fixed Rate" means the Eurodollar Rate, the Eurodollar Bid Rate or the
Absolute Rate.
"Fixed Rate Advance" means an Advance which bears interest at a Fixed Rate.
"Fixed Rate Loan" means a Loan which bears interest at a Fixed Rate.
"Floating Rate" means, for any day, a rate per annum equal to the Alternate
Base Rate for such day.
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"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
"Fourth Amendment" is defined in the first recital.
"Guarantor" means each of Natural Gas Clearinghouse; NGC Oil Trading and
Transportation, Inc., NGC Futures, Inc., Electric Clearinghouse, Inc., Kansas
Gas Supply Corporation, NGC Great Britain, Ltd., NGC Canada, Inc., Warren Energy
Resources, Limited Partnership, Warren Gas Liquids, Inc., Warren Gas Marketing,
Inc., Warren Intrastate Gas Supply, Inc., Warren NGL, Inc., Warren NGL Pipeline
Company, Warren Petroleum Company, Limited Partnership, WPC LP, Inc. and WTLPS,
Inc. and any other Subsidiary (direct or indirect) from time to time of the
Borrower that delivers a Subsidiary Guaranty pursuant to Section 6.1.3 and each
of their respective successors and assigns.
"Guarantor Discontinuance Test" means, with respect to any Subsidiary of
the Borrower, a Subsidiary which at the end of a calendar quarter has (i)
consolidated fixed assets plus net working capital with a book value of less
than $80,000,000 or (ii) 12% or less of the Consolidated EBITD for such calendar
quarter, as determined by the then most recent financial statements provided
pursuant to Section 6.1.1.
"Guaranty" means, with respect to any Person, (a) all indebtedness and
other obligations, contingent or otherwise, of such Person under or in respect
of any letter of credit issued for its own account, and (b) all indebtedness and
other obligations of such Person under any agreement, undertaking or other
arrangement by which such Person (i) assumes, guarantees, endorses (other than
the endorsement of instruments for collection in the ordinary course of
business), commits or agrees (whether or not such commitment or agreement is
contingent or subject to the occurrence of a specified event or events) to
purchase or otherwise acquire or provide funds for the payment of any obligation
or liability of any other Person or (ii) agrees to maintain the net worth,
working capital or any other financial condition of any other Person; provided,
however, in no event shall Guaranties described in any of the foregoing
categories include any Guaranties by a Project Financing Subsidiary that would
not be shown as a liability on the financial statements of the Borrower and its
Subsidiaries on a consolidated basis.
"Hazardous Material" means (a) any "hazardous substance," as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, and (b) any "hazardous waste," as defined by the Resource Conservation
and Recovery Act, as amended and (c) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material waste or substance within the meaning of
any applicable Environmental Law, all as amended or hereafter amended.
"Increasing Lender" is defined in Section 2.22(iii).
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"Indemnified Party" is defined in Section 9.7.
"Information Memorandum" is defined in Section 5.10.
"Institutionally Targeted Capital Securities" means the capital securities
to be issued in an aggregate amount of up to $200,000,000 by a Delaware business
trust, the proceeds of which will be loaned to the Borrower or one or more of
its Subsidiaries all on terms substantially similar to the offering Memorandum
dated May 22, 1997.
"Interest Period" means a Eurodollar Interest Period or an Absolute Rate
Interest Period.
"Investment" of a Person means any loan, advance (other than commission,
relocation, travel and similar loans and/or advances to officers and employees
made in the ordinary course of business), extension of credit (other than
Guaranties, accounts receivable arising in the ordinary course of business on
terms customary in the trade and prepayments made and production payments
acquired in the ordinary course of business), or contribution of capital by such
Person to any other Person or any investment in, or purchase or other
acquisition of, the stock, partnership interests, notes, debentures or other
securities of any other Person made by such Person.
"Invitation for Competitive Bid Quotes" means an Invitation for Competitive
Bid Quotes substantially in the form of Exhibit "G" hereto, completed and
delivered by the Agent to the Tranche A Lenders in accordance with Section
2.3.3.
"Issuance Date" means, for each Letter of Credit, the date on which such
Letter of Credit is issued hereunder.
"Issuance Request" means either (i) a credit issuance request in
substantially the form attached to this Agreement as Exhibit "C-1" hereto, with
all blanks appropriately completed and duly executed and delivered by an
Authorized Representative on behalf of the Borrower, or (ii) a request for the
issuance of a Letter of Credit by First Chicago made by the Borrower through
First Chicago's FirstTrade System pursuant to the FirstTrade Services Agreement
between the Borrower and First Chicago dated as of August 18, 1989, as amended
or replaced from time to time.
"Issuer" means with respect to each Letter of Credit, the Tranche A Lender
that issues such Letter of Credit and shall be either First Chicago or, for
Letters of Credit with a Dollar Equivalent of the Stated Amount of $5,000,000 or
more, First Chicago or a Tranche A Lender other than First Chicago which has
agreed in writing to issue one or more such Letters of Credit under this
Agreement. The Borrower shall indicate in the Issuance Request to the Agent and
any such Tranche A Lender with respect to each Letter of Credit who the Issuer
shall be for such Letter of Credit.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs,
injunctions, or decrees of the United States, any state, any foreign country, or
any other Tribunal.
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"Lenders" means the lending institutions listed on the signature pages of
this Agreement and the lending institutions that hereafter become parties hereto
pursuant to Section 12.3.
"Lending Installation" means, with respect to a Lender, any office, branch,
subsidiary or affiliate of such Lender.
"Letter of Credit" means (i) a Documentary Letter of Credit or a Standby
Letter of Credit or similar instrument which is issued pursuant to this
Agreement for which the Borrower is liable and (ii) each letter of credit
outstanding on the Closing Date listed on Schedule 3 hereto which letters of
credit will be deemed to be issued and outstanding under this Agreement as of
the Closing Date.
"Letter of Credit Collateral Account" has the meaning in Section 2.2.10.
"Letter of Credit Sublimit" is defined in Section 2.2.2.
"Leverage Ratio" means the ratio, expressed as a percentage, of
Consolidated Debt to the sum of Consolidated Debt plus Consolidated Net Worth.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, security interest, encumbrance or preference,
priority or other security agreement or any interest in Property to secure
payment of a debt or performance of an obligation (including, without
limitation, the interest of a vendor or lessor under any conditional sale,
Capitalized Lease or other title retention agreement).
"Loan" means, with respect to a Lender, such Lender's portion of any
Advance of a particular Type.
"Loan Documents" means this Agreement, each of the Notes, each of the
Subsidiary Guaranties, each Competitive Bid Quote Request, each Issuance
Request, each Committed Borrowing Notice, the agreement with respect to fees
referred to in Section 2.21, together in each case with all exhibits, schedules
and attachments thereto, and all other agreements, documents, certificates and
instruments from time to time executed and delivered by the Borrower or any of
its Subsidiaries pursuant to or in connection with any of the foregoing.
"Maintenance Capital Expenditure" means, for any Rolling Period, any
capital expenditure to maintain the Property of the Borrower and its
Subsidiaries in good working condition in accordance with industry standards.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, financial condition or results of operations of the Borrower
and its Subsidiaries taken as a whole, or (ii) the ability of the Borrower to
perform its payment obligations under any of the Loan Documents.
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"Material Agreement" means any contract or agreement to which the Borrower
or any of its Subsidiaries is a party which is material to the consolidated
financial condition or operations of the Borrower and its Subsidiaries, and
includes, without limitation, the Existing Warren Indentures.
"Merger" means the merger, consolidation or combination of NGC's partners
into or with the Borrower, with the Borrower being the surviving corporation
pursuant to the Merger Agreement.
"Merger Agreement" means the Combination Agreement and Plan of Merger by
and among Natural Gas Clearinghouse and Trident NGL Holding, Inc. and others
dated as of October 21, 1994.
"Moody's" means Moody's Investors Service, Inc. and any successor thereto
that is a nationally-recognized rating agency.
"Multiemployer Plan" means a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA to which the Borrower or any member of the
Controlled Group is obligated to make contributions.
"NACII" is defined in the fourth recital.
"Natural Gas" means all gaseous hydrocarbons including, but not limited to
oil well gas, gas well gas, and casinghead gas but excluding any natural gas
liquids.
"Natural Gas Fixed Price Book Report" means, for any calendar month, a
report prepared pursuant to the same procedures and methods of calculation used
to prepare the Natural Gas fixed price book report dated February 28, 1995
delivered to the Agent which report sets out (i) the net open supply or market
position in MMBTU's resulting from all Fixed Price Contracts for the purchase or
sale of Natural Gas to be delivered during such month, and (ii) the net profit
or loss in dollars resulting from all Fixed Price Contracts for the purchase or
sale of Natural Gas to be delivered during such month.
"Natural Gas Monthly Market Exposure" means, for any calendar month, (i) an
amount (such amount being a positive number in the case of a net profit and a
negative number in the case of a net loss) equal to the net profit or loss in
dollars which would be shown on a Natural Gas Fixed Price Book Report for such
calendar month as a result of all Fixed Price Contracts for the purchase and
sale of Natural Gas to be delivered during such month, minus (ii) the aggregate
amount of dollars of profit included in calculating such net profit or loss to
reflect all profitable Fixed Price Contracts for the purchase or sale of Natural
Gas to be delivered during such month under which the counterparty (i.e. the
party thereto other than the Borrower or a Subsidiary of the Borrower) is in
default except to the extent the obligations of such counterparty are secured by
cash, cash equivalent investments or readily marketable securities or other
similar assets or by one or more letters of credit or are subject to set off by
the Borrower or any of its Subsidiaries, plus (iii) the aggregate amount of
dollars of loss included in calculating such net profit or loss to reflect all
unprofitable Fixed Price Contracts for the purchase or sale of Natural Gas to be
delivered during such month under which the
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counterparty (i.e. the party thereto other than the Borrower or a Subsidiary of
the Borrower) is in default.
"Natural Gas Projected Contract Exposure" means, for any period, the sum
(which sum may be either positive or negative and shall be calculated by netting
the net profit and net loss Natural Gas Monthly Market Exposures) of the Natural
Gas Monthly Market Exposures for each full calendar month included in such
period.
"Negative Pledge" means, with respect to any Person, any agreement which
prohibits or limits the creation by such Person of any Lien in, of or on any of
the property, assets or revenue of such Person.
"New Lender" is defined in Section 2.22(iii).
"Newco" means Midstream Combination Corp., a Delaware corporation.
"Newco Combination" means the merger of the Borrower into Newco pursuant to
the Newco Combination Agreement.
"Newco Combination Agreement" means that certain Combination Agreement and
Plan of Merger among NGC Corporation, Chevron U.S.A. Inc., and Midstream
Combination Corp. dated May 22, 1996.
"New Funds Amount" means the amount by which a New Lender's or an
Increasing Lender's outstanding Tranche A Committed Revolving Loans increase as
of a Commitment Increase Effective Date (without regard to any such increase as
a result of Advances made on such Commitment Increase Effective Date).
"NGC" means Natural Gas Clearinghouse, a general partnership organized
under the laws of the state of Colorado.
"Notes" means, collectively, the Competitive Bid Notes, the Tranche A
Committed Notes and the Tranche B Notes; and "Note" means any one of the Notes.
"Notice of Assignment" is defined in Section 12.3.2.
"Notice of Commitment Increase" is defined in Section 2.22.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Notes, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Borrower to the Lenders or to any
Lender, the Agent or any Indemnified Party arising under any of the Loan
Documents.
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"Obligors" means the Borrower and each Guarantor, and their successors and
assigns.
"Original Credit Agreement" is defined in the first recital.
"Out of Funds Period" means the period from and including a Draw Date to
but excluding the date a Tranche A Lender provides the Agent immediately
available and freely transferable funds equal to such Tranche A Lender's
Percentage of the drawing under a Letter of Credit which took place on such Draw
Date.
"Partially Increasing Lender" is defined in Section 2.22(iii).
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last Business Day of each calendar quarter.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Percentage" means, (i) as to any Tranche A Lender at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth decimal
place) at such time of such Lender's Tranche A Commitment divided by the Tranche
A Aggregate Commitment and (ii) as to any Tranche B Lender (A) at any time prior
to the Tranche B Commitments expiring or being terminated in full, the
percentage equivalent (expressed as a decimal, rounded to the ninth decimal
place) at such time of such Lender's Tranche B Commitment divided by the Tranche
B Aggregate Commitment and (B) at any time thereafter, the percentage equivalent
(expressed as a decimal, rounded to the ninth decimal place) of such Tranche B
Lender's outstanding Tranche B Loans divided by the aggregate of the outstanding
Tranche B Loans.
"Permitted Liens" means any one or more of the following: (a) Liens for
taxes, assessments or other governmental charges or levies either not yet
delinquent or which are being contested in good faith by appropriate proceedings
diligently prosecuted and as to which adequate reserves shall have been set
aside in conformity with Agreement Accounting Principles, (b) deposits or
pledges to secure the payment of workers' compensation, unemployment insurance,
social security benefits or obligations arising under similar legislation, or to
secure the performance of public or statutory obligations, surety or appeal
bonds, and other obligations of a like nature incurred in the ordinary course of
business, (c) materialmen's, mechanics', workmen's, repairmen's, employees's,
landlord's, lessor's or other like Liens arising in the ordinary course of
business to secure obligations not more than 30 days past due or being contested
in good faith and as to which adequate reserves shall have been set aside in
conformity with Agreement Accounting Principles or as to which adequate bonds
shall have been obtained, (d) Liens arising under Section 9.319 of the Texas
Uniform Commercial Code or similar statutes of states other than Texas, (e)
zoning restrictions, easements, rights-of-way, restrictions, servitudes,
permits, reservations, encroachments, exceptions, conditions, covenants, and any
other restrictions on the use of real property none of which materially impairs
the use of such property by the owner of such property in the operation of its
business, (f) liens in favor of the Agent
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for pro rata benefit of Lenders, or to the Lenders to secure the Obligations,
(g) inchoate Liens arising under ERISA, (h) Liens reserved in customary oil, gas
and/or mineral leases for bonus or rental payments and for compliance with the
terms of such leases and Liens reserved in customary operating agreements, farm-
out and farm-in agreements, exploration agreements, development agreements and
other similar agreements for compliance with the terms of such agreements, (i)
any obligations or duties affecting any of the Property of any Person to any
municipality or public authority with respect to any franchise, grant, license
or permit which do not materially impair the use of such Property for the
purposes for which it is held, (j) defects, irregularities and deficiencies in
title to any Property of any Person which in the aggregate do not materially
impair the use of such Property for the purposes for which such Property is held
by the Borrower, and defects, irregularities and deficiencies in title to any
Property of the Borrower which defects, irregularities or deficiencies have been
cured by possession under applicable statutes of limitation, (k) royalties,
overriding royalties, revenue interests, net revenue interests, production
payments (other than royalties, overriding royalties, revenue interests, net
revenue interests or production payments granted or created by such Person or
any of its Subsidiaries in the ordinary course of business in connection with,
or having the effect of, the borrowing of money), advance payment obligations
(other than obligations in respect of advance payment received by such Person or
any of its Subsidiaries in connection with, or having the effect of, the
borrowing of money) and other similar burdens now existing on Properties now
owned or, as to Properties hereafter acquired, at the time of acquisition by
such Person, (l) Liens arising out of all presently existing and future division
and transfer orders, advance payment agreements, processing contracts, gas
processing plant agreements, operating agreements, gas balancing or deferred
production agreements, pooling, unitization or communitization agreements,
pipeline, gathering or transportation agreements, platform agreements, drilling
contracts, injection or repressuring agreements, cycling agreements,
construction agreements, salt water or other disposal agreements, leases or
rental agreements (but only as otherwise permitted by this Agreement), farm-out
and farm-in agreements, exploration and development agreements, and any and all
other contracts or agreements covering, arising out of, used or useful in
connection with or pertaining to the exploration, development, operation,
production, sale, use, purchase, exchange, storage, separation, dehydration,
treatment, compression, gathering, transportation, processing, improvement,
marketing, disposal or handling of any Property of a Person, provided such
agreements are entered into the ordinary course of business and contain terms
customary for such agreements in the industry, and (m) in the case of the
Borrower and its Subsidiaries, other minor liens or encumbrances none of which
interferes materially with the use of the Property affected in the ordinary
conduct of the Borrower's and/or its Subsidiaries business and which
individually or in the aggregate do not have a Material Adverse Effect.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, limited liability company, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.
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"Pounds Sterling" and "(Pounds)" each mean lawful money of the United
Kingdom.
"Processing Supply Contract" means any contract (including, without
limitation, physical delivery, option (whether cash or financial), exchange,
swap and futures contracts) entered into by the Borrower or any of its
Subsidiaries in the ordinary course of business for the purpose of managing the
impact of price fluctuations on natural gas supply costs related to any natural
gas processing activity conducted by the Borrower or any of its Subsidiaries.
"Project Financing" shall mean any Debt or other obligations under leases
that do not constitute Capitalized Lease Obligations at the time such leases are
entered into, in each case that are incurred to finance a project (including any
construction financing) and that do not permit recourse to the Borrower or any
of its Subsidiaries (other than a Project Financing Subsidiary) or any of their
respective Property other than the Property of a Project Financing Subsidiary.
"Project Financing Subsidiary" shall mean (i) any Subsidiary of the
Borrower or (ii) any other Person in which the Borrower owns a 50% or less
interest, in each case, whose principal purpose is to incur Project Financing or
to become an owner of interests in a Person so created to conduct the business
activities for which such Project Financing was incurred, and substantially all
the fixed assets of which Subsidiary or Person are those fixed assets being
financed (or to be financed) in whole or in part by one or more Project
Financings.
"Prompt Month" means, as of any date of determination, the first month
thereafter for which NYMEX Natural Gas futures contracts are trading.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person, and includes, without limitation, stock, partnership
and limited liability company interests owned or held in any other Person by
such Person.
"Purchasers" is defined in Section 12.3.1.
"Rate Option" means the Fixed Rate or the Floating Rate.
"Rating Agency" means either of S&P or Moody's.
"Reducing Lender" is defined in Section 2.22(iii).
"Reduction Amount" means the amount by which a Reducing Lender's or a
Partially Increasing Lender's outstanding Loans decrease as of a Commitment
Increase Effective Date (without regard to any such increase as a result of
Advances made on such Commitment Increase Effective Date).
"Reference Banks" means each of the Agent and the Co-Agents.
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"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Single
Employer Plan, excluding, however, such events as to which the PBGC by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event, provided, however, that
a failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of the issuance of
any such waiver of the notice requirement in accordance with either Section
4043(a) of ERISA or Section 412(d) of the Code.
"Required Lenders" means, (i) at any time prior to the Tranche B
Commitments expiring or being terminated in full, Lenders in the aggregate
having at least 60% of the Aggregate Commitment and (ii) at any time thereafter,
Lenders in the aggregate holding at least 60% of the sum of the aggregate of the
outstanding Tranche B Loans plus the Aggregate Commitment or, if the entire
Aggregate Commitment has been terminated, Lenders in the aggregate holding at
least 60% of the aggregate unpaid principal amount of the outstanding Advances.
"Reserve Requirement" means, with respect to a Eurodollar Interest Period,
the maximum aggregate reserve requirement, if any, (including all basic,
supplemental, marginal and other reserves) which is imposed on Eurocurrency
liabilities (in the case of Eurodollar Committed Advances or Eurodollar
Committed Loans). The Reserve Requirement shall be adjusted automatically on
and as of the effective date of any change in the applicable reserve
requirement.
"Risk-Based Capital Guidelines" is defined in Section 3.2.
"Rolling Period" means for each calendar quarter, such quarter and the
three preceding calendar quarters.
"S&P" means Standard & Poor's Ratings Group and any successor thereto that
is a nationally-recognized rating agency.
"Scheduled Debt Service" means, for any Rolling Period, the sum of all
scheduled, required and mandatory principal payments of the Borrower and its
Subsidiaries on a consolidated basis in accordance with Agreement Accounting
Principles plus Consolidated Interest Expense for such Rolling Period, provided,
that for purposes of this definition, principal owing in respect of the CUSA
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Assumed Debt as a result of a demand for payment thereof being made by CUSA
prior to the stated maturity thereof shall not be a scheduled, required or
mandatory principal payment of the Borrower and its Subsidiaries.
"Second Amendment" is defined in the first recital.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Single Employer Plan" means a Plan that is not a Multiemployer Plan.
"Specified Amount" is defined in Section 6.2.2.
"Standby Letter of Credit" means a Letter of Credit (other than a
Documentary Letter of Credit).
"Stated Amount" means the original amount of a Letter of Credit as reduced
(i) by any drawings thereunder or (ii) pursuant to a provision of such Letter of
Credit which provides for one or more reductions in the amount drawable
thereunder and as increased or reinstated pursuant to a provision of such Letter
of Credit which provides for one or more increases in or reinstatements of the
amount drawable thereunder.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any
partnership, association, joint venture, limited liability company or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned. Unless otherwise expressly
provided, all references herein to a "Subsidiary" shall mean a direct or
indirect Subsidiary of the Borrower.
"Subsidiary Guaranty" means (i) in the case of NGC or any Subsidiary of the
Borrower (other than Warren and its Subsidiaries) the Guaranty Agreement
substantially in the form of Exhibit "J-1", (ii) in the case of Warren and its
Subsidiaries, the Guaranty Agreement substantially in the form of Exhibit "J-2"
and (iii) each "Subsidiary Guaranty" outstanding under the Original Credit as
amended by the Consent, Acknowledgment and Amendment delivered pursuant to
Section 4.1(vi), as amended or modified from time to time.
"Substantial Portion" means, with respect to the Property of the Borrower
and its Subsidiaries, Property which (i) represents more than 15% of the
consolidated assets of the Borrower and its Subsidiaries as shown in the
consolidated financial statements of the Borrower and its Subsidiaries most
recently delivered to the Lenders pursuant to Section 6.1.1 (or, if no such
statements have been delivered, the statements referred to in Section 5.4) or
(ii) is responsible for
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more than 15% of the Consolidated EBITD for the Rolling Period ending with the
calendar quarter immediately prior to the quarter in which such determination is
made.
"Third Amendment" is defined in the first recital.
"Tranche A Active Aggregate Revolving Commitment" means, at any time, the
Tranche A Aggregate Revolving Commitment minus the Tranche A Inactive Aggregate
Revolving Commitment.
"Tranche A Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Tranche A Committed Revolving Loans made by some or all of
the Tranche A Lenders to the Borrower on the same Borrowing Date, at the same
Rate Option and for the same Interest Period or a Competitive Bid Advance on the
same interest basis.
"Tranche A Aggregate Revolving Commitment" means $550,000,000 as reduced
from time to time pursuant to the terms hereof; provided, that the Tranche A
Aggregate Revolving Commitment shall be no more than $550,000,000 (or such
increased amount as may be established pursuant to Section 2.22) reduced by
$22,500,000 per quarter commencing June 30, 1998 and on the last Business Day of
each fiscal quarter thereafter.
"Tranche A Commitment" means, for each Tranche A Lender, the obligation of
such Lender to make Tranche A Committed Revolving Loans not exceeding the amount
set forth opposite its signature below or as set forth in any Notice of
Assignment relating to any assignment that has become effective pursuant to
Section 12.3.2, as such amount may be modified from time to time pursuant to the
terms hereof.
"Tranche A Committed Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Tranche A Committed Revolving Loans made by some
or all of the Tranche A Lenders to the Borrower on the same Borrowing Date, at
the same Rate Option and for the same Interest Period.
"Tranche A Committed Note" means a promissory note in substantially the
form of Exhibit "A-1" hereto, with appropriate insertions, duly executed and
delivered to the Agent by the Borrower for the account of a Tranche A Lender and
payable to the order of such Tranche A Lender in the amount of its Tranche A
Commitment, including any amendment, modification, renewal or replacement of
such promissory note.
"Tranche A Committed Revolving Loan" means a Loan made by a Tranche A
Lender pursuant to Section 2.1.1(i).
"Tranche A Inactive Aggregate Revolving Commitment" means $100,000,000 as
from time to time (i) reclassified as Tranche A Active Aggregate Revolving
Commitment pursuant to Section 2.6.1, (ii) increased pursuant to Section 2.22 or
(iii) reduced pursuant to the terms hereof; provided,
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that all reductions to the Tranche A Aggregate Revolving Commitment shall be
first effected as reductions of the Tranche A Inactive Aggregate Revolving
Commitment (as opposed to the Tranche A Active Aggregate Revolving Commitment)
until it is terminated or reduced to zero and then as reductions of the Tranche
A Active Aggregate Revolving Commitment.
"Tranche A Lender" means a Lender identified as a Tranche A Lender on the
signature pages hereto and any successor or assign thereof.
"Tranche A Loan" means a Loan made by a Tranche A Lender pursuant to
Section 2.1.1.
"Tranche A Revolving Advance" means an Advance pursuant to Section
2.1.1(i).
"Tranche A Revolving Facility" is defined in Section 2.1.1.
"Tranche A Revolving Facility Termination Date" means the earlier of March
14, 2000 and the date on which the Tranche A Active Aggregate Revolving
Commitment shall have been reduced to zero pursuant to Section 2.6.3.
"Tranche B Advance" means a borrowing hereunder consisting of the aggregate
amount of several Tranche B Loans made by the Tranche B Lenders to the Borrower
on the same Borrowing Date, at the same Rate Option and for the same Interest
Period.
"Tranche B Aggregate Commitment" means $400,000,000 as reduced from time to
time pursuant to the terms hereof.
"Tranche B Commitment" means, for each Tranche B Lender, the obligation of
such Lender to make Tranche B Loans not exceeding the amount set forth opposite
its signature below or as set forth in any Notice of Assignment relating to any
assignment that has become effective pursuant to Section 12.3.2, as such amount
may be modified from time to time pursuant to the terms hereof.
"Tranche B Facility" is defined in Section 2.1.4.
"Tranche B Facility Termination Date" means the date two (2) years from the
Closing Date.
"Tranche B Lender" means a Lender identified as a Tranche B Lender on the
signature pages hereto and any successor or assign thereof.
"Tranche B Loan" means a Loan made by a Lender pursuant to Section 2.1.4.
"Tranche B Note" means a promissory note in substantially the form of
Exhibit "A-2" hereto, with appropriate insertions, duly executed and delivered
to the Agent by the Borrower for the account of a Tranche B Lender and payable
to the order of such Tranche B Lender in the amount of
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its Tranche B Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"Transferee" is defined in Section 12.4.
"Tribunal" means any state, commonwealth, federal, foreign, territorial, or
other court or governmental department, commission, board, bureau, agency, or
instrumentality or any properly convened arbitration.
"Type" means, with respect to any Committed Advance, its nature as a
Floating Rate Advance or Eurodollar Advance and with respect to any Competitive
Bid Advance, its nature as a Eurodollar Bid Rate Advance or Absolute Rate
Advance.
"UCC" means the Uniform Commercial Code in effect from time to time in the
State of Illinois.
"U.S. Dollars" and "$" each mean lawful money of the United States.
"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested nonforfeitable benefits under all Single Employer Plans exceeds
the fair market value of all such Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans.
