SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1 to Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported).........................June 6, 1996
TEJAS GAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-17389 76-0263364
(Commission File Number) (I.R.S. Employer
Identification Number)
1301 McKinney, Suite 700
Houston, Texas 77010
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number
including area code: (713) 658-0509
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS EXPLANATORY NOTE.
The Registrant's Current Report on Form 8-K dated June 6, 1996 is
hereby amended to include the physical filing of Exhibits 2(b), 2(c) and
2(d).
*2(a) Agreement of Merger dated as of May 9, 1996 between Central
and South West Corporation and Tejas Gas Corporation relating
to Transok, Inc., as amended by First Amendment to Agreement
of Merger dated June 6, 1996.
2(b) Lease Agreement dated as of June 6, 1996 between Canadian
Imperial Bank of Commerce Inc. ("CIBC Inc."), as lessor, and
Transok Acquisition Corporation III, ("TAC III"), as lessee.
2(c) Participation Agreement dated as of June 6, 1996 between TAC
III, as lessee, CIBC Inc., as lessor, Canadian Imperial Bank
of Commerce, New York agency, as administrative agent, and
Bank of Montreal, as documentation agent.
2(d) Secured Credit Agreement dated as of June 6, 1996 between
Transok Acquisition Company, Bank of Montreal and CIBC Inc.
-----------
* Previously Filed.
2
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEJAS GAS CORPORATION
Date: July 17, 1996 By: /s/ JAMES W. WHALEN
James W. Whalen
Executive Vice President and Chief
Financial Officer (principal financial
officer and principal accounting officer)
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EXHIBIT 2(b)
LEASE AGREEMENT
Dated as of June 6, 1996
between
CIBC INC., as Lessor,
and
Transok Acquisition Corporation III, as Lessee
Gas Processing Plants
Located in Oklahoma
================================================================================
ALL RIGHT, TITLE AND INTEREST OF LESSOR UNDER THIS LEASE AGREEMENT AND THE
PROPERTY SUBJECT HERETO HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF, CANADIAN IMPERIAL BANK OF COMMERCE, AS ADMINISTRATIVE
AGENT ("ADMINISTRATIVE AGENT"), UNDER THE ASSIGNMENT OF LEASE AND RENTS DATED AS
OF JUNE 6, 1996 (AS SUCH AGREEMENT MAY BE AMENDED AND/OR SUPPLEMENTED TO THE
EXTENT PERMITTED THEREBY) FOR THE BENEFIT OF THE LENDERS REFERRED TO IN SUCH
AGREEMENT. THIS LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO
THE EXTENT THAT THIS LEASE AGREEMENT MAY CONSTITUTE CHATTEL PAPER (AS SUCH TERM
IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS LEASE AGREEMENT MAY BE CREATED
THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART HEREOF OTHER THAN THE
"ORIGINAL EXECUTED COUNTERPART", WHICH SHALL BE IDENTIFIED AS THE COUNTERPART
CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE ADMINISTRATIVE AGENT ON OR
FOLLOWING THE SIGNATURE PAGE THEREOF.
TABLE OF CONTENTS
<TABLE>
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Page
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ARTICLE I DEFINITIONS; LESSEE LIABILITY............................................................ 1
ARTICLE II LEASE OF LEASED PROPERTY................................................................. 1
SECTION 2.1. [INTENTIONALLY OMITTED].................................................................. 1
SECTION 2.2. Lease of Plants.......................................................................... 1
SECTION 2.3. Assignment of Rights under Easements..................................................... 1
ARTICLE III OTHER PROPERTY........................................................................... 2
ARTICLE IV RENT..................................................................................... 2
SECTION 4.1. Fixed Rent............................................................................... 2
SECTION 4.2. Additional Rent.......................................................................... 2
SECTION 4.3. Method and Amount of Payment............................................................. 2
SECTION 4.4. Late Payment............................................................................. 3
SECTION 4.5. Net Lease; No Setoff; Etc................................................................ 3
SECTION 4.6. Sufficiency of Fixed Rent and Lease Balance.............................................. 4
SECTION 4.7. Taxes.................................................................................... 5
ARTICLE V RENEWAL OPTIONS; PURCHASE OPTIONS........................................................ 6
SECTION 5.1. Renewal Term............................................................................. 6
SECTION 5.2. Effect of Renewal........................................................................ 6
SECTION 5.3. End of Term Purchase Option.............................................................. 6
SECTION 5.4. Special Purchase Option.................................................................. 7
SECTION 5.5. Exercise of Options...................................................................... 7
ARTICLE VI CONDITION AND USE OF LEASED PROPERTY..................................................... 7
SECTION 6.1. Waivers.................................................................................. 7
ARTICLE VII LIENS; EASEMENTS......................................................................... 8
ARTICLE VIII MAINTENANCE AND REPAIR; ALTERATIONS,
MODIFICATIONS AND ADDITIONS.............................................................. 10
SECTION 8.1. Maintenance and Repair; Compliance With Law.............................................. 10
SECTION 8.2. Alterations; Replacements................................................................ 11
SECTION 8.3. Title to Alterations and Replacements.................................................... 13
SECTION 8.4. Maintenance and Repair Reports........................................................... 13
SECTION 8.5. Permitted Contests....................................................................... 13
SECTION 8.6. Environmental Compliance................................................................. 14
SECTION 8.7. Insignia................................................................................. 15
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TABLE OF CONTENTS
(continued)
SECTION 8.8. Special Plant Sales...................................................................... 15
ARTICLE IX USE AND LOCATION......................................................................... 16
SECTION 9.1. Location................................................................................. 16
SECTION 9.2. Use...................................................................................... 16
ARTICLE X INSURANCE................................................................................ 17
SECTION 10.1. Coverage................................................................................. 17
SECTION 10.2. Policy Provisions........................................................................ 18
SECTION 10.3. Evidence of Insurance.................................................................... 19
SECTION 10.4. Indemnification Objections............................................................... 19
ARTICLE XI SALE, RETURN OR PURCHASE OF LEASED PROPERTY.............................................. 19
SECTION 11.1. Sale of the Leased Property.............................................................. 19
SECTION 11.2. Return of Leased Property................................................................ 21
ARTICLE XII ASSIGNMENT AND SUBLEASING................................................................ 22
ARTICLE XIII LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE................................................ 23
SECTION 13.1. General.................................................................................. 23
SECTION 13.2. Event of Loss or Casualty with Termination or Partial
Termination.............................................................................. 24
SECTION 13.3. Event of Loss or Casualty Without Termination or Partial
Termination.............................................................................. 26
SECTION 13.4. Temporary Event of Loss or Lease Termination............................................. 27
SECTION 13.5. Application of Payments.................................................................. 27
SECTION 13.6. Application of Certain Payments Not Relating to an Event
of Taking................................................................................ 28
SECTION 13.7. Other Dispositions....................................................................... 28
SECTION 13.8. No Rent Abatement........................................................................ 28
ARTICLE XIV NON-INTERFERENCE......................................................................... 29
SECTION 14.1. Non-Interference......................................................................... 29
ARTICLE XV INSPECTION, REPORTS AND NOTICES.......................................................... 29
SECTION 15.1. Inspection............................................................................... 29
SECTION 15.2. Reports.................................................................................. 29
ARTICLE XVI EVENTS OF DEFAULT........................................................................ 30
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ARTICLE XVII ENFORCEMENT.............................................................................. 35
SECTION 17.1. Remedies................................................................................. 35
SECTION 17.2. Remedies Cumulative; No Waiver; Consents................................................. 37
ARTICLE XVIII RIGHT TO PERFORM FOR LESSEE.............................................................. 38
ARTICLE XIX MISCELLANEOUS............................................................................ 38
SECTION 19.1. Binding Effect; Successors and Assigns; Survival......................................... 38
SECTION 19.2. Severability............................................................................. 39
SECTION 19.3. Notices.................................................................................. 39
SECTION 19.4. Amendment; Complete Agreements........................................................... 39
SECTION 19.5. Headings................................................................................. 39
SECTION 19.6. Original Lease........................................................................... 40
SECTION 19.7. GOVERNING LAW............................................................................ 40
SECTION 19.8. Discharge of Lessee's Obligations by its Affiliates...................................... 40
SECTION 19.9. Liability of Lessor Limited.............................................................. 40
SECTION 19.10. Estoppel Certificates....................................................... 41
SECTION 19.11. No Joint Venture............................................................ 41
SECTION 19.12. No Accord and Satisfaction.................................................. 41
SECTION 19.13. No Merger................................................................... 41
SECTION 19.14. Successor Lessor............................................................ 42
SECTION 19.15. Survival.................................................................... 42
SECTION 19.16. Transfer of Leased Property to Lessee....................................... 42
SECTION 19.17. Enforcement of Certain Warranties........................................... 42
SECTION 19.18. Investment of Security Funds................................................ 43
SECTION 19.20. Reports..................................................................... 44
SECTION 19.21. [Intentionally Omitted]..................................................... 44
SECTION 19.22. [Intentionally Omitted]..................................................... 44
SECTION 19.23. Construction................................................................ 44
SECTION 19.24. Time of Essence............................................................. 44
SECTION 19.25. Recordation of Lease........................................................ 44
</TABLE>
iii
THIS LEASE AGREEMENT dated as of June 6, 1996 (this "LEASE"), is
between CIBC INC., a Delaware corporation (the "LESSOR"), and TRANSOK
ACQUISITION CORPORATION III, a Delaware corporation, as Lessee (the "LESSEE").
In consideration of the mutual agreements herein contained and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto, intending to be legally bound hereby, hereby agree as follows:
ARTICLE I
DEFINITIONS; LESSEE LIABILITY
The capitalized terms used herein and not otherwise defined shall
have the meanings assigned thereto in Appendix A hereto for all purposes hereof.
All obligations imposed on the "LESSEE" in this Lease shall be the full recourse
liability of the Lessee.
ARTICLE II
LEASE OF LEASED PROPERTY
SECTION 2.1. [INTENTIONALLY OMITTED]
SECTION 2.2. LEASE OF PLANTS. From and after the Effective Time, the
Lessor shall lease, and hereby as of the Effective Time does lease, the Lessor's
right, title and interest in each Plant to the Lessee, and the Lessee shall rent
and lease, and hereby as of the Effective Time does rent and lease, from and
after the Effective Time, the Lessor's right, title and interest in each Plant
from the Lessor, for the Basic Term and, if the Lessee exercises any renewal
option pursuant to SECTION 5.1 hereof, such Renewal Term, or such shorter period
as may result from earlier termination of this Lease as provided herein. The
lease of each Plant pursuant to this SECTION 2.2 shall include any additional
right, title or interest therein which may at any time be acquired by the
Lessor, the intent being that all right, title and interest of the Lessor in and
to each Plant shall at all times be leased hereunder subject to the limitations
set forth in SECTION 2.3 hereof.
SECTION 2.3. ASSIGNMENT OF RIGHTS UNDER EASEMENTS. From and after
the Effective Time, the Lessor shall assign, and hereby as of the Effective Time
does assign, a non-exclusive interest in the Lessor's right, title and interest,
whether now owned or hereafter acquired by Lessor, under each of the Easements
to the Lessee, and the Lessee shall accept, and hereby as of the Effective Time
does accept, a non-exclusive interest in, from and after the Effective Time, the
Lessor's right, title and interest, whether now owned or hereafter acquired by
Lessor, under each of the Easements from the Lessor for the Basic Term and, if
the Lessee exercises any renewal option pursuant to SECTION 5.1 hereof, such
Renewal Term or such shorter period as may result from earlier termination of
this Lease as provided herein. There shall be
1
no merger of Lessee's interest in this Lease, the leasehold created by this
Lease or Lessee's interest in the Easement with the fee estate in the Land or
any part thereof and no such merger shall occur unless and until all Persons
having an ownership interest in the foregoing shall have joined in a written
instrument effecting such merger and shall have duly recorded the same. In the
event any portion of a Plant is determined to be or constitute real property,
then such portion of such Plant shall be deemed to have been excluded from this
Lease and not leased to Lessee hereunder.
ARTICLE III
OTHER PROPERTY
The Lessee may from time to time own or hold under lease from
Persons other than the Lessor, equipment located on or about the Leased Property
that is not subject to this Lease. The Lessor shall from time to time, upon the
reasonable request, and at the cost and expense, of the Lessee, which request
shall be accompanied by such supporting information and documents as the Lessor
may reasonably require, acknowledge in writing to the Lessee or other Persons
that the particular items of equipment in question are not part of the Leased
Property and that the Lessor does not own or have any other right or interest in
or to such equipment.
ARTICLE IV
RENT
SECTION 4.1. FIXED RENT. The Lessee shall pay to the Lessor the
Fixed Rent for the Leased Property in arrears on each Rent Payment Date during
the Basic Term and, if applicable, the then Renewal Term.
SECTION 4.2. ADDITIONAL RENT. The Lessee shall pay to the Lessor, or
to whomever shall be entitled thereto as expressly provided herein or in any
other Operative Document or Operative Loan Document, any and all Additional Rent
promptly as the same shall become due and payable and, in the event of any
failure on the part of the Lessee to pay any Additional Rent, the Lessor shall
have all rights, powers and remedies provided for herein or by law or in equity
or otherwise in the case of nonpayment of Fixed Rent.
SECTION 4.3. METHOD AND AMOUNT OF PAYMENT. Fixed Rent shall be paid
to the Administrative Agent and Additional Rent shall be paid to the Lessor (or
to such Person as may be entitled thereto) at such place as the Administrative
Agent or the Lessor (or such other Person) shall specify in writing to the
Lessee at least two Business Days prior to the due date therefor. Each payment
of Rent shall be made by the Lessee prior to 11:00 a.m. Chicago time (and
payments made after such time shall be deemed to have been made on the next
Business Day) at the place of payment in funds consisting of lawful currency of
the United States of America which (in the case of any amount payable to the
Administrative Agent or any Participant) shall be immediately available on the
scheduled date when such payment shall be
2
due, unless the scheduled date shall not be a Business Day, in which case such
payment shall be made on the next succeeding Business Day (unless the result of
such extension would be to carry such payment into the next calendar month or
beyond the Lease Termination Date, in which event such payment shall be made on
the next preceding Business Day). The provisions of the foregoing sentence of
this SECTION 4.3 shall be applicable only to Fixed Rent and to Additional Rent
payable to, or on behalf or for the account of, the Lessor, any Participant, any
Agent and any other Indemnitee.
SECTION 4.4. LATE PAYMENT. If any Fixed Rent shall not be paid when
due, the Lessee shall pay to the Lessor, or if any Additional Rent payable to or
on behalf or for the account of the Lessor, any Participant, any Agent or other
Indemnitee is not paid when due, the Lessee shall pay to whomever shall be
entitled thereto, in each case as Additional Rent, interest (to the maximum
extent permitted by law) on such overdue amount from and including the due date
thereof to but excluding the Business Day of payment thereof at the Overdue
Rate.
SECTION 4.5. NET LEASE; NO SETOFF; ETC. This Lease is a net lease
and notwithstanding any other provision of this Lease, it is intended that Fixed
Rent and Additional Rent shall be paid without counterclaim, setoff, deduction
or defense and without abatement, suspension, deferment, diminution or
reduction, and Lessee's obligation to pay all such amounts, throughout the Basic
Term and the Renewal Terms, if applicable, is absolute and unconditional. The
obligations and liabilities of the Lessee hereunder shall in no way be released,
discharged or otherwise affected for any reason, including, without limitation,
to the maximum extent permitted by law: (a) any defect in the condition,
merchantability, design, quality or fitness for use of the Leased Property or
any part thereof, or the failure of the Leased Property or any part thereof to
comply with all Applicable Laws and Regulations, including any inability to
occupy or use the Leased Property by reason of such non-compliance; (b) any
damage to, removal, abandonment, salvage, loss, contamination of or Release from
or on, scrapping or destruction of or any requisition or taking of the Leased
Property or any part thereof; (c) any restriction, prevention or curtailment of
or interference with any use of the Leased Property or any part thereof,
including eviction; (d) any defect in title to or rights to the Leased Property
or any part thereof or any Lien on such title or rights or on the Leased
Property; (e) any change, waiver, extension, indulgence or other action or
omission or breach in respect of any obligation or liability of or by the
Lessor, any Agent, any Participant or any other Person; (f) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceedings relating to the Lessee, the Lessor, any Agent, any
Participant or any other Person, or any action taken with respect to this Lease
by any trustee or receiver of the Lessee, the Lessor, any Agent, any Participant
or any other Person, or by any court, in any such proceeding; (g) any claim that
the Lessee has or might have against any Person, including, without limitation,
the Lessor, any Participant, any vendor, manufacturer, contractor of or for any
Plant, any Building or any Improvement or any Equipment; (h) any failure on the
part of the Lessor to perform or comply with any of the terms of this Lease, any
other Operative Document, any Operative Loan Document or of any other agreement
whether or not related to the Overall Transaction; (i) any invalidity or
unenforceability or disaffirmance of this Lease against or by the Lessee or any
provision hereof or any of the other Operative Documents or
3
Operative Loan Documents or any provision of any thereof; (j) the impossibility
of performance by the Lessee, the Lessor or both; (k) any action by any court,
administrative agency or other Governmental Authority; or (l) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not the Lessee shall have notice or knowledge of any of the foregoing. Except
as specifically set forth in ARTICLES V, XI, XIII or XVI of this Lease, this
Lease shall be noncancellable by the Lessee for any reason whatsoever and the
Lessee, to the extent permitted by Applicable Laws and Regulations, waives all
rights now or hereafter conferred by statute or otherwise to quit, terminate or
surrender this Lease, or to any diminution, abatement or reduction of Rent
payable by the Lessee hereunder. If for any reason whatsoever this Lease shall
be terminated in whole or in part by operation of law or otherwise, except as
expressly provided in ARTICLES V, XI, XIII or XVI of this Lease, the Lessee
shall, unless prohibited by Applicable Laws and Regulations, nonetheless pay to
the Lessor (or, in the case of Additional Rent, to whomever shall be entitled
thereto) an amount equal to each Rent payment at the time and in the manner that
such payment would have become due and payable under the terms of this Lease if
it had not been terminated in whole or in part, and in such case, so long as
such payments are made and no Event of Default shall have occurred and be
continuing the Lessor will deem this Lease to have remained in effect. Each
payment of Rent made by the Lessee hereunder shall be final and, absent manifest
error in the computation of the amount thereof or a duplicate payment, the
Lessee shall not seek or have any right to recover all or any part of such
payment from the Lessor, any Agent, any Participant, or any party to any
agreements related thereto for any reason whatsoever. The Lessee assumes the
sole responsibility for the condition, use, operation, maintenance, and
management of the Leased Property and the Lessor shall have no responsibility in
respect thereof and shall have no liability whatsoever for damage to the
property of either the Lessee or any subtenant of the Lessee on any account or
for any reason whatsoever other than by reason of the Lessor's willful
misconduct or gross negligence or breach of any of its obligations under any
Operative Document or Operative Loan Document.
SECTION 4.6. SUFFICIENCY OF FIXED RENT AND LEASE BALANCE.
Notwithstanding any other provision of this Lease or any Operative Document or
Operative Loan Document: (i) the amount of the installment of Fixed Rent payable
on each Rent Payment Date shall be equal to the sum of (A) the accrued interest,
if any, due and payable on such date in respect of all Notes then outstanding
and (B) the Yield on the Lessor's Invested Amount due and payable on such date;
and (ii) each payment of the Lease Balance when required to be paid under this
Lease (when added to all other amounts required to be paid by the Lessee under
this Lease) shall be at least equal to an amount sufficient, as of the date of
payment, to pay in full the principal of and accrued interest on all Notes
outstanding on and as of such payment date, plus the Lessor's Invested Amount
and accrued Yield on the Lessor's Invested Amount on such payment date, together
with all other amounts, if any, due hereunder or to any of the Lenders and the
Lessor.
SECTION 4.7. TAXES. (a) Prior to the first date on which Rent is
payable to the Lessor hereunder, the Lessor agrees that it will deliver to the
Lessee (i) if applicable, two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or
4
successor applicable form, as the case may be, certifying in each case that the
Lessor is entitled to receive payments payable to it under this Lease without
deduction or withholding of any United States federal income taxes, (ii) if
applicable, an Internal Revenue Service Form W-8 or W-9 or successor applicable
form, as the case may be, to establish an exemption from United States backup
withholding tax and (iii) any other governmental forms which are necessary or
required under an applicable tax treaty or otherwise by law to reduce or
eliminate any withholding tax. If the Lessor delivers to the Lessee a Form 1001
or 4224 and a Form W-8 or W-9 pursuant to the preceding sentence, the Lessor
further undertakes to deliver to the Lessee further copies of a Form 1001 or
4224 or a Form W-8 or W-9, as appropriate, or successor applicable forms, or
other manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Lessee, and such extensions or renewals thereof, certifying in the case of a
Form 1001 or 4224 that the Lessor is entitled to receive payments under this
Lease without deduction or withholding of any United States federal income
taxes, unless in any such case an event (including, without limitation, any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required, but subsequent to the date hereof,
that renders such forms inapplicable or which would prevent the Lessor from duly
completing and delivering any such letter or form with respect to it and the
Lessor advises the Lessee that it is not capable of receiving payments without
any deduction or withholding of United States federal income tax, and in the
case of a Form W-8 or W-9, establishing an exemption from United States backup
withholding tax. Payments made by the Lessee under this Lease shall be made free
and clear of, and without reduction or withholding for or on account of, any
present or future United States federal income taxes to the extent that the
Lessor has provided the requisite Internal Revenue Service forms pursuant to
this SECTION 4.7(A). The Lessee shall withhold tax at the rate and in the manner
required by the laws of the United States with respect to payments made to the
Lessor if the Lessor fails to timely provide the requisite Internal Revenue
Service forms, if any.
(b) The Lessee shall promptly send to the Lessor a copy of an
original official receipt received by the Lessee showing payment to the proper
taxing authority by the Lessee of any Taxes withheld. If the Lessee fails to
withhold and pay over to the proper taxing authority any Taxes when due or fails
to remit to the Lessor the required receipts or other required documentary
evidence, the Lessee shall indemnify the Lessor for any interest or penalties
that may become payable by the Lessor as a result of any such failure.
ARTICLE V
RENEWAL OPTIONS; PURCHASE OPTIONS
SECTION 5.1. RENEWAL TERM. (a) At the expiration of the Basic Term,
the Lessee may, with the consent of each Participant (which consent may be
withheld at such Participant's sole and absolute discretion), renew this Lease;
PROVIDED that if a Participant shall not so consent, Lessee may with the consent
of Lessor, which shall not be unreasonably withheld, arrange for another
financial institution to acquire the interest of such non-consenting
5
Participant pursuant to Section 6.3 of the Participation Agreement. Renewals
shall be for the following periods following expiration of the then term hereof:
(i) the first renewal period shall be for two (2) years, and (ii) the second
renewal periods shall be for two years (each such renewal being a "RENEWAL
TERM"). The Lessee shall continue to pay Rent, including Fixed Rent, during each
Renewal Term on each Rent Payment Date occurring during such Renewal Term.
(b) Within 30 days after the Lessee has given the advance notice
described in SECTION 5.5 hereof of its intention to renew the Lease for a first
or second Renewal Term, as the case may be, each Lender, as set forth in Section
6.4 of the Participation Agreement, may provide the Lessee with a written
quotation of the bases and options available for determining the interest rates
(i.e., whether a Eurodollar Interest Rate-based interest rate or otherwise and
any applicable margin relating thereto) which shall apply to the Notes during
such Renewal Term and Lessor, as set forth in Section 6.4 of the Participation
Agreement, may provide the Lessee with a written quotation of the yield which
shall apply to the Lessor's Invested Amount during such Renewal Term. If within
90 days after the advance notice described in SECTION 5.5 hereof (x) any
Participant, in its sole and absolute discretion, shall not have consented to
the Renewal Term or (y) the Lessee and the Lenders have not agreed in writing on
an interest rate for the Notes and the Lessee and the Lessor have not agreed on
a yield for the Lessor's Invested Amount, THEN, the Lessee shall, within 30 days
after the expiration of such 90-day period, notify Lessor of its election to
either (i) purchase the Leased Property at the end of the Lease Term then ending
in accordance with SECTION 5.3 hereof or (ii) sell the Leased Property at the
end of the Lease Term then ending in accordance with SECTION 11.1 hereof and
failure to give such notice will result in an Event of Default and an election
to purchase. The agreed upon interest rate for the Notes and yield on the
Lessor's Invested Amount shall be used in calculating Fixed Rent for each of the
Renewal Terms.
SECTION 5.2. EFFECT OF RENEWAL. All of the provisions of this Lease
shall remain in effect during each Renewal Term.
SECTION 5.3. END OF TERM PURCHASE OPTION. At the end of the Basic
Term or any Renewal Term the Lessee will have the right, at its option, to
purchase the Leased Property at a price equal to the Purchase Option Exercise
Amount. If the Lessee shall have elected to purchase the Leased Property, the
Lessor shall, upon the payment in full of an amount sufficient to retire the
Notes and pay the Lessor's Invested Amount, transfer, in accordance with SECTION
19.16, by quitclaim all of the Lessor's right, title and interest in and to the
Leased Property to the Lessee or its designee, without recourse or warranty
(except as to the absence of Lessor Liens and except that the Lessor shall
represent and warrant that it has not voluntarily conveyed any of its right,
title and interest in the Leased Property to any Person other than as
contemplated in the Operative Documents and the Operative Loan Documents),
against payment by the Lessee of the Purchase Option Exercise Amount in
immediately available funds. Regardless of whether the Lessee exercises its
right under this Section or SECTION 5.4 to purchase the Leased Property, the
Lessee will be responsible for all real estate taxes levied prior to and
6
during the period this Lease is in effect in accordance with standard practice
in the State of Oklahoma with respect to the payment thereof.
SECTION 5.4. SPECIAL PURCHASE OPTION. On any Rent Payment Date, the
Lessee will have the right, at its option, upon not less than 90 days
irrevocable prior written notice to the Lessor, to purchase the Leased Property
at a price equal to the Purchase Option Exercise Amount. If the Lessee shall
have elected to purchase the Leased Property under this SECTION 5.4, the Lessor
shall, upon the payment in full of an amount sufficient to retire the Notes and
pay the Lessor's Invested Amount, transfer, in accordance with SECTION 19.16
hereof, by quitclaim all of the Lessor's right, title and interest in and to the
Leased Property to the Lessee or its designee, without recourse or warranty
(except as to the absence of Lessor Liens and except that the Lessor shall
represent and warrant that it has not voluntarily conveyed any of its right,
title and interest in the Leased Property to any Person other than as
contemplated in the Operative Documents and the Operative Loan Documents),
against payment by the Lessee of the Purchase Option Exercise Amount in
immediately available funds.
SECTION 5.5. EXERCISE OF OPTIONS. In order to exercise any of its
renewal, purchase or sale options under this Lease, other than pursuant to
SECTION 5.4, the Lessee shall give irrevocable written notice to the Lessor not
less than 360 days prior to the end of the Basic Term or the Renewal Term then
in effect, as the case may be, that the Lessee requests the consent of the
Participants to exercise one of the options provided in this ARTICLE V or in
ARTICLE XI and specifying such option and failure to give such notice will
result in an Event of Default and an election to purchase. If the Lessee has
elected the option to sell the Leased Property under SECTION 11.1, such option
shall be revoked and such election shall be deemed of no effect if, on or after
the date the Lessee elects such option, there exists or occurs an Event of
Default or the Lessee shall fail in any manner to fully comply with ARTICLE XI,
in which case the Lessee shall be deemed to have elected the option to purchase
the Leased Property pursuant to SECTION 5.3.
ARTICLE VI
CONDITION AND USE OF LEASED PROPERTY
SECTION 6.1. WAIVERS. The Leased Property is let by the Lessor "AS
IS" in its present or then condition, as the case may be, subject to (a)
Easements and the rights of any other parties in possession thereof, (b) the
state of the title thereto existing at the time the Lessor acquired its interest
in the Leased Property, (c) any state of facts which an accurate survey or
physical inspection might show, (d) all Applicable Laws and Regulations, and (e)
any violations of Applicable Laws and Regulations which may exist at the
commencement of the Lease Term. The Lessee has examined the Leased Property and
(insofar as the Lessor is concerned) has found the same to be satisfactory.
NEITHER THE LESSOR, ANY AGENT NOR ANY PARTICIPANT HAS MADE OR SHALL BE DEEMED TO
HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR SHALL BE DEEMED
TO HAVE ANY LIABILITY WHATSOEVER AS TO TITLE TO THE LEASED PROPERTY
7
OR TO THE VALUE, MERCHANTABILITY, HABITABILITY, CONDITION, DESIGN, OPERATION, OR
FITNESS FOR USE OF THE LEASED PROPERTY (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE
LEASED PROPERTY (OR ANY PART THEREOF) AND NEITHER THE LESSOR, ANY AGENT NOR ANY
PARTICIPANT SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR
THE FAILURE OF THE LEASED PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY
APPLICABLE LAWS AND REGULATIONS, except that the Lessor hereby
represents and warrants that the Leased Property is and shall be free of Lessor
Liens (other than as expressly permitted by the Operative Documents and the
Operative Loan Documents) and that Lessor has not voluntarily conveyed any
right, title or interest in the Leased Property to any Person other than as
contemplated in the Operative Documents and the Operative Loan Documents. The
Lessee has been afforded full opportunity to inspect the Leased Property, is
satisfied with the results of its inspections and is entering into this Lease
solely on the basis of the results of its own inspections and all risks incident
to the matters discussed in the preceding sentence, as between the Lessor, the
Agent and the Participants, on the one hand, and the Lessee, on the other, are
to be borne by the Lessee. The provisions of this ARTICLE VI have been
negotiated, and, except to the extent otherwise expressly stated, the foregoing
provisions are intended to be a complete exclusion and negation of any
representations or warranties by any of the Lessor, the Agents or the
Participants, express or implied, with respect to the Leased Property, that may
arise pursuant to any law now or hereafter in effect, or otherwise.
ARTICLE VII
LIENS; EASEMENTS
The Lessee shall not directly or indirectly create, incur, assume or
suffer to exist any Lien on or with respect to all or any portions of the Leased
Property, any Fixed Rent or Additional Rent, title thereto, or any interest
therein, including all Liens which arise out of the possession, use, occupancy,
construction, repair or rebuilding of the Leased Property or by reason of labor
or materials furnished or claimed to have been furnished to the Lessee, or any
of its contractors or agents or by reason of the financing of any personalty or
equipment purchased or leased by the Lessee (from other than the Lessor) or
Alterations constructed by or for the benefit of the Lessee and not financed by
the Lessor, except in all cases Permitted Liens. The Lessee shall promptly, but
not later than thirty (30) days after the Lessee obtains knowledge of the filing
thereof, at its own expense, take such action as may be necessary duly to
discharge or eliminate or bond in a manner reasonably satisfactory to the Lessor
any such Lien if the same shall arise at any time. NOTICE IS HEREBY GIVEN THAT
NEITHER THE LESSOR NOR ANY OF ITS AFFILIATES IS OR SHALL BE LIABLE FOR ANY
LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO
ANYONE HOLDING OR POSSESSING THE LEASED PROPERTY OR ANY PART THEREOF THROUGH OR
UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER SIMILAR STATUTORY LIENS FOR
ANY LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE LEASED PROPERTY
OR ANY PART THEREOF.
8
Notwithstanding the foregoing paragraph, at the request of the
Lessee, the Lessor shall, from time to time during the Lease Term and upon at
least thirty days' prior written notice from the Lessee, and receipt of the
materials specified in the next succeeding sentence, consent to and join in any
(i) grant of easements, licenses, rights of way and other rights in the nature
of easements, with or without consideration, (ii) release or termination of
easements other than the Easements, licenses, rights of way or other rights in
the nature of easements which are for the benefit of the Easements or any Plant
or any portion of any thereof, with or without consideration, (iii) execution of
petitions to have any Plant, or any portion thereof annexed to any municipal
corporation or utility district, (iv) execution of agreements for reciprocal
rights of ingress and egress and amendments to any covenants and restrictions
affecting the Easements or any Plant or any portion thereof, with or without
consideration, (v) creation of a governmental special benefit district for
public improvements and collection of special assessments in connection
therewith, in lump sum or installments, or (vi) execution and delivery of any
instrument appropriate to confirm or effect such grant, release, dedication,
transfer request or such other matter, document or proceeding. The Lessor's
obligations pursuant to the preceding sentence shall be subject to the
requirements that:
(a) any such action shall be at the sole cost and expense of the
Lessee and the Lessee shall pay all reasonable out-of-pocket costs of the Lessor
in connection therewith (including, without limitation, the reasonable fees of
attorneys, architects, engineers, planners, appraisers and other professionals
retained by the Lessor in connection with any such action);
(b) the Lessee shall have delivered to the Lessor a certificate of a
Responsible Officer of the Lessee stating that: (1) such action will not cause
the Easements or any Plant or any portion thereof to fail to comply in all
respects with the provisions of the Lease or any other Operative Documents or
Operative Loan Documents and in all material respects with all Applicable Laws
and Regulations (including, without limitation, all applicable zoning, planning,
building and subdivision ordinances and all applicable restrictive covenants);
(2) all governmental consents or approvals required prior to such action have
been obtained, and all filings required prior to such action have been made; (3)
such action will not result in any material down-zoning of any Plant or any
portion thereof; (4) the Lease and the Lessee's obligations thereunder shall
continue in full force and effect, without abatement, suspension, deferment,
diminution, reduction, counterclaim, setoff, defense or deduction; and (5) such
action will not materially reduce the fair market value, utility or useful life
of any Easement or any Plant nor the Lessor's interest therein;
(c) all consideration received in connection with such action shall
be paid to the Lessee; and
(d) no Event of Default shall have occurred and be continuing.
9
ARTICLE VIII
MAINTENANCE AND REPAIR;
ALTERATIONS, MODIFICATIONS AND ADDITIONS
SECTION 8.1. (a) MAINTENANCE AND REPAIR; COMPLIANCE WITH LAW. The
Lessee, at its own expense, shall at all times (a) maintain the Leased Property
in good repair and condition, subject to ordinary wear and tear and in safe
repair and condition as would a prudent operator; (b) except to the extent
SECTION 8.5 shall apply, maintain the Leased Property in accordance with all
Applicable Laws and Regulations, whether or not such maintenance requires
structural modifications, noncompliance with which (i) would have a material
adverse effect on the Lessee's right to use the Leased Property or the Lessee's
business or financial condition, (ii) would cause any of the results enumerated
in SECTION 8.5 hereof, (iii) would materially adversely affect the fair market
value, utility, cost of maintenance, remaining useful life or residual value of
the Leased Property, or (iv) would adversely affect the Lessor's interest in the
Leased Property; (c) comply with the standards imposed by any insurance policies
required to be maintained hereunder which are in effect at any time with respect
to the Leased Property or any part thereof; and (d) in accordance with industry
practice and as a prudent operator make all necessary or appropriate repairs,
replacements and renewals in a good and workmanlike manner of the Leased
Property or any part thereof which may be required to keep the Leased Property
in the condition required by the preceding CLAUSES (A), (B) and (C), whether
interior or exterior, structural or nonstructural, ordinary or extraordinary,
foreseen or unforeseen, and including, without limitation, repairs, replacements
and renewals that would constitute capital expenditures under GAAP if incurred
by an owner of property. The Lessee waives any right that it may now have or
hereafter acquire to (x) require the Lessor to maintain, repair, replace, alter,
remove or rebuild all or any part of the Leased Property or (y) make repairs at
the expense of the Lessor pursuant to any Applicable Laws and Regulations or
other agreements.
(b) If Lessee does not elect to purchase the Leased Property upon
the termination or expiration of this Lease, then the Lessee shall maintain
following the termination or expiration of this Lease all operating agreements
and support agreements (collectively, the "Support Agreements") and the Lessee
shall at all times reserve capacity on the pipelines into and out of the Leased
Property, all as required in the Administrative Agent's and Documentation
Agent's sole judgment to operate the Leased Property in the manner in which it
would be operated, in Administrative Agent's and Documentation Agent's
reasonable judgment, by an owner or operator of a natural gas processing plant
following prudent industry practices. The obligations of the Lessee under this
Section 8.1(b) shall survive the expiration or any termination of this Lease and
any other Operative Document or Operative Loan Document (whether by operation of
Law or otherwise).
(c) If all or any part of any Plant or any of the Improvements shall
encroach upon any property or right-of-way adjoining or adjacent to any Easement
or any part thereof, or shall violate any agreements or conditions affecting the
Leased Property or any part thereof (including, without limitation, any
Easement), or shall obstruct any material easement or right-of-way to which the
Leased Property or any material part thereof may be subject, then the
10
Lessee shall, at is sole expense, either (i) contest such matter pursuant to
Section 8.5 hereof, (ii) obtain valid and effective permits for or consents to
such encroachments and/or violations (without any liability to Lessor, any Agent
or any Participant for which such parties are not fully indemnified) or waivers
or settlements of all claims, liabilities and damages resulting therefrom, or
(iii) make such changes, including alteration or removal, to any Plant or any of
the Improvements (subject to the Agents' prior written consent, in its
reasonable discretion) and take such other actions as shall be reasonably
necessary to rectify such encroachments, violations, hindrances, obstructions or
impairments.
SECTION 8.2. ALTERATIONS; REPLACEMENTS. (a) The Lessee may, without
the consent of the Lessor, at the Lessee's own cost and expense, (i) make
Alterations, so long as such Alterations are (A) in the nature of nonstructural
"tenant improvements" or other non-material structural changes; (B) made to
repair or maintain the Leased Property in the condition required by SECTION 8.1;
(C) necessary in order for the Leased Property to be in compliance with
Applicable Laws and Regulations; (D) necessary or advisable to restore the
Leased Property to its condition existing prior to a Casualty or Event of
Taking; or (E) of a type not described in CLAUSES (A) through (D) above and
which comply with the provisions of SECTION 8.1 and of this SECTION 8.2 and (ii)
replace any item of Equipment.
The making of any Alterations or replacement of any Equipment, as
the case may be, must be in compliance with the following requirements: (1) no
such Alterations or replacement shall modify the nature of any Plant as a gas
processing plant; (2) the Lessee shall not make any Alterations or replacement
in violation of the terms of any restriction, easement (including, without
limitation, any Easement), condition or covenant or other matter affecting title
to the Leased Property or which would adversely affect the Lessor's interest in
the Leased Property or any portion thereof; (3) no Alterations shall be
undertaken until the Lessee shall have applied for or procured and paid for, so
far as the same may be required from time to time, all permits and
authorizations relating to such Alterations of all municipal and other
Governmental Authorities having jurisdiction over the Leased Property (PROVIDED
that the Lessor, at the Lessee's expense, shall join in the application for any
such permit or authorization and execute and deliver any document in connection
therewith, whenever such joinder is necessary or advisable); (4) the making of
the Alterations or replacements shall be expeditiously completed in a good and
workmanlike manner, in accordance with industry practice and in compliance with
all Applicable Laws and Regulations then in effect and the standards imposed by
any insurance policies required to be maintained hereunder; (5) all such
replacement Equipment shall be in at least as good operating condition and have
the same or greater fair market value and utility as either the Equipment being
replaced or the equivalent Equipment originally included in any Plant as of the
Closing Date, assuming the replaced Equipment is in at least as good condition
as required to be maintained hereunder; (6) all Alterations or replacements
shall, when completed, be of such a character as not to materially adversely
affect the fair market value, utility, cost of maintenance, remaining useful
life or residual value of the Leased Property from its fair market value,
utility, cost of maintenance, remaining useful life or residual value
immediately prior to the making thereof or the occurrence of the Casualty or
Event of Taking, and such Alterations shall not diminish the capacity or
efficiency of the Plants, as the case may be; and (7) the Lessee
11
shall have made adequate arrangements for payment of the cost of all Alterations
or replacements when due so that the Leased Property shall at all times be free
of Liens for labor and materials supplied or claimed to have been supplied to
the Leased Property, other than Permitted Liens.
(b) Subject to the provisions of SECTION 8.5 hereof, the Lessee
shall make such Alterations or replacements to the Leased Property as may be
required from time to time (i) to comply with all Applicable Laws and
Regulations then in effect and the standards imposed by any insurance policies
required to be maintained hereunder and (ii) to restore the Plants, Improvements
and Equipment to their respective condition prior to a Casualty or Event of
Taking or Alteration, as the case may be, and will maintain such Alterations as
provided in SECTION 8.1 hereof.
(c) If no Event of Default is continuing, the Lessee may, without
the consent of the Lessor, at the Lessee's own cost and expense, remove any item
of Equipment from any Plant which shall have become Obsolete, PROVIDED that (i)
such Equipment, in the aggregate with all other Equipment removed by the Lessee
from the Plants during any calendar year of the Lease Term, does not exceed
$500,000 in value and (ii) subject to the provisions of SECTION 8.5 hereof, the
removal of such Equipment would not cause the Leased Property to fail to comply
with all Applicable Laws and Regulations. The removal of any such Equipment from
any Plant must be in compliance with the following requirements: (A) no such
removal of Equipment shall modify the nature of any Plant as a gas processing
plant; (B) the Lessee shall not remove any Equipment in violation of the terms
of any restriction, easement, condition or covenant or other matter affecting
title to the Leased Property or which would adversely affect the Lessor's
interest in the Leased Property; (C) the removal of any such Equipment shall be
expeditiously completed in a good and workmanlike manner and in compliance with
industry practice and all Applicable Laws and Regulations then in effect and the
standards imposed by any insurance policies required to be maintained hereunder;
(D) all such removals of Equipment shall, when completed, be of such a character
as not to materially adversely affect the fair market value, utility, cost of
maintenance, remaining useful life or residual value of the Leased Property from
its fair market value, utility, cost of maintenance, remaining useful life or
residual value immediately prior to the removal thereof; and (E) the Lessee
shall have made adequate arrangements for payment of the cost of all such
removals when due so that the Leased Property shall at all times be free of
Liens for labor and materials used or supplied or claimed to have been used or
supplied to the Leased Property, other than Permitted Liens.
SECTION 8.3. TITLE TO ALTERATIONS AND REPLACEMENTS. Title to
Alterations and replacement Equipment shall without cost to Lessor and without
further act vest in the Lessor and shall be deemed to constitute a part of the
Leased Property and be subject to this Lease in the following cases: (a) such
Alteration or replacement shall be in replacement of or in substitution for a
portion of any Plant, any of the Improvements and/or any of the Equipment; (b)
such Alteration or replacement shall be required to be made pursuant to the
terms of SECTION 8.1 or 8.2(A)(I)(B)-(E) or 8.2(B) hereof; or (c) such
Alteration shall be Nonseverable. The Lessee, at the Lessor's request, shall
execute and deliver any deeds, assignments, bills of
12
sale or other documents of conveyance reasonably necessary to evidence the
vesting of title in and to such Alterations or replacement to the Lessor. If
such Alteration is not within any of the categories set forth in CLAUSES (A)
through (C) of this SECTION 8.3, then title to such Alteration shall vest in the
Lessee and such Alterations shall not be deemed to be an "Alteration" which is
part of the Leased Property.
All Alterations to which the Lessee shall have title may, so long as
removal thereof shall not result in the violation of any Applicable Laws and
Regulations and no Event of Default is continuing, be removed at any time by the
Lessee. Any such alterations shall be removed by the Lessee at its expense if
the Lessor shall so request prior to the return of the Leased Property to the
Lessor in accordance with the provisions of this Lease and the Lessee shall at
its expense repair any damage to the Leased Property caused by the removal of
such alterations. Unless Lessee shall purchase the Leased Property, the Lessor
may purchase from the Lessee alterations (if not already owned by the Lessor)
which the Lessee notifies the Lessor that the Lessee intends to remove from the
Leased Property prior to the return of the Leased Property to the Lessor, which
purchase shall be at the Fair Market Sales Value of such alterations. Title to
any Lessee alterations shall vest in the Lessor if not removed from the Leased
Property by the Lessee prior to the return of the Leased Property to the Lessor.
SECTION 8.4. MAINTENANCE AND REPAIR REPORTS. The Lessee shall keep
maintenance and repair reports in sufficient detail, and as customary for
operators of gas processing plants operating as prudent operators, to indicate
the nature and date of major work done. Such reports shall be kept on file by
the Lessee at its offices or at the Leased Property during the Lease Term, and
shall be made available to the Lessor upon reasonable request. The Lessee shall
give notice to the Lessor and the Administrative Agent of any Event of Taking or
Casualty the cost to repair which is reasonably expected by the Lessee to exceed
$1,000,000, promptly after the Lessee has knowledge thereof.
SECTION 8.5. PERMITTED CONTESTS. If, to the extent and for so long
as (a) a test, challenge, appeal or proceeding for review of any Applicable Laws
and Regulations or any Governmental Action relating to any Easement or to the
operation or maintenance of any Plant, any Improvements and any Equipment shall
be prosecuted diligently and in good faith in appropriate proceedings by the
Lessee or (b) compliance with such Applicable Laws and Regulations or such
Governmental Action shall have been excused or exempted by a valid nonconforming
use permit, waiver, extension or forbearance, the Lessee shall not be required
to comply with such Applicable Laws and Regulations or such Governmental Action
but only if and so long as any such test, challenge, appeal, proceeding or
noncompliance shall not, in the reasonable opinion of the Lessor, involve (A)
any meaningful risk of (1) foreclosure, forfeiture or loss of the Leased
Property, (2) criminal liability being imposed on the Lessor, any Agent, any
Participant or the Leased Property or (3) the nonpayment of Rent or (B) any
substantial risk of (1) the sale of, or the creation of any Lien (other than a
Permitted Lien) on, any part of the Leased Property, (2) material civil
liability being imposed on the Lessor, any Agent, any Participant or the Leased
Property, (3) the extension of the ultimate imposition of such Applicable Laws
and Regulations or such Governmental Action beyond the last day of the Lease
13
Term, or (4) enjoinment of, or interference with, the use, possession or
disposition of the Leased Property in any material respect. The Lessee shall
provide the Lessor with notice of any contest of the type described in CLAUSE
(A) above in detail sufficient to enable the Lessor to ascertain whether such
contest may have an effect of the type described in CLAUSE (A) and (B) above.
The Lessor will not be required to join in any proceedings pursuant to this
SECTION 8.5.
SECTION 8.6. ENVIRONMENTAL COMPLIANCE. (a) In the event the Lessee
becomes aware of any pending or threatened Claim under any Environmental Law
with respect to the Leased Property or of the presence or suspected presence of
any Hazardous Material at, upon, under, or within the Leased Property or any
part thereof in any quantity or manner or of any other condition which violates
in any material manner or gives rise to material liability or to material
remediation under any Environmental Law, the Lessee shall immediately (i) notify
the Lessor and the Administrative Agent of such Claim or presence or suspected
presence of the Hazardous Material or other condition, (ii) deliver to the
Lessor and the Administrative Agent any notice filed by or received by the
Lessee with or from a Governmental Authority or party or potential party
relating thereto and such other information about the Claim or presence of or
suspected presence of the Hazardous Material or other condition as the Lessor
may reasonably request and (iii) take any and all actions necessary to return
the Leased Property to a condition which is in compliance with all applicable
Environmental Laws.
(b) Subject to the terms of ARTICLE XV, in order to protect its
interest therein the Lessor shall have the right at its expense and risk, but
not the duty, to inspect the Leased Property or any part thereof and conduct
tests thereon upon reasonable notice at any reasonable, mutually agreed-upon
time to determine the extent to which there are Hazardous Materials, if any, at,
upon, under or within the Leased Property in any quantity or manner which
violates or gives rise to material liability or material remediation under any
Environmental Law or the extent to which there is a violation of an
Environmental Law at, upon, under or within the Leased Property. Subject to the
terms of ARTICLE XV, the Lessor shall have the right, but not the duty, at the
Lessee's expense, to enter upon the Leased Property or any part thereof, upon
reasonable notice at reasonable mutually agreed-upon times, to investigate or to
remedy any Hazardous Materials contamination giving rise to material liability
or material remediation under any Environmental Law or any other material
violation, if any, of an Environmental Law if, after being requested to do so,
the Lessee fails to commence such remediation promptly thereafter and to
continue diligently to affect such remediation. In exercising its rights herein,
the Lessor shall use reasonable efforts to minimize interference with the
Lessee's business but any such entry shall not constitute an eviction of the
Lessee, in whole or in part, and the Lessor shall not be liable for any
interference, loss or damage to the Lessee's property or business caused
thereby. If any Governmental Authority shall ever require testing to ascertain
whether there has been a Release of Hazardous Materials onto the Leased
Property, or any part thereof then the costs thereof shall be paid by the
Lessee. The Lessee, at its own expense, shall execute affidavits,
representations, and the like from time to time, at the Lessor's reasonable
request, concerning Lessee's best knowledge and belief regarding (x) the
presence of any Hazardous Material in any quantity or manner which violates or
gives rise to material liability or material remediation under any Environmental
Law on or at the Leased Property, or any part thereof,
14
(y) compliance with Environmental Laws at the Leased Property, or any part
thereof, or (z) the Lessee's intent to store or use a Hazardous Material on or
at the Leased Property in any quantity or manner which violates or gives rise to
material liability or material remediation under Environmental Law.
(c) Except as disclosed in SCHEDULE 8.6, there will not be any
underground storage tanks at the Leased Property (unless, after prior notice,
such underground storage tank is approved by the Lenders and Lessor), nor will
there be any asbestos installed or contained in any part of the Leased Property,
nor will there be any polychlorinated byphenyls (PCBs) brought into or onto,
used, stored or located at the Leased Property.
SECTION 8.7. INSIGNIA. During the Lease Term, the Lessee may letter,
paint or mark the Plant with the name and logo of the Lessee or any permitted
sublessee pursuant to ARTICLE XII. Except as provided above, the Lessee will not
allow the name of any person, corporation or association to be placed on any
Plant as a designation that might reasonably be interpreted as a claim of
ownership.
SECTION 8.8. SPECIAL PLANT SALES. If, within sixty days following
the Closing Date each Participant shall have received a report of the Appraiser,
paid for by the Lessee, which shall meet the requirements of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 which separately
states in a manner reasonably satisfactory to each Participant the estimated
Fair Market Sales Value of each Plant on the Closing Date, the Lessee may
deliver to the Lessor a written notice, not later than 30 days prior to a Rent
Payment Date, containing notice of the Lessee's intention to terminate this
Lease with respect to a Plant (a "Removed Plant") if, (a) after giving effect to
such termination with respect to such Removed Plant, the aggregate Fair Market
Sales Value as of the Closing Date of all Removed Plants does not exceed
twenty-five percent (25%) of the Fair Market Sales Value as of the Closing Date
of all the Leased Property and (b) if no Event of Default has occurred and is
continuing. The Lessee shall purchase such Removed Plant from the Lessor on the
next succeeding Rent Payment Date at a purchase price equal to the sum of (A) an
amount equal to the portion of the Purchase Option Exercise Amount in the same
proportion that the Fair Market Sales Value of such Removed Plant on the Closing
Date bears to the Fair Market Sales Value of all Plants on the Closing Date,
plus (B) all accrued but unpaid Rent thereon plus (C) all other sums due and
payable by the Lessee to the Lessor under any of the Operative Documents. Upon
payment in full of all amounts payable pursuant to this SECTION 8.8, the Lessor
shall transfer by quitclaim to the Lessee, without recourse or warranty but free
and clear of Lessor Liens, all right, title and interest of the Lessor in the
Removed Plant.
ARTICLE IX
USE AND LOCATION
SECTION 9.1. LOCATION. Lessee shall not remove, or permit to be
removed, any Plant, any Improvements or any Equipment or any part thereof from
the Leased Property without the prior written consent of the Lessor, or, until
the Loan Agreement is discharged, the
15
Agents, except that the Lessee or any other Person may remove: (a) if no Event
of Default is continuing, (i) any Alteration with respect to which title has
passed to or remained with the Lessee in accordance with the provisions of
SECTION 8.3, and (ii) any Improvements or Equipment if title to such
Improvements or Equipment shall have passed to or remained with the Lessee; (b)
any part of any Plant or the Improvements or Equipment on a temporary basis for
the purpose of repair or maintenance thereof; (c) any part of any Plant or an
Improvement or item of Equipment which has been replaced by another part which
has become subject to this Lease in accordance with SECTION 8.3 hereof and the
Lien of the Mortgage; or (d) any item of Equipment which shall have become
Obsolete, in accordance with SECTION 8.2 hereof.
SECTION 9.2. USE. (a) The Lessee may use the Leased Property as a
gas processing plant and for related ancillary purposes. The Lessee shall not
use the Leased Property or any part thereof for any purpose or in any manner
that would materially adversely affect (other than through or from ordinary wear
and tear customary for a gas processing plant) the fair market value, utility,
remaining useful life or residual value of the Leased Property or that would
violate or conflict with, or constitute or result in a violation or default
under (x) any Applicable Laws and Regulations whether now existing or hereafter
in effect, foreseen or unforeseen, except to the extent permitted by SECTION
8.5, (y) any insurance policies required by ARTICLE X, or (z) any Operative
Document.
(b) If the Fair Market Sales Value of the Leased Property
(determined based on actual condition and ignoring the assumption in the
definition thereof) has decreased below the Fair Market Sales Value for the
Leased Property due to Excessive Use (as defined below) of the Leased Property
by the Lessee, on the last day of the Basic Term or, if the Participants have
agreed to any renewal option under SECTION 5.1, the then Renewal Term, and
unless the Lessee has purchased the Leased Property hereunder, the Lessee shall
pay to the Lessor such difference as Additional Rent. "EXCESSIVE USE" for
purposes of this SECTION 9.2(B) shall be deemed to have occurred if, pursuant to
the Appraisal Procedure, it is determined that the Fair Market Sales Value (as
so determined) of the Leased Property is less than the Fair Market Sales Value
of such Leased Property due to any use in excess of or in any way differing from
ordinary wear and tear.
ARTICLE X
INSURANCE
SECTION 10.1. COVERAGE. The Lessee will purchase and maintain, or
cause to be purchased and maintained, insurance with respect to the Leased
Property of the following types and in the following amounts (or, if greater, in
sufficient amounts to prevent the Lessor, the Lessee, the Agents, or the
Participants from becoming co-insurers of any loss); PROVIDED, HOWEVER, that the
Lessee may self-insure for the first $1,000,000 in coverage for any of the
following:
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(i) PROPERTY INSURANCE: Insurance against physical damage to the
Leased Property caused by "all risks" perils (including flood and
earthquake), including business interruption coverage as well as broad
form boiler and machinery coverage;
(ii) LIABILITY INSURANCE: Commercial general liability insurance,
including contractual liability against claims for bodily injury
(including death), personal injury and property damage occurring on, in or
about the Property or resulting from activities on the Property or the
business of the Lessee, in the minimum combined single limit amount of
$100,000,000, and in the aggregate, $100,000,000, for each occurrence for
contractual liability, bodily injury (or death), personal injury and/or
property damage;
(iii) WORKERS' COMPENSATION INSURANCE: Insurance, including, without
limitation, workers' compensation insurance at statutory levels and
employers' liability insurance, with a limit of $1,000,000 in the
aggregate; and
(iv) OTHER INSURANCE: Such other insurance, in form and substance,
and in such amounts and against such risks, as is either (x) customarily
carried by companies owning, operating or leasing property or conducting
businesses similar and/or similarly situated to any of the Leased Property
and/or the Lessee, or (y) reasonably requested from time to time by Lessor
and commercially available at reasonable cost.
Primary coverage for such insurance shall be written by companies that are
nationally recognized (including Lloyd's of London and other recognized
international insurers), in each case with an Insurance Solvency International
(ISI) rating of BBB or better, or with Best's ratings of A- (if rated by Best's)
and Class XI or better or as mutually agreed to by Lessor and Lessee) and such
primary insurance shall be written by companies legally qualified to issue such
insurance, selected by the Lessee and, with respect to insurance other than the
insurance specified in Section 10.1(iii) shall, to the extent of Lessee's
indemnity obligations contained in Section 7.1 or Section 7.2 of the
Participation Agreement, name (i) the Lessor, (ii) each Agent, on its own behalf
and on behalf of the holders from time to time of the Notes and their assignees,
and (iii) the Participants, as additional insureds as their interests may
appear. Lessee will use its best efforts to obtain all insurance (other than
self insurance) from companies having Best's ratings as high above ratings of A-
and Class XI as is practicable.
All policies of insurance required to be maintained pursuant to
Section 10.1(ii) which cover liability for bodily injury or property damage
shall provide that all provisions of such insurance, except the limits of
liability (which shall be applicable to all insureds as a group) and liability
for premiums (which shall be solely a liability of the Lessee), shall operate in
the same manner as if there were a separate policy covering each such insured
and/or additional insured without right of contribution from any other insurance
which may be carried by an insured and/or additional insured.
SECTION 10.2. POLICY PROVISIONS. The property insurance referred to
in Section 10.1(i) for the Leased Property may be a blanket policy and shall (i)
at all times be in an amount
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at least equal to the greater of $125,000,000 and one hundred percent (100%) of
the replacement cost value (without depreciation), and (ii) include a lenders
loss payable endorsement in favor of the Lessor and any loss or damage under
such property insurance policy (other than proceeds representing compensation
for business interruption) shall be payable to the Lessor to be held and applied
pursuant to the terms of this Lease. Every policy required under Section 10.1
shall (i) expressly provide that it will not be cancelled or terminated due to a
lapse for nonpayment of premium or materially changed except upon thirty (30)
days' written notice to the Lessor and the Lessee; (ii) provide that the
interests with respect to such property insurance of the Lessor, each Agent, and
the Participants shall be insured regardless of any breach or violation by the
Lessee of any warranties, declarations or conditions contained in such
insurance; (iii) provide that such property insurance shall not be invalidated
by any act, omission or negligence of the Lessee, the Lessor, any Agent or any
Participant, nor by any foreclosure or other proceedings or notices thereof
relating to the Leased Property or any part thereof, nor by legal title to, or
ownership of the Leased Property or any part thereof becoming vested in or by
Lessor or its agents, nor by occupancy or use of the Leased Property or any part
thereof for purposes more hazardous than permitted by such policy; (iv) provide
that all insurance claims pertaining to the Leased Property or any part thereof
shall be adjusted by the insurers thereunder with the Lessee but that the Lessor
must consent to any such adjusted claim over $1,000,000; (v) include a waiver of
all rights of subrogation against the Lessor, the Agents and the Participants
and any recourse against the Lessor, the Agents and the Participants for payment
of any premiums or assessments under any policy; and (vi) not contain a
provision relieving the insurer thereunder of liability for any loss by reason
of the existence of other policies of insurance covering the Leased Property or
any part thereof against the peril involved, whether collectible or not, if such
other policies do not name the Lessor, the Agents and the Participants as
additional insureds, with loss payable as provided in this Lease. The Lessee
shall advise the Lessor promptly of any policy cancellation or any material
change adversely affecting the coverage provided thereby.
SECTION 10.3. EVIDENCE OF INSURANCE. The Lessee shall deliver to the
Lessor certificates of insurance, and any other documentation as may be required
by the Lessor, evidencing the existence of all insurance which is required to be
maintained by the Lessee hereunder including descriptions of the previously
mentioned insurance requirements not customarily found in a standard insurance
policy as well as descriptions of the exceptions to coverage under such
policies, such delivery to be made (i) contemporaneously with the execution and
delivery of this Lease and annually thereafter on March 31, (ii) within
twenty-one (21) days of the issuance of any additional policies or material
amendments or supplements to any of such insurance and (iii) at least twenty-one
(21) days prior to the expiration date of any such insurance, PROVIDED, HOWEVER,
that such delivery with respect to this Section 10.3 shall not be necessary if
either by law or by the terms of such insurance policy, coverage is extended
unless the insurer provides advance notice of its intent not to extend. In the
case of the latter, the Lessee shall provide an officer's certificate at least
twenty-one (21) days prior to such policy expiration, describing therein the
proposed action to be taken by the Lessee or any of the Tejas Group on the
Lessee's behalf in order to renew or replace such expiring policy. Promptly upon
obtaining the replacement policy, which shall be obtained no later than on the
expiration date of the expiring policy, the Lessee will deliver to the Lessor
the proof of insurance referred to
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at the commencement of this Section 10.3. The Lessee shall cause each insurer
under each policy required hereunder to give the Lessor notice of any lapse
under any such policy. The Lessee shall not obtain or carry separate insurance
concurrent in form, or contributing in the event of loss, with that required by
this Article X unless the Lessor, the Agents and the Participants are named as
additional insureds therein, with loss payable as provided in this Lease. The
Lessee shall immediately notify the Lessor, the Agents and the Participants
whenever any such separate insurance is obtained and shall deliver to the Lessor
duplicate certificates of insurance or certified copies of insurance policies
evidencing the same. Any insurance required hereunder may be provided under
Tejas's blanket policies; PROVIDED, that the coverage allocable to the Leased
Property is not less than the coverage required by this Article X as separately
stated.
SECTION 10.4. INDEMNIFICATION OBJECTIONS. The requirements of this
Article X shall not be construed to negate or modify the Lessee's obligations
under Section 7 of the Participation Agreement.
ARTICLE XI
SALE, RETURN OR PURCHASE OF LEASED PROPERTY
SECTION 11.1. SALE OF THE LEASED PROPERTY. (a) In the event that the
Leased Property shall not be purchased on or prior to the expiration of the
Basic Term or the then Renewal Term pursuant to SECTION 5.3 or 5.4 hereof, the
Lessee shall, subject to SECTION 11.1(C) hereof, cause the Leased Property to be
sold in accordance with the procedures set forth in this SECTION 11.1. During
the period commencing on the date 360 days prior to the scheduled end of the
Basic Term or 360 days prior to the scheduled end of the then Renewal Term, as
the case may be, the Lessee shall use commercially reasonable efforts, as
nonexclusive agent for the Lessor (for a fee to be negotiated and agreed by the
Lessor and the Lessee prior to the Lessee acting as such agent and to be paid
from the Sale Proceeds), to obtain cash bids for the purchase of the Leased
Property and, in the event it receives any bid, the Lessee shall, within five
Business Days after receipt thereof and at least twenty Business Days prior to
the Lease Termination Date certify to the Lessor in writing the amount and terms
of such bid, and the name and address of the party or parties (who shall not be
the Lessee or any Affiliate of the Lessee or with whom the Lessee has an
understanding or arrangement regarding the future use of the Leased Property by
the Lessee or such Affiliate but who may be the Lessor or a Participant, any
Affiliate thereof or any Person contacted by a Participant) submitting such bid.
The Lessee shall bear its own expenses and pay, as Additional Rent, the
reasonable expenses of the Lessor and each Participant in connection with any
such bidding and sale process pursuant to this SECTION 11.1, as well as all
reasonable out-of-pocket costs and expenses incurred by any party (including a
buyer or potential buyer) to place the Leased Property in the condition required
by SECTION 11.2.
(b) After the Lessee shall have certified to the Lessor all bids
received, any Participant, any Affiliate thereof or any Person contacted
by any Participant may submit
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a further bid or bids to the Lessee not later than five Business Days
prior to the Lease Termination Date. Subject to SECTION 11.1(C), on or
before the Lease Termination Date, so long as no Potential Event of
Default or Event of Default shall have occurred and be continuing, and
subject to the release of the security interest with respect to the Leased
Property under the Mortgage: (i) the Lessee shall transfer all of the
Lessee's right, title and interest in the Leased Property, or cause the
Leased Property to be transferred, to the bidder(s), if any, which shall
have submitted the highest bid therefor (evaluated on a net cash basis) at
least twenty (or, in the case of a Participant, any Affiliate thereof or
Person contacted by a Participant, five) Business Days prior to such Lease
Termination Date, in the same manner and in the same condition and
otherwise in accordance with all the terms of this Lease as if delivery
were made to the Lessor pursuant to SECTION 11.2 hereof; (ii) subject to
prior or concurrent payment by the Lessee of all amounts due under CLAUSE
(III) of this sentence, the Lessor shall exercise such rights as it has to
cause the Leased Property to be released from the Lien of the Assignment
of Lease and Rents and shall, in accordance with SECTION 19.16 hereof
transfer by quitclaim the Lessor's right, title and interest in and to the
Leased Property for cash to such bidder(s), without recourse or warranty
(except as to the absence of Lessor Liens and except that Lessor shall
represent and warrant that it has not voluntarily conveyed any of its
right, title and interest in the Leased Property to any Person other than
as contemplated in the Operative Documents and the Operative Loan
Documents); and (iii) the Lessee shall simultaneously pay or cause to be
paid to the Lessor in funds of the type specified in SECTION 4.3 hereof,
an amount equal to the sum of (p) all unpaid Fixed Rent due on or prior to
the Lease Termination Date, and all Additional Rent due on or prior to
such date and any other amounts due and payable by the Lessee to the
Lessor, each Agent and each Participant PLUS (q) the gross sale proceeds
of the Leased Property sold by the Lessor (the "SALE PROCEEDS"); PLUS (r)
the excess, if any, of the Lease Balance over the Sale Proceeds, PROVIDED
that the amount of such excess so payable shall not be greater than the
Recourse Deficiency Amount. To the extent the Sale Proceeds shall exceed
the Lease Balance, upon receipt of the amounts described in CLAUSE (P) of
the preceding sentence, the Lessor shall pay the amount of such excess to
the Lessee.
(c) Notwithstanding the provisions of SECTION 11.1(B) hereof, in the
event that the difference between (x) the Lease Balance and (y) the
Recourse Deficiency Amount would exceed the Sale Proceeds, the Lessor may,
upon notice to the Lessee, elect to retain title to the Leased Property.
Upon receipt of notice of such an election by the Lessor, the Lessee shall
cease its efforts to obtain bids as provided above and shall reject all
bids theretofore or thereafter received.
(d) In the event that the Lessor elects to retain title to the
Leased Property pursuant to SECTION 11.1(C) hereof, the Lessee shall pay
or cause to be paid to the Lessor on the Lease Termination Date in funds
of the type specified in SECTION 4.3 hereof, an amount equal to the sum of
(i) all unpaid Fixed Rent with respect to the Leased Property due on or
prior to the Lease Termination Date, and all Additional Rent due on or
prior
20
to such date and any other amounts due and payable by the Lessee to the
Lessor, any Agent or any Participant PLUS (ii) the Recourse Deficiency
Amount.
SECTION 11.2. RETURN OF LEASED PROPERTY. Unless the Leased Property
shall have been transferred to the Lessee pursuant to ARTICLE V or XIII, the
Lessee shall, on the Lease Termination Date, and at its own expense, return the
Leased Property (together with the reports described in SECTION 8.4 relating
thereto) (x) to the Lessor for retention by the Lessor if the Lessor has elected
to retain the Leased Property pursuant to SECTION 11.1(C) hereof, or (y) in all
other cases, for transfer to the independent purchaser thereof, in each case by
surrendering the same into the possession of the Lessor free and clear of all
Liens other than Lessor Liens and Liens described in clauses (f) and (h) of the
definition of Permitted Liens, in as good condition as it was on the Closing
Date (as modified by Alterations permitted by this Lease), ordinary wear and
tear excepted, and in compliance with all Applicable Laws and Regulations and
the other requirements of ARTICLE VIII (and in any event without (x) any
asbestos installed or maintained in any part of the Leased Property, and (y) any
polychlorinated byphenyls (PCBs) in, on or used, stored or located at the Leased
Property). Any Improvements and Equipment removed from any of the Plants or the
Easement pursuant to SECTION 9.1(B) shall have been returned to and reinstalled
in the relevant Plant or on the relevant Easement. The Lessee shall cooperate
with the Lessor and the independent purchaser of the Leased Property in order to
facilitate the ownership and operation by such purchaser of the Leased Property
after the Lease Termination Date, including providing all books, reports and
records regarding the maintenance, repair and ownership of the Leased Property
and all know-how, data and technical information relating thereto, granting or
assigning all licenses necessary for the operation and maintenance of the Leased
Property and cooperating in seeking and obtaining all necessary Governmental
Action. The Lessee shall have also paid the total cost for the completion of all
Alterations commenced prior to the Lease Termination Date. The obligation of the
Lessee under this ARTICLE XI shall survive the expiration or termination of this
Lease. Unless the Lessee shall have exercised or been deemed to have exercised
its option to purchase the Leased Property, not less than nine months prior to
the Lease Termination Date, the Lessor shall at the Lessee's expense be entitled
to perform such investigation, including obtaining reports of engineers and
other experts as to the condition and state of repair and maintenance required
by this SECTION 11.2 and as to the compliance with Environmental Laws of the
Leased Property, as it deems appropriate. The Lessee, at its sole cost and
expense, shall cause the repair or other remediation of any discrepancies
between the actual condition of the Leased Property and the condition required
under the Lease.
ARTICLE XII
ASSIGNMENT AND SUBLEASING
SECTION 12.1. ASSIGNMENT AND SUBLEASING. (a) The Lessee may not
assign, mortgage, or pledge, in whole or in part, any of its right, title or
interest in, to or under this Lease or any portion of the Leased Property to any
Person at any time, and any such assignment, mortgage, or pledge shall be void.
The Lessee may not sublease or grant any
21
license or other right to use or possess the Leased Property or any part thereof
unless (i) at the time of any such sublease (or license or other grant), no
Potential Event of Default or Event of Default shall have occurred and be
continuing; (ii) any such sublease (or license or other grant) shall by its
terms be expressly made subject and subordinate to the terms of this Lease;
(iii) the Lessee shall provide the Lessor, no less than 15 days prior to the
effective date of such sublease (or license or other grant), with a conformed
copy of the instrument creating such sublease (or license or other grant); (iv)
the Lessor has consented to such sublease in its sole discretion; and (v) Lessee
provides Lessor with evidence satisfactory to Lessor (in its sole discretion)
that all consents or other requirements provided for under the terms of any
Conveyance have been obtained or satisfied in a manner satisfactory to Lessor in
its sole discretion.
If the Lessee shall request, in connection with any sublease (or
license or other grant), that the Lessor execute an attornment and
non-disturbance agreement with respect to such sublease (or license or other
grant), the Lessor shall consider each such sublease (or license or other grant)
on a case-by-case basis and may give its consent to its execution and delivery
of an attornment and non-disturbance agreement. Except for Permitted Liens the
Lessee shall not mortgage, pledge, assign, sell, subject to option or otherwise
encumber or transfer its interest in and to this Lease or in and to any sublease
(or license or other grant) or the rentals payable thereunder without the prior
written consent of the Lessor. Any sublease (or license or other grant) made
otherwise than as expressly permitted by this Section 12.1 and any mortgage,
pledge, assignment, sale, encumbrance or transfer of the Lessee's interest
hereunder or under any such sublease (or license or other grant) shall be null
and void and of no force or effect.
