<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 1-11156
DYNEGY INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3248415
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 LOUISIANA, SUITE 5800
HOUSTON, TEXAS 77002
(Address of principal executive offices)
(Zip Code)
(713) 507-6400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [_]
Number of shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date: Common stock, $.01 par value per share,
152,778,072 shares outstanding as of August 12, 1998.
Page 1 of 30
<PAGE>
DYNEGY INC.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
PART I. FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets:
June 30, 1998 and December 31, 1997...................................... 3
Condensed Consolidated Statements of Operations:
For the three months ended June 30, 1998 and 1997........................ 4
Condensed Consolidated Statements of Operations:
For the six months ended June 30, 1998 and 1997.......................... 5
Condensed Consolidated Statements of Cash Flows:
For the six months ended June 30, 1998 and 1997.......................... 6
Notes to Condensed Consolidated Financial Statements........................ 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS...............................14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................27
Item 2. Not Applicable....................................................--
Item 3. Not Applicable....................................................--
Item 4. Submission of Matters to a Vote of Security Holders...............28
Item 5. Not Applicable....................................................--
Item 6. Exhibits and Reports on Form 8-K..................................28
Page 2 of 30
<PAGE>
DYNEGY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- -----------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 54,020 $ 23,047
Accounts receivable, net 1,480,398 1,536,451
Accounts receivable, affiliates 130,337 139,321
Inventories 128,847 136,485
Assets from risk management activities 249,473 127,929
Prepayments and other assets 77,189 55,547
----------- -----------
2,120,264 2,018,780
----------- -----------
PROPERTY, PLANT AND EQUIPMENT 2,173,676 1,958,250
Less: accumulated depreciation (478,702) (436,674)
----------- -----------
1,694,974 1,521,576
----------- -----------
OTHER ASSETS:
Investments in unconsolidated affiliates 520,597 470,477
Assets from risk management activities 139,333 111,341
Other assets 550,591 394,729
----------- -----------
$ 5,025,759 $ 4,516,903
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,414,851 $ 1,404,736
Accounts payable, affiliates 19,318 24,187
Accrued liabilities 165,303 192,159
Liabilities from risk management activities 235,928 132,012
----------- -----------
1,835,400 1,753,094
LONG-TERM DEBT 1,207,338 1,002,054
OTHER LIABILITIES:
Liabilities from risk management activities 76,150 42,679
Deferred income taxes 274,239 254,059
Other long-term liabilities 377,559 245,892
----------- -----------
3,770,686 3,297,778
----------- -----------
200,000 200,000
COMPANY OBLIGATED PREFERRED SECURITIES OF SUBSIDIARY TRUST
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 50,000,000 shares
authorized: 8,000,000 shares designated as
Series A Participating Preferred Stock, 7,815,363
shares issued and outstanding at June 30, 1998 and
December 31, 1997 75,418 75,418
Common stock, $0.01 par value, 400,000,000 shares
authorized: 152,640,509 shares issued at June 30, 1998
and 151,796,622 shares issued at December 31, 1997 1,526 1,518
Additional paid-in capital 927,732 919,720
Retained earnings 64,766 32,975
Less: treasury stock, at cost: 917,100 shares at
June 30, 1998 and 654,900 shares at December 31, 1997 (14,369) (10,506)
----------- -----------
Total Stockholders' Equity 1,055,073 1,019,125
----------- -----------
$ 5,025,759 $ 4,516,903
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
Page 3 of 30
<PAGE>
DYNEGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands,
except per share data)
================================================================================
THREE MONTHS ENDED
JUNE 30,
-----------------------------
1998 1997
----------- -----------
Revenues $ 3,278,214 $ 2,684,339
Cost of sales 3,170,299 2,586,572
----------- -----------
Operating margin 107,915 97,767
Depreciation and amortization 26,984 25,421
General and administrative expenses 44,377 37,592
----------- -----------
Operating income 36,554 34,754
Equity in earnings of unconsolidated affiliates 15,101 13,417
Other income 6,876 11,481
Interest expense (18,091) (13,236)
Other expenses (1,239) (1,316)
Minority interest in income of a subsidiary (4,158) (1,525)
----------- -----------
Income before income taxes 35,043 43,575
Income tax provision 11,602 11,447
----------- -----------
NET INCOME $ 23,441 $ 32,128
=========== ===========
NET INCOME PER SHARE:
Net income $ 23,441 $ 32,128
Less: preferred stock dividends 97 97
----------- -----------
Net income applicable to common stockholders $ 23,344 $ 32,031
=========== ===========
Basic earnings per share $ 0.15 $ 0.21
=========== ===========
Diluted earnings per share $ 0.14 $ 0.19
=========== ===========
Basic shares outstanding 152,491 150,539
=========== ===========
Diluted shares outstanding 166,705 167,127
=========== ===========
See notes to condensed consolidated financial statements.
PAGE 4 OF 30
<PAGE>
DYNEGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands,
except per share data)
================================================================================
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------
1998 1997
----------- -----------
<S> <C> <C>
Revenues $ 6,593,783 $ 5,956,419
Cost of sales 6,388,879 5,791,305
----------- -----------
Operating margin 204,904 165,114
Depreciation and amortization 52,516 48,769
Severance charge 9,644 ---
General and administrative expenses 86,983 65,791
----------- -----------
Operating income 55,761 50,554
Equity in earnings of unconsolidated affiliates 30,856 26,803
Other income 9,844 17,067
Interest expense (34,096) (27,860)
Other expenses (2,595) (17,035)
Minority interest in income of a subsidiary (8,316) (1,525)
----------- -----------
Income before income taxes 51,454 48,004
Income tax provision 15,674 11,262
----------- -----------
NET INCOME $ 35,780 $ 36,742
=========== ===========
NET INCOME PER SHARE:
Net income $ 35,780 $ 36,742
Less: preferred stock dividends 194 194
----------- -----------
Net income applicable to common stockholders $ 35,586 $ 36,548
=========== ===========
Basic earnings per share $ 0.23 $ 0.24
=========== ===========
Diluted earnings per share $ 0.21 $ 0.22
=========== ===========
Basic shares outstanding 152,219 150,357
=========== ===========
Diluted shares outstanding 166,880 166,820
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements
PAGE 5 OF 30
<PAGE>
DYNEGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands)
================================================================================
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
1998 1997
---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 35,780 $ 36,742
Items not affecting cash flows from operating activities:
Depreciation and amortization 49,961 49,617
Equity in earnings of affiliates, net of cash distributions (5,099) (4,601)
Risk management activities (12,149) 5,655
Deferred income taxes 15,674 (8,592)
Amortization of bond premium (2,162) (3,333)
Other 3,812 (1,155)
Changes in assets and liabilities resulting from operating activities:
Accounts receivable 65,803 400,559
Inventories 4,269 84,097
Prepayments and other assets (6,292) (30,089)
Accounts payable (16,421) (360,299)
Accrued liabilities (29,113) 375
Other, net (10,824) (1,535)
---------- -----------
Net cash provided by operating activities 93,239 167,441
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (96,876) (83,078)
Investment in unconsolidated affiliates, net (65,392) (26,837)
Business acquisitions, net of cash acquired --- (715,589)
Proceeds from asset sales --- 154,063
Other, net 6,200 (3,195)
---------- -----------
Net cash used in investing activities (156,068) (674,636)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 171,984 1,119,000
Repayments of long-term borrowings (289,913) (758,000)
Net proceeds from commercial paper and money market lines of credit 226,500 ---
Issuance of company obligated preferred securities of subsidiary trust, net --- 198,044
Other, net (14,769) 54
---------- -----------
Net cash provided by (used in) financing activities 93,802 559,098
---------- -----------
Net change in cash and cash equivalents 30,973 51,903
Cash and cash equivalents, beginning of period 23,047 50,209
---------- -----------
Cash and cash equivalents, end of period $ 54,020 $ 102,112
========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
PAGE 6 OF 30
<PAGE>
DYNEGY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
NOTE 1 -- CORPORATE NAME CHANGE
Effective at the close of business on July 6, 1998, NGC Corporation changed its
name to Dynegy Inc. ("DYNEGY" or the "Company"). Concurrent with the change in
name, DYNEGY also changed its New York Stock Exchange symbol from NGL to DYN.
All subsidiaries of the Company now operate under the DYNEGY name.
NOTE 2 -- ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to interim financial reporting as
prescribed by the Securities and Exchange Commission ("SEC"). These interim
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997, filed with the SEC.
At June 30, 1998, the Company reviewed the valuation of its energy trading
purchase and sale portfolios accounted for on the accrual method through
application of an aggregate portfolio lower-of-cost-or-market analysis. As a
result of this analysis, the Company established a reserve at quarter end
related to its electricity trading and marketing portfolio. The reserve resulted
principally from consideration of continuing market volatility, counterparty
credit risks and its market bias. In the opinion of management, the reserves are
adequate to address known exposures and market risks as of the balance sheet
date. The analysis was performed considering the recent issuance of FASB
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("Statement No. 133") (Note 9) and the current discussion by the
Emerging Issues Task Force regarding accounting for the purchase and sale of
energy trading contracts prior to the effective date and/or adoption of
Statement No. 133. The reserves will be monitored and adjusted regularly as
indicated by changes in market conditions, the Company's trading and marketing
portfolio and other circumstances.
NOTE 3 -- BUSINESS COMBINATIONS AND SIGNIFICANT RESTRUCTURINGS
DESTEC ENERGY, INC. ACQUISITION. On June 27, 1997, DYNEGY acquired Destec
Energy, Inc. ("Destec"), an independent power producer, for $1.26 billion, or
$21.65 per share of Destec common stock. Concurrent with the acquisition, DYNEGY
sold Destec's international facilities and operations for $439 million.
Subsequently, certain non-strategic domestic assets were sold for $296 million.
Such proceeds were used to retire indebtedness incurred in the acquisition. The
Destec acquisition was accounted for under the purchase method of accounting.
Accordingly, the purchase price of approximately $718 million, inclusive of
transaction costs and net of cash acquired, was allocated to the Destec assets
acquired and liabilities assumed based on their estimated fair values as of June
30, 1997, the effective date of the acquisition for accounting purposes. The
results of operations of the acquired Destec assets are consolidated with
DYNEGY's existing operations beginning July 1, 1997. The following table
reflects certain unaudited pro forma information for the six-months ended June
30, 1997 assuming the Destec acquisition occurred on January 1, 1997 (in
thousands, except per share data):
Page 7 of 30
<PAGE>
DYNEGY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
1997
----------
Pro forma revenues $6,076,246
Pro forma net income 36,215
Pro forma earnings per share 0.22
RESTRUCTURING OF NOVAGAS CLEARINGHOUSE, LTD. In June 1997, the Company and
NOVA Corporation ("NOVA") completed the restructuring of the companies' Canadian
natural gas operations formerly executed through Novagas Clearinghouse, Ltd.,
Novagas Clearinghouse Limited Partnership and Novagas Clearinghouse Pipelines
Limited Partnership (collectively "NCL"), a joint venture between NGC and NOVA.
Effective April 1, 1997, DYNEGY Canada Inc. ("DCI"), a wholly owned indirect
subsidiary of DYNEGY, acquired NCL's natural gas marketing business, excluding
the natural gas aggregation business of Pan-Alberta Gas Ltd. ("Pan-Alberta"),
from NCL and sold its aggregate 49.9 percent interest in NCL to NOVA Gas
International ("NGI"), a subsidiary of NOVA. NOVA assumed full ownership of
NCL's gathering and processing business and the operations of Pan-Alberta. The
restructuring included amendments to or termination of various agreements
between NCL, DYNEGY, NOVA and certain affiliates of both DYNEGY and NOVA. DYNEGY
and NOVA are pursuing separate midstream asset businesses in Canada with DYNEGY
operating its Canadian marketing and midstream asset businesses through DCI.
RESTRUCTURING OF ACCORD ENERGY LIMITED ("ACCORD"). In early 1997, British Gas
completed a restructuring whereby Centrica plc ("Centrica") was demerged from
British Gas and British Gas was renamed BG plc ("BG"). Centrica became the
Company's joint venture partner in Accord. BG holds the approximate 26 percent
stake in DYNEGY's common stock formerly held by British Gas. On May 2, 1997,
Centrica and the Company completed a restructuring of Accord by converting
certain common stock interests in Accord to participating preferred stock
interests as of an effective date of January 1, 1997. Centrica and the Company
own 75 percent and 25 percent, respectively, of the outstanding participating
preferred stock shares of Accord. The participating preferred stock has (a) the
right to receive cumulative dividends on a priority basis to other corporate
distributions by Accord, and (b) limited voting rights. In addition, Centrica
has an option to purchase the Company's participating preferred stock interest
at any time after July 1, 2000, at a formula based price, as defined in the
agreement. As part of the reorganization, Centrica will operate Accord while
DYNEGY obtained the right to market natural gas, gas liquids and crude oil in
the United Kingdom, which occurs through its wholly owned subsidiary Dynegy UK
Limited ("Dynegy UK"). In addition, as part of the restructuring, Dynegy UK
acquired Accord's existing crude oil marketing business effective July 1, 1997.
No gain or loss was recognized as a result of this restructuring and DYNEGY's
investment in Accord continues to be accounted for under the equity method.
NOTE 4 -- EARNINGS PER SHARE
Basic earnings per share represents the amount of earnings for the period
available to each share of common stock outstanding during the period. Diluted
earnings per share represents the amount of earnings for the period available to
each share of common stock outstanding during the period plus each share that
would have been outstanding assuming the issuance of common shares for all
dilutive potential common shares outstanding during the period. Differences
between basic and diluted shares outstanding in all periods are attributed to
outstanding shares of the Series A Participating Preferred Stock, stock options
outstanding and a warrant.
NOTE 5 -- UNCONSOLIDATED AFFILIATES
At June 30, 1998, DYNEGY's investment in unconsolidated affiliates accounted for
by the equity method included: a 25 percent participating preferred stock
interest in Accord Energy Limited, a United Kingdom limited company; an
approximate 23 percent interest in Venice Energy Services Company, L.L.C.; a
38.75 percent partnership interest in Gulf Coast Fractionators; a 25 percent
interest in Midstream Barge Company, L.L.C.; a 49 percent partnership interest
in West Texas
Page 8 of 30
<PAGE>
DYNEGY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
LPG Pipeline, Limited Partnership; interests ranging from eight to 50 percent in
fifteen partnerships, each formed to build (or buy), own and operate
cogeneration power generation facilities; a 33.33 percent interest in Waskom Gas
Processing Company, a partnership that owns and operates a natural gas
processing, extraction and fractionation facility; and a 50 percent interest in
NICOR Energy L.L.C., a retail energy alliance. Also, at June 30, 1998, the
Company had two cost-basis investments: Indeck North American Power Fund, L.P.
and Indeck North American Power Partners, L.P. Summarized unaudited combined
income statement information for the unconsolidated affiliates accounted for by
the equity method is presented in the table below:
SIX-MONTHS ENDED JUNE 30,
----------------------------------------
1998 1997
------------------- ------------------
Equity Equity
Total Share Total Share
-------- -------- ------- --------
($ in thousands)
Revenues (1) $418,274 $176,610 $96,951 $ 38,632
======== ======== ======= ========
Operating margin (1) $166,783 $ 67,351 $39,902 $ 16,038
======== ======== ======= ========
Net income (1) $ 64,961 $ 21,856 $31,536 $ 14,195
======== ======== ======= ========
- ---------------
(1) The quarterly financial data for both periods presented is exclusive of
amounts attributable to the Company's investment in Accord and NCL as such
information was unavailable for the current period or is incompatible with
current presentation.
During the second quarter of 1998, the Company purchased all of the outstanding
partnership interests held by third parties in three limited partnerships, each
formed for the purpose of owning and operating a power generation facility in
the State of California. The aggregate acquisition cost approximated $11
million. As a result of the acquisition of these interests, the Company now
consolidates the aggregate assets and liabilities associated with these
projects.
NOTE 6 -- LONG-TERM DEBT
In May 1998, the Company amended its revolving bank credit agreement. The
amended agreement ("Credit Agreement") is divided into two parts, a $400 million
five-year facility and a $400 million 364-day facility, with borrowings under
the Credit Agreement representing unsecured obligations of the Company.
Borrowings under each facility bear interest at a Eurodollar rate plus a margin
that is determined based principally on the Company's unsecured senior debt
rating. In addition, the Company incurs a facility fee associated with each part
of the Credit Agreement. Financial covenants in the restructured Credit
Agreement are limited to a debt to capitalization test. At June 30, 1998,
letters of credit and borrowings under the Credit Agreement aggregated $28.2
million and, after consideration of the $450 million of commercial paper
outstanding at such date, unused borrowing capacity under the Credit Agreement
approximated $321.8 million.
On May 20, 1998, the Company sold $175 million of 7.125 percent, 20-year
debentures due May 15, 2018. The debentures were issued at a price of 99.654
percent, which, after deducting underwriting discounts and commissions, resulted
in net proceeds of approximately $172 million. Proceeds from the sale of the
debentures were used to retire short-term debt incurred in connection with the
redemption of certain high-cost debt described in the following paragraph. The
debentures represent senior unsecured obligations and rank pari passu with
existing senior debt.
In February 1998, the Company delivered Notices of Redemption to the holders of
its $105 million principal amount of 10.25% Subordinated Notes and $65 million
principal amount of 14% Senior Subordinated Notes. On March 31, 1998 and April
15, 1998, the Company retired the Senior Subordinated Notes and the Subordinated
Notes, respectively, pursuant to the redemption provisions contained in the
respective indentures. DYNEGY funded the estimated aggregate redemption value of
$180 million through a combination of borrowings under existing credit
facilities and commercial paper issuances.
Included in the June 30, 1998 consolidated long-term debt balance are three
notes aggregating $95.3 million having recourse only to the assets of the three
power generation projects associated with the partnerships recently consolidated
as a result of the acquisitions described in Note 5. Each of the three notes
represents a fifteen-year term loan obligation payable in semi-annual
Page 9 of 30
<PAGE>
DYNEGY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
installments of principal plus accrued interest. Each note bears interest at a
base rate plus a margin, as defined in each agreement. Interest rate swaps
effectively fix the base rate on $72 million of the indebtedness at a weighted
average rate of 7.65 percent.
NOTE 7 -- COMMITMENTS AND CONTINGENCIES
On April 17, 1997, Pacific Gas and Electric Company ("PG&E") filed a lawsuit in
the Superior Court of the State of California, City and County of San Francisco,
against Destec, Destec Holdings, Inc. ("Holdings"), Destec Operating Company and
San Joaquin CoGen, Inc., wholly-owned direct and indirect subsidiaries of the
Company as well as against San Joaquin CoGen Limited ("San Joaquin" or the
"Partnership"). Dynegy Power Corp. (formerly Destec) and its affiliates now own
all of the partnership interests in the Partnership as a result of the purchase
of the interests of Dominion Energy, Inc. in the second quarter of 1998. In the
lawsuit, PG&E asserts claims and alleges unspecified damages for fraud,
negligent misrepresentation, unfair business practices, breach of contract and
breach of the implied covenant of good faith and fair dealing. PG&E alleges
that due to the insufficient use of steam by San Joaquin's steam host, the
Partnership did not qualify as a cogenerator pursuant to the California Public
Utilities Code ("CPUC") Section 218.5, and thus was not entitled under CPUC
Section 454.4 to the discount the Partnership received under gas transportation
agreements entered into between PG&E and San Joaquin in 1989, 1991, 1993 and
1995. All of PG&E's claims in this suit arise out of the Partnership's alleged
failure to comply with CPUC Section 218.5. The defendants filed a response to
the suit on May 15, 1997. On October 20, 1997, PG&E named Libbey-Owens-Ford
("LOF"), the Partnership's steam host, as an additional defendant in the action.
On February 23, 1998, PG&E served by mail its Second Amended Complaint on all
defendants. On March 30, 1998, the defendants filed their response to PG&E's
Second Amended Complaint, denying PG&E's allegations and alleging certain
counterclaims against PG&E. By Order dated July 20, 1998, the court dismissed
certain of defendants' counterclaims against PG&E, and abated certain others,
pending resolution by the CPUC. Defendants have filed a motion with the court,
seeking clarification of the July 20th Order. The parties are actively engaged
in discovery and a trial date has been set for October 1998. The Partnership
has previously advised the Federal Energy Regulatory Commission ("FERC") of
PG&E's claims, and stated that it would submit any appropriate filings upon
completion of its investigation. If the facility was found not to have
satisfied the California cogeneration facility standards, there is a strong
likelihood that it would also fail to satisfy the more stringent federal
standards. In accordance with the terms of a Protective Order entered into by
the parties at the commencement of the litigation, PG&E has notified San Joaquin
that it may make a FERC filing as early as August 17, 1998, seeking damages from
San Joaquin and decertification of its status as a qualifying facility under the
federal standards. Under FERC precedent, if the San Joaquin facility were found
not to have been a qualifying facility, San Joaquin could be required to refund
PG&E payments it received pursuant to the Power Purchase Agreement in excess of
PG&E's short-term energy costs during the period of non-compliance, plus
interest. In the event the court or FERC determines that San Joaquin is liable
to PG&E under the Gas Transportation Agreement or Power Purchase Agreement due
to LOF's failure to use sufficient quantities of steam, San Joaquin will seek to
recover such amounts from LOF under the terms of the Steam Purchase Agreement
between San Joaquin and LOF. The Company's subsidiaries intend to vigorously
defend this action. In the opinion of management, the ultimate resolution of
this lawsuit will not have a material adverse effect on the Company's financial
position or results of operations.
On March 24, 1995, Southern California Gas Company ("SOCAL") filed a lawsuit in
the Superior Court of the State of California for the County of Los Angeles,
against Destec, Destec Holdings and Destec Gas Services, Inc., wholly-owned
direct and indirect subsidiaries of the Company (collectively, the "Destec
Defendants"), as well as against Chalk Cliff Limited and McKittrick Limited
(collectively, the "Partnerships"). The Company owns an indirect 50 percent
limited partnership interest in McKittrick Limited, and Chalk Cliff Limited is
now wholly owned by subsidiaries of the Company through the purchase of the
interests of Dominion Energy, Inc. in the Partnership. All general partners of
the Partnerships are also named defendants. The lawsuit alleges breach of
contract against the Partnerships and their respective general partners, and
interference and conspiracy to interfere with contracts against the Destec
Defendants. The breach of contract claims arise out of the "transport-or-pay"
provisions of the gas transportation service agreements between the Partnerships
and SOCAL. SOCAL has sought damages from the Partnerships for past damages and
anticipatory breach damages in an amount equal to approximately $31,000,000. On
October 24, 1997, the Court granted SOCAL's Motion for Summary Judgment relating
to the breach of contract causes of action against the Partnerships and their
respective general partners, and requested that SOCAL submit a proposed order
consistent with
Page 10 of 30
<PAGE>
DYNEGY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
that ruling for the Court's signature. On November 21, 1997, the Partnerships
filed for voluntary Chapter 11 bankruptcy protection in the Eastern District of
California. Normal business operations by the Partnerships will continue
throughout the course of these reorganization proceedings. On January 12, 1998,
the Court entered a Final Order that (a) severs out the Partnerships due to
their Chapter 11 bankruptcy filings, (b) includes a finding of contract
liability against the Destec Defendants, (c) dismisses the tortious interference
claims against the Destec Defendants, and (d) assesses damages in an aggregate
amount of approximately $31,000,000. On the same day, the Destec Defendants
filed their Notice of Appeal, and posted a security bond with the Second
Appellate District in Los Angeles based on the lack of allegations made or
proven by SOCAL which support holding those entities liable in contract. On
March 11, 1998, the Partnerships and their respective general partners filed
Notices of Appeal with respect to certain findings of fact in the Court's
January 12, 1998 Final Order that were adverse to those defendants. On or about
April 15, 1998, the Court entered a final judgment against the Partnerships
themselves in recognition of the lifting of the automatic stay against those
entities by the Bankruptcy Court. In the event the appeal is unsuccessful, the
liability of the Destec Defendants under the judgment will be limited to that
portion of the damage award not paid to SOCAL by the Partnerships through the
Chapter 11 bankruptcy proceedings.
The PG&E and SOCAL litigations represent pre-acquisition contingencies acquired
by the Company in the Destec acquisition. In a related matter, Chalk Cliff and
San Joaquin have each guaranteed the obligations of the other partnership,
represented by the project financing loans used to construct the power
generation facilities owned by the respective Partnerships. Chalk Cliff and San
Joaquin believe there is little incentive for their lenders to call on this
cross-guarantee at this time. In the opinion of management, the Company's
financial position or results of operations would not be materially adversely
effected if the lenders chose to exercise their option under the terms of such
arrangements.
On August 3, 1998, Modesto Irrigation District ("MID") filed a lawsuit against
PG&E and Destec in federal court for the Northern District of California, San
Francisco division. The lawsuit alleges violation of federal and state
antitrust laws and breach of contract against Destec. The allegations are
related to a power sale and purchase arrangement in the city of Pittsburg, CA.
MID seeks actual damages from PG&E and Destec in amounts not less than $25
million. MID also seeks a trebling of any portion of damages related to its
antitrust claims. Dynegy believes the allegations made by MID are meritless and
will vigorously defend MID's claims. In the opinion of management, the amount of
ultimate liability with respect to these actions will not have a material
adverse effect on the financial position or results of operations of the
Company.
The Company assumed liability for various claims and litigation in connection
with the Chevron Combination, the Trident Combination, the Destec acquisition
and in connection with the acquisition of certain gas processing and gathering
facilities from Mesa Operating Limited Partnership. The Company believes,
based on its review of these matters and consultation with outside legal
counsel, that the ultimate resolution of such items will not have a material
adverse effect on the Company's financial position or results of operations.
Further, the Company is subject to various legal proceedings and claims, which
arise in the normal course of business. In the opinion of management, the
amount of ultimate liability with respect to these actions will not have a
material adverse effect on the financial position or results of operations of
the Company.
NOTE 8 -- CAPITAL STOCK
At June 30, 1998, employee stock options aggregating 3.7 million shares were
exercisable at prices ranging from $2.03 to $21.63 per share. Employee stock
option grants made from 1993 to 1997 will become exercisable during the
remainder of 1998 and in 1999, respectively, resulting in the potential exercise
of approximately 6.4 million shares during that period, at exercise prices
ranging from $2.03 to $21.63. Other options currently granted under the
Company's option plans will fully vest periodically and become exercisable
through the year 2003 at prices ranging from $2.03 to $21.63. Grants made under
the Company's option plans may be canceled under certain circumstances as
provided in the plans. While the Company cannot predict the timing or the number
of shares that may be issued upon the exercise of option grants by individual
employees, the Company is pursuing a variety of alternatives to help assure an
orderly distribution of shares that may become available to the market.
In May 1997, the Board of Directors approved a stock repurchase program that
allows the Company to repurchase, from time to time, up to 1.6 million shares of
common stock in open-market transactions. The timing and number of shares
ultimately
Page 11 of 30
<PAGE>
DYNEGY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
repurchased will depend upon market conditions and consideration of
alternative investments. Pursuant to this program, the Company has acquired
917,100 shares at a total cost of $14.4 million, or $15.67 per share on a
weighted average cost basis, through June 30, 1998.
NOTE 9 -- RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
No. 130, "Reporting Comprehensive Income" ("Statement No. 130") and Statement
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("Statement No. 131"). In February 1998, the FASB issued Statement No. 132,
"Employers' Disclosure about Pension and Other Postretirement Benefits"
("Statement No. 132") that revised disclosure requirements for pension and other
postretirement benefits. Statement No. 132 does not impact DYNEGY's disclosure
or reporting. During the first quarter of 1998, the Accounting Standards
Executive Committee of the American Institute of Certified Public Accountants
issued two Statements of Position ("SOPs"), "Reporting on the Costs of Start-up
Activities" and "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use". Finally, in June 1998, the FASB issued Statement
No. 133.
Statement No. 130 established standards for reporting and display of
comprehensive income and its components in a full-set of general purpose
financial statements. This standard does not currently alter the Company's
reporting of operating results.
Statement No. 131 established standards for the way public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
established standards for related disclosures about products and services,
geographic areas, and major customers. Statement No. 131 supersedes or amends
existing authoritative literature governing segment reporting, reporting of
significant customers, reporting of geographic operations and reporting of
previously unconsolidated subsidiaries. The new statement is effective for
annual periods ending after December 15, 1997, and comparative information for
earlier years is to be restated. The statement need not be applied to interim
financial statements in the initial year of its application. The Company is
assessing the impact Statement No. 131 will have on its financial disclosures,
if any, and intends to adopt the provisions of such statement within the
timeframe and in accordance with the requirements provided by the statement.
The SOPs establish guidance on the financial reporting for start-up costs and
organization costs, as defined, and on accounting for the costs of computer
software developed or obtained for internal use. The Company's current
accounting methodologies adhere to the provisions contained in the SOPs in all
material respects.
Statement No. 133 established accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires entities to recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The standard also
established certain conditions precedent in order to designate and report
derivative instruments as hedges of certain assets, liabilities, firm
commitments and other transactions, as defined by the statement. Finally,
Statement No. 133 expressly defined the accounting for changes in the fair value
of a derivative based principally on the intended use of the derivative and its
designation. This statement is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. Early adoption is permitted, but only as of the
beginning of any quarter following issuance of the statement and provisions of
the statement do not require retroactive application to financial statements of
prior periods.
Utilization of derivative instruments is an integral part of managing the market
and operational risks affecting the Company in the normal course of operating
its business. The Company routinely enters into financial instrument contracts
to hedge purchase and sale commitments and inventories in its natural gas,
natural gas liquids, electricity and coal businesses in order to minimize the
risk of market fluctuations. Additionally, the Company may, at times, have a
bias in the market, within established guidelines, resulting from management of
its portfolio. DYNEGY also monitors its exposure to fluctuations in interest
rates and foreign currency exchange rates and may execute swaps, forward-
exchange contracts or other financial instruments to hedge and manage these
exposures. Statement No. 133 amends, modifies or supercedes significantly all of
the authoritative literature governing the accounting for and disclosure of
derivative financial instruments and hedging activities.
Page 12 of 30
<PAGE>
DYNEGY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
The Company does not anticipate that its current mark-to-market accounting for
fixed-price natural gas contracts will be significantly affected by the adoption
of Statement No. 133. However, provisions in the standard will affect the
accounting for trading and marketing operations currently accounted for under
the accrual method. The Company is assessing the impact Statement No. 133 will
have on its financial accounting and disclosures and intends to adopt the
provisions of such statement within the timeframe and in accordance with the
requirements provided by the statement.
Page 13 of 30
<PAGE>
DYNEGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
The following discussion and analysis should be read in conjunction with the
unaudited condensed consolidated financial statements of Dynegy Inc. included
elsewhere herein and with the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.
GENERAL
Effective at the close of business on July 6, 1998, NGC Corporation ("NGC")
changed its name to Dynegy Inc. ("DYNEGY" or the "Company"). Concurrent with the
change in name, DYNEGY also changed its New York Stock Exchange symbol to DYN.
All subsidiaries of the Company now operate under the DYNEGY name.
COMPANY PROFILE. DYNEGY is one of the leading marketers of energy products and
services in North America. The Company holds a leadership position in the
marketing of natural gas, natural gas liquids and electricity and is a leading
gatherer, processor and transporter of natural gas liquids through direct and
indirect ownership and operation of natural gas processing plants,
fractionators, storage facilities and pipelines. These activities combined with
a substantial independent power generation business enable the Company to
provide energy solutions to customers throughout North America and in the United
Kingdom, Colombia and Australia.
The Company is a holding company that conducts substantially all of its business
through its subsidiaries. From inception of operations in 1984 until 1990,
Natural Gas Clearinghouse ("Clearinghouse") limited its activities primarily to
natural gas marketing. Starting in 1990, Clearinghouse began expanding its core
business operations through acquisitions and strategic alliances with certain of
its shareholders resulting in the formation of a midstream energy asset business
and establishing energy marketing operations in both Canada and the United
Kingdom. Effective March 1, 1995, Clearinghouse and Trident NGL Holding, Inc.
("Holding"), a fully integrated natural gas liquids company, merged and the
combined entity was renamed NGC Corporation. On August 31, 1996, NGC completed a
strategic combination with Chevron U.S.A. Inc. and certain Chevron affiliates
(collectively "Chevron") whereby substantially all of Chevron's midstream assets
were merged with NGC ("Chevron Combination"). In June 1997, NGC acquired Destec
Energy, Inc. ("Destec"), a leading independent power producer. Effective at the
close of business on July 6, 1998, NGC changed its name to Dynegy Inc. By virtue
of the growth of DYNEGY's core businesses combined with the synergies derived
from these transactions, DYNEGY has established itself as an industry leader
providing quality, competitively priced energy products and services to
customers primarily throughout North America and in the United Kingdom.
The Company currently reports operations under three primary business segments:
the Wholesale Gas and Electric Business ("Wholesale Businesses"), the Natural
Gas Liquids Business ("Liquids Businesses") and Global Operations ("Global
Businesses").
RECENT DEVELOPMENTS. DYNEGY continued successful execution of key operating and
business strategies during the recent quarter. Key accomplishments during the
period, which are further discussed below, included: (i) formation of an
additional retail energy marketing alliance in the southeast United States; (ii)
the formation of asset management and marketing alliances with electric
utilities, municipalities and others; (iii) growth in power generating assets
and infrastructure; (iv) continued restructuring and reorganization of the
Company's natural gas liquids businesses through the formation of a joint
venture and discrete asset dispositions; (v) the sale of non-strategic assets
and operations; and (vi) the continued restructuring of the Company's long-term
debt portfolio.
WHOLESALE BUSINESSES -
On July 15, 1998, AGL Resources Inc., Piedmont Natural Gas Company, Inc. and
DYNEGY announced the formation of SouthStar Energy Services L.L.C.
("SouthStar"). The venture, headquartered in Atlanta, Georgia, offers a
combination of unregulated energy products and services to industrial,
commercial and residential customers in the southeast region of the United
States. The products and services will include natural gas, electricity, fuel
oil and propane, along with related retail services. The formation of SouthStar
represents a furtherance of DYNEGY's strategy of forming alliances with
Page 14 of 30
<PAGE>
DYNEGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
entities that possess a regional presence in order to serve the retail energy
customer base throughout North America. DYNEGY now has interests in four
regional alliances with partners having strong regional retail presence in
Canada and in the northeast, the midwest and southeast regions of the U.S.
During the period, DYNEGY announced an agreement to manage the natural gas
supply, transportation and storage for the city of Richmond, Virginia. The
arrangement represents a full-service energy supply and asset management
arrangement requiring DYNEGY to assure all gas supply requirements for the city
of Richmond as well as requiring DYNEGY to manage more than 200 MMcf/d of firm
transportation capacity and 3.6 Bcf of firm storage capacity.
On May 14, 1998, DYNEGY and Florida Power Corporation, a Florida Progress
Corporation company located in St. Petersburg, Florida, announced an agreement
to form a power marketing alliance that will operate in the U.S. wholesale
electric and natural gas markets. The alliance creates a commercial relationship
between a power marketer and a utility focused on developing wholesale energy
markets in Florida and other regions. It will broaden each company's ability to
conduct electric power and related fuel transactions by combining the energy
marketing, trading and risk management skills of DYNEGY with the current power
marketing capabilities and over 8,500 megawatts of power generation assets of
Florida Power.
During the quarter, DYNEGY announced its intention to develop a 220 megawatt
power generating facility in Dona Ana County, New Mexico, and a 600 megawatt
power generating facility in Rockingham County, North Carolina. Commercial
operations for both facilities are expected to begin in 2000. Additionally,
DYNEGY announced an alliance with NICOR to jointly pursue wholesale generation
and cogeneration power projects in six midwest states.
During the period, DYNEGY and its partner NRG Energy, Inc. ("NRG"), a wholly
owned subsidiary of Northern States Power Company, consummated the acquisitions
of the 560 megawatt gas-fired Long Beach Generating Facility for $30.0 million
and the 1,020 megawatt gas-fired El Segundo Generating Facility for $87.9
million. DYNEGY is the lead party on fuel procurement, power marketing and asset
management for the ventures, while NRG will operate both facilities. The
facilities were acquired by separate partnerships, with DYNEGY and NRG each
owning a 50 percent interest in the two ventures. DYNEGY's aggregate capital
outlay associated with the two acquisitions approximated $59 million.
Additionally, during the second quarter the Company purchased the interests held
by third parties in three partnerships, each formed for the purpose of
purchasing, building and operating power generation facilities in California.
The aggregate purchase price associated with these purchases approximated $11
million.
LIQUIDS BUSINESSES -
On July 9, 1998, Texaco and DYNEGY announced the formation of Versado Gas
Processors L.L.C. (`Versado"), a joint venture of both companies' natural gas
processing facilities in southeast New Mexico and west Texas. DYNEGY will own a
63 percent interest in the venture and will operate the combined facilities with
the intent of gaining efficiencies in operations and economies of scale
consistent with DYNEGY's strategy of asset rationalization and restructuring
that is intended to increase profitability through higher utilization, lower
costs and improved performance. Versado's processing and related gathering
facilities have a combined processing capacity of approximately 340 million
cubic feet of gas per day.
On July 7, 1998, DYNEGY announced that its wholly owned subsidiary Dynegy Canada
Inc. had acquired the Mazeppa and Gladys gas processing plants and associated
gathering lines located in Alberta, Canada, from Compton Petroleum Corporation.
The acquisition of these midstream assets represents the re-establishment of
DYNEGY's Canadian asset base that will complement existing Canadian gas
marketing and trading operations.
Page 15 of 30
<PAGE>
DYNEGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
DYNEGY announced the closing of the sale of the Ozark Gas Transmission System to
an affiliate of Oklahoma City-based Enogex Inc. for $55 million on August 4,
1998, and on July 20, 1998 disclosed a letter of intent to sell substantially
all of its U.S. crude oil transportation and marketing assets. In addition, the
Company sold its interest in a non-strategic natural gas processing plant during
the period. Aggregate net sales proceeds from these dispositions will strengthen
short-term financial position and supplement cash flow for redeployment into
strategic endeavors.