"Unmatured Default" means an event or condition which but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"Warren" means Warren NGL, Inc., a Delaware corporation.
"Warren Intercompany Credit Agreement" means a credit agreement entered
into by the Borrower and Warren.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
1.2 Accounting Terms and Other Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with Agreement Accounting
Principles. The words "herein," "hereof," "hereunder," and words of similar
import refer to this Agreement as a whole and not to a particular article,
section, paragraph or other subdivision. All other terms used herein shall have
the meanings stated herein or, if not otherwise defined herein, the meanings for
such terms provided in the UCC.
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1.3 Currency References. Unless otherwise specified herein, all dollar
amounts expressed herein shall refer to U.S. Dollars. Except as otherwise
herein specified, for purposes of calculating compliance with the terms of this
Agreement and the other Loan Documents (including for purposes of calculating
compliance with the covenants), each obligation or calculation shall be
converted to its Dollar Equivalent.
ARTICLE II
THE FACILITY
2.1 The Facilities.
2.1.1 Description of the Tranche A Revolving Facility. The Tranche A
Lenders grant to the Borrower a revolving credit facility (the "Tranche A
Revolving Facility") pursuant to which, and upon the terms and subject to the
conditions herein set out and provided that no Default or Unmatured Default has
occurred and is continuing:
(i) each Tranche A Lender severally agrees to make Tranche A
Committed Revolving Loans in U.S. Dollars to the Borrower in accordance
with Section 2.1.3; provided, that in no event may the sum of such Tranche
A Lender's share of the outstanding principal amount of Tranche A Revolving
Advances, plus such Tranche A Lender's Percentage of the Dollar Equivalent
of the Stated Amount of outstanding Letters of Credit plus such Tranche A
Lender's Percentage of the Dollar Equivalent of the reimbursement
obligations to the Issuers of Letters of Credit with respect to the amounts
paid by such Issuers pursuant to Letters of Credit which reimbursement
obligations have not been repaid by the Borrower and have not been deemed
to be automatic Floating Rate Advances pursuant to Section 2.2.3 exceed
such Tranche A Commitment;
(ii) the Issuers severally agree to issue Letters of Credit and
the Tranche A Lenders agree with the Issuers to acquire participations in
the Letters of Credit in accordance with Section 2.2;
(iii) each Tranche A Lender may, in its sole discretion, make bids
to make Competitive Bid Loans in U.S. Dollars to the Borrower in accordance
with Section 2.3; and
(iv) in no event may the sum of the aggregate principal amount of
all outstanding Tranche A Revolving Advances plus all Competitive Bid
Advances plus the Dollar Equivalent of the Stated Amount of outstanding
Letters of Credit plus the Dollar Equivalent of the reimbursement
obligations to the Issuers of Letters of Credit with respect to the amounts
paid by such Issuers pursuant to Letters of Credit which reimbursement
obligations have not been repaid by the Borrower and have not been deemed
to be automatic Floating Rate Advances pursuant to Section 2.2.3 exceed the
Tranche A Active Aggregate Revolving Commitment.
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2.1.2 Availability of Tranche A Revolving Facility. Subject to the terms
of this Agreement, the Tranche A Revolving Facility is available to the Borrower
from the date of this Agreement to the Tranche A Revolving Facility Termination
Date, and the Borrower may borrow, repay and reborrow, or obtain Letters of
Credit under the Tranche A Revolving Facility at any time prior to the Tranche A
Revolving Facility Termination Date.
2.1.3 Tranche A Committed Advances. Each Tranche A Committed Advance
hereunder shall consist of borrowings made from the several Tranche A Lenders
ratably in proportion to their respective Percentage. The Tranche A Committed
Advances shall be evidenced by the Tranche A Committed Notes.
2.1.4 Description of Tranche B Facility. The Tranche B Lenders grant to
the Borrower a term credit facility (the "Tranche B Facility") pursuant to
which, and upon the terms and subject to the conditions herein set out:
(i) each Tranche B Lender severally agrees to make Tranche B
Loans in U.S. Dollars to the Borrower in accordance with Section 2.1.6; and
(ii) in no event may the sum of the aggregate principal amount of
all outstanding Tranche B Advances to the Borrower exceed the Tranche B
Commitment.
2.1.5 Availability of Tranche B Facility. Subject to the terms of this
Agreement, the Tranche B Facility is available for borrowing from the date of
this Agreement until the end of the 10th Business Day following the closing of
the Destec Transaction at which time any unutilized portion of the Tranche B
Commitment shall be deemed permanently cancelled. Amounts repaid on the Tranche
B Facility may not be reborrowed.
2.1.6 Tranche B Committed Advances. Each Tranche B Committed Advance
hereunder shall consist of borrowings made from the several Tranche B Lenders
ratably in proportion to their respective Tranche B Lender's Percentage. The
Tranche B Committed Advances shall be evidenced by the Tranche B Notes.
2.2 Letters of Credit.
2.2.1 Issuance of Letters of Credit. Subject to the terms and conditions
of this Agreement, and provided that no Default or Unmatured Default has
occurred and is continuing and the Borrower has provided the Agent and the
applicable Issuer with an Issuance Request, the applicable Issuer will issue one
or more Letters of Credit from time to time prior to the Tranche A Revolving
Facility Termination Date for the account of the Borrower; it being understood
and agreed that subject to the other terms of this Agreement the Borrower may
obtain for its account Letters of Credit on behalf of any of its Subsidiaries.
Each Letter of Credit shall be issued for the purpose of securing the trade
payables or other obligations of the Borrower or a Subsidiary or Affiliate of
the Borrower and shall be in such form as shall be reasonably acceptable to the
Agent and the applicable Issuer and all legal
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and regulatory matters in respect of each Letter of Credit to be issued by an
Issuer shall be reasonably satisfactory to such Issuer and its counsel. Each
Issuer will immediately notify the Agent of the issuance of each Letter of
Credit by such Issuer and immediately provide a copy of each Letter of Credit
issued by such Issuer to the Agent; provided that the failure to so notify the
Agent or so provide a copy to the Agent shall not limit or impair the Borrower's
Obligations hereunder, including, without limitation, its Obligations to
reimburse drawings under or in respect of each such Letter of Credit. Subject to
the other terms and conditions hereof, upon the request of the Borrower, if
First Chicago is the designated Issuer, First Chicago shall issue the applicable
Letter of Credit and if any other Tranche A Lender is the designated Issuer,
such Lender may, but shall not be obligated to, issue such Letter of Credit.
Subject to the terms of this Agreement, the amount, expiry date, date of
issuance, the currency (which may be U.S. Dollars, Canadian Dollars or Pounds
Sterling) and the beneficiary of each Letter of Credit shall be as specified by
the Borrower in a written Issuance Request delivered to the Agent and the
applicable Issuer (by messenger, mail or electronic transmission, including
facsimile transmission) not less than two (2) Business Days prior to the
requested date of issuance. Within ten (10) days after the beginning of each
month, the Agent shall give each Tranche A Lender written notice of all Letters
of Credit issued during the preceding month. The Letters of Credit shall not
have an expiration date later than 5:00 p.m. (Chicago time) on the Tranche A
Revolving Facility Termination Date.
2.2.2 Aggregate Amount Available under Letters of Credit. The aggregate
Dollar Equivalent of the Stated Amount of all Letters of Credit outstanding at
any one time shall not exceed $300,000,000, or, if less, the Tranche A Active
Aggregate Revolving Commitment (the "Letter of Credit Sublimit") and after
issuance of a Letter of Credit, the Dollar Equivalent of the Stated Amount of
all Letters of Credit plus the Dollar Equivalent of the reimbursement
obligations to the Issuers of Letters of Credit with respect to the amounts paid
by such Issuers pursuant to Letters of Credit which reimbursement obligations
have not been repaid by the Borrower and have not been deemed to be automatic
Floating Rate Advances pursuant to Section 2.2.3, plus the aggregate principal
amount of outstanding Tranche A Revolving Advances, plus all Competitive Bid
Advances shall not exceed the Tranche A Active Aggregate Revolving Commitment.
2.2.3 Reimbursement of Issuer; Automatic Advances. The Borrower hereby
irrevocably agrees that it shall provide the Agent with immediately available
and freely transferable funds in an amount equal to the amount (and in the
currency) to be paid by an Issuer upon any drawing under a Letter of Credit by
noon (Chicago time) on the date on which such drawing is to be paid by the
applicable Issuer. Each Issuer shall promptly notify the Borrower and the Agent
on the Business Day (which may be telephonic, promptly confirmed by telecopy)
that a draw request or demand has been made under a Letter of Credit. Any funds
received by the Agent from the Borrower pursuant to the immediately preceding
sentence with respect to a draw or demand under a Letter of Credit shall be
promptly paid by the Agent to the Issuer of such Letter of Credit to reimburse
the Issuer of such Letter of Credit for the amount (and in the currency)
actually disbursed by the Issuer of such Letter of Credit pursuant to such draft
or demand. If the Borrower does not request or is not eligible for a Tranche A
Advance hereunder and does not otherwise provide the Agent with funds, in the
amount (and in the currency) and on the date necessary to settle the
obligations of the Issuer under any draft
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drawn or demand made under a Letter of Credit (whether at or prior to the
expiration of such Letter of Credit) issued for its account, the Borrower will
be deemed to have given a Committed Borrowing Notice to the Agent requesting
that the Tranche A Lenders make a Tranche A Revolving Advance which is a
Floating Rate Advance on the date on which such drawing is honored in an amount
equal to the Dollar Equivalent of such drawing and, to the extent permitted by
law, the Tranche A Lenders shall make, and the Borrower shall accept, a Floating
Rate Advance (consisting of Tranche A Committed Revolving Loans made by the
Tranche A Lenders pro rata in accordance with their respective Tranche A
Lenders' Percentages) in the Dollar Equivalent of the amount actually disbursed
by the Issuer of such Letter of Credit pursuant to such draft or demand;
provided, that to the extent such Floating Rate Advance cannot be made or
accepted and the Borrower does not provide the Agent with immediately available
and freely transferable funds in such amount and in the relevant currency, the
reimbursement obligation shall bear interest (calculated for the actual number
of days elapsed on the basis of a year consisting of 365, or when appropriate
366, days) until paid at a rate per annum equal to the rate that would have been
in effect if a Floating Rate Advance had been made, with respect hereto. Such
Floating Rate Advance shall be made as of the date of such settlement of such
Letter of Credit. The proceeds of such Floating Rate Advance shall be paid by
the Tranche A Lenders to the Agent for payment to the Issuer of such Letter of
Credit (and the Agent shall promptly pay such proceeds to such Issuer) to
reimburse the Issuer of such Letter of Credit for each Tranche A Lender's
Percentage of the Dollar Equivalent of the amount actually disbursed by the
Issuer of such Letter of Credit pursuant to such draft or demand. In the event
that the Issuer of a Letter of Credit makes the Draw Amount available to the
beneficiary of such Letter of Credit and the Dollar Equivalent of such amount
made available by the Tranche A Lenders to the Agent for payment to the Issuer
is not sufficient to enable the Issuer to obtain Alternative Currency equal to
the entire Draw Amount, the Borrower shall pay the Agent on demand for the
benefit of such Issuer an amount equal to the Dollar Equivalent required to
enable the Issuer to obtain Alternative Currency equal to the Draw Amount. In
the event that the Tranche A Lenders shall have reimbursed the Issuer pursuant
to Section 2.2.4 for any funds disbursed by such Issuer pursuant to any draft
drawn or demand made under a Letter of Credit issued in an Alternative Currency,
at the option of such Issuer, and notwithstanding the first sentence of this
Section 2.2.3, the Borrower shall be obligated to reimburse the Issuer in U.S.
Dollars, rather than in the Alternative Currency.
2.2.4 Lender Participation. Immediately upon issuance by an Issuer of any
Letter of Credit in accordance with the procedures set forth in Section 2.2.1,
and on the Closing Date in the case of the Letters of Credit referred to in
clause (ii) of the definition of Letter of Credit, each Tranche A Lender shall
be deemed to have irrevocably and unconditionally purchased and received from
that Issuer, without recourse or warranty, an undivided interest and
participation to the extent of such Tranche A Lender's Percentage in such Letter
of Credit (including, without limitation, all obligations of the Borrower with
respect thereto other than amounts owing to the Issuer under Section 2.2.6) and
any security therefor held in the Letter of Credit Collateral Account or any
Subsidiary Guaranty pertaining thereto. Accordingly, each Tranche A Lender
hereby irrevocably agrees to reimburse the Issuer of each Letter of Credit for
any funds disbursed by such Issuer pursuant to any draft drawn or demand made
under such Letter of Credit, in an amount and in U. S. Dollars equal to the
product of such Tranche A Lender's Percentage of the Dollar Equivalent of the
amount disbursed by such Issuer
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with respect to such Letter of Credit. In the event that the Issuer of a Letter
of Credit makes available to the beneficiary of such Letter of Credit the amount
necessary to settle the obligations of such Issuer under any draft or demand
made under such Letter of Credit (a "Draw Amount") and any Tranche A Lender
fails to make available to the Agent for payment to such Issuer such Tranche A
Lender's Percentage of the Dollar Equivalent of such Draw Amount on the date
(the "Draw Date"), such Tranche A Lender shall pay to the Agent for the benefit
of such Issuer on demand an amount, in addition to such Tranche A Lender's
Percentage of the Dollar Equivalent of the Draw Amount, equal to interest on
such Tranche A Lender's Percentage of the Dollar Equivalent of the Draw Amount
for the number of days in the Out of Funds Period at a rate per annum
(calculated for the actual number of days elapsed on the basis of a year
consisting of 365, or when appropriate 366, days) equal to the Federal Funds
Effective Rate; provided, however, that from and after the fifth (5th) day in
any Out of Funds Period the applicable rate of interest shall be the Floating
Rate rather than the Federal Funds Effective Rate. The obligations of a Tranche
A Lender to make payments to and for the account of an Issuer with respect to a
Letter of Credit shall be irrevocable, not subject to any qualification or
exception whatsoever and shall be made in accordance with the terms of this
Agreement under all circumstances and notwithstanding: (i) any lack of validity
or enforceability of this Agreement or any of the other Loan Documents; (ii) the
existence of any claim, setoff, defense or other right which any Obligor may
have at any time against a beneficiary named in any Letter of Credit or any
transferee of any Letter of Credit (or any Person for whom any such transferee
may be acting), the Agent, the Issuer of any Letter of Credit, any Tranche A
Lender, or any other Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including, without limitation, any underlying transactions between
any Obligor or any Affiliate of any Obligor and the beneficiary named in any
Letter of Credit); (iii) any draft, certificate or any other document presented
under any Letter of Credit being forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents; (v) any failure by
the Agent or any Issuer to make any reports required pursuant to this Agreement
or any of the other Loan Documents; (vi) any inability (whether financial or
otherwise) or unwillingness (for any reason) of any Obligor to perform its
Obligations; (vii) the occurrence of any Default or Unmatured Default; or (viii)
the unavailability of Canadian Dollars or Pounds Sterling.
2.2.5 Letter of Credit Fees. The Borrower hereby agrees to pay to the
Agent for the pro rata benefit of the Tranche A Lenders, as determined by each
Tranche A Lender's Percentage, a Letter of Credit participation fee (i) in the
case of Standby Letters of Credit equal to the Applicable Margin per annum
(calculated for the actual number of days elapsed on the basis of a year
consisting of 365, or when appropriate 366, days) on the daily average of the
Dollar Equivalent of the Stated Amount of each Standby Letter of Credit issued;
and (ii) in the case of Documentary Letters of Credit equal to the Applicable
Documentary Margin per annum (calculated for the actual number of days elapsed
on the basis of a year consisting of 365, or when appropriate 366, days) on the
daily average of the Dollar Equivalent of the Stated Amount of each Documentary
Letter of Credit issued; provided, however, that for purposes of Section 2.2.5,
the Dollar Equivalent of each Letter of Credit in an Alternative Currency will
be deemed to be, on any day (i) during the month the Letter of Credit was
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issued or renewed, the Dollar Equivalent on the date of issuance or renewal of
such Letter of Credit or (ii) in any month subsequent to the month of issuance
or renewal, the Dollar Equivalent on the first Business Day of such subsequent
month, in each case from and including the date issued to and including the date
of its expiration or earlier termination. The Borrower shall pay to the Agent
the Letter of Credit participation fee due with respect to each outstanding
Letter of Credit on each Payment Date in respect of each Letter of Credit
outstanding during the calendar quarter during which such Payment Date occurs,
commencing on the first Payment Date to occur after such Letter of Credit is
issued, and on the Tranche A Revolving Facility Termination Date. The Agent
shall promptly remit to each Tranche A Lender its Percentage of each Letter of
Credit participation fee after its receipt by the Agent.
2.2.6 Issuer Fees. The Borrower hereby agrees to pay to each Issuer
solely for its benefit and in addition to such Issuer's Percentage of the Letter
of Credit participation fees due under Section 2.2.5, (i) in the case of Standby
Letters of Credit a Letter of Credit fronting fee of 10 basis points per annum
(calculated for the actual number of days elapsed on the basis of a year
consisting of 365, or when appropriate 366, days) on the daily average Dollar
Equivalent of the Stated Amount of each Standby Letter of Credit issued by such
Issuer from and including the date issued to and including the date of its
expiration or earlier termination, (ii) in the case of Documentary Letters of
Credit a Letter of Credit fronting fee of 7.5 basis points per annum (calculated
for the actual number of days elapsed on the basis of a year consisting of 365,
or when appropriate 366, days) on the daily average Dollar Equivalent of the
Stated Amount of each Documentary Letter of Credit issued by such Issuer from
and including the date issued to and including the date of its expiration or
earlier termination, and (iii) a fee for each issuance, amendment or renewal of,
and for each negotiation of a draft drawn under, a Letter of Credit issued by
such Issuer in the amount customarily charged by such Issuer from time to time
or such other amount that may be agreed to in writing from time to time by such
Issuer and the Borrower; provided, however, that for purposes of Section 2.2.6,
the Dollar Equivalent of each Letter of Credit in an Alternative Currency will
be deemed to be, on any day (i) during the month the Letter of Credit was issued
or renewed, the Dollar Equivalent on the date of issuance or renewal of such
Letter of Credit or (ii) in any month subsequent to the month of issuance or
renewal, the Dollar Equivalent on the first Business Day of such subsequent
month, in each case from and including the date issued to and including the date
of its expiration or earlier termination. The Borrower shall pay to the Agent
the Letter of Credit fronting fee due with respect to each outstanding Letter of
Credit on each Payment Date in respect of each Letter of Credit outstanding
during the calendar quarter during which such Payment Date occurs, commencing on
the first Payment Date to occur after such Letter of Credit is issued, and on
the Tranche A Revolving Facility Termination Date. The Agent shall promptly
remit to each Issuer any Letter of Credit fronting fee due to such Issuer after
the Agent's receipt of such fee.
2.2.7 Verification. Neither the Agent, any Issuer nor any Lender shall
have any duty to verify or make any inquiry with regard to the truth or accuracy
of any statement made in any draft or document presented to the Agent or any
Issuer under any Letter of Credit, and neither the Agent, any Issuer nor any
Lender shall have any duty to make any inquiry into the genuineness of any
signature on any such draft or document or into the due authorization of any
party to execute or
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present such draft or document or to receive payment under any Letter of Credit;
unless, and to the extent, that the Borrower has provided the Agent with
sufficient funds to reimburse the applicable Issuer for any demand or draw under
a Letter of Credit, and thereafter a court of competent jurisdiction determines
that the Agent or such Issuer was grossly negligent (and not simply negligent or
contributorily negligent) or guilty of willful misconduct for making such
payment in which case the maximum liability of the Agent or such Issuer, as the
case may be, shall not exceed the direct damages resulting therefrom. In no
event, with respect to any Letter of Credit, shall the Agent, any Lender or any
Issuer be liable for punitive or consequential damages.
2.2.8 Irrevocable Obligations and Commercial Practices. None of the
Agent, any Issuer nor any Lender shall be responsible in connection with any
Letter of Credit issued hereunder for, and the obligation of the Borrower set
forth in Section 2.2.3 to provide the Agent with funds to reimburse the Issuer
of each Letter of Credit issued for the account of the Borrower for amounts
disbursed by such Issuer pursuant to drafts or demands made under any Letter of
Credit issued shall be irrevocable, not subject to any qualification or
exception whatsoever and shall be made in accordance with the terms of this
Agreement under all circumstances and notwithstanding, (i) payment made pursuant
to any Letter of Credit despite the failure of any draft to bear any reference
or adequate reference to the Letter of Credit, or the failure of any Person to
note the amount of any drawing on the Letter of Credit; (ii) errors, omissions,
interruptions, or delays in transmission or delivery of any messages, in person,
by mail, cable, telegraph, wireless or otherwise whether or not they may be in
cipher; (iii) any use which may be made of any Letter of Credit; (iv) any acts
or omissions of any beneficiary under any Letter of Credit; (v) the form,
validity, sufficiency, or genuineness of documents, or any endorsements(s)
thereon, even if such documents should in fact prove to be in any and all
respects invalid, insufficient, fraudulent, or forged; (vi) the sufficiency or
genuineness of any messages or instructions to issue a Letter of Credit, or any
of the terms thereof, howsoever delivered or transmitted by any Obligor to the
Agent or any Issuer; or (vii) the existence of any claim, setoff, defense or
other right which any Obligor may have at any time against a beneficiary named
in any Letter of Credit or any transferee of any Letter of Credit (or any Person
for whom any such transferee may be acting), the Agent, the Issuer of any Letter
of Credit, any Lender, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including, without limitation, any underlying
transactions between any Obligor or any Affiliate of any Obligor and the
beneficiary named in any Letter of Credit) other than a defense based on the
gross negligence or willful misconduct of such Issuer as determined by a court
of competent jurisdiction. The happening of any one or more of the contingencies
referred to in the preceding sentence shall not affect, impair, or prevent the
vesting of any of the Agent's, any Issuer's or any Lender's rights or powers
under this Agreement or any other Loan Documents. The Agent, any Issuer or any
Lender may receive, accept, or pay as complying with the terms of any Letter of
Credit, any drafts or other documents, otherwise in order, which may be signed
by, or issued to, the administrator or executor of, or the trustee in bankruptcy
of, or the receiver for any of the property of, the party in whose name such
Letter of Credit provides that any drafts or any other documents should be drawn
or issued. In furtherance and extension but not in limitation of the foregoing
provisions, it is hereby further agreed that any action, inaction, or omission
taken or suffered by the Agent, any Issuer or any Lender under or in connection
with any
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Letter of Credit or any drafts or documents referenced therein shall be binding
upon the Obligors, the Issuers and the Lenders and shall not place the Agent,
any Issuer or any Lender under any resulting liability to any Obligor or any
Lender. Notwithstanding the foregoing, to the extent that an Obligor has
reimbursed the Agent or the applicable Issuer for any draw or demand under a
Letter of Credit issued for its account and thereafter a court of competent
jurisdiction determines that the Agent or such Issuer did not act in good faith
and in substantial conformity with such Person's customary practices and such
domestic laws and customs or regulations as such Person deemed applicable
thereto or was guilty of gross negligence (and not simply negligence or
contributory negligence) or willful misconduct in honoring such demand or draw,
the Agent or such Issuer, as the case may be, shall be liable to such Obligor
for such action, gross negligence or willful misconduct provided that in any
event the maximum liability of the Agent or such Issuer, as the case may be,
shall not exceed the direct damages resulting therefrom. In no event, with
respect to any Letter of Credit, shall the Agent, any Issuer or any Lender be
liable for punitive or consequential damages.
2.2.9 [Intentionally Omitted].
2.2.10 Letter of Credit Collateral Account. The Borrower hereby agrees
that it will, until the final expiration date of any Letter of Credit and
thereafter as long as any amount is payable to the Tranche A Lenders in respect
of any Letter of Credit, maintain a special collateral account (the "Letter of
Credit Collateral Account") with the Agent, in the name of the Borrower but
under the sole dominion and control of the Agent, for the benefit of the Tranche
A Lenders and in which the Borrower shall have no interest other than as set
forth in Section 8.1. The Agent will invest any funds in U.S. Dollars on deposit
from time to time in the Letter of Credit Collateral Account in short term
investments similar to those described in Section 6.2.7(i), (ii), (iii), (ix),
(x), (xi) and (xii) having a maturity not exceeding 30 days. The Agent shall
have the authority to create additional accounts for deposit of Canadian Dollars
and Pounds Sterling in short term investments similar to those described in
Section 6.2.7(i), (ii), (iii), (ix), (x), (xi) and (xii) having a maturity not
exceeding 30 days. Nothing in this Section 2.2.10 shall (i) obligate the
Borrower to deposit any funds in the Letter of Credit Collateral Account, (ii)
obligate the Agent to require the Borrower to deposit any funds in the Letter of
Credit Collateral Account or (iii) limit the right of the Agent to release any
funds held in the Letter of Credit Collateral Account, other than as required by
Section 8.1. The Borrower hereby grants to the Agent for the benefit of the
Tranche A Lenders a security interest in the Letter of Credit Collateral Account
and any funds or investments in such account.
2.2.11 Currency Fluctuation. If as a result of fluctuations in currency
exchange rates (i) the aggregate Dollar Equivalent of the Stated Amount plus the
Dollar Equivalent of the reimbursement obligations to the Issuers of Letters of
Credit which reimbursement obligations have not been repaid by the Borrower and
have not been deemed to be automatic Floating Rate Advances pursuant to Section
2.2.3 exceeds the Letter of Credit Sublimit by more than $5,000,000 at any time,
the Borrower, at its option, either shall within 5 Business Days prepay
outstanding Tranche A Advances in an amount equal to such excess or shall
deliver to the Agent for deposit into the Letter of Credit Collateral Account,
an amount equal to such excess (or a combination thereof) or (ii) the aggregate
of all outstanding Tranche A Advances plus the Dollar Equivalent of the
aggregate Stated Amount
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plus the Dollar Equivalent of the reimbursement obligations to the Issuers of
Letters of Credit which reimbursement obligations have not been repaid by the
Borrower and have not been deemed to be automatic Floating Rate Advances
pursuant to Section 2.2.3 exceeds the amount of the Tranche A Active Aggregate
Revolving Commitment, the Borrower shall within 5 Business Days prepay
outstanding Advances in an amount equal to such excess or, if such excess is
greater than the amount of all outstanding Tranche A Advances, shall within 5
Business Days prepay all outstanding Tranche A Advances and deliver to the Agent
for deposit into the Letter of Credit Collateral Account, an amount equal to the
remaining excess after giving effect to such prepayment.
2.3 Competitive Bid Advances.
2.3.1 Competitive Bid Option. In addition to Committed Advances pursuant
to Section 2.1, but subject to the terms and conditions of this Agreement
(including, without limitation, the limitation set forth in Section 2.1.1(iv) as
to the maximum aggregate principal amount of all outstanding Tranche A Revolving
Advances hereunder), the Borrower may, as set forth in this Section 2.3, request
the Tranche A Lenders, prior to the Tranche A Revolving Facility Termination
Date, to make offers to make Competitive Bid Advances to the Borrower. Each
Tranche A Lender may, but shall have no obligation to, make such offers and the
Borrower may, but shall have no obligation to, accept any such offers in the
manner set forth in this Section 2.3. Competitive Bid Advances shall be
evidenced by the Competitive Bid Notes.
