SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report February 14, 1997
KINDER MORGAN ENERGY PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 1-11234 76-0380342
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification)
1301 McKinney Street, Ste. 3450, Houston, Texas 77010
(Address of principal executive offices)(zip code)
Registrant's telephone number, including area code: 713-844-9500
Enron Liquids Pipeline, L.P.,
1400 Smith Street, Houston, Texas 77002-7369
(Former name or former address if changed since last report.)
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Item 1. Changes in Control of Registrant.
On February 14, 1997, Kinder Morgan, Inc., a Delaware corporation formerly
known as KC Liquids Holding Corporation ("KMI"), acquired from Enron Liquids
Holding Corporation, a Delaware corporation ("ELHC"), all of the issued and
outstanding capital stock of Enron Liquids Pipeline Company, a Delaware
corporation now known as Kinder Morgan G.P., Inc. ("Kinder Morgan GP"), for
approximately $21.7 million. Kinder Morgan GP is the general partner of Enron
Liquids Pipeline, L.P., a Delaware limited partnership (the "Partnership"). As a
result of KMI's acquisition of the capital stock of Kinder Morgan GP, KMI
indirectly acquired control of the Partnership. At the time of the acquisition,
Kinder Morgan GP owned 431,000 Common Units, representing approximately 6.6% of
the outstanding Common Units of the Partnership.
In order to finance the acquisition of Kinder Morgan GP, KMI borrowed $15
million from First Union National Bank of North Carolina ("First Union"). The
loan is due August 31, 1999 and bears interest, at the option of KMI, at either
First Union's Base Rate plus .5% per annum or LIBOR plus 2.5% per annum. In
addition, KMI obtained a $10.8 million letter of credit from First Union to
support Enron Corp.'s remaining obligations with respect to the minimum
quarterly distribution payable to the holders of the Partnership's Common Units.
The "Support Period", during which Enron Corp. committed that certain minimum
quarterly distributions would be made to holders of the Partnership's Common
Units, will expire on September 30, 1997; and the letter of credit from First
Union which supports such commitment will terminate shortly thereafter. The
borrowings by KMI from First Union are secured by a pledge of all of the stock
of Kinder Morgan GP. In addition, Kinder Morgan GP pledged all of the Common
Units owned by it as additional collateral for the loans. The Credit Agreement
requires First Union's consent for, among other things, (i) the merger or
consolidation of the Partnership with any other person, (ii) the sale, lease or
other disposition of all or substantially all of the Partnership's property or
assets to any other person or (iii) the issuance of any additional Common Units.
The balance of the purchase price was funded through sales of equity in KMI
to Richard D. Kinder ("Kinder"), Morgan Associates, Inc., ("MAI") a Missouri
corporation wholly owned by William V. Morgan ("Morgan"), and First Union
Corporation, a North Carolina Corporation ("FUNC"). FUNC and Kinder acquired
their interests in KMI with personal funds. Kinder loaned MAI $390,000 in order
finance its purchase, with the remainder being financed with MAI's working
capital.
KMI's capital stock ownership consists of two classes of stock, voting and
non-voting. Currently all issued and outstanding shares, voting and non-voting,
are held by Kinder, MAI and FUNC. Kinder owns 2,646 shares of voting stock of
KMI, comprising 49.99% of all issued and outstanding shares of voting stock.
Kinder also owns 2,648 shares of non-voting stock comprising 50.00% of all
issued and outstanding shares of non-voting stock. Kinder's
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total ownership of
all classes constitutes 50.00% of all issued and outstanding shares. In
addition, Kinder has the right to acquire control of KMI at such time that
Kinder and Morgan agree on a long term employment agreement for Morgan. MAI owns
2,542 shares of voting stock, comprising 48.01% of all issued and outstanding
shares of voting stock. MAI also owns 106 shares of non-voting stock, comprising
2.01% of all issued and outstanding shares of non-voting stock. MAI's total
ownership of all classes constitutes 25.01% of all issued and outstanding
shares. FUNC owns 105 shares of voting stock of the corporation, comprising of
2.00% of all issued and outstanding shares of voting stock. FUNC also owns 2,541
shares of non-voting stock comprising 47.99% of all issued and outstanding
shares of non-voting stock. FUNC's total ownership of all classes constitutes
24.99% of all issued and outstanding shares.
The Partnership currently has 6,510,000 Common Units issued and
outstanding. FUNC, together with its wholly owned subsidiary, First Union
Investors, Inc., a North Carolina corporation, own 429,000 Common Units,
comprising approximately 6.6% of all issued and outstanding Common Units. In
addition, First Union National Bank of Florida and First Union National Bank of
Washington, D.C., both of which are wholly-owned subsidiaries of FUNC, hold 400
Common Units and 500 Common Units, respectively. Kinder owns 7,500 Common Units,
comprising less than 0.1% of all issued and outstanding Common Units. Morgan
owns 1,000 Common Units, comprising less than 0.1% of all issued and outstanding
Common Units.
The new directors and officers of Kinder Morgan GP are as follows:
Directors
Richard D. Kinder
William V. Morgan
Alan L. Atterbury
Edward O. Gaylord
Thomas B. King
Officers
Richard D. Kinder--Chairman and CEO
William V. Morgan--Vice Chairman
Thomas B. King--President
Thomas P. Tosoni--Vice President, Chief
Financial Officer and Assistant Secretary
Michael C. Morgan--Vice President, Corporate Development
David G. Dehaemers, Jr.--Secretary and Treasurer
Roger C. Mosby--Vice President
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In connection with the transaction, the name of the Partnership was changed
to Kinder Morgan Energy Partners, L.P. and the address of the Partnership was
changed to 1301 McKinney Street, Suite 3450, Houston, Texas 77010. The new
telephone number of the Partnership is (713) 844-9500.
Item 5. Other Events.
In connection with KMI's acquisition of Kinder Morgan GP, Kinder Morgan
Operating L.P. "B" (formerly, Enron Transportation Services, L.P.) ("OLP-B")
entered into a credit agreement with First Union which provided for a
$15,875,000 revolving credit facility. The obligations of OLP-B under the credit
agreement are guaranteed by the Partnership. Borrowings under the credit
facility are due February 14, 1999 and bear interest, at OLP-B's option, at
either First Union's Base Rate plus .5% per annum or LIBOR plus 2.25% per annum
(in each case increasing by .25% as of the end of each calendar quarter
commencing June 30, 1997). The new credit facility (i) refinanced approximately
$4.4 million owed by OLP-B to Enron Corp., and (ii) replaced OLP-B's existing
credit facility with First Union, which had approximately $9.6 million
outstanding as of February 14, 1997. The Partnership's ability to borrow
additional funds under the credit facility is subject to compliance with certain
financial covenants and ratios. The new credit facility also provides for an
approximate $24.1 million letter of credit that will replace an existing letter
of credit issued by Wachovia Bank of Georgia, N.A. and guaranteed by Enron Corp.
supporting the Cora Terminal revenue bonds. The letter of credit fee will
increase from .25% per annum to 1.50% per annum.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
4.0 Third Amendment to Amended and Restated Agreement of Limited
Partnership dated as of February 14, 1997
10.1 Credit Agreement dated as of February 14, 1997
among Kinder Morgan Operating L.P. "B" and First
Union National Bank of North Carolina with form
of Notes attached
10.2 Security Agreement dated as of February 14, 1997
between Kinder Morgan Energy Partners, L.P. and
First Union National Bank of North Carolina
10.3 Security Agreement dated as of February 14, 1997
between Kinder Morgan Operating L.P. "B" and
First Union National Bank of North Carolina
10.4 Guaranty Agreement dated as of February 14, 1997
from Kinder Morgan Energy Partners, L.P. in favor
of First Union National Bank of North Carolina
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10.5 Credit Agreement dated as of February 14, 1997
among Kinder Morgan, Inc. and First Union
National Bank of North Carolina
10.6 First Amendment to Mortgage and Security
Agreement with Assignment oRents (Illinois) dated as of
February 14, 1997 between Kinder Morgan Operating L.P.
"B" and First Union National Bank of North Carolina
10.7 First Amendment to Mortgage, Security Agreement
and Financing Statement (Wyoming) dated as of
February 14, 1997 between Kinder Morgan Operating
L.P. "B" and First Union National Bank of North
Carolina as Agent
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
KINDER MORGAN ENERGY PARTNERS, L.P.
By: Kinder Morgan G.P., Inc.,
Its general partner
By: /s/signature
Name: Thomas King
Title: President
Date: March 3, 1997
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EXHIBIT INDEX
4.0 Third Amendment to Amended and Restated Agreement of Limited
Partnership dated as of February 14, 1997
10.1 Credit Agreement dated as of February 14, 1997
among Kinder Morgan Operating L.P. "B" and First
Union National Bank of North Carolina with form
of Notes attached
10.2 Security Agreement dated as of February 14, 1997
between Kinder Morgan Energy Partners, L.P. and
First Union National Bank of North Carolina
10.3 Security Agreement dated as of February 14, 1997
between Kinder Morgan Operating L.P. "B" and
First Union National Bank of North Carolina
10.4 Guaranty Agreement dated as of February 14, 1997
from Kinder Morgan Energy Partners, L.P. in favor
of First Union National Bank of North Carolina
10.5 Credit Agreement dated as of February 14, 1997
among Kinder Morgan, Inc. and First Union
National Bank of North Carolina
10.6 First Amendment to Mortgage and Security
Agreement with Assignment of Rents (Illinois) dated as of
February 14, 1997 between Kinder Morgan Operating L.P.
"B" and First Union National Bank of North Carolina
10.7 First Amendment to Mortgage, Security Agreement
and Financing Statement (Wyoming) dated as of
February 14, 1997 between Kinder Morgan Operating
L.P. "B" and First Union National Bank of North
Carolina as Agent
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THIRD AMENDMENT TO
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
ENRON LIQUIDS PIPELINE, L.P.
THIS THIRD AMENDMENT TO AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF ENRON LIQUIDS PIPELINE, L.P. (this "Amendment"), dated effective
as of February 14, 1997, is executed by Kinder Morgan G.P., Inc.(formerly Enron
Liquids Pipeline Company), a Delaware corporation, in its capacity as the
General Partner (the "General Partner") of Enron Liquids Pipeline, L.P., a
Delaware limited partnership (the "Partnership").
RECITALS
Pursuant to the terms of that certain Amended and Restated Agreement of
Limited Partnership of Enron Liquids Pipeline, L.P., dated as of August 6, 1992,
by and among the General Partner, the Organizational Limited Partner and the
Limited Partners referred to on the signature page thereof (as amended, the
"Partnership Agreement"), the General Partner has the power and authority to
effect certain amendments to the Partnership Agreement without the approval of,
and pursuant to the power of attorney granted in favor of the General Partner
by, the Limited Partners and any Assignees.
Acting pursuant to such power and authority, the General Partner desires to
cause the Partnership Agreement to be amended as set forth herein.
AGREEMENT
NOW THEREFORE, it is agreed as follows:
1. Article One, Section 1.2 of the Partnership Agreement as presently
constituted is hereby altered by deleting the first sentence of that section and
hereby adding the following sentence it its place:
"The name of the Partnership shall be 'Kinder
Morgan Energy Partners, L.P.'"
All references to "Enron Liquids Pipeline, L.P." throughout the
Partnership Agreement are hereby replaced with "Kinder Morgan Energy Partners,
L.P."
2. Article Two of the Partnership Agreement as presently constituted is
hereby altered by deleting the term "ELPC" and the corresponding definition in
their entirety, and the following is hereby added to Article Two (in appropriate
alphabetical order):
"KMGP" means Kinder Morgan G.P., Inc., a Delaware
corporation."
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All references to "ELPC" throughout the Partnership Agreement are
hereby replaced with "KMGP".
3. (a) Except as amended hereby, the terms and
provisions of the Partnership Agreement shall remain in
full force and effect.
(b) This Amendment shall be binding upon and inure to the benefit of
the parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
effective as of the date first written above.
GENERAL PARTNER:
KINDER MORGAN G.P., INC.
By: /s/
Thomas B. King
President
LIMITED PARTNERS:
All Limited Partners heretofore and hereafter
admitted as limited partners of the Partnership,
pursuant to Powers of Attorney heretofore and
hereafter executed in favor of, and granted and
delivered to, the General Partner.
By: Kinder Morgan G.P., Inc.,
General Partner, as
attorney- in-fact for all
Limited Partners pursuant
to the Powers of Attorney
granted pursuant to
Section 1.4 of the
Partnership Agreement
By: /s/
Thomas B. King
President
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CREDIT AGREEMENT
Dated as of February 14, 1997
Among
KINDER MORGAN OPERATING L.P. "B"
as Borrower,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Agent,
and
THE LENDERS SIGNATORY HERETO
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Terms Defined Above.............. 1
Section 1.02 Certain Defined Terms............ 1
Section 1.03 Accounting Terms and
Determinations................... 16
ARTICLE II
Commitments
Section 2.01 Loans and Letter of Credit....... 16
Section 2.02 Borrowings, Continuations,
Conversions and Letter of
Credit........................... 17
Section 2.03 Changes of Commitments........... 18
Section 2.04 Fees............................. 19
Section 2.05 Several Obligations.............. 19
Section 2.06 Notes............................ 20
Section 2.07 Prepayments of Revolving
Credit Loans..................... 20
Section 2.08 Assumption of Risks.............. 20
Section 2.09 Obligation to Reimburse and to
Prepay........................... 21
Section 2.10 Lending Offices.................. 23
Section 2.11 Telecopied Drawings.............. 23
ARTICLE III
Payments of Principal and Interest
Section 3.01 Repayment of Loans............... 24
Section 3.02 Interest......................... 24
ARTICLE IV
Payments; Pro Rata Treatment; Computations; Etc.
Section 4.01 Payments......................... 25
Section 4.02 Pro Rata Treatment............... 25
Section 4.03 Computations..................... 25
Section 4.04 Non-receipt of Funds by the
Agent............................ 26
Section 4.05 Set-off, Sharing of Payments,
Etc.............................. 26
Section 4.06 Taxes............................ 27
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ARTICLE V
Capital Adequacy
Section 5.01 Additional Costs................. 30
Section 5.02 Limitation on LIBOR Loans........ 32
Section 5.03 Illegality....................... 32
Section 5.04 Base Rate Loans Pursuant to
Sections 5.01, 5.02 and 5.03................... 32
Section 5.05 Compensation..................... 32
ARTICLE VI
Conditions Precedent
Section 6.01 Initial Funding.................. 33
Section 6.02 Initial and Subsequent Loans
and Letter of Credit........................... 35
ARTICLE VII
Representations and Warranties
Section 7.01 Corporate Existence.............. 35
Section 7.02 Financial Condition.............. 36
Section 7.03 Litigation....................... 36
Section 7.04 No Breach........................ 36
Section 7.05 Authority........................ 36
Section 7.06 Approvals........................ 37
Section 7.07 Use of Loans..................... 37
Section 7.08 ERISA............................ 37
Section 7.09 Taxes............................ 38
Section 7.10 Titles, etc...................... 38
Section 7.11 No Material Misstatements........ 39
Section 7.12 Investment Company Act........... 39
Section 7.13 Public Utility Holding Company
Act.............................. 39
Section 7.14 Subsidiaries..................... 39
Section 7.15 Location of Business and
Offices.......................... 39
Section 7.16 Defaults......................... 39
Section 7.17 Environmental Matters............ 40
Section 7.18 Compliance with the Law.......... 41
Section 7.19 Insurance........................ 41
Section 7.20 Hedging Agreements............... 41
Section 7.21 Restriction on Liens............. 41
Section 7.22 Material Agreements.............. 42
Section 7.23 Partnership Agreement............ 42
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ARTICLE VIII
Affirmative Covenants
Section 8.01 Financial Statements............. 42
Section 8.02 Litigation....................... 44
Section 8.03 Maintenance, Etc................. 44
Section 8.04 Environmental Matters............ 45
Section 8.05 Further Assurances............... 45
Section 8.06 Performance of Obligations....... 46
Section 8.07 ERISA Information and
Compliance....................... 46
Section 8.08 Replacement of Wachovia Bank
of Georgia, N.A................................ 46
ARTICLE IX
Negative Covenants
Section 9.01 Debt............................. 46
Section 9.02 Liens............................ 47
Section 9.03 Investments, Loans and Advances.. 47
Section 9.04 Dividends, Distributions and
Redemptions...................... 48
Section 9.05 Sales and Leasebacks............. 48
Section 9.06 Nature of Business............... 48
Section 9.07 Limitation on Leases............. 48
Section 9.08 Mergers, Etc..................... 49
Section 9.09 Proceeds of Notes................ 49
Section 9.10 ERISA Compliance................. 49
Section 9.11 Sale or Discount of Receivables.. 50
Section 9.12 Current Ratio.................... 50
Section 9.13 Debt Service Coverage Ratio...... 50
Section 9.14 Sale of Properties............... 50
Section 9.15 Environmental Matters............ 51
Section 9.16 Transactions with Affiliates..... 51
Section 9.17 Subsidiaries..................... 51
Section 9.18 Negative Pledge Agreements....... 51
Section 9.19 Partnership Agreement............ 51
ARTICLE X
Events of Default; Remedies
Section 10.01 Events of Default............... 51
Section 10.02 Remedies........................ 53
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ARTICLE XI
The Agent
Section 11.01 Appointment, Powers and
Immunities...................... 54
Section 11.02 Reliance by Agent............... 55
Section 11.03 Defaults........................ 55
Section 11.04 Rights as a Lender.............. 55
Section 11.05 Indemnification................. 55
Section 11.06 Non-Reliance on Agent and
other Lenders................... 56
Section 11.07 Action by Agent................. 56
Section 11.08 Resignation or Removal of
Agent........................... 57
ARTICLE XII
Miscellaneous
Section 12.01 Waiver.......................... 57
Section 12.02 Notices......................... 57
Section 12.03 Payment of Expenses,
Indemnities, etc................ 58
Section 12.04 Amendments, Etc................. 60
Section 12.05 Successors and Assigns.......... 60
Section 12.06 Assignments and Participations.. 60
Section 12.07 Invalidity...................... 62
Section 12.08 Counterparts.................... 62
Section 12.09 References...................... 62
Section 12.10 Survival........................ 62
Section 12.11 Captions........................ 62
Section 12.12 No Oral Agreements.............. 63
Section 12.13 Governing Law; Submission to
Jurisdiction.................... 63
Section 12.14 Interest........................ 64
Section 12.15 Confidentiality................. 65
Section 12.16 Effectiveness................... 65
Section 12.17 Exculpation Provisions.......... 65
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Annex I - List of Revolving Credit Commitments
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Replacement Term Note
Exhibit B - Form of Borrowing, Continuation and Conversion Request
Exhibit C - Form of Compliance Certificate
Exhibit D-1 - Form of Legal Opinion of Morrison & Hecker
Exhibit D-2 - Form of Legal Opinion of Illinois Counsel
Exhibit D-3 - Form of Legal Opinion of Wyoming Counsel
Exhibit E - List of Security Instruments
Exhibit F - Form of Assignment Agreement
Exhibit G-1 - Form of Replacement Letter of Credit
Schedule 7.02 - Liabilities
Schedule 7.03 - Litigation
Schedule 7.09 - Taxes
Schedule 7.10 - Titles, etc.
Schedule 7.14 - Subsidiaries and Partnerships
Schedule 7.17 - Environmental Matters
Schedule 7.19 - Insurance
Schedule 7.20 - Hedging Agreements
Schedule 7.22 - Material Agreements
Schedule 9.01 - Debt
Schedule 9.02 - Liens
Schedule 9.03 - Investments, Loans and Advances
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THIS CREDIT AGREEMENT dated as of February 14, 1997 is among: KINDER
MORGAN OPERATING L.P. "B" (formerly known as Enron Transportation Services,
L.P.), a limited partnership formed under the laws of the State of Delaware (the
"Borrower"); each of the lenders that is a signatory hereto or which becomes a
signatory hereto as provided in Section 12.06 (individually, together with its
successors and assigns, a "Lender" and, collectively, the "Lenders"); and FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association (in its
individual capacity, "First Union"), as agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Agent").
R E C I T A L S
A. The Borrower has requested that the Lenders
extend and rearrange all of the Prior Debt (as hereafter
defined) and provide certain loans to and extensions of
credit on behalf of the Borrower; and
B. The Lenders have agreed to make such loans and
extensions of credit subject to the terms and conditions
of this Agreement.
C. In consideration of the mutual covenants and
agreements herein contained and of the loans, extensions
of credit and commitments hereinafter referred to, the
parties hereto agree as follows:
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Terms Defined Above. As used in this Agreement, the terms
"Agent," "Borrower," "First Union," "Lender" and "Lenders" shall have the
meanings indicated above.
Section 1.02 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Article I or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
"A Drawing" shall have the meaning assigned
in the Replacement Letter of Credit.
"Additional Costs" shall have the meaning assigned such term in Section
5.01(a).
"Advance" means a Term Loan advance made by First Union to the Borrower
as provided in Section 2.09(b) hereof.
"Affected Loans" shall have the meaning
assigned such term in Section 5.04.
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"Affiliate" of any Person shall mean (i) any Person directly or
indirectly controlled by, controlling or under common control with such
first Person, (ii) any director or officer of such first Person or of any
Person referred to in clause (i) above and (iii) if any Person in clause
(i) above is an individual, any member of the immediate family (including
parents, spouse and children) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member or
trust. For purposes of this definition, any Person which owns directly or
indirectly 25% or more of the securities having ordinary voting power for
the election of directors or other governing body of a corporation or 25%
or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to
"control" (including, with its correlative meanings, "controlled by" and
"under common control with") such corporation or other Person.
"Agreement" shall mean this Credit Agreement, as the same may from time
to time be amended or supplemented.
"Aggregate Commitments" at any time shall equal the sum of the
Aggregate Revolving Credit Commitments and the Aggregate LC Commitments.
"Aggregate Revolving Credit Commitments" at any time shall equal
$15,875,000, as the same may be reduced in accordance with Section 2.03
hereof.
"Aggregate LC Commitments" at any time shall
equal the sum of the LC Commitments of the
Lenders.
"Applicable Lending Office" shall mean, for each Lender and for each
Type of Loan, the lending office of such Lender (or an Affiliate of such
Lender) designated for such Type of Loan on the signature pages hereof or
such other offices of such Lender (or of an Affiliate of such Lender) as
such Lender may from time to time specify to the Agent and the Borrower as
the office by which its Loans of such Type are to be made and maintained.
"Applicable Margin" shall mean (i) 0.50% per annum with respect to Base
Rate Loans; and (ii) 2.25% per annum with respect to LIBOR Loans, in both
cases increasing by an additional 0.25% per annum on each Quarterly Date
commencing June 30, 1997.
"Assignment" shall have the meaning assigned
such term in Section 12.06(b).
"Base Rate" shall mean, with respect to any Base Rate Loan, for any
day, the higher of (i) the Federal Funds Rate for any such day plus 1/2 of
1% or (ii) the Prime Rate for such day. Each change in any interest rate
provided for
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herein based upon the Base Rate resulting from a change in the Base Rate
shall take effect at the time of such change in the Base Rate.
"Base Rate Loans" shall mean Loans that bear interest at rates based
upon the Base Rate.
"Bonds" shall mean the Port Facility Refunding Revenue Bonds (Enron
Transportation Services, L.P. Project) Series 1994 in the aggregate
principal amount of $23,700,000, as issued by the Jackson-Union Counties
Regional Port District pursuant to the terms of the Indenture.
"Business Day" shall mean any day other than a day on which commercial
banks are authorized or required to close in Charlotte, North Carolina and,
where such term is used in the definition of "Quarterly Date" or if such
day relates to a borrowing or continuation of, a payment or prepayment of
principal of or interest on, or a conversion of or into, or the Interest
Period for, a LIBOR Loan or a notice by the Borrower with respect to any
such borrowing or continuation, payment, prepayment, conversion or Interest
Period, any day which is also a day on which dealings in Dollar deposits
are carried out in the London interbank market.
"Closing Date" shall mean February 14, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and any successor statute.
"Commitment" at any time for any Lender shall equal the sum of its
Revolving Credit Commitment and its LC Commitment.
"Consolidated Net Income" shall mean with respect to the Borrower and
its Consolidated Subsidiaries, for any period, the aggregate of the net
income (or loss) of the Borrower and its Consolidated Subsidiaries after
allowances for taxes for such period, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded from such net
income (to the extent otherwise included therein) the following: (i) the
net income of any Person in which the Borrower or any Consolidated
Subsidiary has an interest (which interest does not cause the net income of
such other Person to be consolidated with the net income of the Borrower
and its Consolidated Subsidiaries in accordance with GAAP), except to the
extent of the amount of dividends or distributions actually paid in such
period by such other Person to the Borrower or to a Consolidated
Subsidiary, as the case may be; (ii) the net income (but not loss) of any
Consolidated Subsidiary to the extent that the declaration or payment of
dividends or similar distributions or transfers or loans by that
Consolidated Subsidiary is not at the time permitted by operation of the
terms of its charter or any agreement, instrument or Governmental
Requirement applicable to such Consolidated Subsidiary, or is otherwise
restricted or prohibited in each case determined in
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accordance with GAAP; (iii) the net income (or loss) of any Person acquired
in a pooling-of-interests transaction for any period prior to the date of
such transaction; (iv) any extraordinary gains or losses, including gains
or losses attributable to Property sales not in the ordinary course of
business; and (v) the cumulative effect of a change in accounting
principles and any gains or losses attributable to writeups or writedowns
of assets.
"Consolidated Subsidiaries" shall mean each Subsidiary of the Borrower
(whether now existing or hereafter created or acquired) the financial
statements of which shall be (or should have been) consolidated with the
financial statements of the Borrower in accordance with GAAP.
"Cora Terminal" shall mean that portion of the Mortgaged Property
located in Jackson and Randolph Counties, Illinois, and known as the Cora
Terminal.
"Debt" shall mean, for any Person the sum of the following (without
duplication): (i) all obligations of such Person for borrowed money or
evidenced by bonds, debentures, notes or other similar instruments
(including principal, interest, fees and charges); (ii) all obligations of
such Person (whether contingent or otherwise) in respect of bankers'
acceptances, letters of credit, surety or other bonds and similar
instruments; (iii) all obligations of such Person to pay the deferred
purchase price of Property or services (other than for borrowed money);
(iv) all obligations under leases which shall have been, or should have
been, in accordance with GAAP, recorded as capital leases in respect of
which such Person is liable (whether contingent or otherwise); (v) all
obligations under leases which require such Person or its Affiliate to make
payments over the term of such lease, including payments at termination,
which are substantially equal to at least eighty percent (80%) of the
purchase price of the Property subject to such lease plus interest as an
imputed rate of interest; (vi) all Debt (as described in the other clauses
of this definition) and other obligations of others secured by a Lien on
any asset of such Person, whether or not such Debt is assumed by such
Person; (vii) all Debt (as described in the other clauses of this
definition) and other obligations of others guaranteed by such Person or in
which such Person otherwise assures a creditor against loss of the debtor
or obligations of others; (viii) all obligations or undertakings of such
Person to maintain or cause to be maintained the financial position or
covenants of others or to purchase the Debt or Property of others; (ix)
obligations to deliver goods or services in consideration of advance
payments ; (x) obligations to pay for goods or services whether or not such
goods or services are actually received or utilized by such Person; (xi)
any capital stock of such Person in which such Person has a mandatory
obligation to redeem such stock; (xii) any Debt of a Special Entity for
which such Person is liable either by agreement or because of a
Governmental Requirement; and (xiv) all obligations of such Person under
Hedging Agreements.
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"Default" shall mean an Event of Default or an event which with notice
or lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean lawful money of
the United States of America.
"EBITDA" shall mean, for any period, the sum of Consolidated Net Income
for such period plus the following expenses or charges to the extent
deducted from Consolidated Net Income in such period: interest, taxes,
depreciation, depletion and amortization, minus all noncash income added to
Consolidated Net Income in such period.
"Effective Date" shall have the meaning assigned such term in Section
12.16.
"Environmental Laws" shall mean any and all Governmental Requirements
pertaining to health or the environment in effect in any and all
jurisdictions in which the Borrower or any Subsidiary is conducting or at
any time has conducted business, or where any Property of the Borrower or
any Subsidiary is located, including without limitation, the Oil Pollution
Act of 1990 ("OPA"), the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980
("CERCLA"), as amended, the Federal Water Pollution Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the
Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection laws. The term "oil" shall have
the meaning specified in OPA, the terms "hazardous substance" and "release"
(or "threatened release") have the meanings specified in CERCLA, and the
terms "solid waste" and "disposal" (or "disposed") have the meanings
specified in RCRA; provided, however, that (i) in the event either OPA,
CERCLA or RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective date
of such amendment and (ii) to the extent the laws of the state in which any
Property of the Borrower or any Subsidiary is located establish a meaning
for "oil," "hazardous substance," "release," "solid waste" or "disposal"
which is broader than that specified in either OPA, CERCLA or RCRA, such
broader meaning shall apply.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Borrower or any Subsidiary would be
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deemed to be a "single employer" within the meaning of section 4001(b)(1)
of ERISA or subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA Event" shall mean (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder, (ii) the withdrawal of
the Borrower, any Subsidiary or any ERISA Affiliate from a Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, (iii) the filing of a notice of intent to terminate a
Plan or the treatment of a Plan amendment as a termination under Section
4041 of ERISA, (iv) the institution of proceedings to terminate a Plan by
the PBGC or (v) any other event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.
"Event of Default" shall have the meaning assigned such term in Section
10.01.
"Excepted Liens" shall mean: (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained; (ii) Liens in connection with workmen's compensation,
unemployment insurance or other social security, old age pension or public
liability obligations not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (iii) operators', vendors', carriers',
warehousemen's, repairmen's, mechanics', workmen's, materialmen's,
construction or other like Liens arising by operation of law in the
ordinary course of business or statutory landlord's liens, each of which is
in respect of obligations that have not been outstanding more than 90 days
or which are being contested in good faith by appropriate proceedings and
for which adequate reserves have been maintained in accordance with GAAP;
(iv) any Liens reserved in leases or farmout agreements for rent or
royalties and for compliance with the terms of the farmout agreements or
leases in the case of leasehold estates, to the extent that any such Lien
referred to in this clause does not materially impair the use of the
Property covered by such Lien for the purposes for which such Property is
held by the Borrower or any Subsidiary or materially impair the value of
such Property subject thereto; (v) encumbrances (other than to secure the
payment of borrowed money or the deferred purchase price of Property or
services), easements, restrictions, servitudes, permits, conditions,
covenants, exceptions or reservations in any rights of way or other
Property of the Borrower or any Subsidiary for the purpose of roads,
pipelines, transmission lines, transportation lines, distribution lines for
the removal of gas, oil, coal or other minerals or timber, and other like
purposes, or for the joint or common use of real estate, rights of way,
facilities and equipment, and defects, irregularities, zoning restrictions
and deficiencies in title of any rights of way or other Property which in
the aggregate do not materially impair the use of such rights of way or
other Property for the purposes of which such rights of way and
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other Property are held by the Borrower or any Subsidiary or materially
impair the value of such Property subject thereto; (vi) deposits of cash or
securities to secure the performance of bids, trade contracts, leases,
statutory obligations and other obligations of a like nature incurred in
the ordinary course of business; and (vii) Liens permitted by the Security
Instruments.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight federal funds transactions with
a member of the Federal Reserve System arranged by federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day, provided that (i) if the date for
which such rate is to be determined is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day,
and (ii) if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to the Agent on such
day on such transactions as determined by the Agent.
"Fee Letter" shall mean that certain letter agreement from First Union
Corporation to the Borrower and agreed to by First Union dated of even date
with this Agreement concerning certain fees in connection with this
Agreement and any agreements or instruments executed in connection
therewith, as the same may be amended or replaced from time to time.
"Financial Statements" shall mean the financial statement or statements
of the Borrower and its Consolidated Subsidiaries described or referred to
in Section 7.02.
"First Union Corporation" shall mean First
Union Corporation of North Carolina, a North
Carolina corporation.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"General Partner" shall mean Kinder Morgan G.P., Inc., general partner
of the Borrower.
"Governmental Authority" shall include the country, the state, county,
city and political subdivisions in which any Person or such Person's
Property is located or which exercises valid jurisdiction over any such
Person or such Person's Property, and any court, agency, department,
commission, board, bureau or instrumentality of any of them including
monetary authorities which exercises valid jurisdiction over any such
Person or such Person's Property. Unless otherwise specified, all
references to Governmental Authority herein shall mean a Governmental
Authority having jurisdiction over, where applicable, the
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Borrower, its Subsidiaries or any of their Property or the Agent, any
Lender or any Applicable Lending Office.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or other
directive or requirement (whether or not having the force of law),
including, without limitation, Environmental Laws, energy regulations and
occupational, safety and health standards or controls, of any Governmental
Authority.
"Guarantor" shall mean Kinder Morgan Energy.
"Guaranty Agreement" shall mean an agreement executed by the Guarantor
in form and substance satisfactory to the Agent guarantying,
unconditionally, payment of the Indebtedness, as the same may be amended,
modified or supplemented from time to time.
"Hedging Agreements" shall mean any commodity, interest rate or
currency swap, cap, floor, collar, forward agreement or other exchange or
protection agreements or any option with respect to any such transaction.
"Highest Lawful Rate" shall mean, with respect to each Lender, the
maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the
Notes or on other Indebtedness under laws applicable to such Lender which
are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
"Indebtedness" shall mean any and all amounts owing or to be owing by
the Borrower to First Union, the Agent and/or Lenders in connection with
the Loan Documents, and any Hedging Agreements now or hereafter arising
between the Borrower and First Union or any Lender and permitted by the
terms of this Agreement and all renewals, extensions and/or rearrangements
of any of the above.
"Indemnified Parties" shall have the meaning assigned such term in
Section 12.03(b).
"Indemnity Matters" shall mean any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), claims, demands
and causes of action made or threatened against a Person and, in connection
therewith, all losses, liabilities, damages (including, without limitation,
consequential damages) or reasonable costs and expenses of any kind or
nature whatsoever incurred by
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such Person whether caused by the sole or concurrent negligence of such
Person seeking indemnification.
"Indenture" shall mean the Indenture of Trust dated as of April 1,
1994, by and between Jackson-Union Counties Regional Port District and the
Trustee securing the Bonds.
"Initial Funding" shall mean the funding of the initial Loans or
issuance of the Letter of Credit pursuant to Section 6.01 hereof.
"Interest Period" shall mean, with respect to any LIBOR Loan, the
period commencing on the date such LIBOR Loan is made and ending on the
numerically corresponding day in the first, second, third or sixth calendar
month thereafter, as the Borrower may select as provided in Section 2.02,
except that each Interest Period which commences on the last Business Day
of a calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall end
on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period may commence
before and end after the Revolving Credit Termination Date; (ii) no
Interest Period for any LIBOR Loan may end after the due date of any
installment, if any, provided for in Section 3.01 hereof to the extent that
such LIBOR Loan would need to be prepaid prior to the end of such Interest
Period in order for such installment to be paid when due; (iii) each
Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day (or, if such next
succeeding Business Day falls in the next succeeding calendar month, on the
next preceding Business Day); and (iv) no Interest Period shall have a
duration of less than one month and, if the Interest Period for any LIBOR
Loans would otherwise be for a shorter period, such Loans shall not be
available hereunder.
"Kinder Morgan Energy" shall mean Kinder
Morgan Energy Partners, L.P., a Delaware limited
partnership.
"LC Maximum Amount" shall mean $24,128,548.00 initially, which amount
may be reduced and reinstated from time to time as provided in the Letter
of Credit.
"LC Commitment" shall mean, for First Union, its obligation to issue
the Letter of Credit, and for each other Lender, its obligation to accept a
participation in the Letter of Credit in an amount equal to its Percentage
Share of the LC Maximum Amount, all as provided in Section 2.01(b) and to
fund its Percentage Share of any Advances as provided in Section 2.09.
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"Letter of Credit" shall mean the Support Letter of Credit for so long
as it is outstanding and thereafter the Replacement Letter of Credit.
"LIBOR" shall mean the rate of interest determined on the basis of the
rate for deposits in Dollars for a period equal to the applicable Interest
Period commencing on the first day of such Interest Period appearing on
Telerate Page 3750 as of 11:00 a.m. (London time) two (2) Business Days
prior to the first day of the applicable Interest Period. In the event that
such rate does not appear on Telerate Page 3750, "LIBOR" shall be
determined by the Agent to be the rate per annum at which deposits in
Dollars are offered by leading reference banks in the London interbank
market to First Union at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of the applicable Interest Period for
a period equal to such Interest Period and in an amount substantially equal
to the amount of the applicable Loan.
"LIBOR Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in the definition of "LIBOR
Rate".
"LIBOR Rate" shall mean, with respect to any LIBOR Loan, a rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Agent to be equal to the quotient of (i) LIBOR for such
Loan for the Interest Period for such Loan divided by (ii) 1 minus the
Reserve Requirement for such Loan for such Interest Period.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether
such interest is based on the common law, statute or contract, and whether
such obligation or claim is fixed or contingent, and including but not
limited to (i) the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt
or a lease, consignment or bailment for security purposes. The term "Lien"
shall include reservations, exceptions, encroachments, easements, rights of
way, covenants, conditions, restrictions, leases and other title exceptions
and encumbrances affecting Property. For the purposes of this Agreement,
the Borrower or any Subsidiary shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale
agreement, or leases under a financing lease or other arrangement pursuant
to which title to the Property has been retained by or vested in some other
Person in a transaction intended to create a financing.
"Loan Documents" shall mean this Agreement,
the Letter of Credit, the Fee Letter, the Notes
and the Security Instruments.
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"Loans" shall mean the loans as provided for
by Section 2.01(a), Section 2.09(b) and Section
2.09(c). "Loans" shall include the Revolving
Credit Loans and the Term Loans.
"Majority Lenders" shall mean, at any time while no Loans are
outstanding, Lenders having at least seventy-five percent (75%) of the
Aggregate Commitments and, at any time while Loans are outstanding, Lenders
holding at least seventy-five percent (75%) of the outstanding aggregate
principal amount of the Loans (without regard to any sale by a Lender of a
participation in any Loan under Section 12.06(c)).
"Material Adverse Effect" shall mean any material and adverse effect on
(i) the assets, liabilities, financial condition, business, operations or
affairs of the Borrower and its Subsidiaries taken as a whole or from the
facts represented or warranted in any Loan Document, or (ii) the ability of
the Borrower and its Subsidiaries taken as a whole to carry out their
business as at the Closing Date or as proposed as of the Closing Date to be
conducted or meet their obligations under the Loan Documents on a timely
basis.
"Maturity Date" shall mean February 14, 1999.
"Mortgaged Property" shall mean the Property owned by the Borrower and
which is subject to the Liens existing and to exist under the terms of the
Security Instruments.
"Multiemployer Plan" shall mean a Plan defined as such in Section 3(37)
or 4001(a)(3) of ERISA.
"Notes" shall mean the Notes provided for by Section 2.06, Section
2.09(b) and 2.09(c), together with any and all renewals, extensions for any
period, increases, rearrangements, substitutions or modifications thereof.
The "Notes" shall include the Revolving Credit Notes and the Term Notes.
"Other Taxes" shall have the meaning assigned such term in Section
4.06(b).
"Painter Gas Plant" shall mean that portion of the Mortgaged Property
located in Uinta County, Wyoming and known as the Painter Gas Plant.
"Partnership Agreement" shall mean the written partnership agreement of
the Borrower dated September 30, 1993, as amended from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions.
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"Percentage Share" shall mean the percentage of the Aggregate
Commitments to be provided by a Lender under this Agreement as indicated on
Annex I hereto, as modified from time to time to reflect any assignments
permitted by Section 12.06(b).
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization
or government or any agency, instrumentality or political subdivision
thereof, or any other form of entity.
"Plan" shall mean any employee pension benefit plan, as defined in
Section 3(2) of ERISA, which (i) is currently or hereafter sponsored,
maintained or contributed to by the Borrower, any Subsidiary or an ERISA
Affiliate or (ii) was at any time during the preceding six calendar years
sponsored, maintained or contributed to, by the Borrower, any Subsidiary or
an ERISA Affiliate.
"Post-Default Rate" shall mean, in respect of any principal of any Loan
or any other amount payable by the Borrower under this Agreement or any
Note, a rate per annum during the period commencing on the date of an Event
of Default until such amount is paid in full or all Events of Default are
cured or waived equal to 2% per annum above the Base Rate as in effect from
time to time plus the Applicable Margin (if any), but in no event to exceed
the Highest Lawful Rate; provided that, for a LIBOR Loan, the "Post-Default
Rate" for such principal shall be, for the period commencing on the date of
the Event of Default and ending on the earlier to occur of the last day of
the Interest Period therefor or the date all Events of Default are cured or
waived, 2% per annum above the interest rate for such Loan as provided in
Section 3.02(ii), but in no event to exceed the Highest Lawful Rate.
"Prime Rate" shall mean the rate of interest from time to time
announced publicly by the Agent at the Principal Office as its prime
commercial lending rate. Such rate is set by the Agent as a general
reference rate of interest, taking into account such factors as the Agent
may deem appropriate, it being understood that many of the Agent's
commercial or other loans are priced in relation to such rate, that it is
not necessarily the lowest or best rate actually charged to any customer
and that the Agent may make various commercial or other loans at rates of
interest having no relationship to such rate.
"Principal Office" shall mean the principal office of the Agent,
presently located at 301 South College Street, TW-10, Charlotte, North
Carolina 28288- 0608 or such other location as designated by the Agent from
time to time.
"Prior Credit Agreement" shall mean the
Credit Agreement among Enron Transportation
Services, L.P. (now known as Kinder Morgan
Operating L.P.
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"B"), a Delaware limited partnership, and First Union dated as of December
29, 1994, as amended.
"Prior Debt" shall mean the outstanding Debt under (i) that certain
promissory note dated as of September 30, 1993 in the original principal
amount of $4,430,437 from the Borrower payable to the order of Enron Corp.
and (ii) that certain promissory note issued pursuant to the Prior Credit
Agreement dated December 29, 1994, in an outstanding principal amount of
$9,618,752.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Quarterly Dates" shall mean the last day of each March, June,
September and December in each year, the first of which shall be March 31,
1997; provided, however, that if any such day is not a Business Day, such
Quarterly Date shall be the next succeeding Business Day.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"Regulatory Change" shall mean, with respect to any Lender, any change
after the Closing Date in any Governmental Requirement (including
Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of lenders
(including such Lender or its Applicable Lending Office) of or under any
Governmental Requirement (whether or not having the force of law) by any
Governmental Authority charged with the interpretation or administration
thereof.
"Replacement Letter of Credit" shall mean First Union's irrevocable
letter of credit No. S113181 for the benefit of the Trustee in the amount
of the LC Maximum Amount to be issued pursuant to Section 2.01(b) in
support of the Bonds and in the form of Exhibit G-2 hereto.
"Replacement Term Note" shall mean the promissory note of the Borrower
evidencing its obligations with respect to the Replacement Term Loan in the
form of Exhibit A-2 hereto.
"Replacement Term Loan" shall mean the term loan made by First Union to
the Borrower pursuant to Section 2.09(b).
"Required Payment" shall have the meaning assigned such term in Section
4.04.
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"Responsible Officer" shall mean, as to any Person, the Chief Executive
Officer, the President or any Vice President of such Person and, with
respect to financial matters, the term "Responsible Officer" shall include
the Chief Financial Officer of such Person. Unless otherwise specified, all
references to a Responsible Officer herein shall mean a Responsible Officer
of the General Partner of Borrower.
"Revolving Credit Commitment" shall mean, as to each Lender, the amount
set forth opposite such Lender's name on Annex I under the caption
"Revolving Credit Commitment" (as the same may be reduced pursuant to
Section 2.03(b) hereof pro rata to each Lender based on its Percentage
Share) as modified from time to time to reflect any assignments permitted
by Section 12.06(b).
"Revolving Credit Loans" shall mean the
loans as provided for by Section 2.01(a).
"Revolving Credit Notes" shall mean the promissory note or notes
(whether one or more) of the Borrower described in Section 2.06 hereof and
being in the form of Exhibit A-1 hereto.
"Revolving Credit Termination Date" shall mean, unless the Commitments
are sooner terminated pursuant to Sections 2.03(b) or 10.02 hereof,
February 14, 1999.
"SEC" shall mean the Securities and Exchange
Commission or any successor Governmental
Authority.
"Security Instruments" shall mean the agreements or instruments
described or referred to in Exhibit E, and any and all other agreements or
instruments now or hereafter executed and delivered by the Borrower or any
other Person (other than participation or similar agreements between any
Lender and any other lender or creditor with respect to any Indebtedness
pursuant to this Agreement) in connection with, or as security for the
payment or performance of the Notes and this Agreement, as the same may be
amended, supplemented or restated from time to time.
"Special Entity" shall mean any joint venture, limited liability
company or partnership, general or limited partnership or any other type of
partnership or company other than a corporation in which the Borrower or
one or more of its other Subsidiaries is a member, owner, partner or joint
venturer and owns, directly or indirectly, at least a majority of the
equity of such entity or controls such entity, but excluding any tax
partnerships that are not classified as partnerships under state law. For
purposes of this definition, any Person which owns directly or indirectly
an equity investment in another Person which allows the first Person to
manage or elect managers who manage the normal activities
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of such second Person will be deemed to "control"
such second Person (e.g. a sole general partner
controls a limited partnership).
"Special Purpose Subsidiary" shall have the meaning assigned such term
in Section 9.17.
"Subsidiary" shall mean (i) any corporation of which at least a
majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and
(ii) any Special Entity. Unless otherwise indicated herein, each reference
to the term "Subsidiary" shall mean a Subsidiary of the Borrower.
"Support Letter of Credit" shall mean First Union's irrevocable credit
in the amount of the LC Maximum Amount issued pursuant to Section 2.01(b)
to Wachovia Bank of Georgia, N.A., in form and substance satisfactory to
First Union and Wachovia National Bank of Georgia, N.A. in order to obtain
the release of the guaranty of Enron Corp. relating to the Wachovia Letter
of Credit, with an initial expiration date of no more than 30 days from the
date of issue, such expiration date being subject to being extended in
additional one month periods at the discretion of First Union.
"Support Term Note" shall mean the promissory note of the Borrower
evidencing its obligations with respect to the Support Term Loan in form
and substance satisfactory to First Union.
"Support Term Loan" shall mean the term loan made by First Union to the
Borrower pursuant to Section 2.09(c).
"Syndication" shall occur on the first date First Union assigns an
interest in this Agreement to another Lender pursuant to Section 12.06(b).
"Taxes" shall have the meaning assigned such
term in Section 4.06(a).
"Term Loans" shall mean the Support Term
Loan and the Replacement Term Loan.
"Term Notes" shall mean the Support Term
Note and the Replacement Term Note.
"Trustee" means Bank One, Texas, National
Association.
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"Type" shall mean, with respect to any Loan, a Base Rate Loan or a
LIBOR Loan.
"Wholly-Owned Subsidiary" shall mean, as to the Borrower, any
Subsidiary of which all of the outstanding shares of stock having by the
terms thereof ordinary voting power to elect the board of directors of such
corporation, other than directors' qualifying shares, are owned or
controlled by the Borrower or one or more of the Wholly-Owned Subsidiaries
or by the Borrower and one or more of the Wholly-Owned Subsidiaries.
Section 1.03 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Agent or the Lenders hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent with the
audited financial statements referred to in Section 7.02 (except for changes
concurred with by Kinder Morgan Energy Partner's independent public
accountants).
ARTICLE II
Commitments
Section 2.01 Loans and Letter of Credit.
(a) Revolving Credit Loans. Each Lender severally agrees, on the terms
of this Agreement, to make Revolving Credit Loans to the Borrower during
the period from and including (i) the Closing Date or (ii) such later date
that such Lender becomes a party to this Agreement as provided in Section
12.06(b), to but excluding the Revolving Credit Termination Date in an
aggregate principal amount at any one time outstanding up to but not
exceeding the amount of such Lender's Commitment as then in effect;
provided, however, that the aggregate principal amount of all such Loans by
all Lenders hereunder at any one time outstanding shall not exceed the
Aggregate Revolving Credit Commitments. Subject to the terms of this
Agreement, during the period from the Closing Date to but excluding the
Revolving Credit Termination Date, the Borrower may borrow, repay and
reborrow the amount described in this Section 2.01(a).
(b) Applications for Letter of Credit. The Borrower hereby applies to
First Union for, and authorizes and instructs First Union to issue, the
Support Letter of Credit in the LC Maximum Amount on March 7, 1997, unless
at such time the Replacement Letter of Credit has been accepted by the
Trustee as an "Alternate Letter of Credit" (as defined in the Indenture).
The Borrower also hereby applies to First Union for, and authorizes and
instructs First Union to issue, the Replacement Letter of Credit at such
time as the Trustee is prepared to accept the Replacement Letter of Credit
in connection with the Bonds and in compliance with the Indenture. First
Union, as issuing bank for the Lenders, agrees to extend credit for the
account of the Borrower by issuing the Letter of Credit in the LC Maximum
Amount on the dates set forth above. The Lenders shall
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participate in the Letter of Credit according to their respective
Percentage Shares. The Letter of Credit may be drawn upon from time to time
as provided in the Letter of Credit.
(c) Limitation on Types of Loans. Subject to the other terms and
provisions of this Agreement, at the option of the Borrower, the Revolving
Credit Loans may be Base Rate Loans or LIBOR Loans; provided that no more
than four (4) LIBOR Loans may be outstanding at any time. Until
Syndication, the LIBOR Loans may only have Interest Periods of one month.
The Term Loans may only be Base Rate Loans.
Section 2.02 Borrowings, Continuations, Conversions and Letter of
Credit.
(a) Borrowings. The Borrower shall give the Agent (which shall promptly
notify the Lenders) advance notice as hereinafter provided of each
borrowing hereunder, which shall specify the aggregate amount of such
borrowing, the Type and the date (which shall be a Business Day) of the
Loans to be borrowed and (in the case of LIBOR Loans) the duration of the
Interest Period therefor.
(b) Minimum Amounts. If a borrowing consists in whole or in part of
LIBOR Loans, such LIBOR Loans with the same Interest Period shall be in
amounts of at least $1,000,000 or any whole multiple of $100,000 in excess
thereof. If a borrowing consists in whole or in part of Base Rate Loans
shall be in amounts of at least $500,000 or any whole multiple of $100,000
in excess thereof.
(c) Notices. Each borrowing and all continuations and conversions shall
require advance written notice to the Agent (which shall promptly notify
the Lenders) in the form of Exhibit B hereto, which in each case shall be
irrevocable, from the Borrower to be received by the Agent not later than
11:00 a.m., Charlotte, North Carolina time at least one Business Day prior
to the date of each Base Rate Loan borrowing and three Business Days prior
to the date of each LIBOR Loan borrowing, continuation or conversion.
(d) Continuation Options. Subject to the provisions made in this
Section 2.02(d), the Borrower may elect to continue all or any part of any
LIBOR Loan beyond the expiration of the then current Interest Period
relating thereto by giving advance notice as provided in Section 2.02(c) to
the Agent (which shall promptly notify the Lenders) of such election,
specifying the amount of such Loan to be continued and the Interest Period
therefor. In the absence of such a timely and proper election, the Borrower
shall be deemed to have elected to convert such LIBOR Loan to a Base Rate
Loan pursuant to Section 2.02(e). All or any part of any LIBOR Loan may be
continued as provided herein, provided that (i) any continuation of any
such Loan shall be (as to each Loan as continued for an applicable Interest
Period) in amounts of at least $1,000,000 or any whole multiple of $100,000
in excess thereof and (ii) no Default shall have occurred and be
continuing. If a Default shall have occurred and be continuing, each LIBOR
Loan
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shall be converted to a Base Rate Loan on the last day of the Interest
Period applicable thereto.
(e) Conversion Options. The Borrower may elect to convert all or any
part of any LIBOR Loan on the last day of the then current Interest Period
relating thereto to a Base Rate Loan by giving advance notice to the Agent
(which shall promptly notify the Lenders) of such election. Subject to the
provisions made in this Section 2.02(e), the Borrower may elect to convert
all or any part of any Base Rate Loan at any time and from time to time to
a LIBOR Loan by giving advance notice as provided in Section 2.02(c) to the
Agent (which shall promptly notify the Lenders) of such election. All or
any part of any outstanding Loan may be converted as provided herein,
provided that (i) any conversion of any Base Rate Loan into a LIBOR Loan
shall be (as to each such Loan into which there is a conversion for an
applicable Interest Period) in amounts of at least $1,000,000 or any whole
multiple of $100,000 in excess thereof and (ii) no Default shall have
occurred and be continuing. If a Default shall have occurred and be
continuing, no Base Rate Loan may be converted into a LIBOR Loan.
(f) Advances. Not later than 1:00 p.m. Charlotte, North Carolina time
on the date specified for each borrowing hereunder, each Lender shall make
available the amount of the Loan to be made by it on such date to the
Agent, to an account which the Agent shall specify, in immediately
available funds, for the account of the Borrower. The amounts so received
by the Agent shall, subject to the terms and conditions of this Agreement,
be made available to the Borrower by depositing the same, in immediately
available funds, in an account of the Borrower designated by the Borrower
and maintained at the Principal Office.
Section 2.03 Changes of Commitments.
(a) The Aggregate Revolving Credit Commitments shall reduce
automatically by $750,000 on each Quarterly Date commencing on June 30,
1997 and may be further reduced pursuant to Section 2.03(b) hereof.
(b) The Borrower shall have the right to terminate or to reduce the
amount of the Aggregate Revolving Credit Commitments at any time or from
time to time upon not less than three (3) Business Days' prior notice to
the Agent (which shall promptly notify the Lenders) of each such
termination or reduction, which notice shall specify the effective date
thereof and the amount of any such reduction (which shall not be less than
$1,000,000 or any whole multiple of $100,000 in excess thereof) and shall
be irrevocable and effective only upon receipt by the Agent.
(c) The Aggregate Revolving Credit Commitments
once terminated or reduced may not be reinstated.
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Section 2.04 Fees.
(a) The Borrower shall pay to the Agent for the
account of each Lender:
(i) a commitment fee on the daily average unused amount of the
Aggregate Revolving Credit Commitment for the period from and including
the Closing Date to but excluding the Revolving Credit Termination Date
at a rate per annum equal to 3/8 of 1%. Accrued commitment fees shall
be payable quarterly in arrears on each Quarterly Date and on the
earlier of the date the Aggregate Revolving Credit Commitments are
terminated or the Revolving Credit Termination Date.
(ii) a letter of credit fee, computed (on the basis of a year of
360 days and actual days elapsed) for each day from the Closing Date at
the rate of 1.50% per annum of the LC Maximum Amount, which rate shall
increase 0.25% per annum quarterly commencing June 30, 1997, payable
quarterly in advance on the Closing Date and on each Quarterly Date
thereafter.
(b) The Borrower shall pay to First Union for
its own account:
(i) 1/8% per annum of the LC Maximum Amount as a fronting fee,
payable quarterly in advance on the Closing Date and on each Quarterly
Date thereafter.
(ii) Upon each transfer of the Letter of Credit to a successor
beneficiary in accordance with its terms, the sum of $500.
(iii) Upon each drawing of the Letter of Credit, a negotiation fee
of $200; provided that such fee shall not be a condition to any
drawing.
(iv) Other fees related to amendments,
modifications, etc.
(c) The Borrower shall pay to First Union Corporation for its account
such other fees as are set forth in the Fee Letter on the dates specified
therein to the extent not paid prior to the Closing Date.
Section 2.05 Several Obligations. The failure of any Lender to make any
Loan to be made by it or to provide funds for disbursements or reimbursements
under the Letter of Credit on the date specified therefor shall not relieve any
other Lender of its obligation to make its Loan or provide funds on such date,
but no Lender shall be responsible for the failure of any other Lender to make a
Loan to be made by such other Lender or to provide funds to be provided by such
other Lender.
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Section 2.06 Notes. Any Term Loan made by First Union shall be
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit A-2 or A-3 hereto, as the case may be, dated the date of the Letter
of Credit to which it relates, payable to the order of First Union and otherwise
duly completed. The Revolving Credit Loans made by each Lender shall be
evidenced by a single promissory note of the Borrower to each Lender in
substantially the form of Exhibit A-1 hereto, dated (i) the Closing Date or (ii)
the effective date of an Assignment pursuant to Section 12.06(b), payable to the
order of such Lender in a principal amount equal to its Revolving Credit
Commitment as in effect on the date of issuance and otherwise duly completed and
such substitute Notes as required by Section 12.06(b). The date, amount, Type,
interest rate and Interest Period of each Loan made by each Lender, and all
payments made on account of the principal thereof, shall be recorded by such
Lender on its books for its Notes, and, prior to any transfer, may be endorsed
by such Lender on a schedule attached to such Notes or any continuation thereof
or on any separate record maintained by such Lender. Failure to make any such
notation or to attach a schedule shall not affect any Lender's or the Borrower's
rights or obligations in respect of such Loans or affect the validity of such
transfer by any Lender of its Notes.
Section 2.07 Prepayments of Revolving Credit
Loans.
(a) The Borrower may prepay the Base Rate Loans that are Revolving
Credit Loans upon not less than one (1) Business Day's prior notice to the
Agent (which shall promptly notify the Lenders), which notice shall specify
the prepayment date (which shall be a Business Day) and the amount of the
prepayment (which shall be at least $500,000 of, if greater, in multiples
of $25,000, or the remaining aggregate principal balance outstanding on the
Revolving Credit Notes) and shall be irrevocable and effective only upon
receipt by the Agent. The Borrower may prepay LIBOR Loans that are
Revolving Credit Loans on the same condition as for Base Rate Loans, except
that not less than three Business Days' notice shall be required and in
addition such prepayments of LIBOR Loans shall be subject to the terms of
Section 5.05 and shall be in an amount equal to all of the LIBOR Loans for
the Interest Period prepaid. Notices received after 11:00 a.m., Charlotte,
North Carolina time, shall be deemed to have been received on the following
Business Day.
(b) If, after giving effect to any termination or reduction of the
Aggregate Revolving Credit Commitments pursuant to Section 2.03, the
outstanding aggregate principal amount of the Revolving Credit Loans
exceeds the Aggregate Revolving Credit Commitments, the Borrower shall
prepay the Revolving Credit Loans on the date of such termination or
reduction in an aggregate principal amount equal to the excess, together
with interest on the principal amount paid accrued to the date of such
prepayment.
(c) Prepayments permitted or required under this Section 2.07 shall be
without premium or penalty, except as required under Section 5.05 for
prepayment of LIBOR Loans. Any prepayments on the Revolving Credit Loans
may be reborrowed subject to the then effective Aggregate Revolving Credit
Commitments.
Section 2.08 Assumption of Risks. The Borrower
assumes all risks of the acts or omissions of any
beneficiary of the Letter of Credit or any transferee
thereof with respect to
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its use of such Letter of Credit. Neither the Agent (except in the case of
willful misconduct or bad faith on the part of the Agent or any of its
employees), its correspondents nor any Lender shall be responsible for the
validity, sufficiency or genuineness of certificates or other documents or any
endorsements thereon, even if such certificates or other documents should in
fact prove to be invalid, insufficient, fraudulent or forged; for errors,
omissions, interruptions or delays in transmissions or delivery of any messages
by mail, telex, or otherwise, whether or not they be in code; for errors in
translation or for errors in interpretation of technical terms; the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign the Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; the failure of any beneficiary or any transferee of
the Letter of Credit to comply fully with conditions required in order to draw
upon the Letter of Credit; or for any other consequences arising from causes
beyond the Agent's control or the control of the Agent's correspondents. In
addition, neither the Agent nor any Lender shall be responsible for any error,
neglect, or default of any of the Agent's correspon- dents; and none of the
above shall affect, impair or prevent the vesting of any of the Agent's or any
Lender's rights or powers hereunder, all of which rights shall be cumulative.
The Agent and its correspondents may accept certificates or other documents that
appear on their face to be in order, without responsibility for further
investigation of any matter contained therein regardless of any notice or
information to the contrary. In furtherance and not in limitation of the
foregoing provisions, the Borrower agrees that any action, inaction or omission
taken or not taken by the Agent or by any correspondent for the Agent in good
faith in connection with the Letter of Credit, or any related drafts,
certificates, documents or instruments, shall be binding on the Borrower and
shall not put the Agent or its correspondents under any resulting liability to
the Borrower.
Section 2.09 Obligation to Reimburse and to Prepay.
(a) Except as provided in subsections (b) and (c) of this Section, the
Borrower agrees to reimburse First Union immediately for any amounts drawn
on the Letter of Credit and amounts not immediately reimbursed shall bear
interest at the Post-Default Rate from and including the date of drawing to
but excluding the date of reimbursement.
(b) Replacement Letter of Credit. The amount of any A Drawing shall
bear interest (i) from and including the date of drawing to but excluding
the "Stated Expiration Date" (as defined in the Replacement Letter of
Credit), at the rate then borne by Base Rate Loans and (ii) on and after
the Stated Expiration Date or during the continuance of an Event of
Default, at the Post-Default Rate. If no Event of Default has occurred and
is continuing, the principal portion of an A Drawing remaining outstanding
for a period of 30 days shall be charged as an Advance against a term loan
account hereby established by First Union for the Borrower. The obligation
of the Borrower to repay any Advances shall be evidenced by the Replacement
Term Note, payable to the order of First Union, representing the obligation
of the Borrower to pay the lesser of (A) $23,700,000 or (B) the aggregate
unpaid principal amount of all Advances, with interest theon at fluctuating
per annum interest rate equal to the rates then borne by Base Rate Loans.