No sublease (or license or other grant) pursuant to this Section
12.1 shall modify or limit any right or power of the Lessor or any of its
Affiliates hereunder or affect or reduce any obligation of the Lessee hereunder,
and all such obligations shall continue in full force and effect as obligations
of a principal and not of a guarantor or surety, as though no subletting (or
license or other grant) had been made.
ARTICLE XIII
LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE
SECTION 13.1. GENERAL. Subject to the provisions of this Article
XIII, the Lessee hereby irrevocably assigns to the Lessor any award or
compensation or insurance payment to which the Lessee may become entitled if the
Leased Property or any part thereof is subject of a Casualty or Event of Loss.
The Lessee shall promptly notify the Lessor and the Administrative
Agent in writing of each and every Casualty (with direct or consequential loss
or damage of more than $1,000,000) or Event of Loss and shall appear in any
proceeding or action to defend, negotiate, prosecute or adjust any claim for any
award or compensation or insurance payment on account of any Casualty or Event
of Loss and shall take all appropriate action in connection with any Casualty or
Event of Loss, including the employment of counsel satisfactory to the Lessor.
The
22
Lessor shall have the right to appear and participate and to employ separate
counsel in any such proceeding or action, and the fees and expenses of such
counsel shall be paid by the Lessee if the Lessee shall have failed to employ
counsel reasonably satisfactory to the Lessor. If the Lessee shall elect not to
appear or shall fail to prosecute diligently, the Lessor may assume the
prosecution thereof and the Lessee shall pay all of the expenses of the Lessor
incurred by the Lessor (including, but not limited to, reasonable fees and
expenses of Lessor's counsel) and the reasonable fees and expenses of local
counsel. No settlement of any such proceeding or action involving a claim for
any award, compensation or payment exceeding $500,000 shall be made by the
Lessee without the written consent of the Required Participants which consent
shall not be unreasonably withheld.
Amounts representing proceeds in excess of $1,000,000 (or all
proceeds, if (x) an Event of Default has occurred and is continuing or (y) upon
the request of the Lessor if a Potential Event of Default has occurred and is
continuing) paid in connection with any such Event of Loss or Casualty, as the
case may be (collectively, the "Proceeds"), shall be paid over to the
Administrative Agent to be held by such Agent and distributed pursuant to
Article XI of this Lease, or pursuant to the Participation Agreement, as
appropriate (all such Proceeds, less the expenses incurred by the Lessor and the
Lessee in collecting such amounts, and less any reimbursement by the Lessee for
costs and expenses in connection therewith to which the Lessor and the
Participants are entitled pursuant to this Lease, are the "Net Proceeds"). Any
and all Proceeds received by the Lessee in connection with any such proceeding
or action shall be received and held in trust for the benefit of the Lessor,
shall be segregated from other funds of the Lessee and shall be forthwith paid
over to the Administrative Agent. The Lessee agrees that this Lease shall
control the rights of the Lessor and the Lessee in any such Proceeds, and any
present or future Law to the contrary is hereby waived. Any and all charges,
fees and expenses of the Administrative Agent shall be paid from the Net
Proceeds.
The Lessee shall give to the Lessor and the Administrative Agent
such information as is not subject to confidentiality restrictions, and copies
of such documents, which relate to such proceedings, or which relate to the
settlement of amounts due under insurance policies required by ARTICLE X, and
are in the possession of the Lessee, as are reasonably requested by the Lessor
or the Agents. If the proceedings relate to an Event of Taking, the Lessee shall
act diligently in connection therewith.
SECTION 13.2. EVENT OF LOSS OR CASUALTY WITH TERMINATION OR PARTIAL
TERMINATION. (a) If a Casualty or an Event of Loss shall in the good faith
opinion of a duly authorized executive officer of Lessee affect the Leased
Property in such manner as to render it unsuitable for restoration or for
continued use, in whole or in material part, and occupancy by the Lessee for the
original purposes thereof, then the Lessee may deliver to the Lessor, not later
than thirty (30) days after such occurrence a written notice (herein called a
"Termination Notice") containing notice of the Lessee's intention to terminate
this Lease with respect to the Leased Property and a certificate of an
Authorized Officer by the Lessee describing the event giving rise to such
termination and certifying as to such matters. The Lessee shall purchase the
Leased Property from the Lessor on a Rent Payment Date not more than 90 days
after the date
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such Casualty or Event of Loss shall have occurred at a purchase price equal to
the sum of (A) the Lease Balance determined as of such Rent Payment Date, plus
(B) all accrued but unpaid Rent, plus (C) all other sums due and payable by the
Lessee to the Lessor under any of the Operative Documents. In connection with
the purchase of the Leased Property pursuant to this SECTION 13.2(A), (i) any
proceeds derived from property insurance maintained by the Lessee then held by
the Lessor or the Administrative Agent shall be credited against the purchase
price set forth above, if not already paid by the Lessee, and any proceeds
derived from property insurance maintained by the Lessee remaining after the
payment of such purchase price shall be paid to, or retained by, the Lessee or
as it may direct and (ii) all Net Proceeds for the Leased Property then held by
the Lessor or the Administrative Agent shall be credited against such purchase
price, if not already paid by the Lessee, and any such Net Proceeds remaining
thereafter shall be paid over to, or retained by, the Lessee or as it may
direct. Upon payment in full of all amounts payable pursuant to this SECTION
13.2(A), (x) the Lease Term shall end, (y) the obligations of the Lessee
hereunder (other than any obligations expressed herein as surviving termination
of this Lease) shall terminate as of the date of such payment and (z) with
respect to an Event of Loss not constituting an Event of Taking, the Lessor
shall transfer by quitclaim to the Lessee, or if the Lessee shall so designate,
to the property damage insurer, without recourse or warranty but free and clear
of Lessor Liens, all right, title and interest of the Lessor in the Leased
Property; or
(b) If within sixty days following the Closing Date each Participant
shall have received a report of the Appraiser, paid for by the Lessee,
which shall meet the requirements of the Financial Institutions Reform
Recovery and Enforcement Act of 1989 which separately states in a manner
reasonably satisfactory to each Participant the estimated Fair Market
Sales Value of each Plant on the Closing Date and if (x) a Casualty or
Event of Loss shall result in the damage or destruction to, or the taking
of, a Plant or any part thereof (an "Affected Plant") resulting in a
decrease or diminution in value of twenty percent (20%) or more of the
lesser of (1) an amount equal to the portion of the Purchase Option
Exercise Amount (such portion the "Partial Purchase Option Exercise
Amount") in the same proportion that the Fair Market Sales Value of such
Plant on the Closing Date bears to the Fair Market Sales Value of all
Plants on the Closing Date or (2) the fair market value prior to such
Casualty or Event of Loss, as determined pursuant to the Appraisal
Procedure, of such Affected Plant, or (y) the Lessor has received an
opinion, which shall be at the Lessee's sole cost and expense, of the
Independent Engineer to the effect that the restoration of such Affected
Plant or its replacement could not be expected to restore and rebuild such
Affected Plant to its previous capacity, efficiency and useful life or
such restoration and rebuilding could not be expected to be completed in
full prior to the Lease Termination Date, then, upon the Lessee's receipt
of Lessor's notice thereof, the Lessee may deliver to the Lessor, not
later than thirty (30) days after such occurrence a written notice (herein
called a "Partial Termination Notice") containing notice of the Lessee's
intention to terminate this Lease with respect to such Affected Plant and
the related portion of the Easement and a certificate of an Authorized
Officer by the Lessee describing the event giving rise to such partial
termination and certifying as to such matters. In furtherance of the
foregoing, the
24
Lessor may (but shall not be obligated to) initiate an Appraisal Procedure
with respect to such Affected Plant. The Lessee shall purchase such
Affected Plant and such portion of the Easement from the Lessor on a Rent
Payment Date not more than 90 days after the date such casualty or Event
of Loss shall have occurred at a purchase price equal to the Partial
Purchase Option Exercise Amount, plus (B) all accrued but unpaid Rent
thereon, plus (C) all other sums due and payable by the Lessee to the
Lessor under any of the Operative Documents.
In connection with the purchase of the Affected Plant pursuant to
this SECTION 13.2(B), (i) any proceeds derived from property insurance
maintained by the Lessee then held by the Lessor or the Administrative Agent
shall be credited against the purchase price set forth above, if not already
paid by the Lessee, and any proceeds derived from property insurance maintained
by the Lessee remaining after the payment of such purchase price shall be paid
to, or retained by, the Lessee or as it may direct and (ii) all Net Proceeds for
the Affected Plant then held by the Lessor or the Administrative Agent shall be
credited against such purchase price, if not already paid by the Lessee, and any
such Net Proceeds with respect to the Affected Plant remaining thereafter shall
be paid over to, or retained by, the Lessee or as it may direct. Upon payment in
full of all amounts payable pursuant to SECTION 13.2(B), with respect to an
Event of Loss not constituting an Event of Taking, the Lessor shall transfer by
quitclaim to the Lessee, or if the Lessee shall so designate, to the property
damage insurer, without recourse or warranty but free and clear of Lessor Liens,
all right, title and interest of the Lessor in the Affected Plant and the
related portion of the Easement.
SECTION 13.3. EVENT OF LOSS OR CASUALTY WITHOUT TERMINATION OR
PARTIAL TERMINATION. If, after a Casualty or Event of Loss, the Lessee has not
given or has not been deemed to have given a Termination Notice or Partial
Termination Notice in accordance with Section 13.2 hereof, then this Lease shall
continue in full force and effect, without abatement of Fixed Rent or any
Additional Rent, and the Lessee shall, at its expense, promptly commence and
diligently pursue to completion the rebuilding, replacement or repair of any
damage to the Leased Property, any Plant, any Improvements and any Equipment
caused by such event in conformity with the requirements of Section 8.1, as
applicable, in order to restore the Leased Property (in the case of an Event of
Loss, as nearly as practicable) to the value and operating condition thereof
immediately prior to such event. In connection with such restoration (except in
the case of an emergency), the Lessee shall, in the event the cost of
restoration could reasonably be expected to exceed $1,000,000 before beginning
such restoration, submit plans and specifications for such restoration, together
with an estimate of the cost thereof, and all necessary construction contracts
therefor for the Lessor's and, if applicable, the Independent Engineer's
approval; PROVIDED, that Lessor shall not be required to provide such approval
if (i) the value, capacity, efficiency and useful life of the Improvements shall
not, after such restoration, be less than the value, capacity, efficiency and
useful life prior to such Casualty or Event of Loss, (ii) the fair market value
of the Leased Property shall not, after such restoration, be less than its fair
market value prior to such Casualty or Event of Loss and (iii) the estimated
cost to complete such restoration shall not exceed the amount of Net Proceeds,
unless the Lessor is, in its sole judgment, satisfied that the Lessee shall have
sufficient funds (the "Excess Funds")
25
available to pay any such excess. At the Lessor's request, such Excess Funds
shall be deposited with the Administrative Agent, which deposits shall, from and
after such deposit, constitute Net Proceeds to be disbursed by the
Administrative Agent as hereinafter provided. Such work shall be completed in a
good and workmanlike manner free and clear of all Liens for labor, services or
materials (subject to the rights of contest set forth in Section 8.5 hereof) and
in compliance (in all material respects) with all applicable Easements,
Applicable Laws, Regulations and the insurance required to be maintained
pursuant to Article X. All fees and expenses of the Independent Engineer in
connection with any rebuilding and restoration shall be at the Lessee's sole
cost and expense.
The Lessee shall be entitled to pay the Excess Funds or to receive
payment from the Net Proceeds, as the case may be, from time to time as such
work of rebuilding, replacement or repair progresses, but only after
presentation of certificates of the Independent Engineer, delivered by the
Lessee to the Administrative Agent (with a copy to the Lessor) from time to time
as such work of rebuilding, replacement or repair progresses. Each such
certificate of the Independent Engineer shall describe the work for which the
Lessee is requesting permission to pay or requesting payment and the cost
incurred by the Lessee in connection therewith and shall state that such work
has been properly completed and that the Lessee has not theretofore received
payment for such work, and shall be accompanied by a certificate of an
Authorized Officer of the Lessee certifying that no Potential Event of Default
or Event of Default has occurred and is continuing and that the amounts held by
the Administrative Agent plus all necessary undisbursed Excess Funds are
adequate to complete such rebuilding, replacement or repair. The Administrative
Agent shall deliver, or cause to be delivered, payment within ten (10) Business
Days after its receipt of the certificates required above. In connection with
such payments Lessee shall first pay all Excess Funds for the cost of such
restoration prior to the Administrative Agent's disbursing any Net Proceeds.
Upon receipt by the Administrative Agent (with a copy to the Lessor) of a
certificate of an Authorized Officer of the Lessee, to the effect that final
payment has been made for any such work and stating that the rebuilding,
replacement or repair has been completed, and that each and every other amount
due and owing under the Operative Documents by the Lessee has been paid in full,
the remaining amount of such Net Proceeds shall be paid to the Lessee. The
Lessee shall be responsible for the cost of any such repair, rebuilding or
restoration in excess of such Net Proceeds, for which cost the Lessee shall make
adequate provision acceptable to the Lessor in its sole judgment.
SECTION 13.4. TEMPORARY EVENT OF LOSS OR LEASE TERMINATION.
Notwithstanding any provision to the contrary contained in this Article XIII, in
the event of any temporary Event of Loss this Lease shall remain in full force
and effect, and provided no Potential Event of Default or Event of Default has
occurred and is continuing, the Lessee shall be entitled to receive the Net
Proceeds allocable to such temporary Event of Loss, except that if this Lease
shall expire or terminate during such temporary Event of Loss, then Lessee shall
be entitled to the Net Proceeds allocable to the period after the termination or
expiration of this Lease only if the Lessee has paid the Purchase Option
Exercise Amount for the Leased Property.
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SECTION 13.5. APPLICATION OF PAYMENTS. All proceeds (except for
payments under insurance policies maintained by the Lessor or any Participant)
received at any time by the Lessor, the Lessee or the Administrative Agent from
any Governmental Authority or other Person with respect to any Casualty to the
Leased Property or any part thereof or with respect to an Event of Loss, plus
the amount of any payment that would have been due from an insurer but for the
Lessee's self-insurance or deductibles ("LOSS PROCEEDS"), shall (except to the
extent SECTION 13.6 applies) be applied as set forth below in this SECTION 13.5.
(a) In the event the Lessee purchases the Leased Property pursuant
to SECTION 13.2(A), such Proceeds and Loss Proceeds shall be applied as
set forth in SECTION 13.2(A);
(b) In the event the Lessee purchases an Affected Plant pursuant to
SECTION 13.2(B), such Proceeds and Loss Proceeds shall be applied as set
forth in SECTION 13.2(B); and
(c) In the event the Lessee repairs or rebuilds the Leased Property
pursuant to SECTION 13.3, such Proceeds and Loss Proceeds shall be applied
as provided in SECTION 13.3 if such section is applicable.
During any period of repair or rebuilding pursuant to this ARTICLE
XIII, this Lease will remain in full force and effect and Rent shall continue to
accrue and be payable without abatement or reduction. The Lessee shall maintain
records setting forth information relating to the receipt and application of
payments in accordance with this SECTION 13.5. Such records shall be kept on
file by the Lessee at its offices and shall be made available to the Lessor and
the Agents upon request. All repair and rebuilding pursuant to this ARTICLE XIII
shall be controlled by the Lessee (the Lessor, during the continuance of an
Event of Default) and completed with due diligence in compliance with the
requirements of SECTION 8.2 (as if references therein to "Alterations" were to
such repair and rebuilding).
SECTION 13.6. APPLICATION OF CERTAIN PAYMENTS NOT RELATING TO AN
EVENT OF TAKING. In case of a requisition for temporary use of all or a portion
of the Leased Property which is not an Event of Taking, this Lease shall remain
in full force and effect, without any abatement or reduction of Rent, and the
Net Proceeds for the Leased Property subject to SECTION 13.3, shall be paid to
the Lessee, except that any portion of such Net Proceeds that was awarded with
respect to the time period after the expiration or termination of the Lease Term
(unless the Lessee shall have exercised an option to purchase the Leased
Property) shall be paid to the Lessor.
SECTION 13.7. OTHER DISPOSITIONS. Notwithstanding the foregoing
provisions of this ARTICLE XIII, so long as a Potential Event of Default or
Event of Default shall have occurred and be continuing, any amount that would
otherwise be payable to or for the account of, or that would otherwise be
retained by, the Lessee pursuant to this ARTICLE XIII shall be paid to the
Administrative Agent (or to the Lessor after the Loan Agreement shall have been
27
satisfied and discharged) as security for the obligations of the Lessee under
this Lease, shall be invested by the Administrative Agent (or the Lessor) in
accordance with SECTION 19.18 in Permitted Investments and, if a Event of
Default is continuing, may be applied to the obligations of the Lessee
hereunder, and, at such time thereafter as no Potential Event of Default or
Event of Default shall be continuing, such amount and gain thereon shall be paid
promptly to the Lessee to the extent not previously applied in accordance with
the terms of this Lease.
SECTION 13.8. NO RENT ABATEMENT. Except as set forth in SECTION
13.2(A) hereof, rent shall not abate hereunder by reason of any Casualty, any
Event of Loss, or any Event of Taking of the Leased Property or any part
thereof, and the Lessee shall continue to perform and fulfill all of the
Lessee's obligations, covenants and agreements hereunder notwithstanding such
Casualty, Event of Loss, or Event of Taking until the Lease Termination Date.
ARTICLE XIV
NON-INTERFERENCE
SECTION 14.1. NON-INTERFERENCE. The Lessor covenants that it will
not interfere in the Lessee's or any of its sublessees' use of the Leased
Property in accordance with this Lease during the Lease Term, so long as no
Event of Default has occurred and is continuing; it being agreed that the
Lessee's remedies for breach of the foregoing covenant shall be limited to a
claim for damages or the commencement of proceedings to enjoin such breach. Such
right is independent of, and shall not affect, the Lessor's rights otherwise to
initiate legal action to enforce the obligations of the Lessee under this Lease.
ARTICLE XV
INSPECTION, REPORTS AND NOTICES
SECTION 15.1. INSPECTION. Upon five Business Days' prior notice to
the Lessee, each of the Agents and the Lessor or their respective authorized
representatives (the "INSPECTING PARTIES") may once during each calendar year
(except that during a Potential Event of Default or Event of Default there shall
be no limitation on the frequency of inspections) inspect (a) the Leased
Property and (b) the books and records of the Lessee relating directly and
primarily to the Leased Property and make copies and abstracts therefrom. All
such inspections shall be at the expense and risk of the Inspecting Parties,
except that if a Potential Event of Default or a Event of Default is continuing,
the Lessee shall reimburse the Inspecting Parties for the reasonable costs of
such inspections and such inspection shall be at the Lessee's risk subject to
the Lessee's discretion as operator to bar access to the Leased Property for
safety reasons. The Lessee shall furnish to the Inspecting Parties statements
accurate in all material respects regarding the condition and state of repair of
the Leased Property, all at such times and as often as may be reasonably
requested. No inspection shall unreasonably interfere with the Lessee's
operations or the operations of any other occupant of the Leased Property. None
of the
28
Inspecting Parties shall have any duty to make any such inspection or inquiry
and none of the Inspecting Parties shall incur any liability or obligation by
reason of not making any such inspection or inquiry. None of the Inspecting
Parties shall incur any liability or obligation by reason of making any such
inspection of inquiry unless and to the extent such Inspecting Party causes
damage to the Leased Property or any property of the Lessee or any other Person
during the course of such inspection.
SECTION 15.2. REPORTS. To the extent permissible under Applicable
Laws and Regulations, the Lessee shall prepare and file in timely fashion, or,
where the Lessor shall be required to file, the Lessee shall prepare and deliver
to the Lessor (with a copy to the Administrative Agent) within a reasonable time
prior to the date for filing and the Lessor shall file, any reports with respect
to the condition or operation of the Leased Property that shall be required to
be filed with any Governmental Authority.
ARTICLE XVI
EVENTS OF DEFAULT
The following events shall constitute "EVENTS OF DEFAULT" (whether
any such event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body):
(a) Lessee shall fail to make any payment of Fixed Rent when
due and such failure shall continue for a period of five (5) Business Days;
(b) Lessee shall fail to make any payment of Rent (other than
the Fixed Rent) or any other amount payable hereunder or under any of the other
Operative Documents (other than Fixed Rent), or any Guarantor shall fail to make
any payment of any amount (other than amounts described in CLAUSE (C) BELOW)
payable under its Guaranty or any other Operative Document, and such failure
shall, in either case, continue for a period of five (5) Business Days after
Lessee's receipt of written notice of such failure from Lessor or such
Guarantor's receipt of written demand from Lessor (as the case may be);
(c) Lessee shall fail to pay the Funded Amount or Lease
Balance when due pursuant to SECTIONS 8.8, 11.1, 11.2, 13.1 or 13.2, or Lessee
shall fail to pay the Recourse Deficiency Amount when required pursuant to
ARTICLE XI; or either Guarantor shall fail to make any payment of the Funded
Amount or Lease Balance when due pursuant to Section 1 of its Guaranty;
(d) Lessee shall fail to maintain insurance as required by
ARTICLE X hereof, and such failure shall continue until the earlier of fifteen
(15) days after written notice thereof from Lessor and the day immediately
preceding the date on which any applicable insurance coverage would otherwise
lapse or terminate;
29
(e) the occurrence of any breach under SECTION 4.1.2 of the
Transok Guaranty arising due to a breach of any financial covenant set forth in
ARTICLE IX of the Credit Agreement or in such SECTION 4.1.2; or the occurrence
of any breach under SECTION 4.1.2 of the Transok Guaranty arising due to a
breach of SECTION 9.1.5(I), 9.2.10, 9.3.2 or 9.3.6 (other than SECTION
9.3.6(1)(C) of the Credit Agreement as incorporated by reference in the Transok
Guaranty;
(f) the occurrence of any Credit Agreement Event of Default or
any Guaranty Event of Default;
(g) the filing by Lessee or any Guarantor of any petition for
dissolution or liquidation of Lessee or any Guarantor, or the commencement by
Lessee or any Guarantor of a voluntary case under any applicable bankruptcy,
insolvency or other similar law for the relief of debtors, foreign or domestic,
now or hereafter in effect, or Lessee or any Guarantor shall have consented to
the entry of an order for relief in an involuntary case under any such law, or
the appointment of or taking possession by a receiver, custodian or trustee (or
other similar official) for Lessee or any Guarantor or any substantial part of
either of their property, or a general assignment by Lessee or any Guarantor for
the benefit of any of their creditors, or Lessee or any Guarantor shall have
taken any corporate action in furtherance of any of the foregoing; or the filing
against Lessee or any Guarantor of an involuntary petition in bankruptcy which
results in an order for relief being entered or, notwithstanding that an order
for relief has not been entered, the petition is not dismissed within 60 days of
the date of the filing of the petition, or the filing under any law relating to
bankruptcy, insolvency or relief of debtors of any petition against Lessee or
any Guarantor which either (i) results in a finding or adjudication of
insolvency of Lessee or such Guarantor or (ii) is not dismissed within 60 days
of the date of the filing of such petition;
(h) (i) any representation or warranty by Lessee or any
Guarantor in any Operative Document or in any certificate or document delivered
to Lessor pursuant to any Operative Document shall have been incorrect in any
material respect when made, (ii) Transok Guarantor or any of its Subsidiaries or
the Parent Company shall obtain knowledge of any fact or matter which would have
made any representation or warranty made or deemed made to the Lessee's
knowledge in SECTION 4.4(B) OR 4.4(C) of the Participation Agreement false or
misleading at the time such representation or warranty was made or deemed made
had the Transok Guarantor, any of its Subsidiaries or the Parent Company had
knowledge of such fact or matter at the time such representation or warranty was
made or deemed made or (iii) unless the Transok Guarantor shall be on a timely
basis and in accordance with appropriate procedures enforcing its rights to
indemnities provided in Article VIII of the Merger Agreement in respect thereof
and such matters shall be fully covered by such indemnities, the Transok
Guarantor or any of its Subsidiaries or the Parent Company shall obtain
knowledge of any fact or matter which would have made any representation or
warranty made or deemed made in SECTION 11.2.9 of the Credit Agreement in
respect of ARTICLE III or ARTICLE IV (other than Section 4.15) of the Merger
Agreement false or misleading at the time such representation or warranty was
made or deemed made had the Transok Guarantor, any of its Subsidiaries or the
Parent Company had
30
knowledge of such fact or matter at the time such representation or warranty was
made or deemed made and the matter or fact about which such representation or
warranty referred to was made or deemed made shall have, or may reasonably be
expected to have, singly or in the aggregate, a material adverse effect on the
financial condition, operations, assets, business, properties or prospects of
the Transok Guarantor and its Subsidiaries;
(i) any Guarantor shall repudiate or terminate its Guaranty,
or, by reason other than the intentional release thereof by, or the bad faith or
willful misconduct of, Lessor or any Agent or any Lender, such Guaranty shall at
any time cease to be in full force and effect or cease to be the legal, valid
and binding obligation of such Guarantor; and
(j) Lessee or any Guarantor shall fail in any material respect
to timely perform or observe any covenant, condition or agreement (not included
in clause (a), (b), (c), (d), (e), (f), (g), (h) or (i) of this ARTICLE) to be
performed or observed by it hereunder or under any of the other Operative
Documents and such failure shall continue for a period of fifteen (15) days
after Lessee's receipt of written notice thereof from Lessor; and
(k) the Lessee or any of its Affiliates shall contest the
validity of any Operative Document or Operative Loan Document taken as a whole
(and not the validity or application of, or compliance with, individual
provisions of an Operative Document or Operative Loan Document) or the lien
granted by this Lease; or the Lessee shall repudiate, discontinue or terminate
any Guaranty or any Guaranty shall cease to be a legal, valid and binding
obligation or shall cease to be in full force and effect for any reason;
(l) default in the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, of any other indebtedness
for borrowed money of, or guaranteed by, the Transok Guarantor or any of its
Subsidiaries having a principal amount, individually or in the aggregate, in
excess of $10,000,000 (except any such indebtedness for borrowed money of any
Subsidiary of the Transok Guarantor to the Transok Guarantor or any such
indebtedness for borrowed money of the Transok Guarantor under the RSNs) or
default in the performance or observance of any obligation or condition with
respect to any such other indebtedness for borrowed money if the effect of such
default in performance or observance is to accelerate the maturity of any such
indebtedness for borrowed money or to permit the holder or holders thereof, or
any trustee or agent for such holders, to cause such indebtedness for borrowed
money to become due and payable prior to its expressed maturity; or
(m) default in the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, of any indebtedness for
borrowed money of, or guaranteed by, the Parent Company, having a principal
amount, individually or in the aggregate, in excess of $25,000,000; or any
indebtedness for borrowed money of the Parent Company having a principal amount,
individually or in the aggregate, in excess of $25,000,000 shall become due
before its stated maturity by acceleration of the maturity thereof PROVIDED that
default in respect of indebtedness for borrowed money guaranteed by the Parent
Company (other than indebtedness for borrowed money of the Transok Guarantor)
shall not be an Event of
31
Default under this SECTION 16(A)(M) unless either (A) a request or demand for
payment in respect of such guaranty shall have been made or (B) enforcement
proceedings in respect of such guaranty shall have been commenced;
(n) with respect to any Pension Plan, there shall exist a
deficiency of more than $5,000,000 in the aggregate in the plan assets available
to satisfy the benefit liabilities under such plan on account of which the
Transok Guarantor or any of its Subsidiaries could incur a liability in excess
of $5,000,000 in the aggregate, and steps are or have been undertaken to
terminate such plan or such plan is terminated or the Transok Guarantor or any
of its Subsidiaries withdraws from or institutes steps to withdraw from such
plan or any Reportable Event with respect to such plan shall occur;
(o) unless the Transok Guarantor or the Parent Company shall
have obtained the prior written consent of the Required Participants, failure by
the Parent Company to own free and clear of all Liens and other encumbrances
(except for agreements prohibiting the creation of any Lien or security interest
on the voting stock of the Transok Guarantor), directly or indirectly through
any of its Subsidiaries, 100% of the outstanding voting stock or membership
interests of the Transok Guarantor; or failure by the Transok Guarantor to own
(free and clear of all Liens and other encumbrances except (i) those in favor of
the Collateral Agent under the Pledge Agreements and the Partnership/Limited
Liability Company Security Agreements and (ii) for agreements prohibiting the
creation of any Lien or security interest on the voting stock, membership
interests or partnership interests, as the case may be, of the Subsidiary
Guarantors), directly or indirectly through any of its Subsidiaries, 100% of the
outstanding voting stock, membership interests or partnership interests, as the
case may be, of the Subsidiary Guarantors (other than failure to own 100% of
such outstanding voting stock, membership interests or partnership interests, as
the case may be, as a result of Transfers of minority interests in Subsidiaries
permitted by SECTION 9.3.8(III) of the Credit Agreement as incorporated by
reference in the Transok Guaranty);
(p) a judgment, decree or order for the payment of money in an
amount of $5,000,000 or more in excess of valid and collectible insurance in
respect thereof the payment of which is not being disputed or contested by the
insurer or insurers shall be rendered against the Transok Guarantor or any of
its Subsidiaries (or, in the event the Transok Guarantor or such Subsidiary
shall have an indemnity reasonably acceptable to the Required Participants from
a Person satisfactory to the Required Participants (which Person acknowledges in
writing its liability for such indemnity) in respect of such judgment, decree or
order for the payment of money, after giving effect to such indemnity, the
Transok Guarantor's or such Subsidiary's liability in respect of such judgment,
decree or order is in excess of $5,000,000, as the case may be), and either (a)
enforcement proceedings shall have been commenced by any creditor upon such
judgment, decree or order or (b) such judgment shall become final and
non-appealable and shall have remained outstanding for a period of sixty (60)
consecutive days;
(q) the failure of any of the Security Documents to constitute
a valid and perfected first and prior lien upon, and security interest in, any
property or properties
32
purported to be pledged or covered thereby, or, if for any reason whatsoever,
any of the Security Documents becomes unenforceable or the security afforded
thereby becomes unenforceable with respect to any property or properties
purported to be pledged or covered thereby; or the Transok Guarantor or any
Subsidiary of the Transok Guarantor shall, directly or indirectly, contest in
any manner the effectiveness, validity, binding nature or enforceability of, or
disclaim their liability under, any Security Document to which it is a party; or
(r) a default shall occur under the terms of any Security
Document and continue for more than the applicable period of grace, if any,
therein set forth.
(s) (i) Transok's financial statements as at December 31, 1995
shall fail to present fairly the financial condition of Transok as at such date
and the results of its operations for the periods then ended, (ii) the Seller
(as defined in the Merger Agreement) shall default under any indemnity in the
Merger Agreement and such default in the opinion of the Required Participants
could reasonably be expected to have a material adverse effect on the business,
assets, properties, operations, conditions or prospects (financial or otherwise)
of the Transok Guarantor and its Subsidiaries taken as a whole or on their
ability to perform their obligations under this Lease and the other Operative
Documents, (iii) the Seller or any of its Affiliates shall challenge pursuant to
appropriate proceedings the validity or enforceability of such indemnities, (iv)
the Seller and/or the Transok Guarantor and/or the Parent Company shall attempt
to amend or modify the Merger Agreement (including any Exhibit or Schedule
thereto) or waive any provision thereof, without the Required Participants'
prior written consent, or (v) the Merger is not consummated as provided in
SECTION 9.2.10 of the Credit Agreement; or
(t) if there occurs any environmental event or the discovery
of any environmental condition in, on, beneath or involving the Leased Property
or any part thereof (including, but not limited to, the presence, emission or
release of Hazardous Materials or the violation of any applicable Environmental
Law) that would have an adverse effect on the use, occupancy, possession, value
or condition of the Property or any part thereof (each, an "Environmental
Event"), if a Permitted Remediation is not available or the Environmental Event
cannot be cured through a Permitted Remediation. A "Permitted Remediation" means
any remediation of an Environmental Event affecting any part of the Leased
Property (a) the cost of which, together with other anticipated remediation of
other Environmental Events is not anticipated, in the opinion of the Agents and
the Environmental Consultant (the expense of the Environmental Consultant to be
borne by the Lessee), to exceed $500,000 in the aggregate at any one time for
all such remediations, and (b) during and after which such Environmental Event
could not be expected to result in any additional environmental liability
incurred by the Lessor, the Agents or the Participants for which all such
Persons have not received additional indemnification in an amount and from a
Person satisfactory to such Persons in their sole and absolute discretion; or
(u) (i) the Lessee shall have ceased using all or any material
part of any Plant for a period of 15 consecutive days, unless (A) Lessee shall
have exercised its option to purchase the such Plant pursuant to this Lease or
(B) such cessation in use shall be for a period
33
of no more than 45 consecutive days, and is due to any cause that is a Force
Majeure (PROVIDED, that such 45 day grace period shall not excuse or otherwise
affect Events of Default based on breaches of Lessee's covenants set forth in
SECTIONS 8.1 AND 8.6 hereof); or (c) such ceasing shall be as a result of normal
scheduled maintenance or scheduled turnaround events or as a result of permitted
Alterations, provided such maintenance, turnarounds or Alterations, as the case
may be, shall be diligently pursued and shall otherwise be in accordance with
the terms hereof; or (ii) the Lessee shall have received notice or otherwise be
aware of (x) any lack of right (or assertion thereof by any Person) of the
Lessee to lease, use, occupy, possess or operate any Plant or any material part
thereof, or of the Lessor to own or lease any Plant or any material part thereof
or (y) any conflicting or paramount right of any Person with respect to any
Plant or any material part thereof or the lease, use, occupation, possession or
operation thereof, and such circumstances are not resolved to Agents'
satisfaction, in their sole discretion, within 30 days of such notice or
awareness;
ARTICLE XVII
ENFORCEMENT
SECTION 17.1. REMEDIES. Upon the occurrence of any Event of Default
and at any time thereafter so long as the same shall be continuing, the Lessor
may, at its option, by notice to the Lessee and the Administrative Agent declare
this Lease to be in default (except that no notice shall be required and this
Lease shall be deemed in default upon the occurrence of an Event of Default
under ARTICLE XVI(G)), and at any time thereafter the Lessor may, so long as
such Event of Default is continuing, do one or more of the following as the
Lessor in its sole discretion from time to time shall determine:
(a) the Lessor may, by notice to the Lessee, rescind or
terminate this Lease as of the date specified in such notice; however, (i) no
reletting, reentry or taking of possession of the Leased Property by the Lessor
will be construed as an election on the Lessor's part to terminate this Lease
unless a written notice of such intention is given to the Lessee, (ii)
notwithstanding any reletting, reentry or taking of possession, the Lessor may
at any time thereafter elect to terminate this Lease for a continuing Event of
Default, and (iii) no act or thing done by the Lessor or any of its agents,
representatives or employees and no agreement accepting a surrender of the
Leased Property shall be valid unless the same be made in writing and executed
by the Lessor;
(b) the Lessor may (i) demand that the Lessee, and the Lessee
shall upon the written demand of the Lessor, return the Leased Property promptly
to the Lessor in the manner and condition required by, and otherwise in
accordance with all of the provisions of ARTICLES VIII and XI hereof as if the
Leased Property were being returned at the end of the Lease Term, and the Lessor
shall not be liable for the reimbursement of the Lessee for any costs and
expenses incurred by the Lessee in connection therewith and (ii) without
prejudice to any other remedy which the Lessor may have for possession of the
Leased Property, enter upon the Leased Property and take immediate possession of
(to the exclusion of the Lessee) the Leased
34
Property or any part thereof and expel or remove the Lessee and any other Person
who may be occupying the Leased Property, by summary proceedings or otherwise,
all without liability to the Lessor for or by reason of such entry or taking of
possession, whether for the restoration of damage to property caused by such
taking or otherwise and, in addition to Lessor's other damages, Lessee shall be
responsible for the reasonably necessary costs and out-of-pocket expenses of
reletting, including broker's fees and the costs of any alterations or repairs
made by the Lessor. The provisions of this SECTION 17.1(B) shall operate as a
notice to quit and shall be deemed to satisfy any other requirement or
provisions of Applicable Laws and Regulations which may require the Lessor to
provide a notice to quit or of the Lessor's intention to re-enter the Leased
Property and any such requirements or provisions are hereby waived by the
Lessee;
(c) the Lessor may sell all or any part of the Leased Property
at public or private sale, as the Lessor may determine, free and clear of any
rights of the Lessee and without any duty to account to the Lessee with respect
to such action or inaction (except to the extent required by CLAUSE (F) below if
the Lessor shall elect to exercise its rights thereunder) in which event the
Lessee's obligation to pay Fixed Rent hereunder for periods commencing after the
date of such sale shall be terminated or proportionately reduced, as the case
may be (except to the extent that Fixed Rent is to be included in computations
under CLAUSES (E) or (F) below if the Lessor shall elect to exercise its rights
thereunder);
(d) Lessor may, at its option, without terminating the Lease,
terminate Lessee's right to possession only, and continue to collect all Fixed
Rent, Additional Rent, and all other amounts due Lessor (together with all costs
of collection) and enforce Lessee's obligations under this Lease as and when the
same becomes due, or are to be performed, and at the option of Lessor, Lessor
may, in its sole and absolute discretion, make such reasonable alterations and
necessary repairs in order to relet the Leased Property, and relet the Leased
Property or any part thereof for such term or terms (which may be for a term
extending beyond the term of this Lease) and at such rental or rentals and upon
such other terms and conditions as Lessor in its reasonable discretion may deem
advisable; and upon each such reletting all rentals actually received by Lessor
from such reletting shall be applied to Lessee's obligations hereunder in such
order, proportion and priority as Lessor may elect in Lessor's sole and absolute
discretion; it being agreed that under no circumstances shall Lessee benefit as
a consequence of its default from any increase in market rents. If such rent
received from such reletting during any period shall be less than the Rent to be
paid during that period by Lessee hereunder, Lessee shall pay any deficiency, as
calculated by Lessor, to Lessor on the Rent Payment Date in such Rent Period;
(e) the Lessor may, whether or not the Lessor shall have
exercised or shall thereafter at any time exercise any of its rights under
CLAUSES (B), (C) or (D) of this SECTION 17.1 with respect to the Leased
Property, demand, by written notice to the Lessee specifying a Rent Payment Date
(the "FINAL RENT PAYMENT DATE") not earlier than 10 days after the date of such
notice, that the Lessee pay to the Lessor, and the Lessee shall pay to the
Lessor, on the Final Rent Payment Date (in lieu of Fixed Rent due after the
Final Rent Payment Date), an amount equal to the sum of (A) all accrued and
unpaid Rent due and unpaid to and including
35
the Final Rent Payment Date PLUS (B) the Lease Balance computed as of the Final
Rent Payment Date; and upon payment of such amount, and the amount of any unpaid
Rent referred to above plus all other sums due and payable by the Lessee to the
Lessor (and interest at the Overdue Rate on the amount payable under this CLAUSE
(E) from the Final Rent Payment Date to the date of actual payment), the Lessor
shall transfer by quitclaim to the Lessee all of the Lessor's right, title and
interest in and to the Leased Property without recourse or warranty, but free
and clear of Lessor's Liens;
(f) if the Lessor shall have sold the Leased Property pursuant
to CLAUSE (C) above, the Lessor, in lieu of exercising its rights under CLAUSE
(E) above, may, if it shall so elect, demand that the Lessee pay to the Lessor,
and the Lessee shall pay to the Lessor, on the date of such sale (in lieu of
Fixed Rent due for periods commencing on or after the Rent Payment Date
coinciding with such date of sale (or, if the sale date is not a Rent Payment
Date, the Rent Payment Date next preceding the date of such sale)), an amount
equal to the sum of (A) all Rent due and unpaid to and including such Rent
Payment Date, PLUS (B) the amount of any excess of the Lease Balance, computed
as of such date, over the net proceeds of such sale (I.E., after deduction from
gross proceeds of all costs related to the sale incurred by the Lessor, the
Administrative Agent and the Lessee, all transfer and other taxes imposed in
connection with the sale and all other costs, charges, title insurance premiums
and fees paid to third Persons in connection with such sale), plus (C) interest
at the Overdue Rate on all of the foregoing amounts from the date of such sale
until the date of payment;
(g) the Lessor may exercise any other right or remedy that may
be available to it under Applicable Laws and Regulations or in equity, or
proceed by appropriate court action (legal or equitable) to enforce the terms
hereof or to recover damages for the breach hereof including any rights or
remedies of a secured party under any applicable provision of the Oklahoma
Uniform Commercial Code. Separate suits may be brought to collect any such
damages for any period(s), and such suits shall not in any manner prejudice the
Lessor's right to collect any such damages for any subsequent period(s), or the
Lessor may defer any such suit until after the expiration of the Basic Term or
any Renewal Term, in which event such suit shall be deemed not to have accrued
until the expiration of the Basic Term, or such Renewal Term; or
(h) the Lessor may retain and apply against the Lessor's
damages all sums which the Lessor would, absent such Event of Default, be
required to pay to, or turn over to, the Lessee pursuant to the terms of this
Lease.
SECTION 17.2. REMEDIES CUMULATIVE; NO WAIVER; CONSENTS. To the
extent permitted by, and subject to the mandatory requirements of, Applicable
Laws and Regulations, each and every right, power and remedy herein specifically
given to the Lessor or otherwise in this Lease shall be cumulative and shall be
in addition to every other right, power and remedy herein specifically given or
now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by
36
the Lessor, and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any right, power or remedy. No delay or omission by the
Lessor in the exercise of any right, power or remedy or in the pursuit of any
remedy shall impair any such right, power or remedy or be construed to be a
waiver of any default on the part of the Lessee or be an acquiescence therein.
The Lessor's consent to any request made by the Lessee shall not be deemed to
constitute or preclude the necessity for obtaining the Lessor's consent, in the
future, to all similar requests. No express or implied waiver by the Lessor of
any Event of Default shall in any way be, or be construed to be, a waiver of any
future or subsequent Potential Event of Default or Event of Default. To the
extent permitted by Applicable Laws and Regulations, the Lessee hereby waives
any rights now or hereafter conferred by statute or otherwise that may require
the Lessor to sell, lease or otherwise use the Leased Property or part thereof
in mitigation of the Lessor's damages upon the occurrence of a Event of Default
or that may otherwise limit or modify any of the Lessor's rights or remedies
under this ARTICLE XVII.
ARTICLE XVIII
RIGHT TO PERFORM FOR LESSEE
If the Lessee shall fail to perform or comply with any of its
agreements contained herein, the Lessor may, but shall not be obligated to, on
five Business Days' prior notice to the Lessee (except in the event of an
emergency, in which case only one Business Day's prior notice shall be
required), perform or comply with such agreement, and the Lessor shall not
thereby be deemed to have waived any default caused by such failure, and the
amount of such payment and the amount of the expenses of the Lessor (including
reasonable attorneys' fees and out-of-pocket expenses) incurred in connection
with such payment or the performance of or compliance with such agreement, as
the case may be, together with interest thereon at the Overdue Rate, shall be
deemed Additional Rent, payable by the Lessee to the Lessor upon demand;
PROVIDED that in the case of an emergency the Lessee shall permit the Lessor to
so perform or comply on less than one Business Day's notice unless the Lessee
has a good faith reason not to permit the Lessor to do so.
ARTICLE XIX
MISCELLANEOUS
SECTION 19.1. BINDING EFFECT; SUCCESSORS AND ASSIGNS; SURVIVAL. The
terms and provisions of this Lease, and the respective rights and obligations
hereunder of the Lessor, the Lessee, the Agents and the Participants shall be
binding upon them and their respective successors, legal representatives and
assigns (including, in the case of the Lessor, any Person to whom the Lessor may
transfer the Leased Property or any interest therein in accordance with the
provisions of the Operative Documents and the Operative Loan Documents), and
inure to their benefit and the benefit of their respective permitted successors,
legal representatives and assigns.
37
SECTION 19.2. SEVERABILITY. Any provision of this Lease that shall
be prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction, and Lessee shall
remain liable to perform its obligations hereunder except to the extent of such
unenforceability. To the extent permitted by Applicable Laws and Regulations,
the Lessee hereby waives any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.
SECTION 19.3. NOTICES. Unless otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been given (i) in the case of notice by
letter, the earlier of when delivered to the addressee by hand or courier if
delivered on a Business Day and, if not delivered on a Business Day, the first
Business Day thereafter, or on the third Business Day after depositing the same
in the mails, registered or certified mail, postage prepaid, return receipt
requested, and (ii) in the case of notice by facsimile or bank wire, when
receipt is confirmed if delivered on a Business Day and, if not delivered on a
Business Day, the first Business Day thereafter, addressed as provided in
SCHEDULE 8.2 of the Participation Agreement, or to such other address as any of
the parties hereto may designate by written notice.
SECTION 19.4. AMENDMENT; COMPLETE AGREEMENTS. Neither this Lease nor
any of the terms hereof may be terminated, amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by the party
against which the enforcement of the termination, amendment, supplement, waiver
or modification shall be sought. This Lease, together with the other Operative
Documents and Operative Loan Documents and the Fee Letter, is intended by the
parties as a final expression of their agreement and as a complete and exclusive
statement of the terms thereof, all negotiations, considerations and
representations between the parties having been incorporated herein and therein.
No course of prior dealings between the parties or their officers, employees,
agents or Affiliates shall be relevant or admissible to supplement, explain, or
vary any of the terms of this Lease or any other Operative Document and
Operative Loan Documents or the Fee Letter. Acceptance of, or acquiescence in, a
course of performance rendered under this or any prior agreement between the
parties or their Affiliates shall not be relevant or admissible to determine the
meaning of any of the terms of this Lease or any other Operative Document or
Operative Loan Document or the Fee Letter. No representations, undertakings, or
agreements have been made or relied upon in the making of this Lease other than
those specifically set forth in the Operative Documents and Operative Loan
Documents.
SECTION 19.5. HEADINGS. The Table of Contents and headings of the
various Articles and Sections of this Lease are for convenience of reference
only and shall not modify, define or limit any of the terms or provisions
hereof.
SECTION 19.6. ORIGINAL LEASE. The single executed original of this
Lease containing the receipt of the Administrative Agent therefor on or
following the signature page
38
thereof shall be the "original executed counterpart" of this Lease. To the
extent that this Lease constitutes chattel paper, as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction, no security
interest in this Lease may be created through the transfer or possession of any
counterpart other than the "original executed counterpart".
SECTION 19.7. GOVERNING LAW. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE; PROVIDED,
HOWEVER, THAT MATTERS RELATING TO THE CREATION OF THE LEASEHOLD ESTATE HEREUNDER
AND THE EXERCISE OF RIGHTS AND REMEDIES WITH RESPECT TO SUCH ESTATE OR RELATING
TO THE ASSIGNMENT OF RIGHTS UNDER THE EASEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OKLAHOMA.
SECTION 19.8. DISCHARGE OF LESSEE'S OBLIGATIONS BY ITS AFFILIATES.
The Lessor agrees that performance of any of the Lessee's obligations hereunder
by one or more of its Affiliates or one or more sublessees of the Leased
Property or any part thereof shall constitute performance by the Lessee of such
obligations to the same extent and with the same effect hereunder as if such
obligations were performed by the Lessee, but no such performance shall excuse
Lessee from any obligation not performed by it or on its behalf under the
Operative Documents.
SECTION 19.9. LIABILITY OF LESSOR LIMITED. The parties hereto agree
that Lessor, in its individual capacity ("CIBC"), shall have no personal
liability whatsoever to the Lessee or its respective successors and assigns for
any Claim based on or in respect of this Lease or any of the other Operative
Documents or Operative Loan Documents or arising in any way from the
transactions contemplated hereby or thereby; PROVIDED, HOWEVER, that CIBC shall
be liable in its individual capacity (a) for its own willful misconduct or gross
negligence (or negligence in the handling of funds), (b) for liabilities that
may result from the incorrectness of any representation or warranty expressly
made by it in its individual capacity in Section 4.2 of the Participation
Agreement, or (c) for any Tax based on or measured by any fees, commission or
compensation received by it for acting as Lessor as contemplated by the
Operative Documents and the Operative Loan Documents. It is understood and
agreed that, except as provided in the preceding proviso: (i) CIBC shall have no
personal liability under any of the Operative Documents or Operative Loan
Documents as a result of acting pursuant to and consistent with any of the
Operative Documents or Operative Loan Documents; (ii) all obligations of CIBC to
the Lessee are solely nonrecourse obligations except to the extent that it has
received payment from others; and (iii) all such personal liability of CIBC is
expressly waived and released as a condition of and as consideration for, the
execution and delivery of the Operative Documents and the Operative Loan
Documents by CIBC.
39
SECTION 19.10. ESTOPPEL CERTIFICATES. Each party hereto agrees that
at any time and from time to time during the Lease Term, it will promptly, but
in no event later than fifteen days after request by the other party hereto,
execute, acknowledge and deliver to such other party or to any prospective
purchaser (if such prospective purchaser has signed a commitment or letter of
intent to purchase the Leased Property or any part thereof), assignee or
mortgagee or third party designated by such other party, a certificate stating
(a) that this Lease is unmodified and in force and effect (or if there have been
modifications, that this Lease is in force and effect as modified, and
identifying the modification agreements); (b) the date to which Fixed Rent has
been paid; (c) in the case of an estoppel certificate to be given by the Lessee,
whether or not there is any existing default by the Lessee in the payment of
Fixed Rent or any other sum of money hereunder, and whether or not there is any
other existing Potential Event of Default or Event of Default with respect to
which a notice of default has been served, and, if there is any such default,
specifying the nature and extent thereof; (d) in the case of an estoppel
certificate to be given by the Lessee, whether or not, to the knowledge of the
Lessee after due inquiry and investigation, there are any purported setoffs,
defenses or counterclaims against enforcement of the obligations to be performed
hereunder existing in favor of the Lessee; and (e) other items that may be
reasonably requested; PROVIDED that no such certificate may be requested unless
the requesting party has a good faith reason for such request.
SECTION 19.11. NO JOINT VENTURE. Any intention to create a joint
venture or partnership relation between the Lessor and the Lessee is hereby
expressly disclaimed.
SECTION 19.12. NO ACCORD AND SATISFACTION. The acceptance by the
Lessor of any sums from the Lessee (whether as Fixed Rent or otherwise) in
amounts which are less than the amounts due and payable by the Lessee hereunder
is not intended, nor shall be construed, to constitute an accord and
satisfaction of any dispute between the Lessor and the Lessee regarding sums due
and payable by the Lessee hereunder, unless the Required Lenders specifically
deem it as such in writing.
SECTION 19.13. NO MERGER. In no event shall the leasehold interests,
estates or rights of the Lessee hereunder, or of the holder of any Notes or
Invested Amount secured by a security interest in this Lease, merge with any
interests, estates or rights of the Lessor in or to the Leased Property, it
being understood that such leasehold interests, estates and rights of the Lessee
hereunder, and of the holder of any Notes or Invested Amounts secured by a
security interest in this Lease, shall be deemed to be separate and distinct
from the Lessor's interests, estates and rights in or to the Leased Property,
notwithstanding that any such interests, estates or rights shall at any time or
times be held by or vested in the same Person. In addition, in the event that
for any reason the Lessee acquires all or any part of the Lessor's interest in
the Easements, such interest shall remain separate and distinct from Lessee's
interest in the Land under and pursuant to this Lease, it being the intent of
the parties hereto that such interests shall not merge or be deemed to have
merged and this Lease and Lessee's obligations hereunder shall continue in full
force and effect.
40
SECTION 19.14. SUCCESSOR LESSOR. The Lessee agrees that, in the case
of the appointment of any successor lessor pursuant to the terms hereof, such
successor lessor shall, upon written notice by such successor lessor to the
Lessee, succeed to all the rights, powers and title of the Lessor hereunder and
shall be deemed to be the Lessor for all purposes hereof and without in any way
altering the terms of this Lease or the Lessee's obligations hereunder. Such
appointment and designation of a successor lessor shall not exhaust the right to
appoint and designate further successor lessors pursuant hereto, but such right
may be exercised repeatedly as long as this Lease shall be in effect.
SECTION 19.15. SURVIVAL. The obligations of the Lessee to be
performed under this Lease prior to the Lease Termination Date and the
obligations of the Lessee pursuant to SECTIONS 4.1, 4.2, 4.3, 4.4, 8.1(B),
ARTICLES XI, XIII, XVII, XVIII and SECTION 19.8 shall survive the expiration or
termination of this Lease. The extension of any applicable statute of
limitations by the Lessor, any Agent, the Lessee, the Lessor or any Indemnitee
shall not affect such survival.
SECTION 19.16. TRANSFER OF LEASED PROPERTY TO LESSEE. Whenever
pursuant to any provision of this Lease the Lessor is required to transfer the
Leased Property to the Lessee or to an independent third party, such transfer
shall be made at Lessee's expense by the quitclaim transfer, by deed, bill of
sale or assignment, as appropriate, of all of the Lessor's right, title and
interest in and to the Leased Property on an "as is, where is, with all faults"
basis free and clear of all Lessor Liens, but subject to the lien of the Loan
Agreement if and to the extent it may then attach, and otherwise without
recourse, representation or warranty of any kind (except that the Lessor shall
represent and warrant that it has not voluntarily conveyed any of its right,
title and interest in and to the Leased Property to any Person other than as
contemplated by the Operative Documents or the Operative Loan Documents), and
together with the due assumption by the Lessee (or such third party) of, and due
release of the Lessor from, all obligations relating to the Leased Property or
the Operative Documents or the Operative Loan Documents. Any provision in this
Lease or other Operative Document or Operative Loan Document to the contrary
notwithstanding, the Lessor shall not be obligated to make any such transfer
until the Lessor and the Lessor have received all Rent and other amounts due and
owing hereunder.
SECTION 19.17. ENFORCEMENT OF CERTAIN WARRANTIES. (a) Unless an
Event of Default shall have occurred and be continuing, the Lessor authorizes
the Lessee (directly or through agents), at the Lessee's expense, to assert,
during the Lease Term, all of the Lessor's rights (if any) under any applicable
warranty and any other claim that the Lessee or the Lessor may have under the
warranties provided to the Lessor in connection with the purchase, construction
and installation of any Plant or portion thereof and the Lessor agrees to
cooperate, at the Lessee's expense, with the Lessee and its agents in asserting
such rights. Any amount recovered by the Lessee under any such warranties shall
be paid to the Lessee and applied first to the repair, restoration or
replacement of the portion of the Plant, Building, Equipment or Improvements by
virtue of which such amount was recovered (to the same level of quality as is
required by SECTION 8.1) and the balance, if any, shall be retained by the
Lessee.
41
(b) Notwithstanding the foregoing provisions of this SECTION
19.17, so long as a Potential Event of Default or Event of Default shall have
occurred and be continuing, any amount that would otherwise be retained by the
Lessee pursuant to Section 19.17(A) shall be paid to the Administrative Agent
(or to the Lessor after the Loan Agreement shall have been satisfied and
discharged) as security for the obligations of the Lessee under this Lease,
shall be invested by the Administrative Agent (or the Lessor) in accordance with
SECTION 19.18 in Permitted Investments and, if a Event of Default is continuing,
may be applied to the obligations of the Lessee hereunder, and, at such time
thereafter as no Potential Event of Default or Event of Default shall be
continuing, such amount and gain thereon shall be paid promptly to the Lessee to
the extent not previously applied in accordance with the terms of this Lease.
SECTION 19.18. INVESTMENT OF SECURITY FUNDS. Any amounts not payable
to the Lessee and paid to or retained by the Lessor (or, so long as the Loan
Agreement shall be in effect, the Administrative Agent) pursuant to any
provision hereof solely because a Potential Event of Default or Event of Default
shall have occurred and be continuing or because the Lessee shall not have
performed in full its obligations under ARTICLE XIII shall be held by the Lessor
(or, so long as the Loan Agreement shall be in effect, the Administrative Agent)
as security for the obligations of the Lessee under this Lease and the other
Operative Documents. At such time as no Potential Event of Default or Event of
Default, or failure to perform shall be continuing, such amounts, net of any
amounts previously applied to the Lessee's obligations hereunder or under any
other Operative Documents, shall be paid to the Lessee. Any such amounts which
are held pending payment to the Lessee or application hereunder shall be
invested by the Lessor (or the Administrative Agent) as directed from time to
time in writing by the Lessee (PROVIDED, HOWEVER, if a Event of Default has
occurred and is continuing it will be directed by the Lessor), and at the
expense and risk of the Lessee, in Permitted Investments. Any gain (including
interest received) realized as the result of any such investment (net of any
fees, commissions and other expenses, if any, incurred in connection with such
investment) shall be applied from time to time in the same manner as the
principal invested. The Lessee will promptly pay to the Lessor (or, so long as
the Loan Agreement shall be in effect, the Administrative Agent), on demand, the
amount of any loss realized as the result of any such investment (together with
any fees, commissions and other expenses, if any, incurred in connection with
such investment), such amount to be held, paid and applied in the same manner as
other amounts subject to this SECTION 19.18.
SECTION 19.19. DESCRIPTION OF LEASED PROPERTY. Schedule 1 attached
hereto is made a part hereof.
SECTION 19.20. REPORTS. To the extent required under Applicable Law and to
the extent it is reasonably practical for Lessee to do so, Lessee shall prepare
and file in timely fashion, or, where such filing is required to be made by
Lessor or it is otherwise not reasonably practical for Lessee to make such
filing, Lessee shall prepare and deliver to Lessor (with a copy to the
Administrative Agent) within a reasonable time prior to the date for filing and
Lessor shall file, any material reports with respect to the condition or
operation of the Leased Property that shall be required to be filed with any
Governmental Authority.
42
SECTION 19.21. [INTENTIONALLY OMITTED].
SECTION 19.22. [INTENTIONALLY OMITTED].
SECTION 19.23. CONSTRUCTION. This Lease shall not be construed more
strictly against any one party, it being recognized that both of the parties
hereto have contributed substantially and materially to the preparation and
negotiation of this Lease.
SECTION 19.24. TIME OF ESSENCE. Time is of the essence of this Lease.
SECTION 19.25. RECORDATION OF LEASE. Lessee will, at its expense, cause
the Memorandum of Lease to be recorded in the proper office or offices in the
State of Oklahoma and the counties in which the Easements are located.
[SIGNATURE PAGE FOLLOWS]
43
IN WITNESS WHEREOF, the undersigned have each caused this Lease
Agreement to be duly executed and delivered and their corporate seals to be
hereunto affixed and attested by their respective officers thereunto duly
authorized as of the day and year first above written.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD
BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE
ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS
WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS
OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
CIBC INC.
By /s/ ROBERT E. LANG
Name: Robert E. Long
Title: Vice President
TRANSOK ACQUISITION CORPORATION
III, as Lessee
By /s/ CHRIS TONG
Name Chris Tong
Title: Vice President Finance
<PAGE>
SCHEDULE 8.6
HAZARDOUS MATERIALS
1. UNDERGROUND STORAGE TANKS (UST),
referred to in the Report by Pilko & Associates, Inc.
<PAGE>
STATE OF TEXAS )
) SS
COUNTY OF HARRIS )
Before me, ______________________ , a Notary Public in and for said
State, on this ______ day of June, 1996, personally appeared _________________,
acting not in its individual capacity but as Lessor as set forth above, to me
personally known, who, being by me duly sworn, did say that he/she is executing
the within and foregoing instrument to which this is attached pursuant to
authority duly granted, as his/her free and voluntary act and the free and
voluntary act of said corporation.
____________________________________
Notary Public in and for said County
My commission expires:
______________________
<PAGE>
STATE OF TEXAS )
) SS
COUNTY OF HARRIS )
Before me, ______________________ , a Notary Public in and for said
State, on this ______ day of June, 1996, personally appeared _________________,
acting not in its individual capacity but as Lessor as set forth above, to me
personally known, who, being by me duly sworn, did say that he/she is executing
the within and foregoing instrument to which this is attached pursuant to
authority duly granted, as his/her free and voluntary act and the free and
voluntary act of said corporation.
____________________________________
Notary Public in and for said County
My commission expires:
______________________
<PAGE>
STATE OF TEXAS )
) SS
COUNTY OF HARRIS )
This instrument was acknowledged before me on this day 6th day of June,
1996 by JAMES W. WHALEN, as Executive Vice President of TRANSOK ACQUISITION
CORPORATION III, a Delaware corporation.
____________________________________
Notary Public in and for said County
My commission expires:
______________________
================================================================================
PARTICIPATION AGREEMENT
Dated as of June 6, 1996
among
TRANSOK ACQUISITION CORPORATION III, as Lessee,
TRANSOK ACQUISITION COMPANY, as Transok Guarantor,
CIBC INC., as Lessor,
CANADIAN IMPERIAL BANK OF COMMERCE, New York Agency,
as Administrative Agent,
BANK OF MONTREAL, as Documentation Agent
and
CERTAIN FINANCIAL INSTITUTIONS NAMED ON SCHEDULE I,
as Lenders
----------------------------------------------
Gas Processing Plants
Located in Oklahoma
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1 DEFINITIONS; INTERPRETATION.................................................................. 1
SECTION 2 ACQUISITION AND LEASE; FUNDINGS; NATURE OF
TRANSACTION.................................................................................. 2
2.1 Agreement to Acquire, Fund and Lease.................................................. 2
2.2 Funding of Purchase Price............................................................. 2
2.3 Funded Amounts and Interest and Yield Thereon......................................... 3
2.4 Lessee Owner for Tax Purposes......................................................... 4
2.5 Amounts Due Under Lease............................................................... 4
SECTION 3 CONDITIONS PRECEDENT AND SUBSEQUENT;
DOCUMENTS.................................................................................... 5
3.1 Conditions to the Obligations of the Participants on the
Closing Date.......................................................................... 5
3.2 Conditions to the Obligations of the Lessee........................................... 10
3.3 Conditions to the Obligations of the Participants..................................... 10
SECTION 4 REPRESENTATIONS.............................................................................. 10
4.1 Representations of the Lessee......................................................... 10
4.2 Representations of the Lessor......................................................... 16
4.3 Representations of the Lenders........................................................ 17
4.4 Additional Representations of the Lessee with Respect to
Seller................................................................................ 17
SECTION 5 COVENANTS OF THE LESSEE AND THE TRANSOK
GUARANTOR.................................................................................... 19
5.1 Qualification to do Business in Oklahoma.............................................. 19
5.2 Further Assurances.................................................................... 19
5.3 Reports, Certificates and Other Information........................................... 19
5.4 Payment of Fees....................................................................... 19
5.5 Additional Required Appraisals........................................................ 19
5.6 Taxes, Assessments, Etc............................................................... 19
5.7 Full Disclosure....................................................................... 19
5.8 Intellectual Property Rights.......................................................... 20
5.9 Separate Business..................................................................... 20
5.10 Resistance to Regulatory Change....................................................... 20
5.11 Regulatory Applications............................................................... 20
5.12 Covenant of Lessee and Transok Guarantor with respect
to Excepted Permits................................................................... 20
-i-
SECTION 6 TRANSFERS BY LESSOR AND LENDERS.............................................................. 21
6.1 Lessor Transfers...................................................................... 21
6.2 Lessee Option to Replace Lessor and Agents............................................ 22
6.3 Lender Transfers...................................................................... 23
6.4 Rate Quotations....................................................................... 24
SECTION 7 INDEMNIFICATION.............................................................................. 24
7.1 General Indemnification............................................................... 24
7.2 Environmental Indemnity............................................................... 26
7.3 Proceedings in Respect of Claims...................................................... 27
7.4 General Tax Indemnity................................................................. 28
7.5 Increased Costs, etc.................................................................. 33
7.6 End of Term Indemnity................................................................. 38
7.7 Maximum Interest...................................................................... 39
SECTION 8 MISCELLANEOUS................................................................................ 40
8.1 Survival of Agreements................................................................ 40
8.2 Notices, Demands, Instructions and Other
Communications........................................................................ 40
8.3 Counterparts.......................................................................... 40
8.4 Amendments............................................................................ 40
8.5 Headings, etc......................................................................... 42
8.6 Parties in Interest................................................................... 42
8.7 GOVERNING LAW......................................................................... 42
8.8 Expenses.............................................................................. 42
8.9 Severability.......................................................................... 43
8.10 Liabilities of the Participants....................................................... 43
8.11 Submission to Jurisdiction; Waivers................................................... 43
8.12 Liabilities of the Agents............................................................. 43
8.13 Withholding Taxes..................................................................... 44
8.14 Confidentiality....................................................................... 44
8.15 Notice................................................................................ 45
</TABLE>
-ii-
APPENDIX A Definitions and Interpretation
SCHEDULES
SCHEDULE I Lenders
SCHEDULE II Disclosure Schedule
SCHEDULE 2.2 Commitments
SCHEDULE 8.2 Notice Information
EXHIBITS
EXHIBIT A Form of Funding Request
EXHIBIT B Form of Easement Agreement
EXHIBIT C Form of Memorandum of Lease
EXHIBIT D-1 Form of Subsidiary Guaranty
EXHIBIT D-2 Form of Transok Guaranty
EXHIBIT D-3 Form of Parent Company Guaranty
EXHIBIT D-4 Form of Holding Company Guaranty
EXHIBIT D-5 Form of Holding Company Security Agreement
EXHIBIT E Form of Assignment of Lease and Rents
EXHIBIT F-1 Form of Opinion of Texas Counsel to Lessee and Guarantors
EXHIBIT F-2 Form of Opinion of Oklahoma Counsel to Lessee and Transok Guarantor
-iii-
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of June 6, 1996 (as it may be
amended or modified from time to time in accordance with the provisions hereof,
this "PARTICIPATION AGREEMENT"), is among TRANSOK ACQUISITION CORPORATION III, a
Delaware corporation, as Lessee, TRANSOK ACQUISITION COMPANY, a Delaware
corporation, as Transok Guarantor, CIBC INC., a Delaware corporation, as Lessor,
CANADIAN IMPERIAL BANK OF COMMERCE, a bank organized under the laws of Canada,
acting through its New York Agency, not in its individual capacity but solely as
Administrative Agent, BANK OF MONTREAL, a bank organized under the laws of
Canada, acting through certain of its U.S. branches or agencies, as
Documentation Agent, and the various financial institutions named on Schedule I
hereto or as are or may from time to time become parties hereto, as Lenders.
PRELIMINARY STATEMENT
In accordance with the terms and provisions of this Participation
Agreement, the Lease, the Loan Agreement and the other Operative Documents and
Operative Loan Documents, (i) the Lessor contemplates acquiring the Leased
Property and leasing the Leased Property to the Lessee, (ii) the Lessee intends
to lease the Leased Property from the Lessor under the Lease, (iii) the Lessee
intends to obtain, and the Lessor is willing to provide, funding for the
acquisition of the Leased Property, (iv) the Lessor intends to obtain, and the
Lenders are willing to provide, financing of a portion of the funding of the
acquisition of the Leased Property, and (v) each Guarantor is willing to provide
its guaranty of the obligations of the Lessee under the Operative Documents.
In consideration of the mutual agreements contained in this Participation
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and not
defined herein shall have the meanings assigned thereto in APPENDIX A hereto for
all purposes hereof; and the rules of interpretation set forth in APPENDIX A
hereto shall apply to this Participation Agreement.
SECTION 2
ACQUISITION AND LEASE; FUNDINGS;
NATURE OF TRANSACTION
SECTION 2.1 AGREEMENT TO ACQUIRE, FUND AND LEASE. Subject to the terms and
conditions of this Participation Agreement, on the Closing Date (i) the Lessor
agrees to purchase such interest in the Leased Property from the Seller as is
transferred, sold, assigned and conveyed to the Lessor pursuant to the Purchase
Agreement, and the Bill of Sale for a purchase price of $125,000,000 (the
"Purchase Price"), (ii) each Lender agrees to finance its Commitment Percentage
of such Purchase Price by a nonrecourse Loan to the Lessor pursuant to the Loan
Agreement, (iii) the Lessor agrees to lease the Leased Property to the Lessee
pursuant to the Lease, and (iv) the Lessee agrees to lease the Leased Property
from the Lessor pursuant to the Lease.
SECTION 2.2 FUNDING OF PURCHASE PRICE.
Subject to the terms and conditions of this Participation Agreement,
on the Closing Date, each Lender shall make available to the Lessor its Loan in
an amount equal to the product of the such Lender's Commitment Percentage times
the Purchase Price for the Leased Property as set forth in Schedule 2.2 (in the
aggregate of $125,000,000), which funds the Lessor shall use, together with its
own funds (which shall be the Lessor's Invested Amount) in an amount equal to
the product of the Lessor's Commitment Percentage times the Purchase Price for
the Leased Property, to purchase the Leased Property from the Seller pursuant to
the Purchase Agreement, and the Bill of Sale, and the Lessor shall lease the
Leased Property to the Lessee pursuant to the Lease.
(a) AGGREGATE LIMITS ON FUNDED AMOUNTS. The aggregate amount that
the Participants shall be committed to provide as Funded Amounts under this
Participation Agreement shall not exceed $125,000,000. The aggregate amount that
any Participant shall be committed to fund under this Participation Agreement
shall not exceed the lesser of (i) such Participant's Commitment and (ii) such
Participant's Commitment Percentage of the Funding requested under this
Participation Agreement.
(b) NOTICE, TIME AND PLACE OF FUNDING. With respect to the Funding,
the Lessee shall give the Lessor and each Lender an irrevocable notice on the
Closing Date pursuant to a Funding Request in form and substance satisfactory to
the Lessor and the Lenders (a "FUNDING REQUEST"), specifying the amount of
Funding requested. All documents and instruments required to be delivered on the
Closing Date pursuant to this Participation Agreement shall be delivered at the
offices of Mayer, Brown & Platt, 700 Louisiana Street, Suite 3600, Houston,
Texas 77002, or at such other location as may be determined by the Lessor, the
Lessee and the Lenders. All remittances made by the Lenders for the Funding
shall be made in immediately available federal funds by wire transfer to the
Lessor with receipt by the Lessor not later than 1:00 p.m., Chicago time, on the
Closing Date. Upon (i) the Lessor's receipt of the funds provided by the Lenders
with respect to the Funding, and (ii) satisfaction
2
or waiver of the conditions precedent to such Funding set forth in SECTION 3,
the Lessor shall on the Closing Date pay the Purchase Price to the Seller for
the Leased Property, from the funds provided by the Lenders and the Lessor's
Commitment Percentage of the amount of such Funding.