2.3.2 Competitive Bid Quote Request. When the Borrower wishes to request
offers to make Competitive Bid Loans under Section 2.3, it shall transmit to the
Agent by telex or telecopy a Competitive Bid Quote Request so as to be received
no later than (i) 10:00 a.m. (Chicago time) at least four Business Days prior to
the Borrowing Date proposed therein, in the case of a Eurodollar Auction or (ii)
9:00 a.m. (Chicago time) at least one Business Day prior to the Borrowing Date
proposed therein, in the case of an Absolute Rate Auction specifying:
(a) the proposed Borrowing Date, which shall be a Business
Day, for the proposed Competitive Bid Advance;
(b) the aggregate principal amount of such Competitive Bid
Advance;
(c) whether the Competitive Bid Quotes requested are to set
forth a Competitive Bid Margin or an Absolute Rate, or
both;
(d) the Interest Period applicable thereto (which may not end after
the Tranche A Revolving Facility Termination Date); and
(e) whether the Competitive Bid Advance is to be prepayable.
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The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period and for a Eurodollar Auction and an Absolute Rate Auction in a
single Competitive Bid Quote Request. No Competitive Bid Quote Request shall be
given within 3 Business Days (or upon reasonable prior notice to the Tranche A
Lenders, such other number of days as the Borrower and the Agent may agree) of
any other Competitive Bid Quote Request. Each Competitive Bid Quote Request
shall be in a minimum amount of $5,000,000 (and in integral multiples of
$1,000,000 in excess thereof). A Competitive Bid Quote Request that does not
conform substantially to the format of Exhibit "F" hereto shall be rejected, and
the Agent shall promptly notify the Borrower of such rejection by telex or
telecopy.
2.3.3 Invitation for Competitive Bid Quotes. Promptly and in any event
before noon (Chicago time) on the same Business Day of receipt of a Competitive
Bid Quote Request that is not rejected pursuant to Section 2.3.2, the Agent
shall send to each of the Tranche A Lenders by telex or telecopy an Invitation
for Competitive Bid Quotes which shall constitute an invitation by the Borrower
to each Tranche A Lender to submit Competitive Bid Quotes offering to make the
Competitive Bid Loans to which such Competitive Bid Quote Request relates in
accordance with Section 2.3.4.
2.3.4 Submission and Contents of Competitive Bid Quotes. (i) Each Tranche
A Lender may, in its sole discretion, submit a Competitive Bid Quote containing
an offer or offers to make Competitive Bid Loans in response to any Invitation
for Competitive Bid Quotes. Each Competitive Bid Quote must comply with the
requirements of this Section 2.3.4 and must be submitted to the Agent by telex
or telecopy at its offices specified in or pursuant to Article XIII not later
than (a) (I) 12:45 p.m. (Chicago time) in the case of First Chicago and (II)
1:00 p.m. (Chicago time) in the case of each other Tranche A Lender, at least
three Business Days prior to the proposed Borrowing Date, in the case of a
Eurodollar Auction or (b) (I) 8:45 a.m. (Chicago time) in the case of First
Chicago and (II) 9:00 a.m. (Chicago time) in the case of each other Tranche A
Lender on the proposed Borrowing Date, in the case of an Absolute Rate Auction
(or, in either case upon reasonable prior notice to the Tranche A Lenders, such
other time and date as the Borrower and the Agent may agree, provided that First
Chicago shall always be required to submit its Competitive Bid Quotes not less
than fifteen minutes prior to the other Tranche A Lenders). Subject to Articles
IV and VIII, any Competitive Bid Quote so made shall be irrevocable except with
the written consent of the Agent given on the instructions of the Borrower.
(ii) Each Competitive Bid Quote shall in any case specify:
(a) the proposed Borrowing Date, which shall be the same as that
set forth in the applicable Invitation for Competitive Bid Quotes;
(b) the principal amount of the Competitive Bid Loan for which
each such offer is being made, which principal amount (1) may be greater
than, less than or equal to the Tranche A Commitment of the quoting Tranche
A Lender, (2) must be at least $5,000,000
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and an integral multiple of $1,000,000, and (3) may not exceed the
principal amount of Competitive Bid Loans for which offers were requested;
(c) in the case of a Eurodollar Auction, the Competitive Bid
Margin offered for each such Competitive Bid Loan;
(d) the minimum or maximum amount, if any, of any Competitive Bid
Loan which may be accepted by the Borrower and/or the limit, if any, as to
the aggregate principal amount of Competitive Bid Loans from such Tranche A
Lender which may be accepted by the Borrower;
(e) in the case of an Absolute Rate Auction, the Absolute Rate
offered for each such Competitive Bid Loan;
(f) the applicable Interest Period; and
(g) the identity of the quoting Tranche A Lender.
(iii) The Agent shall reject any Competitive Bid Quote that:
(a) is not substantially in the form of Exhibit "H" hereto or does
not specify all of the information required by Section 2.3.4(ii);
(b) contains qualifying, conditional or similar language, other
than any such language contained in Exhibit "H" hereto;
(c) proposes terms other than or in addition to those set forth in
the applicable Invitation for Competitive Bid Quotes; or
(d) arrives after the time set forth in Section 2.3.4(i).
If any Competitive Bid Quote shall be rejected pursuant to this Section
2.3.4(iii), then the Agent shall notify the relevant Tranche A Lender of such
rejection as soon as practical.
2.3.5 Notice to the Borrower. The Agent shall promptly notify the
Borrower of the terms (i) of any Competitive Bid Quote submitted by a Tranche A
Lender that is in accordance with Section 2.3.4 and (ii) of any Competitive Bid
Quote that is in accordance with Section 2.3.4 and amends, modifies or is
otherwise inconsistent with a previous Competitive Bid Quote submitted by such
Tranche A Lender with respect to the same Competitive Bid Quote Request. Any
such subsequent Competitive Bid Quote shall be disregarded by the Agent unless
such subsequent Competitive Bid Quote specifically states that it is submitted
solely to correct a manifest error in such former Competitive Bid Quote. The
Agent's notice to the Borrower shall specify the aggregate principal amount of
Competitive Bid Loans for which offers have been received for each Interest
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Period specified in the related Competitive Bid Quote Request and the respective
principal amounts and Competitive Bid Margins or Absolute Rates, as the case may
be, so offered.
2.3.6 Acceptance and Notice by the Borrower. Subject to the receipt of
the notice from the Agent referred to in Section 2.3.5, not later than (i) 2:00
p.m. (Chicago time) at least three Business Days prior to the proposed Borrowing
Date, in the case of a Eurodollar Auction or (ii) 10:00 a.m. (Chicago time) on
the proposed Borrowing Date, in the case of an Absolute Rate Auction, the
Borrower shall notify the Agent of its acceptance or rejection of the offers so
notified to it pursuant to Section 2.3.5; provided, however, that the failure by
the Borrower to give such notice to the Agent shall be deemed to be a rejection
of all such offers. In the case of acceptance, such notice (a "Competitive Bid
Borrowing Notice") shall specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Borrower may accept or reject any
Competitive Bid Quote in whole or in part (subject to the terms of Section
2.3.4(ii)(d)); provided that:
(a) the aggregate principal amount of each Competitive Bid Advance
may not exceed the applicable amount set forth in the related Competitive
Bid Quote Request;
(b) acceptance of offers for any Competitive Bid Advance with
otherwise identical terms may only be made on the basis of ascending
Competitive Bid Margins or Absolute Rates, as the case may be;
(c) the Borrower may not accept any offer of the type described in
Section 2.3.4(iii) or that otherwise fails to comply with the requirements
of this Agreement for the purpose of obtaining a Competitive Bid Loan under
this Agreement; and
(d) after giving effect to such Competitive Bid Advance, the sum
of the Dollar Equivalent of the Stated Amount of all Letters of Credit,
plus the Dollar Equivalent of reimbursement obligations to the Issuers of
Letters of Credit with respect to the amounts paid by such Issuers pursuant
to Letters of Credit which reimbursement obligations have not been repaid
by the Borrower and have not been deemed to be automatic Floating Rate
Advances pursuant to Section 2.2.3, plus the aggregate principal amount of
all outstanding Tranche A Revolving Advances plus all Competitive Bid
Advances shall not exceed the Tranche A Active Aggregate Revolving
Commitment.
2.3.7 Allocation by the Agent. If offers are made by two or more Tranche
A Lenders with the same Competitive Bid Margins or Absolute Rates, as the case
may be, for a greater aggregate principal amount than the amount in respect of
which offers are permitted to be accepted for the related Interest Period, the
principal amount of Competitive Bid Loans in respect of which such offers are
accepted shall be allocated by the Agent among such Tranche A Lenders as nearly
as possible (in such multiples, not greater than $1,000,000, as the Agent may
deem appropriate) in proportion to the aggregate principal amount of such
offers; provided, however, that no Tranche A Lender shall be allocated a portion
of any Competitive Bid Advance which is less than the minimum amount which such
Tranche A Lender has indicated that it is willing to accept. Allocations by the
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Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence
of manifest error. The Agent shall promptly, but in any event on the same
Business Day in the case of Eurodollar Bid Rate Advances, and by 11:00 a.m.
(Chicago time) in the case of Absolute Rate Advances, notify each Tranche A
Lender of its receipt of a Competitive Bid Borrowing Notice and the aggregate
principal amount of such Competitive Bid Advance allocated to each participating
Tranche A Lender.
2.3.8 Administration Fees. The Borrower hereby agrees to pay to the Agent
for its sole account administration fees for Competitive Bid Quote Requests in
such amounts as heretofore agreed upon by the Borrower in writing.
2.4 Required Payments; Termination. The aggregate outstanding Tranche B
Advances shall be payable in full on the Tranche B Facility Termination Date.
All Competitive Bid Loans shall be paid in full by the Borrower on the last day
of the applicable Interest Period. In the event the sum of the aggregate
outstanding principal amount of the Tranche A Revolving Advances plus the
Competitive Bid Advances plus the aggregate Dollar Equivalent of the Stated
Amount of all Letters of Credit then outstanding plus the Dollar Equivalent of
all reimbursement obligations to the Issuers of Letters of Credit with respect
to the amounts paid by such Issuers pursuant to Letters of Credit which
reimbursement obligations have not been repaid by the Borrower and have not been
deemed to be automatic Floating Rate Advances pursuant to Section 2.2.3 exceeds
the Tranche A Active Aggregate Revolving Commitment (the amount of such excess
herein the "Excess Exposure"), the Borrower shall (i) first reclassify Tranche A
Inactive Aggregate Revolving Commitment as Tranche A Active Aggregate Revolving
Commitment pursuant to Section 2.6.1 up to the amount of the Excess Exposure,
(ii) second if any Excess Exposure remains after such reclassification, make a
mandatory prepayment of the outstanding principal amount of the Tranche A
Revolving Advances and the Competitive Bid Advances up to the amount of such
remaining Excess Exposure, and (iii) third if any Excess Exposure remains after
payment of the Tranche A Revolving Advances and the Competitive Bid Advances in
full, the Borrower will deliver to the Agent, at its address specified pursuant
to Article XIII, for deposit into the Letter of Credit Collateral Account, an
amount (the "Collateral Shortfall Amount") equal to the lesser of (1) the sum of
the Dollar Equivalent of the aggregate maximum amount remaining available to be
drawn under the Letters of Credit (assuming compliance with all conditions for
drawing thereunder) issued and outstanding as of such time and (2) the remaining
Excess Exposure; provided, that if no Default shall have occurred and be
continuing, the Borrower may, to the extent applicable, eliminate the Excess
Exposure by any combination of the foregoing (i) and (ii) (but until (i) and
(ii) have been accomplished not (iii)) as the Borrower may select. Any
outstanding Tranche A Committed Advances and all other unpaid Obligations in
respect of Letters of Credit and Competitive Bid Advances shall be paid in full
by the Borrower on the Tranche A Revolving Facility Termination Date.
2.5 Types of Committed Advances. The Committed Advances may be Floating
Rate Advances, or Eurodollar Advances, or a combination thereof, selected by the
Borrower in accordance with Sections 2.9 and 2.10.
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2.6 Facility Fees, Commitment Fees and Designation of the Tranche A
Active Aggregate Revolving Commitment.
2.6.1 Designation of Tranche A Active and Tranche A Inactive Aggregate
Revolving Commitment. As of the date of this Agreement, the Tranche A Active
Aggregate Revolving Commitment shall be $450,000,000 and the Tranche A Inactive
Aggregate Revolving Commitment shall be $100,000,000. The Borrower may at any
time and from time to time designate that the Tranche A Inactive Aggregate
Revolving Commitment be reclassified as Tranche A Active Aggregate Revolving
Commitment, in whole, or in a minimum amount of $15,000,000 and in integral
multiples of $5,000,000, upon one Business Day's prior written notice to the
Agent. The Agent shall promptly notify each Tranche A Lender of its receipt of
notice from the Borrower electing to so reclassify all or part of the Tranche A
Inactive Aggregate Revolving Commitment.
2.6.2 Commitment Fees. The Borrower hereby agrees to pay to the Agent for
the account of each Tranche A Lender, ratably in the proportion that such
Tranche A Commitment bears to the Tranche A Aggregate Revolving Commitment, a
commitment fee equal to the sum of (i) the Applicable Commitment Fee on the
average daily amount of the Tranche A Inactive Aggregate Revolving Commitment
plus (ii) the Applicable Commitment Fee on the average daily unused amount of
the Tranche A Active Aggregate Revolving Commitment (it being understood that
the Dollar Equivalent of the Stated Amount of all outstanding Letters of Credit
is usage of the Tranche A Active Aggregate Revolving Commitment; provided,
however, that for purposes of Section 2.6.2, the Dollar Equivalent of each
Letter of Credit in an Alternative Currency will be deemed to be, on any day (i)
during the month the Letter of Credit was issued or renewed, the Dollar
Equivalent on the date of issuance or renewal of such Letter of Credit or (ii)
in any month subsequent to the month of issuance or renewal, the Dollar
Equivalent on the first Business Day of such subsequent month in each case from
and including the date issued to and including the date of its expiration or
earlier termination. For purposes of calculating the commitment fee referred to
in subpart (ii) above, outstanding Competitive Bid Loans shall not be deemed
usage of the Tranche A Active Aggregate Revolving Commitment. For purposes of
calculating the commitment fee referred to in subparts (i) and (ii) above, the
Tranche A Active Aggregate Revolving Commitment will be deemed increased, and
the Tranche A Inactive Aggregate Revolving Commitment will be deemed permanently
decreased on the first day of each calendar quarter by the aggregate amount of
all portions of the Tranche A Inactive Aggregate Revolving Commitment activated
during such quarter. Such commitment fees shall be payable quarterly in arrears
on the third Business Day after each Payment Date and on the Tranche A Revolving
Facility Termination Date.
2.6.3 Cancellation of Tranche A. The Borrower may at any time after the
date hereof cancel the Tranche A Aggregate Revolving Commitment, in whole, or in
a minimum aggregate amount of $15,000,000 (and in integral multiples of
$5,000,000) ratably among the Tranche A Lenders upon at least three Business
Days' prior written notice to the Agent, which notice shall specify the amount
of such reduction and whether and to what extent such reduction shall apply to
the Tranche A Active Aggregate Revolving Commitment or the Tranche A Inactive
Aggregate Revolving Commitment; provided, however, no such notice of
cancellation shall be effective to the
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extent that (i) it would reduce the Tranche A Active Aggregate Revolving
Commitment to an amount which would be less than the outstanding principal
amount of Tranche A Revolving Advances, plus Competitive Bid Advances plus the
Dollar Equivalent of the Stated Amount of all Letters of Credit outstanding plus
the Dollar Equivalent of reimbursement obligations to the Issuers of Letters of
Credit with respect to the amounts paid by such Issuers pursuant to Letters of
Credit which reimbursement obligations have not been repaid by the Borrower and
have not been deemed to be automatic Floating Rate Advances pursuant to Section
2.2.3 at the time such cancellation is to take effect, (ii) it would reduce or
terminate any portion of the Tranche A Active Aggregate Revolving Commitment
before the Tranche A Inactive Aggregate Revolving Commitment is terminated or
reduced to zero. Any notice of cancellation given pursuant to this Section 2.6.3
shall be irrevocable and permanent and shall specify the date upon which such
cancellation is to take effect. The Agent shall promptly notify each Tranche A
Lender of its receipt of notice from the Borrower electing to cancel all or a
portion of the Tranche A Aggregate Revolving Commitment. Each partial
cancellation of the Tranche A Aggregate Revolving Commitment shall cancel each
Tranche A Commitment ratably in proportion to the ratio that such Tranche A
Lender's Tranche A Commitment bears to the Tranche A Aggregate Revolving
Commitment.
2.7 Minimum Amount of Each Advance. Each Eurodollar Committed Advance
shall be in the minimum amount of $10,000,000 (and in multiples of $1,000,000 if
in excess thereof), and each Floating Rate Advance shall be in the minimum
amount of $5,000,000 (and in multiples of $1,000,000 if in excess thereof),
provided, however, that any Floating Rate Advance may be in the amount of the
unused Tranche A Aggregate Revolving Commitment or the unused Tranche B
Commitment, as the case may be.
2.8 Optional Principal Payments. The Borrower may from time to time
pay, without penalty or premium (other than amounts payable as provided in
Section 3.4, if any, as a result of such prepayment being made other than on the
last day of a Eurodollar Interest Period with respect to any Eurodollar Advance
as provided in Section 3.4), all outstanding Advances, or, in a minimum
aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess
thereof, any portion of the outstanding Advances upon three Business Days' (or
in the case of outstanding Advances bearing interest at a Floating Rate, one
Business Day's) prior notice to the Agent; provided that a Competitive Bid
Advance which the Borrower indicated was not prepayable in the related
Competitive Bid Quote Request may not be prepaid prior to such last day unless
agreed by the relevant Tranche A Lender.
2.9 Method of Selecting Types and Interest Periods for New Advances.
The Borrower shall select the Type of Advance and, in the case of each Fixed
Rate Advance (other than a Competitive Bid Advance), the Interest Period
applicable to each Advance from time to time; provided, that the Borrower will
not select Eurodollar Interest Periods with regard to Committed Loans so that
more than eight (8) Eurodollar Interest Periods with regard to Tranche A
Committed Loans or more than eight (8) Eurodollar Interest Periods with regard
to Tranche B Loans are in effect at any time. The Borrower shall give the Agent
irrevocable notice (a "Committed Borrowing Notice") not later than 10:00 a.m.
(Chicago time) at least one Business Day before the Borrowing Date of each
Floating Rate Advance and three Business Days before the Borrowing Date for each
Eurodollar Advance (other than a Eurodollar Bid Rate Advance), specifying:
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(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected and whether a Tranche A Advance
or a Tranche B Advance, and
(iv) in the case of each Fixed Rate Advance, the Interest Period
applicable thereto.
Not later than noon (Chicago time) on each Borrowing Date, each Tranche A Lender
if a Tranche A Committed Advance and each Tranche B Lender if a Tranche B
Advance shall make available its Loan or Loans, in funds immediately available
in Chicago to the Agent at its address specified pursuant to Article XIII. The
Agent will make the funds so received from the applicable Lenders available to
the Borrower at the Agent's aforesaid address.
2.10 Conversion and Continuation of Outstanding Advances. Floating Rate
Advances shall continue as Floating Rate Advances unless and until converted
into Fixed Rate Advances. Each Eurodollar Committed Advance shall continue as a
Eurodollar Committed Advance until the end of the then applicable Interest
Period therefor, at which time such Eurodollar Committed Advance shall be
automatically converted into a Floating Rate Advance unless the Borrower shall
have given the Agent a Conversion/Continuation Notice requesting that, at the
end of such Interest Period, such Eurodollar Committed Advance either continue
as a Eurodollar Committed Advance for the same or another Interest Period or be
converted into a Floating Rate Advance. Subject to the terms of Section 2.7,
the Borrower may elect from time to time to convert all or any part of a Tranche
A Advance of either Type into the other Type of Tranche A Advance or to convert
all or any part of a Tranche B Advance of either Type into the other Type of
Tranche B Advance; provided that any conversion of any Eurodollar Committed
Advance shall be made on, and only on, the last day of the Interest Period
applicable thereto. The Borrower shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of a Tranche A Advance, a
Tranche B Advance or continuation of a Eurodollar Committed Advance not later
than 10:00 a.m. (Chicago time) at least one Business Day, in the case of a
conversion into a Floating Rate Advance or three Business Days, in the case of a
conversion into or continuation of a Eurodollar Advance, prior to the date of
the requested conversion or continuation, specifying:
(i) the requested date which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount, whether a Tranche A Advance or a Tranche
B Advance and Type of the Advance which is to be converted or continued;
and
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(iii) the amount and Type(s) of Advance(s) into which such Advance
is to be converted or continued and, in the case of a conversion into or
continuation of a Eurodollar Committed Advance, the duration of the
Interest Period applicable thereto.
2.11 Changes in Interest Rate, etc. Each Floating Rate Advance shall bear
interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is converted from a Eurodollar
Committed Advance into a Floating Rate Advance pursuant to Section 2.10 to but
excluding the date it becomes due or is converted into a Eurodollar Committed
Advance pursuant to Section 2.10 hereof, at a rate per annum equal to the
Floating Rate for such day. Changes in the rate of interest on that portion of
any Advance maintained as a Floating Rate Advance will take effect
simultaneously with each change in the Alternate Base Rate. Each Fixed Rate
Advance shall bear interest from and including the first day of the Interest
Period applicable thereto to (but not including) the last day of such Interest
Period at the interest rate determined as applicable to such Fixed Rate Advance.
No Interest Period of any Tranche A Advance may end after the Tranche A
Revolving Facility Termination Date and no Interest Period of any Tranche B
Advance may end after the Tranche B Facility Termination Date. The Borrower
shall select Interest Periods so that it is not necessary to repay any portion
of a Eurodollar Committed Advance prior to the last day of the applicable
Interest Period in order to make a mandatory repayment required pursuant to
Section 2.4.
2.12 Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.9 or 2.10, during the continuance of a Default
or Unmatured Default the Required Lenders may, at their option, by notice to the
Borrower (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 8.2 requiring unanimous consent of the
relevant Lenders to changes in interest rates), declare that no Advance may be
made as, converted into or continued as a Fixed Rate Advance. If any Advance is
not paid at maturity, whether by acceleration or otherwise, the Required Lenders
may, at their option, by notice to the Borrower (which notice may be revoked at
the option of the Required Lenders notwithstanding any provision of Section 8.2
requiring unanimous consent of the affected Lenders to changes in interest
rates), declare that (i) each Fixed Rate Advance shall bear interest for the
remainder of the applicable Interest Period at the rate otherwise applicable to
such Interest Period plus 2% per annum and (ii) each Floating Rate Advance shall
bear interest at a rate per annum equal to the Floating Rate otherwise
applicable to the Floating Rate Advance plus 2% per annum.
2.13 Method of Payment. All payments of the Obligations hereunder shall
be made, without setoff, deduction, or counterclaim, in immediately available
funds and in the appropriate currency to the Agent at the Agent's address
specified pursuant to Article XIII, or at any other Lending Installation of the
Agent specified in writing by the Agent to the Borrower, by noon (Chicago time)
on the date when due and shall be applied ratably by the Agent among the Tranche
A Lenders or the Tranche B Lenders, whichever is applicable. Each payment
delivered to the Agent for the account of any Lender shall be delivered promptly
by the Agent to such Lender in the same type of funds that the Agent received at
its address specified pursuant to Article XIII or at any Lending Installation
specified in a notice received by the Agent from such Lender.
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2.14 Notes; Notices. Each Lender is hereby authorized to record the
principal amount of each of its Loans and each repayment on the schedule
attached to its Notes, provided, however, that the failure to so record shall
not affect the Borrower's obligations under such Notes. The Borrower hereby
authorizes the Lenders and the Agent to extend, convert or continue Advances,
effect selections of Types of Advances and to transfer funds based on telephonic
or telecopy notices made by any person or persons the Agent or any Lender in
good faith believes to be acting on behalf of the Borrower. The Borrower agrees
to deliver promptly to the Agent a written confirmation, if such confirmation is
requested by the Agent or any Lender, of each telephonic or telecopy notice
signed by an Authorized Officer. If the written confirmation differs in any
material respect from the action taken by the Agent and the Lenders, the records
of the Agent and the Lenders shall govern absent manifest error.
2.15 Interest Payment Dates; Interest and Fee Basis. Interest accrued on
each Floating Rate Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof, on any date on which
the Floating Rate Advance is prepaid, whether due to acceleration or otherwise,
and at maturity. Interest accrued on that portion of the outstanding principal
amount of any Floating Rate Advance converted into a Eurodollar Committed
Advance on a day other than a Payment Date shall be payable on the date of
conversion. Interest accrued on each Fixed Rate Advance shall be payable on the
last day of its applicable Interest Period, on any date on which the Fixed Rate
Advance is prepaid, whether by acceleration or otherwise, and at maturity.
Interest accrued on each Eurodollar Rate Advance having an Interest Period
longer than three months shall also be payable on the last day of each three-
month interval during such Interest Period. Interest on Eurodollar Advances
shall be calculated for actual days elapsed on the basis of a 360-day year.
Commitment fees and interest on Floating Rate Advances and Absolute Rate
Advances shall be calculated for actual number of days elapsed on the basis of a
year consisting of 365, or where appropriate 366, days. Interest shall be
payable for the day an Advance is made but not for the day of any payment on the
amount paid if payment is received prior to noon (local time) at the place of
payment. If any payment of principal of or interest on an Advance shall become
due on a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and, in the case of a principal payment, such extension
of time shall be included in computing interest in connection with such payment.
2.16 Notification of Tranche A Advances, Tranche B Advances, Interest
Rates, Prepayments and Commitment Reductions. Promptly after receipt thereof,
the Agent will notify each affected Lender of the contents of each Aggregate
Commitment reduction notice, Borrowing Notice, Conversion/Continuation Notice,
and repayment notice received by it hereunder. The Agent will notify each
Lender of the interest rate applicable to each of such Lender's Eurodollar
Committed Advances promptly upon determination of such interest rate and will
give each Lender prompt notice of each change in the Alternate Base Rate. Each
Reference Bank agrees to furnish timely information for the purpose of
determining the Eurodollar Rate.
2.17 Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this
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Agreement shall apply to any such Lending Installation and the Notes shall be
deemed held by each Lender for the benefit of such Lending Installation. Each
Lender may, by written or telecopy notice to the Agent and the Borrower,
designate a Lending Installation through which Loans will be made by it and for
whose account Loan payments are to be made.
2.18 Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender,
as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (i) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day or (ii) in the case of payment by the
Borrower, the interest rate applicable to the relevant Loan.