First Union is authorized to endorse the date and amount of each Advance
and each payment of principal with respect thereto on the schedule
annexed to and constituting a part of the Replacement Term Note, which
endorsement shall constitute
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prima facie evidence of the accuracy of the information endorsed.
The Replacement Term Note shall (w) be dated as of February 14, 1997 (x)
be payable as to principal (1) on any mandatory or optional redemption date
for the Bonds, in an amount corresponding to the principal amount of Bonds
redeemed and (2) in full, on the Stated Expiration Date (or such earlier
date as may be required by Section 10.02 hereof); (y) be stated to mature
on the Stated Expiration Date; and (z) bear interest on the unpaid
principal amount thereof, if any, until paid.
(c) Support Letter of Credit. The amount of any drawing under the
Support Letter of Credit shall be charged against a term loan account
hereby established by First Union for the Borrower. The obligation of the
Borrower to repay any such drawings shall be evidenced by the Support Term
Note, payable to the order of First Union, representing the obligation of
the Borrower to pay the lesser of (A) $24,128,548 or (B) the aggregate
amount of any such drawing with interest thereon at a fluctuating per annum
interest rate equal to the rates then borne by Base Rate Loans. The Support
Term Note shall (w) be dated as of the date of delivery, (x) be payable as
to principal on the earlier of (1) of ten days from the date of any drawing
on the Support Letter of Credit or (2) the Maturity Date; and (y) bear
interest on the unpaid principal amount thereof, if any, until paid.
(d) Any amounts from time to time owing to First Union as a portion of
the Term Loan (i) may be prepaid on any Business Day by or on behalf of the
Borrower upon 3-day's prior written notice stating the amount to be prepaid
(which shall be in minimum denominations of $100,000 and integral multiples
of $5,000 in excess thereof) and (ii) shall be prepaid to the extent any
Bonds owned by the Borrower are remarketed, on the date of such
remarketing. Accrued interest on the amount prepaid to the date of
prepayment shall be paid to First Union at the same time as such
prepayment. Upon payment to First Union of the amount of such portion of
the Replacement Term Loan to be so prepaid, together with accrued interest
thereon to the date of such prepayment, the outstanding obligations of the
Borrower under the Replacement Term Loan shall be reduced by the amount of
such prepayment, and interest shall cease to accrue on the amount prepaid.
The amount available under this Term Loan facility from time to time shall
equal the aggregate principal amount of Bonds outstanding less the
aggregate principal amount of Pledged Bonds (as defined in the Indenture).
Any prepayment notice shall be irrevocable.
The obligations of the Borrower under this Agreement with respect to the
Letter of Credit shall be absolute, unconditional and irrevocable and shall
be paid or performed strictly in accordance with the terms of this
Agreement under all circumstances whatsoever, including, without
limitation, but only to the fullest extent permitted by applicable law, the
following circumstances: (i) any lack of validity or enforceability of this
Agreement, the Letter of Credit or any of the Security Instruments; (ii)
any amendment or waiver of (including any default), or any consent to
departuAgreement (except to the extent permitted by any amendment or
waiver), the Letter of Credit or any of the Security Instruments; (iii)
the existence of any claim, set-off, defense or other rights which
the Borrower may have at any time against the beneficiary of the
Letter of Credit or any transferee of the Letter of Credit (or any
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Persons for whom any such beneficiary or any such transferee may be
acting), the Agent, any Lender or any other Person, whether in connection
with this Agreement, the Letter of Credit, the Security Instruments, the
transactions contemplated hereby or any unrelated transaction; (iv) any
statement, certificate, draft, notice or any other document presented under
the Letter of Credit proves to have been forged, fraudulent, insufficient
or invalid in any respect or any statement therein proves to have been
untrue or inaccurate in any respect whatsoever; (v) payment by First Union
under the Letter of Credit against presentation of a draft or certificate
which appears on its face to comply, but does not comply, with the terms of
such Letter of Credit; and (vi) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing.
Notwithstanding anything in this Agreement to the contrary, the Borrower
will not be liable for payment or performance that results from the gross
negligence or willful misconduct of First Union, except (i) where the
Borrower or any Subsidiary actually recovers the proceeds for itself or
First Union of any payment made by First Union in connection with such
gross negligence or willful misconduct or (ii) in cases where First Union
makes payment to the named beneficiary of a Letter of Credit.
(e) Each Lender severally and unconditionally agrees that it shall
promptly reimburse First Union an amount equal to such Lender's Percentage
Share of any disbursement made by First Union under the Letter of Credit
that is not reimbursed according to Section 2.09(a) or when due under
Section 2.09(b) or Section 2.09(c), as the case may be.
(f) The Borrower hereby pledges, assigns, transfers and delivers to
First Union all its right, title and interest to all Bonds purchased with
funds drawn under the Replacement Letter of Credit (the "Pledged Bonds"),
and hereby grants to First Union a first lien on, and security interest in,
its rights, title and interest in and to the Pledged Bonds, the interest
thereon and all proceeds thereof or substitutions therefor, as collateral
security for the prompt and complete payment when due of the amounts
payable under this Section 2.09. During such time as any Bonds are Pledged
Bonds, First Union shall be entitled to exercise all of the rights of a
holder of Bonds with respect to voting, consenting and directing the
Trustee as if First Union were the owner of such Bonds, and the Borrower
hereby grants and assigns to the Bank all such rights.
Section 2.10 Lending Offices. The Loans of each Type made by each
Lender shall be made and maintained at such Lender's Applicable Lending Office
for Loans of such Type as shown on the signature pages hereof.
Section 2.11 Telecopied Drawings. The Letter of Credit provides that
drafts and certificates for drawings under the Letter of Credit may be presented
to First Union via telecopy and may state an undertaking by the drawer to cause
the corresponding manually executed drafts and certificates to be delivered to
First Union on the next succeeding Business Day. The Borrower acknowledges and
assumes all risks relating to the use of such telecopied drafts and certificates
and, moreover, agrees that its obligations under this Agreement remain absolute,
irrevocable and unconditional if First Union honors such telecopied drawing(s)
under the Letter of Credit which appear on their face to comply with the terms
of the Letter of Credit notwith
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standing that the manually executed drafts and certificates do not comply with
the terms of the Letter of Credit or failure is made to deliver such manually
executed drafts and certificates, in whole or in part, to First Union following
a drawing made under the Letter of Credit via telecopy.
ARTICLE III
Payments of Principal and Interest
Section 3.01 Repayment of Loans. The Borrower will pay to the Agent,
for the account of each Lender, the principal payments required by this Section
3.01. On the Maturity Date the Borrower shall repay the outstanding aggregate
principal and accrued and unpaid interest under the Notes.
Section 3.02 Interest. The Borrower will pay to the Agent, for the
account of each Lender, interest on the unpaid principal amount of each Loan
made by such Lender for the period commencing on the date such Loan is made to
but excluding the date such Loan shall be paid in full, at the following rates
per annum:
(i) if such a Loan is a Base Rate Loan, the Base Rate (as in effect
from time to time) plus the Applicable Margin (as in effect from time to
time), but in no event to exceed the Highest Lawful Rate; and
(ii) if such a Loan is a LIBOR Loan, for each Interest Period relating
thereto, LIBOR Rate for such Loan plus the Applicable Margin (as in effect
from time to time), but in no event to exceed the Highest Lawful Rate.
Notwithstanding the foregoing, the Borrower will pay to the Agent, for the
account of each Lender, interest at the applicable Post-Default Rate on any
principal of any Loan made by such Lender, and (to the fullest extent permitted
by law) on any other amount payable by the Borrower hereunder, under any Loan
Document or under any Note held by such Lender to or for account of such Lender,
for the period commencing on the date of an Event of Default until the same is
paid in full or all Events of Default are cured or waived.
Accrued interest on Base Rate Loans shall be payable on each Quarterly Date
commencing on March 31, 1997, and accrued interest on each LIBOR Loan shall be
payable on the last day of the Interest Period therefor and, if such Interest
Period is longer than three months at three-month intervals following the first
day of such Interest Period, except that interest payable at the Post-Default
Rate shall be payable from time to time on demand and interest on any LIBOR Loan
that is converted into a Base Rate Loan (pursuant to Section 5.04) shall be
payable on the date of conversion (but only to the extent so converted).
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Promptly after the determination of any interest rate provided for herein
or any change therein, the Agent shall notify the Lenders to which such interest
is payable and the Borrower thereof. Each determination by the Agent of an
interest rate or fee hereunder shall, except in cases of manifest error, be
final, conclusive and binding on the parties.
ARTICLE IV
Payments; Pro Rata Treatment; Computations; Etc.
Section 4.01 Payments. Except to the extent otherwise provided herein,
all payments of principal, interest and other amounts to be made by the Borrower
under the Loan Documents shall be made in Dollars, in immediately available
funds, to the Agent at such account as the Agent shall specify by notice to the
Borrower from time to time, not later than 1:00 p.m. Charlotte, North Carolina
time on the date on which such payments shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day). Such payments shall be made without (to the fullest
extent permitted by applicable law) defense, set-off or counterclaim. Each
payment received by the Agent under this Agreement or any Note for account of a
Lender shall be paid promptly to such Lender in immediately available funds.
Except as provided in clause (iii) of the definition of "Interest Period", if
the due date of any payment under this Agreement or any Note would otherwise
fall on a day which is not a Business Day such date shall be extended to the
next succeeding Business Day and interest shall be payable for any principal so
extended for the period of such extension. At the time of each payment to the
Agent of any principal of or interest on any borrowing, the Borrower shall
notify the Agent of the Loans to which such payment shall apply. In the absence
of such notice the Agent may specify the Loans to which such payment shall
apply, provided that such payment or prepayment will be applied first to the
Loans comprised of Base Rate Loans.
Section 4.02 Pro Rata Treatment. Except to the extent otherwise
provided herein each Lender agrees that: (i) each borrowing from the Lenders
under Section 2.01 and each continuation and conversion under Section 2.02 shall
be made from the Lenders pro rata in accordance with their Percentage Share,
each payment of fees under Section 2.04(a) shall be made for account of the
Lenders pro rata in accordance with their Percentage Share, and each termination
or reduction of the amount of the Aggregate Revolving Credit Commitments under
Section 2.03(b) shall be applied to the Commitment of each Lender, pro rata
according to the amounts of its respective Commitment; (ii) each payment of
principal of Loans by the Borrower shall be made for account of the Lenders pro
rata in accordance with the respective unpaid principal amount of the Loans held
by the Lenders; and (iii) each payment of interest on Loans by the Borrower
shall be made for account of the Lenders pro rata in accordance with the amounts
of interest due and payable to the respective Lenders; and (iv) each
reimbursement by the Borrower of disbursements under the Letter of Credit shall
be made for account of the Agent or, if funded by the Lenders, pro rata for the
account of the Lenders, in accordance with the amounts of reimbursement
obligations due and payable to each respective Lender.
Section 4.03 Computations. Interest on LIBOR
Loans and fees shall be computed on the basis of a year of
360 days and actual days elapsed (including the first day
but excluding
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the last day) occurring in the period for which such interest is payable, unless
such calculation would exceed the Highest Lawful Rate, in which case interest
shall be calculated on the per annum basis of a year of 365 or 366 days, as the
case may be. Interest on Base Rate Loans shall be computed on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which such
interest is payable.
Section 4.04 Non-receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Lender or the Borrower prior to the date on which such
notifying party is scheduled to make payment to the Agent (in the case of a
Lender) of the proceeds of a Loan or a payment under a Letter of Credit to be
made by it hereunder or (in the case of the Borrower) a payment to the Agent for
account of one or more of the Lenders hereunder (such payment being herein
called the "Required Payment"), which notice shall be effective upon receipt,
that it does not intend to make the Required Payment to the Agent, the Agent may
assume that the Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof available to
the intended recipient(s) on such date and, if such Lender or the Borrower (as
the case may be) has not in fact made the Required Payment to the Agent, the
recipient(s) of such payment shall, on demand, repay to the Agent the amount so
made available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until but excluding the date the Agent recovers such amount at a rate per annum
which, for any Lender as recipient, will be equal to the Federal Funds Rate, and
for the Borrower as recipient, will be equal to the Base Rate plus the
Applicable Margin.
Section 4.05 Set-off, Sharing of Payments, Etc.
(a) The Borrower agrees that, in addition to (and without limitation
of) any right of set-off, bankers' lien or counterclaim a Lender may
otherwise have, each Lender shall have the right and be entitled (after
consultation with the Agent), at its option, to offset balances held by it
or by any of its Affiliates for account of the Borrower at any of its
offices, in Dollars or in any other currency, against any principal of or
interest on any of such Lender's Loans, or any other amount payable to such
Lender hereunder, which is not paid when due (regardless of whether such
balances are then due to the Borrower), in which case it shall promptly
notify the Borrower and the Agent thereof, provided that such Lender's
failure to give such notice shall not affect the validity thereof.
(b) If any Lender shall obtain payment of any principal of or interest
on any Loan made by it to the Borrower under this Agreement (or
reimbursement as to the Letter of Credit) through the exercise of any right
of set-off, banker's lien or counterclaim or similar right or otherwise,
and, as a result of such payment, such Lender shall have received a greater
percentage of the principal or interest (or reimbursement) then due
hereunder by the Borrower to such Lender than the percentage received by
any other Lenders, it shall promptly (i) notify the Agent and each other
Lender thereof and (ii) purchase from such other Lenders participations in
(or, if and to the extent specified by such Lender, direct interests in)
the Loans (or participations in the Letter of Credit) made by such other
Lenders (or in interest due thereon, as the case may be) in such
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amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Lenders shall share the benefit of such
excess payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such excess payment) pro rata in accordance with
the unpaid principal and/or interest on the Loans held by each of the
Lenders (or reimbursements of the Letter of Credit). To such end all the
Lenders shall make appropriate adjustments among themselves (by the resale
of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Borrower agrees that any Lender so purchasing a
participation (or direct interest) in the Loans made by other Lenders (or
in interest due thereon, as the case may be) may exercise all rights of
set-off, banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans (or
the Letter of Credit) in the amount of such participation. Nothing
contained herein shall require any Lender to exercise any such right or
shall affect the right of any Lender to exercise, and retain the benefits
of exercising, any such right with respect to any other indebtedness or
obligation of the Borrower. If under any applicable bankruptcy, insolvency
or other similar law, any Lender receives a secured claim in lieu of a
set-off to which this Section 4.05 applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in
a manner consistent with the rights of the Lenders entitled under this
Section 4.05 to share the benefits of any recovery on such secured claim.
Section 4.06 Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrower
hereunder shall be made, in accordance with Section 4.01, free and clear of
and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent, taxes
imposed on its income, and franchise or similar taxes imposed on it, by (i)
any jurisdiction (or political subdivision thereof) of which the Agent or
such Lender, as the case may be, is a citizen or resident or in which such
Lender has an Applicable Lending Office, (ii) the jurisdiction (or any
political subdivision thereof) in which the Agent or such Lender is
organized, or (iii) any jurisdiction (or political subdivision thereof) in
which such Lender or the Agent is presently doing business in which taxes
are imposed solely as a result of doing business in such jurisdiction (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If the Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to the Lenders or the Agent (i) the sum payable shall be
increased by the amount necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section 4.06) such Lender or the Agent (as the case may be)
shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
taxing authority or other Governmental Authority in accordance with
applicable law.
(b) Other Taxes. In addition, to the fullest
extent permitted by applicable law, the Borrower
agrees to pay any present or future stamp or
documentary taxes or any
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other excise or property taxes, charges or similar levies that arise from
any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement, any Assignment or any
Security Instrument (hereinafter referred to as "Other Taxes").
(c) Indemnification. to the fullest extent permitted by applicable law,
the Borrower will indemnify each Lender and the Agent for the full amount
of Taxes and Other Taxes (including, but not limited to, any Taxes or Other
Taxes imposed by any Governmental Authority on amounts payable under this
section 4.06) paid by such Lender or the Agent (on their behalf or on
behalf of any Lender), as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted unless the payment of such Taxes was not correctly or legally
asserted and such Lender's payment of such Taxes or Other Taxes was the
result of its gross negligence or willful misconduct. any payment pursuant
to such indemnification shall be made within thirty (30) days after the
date any Lender or the Agent, as the case may be, makes written demand
therefor. if any Lender or the Agent receives a refund or credit in respect
of any Taxes or Other Taxes for which such Lender or the Agent has received
payment from the Borrower it shall promptly notify the Borrower of such
refund or credit and shall, if no default has occurred and is continuing,
within thirty (30) days after receipt of a request by the Borrower (or
promptly upon receipt, if the Borrower has requested application for such
refund or credit pursuant hereto), pay an amount equal to such refund or
credit to the Borrower without interest (but with any interest so refunded
or credited), provided that the Borrower, upon the request of such Lender
or the Agent, agrees to return such refund or credit (plus penalties,
interest or other charges) to such Lender or the Agent in the event such
Lender or the Agent is required to repay such refund or credit.
(d) Lender Representations.
(i) Each Lender represents that it is either (1) a corporation or
banking association organized under the laws of the United States of
America or any state thereof or (2) it is entitled to complete
exemption from United States withholding tax imposed on or with respect
to any payments, including fees, to be made to it pursuant to this
Agreement (A) under an applicable provision of a tax convention to
which the United States of America is a party or (B) because it is
acting through a branch, agency or office in the United States of
America and any payment to be received by it hereunder is effectively
connected with a trade or business in the United States of America.
Each Lender that is not a corporation or banking association organized
under the laws of the United States of America or any state thereof
agrees to provide to the Borrower and the Agent on the Closing Date, or
on the date of its delivery of the Assignment pursuant to which it
becomes a Lender, and at such other times as required by United States
law or
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as the Borrower or the Agent shall reasonably request, two accurate and
complete original signed copies of either (A) Internal Revenue Service
Form 4224 (or successor form) certifying that all payments to be made
to it hereunder will be effectively connected to a United States trade
or business (the "Form 4224 Certification") or (B) Internal Revenue
Service Form 1001 (or successor form) certifying that it is entitled to
the benefit of a provision of a tax convention to which the United
States of America is a party which completely exempts from United
States withholding tax all payments to be made to it hereunder (the
"Form 1001 Certification"). In addition, each Lender agrees that if it
previously filed a Form 4224 Certification, it will deliver to the
Borrower and the Agent a new Form 4224 Certification prior to the first
payment date occurring in each of its subsequent taxable years; and if
it previously filed a Form 1001 Certification, it will deliver to the
Borrower and the Agent a new certification prior to the first payment
date falling in the third year following the previous filing of such
certification. Each Lender also agrees to deliver to the Borrower and
the Agent such other or supplemental forms as may at any time be
required as a result of changes in applicable law or regulation in
order to confirm or maintain in effect its entitlement to exemption
from United States withholding tax on any payments hereunder, provided
that the circumstances of such Lender at the relevant time and
applicable laws permit it to do so. If a Lender determines, as a result
of any change in either (i) a Governmental Requirement or (ii) its
circumstances, that it is unable to submit any form or certificate that
it is obligated to submit pursuant to this Section 4.06, or that it is
required to withdraw or cancel any such form or certificate previously
submitted, it shall promptly notify the Borrower and the Agent of such
fact. If a Lender is organized under the laws of a jurisdiction outside
the United States of America, unless the Borrower and the Agent have
received a Form 1001 Certification or Form 4224 Certification
satisfactory to them indicating that all payments to be made to such
Lender hereunder are not subject to United States withholding tax, the
Borrower shall withhold taxes from such payments at the applicable
statutory rate. Each Lender agrees to indemnify and hold harmless the
Borrower or Agent, as applicable, from any United States taxes,
penalties, interest and other expenses, costs and losses incurred or
payable by (i) the Agent as a result of such Lender's failure to submit
any form or certificate that it is required to provide pursuant to this
Section 4.06 or (ii) the Borrower or the Agent as a result of their
reliance on any such form or certificate which such Lender has provided
to them pursuant to this Section 4.06.
(ii) For any period with respect to which a Lender has failed to
provide the Borrower with the form required pursuant to this Section
4.06, if any, (other than if such failure is due to a change in a
Governmental Requirement occurring subsequent to the date on which a
form originally was required to be provided), such Lender shall not be
entitled to indemnification under Section 4.06 with respect to taxes
imposed by the United States which taxes would not have been imposed
but for such failure to provide such forms; provided, however, that
should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax becomes subject to taxes because of its failure
to deliver a form
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required hereunder, the Borrower shall take such steps as such Lender
shall reasonably request to assist such Lender to recover such taxes.
(iii) Any Lender claiming any additional amounts payable pursuant
to this Section 4.06 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document
requested by the Borrower or the Agent or to change the jurisdiction of
its Applicable Lending 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, in the sole determination of such
Lender, be otherwise disadvantageous to such Lender.
ARTICLE V
Capital Adequacy
Section 5.01 Additional Costs.
(a) Eurodollar Regulations, etc. The Borrower shall pay directly to
each Lender from time to time such amounts as such Lender may determine to
be necessary to compensate such Lender for any costs which it determines
are attributable to its making or maintaining of any LIBOR Loans or issuing
or participating in the Letter of Credit hereunder or its obligation to
make any LIBOR Loans or issue or participate in the Letter of Credit
hereunder, or any reduction in any amount receivable by such Lender
hereunder in respect of any of such LIBOR Loans, the Letter of Credit or
such obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which: (i) changes the basis of taxation of any amounts
payable to such Lender under this Agreement or any Note in respect of any
of such LIBOR Loans or the Letter of Credit (other than taxes imposed on
the overall net income of such Lender or of its Applicable Lending Office
for any of such LIBOR Loans by the jurisdiction in which such Lender has
its principal office or Applicable Lending Office); or (ii) imposes or
modifies any reserve, special deposit, minimum capital, capital ratio or
similar requirements relating to any extensions of credit or other assets
of, or any deposits with or other liabilities of such Lender, or the
Commitment or Loans of such Lender or the Eurodollar interbank market; or
(iii) imposes any other condition affecting this Agreement or any Note (or
any of such extensions of credit or liabilities) or such Lender's
Commitment or Loans. Each Lender will notify the Agent and the Borrower of
any event occurring after the Closing Date which will entitle such Lender
to compensation pursuant to this Section 5.01(a) as promptly as practicable
after it obtains knowledge thereof and determines to request such
compensation, and will designate a different Applicable Lending Office for
the Loans of such Lender affected by such event if such designation will
avoid the need for, or reduce the amount of, such compensation and will
not, in the sole opinion of such Lender, be disadvantageous to such Lender,
provided that such Lender shall have no obligation to so designate an
Applicable Lending Office located in the United States. If any Lender
requests compensation from the Borrower under this Section 5.01(a), the
Borrower may,
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by notice to such Lender, suspend the obligation of such Lender to make
additional Loans of the Type with respect to which such compensation is
requested until the Regulatory Change giving rise to such request ceases to
be in effect (in which case the provisions of Section 5.04 shall be
applicable).
(b) Regulatory Change. Without limiting the effect of the provisions of
Section 5.01(a), in the event that, by reason of any Regulatory Change or
any other circumstances arising after the Closing Date affecting such
Lender, the Eurodollar interbank market or such Lender's position in such
market, any Lender either (i) incurs Additional Costs based on or measured
by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender which includes deposits by
reference to which the interest rate on LIBOR Loans is determined as
provided in this Agreement or a category of extensions of credit or other
assets of such Lender which includes LIBOR Loans or (ii) becomes subject to
restrictions on the amount of such a category of liabilities or assets
which it may hold, then, if such Lender so elects by notice to the
Borrower, the obligation of such Lender to make additional LIBOR Loans
shall be suspended until such Regulatory Change or other circumstances
ceases to be in effect (in which case the provisions of Section 5.04 shall
be applicable).
(c) Capital Adequacy. Without limiting the effect of the foregoing
provisions of this Section 5.01 (but without duplication), the Borrower
shall pay directly to any Lender from time to time on request such amounts
as such Lender may reasonably determine to be necessary to compensate such
Lender or its parent or holding company for any costs which it determines
are attributable to the maintenance by such Lender or its parent or holding
company (or any Applicable Lending Office), pursuant to any Governmental
Requirement following any Regulatory Change, of capital in respect of its
Commitment, its Notes, or its Loans or any interest held by it in the
Letter of Credit, such compensation to include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of
such Lender or its parent or holding company (or any Applicable Lending
Office) to a level below that which such Lender or its parent or holding
company (or any Applicable Lending Office) could have achieved but for such
Governmental Requirement. Such Lender will notify the Borrower that it is
entitled to compensation pursuant to this Section 5.01(c) as promptly as
practicable after it determines to request such compensation.
(d) Compensation Procedure. Any Lender notifying the Borrower of the
incurrence of additional costs under this Section 5.01 shall in such notice
to the Borrower and the Agent set forth in reasonable detail the basis and
amount of its request for compensation. Determinations and allocations by
each Lender for purposes of this Section 5.01 of the effect of any
Regulatory Change pursuant to Section 5.01(a) or (b), or of the effect of
capital maintained pursuant to Section 5.01(c), on its costs or rate of
return of maintaining Loans or its obligation to make Loans or issue the
Letter of Credit, or on amounts receivable by it in respect of Loans or the
Letter of Credit, and of the amounts required to compensate such Lender
under this Section 5.01, shall be conclusive and binding for all purposes,
provided that such determinations and allocations are made on a reasonable
basis. Any request for additional compensation under this Section 5.01
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shall be paid by the Borrower within thirty (30) days of the receipt by the
Borrower of the notice described in this Section 5.01(d).
Section 5.02 Limitation on LIBOR Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of LIBOR for any Interest
Period:
(i) the Agent determines (which determination shall be conclusive,
absent manifest error) that quotations of interest rates for the relevant
deposits referred to in the definition of "LIBOR" in Section 1.02 are not
being provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for LIBOR Loans as provided
herein; or
(ii) the Agent determines (which determination shall be conclusive,
absent manifest error) that the relevant rates of interest referred to in
the definition of "LIBOR" in Section 1.02 upon the basis of which the rate
of interest for LIBOR Loans for such Interest Period is to be determined
are not sufficient to adequately cover the cost to the Lenders of making or
maintaining LIBOR Loans;
then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional LIBOR Loans.
Section 5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain LIBOR
Loans hereunder, then such Lender shall promptly notify the Borrower thereof and
such Lender's obligation to make LIBOR Loans shall be suspended until such time
as such Lender may again make and maintain LIBOR Loans (in which case the
provisions of Section 5.04 shall be applicable).
Section 5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03.
If the obligation of any Lender to make LIBOR Loans shall be suspended pursuant
to Sections 5.01, 5.02 or 5.03 ("Affected Loans"), all Affected Loans which
would otherwise be made by such Lender shall be made instead as Base Rate Loans
(and, if an event referred to in Section 5.01(b) or Section 5.03 has occurred
and such Lender so requests by notice to the Borrower, all Affected Loans of
such Lender then outstanding shall be automatically converted into Base Rate
Loans on the date specified by such Lender in such notice) and, to the extent
that Affected Loans are so made as (or converted into) Base Rate Loans, all
payments of principal which would otherwise be applied to such Lender's Affected
Loans shall be applied instead to its Base Rate Loans.
Section 5.05 Compensation. The Borrower shall pay to each Lender within
thirty (30) days of receipt of written request of such Lender (which request
shall set forth, in reasonable detail, the basis for requesting such amounts and
which shall be conclusive and binding for all purposes provided that such
determinations are made on a reasonable basis), such amount or amounts as shall
compensate it for any loss, cost, expense or liability which such Lender
determines are attributable to:
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(i) any payment, prepayment or conversion of a LIBOR Loan properly made
by such Lender or the Borrower for any reason (including, without
limitation, the acceleration of the Loans pursuant to Section 10.02) on a
date other than the last day of the Interest Period for such Loan; or
(ii) any failure by the Borrower for any reason (including but not
limited to, the failure of any of the conditions precedent specified in
Article VI to be satisfied) to borrow, continue or convert a LIBOR Loan
from such Lender on the date for such borrowing, continuation or conversion
specified in the relevant notice given pursuant to Section 2.02(c).
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the principal amount so paid, prepaid or converted
or not borrowed for the period from the date of such payment, prepayment or
conversion or failure to borrow to the last day of the Interest Period for such
Loan (or, in the case of a failure to borrow, the Interest Period for such Loan
which would have commenced on the date specified for such borrowing) at the
applicable rate of interest for such Loan provided for herein over (ii) the
interest component of the amount such Lender would have bid in the London
interbank market for Dollar deposits of leading banks in amounts comparable to
such principal amount and with maturities comparable to such period (as
reasonably determined by such Lender).
ARTICLE VI
Conditions Precedent
Section 6.01 Initial Funding.
The obligation of the Lenders to make the Initial Funding is subject to
the receipt by the Agent and the Lenders of all fees payable pursuant to Section
2.04 on or before the Closing Date and the receipt by the Agent of the following
documents and satisfaction of the other conditions provided in this Section
6.01, each of which shall be satisfactory to the Agent in form and substance:
(a) A certificate of the Secretary or an Assistant Secretary of the
General Partner setting forth (i) resolutions of its board of directors
with respect to the authorization of the Borrower and the Guarantor to
execute and deliver the Loan Documents to which it is a party and to enter
into the transactions contemplated in those documents, (ii) the officers of
the General Partner (y) who are authorized to sign the Loan Documents to
which Borrower or the Guarantor is a party and (z) who will, until replaced
by another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of the authorized officers,
and (iv) the Partnership Agreement and the partnership agreement of the
Guarantor, certified as being true and
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complete. The Agent and the Lenders may conclusively rely on such
certificate until the Agent receives notice in writing from the General
Partner to the contrary.
(b) Certificates of the appropriate state agencies with respect to the
existence, qualification and good standing of the Borrower and Guarantor.
(c) A compliance certificate which shall be substantially in the form
of Exhibit C, duly and properly executed by a Responsible Officer and dated
as of the date of the Initial Funding.
(d) The Notes, duly completed and executed.
(e) The Security Instruments, including those described on Exhibit E,
duly completed and executed in sufficient number of counterparts for
recording, if necessary.
(f) Opinions of:
(i) Morrison & Hecker L.L.P., special
counsel to the Borrower and Guarantor,
substantially in the form of Exhibit D-1 hereto;
(ii) Chapman and Cutler, special Illinois
counsel to the Borrower in the form of Exhibit
D-2; and
(iii) Special Wyoming counsel to the
Borrower in the form of Exhibit D-3 hereto.
(g) A certificate of insurance coverage of the Borrower evidencing that
the Borrower is carrying insurance in accordance with Section 7.19 hereof.
(h) Completion, satisfactory to the Agent of due diligence, which shall
include, without limitation, the receipt of title information, in form and
substance reasonably satisfactory to the Agent, as the Agent may require
concerning the status of title to the Borrower's interest in the Painter
Gas Plant and the Cora Terminal as requested by the Agent.
(i) The Agent shall be reasonably satisfied with the environmental
condition of the Mortgaged Properties of the Borrower including review of
environmental information of the Borrower relating to the Painter Gas Plant
and the Cora Terminal.
(j) Kinder Morgan, Inc. shall have acquired 100%
of the common stock of the General Partner pursuant
to the Purchase and Sale Agreement dated January 8,
1997 between Enron Liquids Holding Corp. and Kinder
Morgan, Inc.
(k) The Agent shall have been furnished with appropriate UCC search
certificates reflecting the filing of all financing statements required to
perfect the security interests granted by the Security Instruments and
reflecting no prior liens or security interests.
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(l) The Agent shall have received title insurance within sixty days of
the closing date in the amount of $1,000,000 insuring that the Security
Instrument covering the Cora Terminal constitutes a valid lien on the Cora
Terminal having the priority required by the Agent.
(m) The Borrower shall have given the notice to the Trustee required to
cause the Wachovia Letter of Credit to be replaced with the Letter of
Credit.
(n) Such other documents as the Agent or any Lender or special counsel
to the Agent may reasonably request.
Section 6.02 Initial and Subsequent Loans and Letter of Credit. The
obligation of the Lenders to make Loans to the Borrower upon the occasion of
<PAGE>
each borrowing hereunder and to issue the Letter of Credit for the account of
the Borrower (including the Initial Funding) is subject to the further
conditions precedent that, as of the date of such Loans and after giving effect
thereto: (i) no Default shall have occurred and be continuing; (ii) no Material
Adverse Effect shall have occurred; and (iii) the representations and warranties
made by the Borrower in Article VII and in the Security Instruments shall be
true on and as of the date of the making of such Loans or issuance of the Letter
of Credit with the same force and effect as if made on and as of such date and
following such new borrowing, except to the extent such representations and
warranties are expressly limited to an earlier date or the Majority Lenders may
expressly consent in writing to the contrary. Each request for a borrowing or
issuance of the Letter of Credit by the Borrower hereunder shall constitute a
certification by the Borrower to the effect set forth in the preceding sentence
(both as of the date of such notice and, unless the Borrower otherwise notifies
the Agent prior to the date of and immediately following such borrowing or
issuance, renewal, extension or reissuance of a Letter of Credit as of the date
thereof).
ARTICLE VII
Representations and Warranties
The Borrower represents and warrants to the Agent and the Lenders that
(each representation and warranty herein is given as of the Closing Date and
shall be deemed repeated and reaffirmed on the dates of each borrowing and
issuance, renewal, extension or reissuance of a Letter of Credit as provided in
Section 6.02):
Section 7.01 Corporate Existence. Each of the Borrower and each
Subsidiary: (i) is duly organized, legally existing and in good standing under
the laws of the jurisdiction of its incorporation or formation; (ii) has all
requisite partnership or corporate power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted; and (iii) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would have a Material Adverse Effect.
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Section 7.02 Financial Condition. The audited consolidated and
consolidating balance sheets of the Guarantor and its Consolidated Subsidiaries
as at December 31, 1995 and the related consolidated and consolidating
statements of income, partner's equity and cash flow of the Guarantor and its
Consolidated Subsidiaries for the fiscal year ended on said date, with the
opinion thereon of Arthur Anderson & Company heretofore furnished to the Agent
and the unaudited consolidated and consolidating balance sheets of the Guarantor
and its Consolidated Subsidiaries as at September 30, 1996 and their related
consolidated and consolidating statements of income, partner's equity and cash
flow of the Guarantor and its Consolidated Subsidiaries for the 9 -month period
ended on such date heretofore furnished to the Agent, are complete and correct
and fairly present the consolidated financial condition of the Borrower and its
Consolidated Subsidiaries as at said dates and the results of its operations for
the fiscal year and the 9-month period on said dates, all in accordance with
GAAP, as applied on a consistent basis (subject, in the case of the interim
financial statements, to normal year-end adjustments). Neither the Borrower nor
any Subsidiary has on the Closing Date any material Debt, contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in the Financial Statements or in
Schedule 7.02. Since September 30, 1996, there has been no change or event
having a Material Adverse Effect. Since the date of the Financial Statements,
neither the business nor the Properties of the Borrower or any Subsidiary have
been materially and adversely affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of Property or cancellation of
contracts, permits or concessions by any Governmental Authority, riot,
activities of armed forces or acts of God or of any public enemy.
Section 7.03 Litigation. Except as disclosed to the Lenders in Schedule
7.03 hereto, at the Closing Date there is no litigation, legal, administrative
or arbitral proceeding, investigation or other action of any nature pending or,
to the knowledge of the Borrower, threatened against or affecting the Borrower
or any Subsidiary which involves the possibility of any judgment or liability
against the Borrower or any Subsidiary that would have a Material Adverse Effect
not fully covered by insurance (except for normal deductibles).
Section 7.04 No Breach. Neither the execution and delivery of the Loan
Documents, nor compliance with the terms and provisions thereof will conflict
with or result in a breach of, or require any consent which has not been
obtained as of the Closing Date under, the respective charter or by-laws or
partnership agreement of the Borrower or any Subsidiary, or any Governmental
Requirement or any agreement or instrument to which the Borrower or any
Subsidiary is a party or by which it is bound or to which it or its Properties
are subject, or constitute a default under any such agreement or instrument, or
result in the creation or imposition of any Lien upon any of the revenues or
assets of the Borrower or any Subsidiary pursuant to the terms of any such
agreement or instrument other than the Liens created by the Loan Documents.
Section 7.05 Authority. The Borrower has all necessary power and
authority to execute, deliver and perform its obligations under the Loan
Documents to which it is a party; and the execution, delivery and performance by
the Borrower of the Loan Documents to which it is a party, have been duly
authorized by all necessary partnership action on its part; and the
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Loan Documents constitute the legal, valid and binding obligations of the
Borrower, enforceable in accordance with their terms.
Section 7.06 Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority are necessary
for the execution, delivery or performance by the Borrower of the Loan Documents
or for the validity or enforce- ability thereof, except for the recording and
filing of the Security Instruments as required by this Agreement.
Section 7.07 Use of Loans. The Revolving Credit Loans shall be used to
refinance the Prior Debt and for general partnership purposes . The Borrower is
not engaged principally, or as one of its important activities, in the business
of extending credit for the purpose, whether immediate, incidental or ultimate,
of buying or carrying margin stock (within the meaning of Regulation G, U or X
of the Board of Governors of the Federal Reserve System) and no part of the
proceeds of any Loan hereunder will be used to buy or carry any margin stock.
Section 7.08 ERISA.
(a) The Borrower, each Subsidiary and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the
Code regarding each Plan, except where the failure to so comply would not
have a Material Adverse Effect.
(b) Each Plan is, and has been, maintained in substantial compliance
with ERISA and, where applicable, the Code, except where the failure to so
maintain a Plan would not have a Material Adverse Effect.
(c) No act, omission or transaction has occurred which could result in
imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether
directly or indirectly) of (i) either a civil penalty assessed pursuant to
section 502(c), (i) or (l) of ERISA or a tax imposed pursuant to Chapter 43
of Subtitle D of the Code or (ii) breach of fiduciary duty liability
damages under section 409 of ERISA.
(d) No Plan (other than a defined contribution plan) or any trust
created under any such Plan has been terminated since September 2, 1974. No
liability to the PBGC (other than for the payment of current premiums which
are not past due) by the Borrower, any Subsidiary or any ERISA Affiliate
has been or is expected by the Borrower, any Subsidiary or any ERISA
Affiliate to be incurred with respect to any Plan. No ERISA Event with
respect to any Plan has occurred.
(e) Full payment when due has been made of all amounts which the
Borrower, any Subsidiary or any ERISA Affiliate is required under the terms
of each Plan or applicable law to have paid as contributions to such Plan,
and no accumulated funding deficiency (as defined in section 302 of ERISA
and section 412 of the Code), whether or not waived, exists with respect to
any Plan.
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(f) The actuarial present value of the benefit liabilities under each
Plan which is subject to Title IV of ERISA does not, as of the end of the
Borrower's most recently ended fiscal year, exceed the current value of the
assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabil- ities. The term
"actuarial present value of the benefit liabilities" shall have the meaning
specified in section 4041 of ERISA.
(g) None of the Borrower, any Subsidiary or any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such
plan maintained to provide benefits to former employees of such entities,
that may not be terminated by the Borrower, a Subsidiary or any ERISA
Affiliate in its sole discretion at any time without any material
liability.
(h) None of the Borrower, any Subsidiary or any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time in the preceding
six calendar years, sponsored, maintained or contributed to, any
Multiemployer Plan.
(i) None of the Borrower, any Subsidiary or any ERISA Affiliate is
required to provide security under section 401(a)(29) of the Code due to a
Plan amendment that results in an increase in current liability for the
Plan.
Section 7.09 Taxes. Except as set out in Schedule 7.09, each of the
Borrower and its Subsidiaries has filed all United States Federal income tax
returns and all other tax returns which are required to be filed by them and
have paid all material taxes due pursuant to such returns or pursuant to any
assessment received by the Borrower or any Subsidiary. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of taxes
and other governmental charges are, in the opinion of the Borrower, adequate. No
tax lien has been filed and, to the knowledge of the Borrower, no claim is being
asserted with respect to any such tax, fee or other charge.
Section 7.10 Titles, etc.
(a) Except as set out in Schedule 7.10, each of the Borrower and its
Subsidiaries has good and defensible title to its material (individually or
in the aggregate) Properties, free and clear of all Liens except Liens
permitted by Section 9.02.
(b) All leases and agreements necessary for the conduct of the business
of the Borrower and its Subsidiaries are valid and subsisting, in full
force and effect and there exists no default or event or circumstance which
with the giving of notice or the passage of time or both would give rise to
a default under any such lease or leases, which would adversely affect in
any material respect the conduct of the business of the Borrower and its
Subsidiaries.
(c) The rights, Properties and other assets presently owned, leased or
licensed by the Borrower and its Subsidiaries including, without
limitation, all easements and rights of way, include all rights, Properties
and other assets necessary to permit the
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Borrower and its Subsidiaries to conduct their business in all material
respects in the same manner as its business has been conducted prior to the
Closing Date.
(d) All of the assets and Properties of the Borrower and its
Subsidiaries which are reasonably necessary for the operation of its
business are in good working condition (ordinary wear and tear excepted)
and are maintained in accordance with prudent business standards.
Section 7.11 No Material Misstatements. No written information,
statement, exhibit, certificate, document or report furnished to the Agent by
the Borrower or any Subsidiary in connection with the negotiation of this
Agreement contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statement contained therein not
materially misleading in the light of the circumstances in which made and with
respect to the Borrower and its Subsidiaries taken as a whole. There is no fact
peculiar to the Borrower or any Subsidiary which has a Material Adverse Effect
or in the future is reasonably likely to have (so far as the Borrower can now
foresee) a Material Adverse Effect and which has not been set forth in this
Agreement or the other documents, certificates and statements furnished to the
Agent by or on behalf of the Borrower or any Subsidiary prior to, or on, the
Closing Date in connection with the transactions contemplated hereby.
Section 7.12 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.13 Public Utility Holding Company Act. Neither the Borrower
nor any Subsidiary is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," or a "public utility" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
Section 7.14 Subsidiaries. Except as set forth
on Schedule 7.14, the Borrower has no Subsidiaries.
Section 7.15 Location of Business and Offices. The Borrower's principal
place of business and chief executive offices are located at the address stated
on the signature page of this Agreement. The principal place of business and
chief executive office of each Subsidiary are located at the addresses stated on
Schedule 7.14.
Section 7.16 Defaults. Neither the Borrower nor any Subsidiary is in
default nor has any event or circumstance occurred which, but for the expiration
of any applicable grace period or the giving of notice, or both, would
constitute a default under any material agreement or instrument to which the
Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary
is bound which default would have a Material Adverse Effect. No Default
hereunder has occurred and is continuing.
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Section 7.17 Environmental Matters. Except (i) as provided in Schedule
7.17 or (ii) as would not have a Material Adverse Effect (or with respect to
(c), (d) and (e) below, where the failure to take such actions would not have a
Material Adverse Effect):
(a) Neither any Property of the Borrower or any Subsidiary nor the
operations conducted thereon violate any order or requirement of any court
or Governmental Authority or any Environmental Laws;
(b) Without limitation of clause (a) above, no Property of the Borrower
or any Subsidiary nor the operations currently conducted thereon or, to the
best knowledge of the Borrower, by any prior owner or operator of such
Property or operation, are in violation of or subject to any existing,
pending or, to the best knowledge of Borrower, threatened action, suit,
investigation, inquiry or proceeding by or before any court or Governmental
Authority or to any remedial obligations under Environmental Laws;
(c) All notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed in connection with the operation or use of
any and all Property of the Borrower and each Subsidiary, including without
limitation past or present treatment, storage, disposal or release of a
hazardous substance or solid waste into the environment, have been duly
obtained or filed, and the Borrower and each Subsidiary are in compliance
with the terms and conditions of all such notices, permits, licenses and
similar authorizations;
(d) All hazardous substances, solid waste, and oil and gas exploration
and production wastes, if any, generated at any and all Property of the
Borrower or any Subsidiary have in the past been transported, treated and
disposed of in accordance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and, to the best knowledge of the Borrower, all such transport
carriers and treatment and disposal facilities have been and are operating
in compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment,
and are not the subject of any existing, pending or threatened action,
investigation or inquiry by any Governmental Authority in connection with
any Environmental Laws;
(e) The Borrower has taken all steps reasonably necessary to determine
and has determined that no hazardous substances, solid waste, or oil and
gas exploration and production wastes, have been disposed of or otherwise
released and there has been no threatened release of any hazardous
substances on or to any Property of the Borrower or any Subsidiary except
in compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment;
(f) To the extent applicable, all Property of the Borrower and each
Subsidiary currently satisfies all design, operation, and equipment
requirements imposed by the OPA or scheduled as of the Closing Date to be
imposed by OPA during the term of this Agreement, and the Borrower does not
have any reason to believe that such Property, to the extent subject to
OPA, will not be able to maintain compliance with the OPA requirements
during the term of this Agreement; and
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(g) Neither the Borrower nor any Subsidiary has any known contingent
liability in connection with any release or threatened release of any oil,
hazardous substance or solid waste into the environment.
Section 7.18 Compliance with the Law. Neither the Borrower nor any
Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
Section 7.19 Insurance. Schedule 7.19 attached hereto contains an
accurate and complete description of all material policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by the
Borrower and each Subsidiary. All such policies are in full force and effect,
all premiums with respect thereto covering all periods up to and including the
date of the closing have been paid, and no notice of cancellation or termination
has been received with respect to any such policy. Such policies are sufficient
for compliance with all requirements of law and of all agreements to which the
Borrower or any Subsidiary is a party; are valid, outstanding and enforceable
policies; provide adequate insurance coverage in at least such amounts and
against at least such risks (but including in any event public liability) as are
usually insured against in the same general area by companies engaged in the
same or a similar business for the assets and operations of the Borrower and
each Subsidiary; will remain in full force and effect through the respective
dates set forth in Schedule 7.19 without the payment of additional premiums; and
will not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. Schedule 7.19 identifies all
material risks, if any, which the Borrower and its Subsidiaries and their
General Partner's Board of Directors or officers have designated as being self
insured. To the best of Borrower's knowledge, neither the Borrower nor any
Subsidiary has been refused any insurance with respect to its assets or
operations, nor has its coverage been limited below usual and customary policy
limits, by an insurance carrier to which it has applied for any such insurance
or with which it has carried insurance during the last three years.
Section 7.20 Hedging Agreements. Schedule 7.20 sets forth, as of the
Closing Date, a true and complete list of all Hedging Agreements (including
commodity price swap agreements, forward agreements or contracts of sale which
provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities) of the Borrower and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net mark to market value thereof, all credit support agreements
relating thereto (including any margin required or supplied), and the
counterparty to each such agreement.
Section 7.21 Restriction on Liens. Neither the Borrower nor any of its
Subsidiaries is a party to any agreement or arrangement (other than this
Agreement and the Security Instruments), or subject to any order, judgment, writ
or decree, which either restricts or purports to restrict its ability to grant
Liens to other Persons on or in respect of their respective assets of
Properties.
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Section 7.22 Material Agreements. Set forth on Schedule 7.22 hereto is
a complete and correct list of all material agreements, leases, indentures,
purchase agreements, obligations in respect of letters of credit, guarantees,
joint venture agreements, and other instruments in effect or to be in effect as
of the Closing Date (other than Hedging Agreements) providing for, evidencing,
securing or otherwise relating to any Debt of the Borrower or any of its
Subsidiaries, and all obligations of the Borrower or any of its Subsidiaries to
issuers of surety or appeal bonds issued for account of the Borrower or any such
Subsidiary, and such list correctly sets forth the names of the debtor or lessee
and creditor or lessor with respect to the Debt or lease obligations outstanding
or to be outstanding and the property subject to any Lien securing such Debt or
lease obligation. The Borrower has heretofore delivered to the Agent a complete
and correct copy of all such material credit agreements, indentures, purchase
agreements, contracts, letters of credit, guarantees, joint venture agreements,
or other instruments, including any modifications or supplements thereto, as in
effect on the Closing Date.
Section 7.23 Partnership Agreement. The Partnership Agreement has not
been terminated, is in full force and effect as of the date hereof and no
default has occurred and is in continuance thereunder which would have a
Material Adverse Effect.
ARTICLE VIII
Affirmative Covenants
The Borrower covenants and agrees that, so long as any of the Commitments
are in effect and until payment in full of all Indebtedness hereunder, all
interest thereon and all other amounts payable by the Borrower hereunder:
Section 8.01 Financial Statements. The Borrower shall deliver, or shall
cause to be delivered, to the Agent with sufficient copies of each for the
Lenders:
(a) As soon as available and in any event within 120 days after the end
of each fiscal year of the Borrower: (i) the unaudited consolidated and
consolidating statements of income, partners' equity, changes in financial
position and cash flow of the Borrower and its Consolidated Subsidiaries
for such fiscal year, and the related consolidated and consolidating
balance sheets of the Borrower and its Consolidated Subsidiaries as at the
end of such fiscal year, and (ii) the audited consolidated and
consolidating statements of income, partner's equity, changes in financial
position and cash flow of the Guarantor and its Consolidated Subsidiaries
for such fiscal year, and the related consolidated and consolidating
balance sheets of Guarantor and its Consolidated Subsidiaries at the end of
such fiscal year and accompanied by the related opinion of independent
public accountants of recognized national standing acceptable to the Agent
which opinion shall state that said financial statements of Guarantor and
its Consolidated Subsidiaries fairly present the consolidated and
consolidating financial condition and results of operations of the
Guarantor and its Consolidated Subsidiaries as at the end of, and for, such
fiscal year and that such financial statements have been prepared in
accordance with GAAP except for such changes in such principles with which
the
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independent public accountants shall have concurred and such opinion shall
not contain a "going concern" or like qualification or exception, and a
certificate of such accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge, except as
specifically stated, of any Default.
(b) As soon as available and in any event within 60 days after the end
of each of the first three fiscal quarterly periods of each fiscal year of
the Borrower and Guarantor, unaudited consolidated and consolidating
statements of income, partners' equity, changes in financial position and
cash flow of the Borrower and Guarantor for such period and for the period
from the beginning of the respective fiscal year to the end of such period,
and the related unaudited consolidated and consolidating balance sheets as
at the end of such period, accompanied by the certificate of a Responsible
Officer, which certificate shall state that said financial statements
fairly present the consolidated and consolidating financial condition and
results of operations of the Borrower and Guarantor in accordance with
GAAP, as at the end of, and for, such period (subject to normal year-end
audit adjustments).
(c) Promptly after the Borrower knows that any Default or any Material
Adverse Effect has occurred, a notice of such Default or Material Adverse
Effect, describing the same in reasonable detail and the action the
Borrower proposes to take with respect thereto.
(d) Promptly upon receipt thereof, a copy of each other report or
letter submitted to the Borrower or by independent accountants in
connection with any annual, interim or special audit made by them of the
books of the Borrower and Guarantor, and a copy of any response by the
Borrower or Guarantor, or the Board of Directors of the General Partner of
the Borrower or Guarantor, to such letter or report.
(e) Promptly upon its becoming available, each financial statement,
report, notice or proxy statement sent by the Guarantor to stockholders
generally and each regular or periodic report and any registration
statement, prospectus or written communication (other than transmittal
letters) in respect thereof filed by the Guarantor with or received by the
Guarantor in connection therewith from any securities exchange or the SEC
or any successor agency.
(f) Promptly after the furnishing thereof, copies of any statement,
report or notice furnished to or any Person pursuant to the terms of any
indenture, loan or credit or other similar agreement, other than this
Agreement and not otherwise required to be furnished to the Agent pursuant
to any other provision of this Section 8.01.
(g) From time to time such other information regarding the business,
affairs or financial condition of the Borrower or any Subsidiary
(including, without limitation, any Plan or Multiemployer Plan and any
reports or other information required to be filed under ERISA) as the
Required Lenders or the Agent may reasonably request.
(h) As soon as available and in any event within ten (10) Business Days
after the last day of each calendar quarter, a report, in form and
substance satisfactory to the
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Agent, setting forth as of the last Business Day of such calendar quarter a
true and complete list of all Hedging Agreements (including commodity price
swap agreements, forward agreements or contracts of sale which provide for
prepayment for deferred shipment or delivery of oil, gas or other
commodities) of the Borrower and each Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and
notional amounts or volumes), the net mark to market value therefor, any
new credit support agreements relating thereto not listed on Schedule 7.20,
any margin required or supplied under any credit support document, and the
counterparty to each such agreement.
The Borrower will furnish to the Agent, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate
substantially in the form of Exhibit C hereto executed by a Responsible Officer
(i) certifying as to the matters set forth therein and stating that no Default
has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail), and (ii) setting forth in
reasonable detail the computations necessary to determine whether the Borrower
is in compliance with Sections 9.12 and 9.13 as of the end of the respective
fiscal quarter or fiscal year.
Section 8.02 Litigation. The Borrower shall promptly give to the Agent
notice of all legal or arbitral proceedings, and of all proceedings before any
Governmental Authority affecting the Borrower or any Subsidiary, except
proceedings which, if adversely determined, would not have a Material Adverse
Effect. The Borrower will, and will cause each of its Subsidiaries to, promptly
notify the Agent of any claim, judgment, Lien or other encumbrance affecting any
Property of the Borrower or any Subsidiary if the value of the claim, judgment,
Lien, or other encumbrance affecting such Property shall exceed $250,000.
Section 8.03 Maintenance, Etc.
(a) The Borrower shall and shall cause each Subsidiary to: preserve and
maintain its existence and all of its material rights, privileges and
franchises; keep books of record and account in which full, true and
correct entries will be made of all dealings or transactions in relation to
its business and activities; comply with all Governmental Requirements if
failure to comply with such requirements will have a Material Adverse
Effect; pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for
any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which
adequate reserves are being maintained; upon reasonable notice, permit
representatives of the Agent, during normal business hours, to examine,
copy and make extracts from its books and records, to inspect its
Properties, and to discuss its business and affairs with its officers, all
to the extent reasonably requested by the Agent; and keep, or cause to be
kept, insured by financially sound and reputable insurers all Property of a
character usually insured by Persons engaged in the same or similar
business similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such Persons and carry such other
insurance as is usually carried by such Persons including, without
limitation, environmental risk insurance to the extent reasonably
available.
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(b) Contemporaneously with the delivery of the financial statements
required by Section 8.01(a) to be delivered for each year, the Borrower
will furnish or cause to be furnished to the Agent a certificate of
insurance coverage from the insurer in form and substance satisfactory to
the Agent and, if requested, will furnish the Agent copies of the
applicable policies.
(c) The Borrower will and will cause each Subsidiary to operate its
Properties or cause such Properties to be operated in a careful and
efficient manner in accordance with the practices of the industry and in
compliance with all applicable contracts and agreements and in compliance
in all material respects with all Governmental Requirements.
Section 8.04 Environmental Matters.
(a) The Borrower will and will cause each Subsidiary to establish and
implement such procedures as may be reasonably necessary to continuously
determine and assure that any failure of the following does not have a
Material Adverse Effect: (i) all Property of the Borrower and its
Subsidiaries and the operations conducted thereon and other activities of
the Borrower and its Subsidiaries are in compliance with and do not violate
the requirements of any Environmental Laws, (ii) no oil, hazardous
substances or solid wastes are disposed of or otherwise released on or to
any Property owned by any such party except in compliance with
Environmental Laws, (iii) no hazardous substance will be released on or to
any such Property in a quantity equal to or exceeding that quantity which
requires reporting pursuant to Section 103 of CERCLA, and (iv) no oil, oil
and gas exploration and production wastes or hazardous substance is
released on or to any such Property so as to pose an imminent and
substantial endangerment to public health or welfare or the environment.
(b) The Borrower will promptly notify the Agent in writing of any
threatened action, investigation or inquiry by any Governmental Authority
of which the Borrower has knowledge in connection with any Environmental
Laws, excluding routine testing and corrective action.
Section 8.05 Further Assurances. The Borrower will cure promptly any
defects in the creation and issuance of the Notes and the execution and delivery
of the Security Instruments and this Agreement. The Borrower at its expense will
promptly execute and deliver to the Agent upon request all such other documents,
agreements and instruments to comply with or accomplish the covenants and
agreements of the Borrower in the Security Instruments and this Agreement, or to
further evidence and more fully describe the collateral intended as security for
the Notes, or to correct any omissions in the Security Instruments, or to state
more fully the security obligations set out herein or in any of the Security
Instruments, or to perfect, protect or preserve any Liens created pursuant to
any of the Security Instruments, or to make any recordings, to file any notices
or obtain any consents, all as may be necessary or appropriate in connection
therewith.
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Section 8.06 Performance of Obligations. The Borrower will pay the
Notes according to the reading, tenor and effect thereof; and the Borrower will
do and perform every act and discharge all of the obligations to be performed
and discharged by it under the Security Instruments and this Agreement, at the
time or times and in the manner specified.
Section 8.07 ERISA Information and Compliance. The Borrower will
promptly furnish and will cause the Subsidiaries and any ERISA Affiliate to
promptly furnish to the Agent with sufficient copies to the Lenders (i) promptly
after the filing thereof with the United States Secretary of Labor, the Internal
Revenue Service or the PBGC, copies of each annual and other report with respect
to each Plan or any trust created thereunder, (ii) immediately upon becoming
aware of the occurrence of any ERISA Event or of any "prohibited transaction,"
as described in section 406 of ERISA or in section 4975 of the Code, in
connection with any Plan or any trust created thereunder, a written notice
signed by a Responsible Officer specifying the nature thereof, what action the
Borrower, the Subsidiary or the ERISA Affiliate is taking or proposes to take
with respect thereto, and, when known, any action taken or proposed by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto, and (iii) immediately upon receipt thereof, copies of any notice of the
PBGC's intention to terminate or to have a trustee appointed to administer any
Plan. With respect to each Plan (other than a Multiemployer Plan), the Borrower
will, and will cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full
and in a timely manner, without incurring any late payment or underpayment
charge or penalty and without giving rise to any lien, all of the contribution
and funding requirements of section 412 of the Code (determined without regard
to subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.
Section 8.08 Replacement of Wachovia Bank of Georgia, N.A.. Borrower
will use its best efforts and will cooperate with First Union and the
Remarketing Agent to cause the Replacement Letter of Credit to replace the
existing letter of credit supporting the Bonds, on March 3, 1997.
ARTICLE IX
Negative Covenants
The Borrower covenants and agrees that, so long as any of the Commitments
are in effect and until payment in full of all Indebtedness hereunder, all
interest thereon and all other amounts payable by the Borrower hereunder,
without the prior written consent of the Majority Lenders:
Section 9.01 Debt. Neither the Borrower nor any
Subsidiary will incur, create, assume or suffer to exist
any Debt, except:
(a) the Notes or other Indebtedness arising under the Loan Documents or
any guaranty of or suretyship arrangement for the Notes or other
Indebtedness arising under the Loan Documents;
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(b) Debt of the Borrower existing on the Closing Date which is
reflected in the Financial Statements or is disclosed in Schedule 9.01, and
any renewals or extensions (but not increases) thereof;
(c) accounts payable (for the deferred purchase price of Property or
services) from time to time incurred in the ordinary course of business
which, if greater than 90 days past the invoice or billing date, are being
contested in good faith by appropriate proceedings if reserves adequate
under GAAP shall have been established therefor;
(d) Debt under capital leases (as required to be reported on the
financial statements of the Borrower pursuant to GAAP) not to exceed
$150,000 outstanding at any one time;
(e) Debt of the Borrower under Hedging Agreements with First Union or
as approved by the Majority Lenders.
(f) Debt of a Special Purpose Subsidiary which
is non recourse to the Borrower or the Guarantor on
terms acceptable to the Majority Lenders; and
(g) other Debt of the Borrower not to exceed $1,000,000 in the
aggregate outstanding at any time (excluding Debt owed to Wachovia Bank of
Georgia, N.A. under the Letter of Credit and Reimbursement Agreement dated
June 25, 1996 between Borrower and Wachovia Bank of Georgia, N.A. pending
issuance of the Replacement Letter of Credit).
Section 9.02 Liens. Neither the Borrower nor any Subsidiary will
create, incur, assume or permit to exist any Lien on any of its Properties (now
owned or hereafter acquired), except:
(a) Liens securing the payment of any
Indebtedness;
(b) Excepted Liens;
(c) Liens securing leases allowed under Section
9.01(d) but only on the Property under lease; and
(d) Liens disclosed on Schedule 9.02.
Section 9.03 Investments, Loans and Advances. Neither the Borrower nor
any Subsidiary will make or permit to remain outstanding any loans or advances
to or investments in any Person, except that the foregoing restriction shall not
apply to:
(a) investments, loans or advances reflected in
the Financial Statements or which are disclosed to
the Lenders in Schedule 9.03;
(b) accounts receivable arising in the ordinary
course of business;
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(c) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in each
case maturing within one year from the date of creation thereof;
(d) commercial paper maturing within one year from the date of creation
thereof rated in the highest grade by Standard & Poor's Corporation or
Moody's Investors Service, Inc.;
(e) deposits maturing within one year from the date of creation thereof
with, including certificates of deposit issued by, any Lender or any office
located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has
capital, surplus and undivided profits aggregating at least $100,000,000.00
(as of the date of such Lender's or bank or trust company's most recent
financial reports) and has a short term deposit rating of no lower than A2
or P2, as such rating is set forth from time to time, by Standard & Poor's
Corporation or Moody's Investors Service, Inc., respectively;
(f) deposits in money market funds investing
exclusively in investments described in Section
9.03(c), 9.03(d) or 9.03(e);
(g) other investments, loans or advances not to
exceed $500,000 in the aggregate at any time.