(c) LESSEE'S DEEMED REPRESENTATION FOR THE FUNDING. The Funding
Request by the Lessee shall be deemed a representation by the Lessee to the
Lessor and each Lender that on the Closing Date, (i) the amount of Funding
requested represents amounts owing in respect of the Purchase Price of the
Leased Property, (ii) no Event of Default or Potential Event of Default exists,
and (iii) the representations of the Lessee and the other Obligors set forth in
SECTIONS 4.1 and 4.4 and in the other Operative Documents are true and correct
in all material respects as though made on and as of the Closing Date.
SECTION 2.3 FUNDED AMOUNTS AND INTEREST AND YIELD THEREON.
(a) During the period from and including the Closing Date to but
excluding the first Business Day following the Closing Date, the Lessor's
Invested Amount shall accrue yield ("YIELD") at a rate PER ANNUM equal to the
sum of (A) the Applicable Margin with respect to Domestic Loans from time to
time in effect plus (B) the Alternate Base Rate from time to time in effect
computed using the actual number of days elapsed and a 365- (or, if applicable,
366-day) year. During the period from and including the first Business Day
following the Closing Date to but excluding August 2, 1996, the Lessor's
Invested Amount shall accrue Yield at a rate PER ANNUM equal to the sum of (A)
the Applicable Margin with respect to Eurodollar Loans from time to time in
effect, plus (B) as may be requested by the Lessee, (i) the Eurodollar Interest
Rate from time to time in effect or (ii) the Eurodollar Interest Rate determined
pursuant to CLAUSE (II) of the definition thereof from time to time in effect,
computed using the actual number of days elapsed and a 360-day year; and
commencing on August 2, 1996 and thereafter, the Lessor's Invested Amount shall
accrue Yield at a rate PER ANNUM equal to the sum of (A) the Applicable Margin
with respect to Eurodollar Loans from time to time in effect plus (B) the
Eurodollar Interest Rate from time to time in effect, computed using the actual
number of days elapsed and a 360-day year; PROVIDED, HOWEVER, that the Lessor's
Invested Amount shall automatically accrue Yield at a rate PER ANNUM equal to
the sum of (A) the Applicable Margin with respect to Domestic Loans from time to
time in effect plus (B) the Alternate Base Rate from time to time in effect, at
the times and under the circumstances set forth in SECTION 7.5(B) or (C). In
addition, during the period from and including the Closing Date to and including
the date that all amounts outstanding under the Credit Agreement have been paid
in full and the commitments thereunder have terminated, the Lessor's invested
amount shall accrue additional yield at a rate per annum equal to 5 basis
points, such additional yield being payable, in arrears on each Rent Payment
Date and such additional yield constituting Lessor Fixed Rent.
(b) Each Lender's Funded Amount outstanding from time to time shall
accrue interest as provided in the Loan Agreement.
3
(c) Each Participant's Funded Amount may be reduced from time to
time by the portion of Qualified Payments applied thereto pursuant to Section 3
of the Loan Agreement.
SECTION 2.4 LESSEE OWNER FOR TAX PURPOSES. It is the intent of the Lessee,
the Lessor, the Transok Guarantor and each of the other Participants that for
federal, state and local tax purposes (i) the Lessee owns the Leased Property
and will be entitled to all tax benefits ordinarily available to an owner of
property similar to the Leased Property, (ii) the Lease will be treated as a
financing arrangement, and (iii) the Lessor will be treated as a lender making
loans to the Lessee. Nevertheless, the Lessee and the Transok Guarantor
acknowledge and agree that no Participant or any other Person has made any
representations or warranties concerning the tax, financial, accounting or legal
characteristics or treatment of any of the Operative Documents or Operative Loan
Documents and that the Lessee has obtained and relied solely upon the advice of
its own tax, accounting and legal advisors concerning the Operative Documents
and the Operative Loan Documents and the accounting, tax, financial and legal
consequences of the transactions contemplated therein. Lessor does represent and
agree that, except as otherwise required by law, it will not take any position
on any tax return or report (or in connection with any audit) inconsistent with
the intention of the parties as set forth in this SECTION 2.4; PROVIDED,
HOWEVER, that, except as otherwise provided in SECTION 7.4(C), Lessor shall have
no obligation to contest any determination (other than positions taken during
audit) by any governmental authority with respect to any federal, state or local
taxes relating to ownership of the Leased Property, treatment of the Lease as a
financing arrangement or treatment of the Lessor as a lender.
SECTION 2.5 AMOUNTS DUE UNDER LEASE. Anything else herein or elsewhere to
the contrary notwithstanding, it is the intention of the Lessee, the Transok
Guarantor and the Participants that: (i) the amount and timing of installments
of Fixed Rent due and payable from time to time from the Lessee under the Lease
shall be equal to the aggregate payments due and payable as interest on the
Loans and Yield on the Lessor's Invested Amount on each Rent Payment Date; (ii)
if the Lessee elects the Purchase Option or becomes obligated to purchase the
Leased Property under the Lease, the Funded Amounts, all interest and Yield
thereon and all other obligations of the Lessee owing to any Participant or any
Agent shall be paid in full by the Lessee, (iii) if the Lessee fails to elect to
purchase the Leased Property pursuant to Section 5.3 or 5.4 of the Lease or
renew the Lease pursuant to Section 5.1 of the Lease, the APortion Participant
Balance of each Participant will be paid out of the Recourse Deficiency Amount,
and the Lessee shall only be required to pay to each Participant in respect of
such Participant's B-Portion Participant Balance the proceeds of the sale of the
Leased Property (which may be less than such Participant's B-Portion Participant
Balance); and (iv) upon an Event of Default resulting in an acceleration of the
Lessee's obligation to purchase the Leased Property under the Lease, the amounts
then due and payable by the Lessee under the Lease shall include all amounts
necessary to pay in full the Loans, accrued interest thereon, the Lessor's
Invested Amount and accrued Yield thereon.
4
SECTION 3
CONDITIONS PRECEDENT AND SUBSEQUENT; DOCUMENTS
SECTION 3.1 CONDITIONS TO THE OBLIGATIONS OF THE PARTICIPANTS ON THE
CLOSING DATE. The obligations of the Lessor and each Lender to carry out their
respective obligations under SECTION 2 of this Participation Agreement to be
performed on the Closing Date shall be subject to the fulfillment to the
satisfaction of, or waiver by, each such party hereto (acting directly or
through its counsel) on or prior to the Closing Date of the following conditions
precedent and condition subsequent, PROVIDED that the obligations of any
Participant shall not be subject to any conditions contained in this SECTION 3.1
which are required to be performed by such Participant:
(a) DOCUMENTS. The following documents shall have been duly
authorized, executed and delivered by the respective parties thereto:
(i) EASEMENT AGREEMENTS AND BILL OF SALE. An original of the
Bill of Sale, duly executed by the Seller, shall have been delivered
in the case of the Bill of Sale, or shall be delivered immediately
after the Merger, in the case of the Easement Agreements, to the
Lessor.
(ii) LEASE AND MEMORANDUM OF LEASE. The original of the Lease,
duly executed by the Lessee and the Lessor and in recordable form,
shall have been delivered to the Administrative Agent; the original
of the Memorandum of Lease substantially in the form of EXHIBIT C
attached hereto, duly executed by the Lessee and Lessor and in
recordable form, shall have been delivered to the Administrative
Agent.
(iii) GUARANTIES. Counterparts of the Guaranties from each
Subsidiary Guarantor in substantially the form of EXHIBIT D-1, the
Transok Guaranty from the Transok Guarantor in substantially the
form of EXHIBIT D-2, the Parent Company Guaranty from the Parent
Company in substantially the form of EXHIBIT D-3, the Holding
Company Guaranty in substantially the form of EXHIBIT D-4 and the
Holding Company Security Agreement in substantially the form of
EXHIBIT D-5, shall have been delivered to each Participant.
(iv) LOAN AGREEMENT AND ASSIGNMENT OF LEASE AND RENTS.
Counterparts of the Loan Agreement, duly executed by the Lessor and
the Lenders, shall have been delivered to each of the Lessor and
each Lender; and the Assignment of Lease and Rents substantially in
the form of EXHIBIT E hereto with appropriate insertions and in
recordable form, duly executed by the Lessor, shall have been
delivered to the Administrative Agent.
(v) PARTICIPATION AGREEMENT. Counterparts of this
Participation Agreement, duly executed by the parties hereto, shall
have been delivered to each of the parties hereto.
5
(vi) [INTENTIONALLY OMITTED]
(vii) EXECUTED ORIGINAL NOTES. The Notes of the Lessor payable
to the order of each of the Lenders shall have been delivered to
each Lender.
(viii) CLOSING DATE APPRAISAL. Each Participant shall have
received a report of the Appraiser (the "CLOSING DATE APPRAISAL"),
paid for by the Lessee, which shall meet the requirements of the
Financial Institutions Reform, Recovery and Enforcement Act of 1989
and shall state in a manner reasonably satisfactory to such
Participant the following: (A) the estimated Fair Market Sales Value
of the Leased Property on the Closing Date; and (B) the estimated
Fair Market Sales Value of the Leased Property at the end of the
Lease Term.
(ix) [INTENTIONALLY OMITTED]
(x) EVIDENCE OF INSURANCE. The Lessor shall have received from
the Lessee a certificate of insurance describing in detail all
insurance maintained by the Lessee for the benefit of the Lessee and
its Subsidiaries with respect to the Leased Property and certifying
that such insurance complies with the provisions of Article X of the
Lease (including the naming of the Lessor as additional insured or
loss payee with respect to such insurance), in form and substance
reasonably satisfactory to the Lessor.
(xi) [INTENTIONALLY OMITTED]
(xii) CERTIFICATE OF OFFICERS OF THE LESSEE AND THE
GUARANTORS. Each of the Lenders, the Lessor and the Agents shall
have received a certificate, in form and substance satisfactory to
the Agents, of a Secretary or an Assistant Secretary and the
President or a Vice President of the Lessee and each Guarantor,
together with certified copies of the articles of incorporation and
by-laws, certificate of formation and limited liability company
agreement, or the partnership agreement, as the case may be, and
signatures and incumbency of officers of the Lessee and the
Guarantors and resolutions with respect to the transactions
contemplated herein.
(xiii) RECORDING FEES; TRANSFER TAXES. The Lessor shall have
received evidence of a satisfactory arrangement for payment of all
recording and filing fees and taxes with respect to any recordings
or filings made with respect to the Easement Agreements, the
Memorandum of Lease and the Assignment of Lease and Rents or with
respect to the execution, delivery, recording, publishing,
registration and filing of the Operative Documents and the Operative
Loan Documents or any memorandum thereof and any financing
statements with respect thereto.
6
(xiv) OPINIONS OF COUNSEL. The following opinions, each dated
the Closing Date, substantially in the form set forth in the Exhibit
noted below, and containing such other matters as the parties to
whom they are addressed shall reasonably request, shall have been
delivered and addressed to each of the Lessor, the Agents and the
Lenders:
(1) the opinion of Hutcheson & Grundy, L.L.P., special
Texas counsel of the Lessee and the Guarantors (EXHIBIT F-1);
and
(2) the opinion of Hall, Estill, Hardwick, Gable, Golden
& Nelson, special Oklahoma counsel for the Lessee and the
Transok Guarantor (EXHIBIT F-2);
(xv) FEE LETTER AGREEMENT. The Lessor shall have received the
Fee Letter Agreement duly executed by the Lessee and the Transok
Guarantor.
(xvi) [INTENTIONALLY OMITTED]
(xvii) [INTENTIONALLY OMITTED]
(xviii) PERMITS AND CERTAIN MATTERS. (i) All Permits that are
or will become Applicable Permits shall be obtained on the Closing
Date after giving effect to all transactions (A) in connection with
the transfer of the Leased Property by the Seller and the granting
of the Easements by Transok to the Lessor and (B) intended to be
consummated on the Closing Date pursuant to the Operative Documents)
shall have been obtained, except for (x) Applicable Permits required
by Law to be obtained after the Closing Date, and (y) the Excepted
Permits provided that the representations and warranties in Section
4.1(g)(ii) of the Participation Agreement are true and correct on
the Closing Date and that the covenant in Section 5.12 of the
Participation Agreement shall have been fulfilled as provided
therein. All such obtained Permits shall be in proper form, in full
force and effect and not subject to any further appeal or further
contest or to any unsatisfied condition (other than conditions
relating to completion in the future) that may allow modification or
revocation.
(xix) DOCUMENTS RELATING TO THE LEASED PROPERTY. The Lessee
shall have delivered, or caused to be delivered, to the
Administrative Agent and the Lessor documentation with respect to
the condition of the Leased Property or any part thereof, the Taxes
applicable to the Leased Property and such other documents and
agreements relating to the operation of the Leased Property or any
part thereof as the Administrative Agent or the Lessor (through the
Administrative Agent) may reasonably request, in form and substance
reasonably acceptable to the Administrative Agent and the Lessor.
7
(xx) CERTIFICATE OF FINANCIAL CONDITION. The Administrative
Agent shall have received a Certificate of Financial Condition from
the chief financial officer of the Transok Guarantor in form
satisfactory to the Agents and the Lessor (addressed to or otherwise
in favor of the Agents, the Lessor and each Lender).
(b) LITIGATION. No action or proceeding shall have been instituted
or threatened nor shall any governmental action, suit, proceeding or
investigation be instituted or threatened before any Governmental Authority, nor
shall any order, judgment or decree have been issued or proposed to be issued by
any Governmental Authority, to set aside, restrain, enjoin or prevent the
performance of this Participation Agreement or any transaction contemplated
hereby or by any other Operative Document or any Operative Loan Document or
which is reasonably likely to materially adversely affect the Leased Property or
the Easements or any transaction contemplated by the Operative Documents and the
Operative Loan Documents or which could reasonably be expected to result in a
Material Adverse Effect.
(c) LEGALITY. In the opinion of such Participant or its counsel, the
transactions contemplated by the Operative Documents and the Operative Loan
Documents shall not violate any Applicable Law, and no change shall have
occurred or been proposed in Applicable Law that would make it illegal for such
Participant to participate in any of the transactions contemplated by the
Operative Documents and the Operative Loan Documents.
(d) NO EVENTS. (i) No Event of Default, Potential Event of Default,
Event of Loss or Event of Taking shall have occurred and be continuing, and (ii)
no action shall be pending or threatened by a Governmental Authority to initiate
a Condemnation or an Event of Taking.
(e) REPRESENTATIONS. Each representation and warranty of the parties
hereto or to any other Operative Document or any Operative Loan Document
contained herein or in any other Operative Document or any Operative Loan
Document shall be true and correct in all material respects as though made on
and as of the Closing Date.
(f) CLOSING DATE. The Closing Date shall occur on or prior to June
6, 1996.
(g) MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change, in (i) the consolidated business, condition (financial or
otherwise), operations, performance or properties of Transok Inc. and its
Subsidiaries taken as a whole from that presented in the financial statements
dated as of December 31, 1995, a copy of which has been furnished to the
Participants and (ii) in the consolidated business, condition (financial or
otherwise, operations, performance, properties or prospects of the Parent
Company, the Transok Guarantor or their respective consolidated Subsidiaries
taken as a whole.
(h) FEES; TRANSACTION EXPENSES. The Lessee shall have paid to the
Administrative Agent for the account of each Lender on the Closing Date the fee
as described in the Fee Letter Agreement. The Lessor shall have received from
the Lessee the fees required
8
to be paid to the Lessor on or prior to the Closing Date pursuant to the Fee
Letter Agreement. The Lessee shall have paid the Transaction Costs then accrued
and invoiced which the Lessee agrees to pay pursuant to SECTION 8.8(A).
(i) UCC SEARCHES; RECORDING AND FILING. The Administrative Agent
shall have received results of UCC filing searches conducted at the Lessee's
expense, identifying all financing statements on file in the Offices of the
Secretary of State of Oklahoma and Delaware in respect of the Lessee.
Arrangements reasonably satisfactory to the Administrative Agent that each
Conveyance Instrument that requires filing of record, the Lease, the Memorandum
of Lease and all financing statements under the UCC with respect to the
Conveyance Instruments shall be duly recorded, published, registered and filed
in such manner and in such places as the Lessor, the Lessee, the Lessee's
counsel and the Agents shall determine to be necessary or appropriate to publish
notice of and protect the validity and effectiveness thereof and to establish,
create, perfect, preserve and protect the rights of the parties thereto and
their respective successors and assigns.
(j) TITLE. The Seller shall have good title to the Leased Property
and Seller or Transok shall have good title to the Land, in each case
satisfactory to the Administrative Agent and the Participants (each in its sole
discretion), free and clear of all Liens (other than Permitted Liens).
(k) COMPLIANCE. The Lessee shall have delivered, or caused to be
delivered, to the Agents and the Lessor such evidence as any Agent or the Lessor
may reasonably request to establish the compliance in all material respects of
the Leased Property with all Applicable Laws.
(l) [INTENTIONALLY OMITTED]
(m) SATISFACTION WITH CONTEMPLATED TRANSACTIONS. The Agents and the
Lessor shall have been satisfied in their sole discretion that the initial
Borrowing under the Credit Agreement shall occur immediately after the funding
of the Purchase Price pursuant to SECTION 2.2.
(n) REGULATORY FILINGS; CONSENTS. All actions and proceedings
required by Applicable Law shall have been taken, all waiting periods thereunder
shall have expired or terminated, and all consents, waivers and approvals
necessary for the transactions contemplated by the Operative Documents and the
Operative Loan Documents (including, without limitation, those of any
Governmental Authority and any required under the terms of the Purchase
Agreement, the Easement Agreements and the Bill of Sale) shall have been given
or obtained, other than the Excepted Permits.
(o) ADDITIONAL DOCUMENTS. The Administrative Agent shall have
received such other approvals, certificates or documents as any Agent may
reasonably request to evidence satisfaction of the conditions set forth in this
SECTION 3.1(A).
9
SECTION 3.2 CONDITIONS TO THE OBLIGATIONS OF THE LESSEE. The obligations
of the Lessee to lease the Leased Property from the Lessor are subject to the
fulfillment on the Closing Date to the satisfaction of, or waiver by, the
Lessee, of the following conditions precedent:
(a) GENERAL CONDITIONS. The conditions set forth in SECTION 3.1 that
require fulfillment by the Lessor and the Lenders shall have been satisfied.
(b) LEGALITY. In the opinion of the Lessee or its counsel, the
transactions contemplated by the Operative Documents and the Operative Loan
Documents shall not violate any Applicable Law, and no change shall have
occurred or been proposed in Applicable Law that would make it illegal for the
Lessee to participate in any of the transactions contemplated by the Operative
Documents.
SECTION 3.3 CONDITIONS TO THE OBLIGATIONS OF THE PARTICIPANTS. The
obligations of the Lessor and each Lender to carry out their respective
obligations under SECTION 2 of this Participation Agreement shall be subject to
the fulfillment to the satisfaction of, or waiver by, each such party hereto
(acting directly or through their respective counsel) or prior to the Closing
Date of the following conditions precedent, PROVIDED that the obligations of any
Participant shall not be subject to any conditions contained in this SECTION 3.3
which are required to be performed by such Participant:
(a) FUNDING REQUEST. The Lessor shall have received from the Lessee
the Funding Request therefor pursuant to SECTION 2.2.
(b) CONDITION FULFILLED. As of the Closing Date, the condition set
forth in SECTION 3.1(D)(I) shall have been satisfied.
(c) REPRESENTATIONS. As of the Closing Date, both before and after
giving effect to the Funding requested by the Lessee on such date, the
representations that the Lessee is deemed to make pursuant to SECTION 2.2(C)
shall be true and correct in all material respects on and as of the Closing Date
as though made on and as of the Closing Date, except to the extent such
representations or warranties relate solely to an earlier date, in which case
such representations and warranties shall have been true and correct in all
material respects on and as of such earlier date.
SECTION 4
REPRESENTATIONS
SECTION 4.1 REPRESENTATIONS OF THE LESSEE. Effective as of the date of
execution hereof and as of the Closing Date, the Lessee represents and warrants
to each of the Participants and the Agents as follows:
(a) ORGANIZATION, ETC. The Lessee and each Subsidiary of the Lessee
are each a corporation duly incorporated, a limited liability company duly
organized or a partnership duly
10
formed, as the case may be, and are each validly existing and in good standing
(or, in the case of a partnership, validly existing) under the laws of the state
of its respective incorporation, organization or formation; and the Lessee and
each Subsidiary of the Lessee are each duly qualified and in good standing as a
foreign corporation, limited liability company or partnership authorized to do
business in each jurisdiction where, because of the nature of its activities or
properties, such qualification is required and where the failure so to qualify
would have a material adverse effect on the financial condition, business,
operations and prospects of the Lessee, or the Lessee and its Subsidiaries taken
as a whole, and effective at the Merger the Lessee is duly qualified and in good
standing as a foreign corporation in the State of Oklahoma.
(b) AUTHORIZATION; NO CONFLICT. The execution and delivery of this
Participation Agreement, the Funding hereunder, the execution and delivery of
the Lease and the other Operative Documents, and the performance by the Lessee
and each Guarantor of their respective Obligations under this Participation
Agreement, the Lease and the other Operative Documents, are within the Lessee's
and the Guarantors' corporate, limited liability company, or partnership powers
as the case may be, have been duly authorized by all necessary corporate,
limited liability company or partnership action, as the case may be, have
received all necessary governmental consents, authorizations, orders and
approvals (if any shall be required), except for those approvals described in
Section 4.1(b) of the Disclosure Schedule, and do not and will not contravene or
conflict with any provision (a) of Law, (b) of the charter, by-laws, certificate
of formation, limited liability company agreement or partnership agreement of
the Lessee or any other Obligor, or (c) of any material agreement binding upon
the Lessee or any other Obligor or any of them.
(c) VALIDITY AND BINDING NATURE. This Participation Agreement is,
and the Lease and the Operative Documents when duly executed and delivered will
be, legal, valid and binding obligations of the Lessee and each other Obligor
party thereto enforceable against each of the Lessee and such other Obligors in
accordance with their respective terms subject as to enforcement only to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and general principles
of equity.
(d) RIGHTS IN RESPECT OF THE LEASED PROPERTY. The Lessee is not a
party to any contract or agreement to sell any interest in the Leased Property
or any part thereof other than pursuant to this Participation Agreement and the
Lease.
(e) LEASED PROPERTY. The present condition and use of the Leased
Property conforms in all material respects with all conditions or requirements
of all existing permits and approvals issued with respect to the Leased
Property, and the present use of the Leased Property and the Lessee's future
intended use of the Leased Property under the Lease does not, in any material
respect, violate any Applicable Law. No material notices, complaints or orders
or violation or non-compliance have been issued or, to the best of the Lessee's
knowledge, threatened or contemplated by any Governmental Authority with respect
to the Leased Property or any present or intended future use thereof, in each
case except as described in Section 4.1(e) of the Disclosure Schedule. All
agreements, easements and other rights, public or private,
11
which are necessary to permit the lawful use and operation of the Leased
Property as the Lessee intends to use the Leased Property under the Lease and
which are necessary to permit the lawful intended use and operation of all
presently intended utilities, driveways, roads and other means of egress and
ingress to and from the same have been, or to the Lessee's best knowledge will
be, obtained and are in full force and effect and the Lessee has no actual
knowledge of any pending modification or cancellation of any of the same.
(f) RECORDATION. All of the Conveyance Instruments, the Memorandum
of Lease and all UCC financing statements to be filed pursuant to SECTION 3.1(I)
hereof are in a form sufficient to create or publish notice of, as the case may
be, the interests in the Leased Property purported to be created thereby or by
the Lease, the Purchase Agreement, the Easement Agreements or the Bill of Sale.
Upon the filing of the UCC financing statements and recordation of the
Conveyance Instruments and the Lease (or the Memorandum of Lease) to be filed
and recorded pursuant to SECTION 3.1(I) hereof, such documents will have been
recorded in each place in which filing or recordation is required to publish
notice of the interests created thereby and to protect the validity and
effectiveness thereof; and all Taxes, fees and other publish charges payable in
connection with the filing or recordation of the Conveyance Instruments, the
Memorandum of Lease and such UCC financing statements will have been paid in
full.
(g) TITLE TO PROPERTY. (i) The Seller has good and indefeasible
title to the Leased Property and Transok or the Seller, as the case may be, has
good and indefeasible title to the Land, free and clear of all Liens (other than
Permitted Liens) as is necessary to permit the Lessee, pursuant to the Lease, to
operate the business of the Lessee as intended to be conducted on the Closing
Date, and subject only to such minor imperfections or other burdens of title to
any of such property interests which (x) do not individually or in the aggregate
diminish the value thereof or the Lessee's use thereof in the conduct of such
business or (y) could not have a Material Adverse Effect as determined by the
Required Lenders, in their sole discretion.
(ii) Except as disclosed in Section 4.1(g)(ii) of the
Disclosure Schedule, (A) the Seller will possess on the Closing Date all
rights-of-way, pipeline interconnections, easements, licenses, permits, rights
in real property (including, without limitation, line pipe in place, fixtures
and appurtenances), personal property (including capital equipment), utilities
and other services necessary for the day-to-day operation of the Leased
Property, free and clear of all Liens (other than any Permitted Liens), (B) such
rights-of-way, easements, licenses, permits, other real property rights,
personal property, utilities and other services are valid and in full force and
effect in accordance with their terms with all rentals and other payments due
thereunder having been paid in full and (C) there is presently no default with
respect to any such rights-of-way, easements, licenses, permits, other real
property rights, personal property, utilities and other services, which default
could reasonably be expected to result in a termination or loss of any of the
foregoing, which termination or loss, individually or in the aggregate, could
reasonably be expected to (1) result in a reduction in the fair market value of
the Leased Property taken as a whole or any material part thereof, (2) result in
any impairment in the
12
usefulness, for the purposes intended by the Lessee and the Lessor on the
Closing Date, of the Leased Property taken as a whole or any material part
thereof, (3) subject the Lessor or any of its Affiliates to any civil or
criminal liability, or any loss, cost, disability, damage, claim, penalty or
expense (not fully and promptly indemnified by the Lessee or another obligor) or
(4) result in a Material Adverse Effect (and no other event has occurred with
respect to any such rights-of-way, easements, licenses, permits, other real
property rights, personal property, utilities and other services which, with the
passage of time or giving of notice, could individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect).
(iii) None of the Permitted Liens will, on and after the
Closing Date, be reasonably expected to materially interfere with the lease, use
or possession of the Leased Property by the Lessee in the manner intended by the
Lessee and the Lessor on the Closing Date, the ownership and lease of the Leased
Property by the Lessor or the exercise by the Lessor of its rights under any
Operative Document or any Operative Loan Document.
(iv) There are no obligations under the terms of the
instruments creating the possessory interests of the Lessee or the Seller, or
any predecessor-in-interest of the Seller in the Leased Property requiring the
payment of any money to permit the continued use of the rights granted by such
instruments.
(v) As of the Closing Date, the Lessee has (i) obtained the
Permits identified in Section 4.1(g)(ii) of the Disclosure Schedule (the
"EXCEPTED PERMITS") or (ii) submitted applications to the appropriate
Governmental Authority to obtain each of the Excepted Permits, all such
applications in each case being properly filed and accompanied by all necessary
fees is required in connection with such applications.
(vi) As of the Closing Date, the Excepted Permits are held,
owned, controlled, possessed by or for the use or benefit of Transok.
(h) ENVIRONMENTAL COMPLIANCE. Except as set forth in Section 4.1(h)
of the Disclosure Schedule: (i) the condition and operations of the Leased
Property are in compliance in all material respects with all Environmental Laws;
(ii) no Hazardous Materials that have been generated at or transported from the
Leased Property or any part thereof have been disposed of at a site which as of
the date hereof is on the National Priorities List, the CERCLIS or any analogous
list of state Superfund sites, nor has any governmental authority named the
Lessee, the Seller or any other Person, with respect to the Leased Property or
any part thereof, a potentially responsible party in connection with a cleanup
authorized by CERCLA or similar state law; (iii) as of the date hereof, none of
the Lessee or the Seller or any of their respective Affiliates has received any
notice, mandate, order or request which remains pending under any Environmental
Law concerning the Leased Property or any part thereof or relating to an alleged
violation of Environmental Law or relating to any potential adverse action in
any way involving environmental, health or safety matters affecting the Leased
Property or any part thereof; (iv) there is no proceeding pending or, to the
knowledge of the Lessee, anticipated against the Lessee or the Seller or any of
their respective Affiliates by any Federal, state or local court,
13
tribunal, administrative agency, department, commission, board or other
authority or instrumentality with respect to the presence or release of any
Hazardous Materials from the Leased Property or any part thereof; and (v) no
Hazardous Materials have been released from or on the Leased Property or the
Land by the Lessee or the Seller in a quantity or concentration for which
cleanup or corrective action is authorized under any Environmental Law or may be
necessary to prevent or eliminate a significant risk to human health or the
environment. None of the foregoing matters disclosed in Section 4.1(h) of the
Disclosure Schedule, singly or in the aggregate, could reasonably be expected to
result in aggregate liability on the part of any Person in excess of $500,000 or
to have a Material Adverse Effect.
(i) REGULATION.
(i) Lessee is not an "intrastate pipeline" within the meaning of the
Natural Gas Policy Act of 1978, as amended. Neither the Lessee or Lessor
is or, by reason of the transactions contemplated by the Operative
Documents and the Operative Loan Documents, will be subject to regulation
by the FERC as (A) a "natural-gas company" under the Natural Gas Act, as
amended, or (B) an "interstate pipeline" under the Natural Gas Policy Act
of 1978, as amended.
(ii) None of the Lessor or any Participant will, by reason of the
transactions contemplated by the Operative Documents and the Operative
Loan Documents, be subject to regulation by the Oklahoma Corporation
Commission as a "public utility" within the meaning of 17 Okla. Stat. 1991
ss.ss. 151 - 156.
(iii) Lessee is not a "domestic public utility" within the meaning
of 17 Okla. Stat. 1991 ss.ss. 191.1 - 191.13.
(iv) Subject to the rights and powers of a municipality to grant or
refuse franchises to use streets and alleys within its limits and make
charges for the use thereof, none of the Lessee, the Administrative Agent,
the Documentation Agent or any Lender will be subject to regulation of
rates or services as a "public utility" within the meaning of 17 Okla.
Stat. 1991, ss. 156 by any Oklahoma municipal corporation.
(v) Other than the filings and notifications described in Section
4.1(r) of the Disclosure Schedule attached hereto, no authorization,
consent, approval, license or exemption of, registration, qualification,
designation, declaration or filing with, or notice to, any court or
governmental department, commission, board, bureau, agency,
instrumentality or authority or other Persons or entities, including,
without limitation, the Corporation Commission of Oklahoma, will be
required to be obtained by any of the Agents, the Lessor or any
Participant in connection with the exercise of any of its rights or
remedies under the Operative Documents and the Operative Loan Documents,
including, without limitation, the termination of the Lease by the Lessee,
the sale by the Lessor of the Leased Property to any Person.
14
(vi) None of the Administrative Agent, the Documentation Agent, the
Lessor or any Participant will, by reason of the transactions contemplated
by the Operative Documents and the Operative Loan Documents, be providing
any service that would require the prior approval of the Oklahoma
Corporation Commission in order to discontinue or abandon such service.
(j) SUFFICIENCY OF THE PROPERTY. The Leased Property and the
Easements conveyed to the Lessor and the Leased Property leased to the Lessee as
of the Closing Date are sufficient to permit the Lessee to conduct its business
with respect to the Leased Property in the manner such business was conducted by
the Seller immediately prior to the effectiveness of the Bill of Sale and is
intended to be conducted by the Lessee on and after the Closing Date. Further,
the Leased Property and the Easements conveyed to the Lessor is sufficient to
permit the Lessor or any purchaser from the Lessor to conduct its business with
respect to the Leased Property after the termination of the Lease in the manner
such business was conducted by the Seller immediately prior to the effectiveness
of the Bill of Sale and is intended to be conducted by the Lessee on and after
the Closing Date. Title to the property and interests therein acquired by the
exercise of such power will be held by, or transferred by the Seller (prior to
the execution and delivery of the Bill of Sale and Easement Agreements) to, the
Lessor (from and after the execution and delivery of the Bill of Sale and
Easement Agreements) and may be transferred freely by the Lessor to any Person
acquiring the Leased Property to the extent the same are valid and subsisting at
the time of such conveyance.
(k) FULL DISCLOSURE. To the best of the Lessee's knowledge and
belief, all factual information heretofore or contemporaneously furnished by or
on behalf of the Seller, Lessee or any Guarantor for purposes of or in
connection with the Operative Documents or any transaction contemplated thereby
is true and accurate (taken as a whole) on the date as of which such information
is dated or certified and does not omit any material fact necessary to make such
information (taken as a whole) not misleading at such time.
(l) TRADE SECRETS AND PATENTS. (i) The ownership of the Leased
Property by the Lessor and the operation of the Leased Property by the Lessee do
not conflict with, infringe on or otherwise violate any copyright, trade secret
or patent rights of others.
(ii) As of the Closing Date, the Lessee will own, or have the
license or right to use, all patents, patent applications, trademarks
(whether registered or not), trademark applications, trade names,
proprietary computer software and copyrights that are necessary for and
material to the operation of the Leased Property (the "Intellectual
Property Rights"). There is no pending judicial proceeding involving any
claim (nor to the knowledge of the Lessee is any such claim threatened),
of any infringement, misuse or misappropriation by the Lessee, or the
Lessor or any Affiliate thereof of any patent, trademark, trade name,
copyright, license or similar intellectual property right owned by any
third party related to the Intellectual Property Rights.
15
(m) No Event of Default, Potential Event of Default, Event of Loss
or Event of Taking has occurred and is continuing.
SECTION 4.2 REPRESENTATIONS OF THE LESSOR. Effective as of the date of
execution hereof and as of the Closing Date, the Lessor represents and warrants
to the Administrative Agent, the Documentation Agent and each of the Lenders
and, as to PARAGRAPHS (A), (B) AND (F) below, also to the Lessee as follows:
(a) DUE ORGANIZATION, ETC. The Lessor is a corporation duly
organized and validly existing in good standing under the laws of Delaware and
has full corporate power, authority and legal right to execute, deliver and
perform its obligations under the Lease, this Participation Agreement and each
other Operative Document and Operative Loan Document to which it is or will be a
party.
(b) DUE AUTHORIZATION; ENFORCEABILITY, ETC. This Participation
Agreement and each other Operative Document and Operative Loan Document to which
the Lessor is or will be a party have been or will be duly authorized, executed
and delivered by or on behalf of the Lessor and are, or upon execution and
delivery will be, legal, valid and binding obligations of the Lessor enforceable
against it in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting creditors' rights generally and by general equitable principles.
(c) NO CONFLICT. The execution and delivery by the Lessor of the
Lease, this Participation Agreement and each other Operative Document and
Operative Loan Document to which the Lessor is or will be a party, are not or
will not be, and the performance by the Lessor of its obligations under each
will not be, inconsistent with its certificate of incorporation or by-laws, and
do not and will not contravene any provision of, or constitute a default under,
any indenture, mortgage, contract or other instrument to which the Lessor is a
party or by which it or its properties are bound.
(d) LITIGATION. There are no pending or, to the knowledge of the
Lessor, threatened actions or proceedings against the Lessor before any court,
arbitrator or administrative agency that would if adversely determined have a
material adverse effect upon the ability of the Lessor to perform its
obligations under this Participation Agreement or any other Operative Documents
or Operative Loan Documents to which it is or will be a party.
(e) LESSOR LIENS. No Lessor Liens or other liens created by the acts
or omissions of the Lessor (other than by the Operative Documents and the
Operative Loan Documents) exist on the Closing Date on the Leased Property, or
any portion thereof, and the execution, delivery and performance by the Lessor
of this Participation Agreement or any other Operative Document or Operative
Loan Document to which it is or will be a party will not subject the Leased
Property, or any portion thereof, to any Lessor Liens or other liens created by
the Lessor (other than by the Operative Documents and the Operative Loan
Documents).
16
(f) SECURITIES ACT. The interest being acquired or to be acquired by
the Lessor in the Lessor's Invested Amount and the Leased Property is being
acquired for its own account, without any view to the distribution thereof or
any interest therein, PROVIDED that the Lessor shall be entitled to assign,
convey or transfer its interest in accordance with SECTION 6.1. The Lessor is an
accredited investor as that term is defined in Rule 501(a) under the Securities
Act.
(g) EMPLOYEE BENEFIT PLANS. The Lessor is not and will not be making
its investment hereunder, and is not performing its obligations under the
Operative Documents and the Operative Loan Documents, with the assets of an
"employee benefit plan" (as defined in Section 3(3) of ERISA) which is subject
to Title I of ERISA, or "plan" (as defined in Section 4975(e)(1) of the Code.
SECTION 4.3 REPRESENTATIONS OF THE LENDERS. Effective as of the date of
execution hereof and as of the Closing Date, each Lender represents and warrants
to the Lessor and to each of the other Lenders and the Agents and, as to
PARAGRAPHS (A) AND (B) below, also to the Lessee as follows:
(a) DUE AUTHORIZATION, ETC. Each of this Participation Agreement and
the Loan Agreement has been duly authorized, executed and delivered by it.
(b) SECURITIES ACT. The interest being acquired or to be acquired by
such Lender in the Funded Amounts is being acquired for its own account, without
any view to the distribution thereof or any interest therein, provided that such
Lender shall be entitled to assign, convey or transfer its interest in
accordance with SECTION 6.3. Such Lender is an accredited investor as that term
is defined in Rule 501(a) under the Securities Act.
(c) EMPLOYEE BENEFIT PLANS. Such Lender is not and will not be
making its investment hereunder, and is not performing its obligations under the
Operative Documents and the Operative Loan Documents, with the assets of an
"employee benefit plan" (as defined in Section 3(3) of ERISA) which is subject
to Title I of ERISA, or "plan" (as defined in Section 4975(e)(1) of the Code.
SECTION 4.4 ADDITIONAL REPRESENTATIONS OF THE LESSEE WITH RESPECT TO
SELLER. Effective as of the Closing Date, and subject to the limitations set
forth in this Section, the Lessee represents and warrants to each of the other
parties hereto, that as of the Closing Date:
(a) STATUS. Seller is a corporation duly organized, validly existing
and in good standing under the laws of Delaware and is duly authorized to carry
on its business in the State of Oklahoma. Seller has all requisite corporate
power and authority to enter into and perform all the transactions contemplated
by the Purchase Agreement. The Bill of Sale is a legal, valid and binding
obligations of the Seller, enforceable against the Seller in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by general equitable principles.
17
(b) AUTHORIZATION OF AGREEMENT, ETC. Seller has duly authorized the
execution, delivery and performance of the Bill of Sale and each agreement,
document or instrument required to be executed and delivered by Seller pursuant
thereto. To the best of Lessee's knowledge, the execution, delivery or
performance of the Bill of Sale or any other such document will not violate any
term of Seller's articles of incorporation or by-laws, or any other agreement,
judicial decree, statute or regulation to which Seller is a party or by which
Seller may be bound or affected; and Seller has obtained all consents necessary
in order to enter into and perform all its obligations under the Bill of Sale
and under any documentation to be delivered pursuant to the Bill of Sale, and no
further consents of any kind (including internal consents such as by a board of
directors, limited partners, or the like) will need to be obtained for the Bill
of Sale, any documentation to be delivered pursuant to the Bill of Sale, or
performance under any of the foregoing.
(c) SOLVENCY. Seller is solvent and has not filed, nor, to the best
of Lessee's knowledge, has there been filed against Seller, any voluntary or
involuntary petition in bankruptcy or insolvency; no receiver or trustee or
similar custodian has been appointed with respect to Seller's property or any
substantial portion thereof; Seller has not made any assignment for the benefit
of creditors; to the best of Lessee's knowledge, Seller has not admitted
insolvency in writing, nor admitted that its property is not, at a fair
valuation, sufficient to pay its debts generally as they become due; and there
are no outstanding charging orders, executions or attachments against the
property of Seller or any portion thereof.
(d) NO FOREIGN STATUS. Seller is not a "foreign person" within the
meaning of ss. 1445 of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
(e) NOTICE OF ACTIONS. To the best of Lessee's knowledge, Seller has
received no written notice of any condemnation, eminent domain proceeding,
taking, or any other actions, suits, claims, legal proceedings or any other
proceedings currently affecting the Leased Property, or any portion thereof, at
law or in equity, and no such proceedings are currently pending or threatened
before any court or Governmental Authority.
(f) TENANTS. Before the Closing Date, no person has any right to
use, occupy, or possess any portion of the Leased Property for any purpose,
other than Transok, Inc. and its Subsidiaries. Seller has entered into no lease
or occupancy agreement of any kind with respect to the Leased Property or any
portion thereof.
(g) HAZARDOUS MATERIAL LIENS. During the period of Seller's
ownership of the Leased Property, no Lien has attached to (or been asserted in
writing to exist with respect to) the Leased Property by reason of any
Governmental Authority expending monies to clean up or remove toxic or Hazardous
Materials from the Leased Property.
(h) SPECIAL TAXES AND ASSESSMENTS. Seller has received no written
notice from any government authority of any special tax or assessment to be
levied (or proposed to be levied) against the Leased Property.
18
SECTION 5
COVENANTS OF THE LESSEE AND THE TRANSOK GUARANTOR
SECTION 5.1 QUALIFICATION TO DO BUSINESS IN OKLAHOMA. After giving effect
to the Merger, the Lessee shall remain qualified to do business in the State of
Oklahoma.
SECTION 5.2 FURTHER ASSURANCES. Upon the written request of the Lessor,
the Lessee and the Transok Guarantor, at their own cost and expense, will cause
all financing statements (including precautionary financing statements), fixture
filings and other similar documents, to be recorded or filed at such places and
times in such manner, as may be necessary to preserve, protect and perfect the
interest of the Lessor in the Easements and the Leased Property as contemplated
by the Operative Documents and the Operative Loan Documents.
SECTION 5.3 REPORTS, CERTIFICATES AND OTHER INFORMATION. The Lessee will
furnish or cause to be furnished to the Lessor, the Administrative Agent, the
Documentation Agent and each Lender from time to time such information
concerning the Lessee and its Subsidiaries as the Lessor, any Lender, the
Administrative Agent or the Documentation Agent may reasonably request from the
Lessee.
SECTION 5.4 PAYMENT OF FEES. The Lessee and the Transok Guarantor jointly
and severally agree to pay to the Lessor at such times and in such amounts the
other fees payable to the Lessor in accordance with the fee letter agreement
dated the date hereof between the Lessor, the Lessee and the Transok Guarantor,
as it may be amended from time to time (the "FEE LETTER AGREEMENT").
SECTION 5.5 ADDITIONAL REQUIRED APPRAISALS. If, as a result of any change
in Applicable Law after the date hereof, an appraisal of all or any of the
Leased Property is required under Applicable Law during the Lease Term with
respect to any Participant's interest therein, in such Participant's Funded
Amount or in the Operative Documents or in the Operative Loan Documents, then
the Lessee shall pay the cost of such appraisal.
SECTION 5.6 TAXES, ASSESSMENTS, ETC. The Lessee covenants that it shall
pay when due all taxes, assessments and other governmental charges except as
contested in good faith and by appropriate proceedings and for which adequate
reserves in accordance with GAAP have been set aside on its books.
SECTION 5.7 FULL DISCLOSURE. All factual information furnished by or on
behalf of the Lessee or the Transok Guarantor pursuant to this Participation
Agreement (i) will be true and accurate (taken as a whole) on the date of which
such information is dated or certified and (ii) will not omit any material fact
necessary to make such information (taken as a whole) not misleading as of such
time.
19
SECTION 5.8 INTELLECTUAL PROPERTY RIGHTS. The Lessee shall preserve,
protect and maintain its rights in and to the Intellectual Property Rights in
accordance with prudent industry practice, and shall defend and hold harmless
each of the Administrative Agent, the Documentation Agent and the Participants
from and against any cost, liability or expense arising from any claim of
infringement, misuse or misappropriation of any Intellectual Property Rights.
SECTION 5.9 SEPARATE BUSINESS. The Lessee shall conduct its business as an
entity distinct from its Affiliates, including, without limitation, (i) paying
its own expenses from its own funds, (ii) maintaining separate books and
records, (iii) maintaining and issuing its own financial statements, (iv)
maintaining separate assets and liabilities, (v) maintaining adequate
capitalization, financing and working capital, (vi) observing corporate
formalities, (vii) not commingling assets with those of its Affiliates (except
as reasonably required in connection with Tejas' cash management practices) and
(viii) separately entering into and performing contracts.
SECTION 5.10 RESISTANCE TO REGULATORY CHANGE. If any court or governmental
department, commission, board, bureau, agency, instrumentality or authority
shall issue, or propose to issue, any order, judgment, rule, regulation or
decision, the effect of which is, or which proposes, to rescind, terminate,
repeal, invalidate, suspend, enjoin, amend or modify any Operative Document or
Operative Loan Document, or any part thereof, then the Lessee promptly shall so
notify the Administrative Agent and if such regulatory change, in the opinion of
the Agents (in their sole judgment reasonably exercised), could have a Material
Adverse Effect, the Administrative Agent shall give the Lessee reasonable notice
thereof and the Lessee shall diligently and timely (i) make all filings, (ii)
pursue all remedies and appeals and (iii) take such other lawful action, in each
case as the Agents (in their sole judgment) determines to be necessary or
desirable to prevent such regulatory change from becoming final and
non-appealable or otherwise irrevocable, to attempt to prevent or postpone the
effectiveness of such regulatory change and to cause such regulatory change to
be revoked, amended or modified so as to prevent the occurrence of such Material
Adverse Effect. If, no later than ten (10) days after the Administrative Agent
so notifies the Lessee, the Lessee notifies the Administrative Agent that it has
decided not to pursue any of the actions described in clause (i), (ii) or (iii)
immediately above, the Administrative Agent may pursue such actions on behalf of
the Lessee, at the Lessee's sole cost and expense.
SECTION 5.11 REGULATORY APPLICATIONS. The Lessee shall not make any
application to or filing with, or take any other action before, the Oklahoma
Corporation Commission or any other applicable regulatory body to rescind,
terminate, repeal, invalidate, suspend, enjoin, amend or modify any Operative
Document or any Operative Loan Document or any term thereof without the prior
written consent of the Agents and the Lessor.
SECTION 5.12 COVENANT OF LESSEE AND TRANSOK GUARANTOR WITH RESPECT TO
EXCEPTED PERMITS. To the extent the Lessee fails to hold, own, control, possess,
or have the use or benefit of, any Excepted Permits, the Lessee and the Transok
Guarantor each covenants that it will use its best efforts to obtain all
Excepted Permits for the Lessee as promptly as possible, but in no event later
than 60 days from the Closing Date (the 60th day following the Closing
20
Date herein referred to as the "PERMIT DATE"). In the event the Lessee fails to
obtain the Excepted Permits as provided herein, the Lessee and Transok covenant
that they will promptly effect a merger no later than 15 days from the Permit
Date.
SECTION 6
TRANSFERS BY LESSOR AND LENDERS
SECTION 6.1 LESSOR TRANSFERS. The Lessor shall not assign, convey or
otherwise transfer all or any portion of its right, title or interest in, to or
under the Leased Property (except pursuant to ARTICLE VII of the Lease) or any
of the Operative Documents or any Operative Loan Documents without the prior
written consent of the Required Participants and the Lessee except that without
the prior written consent of the Required Participants or the Lessee, the Lessor
may assign (reserving all rights of the Lessor to indemnification relating to
the period prior to such transfer) all (but not less than all) of its right,
title and interest in, to and under the Leased Property, the Easements and the
Operative Documents and the Operative Loan Documents to (x) another wholly-owned
U.S. subsidiary of Canadian Imperial Bank of Commerce (i) that has a net worth
of at least $250,000,000, or (ii) the obligations of which under the Operative
Documents and the Operative Loan Documents are guaranteed by the assigning
Lessor or another wholly-owned U.S. subsidiary of Canadian Imperial Bank of
Commerce having a net worth of at least $250,000,000, or (y) alternatively, a
special purpose entity all of the equity of and/or beneficial interest in which
is owned by the Lessor or an entity described in the foregoing CLAUSE (X)
(PROVIDED, the form of such special purpose entity shall be subject to the
approval of the Required Lenders, which approval shall not be unreasonably
withheld); PROVIDED that:
(a) REQUIRED NOTICE AND EFFECTIVE DATE. The Lessor shall give
written notice of any such proposed transfer to the Lessee and the Lenders
at least ten (10) days prior to such proposed transfer, setting forth the
name of such proposed transferee, and the date on which such transfer is
proposed to become effective.
(b) ASSUMPTION OF OBLIGATIONS. Any transfer pursuant to this SECTION
6.1, SECTION 6.2 or SECTION 7.5(I) shall be made pursuant to an agreement
satisfactory to the Lessor which shall confirm that, except for a
representation and warranty that there are no Lessor Liens on the Leased
Property, the transfer is made without recourse to the Lessor and that the
Lessor makes no other representation or warranty of any kind to the
transferee, and any transferee shall have executed and delivered to the
Lessor and the Lessee a letter making the representations set forth in
SECTION 4.2 as of the date of such transfer, and thereupon the obligations
of the transferring Lessor under the Operative Documents and the Operative
Loan Documents shall be released; PROVIDED that Lessor shall not make any
transfer pursuant to SECTION 6.1, SECTION 6.2 or SECTION 7.5(I) without
also transferring the appropriate PRO RATA share of its Borrowings, Notes
and Commitments (as such terms are defined in the Credit Agreement) and
other interests under the Credit Agreement. Upon any such transfer as
above provided, the transferee
21
shall be deemed to be bound by all obligations (whether or not yet
accrued) under, and to have become a party to all Operative Documents and
the Operative Loan Documents to which its transferor was a party, shall be
deemed the "Lessor" for all purposes of the Operative Documents and the
Operative Loan Documents and shall be deemed to have made that portion of
the Fundings pursuant to this Participation Agreement previously made or
deemed to have been made by the Lessor; and each reference herein and in
the other Operative Documents and the Operative Loan Documents to the
"Lessor" shall thereafter be deemed a reference to the transferee for all
purposes. Upon any such transfer, the Lessor shall deliver to each Lender
and the Lessee a new SCHEDULE 2.2 to the Participation Agreement, revised
to reflect the relevant information for such new Lessor and the Commitment
of such new Lessor.
(c) EMPLOYEE BENEFIT PLANS. The Lessor may not make any such
assignment, conveyance or transfer to any Person that cannot make the
representation in SECTION 4.2(G).
SECTION 6.2 LESSEE OPTION TO REPLACE LESSOR AND AGENTS. If at any time
none of Canadian Imperial Bank of Commerce, Bank of Montreal or any of their
Affiliates nor any Affiliate thereof is a Lender Party to the Credit Agreement,
the Lessee may (with the consent of the Required Lenders, not to be unreasonably
withheld) direct the Lessor to transfer, and the Lessor shall promptly transfer,
to a Lender under the Credit Agreement (the "REPLACEMENT LESSOR") that is
willing to accept the same, all of the Lessor's right, title, interest, duties
and obligations in respect of the Leased Property, the Easements, the Lessor's
Invested Amount, the Lease and the other Operative Documents and the Operative
Loan Documents (without recourse to the Lessor and reserving all rights of the
Lessor to indemnification relating to the period prior to such transfer) for an
amount payable to the Lessor in immediately available funds that is equal to the
outstanding Lessor's Invested Amount, accrued and unpaid Yield thereon plus all
other amounts then owing to the Lessor under the Operative Documents and the
Operative Loan Documents and the assumption by such replacement Lessor of the
duties and obligations of the Lessor under the Operative Documents and the
Operative Loan Documents. If at any time none of Canadian Imperial Bank of
Commerce, Bank of Montreal or any of their Affiliates is a Lender party to the
Credit Agreement, the Lessee may (with the consent of the Required Lenders, not
to be unreasonably withheld) direct any Agent to transfer, and such Agent shall
promptly transfer, to a Lender under the Credit Agreement (the "REPLACEMENT
AGENT") that is willing to accept the same, all of such Agent's right, title,
interest, duties and obligations in respect of the Operative Documents and the
Operative Loan Documents (without recourse to such Agent and reserving all
rights of such Agent to indemnification relating to the period prior to such
transfer) PROVIDED that all amounts then owing to such Agent under the Operative
Documents and the Operative Loan Documents are paid in full by the Lessee and
such replacement Agent assumes the duties and obligations of such Agent under
the Operative Documents and the Operative Loan Documents. As a condition
precedent to the effectiveness of such transfers, the Lessee shall have
obtained, at its expense, all necessary approvals from Governmental Authorities
and other Persons for such transfers and shall have effected, at its expense,
all recordings and filings necessary to perfect such transfers. All reasonable
and
22
documented expenses of the Lessor and any Agent incurred in connection with such
transfers or a transfer by Lessor pursuant to SECTION 7.5(I) shall be reimbursed
by the Lessee promptly therefor to the Lessor or such Agent, as the case may be.
SECTION 6.3 LENDER TRANSFERS. No Lender shall assign, convey or otherwise
transfer all or any portion of its right, title or interest in, to or under any
of the Operative Documents or Operative Loan Documents without the prior written
consent of the Lessor and the Lessee (such consents not to be unreasonably
withheld, but in determining whether or not to grant such consents, the Lessee
may consider, without limitation, its interest in the number of Lenders, the
size of any Lender's Commitment, the ability of the proposed assignee to satisfy
its obligations under the Operative Documents and the Operative Loan Documents
and whether such assignment will or may impose increased costs or other
indemnities on the Lessee, the Transok Guarantor or any of their respective
Subsidiaries) except that (i) without the prior written consent of the Lessor or
the Lessee, any Lender may transfer all or any portion of its interest to any
other existing Lender and (ii) the prior written consent of the Lessor shall not
be required for any transfer by a Lender to a financial institution having a
consolidated net worth of at least $100,000,000 as at the end of its most recent
fiscal year, and PROVIDED that:
(a) REQUIRED NOTICE AND EFFECTIVE DATE; ADMINISTRATIVE AGENT'S FEE.
The transferor Lender shall give written notice of each such proposed
transfer to the Lessee, the Lessor and the Administrative Agent at least
fifteen (15) days prior to such proposed transfer, setting forth the name
of such proposed transferee, the percentage or interest to be retained by
such Lender, if any, and the date on which such transfer is proposed to
become effective. The related Lender shall pay to the Administrative Agent
a transfer processing fee of $3,000, except in the case of a transfer
directed by the Lessee pursuant to SECTION 7.5(I). All reasonable and
documented out-of-pocket costs incurred by the Lessor in connection with
any such disposition by such Lender under this SECTION 6.3 shall be borne
by such Lender; except in the case of a transfer pursuant to SECTION
7.5(I), in which case such costs shall be paid by Lessee.
(b) ASSUMPTION OF OBLIGATIONS. Any transfer pursuant to this SECTION
6.3 or SECTION 7.5(I) shall be made pursuant to an agreement in
substantially the form of EXHIBIT 6.3(B) hereto which shall confirm that,
except for a representation and warranty that such transferring Lender is
the legal and beneficial owner of the interest being assigned by it and
that such interest is free and clear of any adverse claim created by such
transferring Lender, the transfer is made without recourse to the
transferring Lender and that the transferring Lender makes no other
representation or warranty of any kind to the transferee, and any
transferee pursuant to this SECTION 6.3 shall have executed and delivered
to the Lessor and the Lessee a letter making the representations set forth
in SECTION 4.3 as of the date of such transfer, and thereupon the
obligations of the transferring Lender under the Operative Documents and
the Operative Loan Documents shall be proportionately released and reduced
to the extent of such transfer; PROVIDED such Lender shall not make any
transfer pursuant to the SECTION 6.3 or SECTION 7.5(I) without also
transferring the appropriate PRO RATA share of its Borrowings, Notes and
23
Commitments (as such terms are defined in the Credit Agreement) and other
interests under the Credit Agreement. Upon any such transfer as above
provided, the transferee shall be deemed to be bound by all obligations
(whether or not yet accrued) under, and to have become a party to all
Operative Documents and the Operative Loan Documents to which its
transferor was a party, shall be deemed the pertinent "Lender" for all
purposes of the Operative Documents and the Operative Loan Documents and
shall be deemed to have made that portion of the Fundings pursuant to this
Participation Agreement previously made or deemed to have been made by the
transferor represented by the interest being conveyed; and each reference
herein and in the other Operative Documents and the Operative Loan
Documents to the pertinent "Lender" shall thereafter be deemed a reference
to the transferee for all purposes. Upon any such transfer, the
Administrative Agent shall deliver to each Lender and the Lessee a new
SCHEDULE 2.2 to the Participation Agreement, revised to reflect the
relevant information for such new Lender and the Commitment of such new
Lender (and the revised Commitment of the transferor Lender if it shall
not have transferred its entire interest); and
(c) EMPLOYEE BENEFIT PLANS. No Lender may make any such assignment,
conveyance or transfer to any Person that cannot make the representation
in SECTION 4.3(C); and
(d) LIMITATION ON LENDER TRANSFERS. Any Lender proposing to transfer
its interest may not make any such assignment, conveyance or transfer at
any time when there shall have occurred and be continuing any material
default of such Lender to the Lessee under this Participation Agreement
unless the Lessee shall consent to such transfer; and
(e) MINIMUM AMOUNT OF LENDER COMMITMENT. No Lender may make any such
assignment, conveyance or transfer if, as a consequence thereof, the
transferor (if such Lender retains any part of its Commitment) or
transferee Lender would have a Commitment (assuming for this purpose no
funding by such Lender) of less than $2,000,000.
SECTION 6.4 RATE QUOTATIONS. Upon the Lessee giving notice pursuant to
SECTION 5.5 of the Lease of its desire to renew the Lease for a first or second
Renewal Term, each Participant may, in its sole and absolute discretion, within
30 days thereafter, provide the Lessee with the written quotation described in
Section 5.1 of the Lease.
SECTION 7
INDEMNIFICATION
SECTION 7.1 GENERAL INDEMNIFICATION. The Lessee and the Transok Guarantor
jointly and severally agree, whether or not any of the transactions contemplated
hereby shall be consummated, to assume liability for, and to indemnify, protect,
defend, save and keep harmless each Indemnitee, on an After-Tax Basis, from and
against, any and all Claims that may be
24
imposed on, incurred by or asserted against such Indemnitee (whether because of
action or omission by such Indemnitee or otherwise), whether or not such
Indemnitee shall also be indemnified as to any such Claim by any other Person
and whether or not such Claim arises or accrues prior to the Closing Date or
after the Lease Termination Date, in any way relating to or arising out of: (a)
any of the Operative Documents or the Operative Loan Documents or any of the
transactions contemplated thereby, and any amendment, modification or waiver in
respect thereof; or (b) the Leased Property or any part thereof or interest
therein; (c) the purchase, design, construction, preparation, installation,
inspection, delivery, non-delivery, acceptance, rejection, ownership,
management, possession, operation, rental, lease, sublease, repossession,
maintenance, repair, alteration, modification, addition or substitution,
storage, transfer or title, redelivery, use, financing, refinancing,
disposition, operation, condition, sale (including, without limitation, any sale
pursuant to Section 11.1 of the Lease), return or other disposition of all or
any part or any interest in the Leased Property or the imposition of any Lien
(or incurring of any liability to refund or pay over any amount as a result of
any Lien) thereon, including, without limitation: (1) Claims or penalties
arising from any violation of law or in tort (strict liability or otherwise),
(2) latent or other defects with respect to the Leased Property, whether or not
discoverable, (3) any Claim based upon a violation or alleged violation of the
terms of any restriction, easement, condition or covenant or other matter
affecting title to the Leased Property, (4) the making of any Alterations in
violation of any standards imposed by any insurance policies required to be
maintained by Lessee pursuant to the Lease which are in effect at any time with
respect to the Leased Property or any part thereof, (5) any Claim for patent,
trademark or copyright infringement with respect to the Leased Property, and (6)
Claims arising from any public improvements with respect to the Leased Property
resulting in any change or special assessments being levied against the Leased
Property or any plans existing or proposed on the Closing Date to widen, modify
or realign any street or highway adjacent to the Leased Property, or any Claim
for utility "tap-in" fees; (d) the offer, issuance, sale or delivery of the
Notes; (e) the breach or alleged breach by the Lessee or the Transok Guarantor
or any other Obligor of any representation or warranty made by it or deemed made
by it in any Operative Document or any certificate required to be delivered by
it in any Operative Document; (f) the retaining or employment of any broker,
finder or financial advisor by the Lessee or the Transok Guarantor or any other
Obligor to act on its behalf in connection with this Participation Agreement or
the authorization of any broker or financial adviser retained or employed by any
other Person (other than an Indemnitee or any member of its Indemnitee Group) so
to act, or the incurring of any fees or commissions to which the Lessor might be
subjected by virtue of their entering into the transactions contemplated by this
Participation Agreement; (g) the existence of any Lien on or with respect to the
Leased Property, any Fixed Rent or Additional Rent, title thereto, or any
interest therein including any Liens which arise out of the possession, use,
occupancy, construction, repair or rebuilding of the Leased Property or by
reason of labor or materials furnished or claimed to have been furnished to the
Lessee, or any of its contractors or agents or by reason of the financing of any
personalty or equipment purchased or leased by the Lessee or Alterations
constructed by the Lessee, except in all cases the Liens listed as items (a) and
(b) in the definition of Permitted Liens; or (h) any act or omission by Seller
or its Affiliates under the Purchase Agreement or Easement Agreements and any
breach of any requirement, condition, restriction or limitation in the Purchase
Agreement or the Easement
25
Agreements; PROVIDED, HOWEVER, the Lessee and the Transok Guarantor shall not be
required to indemnify any Indemnitee under this SECTION 7.1 for any of the
following: (1) any Claim to the extent resulting from the willful misconduct or
gross negligence of such Indemnitee or any member of its Indemnitee Group or the
material breach by such Indemnitee of any representation, warranty or covenant
of such Indemnitee set forth in any Operative Document, (2) any Claim resulting
from Lessor Liens which the Lessor Indemnitee Group is responsible for
discharging under the Operative Documents, (3) any dispute between any Lenders,
(4) any dispute between any Lender and either Agent, (5) any dispute between the
Lessor on the one hand and either Agent and/or any of the Lenders on the other
hand, arising from the alleged failure of the Lessor to perform any
administrative functions under the Operative Documents or the Operative Loan
Documents (including the giving of notices and the distribution of funds
received), and (6) any claims, losses or other liabilities referred to in
SECTION 7.2 (whether or not covered by SECTION 7.2). It is expressly understood
and agreed that the indemnity provided for herein shall survive the expiration
or termination of and shall be separate and independent from any remedy under
the Lease or any other Operative Document or Operative Loan Document.
SECTION 7.2 ENVIRONMENTAL INDEMNITY. Without limitation of SECTION 7.1,
the Lessee and the Transok Guarantor hereby jointly and severally agree to
indemnify, hold harmless and defend each Indemnitee from and against any and all
claims (including without limitation third party claims for personal injury or
real or personal property damage), losses (including but not limited to any loss
of value of the Leased Property), damages, liabilities, fines, penalties,
charges, administrative and judicial proceedings (including informal
proceedings) and orders, judgments, remedial action, requirements, enforcement
actions of any kind, and all reasonable and documented costs and expenses
incurred in connection therewith (including but not limited to reasonable and
documented attorneys' and/or paralegals' fees and expenses), including, but not
limited to, all costs incurred in connection with any investigation or
monitoring of site conditions or any clean-up, remedial, removal or restoration
work by any federal, state or local government agency, arising directly or
indirectly, in whole or in part, out of (i) the presence on or under the Leased
Property of any Hazardous Materials, or any releases or discharges of any
Hazardous Materials on, under, from or onto the Leased Property, (ii) any
activity, including, without limitation, construction, carried on or undertaken
on or off the Leased Property, and whether by the Lessee, the Transok Guarantor
or any predecessor in title or any employees, agents, contractors or
subcontractors of the Lessee, the Transok Guarantor or any predecessor in title,
or any other Persons (including such Indemnitee), in connection with the
handling, treatment, removal, storage, decontamination, clean-up, transport or
disposal of any Hazardous Materials that at any time are located or present on
or under or that at any time migrate, flow, percolate, diffuse or in any way
move onto or under the Leased Property, (iii) loss of or damage to any property
or the environment (including, without limitation, clean-up costs, response
costs, remediation and removal costs, cost of corrective action, costs of
financial assurance, fines and penalties and natural resource damages), or death
or injury to any Person, and all expenses associated with the protection of
wildlife, aquatic species, vegetation, flora and fauna, and any mitigative
action required by or under Environmental Laws, (iv) any claim concerning lack
of compliance with Environmental Laws with respect to the Leased Property, or
any act or
26
omission causing an environmental condition that requires remediation or would
allow any governmental agency to record a lien or encumbrance on the land
records, or (v) any residual contamination on or under the Leased Property, or
affecting any natural resources, and to any contamination of any property or
natural resources arising in connection with the generation, use, handling,
storage, transport or disposal of any such Hazardous Materials, and irrespective
of whether any of such activities were or will be undertaken in accordance with
applicable laws, regulations, codes and ordinances; in any case arising or
occurring (w) prior to or during the Lease Term, (x) at any time during which
the Lessee or the Transok Guarantor or any Affiliate thereof owns any interest
in or otherwise occupies or possesses the Leased Property or any portion
thereof, (y) during any period after and during the continuance of any Event of
Default, or (z) during any period of six months following the date an Indemnitee
takes possession of the Leased Property, PROVIDED, HOWEVER, the Lessee and the
Transok Guarantor shall not be required to indemnify any Indemnitee under this
SECTION 7.2 for any Claim to the extent resulting from the willful misconduct or
gross negligence of such Indemnitee. It is expressly understood and agreed that
the indemnity provided for herein shall survive the expiration or termination of
and shall be separate and independent from any remedy under the Lease or any
other Operative Document or Operative Loan Document.
SECTION 7.3 PROCEEDINGS IN RESPECT OF CLAIMS. With respect to any amount
that the Lessee or the Transok Guarantor is requested by an Indemnitee to pay by
reason of SECTION 7.1 or 7.2, such Indemnitee shall, if so requested by the
Lessee or the Transok Guarantor and prior to any payment, submit such additional
information to the Lessee or the Transok Guarantor as the Lessee or the Transok
Guarantor may reasonably request and which is in the possession of such
Indemnitee to substantiate properly the requested payment.
In case any action, suit or proceeding shall be brought against any
Indemnitee, such Indemnitee shall notify the Lessee or the Transok Guarantor of
the commencement thereof, and the Lessee or the Transok Guarantor shall be
entitled, at its expense, to participate in, and, to the extent that the Lessee
or the Transok Guarantor desires to, assume and control the defense thereof;
PROVIDED, HOWEVER, that the Lessee or the Transok Guarantor shall have
acknowledged in writing its obligation to fully indemnify such Indemnitee in
respect of such action, suit or proceeding, and, the Lessee shall keep such
Indemnitee fully apprised of the status of such action suit or proceeding and
shall provide such Indemnitee with all information with respect to such action
suit or proceeding as such Indemnitee shall reasonably request, and, PROVIDED
FURTHER, that the Lessee and the Transok Guarantor shall not be entitled to
assume and control the defense of any such action, suit or proceeding if and to
the extent that, (A) in the reasonable opinion of such Indemnitee, (x) such
action, suit or proceeding involves any possibility of imposition of criminal
liability or any material risk of material civil liability on such Indemnitee or
will involve a material risk of the sale, forfeiture or loss of, or the creation
of any Lien (other than a Permitted Lien) on the Leased Property or any part
thereof unless the Lessee and the Transok Guarantor shall have posted a bond or
other security satisfactory to the relevant Indemnitees in respect to such risk
or (y) the control of such action, suit or proceeding would involve an actual or
potential conflict of interest, (B) such proceeding involves Claims not fully
indemnified by the Lessee and the Transok Guarantor which the Lessee and the
Transok Guarantor and the
27
Indemnitee have been unable to sever from the indemnified claim(s), or (C) such
proceedings involve Claims for criminal liability; (D) an Event of Default has
occurred and is continuing. The Indemnitee may participate in a reasonable
manner at its own expense and with its own counsel in any proceeding conducted
by the Lessee or the Transok Guarantor in accordance with the foregoing. The
Lessee and the Transok Guarantor shall not enter into any settlement or other
compromise with respect to any Claim which is entitled to be indemnified under
SECTION 7.1 or 7.2 without the prior written consent of the Indemnitee which
consent shall not be unreasonably withheld.
Each Indemnitee shall at the expense of the Lessee and the Transok
Guarantor supply the Lessee and the Transok Guarantor with such information and
documents reasonably requested by the Lessee and the Transok Guarantor as are
necessary or advisable for the Lessee to participate in any action, suit or
proceeding to the extent permitted by SECTION 7.1 or 7.2. Unless an Event of
Default shall have occurred and be continuing, no Indemnitee shall enter into
any settlement or other compromise with respect to any Claim which is entitled
to be indemnified under SECTION 7.1 or 7.2 without the prior written consent of
the Lessee or the Transok Guarantor, which consent shall not be unreasonably
withheld, unless such Indemnitee waives its right to be indemnified under
SECTION 7.1 or 7.2 with respect to such Claim, unless such Claim involves
potential criminal liability.
Upon payment in full of any Claim by the Lessee or the Transok Guarantor,
as the case may be, pursuant to SECTION 7.1 or 7.2 to or on behalf of an
Indemnitee, the Lessee or the Transok Guarantor, as the case may be, without any
further action, shall be subrogated to any and all claims that such Indemnitee
may have relating thereto (other than claims in respect of insurance policies
maintained by such Indemnitee at its own expense), and such Indemnitee shall
execute such instruments of assignment and conveyance, evidence of claims and
payment and such other documents, instruments and agreements as may be necessary
to preserve any such claims and otherwise cooperate with the Lessee or the
Transok Guarantor, as the case may be, and give such further assurances as are
necessary or advisable to enable the Lessee or the Transok Guarantor, as the
case may be, vigorously to pursue such claims.
Any amount payable to an Indemnitee pursuant to SECTION 7.1 or 7.2 shall
be paid to such Indemnitee promptly upon receipt of a written demand therefor
from such Indemnitee, accompanied by evidence of Indemnitee's payment of, or
obligation to pay, the amount so payable, and a written statement describing in
reasonable detail the basis for such indemnity and the computation of the amount
so payable and, if requested by the Lessee or the Transok Guarantor, as the case
may be, such determination shall be verified by a nationally recognized
independent accounting firm mutually acceptable to the Lessee or the Transok
Guarantor, as the case may be, and the Indemnitee at the expense of the Lessee
and the Transok Guarantor.