GLOBAL BUSINESSES -
In early July DYNEGY announced an agreement in principle to form the first
natural gas and power marketing joint venture in the Colombian wholesale
electric and natural gas markets. DYNEGY's joint venture partner is ISAGEN S.A.
E.S.P., currently the third largest power generating company in Colombia, with
generating capacity of 1,661 megawatts, or 15 percent of total Colombian
generating capacity. The alliance is expected to offer wholesale customers in
Colombia a full spectrum of energy products and services.
DEBT PORTFOLIO RESTRUCTURING -
In May 1998, the Company amended its revolving bank credit agreement. The
amended agreement ("Credit Agreement") is divided into two parts, a $400 million
five-year facility and a $400 million 364-day facility, with borrowings under
the Credit Agreement representing unsecured obligations of the Company. The
Credit Agreement combined with the Company's commercial paper program and money
market lines of credit provide management with significant liquidity to manage
working capital and strategic capital investing requirements.
On May 20, 1998, the Company sold $175 million of 7.125 percent, 20-year
debentures due May 15, 2018. The debentures were issued at a price of 99.654
percent, which, after deducting underwriting discounts and commissions, resulted
in net proceeds of approximately $172 million. Proceeds from the sale of the
debentures were used to retire short-term debt incurred in connection with the
redemption of certain high-cost debt described in the following paragraph.
In February 1998, the Company delivered Notices of Redemption to the holders of
its $105 million principal amount of 10.25% Subordinated Notes and $65 million
principal amount of 14% Senior Subordinated Notes. On March 31, 1998 and April
15, 1998, the Company retired the Senior Subordinated Notes and the Subordinated
Notes, respectively, pursuant to the redemption provisions contained in the
respective indentures. DYNEGY funded the estimated aggregate redemption value of
$180 million through a combination of borrowings under existing credit
facilities and commercial paper issuances.
In August 1998, the Company filed a Registration Statement for the purpose of
registering certain securities for sale or issuance by the Company, from time-
to-time, in an aggregate amount not to exceed $500 million, pursuant to Rule 415
of the Securities Act of 1933. The transaction timing and specific terms of the
particular securities to be issued will be set forth in prospectus supplements,
but such securities may take the form of debt, preferred stock, common stock,
security warrants or trust debentures as provided for in the Registration
Statement.
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS AND INFORMATION. This Form 10-Q
contains various forward-looking statements and information that are based on
management's beliefs as well as assumptions made by and information currently
available to management. When used in this document, words such as
"anticipate", "estimate", "project", and "expect" are intended to identify
forward-looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable; it can give no
assurance that such expectations will prove to have been correct. Such
statements are subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated, projected or expected. Among the key risk factors that
may have a direct bearing on DYNEGY's results of operations and financial
condition are: (i) competitive practices in the industries in which DYNEGY
competes, (ii) fluctuations in energy commodity prices which have not been
properly hedged or which are inconsistent with DYNEGY's open position in its
energy marketing activities, (iii) operational and systems risks, (iv)
environmental liabilities which are
Page 16 of 30
<PAGE>
DYNEGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
not covered by indemnity or insurance, and (v) the impact of current and future
laws and governmental regulations (particularly environmental regulations)
affecting the energy industry in general, and DYNEGY's operations in particular.
IMPACT OF PRICE FLUCTUATIONS. Operating margin earned by the Wholesale
Businesses, exclusive of risk-management activities, is relatively insensitive
to commodity price fluctuations since most of this segment's purchase and sales
contracts do not contain fixed-price provisions. Generally, prices contained in
these contracts are tied to a current spot or index price and, therefore, adjust
directionally with changes in overall market conditions. However, market price
fluctuations for natural gas and electricity can have a significant impact on
the operating margin derived from the segment's risk-management activities.
DYNEGY generally attempts to balance its fixed-price physical and financial
purchase and sales commitments in terms of contract volumes, and the timing of
performance and delivery obligations. However, the Company may, at times, have
a bias in the market, within established guidelines, resulting from management
of its portfolio. To the extent a net open position exists, fluctuating
commodity market prices can impact DYNEGY's financial position or results of
operations, either favorably or unfavorably. Further, differences in the
comprehensive methods of accounting for North American fixed-price natural gas
transactions, which are accounted for under the mark-to-market method, and
electricity marketing transactions, which are accounted for under accrual
accounting, create differences in the timing of the recognition of such
commodity price movements. The net open positions are actively managed, and the
impact of changing prices on the Company's financial condition at a point in
time is not necessarily indicative of the impact of price movements throughout
the year. Fuel costs, principally natural gas, represent the primary variable
cost impacting margins at the Company's power generating facilities.
Historically, operating margins have been relatively insensitive to commodity
price fluctuations since most of this business's purchase and sales contracts
contain variable power sales contract features tied to a current spot or index
natural gas price allowing revenues to adjust directionally with changes in
natural gas prices.
Operating margins associated with the Liquids Businesses' natural gas gathering,
processing and fractionation activities are very sensitive to changes in natural
gas liquids prices principally as a result of contractual terms under which
products are sold by these businesses. Based upon current operations, a one cent
movement in the annual average price of natural gas liquids would impact annual
operating margin by approximately $10 million. The operating margin in these
businesses is relatively insensitive to fluctuations in natural gas prices as a
result of the mitigating impact of fuel costs in the Company's fractionation
operations and residue gas sales in its gathering and processing activities.
Commodity price fluctuations also impact the operating margins derived from the
Liquids segment's natural gas liquids and crude oil marketing businesses. In
order to manage its exposure to price risks in these businesses, the Company,
from time to time, will enter into financial instrument contracts to hedge
purchase and sale commitments and inventories.
SEASONALITY. DYNEGY's revenue and operating margin are subject to fluctuations
during the year primarily due to the impact certain seasonal factors have on
sales volumes and the prices of natural gas, electricity and natural gas
liquids. Natural gas sales volumes and operating margin are typically higher in
the winter months than in the summer months, reflecting increased demand due to
greater heating requirements and, typically, higher natural gas prices.
Conversely, electricity marketing operations are typically impacted by higher
demand and commodity price volatility during the summer cooling season.
Consistent with electricity marketing, the Company's electricity generating
facilities generally experience peak demand during the summer cooling season.
The Liquids Businesses are also subject to seasonal factors; however, such
factors typically have a greater impact on sales prices than on sales volumes.
Natural gas liquids prices typically increase during the winter season due to
greater heating requirements. The Company's wholesale propane business is
seasonally weighted in terms of volume and price consistent with the trend in
the Company's natural gas operations as a result of greater demand for crop-
drying and space-heating requirements in the fall and winter months.
LIQUIDITY AND CAPITAL RESOURCES
The Company's business strategy has been to grow horizontally across all sectors
of the midstream energy business segment through strategic acquisitions or
construction of core operating facilities in order to capture the significant
synergies which management believes exist among these types of assets and
DYNEGY's natural gas, electricity and natural gas liquids
Page 17 of 30
<PAGE>
DYNEGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
marketing businesses. In addition, the Company is extensively involved in risk
management activities, which complement its firm purchase and sales commitments,
capacity, transportation and other similar obligations.
DYNEGY has historically relied upon operating cash flow and borrowings from a
combination of sales of commercial paper, money market lines of credit, the
Credit Agreement and various long-term debt issuances for its liquidity and
capital resource requirements. The following briefly describes the terms of
these arrangements.
COMMERCIAL PAPER AND MONEY MARKET LINES OF CREDIT. The Company utilizes
commercial paper proceeds and borrowings under uncommitted money market bank
lines for general corporate purposes, including short-term working capital
requirements. At June 30, 1998, commercial paper outstanding totaled $450
million at an interest rate of 6.92 percent and amounts outstanding under
uncommitted money market bank lines totaled $6 million at an interest rate of
6.73 percent. The weighted average interest rates for commercial paper and
uncommitted money market bank lines during the three-months ended June 30, 1998
were 5.72 percent and 5.88 percent, respectively.
CREDIT AGREEMENT. As stated previously, DYNEGY restructured its Credit
Agreement in May 1998 establishing an $800 million facility divided into two
parts, a $400 million five-year facility and a $400 million 364-day facility. At
June 30, 1998, letters of credit and borrowings under the Credit Agreement
aggregated $28.2 million and after consideration of the outstanding commercial
paper, unused borrowing capacity under the Credit Facility approximated $321.8
million.
SENIOR NOTES. As stated previously, on May 20, 1998, the Company sold $175
million of 7.125 percent, 20-year debentures due May 15, 2018. Interest on the
7.125 percent notes is payable semiannually on May 15 and November 15 of each
year. In October 1996, DYNEGY sold $175 million of 7.625 percent 30-year Senior
Notes due 2026 ("Senior Debentures"). Interest on the Senior Debentures is
payable semiannually on April 15 and October 15 of each year. The Senior
Debentures are redeemable, at the option of the Company, in whole or in part
from time to time, at a formula based redemption price. On December 15, 1995,
the Company sold $150 million of 6.75 percent Senior Notes due 2005 ("Senior
Notes"). Interest on the Senior Notes is payable semiannually on June 15 and
December 15 of each year.
CHEVRON NOTE. As part of the Chevron Combination, DYNEGY assumed approximately
$155.4 million payable to Chevron upon demand on or after August 31, 1998 (the
"Chevron Note"). The Chevron Note bears interest at an effective rate of 6.4
percent per annum payable semiannually in arrears each February and August.
Should Chevron choose not to demand payment of the Chevron Note then principal
plus accrued interest is payable in full on August 14, 2004. DYNEGY has the
right, at any time on or after August 31, 1998, to prepay in whole or in part
the principal and accrued interest outstanding under the Chevron Note.
GUARANTEED PREFERRED BENEFICIAL INTERESTS IN SUBORDINATED DEFERRABLE INTEREST
DEBENTURES. During May 1997, DYNEGY Corporation Capital Trust I ("Trust"), a
wholly owned subsidiary of DYNEGY, issued in a private transaction $200 million
aggregate liquidation amount of 8.316% Subordinated Capital Income Securities
(referred to herein as "Guaranteed Preferred Beneficial Interests in
Subordinated Deferrable Interest Debentures" or "Trust Securities") representing
preferred undivided beneficial interests in the assets of the Trust. The Trust
invested the proceeds from the issuance of the Trust Securities in an equivalent
amount of 8.316% Subordinated Debentures ("Subordinated Debentures") of the
Company. The sole assets of the Trust are the Subordinated Debentures. Proceeds
from issuance of the Securities were used to reduce amounts outstanding under
the Credit Agreement. During October 1997, the Trust completed an exchange offer
through which all of the outstanding Securities were exchanged by the holders
thereof for registered securities having substantially the same rights and
obligations.
QUANTITATIVE AND QUALITATIVE MARKET RISK DISCLOSURES. The Company is exposed to
certain market risks inherent in the Company's financial instruments that arise
from transactions entered into in the normal course of business. The Company
routinely enters into financial instrument contracts to hedge purchase and sale
commitments and inventories in its natural gas, natural gas liquids, electricity
and coal businesses in order to minimize the risk of market fluctuations.
DYNEGY also monitors its exposure to fluctuations in interest rates and foreign
currency exchange rates and may execute swaps, forward-exchange contracts or
other financial instruments to hedge and manage these exposures. A comparison
of the absolute
Page 18 of 30
<PAGE>
DYNEGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
notional contract amounts associated with commodity risk-management, interest
rate and forward exchange contracts, respectively, as of June 30, 1998 and
December 31, 1997, is as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------- --------
<S> <C> <C>
Natural Gas (Trillion Cubic Feet) 3.459 2.558
Electricity (Million Megawatt Hours) 2.723 2.244
Natural Gas Liquids (Million Barrels) 2.250 4.355
Crude Oil (Million Barrels) 22.607 14.920
Interest Rate Swaps (in thousands of US Dollars) $ 72,132 $180,000
Weighted Average Fixed Interest Rate Paid on Swaps 7.657 6.603
U.K. Pound Sterling (in thousands of US Dollars) $ 74,638 $ 74,638
Average U.K. Pound Sterling Contract Rate (in US Dollars) $ 1.5948 $ 1.5948
Canadian Dollar (in thousands of US Dollars) $ 49,621 $ 37,041
Average Canadian Dollar Contract Rate (in US Dollars) $ 0.7113 $ 0.7240
</TABLE>
The Company's electric power marketing and trading business benefited
substantially during the quarter from opportunities created by extreme market
volatility experienced in certain U.S. markets. Management believes that such
volatility will continue as the electricity markets deregulate throughout the
U.S. Such volatility will result principally from imbalances between supply and
demand created by illiquidity in certain markets resulting from, among other
things, the lack of a mature regional trading and price discovery mechanism,
transmission constraints resulting from continued regulation in certain U.S.
markets and the need for a representative number of market participants
maintaining the financial liquidity and other resources necessary to compete
effectively. These matters may significantly affect periodic results. Management
will continue to monitor exposure to these and other market and business risks
and will adjust valuation reserves accordingly as indicated by changing
circumstances.
YEAR 2000 ISSUES. The Company is continuing its analysis of the "Year 2000"
issue. The potential costs and uncertainties associated with this review are
dependent upon a number of factors, including legacy software and hardware
configurations and planned information technology infrastructure enhancements.
Results of the review conducted to date indicate that the Company will not be
burdened by a material event resulting from the Company's untimely resolution of
Year 2000 issues. Further, management does not currently believe the cost of
resolving such issues will be material to the Company's consolidated results of
operations or financial position.
CONCLUSION
The Company continues to believe that it will be able to meet all foreseeable
cash requirements, including working capital, capital expenditures and debt
service, from operating cash flow and borrowings under its various credit
facilities, money market lines of credit, commercial paper issuances and long-
term debt issuances.
Page 19 of 30
<PAGE>
DYNEGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
RESULTS OF OPERATIONS
Provided below is a tabular presentation of certain domestic and international
operating and financial statistics for the Company's segments and subsegments
for the three- and six-month periods ended June 30, 1998 and 1997, respectively.
Both the continuity of operations and the resulting comparability of results
between periods are impacted by the Destec acquisition and the reorganizations
of the Company's operations in Canada and in the United Kingdom.
================================================================================
<TABLE>
<CAPTION>
THREE-MONTHS ENDED JUNE 30, SIX-MONTHS ENDED JUNE 30,
--------------------------- -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
($ US IN THOUSANDS)
OPERATING MARGIN (1)(2):
WHOLESALE GAS AND ELECTRIC BUSINESS -
<S> <C> <C> <C> <C>
Natural Gas Marketing $ 28,121 $ 40,749 $ 54,174 $ 58,354
Electric Power Marketing 25,986 2,753 23,551 4,676
Power Generation 11,292 --- 20,807 ---
---------- ---------- ---------- ----------
TOTAL WHOLESALE GAS AND ELECTRIC BUSINESS 65,399 43,502 98,532 63,030
---------- ---------- ---------- ----------
NATURAL GAS LIQUIDS BUSINESS (AND OTHER US OPERATIONS)
Natural Gas Processing - Field Plants 15,821 34,331 38,437 83,658
Natural Gas Processing - Straddle Plants 1,471 8,868 6,651 12,311
Fractionation 5,994 5,444 13,246 11,526
Natural Gas Liquids Marketing 8,966 5 22,684 (16,330)
---------- ---------- ---------- ----------
32,252 48,648 81,018 91,165
---------- ---------- ---------- ----------
Crude Oil Marketing 2,766 470 5,475 (529)
Natural Gas Gathering and Transmission 2,357 4,740 6,413 8,894
---------- ---------- ---------- ----------
5,123 5,210 11,888 8,365
---------- ---------- ---------- ----------
TOTAL NATURAL GAS LIQUIDS BUSINESS (AND OTHER
US OPERATIONS) 37,375 53,858 92,906 99,530
---------- ---------- ---------- ----------
GLOBAL:
Gas Sales 3,580 315 9,672 665
LPG Sales 1,561 92 3,794 1,889
---------- ---------- ---------- ----------
TOTAL GLOBAL OPERATIONS 5,141 407 13,466 2,554
---------- ---------- ---------- ----------
TOTAL OPERATING MARGIN $ 107,915 $ 97,767 $ 204,904 $ 165,114
========== ========== ========== ==========
OPERATING STATISTICS (1)(2):
Natural Gas Marketing (Bcf/d) -
U.S. Sales Volumes (3) 5.3 6.2 5.9 6.2
Canadian Sales Volumes (4) 2.3 1.6 2.2 ---
U.K. 0.6 0.1 0.6 0.1
---------- ---------- ---------- ----------
8.2 7.9 8.7 6.3
========== ========== ========== ==========
Electric Power Marketing - Million Megawatt Hours Sold 26.6 16.6 51.5 34.0
Power Generation (Million Megawatt Hours Generated) -
Gross 3.5 --- 6.8 ---
Net 2.3 --- 4.4 ---
Natural Gas Liquids Processed (MBbls/d - Gross) -
Field Plants 85.2 83.8 86.0 82.1
Straddle Plants 31.9 46.9 36.3 47.6
Fractionation - Barrels Received for Fractionation (MBbls/d) 156.0 172.0 192.3 160.9
NGL Marketing - Sales Volumes (MBbls/d) 378.6 382.7 405.0 403.3
Natural Gas Gathering and Transmission (MMcf/d) 0.4 0.4 0.4 0.4
Crude Oil Marketing - Sales Volumes (MBbls/d) 281.5 176.4 238.6 164.2
Global LPG -- LPG Sales Volumes (MMBbls) (5) 4.4 8.6 9.8 12.5
</TABLE>
================================================================================
(1) The Destec acquisition was accounted for as an acquisition of a business in
accordance with the purchase method of accounting and the results of operations
attributed to the acquired business are included in the Company's financial
statements and operating statistics effective July 1, 1997.
PAGE 20 OF 30
<PAGE>
DYNEGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
The reorganization of the Company's Canadian operations was effective
April 1, 1997, and the reorganization of the Company's operations in the
United Kingdom was effective January 1, 1997.
(2) Information excludes the Company's proportionate share of margin and
operating statistics associated with ventures accounted for under the
equity method. In 1998, the most significant operations included equity
investments in Accord Energy Limited ("Accord"), Venice Energy Services
Company L.L.C. ("VESCO"), West Texas Pipeline Partnership ("West Texas
Pipeline"), Gulf Coast Fractionators ("GCF") and interests in certain
partnerships each owning power generating assets. Significant equity
investments in the 1997 period included the operations of Accord, Novagas
Clearinghouse, Ltd. ("NCL"), VESCO, West Texas Pipeline and GCF,
respectively.
(3) Includes immaterial amounts of inter-company gas sales for both periods.
(4) Represents volumes sold by DYNEGY Canada, Inc. Volumes sold by NCL prior to
the reorganization are not comparable.
(5) Includes inter-company sales for all periods.
THREE-MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
For the quarter ended June 30, 1998, DYNEGY realized net income of $23.4
million, or $0.14 per share, on revenues of $3.3 billion. This compared with
net income of $32.1 million, or $0.19 per share, on total revenue of $2.7
billion reported in the second quarter of 1997. Prior period results include an
after-tax benefit of $14.6 million, or $0.09 per share, related to certain
adjustments to gas marketing sales accruals.
Consolidated operating margin for the second quarter of 1998 totaled $107.9
million as compared to $97.8 million in the corresponding 1997 period, which,
after taking into account the $22.5 million pre-tax benefit associated with the
adjustments referred to in the previous paragraph, is normalized to $75.3
million. The improved consolidated operating margin reflected an expanding
wholesale gas and electricity marketing operation driven by volatility in the
electricity markets and continued strong gas marketing per unit margins offset
by lower operating results in the Company's liquids businesses resulting
principally from lower commodity prices period to period. The Wholesale
Businesses contributed $65.4 million to the 1998 consolidated operating margin,
compared to $43.5 million reported a year ago; whereas, the Liquids Businesses
contributed an aggregate $37.4 million to the consolidated operating margin or
$16.5 million less than the $53.9 million reported in 1997. Global Operations
contributed $4.7 million more in margin during the 1998 period as compared to
the same period in 1997. Operating income totaled $36.6 million in the second
quarter of 1998 compared to $34.8 million in the comparable 1997 period, an
increase of $1.8 million, reflecting the aforementioned increase in consolidated
operating margin offset by increases in both depreciation and amortization and
general and administrative expenses. The increase in depreciation and
amortization expense results principally from the depreciable assets acquired in
the Destec acquisition, effective July 1, 1997 for accounting purposes, as well
as the continued expansion of the Company's depreciable asset base resulting
from other acquisitions and capital projects completed during the four quarters
in the period ended June 30, 1998. The increase in depreciation and amortization
expense was partially offset by the favorable impact on current period expense
from the impact of the asset abandonments and impairments recognized during the
fourth quarter of 1997. The increased level of general and administrative
expenses period to period resulted principally from the incremental expense
associated with the Destec acquisition, the reorganization and expansion of
operations in Canada and the United Kingdom, expansion of the electricity
marketing and global transportation businesses and the effect of increased
overhead required to support the technology infrastructure improvements
currently being implemented by the Company.
Incremental to DYNEGY's consolidated operating income was the Company's equity
share in the earnings of its unconsolidated affiliates which contributed an
aggregate $15.1 million to 1998 pre-tax quarterly earnings, compared to $13.4
million during the comparable 1997 period. The increase in equity earnings
generally reflects the addition of equity investments acquired in the Destec
acquisition offset by lower earnings from the Company's investments in Gulf
Coast Fractionators ("GCF") and Venice Energy Services Company, L.L.C.
("VESCO"). Results for GCF and VESCO were influenced by the commodity pricing
environment in 1998, downtime at the GCF facility resulting from routine
maintenance during the 1998 period, insurance proceeds received by GCF in the
1997 period and a lower ownership interest in VESCO period to period. The
following table provides a summary of equity earnings by investment for the
comparable periods.
Page 21 of 30
<PAGE>
DYNEGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
For the Three-Months Ended June 30,
------- -------
1998 1997
------- -------
Accord (1) $ 4,500 $ 4,500
Gulf Coast Fractionators 891 3,343
West Texas LPG Pipeline Limited Partnership 1,859 1,744
Venice Energy Services Company, L.L.C. 1,163 3,419
Destec equity investments (aggregate) 6,973 --
Other, net (285) 411
------- -------
$15,101 $13,417
======= =======
1. For a discussion of the Accord restructuring, refer to Note 3 of the
Condensed Consolidated Financial Statements.
Interest expense totaled $18.1 million for the quarter ended June 30, 1998,
compared to $13.2 million for the equivalent 1997 period. The increase of $4.9
million is attributed to higher average outstanding principal amounts in 1998
resulting primarily from debt used to finance the Destec acquisition.
During the second quarter of 1997, the Company sold $200 million of 8.316%
Guaranteed Preferred Beneficial Interests in Subordinated Deferrable Interest
Debentures. The accumulated distributions attributable to these Trust Securities
are reported as minority interest in income of a subsidiary in the consolidated
statements of operations. Accumulated distributions associated with these Trust
Securities totaled $4.2 million for the quarter ended June 30, 1998 as compared
to $1.5 million in the comparable 1997 period.
Other income and expenses, net totaled $5.6 million in the quarter ended June
30, 1998 compared to $10.2 million in the 1997 period. Both periods were
influenced by gains recognized on asset sales. The 1998 period included a
pretax gain of $4.8 million related to the sale of a natural gas processing
facility, while the 1997 period included $7.8 million attributed to the pretax
gain on the sale of a 49.9 percent interest in Novagas Clearinghouse Ltd. The
remaining amounts of other income and expense in both periods consisted of
interest income, minority interests in consolidated subsidiaries and certain
other non-recurring income and expense items.
The Company reported an income tax provision of $11.6 million for the three-
month period ended June 30, 1998, representing an effective tax rate of 33
percent, compared to an income tax provision of $11.5 million and an effective
rate of 26 percent for the equivalent 1997 period. The difference between the
aforementioned effective rate and the statutory rate of 35 percent for
the three-month period ended June 30, 1998, results principally from permanent
differences arising from the amortization of certain intangibles and debt
premiums and, to a lesser degree, state income taxes. The difference between the
aforementioned effective rate and the statutory rate of 35 percent for the
three-month period ended June 30, 1997, results principally from permanent
differences attributable to amortization of certain intangibles, state income
taxes and the tax effect of the sale of the NCL interest.
WHOLESALE GAS AND ELECTRIC BUSINESSES
Operating margin for the three-month period ended June 30, 1998, totaled $65.4
million compared with $43.5 million in the same 1997 period. Included in the
1997 quarterly operating margin is a $22.5 million benefit resulting from
adjustments related to a reconciliation and true-up to actual results of certain
gas marketing accruals made in prior periods for price and volumes. As a result,
normalized operating margins in that period totaled $21.0 million. The
significant increase in operating margin period to period generally reflects
higher electricity marketing volumes, higher normalized per unit margins on both
gas and power sales and the contribution of operating margin from the power
generation business.
Page 22 of 30
<PAGE>
DYNEGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
Total natural gas volumes sold in North America decreased to 7.6 billion cubic
feet per day from 7.8 billion cubic feet per day during last year's second
quarter, principally as a result of reduced volumes in the U.S. reflecting
intentional elimination of certain marginally profitable sales from DYNEGY's
sales portfolio. The decrease in U.S. sales volumes was partially offset by
increased natural gas sales volumes in Canada period to period. North American
per unit natural gas sales margins averaged $0.041 per thousand cubic feet for
the 1998 quarter compared to a normalized per unit margin of $0.026 per unit in
1997 reflecting the positive impact on operating margin of the selectivity
analysis performed on the gas sales portfolio.
Electricity marketing continued to improve its sales volumes dramatically,
increasing total megawatt hours sold by 10.0 million period to period. The
Company's electric power marketing and trading business benefited substantially
during the quarter from opportunities created by extreme market volatility
experienced in certain U.S. markets, particularly in the midwest. The Company
recorded certain reserves at quarter end in consideration of continuing market
volatility, counterparty credit risks and its market bias.
The Company's power generation operations, acquired effective June 30, 1997,
contributed $11.3 million of operating margin and $7.0 million of equity
earnings during the 1998 period. The Company's ownership of power generating
assets is predominantly through varying interests held in partnerships that own
and operate power generation facilities. During the period, the power generating
assets in which NGC maintains an interest generated 3.5 million megawatt hours
of electricity (2.3 million megawatt hours, net to the Company's interest).
NATURAL GAS LIQUIDS BUSINESSES
Operating margin in this segment dropped to $37.4 million from the $53.9 million
reported in the comparable 1997 period. The lower 1998 operating margins were
principally a result of the negative impact lower industry-wide average natural
gas liquids prices had on the segment's gas processing business mitigated, in
part, by aggressive management of inventories, which contributed to improved
operating margins in the natural gas liquids marketing business period to
period. The segment owns interests in joint ventures, partnerships and limited
liability companies that contributed an aggregate $4.2 million to pre-tax
earnings during the three-months ended June 30, 1998, compared with $8.8 million
in the comparable 1997 period. As described previously, the segment's lower
equity earnings period to period reflect the aforementioned impact that lower
average natural gas liquids prices had on the domestic investments and an
insurance reimbursement of $1.8 million recognized in earnings in the 1997
period.
Natural gas liquids production volumes decreased 10 percent this quarter to
117.1 thousand barrels per day from 130.7 thousand barrels per day in the second
quarter last year, principally as a result of reduced volumes at the Company's
straddle plant facilities. The straddle plants were shutdown during a portion
of the 1998 period as a result of unfavorable economics created by lower spreads
between natural gas and natural gas liquids prices. NGL marketing volumes sold
were essentially flat period to period while volumes received for fractionation
decreased from 172,000 barrels per day to 156,000 barrels per day reflecting the
straddle plant closures among other factors.
The segment's operating margins include amounts attributed to the Ozark Gas
Transmission System and the U.S. crude oil marketing operations. Closing on the
sale of Ozark occurred in August 1998 and the Company expects to recognize an
approximate $27 million pretax gain on this sale in the third quarter. The sale
of the U.S. crude oil marketing assets is expected to close in the fourth
quarter of 1998. The Company expects to recognize a gain on this transaction,
subject to further negotiation and finalization of the transaction.
GLOBAL BUSINESSES
The segment benefited from improved operating margins in the UK reflecting the
expanding energy marketing operations, which were essentially a start-up
operation during the 1997 period. The segment also reflects improved margins in
LPG sales offset by lower volumes.
Page 23 of 30
<PAGE>
DYNEGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
SIX-MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
For the six-months ended June 30, 1998, DYNEGY realized net income of $35.8
million, or $0.21 per share, on revenues of approximately $6.6 billion. This
compared with net income of $36.7 million, or $0.22 per share, on total revenue
of $6.0 billion reported in the same 1997 period. Results for the 1997 period
included an aggregate after-tax charge of $24.9 million, or $0.15 per share,
related to the Company's liquids businesses and a reserve related to an
investment in a gas storage project, partially offset by a $5.7 million, or
$0.03 per share, benefit resulting from the previously discussed gas marketing
accrual adjustment. Normalized earnings for the first six months of 1997, which
exclude the aforementioned charges and benefit, totaled $55.9 million, or $0.34
per share. Cash flow provided by operating activities totaled $93.2 million in
1998 compared to $167.4 million during the 1997 period.
Consolidated operating margin for the first six months of 1998 totaled $204.9
million compared to $165.1 million in 1997, which is net of $14.5 million of
pretax charges related to the aforementioned special items. The Wholesale
Businesses operating margin totaled $98.5 million, an improvement of $35.5
million period to period. The Liquids Businesses contributed an aggregate $92.9
million to the consolidated operating margin, or $6.6 million less than the
$99.5 million reported in 1997. Operating margin from Global Operations improved
by $10.9 million in 1998. Operating income totaled $55.8 million for the six-
months ended June 30, 1998, compared to $50.6 million in the comparable 1997
period. The increase of $5.2 million reflects the aforementioned increase in
consolidated operating margin, which was partially offset by the aggregate
increase in depreciation and amortization and general and administrative
expenses. The increases in depreciation and amortization expense and general and
administrative expenses result principally from the same reasons and
circumstances that impacted these items during the three-months ended June 30,
1998, described previously.
The Company's equity share in the earnings of its unconsolidated affiliates
contributed an aggregate $30.9 million to 1998 pretax year-to-date results,
compared to $26.8 million during the comparable 1997 period. The increase in
equity earnings generally reflects the addition of equity investments as part of
the Destec acquisition offset by lower earnings from the Company's investments
in GCF, VESCO and Accord Energy Limited. The following table provides a summary
of equity earnings by investment for the comparable periods.
For the Six-Months Ended June 30,
---------------------------------
1998 1997
------- -------
Accord (1) $ 9,000 $13,500
Gulf Coast Fractionators 2,080 4,716
West Texas LPG Pipeline Limited Partnership 3,576 3,284
Venice Energy Services Company, L.L.C. 2,926 6,110
Destec equity investments (aggregate) 14,127 ---
Other, net (853) (807)
------- -------
$30,856 $26,803
======= =======
1. For a discussion of Accord restructuring, refer to Note 3 of the Condensed
Consolidated Financial Statements.
Interest expense totaled $34.1 million for the six-month period ended June 30,
1998, compared to $27.9 million for the same 1997 period. The increase of $6.2
million is principally attributed to the debt resulting from the Destec
acquisition. Distributions associated with the Trust Securities totaled $8.3
million in 1998 compared to $1.5 million in 1997.
Other income and expenses, net totaled $7.2 million for the first six months of
1998 and was immaterial to the six-month period ended June 30, 1997. As
discussed previously, the 1998 amount is primarily a result of the gain on sale
of the gas processing facility.
Page 24 of 30
<PAGE>
DYNEGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
The Company reported an income tax provision of $15.7 million for the six-month
period ended June 30, 1998, representing an effective tax rate of 30 percent,
compared to an income tax provision of $11.3 million and an effective rate of 24
percent for the equivalent 1997 period. Differences between the aforementioned
effective rates and the statutory rate of 35 percent for each of the six-month
periods ended June 30, 1998 and 1997, respectively, result principally from the
same factors impacting the effective rates for the three-month periods ended
June 30, 1998 and 1997, previously discussed.
WHOLESALE GAS AND ELECTRIC BUSINESSES
Operating margin for the six-month period ended June 30, 1998, totaled $98.5
million compared with $63.0 million in the same 1997 period. The 1997 operating
margin includes an $8.8 million benefit resulting from adjustments related to
the aforementioned adjustments to gas marketing sales accruals. As a result,
normalized operating margins in that period totaled $54.2 million. The El Nino-
influenced mild winter during 1998 depressed demand for energy negatively
impacting operating margin in the gas marketing business during the period.
However, the focus placed by the Company on the quality of its gas sales
portfolio rather than an emphasis on volumetric market share continues to
enhance overall performance by this core business. The significant increase in
electricity marketing and power generation operating margin and volumetric
variances period to period principally result from the same factors impacting
these items for the three-month periods ended June 30, 1998 and 1997,
respectively.
NATURAL GAS LIQUIDS BUSINESSES
Operating margin for the six-month period ended June 30, 1998, totaled $92.9
million compared with $99.5 million in the same 1997 period. Both periods were
negatively influenced by market conditions. As described previously, the El
Nino-influenced mild winter during 1998 depressed demand for energy impacting
industry-wide inventories of natural gas liquids. As a result, average natural
gas liquids prices are at their lowest levels in several years, negatively
impacting this segment's profitability. The 1997 operating margin included
charges aggregating $23.3 million resulting from lower-of-cost-or-market
writedowns of NGL and crude inventories and a hedge related loss. These charges
were primarily a result of the precipitous drop in commodity prices during the
first quarter of 1997. As discussed previously, the Company's emphasis on
inventory management during the 1998 period has improved the segment's
performance period to period. Variances in volumetric data principally reflect
the same factors impacting the three-month period amounts previously discussed.
GLOBAL BUSINESSES
The 1998 period benefited substantially from improved operating margins in the
UK reflecting the expanding energy marketing operations in that country.
Natural gas sales volumes increased to 0.6 Bcf/d compared to 0.1 Bcf/d in 1997.
Per unit volumes also increased significantly period to period. The segment also
reflects improved margins in LPG sales offset by lower volumes.
OPERATING CASH FLOW
Cash flow from operating activities totaled $93.2 million for the six-month
period ended June 30, 1998, compared to $167.4 million reported in the same 1997
period. Changes in operating cash flow reflect the operating results previously
discussed herein and the continued focus on management of working capital,
particularly trade accounts receivable and payable and the reduction of
discretionary inventory volume purchases period to period . Changes in other
working capital accounts, which include prepayments, other current assets and
accrued liabilities, reflect expenditures or recognition of liabilities for
insurance costs, certain deposits, salaries, taxes other than on income, certain
deferred revenue accounts and other similar items. Fluctuations in these
accounts, period to period, reflect changes in the timing of payments or
recognition of liabilities and are not directly impacted by seasonal factors.
Page 25 of 30
<PAGE>
DYNEGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE INTERIM PERIODS ENDED JUNE 30, 1998 AND 1997
CAPITAL EXPENDITURES AND INVESTING ACTIVITIES
During the six-months ended June 30, 1998, the Company spent a net $156.1
million, principally on the acquisition of power generating assets, construction
costs associated with the previously disclosed Lake Charles fractionation
facility and on expenditures for capital improvements at existing facilities.
Additionally, during the period, the Company sold several discrete non-strategic
assets, including a gas processing facility. During the first six months of
1997, the Company spent a net $113.1 million principally on acquisitions of
additional interests in gas processing facilities, for contributions to joint
ventures, on capital improvements at existing facilities and on capital
additions at the Company's new headquarters. In addition, the Company acquired
Destec on June 30, 1997, for $715.6 million, net of cash received and inclusive
of transaction costs. Additionally, during that period, the Company divested
itself of the Mont Belvieu I fractionation facility pursuant to an agreement
reached with the Federal Trade Commission related to the Chevron Combination.
DIVIDEND REQUIREMENTS AND STOCK REPURCHASES
DYNEGY declares quarterly dividends on its outstanding common stock at the
discretion of its Board of Directors. The holders of the Series A Preferred
Stock are entitled to receive dividends or distributions equal per share in
amount and kind to any dividend or distribution payable on shares of the
Company's common stock, when and as the same are declared by the Company's Board
of Directors. The Company paid approximately $4.0 million in cash dividends and
distributions during each six-month period ended June 30, 1998 and 1997,
respectively.
In May 1997, the Board of Directors approved a stock repurchase program that
allows the Company to repurchase, from time to time, up to 1.6 million shares of
common stock in open market transactions. The timing and number of shares
ultimately repurchased will depend upon market conditions and consideration of
alternative investments. Pursuant to this program, the Company acquired 262,200
shares of its stock through open-market trades during the six-month period ended
June 30, 1998, at a total cost of $3.9 million, or $14.73 per share on a
weighted average cost basis. For the six-month period ended June 30, 1997, the
Company acquired 59,900 shares of its common stock in open-market transactions
for an aggregate cost of $935,000.
Page 26 of 30
<PAGE>
DYNEGY INC.