Section 9.04 Dividends, Distributions and Redemptions. The Borrower
will not declare or pay any dividend, purchase, redeem or otherwise acquire for
value any of its partnership interests now or hereafter outstanding, return any
capital to its partners or make any distribution of its assets to its partners,
except that the Borrower may make distributions to its partners provided that no
Default shall have occurred and be continuing or would result from such
distribution.
Section 9.05 Sales and Leasebacks. Neither the Borrower nor any
Subsidiary will enter into any arrangement, directly or indirectly, with any
Person whereby the Borrower or any Subsidiary shall sell or transfer any of its
Property, whether now owned or hereafter acquired, and whereby the Borrower or
any Subsidiary shall then or thereafter rent or lease as lessee such Property or
any part thereof or other Property which the Borrower or any Subsidiary intends
to use for substantially the same purpose or purposes as the Property sold or
transferred.
Section 9.06 Nature of Business. Neither the Borrower nor any
Subsidiary will allow any material change to be made in the character of its
business.
Section 9.07 Limitation on Leases. Neither the Borrower nor any
Subsidiary will create, incur, assume or suffer to exist any obligation for the
payment of rent or hire of Property of any kind whatsoever (real or personal
including capital leases), under leases or lease agreements which would cause
the aggregate amount of all payments made by the Borrower and its Subsidiaries
pursuant to all such leases or lease agreements to exceed $50,000 in any period
of twelve consecutive calendar months during the life of such leases.
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Section 9.08 Mergers, Etc. Neither the Borrower nor any Subsidiary will
merge into or with or consolidate with any other Person, or sell, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its Property or assets to any other Person.
Section 9.09 Proceeds of Notes. The Borrower will not permit the
proceeds of the Notes to be used for any purpose other than those permitted by
Section 7.07. Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulation G, U or X or any other regulation of the Board
of Governors of the Federal Reserve System or to violate Section 7 of the
Securities Exchange Act of 1934 or any rule or regulation thereunder, in each
case as now in effect or as the same may hereinafter be in effect.
Section 9.10 ERISA Compliance. The Borrower will not at any time:
(a) Engage in, or permit any Subsidiary or ERISA Affiliate to engage
in, any transaction in connection with which the Borrower, any Subsidiary
or any ERISA Affiliate could be subjected to either a civil penalty
assessed pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed
by Chapter 43 of Subtitle D of the Code;
(b) Terminate, or permit any Subsidiary or ERISA Affiliate to
terminate, any Plan in a manner, or take any other action with respect to
any Plan, which could result in any material liability to the Borrower, any
Subsidiary or any ERISA Affiliate to the PBGC;
(c) Fail to make, or permit any Subsidiary or ERISA Affiliate to fail
to make, full payment when due of all amounts which, under the provisions
of any Plan, agreement relating thereto or applicable law, the Borrower, a
Subsidiary or any ERISA Affiliate is required to pay as contributions
thereto;
(d) Permit to exist, or allow any Subsidiary or ERISA Affiliate to
permit to exist, any accumulated funding deficiency within the meaning of
Section 302 of ERISA or section 412 of the Code, whether or not waived,
with respect to any Plan;
(e) Permit, or allow any Subsidiary or ERISA Affiliate to permit, the
actuarial present value of the benefit liabilities under any Plan
maintained by the Borrower, any Subsidiary or any ERISA Affiliate which is
regulated under Title IV of ERISA to exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA)
of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified
in section 4041 of ERISA;
(f) Contribute to or assume an obligation to contribute to, or permit
any Subsidiary or ERISA Affiliate to contribute to or assume an obligation
to contribute to, any Multiemployer Plan;
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(g) Acquire, or permit any Subsidiary or ERISA Affiliate to acquire, an
interest in any Person that causes such Person to become an ERISA Affiliate
with respect to the Borrower, any Subsidiary or any ERISA Affiliate if such
Person sponsors, maintains or contributes to, or at any time in the
six-year period preceding such acquisition has sponsored, maintained, or
contributed to, (1) any Multiemployer Plan, or (2) any other Plan that is
subject to Title IV of ERISA under which the actuarial present value of the
benefit liabilities under such Plan exceeds the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA)
of such Plan allocable to such benefit liabilities;
(h) Incur, or permit any Subsidiary or ERISA Affiliate to incur, a
liability to or on account of a Plan under sections 515, 4062, 4063, 4064,
4201 or 4204 of ERISA;
(i) Contribute to or assume an obligation to contribute to, or permit
any Subsidiary or ERISA Affiliate to contribute to or assume an obligation
to contribute to, any employee welfare benefit plan, as defined in section
3(1) of ERISA, including, without limitation, any such plan maintained to
provide benefits to former employees of such entities, that may not be
terminated by such entities in their sole discretion at any time without
any material liability; or
(j) Amend or permit any Subsidiary or ERISA Affiliate to amend, a Plan
resulting in an increase in current liability such that the Borrower, any
Subsidiary or any ERISA Affiliate is required to provide security to such
Plan under section 401(a)(29) of the Code.
Section 9.11 Sale or Discount of Receivables. Neither the Borrower nor
any Subsidiary will discount or sell (with or without recourse) any of its notes
receivable or accounts receivable.
Section 9.12 Current Ratio. The Borrower will not permit its ratio of
(i) consolidated current assets plus the amount of the unused Aggregate
Revolving Credit Commitments to (ii) consolidated current liabilities (excluding
current maturities of the Notes) to be less than 1.1 to 1.0 at any time.
Section 9.13 Debt Service Coverage Ratio. The Borrower will not permit
its Debt Service Ratio as of the end of any fiscal quarter of the Borrower
(calculated quarterly at the end of each fiscal quarter) to be less than 1.25 to
1.00. For purposes of this Section 9.13, "Debt Service Ratio" shall mean the
ratio of (i) EBITDA for the four fiscal quarters ending on such date to (ii)
cash payments made for principal and interest on Debt of the Borrower and its
Consolidated Subsidiaries other than as permitted under Section 9.01(f) for such
four fiscal quarters of the Borrower and its Consolidated Subsidiaries.
Section 9.14 Sale of Properties. The Borrower will not, and will not
permit any Subsidiary to, sell, assign, convey or otherwise transfer any
Property except for non Mortgaged Property and which shall not exceed $150,000
in the aggregate in any fiscal year.
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Section 9.15 Environmental Matters. Neither the Borrower nor any
Subsidiary will cause or permit any of its Property to be in violation of, or do
anything or permit anything to be done which will subject any such Property to
any remedial obligations under any Environmental Laws, assuming disclosure to
the applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations would have a Material Adverse Effect.
Section 9.16 Transactions with Affiliates. Neither the Borrower nor any
Subsidiary will enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any service,
with any Affiliate unless such transactions are otherwise permitted under this
Agreement, are in the ordinary course of its business and are upon fair and
reasonable terms no less favorable to it than it would obtain in a comparable
arm's length transaction with a Person not an Affiliate.
Section 9.17 Subsidiaries. The Borrower shall not, and shall not permit
any Subsidiary to, create any additional Subsidiaries or partnerships except for
Subsidiaries which are established solely for the purpose of acquiring
Properties financed by Debt which is non recourse to the Borrower and the
Guarantor ("Special Purpose Subsidiary"). The Borrower shall not and shall not
permit any Subsidiary to sell or to issue any stock or ownership interest of a
Subsidiary except to the Borrower or Guarantor and except in compliance with
Section 9.03.
Section 9.18 Negative Pledge Agreements. Neither the Borrower nor any
Subsidiary will create, incur, assume or suffer to exist any contract, agreement
or understanding (other than this Agreement and the Security Instruments) which
in any way prohibits or restricts the granting, conveying, creation or
imposition of any Lien on any of its Property or restricts any Subsidiary from
paying dividends to the Borrower, or which requires the consent of or notice to
other Persons in connection therewith.
Section 9.19 Partnership Agreement. The Borrower will not amend or
permit to be amended the Partnership Agreement without the prior written consent
of the Majority Lenders.
ARTICLE X
Events of Default; Remedies
Section 10.01 Events of Default. One or more of
the following events shall constitute an "Event of
Default":
(a) the Borrower shall (i) default in the payment or prepayment when
due of any principal on any Loan or any reimbursement obligation for a
disbursement made under the Letter of Credit, (ii) default, and such
default shall continue unremedied for three (3) or more Business Days, in
the payment when due of any interest on any Loan or any fees or other
amount payable by it under the Loan Documents; or
(b) the Borrower, any Subsidiary or Kinder
Morgan Energy or any of its Subsidiaries shall
default in the payment when due of any principal of
or interest on any
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of its other Debt aggregating $1,000,000 or more, or any event specified in
any note, agreement, indenture or other document evidencing or relating to
any such Debt shall occur if the effect of such event is to cause, or (with
the giving of any notice or the lapse of time or both) to permit the holder
or holders of such Debt (or a trustee or agent on behalf of such holder or
holders) to cause, such Debt to become due prior to its stated maturity;
provided, however, that no default under Debt owed by Mont Belview
Associates which is non-recourse to Kinder Morgan Energy shall constitute
an Event of Default under Section 10.01(b); or
(c) any representation, warranty or certification made or deemed made
herein or in any Security Instrument by the Borrower or any Subsidiary or
the Guarantor, or any certificate furnished to any Lender or the Agent
pursuant to the provisions hereof or any Security Instrument, shall prove
to have been false or misleading as of the time made or furnished in any
material respect; or
(d) the Borrower shall default in the performance of any of its
obligations under Article IX or any other Article of this Agreement other
than under Article VIII; or the Borrower shall default in the performance
of any of its obligations under Article VIII or any Security Instrument
(other than the payment of amounts due which shall be governed by Section
10.01(a)) and such default shall continue unremedied for a period of thirty
(30) days after the earlier to occur of (i) notice thereof to the Borrower
by the Agent or any Lender (through the Agent), or (ii) the Borrower
otherwise becoming aware of such default; or
(e) the Borrower shall admit in writing its
inability to, or be generally unable to, pay its
debts as such debts become due; or
(f) the Borrower shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of its creditors, (iii) commence
a voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), (iv) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, liquidation
or composition or readjustment of debts, (v) fail to controvert in a timely
and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Federal Bankruptcy Code, or
(vi) take any partnership action for the purpose of effecting any of the
foregoing; or
(g) a proceeding or case shall be commenced, without the application or
consent of the Borrower, in any court of competent jurisdiction, seeking
(i) its liquida- tion, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of the Borrower of all
or any substantial part of its assets, or (iii) similar relief in respect
of the Borrower under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of 60 days; or (iv) an
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order for relief against the Borrower shall be
entered in an involuntary case under the Federal
Bankruptcy Code; or
(h) a judgment or judgments for the payment of money in excess of
$250,000 in the aggregate shall be rendered by a court against the Borrower
or any Subsidiary and the same shall not be discharged (or provision shall
not be made for such discharge), or a stay of execution thereof shall not
be procured, within thirty (30) days from the date of entry thereof and the
Borrower or such Subsidiary shall not, within said period of 30 days, or
such longer period during which execution of the same shall have been
stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
(i) the Security Instruments after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be in
full force and effect and valid, binding and enforceable in accordance with
their terms, or cease to create a valid and perfected Lien of the priority
required thereby on any of the collateral purported to be covered thereby,
except to the extent permitted by the terms of this Agreement, or the
Borrower shall so state in writing; or
(j) the Letter of Credit becomes the subject matter of any order,
judgment, injunction or any other such determination, or if the Borrower or
any other Person shall petition or apply for or obtain any order
restricting payment by First Union under the Letter of Credit or extending
First Union's liability under the Letter of Credit beyond the expiration
date stated therein or otherwise agreed to by First Union; or
(k) the Borrower discontinues its usual business
or suffers to exist any material change in its
ownership, control or management; or
(l) Guarantor takes, suffers or permits to exist any of the events or
conditions referred to in paragraphs (e), (f), (g) or (h) hereof or if any
provision of the Guaranty Agreement shall for any reason cease to be valid
and binding on Guarantor or if Guarantor shall so state in writing or the
Guarantor shall default on any of its covenants under the Guaranty
Agreement; or
(m) any Subsidiary takes, suffers or permits to exist any of the events
or conditions referred to in paragraphs (e), (f), (g) or (h) hereof which
results in a Material Adverse Effect; or
(n) Kinder Morgan, Inc., a Delaware corporation,
or Kinder Morgan G.P. shall suffer any change of
control or ownership.
Section 10.02 Remedies.
(a) In the case of an Event of Default other than one referred to in
clauses (e), (f) or (g) of Section 10.01 or in clause (l) to the extent it
relates to clauses (e), (f) or (g), the Agent, upon request of the Majority
Lenders, shall, by notice to the Borrower, cancel the Commitments and/or
declare the principal amount then outstanding of, and the accrued interest
on, the Loans and all other amounts payable by the Borrower hereunder
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and under the Notes to be forthwith due and payable, whereupon such amounts
shall be immediately due and payable without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration or other formalities
of any kind, all of which are hereby expressly waived by the Borrower.
(b) In the case of the occurrence of an Event of Default referred to in
clauses (e), (f) or (g) of Section 10.01 or in clause (l) to the extent it
relates to clauses (e), (f) or (g), the Commitments shall be automatically
canceled and the principal amount then outstanding of, and the accrued
interest on, the Loans and all other amounts payable by the Borrower
hereunder and under the Notes shall become automatically immediately due
and payable without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other formalities of any kind, all of
which are hereby expressly waived by the Borrower.
(c) All proceeds received after maturity of the Notes, whether by
acceleration or otherwise shall be applied first to reimbursement of
expenses and indemnities provided for in this Agreement and the Security
Instruments; second to accrued interest on the Notes; third to fees; fourth
pro rata to principal outstanding on the Notes and other Indebtedness;
fifth to serve as cash collateral to be held by First Union to secure the
LC Maximum Amount; and any excess shall be paid to the Borrower or as
otherwise required by any Governmental Requirement.
ARTICLE XI
The Agent
Section 11.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the Security Instruments with such powers as are specifically delegated to
the Agent by the terms of this Agreement and the Security Instruments, together
with such other powers as are reasonably incidental thereto. The Agent (which
term as used in this sentence and in Section 11.05 and the first sentence of
Section 11.06 shall include reference to its Affiliates and its and its
Affiliates' officers, directors, employees, attorneys, accountants, experts and
agents): (i) shall have no duties or responsibilities except those expressly set
forth in the Loan Documents, and shall not by reason of the Loan Documents be a
trustee or fiduciary for any Lender; (ii) makes no representation or warranty to
any Lender and shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement, or for the value, validity, effectiveness,
genuineness, execution, effectiveness, legality, enforceability or sufficiency
of this Agreement, any Note or any other document referred to or provided for
herein or for any failure by the Borrower or any other Person (other than the
Agent) to perform any of its obligations hereunder or thereunder or for the
existence, value, perfection or priority of any collateral security or the
financial or other condition of the Borrower, its Subsidiaries or any other
obligor or guarantor; (iii) except pursuant to Section 11.07 shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder; and (iv) shall not be responsible for any action taken or omitted to
be
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taken by it hereunder or under any other document or instrument referred to or
provided for herein or in connection herewith including its own ordinary
negligence, except for its own gross negligence or willful misconduct. The Agent
may employ agents, accountants, attorneys and experts and shall not be
responsible for the negligence or misconduct of any such agents, accountants,
attorneys or experts selected by it in good faith or any action taken or omitted
to be taken in good faith by it in accordance with the advice of such agents,
accountants, attorneys or experts. The Agent may deem and treat the payee of any
Note as the holder thereof for all purposes hereof unless and until a written
notice of the assignment or transfer thereof permitted hereunder shall have been
filed with the Agent. The Agent is authorized to release any collateral that is
permitted to be sold or released pursuant to the terms of the Loan Documents.
Section 11.02 Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telecopier, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent.
Section 11.03 Defaults. The Agent shall not be deemed to have knowledge
of the occurrence of a Default (other than the non-payment of principal of or
interest on Loans or of fees or failure to reimburse for Letter of Credit
drawings) unless the Agent has received notice from a Lender or the Borrower
specifying such Default and stating that such notice is a "Notice of Default."
In the event that the Agent receives such a notice of the occurrence of a
Default, the Agent shall give prompt notice thereof to the Lenders. In the event
of a payment Default, the Agent shall give each Lender prompt notice of each
such payment Default.
Section 11.04 Rights as a Lender. With respect to its Commitments and
the Loans made by it and its participation in the issuance of the Letter of
Credit, First Union (and any successor acting as Agent) in its capacity as a
Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as the Agent, and
the term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. First Union (and any successor
acting as Agent) and its Affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to and generally engage in any kind
of banking, trust or other business with the Borrower (and any of its
Affiliates) as if it were not acting as the Agent, and First Union and its
Affiliates may accept fees and other consideration from the Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
Section 11.05 Indemnification. The Lenders agree to indemnify the Agent
ratably in accordance with their Percentage Shares for the Indemnity Matters as
described in Section 12.03 to the extent not indemnified or reimbursed by the
Borrower under Section 12.03, but without limiting the obligations of the
Borrower under said Section 12.03 and for any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of: (i) this Agreement, the Security Instruments or any other
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documents contemplated by or referred to herein or the transactions contemplated
hereby, but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder or (ii) the enforcement of any of the terms of this Agreement,
any Security Instrument or of any such other documents; whether or not any of
the foregoing specified in this Section 11.05 arises from the sole or concurrent
negligence of the Agent, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Agent.
Section 11.06 Non-Reliance on Agent and other Lenders. Each Lender
acknowledges and agrees that it has, independently and without reliance on the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Borrower and its
decision to enter into this Agreement, and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement.
The Agent shall not be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement, the Notes, the Security
Instruments or any other document referred to or provided for herein or to
inspect the properties or books of the Borrower. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its Affiliates) which may come into the possession of the Agent or any of its
Affiliates. In this regard, each Lender acknowledges that Vinson & Elkins L.L.P.
is acting in this transaction as special counsel to the Agent only, except to
the extent otherwise expressly stated in any legal opinion or any Loan Document.
Each Lender will consult with its own legal counsel to the extent that it deems
necessary in connection with the Loan Documents and the matters contemplated
therein.
Section 11.07 Action by Agent. Except for action or other matters
expressly required of the Agent hereunder, the Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall (i) receive
written instructions from the Majority Lenders (or all of the Lenders as
expressly required by Section 12.04) specifying the action to be taken, and (ii)
be indemnified to its satisfaction by the Lenders against any and all liability
and expenses which may be incurred by it by reason of taking or continuing to
take any such action.
The instructions of the Majority Lenders (or all of the Lenders as expressly
required by Section 12.04) and any action taken or failure to act pursuant
thereto by the Agent shall be binding on all of the Lenders. If a Default has
occurred and is continuing, the Agent shall take such action with respect to
such Default as shall be directed by the Majority Lenders (or all of the Lenders
as required by Section 12.04) in the written instructions (with indemnities)
described in this Section 11.07, provided that, unless and until the Agent shall
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interests of the Lenders. In no
event, however, shall the Agent be required to take any action which exposes the
Agent to personal liability or which is contrary to this Agreement and the
Security Instruments or applicable law.
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Section 11.08 Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving notice thereof to the Lenders and the Borrower, and
the Agent may be removed at any time with or without cause by the Majority
Lenders. Upon any such resignation or removal, the Majority Lenders shall have
the right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Majority Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving of notice of
resignation or the Majority Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent. Upon
the acceptance of such appointment hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article XI and Section 12.03 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.
ARTICLE XII
Miscellaneous
Section 12.01 Waiver. No failure on the part of the Agent or any Lender
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power or privilege under any of the Loan Documents shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege under any of the Loan Documents preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Section 12.02 Notices. All notices and other communications provided
for herein and in the other Loan Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement or the other Loan
Documents) shall be given or made by telex, telecopy, courier or U.S. Mail or in
writing and telexed, telecopied, mailed or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof or in the Loan Documents, except that for notices and other
communications to the Agent other than payment of money, the Borrower need only
send such notices and communications to the Agent care of the Houston address of
First Union Corporation; or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement or in the other Loan Documents, all such
communications shall be deemed to have been duly given when transmitted, if
transmitted before 1:00 p.m. local time on a Business Day (otherwise on the next
succeeding Business Day) by telex or telecopier and evidence or confirmation of
receipt is obtained, or personally delivered or, in the case of a mailed notice,
three (3) Business Days after the date deposited in the mails, postage prepaid,
in each case given or addressed as aforesaid.
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Section 12.03 Payment of Expenses, Indemnities,
etc. The Borrower agrees:
(a) whether or not the transactions hereby contemplated are
consummated, pay all reasonable expenses of the Agent in the administration
(both before and after the execution hereof and including advice of counsel
as to the rights and duties of the Agent and the Lenders with respect
thereto) of, and in connection with the negotiation, syndication,
investigation, preparation, execution and delivery of, recording or filing
of, preservation of rights under, enforcement of, and refinancing,
renegotiation or restructuring of, the Loan Documents and any amendment,
waiver or consent relating thereto (including, without limitation, travel,
photocopy, mailing, courier, telephone and other similar expenses of the
Agent, the cost of environmental audits, surveys and appraisals at
reasonable intervals, the reasonable fees and disbursements of counsel and
other outside consultants for the Agent and, in the case of enforcement,
the reasonable fees and disbursements of counsel for the Agent and any of
the Lenders); and promptly reimburse the Agent for all amounts expended,
advanced or incurred by the Agent or the Lenders to satisfy any obligation
of the Borrower under this Agreement or any Security Instrument, including
without limitation, all costs and expenses of foreclosure;
(b) to indemnify the Agent and each Lender and each of their Affiliates
and each of their officers, directors, employees, representatives, agents,
attorneys, accountants and experts ("Indemnified Parties") from, hold each
of them harmless against and promptly upon demand pay or reimburse each of
them for, the Indemnity Matters which may be incurred by or asserted
against or involve any of them (whether or not any of them is designated a
party thereto) as a result of, arising out of or in any way related to (i)
any actual or proposed use by the Borrower of the proceeds of any of the
Loans or The Letter of Credit, (ii) the execution, delivery and performance
of the Loan Documents, (iii) the operations of the business of the Borrower
and its Subsidiaries, (iv) the failure of the Borrower or any Subsidiary to
comply with the terms of any Security Instrument or this Agreement, or with
any Governmental Requirement, (v) any inaccuracy of any representation or
any breach of any warranty of the Borrower or any Guarantor set forth in
any of the Loan Documents, (vi) the issuance, execution and delivery or
transfer of or payment or failure to pay under the Letter of Credit, (vii)
the payment of a drawing under the Letter of Credit notwithstanding the
non-compliance, non-delivery or other improper presentation of the manually
executed draft(s) and certification(s), (viii) any assertion that the
Lenders were not entitled to receive the proceeds received pursuant to the
Security Instruments or (ix) any other aspect of the Loan Documents,
including, without limitation, the reasonable fees and disbursements of
counsel and all other expenses incurred in connection with investigating,
defending or preparing to defend any such action, suit, proceeding
(including any investigations, litigation or inquiries) or claim and
including all Indemnity Matters arising by reason of the ordinary
negligence of any Indemnified Party, but excluding all
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Indemnity Matters arising solely by reason of claims between the Lenders
or any Lender and the Agent or a Lender's shareholders against the Agent or
Lender or by reason of the gross negligence or willful misconduct on the
part of the Indemnified Party; and
(c) to indemnify and hold harmless from time to time the Indemnified
Party from and against any and all losses, claims, cost recovery actions,
administrative orders or proceedings, damages and liabilities to which any
such Person may become subject (i) under any Environmental Law applicable
to the Borrower or any Subsidiary or any of their Properties, including
without limitation, the treatment or disposal of hazardous substances on
any of their Properties, (ii) as a result of the breach or non-compliance
by the Borrower or any Subsidiary with any Environmental Law applicable to
the Borrower or any Subsidiary, (iii) due to past ownership by the Borrower
or any Subsidiary of any of their Properties or past activity on any of
their Properties which, though lawful and fully permissible at the time,
could result in present liability, (iv) the presence, use, release,
storage, treatment or disposal of hazardous substances on or at any of the
Properties owned or operated by the Borrower or any Subsidiary, or (v) any
other environmental, health or safety condition in connection with the Loan
Documents, provided, however, no indemnity shall be afforded under this
Section 12.03(c) in respect of any Property for any occurrence arising from
the acts or omissions of the Agent or any Lender during the period after
which such Person, its successors or assigns shall have obtained possession
of such Property (whether by foreclosure or deed in lieu of foreclosure, as
mortgagee-in-possession or otherwise).
(d) No Indemnified Party may settle any claim to be indemnified without
the consent of the indemnitor, such consent not to be unreasonably
withheld; provided, that the indemnitor may not reasonably withhold consent
to any settlement that an Indemnified Party proposes, if the indemnitor
does not have the financial ability to pay all its obligations outstanding
and asserted against the indemnitor at that time, including the maximum
potential claims against the Indemnified Party to be indemnified pursuant
to this Section 12.03.
(e) In the case of any indemnification hereunder, the Agent or Lender,
as appropriate shall give notice to the Borrower of any such claim or
demand being made against the Indemnified Party and the Borrower shall have
the non-exclusive right to join in the defense against any such claim or
demand provided that if the Borrower provides a defense, the Indemnified
Party shall bear its own cost of defense unless there is a conflict between
the Borrower and such Indemnified Party.
(f) The foregoing indemnities shall extend to the Indemnified Parties
notwithstanding the sole or concurrent negligence of every kind or
character whatsoever, whether active or passive, whether an affirma- tive
act or an omission, including without limitation, all types of
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negligent conduct identified in the restatement (second) of torts of one
or more of the Indemnified Parties or by reason of strict liability imposed
without fault on any one or more of the Indemnified Parties. To the
extent that an Indemnified Party is found to have committed an act of gross
negligence or willful misconduct, this contractual obligation of
indemnification shall continue but shall only extend to the portion of the
claim that is deemed to have occurred by reason of events other than the
gross negligence or willful misconduct of the Indemnified Party.
(g) The Borrower's obligations under this Section 12.03 shall survive
any termination of this Agreement and the payment of the Notes and shall
continue thereafter in full force and effect.
(h) The Borrower shall pay any amounts due under this Section 12.03
within thirty (30) days of the receipt by the Borrower of notice of the
amount due.
Section 12.04 Amendments, Etc. Any provision of this Agreement or any
Security Instrument may be amended, modified or waived with the Borrower's and
the Majority Lenders' prior written consent; provided that (i) no amendment,
modification or waiver which extends the final maturity of the Loans, increases
the Aggregate Revolving Credit Commitments, forgives the principal amount of any
Indebtedness outstanding under this Agreement, releases any guarantor of the
Indebtedness or releases all or substantially all of the collateral, reduces the
interest rate applicable to the Loans or the fees payable to the Lenders
generally, affects Section 2.03(a), this Section 12.04 or Section 12.06(a) or
modifies the definition of "Majority Lenders" shall be effective without consent
of all Lenders; (ii) no amendment, modification or waiver which increases the
Commitment of any Lender shall be effective without the consent of such Lender;
and (iii) no amendment, modification or waiver which modifies the rights, duties
or obligations of the Agent shall be effective without the consent of the Agent.
Section 12.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 12.06 Assignments and Participations.
(a) The Borrower may not assign its rights or obligations hereunder or
under the Notes or the Letter of Credit without the prior consent of all of
the Lenders and the Agent.
(b) Any Lender may, upon the written consent of the Agent and, so long
as no Event of Default has occurred and is continuing, the Borrower (which
consent will not be unreasonably withheld), assign to one or more assignees
all or a portion of its rights and obligations under this Agreement
pursuant to an Assignment Agreement substantially in the form of Exhibit F
(an "Assignment") provided, however, that (i) any such assignment shall be
in the amount of the lesser of (y) $5,000,000 or (z) the aggregate rights
and obligations of the Lender making such assignment immediately
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before such assignment and (ii) the assignee or assignor shall pay to the
Agent a processing and recordation fee of $2,500 for each assignment].
Any such assignment will become effective upon the execution and delivery
to the Agent of the Assignment and the consent of the Agent and the
Borrower. Promptly after receipt of an executed Assignment, the Agent
shall send to the Borrower a copy of such executed Assignment. Upon receipt
of such executed Assignment and approval thereof by Borrower, the Borrower,
will, at its own expense, execute and deliver new Notes to the assignor
and/or assignee, as appropriate, in accordance with their respective
interests as they appear. Upon the effectiveness of any assignment
pursuant to this Section 12.06(b), the assignee will become a "Lender,"
if not already a "Lender," for all purposes of this Agreement and the
Security Instruments. The assignor shall
be relieved of its obligations hereunder to the extent of such assignment
(and if the assigning Lender no longer holds any rights or obligations
under this Agreement, such assigning Lender shall cease to be a "Lender"
hereunder except that its rights under Sections 4.06, 5.01, 5.05 and 12.03
shall not be affected). The Agent will prepare on the last Business Day of
each month during which an assignment has become effective pursuant to this
Section 12.06(b), a new Annex I giving effect to all such assignments
effected during such month, and will promptly provide the same to the
Borrower and each of the Lenders.
(c) Each Lender may transfer, grant or assign participations in all or
any part of such Lender's interests hereunder pursuant to this Section
12.06(c) to any Person, provided that: (i) such Lender shall remain a
"Lender" for all purposes of this Agreement and the transferee of such
participation shall not constitute a "Lender" hereunder; and (ii) no
participant under any such participation shall have rights to approve any
amendment to or waiver of any of the Loan Documents except to the extent
such amendment or waiver would (x) forgive any principal owing on any
Indebtedness or extend the final maturity of the Loans, (y) reduce the
interest rate (other than as a result of waiving the applicability of any
post-default increases in interest rates) or fees applicable to any of the
Commitments or Loans or the Letter of Credit in which such participant is
participating, or postpone the payment of any thereof, or (z) release any
guarantor of the Indebtedness or release all or substantially all of the
collateral (except as provided in the Loan Documents) supporting any of the
Commitments or Loans or the Letter of Credit in which such participant is
participating. In the case of any such participation, the participant shall
not have any rights under this Agreement or any of the Security Instruments
(the participant's rights against the granting Lender in respect of such
participation to be those set forth in the agreement with such Lender
creating such participation), and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such
participation, provided that such participant shall be entitled to receive
additional amounts under Article V on the same basis as if it were a Lender
and be indemnified under Section 12.03 as if it were a Lender. In addition,
each agreement creating any participation must include an agreement by the
participant to be bound by the provisions of Section 12.15.
(d) The Lenders may furnish any information concerning the Borrower in
the possession of the Lenders from time to time to assignees and
participants (including prospective assignees and participants); provided
that, such Persons agree to be bound by the provisions of Section 12.15
hereof.
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(e) Notwithstanding anything in this Section 12.06 to the contrary, any
Lender may assign and pledge its Notes to any Federal Reserve Bank or the
United States Treasury as collateral security pursuant to Regulation A of
the Board of Governors of the Federal Reserve System and any operating
circular issued by such Federal Reserve System and/or such Federal Reserve
Bank. No such assignment and/or pledge shall release the assigning and/or
pledging Lender from its obligations hereunder.
(f) Notwithstanding any other provisions of this Section 12.06, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the "Blue Sky" laws of
any state.
Section 12.07 Invalidity. In the event that any one or more of the
provisions contained in any of the Loan Documents or the Letter of Credit,
shall, for any reason, be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of the Notes, this Agreement or any Security Instrument.
Section 12.08 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 12.09 References. The words "herein," "hereof," "hereunder" and
other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Any reference herein to a Section shall be deemed to refer to the applicable
Section of this Agreement unless otherwise stated herein. Any reference herein
to an exhibit or schedule shall be deemed to refer to the applicable exhibit or
schedule attached hereto unless otherwise stated herein.
Section 12.10 Survival. The obligations of the parties under Section
4.06, Article V, and Sections 11.05 and 12.03 shall survive the repayment of the
Loans and the termination of the Commitments. To the extent that any payments on
the Indebtedness or proceeds of any collateral are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent, the Indebtedness so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Agent's and the Lenders' Liens, security interests,
rights, powers and remedies under this Agreement and each Security Instrument
shall continue in full force and effect. In such event, each Security Instrument
shall be automatically reinstated and the Borrower shall take such action as may
be reasonably requested by the Agent and the Lenders to effect such
reinstatement.
Section 12.11 Captions. Captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
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Section 12.12 No Oral Agreements. The Loan Documents embody the entire
agreement and understanding between the parties and supersede all other
agreements and understandings between such parties relating to the subject
matter hereof and thereof. The Loan Documents represent the final agreement
between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. there are no
unwritten oral agreements between the parties.
Section 12.13 Governing Law; Submission to Jurisdiction.
(a) This Agreement and the Notes shall be
governed by, and construed in accordance with, the
laws of the state of Texas except to the extent that
United States federal law permits any Lender to
charge interest at the rate allowed by the laws of
the state where such Lender is located. Tex. Rev.
Civ. Stat. Ann. Art. 5069, Ch. 15 (which regulates
certain revolving credit loan accounts and revolving
tri-party accounts) shall not apply to this Agreement
or the notes.
(b) any legal action or proceeding with respect to the Loan Documents
shall be brought in the courts of the state of Texas or of the United
States of America for the Southern District of Texas, and, by execution and
delivery of this Agreement, the Borrower hereby accepts for itself and (to
the extent permitted by law) in respect of its Property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Borrower
hereby irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions. This submission to
jurisdiction is non-exclusive and does not preclude the Agent or any Lender
from obtaining jurisdiction over the Borrower in any court otherwise having
jurisdiction.
(c) The Borrower irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid,
to the Borrower at its said address, such service to become effective
thirty (30) days after such mailing.
(d) Nothing herein shall affect the right of the Agent or any Lender or
any holder of a Note to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against the Borrower
in any other jurisdiction.
(e) Each of the Borrower and each lender hereby (i) irrevocably waive,
to the maximum extent not prohibited by law, any right it may have to claim
or recover in any such litigation any special, exemplary, punitive or
consequential damages, or damages other than, or in addition
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to, actual damages; (ii) certify that no party hereto nor any
representative or agent of counsel for any party hereto has represented,
expressly or otherwise, or implied that such party would not, in the event
of litigation, seek to enforce the foregoing waivers, and (iii) acknowledge
that it has been induced to enter into this Agreement, the Security
Instruments and the transactions contemplated hereby and thereby by, among
other things, the mutual waivers and certifications contained in this
Section 12.13.
Section 12.14 Interest. It is the intention of the parties hereto that
each Lender shall conform strictly to usury laws applicable to it. Accordingly,
if the transactions contemplated hereby would be usurious as to any Lender under
laws applicable to it (including the laws of the United States of America and
the State of Texas or any other jurisdiction whose laws may be mandatorily
applicable to such Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in any
of the Loan Documents or any agreement entered into in connection with or as
security for the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and (ii) in the event that the maturity of the Notes is accelerated
by reason of an election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to any Lender may never include more than the maximum amount
allowed by such applicable law, and excess interest, if any, provided for in
this Agreement or otherwise shall be canceled automatically by such Lender as of
the date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower). All sums paid
or agreed to be paid to any Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to such Lender,
be amortized, prorated, allocated and spread throughout the full term of the
Loans evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the
amount of interest payable to any Lender on any date shall be computed at the
Highest Lawful Rate applicable to such Lender pursuant to this Section 12.14 and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate applicable
to such Lender, then the amount of interest payable to such Lender in respect of
such subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 12.14. To the extent that Article
5069-1.04 of the Texas Revised
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Civil Statutes is relevant for the purpose of determining the Highest Lawful
Rate, such Lender elects to determine the applicable rate ceiling under such
Article by the indicated weekly rate ceiling from time to time in effect.
Section 12.15 Confidentiality. In the event that the Borrower provides
to the Agent or the Lenders written confidential information belonging to the
Borrower, if the Borrower shall denominate such information in writing as
"confidential", the Agent and the Lenders shall thereafter maintain such
information in confidence in accordance with the standards of care and diligence
that each utilizes in maintaining its own confidential information. This
obligation of confidence shall not apply to such portions of the information
which (i) are in the public domain, (ii) hereafter become part of the public
domain without the Agent or the Lenders breaching their obligation of confidence
to the Borrower, (iii) are previously known by the Agent or the Lenders from
some source other than the Borrower, (iv) are hereafter developed by the Agent
or the Lenders without using the Borrower's information, (v) are hereafter
obtained by or available to the Agent or the Lenders from a third party who owes
no obligation of confidence to the Borrower with respect to such information or
through any other means other than through disclosure by the Borrower, (vi) are
disclosed with the Borrower's consent, (vii) must be disclosed either pursuant
to any Governmental Requirement or to Persons regulating the activities of the
Agent or the Lenders, or (viii) as may be required by law or regulation or order
of any Governmental Authority in any judicial, arbitration or governmental
proceeding. Further, the Agent or a Lender may disclose any such information to
any other Lender, any independent petroleum engineers or consultants, any
independent certified public accountants, any legal counsel employed by such
Person in connection with this Agreement or any Security Instrument, including
without limitation, the enforcement or exercise of all rights and remedies
thereunder, or any assignee or participant (including prospective assignees and
participants) in the Loans; provided, however, that the Agent or the Lenders
shall receive a confidentiality agreement from the Person to whom such
information is disclosed such that said Person shall have the same obligation to
maintain the confidentiality of such information as is imposed upon the Agent or
the Lenders hereunder.
Section 12.16 Effectiveness. This Agreement
shall be effective on the Closing Date (the "Effective
Date").
Section 12.17 Exculpation Provisions. Each of the parties hereto
specifically agrees that it has a duty to read this Agreement and the Security
Instruments and agrees that it is charged with notice and knowledge of the terms
of this Agreement and the Security Instruments; that it has in fact read this
Agreement and is fully informed and has full notice and knowledge of the terms,
conditions and effects of this Agreement; that it has been represented by
independent legal counsel of its choice throughout the negotiations preceding
its execution of this Agreement and the Security Instruments; and has received
the advice of its attorney in entering into this Agreement and the Security
Instruments; and that it recognizes that certain of the terms of this Agreement
and the Security Instruments result in one party assuming the liability inherent
in some aspects of the transaction and relieving the other party of its
responsibility for such liability. each party hereto agrees and covenants that
it will not contest the validity or enforceability of any
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exculpatory provision of this Agreement and the Security Instruments on the
basis that the party had no notice or knowledge of such provision or that the
provision is not "conspicuous."
The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
BORROWER: KINDER MORGAN OPERATING L.P.
"B" (formerly known as Enron
Transportation Services, L.P.)
By: Kinder Morgan G.P., Inc.
its General Partner
By:________________________
Name: Thomas B. King
Title: President
Address for Notices:
1301 McKinney Street
Suite 3450
Houston, Texas 77010
Telecopier No.: (713)844-9570
Telephone No.: (713)844-9500
Attention: Richard D.Kinder
Chief Executive Office and Principal Place
of Business:
1301 McKinney Street
Suite 3450
Houston, Texas 77010
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LENDER AND AGENT: FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:_____________________________
Name: Michael J. Kolosowsky
Title: Vice President
First Union National Bank of North Carolina
301 South College Street, TW-10
Charlotte, North Carolina 28288-0608
Telecopier No.: (704) 383-0288
Telephone No.: (704) 383-0281
Attention: Syndication Agency Services
With copy to:
First Union Corporation of North Carolina
1001 Fannin, Suite 2255
Houston, Texas 77002
Telecopier No.: (713) 650-6354
Telephone No.: (713) 650-3716
Attention: Paul N. Riddle
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LENDERS: ________________________________
By: ____________________________
Lending Office for Base Rate
Loans:
________________________________
________________________________
________________________________
Lending Office for LIBOR Loans:
________________________________
________________________________
________________________________
Address for Notices:
________________________________
________________________________
________________________________
Telecopier No.: _______________
Telephone No.: _______________
Attention: _____________________
[With copy to:]
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EXHIBIT A-1
FORM OF REVOLVING CREDIT NOTE
$_____________________________ ___________________, 199__
FOR VALUE RECEIVED, KINDER MORGAN OPERATING L.P. "B",
a Delaware limited partnership (the "Borrower"), hereby
promises to pay to the order of
______________________________ (the "Lender"), at the Principal Office of FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, (the "Agent"), at 301 South Tryon Street,
Charlotte, North Carolina 28288, the principal sum of _____________ Dollars
($____________) (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Loans made by the Lender to the Borrower under the
Credit Agreement, as hereinafter defined), in lawful money of the United States
of America and in immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Loan, at such office, in like money and funds, for
the period commencing on the date of such Loan until such Loan shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.
The date, amount, Type, interest rate, Interest Period and maturity of each
Loan made by the Lender to the Borrower, and each payment made on account of the
principal thereof, shall be recorded by the Lender on its books and, prior to
any transfer of this Revolving Credit Note, may be endorsed by the Lender on the
schedules attached hereto or any continuation thereof or on any separate record
maintained by the Lender.
This Revolving Credit Note is one of the Revolving Credit Notes referred to
in the Credit Agreement dated as of ________________, 1997 among the Borrower,
the Lenders which are or become parties thereto (including the Lender) and the
Agent, and evidences Loans made by the Lender thereunder (such Credit Agreement
as the same may be amended or supplemented from time to time, the "Credit
Agreement"). Capitalized terms used in this Revolving Credit Note have the
respective meanings assigned to them in the Credit Agreement.
This Revolving Credit Note is issued pursuant to the Credit Agreement and
is entitled to the benefits provided for in the Credit Agreement and the
Security Instruments. The Credit Agreement provides for the acceleration of the
maturity of this Revolving Credit Note upon the occurrence of certain events,
for prepayments of Loans upon the terms and conditions specified therein and
other provisions relevant to this Revolving Credit Note.
A-1-1
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THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS.
KINDER MORGAN OPERATING L.P. "B"
By: Kinder Morgan G.P., Inc.,
its General Partner
By:
Name:
Title:
A-1-2
<PAGE>
EXHIBIT A-2
REPLACEMENT TERM NOTE
$23,700,000 February 14, 1997
FOR VALUE RECEIVED, Kinder Morgan Operating L.P. "B" (formerly known as
Enron Transportation Services, L.P., a Delaware limited partnership (the
"Borrower"), hereby promises to pay to the order of First Union National Bank of
North Carolina ("First Union"), at its principal office in Charlotte, North
Carolina, the principal amount of the lesser of (a) $23,700,000 or (b) the
aggregate unpaid principal amount of all Advances (as defined in that certain
Credit Agreement dated as of February 14, 1997 among the Borrower, First Union
and the lenders party thereto (the "Credit Agreement")), with the principal
amount of each Advance payable on the Stated Expiration Date (as defined in the
Credit Agreement) (or such earlier date as may be required by Section 10.02 of
the Credit Agreement), together with interest from the date hereof to, and
after, maturity on the principal hereof from time to time unpaid, payable
quarterly in arrears on each principal payment date at a rate equal to the Base
Rate (as defined in the Credit Agreement) plus .5% per annum; provided, that in
the event that payment of any principal installment is not timely made, the
outstanding principal balance hereunder shall bear interest until paid in full
at the Post-Default Rate (as defined in the Credit Agreement) per annum payable
monthly in arrears on the first Business Day (as defined in the Credit
Agreement) of each month. All payments to First Union hereunder shall be made
without set-off, counterclaim or deduction of any kind in lawful currency of the
United States and in immediately available funds at First Union's principal
office as aforesaid, Attention: Letters of Credit. Payments falling due on a day
which is not a Business Day shall be made on the next occurring Business Day.
First Union is authorized to endorse the date and amount of each Advance,
the amount of each payment of principal made by the Borrower with respect
thereto on the schedule annexed hereto and made a part hereof, or a continuation
thereof which shall be attached hereto and made a part hereof, which endorsement
shall constitute prima facie evidence of the accuracy of the information
endorsed.
ALL SUMS paid hereon shall be applied first to the satisfaction of
accrued interest and the balance to the unpaid principal.
THIS NOTE is the Replacement Term Note referred to in the Credit
Agreement, and is subject to, and is executed in accordance with all of the
terms, conditions and provisions thereof, including those respecting prepayment
or acceleration and is further subject
A-2-1
<PAGE>
to all of the terms, conditions and provisions of the
Credit Agreement.
The Borrower and any and each other Person liable for the payment or
collection of this Note expressly waive demand and presentment for payment,
notice of nonpayment, protest, notice of protest, notice of dishonor, notice of
intent to accelerate, notice of acceleration, bringing of suit, and diligence in
taking any action to collect amounts called for hereunder and in the handling of
property at any time existing as security in connection herewith, and shall be
directly and primarily liable for the payment of all sums owing and to be owing
hereon, regard- less of and without any notice, diligence, act or omission as or
with respect to the collection of any amount called for hereunder or in
connection with any lien at any time had or existing as security for any amount
called for hereunder.
THIS NOTE is a contract made under and shall be construed in accordance
with and governed by the laws of the United States of America and the State of
Texas.
IN WITNESS WHEREOF, the Borrower has executed and delivered this Term Note
as of the 14th day of February, 1997.
KINDER MORGAN OPERATING L.P. "B"
By: Kinder Morgan G.P., Inc.,
its General Partner
By:________________________
Name:
Title:
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<PAGE>
EXHIBIT B
FORM OF BORROWING, CONTINUATION AND CONVERSION REQUEST
_____________________, 199__
KINDER MORGAN OPERATING L.P. "B", a Delaware limited partnership (the
"Borrower"), pursuant to the Credit Agreement dated as of ___________________,
1997 (together with all amendments or supplements thereto, the "Credit
Agreement") among the Borrower, FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as
Agent for the lenders (the "Lenders") which are or become parties thereto, and
such Lenders, hereby makes the requests indicated below (unless otherwise
defined herein, capitalized terms are defined in the Credit Agreement):
1. Revolving Credit Loans:
(a) Aggregate amount of new Revolving Credit Loans to
be $__________________;
(b) Requested funding date is _________________,
199__;
(c) $_____________________ of such borrowings are to
be LIBOR Loans;
$_____________________ of such borrowings are to
be Base Rate Loans; and
(d) Length of Interest Period for LIBOR Loans is:
-------------------------.
2. LIBOR Loan Continuation for LIBOR Loans maturing
on __________________:
(a) Aggregate amount to be continued as LIBOR Loans
is $____________________;
(b) Aggregate amount to be converted to Base Rate
Loans is $__________________;
(c) Length of Interest Period for continued LIBOR
Loans is ___________________.
3. Conversion of Outstanding Base Rate Loans to
LIBOR Loans:
Convert $__________________ of the outstanding Base Rate Loans to LIBOR
Loans on _____________ with an Interest Period of
______________________.
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4. Conversion of outstanding LIBOR Loans to Base
Rate Loans:
Convert $__________________ of the outstanding LIBOR Loans with
Interest Period maturing on ______________________, 199_, to Base Rate
Loans.
The undersigned certifies that he is the _____________________ of the
General Partner of the Borrower, and that as such he is authorized to execute
this certificate on behalf of the Borrower. The undersigned further certifies,
represents and warrants on behalf of the Borrower that the Borrower is entitled
to receive the requested borrowing, continuation or conversion under the terms
and conditions of the Credit Agreement.
KINDER MORGAN OPERATING L.P. "B"
By: Kinder Morgan G.P., Inc.,
its General Partner
By:__________________________
Name:
Title:
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<PAGE>
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the ________________ of KINDER
MORGAN G.P., INC., a Delaware corporation, general partner of KINDER MORGAN
OPERATING L.P. "B", a Delaware limited partnership (the "Borrower"), and that as
such he is authorized to execute this certificate on behalf of the Borrower.
With reference to the Credit Agreement dated as of ______________, 1997
(together with all amendments or supplements thereto being the "Agreement")
among the Borrower, FIRST UNION NATIONAL BANK OF NORTH CAROLINA , as Agent for
the lenders (the "Lenders") which are or become a party thereto, and such
Lenders, the undersigned represents and warrants as follows (each capitalized
term used herein having the same meaning given to it in the Agreement unless
otherwise specified):
(a) The representations and warranties of the Borrower contained in
Article VII of the Agreement and in the Security Instruments and otherwise
made in writing by or on behalf of the Borrower pursuant to the Agreement
and the Security Instruments were true and correct when made, and are
repeated at and as of the time of delivery hereof and are true and correct
at and as of the time of delivery hereof, except to the extent such
representations and warranties are expressly limited to an earlier date or
the Majority Lenders have expressly consented in writing to the contrary.
(b) The Borrower has performed and complied with all agreements and
conditions contained in the Agreement and in the Security Instruments
required to be performed or complied with by it prior to or at the time of
delivery hereof.
(c) Since __________________, no change has occurred, either in any
case or in the aggregate, in the condition, financial or otherwise, of the
Borrower or any Subsidiary which would have a Material Adverse Effect.
(d) There exists, and, after giving effect to the loan or loans with
respect to which this certificate is being delivered, will exist, no
Default under the Agreement or any event or circumstance which constitutes,
or with notice or lapse of time (or both) would constitute, an event of
default under any loan or credit agreement, indenture, deed of trust,
security agreement or other agreement or instrument evidencing or
pertaining to any Debt of the Borrower or any Subsidiary, or under any
material agreement or instrument to which the Borrower or any Subsidiary is
a party or by which the Borrower or any Subsidiary is bound.
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(e) Attached hereto are the detailed computations necessary to
determine whether the Borrower is in compliance with Sections 9.12 and 9.13
as of the end of the [fiscal quarter][fiscal year] ending
.
EXECUTED AND DELIVERED this ____ day of ______________, 19___.
KINDER MORGAN OPERATING L.P. "B"
By: Kinder Morgan G.P., Inc.,
its General Partner
By:
Name:
Title:
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<PAGE>
EXHIBIT D - NONE INCLUDED
D-1
<PAGE>
EXHIBIT E
LIST OF SECURITY INSTRUMENTS
1. Guaranty Agreement from Kinder Morgan Energy
Partners, L.P. ("Guarantor")
2. First Amendment to Mortgage and Security Agreement
with Assignment of Rents (Illinois) between the
Borrower and the Agent
3. Financing Statement Amendments and Financing
Statement Assignments executed by the Borrower and
the Agent with respect to item 2 above
4. First Amendment to Mortgage, Security Agreement and
Financing Statement (Wyoming) between the Borrower
and the Agent
5. Financing Statement Amendments and Financing
Statement Assignments executed by the Borrower and
the Agent with respect to item 4 above
6. Security Agreement covering partnership interests
from the Guarantor
7. Instruction letter and Confirmation of Registration
executed by the Guarantor in connection with item 6
above
8. Financing Statement executed by the Borrower with
respect to item 6 above
9. Security Agreement covering accounts, equipment,
inventory and general intangibles from the Borrower
10. Financing Statement executed by the Borrower with
respect to item 9 above
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EXHIBIT F
FORM OF
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT ("Agreement") dated as of ________________, 199__
is between: _________________________________ (the "Assignor") and
__________________________ (the "Assignee").
RECITALS
A. The Assignor is a party to the Credit Agreement dated as of ___________,
1997 (as amended and supplemented and in effect from time to time, the "Credit
Agreement") among KINDER MORGAN OPERATING L.P. "B", a Delaware limited
partnership (the "Borrower"), each of the lenders that is or becomes a party
thereto as provided in Section 12.06 of the Credit Agreement (individually,
together with its successors and assigns, a "Lender", and collectively, together
with their successors and assigns, the "Lenders"), and FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, in its individual capacity, ("First Union") and as agent for
the Lenders (in such capacity, together with its successors in such capacity,
the "Agent").
B. The Assignor proposes to sell, assign and transfer to the Assignee, and
the Assignee proposes to purchase and assume from the Assignor, [all][a portion]
of the Assignor's Revolving Credit Commitment, outstanding Loans and its
Percentage Share of the outstanding LC Commitment, all on the terms and
conditions of this Agreement.
C. In consideration of the foregoing and the mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
Definitions.
Section 1.01 Definitions. All capitalized terms used but not defined herein
have the respective meanings given to such terms in the Credit Agreement.
Section 1.02 Other Definitions. As used herein, the
following terms have the following respective meanings:
"Assigned Interest" shall mean all of Assignor's (in its capacity as a
"Lender") rights and obligations (i) under the Credit Agreement and the
other Security Instruments in respect of the Revolving Credit Commitment of
the Assignor in the
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principal amount equal to $____________________, including, without
limitation, any obligation to participate pro rata in any LC Commitment and
(ii) to make Loans under the Revolving Credit Commitment and any right to
receive payments for the Loans outstanding under the Revolving Credit
Commitment assigned hereby of $__________________ (the "Loan Balance"),
plus the interest and fees which will accrue from and after the Assignment
Date.
"Assignment Date" shall mean
_____________________, 199___.
ARTICLE II
Sale and Assignment.
Section 2.01 Sale and Assignment. On the terms and conditions set forth
herein, effective on and as of the Assignment Date, the Assignor hereby sells,
assigns and transfers to the Assignee, and the Assignee hereby purchases and
assumes from the Assignor, all of the right, title and interest of the Assignor
in and to, and all of the obligations of the Assignor in respect of, the
Assigned Interest. Such sale, assignment and transfer is without recourse and,
except as expressly provided in this Agreement, without representation or
warranty.
Section 2.02 Assumption of Obligations. The Assignee agrees with the
Assignor (for the express benefit of the Assignor and the Borrower) that the
Assignee will, from and after the Assignment Date, perform all of the
obligations of the Assignor in respect of the Assigned Interest. From and after
the Assignment Date: (a) the Assignor shall be released from the Assignor's
obligations in respect of the Assigned Interest, and (b) the Assignee shall be
entitled to all of the Assignor's rights, powers and privileges under the Credit
Agreement and the other Security Instruments in respect of the Assigned
Interest.
Section 2.03 Consent by Agent. By executing this Agreement as provided
below, in accordance with Section 12.06(b) of the Credit Agreement, the Agent
hereby acknowledges notice of the transactions contemplated by this Agreement
and consents to such transactions.
Section 2.04 Consent by Borrower. By executing this Agreement as provided
below, in accordance with Section 12.06(b) of the Credit Agreement, the Borrower
hereby acknowledges notice of the transactions contemplated by this Agreement
and consents to such transactions.
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<PAGE>
ARTICLE III
Payments.
Section 3.01 Payments. As consideration for the sale, assignment and
transfer contemplated by Section 2.01 hereof, the Assignee shall, on the
Assignment Date, assume Assignor's obligations in respect of the Assigned
Interest and pay to the Assignor an amount equal to the Loan Balance, if any. An
amount equal to all accrued and unpaid interest and fees shall be paid to the
Assignor as provided in Section 3.02 (iii) below. Except as otherwise provided
in this Agreement, all payments hereunder shall be made in Dollars and in
immediately available funds, without setoff, deduction or counterclaim.
Section 3.02 Allocation of Payments. The Assignor and the Assignee agree
that (i) the Assignor shall be entitled to any payments of principal with
respect to the Assigned Interest made prior to the Assignment Date, together
with any interest and fees with respect to the Assigned Interest accrued prior
to the Assignment Date, (ii) the Assignee shall be entitled to any payments of
principal with respect to the Assigned Interest made from and after the
Assignment Date, together with any and all interest and fees with respect to the
Assigned Interest accruing from and after the Assignment Date, and (iii) the
Agent is authorized and instructed to allocate payments received by it for
account of the Assignor and the Assignee as provided in the foregoing clauses.
Each party hereto agrees that it will hold any interest, fees or other amounts
that it may receive to which the other party hereto shall be entitled pursuant
to the preceding sentence for account of such other party and pay, in like money
and funds, any such amounts that it may receive to such other party promptly
upon receipt.
Section 3.03 Delivery of Notes. Promptly following the receipt by the
Assignor of the consideration required to be paid under Section 3.01 hereof, the
Assignor shall, in the manner contemplated by Section 12.06(b) of the Credit
Agreement, (i) deliver to the Agent (or its counsel) the Notes held by the
Assignor and (ii) notify the Agent to request that the Borrower execute and
deliver new Notes to the Assignor, if Assignor continues to be a Lender, and the
Assignee, dated the date of this Agreement in respective principal amounts equal
to the respective Revolving Credit Commitment of the Assignor (if appropriate)
and the Assignee after giving effect to the sale, assignment and transfer
contemplated hereby.
Section 3.04 Further Assurances. The Assignor and the Assignee hereby agree
to execute and deliver such other instruments, and take such other actions, as
either party may reasonably request in connection with the transactions
contemplated by this Agreement.
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<PAGE>
ARTICLE IV
Conditions Precedent.
Section 4.01 Conditions Precedent. The effectiveness of the sale,
assignment and transfer contemplated hereby is subject to the satisfaction of
each of the following conditions precedent:
(a) the execution and delivery of this
Agreement by the Assignor and the Assignee;
(b) the receipt by the Assignor of the payment
required to be made by the Assignee under
Section 3.01 hereof;
(c) the acknowledgment and consent by the
Agent contemplated by Section 2.03 hereof; and
(d) the acknowledgment and consent by the
Agent contemplated by Section 2.03 hereof.
ARTICLE V
Representations and Warranties.
Section 5.01 Representations and Warranties of the Assignor. The Assignor
represents and warrants to the Assignee as follows:
(a) it has all requisite power and authority, and has taken all action
necessary to execute and deliver this Agreement and to fulfill its
obligations under, and consummate the transactions contemplated by, this
Agreement;
(b) the execution, delivery and compliance with the terms hereof by
Assignor and the delivery of all instruments required to be delivered by it
hereunder do not and will not violate any Governmental Requirement
applicable to it;
(c) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor,
enforceable against it in accordance with its terms;
(d) all approvals and authorizations of, all filings with and all
actions by any Governmental Authority necessary for the validity or
enforceability of its obligations under this Agreement have been obtained;
(e) the Assignor has good title to, and is the sole legal and
beneficial owner of, the Assigned Interest, free and clear of all Liens,
claims, participations or other charges of any nature whatsoever; and
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<PAGE>
(f) the transactions contemplated by this Agreement are commercial
banking transactions entered into in the ordinary course of the banking
business of the Assignor.
Section 5.02 Disclaimer. Except as expressly provided in Section 5.01
hereof, the Assignor does not make any representation or warranty, nor shall it
have any responsibility to the Assignee, with respect to the accuracy of any
recitals, statements, representations or warranties contained in the Credit
Agreement or in any certificate or other document referred to or provided for
in, or received by any Lender under, the Credit Agreement, or for the value,
validity, effectiveness, genuineness, execution, effectiveness, legality,
enforceability or sufficiency of the Credit Agreement, the Notes or any other
document referred to or provided for therein or for any failure by the Borrower
or any other Person (other than Assignor) to perform any of its obligations
thereunder or for the existence, value, perfection or priority of any collateral
security or the financial or other condition of the Borrower or the Subsidiaries
or any other obligor or guarantor, or any other matter relating to the Credit
Agreement or any other Security Instrument or any extension of credit
thereunder.
Section 5.03 Representations and Warranties of the Assignee. The Assignee
represents and warrants to the Assignor as follows:
(a) it has all requisite power and authority, and has taken all action
necessary to execute and deliver this Agreement and to fulfill its
obligations under, and consummate the transactions contemplated by, this
Agreement;
(b) the execution, delivery and compliance with the terms hereof by
Assignee and the delivery of all instruments required to be delivered by it
hereunder do not and will not violate any Governmental Requirement
applicable to it;
(c) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignee,
enforceable against it in accordance with its terms;
(d) all approvals and authorizations of, all filings with and all
actions by any Governmental Authority necessary for the validity or
enforceability of its obligations under this Agreement have been obtained;
(e) the Assignee has fully reviewed the terms of the Credit Agreement
and the other Security Instruments and has independently and without
reliance upon the Assignor, and based on such information as the Assignee
has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement;
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<PAGE>
(f) the Assignee hereby affirms that the representations contained in
Section 4.06(d)[(i)][ii)] of the Credit Agreement are true and accurate as
to it [IF (ii) IS SELECTED ADD: and, the Assignee has contemporaneously
herewith delivered to the Agent and the Borrower such certifications as are
required thereby to avoid the withholding taxes referred to in Section
4.06]; and
(g) the transactions contemplated by this Agreement are commercial
banking transactions entered into in the ordinary course of the banking
business of the Assignee.
ARTICLE VI
Miscellaneous.
Section 6.01 Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers,
requests or consents under, this Agreement) shall be given or made in writing
(including, without limitation, by telex or telecopy) to the intended recipient
at its "Address for Notices" specified below its name on the signature pages
hereof or, as to either party, at such other address as shall be designated by
such party in a notice to the other party.
Section 6.02 Amendment, Modification or Waiver. No provision of this
Agreement may be amended, modified or waived except by an instrument in writing
signed by the Assignor and the Assignee, and consented to by the Agent and
Borrower.