SECTION 7.4 GENERAL TAX INDEMNITY. (a) Except as otherwise provided in
this SECTION 7.4, the Lessee shall pay on an After-Tax Basis, and on written
demand shall indemnify and hold each Tax Indemnitee harmless from and against,
any and all fees (including, without limitation, documentation, recording,
license and registration fees), taxes (including, without
28
limitation, income, gross receipts, sales, rental, use, turnover, value-added,
property, excise and stamp taxes), levies, imposts, duties, charges, assessments
or withholdings of any nature whatsoever, together with any penalties, fines or
interest thereon or additions thereto (any of the foregoing being referred to
herein as "TAXES" and individually as a "TAX" (for the purposes of this SECTION
7.4, the definition of "Taxes" includes amounts imposed on, incurred by, or
asserted against each Tax Indemnitee as the result of any prohibited
transaction, within the meaning of Section 406 or 407 of ERISA or Section
4975(c) of the Code, arising out of the transactions contemplated hereby or by
any other Operative Document or Operative Loan Document)) imposed on or with
respect to any Tax Indemnitee, the Lessee, the Leased Property or any portion
thereof or the Leased Property, or any sublessee or user thereof, by the United
States or by any state or local government or other taxing authority in the
United States in connection with or in any way relating to (i) the acquisition,
financing, mortgaging, construction, preparation, installation, inspection,
delivery, non-delivery, acceptance, rejection, purchase, ownership, possession,
rental, lease, sublease, maintenance, repair, storage, transfer of title,
redelivery, use, operation, condition, sale, return or other application or
disposition of all or any part of the Leased Property or the imposition of any
Lien (or incurrence of any liability to refund or pay over any amount as a
result of any Lien) thereon, (ii) Fixed Rent or Additional Rent or the receipts
or earnings arising from or received with respect to the Leased Property or any
part thereof, or any interest therein or any applications or dispositions
thereof, (iii) any other amount paid or payable pursuant to the Notes or any
other Operative Documents or Operative Loan Documents, (iv) the Leased Property,
or any part thereof or any interest therein, (v) all or any of the Operative
Documents or Operative Loan Documents, any other documents contemplated thereby,
any amendments and supplements thereto, and (vi) otherwise with respect to or in
connection with the transactions contemplated by the Operative Documents.
(b) EXCLUSIONS FROM GENERAL TAX INDEMNITY. SECTION 7.4(A) shall not
apply to: (i) Taxes on, based on, or measured by or with respect to net income
of the Lessor and the Lenders (including, without limitation, minimum Taxes,
capital gains Taxes, Taxes on or measured by items of tax preference or
alternative minimum Taxes) other than (A) any such Taxes that are, or are in the
nature of, sales, use, license, rental or property Taxes, (B) withholding Taxes
imposed by the United States (i) on payments with respect to the Notes, to the
extent imposed by reason of a change in Applicable Law occurring after the date
on which the holder of such Note became the holder of such Note or (ii) on Rent,
to the extent the net payment of Rent after deduction of such withholding Taxes
would be less than amounts currently payable with respect to the Notes, and (C)
any increase in any franchise taxes based on or otherwise measured by net
income, estate, inheritance, transfer, income tax or gross income or gross
receipts tax in lieu of net income over the term of the Lease, net of any
decrease in such taxes realized by such Tax Indemnitee, to the extent that such
tax increase or decrease would not have occurred if on each Closing Date the
Lessor and the Lenders had advanced funds to the Lessee in the form of a loan
secured by the Leased Property in an amount equal to the Funded Amounts funded
on such Closing Date, with debt service for such loan equal to the Fixed Rent
payable on each Rent Payment Date and a principal balance at the maturity of
such loan in an amount equal to the Funded Amounts at the end of the Lease Term;
(ii) Taxes on, based on, or in the nature of or measured by Taxes on doing
business, business privilege,
29
capital, capital stock, net worth, or mercantile license or similar taxes other
than (A) any increase in such Taxes imposed on such Tax Indemnitee by the State
of Oklahoma, net of any decrease in such taxes realized by such Tax Indemnitee,
to the extent that such tax increase or decrease would not have occurred if the
Lessor and the Lenders had advanced funds to the Lessee in the form of a loan
secured by the Leased Property in an amount equal to the Funded Amounts, with
debt service for such loan equal to the Fixed Rent payable on each Rent Payment
Date and a principal balance at the maturity of such loan in an amount equal to
the Funded Amounts at the end of the Lease Term, or (B) any Taxes that are or
are in the nature of sales, use, rental, license or property Taxes; (iii) Taxes
that are based on, or measured by, the fees or other compensation received by a
Person acting as Lessor, Administrative Agent or Documentation Agent (in their
respective individual capacities); (iv) Taxes that result from any act, event or
omission, or are attributable to any period of time, that occurs after the
earliest of (A) the expiration of the Lease Term with respect to the Leased
Property and, if the Leased Property is required to be returned to the Lessor in
accordance with the Lease, such return and (B) the discharge in full of the
Lessee's obligations to pay the Lease Balance, or any amount determined by
reference thereto, with respect to the Leased Property and all other amounts due
under the Lease, unless such Taxes relate to acts, events or matters occurring
prior to the earliest of such times or are imposed on or with respect to any
payments due under the Operative Documents or Operative Loan Documents after
such expiration or discharge; (v) Taxes imposed on a Tax Indemnitee that result
from any voluntary sale, assignment, transfer or other disposition by such Tax
Indemnitee or any related Tax Indemnitee of any interest in the Leased Property
or any part thereof, or any interest therein or any interest or obligation
arising under the Operative Documents or Operative Loan Documents or any Notes,
or from any sale, assignment, transfer or other disposition of any interest in
such Tax Indemnitee or any related Tax Indemnitee, it being understood that each
of the following shall not be considered a voluntary sale: (A) any substitution,
replacement or removal of any of the property by the Lessee shall not be treated
as a voluntary action of any Tax Indemnitee, (B) any sale or transfer resulting
from the exercise by the Lessee of any termination option, any purchase option
or sale option, (C) any sale or transfer while an Event of Default shall have
occurred and be continuing under the Lease, and (D) any sale or transfer
resulting from the Lessor's exercise of remedies under the Lease; (vi) any Tax
which is being contested in accordance with the provisions of SECTION 7.4(B),
during the pendency of such contest; (vii) any Tax that is imposed on an
Indemnified Person as a result of such Tax Indemnitee's gross negligence or
willful misconduct (other than gross negligence or willful misconduct imputed to
Lessor solely by reason of its interest in the Leased Property); (viii) any Tax
that results from a Tax Indemnitee engaging, with respect to the Leased
Property, in transactions other than those permitted by the Operative Documents
or the Operative Loan Documents; (ix) to the extent any interest, penalties or
additions to tax result in whole or in part from the failure of a Tax Indemnitee
to file a return that it is required to file in a proper and timely manner,
unless such failure (A) results from the transactions contemplated by the
Operative Documents or the Operative Loan Documents in circumstances where
Lessee did not give timely notice to Lessor (and Lessor otherwise had no actual
knowledge) of such filing requirement that would have permitted a proper and
timely filing of such return or (B) results from the failure of Lessee to supply
information necessary for the proper and timely filing of such return that was
not in the possession of Lessor.
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(c) CONTESTS. If any Claim shall be made against any Tax Indemnitee
or if any proceeding shall be commenced against any Tax Indemnitee (including a
written notice of such proceeding) for any Taxes as to which the Lessee may have
an indemnity obligation pursuant to SECTION 7.4, or if any Tax Indemnitee shall
determine that any Taxes as to which the Lessee may have an indemnity obligation
pursuant to SECTION 7.4 may be payable, such Tax Indemnitee shall promptly give
written notice thereof to the Lessee. The Lessee shall be entitled, at its
expense, to participate in, and, to the extent that the Lessee desires to,
assume and control the defense thereof; PROVIDED, HOWEVER, that the Lessee shall
have acknowledged in writing if the contest is unsuccessful its obligation to
fully indemnify such Tax Indemnitee in respect of such action, suit or
proceeding; and, PROVIDED FURTHER, that the Lessee shall not be entitled to
assume and control the defense of any such action, suit or proceeding (but the
Tax Indemnitee shall then contest, at the sole cost and expense of the Lessee,
on behalf of the Lessee) if and to the extent that, (A) in the reasonable
opinion of such Tax Indemnitee, such action, suit or proceeding involves any
meaningful risk of imposition of criminal liability or any material risk of
material civil liability on such Tax Indemnitee or will involve a material risk
of the sale, forfeiture or loss of, or the creation of any Lien (other than a
Permitted Lien) on the Leased Property or any part thereof unless the Lessee
shall have posted a bond or other security satisfactory to the relevant Tax
Indemnities in respect to such risk, (B) such proceeding involves Claims not
fully indemnified by the Lessee which the Lessee and the Tax Indemnitee have
been unable to sever from the indemnified claim(s), (C) an Event of Default has
occurred and is continuing, (D) such action, suit or proceeding involves matters
which extend beyond or are unrelated to the matters for which indemnity is
provided under SECTION 7.4, and if determined adversely, could be materially
detrimental to the interests of such Tax Indemnitee notwithstanding
indemnification by the Lessee or (E) such action, suit or proceeding involves
the federal or any state income tax liability of the Tax Indemnitee. With
respect to any contests controlled by a Tax Indemnitee, (i) if such contest
relates to the federal or any state income tax liability of such Tax Indemnitee,
such Tax Indemnitee shall be required to conduct such contest only if Lessee
shall have provided to such Tax Indemnitee an opinion of independent tax counsel
selected by the Lessee and reasonably satisfactory to the Tax Indemnitee stating
that a reasonable basis exists to contest such claim or (ii) in the case of an
appeal of an adverse determination of any contest relating to any Taxes, an
opinion of such counsel to the effect that such appeal is more likely than not
to be successful, PROVIDED, HOWEVER, such Tax Indemnitee shall in no event be
required to appeal an adverse determination to the United States Supreme Court.
The Tax Indemnitee may participate in a reasonable manner at its own expense and
with its own counsel in any proceeding conducted by the Lessee in accordance
with the foregoing. The Lessee may participate in a reasonable manner at its own
expense and with its own counsel in any proceeding conducted by Tax Indemnitee
in accordance with the foregoing.
Each Tax Indemnitee shall at the Lessee's expense supply the Lessee with
such information and documents reasonably requested by the Lessee as are
necessary or advisable for the Lessee to participate in any action, suit or
proceeding to the extent permitted by this SECTION 7.4. Unless an Event of
Default shall have occurred and be continuing, no Tax Indemnitee shall enter
into any settlement or other compromise with respect to any Claim which is
entitled to be indemnified under this SECTION 7.4 without the prior written
consent of the Lessee, which consent
31
shall not be unreasonably withheld, unless such Tax Indemnitee waives its right
to be indemnified under this SECTION 7.4 with respect to such Claim.
Notwithstanding anything contained herein to the contrary, (a) a Tax
Indemnitee will not be required to contest (and the Lessee shall not be
permitted to contest) a claim with respect to the imposition of any Tax if such
Tax Indemnitee shall waive its right to indemnification under this SECTION 7.4
with respect to such claim (and any related claim with respect to other taxable
years the contest of which is precluded as a result of such waiver) and (b) no
Tax Indemnitee shall be required to contest any claim if the subject matter
thereof shall be of a continuing nature and shall have previously been decided
adversely, unless there has been a change in law which in the opinion of
Lessee's counsel creates substantial authority for the success of such contest.
Each Tax Indemnitee and the Lessee shall consult in good faith with each other
regarding the conduct of such contest controlled by either.
(d) REIMBURSEMENT FOR TAX SAVINGS. If (x) a Tax Indemnitee shall
obtain a credit or refund of any Taxes paid by Lessee pursuant to this SECTION
7.4 or (y) by reason of the incurrence or imposition of any Tax for which a Tax
Indemnitee is indemnified hereunder or any payment made to or for the account of
such Tax Indemnitee by the Lessee pursuant to this SECTION 7.4, such Tax
Indemnitee at any time realizes a reduction in any Taxes for which Lessee is not
required to indemnify such Tax Indemnitee pursuant to this SECTION 7.4, which
reduction in Taxes was not taken into account in computing such payment by the
Lessee to or for the account of such Tax Indemnitee, then such Tax Indemnitee
shall promptly pay to the Lessee (xx) the amount of such credit or refund,
together with the amount of any interest received by such Tax Indemnitee on
account of such credit or refund or (yy) an amount equal to such reduction in
Taxes, as the case may be; PROVIDED that no such payment shall be made so long
as an Event of Default shall have occurred and be continuing and, PROVIDED,
FURTHER, that the amount payable to the Lessee by any Tax Indemnitee pursuant to
this SECTION 7.4(D) shall not at any time exceed the aggregate amount of all
indemnity payments made by the Lessee under this SECTION 7.4 to such Tax
Indemnitee and all related Tax Indemnitees with respect to the Taxes which gave
rise to a credit or refund or with respect to the Tax which gave rise to a
reduction in Taxes less the amount of all prior payments made to the Lessee by
such Tax Indemnitee and related Tax Indemnitees under this SECTION 7.4(D). Each
Tax Indemnitee agrees to act in good faith to claim such refunds and other
available Tax benefits, and take such other actions as may be reasonable to
minimize any payment due from the Lessee pursuant to this SECTION 7.4 and to
maximize the amount of any Tax savings available to it. The disallowance or
reduction of any credit, refund or other tax savings with respect to which a Tax
Indemnitee has made a payment to the Lessee under this SECTION 7.4(D) shall be
treated as a Tax for which the Lessee is obligated to indemnify such Tax
Indemnitee hereunder.
(e) PAYMENTS. Any Tax indemnifiable under this SECTION 7.4 shall be
paid directly when due to the applicable taxing authority if direct payment is
practicable and permitted. If direct payment to the applicable taxing authority
is not permitted or is otherwise not made, any amount payable to a Tax
Indemnitee pursuant to SECTION 7.4 shall be paid within thirty (30) days after
receipt of a written demand therefor from such Tax Indemnitee
32
accompanied by a written statement describing in reasonable detail the amount so
payable, but not before the date that the relevant Taxes are due. Any payments
made pursuant to SECTION 7.4 shall be made directly to the Tax Indemnitee
entitled thereto or the Lessee, as the case may be, in immediately available
funds at such bank or to such account as specified by the payee in written
directions to the payor, or, if no such direction shall have been given, by
check of the payor payable to the order of the payee by certified mail, postage
prepaid at its address as set forth in this Participation Agreement. Upon the
request of any Tax Indemnitee with respect to a Tax that the Lessee is required
to pay, Lessee shall furnish to such Tax Indemnitee the original or a certified
copy of a receipt for Lessee's payment of such Tax or, if a receipt is not
available, such other evidence of payment as is reasonably acceptable to such
Tax Indemnitee.
(f) REPORTS. If the Lessee knows of any report, return or statement
required to be filed with respect to any Taxes that are subject to
indemnification under this SECTION 7.4, the Lessee shall, if the Lessee is
permitted by Applicable Law, timely file such report, return or statement (and,
to the extent permitted by law, show ownership of the Leased Property in the
Lessee); PROVIDED, HOWEVER, that if the Lessee is not permitted by Applicable
Law or does not have access to the information required to file any such report,
return or statement, the Lessee will promptly so notify the appropriate Tax
Indemnitee, in which case Tax Indemnitee will file such report. In any case in
which the Tax Indemnitee will file any such report, return or statement, Lessee
shall, upon written request of such Tax Indemnitee, provide such Tax Indemnitee
with such information as is reasonably available to the Lessee.
(g) VERIFICATION. At the Lessee's request, the amount of any
indemnity payment by the Lessee or any payment by a Tax Indemnitee to the Lessee
pursuant to this SECTION 7.4 shall be verified and certified by an independent
public accounting firm selected by the Lessee and reasonably acceptable to the
Tax Indemnitee. Unless such verification shall disclose an error in Lessee's
favor of 15% or more (in which event the Tax Indemnitee shall bear the costs of
such verification), the costs of such verification shall be borne by the Lessee.
In no event shall the Lessee have the right to review the Tax Indemnitee's tax
returns or receive any other confidential information from the Tax Indemnitee in
connection with such verification. The Tax Indemnitee agrees to cooperate with
the independent public accounting firm performing the verification and to supply
such firm with all information reasonably necessary to permit it to accomplish
such verification, PROVIDED that the information provided to such firm by such
Tax Indemnitee shall be for its confidential use. The parties agree that the
sole responsibility of the independent public accounting firm shall be to verify
the amount of a payment pursuant to this Participation Agreement and that
matters of interpretation of this Participation Agreement are not within the
scope of the independent accounting firm's responsibilities.
SECTION 7.5 INCREASED COSTS, ETC.
(a) INCREASED CAPITAL COSTS. If any Regulatory Change imposes,
modifies, or deems applicable any capital adequacy, capital maintenance, or
similar requirement (including a request or requirement which affects the manner
in which any Participant allocates capital resources to its commitments,
including its Commitments hereunder) and as a result thereof, in
33
the opinion of such Participant, the rate of return on such Participant's
capital as a consequence of its Commitments or the Funded Amounts made available
by such Participant is reduced to a level below that which such Participant
could have achieved but for such circumstances, then and in each such case upon
notice from time to time by such Participant to the Lessee, the Lessee shall
within (15) days after demand (which demand shall be accomplished by a
certificate setting forth the basis of such demand and including calculations in
reasonable detail), pay (without duplication of costs paid pursuant to SECTIONS
7.5(D) and 7.5(F)) to such Participant such additional amount or amounts as
shall compensate such Participant for such reduction in rate of return. Each
Participant, upon determining in good faith that any additional amounts are
payable pursuant to this SECTION 7.5(A), will give prompt written notice thereof
to the Lessee with a copy to the Administrative Agent, PROVIDED that the failure
to give any such notice shall not release or diminish the Lessee's obligations
to pay additional amounts pursuant to this SECTION 7.5(A); PROVIDED FURTHER,
HOWEVER, that the Lessee shall not be obligated to pay additional amounts
attributable to such reduction under this SECTION 7.5(A) in respect of time
periods more than 180 days prior to the receipt by the Lessee of the certificate
referred to in the preceding sentence. Any certificate of any Participant as to
any such additional amount or amounts (including calculations thereof in
reasonable detail) shall be rebuttable presumptive evidence of such cost and
amount. In determining such amount, any Participant may use any method of
averaging and attribution that it (in its sole and absolute discretion) shall
deem applicable.
(b) EURODOLLAR DEPOSITS UNAVAILABLE OR EURODOLLAR INTEREST RATE
UNASCERTAINABLE. In the event that, prior to any Eurodollar Period Commencement
Date in respect of any Eurodollar Funded Amounts, the Administrative Agent shall
have determined (which determination shall be conclusive and binding on all
parties hereto) that Dollar deposits of the relevant amount and for the relevant
Eurodollar Interest Period for such Eurodollar Funded Amounts are not available
to the Participants in the interbank Eurodollar market or that, by reason of
circumstances affecting the interbank Eurodollar market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Interest Rate applicable to
such Eurodollar Interest Period or the Required Participants advise the
Administrative Agent that the Eurodollar Interest Rate as determined by the
Administrative Agent will not adequately and fairly reflect the cost to such
Required Participants of maintaining or funding Eurodollar Funded Amounts for
the relevant Eurodollar Interest Period, the Administrative Agent shall promptly
give notice of such determination to the Lessee and the Participants and (i) any
outstanding Eurodollar Funded Amounts (unless the Administrative Agent
subsequent to such determination of unavailability shall determine that such
Dollar deposits are again available) shall be converted, without any notice to
or from the Lessee, into Domestic Funded Amounts on the last day of the then
current Eurodollar Interest Period for any outstanding Funded Amounts, and (ii)
the obligation of the Participants to make or maintain Eurodollar Funded Amounts
shall forthwith terminate, provided that if circumstances subsequently change so
that the Participants shall not continue to be so affected, the Participants
shall by notice to the Lessee reinstate their obligations to make, convert,
maintain or continue Domestic Funded Amounts as, or into, Eurodollar Funded
Amounts.
34
(c) CHANGES IN LAW RENDERING EURODOLLAR LENDING UNLAWFUL. In the
event that any change in (including the adoption of any new) applicable Laws or
regulations, or in the interpretation or application thereof by any governmental
or other regulatory authority charged with the administration thereof, should
make it unlawful for any Participant to make, continue or maintain any Funded
Amount as, or to convert any Funded Amount to, a Eurodollar Funded Amount, the
Commitment of such Participant to make, continue and maintain any Funded Amount
as, and to convert any Funded Amount to, a Eurodollar Funded Amount shall, upon
the happening of such event, forthwith terminate and such Participant shall, by
written notice to the Lessee, declare that such Commitment has so terminated;
and if any such change or adoption shall make it unlawful for such Participant
to maintain any Eurodollar Funded Amount made by it hereunder, such Participant
shall, upon the happening of such event, notify the Lessee thereof in writing
stating the reasons therefor, and the Lessee shall, at the maturity thereof (or
such earlier date as may be required by the relevant law, regulation,
interpretation or application), repay such Eurodollar Funded Amount with respect
to such Participant in full. Upon the happening of any such event, such
Eurodollar Funded Amount shall automatically convert to a Domestic Funded Amount
at the end of the current Eurodollar Interest Period with respect thereto (or
such earlier date as may be required by the relevant law, regulation,
interpretation or application) provided that if circumstances subsequently
change so that such Participant shall not continue to be so affected, such
Participant shall by notice to the Lessee reinstate its obligations to make,
convert, maintain or continue Funded Amounts as, or into, Eurodollar Funded
Amounts.
(d) SPECIAL FEES IN RESPECT OF RESERVE REQUIREMENTS. With respect to
Eurodollar Funded Amounts, the Lessee agrees to pay to each Participant on
appropriate Rent Payment Dates, as additional interest or additional Yield, such
amounts as will compensate such Participant for any cost to such Participant,
from time to time, of any reserve, special deposit, special assessment or
similar capital requirements against assets of, deposits with or for the account
of, or credit extended by, such Participant which are imposed on, or deemed
applicable by, such Participant, from time to time, under or pursuant to (i) any
Law, treaty, regulation or directive now or hereafter in effect (including,
without limitation, Regulation D of the Board of Governors of the Federal
Reserve System but excluding any reserve requirement included in the definition
of Eurodollar Interest Rate in APPENDIX A), (ii) any interpretation or
application thereof by any governmental authority, agency or instrumentality
charged with the administration thereof or by any court, central bank or other
fiscal, monetary or other authority having jurisdiction over the Eurodollar
Funded Amounts or the office of such Participant where its Eurodollar Funded
Amounts are lodged, or (iii) any requirement imposed or requested by any court,
governmental authority, agency or instrumentality or central bank, fiscal,
monetary or other authority, whether or not having the force of law. A
certificate as to the amount of any such cost or any change therein (including
calculations, in reasonable detail, showing how such Participant computed such
cost or change) shall be promptly furnished by such Participant to the Lessee
and, in the absence of manifest error, shall be rebuttable presumptive evidence
of such cost or change. The Lessee will not be responsible for paying any
amounts pursuant to this SECTION 7.5(D) accruing prior to 180 days prior to the
receipt by the Lessee of the certificate referred to in the preceding sentence.
Within fifteen (15) days after such certificate is furnished
35
to the Lessee, the Lessee will pay directly to such Participant such additional
amount or amounts as will compensate such Participant for such cost or change.
(e) REASONABLE EFFORTS. Each Participant agrees that it will use all
reasonable efforts in order to avoid or to minimize, as the case may be, the
payment by the Lessee of any additional amounts under SECTION 7.5(D) or SECTION
7.5(F) or the subjecting of any payment by the Lessee to any withholding tax,
and that it will, as promptly as practicable, notify the Lessee of the existence
of any event which will require the payment by the Lessee of any such additional
amounts or the subjecting of any payment by the Lessee to any withholding tax;
PROVIDED, HOWEVER, that the foregoing shall not in any way affect the rights of
any Participant or the obligations of the Lessee under said Sections, and
PROVIDED FURTHER that no Participant shall be obligated to make its Eurodollar
Funded Amounts hereunder at any office located in the United States of America,
and PROVIDED FURTHER that no Participant shall be required to use any such
efforts that are disadvantageous to such Participant in the sole opinion of such
Participant.
(f) INCREASED COSTS. If (i) Regulation D of the Board of Governors
of the Federal Reserve System, or (ii) after the date hereof, the adoption of
any applicable Law or treaty or any change in any applicable Law or treaty or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Participant (or any Eurodollar
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency: (i) shall subject any
Participant (or any Eurodollar Office of such Participant) to any tax, levy,
impost, fee, duty, assessment or other charge with respect to its Eurodollar
Funded Amounts, its Notes or its obligation to make Eurodollar Funded Amounts,
or shall change the basis of taxation of payments to any Participant of the
principal of or interest or Yield on its Eurodollar Funded Amounts or any other
amounts due under this Agreement or any other Operative Document or Operative
Loan Document in respect of its Eurodollar Funded Amounts or its obligation to
make Funded Amounts (except for changes in the rate of tax imposed on or
measured by the overall net income or receipts of such Participant or its
Eurodollar Office imposed by the jurisdiction in which such Participant's
principal office or its Eurodollar Office is located); or (ii) shall impose,
modify or deem applicable any reserve (including, without limitation, any
reserve imposed by the Board of Governors of the Federal Reserve System, but
excluding any reserve included in the determination of the Eurodollar Interest
Rate pursuant to APPENDIX A), special deposit, special assessment or similar
capital requirement against assets of, deposits with or for the account of, or
credit extended by, any Participant (or any Eurodollar Office of such
Participant); or (iii) shall impose on any Participant (or its Eurodollar
Office) any other condition affecting this Agreement or any other Operative
Document or Operative Loan Document, its Eurodollar Funded Amounts, its Notes or
its obligation to make Funded Amounts, and the result of any of the foregoing is
to increase the cost to (or in the case of Regulation D referred to above, to
impose a cost on) such Participant (or any Eurodollar Office of such
Participant) of making or maintaining any Eurodollar Funded Amount, or to reduce
the amount of any sum received or receivable by such Participant (or any
Eurodollar Office of such Participant) under this Agreement or under its Notes
with respect thereto, then within fifteen (15) days after demand by such
Participant (which
36
demand shall be accompanied by a certificate setting forth the basis of such
demand and including calculations in reasonable detail), the Lessee shall pay
directly to such Participant such additional amount or amounts as will
compensate such Participant for such costs or expenses. The Lessee will not be
responsible for paying any amounts pursuant to this SECTION 7.5(F) accruing
prior to 180 days prior to the receipt by the Lessee of the certificate referred
to in the preceding sentence. Any certificate as to any such cost or expense
submitted by such Participant to the Lessee shall be rebuttable presumptive
evidence of such cost or expense. In determining such amount, any Participant
may use any method of averaging and attribution that it (in its sole and
absolute discretion) shall deem applicable.
(g) DISCRETION OF THE PARTICIPANTS AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement to the contrary, each
Participant shall be entitled to fund and maintain its funding of all or any
part of its Funded Amounts in any manner it sees fit, it being understood,
however, that for the purposes of this Participation Agreement and each other
Operative Document and Operative Loan Document all determinations hereunder
shall be made as if such Participant had actually funded and maintained each
Eurodollar Funded Amount during each Eurodollar Interest Period for such
Eurodollar Funded Amount through the purchase of deposits having a maturity
corresponding to such Eurodollar Interest Period and bearing an interest rate
equal to the Eurodollar Interest Rate for such Eurodollar Interest Period. It is
understood by the parties hereto that this SECTION 7.5(G) is not intended to,
nor shall it be construed so as to, relieve any Participant of any obligation to
make Funded Amounts available hereunder pursuant to the other provisions of this
Agreement.
(h) EURODOLLAR FUNDED AMOUNT-RELATED INDEMNIFICATION PROVISIONS.
UPON DEMAND BY ANY PARTICIPANT, THE LESSEE SHALL INDEMNIFY SUCH PARTICIPANT
AGAINST ANY ACTUAL LOSS OR EXPENSE WHICH SUCH PARTICIPANT MAY SUSTAIN OR INCUR
(BUT NOT ANY PENALTY OR PREMIUM), AS A CONSEQUENCE OF (I) THE LESSEE'S FAILURE
TO PAY RENT WITH RESPECT TO ANY EURODOLLAR FUNDED AMOUNTS ON THE DUE DATE
THEREOF, (II) ANY PAYMENT OR PREPAYMENT (MANDATORY OR OPTIONAL) OF RENT WITH
RESPECT TO A EURODOLLAR FUNDED AMOUNT BY THE LESSEE ON ANY DATE OTHER THAN ON
THE LAST DAY OF ANY RELEVANT EURODOLLAR INTEREST PERIOD, (III) ANY FAILURE BY
THE LESSEE TO PREPAY RENT WITH RESPECT TO A EURODOLLAR FUNDED AMOUNT ON THE DATE
FOR SUCH PREPAYMENT SPECIFIED IN THE RELEVANT NOTICE OF PREPAYMENT MADE BY THE
LESSEE TO THE ADMINISTRATIVE AGENT, (IV) ANY CONVERSION ON ANY DATE OTHER THAN
ON THE LAST DAY OF ANY RELEVANT EURODOLLAR INTEREST PERIOD BY REASON OF THE
OPERATION OF SECTION 7.5(B) OR 7.5(C), OR (V) SUCH PARTICIPANT'S BEING REPLACED
PURSUANT TO SECTION 7.5(F), INCLUDING IN ALL INSTANCES, BUT NOT LIMITED TO, ANY
LOSS OR EXPENSE SUSTAINED OR INCURRED IN LIQUIDATING OR EMPLOYING DEPOSITS FROM
THIRD PARTIES ACQUIRED TO EFFECT, FUND OR MAINTAIN SUCH EURODOLLAR FUNDED
AMOUNTS OR ANY PART THEREOF. A certificate from a Participant as to the amount
of any such loss or expense to such Participant, specifying the basis upon which
such loss or expense is computed (and including calculations in reasonable
detail), shall, in the absence of manifest error, be rebuttable presumptive
evidence of such loss or expense. Within fifteen (15) days after such
certificate is furnished to the Lessee, the Lessee will pay directly to such
Participant such additional amount or amounts as will compensate such
Participant for such loss or expense.
37
(i) REPLACEMENT OF PARTICIPANT ON ACCOUNT OF INCREASED COSTS,
EURODOLLAR LENDING UNLAWFUL, RESERVE REQUIREMENTS, TAXES, ETC. If any
Participant is owed increased costs under SECTION 7.5(A) above, if any
Participant shall claim the inability to make or maintain Funded Amounts
pursuant to SECTION 7.5(C) above, if any Participant is owed any cost or expense
pursuant to SECTION 7.5(D) or 7.5(F) above, or if any payment to any Participant
by the Lessee is subject to any withholding tax pursuant to SECTION 8.13 the
Lessee shall have the right, if no Event of Default or Default then exists, to
replace such Participant with another bank or financial institution PROVIDED
that (i) if it is not a Participant or an affiliate thereof, such bank or
financial institution shall be reasonably acceptable to the Agents and (ii) such
bank or financial institution shall unconditionally offer in writing (with a
copy to the Administrative Agent and the Documentation Agent) to purchase, in
accordance with SECTION 6.1 or 6.3, as applicable, all of such Participant's
rights and obligations under this Participation Agreement and the other
Operative Documents and Operative Loan Documents, without recourse or expense
to, or warranty by, such Participant being replaced for a purchase price equal
to the Participant Balance of such Participant to the date of such purchase on a
date therein specified. If such Participant accepts such purchase offer and such
purchase is consummated, the Lessee shall be obligated to pay, simultaneously
with such purchase and sale, the increased costs, amounts, expenses and taxes
under SECTIONS 7.5(A), 7.5(C), 7.5(D) and 7.5(F), all breakage fees payable
under SECTION 7.5(H), all withholding tax pursuant to SECTION 8.13 and all other
costs, fees and expenses payable to such Participant hereunder, to the date of
such purchase as well as all other amounts due and payable to or for the benefit
of such Participant under the Operative Documents and Operative Loan Documents;
PROVIDED, that (x) if such Participant accepts such an offer and such bank or
financial institution fails to purchase such rights and obligations on such
specified date in accordance with the terms of such offer, the Lessee shall
continue to be obligated to pay the increased costs, amounts, expenses and taxes
under SECTIONS 7.5(A), 7.5(C), 7.5(D), 7.5(F) and 8.13, to such Participant and
(y) if such Participant fails to accept such purchase offer, the Lessee shall
not be obligated to pay such Participant such increased costs pursuant to
SECTIONS 7.5(A), 7.5(C), 7.5(D), 7.5(F) and 8.13 from and after the date of such
purchase offer.
SECTION 7.6 END OF TERM INDEMNITY. In the event that at the end of the
Lease Term: (i) the Lessee elects the option set forth in Section 11.1 of the
Lease, and (ii) after the Lessor receives the sales proceeds from the Leased
Property under Section 11.1 of the Lease together with the Lessee's payment of
the Recourse Deficiency Amount, the Lessor shall not have received the entire
Lease Balance, then the Lessor may obtain, at the Lessee's sole cost and
expense, a report from the Appraiser (or, if the Appraiser is not available,
another appraiser reasonably satisfactory to the Lessor) in form and substance
satisfactory to Lessor (the "REPORT") to establish the reason for any decline in
value of the Leased Property from that anticipated for such date in the
Appraisal delivered on the Closing Date. The Lessee and the Transok Guarantor
shall promptly reimburse the Lessor for the amount equal to such decline in
value to the extent that the Report indicates that such decline was due to (w)
extraordinary use, failure to maintain, to repair, to restore, to rebuild or to
replace, failure to comply with all applicable laws, failure to use,
workmanship, method of installation or removal or maintenance, repair,
rebuilding or replacement, or any other cause or condition within the power of
the Lessee or the Transok Guarantor to control or effect which the Appraiser or
the Report deems to be beyond
38
ordinary wear and tear, or (x) any Alteration made to, or any rebuilding of, the
Leased Property or any part thereof by the Lessee, or (y) any restoration or
rebuilding carried out by the Lessor or any condemnation of any portion of the
Leased Property pursuant to Article XIII of the Lease, or (z) any use of the
Leased Property or any part thereof by the Lessee other than as gas processing
plants.
SECTION 7.7 MAXIMUM INTEREST. It is the intention of the parties hereto to
conform strictly to applicable usury laws and, anything herein to the contrary
notwithstanding, the obligations of the Lessee to each Participant under this
Participation Agreement and the other Operative Documents and Operative Loan
Documents shall be subject to the limitation that payments of interest shall not
be required to the extent that receipt thereof would be contrary to provisions
of law applicable to such Participant limiting rates of interest or yield which
may be charged or collected by such Participant. Accordingly, if the
transactions contemplated hereby would be usurious under applicable law
(including the Federal and state laws of the United States of America, or of any
other jurisdiction whose laws may be mandatorily applicable) with respect to a
Participant then, in that event, notwithstanding anything to the contrary in
this Participation Agreement, it is agreed as follows: (i) the provisions of
this SECTION 7.7 shall govern and control; (ii) the aggregate of all
consideration which constitutes interest under applicable law that is contracted
for, charged or received under this Participation Agreement, or under any of the
other aforesaid agreements or otherwise in connection with this Participation
Agreement by such Participant shall under no circumstances exceed the maximum
amount of interest allowed by applicable law (such maximum lawful interest rate,
if any, with respect to such Participant herein called the "HIGHEST LAWFUL
RATE"), and any excess shall be credited to the Lessee by such Participant (or,
if such consideration shall have been paid in full, such excess refunded to the
Lessee); (iii) all sums paid, or agreed to be paid, to such Participant for the
use, forbearance and detention of any indebtedness of the Lessee to such
Participant hereunder shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of any such
indebtedness until payment in full so that the actual rate of interest is
uniform throughout the full term thereof; and (iv) if at any time the fixed Rent
provided pursuant to Section 4.1 of the Lease together with Additional Rent and
any other fees payable pursuant to this Participation Agreement, the Lease and
the other Operative Documents and Operative Loan Documents and deemed interest
under applicable law, exceeds that amount which would have accrued at the
Highest Lawful Rate, the amount of Rent and any such Additional Rent and fees to
accrue to such Participant pursuant to this Participation Agreement, the Lease
and the other Operative Documents and Operative Loan Documents shall be limited,
notwithstanding anything to the contrary in this Participation Agreement to that
amount which would have accrued at the Highest Lawful Rate, but any subsequent
reductions, as applicable, shall not reduce the Rent to accrue to such
Participant pursuant to this Participation Agreement, the Lease and the other
Operative Documents and Operative Loan Documents below the Highest Lawful Rate
until the total amount of interest accrued pursuant to this Participation
Agreement, the Lease and the other Operative Documents and Operative Loan
Documents and such fees deemed to be interest equals the amount of Rent which
would have accrued to such Participant if a varying rate per annum equal to the
Fixed Rent provided pursuant to Section 4.1 of the Lease had at all times been
in effect, PLUS the amount of fees which would have been received
39
but for the effect of this SECTION 7.7. For purposes of Article 5069-1.04,
Vernon's Texas Civil Statutes, as amended, to the extent, if any, applicable to
a Participant, the Lessee agrees that the Highest Lawful Rate shall be the
"indicated (weekly) rate ceiling" as defined in said Article, provided that such
Participant may also rely, to the extent permitted by applicable laws, on
alternative maximum rates of interest under other laws applicable to such
Participant if greater. 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 Participation Agreement, the Lease or any
other Operative Document or Operative Loan Document.
SECTION 8
MISCELLANEOUS
SECTION 8.1 SURVIVAL OF AGREEMENTS. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Documents and Operative Loan Documents, and the parties' obligations
under any and all thereof, shall survive the execution and delivery and the
termination or expiration of this Participation Agreement and any of the
Operative Documents or Operative Loan Documents, the transfer of the Leased
Property and the granting of the Easements to the Lessor as provided herein (and
shall not be merged into the Bill of Sale), any disposition of any interest of
the Lessor in the Leased Property, the purchase and sale of the Notes, payment
therefor and any disposition thereof and shall be and continue in effect
notwithstanding any investigation made by any party hereto or to any of the
other Operative Documents or Operative Loan Documents and the fact that any such
party may waive compliance with any of the other terms, provisions or conditions
of any of the Operative Documents or Operative Loan Documents.
SECTION 8.2 NOTICES, DEMANDS, INSTRUCTIONS AND OTHER COMMUNICATIONS. All
notices, demands, instructions and other communications required or permitted to
be given to or made upon any party hereto shall be in writing and shall be
personally delivered or sent by registered or certified mail, postage prepaid,
return receipt requested, or by telecopier and shall be deemed to be given for
purposes of this Participation Agreement on the day that such writing is
delivered or sent to the intended recipient thereof in accordance with the
provisions of this SECTION 8.2; provided, however, that the Funding Request
shall not become effective until actually received by the Administrative Agent.
Unless otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this SECTION 8.2, notices, demands, instructions and
other communications shall be given to or made upon the respective parties
hereto at their respective addresses (or to their respective telecopier numbers)
indicated on SCHEDULE 8.2.
SECTION 8.3 COUNTERPARTS. This Participation Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 8.4 AMENDMENTS. No Operative Document or Operative Loan Document
nor any of the terms thereof may be terminated, amended, supplemented, waived or
modified with
40
respect to the Lessee, the Transok Guarantor, the Administrative Agent, the
Documentation Agent or any Participant, except (a) in the case of a termination,
amendment, supplement, waiver or modification to be binding on the Lessee, the
relevant Guarantor, the Administrative Agent or the Documentation Agent, with
the written agreement or consent of such party, and (b) in the case of a
termination, amendment, supplement, waiver or modification to be binding on the
Participants, with the written agreement or consent of the Required
Participants; PROVIDED, HOWEVER, that (x) notwithstanding the foregoing
provisions of this Section 8.4, the consent of each Participant affected thereby
shall be required for any amendment, modification or waiver directly: (i)
modifying any of the provisions of this SECTION 8.4, changing the definition of
"REQUIRED PARTICIPANTS", or "REQUIRED LENDERS" or increasing the Commitment of
such Participant (it being understood that, without in any way limiting the
meaning of the phrase "Participant affected thereby", a Participant shall be
deemed a "Participant affected thereby" if there is an increase in another
Participant's Commitment unless the Operative Documents or Operative Loan
Documents are simultaneously amended so that the amounts payable thereunder are
commensurately increased to the extent advances of Fundings are made under such
increased Commitment); (ii) amending, modifying, waiving or supplementing any of
the provisions of Section 3 of the Loan Agreement or the representations of such
Participant in SECTION 4.2 or 4.3 or the covenants of such Participant in
SECTION 5 of this Participation Agreement; (iii) reducing any amount payable to
such Participant under the Operative Documents or Operative Loan Documents or
extending the time for payment of any such amount, including, without
limitation, any Rent, any Funded Amount, any fees, any indemnity, the Lease
Balance, any Participant Balance, Recourse Deficiency Amount, interest or Yield;
or (iv) consenting to any assignment of the Lease, releasing any of the
collateral assigned to the Administrative Agent or any of the Lenders pursuant
to the Assignment of Lease and Rents (but excluding a release of any rights that
the Lenders may have in the Leased Property as contemplated in the definition of
"Release Date") releasing the Lessee from its obligations in respect of the
payments of Rent and the Lease Balance, releasing any Guarantor from its
obligations under its Guaranty or the other Operative Documents or changing the
absolute and unconditional character of any such obligation; and (y) no such
termination, amendment, supplement, waiver or modification shall, without the
written agreement or consent of the Lessor and the Required Lenders, be made to
the Lease, SECTION 3.1, 3.2, 3.3, 4.1(I), 4.1(J), 5.4 or 5.6 of this
Participation Agreement or the definition of "CREDIT AGREEMENT DEFAULT"; (z)
subject to the foregoing CLAUSES (X) and (Y), the Lessor and the Required
Lenders may amend, supplement, waive or modify any terms of the Loan Agreement,
the Notes, and the Assignment of Lease and Rents without the consent of the
Lessee or the Transok Guarantor so long as such amendment, supplement, waiver or
modification does not reduce the Commitments or increase any Rent or the Lease
Balance or accelerate the scheduled date of any payment of Rent or the Lease
Balance, PROVIDED that, so long as no Event of Default has occurred and is
continuing, the Loan Agreement shall not be modified in a manner adversely
affecting the Lessee and the Guarantors without the consent of the Lessee and
the Guarantors (such consent not to be unreasonably withheld or delayed), and
PROVIDED FURTHER, no amendment to the Loan Agreement shall have the effect of
expanding the remedies of Lessor set forth at Section 17.1 of the Lease; the
Lessor and the Lessee may amend, supplement, waive or modify any terms of the
Lease without the consent of the Lenders, except for Articles XI and XIII of the
Lease and Sections 5.3 and 5.4 of the Lease and except as provided in CLAUSE
(X);
41
except as provided for in the first clause of this ITEM (Z), no amendment,
modification or waiver of any Operative Document or Operative Loan Document
which would increase or otherwise adversely affect a Guarantor's liability under
its Guaranty shall become effective until such time as Lessor has received, in
form and substance reasonably satisfactory to Lessor, a written consent of such
Guarantor to such amendment, modification or waiver.
SECTION 8.5 HEADINGS, ETC. The Table of Contents and headings of the
various Articles and Sections of this Participation Agreement are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
SECTION 8.6 PARTIES IN INTEREST. Except as expressly provided herein, none
of the provisions of this Participation Agreement is intended for the benefit of
any Person except the parties hereto, their successors are permitted assigns.
SECTION 8.7 GOVERNING LAW. THIS PARTICIPATION AGREEMENT HAS BEEN DELIVERED
IN, AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE.
SECTION 8.8 EXPENSES.
(a) EXPENSES OF LESSOR, ADMINISTRATIVE AGENT AND DOCUMENTATION
AGENT. The reasonable fees, expenses and disbursements (including reasonable
counsel fees) of the Lessor, the Administrative Agent, the Documentation Agent
and each of the Lenders in connection with the Operative Documents and Operative
Loan Documents shall be paid by the Lessee as Additional Rent upon demand
therefor by the Lessor.
(b) AMENDMENTS, SUPPLEMENTS AND APPRAISAL. Whether or not the
transactions herein contemplated are consummated, the Lessee agrees to pay all
reasonable and documented out-of-pocket costs and expenses of the Lessor, the
Administrative Agent, the Documentation Agent and each of the Lenders in
connection with the preparation, execution and delivery of the Operative
Documents and Operative Loan Documents and the documents and instruments
referred to therein and any amendment, waiver or consent relating thereto
(including, without limitation, the reasonable and documented fees and
disbursements of Mayer, Brown & Platt) and of the Lessor, the Administrative
Agent, the Documentation Agent and each of the Lenders in connection with the
enforcement of the Operative Documents and Operative Loan Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable and documented fees and disbursements of counsel for the Lessor,
the Administrative Agent, the Documentation Agent and for each of the Lenders).
The Administrative Agent, the Lessor, each Lender and the Documentation Agent
agree to the extent feasible, and to the extent a conflict of interest does not
exist in the reasonable opinion of the Administrative Agent, the Lessor, any
Lender, the Documentation Agent or their counsel, to use the same single counsel
42
(i.e. one law firm) in connection with the foregoing, to the extent they seek
reimbursement for the expenses thereof from the Lessee.
SECTION 8.9 SEVERABILITY. Any provision of this Participation Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 8.10 LIABILITIES OF THE PARTICIPANTS. No Participant shall have
any obligation to any other Participant or to the Lessee, the Administrative
Agent or the Documentation Agent with respect to the transactions contemplated
by the Operative Documents and Operative Loan Documents except those obligations
of such Participant expressly set forth in the Operative Documents and Operative
Loan Documents or except as set forth in the instruments delivered in connection
therewith, and no Participant shall be liable for performance by any other party
hereto of such other party's obligations under the Operative Documents or
Operative Loan Documents except as otherwise so set forth. No Lender shall have
any obligation or duty to the Lessee, any other Participants, any Agent or any
other Person with respect to the transactions contemplated hereby except to the
extent expressly set forth in this Participation Agreement or the Loan
Agreement. No Lender shall be liable for the performance by any other Lender of
such other Lenders obligations hereunder, the obligations of each Lender being
taken severally and not jointly with any other Lender.
SECTION 8.11 SUBMISSION TO JURISDICTION; WAIVERS. Each party hereto hereby
irrevocably and unconditionally: (i) submits for itself and its property in any
legal action or proceeding relating to this Participation Agreement or any other
Operative Document or Operative Loan Document, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
from any thereof; (ii) consents that any such action or proceedings may be
brought to such courts, and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same; (iii) agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
such party at its address set forth in SCHEDULE 8.2 or at such other address of
which the other parties hereto shall have been notified pursuant to SECTION 8.2;
and (iv) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law.
SECTION 8.12 LIABILITIES OF THE AGENTS. Neither the Administrative Agent
nor the Documentation Agent shall have any duty, liability or obligation to any
party to this Participation Agreement with respect to the transactions
contemplated hereby except those duties, liabilities or obligations expressly
set forth in this Participation Agreement or the Loan Agreement, and
43
any such duty, liability or obligation of any Agent shall be as expressly
limited by this Participation Agreement or the Loan Agreement, as the case may
be.
SECTION 8.13 WITHHOLDING TAXES. Each Lender represents and warrants to
each Administrative Agent, the Documentation Agent, the Lessee and the Lessor,
as applicable, that under applicable law and treaties in effect as of the date
hereof no taxes will be required to be withheld by the Administrative Agent, the
Documentation Agent, the Lessee or the Lessor with respect to any payments to be
made to or for the benefit of such Lender in respect of the Rent or other
obligations under the Operative Agreements. Each Lender agrees to (a) furnish to
the Administrative Agent, the Documentation Agent, the Lessee or the Lessor, as
applicable, in the case of each Lender organized under the laws of a
jurisdiction outside of the United States, either U.S. Internal Revenue Service
Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein such Lender
certifies entitlement to complete exemption from U.S. federal withholding tax on
all interest payments hereunder) and (b) provide to the Administrative Agent,
the Documentation Agent, the Lessee and the Lessor a new Form 4224 or Form 1001
upon the obsolescence of any previously delivered form in accordance with
applicable U.S. laws and regulations with regard to such withholding tax
exemption. Notwithstanding any other provision of this Participation Agreement
to the contrary, none of the Administrative Agent, the Documentation Agent, the
Lessee or the Lessor shall be required to make payments on account of U.S.
withholding taxes to any Lender under this Participation Agreement if such
Lender shall not have so delivered any such forms or if the above representation
and warranty of such Lender is untrue, PROVIDED, HOWEVER, that, in the event
that the Lessor, the Administrative Agent or the Documentation Agent is required
(after consulting in good faith with the Lessee) to make any payment on account
of U.S. withholding taxes to any Lender under this Participation Agreement, the
Lessee hereby agrees to indemnify and hold harmless the Lessor, the
Administrative Agent and the Documentation Agent on an After-Tax Basis with
respect to any such payments.
SECTION 8.14 CONFIDENTIALITY. Each Participant agrees that it will use
reasonable efforts not to disclose without the prior written consent of the
Lessee (other than to its employees, affiliates, insurers, auditors or counsel
or to any other party hereto) any financial information with respect to the
Transok Guarantor, the Lessee, any of their Subsidiaries, or the Parent Company
or any of its Subsidiaries which is furnished pursuant to this Participation
Agreement or any other agreement executed pursuant hereto and which is clearly
designated by the Lessee to each Participant in writing as confidential;
PROVIDED that the foregoing shall not apply to, and each Participant may
disclose any such information (a) as has become generally available to the
public, (b) to any of its examiners or as may be required or appropriate in any
report, certificate, application, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Participant or the Leased Property or any part thereof or
to the Federal Reserve Board, the Federal Deposit Insurance Corporation, the
Oklahoma Corporation Commission or similar organizations (whether in the United
States or elsewhere) or their successors, (c) as may be required or appropriate
in response to any summons or subpoena or in connection with any litigation, (d)
in order to comply with any law, order, regulation or ruling applicable to such
Participant or the Leased Property or any part thereof, (e) to a prospective
transferee or purchasing Participant, in
44
connection with any contemplated transfer of any of the Notes or any interest
therein by such Participant, PROVIDED, that such prospective transferee or
purchasing Participant (other than an affiliates of such Participant) executes
an agreement with the Lessee containing provisions substantially identical to
those contained in this SECTION 8.14, (f) with the prior written authorization
of the Lessee, (g) received by such Participant prior to the Closing Date or
already known by, or in the possession of such Participant without restrictions
on the disclosure thereof at the time such information was received by the
Participant (it being acknowledged by each of the Lenders that all financial
information received from the Parent Company, any Subsidiary thereof, or the
Lessee prior to the Closing Date was confidential), (h) in connection with the
exercise of any remedies by any Participant or Agent, (i) after termination of
the Lease if the Lessee has not exercised its rights under the Lease to purchase
the Leased Property or (j) if the Lessee shall not have timely paid to the
Lessor the amounts described in Section 17.1(e) of the Lease, following the
occurrence and continuation of an Event of Default (as defined in the
Participation Agreement or the Secured Credit Agreement). Each Participant
further agrees that it will use its reasonable efforts to advise the Lessee, as
promptly as practicable, of any disclosure of information clearly designated by
the Lessee to each Participant in writing as confidential made by such
Participant pursuant to CLAUSE (C) of this SECTION 8.14; PROVIDED, HOWEVER, that
the foregoing notwithstanding, such Participant shall have no obligation to
notify the Borrower of any such disclosure pursuant to such CLAUSE (C) or
otherwise and failure to give such notification shall not give rise to a claim
against such Participant.
SECTION 8.15 NOTICE. THIS WRITTEN AGREEMENT TOGETHER WITH THE OTHER
DOCUMENTS 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.
45
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
TRANSOK ACQUISITION CORPORATION III,
as Lessee
By: /s/ CHRIS TONG
Title: VICE PRESIDENT - FINANCE
TRANSOK ACQUISITION COMPANY, as
Transok Guarantor
By:/s/ CHRIS TONG
Title: VICE PRESIDENT - FINANCE
CIBC INC., as Lessor and Lender
By: /s/ FLORENCE DIPAOLA
Title: DIRECTOR
CANADIAN IMPERIAL BANK OF
COMMERCE, New York Agency, as
Administrative Agent
By:
Title:
BANK OF MONTREAL, as
Documentation Agent and as Lender
By: /s/ DONALD G. WARMINGTON
Title: DIRECTOR
46
APPENDIX A
to
Participation Agreement,
LEASE AND LOAN AGREEMENT
DEFINITIONS AND INTERPRETATION
A. INTERPRETATION. In each Operative Document and Operative Loan
Document, unless a clear contrary intention appears:
(i) the singular number includes the plural number and VICE VERSA;
(ii) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are
permitted by the Operative Documents or Operative Loan Document, as the
case may be, and reference to a Person in a particular capacity excludes
such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement (including any Operative Document),
document or instrument means such agreement, document or instrument as
amended or modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms of the other Operative
Documents and the Operative Loan Documents and reference to any promissory
note includes any promissory note which is an extension or renewal thereof
or a substitute or replacement therefor;
(v) reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or in part,
and in effect from time to time, including rules and regulations
promulgated thereunder and reference to any section or other provision of
any Applicable Law means that provision of such Applicable Law from time
to time in effect and constituting the substantive amendment,
modification, codification, replacement or reenactment of such section or
other provision;
(vi) reference in any Operative Document or Operative Loan Document,
as the case may be, to any ARTICLE, SECTION, APPENDIX, SCHEDULE or EXHIBIT
means such ARTICLE or SECTION thereof or APPENDIX, SCHEDULE or EXHIBIT
thereto;
(vii) "hereunder", "hereof", "hereto" and words of similar import
shall be deemed references to an Operative Document or Operative Loan
Document, as the case may be, as a whole and not to any particular
ARTICLE, SECTION or other provision hereof;
(viii) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding
such term;
(ix) "or" is not exclusive; and
(x) relative to the determination of any period of time, "from"
means "from and including" and "to" and "through" mean "to but excluding".
B. ACCOUNTING TERMS. In each Operative Document, unless expressly
otherwise provided, accounting terms shall be construed and interpreted, and
accounting determinations and computations shall be made, in accordance with
GAAP.
C. CONFLICT IN OPERATIVE DOCUMENTS. If there is any conflict between any
Operative Documents or Operative Loan Document, as the case may be, such
Operative Document or Operative Loan Document, as the case may be, shall be
interpreted and construed, if possible, so as to avoid or minimize such conflict
but, to the extent (and only to the extent) of such conflict, the Participation
Agreement shall prevail and control.
D. LEGAL REPRESENTATION OF THE PARTIES. The Operative Documents and the
Operative Loan Documents were negotiated by the parties with the benefit of
legal representation and any rule of construction or interpretation otherwise
requiring the Operative Document or Operative Loan document, as the case may be,
to be construed or interpreted against any party shall not apply to any
construction or interpretation hereof or thereof.
E. DEFINED TERMS. Unless a clear contrary intention appears, terms
defined herein have the respective indicated meanings when used in each
Operative Document and the Operative Loan Documents.
"A-NOTES" means all of the Series A Notes issued and, unless otherwise
specified or the contest otherwise requires, outstanding under the Loan
Agreement.
"A-PORTION" means 85%.
"A-PORTION PARTICIPANT BALANCE" means, for any Participant as of any date
of determination, an amount equal to the sum of the outstanding principal amount
of the A-Notes or the Lessor's A-Invested Amount of such Participant, all
accrued and unpaid interest or yield thereon, and the A-Portion of all unpaid
fees owing to such Participant by the Lessee or any Guarantor under the
Operative Documents, and the A-Portion of all other amounts owing to such
Participant by the Lessee or any Guarantor under the Operative Documents.
"ACCELERATION" is defined in SECTION 5.4(B) of the Loan Agreement.
"ADDITIONAL RENT" means any and all amounts, liabilities and obligations
other than Fixed Rent which Lessee assumes or agrees or is otherwise obligated
to pay under the Lease or any
-2-
other Operative Document (whether or not designated as Additional Rent) to
Lessor, the Lenders or any other party, including, without limitation, amounts
under Article XVII of the Lease, and Fair Market Sales Value payments, and
indemnities and damages for breach of any covenants, representations, warranties
or agreements.
"ADDRESS" means with respect to any Person, its address set forth in
SCHEDULE 8.2 to the Participation Agreement or such other address as it shall
have identified to the parties to the Participation Agreement in writing.
"ADMINISTRATIVE AGENT" means (a) with respect to the Operative Documents
and the Operative Loan Documents, Canadian Imperial Bank of Commerce, a bank
organized under the laws of Canada, acting through its New York Agency, as
administrative agent under the Loan Agreement (together with its successors and
assigns), or (b) with respect to the Loan Documents, Bank of Montreal, a bank
organized under the laws of Canada, acting through its Houston Agency, as
administrative agent under the Credit Agreement (together with its successors
and assigns).
"AFFECTED PLANT" is defined in SECTION 13.2 of the Lease.
"AFFILIATE" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any employee benefit plan). A Person shall be deemed to be
"controlled by" any other Person if such other Person possesses, directly or
indirectly, power (a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managing
general partners; or (b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"AFTER-TAX BASIS" means (a) with respect to any payment to be received by
an Indemnitee (which, for purposes of this definition, shall include any Tax
Indemnitee), the amount of such payment supplemented by a further payment or
payments so that, after deducting from such payments the amount of all Taxes
(net of any current credits, deductions or other Tax benefits arising from the
payment by the Indemnitee of any amount, including Taxes, for which the payment
to be received is made) actually imposed currently on the Indemnitee by any
Governmental Authority or taxing authority with respect to such payments, the
balance of such payments shall be equal to the original payment to be received
and (b) with respect to any payment to be made by any Indemnitee, the amount of
such payment supplemented by a further payment or payments so that, after
increasing such payment by the amount of any current credits or other Tax
benefits realized by the Indemnitee under the laws of any Governmental Authority
or taxing authority resulting from the making of such payments, the sum of such
payments (net of such credits or benefits) shall be equal to the original
payment to be made; PROVIDED, HOWEVER, for the purposes of this definition, and
for purposes of any payment to be made to either the Lessee or Tax Indemnitee on
an after-tax basis, it shall be assumed that (i) federal, state and local taxes
are payable at the highest combined marginal federal and state statutory
-3-
income tax rate (taking into account the deductibility of state income taxes for
federal income tax purposes) applicable to corporations from time to time and
(ii) such Indemnitee or the Lessee has sufficient income to utilize any
deductions, credits (other than foreign tax credits, the use of which shall be
determined on an actual basis) and other Tax benefits arising from any payments
described in clause (b) of this definition.
"AGENT" or "AGENTS" means the Administrative Agent or the Documentation
Agent, or both.
"ALTERATIONS" means, with respect to the Leased Property, fixtures,
alterations, improvements, modifications and additions to the Leased Property.
"ALTERNATE BASE RATE" means:
(a) on any date and with respect to all Domestic Loans other than
those dates and Loans described in CLAUSE (B) of this
definition, a fluctuating rate of interest per annum equal to
the higher of:
(i) the Base Rate, and
(ii) the Federal Funds Rate most recently determined by
the Administrative Agent PLUS 1% per annum; or
(b) on any date occurring during any Overnight Funds Period, but
with respect only to Domestic Loans made or Eurodollar Loans
converted into Domestic Loans during such Overnight Funds
Period, the Overnight
Funds Rate.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by the Administrative Agent in connection with extensions of
credit. Changes in the rate of interest on that portion of any Loans maintained
as Domestic Loans shall take effect simultaneously with each change in the
Alternate Base Rate. The Administrative Agent shall give notice promptly to the
Lessee, the Lessor and the Lenders of changes in the Alternate Base Rate.
"APPLICABLE LAW" means all existing and future applicable laws, rules,
regulations (including Environmental Laws) statutes, treaties, codes,
ordinances, permits, certificates, orders and licenses of and interpretations
by, any Governmental Authorities, and applicable judgments, decrees,
injunctions, writs, orders or like action of any court, arbitrator or other
administrative, judicial or quasi-judicial tribunal or agency of competent
jurisdiction (including those pertaining to health, safety or the environment
(including, without limitation, wetlands) and those pertaining to the use or
occupancy of the Leased Property) and any restrictive covenant or deed
restriction or easement of record affecting the Leased Property.
-4-
"APPLICABLE MARGIN" means at such times and from time to time as set forth
below, the percentages per annum set forth opposite such time under the heading
for the relevant type of Loan:
PERCENTAGE
----------
PERIOD OF TIME DOMESTIC LOAN EURODOLLAR
-------------- ------------- ----------
LOAN
----
Closing Date through 12/31/96 0% 1.1875%
1/1/97 through 6/30/97 0% 1.4375%
7/1/97 through 12/31/97 0% 2.0000%
; provided that after the Credit Maturity Date, the Applicable Margin shall be
the amount set forth opposite the relevant ratio of Funded Debt to
Capitalization below:
RATIO DOMESTIC LOAN EURODOLLAR
----- ------------- ----------
LOAN
----
If the ratio of Funded Debt to Capitalization .2500% 1.2500%
expressed as a percentage is equal to or greater
than 65%
If the ratio of Funded Debt to Capitalization 0% 0.8750%
expressed as a percentage is equal to or greater
than 60%, but less than 65%
If the ratio of Funded Debt to Capitalization 0% 0.7500%
expressed as a percentage is equal to or greater
than 55%, but less than 60%
If the ratio of Funded Debt to Capitalization 0% 0.6250%
expressed as a percentage is equal to or greater
than 50%, but less than 55%
If the ratio of Funded Debt to Capitalization 0% 0.5000%
expressed as a percentage is less than 50%
"APPLICABLE PERMIT" means any Permit (including, without limitation, the
Environmental Permits) that is necessary to own, test, maintain, repair,
operate, lease or use all or any part of the Leased Property in accordance with
the Operative Documents, whether such Permit is required to be obtained by or on
behalf of the Lessee, the Lessor, the Administrative Agent, the Documentation
Agent, any Affiliate of any of them or any other Person.
"APPRAISAL PROCEDURE" means the procedure by which an independent
appraiser shall determine the fair market value of the Leased Property after any
Event of Loss or Casualty. The fair market value of the Leased Property prior to
such Casualty or Event of Loss shall be that fair market value determined in the
appraisal delivered on the Closing Date. If the Lessor and the Lessee cannot
agree on an independent appraiser within ten Business Days after receipt of
-5-
written notice to the Lessee by the Lessor that an appraiser is to be retained,
the Lessor and the Lessee shall each appoint an independent appraiser within 15
Business Days thereafter, and the two appraisers so appointed shall appoint a
third independent appraiser. The appraisers appointed pursuant to the foregoing
procedure shall, within ten days after appointment of the last appraiser,
independently determine the value of the Leased Property. If the Lessor or the
Lessee shall fail to appoint an independent appraiser within the above-mentioned
15 Business Day period, then the appraiser appointed by the other party shall
determine the value of the Leased Property. If a single appraiser is appointed,
such appraiser's determination of the value of the Leased Property shall be
final. If three appraisers are appointed, the values determined by the three
appraisers shall be averaged, the value which differs the most from such average
shall be excluded, the remaining two values shall be averaged and such average
shall be final. The expenses of all appraisers shall be paid by the Lessee.
"APPRAISER" means any reputable appraisal company, firm or individual
satisfactory to the Agents and the Required Participants (each in its sole
discretion).
"ASSET" means, as to the Borrower and its Subsidiaries, all property of
any kind, name or nature, real or personal, tangible or intangible, legal or
equitable, whether now owned or hereafter acquired, including, without
limitation, money, stock, contract rights, franchises, value as a going concern,
causes of action, undivided fractional ownership interests, and anything of any
value which can be made available for, or may be appropriated to, the payment of
debts.
"ASSIGNEE" is defined in the preamble to the Assignment of Lease and
Rents.
"ASSIGNMENT OF LEASE AND RENTS" means that certain Assignment of Lease and
Rents dated as of June 6, 1996 (as may be amended or otherwise modified from
time to time) between the Lessor and the Assignee.
"AWARDS" means any award or payment received by or payable to Lessor or
Lessee on account of any Condemnation or Event of Taking (less the actual costs,
fees and expenses incurred in the collection thereof, for which the Person
incurring the same shall be reimbursed from such award or payment).
"B-NOTES" means all of the Series B Notes issued and, unless otherwise
specified or the context otherwise requires, outstanding under the Loan
Agreement.
"B-PORTION" means 15%.
"B-PORTION PARTICIPANT BALANCE" means, for any Participant as of any date
of determination, an amount equal to the sum of the outstanding principal amount
of the B-Notes and the Lessor's B-Invested Amount of such Participant, all
accrued and unpaid interest or yield thereon, and the B-Portion of all unpaid
fees owing to such Participant by the Lessee or any Guarantor under the
Operative Documents, and the B-Portion of all other amounts owing to such
Participant by the Lessee or any Guarantor under the Operative Documents.
-6-
"BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978, as amended.
"BASE RATE" means, at any time, the rate per annum then most recently
announced by the Administrative Agent at New York, New York as its base rate for
Dollar loans in the United States, which base rate may not be the lowest rate
charged by the Administrative Agent on loans to any of its customers.
"BASIC TERM" means (a) the period commencing on the Effective Time and
ending five (5) years from the Effective Time or (b) such shorter period as may
result from early termination of the Lease as provided therein.
"BASIC TERM COMMENCEMENT DATE" means June 6, 1996.
"BILL OF SALE" or "BILLS OF SALE" means each and all of those certain
Bills of Sale dated as of June 6, 1996 between Seller and Lessee.
"BOARD OF DIRECTORS", with respect to a corporation, means either the
Board of Directors or any duly authorized committee of that Board which pursuant
to the by-laws of such corporation has the same authority as that Board as to
the matter at issue.
"BORROWER" means Transok Acquisition Company, a Delaware corporation and
its successors and assigns.
"BUILDING" means any building, structure and improvement described on
Appendix B of the Lease to be located on any of the Land, along with all
fixtures and appurtenances used or useful in connection with the operation of
the Leased Property, including, without limitation, all furnaces, boilers,
compressors, fittings, pipings, connectives, conduits, ducts, partitions,
equipment and apparatus of every kind and description now or hereafter affixed
or attached or used or useful in connection with any such Building, and all
Alterations (including all restorations, repairs, replacements and rebuilding of
such buildings, improvements and structures) thereto.
"BUSINESS DAY" means a day which is both a Domestic Business Day and a
Eurodollar Business Day.
"CAPITALIZATION" means the sum, at the time outstanding and without
duplication, of (i) Funded Debt plus (ii) Stockholders' Equity plus (iii) all
Indebtedness of the Borrower outstanding under the RSNs.
"CAPITALIZED LEASE OBLIGATIONS" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Appendix A and each other Operative Document, the amount of
such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP.
-7-
"CASUALTY" means an event of damage or casualty relating to all or part of
the Leased Property which does not constitute an Event of Loss.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"CLAIMS" means liabilities, obligations, damages, losses, demands,
penalties, fines, claims, actions, suits, judgments, settlements, utility
charges, costs, expenses and disbursements (including, without limitation,
reasonable legal fees and expenses) of any kind and nature whatsoever.
"CLOSING DATE" means June 6, 1996.
"CLOSING DATE APPRAISAL" is defined in SECTION 3.1(VIII) of the
Participation Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL AGENT" means Bank of Montreal, in its capacity as collateral
agent under the Security Documents, together with its successors in such
capacity.
"COMMITMENT" means as to each Participant, its obligation to make Fundings
as investments in the Leased Property, or Loans to the Lessor, as the case may
be, in an aggregate amount not to exceed at any one time outstanding the amount
set forth for such Participant on SCHEDULE 2.2 to the Participation Agreement
(as it may be adjusted from time to time pursuant to SECTION 6 of the
Participation Agreement).
"COMMITMENT PERCENTAGE" means as to any Participant, at a particular time,
the percentage of the aggregate Commitments in effect at such time constituted
by such Participant's Commitment, as such percentage is shown for such
Participant on SCHEDULE 2.2 to the Participation Agreement (as it may be
adjusted from time to time pursuant to SECTION 6 of the Participation
Agreement).
"CONDEMNATION" means any condemnation, requisition, confiscation, seizure
or other taking or sale of the use, occupancy or title to the Leased Property or
any part thereof in, by or on account of any actual eminent domain proceeding or
other action by any Governmental Authority or other Person under the power of
eminent domain or otherwise or any transfer in lieu of or in anticipation
thereof, which in any case does not constitute an Event of Taking. A
Condemnation shall be deemed to have "occurred" on the earliest of the dates
that use, occupancy or title is taken.
-8-
"CONSOLIDATED NET INCOME" means, for any period, with respect to any
Person, the consolidated net income (or loss) of such Person and its
Subsidiaries for such period determined on a consolidated basis in accordance
with GAAP; PROVIDED that there shall be excluded therefrom all non-cash gains
and losses which would be classified as extraordinary under GAAP.
"CONTINGENT LIABILITY" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the Indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of or interests in
any other Person. The amount of any Person's obligation under any Contingent
Liability shall (subject to any limitation set forth therein) be deemed to be
the outstanding principal amount (or maximum principal amount, if larger) of the
Indebtedness, obligation or other liability guaranteed thereby or, if
applicable, such lesser principal amount as is expressly stated to be the
maximum principal amount of such Person's obligation thereunder.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision of
any Securities issued by that Person or any indenture, mortgage, deed of trust,
contract, undertaking, agreement, instrument or other document to which that
Person is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject (including, without limitation, any
restrictive covenant affecting any of the properties of such Person).
"CONVEYANCE INSTRUMENTS" means each of the Easement Agreements, each of
the Bills of Sale, the Assignment of Leases and Rents and all documents and
instruments executed and delivered in connection with each of the foregoing.
"CREDIT AGREEMENT" means the Secured Credit Agreement dated as of June 6,
1996, as the same may be amended, restated, supplemented, renewed, extended or
otherwise modified from time to time, among the Borrower, certain financial
institutions as Lenders, Bank of Montreal as Administrative Agent, and Canadian
Imperial Bank of Commerce, New York Agency, as Documentation Agent.
"CREDIT AGREEMENT EVENT OF DEFAULT" means any "Event of Default" (as
defined in the Credit Agreement), and PROVIDED that if the Lessor or an
Affiliate of the Lessor continues to be a Lender party to the Credit Agreement,
such Event of Default shall not have been waived by the Lenders under the Credit
Agreement pursuant to the terms of the Credit Agreement (or shall have ceased to
exist) within 10 days after the occurrence thereof and the giving of notice and
passage of time, if applicable; IT BEING UNDERSTOOD that the provisions and
defined terms of the Credit Agreement referred to and incorporated in this
definition shall be automatically modified upon any modification to such
provisions and defined terms being effected under the Credit Agreement unless
neither the Lessor nor any Affiliate of the Lessor is then a Lender party to the
Credit Agreement.