PART II. OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
On April 17, 1997, Pacific Gas and Electric Company ("PG&E") filed a lawsuit in
the Superior Court of the State of California, City and County of San Francisco,
against Destec, Destec Holdings, Inc. ("Holdings"), Destec Operating Company and
San Joaquin CoGen, Inc., wholly-owned direct and indirect subsidiaries of the
Company as well as against San Joaquin CoGen Limited ("San Joaquin" or the
"Partnership"), a limited partnership which is now wholly-owned by subsidiaries
of the Company through the purchase of the interests of Dominion Energy, Inc. in
the Partnership. In the lawsuit, PG&E asserts claims and alleges unspecified
damages for fraud, negligent misrepresentation, unfair business practices,
breach of contract and breach of the implied covenant of good faith and fair
dealing. PG&E alleges that due to the insufficient use of steam by San
Joaquin's steam host, the Partnership did not qualify as a cogenerator pursuant
to the California Public Utilities Code ("CPUC") Section 218.5, and thus was not
entitled under CPUC Section 454.4 to the discount the Partnership received under
gas transportation agreements entered into between PG&E and San Joaquin in 1989,
1991, 1993 and 1995. All of PG&E's claims in this suit arise out of the
Partnership's alleged failure to comply with CPUC Section 218.5. The defendants
filed a response to the suit on May 15, 1997. On October 20, 1997, PG&E named
Libbey-Owens-Ford ("LOF"), the Partnership's steam host, as an additional
defendant in the action. On February 23, 1998, PG&E served by mail its Second
Amended Complaint on all defendants. On March 30, 1998, the defendants filed
their response to PG&E's Second Amended Complaint, denying PG&E's allegations
and alleging certain counterclaims against PG&E. By Order dated July 20, 1998,
the court dismissed certain of defendants' counterclaims against PG&E, and
abated certain others, pending resolution by the CPUC. Defendants have filed a
motion with the court, seeking clarification of the July 20th Order. The
parties are actively engaged in discovery and the September trial date has been
moved to October 1998. The Partnership has previously advised the Federal
Energy Regulatory Commission ("FERC") of PG&E's claims, and stated that it would
submit any appropriate filings upon completion of its investigation. If the
facility were found by the court not to have satisfied the California
cogeneration facility standards, there is a strong likelihood that it would also
fail to satisfy the more stringent federal standards. In accordance with the
terms of a Protective Order entered into by the parties at the commencement of
the litigation, PG&E has notified the Partnership that it may make a FERC filing
as early as August 17, 1998, seeking damages from San Joaquin and
decertification of its status as a qualifying facility under the federal
standards. In the event the court or FERC determines that San Joaquin is liable
to PG&E under the Gas Transportation Agreement or Power Purchase Agreement due
to LOF's failure to use sufficient quantities of steam, San Joaquin will seek to
recover such amounts from LOF under the terms of the Steam Purchase Agreement
between San Joaquin and LOF. The Company's subsidiaries intend to vigorously
defend this action. In the opinion of management, the ultimate resolution of
this lawsuit will not have a material adverse effect on the Company's financial
position or results of operations.
On March 24, 1995, Southern California Gas Company ("SOCAL") filed a lawsuit in
the Superior Court of the State of California for the County of Los Angeles,
against Destec, Destec Holdings and Destec Gas Services, Inc., wholly-owned
direct and indirect subsidiaries of the Company (collectively, the "Destec
Defendants"), as well as against Chalk Cliff Limited and McKittrick Limited
(collectively, the "Partnerships"). The Company owns an indirect 50 percent
limited partnership interest in McKittrick Limited, and Chalk Cliff Limited is
now wholly-owned by subsidiaries of the Company through the purchase of the
interests of Dominion Energy, Inc. in the Partnership. All general partners of
the Partnerships are also named defendants. The lawsuit alleges breach of
contract against the Partnerships and their respective general partners, and
interference and conspiracy to interfere with contracts against the Destec
Defendants. The breach of contract claims arise out of the "transport-or-pay"
provisions of the gas transportation service agreements between the Partnerships
and SOCAL. SOCAL has sought damages from the Partnerships for past damages and
anticipatory breach damages in an amount equal to approximately $31,000,000. On
October 24, 1997, the Court granted SOCAL's Motion for Summary Judgment relating
to the breach of contract causes of action against the Partnerships and their
respective general partners, and requested that SOCAL submit a proposed order
consistent with that ruling for the Court's signature. On November 21, 1997,
the Partnerships filed for voluntary Chapter 11 bankruptcy protection in the
Eastern District of California. Normal business operations by the Partnerships
will continue throughout the course of these reorganization proceedings. On
January 12, 1998, the Court entered a Final Order that (a) severs out the
Partnerships due to their Chapter 11 bankruptcy filings, (b) includes a finding
of contract liability against the Destec Defendants, (c) dismisses the tortious
interference claims against the Destec Defendants, and (d) assesses damages in
an aggregate amount of approximately $31,000,000. On the same day, the Destec
Defendants filed their Notice of Appeal, and posted a security bond with the
Second Appellate District in Los Angeles based on the lack of allegations made
or proven by SOCAL which support holding those entities liable in contract. On
March 11, 1998, the Partnerships and their respective general partners filed
Notices of Appeal with respect to certain findings of fact in the Court's
January 12, 1998 Final Order that were adverse to those defendants. On or about
April 15, 1998, the Court entered a final judgment against the Partnerships
themselves in recognition of
Page 27 of 30
<PAGE>
DYNEGY INC.
PART II. OTHER INFORMATION
the lifting of the automatic stay against those entities by the Bankruptcy
Court. The Partnerships filed their judgment on June 4, 1998. The appeal process
is anticipated to take approximately eighteen months. The liability of the
Destec Defendants under the judgment will be limited to that portion of the
damage award not paid to SOCAL by the Partnerships through the Chapter 11
bankruptcy proceedings.
The PG&E and SOCAL litigations represent pre-acquisition contingencies acquired
by the Company in the Destec acquisition. In a related matter, Chalk Cliff and
San Joaquin have each guaranteed the obligations of the other partnership,
represented by the project financing loans used to construct the power
generation facilities owned by the respective Partnerships. Chalk Cliff and San
Joaquin believe there is little incentive for their lenders to call on this
cross-guarantee at this time. In the opinion of management, the Company's
financial position or results of operations would not be materially adversely
effected if the lenders chose to exercise their option under the terms of such
arrangements.
On August 3, 1998, Modesto Irrigation District ("MID") filed a lawsuit against
PG&E and Destec in federal court for the Northern District of California, San
Francisco division. The lawsuit alleges violation of federal and state
antitrust laws, tortious interference with and inducing breach of contract
(against PG&E only), tortious interference with prospective business
relationships (against PG&E only) and breach of contract (against Destec only).
The allegations are related to a power sale and purchase arrangement in the city
of Pittsburg, CA. MID seeks actual damages in amounts not less than $25 million
and punitive damages. Dynegy believes the allegations made by MID are meritless
and will vigorously defend MID's antitrust and breach of contract claims. In the
opinion of management, the amount of ultimate liability with respect to these
actions will not have a material adverse effect on the financial position or
results of operations of the Company.
The Company assumed liability for various claims and litigation in connection
with the Chevron Combination, the Trident Combination, the Destec acquisition
and in connection with the acquisition of certain gas processing and gathering
facilities from Mesa Operating Limited Partnership. The Company believes,
based on its review of these matters and consultation with outside legal
counsel, that the ultimate resolution of such items will not have a material
adverse effect on the Company's financial position or results of operations.
Further, the Company is subject to various legal proceedings and claims, which
arise in the normal course of business. In the opinion of management, the
amount of ultimate liability with respect to these actions will not have a
material adverse effect on the financial position or results of operations of
the Company.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1998 annual meeting (the "Annual Meeting") of the stockholders of the
Company was held on May 22, 1998. The purpose of the Annual Meeting was to
consider and vote upon the following proposals:
1. to elect thirteen directors to serve until the 1999 Annual Meeting of
Stockholders; and
2. to ratify the selection of Arthur Andersen LLP as independent auditors of
the Company for the fiscal year ending December 31, 1998.
The Company's Board of Directors is comprised of thirteen members. At the
Annual Meeting, each of the following individuals was re-elected to serve as a
director of the Company: C.L. Watson; Thomas M. Matthews; Stephen J. Brandon;
Frank J. Chapman; Paul Nicholas Woollacott; Jeffrey M. Lipton; Jack S. Mustoe;
A. Terence Poole; Darald W. Callahan; Peter J. Robertson; Patricia A. Woertz;
Daniel L. Dienstbier; and J. Otis Winters.
The votes cast for each nominee were as follows:
C.L. Watson 148,261,372
Thomas M. Matthews(1) 148,265,815
Stephen J. Brandon 148,267,331
Frank J. Chapman 148,265,894
Paul Nicholas Woollacott 148,267,394
Jeffrey M. Lipton 148,274,108
Jack S. Mustoe 148,269,894
A. Terence Poole 148,269,408
Page 28 of 30
<PAGE>
DYNEGY INC.
PART II. OTHER INFORMATION
Darald W. Callahan 148,267,094
Peter J. Robertson 148,271,294
Patricia A. Woertz 148,270,621
Daniel L. Dienstbier 148,265,608
J. Otis Winters 148,272,408
- ----------------
(1) Effective July 1, 1998, Mr. Matthews resigned as President of NGC
Corporation and as a member of the Board of Directors of the Company.
The following votes were cast with respect to the ratification of the selection
of Arthur Andersen LLP as independent auditors of the Company for the fiscal
year ending December 31, 1998:
For: 148,765,632
Against/Withheld: 43,144
Abstentions: 13,221
Broker non-votes: -0-
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
(a) The following instruments and documents are included as exhibits to this
Form 10-Q.
EXHIBIT NUMBER DESCRIPTION
--------------
4.1 Credit Agreement dated as of May 27, 1998, among NGC
Corporation and The First National Bank of Chicago,
Individually and as Administrative Agent, The Chase
Manhattan Bank, Individually and as Syndication agent
and NationsBank, N.A., Individually and as
Documentation Agent and the Lenders named therein.
4.2 364-Day Revolving Credit Agreement dated as of May 27,
1998, among NGC Corporation and The First National
Bank of Chicago, Individually and as Administrative
Agent, The Chase Manhattan Bank, Individually and as
Syndication agent and NationsBank, N.A., Individually
and as Documentation Agent and the Lenders named
therein.
(b) Current Report on Form 8-K, Commission File No. 1-11156, dated April 29,
1998, relating to the Company's announcement of 1998 first-quarter results.
Current Report on Form 8-K, Commission File No. 1-11156, dated May 20,
1998, relating to the Company's underwritten public offering of $175
million of its 7-1/8% Senior Debentures due May 15, 2018.
Page 29 of 30
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.
DYNEGY INC.
Date: August 14, 1998 By: /s/ Bradley P. Farnsworth
--------------- -----------------------------------------
Bradley P. Farnsworth, Vice President and
Controller (Principal Accounting Officer)
Page 30 of 30
<PAGE>
EXHIBIT 4.1
CREDIT AGREEMENT
Dated as of May 27, 1998
AMONG
NGC CORPORATION
and
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Administrative Agent
THE CHASE MANHATTAN BANK
Individually and as Syndication Agent
and
NATIONSBANK, N.A.,
Individually and as Documentation Agent
and
THE LENDERS NAMED HEREIN
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
ARTICLE I DEFINITIONS 1
1.1 Defined Terms 1
1.2 Accounting Terms and Other Determinations 19
1.3 Currency References 19
ARTICLE II THE FACILITY 20
2.1 The Facilities 20
2.1.1 Description of the Revolving Facility 20
2.1.2 Availability of Revolving Facility 20
2.1.3 Committed Advances 20
2.2 Letters of Credit 20
2.2.1 Issuance of Letters of Credit 20
2.2.2 Aggregate Amount Available under Letters of Credit 21
2.2.3 Reimbursement of Issuer; Automatic Advances 21
2.2.4 Lender Participation 22
2.2.5 Letter of Credit Fees 23
2.2.6 Issuer Fees 24
2.2.7 Verification 24
2.2.8 Irrevocable Obligations and Commercial Practices 25
2.2.9 Letter of Credit Collateral Account 26
2.2.10 Currency Fluctuation 27
2.3 Competitive Bid Advances 27
2.3.1 Competitive Bid Option 27
2.3.2 Competitive Bid Quote Request 27
2.3.3 Invitation for Competitive Bid Quotes 28
2.3.4 Submission and Contents of Competitive Bid Quotes 28
2.3.5 Notice to the Borrower 29
2.3.6 Acceptance and Notice by the Borrower 30
2.3.7 Allocation by the Administrative Agent 30
2.3.8 Administration Fees 31
2.4 Required Payments; Termination 31
2.5 Types of Committed Advances 31
2.6 Facility Fees 31
2.7 Cancellation of Aggregate Commitment. 31
2.8 Minimum Amount of Each Advance 32
2.9 Optional Principal Payments 32
2.10 Method of Selecting Types and Interest Periods for New Advances 32
2.11 Conversion and Continuation of Outstanding Advances 32
2.12 Changes in Interest Rate, etc. 33
2.13 Rates Applicable After Default 33
2.14 Method of Payment 34
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
2.15 Register; Notes; Notices 34
2.16 Interest Payment Dates; Interest and Fee Basis 35
2.17 Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions 35
2.18 Lending Installations 35
2.19 Non-Receipt of Funds by the Administrative Agent 35
2.20 Withholding Tax Exemption 36
2.21 Maximum Interest Rate 36
2.22 Administrative Agent's Fees 37
2.23 Procedures with respect to the Aggregate Commitment 37
2.24 Extension of Facility Termination Date 39
ARTICLE III CHANGE IN CIRCUMSTANCES 42
3.1 Yield Protection 42
3.2 Changes in Capital Adequacy Regulations 43
3.3 Availability of Types of Advances 43
3.4 Funding Indemnification 44
3.5 Lender Statements; Survival of Indemnity 44
3.6 Replacement of Lenders 44
3.7 Currency 45
ARTICLE IV CONDITIONS PRECEDENT 46
4.1 Conditions Precedent to Effectiveness 46
4.2 Each Advance 47
ARTICLE V REPRESENTATIONS AND WARRANTIES 48
5.1 Corporate or Partnership Existence and Standing 48
5.2 Authorization and Validity 48
5.3 No Conflict; Government Consent 48
5.4 Financial Statements 49
5.5 Material Adverse Change 49
5.6 Taxes 49
5.7 Litigation and Contingent Obligations 49
5.8 ERISA 49
5.9 Regulation U 49
5.10 Environmental Matters 50
5.11 Investment Company Act 50
5.12 Public Utility Holding Company Act 50
ARTICLE VI COVENANTS 50
6.1 Affirmative Covenants 51
6.1.1 Financial Reporting 51
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
6.1.2 Use of Proceeds 52
6.1.3 Maintain Legal Existence 52
6.1.4 Insurance 52
6.1.5 Compliance with Laws 52
6.1.6 Inspection 53
6.1.7 Compliance with ERISA 53
6.2 Negative Covenants 53
6.2.1 Merger 53
6.2.2 Sale of Assets 53
6.2.3 Liens 53
6.2.4 Leverage Ratio 53
ARTICLE VII DEFAULTS 54
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 55
8.1 Acceleration 55
8.2 Amendments 57
8.3 Preservation of Rights 57
ARTICLE IX GENERAL PROVISIONS 58
9.1 Survival of Representations; Obligations 58
9.2 Governmental Regulation 58
9.3 Taxes 58
9.4 Headings 58
9.5 Entire Agreement 58
9.6 Several Obligations; Benefits of this Agreement 58
9.7 Expenses; Indemnification of Administrative Agent, Issuers and
Lenders 58
9.8 Numbers of Documents 59
9.9 Severability of Provisions 59
9.10 Nonliability of Lenders 59
9.11 CHOICE OF LAW 60
9.12 CONSENT TO JURISDICTION 60
9.13 WAIVER OF JURY TRIAL 60
9.14 Confidential Information 60
ARTICLE X THE ADMINISTRATIVE AGENT 61
10.1 Appointment and Authority of Administrative Agent and Issuers 61
10.2 Capacity of the Administrative Agent and each Issuer 62
10.3 No Liability of the Administrative Agent or Issuers and Indemnity 62
10.4 Employees of Administrative Agent and Issuers 63
10.5 Reliance 63
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
10.6 Several Commitments 64
10.7 Notice of Default 64
10.8 Lender Credit Decision 64
10.9 Successor Administrative Agent 65
ARCTICLE XI SETOFF; RATABLE PAYMENTS 65
11.1 Setoff 65
11.2 Ratable Payments 66
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 66
12.1 Successors and Assigns 66
12.2 Participations 66
12.2.1 Permitted Participants; Effect 66
12.2.2 Voting Rights 67
12.2.3 Benefit of Setoff 67
12.3 Assignments 67
12.3.1 Permitted Assignments 67
12.3.2 Effect; Effective Date 68
12.4 Dissemination of Information 68
12.5 Tax Treatment 69
ARTICLE XIII NOTICES 69
13.1 Giving Notice 69
13.2 Change of Address 69
ARTICLE XIV COUNTERPARTS 69
</TABLE>
iv
<PAGE>
SCHEDULES
---------
EXHIBIT "A-1" COMMITTED NOTE
EXHIBIT "A-2" 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
SCHEDULE "1" OUTSTANDING LETTERS OF CREDIT
v
<PAGE>
CREDIT AGREEMENT
This Credit Agreement, dated as of May 27, 1998 is among NGC Corporation, a
Delaware corporation, as Borrower (the "Borrower"), the Lenders (hereinafter
defined), The First National Bank of Chicago, as Administrative Agent, The Chase
Manhattan Bank, as syndication agent (the "Syndication Agent"), and NationsBank,
N.A., as documentation agent (the "Documentation Agent"). The parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms.
-------------
As used in this Agreement:
"364-Day Revolving Credit Agreement" means that certain 364-Day Revolving
Credit Agreement dated as of even date herewith, among NGC Corporation, a
Delaware corporation, as Borrower, the Lenders (defined therein), The First
National Bank of Chicago, as Administrative Agent, The Chase Manhattan Bank, as
Syndication Agent and Citibank, N.A., as Documentation Agent.
"Absolute Rate" means, with respect to a Competitive Bid Loan made by a
given 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 Lender
and accepted by the Borrower pursuant to Section 2.3.6.
"Absolute Rate Advance" means a Competitive Bid Advance which bears
interest at an Absolute Rate.
"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 7 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 Competitive Bid Loan which bears interest at an
Absolute Rate.
<PAGE>
"Accepting Lender" is defined in Section 2.24(a).
"Administrative Agent" means The First National Bank of Chicago in its
capacity as administrative agent for the Lenders pursuant to Article X, and not
in its individual capacity as a Lender, and any successor Administrative Agent
appointed pursuant to Article X.
"Advance" means a Committed Advance or a Competitive Bid Advance.
"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.
"Agents" means, collectively, the Administrative Agent, the Syndication Agent
and the Documentation Agent.
"Agreed Currency" is defined in Section 3.7(i).
"Aggregate Commitment" means $400,000,000 as such amount may be reduced or
increased from time to time pursuant to the terms hereof, including without
limitation, Section 2.7 and Section 2.23.
"Agreement" means this Credit Agreement, as it may be amended or modified and
in effect from time to time.
"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.
"Alternate Base Rate Advance" means a Committed Advance that bears interest
at the Alternate Base Rate.
"Alternate Base Rate Loan" means a Committed Loan that bears interest at the
Alternate Base Rate.
"Alternative Currency" means Pounds Sterling or Canadian Dollars.
"Amended and Restated Credit Agreement" means that certain Amended and
Restated Credit Agreement dated as of June 27, 1997, among NGC Corporation, a
Delaware corporation, as Borrower, the Lenders (defined therein), 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, N.A.,
as Co-Agents.
2
<PAGE>
"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:
<TABLE>
<CAPTION>
Applicable
Applicable Documentary
Rating Level Margin
- --------------- ------------
<S> <C>
Level I 0.1500%
- -----------------------------
Level II 0.1800%
- -----------------------------
Level III 0.2000%
- -----------------------------
Level IV 0.2500%
- -----------------------------
Level V 0.3500%
- -----------------------------
</TABLE>
"Applicable Facility 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>
Applicable Rating Level Applicable Facility Fee
- ----------------------------------------------------
<S> <C>
Level I 0.0800%
- ----------------------------------------------------
Level II 0.1000%
- ----------------------------------------------------
Level III 0.1200%
- ----------------------------------------------------
Level IV 0.1500%
- ----------------------------------------------------
Level V 0.1750%
- ----------------------------------------------------
</TABLE>
"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:
<TABLE>
<CAPTION>
Applicable Applicable
Rating Level Margin
- --------------- -----------
<S> <C>
Level I 0.1700%
- ----------------------------
Level II 0.2000%
- ----------------------------
Level III 0.2300%
- ----------------------------
Level IV 0.3000%
- ----------------------------
Level V 0.4750%
- ----------------------------
</TABLE>
3
<PAGE>
"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:
<TABLE>
<CAPTION>
Moody's S&P
------- -----
<S> <C> <C>
Level I (greater than or equal to)A3 (greater than or equal to)A-
- --------------------------------------------------------------------------
Level II Baa1 BBB+
- --------------------------------------------------------------------------
Level III Baa2 BBB
- --------------------------------------------------------------------------
Level IV Baa3 BBB-
- --------------------------------------------------------------------------
Level V (less than)Baa3 (less than)BBB-
- --------------------------------------------------------------------------
</TABLE>
For example, if the Moody's rating is Baa1 and the S&P rating is BBB, Level II
shall apply.
For purposes of the foregoing, (i) "(greater than or equal to)" means a
rating equal to or more favorable than; "(less than)" means a rating less
favorable than; (ii) if ratings for the Borrower's senior unsecured long-term
debt shall not be available from both S&P and Moody's, Level V 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 Applicable Rating Level in effect immediately prior to
such changed rating system shall apply.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the Chief Executive Officer, the
President, the Chief Financial Officer, any Senior Vice President, the
Controller, the Treasurer or any Assistant Treasurer of the Borrower.
"Borrower" means NGC Corporation, a Delaware corporation and its successors
and assigns.
4
<PAGE>
"Borrower's Home Page" means the Borrower's home page on the World Wide Web
at www.ngccorp.com or such other address as the Borrower may provide pursuant to
Section 13.2.
"Borrowing Date" means a date on which an Advance is made or a Letter of
Credit is issued hereunder.
"Borrowing Notice" means a Committed Borrowing Notice or a Competitive Bid
Borrowing Notice, or both, as the context may require.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Committed 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 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.
"Change" is defined in Section 3.2.
"Change of Control" means, at any time, any Person, other than any existing
owner of at least 20% of the outstanding shares of the stock of the Borrower as
of the Closing Date, owns, directly or indirectly, in the aggregate, more than
50% of the outstanding shares of the stock of the Borrower.
"Closing Date" means May 27, 1998.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"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 or to purchase Letter of Credit Liabilities not exceeding the
amount set forth opposite its name
5
<PAGE>
in Schedule 2 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 Loan or
Letter of Credit Liabilities, as such amount may be modified from time to time
pursuant to the terms hereof.
"Commitment Increase Effective Date" is defined in Section 2.23.
"Committed Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Committed Loans made by the relevant Lenders to the
Borrower on the same Borrowing Date, for the same Interest Period and of the
same Type.
"Committed Borrowing Notice" is defined in Section 2.10.
"Committed Loan" means a Eurodollar Committed Loan or an Alternate Base
Rate Loan.
"Committed Note" means a promissory note in substantially the form of
Exhibit "A-1" hereto, with appropriate insertions, duly executed and delivered
to the Administrative Agent by the Borrower for the account of a Lender and
payable to the order of such Lender in the amount of its Commitment, including
any amendment, modification, renewal or replacement of such promissory note.
"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
Lenders to the Borrower on the same Borrowing Date, for the same Interest Period
and of the same Type.
"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.
"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 Administrative Agent by the Borrower for the account of a Lender and
payable to the order of such 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 Lender to the
Administrative 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 Administrative Agent in accordance with Section 2.3.2.
6
<PAGE>
"Compliance Certificate" is defined in Section 6.1.1(iii).
"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 GAAP as of
such date.
"Consolidated EBITDA" means, for any period, the sum of (a) net income
(before income taxes) of the Borrower and its Subsidiaries determined for such
period on a consolidated basis; plus (b) interest expense, whether paid or
accrued, of the Borrower and its Subsidiaries determined for such period on a
consolidated basis, plus (c) depreciation, depletion, impairment, abandonment
and amortization expense of the Borrower and its Subsidiaries determined for
such period on a consolidated basis; provided, however, for purposes of this
definition, extraordinary gains and losses and other gains and losses on the
disposition of assets not in the ordinary course of business shall be excluded
from the calculation of Consolidated EBITDA.
"Consolidated Net Worth" means, at any date, the stockholders' equity of
the Borrower and its Subsidiaries (including the Subordinated Capital Income
Securities) determined on a consolidated basis in accordance with GAAP as of
such date.
"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 2.11.
"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 Assumed Debt" means the $155,373,000 aggregate principal amount of
Chevron U.S.A. Inc.'s obligations under the demand promissory note dated August
25, 1994 payable by Chevron U.S.A. Inc. to Chevron Capital U.S.A. Inc., the
payment of which was assumed by the Borrower.
"Declining Lenders" is defined in Section 2.24(b).
"Debt" means, with respect to any Person, (a) all indebtedness and other
obligations of such Person for the repayment of money borrowed (including,
without limitation, reimbursement obligations with respect to drawn Letters of
Credit), 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, (d) all
indebtedness and other obligations, whether or not assumed by such Person,
secured by any Lien (other than Permitted Liens of the type described in clauses
(a) through (n) and (p), (q)
7
<PAGE>
and items (iii) and (iv) of clause (o) of the definition of "Permitted Liens"
and extensions, renewals, or replacements of any Permitted Lien referred to in
this parenthetical, provided that the principal amount of the Debt or obligation
secured thereby is no greater than the principal amount or, if greater, the
maximum commitment of such Debt or obligation at the time such Lien became a
Permitted Lien and that any such extension, renewal or replacement Lien is
limited to the Property originally encumbered thereby) on any Property of such
Person and (e) all guaranties of payment or collection of any Debt of any other
Person described in clauses (a) through (d) above; 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, or (ii) include any Project
Financing; 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 GAAP; provided further that the Subordinated Capital Income Securities and
completion guaranties (or similar guaranties that a project perform as planned)
shall not constitute Debt.
"Default" means an event described in Article VII.
"Documentary Letter of Credit" means a Letter of Credit which is a short
term, self-liquidating trade-related contingency.
"Documentation Agent" is defined in the preamble.
"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 Administrative 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.
"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.
"EDGAR" means the SEC's Electronic Data Gathering, Analysis and Retrieval
system or any successor system.
8
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"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 Committed Loan or Eurodollar Bid Rate 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
Administrative 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 2.21. 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 Committed Loan or Eurodollar Bid Rate Loan, the lesser of (A) the
rate per annum determined by the Administrative 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 Committed Loan or Eurodollar Bid Rate
Loan of such respective Reference Bank to which such Eurodollar Interest Period
relates or (B) the maximum interest rate permitted pursuant to Section 2.21. If
any Reference Bank does not furnish a timely quotation, the Administrative 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 Competitive Bid Loan made by
a given Lender for the relevant Eurodollar Interest Period, the sum of (i) the
Eurodollar Base Rate and (ii) the Competitive Bid Margin offered by such Lender
and accepted by the Borrower pursuant to Section 2.3.6.
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Competitive Bid Loan which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Committed Advance" means a Committed Advance which bears
interest at a Eurodollar Rate.
"Eurodollar Committed Loan" means a Committed Loan which bears interest at
a Eurodollar Rate.
9
<PAGE>
"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 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.
"Facility Termination Date" means the earlier of (i) May 27, 2003 or such
other later date as may result from any extension requested by the Borrower and
consented to by the Accepting Lenders pursuant to Section 2.24 and (ii) the date
on which the Aggregate Commitment shall have been reduced to zero pursuant to
Section 2.7.
"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 Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.
"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.
"GAAP" means generally accepted accounting principles as in effect from
time to time.
"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
10
<PAGE>
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 Accepting Lenders" is defined in Section 2.24(b)(ii).
"Increasing Lender" is defined in Section 2.23.
"Indemnified Party" is defined in Section 9.7.
"Interest Period" means a Eurodollar Interest Period or an Absolute Rate
Interest Period.
"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 Administrative Agent to the 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 Officer 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 Lender that
issues such Letter of Credit and shall be either First Chicago or 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 Administrative Agent and any such Lender with respect to each
Letter of Credit who the Issuer shall be for such Letter of Credit.
"Issuing Office" means, with respect to an Issuer, any office, branch,
subsidiary or affiliate of such Issuer.
"Judgment Currency" is defined in Section 3.7(ii).
"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.
"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 2.23, 2.24, 3.6 or 12.3.
11
<PAGE>
"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 1 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" is defined in Section 2.2.9.
"Letter of Credit Collateral Account Investments" is defined in Section
2.2.9.
"Letter of Credit Liabilities" means, at any time, 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 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 Alternate Base Rate Advances pursuant to Section 2.2.3.
"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, if any, each
Competitive Bid Quote Request, each Issuance Request, each Committed Borrowing
Notice, the agreement with respect to fees referred to in Section 2.22, together
in each case with all exhibits, schedules and attachments thereto, and any
agreements, documents, certificates and instruments from time to time executed
and delivered by the Borrower pursuant to or in connection with this Agreement.
"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.
"Material Agreement" means any contract or agreement binding on the
Borrower which is material to the consolidated financial condition or operations
of the Borrower and its Subsidiaries taken as a whole.
12
<PAGE>
"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.
"New Lender" is defined in Section 2.23.
"New Funds Amount" means the amount by which a New Lender's or an
Increasing Lender's outstanding Committed 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).
"Notes" means, collectively, the Competitive Bid Notes, and the Committed
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 2.23.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Loans, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Borrower to the Lenders or to any
Lender, the Administrative Agent or any Indemnified Party arising under any of
the Loan Documents.
"Other Currency" is defined in Section 3.7(i).
"Out of Funds Period" means the period from and including a Draw Date to
but excluding the date a Lender provides the Administrative Agent immediately
available and freely transferable funds equal to such 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 2.23.
"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 Lender at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Lender's Commitment divided by the Aggregate Commitment.
13
<PAGE>
"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, employees', 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 property by the owner of such property in the
operation of its business, (f) Liens in favor of the Administrative Agent 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 a 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, 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,
14
<PAGE>
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, (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, (n) utility easements, building restrictions and such
other encumbrances or charges against real property which 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; (o) (i) Liens
created by Capitalized Leases 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, (ii) purchase money Liens securing Debt
(including such Liens securing Debt incurred within 12 months of the date on
which such Property was acquired) provided that all such Liens attach only to
the Property purchased with the proceeds of the Debt secured thereby, (iii)
Liens on receivables, notes, contracts or contract rights created in connection
with a sale, securitization or monetization of such receivables, notes or
contracts or contract rights, and Liens on rights of the Borrower or any
Subsidiary related to such receivables, notes, contracts or contract rights
which are transferred to the purchaser of such receivables, notes or, contracts
or contract rights in connection with such sale, securitization or monetization;
provided that such Liens secure only the obligations of the Borrower or any of
its Subsidiaries in connection with such sale, securitization or monetization
and (iv) 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; (p) Liens on cash and short-term investments (i) deposited by
the Borrower or any of its Subsidiaries in margin accounts with or on behalf of
futures contract brokers or other counterparties or (ii) pledged by the Borrower
or any of its Subsidiaries, in the case of clause (i) or (ii) to secure its
obligations with respect to contracts (including without limitation, physical
delivery, option (whether cash or financial), exchange, swap and futures
contracts) for the purchase or sale of any energy-related commodity or interest
rate or currency rate management contracts, (q) Liens on (i) Property owned by a
Project Financing Subsidiary or (ii) 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, (r) 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, (s)
extensions, renewals or replacements of any Permitted Lien referred to in
clauses (a) through (r) of this definition of "Permitted Liens", provided that
the principal amount of the Debt or obligation secured thereby is no greater
than the principal amount or, if greater, the maximum commitment of such Debt or
obligation at the time such Lien became a Permitted Lien and that any such
extension, renewal or replacement Lien is limited to the Property originally
encumbered thereby, and (t) other Liens securing Debt and other obligations not
to exceed the higher of (i) $25,000,000 in the aggregate at any time outstanding
or (ii) 2% of Consolidated Net Worth.
15
<PAGE>
"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.
"Pounds Sterling" and "(Pounds)" each mean lawful money of the United
Kingdom.
"Principal Subsidiary" means any Subsidiary, other than a Project Financing
Subsidiary, having (i) consolidated fixed assets plus net working capital with a
book value equal to or greater than 10% of the Borrower's consolidated fixed
assets plus net working capital in the aggregate as determined in a manner
consistent with the most recent financial statements delivered to Lenders
pursuant to Section 6.1.1 (or the statements referred to in Section 5.4 until
financial statements have been delivered pursuant to Section 6.1.1) or (ii) 15%
or more of the Borrower's Consolidated EBITDA for the calendar quarter
immediately prior to the quarter in which such determination is made.
"Project Financing" means 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 or group of
projects (including any construction financing), in each case to the extent that
such Debt or other obligations expressly are not 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" means (i) any Subsidiary of the Borrower or
(ii) any other Person in which the Borrower directly or indirectly 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.
"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.
"Rating Agency" means either of S&P or Moody's.
"Reducing Lender" is defined in Section 2.23.
16
<PAGE>
"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 Administrative Agent, the Syndication
Agent and the Documentation Agent.
"Register" is defined in Section 2.15.
"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.
"Replacement Lenders" is defined in Section 2.24(b)(ii).
"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, at any time, Lenders in the aggregate holding at
least 51% of the sum of the Aggregate Commitment or, if the entire Aggregate
Commitment has been terminated, Lenders in the aggregate holding at least 51% of
the aggregate unpaid principal amount of the sum of outstanding Advances and
Letter of Credit Liabilities.
"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.
"Revolving Facility" is defined in Section 2.1.1.
"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.
17
<PAGE>
"S&P" means Standard & Poor's Ratings Group and any successor thereto that
is a nationally-recognized rating agency.
"SEC" means the Securities & Exchange Commission.
"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.
"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.
"Subordinated Capital Income Securities" means the capital securities
issued in an aggregate amount of $200,000,000 by NGC Corporation Capital Trust I
or other similar securities with similar accounting treatment which may be
issued from time to time by the Borrower or its Subsidiaries.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any
partnership, association, joint venture, limited liability company, trust or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a direct
or indirect Subsidiary of the Borrower.
"Syndication Agent" is defined in the preamble.
"Transferee" is defined in Section 12.4.
"Tribunal" means any state, commonwealth, federal, foreign, territorial, or
other court or governmental department, commission, board, bureau, agency, or
instrumentality or any properly convened arbitration.
"Type" means, with respect to any Committed Advance, its nature as an
Alternate Base Rate Advance or Eurodollar Committed Advance and with respect to
any Competitive Bid Advance, its nature as a Eurodollar Bid Rate Advance or
Absolute Rate Advance.
18
<PAGE>
"UCC" means the Uniform Commercial Code in effect from time to time in the
State of Illinois.
"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested nonforfeitable benefits under all Single Employer Plans exceeds
the fair market value of all such Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans.
"Unmatured Default" means an event or condition which but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"U.S. Dollars" and "$" each mean lawful money of the United States.
"World Wide Web" means the subset (commonly referred to as the "World Wide
Web") of the worldwide network of computers (commonly known as the "Internet")
communicating via an agreed upon protocol which uses a combination of text,
graphics, audio and video (multimedia) to provide information.
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 GAAP. 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.
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.
19
<PAGE>
ARTICLE II
THE FACILITY
------------
2.1 The Facilities.
2.1.1 Description of the Revolving Facility. The Lenders grant to
the Borrower a revolving credit facility (the "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 Lender severally agrees to make Committed Loans in U.S.
Dollars to the Borrower in accordance with Section 2.1; provided, that in
no event may the sum of such Lender's Percentage of the outstanding
principal amount of Committed Advances, plus such Lender's Percentage of
the Letter of Credit Liabilities exceed such Lender's Commitment;
(ii) the Issuers severally agree to issue Letters of Credit and the
Lenders agree with the Issuers to acquire participations in the Letters of
Credit in accordance with Section 2.2;
(iii) each 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 Committed Advances plus all Competitive Bid Advances plus the
Letter of Credit Liabilities exceed the Aggregate Commitment.
2.1.2 Availability of Revolving Facility. Subject to the terms of this
Agreement, the Revolving Facility is available to the Borrower from the date of
this Agreement to the Facility Termination Date, and the Borrower may borrow,
repay and reborrow, or obtain Letters of Credit under the Revolving Facility at
any time prior to the Facility Termination Date.
2.1.3 Committed Advances. Each Committed Advance hereunder shall
consist of borrowings made from the several Lenders ratably in proportion to
their respective Percentage. The Committed Loans made by each Lender shall be
evidenced by a Committed Note if requested in writing by such Lender.
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 Administrative
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 Facility
Termination Date for the account of the Borrower; it being understood and agreed
that subject to the
20
<PAGE>
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 Administrative Agent and the
applicable Issuer and all legal 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 Administrative
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
Administrative Agent; provided that the failure to so notify the Administrative
Agent or so provide a copy to the Administrative 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 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 Administrative 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 Administrative Agent shall give each 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
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 the Aggregate Commitment; and after
issuance of a Letter of Credit, the Letter of Credit Liabilities, plus the
aggregate principal amount of outstanding Committed Advances, plus all
Competitive Bid Advances shall not exceed the Aggregate Commitment.
2.2.3 Reimbursement of Issuer; Automatic Advances. The Borrower hereby
irrevocably agrees that it shall provide the Administrative 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 Administrative 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 Administrative
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 Administrative 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 an Advance
hereunder and does not otherwise provide the Administrative 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 drawn or
21
<PAGE>
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 Administrative Agent requesting
that the Lenders make a Committed Advance which is an Alternate Base 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
Lenders shall make, and the Borrower shall accept, an Alternate Base Rate
Advance (consisting of Committed Loans made by the Lenders pro rata in
accordance with their respective 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 Alternate Base Rate
Advance cannot be made or accepted and the Borrower does not provide the
Administrative 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 an Alternate Base
Rate Advance had been made, with respect hereto. Such Alternate Base Rate
Advance shall be made as of the date of such settlement of such Letter of
Credit. The proceeds of such Alternate Base Rate Advance shall be paid by the
Lenders to the Administrative Agent for payment to the Issuer of such Letter of
Credit (and the Administrative Agent shall promptly pay such proceeds to such
Issuer) to reimburse the Issuer of such Letter of Credit for each 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 Lenders to the Administrative 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 Administrative 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 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 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 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. Accordingly, each 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 Lender's Percentage of the Dollar Equivalent of the amount
disbursed by such Issuer 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
22
<PAGE>
to settle the obligations of such Issuer under any draft or demand made under
such Letter of Credit (a "Draw Amount") and any Lender fails to make available
to the Administrative Agent for payment to such Issuer such Lender's Percentage
of the Dollar Equivalent of such Draw Amount on the date (the "Draw Date"), such
Lender shall pay to the Administrative Agent for the benefit of such Issuer on
demand an amount, in addition to such Lender's Percentage of the Dollar
Equivalent of the Draw Amount, equal to interest on such 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 Alternate Base Rate rather than the Federal Funds
Effective Rate. The obligations of 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 the Borrower 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
Administrative 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 the Borrower or any
Affiliate of the Borrower 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 Administrative 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 the Borrower 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
Administrative Agent for the pro rata benefit of the Lenders, as determined by
each 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 this 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
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
23
<PAGE>
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 Administrative 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 Facility
Termination Date. The Administrative Agent shall promptly remit to each Lender
its Percentage of each Letter of Credit participation fee after its receipt by
the Administrative 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 8 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 6 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 this 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
Administrative 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 Facility Termination Date. The Administrative
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 Administrative 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 Administrative Agent or any Issuer under any Letter of Credit, and neither
the Administrative 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 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 Administrative Agent with sufficient
funds to reimburse the applicable Issuer for any demand or draw under a Letter
24
<PAGE>
of Credit, and thereafter a court of competent jurisdiction determines that the
Administrative 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 Administrative
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 Administrative Agent, any Lender or any Issuer be liable for punitive or
consequential damages.