2.19 Withholding Tax Exemption. At least five Business Days prior to the
first date on which interest or fees are payable hereunder for the account of
any Lender, each Lender (or Lending Installation) that is not incorporated under
the laws of the United States of America, or a state thereof, agrees that it
will deliver to each of the Borrower and the Agent two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, certifying in either
case that such Lender (or Lending Installation) is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of any
United States federal income taxes. Each Lender (or Lending Installation) which
so delivers a Form 1001 or 4224 further undertakes to deliver to each of the
Borrower and the Agent two additional copies of such form (or a successor form)
on or before the date that such form expires (currently, three successive
calendar years for Form 1001 and one calendar year for Form 4224) or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrower or the Agent, in
each case certifying that such Lender (or Lending Installation) is entitled to
receive payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender (or Lending Installation) from duly completing and delivering any such
form with respect to it and such Lender (or Lending Installation) advises the
Borrower and the Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
2.20 Maximum Interest Rate. Nothing contained in this Agreement or the
Notes shall require any Obligor to pay interest to any Lender at a rate
exceeding the maximum rate permitted by
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applicable law with respect to such Lender. This Section 2.20 is not intended to
limit the rate of interest payable for the account of any Lender to the maximum
rate permitted by the laws of any state if a higher rate is permitted with
respect to such Lender by supervening provisions of U.S. federal law and it is
specifically provided that Chapter 15 of Texas Revised Civil Statutes Article
5069 (the Texas Credit Code), which regulates certain revolving loan accounts
and revolving tri-party accounts, shall not be applicable to this Agreement, the
Notes or any of the Debt arising hereunder. If the amount of interest payable
for the account of any Lender on any interest payment date in respect of the
immediately preceding interest computation period (together with any fees or
charges which would constitute interest under applicable law) would exceed the
maximum amount permitted by applicable law to be charged by such Lender, the
amount of interest payable for its account on such interest payment date shall
be automatically reduced to such maximum permissible amount. If the amount of
interest payable for the account of any Lender in respect of any interest
computation period is reduced pursuant to the third sentence of this Section
2.20 and the amount of interest payable for its account in respect of any
subsequent interest computation period would be less than the maximum amount
permitted by applicable law to be charged by such Lender, then the amount of
interest payable for its account in respect of such subsequent interest
computation period shall be automatically increased to such maximum permissible
amount; provided that at no time shall the aggregate amount by which interest
paid for the account of any Lender has been increased pursuant to this sentence
exceed the aggregate amount by which interest paid for its account has
theretofore been reduced pursuant to the third sentence of this Section 2.20.
2.21 Agent's Fees. In order to compensate First Chicago for the cost and
expense of acting as Agent under this Agreement, the Borrower hereby agrees to
pay to First Chicago the fees agreed to between the Borrower and First Chicago
with respect to its activities in structuring and administering this Agreement.
2.22 Procedures with respect to the Tranche A Aggregate Revolving
Commitment. So long as no Default or Unmatured Default has occurred and is
continuing, the Borrower may request from time to time, and subject to the terms
and conditions hereinafter set forth, that the Tranche A Aggregate Revolving
Commitment be increased by giving written notice thereof to the Agent; provided,
however, that any such notice must be given no later than 60 days prior to the
then Tranche A Revolving Facility Termination Date. Each such notice (a "Notice
of Commitment Increase") shall be in the form of Exhibit C-2 and specify
therein:
(i) the effective date of such increase, which date (the
requested "Commitment Increase Effective Date") shall be no earlier than
five Business Days after receipt by the Agent of such notice;
(ii) the amount of the requested increase; provided, however, that
after giving effect to such requested increase, the Tranche A Aggregate
Revolving Commitment shall not exceed $750,000,000;
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(iii) the identity of the then Tranche A Lenders, if any, which
have agreed with the Borrower to increase their respective Tranche A
Commitments in an amount such that their respective Percentage after giving
effect to such requested increase will be the same or greater than their
respective Percentages prior to giving effect to such requested increase
(each such then Tranche A Lender being a then "Increasing Lender"), each
other Tranche A Lender which has agreed to increase its Tranche A
Commitment in an amount such that its Tranche A Lender's Percentage after
giving effect to such a requested increase will be less than its Tranche A
Lender's Percentage prior to giving effect to such requested increase (each
such Tranche A Lender being a "Partially Increasing Lender") and the
identity of each financial institution not already a Tranche A Lender, if
any, which has agreed with the Borrower to become a Tranche A Lender to
effect such requested increase in the Tranche A Aggregate Revolving
Commitment (each such assignee shall be reasonably acceptable to the Agent
and each such assignee being a then "New Lender" and each Tranche A Lender
which has not agreed to increase its Tranche A Commitment being a "Reducing
Lender");
(iv) the amount of the respective Tranche A Commitments of the
then existing Tranche A Lenders and such New Lenders from and after the
effective date of such increase; and
(v) the amount of the requested increase that will be the Tranche
A Active Aggregate Revolving Commitment and the amount that will be the
Tranche A Inactive Aggregate Revolving Commitment.
On or before each Commitment Increase Effective Date:
(i) the Borrower, each Increasing Lender, each Partially
Increasing Lender and each then New Lender shall execute and deliver to the
Agent for its acceptance, as to form, documentation embodying the
provisions of the Notice of Commitment Increase relating to the increase in
the Tranche A Aggregate Revolving Commitment to be effected on such
Commitment Increase Effective Date; and
(ii) upon acceptance of such documentation by the Agent, which
acceptance shall not be unreasonably withheld, and so long as no Default or
Unmatured Default has occurred and is continuing, (A) the Agent shall give
prompt notice of such acceptance to each Co-Agent and each Lender, (B) it
shall become effective, and the Tranche A Aggregate Revolving Commitment
shall be increased to the amount specified therein, on such Commitment
Increase Effective Date, (C) the Borrower shall execute and deliver to each
then New Lender a Tranche A Committed Note payable to the order of such
Lender in the face principal amount equal to such Tranche A Lenders'
Commitment and a Competitive Bid Note and (D) the Borrower shall execute
and deliver to each Increasing Lender and each Partially Increasing Lender,
against receipt by the Borrower of such Lender's then existing Tranche A
Committed Note, a new Tranche A Committed Note in the face principal amount
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equal to such Tranche A Lenders' Commitment after giving effect to such
Commitment increase.
On each Commitment Increase Effective Date:
(i) each then New Lender and each then Increasing Lender shall,
by wire transfer of immediately available funds, deliver to the Agent such
Lenders' New Funds Amount for such Commitment Increase Effective Date,
which amount, for each such Lender, shall constitute Tranche A Committed
Revolving Loans made by such Lender to the Borrower pursuant to Section 2.1
on such Commitment Increase Effective Date; and
(ii) the Agent shall, by wire transfer of immediately available
funds, pay to each then Reducing Lender and to each Partially Increasing
Lender its Reduction Amount for such Commitment Increase Effective Date,
which amount, for each such Lender, shall constitute a prepayment by the
Borrower pursuant to Section 2.8, ratably in accordance with the respective
principal amounts thereof, of the principal amounts of all then outstanding
Tranche A Committed Revolving Loans of such Lender.
Effective as of each Commitment Increase Effective Date, the Notes then or
theretofore delivered to each then New Lender, and the new Notes then or
theretofore delivered to each then Increasing Lender and each then Partially
Increasing Lender, shall evidence such Tranche A Lender's ownership of its
Tranche A Lender's Percentage, effective as of such Commitment Increase
Effective Date, of all Tranche A Loans then outstanding. Also effective as of
each Commitment Increase Effective Date, each then New Lender and each then
Increasing Lender shall be deemed to have purchased and had transferred to it,
and each then Reducing Lender and each Partially Increasing Lender shall be
deemed to have sold and transferred to such New Lenders and Increasing Lenders,
such undivided interest and participation in such Reducing Lender's and such
Partially Increasing Lender's interest and participation in all then outstanding
Letters of Credit, the obligations of the Borrower with respect thereto and any
security therefor and any guaranty pertaining thereto at any time existing as is
necessary so that such undivided interests and participations of all Tranche A
Lenders (including each then New Lender) shall accord with their respective
Tranche A Lender's Percentages after giving effect to the increase in the
Tranche A Aggregate Revolving Commitment on such Commitment Increase Effective
Date.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection. If any change in, or introduction of, any law or
any governmental or quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any interpretation
thereof, or the compliance of any Lender or Issuer therewith,
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(i) subjects any Lender or Issuer or any applicable Lending
Installation to any additional tax, duty, charge or withholding on or from
payments due from the Borrower (excluding federal taxation of the overall
net income of any Lender or Issuer or applicable Lending Installation), or
changes the basis of taxation of payments to any Lender in respect of its
Loans or Letters of Credit or participations therein or other amounts due
it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended
by, any Lender or Issuer or any applicable Lending Installation (other than
reserves and assessments taken into account in determining the interest
rate applicable to Fixed Rate Advances), or
(iii) imposes any other condition the direct result of which is to
increase the cost to any Lender or Issuer or any applicable Lending
Installation of making, funding, maintaining or participating in the Loans
or Letters of Credit or reduces any amount receivable by any Lender or
Issuer or any applicable Lending Installation in connection with the Loans
or Letters of Credit, or requires any Lender or Issuer or any applicable
Lending Installation to make any payment calculated by reference to the
amount of the Loans or Letters of Credit held or interest received by it,
by an amount deemed material by such Lender,
then, within 15 days of demand by such Lender or Issuer, the Borrower shall pay
such Lender or Issuer that portion of such increased expense incurred or
reduction in an amount received which such Lender or Issuer reasonably
determines is attributable to making, funding and maintaining its Loans, Letters
of Credit, participations therein and its Commitment. Any Lender or Issuer
claiming or reasonably anticipating any additional amounts payable pursuant to
Section 3.1(i) shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document requested by the
Borrower or the Agent or to change the jurisdiction of its applicable Lending
Installation or Issuing Office or to contest any tax imposed if the making of
such a filing or change or contesting such tax would avoid the need for or
reduce the amount of any such additional amounts that may thereafter accrue and
would not be otherwise disadvantageous to such Lender or Issuer in its opinion.
The Borrower shall not be obligated to compensate any Lender or Issuer pursuant
to this Section 3.1 for any amounts attributable to a period more than 90 days
prior to the giving of notice by such Lender or Issuer to the Borrower of its
intention to seek compensation under this Section 3.1.
3.2 Changes in Capital Adequacy Regulations. If a Lender or Issuer
determines that the amount of capital required or expected to be maintained by
such Lender, any Lending Installation of such Lender, such Issuer, or any
corporation controlling such Lender or Issuer is increased as a result of a
Change, then, within 15 days of demand by such Lender or Issuer, the Borrower
shall pay such Lender or Issuer the amount necessary to compensate for any
shortfall in the rate of return on the portion of such increased capital which
such Lender or Issuer reasonably determines is
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attributable to this Agreement, its Loans, its Letters of Credit or its
obligation to make Loans or issue Letters of Credit or participate in Letters of
Credit hereunder (after taking into account such Lender's or Issuer's policies
as to capital adequacy being applied with respect to customers similarly
situated to Borrower with whom such Lender or Issuer has a contractual right to
so charge such amounts). "Change" means (i) any change after the date of this
Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of or change
in any other law, governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having the force of law)
after the date of this Agreement which affects the amount of capital required or
expected to be maintained by any Lender or Issuer or any Lending Installation or
Issuing Office or any corporation controlling any Lender or Issuer. "Risk-Based
Capital Guidelines" means (i) the risk-based capital guidelines in effect in the
United States on the date of this Agreement, including transition rules, and
(ii) the corresponding capital regulations promulgated by regulatory authorities
outside the United States implementing the July 1988 report of the Basle
Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement. The Borrower shall not be obligated to compensate
any Lender or Issuer pursuant to this Section 3.2 for any amounts attributable
to a period more than 90 days prior to the giving of notice by such Lender or
Issuer to the Borrower of its intention to seek compensation under this
Section 3.2.
3.3 Availability of Types of Advances. If any Lender determines that
maintenance of any of its Eurodollar Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation or directive, whether or not
having the force of law, the Agent shall suspend the availability of the
affected Type of Advance and require any Eurodollar Advances of the affected
Type to be converted into Floating Rate Advances. If the Required Lenders
determine that (i) deposits of a type or maturity appropriate to match fund
Eurodollar Advances are not available, the Agent shall suspend the availability
of the affected Type of Advance with respect to any Eurodollar Advances made
after the date of any such determination until such time as deposits of a Type
or maturity appropriate to match fund Eurodollar Advances are made available, or
(ii) after giving effect to amounts payable under Sections 3.1 and 3.2 an
interest rate applicable to a Type of Advance does not accurately reflect the
cost of making a Eurodollar Advance of such Type, then, if for any reason
whatsoever the provisions of Section 3.1 are inapplicable, the Agent shall
suspend the availability of the affected Type of Advance with respect to any
Eurodollar Advances made after the date of any such determination.
3.4 Funding Indemnification. If any payment of a Fixed Rate Advance
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment or otherwise, or any Eurodollar
Committed Advance is converted to a Floating Rate Advance on a date which is not
the last day of the applicable Interest Period or a Fixed Rate Advance is not
made on the date specified by the Borrower for any reason other than default by
the Lenders, the Borrower will indemnify each Lender for any loss or cost
incurred by it directly resulting therefrom, including, without limitation, any
loss or cost in liquidating or employing deposits acquired to fund or maintain
the Fixed Rate Advance; provided that the foregoing shall not permit
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prepayment of a Competitive Bid Advance (i) which the Borrower has indicated in
the related Competitive Bid Quote Request is not to be prepayable and (ii) which
the relevant Lender has not agreed to permit to be prepaid.
3.5 Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation to
reduce any liability of the Borrower to such Lender under Sections 3.1 and 3.2
or to avoid the unavailability of a Type of Advance under Section 3.3, so long
as such designation is not disadvantageous to such Lender in its opinion. If
any amount becomes due under Section 3.1, 3.2 or 3.4, each affected Lender or
Issuer shall consult with the Borrower as to how it intends to calculate the
amount due and shall deliver a written statement of such Lender or Issuer as to
the amount due, if any, under Section 3.1, 3.2 or 3.4. Such written statement
shall set forth in reasonable detail the basis for claiming such amount and
calculations upon which such Lender or Issuer determined such amount and shall
be final, conclusive and binding on the Borrower in the absence of manifest
error; provided that the determination of such amount shall be made in good
faith and in a manner consistent with such Lender's standard practice and that
such Lender's policies as to imposing such increased costs are being applied
with respect to customers similarly situated to Borrower with whom such Lender
or Issuer has a contractual right to so charge such amounts. Determination of
amounts payable under such Sections in connection with a Fixed Rate Loan shall
be calculated as though each Lender funded its Fixed Rate Loan through the
purchase of a deposit of the Type and maturity corresponding to the deposit used
as a reference in determining the Fixed Rate applicable to such Loan, whether in
fact that is the case or not. Unless otherwise provided herein, the amount
specified in the written statement shall be payable within ten (10) Business
Days after receipt by the Borrower of the written statement. The obligations of
the Borrower under Sections 3.1, 3.2 and 3.4 shall survive payment of the
Obligations and termination of this Agreement.
3.6 Replacement of Lenders. If any Lender is unable to make a Fixed
Rate Loan pursuant to Section 3.3, is subject to increased costs pursuant to
Section 3.1, 3.2 or 3.4, fails to designate an alternate Lending Installation
pursuant to Section 3.1 or 3.5, or is owed or reasonably anticipates being owed
additional amounts pursuant to Section 3.1 and fails to take action to the
extent required under Subsection 3.1 to avoid or reduce any such additional
amounts, the Borrower shall have the right, if no Default then exists, to
replace such Lender with another financial institution reasonably acceptable to
the Agent and any Issuing Bank provided that (i) such financial institution
shall unconditionally offer in writing (with a copy to the Agent) to purchase,
in accordance with Section 12.3.2 all of such Lender's rights and obligations
under this Agreement and the Notes, without recourse or expense to, or warranty
by, such Lender being replaced for a purchase price equal to the aggregate
outstanding principal amount of the Notes payable to such Lender plus such
Lender's Tranche A Percentage, if any, of any outstanding reimbursement
obligations with respect to any outstanding Letters of Credit plus any accrued
but unpaid interest on such Notes and such reimbursement obligations plus
accrued but unpaid fees in respect of such Lender's Commitment hereunder to the
date of such purchase on a date therein specified, (ii) the obligations of the
Borrower owing pursuant to Section 3.1, 3.2 and 3.4 to the Lender being
replaced, shall be paid in full to the Lender being replaced concurrently with
such replacement, (iii) the replacement financial
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institution shall execute a Notice of Assignment pursuant to which it shall
become a party hereto as provided in Section 12.3.2 and shall pay the processing
fee required pursuant to such section, and (iv) upon compliance with the
provisions for assignment provided in Section 12.3 and the payment of amounts
referred to in clause (i), the replacement financial institution shall
constitute a "Lender" hereunder and the Lender being so replaced shall no longer
constitute a "Lender" hereunder; provided that (x) if such Lender accepts such
an offer and such financial institution fails to purchase on such specified date
in accordance with the terms of such offer, the Borrower shall continue to be
obligated to pay the increased cost, amounts, expenses and taxes under Sections
3.1, 3.2, 3.4 and 3.5 above to such Lender and (y) if such Lender fails to
accept such purchase offer, the Borrower shall not be obligated to pay such
Lender such increased cost pursuant to such sections from and after the date of
such purchase offer; provided, further that notwithstanding the foregoing, no
Lender which is an Issuer of an outstanding Letter of Credit may be replaced
pursuant to this Section 3.6 while such Letter of Credit is outstanding.
3.7 Currency.
(i) Payments in Agreed Currency. The Borrower shall make payment
relative to each Advance and each Letter of Credit in the currency (the
"Agreed Currency") in which the Advance or Letter of Credit was effected.
If any payment is received on account of any Advance or Letter of Credit in
any currency (the "Other Currency") other than the Agreed Currency (whether
voluntarily or pursuant to an order or judgment or the enforcement thereof
or the realization of any security or the liquidation of the Borrower or
otherwise howsoever), such payment shall constitute a discharge of the
liability of such Borrower hereunder and under the other Loan Documents in
respect of such obligation only to the extent of the amount of the Agreed
Currency which the relevant Issuer, Lender or Agent, as the case may be, is
able to purchase with the amount of the Other Currency received by it on
the Business Day next following such receipt in accordance with its normal
procedures and after deducting any premium and costs of exchange.
(ii) Conversion of Agreed Currency into Judgment Currency. If, for
the purpose of obtaining or enforcing judgment in any court in any
jurisdiction, it becomes necessary to convert into a particular currency
(the "Judgment Currency") any amount due in the Agreed Currency then the
conversion shall be made on the basis of the rate of exchange prevailing on
the Business Day next preceding the day on which judgment is given and in
any event the Borrower shall be obligated to pay the Issuer, the Agents and
the Lenders any deficiency in accordance with subsection 3.7(i). For the
foregoing purposes "rate of exchange" means the rate at which the relevant
Issuer, Lender or Agent, as applicable, in accordance with its normal
banking procedures is able on the relevant date to purchase the Agreed
Currency with the Judgment Currency after deducting any premium and costs
of exchange.
(iii) Circumstances Giving Rise to Payment. If (i) any Issuer,
Lender or Agent receives any payment or payments on account of the
liability of the Borrower hereunder pursuant to any judgment or order in
any Other Currency, and (ii) the amount of the Agreed
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Currency which the relevant Issuer, Lender or Agent, as applicable, is able
to purchase on the Business Day next following such receipt with the
proceeds of such payment or payments in accordance with its normal
procedures, and after deducting any premiums and costs of exchange, is less
than the amount of the Agreed Currency due in respect of such obligations
immediately prior to such judgment or order, then Borrower on demand shall,
and Borrower hereby agrees to, pay to the Issuers, Lenders and the Agents
amounts equal to the deficiency and any loss, cost or expense arising out
of or in connection with such deficiency.
(iv) Separate Obligation. The agreement provided for in subsection
3.7(iii) shall constitute an obligation separate and independent from all
other obligations contained in this Agreement, shall give rise to a
separate and independent cause of action, shall apply irrespective of any
indulgence granted by the Issuers, Lenders or the Agents or any of them
from time to time, and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in respect of an
amount due hereunder or under any judgment or order. The agreements and
obligations of the Borrower in this Section 3.7 shall survive the payment
of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions Precedent to Effectiveness. The effectiveness of this
Credit Agreement and the obligation of each Lender to make Loans hereunder and
the obligation of each Issuer to issue the Letters of Credit hereunder pursuant
to the terms and conditions of this Agreement are subject to the conditions
precedent that the Borrower furnishes the following with sufficient copies for
the Lenders:
(i) Copies of the articles of incorporation of the Borrower,
Warren NGL, Inc., Warren Gas Liquids, Inc., and NGC Oil Trading and
Transportation, Inc. and each corporate partner of Natural Gas
Clearinghouse and Warren Petroleum Company, Limited Partnership and of the
partnership agreement of each of Natural Gas Clearinghouse and Warren
Petroleum Company, Limited Partnership or partner of Natural Gas
Clearinghouse and Warren Petroleum Company, Limited Partnership which is a
partnership, together with all amendments, and a certificate of good
standing for each of the Borrower, Warren NGL, Inc., Warren Gas Liquids,
Inc., and NGC Oil Trading and Transportation, Inc. and each corporate
partner of Natural Gas Clearinghouse and Warren Petroleum Company, Limited
Partnership, certified with respect to each of the Borrower, Warren NGL,
Inc., Warren Gas Liquids, Inc., and NGC Oil Trading and Transportation,
Inc. and each corporate partner of Natural Gas Clearinghouse and Warren
Petroleum Company, Limited Partnership by the appropriate governmental
officer in its jurisdiction of incorporation or organization, as the case
may be; provided that in lieu of delivering any such documents which were
previously provided to the Agent pursuant to the Original Credit Agreement
and which documents so provided have
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not changed, the Borrower may furnish a certificate in form and substance
satisfactory to the Agent which states that such documents were so
delivered and have not changed.
(ii) Copies, certified by the Secretary or Assistant Secretary of
each of the Borrower, Warren NGL, Inc., Warren Gas Liquids, Inc., and NGC
Oil Trading and Transportation, Inc. and each partner of Natural Gas
Clearinghouse and Warren Petroleum Company, Limited Partnership, of its by-
laws and of its Board of Directors' resolutions (and resolutions of other
bodies, if any are deemed necessary by counsel for any Lender) authorizing
the execution of the Loan Documents to which it is a party.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of each of the Borrower, Warren NGL, Inc., Warren Gas
Liquids, Inc., and NGC Oil Trading and Transportation, Inc. and each
partner of Natural Gas Clearinghouse and Warren Petroleum Company, Limited
Partnership, which shall identify by name and title and bear the signature
of the officers of the Borrower, Warren NGL, Inc.; Warren Gas Liquids,
Inc.; and NGC Oil Trading and Transportation, Inc. or partner of Natural
Gas Clearinghouse and Warren Petroleum Company, Limited Partnership
authorized to sign the Loan Documents and to make borrowings and obtain
Letters of Credit hereunder, upon which certificate the Agent and the
Lenders shall be entitled to rely until informed of any change in writing
by the Borrower; provided that in lieu of delivering any such incumbency
certificates for Obligors for which such certificates were previously
provided to the Agent pursuant to the Original Credit Agreement and which
certificates so provided have not changed, the Borrower may furnish a
certificate in form and substance satisfactory to the Agent which states
that such certificates were so delivered and have not changed.
(iv) A written opinion of (A) the General Counsel or Corporate
Counsel of the Borrower substantially in the form of Exhibit "B-1", (B)
Vinson & Elkins, L.L.P., counsel to the Obligors, substantially in the form
of Exhibit "B-2" and (C) Mayer, Brown & Platt, special counsel to the
Agent, substantially in the form of Exhibit "I" hereto, each dated as of
the Closing Date and addressed to the Agent and the Lenders.
(v) Notes payable to the order of each of the Lenders (other than
the outstanding Notes under the Original Credit Agreement).
(vi) Consent, Acknowledgment and Agreement from each of Natural
Gas Clearinghouse, NGC Oil Trading and Transportation, Inc., NGC Futures,
Inc., Electric Clearinghouse, Inc., Kansas Gas Supply Corporation, NGC
Great Britain, Ltd., NGC Canada, Inc., Warren Energy Resources, Limited
Partnership, Warren Gas Liquids, Inc., Warren Gas Marketing, Inc., Warren
Intrastate Gas Supply, Inc., Warren NGL, Inc., Warren NGL Pipeline Company,
Warren Petroleum Company, Limited Partnership, WPC LP, Inc. and WTLPS, Inc.
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(vii) A copy of the Destec Contract and the AES Contract, each
certified as being true, complete and correct by an officer of the
Borrower.
(viii) Such other documents as the Agent, any Lender or its counsel
may have reasonably requested.
4.2 Additional Condition to Effectiveness. The effectiveness of the
provisions of this Credit Agreement relating to Destec, Destec's Subsidiaries,
the Destec Transaction, AES, the AES Contract and the AES Transaction and the
obligation of each Tranche B Lender to make Tranche B Loans hereunder are
subject to the additional condition that the Agent shall have received on or
before September 30, 1997, a certificate of an officer of the Borrower to the
effect that the conditions to closing set forth in the Destec Contract have been
satisfied, and concurrently with the consummation of the Destec Transaction,
Destec shall have delivered a Subsidiary Guaranty.
4.3 Each Advance. The Lenders shall not be required to make any Advance
(other than an Advance that, after giving effect thereto and to the application
of the proceeds thereof, does not increase the aggregate amount of outstanding
Advances) and no Issuer shall be obligated to issue a Letter of Credit, unless
on the applicable Borrowing Date or Issuance Date, as the case may be:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V and
the representations in Sections 11 and 15 of each of the Subsidiary
Guaranties are true and correct in all material respects as of such
Borrowing Date or Issuance Date, as the case may be, except to the extent
any such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall be true
and correct on and as of such earlier date.
Each Committed Borrowing Notice (other than a Committed Borrowing Notice
deemed given pursuant to Section 2.2.3) and Competitive Bid Borrowing Notice
with respect to each such Advance and each Issuance Request with respect to a
Letter of Credit shall constitute a representation and warranty by the Borrower
that the conditions contained in Sections 4.3(i) and (ii) have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders, the Agent and each
Issuer that:
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5.1 Corporate or Partnership Existence and Standing. Each of the
Borrower and its Subsidiaries is duly incorporated or organized, as the case may
be, validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization and is in good standing and has all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted, except where failure to have such authority would not have a Material
Adverse Effect.
5.2 Authorization and Validity. Each Obligor has the corporate or
partnership power and authority to execute and deliver the Loan Documents to
which it is a party and to perform its obligations thereunder. Except to the
extent that the failure to so qualify would not have a Material Adverse Effect,
each of the Borrower and its Subsidiaries has all requisite power, and is in all
respects duly qualified and licensed under all applicable laws to own its assets
and properties as now owned and to carry on its business as now conducted. The
execution and delivery by each Obligor of the Loan Documents to which it is a
party and the performance of its obligations thereunder have been duly
authorized by proper corporate and partnership proceedings, and the Loan
Documents constitute legal, valid and binding obligations of each Obligor party
thereto, enforceable against such Obligor in accordance with their terms, except
as enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
5.3 No Conflict; Government Consent. Neither the execution and delivery
by the Obligors of the Loan Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate
any law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on any Obligor or any of its Subsidiaries or any partner of any Obligor
or the Borrower's or any Subsidiary's or any partner's articles of
incorporation, by-laws or partnership agreement or the provisions of any
indenture, instrument or agreement to which the Borrower or any of its
Subsidiaries is a party or is subject, or by which it, or its Property, is
bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien in, of or on the Property of the Borrower or
any Subsidiary pursuant to the terms of any such indenture, instrument or
agreement that is a Material Agreement. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, any of the Loan Documents or, to the extent that
any such consent or other action may be required, it has been validly procured
and all waiting periods with respect thereto have expired.