-9-
"CREDIT MATURITY DATE" is defined in SECTION 4.1.2 of the Transok
Guaranty.
"DISCLOSURE SCHEDULE" means SCHEDULE II to the Participation Agreement.
"DOCUMENTATION AGENT" means, as the case may be, (a) with respect to the
Operative Documents and the Operative Loan Documents, Bank of Montreal, a bank
organized under the laws of Canada, acting through its Houston Agency, or (b)
with respect to the Loan Documents, Canadian Imperial Bank of Commerce.
"DOLLARS" (and the symbol "$") means the lawful money of the United
States.
"DOMESTIC BUSINESS DAY" means a day on which banks are open for business
in Houston, Texas, New York City, New York and Chicago, Illinois.
"DOMESTIC FUNDED AMOUNT" means, as to the Lessor, the Lessor's Invested
Amount bearing Interest at a rate determined with reference to the Alternate
Base Rate, and, as to each Lender, such Lender's Domestic Loans.
"DOMESTIC LOAN" means a Loan bearing an interest rate determined with
reference to the Alternate Base Rate.
"EASEMENT" has the meaning set forth in SECTION 1 of each of the Easement
Agreements.
"EASEMENT AGREEMENT" or "EASEMENT AGREEMENTS" means any and all of those
certain Grant of Easement and Property Rights Agreements dated as of June 6,
1996, from the Seller to the Lessor, conveying the Easements, substantially in
the form of EXHIBIT B to the Participation Agreement.
"EBITDA" means, with respect to any Person and to any period for which a
determination thereof is to be made, the sum of (i) gross profit (revenues less
cost of sales), MINUS (ii) operating expenses (excluding any Fixed Rent or
amortization of deferred costs associated with such Fixed Rent), MINUS (iii)
general and administrative expenses, PLUS (iv) cash equity earnings of any
unconsolidated Subsidiary of such Person or any partnership or joint venture in
which such Person or any of its Subsidiaries has an equity interest and actually
paid to such Person and its Subsidiaries, all as determined on a consolidated
basis for such Person and its Subsidiaries in accordance with GAAP.
"EFFECTIVE TIME" means 4:30 p.m., Eastern Daylight Time, on the Closing
Date.
"ENVIRONMENTAL LAWS" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
-10-
"ENVIRONMENTAL PERMITS" means all permits, licenses, authorizations,
certificates and approvals of Governmental Authorities required by Environmental
Laws.
"ENVIRONMENTAL CONSULTANT" means any reputable environmental consulting
firm satisfactory to the Agents and the Required Participants (each in its sole
discretion).
"EQUIPMENT" means all machinery, devices, apparatuses and equipment leased
and to be leased to the Lessee by the Lessor under the Lease as set forth in
Part B of Schedule 1 of the Lease and all Alterations (including restorations,
repairs, replacements and rebuilding of such equipment). Equipment shall not
include machinery, devices, apparatuses and equipment not financed by the Lessor
which is not a part of the Plants.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time or any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
"EUROCURRENCY RESERVE PERCENTAGE" - means, with respect to each Eurodollar
Interest Period, a percentage (expressed as a decimal) equal to the daily
average during such Eurodollar Interest Period of the percentages in effect on
each day of such Eurodollar Interest Period, if any, as prescribed by the Board
of Governors of the Federal Reserve System (or any successor thereto), for
determining the maximum reserve requirements applicable to "Eurocurrency
Liabilities" pursuant to Regulation D of the Board of Governors of the Federal
Reserve System or any other then applicable regulation of the Board of Governors
which prescribes reserve requirements applicable to "Eurocurrency Liabilities"
as presently defined in Regulation D.
"EURODOLLAR BUSINESS DAY" means a day on which dealings are carried on in
the interbank Eurodollar market and on which banks are open for business in
Houston, Texas, New York City, New York and Chicago, Illinois.
"EURODOLLAR FUNDED AMOUNT" means, as to the Lessor, the Lessor's Invested
Amount bearing interest at a rate determined with reference to the Eurodollar
Interest Rate, and, as to each Lender, such Lender's Eurodollar Loans.
"EURODOLLAR INTEREST PERIOD" means, as to each Eurodollar Loan, the period
commencing on (and including) the latest Eurodollar Period Commencement Date
with respect to such Eurodollar Funded Amount and ending on (but excluding) the
day numerically corresponding to such date three (3) months thereafter;
PROVIDED, HOWEVER, that:
(a) any Eurodollar Interest Period which would otherwise end on a
day which is not a Eurodollar Business Day shall continue to
and end on the next succeeding Eurodollar Business Day, unless
the result would be that such Eurodollar Interest Period would
be extended to the next succeeding calendar month in which
case such Eurodollar Interest Period shall end on the next
preceding Eurodollar Business Day;
-11-
(b) if there exists no numerically corresponding day in such
month, such Eurodollar Interest Period shall end on the last
Eurodollar Business Day of such month;
(c) no Eurodollar Interest Period shall end later than the Lease
Termination Date;
(c) subject to the provisions of clauses (a) through (c) above,
each Eurodollar Interest Period during the period from and
including the first Business Day following the Closing Date
to but excluding August 2, 1996, shall end on the date
specified by the Lessee by written notice to the
Administrative Agent received no later than 12:00 noon, New
York City time, at least three Eurodollar Business Days
prior to the commencement of such Eurodollar Interest Period
(or at least one Eurodollar Business Day in the case of a
Eurodollar Funded Amount bearing interest or Yield at a
Eurodollar Interest Rate determined pursuant to clause (ii)
of the definition thereof), or in absence of such
specification, such Eurodollar Interest Period shall end on
August 2, 1996.
"EURODOLLAR INTEREST RATE" means, with respect to each Eurodollar Funded
Amount for any Eurodollar Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest integral multiple of one one-hundredth of one percent
(1/100%)) equal to (i) the average of the offered quotations appearing on
Telerate Page 3750 (or if such Telerate Page shall not be available, any
successor or similar service as may be selected by the Agents and the Lessee) as
of 11:00 a.m., London time (or as soon thereafter as practicable), and (ii) if
none of such Telerate Page 3750 nor any successor or similar service is
available, then the quotient of (x) the arithmetic average of the quotation by
each Reference Lender (notified to the Administrative Agent by such Reference
Lender) of the rate of interest per annum at which deposits in Dollars in
immediately available funds are offered to such Reference Lender two (2)
Eurodollar Business Days prior to the beginning of such Eurodollar Interest
Period by prime banks in the interbank Eurodollar market as at or about 9:00
a.m., Chicago time, for delivery on the first day of such Eurodollar Interest
Period, in each case for a period equal to such Eurodollar Interest Period and
in an amount equal to the proposed Eurodollar Loan of such Reference Lender to
which such Eurodollar Interest Period relates, divided by (y) the remainder of
one (1) minus the decimal equivalent of the applicable Eurocurrency Reserve
Percentage. If on any occasion any Reference Lender is unable, or for any reason
fails, so to notify the Administrative Agent by 10:00 a.m., Chicago time, two
(2) Eurodollar Business Days before the first day of such Eurodollar Interest
Period, the applicable Eurodollar Interest Rate shall be determined on the basis
of each quotation furnished by those of the Reference Lenders which so notify
the Administrative Agent at or prior to said 10:00 a.m.
"EURODOLLAR LOAN" means a Loan bearing an interest rate determined with
reference to the Eurodollar Interest Rate.
-12-
"EURODOLLAR OFFICE" means initially, the office of each Participant
designated as such in SCHEDULE 2.2 to the Participation Agreement; thereafter,
such other office of such Participant, if any, which shall be making or
maintaining its Funded Amounts.
"EURODOLLAR PERIOD COMMENCEMENT DATE" means, with respect to each
Eurodollar Loan, (A) in the case of the Funding on the Closing Date, the first
Business Day following the Closing Date and (B) thereafter, the last day of the
preceding Eurodollar Interest Period.
"EVENT OF DEFAULT" means any event or condition designated as an "Event of
Default" in Article XVI of the Lease.
"EVENT OF LOSS" means (x) the actual or constructive total loss of the
Leased Property or damage to the Leased Property to an extent rendering repair
impractical or uneconomical, in any case as reasonably determined in good faith
by the senior officer of the Lessee, such determination to be made promptly
after the occurrence of such event and to be evidenced by Notice of the Lessee
delivered to each Participant and the Agents, (y) damage to the Leased Property
which results in an insurance settlement on the basis of a total loss or a
constructive total loss (including title insurance proceeds) in respect of a
total loss of the Leased Property, or (z) an Event of Taking.
"EVENT OF TAKING" means (A) taking of title to the Leased Property or the
Land or any portion thereof or (B) any condemnation (other than a requisition of
temporary use) or requisition of use for a period scheduled to last beyond the
end of the Lease Term, in either case resulting in (i) the loss of use or
possession of substantially all the Leased Property or (ii) the loss of use or
possession of a material portion of the Leased Property, in either of CLAUSE (I)
or CLAUSE (II), as reasonably determined in good faith by a senior officer of
the Lessee, such determination to be made promptly after the occurrence of such
event and to be evidenced by notice of such senior officer delivered to each
Participant and the Agents.
"EXCEPTED PERMIT" or "EXCEPTED PERMITS" means any and all of those
Applicable Permits identified in SECTION 4.1.(G)(II) of the DISCLOSURE SCHEDULE.
"EXCESS FUNDS" shall have the meaning assigned to that term in SECTION
13.3 of the Lease.
"FAIR MARKET RENTAL VALUE" with respect to the Leased Property means the
fair market rental value as determined by an independent appraiser chosen by
Lessor that would be obtained in an arm's-length lease between an informed and
willing lessee and an informed and willing lessor, in either case under no
compulsion to lease, and neither of which is related to Lessor or Lessee for the
lease of the Leased Property on the terms set forth, or referred to, in the
Lease. Such fair market rental value shall be calculated as the value for the
use of the Leased Property to be leased in place at the Easement, assuming, in
the determination of such fair market rental value, that the Leased Property is
in the condition and repair required to be maintained by the terms of the Lease
(unless such fair market rental value is being determined for the purposes of
-13-
SECTION 17.1 of the Lease and except as otherwise specifically provided in the
Lease, in which case this assumption shall not be made).
"FAIR MARKET SALES VALUE" with respect to the Leased Property or any
portion thereof means the fair market sales value as determined by an
independent appraiser chosen by Lessor that would be obtained in an arm's-length
transaction between an informed and willing buyer (other than a lessee currently
in possession) and an informed and willing seller, under no compulsion,
respectively, to buy or sell and neither of which is related to Lessor or
Lessee, for the purchase of the Leased Property. Such fair market sales value
shall be calculated as the value for the use of the Leased Property, assuming,
in the determination of such fair market sales value, that the Leased Property
is in the condition and repair required to be maintained by the terms of the
Lease (unless such fair market sales value is being determined for purposes of
SECTION 17.1 of the Lease and except as otherwise specifically provided in the
Lease or the Participation Agreement, in which case this assumption shall not be
made).
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to (a) the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Domestic Business Day, for the next preceding Domestic
Business Day) by the Federal Reserve Bank of New York; or (b) if such rate is
not so published for any day which is a Domestic Business Day, the average of
the quotations for such day on such transactions received by the Administrative
Agent from two Federal funds brokers of recognized standing selected by it.
"FEE LETTER AGREEMENT" has the meaning set forth in SECTION 5.4 of the
Participation Agreement.
"FINAL RENT PAYMENT DATE" is defined in SECTION 17.1(E) of the Lease.
"FISCAL YEAR" means the fiscal year of the Borrower, the Lessee or their
Subsidiaries, as the case may be, which shall be the twelve (12) monthly
accounting periods ending on the last calendar day of December or such other
period as the Borrower, Lessee or their Subsidiaries may designate with the
written consent of the Required Participants.
"FIXED RENT" means, for the Lease Term, the rent payable pursuant to
SECTION 4.1 of the Lease, determined in accordance with the following: each
installment of Fixed Rent payable on any Rent Payment Date shall be in an amount
equal to the sum of (A) the aggregate amount of Lender Fixed Rent payable on
such Rent Payment Date, plus (B) the aggregate amount of Lessor Fixed Rent
payable on such Rent Payment Date.
"FORCE MAJEURE" means conditions or circumstances not wholly controlled by
the Lessee and includes but is not limited to Acts of God, war, strikes,
lockouts, and riots or conflicts with Federal, state, county, or municipal laws,
rules or regulations asserted as official by or under any Governmental
Authority.
-14-
"FUNDED AMOUNT" means, as to the Lessor, the Lessor's Invested Amount,
and, as to each Lender, such Lender's Loans.
"FUNDED COST SHARE AMOUNTS" is defined in SECTION 5.9 of the Loan
Agreement.
"FUNDED COST SHARE BALANCE" shall have the meaning set forth in SECTION
5.9 of the Loan Agreement.
"FUNDED DEBT" means on a consolidated basis for the Borrower and its
Subsidiaries at any time a determination thereof is to be made, the sum without
duplication of: (a) indebtedness for borrowed money, all obligations evidenced
by bonds, debentures, notes or other similar instruments, and purchase money
obligations which in accordance with GAAP would be shown on the consolidated
balance sheet of the Borrower as a liability, (b) all obligations evidenced by
the Medium Term Notes, (c) all obligations, contingent or otherwise, relative to
the face amount of all letters of credit, whether or not drawn,issued for the
account of the Transok Guarantor or any of its Subsidiaries, and (d) all
obligations of such Person as lessee under leases which have been, in accordance
with GAAP, recorded as Capitalized Lease Obligations.
"FUNDING" means the funding by the Participants pursuant to SECTION 2.2 of
the Participation Agreement.
"FUNDING REQUEST" is defined in SECTION 2.2 of the Participation
Agreement.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time.
"GOVERNMENTAL ACTION" means all permits, authorizations, registrations,
consents, approvals, waivers, exceptions, variances, orders, judgments, decrees,
licenses, exemptions, publications, filings, notices to and declarations of or
with, or required by, any Governmental Authority, or required by any Applicable
Law and shall include, without limitation, all citings, environmental and
operating permits and licenses that are required for the use, occupancy, zoning
and operation of the Leased Property.
"GOVERNMENTAL AUTHORITY" means any foreign or domestic federal, state,
county, municipal or other governmental or regulatory authority, agency, board,
body, commission, instrumentality, court or any political subdivision thereof.
"GUARANTOR" means the Parent Company, the Transok Guarantor, Tejas Transok
Holding Company, the Subsidiary Guarantors or any other Person (other than any
Agent or any Participant) obligated under the Operative Documents (together with
their successors and assigns).
"GUARANTY" or "GUARANTIES" means any and all of the Parent Company
Guaranty, the Transok Guaranty, the Holding Company Guaranty, and the Subsidiary
Guaranties.
-15-
"GUARANTY EVENT OF DEFAULT" is defined in the Parent Company Guaranty.
"HAZARDOUS MATERIAL" means:
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act, as amended;
(c) any petroleum product, crude oil or any fraction thereof; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any
other Environmental Law.
"HEDGING OBLIGATIONS" means, with respect to any Person, (a) all
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates, and (b) all liabilities of such Person under
commodity hedge, commodity swap, exchange, forward, future, collar or cap
agreements, fixed price agreements and all other agreements or arrangements
designed to protect such Person against fluctuations in commodity prices.
"HOLDING COMPANY GUARANTY" means the Guaranty dated as of June 6, 1996
executed and delivered by Tejas Transok Holding Company in favor of the Lessor,
as may be amended, or otherwise modified from time to time.
"IMPROVEMENTS" means all improvements located and to be located at or on
the Plants and all personal property, used or useful in connection with the
operation of the Leased Property including those listed in Part C of Schedule 1
to the Lease, including, without limitation, all furnaces, boilers, machinery,
engines, motors, compressors, elevators, fittings, pipings, connectives,
conduits, ducts, partitions and apparatus of every kind and description now or
hereafter affixed or attached, or used or useful, in connection with the Plants.
"INDEBTEDNESS" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments (but excluding sight drafts
that evidence trade account payables arising in the ordinary
course of business);
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
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(c) all obligations of such Person as lessee under leases which
have been or should be, in accordance with GAAP, recorded as
Capitalized Lease Obligations;
(d) all obligations of such Person as lessee of any real or
personal property (or any interest therein) which have not
been or should not be, in accordance with GAAP, recorded as
Capitalized Lease Obligations;
(e) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance
sheet of such Person as of the date at which Indebtedness is
to be determined;
(f) net liabilities of such Person under all Hedging Obligations;
(g) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred
purchase price of property or services (but excluding trade
accounts payable arising in the ordinary course of business),
and indebtedness (excluding prepaid interest thereon) secured
by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or
other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is
limited in recourse; and
(h) all Contingent Liabilities of such Person in respect of any
Indebtedness of any other Person.
For all purposes of this Appendix A, the Indebtedness of any Person shall
include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer.
"INDEMNITEE" means each Lender, the Administrative Agent (in its
individual capacity), the Documentation Agent (in its individual capacity) and
the Lessor, and their respective Affiliates, successors, permitted assigns,
permitted transferees, employees, officers, directors and agents thereof;
PROVIDED, HOWEVER, that in no event shall the Lessee or any Guarantor be an
Indemnitee.
"INDEMNITEE GROUP" means the respective Affiliates, employees, officers,
directors and agents of any Agent, any Lender or the Lessor, as applicable;
PROVIDED, HOWEVER, that in no event shall the Lessee or any Guarantor be member
of the Indemnitee Group.
"INDEPENDENT ENGINEER" means a reputable construction engineering firm
satisfactory to the Agents and the Required Participants (each in its sole
discretion).
"INSPECTING PARTIES" is defined in SECTION 15.1 of the Lease.
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"LAND" means the land described in SCHEDULE 1 to the Lease.
"LAW" - means any law (including, without limitation, any zoning law or
ordinance or any Environmental Law), statute, rule, regulation, ordinance,
order, directive, code, interpretation, judgment, decree, injunction, writ,
determination, award, permit, license, authorization, direction, requirement or
decision of and agreement with or by any government or governmental department,
commission, board, court, authority, agency, official or officer, domestic or
foreign.
"LEASE" means the Lease Agreement dated as of June 6, 1996, between the
Lessor and the Lessee.
"LEASE BALANCE" means, as of any date of determination, an amount equal to
the aggregate sum of the outstanding Funded Amounts of all Participants, all
accrued and unpaid interest on the Loans, all accrued and unpaid Yield on the
Lessor's Invested Amount, all unpaid fees owing to the Agents and the
Participants by the Lessee or any Guarantor under the Operative Documents, and
all other amounts owing to the Agents and the Participants by the Lessee or any
Guarantor under the Operative Documents.
"LEASE TERMINATION DATE" means the last day of the Basic Term, as the same
may be accelerated pursuant to the Lease.
"LEASED PROPERTY" means the Plants and the Easements from time to time
subject to the Lease.
"LENDER FIXED RENT" means, for any Rent Period, the aggregate amount of
interest accrued on the Loans pursuant to SECTION 2.6 of the Loan Agreement
during such Rent Period.
"LENDER PARTY" means a Lender under the Credit Agreement.
"LENDERS" means the holders of the Loans.
"LESSEE" means Transok Acquisition Corporation III in its capacity as
lessee under the Lease and its permitted successors and assigns.
"LESSOR" means CIBC Inc. in its capacity as lessor under the Lease and its
permitted successors and assigns.
"LESSOR FIXED RENT" means, for any Rent Period, the aggregate amount of
Yield accrued on the Lessor's Invested Amount under SECTION 2.3(A) of the
Participation Agreement during such Rent Period.
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"LESSOR LIENS" means Liens on or against the Leased Property, the Lease or
any payment of Rent (a) which result from any act of, or any Claim against, the
Lessor unrelated to the transactions contemplated by the Operative Documents and
the Operative Loan Documents or (b) which result from any Tax owed by the
Lessor, except any Tax for which the Lessee is obligated to indemnify.
"LESSOR'S A-INVESTED AMOUNT" means the A-Portion of the Lessor's Invested
Amount.
"LESSOR'S B-INVESTED AMOUNT" means the B-Portion of the Lessor's Invested
Amount.
"LESSOR'S INVESTED AMOUNT" means the amounts funded by the Lessor pursuant
to SECTION 2 of the Participation Agreement that are not proceeds of Loans by
the Lenders.
"LIEN" means any interest in any asset or property securing an obligation
owed to, or a claim by, a Person other than the owner of the asset or 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, without
limitation, any security interest, mortgage, pledge, lien, claim, charge,
encumbrance, hypothecation, assignment, deposit arrangement, or interest in
property to secure payment of a debt or performance of an obligation; provided
that a negative pledge arrangement or a restriction on alienation is not a Lien
for purposes of any Operative Document.
"LOAN" is defined in SECTION 2.1 of the Loan Agreement.
"LOAN AGREEMENT" means the Loan Agreement, dated as of June 6, 1996, among
the Lessor, the Agents and the Lenders.
"LOAN DOCUMENTS" means, collectively, the Credit Agreement, the Notes (as
defined in the Credit Agreement), the Security Documents, the Guaranties (as
defined in the Credit Agreement), and any other document, instrument or
certificate executed pursuant hereto or thereto as such may be amended,
modified, supplemented, renewed, extended, or restated from time to time.
"LOAN EVENT OF DEFAULT" means any of the events specified in SECTION 6.1
of the Loan Agreement, provided that any requirement for the giving of notice,
the lapse of time, or both, or any other condition, event or act has been
satisfied.
"LOAN POTENTIAL EVENT OF DEFAULT" means any event, condition or failure
which, with notice or lapse of time or both, would become a Loan Event of
Default.
"LOSS PROCEEDS" is defined in SECTION 13.5 of the Lease.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon the
financial condition, operations, performance, properties or prospects of Transok
Guarantor, the Lessee and their
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Subsidiaries, taken as a whole, or the ability of any Guarantor or the Lessee to
perform in any material respect their respective obligations under the Operative
Documents.
"MATERIAL SUBSIDIARY" means (1) as of the date hereof the entities
identified as such on EXHIBIT 8.7 and (2) any Subsidiary of the Borrower with an
aggregate of Consolidated Stockholders' Equity (as defined in the Credit
Agreement) plus liabilities in respect of Intercompany Subordinated Demand Notes
(as defined in the Credit Agreement) plus liabilities in respect of Subordinated
Term Notes (as defined in the Credit Agreement) in excess of $15,000,000;
provided, that any Subsidiary which becomes a Material Subsidiary of the type
described in the foregoing clause shall remain a Material Subsidiary for
purposes of this Agreement even if it shall cease to have an aggregate of
Consolidated Stockholders' Equity plus liabilities in respect of Intercompany
Subordinated Demand Notes plus liabilities in respect of Subordinated Term Notes
in excess of $15,000,000 and (3) any Subsidiary of the Borrower that is
designated by the Borrower in writing to the Administrative Agent as a Material
Subsidiary.
"MATERIAL TEJAS SUBSIDIARIES" is defined in SECTION 1.1 of the Credit
Agreement.
"MEDIUM TERM NOTES" means the $200,000,000 Medium Term Notes of Transok
issued under the Private Placement Memorandum dated March 30, 1992, and the
Amended Private Placement Memorandum dated August 17, 1992.
"MEMORANDUM OF LEASE" means that Memorandum of Lease dated June 6, 1996
executed by Lessee and Lessor in connection with the Lease.
"MERGER AGREEMENT" is defined in SECTION 1.1 of the Credit Agreement.
"NET PROCEEDS" is defined in SECTION 13.1 of the Lease.
"NONSEVERABLE" means an Alteration or part of an Alteration which cannot
be readily removed from the Leased Property without causing material damage to
or materially impairing the value of the Leased Property from that shown in the
Appraisal described in SECTION 8.8 of the Participation Agreement.
"NOTES" means the A-Notes and the B-Notes issued by the Lessor under
SECTION 2.2 of the Loan Agreement, and any and all Notes issued in replacement
or exchange therefor in accordance with the provisions thereof.
"OBLIGOR" means the Lessee and any Guarantor.
"OBSOLETE" means, as of any date of determination, that a Responsible
Officer of the Lessee shall have made a good faith determination, such
determination to be evidenced by a certificate of such Responsible Officer
delivered to the Lessor and the Administrative Agent, that an item of Equipment
is obsolete, surplus or no longer economic for the Lessee's continued use.
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"OPERATING LESSOR'S DEBT" means Indebtedness in respect of the A-Notes,
the A-Invested Amount, the B-Notes and the B-Invested Amount at all times when
the Lease is not a Capitalized Lease Obligation.
"OPERATIVE DOCUMENTS" means the Participation Agreement, the Guaranties,
the Easement Agreements, the Lease, the Memorandum of Lease, the Purchase
Agreement and all documents and instruments executed and delivered in connection
with each of the foregoing.
"OPERATIVE LOAN DOCUMENTS" means the Notes, the Assignment of Lease and
Rents and the Loan Agreement.
"OVERALL TRANSACTION" means all the transactions and activities referred
to in or contemplated by the Operative Documents and the Operative Loan
Documents.
"OVERDUE RATE" means the lesser of (a) the highest interest rate permitted
by Applicable Law and (b) an interest rate per annum equal to (i) as to any
unpaid principal amount representing Domestic Funded Amounts and, to the extent
permitted by applicable law, as to any unpaid, accrued interest on Domestic
Funded Amounts, 2% PLUS the Alternate Base Rate from time to time in effect (but
not less than the Alternate Base Rate in effect at maturity) (calculated on the
basis of a 365 day year or, if applicable, a 366 day year); and (ii) as to any
unpaid principal amount representing Eurodollar Loans and, to the extent
permitted by applicable law, as to any unpaid, accrued interest on Eurodollar
Funded Amounts, 2% PLUS the Applicable Margin with respect to Eurodollar Loans
from time to time in effect, PLUS the Eurodollar Interest Rate for a Eurodollar
Interest Period of one (1) day, one (1) week, or one (1) month (as the Agents
shall select in the exercise of their sole discretion) determined as at 9:00
a.m., Chicago time, on the Eurodollar Business Day next succeeding that on which
the Administrative Agent became aware of such default, as determined by the
Administrative Agent; PROVIDED that so long as the principal amount or any part
thereof of any such Eurodollar Funded Amount remains unpaid, the rate herein
provided for shall be recalculated on the same basis as aforesaid on the last
day of each period for which such rate has been determined as aforesaid. If on
any occasion any of the Reference Lenders is unable, or for any reason fails, so
to notify the Administrative Agent by 11:00 a.m., New York City time on such
Eurodollar Business Day, such interest rate shall be determined on the basis of
the quotations furnished by the other Reference Lenders to the Administrative
Agent at or prior to said 11:00 a.m.
"PARENT COMPANY" means Tejas Gas Corporation, a Delaware corporation and
its successors and assigns.
"PARENT COMPANY GUARANTY" means that certain Guaranty dated as of June 6,
1996 (as may be amended or otherwise modified from time to time) executed by the
Parent Company in favor of the Lessor.
"PARTIAL PURCHASE OPTION EXERCISE AMOUNT" is defined in SECTION 13.2 of
the Lease.
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"PARTICIPANT BALANCE" means, for any Participant as of any date of
determination, an amount equal to the sum of the outstanding Funded Amount of
such Participant, all accrued and unpaid interest or Yield thereon, all unpaid
fees owing to such Participant by the Lessee or any Guarantor under the
Operative Documents and the Operative Loan Documents, and all other amounts
owing to such Participant by the Lessee or any Guarantor under the Operative
Documents and the Operative Loan Documents.
"PARTICIPANTS" means the Lessor and the Lenders, collectively.
"PARTICIPATION AGREEMENT" means the Participation Agreement, dated as of
June 6, 1996, among the Lessee, the Lessor, the Transok Guarantor, the Agents
and the Lenders.
"PENSION PLAN" is defined in SECTION 3.17 of the Parent Company Guaranty.
"PERMIT" means any approval, certificate of occupancy, consent, waiver,
exemption, variance, franchise, order, permit, authorization, right or license
of or from or filing with any federal, state or local government or agency or
subdivision thereof.
"PERMIT DATE" is defined in SECTION 5.12 of the Participation Agreement.
"PERMITTED INVESTMENT" means the following at any time:
(a) any evidence of Indebtedness, maturing not more than one year
after such time, issued by or guaranteed by the full faith and
credit of the United States of America; or
(b) commercial paper, maturing not more than nine months from the
date of issue, which is issued by, or notes or bonds maturing
not more than one year after such time which is issued by a
corporation (other than an Affiliate of a Borrower) organized
under the laws of any state of the United States or of the
District of Columbia with a senior unsecured debt rating of
AA- or higher by Standard & Poors Ratings Group or the
equivalent by Moody's Investor Service, Inc. and which
commercial paper is rated A-1 by Standard & Poors Ratings
Group or P-1 by Moody's Investors Service, Inc.; or
(c) any certificate of deposit or bankers acceptance, or time
deposits including Eurodollar time deposits, in each case,
maturing not more than one year after such time, which is
issued by either
(i) a commercial banking institution that is a member of the
Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than
U.S.$400,000,000 and with a senior unsecured debt rating
of AA- or higher by Standard &
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Poors Ratings Group or the equivalent by Moody's
Investor Service, Inc.; or
(ii) a commercial banking institution not organized under the
laws of the United States or any State thereof, that has
a combined capital and surplus and undivided profits of
not less than $500,000,000 and with senior unsecured
debt rating of AA- by Standard & Poors Ratings Group or
the equivalent by Moody's Investor Service, Inc.; or
(d) any repurchase agreement entered into with any Participant (or
other Person) having a senior unsecured debt rating of AA- or
higher by Standard & Poors Ratings Group or the equivalent by
Moody's Investor Service, Inc. which
(i) is secured by a fully perfected security interest in any
obligation of the type described in CLAUSE (A); and
(ii) has a market value at the time such repurchase agreement
is entered into of not less than 100% of the repurchase
obligation of such Participant (or other Person)
thereunder; or
(e) any investment permitted by the investment policy of United
States Trust Company of New York as in effect from time to
time.
"PERMITTED LIENS" means (a) Liens for taxes not yet due or which are being
contested in good faith pursuant to SECTION 8.5 of the Lease; (b) Liens in
connection with worker's compensation, unemployment insurance, old-age pensions
or other social security benefits or obligations (excluding any Liens arising
under ERISA); (c) mechanics', materialmen's, warehousemen's, carriers' or other
like Liens arising in the ordinary course of business securing obligations
incurred in connection with the Property and which (i) are not yet due or which
are being contested in good faith pursuant to SECTION 8.5 of the Lease, (ii) do
not secure amounts in excess of $250,000 individually or in the aggregate and
(iii) do not pose a material risk of the sale or seizure of all or any material
part of the Leased Property; (d) Liens of judgments or awards not in excess of
$500,000, and Liens of judgements or awards which are fully covered by insurance
and with respect to which an appeal or proceeding for review is being contested
in good faith pursuant to SECTION 8.5 of the Lease; (e) Liens created by any of
the Operative Documents or any of the Operative Loan Documents; (f) the
exceptions or encumbrances set forth in the Disclosure Schedule; (g)
[Intentionally omitted]; and (h) any other zoning and planning restrictions,
subdivision and platting restrictions, easements, right-of-ways, licenses,
reservations, covenants, conditions, waivers, restrictions on the use of any
Plant, minor encroachments or minor irregularities of title which could not
singularly or in the aggregate (i) reduce the fair market value of the Leased
Property or any material part thereof (including on
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the direct or indirect transfer of the Leased Property to a third party after
termination of the Lease), (ii) impair the usefulness, for the purposes intended
by the Lessee and Lessor on the Closing Date, of the Leased Property taken as a
whole or any material part thereof, (iii) subject the Lessor or any of its
Affiliates to any civil liability, or any loss, costs, disability, damage,
claim, penalty or expense (not fully indemnified by a member of the Tejas
Group), (iv) subject the Lessor or any of its Affiliates to any criminal
liability, or (v) have a Material Adverse Effect.
"PERSON" means an individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
nonincorporated organization or government or any agency or political
subdivision thereof.
"PLANT" means any gas processing plant conveyed from the Seller to the
Lessee under the Bills of Sale.
"POTENTIAL EVENT OF DEFAULT" means any event which with notice or passage
of time or both, would constitute an Event of Default.
"PROCEEDS" is defined in SECTION 13.1 of the Lease.
"PURCHASE AGREEMENT" means the Merger Agreement (as defined in the Credit
Agreement).
"PURCHASE OPTION EXERCISE AMOUNT" means as of any date of determination,
an amount equal to the sum of (A) the Lease Balance as of the date of purchase,
PLUS (B) all accrued but unpaid Rent, PLUS (C) all other sums then due and
payable under the Operative Documents by the Lessee or any Guarantor.
"PURCHASE PRICE" is defined in SECTION 2.1 of the Participation Agreement.
"QUALIFIED PAYMENTS" means all payments received by the Lessor from time
to time during the Lease Term from any party (1) as compensation for any
restriction placed upon the use or development of the Leased Property, (2)
because of any judgment, decree or award for injury or damage to the Leased
Property, (3) under any title insurance policy or otherwise as a result of any
title defect or claimed title defect with respect to the Leased Property, or (4)
if and only to the extent provided in SECTION 13.1 of the Lease, the portion of
any Awards, in respect of a Condemnation which relate to the Easements;
provided, however, that (x) all Loss Proceeds shall be applied pursuant to the
Lease, and except as otherwise provided in CLAUSE (4) above, no Loss Proceeds
shall constitute Qualified Payments, (y) in determining "Qualified Payments",
there shall be deducted all reasonable and documented expenses and costs of
every kind, type and nature (including taxes and attorneys' fees) incurred by
the Lessor (but there shall be no such deduction for such expenses and costs
incurred by Lessee) with respect to the collection of such payments, and (z)
"Qualified Payments" shall not include any payment to the Lessor by a
Participant or an Affiliate of the Lessor that is made to compensate the Lessor
for
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the Participant's or Affiliate's share of any losses the Lessor may incur as a
result of any of the events described in the preceding CLAUSES (1) through (4).
For purposes of computing the total Qualified Payments paid to or received by
the Lessor as of any date, payments described in the preceding CLAUSES (1)
through (4) will not be considered Qualified Payments until they are actually
applied as Qualified Payments by the Lessor.
"RECOURSE DEFICIENCY AMOUNT" means the aggregate A-Portion Participant
Balances of the Participants as of the Lease Termination Date.
"REFERENCE LENDERS" means Bank of Montreal and Canadian Imperial Bank of
Commerce.
"REFERENCE RATE" means the rate of interest most recently announced by
Canadian Imperial Bank of Commerce in the United States from time to time as its
"reference rate" for calculating interest on certain loans, which need not be
the lowest interest rate charged by such bank. If such reference rate or
equivalent of such bank changes from time to time after the date hereof, the
Reference Rate shall be automatically increased or decreased, as the case may
be, without notice to the Lessee as of the effective time of each change in such
reference rate or equivalent.
"REGULATIONS" means the income tax regulations promulgated from time to
time under and pursuant to the Code.
"REGULATORY CHANGE" means, relative to any Participant, any change
occurring after the date hereof in any (or the adoption after the date hereof of
any new):
(a) United States Federal or state law or foreign law applicable
to such Participant; or
(b) regulation, interpretation, directive, or request (whether or
not having the force of law) applicable to such Participant of
any court or governmental authority charged with the
interpretation or administration of any law referred to in
CLAUSE (A) or of any fiscal, monetary, or other authority
having jurisdiction over such Participant.
"RELEASE" means a "release", as such term is defined in CERCLA.
"RELEASE DATE" means the earlier of (i) the date that the Participant
Balances of the Lenders have been paid in full, and (ii) the date on which the
Required Lenders or any Agent acting upon the instructions of the Required
Lenders gives notice to the Lessor that the Agents and the Lenders release any
and all interest they may have in the Leased Property and all proceeds thereof,
and any rights to direct, consent or deny consent to any action by the Lessor
with respect to the Leased Property.
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"RENEWAL TERM" is defined in SECTION 5.1 of the Lease.
"RENT" means Fixed Rent and Additional Rent, collectively.
"RENT PAYMENT DATES" means the last day of each Eurodollar Interest
Period; PROVIDED, HOWEVER, that if interest on the Loans and Yield on the
Lessor's Invested Amount is not determined by reference to the Eurodollar
Interest Rate, then the Rent Payment Date shall be the last day of each
three-month period following the last day of the preceding Eurodollar Interest
Period, or if such day is not a Business Day, the next succeeding Business Day
and PROVIDED FURTHER that the first Rent Payment Date shall be September 30,
1996.
"RENT PERIOD" means initially the period commencing on the Basic Term
Commencement Date and ending on the first Rent Payment Date, and thereafter each
period from one Rent Payment Date to the next following Rent Payment Date.
"REPORT" is defined in SECTION 7.6 of the Participation Agreement.
"REQUIRED LENDERS" means, at any time, the Lenders holding an aggregate
outstanding principal amount of Loans equal to at least 51% of the aggregate
outstanding principal amount of all Loans.
"REQUIRED PARTICIPANTS" means, at any time, Participants holding an
aggregate outstanding principal amount of Funded Amounts equal to at least 51%
of the aggregate outstanding principal amount of all Funded Amounts.
"REQUIREMENTS OF LAW" means, as to any Person, the charter and by-laws or
other organizational or governing documents of such Person, and any law, rule or
regulation, permit, approval, authorization, license or variance, order or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject, including, without
limitation, the Securities Act, the Securities Exchange Act, Regulations G, T, U
and X, and any building, environmental or land use requirement or permit or
occupational safety or health law, rule or regulation.
"RESOURCE CONSERVATION AND RECOVERY ACT" means the Resource Conservation
and Recovery Act, 42 U.S.C. SECTION 690, ET SEQ., as in effect from time to
time.
"RESPONSIBLE OFFICER" means the Chairman or Vice Chairman of the Board of
Directors, the Chairman or Vice Chairman of the Executive Committee of the Board
of Directors, the President, any Senior Vice President or Executive Vice
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer.
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"RSN" means a revolving subordinated promissory note from the Borrower
payable to the Parent Company in the form of EXHIBIT 9.3.3B to the Credit
Agreement.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES" means any stock, shares, voting trust certificates, bonds,
debentures, notes or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly
known as "securities", or any certificates of interest, shares, or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing, but shall not include any evidence of the obligations of the Borrower
or the Lessee.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY DOCUMENTS" means, collectively, the Pledge Agreements (as
defined in the Credit Agreement), the Notes Security Agreement (as defined in
the Credit Agreement), the Parent Company Guaranty, the Transok Guaranty, the
Holding Company Guaranty, the Holding Company Security Agreement (as defined in
the Credit Agreement) the Partnership/Limited Liability Company Security
Agreements (as defined in the Credit Agreement) and any and all additional
security documents described in SECTION 4.1.4 of the Transok Guaranty.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SELLER" means Transok Gas Processing Company, a Delaware corporation.
"SPECIAL APPLICABLE LAWS" mean all Applicable Laws, noncompliance with
which would, in Lessor's judgment, constitute a crime for which Lessor could
reasonably be expected to be liable and for which Lessee cannot legally
indemnify Lessor.
"STATED MATURITY DATE" means the Lease Termination Date.
"STOCKHOLDERS' EQUITY" means, as of the time any determination thereof is
to be made (i) at a time when the Borrower is a corporation, the sum of the
Borrower's capital stock (which shall exclude treasury stock and any capital
stock subject to mandatory redemption by the issuer at the option of the holder
thereof) and additional paid-in capital, PLUS retained earnings (MINUS
accumulated deficit) and (ii) at a time when the Borrower is a limited liability
company, the sum of all membership interests of all members of the Borrower, all
as shown on the consolidated balance sheet of the Borrower and its Subsidiaries
and based on GAAP.
"SUBSIDIARY" means a corporation, of which any Person and its Subsidiaries
own, directly or indirectly, such number of outstanding shares of capital stock
as have more than fifty percent (50%) of the ordinary voting power for the
election of directors; each partnership, of which any Person or any Subsidiary
of any Person is a general partner; and each limited liability company,
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in which any Person is a member or manager and with an aggregate interest of
more than fifty percent (50%).
"SUBSIDIARY GUARANTOR" or "SUBSIDIARY GUARANTORS" means any and all
Subsidiaries of the Transok Guarantor listed in EXHIBIT 11.1.8 of the Credit
Agreement or any other Subsidiary of the Transok Guarantor that may from time to
time execute and deliver a Guaranty and become a Guarantor pursuant to SECTION
4.1.4 of the Transok Guaranty.
"SUBSIDIARY GUARANTY" or SUBSIDIARY GUARANTIES" means any and all
Guaranties executed and delivered by a Subsidiary Guarantor in favor of the
Lessor, as may be amended or otherwise modified from time to time.
"TAX" or "TAXES" is defined in SECTION 7.4 of the Participation Agreement.
"TAX INDEMNITEE" means the Lessor, each Lender, the Administrative Agent
(in its individual capacity), the Documentation Agent and their respective
Affiliates, successors, permitted assigns, permitted transferees, employees,
officers, directors and agents thereof, PROVIDED, HOWEVER, that in no event
shall the Lessee or any Guarantor be a Tax Indemnitee.
"TEJAS" means Tejas Gas Corporation, a Delaware corporation, its
successors and assigns.
"TEJAS GROUP" means Tejas and its Subsidiaries and their successors and
assigns.
"TERMINATION NOTICE" is defined in SECTION 13.2 of the Lease.
"TOTAL INTEREST EXPENSE" means, with respect to any Person and to any
period for which a determination thereof is to be made, the sum, without
duplication, of (i) the aggregate amount of all interest accrued and paid on all
Indebtedness of such Person and its Subsidiaries on a consolidated basis, PLUS
(ii) the portion of any rental obligation paid which is allocable to interest
expense in accordance with GAAP.
"TRANSFER" means (i) a sale, transfer, conveyance, assignment or other
disposition of an Asset (or related Assets) having a Fair Market Value in excess
of $100,000, or (ii) destruction as a result of a casualty of an Asset (or
related Assets) having a Fair Market Value in excess of $500,000 in the
aggregate for any such casualty.
"TRANSOK" means Transok, Inc., an Oklahoma corporation, its successors and
assigns.
"TRANSOK GUARANTOR" means Transok Acquisition Company, a Delaware
corporation, its successors and assigns.
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"TRANSOK GUARANTY" means the Guaranty dated June 6, 1996 executed and
delivered by the Transok Guarantor in favor of the Lessor, as may be amended or
otherwise modified from time to time.
"TRIGGER EVENT" means the occurrence of any one or more of the following
events:
(i) an Event of Default under any one or more of the following
clauses under Article XVI of the Lease: (A) (failure to pay Fixed Rent),
(B) (failure to pay Additional Rent), (C) (failure to pay Funded Amount,
Lease Balance or Recourse Deficiency Amount), or (E) (a financial covenant
default);
(ii) an Event of Default or a Potential Event of Default under
CLAUSE (G) of Article XVI of the Lease;
(iii) any other Event of Default under Article XVI of the Lease and,
as a result thereof, the exercise by the Lessor of any one or more
remedies set forth in SECTION 17.1 of the Lease; or
(iv) the acceleration of the obligations under the Credit Agreement
following an "Event of Default" (as defined in the Credit Agreement).
"UCC" means the Uniform Commercial Code of New York, as in effect from
time to time.
"UNFUNDED BENEFIT LIABILITIES" means with respect to any Employee Benefit
Plan at any time, the amount of unfunded benefit liabilities of such Employee
Benefit Plan at such time as determined under ERISA SECTION 4001(A)(18) which
shall not be less than the accumulated benefit obligation, as disclosed in
accordance with FAS 87, over the fair market value of Employee Benefit Plan
assets.
"UNREIMBURSED LESSOR ADVANCES" is defined in SECTION 5.10 of the Loan
Agreement.
"UNREIMBURSED LESSOR ADVANCES BALANCE" is defined in SECTION 5.10 of the
Loan Agreement.
"YIELD" is defined in SECTION 2.3 of the Participation Agreement.
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EXHIBIT D-1
GUARANTY
THIS GUARANTY (this "GUARANTY"), dated as of June 6, 1996, made by TEJAS
GAS CORPORATION, a Delaware corporation (the "GUARANTOR"), in favor of the
Lessor (hereinafter defined).
W I T N E S S E T H:
WHEREAS, pursuant to a Participation Agreement, dated as of June 6, 1996
(together with all amendments and other modifications, if any, from time to time
thereafter made thereto, the "PARTICIPATION AGREEMENT"), among TRANSOK
ACQUISITION COMPANY, a Delaware corporation ("TAC"), TRANSOK ACQUISITION
CORPORATION III, a Delaware corporation ("TAC III"), CIBC INC., a Delaware
corporation, as lessor (together with its successors, transferees and assigns
and including any Person to whom the Lessor may transfer the Leased Property or
this Guaranty or any interest therein or herein in accordance with the Operative
Documents (the "LESSOR"), the various financial institutions (together with the
Lessor, individually a "PARTICIPANT" and collectively the "PARTICIPANTS") as
are, or may from time to time become, parties thereto, CANADIAN IMPERIAL BANK OF
COMMERCE, acting through certain of its U.S. branches or agencies ("CIBC"), as
administrative agent for the Lenders (in such capacity, together with any
successor(s) thereto in such capacity, the "ADMINISTRATIVE AGENT"), BANK OF
MONTREAL ("BMO"), as documentation agent for the Lenders (in such capacity
together with any successor(s) thereto in such capacity the "DOCUMENTATION
AGENT"), the Lessor and the Lessee have entered into the Lease; and
WHEREAS, as a condition precedent to the Lessor's entering into the Lease,
the Guarantor is required to execute and deliver this Guaranty; and
WHEREAS, the Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, the Lessee is a wholly-owned indirect subsidiary of the
Guarantor; and
WHEREAS, it is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Lease;
NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lessor to enter into the
Operative Documents and the Operative Loan Documents, the Guarantor agrees, for
the benefit of the Lessor, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"AGENT" means either the Administrative Agent, the Documentation Agent, or
both, as applicable.
"BMO" is defined in the FIRST RECITAL.
"CIBC" is defined in the FIRST RECITAL.
"GUARANTOR" is defined in the PREAMBLE.
"GUARANTY" is defined in the PREAMBLE.
"PARTICIPANT" is defined in the FIRST RECITAL.
"PARTICIPATION AGREEMENT" is defined in the FIRST RECITAL.
"NET WORTH" means the consolidated net worth of the Guarantor and its
Subsidiaries, determined in accordance with GAAP.
"TAC" is defined in the FIRST RECITAL.
"TAC III" is defined in the FIRST RECITAL.
"TAC CREDIT AGREEMENT" means the Secured Credit Agreement dated as of June
6, 1996 among TAC, certain financial institutions, BMO as administrative agent
and CIBC as documentation agent, as amended.
"U.C.C." means the Uniform Commercial Code as in effect in the State of
New York, as the same may be amended from time to time.
SECTION 1.2. PARTICIPATION AGREEMENT DEFINITIONS. Unless otherwise defined
herein or the context otherwise requires, terms used in this Guaranty, including
its preamble and recitals, have the meanings provided such terms in the
Participation Agreement.
2
SECTION 1.3. U.C.C. DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Guaranty, including its preamble and recitals, with such
meanings.
ARTICLE II
GUARANTY PROVISIONS; EVENTS OF DEFAULT
SECTION 2.1. GUARANTY. The Guarantor hereby absolutely, unconditionally
and irrevocably guarantees to the Lessor that:
(a) all amounts provided in the Operative Documents (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, whether or not allowed or
allowable in such proceeding, and all such obligations, liabilities,
claims, debts and indebtedness incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, and
further to include, without limitation, all such amounts which would
become due but for the operation of Section 502(b) of the United States
Bankruptcy Code, 11 U.S.C. ss. 502(b)) to be payable by Lessee will be
promptly paid in full when the same shall become due and payable in
accordance with the terms hereof (all such sums, and all such interest,
obligations, liabilities, claims, debts, indebtedness and amounts,
collectively, the "GUARANTEED AMOUNTS"); and
(b) (i) the Lessee will perform, comply with and observe all
obligations, covenants, terms, conditions and undertakings of the Lessee
contained in the Operative Documents and (ii) TAC will perform, comply
with and observe all obligations, covenants, terms, conditions and
undertakings of TAC contained in the Transok Guaranty, in each case as and
when required in accordance with the terms thereof, or any successor
thereto (all such obligations, covenants, terms, conditions and
undertakings of the Lessee and TAC, collectively, the "GUARANTEED
OBLIGATIONS", and, together with the Guaranteed Amounts, the
"LIABILITIES").
If for any reason whatsoever (x) the Lessee shall fail or be unable duly,
punctually and fully to pay any Guaranteed Amounts as and when such Guaranteed
Amounts shall become due and payable under the Operative Documents or to perform
or comply with any Guaranteed Obligation to be performed or complied with by the
Lessee under the Operative Documents, or (y) TAC shall fail or be unable duly,
punctually and fully to pay any Guaranteed Amount as and when such Guaranteed
Amounts shall become due and payable under the Transok Guaranty or to perform or
comply with any Guaranteed Obligation to be performed or complied with by TAC
under the Transok Guaranty, then the Guarantor shall pay on demand, or cause to
be paid on demand, such Guaranteed Amounts to the Person entitled to receive
such Guaranteed Amounts pursuant to the terms of the Operative Documents, as
appropriate, and will perform
3
or cause to be performed such Guaranteed Obligations to be performed or complied
with, together with interest on any Guaranteed Amounts due and owing from (1)
the Lessee in accordance with the terms of the Operative Documents and (2) TAC
in accordance with the Transok Guaranty, in each case from the date any such
Guaranteed Amounts become due and payable to the date of payment. The Guarantor
also agrees to pay certain legal fees and expenses of the Lessor in accordance
with Section 8.8 of the Participation Agreement.
SECTION 2.2. NATURE OF GUARANTY. This Guaranty constitutes a guaranty of
payment when due and not of collection, and the Guarantor specifically agrees
that it shall not be necessary or required that the Lessor exercise any right,
assert any claim or demand or enforce any remedy whatsoever against the Lessee
or any other Obligor (or any other Person) before or as a condition to the
obligations of the Guarantor hereunder. Any amounts received by the Lessor
whatsoever source on account of the Liabilities may be applied by it toward the
payment of such of the Liabilities, and in such order of application, as the
Lessor may from time to time elect.
SECTION 2.3. ACCELERATION OF GUARANTY. The Guarantor agrees that, in the
event of the dissolution or insolvency of the Lessee or the Guarantor, or the
inability or failure of the Lessee or the Guarantor to pay debts as they become
due, or an assignment by the Lessee or the Guarantor for the benefit of
creditors, or the commencement of any case or proceeding in respect of the
Lessee or the Guarantor under any bankruptcy, insolvency or similar laws, and if
such event shall occur at a time when any of the Liabilities may not then be due
and payable, the Guarantor will pay to the Lessor forthwith the full amount
which would be payable hereunder by the Guarantor if all such Liabilities were
then due and payable.
SECTION 2.4. GUARANTY ABSOLUTE, ETC. This Guaranty shall in all respects
be a continuing, absolute and unconditional guaranty, and shall remain in full
force and effect (notwithstanding, without limitation, the dissolution of the
undersigned or that at any time or from time to time all Liabilities may have
been paid in full), until all Liabilities (including any extensions,
modifications, rearrangements, substitutions, supplements or renewals of any
thereof) and all interest thereon and all reasonable expenses (including
reasonable attorneys' fees and legal expenses) paid or incurred by the Lessor
(subject to the terms and provisions of Section 8.8 of the Participation
Agreement) in endeavoring to collect the Liabilities and in enforcing this
Guaranty shall have been finally paid in full and the Lease shall have been
permanently terminated. Once the Liabilities have been paid in full, all
obligations of the Guarantor hereunder shall have been paid in full and the
Lease shall have been terminated, this Guaranty shall terminate except for the
provisions hereof which by their terms expressly survive termination. The
Guarantor guarantees that the obligations of the Lessee with respect to the
Liabilities will be paid strictly in accordance with the terms of the Operative
Documents under which they arise, regardless of any law, regulation or order now
or hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Lessor with respect thereto. The liability of the Guarantor under
this Guaranty shall be absolute, unconditional and irrevocable irrespective of:
4
(a) any lack of validity, legality or enforceability of any of the
Lease or any other Operative Documents or any of the Operative Loan
Documents;
(b) the failure of the Lessor (i) to assert any claim or demand or
to enforce any right or remedy against the Lessee, any other Obligor or
any other Person (including any other guarantor) under the provisions of
the Lease or any other Operative Documents or any of the Operative Loan
Documents or otherwise, or (ii) to exercise any right or remedy against
any other guarantor of, or collateral securing, any obligations of the
Lessee or any other Obligor;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of the Lessee or any other
Obligor, or any other extension, compromise or renewal of any obligation
of the Lessee or any other Obligor;
(d) any reduction, limitation, impairment or termination of any
obligations of the Lessee or any other Obligor for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and the Guarantor hereby waives any right to or
claim of) any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or
occurrence affecting, any obligations of the Lessee, any other Obligor or
otherwise;
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Lease or any
other Operative Documents or any of the Operative Loan Documents;
(f) any addition, exchange, release, surrender or non-perfection of
any collateral, or any amendment to or waiver or release or addition of,
or consent to departure from, any other guaranty, held by the Lessor
securing any of the obligations of the Lessee or any other Obligor;
(g) the merger of the Lessee or any of its Subsidiaries or
Affiliates with or into any other Person and whether or not the Lessee is
the surviving Person; or
(h) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Lessee,
any other Obligor, any surety or any guarantor.
The Lessor may, from time to time, at its sole discretion and without
notice to the undersigned, take any or all of the following actions: (a) retain
or obtain a Lien upon any property to secure any of the Liabilities or any
obligation hereunder (provided, that this clause (a) does not and shall not be
deemed to constitute a grant of, or consent to, a lien or security interest on
any property of the undersigned), (b) retain or obtain the primary or secondary
5
obligation of any obligor or obligors, in addition to the undersigned, with
respect to any of the Liabilities, (c) extend or renew for one or more periods
(whether or not longer than the original period), alter or exchange any of the
Liabilities, or release or compromise any obligation of the undersigned
hereunder or any obligation of any nature of any other obligor with respect to
any of the Liabilities, (d) release or fail to perfect its lien upon or security
interest in, or impair, surrender, release or permit any substitution or
exchange for, all or any part of any property securing any of the Liabilities or
any obligation hereunder, or extend or renew for one or more periods (whether or
not longer than the original period) or release, compromise, alter or exchange
any obligations of any nature of any obligor with respect to any such property,
and (e) upon the occurrence and during the continuance of an Event of Default or
upon the maturity thereof, as the case may be, resort to the undersigned for
payment of any of the Liabilities, whether or not the Lessor (i) shall have
resorted to any property securing any of the Liabilities or any obligation
hereunder or (ii) shall have proceeded against any other Obligor primarily or
secondarily obligated with respect to any of the Liabilities (all of the actions
referred to in preceding clauses (i) and (ii) being hereby expressly waived by
the undersigned).
SECTION 2.5. REINSTATEMENT, ETC. The Guarantor agrees that,
notwithstanding the first and second sentences of SECTION 2.4 hereof, if at any
time all or any part of any payment theretofore applied by the Lessor to any of
the Liabilities is or must be rescinded or returned by the Lessor for any reason
whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of any Obligor), such Liabilities shall, for the purposes of this
guaranty, to the extent that such payment is or must be rescinded or returned,
be deemed to have continued in existence, notwithstanding such application by
the Lessor, and this guaranty shall continue to be effective or be reinstated,
as the case may be, as to such Liabilities, all as though such application by
the Lessor had not been made.
SECTION 2.6. WAIVER, ETC. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
obligations of the Lessee or any other Obligor and this Guaranty and any
requirement that the Lessor protect, secure, perfect or insure any security
interest or Lien, or any property subject thereto, or exhaust any right or take
any action against the Lessee, any other Obligor or any other Person (including
any other guarantor) or entity or any collateral securing the obligations of the
Lessee or any other Obligor, as the case may be.
SECTION 2.7. WAIVER OF SUBROGATION. The Guarantor hereby irrevocably
waives any claim or other rights which it may now or hereafter acquire against
the Lessee or any other Obligor that arise from the existence, payment,
performance or enforcement of the Guarantor's obligations under this Guaranty or
any other Operative Document, including any right of subrogation, reimbursement,
exoneration, or indemnification, any right to participate in any claim or remedy
of the Lessor against the Lessee or any other Obligor or any collateral which
the Lessor now has or hereafter acquires, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including,
without limitation, the right to take or receive from the Lessee or any other
Obligor, directly or indirectly, in cash or other property
6
or by set-off or in any manner, payment or security on account of such claim or
other rights. If any amount shall be paid to the Guarantor in violation of the
preceding sentence and the obligations of the Lessee or any other Obligor with
respect to the Liabilities shall not have been paid in full and the Lease is in
effect, such amount shall be deemed to have been paid to the Guarantor for the
benefit of, and held in trust for, the Lessor, and shall forthwith be paid to
the Lessor to be credited and applied upon the obligations of the Lessee or any
other Obligor with respect to the Liabilities, whether matured or unmatured. The
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by the Participation Agreement and that
the waiver set forth in this SECTION 2.7 is knowingly made in contemplation of
such benefits.
SECTION 2.8. SUCCESSORS, TRANSFEREES AND ASSIGNS; TRANSFERS OF
LIABILITIES, ETC. This Guaranty shall:
(a) be binding upon the Guarantor, and its successors, transferees
and assigns; and
(b) inure to the benefit of and be enforceable by the Lessor, and
its successors, transferees and assigns, including any Person to whom the
Lessor may transfer the Leased Property or this Guaranty or any interest
therein or herein in accordance with the provisions of the Operative
Documents.
Without limiting the generality of the foregoing CLAUSE (B), the Lessor may,
subject to the terms and provisions of Section 6.1 or 6.2, as the case may be,
of the Participation Agreement, from time to time, without notice to the
undersigned, assign or transfer any or all of the Liabilities or any interest
therein; and, notwithstanding any such assignment or transfer or any subsequent
assignment or transfer thereof, such Liabilities shall be and remain Liabilities
for the purposes of this Guaranty, and each and every immediate and successive
assignee or transferee of any of the Liabilities or of any interest therein
shall, to the extent of the interest of such assignee or transferee in the
Liabilities, be entitled to the benefits of this Guaranty to the same extent as
if such assignee or transferee were the transferring Lessor; provided, however,
that, unless the transferring Lessor shall otherwise consent in writing, the
transferring Lessor shall have an unimpaired right, prior and superior to that
of any such assignee or transferee, to enforce this guaranty, for the benefit of
the transferring Lessor as to those of the Liabilities which the transferring
Lessor has not assigned or transferred; provided, that any such assignment or
transfer shall be subject to the limitations and restrictions in Sections 6.1 or
6.2, if applicable, of the Participation Agreement.
SECTION 2.9. EVENTS OF DEFAULT. If any of the following events shall occur
and be continuing it shall constitute an "EVENT OF DEFAULT" hereunder:
7
(a) The Guarantor shall fail to observe or perform any covenant or
agreement contained in SECTION 2.1 (after giving effect to any applicable
grace period), 4.1.1, 4.1.5 or 4.2.1 hereof;
(b) The Guarantor shall default in the due performance or observance
of any covenant or agreement contained in this Guaranty other than the
covenants and agreements referred to in the immediately preceding clause
(a) for more than ten Business Days after the earlier of (i) the date on
which the Guarantor becomes aware of such failure and (ii) the date on
which written notice thereof has been given to the Guarantor by either
Agent; or
(c) Without the prior written consent of the Administrative Agent
and the Required Participants, failure by the Guarantor to own (free and
clear of all Liens and other encumbrances except those in favor of the
either Agent pursuant to or otherwise permitted by the Operative
Documents), directly or indirectly through any of its Subsidiaries, 100%
of the outstanding capital stock (including, without limitation, voting
stock) of each of Lessee, Tejas-Acadian Holding Company, a Delaware
corporation ("TAHC") and TAC.
No waiver by the Lessor of any Event of Default shall in any way be, or be
construed to be, a waiver of any further or subsequent Event of Default.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants unto the Lessor as set forth in this Article.
SECTION 3.1.1. ORGANIZATION, ETC. The Guarantor is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation and is duly qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction where, because of the
nature of its activities or properties, such qualification is required and where
the failure so to qualify would have a material adverse effect on the financial
position, business, operations and prospects of the Guarantor on a consolidated
basis.
SECTION 3.1.2. AUTHORIZATION; NO CONFLICT. The execution and delivery of
this Guaranty and the performance by the Guarantor of its obligations under this
Guaranty are within the Guarantor's corporate powers, have been duly authorized
by all necessary corporate action, have received all necessary governmental
approvals (if any shall be required), and do not and
8
will not contravene or conflict with any provision of Law or of the charter or
by-laws of the Guarantor or of any material agreement binding upon the
Guarantor.
SECTION 3.1.3. VALIDITY AND BINDING NATURE. This Guaranty is the legal,
valid and binding obligation of the Guarantor enforceable against the Guarantor
in accordance with its terms subject as to enforcement only to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and general principles of equity.
SECTION 3.1.4. REPRESENTATION WITH RESPECT TO TRUE AND COMPLETE DISCLOSURE.
To the best of the Guarantor's knowledge and belief, all factual information
heretofore or contemporaneously furnished by or on behalf of the Guarantor, TAC,
the Lessee, or any Subsidiary of TAC to the Lessor, each Agent and each
Participant for purposes of or in connection with this Guaranty, the
Participation Agreement or any transaction contemplated hereby or thereby is,
and all other such factual information hereafter furnished by or on behalf of
the Guarantor, the Lessee, or any Subsidiary of the Lessee to the Lessor, each
Agent and each Participant will be, true and accurate (taken as a whole) on the
date as of which such information is dated or certified and does not omit any
material fact necessary to make such information (taken as a whole) not
misleading at such time.
SECTION 3.1.5. UNCONDITIONAL PURCHASE OBLIGATIONS. Except as permitted by
Section 9.3.9 of the TAC Credit Agreement and Section 4.2 of the Transok
Guaranty, neither the Guarantor nor any of the Material Tejas Subsidiaries has
entered into, or is a party to, or has any obligation under, any material
contract for the purchase of materials, supplies or other property or services,
if such contract requires that payment be made by it regardless of whether or
not delivery is ever made of such materials, supplies or other property or
services.
SECTION 3.1.6. PENDING OR THREATENED LITIGATION AND CONTINGENT LIABILITIES.
No litigation (including, without limitation, derivative actions and take-or-pay
actions), arbitration proceedings or governmental proceedings are pending or to
the best knowledge of the Guarantor threatened against the Guarantor which
would, if adversely determined, materially and adversely affect the financial
condition, operations, assets, business, properties or prospects of the
Guarantor (excluding any rulemaking or similar proceedings of general
applicability to natural gas pipelines and any appeal or petition for review
related thereto) or continued operations of the Guarantor, or which purports to
affect the legality, validity or enforceability of this Guaranty. Other than any
liability incident to such litigation or proceedings, the Guarantor does not
have any contingent liabilities that would be material to the Guarantor that are
not provided for or disclosed in the financial statements referred to in SECTION
3.1.12.
SECTION 3.1.7. EXISTING EMPLOYEE BENEFIT PLANS. Each employee benefit plan
sponsored or maintained by the Guarantor or any of its Subsidiaries for their
employees or former employees ("EMPLOYEE BENEFIT PLAN") complies in all material
respects with all applicable requirements of Law. No Reportable Event (as
defined in ERISA) for which the disclosure
9
requirements under Regulation 2615.3 promulgated by the Pension Benefit Guaranty
Corporation (the "PBGC") has not been waived has occurred with respect to any
Employee Benefit Plan that is subject to Title IV of ERISA (hereinafter "PENSION
PLAN") and there has been no withdrawal from any such plan or steps taken to do
so which has resulted or could result in material liability for the Guarantor or
any of its Subsidiaries under Title IV of ERISA.
SECTION 3.1.8. INVESTMENT COMPANY ACT REPRESENTATION. The Guarantor is not
an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
SECTION 3.1.9. PUBLIC UTILITY HOLDING COMPANY. The Guarantor is not 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", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
SECTION 3.1.10. REGULATION G, T, U AND X. The execution, performance or
delivery by the Guarantor of this Guaranty will not violate Regulation G, T, U
or X. The Guarantor is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying margin stock (within the meaning of Regulation U), and both before and
after giving effect to all of the transactions contemplated herein and by the
Participation Agreement, including, without limitation, the Merger (as defined
in the TAC Credit Agreement), the purchases and acquisitions permitted under the
Participation Agreement and all of the transactions contemplated by the
Operative Documents, less than 25% of the assets of the Guarantor consists of
Margin Stock.
SECTION 3.1.11. TAXES. The Guarantor has to the best knowledge of the
Guarantor filed all tax returns or extensions and reports required by law to
have been filed by it and has paid all taxes and governmental charges thereby
shown to be owing, except such taxes or charges which are being contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
SECTION 3.1.12. FINANCIAL STATEMENTS. The Guarantor's consolidated
financial statements for the year ended December 31, 1995, and the Guarantor's
unaudited consolidated financial statements as at March 31, 1996, copies of
which have been furnished to each Agent and each Participant, have been prepared
in conformity with GAAP applied on a basis consistent with that of the preceding
fiscal year, and present fairly the consolidated financial condition of the
Guarantor and its Subsidiaries as at such date and the results of its
consolidated operations for the period then ended (subject, with respect to the
March 31, 1996 statements, to normal year-end audit adjustments) and since March
31, 1996 there has been no material adverse change in the Guarantor's financial
condition, operations, assets, business, properties or prospects.
10
SECTION 3.1.13. STATUS OF TITLE TO ASSETS. The representations and
warranties in Section 8.13 of the TAC Credit Agreement are each true and
correct. The representations and warranties in Section 4.1(g) of the
Participation Agreement are each true and correct.
SECTION 3.1.14. ENVIRONMENTAL WARRANTIES. The representations and
warranties in Section 8.16 of the TAC Credit Agreement are each true and
correct.
SECTION 3.1.15. DIVIDEND AND LOAN RESTRICTIONS OF THE MATERIAL
SUBSIDIARIES. None of the Material Tejas Subsidiaries is a party to, or
otherwise subject to any provision contained in, any agreement or instrument
which restricts the ability of such Material Tejas Subsidiary to pay dividends
to, make loans or advances to, or otherwise make distributions or payments to,
the Guarantor, except the restrictions in (i) the TAC Credit Agreement, (ii) the
Amended and Restated Secured Credit Agreement dated as of January 12, 1995 among
Tejas-Acadian Holding Company, certain financial institutions, BMO, CIBC and
Citibank, N.A. as co-agents and CIBC as administrative agent, as amended (the
"TAHC CREDIT AGREEMENT"), (iii) the Secured Credit Agreement dated as of January
12, 1995, among Tejas Natural Gas Company, certain financial institutions, BMO,
CIBC and Citibank, N.A., as co-agents and CIBC as administrative agent, as
amended (the "TNGC CREDIT AGREEMENT"), (iv) the Transok Guaranty, (v) the
Participation Agreement, (vi) the Participation Agreement dated as of September
15, 1993, as amended as of January 12, 1995, among Tejas North Pipeline
Partnership, State Street Bank and Trust Company of Connecticut, National
Association, as Trustee, 1993 TX Pipeline I Inc., 1993 TX Pipeline II Inc., 1993
TX Pipeline General Partnership, the financial institutions named on Schedule 1
thereto, as purchasers and Citibank, N.A., as administrative agent, (vii) the
Parent Guaranty dated as of September 15, 1993, as amended as of January 12,
1995, from Tejas Gas Corporation, (viii) the TNG Guaranty dated as of September
15, 1993, as amended as of January 12, 1995 from Tejas Natural Gas Company, and
(ix) the TAC Guaranty.
SECTION 3.1.16. OPERATIVE DOCUMENTS. The representations and warranties of
the Lessee and each other Obligor set forth in the Operative Documents are true
and correct on and as of the date hereof.
SECTION 3.1.17. MERGER AGREEMENT. To the best knowledge of the Guarantor
after completion of its and its Subsidiaries' due diligence in respect of
Transok and its Subsidiaries and the Merger, except for those matters disclosed
in the Letter to Counsel and Exhibit 8.17 of the Credit Agreement, (i) the
representations and warranties of the Seller set forth in the Merger Agreement
are true and correct, (ii) the Seller has not defaulted or breached any of its
obligations under the Merger Agreement, and (iii) no litigation, arbitration,
governmental investigation, or proceeding or inquiry shall be threatened which
seeks to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated by the
Merger Agreement.
11
ARTICLE IV
COVENANTS, ETC.
SECTION 4.1. AFFIRMATIVE COVENANTS. The Guarantor covenants and agrees
that, so long as any portion of the Liabilities shall remain unpaid, or the
Lease is in effect, the Guarantor will perform the obligations set forth in this
Section.
SECTION 4.1.1. OWNERSHIP. The Guarantor will own (free and clear of all
Liens and other encumbrances, other than any agreement prohibiting the creation
or assumption of any Lien upon the capital stock of the Lessee and the Material
Subsidiaries and other than the pledge of the stock of the Lessee pursuant to
the Operative Documents) directly or indirectly through any of its Subsidiaries,
100% of the outstanding capital stock (including, without limitation, the
outstanding voting stock) of each of the Lessee, TAHC and TAC.
SECTION 4.1.2. COMPLIANCE WITH LESSEE'S AND EACH OTHER OBLIGORS' COVENANTS
AS TO AFFILIATE TRANSACTIONS. The Guarantor will not permit the Lessee, or any
of its Subsidiaries, to enter into, or cause, suffer or permit to exist any
arrangement or contract with any of their Affiliates (other than among the
Lessee and its Subsidiaries), except in the ordinary course of business and
pursuant to the reasonable requirements of the Lessee's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to the Lessee or
such Subsidiary than the Lessee or such Subsidiary would obtain in a comparable
arms-length transaction.
SECTION 4.1.3. REPORTS, CERTIFICATES AND OTHER INFORMATION. The Guarantor
will furnish to each Agent and each Participant:
(a) AUDIT REPORT. Within one hundred twenty (120) days after the end of
each fiscal year of the Guarantor, a copy of an annual audit report of the
Guarantor, including therein consolidated balance sheets of the Guarantor as of
the end of such fiscal year and consolidated statements of earnings and cash
flow of the Guarantor for such fiscal year, prepared on a consolidated basis in
conformity with GAAP applied on a basis consistent with the audited consolidated
financial statements of the Guarantor as at December 31, 1995, duly certified by
independent certified public accountants of nationally recognized standing
selected by the Guarantor.