2.2.8 Irrevocable Obligations and Commercial Practices. None of the
Administrative 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 Administrative 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 the
Borrower to the Administrative Agent or any Issuer; or (vii) the existence of
any claim, setoff, defense or other right which the Borrower 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 Administrative 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 the Borrower or any
Affiliate of the Borrower 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 Administrative Agent's, any
Issuer's or any Lender's rights or powers under this Agreement or any other Loan
Documents. The Administrative 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 Administrative Agent, any Issuer or any Lender under or
in connection with any Letter of Credit or any drafts or documents referenced
therein shall be binding upon the Borrower, the Issuers and the
25
<PAGE>
Lenders and shall not place the Administrative Agent, any Issuer or any Lender
under any resulting liability to the Borrower or any Lender. Notwithstanding the
foregoing, to the extent that the Borrower has reimbursed the Administrative
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 Administrative 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 Administrative Agent or such Issuer, as the case may be, shall be liable to
the Borrower for such action, gross negligence or willful misconduct provided
that in any event the maximum liability of the Administrative 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
Administrative Agent, any Issuer or any Lender be liable for punitive or
consequential damages.
2.2.9 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 Lenders in respect of any
Letter of Credit, maintain a special collateral account (the "Letter of Credit
Collateral Account") with the Administrative Agent, in the name of the Borrower
but under the sole dominion and control of the Administrative Agent, for the
benefit of the Lenders and in which the Borrower shall have no interest other
than as set forth in Section 8.1. The Administrative 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 having a maturity not exceeding 30
days similar to the following: (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, (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) 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, (v) 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 and (vi) 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) (the "Letter of Credit Collateral Account
Investments"). The Administrative Agent shall have the authority to create
additional accounts for deposit of Canadian Dollars and Pounds Sterling in short
term investments similar to the Letter of Credit Collateral Account Investments.
Nothing in this Section 2.2.9 shall (i) obligate the Borrower to deposit any
funds in the Letter of Credit Collateral Account, (ii) obligate the
Administrative Agent to require the Borrower to deposit any funds in the Letter
of Credit Collateral Account or (iii) limit the right of the Administrative
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
Administrative Agent for the benefit of the Lenders a security interest in the
Letter of Credit Collateral Account and any funds or investments in such
account.
26
<PAGE>
2.2.10 Currency Fluctuation. If as a result of fluctuations in currency
exchange rates, the aggregate of all outstanding Advances plus the Letter of
Credit Liabilities exceeds the amount of the Aggregate 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
Advances, shall within 5 Business Days prepay all outstanding Advances and
deliver to the Administrative 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
Committed Advances hereunder), the Borrower may, as set forth in this Section
2.3, request the Lenders, prior to the Facility Termination Date, to make offers
to make Competitive Bid Advances to the Borrower. Each 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 Loans made by each Lender shall be evidenced by a
Competitive Bid Note if requested in writing by such Lender.
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 Administrative 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 Facility Termination Date); and
(e) whether the Competitive Bid Advance is to be prepayable.
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
27
<PAGE>
Request. No Competitive Bid Quote Request shall be given within 3 Business Days
(or upon reasonable prior notice to the Lenders, such other number of days as
the Borrower and the Administrative 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 Administrative 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
Administrative Agent shall send to each of the Lenders by telex or telecopy an
Invitation for Competitive Bid Quotes which shall constitute an invitation by
the Borrower to each 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
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 Administrative
Agent by telex or telecopy at its offices specified in or pursuant to Article
XIII not later than (a) (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 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 Lender on
the proposed Borrowing Date, in the case of an Absolute Rate Auction (or, in
either case upon reasonable prior notice to the Lenders, such other time and
date as the Borrower and the Administrative 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 Lenders). Subject to Articles IV and
VIII, any Competitive Bid Quote so made shall be irrevocable except with the
written consent of the Administrative 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 Commitment of the quoting Lender, (2) must be at
least $5,000,000 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;
28
<PAGE>
(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 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 Lender.
(iii) The Administrative 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 Administrative Agent shall notify the relevant Lender of
such rejection as soon as practical.
2.3.5 Notice to the Borrower. The Administrative Agent shall promptly
notify the Borrower of the terms (i) of any Competitive Bid Quote submitted by 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
Lender with respect to the same Competitive Bid Quote Request. Any such
subsequent Competitive Bid Quote shall be disregarded by the Administrative
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 Administrative 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 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 Administrative Agent referred to in Section 2.3.5, not later
than (i) 10:00 a.m. (Chicago time) at least three Business Days prior to the
proposed Borrowing Date, in the case of a Eurodollar Auction or
29
<PAGE>
(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 Administrative 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 Administrative 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 Letter of Credit Liabilities plus the aggregate principal amount of all
outstanding Committed Advances plus all Competitive Bid Advances shall not
exceed the Aggregate Commitment.
2.3.7 Allocation by the Administrative Agent. If offers are made by
two or more 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 Administrative Agent among such
Lenders as nearly as possible (in such multiples, not greater than $1,000,000,
as the Administrative Agent may deem appropriate) in proportion to the aggregate
principal amount of such offers; provided, however, that no Lender shall be
allocated a portion of any Competitive Bid Advance which is less than the
minimum amount which such Lender has indicated that it is willing to accept.
Allocations by the Administrative Agent of the amounts of Competitive Bid Loans
shall be conclusive in the absence of manifest error. The Administrative 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) on the same
Business Day in the case of Absolute Rate Advances, notify each Lender of its
receipt of a Competitive Bid Borrowing Notice and the aggregate principal amount
of such Competitive Bid Advance allocated to each participating Lender.
2.3.8 Administration Fees. The Borrower hereby agrees to pay to the
Administrative Agent for its sole account administration fees for Competitive
Bid Quote Requests in such amounts as heretofore agreed upon by the Borrower in
writing.
30
<PAGE>
2.4 Required Payments; Termination. 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
Committed Advances plus the Competitive Bid Advances plus the Letter of Credit
Liabilities exceeds the Aggregate Commitment (the amount of such excess herein
the "Excess Exposure"), the Borrower shall make a mandatory prepayment of the
outstanding principal amount of the Committed Advances and the Competitive Bid
Advances up to the amount of such remaining Excess Exposure, and if any Excess
Exposure remains after payment of the Committed Advances and the Competitive Bid
Advances in full, the Borrower will deliver to the Administrative 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. Any outstanding 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 Facility
Termination Date.
2.5 Types of Committed Advances. The Committed Advances may be Alternate
Base Rate Advances, or Eurodollar Committed Advances, or a combination thereof,
selected by the Borrower in accordance with Sections 2.9 and 2.10.
2.6 Facility Fees. The Borrower hereby agrees to pay to the
Administrative Agent for the account of each Lender, ratably in proportion to
such Lender's Percentage, a facility fee equal to the Applicable Facility Fee
per annum on the average daily amount of the Aggregate Commitment, regardless of
usage. Such facility fee shall be payable quarterly in arrears on the third
Business Day after each Payment Date and on the Facility Termination Date.
2.7 Cancellation of Aggregate Commitment. The Borrower may at any time
after the date hereof cancel the Aggregate Commitment, in whole, or in a minimum
aggregate amount of $15,000,000 (and in integral multiples of $5,000,000)
ratably among the Lenders upon at least two Business Days' prior written notice
to the Administrative Agent, which notice shall specify the amount of such
reduction; provided, however, no such notice of cancellation shall be effective
to the extent that it would reduce the Aggregate Commitment to an amount which
would be less than the outstanding principal amount of Committed Advances, plus
Competitive Bid Advances plus the Letter of Credit Liabilities at the time such
cancellation is to take effect. Any notice of cancellation given pursuant to
this Section 2.7 shall be irrevocable and permanent and shall specify the date
upon which such cancellation is to take effect. The Administrative Agent shall
promptly notify each Lender of its receipt of notice from the Borrower electing
to cancel all or a portion of the Aggregate Commitment. Each partial
cancellation of the Aggregate Commitment shall cancel each Commitment ratably in
proportion to the ratio that such Lender's Commitment bears to the Aggregate
Commitment.
2.8 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 Alternate Base Rate Advance shall be in the minimum
amount of $5,000,000 (and in multiples
31
<PAGE>
of $1,000,000 if in excess thereof), provided, however, that any Alternate Base
Rate Advance may be in the amount of the unused Aggregate Commitment.
2.9 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 Committed
Advance or Eurodollar Bid Rate 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' prior notice (or in the case of
outstanding Advances bearing interest at an Alternate Base Rate, upon notice by
11:00 a.m. (Chicago time) on the same Business Day) to the Administrative 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 Lender.
2.10 Method of Selecting Types and Interest Periods for New Advances.
The Borrower shall select the Type of Advance and, in the case of each
Eurodollar Committed Advance, the Interest Period applicable to each Advance
from time to time. The Borrower shall give the Administrative Agent irrevocable
notice (a "Committed Borrowing Notice") not later than 11:00 a.m. (Chicago time)
on the Borrowing Date of each Alternate Base Rate Advance and three Business
Days before the Borrowing Date for each Eurodollar Committed Advance,
specifying:
(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
(iv) in the case of each Eurodollar Committed Advance, the Interest
Period applicable thereto.
Not later than 2:00 p.m. (Chicago time) on each Borrowing Date, each Lender
shall make available its Loan or Loans, in funds immediately available in
Chicago to the Administrative Agent at its address specified pursuant to Article
XIII. The Administrative Agent will make the funds so received from the
applicable Lenders available to the Borrower at the Administrative Agent's
aforesaid address.
2.11 Conversion and Continuation of Outstanding Advances. Alternate
Base Rate Advances shall continue as Alternate Base Rate Advances unless and
until converted into Eurodollar Committed 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 an Alternate Base Rate
Advance unless the Borrower shall have given the Administrative Agent a
Conversion/Continuation Notice requesting that, at the end of such Interest
Period, such Eurodollar Committed Advance either
32
<PAGE>
continue as a Eurodollar Committed Advance for the same or another Interest
Period or be converted into an Alternate Base Rate Advance. Subject to the terms
of Section 2.8, the Borrower may elect from time to time to convert all or any
part of an Advance of a given Type into another Type of 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 Administrative Agent irrevocable notice (a "Conversion/Continuation
Notice") of each conversion of an Advance or continuation of a Eurodollar
Committed Advance not later than 11:00 a.m. (Chicago time) on the date of the
requested conversion, in the case of a conversion into an Alternate Base Rate
Advance, or not later than 11:00 a.m. (Chicago time) three Business Days prior
to the date of the requested conversion or continuation, in the case of a
conversion into or continuation of a Eurodollar Committed Advance or Eurodollar
Bid Rate Advance, in each case specifying:
(i) the requested date which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of the Advance which is to be
converted or continued; and
(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.
2.12 Changes in Interest Rate, etc. Each Alternate Base 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 an Alternate Base Rate Advance pursuant to
Section 2.11 to but excluding the date it becomes due or is converted into a
Eurodollar Committed Advance pursuant to Section 2.11 hereof, at a rate per
annum equal to the Alternate Base Rate for such day. Changes in the rate of
interest on that portion of any Advance maintained as an Alternate Base Rate
Advance will take effect simultaneously with each change in the Alternate Base
Rate. Each Eurodollar Committed Advance, Eurodollar Bid Rate Advance and
Absolute 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
Eurodollar Committed Advance, Eurodollar Bid Rate Advance or Absolute Rate
Advance, as the case may be. No Interest Period of any Advance may end after
the 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.
2.13 Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.10 or 2.11, 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 Eurodollar Committed Advance,
Eurodollar Bid Rate Advance or
33
<PAGE>
Absolute Rate Advance, as the case may be. 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 Eurodollar Committed Advance, Eurodollar Bid Rate
Advance and Absolute 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 Alternate Base Rate Advance shall bear
interest at a rate per annum equal to the Alternate Base Rate otherwise
applicable to the Alternate Base Rate Advance plus 2% per annum.
2.14 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 Administrative Agent at
the Administrative Agent's address specified pursuant to Article XIII, or at any
other Lending Installation of the Administrative Agent specified in writing by
the Administrative Agent to the Borrower, by noon (Chicago time) on the date
when due and shall be applied ratably by the Administrative Agent among the
Lenders. Each payment delivered to the Administrative Agent for the account of
any Lender shall be delivered promptly by the Administrative Agent to such
Lender in the same type of funds that the Administrative Agent received at its
address specified pursuant to Article XIII or at any Lending Installation
specified in a notice received by the Administrative Agent from such Lender.
2.15 Register; Notes; Notices. The Administrative Agent shall
maintain a register for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of, the Loans owing to each
Lender pursuant to the terms hereof, from time to time (the "Register"). The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice. Each
Lender that requests and receives Notes 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 Administrative 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
Administrative Agent or any Lender in good faith believes to be acting on behalf
of the Borrower. The Borrower agrees to deliver promptly to the Administrative
Agent a written confirmation, if such confirmation is requested by the
Administrative 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 Administrative Agent and the Lenders, the
records of the Administrative Agent and the Lenders shall govern absent manifest
error.
2.16 Interest Payment Dates; Interest and Fee Basis. Interest accrued
on each Alternate Base 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 Alternate Base Rate Advance is prepaid,
34
<PAGE>
whether due to acceleration or otherwise, and at maturity. Interest accrued on
that portion of the outstanding principal amount of any Alternate Base 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 Eurodollar Committed Advance, Eurodollar Bid Rate Advance and Absolute Rate
Advance shall be payable on the last day of its applicable Interest Period, on
any date on which the Eurodollar Committed Advance, Eurodollar Bid Rate Advance
or Absolute Rate Advance, as the case may be, is prepaid, whether by
acceleration or otherwise, and at maturity. Interest accrued on each Eurodollar
Committed Advance and Eurodollar Bid 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 Committed
Advances and Eurodollar Bid Rate Advances shall be calculated for actual days
elapsed on the basis of a 360-day year. Fees and interest on Alternate Base 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.
2.17 Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Administrative 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 Administrative 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.
2.18 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 Agreement shall apply to any
such Lending Installation. Each Lender may, by written or telecopy notice to
the Administrative 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.
2.19 Non-Receipt of Funds by the Administrative Agent. Unless the
Borrower or a Lender, as the case may be, notifies the Administrative Agent
prior to the date on which it is scheduled to make payment to the Administrative
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 Administrative
Agent for the account of the Lenders, that it does not intend to make such
payment, the Administrative Agent may assume that such payment has been made.
The Administrative 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 Administrative Agent, the recipient of such payment
shall, on
35
<PAGE>
demand by the Administrative Agent, repay to the Administrative 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
Administrative Agent until the date the Administrative 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.
2.20 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 Administrative 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, if any, 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 Administrative 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 Administrative Agent, in each case certifying
that such Lender (or Lending Installation) is entitled to receive payments under
this Agreement and the Notes, if any, 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
Administrative Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
2.21 Maximum Interest Rate. Nothing contained in this Agreement or
any Notes shall require the Borrower to pay interest to any Lender at a rate
exceeding the maximum rate permitted by applicable law with respect to such
Lender. This Section 2.21 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 346
of the Texas Finance Code, which regulates certain revolving loan accounts and
revolving tri-party accounts, shall not be applicable to this Agreement, any
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
36
<PAGE>
third sentence of this Section 2.21 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 2.21.
2.22 Administrative Agent's Fees. In order to compensate First
Chicago for the cost and expense of acting as Administrative 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.
2.23 Procedures with respect to the Aggregate 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 Aggregate Commitment be increased by giving written notice
thereof to the Administrative Agent; provided, however, that any such notice
must be given no later than 60 days prior to the then 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 Administrative Agent of such notice;
(ii) the amount of the requested increase; provided, however, that
after giving effect to such requested increase, the Aggregate Commitment
shall not exceed $700,000,000;
(iii) the identity of the then Lenders, if any, which have agreed
with the Borrower to increase their respective 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 Lender
being a then "Increasing Lender"), each other Lender which has agreed to
increase its Commitment in an amount such that its Lender's Percentage
after giving effect to such a requested increase will be less than its
Lender's Percentage prior to giving effect to such requested increase (each
such Lender being a "Partially Increasing Lender") and the identity of each
financial institution not already a Lender, if any, which has agreed with
the Borrower to become a Lender to effect such requested increase in the
Aggregate Commitment (each such assignee shall be reasonably acceptable to
the Administrative Agent and each such assignee being a then "New Lender"
and each Lender which has not agreed to increase its Commitment being a
"Reducing Lender"); and
37
<PAGE>
(iv) the amount of the respective Commitments of the then existing
Lenders and such New Lenders from and after the effective date of such
increase.
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
Administrative Agent for its acceptance, as to form, documentation
embodying the provisions of the Notice of Commitment Increase relating to
the increase in the Aggregate Commitment to be effected on such Commitment
Increase Effective Date; and
(ii) upon acceptance of such documentation by the Administrative
Agent, which acceptance shall not be unreasonably withheld, and so long as
no Default or Unmatured Default has occurred and is continuing, (A) the
Administrative Agent shall give prompt notice of such acceptance to each
Lender, (B) it shall become effective, and the Aggregate Commitment shall
be increased to the amount specified therein, on such Commitment Increase
Effective Date, (C) the Administrative Agent shall record each New Lender's
information in the Register, and the Borrower shall execute and deliver to
each then New Lender, upon written request by such New Lender, a Committed
Note payable to the order of such Lender in the face principal amount equal
to such Lender's Commitment and a Competitive Bid Note and (D) upon written
request by a Lender, the Borrower shall execute and deliver to each such
Increasing Lender and each such Partially Increasing Lender, against
receipt by the Borrower of such Lender's then existing Committed Note, if
any, a new Committed Note in the face principal amount equal to such
Lender's 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 Administrative
Agent such Lenders' New Funds Amount for such Commitment Increase Effective
Date, which amount, for each such Lender, shall constitute Committed Loans
made by such Lender to the Borrower pursuant to Section 2.1 on such
Commitment Increase Effective Date; and
(ii) the Administrative 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 2.9, ratably in accordance
with the respective principal amounts thereof, of the principal amounts of
all then outstanding Committed Loans of such Lender.
The Administrative Agent shall record each then New Lender's, each then
Increasing Lender's and each then Partially Increasing Lender's information in
the Register. Also effective as of each Commitment Increase Effective Date,
each then New Lender and each then Increasing
38
<PAGE>
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 Lenders
(including each then New Lender) shall accord with their respective Lender's
Percentages after giving effect to the increase in the Aggregate Commitment on
such Commitment Increase Effective Date.
2.24 Extension of Facility Termination Date. Subject to the other
provisions of this Agreement, the Commitments of the Lenders shall be effective
for an initial period from the Closing Date to the original Facility Termination
Date; provided that so long as no Default or Unmatured Default shall have
occurred and be continuing, the Facility Termination Date, and concomitantly the
Commitments of the Lenders, may be extended for successive one year periods
expiring on the date which is one (1) year from the then scheduled Facility
Termination Date. In order to request such extension, the Borrower will deliver
written notice to the Administrative Agent not more than one hundred five (105)
days nor less than seventy-five (75) days prior to any anniversary date of the
Closing Date that the Facility Termination Date be extended for one year from
the then scheduled Facility Termination Date. The Administrative Agent shall
then promptly notify each Lender of such request, and each Lender shall notify
the Administrative Agent in writing no later than thirty (30) days after
receipt by the Lenders of the relevant request for an extension from the
Borrower, pursuant to this Section 2.24 whether such Lender, in the exercise of
its sole discretion, will extend the Facility Termination Date for such one-year
period. Any Lender which shall not timely notify the Administrative Agent
whether it will extend the Facility Termination Date shall be deemed to not have
agreed to extend the Facility Termination Date. No Lender shall have any
obligation whatsoever to agree to extend the Facility Termination Date. Any
agreement to extend the Facility Termination Date by any Lender shall be
irrevocable, except to the extent revocable by the Borrower as provided in
Section 2.24(b)(C)(iii).
(a) If all the Lenders notify the Administrative Agent pursuant to the
foregoing provisions of this Section 2.24 of their agreement to extend the
Facility Termination Date (such Lenders agreeing to extend the Facility
Termination Date herein called the "Accepting Lenders"), then the Administrative
Agent shall so notify each Lender and the Borrower, and such extension shall be
effective without other or further action by any party hereto for such
additional one-year period.
(b) If Lenders constituting at least the Required Lenders approve the
extension of the then scheduled Facility Termination Date and if one or more of
the Lenders shall notify, or be deemed to notify, the Administrative Agent
pursuant to the foregoing provisions of this Section 2.24 that they will not
extend the then scheduled Facility Termination Date (such Lenders herein called
the "Declining Lenders"), then (A) the Administrative Agent shall promptly so
notify the Borrower and the Accepting Lenders, (B) the Accepting Lenders shall,
upon the Borrower's election to extend the then scheduled Facility Termination
Date in accordance with clause (C)(i) or (C)(ii) below, extend
39
<PAGE>
the then scheduled Facility Termination Date and (C) the Borrower, shall
pursuant to a notice delivered to the Administrative Agent, the Accepting
Lenders and the Declining Lenders, no later than the tenth day following the
date by which each Lender is required, pursuant to this Section 2.24, to approve
or disapprove the requested extension of the Facility Termination Date, either:
(i) elect to extend the Facility Termination Date with respect to the
Accepting Lenders and direct the Declining Lenders to terminate their
Commitments, which termination shall become effective on the date which
would have been the Facility Termination Date except for the operation of
this Section 2.24. On such date, (x) the Borrower shall deliver a notice
of the effectiveness of such termination to the Declining Lenders with a
copy to the Administrative Agent, (y) the Borrower shall pay in full in
immediately available funds (A) all Obligations of the Borrower owing to
the Declining Lenders (including any Obligations owed to any Declining
Lender in its capacity as Issuer, if any) and (B) unless Borrower consents
otherwise, all obligations of the Borrower owing to the Declining Lenders,
if any, under the 364-Day Revolving Credit Agreement as provided in
Section 2.23 thereof (including any obligations, if any, owed to any
Declining Lender in its capacity as issuer under the 364-Day Revolving
Credit Agreement, if any) and terminate, unless Borrower consents
otherwise, such Declining Lender's commitment under the 364-Day Revolving
Credit Agreement and the Borrower shall return for cancellation, to any
Declining Lender that is an Issuer, the originals of all Letters of Credit
issued by such Declining Lenders and (z) upon the occurrence of the events
set forth in clauses (x) and (y), the Declining Lenders shall each cease to
be a Lender hereunder for all purposes and each cease to be an Issuer
hereunder for all purposes, if applicable, and shall no longer have any
obligations hereunder; however, such Person shall be obligated to make or
entitled to receive payments pursuant to Sections 3.1, 3.2, 3.4, 9.7 and
10.3 (but only to the extent the event giving rise to such payment occurred
prior to the time at which the events set forth in clauses (x) and (y)
shall have occurred) as if it were a Lender, and the Administrative Agent
shall promptly notify the Accepting Lenders and the Borrower of the new
Aggregate Commitment and the new Facility Termination Date; or
(ii) elect to extend the Facility Termination Date with respect to the
Accepting Lenders and, prior to or no later than the then scheduled
Facility Termination Date, (a) the Borrower shall replace one or more of
the Declining Lenders with another lender or lenders reasonably acceptable
to the Administrative Agent (such lenders herein called the "Replacement
Lenders") or with Accepting Lenders, if any, which have agreed with the
Borrower to increase their respective Commitments (the "Increasing
Accepting Lenders") or to the extent Borrower is not able to replace all
Commitments of any Declining Lenders, direct such Declining Lenders to
terminate any such Commitments not being replaced as provided in clause (i)
above and (b) the Borrower shall pay in full in immediately available funds
(A) all Obligations of the Borrower owing to the Declining Lenders which
are not being replaced (including any Obligations owed to any Declining
Lender in its capacity as an Issuer, if any) and return all Letters of
Credit to Declining Lenders that are Issuers as provided in clause (i)
above and (B) unless Borrower consents otherwise, all obligations of the
Borrower owing to the Declining Lenders which are not being replaced under
the 364-
40
<PAGE>
Day Revolving Credit Agreement (including any obligations owed to any
Declining Lender in its capacity as an issuer under the 364-Day Revolving
Credit Agreement); provided that (x) the Replacement Lenders and Increasing
Accepting Lenders shall purchase, and the Declining Lenders being replaced
shall sell, the interest of the Declining Lenders being replaced and their
rights hereunder in accordance with Section 12.3.2 hereof without recourse
or expense to, or warranty (except warranty of ownership which is free and
clear of any adverse claims) by, such Declining Lenders being replaced for
a purchase price equal to the aggregate outstanding principal amount of the
Obligations payable to such Declining Lenders plus any accrued but unpaid
interest on such Obligations and accrued but unpaid fees in respect of such
Declining Lenders' Loans and Commitments hereunder, and the Replacement
Lenders and Increasing Accepting Lenders shall purchase, and the Declining
Lenders being replaced shall sell, the interest of the Declining Lenders
being replaced and their rights under the 364-Day Revolving Credit
Agreement in accordance with Section 12.3.2 thereof without recourse or
expense to, or warranty (except warranty of ownership which is free and
clear of any adverse claims) by, such Declining Lenders being replaced for
a purchase price equal to the aggregate outstanding principal amount of the
obligations payable to such Declining Lenders plus any accrued but unpaid
interest on such obligations and accrued but unpaid fees in respect of such
Declining Lenders' loans and commitments thereunder, and (y) all
obligations of the Borrower owing under or in connection with this
Agreement with respect to the Declining Lenders being replaced (including,
without limitation, such increased costs, breakage fees payable under
Article III and all other costs and expenses payable to each such Declining
Lender) shall be paid in full in immediately available funds to such
Declining Lenders concurrently with such replacement, and all obligations
of the Borrower owing under or in connection with the 364-Day Revolving
Credit Agreement with respect to the Declining Lenders being replaced
(including, without limitation, such increased costs, breakage fees payable
under Article III of the 364-Day Revolving Credit Agreement) shall be paid
in full in immediately available funds to such Declining Lenders
concurrently with such replacement, and (z) upon the payment of such
amounts referred to in clauses (x) and (y), the Replacement Lenders shall
each constitute a Lender hereunder and the Declining Lenders being so
replaced shall no longer constitute a Lender or an Issuer and shall no
longer have any obligations hereunder; however, such Person shall be
obligated to make or entitled to receive payments pursuant to Sections 3.1,
3.2, 3.4, 9.7 and 10.3 (but only to the extent the event giving rise to
such payment occurred prior to the time at which the events set forth in
clauses (x) and (y) shall have occurred) as if it were a Lender or
(iii) elect to revoke and cancel such extension request by giving
notice of such revocation and cancellation to the Administrative Agent
(which shall promptly notify the Lenders thereof) no later than the tenth
day following the date by which each Lender is required, pursuant to
Section 2.24, to approve or disapprove the requested extension of the
Facility Termination Date, and concomitantly the Commitments of the
Lenders. If the Borrower fails to timely provide the election notice
referred to in this clause (C), the Borrower shall be deemed to have
revoked and canceled such extension request and to have elected not to
extend the Facility Termination Date and the Commitments of the Lenders,
and, on the then scheduled Facility Termination Date, the Borrower shall
repay in full all Obligations under the Loan Documents.
41
<PAGE>
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,
(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 Eurodollar Committed Advances, Eurodollar Bid Rate Advances or Absolute
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 Administrative 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
42
<PAGE>
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 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 Committed Loans or Eurodollar Bid Rate
Loans at a suitable Lending Installation would violate any applicable law, rule,
regulation or directive, whether or not having the force of law, the
Administrative Agent shall suspend the availability of the affected Type of
Advance and require any Eurodollar Committed Advances and Eurodollar Bid Rate
Advances of the affected Type to be converted into Alternate Base Rate Advances.
If the Required Lenders determine that (i) deposits of a type or maturity
appropriate to match fund Eurodollar Committed Advances or Eurodollar Bid Rate
Advances are not available, the Administrative Agent shall suspend the
availability of the affected Type of Advance with respect to any Eurodollar
Committed Advances or Eurodollar Bid Rate Advances made after the date of any
such determination until such time as deposits of a Type or maturity appropriate
to match fund Eurodollar Committed Advances or Eurodollar Bid Rate 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 Committed Advance or a Eurodollar Bid
Rate Advance of such Type, then, if for any reason whatsoever the provisions of
Section 3.1 are inapplicable, the Administrative Agent shall suspend the
availability of the affected Type of Advance with respect
43
<PAGE>
to any Eurodollar Committed Advances or Eurodollar Bid Rate Advances made after
the date of any such determination.
3.4 Funding Indemnification. If any payment of a Eurodollar Committed
Advance, Eurodollar Bid Rate Advance or Absolute 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 an Alternate Base Rate Advance on a date which is not the last day
of the applicable Interest Period or a Eurodollar Committed Advance, Eurodollar
Bid Rate Advance or Absolute 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 Eurodollar Committed
Advance, Eurodollar Bid Rate Advance or the Absolute Rate Advance; provided that
the foregoing shall not permit 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 Eurodollar Committed
Loan, Eurodollar Bid Rate Loan or an Absolute Rate Loan shall be calculated as
though each Lender funded its Eurodollar Committed Loan, Eurodollar Bid Rate
Loan or its Absolute Rate Loan, as the case may be, through the purchase of a
deposit of the Type and maturity corresponding to the deposit used as a
reference in determining the Eurodollar Rate, Eurodollar Bid Rate or the
Absolute 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 Eurodollar
Loan or an Absolute 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 Section 3.1 to avoid or reduce any such
additional amounts, the
44
<PAGE>
Borrower shall have the right, if no Default then exists, to replace such Lender
with another financial institution reasonably acceptable to the Administrative
Agent and any Issuer provided that (i) such financial institution shall
unconditionally offer in writing (with a copy to the Administrative Agent) to
purchase, in accordance with Section 12.3.2, all of such Lender's rights and
obligations under this Agreement and the Loans and the Notes, if any, and all of
such Lender's rights and obligations under the 364-Day Revolving Credit
Agreement and the "Loans" and the "Notes", if any, thereunder as provided in
Section 12.3.2 thereof, 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 Loans payable to such Lender plus such Lender's
Percentage, if any, of any outstanding reimbursement obligations with respect to
any outstanding Letters of Credit plus any accrued but unpaid interest on the
Loans 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 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 Administrative 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
45
<PAGE>
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 Administrative 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 Administrative 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 Currency
which the relevant Issuer, Lender or Administrative 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 this Section
3.7 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
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, to the Administrative
Agent, on the Closing Date, with sufficient copies for the Lenders:
(i) Copies of the articles of incorporation of the Borrower, together
with all amendments, and a certificate of good standing for the Borrower,
certified by the appropriate governmental officer in its jurisdiction of
incorporation.
46
<PAGE>
(ii) Copies, certified by the Secretary or Assistant Secretary of the
Borrower of its by-laws and of its Board of Directors' resolutions
authorizing the execution of the Loan Documents.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify by name and title
and bear the signature of the officers of the Borrower authorized to sign
the Loan Documents and to make borrowings and obtain Letters of Credit
hereunder, upon which certificate the Administrative Agent and the Lenders
shall be entitled to rely until informed of any change in writing by the
Borrower.
(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 Borrower, substantially in the form of
Exhibit "B-2" and (C) Mayer, Brown & Platt, special counsel to the
Administrative Agent, substantially in the form of Exhibit "I" hereto, each
dated as of the Closing Date and addressed to the Administrative Agent and
the Lenders.
(v) Notes payable to the order of any Lender requesting Notes.
(vi) Certificate of an Authorized Officer of Borrower stating that (a)
all obligations under the Amended and Restated Credit Agreement have been
paid or fulfilled, (b) the Borrower has delivered a notice to the lenders
under the Amended and Restated Credit Agreement requesting that the
"Aggregate Commitment" thereunder be terminated on the Closing Date (each
Lender that is a "Lender" under the Amended and Restated Credit Agreement
hereby waives the requirement of prior notice of cancellation in Section
2.6.3 of the Amended and Restated Credit Agreement and the requirement of
prior notice of prepayment in Section 2.8 of the Amended and Restated
Credit Agreement), (c) the 364-Day Revolving Credit Agreement has been
executed and delivered, and (d) the "Closing Date" under the 364-Day
Revolving Credit Agreement is the same date as the Closing Date hereunder.
(vii) Certificate of an Authorized Officer of Borrower stating that
all representations and warranties contained in Article V are true and
correct in all material respects as of the Closing Date and that no Default
or Unmatured Default exists.
(viii) Such other documents as the Administrative Agent, any Lender
or its counsel may have reasonably requested.
4.2 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.
47
<PAGE>
(ii) The representations and warranties contained in Article V 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 4.2(i) and (ii) have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders, the Administrative
Agent and each Issuer (except for matters disclosed, in writing, by the Borrower
to the Administrative Agent, pursuant to this Agreement, that have not been
objected to, in writing, by the Lenders) that:
5.1 Corporate or Partnership Existence and Standing. Each of the Borrower
and its Principal Subsidiaries is duly organized, validly existing and in good
standing under the laws of its jurisdiction of 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 good standing or authority would not have a Material Adverse Effect.
5.2 Authorization and Validity. The Borrower has the corporate power and
authority to execute and deliver the Loan Documents and to perform its
obligations thereunder. The execution and delivery by the Borrower of the Loan
Documents and the performance of its obligations thereunder have been duly
authorized by proper corporate proceedings, and the Loan Documents constitute
legal, valid and binding obligations of the Borrower, enforceable against the
Borrower 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. The execution, delivery and
performance of the Loan Documents by the Borrower will not violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
the Borrower, or conflict with any organizational document or Material Agreement
of the Borrower, or require any government approval except where such violation,
conflict or lack of approval would not have a Material Adverse Effect 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 Material Agreement.
5.4 Financial Statements. The March 31, 1998 consolidated financial
statements of the Borrower and its Subsidiaries were prepared in accordance with
GAAP in effect on the date such statements were prepared and fairly present the
consolidated financial condition and operations of
48
<PAGE>
the Borrower and its Subsidiaries at such date and the consolidated results of
their operations for the period then ended.
5.5 Material Adverse Change. As of the Closing Date 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 which could reasonably be expected
to have a Material Adverse Effect. 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, in
either case, could reasonably be expected to have a Material Adverse Effect.
5.7 Litigation and Contingent Obligations. Except as disclosed in the
Borrower's most recent Form 10-K or 10-Q filed with the SEC, there is no
litigation, arbitration, governmental investigation, proceeding or inquiry
pending or, to the knowledge of an officer of the Borrower, threatened against
or affecting the Borrower or any of its Subsidiaries (including, without
limitation, any such action involving Environmental Laws) which, in either case,
could reasonably be expected to have a Material Adverse Effect.
5.8 ERISA. The Unfunded Liabilities of all Single Employer Plans do not
in the aggregate exceed $75,000,000. 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 $75,000,000 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, 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 to do so, and no steps have
been taken to reorganize or terminate any Single Employer Plan.
5.9 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 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
49
<PAGE>
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 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.
5.10 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 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.
5.11 Investment Company Act. None of the Borrower nor any Principal
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.
5.12 Public Utility Holding Company Act. Each of the Borrower and each
of its Principal 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.
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:
(i) Make available promptly (and in any event within 60 days) after the
end of each of the first three quarterly periods of each of its fiscal
years, on either EDGAR or
50
<PAGE>
Borrower's Home Page or otherwise transmit to the Lenders a copy of
Borrower's report on Form 10-Q (or any comparable form) for such quarter,
which report will include Borrower's quarterly unaudited consolidated
financial statements as of the end of and for such quarter prepared in
accordance with GAAP, subject to changes resulting from any year-end audit
adjustment. Upon request, the Administrative Agent shall provide a copy of
any such statement or report described above to any Lender that does not
have access to EDGAR or the World Wide Web.
(ii) (A) Make available promptly (and in any event within 120 days)
after the close of its fiscal year, on either EDGAR or Borrower's Home Page
or otherwise transmit to the Lenders a copy of the Borrower's report on
Form 10-K (or any comparable form) for such year, which report will include
Borrower's annual audited consolidated financial statements as of the end
of and for such year prepared in accordance with GAAP and (B) promptly
after the sending thereof, deliver a copy of the Borrower's annual report
which it sends to its public shareholders. Upon request, the
Administrative Agent shall provide a copy of any such statement or report
described in clause (A) above to any Lender that does not have access to
EDGAR or the World Wide Web.
(iii) Concurrently with making available the financial statements
referred to in clause (i) and (ii) above, deliver a compliance certificate
in substantially the form of Exhibit "C" hereto, in writing, 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 the operations of the Borrower at the date and for the period
indicated therein, subject to changes resulting from year-end audit
adjustments and showing the calculations necessary to determine compliance
with this Agreement (including, without limitations, calculations of
financial covenants) and stating that no Default or Unmatured Default
exists, or if any Default or Unmatured Default exists, stating the nature
and status thereof.
(iv) Within 10 days after the Borrower knows that any Reportable Event
has occurred with respect to any Single Employer Plan, deliver 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, deliver written notice of
any litigation which could reasonably be expected to result in a judgment
in excess of $75,000,000 against the Borrower or any of its Principal
Subsidiaries 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) Make available promptly, all publicly available reports and proxy
statements furnished to shareholders on either EDGAR or Borrower's Home
Page. Upon request, the Administrative Agent shall provide a copy of any
such statement or report described above to any Lender that does not have
access to EDGAR or the World Wide Web.