Section 6.03 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. The representations and warranties made herein by the
Assignee are also made for the benefit of the Agent and the Borrower, and the
Assignee agrees that the Agent and the Borrower are entitled to rely upon such
representations and warranties.
Section 6.04 Assignments. Neither party hereto may assign any of its rights
or obligations hereunder except in accordance with the terms of the Credit
Agreement.
Section 6.05 Captions. The captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
Section 6.06 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be identical and all of which, taken together,
shall constitute one and the same instrument, and each of the parties hereto may
execute this Agreement by signing any such counterpart.
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<PAGE>
Section 6.07 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the law of
the State of Texas.
Section 6.08 Expenses. To the extent not paid by the Borrower pursuant to
the terms of the Credit Agreement, each party hereto shall bear its own expenses
in connection with the execution, delivery and performance of this Agreement.
Section 6.09 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. IN WITNESS WHEREOF, the
parties hereto have caused this Assignment Agreement to be executed and
delivered as of the date first above written.
ASSIGNOR
By:
Name:
Title:
Address for Notices:
Telecopier No.:
Telephone No.:
Attention:
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<PAGE>
ASSIGNEE
By:
Name:
Title:
Address for Notices:
Telecopier No.:
Attention: Telephone No.:
ACKNOWLEDGED AND CONSENTED TO:
,
as Agent
By:
Name:
Title:
KINDER MORGAN OPERATING L.P. "B"
By: Kinder Morgan G.P., Inc.
its General Partner
By:
Name:
Title:
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<PAGE>
EXHIBIT G-1
[FORM OF REPLACEMENT LETTER OF CREDIT]
IRREVOCABLE LETTER OF CREDIT
_______, 1997
Bank One, Texas, National Association
910 Travis, 6th Floor
Houston, Texas 77002
Attention: Corporate Trust Department
Re: Irrevocable Letter of Credit No. S113181
Ladies and Gentlemen:
At the request and for the account of Kinder Morgan Operating L.P. "B"
(formerly known as Enron Transportation Services, L.P.), a Delaware limited
partnership (the "Company"), we hereby establish this Irrevocable Letter of
Credit in your favor, as Trustee under the Indenture of Trust dated as of April
1, 1994 (as amended or supplemented from time to time, the "Trust Indenture"),
by and between Jackson-Union Counties Regional Port District, a political
subdivision, a body politic and a municipal corporation duly organized and
validly existing under the laws of the State of Illinois (the "Issuer"), and
you, pursuant to which the Issuer has issued $23,700,000 in aggregate original
principal amount of the Issuer's Port Facility Refunding Revenue Bonds (Enron
Transportation Services, L.P. Project) Series 1994 (the "Bonds"), in the stated
amount of $24,128,548.00 (hereinafter, as reduced and reinstated from time to
time in accordance with the provisions hereof, the "Stated Amount"), of which an
amount not exceeding $23,700,000.00 (as reduced and reinstated from time to time
in accordance with the terms hereof, the "Principal Component") may be drawn
upon with respect to payment of the unpaid principal of, or the portion of the
purchase price corresponding to principal of, the Bonds, and an amount not
exceeding $428,548.00 (as reduced and reinstated from time to time in accordance
with the terms hereof, the "Interest Component") may be drawn upon with respect
to payment of interest on, or the portion of the purchase price corresponding to
interest on, the Bonds, on or prior to the stated maturity thereof, effective
March 3, 1997, and expiring at our office in Charlotte, North Carolina at 5:00
p.m. (Charlotte, North Carolina time) on March 15, 1998 (the "Stated Expiration
Date") unless terminated earlier or extended in accordance with the provisions
hereof. Notwithstanding that this Letter of Credit is stated to expire on March
15, 1998 (subject to earlier termination), if the Company and the Trustee do not
receive a written notice (a "Notice of Non-Extension") from the Bank to the
effect that this Letter of Credit will not be extended beyond the Stated
Expiration Date then
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in effect, the term of this Letter of Credit will be automatically extended for
successive additional periods of one calendar month each until the earlier of
(i) the first day of the thirteenth month following receipt by the Company and
the Trustee of Notice of Non-Extension from the Bank and (ii) the Termination
Date (as hereinafter defined).
Funds under this Letter of Credit will be made available to you, or to such
other person as shall be designated by you, against receipt by us of the
following items at the time required below.
(A) if a drawing is being made with respect to the payment of the
portion of the purchase price corresponding to the principal of the Bonds to be
purchased from the holder thereof pursuant to Section 4.01, 4.02, 4.03, 4.04 or
4.05 of the Trust Indenture (an "A Drawing"), receipt by us of your written
certificate in the form of Annex A attached hereto appropriately completed and
signed by an Authorized Officer (as hereinafter defined),
(B) if a drawing is being made with respect to the payment of principal
of the Bonds, whether at maturity or upon redemption or acceleration (a "B
Drawing"), receipt by us of your written certificate in the form of Annex B
attached hereto appropriately completed and signed by an Authorized Officer,
(C) if a drawing is being made with respect to the payment of interest
on the Bonds (other than the portion of the purchase price corresponding to
interest on the Bonds) pursuant to the Trust Indenture (a "C Drawing"), receipt
by us of your written certificate in the form of Annex C attached hereto
appropriately completed and signed by an Authorized Officer, and
(D) if a drawing is being made with respect to the payment of the
portion of the purchase price corresponding to interest on the Bonds to be
purchased from the holder thereof pursuant to Section 4.01, 4.02, 4.03, 4.04 or
4.05 of the Trust Indenture (a "D Drawing"), receipt by us of your written
certificate in the form of Annex D attached hereto appropriately completed and
signed by an Authorized Officer.
Such certificate or certificates shall be presented at our office located at 301
South Tryon Street, M7, Charlotte, North Carolina 28288-0742, Attention: Letters
of Credit, or by facsimile transmission to the following number: (704) 383-6984
(to be promptly confirmed by telephone at the following number: (704) 374-3091
and by delivery thereafter of the original executed certificate or certificates.
The facsimile and telephone numbers specified immediately above may be changed
by written notice from us to you.
Demands for payment under this Letter of Credit may be made by you, or such
other person as shall be designated by you, at any time during our business
hours at our aforesaid address on a Business Day (as hereinafter defined). If
demand for payment is made by you, or such other person designated by you, at or
prior to 11:30 a.m. (Charlotte, North Carolina time) on a Business Day; and
provided that such demand for payment and the documents presented in connection
therewith conform to the terms and conditions hereof, payment shall be made to
the Paying Agent, as defined below, by wire transfer of the amount demanded, in
same day funds, not later than 2:00 p.m. (Charlotte, North Carolina time) on the
same Business Day or
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<PAGE>
such later Business Day as may be specified in the demand. If demand for payment
is made by you, or such other person designated by you, after 11:30 a.m.
(Charlotte, North Carolina time) on a Business Day; and provided that such
demand for payment and the documents presented in connection therewith conform
to the terms and conditions hereof, payment shall be made to the Paying Agent by
wire transfer of the amount demanded, in same day funds, not later than 9:00
a.m. (Charlotte, North Carolina time) on the next succeeding Business Day or
such later Business Day as may be specified in the demand. All payments
hereunder will be made with our own funds.
Demands for payment hereunder honored by us shall not exceed the Stated
Amount, as the Stated Amount may have been reinstated by us as provided in the
second succeeding paragraph. Subject to the preceding sentence, each A Drawing
and each B Drawing honored hereunder shall pro tanto reduce the Principal
Component and each C Drawing and each D Drawing honored hereunder shall pro
tanto reduce the Interest Component. Any such reduction in accordance with the
preceding sentence shall result in a corresponding reduction in the Stated
Amount, it being understood that after the effectiveness of any such reduction
you shall no longer have any right to make a drawing hereunder in respect of the
amount of such principal of and/or interest on the Bonds or the purchase price
of the Bonds corresponding thereto.
Upon receipt by us of a Notice of Termination in the form attached hereto
as Annex E signed on your behalf by an Authorized Officer and appropriately
completed, this Letter of Credit shall be terminated.
Following any A Drawing, when (i) we have been reimbursed in an amount
equal to such A Drawing plus interest accrued on the unpaid amount of such A
Drawing to the date of payment, or (ii) we have received a notice from you or
the Paying Agent in the form of Annex G attached hereto appropriately completed
and signed by an Authorized Officer, the Stated Amount and the Principal
Component will be reinstated in an amount equal to the amount of such A Drawing
(or, in the case of a partial remarketing, in an amount equal to the aggregate
principal amount of the Bonds remarketed) and we will send you and the Paying
Agent notice in writing of such reinstatement. In addition, if you shall not
have received written notice from us by the close of business on the sixth
calendar day following the date of payment by the Bank of any C Drawing to the
effect that an Event of Default under that certain Credit Agreement dated as of
February 14, 1997 (as amended or supplemented from time to time, the "Credit
Agreement") between the Company and us, has occurred and is continuing, the
Stated Amount and the Interest Component will automatically be reinstated as of
the opening of business on the seventh calendar day following the date of
payment by the Bank in respect of such C Drawing by an amount equal to the
amount of such C Drawing exclusive of the portion of such C Drawing constituting
the interest portion of the redemption price of the Bonds. Furthermore,
following any D Drawing immediately upon our notifying you and the Paying Agent
that (i) we have been reimbursed in an amount equal to such D Drawing plus
interest accrued on the unpaid amount of such D Drawing to the date of payment
or (ii) we have received a notice from you or the Paying Agent in the form of
Annex G attached hereto appropriately completed and signed by an Authorized
Officer, the Stated Amount and the Interest Component will be reinstated in an
amount equal to the amount of such D Drawing (or, in the case of a partial
remarketing, in an amount equal to the portion of such D Drawing which related
to the aggregate principal amount of the Bonds remarketed).
G-1-3
<PAGE>
Only you or a person designated by you in writing may make a drawing under
this Letter of Credit. Upon payment to the Paying Agent or to the Paying Agent's
account of the amount demanded hereunder, we shall be fully discharged on our
obligation under this Letter of Credit with respect such demand for payment and
we shall not thereafter be obligated to make any further payments under this
Letter of Credit in respect of such demand for payment to the Paying Agent. By
paying to the Paying Agent an amount demanded in accordance herewith, we make no
representation as to the correctness of the amount demanded.
This Letter of Credit applies only to the payment of principal of the Bonds
and up to 55 days' interest (computed at an assumed rate of 12% per annum and a
year of 365 days) accruing on the Bonds on or prior to the expiration of this
Letter of Credit and does not apply to any interest that may accrue thereon or
any principal which may be payable with respect thereto after such date.
Notwithstanding anything to the contrary contained in this Letter of Credit, the
Trust Indenture or the Credit Agreement, no payment shall be made under this
Letter of Credit in respect of any Bond which bears interest at the Fixed Rate,
as defined in the Trust Indenture, until maturity determined in accordance with
the Trust Indenture.
Upon the earliest of (i) the making by you or the person designated by you
of the final drawing available to be made hereunder and payment thereof, (ii)
our close of business on the Stated Expiration Date then in effect, (iii) the
surrender by you to us of this Letter of Credit in connection with delivery of a
certificate in the form of Annex E attached hereto stating that this Letter of
Credit is terminated, (iv) our close of business on the date of conversion of
all bonds outstanding to bear interest at a Fixed Rate, (v) our close of
business on the date Bonds are deemed to have been paid in accordance with
Article X of the Trust Indenture or (vi) our close of business on the date of
delivery of an Alternate Letter of Credit, this Letter of Credit shall forthwith
terminated and be of no further force or effect (such earliest date being the
"Termination Date").
Communications with respect to this Letter of Credit shall be in writing
and shall be addressed to us at the address specified above, or, if made by
facsimile transmission, at the facsimile number and confirmed by telephone at
the telephone number specified above, and shall specifically refer to this
Letter of Credit by number.
This Letter of Credit may not be transferred or assigned, either in whole
or in part, except to a successor trustee appointed pursuant to the Trust
Indenture. We agree to issue a substitute letter of credit to any such successor
trustee (and successively to replace any such substitute letter of credit) upon
the return to us for cancellation of the original of the letter of credit to be
replaced, accompanied by a request relating to such letter of credit which shall
(i) be in the form of Annex F attached hereto appropriately completed, (ii) be
signed by an Authorized Officer, (iii) specify where indicated therein the same
letter of credit number as the number of the letter of credit to be replaced and
(iv) state the name and address of the successor trustee. Each substitute letter
of credit will be in substantially the form of the letter of credit for which
the same is substituted except for the date, the letter of credit number and the
identity of the beneficiary thereof.
G-1-4
<PAGE>
As used herein (a) "Authorized Officer" shall mean any person signing as
one of your Vice Presidents, Assistant Vice Presidents, Senior Trust Officers or
Trust Officers or any equivalent officer of a successor beneficiary hereof, (b)
"Business Day" shall mean a day on which the Trustee, any Paying Agent, the
Remarketing Agent, the Bank and banks or trust companies located in New York,
New York and Houston, Texas are not required or authorized by law to close and
on which the New York Stock Exchange is not closed; (c)"Paying Agent" shall mean
initially Bank One, Texas, National Association and any person who shall
thereafter be designated as Paying Agent pursuant to the Trust Indenture and so
identified to us by written notice; and (d) "Remarketing Agent" shall mean
initially Merrill Lynch, Pierce, Fenner & Smith Incorporated and any person who
shall thereafter be designated as Remarketing Agent pursuant to the Trust
Indenture and so identified to us by written notice.
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds), except as specifically provided
herein; an any such reference shall not be deemed to incorporate herein by
reference any document, instrument or agreement except as so provided.
This Letter of Credit is subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500 (the "Uniform Customs"). This Letter of Credit shall be
deemed to be a contract made under the laws of the State of Texas and shall, as
to matters not governed by the Uniform Customs, be governed by and construed in
accordance with the laws of said State.
Anything to the contrary in Article 45 of the Uniform Customs
notwithstanding, this Letter of Credit is intended to remain in full force and
effect until it expires in accordance with its terms. Any failure by your or any
successor trustee under the Trust Indenture to draw upon this Letter of Credit
with respect to a scheduled payment on the Bonds in accordance with the terms
and conditions of the Trust Indenture shall not cause this Letter of Credit to
become unavailable for any future drawing in accordance with the terms and
conditions of the Trust Indenture.
Very truly yours,
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By:
Name:
Title:
G-1-5
<PAGE>
Annex A
CERTIFICATE FOR A DRAWING
Date:__________________
First Union National Bank
of North Carolina
301 South Tryon
Charlotte, North Carolina 28288-0742
Attention: Letters of Credit
Re: Irrevocable Letter of Credit No.
- ------------
(the "Letter of Credit")
Ladies and Gentlemen:
Bank One, Texas, National Association, as Trustee (the "Trustee"), through
its undersigned duly Authorized Officer, hereby certifies to First Union
National Bank of North Carolina (the "Bank") that:
(1) The Trustee is acting pursuant to the Trust
Indenture for the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of Credit in the
aggregate amount of $_______________ with respect to the payment of the portion
of the purchase price corresponding to principal of the bonds to be purchased
from the holder thereof pursuant to the following Sections of the Trust
Indenture:
4.01 $
4.02 $
4.03 $
4.04 $
4.05 $
and for the payment of which moneys are not otherwise available pursuant to the
Trust Indenture for such purposes prior to the utilization of the Letter of
Credit, and the Remarketing Agent (as defined in the Trust Indenture) and/or the
Paying Agent (as defined in the Trust Indenture) has received in connection with
this drawing a principal amount of the Bonds equal to the respective amount
demanded hereby. Payment of such amounts is demanded on ____________, 199_, the
date on which such amounts are due and payable under the Trust Indenture and
shall be made to the account of the Paying Agent as follows:
____________________..
G-1-6
<PAGE>
(3) The Trustee will [cause the Paying Agent to] (delete bracketed language
if letter of Representations is in effect) hold the Bonds in connection with
which this drawing is being made in accordance with Section 4.08(c) of the Trust
Indenture.
(4) The amounts demanded hereby do not exceed the amount available on the
date hereof to be drawn under the Letter of Credit in respect of the Principal
Component.
(5) The amounts demanded hereby do not exceed the amount which the Trustee
is required to draw on the date specified in (2) above under the Trust
Indenture.
(6) Upon receipt by the Paying Agent of the amounts demanded hereby, (a)
the Trustee will cause the Paying Agent to apply the same directly to the
payment when due of the principal amount owing on account of the purchase price
of the Bonds pursuant to the Trust Indenture, (b) no portion of any such amount
shall be applied by the Paying Agent for any other purpose and (c) no portion of
any such amount shall be commingled with other funds held by the Trustee or the
Paying Agent.
Capitalized terms used herein and not otherwise defined herein but defined
in the Letter of Credit shall have the same respective meanings herein as in the
Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate
as of the ____day of ______________, 199 .
BANK ONE, TEXAS, NATIONAL
ASSOCIATION, as Trustee
By:
Name:
Title:
G-1-7
<PAGE>
Annex B
CERTIFICATE FOR B DRAWING
Date:__________________
First Union National Bank
of North Carolina
301 South Tryon
Charlotte, North Carolina 28288-0742
Attention: Letters of Credit
Re: Irrevocable Letter of Credit No.
- ------------
(the "Letter of Credit")
Ladies and Gentlemen:
Bank One, Texas, National Association, as (the "Trustee"), through its
undersigned duly Authorized Officer, hereby certifies to First Union National
Bank of North Carolina (the "Bank") that:
(1) The Trustee is acting pursuant to the Trust
Indenture for the holders of the Bonds.
(2) (a) The Trustee is making a drawing under the Letter of Credit in the
aggregate amount of $_______________ with respect to the payment of principal of
the Bonds, whether at maturity or upon acceleration, for the payment of which
moneys are not otherwise available pursuant to the Trust Indenture.
(b) The Trustee is making a drawing under the Letter of Credit in the
aggregate amount of $_______________ with respect to the payment of the
principal of the Bonds upon redemption thereof pursuant to the following
Sections of the Trust Indenture:
3.01 $
3.02 $
3.03 $
3.04 $
(c) Payment of the foregoing amounts is demanded on _____________, 19
__, the date on which such amounts are due and payable under the Trust Indenture
and shall be made to the account of the Paying Agent as
follows:____________________________.
(3) The amounts demanded hereby do not exceed the amount available on the
date hereof to be drawn under the Letter of Credit in respect of the Principal
Component.
G-1-8
<PAGE>
(4) The amounts demanded hereby do not exceed the amount which the Trustee
is required to draw on the date specified in (2) above under the Trust
Indenture.
(5) Upon receipt by the Paying Agent of the amounts demanded hereby, (a)
the Trustee will cause the Paying Agent to apply the same directly to the
payment when due of the principal amount owing on account of the Bonds pursuant
to the Trust Indenture, (b) no portion of any such amount shall be applied by
the Paying Agent for any other purpose and (c) no portion of any such amount
shall be commingled with other funds held by the Trustee or the Paying Agent.
Capitalized terms used herein and not otherwise defined herein but defined
in the Letter of Credit shall have the same respective meanings herein as in the
Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate
as of the _______ day of ____________, 199 .
BANK ONE, TEXAS, NATIONAL
ASSOCIATION, as Trustee
By:
Name:
Title:
G-1-9
<PAGE>
Annex C
CERTIFICATE FOR C DRAWING
Date:______________
First Union National Bank
of North Carolina
301 South College
Charlotte, North Carolina 28288-0742
Attention: Letters of Credit
Re: Irrevocable Letter of Credit No.
- ------------
(the "Letter of Credit")
Ladies and Gentlemen:
Bank One, Texas, National Association, as Trustee (the "Trustee"), through
its undersigned duly Authorized Officer, hereby certifies to First Union
National Bank of North Carolina (the "Bank") that:
(1) The Trustee is acting pursuant to the Trust
Indenture for the holders of the Bonds.
(2) (a) The Trustee is making a drawing under the Letter of Credit in the
aggregate amount of $_____________ with respect to the payment of interest on
the Bonds (other than the portion of the purchase price corresponding to
interest on the Bonds and other than with respect to the redemption of the
Bonds) pursuant to the Trust Indenture.
(b) The Trustee is making a drawing under the Letter of Credit in the
aggregate amount of $_____________ with respect to the payment of accrued
interest on the Bonds upon redemption thereof pursuant to the following Sections
of the Trust Indenture:
3.01 $
3.02 $
3.03 $
3.04 $
(c) Payment of such amounts is demanded on ____________ 19__, the date
on which such amounts are due and payable under the Trust Indenture and shall be
made to the account of the Paying Agent as
follows:__________________________________.
(3) The Trustee hereby represents and warrants that the drawing does not
relate to interest on the Bonds accruing at a Fixed Rate.
G-1-10
<PAGE>
(4) The amounts demanded hereunder do not exceed the amount available on
the date hereof to be drawn under the Letter of Credit in respect of the
Interest Component.
(5) The amounts demanded hereby do not exceed the amount which the Trustee
is required to draw on the date specified in (2) above under the Trust
Indenture.
(6) Upon receipt by the Paying Agent of the amounts demanded hereby, (a)
the Trustee will cause the Paying Agent to apply the same directly to the
payment when due of the interest owing on account of the Bonds pursuant to the
Trust Indenture, (b) no portion of any such amount shall be applied by the
Paying Agent for any other purpose and (c) no portion of any such amount shall
be commingled with other funds held by the Trustee or the Paying Agent.
Capitalized terms used herein and not otherwise defined herein but defined
in the Letter of Credit shall have the same respective meanings herein as in the
Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate
as of the____ day of _______________, 199 .
BANK ONE, TEXAS, NATIONAL
ASSOCIATION, as Trustee
By:
Name:
Title:
G-1-11
<PAGE>
Annex D
CERTIFICATE FOR D DRAWING
Date:______________
First Union National Bank
of North Carolina
301 South Tryon
Charlotte, North Carolina 28288-0742
Attention: Letters of Credit
Re: Irrevocable Letter of Credit No.
- ------------
(the "Letter of Credit")
Ladies and Gentlemen:
Bank One, Texas, National Association, as Trustee (the "Trustee"), through
its undersigned duly Authorized Officer, hereby certifies to First Union
National Bank of North Carolina (the "Bank") that:
(1) The Trustee is acting pursuant to the
Trust Indenture for the holders of the bonds.
(2) The Trustee is making a drawing under the Letter of Credit in the
aggregate amount of $_____________ with respect to the payment of the portion of
the purchase price corresponding to interest on the Bonds to be purchased from
the holder or holders hereof pursuant to the following Section of the Trust
Indenture:
4.01 $
4.02 $
4.03 $
4.04 $
4.05 $
and for the payment of which moneys are not otherwise available pursuant to the
Trust Indenture for such purposes prior to the utilization of the Letter of
Credit. Payment of such amounts is demanded on ___________, 19__, the date on
which such amounts are due and payable under the Trust Indenture, and shall be
made to the account of the Paying Agent as follows:_________.
(3) The Trustee will [cause the Paying Agent to] (delete bracketed language
if Letter of Representations is in effect) hold the Bonds in connection with
which this drawing is being made in accordance with Section 4.08(c) of the Trust
Indenture.
G-1-12
<PAGE>
(4) The Trustee hereby represents and warrants that the drawing does not
relate to interest on the Bonds accruing at a Fixed Rate.
(5) The amounts demanded hereby do not exceed the amount available on the
date hereof under the Letter of Credit in respect of the Interest Component.
(6) The amounts demanded hereby do not exceed the amount which the Trustee
is required to draw on the date specified in (2) above under the Trust
Indenture.
(7) Upon receipt by the Paying Agent of any such amounts demanded hereby,
(a) the Trustee will cause the Paying Agent to apply the same directly to the
payment when due of interest owing on account of the purchase price of the Bonds
pursuant to the Trust Indenture, (b) no portion of any such amount shall be
applied by the Paying Agent for any other purpose and (c) no portion of any such
amount shall be commingled with other funds held by the Trustee or the Paying
Agent.
Capitalized terms used herein and not otherwise defined herein but defined
in the Letter of Credit shall have the same respective meanings herein as in the
Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate
as of the____ day of _______________, 199 .
BANK ONE, TEXAS, NATIONAL
ASSOCIATION, as Trustee
By:
Name:
Title:
G-1-13
<PAGE>
Annex E
NOTICE OF TERMINATION
Date:______________
First Union National Bank
of North Carolina
301 South Tryon
Charlotte, North Carolina 28288-0742
Attention: Letters of Credit
Re: Irrevocable Letter of Credit No.
- ------------
(the "Letter of Credit")
Ladies and Gentlemen:
Bank One, Texas, National Association, as Trustee (the "Trustee"), through
its undersigned duly Authorized Officer, hereby certifies to First Union
National Bank of North Carolina (the "Bank"), with reference to the Letter of
Credit (the terms defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the Trustee that:
(1) The Trustee is acting pursuant to the Trust
Indenture for the holders of the Bonds.
(2) The Trustee hereby informs you that the conditions precedent to the
delivery of an Alternate Letter of Credit set forth in Section 4.12 of the Trust
Indenture have been satisfied and the Trustee has accepted delivery of such
Alternate Letter of Credit.
(3) We submit hereby for cancellation the original of
the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate
as of the_______ day of _______________, 199 .
BANK ONE, TEXAS, NATIONAL
ASSOCIATION, as Trustee
By:
Name:
Title:
G-1-14
<PAGE>
Annex F
INSTRUCTION TO ISSUE LETTER OF CREDIT
Date:_______________
First Union National Bank
of North Carolina
301 South Tryon
Charlotte, North Carolina 28288-0742
Attention: Letters of Credit
Re: Irrevocable Letter of Credit No.
- ------------
(the "Letter of Credit")
Ladies and Gentlemen:
Reference is made to i) the above-referenced letter of credit (the "Old
Letter of Credit") and (ii) the Indenture of Trust, dated as of April 1, 1994
(as amended or supplemented from time to time, the "Trust Indenture"), by and
between Jackson-Union Counties Regional Port District and the undersigned, as
Trustee, as referred to in the Old Letter of Credit.
[Name and address of successor Trustee] (the "Successor Trustee") has been
properly appointed Successor Trustee pursuant to Section 8.02 of the Trust
Indenture. You are hereby requested to issue, in accordance with the terms of
the Old Letter of Credit, a new letter of credit to the Successor Trustee having
the same terms and providing for the same Stated Amount as the Old Letter of
Credit.
We submit for cancellation the original of the Old Letter of Credit.
Very truly yours,
BANK ONE, TEXAS, NATIONAL
ASSOCIATION, as Trustee
By:
Name:
Title:
G-1-15
<PAGE>
Annex G
NOTICE OF RECEIPT OF REMARKETING PROCEEDS
Date:_____________
First Union National Bank of North Carolina
- ------------------
Charlotte, North Carolina _____
Attention: Letters of Credit
Re: Irrevocable Letter of Credit No.
- ------------
(the "Letter of Credit")
Ladies and Gentlemen:
Bank One, Texas, National Association, as Trustee (the "Trustee") or as
Paying Agent [strike inapplicable title] (the "Custodian"), through its
undersigned duly Authorized Officer, hereby certifies to First Union National
Bank of North Carolina (the "Bank"), with reference to the Letter of Credit (the
terms defined therein and not otherwise defined herein being used herein as
therein defined) issued by the Bank in favor of the Trustee that:
(1) The Custodian is acting pursuant to the Trust
Indenture for the benefit of the Bank.
(2) The Custodian hereby informs you that (A) Pledged Bonds, as defined in
the Trust Indenture, have been remarketed and (B) proceeds of such remarketing
in the amount of $___________ (including with respect to principal of the
Pledged Bonds so remarketed, and $___________ with respect to interest accrued
on such Bonds) have been received by us and are being held for your benefit.
IN WITNESS WHEREOF, the Custodian has executed and delivered this
Certificate as of the_______ day of _______________, 199 .
BANK ONE, TEXAS, NATIONAL
ASSOCIATION, as Trustee or Paying
Agent
(strike inapplicable title)
By:
Name:
Title:
G-1-16
<PAGE>
Schedule 7.02
Liabilities
None other than those matters described in the Amended and Restated Purchase and
Sale Agreement dated February 14, 1997 between Kinder Morgan, Inc. and Enron
Liquids Holding Corp. (the "Purchase Agreement") and the most recent 10K and 10Q
reports filed by Kinder Morgan Energy with the Securities and Exchange
Commission.
G-1-17
<PAGE>
Schedule 7.03
Litigation
None other than those matters described in the Purchase Agreement and the most
recent 10K and 10Q reports filed by Kinder Morgan Energy with the Securities and
Exchange
Commission.
G-1-18
<PAGE>
Schedule 7.09
Taxes
None other than those matters described in the Purchase Agreement and the most
recent 10K and 10Q reports filed by Kinder Morgan Energy with the Securities and
Exchange
Commission.
G-1-19
<PAGE>
Schedule 7.10
Titles, etc.
None other than those matters described in the Purchase Agreement and the most
recent 10K and 10Q reports filed by Kinder Morgan Energy with the Securities and
Exchange
Commission.
G-1-20
<PAGE>
Schedule 7.14
Subsidiaries and Partnerships
Subsidiaries of Borrower
None.
G-1-21
<PAGE>
Schedule 7.17
Environmental Matters
None other than those matters described in the most recent 10K and 10Q reports
filed by Kinder Morgan Energy with the Securities and Exchange
Commission.Schedule 7.19
Insurance
Insurance Certificates Attached.
G-1-22
<PAGE>
Schedule 7.20
Hedging Agreements
SWAP transaction to Enron Transportation Services, L.P.
from First Union National Bank of North Carolina dated
February 13, 1996.
G-1-23
<PAGE>
Schedule 7.22
Material Agreements
1. Documents and agreements relating to $23,000,000 Port
Facility Refunding Revenue Bonds (Enron
Transportation Services, L.P. Project) Series 1994 of
the Jackson-Union Counties Regional Port District.
2. Letter of Credit Agreement and Reimbursement
Agreement between Borrower and Wachovia Bank of
Georgia, N.A. relating to the Bonds described in
paragraph 1 above and all documents, instruments and
agreements related thereto.
3. Those other agreements to which Borrower or any Subsidiary is a party and
described in the most recent 10K and 10Q reports filed by Kinder Morgan
Energy with the Securities and Exchange Commission.
G-1-24
<PAGE>
Schedule 9.01
Debt
See Schedule 7.22.
G-1-25
<PAGE>
Schedule 9.02
Liens
Liens relating to the Bonds and related documents described in items 1 and 2 of
Schedule 7.22.
G-1-26
<PAGE>
Schedule 9.03
Investments, Loans and Advances
None.
G-1-27
SECURITY AGREEMENT
(Partnership Interests)
Between
KINDER MORGAN ENERGY PARTNERS, L.P.
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as Agent
February 14, 1997
<PAGE>
SECURITY AGREEMENT
(Partnership Interests)
THIS SECURITY AGREEMENT (this "Agreement") is made as of February 14, 1997,
between KINDER MORGAN ENERGY PARTNERS, L.P., a Delaware limited partnership with
principal offices at 1301 McKinney Street, Suite 3450, Houston, Texas 77010
("Pledgor"); and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking
association with offices at 301 South College Street, Charlotte, North Carolina
28288, as Agent ("Secured Party") for itself and the Lenders which are parties
to the Credit Agreement referred to below.
RECITALS
A. On even date herewith, Kinder Morgan Operating L.P. "B", a Delaware
limited partnership (the "Borrower"), the Lenders and Secured Party are
executing a Credit Agreement (such agreement, as may from time to time be
amended or supplemented, being hereinafter called the "Credit Agreement")
pursuant to which, upon the terms and conditions stated therein, the Lenders
agree to make loans and extensions of credit to Pledgor.
B. The Lenders have conditioned their respective obligations under the
Credit Agreement upon the execution and delivery by Pledgor of this Agreement,
and Pledgor has agreed to enter into this Agreement.
C. Therefore, in order to comply with the terms and conditions of the
Credit Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
ARTICLE 1
SECURITY INTEREST
Section 1.01 Pledge. Pledgor hereby pledges, assigns and grants to Secured
Party a security interest in and right of set-off against the assets referred to
in Section 1.02 (the "Collateral") to secure the prompt payment and performance
of the "Obligations" (as defined in Section 2.02) and the performance by Pledgor
of this Agreement.
Section 1.02 Collateral. The Collateral consists of
the following types or items of property:
(a) All of Pledgor's rights, whether now owned or hereafter acquired,
in (i) limited partner interests in the Borrower, (ii) the Partnership
Agreement, (iii) Pledgor's share of profits, income, distributions and
surplus from the Borrower as a limited partner, (iv) specific properties of
the Borrower upon dissolution or otherwise as a limited partner and (v) any
and all other rights, titles and interests of every kind and character of
Pledgor in and to the Borrower as a limited partner.
<PAGE>
(b) all proceeds, replacements, additions to and substitutions for any
of the property referred to in this Section 1.02 and claims against third
parties.
It is expressly contemplated that additional securities or other property may
from time to time be pledged, assigned or granted to Secured Party as additional
security for the Obligations, and the term "Collateral" as used herein shall be
deemed for all purposes hereof to include all such additional securities and
property, together with all other property of the types described above related
thereto.
ARTICLE 2
DEFINITIONS
Section 2.01 Terms Defined Above or in the Credit Agreement. As used in
this Agreement, the terms defined above shall have the meanings respectively
assigned to them. Other capitalized terms which are defined in the Credit
Agreement but which are not defined herein shall have the same meanings as
defined in the Credit Agreement.
Section 2.02 Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings, unless the context otherwise requires:
"Agreement" means this Security Agreement, as the same may from time to
time be amended or supplemented.
"Code" means the Uniform Commercial Code as presently in effect in the
State of Texas, Business and Commerce Code, Chapters 1 through 9. Unless
otherwise indicated by the context herein, all uncapitalized terms which
are defined in the Code shall have their respective meanings as used in
Chapters 8 and 9 of the Code.
"Event of Default" means any event specified in
Section 6.01.
"Obligations" means:
(a) any and all indebtedness, obligations and liabilities of the
Borrower pursuant to the Credit Agreement, including without limitation,
the unpaid principal of and interest on the Notes, including without
limitation, interest accruing subsequent to the filing of a petition or
other action concerning bankruptcy or other similar proceeding;
(b) any additional loans made by the Lenders to
the Borrower;
(c) payment of and performance of any and all present or future
obligations of the Borrower according to the terms of any present or future
interest or currency rate swap, rate cap, rate floor, rate collar, exchange
transaction, forward rate agreement or other exchange or rate protection
agreements or any option with
-2-
<PAGE>
respect to any such transaction now existing or
hereafter entered into between the Borrower and any
of the Lenders;
(d) payment of and performance of any and all present or future
obligations of the Borrower according to the terms of any present or future
swap agreements, cap, floor, collar, exchange transaction, forward
agreement or other exchange or protection agreements relating to crude oil,
natural gas or other hydrocarbons or any option with respect to any such
transaction now existing or hereafter entered into between the Borrower and
any of the Lenders;
(e) all reimbursement obligations for drawn or undrawn portions under
any letter of credit now outstanding or hereafter issued under the Credit
Agreement, including without limitation, the Support Letter of Credit and
the Replacement Letter of Credit and any letters of credit issued in
replacement thereof and all principal and interest on the Replacement Term
Note and the Support Term Note, including without limitation, interest
accruing subsequent to the filing of a petition or other action concerning
bankruptcy or other similar proceeding;
(f) any and all other indebtedness, obligations and liabilities of any
kind of the Borrower to the Lenders, now or hereafter existing, arising
directly between the Borrower and the Lenders or acquired outright, as a
participation, conditionally or as collateral security from another by the
Lenders, absolute or contingent, joint and/or several, secured or
unsecured, due or not due, arising by operation of law or otherwise, or
direct or indirect, including indebtedness, obligations and liabilities to
the Lenders of the Borrower as a member of any partnership, syndicate,
association or other group, and whether incurred by the Borrower as
principal, surety, endorser, guarantor, accommodation party or otherwise;
(g) any and indebtedness, obligations and liabilities of Pledgor
pursuant to that certain Guaranty Agreement dated of even date herewith in
favor of Secured Party guaranteeing the indebtedness, obligations and
liabilities of the Borrower under the Credit Agreement; and
(h) all renewals, rearrangements, increases, extensions for any period,
amendments or supplement in whole or in part of the Notes or any documents
evidencing the above.
The Obligations shall also include all interest, charges, expenses,
attorneys' or other fees and any other sums payable to or incurred by
Secured Party and the Lenders in connection with the execution,
administration or enforcement of Secured Party's or any of the Lenders'
rights and remedies hereunder or any other agreement with the Borrower.
"Obligor" means any other Person, other than Pledgor, liable (whether
directly or indirectly, primarily or secondarily) for the payment or
performance of any of the Obligations whether as maker, co-maker, endorser,
guarantor, accommodation party, general partner or otherwise.
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"Partnership Agreement" shall mean the Amended and Restated Agreement
of Limited Partnership of the Borrower dated September 30, 1993, together
with all amendments, modifications and supplements thereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce Secured Party to accept this Agreement, Pledgor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Encumbrances. Pledgor is the legal
and beneficial owner of the Collateral free and clear of any adverse claim,
lien, security interest, option or other charge or encumbrance except for the
security interest created by this Agreement, and Pledgor has full right, power
and authority to pledge, assign and grant a security interest in the Collateral
to Secured Party. Pledgor owns a 99% limited partner interest in the Borrower.
Pledgor's limited partner interest in the Borrower is not represented by a
certificate.
Section 3.02 No Required Consent. No authorization, consent, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for (i) the due execution, delivery and performance
by Pledgor of this Agreement, (ii) the grant by Pledgor of the security interest
granted by this Agreement, (iii) the perfection of such security interest or
(iv) the exercise by Secured Party of its rights and remedies under this
Agreement.
Section 3.03 First Priority Security Interest. The grant of the security
interest in the Collateral pursuant to this Agreement creates a valid and
perfected first priority security interest in the Collateral, enforceable
against Pledgor and all third parties and securing payment of the Obligations.
Section 3.04 Partnership. The Partnership Agreement is in full force and
effect and constitutes a binding obligation upon the parties thereto; there have
been no amendments or modifications to any of such Partnership Agreement that
would detrimentally affect Pledgor's interest in the Borrower in any material
respect. Pledgor has complied in all material respects with its obligations
under the Partnership Agreement.
Section 3.04 Collateral. All statements or other information provided by
Pledgor to Secured Party or any Lender describing or with respect to the
Collateral is or (in the case of subsequently furnished information) will be
when provided correct and complete in all material respects. The delivery at any
time by Pledgor to Secured Party of additional Collateral or of additional
descriptions of Collateral shall constitute a representation and warranty by
Pledgor to Secured Party hereunder that the representations and warranties of
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this Article 3 are correct insofar as they would pertain to such Collateral or
the descriptions thereof.
ARTICLE 4
COVENANTS AND AGREEMENTS
Pledgor will at all times comply with the covenants and agreements
contained in this Article 4, from the date hereof and for so long as any part of
the Obligations are outstanding.
Section 4.01 Sale, Disposition or Encumbrance of Collateral. Pledgor will
not in any way encumber any of the Collateral (or permit or suffer any of the
Collateral to be encumbered) or sell, pledge, assign, lend or otherwise dispose
of or transfer any of the Collateral to or in favor of any Person other than
Secured Party.
Section 4.02 Dividends or Distributions. So long as no Event of Default
shall have occurred and be continuing: Pledgor shall be entitled to receive and
retain any and all dividends or distributions and interest paid in respect of
the Collateral, provided, however, that any and all
(a) dividends, distributions and interest paid or payable other than in
cash in respect of, and instruments and other property received, receivable
or otherwise distributed in respect of, or in exchange for (including,
without limitation, any certificate or share purchased or exchanged in
connection with a tender offer or merger agreement), any Collateral,
(b) dividends and other distributions paid or payable in cash in
respect of any Collateral in connection with a partial or total liquidation
or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, or reclassification, and
(c) cash paid, payable or otherwise distributed
in respect of principal of, or in redemption of, or
in exchange for, any Collateral,
shall be, and shall be forthwith delivered to Secured Party to hold as,
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of
Pledgor, and be forthwith delivered to Secured Party as Collateral in the same
form as so received (with any necessary indorsement).
Section 4.03 Records and Information. Pledgor shall keep accurate and
complete records of the Collateral (including proceeds, payments, distributions,
income and profits). Secured Party may at any time have access to, examine,
audit, make extracts from and inspect without hindrance or delay Pledgor's
records, files and the Collateral. Pledgor will promptly provide written notice
to Secured Party of all information which in any way relates to or affects the
filing of any financing statement or other public notices or recordings, or the
delivery and possession of items of Collateral for the purpose of perfecting a
security
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interest in the Collateral. Pledgor will also promptly furnish such information
as Secured Party may from time to time reasonably request regarding (i) the
business, affairs or financial condition of Pledgor or (ii) the Collateral or
Secured Party's rights or remedies with respect thereto.
Section 4.04 Reimbursement of Expenses. Pledgor agrees to indemnify and
hold Secured Party and the Lenders harmless from and against and covenants to
defend Secured Party and the Lenders against any and all losses, damages,
claims, costs, penalties, liabilities and expenses, including, without
limitation, court costs and attorneys' fees, incurred because of, incident to,
or with respect to the Collateral (including, without limitation, any exercise
of rights or remedies in connection therewith except to the extent of Secured
Party's gross negligence or willful misconduct). All amounts for which Pledgor
is liable pursuant to this Section 4.04 shall be due and payable by Pledgor to
Secured Party upon demand. If Pledgor fails to make such payment upon demand (or
if demand is not made due to an injunction or stay arising from bankruptcy or
other proceedings) and Secured Party or any Lender pays such amount, the same
shall be due and payable by Pledgor to Secured Party, plus interest thereon from
the date of Secured Party's demand (or from the date of Secured Party's payment
if demand is not made due to such proceedings) at the Highest Lawful Rate.
Section 4.05 Further Assurances. Upon the request of Secured Party, Pledgor
shall (at Pledgor's expense) execute and deliver all such assignments,
certificates, instruments, securities, financing statements, notifications to
financial intermediaries, clearing corporations, issuers of securities or other
third parties or other documents and give further assurances and do all other
acts and things as Secured Party may reasonably request to perfect Secured
Party's interest in the Collateral or to protect, enforce or otherwise effect
Secured Party's rights and remedies hereunder.
Section 4.06 Voting and Other Consensual Rights. Except to the extent
otherwise provided in Section 6.07(d), Pledgor shall be entitled to exercise any
and all voting and other consensual rights pertaining to the Collateral or any
part thereof for any purpose not inconsistent with the terms of this Agreement;
provided however, that Pledgor shall not exercise or refrain from exercising any
such right if such action would have a material adverse effect on the value of
the Collateral or any part thereof, and, provided, further, that upon request of
Secured Party at any time or from time to time, Pledgor shall give Secured Party
prompt written notice of the manner in which Pledgor has exercised, or the
reasons for refraining from exercising, any such right.
ARTICLE 5
RIGHTS, DUTIES AND POWERS OF SECURED PARTY
The following rights, duties and powers of Secured Party are applicable
irrespective of whether an Event of Default occurs and is continuing:
Section 5.01 Discharge Encumbrances. Secured Party
may, at its option, discharge any taxes, liens, security
interests or other encumbrances at any time levied or
placed on the
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Collateral. Pledgor agrees to reimburse Secured Party upon demand for any
payment so made, plus interest thereon from the date of Secured Party's demand
at the Highest Lawful Rate.
Section 5.02 Transfer of Collateral. Secured Party may transfer any or all
of the Obligations, and upon any such transfer Secured Party may transfer its
interest in any or all of the Collateral and shall be fully discharged
thereafter from all liability therefor. Any transferee of the Collateral shall
be vested with all rights, powers and remedies of Secured Party hereunder.
Section 5.03 Cumulative and Other Rights. The rights, powers and remedies
of Secured Party hereunder are in addition to all rights, powers and remedies
given by law or in equity. The exercise by Secured Party of any one or more of
the rights, powers and remedies herein shall not be construed as a waiver of any
other rights, powers and remedies, including, without limitation, any other
rights of set-off. If any of the Obligations are given in renewal, extension for
any period or rearrangement, or applied toward the payment of debt secured by
any lien, Secured Party shall be, and is hereby, subrogated to all the rights,
titles, interests and liens securing the debt so renewed, extended, rearranged
or paid.
Section 5.04 Disclaimer of Certain Duties.
(a) The powers conferred upon Secured Party by this Agreement are to
protect its interest in the Collateral and shall not impose any duty upon
Secured Party or any Lender to exercise any such powers. To the extent permitted
by applicable law, Pledgor hereby agrees that Secured Party shall not be liable
for, nor shall the indebtedness evidenced by the Obligations be diminished by,
Secured Party's delay or failure to collect upon, foreclose, sell, take
possession of or otherwise obtain value for the Collateral.
(b) Secured Party shall be under no duty whatsoever to make or give any
presentment, notice of dishonor, protest, demand for performance, notice of
non-performance, notice of intent to accelerate, notice of acceleration, or
other notice or demand in connection with any Collateral or the Obligations, or
to take any steps necessary to preserve any rights against any Obligor or other
Person. Pledgor waives any right of marshaling in respect of any and all
Collateral, and waives any right to require Secured Party or any Lender to
proceed against any Obligor or other Person, exhaust any Collateral or enforce
any other remedy which Secured Party or any Lender now has or may hereafter have
against any Obligor or other Person.
Section 5.05 Modification of Obligations; Other Security. To the extent
permitted by applicable law, Pledgor waives (i) any and all notice of
acceptance, creation, modification, rearrangement, renewal or extension for any
period of any instrument executed by any Obligor in connection with the
Obligations and (ii) any defense of any Obligor by reason of disability, lack of
authorization, cessation of the liability of any Obligor or for any other
reason. Pledgor authorizes Secured Party, without notice or demand and without
any reservation of rights against Pledgor and without affecting Pledgor's
liability hereunder or on the Obligations, from time to time to (x) take and
hold other property, other than the Collateral, as security for the Obligations,
and exchange, enforce, waive and release any or
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all of the Collateral, (y) apply the Collateral in the manner permitted by this
Agreement and (z) renew, extend for any period, accelerate, amend or modify,
supplement, enforce, compromise, settle, waive or release the obligations of any
Obligor or any instrument or agreement of such other Person with respect to any
or all of the Obligations or Collateral.
Section 5.06 Custody and Preservation of the Collateral. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which comparable secured parties accord
comparable collateral, it being understood and agreed, however, that neither
Secured Party nor any Lender shall have responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relative to any Collateral, whether or not Secured Party has or
is deemed to have knowledge of such matters, or (ii) taking any necessary steps
to preserve rights against Persons or entities with respect to any Collateral.
ARTICLE 6
EVENTS OF DEFAULT
Section 6.01 Events. It shall constitute an Event of Default under this
Agreement if an Event of Default occurs and is continuing under the Credit
Agreement.
Section 6.02 Remedies. Upon the occurrence and during the continuance of
any Event of Default, Secured Party may take any or all of the following actions
without notice (except where expressly required below or in the Credit
Agreement) or demand to Pledgor:
(a) Declare all or part of the indebtedness pursuant to the Obligations
immediately due and payable and enforce payment of the same by the Borrower
or any Obligor.
(b) Sell, in one or more sales and in one or more parcels, or otherwise
dispose of any or all of the Collateral in any commercially reasonable
manner as Secured Party may elect, in a public or private transaction, at
any location as deemed reasonable by Secured Party either for cash or
credit or for future delivery at such price as Secured Party may deem fair,
and (unless prohibited by the Code, as adopted in any applicable
jurisdiction) Secured Party or any Lender may be the purchaser of any or
all Collateral so sold and may apply upon the purchase price therefor any
Obligations secured hereby. Any such sale or transfer by Secured Party
either to itself or to any other Person shall be absolutely free from any
claim of right by Pledgor, including any equity or right of redemption,
stay or appraisal which Pledgor has or may have under any rule of law,
regulation or statute now existing or hereafter adopted. Upon any such sale
or transfer, Secured Party shall have the right to deliver, assign and
transfer to the purchaser or transferee thereof the Collateral so sold or
transferred. If Secured Party deems it advisable to do so, it may restrict
the bidders or purchasers of any such sale or transfer to Persons or
entities who will represent and agree that they are purchasing the
Collateral for their own account and not with the view to the distribution
or resale of any of the Collateral. Secured Party
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may, at its discretion, provide for a public sale, and any such public sale
shall be held at such time or times within ordinary business hours and at
such place or places as Secured Party may fix in the notice of such sale.
Secured Party shall not be obligated to make any sale pursuant to any such
notice. Secured Party may, without notice or publication, adjourn any
public or private sale by announcement at any time and place fixed for such
sale, and such sale may be made at any time or place to which the same may
be so adjourned. In the event any sale or transfer hereunder is not
completed or is defective in the opinion of Secured Party, such sale or
transfer shall not exhaust the rights of Secured Party hereunder, and
Secured Party shall have the right to cause one or more subsequent sales or
transfers to be made hereunder. If only part of the Collateral is sold or
transferred such that the Obligations remain outstanding (in whole or in
part), Secured Party's rights and remedies hereunder shall not be
exhausted, waived or modified, and Secured Party is specifically empowered
to make one or more successive sales or transfers until all the Collateral
shall be sold or transferred and all the Obligations are paid. In the event
that Secured Party elects not to sell the Collateral, Secured Party retains
its rights to dispose of or utilize the Collateral or any part or parts
thereof in any manner authorized or permitted by law or in equity, and to
apply the proceeds of the same towards payment of the Obligations. Each and
every method of disposition of the Collateral described in this subsection
or in subsection (d) shall constitute disposition in a commercially
reasonable manner.
(c) Apply proceeds of the disposition of the Collateral to the
Obligations in any manner elected by Secured Party and permitted by the
Code or otherwise permitted by law or in equity. Such application may
include, without limitation, the reasonable attorneys' fees and legal
expenses incurred by Secured Party and the Lenders.
(d) Appoint any Person as agent to perform any act or acts necessary or
incident to any sale or transfer by Secured Party of the Collateral.
(e) Exercise all other rights and remedies
permitted by law or in equity.
Section 6.03 Attorney-in-Fact. Pledgor hereby irrevocably appoints Secured
Party as Pledgor's attorney-in-fact, with full authority in the place and stead
of Pledgor and in the name of Pledgor or otherwise, from time to time in Secured
Party's discretion upon the occurrence and during the continuance of an Event of
Default, but at Pledgor's cost and expense and without notice to Pledgor, to
take any action and to execute any assignment, certificate, financing statement,
stock power, notification, document or instrument which Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation, to receive, endorse and collect all instruments made payable
to Pledgor representing any dividend, interest payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same.
Section 6.04 Liability for Deficiency. If any sale or other disposition of
Collateral by Secured Party or any other action of Secured Party or any Lender
hereunder results in reduction of the Obligations, such action will not release
Pledgor from its liability to Secured
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Party and the Lenders for any unpaid Obligations, including costs, charges and
expenses incurred in the liquidation of Collateral, together with interest
thereon, and the same shall be immediately due and payable to Secured Party at
Secured Party's address set forth in the opening paragraph hereof.
Section 6.05 Reasonable Notice. If any applicable provision of any law
requires Secured Party or any Lender to give reasonable notice of any sale or
disposition or other action, Pledgor hereby agrees that ten days' prior written
notice shall constitute reasonable notice thereof. Such notice, in the case of
public sale, shall state the time and place fixed for such sale and, in the case
of private sale, the time after which such sale is to be made.
Section 6.06 Non-judicial Enforcement. Secured Party may enforce its rights
hereunder without prior judicial process or judicial hearing, and to the extent
permitted by law Pledgor expressly waives any and all legal rights which might
otherwise require Secured Party to enforce its rights by judicial process.
Section 6.07 Collateral. Upon the occurrence and
during the continuance of an Event of Default:
(a) All rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain
pursuant to Section 4.02 shall cease, and all such rights shall thereupon
become vested in Secured Party who shall thereupon have the sole right to
receive and hold as Collateral such dividends and interest payments, but
Secured Party shall have no duty to receive and hold such dividends and
interest payments and shall not be responsible for any failure to do so or
delay in so doing.
(b) All dividends and interest payments which are received by Pledgor
contrary to the provisions of this Section 6.07 shall be received in trust
for the benefit of Secured Party, shall be segregated from other funds of
Pledgor and shall be forthwith paid over to Secured Party as Collateral in
the same form as so received (with any necessary indorsement).
(c) Secured Party may exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options
pertaining to any of the Collateral as if it were the absolute owner
thereof, including without limitation, the right to exchange at its
discretion, any and all of the Collateral upon the merger, consolidation,
reorganization, recapitalization or other readjustment of any issuer of
such Collateral or upon the exercise by any such issuer or Secured Party of
any right, privilege or option pertaining to any of the Collateral, and in
connection therewith, to deposit and deliver any and all of the Collateral
with any committee, depository, transfer agent, registrar or other
designated agency upon such terms and conditions as it may determine, all
without liability except to account for property actually received by it,
but Secured Party shall have no duty to exercise any of the aforesaid
rights, privileges or options and shall not be responsible for any failure
to do so or delay in so doing.
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(d) If the issuer of any Collateral is the subject of bankruptcy,
insolvency, receivership, custodianship or other proceedings under the
supervision of any court or governmental agency or instrumentality, then
all rights of Pledgor to exercise the voting and other consensual rights
which Pledgor would otherwise be entitled to exercise pursuant to Section
4.06 with respect to the Collateral issued by such issuer shall cease, and
all such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to exercise such voting and other consensual
rights, but Secured Party shall have no duty to exercise any such voting or
other consensual rights and shall not be responsible for any failure to do
so or delay in so doing.
ARTICLE 7
MISCELLANEOUS PROVISIONS
Section 7.01 Notices. Any notice required or permitted to be given under or
in connection with this Agreement shall be given in accordance with the notice
provisions of the Credit Agreement.
Section 7.02 Amendments and Waivers. Secured Party's acceptance of partial
or delinquent payments or any forbearance, failure or delay by Secured Party in
exercising any right, power or remedy hereunder shall not be deemed a waiver of
any obligation of Pledgor or any Obligor, or of any right, power or remedy of
Secured Party; and no partial exercise of any right, power or remedy shall
preclude any other or further exercise thereof. Secured Party may remedy any
Event of Default hereunder or in connection with the Obligations without waiving
the Event of Default so remedied. Pledgor hereby agrees that if Secured Party
agrees to a waiver of any provision hereunder, or an exchange of or release of
the Collateral, or the addition or release of any Obligor or other Person, any
such action shall not constitute a waiver of any of Secured Party's other rights
or of Pledgor's obligations hereunder. This Agreement may be amended only by an
instrument in writing executed jointly by Pledgor and Secured Party and may be
supplemented only by documents delivered or to be delivered in accordance with
the express terms hereof.
Section 7.03 Copy as Financing Statement. A photocopy or other reproduction
of this Agreement may be delivered by Pledgor or Secured Party to any financial
intermediary or other third party for the purpose of transferring or perfecting
any or all of the Pledged Securities to Secured Party or its designee or
assignee.
Section 7.04 Possession of Collateral. Secured Party shall be deemed to
have possession of any Collateral in transit to it or set apart for it (or, in
either case, any of its agents, affiliates or correspondents).
Section 7.05 Redelivery of Collateral. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of proceeds,
Secured Party will deliver to Pledgor such excess proceeds in a commercially
reasonable time; provided, however, that neither
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Secured Party nor any Lender shall have any liability for any interest, cost or
expense in connection with any delay in delivering such proceeds to Pledgor.
Section 7.06 Governing Law; Jurisdiction. This Agreement and the security
interest granted hereby shall be construed in accordance with and governed by
the laws of the State of Texas (except to the extent that the laws of any other
jurisdiction govern the perfection and priority of the security interests
granted hereby).
Section 7.07 Continuing Security Agreement.
(a) Except as may be expressly applicable pursuant to Section 9.505 of the
Code, no action taken or omission to act by Secured Party or the Lenders
hereunder, including, without limitation, any exercise of voting or consensual
rights pursuant to Section 4.07 or any other action taken or inaction pursuant
to Section 6.02, shall be deemed to constitute a retention of the Collateral in
satisfaction of the Obligations or otherwise to be in full satisfaction of the
Obligations, and the Obligations shall remain in full force and effect, until
Secured Party and the Lenders shall have applied payments (including, without
limitation, collections from Collateral) towards the Obligations in the full
amount then outstanding or until such subsequent time as is hereinafter provided
in subsection (b) below.
(b) To the extent that any payments on the Obligations or proceeds of the
Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent the Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Secured Party or the Lenders, and Secured Party's and the Lenders' security
interests, rights, powers and remedies hereunder shall continue in full force
and effect. In such event, this Agreement shall be automatically reinstated if
it shall theretofore have been terminated pursuant to Section 7.08.
Section 7.08 Termination. The grant of a security interest hereunder and
all of Secured Party's and the Lenders' rights, powers and remedies in
connection therewith shall remain in full force and effect until Secured Party
has (i) retransferred and delivered all Collateral in its possession to Pledgor,
and (ii) executed a written release or termination statement and reassigned to
Pledgor without recourse or warranty any remaining Collateral and all rights
conveyed hereby. Upon the complete payment of the Obligations and the compliance
by Pledgor with all covenants and agreements hereof, Secured Party, at the
written request and expense of Pledgor, will release, reassign and transfer the
Collateral to Pledgor and declare this Agreement to be of no further force or
effect. Notwithstanding the foregoing, the reimbursement and indemnification
provisions of Section 4.04 and the provisions of subsection 7.07(b) shall
survive the termination of this Agreement.
Section 7.09 Counterparts, Effectiveness. This
Agreement may be executed in two or more counterparts.
Each counterpart is deemed an original, but all such
counterparts
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taken together constitute one and the same instrument. This Agreement becomes
effective upon the execution hereof by Pledgor and delivery of the same to
Secured Party or the Lenders, and it is not necessary for Secured Party or any
Lender to execute any acceptance hereof or otherwise signify or express its
acceptance hereof.
PLEDGOR: KINDER MORGAN ENERGY PARTNERS, L.P.
By: Kinder Morgan G.P., Inc.,
its General Partner
By:________________________________
Name: Thomas B. King
Title: President
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FINANCING STATEMENT
This Financing Statement is presented to a filing officer for filing
pursuant to the Uniform Commercial Code.
1. The name and address of the Debtor is:
KINDER MORGAN ENERGY PARTNERS, L.P.
1301 McKinney Street, Suite 3450
Houston, Texas 77010
2. The name and address of the Secured Party is:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, AS AGENT 301 South College Street Charlotte, North
Carolina 28288
3. This Financing Statement covers the following
Collateral:
(a) All of Debtor's rights, whether now owned or hereafter acquired, in
(i) limited partner interests in Kinder Morgan Operating L.P."B" (the
"Partnership"), (ii) the the Amended and Restated Agreement of Limited
Partnership dated September 30, 1993 and all amendments thereto, (iii)
Debtor's share of profits, income, distributions and surplus from the
Partnership, (iv) specific properties of the Partnership upon dissolution
or otherwise and (v) any and all other rights, titles and interests of
every kind and character of Debtor in and to the Partnership.
(b) all proceeds, replacements, additions to and substitutions for any
of the property referred to in this Section 1.02 and claims against third
parties.
DEBTOR: KINDER MORGAN ENERGY PARTNERS,
L.P.
By: Kinder Morgan G. P., Inc.,
its General Partner
By:_______________________________
Name: Thomas B. King
Title: President
SECURITY AGREEMENT
Accounts, Inventory, Equipment,
Chattel Paper, Documents, Instruments and General Intangibles
THIS SECURITY AGREEMENT (this "Agreement") is made as of February 14, 1997
between KINDER MORGAN OPERATING L.P. "B" (formerly known as Enron Transportation
Services L.P.), a Delaware limited partnership with an address for notices at
1301 McKinney Street, Suite 3450, Houston, Texas 77002 ("Debtor"), and FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association with
offices at 301 South College Street, Charlotte, North Carolina 28288, as Agent
("Secured Party") for itself and the Lenders which are from time to time parties
to the Credit Agreement referred to below ("Lenders").
RECITALS
A. On even date herewith, Debtor, the Lenders and Secured Party are
executing a Credit Agreement (such agreement, as may from time to time be
amended or supplemented, being hereinafter called the "Credit Agreement")
pursuant to which, upon the terms and conditions stated therein, the Lenders
agree to make loans and extend other credit to Debtor.
B. The Lenders have conditioned their respective obligations under the
Credit Agreement upon the execution and delivery by Debtor of this Agreement,
and Debtor has agreed to enter into this Agreement.
C. Therefore, in order to comply with the terms and conditions of the
Credit Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Debtor hereby agrees with Secured
Party as follows:
ARTICLE 1
SECURITY INTEREST
Section 1.01 Grant of Security Interest. Debtor hereby assigns and grants
to Secured Party a security interest in and right of set-off against the assets
referred to in Section 1.02 (the "Collateral") to secure the prompt payment and
performance of the "Obligations" (as defined in Section 2.02) and the
performance by Debtor of this Agreement.
Section 1.02 Collateral. The Collateral consists of the following types or
items of property (including property hereafter acquired by Debtor as well as
property which Debtor now owns or in which Debtor has rights):
(a) All of Debtor's accounts, inventory, equipment, chattel paper,
documents, instruments and general intangibles, including, without
limitation, any
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of the foregoing which may be more specifically
indicated in the remainder of this Section.