5.4 Financial Statements. The March 31, 1997 consolidated financial
statements of the Borrower and its Subsidiaries were prepared in accordance with
generally accepted accounting principles in effect on the date such statements
were prepared and fairly present the consolidated financial condition and
operations of the Borrower and its Subsidiaries at such date and the
consolidated results of their operations for the period then ended.
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5.5 Material Adverse Change. Since March 31, 1997, there has been no
change in the business, Property, financial condition or results of operations
of the Borrower and its Subsidiaries which could reasonably be expected to have
a Material Adverse Effect.
5.6 Taxes. The Borrower and its Subsidiaries have filed all United
States federal tax returns and all other tax returns or reports which are
required to be filed and have paid all taxes due pursuant to said returns or
pursuant to any assessment received by the Borrower or any of its Subsidiaries,
except such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided. No tax liens have been filed and no claims
are being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of any
taxes or other governmental charges are adequate in all material respects. The
Borrower knows of no pending investigation of the Borrower or any of its
Subsidiaries by any taxing authority, nor of any pending but unassessed tax
liability which could reasonably be expected to have a Material Adverse Effect.
5.7 Litigation and Contingent Obligations. Except as set forth on
Schedule "4" hereto, there is no litigation, arbitration, governmental
investigation, proceeding or inquiry pending or, to the knowledge of any of
their officers, threatened against or affecting the Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect. Other than any liability incident to such litigation, arbitration or
proceedings, the Borrower has no material contingent obligations not provided
for or disclosed in the financial statements referred to in Section 5.4. To the
knowledge of the Borrower there are no outstanding judgments individually or in
the aggregate in excess of Twenty-Five Million Dollars ($25,000,000) (net of any
insurance coverage which is reasonably expected to be paid by the insurer) which
have not been stayed, against the Borrower, any of its Subsidiaries or any of
their respective Properties.
5.8 Subsidiaries. Schedule "1" hereto contains an accurate list of all
of the existing Subsidiaries of the Borrower on the Closing Date, setting forth
their respective jurisdictions of incorporation or organization and the
percentage of their respective capital stock or other equity owned by the
Borrower or other Subsidiaries of the Borrower. All of the issued and
outstanding shares of capital stock of such Subsidiaries which are corporations
have been duly authorized and issued and are fully paid and non-assessable.
5.9 ERISA. The Unfunded Liabilities of all Single Employer Plans do not
in the aggregate exceed $25,000,000. Neither the Borrower nor any other member
of the Controlled Group has incurred, or is reasonably expected to incur, any
withdrawal liability to Multiemployer Plans in excess of $25,000,000 in the
aggregate. Except for such matters as would not singly or in the aggregate have
or reasonably be expected to have a Material Adverse Effect, each Single
Employer Plan complies in all material respects with all applicable requirements
of law and regulations, no Reportable Event has occurred with respect to any
Single Employer Plan, except in connection with the Merger, neither the Borrower
nor any other members of the Controlled Group has withdrawn from any
Multiemployer Plan with respect to which it has any unsatisfied liability or
initiated steps
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to do so, and except in connection with the Merger, no steps have been taken to
reorganize or terminate any Single Employer Plan.
5.10 Accuracy of Information. All factual information contained in the
NGC Corporation Amended and Restated Credit Facilities Confidential Information
Memorandum dated March 1997 (the "Information Memorandum") is true and accurate
in all material respects (taken as a whole) on the Closing Date and is not
incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time. In addition, the
Information Memorandum contains estimates and projections and such estimates and
projections are based upon information that was available at such time and
believed to be correct and upon assumptions believed to be reasonable and the
Borrower does not warrant that such estimates and projections will ultimately
prove to have been accurate. All written factual information furnished by the
Borrower or any of its Subsidiaries on or after the Closing Date to the Agent or
any Lender for purposes of or in connection with this Agreement or any
transaction contemplated hereby will be, true and accurate in all material
respects (taken as a whole) on the date as of which such information is dated,
certified or delivered and will not be incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time. In addition, any estimates or projections provided in
connection therewith will be based on information that is then currently
available and believed to be correct and on assumptions believed to be
reasonable, but the Borrower does not warrant that such estimates or projections
will ultimately prove to have been accurate.
5.11 Regulation U. Margin stock (as defined in Regulation U) constitutes
less than 25% of those assets of the Borrower and its Subsidiaries which are
subject to any limitation on sale, pledge, or other restriction hereunder. The
Borrower is not engaged principally, and does not as one of its important
activities engage, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations G, U, or
X of the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any extension of credit under this Agreement will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock other than the purchase
of margin stock from time to time in connection with transactions (i) authorized
by the board of directors of the Borrower, (ii) either (A) authorized by the
board of directors or other governing body of the Person which stock is being
acquired or (B) involving less than 5% of the stock of any Person and (iii)
which would not cause the Borrower to fail to be in compliance with the
following sentence. Neither the Borrower nor any Person acting on its behalf has
taken or will take any action which could reasonably be expected to cause this
Agreement or any of the Notes to violate any of said Regulations G, U, or X, or
any other regulation of the Board of Governors of the Federal Reserve System or
to violate the Securities Exchange Act of 1934, in each case as now in effect or
as the same may hereafter be in effect.
5.12 Compliance With Laws. The Borrower and its Subsidiaries have
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct of their respective
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businesses or the ownership of their respective Property, except where the
failure to so comply would not have a Material Adverse Effect.
5.13 Environmental Matters. The Borrower, each of its Subsidiaries, and
their respective Properties are in compliance with all Environmental Laws except
where the failure to be in compliance could not reasonably be expected to have a
Material Adverse Effect and neither the Borrower nor any of its Subsidiaries is
subject to any liability or obligation for remedial action thereunder or in
connection therewith which could reasonably be expected to have a Material
Adverse Effect. There is no pending or, to the best of the Borrower's
knowledge, threatened investigation or inquiry by any Tribunal of the Borrower,
any of its Subsidiaries, or any of their respective Properties (i) pertaining to
any violation of any Environmental Law relating to Hazardous Materials, or (ii)
which could reasonably be expected to result in any requirement that the
Borrower or any of its Subsidiaries conduct any clean-up or remediation
activities with respect to any Hazardous Materials, which could reasonably be
expected to have a Material Adverse Effect. There are no Hazardous Materials
located on or under any of the properties of the Borrower or any of its
Subsidiaries (other than petroleum products which are located thereon in the
ordinary course of business and in a manner which does not constitute a
violation of applicable Environmental Law) which could reasonably be expected to
have a Material Adverse Effect. Neither the Borrower nor any of its
Subsidiaries has caused or permitted any Hazardous Material to be disposed of on
or under or released from any of its properties which disposal or release could
reasonably be expected to have a Material Adverse Effect. Neither the Borrower
nor any of its Subsidiaries has any knowledge of any violation of any
Environmental Law by any previous owner of any of its properties that could
reasonably be expected to have a Material Adverse Effect.
5.14 Ownership of Properties; Liens. Except as set forth on Schedule "2"
hereto, on the date of this Agreement, the Borrower and its Subsidiaries will
have marketable title or valid leasehold interests, free of all Liens other than
those permitted by Section 6.2.9, to all of the Property and assets reflected in
the financial statements described in Section 5.4, except that with respect to
properties acquired subsequent to the date hereof, the Borrower represents only
that (i) the same will be acquired only after appropriate due diligence
regarding title to the same, and (ii) the title to all such property so acquired
will be acceptable to a reasonably prudent person engaged in the acquisition,
ownership and operation of the type of property interest involved and subject
only to defects existing as of the date of acquisition which are not material or
for which appropriate adjustments in the cost of acquisition shall have been
made.
5.15 Investment Company Act. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
5.16 Public Utility Holding Company Act. Each of the Borrower and each
of its Subsidiaries is not subject to, or is exempt from, regulation as a
"holding company", a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", in each case as such
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terms are defined in the Public Utility Holding Company Act of 1935, as amended
and the rules and regulations thereunder.
5.17 Insurance. As of the Closing Date, the certificate provided
pursuant to Section 4.1(x) of the Original Credit Agreement and signed by an
Authorized Representative of the Borrower, that attests to the existence and
adequacy of, and summarizes, the property and casualty insurance program carried
by the Borrower and that has been furnished by the Borrower to the Agent and the
Lenders, is complete and accurate in all material respects.
5.18 Solvency. (i) Immediately after the consummation of the Destec
Transaction and immediately following the making of each Loan, if any, and
issuance of any Letter of Credit, if any, made or issued, as the case may be, on
the date hereof and after giving effect to the application of the proceeds of
such Loans and Letters of Credit, (a) the value of the assets of the Borrower
and its Subsidiaries on a consolidated basis, at a fair valuation, will exceed
the debts and liabilities, subordinated, contingent or otherwise, of the
Borrower and its Subsidiaries on a consolidated basis; (b) the present fair
saleable value of the property of the Borrower and the Subsidiaries on a
consolidated basis will be greater than the amount that will be required to pay
the probable liability of the Borrower and its Subsidiaries on a consolidated
basis on their debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; (c)
the Borrower and its Subsidiaries on a consolidated basis will be able to pay
their debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (d) the Borrower and its
Subsidiaries on a consolidated basis will not have unreasonably small capital
with which to conduct the businesses in which they are engaged as such
businesses are now conducted and are proposed to be conducted after the date
hereof.
(ii) The Borrower does not intend to, or to permit any of its
Subsidiaries to, and does not believe that it or any of its Subsidiaries will,
incur debts beyond its ability to pay such debts as they mature, taking into
account the timing of and amounts of cash to be received by it or any such
Subsidiary and the timing of the amounts of cash to be payable on or in respect
of its Debt or the Debt of any such Subsidiary.
5.19 Default. Neither the Borrower nor any of its Subsidiaries is in
default under the provisions of any Material Agreement or of any instrument
evidencing any material obligation, indebtedness, or liability of the Borrower
or any of its Subsidiaries, or of any agreement relating thereto, or in default
under or in violation of any order, writ, injunction, decree, regulation, or
demand of any Tribunal, which default or violation could reasonably be expected
to have a Material Adverse Effect.
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ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1 Affirmative Covenants.
6.1.1 Financial Reporting. The Borrower will maintain, for itself and each
Subsidiary of the Borrower, a system of accounting established and administered
in accordance with generally accepted accounting principles, and furnish to the
Lenders:
(i) As soon as available, and in any event within sixty (60) days
after the end of each of the first three quarterly periods of each of its
fiscal years, (i) a consolidated statement of income of the Borrower and
its Subsidiaries for such quarter and a consolidated statement of income
and a consolidated statement of cash flows of the Borrower and its
Subsidiaries for the period commencing with the beginning of the Borrower's
fiscal year to the end of such quarter, (ii) a consolidated balance sheet
of the Borrower and its Subsidiaries as of the close of business for such
quarter, (iii) consolidating statements of income of the Borrower and its
Subsidiaries for such quarter and consolidating statements of income and
consolidating statements of cash flows of the Borrower and its Subsidiaries
for the period commencing with the beginning of the Borrower's fiscal year
to the end of such quarter prepared on a business segment basis, showing
gas, liquids, electric power and corporate, or such other segments as
agreed from time to time by the Agent, as business segments, (iv)
consolidating balance sheets of the Borrower and its Subsidiaries as of the
close of business for such quarter prepared on a business segment basis,
showing gas, liquids, electric power and corporate, or such other segments
as agreed from time to time by the Agent, as business segments, and (v) a
computation of the ratios and amounts required to be maintained by Sections
6.3.1, 6.3.2 and 6.3.3, all in reasonable detail, prepared in accordance
with generally accepted accounting principles and certified by an
Authorized Officer to the effect that they present fairly the financial
condition and results of the operations of the Borrower at the date and for
the period indicated therein, subject to changes resulting from year-end
audit adjustments.
(ii) As soon as available and in any event within 120 days after the
close of each of its fiscal years, an unqualified (except for
qualifications relating to changes in accounting principles or practices
reflecting changes in generally accepted principles of accounting and
required or approved by the Borrower's independent certified public
accountants) audit report certified by independent certified public
accountants, acceptable to the Agent, prepared in accordance with generally
accepted accounting principles on a consolidated basis for the Borrower and
its Subsidiaries, including a balance sheet as of the end of such period
and related statements of income, retained earnings and cash flows,
accompanied by a
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computation made by such accountants of the ratios and amounts required to
be maintained by Sections 6.3.1, 6.3.2 and 6.3.3.
(iii) Together with the financial statements required hereunder, a
compliance certificate in substantially the form of Exhibit "C" hereto
signed by an Authorized Officer of the Borrower (a "Compliance
Certificate") certifying that the statements fairly present the Borrower's
financial condition and results of operations showing the calculations
necessary to determine compliance with this Agreement and stating that no
Default or Unmatured Default exists, or if any Default or Unmatured Default
exists, stating the nature and status thereof.
(iv) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with respect to any
Single Employer Plan, a statement, signed by an Authorized Officer of the
Borrower, describing said Reportable Event and the action which the
Borrower proposes to take with respect thereto.
(v) Promptly after becoming aware thereof, written notice of any
litigation which could reasonably be expected to result in a judgment
against the Borrower or any of its Subsidiaries in excess of $25,000,000,
net of insurance coverage which is reasonably expected to be paid by the
insurer, or other event or condition which could reasonably be expected to
have a Material Adverse Effect.
(vi) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy statements
so furnished.
(vi) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports which
the Borrower or any of its Subsidiaries files with the Securities and
Exchange Commission.
(vii) Promptly, notice in writing to the Lenders of the occurrence of
any Default or Unmatured Default.
(ix) Such other information (including non-financial information) as
the Agent or any Lender may from time to time reasonably request.
6.1.2 Use of Proceeds. The Borrower will, and will cause each Subsidiary
of the Borrower to, use the proceeds of the Tranche A Advances to provide (i)
funds to complete the Destec Transaction and for paying the expenses of
consummating the Destec Transaction, (ii) funds for working capital needs and
other general corporate purposes, including Acquisitions provided that any
Acquisition is approved by the board of directors of the target or selling
company and by any required shareholder vote (to the extent such approval or
vote is required by applicable law or by the organizational documents,
regulations or by-laws of the target or selling company), other than purchases
which comply with the second sentence of Section 5.11, and (iii) to repay
outstanding
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Tranche A Advances. The Borrower will use the Tranche B Advances to provide
funds to complete the Destec Transaction and for paying the expenses of
consummating the Destec Transaction. The Borrower will not, nor will it permit
any Subsidiary of the Borrower to, use any of the proceeds of the Advances to
purchase or carry any "margin stock" (as defined in Regulation U) in violation
of Regulation U.
6.1.3 Additional Subsidiary Guaranties. The Borrower will cause any
Subsidiary of the Borrower (other than any Project Financing Subsidiary) which
after the date hereof has (i) consolidated fixed assets plus net working capital
with a book value equal to or greater than $100,000,000 as determined in a
manner consistent with the most recent financial statements provided pursuant to
Section 6.1.1 or (ii) 15% or more of the Consolidated EBITD for the calendar
quarter immediately prior to the quarter in which such determination is made
(unless such Consolidated EBITD for such Subsidiary for such quarter is less
than $10,000,000 or unless such Person is not a Subsidiary of the Borrower for
the entire calendar quarter) to become a Guarantor with respect to, and be
jointly and severally liable with all other Guarantors for, all the Obligations
by executing and delivering to the Lenders a guaranty substantially in the form
of the applicable Subsidiary Guaranty except to the extent that such Person
becomes a Subsidiary of the Borrower pursuant to an Acquisition and is subject
at the time of such Acquisition to restrictions adversely affecting its ability
to enter into a Subsidiary Guaranty; provided however, in the event that any
Subsidiary of the Borrower provides a Guaranty with respect to any Debt of the
Borrower other than the Obligations or of the Institutionally Targeted Capital
Securities, such Subsidiary shall also concurrently become a Guarantor with
respect to, and be jointly and severally liable with all other Guarantors for,
all the Obligations by executing and delivering to the Lenders a guaranty
substantially in the form of the applicable Subsidiary Guaranty (an "Additional
Guaranty") and, in the event that any such Subsidiary no longer provides a
Guaranty with respect to such other Debt of the Borrower or the Institutionally
Targeted Capital Securities, so long as such Additional Guaranty is not
otherwise required pursuant to this Section 6.1.3, the Additional Guaranty shall
concurrently terminate. Notwithstanding anything to the contrary in this
Section 6.1.3, no Subsidiary of Destec shall be required to deliver a Guaranty
pursuant to this Section 6.1.3 to the extent (i) it does not incur any Debt or
issue any Guaranty after the effective date of the Destec Transaction and (ii)
the eighteenth month anniversary of the effective date of the Destec Transaction
has not yet occurred; provided, that if within such eighteen month period a
Destec Subsidiary which has provided a Subsidiary Guaranty pursuant to this
Section 6.1.3 is (A) sold or otherwise transferred and ceases to be a Subsidiary
of the Borrower or (B) sells or transfers assets and as a result thereof is not
(after giving effect to such sales and transfers) a Subsidiary which would be
obligated to deliver a Subsidiary Guaranty under this Section 6.1.3, then so
long as no Default has occurred and is continuing, such Subsidiary Guaranty
shall be automatically released upon such sale or other transfer in the case of
the foregoing (A) or upon request of the Borrower in the case of the foregoing
(B). In addition, a Subsidiary Guaranty delivered by a Guarantor pursuant to
this Agreement may be released and terminated upon written request of the
Borrower provided that (A) such Guarantor as of the end of the most recent
calendar quarter prior to the quarter in which such request is made satisfies
the Guarantor Discontinuance Test, (B) at the time of such release no Default
shall have occurred and be continuing and (C) upon the effectiveness of such
termination all other Guaranties
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of such Subsidiary with respect to any Debt of the Borrower (other than the
Obligations) or the Institutionally Targeted Capital Securities shall
concurrently terminate and be of no further force or effect. The Administrative
Agent is hereby authorized by each of the Lenders to provide to the Borrower on
behalf of the Lenders written confirmation of the release and termination of any
Subsidiary Guaranty pursuant to either of the three preceding sentences. The
Administrative Agent and the Lenders acknowledge and agree that each of the NGC
Storage, Inc., Hub Service, Inc., and NGC Anadarko Gathering Systems, Inc.
Subsidiary Guaranties have been released and terminated.
6.1.4 Conduct of Business. The Borrower will, and will cause each
Subsidiary of the Borrower to, carry on and conduct its business in
substantially the same manner and in substantially the same fields of enterprise
as it is presently conducted or contemplated (after giving effect to the Destec
Transaction) and to do all things reasonably necessary to remain duly
incorporated, validly existing and in good standing as a domestic corporation in
its jurisdiction of incorporation or as a partnership in its jurisdiction of
organization, as the case may be, to maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted (except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect) and to keep in full force and effect its respective existence,
rights, leases, patents, and all other licenses or rights necessary to comply
with all Laws or other provisions of any Material Agreement (except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect); provided, however, that nothing in this Section 6.1.4 shall prevent the
abandonment and retirement of property used or useful in the conduct of the
business of the Borrower or any of its Subsidiaries, if, in the reasonable
opinion of the Borrower or the applicable Subsidiary of the Borrower, such
abandonment or retirement of property is in the interest of the Borrower or such
Subsidiary and not prejudicial to the Lenders.
6.1.5 Taxes and Other Charges. The Borrower will, and will cause each
Subsidiary of the Borrower to, pay when due all taxes, assessments and
governmental charges and levies upon it or its income, profits or Property, as
well as all lawful claims for labor, materials, and supplies, which, if unpaid
could become a Lien or charge on such Property, or any part thereof, except,
with regard to any of the foregoing, which are being contested in good faith by
appropriate proceedings diligently pursued and with respect to which adequate
reserves as required by Agreement Accounting Principles have been set aside.
6.1.6 Insurance. The Borrower will, and will cause each Subsidiary of the
Borrower to, maintain with financially sound and reputable insurance companies
insurance on their Property in such amounts and covering such risks as is
consistent with prudent industry practice, and the Borrower will furnish to any
Lender upon reasonable request full information as to the insurance carried,
including, without limitation, certificates of insurers, brokers and agents, as
to such insurance.
6.1.7 Compliance with Laws. The Borrower will, and will cause each
Subsidiary of the Borrower to, comply with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be subject,
including, without limitation, all Environmental Laws, and
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obtain, keep, and comply with, all necessary permits, approvals, certificates
and licenses in effect and remain in compliance therewith, except in any such
case where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
6.1.8 Maintenance of Properties. The Borrower will, and will cause each
Subsidiary of the Borrower to, maintain, preserve, protect and keep its Property
in good repair, working order and condition in accordance with prudent industry
practices, and make all necessary and proper repairs, renewals and replacements
so that its business is carried on in accordance with prudent industry
practices; provided, however, that nothing in this Section 6.1.8 shall prevent
the abandonment and retirement of property used or useful in the conduct of the
business of the Borrower or any of its Subsidiaries, if, in the reasonable
opinion of the Borrower or the applicable Subsidiary, such abandonment or
retirement of property is in the interest of the Borrower or such Subsidiary and
would not have a Material Adverse Effect.
6.1.9 Inspection. The Borrower will, and will cause each Subsidiary of the
Borrower to, permit the Agent and the Lenders, by their respective
representatives and agents, to visit and inspect (so long as no Default shall
have occurred, at their own risk, cost and expense) any of the Property,
corporate books and financial records of the Borrower and each Subsidiary of the
Borrower, to audit and examine and make copies of the books of accounts and
other financial records (and after the occurrence and during the continuance of
a Default, other records) of the Borrower and each Subsidiary of the Borrower,
and to discuss the affairs, finances and accounts of the Borrower and each
Subsidiary of the Borrower with, and to be advised as to the same by, their
respective officers upon reasonable advance notice, and at such reasonable times
(during normal business hours) and intervals as the Agent and the Lenders may
designate; provided, however, that during such time as no Default has occurred
and is continuing, visits, inspections and audits by the Agent and the Lenders
shall be conducted on the same date and not more often than once during any
calendar quarter, unless otherwise agreed by the Borrower.
6.1.10 Maintenance of Books and Records. The Borrower will maintain, and
will cause each of its Subsidiaries to maintain, proper books of record and
account in which the Borrower and each of its Subsidiaries will make full, true,
and correct entries, in accordance with Agreement Accounting Principles, of all
dealings and transactions with respect to which pursuant to any Law or Agreement
Accounting Principles the Borrower is required to maintain written records in
relation to its business and activities.
6.1.11 Compliance with ERISA. The Borrower will comply, and will cause
each of its Subsidiaries to comply, with all applicable minimum funding
requirements and all other applicable requirements of ERISA except where a
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
6.2 Negative Covenants.
6.2.1 [Intentionally Omitted].
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6.2.2 Debt. The Borrower will not, nor will it permit any Subsidiary of
the Borrower to, create, incur or suffer to exist any Debt, except:
(i) The Obligations;
(ii) Debt existing on the date hereof (not otherwise permitted
pursuant to this Section 6.2.2) and included in the financial statements
referred to in Section 5.4 or in Schedule "2" hereto;
(iii) The Existing Warren Subordinated Debt;
(iv) Debt incurred under Capitalized Leases or secured by a purchase
money Lien permitted by Section 6.2.9(iv) provided that both before and
after giving effect to any incurrence of any such obligation or Debt there
exists no Default or Unmatured Default;
(v) Debt of (A) a Subsidiary of the Borrower due to the Borrower or
any other Subsidiary of the Borrower or (B) the Borrower due to any
Subsidiary of the Borrower;
(vi) To the extent not otherwise permitted by this Section 6.2.2,
Debt of Subsidiaries of the Borrower in an amount not to exceed in the
aggregate for all such Debt at any one time outstanding $150,000,000,
provided, that both before and after giving effect to any incurrence of
such Debt there exists no Default or Unmatured Default, provided further
that no Subsidiary of the Borrower shall enter into or permit to exist any
agreement with respect to any such Debt which restricts or prohibits, or
which has the effect of restricting or prohibiting the declaration or
payment of dividends or other distributions or advances by that Subsidiary
to the Borrower and its other Subsidiaries;
(vii) Project Financing;
(viii) To the extent not otherwise permitted by this Section 6.2.2,
Debt of the Borrower up to an amount such that both before and after the
incurrence of such Debt there will not exist a Default or an Unmatured
Default;
(ix) Debt of any Person which is outstanding at the time such Person
becomes a Subsidiary of the Borrower as a result of a permitted
Acquisition;
(x) Renewals, extensions, amendments, refinancing, rearrangements,
modifications, restatements, defeasances, purchases or supplements of any
Debt referred to in Subsection 6.2.2(i) through (ix), provided that no such
renewal, extension, amendment, refinancing, rearrangement, modification,
restatement or supplement shall increase the amount of the outstanding
Existing Warren Subordinated Debt; and
(xi) Debt in respect of the facility referred to in clause (iv)(a) of
Section 6.2.8.
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6.2.3 Merger. The Borrower will not, nor will it permit any Subsidiary of
the Borrower to, merge or consolidate with or into any other Person, unless both
before and after giving effect to such merger or consolidation, there exists no
Default or Unmatured Default; provided that (i) if any Subsidiary of the
Borrower party to such a merger or consolidation is a Guarantor, the Subsidiary
Guaranty of such Guarantor shall remain in force and effect and (ii) if the
Borrower is a party to such a merger or consolidation, the Borrower is the
surviving Person or if the Borrower is not the surviving Person, the surviving
Person shall expressly assume in writing in form and substance reasonably
satisfactory to the Agent all of the liabilities and obligations of the Borrower
hereunder, under the Notes and under the other Loan Documents.