(vii) Make available promptly, all publicly available registration
statements and annual, quarterly, monthly or other regular reports which
the Borrower or any of its Principal
51
<PAGE>
Subsidiaries files with the SEC either on EDGAR or Borrower's Home Page.
Upon request, the Administrative Agent shall provide a copy of any such
statement or report described above to any Lender that does not have access
to EDGAR or the World Wide Web.
(viii) Promptly deliver written notice to the Lenders of the occurrence
of any Default or Unmatured Default.
(ix) Deliver such other information (including non-financial information)
as the Administrative 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 Advances to provide funds for
working capital needs and other general corporate purposes, including
acquisitions, commercial paper back up and repayment of loans under the Amended
and Restated Credit Agreement. 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 Maintain Legal Existence. The Borrower will preserve and maintain,
and cause each of its Principal Subsidiaries to preserve and maintain, its legal
existence, rights and franchises; provided that (i) the foregoing shall not
prevent any merger, consolidation, sale or other disposition permitted under
Section 6.2.1 or 6.2.2 of this Agreement and (ii) the Borrower and its Principal
Subsidiaries shall not be required to preserve or maintain any existence, right
or franchise if the failure to preserve or maintain such existence, right or
franchise would not have a Material Adverse Effect.
6.1.4 Insurance. The Borrower will, and will cause each Principal
Subsidiary to, maintain insurance with financially sound and reputable insurance
companies, (other than prudent self-insurance programs) 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.
6.1.5 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, except when failure to do
so could not reasonably be expected to have a Material Adverse Effect; the
Borrower and its Subsidiaries will pay all taxes, assessments and governmental
charges and levies upon income, profits or Property before the same become
delinquent (except with regard to any of the foregoing payments which are being
contested in good faith by appropriate proceeding, diligently pursued and with
respect to which adequate reserves as required by GAAP have been set aside)
except where failure to do so could not reasonably be expected to have a
Material Adverse Effect; and the Borrower and its Principal Subsidiaries will
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.
52
<PAGE>
6.1.6 Inspection. The Borrower will, and will cause each Principal
Subsidiary to, permit the Administrative 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
Principal Subsidiary 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 Principal
Subsidiary and to discuss the affairs, finances and accounts of the Borrower and
each Principal Subsidiary 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 Administrative 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
Administrative 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.
6.1.7 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 Merger. The Borrower will not merge or consolidate with or into any
other Person, unless (i) both before and after giving effect to such merger or
consolidation, there exists no Default or Unmatured Default and (ii) either (A)
the Borrower is the surviving Person or (B) if the Borrower is not the surviving
Person, the surviving Person shall expressly assume in writing in form and
substance reasonably satisfactory to the Administrative Agent all of the
liabilities and obligations of the Borrower hereunder and under the other Loan
Documents.
6.2.2 Sale of Assets. The Borrower will not sell or otherwise dispose of
all or substantially all of the Borrower's assets.
6.2.3 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 Permitted Liens.
6.2.4 Leverage Ratio. The Borrower will not permit its Leverage Ratio to
exceed 60% as determined in accordance with GAAP.
53
<PAGE>
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 to
the Lenders, any Issuer or the Administrative 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 the Borrower 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, 6.1.6 or 6.2.
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 and 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 Administrative Agent or any Issuer.
7.5 (a) Failure of the Borrower or any Principal Subsidiary 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 CUSA Assumed
Debt) aggregating in excess of $75,000,000 in principal amount; (b) any Debt
(other than the Obligations and other than the CUSA Assumed Debt) of the
Borrower or any of its Principal Subsidiaries aggregating in excess of
$75,000,000 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; or (c) 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 Principal 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 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
54
<PAGE>
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.
7.7 Without the application, approval or consent of the Borrower or any
Principal Subsidiary, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or such Principal Subsidiary or a
proceeding described in Section 7.6(iv) shall be instituted against the Borrower
or any Principal Subsidiary and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of 60 consecutive
days.
7.8 Any judgment or order for the payment of money in excess of
$75,000,000 shall be rendered against the Borrower or any Principal Subsidiary
and either such judgment or order is not discharged within a period of 60 days
following the rendering thereof or there shall be any period during which a stay
of enforcement of such judgment or order, by reason of an appeal or a bond
pending appeal, shall not be in effect.
7.9 Any Change of Control shall occur.
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
Administrative 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 Administrative 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;
55
<PAGE>
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 Administrative Agent shall
return to the Borrower an amount of such deposit equal to such excess, and the
Lenders and Issuers hereby authorize the Administrative 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 Administrative Agent (acting at the direction of 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 Administrative 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.
(c) If at any time while any Default is continuing, the Administrative Agent
determines that the Collateral Shortfall Amount at such time is greater than
zero, the Administrative Agent (acting at the direction of the Required Lenders)
may make demand on the Borrower to deliver (and the Borrower will, forthwith
upon demand by the Administrative Agent and without necessity of further act or
evidence, be and become thereby unconditionally obligated to deliver), to the
Administrative 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 Administrative 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 Administrative Agent to the Borrower or paid to whoever
may be legally entitled thereto at such time.
(f) The Administrative 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 Administrative Agent accords its own
property, it being understood that the Administrative Agent shall not have any
responsibility for taking any necessary steps to preserve rights against any
Persons with respect to any such funds.
56
<PAGE>
8.2 Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Administrative 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 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 Facility Termination Date (except as provided in Section 2.24)
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 (except as provided in Section 2.23),
or change the definition of Aggregate Commitment (except as provided in
Section 2.23).
(iv) Amend this Section 8.2.
(v) Permit the Borrower to assign its rights or obligations under the Loan
Documents.
(vi) 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 Administrative
Agent shall be effective without the written consent of the Administrative
Agent. The Administrative 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
Administrative 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 Administrative Agent, the Issuers and the Lenders
until the Obligations have been paid in full and all Commitments have
terminated.
57
<PAGE>
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
any Notes and the making of the Loans and issuance of Letters of Credit herein
contemplated.
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 Administrative Agent, each Issuer and the
Lenders and supersede all prior agreements and understandings among the
Borrower, the Administrative 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
Administrative 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 Administrative Agent, Issuers and
Lenders. The Borrower shall reimburse the Administrative Agent for any
reasonable costs, internal charges and out-of-pocket expenses (including
reasonable attorneys' fees and time charges of attorneys for the Administrative
Agent, which attorneys may be employees of the Administrative Agent) paid or
incurred by the Administrative 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
Administrative 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 Administrative Agent, the Issuers and
the Lenders, which attorneys may be employees of the Administrative Agent, the
Issuers or the Lenders) paid or incurred by the Administrative Agent or any
Lender in connection with the collection and enforcement of the Loan Documents.
NEITHER THE ADMINISTRATIVE AGENT, ANY
58
<PAGE>
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 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 Administrative 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 the Borrower 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 Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to each
of the Lenders.
9.9 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.
9.10 Nonliability of Lenders. The relationship between the Borrower and
the Lenders and the Administrative Agent shall be solely that of borrower and
lender. Neither the Administrative Agent, any Issuer nor any Lender shall have
any fiduciary responsibilities to the Borrower. Neither the Administrative
Agent, any Issuer nor any Lender undertakes any responsibility to the Borrower
59
<PAGE>
to review or inform the Borrower of any matter in connection with any phase of
the Borrower's business or operations.
9.11 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.
9.12 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 ADMINISTRATIVE AGENT, ANY ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST
THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
9.13 WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE 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.
9.14 Confidential Information. The Administrative Agent and each Lender
agree that all documentation and other information made available by the
Borrower to the Administrative 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 Administrative Agent or such Lender, or was theretofore known or
hereinafter becomes known to the Administrative Agent or such Lender on a
nonconfidential basis independent of any disclosure thereto by the Borrower) be
held in confidence by the Administrative 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 Administrative Agent or such Lender may disclose
documentation and information to the Administrative Agent and/or to any other
Lender which is a party to this Agreement or any Affiliates thereof and (ii) the
Administrative 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
Administrative Agent or such Lender in connection with such potential transfers
provided that the
60
<PAGE>
terms of such confidentiality statement are no less restrictive than those
contained in the confidentiality agreement executed by the Borrower and the
Administrative Agent or such Lender. Notwithstanding the foregoing, nothing
contained herein shall be construed to prevent the Administrative 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
Administrative Agent's or Lender's business or that of the Administrative
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 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 Administrative Agent or such Lender or its counsel deems necessary or
appropriate to enforce any remedy provided in any of the Loan Documents 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
Administrative Agent or such Lender is compelled to disclose such confidential
information in a proceeding requesting such disclosure, the Administrative Agent
or such Lender shall seek to obtain assurance that such confidential treatment
will be accorded such information; provided, however, the Administrative 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 ADMINISTRATIVE AGENT
10.1 Appointment and Authority of Administrative 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 Administrative 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 Administrative 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 the
Borrower, 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 Administrative Agent or any Issuer.
Should the Administrative Agent fail or refuse to take any action requested
hereunder by the Required Lenders, the Administrative Agent shall resign and the
Required Lenders shall promptly appoint a successor to the Administrative Agent
hereunder. At any time that no Person or Persons are acting as agent
61
<PAGE>
hereunder, the Borrower is 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 Borrower, the Borrower
shall receive written evidence thereof. The Administrative Agent is hereby
expressly authorized as agent on behalf of the Lenders, without hereby limiting
any implied authority:
(a) To receive on behalf of each Lender any payment of principal or interest
on the Advances paid to the Administrative 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 Borrower and others;
(f) To execute and deliver to the Borrower 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 Administrative 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 Administrative Agent and each Issuer. With respect to
its commitment to lend hereunder and the Loans made by it, the Administrative
Agent and each Issuer in their respective capacities as a Lender and not as the
Administrative 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 Administrative Agent or an Issuer.
10.3 No Liability of the Administrative Agent or Issuers and Indemnity.
Neither the Administrative 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 the
Borrower or any officer thereof contained in any Loan Document or in any
certificate, report, statement, or other document referred to or provided for
in,
62
<PAGE>
or received by the Administrative 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 the
Borrower to perform its obligations under any Loan Document. Neither the
Administrative Agent nor any Issuer shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements or conditions contained in any Loan Document, or to inspect the
properties, books, or records of the Borrower. To the extent that the
Administrative Agent or any Issuer is not reimbursed or indemnified by the
Borrower, each of the Lenders will indemnify the Administrative 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 Administrative 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 Administrative Agent or such Issuer under or in connection with any of the
foregoing, including resulting from the Administrative 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
Administrative 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 Administrative Agent and Issuers. The Administrative
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 Administrative
Agent for actual out-of-pocket expenses incurred by the Administrative 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
Administrative Agent in connection with the development, preparation,
negotiation, and execution of the Loan Documents, or the enforcement of the
rights of the Administrative Agent, the Issuers and the Lenders thereunder. Each
Lender agrees to reimburse the Administrative 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 Borrower.
10.5 Reliance. The Administrative 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 Administrative Agent or such Issuer. The Administrative Agent, each
Issuer and the Borrower 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 owner of any of the Obligations shall be conclusive
and binding on any subsequent holder, transferee, or assignee of such
Obligations. The Administrative 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
63
<PAGE>
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 Administrative
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 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 Administrative 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 Administrative Agent
or any Issuer hereinafter taken shall be deemed to constitute any representation
or warranty by the Administrative Agent or any Issuer to any Lender. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, neither the Administrative 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 the Borrower or any of its
Subsidiaries which may come into the possession of the Administrative 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 Administrative Agent nor any Issuer
shall be deemed to have knowledge or notice of the occurrence of any Default or
Unmatured Default unless the Administrative Agent or such Issuer has received
notice from a Lender or the Borrower 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 Administrative 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 Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative 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
Administrative Agent shall have received such directions, the Administrative
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 Administrative Agent, any Issuer or
any other Lender and based on the
64
<PAGE>
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
Administrative Agent, any Issuer or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
10.9 Successor Administrative Agent. The Administrative 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
Administrative Agent or, if no successor Administrative Agent has been
appointed, forty-five days after the retiring Administrative 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 Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Lenders within
thirty days after the resigning Administrative Agent's giving notice of its
intention to resign, then the resigning Administrative 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
Administrative Agent. If the Administrative Agent has resigned and no successor
Administrative Agent has been appointed, the Lenders may perform all the duties
of the Administrative 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
Administrative Agent shall be deemed to be appointed hereunder until such
successor Administrative Agent has accepted the appointment. Any such successor
Administrative Agent shall be a commercial bank having capital and retained
earnings of at least $100,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Administrative
Agent. Upon the effectiveness of the resignation of the Administrative Agent,
the resigning Administrative Agent shall be discharged from its duties and
obligations hereunder and under the Loan Documents. After the effectiveness of
the resignation of an Administrative Agent, the provisions of this Article X
shall continue in effect for the benefit of such Administrative Agent in respect
of any actions taken or omitted to be taken by it while it was acting as the
Administrative Agent hereunder and under the other Loan Documents.
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
65
<PAGE>
Obligations owing to such Lender, whether or not the Obligations, or any part
hereof, shall then be due.
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 2.23, 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
Administrative 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 Administrative Agent, assign all or any
portion of its rights under this Agreement and its Notes, if any, to a Federal
Reserve Bank; provided, however, that no such assignment shall release the
transferor Lender from its obligations hereunder. Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
Section 12.3 shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
Section 12.2. 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 owner of any portion of the Obligations,
shall be conclusive and binding on any subsequent holder, transferee or assignee
of such portion of the Obligations.
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
66
<PAGE>
hereto for the 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 Administrative 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 or releases any substantial portion of
collateral, if any, securing any 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 Administrative Agent and the Issuers of
any outstanding Letters of Credit, provided that no Lender may assign any
part of its rights and obligations under the Loan Documents without also
assigning to such Purchaser the applicable pro rata share of such rights
and obligations under the 364-Day Revolving Credit Agreement such that such
Purchaser owns the same pro rata share of rights and obligations under the
364-Day Revolving Credit Agreement as it does hereunder. 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 Administrative Agent and 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 an Affiliate
thereof; provided, however, that if a Default has occurred and is
continuing, the consent of the Borrower shall not be required. Such
consent of the Borrower and the Administrative Agent shall not be
67
<PAGE>
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
Administrative 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 $3,500 fee to the Administrative 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 Administrative 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
Administrative Agent shall accept such assignment and record the
Purchaser's information in the Register, and Borrower shall provide such
Purchaser with Notes to evidence its Loans, if requested in writing by such
Purchaser, and the transferor Lender, the Administrative Agent and the
Borrower shall make appropriate arrangements so that either (x) with
respect to any transferor Lender that is assigning a portion of its
Obligations, replacement Notes are issued, if necessary, to such transferor
Lender and each replaced Note shall be returned to the Borrower marked
"replaced" or (y) with respect to a transferor Lender assigning all of its
Obligations, such Lender shall return its Note, if any, to the Borrower
marked "cancelled." 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 Administrative
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
9.14.
68
<PAGE>
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 thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the provisions of Section 2.20.
ARTICLE XIII
NOTICES
13.1 Giving Notice. Except as otherwise permitted by Section 2.15 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 Administrative 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 Administrative Agent
and the Lenders and each party has notified the Administrative Agent by telex or
telephone, that it has taken such action.
69
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Lenders and the Administrative 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
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO, Individually and
as Administrative Agent
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
<PAGE>
THE CHASE MANHATTAN BANK,
Individually and as Syndication Agent
By:
---------------------------------
Print Name:
Title:
600 Travis, 20th Floor
Houston, Texas 77002
Attn:
Telecopy No.: (713) 216-4295
<PAGE>
NATIONSBANK, N.A.
Individually and as Documentation Agent
By:
---------------------------------
Print Name:
Title:
700 Louisiana, 8th Floor
Houston, Texas 77002-2725
Attn:
Telecopy No.: (713) 247-6432
<PAGE>
ABN AMRO BANK, N.V.
By:
----------------------------------
Print Name:
Title:
By:
----------------------------------
Print Name:
Title:
Three Riverway, Suite 1700
Houston, Texas 77056
Attn:
Telecopy No.: 713-629-7533
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By:
----------------------------------
Print Name:
Title:
333 Clay Street, Suite 4550
Houston, Texas 77002
Attn:
Telecopy No.:
<PAGE>
THE BANK OF NOVA SCOTIA
By:
----------------------------------
Print Name:
Title:
600 Peachtree Street, N.E., Suite 2700
Atlanta, Georgia 30308
Attn:
Telecopy No.:
<PAGE>
THE BANK OF TOKYO-MITSUBISHI, LTD.,
HOUSTON AGENCY
By:
----------------------------------
Print Name:
Title:
1100 Louisiana Street, Suite 2800
Houston, Texas 77002-5216
Attn: David L. Denbina, P.E.
Telecopy No.: 713/658-0116
<PAGE>
BANKBOSTON, N.A.
By:
----------------------------------
Print Name:
Title:
100 Federal Street
Mail Stop 01-08-04
Boston, MA 02110
Attn: V. Ryan
Telecopy No.: (617) 434-3652
<PAGE>
CREDIT AGRICOLE INDOSUEZ
By:
------------------------------------
Print Name:
Title:
By:
------------------------------------
Print Name:
Title:
600 Travis Street, Suite 2340
Houston, Texas 77002
Attn: Brian Knezeak
Telecopy No.: (713) 223-7029
<PAGE>
CITIBANK, N.A.
By:
------------------------------------
Print Name:
Title:
Attn:
----------------------------------
Telecopy No.:
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By:
------------------------------------
Print Name:
Title:
with a copy to:
1000 Louisiana, Suite 5360
Houston, Texas 77002
Attn: Darrell Stanley, Vice President
Telecopy No.: (713) 751-0307
<PAGE>
FUJI BANK, LIMITED, HOUSTON AGENCY
By:
------------------------------------
Print Name:
Title:
1221 McKinney, Suite 4100
Houston, Texas 77010
Attn:
Telecopy No.:
<PAGE>
SOCIETE GENERALE, SOUTHWEST AGENCY
By:
------------------------------------
Print Name:
Title:
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attn: Lia Guerra
Telecopy No.: (214) 754-0171
<PAGE>
THE TORONTO-DOMINION BANK
By:
------------------------------------
Print Name:
Title:
31 West 52nd Street
New York, NY 10019-6101
Attn:
Telecopy No.: (212) 262-1929
<PAGE>
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH
By:
------------------------------------
Print Name:
Title:
By:
------------------------------------
Print Name:
Title:
1211 Avenue of the Americas, 23rd Floor
New York, NY 10036
Attn:
Telecopy No.: (212) 852-6307
<PAGE>
EXHIBIT "A-1"
COMMITTED NOTE
$________________ ______________, _____
NGC Corporation, a Delaware corporation (the "Borrower"), promises to pay
to the order of _____________________________________ (the "Lender") the lesser
of the principal sum of __________________________ Million Dollars or the
aggregate unpaid principal amount of all Committed Loans made by the Lender to
the Borrower pursuant to Section 2.1 or 2.2 of the Credit Agreement hereinafter
referred to (as the same may be amended or modified, the "Agreement"), in lawful
money of the United States in immediately available funds at the main office of
The First National Bank of Chicago in Chicago, Illinois, as Administrative Agent
or as otherwise directed by the Administrative Agent pursuant to the terms of
the Agreement, together with interest, in like money and funds, on the unpaid
principal amount hereof at the rates and on the dates set forth in the
Agreement. The Borrower shall pay each Committed Loan in full on the Facility
Termination Date (as defined in the Agreement) and mandatory repayments of
principal will be made by the Borrower as set forth in the Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Committed Loan and the date and amount of each
principal payment hereunder; provided, however, that any failure to so record
shall not affect the Borrower's obligations under any Loan Document.
This Committed Note is one of the Notes issued pursuant to, and is entitled
to the benefits of, the Credit Agreement, dated as of May 27, 1998, among the
Borrower, The First National Bank of Chicago, individually and as Administrative
Agent, The Chase Manhattan Bank, individually and as Syndication Agent and
NationsBank, N.A., individually and as a Documentation Agent and the lenders
named therein, including the Lender, to which Agreement, as it may be amended
from time to time, reference is hereby made for a statement of the terms and
conditions under which this Committed Note may be prepaid or its maturity date
accelerated. Capitalized terms used herein and not otherwise defined herein are
used with the meanings attributed to them in the Agreement.
Borrower and any endorser hereof waive presentment, notice of dishonor and
protest, and assent to any extension of time with respect to any payment due
under this note and to the addition or release of any party.
NGC CORPORATION
By:
------------------------------------
Title:
<PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
COMMITTED NOTE OF _____________________
DATED ________________, ______
<TABLE>
<CAPTION>
Maturity
of Principal
Principal Interest Applicable Amount Unpaid
Date Amount of Loan Type Period Rate Paid Balance
- ---- -------------- ---- -------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT "A-2"
COMPETITIVE BID NOTE
_______________, ______
NGC Corporation, a Delaware corporation (the "Borrower"), promises to pay
to the order of _____________________ (the "Lender") the aggregate unpaid
principal amount of all Competitive Bid Loans made by the Lender to the Borrower
pursuant to Section 2.3 of the Credit Agreement hereinafter referred to (as the
same may be amended or modified, the "Agreement"), in lawful money of the United
States in immediately available funds at the main office of The First National
Bank of Chicago, as Administrative Agent, in Chicago, Illinois or as otherwise
directed by the Administrative Agent pursuant to the terms of the Agreement,
together with interest, in like money and funds, on the unpaid principal amount
hereof at the rates and on the dates determined in accordance with the
Agreement. The Borrower shall pay each Competitive Bid Loan in full on the
earlier of (A) the last day of such Competitive Bid Loan's applicable Interest
Period or (B) the Facility Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or otherwise record in accordance with its usual practice, the
date and amount of each Competitive Bid Loan and the date and amount of each
principal payment hereunder, provided, however, that any failure to so record
shall not affect the Borrower's obligations under any Loan Document.
This Competitive Bid Note is one of the Notes issued pursuant to, and is
entitled to the benefits of, the Credit Agreement dated as of May 27, 1998,
among the Borrower, The First National Bank of Chicago, individually and as
Administrative Agent, The Chase Manhattan Bank, individually and as Syndication
Agent and NationsBank, N.A., individually and as Documentation Agent and the
lenders named therein, including the Lender, to which Agreement, as it may be
amended from time to time, reference is hereby made for a statement of the terms
and conditions under which this Competitive Bid Note may be prepaid or its
maturity date accelerated. Capitalized terms used herein and not otherwise
defined herein are used with the meanings attributed to them in the Agreement.
Borrower and any endorser hereof waive presentment, notice of dishonor and
protest, and assent to any extension of time with respect to any payment due
under this note and to the addition or release of any party.
---------------------------------
By:
------------------------------
Title:
<PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
COMPETITIVE BID NOTE OF
---------------------
DATED ______________, ______
<TABLE>
<CAPTION>
Maturity
of Principal
Principal Interest Applicable Amount Unpaid
Date Amount of Loan Type Period Rate Paid Balance
- ---- -------------- ---- -------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT "B-1"
FORM OF OPINION OF BORROWER'S COUNSEL
(to be provided)
<PAGE>
EXHIBIT "B-2"
FORM OF OPINION OF VINSON & ELKINS
(to be provided)
<PAGE>
EXHIBIT "C"
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain Credit
Agreement dated as of May 27, 1998 (as amended, modified, renewed or extended
from time to time, the "Agreement") among the Borrower, the Lenders party
thereto, The First National Bank of Chicago, as Administrative Agent, The Chase
Manhattan Bank, as Syndication Agent and NationsBank, N.A., as Documentation
Agent. Unless otherwise defined herein, capitalized terms used in this
Compliance Certificate have the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am an Authorized Officer;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Borrower during the accounting period covered by the
attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and computations
evidencing the Borrower's compliance with Section 6.2.4 of the Agreement, all of
which data and computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
-------------------------------------------
-------------------------------------------
-------------------------------------------
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this ____ day of ______________,
19___.
------------------------------------
<PAGE>
[SAMPLE]
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of with
Provisions of ______ and ________ of
the Agreement
<PAGE>
EXHIBIT "C-1"
(to Credit Agreement)
ISSUANCE REQUEST
To: The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Attn: Petroleum and Mining Division
WITH
COPY
TO: The First National Bank of Chicago
1100 Louisiana, Suite 4610
Houston, Texas 77002
Attn: Ms. Helen Carr
Ladies and Gentlemen:
The undersigned is an Authorized Officer of NGC Corporation, a Delaware
corporation, and is authorized to make and deliver this certificate pursuant to
that certain Credit Agreement dated as of May 27, 1998 among NGC Corporation, a
Delaware corporation, the Lenders party thereto, The First National Bank of
Chicago, as Administrative Agent, The Chase Manhattan Bank, as Syndication Agent
and NationsBank, N.A., as Documentation Agent, (said Credit Agreement, as it may
be amended, supplemented or otherwise modified from time to time, is hereinafter
referred to as the "Agreement"). Terms having their initial letters capitalized
and not otherwise defined herein shall have the meanings assigned to them in the
Agreement.
Pursuant to the terms and provisions of the Agreement, the undersigned
Borrower hereby certifies that all conditions to such issuance have been met.
The undersigned Borrower hereby requests the issuance of a Letter of Credit
in accordance with the Agreement in substantially the form attached and
containing the following terms:
Credit Issuance Request Information
1. Beneficiary:
Attn:
2. Amount $ or $Cn. or (Pounds)
<PAGE>
3. Requested Date of Issuance: , 19__
4. Requested Date of Expiry: , 19__
5. Type of Letter of Credit:___ Documentary ___ Standby.
EXECUTED THIS ____ DAY OF _______________, 19__.
---------------------------------
By:
------------------------------
Title:
2
<PAGE>
EXHIBIT "C-2"
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Attention: Petroleum and Mining Division
Telecopier: (312) 732-7235
cc: The First National Bank of Chicago
1100 Louisiana, Suite 3200
Houston, Texas 77002
Attention: Helen A. Carr
Telecopier: (713) 654-7370
Date:
Notice of Commitment Increase
Reference is made to the Credit Agreement, dated as of May 27, 1998, among
NGC Corporation, a Delaware corporation, as Borrower (the "Borrower"), the
Lenders (parties thereto), The First National Bank of Chicago, as Administrative
Agent, The Chase Manhattan Bank, as Syndication Agent and NationsBank, N.A., as
Documentation Agent (as amended, modified and supplemented to the date hereof,
the "Agreement"). Capitalized terms used herein but not otherwise defined have
the meanings assigned to them in the Agreement. The undersigned hereby gives
notice pursuant to Section 2.23 of the Agreement of its intent to increase the
Aggregate Commitment by the amount of $______________, effective
_______________________ (the "Commitment Increase Effective Date"). The
existing Lenders agreeing to increase their commitments and the assignees
agreeing to become New Lenders to effect such requested increase are identified
below.
From and after the Commitment Increase Effective Date, the respective
Commitments of the existing Lenders agreeing to increase their commitments and
the New Lenders will be as set forth below:
Existing Lenders: Commitment
$
- ----------------- ----------
$
- ----------------- ----------
$
- ----------------- ----------
$
- ----------------- ----------
Existing Lenders: Commitment
$
- ----------------- ----------
<PAGE>
$
- ----------------- ----------
New Lenders: Commitment
- ----------------- ----------
$
- ----------------- ----------
$
- ----------------- ----------
$
- ----------------- ----------
$
- ----------------- ----------
$
- ----------------- ----------
$
- ----------------- ----------
The undersigned Authorized Officer represents and warrants that (a)
the increase requested hereby complies with the requirements of Section 2.23 of
the Agreement and (b) except [as set forth on Annex A hereto, and]/1/ to the
extent the undersigned gives notice to the Administrative Agent to the contrary
prior to 5:00 p.m., (Chicago time) on the Business Day before the Commitment
Increase Effective Date, no Default or Unmatured Default exists as of the date
hereof and no Default will exist on the Commitment Increase Effective Date.
---------------------------------
By:
------------------------------
Name:
Title:
/1/ If the representation and warranty in clause (b) would be incorrect, include
the material in the brackets and set forth the reasons such representation
and warranty would be incorrect on an attachment labeled Annex A.
2
<PAGE>
EXHIBIT "D"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
__________________________ (the "Assignor") and __________________ (the
"Assignee") is dated as of _________________, 19__. The parties hereto agree as
follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit
Agreement (which, as it may be amended, modified, renewed or extended from time
to time is herein called the "Agreement") described in Item 1 of Schedule 1
attached hereto ("Schedule 1"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings attributed to them in the Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns
to the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, an interest in and to the Assignor's rights and obligations under the
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and obligations
under the Agreement relating to the facilities listed in Item 3 of Schedule 1
and the other Loan Documents. The aggregate Commitment (or Loans, if the
applicable Commitment has been terminated) purchased by the Assignee hereunder
is set forth in Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement
(the "Effective Date") shall be the later of the date specified in Item 5 of
Schedule 1 or two Business Days (or such shorter period agreed to by the
Administrative Agent) after a Notice of Assignment substantially in the form of
Exhibit "I" attached hereto has been delivered to the Administrative Agent.
Such Notice of Assignment must include any consents required to be delivered to
the Administrative Agent by Section 12.3.1 of the Agreement. In no event will
the Effective Date occur if the payments required to be made by the Assignee to
the Assignor on the Effective Date under Sections 4 and 5 hereof are not made on
the proposed Effective Date. The Assignor will notify the Assignee of the
proposed Effective Date no later than the Business Day prior to the proposed
Effective Date. As of the Effective Date, (i) the Assignee shall have the
rights and obligations of a Lender under the Loan Documents with respect to the
rights and obligations assigned to the Assignee hereunder and (ii) the Assignor
shall relinquish its rights and be released from its corresponding obligations
under the Loan Documents (other than its obligations pursuant to Section 10.3 of
the Agreement with respect to acts and circumstances occurring prior to the
Effective Date) with respect to the rights and obligations assigned to the
Assignee hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the
Assignee shall be entitled to receive from the Administrative Agent all payments
of principal, interest and fees with respect to the interest assigned hereby.
The Assignee shall advance funds directly to the Administrative Agent with
respect to all Loans and reimbursement payments made on or after the Effective
Date with respect to the interest assigned hereby. [In consideration for the
sale and assignment of Loans hereunder, (i) the Assignee shall pay the Assignor,
on the Effective Date, an amount equal to the principal amount of the portion of
all Alternate Base Rate Loans assigned to the
<PAGE>
Assignee hereunder and (ii) with respect to each Eurodollar Committed Loan,
Eurodollar Bid Rate Loan and Absolute Rate Loan made by the Assignor and
assigned to the Assignee hereunder which is outstanding on the Effective Date,
on the earliest of (a) the last day of the Interest Period therefor or (b) such
earlier date agreed to by the Assignor and the Assignee or (c) the date on which
any such Eurodollar Committed Loan, Eurodollar Bid Rate Loan or Absolute Rate
Loan either becomes due (by acceleration or otherwise) or is prepaid (the date
as described in the foregoing clauses (a), (b) or (c) being hereinafter referred
to as the "Payment Date"), the Assignee shall pay the Assignor an amount equal
to the principal amount of the portion of such Eurodollar Committed Loan,
Eurodollar Bid Rate Loan or Absolute Rate Loan assigned to the Assignee which is
outstanding on the Payment Date. If the Assignor and the Assignee agree that the
Payment Date for such Eurodollar Committed Loan, Eurodollar Bid Rate Loan or
Absolute Rate Loan shall be the Effective Date, they shall agree to the interest
rate applicable to the portion of such Loan assigned hereunder for the period
from the Effective Date to the end of the existing Interest Period applicable to
such Eurodollar Committed Loan, Eurodollar Bid Rate Loan or Absolute Rate Loan
(the "Agreed Interest Rate") and any interest received by the Assignee in excess
of the Agreed Interest Rate shall be remitted to the Assignor. In the event
interest for the period from the Effective Date to but not including the Payment
Date is not paid by the Borrower with respect to any Eurodollar Committed Loan,
Eurodollar Bid Rate Loan or Absolute Rate Loan sold by the Assignor to the
Assignee hereunder, the Assignee shall pay to the Assignor interest for such
period on the portion of such Eurodollar Committed Loan, Eurodollar Bid Rate
Loan or Absolute Rate Loan sold by the Assignor to the Assignee hereunder at the
applicable rate provided by the Agreement. In the event a prepayment of any
Eurodollar Committed Loan, Eurodollar Bid Rate Loan or Absolute Rate Loan, which
is existing on the Payment Date and assigned by the Assignor to the Assignee
hereunder occurs after the Payment Date but before the end of the Interest
Period applicable to such Eurodollar Committed Loan, Eurodollar Bid Rate Loan or
Absolute Rate Loan, the Assignee shall remit to the Assignor the excess of the
loss or cost paid by the Borrower pursuant to Section 3.4 of the Agreement with
respect to the portion of such Eurodollar Committed Loan, Eurodollar Bid Rate
Loan or Absolute Rate Loan assigned to the Assignee hereunder over the amount
which would have been paid if such loss or cost was calculated based on the
Agreed Interest Rate. The Assignee will also promptly remit to the Assignor (i)
any principal payments received from the Administrative Agent with respect to
Eurodollar Committed Loans, Eurodollar Bid Rate Loans or Absolute Rate Loans
prior to the Payment Date and (ii) any amounts of interest on Loans and fees
received from the Administrative Agent which relate to the portion of the Loans
assigned to the Assignee hereunder for periods prior to the Effective Date, in
the case of Alternate Base Rate Loans or fees, or the Payment Date, in the case
of Eurodollar Committed Loans, Eurodollar Bid Rate Loans or Absolute Rate Loans,
and not previously paid by the Assignee to the Assignor.]* In the event that
either party hereto receives any payment to which the other party hereto is
entitled under this Assignment Agreement, then the party receiving such amount
shall promptly remit it to the other party hereto.
*Each Assignor may insert its standard payment provisions in lieu of the payment
terms included in this Exhibit.
5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the
Assignor a fee on each day on which a payment of interest or facility fees is
made under the Agreement with respect to the amounts assigned to the Assignee
hereunder (other than a payment of interest or commitment fees for the period
prior to the Effective Date or, in the case of Eurodollar Committed Loans,
Eurodollar Bid Rate Loans and Absolute Rate Loans, the Payment Date, which the
Assignee is
2
<PAGE>
obligated to deliver to the Assignor pursuant to Section 4 hereof). The amount
of such fee shall be the difference between (i) the interest or fee, as
applicable, paid with respect to the amounts assigned to the Assignee hereunder
and (ii) the interest or fee, as applicable, which would have been paid with
respect to the amounts assigned to the Assignee hereunder if each interest rate
was ___ of 1% less than the interest rate paid by the Borrower or if the
facility fee was ___ of 1% less than the facility fee paid by the Borrower, as
applicable. In addition, the Assignee agrees to pay ___% of the recordation fee
required to be paid to the Administrative Agent in connection with this
Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. It is
understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor
nor any of its officers, directors, employees, agents or attorneys shall be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectibility of any Loan Document, including
without limitation, documents granting the Assignor and the other Lenders a
security interest in assets of the Borrower or any guarantor, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of the
Borrower or any guarantor, (iv) the performance of or compliance with any of the
terms or provisions of any of the Loan Documents, (v) inspecting any of the
Property, books or records of the Borrower, (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral securing
or purporting to secure the Loans or (vii) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that
it has received a copy of the Agreement, together with copies of the financial
statements requested by the Assignee and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment Agreement, (ii) agrees that it will, independently and
without reliance upon the Administrative Agent, the Assignor or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, (iii) appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and authorizes the Administrative
Agent and each Issuer to exercise such powers under the Loan Documents as are
delegated to the Administrative Agent or such Issuer by the terms thereof,
together with such powers as are reasonably incidental thereto, (iv) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Loan Documents are required to be performed by it as a Lender,
(v) agrees that its payment instructions and notice instructions are as set
forth in the attachment to Schedule 1, (vi) confirms that none of the funds,
monies, assets or other consideration being used to make the purchase and
assumption hereunder are "plan assets" as defined under ERISA and that its
rights, benefits and interests in and under the Loan Documents will not be "plan
assets" under ERISA, [and (vii) attaches the forms prescribed by the Internal
Revenue Service of the United States certifying that the Assignee is entitled to
receive payments under the Loan Documents without deduction or withholding of
any United States federal income taxes].**
**to be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.
3
<PAGE>
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor
in connection with or arising in any manner from the Assignee's non-performance
of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee
shall have the right pursuant to Section 12.3.1 of the Agreement to assign the
rights which are assigned to the Assignee hereunder to any entity or person,
provided that (i) any such subsequent assignment does not violate any of the
terms and conditions of the Loan Documents or any law, rule, regulation, order,
writ, judgment, injunction or decree and that any consent required under the
terms of the Loan Documents has been obtained and (ii) unless the prior written
consent of the Assignor is obtained, the Assignee is not thereby released from
its obligations to the Assignor hereunder, if any remain unsatisfied, including,
without limitation, its obligations under [Sections 4, 5 and 8] hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
Aggregate Commitment occurs between the date of this Assignment Agreement and
the Effective Date, the percentage interest specified in Item 3 of Schedule 1
shall remain the same, but the dollar amount purchased shall be recalculated
based on the reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings between the
parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by
the internal law, and not the law of conflicts, of the State of Illinois.
13. NOTICES. Notices shall be given under this Assignment Agreement
in the manner set forth in the Agreement. For the purpose hereof, the addresses
of the parties hereto (until notice of a change is delivered) shall be the
address set forth in the attachment to Schedule 1.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By:
----------------------------------
Title:
[NAME OF ASSIGNEE]
By:
----------------------------------
Title:
5
<PAGE>
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Agreement:
2. Date of Assignment Agreement: ___________________, 19__
3. Amounts (As of Date of Item 2 above):
<TABLE>
<CAPTION>
Facility Facility Facility Facility
1* 2* *3 *4
-------- -------- -------- --------
<S> <C> <C> <C> <C>
a. Total of Commitments
(Loans)** under
Agreement $ $ $ $
b. Assignee's Percentage
of each Facility purchased
under the Assignment
Agreement*** % % % %
c. Amount of Assigned Share in
each Facility purchased under
the Assignment
Agreement $ $ $ $
4. Assignee's Aggregate (Loan
Amount)** Commitment Amount
Purchased Hereunder: $
5. Proposed Effective Date:
</TABLE>
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
Title: Title:
* Insert specific facility names per Agreement
** If a Commitment has been terminated, insert outstanding Loans in place of
Commitment
*** Percentage taken to 10 decimal places
<PAGE>
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
<PAGE>
EXHIBIT "E"
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To The First National Bank of Chicago,
as Administrative Agent (the "Administrative Agent") under the Credit Agreement
Described Below.