(b) (i) Any related or additional property from time to time delivered
to or deposited with Secured Party by or for the account of Debtor; (ii)
all certificates of title or other documents evidencing ownership or
possession of or otherwise relating to any property referred to in this
Section; (iii) all property used or usable in connection with any property
referred to in this Section; (iv) all policies of insurance (whether or
not required by Secured Party) covering any property referred to in this
Section; (v) all goods which were at any time included in the Collateral
and which are returned to or for the account of Debtor following their
sale, lease or other disposition; (vi) all proceeds, products,
replacements, additions to, substitutions for, accessions of, and property
necessary for the operation of any of the property referred to in this
Section, including, without limitation, insurance payable as a result of
loss or damage to any of the property referred to in this Section, refunds
of unearned premiums of any such insurance policy and claims against third
parties; and (vii) all books and records related to any of the property
referred to in this Section, including, without limitation, any and all
books of account, customer lists and other records relating in any way to
the accounts, chattel paper, instruments or inventory referred to in this
Section.
(d) All general intangibles related to any property referred to in
this Section, including, without limitation, all (i) letters of credit,
bonds, guaranties, purchase or sales agreements and other contractual
rights, rights to performance, and claims for damages, refunds (including
tax refunds) or other monies due or to become due; (ii) orders,
franchises, permits, certificates, licenses, consents, exemptions,
variances, authorizations or other approvals by any governmental agency or
court, to the extent assignable; (iii) consulting, engineering and
technological information and specifications, design data, patent rights,
trade secrets, literary rights, copyrights, trademarks, labels, trade
names and other intellectual property; (iv) business records, computer
tapes and computer software; (v) goodwill; and (vi) other intangible
personal property, whether similar or dissimilar to the property referred
to in this Section.
It is expressly contemplated that additional property may from time to time be
pledged, assigned or granted to Secured Party as additional security for the
Obligations, and the term "Collateral" as used herein shall be deemed for all
purposes hereof to include all such additional property, together with all other
property of the types described above related thereto.
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ARTICLE 2
DEFINITIONS
Section 2.01 Terms Defined Above or in the Credit Agreement. As used in
this Agreement, the terms defined above shall have the meanings respectively
assigned to them. Other capitalized terms which are defined in the Credit
Agreement but which are not defined herein shall have the same meanings as
defined in the Credit Agreement.
Section 2.02 Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings, unless the context otherwise requires:
"Accounts" means all accounts, chattel paper and instruments (as such
terms are defined in the Code) at any time included in the Collateral.
"Account Debtor" means any Person liable (whether directly or
indirectly, primarily or secondarily) for the payment or performance of
any obligations included in the Collateral, whether as an account debtor
(as defined in the Code), obligor on an instrument, issuer of documents or
securities, guarantor or otherwise.
"Agreement" means this Security Agreement, as the same may from time
to time be amended or supplemented.
"Code" means the Uniform Commercial Code as presently in effect in the
State of Texas, Business and Commerce Code, Chapters 1 through 9. Unless
otherwise indicated by the context herein, all uncapitalized terms which
are defined in the Code shall have their respective meanings as used in
Chapter 9 of the Code.
"Event of Default" means any event specified in
Section 6.01.
"Inventory" means all inventory (as defined in
the Code) at any time included in the Collateral.
"Obligations" means the following indebtedness,
obligations and liabilities:
(a) payment of and performance of any and all indebtedness,
obligations and liabilities of Debtor pursuant to the Credit Agreement
dated as of February 14, 1997 among Debtor, Secured Party and the
Lenders") (as amended, restated or supplemented from time to time the
"Governing Agreement"), including without limitation, those certain
promissory notes which are or may be executed by Debtor in the aggregate
principal amount of $15,875,000 with final maturity on or before February
14, 1999 and all other notes given in substitution therefor or in
modification, renewal or extension thereof, in whole or in part (such
notes, as from time to time supplemented, amended or modified and all
other notes given in substitution therefor or in modification, renewal or
extension thereof, in whole or in part, being hereafter called the
"Revolving Credit Notes");
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(b) Replacement Term Note dated of even date herewith executed by
Debtor payable to the order of First Union National Bank of North Carolina
in the face amount of ____________________ ($___________________), bearing
interest and payable as therein provided with a final maturity of all
principal and interest of February 14, 1999 and all other notes given in
substitution therefor or in modification, renewal or extension thereof, in
whole or in part (such notes, as from time to time supplemented, amended
or modified and all other notes given in substitution therefor or in
modification, renewal or extension thereof, in whole or in part, being
hereafter the "Replacement Term Note"; the Revolving Credit Notes and the
Term Note being herein collectively referred to as the "Notes");
(c) Payment of any sums which may be advanced or paid by Secured Party
under the terms hereof on account of the failure of Debtor to comply with
the covenants of Debtor contained herein; and all other indebtedness of
Debtor arising pursuant to the provisions of this Agreement;
(d) Payment of any additional loans made by the Lenders to Debtor. It
is contemplated that the Lenders may lend additional sums to Debtor from
time to time, but shall not be obligated to do so, and Debtor agrees that
any such additional loans shall be secured by this Agreement;
(e) Payment of and performance of any and all present or future
obligations of Debtor according to the terms of any present or future
interest or currency rate swap, rate cap, rate floor, rate collar,
exchange transaction, forward rate agreement or other exchange or rate
protection agreements or any option with respect to any such transaction
now existing or hereafter entered into between Debtor and Secured Party or
any of the Lenders;
(f) Payment of and performance of any and all present or future
obligations of Debtor according to the terms of any present or future swap
agreements, cap, floor, collar, exchange transaction, forward agreement or
other exchange or protection agreements relating to crude oil, natural gas
or other hydrocarbons or any option with respect to any such transaction
now existing or hereafter entered into between Debtor and Secured Party or
any of the Lenders;
(g) All reimbursement obligations for drawn or undrawn portions under
that certain irrevocable letter of credit No. ________ in the amount of
$24,128,548.00 issued by First Union National Bank of North Carolina (the
"Replacement Letter of Credit") and any letter of credit now outstanding
or hereafter issued under or pursuant to the Governing Agreement in
replacement of the Replacement Letter of Credit; and
(h) Payment of and performance of any and all other indebtedness,
obligations and liabilities of any kind of Debtor to the Secured Party or
any Lender, now or hereafter existing, arising directly between Debtor and
the Secured Party or any Lender or acquired outright, as a participation,
conditionally or as collateral security from another by the Secured Party
or any Lender, absolute or contingent,
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joint and/or several, secured or unsecured, due or not due, arising by
operation of law or otherwise, or direct or indirect, including
indebtedness, obligations and liabilities to the Secured Party or any
Lender of Debtor as a member of any partnership, syndicate, association or
other group, and whether incurred by Debtor as principal, surety,
endorser, guarantor, accommodation party or otherwise.
The Obligations shall also include all interest, charges, expenses,
attorneys' or other fees and any other sums payable to or incurred by
Secured Party and the Lenders in connection with the execution,
administration or enforcement of Secured Party's or any of the Lenders'
rights and remedies hereunder or any other agreement with Debtor.
Notwithstanding any other provision of this Agreement, the Obligations
shall not include any reimbursement obligation under the Support Letter of
Credit (as defined in the Governing Agreement) that may be issued under
the Governing Agreement and any principal or interest outstanding on the
Support Term Note (as defined in the Governing Agreement).
"Obligor" means any Person, other than Debtor, liable (whether
directly or indirectly, primarily or secondarily) for the payment or
performance of any of the Obligations whether as maker, co-maker,
endorser, guarantor, accommodation party, general partner or otherwise.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce Secured Party to accept this Agreement, Debtor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Encumbrances. Debtor is the legal
and beneficial owner of the Collateral free and clear of any adverse claim,
lien, security interest, option or other charge or encumbrance except for the
security interest created by this Agreement, and Debtor has full right, power
and authority to assign and grant a security interest in the Collateral to
Secured Party.
Section 3.02 No Required Consent. No authorization, consent, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body (other than the filing of financing statements and other
Security Instruments) is required for (i) the due execution, delivery and
performance by Debtor of this Agreement, (ii) the grant by Debtor of the
security interest granted by this Agreement, (iii) the perfection of such
security interest or (iv) the exercise by Secured Party of its rights and
remedies under this Agreement.
Section 3.03 First Priority Security Interest. The grant of the security
interest in the Collateral pursuant to this Agreement creates a valid and
perfected first priority security interest in the Collateral, enforceable
against Debtor and all third parties and securing payment of the Obligations.
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Section 3.04 No Filings By Third Parties. No financing statement or other
public notice or recording covering the Collateral is on file in any public
office (other than any financing statement or other public notice or recording
naming Secured Party as the secured party therein), and Debtor will not execute
any such financing statement or other public notice or recording so long as any
of the Obligations are outstanding.
Section 3.05 No Name Changes. Debtor has not, during the preceding five
years, entered into any contract, agreement, security instrument or other
document using a name other than, or been known by or otherwise used any name
other than, the name used by Debtor herein, except that Debtor has used the name
"Enron Transportation Services L.P."
Section 3.06 Location of Debtor. Debtor's chief executive office or
residence (as applicable) and Debtor's records concerning the Collateral are
located at the address or location set forth in the opening paragraph hereof and
the other addresses and locations specified in Schedule 3.06.
Section 3.07 Collateral. All statements or other information provided by
Debtor to Secured Party or any Lender describing or with respect to the
Collateral is or (in the case of subsequently furnished information) will be
when provided correct and complete in all material respects. The delivery at any
time by Debtor to Secured Party of additional Collateral or of additional
descriptions of Collateral shall constitute a representation and warranty by
Debtor to Secured Party hereunder that the representations and warranties of
this Article 3 are correct insofar as they would pertain to such Collateral or
the descriptions thereof.
Section 3.08 Accounts.
(a) To the best of Debtor's knowledge, each Account represents in all
material respects a genuine, valid and legally enforceable indebtedness of an
Account Debtor arising from the sale, lease or rendition by Debtor of goods or
services and is not and will not be subject to contra accounts, set-offs,
defenses, counterclaims, allowances or adjustments (other than discounts for
prompt payment shown on the invoice), or objections or complaints by the Account
Debtor concerning its liability on the Account; and any goods, the sale of which
gave rise to an Account, have not been, to the best of Debtor's knowledge,
returned or rejected by the Account Debtor or lost or damaged prior to receipt
by the Account Debtor.
(b) The amount shown as to each Account on Debtor's books is or will be in
all material respects the true and undisputed amount owing and unpaid thereon.
Each Account arose or shall have arisen in the ordinary course of Debtor's
business; provided, however, that any Accounts which arose or hereafter arise
outside the ordinary course of Debtor's business shall nevertheless be included
as part of the Collateral. Debtor has no knowledge of any bankruptcy, insolvency
or other action affecting creditors' rights with respect to any Account Debtor.
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Section 3.09 Delivery of Documents or Letters of Credit. With respect to
any Inventory or other Collateral covered by one or more certificates of title
or other documents evidencing ownership or possession thereof, and with respect
to any Accounts or other Collateral supported by letters of credit, each of such
certificates, documents or letters of credit will be delivered to Secured Party
upon Secured Party's request (provided that all certificates, documents and
letters of credit referred to in Section 1.02 shall be subject to the security
interest created by this Agreement irrespective of whether or not such delivery
shall have been made).
ARTICLE 4
COVENANTS AND AGREEMENTS
Debtor will at all times comply with the covenants and agreements
contained in this Article 4, from the date hereof and for so long as any part of
the Obligations are outstanding.
Section 4.01 Change in Location of Collateral or Debtor. Debtor will
notify Secured Party on or before the date of any change in location of the
Collateral. Debtor will not, without Secured Party's prior written consent,
change the location of the Collateral to any state, county or other jurisdiction
in which Secured Party has not already filed a financing statement or taken
other necessary steps to perfect its security interests in the Collateral or to
maintain such perfection. Debtor will give Secured Party 30 days' prior written
notice of (i) the opening or closing of any place of Debtor's business or (ii)
any change in the location of Debtor's residence, chief executive office or
address.
Section 4.02 Change in Debtor's Name or Corporate Structure. Debtor will
not change its name, identity or corporate structure (including, without
limitation, any merger, consolidation or sale of substantially all of its
assets) without notifying Secured Party of such change in writing at least 30
days prior to the effective date of such change. Without the express written
consent of Secured Party, however, Debtor will not engage in any other business
or transaction under any name other than Debtor's name hereunder.
Section 4.03 Documents; Collateral in Possession of Third Parties. If
certificates of title or other documents evidencing ownership or possession of
the Collateral are issued or outstanding, Debtor will, at Secured Party's
request, cause the interest of Secured Party to be properly noted thereon and
will, forthwith upon receipt, deliver same to Secured Party. If any Collateral
is at any time in the possession or control of any warehouseman, bailee, agent
or independent contractor, Debtor shall notify such Person of Secured Party's
security interest in such Collateral. Upon Secured Party's request, Debtor shall
instruct any such Person to hold all such Collateral for Secured Party's account
subject to Debtor's instructions, or, if an Event of Default shall have
occurred, subject to Secured Party's instructions.
Section 4.04 Delivery of Letters of Credit and Instruments. Upon Secured
Party's request, Debtor will deliver each letter of credit, if any, included in
the Collateral to Secured Party, in each case forthwith upon receipt by or for
the account of Debtor. If any
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Account having a value in excess of $__________ becomes evidenced by a
promissory note, trade acceptance or any other instrument for the payment of
money (other than checks or drafts in payment of Accounts collected by Debtor in
the ordinary course of business prior to notification by Secured Party under
Section 6.02(h)), Debtor will immediately deliver such instrument to Secured
Party appropriately endorsed and, regardless of the form of presentment, demand,
notice of dishonor, protest and notice of protest with respect thereto, Debtor
will remain liable thereon until such instrument is paid in full.
Section 4.05 Sale, Disposition or Encumbrance of Collateral. Except as
permitted by Section 4.10 or with Secured Party's prior written consent, Debtor
will not in any way encumber any of the Collateral (or permit or suffer any of
the Collateral to be encumbered) or sell, assign, lend, rent, lease or otherwise
dispose of or transfer any of the Collateral to or in favor of any Person other
than Secured Party.
Section 4.06 Proceeds of Collateral. Except as permitted by Sections 4.04,
4.10 and 4.11, Debtor will deliver to Secured Party promptly upon receipt all
proceeds delivered to Debtor from the sale or disposition of any Collateral. If
chattel paper, documents or instruments are received as proceeds, which are
required to be delivered to Secured Party, they will be, immediately upon
receipt, properly endorsed or assigned and delivered to Secured Party as
Collateral. This Section 4.06 shall not be construed to permit sales or
dispositions of Collateral except as may be elsewhere expressly permitted by
this Agreement.
Section 4.07 Records and Information. Debtor shall keep accurate and
complete records of the Collateral (including proceeds). Secured Party may at
any time have access to, examine, audit, make extracts from and inspect without
hindrance or delay Debtor's records, files and the Collateral. Debtor will
promptly provide written notice to Secured Party of all information which in any
way relates to or affects the filing of any financing statement or other public
notices or recordings, or the delivery and possession of items of Collateral for
the purpose of perfecting a security interest in the Collateral. Debtor will
also promptly furnish such information as Secured Party may from time to time
reasonably request regarding (i) the business, affairs or financial condition of
Debtor or (ii) the Collateral or Secured Party's rights or remedies with respect
thereto.
Section 4.08 Reimbursement of Expenses. Debtor hereby assumes all
liability for the Collateral, the security interests created hereunder and any
use, possession, maintenance, management, enforcement or collection of any or
all of the Collateral. Debtor agrees to indemnify and hold Secured Party and the
Lenders harmless from and against and covenants to defend Secured Party and the
Lenders against any and all losses, damages, claims, costs, penalties,
liabilities and expenses, including, without limitation, court costs and
attorneys' fees, incurred because of, incident to, or with respect to the
Collateral (including, without limitation, any use, possession, maintenance or
management thereof, or any injuries to or deaths of persons or damage to
property), except those arising from Debtor's gross negligence or willful
misconduct. All amounts for which Debtor is liable pursuant to this Section 4.08
shall be due and payable by Debtor to Secured Party upon demand. If Debtor fails
to make such payment upon demand (or if demand is not made due to an injunction
or stay arising from bankruptcy or other proceedings) and Secured Party or any
Lender pays such amount, the same shall be due and payable by Debtor to Secured
Party, plus interest
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thereon from the date of Secured Party's demand (or from the date of Secured
Party's payment if demand is not made due to such proceedings) at the Highest
Lawful Rate.
Section 4.09 Further Assurances. Upon the request of Secured Party, Debtor
shall (at Debtor's expense) execute and deliver all such assignments,
certificates, financing statements or other documents and give further
assurances and do all other acts and things as Secured Party may reasonably
request to perfect Secured Party's interest in the Collateral or to protect,
enforce or otherwise effect Secured Party's rights and remedies hereunder.
Section 4.10 Inventory. Until an Event of Default occurs hereunder, Debtor
may use the Inventory in any lawful manner not inconsistent with this Agreement
and with the terms of insurance thereon and may sell, lease or otherwise dispose
of its Inventory for cash or terms in the ordinary course of business, and
Debtor may retain the proceeds of such sales, leases or other dispositions
(subject to Section 4.04 and subsection 4.11(a)); provided, however, the
Inventory shall remain in Debtor's possession and control at all times prior to
sale, lease or other disposition at Debtor's address set forth in the opening
paragraph hereof or at such other location(s) as may be specified in Section
1.02. Debtor shall bear any risk of loss of the Inventory. Debtor shall not use
any item of Inventory in a manner inconsistent with the holding thereof for
sale, lease or other disposition in the ordinary course of business or in
contravention of the terms of any agreement. A sale, lease or disposition in the
ordinary course of business does not include the exchange of Inventory for
services or goods in kind or transfers of Inventory for the satisfaction of
obligations to suppliers or other indebtedness.
Section 4.11 Accounts.
(a) Prior to notification by Secured Party under Section 6.02(h), Debtor
will collect the Accounts in the ordinary course of its business and may retain
the proceeds of such collections (subject to Section 4.04).
(b) Debtor will duly perform or cause to be performed all of Debtor's
obligations with respect to the Accounts and the underlying sales of goods or
other transactions giving rise to the Accounts.
Section 4.12 Condition of Collateral. Except with respect to the
Collateral described in Schedule 4.12 hereto, Debtor will maintain all the
Collateral in good condition, repair and working order (ordinary wear and tear
excepted), and in accordance with any manufacturer's manual. Debtor will not
misuse, abuse, waste, destroy or endanger the Collateral or allow it to
deteriorate, except for ordinary wear and tear from its intended use. Debtor
will not use any Collateral in violation of any law, statute, ordinance,
regulation or administrative order, or suffer it to be so used.
Section 4.13 Collateral Attached to Other Property. In the event that the
Collateral is to be attached or affixed to any real property, Debtor hereby
agrees that this Agreement may be filed for record in any appropriate real
estate records as a financing statement which is a fixture filing. In connection
therewith, Debtor will take whatever action is required by Section 4.09. If
Debtor is not the record owner of such real property,
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Debtor will provide Secured Party with any additional security agreements or
financing statements necessary for the perfection of Secured Party's security
interest in the Collateral. If the Collateral is wholly or partly affixed to
real estate or installed in or affixed to other goods, Debtor will, on demand of
Secured Party, furnish Secured Party with a disclaimer (including landlord's or
other lien waivers or releases, if applicable), signed by all Persons or
entities having an interest in the real estate or other goods to which the
Collateral may have become affixed, of any prior interest to Secured Party's
interest in the Collateral.
Section 4.14 Collateral Separate and Distinct. Debtor shall at all times
keep the Collateral, including proceeds, or cause it to be kept (when in the
possession of warehousemen, bailees, agents, independent contractors or other
third parties), separate and distinct from other property.
ARTICLE 5
RIGHTS, DUTIES AND POWERS OF SECURED PARTY
The following rights, duties and powers of Secured Party are applicable
irrespective of whether an Event of Default occurs and is continuing:
Section 5.01 Discharge Encumbrances. Secured Party may, at its option,
discharge any taxes, liens, security interests or other encumbrances at any time
levied or placed on the Collateral, may pay for insurance on the Collateral and
may pay for the maintenance and preservation of the Collateral. Debtor agrees to
reimburse Secured Party upon demand for any payment so made, plus interest
thereon from the date of Secured Party's demand at the Highest Lawful Rate.
Section 5.02 Transfer of Collateral. Upon reasonable notice to Debtor,
Secured Party may transfer any or all of the Obligations, and upon any such
transfer Secured Party may transfer its interest in any or all of the Collateral
and shall be fully discharged thereafter from all liability therefor, other than
liabilities arising prior to the date of such transfer. Any transferee of the
Collateral shall be vested with all rights, powers and remedies of Secured Party
hereunder.
Section 5.03 Licenses and Rights to Use Collateral. In connection with any
transfer or sale (to Secured Party or any other Person) of the Collateral,
Secured Party is hereby granted a non-exclusive transferable license or other
right to use, without any charge, any of Debtor's labels, patents, copyrights,
trade names, trade secrets, trademarks or other similar property in completing
production, advertising or selling such Collateral. Debtor's rights under all
licenses and franchise agreements shall inure to the benefit of Secured Party
and any transferee of all or any part of the Collateral.
Section 5.04 Cumulative and Other Rights. The rights, powers and remedies
of Secured Party hereunder are in addition to all rights, powers and remedies
given by law or in equity. The exercise by Secured Party of any one or more of
the rights, powers and remedies herein shall not be construed as a waiver of any
other rights, powers and remedies, including, without limitation, any other
rights of set-off. If any of the Obligations are given
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in renewal, extension for any period or rearrangement, or applied toward the
payment of debt secured by any lien, Secured Party shall be, and is hereby,
subrogated to all the rights, titles, interests and liens securing the debt so
renewed, extended, rearranged or paid.
Section 5.05 Disclaimer of Certain Duties. The powers conferred upon
Secured Party by this Agreement are to protect its interest in the Collateral
and shall not impose any duty upon Secured Party or any Lender to exercise any
such powers. To the fullest extent permitted by applicable law, Debtor hereby
agrees that Secured Party shall not be liable for, nor shall the indebtedness
evidenced by the Obligations be diminished by, Secured Party's delay or failure
to collect upon, foreclose, sell, take possession of or otherwise obtain value
for the Collateral.
ARTICLE 6
EVENTS OF DEFAULT
Section 6.01 Events. It shall constitute an Event of Default under this
Agreement if an Event of Default occurs and is continuing under the Credit
Agreement.
Section 6.02 Remedies. Upon the occurrence and during the continuance of
any Event of Default, Secured Party may take any or all of the following actions
without notice (except where expressly required below or in the Credit
Agreement) or demand to Debtor:
(a) Declare all or part of the Obligations immediately due and payable
and enforce payment of the same by Debtor or any Obligor.
(b) Take possession of the Collateral, or at Secured Party's request
Debtor shall, at Debtor's cost, assemble the Collateral and make it
available at a location to be specified by Secured Party which is
reasonably convenient to Debtor and Secured Party. Secured Party may, at
its option, render any equipment unusable that may be included in the
Collateral, or, at Secured Party's request, Debtor will render it
unusable. In any event, Debtor shall bear the risk of accidental loss or
damage to or diminution in value of the Collateral, and neither Secured
Party nor any Lender will have any liability whatsoever for failure to
obtain or maintain insurance, nor to determine whether any insurance ever
in force is adequate as to amount or as to risk insured.
(c) Sell or lease, in one or more sales or leases and in one or more
parcels, or otherwise dispose of any or all of the Collateral in its then
condition or in any other commercially reasonable manner as Secured Party
may elect, in a public or private transaction, at any location as deemed
reasonable by Secured Party (including, without limitation, Debtor's
premises), either for cash or credit or for future delivery at such price
as Secured Party may deem fair, and (unless prohibited by the Code, as
adopted in any applicable jurisdiction) Secured Party or any Lender may be
the purchaser of any or all Collateral so sold and may apply upon the
purchase price therefor any Obligations secured hereby. Any such sale or
transfer by Secured Party either to itself or to any other Person shall be
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absolutely free from any claim of right by Debtor, including any equity or
right of redemption, stay or appraisal which Debtor has or may have under
any rule of law, regulation or statute now existing or hereafter adopted.
Upon any such sale or transfer, Secured Party shall have the right to
deliver, assign and transfer to the purchaser or transferee thereof the
Collateral so sold or transferred. It shall not be necessary that the
Collateral or any part thereof be present at the location of any such sale
or transfer. Secured Party may, at its discretion, provide for a public
sale, and any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as Secured Party may
fix in the notice of such sale. Secured Party shall not be obligated to
make any sale pursuant to any such notice. Secured Party may, without
notice or publication, adjourn any public or private sale by announcement
at any time and place fixed for such sale, and such sale may be made at
any time or place to which the same may be so adjourned. In the event any
sale or transfer hereunder is not completed or is defective in the opinion
of Secured Party, such sale or transfer shall not exhaust the rights of
Secured Party hereunder, and Secured Party shall have the right to cause
one or more subsequent sales or transfers to be made hereunder. In the
event that any of the Collateral is sold or transferred on credit, or to
be held by Secured Party for future delivery to a purchaser or transferee,
the Collateral so sold or transferred may be retained by Secured Party
until the purchase price or other consideration is paid by the purchaser
or transferee thereof, but in the event that such purchaser or transferee
fails to pay for the Collateral so sold or transferred or to take delivery
thereof, neither Secured Party nor any Lender shall incur any liability in
connection therewith. If only part of the Collateral is sold or
transferred such that the Obligations remain outstanding (in whole or in
part), Secured Party's rights and remedies hereunder shall not be
exhausted, waived or modified, and Secured Party is specifically empowered
to make one or more successive sales or transfers until all the Collateral
shall be sold or transferred and all the Obligations are paid. In the
event that Secured Party elects not to sell the Collateral, Secured Party
retains its rights to lease or otherwise dispose of or utilize the
Collateral or any part or parts thereof in any manner authorized or
permitted by law or in equity, and to apply the proceeds of the same
towards payment of the Obligations. To the fullest extent permitted by
applicable law, each and every method of disposition of the Collateral
described in this subsection or in subsection (f) shall constitute
disposition in a commercially reasonable manner.
(d) Take possession of all books and records of Debtor pertaining to
the Collateral. Secured Party shall have the authority to enter upon any
real property or improvements thereon in order to obtain any such books or
records, or any Collateral located thereon owned by Debtor, and remove the
same therefrom without liability.
(e) Apply proceeds of the disposition of the Collateral to the
Obligations in any manner elected by Secured Party and permitted by the
Code or otherwise permitted by law or in equity. Such application may
include, without limitation, the reasonable expenses of retaking, holding,
preparing for sale or other disposition, and the reasonable attorneys'
fees and legal expenses incurred by Secured Party and the Lenders.
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<PAGE>
(f) Appoint any Person as agent to perform any act or acts necessary
or incident to any sale or transfer by Secured Party of the Collateral.
Additionally, any sale or transfer hereunder may be conducted by an
auctioneer or any officer or agent of Secured Party.
(g) Receive, change the address for delivery, open and dispose of mail
addressed to Debtor, and to execute, assign and endorse negotiable and
other instruments for the payment of money, documents of title or other
evidences of payment, shipment or storage for any form of Collateral on
behalf of and in the name of Debtor.
(h) Notify or require Debtor to notify Account Debtors that the
Accounts have been assigned to Secured Party and direct such Account
Debtors to make payments on the Accounts directly to Secured Party. To the
extent Secured Party does not so elect, Debtor shall continue to collect
the Accounts. Secured Party or its designee shall also have the right, in
its own name or in the name of Debtor, to do any of the following: (i) to
demand, collect, receipt for, settle, compromise any amounts due, give
acquittances for, prosecute or defend any action which may be in relation
to any monies due or to become due by virtue of, the Accounts; (ii) to
sell, transfer or assign or otherwise deal in the Accounts or the proceeds
thereof or the related goods, as fully and effectively as if Secured Party
were the absolute owner thereof; (iii) to extend the time of payment of
any of the Accounts, to grant waivers and make any allowance or other
adjustment with reference thereto; (iv) to endorse the name of Debtor on
notes, checks or other evidences of payments on Collateral that may come
into possession of Secured Party; (v) to take control of cash and other
proceeds of any Collateral; (vi) to sign the name of Debtor on any invoice
or bill of lading relating to any Collateral, or any drafts against
Account Debtors or other persons making payment with respect to
Collateral; (vii) to send a request for verification of Accounts to any
Account Debtor; and (viii) to do all other acts and things necessary to
carry out the intent of this Agreement.
Section 6.03 Attorney-in-Fact. Debtor hereby irrevocably appoints Secured
Party as Debtor's attorney-in-fact, with full authority in the place and stead
of Debtor and in the name of Debtor or otherwise, from time to time in Secured
Party's discretion upon the occurrence and during the continuance of an Event of
Default, but at Debtor's cost and expense and without notice to Debtor:
(a) To obtain, adjust, sell and cancel any insurance with respect to
the Collateral, and endorse any draft drawn by insurers of the Collateral.
Secured Party may apply any proceeds or unearned premiums of such
insurance to the Obligations (whether or not due).
(b) To take any action and to execute any assignment, certificate,
financing statement, notification, document or instrument which Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, to receive, endorse and collect
all instruments made
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<PAGE>
payable to Debtor representing any payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge
for the same.
Section 6.04 Account Debtors. Any payment or settlement of an Account made
by an Account Debtor will be, to the extent of such payment or to the extent
provided under such settlement, a release, discharge and acquittance of the
Account Debtor with respect to such Account, and Debtor shall take any action as
may be required by Secured Party in connection therewith. No Account Debtor on
any Account will ever be bound to make inquiry as to the termination of this
Agreement or the rights of Secured Party to act hereunder, but shall be fully
protected by Debtor in making payment directly to Secured Party.
Section 6.05 Liability for Deficiency. If any sale or other disposition of
Collateral by Secured Party or any other action of Secured Party or any Lender
hereunder results in reduction of the Obligations, such action will not release
Debtor from its liability to Secured Party and the Lenders for any unpaid
Obligations, including costs, charges and expenses incurred in the liquidation
of Collateral, together with interest thereon, and the same shall be immediately
due and payable to Secured Party at Secured Party's address set forth in the
opening paragraph hereof.
Section 6.06 Reasonable Notice. If any applicable provision of any law
requires Secured Party or any Lender to give reasonable notice of any sale or
disposition or other action, Debtor hereby agrees that ten days' prior written
notice shall constitute reasonable notice thereof. Such notice, in the case of
public sale, shall state the time and place fixed for such sale and, in the case
of private sale, the time after which such sale is to be made.
Section 6.07 Non-judicial Enforcement. Secured Party may enforce its
rights hereunder without prior judicial process or judicial hearing, and to the
extent permitted by law Debtor expressly waives any and all legal rights which
might otherwise require Secured Party to enforce its rights by judicial process.
ARTICLE 7
MISCELLANEOUS PROVISIONS
Section 7.01 Notices. Any notice required or permitted to be given under
or in connection with this Agreement shall be given in accordance with the
notice provisions of the Credit Agreement.
Section 7.02 Amendments and Waivers. Secured Party's acceptance of partial
or delinquent payments or any forbearance, failure or delay by Secured Party in
exercising any right, power or remedy hereunder shall not be deemed a waiver of
any obligation of Debtor or any Obligor, or of any right, power or remedy of
Secured Party; and no partial exercise of any right, power or remedy shall
preclude any other or further exercise thereof. Secured Party may remedy any
Event of Default hereunder or in connection with the Obligations without waiving
the Event of Default so remedied. Debtor hereby agrees that if Secured Party
agrees to a waiver of any provision hereunder, or an exchange of or release of
the
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<PAGE>
Collateral, or the addition or release of any Obligor or other Person, any such
action shall not constitute a waiver of any of Secured Party's other rights or
of Debtor's obligations hereunder. This Agreement may be amended only by an
instrument in writing executed jointly by Debtor and Secured Party and may be
supplemented only by documents delivered or to be delivered in accordance with
the express terms hereof.
Section 7.03 Copy as Financing Statement. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral is sufficient as a financing statement, and the same may be filed
with any appropriate filing authority for the purpose of perfecting Secured
Party's security interest in the Collateral.
Section 7.04 Possession of Collateral. Secured Party shall be deemed to
have possession of any Collateral in transit to it or set apart for it (or, in
either case, any of its agents, affiliates or correspondents).
Section 7.05 Redelivery of Collateral. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of proceeds,
Secured Party will deliver to Debtor such excess proceeds in a commercially
reasonable time; provided, however, that neither Secured Party nor any Lender
shall have any liability for any interest, cost or expense in connection with
any reasonable delay in delivering such proceeds to Debtor.
Section 7.06 Governing Law; Jurisdiction. This Agreement and the security
interest granted hereby shall be construed in accordance with and governed by
the laws of the State of Texas (except to the extent that the laws of any other
jurisdiction govern the perfection and priority of the security interests
granted hereby).
Section 7.07 Continuing Security Agreement.
(a) Except as may be expressly applicable pursuant to Section 9.505 of the
Code, no action taken or omission to act by Secured Party or the Lenders
hereunder, including, without limitation, any action taken or inaction pursuant
to Section 6.02, shall be deemed to constitute a retention of the Collateral in
satisfaction of the Obligations or otherwise to be in full satisfaction of the
Obligations, and the Obligations shall remain in full force and effect, until
Secured Party and the Lenders shall have applied payments (including, without
limitation, collections from Collateral) towards the Obligations in the full
amount then outstanding or until such subsequent time as is hereinafter provided
in subsection (b) below.
(b) To the extent that any payments on the Obligations or proceeds of the
Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent the Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Secured Party or the Lenders, and Secured Party's and the Lenders' security
interests, rights, powers and remedies hereunder shall continue in full force
and effect. In such event, this Agreement shall be automatically reinstated if
it shall theretofore have been terminated pursuant to Section 7.08.
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<PAGE>
Section 7.08 Termination. The grant of a security interest hereunder and
all of Secured Party's and the Lenders' rights, powers and remedies in
connection therewith shall remain in full force and effect until Secured Party
has retransferred and delivered all Collateral in its possession to Debtor, and
executed a written release or termination statement and reassigned to Debtor
without recourse or warranty any remaining Collateral and all rights conveyed
hereby. Upon the complete payment of the Obligations and the compliance by
Debtor with all covenants and agreements hereof, Secured Party, at the written
request and expense of Debtor, will release, reassign and transfer the
Collateral to Debtor and declare this Agreement to be of no further force or
effect. Notwithstanding the foregoing, the reimbursement and indemnification
provisions of Section 4.08 and the provisions of subsection 7.07(b) shall
survive the termination of this Agreement.
Section 7.09 Counterparts, Effectiveness. This Agreement may be executed
in two or more counterparts. Each counterpart is deemed an original, but all
such counterparts taken together constitute one and the same instrument. This
Agreement becomes effective upon the execution hereof by Debtor and delivery of
the same to Secured Party or the Lenders, and it is not necessary for Secured
Party or any Lender to execute any acceptance hereof or otherwise signify or
express its acceptance hereof.
DEBTOR: KINDER MORGAN OPERATING L.P. "B"
By: Kinder Morgan G.P., Inc.,
its General Partner
By:____________________________
Name: Thomas B. King
Title: President
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<PAGE>
FINANCING STATEMENT
This Financing Statement is presented to a filing officer for filing
pursuant to the Uniform Commercial Code.
1. The name and address of the Debtor is:
KINDER MORGAN OPERATING L.P. "B"
1301 McKinney Street, Suite 3450
Houston, Texas 77010
2. The name and address of the Secured Party is:
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, AS AGENT 301 South College Street Charlotte, North
Carolina 28288
3. This Financing Statement covers the following
Collateral:
(a) All of Debtor's accounts, inventory, equipment, chattel paper,
documents, instruments and general intangibles, including, without
limitation, any of the foregoing which may be more specifically indicated
in the remainder of this paragraph 3.
(b) (i) Any related or additional property from time to time delivered
to or deposited with Secured Party by or for the account of Debtor; (ii)
all certificates of title or other documents evidencing ownership or
possession of or otherwise relating to any property referred to in this
paragraph 3; (iii) all property used or usable in connection with any
property referred to in this paragraph 3; (iv) all policies of insurance
(whether or not required by Secured Party) covering any property referred
to in this paragraph 3; (v) all goods which were at any time included in
the Collateral and which are returned to or for the account of Debtor
following their sale, lease or other disposition; (vi) all proceeds,
products, replacements, additions to, substitutions for, accessions of,
and property necessary for the operation of any of the property referred
to in this paragraph 3, including, without limitation, insurance payable
as a result of loss or damage to any of the property referred to in this
paragraph 3, refunds of unearned premiums of any such insurance policy and
claims against third parties; and (vii) all books and records related to
any of the property referred to in this paragraph 3, including, without
limitation, any and all books of account, customer lists and other records
relating in any way to the accounts, chattel paper, instruments or
inventory referred to in this paragraph 3.
<PAGE>
(c) All general intangibles related to any property referred to in
this paragraph 3, including, without limitation, all (i) letters of
credit, bonds, guaranties, purchase or sales agreements and other
contractual rights, rights to performance, and claims for damages, refunds
(including tax refunds) or other monies due or to become due; (ii) orders,
franchises, permits, certificates, licenses, consents, exemptions,
variances, authorizations or other approvals by any governmental agency or
court; (iii) consulting, engineering and technological information and
specifications, design data, patent rights, trade secrets, literary
rights, copyrights, trademarks, labels, trade names and other intellectual
property; (iv) business records, computer tapes and computer software; (v)
goodwill; and (vi) other intangible personal property, whether similar or
dissimilar to the property referred to in this paragraph 3.
DEBTOR: KINDER MORGAN OPERATING L.P. "B"
By: Kinder Morgan G.P., Inc.
its General Partner
By:_______________________________
Name: Thomas B. King
Title: President
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<PAGE>
GUARANTY AGREEMENT
by
KINDER MORGAN ENERGY PARTNERS, L.P.
in favor of
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, AS AGENT
FEBRUARY 14, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 General Terms
Section 1.1 Terms Defined Above..................1
Section 1.2 Certain Definitions..................1
Section 1.3 Credit Agreement Definitions.........2
ARTICLE 2 The Guaranty
Section 2.1 Liabilities Guaranteed...............3
Section 2.2 Nature of Guaranty...................3
Section 2.3 Agent's Rights.......................3
Section 2.4 Guarantor's Waivers..................3
Section 2.5 Maturity of Liabilities; Payment.....4
Section 2.6 Agent's Expenses.....................4
Section 2.7 Liability............................4
Section 2.8 Events and Circumstances Not Reducing
or Discharging Guarantor's
Obligations..........................4
Section 2.9 Subrogation..........................7
ARTICLE 3 Representations, Warranties and Covenants
Section 3.1 By Guarantor.........................7
Section 3.2 No Representation by Lenders.........8
Section 3.3 Covenants............................8
ARTICLE 4 Subordination of Indebtedness
Section 4.1 Subordination of All Guarantor Claims11
Section 4.2 Claims in Bankruptcy................12
Section 4.3 Payments Held in Trust..............12
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Section 4.4 Liens Subordinate.......................12
Section 4.5 Notation of Records.................12
ARTICLE 5 Miscellaneous
Section 5.1 Successors and Assigns..............13
Section 5.2 Notices.............................13
Section 5.3 Business and Financial Information..13
Section 5.4 Construction........................13
Section 5.5 Invalidity..........................13
Section 5.6 ENTIRE AGREEMENT....................13
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<PAGE>
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT by KINDER MORGAN ENERGY PARTNERS, L.P. (formerly
known as Enron Liquids Pipeline, L.P.), a Delaware limited partnership (the
"Guarantor"), is in favor of FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as
agent (the "Agent") for the lenders (the "Lenders") that are or become parties
to the Credit Agreement defined below.
W I T N E S S E T H:
WHEREAS, on even date herewith, KINDER MORGAN OPERATING L.P. "B" (formerly
known as Enron Transportation Services, L.P.), a Delaware limited partnership
(the "Borrower"), the Agent and the Lenders have entered into that certain
Credit Agreement (as the same may be amended from time to time, the "Credit
Agreement"); and
WHEREAS, one of the terms and conditions stated in the Credit Agreement for
the making of the loans described therein is the execution and delivery to the
Agent for the benefit of the Lenders of this Guaranty Agreement;
NOW, THEREFORE, (i) in order to comply with the terms and conditions of the
Credit Agreement, (ii) to induce the Lenders, at any time or from time to time,
to loan monies, with or without security to or for the account of Borrower in
accordance with the terms of the Credit Agreement, (iii) at the special
insistence and request of the Lenders, and (iv) for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Guarantor hereby agrees as follows:
ARTICLE 1
General Terms
Section 1.1 Terms Defined Above. As used in this Guaranty Agreement, the
terms "Borrower", "Guarantor", "Credit Agreement" and "Lenders" shall have the
meanings indicated above.
Section 1.2 Certain Definitions. As used in this Guaranty Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
"Guarantor Claims" shall have the meaning
indicated in Section 4.1 hereof.
"Guaranty Agreement" shall mean this Guaranty Agreement, as the same may
from time to time be amended or supplemented.
"Liabilities" shall mean (a) any and all
indebtedness, obligations and liabilities of the
Borrower pursuant to the Credit Agreement,
including without limitation, the
<PAGE>
unpaid principal of and interest on the Notes, including without
limitation, interest accruing subsequent to the filing of a petition or
other action concerning bankruptcy or other similar proceeding; (b) any
additional loans made by the Lenders to the Borrower; (c) payment of and
performance of any and all present or future obligations of the Borrower
according to the terms of any present or future interest or currency rate
swap, rate cap, rate floor, rate collar, exchange transaction, forward rate
agreement or other exchange or rate protection agreements or any option
with respect to any such transaction now existing or hereafter entered into
between the Borrower and any of the Lenders; (d) payment of and performance
of any and all present or future obligations of the Borrower according to
the terms of any present or future swap agreements, cap, floor, collar,
exchange transaction, forward agreement or other exchange or protection
agreements relating to crude oil, natural gas or other hydrocarbons or any
option with respect to any such transaction now existing or hereafter
entered into between the Borrower and any of the Lenders; (e) all
reimbursement obligations for drawn or undrawn portions under any letter of
credit now outstanding or hereafter issued under the Credit Agreement,
including without limitation, the Support Letter of Credit and the
Replacement Letter of Credit and any letters of credit issued in
replacement thereof and all principal and interest on the Replacement Term
Note and the Support Term Note, including without limitation, interest
accruing subsequent to the filing of a petition or other action concerning
bankruptcy or other similar proceeding; (f) any and all other indebtedness,
obligations and liabilities of any kind of the Borrower to the Lenders, now
or hereafter existing, arising directly between the Borrower and the
Lenders or acquired outright, as a participation, conditionally or as
collateral security from another by the Lenders, absolute or contingent,
joint and/or several, secured or unsecured, due or not due, arising by
operation of law or otherwise, or direct or indirect, including
indebtedness, obligations and liabilities to the Lenders of the Borrower as
a member of any partnership, syndicate, association or other group, and
whether incurred by the Borrower as principal, surety, endorser, guarantor,
accommodation party or otherwise and (g) all renewals, rearrangements,
increases, extensions for any period, amendments or supplement in whole or
in part of the Notes or any documents evidencing the above.
"Loan Documents" shall mean the Credit
Agreement, the Letter of Credit, the Fee Letter,
the Notes and the Security Instruments.
Section 1.3 Credit Agreement Definitions. Unless otherwise defined herein,
all terms beginning with a capital letter which are defined in the Credit
Agreement shall have the same meanings herein as therein.
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<PAGE>
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed. Guarantor hereby irrevocably and
unconditionally guarantees the prompt payment of the Liabilities when due,
whether at maturity or otherwise.
Section 2.2 Nature of Guaranty. This Guaranty Agreement is an absolute,
irrevocable, completed and continuing guaranty of payment and not a guaranty of
collection, and no notice of the Liabilities or any extension of credit already
or hereafter contracted by or extended to Borrower need be given to Guarantor.
This Guaranty Agreement may not be revoked by Guarantor and shall continue to be
effective with respect to debt under the Liabilities arising or created after
any attempted revocation by Guarantor and shall remain in full force and effect
until the Liabilities are paid in full and the Aggregate Credit Commitments are
terminated, notwithstanding that from time to time prior thereto no Liabilities
may be outstanding. Borrower and the Lenders may modify, alter, rearrange,
extend for any period and/or renew from time to time, the Liabilities, and the
Lenders may waive any Default or Events of Default without notice to the
Guarantor and in such event Guarantor will remain fully bound hereunder on the
Liabilities. This Guaranty Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of the Liabilities is
rescinded or must otherwise be returned by any of the Lenders upon the
insolvency, bankruptcy or reorganization of Borrower or otherwise, all as though
such payment had not been made. This Guaranty Agreement may be enforced by the
Agent and any subsequent holder of any of the Liabilities and shall not be dis-
charged by the assignment or negotiation of all or part of the Liabilities.
Guarantor hereby expressly waives presentment, demand, notice of non-payment,
protest and notice of protest and dishonor, notice of Default or Event of
Default, notice of intent to accelerate the maturity and notice of acceleration
of the maturity and any other notice in connection with the Liabilities, and
also notice of acceptance of this Guaranty Agreement, acceptance on the part of
the Lenders being conclusively presumed by the Lenders' request for this
Guaranty Agreement and delivery of the same to the Agent.
Section 2.3 Agent's Rights. Guarantor authorizes the Agent, without notice
or demand and without affecting Guarantor's liability hereunder, to take and
hold security for the payment of this Guaranty Agreement and/or the Liabilities,
and exchange, enforce, waive and release any such security; and to apply such
security and direct the order or manner of sale thereof as the Agent in its
discretion may determine; and to obtain a guaranty of the Liabilities from any
one or more Persons and at any time or times to enforce, waive, rearrange,
modify, limit or release any of such other Persons from their obligations under
such guaranties.
Section 2.4 Guarantor's Waivers. To the extent permitted by applicable law,
Guarantor waives any right to require Agent or any of the Lenders to (i) proceed
against Borrower or any other person liable on the Liabilities, (ii) enforce any
of their rights against any other guarantor of the Liabilities (iii) proceed or
enforce any of their rights against or exhaust any security given
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<PAGE>
to secure the Liabilities (iv) have Borrower joined with Guarantor in any suit
arising out of this Guaranty Agreement and/or the Liabilities, or (v) pursue any
other remedy in the Lenders' powers whatsoever. The Lenders shall not be
required to mitigate damages or take any action to reduce, collect or enforce
the Liabilities. Guarantor waives to the extent permitted by applicable law any
defense arising by reason of any disability, lack of corporate authority or
power, or other defense of Borrower or any other guarantor of the Liabilities,
and shall remain liable hereon regardless of whether Borrower or any other
guarantor be found not liable thereon for any reason. Whether and when to
exercise any of the remedies of the Agent and Lenders under any of the Loan
Documents shall be in the sole and absolute discretion of the Agent or the
Majority Lenders, and no delay by the Agent in enforcing any remedy, including
delay in conducting a foreclosure sale, shall be a defense to the Guarantor's
liability under this Guaranty Agreement. To the extent allowed by applicable
law, the Guarantor hereby waives any good faith duty on the part of the Agent in
exercising any remedies provided in the Loan Documents.
Section 2.5 Maturity of Liabilities; Payment. Guarantor agrees that if the
maturity of any of the Liabilities is accelerated by bankruptcy or otherwise,
such maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to Guarantor. Guarantor will, forthwith upon
notice from the Agent, pay to the Agent the amount due and unpaid by Borrower
and guaranteed hereby. The failure of the Agent to give this notice shall not in
any way release Guarantor hereunder.
Section 2.6 Agent's Expenses. If Guarantor fails to pay the Liabilities
after notice from the Agent of Borrower's failure to pay any Liabilities at
maturity, and if the Agent obtains the services of an attorney for collection of
amounts owing by Guarantor hereunder, or obtaining advice of counsel in respect
of any of their rights under this Guaranty Agreement, or if suit is filed to
enforce this Guaranty Agreement, or if proceedings are had in any bankruptcy,
probate, receivership or other judicial proceedings for the establishment or
collection of any amount owing by Guarantor hereunder, or if any amount owing by
Guarantor hereunder is collected through such proceedings, Guarantor agrees to
pay to the Agent the Agent's reasonable attorneys' fees.
Section 2.7 Liability. It is expressly agreed that the liability of the
Guarantor for the payment of the Liabilities guaranteed hereby shall be primary
and not secondary.
Section 2.8 Events and Circumstances Not Reducing or Discharging
Guarantor's Obligations. Guarantor hereby consents and agrees to each of the
following to the fullest extent permitted by law, and agrees that Guarantor's
obligations under this Guaranty Agreement shall not be released, diminished,
impaired, reduced or adversely affected by any of the following, and waives any
rights (including without limitation rights to notice) which Guarantor might
otherwise have as a result of or in connection with any of the following:
(a) Modifications, etc. Any renewal,
extension, modification, increase, decrease,
alteration or rearrangement of all or any part
of the Liabilities, or of
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<PAGE>
the Notes, or the Credit Agreement or any instrument executed in connection
therewith, or any contract or understanding between Borrower and any of the
Lenders, or any other Person, pertaining to the Liabilities;
(b) Adjustment, etc. Any adjustment,
indulgence, forbearance or compromise that might
be granted or given by any of the Lenders to
Borrower or Guarantor or any Person liable on
the Liabilities;
(c) Condition of Borrower or Guarantor. The insolvency, bankruptcy
arrangement, adjustment, composition, liquidation, disability, dissolution,
death or lack of power of Borrower or Guarantor or any other Person at any
time liable for the payment of all or part of the Liabilities; or any
dissolution of Borrower or Guarantor, or any sale, lease or transfer of any
or all of the assets of Borrower or Guarantor, or any changes in the
shareholders, partners, or members of Borrower or Guarantor; or any
reorganization of Borrower or Guarantor;
(d) Invalidity of Liabilities. The invalidity, illegality or
unenforceability of all or any part of the Liabilities, or any document or
agreement executed in connection with the Liabilities, for any reason
whatsoever, including without limitation the fact that the Liabilities, or
any part thereof, exceed the amount permitted by law, the act of creating
the Liabilities or any part thereof is ultra vires, the officers or
representatives executing the documents or otherwise creating the
Liabilities acted in excess of their authority, the Liabilities violate
applicable usury laws, the Borrower has valid defenses, claims or offsets
(whether at law, in equity or by agreement) which render the Liabilities
wholly or partially uncollectible from Borrower, the creation, performance
or repayment of the Liabilities (or the execution, delivery and performance
of any document or instrument representing part of the Liabilities or
executed in connection with the Liabilities, or given to secure the
repayment of the Liabilities) is illegal, uncollectible, legally impossible
or unenforceable, or the Credit Agreement or other documents or instruments
pertaining to the Liabilities have been forged or otherwise are irregular
or not genuine or authentic;
(e) Release of Obligors. Any full or partial release of the liability
of Borrower on the Liabilities or any part thereof, of any co-guarantors,
or any other Person now or hereafter liable, whether directly or
indirectly, jointly, severally, or jointly and severally, to pay, perform,
guarantee or assure the payment of the Liabilities or any part thereof, it
being recognized, acknowledged and agreed by Guarantor that Guarantor may
be required to pay the Liabilities in full without assistance or support of
any other Person, and Guarantor has not been induced to enter into this
Guaranty Agreement on the basis of a contemplation, belief, understanding
or agreement that other parties other than the
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<PAGE>
Borrower will be liable to perform the Liabilities, or the Lenders will
look to other parties to perform the Liabilities.
(f) Other Security. The taking or
accepting of any other security, collateral or
guaranty, or other assurance of payment, for all
or any part of the Liabilities;
(g) Release of Collateral, etc. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including without
limitation negligent, willful, unreasonable or unjustifiable impairment) of
any collateral, property or security, at any time existing in connection
with, or assuring or securing payment of, all or any part of the
Liabilities;
(h) Care and Diligence. The failure of the Agent, Lenders or any other
Person to exercise diligence or reasonable care in the preservation,
protection, enforcement, sale or other handling or treatment of all or any
part of such collateral, property or security;
(i) Status of Liens. The fact that any collateral, security, security
interest or lien contemplated or intended to be given, created or granted
as security for the repayment of the Liabilities shall not be properly
perfected or created, or shall prove to be unenforceable or subordinate to
any other security interest or lien, it being recognized and agreed by
Guarantor that Guarantor is not entering into this Guaranty Agreement in
reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the collateral for the
Liabilities;
(j) Payments Rescinded. Any payment by
Borrower to the Lenders is held to constitute a
preference under the bankruptcy laws, or for any
reason the Lenders are required to refund such
payment or pay such amount to Borrower or
someone else; or
(k) Other Actions Taken or Omitted. Any other action taken or omitted
to be taken with respect to the Credit Agreement, the Liabilities, or the
security and collateral therefor, whether or not such action or omission
prejudices Guarantor or increases the likelihood that Guarantor will be
required to pay the Liabilities pursuant to the terms hereof; it being the
unambiguous and unequivocal intention of Guarantor that Guarantor shall be
obligated to pay the Liabilities when due, notwithstanding any occurrence,
circumstance, event, action, or omission whatsoever, whether contemplated
or uncontemplated, and whether or not otherwise or particularly described
herein, except for the full and final payment and satisfaction of the
Liabilities.
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<PAGE>
Section 2.9 Subrogation. Guarantor shall not enforce its rights against the
Borrower to any repayment by way of subrogation or by exercising its rights of
contribution or reimbursement or the right to participate in any security now or
hereafter held by or for the benefit of the Lenders until the Liabilities have
been paid in full.
ARTICLE 3
Representations, Warranties and Covenants
Section 3.1 By Guarantor. In order to induce the Lenders to accept this
Guaranty Agreement, Guarantor represents and warrants to the Lenders (which
representations and warranties will survive the creation of the Liabilities and
any extension of credit thereunder) that:
(a) Benefit to Guarantor. Guarantor's guaranty pursuant to this
Guaranty Agreement reasonably may be expected to benefit, directly or
indirectly, Guarantor.
(b) Existence. Guarantor is a partnership duly organized, legally
existing and in good standing under the laws of the State of Delaware and
is duly qualified in all jurisdictions wherein the property owned or the
business transacted by it makes such qualification necessary.
(c) Partnership Power and Authorization. Guarantor is duly authorized
and empowered to execute, deliver and perform this Guaranty Agreement and
all action on Guarantor's part requisite for the due execution, delivery
and performance of this Guaranty Agreement has been duly and effectively
taken.
(d) Binding Obligations. This Guaranty Agreement constitutes valid and
binding obligations of Guarantor, enforceable in accordance with its terms
(except that enforcement may be subject to any applicable bankruptcy,
insolvency or similar laws generally affecting the enforcement of
creditors' rights).
(e) No Legal Bar or Resultant Lien. This Guaranty Agreement will not
violate any provisions of Guarantor's agreement of limited partnership, or
any contract, agreement, law, regulation, order, injunction, judgment,
decree or writ to which Guarantor is subject, or result in the creation or
imposition of any Lien upon any Properties of Guarantor.
(f) No Consent. Guarantor's execution,
delivery and performance of this Guaranty
Agreement does not require the consent or
approval of any other Person, including without
limitation any regulatory authority or
governmental
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<PAGE>
body of the United States or any state thereof or any political subdivision
of the United States or any state thereof.
(g) Solvency. The Guarantor hereby represents that (i) it is not
insolvent as of the date hereof and will not be rendered insolvent as a
result of this Guaranty Agreement, (ii) it is not engaged in business or a
transaction, or about to engage in a business or a transaction, for which
any property or assets remaining with such Guarantor is unreasonably small
capital, and (iii) it does not intend to incur, or believe it will incur,
debts that will be beyond its ability to pay as such debts mature.
Section 3.2 No Representation by Lenders. Neither the Lenders nor any other
Person has made any representation, warranty or statement to the Guarantor in
order to induce the Guarantor to execute this Guaranty Agreement.
Section 3.3 Covenants.
(a) Debt. The Guarantor will not incur,
create, assume or suffer to exist any Debt,
except:
(i) the Liabilities or other
Indebtedness arising under the Loan
Documents;
(ii) accounts payable (for the deferred purchase price of Property
or services) from time to time incurred in the ordinary course of
business which, if greater than 90 days past the invoice or billing
date, are being contested in good faith by appropriate proceedings if
reserves adequate under GAAP shall have been established therefor;
(iii) Debt under capital leases (as required to be reported on the
financial statements of the Guarantor pursuant to GAAP) not to exceed,
when combined with the Debt of the Borrower permitted under Section
9.01(d) of the Credit Agreement, $150,000 outstanding at any one time;
(iv) other Debt of the Guarantor not to exceed, when combined with
the Debt of the Borrower permitted under Section 9.01(g) of the Credit
Agreement, $1,000,000 in the aggregate outstanding at any time
(excluding Debt owed to Wachovia Bank of Georgia, N.A. under the Letter
of Credit and Reimbursement Agreement dated June 25, 1996 between
Borrower and Wachovia Bank of Georgia, N.A. pending issuance of the
Replacement Letter of Credit); and
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<PAGE>
(v) Debt of the Guarantor existing on the Closing Date disclosed
on Schedule 3.3 hereof and any renewals or extensions (but not
increases) thereof.
(b) Liens. The Guarantor will not create, incur, assume or permit to
exist any Lien on any of its Properties (now owned or hereafter acquired),
except:
(i) Liens securing the payment of any
Indebtedness or Liabilities; and
(ii) Excepted Liens;
(iii) Liens securing leases allowed
under paragraph (a)(iii) above but only
on the Property under lease; and
(iv) Liens disclosed on Schedule
3.3 hereof.
(c) Investments, Loans and Advances. The Guarantor will not make or
permit to remain outstanding any loans or advances to or investments in any
Person, except that the foregoing restriction shall not apply to:
(i) investments, loans or advances
reflected in the Financial Statements or
which are disclosed to the Lenders;
(ii) accounts receivable arising in the
ordinary course of business;
(iii) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency
thereof, in each case maturing within one year from the date of
creation thereof;
(iv) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by Standard & Poors
Corporation or Moody's Investors
Service, Inc.;
(v) deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by, any Lender
or any office located in the United States of any other bank or trust
company which is organized under the laws of the United States or any
state thereof, has capital, surplus and undivided profits aggregating
at least $100,000,000.00 (as of the date of such Lender's or bank or
trust company's most recent financial reports) and has a short term
deposit
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<PAGE>
rating of no lower than A2 or P2, as such rating is set forth from time
to time, by Standard & Poors Corporation or Moody's Investors Service,
Inc., respectively;
(vi) deposits in money market funds
investing exclusively in investments
described in paragraphs (iii), (iv) or (v);
(vii) other investments, loans or advances not to exceed, when
combined with the investments, loans or advances of the Borrower
permitted by Section 9.03 (g) of the Credit Agreement, $500,000 in the
aggregate at any time.
(d) Dividends, Distributions and Redemptions. The Guarantor will not
declare or pay any dividend, purchase, redeem or otherwise acquire for
value any of its partnership interests now or hereafter outstanding, return
any capital to its - partners or make any distribution of its assets to its
partners, except that the Guarantor may make distributions to its partners
provided that no Default shall have occurred and be continuing or would
result from such distribution.
(e) Sales and Leasebacks. The Guarantor will not enter into any
arrangement, directly or indirectly, with any Person whereby the Guarantor
shall sell or transfer any of its Property, whether now owned or hereafter
acquired, and whereby the Guarantor shall then or thereafter rent or lease
as lessee such Property or any part thereof or other Property which the
Guarantor intends to use for substantially the same purpose or purposes as
the Property sold or transferred.
(f) Limitation on Leases. The Guarantor will not create, incur, assume
or suffer to exist any obligation for the payment of rent or hire of
Property of any kind whatsoever (real or personal including capital
leases), under leases or lease agreements which would cause the aggregate
amount of all payments made by the Guarantor pursuant to all such leases or
lease agreements to exceed, when combined with the payments made by the
Borrower permitted by Section 9.07 of the Credit Agreement, $50,000 in any
period of twelve consecutive calendar months during the life of such
leases.
(g) Sale or Discount of Receivables. The Guarantor will not discount or
sell (with or without recourse) any of its notes receivable or accounts
receivable.
(h) Nature of Business. The Guarantor
will not allow any material change to be made in
the character of its business.
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<PAGE>
(i) Mergers, Etc. The Guarantor will not merge into or with or
consolidate with any other Person, or sell, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or
substantially all of its Property or assets to any other Person.
(j) Sale of Properties. The Guarantor will not sell, assign, convey or
otherwise transfer any Property except for non Mortgaged Property and which
shall not exceed, when combined with the sale, assignment, conveyance or
transfer of any Property by the Borrower permitted by Section 9.14 of the
Credit Agreement, $150,000 in the aggregate in any fiscal year.
(k) Transactions with Affiliates. The Guarantor will not enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property or the rendering of any service, with any Affiliate
unless such transactions are otherwise permitted under the Credit
Agreement, are in the ordinary course of its business and are upon fair and
reasonable terms no less favorable to it than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate.