6.2.4 Sale of Assets. The Borrower will not, nor will it permit any
Subsidiary of the Borrower to, lease, sell or otherwise dispose of its Property,
to any other Person except:
(i) sales of inventory, Natural Gas, electricity, crude oil, natural
gas liquids and other forms of energy in the ordinary course of business,
(ii) sales or other dispositions of notes receivable or accounts
receivable as permitted by Section 6.2.5,
(iii) leases, sales or other dispositions of its Property that,
together with all other Property of the Borrower and its Subsidiaries
previously leased, sold or disposed of (other than Property otherwise
permitted to be sold, leased, or otherwise disposed of pursuant to this
Section 6.2.4) during the twelve-month period ending with the month in
which any such lease, sale or other disposition occurs, do not constitute a
Substantial Portion of the Property of the Borrower and its Subsidiaries,
provided, that for purposes of this clause (iii), the sale or other
disposition by a Subsidiary of the Borrower of stock or other equity
interests in itself to a Person other than the Borrower or one or more of
its Subsidiaries shall be considered a sale or other disposition of
Property with a value equal to the difference between (A) the product of
the Borrower's direct and indirect percentage of ownership of such
Subsidiary times the book value of such Subsidiary before such sale or
other disposition minus (B) the product of the percentage of the Borrower's
direct and indirect ownership of such Subsidiary times the sum of the book
value of such Subsidiary after giving effect to such sale or other
disposition plus any assets acquired in connection with such sale or other
disposition,
(iv) sales of assets which are concurrently leased back,
(v) sales or exchanges of fixed assets which are intended to be and
are replaced within 180 days of such sale or other disposition by fixed
assets having a substantially similar or greater fair market value,
(vi) dispositions of assets which are obsolete or no longer used or
useful in the business of the Borrower or any of its Subsidiaries,
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(vii) leases, sales or other dispositions of its Property by (A) the
Borrower to any of its Subsidiaries or (B) any Subsidiary of the Borrower
to the Borrower or any other Subsidiary of the Borrower,
(viii) sales or other dispositions of any ownership interest, whether
in whole or in part, in any fractionators within twelve (12) months of the
consummation of the Newco Combination to comply with requirements of
governmental authorities in connection with the Newco Combination, or
(ix) the AES Transaction, or
(x) the sale of any of Destec's assets or any of Destec's
Subsidiaries, in whole or in part, within 18 months of the effective date
of the Destec Transaction;
provided that the parties understand and agree that any merger otherwise
permitted by Section 6.2.3 (including the Newco Combination) shall not
constitute a disposition of assets.
6.2.5 Sale of Accounts. The Borrower will not, nor will it permit any
Subsidiary to, sell or otherwise dispose of any notes receivable or accounts
receivable, with or without recourse, with an aggregate outstanding principal
amount (in the case of notes) and an aggregate outstanding face amount (in the
case of accounts receivable) in excess, for all such sales and other
dispositions on or after the date hereof of $150,000,000 at any time and from
time to time outstanding.
6.2.6 [Intentionally Omitted]
6.2.7 Investments and Acquisitions. The Borrower will not, nor will it
permit any Subsidiary of the Borrower to, make or suffer to exist any
Investments, except:
(i) Short-term obligations of, or fully guaranteed by, the United
States of America.
(ii) Commercial paper rated A-l or better by S&P or P-l or better by
Moody's Investors Service, Inc.
(iii) Certificates of deposit issued by and time deposits with
commercial banks (whether domestic or foreign) having capital and surplus
in excess of $100,000,000 or any Lender.
(iv) Other Investments (not otherwise permitted pursuant to this
Section 6.2.7) in existence on the date hereof and included in the
financial statements provided pursuant to Section 5.4 or in Schedule "1"
hereto.
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(v) Loans or advances to Warren pursuant to the Warren Intercompany
Credit Agreement.
(vi) Advances, loans, extensions of credit or capital contributions by
the Borrower or any of its Subsidiaries to or on behalf of the Borrower or
any Subsidiary or Affiliate of the Borrower (including, but not limited to,
the purchase of the Existing Warren Subordinated Debt), provided that both
before and after giving effect to any such advance, loan, extension of
credit or capital contribution, there exists no Default or Unmatured
Default.
(vii) Contributions of capital to any Person, or investments in, or
purchases or other acquisitions (in accordance with Regulation U) of, the
stock, partnership interests, notes, debentures or other securities of any
Person, or any commitment for any of the foregoing.
(viii) Repurchase agreements with the Agent or any Lender, or banks
that are insured by the Federal Deposit Insurance Corporation and having a
capital and an unimpaired surplus of at least One Hundred Million Dollars
($100,000,000), and with members of the Association of Primary Dealers in
United States Government Securities, the underlying securities of which are
of the type described in (i) above, and each of which is secured at all
times by obligations of the same type that have fair market value,
including accrued interest, at least equal to the amount of such repurchase
agreement, including accrued interest.
(ix) Obligations of any state within the United States of America, any
nonprofit corporation or any instrumentality of the foregoing, provided
that at the time of their purchase, such obligations are rated in one of
the two highest letter rating categories (e.g. in the case of S&P, either
its AAA or AA category) by a nationally recognized securities credit rating
agency.
(x) Obligations issued by political subdivisions or municipalities of
any state within the United States of America, any nonprofit corporation or
any instrumentality of the foregoing, that are rated in one of the two
highest letter rating categories (e.g. in the case of S&P, either its AAA
or AA category) by a nationally recognized securities credit rating agency.
(xi) Eurodollar deposits with the overseas branch of any domestic bank
or any Lender having a capital and surplus of at least One Hundred Million
Dollars ($100,000,000).
(xii) Participations having a term of no more than 90 days with (i)
any Lender or (ii) any financial institution, the unsecured debt of which
is rated in one of the two highest letter rating categories (e.g. in the
case of S&P, either its AAA or AA category) by a nationally recognized
securities credit rating agency, in loans made or owned by such Lender or
other financial institution to Persons which have open market commercial
paper rated in
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either of the two highest short-term rating categories by a nationally
recognized securities credit rating agency.
6.2.8 Contingent Obligations. The Borrower will not, nor will it permit
any Subsidiary of the Borrower to, make or suffer to exist any Guaranty, except:
(i) endorsement of instruments for deposit or collection in the
ordinary course of business,
(ii) the Subsidiary Guaranties,
(iii) Guaranties of the Existing Warren Subordinated Debt, which
Guaranties are subordinated to the Obligations in a manner satisfactory to
the Agent, acting reasonably,
(iv) Guaranties of obligations in respect of letters of credit (other
than Letters of Credit) or Debt with respect to reimbursement of draws (a)
under a letter of credit and reimbursement facility in an amount not to
exceed $350,000,000 in the aggregate pursuant to which one or more letters
of credit will be issued in favor of CUSA to support the obligations of the
Borrower and/or any of its Subsidiaries under the Natural Gas Purchase and
Sale Agreement between the Borrower and/or any of its Subsidiaries and CUSA
and (b) in addition to the letters of credit described in the foregoing
clause (a), not to exceed in the aggregate at any time outstanding an
amount equal to the excess, if any, of (1) $300,000,000 over (2) the Stated
Amount of Letters of Credit plus unreimbursed obligations in respect of
drawings under Letters of Credit,
(v) the Warren Guaranties set forth in Schedule 5,
(vi) Guaranties of (A) Debt of the Borrower and its Subsidiaries
otherwise permitted pursuant to the terms of this Agreement, (B)
obligations of the Borrower and its Subsidiaries under leases that do not
constitute Capitalized Lease Obligations at the time such leases are
entered into, and (C) other obligations of the Borrower and its
Subsidiaries (other than (1) Guaranties of Debt of Persons other than the
Borrower and its Subsidiaries, (2) Guaranties of obligations set forth in
agreements, undertakings or other arrangements by which the Borrower and
its Subsidiaries agree to maintain the net worth, working capital or any
other financial condition of any other Person, (3) Guaranties of the type
referred to in clause (a) of the definition of the term Guaranty and not
otherwise permitted by clause (iv) of this Section 6.2.8, and (4)
completion guaranties or similar assurances that a project performs as
planned) of a type normally incurred in the industry and incurred in the
ordinary course of business; and
(vii) to the extent not included above, Guaranties of other
obligations (including, without limitation, agreements containing
completion guaranties or similar assurances that a project performs as
planned and excluding Guaranties of the type referred to in clause (a)
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of the definition of Guaranty not otherwise permitted by clause (iv) of
this Section 6.2.8) which obligations are otherwise permitted pursuant to
the terms of this Agreement not to exceed in the aggregate at any time the
greater of $150,000,000 or 5% of the Borrower's tangible assets on a
consolidated basis at such time.
6.2.9 Liens. The Borrower will not, nor will it permit any Subsidiary of
the Borrower to, create, incur, or suffer to exist any Lien in, of or on the
Property of the Borrower or any of its Subsidiaries, except:
(i) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not
materially affect the marketability of the same or interfere with the use
thereof in the business of the Borrower or its Subsidiaries;
(ii) Liens existing on the date hereof (not otherwise permitted
pursuant to this Section 6.2.9) and described in Schedule "2" hereto;
(iii) Permitted Liens;
(iv) (a) Liens created by Capitalized Leases permitted by Section
6.2.2(iv) provided that the Liens created by any such Capitalized Lease
attach only to the property leased to the Borrower or one of its
Subsidiaries pursuant thereto, and (b) purchase money Liens securing Debt
(including such Liens securing Debt incurred within 12 months of the date
on which such Property was acquired) permitted by Section 6.2.2(iv)
provided that all such Liens attach only to the property purchased with the
proceeds of the Debt secured thereby, (c) Liens on receivables or notes
created in connection with a receivables or notes sale permitted by Section
6.2.5 and Liens on rights of the Borrower or any of its Subsidiaries
related to such receivables or notes which are transferred to the purchaser
of such receivables or notes in connection with such permitted sale,
provided that such Liens secure only the obligations of the Borrower or any
of its Subsidiaries in connection with such sale and (d) Liens created by
leases that do not constitute Capitalized Leases at the time such leases
are entered into provided that the Liens created thereby attach only to the
property leased to the Borrower or one of its Subsidiaries pursuant
thereto;
(v) Liens on cash and short-term investments (a) deposited by the
Borrower or any of its Subsidiaries in margin accounts with futures
contract brokers authorized to trade on the New York Mercantile Exchange to
secure its obligations with respect to futures contracts for the purchase
or sale of natural gas, natural gas liquids, domestic crude, Brent crude,
propane, heating oil, unleaded gasoline and/or jet fuel or (b) pledged by
the Borrower or any of its Subsidiaries to secure its obligations pursuant
to one or more Fixed Price Contracts or other such contracts with respect
to other commodities or interest rate or currency rate management
contracts;
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(vi) Liens on (A) Property owned by a Project Financing Subsidiary or
(B) equity interests in a Project Financing Subsidiary (including in each
case a pledge of a partnership interest, common stock or a membership
interest in a limited liability company) securing Debt incurred in
connection with a Project Financing;
(vii) Liens on Property of a Person which exist at the time such
Person becomes a Subsidiary of the Borrower as a result of a permitted
Acquisition which Liens were not granted in contemplation of such Person
becoming a Subsidiary of the Borrower; and
(viii) extensions, renewals or replacements of any Lien referred to in
Sections 6.2.9(i) through (vii), provided that the principal amount of the
Debt or obligation secured thereby is not increased and that any such
extension, renewal or replacement Lien is limited to the Property
originally encumbered thereby.
6.2.10 Consolidated Net Fixed Price Book Deficit. The Borrower will not
permit the Consolidated Net Fixed Price Book Deficit as of any date for the
period beginning on the first day of the Prompt Month and ending on the last day
of the last month after such date for which there is any Natural Gas Projected
Contract Exposure to exceed $15,000,000.
6.2.11 [Intentionally omitted.]
6.2.12 Affiliates. The Borrower will not, and will not permit any
Subsidiary of the Borrower to, enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with, or make any
payment or transfer to, any Affiliate (other than the Borrower or any of its
Subsidiaries and other than dividends to shareholders of the Borrower) except
upon terms no less favorable to the Borrower or such Subsidiary than the
Borrower or such Subsidiary would obtain in a comparable arms-length transaction
and except the transactions and payments contemplated in and made pursuant to
the Destec Contract or the Merger Agreement or the Newco Combination Agreement
and together with, in each case, the other agreements attached as Exhibits
thereto and except transactions and payments between Destec and its Affiliates
pursuant to agreements in effect at the time of the effectiveness of the Destec
Transaction.
6.2.13 Judgments. The Borrower will not allow any final judgment for the
payment of money in excess of Twenty-Five Million Dollars ($25,000,000) with
respect to the Borrower or any Subsidiary of the Borrower (other than any
Project Financing Subsidiary) rendered against the Borrower or any Subsidiary of
the Borrower to remain undischarged or unbonded for a period of thirty (30) days
during which such execution shall not be effectively stayed or deferred.
6.3 Financial Covenants.
6.3.1 Net Worth. The Borrower will maintain at all times, Consolidated
Tangible Net Worth of not less than the sum of (i) $400 million, plus (ii) 50%
of the Borrower's Consolidated Net Income, if positive, for each fiscal quarter
ending after March 14, 1995, plus (iii) 50% of the
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aggregate net proceeds of all issuances of equity securities made by the
Borrower after March 14, 1995; provided that for purposes of this Section 6.3.1,
the Institutionally Targeted Capital Securities will not constitute equity of
the Borrower and its Subsidiaries.
6.3.2 Leverage Ratio. The Borrower will not permit its Leverage Ratio to
exceed 60%; provided that notwithstanding the foregoing, until the earlier of
(i) the end of the quarter which ends the quarter containing the date which is
18 months from the effective date of the Destec Transaction, and (ii) the
effective date of the AES Transaction, the Leverage ratio shall not exceed 65%;
provided further that for purposes of determining the Leverage Ratio pursuant to
this Section 6.3.2, the Institutionally Targeted Capital Securities are deemed
to be included in stockholders' equity.
6.3.3 Coverage Ratio. The Borrower will maintain for each Rolling Period
ending as of the last day of each calendar quarter a ratio of (i) Consolidated
EBITD minus Maintenance Capital Expenditures to (ii) Scheduled Debt Service of
not less than 2.0 to 1.0.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall constitute
a Default:
7.1 Any representation or warranty made or deemed made by the Borrower or
any of its Subsidiaries to the Lenders, any Issuer or the Agent under or in
connection with this Agreement or any other Loan Document shall be incorrect in
any material respect on the date as of which made or deemed made.
7.2 The failure or refusal of any Obligor to (a) pay the principal of any
of the Obligations, or any part thereof, as it becomes due in accordance with
the terms of the Loan Documents, or (b) pay interest on any of the Obligations,
or any part thereof, or any other amount or fee under the terms of this
Agreement and the other Loan Documents, within five (5) Business Days after it
becomes due.
7.3 The breach by the Borrower of any of the terms or provisions of
Section 6.1.2, 6.1.9, 6.2.1, 6.2.2, 6.2.3, 6.2.4, 6.2.5, 6.2.8 or 6.2.9.
7.4 The breach by the Borrower (other than a breach which constitutes a
Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions of this
Agreement or any other Loan Document or by any Obligor of any other Loan
Document and, if capable of being remedied, such breach shall remain unremedied
for 30 days after the earlier of (i) an Authorized Officer of the Borrower
obtaining knowledge of such breach, or (ii) written notice thereof being given
to the Borrower by any Lender, the Agent or any Issuer.
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7.5 (a) Failure of any Obligor or any Subsidiary (other than any Project
Financing Subsidiary) of an Obligor to pay when due (subject to any applicable
grace period), whether by acceleration or otherwise, any Debt (other than the
Obligations and other than the Existing Warren Subordinated Debt and other than
the CUSA Assumed Debt) aggregating for all of the Obligors and their respective
Subsidiaries in excess of $40,000,000 in principal amount; (b) the default by
any Obligor or any Subsidiary (other than any Project Financing Subsidiary) of
an Obligor in the performance of any term, provision or condition contained in
any agreement under which any Debt (other than the Obligations and other than
the Existing Warren Subordinated Debt and other than the CUSA Assumed Debt)
aggregating for all of the Obligors and their respective Subsidiaries (other
than any Project Financing Subsidiary) in excess of $40,000,000 in principal
amount was created or is governed, or any other event shall occur or condition
exist, the effect of which default or other event or condition is to permit the
holder or holders of such Debt to cause such Debt to become due prior to its
stated maturity and such default, event or condition continues for more than 30
days; provided, however, that in the event the rights of any holder or holders
of such Debt to accelerate such Debt have been terminated by cure of such
default or written waiver by the holder of such Debt, such default shall not
thereafter constitute a Default hereunder until such time as the right of such
holder or holders to accelerate such Debt again arises; (c) any Debt (other than
the Obligations and other than the Existing Warren Subordinated Debt and other
than the CUSA Assumed Debt) of any of the Obligors or any of their respective
Subsidiaries aggregating for all of the Obligors and their respective
Subsidiaries in excess of $40,000,000 in principal amount shall be declared to
be due and payable or required to be prepaid (other than by a regularly
scheduled payment) prior to the stated maturity thereof; (d) any of the Existing
Warren Subordinated Debt shall be declared to be due and payable or required to
be prepaid prior to the stated maturity thereof and shall not be paid (or such
acceleration rescinded) within 30 days of the date on which it is required to be
so paid; or (e) demand for payment shall be made for all or any part of the CUSA
Assumed Debt prior to the stated maturity thereof and such payment shall not be
made (or such demand rescinded) on or before the earlier of (i) 30 days
following such demand or (ii) the date upon which the holder thereof commences
proceedings to collect such payment.
7.6 The Borrower or any of its Subsidiaries (other than any Project
Financing Subsidiary) or any Guarantor shall (i) have an order for relief
entered with respect to it under the Federal bankruptcy laws as now or hereafter
in effect, (ii) make an assignment for the benefit of creditors, (iii) apply
for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
Substantial Portion of its Property, (iv) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it, (v)
take any corporate action to authorize or effect any of the foregoing actions
set forth in this Section 7.6, (vi) not pay, or admit in writing its inability
to pay, its debts generally as they become due. or (vii) fail to contest in good
faith any appointment or proceeding described in Section 7.7.
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7.7 Without the application, approval or consent of the Borrower or any of
its Subsidiaries (other than any Project Financing Subsidiary), or any
Guarantor, a receiver, trustee, examiner, liquidator or similar official shall
be appointed for the Borrower or such Subsidiary or such Guarantor or any
Substantial Portion of the Property of any of the foregoing, or a proceeding
described in Section 7.6(iv) shall be instituted against the Borrower or any of
its Subsidiaries (other than any Project Financing Subsidiary) or any Guarantor
and such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of 60 consecutive days.
7.8 The failure of the Borrower or any Subsidiary of the Borrower (other
than any Project Financing Subsidiary) to have stayed or discharged within a
period of thirty (30) days after the commencement thereof any attachment,
sequestration, or similar proceeding against any of its assets having a fair
market value of $25,000,000 or more.
7.9 Any Change in Control shall occur.
7.10 Any Subsidiary Guaranty shall fail to remain in full force or effect
or any action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Subsidiary Guaranty, or any Guarantor shall fail to
comply with any of the terms or provisions of any Subsidiary Guaranty to which
it is a party, or any Guarantor denies that it has any further liability under
any Subsidiary Guaranty to which it is a party, or gives notice to such effect;
provided, however, that no termination of a Subsidiary Guaranty resulting from
the merger of one Subsidiary of the Borrower which has executed a Subsidiary
Guaranty into another Subsidiary of the Borrower which has executed a Subsidiary
Guaranty shall constitute a Default so long as the Subsidiary Guaranty of the
corporation surviving such merger remains in full force and effect and that any
release or termination of a Subsidiary Guaranty pursuant to Section 6.1.3 shall
not constitute a Default.
7.11 Subsidiaries. The Borrower shall cease to own, directly or indirectly,
free and clear of Liens, at least the following percentage (or such lesser
percentage of such Person as was owned at the time such Person reached either of
the thresholds described in (i)(A) or (i)(B) below, without giving effect to
transfers made in contemplation of such Person's reaching such threshold) of the
issued and outstanding capital stock or other equity of a Guarantor, other than
as a result of the merger of such Guarantor into another Subsidiary of the
Borrower or as a result of a transfer that did not result in a Default under
this Section 7.11 at the time made: (i) 80% of a Guarantor at any time either
(A) having fixed assets and net working capital with a book value equal to or
greater than $100,000,000 or (B) contributing 15% or more of the Consolidated
EBITD for an entire calendar quarter or (ii) 51% of any Guarantor other than a
Guarantor referred to in the foregoing clause (i); provided, however, that the
failure to own a Guarantor that has been released, or whose Subsidiary Guaranty
has been terminated, pursuant to Section 6.1.3 shall not constitute a Default.
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ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1 Acceleration.
(a) If any Default described in Section 7.6 (other than 7.6 (ii) and other
than 7.6(v) hereof as to any of the matters in 7.6(ii) hereof) or 7.7 occurs,
(i) the obligations of the Lenders to make Loans hereunder and the obligations
of the Issuers to issue Letters of Credit shall automatically terminate and the
Obligations shall immediately become due and payable without presentment,
demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives and without any election or action on the part of the Agent,
any Lender or any Issuer and (ii) the Borrower will be and become thereby
unconditionally obligated, without the need for demand or the necessity of any
act or evidence, to deliver to the Agent from time to time, for deposit into the
Letter of Credit Collateral Account, an amount (the "Collateral Shortfall
Amount") equal to the excess, if any, of
(A) 100% of the sum of the aggregate maximum amount remaining
available to be drawn under the Letters of Credit (assuming compliance with
all conditions for drawing thereunder) issued and outstanding as of such
time, over
(B) the amount on deposit in the Letter of Credit Collateral Account
at such time that is free and clear of all rights and claims of third
parties and that has not been applied by the Lenders against the
Obligations;
provided, however, that so long as no Default shall have occurred and be
continuing, if the amount on deposit in the Letter of Credit Collateral Account
exceeds the Collateral Shortfall Amount, then the Agent shall return to the
Borrower an amount of such deposit equal to such excess, and the Lenders and
Issuers hereby authorize the Agent to do so.
(b) If any Default occurs and is continuing (other than a Default described
in Section 7.6(i) or 7.6(iii) through (vii) or 7.7), (i) the Required Lenders
may terminate or suspend the obligations of the Lenders to make Loans and the
obligation of the Issuers to issue Letters of Credit hereunder, or declare the
Obligations to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which the Borrower hereby expressly waives and (ii)
the Required Lenders may, upon notice delivered to the Borrower and in addition
to the continuing right to demand payment of all amounts payable under this
Agreement, make demand on the Borrower to deliver (and the Borrower will,
forthwith upon demand by the Required Lenders and without necessity of further
act or evidence, be and become thereby unconditionally obligated to deliver), to
the Agent, at its address specified pursuant to Article XIII, for deposit into
the Letter of Credit Collateral Account an amount equal to the Collateral
Shortfall Amount.
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(c) If at any time while any Default is continuing, the Agent determines
that the Collateral Shortfall Amount at such time is greater than zero, the
Agent may make demand on the Borrower to deliver (and the Borrower will,
forthwith upon demand by the Agent and without necessity of further act or
evidence, be and become thereby unconditionally obligated to deliver), to the
Agent as additional funds to be deposited and held in the Letter of Credit
Collateral Account an amount equal to such Collateral Shortfall Amount at such
time.
(d) The Agent may at any time or from time to time after funds are
deposited in the Letter of Credit Collateral Account, apply such funds to the
payment of the Obligations and any other amounts as shall from time to time have
become due and payable by the Borrower to the Lenders under the Loan Documents;
provided, that such amounts will not be applied to Obligations (other than
Obligations in respect of Letters of Credit) until all Letters of Credit have
terminated and all Obligations in respect of Letters of Credit have been paid in
full.
(e) Neither the Borrower nor any Person claiming on behalf of or through
the Borrower shall have any right to withdraw any of the funds held in the
Letter of Credit Collateral Account. After all of the Obligations have been
indefeasibly paid in full, any funds remaining in the Letter of Credit
Collateral Account shall be returned by the Agent to the Borrower or paid to
whoever may be legally entitled thereto at such time.
(f) The Agent shall exercise reasonable care in the custody and
preservation of any funds held in the Letter of Credit Collateral Account and
shall be deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Agent accords its own property, it
being understood that the Agent shall not have any responsibility for taking any
necessary steps to preserve rights against any Persons with respect to any such
funds.
8.2 Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements (including consents and
waivers) supplemental hereto for the purpose of adding or modifying any
provisions to the Loan Documents or changing in any manner the rights of the
Lenders or the Borrower hereunder or waiving any Default hereunder; provided,
however, that no such supplemental agreement shall, without the consent of each
Lender affected thereby:
(i) Extend the maturity of any Loan or Note or forgive all or any portion
of the principal amount, interest or fees thereof, or reduce the rate
or extend the time of payment of interest or fees thereon or any
participation fee on any Letter of Credit.
(ii) Reduce the percentage specified in the definition of Required
Lenders.
(iii) Extend the Tranche A Revolving Facility Termination Date, or the
Tranche B Facility Termination Date or reduce the amount of, or
extend the payment date for, the mandatory payments required under
Section 2.4, or increase the amount of the Commitment of any Lender
hereunder, or permit the Borrower to assign its rights
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under this Agreement or change the definition of Tranche A Aggregate
Revolving Commitment or Tranche B Aggregate Commitment.
(iv) Amend this Section 8.2.
(v) Release any Guarantor of any Obligation from its Subsidiary Guaranty
or release any Subsidiary Guaranty other than a release pursuant to
Section 6.1.3.
(vi) Permit the Borrower to assign its rights or obligations under the
Loan Documents.
(vii) Amend the parenthetical phrase in the first sentence of the
definition of Eurodollar Interest Period.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of or modify the fee required under Section 12.3.2 without obtaining the consent
of any other party to this Agreement. No amendment of any provision of this
Agreement relating to any Issuer shall be effective without the consent of such
Issuer. The Issuer of any Letter of Credit may waive or modify the fee required
under Section 2.2.6 with respect to such Letter of Credit without obtaining the
consent of any other party to this Agreement.
8.3 Preservation of Rights. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 8.2, and then only
to the extent specifically set forth in such writing. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent, the Issuers and the Lenders until the Obligations have
been paid in full and all Commitments have terminated.
ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations; Obligations. All representations and
warranties of the Borrower contained in this Agreement shall survive delivery of
the Notes and the making of the Loans and issuance of Letters of Credit herein
contemplated.
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9.2 Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3 Taxes. Any taxes (excluding federal income taxes on the overall net
income of any Lender) or other similar assessments or charges made by any
governmental or revenue authority in respect of the Loan Documents shall be paid
by the Borrower, together with interest and penalties, if any.
9.4 Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
9.5 Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Agent, each Issuer and the Lenders and
supersede all prior agreements and understandings among the Borrower, the Agent,
each Issuer and the Lenders relating to the subject matter thereof.
9.6 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any
of its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this Agreement
and their respective permitted successors and assigns.
9.7 Expenses; Indemnification of Agent, Issuers and Lenders. The Borrower
shall reimburse the Agent for any reasonable costs, internal charges and out-of-
pocket expenses (including reasonable attorneys' fees and time charges of
attorneys for the Agent, which attorneys may be employees of the Agent) paid or
incurred by the Agent in connection with the preparation, negotiation,
execution, delivery, review, amendment, modification, and administration of the
Loan Documents. The Borrower also agrees to reimburse the Agent, the Issuers
and the Lenders for any reasonable costs, internal charges and out-of-pocket
expenses (including reasonable attorneys' fees and time charges of attorneys for
the Agent, the Issuers and the Lenders, which attorneys may be employees of the
Agent, the Issuers or the Lenders) paid or incurred by the Agent or any Lender
in connection with the collection and enforcement of the Loan Documents.