(b) INTERIM FINANCIAL REPORTS. Within seventy-five (75) days after the end
of the first three fiscal quarters of each fiscal year commencing with the
fiscal quarter ending after the Effective Date, copies of the unaudited
financial statements of the Guarantor and its Subsidiaries, prepared on a
consolidated basis and in the same manner as the audit report referred to in
CLAUSE (A) of this SECTION 4.1.3, signed by a duly authorized financial officer
of the Guarantor and consisting of at least a balance sheet as at the end of
such quarter, statements of cash flows and statements of earnings for such
quarter.
12
(c) COMPLIANCE CERTIFICATES. Concurrently with the delivery of the reports
described in CLAUSES (A) and (B) of this SECTION 4.1.3 and from time to time
promptly upon the reasonable request by either Agent, a compliance certificate
duly executed by an authorized financial officer of the Guarantor, containing a
computation of, and showing compliance with, the financial restriction contained
in SECTION 4.1.5, such computation to be made as of the end of the immediately
preceding fiscal year if furnished concurrently with the report described in
CLAUSE (A) of this SECTION 4.1.3, and as of the end of the immediately preceding
fiscal quarter if furnished concurrently with the report described in CLAUSE (B)
of this SECTION 4.1.3 or upon the reasonable request of either Agent and
containing a statement by the authorized officer that in examining the
financials and covenants contained in SECTION 4.1.5 the authorized officer did
not become aware of any Event of Default or Potential Event of Default, or if
the authorized officer has become aware of any such event, describing it and the
steps, if any, being taken to cure it.
(d) NOTICES RELATING TO DEFAULT. Promptly upon learning of the occurrence
of any Event of Default or Potential Event of Default, written notice thereof,
describing the same and the steps being taken by the Guarantor or any of its
Subsidiaries affected with respect thereto.
(e) REGULATORY FILINGS. As may reasonably be requested by either Agent or
any Participant, each material public filing and report made by the Guarantor or
any Material Tejas Subsidiary with or to any governmental authority or
regulatory body (including, without limitation, the Securities and Exchange
Commission, Federal Energy Regulatory Commission, the Texas Railroad Commission,
the Louisiana Public Service Commission, the Louisiana Conservation Commission,
the Oklahoma Corporation Commission and any successor agencies) and other
customarily provided material public communications from the Guarantor or any
Material Tejas Subsidiary, promptly upon the filing or making thereof.
SECTION 4.1.4. SECURITY ISSUE. The Guarantor will use or cause any of its
Subsidiaries to use the proceeds (net of reasonable and customary brokerage,
legal and other closing costs and commissions) received from any equity,
debenture, note or subordinated debenture or other securities issue (other than
any money market lines, the TAC Credit Agreement, the TAHC Credit Agreement, the
TNGC Credit Agreement or any replacement credit facilities refinancing any
outstanding credit facilities) to permanently reduce the Commitment under the
Secured Credit Agreement and to prepay any amount in excess of such reduced
Commitment. To accomplish the foregoing, the Guarantor may pay or cause any
Subsidiary to pay any such amounts directly or Guarantor may loan to the Lessee
under the RSN, on each date of any such equity, debenture, note or subordinated
debenture issue, an amount equal to the proceeds received by the Guarantor or
such Subsidiary from such issuance, net of reasonable and customary brokerage,
legal and other closing costs and commissions, each such loan to be made
promptly, and in any event within three (3) Business Days of the receipt by the
Guarantor or such Subsidiary of such amounts.
SECTION 4.1.5. MINIMUM NET WORTH. At all times the Guarantor will maintain
a minimum Net Worth equal to at least $226,000,000.
13
SECTION 4.2. NEGATIVE COVENANTS. The Guarantor covenants and agrees that,
so long as any portion of the obligations with respect to the Liabilities shall
remain unpaid, or the Lease is in effect, the Guarantor will not do anything
prohibited in this Section.
SECTION 4.2.1. RESTRICTIONS ON MERGERS. The Guarantor will not be a party
to any merger into or consolidation with any other Person, except that the
Guarantor may merge into or consolidate with any other Person if, upon the
consummation of any such merger or consolidation, the Guarantor is the surviving
corporation and no Event of Default or Potential Event of Default shall have
occurred, exist or be continuing or shall result after giving effect to such
merger or consolidation.
SECTION 4.2.2. DIVIDENDS AND LOANS FROM THE MATERIAL SUBSIDIARIES. The
Guarantor will not permit any of its Material Tejas Subsidiaries to enter into
any new agreement, or any amendment, supplement or other modification to any
agreement existing on the date hereof, which is materially more restrictive of
any Material Tejas Subsidiary's abilities, taken as whole, to pay dividends,
make loans or advances to, or otherwise make distributions or payments to, the
Guarantor than the restrictions thereto in existence on the date hereof.
SECTION 4.2.3. LIENS. The Guarantor will not create, incur, assume, permit
to exist or guarantee any notes, bonds, debentures or other evidences of
indebtedness for borrowed money (i) which is secured by any lien, mortgage,
security interest, pledge, hypothecation or charge on any asset now owned or
hereafter acquired by it without making effective provision whereby all
obligations of the Guarantor under this Guaranty will be secured equally and
ratably with any and all other obligations thereby secured, so long as any such
obligations shall be so secured or (ii) which is senior in right of payment to
this Guaranty.
SECTION 4.2.4. ACTIVITIES. The Guarantor will not (i) own any assets other
than the stock of its subsidiaries and immaterial personal property incidental
to the ownership of such stock or (ii) directly engage in any business other
than the ownership of the stock of its subsidiaries.
SECTION 4.2.5. OWNERSHIP. The Guarantor will not at any time own, directly
or indirectly, less than 100% of the issued and outstanding capital stock of the
Lessee, TAHC or TAC or any successor of any thereof, free and clear of all
Liens.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. LOAN DOCUMENT. This Guaranty is an Operative Document
executed pursuant to the Participation Agreement and shall (unless otherwise
expressly indicated
14
herein) be construed, administered and applied in accordance with the terms and
provisions thereof.
SECTION 5.2. BINDING ON SUCCESSORS, TRANSFEREES AND ASSIGNS; ASSIGNMENT.
In addition to, and not in limitation of, SECTION 2.8, this Guaranty shall be
binding upon the Guarantor and its successors, transferees and assigns and shall
inure to the benefit of and be enforceable by the Lessor and its successors,
transferees and assigns (to the full extent provided pursuant to SECTION 2.8);
PROVIDED, HOWEVER, that the Guarantor may not assign any of its obligations
hereunder without the prior written consent of the Lessor.
SECTION 5.3. AMENDMENTS, ETC. No amendment to or waiver of any provision
of this Guaranty, nor consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Lessor, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 5.4. ADDRESSES FOR NOTICES TO THE GUARANTOR. All notices and other
communications hereunder to the Guarantor shall be in writing (including
telegraphic communication) and mailed or telegraphed or delivered to it,
addressed to it at the address set forth below its signature hereto or at such
other address as shall be designated by the Guarantor in a written notice to the
Lessor at the address specified in the Participation Agreement complying as to
delivery with the terms of this Section. All such notices and other
communications shall, when mailed or telegraphed, respectively, be effective
when deposited in the mails or delivered to the telegraph company, respectively,
addressed as aforesaid.
SECTION 5.5. NO WAIVER; REMEDIES. In addition to, and not in limitation
of, SECTION 2.4 and SECTION 2.6, no failure on the part of the Lessor to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 5.6. SECTION CAPTIONS. Section captions used in this Guaranty are
for convenience of reference only, and shall not affect the construction of this
Guaranty.
SECTION 5.7. SETOFF. In addition to, and not in limitation of, any rights
of the Lessor under applicable law, the Lessor shall, upon the occurrence of any
Potential Event of Default described in paragraph (g) of Article XVI of the
Lease or any Event of Default have the right to appropriate and apply to the
payment of the obligations of the Guarantor owing to it hereunder, whether or
not then due, and the Guarantor hereby grants to the Lessor a continuing
security interest in, any and all balances, credits, deposits, accounts or
moneys of the Guarantor then or thereafter maintained with the Lessor and any
and all property of every kind or description of or in the name of the Guarantor
now or hereafter, for any reason or purpose
15
whatsoever, in the possession or control of, or in transit to, the Lessor or any
agent or bailee for the Lessor; PROVIDED, HOWEVER, that any such appropriation
and application shall be subject to the provisions of Article III of the Loan
Agreement.
SECTION 5.8. SEVERABILITY. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 5.9. GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK. THIS GUARANTY AND THE OTHER OPERATIVE DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 5.10. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF THE LESSOR OR THE GUARANTOR. THE GUARANTOR ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LESSOR ENTERING INTO THE
PARTICIPATION AGREEMENT.
SECTION 5.11. MEDIUM TERM NOTES. Notwithstanding anything to the contrary
contained herein, including, without limitation, in SECTION 2.1 hereof, the
Guarantor expressly does not guaranty payment or performance of any obligation
of any Person under the Medium Term Notes.
SECTION 5.12. FORUM SELECTION AND CONSENT TO JURISDICTION. TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
LESSOR OR THE GUARANTOR SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT
16
SEEKING ENFORCEMENT AGAINST ANY PROPERTY MAY BE BROUGHT, AT THE LESSOR'S OPTION,
IN THE COURTS OF ANY JURISDICTION WHERE SUCH PROPERTY MAY BE FOUND. THE
GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. THE GUARANTOR FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE GUARANTOR HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
THE GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY AND THE OTHER OPERATIVE
DOCUMENTS.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
TEJAS GAS CORPORATION
By
Title:
Address: 1301 McKinney, Suite 700
Houston, Texas 77010
Attention:
Telecopy:
17
EXHIBIT 2(d)
SECURED CREDIT AGREEMENT
among
TRANSOK ACQUISITION COMPANY,
as the Borrower,
and
CERTAIN FINANCIAL INSTITUTIONS,
as the Lenders,
and
BANK OF MONTREAL,
as Administrative Agent,
and
CANADIAN IMPERIAL BANK OF COMMERCE,
as Documentation Agent
Dated as of June 6, 1996
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS............................................. 1
SECTION 1.1 Certain Defined Terms................................... 1
ARTICLE II COMMITMENTS OF THE LENDERS; BORROWING
PROCEDURES AND CONDITIONS............................... 21
SECTION 2.1 Commitments............................................. 21
SECTION 2.1.1 Loan Commitment......................................... 21
SECTION 2.1.2 Letter of Credit Commitment............................. 22
SECTION 2.1.3 Lenders Not Permitted or Required to Make Borrowings
Available............................................... 22
SECTION 2.2 Domestic Loans and Eurodollar Loans..................... 22
SECTION 2.3 Borrowing Procedures.................................... 22
SECTION 2.3.1 Domestic Loans.......................................... 23
SECTION 2.3.2 Eurodollar Loans........................................ 23
SECTION 2.3.3 Letters of Credit....................................... 23
SECTION 2.4 Letter of Credit Procedures............................. 24
SECTION 2.4.1 Letter of Credit Operations............................. 24
SECTION 2.4.2 Borrower's Agreement to Repay Letter of Credit Drawings. 24
SECTION 2.4.3 Lenders' Agreement to Repay Letter of Credit Drawings... 26
SECTION 2.4.4 Procedures for Depositing Cash Collateral............... 27
SECTION 2.5 [Intentionally Omitted]................................. 27
SECTION 2.6 Increased Capital Costs................................. 27
ARTICLE III PROVISIONS RELATING TO THE NOTES AND
REPAYMENT............................................... 28
SECTION 3.1 The Notes............................................... 28
SECTION 3.2 Repayments.............................................. 28
SECTION 3.3 Due Date Extension...................................... 28
ARTICLE IV INTEREST, FEES AND SPECIAL EURODOLLAR LOAN
RELATED PROVISIONS...................................... 29
SECTION 4.1 Interest on the Borrowings.............................. 29
SECTION 4.1.1 Interest Prior to Maturity.............................. 29
SECTION 4.1.2 Interest After Maturity................................. 29
SECTION 4.2 Notice of Eurodollar Interest Rate; Determination
Conclusive.............................................. 30
SECTION 4.3 Eurodollar Interest Periods............................. 30
SECTION 4.4 Commitment Fee.......................................... 30
SECTION 4.5 Letter of Credit Fees................................... 31
SECTION 4.6 Payment of Interest; Calculation of Interest and Fees... 31
i
SECTION 4.7 Eurodollar Deposits Unavailable or Eurodollar
Interest Rate Unascertainable........................... 32
SECTION 4.8 Changes in Law Rendering Eurodollar Lending Unlawful.... 32
SECTION 4.9 Special Fees in Respect of Reserve Requirements......... 33
SECTION 4.10 Taxes................................................... 33
SECTION 4.11 Reasonable Efforts...................................... 34
SECTION 4.12 Increased Costs......................................... 34
SECTION 4.13 Discretion of the Lenders as to Manner of Funding....... 36
SECTION 4.14 Eurodollar Loan-Related Indemnification Provisions...... 36
SECTION 4.15 Replacement of Lender on Account of Increased Costs,
Eurodollar Lending Unlawful, Reserve Requirements,
Taxes, Certain Dissents, etc............................ 36
SECTION 4.16 Maximum Interest........................................ 37
ARTICLE V REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS............................................. 39
SECTION 5.1 Voluntary Reduction or Termination of the Commitments... 39
SECTION 5.2 Voluntary Prepayments................................... 39
SECTION 5.3 [Intentionally Omitted]................................. 39
SECTION 5.4 Mandatory Prepayments, Reduction of Commitment Amount on
Account of a Receivables Financing...................... 39
SECTION 5.5 Mandatory Prepayments and Reduction of Commitment
Amount on Account of Asset Transfers and Certain
Transactions............................................ 40
SECTION 5.6 [Intentionally Omitted]................................. 41
SECTION 5.7 Mandatory Prepayments on Account of Loans and Letters
of Credit Exceeding Commitment Amounts.................. 41
ARTICLE VI CONVERSION OF LOANS BETWEEN EURODOLLAR
LOANS AND DOMESTIC LOANS................................ 41
ARTICLE VII MAKING AND PRORATION OF PAYMENTS; OFFSET................ 42
SECTION 7.1 Making of Payments...................................... 42
SECTION 7.2 Proration of Payments................................... 42
SECTION 7.3 Offset.................................................. 42
ARTICLE VIII REPRESENTATIONS AND WARRANTIES.......................... 43
SECTION 8.1 Organization, etc....................................... 43
SECTION 8.2 Authorization; No Conflict.............................. 43
SECTION 8.3 Validity and Binding Nature............................. 43
ii
SECTION 8.4 Representation with Respect to Financial Statements..... 43
SECTION 8.5 Pending or Threatened Litigation and Contingent
Liabilities............................................. 44
SECTION 8.6 Existing Liens.......................................... 44
SECTION 8.7 Existing Subsidiaries................................... 45
SECTION 8.8 Existing Employee Benefit Plans......................... 45
SECTION 8.9 Investment Company Act Representation................... 45
SECTION 8.10 Public Utility Holding Company Act Representation....... 46
SECTION 8.11 Representation with Respect to Regulations G, T, U
and X................................................... 46
SECTION 8.12 Representation with Respect to True and Complete
Disclosure.............................................. 46
SECTION 8.13 Status of Title to Assets............................... 46
SECTION 8.14 Taxes................................................... 46
SECTION 8.15 Unconditional Purchase Obligations...................... 47
SECTION 8.16 Environmental Warranties................................ 47
SECTION 8.17 Regulatory Compliance................................... 49
ARTICLE IX BORROWER'S COVENANTS.................................... 50
SECTION 9.1 Reports, Certificates and Other Information............. 50
SECTION 9.1.1 Audit Report............................................ 50
SECTION 9.1.2 Interim Financial Reports............................... 51
SECTION 9.1.3 Compliance Certificates................................. 51
SECTION 9.1.4 Reports to SEC, Shareholders and Other Regulatory
Agencies................................................ 51
SECTION 9.1.5 Notices Relating to Default, Litigation and Certain
ERISA Matters........................................... 52
SECTION 9.1.6 Changes in Material Subsidiaries........................ 52
SECTION 9.1.7 Projected Cash Flow Statements.......................... 52
SECTION 9.1.8 Other Information....................................... 52
SECTION 9.2 Affirmative Covenants................................... 52
SECTION 9.2.1 Books, Records and Inspections.......................... 53
SECTION 9.2.2 Insurance............................................... 53
SECTION 9.2.3 Taxes, Assessments, Etc................................. 53
SECTION 9.2.4 Maintenance of Employee Benefit Plans................... 53
SECTION 9.2.5 Use of Loan Proceeds and Letters of Credit.............. 53
SECTION 9.2.6 Title to Properties..................................... 53
SECTION 9.2.7 New or Activated Subsidiaries; Material Subsidiaries.... 54
SECTION 9.2.8 Environmental Covenant.................................. 54
SECTION 9.2.9 Compliance with Laws, etc............................... 54
SECTION 9.2.10 Merger.................................................. 55
SECTION 9.2.11 Indemnity............................................... 55
SECTION 9.3 Negative Covenants...................................... 55
iii
SECTION 9.3.1 Restrictions on Redemption and Purchase of
Securities and Payment of Dividends..................... 55
SECTION 9.3.2 Stock Purchases......................................... 56
SECTION 9.3.3 Permitted Indebtedness.................................. 57
SECTION 9.3.4 Liens................................................... 59
SECTION 9.3.5 Guaranties, Loans, Advances or Investments.............. 59
SECTION 9.3.6 Restrictions on Fundamental Changes..................... 63
SECTION 9.3.7 Fiscal Year............................................. 63
SECTION 9.3.8 Transfer of Assets...................................... 63
SECTION 9.3.9 Unconditional Purchase Obligations...................... 65
SECTION 9.3.10 Other Agreements........................................ 65
SECTION 9.3.11 Business Activities..................................... 65
SECTION 9.3.12 Capital Expenditures, etc............................... 65
SECTION 9.3.13 Negative Pledges, Restrictive Agreements, etc........... 66
SECTION 9.3.14 [Intentionally Omitted]................................. 66
SECTION 9.3.15 Transactions with Affiliates............................ 66
SECTION 9.3.16 Restrictions on Decrease in Capital Stock............... 66
SECTION 9.3.17 [Intentionally Omitted]................................. 66
SECTION 9.3.18 Modifications of Certain Agreements..................... 66
SECTION 9.3.19 Receivables Financing................................... 66
SECTION 9.4 Financial Covenants..................................... 67
SECTION 9.4.1 EBITDA to Total Interest Expense........................ 67
SECTION 9.4.2 Funded Debt to Capitalization........................... 67
ARTICLE X COLLATERAL SECURITY..................................... 67
SECTION 10.1 Pledge Agreement........................................ 67
SECTION 10.2 Partnership/Limited Liability Company Security
Agreement............................................... 67
SECTION 10.3 Guaranties.............................................. 68
SECTION 10.4 Notes Security Agreement................................ 68
SECTION 10.5 Guaranty of the Parent Company; etc..................... 68
ARTICLE XI CONDITIONS TO BORROWING................................. 68
SECTION 11.1 Conditions Precedent to Initial Borrowing............... 68
SECTION 11.1.1 Executed Original Notes................................. 69
SECTION 11.1.2 Certificate of Officers of the Parent Company,
the Borrower and Certain Subsidiaries................... 69
SECTION 11.1.3 Consents, etc........................................... 69
SECTION 11.1.4 Opinion of Counsel for the Borrower..................... 69
SECTION 11.1.5 UCC Searches............................................ 69
iv
SECTION 11.1.6 The Pledge Agreements................................... 69
SECTION 11.1.7 Certificate as to Insurance Policies.................... 69
SECTION 11.1.8 Guaranties.............................................. 70
SECTION 11.1.9 Certificate of Financial Condition...................... 70
SECTION 11.1.10 Subordination Agreement................................. 70
SECTION 11.1.11 Notes Security Agreement................................ 70
SECTION 11.1.12 Partnership/Limited Liability Company Security
Agreement............................................... 70
SECTION 11.1.13 Holding Company......................................... 70
SECTION 11.1.14 [Intentionally omitted]................................. 70
SECTION 11.1.15 Certificate as to Collateral............................ 70
SECTION 11.1.16 Financial Statements.................................... 70
SECTION 11.1.17 Other Documents......................................... 70
SECTION 11.2 Other Conditions Precedent to Making Initial Borrowing.. 71
SECTION 11.2.1 Fees.................................................... 71
SECTION 11.2.2 Filing of Security Documents............................ 71
SECTION 11.2.3 Material Adverse Change................................. 71
SECTION 11.2.4 Equity Contribution..................................... 71
SECTION 11.2.5 Purchase Price.......................................... 71
SECTION 11.2.6 No Default; Warranties True and Correct................. 71
SECTION 11.2.7 Merger.................................................. 72
SECTION 11.2.8 Regulatory Filings...................................... 72
SECTION 11.2.9 Merger Agreement........................................ 72
SECTION 11.2.10 Lease................................................... 72
SECTION 11.3 All Borrowings.......................................... 72
SECTION 11.3.1 No Default; Warranties True and Correct................. 72
SECTION 11.3.2 Material Adverse Change................................. 73
ARTICLE XII EVENTS OF DEFAULT AND THEIR EFFECT...................... 73
SECTION 12.1 Events of Default....................................... 73
SECTION 12.1.1 Non-Payment of the Loans, Letter of Credit
Obligations, Fees or Other Amounts...................... 73
SECTION 12.1.2 Non-Payment of Other Indebtedness for Borrowed Money.... 73
SECTION 12.1.3 Lease................................................... 74
SECTION 12.1.4 Bankruptcy, Insolvency, etc............................. 74
SECTION 12.1.5 Non-Performance of Certain Covenants and Obligations.... 74
SECTION 12.1.6 Non-Performance of Other Covenants and Obligations...... 74
SECTION 12.1.7 Breach of Warranties and Misleading Statements.......... 75
SECTION 12.1.8 Change in Ownership..................................... 75
SECTION 12.1.9 Judgments............................................... 75
v
SECTION 12.1.10 Employee Benefit Plans.................................. 76
SECTION 12.1.11 Lien or Guaranty Failure................................ 76
SECTION 12.1.12 Default Under Any Security Document..................... 76
SECTION 12.1.13 [Intentionally Omitted]................................. 76
SECTION 12.1.14 Breach of Warranties Under Merger Agreement; Failure or
Breach of Indemnities; Failure to Consummate Merger..... 76
SECTION 12.1.15 [Intentionally Omitted]................................. 77
SECTION 12.1.16 Non-Payment of Other Indebtedness for Borrowed
Money by the Parent Company............................. 77
SECTION 12.2 Effect of Event of Default.............................. 77
SECTION 12.3 Cash Collateralization of Letters of Credit Upon
Event of Default........................................ 77
ARTICLE XIII THE ADMINISTRATIVE AGENT, DOCUMENTATION
AGENT AND ISSUING BANK.................................. 78
SECTION 13.1 Authorization........................................... 78
SECTION 13.2 Power................................................... 78
SECTION 13.3 Indemnification of the Administrative Agent,
the Documentation Agent or the Issuing Bank............. 78
SECTION 13.4 Action on Instructions of the Required Lenders.......... 79
SECTION 13.5 Exculpation............................................. 80
SECTION 13.6 Employment of Counsel, etc.............................. 80
SECTION 13.7 Reliance on Documents................................... 80
SECTION 13.8 Credit Investigation.................................... 81
SECTION 13.9 Resignation............................................. 81
SECTION 13.10 Annual Administrative Agency Fees....................... 81
SECTION 13.11 The Administrative Agent, Issuing Bank and
Documentation Agent as Lenders.......................... 82
ARTICLE XIV MISCELLANEOUS PROVISIONS................................ 82
SECTION 14.1 No Waiver............................................... 82
SECTION 14.2 Amendments, Modifications, Waivers and Consents......... 82
SECTION 14.3 Confirmations........................................... 83
SECTION 14.4 Notices, Demands, Instructions and Other Communications. 83
SECTION 14.5 Accounting Terms and Computations....................... 83
SECTION 14.6 Sales and Transfers, etc., of Borrowings and Notes;
Participations in Borrowings and Notes.................. 84
SECTION 14.7 Payment of Costs, Expenses and Taxes.................... 87
SECTION 14.8 Indemnification Provisions.............................. 88
SECTION 14.9 Subsidiary References................................... 89
vi
SECTION 14.10 Section Captions and Table of Contents.................. 89
SECTION 14.11 Governing Law........................................... 89
SECTION 14.12 Execution in Counterparts............................... 89
SECTION 14.13 Successors and Assigns.................................. 90
SECTION 14.14 Waiver of Jury Trial.................................... 90
SECTION 14.15 Forum Selection and Consent to Jurisdiction............. 90
SECTION 14.16 Severability............................................ 91
SECTION 14.17 Confidentiality......................................... 91
SECTION 14.18 Notice.................................................. 92
vii
LIST OF SCHEDULES AND EXHIBITS TO SECURED CREDIT AGREEMENT
SCHEDULE I Address, Telex, TWX, Telephone and Telecopier Numbers
SCHEDULE II Percentages, Original Designated Maximum Commitments, Etc.
EXHIBIT 2.3 Form of Borrowing Request
EXHIBIT 2.3.3A Form of Issuance Request
EXHIBIT 3.1 Form of Note
EXHIBIT 8.5 Pending Litigation
EXHIBIT 8.6 Existing Liens
EXHIBIT 8.7 Existing Subsidiaries
EXHIBIT 8.16 Environmental Matters
EXHIBIT 8.17 Regulatory Compliance
EXHIBIT 9.1.3A Form of Annual Compliance Certificate
EXHIBIT 9.1.3B Form of Quarterly Compliance Certificate
EXHIBIT 9.3.3 Form of RSN
EXHIBIT 9.3.3(xv) Subordination Provisions
EXHIBIT 9.3.5(xxiv) Existing Equity Investments
EXHIBIT 9.3.9 Unconditional Purchase Obligations
EXHIBIT 10.1A Form of Pledge Agreement from Borrower
EXHIBIT 10.1B Form of Pledge Agreement from Subsidiary
EXHIBIT 10.2 Form of Partnership/Limited Liability Company Security
Agreement
EXHIBIT 10.3 Form of Guaranty
EXHIBIT 10.4A Form of Notes Security Agreement
EXHIBIT 10.4B Form of Intercompany Subordinated Demand Note
EXHIBIT 10.5A Form of Parent Company Guaranty
EXHIBIT 10.5B Form of Holding Company Guaranty
EXHIBIT 10.5C Form of Holding Company Security Agreement
EXHIBIT 11.1.4 Form of Opinion of Counsel for the Borrower
EXHIBIT 11.1.5 States for Uniform Commercial Code Searches
EXHIBIT 11.1.7 Form of Insurance Certificate
EXHIBIT 11.1.8 Guarantors
EXHIBIT 11.1.9 Form of Certificate of Financial Condition
EXHIBIT 11.1.10 Form of Subordination Agreement
EXHIBIT 11.1.15 Form of Certificate as to Collateral
EXHIBIT 14.6 Form of Assignment and Acceptance Agreement
SECURED CREDIT AGREEMENT
THIS SECURED CREDIT AGREEMENT, dated as of June 6, 1996 (as may be
amended, modified, supplemented, renewed, extended or restated from time to
time, this "AGREEMENT"), among TRANSOK ACQUISITION COMPANY, a Delaware
corporation (herein together with any permitted successors or assigns, the
"BORROWER"), the various financial institutions as are or may become parties
hereto (collectively the "LENDERS"), BANK OF MONTREAL, acting through certain of
its U.S. branches or agencies ("BMO"), as administrative agent (in such
capacity, together with any successor(s) thereto in such capacity, the
"ADMINISTRATIVE AGENT"), and CANADIAN IMPERIAL BANK OF COMMERCE, a Delaware
corporation ("CIBC"), as documentation agent (in such capacity, together with
any successor(s) thereto in such capacity, the "Documentation Agent").
W I T N E S S E T H:
WHEREAS, the Borrower intends to obtain Commitments (as hereinafter
defined) from each of the Lenders to make loans to the Borrower and to
participate in letters of credit issued by the Issuing Bank (as hereinafter
defined) for the account of the Borrower; and
WHEREAS, the Lenders are willing to extend such Commitments to the
Borrower on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. Unless otherwise defined herein or in
such other agreements, as used in this Agreement, the Notes (as hereinafter
defined), or any other agreement, document, statement, instrument or transaction
contemplated thereby or relating thereto, and all amendments, extensions,
modifications, renewals, supplements or waivers thereof or thereto, the
following terms shall have the following meanings, which meanings shall be
equally applicable to both the singular and plural form of such terms:
A-NOTES - shall mean all of the Series A Notes issued and, unless
otherwise specified or the context otherwise requires, outstanding under the
Loan Agreement (as defined in the Participation Agreement).
ACADIAN - shall mean Acadian Gas Corporation, a Nevada corporation.
ACTIVATION - shall mean, with respect to any Subsidiary of the Borrower,
the transformation of such entity from a passive legal entity existing for a
purpose such as holding a royalty or similar interest and receiving payments
thereunder to an entity engaged in business or commercial activities of any type
or otherwise engaged in activities other than the holding of such interest and
the receipt of payments thereunder.
ADDITIONAL RENT - shall have the meaning set forth in the Lease.
ADMINISTRATIVE AGENT - is defined in the PREAMBLE.
AFFILIATE - of any Person shall mean any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any employee benefit plan). A Person shall be deemed to be
"controlled by" any other Person if such other Person possesses, directly or
indirectly, power (a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managing
general partners; or (b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
AGENT - shall mean either the Administrative Agent, the Collateral Agent
or the Documentation Agent, or any combination of the foregoing, as the case may
be.
AGGREGATE DISTRIBUTIONS AND INVESTMENTS - shall mean at the time any
determination thereof is to be made, the sum of (i) all Distributions made in
accordance with SECTION 9.3.1(I), (ii) the aggregate amount of all Equity
Investments made in accordance with SECTION 9.3.5(XIX), and (iii) loans made and
not repaid pursuant to SECTION 9.3.5(XVIII) to the Parent Company, made on or
after December 31, 1995 and to and including the date of such determination.
AGGREGATE REVOLVING OUTSTANDINGS - shall mean, at any time, the sum of (i)
the aggregate principal amount of all Loans outstanding at such time PLUS (ii)
the aggregate amount of all Letter of Credit Liabilities outstanding at such
time.
AGREEMENT - is defined in the PREAMBLE.
ALTERNATE BASE RATE - shall mean:
(a) on any date and with respect to all Domestic Loans other than
those dates and Loans described in CLAUSE (B) of this
definition, a fluctuating rate of interest per annum equal to
the higher of:
(i) the Base Rate, and
(ii) the Federal Funds Rate most recently determined by the
Administrative Agent PLUS 1% per annum; or
2
(b) on any date occurring during any Overnight Funds Period, but
with respect only to Domestic Loans made or Eurodollar Loans
converted into Domestic Loans during such Overnight Funds
Period, the Overnight Funds Rate.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by the Administrative Agent in connection with extensions of
credit. Changes in the rate of interest on that portion of any Loans maintained
as Domestic Loans shall take effect simultaneously with each change in the
Alternate Base Rate. The Administrative Agent shall give notice promptly to the
Borrower and the Lenders of changes in the Alternate Base Rate.
APPLICABLE DEFAULT MARGIN - shall mean two percent (2%) per annum.
APPLICABLE MARGIN - shall mean either the Applicable Margin Loans or the
Applicable Margin Letters of Credit, as the case may be.
APPLICABLE MARGIN FOR LETTERS OF CREDIT - shall mean with respect to the
letter of credit fee described in SECTION 4.5(A), at such times and from time to
time as set forth below, the percentage per annum set forth opposite such time:
PERIOD OF TIME PERCENTAGE
Closing Date through 12/31/96 1.1875%
1/1/97 through 6/30/97 1.4375%
7/1/97 and thereafter 2.0000%
APPLICABLE MARGIN FOR LOANS - shall mean with respect to Loans, at such
times and from time to time as set forth below, the percentages per annum set
forth opposite such time under the heading for the relevant type of Loan:
PERCENTAGE
PERIOD OF TIME DOMESTIC LOAN EURODOLLAR LOAN
Closing Date through 12/31/96 0% 1.1875%
1/1/97 through 6/30/97 0% 1.4375%
7/1/97 and thereafter 0% 2.0000%
ASSET - shall mean, as to the Borrower and its Subsidiaries, all property
of any kind, name or nature, real or personal, tangible or intangible, legal or
equitable, whether now owned or hereafter acquired, including, without
limitation, money, stock, contract rights, franchises, value as a going concern,
causes of action, undivided fractional ownership interests, and anything of any
value which can be made available for, or may be appropriated to, the payment of
debts.
2
ASSIGNMENT AND ACCEPTANCE - shall mean an Assignment and Acceptance
Agreement substantially in the form of EXHIBIT 14.6.
B-NOTES - shall mean the Series B Notes issued and, unless specified or
the context otherwise requires, outstanding under the Loan Agreement (as defined
in the Participation Agreement).
BASE RATE - shall mean, at any time, the rate per annum then most recently
announced by the Administrative Agent at Chicago, Illinois, as its base rate for
Dollar loans in the United States, which base rate may not be the lowest rate
charged by the Administrative Agent on loans to any of its customers.
BMO - is defined in the PREAMBLE.
BORROWER - is defined in the PREAMBLE.
BORROWING - shall mean any extension of credit (as opposed to any
continuation or conversion thereof) made by the Lenders by way of Letters of
Credit or Loans.
BORROWING REQUEST - shall mean a request for a Borrowing and certificate
duly executed by the Borrower substantially in the form of EXHIBIT 2.3.
BUSINESS DAY - shall mean a day which is both a Domestic Business Day and
a Eurodollar Business Day.
CAPITAL EXPENDITURES - shall mean, for any period, the sum, without
duplication, of (i) all expenditures of the Borrower and its Subsidiaries
(including all expenditures incurred by the Lessee pursuant to the Lease) for
fixed or capital assets (except for purchases of natural gas classified as
property, plant and equipment) made during such period which, in accordance with
GAAP, would be classified as capital expenditures, and (ii) all Capitalized
Lease Obligations incurred during such period.
CAPITALIZATION - shall mean the sum, at the time outstanding and without
duplication, of (i) Funded Debt plus (ii) Stockholders' Equity plus (iii) all
Indebtedness of the Borrower outstanding under the RSNs.
CAPITALIZED LEASE OBLIGATIONS - shall mean all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
CERCLA - shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
4
CERCLIS - shall mean the Comprehensive Environmental Response Compensation
Liability Information System List.
CIBC - is defined in the PREAMBLE.
CODE - shall mean the Internal Revenue Code of 1986, as amended, and the
laws promulgated or issued from time to time thereunder.
CLOSING DATE - shall mean the date of this Agreement.
COLLATERAL AGENT - shall mean BMO, in its capacity as collateral agent
under the Security Documents, together with its successors in such capacity.
COMMITMENT - shall mean, as the context may require, a Letter of Credit
Commitment, Loan Commitment or Revolving Commitment.
COMMITMENT AMOUNT - shall mean, on any date, the Total Committed Amount as
such amount may be reduced from time to time pursuant to SECTIONS 5.1, 5.4 or
5.5.
COMMITMENT FEE RATE - shall mean 0.25% per annum.
COMMITMENT TERMINATION DATE - shall mean the earliest of:
(a) the Scheduled Commitment Termination Date;
(b) the date on which all of the Commitments are terminated in
full or the Commitment Amount is reduced to zero pursuant to
SECTIONS 5.1, 5.4 or 5.5 and
(c) the earlier of the date of either
(i) the occurrence of any Event of Default described in
SECTION 12.1.4; or
(ii) the occurrence and continuance of any other Event of
Default and either (1) the declaration of the Loans to
be due and payable pursuant to SECTION 12.2, or (2) in
the absence of such declaration, the giving of notice by
the Administrative Agent to the Borrower that the
Commitments have been terminated pursuant to SECTION
12.2.
CONSOLIDATED NET INCOME - shall mean, for any period, the consolidated net
income (or loss) of the Borrower and its Subsidiaries for such period determined
on a consolidated basis in
5
accordance with GAAP; PROVIDED that there shall be excluded therefrom all
non-cash gains and losses which would be classified as extraordinary under GAAP.
CONSOLIDATED STOCKHOLDERS' EQUITY - shall mean, with respect to any Person
as of the time any determination thereof is to be made, (a) with respect to any
Person that is a corporation, the sum of such Person's capital stock (which
shall exclude, except in the case of the Parent Company, treasury stock and any
capital stock subject to mandatory redemption by the issuer at the option of the
holder thereof) and additional paid-in capital, PLUS retained earnings (MINUS
accumulated deficit), (b) with respect to any Person that is a partnership, the
aggregate of the capital accounts of all partners of such partnership, and (c)
with respect to any Person that is a limited liability company, the aggregate of
all membership interests of all members of such limited liability company.
CONTINGENT LIABILITY - shall mean any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the
Indebtedness, obligation or any other liability of any other Person (other than
by endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of or interests in
any other Person. The amount of any Person's obligation under any Contingent
Liability shall (subject to any limitation set forth therein) be deemed to be
the outstanding principal amount (or maximum principal amount, if larger) of the
Indebtedness, obligation or other liability guaranteed thereby or, if
applicable, such lesser principal amount as is expressly stated to be the
maximum principal amount of such Person's obligation thereunder.
COURT - shall mean any court, federal, state or local, or arbitration
tribunal.
DESIGNATED MAXIMUM COMMITMENT - shall mean, as to each Lender, the amount
set forth opposite its name on SCHEDULE II or as set forth in the Assignment and
Acceptance Agreement executed by such Lender and its Purchasing Lender and
delivered pursuant to SECTION 14.6.
DISTRIBUTION - shall have the meaning assigned to such term in SECTION
9.3.1.
DOLLARS (and the symbol "$") - shall mean lawful money of the United
States.
DOMESTIC BUSINESS DAY - shall mean a day on which banks are open for
business in Houston, Texas, New York City, New York and Chicago, Illinois.
DOMESTIC LOAN - shall mean a Loan bearing an interest rate determined with
reference to the Alternate Base Rate.
EBITDA - shall mean, with respect to any period for which a determination
thereof is to be made, the sum of (i) gross profit (revenues less cost of
sales), MINUS (ii) operating expenses (excluding any Fixed Rent or amortization
of deferred costs associated with such Fixed Rent),
6
MINUS (iii) general and administrative expenses, PLUS (iv) cash equity earnings
of any unconsolidated Subsidiary of the Borrower or any partnership or joint
venture in which the Borrower or any of its Subsidiaries has an equity interest
and actually paid to the Borrower and its Subsidiaries, all as determined on a
consolidated basis for the Borrower and its Subsidiaries in accordance with
GAAP.
EFFECTIVE DATE - shall mean the first Business Day to occur on which all
conditions to the effectiveness of this Agreement set forth in ARTICLE XI have
been satisfied or waived by all Lenders, which will be in no event later than
June 30, 1996.
ENVIRONMENTAL LAWS - shall mean all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
EQUITY INVESTMENT - shall mean, relative to any Person, any ownership or
similar interest held by such Person in any other Person. The amount of any
Equity Investment shall be the original capital amount thereof less all returns
of equity thereon (and without adjustment by reason of the financial condition
of such other Person) and shall, if made by the transfer or exchange of property
other than cash, be deemed to have been made in an original capital amount equal
to the Fair Market Value of such property.
ERISA - shall mean the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
EUROCURRENCY RESERVE PERCENTAGE - shall mean, with respect to each
Eurodollar Interest Period, a percentage (expressed as a decimal) equal to the
daily average during such Eurodollar Interest Period of the percentages in
effect on each day of such Eurodollar Interest Period, if any, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor thereto),
for determining the maximum reserve requirements applicable to "Eurocurrency
Liabilities" pursuant to Regulation D of the Board of Governors of the Federal
Reserve System or any other then applicable regulation of the Board of Governors
which prescribes reserve requirements applicable to "Eurocurrency Liabilities"
as presently defined in Regulation D.
EURODOLLAR BUSINESS DAY - shall mean a day on which dealings are carried
on in the interbank Eurodollar market and on which banks are open for business
in Houston, Texas, New York City, New York and Chicago, Illinois.
EURODOLLAR INTEREST PAYMENT DATE - shall have the meaning assigned to such
term in SECTION 4.6.
EURODOLLAR INTEREST PERIOD - shall mean, as to each Eurodollar Loan, the
period commencing on (and including) the latest Eurodollar Period Commencement
Date with respect to such Eurodollar Loan and ending on (but excluding) the day
numerically corresponding to such date
7
one (1) month, two (2), three (3), or six (6) months, thereafter, as selected by
the Borrower in the relevant notice pursuant to SECTION 2.3; PROVIDED, HOWEVER,
that:
(a) absent such selection, the Borrower shall be deemed to have
selected a Eurodollar Interest Period of one month or such
other duration as shall be required in order to comply with
the provisions of this definition;
(b) there shall not be more than seven (7) Eurodollar Interest
Payment Dates in effect at any one time for all Loans;
(c) any Eurodollar Interest Period which would otherwise end on a
day which is not a Eurodollar Business Day shall continue to
and end on the next succeeding Eurodollar Business Day, unless
the result would be that such Eurodollar Interest Period would
be extended to the next succeeding calendar month in which
case such Eurodollar Interest Period shall end on the next
preceding Eurodollar Business Day;
(d) if there exists no numerically corresponding day in such
month, such Eurodollar Interest Period shall end on the last
Eurodollar Business Day of such month; and
(e) no Eurodollar Interest Period shall end later than the
Scheduled Commitment Termination Date.
EURODOLLAR INTEREST RATE - shall mean, with respect to each Eurodollar
Loan for any Eurodollar Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest integral multiple of one one-hundredth of one percent
(1/100%)) equal to (i) the average of the offered quotations appearing on
Telerate Page 3750 (or if such Telerate Page shall not be available, any
successor or similar service as may be selected by the Agents and the Borrower)
as of 11:00 a.m., London time (or as soon thereafter as practicable), two (2)
Eurodollar Business Days prior to the beginning of such Eurodollar Interest
Period, and (ii) if none of such Telerate Page 3750 nor any successor or similar
service is available, then the quotient of (x) the arithmetic average of the
quotation by each Reference Lender (notified to the Administrative Agent by such
Reference Lender) of the rate of interest per annum at which deposits in Dollars
in immediately available funds are offered to such Reference Lender two (2)
Eurodollar Business Days prior to the beginning of such Eurodollar Interest
Period by prime banks in the interbank Eurodollar market as at or about 9:00
a.m., Chicago time, for delivery on the first day of such Eurodollar Interest
Period, in each case for a period equal to such Eurodollar Interest Period and
in an amount equal to the proposed Eurodollar Loan of such Reference Lender to
which such Eurodollar Interest Period relates, divided by (y) the remainder of
one (1) minus the decimal equivalent of the applicable Eurocurrency Reserve
Percentage. If on any occasion any Reference Lender is unable, or for any reason
fails, so to notify the Administrative Agent by 10:00 a.m., Chicago time, two
(2) Eurodollar Business Days before the first day of such Eurodollar Interest
Period, the applicable Eurodollar Interest Rate shall be determined on the basis
of each quotation furnished
8
by those of the Reference Lenders which so notify the Administrative Agent at or
prior to said 10:00 a.m.
EURODOLLAR LOAN - shall mean a Loan bearing an interest rate determined
with reference to the Eurodollar Interest Rate.
EURODOLLAR OFFICE - shall have the meaning set forth in SECTION 4.12.
EURODOLLAR PERIOD COMMENCEMENT DATE - shall mean, with respect to each
Eurodollar Loan, the date on which such Eurodollar Loan is made or the date on
which such Eurodollar Loan is converted from a Domestic Loan to a Eurodollar
Loan pursuant to the provisions of ARTICLE VI, and thereafter each date on which
such Eurodollar Loan is continued as a Eurodollar Loan pursuant to the
provisions of SECTION 4.3.
EVENT OF DEFAULT - shall mean any event described in SECTION 12.1.
FAIR MARKET VALUE - shall mean (i) with respect to any Asset (other than
cash) the price at which a willing buyer would buy and a willing seller would
sell, such Asset in an arms' length transaction, and (ii) with respect to cash,
the amount of such cash.
FEDERAL FUNDS RATE - shall mean, for any period, a fluctuating interest
rate per annum equal for each day during such period to:
(a) the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day
(or, if such day is not a Domestic Business Day, for the next
preceding Domestic Business Day) by the Federal Reserve Bank
of New York; or
(b) if such rate is not so published for any day which is a
Domestic Business Day, the average of the quotations for such
day on such transactions received by the Administrative Agent
from two Federal funds brokers of recognized standing selected
by it.
FIXED RENT - shall have the meaning provided in the Lease.
FUNDED DEBT - shall mean on a consolidated basis for the Borrower and its
Subsidiaries at any time a determination thereof is to be made, the sum without
duplication of: (a) indebtedness for borrowed money, all obligations evidenced
by bonds, debentures, notes or other similar instruments, and purchase money
obligations which in accordance with GAAP would be shown on the consolidated
balance sheet of the Borrower as a liability, (b) all obligations evidenced by
the Medium Term Notes, (c) all obligations, contingent or otherwise, relative to
the face amount of all letters of credit, whether or not drawn, issued for the
account of the Borrower or any of its
9
Subsidiaries, and (d) all obligations of such Person as lessee under leases
which have been, in accordance with GAAP, recorded as Capitalized Lease
Obligations.
GAAP - shall have the meaning assigned to such term in SECTION 14.5.
GUARANTOR - shall mean each Subsidiary of the Borrower listed as a
Material Subsidiary in EXHIBIT 8.7 or a Guarantor in EXHIBIT 11.1.8, and any
other Subsidiary of the Borrower that may from time to time execute and deliver
a Guaranty and become a Guarantor pursuant to SECTION 9.2.7.
GUARANTY - shall have the meaning set forth in SECTION 10.3.
HAZARDOUS MATERIAL - shall mean
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act, as amended;
(c) any petroleum product, crude oil or any fraction thereof; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any
other Environmental Law.
HEDGING OBLIGATIONS - shall mean, with respect to any Person, (a) all
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates, and (b) all liabilities of such Person under
commodity hedge, commodity swap, exchange, forward, future, collar or cap
agreements, fixed price agreements and all other agreements or arrangements
designed to protect such Person against fluctuations in commodity prices.
HEREIN, HEREOF, HERETO, HEREUNDER and similar terms contained in this
Agreement or any other Loan Document refer to this Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular section,
paragraph or provision of this Agreement or such other Loan Document.
HIGHEST LAWFUL RATE - shall have the meaning assigned to such term in
SECTION 4.16.
HOLDING COMPANY GUARANTY - shall have the meaning assigned to such term in
SECTION 10.5.
HOLDING COMPANY SECURITY AGREEMENT - shall have the meaning assigned to
such term in SECTION 10.5.
10
HYDROCARBONS - shall mean collectively, natural gas, oil, condensate and
other liquid and gaseous hydrocarbons, including natural gas or liquid products
extracted from gas.
INCREMENTAL EARNINGS - shall mean at the time any determination thereof is
to be made, the amount, if positive, equal to the sum of (i) 50% of Consolidated
Net Income of the Borrower and its Subsidiaries for each quarter ending on or
prior to the date of such determination (as shown on the financial statements
delivered under SECTION 9.1.2 or, with respect to the last fiscal quarter of any
fiscal year, as shown on the financial statements delivered under SECTION 9.1.1)
in which such Consolidated Net Income is positive AND (ii) 100% of Consolidated
Net Income of the Borrower and its Subsidiaries for each quarter ending on or
prior to the date of such determination (as shown on the financial statements
delivered under SECTION 9.1.2 or, with respect to the last fiscal quarter of any
fiscal year, as shown on the financial statements delivered under SECTION 9.1.1)
in which such Consolidated Net Income is negative, for each quarter beginning
with the fiscal quarter commencing June 30, 1996 through the date of such
determination and, if negative, zero.
INCREMENTAL LOSSES - shall mean at the time any determination thereof is
to be made, the amount, if negative, equal to the sum of (i) 50% of Consolidated
Net Income of the Borrower and its Subsidiaries for each quarter ending on or
prior to the date of such determination (as shown on the financial statements
delivered under SECTION 9.1.2 or, with respect to the last fiscal quarter of any
fiscal year, as shown on the financial statements delivered under SECTION 9.1.1)
in which such Consolidated Net Income is positive AND (ii) 100% of Consolidated
Net Income of the Borrower and its Subsidiaries for each quarter ending on or
prior to the date of such determination (as shown on the financial statements
delivered under SECTION 9.1.2 or, with respect to the last fiscal quarter of any
fiscal year, as shown on the financial statements delivered under SECTION 9.1.1)
in which such Consolidated Net Income is negative, for each quarter beginning
with the fiscal quarter commencing June 30, 1996 through the date of such
determination and, if positive, zero.
INDEBTEDNESS - of any Person shall mean, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments (but excluding sight drafts
that evidence trade account payables arising in the ordinary
course of business);
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which
have been or should be, in accordance with GAAP, recorded as
Capitalized Lease Obligations;
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(d) all obligations of such Person as lessee of any real or
personal property (or any interest therein) which have not
been or should not be, in accordance with GAAP, recorded as
Capitalized Lease Obligations;
(e) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance
sheet of such Person as of the date at which Indebtedness is
to be determined;
(f) net liabilities of such Person under all Hedging Obligations;
(g) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred
purchase price of property or services (but excluding trade
accounts payable arising in the ordinary course of
business), and indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being
purchased by such Person (including indebtedness arising
under conditional sales or other title retention
agreements), whether or not such indebtedness shall have
been assumed by such Person or is limited in recourse; and
(h) all Contingent Liabilities of such Person in respect of any
Indebtedness of any other Person.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer.
INDEMNIFIED PARTIES - shall have the meaning assigned to such term in
SECTION 14.8.
INITIAL BORROWING DATE - shall mean the date on which the initial Loans
are made or the initial Letters of Credit are issued.
INTERCOMPANY SUBORDINATED DEMAND NOTES - shall have the meaning assigned
to such term in SECTION 10.4.
INTERESTS - shall have the meaning assigned to such term in SECTION
14.6(F).
ISSUANCE REQUEST - shall mean a request for issuance of a Letter of Credit
and a certificate duly executed by the Borrower substantially in the form of
EXHIBIT 2.3.3A.
ISSUING BANK - shall mean BMO, in its capacity as Letter of Credit issuing
bank, together with its successors and assigns in such capacity.
LAW - shall mean any law (including, without limitation, any zoning law or
ordinance or any Environmental Law), statute, rule, regulation, ordinance,
order, directive, code, interpretation, judgment, decree, injunction, writ,
determination, award, permit, license,
12
authorization, direction, requirement or decision of and agreement with or by
any government or governmental department, commission, board, court, authority,
agency, official or officer, domestic or foreign.
LEASE - shall mean the Lease, dated on or about the Initial Borrowing Date
between CIBC Inc., as Lessor and Transok Acquisition Corporation III, as Lessee,
as the same may be amended, extended, renewed, supplemented, restated or
otherwise modified from time to time.
LENDERS - is defined in the PREAMBLE.
LENDING INSTALLATION - shall mean a foreign branch, foreign subsidiary or
foreign affiliate of a Lender designated by such Lender pursuant to the
provisions of SECTION 2.2 to make any Eurodollar Loan.
LESSEE - shall mean Transok Acquisition Corporation III, a Delaware
corporation.
LESSOR'S A-INVESTED AMOUNT - is defined in the Participation Agreement.
LESSOR'S B-INVESTED AMOUNT - is defined in the Participation Agreement.
LETTER OF CREDIT - shall have the meaning assigned to such term in SECTION
2.1.2.
LETTER OF CREDIT COMMITMENT - shall mean, relative to the Issuing Bank its
obligation to issue, and relative to any Lender, its obligation to participate
in, Letters of Credit hereunder pursuant to SECTION 2.1.2 and SECTION 2.3.3.
LETTER OF CREDIT COMMITMENT AMOUNT - shall mean, at any time, the lesser
of (i) $50,000,000, as such amount may be reduced pursuant to SECTION 5.1, 5.4
or 5.5, (ii) an amount equal to the positive difference, if any, between the
Commitment Amount MINUS the aggregate principal amount of all Loans outstanding
at such time and (iii) the Commitment Amount.
LETTER OF CREDIT LIABILITIES - shall mean, at any time, with respect to
any Letter of Credit then in effect, the sum of (i) the undrawn face amount of
such Letter of Credit PLUS (ii) the aggregate unpaid amount, if any, of all
Obligations of the Borrower then due and payable to reimburse the Issuing Bank
and the Lenders in respect of drawings under such Letter of Credit.
LETTER TO COUNSEL - shall mean that certain letter dated June 5, 1996, to
David I. Bloom of Mayer, Brown & Platt, from Transok Acquisition Company.
LIEN - shall mean any interest in any asset or property securing an
obligation owed to, or a claim by, a Person other than the owner of the asset or
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,
without limitation, any security interest, mortgage, pledge, lien, claim,
13
charge, encumbrance, hypothecation, assignment, deposit arrangement, or interest
in property to secure payment of a debt or performance of an obligation;
provided that a negative pledge arrangement or a restriction on alienation is
not a Lien for purposes of this Agreement or any other Loan Document.
LOAN - shall have the meaning assigned to such term in SECTION 2.1.1 and
shall include Loans deemed made or continued pursuant to SECTION 14.6(F).
LOAN COMMITMENT - shall mean, relative to any Lender, such Lender's
obligations to make Loans pursuant to SECTION 2.1.1.
LOAN COMMITMENT AMOUNT - shall mean, at any time, an amount equal to the
positive difference, if any, between (a) the Commitment Amount then in effect
MINUS (b) the aggregate of all Letter of Credit Liabilities.
LOAN DOCUMENTS - shall mean, collectively, this Agreement, the Notes, the
Security Documents, the Guaranties, and any other document, instrument or
certificate executed pursuant hereto or thereto as such may be amended,
modified, supplemented, renewed, extended, or restated from time to time.
MAJORITY LENDERS - shall mean, at any time, Lenders holding more than 66
2/3% of the then aggregate outstanding principal or face amount of the
Borrowings, or, if no such principal or face amount is then outstanding, Lenders
having more than 66 2/3% of the total Commitments.
MARGIN STOCK - shall mean "margin stock" as such term is defined in
Regulation U.
MATERIAL SUBSIDIARY - shall mean (i) as of the date hereof the entities
identified as such on Exhibit 8.7 and (ii) any Subsidiary of the Borrower with
an aggregate of Consolidated Stockholders' Equity plus liabilities in respect of
Intercompany Subordinated Demand Notes plus liabilities in respect of
Subordinated Term Notes in excess of $15,000,000; provided, that any Subsidiary
which becomes a Material Subsidiary of the type described in the foregoing
clause shall remain a Material Subsidiary for purposes of this Agreement even if
it shall cease to have an aggregate of Consolidated Stockholders' Equity plus
liabilities in respect of Intercompany Subordinated Demand Notes plus
liabilities in respect of Subordinated Term Notes in excess of $15,000,000 and
(iii) any Subsidiary of the Borrower that is designated by the Borrower in
writing to the Administrative Agent as a Material Subsidiary.
MATERIAL TEJAS SUBSIDIARIES - shall mean Acadian, TGC, TNGC, TAHC and any
Subsidiary of the Parent Company having Consolidated Stockholders' Equity in
excess of $75,000,000.
MEDIUM TERM NOTES - shall mean the $200,000,000 Medium Term Notes of
Transok issued under the Private Placement Memorandum dated March 30, 1992, and
the Amended Private Placement Memorandum dated August 17, 1992.
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MERGER - means the merger of the Borrower and Transok, with Transok being
the surviving Person as provided in the Merger Agreement.
MERGER AGREEMENT - shall mean the Agreement of Merger dated May 9, 1996
between Central and South West Corporation and Tejas Gas Corporation relating to
Transok, Inc., as amended, extended, modified or supplemented from time to time.
NET PROCEEDS - shall mean, with respect to any Transfer of any Asset, an
amount equal to the proceeds received by the transferor of such Asset net of
reasonable brokerage and reasonable legal and other closing costs, commissions
and any transfer or similar tax.
NOTE - shall mean a promissory note issued by the Borrower to a Lender
pursuant to the provisions of SECTION 3.1, as amended, extended, modified,
rearranged and/or supplemented from time to time, together with any promissory
note given in extension, renewal, replacement, rearrangement, modification
and/or substitution thereof or therefor.
NOTES SECURITY AGREEMENT - shall have the meaning assigned to such term in
SECTION 10.4.
OBLIGATIONS - shall mean all obligations (monetary or otherwise) of the
Borrower and each other Obligor arising under or in connection with this
Agreement, the Notes, the Letters of Credit and each other Loan Document.
OBLIGOR - shall mean the Borrower, any Guarantor, Tejas Transok Holding
Company and the Parent Company.
OPERATING LESSOR'S DEBT - shall mean Indebtedness in respect of the
A-Notes, the Lessor's A-Invested Amount, the B-Notes and the Lessor's B-Invested
Amount at all times when the Lease is not a Capitalized Lease Obligation.
OPERATIVE DOCUMENTS - shall have the meaning provided in the Participation
Agreement.
OPTION TO PURCHASE - shall mean any option to purchase all or a portion of
any pipeline, gas plant, gas gathering system or other related assets of a type
customarily entered into by parties engaged in the gas processing, transporting
and gathering business.
ORIGINAL TOTAL COMMITTED AMOUNT - shall mean $425,000,000.
OVERNIGHT FUNDS PERIOD - shall mean a period of one or more consecutive
days during which the Overnight Funds Rate exceeds the rates described in
CLAUSES (A)(I) and (A)(II) of the definition "ALTERNATE BASE RATE". Upon the
making, continuing, or converting of any applicable Loan during any such period,
the Administrative Agent shall give prompt notice to the Borrower and the
Lenders of the commencement and termination of such Overnight Funds Period and
the Overnight Funds Rate for such period.
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OVERNIGHT FUNDS RATE - shall mean, for any Overnight Funds Period, a
fluctuating interest rate per annum equal for each day during such period to the
rate of interest offered in the interbank market to the Administrative Agent as
the overnight Federal Funds Rate as at or about 10:00 a.m., New York City time
on such day (or if such day is not a Domestic Business Day, for the next
preceding Domestic Business Day) plus 1% per annum.
PARENT COMPANY - shall mean Tejas Gas Corporation, a Delaware corporation.
PARENT COMPANY GUARANTY - shall have the meaning assigned to such term in
SECTION 10.5.
PARTICIPANT - shall have the meaning assigned to such term in SECTION
14.6.
PARTICIPATION AGREEMENT - shall mean the Participation Agreement dated on
or about the Initial Borrowing Date, among the Lessee, the Lessor, the Transok
Guarantor, the Administrative Agent, the Documentation Agent and the Lenders
party thereto, as amended, modified, supplemented or restated from time to time.
PARTNERSHIP/LIMITED LIABILITY COMPANY SECURITY AGREEMENTS - shall have the
meaning assigned to such term in SECTION 10.2.
PAYEE - shall have the meaning assigned to such term in SECTION 9.3.3(XV).
PAYMENT OFFICE - shall mean the office of Harris Trust and Savings Bank
located at 115 South LaSalle Street, Chicago, Illinois 60603, or such other
office or branch of a financial institution located in Chicago, Illinois or New
York City, New York as the Administrative Agent may from time to time designate
by notice to the Borrower and the Lenders.
PAYOR - shall have the meaning assigned to such term in SECTION 9.3.3(XV).
PBGC - shall have the meaning assigned to such term in SECTION 8.8.
PERCENTAGE - shall mean, relative to any Lender, the percentage set forth
opposite its name on SCHEDULE II or as set forth in an Assignment and Acceptance
executed by such Lender and its Purchasing Lender and delivered pursuant to
SECTION 14.6.
PERMITTED CASH COLLATERAL INVESTMENTS - shall mean marketable obligations,
maturing within one (1) year after acquisition thereof, issued or
unconditionally guaranteed by the United States of America or an instrumentality
or agency thereof and entitled to the full faith and credit of the United States
of America, and money market and mutual funds that invest solely in such
obligations.
PERMITTED INVESTMENT - shall mean the following at any time:
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(a) any evidence of Indebtedness, maturing not more than one year
after such time, issued by or guaranteed by the full faith and
credit of the United States of America; or
(b) commercial paper, maturing not more than nine months from the
date of issue, which is issued by, or notes or bonds maturing
not more than one year after such time which is issued by a
corporation (other than an Affiliate of a Borrower) organized
under the laws of any state of the United States or of the
District of Columbia with a senior unsecured debt rating of
AA- or higher by Standard & Poors Ratings Group or the
equivalent by Moody's Investor Service, Inc. and which
commercial paper is rated A-1 by Standard & Poors Ratings
Group or P-1 by Moody's Investors Service, Inc.; or
(c) any certificate of deposit or bankers acceptance, or time
deposits including Eurodollar time deposits, in each case,
maturing not more than one year after such time, which is
issued by either
(i) a commercial banking institution that is a member of the
Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than
U.S.$400,000,000 and with a senior unsecured debt rating
of AA- or higher by Standard & Poors Ratings Group or
the equivalent by Moody's Investor Service, Inc.; or
(ii) a commercial banking institution not organized under the
laws of the United States or any State thereof, that has
a combined capital and surplus and undivided profits of
not less than $500,000,000 and with senior unsecured
debt rating of AA- by Standard & Poors Ratings Group or
the equivalent by Moody's Investor Service, Inc.; or
(d) any repurchase agreement entered into with any Lender (or
other Person) having a senior unsecured debt rating of AA- or
higher by Standard & Poors Ratings Group or the equivalent by
Moody's Investor Service, Inc. which
(i) is secured by a fully perfected security interest in any
obligation of the type described in CLAUSE (A); and
(ii) has a market value at the time such repurchase agreement
is entered into of not less than 100% of the repurchase
obligation of such Lender (or other Person) thereunder;
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(e) any investment permitted by the investment policy of United
States Trust Company of New York as in effect from time to
time; or
(f) any certificate of deposit or bankers acceptance or time
deposits including Eurodollar time deposits, in each case
maturing not more than one year after such time, issued by one
or more local Oklahoma banks; provided, however, that the
aggregate at any time of all such investments permitted by
this clause (f) shall not exceed at any time outstanding
$10,000,000 in the aggregate.
PERSON - shall mean any corporation, limited liability company, trust,
partnership, joint venture, association, joint stock association or other
unincorporated entity or any government or governmental agency, body or
instrumentality; or a natural person.
PLEDGE AGREEMENT - shall have the meaning assigned to such term in SECTION
10.1.
PRO FORMA BALANCE SHEET - shall have the meaning assigned to such term in
SECTION 8.4(B).
PURCHASING LENDER - shall have the meaning assigned to such term in
SECTION 14.6.
RECEIVABLES - shall mean trade receivables of the Borrower or any of its
Subsidiaries arising in the ordinary course of business and (i) all of the
interest of the Borrower or such Subsidiary in the goods or services the sale or
rendering of which gave rise to such receivables after the passage of title
thereto to any obligor, (ii) all security interests, mortgages, pledges,
hypothecations, assignments, deposit arrangements, encumbrances, liens or
charges and property subject thereto from time to time purporting to secure
payment of such receivables and (iii) all guarantees, insurance, letters of
credit and other agreements or arrangements of whatever character from time to
time supporting or securing payment of any such receivables.
RECEIVABLES FINANCING - shall mean the Transfer by the Borrower or any
Subsidiary of the Borrower of Receivables or of an undivided ownership interest
in a Receivables pool purporting to be a sale (and considered a sale under GAAP)
that (i) does not provide, directly or indirectly, for recourse against the
seller of such Receivables (or against the Borrower or any Subsidiary of the
Borrower) by way of guaranty or any other support arrangement for the
collectibility of such Receivables (based on financial conditions or
circumstances of the obligor thereunder) other than such limited recourse as is
related to historical bad debt loss experience or (ii) does not satisfy the
requirements of the foregoing clause (i).
REFERENCE LENDERS - shall mean BMO and Canadian Imperial Bank of Commerce.
REGULATION G - shall mean Regulation G of the Board of Governors of the
Federal Reserve System, from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
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REGULATION T - shall mean Regulation T of the Board of Governors of the
Federal Reserve System, from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
REGULATION U - shall mean Regulation U of the Board of Governors of the
Federal Reserve System, as from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
REGULATION X - shall mean Regulation X of the Board of Governors of the
Federal Reserve System, as from time to time in effect, and all official rulings
and interpretations thereunder or thereof.
REGULATORY CHANGE - shall mean, relative to any Lender, any change
occurring after the date hereof in any (or the adoption after the date hereof of
any new):
(a) United States Federal or state law or foreign law applicable
to such Lender; or
(b) regulation, interpretation, directive, or request (whether or
not having the force of law) applicable to such Lender of any
court or governmental authority charged with the
interpretation or administration of any law referred to in
CLAUSE (A) or of any fiscal, monetary, or other authority
having jurisdiction over such Lender.
REIMBURSEMENT OBLIGATION - shall have the meaning assigned to such term in
SECTION 2.4.2.
RELEASE - shall mean a "release", as such term is defined in CERCLA.
REQUIRED LENDERS - shall mean, at any time, Lenders holding at least 51%
of the then aggregate outstanding principal or face amount of the Borrowings,
or, if no such principal or face amount is then outstanding, Lenders having at
least 51% of the total Commitments.
RESOURCE CONSERVATION AND RECOVERY ACT - shall mean the Resource
Conservation and Recovery Act, 42 U.S.C. Section 690, ET SEQ., as in effect from
time to time.
REVOLVING COMMITMENT - shall mean, relative to any Lender, such Lender's
obligation to make Loans and to participate in Letters of Credit pursuant to
SECTIONS 2.1.1 and 2.1.2.
RSN - shall mean a revolving subordinated promissory note from the
Borrower payable to the Parent Company in the form of EXHIBIT 9.3.3B.
SCHEDULED COMMITMENT TERMINATION DATE - shall mean December 31, 1997.
19
SECURITY DOCUMENTS - shall mean, collectively, the Pledge Agreements, the
Notes Security Agreement, the Parent Company Guaranty, the Holding Company
Guaranty, the Holding Company Security Agreement, the Partnership/Limited
Liability Company Security Agreements and any and all additional security
documents described in SECTION 9.2.7.
STATED MATURITY DATE - shall mean the earlier of:
(a) the Scheduled Commitment Termination Date; and
(b) either
(i) the occurrence of any Event of Default described in
SECTION 12.1.4; or
(ii) the occurrence and continuance of any other Event of Default
and the declaration of the Loans to be due and payable
pursuant to SECTION 12.2.
STOCKHOLDERS' EQUITY - shall mean, as of the time any determination
thereof is to be made (i) at a time when the Borrower is a corporation, the sum
of the Borrower's capital stock (which shall exclude treasury stock and any
capital stock subject to mandatory redemption by the issuer at the option of the
holder thereof) and additional paid-in capital, PLUS retained earnings (MINUS
accumulated deficit) and (ii) at a time when the Borrower is a limited liability
company, the sum of all membership interests of all members of the Borrower, all
as shown on the consolidated balance sheet of the Borrower and its Subsidiaries
and based on GAAP.
SUBORDINATED DEBT - shall mean all unsecured Indebtedness of the Borrower
and its Subsidiaries on a consolidated basis for borrowed money which is
subordinated, upon terms satisfactory to the Lenders, in right of payment to the
payment in full in cash of all Obligations, including Indebtedness evidenced by
the RSNs.
SUBORDINATED TERM NOTES - shall have the meaning assigned to such term in
SECTION 10.4.
SUBSIDIARY - shall mean a corporation, of which any Person and its
Subsidiaries own, directly or indirectly, such number of outstanding shares of
capital stock as have more than fifty percent (50%) of the ordinary voting power
for the election of directors; each partnership, of which any Person or any
Subsidiary of any Person is a general partner; and each limited liability
company, in which any Person is a member or manager and with an aggregate
interest of more than fifty percent (50%).
TAHC - shall mean Tejas-Acadian Holding Company, a Delaware corporation.
TAXES - shall have the meaning assigned to such term in SECTION 4.10.
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TGC - shall mean Tejas Gas Corp., a Nevada corporation.
TNGC - shall mean Tejas Natural Gas Company, a Nevada corporation.
TOTAL COMMITTED AMOUNT - shall mean the lesser of:
(a) the Original Total Committed Amount; and
(b) the aggregate of the Designated Maximum Commitments.
TOTAL INTEREST EXPENSE - shall mean with respect to any period for which a
determination thereof is to be made, the sum, without duplication, of (i) the
aggregate amount of all interest accrued, whether or not paid, on all
Indebtedness of the Borrower and its Subsidiaries on a consolidated basis, PLUS
(ii) the portion of any rental obligation allocable to interest expense in
accordance with GAAP, PLUS (iii) the aggregate amount of all Fixed Rent accrued,
whether or not paid.
TRANSFER - shall mean (i) a sale, transfer, conveyance, assignment or
other disposition of an Asset (or related Assets) having a Fair Market Value in
excess of $100,000, or (ii) destruction as a result of a casualty of an Asset
(or related Assets) having a Fair Market Value in excess of $500,000 in the
aggregate for any such casualty.
TRANSFER EFFECTIVE DATE - shall have the meaning assigned to such term in
the Assignment and Acceptance.
TRANSFEREE - shall have the meaning assigned to such term in SECTION 14.6.
TRANSOK - means Transok, Inc., an Oklahoma corporation.
TYPE - shall mean, relative to any Loan, the portion thereof, if any,
being maintained as a Domestic Loan or a Eurodollar Loan.
UNITED STATES or U.S. - shall mean the United States of America, its fifty
States and the District of Columbia.
UNMATURED EVENT OF DEFAULT - shall mean any event which with the passage
of time or notice to the Borrower, or both, would constitute an Event of
Default.
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ARTICLE II
COMMITMENTS OF THE LENDERS;
BORROWING PROCEDURES AND CONDITIONS
SECTION 2.1 COMMITMENTS. Subject to the terms and conditions of this
Agreement, each Lender severally and for itself alone agrees to make extensions
of credit pursuant to the Commitments as described in this ARTICLE II.
SECTION 2.1.1 LOAN COMMITMENT. From time to time on any Business Day
occurring prior to the Commitment Termination Date each Lender will make loans
(relative to such Lender, its "LOANS") to the Borrower equal to such Lender's
Percentage of the aggregate amount of Loans requested by the Borrower to be made
on such day. No Lender shall be permitted or required to make any Loan if, after
giving effect thereto, the aggregate outstanding principal amount of all Loans
(i) of all Lenders would exceed the Loan Commitment Amount or (ii) of such
Lender would exceed such Lender's Percentage of the Loan Commitment Amount or
such Lender's Designated Maximum Commitment. On the terms and subject to the
conditions hereof, the Borrower may from time to time borrow, prepay, repay and
reborrow Loans.