(l) Partnership Agreement. The Guarantor
will not amend or permit to be amended its
partnership agreement without the prior written
consent of the Majority Lenders.
ARTICLE 4
Subordination of Indebtedness
Section 4.1 Subordination of All Guarantor Claims. As used herein, the term
"Guarantor Claims" shall mean all debts and liabilities of Borrower to
Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor. The Guarantor Claims shall include without limitation
all rights and claims of Guarantor against Borrower arising as a result of
subrogation or otherwise as a result of Guarantor's payment of all or a portion
of the Liabilities. Until the Liabilities shall be paid and satisfied in full
and Guarantor shall have performed all of its obligations hereunder, Guarantor
shall not receive or collect, directly or indirectly, from Borrower or any other
party any amount upon the Guarantor Claims. Notwithstanding the foregoing so
long as no Default exists under the Credit Agreement, Guarantor may collect
amounts due from Borrower in the ordinary course of business.
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<PAGE>
Section 4.2 Claims in Bankruptcy. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor's relief, or other insolvency proceedings
involving Borrower as debtor, the Lenders shall have the right to prove their
claim in any proceeding, so as to establish its rights hereunder and receive
directly from the receiver, trustee or other court custodian, dividends and
payments which would otherwise be payable upon Guarantor Claims. Guarantor
hereby assigns such dividends and payments to the Lenders. Should the Agent or
any Lender receive, for application upon the Liabilities, any such dividend or
payment which is otherwise payable to Guarantor, and which, as between Borrower
and Guarantor, shall constitute a credit upon the Guarantor Claims, then upon
payment in full of the Liabilities, Guarantor shall become subrogated to the
rights of the Lenders to the extent that such payments to the Lenders on the
Guarantor Claims have contributed toward the liquidation of the Liabilities, and
such subrogation shall be with respect to that proportion of the Liabilities
which would have been unpaid if the Agent or a Lender had not received dividends
or payments upon the Guarantor Claims.
Section 4.3 Payments Held in Trust. In the event that notwithstanding
Sections 4.1 and 4.2 above, Guarantor should receive any funds, payments, claims
or distributions which is prohibited by such Sections, Guarantor agrees to hold
in trust for the Lenders an amount equal to the amount of all funds, payments,
claims or distributions so received, and agrees that it shall have absolutely no
dominion over the amount of such funds, payments, claims or distributions except
to pay them promptly to the Agent, and Guarantor covenants promptly to pay the
same to the Agent.
Section 4.4 Liens Subordinate. Guarantor agrees that any liens, security
interests, judgment liens, charges or other encumbrances upon Borrower's assets
securing payment of the Guarantor Claims shall be and remain inferior and
subordinate to any liens, security interests, judgment liens, charges or other
encumbrances upon Borrower's assets securing payment of the Liabilities,
regardless of whether such encumbrances in favor of Guarantor, the Agent or the
Lenders presently exist or are hereafter created or attach. Without the prior
written consent of the Majority Lenders, Guarantor shall not (a) exercise or
enforce any creditor's right it may have against the Borrower, or (b) foreclose,
repossess, sequester or otherwise take steps or institute any action or
proceeding (judicial or otherwise, including without limitation the commencement
of or joinder in any liquidation, bankruptcy, rearrangement, debtor's relief or
insolvency proceeding) to enforce any lien, mortgages, deeds of trust, security
interest, collateral rights, judgments or other encumbrances on assets of
Borrower held by Guarantor.
Section 4.5 Notation of Records. All promissory notes, accounts receivable
ledgers or other evidence of the Guarantor Claims accepted by or held by
Guarantor shall contain a specific written notice thereon that the indebtedness
evidenced thereby is subordinated under the terms of this Guaranty Agreement.
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<PAGE>
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Guaranty Agreement is and shall be
in every particular available to the successors and assigns of the Lenders and
is and shall always be fully binding upon the legal representatives, heirs,
successors and assigns of Guarantor, notwithstanding that some or all of the
monies, the repayment of which this Guaranty Agreement applies, may be actually
advanced after any bankruptcy, receivership, reorganization, death, disability
or other event affecting Guarantor.
Section 5.2 Notices. Any notice or demand to Guarantor under or in
connection with this Guaranty Agreement may be given and shall conclusively be
deemed and considered to have been given and received in accordance with Section
12.02 of the Credit Agreement, addressed to Guarantor at the address on the
signature page hereof or at such other address provided to the Agent in writing.
Section 5.3 Business and Financial Information. The Guarantor will promptly
furnish to the Agent and the Lenders from time to time upon request such
information regarding the business and affairs and financial condition of the
Guarantor and its subsidiaries as the Agent and the Lenders may reasonably
request.
Section 5.4 Construction. This Guaranty Agreement is a contract made under
and shall be construed in accordance with and governed by the laws of the State
of Texas.
Section 5.5 Invalidity. In the event that any one or more of the provisions
contained in this Guaranty Agreement shall, for any reason, be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Guaranty
Agreement.
Section 5.6 ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AGREEMENT EMBODIES THE
ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE LENDERS AND THE GUARANTOR AND
SUPERSEDES ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING
TO THE SUBJECT MATTER HEREOF AND THEREOF. THIS WRITTEN GUARANTY AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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<PAGE>
WITNESS THE EXECUTION HEREOF, as of this the 14th day of February, 1997.
KINDER MORGAN ENERGY PARTNERS, L.P.
By: Kinder Morgan G.P., Inc.,
its General Partner
By:____________________________
Name: Thomas B. King
Title: President
Address: 1301 McKinney
Suite 3450
Houston, Texas 77010
Telecopier No.: (713) 844-9570
Telephone No.: (713) 844-9500
Attention: Richard D. Kinder
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CREDIT AGREEMENT
Dated as of February 14, 1997
Among
KINDER MORGAN, INC.
as Borrower,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Agent,
and
THE LENDERS SIGNATORY HERETO
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Terms Defined Above................1
Section 1.02 Certain Defined Terms..............1
Section 1.03 Accounting Terms and
Determinations...................16
ARTICLE II
Commitments
Section 2.01 The Facilities....................16
Section 2.02 Borrowings, Continuations,
Conversions, Letters of Credit....17
Section 2.03 Changes of Facility A
Commitments.......................19
Section 2.04 Fees..............................19
Section 2.05 Several Obligations...............21
Section 2.06 Notes.............................21
Section 2.07 Prepayments.......................22
Section 2.08 Assumption of Risks...............22
Section 2.09 Obligation to Reimburse and to
Prepay............................23
Section 2.10 Lending Offices...................25
ARTICLE III
Payments of Principal and Interest
Section 3.01 Repayment of Loans................25
Section 3.02 Interest..........................25
ARTICLE IV
Payments; Pro Rata Treatment; Computations; Etc.
Section 4.01 Payments..........................26
Section 4.02 Pro Rata Treatment................26
Section 4.03 Computations......................27
Section 4.04 Non-receipt of Funds by the
Agent..... .......................27
Section 4.05 Set-off, Sharing of Payments,
Etc...............................27
Section 4.06 Taxes.............................28
<PAGE>
ARTICLE V
Capital Adequacy
Section 5.01 Additional Costs..................31
Section 5.02 Limitation on LIBOR Loans.........33
Section 5.03 Illegality........................34
Section 5.04 Base Rate Loans Pursuant to
Sections 5.01, 5.02 and 5.03......34
Section 5.05 Compensation......................34
ARTICLE VI
Conditions Precedent
Section 6.01 Initial Funding...................35
Section 6.02 Initial and Subsequent Loans
and Letters of Credit.............36
Section 6.03 Conditions Relating to Letters
of Credit.........................37
Section 6.04 Conditions Relating to
Distribution LC...................37
ARTICLE VII
Representations and Warranties
Section 7.01 Corporate Existence...............38
Section 7.02 Financial Condition...............38
Section 7.03 Litigation........................38
Section 7.04 No Breach.........................39
Section 7.05 Authority.........................39
Section 7.06 Approvals.........................39
Section 7.07 Use of Facilities.................39
Section 7.08 ERISA.............................39
Section 7.09 Taxes.............................41
Section 7.10 Titles, etc.......................41
Section 7.11 No Material Misstatements.........41
Section 7.12 Investment Company Act............42
Section 7.13 Public Utility Holding
Company Act.......................42
Section 7.14 Subsidiaries......................42
Section 7.15 Location of Business and
Offices...........................42
Section 7.16 Defaults..........................42
Section 7.17 Environmental Matters.............42
Section 7.18 Compliance with the Law...........43
Section 7.19 Insurance.........................44
Section 7.20 Hedging Agreements................44
Section 7.21 Restriction on Liens..............44
Section 7.22 Kinder Morgan G.P. Assets.........44
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Section 7.23 LP Units..........................44
Section 7.24 Acquisition Documents.............45
ARTICLE VIII
Affirmative Covenants
Section 8.01 Financial Statements..............45
Section 8.02 Litigation........................47
Section 8.03 Maintenance, Etc..................47
Section 8.04 Environmental Matters.............48
Section 8.05 Further Assurances................48
Section 8.06 Performance of Obligations........48
Section 8.07 ERISA Information and
Compliance........................49
Section 8.08 Collateral........................49
Section 8.09 Minimum Distribution..............49
ARTICLE IX
Negative Covenants
Section 9.01 Debt..............................50
Section 9.02 Liens.............................50
Section 9.03 Investments, Loans and Advances...51
Section 9.04 Dividends, Distributions and
Redemptions.......................51
Section 9.05 Sales and Leasebacks..............52
Section 9.06 Nature of Business................52
Section 9.07 Limitation on Leases..............52
Section 9.08 Mergers, Etc......................52
Section 9.09 Proceeds of Notes.................52
Section 9.10 ERISA Compliance..................52
Section 9.11 Sale or Discount of Receivables...54
Section 9.12 Current Ratio.....................54
Section 9.13 Debt Service Coverage Ratio.......54
Section 9.14 Margin Maintenance Ratio..........54
Section 9.15 Sale of Properties................54
Section 9.16 Environmental Matters.............54
Section 9.17 Transactions with Affiliates......55
Section 9.18 Subsidiaries......................55
Section 9.19 Negative Pledge Agreements........55
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ARTICLE X
Events of Default; Remedies
Section 10.01 Events of Default................55
Section 10.02 Remedies.........................57
ARTICLE XI
The Agent
Section 11.01 Appointment, Powers and
Immunities.......................58
Section 11.02 Reliance by Agent................59
Section 11.03 Defaults.........................59
Section 11.04 Rights as a Lender...............59
Section 11.05 Indemnification..................59
Section 11.06 Non-Reliance on Agent and
other Lenders....................60
Section 11.07 Action by Agent..................60
Section 11.08 Resignation or Removal of
Agent............................61
ARTICLE XII
Miscellaneous
Section 12.01 Waiver...........................61
Section 12.02 Notices..........................61
Section 12.03 Payment of Expenses,
Indemnities, etc.................62
Section 12.04 Amendments, Etc..................64
Section 12.05 Successors and Assigns...........64
Section 12.06 Assignments and Participations...65
Section 12.07 Invalidity.......................66
Section 12.08 Counterparts.....................66
Section 12.09 References.......................66
Section 12.10 Survival.........................67
Section 12.11 Captions.........................67
Section 12.12 No Oral Agreements...............67
Section 12.13 Governing Law; Submission to
Jurisdiction.....................67
Section 12.14 Interest.........................68
Section 12.15 Confidentiality..................69
Section 12.16 Effectiveness....................70
Section 12.17 Exculpation provisions...........70
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<PAGE>
Annex I - List of Commitments
Exhibit A-1 - Form of Facility A Note
Exhibit A-2 - Form of Facility B Note
Exhibit A-3 - Form of Facility C Note
Exhibit B - Form of Borrowing, Continuation and Conversion Request
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Legal Opinion of Morrison & Hecker, L.L.P.
Exhibit E - List of Security Instruments
Exhibit F - Form of Assignment Agreement
Exhibit G - Form of Distribution LC
Schedule 7.02 - Liabilities
Schedule 7.03 - Litigation
Schedule 7.09 - Taxes
Schedule 7.10 - Titles, etc.
Schedule 7.14 - Subsidiaries and Partnerships
Schedule 7.17 - Environmental Matters
Schedule 7.19 - Insurance
Schedule 7.20 - Hedging Agreements
Schedule 7.21 - Restrictions on Liens
Schedule 7.24 - Acquisition Documents
Schedule 9.01 - Debt
Schedule 9.02 - Liens
Schedule 9.03 - Investments, Loans and Advances
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<PAGE>
THIS CREDIT AGREEMENT dated as of February 14, 1997 is among: KINDER
MORGAN, INC., a corporation formed under the laws of the State of Delaware (the
"Borrower"); each of the lenders that is a signatory hereto or which becomes a
signatory hereto as provided in Section 12.06 (individually, together with its
successors and assigns, a "Lender" and, collectively, the "Lenders"); and FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association (in its
individual capacity, "First Union"), as agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Agent").
R E C I T A L S
A. The Borrower has requested that the Lenders
provide certain loans to and extensions of credit on
behalf of the Borrower; and
B. The Lenders have agreed to make such loans and
extensions of credit subject to the terms and conditions
of this Agreement.
C. In consideration of the mutual covenants and
agreements herein contained and of the loans, extensions
of credit and commitments hereinafter referred to, the
parties hereto agree as follows:
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Terms Defined Above. As used in this Agreement, the terms
"Agent," "Borrower," "First Union," "Lender" and "Lenders" shall have the
meanings indicated above.
Section 1.02 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Article I or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
"Acquisition" shall mean the acquisition by
the Borrower of all of the common stock of Enron
Liquids Pipeline Company pursuant to the
Purchase Agreement.
"Acquisition Documents" shall mean the Purchase Agreement and all other
documents executed in connection with the Acquisition.
"Additional Costs" shall have the meaning assigned such term in Section
5.01(a).
"Affected Loans" shall have the meaning
assigned such term in Section 5.04.
"Affiliate" of any Person shall mean (i) any Person directly or
indirectly controlled by, controlling or under common control with such
first Person, (ii)
<PAGE>
any director or officer of such first Person or of any Person referred to
in clause (i) above and (iii) if any Person in clause (i) above is an
individual, any member of the immediate family (including parents, spouse
and children) of such individual and any trust whose principal beneficiary
is such individual or one or more members of such immediate family and any
Person who is controlled by any such member or trust. For purposes of this
definition, any Person which owns directly or indirectly 25% or more of the
securities having ordinary voting power for the election of directors or
other governing body of a corporation or 25% or more of the partnership or
other ownership interests of any other Person (other than as a limited
partner of such other Person) will be deemed to "control" (including, with
its correlative meanings, "controlled by" and "under common control with")
such corporation or other Person.
"Agreement" shall mean this Credit Agreement, as the same may from time
to time be amended or supplemented.
"Aggregate Commitments" at any time shall equal the sum of the
Aggregate Facility A Commitments, the Aggregate Facility B Commitments and
the Aggregate Facility C Commitments.
"Aggregate Facility A Commitments" at any time shall equal $10,000,000
as reduced or terminated as provided in accordance with Section 2.03
hereof.
"Aggregate Facility B Commitments" at any time shall equal the sum of
the Facility B Commitments of the Lenders.
"Aggregate Facility C Commitments" at any time shall equal the sum of
the Facility C Commitments of the Lenders in the aggregate amount of
$5,000,000.
"Applicable Lending Office" shall mean, for each Lender and for each
Type of Loan, the lending office of such Lender (or an Affiliate of such
Lender) designated for such Type of Loan on the signature pages hereof or
such other offices of such Lender (or of an Affiliate of such Lender) as
such Lender may from time to time specify to the Agent and the Borrower as
the office by which its Loans of such Type are to be made and maintained.
"Applicable Margin" shall mean (i) 1/2 of 1% per annum with respect to
Base Rate Loans; and (ii) 2.50% per annum with respect to LIBOR Loans.
"Assignment" shall have the meaning assigned
such term in Section 12.06(b).
"Base Rate" shall mean, with respect to any Base Rate Loan, for any
day, the higher of (i) the Federal Funds Rate for any such day plus 1/2 of
1% or (ii)
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the Prime Rate for such day. Each change in any interest rate provided for
herein based upon the Base Rate resulting from a change in the Base Rate
shall take effect at the time of such change in the Base Rate.
"Base Rate Loans" shall mean Loans that bear interest at rates based
upon the Base Rate.
"Business Day" shall mean any day other than a day on which commercial
banks are authorized or required to close in Charlotte, North Carolina and,
where such term is used in the definition of "Quarterly Date" or if such
day relates to a borrowing or continuation of, a payment or prepayment of
principal of or interest on, or a conversion of or into, or the Interest
Period for, a LIBOR Loan or a notice by the Borrower with respect to any
such borrowing or continuation, payment, prepayment, conversion or Interest
Period, any day which is also a day on which dealings in Dollar deposits
are carried out in the London interbank market.
"Cash Flow" for the Borrower shall equal the cumulative amount of
dividends received from Kinder Morgan G.P. for the period of calculation
less all cash expenditures for such period.
"Cash Flow After Debt Service" for the Borrower shall equal the
cumulative amount of dividends received from Kinder Morgan G.P. for the
period of calculation less all cash expenditures and payments of principal,
interest and other amounts in respect of the Indebtedness for such period.
"Closing Date" shall mean February 14, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and any successor statute.
"Collateral" shall mean the Property owned by the Borrower which is
subject to the Liens existing and to exist under the terms of the Security
Instruments.
"Commitments" shall mean, for any Lender, its Facility A Commitment,
its Facility B Commitment and its Facility C Commitment.
"Consolidated Net Income" shall mean with respect to the Borrower and
its Consolidated Subsidiaries, for any period, the aggregate of the net
income (or loss) of the Borrower and its Consolidated Subsidiaries after
allowances for taxes for such period, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded from such net
income (to the extent otherwise included therein) the following: (i) the
net income of any Person in
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which the Borrower or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be
consolidated with thenet income of the Borrower and its Consolidated
Subsidiaries in accordance with GAAP), except to the extent of the amount
of dividends or distributions actually paid in such period by such other
Person to the Borrower or to a Consolidated Subsidiary, as the case may be;
(ii) the net income (but not loss) of any Consolidated Subsidiary to the
extent that the declaration or payment of dividends or similar
distributions or transfers or loans by that Consolidated Subsidiary is not
at the time permitted by operation of the terms of its charter or any
agreement, instrument or Governmental Requirement applicable to such
Consolidated Subsidiary, or is otherwise restricted or prohibited in each
case determined in accordance with GAAP; (iii) the net income (or loss) of
any Person acquired in a pooling-of-interests transaction for any period
prior to the date of such transaction; (iv) any extraordinary gains or
losses, including gains or losses attributable to Property sales not in the
ordinary course of business; and (v) the cumulative effect of a change in
accounting principles and any gains or losses attributable to writeups or
writedowns of assets.
"Consolidated Subsidiaries" shall mean each Subsidiary of the Borrower
(whether now existing or hereafter created or acquired) the financial
statements of which shall be (or should have been) consolidated with the
financial statements of the Borrower in accordance with GAAP.
"Debt" shall mean, for any Person the sum of the following (without
duplication): (i) all obligations of such Person for borrowed money or
evidenced by bonds, debentures, notes or other similar instruments
(including principal, interest, fees and charges); (ii) all obligations of
such Person (whether contingent or otherwise) in respect of bankers'
acceptances, letters of credit, surety or other bonds and similar
instruments; (iii) all obligations of such Person to pay the deferred
purchase price of Property or services (other than for borrowed money);
(iv) all obligations under leases which shall have been, or should have
been, in accordance with GAAP, recorded as capital leases in respect of
which such Person is liable (whether contingent or otherwise); (v) all
obligations under leases which require such Person or its Affiliate to make
payments over the term of such lease, including payments at termination,
which are substantially equal to at least eighty percent (80%) of the
purchase price of the Property subject to such lease plus interest as an
imputed rate of interest; (vi) all Debt (as described in the other clauses
of this definition) and other obligations of others secured by a Lien on
any asset of such Person, whether or not such Debt is assumed by such
Person; (vii) all Debt (as described in the other clauses of this
definition) and other obligations of others guaranteed by such Person or in
which such Person otherwise assures a creditor against loss of the debtor
or obligations of others; (viii) all obligations or undertakings of such
Person to maintain or cause to be maintained the financial position or
covenants of others or to purchase the Debt or Property of others; (ix)
obligations to deliver goods or services in consideration of advance
payments;
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(x) obligations to pay for goods or services whether or not such goods or
services are actually received or utilized by such Person; (xi) any capital
stock of such Person in which such Person has a mandatory obligation to
redeem such stock; (xii) any Debt of a Special Entity for which such Person
is liable either by agreement or because of a Governmental Requirement; and
(xiv) all obligations of such Person under Hedging Agreements.
"Default" shall mean an Event of Default or an event which with notice
or lapse of time or both would become an Event of Default.
"Distribution LC" shall mean that certain $10,851,096 letter of credit
in the form of Exhibit G issued to support Enron's obligations with respect
to the minimum quarterly distribution payable to the public unitholders of
Kinder Morgan Energy.
"Dollars" and "$" shall mean lawful money of
the United States of America.
"EBITDA" shall mean, for any period, the sum of Consolidated Net Income
for such period plus the following expenses or charges to the extent
deducted from Consolidated Net Income in such period: interest, taxes,
depreciation, depletion and amortization; minus all non cash income added
to Consolidated Net Income in such period.
"Effective Date" shall have the meaning assigned such term in Section
12.16.
"Enron" shall mean Enron Corp., a Delaware
corporation.
"Environmental Laws" shall mean any and all Governmental Requirements
pertaining to health or the environment in effect in any and all
jurisdictions in which the Borrower or any Subsidiary is conducting or at
any time has conducted business, or where any Property of the Borrower or
any Subsidiary is located, including without limitation, the Oil Pollution
Act of 1990 ("OPA"), the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980
("CERCLA"), as amended, the Federal Water Pollution Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the
Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection laws. The term "oil" shall have
the meaning specified in OPA, the terms "hazardous substance" and "release"
(or "threatened release") have the meanings specified in CERCLA, and the
terms "solid waste" and "disposal" (or "disposed") have the
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meanings specified in RCRA; provided, however, that (i) in the event either
OPA, CERCLA or RCRA is amended so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and (ii) to the extent the laws of the
state in which any Property of the Borrower or any Subsidiary is located
establish a meaning for "oil," "hazardous substance," "release," "solid
waste" or "disposal" which is broader than that specified in either OPA,
CERCLA or RCRA, such broader meaning shall apply.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Borrower or any Subsidiary would be
deemed to be a "single employer" within the meaning of section 4001(b)(1)
of ERISA or subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA Event" shall mean (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder, (ii) the withdrawal of
the Borrower, any Subsidiary or any ERISA Affiliate from a Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, (iii) the filing of a notice of intent to terminate a
Plan or the treatment of a Plan amendment as a termination under Section
4041 of ERISA, (iv) the institution of proceedings to terminate a Plan by
the PBGC or (v) any other event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.
"Event of Default" shall have the meaning assigned such term in Section
10.01.
"Excepted Liens" shall mean: (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained; (ii) Liens in connection with workmen's compensation,
unemployment insurance or other social security, old age pension or public
liability obligations not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (iii) operators', vendors', carriers',
warehousemen's, repairmen's, mechanics', workmen's, materialmen's,
construction or other like Liens arising by operation of law in the
ordinary course of business or statutory landlord's liens, each of which is
in respect of obligations that have not been outstanding more than 90 days
or which are being contested in good faith by appropriate proceedings and
for which adequate reserves have been maintained in accordance with GAAP;
(iv) any Liens reserved in leases or farmout agreements for rent or
royalties and for compliance with the terms of the farmout agreements or
leases in the case of
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leasehold estates, to the extent that any such Lien referred to in this
clause does not materially impair the use of the Property covered by such
Lien for the purposes for which such Property is held by the Borrower or
any Subsidiary or materially impair the value of such Property subject
thereto; (v) encumbrances (other than to secure the payment of borrowed
money or the deferred purchase price of Property or services), easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations in any rights of way or other Property of the Borrower or any
Subsidiary for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal
or other minerals or timber, and other like purposes, or for the joint or
common use of real estate, rights of way, facilities and equipment, and
defects, irregularities, zoning restrictions and deficiencies in title of
any rights of way or other Property which in the aggregate do not
materially impair the use of such rights of way or other Property for the
purposes of which such rights of way and other Property are held by the
Borrower or any Subsidiary or materially impair the value of such Property
subject thereto; (vi) deposits of cash or securities to secure the
performance of bids, trade contracts, leases, statutory obligations and
other obligations of a like nature incurred in the ordinary course of
business; and (vii) Liens permitted by the Security Instruments.
"Facilities" shall mean Facility A, Facility
B and Facility C.
"Facility A" shall mean the credit extended to the Borrower by the
Lenders pursuant to Section 2.01(a).
"Facility A Commitment" shall mean, as to each Lender under Facility A,
the amount set forth opposite such Lender's name on Annex I under the
caption "Facility A Commitment" (as the same may be reduced pursuant to
Section 2.03 hereof pro rata to each Lender based on its Percentage Share)
as modified from time to time to reflect any assignments permitted by
Section 12.06(b).
"Facility A Loans" shall mean Loans made pursuant to Section 2.01(a)(i)
hereof.
"Facility A Notes" shall mean the promissory note or notes (whether one
or more) of the Borrower described in Section 2.06 hereof and being in the
form of Exhibit A-1 hereto.
"Facility A Termination Date" shall mean
August 31, 1999.
"Facility B" shall mean the credit extended to the Borrower by First
Union pursuant to Section 2.01(b).
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"Facility B Commitment" shall mean, for any Lender, its obligation to
participate in the Distribution LC up to its Percentage Share of the
original face amount of the Distribution LC.
"Facility B Loans" shall mean Loans made pursuant to Section 2.01(b)
hereof.
"Facility B Note" shall mean the promissory note of the Borrower
described in Section 2.06 hereof and being in the form of Exhibit A-2
hereto.
"Facility C" shall mean the credit extended to the Borrower by the
Lenders pursuant to Section 2.01(c).
"Facility C Commitment" shall mean, for any Lender, its obligation to
make Loans up to its Percentage Share as provided in Section 2.01(c).
"Facility C Loans" shall mean Loans made pursuant to Section 2.01(c)
hereof.
"Facility C Notes" shall mean the promissory note or notes (whether one
or more) of the Borrower described in Section 2.06 hereof and being in the
form of Exhibit A-3 hereto.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight federal funds transactions with
a member of the Federal Reserve System arranged by federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day, provided that (i) if the date for
which such rate is to be determined is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day,
and (ii) if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to the Agent on such
day on such transactions as determined by the Agent.
"Fee Letter" shall mean that certain letter agreement from First Union
Corporation to the Borrower and agreed to by First Union dated of even date
with this Agreement concerning certain fees in connection with this
Agreement and any agreements or instruments executed in connection
therewith, as the same may be amended or replaced from time to time.
"Financial Statements" shall mean the financial statement or statements
of the Borrower and its Consolidated Subsidiaries described or referred to
in Section 7.02.
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"First Union Corporation" shall mean First
Union Corporation of North Carolina, a North
Carolina corporation.
"Funded Debt" shall mean all outstanding Loans under the Facilities A
and B and the LC Exposure.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority" shall include the country, the state, county,
city and political subdivisions in which any Person or such Person's
Property is located or which exercises valid jurisdiction over any such
Person or such Person's Property, and any court, agency, department,
commission, board, bureau or instrumentality of any of them including
monetary authorities which exercises valid jurisdiction over any such
Person or such Person's Property. Unless otherwise specified, all
references to Governmental Authority herein shall mean a Governmental
Authority having jurisdiction over, where applicable, the Borrower, its
Subsidiaries or any of their Property or the Agent, any Lender or any
Applicable Lending Office.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or other
directive or requirement (whether or not having the force of law),
including, without limitation, Environmental Laws, energy regulations and
occupational, safety and health standards or controls, of any Governmental
Authority.
"Hedging Agreements" shall mean any commodity, interest rate or
currency swap, cap, floor, collar, forward agreement or other exchange or
protection agreements or any option with respect to any such transaction.
"Highest Lawful Rate" shall mean, with respect to each Lender, the
maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the
Notes or on other Indebtedness under laws applicable to such Lender which
are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
"Indebtedness" shall mean any and all amounts owing or to be owing by
the Borrower to First Union, the Agent and/or Lenders in connection with
the Loan Documents, the Letter of Credit Agreements, and any Hedging
Agreements now or hereafter arising between the Borrower and First Union or
any Lender and permitted by the terms of this Agreement and all renewals,
extensions and/or rearrangements of any of the above.
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"Indemnified Parties" shall have the meaning assigned such term in
Section 12.03(b).
"Indemnity Matters" shall mean any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), claims, demands
and causes of action made or threatened against a Person and, in connection
therewith, all losses, liabilities, damages (including, without limitation,
consequential damages) or reasonable costs and expenses of any kind or
nature whatsoever incurred by such Person whether caused by the sole or
concurrent negligence of such Person seeking indemnification.
"Initial Funding" shall mean the funding of the initial Loans or
issuance of the Distribution LC and the initial Letters of Credit pursuant
to Section 6.01 hereof.
"Interest Period" shall mean, with respect to any LIBOR Loan, the
period commencing on the date such LIBOR Loan is made and ending on the
numerically corresponding day in the first, second, third or sixth calendar
month thereafter, as the Borrower may select as provided in Section 2.02
(or such longer period as may be requested by the Borrower and agreed to by
the Majority Lenders), except that each Interest Period which commences on
the last Business Day of a calendar month (or on any day for which there is
no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent
calendar month.
Notwithstanding the foregoing: (i) no Interest Period may commence
before and end after the Facility A Termination Date; (ii) no Interest
Period for any LIBOR Loan may end after the due date of any installment, if
any, provided for in Section 3.01 hereof to the extent that such LIBOR Loan
would need to be prepaid prior to the end of such Interest Period in order
for such installment to be paid when due; (iii) each Interest Period which
would otherwise end on a day which is not a Business Day shall end on the
next succeeding Business Day (or, if such next succeeding Business Day
falls in the next succeeding calendar month, on the next preceding Business
Day); and (iv) no Interest Period shall have a duration of less than one
month and, if the Interest Period for any LIBOR Loans would otherwise be
for a shorter period, such Loans shall not be available hereunder.
"Kinder Morgan Energy" shall mean Kinder
Morgan Energy Partners, L.P., a Delaware limited
partnership.
"Kinder Morgan G.P." shall mean Kinder Morgan G.P., Inc., a Delaware
corporation.
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"Kinder Morgan Operating A" shall mean
Kinder Morgan Operating L.P. "A", a Delaware
limited partnership.
"Kinder Morgan Operating B" shall mean
Kinder Morgan Operating L.P. "B", a Delaware
limited partnership.
"LC Commitment" at any time shall mean
$1,000,000.
"LC Exposure" at any time shall mean the aggregate face amount of all
undrawn and uncancelled Letters of Credit and the aggregate of all amounts
drawn under all Letters of Credit and not yet reimbursed.
"Letter of Credit Agreements" shall mean the written agreements with
the Agent, as issuing lender for any Letter of Credit or the Distribution
LC, executed or hereafter executed in connection with the issuance by the
Agent of the Letters of Credit and the Distribution LC, such agreements to
be on the Agent's customary form for letters of credit of comparable amount
and purpose as from time to time in effect or as otherwise agreed to by the
Borrower and the Agent.
"Letters of Credit" shall mean the letters of credit issued under
Facility A and all reimbursement obligations pertaining to any such letters
of credit, and "Letter of Credit" shall mean any one of the Letters of
Credit and the reimbursement obligations pertaining thereto.
"LIBOR" shall mean the rate of interest determined on the basis of the
rate for deposits in Dollars for a period equal to the applicable Interest
Period commencing on the first day of such Interest Period appearing on
Telerate Page 3750 as of 11:00 a.m. (London time) two (2) Business Days
prior to the first day of the applicable Interest Period. In the event that
such rate does not appear on Telerate Page 3750, "LIBOR" shall be
determined by the Agent to be the rate per annum at which deposits in
Dollars are offered by leading reference banks in the London interbank
market to First Union at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of the applicable Interest Period for
a period equal to such Interest Period and in an amount substantially equal
to the amount of the applicable Loan.
"LIBOR Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in the definition of "LIBOR
Rate".
"LIBOR Rate" shall mean, with respect to any LIBOR Loan, a rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Agent to be equal to the quotient of (i) LIBOR for such
Loan for the Interest Period for such Loan divided by (ii) 1 minus the
Reserve Requirement for such Loan for such Interest Period.
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"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether
such interest is based on the common law, statute or contract, and whether
such obligation or claim is fixed or contingent, and including but not
limited to (i) the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt
or a lease, consignment or bailment for security purposes. The term "Lien"
shall include reservations, exceptions, encroachments, easements, rights of
way, covenants, conditions, restrictions, leases and other title exceptions
and encumbrances affecting Property. For the purposes of this Agreement,
the Borrower or any Subsidiary shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale
agreement, or leases under a financing lease or other arrangement pursuant
to which title to the Property has been retained by or vested in some other
Person in a transaction intended to create a financing.
"Loan Documents" shall mean this Agreement, the Notes, the Distribution
LC, the Letters of Credit, the Letter of Credit Agreements, the Fee Letter,
and the Security Instruments.
"Loans" shall mean the loans as provided for by Sections 2.01(a)(i),
2.01(b) and 2.01(c). "Loans" shall include the Facility A Loans, the
Facility B Loans and the Facility C Loans.
"LP Units" shall mean the limited partner units of Kinder Morgan
Energy.
"Majority Lenders" shall mean, at any time while no Loans are
outstanding, Lenders having at least sixty-six and two-thirds percent
(66-2/3%) of the Aggregate Commitments and, at any time while Loans are
outstanding, Lenders holding at least sixty-six and two-thirds percent
(66-2/3%) of the outstanding aggregate principal amount of the Loans
(without regard to any sale by a Lender of a participation in any Loan
under Section 12.06(c)).
"Material Adverse Effect" shall mean any material and adverse effect on
(i) the assets, liabilities, financial condition, business, operations or
affairs of the Borrower and its Subsidiaries taken as a whole or from the
facts represented or warranted in any Loan Document, or (ii) the ability of
the Borrower and its Subsidiaries taken as a whole to carry out their
business as at the Closing Date or as proposed as of the Closing Date to be
conducted or meet their obligations under the Loan Documents on a timely
basis.
"Maturity Date" shall mean August 31, 1999.
"Multiemployer Plan" shall mean a Plan defined as such in Section 3(37)
or 4001(a)(3) of ERISA.
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"Notes" shall mean the Notes provided for by Section 2.06, together
with any and all renewals, extensions for any period, increases,
rearrangements, substitutions or modifications thereof. The "Notes" shall
include the Facility A Notes, the Facility B Note and the Facility C Notes.
"Other Taxes" shall have the meaning assigned such term in Section
4.06(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions.
"Percentage Share" shall mean the percentage of the Aggregate
Commitments to be provided by a Lender under this Agreement as indicated on
Annex I hereto, as modified from time to time to reflect any assignments
permitted by Section 12.06(b).
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization
or government or any agency, instrumentality or political subdivision
thereof, or any other form of entity.
"Plan" shall mean any employee pension benefit plan, as defined in
Section 3(2) of ERISA, which (i) is currently or hereafter sponsored,
maintained or contributed to by the Borrower, any Subsidiary or an ERISA
Affiliate or (ii) was at any time during the preceding six calendar years
sponsored, maintained or contributed to, by the Borrower, any Subsidiary or
an ERISA Affiliate.
"Post-Default Rate" shall mean, in respect of any principal of any Loan
or any other amount payable by the Borrower under this Agreement or any
Note, a rate per annum during the period commencing on the date of an Event
of Default until such amount is paid in full or all Events of Default are
cured or waived equal to 2% per annum above the Base Rate as in effect from
time to time plus the Applicable Margin (if any), but in no event to exceed
the Highest Lawful Rate provided that, for a LIBOR Loan, the "Post-Default
Rate" for such principal shall be, for the period commencing on the date of
the Event of Default and ending on the earlier to occur of the last day of
the Interest Period therefor or the date all Events of Default are cured or
waived, 2% per annum above the interest rate for such Loan as provided in
Section 3.02(ii), but in no event to exceed the Highest Lawful Rate.
"Prime Rate" shall mean the rate of interest from time to time
announced publicly by the Agent at the Principal Office as its prime
commercial lending rate. Such rate is set by the Agent as a general
reference rate of interest, taking into account such factors as the Agent
may deem appropriate, it being understood that many of the Agent's
commercial or other loans are priced in relation to such
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rate, that it is not necessarily the lowest or best rate actually charged
to any customer and that the Agent may make various commercial or other
loans at rates of interest having no relationship to such rate.
"Principal Office" shall mean the principal office of the Agent,
presently located at 301 South College Street, TW-10, Charlotte, North
Carolina 28288- 0608 or such other location as designated by the Agent from
time to time.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Purchase Agreement" shall mean the Amended and Restated Purchase and
Sale Agreement between Enron Liquids Holding Corp. and the Borrower dated
February 14, 1997, as amended, providing for the purchase by the Borrower
of all of the outstanding stock of Enron Liquids Pipeline Company.
"Quarterly Dates" shall mean the last day of each March, June,
September, and December, in each year, the first of which shall be March
31, 1997; provided, however, that if any such day is not a Business Day,
such Quarterly Date shall be the next succeeding Business Day.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"Regulatory Change" shall mean, with respect to any Lender, any change
after the Closing Date in any Governmental Requirement (including
Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of lenders
(including such Lender or its Applicable Lending Office) of or under any
Governmental Requirement (whether or not having the force of law) by any
Governmental Authority charged with the interpretation or administration
thereof.
"Required Payment" shall have the meaning assigned such term in Section
4.04.
"Responsible Officer" shall mean, as to any Person, the Chief Executive
Officer, the President or any Vice President of such Person and, with
respect to financial matters, the term "Responsible Officer" shall include
the Chief Financial Officer of such Person. Unless otherwise specified, all
references to a Responsible Officer herein shall mean a Responsible Officer
of the Borrower.
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"Rule 144" shall mean Rule 144 promulgated under the Securities Act of
1933, as amended.
"SEC" shall mean the Securities and Exchange
Commission or any successor Governmental
Authority.
"Security Instruments" shall mean the agreements or instruments
described or referred to in Exhibit E, and any and all other agreements or
instruments now or hereafter executed and delivered by the Borrower or any
other Person (other than participation or similar agreements between any
Lender and any other lender or creditor with respect to any Indebtedness
pursuant to this Agreement) in connection with, or as security for the
payment or performance of the Notes, this Agreement, or reimbursement
obligations under the Letters of Credit and the Distribution LC, as such
agreements may be amended, supplemented or restated from time to time.
"Special Entity" shall mean any joint venture, limited liability
company or partnership, general or limited partnership or any other type of
partnership or company other than a corporation in which the Borrower or
one or more of its other Subsidiaries is a member, owner, partner or joint
venturer and owns, directly or indirectly, at least a majority of the
equity of such entity or controls such entity, but excluding any tax
partnerships that are not classified as partnerships under state law. For
purposes of this definition, any Person which owns directly or indirectly
an equity investment in another Person which allows the first Person to
manage or elect managers who manage the normal activities of such second
Person will be deemed to "control" such second Person (e.g. a sole general
partner controls a limited partnership).
"Special Purpose Subsidiary" shall have the meaning assigned such term
in Section 9.18.
"Subsidiary" shall mean (i) any corporation of which at least a
majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and
(ii) any Special Entity. Unless otherwise indicated herein, each reference
to the term "Subsidiary" shall mean a Subsidiary of the Borrower. For
purposes of this Agreement Kinder Morgan Energy and its Subsidiaries shall
be deemed to be Subsidiaries of the Borrower commencing immediately upon
the Closing Date.
"Taxes" shall have the meaning assigned such
term in Section 4.06(a).
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"Type" shall mean, with respect to any Loan, a Base Rate Loan or a
LIBOR Loan.
"Unrestricted Balance" shall mean at any time the sum of cash or cash
equivalents held by Kinder Morgan Energy free and clear of any Liens,
negative pledges or contracted restrictions with other Persons.
"Wholly-Owned Subsidiary" shall mean, as to the Borrower, any
Subsidiary of which all of the outstanding shares of stock having by the
terms thereof ordinary voting power to elect the board of directors of such
corporation, other than directors' qualifying shares, are owned or
controlled by the Borrower or one or more of the Wholly-Owned Subsidiaries
or by the Borrower and one or more of the Wholly-Owned Subsidiaries.
Section 1.03 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Agent or the Lenders hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent with the
audited financial statements of the Borrower referred to in Section 7.02 (except
for changes concurred with by the Borrower's independent public accountants).
ARTICLE II
Commitments
Section 2.01 The Facilities.
(a) Facility A.
(i) Loans. Each Lender severally agrees, on the terms of this
Agreement, to make Loans to the Borrower during the period from and
including (i) the Closing Date or (ii) such later date that such Lender
becomes a party to this Agreement as provided in Section 12.06(b), to but
excluding the Facility A Termination Date in an aggregate principal amount
at any one time outstanding up to but not exceeding the amount of such
Lender's Facility A Commitment as then in effect; provided, however, that
the aggregate principal amount of all such Loans by all Lenders hereunder
at any one time outstanding together with the LC Exposure shall not exceed
the Aggregate Facility A Commitments. Subject to the terms of this
Agreement, during the period from the Closing Date to but excluding the
Facility A Termination Date, the Borrower may borrow, repay and reborrow
the amount described in this Section 2.01(a).
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(ii) Letters of Credit. During the period from and including the
Closing Date to but excluding the Facility A Termination Date, the Agent,
as issuing bank for the Lenders, agrees to extend credit for the account of
the Borrower at any time and from time to time by issuing renewing,
extending or reissuing Letters of Credit; provided however, the LC Exposure
at any one time outstanding shall not exceed the lesser of (i) the LC
Commitment or (ii) the Aggregate Facility A Commitments, as then in effect,
minus the aggregate principal amount of all Facility A Loans then
outstanding. The Lenders shall participate in such Letters of Credit
according to their respective Percentage Shares.
(b) Facility B. On the Closing Date, the Agent, as issuing bank for the
Lenders, agrees to extend credit for the account of the Borrower by issuing
the Distribution LC. The Lenders shall participate in the Distribution LC
according to their respective Percentage Shares.
(c) Facility C. Each Lender severally agrees, subject to the terms and
conditions of this Agreement, to make a term Loan to the Borrower not to
exceed its Facility C Commitment. Such Loan shall be made by way of a
single borrowing made on the Closing Date. Any portion of each Lender's
Facility C Commitment not utilized by such borrowing on such date shall be
permanently canceled.
(d) Limitation on Types of Loans. Subject to the other terms and
provisions of this Agreement, at the option of the Borrower, the Loans
outstanding under the Facilities may be Base Rate Loans or LIBOR Loans;
provided that, without the prior written consent of the Majority Lenders,
no more than four (4) LIBOR Loans may be outstanding at any time under all
of the Facilities.
Section 2.02 Borrowings, Continuations,
Conversions, Letters of Credit.
(a) Borrowings. The Borrower shall give the Agent (which shall promptly
notify the Lenders) advance notice as hereinafter provided of each
borrowing hereunder, which shall specify the aggregate amount of such
borrowing, the Type and the date (which shall be a Business Day) of the
Loans to be borrowed and (in the case of LIBOR Loans) the duration of the
Interest Period therefor.
(b) Minimum Amounts. If a borrowing consists in whole or in part of
LIBOR Loans, such LIBOR Loans with the same Interest Period shall be in
amounts of at least $500,000 or any whole multiple of $50,000 in excess
thereof.
(c) Notices. Each borrowing and all continuations and conversions shall
require advance written notice to the Agent (which shall promptly notify
the Lenders) in the form of Exhibit B hereto, which in each case shall be
irrevocable, from the Borrower to be received by the Agent not later than
11:00 a.m. Charlotte, North Carolina time at least one Business Day prior
to the date of each Base Rate Loan borrowing and three
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Business Days prior to the date of each LIBOR Loan borrowing, continuation
or conversion.
(d) Continuation Options. Subject to the provisions made in this
Section 2.02(d), the Borrower may elect to continue all or any part of any
LIBOR Loan beyond the expiration of the then current Interest Period
relating thereto by giving advance notice as provided in Section 2.02(c) to
the Agent (which shall promptly notify the Lenders) of such election,
specifying the amount of such Loan to be continued and the Interest Period
therefor. In the absence of such a timely and proper election, the Borrower
shall be deemed to have elected to convert such LIBOR Loan to a Base Rate
Loan pursuant to Section 2.02(e). All or any part of any LIBOR Loan may be
continued as provided herein, provided that (i) any continuation of any
such Loan shall be (as to each Loan as continued for an applicable Interest
Period) in amounts of at least $500,000 or any whole multiple of $50,000 in
excess thereof and (ii) no Default shall have occurred and be continuing.
If a Default shall have occurred and be continuing, each LIBOR Loan shall
be converted to a Base Rate Loan on the last day of the Interest Period
applicable thereto.
(e) Conversion Options. The Borrower may elect to convert all or any
part of any LIBOR Loan on the last day of the then current Interest Period
relating thereto to a Base Rate Loan by giving advance notice to the Agent
(which shall promptly notify the Lenders) of such election. Subject to the
provisions made in this Section 2.02(e), the Borrower may elect to convert
all or any part of any Base Rate Loan at any time and from time to time to
a LIBOR Loan by giving advance notice as provided in Section 2.02(c) to the
Agent (which shall promptly notify the Lenders) of such election. All or
any part of any outstanding Loan may be converted as provided herein,
provided that (i) any conversion of any Base Rate Loan into a LIBOR Loan
shall be (as to each such Loan into which there is a conversion for an
applicable Interest Period) in amounts of at least $500,000 or any whole
multiple of $50,000 in excess thereof and (ii) no Default shall have
occurred and be continuing. If a Default shall have occurred and be
continuing, no Base Rate Loan may be converted into a LIBOR Loan.
(f) Advances. Not later than 11:00 a.m. Charlotte, North Carolina time
on the date specified for each borrowing hereunder, each Lender shall make
available the amount of the Loan to be made by it on such date to the
Agent, to an account which the Agent shall specify, in immediately
available funds, for the account of the Borrower. The amounts so received
by the Agent shall, subject to the terms and conditions of this Agreement,
be made available to the Borrower by depositing the same, in immediately
available funds, in an account of the Borrower, designated by the Borrower
and maintained at the Principal Office.
(g) Letters of Credit. The Borrower shall give the Agent (which shall
promptly notify the Lenders of such request) advance notice to be received
by the Agent not later than 11:00 a.m. Charlotte, North Carolina time not
less than three (3) Business Days prior thereto of each request for the
issuance and at least thirty (30) Business Days
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prior to the date of the renewal or extension of a Letter of Credit
hereunder which request shall specify the amount of such Letter of Credit,
the date (which shall be a Business Day) such Letter of Credit is to be
issued, renewed or extended, the duration thereof, the name and address of
the beneficiary thereof, the form of the Letter of Credit and such other
information as the Agent may reasonably request all of which shall be
reasonably satisfactory to the Agent. Subject to the terms and conditions
of this Agreement, on the date specified for the issuance, renewal or
extension of a Letter of Credit, the Agent shall issue such Letter of
Credit to the beneficiary thereof.
In conjunction with the issuance of each Letter of Credit, the Borrower
shall execute a Letter of Credit Agreement. In the event of any conflict
between any provision of a Letter of Credit Agreement and this Agreement,
the Borrower, the Agent and the Lenders hereby agree that the provisions of
this Agreement shall govern.
The Agent will send to the Borrower and each Lender, upon issuance of
any Letter of Credit, or an amendment thereto, a true and complete copy of
such Letter of Credit, or such amendment thereto.
(h) Distribution LC. In conjunction with the issuance of the
Distribution LC, the Borrower shall execute a Letter of Credit Agreement.
In the event of any conflict between any provision of such Letter of Credit
Agreement and this Agreement, the Borrower, the Agent and the Lenders
hereby agree that the provisions of this Agreement shall govern.
The Agent will send to the Borrower and each Lender, upon issuance of
the Distribution LC, or an amendment thereto, a true and complete copy of
such Distribution LC, or such amendment thereto.
Section 2.03 Changes of Facility A Commitments. The Borrower shall have
the right to terminate or to reduce the amount of the Aggregate Facility A
Commitments at any time or from time to time upon not less than three (3)
Business Days' prior notice to the Agent (which shall promptly notify the
Lenders) of each such termination or reduction, which notice shall specify the
effective date thereof and the amount of any such reduction (which shall not be
less than $1,000,000 or any whole multiple of $100,000 in excess thereof) and
shall be irrevoca- ble and effective only upon receipt by the Agent. Once
terminated or reduced, the Aggregate Facility A Commitments may not be
reinstated.
Section 2.04 Fees.
(a) The Borrower shall pay to the Agent for the account of each Lender
a commitment fee on the daily average unused amount of the Aggregate
Facility A Commitments for the period from and including the Closing Date
up to but excluding the earlier of the date the Aggregate Facility A
Commitments are terminated or the Facility A Termination Date at a rate per
annum equal to 1/2 of 1%. Accrued commitment fees
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shall be payable quarterly in arrears on each Quarterly Date and on the
earlier of the date the Aggregate Facility A Commitments are terminated or
the Facility A Termination Date. Outstanding Letters of Credit will be
treated as utilization of Facility A for purposes of determining the
commitment fee.
(b) The Borrower agrees to pay the Agent, for the account of each
Lender, commissions for issuing the Letters of Credit at the rate of 2.25%
per annum, provided that each Letter of Credit shall bear a minimum
commission of $500.
(c) The Borrower agrees to pay to the Agent, for its own account, a
fronting fee of 1/8% per annum for each Letter of Credit on the daily
average outstanding of the maximum liability of the Agent existing from
time to time under each Letter of Credit (calculated separately for each
Letter of Credit).
(d) The Borrower agrees to pay the Agent, for the account of each
Lender, commissions for issuing the Distribution LC at the rate of either
(i) 1/2 of 1% per annum, provided Kinder Morgan Energy maintains at all
times an Unrestricted Balance equal to the maximum liability of the Agent
existing from time to time under the Distribution LC or (ii) 2.25% per
annum, if Kinder Morgan Energy does not maintain the required Unrestricted
Balance.
(e) The Borrower agrees to pay to the Agent, for its own account, a
fronting fee of 1/8% per annum for the Distribution LC on the daily average
outstanding of the maximum liability of the Agent existing from time to
time under such Distribution LC.
(f) Upon each issuance of any Letter of Credit or the Distribution LC,
the Borrower shall pay to the Agent for its own account an issuance fee of
$85.
(g) Upon each transfer of any Letter of Credit to a successor
beneficiary in accordance with its terms, the Borrower shall pay the sum of
$200 to the Agent for its own account. The Distribution LC shall be
non-transferrable.
(h) Upon each drawing of any Letter of Credit or the Distribution LC,
the Borrower shall pay to the Agent for its own account a negotiation fee
of $100; provided that such fee shall not be a condition to any drawing.
(i) Upon each amendment of any Letter of Credit or the Distribution LC,
the Borrower shall pay to the Agent for its own account the sum of $50.
(j) Each Letter of Credit and the Distribution LC shall be deemed to be
outstanding up to its full face amount until the Agent has received (1) the
canceled Letter of Credit or the Distribution LC or a written cancellation
of the Letter of Credit or the Distribution LC from the beneficiary of such
Letter of Credit or Distribution LC in form and substance acceptable to the
Agent, or (2) for any reductions in the amount of the Letter of Credit or
the Distribution LC (other than from a drawing or a scheduled
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reduction set forth in the Letter of Credit or the Distribution LC),
written notification from the beneficiary of such Letter of Credit or the
Distribution LC. The commissions and fronting fees in Sections 2.04(b),
(c), (d) and (e) are payable quarterly in advance on each Quarterly Date.
(k) The Borrower shall pay to First Union Corporation for its account
such other fees as are set forth in the Fee Letter on the dates specified
therein to the extent not paid prior to the Closing Date.
Section 2.05 Several Obligations. The failure of any Lender to make any
Loan to be made by it or to provide funds for disbursements or reimbursements
under Letters of Credit or the Distribution LC on the date specified therefor
shall not relieve any other Lender of its obligation to make its Loan or provide
funds on such date, but no Lender shall be responsible for the failure of any
other Lender to make a Loan to be made by such other Lender or to provide funds
to be provided by such other Lender.
Section 2.06 Notes.
(a) The Facility A Loans made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit
A-1 hereto, dated (i) the Closing Date or (ii) the effective date of an
Assignment pursuant to Section 12.06(b), payable to the order of such
Lender in a principal amount equal to its Percentage Share of the Aggregate
Facility A Commitments as in effect on the date of issue and otherwise duly
completed and such substitute Notes as required by Section 12.06(b).
(b) The Facility B Loans made by First Union shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit
A-2 hereto dated the Closing Date payable to the order of First Union.
(c) The Facility C Loans made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit
A-3 hereto dated (i) the Closing Date or (ii) the effective date of an
Assignment pursuant to Section 12.06(b), payable to the order of such
Lender in a principal amount equal to its Percentage Share of the Aggregate
Facility C Commitments as in effect on the date of issue and otherwise duly
completed.
(d) The date, amount, Type, interest rate and Interest Period of each
Loan made by each Lender, and all payments made on account of the principal
thereof, shall be recorded by such Lender on its books for its Notes, and,
prior to any transfer, may be endorsed by such Lender on schedules attached
to such Notes or any continuation thereof or on any separate record
maintained by such Lender. Failure to make any such notation or to attach a
schedule shall not affect any Lender's or the Borrower's rights or
obligations in respect of such Loans or affect the validity of such
transfer by any Lender of its Notes.
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Section 2.07 Prepayments.
(a) The Borrower may prepay the Base Rate Loans upon not less than one
(1) Business Day's prior notice to the Agent (which shall promptly notify
the Lenders), which notice shall specify the prepayment date (which shall
be a Business Day) and the amount of the prepayment (which shall be at
least $100,000 or the remaining aggregate principal balance outstanding on
the Notes) and shall be irrevocable and effective only upon receipt by the
Agent, provided that interest on the principal prepaid, accrued to the
prepayment date, shall be paid on the prepayment date. The Borrower may
prepay LIBOR Loans on the same condition as for Base Rate Loans and in
addition such prepayments of LIBOR Loans shall be subject to the terms of
Section 5.05 and shall be in an amount equal to all of the LIBOR Loans for
the Interest Period prepaid.
(b) If, after giving effect to any termination or reduction of the
Aggregate Facility A Commitments pursuant to Section 2.03, the outstanding
aggregate principal amount of the Facility A Loans plus the LC Exposure
exceeds the Aggregate Facility A Commitments, the Borrower shall (i) prepay
the Facility A Loans on the date of such termination or reduction in an
aggregate principal amount equal to the excess, together with interest on
the principal amount paid accrued to the date of such prepayment and (ii)
if any excess remains after prepaying all of the Facility A Loans, pay to
the Agent on behalf of the Lenders an amount equal to the excess to be held
as cash collateral as provided in Section 2.09(b).
(c) Upon any sale of the LP Units or any liquidating distribution or
special distribution attributable to the LP Units, the Borrower shall pay
to the Agent on behalf of the Lenders an amount equal to the proceeds of
such sale or distribution. Such proceeds shall be first applied as a
mandatory payment of any outstanding Facility A Loans, second, held as cash
collateral for any LC Exposure as provided in Section 2.09(b), third, held
by cash collateral for the contingent expenses on the Distribution LC as
provided in Section 2.09(b), and fourth, applied as a mandatory prepayment
of Facility C Loans. The Aggregate Facility A Commitments shall be reduced
by the amount of such proceeds, but not less than zero.
(d) Prepayments permitted or required under this Section 2.07 shall be
without premium or penalty, except as required under Section 5.05 for
prepayment of LIBOR Loans. Any voluntary prepayments on the Facility A
Loans under Section 2.07(a) may be reborrowed subject to the then effective
Aggregate Facility A Commitments. Any voluntary prepayments on the Facility
B Loans and the Facility C Loans and any mandatory prepayments of any
Facility may not be reborrowed.
Section 2.08 Assumption of Risks. The Borrower assumes all risks of the
acts or omissions of any beneficiary of any Letter of Credit or the Distribution
LC or any transferee thereof with respect to its use of such Letter of Credit or
the Distribution LC. Neither the Agent (except in the case of willful misconduct
or bad faith on the part of the Agent or any of its employees), its
correspondents nor any Lender shall be responsible for the validity, sufficiency
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or genuineness of certificates or other documents or any endorsements thereon,
even if such certificates or other documents should in fact prove to be invalid,
insufficient, fraudulent or forged; for errors, omissions, interruptions or
delays in transmissions or delivery of any messages by mail, telex, or
otherwise, whether or not they be in code; for errors in translation or for
errors in interpretation of technical terms; the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the Distribution LC or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; the failure of any beneficiary or any transferee of
any Letter of Credit or the Distribution LC to comply fully with conditions
required in order to draw upon any Letter of Credit or the Distribution LC; or
for any other consequences arising from causes beyond the Agent's control or the
control of the Agent's correspondents. In addition, neither the Agent nor any
Lender shall be responsible for any error, neglect, or default of any of the
Agent's correspondents; and none of the above shall affect, impair or prevent
the vesting of any of the Agent's or any Lender's rights or powers hereunder or
under the Letter of Credit Agreements, all of which rights shall be cumulative.
The Agent and its correspondents may accept certificates or other documents that
appear on their face to be in order, without responsibility for further
investigation of any matter contained therein regardless of any notice or
information to the contrary. In furtherance and not in limitation of the
foregoing provisions, the Borrower agrees that any action, inaction or omission
taken or not taken by the Agent or by any correspondent for the Agent in good
faith in connection with any Letter of Credit or the Distribution LC, or any
related drafts, certificates, documents or instruments, shall be binding on the
Borrower and shall not put the Agent or its correspondents under any resulting
liability to the Borrower.
Section 2.09 Obligation to Reimburse and to Prepay.
(a) (i) If a disbursement by First Union is made under any Letter of
Credit, the Borrower shall pay to First Union within two (2) Business Days
after notice of any such disbursement is received by the Borrower, the
amount of each such disbursement made by First Union under the Letter of
Credit (if such payment is not sooner effected as may be required under
this Section 2.09 or under other provisions of the Letter of Credit),
together with interest on the amount disbursed from and including the date
of disbursement until payment in full of such disbursed amount at a varying
rate per annum equal to (1) the then applicable interest rate for Base Rate
Loans through the second Business Day after notice of such disbursement is
received by the Borrower and (2) thereafter, the Post-Default Rate for Base
Rate Loans (but in no event to exceed the Highest Lawful Rate) for the
period from and including the third Business Day following the date of such
disbursement to and including the date of repayment in full of such
disbursed amount.
(ii) If a disbursement by First Union is made under the
Distribution LC, such disbursement shall constitute an automatic borrowing
under the Facility B Note as a Base Rate Loan subject to the right to
continue or convert such Loan as provided in Section 2.02.
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The obligations of the Borrower under this Agreement with respect to each
Letter of Credit and the Distribution LC shall be absolute, unconditional
and irrevocable and shall be paid or performed strictly in accordance with
the terms of this Agreement under all circumstances whatsoever, including,
without limitation, but only to the fullest extent permitted by applicable
law, the following circumstances: (1) any lack of validity or
enforceability of this Agreement, any Letter of Credit, the Distribution LC
or any of the Security Instruments; (2) any amendment or waiver of
(including any default), or any consent to departure from this Agreement
(except to the extent permitted by any amendment or waiver), any Letter of
Credit, the Distribution LC or any of the Security Instruments; (3) the
existence of any claim, set-off, defense or other rights which the Borrower
may have at any time against the beneficiary of any Letter of Credit or
Distribution LC or any transferee of any Letter of Credit or the
Distribution LC (or any Persons for whom any such beneficiary or any such
transferee may be acting), the Agent, any Lender or any other Person,
whether in connection with this Agreement, any Letter of Credit, the
Distribution LC, the Security Instruments, the transactions contemplated
hereby or any unrelated transaction; (4) any statement, certificate, draft,
notice or any other document presented under any Letter of Credit or the
Distribution LC proves to have been forged, fraudulent, insufficient or
invalid in any respect or any statement therein proves to have been untrue
or inaccurate in any respect whatsoever; (5) payment by First Union under
any Letter of Credit or the Distribution LC against presentation of a draft
or certificate which appears on its face to comply, but does not comply,
with the terms of such Letter of Credit or the Distribution LC; and (6) any
other circumstance or happening whatsoever, whether or not similar to any
of the foregoing.
Notwithstanding anything in this Agreement to the contrary, the Borrower
will not be liable for payment or performance that results from the gross
negligence or willful misconduct of First Union, except (1) where the
Borrower or any Subsidiary actually recovers the proceeds for itself or the
Agent of any payment made by First Union in connection with such gross
negligence or willful misconduct or (2) in cases where First Union makes
payment to the named beneficiary of a Letter of Credit or the Distribution
LC.