Re: Credit Agreement, dated May 27, 1998 (as the same may be amended or
modified, the "Agreement"), among NGC Corporation (the "Borrower"), the
Administrative Agent, the Syndication Agent, the Documentation Agent and the
Lenders named therein. Terms used herein and not otherwise defined shall
have the meanings assigned thereto in the Agreement.
The Administrative Agent is specifically authorized and directed to act
upon the following standing money transfer instructions with respect to the
proceeds of Advances or other extensions of credit from time to time until
receipt by the Administrative Agent of a specific written revocation of such
instructions by the Borrower, provided, however, that the Administrative Agent
may otherwise transfer funds as hereafter directed in writing by the Borrower in
accordance with Section 13.1 of the Agreement or based on any telephonic notice
made in accordance with Section 2.15 of the Agreement.
Facility Identification Number(s)
-------------------------------------------
Customer/Account Name
-------------------------------------------------------
Transfer Funds To
-----------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
For Account No.
-------------------------------------------------------------
Reference/Attention To
------------------------------------------------------
Authorized Officer Date
---------------------
- ------------------------------ -------------------------------
(Please Print) Signature
Bank Officer Name Date
---------------------
- ------------------------------ -------------------------------
(Please Print) Signature
<PAGE>
EXHIBIT "F"
COMPETITIVE BID QUOTE REQUEST
(Section 2.3.2)
_______________, 19____
To: The First National Bank of Chicago,
as administrative agent (the "Administrative Agent")
From: NGC Corporation (the "Borrower")
Re: Credit Agreement (the "Agreement") dated as of May 27, 1998 among the
Borrower, The First National Bank of Chicago, individually and as
Administrative Agent, The Chase Manhattan Bank, as Syndication Agent and
NationsBank, N.A., as Documentation Agent and the Lenders listed on the
signature pages thereof
We hereby give notice pursuant to Section 2.3.2 of the Agreement that we
request Competitive Bid Quotes for the following proposed Competitive Bid
Advance(s):
Borrowing Date: _________________, 19___
Principal Amount/1/ Interest Period/2/
- ------------------- ------------------
$
Such Competitive Bid Quotes should offer [a Competitive Bid Margin] [an
Absolute Rate].
Such Competitive Bid Advances are [not] to be subject to prepayment.
Upon acceptance by the undersigned of any or all of the Competitive Bid
Advances offered by Lenders in response to this request, the undersigned shall
be deemed to affirm as of the Borrowing Date thereof the representations and
warranties made in the Agreement to the extent specified in Article IV thereof.
Capitalized terms used herein have the meanings assigned to them in the
Agreement.
----------------------------------
By:
-------------------------------
Title:
- ---------------
/1/ Amount must be at least $5,000,000 and an integral multiple of
$1,000,000.
/2/ One, two, three, six, nine or twelve months (Eurodollar Auction) or at least
7 and up to 270 days (Absolute Rate Auction), subject to the provisions of
the definitions of Eurodollar Interest Period and Absolute Rate Interest
Period.
<PAGE>
EXHIBIT "G"
INVITATION FOR COMPETITIVE BID QUOTES
(Section 2.3.3)
_____________________, 19___
To: [Name of Lender]
Re: Invitation for Competitive Bid Quotes to
NGC Corporation (the "Borrower")
Pursuant to Section 2.3.3 of the Credit Agreement dated as of May 27,
1998 (the "Agreement") among the Borrower, the Lenders parties thereto, The
Chase Manhattan Bank and NationsBank, N.A., as Co-Agents, the undersigned, as
Administrative Agent, we are pleased on behalf of the Borrower to invite you to
submit Competitive Bid Quotes to the Borrower for the following proposed
Competitive Bid Advance(s):
Borrowing Date: ______________, 19___
Principal Amount Interest Period
$
Such Competitive Bid Quotes should offer [a Competitive Bid Margin]
[an Absolute Rate]. Such Competitive Bid Advances are [not] to be subject to
prepayment. Your Competitive Bid Quote must comply with Section 2.3.4 of the
Agreement and the foregoing. Capitalized terms used herein have the meanings
assigned to them in the Agreement.
Please respond to this invitation by no later than [9:00 a.m.]
[1:00 p.m,.] Chicago time on _________, 19____.
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent
By:
----------------------------------
Authorized Officer
<PAGE>
EXHIBIT "H"
COMPETITIVE BID QUOTE
(Section 2.3.4)
__________________, 19___
To: The First National Bank of Chicago, as Administrative Agent
Attn: ___________________
Re: Competitive Bid Quote to NGC Corporation (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_________, 199_, we hereby make the following Competitive Bid Quote pursuant to
Section 2.3.4 of the Credit Agreement hereinafter referred to and on the
following terms:
1. Quoting Lender:______________________
2. Person to contact at Quoting Lender:________________
3. Borrowing Date:_______________, 19__/1/
4. We hereby offer to make Competitive Bid Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest [Competitive [Absolute Minimum
Amount/2/ Period/3/ Bid Margin/4/] Rate/5/] Amount/6/
- ------------ --------- -------------- --------- ---------
$
- --------------
/1/ As specified in the related Invitation For Competitive Bid Quotes.
/2/ Principal amount bid for each Interest Period may not exceed the principal
amount requested. Bids must be made for at least $5,000,000 and an
integral multiple of $1,000,000.
/3/ One, two, three, six, nine or twelve months or at least 7 and up to 270
days, as specified in the related Invitation For Competitive Bid Quotes.
/4/ Competitive Bid Margin over or under the Eurodollar Base Rate determined
for the applicable Interest Period. Specify percentage (rounded to the
nearest 1/100 of 1%) and specify whether "PLUS" or "MINUS".
/5/ Specify rate of interest per annum (rounded to the nearest 1/100 of 1%).
/6/ Specify minimum or maximum amount, if any, which the Borrower may accept
and/or the limit, if any, as to the aggregate principal amount of the
Competitive Bid Loans of the quoting Lender which the Borrower may accept
(see Section 2.3.4(ii)(d)).
<PAGE>
We understand and agree that the offer(s) set forth above, subject to the
satisfaction of the applicable conditions set forth in the Credit Agreement
dated as of May 27, 1998, among the Borrower, the Lenders listed on the
signature pages thereof, The Chase Manhattan Bank, as Syndication Agent and
NationsBank, N.A., as Documentation Agent and yourselves, as Administrative
Agent (the "Agreement"), irrevocably obligates us to make the Competitive Bid
Loan(s) for which any offer(s) are accepted, in whole or in part. Capitalized
terms used herein and not otherwise defined herein shall have their meanings as
defined in the Agreement.
Very truly yours,
[NAME OF BANK]
Dated: _________________, 19___ By:
--------------------------------
Authorized Officer
2
<PAGE>
EXHIBIT "I"
FORM OF OPINION OF MAYER, BROWN & PLATT
(to be provided)
<PAGE>
EXHIBIT 4.2
================================================================================
364-DAY REVOLVING CREDIT AGREEMENT
Dated as of May 27, 1998
AMONG
NGC CORPORATION
and
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Administrative Agent
THE CHASE MANHATTAN BANK
Individually and as Syndication Agent
and
CITIBANK, N.A.,
Individually and as Documentation Agent
and
THE LENDERS NAMED HEREIN
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I DEFINITIONS 1
1.1 Defined Terms 1
1.2 Accounting Terms and Other Determinations 19
1.3 Currency References 19
ARTICLE II THE FACILITY 19
2.1 The Facilities 19
2.1.1 Description of the Revolving Facility 19
2.1.2 Availability of Revolving Facility 20
2.1.3 Committed Advances 20
2.2 Letters of Credit 20
2.2.1 Issuance of Letters of Credit 20
2.2.2 Aggregate Amount Available under Letters of Credit 20
2.2.3 Reimbursement of Issuer; Automatic Advances 21
2.2.4 Lender Participation 22
2.2.5 Letter of Credit Fees 23
2.2.6 Issuer Fees 23
2.2.7 Verification 24
2.2.8 Irrevocable Obligations and Commercial Practices 24
2.2.9 Letter of Credit Collateral Account 25
2.2.10 Currency Fluctuation 26
2.3 Competitive Bid Advances 26
2.3.1 Competitive Bid Option 26
2.3.2 Competitive Bid Quote Request 26
2.3.3 Invitation for Competitive Bid Quotes 27
2.3.4 Submission and Contents of Competitive Bid Quotes 27
2.3.5 Notice to the Borrower 29
2.3.6 Acceptance and Notice by the Borrower 29
2.3.7 Allocation by the Administrative Agent 30
2.3.8 Administration Fees 30
2.4 Required Payments; Termination 30
2.5 Types of Committed Advances 30
2.6 Facility Fees 31
2.7 Cancellation of Aggregate Commitment. 31
2.8 Minimum Amount of Each Advance 31
2.9 Optional Principal Payments 31
2.10 Method of Selecting Types and Interest Periods for New Advances 31
2.11 Conversion and Continuation of Outstanding Advances 32
2.12 Changes in Interest Rate, etc. 33
2.13 Rates Applicable After Default 33
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
2.14 Method of Payment 33
2.15 Register; Notes; Notices 34
2.16 Interest Payment Dates; Interest and Fee Basis 34
2.17 Notification of Advances, Interest Rates, Prepayments and Commitment
Reductions 35
2.18 Lending Installations 35
2.19 Non-Receipt of Funds by the Administrative Agent 35
2.20 Withholding Tax Exemption 35
2.21 Maximum Interest Rate 36
2.22 Administrative Agent's Fees 36
2.23 Procedure for Terminating Certain Commitments. 36
2.24 Extension of Facility Termination Date 37
ARTICLE III CHANGE IN CIRCUMSTANCES 39
3.1 Yield Protection 39
3.2 Changes in Capital Adequacy Regulations 40
3.3 Availability of Types of Advances 41
3.4 Funding Indemnification 41
3.5 Lender Statements; Survival of Indemnity 41
3.6 Replacement of Lenders 42
3.7 Currency 43
ARTICLE IV CONDITIONS PRECEDENT 44
4.1 Conditions Precedent to Effectiveness 44
4.2 Each Advance 45
ARTICLE V REPRESENTATIONS AND WARRANTIES 45
5.1 Corporate or Partnership Existence and Standing 45
5.2 Authorization and Validity 46
5.3 No Conflict; Government Consent 46
5.4 Financial Statements 46
5.5 Material Adverse Change 46
5.6 Taxes 46
5.7 Litigation and Contingent Obligations 46
5.8 ERISA 47
5.9 Regulation U 47
5.10 Environmental Matters 47
5.11 Investment Company Act 48
5.12 Public Utility Holding Company Act 48
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE VI COVENANTS 48
6.1 Affirmative Covenants 48
6.1.1 Financial Reporting 48
6.1.2 Use of Proceeds 49
6.1.3 Maintain Legal Existence 49
6.1.4 Insurance 50
6.1.5 Compliance with Laws 50
6.1.6 Inspection 50
6.1.7 Compliance with ERISA 50
6.2 Negative Covenants 50
6.2.1 Merger 51
6.2.2 Sale of Assets 51
6.2.3 Liens 51
6.2.4 Leverage Ratio 51
ARTICLE VII DEFAULTS 51
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 53
8.1 Acceleration 53
8.2 Amendments 54
8.3 Preservation of Rights 55
ARTICLE IX GENERAL PROVISIONS 55
9.1 Survival of Representations; Obligations 55
9.2 Governmental Regulation 56
9.3 Taxes 56
9.4 Headings 56
9.5 Entire Agreement 56
9.6 Several Obligations; Benefits of this Agreement 56
9.7 Expenses; Indemnification of Administrative Agent, Issuers and
Lenders 56
9.8 Numbers of Documents 57
9.9 Severability of Provisions 57
9.10 Nonliability of Lenders 57
9.11 CHOICE OF LAW 57
9.12 CONSENT TO JURISDICTION 58
9.13 WAIVER OF JURY TRIAL 58
9.14 Confidential Information 58
ARCTICLE X THE ADMINISTRATIVE AGENT 59
10.1 Appointment and Authority of Administrative Agent and Issuers 59
10.2 Capacity of the Administrative Agent and each Issuer 60
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
10.3 No Liability of the Administrative Agent or Issuers and Indemnity 60
10.4 Employees of Administrative Agent and Issuers 61
10.5 Reliance 61
10.6 Several Commitments 62
10.7 Notice of Default 62
10.8 Lender Credit Decision 62
10.9 Successor Administrative Agent 62
ARTICLE XI SETOFF; RATABLE PAYMENTS 63
11.1 Setoff 63
11.2 Ratable Payments 63
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 64
12.1 Successors and Assigns 64
12.2 Participations 64
12.2.1 Permitted Participants; Effect 64
12.2.2 Voting Rights 64
12.2.3 Benefit of Setoff 65
12.3 Assignments 65
12.3.1 Permitted Assignments 65
12.3.2 Effect; Effective Date 65
12.4 Dissemination of Information 66
12.5 Tax Treatment 66
ARTICLE XIII NOTICES 66
13.1 Giving Notice 66
13.2 Change of Address 67
ARTICLE XIV COUNTERPARTS 67
</TABLE>
iv
<PAGE>
SCHEDULES
EXHIBIT "A-1" COMMITTED NOTE
EXHIBIT "A-2" 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 "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
SCHEDULE "1" OUTSTANDING LETTERS OF CREDIT
v
<PAGE>
364-DAY REVOLVING CREDIT AGREEMENT
This 364-Day Revolving Credit Agreement, dated as of May 27, 1998 is among
NGC Corporation, a Delaware corporation, as Borrower (the "Borrower"), the
Lenders (hereinafter defined), The First National Bank of Chicago, as
Administrative Agent, The Chase Manhattan Bank, as syndication agent (the
"Syndication Agent"), and Citibank, N.A., as documentation agent (the
"Documentation Agent"). The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms.
As used in this Agreement:
"Absolute Rate" means, with respect to a Competitive Bid Loan made by a given
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 Lender and accepted
by the Borrower pursuant to Section 2.3.6.
"Absolute Rate Advance" means a Competitive Bid Advance which bears interest
at an Absolute Rate.
"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 7 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 Competitive Bid Loan which bears interest at an
Absolute Rate.
"Accepting Lender" is defined in Section 2.24(a).
"Administrative Agent" means The First National Bank of Chicago in its
capacity as administrative agent for the Lenders pursuant to Article X, and not
in its individual capacity as a Lender, and any successor Administrative Agent
appointed pursuant to Article X.
<PAGE>
"Advance" means a Committed Advance or a Competitive Bid Advance.
"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.
"Agents" means, collectively, the Administrative Agent, the Syndication Agent
and the Documentation Agent.
"Agreed Currency" is defined in Section 3.7(i).
"Aggregate Commitment" means $400,000,000 as such amount may be reduced from
time to time pursuant to the terms hereof, including without limitation Section
2.7.
"Agreement" means this 364-Day Revolving Credit Agreement, as it may be
amended or modified and in effect from time to time.
"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.
"Alternate Base Rate Advance" means a Committed Advance that bears interest
at the Alternate Base Rate.
"Alternate Base Rate Loan" means a Committed Loan that bears interest at the
Alternate Base Rate.
"Alternative Currency" means Pounds Sterling or Canadian Dollars.
"Amended and Restated Credit Agreement" means that certain Amended and
Restated Credit Agreement dated as of June 27, 1997, among NGC Corporation, a
Delaware corporation, as Borrower, the Lenders (defined therein), 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, N.A.,
as Co-Agents.
"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:
2
<PAGE>
Applicable
Applicable Documentary
Rating Level Margin
------------ -----------
Level I 0.1500%
-----------------------------
Level II 0.1800%
-----------------------------
Level III 0.2000%
-----------------------------
Level IV 0.2500%
-----------------------------
Level V 0.3500%
-----------------------------
"Applicable Facility 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:
Applicable Rating Level Applicable Facility Fee
- ----------------------------------------------------
Level I 0.0700%
- ----------------------------------------------------
Level II 0.0800%
- ----------------------------------------------------
Level III 0.1000%
- ----------------------------------------------------
Level IV 0.1250%
- ----------------------------------------------------
Level V 0.1500%
- ----------------------------------------------------
"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 0.1800%
- ----------------------------
Level II 0.2200%
- ----------------------------
Level III 0.2500%
- ----------------------------
Level IV 0.3250%
- ----------------------------
Level V 0.5000%
- ----------------------------
3
<PAGE>
"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:
Moody's S&P
------- -----
Level I * A3 * A-
- --------------------------------------
Level II Baa1 BBB+
- --------------------------------------
Level III Baa2 BBB
- --------------------------------------
Level IV Baa3 BBB-
- --------------------------------------
Level V less than Baa3 less than BBB-
- --------------------------------------
* = equal to or greater than
For example, if the Moody's rating is Baa1 and the S&P rating is BBB, Level II
shall apply.
For purposes of the foregoing, (i) "(equal to or greater than)" means a
rating equal to or more favorable than; "(less than)" means a rating less
favorable than; (ii) if ratings for the Borrower's senior unsecured long-term
debt shall not be available from both S&P and Moody's, Level V 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 Applicable Rating Level in effect immediately prior to
such changed rating system shall apply.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the Chief Executive Officer, the
President, the Chief Financial Officer, any Senior Vice President, the
Controller, the Treasurer or any Assistant Treasurer of the Borrower.
"Borrower" means NGC Corporation, a Delaware corporation and its successors
and assigns.
"Borrower's Home Page" means the Borrower's home page on the World Wide Web
at www.ngccorp.com or such other address as the Borrower may provide pursuant to
Section 13.2.
4
<PAGE>
"Borrowing Date" means a date on which an Advance is made or a Letter of
Credit is issued hereunder.
"Borrowing Notice" means a Committed Borrowing Notice or a Competitive Bid
Borrowing Notice, or both, as the context may require.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Committed 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 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.
"Change" is defined in Section 3.2.
"Change of Control" means, at any time, any Person, other than any existing
owner of at least 20% of the outstanding shares of the stock of the Borrower as
of the Closing Date, owns, directly or indirectly, in the aggregate, more than
50% of the outstanding shares of the stock of the Borrower.
"Closing Date" means May 27, 1998.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"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 or to purchase Letter of Credit Liabilities not exceeding the
amount set forth opposite its name in Schedule 2 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 Loan or Letter of Credit Liabilities, as such amount may
be modified from time to time pursuant to the terms hereof.
5
<PAGE>
"Committed Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Committed Loans made by the relevant Lenders to the
Borrower on the same Borrowing Date, for the same Interest Period and of the
same Type.
"Committed Borrowing Notice" is defined in Section 2.10.
"Committed Loan" means a Eurodollar Committed Loan or an Alternate Base
Rate Loan.
"Committed Note" means a promissory note in substantially the form of
Exhibit "A-1" hereto, with appropriate insertions, duly executed and delivered
to the Administrative Agent by the Borrower for the account of a Lender and
payable to the order of such Lender in the amount of its Commitment, including
any amendment, modification, renewal or replacement of such promissory note.
"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
Lenders to the Borrower on the same Borrowing Date, for the same Interest Period
and of the same Type.
"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.
"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 Administrative Agent by the Borrower for the account of a Lender and
payable to the order of such 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 Lender to the
Administrative 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 Administrative Agent in accordance with Section 2.3.2.
"Compliance Certificate" is defined in Section 6.1.1(iii).
"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 GAAP as of
such date.
6
<PAGE>
"Consolidated EBITDA" means, for any period, the sum of (a) net income
(before income taxes) of the Borrower and its Subsidiaries determined for such
period on a consolidated basis; plus (b) interest expense, whether paid or
accrued, of the Borrower and its Subsidiaries determined for such period on a
consolidated basis, plus (c) depreciation, depletion, impairment, abandonment
and amortization expense of the Borrower and its Subsidiaries determined for
such period on a consolidated basis; provided, however, for purposes of this
definition, extraordinary gains and losses and other gains and losses on the
disposition of assets not in the ordinary course of business shall be excluded
from the calculation of Consolidated EBITDA.
"Consolidated Net Worth" means, at any date, the stockholders' equity of
the Borrower and its Subsidiaries (including the Subordinated Capital Income
Securities) determined on a consolidated basis in accordance with GAAP as of
such date.
"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 2.11.
"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.
"Credit Agreement" means that certain Credit Agreement dated as of even
date herewith, among NGC Corporation, a Delaware corporation, as Borrower, the
Lenders (defined therein), The First National Bank of Chicago, as Administrative
Agent, The Chase Manhattan Bank, as Syndication Agent and NationsBank, N.A., as
Documentation Agent.
"CUSA Assumed Debt" means the $155,373,000 aggregate principal amount of
Chevron U.S.A. Inc.'s obligations under the demand promissory note dated August
25, 1994 payable by Chevron U.S.A. Inc. to Chevron Capital U.S.A. Inc., the
payment of which was assumed by the Borrower.
"Declining Lenders" is defined in Section 2.24(b).
"Debt" means, with respect to any Person, (a) all indebtedness and other
obligations of such Person for the repayment of money borrowed (including,
without limitation, reimbursement obligations with respect to drawn Letters of
Credit), 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, (d) all indebtedness and other
obligations, whether or not assumed by such Person, secured by any Lien (other
than Permitted Liens of the type described in clauses (a) through (n) and (p),
(q) and items (iii) and (iv) of clause (o) of the definition of "Permitted
Liens" and extensions, renewals,
7
<PAGE>
or replacements of any Permitted Lien referred to in this parenthetical,
provided that the principal amount of the Debt or obligation secured thereby is
no greater than the principal amount or, if greater, the maximum commitment of
such Debt or obligation at the time such Lien became a Permitted Lien and that
any such extension, renewal or replacement Lien is limited to the Property
originally encumbered thereby) on any Property of such Person and (e) all
guaranties of payment or collection of any Debt of any other Person described in
clauses (a) through (d) above; 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, or (ii) include any Project Financing;
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 GAAP; provided further that
the Subordinated Capital Income Securities and completion guaranties (or similar
guaranties that a project perform as planned) shall not constitute Debt.
"Default" means an event described in Article VII.
"Documentary Letter of Credit" means a Letter of Credit which is a short
term, self-liquidating trade-related contingency.
"Documentation Agent" is defined in the preamble.
"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 Administrative 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.
"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.
"EDGAR" means the SEC's Electronic Data Gathering, Analysis and Retrieval
system or any successor system.
8
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"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 Committed Loan or Eurodollar Bid Rate 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
Administrative 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 2.21. 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 Committed Loan or Eurodollar Bid Rate Loan, the lesser of (A) the
rate per annum determined by the Administrative 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 Committed Loan or Eurodollar Bid Rate
Loan of such respective Reference Bank to which such Eurodollar Interest Period
relates or (B) the maximum interest rate permitted pursuant to Section 2.21. If
any Reference Bank does not furnish a timely quotation, the Administrative 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 Competitive Bid Loan made by
a given Lender for the relevant Eurodollar Interest Period, the sum of (i) the
Eurodollar Base Rate and (ii) the Competitive Bid Margin offered by such Lender
and accepted by the Borrower pursuant to Section 2.3.6.
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Competitive Bid Loan which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Committed Advance" means a Committed Advance which bears
interest at a Eurodollar Rate.
"Eurodollar Committed Loan" means a Committed Loan which bears interest at
a Eurodollar Rate.
9
<PAGE>
"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 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.
"Facility Termination Date" means the earlier of (i) May 26, 1999 or such
other later date as may result from any extension requested by the Borrower and
consented to by the Accepting Lenders pursuant to Section 2.24 and (ii) the date
on which the Aggregate Commitment shall have been reduced to zero pursuant to
Section 2.7.
"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 Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.
"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.
"GAAP" means generally accepted accounting principles as in effect from
time to time.
"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
10
<PAGE>
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 Accepting Lenders" is defined in Section 2.24(b)(ii).
"Indemnified Party" is defined in Section 9.7.
"Interest Period" means a Eurodollar Interest Period or an Absolute Rate
Interest Period.
"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 Administrative Agent to the 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 Officer 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 Lender that
issues such Letter of Credit and shall be either First Chicago or 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 Administrative Agent and any such Lender with respect to each
Letter of Credit who the Issuer shall be for such Letter of Credit.
"Issuing Office" means, with respect to an Issuer, any office, branch,
subsidiary or affiliate of such Issuer.
"Judgment Currency" is defined in Section 3.7(ii).
"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.
"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 2.24, 3.6 or 12.3.
"Lending Installation" means, with respect to a Lender, any office, branch,
subsidiary or affiliate of such Lender.
11
<PAGE>
"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 1 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" is defined in Section 2.2.9.
"Letter of Credit Collateral Account Investments" is defined in Section
2.2.9.
"Letter of Credit Liabilities" means, at any time, 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 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 Alternate Base Rate Advances pursuant to Section 2.2.3.
"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, if any, each
Competitive Bid Quote Request, each Issuance Request, each Committed Borrowing
Notice, the agreement with respect to fees referred to in Section 2.22, together
in each case with all exhibits, schedules and attachments thereto, and any
agreements, documents, certificates and instruments from time to time executed
and delivered by the Borrower pursuant to or in connection with this Agreement.
"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.
"Material Agreement" means any contract or agreement binding on the
Borrower which is material to the consolidated financial condition or operations
of the Borrower and its Subsidiaries taken as a whole.
"Moody's" means Moody's Investors Service, Inc. and any successor thereto
that is a nationally-recognized rating agency.
12
<PAGE>
"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.
"Notes" means, collectively, the Competitive Bid Notes, and the Committed
Notes; and "Note" means any one of the Notes.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Loans, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Borrower to the Lenders or to any
Lender, the Administrative Agent or any Indemnified Party arising under any of
the Loan Documents.
"Other Currency" is defined in Section 3.7(i).
"Out of Funds Period" means the period from and including a Draw Date to
but excluding the date a Lender provides the Administrative Agent immediately
available and freely transferable funds equal to such Lender's Percentage of the
drawing under a Letter of Credit which took place on such Draw Date.
"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 Lender at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Lender's Commitment divided by the Aggregate Commitment.
"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, employees', 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,
13
<PAGE>
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 Administrative Agent 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 a 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, 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, (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, (n) utility easements, building
restrictions and such other encumbrances or charges against real property which
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; (o) (i) Liens created by Capitalized Leases 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, (ii) purchase money
Liens securing Debt (including such Liens securing Debt incurred within 12
months of the date on which such Property was acquired) provided that all such
14
<PAGE>
Liens attach only to the Property purchased with the proceeds of the Debt
secured thereby, (iii) Liens on receivables, notes, contracts or contract rights
created in connection with a sale, securitization or monetization of such
receivables, notes or contracts or contract rights, and Liens on rights of the
Borrower or any Subsidiary related to such receivables, notes, contracts or
contract rights which are transferred to the purchaser of such receivables,
notes or, contracts or contract rights in connection with such sale,
securitization or monetization; provided that such Liens secure only the
obligations of the Borrower or any of its Subsidiaries in connection with such
sale, securitization or monetization and (iv) 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; (p) Liens on cash and
short-term investments (i) deposited by the Borrower or any of its Subsidiaries
in margin accounts with or on behalf of futures contract brokers or other
counterparties or (ii) pledged by the Borrower or any of its Subsidiaries, in
the case of clause (i) or (ii) to secure its obligations with respect to
contracts (including without limitation, physical delivery, option (whether cash
or financial), exchange, swap and futures contracts) for the purchase or sale of
any energy-related commodity or interest rate or currency rate management
contracts, (q) Liens on (i) Property owned by a Project Financing Subsidiary or
(ii) 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, (r) 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, (s) extensions, renewals or replacements of any
Permitted Lien referred to in clauses (a) through (r) of this definition of
"Permitted Liens", provided that the principal amount of the Debt or obligation
secured thereby is no greater than the principal amount or, if greater, the
maximum commitment of such Debt or obligation at the time such Lien became a
Permitted Lien and that any such extension, renewal or replacement Lien is
limited to the Property originally encumbered thereby, and (t) other Liens
securing Debt and other obligations not to exceed the higher of (i) $25,000,000
in the aggregate at any time outstanding or (ii) 2% of Consolidated Net Worth.
"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.
"Pounds Sterling" and "(Pounds)" each mean lawful money of the United
Kingdom.
"Principal Subsidiary" means any Subsidiary, other than a Project Financing
Subsidiary, having (i) consolidated fixed assets plus net working capital with a
book value equal to or greater than 10% of the Borrower's consolidated fixed
assets plus net working capital in the aggregate as determined in a manner
consistent with the most recent financial statements delivered to Lenders
pursuant to Section 6.1.1 (or the statements referred to in Section 5.4 until
financial statements have
15
<PAGE>
been delivered pursuant to Section 6.1.1) or (ii) 15% or more of the Borrower's
Consolidated EBITDA for the calendar quarter immediately prior to the quarter in
which such determination is made.
"Project Financing" means 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 or group of
projects (including any construction financing), in each case to the extent that
such Debt or other obligations expressly are not 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" means (i) any Subsidiary of the Borrower or
(ii) any other Person in which the Borrower directly or indirectly 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.
"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.
"Rating Agency" means either of S&P or Moody's.
"Reference Banks" means each of the Administrative Agent, the Syndication
Agent and the Documentation Agent.
"Register" is defined in Section 2.15.
"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.
"Replacement Lenders" is defined in Section 2.24(b)(ii).
"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
16
<PAGE>
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, at any time, Lenders in the aggregate holding at
least 51% of the sum of the Aggregate Commitment or, if the entire Aggregate
Commitment has been terminated, Lenders in the aggregate holding at least 51% of
the aggregate unpaid principal amount of the sum of outstanding Advances and
Letter of Credit Liabilities.
"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.
"Revolving Facility" is defined in Section 2.1.1.
"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.
"SEC" means the Securities & Exchange Commission.
"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.
"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.
"Subordinated Capital Income Securities" means the capital securities
issued in an aggregate amount of $200,000,000 by NGC Corporation Capital Trust I
or other similar securities with similar accounting treatment which may be
issued from time to time by the Borrower or its Subsidiaries.
17
<PAGE>
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any
partnership, association, joint venture, limited liability company, trust or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a direct
or indirect Subsidiary of the Borrower.
"Syndication Agent" is defined in the preamble.
"Transferee" is defined in Section 12.4.
"Tribunal" means any state, commonwealth, federal, foreign, territorial, or
other court or governmental department, commission, board, bureau, agency, or
instrumentality or any properly convened arbitration.
"Type" means, with respect to any Committed Advance, its nature as an
Alternate Base Rate Advance or Eurodollar Committed Advance and with respect to
any Competitive Bid Advance, its nature as a Eurodollar Bid Rate Advance or
Absolute Rate Advance.
"UCC" means the Uniform Commercial Code in effect from time to time in the
State of Illinois.
"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested nonforfeitable benefits under all Single Employer Plans exceeds
the fair market value of all such Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans.
"Unmatured Default" means an event or condition which but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"U.S. Dollars" and "$" each mean lawful money of the United States.
"World Wide Web" means the subset (commonly referred to as the "World Wide
Web") of the worldwide network of computers (commonly known as the "Internet")
communicating via an agreed upon protocol which uses a combination of text,
graphics, audio and video (multimedia) to provide information.
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
18
<PAGE>
with GAAP. 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.
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 Revolving Facility. The Lenders grant to the
Borrower a revolving credit facility (the "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 Lender severally agrees to make Committed Loans in U.S.
Dollars to the Borrower in accordance with Section 2.1; provided, that in
no event may the sum of such Lender's Percentage of the outstanding
principal amount of Committed Advances, plus such Lender's Percentage of
the Letter of Credit Liabilities exceed such Lender's Commitment;
(ii) the Issuers severally agree to issue Letters of Credit and the
Lenders agree with the Issuers to acquire participations in the Letters of
Credit in accordance with Section 2.2;
(iii) each 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 Committed Advances plus all Competitive Bid Advances plus the
Letter of Credit Liabilities exceed the Aggregate Commitment.
2.1.2 Availability of Revolving Facility. Subject to the terms of this
Agreement, the Revolving Facility is available to the Borrower from the date of
this Agreement to the Facility Termination Date, and the Borrower may borrow,
repay and reborrow, or obtain Letters of Credit under the Revolving Facility at
any time prior to the Facility Termination Date.
19
<PAGE>
2.1.3 Committed Advances. Each Committed Advance hereunder shall
consist of borrowings made from the several Lenders ratably in proportion to
their respective Percentage. The Committed Loans made by each Lender shall be
evidenced by a Committed Note if requested in writing by such Lender.
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 Administrative
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 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
Administrative Agent and the applicable Issuer and all legal 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 Administrative 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 Administrative Agent; provided that the failure to
so notify the Administrative Agent or so provide a copy to the Administrative
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
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 Administrative 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 Administrative Agent shall give each
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 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 the Aggregate Commitment; and after
issuance of a Letter of Credit, the Letter of Credit Liabilities, plus the
aggregate principal amount of outstanding Committed Advances, plus all
Competitive Bid Advances shall not exceed the Aggregate Commitment.
2.2.3 Reimbursement of Issuer; Automatic Advances. The Borrower hereby
irrevocably agrees that it shall provide the Administrative Agent with
immediately available and freely
20
<PAGE>
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 Administrative 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 Administrative 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 Administrative 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 an Advance hereunder and does not otherwise provide the
Administrative 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 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 Administrative Agent requesting
that the Lenders make a Committed Advance which is an Alternate Base 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
Lenders shall make, and the Borrower shall accept, an Alternate Base Rate
Advance (consisting of Committed Loans made by the Lenders pro rata in
accordance with their respective 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 Alternate Base Rate
Advance cannot be made or accepted and the Borrower does not provide the
Administrative 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 an Alternate Base
Rate Advance had been made, with respect hereto. Such Alternate Base Rate
Advance shall be made as of the date of such settlement of such Letter of
Credit. The proceeds of such Alternate Base Rate Advance shall be paid by the
Lenders to the Administrative Agent for payment to the Issuer of such Letter of
Credit (and the Administrative Agent shall promptly pay such proceeds to such
Issuer) to reimburse the Issuer of such Letter of Credit for each 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 Lenders to the Administrative 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 Administrative 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 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.
21
<PAGE>
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 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 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. Accordingly, each 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 Lender's Percentage of the Dollar Equivalent of the amount
disbursed by such Issuer 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 Lender fails to make available to the Administrative Agent for payment to
such Issuer such Lender's Percentage of the Dollar Equivalent of such Draw
Amount on the date (the "Draw Date"), such Lender shall pay to the
Administrative Agent for the benefit of such Issuer on demand an amount, in
addition to such Lender's Percentage of the Dollar Equivalent of the Draw
Amount, equal to interest on such 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
Alternate Base Rate rather than the Federal Funds Effective Rate. The
obligations of 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
the Borrower 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 Administrative 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 the Borrower or any Affiliate of the Borrower 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 Administrative 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
the Borrower to perform its Obligations; (vii) the occurrence of any Default or
Unmatured Default; or (viii) the unavailability of Canadian Dollars or Pounds
Sterling.
22
<PAGE>
2.2.5 Letter of Credit Fees. The Borrower hereby agrees to pay to the
Administrative Agent for the pro rata benefit of the Lenders, as determined by
each 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 this 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
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
Administrative 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 Facility Termination Date. The Administrative Agent
shall promptly remit to each Lender its Percentage of each Letter of Credit
participation fee after its receipt by the Administrative 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 8 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 6 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 this 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
Administrative Agent the Letter of Credit fronting fee
23
<PAGE>
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 Facility Termination Date. The
Administrative 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 Administrative 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 Administrative Agent or any Issuer under any Letter of Credit, and neither
the Administrative 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 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 Administrative 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
Administrative 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 Administrative
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 Administrative Agent, any Lender or any Issuer be liable for punitive or
consequential damages.
2.2.8 Irrevocable Obligations and Commercial Practices. None of the
Administrative 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 Administrative 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 the
Borrower to the Administrative Agent or any Issuer; or (vii) the existence of
any claim, setoff, defense or other right which the Borrower 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 Administrative 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
24
<PAGE>
underlying transactions between the Borrower or any Affiliate of the Borrower
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 Administrative Agent's, any Issuer's or any
Lender's rights or powers under this Agreement or any other Loan Documents. The
Administrative 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
Administrative Agent, any Issuer or any Lender under or in connection with any
Letter of Credit or any drafts or documents referenced therein shall be binding
upon the Borrower, the Issuers and the Lenders and shall not place the
Administrative Agent, any Issuer or any Lender under any resulting liability to
the Borrower or any Lender. Notwithstanding the foregoing, to the extent that
the Borrower has reimbursed the Administrative 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 Administrative
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 Administrative Agent or such
Issuer, as the case may be, shall be liable to the Borrower for such action,
gross negligence or willful misconduct provided that in any event the maximum
liability of the Administrative 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 Administrative Agent, any Issuer or any Lender
be liable for punitive or consequential damages.
2.2.9 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 Lenders in respect of any
Letter of Credit, maintain a special collateral account (the "Letter of Credit
Collateral Account") with the Administrative Agent, in the name of the Borrower
but under the sole dominion and control of the Administrative Agent, for the
benefit of the Lenders and in which the Borrower shall have no interest other
than as set forth in Section 8.1. The Administrative 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 having a maturity not exceeding 30
days similar to the following: (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, (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) 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, (v) obligations issued by political
subdivisions or municipalities of
25
<PAGE>
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 and (vi)
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) (the "Letter of Credit Collateral Account Investments"). The
Administrative Agent shall have the authority to create additional accounts for
deposit of Canadian Dollars and Pounds Sterling in short term investments
similar to the Letter of Credit Collateral Account Investments. Nothing in this
Section 2.2.9 shall (i) obligate the Borrower to deposit any funds in the Letter
of Credit Collateral Account, (ii) obligate the Administrative Agent to require
the Borrower to deposit any funds in the Letter of Credit Collateral Account or
(iii) limit the right of the Administrative 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 Administrative Agent for the benefit of the
Lenders a security interest in the Letter of Credit Collateral Account and any
funds or investments in such account.