Neither the Agent, any Issuer, any Lender nor any of their respective officers,
directors, employees, or agents (each, an "Indemnified Party") shall be liable
for any action in good faith taken or omitted to be taken by such Indemnified
Party pursuant to, in connection with, or in any way related to this Agreement
or any other Loan Document including, without limitation, an Indemnified Party's
own negligence or co-negligence except to the extent such action or omission
constitutes willful misconduct or gross negligence on the part of such
Indemnified Party (or its officers, directors, employees or authorized
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agents) or is adjudicated by a court of competent jurisdiction to constitute
gross negligence or willful misconduct on the part of such Indemnified Party (or
its officers, directors, employees or authorized agents). The Borrower agrees to
the fullest extent permitted by applicable Law, to indemnify and to hold
harmless each Indemnified Party from and against any and all losses, claims,
damages, penalties, judgments, expenses and liabilities to Persons not party to
this Agreement including all actions with respect thereto (including, without
limitation, any alleged violations of applicable federal or state securities
laws committed by any Person other than such Indemnified Party or any such loss
resulting from such Indemnified Party's negligence), and reasonable attorneys'
fees and costs (including, without limitation, all expenses of litigation and
preparation therefor) which any of them may pay or incur arising out of or in
connection with this Agreement, the other Loan Documents and the transactions
contemplated hereby and thereby or the direct or indirect application of the
proceeds of any Loan or Letter of Credit, or the performance by such Indemnified
Party of its obligations hereunder and under the other Loan Documents; provided,
however, that the indemnification provided for herein shall not apply to any
such loss (i) adjudicated by a court of competent jurisdiction to have resulted
from the willful misconduct or gross negligence of such Indemnified Party, (ii)
arising out of any claim made by any Lender against the Agent or another Lender
under this Agreement or the other Loan Documents, or (iii) arising out of any
claim made by any Participant against a Lender which does not result from a
breach by any Obligor of any term or provision of this Agreement or any other
Loan Document. The obligations of the Borrower under this Section shall survive
the termination of this Agreement.
9.8 Numbers of Documents. All statements, notices, closing documents, and
requests hereunder shall be furnished to the Agent with sufficient counterparts
so that the Agent may furnish one to each of the Lenders.
9.9 [Intentionally Omitted].
9.10 Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
9.11 Nonliability of Lenders. The relationship between the Borrower and
the Lenders and the Agent shall be solely that of borrower and lender. Neither
the Agent, any Issuer nor any Lender shall have any fiduciary responsibilities
to the Borrower. Neither the Agent, any Issuer nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower of any matter in
connection with any phase of the Borrower's business or operations.
9.12 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS OF LAWS) OF THE STATE OF
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
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9.13 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
THE AGENT, ANY ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION.
9.14 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT, EACH ISSUER AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
9.15 Confidential Information. The Agent and each Lender agree that all
documentation and other information made available by the Borrower to the Agent
or such Lender under the terms of this Agreement shall (except to the extent
such documentation or other information is publicly available or hereafter
becomes publicly available other than by action of the Agent or such Lender, or
was theretofore known or hereinafter becomes known to the Agent or such Lender
on a nonconfidential basis independent of any disclosure thereto by the
Borrower) be held in confidence by the Agent or such Lender in accordance with
prudent banking procedures and used solely in the administration and enforcement
of the Loans and Letters of Credit from time to time outstanding and in the
prosecution or defense of legal proceedings arising in connection herewith;
provided that (i) the Agent or such Lender may disclose documentation and
information to the Agent and/or to any other Lender which is a party to this
Agreement or any Affiliates thereof and (ii) the Agent or such Lender may
disclose such documentation or other information to any other bank or other
Person to which such Lender sells or proposes to make an assignment or sell a
participation in its Loans hereunder if such other bank or Person, prior to such
disclosure, agrees in writing to be bound by the terms of the confidentiality
statement customarily employed by the Agent or such Lender in connection with
such potential transfers provided that the terms of such confidentiality
statement are no less restrictive than those contained in the confidentiality
agreement executed by the Borrower and the Agent or such Lender.
Notwithstanding the foregoing, nothing contained herein shall be construed to
prevent the Agent or any Lender from (a) making disclosure of any information
(i) if required to do so by applicable law or regulation, (ii) to any
governmental agency or regulatory body having or claiming to have authority to
regulate or oversee any aspect of the Agent's or Lender's business or that of
the Agent's or Lender's corporate parent or affiliates in connection with the
exercise of such authority or claimed authority, (iii) pursuant to any subpoena
or if otherwise
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compelled in connection with any litigation or administrative proceeding, (iv)
to correct any false or misleading information which may become public
concerning such Person's relationship to the Borrower, or (v) to the extent the
Agent or such Lender or its counsel deems necessary or appropriate to enforce
any remedy provided in the Loan Documents, the Notes or this Agreement or
otherwise available by law; or (b) making, on a confidential basis, such
disclosures as such Lender reasonably deems necessary or appropriate to its
legal counsel or accountants (including outside auditors). If the Agent or such
Lender is compelled to disclose such confidential information in a proceeding
requesting such disclosure, the Agent or such Lender shall seek to obtain
assurance that such confidential treatment will be accorded such information;
provided, however, the Agent or such Lender shall have no liability for the
failure to obtain such treatment. Notwithstanding anything in this Agreement to
the contrary, each Lender agrees that to the extent it acquires information from
or on behalf of the Borrower or any of its Subsidiaries that may provide a
competitive advantage with regard to the sale or purchase of commodities or
derivative products, such Lender will take all reasonable care to keep such
information confidential as to the officers, agents or employees of such Lender
or any Affiliate thereof that are involved in such Lender's or Affiliate's
commodity trading activities.
ARTICLE X
THE AGENT
10.1 Appointment and Authority of Agent and Issuers. In order to expedite
the various transactions contemplated by this Agreement, each Lender hereby
designates and appoints First Chicago to act as its agent hereunder, and
authorizes First Chicago and each Issuer to take such action on its behalf under
the provisions of this Agreement and to exercise such powers and perform such
duties as are expressly delegated to the Agent or such Issuer, as the case may
be, by the terms of this Agreement or any other Loan Document, together with
such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement or any other Loan
Document, neither the Agent nor any Issuer shall have any duties or
responsibilities, except those expressly set forth herein or therein, or any
fiduciary relationship with any Lender or any Obligor, and no implied covenants,
functions, responsibilities, duties, obligations, or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Agent or any Issuer. Should the Agent fail or refuse to take any action
requested hereunder by the Required Lenders, the Agent shall resign and the
Required Lenders shall promptly appoint a successor to the Agent hereunder. At
any time that no Person or Persons are acting as agent hereunder, the Obligors
are authorized to deal directly with each Lender for all purposes hereunder
including, without limitation, the remittances of amounts then required to be
paid hereunder and, in respect to any request or the like purportedly delivered
by the Required Lenders to the Obligors, the Obligors shall receive written
evidence thereof. The Agent is hereby expressly authorized as agent on behalf
of the Lenders, without hereby limiting any implied authority:
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(a) To receive on behalf of each Lender any payment of principal or
interest on the Advances paid to the Agent, and to promptly distribute to each
Lender its pro rata share of all payments so received;
(b) To receive all documents and items to be furnished hereunder;
(c) To act as nominee for and on behalf of all of the Lenders in and under
this Agreement and the other Loan Documents;
(d) To arrange for the means whereby the funds of the Lenders are to be
made available to the Borrower;
(e) To distribute to the Lenders information, requests, payments,
prepayments, documents, and other items received from the Obligors and others;
(f) To execute and deliver to the Obligors and others requests, demands,
approvals, and consents received from the Lenders;
(g) To the extent permitted by this Agreement, to exercise on behalf of
each Lender all remedies of the Lenders or the Agent upon the occurrence of any
Default or Unmatured Default specified in this Agreement, to the extent
requested by the Required Lenders; and
(h) To take such other actions as may be requested by the Required Lenders,
subject to the limitations of Section 8.2.
10.2 Capacity of the Agent and each Issuer. With respect to its commitment
to lend hereunder and the Loans made by it, the Agent and each Issuer in their
respective capacities as a Lender and not as the Agent or an Issuer, as the case
may be, shall have the same rights and powers hereunder as the other Lenders and
may exercise the same rights and power as though it were not the Agent or an
Issuer.
10.3 No Liability of the Agent or Issuers and Indemnity. Neither the
Agent, any Issuer nor any of their respective officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (i) liable for any action taken
or omitted to be taken by it or them hereunder or otherwise in connection with
the Loan Documents (except for its or such Person's own willful misconduct or
gross negligence in not performing a specific administrative duty hereunder), or
(ii) responsible in any manner to any Lender for any recitals, statements,
representations, or warranties made by any Obligor or any officer thereof
contained in any Loan Document or in any certificate, report, statement, or
other document referred to or provided for in, or received by the Agent or any
Issuer under or in connection with, any Loan Document or for the value,
validity, effectiveness, genuineness, enforceability, or sufficiency of any Loan
Document or for any failure of any Obligor to perform its obligations under any
Loan Document. Neither the Agent nor any Issuer shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
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any of the agreements or conditions contained in any Loan Document, or to
inspect the properties, books, or records of any Obligor. To the extent that
the Agent or any Issuer is not reimbursed or indemnified by the Obligors, each
of the Lenders will indemnify the Agent and each Issuer to the fullest extent
permitted by applicable Law pro rata based upon their respective Percentages
from and against any and all demands, liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements of any
kind whatsoever which may at any time be imposed on, incurred by, or asserted
against the Agent or such Issuer in any way relating to or arising out of this
or any other Loan Document, or any documents contemplated by or referred to
herein, or therein, or the transactions contemplated hereby, or thereby, or any
action taken or omitted by the Agent or such Issuer under or in connection with
any of the foregoing, including resulting from the Agent's or such Issuer's own
negligence (and including, without limitation, any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting from any violations or alleged violation of applicable
federal or state securities laws, committed by any Person other than the Agent
or such Issuer) but not gross negligence or willful misconduct. The agreements
in this Section 10.3. shall survive the termination of this Agreement.
10.4 Employees of Agent and Issuers. The Agent and the Issuers may execute
any and all duties hereunder by or through agents or employees and shall be
entitled to advice of counsel pertaining to all matters hereunder. The Borrower
has agreed to reimburse the Agent for actual out-of-pocket expenses incurred by
the Agent and its agents in acting under this Agreement and each other Loan
Document and to pay any reasonable legal and out-of-pocket expenses incurred by
the Agent in connection with the development, preparation, negotiation, and
execution of the Loan Documents, or the enforcement of the rights of the Agent,
the Issuers and the Lenders thereunder. Each Lender agrees to reimburse the
Agent and each Issuer, when applicable, in the amount of its pro rata share
based upon its Percentage of any out-of-pocket expenses incurred for the benefit
of the Lenders and not reimbursed by the Obligors.
10.5 Reliance. The Agent and each Issuer shall be entitled to rely on any
conversation, notice, consent, certificate, schedule, affidavit, letter,
telegram, teletype message, statement, order, or other document believed to be
genuine and correct and to have been signed or sent by the proper Person or
Persons and, in respect of legal matters, upon an opinion of counsel selected by
the Agent or such Issuer. The Agent, each Issuer and the Obligors may deem and
treat the original Lenders hereunder as the owners of their respective pro rata
shares of the Obligations for all purposes hereof notwithstanding any assignment
or transfer of any interest therein by any Lender in accordance with the
provisions of Article XII. Any request, authority, or consent of any holder of
any of the Notes shall be conclusive and binding on any subsequent holder,
transferee, or assignee of such Note. The Agent and each Issuer shall be fully
justified in failing or refusing to take any action hereunder or under any other
Loan Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent and each Issuer shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or under any other Loan Document in accordance
with a request of the Required Lenders, or of all of the Lenders in the
circumstances required by
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Section 10.7, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders and their successors and
assigns. Each Lender expressly acknowledges that neither the Agent, any Issuer
nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it
and that no act by the Agent or any Issuer hereinafter taken shall be deemed to
constitute any representation or warranty by the Agent or any Issuer to any
Lender. Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Agent hereunder, neither the Agent nor any
Issuer shall have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property,
financial and other condition or creditworthiness of any Obligor or any of its
Subsidiaries which may come into the possession of the Agent, any Issuer or any
of their respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
10.6 Several Commitments. Except as expressly provided in this Section
10.6, the obligations of the Lenders under this Agreement are several. The
default by any Lender in making its Loan in accordance with its commitment
hereunder shall not relieve the other Lenders of their obligations hereunder.
In the event of any default by any Lender in advancing its pro rata share of any
Advance, a non-defaulting Lender shall be obligated to advance its pro-rata
share of such Advance but shall not be obligated to advance the amount which the
defaulting Lender was required to advance hereunder. Nothing in this Section
10.6 shall be construed as releasing, modifying, or waiving the obligation of
each Lender to forward or deposit its pro rata share of any Advance pursuant to
the terms of this Section 10.6 and this Agreement.
10.7 Notice of Default. Neither the Agent nor any Issuer shall be deemed
to have knowledge or notice of the occurrence of any Default or Unmatured
Default unless the Agent or such Issuer has received notice from a Lender or an
Obligor referring to this Agreement or other relevant Loan Document, describing
such Default or Unmatured Default and stating that such notice is a "notice of
default." Notwithstanding the provisions of the immediately preceding sentence,
in the event that the Agent, any Issuer or any Lender knows of any Default or
Unmatured Default such Person shall, as soon as practicable, give notice of same
to each other Lender. In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the Lenders. The Agent shall take such
action with respect to such Default or Unmatured Default as shall be reasonably
directed by the Required Lenders; provided that, unless and until the Agent
shall have received such directions, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action (unless directions from
the Required Lenders are required therefore under Article VIII), with respect to
such Default or Unmatured Default as it shall deem advisable in the best
interests of the Lenders.
10.8 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, any Issuer or any other
Lender and based on the financial statements prepared by the Borrower and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent, any Issuer or any other Lender and based on
such documents and information as it
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shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
10.9 Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, such resignation to be effective
upon the appointment of a successor Agent or, if no successor Agent has been
appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, the Required Lenders shall have
the right to appoint with the consent of the Borrower which such consent shall
not be unreasonably withheld or delayed, on behalf of the Borrower and the
Lenders, a successor Agent. If no successor Agent shall have been so appointed
by the Required Lenders within thirty days after the resigning Agent's giving
notice of its intention to resign, then the resigning Agent may appoint with the
consent of the Borrower which such consent shall not be unreasonably withheld or
delayed, on behalf of the Borrower and the Lenders, a successor Agent. If the
Agent has resigned and no successor Agent has been appointed, the Lenders may
perform all the duties of the Agent hereunder and the Borrower shall make all
payments in respect of the Obligations to the applicable Lender or Issuer and
for all other purposes shall deal directly with the Lenders. No successor Agent
shall be deemed to be appointed hereunder until such successor Agent has
accepted the appointment. Any such successor Agent shall be a commercial bank
having capital and retained earnings of at least $100,000,000. 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 resigning Agent. Upon the
effectiveness of the resignation of the Agent, the resigning Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation of an Agent, the
provisions of this Article X shall continue in effect for the benefit of such
Agent in respect of any actions taken or omitted to be taken by it while it was
acting as the Agent hereunder and under the other Loan Documents.
10.10 The Co-Agents have no duties hereunder in their capacities as Co-
Agents.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1 Setoff. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default or Unmatured Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or not
collected or available) and any other Debt at any time held or owing by any
Lender to or for the credit or account of the Borrower may be offset and applied
toward the payment of the Obligations owing to such Lender, whether or not the
Obligations, or any part hereof, shall then be due.
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11.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans of a particular Type (other than payments
received pursuant to Sections 3.1, 3.2 or 3.4 and other than in respect of its
Competitive Bid Advances) in an amount greater than its Percentage, such Lender
agrees, promptly upon demand, to purchase a portion of the Loans held by the
other Lenders of such Type of Loans so that after such purchase each Lender of
such Type of Loans will hold its ratable proportion of such Type of Loans. If
any Lender, whether in connection with setoff or amounts which might be subject
to setoff or otherwise, receives collateral or other protection for its
Obligations or such amounts which may be subject to setoff, such Lender agrees,
promptly upon demand, to take such action necessary such that all Lenders share
in the benefits of such collateral ratably in proportion to their Percentages.
In case any such payment is disturbed by legal process, or otherwise,
appropriate further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower, the
Agent, the Issuers and the Lenders and their respective successors and permitted
assigns, except that (i) the Borrower shall not have the right to assign its
rights or obligations under the Loan Documents and (ii) any assignment by any
Lender must be made in compliance with Section 12.3. Notwithstanding clause
(ii) of this Section, any Lender may at any time, without the consent of the
Borrower or the Agent, assign all or any portion of its rights under this
Agreement and its Notes to a Federal Reserve Bank; provided, however, that no
such assignment shall release the transferor Lender from its obligations
hereunder. The Agent and the Borrower may treat the payee of any Note as the
owner thereof for all purposes hereof unless and until such payee complies with
Section 12.3 in the case of an assignment thereof. Any assignee or transferee
of a Note agrees by acceptance thereof to be bound by all the terms and
provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
12.2 Participations.
12.2.1 Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to such Lender, any Note held by
such Lender, any Commitment of such Lender or any other interest of such
Lender under the Loan Documents. In the event of any such sale by a Lender
of participating interests to a Participant, such Lender's obligations
under the Loan Documents shall remain unchanged, such Lender shall remain
solely responsible to the other parties hereto for the
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performance of such obligations, such Lender shall remain the holder of any
such Note for all purposes under the Loan Documents, all amounts payable by
the Borrower under this Agreement shall be determined as if such Lender had
not sold such participating interests, and the Borrower and the Agent shall
continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under the Loan Documents.
12.2.2 Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which forgives
principal, interest or fees or reduces the interest rate or fees payable
with respect to any such Loan or Commitment, postpones any date fixed for
any regularly-scheduled payment of principal of, or interest or fees on,
any such Loan or Commitment, releases any Guarantor of any such Loan or
Letter of Credit or releases any substantial portion of collateral, if any,
securing any such Loan or Letter of Credit.
12.2.3 Benefit of Setoff. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in Section 11.1 in
respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under the Loan Documents, provided
that each Lender shall retain the right of setoff provided in Section 11.1
with respect to the amount of participating interests sold to each
Participant. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11.1,
agrees to share with each Lender, any amount received pursuant to the
exercise of its right of setoff, such amounts to be shared in accordance
with Section 11.2 as if each Participant were a Lender.
12.3 Assignments.
12.3.1 Permitted Assignments. Any Lender may, in the ordinary course
of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities ("Purchasers") all or any part of
its rights and obligations under the Loan Documents subject, in the case of
assignments to a Purchaser which is not a Lender prior to such assignment,
to a minimum of $15,000,000 or such lesser amount as may be consented to by
the Borrower, the Agent and, in the case of an assignment of any interest
in the Tranche A Revolving Facility, the Issuers of any outstanding Letters
of Credit. Such assignment shall be substantially in the form of Exhibit
"D" hereto or in such other form as may be agreed to by the parties
thereto. The consent of the Borrower, the Agent and, in the case of an
assignment of any interest in the Tranche A Revolving Facility, the Issuers
of any outstanding Letters of Credit shall be required prior to an
assignment becoming effective with respect to a Purchaser which is not a
Lender (or in the case of an assignment of any interest in the Tranche A
Revolving Facility, a Tranche A Lender), or an Affiliate thereof; provided,
however, that if a Default has occurred and is continuing, the consent of
the
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Borrower shall not be required. Such consent of the Borrower and the Agent
shall not be unreasonably withheld; such consent of each Issuer may be
given or withheld in its sole discretion.
12.3.2 Effect; Effective Date. Upon (i) delivery to the Agent of a
notice of assignment, substantially in the form attached as Exhibit "I" to
Exhibit "D" hereto (a "Notice of Assignment"), together with any consents
required by Section 12.3.1, and (ii) payment of a $2,500 fee to the Agent
for processing such assignment, such assignment shall become effective on
the effective date specified in such Notice of Assignment. The Notice of
Assignment shall contain a representation by the Purchaser to the effect
that none of the consideration used to make the purchase of the Commitment
and Loans under the applicable assignment agreement are "plan assets" as
defined under ERISA and that the rights and interests of the Purchaser in
and under the Loan Documents will not be "plan assets" under ERISA. On and
after the effective date of such assignment, such Purchaser shall, to the
extent that rights and obligations hereunder have been assigned it pursuant
to such assignment, be a Lender party to this Agreement and any other Loan
Document executed by the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same extent as if
it were an original party hereto, and no further consent or action by the
Borrower, the Lenders or the Agent shall be required to release the
transferor Lender with respect to the percentage of the Aggregate
Commitment and Loans assigned to such Purchaser. Upon the consummation of
any assignment to a Purchaser pursuant to this Section 12.3.2, the
transferor Lender, the Agent and the Borrower shall make appropriate
arrangements so that replacement Notes are issued to such transferor Lender
and new Notes or, as appropriate, replacement Notes, are issued to such
Purchaser, in each case in principal amounts reflecting their Commitment,
as adjusted pursuant to such assignment and each replaced Note shall be
returned to the Borrower marked "canceled and replaced." Notwithstanding
any assignment hereunder, the agreements and Obligations of the Borrower
contained in Section 3.1, 3.2, 3.4 or 9.7 with respect to the transferor
Lender shall survive such assignment and be enforceable by such transferor
Lender, in accordance with the terms of this Agreement, with respect to
acts and circumstances occurring prior to such transfer. Notwithstanding
any assignment hereunder, the agreements and obligations of the transferor
Lender pursuant to Section 10.3 shall survive such assignment and be
enforceable by the Agent or any Issuer with respect to acts and
circumstances occurring prior to such transfer.
12.4 Dissemination of Information. The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries, provided
such Participant, Purchaser, Transferee or other Person has signed a
confidentiality agreement substantially similar to the provisions of Section
9.15.
12.5 Tax Treatment. If any interest in any Loan Document is transferred to
any Transferee which is organized under the laws of any jurisdiction other than
the United States or any State
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thereof, the transferor Lender shall cause such Transferee, concurrently with
the effectiveness of such transfer, to comply with the provisions of Section
2.19.
ARTICLE XIII
NOTICES
13.1 Giving Notice. Except as otherwise permitted by Section 2.13 with
respect to Borrowing Notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as may
be designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shall be deemed
given when transmitted on any Business Day (answerback confirmed in the case of
telexes).
13.2 Change of Address. The Borrower, the Agent, any Issuer and any Lender
may each change the address for service of notice upon it by a notice in writing
to the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower, the Agent and the Lenders
and each party has notified the Agent by telex or telephone, that it has taken
such action.
90
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
NGC CORPORATION
By:_________________________
Print Name:_________________
Title:______________________
1000 Louisiana, Suite 5800
Houston, TX 77002
Attn: Senior Vice President and
Chief Financial Officer
Telephone No.: (713) 507-6400
with a copy to:
Attn: Senior Vice President and General
Counsel
91
<PAGE>
Tranche A Tranche B THE FIRST NATIONAL BANK OF
- --------- --------- CHICAGO, Individually and as Agent
Commitments Commitments
$62,799,999.92 $30,000,000.00
By:_____________________________
Print Name:_____________________
Title:__________________________
One First National Plaza
Chicago, Illinois 60670
Attn: Petroleum and Mining Division
Telecopy No.: 312-732-3055
with a copy to:
The First National Bank of Chicago
1100 Louisiana, Suite 3200
Houston, Texas 77002
Attn: Helen Carr
Telephone No.: 713-654-7335
Telecopy No.: 713-654-7370
92
<PAGE>
Tranche A Tranche B ABN AMRO BANK, N.V.
- --------- ---------
Commitments Commitments
$11,338,461.54 $0.00
By:_________________________
Print Name:_________________
Title:______________________
By:_________________________
Print Name:_________________
Title:______________________
Three Riverway, Suite 1700
Houston, Texas 77056
Attn:_______________________
Telecopy No.: 713-629-7533
93
<PAGE>
Tranche A Tranche B BANK OF MONTREAL
- --------- ---------
Commitments Commitments
$25,384,615.38 $0.00
By:___________________________
Print Name:___________________
Title:________________________
700 Louisiana, Suite 4400
Houston, Texas 77002
Attn:_________________________
Telecopy No.: 713-223-4007
94
<PAGE>
Tranche A Tranche B THE BANK OF NEW YORK
- --------- ---------
Commitments Commitments
$24,030,769.23 $26,000,000.00
By:____________________________
Print Name:____________________
Title:_________________________
1 Wall Street, 19th Floor
New York, NY 10286
Attn:__________________________
Telecopy No.:__________________
95
<PAGE>
Tranche A Tranche B THE BANK OF NOVA SCOTIA
- --------- ---------
Commitments Commitments
$25,384,615.38 $26,000,000.00
By:__________________________
Print Name:__________________
Title:_______________________
1100 Louisiana, Suite 3000
Houston, Texas 77002
Attn:________________________
Telecopy No.:________________
96
<PAGE>
Tranche A Tranche B BANK OF SCOTLAND
- --------- ---------
Commitments Commitments
$25,384,615.38 $0.00
By:__________________________
Print Name:__________________
Title:_______________________
565 Fifth Avenue
New York, New York 10017
Attn:________________________
Telecopy No.:________________
with a copy to:
BANK OF SCOTLAND
1750 Two Allen Center
1200 Smith Street
Houston, Texas 77002-1870
Attn: Mr. Rex M. McSwain
Telephone No.: 713-651-1870
Telecopy No.: 713-651-9714
97
<PAGE>
Tranche A Tranche B THE BANK OF TOKYO-MITSUBISHI,
- --------- --------- LTD., HOUSTON AGENCY
Commitments Commitments
$22,676,923.08 $26,000,000.00
By:__________________________
Print Name:__________________
Title:_______________________
1100 Louisiana Street, Suite 2800
Houston, Texas 77002-5215
Attn: David L. Denbina, P.E.
Telecopy No.: 713/658-0116
98
<PAGE>
Tranche A Tranche B THE CHASE MANHATTAN BANK
- --------- ---------
Commitments Commitments
$42,307,692.31 $29,000,000.00
By:__________________________
Print Name:__________________
Title:_______________________
707 Travis, 7th Floor North
Houston, Texas 77002
Attn:________________________
Telecopy No.:________________
99
<PAGE>
Tranche A Tranche B CHRISTIANA BANK, NEW YORK BRANCH
- --------- ---------
Commitments Commitments
$11,338,461.54 $26,000,000.00
By:__________________________
Print Name:__________________
Title:_______________________
11 West 42nd Street, 7th Floor
New York, New York 10036
Attn:________________________
Telecopy No.:________________
100
<PAGE>
Tranche A Tranche B CIBC INC.