(b) In the event of the occurrence of any Event of Default, an amount
equal to the sum of the LC Exposure and the contingent exposure on the
Distribution LC shall be deemed to be forthwith due and owing by the
Borrower to First Union as of the date of any such occurrence; and the
Borrower's obligation to pay such amount shall be absolute and
unconditional, without regard to whether any beneficiary of any such Letter
of Credit or the Distribution LC has attempted to draw down all or a
portion of such amount under the terms of a Letter of Credit or the
Distribution LC, and, to the fullest extent permitted by applicable law,
shall not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower may now or hereafter have
against any such beneficiary, First Union, the Lenders or any other Person
for any reason whatsoever. Such payments shall be held by First Union on
behalf of the Lenders as cash collateral securing the LC Exposure and the
contingent exposure on the Distribution LC in an account or accounts at the
Principal Office; and the Borrower
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hereby grants to and by its deposit with First Union grants to First Union
a security interest in such cash collateral. In the event of any such
payment by the Borrower of amounts contingently owing under outstanding
Letters of Credit or the Distribution LC and in the event that thereafter
drafts or other demands for payment complying with the terms of such
Letters of Credit or the Distribution LC are not made prior to the
respective expiration dates thereof, First Union agrees, if no Event of
Default has occurred and is continuing or if no Indebtedness is outstanding
under this Agreement, the Facility A Notes or the Security Instruments, to
remit to the Borrower amounts for which the contingent obligations
evidenced by the Letters of Credit or the Distribution LC have ceased.
(c) Each Lender severally and unconditionally agrees that it shall
promptly reimburse First Union an amount equal to such Lender's Percentage
Share of any disbursement made by First Union under any Letter of Credit or
the Distribution LC that is not reimbursed according to Section 2.09(a)(i).
Section 2.10 Lending Offices. The Loans of each Type made by each
Lender shall be made and maintained at such Lender's Applicable Lending Office
for Loans of such Type as shown on the signature pages hereof.
ARTICLE III
Payments of Principal and Interest
Section 3.01 Repayment of Loans. The Borrower will pay to the Agent,
for the account of each Lender, the principal payments required by this Section
3.01. On the Maturity Date the Borrower shall repay the outstanding aggregate
principal and accrued and unpaid interest under the Facility A Notes, the
Facility B Note and the Facility C Notes.
Section 3.02 Interest. The Borrower will pay to the Agent, for the
account of each Lender, interest on the unpaid principal amount of each Loan
made by such Lender for the period commencing on the date such Loan is made to
but excluding the date such Loan shall be paid in full, at the following rates
per annum:
(i) if such a Loan is a Base Rate Loan, the Base Rate (as in effect
from time to time) plus the Applicable Margin (as in effect from time to
time), but in no event to exceed the Highest Lawful Rate; and
(ii) if such a Loan is a LIBOR Loan, for each Interest Period relating
thereto, the LIBOR Rate for such Loan plus the Applicable Margin (as in
effect from time to time), but in no event to exceed the Highest Lawful
Rate.
Notwithstanding the foregoing, the Borrower will pay to the Agent, for the
account of each Lender, interest at the applicable Post-Default Rate on any
principal of any Loan made by such
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Lender, and (to the fullest extent permitted by law) on any other amount payable
by the Borrower hereunder, under any Loan Document or under any Note held by
such Lender to or for account of such Lender, for the period commencing on the
date of an Event of Default until the same is paid in full or all Events of
Default are cured or waived.
Accrued interest on Base Rate Loans shall be payable on each Quarterly Date
commencing on March 31, 1997, and accrued interest on each LIBOR Loan shall be
payable on the last day of the Interest Period therefor and, if such Interest
Period is longer than three months at three-month intervals following the first
day of such Interest Period, except that interest payable at the Post-Default
Rate shall be payable from time to time on demand and interest on any LIBOR Loan
that is converted into a Base Rate Loan (pursuant to Section 5.04) shall be
payable on the date of conversion (but only to the extent so converted).
Promptly after the determination of any interest rate provided for herein
or any change therein, the Agent shall notify the Lenders to which such interest
is payable and the Borrower thereof. Each determination by the Agent of an
interest rate or fee hereunder shall, except in cases of manifest error, be
final, conclusive and binding on the parties.
ARTICLE IV
Payments; Pro Rata Treatment; Computations; Etc.
Section 4.01 Payments. Except to the extent otherwise provided herein,
all payments of principal, interest and other amounts to be made by the Borrower
under the Loan Documents shall be made in Dollars, in immediately available
funds, to the Agent at such account as the Agent shall specify by notice to the
Borrower from time to time, not later than 11:00 a.m. Charlotte, North Carolina
time on the date on which such payments shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day). Such payments shall be made without (to the fullest
extent permitted by applicable law) defense, set-off or counterclaim. Each
payment received by the Agent under this Agreement or any Note for account of a
Lender shall be paid promptly to such Lender in immediately available funds.
Except as provided in clause (iii) of the definition of "Interest Period", if
the due date of any payment under this Agreement or any Note would otherwise
fall on a day which is not a Business Day such date shall be extended to the
next succeeding Business Day and interest shall be payable for any principal so
extended for the period of such extension. At the time of each payment to the
Agent of any principal of or interest on any borrowing, the Borrower shall
notify the Agent of the Loans to which such payment shall apply. In the absence
of such notice the Agent may specify the Loans to which such payment shall
apply, but to the extent possible such payment or prepayment will be applied
first to the Loans comprised of Base Rate Loans.
Section 4.02 Pro Rata Treatment. Except to the extent otherwise
provided herein each Lender agrees that: (i) each borrowing from the Lenders
under Section 2.01 and each continuation and conversion under Section 2.02 shall
be made from the Lenders pro rata in
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accordance with their Percentage Share, each payment of commitment fee or other
fees under Section 2.04(a) and Section 2.04(b) shall be made for account of the
Lenders pro rata in accordance with their Percentage Share, and each termination
or reduction of the amount of the Aggregate Facility A Commitments under Section
2.03(b) shall be applied to the Facility A Commitment of each Lender, pro rata
according to the amounts of its respective Facility A Commitment; (ii) each
payment of principal of Loans under a Facility by the Borrower shall be made for
account of the Lenders pro rata in accordance with the respective unpaid
principal amount of the Loans held by the Lenders under such Facility; and (iii)
each payment of interest on Loans by the Borrower shall be made for account of
the Lenders pro rata in accordance with the amounts of interest due and payable
to the respective Lenders; and (iv) each reimbursement by the Borrower of
disbursements under Letters of Credit and the Distribution LC shall be made for
account of the Agent or, if funded by the Lenders, pro rata for the account of
the Lenders, in accordance with the amounts of reimbursement obligations due and
payable to each respective Lender.
Section 4.03 Computations. Interest on LIBOR Loans and fees shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which such
interest is payable, unless such calculation would exceed the Highest Lawful
Rate, in which case interest shall be calculated on the per annum basis of a
year of 365 or 366 days, as the case may be. Interest on Base Rate Loans shall
be computed on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
Section 4.04 Non-receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Lender or the Borrower prior to the date on which such
notifying party is scheduled to make payment to the Agent (in the case of a
Lender) of the proceeds of a Loan or a payment under a Letter of Credit or the
Distribution LC to be made by it hereunder or (in the case of the Borrower) a
payment to the Agent for account of one or more of the Lenders hereunder (such
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that it does not intend to make the Required Payment to
the Agent, the Agent may assume that the Required Payment has been made and may,
in reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient(s) on such date and, if such Lender
or the Borrower (as the case may be) has not in fact made the Required Payment
to the Agent, the recipient(s) of such payment shall, on demand, repay to the
Agent the amount so made available together with interest thereon in respect of
each day during the period commencing on the date such amount was so made
available by the Agent until but excluding the date the Agent recovers such
amount at a rate per annum which, for any Lender as recipient, will be equal to
the Federal Funds Rate, and for the Borrower as recipient, will be equal to the
Base Rate plus the Applicable Margin.
Section 4.05 Set-off, Sharing of Payments, Etc.
(a) The Borrower agrees that, in addition to (and without limitation
of) any right of set-off, bankers' lien or counterclaim a Lender may
otherwise have, each Lender
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shall have the right and be entitled (after consultation with the Agent),
at its option, to offset balances held by it or by any of its Affiliates
for account of the Borrower at any of its offices, in Dollars or in any
other currency, against any principal of or interest on any of such
Lender's Loans, or any other amount payable to such Lender hereunder, which
is not paid when due (regardless of whether such balances are then due to
the Borrower), in which case it shall promptly notify the Borrower and the
Agent thereof, provided that such Lender's failure to give such notice
shall not affect the validity thereof.
(b) If any Lender shall obtain payment of any principal of or interest
on any Loan made by it to the Borrower under this Agreement (or
reimbursement as to any Letter of Credit) through the exercise of any right
of set-off, banker's lien or counterclaim or similar right or otherwise,
and, as a result of such payment, such Lender shall have received a greater
percentage of the principal or interest (or reimbursement) then due
hereunder by the Borrower to such Lender than the percentage received by
any other Lenders, it shall promptly (i) notify the Agent and each other
Lender thereof and (ii) purchase from such other Lenders participations in
(or, if and to the extent specified by such Lender, direct interests in)
the Loans (or participations in Letters of Credit or the Distribution LC)
made by such other Lenders (or in interest due thereon, as the case may be)
in such amounts, and make such other adjustments from time to time as shall
be equitable, to the end that all the Lenders shall share the benefit of
such excess payment (net of any expenses which may be incurred by such
Lender in obtaining or preserving such excess payment) pro rata in
accordance with the unpaid principal and/or interest on the Loans held by
each of the Lenders (or reimbursements of Letters of Credit or the
Distribution LC). To such end all the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or
otherwise) if such payment is rescinded or must otherwise be restored. The
Borrower agrees that any Lender so purchasing a participation (or direct
interest) in the Loans made by other Lenders (or in interest due thereon,
as the case may be) may exercise all rights of set-off, banker's lien,
counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans (or Letters of Credit or
the Distribution LC ) in the amount of such participation. Nothing
contained herein shall require any Lender to exercise any such right or
shall affect the right of any Lender to exercise, and retain the benefits
of exercising, any such right with respect to any other indebtedness or
obligation of the Borrower. If under any applicable bankruptcy, insolvency
or other similar law, any Lender receives a secured claim in lieu of a
set-off to which this Section 4.05 applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in
a manner consistent with the rights of the Lenders entitled under this
Section 4.05 to share the benefits of any recovery on such secured claim.
Section 4.06 Taxes.
(a) Payments Free and Clear. Any and all
payments by the Borrower hereunder shall be made, in
accordance with Section 4.01, free and clear of and
without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or
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withholdings, and all liabilities with respect thereto, excluding, in the
case of each Lender and the Agent, taxes imposed on its income, and
franchise or similar taxes imposed on it, by (i) any jurisdiction (or
political subdivision thereof) of which the Agent or such Lender, as the
case may be, is a citizen or resident or in which such Lender has an
Applicable Lending Office, (ii) the jurisdiction (or any political
subdivision thereof) in which the Agent or such Lender is organized, or
(iii) any jurisdiction (or political subdivision thereof) in which such
Lender or the Agent is presently doing business in which taxes are imposed
solely as a result of doing business in such jurisdiction (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to the Lenders or the Agent (i) the sum payable shall be
increased by the amount necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section 4.06) such Lender or the Agent (as the case may be)
shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
taxing authority or other Governmental Authority in accordance with
applicable law.
(b) Other Taxes. In addition, to the fullest extent permitted by
applicable law, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement,
any Assignment or any Security Instrument (hereinafter referred to as
"Other Taxes").
(c) Indemnification. To the fullest extent permitted by applicable law,
the Borrower will indemnify each Lender and the Agent for the full amount
of Taxes and Other Taxes (including, but not limited to, any Taxes or Other
Taxes imposed by any Governmental Authority on amounts payable under this
Section 4.06) paid by such Lender or the Agent (on their behalf or on
behalf of any Lender), as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted unless the payment of such Taxes was not correctly or legally
asserted and such Lender's payment of such Taxes or Other Taxes was the
result of its gross negligence or willful misconduct. Any payment pursuant
to such indemnification shall be made within thirty (30) days after the
date any Lender or the Agent, as the case may be, makes written demand
therefor. if any Lender or the Agent receives a refund or credit in respect
of any Taxes or Other Taxes for which such Lender or the Agent has received
payment from the Borrower it shall promptly notify the Borrower of such
refund or credit and shall, if no default has occurred and is continuing,
within thirty (30) days after receipt of a request by the Borrower (or
promptly upon
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receipt, if the Borrower has requested application for such refund or
credit pursuant hereto), pay an amount equal to such refund or credit to
the Borrower without interest (but with any interest so refunded or
credited), provided that the Borrower, upon the request of such Lender or
the Agent, agrees to return such refund or credit (plus penalties, interest
or other charges) to such Lender or the Agent in the event such Lender or
the Agent is required to repay such refund or credit.
(d) Lender Representations.
(i) Each Lender represents that it is either (1) a corporation or
banking association organized under the laws of the United States of
America or any state thereof or (2) it is entitled to complete
exemption from United States withholding tax imposed on or with respect
to any payments, including fees, to be made to it pursuant to this
Agreement (A) under an applicable provision of a tax convention to
which the United States of America is a party or (B) because it is
acting through a branch, agency or office in the United States of
America and any payment to be received by it hereunder is effectively
connected with a trade or business in the United States of America.
Each Lender that is not a corporation or banking association organized
under the laws of the United States of America or any state thereof
agrees to provide to the Borrower and the Agent on the Closing Date, or
on the date of its delivery of the Assignment pursuant to which it
becomes a Lender, and at such other times as required by United States
law or as the Borrower or the Agent shall reasonably request, two
accurate and complete original signed copies of either (A) Internal
Revenue Service Form 4224 (or successor form) certifying that all
payments to be made to it hereunder will be effectively connected to a
United States trade or business (the "Form 4224 Certification") or (B)
Internal Revenue Service Form 1001 (or successor form) certifying that
it is entitled to the benefit of a provision of a tax convention to
which the United States of America is a party which completely exempts
from United States withholding tax all payments to be made to it
hereunder (the "Form 1001 Certification"). In addition, each Lender
agrees that if it previously filed a Form 4224 Certification, it will
deliver to the Borrower and the Agent a new Form 4224 Certification
prior to the first payment date occurring in each of its subsequent
taxable years; and if it previously filed a Form 1001 Certification, it
will deliver to the Borrower and the Agent a new certification prior to
the first payment date falling in the third year following the previous
filing of such certification. Each Lender also agrees to deliver to the
Borrower and the Agent such other or supplemental forms as may at any
time be required as a result of changes in applicable law or regulation
in order to confirm or maintain in effect its entitlement to exemption
from United States withholding tax on any payments hereunder, provided
that the circumstances of such Lender at the relevant time and
applicable laws permit it to do so. If a Lender determines, as a result
of any change in either (i) a Governmental Requirement or (ii) its
circumstances, that it is unable to submit any form or certificate that
it is obligated to submit pursuant
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to this Section 4.06, or that it is required to withdraw or cancel any
such form or certificate previously submitted, it shall promptly notify
the Borrower and the Agent of such fact. If a Lender is organized under
the laws of a jurisdiction outside the United States of America, unless
the Borrower and the Agent have received a Form 1001 Certification or
Form 4224 Certification satisfactory to them indicating that all
payments to be made to such Lender hereunder are not subject to United
States withholding tax, the Borrower shall withhold taxes from such
payments at the applicable statutory rate. Each Lender agrees to
indemnify and hold harmless the Borrower or Agent, as applicable, from
any United States taxes, penalties, interest and other expenses, costs
and losses incurred or payable by (i) the Agent as a result of such
Lender's failure to submit any form or certificate that it is required
to provide pursuant to this Section 4.06 or (ii) the Borrower or the
Agent as a result of their reliance on any such form or certificate
which such Lender has provided to them pursuant to this Section 4.06.
(ii) For any period with respect to which a Lender has failed to
provide the Borrower with the form required pursuant to this Section
4.06, if any, (other than if such failure is due to a change in a
Governmental Requirement occurring subsequent to the date on which a
form originally was required to be provided), such Lender shall not be
entitled to indemnification under Section 4.06 with respect to taxes
imposed by the United States which taxes would not have been imposed
but for such failure to provide such forms; provided, however, that
should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax becomes subject to taxes because of its failure
to deliver a form required hereunder, the Borrower shall take such
steps as such Lender shall reasonably request to assist such Lender to
recover such taxes.
(iii) Any Lender claiming any additional amounts payable pursuant
to this Section 4.06 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document
requested by the Borrower or the Agent or to change the jurisdiction of
its Applicable Lending 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, in the sole determination of such
Lender, be otherwise disadvantageous to such Lender.
ARTICLE V
Capital Adequacy
Section 5.01 Additional Costs.
(a) Eurodollar Regulations, etc. The Borrower
shall pay directly to each Lender from time to time
such amounts as such Lender may determine to be
necessary
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to compensate such Lender for any costs which it determines are
attributable to its making or maintaining of any LIBOR Loans or issuing or
participating in Letters of Credit or the Distribution LC hereunder or its
obligation to make any LIBOR Loans or issue or participate in any Letters
of Credit or the Distribution LC hereunder, or any reduction in any amount
receivable by such Lender hereunder in respect of any of such LIBOR Loans,
Letters of Credit or the Distribution LC or such obligation (such increases
in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which: (i)
changes the basis of taxation of any amounts payable to such Lender under
this Agreement or any Note in respect of any of such LIBOR Loans, Letters
of Credit or the Distribution LC (other than taxes imposed on the overall
net income of such Lender or of its Applicable Lending Office for any of
such LIBOR Loans by the jurisdiction in which such Lender has its principal
office or Applicable Lending Office); or (ii) imposes or modifies any
reserve, special deposit, minimum capital, capital ratio or similar
requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of such Lender, or the Facility A
Commitment or Loans of such Lender or the Eurodollar interbank market; or
(iii) imposes any other condition affecting this Agreement or any Note (or
any of such extensions of credit or liabilities) or such Lender's Facility
A Commitment or Loans. Each Lender will notify the Agent and the Borrower
of any event occurring after the Closing Date which will entitle such
Lender to compensation pursuant to this Section 5.01(a) as promptly as
practicable after it obtains knowledge thereof and determines to request
such compensation, and will designate a different Applicable Lending Office
for the Loans of such Lender affected by such event if such designation
will avoid the need for, or reduce the amount of, such compensation and
will not, in the sole opinion of such Lender, be disadvantageous to such
Lender, provided that such Lender shall have no obligation to so designate
an Applicable Lending Office located in the United States. If any Lender
requests compensation from the Borrower under this Section 5.01(a), the
Borrower may, by notice to such Lender, suspend the obligation of such
Lender to make additional Loans of the Type with respect to which such
compensa- tion is requested until the Regulatory Change giving rise to such
request ceases to be in effect (in which case the provisions of Section
5.04 shall be applicable).
(b) Regulatory Change. Without limiting the effect of the provisions of
Section 5.01(a), in the event that, by reason of any Regulatory Change or
any other circumstances arising after the Closing Date affecting such
Lender, the Eurodollar interbank market or such Lender's position in such
market, any Lender either (i) incurs Additional Costs based on or measured
by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender which includes deposits by
reference to which the interest rate on LIBOR Loans is determined as
provided in this Agreement or a category of extensions of credit or other
assets of such Lender which includes LIBOR Loans or (ii) becomes subject to
restrictions on the amount of such a category of liabilities or assets
which it may hold, then, if such Lender so elects by notice to the
Borrower, the obligation of such Lender to make additional LIBOR Loans
shall be suspended until such Regulatory Change or other circumstances
ceases to be in effect (in which case the provisions of Section 5.04 shall
be applicable).
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(c) Capital Adequacy. Without limiting the effect of the foregoing
provisions of this Section 5.01 (but without duplication), the Borrower
shall pay directly to any Lender from time to time on request such amounts
as such Lender may reasonably determine to be necessary to compensate such
Lender or its parent or holding company for any costs which it determines
are attributable to the maintenance by such Lender or its parent or holding
company (or any Applicable Lending Office), pursuant to any Governmental
Requirement following any Regulatory Change, of capital in respect of its
Facility A Commitment, its Note, or its Loans or any interest held by it in
any Letter of Credit or the Distribution LC, such compensation to include,
without limitation, an amount equal to any reduction of the rate of return
on assets or equity of such Lender or its parent or holding company (or any
Applicable Lending Office) to a level below that which such Lender or its
parent or holding company (or any Applicable Lending Office) could have
achieved but for such Governmental Requirement. Such Lender will notify the
Borrower that it is entitled to compensation pursuant to this Section
5.01(c) as promptly as practicable after it determines to request such
compensation.
(d) Compensation Procedure. Any Lender notifying the Borrower of the
incurrence of additional costs under this Section 5.01 shall in such notice
to the Borrower and the Agent set forth in reasonable detail the basis and
amount of its request for compensation. Determinations and allocations by
each Lender for purposes of this Section 5.01 of the effect of any
Regulatory Change pursuant to Section 5.01(a) or (b), or of the effect of
capital maintained pursuant to Section 5.01(c), on its costs or rate of
return of maintaining Loans or its obligation to make Loans or issue
Letters of Credit or the Distribution LC, or on amounts receivable by it in
respect of Loans or Letters of Credit or the Distribution LC, and of the
amounts required to compensate such Lender under this Section 5.01, shall
be conclusive and binding for all purposes, provided that such
determinations and allocations are made on a reasonable basis. Any request
for additional compensation under this Section 5.01 shall be paid by the
Borrower within thirty (30) days of the receipt by the Borrower of the
notice described in this Section 5.01(d).
Section 5.02 Limitation on LIBOR Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of LIBOR for any Interest
Period:
(i) the Agent determines (which determination shall be conclusive,
absent manifest error) that quotations of interest rates for the relevant
deposits referred to in the definition of "LIBOR" in Section 1.02 are not
being provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for LIBOR Loans as provided
herein; or
(ii) the Agent determines (which determination shall be conclusive,
absent manifest error) that the relevant rates of interest referred to in
the definition of "LIBOR" in Section 1.02 upon the basis of which the rate
of interest for LIBOR Loans for such Interest Period is to be determined
are not sufficient
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to adequately cover the cost to the Lenders of
making or maintaining LIBOR Loans;
then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional LIBOR Loans.
Section 5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain LIBOR
Loans hereunder, then such Lender shall promptly notify the Borrower thereof and
such Lender's obligation to make LIBOR Loans shall be suspended until such time
as such Lender may again make and maintain LIBOR Loans (in which case the
provisions of Section 5.04 shall be applicable).
Section 5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03.
If the obligation of any Lender to make LIBOR Loans shall be suspended pursuant
to Sections 5.01, 5.02 or 5.03 ("Affected Loans"), all Affected Loans which
would otherwise be made by such Lender shall be made instead as Base Rate Loans
(and, if an event referred to in Section 5.01(b) or Section 5.03 has occurred
and such Lender so requests by notice to the Borrower, all Affected Loans of
such Lender then outstanding shall be automatically converted into Base Rate
Loans on the date specified by such Lender in such notice) and, to the extent
that Affected Loans are so made as (or converted into) Base Rate Loans, all
payments of principal which would otherwise be applied to such Lender's Affected
Loans shall be applied instead to its Base Rate Loans.
Section 5.05 Compensation. The Borrower shall pay to each Lender within
thirty (30) days of receipt of written request of such Lender (which request
shall set forth, in reasonable detail, the basis for requesting such amounts and
which shall be conclusive and binding for all purposes provided that such
determinations are made on a reasonable basis), such amount or amounts as shall
compensate it for any loss, cost, expense or liability which such Lender
determines are attributable to:
(i) any payment, prepayment or conversion of a LIBOR Loan properly made
by such Lender or the Borrower for any reason (including, without
limitation, the acceleration of the Loans pursuant to Section 10.02) on a
date other than the last day of the Interest Period for such Loan; or
(ii) any failure by the Borrower for any reason (including but not
limited to, the failure of any of the conditions precedent specified in
Article VI to be satisfied) to borrow, continue or convert a LIBOR Loan
from such Lender on the date for such borrowing, continuation or conversion
specified in the relevant notice given pursuant to Section 2.02(c).
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the principal amount so paid, prepaid or converted
or not borrowed for the period from the date of
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such payment, prepayment or conversion or failure to borrow to the last day of
the Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan which would have commenced on the date specified
for such borrowing) at the applicable rate of interest for such Loan provided
for herein over (ii) the interest component of the amount such Lender would have
bid in the London interbank market for Dollar deposits of leading banks in
amounts comparable to such principal amount and with maturities comparable to
such period (as reasonably determined by such Lender).
ARTICLE VI
Conditions Precedent
Section 6.01 Initial Funding.
The obligation of the Lenders to make the Initial Funding is subject to
the receipt by the Agent and the Lenders of all fees payable pursuant to Section
2.04 on or before the Closing Date and the receipt by the Agent of the following
documents and satisfaction of the other conditions provided in this Section
6.01, each of which shall be satisfactory to the Agent in form and substance:
(a) A certificate of the Secretary or an Assistant Secretary of the
Borrower and of Kinder Morgan G.P. setting forth (i) resolutions of its
board of directors with respect to the authorization of the Borrower or
Kinder Morgan G.P. to execute and deliver the Loan Documents and the
Acquisition Documents to which it is a party and to enter into the
transactions contemplated in those documents, (ii) the officers of the
Borrower or Kinder Morgan G.P. (y) who are authorized to sign the Loan
Documents to which Borrower or Kinder Morgan G.P. is a party and (z) who
will, until replaced by another officer or officers duly authorized for
that purpose, act as its representative for the purposes of signing
documents and giving notices and other communications in connection with
this Agreement and the transactions contemplated hereby, (iii) specimen
signatures of the authorized officers, and (iv) the articles or certificate
of incorporation and bylaws of the Borrower or Kinder Morgan G.P.,
certified as being true and complete. The Agent and the Lenders may
conclusively rely on such certificate until the Agent receives notice in
writing from the Borrower or Kinder Morgan G.P. to the contrary.
(b) Certificates of the appropriate state agencies with respect to the
existence, qualification and good standing of the Borrower and Kinder
Morgan G.P.
(c) A compliance certificate which shall be substantially in the form
of Exhibit C, duly and properly executed by a Responsible Officer and dated
as of the date of the Initial Funding.
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(d) The Notes, duly completed and executed.
(e) The Security Instruments, including those described on Exhibit E,
duly completed and executed in sufficient number of counterparts for
recording, if necessary.
(f) An opinion of Morrison & Hecker, L.L.P., special counsel to the
Borrower and Kinder Morgan G.P., substantially in the form of Exhibit D
hereto.
(g) A certificate of insurance coverage of the Borrower evidencing that
the Borrower is carrying insurance in accordance with Section 7.19 hereof.
(h) The Agent shall have been furnished with appropriate UCC search
certificates reflecting the filing of all financing statements required to
perfect the security interests granted by the Security Instruments and
reflecting no prior liens or security interests.
(i) Evidence that the Borrower has (i) obtained all necessary or
advisable orders, consents, approvals and authorizations from, and (ii)
made all filings and notifications with, all Governmental Authorities and
other Persons required in connection with the Acquisition.
(j) The Agent shall have received a certificate of a Responsible
Officer of the Borrower certifying that (i) at least $9,000,000 of equity
has been contributed to the Borrower of which at least $1,486,651 has been
contributed by William V. Morgan (or his Affiliate) and $4,866,301 by
Richard D. Kinder (or his Affiliate), (ii) true and complete executed
copies of the Acquisition Documents, said agreements being in form and
substance reasonably satisfactory to the Agent, and being certified by such
Responsible Officer as being in full force and effect, and (iii) such other
related documents and information as the Agent shall have reasonably
requested.
(k) Evidence that the Acquisition shall be
completed with the Initial Funding.
(l) The Debt of Kinder Morgan Operating B shall have been refinanced on
terms acceptable to the Agent.
(m) The Agent shall have received an LP Unit Certificate registered in
the name of Kinder Morgan G.P. (or Enron Liquids Pipeline Company which is
the prior corporate name of Kinder Morgan G.P.), evidencing Kinder Morgan
G.P.'s ownership of 431,000 LP Units, together with a stock power endorsed
in blank.
(n) Such other documents as the Agent or any Lender or special counsel
to the Agent may reasonably request.
Section 6.02 Initial and Subsequent Loans and Letters of Credit. The
obligation of the Lenders to make Loans to the Borrower upon the occasion of
each borrowing hereunder
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and to issue, renew, extend or reissue Letters of
Credit or Distribution LC for the account of the Borrower (including the Initial
Funding) is subject to the further conditions precedent that, as of the date of
such Loans and after giving effect thereto: (i) no Default shall have occurred
and be continuing; (ii) no Material Adverse Effect shall have occurred; and
(iii) the representations and warranties made by the Borrower in Article VII and
in the Security Instruments shall be true on and as of the date of the making of
such Loans or issuance, renewal, extension or reissuance of a Letter of Credit
or Distribution LC with the same force and effect as if made on and as of such
date and following such new borrowing, except to the extent such representations
and warranties are expressly limited to an earlier date or the Majority Lenders
may expressly consent in writing to the contrary. Each request for a borrowing
or issuance, renewal, extension or reissuance of a Letter of Credit or
Distribution LC by the Borrower hereunder shall constitute a certification by
the Borrower to the effect set forth in the preceding sentence (both as of the
date of such notice and, unless the Borrower otherwise notifies the Agent prior
to the date of and immediately following such borrowing or issuance, renewal,
extension or reissuance of a Letter of Credit or Distribution LC as of the date
thereof).
Section 6.03 Conditions Relating to Letters of Credit. In addition to
the satisfaction of all other conditions precedent set forth in this Article VI,
the issuance, renewal, extension or reissuance of the Letters of Credit referred
to in Section 2.01(a) hereof is subject to the following conditions precedent:
(a) At least three (3) Business Days prior to the date of the issuance
and at least thirty (30) Business Days prior to the date of the renewal,
extension or reissuance of each Letter of Credit, the Agent shall have
received a written request for a Letter of Credit.
(b) Each of the Letters of Credit shall (i) be issued by the Agent,
(ii) contain such terms and provisions as are reasonably required by the
Agent, (iii) be for the account of the Borrower and (iv) expire not later
than the earlier of one (1) year from the date of issuance, renewal,
extension or reissuance or two (2) days before the Facility A Termination
Date.
(c) The Borrower shall have duly and validly executed and delivered to
the Agent a Letter of Credit Agreement pertaining to the Letter of Credit.
Section 6.04 Conditions Relating to Distribution LC. In addition to the
satisfaction of all other conditions precedent set forth in this Article VI, the
issuance, renewal, extension or reissuance of the Distribution LC is subject to
the following conditions precedent:
(a) the Distribution LC shall be issued by the
Agent in the form of Exhibit G.
(b) The Borrower shall have duly and validly executed and delivered to
the Agent a Letter of Credit Agreement pertaining to the Distribution LC.
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ARTICLE VII
Representations and Warranties
The Borrower represents and warrants to the Agent and the Lenders that
(each representation and warranty herein is given as of the Closing Date and
shall be deemed repeated and reaffirmed on the dates of each borrowing and
issuance, renewal, extension or reissuance of a Letter of Credit as provided in
Section 6.02):
Section 7.01 Corporate Existence. Each of the Borrower and each
Subsidiary: (i) is duly organized, legally existing and in good standing under
the laws of the jurisdiction of its incorporation or formation; (ii) has all
requisite corporate or partnership power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted; and (iii) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would have a Material Adverse Effect. Schedule 7.01 sets forth as of
the Closing Date the capital structure for the Borrower including any Debt that
is convertible into equity and includes the owners and percent of ownership and
voting rights of all stock, and other equity issued and outstanding as of the
Closing Date.
Section 7.02 Financial Condition.
(a) The pro forma balance sheet of Borrower as of the Closing Date (the
"Pro Forma Balance Sheet") correctly and fairly represents the financial
condition of Borrower as of the Closing Date. Except as reflected in the Pro
Forma Balance Sheet, Borrower has no material Debt, contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments.
(b) The balance sheet of Kinder Morgan G.P. as of September 30, 1996 which
was provided by Enron Liquid Holding Corp. to Borrower pursuant to the Purchase
Agreement, and the pro forma balance sheet for Kinder Morgan G.P. included
therewith (which reflects the pro forma financial condition of Kinder Morgan
G.P. following closing of the transactions described in the Purchase Agreement),
correctly and fairly represent the financial condition of Kinder Morgan G.P. as
of the dates specified therein. Except as reflected in such balance sheets,
Kinder Morgan G.P. has no material Debt, contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments.
Section 7.03 Litigation. Except as disclosed to the Lenders in Schedule
7.03 hereto, at the Closing Date there is no litigation, legal, administrative
or arbitral proceeding, investigation or other action of any nature pending or,
to the knowledge of the Borrower threatened against or affecting (a) the
Acquisition or (b) the Borrower or any Subsidiary which involves the possibility
of any judgment or liability against the Borrower or any Subsidiary not
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fully covered by insurance (except for normal deductibles), and which would have
a Material Adverse Effect.
Section 7.04 No Breach. Neither the execution and delivery of the Loan
Documents and the Acquisition Documents, nor compliance with the terms and
provisions thereof will conflict with or result in a breach of, or require any
consent which has not been obtained as of the Closing Date under, the respective
charter or by-laws or partnership agreement of the Borrower or any Subsidiary,
or any Governmental Requirement or any agreement or instrument to which the
Borrower or any Subsidiary is a party or by which it is bound or to which it or
its Properties are subject, or constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien upon any of the
revenues or assets of the Borrower or any Subsidiary pursuant to the terms of
any such agreement or instrument other than the Liens created by the Loan
Documents.
Section 7.05 Authority. The Borrower and Kinder Morgan G.P. have all
necessary corporate power and authority to execute, deliver and perform its
obligations under the Loan Documents and the Acquisition Documents to which it
is a party; and the execution, delivery and performance by the Borrower and
Kinder Morgan G.P. of the Loan Documents and the Acquisition Documents to which
it is a party, have been duly authorized by all necessary corporate action on
its part; and the Loan Documents and the Acquisition Documents constitute the
legal, valid and binding obligations of the Borrower and Kinder Morgan G.P.,
enforceable in accordance with their terms.
Section 7.06 Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority are necessary
for the execution, delivery or performance by the Borrower or any Subsidiary of
the Loan Documents or the Acquisition Documents or for the validity or
enforceability thereof, except for the recording and filing of the Security
Instruments as required by this Agreement.
Section 7.07 Use of Facilities. The proceeds of the Facility A Loans
shall be used to acquire the common stock of Enron Liquids Pipeline Company and
for general working capital and for the issuance of Letters of Credit for
general corporate purposes. The purpose of Facility B is for the issuance of the
Distribution LC. The proceeds of the Facility C Loans shall be used to acquire
the common stock of Enron Liquids Pipeline Company. The Borrower is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose, whether immediate, incidental or ultimate, of buying or
carrying margin stock (within the meaning of Regulation G, U or X of the Board
of Governors of the Federal Reserve System). No part of the proceeds of any Loan
or extension of credit hereunder will be used to buy or carry any margin stock.
Section 7.08 ERISA.
(a) The Borrower, each Subsidiary and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the
Code regarding each Plan, except where the failure to so maintain would not
have a Material Adverse Effect.
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(b) Each Plan is, and has been, maintained in substantial compliance
with ERISA and, where applicable, the Code, except where the failure to so
maintain a Plan would have a Material Adverse Effect.
(c) No act, omission or transaction has occurred which could result in
imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether
directly or indirectly) of (i) either a civil penalty assessed pursuant to
section 502(c), (i) or (l) of ERISA or a tax imposed pursuant to Chapter 43
of Subtitle D of the Code or (ii) breach of fiduciary duty liability
damages under section 409 of ERISA.
(d) No Plan (other than a defined contribution plan) or any trust
created under any such Plan has been terminated since September 2, 1974. No
liability to the PBGC (other than for the payment of current premiums which
are not past due) by the Borrower, any Subsidiary or any ERISA Affiliate
has been or is expected by the Borrower, any Subsidiary or any ERISA
Affiliate to be incurred with respect to any Plan. No ERISA Event with
respect to any Plan has occurred.
(e) Full payment when due has been made of all amounts which the
Borrower, any Subsidiary or any ERISA Affiliate is required under the terms
of each Plan or applicable law to have paid as contributions to such Plan,
and no accumulated funding deficiency (as defined in section 302 of ERISA
and section 412 of the Code), whether or not waived, exists with respect to
any Plan.
(f) The actuarial present value of the benefit liabilities under each
Plan which is subject to Title IV of ERISA does not, as of the end of the
Borrower's most recently ended fiscal year, exceed the current value of the
assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabil- ities. The term
"actuarial present value of the benefit liabilities" shall have the meaning
specified in section 4041 of ERISA.
(g) None of the Borrower, any Subsidiary or any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such
plan maintained to provide benefits to former employees of such entities,
that may not be terminated by the Borrower, a Subsidiary or any ERISA
Affiliate in its sole discretion at any time without any material
liability.
(h) None of the Borrower, any Subsidiary or any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time in the preceding
six calendar years, sponsored, maintained or contributed to, any
Multiemployer Plan.
(i) None of the Borrower, any Subsidiary or any ERISA Affiliate is
required to provide security under section 401(a)(29) of the Code due to a
Plan amendment that results in an increase in current liability for the
Plan.
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Section 7.09 Taxes. Except as set out in Schedule 7.09, each of the
Borrower and its Subsidiaries has filed all United States Federal income tax
returns and all other tax returns which are required to be filed by them and
have paid all material taxes due pursuant to such returns or pursuant to any
assessment received by the Borrower or any Subsidiary. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of taxes
and other governmental charges are, in the opinion of the Borrower, adequate. No
tax lien has been filed and, to the knowledge of the Borrower, no claim is being
asserted with respect to any such tax, fee or other charge.
Section 7.10 Titles, etc.
(a) Except as set out in Schedule 7.10, each of the Borrower and its
Subsidiaries has good and defensible title to its material (individually or
in the aggregate) Properties, free and clear of all Liens except Liens
permitted by Section 9.02.
(b) All leases and agreements necessary for the conduct of the business
of the Borrower and its Subsidiaries are valid and subsisting, in full
force and effect and there exists no default or event or circumstance which
with the giving of notice or the passage of time or both would give rise to
a default under any such lease or leases, which would adversely affect in
any material respect the conduct of the business of the Borrower and its
Subsidiaries.
(c) The rights, Properties and other assets presently owned, leased or
licensed by the Borrower and its Subsidiaries including, without
limitation, all easements and rights of way, include all rights, Properties
and other assets necessary to permit the Borrower and its Subsidiaries to
conduct their business in all material respects in the same manner as its
business has been conducted prior to the Closing Date.
(d) Except as provided in Schedule 7.10, all of the assets and
Properties of the Borrower and its Subsidiaries which are reasonably
necessary for the operation of its business are in good working condition
and are maintained in accordance with prudent business standards.
(e) After the Initial Funding the Borrower shall own good and
marketable title to 100% of the common stock of Kinder Morgan G.P., and
Kinder Morgan G.P. shall have no other stock issued or outstanding other
than the common stock owned by the Borrower and pledged to the Agent for
the benefit of the Lenders.
Section 7.11 No Material Misstatements. No written information,
statement, exhibit, certificate, document or report furnished to the Agent by
the Borrower or any Subsidiary in connection with the negotiation of this
Agreement contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statement contained therein not
materially misleading in the light of the circumstances in which made and with
respect to the Borrower and its Subsidiaries taken as a whole. There is no fact
peculiar to the Borrower or any Subsidiary which has a Material Adverse Effect
or in the future is reasonably likely to
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have (so far as the Borrower can now foresee) a Material Adverse Effect and
which has not been set forth in this Agreement or the other documents,
certificates and statements furnished to the Agent by or on behalf of the
Borrower or any Subsidiary prior to, or on, the Closing Date in connection with
the transactions contemplated hereby.
Section 7.12 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.13 Public Utility Holding Company Act. Neither the Borrower
nor any Subsidiary is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," or a "public utility" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
Section 7.14 Subsidiaries. Except as set forth
on Schedule 7.14, the Borrower has no Subsidiaries.
Section 7.15 Location of Business and Offices. The Borrower's principal
place of business and chief executive offices are located at the address stated
on the signature page of this Agreement. The principal place of business and
chief executive office of each Subsidiary are located at the addresses stated on
Schedule 7.14.
Section 7.16 Defaults. Neither the Borrower nor any Subsidiary is in
default nor has any event or circumstance occurred which, but for the expiration
of any applicable grace period or the giving of notice, or both, would
constitute a default under any material agreement or instrument to which the
Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary
is bound which default would have a Material Adverse Effect. No Default
hereunder has occurred and is continuing.
Section 7.17 Environmental Matters. Except (i) as provided in Schedule
7.17 or (ii) as would not have a Material Adverse Effect (or with respect to
(c), (d) and (e) below, where the failure to take such actions would not have a
Material Adverse Effect):
(a) Neither any Property of the Borrower or any Subsidiary nor the
operations conducted thereon violate any order or requirement of any court
or Governmental Authority or any Environmental Laws;
(b) Without limitation of clause (a) above, no Property of the Borrower
or any Subsidiary nor the operations currently conducted thereon or, to the
best knowledge of the Borrower, by any prior owner or operator of such
Property or operation, are in violation of or subject to any existing,
pending or to the best knowledge of the Borrower threatened action, suit,
investigation, inquiry or proceeding by or before any court or Governmental
Authority or to any remedial obligations under Environmental Laws;
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(c) All notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed in connection with the operation or use of
any and all Property of the Borrower and each Subsidiary, including without
limitation past or present treatment, storage, disposal or release of a
hazardous substance or solid waste into the environment, have been duly
obtained or filed, and the Borrower and each Subsidiary are in compliance
with the terms and conditions of all such notices, permits, licenses and
similar authorizations;
(d) All hazardous substances, solid waste, and oil and gas exploration
and production wastes, if any, generated at any and all Property of the
Borrower or any Subsidiary have in the past been transported, treated and
disposed of in accordance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and, to the best knowledge of the Borrower, all such transport
carriers and treatment and disposal facilities have been and are operating
in compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment,
and are not the subject of any existing, pending or threatened action,
investigation or inquiry by any Governmental Authority in connection with
any Environmental Laws;
(e) The Borrower has taken all steps reasonably necessary to determine
and has determined that no hazardous substances, solid waste, or oil and
gas exploration and production wastes, have been disposed of or otherwise
released and there has been no threatened release of any hazardous
substances on or to any Property of the Borrower or any Subsidiary [by
Borrower or its Subsidiaries] except in compliance with Environmental Laws
and so as not to pose an imminent and substantial endangerment to public
health or welfare or the environment;
(f) To the extent applicable, all Property of the Borrower and each
Subsidiary currently satisfies all design, operation, and equipment
requirements imposed by the OPA or scheduled as of the Closing Date to be
imposed by OPA during the term of this Agreement, and the Borrower does not
have any reason to believe that such Property, to the extent subject to
OPA, will not be able to maintain compliance with the OPA requirements
during the term of this Agreement; and
(g) Neither the Borrower nor any Subsidiary has any known contingent
liability in connection with any release or threatened release of any oil,
hazardous substance or solid waste into the environment.
Section 7.18 Compliance with the Law. Neither the Borrower nor any
Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
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Section 7.19 Insurance. Schedule 7.19 attached hereto contains an
accurate and complete description of all material policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by the
Borrower and each Subsidiary. All such policies are in full force and effect,
all premiums with respect thereto covering all periods up to and including the
date of the closing have been paid, and no notice of cancellation or termination
has been received with respect to any such policy. Such policies are sufficient
for compliance with all requirements of law and of all agreements to which the
Borrower or any Subsidiary is a party; are valid, outstanding and enforceable
policies; provide adequate insurance coverage in at least such amounts and
against at least such risks (but including in any event public liability) as are
usually insured against in the same general area by companies engaged in the
same or a similar business for the assets and operations of the Borrower and
each Subsidiary; will remain in full force and effect through the respective
dates set forth in Schedule 7.19 without the payment of additional premiums; and
will not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. Schedule 7.19 identifies all
material risks, if any, which the Borrower and its Subsidiaries and their
respective Board of Directors or officers have designated as being self insured.
To the best knowledge of Borrower, neither the Borrower nor any Subsidiary has
been refused any insurance with respect to its assets or operations, nor has its
coverage been limited below usual and customary policy limits, by an insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance during the last three years.
Section 7.20 Hedging Agreements. Schedule 7.20 sets forth, as of the
Closing Date, a true and complete list of all Hedging Agreements (including
commodity price swap agreements, forward agreements or contracts of sale which
provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities) of the Borrower and Kinder Morgan G.P., the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net mark to market value thereof, all credit support agreements
relating thereto (including any margin required or supplied), and the
counterparty to each such agreement.
Section 7.21 Restriction on Liens. Except as provided in Schedule 7.21,
neither the Borrower nor Kinder Morgan G.P. is a party to any agreement or
arrangement (other than this Agreement and the Security Instruments), or subject
to any order, judgment, writ or decree, which either restricts or purports to
restrict its ability to grant Liens to other Persons on or in respect of their
respective assets of Properties.
Section 7.22 Kinder Morgan G.P. Assets. At the
closing of the Acquisition Kinder Morgan G.P. shall own an
approximate: (i) 1.01% general partner interest in Kinder
Morgan Energy, (ii) 1.01% general partner interest in
Kinder Morgan Operating A, and (iii) 1.01% general partner
interest in Kinder Morgan Operating B.
Section 7.23 LP Units. Kinder Morgan G.P. has held the 431,000 LP Units
pledged to the Agent for the benefit of the Lenders continuously for more than
three (3) years for purposes of Rule 144. The Agent can freely sell all of the
LP Units in the public markets without registration pursuant to Rule 144,
provided that the Agent is not an affiliate of Kinder
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Morgan Energy for purposes of Rule 144. Kinder Morgan
G.P. has the right to register the 431, 000 LP Units.
Section 7.24 Acquisition Documents. Schedule
7.24 is a complete list of the Acquisition Documents.
ARTICLE VIII
Affirmative Covenants
The Borrower covenants and agrees that, so long as any of the Commitments
are in effect and until payment in full of all Indebtedness hereunder, all
interest thereon and all other amounts payable by the Borrower hereunder:
Section 8.01 Financial Statements. The Borrower shall deliver, or shall
cause to be delivered, to the Agent with sufficient copies of each for the
Lenders:
(a) As soon as available and in any event within 120 days after the end
of each fiscal year of the Borrower, the audited consolidated and unaudited
consolidating statements of income, stockholders' equity, changes in
financial position and cash flow of the Borrower and Kinder Morgan G.P. for
such fiscal year, and the related consolidated and consolidating balance
sheets of the Borrower and Kinder Morgan G.P. as at the end of such fiscal
year, and setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, and accompanied by the related
opinion of independent public accountants of recognized national standing
acceptable to the Agent which opinion shall state that said financial
statements fairly present the consolidated and consolidating financial
condition and results of operations of the Borrower and Kinder Morgan G.P.
as at the end of, and for, such fiscal year and that such financial
statements have been prepared in accordance with GAAP except for such
changes in such principles with which the independent public accountants
shall have concurred and such opinion shall not contain a "going concern"
or like qualification or exception, and a certificate of such accountants
stating that, in making the examination necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any Default.
(b) As soon as available and in any event within 60 days after the end
of each of the first three fiscal quarterly periods of each fiscal year of
the Borrower, unaudited consolidated and consolidating statements of
income, stockholders' equity, changes in financial position and cash flow
of the Borrower and Kinder Morgan G.P. for such period and for the period
from the beginning of the respective fiscal year to the end of such period,
and the related unaudited consolidated and consolidating balance sheets as
at the end of such period, and setting forth in each case in comparative
form the corresponding figures for the corresponding period in the
preceding fiscal year, accompanied by the certificate of a Responsible
Officer, which certificate shall state that to the best of the Responsible
Officer's knowledge said financial statements fairly present
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the consolidated and consolidating financial condition and results of
operations of the Borrower and Kinder Morgan G.P. in accordance with GAAP,
as at the end of, and for, such period (subject to normal year-end audit
adjustments).
(c) Promptly after the Borrower knows that any Default or any Material
Adverse Effect has occurred, a notice of such Default or Material Adverse
Effect, describing the same in reasonable detail and the action the
Borrower proposes to take with respect thereto.
(d) Promptly upon receipt thereof, a copy of each other report or
letter submitted to the Borrower or any Subsidiary by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Borrower and its Subsidiaries, and a copy of any
response by the Borrower or any Subsidiary of the Borrower, or the Board of
Directors of the Borrower or any Subsidiary of the Borrower, to such letter
or report.
(e) Promptly upon its becoming available, each financial statement,
report, notice or proxy statement sent by the Borrower to stockholders
generally and Kinder Morgan Energy to partners generally and each regular
or periodic report and any registration statement, prospectus or written
communication (other than transmittal letters) in respect thereof filed by
the Borrower and Kinder Morgan Energy with or received by the Borrower or
Kinder Morgan Energy in connection therewith from any securities exchange
or the SEC or any successor agency.
(f) Promptly after the furnishing thereof, copies of any statement,
report or notice furnished to or any Person pursuant to the terms of any
indenture, loan or credit or other similar agreement, other than this
Agreement and not otherwise required to be furnished to the Agent pursuant
to any other provision of this Section 8.01.
(g) From time to time such other information regarding the business,
affairs or financial condition of the Borrower or any Subsidiary
(including, without limitation, any Plan or Multiemployer Plan and any
reports or other information required to be filed under ERISA) as the
Required Lenders or the Agent may reasonably request.
(h) As soon as available and in any event within forty-five (45)
Business Days after the last day of each calendar quarter, a report, in
form and substance satisfactory to the Agent, setting forth as of the last
Business Day of such calendar quarter a true and complete list of all
Hedging Agreements (including commodity price swap agreements, forward
agreements or contracts of sale which provide for prepayment for deferred
shipment or delivery of oil, gas or other commodities) of the Borrower and
Kinder Morgan G.P., the material terms thereof (including the type, term,
effective date, termination date and notional amounts or volumes), the net
mark to market value therefor, any new credit support agreements relating
thereto not listed on Schedule 7.20, any margin required or supplied under
any credit support document, and the counterparty to each such agreement.
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The Borrower will furnish to the Agent, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate
substantially in the form of Exhibit C hereto executed by a Responsible Officer
(i) certifying as to the matters set forth therein and stating that no Default
has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail), and (ii) setting forth in
reasonable detail the computations necessary to determine whether the Borrower
is in compliance with Sections 9.12, 913 and 9.14 as of the end of the
respective fiscal quarter or fiscal year.
Section 8.02 Litigation. The Borrower shall promptly give to the Agent
notice of all legal or arbitral proceedings, and of all proceedings before any
Governmental Authority affecting the Borrower or any Subsidiary, except
proceedings which, if adversely determined, would not have a Material Adverse
Effect. The Borrower will, and will cause Kinder Morgan G.P. to, promptly notify
the Agent of any claim, judgment, Lien or other encumbrance affecting any
Property of the Borrower or Kinder Morgan G.P. if the value of the claim,
judgment, Lien, or other encumbrance affecting such Property shall exceed
$250,000.
Section 8.03 Maintenance, Etc.
(a) The Borrower shall and shall cause each Subsidiary to: preserve and
maintain its corporate existence and all of its material rights, privileges
and franchises; keep books of record and account in which full, true and
correct entries will be made of all dealings or transactions in relation to
its business and activities; comply with all Governmental Requirements if
failure to comply with such requirements will have a Material Adverse
Effect; pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for
any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which
adequate reserves are being maintained; upon reasonable notice, permit
representatives of the Agent, during normal business hours, to examine,
copy and make extracts from its books and records, to inspect its
Properties, and to discuss its business and affairs with its officers, all
to the extent reasonably requested by such the Agent; and keep, or cause to
be kept, insured by financially sound and reputable insurers all Property
of a character usually insured by Persons engaged in the same or similar
business similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such Persons and carry such other
insurance as is usually carried by such Persons including, without
limitation, environmental risk insurance to the extent reasonably
available.
(b) Contemporaneously with the delivery of the financial statements
required by Section 8.01(a) to be delivered for each year, the Borrower
will furnish or cause to be furnished to the Agent a certificate of
insurance coverage from the insurer in form and substance satisfactory to
the Agent and, if requested, will furnish the Agent copies of the
applicable policies.
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(c) The Borrower will and will cause each Subsidiary to operate its
Properties or cause such Properties to be operated in a careful and
efficient manner in accordance with the practices of the industry and in
compliance with all applicable contracts and agreements and in compliance
in all material respects with all Governmental Requirements.
Section 8.04 Environmental Matters.
(a) The Borrower will and will cause each Subsidiary to establish and
implement such procedures as may be reasonably necessary to continuously
determine and assure that any failure of the following does not have a
Material Adverse Effect: (i) all Property of the Borrower and its
Subsidiaries and the operations conducted thereon and other activities of
the Borrower and its Subsidiaries are in compliance with and do not violate
the requirements of any Environmental Laws, (ii) no oil, hazardous
substances or solid wastes are disposed of or otherwise released on or to
any Property owned by any such party except in compliance with
Environmental Laws, (iii) no hazardous substance will be released on or to
any such Property in a quantity equal to or exceeding that quantity which
requires reporting pursuant to Section 103 of CERCLA, and (iv) no oil, oil
and gas exploration and production wastes or hazardous substance is
released on or to any such Property so as to pose an imminent and
substantial endangerment to public health or welfare or the environment.
(b) The Borrower will promptly notify the Agent in writing of any
threatened action, investigation or inquiry by any Governmental Authority
of which the Borrower has knowledge in connection with any Environmental
Laws, excluding routine testing and corrective action.
Section 8.05 Further Assurances. The Borrower will and will cause
Kinder Morgan G.P. to cure promptly any defects in the creation and issuance of
the Notes and the execution and delivery of the Security Instruments and this
Agreement. The Borrower at its expense will and will cause Kinder Morgan G.P. to
promptly execute and deliver to the Agent upon request all such other documents,
agreements and instruments to comply with or accomplish the covenants and
agreements of the Borrower or Kinder Morgan G.P., as the case may be, in the
Security Instruments and this Agreement, or to further evidence and more fully
describe the collateral intended as security for the Notes, or to correct any
omissions in the Security Instruments, or to state more fully the security
obligations set out herein or in any of the Security Instruments, or to perfect,
protect or preserve any Liens created pursuant to any of the Security
Instruments, or to make any recordings, to file any notices or obtain any
consents, all as may be necessary or appropriate in connection therewith.
Section 8.06 Performance of Obligations. The Borrower will pay the
Notes according to the reading, tenor and effect thereof; and the Borrower will
and will cause Kinder Morgan G.P. to do and perform every act and discharge all
of the obligations to be performed and discharged by them under the Security
Instruments and this Agreement, at the time or times and in the manner
specified.
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Section 8.07 ERISA Information and Compliance. The Borrower will
promptly furnish and will cause the Subsidiaries and any ERISA Affiliate to
promptly furnish to the Agent with sufficient copies to the Lenders (i) promptly
after the filing thereof with the United States Secretary of Labor, the Internal
Revenue Service or the PBGC, copies of each annual and other report with respect
to each Plan or any trust created thereunder, (ii) immediately upon becoming
aware of the occurrence of any ERISA Event or of any "prohibited transaction,"
as described in section 406 of ERISA or in section 4975 of the Code, in
connection with any Plan or any trust created thereunder, a written notice
signed by a Responsible Officer specifying the nature thereof, what action the
Borrower, the Subsidiary or the ERISA Affiliate is taking or proposes to take
with respect thereto, and, when known, any action taken or proposed by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto, and (iii) immediately upon receipt thereof, copies of any notice of the
PBGC's intention to terminate or to have a trustee appointed to administer any
Plan. With respect to each Plan (other than a Multiemployer Plan), the Borrower
will, and will cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full
and in a timely manner, without incurring any late payment or underpayment
charge or penalty and without giving rise to any lien, all of the contribution
and funding requirements of section 412 of the Code (determined without regard
to subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.
Section 8.08 Collateral. The Borrower shall and shall cause Kinder
Morgan G.P. to have the following Property subject to a first and prior Lien for
the benefit of the Agent on behalf of the Lenders pursuant to the Security
Instruments: (a) 100% of the issued and outstanding stock of Kinder Morgan G.P.,
and (b) 431,000 LP Units owned by Kinder Morgan G.P. and (c) any additional LP
Units owned or acquired by the Borrower or Kinder Morgan G.P.. The Borrower
shall cause the LP Units to be evidenced by a certificate of common units
representing limited partnership interest in Kinder Morgan Energy and deliver
such certificates to the Agent together with executed stockpowers within five
(5) Business Days of the Closing Date.
Section 8.09 Minimum Distribution. The Borrower shall cause Kinder
Morgan G.P., as general partner of Kinder Morgan Energy to cause Kinder Morgan
Energy, to maintain a minimum cash distribution on each LP Unit equal to no less
than $0.55 per quarter.
ARTICLE IX
Negative Covenants
The Borrower covenants and agrees that, so long as any of the Commitments
are in effect and until payment in full of Indebtedness hereunder, all interest
thereon and all other amounts payable by the Borrower hereunder, without the
prior written consent of the Majority Lenders:
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Section 9.01 Debt. The Borrower will not and
will not permit Kinder Morgan G.P. to incur, create,
assume or suffer to exist any Debt, except:
(a) the Notes or other Indebtedness arising under the Loan Documents or
any guaranty of or suretyship arrangement for the Notes or other
Indebtedness arising under the Loan Documents;
(b) Debt of the Borrower and Kinder Morgan G.P.
existing on the Closing Date which is reflected in
the Financial Statements or is disclosed in Schedule
9.01, and any renewals or extensions (but not
increases) thereof;
(c) accounts payable (for the deferred purchase price of Property or
services) from time to time incurred in the ordinary course of business
which, if greater than 90 days past the invoice or billing date, are being
contested in good faith by appropriate proceedings if reserves adequate
under GAAP shall have been established therefor;
(d) Debt under capital leases (as required to be reported on the
financial statements of the Borrower and Kinder Morgan G.P. pursuant to
GAAP) not to exceed in the case of the Borrower, $50,000, and in the case
of Kinder Morgan G.P., $600,000, outstanding at one time;
(e) Debt of the Borrower under Hedging
Agreements with the Agent or as approved by the
Majority Lenders;
(f) Debt of a Special Purpose Subsidiary which
is non recourse to the Borrower or Kinder Morgan G.P.
on terms acceptable to the Majority Lenders;
(g) Debt of Kinder Morgan G.P. arising by
operation of law as a result of Kinder Morgan G.P.
being the general partner of Kinder Morgan Energy,
Kinder Morgan Operating A or Kinder Morgan Operating
B; and
(h) other Debt not to exceed in the case of the Borrower, $50,000, and
in the case of Kinder Morgan G.P., $600,000, in the aggregate outstanding
at any time.
Section 9.02 Liens. The Borrower will not and will not permit Kinder
Morgan G.P. to create, incur, assume or permit to exist any Lien on any Property
(now owned or hereafter acquired by the Borrower or Kinder Morgan G.P.), except:
(a) Liens securing the payment of any
Indebtedness;
(b) Excepted Liens;
(c) Liens securing leases allowed under Section
9.01(d) but only on the Property under lease; and
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(d) Liens disclosed on Schedule 9.02.
Section 9.03 Investments, Loans and Advances. The Borrower will not and
will not permit Kinder Morgan G.P. to make or permit to remain outstanding any
loans or advances to or investments in any Person, except that the foregoing
restriction shall not apply to:
(a) investments, loans or advances reflected in
the Financial Statements or which are disclosed to
the Lenders in Schedule 9.03;
(b) accounts receivable arising in the ordinary
course of business;
(c) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in each
case maturing within one year from the date of creation thereof;
(d) commercial paper maturing within one year from the date of creation
thereof rated in the highest grade by Standard & Poors Corporation or
Moody's Investors Service, Inc.;
(e) deposits maturing within one year from the date of creation thereof
with, including certificates of deposit issued by, any Lender or any office
located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has
capital, surplus and undivided profits aggregating at least $100,000,000.00
(as of the date of such Lender's or bank or trust company's most recent
financial reports) and has a short term deposit rating of no lower than A2
or P2, as such rating is set forth from time to time, by Standard & Poors
Corporation or Moody's Investors Service, Inc., respectively;
(f) deposits in money market funds investing
exclusively in investments described in Section
9.03(c), 9.03(d) or 9.03(e); and
(g) investments, loans or advances made by the
Borrower or Kinder Morgan G.P. in or to its
Subsidiaries, not to exceed at any one time
outstanding $150,000 in the aggregate.
Section 9.04 Dividends, Distributions and Redemptions. The Borrower
will not declare or pay any dividend, purchase, redeem or otherwise acquire for
value any of its stock now or hereafter outstanding, return any capital to its
stockholders or make any distribution of its assets to its stockholders, except
that the Borrower may pay dividends on and redeem its common and preferred stock
provided that (a) the Distribution LC shall have expired, (b) no Default shall
have occurred and be continuing or would result from such dividend or redemption
and (c) the cumulative dollar amount of the dividends and redemption made by the
Borrower for the period commencing with the date the Distribution LC expired
through the determination date shall not exceed in the aggregate 50% of Cash
Flow after Debt Service for the same period.