2.2.10 Currency Fluctuation. If as a result of fluctuations in currency
exchange rates, the aggregate of all outstanding Advances plus the Letter of
Credit Liabilities exceeds the amount of the Aggregate 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
Advances, shall within 5 Business Days prepay all outstanding Advances and
deliver to the Administrative 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
Committed Advances hereunder), the Borrower may, as set forth in this Section
2.3, request the Lenders, prior to the Facility Termination Date, to make offers
to make Competitive Bid Advances to the Borrower. Each 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 Loans made by each Lender shall be evidenced by a
Competitive Bid Note if requested in writing by such Lender.
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 Administrative 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;
26
<PAGE>
(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 Facility Termination Date); and
(e) whether the Competitive Bid Advance is to be prepayable.
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 Lenders,
such other number of days as the Borrower and the Administrative 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 Administrative 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
Administrative Agent shall send to each of the Lenders by telex or telecopy an
Invitation for Competitive Bid Quotes which shall constitute an invitation by
the Borrower to each 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
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 Administrative
Agent by telex or telecopy at its offices specified in or pursuant to Article
XIII not later than (a) (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 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 Lender on
the proposed Borrowing Date, in the case of an Absolute Rate Auction (or, in
either case upon reasonable prior notice to the Lenders, such other time and
date as the Borrower and the Administrative 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 Lenders). Subject to Articles IV and
VIII, any Competitive Bid Quote so made shall be irrevocable except with the
written consent of the Administrative Agent given on the instructions of the
Borrower.
27
<PAGE>
(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 Commitment of the quoting Lender, (2) must be at
least $5,000,000 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 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 Lender.
(iii) The Administrative 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 Administrative Agent shall notify the relevant Lender of
such rejection as soon as practical.
2.3.5 Notice to the Borrower. The Administrative Agent shall promptly
notify the Borrower of the terms (i) of any Competitive Bid Quote submitted by a
Lender that is in accordance
28
<PAGE>
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 Lender with respect to the same
Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote shall
be disregarded by the Administrative 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 Administrative 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 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 Administrative Agent referred to in Section 2.3.5, not later
than (i) 10:00 a.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 Administrative 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
Administrative 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 Letter of Credit Liabilities plus the aggregate principal amount of all
outstanding Committed Advances plus all Competitive Bid Advances shall not
exceed the Aggregate Commitment.
2.3.7 Allocation by the Administrative Agent. If offers are made by
two or more 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 Administrative Agent among such
Lenders as nearly as possible (in such multiples, not greater than $1,000,000,
as the Administrative Agent may
29
<PAGE>
deem appropriate) in proportion to the aggregate principal amount of such
offers; provided, however, that no Lender shall be allocated a portion of any
Competitive Bid Advance which is less than the minimum amount which such Lender
has indicated that it is willing to accept. Allocations by the Administrative
Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence
of manifest error. The Administrative 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) on the same Business Day in the case of Absolute Rate
Advances, notify each Lender of its receipt of a Competitive Bid Borrowing
Notice and the aggregate principal amount of such Competitive Bid Advance
allocated to each participating Lender.
2.3.8 Administration Fees. The Borrower hereby agrees to pay to the
Administrative 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. 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
Committed Advances plus the Competitive Bid Advances plus the Letter of Credit
Liabilities exceeds the Aggregate Commitment (the amount of such excess herein
the "Excess Exposure"), the Borrower shall make a mandatory prepayment of the
outstanding principal amount of the Committed Advances and the Competitive Bid
Advances up to the amount of such remaining Excess Exposure, and if any Excess
Exposure remains after payment of the Committed Advances and the Competitive Bid
Advances in full, the Borrower will deliver to the Administrative 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. Any outstanding 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 Facility
Termination Date.
2.5 Types of Committed Advances. The Committed Advances may be Alternate
Base Rate Advances, or Eurodollar Committed Advances, or a combination thereof,
selected by the Borrower in accordance with Sections 2.9 and 2.10.
2.6 Facility Fees. The Borrower hereby agrees to pay to the
Administrative Agent for the account of each Lender, ratably in proportion to
such Lender's Percentage, a facility fee equal to the Applicable Facility Fee
per annum on the average daily amount of the Aggregate Commitment, regardless of
usage. Such facility fee shall be payable quarterly in arrears on the third
Business Day after each Payment Date and on the Facility Termination Date.
30
<PAGE>
2.7 Cancellation of Aggregate Commitment. The Borrower may at any time
after the date hereof cancel the Aggregate Commitment, in whole, or in a minimum
aggregate amount of $15,000,000 (and in integral multiples of $5,000,000)
ratably among the Lenders upon at least two Business Days' prior written notice
to the Administrative Agent, which notice shall specify the amount of such
reduction; provided, however, no such notice of cancellation shall be effective
to the extent that it would reduce the Aggregate Commitment to an amount which
would be less than the outstanding principal amount of Committed Advances, plus
Competitive Bid Advances plus the Letter of Credit Liabilities at the time such
cancellation is to take effect. Any notice of cancellation given pursuant to
this Section 2.7 shall be irrevocable and permanent and shall specify the date
upon which such cancellation is to take effect. The Administrative Agent shall
promptly notify each Lender of its receipt of notice from the Borrower electing
to cancel all or a portion of the Aggregate Commitment. Each partial
cancellation of the Aggregate Commitment shall cancel each Commitment ratably in
proportion to the ratio that such Lender's Commitment bears to the Aggregate
Commitment.
2.8 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 Alternate Base 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 Alternate Base Rate Advance may be in the amount of
the unused Aggregate Commitment.
2.9 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 Committed
Advance or Eurodollar Bid Rate 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' prior notice (or in the case of
outstanding Advances bearing interest at an Alternate Base Rate, upon notice by
11:00 a.m. (Chicago time) on the same Business Day) to the Administrative 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 Lender.
2.10 Method of Selecting Types and Interest Periods for New Advances.
The Borrower shall select the Type of Advance and, in the case of each
Eurodollar Committed Advance, the Interest Period applicable to each Advance
from time to time. The Borrower shall give the Administrative Agent irrevocable
notice (a "Committed Borrowing Notice") not later than 11:00 a.m. (Chicago time)
on the Borrowing Date of each Alternate Base Rate Advance and three Business
Days before the Borrowing Date for each Eurodollar Committed Advance,
specifying:
(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
31
<PAGE>
(iv) in the case of each Eurodollar Committed Advance, the Interest
Period applicable thereto.
Not later than 2:00 p.m. (Chicago time) on each Borrowing Date, each Lender
shall make available its Loan or Loans, in funds immediately available in
Chicago to the Administrative Agent at its address specified pursuant to Article
XIII. The Administrative Agent will make the funds so received from the
applicable Lenders available to the Borrower at the Administrative Agent's
aforesaid address.
2.11 Conversion and Continuation of Outstanding Advances. Alternate
Base Rate Advances shall continue as Alternate Base Rate Advances unless and
until converted into Eurodollar Committed 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 an Alternate Base Rate
Advance unless the Borrower shall have given the Administrative 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
an Alternate Base Rate Advance. Subject to the terms of Section 2.8, the
Borrower may elect from time to time to convert all or any part of an Advance of
a given Type into another Type of 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 Administrative
Agent irrevocable notice (a "Conversion/Continuation Notice") of each conversion
of an Advance or continuation of a Eurodollar Committed Advance not later than
11:00 a.m. (Chicago time) on the date of the requested conversion, in the case
of a conversion into an Alternate Base Rate Advance, or not later than 11:00
a.m. (Chicago time) three Business Days prior to the date of the requested
conversion or continuation, in the case of a conversion into or continuation of
a Eurodollar Committed Advance or Eurodollar Bid Rate Advance, in each case
specifying:
(i) the requested date which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of the Advance which is to be
converted or continued; and
(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.
2.12 Changes in Interest Rate, etc. Each Alternate Base 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 an Alternate Base Rate Advance pursuant to
Section 2.11 to but excluding the date it becomes due or is converted into a
Eurodollar Committed Advance pursuant to Section 2.11 hereof, at a rate per
annum equal to the Alternate Base Rate for such day. Changes in the rate of
interest on that portion of any Advance maintained as an
32
<PAGE>
Alternate Base Rate Advance will take effect simultaneously with each change in
the Alternate Base Rate. Each Eurodollar Committed Advance, Eurodollar Bid Rate
Advance and Absolute 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 Eurodollar Committed Advance, Eurodollar Bid Rate Advance or Absolute
Rate Advance, as the case may be. No Interest Period of any Advance may end
after the 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.
2.13 Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.10 or 2.11, 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 Eurodollar Committed Advance,
Eurodollar Bid Rate Advance or Absolute Rate Advance, as the case may be. 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 Eurodollar Committed Advance,
Eurodollar Bid Rate Advance and Absolute 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 Alternate Base Rate
Advance shall bear interest at a rate per annum equal to the Alternate Base Rate
otherwise applicable to the Alternate Base Rate Advance plus 2% per annum.
2.14 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 Administrative Agent at
the Administrative Agent's address specified pursuant to Article XIII, or at any
other Lending Installation of the Administrative Agent specified in writing by
the Administrative Agent to the Borrower, by noon (Chicago time) on the date
when due and shall be applied ratably by the Administrative Agent among the
Lenders. Each payment delivered to the Administrative Agent for the account of
any Lender shall be delivered promptly by the Administrative Agent to such
Lender in the same type of funds that the Administrative Agent received at its
address specified pursuant to Article XIII or at any Lending Installation
specified in a notice received by the Administrative Agent from such Lender.
2.15 Register; Notes; Notices. The Administrative Agent shall
maintain a register for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of, the Loans owing to each
Lender pursuant to the terms hereof, from time to time (the "Register"). The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable
33
<PAGE>
time and from time to time upon reasonable prior notice. Each Lender that
requests and receives Notes 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
Administrative 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 Administrative Agent or any Lender in
good faith believes to be acting on behalf of the Borrower. The Borrower agrees
to deliver promptly to the Administrative Agent a written confirmation, if such
confirmation is requested by the Administrative 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
Administrative Agent and the Lenders, the records of the Administrative Agent
and the Lenders shall govern absent manifest error.
2.16 Interest Payment Dates; Interest and Fee Basis. Interest accrued
on each Alternate Base 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 Alternate Base 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 Alternate Base 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 Eurodollar Committed
Advance, Eurodollar Bid Rate Advance and Absolute Rate Advance shall be payable
on the last day of its applicable Interest Period, on any date on which the
Eurodollar Committed Advance, Eurodollar Bid Rate Advance or Absolute Rate
Advance, as the case may be, is prepaid, whether by acceleration or otherwise,
and at maturity. Interest accrued on each Eurodollar Committed Advance and
Eurodollar Bid 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 Committed Advances and Eurodollar Bid
Rate Advances shall be calculated for actual days elapsed on the basis of a 360-
day year. Fees and interest on Alternate Base 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.
2.17 Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Administrative 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 Administrative 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.
34
<PAGE>
2.18 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 Agreement shall apply to any
such Lending Installation. Each Lender may, by written or telecopy notice to
the Administrative 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.
2.19 Non-Receipt of Funds by the Administrative Agent. Unless the
Borrower or a Lender, as the case may be, notifies the Administrative Agent
prior to the date on which it is scheduled to make payment to the Administrative
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 Administrative
Agent for the account of the Lenders, that it does not intend to make such
payment, the Administrative Agent may assume that such payment has been made.
The Administrative 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 Administrative Agent, the recipient of such payment
shall, on demand by the Administrative Agent, repay to the Administrative 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 Administrative Agent until the date the Administrative 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.
2.20 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 Administrative 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, if any, 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 Administrative 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 Administrative Agent, in each case certifying
that such Lender (or Lending Installation) is entitled to receive payments under
this Agreement and the Notes, if any, 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
Administrative Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
35
<PAGE>
2.21 Maximum Interest Rate. Nothing contained in this Agreement or
any Notes shall require the Borrower to pay interest to any Lender at a rate
exceeding the maximum rate permitted by applicable law with respect to such
Lender. This Section 2.21 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 346
of the Texas Finance Code, which regulates certain revolving loan accounts and
revolving tri-party accounts, shall not be applicable to this Agreement, any
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
2.21 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 2.21.
2.22 Administrative Agent's Fees. In order to compensate First
Chicago for the cost and expense of acting as Administrative 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.
2.23 Procedure for Terminating Certain Commitments. Subject to the
other provisions of this Agreement, the Commitments of the Lenders shall be
effective for an initial period from the Closing Date to the original Facility
Termination Date; provided however, if any Lender declines to extend the
"Facility Termination Date" under the Credit Agreement in accordance with
Section 2.24 thereof then the Borrower may elect to direct such Lender to
terminate its Commitment. Such termination shall become effective when the
Borrower (x) delivers a notice of the effectiveness of such termination to such
Lender with a copy to the Administrative Agent, and (y) pays in full in
immediately available funds (A) all Obligations of the Borrower owing to such
Lender (including any Obligations owed to such Lender in its capacity as Issuer,
if any) and the Borrower shall return for cancellation, to such Lender that is
an Issuer, the originals of all Letters of Credit issued by such Lender. Upon
the occurrence of the events set forth in clauses (x) and (y), such Lender shall
(i) cease to be a Lender hereunder for all purposes, (ii) cease to be an Issuer
hereunder for all purposes, if applicable, and (iii) no longer have any
obligations hereunder; however, such Lender shall be obligated to make or
entitled to receive payments pursuant to Sections 3.1, 3.2, 3.4, 9.7 and 10.3
(but only to the extent the event giving rise to such payment occurred prior to
the time at which the events set forth in clauses (x) and (y) shall have
occurred) as if it were a Lender.
36
<PAGE>
2.24 Extension of Facility Termination Date. Subject to the other
provisions of this Agreement, the Commitments of the Lenders shall be effective
for an initial period from the Closing Date to the original Facility Termination
Date; provided that so long as no Default or Unmatured Default shall have
occurred and be continuing, the Facility Termination Date, and concomitantly the
Commitments of the Lenders, may be extended for successive 364-day periods
expiring on the date which is 364-days from the then scheduled Facility
Termination Date. In order to request such extension, the Borrower will deliver
written notice delivered to the Administrative Agent not more than sixty (60)
days nor less than forty-five (45) days prior to the then scheduled Facility
Termination Date that the Facility Termination Date be extended for 364-days
from the then scheduled Facility Termination Date. The Administrative Agent
shall then promptly notify each Lender of such request, and each Lender shall
notify the Administrative Agent in writing no later than fifteen (15) days
after receipt by the Lenders of the relevant request for an extension from the
Borrower, pursuant to this Section 2.24 whether such Lender, in the exercise of
its sole discretion, will extend the Facility Termination Date for such 364-day
period. Any Lender which shall not timely notify the Administrative Agent
whether it will extend the Facility Termination Date shall be deemed to not have
agreed to extend the Facility Termination Date. No Lender shall have any
obligation whatsoever to agree to extend the Facility Termination Date. Any
agreement to extend the Facility Termination Date by any Lender shall be
irrevocable, except to the extent revocable by the Borrower as provided in
Section 2.24(b)(C)(iii).
(a) If all the Lenders notify the Administrative Agent pursuant to the
foregoing provisions of this Section 2.24 of their agreement to extend the
Facility Termination Date (such Lenders agreeing to extend the Facility
Termination Date herein called the "Accepting Lenders"), then the Administrative
Agent shall so notify each Lender and the Borrower, and such extension shall be
effective without other or further action by any party hereto for such
additional 364-day period.
(b) If Lenders constituting at least the Required Lenders approve the
extension of the then scheduled Facility Termination Date and if one or more of
the Lenders shall notify, or be deemed to notify, the Administrative Agent
pursuant to the foregoing provisions of this Section 2.24 that they will not
extend the then scheduled Facility Termination Date (such Lenders herein called
the "Declining Lenders"), then (A) the Administrative Agent shall promptly so
notify the Borrower and the Accepting Lenders, (B) the Accepting Lenders shall,
upon the Borrower's election to extend the then scheduled Facility Termination
Date in accordance with clause (C)(i) or (C)(ii) below, extend the then
scheduled Facility Termination Date and (C) the Borrower shall, pursuant to a
notice delivered to the Administrative Agent, the Accepting Lenders and the
Declining Lenders, no later than the tenth day following the date by which each
Lender is required, pursuant to this Section 2.24, to approve or disapprove the
requested extension of the Facility Termination Date, either:
(i) elect to extend the Facility Termination Date with respect to the
Accepting Lenders and direct the Declining Lenders to terminate their
Commitments, which termination shall become effective on the date which
would have been the Facility Termination Date except for the operation of
this Section 2.24. On such date, (x) the Borrower shall deliver a notice
of the effectiveness of such termination to the Declining Lenders with a
copy to the
37
<PAGE>
Administrative Agent, (y) the Borrower shall pay in full in immediately
available funds all Obligations of the Borrower owing to the Declining
Lenders (including any Obligations owed to any Declining Lender in its
capacity as Issuer, if any) and the Borrower shall return for cancellation,
to any Declining Lender that is an Issuer, the originals of all Letters of
Credit issued by such Declining Lenders and (z) upon the occurrence of the
events set forth in clauses (x) and (y), the Declining Lenders shall each
cease to be a Lender hereunder for all purposes and each cease to be an
Issuer hereunder for all purposes, if applicable, and shall no longer have
any obligations hereunder; however, such Person shall be obligated to make
or entitled to receive payments pursuant to Sections 3.1, 3.2, 3.4, 9.7 and
10.3 (but only to the extent the event giving rise to such payment occurred
prior to the time at which the events set forth in clauses (x) and (y)
shall have occurred) as if it were a Lender, and the Administrative Agent
shall promptly notify the Accepting Lenders and the Borrower of the new
Aggregate Commitment and the new Facility Termination Date; or
(ii) elect to extend the Facility Termination Date with respect to the
Accepting Lenders and, prior to or no later than the then scheduled
Facility Termination Date, (a) the Borrower shall replace one or more of
the Declining Lenders with another lender or lenders reasonably acceptable
to the Administrative Agent (such lenders herein called the "Replacement
Lenders") or with Accepting Lenders, if any, which have agreed with the
Borrower to increase their respective Commitments (the "Increasing
Accepting Lenders") or to the extent Borrower is not able to replace all
Commitments of any Declining Lenders, direct such Declining Lenders to
terminate any such Commitments not being replaced as provided in clause (i)
above and (b) the Borrower shall pay in full in immediately available funds
all Obligations of the Borrower owing to the Declining Lenders which are
not being replaced (including any Obligations owed to any Declining Lender,
in its capacity as an Issuer, if any) and return all Letters of Credit to
Declining Lenders that are Issuers as provided in clause (i) above;
provided that (x) the Replacement Lenders and Increasing Accepting Lenders
shall purchase, and the Declining Lenders being replaced shall sell, the
interest of the Declining Lenders being replaced and their rights hereunder
in accordance with Section 12.3.2 without recourse or expense to, or
warranty (except warranty of ownership which is free and clear of any
adverse claims) by, such Declining Lenders being replaced for a purchase
price equal to the aggregate outstanding principal amount of the
Obligations payable to such Declining Lenders plus any accrued but unpaid
interest on such Obligations and accrued but unpaid fees in respect of such
Declining Lenders' Loans and Commitments hereunder, and (y) all obligations
of the Borrower owing under or in connection with this Agreement with
respect to the Declining Lenders being replaced (including, without
limitation, such increased costs, breakage fees payable under Article III
and all other costs and expenses payable to each such Declining Lender)
shall be paid in full in immediately available funds to such Declining
Lenders concurrently with such replacement, and (z) upon the payment of
such amounts referred to in clauses (x) and (y), the Replacement Lenders
shall each constitute a Lender hereunder and the Declining Lenders being so
replaced shall no longer constitute a Lender or an Issuer and shall no
longer have any obligations hereunder; however, such Person shall be
obligated to make or entitled to receive payments pursuant to Sections 3.1,
3.2, 3.4, 9.7 and 10.3 (but only to the extent the
38
<PAGE>
event giving rise to such payment occurred prior to the time at which the
events set forth in clauses (x) and (y) shall have occurred) as if it were
a Lender or
(iii) elect to revoke and cancel such extension request by giving
notice of such revocation and cancellation to the Administrative Agent
(which shall promptly notify the Lenders thereof) no later than the tenth
day following the date by which each Lender is required, pursuant to
Section 2.24, to approve or disapprove the requested extension of the
Facility Termination Date, and concomitantly the Commitments of the
Lenders. If the Borrower fails to timely provide the election notice
referred to in this clause (C), the Borrower shall be deemed to have
revoked and canceled such extension request and to have elected not to
extend the Facility Termination Date and the Commitments of the Lenders,
and, on the then scheduled Facility Termination Date, the Borrower shall
repay in full all Obligations under the Loan Documents.
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,
(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 Eurodollar Committed Advances, Eurodollar Bid Rate Advances or Absolute
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
39
<PAGE>
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 Administrative
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 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 Committed Loans or Eurodollar Bid Rate
Loans at a suitable Lending Installation
40
<PAGE>
would violate any applicable law, rule, regulation or directive, whether or not
having the force of law, the Administrative Agent shall suspend the availability
of the affected Type of Advance and require any Eurodollar Committed Advances
and Eurodollar Bid Rate Advances of the affected Type to be converted into
Alternate Base Rate Advances. If the Required Lenders determine that (i)
deposits of a type or maturity appropriate to match fund Eurodollar Committed
Advances or Eurodollar Bid Rate Advances are not available, the Administrative
Agent shall suspend the availability of the affected Type of Advance with
respect to any Eurodollar Committed Advances or Eurodollar Bid Rate Advances
made after the date of any such determination until such time as deposits of a
Type or maturity appropriate to match fund Eurodollar Committed Advances or
Eurodollar Bid Rate 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 Committed
Advance or a Eurodollar Bid Rate Advance of such Type, then, if for any reason
whatsoever the provisions of Section 3.1 are inapplicable, the Administrative
Agent shall suspend the availability of the affected Type of Advance with
respect to any Eurodollar Committed Advances or Eurodollar Bid Rate Advances
made after the date of any such determination.
3.4 Funding Indemnification. If any payment of a Eurodollar Committed
Advance, Eurodollar Bid Rate Advance or Absolute 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 an Alternate Base Rate Advance on a date which is not the last day
of the applicable Interest Period or a Eurodollar Committed Advance, Eurodollar
Bid Rate Advance or Absolute 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 Eurodollar Committed
Advance, Eurodollar Bid Rate Advance or the Absolute Rate Advance; provided that
the foregoing shall not permit 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 Eurodollar Committed
Loan, Eurodollar Bid Rate Loan or an Absolute Rate Loan shall be
41
<PAGE>
calculated as though each Lender funded its Eurodollar Committed Loan,
Eurodollar Bid Rate Loan or its Absolute Rate Loan, as the case may be, through
the purchase of a deposit of the Type and maturity corresponding to the deposit
used as a reference in determining the Eurodollar Rate, Eurodollar Bid Rate or
the Absolute 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 Eurodollar
Loan or an Absolute 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 Section 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 Administrative Agent and any Issuer provided that (i) such
financial institution shall unconditionally offer in writing (with a copy to the
Administrative Agent) to purchase, in accordance with Section 12.3.2, all of
such Lender's rights and obligations under this Agreement and the Loans and the
Notes, if any, and all of such Lender's rights and obligations under the Credit
Agreement and the "Loans" and the "Notes", if any, thereunder as provided in
Section 12.3.2 thereof, 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 Loans payable to such Lender plus such Lender's
Percentage, if any, of any outstanding reimbursement obligations with respect to
any outstanding Letters of Credit plus any accrued but unpaid interest on the
Loans 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 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.
42
<PAGE>
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 Administrative 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 Administrative 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 Administrative 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 Currency
which the relevant Issuer, Lender or Administrative 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 this Section
3.7 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
43
<PAGE>
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
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, to the Administrative
Agent, on the Closing Date, with sufficient copies for the Lenders:
(i) Copies of the articles of incorporation of the Borrower, together
with all amendments, and a certificate of good standing for the Borrower,
certified by the appropriate governmental officer in its jurisdiction of
incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary of the
Borrower of its by-laws and of its Board of Directors' resolutions
authorizing the execution of the Loan Documents.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify by name and title
and bear the signature of the officers of the Borrower authorized to sign
the Loan Documents and to make borrowings and obtain Letters of Credit
hereunder, upon which certificate the Administrative Agent and the Lenders
shall be entitled to rely until informed of any change in writing by the
Borrower.
(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 Borrower, substantially in the form of
Exhibit "B-2" and (C) Mayer, Brown & Platt, special counsel to the
Administrative Agent, substantially in the form of Exhibit "I" hereto, each
dated as of the Closing Date and addressed to the Administrative Agent and
the Lenders.
(v) Notes payable to the order of any Lender requesting Notes.
(vi) Certificate of an Authorized Officer of Borrower stating that (a)
all obligations under the Amended and Restated Credit Agreement have been
paid or fulfilled, (b) the Borrower has delivered a notice to the lenders
under the Amended and Restated Credit Agreement requesting that the
"Aggregate Commitment" thereunder be terminated on the Closing Date (each
Lender that is a "Lender" under the Amended and Restated Credit Agreement
hereby waives the requirement of prior notice of cancellation in Section
2.6.3 of the Amended and Restated Credit Agreement and the requirement of
prior notice of prepayment in Section 2.8 of the Amended and Restated
Credit Agreement), (c) the Credit
44
<PAGE>
Agreement has been executed and delivered, and (d) the "Closing Date" under
the Credit Agreement is the same date as the Closing Date hereunder.
(vii) Certificate of an Authorized Officer of Borrower stating that
all representations and warranties contained in Article V are true and
correct in all material respects as of the Closing Date and that no Default
or Unmatured Default exists.
(viii) Such other documents as the Administrative Agent, any Lender
or its counsel may have reasonably requested.
4.2 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 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 4.2(i) and (ii) have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders, the Administrative
Agent and each Issuer (except for matters disclosed, in writing, by the Borrower
to the Administrative Agent, pursuant to this Agreement, that have not been
objected to, in writing, by the Lenders) that:
5.1 Corporate or Partnership Existence and Standing. Each of the Borrower
and its Principal Subsidiaries is duly organized, validly existing and in good
standing under the laws of its jurisdiction of 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 good standing or authority would not have a Material Adverse Effect.
5.2 Authorization and Validity. The Borrower has the corporate power and
authority to execute and deliver the Loan Documents and to perform its
obligations thereunder. The execution
45
<PAGE>
and delivery by the Borrower of the Loan Documents and the performance of its
obligations thereunder have been duly authorized by proper corporate
proceedings, and the Loan Documents constitute legal, valid and binding
obligations of the Borrower, enforceable against the Borrower 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. The execution, delivery and
performance of the Loan Documents by the Borrower will not violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
the Borrower, or conflict with any organizational document or Material Agreement
of the Borrower, or require any government approval except where such violation,
conflict or lack of approval would not have a Material Adverse Effect 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 Material Agreement.
5.4 Financial Statements. The March 31, 1998 consolidated financial
statements of the Borrower and its Subsidiaries were prepared in accordance with
GAAP 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.
5.5 Material Adverse Change. As of the Closing Date 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 which could reasonably be expected
to have a Material Adverse Effect. 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, in
either case, could reasonably be expected to have a Material Adverse Effect.
5.7 Litigation and Contingent Obligations. Except as disclosed in the
Borrower's most recent Form 10-K or 10-Q filed with the SEC, there is no
litigation, arbitration, governmental investigation, proceeding or inquiry
pending or, to the knowledge of an officer of the Borrower, threatened against
or affecting the Borrower or any of its Subsidiaries (including, without
limitation, any such action involving Environmental Laws) which, in either case,
could reasonably be expected to have a Material Adverse Effect.
5.8 ERISA. The Unfunded Liabilities of all Single Employer Plans do not
in the aggregate exceed $75,000,000. 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
46
<PAGE>
excess of $75,000,000 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, 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 to do
so, and no steps have been taken to reorganize or terminate any Single Employer
Plan.
5.9 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 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 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.
5.10 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 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.
5.11 Investment Company Act. None of the Borrower nor any Principal
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.
5.12 Public Utility Holding Company Act. Each of the Borrower and each
of its Principal 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
47
<PAGE>
terms are defined in the Public Utility Holding Company Act of 1935, as amended
and the rules and regulations thereunder.
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:
(i) Make available promptly (and in any event within 60 days) after the
end of each of the first three quarterly periods of each of its fiscal
years, on either EDGAR or Borrower's Home Page or otherwise transmit to the
Lenders a copy of Borrower's report on Form 10-Q (or any comparable form)
for such quarter, which report will include Borrower's quarterly unaudited
consolidated financial statements as of the end of and for such quarter
prepared in accordance with GAAP, subject to changes resulting from any
year-end audit adjustment. Upon request, the Administrative Agent shall
provide a copy of any such statement or report described above to any
Lender that does not have access to EDGAR or the World Wide Web.
(ii) (A) Make available promptly (and in any event within 120 days)
after the close of its fiscal year, on either EDGAR or Borrower's Home Page
or otherwise transmit to the Lenders a copy of the Borrower's report on
Form 10-K (or any comparable form) for such year, which report will include
Borrower's annual audited consolidated financial statements as of the end
of and for such year prepared in accordance with GAAP and (B) promptly
after the sending thereof, deliver a copy of the Borrower's annual report
which it sends to its public shareholders. Upon request, the
Administrative Agent shall provide a copy of any such statement or report
described in clause (A) above to any Lender that does not have access to
EDGAR or the World Wide Web.
(iii) Concurrently with making available the financial statements
referred to in clause (i) and (ii) above, deliver a compliance certificate
in substantially the form of Exhibit "C" hereto, in writing, 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 the operations of the Borrower at the date and for the
period indicated therein, subject to changes resulting from year-end audit
adjustments and showing the calculations necessary to determine compliance
with this Agreement (including, without limitations, calculations of
financial covenants) and stating that no Default or Unmatured Default
exists, or if any Default or Unmatured Default exists, stating the nature
and status thereof.
48
<PAGE>
(iv) Within 10 days after the Borrower knows that any Reportable Event
has occurred with respect to any Single Employer Plan, deliver 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, deliver written notice of any
litigation which could reasonably be expected to result in a judgment in
excess of $75,000,000 against the Borrower or any of its Principal
Subsidiaries 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) Make available promptly, all publicly available reports and proxy
statements furnished to shareholders on either EDGAR or Borrower's Home
Page. Upon request, the Administrative Agent shall provide a copy of any
such statement or report described above to any Lender that does not have
access to EDGAR or the World Wide Web.
(vii) Make available promptly, all publicly available registration
statements and annual, quarterly, monthly or other regular reports which
the Borrower or any of its Principal Subsidiaries files with the SEC either
on EDGAR or Borrower's Home Page. Upon request, the Administrative Agent
shall provide a copy of any such statement or report described above to any
Lender that does not have access to EDGAR or the World Wide Web.
(viii) Promptly deliver written notice to the Lenders of the occurrence
of any Default or Unmatured Default.
(ix) Deliver such other information (including non-financial information)
as the Administrative 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 Advances to provide funds
for working capital needs and other general corporate purposes, including
acquisitions, commercial paper back up and repayment of loans under the Amended
and Restated Credit Agreement. 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 Maintain Legal Existence. The Borrower will preserve and
maintain, and cause each of its Principal Subsidiaries to preserve and maintain,
its legal existence, rights and franchises; provided that (i) the foregoing
shall not prevent any merger, consolidation, sale or other disposition permitted
under Section 6.2.1 or 6.2.2 of this Agreement and (ii) the Borrower and its
Principal Subsidiaries shall not be required to preserve or maintain any
existence, right or franchise if the failure to preserve or maintain such
existence, right or franchise would not have a Material Adverse Effect.
6.1.4 Insurance. The Borrower will, and will cause each Principal
Subsidiary to, maintain insurance with financially sound and reputable insurance
companies, (other than prudent self-insurance programs) in such amounts and
covering such risks as is consistent with prudent industry
49
<PAGE>
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.
6.1.5 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, except when failure to do
so could not reasonably be expected to have a Material Adverse Effect; the
Borrower and its Subsidiaries will pay all taxes, assessments and governmental
charges and levies upon income, profits or Property before the same become
delinquent (except with regard to any of the foregoing payments which are being
contested in good faith by appropriate proceeding, diligently pursued and with
respect to which adequate reserves as required by GAAP have been set aside)
except where failure to do so could not reasonably be expected to have a
Material Adverse Effect; and the Borrower and its Principal Subsidiaries will
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.
6.1.6 Inspection. The Borrower will, and will cause each Principal
Subsidiary to, permit the Administrative 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
Principal Subsidiary 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 Principal
Subsidiary and to discuss the affairs, finances and accounts of the Borrower and
each Principal Subsidiary 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 Administrative 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
Administrative 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.
6.1.7 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 Merger. The Borrower will not merge or consolidate with or into
any other Person, unless (i) both before and after giving effect to such merger
or consolidation, there exists no Default or Unmatured Default and (ii) either
(A) the Borrower is the surviving Person or (B) if the Borrower is not the
surviving Person, the surviving Person shall expressly assume in writing in form
and substance reasonably satisfactory to the Administrative Agent all of the
liabilities and obligations of the Borrower hereunder and under the other Loan
Documents.
50
<PAGE>
6.2.2 Sale of Assets. The Borrower will not sell or otherwise dispose of
all or substantially all of the Borrower's assets.
6.2.3 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 Permitted Liens.
6.2.4 Leverage Ratio. The Borrower will not permit its Leverage Ratio to
exceed 60% as determined in accordance with GAAP.
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
to the Lenders, any Issuer or the Administrative 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 the Borrower 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, 6.1.6 or 6.2.
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 and 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 Administrative Agent or any
Issuer.
7.5 (a) Failure of the Borrower or any Principal Subsidiary 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 CUSA Assumed
Debt) aggregating in excess of $75,000,000 in principal amount; (b) any Debt
(other than the Obligations and other than the CUSA Assumed Debt) of the
Borrower or any of its Principal Subsidiaries aggregating in excess of
$75,000,000 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; or (c) 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
51
<PAGE>
demand or (ii) the date upon which the holder thereof commences proceedings to
collect such payment.
7.6 The Borrower or any Principal 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 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.
7.7 Without the application, approval or consent of the Borrower or
any Principal Subsidiary, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or such Principal Subsidiary or a
proceeding described in Section 7.6(iv) shall be instituted against the Borrower
or any Principal Subsidiary and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of 60 consecutive
days.
7.8 Any judgment or order for the payment of money in excess of
$75,000,000 shall be rendered against the Borrower or any Principal Subsidiary
and either such judgment or order is not discharged within a period of 60 days
following the rendering thereof or there shall be any period during which a stay
of enforcement of such judgment or order, by reason of an appeal or a bond
pending appeal, shall not be in effect.
7.9 Any Change of Control shall occur.
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
Administrative 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 Administrative Agent from
time to time, for
52
<PAGE>
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 Administrative Agent shall
return to the Borrower an amount of such deposit equal to such excess, and the
Lenders and Issuers hereby authorize the Administrative 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 Administrative Agent (acting at the direction of 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 Administrative 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.
(c) If at any time while any Default is continuing, the Administrative Agent
determines that the Collateral Shortfall Amount at such time is greater than
zero, the Administrative Agent (acting at the direction of the Required Lenders)
may make demand on the Borrower to deliver (and the Borrower will, forthwith
upon demand by the Administrative Agent and without necessity of further act or
evidence, be and become thereby unconditionally obligated to deliver), to the
Administrative 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 Administrative 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.
53
<PAGE>
(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 Administrative Agent to the Borrower or paid to whoever
may be legally entitled thereto at such time.
(f) The Administrative 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 Administrative Agent accords its own
property, it being understood that the Administrative 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 Administrative 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 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 Facility Termination Date (except as provided in Section
2.24) 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 change the definition of
Aggregate Commitment.
(iv) Amend this Section 8.2.
(v) Permit the Borrower to assign its rights or obligations under the Loan
Documents.
(vi) 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 Administrative
Agent shall be effective without the written consent of the Administrative
Agent. The Administrative 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.
54
<PAGE>
In addition, in the event of an amendment, modification or waiver of any
provision in the Credit Agreement in accordance with the terms thereof and the
same or substantially similar provision exists in this Agreement, then the
Administrative Agent shall be deemed authorized to and will execute on behalf of
all of the Lenders a similar amendment, modification or waiver of this Agreement
without the consent or approval of the Lenders herein; provided, however, that
the consent of each Lender is required for any of the matters described in
clauses (i) through (vi) above and the consent of the Required Lenders is
required for any amendment, modification or waiver of Section 6.2.4.
8.3 Preservation of Rights. No delay or omission of the Lenders or the
Administrative 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 Administrative 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
any Notes and the making of the Loans and issuance of Letters of Credit herein
contemplated.
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 Administrative Agent, each Issuer and the
Lenders and
55
<PAGE>
supersede all prior agreements and understandings among the Borrower, the
Administrative 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
Administrative 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 Administrative Agent, Issuers and
Lenders. The Borrower shall reimburse the Administrative Agent for any
reasonable costs, internal charges and out-of-pocket expenses (including
reasonable attorneys' fees and time charges of attorneys for the Administrative
Agent, which attorneys may be employees of the Administrative Agent) paid or
incurred by the Administrative 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
Administrative 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 Administrative Agent, the Issuers and
the Lenders, which attorneys may be employees of the Administrative Agent, the
Issuers or the Lenders) paid or incurred by the Administrative Agent or any
Lender in connection with the collection and enforcement of the Loan Documents.
NEITHER THE ADMINISTRATIVE 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 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,
56
<PAGE>
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 Administrative 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 the Borrower 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 Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to each
of the Lenders.
9.9 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.
9.10 Nonliability of Lenders. The relationship between the Borrower and
the Lenders and the Administrative Agent shall be solely that of borrower and
lender. Neither the Administrative Agent, any Issuer nor any Lender shall have
any fiduciary responsibilities to the Borrower. Neither the Administrative
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.