SECTION 2.1.2 LETTER OF CREDIT COMMITMENT. From time to time on any
Business Day occurring at least six (6) Business Days prior to the Commitment
Termination Date then in effect, the Issuing Bank will issue, and each Lender
will participate in, standby letters of credit (herein individually referred to
as a "LETTER OF CREDIT" and collectively referred to as "LETTERS OF CREDIT") for
the account of the Borrower, and in the name of the Borrower or any Subsidiary
of the Borrower, in a principal amount equal to such Lender's Percentage of the
face amount of all Letters of Credit requested by the Borrower to be issued on
such day. Neither the Issuing Bank nor any Lender shall be permitted or required
to issue or participate in any Letter of Credit if, after giving effect thereto,
(i) the aggregate of all Letter of Credit Liabilities outstanding on such date
under and in connection with all Letters of Credit of all Lenders would exceed
the Letter of Credit Commitment Amount or (ii) the Percentage of such Lender in
all Letter of Credit Liabilities outstanding on such date would exceed such
Lender's Percentage of the Letter of Credit Commitment Amount. Anything herein
contained to the contrary notwithstanding, BMO's obligations and commitments to
issue Letters of Credit hereunder shall cease immediately and automatically and
without further action of any kind if BMO ceases to be the Administrative Agent
hereunder. On the terms and subject to the conditions hereof, the Borrower may
from time to time request, reimburse and request new Letters of Credit.
SECTION 2.1.3 LENDERS NOT PERMITTED OR REQUIRED TO MAKE BORROWINGS
AVAILABLE. No Lender shall be permitted or required to make any Loan or
participate in (and the Issuing Bank shall have no obligation to issue) any
Letter of Credit, if, after giving effect thereto and to all other Borrowings
and conversions and continuations to be made on such date, (a) the Aggregate
Revolving Outstandings of all Lenders would exceed the Commitment Amount or (b)
the sum of the aggregate outstanding principal amount of all Loans of such
Lender PLUS the aggregate of such Lender's Percentage of all Letter of Credit
Liabilities would exceed the lesser of (i) such Lender's
22
Percentage of the Commitment Amount and (ii) such Lender's Designated Maximum
Commitment.
SECTION 2.2 DOMESTIC LOANS AND EURODOLLAR LOANS. Subject to the terms and
conditions set forth in ARTICLE VI, each Loan shall be either a Eurodollar Loan
or a Domestic Loan as the Borrower may request, it being understood that Loans
made to the Borrower on any date may be either Eurodollar Loans or Domestic
Loans or a combination thereof. As to any Eurodollar Loan, each Lender may, if
it so elects, fulfill its commitment to make such Eurodollar Loan by causing a
Lending Installation to make such Eurodollar Loan; PROVIDED, HOWEVER, that in
such event the obligation of the Borrower to repay such Eurodollar Loan
nevertheless shall be to such Lender and shall be deemed to be held by such
Lender for the account of such Lending Installation.
SECTION 2.3 BORROWING PROCEDURES. The Borrower shall give the
Administrative Agent prior written or telegraphic notice (in substantially the
form of EXHIBIT 2.3 hereto) of each proposed Borrowing or continuation, and as
to whether such Borrowing or continuation is to be of Domestic Loans, Eurodollar
Loans or Letters of Credit, as follows:
SECTION 2.3.1 DOMESTIC LOANS. The Administrative Agent shall receive
written or telegraphic notice from the Borrower on or before 11:00 a.m. Chicago
time at least one (1) Domestic Business Day prior to the date requested for each
proposed Borrowing of a Domestic Loan of the date of such Borrowing and amount
of such Borrowing (which shall be in a minimum amount of $1,000,000 or in the
unused amount of the Loan Commitment), and the Administrative Agent shall advise
each Lender thereof promptly thereafter. Not later than 10:00 a.m., Chicago
time, on the date specified in such notice for such Borrowing, each Lender shall
provide to the Administrative Agent at the Payment Office, same day or
immediately available funds covering such Lender's Percentage of the requested
Domestic Loan. Upon fulfillment of the applicable conditions set forth in
ARTICLE XI with respect to such Domestic Loan, the Administrative Agent shall
make available to the Borrower the proceeds of each Domestic Loan (to the extent
received from the Lenders) by wire transfer of such proceeds to such account(s)
as the Borrower shall have specified in the Borrowing Request.
SECTION 2.3.2 EURODOLLAR LOANS. The Administrative Agent shall receive
written or telegraphic notice from the Borrower on or before 11:00 a.m. Chicago
time, at least three (3) Eurodollar Business Days prior to the date requested
for each proposed Borrowing or continuation of a Eurodollar Loan having an
initial one (1), two (2), three (3) or six (6) month Eurodollar Interest Period
of the date of such Borrowing or continuation, as the case may be, the amount of
such Borrowing or continuation, as the case may be (which shall be in a minimum
amount of $5,000,000 or in the unused amount of the applicable Commitment), and
the duration of the initial Eurodollar Interest Period with respect thereto, and
the Administrative Agent shall advise each Lender thereof promptly thereafter.
Not later than 10:00 a.m., Chicago time, on the date specified in such notice
for such Borrowing, each Lender shall provide to the Administrative Agent at the
Payment Office, same day or immediately available funds covering such Lender's
Percentage of the requested Eurodollar Loan. Upon fulfillment of the applicable
conditions set
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forth in ARTICLE XI with respect to such Eurodollar Loan, the Administrative
Agent shall make available to the Borrower the proceeds of each Eurodollar Loan
(to the extent received from the Lenders) by wire transfer of such proceeds to
such account(s) as the Borrower shall have specified in the Borrowing Request.
SECTION 2.3.3 LETTERS OF CREDIT. The Administrative Agent shall receive
written or telegraphic notice from the Borrower on or before 11:00 a.m. Chicago
time at least three (3) Domestic Business Days prior to the proposed issuance
date of a Letter of Credit, and the Administrative Agent shall advise the
Issuing Bank and each Lender thereof promptly thereafter. Each Borrowing Request
for the issuance of a Letter of Credit shall be accompanied by an Issuance
Request, substantially in the form of EXHIBIT 2.3.3A, with appropriate
insertions, setting forth in detail the proposed terms of such requested Letter
of Credit, including, without limitation, the proposed date of issuance, amount,
beneficiary, expiry date and documents to be required upon presentation, if any
(such terms regarding documents required upon presentation to be satisfactory in
form and substance to the Issuing Bank). Each Letter of Credit shall have a
fixed expiration date occurring not later than one (1) year after the date of
issuance thereof (and in no event later than five (5) Business Days prior to the
Commitment Termination Date), may by its terms be renewable for additional
periods (but in no event later than five (5) Business Days prior to the
Commitment Termination Date), and shall provide that demands for payment
thereunder be made at least three (3) Domestic Business Days prior to the
proposed date of payment; PROVIDED, HOWEVER, that for all purposes of this
Agreement (other than the condition requiring delivery of a Borrowing Request
and an Issuance Request and except that customary renewal fees, rather than
issuance fees, of the Issuing Bank shall be payable with respect to such
renewals) the renewal of a Letter of Credit shall be considered an issuance
thereof and the Borrower shall be required to comply with all the provisions of
this Agreement with respect to any such renewal to the same extent as if a new
Letter of Credit was being issued on such renewal date. Upon fulfillment of the
applicable conditions set forth in ARTICLE XI and subject to the terms hereof,
the Issuing Bank shall issue such Letter of Credit to the requested beneficiary
no later than the close of business on the date of such proposed issuance. Each
Lender shall, upon the issuance of each Letter of Credit and without further
action, hold a participation therein and each Lender hereby irrevocably and
unconditionally purchases a participation in each such Letter of Credit in an
amount equal to such Lender's Percentage of the face amount of such Letter of
Credit. Each Lender shall, to the extent of its Percentage, be responsible for
reimbursing promptly (and in any event within one Business Day), without setoff,
deduction or counterclaim, the Issuing Bank for Reimbursement Obligations which
have not been reimbursed by the Borrower in accordance with SECTION 2.4.2.
SECTION 2.4 LETTER OF CREDIT PROCEDURES.
SECTION 2.4.1 LETTER OF CREDIT OPERATIONS. The Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment by a beneficiary under a Letter of Credit to
ascertain that the same appear on their face to be in conformity with the terms
and conditions of such Letter of Credit. If, after examination, the Issuing Bank
shall have determined that a demand for payment under such Letter of Credit does
24
not conform to the terms and conditions of such Letter of Credit, then the
Issuing Bank shall, as soon as reasonably practicable, give notice to such
beneficiary to the effect that such demand for payment was not in accordance
with the terms and conditions of such Letter of Credit, stating the reasons
therefor. Thereupon, such beneficiary may attempt to correct any such
non-conforming demand for payment under such Letter of Credit if, and to the
extent that, such beneficiary is entitled (without regard to the provisions of
this sentence) and able to do so. The Lenders hereby expressly agree to accept
as correct and conclusive, in the absence of gross negligence or willful
misconduct, any determination by the Issuing Bank that any demand for payment
under a Letter of Credit complies, or does not comply, with the terms and
conditions of such Letter of Credit.
After determining that a demand for payment under such Letter of Credit
conforms to the terms and conditions thereof, the Issuing Bank shall promptly
notify the Lenders by telecopy of the same.
SECTION 2.4.2 BORROWER'S AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. The
Borrower hereby agrees to reimburse the Issuing Bank, forthwith, for each
payment or disbursement made by the Issuing Bank to settle its obligations under
any draft drawn under any Letter of Credit, with interest on the amount so paid
or disbursed by the Issuing Bank from and including the date of payment or
disbursement to, but not including, the date the Issuing Bank is reimbursed
therefor or the Lenders are deemed to have made a Loan in respect thereof
pursuant to the following proviso, as the case may be, at the rate set forth in
SECTION 4.1.1(A) (any and all obligations of the Borrower to reimburse the
Issuing Bank hereunder with respect to each payment or disbursement made by the
Issuing Bank under a Letter of Credit being herein referred to as a
"REIMBURSEMENT OBLIGATION" and collectively as "REIMBURSEMENT OBLIGATIONS");
PROVIDED, HOWEVER, that if any such payment or disbursement shall not be
reimbursed to the Issuing Bank after any grace period for the payment thereof as
provided in SECTION 12.1.1 herein and if the Commitment Termination Date shall
not have occurred, then the Reimbursement Obligation in respect thereof shall
automatically, without notice from or to the Borrower and without any further
authorization from the Borrower (and whether or not the amount thereof satisfies
the conditions of SECTION 2.3.1 and whether or not the conditions of ARTICLE XI
are satisfied), be deemed to be a Loan, made by each of the Lenders to the
Borrower in their respective Percentages of the Issuing Bank's payments or
disbursements bearing interest determined pursuant to SECTION 4.1.1(A) and the
related Letter of Credit Liability shall be deemed paid simultaneously with such
funding of the deemed Loan; PROVIDED FURTHER, HOWEVER, that if any such payment
or disbursement shall not be reimbursed to the Issuing Bank and a Loan shall not
be deemed to have been made notwithstanding the preceding proviso due to failure
to meet the applicable conditions in ARTICLE XI, then the Reimbursement
Obligation in respect thereof shall be due and payable, with interest accruing
thereon at the rate set forth in SECTION 4.1.2(C), if applicable.
Any action taken by the Issuing Bank, any Lender, the Administrative
Agent, the Documentation Agent or the Collateral Agent in connection with any
Letter of Credit or any draft thereon or demand for payment thereunder shall, if
in good faith and in conformity with all laws, regulations or customs applicable
thereto, be binding upon the Borrower and its Subsidiaries and
25
shall not place the Issuing Bank, any Lender, the Administrative Agent, the
Collateral Agent or the Documentation Agent under any resulting liability to the
Borrower or any of its Subsidiaries. Without limiting the generality of the
foregoing, the Borrower and its Subsidiaries assume all risks of the acts or
omissions of any beneficiary or transferee of each Letter of Credit and neither
the Issuing Bank, the Lenders, the Administrative Agent, the Collateral Agent
nor the Documentation Agent nor any of their respective officers, directors or
agents shall be liable or responsible for (i) the use which may be made of any
Letters of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith, (ii) the validity or genuineness of any document specified
in, or demand for payment under, any Letter of Credit, or any endorsements
thereon, even if such document or demand should prove to be in any or all
respects invalid, fraudulent or forged (and the Issuing Bank may accept
documents and demands that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary), (iii) failure of any draft to bear any reference
or adequate reference to a Letter of Credit, or failure of any Person to note
the amount of any draft on the reverse side of a Letter of Credit, (iv) errors,
omissions, interruptions or delays in transmission or delivery of any message by
mail, cable, telegram, telecopier, wireless or otherwise, (v) errors in
translation or errors in interpretation of technical terms or (vi) any error,
neglect, default, suspension or insolvency of any of the Issuing Bank's
correspondents. Notwithstanding the foregoing, the Borrower shall not be
obligated to reimburse the Issuing Bank for any wrongful payment or disbursement
made by the Issuing Bank under any Letter of Credit as a result of acts or
omissions constituting gross negligence or willful misconduct on the part of the
Issuing Bank or any of its officers, directors, employees or agents.
THE BORROWER WILL ON DEMAND INDEMNIFY AND KEEP THE ISSUING BANK AND EACH
LENDER HARMLESS FROM AND AGAINST ALL LIABILITIES, LOSSES, DAMAGES, CLAIMS,
COSTS, DEMANDS AND ACTIONS WHICH THE ISSUING BANK OR SUCH LENDER MAY SUFFER OR
INCUR IN CONNECTION WITH ANY LETTER OF CREDIT OR ANY PAYMENT THEREUNDER, EXCEPT
TO THE EXTENT DUE TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE ISSUING
BANK OR SUCH LENDER OR RESULTING FROM THE ISSUING BANK'S OR SUCH LENDER'S OWN
UNEXCUSED BREACH OF ANY MATERIAL PROVISION OF ANY LOAN DOCUMENT, PROVIDED THAT
IT IS THE INTENTION OF THE PARTIES HERETO FOR THE ISSUING BANK AND EACH LENDER
TO BE INDEMNIFIED IN THE CASE OF SIMPLE NEGLIGENCE, INCLUDING THEIR OWN
NEGLIGENCE. The obligations of the Borrower under this SECTION 2.4.2 shall not
be impaired by (i) any waiver or time granted to or by the Issuing Bank, any
Lender, the Documentation Agent, the Administrative Agent or the Collateral
Agent, (ii) any release or dealings with any rights or security of the Issuing
Bank, any Lender, the Documentation Agent, the Administrative Agent or the
Collateral Agent (including, without limitation, under any of the Security
Documents or any of the Guaranties), (iii) any invalidity of any Letter of
Credit or (iv) any other circumstances (other than an express release in writing
by the relevant beneficiaries) which might impair such obligations. Anything in
this SECTION 2.4.2 to the contrary notwithstanding, the Borrower does not hereby
waive its right to pursue an action against the Issuing Bank or any Lender for
willful misconduct or gross negligence by the Issuing Bank, such Lender or any
of their officers, employees or agents in connection with a Letter of Credit or
any payment thereunder.
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SECTION 2.4.3 LENDERS' AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. Any
action taken by the Issuing Bank, any Lender, the Administrative Agent, the
Documentation Agent or the Collateral Agent in connection with any Letter of
Credit or any draft thereon or demand for payment thereunder shall, if in good
faith and in conformity with all laws, regulations or customs applicable
thereto, be binding upon the Lenders and shall not place the Issuing Bank, any
Lender, the Administrative Agent, the Collateral Agent or the Documentation
Agent under any resulting liability to any of the other Lenders. Without
limiting the generality of the foregoing, the Lenders assume all risks of the
acts or omissions of each beneficiary or transferee of each Letter of Credit and
neither the Issuing Bank nor any of its officers, directors, employees, or
agents shall be liable or responsible for (i) the use which may be made of any
Letters of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith, (ii) the validity or genuineness of any document specified
in, or demand for payment under, any Letter of Credit, or any endorsements
thereon, even if such document or demand should prove to be in any or all
respects invalid, fraudulent or forged (and the Issuing Bank may accept
documents and demands that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary), (iii) failure of any draft to bear any reference
or adequate reference to a Letter of Credit, or failure of any Person to note
the amount of any draft on the reverse side of a Letter of Credit, (iv) errors,
omissions, interruptions or delays in transmission or delivery of any message by
mail, cable, telegram, telecopier, wireless or otherwise, (v) errors in
translation or errors in interpretation of technical terms or (vi) any error,
neglect, default, suspension or insolvency of any of the Issuing Bank's
correspondents. Notwithstanding the foregoing, no Lender shall be obligated to
reimburse the Issuing Bank for any wrongful payment or disbursement made by the
Issuing Bank under any Letter of Credit as a result of acts or omissions
constituting gross negligence or willful misconduct on the part of the Issuing
Bank or any of its officers, employees or agents.
SECTION 2.4.4 PROCEDURES FOR DEPOSITING CASH COLLATERAL. Any cash
collateral amounts received by the Collateral Agent pursuant to SECTION 5.7 or
12.3 shall be retained by the Collateral Agent for the benefit of the Lenders as
collateral security for, and the Borrower hereby grants to the Collateral Agent
a security interest in, such cash collateral, the Permitted Cash Collateral
Investments and the proceeds of any thereof to secure, first, the payment of the
Obligations of the Borrower under and in connection with the Letters of Credit
and then the other Obligations of the Borrower under and in connection with this
Agreement and the other Loan Documents. If, and to the extent that (i) all
Obligations of the Borrower in connection with all outstanding Letters of Credit
and all other Obligations have been fully paid and satisfied, and (ii) the
Commitments have terminated, the Collateral Agent shall pay to the Borrower,
upon the Borrower's request therefor, all amounts previously paid by the
Borrower pursuant to SECTION 5.7 or 12.3, plus any interest earned thereon, and
not theretofore applied by the Collateral Agent to reduce amounts payable by the
Borrower to the Issuing Bank and the Lenders under or in connection with the
Letters of Credit or other Obligations. All amounts on deposit pursuant to this
SECTION 2.4.4 shall, until their application to any Obligation or their return
to the Borrower, as the case may be, at the Borrower's written request, be
invested in Permitted Cash Collateral
27
Investments designated by the Borrower, which Permitted Cash Collateral
Investments shall be held by the Collateral Agent as additional collateral
security for the repayment of the Borrower's Obligations under and in connection
with the Letters of Credit and all other Obligations. Any losses, net of
earnings, and reasonable fees and expenses of such Permitted Cash Collateral
Investments shall be charged against the principal amount invested. The
Collateral Agent and the Lenders shall not be liable for any loss resulting from
any Permitted Cash Collateral Investment made by it at the Borrower's request.
The Collateral Agent is not obligated hereby, or by any other Loan Document, to
make or maintain any Permitted Cash Collateral Investment, except upon written
request by the Borrower.
SECTION 2.5 [INTENTIONALLY OMITTED].
SECTION 2.6 INCREASED CAPITAL COSTS. If any Regulatory Change imposes,
modifies, or deems applicable any capital adequacy, capital maintenance, or
similar requirement (including a request or requirement which affects the manner
in which any Lender or the Issuing Bank allocates capital resources to its
commitments, including its Commitments hereunder) and as a result thereof, in
the opinion of such Lender or the Issuing Bank, the rate of return on such
Lender's or the Issuing Bank's capital as a consequence of its Commitments, the
Loans made by such Lender or its issuance of or participation in the Letters of
Credit is reduced to a level below that which such Lender or the Issuing Bank
could have achieved but for such circumstances, then and in each such case upon
notice from time to time by such Lender or the Issuing Bank to the Borrower, the
Borrower shall pay (without duplication of costs paid pursuant to SECTIONS 4.9
and 4.12) to such Lender or the Issuing Bank such additional amount or amounts
as shall compensate such Lender or the Issuing Bank for such reduction in rate
of return. Each Lender and the Issuing Bank, upon determining in good faith that
any additional amounts are payable pursuant to this SECTION 2.6, will give
prompt written notice thereof to the Borrower with a copy to the Administrative
Agent, PROVIDED that the failure to give any such notice shall not release or
diminish the Borrower's obligations to pay additional amounts pursuant to this
SECTION 2.6; PROVIDED FURTHER, HOWEVER, that the Borrower shall not be obligated
to pay additional amounts attributable to such reduction under this SECTION 2.6
in respect of time periods more than 180 days prior to the date of such notice.
A statement of any Lender or the Issuing Bank as to any such additional amount
or amounts (including calculations thereof in reasonable detail) shall be
rebuttable presumptive evidence of such cost and amount. In determining such
amount, any Lender and the Issuing Bank may use any method of averaging and
attribution that it (in its sole and absolute discretion) shall deem applicable.
ARTICLE III
PROVISIONS RELATING TO THE NOTES AND REPAYMENT
SECTION 3.1 THE NOTES. Each Lender's Loans under the Revolving
Commitment shall be evidenced by a Note of the Borrower substantially in the
form set forth in
28
EXHIBIT 3.1 (such Note herein called the "NOTE") with appropriate insertions,
and dated the Initial Borrowing Date (or such other date prior thereto as shall
be satisfactory to the Agents), payable to the order of such Lender in a maximum
principal amount equal to such Lender's Percentage of the Original Total
Committed Amount. The date and amount of each Loan made by such Lender and of
each repayment of principal thereon received by such Lender shall be recorded by
such Lender in its records or, at its option, on the schedule attached to the
Note issued to such Lender. The aggregate unpaid principal amount so recorded
shall be rebuttable presumptive evidence of the principal amount owing and
unpaid on such Note. The failure so to record any such amount or any error in so
recording any such amount shall not, however, limit or otherwise affect the
obligations of the Borrower hereunder or under any Note to repay the principal
amount of the Loans together with all interest accruing thereon.
SECTION 3.2 REPAYMENTS. The Borrower shall repay in full the unpaid
principal amount of each Loan upon the Stated Maturity Date.
SECTION 3.3 DUE DATE EXTENSION. If any payment of principal of, or
interest on, any Eurodollar Loan shall fall due on a day which is not a
Eurodollar Business Day, or if any payment of principal of or interest on any
Domestic Loan or any payment of any fee provided for herein or any other amount
due hereunder shall fall due on a day which is not a Domestic Business Day, then
such due date shall be extended to the next succeeding Eurodollar Business Day
or Domestic Business Day, as the case may be (unless, with respect to a payment
relating to a Eurodollar Loan, such due date would fall in another calendar
month, in which event payment shall be made on the next preceding Eurodollar
Business Day) and additional interest and fees shall accrue and be payable for
the period of such extension.
ARTICLE IV
INTEREST, FEES AND SPECIAL
EURODOLLAR LOAN RELATED PROVISIONS
SECTION 4.1 INTEREST ON THE BORROWINGS.
SECTION 4.1.1 INTEREST PRIOR TO MATURITY. Until maturity (whether on the
Stated Maturity Date, upon acceleration or otherwise), the unpaid principal
amount from time to time outstanding on the Loans and any unpaid Reimbursement
Obligations with respect to the Letters of Credit shall bear interest at a
fluctuating rate per annum equal to:
(a) as to any unpaid principal amount representing Domestic Loans
or any unpaid Reimbursement Obligations with respect to the
Letters of Credit, the sum of the Alternate Base Rate from
time to time in effect, and
29
(b) as to any unpaid principal amount representing Eurodollar
Loans, the sum of the Eurodollar Interest Rate for the
applicable Eurodollar Interest Period in effect, PLUS the
Applicable Margin for Loans with respect to Eurodollar Loans
from time to time in effect.
SECTION 4.1.2 INTEREST AFTER MATURITY. After the date any principal amount
of any Loan is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise) and after any other monetary Obligation with respect
to Letters of Credit of the Borrower hereunder shall have become due and
payable, and after any applicable grace periods have lapsed, until paid, such
due and payable amounts and Obligations shall bear interest, but only to the
extent permitted by applicable law, at a fluctuating rate per annum equal to:
(a) as to any unpaid principal amount representing Domestic Loans
and, to the extent permitted by applicable law, as to any
unpaid, accrued interest on Domestic Loans, the sum of the
Applicable Default Margin, PLUS the Alternate Base Rate from
time to time in effect (but not less than the Alternate Base
Rate in effect at maturity); and
(b) as to any unpaid principal amount representing Eurodollar
Loans and, to the extent permitted by applicable law, as to
any unpaid, accrued interest on Eurodollar Loans, the sum of
the Applicable Default Margin, PLUS the Applicable Margin
for Loans with respect to Eurodollar Loans from time to time
in effect, PLUS the Eurodollar Interest Rate for a
Eurodollar Interest Period of one (1) day, one (1) week, or
one (1) month (as the Administrative Agent shall select in
the exercise of its sole discretion) determined as at 9:00
a.m., Chicago time, on the Eurodollar Business Day next
succeeding that on which the Administrative Agent became
aware of such default, all of the foregoing as determined by
the Administrative Agent; PROVIDED that so long as the
principal amount or any part thereof of any such Eurodollar
Loan remains unpaid, the rate herein provided for shall be
recalculated on the same basis as aforesaid on the last day
of each period for which such rate has been determined as
aforesaid. If on any occasion any of the Reference Lenders
is unable, or for any reason fails, so to notify the
Administrative Agent by 11:00 a.m., New York City time on
such Eurodollar Business Day, such interest rate shall be
determined on the basis of the quotations furnished by the
other Reference Lenders to the Administrative Agent at or
prior to said 11:00 a.m.; and
(c) as to any other unpaid monetary Obligations with respect to
Letters of Credit, the sum of the Applicable Default Margin,
PLUS the Alternate Base Rate from time to time in effect.
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SECTION 4.2 NOTICE OF EURODOLLAR INTEREST RATE; DETERMINATION CONCLUSIVE.
The Eurodollar Interest Rate with respect to each Eurodollar Interest Period
shall be determined by the Administrative Agent as provided in the definition of
Eurodollar Interest Rate in SECTION 1.1, and notice thereof shall be given
promptly by the Administrative Agent to the Borrower and the Lenders. Each
determination of the Eurodollar Interest Rate by the Administrative Agent shall
be conclusive and binding upon the parties hereto, in the absence of
demonstrable error. At the request in writing of the Borrower, however, the
Administrative Agent shall deliver to the Borrower a statement showing in
reasonable detail the computations used by the Administrative Agent in
determining the Eurodollar Interest Rate.
SECTION 4.3 EURODOLLAR INTEREST PERIODS. Subject to the provisions of
SECTION 4.1.2(B) and subject to the requirements of the definition of Eurodollar
Interest Period, the Borrower may elect to continue a Eurodollar Loan from one
Eurodollar Interest Period into the subsequent Eurodollar Interest Period, in
the notice required by SECTION 2.3.2 above. If no such election is made and such
Eurodollar Loan is not repaid, the Borrower shall be deemed to have elected a
one (1) month Eurodollar Interest Period.
SECTION 4.4 COMMITMENT FEE. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender, for the period commencing
on the Effective Date, and continuing through the Commitment Termination Date, a
commitment fee at a rate PER ANNUM equal to the Commitment Fee Rate on such
Lender's Percentage of the sum of the average daily unused portion of the
Commitment Amount (it being understood that, with respect to any Lender, the
principal amount of its Loans and the outstanding principal amount of its
Percentage of Letter of Credit Liabilities shall be considered utilizations of
the Commitment Amount). Such commitment fees shall be payable by the Borrower in
arrears on the last Business Day of March, June, September and December of each
year, the first such payment to be made on June 30, 1996 for the period then
ending for which no fees shall theretofore have been paid, and on the Commitment
Termination Date.
SECTION 4.5 LETTER OF CREDIT FEES. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender with respect to each Letter
of Credit issued hereunder, for the period from and including the date of
issuance of such Letter of Credit to (but not including) the date on which such
Letter of Credit expires, a letter of credit fee at a rate PER ANNUM equal to
the Applicable Margin for Letters of Credit on such Lender's Percentage of the
face amount of such Letter of Credit. Such letter of credit fees shall be
payable by the Borrower in arrears on the last Business Day of March, June,
September and December of each year, the first such payment to be made on the
last day of the first calendar quarter for which a Letter of Credit is first
outstanding hereunder for which no fees shall theretofore have been paid, and on
the date such Letter of Credit expires.
(b) The Borrower agrees to pay to the Issuing Bank an issuance fee and a
renewal fee for each Letter of Credit issued hereunder, payable at the time of
issuance or renewal of such
31
Letter of Credit, as the case may be, and negotiation fees on each sight draft
drawn under a Letter of Credit and amendment fees in respect of the amendment of
each Letter of Credit, payable on demand, such issuance fees, renewal fees,
negotiation fees and amendment fees to be in amounts mutually agreed by the
Borrower and the Issuing Bank.
SECTION 4.6 PAYMENT OF INTEREST; CALCULATION OF INTEREST AND FEES.
Interest accrued on each Note prior to maturity (whether by acceleration or
otherwise) shall be payable:
(a) on Eurodollar Loans, on the last day of each applicable
Eurodollar Interest Period and, if such Eurodollar Interest
Period shall exceed three (3) months, on the day of each
third month during such Eurodollar Interest Period which is
numerically equivalent to the Eurodollar Period Commencement
Date for such Eurodollar Interest Period or if there exists
no numerically corresponding day in such month, on the last
Eurodollar Business Day of such month (each such date herein
called a "EURODOLLAR INTEREST PAYMENT DATE");
(b) on Domestic Loans, in arrears, on the last Business Day of
each March, June, September, and December of each year,
commencing with the first quarterly period during which
Domestic Loans are outstanding hereunder for which no interest
shall theretofore have been paid;
and at the Stated Maturity Date for each Loan. After maturity (whether by
acceleration or otherwise), interest shall be payable on demand. All interest on
Domestic Loans and all commitment and letter of credit fees due under this
Agreement shall be calculated on the basis of the actual number of days elapsed
in a year consisting of 365 days (or 366 days in a leap year, as applicable).
All interest on the Eurodollar Loans shall be calculated on the basis of the
actual number of days elapsed in a year consisting of 360 days. Where interest
is calculated on the basis of the Alternate Base Rate, such rate shall change
simultaneously with each change in the Alternate Base Rate.
SECTION 4.7 EURODOLLAR DEPOSITS UNAVAILABLE OR EURODOLLAR INTEREST RATE
UNASCERTAINABLE. In the event that, prior to any Eurodollar Period Commencement
Date in respect of any Eurodollar Loans, the Administrative Agent shall have
determined (which determination shall be conclusive and binding on all parties
hereto) that Dollar deposits of the relevant amount and for the relevant
Eurodollar Interest Period for such Eurodollar Loans are not available to the
Lenders in the interbank Eurodollar market or that, by reason of circumstances
affecting the interbank Eurodollar market, adequate and reasonable means do not
exist for ascertaining the Eurodollar Interest Rate applicable to such
Eurodollar Interest Period or the Required Lenders advise the Administrative
Agent that the Eurodollar Interest Rate as determined by the Administrative
Agent will not adequately and fairly reflect the cost to such Required Lenders
of maintaining or funding Eurodollar Loans for the relevant Eurodollar Interest
Period, the
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Administrative Agent shall promptly give notice of such determination to the
Borrower and the Lenders and (i) the Borrower's request for a proposed
Eurodollar Loan shall be deemed a request for a Domestic Loan, (ii) any
outstanding Eurodollar Loans (unless the Administrative Agent subsequent to such
determination of unavailability shall determine that such Dollar deposits are
again available) shall be converted, without any notice to or from the Borrower,
into Domestic Loans on the last day of the then current Eurodollar Interest
Period for any outstanding Eurodollar Loan, and (iii) the obligation of the
Lenders to make or maintain Eurodollar Loans shall forthwith terminate, provided
that if circumstances subsequently change so that the Lenders shall not continue
to be so affected, the Lenders shall by notice to the Borrower reinstate their
obligations to make, convert, maintain or continue Domestic Loans as, or into,
Eurodollar Loans.
SECTION 4.8 CHANGES IN LAW RENDERING EURODOLLAR LENDING UNLAWFUL. In the
event that any change in (including the adoption of any new) applicable Laws or
regulations, or in the interpretation or application thereof by any governmental
or other regulatory authority charged with the administration thereof, should
make it unlawful for any Lender to make, continue or maintain any Loan as, or to
convert any Loan to, a Eurodollar Loan, the Commitment of such Lender to make,
continue and maintain any Loan as, and to convert any Loan to, a Eurodollar Loan
shall, upon the happening of such event, forthwith terminate and such Lender
shall, by written notice to the Borrower, declare that such Commitment has so
terminated; and if any such change or adoption shall make it unlawful for such
Lender to maintain any Eurodollar Loan made by it hereunder, such Lender shall,
upon the happening of such event, notify the Borrower thereof in writing stating
the reasons therefor, and the Borrower shall, at the maturity thereof (or such
earlier date as may be required by the relevant law, regulation, interpretation
or application), repay such Eurodollar Loan with respect to such Lender in full.
Upon the happening of any such event, such Eurodollar Loan shall automatically
convert to a Domestic Loan at the end of the current Eurodollar Interest Period
with respect thereto (or such earlier date as may be required by the relevant
law, regulation, interpretation or application) provided that if circumstances
subsequently change so that such Lender shall not continue to be so affected,
such Lender shall by notice to the Borrower reinstate its obligations to make,
convert, maintain or continue Loans as, or into, Eurodollar Loans.
SECTION 4.9 SPECIAL FEES IN RESPECT OF RESERVE REQUIREMENTS. With respect
to Eurodollar Loans, the Borrower agrees to pay to each Lender on appropriate
Eurodollar Interest Payment Dates, as additional interest, such amounts as will
compensate such Lender for any cost to such Lender, from time to time, of any
reserve, special deposit, special assessment or similar capital requirements
against assets of, deposits with or for the account of, or credit extended by,
such Lender which are imposed on, or deemed applicable by, such Lender, from
time to time, under or pursuant to (i) any Law, treaty, regulation or directive
now or hereafter in effect (including, without limitation, Regulation D of the
Board of Governors of the Federal Reserve System but excluding any reserve
requirement included in the definition of Eurodollar Interest Rate in SECTION
1.1), (ii) any interpretation or application thereof by any governmental
authority, agency or instrumentality charged with the administration thereof or
by any court,
33
central bank or other fiscal, monetary or other authority having jurisdiction
over the Eurodollar Loans or the office of such Lender where its Eurodollar
Loans are lodged, or (iii) any requirement imposed or requested by any court,
governmental authority, agency or instrumentality or central bank, fiscal,
monetary or other authority, whether or not having the force of law. A
certificate as to the amount of any such cost or any change therein (including
calculations, in reasonable detail, showing how such Lender computed such cost
or change) shall be promptly furnished by such Lender to the Borrower and, in
the absence of manifest error, shall be rebuttable presumptive evidence of such
cost or change. The Borrower will not be responsible for paying any amounts
pursuant to this SECTION 4.9 accruing prior to 180 days prior to the receipt by
the Borrower of the certificate referred to in the preceding sentence. Within
fifteen (15) days after such certificate is furnished to the Borrower, the
Borrower will pay directly to such Lender such additional amount or amounts as
will compensate such Lender for such cost or change.
SECTION 4.10 TAXES. All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by any Lender's net
income or receipts imposed on such Lender as a result of a present or former
connection between the government or taxing authority imposing such tax and such
Lender or any political subdivision or taxing authority thereof or therein
(other than a connection arising solely from such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced
this Agreement or the Notes) (such non-excluded taxes, fees, duties,
withholdings, charges and other items being called "TAXES"). In the event that
any withholding or deduction from any payment to be made by the Borrower
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, or if any Taxes are directly asserted against the
Administrative Agent or any Lender with respect to any payment received by the
Administrative Agent or such Lender hereunder, the Administrative Agent or such
Lender, as the case may be, shall promptly notify the Borrower thereof, and the
Borrower will promptly pay to the Administrative Agent for its or such Lender's
account such additional amount or amounts as is necessary in order that the net
amount received by the Administrative Agent and each Lender after any
withholding or deduction and the payment of such Taxes (including any Taxes on
such additional amount) shall equal the amount such person would have received
had not such withholding or deduction been required or such Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this SECTION 4.10, a distribution hereunder by the
Administrative Agent or any Lender to or for the account of any Lender shall be
deemed a payment by the Borrower.
34
Upon the request of the Borrower or the Administrative Agent, each Lender
that is organized under the laws of a jurisdiction other than the United States
shall, prior to the due date of any payments in respect of the Borrowings,
execute and deliver to the Borrower and the Administrative Agent, on or about
January 15 of each calendar year, one or more (as the Borrower or the
Administrative Agent may reasonably request) United States Internal Revenue
Service Forms 4224 or Forms 1001 or such other forms or documents (or successor
forms or documents), appropriately completed, as may be applicable to establish
the extent, if any, to which a payment to such Lender is exempt from withholding
or deduction of Taxes.
SECTION 4.11 REASONABLE EFFORTS. Each Lender agrees that it will use all
reasonable efforts in order to avoid or to minimize, as the case may be, the
payment by the Borrower of any additional amounts under SECTION 4.9, SECTION
4.10 or SECTION 4.12 or the subjecting of any payment by the Borrower to any
withholding tax, and that it will, as promptly as practicable, notify the
Borrower of the existence of any event which will require the payment by the
Borrower of any such additional amounts or the subjecting of any payment by the
Borrower to any withholding tax; PROVIDED, HOWEVER, that the foregoing shall not
in any way affect the rights of any Lender or the obligations of the Borrower
under said Sections, and PROVIDED FURTHER that no Lender shall be obligated to
make its Eurodollar Loans hereunder at any office located in the United States
of America, and PROVIDED FURTHER that no Lender shall be required to use any
such efforts that are disadvantageous to such Lender in the sole opinion of such
Lender.
SECTION 4.12 INCREASED COSTS. If (i) Regulation D of the Board of
Governors of the Federal Reserve System, or (ii) after the date hereof, the
adoption of any applicable Law or treaty or any change in any applicable Law or
treaty or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
office of such Lender designated from time to time by such Lender as the office
which shall be making or maintaining the Eurodollar Loans of such Lender
hereunder or through which such Lender will be determining its Eurodollar
Interest Rate (herein called a "EURODOLLAR OFFICE")) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:
(a) shall subject any Lender (or any Eurodollar Office of such
Lender) to any tax, levy, impost, fee, duty, assessment or
other charge with respect to its Eurodollar Loans, its Notes
or its obligation to make Eurodollar Loans, or shall change
the basis of taxation of payments to any Lender of the
principal of or interest on its Eurodollar Loans or any
other amounts due under this Agreement in respect of its
Eurodollar Loans or its obligation to make Eurodollar Loans
(except for changes in the rate of tax imposed on or
measured by the overall net income or receipts of such
Lender or its Eurodollar Office imposed by the jurisdiction
in which such Lender's principal office or its Eurodollar
Office is located); or
35
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the
Board of Governors of the Federal Reserve System, but
excluding any reserve included in the determination of the
Eurodollar Interest Rate pursuant to SECTION 1.1), special
deposit, special assessment or similar capital requirement
against assets of, deposits with or for the account of, or
credit extended by, any Lender (or any Eurodollar Office of
such Lender); or
(c) shall impose on any Lender (or its Eurodollar Office) any
other condition affecting this Agreement, its Eurodollar
Loans, its Notes or its obligation to make Eurodollar Loans,
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D referred to above, to impose a cost on) such Lender (or any
Eurodollar Office of such Lender) of making or maintaining any Eurodollar Loan,
or to reduce the amount of any sum received or receivable by such Lender (or any
Eurodollar Office of such Lender) under this Agreement or under its Notes with
respect thereto, then within fifteen (15) days after demand by such Lender
(which demand shall be accompanied by a certificate setting forth the basis of
such demand and including calculations in reasonable detail), the Borrower shall
pay directly to such Lender such additional amount or amounts as will compensate
such Lender for such costs or expenses. The Borrower will not be responsible for
paying any amounts pursuant to this SECTION 4.12 accruing prior to 180 days
prior to the receipt by the Borrower of the certificate referred to in the
preceding sentence. Any certificate as to any such cost or expense submitted
by such Lender to the Borrower shall be rebuttable presumptive evidence of such
cost or expense. In determining such amount, any Lender may use any method of
averaging and attribution that it (in its sole and absolute discretion) shall
deem applicable.
SECTION 4.13 DISCRETION OF THE LENDERS AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if such
Lender had actually funded and maintained each Eurodollar Loan during each
Eurodollar Interest Period for such Eurodollar Loan through the purchase of
deposits having a maturity corresponding to such Eurodollar Interest Period and
bearing an interest rate equal to the Eurodollar Interest Rate for such
Eurodollar Interest Period. It is understood by the parties hereto that this
SECTION 4.13 is not intended to, nor shall it be construed so as to, relieve any
Lender of any obligation to make a Loan hereunder pursuant to the other
provisions of this Agreement.
SECTION 4.14 EURODOLLAR LOAN-RELATED INDEMNIFICATION PROVISIONS. UPON
DEMAND BY ANY LENDER, THE BORROWER SHALL INDEMNIFY SUCH LENDER AGAINST ANY
ACTUAL LOSS OR EXPENSE WHICH SUCH LENDER MAY SUSTAIN OR INCUR (BUT NOT ANY
PENALTY OR PREMIUM), AS A CONSEQUENCE OF (I) THE BORROWER'S FAILURE TO MAKE A
PRINCIPAL OR INTEREST PAYMENT WITH
36
RESPECT TO ANY EURODOLLAR LOANS ON THE DUE DATE THEREOF, (II) ANY PAYMENT,
PREPAYMENT (MANDATORY OR OPTIONAL) OR CONVERSION OF EURODOLLAR LOANS BY THE
BORROWER ON ANY DATE OTHER THAN ON THE LAST DAY OF ANY RELEVANT EURODOLLAR
INTEREST PERIOD, (III) ANY FAILURE BY THE BORROWER TO BORROW, CONTINUE, CONVERT
INTO OR PREPAY A EURODOLLAR LOAN ON THE DATE FOR SUCH BORROWING, CONTINUATION,
CONVERSION OR PREPAYMENT SPECIFIED IN THE RELEVANT BORROWING REQUEST, OR NOTICE
OF CONVERSION, CONTINUATION OR PREPAYMENT MADE BY THE BORROWER TO THE
ADMINISTRATIVE AGENT, (IV) ANY CONVERSION ON ANY DATE OTHER THAN ON THE LAST DAY
OF ANY RELEVANT EURODOLLAR INTEREST PERIOD BY REASON OF THE OPERATION OF SECTION
4.7 OR 4.8, OR (V) SUCH LENDER'S BEING REPLACED PURSUANT TO SECTION 4.15,
INCLUDING IN ALL INSTANCES, BUT NOT LIMITED TO, ANY LOSS OR EXPENSE SUSTAINED OR
INCURRED IN LIQUIDATING OR EMPLOYING DEPOSITS FROM THIRD PARTIES ACQUIRED TO
EFFECT, FUND OR MAINTAIN SUCH EURODOLLAR LOANS OR ANY PART THEREOF. A
certificate from a Lender as to the amount of any such loss or expense to such
Lender, specifying the basis upon which such loss or expense is computed (and
including calculations in reasonable detail), shall, in the absence of manifest
error, be rebuttable presumptive evidence of such loss or expense. Within
fifteen (15) days after such certificate is furnished to the Borrower, the
Borrower will pay directly to such Lender such additional amount or amounts as
will compensate such Lender for such loss or expense.
SECTION 4.15 REPLACEMENT OF LENDER ON ACCOUNT OF INCREASED COSTS,
EURODOLLAR LENDING UNLAWFUL, RESERVE REQUIREMENTS, TAXES, CERTAIN DISSENTS, ETC.
If any Lender is owed increased costs under SECTION 2.6 above, if any Lender
shall claim the inability to make or maintain Eurodollar Loans pursuant to
SECTION 4.8 above, if any Lender is owed any cost or expense pursuant to SECTION
4.9 or 4.12 above, or if any payment to any Lender by the Borrower is subject to
any withholding tax pursuant to SECTION 4.10, the Borrower shall have the right,
if no Event of Default or Unmatured Event of Default then exists, to replace
such Lender with another bank or financial institution PROVIDED that (i) if it
is not a Lender or an affiliate thereof, such bank or financial institution
shall be reasonably acceptable to the Agents and the Issuing Bank and (ii) such
bank or financial institution shall unconditionally offer in writing (with a
copy to the Administrative Agent and the Documentation Agent) to purchase, in
accordance with SECTION 14.6 hereof and SECTION 7.5(I) of the Participation
Agreement, all of such Lender's rights and obligations under this Agreement and
the Notes and the appropriate pro rata share of such Lender's A-Notes, Lessor's
A-Invested Amount, B-Notes and Lessor's B- Invested Amount, without recourse or
expense to, or warranty by, such Lender being replaced for a purchase price
equal to the aggregate outstanding principal amount of the Note payable to such
Lender, PLUS such Lender's Percentage of any outstanding Reimbursement
Obligation, PLUS any accrued but unpaid interest on such Note and such
Reimbursement Obligations, PLUS the principal and stated amount of such A-Notes,
Lessor's A-Invested Amount, B-Notes and Lessor's B-Invested Amount, PLUS any
accrued but unpaid Fixed Rent, PLUS accrued but unpaid fees in respect of such
Lender's Borrowings and Percentage of the Commitments hereunder to the date of
such purchase on a date therein specified. If such Lender accepts such purchase
offer and such purchase is consummated, the Borrower shall be obligated to pay,
simultaneously with such purchase and sale, the increased costs, amounts,
expenses and taxes under SECTIONS 2.6, 4.8, 4.9, 4.10, and 4.12 above, all
37
breakage fees payable under SECTION 4.14 and all other costs, fees and expenses
payable to such Lender hereunder and under the Operative Documents and under the
Operative Loan Documents (as defined in the Operative Documents), to the date of
such purchase as well as all other Obligations due and payable to or for the
benefit of such Lender; PROVIDED, that (x) if such Lender accepts such an offer
and such bank or financial institution fails to purchase such rights and
obligations on such specified date in accordance with the terms of such offer,
the Borrower shall continue to be obligated to pay the increased costs, amounts,
expenses and taxes under SECTIONS 2.6, 4.8, 4.9, 4.10 and 4.12 above to such
Lender and (y) if such Lender fails to accept such purchase offer, the Borrower
shall not be obligated to pay such Lender such increased costs pursuant to
SECTIONS 2.6, 4.8, 4.9, 4.10 and 4.12 above from and after the date of such
purchase offer.
SECTION 4.16 MAXIMUM INTEREST. It is the intention of the parties hereto
to conform strictly to applicable usury laws and, anything herein to the
contrary notwithstanding, the obligations of the Borrower to each Lender under
this Agreement shall be subject to the limitation that payments of interest
shall not be required to the extent that receipt thereof would be contrary to
provisions of law applicable to such Lender limiting rates of interest which may
be charged or collected by such Lender. Accordingly, if the transactions
contemplated hereby would be usurious under applicable law (including the
Federal and state laws of the United States of America, or of any other
jurisdiction whose laws may be mandatorily applicable) with respect to a Lender
then, in that event, notwithstanding anything to the contrary in this Agreement,
it is agreed as follows:
(a) the provisions of this SECTION 4.16 shall govern and
control;
(b) the aggregate of all consideration which constitutes
interest under applicable law that is contracted for,
charged or received under this Agreement, or under any of
the other aforesaid agreements or other- wise in connection
with this Agreement by such Lender shall under no
circumstances exceed the maximum amount of interest allowed
by applicable law (such maximum lawful interest rate, if
any, with respect to such Lender herein called the "HIGHEST
LAWFUL RATE"), and any excess shall be credited to the
Borrower by such Lender (or, if such consideration shall
have been paid in full, such excess refunded to the
Borrower);
(c) all sums paid, or agreed to be paid, to such Lender for the
use, forbearance and detention of the indebtedness of the
Borrower to such Lender hereunder shall, to the extent
permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate
of interest is uniform throughout the full term thereof;
and
38
(d) if at any time the interest provided pursuant to
SECTION 4.1 together with any other fees payable pursuant
to this Agreement and deemed interest under applicable law,
exceeds that amount which would have accrued at the Highest
Lawful Rate, the amount of interest and any such fees to
accrue to such Lender pursuant to this Agreement shall be
limited, notwithstanding anything to the contrary in this
Agreement to that amount which would have accrued at the
Highest Lawful Rate, but any subsequent reductions, as
applicable, shall not reduce the interest to accrue to such
Lender pursuant to this Agreement below the Highest Lawful
Rate until the total amount of interest accrued pursuant to
this Agreement and such fees deemed to be interest equals
the amount of interest which would have accrued to such
Lender if a varying rate per annum equal to the interest
provided pursuant to SECTION 4.1 had at all times been in
effect, PLUS the amount of fees which would have been
received but for the effect of this SECTION 4.16.
For purposes of Article 5069-1.04, Vernon's Texas Civil Statutes, as amended, to
the extent, if any, applicable to a Lender, the Borrower agrees that the Highest
Lawful Rate shall be the "indicated (weekly) rate ceiling" as defined in said
Article, provided that such Lender may also rely, to the extent permitted by
applicable laws, on alternative maximum rates of interest under other laws
applicable to such Lender if greater.
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.
ARTICLE V
REDUCTION OR TERMINATION
OF THE COMMITMENTS; PREPAYMENTS
SECTION 5.1 VOLUNTARY REDUCTION OR TERMINATION OF THE COMMITMENTS. The
Borrower may from time to time on at least three (3) Business Days' prior
written or telegraphic notice received by the Administrative Agent (which shall
promptly advise each Lender thereof) permanently reduce the Commitment Amount or
the Letter of Credit Commitment Amount (such reduction to be made PRO RATA among
the Lenders according to their respective Percentages) but only upon repayment
of the amount, if any, by which the aggregate outstandings under such facility
exceeds the then reduced Commitment Amount in accordance with SECTION 5.7;
PROVIDED, HOWEVER, that (i) if as a result thereof, the Borrower shall prepay
Eurodollar Loans on any day other than the last day of the relevant Eurodollar
Interest Period for such Eurodollar Loans then it shall also pay any loss or
expense pursuant to SECTION 4.14 and (ii) any permanent reduction shall be in a
minimum principal amount of $5,000,000 and in integral multiples of $100,000.
The Borrower may at any time on like notice, terminate all of the Commitments
upon payment in full
39
of the Notes, all other Obligations with respect to the Loans and all Letter of
Credit Liabilities (including, without limitation, all increased costs pursuant
to SECTION 2.6, breakage fees pursuant to SECTION 4.14 and all other fees, costs
and expenses) owing under this Agreement.
SECTION 5.2 VOLUNTARY PREPAYMENTS. The Borrower may from time to time,
upon at least one (1) Business Day for Domestic Loans and three (3) Business
Days for Eurodollar Loans prior written or telegraphic notice received by the
Administrative Agent (which shall promptly advise each Lender thereof), prepay
the Loans in whole or in part, without premium or penalty; PROVIDED, HOWEVER,
that the Borrower may only prepay Eurodollar Loans in whole or in part on the
last day of the relevant Eurodollar Interest Period for such Eurodollar Loan
UNLESS the Borrower pays all losses and expenses pursuant to SECTION 4.14. Any
voluntary partial prepayment shall be in a minimum principal amount of
$1,000,000 and in integral multiples of $100,000. Any voluntary prepayment of
principal of the Loans shall include accrued interest to the date of prepayment
on the principal amount being prepaid.
SECTION 5.3 [INTENTIONALLY OMITTED].
SECTION 5.4 MANDATORY PREPAYMENTS, REDUCTION OF COMMITMENT AMOUNT ON
ACCOUNT OF A RECEIVABLES FINANCING. Upon the effective date of the Borrower's
entering into a Receivables Financing, the Commitment Amount shall be
automatically and permanently reduced by an amount equal to the aggregate amount
of such Receivables Financing. If, after giving effect to such reduction, the
Aggregate Revolving Outstandings exceed the Commitment Amount, then the Borrower
shall make any and all prepayments required by SECTION 5.7.
SECTION 5.5 MANDATORY PREPAYMENTS AND REDUCTION OF COMMITMENT AMOUNT ON
ACCOUNT OF ASSET TRANSFERS AND CERTAIN TRANSACTIONS.
(i) If, at any time and from time to time after the date hereof,
the Borrower or any of its Subsidiaries shall Transfer any
Asset as permitted by SECTION 9.3.8(II), the Commitment Amount
shall be automatically and permanently reduced (1) on the
earlier to occur of (A) the date of receipt by the Borrower
or any Subsidiary of the Borrower of the consideration on
account of such Transfer (other than a Transfer pursuant to
the exercise of an Option to Purchase) and (B) the date
which is 15 days after the date of such Transfer and (2) on
the earlier to occur of (A) the date of receipt by the
Borrower or any Subsidiary of the Borrower of the
consideration due on account of any such Transfer made
pursuant to the exercise of an Option to Purchase or (B) the
date which is 25 days after the date of any such Transfer
made pursuant to the exercise of an Option to Purchase. Such
mandatory reduction of the Commitment Amount shall be in an
amount equal to the Net Proceeds (or, if such Transfer is to
an Affiliate of the transferor, the higher of (x) the Fair
Market Value of the Asset so
40
transferred and (y) the Net Proceeds received or to be
received) in excess of $10,000,000 in the aggregate for all
such Net Proceeds or Fair Market Value, as the case may be,
in respect of all such Transfers received or to be received
from all such Transfers on or after the Closing Date.
(ii) If the Parent Company or any of its Subsidiaries receives
proceeds of any equity or rights issue or any Indebtedness
of the type referred to in clause (a) of the definition of
Indebtedness (other than (i) proceeds of money market lines,
(ii) proceeds of Borrowings hereunder, (iii) proceeds in
respect of any borrowings under any credit commitment
existing on the date hereof or any refinancing or refunding
of any such existing commitment in clauses (i) or (ii) or
this clause (iii) or (iv) Indebtedness permitted under
SECTION 9.3.3 if the Parent Company or such Subsidiary
is not currently restricted in its use of such proceeds to
permit a paydown of the Borrowings, the Commitment Amount
shall be automatically and permanently reduced by an amount
equal to the amount of such proceeds (net of reasonable
brokerage and reasonable legal and other closing costs,
commissions and any relevant taxes) received by the Parent
Company or such Subsidiary, as the case may be, such
reduction to be effective on the second Business Day after
receipt of such proceeds.
(iii) On each date when a reduction in the Commitment Amount
pursuant to this SECTION 5.5 is effective, the Borrower shall
make any and all prepayments required by SECTION 5.7.
SECTION 5.6 [INTENTIONALLY OMITTED].
SECTION 5.7 MANDATORY PREPAYMENTS ON ACCOUNT OF LOANS AND LETTERS OF
CREDIT EXCEEDING COMMITMENT AMOUNTS. In the event the aggregate outstanding
principal amount of the Loans shall at any time exceed the Loan Commitment
Amount, the Borrower shall immediately prepay the Loans in an amount equal to
such excess. In the event the aggregate of Letter of Credit Liabilities exceeds
the Letter of Credit Commitment Amount, the Borrower shall either reduce the
Letter of Credit Liabilities by an amount equal to such excess or deposit cash
collateral with the Collateral Agent on account of and to secure its Obligations
with respect to Letters of Credit then in effect and not otherwise fully
collateralized pursuant to SECTION 2.4.4, such cash deposits to be in an amount
equal to such excess. In addition, in the event the sum of the aggregate
outstanding principal amount of the Loans plus the aggregate amount of all
Letter of Credit Liabilities then outstanding exceeds the Commitment Amount, the
Borrower shall first make a mandatory prepayment of the outstanding principal
amount of the Loans, and second, deposit cash collateral with the Collateral
Agent on account of and to secure its Obligations with respect to the Letters of
Credit then in effect and not otherwise fully collateralized pursuant to
41
SECTION 2.4.4, such prepayments and/or cash deposits to be in an aggregate
amount equal to such excess.
ARTICLE VI
CONVERSION OF LOANS BETWEEN
EURODOLLAR LOANS AND DOMESTIC LOANS
On any Eurodollar Business Day, the Borrower may convert any outstanding
Domestic Loans into Eurodollar Loans or any outstanding Eurodollar Loans into
Domestic Loans; PROVIDED, HOWEVER, that (i) no such conversion of any Eurodollar
Loan into a Domestic Loan may be made except on the last day of the relevant
Eurodollar Interest Period for such Eurodollar Loan UNLESS the Borrower pays all
losses and expenses pursuant to SECTION 4.14, (ii) any conversion of a Domestic
Loan into a Eurodollar Loan shall be preceded by written notice from the
Borrower that it elects such conversion, which notice shall contain the
information required in SECTION 2.3.2 and shall be received by the
Administrative Agent by 11:00 a.m. (Chicago time) at least three (3) Eurodollar
Business Days prior to the date requested for such conversion (and the
Administrative Agent shall advise such Lender thereof promptly thereafter),
(iii) except as provided in Section 4.7, the Lenders shall not be obligated to
effect any conversion into Eurodollar Loans hereunder so long as any Unmatured
Event of Default or any Event of Default has occurred and is continuing, and
(iv) after giving effect to each conversion, Eurodollar Loans having a
Eurodollar Interest Period ending on the same date, if any, shall be in a
minimum principal amount of $5,000,000.
ARTICLE VII
MAKING AND PRORATION OF PAYMENTS; OFFSET
SECTION 7.1 MAKING OF PAYMENTS. Unless otherwise expressly provided, all
payments (including those made pursuant to the provisions of ARTICLE V) by the
Borrower under this Agreement, the Notes or any other Loan Document shall be
made, without setoff, deduction or counterclaim, in immediately available funds
by the Borrower to the Administrative Agent at the Payment Office, for the PRO
RATA account of the Lenders entitled to receive such payment. All such payments
shall be made not later than 11:00 a.m. (Chicago time) at the place of payment,
on the date due; and funds received after that hour shall be deemed to have been
received by the Administrative Agent on the next succeeding Eurodollar Business
Day or Domestic Business Day, as the case may be. The Administrative Agent shall
promptly remit in same day funds to each Lender its share of all such payments
received by the Administrative Agent for the account of such Lender.
SECTION 7.2 PRORATION OF PAYMENTS. If any Lender or other holder of a Note
shall obtain any payment or other recovery (whether voluntary, involuntary, by
application of offset
42
pursuant to applicable law or SECTION 7.3, or otherwise) on account of all or
part of its Loans or the Reimbursement Obligations owing to it, or interest
thereon, owing hereunder or under any other Loan Document (other than any
payment or recovery under SECTION 4.9, SECTION 4.12, SECTION 4.14, SECTION 4.15
or SECTION 14.6) in excess of such Lender's PRO RATA share of payments and other
recoveries then and therewith obtained by all Lenders, then such Lender
receiving such excess payment or other recovery shall purchase for cash without
recourse from the other Lenders participating interests in the Obligations of
the Borrower to such Lenders in such amount as shall be necessary to cause such
purchasing Lender to share such excess payment or other recovery ratably with
each of them; PROVIDED, HOWEVER, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Lender or
other holder, the purchase shall be rescinded and the purchase price restored to
the extent of such recovery, but without interest.
SECTION 7.3 OFFSET. In addition to and not in limitation of all rights of
offset that any Lender or other holder of a Note may have under applicable law,
to the fullest extent permitted by applicable law, each Lender shall, upon the
occurrence of any Event of Default, have the right to appropriate and apply to
the payment of such Note and any other Obligations any and all balances,
credits, deposits, accounts or moneys of the Borrower then or thereafter with
such Lender.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
To induce the Lenders and the Issuing Bank to extend their Commitments
hereunder to make the Loans hereunder and to issue the Letters of Credit and
acquire participation therein hereunder, the Borrower represents and warrants to
the Administrative Agent, the Documentation Agent, the Collateral Agent, the
Issuing Bank and the Lenders that:
SECTION 8.1 ORGANIZATION, ETC. The Borrower and each Subsidiary of the
Borrower are each a corporation duly incorporated, a limited liability company
duly organized or a partnership duly formed, as the case may be, and are each
validly existing and in good standing (or, in the case of a partnership, validly
existing) under the laws of the state of its respective incorporation,
organization or formation; and the Borrower and each Subsidiary of the Borrower
are each duly qualified and in good standing as a foreign corporation, limited
liability company or partnership authorized to do business in each jurisdiction
where, because of the nature of its activities or properties, such qualification
is required and where the failure so to qualify would have a material adverse
effect on the financial condition, business, operations and prospects of the
Borrower, or the Borrower and its Subsidiaries taken as a whole.
SECTION 8.2 AUTHORIZATION; NO CONFLICT. The execution and delivery of this
Agreement, the Borrowings hereunder, the execution and delivery of the Notes and
the Loan
43
Documents, and the performance by the Borrower and the other Obligors of their
respective Obligations under this Agreement, the Notes and the other Loan
Documents, are within the Borrower's and the other Obligors' corporate, limited
liability company, or partnership powers, as the case may be, have been duly
authorized by all necessary corporate, limited liability company or partnership
action, as the case may be, have received all necessary governmental consents,
authorizations, orders and approvals (if any shall be required), except for
those approvals described in SECTION 9.2.10, and do not and will not contravene
or conflict with any provision (a) of Law, (b) of the charter, by-laws,
certificate of formation, limited liability company agreement or partnership
agreement of the Borrower or any other Obligor, or (c) of any material agreement
binding upon the Borrower or any other Obligor or any of them.
SECTION 8.3 VALIDITY AND BINDING NATURE. This Agreement is, and the Notes
and the Loan Documents when duly executed and delivered will be, legal, valid
and binding obligations of the Borrower and each other Obligor party thereto
enforceable against each of the Borrower and such other Obligors in accordance
with their respective terms subject as to enforcement only to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and general principles of equity.
SECTION 8.4 REPRESENTATION WITH RESPECT TO FINANCIAL STATEMENTS. (a) The
audited consolidated financial statements of Transok, Inc. dated as of December
31, 1995, and the related consolidated statements of earnings and cash flow of
Transok, Inc. and its Subsidiaries, copies of which have been furnished to each
Lender, have been prepared in conformity with GAAP, and present fairly the
consolidated financial condition of the corporations and other entities covered
thereby as at the dates thereof and the results of operations for the periods
then ended and since December 31, 1995 there has been no material adverse change
in the consolidated business, condition (financial or otherwise), operations,
performance or properties of Transok and its Subsidiaries on a consolidated
basis (taken as a whole).
(b) The PRO FORMA consolidated balance sheet of the Borrower and its
Subsidiaries dated March 31, 1996 adjusted for the Borrowings hereunder (the
"PRO FORMA BALANCE SHEET"), copies of which have been furnished to each Lender,
is the consolidated balance sheet of the Borrower and its Subsidiaries as of
March 31, 1996 adjusted to give effect as if the Borrowings hereunder had been
in place. The Pro Forma Balance Sheet presents fairly on a PRO FORMA basis the
consolidated financial position of the Borrower and its Subsidiaries as of March
31, 1996 assuming that the Borrowings hereunder actually occurred on such date.
SECTION 8.5 PENDING OR THREATENED LITIGATION AND CONTINGENT LIABILITIES.
No litigation (including, without limitation, derivative actions and take-or-pay
actions), arbitration proceedings or governmental proceedings are pending or to
the best knowledge of the Borrower and its Subsidiaries threatened against the
Borrower, any of its Subsidiaries which would, if adversely determined,
materially and adversely affect the financial condition, operations, assets,
business, properties or prospects of the Borrower and its Subsidiaries (taken as
a whole)
44
(excluding any rulemaking or similar proceedings of general applicability to
natural gas pipelines and any appeal or petition for review related thereto) or
continued operations of the Borrower and its Subsidiaries, or which purports to
affect the legality, validity or enforceability of this Agreement, the Notes or
any other Loan Document, except as set forth in EXHIBIT 8.5 or as disclosed in
the Letter to Counsel.
SECTION 8.6 EXISTING LIENS. None of the Assets of the Borrower or any
Subsidiary of the Borrower is subject to any Lien except (i) for current taxes
not delinquent or taxes being contested in good faith and by appropriate
proceedings, (ii) liens arising in the ordinary course of business for sums not
due or sums being contested in good faith and by appropriate proceedings and not
involving any deposits or advances or borrowed money or the deferred purchase
price of property or services, including, but not limited to, reciprocal liens
customarily granted pursuant to joint venture agreements and joint operating
agreements to secure payment of joint operating costs, PROVIDED such costs are
directly related to the business and operations of the pertinent joint venture,
and liens imposed by law, such as mechanic's, materialman's, and carrier's liens
and liens arising in connection with customary pooling or unitization agreements
entered into by the Borrower or its Subsidiaries in the ordinary course of
business, (iii) liens (other than any lien imposed under ERISA) incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security or old
age pension benefits, (iv) any liens in favor of the Collateral Agent for the
benefit of the Lenders and liens created under the Security Documents, (v) liens
on real or personal property leased pursuant to leases permitted under SECTION
9.3.3(VI) for nondelinquent lease payments thereunder, (vi) severance tax liens
on purchased gas arising by operation of law, (vii) to the extent shown in the
financial statements referred to in SECTION 8.4, (viii) to the extent shown in
EXHIBIT 8.6, (ix) Options to Purchase granted in the ordinary course of
business, (x) liens permitted by SECTION 9.3.4, (xi) deposits of cash to secure
insurance in the ordinary course of business, the performance of bonds, tenders,
contracts (other than contracts for the payment of money), leases, licenses,
franchises, statutory obligations, surety and appeal bonds and performance bonds
and other obligations of a like nature incurred in the ordinary course of
business; (xii) easements, rights-of-way, covenants, reservations, exceptions,
encroachments, zoning and similar restrictions and other similar encumbrances or
title defects which, in the aggregate, are not substantial in amount, and which
do not in any case singly or in the aggregate materially detract from the value
or usefulness of the property subject thereto for the business conducted or
materially interfere with the ordinary conduct of the business of the Borrower
and its Subsidiaries; (xiii) bankers' liens arising by operation of law; (xiv)
Liens arising pursuant to any order of attachment, distraint or similar legal
process arising in connection with any court proceeding the payment of which is
covered in full (subject to customary deductibles) by insurance; (xv) inchoate
Liens arising under ERISA to secure contingent liabilities of the Borrower and
its Subsidiaries; (xvi) rights of lessee and sublessee in property leased by the
Borrower or any of its Subsidiaries not prohibited elsewhere herein, and (xvii)
Liens of record on Assets acquired in connection with the Merger permitted in
Section 4.06 of the Merger Agreement.
45
SECTION 8.7 EXISTING SUBSIDIARIES. As of the date hereof, the Borrower has
no Subsidiaries and owns no interest in any other entity except those listed in
EXHIBIT 8.7. The Borrower has no Material Subsidiaries except those listed on
EXHIBIT 8.7 (as such exhibit may be deemed amended pursuant to SECTION 9.1.6).
SECTION 8.8 EXISTING EMPLOYEE BENEFIT PLANS. Each employee benefit plan
sponsored or maintained by the Borrower or any of its Subsidiaries for their
employees or former employees ("EMPLOYEE BENEFIT PLAN") complies in all material
respects with all applicable requirements of Law. No Reportable Event (as
defined in ERISA), for which the disclosure requirements under Regulation 2615.3
promulgated by the Pension Benefit Guaranty Corporation (the "PBGC") has not
been waived, has occurred with respect to any Employee Benefit Plan that is
subject to Title IV of ERISA (hereinafter "PENSION PLAN") and there has been no
withdrawal from any such plan or steps taken to do so which has resulted or
could result in material liability for the Borrower or any of its Subsidiaries
under Title IV of ERISA.
SECTION 8.9 INVESTMENT COMPANY ACT REPRESENTATION. Neither the Borrower,
nor any of its Subsidiaries, 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 8.10 PUBLIC UTILITY HOLDING COMPANY ACT REPRESENTATION. Neither
the Borrower, nor any of its Subsidiaries, 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", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
SECTION 8.11 REPRESENTATION WITH RESPECT TO REGULATIONS G, T, U AND X. No
part of the proceeds of the Borrowings will be used to purchase or carry Margin
Stock in violation of Regulation G, T, U or X, nor will the execution,
performance or delivery by the Borrower of the Notes or the Security Documents,
or the execution, performance and delivery by any Guarantor of its respective
Guaranty and of those Security Documents to which such Guarantor is a party, nor
the application of the proceeds of the Borrowings in accordance herewith,
violate Regulation G, T, U or X. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of buying or carrying Margin
Stock, and both before and after giving effect to all of the transactions
contemplated herein, and the purchases and acquisitions permitted under Section
9.3.2, and application of the proceeds of any Borrowings, less than 25% of the
Assets of each of the Borrower and each of its Subsidiaries consists of Margin
Stock.
SECTION 8.12 REPRESENTATION WITH RESPECT TO TRUE AND COMPLETE DISCLOSURE.
To the best of the Borrower's knowledge and belief, all factual information
heretofore or contemporaneously furnished by or on behalf of the Borrower, any
Subsidiary of the Borrower, Tejas Transok Holding Company or the Parent Company
to any Lender, the Issuing Bank, the Collateral
46
Agent, the Documentation Agent or the Administrative Agent for purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all other such factual information hereafter furnished by or on behalf of the
Borrower, any Subsidiary of the Borrower, Tejas Transok Holding Company or the
Parent Company to any Lender, the Issuing Bank, the Documentation Agent, the
Collateral Agent or the Administrative Agent will be, true and accurate (taken
as a whole) on the date as of which such information is dated or certified and
does not omit any material fact necessary to make such information (taken as a
whole) not misleading at such time.
SECTION 8.13 STATUS OF TITLE TO ASSETS. The Borrower and each of its
Subsidiaries have valid title to, or valid leasehold interest in, all of the
Assets of the Borrower and its Subsidiaries, free and clear of liens, burdens
and imperfections other than such imperfections or other burdens of title to
such Assets as do not in the aggregate materially detract from the value thereof
to, or for the use thereof in, their businesses (taken as a whole), the Liens
permitted by SECTION 9.3.4 and Options to Purchase granted in the ordinary
course of business.
SECTION 8.14 TAXES. The Borrower and each of its Subsidiaries has to the
best knowledge of the Borrower filed all tax returns or extensions and reports
required by law to have been filed by them and have paid all taxes and
governmental charges thereby shown to be owing, except such taxes or charges
which are being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on their
respective books and except for taxes and governmental charges, and any tax
returns, extensions, reports or audits in connection therewith, disclosed in
EXHIBIT 8.14 and except for Taxes for which the Parent Company is fully
indemnified under Section 8.03 of the Merger Agreement.