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Section 9.05 Sales and Leasebacks. The Borrower will not and will not
permit Kinder Morgan G.P. to enter into any arrangement, directly or indirectly,
with any Person whereby the Borrower or Kinder Morgan G.P. shall sell or
transfer any of its Property, whether now owned or hereafter acquired, and
whereby the Borrower or Kinder Morgan G.P. shall then or thereafter rent or
lease as lessee such Property or any part thereof or other Property which the
Borrower or Kinder Morgan G.P. intends to use for substantially the same purpose
or purposes as the Property sold or transferred.
Section 9.06 Nature of Business. Neither the Borrower nor any
Subsidiary will allow any material change to be made in the character of its
business.
Section 9.07 Limitation on Leases. The Borrower will not and will not
permit Kinder Morgan G.P. to create, incur, assume or suffer to exist any
obligation for the payment of rent or hire of Property of any kind whatsoever
(real or personal including capital leases but excluding leases of Hydrocarbon
Interests), under leases or lease agreements which would cause the aggregate
amount of all payments made pursuant to all such leases or lease agreements to
exceed $50,000 in the case of the Borrower and $600,000 in the case of Kinder
Morgan G.P. in any period of twelve consecutive calendar months during the life
of such leases.
Section 9.08 Mergers, Etc. Neither the Borrower nor any Subsidiary will
merge into or with or consolidate with any other Person, or sell, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its Property or assets to any other Person.
Section 9.09 Proceeds of Notes. The Borrower will not permit the
proceeds of the Notes to be used for any purpose other than those permitted by
Section 7.07. Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulation G, U or X or any other regulation of the Board
of Governors of the Federal Reserve System or to violate Section 7 of the
Securities Exchange Act of 1934 or any rule or regulation thereunder, in each
case as now in effect or as the same may hereinafter be in effect.
Section 9.10 ERISA Compliance. The Borrower will not at any time:
(a) Engage in, or permit any Subsidiary or ERISA Affiliate to engage
in, any transaction in connection with which the Borrower, any Subsidiary
or any ERISA Affiliate could be subjected to either a civil penalty
assessed pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed
by Chapter 43 of Subtitle D of the Code;
(b) Terminate, or permit any Subsidiary or ERISA Affiliate to
terminate, any Plan in a manner, or take any other action with respect to
any Plan, which could result in any material liability to the Borrower, any
Subsidiary or any ERISA Affiliate to the PBGC;
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(c) Fail to make, or permit any Subsidiary or ERISA Affiliate to fail
to make, full payment when due of all amounts which, under the provisions
of any Plan, agreement relating thereto or applicable law, the Borrower, a
Subsidiary or any ERISA Affiliate is required to pay as contributions
thereto;
(d) Permit to exist, or allow any Subsidiary or ERISA Affiliate to
permit to exist, any accumulated funding deficiency within the meaning of
Section 302 of ERISA or section 412 of the Code, whether or not waived,
with respect to any Plan;
(e) Permit, or allow any Subsidiary or ERISA Affiliate to permit, the
actuarial present value of the benefit liabilities under any Plan
maintained by the Borrower, any Subsidiary or any ERISA Affiliate which is
regulated under Title IV of ERISA to exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA)
of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified
in section 4041 of ERISA;
(f) Contribute to or assume an obligation to contribute to, or permit
any Subsidiary or ERISA Affiliate to contribute to or assume an obligation
to contribute to, any Multiemployer Plan;
(g) Acquire, or permit any Subsidiary or ERISA Affiliate to acquire, an
interest in any Person that causes such Person to become an ERISA Affiliate
with respect to the Borrower, any Subsidiary or any ERISA Affiliate if such
Person sponsors, maintains or contributes to, or at any time in the
six-year period preceding such acquisition has sponsored, maintained, or
contributed to, (1) any Multiemployer Plan, or (2) any other Plan that is
subject to Title IV of ERISA under which the actuarial present value of the
benefit liabilities under such Plan exceeds the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA)
of such Plan allocable to such benefit liabilities;
(h) Incur, or permit any Subsidiary or ERISA Affiliate to incur, a
liability to or on account of a Plan under sections 515, 4062, 4063, 4064,
4201 or 4204 of ERISA;
(i) Contribute to or assume an obligation to contribute to, or permit
any Subsidiary or ERISA Affiliate to contribute to or assume an obligation
to contribute to, any employee welfare benefit plan, as defined in section
3(1) of ERISA, including, without limitation, any such plan maintained to
provide benefits to former employees of such entities, that may not be
terminated by such entities in their sole discretion at any time without
any material liability; or
(j) Amend or permit any Subsidiary or ERISA Affiliate to amend, a Plan
resulting in an increase in current liability such that the Borrower, any
Subsidiary or any ERISA Affiliate is required to provide security to such
Plan under section 401(a)(29) of the Code.
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Section 9.11 Sale or Discount of Receivables.
The Borrower will not and will not permit Kinder Morgan
G.P. to discount or sell (with or without recourse) any of
its notes receivable or accounts receivable.
Section 9.12 Current Ratio. The Borrower will not permit its ratio of
(i) consolidated current assets plus the amount of the unused Aggregate Facility
A Commitments to (ii) consolidated current liabilities (excluding current
maturities of the Notes, if any) to be less than 1.1 to 1.0 at any time.
Section 9.13 Debt Service Coverage Ratio. The Borrower will not permit
its Debt Service Ratio as of the end of any fiscal quarter of the Borrower
(calculated quarterly at the end of each fiscal quarter) to be less than the
amount for the applicable date set forth below:
Date Ratio
Closing Date to March 31, 1998 1.1 to 1.0
April 1, 1998 to December 31, 1998 1.3 to 1.0
January 1, 1999 to August 31, 1999 1.4 to 1.0
For purposes of this Section 9.13, "Debt Service Ratio" shall mean the ratio of
(i) Cash Flow for the four fiscal quarters ending on such date to (ii) cash
payments made for principal and interest for such four fiscal quarters of the
Borrower.
Section 9.14 Margin Maintenance Ratio. (a) The
Borrower will not permit the ratio of the market value of
the LP Units owned by Kinder Morgan G.P. to Funded Debt to
be less than 1.20011 to 1.00 at any time.
(b) The Borrower will not permit the ratio of the market value of the LP
Units owned by Kinder Morgan G.P. to Funded Debt to be less than 1.4001 to 1.00
for any ten (10) consecutive days that common units representing a limited
partner interest of Kinder Morgan Energy are publicly traded.
Section 9.15 Sale of Properties. The Borrower will not, and will not
permit Kinder Morgan G.P. to, sell, assign, convey or otherwise transfer any
Property, except for non Mortgaged Property which shall not exceed $300,000 in
the aggregate in any fiscal year.
Section 9.16 Environmental Matters. Neither the Borrower nor any
Subsidiary will cause or permit any of its Property to be in violation of, or do
anything or permit anything to be done which will subject any such Property to
any remedial obligations under any Environmental Laws, assuming disclosure to
the applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations would have a Material Adverse Effect.
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Section 9.17 Transactions with Affiliates. Neither the Borrower nor any
Subsidiary will enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any service,
with any Affiliate unless such transactions are otherwise permitted under this
Agreement, are in the ordinary course of its business and are upon fair and
reasonable terms no less favorable to it than it would obtain in a comparable
arm's length transaction with a Person not an Affiliate.
Section 9.18 Subsidiaries. The Borrower shall
not, and shall not permit Kinder Morgan G.P. to, create
any additional Subsidiaries or partnerships except for
Subsidiaries which are established solely for the purpose
of acquiring Properties financed by Debt which is non
recourse to the Borrower and Kinder Morgan G.P. ("Special
Purpose Subsidiary"). The Borrower shall not and shall
not permit any Subsidiary to sell or to issue any stock or
ownership interest of a Subsidiary except to the Borrower
or Kinder Morgan G.P. and except in compliance with
Section 9.03.
Section 9.19 Negative Pledge Agreements. The Borrower shall not, and
shall not permit Kinder Morgan G.P. to create, incur, assume or suffer to exist
any contract, agreement or understanding (other than this Agreement and the
Security Instruments) which in any way prohibits or restricts the granting,
conveying, creation or imposition of any Lien on any of its Property or
restricts any Subsidiary from paying dividends to the Borrower, or which
requires the consent of or notice to other Persons in connection therewith.
ARTICLE X
Events of Default; Remedies
Section 10.01 Events of Default. One or more of
the following events shall constitute an "Event of
Default":
(a) the Borrower shall (i) default in the payment or prepayment when
due of any principal on any Loan or any reimbursement obligation for a
disbursement made under any Letter of Credit or the Distribution LC, (ii)
default, and such default shall continue unremedied for three (3) or more
Business Days, in the payment when due of any interest on any Loan or any
fees or other amount payable by it under the Loan Documents; or
(b) the Borrower or Kinder Morgan G.P. shall default in the payment
when due of any principal of or interest on any of its other Debt
aggregating $100,000 or more, or any event specified in any note,
agreement, indenture or other document evidencing or relating to any such
Debt shall occur if the effect of such event is to cause, or (with the
giving of any notice or the lapse of time or both) to permit the holder or
holders of such Debt (or a trustee or agent on behalf of such holder or
holders) to cause, such Debt to become due prior to its stated maturity; or
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(c) any representation, warranty or certification made or deemed made
herein or in any Security Instrument by the Borrower or Kinder Morgan G.P.,
or any certificate furnished to or the Agent pursuant to the provisions
hereof or any Security Instrument, shall prove to have been false or
misleading as of the time made or furnished in any material respect; or
(d) the Borrower shall default in the performance of any of its
obligations under Article IX or any other Article of this Agreement other
than under Article VIII; or the Borrower shall default in the performance
of any of its obligations under Article VIII or any Security Instrument
(other than the payment of amounts due which shall be governed by Section
10.01(a)) and such default shall continue unremedied for a period of thirty
(30) days after the earlier to occur of (i) notice thereof to the Borrower
by the Agent, or (ii) the Borrower otherwise becoming aware of such
default; or
(e) the Borrower shall admit in writing its
inability to, or be generally unable to, pay its
debts as such debts become due; or
(f) the Borrower shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of its creditors, (iii) commence
a voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), (iv) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, liquidation
or composition or readjustment of debts, (v) fail to controvert in a timely
and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Federal Bankruptcy Code, or
(vi) take any corporate action for the purpose of effecting any of the
foregoing; or
(g) a proceeding or case shall be commenced, without the application or
consent of the Borrower, in any court of competent jurisdiction, seeking
(i) its liquida- tion, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of the Borrower of all
or any substantial part of its assets, or (iii) similar relief in respect
of the Borrower under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of 60 days; or (iv) an order
for relief against the Borrower shall be entered in an involuntary case
under the Federal Bankruptcy Code; or
(h) a judgment or judgments for the payment of money in excess of
$150,000 in the aggregate shall be rendered by a court against the Borrower
or any Subsidiary and the same shall not be discharged (or provision shall
not be made for such discharge), or a stay of execution thereof shall not
be procured, within thirty (30) days from the date of entry thereof and the
Borrower or such Subsidiary shall not, within said period of 30
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days, or such longer period during which execution of the same shall have
been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
(i) the Security Instruments after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be in
full force and effect and valid, binding and enforceable in accordance with
their terms, or cease to create a valid and perfected Lien of the priority
required thereby on any of the collateral purported to be covered thereby,
except to the extent permitted by the terms of this Agreement, or the
Borrower shall so state in writing; or
(j) any Letter of Credit or the Distribution LC becomes the subject
matter of any order, judgment, injunction or any other such determination,
or if the Borrower or any other Person shall petition or apply for or
obtain any order restricting payment by First Union under any Letter of
Credit or the Distribution LC or extending First Union's liability under
any Letter of Credit or the Distribution LC beyond the expiration date
stated therein or otherwise agreed to by First Union; or
(k) the Borrower discontinues its usual business
or suffers to exist any material change in its
ownership, control or management; or
(l) Kinder Morgan G.P. takes, suffers or permits
to exist any of the events or conditions referred to
in paragraphs (e), (f), (g) or (h) hereof or if any
provision of any Security Instrument to which it is a
party shall for any reason cease to be valid and
binding on Kinder Morgan G.P. or if Kinder Morgan
G.P. shall so state in writing; or
(m) any Subsidiary takes, suffers or permits to exist any of the events
or conditions referred to in paragraphs (e), (f), (g) or (h) hereof which
would result in a Material Adverse Effect; or
(n) Kinder Morgan Energy or any of its Subsidiaries shall default in
the payment when due of any principal of or interest in any of its Debt
aggregating $5,000,000.
Section 10.02 Remedies.
(a) In the case of an Event of Default other than one referred to in
clauses (e), (f) or (g) of Section 10.01 or in clause (m) to the extent it
relates to clauses (e), (f) or (g), the Agent, upon request of the Majority
Lenders, shall, by notice to the Borrower, cancel the Commitments and/or
declare the principal amount then outstanding of, and the accrued interest
on, the Loans and all other amounts payable by the Borrower hereunder and
under the Notes (including without limitation the payment of cash
collateral to secure the LC Exposure and exposure under the Distribution
LC) to be forthwith due and payable, whereupon such amounts shall be
immediately due and payable without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other formalities of any
kind, all of which are hereby expressly waived by the Borrower.
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(b) In the case of the occurrence of an Event of Default referred to in
clauses (e), (f) or (g) of Section 10.01 or in clause (m) to the extent it
relates to clauses (e), (f) or (g), the Commitments shall be automatically
canceled and the principal amount then outstanding of, and the accrued
interest on, the Loans and all other amounts payable by the Borrower
hereunder and under the Notes (including without limitation the payment of
cash collateral to secure the LC Exposure and exposure under the
Distribution LC) shall become automatically immediately due and payable
without presentment, demand, protest, notice of intent to accelerate,
notice of acceleration or other formalities of any kind, all of which are
hereby expressly waived by the Borrower.
(c) All proceeds received after maturity of the Notes, whether by
acceleration or otherwise shall be applied first to reimbursement of
expenses and indemnities provided for in this Agreement and the Security
Instruments; second to accrued interest on the Notes; third to fees; fourth
pro rata to principal outstanding on the Notes and other Indebtedness;
fifth to serve as cash collateral to be held by First Union to secure the
LC Exposure and exposure under the Distribution LC; and any excess shall be
paid to the Borrower or as otherwise required by any Governmental
Requirement.
ARTICLE XI
The Agent
Section 11.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the Security Instruments with such powers as are specifically delegated to
the Agent by the terms of this Agreement and the Security Instruments, together
with such other powers as are reasonably incidental thereto. The Agent (which
term as used in this sentence and in Section 11.05 and the first sentence of
Section 11.06 shall include reference to its Affiliates and its and its
Affiliates' officers, directors, employees, attorneys, accountants, experts and
agents): (i) shall have no duties or responsibilities except those expressly set
forth in the Loan Documents, and shall not by reason of the Loan Documents be a
trustee or fiduciary for any Lender; (ii) makes no representation or warranty to
any Lender and shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement, or for the value, validity, effectiveness,
genuineness, execution, effectiveness, legality, enforceability or sufficiency
of this Agreement, any Note or any other document referred to or provided for
herein or for any failure by the Borrower or any other Person (other than the
Agent) to perform any of its obligations hereunder or thereunder or for the
existence, value, perfection or priority of any collateral security or the
financial or other condition of the Borrower, its Subsidiaries or any other
obligor or guarantor; (iii) except pursuant to Section 11.07 shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder; and (iv) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith including its own ordinary
negligence, except for its own gross
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negligence or willful misconduct. The Agent may employ agents, accountants,
attorneys and experts and shall not be responsible for the negligence or
misconduct of any such agents, accountants, attorneys or experts selected by it
in good faith or any action taken or omitted to be taken in good faith by it in
accordance with the advice of such agents, accountants, attorneys or experts.
The Agent may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until a written notice of the assignment or transfer
thereof permitted hereunder shall have been filed with the Agent and consented
to by Agent and the Borrower (which consent shall not be unreasonably withheld).
The Agent is authorized to release any collateral that is permitted to be sold
or released pursuant to the terms of the Loan Documents.
Section 11.02 Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telecopier, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent.
Section 11.03 Defaults. The Agent shall not be deemed to have knowledge
of the occurrence of a Default (other than the non-payment of principal of or
interest on Loans or of fees or failure to reimburse for Letter of Credit
drawings) unless the Agent has received notice from a Lender or the Borrower
specifying such Default and stating that such notice is a "Notice of Default."
In the event that the Agent receives such a notice of the occurrence of a
Default, the Agent shall give prompt notice thereof to the Lenders. In the event
of a payment Default, the Agent shall give each Lender prompt notice of each
such payment Default.
Section 11.04 Rights as a Lender. With respect to its Commitments and
the Loans made by it and its participation in the issuance of Letters of Credit,
First Union (and any successor acting as Agent) in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Agent, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. First Union (and any successor
acting as Agent) and its Affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to and generally engage in any kind
of banking, trust or other business with the Borrower (and any of its
Affiliates) as if it were not acting as the Agent, and First Union and its
Affiliates may accept fees and other consideration from the Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
Section 11.05 Indemnification. The Lenders agree to indemnify the Agent
ratably in accordance with their Percentage Shares for the Indemnity Matters as
described in Section 12.03 to the extent not indemnified or reimbursed by the
Borrower under Section 12.03, but without limiting the obligations of the
Borrower under said Section 12.03 and for any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating
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to or arising out of: (i) this Agreement, the Security Instruments or any other
documents contemplated by or referred to herein or the transactions contemplated
hereby, but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder or (ii) the enforcement of any of the terms of this Agreement,
any Security Instrument or of any such other documents; whether or not any of
the foregoing specified in this Section 11.05 arises from the sole or concurrent
negligence of the Agent, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Agent.
Section 11.06 Non-Reliance on Agent and other Lenders. Each Lender
acknowledges and agrees that it has, independently and without reliance on the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Borrower and its
decision to enter into this Agreement, and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement.
The Agent shall not be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement, the Notes, the Security
Instruments or any other document referred to or provided for herein or to
inspect the properties or books of the Borrower. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its Affiliates) which may come into the possession of the Agent or any of its
Affiliates. In this regard, each Lender acknowledges that Vinson & Elkins L.L.P.
is acting in this transaction as special counsel to the Agent only, except to
the extent otherwise expressly stated in any legal opinion or any Loan Document.
Each Lender will consult with its own legal counsel to the extent that it deems
necessary in connection with the Loan Documents and the matters contemplated
therein.
Section 11.07 Action by Agent. Except for action or other matters
expressly required of the Agent hereunder, the Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall (i) receive
written instructions from the Majority Lenders (or all of the Lenders as
expressly required by Section 12.04) specifying the action to be taken, and (ii)
be indemnified to its satisfaction by the Lenders against any and all liability
and expenses which may be incurred by it by reason of taking or continuing to
take any such action.
The instructions of the Majority Lenders (or all of the Lenders as expressly
required by Section 12.04) and any action taken or failure to act pursuant
thereto by the Agent shall be binding on all of the Lenders. If a Default has
occurred and is continuing, the Agent shall take such action with respect to
such Default as shall be directed by the Majority Lenders (or all of the Lenders
as required by Section 12.04) in the written instructions (with indemnities)
described in this Section 11.07, provided that, unless and until the Agent shall
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interests of the Lenders. In
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no event, however, shall the Agent be required to take any action which exposes
the Agent to personal liability or which is contrary to this Agreement and the
Security Instruments or applicable law.
Section 11.08 Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving notice thereof to the Lenders and the Borrower, and
the Agent may be removed at any time with or without cause by the Majority
Lenders. Upon any such resignation or removal, the Majority Lenders shall have
the right to appoint a successor Agent with the consent of Borrower (which shall
not be unreasonably withheld). If no successor Agent shall have been so
appointed by the Majority Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving of notice of
resignation or the Majority Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent with the
consent of Borrower (which shall not be unreasonably withheld). Upon the
acceptance of such appointment hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article XI and
Section 12.03 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Agent.
ARTICLE XII
Miscellaneous
Section 12.01 Waiver. No failure on the part of the Agent or any Lender
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power or privilege under any of the Loan Documents shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege under any of the Loan Documents preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Section 12.02 Notices. All notices and other communications provided
for herein and in the other Loan Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement or the other Loan
Documents) shall be given or made by telex, telecopy, courier or U.S. Mail or in
writing and telexed, telecopied, mailed or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof or in the Loan Documents, except that for notices and other
communications to the Agent other than payment of money, the Borrower need only
send such notices and communications to the Agent care of the Houston address of
First Union Corporation; or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement or in the other Loan Documents, all such
communications shall be deemed to have been duly given when transmitted, if
transmitted before
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1:00 p.m. local time on a Business Day (otherwise on the next succeeding
Business Day) by telex or telecopier and evidence or confirmation of receipt is
obtained, or personally delivered or, in the case of a mailed notice, three (3)
Business Days after the date deposited in the mails, postage prepaid, in each
case given or addressed as aforesaid.
Section 12.03 Payment of Expenses, Indemnities,
etc. The Borrower agrees:
(a) whether or not the transactions hereby contemplated are
consummated, pay all reasonable expenses of the Agent in the administration
(both before and after the execution hereof and including advice of counsel
as to the rights and duties of the Agent and the Lenders with respect
thereto) of, and in connection with the negotiation, syndication,
investigation, preparation, execution and delivery of, recording or filing
of, preservation of rights under, enforcement of, and refinancing,
renegotiation or restructuring of, the Loan Documents and any amendment,
waiver or consent relating thereto (including, without limitation, travel,
photocopy, mailing, courier, telephone and other similar expenses of the
Agent, the cost of environmental audits, surveys and appraisals at
reasonable intervals, the reasonable fees and disbursements of counsel and
other outside consultants for the Agent and, in the case of enforcement,
the reasonable fees and disbursements of counsel for the Agent and any of
the Lenders); and promptly reimburse the Agent for all amounts expended,
advanced or incurred by the Agent or the Lenders to satisfy any obligation
of the Borrower under this Agreement or any Security Instrument, including
without limitation, all costs and expenses of foreclosure;
(b) to indemnify the Agent and each Lender and each of their Affiliates
and each of their officers, directors, employees, representatives, agents,
attorneys, accountants and experts ("Indemnified Parties") from, hold each
of them harmless against and promptly upon demand pay or reimburse each of
them for, the Indemnity Matters which may be incurred by or asserted
against or involve any of them (whether or not any of them is designated a
party thereto) as a result of, arising out of or in any way related to (i)
any actual or proposed use by the Borrower of the proceeds of any of the
Loans or Letters of Credit, (ii) the execution, delivery and performance of
the Loan Documents, (iii) the operations of the business of the Borrower
and its Subsidiaries, (iv) the failure of the Borrower or any Subsidiary to
comply with the terms of any Security Instrument or this Agreement, or with
any Governmental Requirement, (v) any inaccuracy of any representation or
any breach of any warranty of the Borrower set forth in any of the Loan
Documents, (vi) the issuance, execution and delivery or transfer of or
payment or failure to pay under any Letter of Credit, (vii) the payment of
a drawing under any Letter of Credit notwithstanding the non-compliance,
non- delivery or other improper presentation of the manually executed
draft(s) and certification(s), (viii) any assertion that the Lenders were
not entitled to receive the proceeds received pursuant to the Security
Instruments or (ix) any other aspect of the Loan Documents, including,
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without limitation, the reasonable fees and disbursements of counsel and
all other expenses incurred in connection with investigating, defending or
preparing to defend any such action, suit, proceeding (including any
investigations, litigation or inquiries) or claim and including all
Indemnity Matters arising by reason of the ordinary negligence of any
Indemnified Party, but excluding all Indemnity Matters arising solely by
reason of claims between the Lenders or any Lender and the Agent or a
Lender's shareholders against the Agent or Lender or by reason of the gross
negligence or willful misconduct on the part of the Indemnified Party; and
(c) to indemnify and hold harmless from time to time the Indemnified
Party from and against any and all losses, claims, cost recovery actions,
administrative orders or proceedings, damages and liabilities to which any
such Person may become subject (i) under any Environmental Law applicable
to the Borrower or any Subsidiary or any of their Properties, including
without limitation, the treatment or disposal of hazardous substances on
any of their Properties, (ii) as a result of the breach or non-compliance
by the Borrower or any Subsidiary with any Environmental Law applicable to
the Borrower or any Subsidiary, (iii) due to past ownership by the Borrower
or any Subsidiary of any of their Properties or past activity on any of
their Properties which, though lawful and fully permissible at the time,
could result in present liability, (iv) the presence, use, release,
storage, treatment or disposal of hazardous substances on or at any of the
Properties owned or operated by the Borrower or any Subsidiary, or (v) any
other environmental, health or safety condition in connection with the Loan
Documents, provided, however, no indemnity shall be afforded under this
Section 12.03(c) in respect of any Property for any occurrence arising from
the acts or omissions of the Agent or any Lender during the period after
which such Person, its successors or assigns shall have obtained possession
of such Property (whether by foreclosure or deed in lieu of foreclosure, as
mortgagee-in-possession or otherwise).
(d) No Indemnified Party may settle any claim to be indemnified without
the consent of the indemnitor, such consent not to be unreasonably
withheld; provided, that the indemnitor may not reasonably withhold consent
to any settlement that an Indemnified Party proposes, if the indemnitor
does not have the financial ability to pay all its obligations outstanding
and asserted against the indemnitor at that time, including the maximum
potential claims against the Indemnified Party to be indemnified pursuant
to this Section 12.03.
(e) In the case of any indemnification hereunder, the Agent or Lender,
as appropriate shall give notice to the Borrower of any such claim or
demand being made against the Indemnified Party and the Borrower shall have
the non-exclusive right to join
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in the defense against any such claim or demand provided that if the
Borrower provides a defense, the Indemnified Party shall bear its own cost
of defense unless there is a conflict between the Borrower and such
Indemnified Party.
(f) The foregoing indemnities shall extend to the Indemnified Parties
notwithstanding the sole or concurrent negligence of every kind or
character whatsoever, whether active or passive, whether an affirma- tive
act or an omission, including without limitation, all types of negligent
conduct identified in the restatement (second) of torts of one or more of
the Indemnified Parties or by reason of strict liability imposed without
fault on any one or more of the Indemnified Parties. To the extent that an
Indemnified Party is found to have committed an act of gross negligence or
willful misconduct, this contractual obligation of indemnification shall
continue but shall only extend to the portion of the claim that is deemed
to have occurred by reason of events other than the gross negligence or
willful misconduct of the Indemnified Party.
(g) The Borrower's obligations under this Section 12.03 shall survive
any termination of this Agreement and the payment of the Notes and shall
continue thereafter in full force and effect.
(h) The Borrower shall pay any amounts due under this Section 12.03
within thirty (30) days of the receipt by the Borrower of notice of the
amount due.
Section 12.04 Amendments, Etc. Any provision of this Agreement or any
Security Instrument may be amended, modified or waived with the Borrower's and
the Majority Lenders' prior written consent; provided that (i) no amendment,
modification or waiver which extends the final maturity of the Loans, increases
the Aggregate Maximum Credit Amounts, forgives the principal amount of any
Indebtedness outstanding under this Agreement, releases any guarantor of the
Indebtedness or releases all or substantially all of the collateral, reduces the
interest rate applicable to the Loans or the fees payable to the Lenders
generally, affects Section 2.03, this Section 12.04 or Section 12.06(a) or
modifies the definition of "Majority Lenders" shall be effective without consent
of all Lenders; (ii) no amendment, modification or waiver which increases the
Maximum Credit Amount of any Lender shall be effective without the consent of
such Lender; and (iii) no amendment, modification or waiver which modifies the
rights, duties or obligations of the Agent shall be effective without the
consent of the Agent.
Section 12.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
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Section 12.06 Assignments and Participations.
(a) The Borrower may not assign its rights or obligations hereunder or
under the Notes or any Letters of Credit without the prior consent of all
of the Lenders and the Agent.
(b) Any Lender may, upon the written consent of the Agent and the
Borrower (which consent will not be unreasonably withheld), assign to one
or more assignees all or a portion of its rights and obligations under this
Agreement pursuant to an Assignment Agreement substantially in the form of
Exhibit F (an "Assignment") provided, however, that (i) any such assignment
shall be in the amount of the lesser of (y) $5,000,000 or (z) the aggregate
rights and obligations of the Lender making such assignment immediately
before such assignment and (ii) the assignee or assignor shall pay to the
Agent a processing and recordation fee of $2,500 for each assignment. Any
such assignment will become effective upon the execution and delivery to
the Agent of the Assignment and the consent of the Agent and the Borrower.
Promptly after receipt of an executed Assignment, the Agent shall send to
the Borrower a copy of such executed Assignment. Upon receipt of such
executed Assignment and approval thereof by Borrower, the Borrower, will,
at its own expense, execute and deliver new Notes to the assignor and/or
assignee, as appropriate, in accordance with their respective interests as
they appear. Upon the effectiveness of any assignment pursuant to this
Section 12.06(b), the assignee will become a "Lender," if not already a
"Lender," for all purposes of this Agreement and the Security Instruments.
The assignor shall be relieved of its obligations hereunder to the extent
of such assignment (and if the assigning Lender no longer holds any rights
or obligations under this Agreement, such assigning Lender shall cease to
be a "Lender" hereunder except that its rights under Sections 4.06, 5.01,
5.05 and 12.03 shall not be affected). The Agent will prepare on the last
Business Day of each month during which an assignment has become effective
pursuant to this Section 12.06(b), a new Annex I giving effect to all such
assignments effected during such month, and will promptly provide the same
to the Borrower and each of the Lenders.
(c) Each Lender may transfer, grant or assign participations in all or
any part of such Lender's interests hereunder pursuant to this Section
12.06(c) to any Person, provided that: (i) such Lender shall remain a
"Lender" for all purposes of this Agreement and the transferee of such
participation shall not constitute a "Lender" hereunder; and (ii) no
participant under any such participation shall have rights to approve any
amendment to or waiver of any of the Loan Documents except to the extent
such amendment or waiver would (x) forgive any principal owing on any
Indebtedness or extend the final maturity of the Loans, (y) reduce the
interest rate (other than as a result of waiving the applicability of any
post-default increases in interest rates) or fees applicable to any of the
Commitments or Loans or Letters of Credit in which such participant is
participating, or postpone the payment of any thereof, or (z) release any
guarantor of the Indebtedness or release all or substantially all of the
collateral (except as provided in the Loan Documents) supporting any of the
Commitments or Loans or Letters of Credit in which such participant is
participating. In the case of any such
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participation, the participant shall not have any rights under this
Agreement or any of the Security Instruments (the participant's rights
against the granting Lender in respect of such participation to be those
set forth in the agreement with such Lender creating such participation),
and all amounts payable by the Borrower hereunder shall be determined as if
such Lender had not sold such participation, provided that such participant
shall be entitled to receive additional amounts under Article V on the same
basis as if it were a Lender and be indemnified under Section 12.03 as if
it were a Lender. In addition, each agreement creating any participation
must include an agreement by the participant to be bound by the provisions
of Section 12.15.
(d) The Lenders may furnish any information concerning the Borrower in
the possession of the Lenders from time to time to assignees and
participants (including prospective assignees and participants); provided
that, such Persons agree to be bound by the provisions of Section 12.15
hereof.
(e) Notwithstanding anything in this Section 12.06 to the contrary, any
Lender may assign and pledge its Note to any Federal Reserve Bank or the
United States Treasury as collateral security pursuant to Regulation A of
the Board of Governors of the Federal Reserve System and any operating
circular issued by such Federal Reserve System and/or such Federal Reserve
Bank. No such assignment and/or pledge shall release the assigning and/or
pledging Lender from its obligations hereunder.
(f) Notwithstanding any other provisions of this Section 12.06, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the "Blue Sky" laws of
any state.
Section 12.07 Invalidity. In the event that any one or more of the
provisions contained in any of the Loan Documents or the Letters of Credit, [the
Letter of Credit Agreements] shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of the Notes, this Agreement or any
Security Instrument.
Section 12.08 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 12.09 References. The words "herein," "hereof," "hereunder" and
other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Any reference herein to a Section shall be deemed to refer to the applicable
Section of this Agreement unless otherwise stated herein. Any reference herein
to an exhibit or schedule shall be deemed to refer to the applicable exhibit or
schedule attached hereto unless otherwise stated herein.
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Section 12.10 Survival. The obligations of the parties under Section
4.06, Article V, and Sections 11.05 and 12.03 shall survive the repayment of the
Loans and the termination of the Commitments. To the extent that any payments on
the Indebtedness or proceeds of any collateral are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent, the Indebtedness so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Agent's and the Lenders' Liens, security interests,
rights, powers and remedies under this Agreement and each Security Instrument
shall continue in full force and effect. In such event, each Security Instrument
shall be automatically reinstated and the Borrower shall take such action as may
be reasonably requested by the Agent and the Lenders to effect such
reinstatement.
Section 12.11 Captions. Captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
Section 12.12 No Oral Agreements. The Loan Documents embody the entire
agreement and understanding between the parties and supersede all other
agreements and understandings between such parties relating to the subject
matter hereof and thereof. The Loan Documents represent the final agreement
between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. there are no
unwritten oral agreements between the parties.
Section 12.13 Governing Law; Submission to Jurisdiction.
(a) this Agreement and the Notes shall be
governed by, and construed in accordance with, the
laws of the state of Texas except to the extent that
United States federal law permits any Lender to
charge interest at the rate allowed by the laws of
the state where such Lender is located. Tex. Rev.
Civ. Stat. Ann. Art. 5069, Ch. 15 (which regulates
certain revolving credit loan accounts and revolving
tri-party accounts) shall not apply to this Agreement
or the notes.
(b) any legal action or proceeding with respect to the Loan Documents
shall be brought in the courts of the state of Texas or of the United
States of America for the Southern District of Texas, and, by execution and
delivery of this Agreement, the Borrower hereby accepts for itself and (to
the extent permitted by law) in respect of its Property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Borrower
hereby irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such respective
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jurisdictions. This submission to jurisdiction is
non-exclusive and does not preclude the Agent or any
Lender from obtaining jurisdiction over the Borrower
in any court otherwise having jurisdiction.
(c) the Borrower Irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid,
to the Borrower at its said address, such service to become effective
thirty (30) days after such mailing.
(d) nothing herein shall affect the right of the Agent or any Lender or
any holder of a Note to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against the Borrower
in any other jurisdiction.
(e) Borrower and each lender hereby (i) irrevocably waive, to the
maximum extent not prohibited by law, any right it may have to claim or
recover in any such litigation any special, exemplary, punitive or
consequential damages, or damages other than, or in addition to, actual
damages; certify that no party hereto nor any representative or agent of
counsel for any party hereto has represented, expressly or otherwise, or
implied that such party would not, in the event of litigation, seek to
enforce the foregoing waiver, and (iii) acknowledge that it has been
induced to enter into this Agreement, the Security Instruments and the
transactions contemplated hereby and thereby by, among other things, the
mutual waivers and certifications contained in this Section 12.13.
Section 12.14 Interest. It is the intention of the parties hereto that
each Lender shall conform strictly to usury laws applicable to it. Accordingly,
if the transactions contemplated hereby would be usurious as to any Lender under
laws applicable to it (including the laws of the United States of America and
the State of Texas or any other jurisdiction whose laws may be mandatorily
applicable to such Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in any
of the Loan Documents or any agreement entered into in connection with or as
security for the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and (ii) in the event that the maturity of the Notes is accelerated
by reason of an election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to any Lender may never include
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more than the maximum amount allowed by such applicable law, and excess
interest, if any, provided for in this Agreement or otherwise shall be canceled
automatically by such Lender as of the date of such acceleration or prepayment
and, if theretofore paid, shall be credited by such Lender on the principal
amount of the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower). All sums paid or agreed to be paid to any Lender for
the use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to such Lender, be amortized, prorated, allocated
and spread throughout the full term of the Loans evidenced by the Notes until
payment in full so that the rate or amount of interest on account of any Loans
hereunder does not exceed the maximum amount allowed by such applicable law. If
at any time and from time to time (i) the amount of interest payable to any
Lender on any date shall be computed at the Highest Lawful Rate applicable to
such Lender pursuant to this Section 12.14 and (ii) in respect of any subsequent
interest computation period the amount of interest otherwise payable to such
Lender would be less than the amount of interest payable to such Lender computed
at the Highest Lawful Rate applicable to such Lender, then the amount of
interest payable to such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Lender until the total amount of interest payable to such
Lender shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without giving
effect to this Section 12.14. To the extent that Article 5069-1.04 of the Texas
Revised Civil Statutes is relevant for the purpose of determining the Highest
Lawful Rate, such Lender elects to determine the applicable rate ceiling under
such Article by the indicated weekly rate ceiling from time to time in effect.
Section 12.15 Confidentiality. In the event that the Borrower provides
to the Agent or the Lenders written confidential information belonging to the
Borrower, if the Borrower shall denominate such information in writing as
"confidential", the Agent and the Lenders shall thereafter maintain such
information in confidence in accordance with the standards of care and diligence
that each utilizes in maintaining its own confidential information. This
obligation of confidence shall not apply to such portions of the information
which (i) are in the public domain, (ii) hereafter become part of the public
domain without the Agent or the Lenders breaching their obligation of confidence
to the Borrower, (iii) are previously known by the Agent or the Lenders from
some source other than the Borrower, (iv) are hereafter developed by the Agent
or the Lenders without using the Borrower's information, (v) are hereafter
obtained by or available to the Agent or the Lenders from a third party who owes
no obligation of confidence to the Borrower with respect to such information or
through any other means other than through disclosure by the Borrower, (vi) are
disclosed with the Borrower's consent, (vii) must be disclosed either pursuant
to any Governmental Requirement or to Persons regulating the activities of the
Agent or the Lenders, or (viii) as may be required by law or regulation or order
of any Governmental Authority in any judicial, arbitration or governmental
proceeding. Further, the Agent or a Lender may disclose any such information to
any other Lender, any independent petroleum engineers or consultants, any
independent certified public accountants, any legal counsel employed by such
Person in connection with this Agreement or any Security Instrument, including
without limitation, the enforcement or exercise of all rights and remedies
thereunder, or any assignee or participant (including prospective assignees and
-69-
<PAGE>
participants) in the Loans; provided, however, that the Agent or the Lenders
shall receive a confidentiality agreement from the Person to whom such
information is disclosed such that said Person shall have the same obligation to
maintain the confidentiality of such information as is imposed upon the Agent or
the Lenders hereunder. Notwithstanding anything to the contrary provided herein,
this obligation of confidence shall cease three (3) years from the date the
information was furnished, unless the Borrower requests in writing at least
thirty (30) days prior to the expiration of such three year period, to maintain
the confidentiality of such information for an additional three year period. The
Borrower waives any and all other rights it may have to confidentiality as
against the Agent and the Lenders arising by contract, agreement, statute or
law, except as expressly stated in this Section 12.13.
Section 12.16 Effectiveness. This Agreement
shall be effective on the Closing Date (the "Effective
Date").
Section 12.17 Exculpation Provisions. Each of the parties hereto
specifically agrees that it has a duty to read this Agreement and the Security
Instruments and agrees that it is charged with notice and knowledge of the terms
of this Agreement and the Security Instruments; that it has in fact read this
Agreement and is fully informed and has full notice and knowledge of the terms,
conditions and effects of this Agreement; that it has been represented by
independent legal counsel of its choice throughout the negotiations preceding
its execution of this Agreement and the Security Instruments; and has received
the advice of its attorney in entering into this Agreement and the Security
Instruments; and that it recognizes that certain of the terms of this Agreement
and the Security Instruments result in one party assuming the liability inherent
in some aspects of the transaction and relieving the other party of its
responsibility for such liability. Each party hereto agrees and covenants that
it will not contest the validity or enforceability of any exculpatory provision
of this Agreement and the Security Instruments on the basis that the party had
no notice or knowledge of such provision or that the provision is not
"conspicuous."
-70-
<PAGE>
The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
BORROWER: KINDER MORGAN, INC.
By:_____________________________
William V. Morgan
President
Address for Notices:
1301 McKinney Street, Suite 3450
Houston, Texas 77010
Telecopier No.: (713) 844-9570
Telephone No.: (713) 844-9500
Attention: Richard D. Kinder
Chief Executive Office and Principal
Place of Business
1301 McKinney Street, Suite 3450
Houston, Texas 77010
S-1
<PAGE>
LENDER AND AGENT: FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:_____________________________
Name: Michael J. Kolosowsky
Title: Vice President
First Union National Bank of North Carolina
301 South College Street, TW-10
Charlotte, North Carolina 28288-0608
Telecopier No.: (704) 383-0288
Telephone No.: (704) 383-0281
Attention: Syndication Agency Services
With copy to:
First Union Corporation of North Carolina
1001 Fannin, Suite 2255
Houston, Texas 77002
Telecopier No.: (713) 650-6354
Telephone No.: (713) 650-3716
Attention: Paul N. Riddle
S-2
<PAGE>
<TABLE>
<CAPTION>
ANNEX 1
LIST OF COMMITMENTS
Name of Lender Percentage Share Facility A Facility B Facility C
<S> <C> <C> <C> <C>
First Union National Bank
of North Carolina 100% $10,000,000 $10,518,000 $5,000,000
</TABLE>
<PAGE>
THIS INSTRUMENT PREPARED
BY AND WHEN RECORDED
RETURN TO:
Vinson & Elkins L.L.P.
1001 Fannin, Suite 3562
Houston, Texas 77002-6760
Attention: Larry Barbour
FIRST AMENDMENT TO MORTGAGE AND
SECURITY AGREEMENT WITH ASSIGNMENT OF RENTS
THIS FIRST AMENDMENT TO MORTGAGE AND SECURITY AGREEMENT WITH ASSIGNMENT OF
RENTS (this "Amendment") is entered into as of the effective time and date
hereinafter stated (the "Effective Date") by and between KINDER MORGAN OPERATING
L.P. "B" (formerly known as Enron Transportation Services, L.P.), a Delaware
limited partnership with an address for notice hereunder of 1301 McKinney
Street, Suite 3450, Houston, Texas 77010 ("Mortgagor") and FIRST UNION NATIONAL
BANK OF NORTH CAROLINA, a national banking association with offices and banking
quarters at 301 South College Street, Charlotte, North Carolina 28288,
individually (in such capacity, "First Union") and as agent for the lenders
which are or become parties to the Credit Agreement referred to below
(collectively called the "Lenders") (in such capacity as agent, together with
its successors in such capacity, the "Mortgagee").
R E C I T A L S
A. Mortgagor and First Union previously entered into a Credit Agreement
dated as of December 29, 1994, as amended (the "Prior Credit Agreement").
B. The Prior Credit Agreement is secured by, among other things, that
certain Mortgage and Security Agreement With Assignment of Rents dated of even
date therewith from Mortgagor to First Union (the "Mortgage").
C. The Mortgage was duly recorded in the State of Illinois as follows
encumbering the property described on Exhibit A hereto:
<PAGE>
County Date Filed Recording Information
Jackson 1/9/95 Book 862, Page 195,
Mortgage Records,
#233117
Randolph 1/9/95 Book 464, Page 846,
Mortgage Records,
#147782
D. Of even date herewith, Mortgagor, Mortgagee and the Lenders are
entering into that certain Credit Agreement, and in connection therewith,
Mortgagor and Mortgagee now desire to amend the Mortgage.
NOW, THEREFORE, in view of the foregoing and for good and valuable
consideration, the receipt of which is hereby acknowledged, Mortgagor and
Mortgagee do hereby agree as follows:
1. All capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Mortgage.
2. All references in the Mortgage to "this Mortgage", as defined in the
opening paragraph of the Mortgage shall mean the Mortgage as amended hereby and
as the same may from time to time be further amended or supplemented.
3. Each Lender has appointed and authorized First Union to act as its
agent under the Mortgage pursuant to Section 11.01 of the Credit Agreement,
therefore, all references in the Mortgage to "Mortgagee", as defined in the
opening paragraph of the Mortgage shall be deemed to be references to First
Union National Bank of North Carolina, as agent for the Lenders.
4. Section 1.4 of the Mortgage is amended to delete the figure
"$29,650,000" and substitute the figure "$31,750,000" therefor.
5. Article II of the Mortgage is amended to read as follows:
"INDEBTEDNESS SECURED
This conveyance is made to secure and enforce the payment of the
following indebtedness, obligations and liabilities:
(a) Payment of and performance of any and all indebtedness,
obligations and liabilities of Mortgagor pursuant to the Credit Agreement
dated as of February 14, 1997 among Mortgagor, Mortgagee and the lenders
party thereto (the "Lenders") (as amended, restated or supplemented from
time to time
-2-
<PAGE>
the "Governing Agreement"), including without limitation, those certain
promissory notes which are or may be executed by Mortgagor in the
aggregate principal amount of $15,875,000 with final maturity on or before
February 14, 1999 and all other notes given in substitution therefor or in
modification, renewal or extension thereof, in whole or in part (such
notes, as from time to time supplemented, amended or modified and all
other notes given in substitution therefor or in modification, renewal or
extension thereof, in whole or in part, being hereafter called the
"Revolving Credit Notes");
(b) Replacement Term Note dated of even date herewith executed by
Mortgagor payable to the order of First Union National Bank of North
Carolina in the face amount of $23,700,000, bearing interest and payable
as therein provided with a final maturity of all principal and interest of
February 14, 1999 and all other notes given in substitution therefor or in
modification, renewal or extension thereof, in whole or in part (such
notes, as from time to time supplemented, amended or modified and all
other notes given in substitution therefor or in modification, renewal or
extension thereof, in whole or in part, being hereafter the "Replacement
Term Note"; the Revolving Credit Notes and the Term Note being herein
collectively referred to as the "Notes");
(c) Payment of any sums which may be advanced or paid by Mortgagee
under the terms hereof on account of the failure of Mortgagor to comply
with the covenants of Mortgagor contained herein; and all other
indebtedness of Mortgagor arising pursuant to the provisions of this
Mortgage;
(d) Payment of any additional loans made by the Lenders to Mortgagor.
It is contemplated that the Lenders may lend additional sums to Mortgagor
from time to time, but shall not be obligated to do so, and Mortgagor
agrees that any such additional loans shall be secured by this Mortgage;
(e) Payment of and performance of any and all present or future
obligations of Mortgagor according to the terms of any present or future
interest or currency rate swap, rate cap, rate floor, rate collar,
exchange transaction, forward rate agreement or other exchange or rate
protection agreements or any option with respect to any such transaction
now existing or hereafter entered into between Mortgagor and Mortgagee or
any of the Lenders;
(f) Payment of and performance of any and all present or future
obligations of Mortgagor according to the terms of any present or future
swap agreements, cap, floor, collar, exchange transaction, forward
agreement or other exchange or protection agreements relating to crude
oil, natural gas or other hydrocarbons or any option with respect to any
such transaction now existing or hereafter entered into between Mortgagor
and Mortgagee or any of the Lenders;
-3-
<PAGE>
(g) All reimbursement obligations for drawn or undrawn portions under
that certain irrevocable letter of credit in the amount of $24,128,548.00
issued by First Union National Bank of North Carolina (the "Replacement
Letter of Credit") and any letter of credit now outstanding or hereafter
issued under or pursuant to the Governing Agreement in replacement of the
Replacement Letter of Credit; and
(h) Payment of and performance of any and all other indebtedness,
obligations and liabilities of any kind of Mortgagor to the Mortgagee or
any Lender, now or hereafter existing, arising directly between Mortgagor
and the Mortgagee or any Lender or acquired outright, as a participation,
conditionally or as collateral security from another by the Mortgagee or
any Lender, absolute or contingent, joint and/or several, secured or
unsecured, due or not due, arising by operation of law or otherwise, or
direct or indirect, including indebtedness, obligations and liabilities to
the Mortgagee or any Lender of Mortgagor as a member of any partnership,
syndicate, association or other group, and whether incurred by Mortgagor
as principal, surety, endorser, guarantor, accommodation party or
otherwise.
The term "Indebtedness" as used herein shall mean and include said
Notes and all other indebtedness described, referred to or mentioned in
paragraphs (a) through (h), inclusive, of this Article II and all
renewals, extensions and modifications thereof and all substitutions
therefor, in whole or in part. Notwithstanding any other provision of this
Mortgage, the Indebtedness shall not include any reimbursement obligation
under the Support Letter of Credit (as defined in the Governing Agreement)
that may be issued under the Governing Agreement and any principal or
interest outstanding on the Support Term Note (as defined in the Governing
Agreement).
It is expressly understood and agreed that the Indebtedness hereby
secured will in no event exceed two hundred percent (200%) of (i) the
total face amount of the Notes plus (ii) the total interest which may
hereafter accrue under the Notes on such face amount plus (iii) any fees,
costs or expenses which may be payable hereunder or under any Loan
Document."
6. All references to "Default Rate" in the Mortgage shall be deemed to be
references to "Post-Default Rate" as such term is defined in the Credit
Agreement.
7. Mortgagor hereby confirms that it has heretofore granted, bargained,
sold, conveyed, mortgaged, warranted, assigned and pledged, and granted a
security interest in the Mortgaged Property to First Union, and Mortgagor
further grants, bargains, sells, conveys, mortgages, warrants, assigns and
pledges, and grants a security interest in the Mortgaged
-4-
<PAGE>
Property to Mortgagee to secure the payment and performance of the Indebtedness
as amended herein.
8. The parties hereto hereby acknowledge and agree that except as
specifically amended, changed or modified hereby, the Mortgage shall remain in
full force and effect in accordance with its terms. None of the rights, titles
and interests existing and to exist under the Mortgage are hereby released,
diminished or impaired, and Mortgagor hereby reaffirms all covenants,
representations and warranties made in the Mortgage.
9. This Amendment may be executed in two or more counterparts, and it
shall not be necessary that the signatures of all parties hereto be contained on
any one counterpart hereof. To facilitate recordation, the descriptions of the
Mortgaged Property attached as Exhibits and B to the Mortgage, are attached
hereto.
EXECUTED as of the 14th day of February, 1997 (the "Effective Date").
MORTGAGOR:
KINDER MORGAN OPERATING L.P. "B"
(formerly known as Enron Transportation Services,
L.P.)
By: Kinder Morgan G.P., Inc.
(formerly known as Enron Liquids Pipeline
Company),
its General Partner
By:________________________________
Name: Thomas B. King
Title: President
MORTGAGEE:
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, INDIVIDUALLY AND
AS AGENT
By:__________________________________
Name: Michael J. Kolosowsky
Title: Vice President
-5-
<PAGE>
STATE OF TEXAS )
)
COUNTY OF HARRIS )
I, _____________________________, a Notary Public in and for said County,
in the State aforesaid, do hereby certify that Thomas B. King, President of
Kinder Morgan G.P., Inc. (formerly known as Enron Liquids Pipeline Company), a
Delaware corporation, General Partner of KINDER MORGAN OPERATING L.P. "B", a
Delaware limited partnership, who is personally known to me to be the same
person whose name is subscribed to the foregoing instrument as such President,
appeared before me this day in person and acknowledged that he signed and
delivered the said instrument as his own free and voluntary act as the free and
voluntary act of said corporation and limited partnership, for the uses and
purposes therein set forth.
Given under my hand and notarial seal, this ___ day of February, 1997.
------------------------------
Notary Public in and for the
State of Texas
Seal:
STATE OF NORTH CAROLINA )
)
COUNTY OF MECKLENBURG )
I, _____________________________, a Notary Public in and for said County,
in the State aforesaid, do hereby certify that Michael J. Kolosowsky, Vice
President of FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking
association, who is personally known to me to be the same person whose name is
subscribed to the foregoing instrument as such Vice President, appeared before
me this day in person and acknowledged that he signed and delivered the said
instrument as his own free and voluntary act as the free and voluntary act of
said association, for the uses and purposes therein set forth.
Given under my hand and notarial seal, this ___ day of February, 1997.
------------------------------
Notary Public in and for the
State of North Carolina
Seal:
-6-
<PAGE>
WHEN RECORDED RETURN TO:
Vinson & Elkins L.L.P.
1001 Fannin, Suite 3562
Houston, Texas 77002-6760
Attention: Linda Daugherty
FIRST AMENDMENT TO MORTGAGE,
SECURITY AGREEMENT AND FINANCING STATEMENT
THIS FIRST AMENDMENT TO MORTGAGE, SECURITY AGREEMENT AND
FINANCING STATEMENT (this "Amendment") is entered into as of the effective time
and date hereinafter stated (the "Effective Date") by and between KINDER MORGAN
OPERATING L.P. "B" (formerly known as Enron Transportation Services, L.P.), a
Delaware limited partnership with an address for notice hereunder of 1301
McKinney Street, Suite 3450, Houston, Texas 77010 ("Mortgagor") and FIRST UNION
NATIONAL BANK OF NORTH CAROLINA, a national banking association with offices and
banking quarters at 301 South College Street, Charlotte, North Carolina 28288,
individually (in such capacity, "First Union") and as agent for the lenders
which are or become parties to the Credit Agreement referred to below
(collectively called the "Lenders") (in such capacity as agent, together with
its successors in such capacity, the "Mortgagee").
R E C I T A L S
A. Mortgagor and First Union previously entered into a Credit Agreement
dated as of December 29, 1994, as amended (the "Prior Credit Agreement").
B. The Prior Credit Agreement is secured by, among other things, that
certain Mortgage, Security Agreement and Financing Statement dated of even date
therewith from Mortgagor to First Union (the "Mortgage").
C. The Mortgage was duly recorded in Uinta County, Wyoming on January 9,
1995 in Book 642, Page 320 in the Mortgage Records with Entry No. R68617.
D. Of even date herewith, Mortgagor, Mortgagee and the Lenders are
entering into that certain Credit Agreement, and in connection therewith,
Mortgagor and Mortgagee now desire to amend the Mortgage.
<PAGE>
NOW, THEREFORE, in view of the foregoing and for good and valuable
consideration, the receipt of which is hereby acknowledged, Mortgagor and
Mortgagee do hereby agree as follows:
1. All capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Mortgage.
2. All references in the Mortgage to "this Mortgage", as defined in the
opening paragraph of the Mortgage shall mean the Mortgage as amended hereby and
as the same may from time to time be further amended or supplemented.
3. Each Lender has appointed and authorized First Union to act as its
agent under the Mortgage pursuant to Section 11.01 of the Credit Agreement,
therefore, all references in the Mortgage to "Mortgagee", as defined in Section
1.1 of the Mortgage shall be deemed to be references to First Union National
Bank of North Carolina, as agent for the Lenders.
4. Article II of the Mortgage is amended to read as follows:
"INDEBTEDNESS SECURED
This conveyance is made to secure and enforce the payment of the
following indebtedness, obligations and liabilities:
(a) Payment of and performance of any and all indebtedness,
obligations and liabilities of Mortgagor pursuant to the Credit Agreement
dated as of February 14, 1997 among Mortgagor, Mortgagee and the lenders
party thereto (the "Lenders") (as amended, restated or supplemented from
time to time the "Governing Agreement"), including without limitation,
those certain promissory notes which are or may be executed by Mortgagor
in the aggregate principal amount of $15,875,000 with final maturity on or
before February 14, 1999 and all other notes given in substitution
therefor or in modification, renewal or extension thereof, in whole or in
part (such notes, as from time to time supplemented, amended or modified
and all other notes given in substitution therefor or in modification,
renewal or extension thereof, in whole or in part, being hereafter called
the "Revolving Credit Notes");
(b) Replacement Term Note dated of even date herewith executed by
Mortgagor payable to the order of First Union National Bank of North
Carolina in the face amount of $23,700,000, bearing interest and payable
as therein provided with a final maturity of all principal and interest of
February 14, 1999 and all other notes given in substitution therefor or in
modification, renewal or extension thereof, in whole or in part (such
notes, as from time to time supplemented, amended or modified and all
other notes given in substitution
-2-
<PAGE>
therefor or in modification, renewal or extension thereof, in whole or in
part, being hereafter the "Replacement Term Note"; the Revolving Credit
Notes and the Term Note being herein collectively referred to as the
"Notes");
(c) Payment of any sums which may be advanced or paid by Mortgagee
under the terms hereof on account of the failure of Mortgagor to comply
with the covenants of Mortgagor contained herein; and all other
indebtedness of Mortgagor arising pursuant to the provisions of this
Mortgage;
(d) Payment of any additional loans made by the Lenders to Mortgagor.
It is contemplated that the Lenders may lend additional sums to Mortgagor
from time to time, but shall not be obligated to do so, and Mortgagor
agrees that any such additional loans shall be secured by this Mortgage;
(e) Payment of and performance of any and all present or future
obligations of Mortgagor according to the terms of any present or future
interest or currency rate swap, rate cap, rate floor, rate collar,
exchange transaction, forward rate agreement or other exchange or rate
protection agreements or any option with respect to any such transaction
now existing or hereafter entered into between Mortgagor and Mortgagee or
any of the Lenders;
(f) Payment of and performance of any and all present or future
obligations of Mortgagor according to the terms of any present or future
swap agreements, cap, floor, collar, exchange transaction, forward
agreement or other exchange or protection agreements relating to crude
oil, natural gas or other hydrocarbons or any option with respect to any
such transaction now existing or hereafter entered into between Mortgagor
and Mortgagee or any of the Lenders;
(g) All reimbursement obligations for drawn or undrawn portions under
that certain irrevocable letter of credit in the amount of $24,128,548.00
issued by First Union National Bank of North Carolina (the "Replacement
Letter of Credit") and any letter of credit now outstanding or hereafter
issued under or pursuant to the Governing Agreement in replacement of the
Replacement Letter of Credit; and
(h) Payment of and performance of any and all other indebtedness,
obligations and liabilities of any kind of Mortgagor to the Mortgagee or
any Lender, now or hereafter existing, arising directly between Mortgagor
and the Mortgagee or any Lender or acquired outright, as a participation,
conditionally or as collateral security from another by the Mortgagee or
any Lender, absolute or contingent, joint and/or several, secured or
unsecured, due or not due, arising by operation of law or otherwise, or
direct or indirect, including indebtedness, obligations and liabilities to
the Mortgagee or any Lender of Mortgagor as a
-3-
<PAGE>
member of any partnership, syndicate, association or other group, and
whether incurred by Mortgagor as principal, surety, endorser, guarantor,
accommodation party or otherwise.
The term "Indebtedness" as used herein shall mean and include said
Notes and all other indebtedness described, referred to or mentioned in
paragraphs (a) through (h), inclusive, of this Article II and all
renewals, extensions and modifications thereof and all substitutions
therefor, in whole or in part. Notwithstanding any other provision of this
Mortgage, the Indebtedness shall not include any reimbursement obligation
under the Support Letter of Credit (as defined in the Governing Agreement)
that may be issued under the Governing Agreement and any principal or
interest outstanding on the Support Term Note (as defined in the Governing
Agreement)."
5. All references to "Default Rate" in the Mortgage shall be deemed to be
references to "Post-Default Rate" as such term is defined in the Credit
Agreement.
6. Mortgagor hereby confirms that it has heretofore granted, bargained,
sold, conveyed, transferred and assigned and granted a security interest in the
Mortgaged Property to First Union, and Mortgagor further grants, bargains,
sells, conveys, transfers and assigns and grants a security interest in the
Mortgaged Property to Mortgagee to secure the payment and performance of the
Indebtedness as amended herein.
7. The parties hereto hereby acknowledge and agree that except as
specifically amended, changed or modified hereby, the Mortgage shall remain in
full force and effect in accordance with its terms. None of the rights, titles
and interests existing and to exist under the Mortgage are hereby released,
diminished or impaired, and Mortgagor hereby reaffirms all covenants,
representations and warranties made in the Mortgage.
8. This Amendment may be executed in two or more counterparts, and it
shall not be necessary that the signatures of all parties hereto be contained on
any one counterpart hereof.
-4-
<PAGE>
EXECUTED as of the 14th day of February, 1997 (the "Effective Date").
MORTGAGOR:
KINDER MORGAN OPERATING L.P. "B"
(formerly known as Enron Transportation Services,
L.P.)
By: Kinder Morgan G.P., Inc. (formerly known
as Enron Liquids Pipeline Company),
its General Partner
By:________________________________
Name: Thomas B. King
Title: President
-5-
<PAGE>
MORTGAGEE:
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, AS AGENT
By:__________________________________
Name: Michael J. Kolosowsky
Title: Vice President
STATE OF TEXAS )
)
COUNTY OF HARRIS )
The foregoing instrument was acknowledged before me this ___ day of
February, 1997 by Thomas B. King, President of Kinder Morgan G.P., Inc.
(formerly known as Enron Liquids Pipeline Company), a Delaware corporation,
General Partner of KINDER MORGAN OPERATING L.P. "B", a Delaware limited
partnership, on behalf of such corporation as General Partner of such limited
partnership.
------------------------------
Notary Public in and for the
State of Texas
Seal:
STATE OF NORTH CAROLINA )
)
COUNTY OF MECKLENBURG )
The foregoing instrument was acknowledged before me this ___ day of
February, 1997 by Michael J. Kolosowsky, Vice President of FIRST UNION NATIONAL
BANK OF NORTH CAROLINA, a national banking association, on behalf of such
association.
------------------------------
Notary Public in and for the
State of North Carolina
Seal:
-6-