9.11 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.
9.12 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 ADMINISTRATIVE AGENT, ANY ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST
THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
9.13 WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT, EACH
ISSUER AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY
57
<PAGE>
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.
9.14 Confidential Information. The Administrative Agent and each Lender
agree that all documentation and other information made available by the
Borrower to the Administrative 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 Administrative Agent or such Lender, or was theretofore known or
hereinafter becomes known to the Administrative Agent or such Lender on a
nonconfidential basis independent of any disclosure thereto by the Borrower) be
held in confidence by the Administrative 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 Administrative Agent or such Lender may disclose
documentation and information to the Administrative Agent and/or to any other
Lender which is a party to this Agreement or any Affiliates thereof and (ii) the
Administrative 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
Administrative 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 Administrative Agent or such Lender. Notwithstanding the
foregoing, nothing contained herein shall be construed to prevent the
Administrative 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 Administrative Agent's or Lender's
business or that of the Administrative 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 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 Administrative Agent or
such Lender or its counsel deems necessary or appropriate to enforce any remedy
provided in any of the Loan Documents 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 Administrative Agent or such Lender is
compelled to disclose such confidential information in a proceeding requesting
such disclosure, the Administrative Agent or such Lender shall seek to obtain
assurance that such confidential treatment will be accorded such information;
provided, however, the Administrative 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
58
<PAGE>
Lender or any Affiliate thereof that are involved in such Lender's or
Affiliate's commodity trading activities.
ARTICLE X
THE ADMINISTRATIVE AGENT
------------------------
10.1 Appointment and Authority of Administrative 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 Administrative 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 Administrative 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 the
Borrower, 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 Administrative Agent or any Issuer.
Should the Administrative Agent fail or refuse to take any action requested
hereunder by the Required Lenders, the Administrative Agent shall resign and the
Required Lenders shall promptly appoint a successor to the Administrative Agent
hereunder. At any time that no Person or Persons are acting as agent hereunder,
the Borrower is 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 Borrower, the Borrower
shall receive written evidence thereof. The Administrative Agent is hereby
expressly authorized as agent on behalf of the Lenders, without hereby limiting
any implied authority:
(a) To receive on behalf of each Lender any payment of principal or interest
on the Advances paid to the Administrative 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 Borrower and others;
(f) To execute and deliver to the Borrower and others requests, demands,
approvals, and consents received from the Lenders;
59
<PAGE>
(g) To the extent permitted by this Agreement, to exercise on behalf of each
Lender all remedies of the Lenders or the Administrative 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 Administrative Agent and each Issuer. With respect to
its commitment to lend hereunder and the Loans made by it, the Administrative
Agent and each Issuer in their respective capacities as a Lender and not as the
Administrative 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 Administrative Agent or an Issuer.
10.3 No Liability of the Administrative Agent or Issuers and Indemnity.
Neither the Administrative 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 the
Borrower 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 Administrative 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 the
Borrower to perform its obligations under any Loan Document. Neither the
Administrative Agent nor any Issuer shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements or conditions contained in any Loan Document, or to inspect the
properties, books, or records of the Borrower. To the extent that the
Administrative Agent or any Issuer is not reimbursed or indemnified by the
Borrower, each of the Lenders will indemnify the Administrative 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 Administrative 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 Administrative Agent or such Issuer under or in connection with any of the
foregoing, including resulting from the Administrative 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
Administrative 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 Administrative Agent and Issuers. The Administrative
Agent and the Issuers may execute any and all duties hereunder by or through
agents or employees and shall be
60
<PAGE>
entitled to advice of counsel pertaining to all matters hereunder. The Borrower
has agreed to reimburse the Administrative Agent for actual out-of-pocket
expenses incurred by the Administrative 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 Administrative Agent in connection with
the development, preparation, negotiation, and execution of the Loan Documents,
or the enforcement of the rights of the Administrative Agent, the Issuers and
the Lenders thereunder. Each Lender agrees to reimburse the Administrative 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 Borrower.
10.5 Reliance. The Administrative 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 Administrative Agent or such Issuer. The Administrative Agent, each
Issuer and the Borrower 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 owner of any of the Obligations shall be conclusive
and binding on any subsequent holder, transferee, or assignee of such
Obligations. The Administrative 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 Administrative 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 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 Administrative 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 Administrative
Agent or any Issuer hereinafter taken shall be deemed to constitute any
representation or warranty by the Administrative Agent or any Issuer to any
Lender. Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, neither the
Administrative 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 the
Borrower or any of its Subsidiaries which may come into the possession of the
Administrative 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
61
<PAGE>
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 Administrative Agent nor any Issuer
shall be deemed to have knowledge or notice of the occurrence of any Default or
Unmatured Default unless the Administrative Agent or such Issuer has received
notice from a Lender or the Borrower 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 Administrative 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 Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative 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
Administrative Agent shall have received such directions, the Administrative
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 Administrative 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 Administrative Agent, any Issuer or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents.
10.9 Successor Administrative Agent. The Administrative 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
Administrative Agent or, if no successor Administrative Agent has been
appointed, forty-five days after the retiring Administrative 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 Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Lenders within
thirty days after the resigning Administrative Agent's giving notice of its
intention to resign, then the resigning Administrative 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
Administrative Agent. If the Administrative Agent has resigned and no successor
Administrative Agent has been appointed, the Lenders may perform all the duties
of the Administrative 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 Administrative
Agent shall be deemed to be appointed hereunder until such successor
Administrative Agent has accepted the appointment. Any such successor
Administrative Agent shall be a
62
<PAGE>
commercial bank having capital and retained earnings of at least $100,000,000.
Upon the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the resigning Administrative Agent. Upon the effectiveness of the
resignation of the Administrative Agent, the resigning Administrative Agent
shall be discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation of an Administrative
Agent, the provisions of this Article X shall continue in effect for the benefit
of such Administrative Agent in respect of any actions taken or omitted to be
taken by it while it was acting as the Administrative Agent hereunder and under
the other Loan Documents.
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.
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 2.23, 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
Administrative 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
63
<PAGE>
Section, any Lender may at any time, without the consent of the Borrower or the
Administrative Agent, assign all or any portion of its rights under this
Agreement and its Notes, if any, to a Federal Reserve Bank; provided, however,
that no such assignment shall release the transferor Lender from its obligations
hereunder. Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with Section 12.3 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with Section 12.2. 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 owner of any portion of the Obligations, shall be conclusive and
binding on any subsequent holder, transferee or assignee of such portion of the
Obligations.
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 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 Administrative 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 or releases any substantial portion of
collateral, if any, securing any 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
64
<PAGE>
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 Administrative Agent and the Issuers of
any outstanding Letters of Credit, provided that no Lender may assign any
part of its rights and obligations under the Loan Documents without also
assigning to such Purchaser the applicable pro rata share of such rights
and obligations under the Credit Agreement such that such Purchaser owns
the same pro rata share of rights and obligations under the Credit
Agreement as it does hereunder. 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 Administrative Agent
and 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 an Affiliate thereof; provided, however, that if a
Default has occurred and is continuing, the consent of the Borrower shall
not be required. Such consent of the Borrower and the Administrative 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
Administrative 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 $3,500 fee to the Administrative 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 Administrative 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
Administrative Agent shall accept such assignment and record the
Purchaser's information in the Register, and Borrower shall provide such
Purchaser with Notes to evidence its Loans, if requested in writing by such
Purchaser, and the transferor Lender, the Administrative Agent and the
Borrower shall make appropriate arrangements so that either (x) with
respect to any transferor Lender that
65
<PAGE>
is assigning a portion of its Obligations replacement Notes are issued, if
necessary, to such transferor Lender and each replaced Note shall be
returned to the Borrower marked "replaced" or (y) with respect to a
transferor Lender assigning all of its Obligations, such Lender shall
return its Note, if any, to the Borrower marked "cancelled".
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 Administrative 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
9.14.
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 thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the provisions of Section 2.20.
ARTICLE XIII
NOTICES
-------
13.1 Giving Notice. Except as otherwise permitted by Section 2.15 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 Administrative 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.
66
<PAGE>
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 Administrative Agent
and the Lenders and each party has notified the Administrative Agent by telex or
telephone, that it has taken such action.
67
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Lenders and the Administrative 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
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Administrative
Agent
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
<PAGE>
THE CHASE MANHATTAN BANK,
Individually and as Syndication Agent
By:_______________________________
Print Name:_______________________
Title:____________________________
600 Travis, 20th Floor
Houston, Texas 77002
Attn:______________________________
Telecopy No.: (713) 216-4295
<PAGE>
CITIBANK, N.A.
Individually and as Documentation Agent
By:_______________________________
Print Name:_______________________
Title:____________________________
Attn:____________________________
Telecopy No.:____________________
<PAGE>
ABN AMRO BANK, N.V.
By:_______________________________
Print Name:_______________________
Title:____________________________
By:_______________________________
Print Name:_______________________
Title:____________________________
Three Riverway, Suite 1700
Houston, Texas 77056
Attn:_____________________________
Telecopy No.: 713-629-7533
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:_______________________________
Print Name:_______________________
Title:____________________________
333 Clay Street, Suite 4550
Houston, Texas 77002
Attn:_____________________________
Telecopy No.:_____________________
<PAGE>
THE BANK OF NOVA SCOTIA
By:_______________________________
Print Name:_______________________
Title:____________________________
600 Peachtree Street, N.E., Suite 2700
Atlanta, Georgia 30308
Attn:_____________________________
Telecopy No.:_____________________
<PAGE>
THE BANK OF TOKYO-MITSUBISHI,
LTD., HOUSTON AGENCY
By:_______________________________
Print Name:_______________________
Title:____________________________
1100 Louisiana Street, Suite 2800
Houston, Texas 77002-5216
Attn: David L. Denbina, P.E.
Telecopy No.: 713/658-0116
<PAGE>
BANKBOSTON, N.A.
By:_______________________________
Print Name:_______________________
Title:____________________________
100 Federal Street
Mail Stop 01-08-04
Boston, MA 02110
Attn: V. Ryan
Telecopy No.: (617) 434-3652
<PAGE>
CREDIT AGRICOLE INDOSUEZ
By:_______________________________
Print Name:_______________________
Title:____________________________
By:_______________________________
Print Name:_______________________
Title:____________________________
600 Travis Street, Suite 2340
Houston, Texas 77002
Attn: Brian Knezeak
Telecopy No.: (713) 223-7029
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By:_______________________________
Print Name:_______________________
Title:____________________________
1000 Louisiana, Suite 5360
Houston, Texas 77002
Attn: Darrell Stanley, Vice President
Telecopy No.: (713) 751-0307
<PAGE>
FUJI BANK, LIMITED, HOUSTON
AGENCY
By:_______________________________
Print Name:_______________________
Title:____________________________
1221 McKinney, Suite 4100
Houston, Texas 77010
Attn:_____________________________
Telecopy No.:_____________________
<PAGE>
NATIONSBANK, N.A.
By:_______________________________
Print Name:_______________________
Title:____________________________
700 Louisiana, 8th Floor
Houston, Texas 77002-2725
Attn:_____________________________
Telecopy No.: (713) 247-6432
<PAGE>
SOCIETE GENERALE, SOUTHWEST
AGENCY
By:_______________________________
Print Name:_______________________
Title:____________________________
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attn: Lia Guerra
Telecopy No.: (214) 754-0171
<PAGE>
THE TORONTO-DOMINION BANK
By:_______________________________
Print Name:_______________________
Title:____________________________
31 West 52nd Street
New York, NY 10019-6101
Attn:_____________________________
Telecopy No.: (212) 262-1929
<PAGE>
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH
By:_______________________________
Print Name:_______________________
Title:____________________________
By:_______________________________
Print Name:_______________________
Title:____________________________
1211 Avenue of the Americas, 23rd Floor
New York, NY 10036
Attn:_____________________________
Telecopy No.: (212) 852-6307
<PAGE>
EXHIBIT "A-1"
COMMITTED NOTE
$________________ ______________, ____
NGC Corporation, a Delaware corporation (the "Borrower"), promises to pay
to the order of _____________________________________ (the "Lender") the lesser
of the principal sum of __________________________ Million Dollars or the
aggregate unpaid principal amount of all Committed Loans made by the Lender to
the Borrower pursuant to Section 2.1 or 2.2 of the 364-Day Revolving Credit
Agreement hereinafter referred to (as the same may be amended or modified, the
"Agreement"), in lawful money of the United States in immediately available
funds at the main office of The First National Bank of Chicago in Chicago,
Illinois, as Administrative Agent or as otherwise directed by the Administrative
Agent pursuant to the terms of the Agreement, together with interest, in like
money and funds, on the unpaid principal amount hereof at the rates and on the
dates set forth in the Agreement. The Borrower shall pay each Committed Loan in
full on the Facility Termination Date (as defined in the Agreement) and
mandatory repayments of principal will be made by the Borrower as set forth in
the Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Committed Loan and the date and amount of each
principal payment hereunder; provided, however, that any failure to so record
shall not affect the Borrower's obligations under any Loan Document.
This Committed Note is one of the Notes issued pursuant to, and is entitled
to the benefits of, the 364-Day Revolving Credit Agreement, dated as of May 27,
1998, among the Borrower, The First National Bank of Chicago, individually and
as Administrative Agent, The Chase Manhattan Bank, individually and as
Syndication Agent and Citibank, N.A., individually and as a Documentation Agent
and the lenders named therein, including the Lender, to which Agreement, as it
may be amended from time to time, reference is hereby made for a statement of
the terms and conditions under which this Committed Note may be prepaid or its
maturity date accelerated. Capitalized terms used herein and not otherwise
defined herein are used with the meanings attributed to them in the Agreement.
Borrower and any endorser hereof waive presentment, notice of dishonor and
protest, and assent to any extension of time with respect to any payment due
under this note and to the addition or release of any party.
NGC CORPORATION
By:_______________________________
Title:____________________________
<PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
COMMITTED NOTE OF ___________
DATED _____________, ____
==========================================================================
Maturity
of Principal
Principal Interest Applicable Amount Unpaid
Date Amount of Loan Type Period Rate Paid Balance
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
==========================================================================
<PAGE>
EXHIBIT "A-2"
COMPETITIVE BID NOTE
_______________, ____
NGC Corporation, a Delaware corporation (the "Borrower"), promises to pay
to the order of _________________________ (the "Lender") the aggregate unpaid
amount of all Competitive Bid Loans made by the Lender to the Borrower pursuant
to Section 2.3 of the 364-Day Revolving Credit Agreement hereinafter referred to
(as the same may be amended or modified, the "Agreement"), in lawful money of
the United States in immediately available funds at the main office of The First
national Bank of Chicago, as Administrative Agent, in Chicago Illionos or as
otherwise directed by the Administrative Agent pursuant to the terms of the
Agreement, together with interest, in like money and funds, on the unpaid
principal amount of all Competitive Bid Loans made by the Lender to the Borrower
terreferred to (as the same may be amended or modified, the "Agreement"), in
lawful money of the United States in immediately available funds at the main
office of The First National Bank of Chicago, as Administrative Agent, in
Chicago, Illinois or as otherwise directed by the Administrative Agent pursuant
to the terms of the Agreement, together with interest, in like money and funds,
on the unpaid principal amount hereof at the rates and on the dates determined
in accordance with the Agreement. The Borrower shall pay each Competitive Bid
Loan in full on the earlier of (A) the last day of such Competitive Bid Loan's
applicable Interest Period or (B) the Facility Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or otherwise record in accordance with its usual practice, the
date and amount of each Competitive Bid Loan and the date and amount of each
principal payment hereunder, provided, however, that any failure to so record
shall not affect the Borrower's obligations under any Loan Document.
This Competitive Bid Note is one of the Notes issued pursuant to, and is
entitled to the benefits of, the 364-Day Revolving Credit Agreement dated as of
May 27, 1998, among the Borrower, The First National Bank of Chicago,
individually and as Administrative Agent, The Chase Manhattan Bank, individually
and as Syndication Agent and Citibank, N.A., individually and as Documentation
Agent and the lenders named therein, including the Lender, to which Agreement,
as it may be amended from time to time, reference is hereby made for a statement
of the terms and conditions under which this Competitive Bid Note may be prepaid
or its maturity date accelerated. Capitalized terms used herein and not
otherwise defined herein are used with the meanings attributed to them in the
Agreement.
Borrower and any endorser hereof waive presentment, notice of dishonor and
protest, and assent to any extension of time with respect to any payment due
under this note and to the addition or release of any party.
__________________________
By:__________________________
Title:_______________________
<PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
COMPETITIVE BID NOTE OF
---------------------
DATED _________________, _____
==========================================================================
Maturity
of Principal
Principal Interest Applicable Amount Unpaid
Date Amount of Loan Type Period Rate Paid Balance
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
==========================================================================
<PAGE>
EXHIBIT "B-1"
FORM OF OPINION OF BORROWER'S COUNSEL
(to be provided)
<PAGE>
EXHIBIT "B-2"
FORM OF OPINION OF VINSON & ELKINS
(to be provided)
<PAGE>
EXHIBIT "C"
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain 364-Day
Revolving Credit Agreement dated as of May 27, 1998 (as amended, modified,
renewed or extended from time to time, the "Agreement") among the Borrower, the
Lenders party thereto, The First National Bank of Chicago, as Administrative
Agent, The Chase Manhattan Bank, as Syndication Agent and Citibank, N.A., as
Documentation Agent. Unless otherwise defined herein, capitalized terms used in
this Compliance Certificate have the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am an Authorized Officer;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Borrower during the accounting period covered by the
attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and computations
evidencing the Borrower's compliance with Section 6.2.4 of the Agreement, all of
which data and computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
________________________________________________________
________________________________________________________
________________________________________________________
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this __ day of ______________, 19__.
------------------------------------
<PAGE>
[SAMPLE]
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of with
Provisions of ______ and ________ of
the Agreement
<PAGE>
EXHIBIT "C-1"
(to 364-Day Revolving Credit Agreement)
ISSUANCE REQUEST
To: The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Attn: Petroleum and Mining Division
WITH
COPY
TO: The First National Bank of Chicago
1100 Louisiana, Suite 4610
Houston, Texas 77002
Attn: Ms. Helen Carr
Ladies and Gentlemen:
The undersigned is an Authorized Officer of NGC Corporation, a Delaware
corporation, and is authorized to make and deliver this certificate pursuant to
that certain 364-Day Revolving Credit Agreement dated as of May 27, 1998 among
NGC Corporation, a Delaware corporation, the Lenders party thereto, The First
National Bank of Chicago, as Administrative Agent, The Chase Manhattan Bank, as
Syndication Agent and Citibank, N.A., as Documentation Agent, (said 364-Day
Revolving Credit Agreement, as it may be amended, supplemented or otherwise
modified from time to time, is hereinafter referred to as the "Agreement").
Terms having their initial letters capitalized and not otherwise defined herein
shall have the meanings assigned to them in the Agreement.
Pursuant to the terms and provisions of the Agreement, the undersigned
Borrower hereby certifies that all conditions to such issuance have been met.
The undersigned Borrower hereby requests the issuance of a Letter of Credit
in accordance with the Agreement in substantially the form attached and
containing the following terms:
Credit Issuance Request Information
-----------------------------------
1. Beneficiary:______________________________
__________________________________________
__________________________________________
Attn:_____________________________________
2. Amount $ or $Cn. or (Pounds)
<PAGE>
3. Requested Date of Issuance:___________________, 19__
4. Requested Date of Expiry:_____________________, 19__
5. Type of Letter of Credit:___ Documentary ___ Standby.
EXECUTED THIS __ DAY OF _______________, 19__.
_____________________________
By:__________________________
Title:_______________________
2
<PAGE>
EXHIBIT "D"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
_____________________ (the "Assignor") and __________________ (the "Assignee")
is dated as of _________________, 19__. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a 364-Day Revolving
Credit Agreement (which, as it may be amended, modified, renewed or extended
from time to time is herein called the "Agreement") described in Item 1 of
Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to them in the
Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Agreement
such that after giving effect to such assignment the Assignee shall have
purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and obligations
under the Agreement relating to the facilities listed in Item 3 of Schedule 1
and the other Loan Documents. The aggregate Commitment (or Loans, if the
applicable Commitment has been terminated) purchased by the Assignee hereunder
is set forth in Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of Schedule
1 or two Business Days (or such shorter period agreed to by the Administrative
Agent) after a Notice of Assignment substantially in the form of Exhibit "I"
attached hereto has been delivered to the Administrative Agent. Such Notice of
Assignment must include any consents required to be delivered to the
Administrative Agent by Section 12.3.1 of the Agreement. In no event will the
Effective Date occur if the payments required to be made by the Assignee to the
Assignor on the Effective Date under Sections 4 and 5 hereof are not made on the
proposed Effective Date. The Assignor will notify the Assignee of the proposed
Effective Date no later than the Business Day prior to the proposed Effective
Date. As of the Effective Date, (i) the Assignee shall have the rights and
obligations of a Lender under the Loan Documents with respect to the rights and
obligations assigned to the Assignee hereunder and (ii) the Assignor shall
relinquish its rights and be released from its corresponding obligations under
the Loan Documents (other than its obligations pursuant to Section 10.3 of the
Agreement with respect to acts and circumstances occurring prior to the
Effective Date) with respect to the rights and obligations assigned to the
Assignee hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Administrative Agent all payments of
principal, interest and fees with respect to the interest assigned hereby. The
Assignee shall advance funds directly to the Administrative Agent with respect
to all Loans and reimbursement payments made on or after the
<PAGE>
Effective Date with respect to the interest assigned hereby. [In consideration
for the sale and assignment of Loans hereunder, (i) the Assignee shall pay the
Assignor, on the Effective Date, an amount equal to the principal amount of the
portion of all Alternate Base Rate Loans assigned to the Assignee hereunder and
(ii) with respect to each Eurodollar Committed Loan, Eurodollar Bid Rate Loan
and Absolute Rate Loan made by the Assignor and assigned to the Assignee
hereunder which is outstanding on the Effective Date, on the earliest of (a) the
last day of the Interest Period therefor or (b) such earlier date agreed to by
the Assignor and the Assignee or (c) the date on which any such Eurodollar
Committed Loan, Eurodollar Bid Rate Loan or Absolute Rate Loan either becomes
due (by acceleration or otherwise) or is prepaid (the date as described in the
foregoing clauses (a), (b) or (c) being hereinafter referred to as the "Payment
Date"), the Assignee shall pay the Assignor an amount equal to the principal
amount of the portion of such Eurodollar Committed Loan, Eurodollar Bid Rate
Loan or Absolute Rate Loan assigned to the Assignee which is outstanding on the
Payment Date. If the Assignor and the Assignee agree that the Payment Date for
such Eurodollar Committed Loan, Eurodollar Bid Rate Loan or Absolute Rate Loan
shall be the Effective Date, they shall agree to the interest rate applicable to
the portion of such Loan assigned hereunder for the period from the Effective
Date to the end of the existing Interest Period applicable to such Eurodollar
Committed Loan, Eurodollar Bid Rate Loan or Absolute Rate Loan (the "Agreed
Interest Rate") and any interest received by the Assignee in excess of the
Agreed Interest Rate shall be remitted to the Assignor. In the event interest
for the period from the Effective Date to but not including the Payment Date is
not paid by the Borrower with respect to any Eurodollar Committed Loan,
Eurodollar Bid Rate Loan or Absolute Rate Loan sold by the Assignor to the
Assignee hereunder, the Assignee shall pay to the Assignor interest for such
period on the portion of such Eurodollar Committed Loan, Eurodollar Bid Rate
Loan or Absolute Rate Loan sold by the Assignor to the Assignee hereunder at the
applicable rate provided by the Agreement. In the event a prepayment of any
Eurodollar Committed Loan, Eurodollar Bid Rate Loan or Absolute Rate Loan which
is existing on the Payment Date and assigned by the Assignor to the Assignee
hereunder occurs after the Payment Date but before the end of the Interest
Period applicable to such Eurodollar Committed Loan, Eurodollar Bid Rate Loan or
Absolute Rate Loan the Assignee shall remit to the Assignor the excess of the
loss or cost paid by the Borrower pursuant to Section 3.4 of the Agreement with
respect to the portion of such Eurodollar Committed Loan, Eurodollar Bid Rate
Loan or Absolute Rate Loan assigned to the Assignee hereunder over the amount
which would have been paid if such loss or cost was calculated based on the
Agreed Interest Rate. The Assignee will also promptly remit to the Assignor (i)
any principal payments received from the Administrative Agent with respect to
Eurodollar Committed Loans, Eurodollar Bid Rate Loans or Absolute Rate Loans
prior to the Payment Date and (ii) any amounts of interest on Loans and fees
received from the Administrative Agent which relate to the portion of the Loans
assigned to the Assignee hereunder for periods prior to the Effective Date, in
the case of Alternate Base Rate Loans or fees, or the Payment Date, in the case
of Eurodollar Committed Loans, Eurodollar Bid Rate Loans or Absolute Rate Loans,
and not previously paid by the Assignee to the Assignor.]* In the event that
either party hereto receives any payment to which the other party hereto is
entitled under this Assignment Agreement, then the party receiving such amount
shall promptly remit it to the other party hereto.
*Each Assignor may insert its standard payment provisions in lieu of the payment
terms included in this Exhibit.
2
<PAGE>
5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the Assignor a
fee on each day on which a payment of interest or facility fees is made under
the Agreement with respect to the amounts assigned to the Assignee hereunder
(other than a payment of interest or commitment fees for the period prior to the
Effective Date or, in the case of Eurodollar Committed Loans, Eurodollar Bid
Rate Loans and Absolute Rate Loans, the Payment Date, which the Assignee is
obligated to deliver to the Assignor pursuant to Section 4 hereof). The amount
of such fee shall be the difference between (i) the interest or fee, as
applicable, paid with respect to the amounts assigned to the Assignee hereunder
and (ii) the interest or fee, as applicable, which would have been paid with
respect to the amounts assigned to the Assignee hereunder if each interest rate
was ___ of 1% less than the interest rate paid by the Borrower or if the
facility fee was ___ of 1% less than the facility fee paid by the Borrower, as
applicable. In addition, the Assignee agrees to pay ___% of the recordation fee
required to be paid to the Administrative Agent in connection with this
Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. It is
understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor
nor any of its officers, directors, employees, agents or attorneys shall be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectibility of any Loan Document, including
without limitation, documents granting the Assignor and the other Lenders a
security interest in assets of the Borrower or any guarantor, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of the
Borrower or any guarantor, (iv) the performance of or compliance with any of the
terms or provisions of any of the Loan Documents, (v) inspecting any of the
Property, books or records of the Borrower, (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral securing
or purporting to secure the Loans or (vii) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it has
received a copy of the Agreement, together with copies of the financial
statements requested by the Assignee and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment Agreement, (ii) agrees that it will, independently and
without reliance upon the Administrative Agent, the Assignor or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, (iii) appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and authorizes the Administrative
Agent and each Issuer to exercise such powers under the Loan Documents as are
delegated to the Administrative Agent or such Issuer by the terms thereof,
together with such powers as are reasonably incidental thereto, (iv) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Loan Documents are required to be performed by it as a Lender,
(v) agrees that its payment instructions and notice
instructions are as set forth in the attachment to Schedule 1, (vi) confirms
that none of the funds, monies, assets or other consideration
3
<PAGE>
being used to make the purchase and assumption hereunder are "plan assets" as
defined under ERISA and that its rights, benefits and interests in and under the
Loan Documents will not be "plan assets" under ERISA, [and (vii) attaches the
forms prescribed by the Internal Revenue Service of the United States certifying
that the Assignee is entitled to receive payments under the Loan Documents
without deduction or withholding of any United States federal income taxes].**
**to be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor
in connection with or arising in any manner from the Assignee's non-performance
of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
have the right pursuant to Section 12.3.1 of the Agreement to assign the rights
which are assigned to the Assignee hereunder to any entity or person, provided
that (i) any such subsequent assignment does not violate any of the terms and
conditions of the Loan Documents or any law, rule, regulation, order, writ,
judgment, injunction or decree and that any consent required under the terms of
the Loan Documents has been obtained and (ii) unless the prior written consent
of the Assignor is obtained, the Assignee is not thereby released from its
obligations to the Assignor hereunder, if any remain unsatisfied, including,
without limitation, its obligations under [Sections 4, 5 and 8] hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the Aggregate
Commitment occurs between the date of this Assignment Agreement and the
Effective Date, the percentage interest specified in Item 3 of Schedule 1 shall
remain the same, but the dollar amount purchased shall be recalculated based on
the reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice
of Assignment embody the entire agreement and understanding between the parties
hereto and supersede all prior agreements and understandings between the parties
hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Illinois.
13. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Agreement. For the purpose hereof, the addresses of
the parties hereto (until notice of a change is delivered) shall be the address
set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
4
<PAGE>
By:__________________________
Title:_______________________
[NAME OF ASSIGNEE]
By:__________________________
Title:_______________________
5
<PAGE>
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Agreement:
2. Date of Assignment Agreement:_____________________, 19__
3. Amounts (As of Date of Item 2 above):
Facility Facility Facility Facility
1* 2* *3 *4
--------------------------------------
a. Total of Commitments
(Loans)** under
Agreement $_______ $_______ $_______ $_______
b. Assignee's Percentage
of each Facility purchased
under the Assignment
Agreement*** ____ % ____ % ____ % ____ %
c. Amount of Assigned Share in
each Facility purchased under
the Assignment
Agreement $_______ $_______ $_______ $_______
4. Assignee's Aggregate (Loan
Amount)** Commitment Amount
Purchased Hereunder: $_______
5. Proposed Effective Date: ________
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By:________________________ By:________________________
Title:_____________________ Title:_____________________
* Insert specific facility names per Agreement
** If a Commitment has been terminated, insert outstanding Loans in place
of Commitment
*** Percentage taken to 10 decimal places
<PAGE>
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
<PAGE>
EXHIBIT "E"
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To The First National Bank of Chicago,
as Administrative Agent (the "Administrative Agent") under the Credit Agreement
Described Below.
Re: 364-Day Revolving Credit Agreement, dated May 27, 1998 (as the same may be
amended or modified, the "Agreement"), among NGC Corporation (the
"Borrower"), the Administrative Agent, the Syndication Agent, the
Documentation Agent and the Lenders named therein. Terms used herein and
not otherwise defined shall have the meanings assigned thereto in the
Agreement.
The Administrative Agent is specifically authorized and directed to act
upon the following standing money transfer instructions with respect to the
proceeds of Advances or other extensions of credit from time to time until
receipt by the Administrative Agent of a specific written revocation of such
instructions by the Borrower, provided, however, that the Administrative Agent
may otherwise transfer funds as hereafter directed in writing by the Borrower in
accordance with Section 13.1 of the Agreement or based on any telephonic notice
made in accordance with Section 2.15 of the Agreement.
Facility Identification Number(s)_____________________________________________
Customer/Account Name_________________________________________________________
Transfer Funds To_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
For Account No. _____________________________________________________________
Reference/Attention To _______________________________________________________
Authorized Officer Date___________________
________________________________ _________________________________
(Please Print) Signature
Bank Officer Name Date___________________
________________________________ _________________________________
(Please Print) Signature
<PAGE>
EXHIBIT "F"
COMPETITIVE BID QUOTE REQUEST
(Section 2.3.2)
_______________, 19___
To: The First National Bank of Chicago,
as administrative agent (the "Administrative Agent")
From: NGC Corporation (the "Borrower")
Re: 364-Day Revolving Credit Agreement (the "Agreement") dated as of May 27,
1998 among the Borrower, The First National Bank of Chicago, individually
and as Administrative Agent, The Chase Manhattan Bank, as Syndication
Agent and Citibank, N.A., as Documentation Agent and the Lenders listed on
the signature pages thereof
We hereby give notice pursuant to Section 2.3.2 of the Agreement that we
request Competitive Bid Quotes for the following proposed Competitive Bid
Advance(s):
Borrowing Date: _________________, 19___
Principal Amount/1/ Interest Period/2/
- ---------------- ---------------
$
Such Competitive Bid Quotes should offer [a Competitive Bid Margin] [an
Absolute Rate].
Such Competitive Bid Advances are [not] to be subject to prepayment.
Upon acceptance by the undersigned of any or all of the Competitive Bid
Advances offered by Lenders in response to this request, the undersigned shall
be deemed to affirm as of the Borrowing Date thereof the representations and
warranties made in the Agreement to the extent specified in Article IV thereof.
Capitalized terms used herein have the meanings assigned to them in the
Agreement.
_____________________________
By:__________________________
Title:_______________________
- ---------------------
/1/ Amount must be at least $5,000,000 and an integral multiple of $1,000,000.
/2/ One, two, three, six, nine or twelve months (Eurodollar Auction) or at least
7 and up to 270 days (Absolute Rate Auction), subject to the provisions of
the definitions of Eurodollar Interest Period and Absolute Rate Interest
Period.
<PAGE>
EXHIBIT "G"
INVITATION FOR COMPETITIVE BID QUOTES
(Section 2.3.3)
_____________________, 19___
To: [Name of Lender]
Re: Invitation for Competitive Bid Quotes to
NGC Corporation (the "Borrower")
Pursuant to Section 2.3.3 of the 364-Day Revolving Credit Agreement dated
as of May 27, 1998 (the "Agreement") among the Borrower, the Lenders parties
thereto, The Chase Manhattan Bank and Citibank, N.A., as Co-Agents, the
undersigned, as Administrative Agent, we are pleased on behalf of the Borrower
to invite you to submit Competitive Bid Quotes to the Borrower for the following
proposed Competitive Bid Advance(s):
Borrowing Date: ______________, 19___
Principal Amount Interest Period
- ---------------- ---------------
$
Such Competitive Bid Quotes should offer [a Competitive Bid Margin]
[an Absolute Rate]. Such Competitive Bid Advances are [not] to be subject to
prepayment. Your Competitive Bid Quote must comply with Section 2.3.4 of the
Agreement and the foregoing. Capitalized terms used herein have the meanings
assigned to them in the Agreement.
Please respond to this invitation by no later than [9:00 a.m.] [1:00 p.m,.]
Chicago time on _________, 19____.
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent
By:________________________________
Authorized Officer
<PAGE>
EXHIBIT "H"
COMPETITIVE BID QUOTE
(Section 2.3.4)
__________________, 19___
To: The First National Bank of Chicago, as Administrative Agent
Attn: ___________________
Re: Competitive Bid Quote to NGC Corporation (the "Borrower")
In response to your invitation on behalf of the Borrower dated
____________________, we hereby make the following Competitive Bid Quote
pursuant to Section 2.3.4 of the 364-Day Revolving Credit Agreement hereinafter
referred to and on the following terms:
1. Quoting Lender:
2. Person to contact at Quoting Lender:
3. Borrowing Date:_________________, 19__/1/
4. We hereby offer to make Competitive Bid Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest [Competitive [Absolute Minimum
Amount/2/ Period/3/ Bid Margin/4/] Rate/5/] Amount/6/
------ ------ ---------- ---- ------
$
- ---------------------------
/1/ As specified in the related Invitation For Competitive Bid Quotes.
/2/ Principal amount bid for each Interest Period may not exceed the principal
amount requested. Bids must be made for at least $5,000,000 and an
integral multiple of $1,000,000.
/3/ One, two, three, six, nine or twelve months or at least 7 and up to 270
days, as specified in the related Invitation For Competitive Bid Quotes.
/4/ Competitive Bid Margin over or under the Eurodollar Base Rate determined
for the applicable Interest Period. Specify percentage (rounded to the
nearest 1/100 of 1%) and specify whether "PLUS" or "MINUS".
/5/ Specify rate of interest per annum (rounded to the nearest 1/100 of 1%).
/6/ Specify minimum or maximum amount, if any, which the Borrower may accept
and/or the limit, if any, as to the aggregate principal amount of the
Competitive Bid Loans of the quoting Lender which the Borrower may accept
(see Section 2.3.4(ii)(d)).
<PAGE>
We understand and agree that the offer(s) set forth above, subject to the
satisfaction of the applicable conditions set forth in the 364-Day Revolving
Credit Agreement dated as of May 27, 1998, among the Borrower, the Lenders
listed on the signature pages thereof, The Chase Manhattan Bank, as Syndication
Agent and Citibank, N.A., as Documentation Agent and yourselves, as
Administrative Agent (the "Agreement"), irrevocably obligates us to make the
Competitive Bid Loan(s) for which any offer(s) are accepted, in whole or in
part. Capitalized terms used herein and not otherwise defined herein shall have
their meanings as defined in the Agreement.
Very truly yours,
[NAME OF BANK]
Dated: _________________, 19___ By:____________________________
Authorized Officer
2
<PAGE>
EXHIBIT "I"
FORM OF OPINION OF MAYER, BROWN & PLATT
(to be provided)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> APR-01-1998 APR-01-1997
<PERIOD-END> JUN-30-1998 JUN-30-1997
<CASH> 54,020 23,047
<SECURITIES> 0 0
<RECEIVABLES> 1,610,735 1,675,772
<ALLOWANCES> 0 0
<INVENTORY> 128,847 136,485
<CURRENT-ASSETS> 2,120,264 2,018,780
<PP&E> 2,173,676 1,958,250
<DEPRECIATION> (478,702) (436,674)
<TOTAL-ASSETS> 5,025,759 4,516,903
<CURRENT-LIABILITIES> (1,835,400) (1,753,094)
<BONDS> 0 0
0 0
(75,418) (75,418)
<COMMON> (1,526) (1,518)
<OTHER-SE> (978,129) (1,017,607)
<TOTAL-LIABILITY-AND-EQUITY> (5,025,759) (4,516,903)
<SALES> (3,278,214) (2,684,339)
<TOTAL-REVENUES> (3,278,214) (2,684,339)
<CGS> 3,170,299 2,586,572
<TOTAL-COSTS> 3,170,299 2,586,572
<OTHER-EXPENSES> 1,239 1,316
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 18,091 13,236
<INCOME-PRETAX> (35,043) (43,575)
<INCOME-TAX> 11,602 11,447
<INCOME-CONTINUING> (23,441) (32,128)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (23,441) (32,128)
<EPS-PRIMARY> 0.15 0.21
<EPS-DILUTED> 0.14 0.19
</TABLE>