- --------- ---------
Commitments Commitments
$25,384,615.38 $26,000,000.00
By:__________________________
Print Name:__________________
Title:_______________________
Attn:________________________
Telecopy No.:________________
with a copy to:
Canadian Imperial Bank of Commerce
909 Fannin, Suite 1200
Houston, Texas 77010
Attn: Alice Davidson
Telephone No.: 713-655-5230
Telecopy No.: 713-658-9922
101
<PAGE>
Tranche A Tranche B CAISSE NATIONALE DE CREDIT
- --------- --------- AGRICOLE
Commitments Commitments
$23,338,461.54 $26,000,000.00
By:__________________________
Print Name:__________________
Title:_______________________
55 East Monroe Street, 47th Floor
Chicago, Illinois 60603-5702
Attn:________________________
Telecopy No.:________________
102
<PAGE>
Tranche A Tranche B CREDIT LYONNAIS NEW YORK BRANCH
- --------- ---------
Commitments Commitments
$25,384,615.38 $26,000,000.00
By:__________________________
Print Name:__________________
Title:_______________________
Attn:________________________
Telecopy No.:________________
with a copy to:
Credit Lyonnais Houston Representative Office
1000 Louisiana Street, Suite 5360
Houston, Texas 77002
Attn:________________________
Telephone No.:_______________
Telecopy No.:________________
103
<PAGE>
Tranche A Tranche B THE FIRST NATIONAL BANK OF BOSTON
- --------- ---------
Commitments Commitments
$25,384,615.38 $12,500,000.00
By:__________________________
Print Name:__________________
Title:_______________________
100 Federal Street
Mail Stop 010802
Boston, Massachusetts 02110
Attn:________________________
Telecopy No.:________________
104
<PAGE>
Tranche A Tranche B THE FUJI BANK, LIMITED, HOUSTON
- --------- --------- AGENCY
Commitments Commitments
$11,338,461.54 $26,000,000.00
By:__________________________
Print Name:__________________
Title:_______________________
One Houston Center, Suite 4100
1221 McKinney
Houston, Texas 77010
Attn:________________________
Telecopy No.:________________
105
<PAGE>
Tranche A Tranche B THE INDUSTRIAL BANK OF JAPAN, LTD
- --------- ---------
Commitments Commitments
$11,338,461.54 $12,500,000.00
By:__________________________
Print Name:__________________
Title:_______________________
245 Park Avenue, 23rd Floor
New York, New York 10167
Attn:________________________
Telecopy No.:________________
106
<PAGE>
Tranche A Tranche B LTCB TRUST COMPANY
- --------- ---------
Commitments Commitments
$11,338,461.54 $0.00
By:__________________________
Print Name:__________________
Title:_______________________
New York, New York
Attn:________________________
Telecopy No.:________________
with a copy to:
LTCB
2200 Ross Avenue, Suite 4700 West
Dallas, Texas 75201
Attn: Brian Myers
Telephone No.: 214/969-5352
Telecopy No.: 214/969-5357
107
<PAGE>
Tranche A Tranche B MELLON BANK, N.A. (WEST)
- --------- ---------
Commitments Commitments
$11,338,461.54 $0.00
By:__________________________
Print Name:__________________
Title:_______________________
1100 Louisiana, Suite 3600
Houston, Texas 77002-5201
Attn: Mark Cuenod
Telecopy No.: 713/650-3409
108
<PAGE>
Tranche A Tranche B NATIONAL WESTMINSTER BANK PLC
- --------- --------- (NEW YORK BRANCH)
Commitments Commitments
$25,384,615.38 $0.00
By:__________________________
Print Name:__________________
Title:_______________________
175 Water Street
New York, New York 10038
Attn: David Smith
Telecopy No.: 212/602-4118
NATIONAL WESTMINSTER BANK PLC
(NASSAU BRANCH)
By:__________________________
Print Name:__________________
Title:_______________________
109
<PAGE>
Tranche A Tranche B NATIONSBANK OF TEXAS, N.A.
- --------- ---------
Commitments Commitments
$42,307,692.31 $29,000,000.00
By:__________________________
Print Name:__________________
Title:_______________________
Attn:________________________
Telecopy No.:________________
110
<PAGE>
Tranche A Tranche B PNC BANK, N.A.
- --------- ---------
Commitments Commitments
$11,338,461.54 $0.00
By:__________________________
Print Name:__________________
Title:_______________________
Attn:________________________
Telecopy No.:________________
111
<PAGE>
Tranche A Tranche B ROYAL BANK OF CANADA
- --------- ---------
Commitments Commitments
$25,384,615.38 $26,000,000.00
By:__________________________
Print Name:__________________
Title:_______________________
Financial Square, 32 Old Slip
New York, NY 10005-3537
Attn: Loan Administrator
Telecopy No.: (212) 428-2372
Telepone No.: (212) 428-6204
112
<PAGE>
Tranche A Tranche B SOCIETE GENERALE, SOUTHWEST
- --------- ---------- AGENCY
Commitments Commitments
$25,384,615.38 $12,500,000.00
By:__________________________
Print Name:__________________
Title:_______________________
1111 Bagby Street
Houston, TX 77002
Attn:________________________
Telecopy No.:________________
113
<PAGE>
Tranche A Tranche B SOUTHWEST BANK OF TEXAS, N.A.
- --------- ---------
Commitments Commitments
$2,030,769.23 $2,000,000.00
By:__________________________
Print Name:__________________
Title:_______________________
Attn:________________________
Telecopy No.:________________
114
<PAGE>
Tranche A Tranche B THE TORONTO-DOMINION BANK
- --------- ---------
Commitments Commitments
$11,338,461.54 $26,000,000.00
By:__________________________
Print Name:__________________
Title:_______________________
31 West 52nd Street
New York, New York 10019-6101
Attn: Richard Donner
Telecopy No.: 212/262-1929
115
<PAGE>
Tranche A Tranche B WESTDEUTSCHE LANDESBANK
- --------- --------- GIROZENTRALE
Commitments Commitments
$11,338,461.54 $12,500,000.00
By:__________________________
Print Name:__________________
Title:_______________________
1211 Avenue of the Americas, 23rd Floor
New York, New York 10036
Attn: Richard Newmann
Telecopy No.: 212/852-6307
By:__________________________
Print Name:__________________
Title:_______________________
116
<PAGE>
EXHIBIT ___
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FIRST AMENDMENT TO
LETTER OF CREDIT FACILITY AGREEMENT
among
NGC CORPORATION,
as the Borrower,
and
CANADIAN IMPERIAL BANK OF COMMERCE,
Individually and As Agent,
and
THE LENDERS NAMED THEREIN
Dated as of April 23, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
FIRST AMENDMENT TO LETTER OF CREDIT FACILITY AGREEMENT
THIS FIRST AMENDMENT TO LETTER OF CREDIT FACILITY AGREEMENT (the
"Amendment"), dated as of April 23, 1997, is among NGC Corporation, a Delaware
corporation, as Borrower (the "Borrower"), the Lenders parties thereto and
Canadian Imperial Bank of Commerce, a Delaware corporation, as Agent. The
parties hereto agree as follows:
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower, the Lenders and the Agent have heretofore entered
into a certain Letter of Credit Facility Agreement, dated as of September 1,
1996 (herein called the "Letter of Credit Facility Agreement"); and
WHEREAS, the Borrower and NGC Acquisition Corporation II, a wholly-owned
subsidiary of the Borrower, ("NACII") have entered into that certain Agreement
and Plan of Merger dated as of February 17, 1997 (hereinafter the "Destec
Contract") with Destec Energy, Inc., ("Destec") and The Dow Chemical Company,
whereby at the closing of the transaction contemplated thereby (the "Destec
Transaction"), Borrower will acquire the stock of Destec and NACII shall be
merged with and into Destec; and
WHEREAS, the Borrower, the Lenders and the Agent now intend to amend the
Letter of Credit Facility Agreement in certain respects as hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Borrower, the Lenders and the Agent hereby agree as
follows:
SECTION 1. Amendments to Letter of Credit Facility Agreement
A. The following definitions are added to Section 1.1 of the Letter of
Credit Facility Agreement in alphabetical order:
"AES" means The AES Corporation, a Delaware corporation.
<PAGE>
"AES Contract" means the Asset Purchase Agreement dated February 17, 1997
between the Borrower and AES.
"AES Transaction" means the sale by Borrower of the International Assets
(as defined in the AES Contract) of Destec pursuant to the AES Contract.
"Destec" means Destec Energy, Inc., a Delaware corporation.
"Destec Contract" means the Agreement and Plan of Merger dated February 17,
1997 among NGC Acquisition Corporation II, the Borrower, Destec and The Dow
Chemical Company.
"Destec Transaction" means the Borrower's acquisition of the stock of
Destec and the merger of NGC Acquisition Corporation II with and into
Destec pursuant to the Destec Contract.
"Guarantor Discontinuance Test" means, with respect to any Subsidiary of
the Borrower, a Subsidiary which at the end of a calendar quarter has (i)
consolidated fixed assets plus net working capital with a book value of
less than $80,000,000 or (ii) 12% or less of the Consolidated EBITD for
such calendar quarter, as determined by the then most recent financial
statements provided pursuant to Section 6.1.1.
"Institutionally Targeted Capital Securities" means the capital securities
to be issued in an aggregate amount of up to $250,000,000 by a Delaware
business trust, the proceeds of which will be loaned to the Borrower or one
or more of its Subsidiaries all on terms substantially similar to the
Summary of Terms previously delivered to the Agent on March 13, 1997.
B. Clause (c) of the definition of "Consolidated EBITD" appearing in
Section 1.1 of the Letter of Credit Facility Agreement is amended to read in its
entirety as follows:
"(c) to the extent taken into account in calculating Consolidated Net
Income (excluding income taxes) referred to in clause (a) of this
definition, the aggregate amount of all costs and expenses incurred as a
result of the Destec Transaction, the Trident Merger and of the Midstream
Merger, respectively, including, without limitation, all prepayment
premiums payable on Debt required to be prepaid as a result of the
occurrence of the Trident Merger plus".
2
<PAGE>
C. The definition of "Debt" appearing in Section 1.1 of the Letter of
Credit Facility Agreement is amended by inserting at the end of such definition
before the period the following:
"; provided, that for purposes of the foregoing clauses (a), (b), (c) and
(d), Debt shall only include, in the case of the Borrower and its
Subsidiaries, only such obligations as are shown as a liability on a
consolidated balance sheet of the Borrower and its Subsidiaries in
accordance with Agreement Accounting Principles; provided further that the
Institutionally Targeted Capital Securities shall not constitute Debt."
D. Section 5.11 of the Letter of Credit Facility Agreement is amended by
adding the phrase "other than the purchase of margin stock from time to time in
connection with transactions (i) authorized by the board of directors of the
Borrower, (ii) either (A) authorized by the board of directors or other
governing body of the Person which stock is being acquired or (B) involving less
than 5% of the stock of any Person and (iii) which would not cause the Borrower
to fail to be in compliance with the following sentence" at the end of the
second sentence of that Section 5.11 after the word "stock".
E. Section 5.16 is amended to read in its entirety as follows:
"Public Utility Holding Company Act. Each of the Borrower and each of its
Subsidiaries is not subject to, or is exempt from, regulation as a "holding
company", a "subsidiary company" of a "holding company", or an "affiliate"
of a "holding company", in each case as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended and the rules and
regulations thereunder."
F. Section 6.1.2 is amended by adding the phrase "other than purchases
which comply with the second sentence of Section 5.11" at the end of the last
sentence of such Section before the period.
G. Section 6.1.3 of the Letter of Credit Facility Agreement is amended by
inserting the following at the end of the last sentence before the period: ";
provided further that notwithstanding anything to the contrary in this Section
6.1.3, no Subsidiary of Destec shall be required to deliver a Guaranty
3
<PAGE>
pursuant to this Section 6.1.3 to the extent (i) it does not incur any Debt or
issue any Guaranty after the effective date of the Destec Transaction and (ii)
the eighteenth month anniversary of the effective date of the Destec Transaction
has not yet occurred; provided, that if within such eighteen month period a
Destec Subsidiary which has provided a Subsidiary Guaranty pursuant to this
Section 6.1.3 is (A) sold or otherwise transferred and ceases to be a Subsidiary
of the Borrower or (B) sells or transfers assets and as a result thereof is not
(after giving effect to such sales and transfers) a Subsidiary which would be
obligated to deliver a Subsidiary Guaranty under this Section 6.1.3, then so
long as no Default or Event of Default has occurred and is continuing, such
Subsidiary Guaranty shall be automatically released upon such sale or other
transfer in the case of the foregoing (A) or upon request of the Borrower in the
case of the foregoing (B). In addition, a Subsidiary Guaranty delivered by a
Guarantor pursuant to this Agreement may be released and terminated upon written
request of the Borrower provided that (A) such Guarantor as of the end of the
most recent calendar quarter prior to the quarter in which such request is made
satisfies the Guarantor Discontinuance Test, (B) at the time of such release no
Default or Event of Default shall have occurred and be continuing and (C) upon
the effectiveness of such termination all other Guaranties of such Subsidiary
with respect to any Debt of the Borrower (other than the Obligations) shall
concurrently terminate and be of no further force or effect. The Administrative
Agent is hereby authorized by each of the Lenders to provide to the Borrower on
behalf of the Lenders written confirmation of the release and termination of any
Guarantor pursuant to either of the two preceding sentences."
H. Section 6.1.4 of the Letter of Credit Facility Agreement is amended by
adding the phrase: "(after giving effect to the Destec Transaction)" after the
word "contemplated" in the third line.
I. Section 6.2.4 of the Letter of Credit Facility Agreement is amended by
amending clause (i) thereof to read in its entirety as follows: "(i) sales of
inventory, Natural Gas, electricity, crude oil, natural gas liquids and other
forms of energy in the ordinary course of business," and by inserting at the end
of such Section before the period the following:
"or;
4
<PAGE>
(ix) the AES Transaction; or
(x) the sale of any of Destec's assets or any of Destec's
Subsidiaries, in whole or in part, within 18 months of the effective date
of the Destec Transaction;"
J. Clauses (vi) and (vii) of Section 6.2.7 of the Letter of Credit
Facility Agreement are hereby amended to read in their entirety as follows:
"(vi) Guaranties of (A) Debt of the Borrower and its Subsidiaries
otherwise permitted pursuant to the terms of this Agreement, (B)
obligations of the Borrower and its Subsidiaries under leases that do not
constitute Capitalized Lease Obligations at the time such leases are
entered into, and (C) other obligations of the Borrower and its
Subsidiaries (other than (1) Guaranties of Debt of Persons other than the
Borrower and its Subsidiaries (2) Guaranties of obligations set forth in
agreements, undertakings or other arrangements by which the Borrower and
its Subsidiaries agree to maintain the net worth, working capital or any
other financial condition of any other Person, (3) Guaranties of the type
referred to in clause (a) of the definition of the term Guaranty and not
otherwise permitted by clause (iv) of this Section 6.2.7, and (4)
completion guaranties or similar assurances that a project performs as
planned) of a type normally incurred in the industry and incurred in the
ordinary course of business; and
(vii) to the extent not included above, Guaranties of other
obligations (including, without limitation, agreements containing
completion guaranties or similar assurances that a project performs as
planned and excluding Guaranties of the type referred to in clause (a) of
the definition of Guaranty not otherwise permitted by clause (iv) of this
Section 6.2.7) which obligations are otherwise permitted pursuant to the
terms of this Agreement not to exceed in the aggregate at any time the
greater of $150,000,000 or 5% of the Borrower's tangible assets on a
consolidated basis at such time."
K. Section 6.2.10 of the Letter of Credit Facility Agreement is amended
to read in its entirety as follows:
"The Borrower will not, and will not permit any Subsidiary of the Borrower
to, enter into any transaction (including, without limitation, the purchase
or sale of any Property or
5
<PAGE>
service) with, or make any payment or transfer to, any Affiliate (other
than the Borrower or any of its Subsidiaries and other than dividends to
shareholders of the Borrower) except upon terms no less favorable to the
Borrower or such Subsidiary than the Borrower or such Subsidiary would
obtain in a comparable arms-length transaction and except the transactions
and payments contemplated in and made pursuant to the Destec Contract or
the Trident Merger Agreement or the Midstream Merger Agreement and together
with, in each case, the other agreements attached as Exhibits thereto and
except transactions and payments between Destec and its Affiliates pursuant
to agreements in effect at the time of the completion of the Destec
Transaction."
L. Section 6.3.1 of the Letter of Credit Facility Agreement is amended by
inserting at the end of such Section before the period the following:
"; provided that for purposes of this Section 6.3.1, the Institutionally
Targeted Capital Securities will not constitute equity of the Borrower and
its Subsidiaries".
M. Section 6.3.2 of the Letter of Credit Facility Agreement is amended to
read in its entirety as follows:
"The Borrower will not permit its Leverage Ratio to exceed 60%; provided
that notwithstanding the foregoing, until the earlier of (i) the end of the
quarter which ends the quarter containing the date which is 18 months from
the effective date of the Destec Transaction, and (ii) the effective date
of the AES Transaction, the foregoing 60% shall be 65%; provided further
that for purposes of determining the Leverage Ratio for purposes of this
Section 6.3.2, the Institutionally Targeted Capital Securities are deemed
to be included in stockholders' equity."
N. Sections 7.10 and 7.11 of the Letter of Credit Facility Agreement are
amended to read in their entirety as follows:
"7.10 Any Subsidiary Guaranty shall fail to remain in full force or effect
or any action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Subsidiary Guaranty, or any Guarantor shall fail to
comply with any of the terms or provisions of any Subsidiary Guaranty to
which it is a party, or any Guarantor denies that it has any further
liability under any Subsidiary Guaranty to which it
6
<PAGE>
is a party, or gives notice to such effect; provided, however, that no
termination of a Subsidiary Guaranty resulting from the merger of one
Subsidiary of the Borrower which has executed a Subsidiary Guaranty into
another Subsidiary of the Borrower which has executed a Subsidiary Guaranty
shall constitute a Default so long as the Subsidiary Guaranty of the
corporation surviving such merger remains in full force and effect and that
any release or termination of a Subsidiary Guaranty pursuant to Section
6.1.3 shall not constitute a Default.
7.11 Subsidiaries. The Borrower shall cease to own, directly or
indirectly, free and clear of Liens, at least the following percentage (or
such lesser percentage of such Person as was owned at the time such Person
reached either of the thresholds described in (i)(A) or (i)(B) below,
without giving effect to transfers made in contemplation of such Person's
reaching such threshold) of the issued and outstanding capital stock or
other equity of a Guarantor other than as a result of the merger of such
Guarantor into another Subsidiary of the Borrower or as a result of a
transfer that did not result in a Default under this Section 7.11 at the
time made: (i) 80% of a Guarantor at any time either (A) having fixed
assets and net working capital with a book value equal to or greater than
$100,000,000 or (B) contributing 15% or more of the Consolidated EBITD for
an entire calendar quarter or (ii) 51% of any Guarantor other than a
Guarantor referred to in the foregoing clause (i); provided, however that
the failure to own a Guarantor that has been released, or whose Subsidiary
Guaranty has been terminated, pursuant to Section 6.1.3 shall not
constitute a Default."
O. Section 8.2(v) of the Credit is amended by adding at the end thereof
before the period the phrase "other than the release pursuant to Section 6.1.3
of a Subsidiary Guaranty."
SECTION 2. To induce the Lenders and the Agent to enter into this
Amendment, the Borrower hereby reaffirms, as of the date hereof, its
representations and warranties contained in Article V of the Letter of Credit
Facility Agreement (except to the extent such representations and warranties
relate solely to an earlier date).
7
<PAGE>
SECTION 3. The effectiveness of (a) paragraphs G (other than the
provisions relating to Destec and the Destec Transaction), N, and O of this
Amendment is conditioned upon counterparts of this Amendment being executed by
the Borrower, each Lender and the Agent and (b) the remainder of this Amendment
is conditioned upon the foregoing and upon receipt by the Agent on or before
September 30, 1997 of each of the following, each in form and substance
reasonably satisfactory to the Agent:
(i) A certificate of the Secretary or an Assistant Secretary of
the Borrower with respect to the resolutions in full force and effect
authorizing the execution, delivery and performance of this Amendment and
with respect to the names of its Authorized Officers authorized to sign
this Amendment together with a sample of the true signature of each such
officer;
(ii) Favorable opinions of counsel to the Borrower including,
without limitation, opinions with respect to the due authorization,
execution and delivery of this Amendment and the legality, validity and
enforceability of this Amendment and the Letter of Credit Facility
Agreement as amended hereby; and
(iii) Such other documents as the Agent, any Lender or its counsel
shall have reasonably requested.
Notwithstanding the foregoing, the effectiveness of the provisions of this
Amendment relating to Destec, Destec's Subsidiaries, the Destec Transaction,
AES, the AES Contract, and the AES Transaction are conditioned upon the
foregoing and upon receipt by the Agent on or before September 30, 1997 of a
copy of the fully executed Destec Contract certified by an officer of Borrower
as being true, correct and complete together with a certificate of an officer of
Borrower to the effect that the conditions of closing set forth therein have
been satisfied.
SECTION 4. Upon the effectiveness hereof as provided in the foregoing
Section 3, this Amendment (or the portions thereof) shall be deemed to be an
amendment to the Letter of Credit Facility Agreement, and the Letter of Credit
Facility Agreement, as amended hereby, is hereby ratified, approved and
confirmed in each and every respect. All references to the Letter of Credit
Facility Agreement in any other document, instrument, agreement or writing
8
<PAGE>
shall hereafter be deemed to refer to the Letter of Credit Facility Agreement as
amended hereby.
SECTION 5. THIS AMENDMENT SHALL BE A CONTRACT GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF ILLINOIS. All obligations of the Borrower and rights of
the Lenders and the Agent expressed herein shall be in addition to and not in
limitation of those provided by applicable law. Whenever possible each
provision of this Amendment shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Amendment
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Amendment.
SECTION 6. This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and
any party hereto may execute this Amendment by signing one or more counterparts.
SECTION 7. This Amendment shall be binding upon the Borrower and the
Lenders and the Agent and their respective successors and assigns, and shall
inure to the benefit of each of the Borrower, the Lenders and the Agent and the
successors and assigns of any of the Lenders and the Agent.
SECTION 8. EACH OF THE BORROWER, THE LENDERS AND THE AGENT HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AMENDMENT OR ANY LOAN DOCUMENT, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY OF THE BORROWER, THE LENDERS OR THE AGENT. THE BORROWER ACKNOWLEDGES AND
AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION
(AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY)
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO
THIS AMENDMENT.
SECTION 9. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN
CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN
DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR
9
<PAGE>
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
NGC CORPORATION
By:___________________________________
Print Name:___________________________
Title:________________________________
CANADIAN IMPERIAL BANK OF COMMERCE
individually and as Agent
By:_______________________________
Its:______________________________
ABN AMRO BANK, N.V.
By:_______________________________
Print Name:_______________________
Title:____________________________
By:_______________________________
Print Name:_______________________
Title:____________________________
THE FIRST NATIONAL BANK OF BOSTON
By:_______________________________
Print Name:_______________________
Title:____________________________
10
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By:_______________________________
Print Name:_______________________
Title:____________________________
THE FIRST NATIONAL BANK OF CHICAGO
By:_______________________________
Print Name:_______________________
Title:____________________________
MELLON BANK, N.A. (WEST)
By:_______________________________
Print Name:_______________________
Title:____________________________
BANK OF MONTREAL
By:_______________________________
Print Name:_______________________
Title:____________________________
THE BANK OF NOVA SCOTIA
By:_______________________________
Print Name:_______________________
Title:____________________________
11
<PAGE>
THE CHASE MANHATTAN BANK (successor
by merger to The Chase Manhattan Bank
National Association)
By:_______________________________
Print Name:_______________________
Title:____________________________
NATIONSBANK OF TEXAS, N.A.
By:_______________________________
Print Name:_______________________
Title:____________________________
ROYAL BANK OF CANADA
By:_______________________________
Print Name:_______________________
Title:____________________________
12
<PAGE>
MEDIA CONTACT: Katherine K. Putnam
713/507-3936
ANALYST CONTACT: Dean Ayers
713/507-6852
NGC CORPORATION CLOSES ACQUISITION OF
DESTEC ENERGY, ASSET SALES TO AES CORPORATION
HOUSTON (June 30, 1997) -- NGC Corporation today announced that it has
closed its acquisition of Destec Energy, Inc., a leading independent power
producer, and has closed on the related sale of most of Destec's international
projects and operations to AES Corporation for $407 million, subject to certain
adjustments. The net cost of the assets to be retained by NGC, originally
expected to be approximately $400 million, is now estimated to be in the range
of $300 to $325 million, after the sale of certain non-strategic assets. Destec
Energy will retain its name and operate as a subsidiary of NGC.
NGC President Thomas M. Matthews said, "The acquisition of Destec adds an
important new business to our Energy Store of products and services. Similar to
the successful strategy that made NGC North America's largest natural gas and
gas liquids marketer, we are enhancing our power marketing business with a
substantial asset base. Destec also provides a platform for future domestic and
international growth. Although we have sold most of Destec's international
assets because they are not strategic to our interests, NGC will pursue an
international strategy for the power generation business with those remaining
assets, as well as future opportunities."
-more-
<PAGE>
NGC CLOSES DESTEC ACQUISITION, SALE TO AES
2-2-2-2-2
Over the next few weeks, NGC also expects to complete the sale of other
Destec assets, including oil, natural gas and lignite reserves and Tiger Bay
CoGen, a 212-megawatt power plant, to Florida Power Corp.
NGC Corporation (NYSE:NGL) is a leading gatherer, processor, transporter and
marketer of energy products and services in North America and the United
Kingdom. Through its "Energy Store," NGC offers a multi-commodity energy-
product-and-services resource that provides natural gas, natural gas liquids,
electricity and crude oil.
###
<PAGE>
[LOGO FOR NGC CORPORATION EXHIBIT 99.2
APPEARS HERE]
NEWS RELEASE
MEDIA CONTACT: Katherine K. Putnam
713/507-3936
ANALYST CONTACT: Dean Ayers
713/507-6852
NGC AGREES TO SELL LIGNITE RESERVES AND OTHER
ASSETS TO ENRON
HOUSTON (July 10, 1997) - NGC Corporation has signed an agreement with an
affiliate of Enron Capital & Trade Resources Corp., a subsidiary of Enron Corp.,
to sell certain lignite reserves and other assets owned by Destec Energy, Inc.,
for $149 million, subject to certain adjustments. NGC acquired the assets,
which are located in Michigan, Colorado, New Mexico and Texas, as part of its
acquisition of Destec Energy, Inc., a major independent power producer. Closing
is expected by Aug. 1, subject to certain conditions.
NGC Corporation President Tom Matthews said, "This agreement is the
successful result of a planned divestiture of non-strategic assets related to
our acquisition of Destec Energy. The success of the planned asset sales of
certain power stations, as well as this sale, is a key factor in reducing NGC's
net cost of retained Destec assets from the approximately $400 million that was
originally expected to a level a little above $300 million."
Under the agreement, NGC retained various royalty interests and mineral
interests underlying the lignite deposits in East Texas, as well as rights to
easements for construction of pipeline systems in the vicinity of the Pinnacle
Reef play.
NGC Corporation (NYSE:NGL) is a leading gatherer, processor, transporter
and marketer of energy products and services in North America and the United
Kingdom. Through its "Energy Store," NGC offers a multi-commodity energy-
product-and-services resource that provides natural gas, natural gas liquids,
electricity and crude oil.
###