SECTION 8.15 UNCONDITIONAL PURCHASE OBLIGATIONS. Except as permitted in
SECTION 9.3.9, neither the Borrower nor any of its Subsidiaries has entered
into, is a party to, or has any obligations under, any material contract for the
purchase of materials, supplies or other property or services, if such contract
requires that payment be made by it regardless of whether or not delivery is
ever made of such materials, supplies or other property or services.
SECTION 8.16 ENVIRONMENTAL WARRANTIES. Except as set forth in EXHIBIT 8.16
and except for matters for which the Parent Company is fully indemnified
(subject to the dollar limitations set forth in Section 8.01 or Section 8.02 of
the Merger Agreement) pursuant to such Section 8.01 or Section 8.02:
(a) to the best knowledge of the management of the Borrower, all
facilities and property (including underlying groundwater)
owned, leased or operated by the Borrower or any of its
Subsidiaries have been, and continue to be, owned, leased or
operated by the Borrower and its Subsidiaries in material
compliance with all Environmental Laws except where such
failure to comply singly or in the aggregate, will not have
or reasonably be expected
47
to have, a material adverse effect on the financial
condition, operations, assets, business, properties or
prospects of the Borrower and its Subsidiaries (taken as a
whole);
(b) to the best knowledge of the Borrower, there have been no
past, and there are no pending or threatened
(i) claims, complaints, notices or inquiries to, or
requests for information received by, the Borrower or
any of its Subsidiaries with respect to any alleged
violation of any Environmental Law, except where such
violation singly or in the aggregate, will not have,
or reasonably be expected to have, a material adverse
effect on the financial condition, operations, assets,
business, properties or prospects of the Borrower and
its Subsidiaries (taken as a whole) or
(ii) claims, complaints, notices or inquiries to, or
requests for information received by, the Borrower or
any of its Subsidiaries regarding potential liability
under any Environmental Law or under any common law
theories relating to operations or the condition of
any facilities or property (including underlying
groundwater) owned, leased or operated by the Borrower
or any of its Subsidiaries that, singly or in the
aggregate, have, or may reasonably be expected to
have, a material adverse effect on the financial
condition, operations, assets, business, properties or
prospects of the Borrower and its Subsidiaries (taken
as a whole);
(c) to the best knowledge of the management of the Borrower, there
have been no Releases of Hazardous Materials at, on or under
any property now or previously owned or leased by the Borrower
or any of its Subsidiaries that, singly or in the aggregate,
have, or may reasonably be expected to have, a material
adverse effect on the financial condition, operations, assets,
business, properties or prospects of the Borrower and its
Subsidiaries (taken as a whole);
(d) the Borrower and its Subsidiaries have been issued and are in
material compliance with all permits, certificates, approvals,
licenses and other authorizations relating to environmental
matters and necessary or desirable for their businesses,
except where failure to have been so issued or comply, singly
or in the aggregate, will not have, or reasonably be expected
to have, a material adverse effect on the financial condition,
operations,
48
assets, business, properties or prospects of the Borrower and
its Subsidiaries (taken as a whole);
(e) no property now (or to the best knowledge of the management of
the Borrower previously) owned, leased or operated by the
Borrower or any of its Subsidiaries is listed or proposed for
listing on the National Priorities List pursuant to CERCLA, on
the CERCLIS or on any other similar state list of sites
requiring investigation or clean-up;
(f) to the best knowledge of the Borrower, there are no
underground storage tanks, active or abandoned, including
petroleum storage tanks, on or under any property now or
previously owned, leased or operated by the Borrower or any of
its Subsidiaries that, singly or in the aggregate, have, or
may reasonably be expected to have, a material adverse effect
on the financial condition, operations, assets, business,
properties or prospects of the Borrower and its Subsidiaries
(taken as a whole);
(g) to the best knowledge of the Borrower, neither the Borrower
nor any Subsidiary of the Borrower has directly transported or
directly arranged for the transportation of any Hazardous
Material to any location which is listed or proposed for
listing on the National Priorities List pursuant to CERCLA, on
the CERCLIS or on any similar state list or which is the
subject of federal, state or local enforcement actions or
other investigations which may lead to material claims against
the Borrower or such Subsidiary thereof for any remedial work,
damage to natural resources or personal injury, including
claims under CERCLA;
(h) to the best knowledge of the Borrower, there are no
polychlorinated biphenyls, radioactive materials or friable
asbestos present at any property now or previously owned or
leased by the Borrower or any Subsidiary of the Borrower that,
singly or in the aggregate, have, or may reasonably be
expected to have, a material adverse effect on the financial
condition, operations, assets, business, properties or
prospects of the Borrower and its Subsidiaries (taken as a
whole); and
(i) no conditions exist at, on or under any property now or
previously owned or leased by the Borrower or any Subsidiary
of the Borrower which would have a material adverse effect on
the financial condition, operations, assets, business,
properties or prospects of the Borrower and its Subsidiaries
(taken as a whole) arising out of liability under any
Environmental Law.
49
SECTION 8.17 REGULATORY COMPLIANCE. The Borrower and each of its
Subsidiaries is in possession of, and is operating in compliance with, all
franchises, grants, authorizations, approvals, licenses, permits, consents,
certificates and orders required to own, lease or use their respective Assets
(including, without limitation, those required to be obtained from the Railroad
Commission of Texas, the Federal Energy Regulatory Commission, the Louisiana
Public Service Commission, the Louisiana Commissioner of Conservation, the
Oklahoma Corporation Commission and any successor agencies) and to permit the
conduct of its business as now conducted and as proposed to be conducted, except
(i) for those franchises, grants, authorizations, approvals, licenses, permits,
consents, certificates and orders which are routine or administrative in nature
and are expected in the reasonable judgment of the Borrower to be obtained or
given in the ordinary course of business after the Closing Date, (ii) where
failure to so possess, or operate in compliance with, such franchises, grants,
authorizations, approvals, licenses, permits, consents, certificates and orders
would not singly or in the aggregate have, and could not reasonably be expected
to have, a material adverse effect on the financial condition, operations,
assets, business, properties or prospects of the Borrower and its Subsidiaries
(taken as a whole), (iii) as disclosed in EXHIBIT 8.17 and (iv) matters for
which the Parent Company is fully indemnified (subject to the dollar limitations
set forth in Section 8.01 and Section 8.02 of the Merger Agreement) pursuant to
such Section 8.01 or Section 8.02. The Borrower, each of its Subsidiaries and
their respective Assets are in compliance with all applicable statutes and
regulations of, and all applicable restrictions imposed by, all governmental
authorities and regulatory bodies (including, without limitation, the Federal
Energy Regulatory Commission, the Railroad Commission of Texas, the Louisiana
Public Service Commission, the Louisiana Commissioner of Conservation, the
Oklahoma Corporation Commission and any successor agencies) except (i) where
failure to so comply would not singly or in the aggregate have, and could not
reasonably be expected to have, a material adverse effect on the financial
condition, operation, assets, business, properties or prospects of the Borrower
and its Subsidiaries (taken as a whole) and (ii) as specifically disclosed in
EXHIBIT 8.17 and matters for which the Parent Company is fully indemnified
(subject to the dollar limitations set forth in Section 8.01 and Section 8.02 of
the Merger Agreement) pursuant to such Section 8.01 or Section 8.02.
ARTICLE IX
BORROWER'S COVENANTS
Until the expiration or termination of the Commitments of the Lenders
hereunder and thereafter until all Obligations are paid and performed (other
than continuing indemnity obligations) in full, the Borrower agrees that, unless
at any time the Required Lenders shall consent in writing, it will observe or
cause to be observed, as the case may be, the following covenants, agreements
and obligations:
50
SECTION 9.1 REPORTS, CERTIFICATES AND OTHER INFORMATION. The Borrower will
furnish or cause to be furnished to each Lender and each Agent (or in the case
of the information and documents described in SECTIONS 9.1.4 AND 9.1.6, to the
Administrative Agent with enough copies to provide one to each Agent and each
Lender or in the case of information requested by any Agent or any Lender
pursuant to SECTION 9.1.8, a copy for such requestor).
SECTION 9.1.1 AUDIT REPORT. Within one hundred twenty (120) days after the
end of each fiscal year of the Borrower, beginning with the fiscal year ended
December 31, 1996, (i) a copy of an annual audit report of the Borrower,
including therein consolidated balance sheets of the Borrower and its
Subsidiaries, as of the end of such fiscal year and consolidated statements of
earnings of the Borrower and its Subsidiaries for such fiscal year, and,
consolidated statements of cash flow for the Borrower and its Subsidiaries for
such fiscal year, in conformity with GAAP and, in the case of such annual audit
reports for fiscal years commencing with fiscal year ended December 31, 1996,
applied on a basis consistent with the audited consolidated financial statements
of the Parent Company as of December 31, 1995, duly certified by independent
certified public accountants of nationally recognized standing selected by the
Borrower and consisting of at least a balance sheet as at the close of such
fiscal year, statements of cash flow and statements of earnings for such fiscal
year. Such annual audit reports shall be accompanied by a certificate (which
certificate shall not be part of such audit report) from a duly authorized
financial officer of the Borrower showing compliance with SECTION 9.4 and
containing a statement by such authorized officer that in examining the
financial statements and the covenants contained in SECTION 9.4 such authorized
officer did not become aware of any Event of Default or Unmatured Event of
Default, or if the authorized officer has become aware of any such event,
describing it and the steps, if any, being taken to cure it.
SECTION 9.1.2 INTERIM FINANCIAL REPORTS. Within seventy-five (75) days
after the end of the first three fiscal quarters of each fiscal year, commencing
with the fiscal quarter ending September 30, 1996, copies of the unaudited
financial statements of the Borrower prepared on a consolidated and
consolidating basis and in the same manner as the audit report referred to in
SECTION 9.1.1 (except that allocation of taxes need not be shown on such
quarterly unaudited consolidating financial statements), signed by a duly
authorized financial officer of the Borrower, and consisting of at least a
balance sheet as at the close of such quarter, statements of cash flows and
statements of earnings for such quarter. Such quarterly financial statements
shall be accompanied by a certificate (which certificate shall not be part of
such quarterly financial statements) from a duly authorized financial officer of
the Borrower, and showing compliance with SECTION 9.4 and containing a statement
by such authorized officer that in examining the financial statements and the
covenants contained in SECTION 9.4 such authorized officer did not become aware
of any Event of Default or Unmatured Event of Default, or if the authorized
officer has become aware of any such event, describing it and the steps, if any,
being taken to cure it.
SECTION 9.1.3 COMPLIANCE CERTIFICATES. Concurrently with the delivery of
the reports described in SECTIONS 9.1.1 and 9.1.2 and from time to time promptly
upon request by the
51
Lenders, a compliance certificate substantially in the form of EXHIBIT 9.1.3A or
EXHIBIT 9.1.3B, as the case may be, duly executed by an authorized financial
officer of the Borrower, containing a computation of, and showing compliance
with, each of the financial ratios and restrictions contained in SECTION 9.4,
all such computations to be made as of the end of the immediately preceding
fiscal year if furnished concurrently with the report described in SECTION
9.1.1, and as of the end of the immediately preceding fiscal quarter if
furnished concurrently with the report described in SECTION 9.1.2 or at the
request of the Lenders.
SECTION 9.1.4 REPORTS TO SEC, SHAREHOLDERS AND OTHER REGULATORY AGENCIES.
Copies of (i) each material public filing and report made by the Borrower, any
of its Subsidiaries, the Parent Company or any Material Tejas Subsidiary with or
to any securities exchange or the Securities and Exchange Commission, (ii) as
may be reasonably requested by any Lender or any Agent, each material public
filing and report (other than routine operating reports) made by the Borrower or
any of its Subsidiaries, with or to any governmental authority or regulatory
body (including, without limitation, the Federal Energy Regulatory Commission,
the Railroad Commission of Texas, the Louisiana Public Service Commission, the
Louisiana Conservation Commission, the Oklahoma Corporation Commission and any
successor agencies), and (iii) other customarily provided material public
communications from the Borrower, any of its Subsidiaries, the Parent Company or
any Material Tejas Subsidiary, promptly upon the filing or making thereof.
SECTION 9.1.5 NOTICES RELATING TO DEFAULT, LITIGATION AND CERTAIN ERISA
MATTERS. Promptly upon learning of the occurrence of any of the following,
written notice thereof, describing the same and the steps being taken by the
Borrower or any of its Subsidiaries affected with respect thereto: (i) the
occurrence of an Event of Default or an Unmatured Event of Default, or (ii) the
institution of, or any adverse determination in, any litigation, arbitration
proceeding or governmental proceeding which in the opinion of Borrower's
management is or may be material to the Borrower and its Subsidiaries on a
consolidated basis. Promptly upon an officer of the Borrower knowing of the
occurrence of any of the following, written notice thereof, describing the same
and the steps being taken by the Borrower or any of its Subsidiaries affected
with respect thereto: (i) the occurrence of a Reportable Event (as defined in
ERISA) for which the disclosure requirements under Regulation 2615.3 promulgated
by the PBGC have not been waived with respect to a Pension Plan, (ii) the
institution of steps to withdraw from, or the institution of any steps to
terminate, any Pension Plan of the Borrower, its Subsidiaries or a corporation
or other entity which together with the Borrower or a Subsidiary of the Borrower
is under common control or a member of an affiliated service group or any other
entity required to be aggregated with the Borrower or a Subsidiary of the
Borrower under Code Sections 414(b) or (c) as modified by Code Section 414(h) or
Code Sections 414(m) or (o) ("ERISA AFFILIATE") or the failure to make a
required contribution to any such plan if such failure is sufficient to give
rise to a Lien under section 302(f) of ERISA or Section 412 of the Code, or
(iii) the taking of any action with respect to any such Pension Plan which could
result in the requirement that the Borrower or any of its Subsidiaries furnish a
bond or other security to the PBGC or such plan, or the occurrence of any event
52
with respect to any such plan which could result in material liability for the
Borrower or any of its Subsidiaries.
SECTION 9.1.6 CHANGES IN MATERIAL SUBSIDIARIES. Within fifteen (15) days
after the formation, Activation, or acquisition of any Material Subsidiary or
upon the designation of a Material Subsidiary as such, a written report of any
changes in the list of its respective Material Subsidiaries which report shall
be deemed to be an amendment to EXHIBIT 8.7.
SECTION 9.1.7 PROJECTED CASH FLOW STATEMENTS. On or before September 30 of
each calendar year, commencing September 30, 1997, projected cash flow
statements, earnings forecasts and financial ratios, prepared on a consolidated
basis for the Borrower and its Subsidiaries, including, without limitation,
projected gas systems volumes, average gas spread, costs, capital expenditures,
cash flow from operations and debt retirement together with schedules containing
supporting data used in calculating the foregoing.
SECTION 9.1.8 OTHER INFORMATION. From time to time such other information
concerning the Borrower and its Subsidiaries as any Lender or any Agent may
reasonably request from the Borrower.
SECTION 9.2 AFFIRMATIVE COVENANTS. The Borrower will and will cause each
of its Subsidiaries to:
SECTION 9.2.1 BOOKS, RECORDS AND INSPECTIONS. Maintain complete and
accurate books and records; permit access by any Lender or any Agent to the
books and records of the Borrower and any of its Subsidiaries at such times
during normal business hours as such Lender or such Agent may reasonably
request; and permit any Lender or any Agent to inspect the properties and
operations of the Borrower and any of its Subsidiaries at such times during
normal business hours as such Lender or such Agent may reasonably request.
SECTION 9.2.2 INSURANCE. Maintain, directly or indirectly, with
responsible insurance companies such insurance with respect to their properties
and business as may be required by law and such other insurance, in such types
and amounts and against such hazards and liabilities, as is customarily
maintained by well-insured companies in the industry; and (i) furnish to any
Lender or any Agent promptly after a request by such Lender or such Agent, a
certificate from an authorized officer of the Borrower setting forth all
insurance maintained by the Borrower and its Subsidiaries; PROVIDED, HOWEVER,
that the Borrower may provide to the Lender requesting such information any
insurance certificate having already been prepared by the Borrower within such
calendar quarter pursuant to this SECTION 9.2.2 and such certificate shall
suffice for purposes of this section, and (ii) on or before March 31st of each
calendar year, furnish to each Lender and each Agent a certificate from an
authorized officer of the Borrower setting forth in detail the insurance
maintained by the Borrower and its Subsidiaries.
53
SECTION 9.2.3 TAXES, ASSESSMENTS, ETC. Pay when due all taxes, assessments
and other governmental charges except as contested in good faith and by
appropriate proceedings and for which adequate reserves in accordance with GAAP
have been set aside on its books.
SECTION 9.2.4 MAINTENANCE OF EMPLOYEE BENEFIT PLANS. Maintain each
employee benefit plan as to which the Borrower or any of its Subsidiaries may
have any liability, in compliance in all material respects with all applicable
requirements of law and regulations.
SECTION 9.2.5 USE OF LOAN PROCEEDS AND LETTERS OF CREDIT. Use the proceeds
of the Loans hereunder and use the Letters of Credit for the merger with Transok
and the costs associated therewith and as provided in the Merger Agreement and
general corporate purposes including, without limitation, support of trade
payables of the Borrower and its Subsidiaries; PROVIDED, HOWEVER, that no part
of the proceeds of the Loans or any Letter of Credit will be used to purchase or
carry any Margin Stock in violation of Regulation G, T, U or X.
SECTION 9.2.6 TITLE TO PROPERTIES. Maintain at all times valid title to,
or valid leasehold or right-of-way interest, easement or license in, all their
respective Assets free and clear of Liens, burdens and imperfections other than
such imperfections or other burdens of title to such Assets as do not in the
aggregate materially detract from the value thereof to, or for the use thereof
in, the business of the Borrower and its Subsidiaries (taken as a whole), the
Liens permitted by SECTION 9.3.4 and Options to Purchase granted in the ordinary
course of business.
SECTION 9.2.7 NEW OR ACTIVATED SUBSIDIARIES; MATERIAL SUBSIDIARIES. Cause
any Subsidiary of the Borrower (other than any Subsidiary of Transok existing on
the day of the Merger) which Subsidiary (a) is a Material Subsidiary that is
formed, acquired, or Activated after the date hereof or (b) becomes a Material
Subsidiary after the date hereof, to become a Guarantor with respect to, and
jointly and severally liable with all other Guarantors for, all the obligations
under this Agreement and the Notes by executing and delivering to the Lenders a
guaranty substantially in the form of the Guaranties delivered pursuant to
SECTION 10.3 and an Intercompany Subordinated Demand Note substantially in the
form of the Intercompany Subordinated Demand Notes delivered pursuant to SECTION
10.4 and by causing such Subsidiary's, as the case may be, capital stock,
partnership or membership interest therein to be pledged pursuant to a Pledge
Agreement delivered pursuant to SECTION 10.1 or a Partnership/Limited Liability
Company Security Agreement pursuant to SECTION 10.2, as appropriate; and cause
any Subsidiary of the Borrower that is not a Material Subsidiary and that owns
directly any interest in a Guarantor to become a Guarantor with respect to, and
jointly and severally liable with all other Guarantors, for all obligations
under this Agreement and the Notes by executing and delivering to the Lenders a
guaranty substantially in the form of the Guaranties delivered pursuant to
SECTION 10.3. In addition, the Borrower may cause any Subsidiary which is not a
Material Subsidiary to become a Guarantor hereunder by executing and delivering
a Guaranty and an Intercompany Subordinated Demand Note and by causing its
capital stock, partnership or membership interest to be pledged, all as provided
in the foregoing sentence.
54
SECTION 9.2.8 ENVIRONMENTAL COVENANT. Use, operate and maintain all
respective facilities and properties of the Borrower and its Subsidiaries in
material compliance with all Environmental Laws, keep all necessary permits,
approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in material compliance therewith, and
handle all Hazardous Materials in material compliance with all applicable
Environmental Laws, and promptly cure or defend any actions and proceedings
relating to compliance with Environmental Laws, in each case where failure to do
so may reasonably be expected to have a material adverse effect on the financial
condition, operations, assets, businesses, properties or prospects of the
Borrower and its Subsidiaries (taken as a whole).
SECTION 9.2.9 COMPLIANCE WITH LAWS, ETC. Comply in all material respects
with, and own, operate and maintain the Borrower's and its Subsidiaries' Assets
in material compliance with, all applicable federal, state and local laws,
rules, regulations and orders, including, without limitation, compliance with
all applicable laws, rules, regulations and orders of the Federal Energy
Regulatory Commission, the Railroad Commission of Texas, the Louisiana Public
Service Commission, the Louisiana Commissioner of Conservation, the Oklahoma
Corporation Commission and any successor agencies; and obtain, maintain in full
force and effect, and comply in all material respects with all applicable
authorizations, consents, approvals, licenses, rulings, permits, tariffs, rates,
certifications, exemptions and filings required by any governmental authority or
regulatory body (including, without limitation, the Federal Energy Regulatory
Commission, the Railroad Commission of Texas, the Louisiana Public Service
Commission, the Louisiana Commissioner of Conservation and any successor
agencies) as shall now or hereafter be necessary under applicable laws,
ordinances, regulations or any interpretation or administration thereof in
connection with the ownership, operation and maintenance of the Assets of the
Borrower and its Subsidiaries, and in each case where non-compliance therewith
may reasonably be expected to have a material adverse effect on the financial
condition, operations, assets, businesses, properties or prospects of the
Borrower and its Subsidiaries (taken as a whole).
SECTION 9.2.10 MERGER. Promptly, and in any event within one Business Day
following the Initial Borrowing Date, the Borrower shall cause the Effective
Time (as defined in the Merger Agreement) of the Merger to occur as provided in
Section 2.04 of the Merger Agreement.
SECTION 9.2.11 INDEMNITY. The Borrower from time to time and on a timely
basis and in accordance with appropriate procedures will enforce its rights to
the indemnities provided in Article VIII of the Merger Agreement.
SECTION 9.3 NEGATIVE COVENANTS. The Borrower will:
SECTION 9.3.1 RESTRICTIONS ON REDEMPTION AND PURCHASE OF SECURITIES AND
PAYMENT OF DIVIDENDS; ISSUANCE OF CAPITAL STOCK. Not, and not permit any of its
Subsidiaries to, redeem, purchase or otherwise acquire any shares of the capital
stock of the Borrower or any Subsidiary
55
of the Borrower other than as permitted by SECTION 9.3.6, and not declare or pay
any dividends on the capital stock of the Borrower (other than stock dividends),
make any distribution or (except for payments on Indebtedness permitted pursuant
to SECTION 9.3.3(V), (VIII), (XV), or (XXII)) payment to stockholders, or set
aside any funds for any such purpose, and not prepay, purchase or redeem, and
not permit any of its Subsidiaries to purchase, any subordinated Indebtedness of
the Borrower (any such foregoing redemption, purchase, acquisition, declaration,
payment, distribution, prepayment or set aside herein called a "DISTRIBUTION"
and all of the foregoing collectively called "DISTRIBUTIONS"), except:
(i) the Borrower may make Distributions on any date so long as
such Distributions, do not exceed the positive difference, if
any, between (i) the sum of (A) Incremental Earnings plus (B)
Incremental Losses, to the date of such Distribution, MINUS
(ii) Aggregate Distributions and Investments to and including
the date of such Distribution (without giving effect to such
Distribution on such date); PROVIDED that no Event of Default
or Unmatured Event of Default has occurred and is continuing
or would occur as a result of any such Distribution and
provided further, that after giving effect to such
Distribution, the Borrower's ratio of (a) Funded Debt plus
Operating Lessor's Debt to (b) Capitalization expressed as a
percentage is 65% or less;
(ii) [Intentionally omitted];
(iii) the Borrower may make payments of principal and accrued
interest on the RSNs PROVIDED that (A) such payment is
permitted by and in accordance with the terms of such
Indebtedness and any subordination provisions and agreements
applicable thereto and (B) no Unmatured Event of Default of
the type described in SECTION 12.1.1, 12.1.2, 12.1.4, 12.1.8,
12.1.9, 12.1.16, or Event of Default shall have occurred and
be continuing or would occur as a result of any such payment;
(iv) any Subsidiary of the Borrower may declare and pay dividends
to its owners ratably, in accordance with their respective
ownership interests;
(v) the Borrower may make payments to the Parent Company or any
Affiliate thereof for all reasonable amounts owing to the
Parent Company or any Affiliate thereof in the ordinary course
of business for the Borrower's direct benefit or the
Borrower's PRO RATA share of such ordinary course items,
including, but not limited to, insurance, taxes, and
professional fees; PROVIDED such ordinary course items are
incurred pursuant to an arrangement or contract that complies
with SECTION 9.3.15 and upon the reasonable request of any
Lender or any Agent, the Borrower shall provide
56
calculations in reasonable detail setting forth such ordinary
course items; and
(vi) the Borrower may make payments to Material Subsidiaries in
respect of Indebtedness described in SECTION 9.3.3(XVI) to the
extent permitted by the subordination provisions in such
promissory notes as described in SECTION 9.3.3(XVI).
The Borrower will not permit any Guarantor to issue any shares of capital stock
having any voting rights including, without limitation, in connection with a
stock dividend, UNLESS such shares are promptly pledged to, and a first and
prior lien or security interest therein is promptly granted to, the Collateral
Agent, for the benefit of the Lenders, pursuant to a duly authorized, executed
and delivered Pledge Agreement, from each holder of such shares, as additional
security for the Loans and all other Obligations hereunder, all Obligations to
any Lender pursuant to Hedging Obligations or all Obligations pursuant to such
holder's Guaranty. The holder of such shares shall further deliver to the
Collateral Agent stock certificates and undated stock powers executed in blank
and any and all instruments, documents, approvals, consents or opinions of
counsel reasonably requested by the Collateral Agent or any other Agent in
connection with any such Pledge Agreements required to be executed pursuant to
the foregoing.
SECTION 9.3.2 STOCK PURCHASES. Not, and not permit any of its Subsidiaries
to, make a Borrowing hereunder or use any Letter of Credit or the proceeds of a
Loan to consummate a tender offer, merger, stock purchase transaction, or
investment in the securities of any other Person unless the board of directors,
partners, members, or other governing body of such Person and any shareholder,
partner or member vote required by law or corporate charter shall have approved
such tender offer, merger, stock purchase transaction or investment.
SECTION 9.3.3 PERMITTED INDEBTEDNESS. Not, and not permit any of its
Subsidiaries to, create, incur, assume or permit to exist or otherwise become or
be liable in respect of any Indebtedness unless approved in writing by the
Required Lenders, except
(i) Indebtedness under this Agreement and the other Loan
Documents;
(ii) Indebtedness in respect of the Medium Term Notes and any
Indebtedness refinancing such Medium Term Notes or in
extension or renewal thereof;
(iii) current accounts payable and accrued liabilities arising
in the ordinary course of business;
(iv) Indebtedness incurred in connection with the Liens
permitted by SECTION 9.3.4;
57
(v) Indebtedness of any Material Subsidiary of the Borrower
payable to the Borrower PROVIDED that such Indebtedness
shall be evidenced by the Intercompany Subordinated Demand
Note or the Subordinated Term Note of such Material
Subsidiary payable to the order of the Borrower, and
endorsed over to the Collateral Agent pursuant to the
terms of, and subject to the Liens created under, the
Notes Security Agreement, and PROVIDED FURTHER, that such
Indebtedness shall be subordinated pursuant to the terms
of a subordination agreement in substantially the form of
the Subordination Agreement delivered pursuant to SECTION
11.1.11;
(vi) (a) Capitalized Lease Obligations; provided the amount of
Capitalized Lease Obligations payable by the Borrower and
its Subsidiaries during any calendar year does not exceed
$20,000,000 in the aggregate and (b) Indebtedness of the
Borrower and its Subsidiaries of the type described in
CLAUSE (D) of the definition of "INDEBTEDNESS"; PROVIDED
the amount of rentals payable by the Borrower and its
Subsidiaries under all arrangements (other than the Lease)
for such Indebtedness described in such CLAUSE (D) during
any calendar year does not exceed $7,500,000 in the
aggregate;
(vii) Indebtedness of the Borrower or any of its Subsidiaries in
respect of Hedging Obligations from time to time entered
into in accordance with customary industry practice;
(viii) Indebtedness of the Borrower and the Lessee under the
Operative Documents, all as in effect on the date hereof;
(ix) [Intentionally omitted];
(x) Indebtedness of the Borrower to the Parent Company
evidenced by the RSNs in an aggregate original principal
amount not to exceed $75,000,000;
(xi) Indebtedness permitted under SECTION 9.3.5;
(xii) Indebtedness for current taxes and deferred taxes not
delinquent or being contested in good faith and by
appropriate proceedings;
(xiii) Indebtedness of the Borrower to the Parent Company or its
Affiliates permitted under SECTION 9.3.1(V);
58
(xiv) Indebtedness in respect of one or more letters of credit
(other than Letters of Credit) in an aggregate undrawn
face amount not to exceed $4,000,000 for all such letters
of credit;
(xv) Indebtedness of any Material Subsidiary of the Borrower
(the "PAYOR") to any other Subsidiary of the Borrower (the
"PAYEE") PROVIDED that (a) such Indebtedness shall be
evidenced by a promissory note of the Payor payable to the
order of the Payee, (b) such promissory note is
subordinated to the Guaranty of the Payor and the other
obligations of the Payor to the Lenders and the Agents
pursuant to subordination provisions in such promissory
note no less favorable to the Lenders than those
provisions set forth in EXHIBIT 9.3.3(XV) hereto; and
(xvi) Indebtedness of the Borrower to any Subsidiary of the
Borrower PROVIDED that (a) such Indebtedness shall be
evidenced by a promissory note of the Borrower payable to
the order of such Subsidiary, (b) such promissory note is
subordinated to the Obligations of the Borrower pursuant
to subordination provisions in such promissory note no
less favorable to the Lenders than those provisions set
forth in EXHIBIT 9.3.3(XV) hereto; and
(xvii) [Intentionally omitted];
(xviii) [Intentionally omitted];
(xix) [Intentionally omitted];
(xx) [Intentionally omitted];
(xxi) [Intentionally omitted];
(xxii) Indebtedness of any Subsidiary of the Borrower that is not
a Material Subsidiary, payable to any other Subsidiary of
the Borrower that is not a Material Subsidiary.
SECTION 9.3.4 LIENS. Not, and not permit any of its Subsidiaries to,
create or permit to exist any Lien with respect to any Assets now owned or
hereafter acquired, except
(i) those in favor of the Collateral Agent pursuant to the
Security Documents;
59
(ii) the Liens referred to in CLAUSES (VII) and (VIII) of
SECTION 8.6, the types of Liens referred to in the other
clauses of SECTION 8.6 and the Liens listed on Exhibit
8.6;
(iii) [Intentionally omitted];
(iv) Liens on (A) cash collateral, (B) letters of credit or (C)
Permitted Investments pledged as collateral in favor of
counterparties to Hedging Obligations of the type
described in CLAUSE (B) of the definition of "HEDGING
OBLIGATIONS" and permitted by SECTION 9.3.3(VII);
(v) Liens or encumbrances on Receivables created in connection
with a Receivables Financing permitted pursuant to SECTION
9.3.19 and Liens or encumbrances on the rights of the
Borrower or any of its Subsidiaries related to such
Receivables which are transferred to the purchaser of such
Receivables in connection with any such permitted
Receivables Financing; PROVIDED that such Liens secure
only, or such encumbrances relate solely to, the
obligations of the Borrower or any of its Subsidiaries in
connection with such Receivables Financing; and
(vi) Liens on Assets securing Indebtedness of Capitalized Lease
Obligations provided such Liens attach solely to the
assets subject of the capitalized lease.
SECTION 9.3.5 GUARANTIES, LOANS, ADVANCES OR INVESTMENTS. Not, and not
permit any of its Subsidiaries to, become or be a guarantor or surety of,
endorse or otherwise become or be contingently liable upon (by direct or
indirect agreement, contingent or otherwise, or by operation of law, to provide
funds for payment, to supply funds to, or otherwise invest in, a debtor, or
otherwise assure a creditor against loss) the debt, obligation, undertaking or
other liability of any other Person, or otherwise become or be responsible in
any manner (whether by agreement to purchase any obligations, stock, assets,
goods or services, or to supply or advance any funds, assets, goods or services,
or otherwise) with respect to, any undertaking of any other Person, or make or
permit to exist any loans or advances to or investments in any other Person,
except for
(i) the endorsement, in the ordinary course of collection, of
instruments payable to the Borrower or any of its
Subsidiaries or to the order of the Borrower or any of its
Subsidiaries;
(ii) the Guaranties;
60
(iii) guaranties or similar assurances incurred by the Borrower
or its Subsidiaries in respect of obligations of the
Borrower or Subsidiaries of the Borrower for the payment
of Hydrocarbons purchased in the ordinary course of
business, the payment of trade payables or the performance
of Hydrocarbons transportation, construction, gathering,
procurement, marketing, sales, storage, processing,
leasing and other related activities, PROVIDED such
guaranties and such similar assurances and the obligations
so guaranteed are of the type normally incurred in the
industry from time to time for the type of project
involved and are (except for liquidated damages
provisions, obligations to reimburse sureties for payments
made under performance bonds, and except for such
guaranties for payment of Hydrocarbons purchased in the
ordinary course of business and payment of trade payables)
guaranties of performance and not of payment;
(iv) the guaranty by the Borrower or its Subsidiaries of
Hedging Obligations of the Borrower or Subsidiaries of the
Borrower permitted under SECTION 9.3.3(VII);
(v) [Intentionally omitted];
(vi) the Transok Guaranty (as defined in the Participation
Agreement) and the Guaranty dated as of June 6, 1996 by
Tejas in favor of the Agents (as defined in the
Participation Agreement) and the Participants (as defined
in the Participation Agreement);
(vii) [Intentionally omitted];
(viii) [Intentionally omitted];
(ix) [Intentionally omitted];
(x) [Intentionally omitted];
(xi) [Intentionally omitted];
(xii) [Intentionally omitted];
(xiii) [Intentionally omitted];
(xiv) guaranties and indemnities by the Borrower or any of its
Subsidiaries (a) in respect of limited recourse to a
seller pursuant to a Receivables
61
Financing meeting the requirements of clause (i) of the
definition of Receivables Financing, related to, and not
to exceed, the historical bad debt loss experience of the
Receivables subject of such Receivables Financing or (b)
securing losses of the purchaser resulting from the
purchaser's security interests in the Receivables subject
of a Receivables Financing being junior to other security
interests in favor of interest owners arising pursuant to
statutes similar to Section 9-319 of the Uniform
Commercial Code of the State of Texas; PROVIDED that
guaranties and indemnities of the type referred to in the
foregoing clause (b) shall be deemed to be Funded Debt for
purposes of SECTION 9.4;
(xv) [Intentionally omitted];
(xvi) [Intentionally omitted];
(xvii) (a) loans from the Borrower to its Material Subsidiaries
pursuant to Indebtedness permitted under SECTION 9.3.3(V);
(b) loans from any Subsidiary of the Borrower to any
Material Subsidiary of the Borrower pursuant to
Indebtedness permitted under SECTION 9.3.3(XV); loans from
any Subsidiary of the Borrower to the Borrower pursuant to
Indebtedness permitted under SECTION 9.3.3(XVI); (c) loans
from any Subsidiary of the Borrower that is not a Material
Subsidiary to any Subsidiary of the Borrower that is not a
Material Subsidiary pursuant to Indebtedness permitted
under SECTION 9.3.3(XXII);
(xviii) (a) loans from the Borrower to the Parent Company not to
exceed $10,000,000 in original aggregate principal amount
(exclusive of capitalized interest) used to manage working
capital needs and daily money management activities of the
Parent Company and its Subsidiaries and (b) so long as no
Event of Default or Unmatured Event of Default has
occurred and is continuing or would occur as a result of
such loan and so long as after giving effect to such loan
the Borrower's ratio of Funded Debt to Capitalization
expressed as a percentage is 65% or less, loans from the
Borrower to the Parent Company not to exceed at the time
of funding an aggregate principal amount equal to the
positive difference, if any, of the sum of Incremental
Earnings plus Incremental Losses to the date of such loan
MINUS Aggregate Distributions and Investments to and
including the date of such loan (without giving effect to
such loan on such date); provided (1) the obligations of
the Parent Company with respect to any such loans are
evidenced by promissory notes of the Parent Company
62
payable to the order of the Borrower (as from time to time
amended, modified or supplemented, each a "Parent Company
Note"), (2) such Parent Company Notes are endorsed and
delivered by the Borrower to the Collateral Agent pursuant
to the terms of, and subject to the Liens created under,
the Notes Security Agreement, and (3) the Indebtedness
evidenced by such Parent Company Notes rank pari passu
with all senior unsecured debt of the Parent Company;
(xix) Equity Investments by the Borrower or any of its
Subsidiaries in any one or more Persons that is not the
Borrower or a Material Subsidiary of the Borrower in an
aggregate amount not to exceed at the time of such Equity
Investment the sum of (a) $10,000,000 PLUS (b) the
positive difference, if any, between (1) Incremental
Earnings to such date, if any, and zero if no Incremental
Earnings to such date and (2) all Aggregate Distributions
and Investments to and including such date (without giving
effect to Equity Investments on such date); PROVIDED
FURTHER that any Equity Investment pursuant to this CLAUSE
(XIX) will only be made in cash;
(xx) Equity Investments in Material Subsidiaries;
(xxi) [Intentionally omitted];
(xxii) [Intentionally omitted];
(xxiii) Permitted Investments; and
(xxiv) Equity Investments outstanding as of the Effective Date
and set forth in EXHIBIT 9.3.5 (XXIV).
SECTION 9.3.6 RESTRICTIONS ON FUNDAMENTAL CHANGES. Without the prior
written consent of the Required Lenders, not, and not permit any of its
Subsidiaries to, be a party to any merger into or consolidation with, or
purchase or otherwise acquire all or substantially all of the assets of, any
other Person, except that (1) the Borrower or any of its Subsidiaries may merge
into or consolidate with any other Person and the Borrower or any of its
Subsidiaries may purchase or otherwise acquire the assets of any other Person,
IF upon the consummation of any such merger, consolidation, purchase or
acquisition, (A) the Borrower or such Subsidiary is the surviving entity and the
nature of its business is not materially changed from its core Hydrocarbons,
transportation, construction, procurement, sales, leasing, storage,
transmission, gathering, marketing, processing and other related activities, (B)
the Borrower or such Subsidiary has the power and authority under the pertinent
agreement, as applicable, and under applicable law, to subject the assets of
such acquired Person or the assets so acquired to the provisions of
63
this Agreement, including, without limitation, SECTION 9.3.4, (C) the Borrower
or such Subsidiary does so subject such assets to the provisions of this
Agreement, including without limitation, SECTION 9.3.4, and (D) no Event of
Default or Unmatured Event of Default shall have occurred, exist or be
continuing or shall result after giving effect to such merger, consolidation,
purchase or acquisition and (2) the Borrower or any Subsidiary of the Borrower
may merge into, or consolidate with, or purchase or otherwise acquire the assets
of, any other Subsidiary of the Borrower, if (A) the surviving entity (if either
such Subsidiary is a Guarantor) shall be the Borrower or a Subsidiary that is
liable with all other Guarantors pursuant to a Guaranty for all obligations of
the Borrower under this Agreement and the Notes, (B) the Collateral Agent shall
have received documentation duly executed by the surviving entity in form and
substance satisfactory to the Required Lenders and the Agents, which
documentation shall at a minimum consist of the execution and delivery of a
Guaranty or restated Guaranty (if the surviving Subsidiary is not a Guarantor
prior to the consummation of such merger or consolidation but is a Material
Subsidiary or a Subsidiary which directly owns an interest in a Guarantor) and
supporting documentation substantially similar to the documentation described in
SECTION 11.1, as applicable, and (C) no Event of Default or Unmatured Event of
Default shall have occurred and be continuing or would otherwise be existing
after or result from such merger or consolidation and (3) the Borrower and its
Subsidiaries may merge into Transok and its Subsidiaries in order to consummate
the transaction provided for under the Merger Agreement. The Borrower shall not,
and shall not permit any of its Subsidiaries to, sell or dispose of any capital
stock of any Subsidiary of the Borrower except for Transfer of minority
interests in any Subsidiary of the Borrower pursuant to SECTION 9.3.8(III).
SECTION 9.3.7 FISCAL YEAR. Not, and not permit any of its Subsidiaries to,
change its fiscal year as in effect on the date hereof without the consent of
the Required Lenders, which consent shall not be unreasonably withheld.
SECTION 9.3.8 TRANSFER OF ASSETS. Not, and not permit any of its
Subsidiaries to, Transfer any Asset (including, without limitation, any sale or
assignment with or without recourse of any Receivable and any Transfer pursuant
to an Option to Purchase) whether or not such Asset constitutes all or a
substantial part of its Assets, except:
(i) retirement of assets in the ordinary course of business;
(ii) with the prior written consent of the Required Lenders,
the Transfer of any Asset or Assets not otherwise
permitted pursuant to one or more of the other clauses of
this SECTION 9.3.8; PROVIDED that (x) the Commitment
Amount is reduced as a result thereof in accordance with
SECTION 5.5, (y) promptly, and in any event within fifteen
(15) days after the receipt by the Borrower or such
Subsidiary of the Net Proceeds of such Transfer, the
Borrower shall provide the
64
Administrative Agent with written notice of such Transfer,
and of the amount of the Fair Market Value and the Net
Proceeds thereof;
(iii) at any time on or after the Effective Date, (a) the
Transfer of any Asset or Assets (including, without
limitation, Transfers of minority interests in any
Subsidiaries of the Borrower) having an aggregate Fair
Market Value at the time of Transfer of $25,000,000 or
less in the aggregate for all Assets Transferred in all
such Transfers on and after the Effective Date; PROVIDED
that (x) promptly, and in any event within fifteen (15)
days after the receipt by the Borrower or such Subsidiary
of the Net Proceeds of such Transfer, the Borrower shall
provide the Administrative Agent with written notice of
such Transfer, of the amount of the Fair Market Value and
the Net Proceeds thereof, and of the Borrower's election
to make such Transfer pursuant to this CLAUSE (III);
(iv) the Transfer of any Asset to the Borrower or any
Guarantor;
(v) Transfers in connection with the settlement of Hedging
Obligations permitted under SECTION 9.3.3(VII);
(vi) the sale of inventory in the ordinary course of business;
(vii) the Transfer of the interest in the Palo Duro Pipeline
leased by the Borrower or one or more of its Subsidiaries
to Central and South West Corporation or an Affiliate
pursuant to the Merger Agreement;
(viii) the Transfer of Receivables in accordance with
SECTION 9.3.19;
(ix) [Intentionally omitted];
(x) [Intentionally omitted];
(xi) the assignment or termination of any Hedging Obligation;
(xii) [Intentionally omitted];
(xiii) [Intentionally omitted]; and
(xiv) the Transfer by a Subsidiary of the Borrower (other than a
Material Subsidiary of the Borrower or a Guarantor) to a
Subsidiary of the Borrower or to the Borrower.
65
The foregoing notwithstanding, the Borrower shall not, nor shall the Borrower
permit any of its Subsidiaries to, Transfer any Assets, other than the sale of
inventory and payment of trade payables in the ordinary course of business, to
any Person pursuant to this SECTION 9.3.8 if an Event of Default or Unmatured
Event of Default shall have occurred and be continuing or would otherwise be
existing after or result from any such Transfer.
SECTION 9.3.9 UNCONDITIONAL PURCHASE OBLIGATIONS. Not, and not permit any
of its Subsidiaries to, enter into or be a party to any material contract for
the purchase of materials, supplies or other property or services, if such
contract requires that payment be made by it regardless of whether or not
delivery is ever made of such materials, supplies or other property or services
except for (i) take-or-pay arrangements and Hedging Obligations permitted under
SECTION 9.3.3(VII) entered into in the ordinary course of business in accordance
with industry standards by the Borrower and its Subsidiaries relating to the
purchase and sale of energy-related commodities, including Hydrocarbons, (ii)
those set forth on EXHIBIT 9.3.9 and (iii) arrangements entered into by the
Borrower and its Subsidiaries relating to the purchase of assets or stock of
another Person.
SECTION 9.3.10 OTHER AGREEMENTS. Not, and not permit any of its
Subsidiaries to, enter into any agreement containing any provision which would
be violated or breached by the performance of their Obligations hereunder or
under any instrument or document delivered or to be delivered by them hereunder
or in connection herewith in each case if such violation would singly or in the
aggregate have or may reasonably be expected to have a material adverse effect
on the financial condition, operations, assets, business, properties or
prospects of the Borrower and its Subsidiaries (taken as a whole) or on the
ability of the Borrower and its Subsidiaries and the Parent Company and its
Subsidiaries to perform their respective obligations under each of the Loan
Documents or which could result in any liability to any Agent or any Lender.
SECTION 9.3.11 BUSINESS ACTIVITIES. The Borrower will not and will not
permit any of its Subsidiaries to engage in any business activities other than
Hydrocarbon transportation, construction, procurement, sales, leasing, storage,
transmission, gathering, marketing, processing and other business activities
incidental thereto.
SECTION 9.3.12 CAPITAL EXPENDITURES, ETC. Not, and not permit any of its
Subsidiaries to, make or commit to make any Capital Expenditures the effect of
which would materially change the nature of its business away from its core
Hydrocarbon transportation, transmission, construction, gathering, storage,
leasing, marketing, sales, procurement and processing and related activities.
SECTION 9.3.13 NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC. Not, and not
permit any of its Subsidiaries to, enter into any agreement (other than this
Agreement, any other Loan Document, any of the Operative Documents, or the
Medium Term Notes or organizational documents for Subsidiaries which documents
are in existence prior to the date of this Agreement)
66
prohibiting (a) the creation or assumption of any Lien upon its properties,
revenues or assets, whether now owned or hereafter acquired; (b) the ability of
the Borrower or any Guarantor or the Parent Company and its Subsidiaries to
amend or otherwise modify this Agreement or any other Loan Document; or (c) the
ability of any Subsidiary of the Borrower to make any payments, directly or
indirectly, to the Borrower by way of dividends, advances, repayments of loans
or advances, reimbursements of management and other intercompany charges,
expenses and accruals or other returns on investments, or any other agreement or
arrangement which restricts the ability of any such Subsidiary to make any
payment, directly or indirectly, to the Borrower.
SECTION 9.3.14 [INTENTIONALLY OMITTED].
SECTION 9.3.15 TRANSACTIONS WITH AFFILIATES. Not, and not permit any of
its Subsidiaries to, enter into any transaction (including, without limitation,
the purchase or sale of any property or service) with, or make any payment or
transfer to, any Affiliate (other than the Borrower, the Parent Company or a
Guarantor) except in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary
than the Borrower or such Subsidiary would obtain in a comparable arms-length
transaction.
SECTION 9.3.16 RESTRICTIONS ON DECREASE IN CAPITAL STOCK. Not take any
action, or permit any of its Subsidiaries to take any action, which will result
in a decrease in the percentage of the outstanding shares of capital stock of,
or in the percentage of the partnership interests in, any of the Material
Subsidiaries of the Borrower or any Guarantor by the Borrower and any Subsidiary
of the Borrower other than as permitted by SECTION 9.3.6 herein.
SECTION 9.3.17 [INTENTIONALLY OMITTED].
SECTION 9.3.18 MODIFICATIONS OF CERTAIN AGREEMENTS. Not, and not permit
any of its Subsidiaries to, consent to any amendment, supplement or other
modification of any of the subordination terms or subordination provisions
contained in or applicable to any document or instrument evidencing or
applicable to any Subordinated Debt.
SECTION 9.3.19 RECEIVABLES FINANCING. Not, and not permit any of its
Subsidiaries to, sell, transfer, convey, assign or otherwise dispose of, with or
without recourse, any Receivables of any kind; PROVIDED, HOWEVER, the foregoing
restriction will not prohibit the sale of Receivables of the Borrower and its
Subsidiaries so long as (a) such Receivables are sold pursuant to a Receivables
Financing for no less than 80% of face value and (b) the aggregate outstanding
amount of Receivables so sold at no time exceeds $100,000,000.
SECTION 9.4 FINANCIAL COVENANTS. The Borrower will and will cause each of
its Subsidiaries to:
67
SECTION 9.4.1 EBITDA TO TOTAL INTEREST EXPENSE. Not permit the ratio of
EBITDA to Total Interest Expense for any consecutive period of four fiscal
quarters ending on the last day of each fiscal quarter to be less than, for the
period ending on September 30, 1996, 1.25:1.0; for the period ending on December
31, 1996, 1.40:1.0; for the period ending on March 31, 1997, 1.40:1.0; for the
period ending on June 30, 1997, 1.45:1.0; and for any consecutive period of four
fiscal quarters ending at any time thereafter, 1.50:1.0; provided, that for
purposes of determining compliance with this SECTION 9.4.1 for the periods
ending on each of September 30, 1996, December 31, 1996 and March 31, 1997, the
actual EBITDA and Total Interest Expense from the Closing Date to each such
respective date shall be annualized.
SECTION 9.4.2 FUNDED DEBT TO CAPITALIZATION. Not permit the ratio of (a)
Funded Debt plus Operating Lessor's Debt to (b) Capitalization, expressed as a
percentage, to exceed 85% at any time.
ARTICLE X
COLLATERAL SECURITY
As collateral security for its Obligations hereunder and under the Notes
and the other Loan Documents, the Borrower and its Subsidiaries shall, as
applicable, execute and deliver or cause to be executed and delivered to the
Collateral Agent the following:
SECTION 10.1 PLEDGE AGREEMENT. A pledge agreement (herein, as from time to
time amended, modified or supplemented, individually called a "PLEDGE AGREEMENT"
and collectively called the "PLEDGE AGREEMENTS") in substantially the form of
EXHIBIT 10.1A or 10.1B, as appropriate, from the Borrower and any Subsidiary of
the Borrower (including all entities which shall become Subsidiaries of the
Borrower after the Closing Date) owning stock of any Material Subsidiary
including those set forth in EXHIBIT 8.7 (and including all entities which shall
become Material Subsidiaries after the Closing Date), together with all the
issued and outstanding capital stock of all such Material Subsidiaries of the
Borrower owned by the Borrower and its Subsidiaries.
SECTION 10.2 PARTNERSHIP/LIMITED LIABILITY COMPANY SECURITY AGREEMENT. A
Security Agreement, Undertaking and Financing Statement (herein, from time to
time amended, modified or supplemented, individually called a
"PARTNERSHIP/LIMITED LIABILITY COMPANY SECURITY AGREEMENT" and collectively
called the PARTNERSHIP/LIMITED LIABILITY COMPANY SECURITY AGREEMENTS") in
substantially the form of EXHIBIT 10.2 from the Borrower and each Subsidiary of
the Borrower (including all entities which shall become Subsidiaries after the
Closing Date) owning a partnership interest or membership interest in any
Material Subsidiary (including all entities which shall become Material
Subsidiaries after the Closing Date).
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SECTION 10.3 GUARANTIES. A Guaranty (herein, as from time to time amended,
modified or supplemented, individually called a "GUARANTY" and collectively
called the "GUARANTIES") from each Guarantor in substantially the form of
EXHIBIT 10.3.
SECTION 10.4 NOTES SECURITY AGREEMENT. A Security Agreement, Assignment,
Undertaking and Financing Statement (herein, as from time to time amended,
modified or supplemented, called the "NOTES SECURITY AGREEMENT") from the
Borrower in substantially the form of EXHIBIT 10.4A, pledging (i) a subordinated
demand promissory note from each Material Subsidiary of the Borrower in favor of
the Borrower in substantially the form of EXHIBIT 10.4B (herein, as from time to
time amended, modified or supplemented, collectively called the "INTERCOMPANY
SUBORDINATED DEMAND NOTES"), and (ii) all subordinated promissory notes from the
Material Subsidiaries of the Borrower in favor of the Borrower in substantially
the form of EXHIBIT 10.4C (herein, as from time to time amended, modified or
supplemented, collectively called the "SUBORDINATED TERM NOTES").
SECTION 10.5 GUARANTY OF THE PARENT COMPANY; ETC.. A guaranty from the
Parent Company (herein, as the same may be amended, modified, supplemented,
extended or renewed, called the "PARENT COMPANY GUARANTY") in substantially the
form of EXHIBIT 10.5A. A guaranty from Tejas Transok Holding Company in
substantially the form of EXHIBIT 10.5B (the "HOLDING COMPANY GUARANTY") and a
Security Agreement, Undertaking and Financing Statement from Tejas Transok
Holding Company in substantially the form of EXHIBIT 10.5C (the "HOLDING COMPANY
SECURITY AGREEMENT").
ARTICLE XI
CONDITIONS TO BORROWING
The obligation of each Lender to fund or make any Borrowing is subject to
the following conditions precedent:
SECTION 11.1 CONDITIONS PRECEDENT TO INITIAL BORROWING. The obligation of
each Lender to fund or make its Borrowing on the Initial Borrowing Date is, in
addition to the conditions precedent specified in SECTIONS 11.2 and 11.3,
subject to the conditions precedent that the Administrative Agent shall have
received all of the following, each duly executed and dated the date of the
Initial Borrowing Date (or such other date prior thereto as shall be
satisfactory to the Agents), in form and substance satisfactory to the Agents,
and each (except for the Notes, of which only one original shall be signed for
each Lender) in sufficient number of signed counterparts to provide one for each
Agent and each Lender:
SECTION 11.1.1 EXECUTED ORIGINAL NOTES. The Notes of the Borrower payable
to the order of each of the Lenders.
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SECTION 11.1.2 CERTIFICATE OF OFFICERS OF THE PARENT COMPANY, THE BORROWER
AND CERTAIN SUBSIDIARIES. Certificates, in form and substance satisfactory to
the Agents, of a Secretary or an Assistant Secretary and the President or a Vice
President of the Parent Company, Tejas Transok Holding Company, the Borrower and
each Subsidiary of the Borrower which is a party to a Loan Document, together
with certified copies of the articles of incorporation and by-laws, certificate
of formation and limited liability company agreement, or the partnership
agreement, as the case may be, and signatures and incumbency of officers of the
Parent Company, Tejas Transok Holding Company, the Borrower and each such
Subsidiary of the Borrower and resolutions with respect to the transactions
contemplated herein.
SECTION 11.1.3 CONSENTS, ETC. Certified copies of all documents evidencing
any necessary corporate action, consents and governmental approvals (if any)
with respect to this Agreement, the Notes, any Security Document, the Merger
Agreement or any other documents provided for herein or therein and certified
copies of all notices or requests for consents required to be obtained in order
to enable the Parent Company, Tejas Transok Holding Company, the Borrower and
each Subsidiary of the Borrower, as applicable, to grant the liens pursuant to
the Security Documents and execute the pertinent collateral documents described
in ARTICLE X.
SECTION 11.1.4 OPINION OF COUNSEL FOR THE BORROWER. The opinions of
Hutcheson & Grundy, L.L.P., counsel for the Parent Company, Tejas Transok
Holding Company, the Borrower and certain Subsidiaries of the Borrower,
addressed to the Lenders in substantially the form of EXHIBIT 11.1.4.
SECTION 11.1.5 UCC SEARCHES. Results of Uniform Commercial Code Searches
identifying all of the financing statements on central file with respect to (i)
the Parent Company in the state of Texas and (ii) Transok Acquisition
Corporation III and Transok and each Subsidiary of Transok in the States
described in EXHIBIT 11.1.5, indicating that no Person claims any interest in
any of the Assets except as set forth in EXHIBIT 8.6.
SECTION 11.1.6 THE PLEDGE AGREEMENTS. The Pledge Agreements and any
necessary financing statements relating thereto, together with all necessary
stock certificates and undated stock powers executed in blank, covering the
capital stock of the Guarantors.
SECTION 11.1.7 CERTIFICATE AS TO INSURANCE POLICIES. Certificate of the
Borrower, in substantially the form of EXHIBIT 11.1.7, describing in detail all
insurance maintained by or for the benefit of the Borrower and each Subsidiary
of the Borrower on their property and their business as of the Effective Date
and certifying that such insurance satisfies the requirements of SECTION 9.2.2.
SECTION 11.1.8 GUARANTIES. The Guaranties from each Guarantor described in
EXHIBIT 11.1.8 in substantially the form of EXHIBIT 10.3 and the Parent Company
Guaranty from the Parent Company in substantially the form of EXHIBIT 10.4.
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SECTION 11.1.9 CERTIFICATE OF FINANCIAL CONDITION. Certificate of
Financial Condition from the chief financial officer of the Borrower, in
substantially the form of EXHIBIT 11.1.9, together with all related financial
statements, opinions and other material documents containing information on
which such certificate is based.
SECTION 11.1.10 SUBORDINATION AGREEMENT. A Subordination Agreement
executed by the Borrower in substantially the form of EXHIBIT 11.1.10 (herein,
as from time to time amended, modified or supplemented, the "SUBORDINATION
AGREEMENT").
SECTION 11.1.11 NOTES SECURITY AGREEMENT. The Notes Security Agreement
executed by the Borrower together with any necessary financing statements and
all the original Intercompany Subordinated Demand Notes, the original
Subordinated Term Notes, and the Parent Company Notes outstanding as of the
Initial Borrowing Date properly endorsed to the Collateral Agent.
SECTION 11.1.12 PARTNERSHIP/LIMITED LIABILITY COMPANY SECURITY AGREEMENT.
The Partnership/Limited Liability Company Security Agreements and any necessary
financing statements relating thereto, covering the partnership interest or
membership interest in the Material Subsidiaries.
SECTION 11.1.13 HOLDING COMPANY. The Holding Company Guaranty and the
Holding Company Security Agreement.
SECTION 11.1.14 [INTENTIONALLY OMITTED].
SECTION 11.1.15 CERTIFICATE AS TO COLLATERAL. A certificate of an officer
of the Borrower substantially in the form of EXHIBIT 11.1.15 hereto with
appropriate insertions.
SECTION 11.1.16 FINANCIAL STATEMENTS. Copies, certified by the Parent
Company as true, correct and complete copies, of all the financial statements
and the Pro Forma Balance Sheet described in SECTION 8.4, together with a draft,
when available, of the report on Form 8-K to be filed with the Securities and
Exchange Commission by the Parent Company in connection with the Merger.
SECTION 11.1.17 OTHER DOCUMENTS. Such other documents as any Agent or any
Lender may reasonably request.
SECTION 11.2 OTHER CONDITIONS PRECEDENT TO MAKING INITIAL BORROWING. The
obligation of each Lender to fund or make any Borrowing on the Initial Borrowing
Date is, in addition to the conditions precedent specified in SECTION 11.1,
subject to the conditions precedent that:
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SECTION 11.2.1 FEES. The Borrower shall have paid to the Administrative
Agent for the benefit of the Agents all remaining fees due and payable to the
Agents.
SECTION 11.2.2 FILING OF SECURITY DOCUMENTS. The Collateral Agent shall
have received evidence of arrangements satisfactory to the Collateral Agent for
the prompt completion of, all recordings and filings of the Security Documents
as may be necessary or, in the reasonable opinion of the Administrative Agent,
desirable to create a valid, perfected first priority Lien against the
collateral covered by the Security Documents.
SECTION 11.2.3 MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in (i) the consolidated business, condition (financial or
otherwise), operations, performance or properties of Transok Inc. and its
Subsidiaries taken as a whole from that presented in the financial statements
dated as of December 31, 1995, a copy of which has been furnished to the Lenders
and (ii) in the consolidated business, condition (financial or otherwise),
operations, performance, properties or prospects of the Parent Company, the
Borrower or their respective consolidated Subsidiaries taken as a whole from
March 31, 1996.
SECTION 11.2.4 EQUITY CONTRIBUTION. The Agents shall have received, in
form and substance satisfactory to the Agents, evidence that the Parent Company
has made an equity capital contribution of at least $178,000,000 to the Borrower
in cash and upon terms satisfactory to the Agents.
SECTION 11.2.5 PURCHASE PRICE. The Lenders shall have received a copy,
certified by the Parent Company as true, correct and complete, of the fully
executed Merger Agreement, together with evidence, in form and substance
satisfactory to the Agents, that the Purchase Price as defined in the Merger
Agreement does not exceed $890,000,000 and that neither the Borrower, any other
Subsidiaries of the Borrower, nor the Parent Company, nor Tejas Transok Holding
Company has assumed any Indebtedness of the Seller or any other Person except
(i) existing trade payables of Transok and its Subsidiaries, and (ii) debt
evidenced by the Medium Term Notes.
SECTION 11.2.6 NO DEFAULT; WARRANTIES TRUE AND CORRECT. (i) No Event of
Default, or Unmatured Event of Default, shall have occurred and be continuing,
or will result from the making of such Borrowing and (ii) the representations
and warranties of the Borrower, the Parent Company, Tejas Transok Holding
Company and each Subsidiary contained in ARTICLE VIII, in any Guaranty or in any
Security Document shall be true and correct as of the date of such requested
Borrowing, except to the extent such representations and warranties relate
solely to an earlier date (it being understood that the financial statements
referred to in SECTION 8.4(A) are dated as of December 31, 1995 and March 31,
1996, as the case may be). The Initial Borrowing under this Agreement shall be
deemed to constitute a representation and warranty by the Borrower on the date
of such Borrowing as to the matters set forth in this SECTION 11.2.6.
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SECTION 11.2.7 MERGER. The conditions set forth in the Merger Agreement to
obligations of the parties to the Merger Agreement to consummate the Merger
shall have been satisfied in full (without amendment or waiver of, or other
forbearance to exercise any rights with respect to, any of the terms and
provisions thereof by the Borrower or the Parent Company) except as described in
EXHIBIT 8.17 or the Letter to Counsel.
SECTION 11.2.8 REGULATORY FILINGS. All actions and proceedings required by
applicable law or regulation (including, without limitation, compliance with the
Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended) shall have
been taken, all waiting periods thereunder shall have expired or terminated, and
all consents, waivers, and approvals necessary for the Merger and the
transactions contemplated hereby (including, without limitation, those of any
governmental authority or regulatory body) shall have been given or obtained.
SECTION 11.2.9 MERGER AGREEMENT. To the best knowledge of the Borrower and
the Parent Company after completion of their due diligence in respect of Transok
and its Subsidiaries and the Merger, except for those matters specifically set
forth in the Letter to Counsel or EXHIBIT 8.17 (i) no party thereto has
defaulted or breached any of its obligations under the Merger Agreement, (ii) no
litigation, arbitration, governmental investigation, or proceeding or inquiry
shall be pending or threatened which seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of, the
transactions contemplated by the Merger Agreement, and (iii) the representations
and warranties of the Seller in the Merger Agreement are true and correct. The
Initial Borrowing under this Agreement shall be deemed to constitute a
representation and warranty by the Borrower on the date of such Borrowing as to
the matters set forth in this SECTION 11.2.9.
SECTION 11.2.10 LEASE. The conditions set forth in Section 3 of the
Participation Agreement to consummate the transactions described in Section 2.1
of the Participation Agreement shall have been satisfied in full, and the
transactions described in Section 2.1 of the Participation Agreement shall have
been consummated in accordance with the Participation Agreement and the other
Operative Documents.
SECTION 11.3 ALL BORROWINGS. The obligation of each Lender to fund or make
any Borrowing (subsequent to the initial Borrowing) is subject to the following
further conditions precedent that:
SECTION 11.3.1 NO DEFAULT; WARRANTIES TRUE AND CORRECT. (i) No Event of
Default, or Unmatured Event of Default, shall have occurred and be continuing,
or will result from the making of such Borrowing and (ii) the representations
and warranties of the Borrower, the Parent Company, Tejas Transok Holding
Company and each Subsidiary contained in ARTICLE VIII, any Guaranty or any
Security Document shall be true and correct as of the date of such requested
Borrowing, except to the extent such representations and warranties relate
solely to an earlier date (it being understood that the financial statements
referred to in SECTION 8.4(A) are dated as of
73
December 31, 1995 and May 31, 1996, as the case may be. Each Borrowing under
this Agreement shall be deemed to constitute a representation and warranty by
the Borrower on the date of such Borrowing as to the matters set forth in this
SECTION 11.3.1.
SECTION 11.3.2 MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change, in the opinion of the Majority Lenders, (i) in the business,
assets, properties, operations, condition or prospects (financial or otherwise)
of any of the (a) the Borrower and its Material Subsidiaries taken as a whole
from that presented in the financial statements dated December 31, 1995 and the
Pro Forma Balance Sheet on a combined basis, or (b) the Parent Company and its
Material Tejas Subsidiaries taken as a whole, from December 31, 1995, (ii)
affecting the rights and remedies of the Lenders under and in connection with
this Agreement, the Notes, the Guaranties and the Security Documents or (iii) in
the ability of the Borrower to perform its Obligations under this Agreement, the
Notes, the Guaranties or other Loan Documents or the ability of the Parent
Company, Tejas Transok Holding Company or the Subsidiaries of the Borrower to
perform their respective Obligations under the Guaranties, the Security
Documents or other Loan Documents to which they are a party.
ARTICLE XII
EVENTS OF DEFAULT AND THEIR EFFECT
SECTION 12.1 EVENTS OF DEFAULT. Each of the following shall constitute an
Event of Default under this Agreement:
SECTION 12.1.1 NON-PAYMENT OF THE LOANS, LETTER OF CREDIT OBLIGATIONS,
FEES OR OTHER AMOUNTS. Default, and continuance thereof for five (5) Domestic
Business Days, in the payment when due (i) of any principal of any Loan or any
Reimbursement Obligation, or (ii) of any interest on any Loan, of any Obligation
in connection with or with respect to any Letter of Credit, of any Fixed Rent or
any Additional Rent under the Lease, of any fees payable by the Borrower
hereunder or in connection herewith, or of any other monetary Obligation.
SECTION 12.1.2 NON-PAYMENT OF OTHER INDEBTEDNESS FOR BORROWED MONEY.
Default in the payment when due (subject to any applicable grace period),
whether by acceleration or otherwise, of any other indebtedness for borrowed
money of, or guaranteed by, the Borrower or any of its Subsidiaries having a
principal amount, individually or in the aggregate, in excess of $10,000,000
(except any such indebtedness for borrowed money of any Subsidiary of the
Borrower to the Borrower or any such indebtedness for borrowed money of the
Borrower under the RSNs) or default in the performance or observance of any
obligation or condition with respect to any such other indebtedness for borrowed
money if the effect of such default in performance or observance is to
accelerate the maturity of any such indebtedness for borrowed money or to
74
permit the holder or holders thereof, or any trustee or agent for such holders,
to cause such indebtedness for borrowed money to become due and payable prior to
its expressed maturity.
SECTION 12.1.3 LEASE. An Event of Default shall occur under any of the
Operative Documents.
SECTION 12.1.4 BANKRUPTCY, INSOLVENCY, ETC. The Borrower, any of its
Material Subsidiaries, the Parent Company, Tejas Transok Holding Company or any
Material Tejas Subsidiary becomes insolvent or generally fails to pay, or admits
in writing its inability to pay, debts as they become due; or the Borrower, any
of its Material Subsidiaries, the Parent Company, Tejas Transok Holding Company
or any of Material Tejas Subsidiary applies for, consents to, or acquiesces in,
the appointment of, a trustee, receiver or other custodian for the Borrower, any
of its Material Subsidiaries, the Parent Company, Tejas Transok Holding Company
or any Material Tejas Subsidiary or any property of any thereof, or makes a
general assignment for the benefit of creditors; or, in the absence of such
application, consent or acquiescence, a trustee, receiver or other custodian is
appointed for the Borrower, any of its Material Subsidiaries, the Parent
Company, Tejas Transok Holding Company or any Material Tejas Subsidiary or for a
substantial part of the property of any thereof and is not discharged within
sixty (60) days; or any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding (except the voluntary dissolution, not under any
bankruptcy or insolvency law, of a Material Subsidiary of the Borrower), is
commenced in respect of the Borrower, any of its Material Subsidiaries, the
Parent Company, Tejas Transok Holding Company or any Material Tejas Subsidiary
and if such case or proceeding is not commenced by the Borrower, any of its
Material Subsidiaries, the Parent Company, Tejas Transok Holding Company or any
Material Tejas Subsidiary, it is consented to or acquiesced in by the Borrower,
any of its Material Subsidiaries, the Parent Company, Tejas Transok Holding
Company or any Material Tejas Subsidiary or remains for sixty (60) days
undismissed; or the Borrower, any of its Material Subsidiaries, the Parent
Company, Tejas Transok Holding Company or any Material Tejas Subsidiary takes
any corporate action to authorize, or in furtherance of, any of the foregoing.
SECTION 12.1.5 NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS. The
Borrower shall default in the due performance and observance of any of its
obligations under SECTION 9.1.5(I), 9.2.10, 9.3.2 or 9.3.6 (other than SECTION
9.3.6(1)(C)).
SECTION 12.1.6 NON-PERFORMANCE OF OTHER COVENANTS AND OBLIGATIONS. The
Borrower or any Subsidiary of the Borrower shall default in the due performance
and observance of any other provision of this Agreement (and not constituting an
Event of Default under any of the preceding provisions of this SECTION 12.1) or
in any other Loan Document executed by it (and not constituting an Event of
Default under SECTION 12.1.12), and such default shall continue unremedied for a
period of fifteen (15) days after notice thereof to the Borrower from any Agent
or any Lender.
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SECTION 12.1.7 BREACH OF WARRANTIES AND MISLEADING STATEMENTS. (a) Any
representation or warranty made or deemed made by the Borrower, the Parent
Company, Tejas Transok Holding Company or any Subsidiary of the Borrower herein
or in any other Loan Document executed by it is breached or is false or
misleading in any material respect on the date made or deemed made, or (b) any
schedule, certificate, financial statement, report, notice, or other writing now
or hereafter furnished by the Borrower, the Parent Company, Tejas Transok
Holding Company or any Subsidiary of the Borrower to any Agent, the Issuing Bank
or any Lender in connection with the Loan Documents and the transactions
contemplated therein is false or misleading in any material respect on the date
as of which the facts therein set forth are stated or certified.
SECTION 12.1.8 CHANGE IN OWNERSHIP. Unless the Borrower or the Parent
Company shall have obtained the prior written consent of the Required Lenders,
failure by the Parent Company to own free and clear of all Liens and other
encumbrances (except for agreements prohibiting the creation of any Lien or
security interest on the voting stock of the Borrower), directly or indirectly
through any of its Subsidiaries, 100% of the outstanding voting stock or
membership interests of the Borrower; or failure by the Borrower to own (free
and clear of all Liens and other encumbrances except (i) those in favor of the
Collateral Agent under the Pledge Agreements and the Partnership/Limited
Liability Company Security Agreements and (ii) for agreements prohibiting the
creation of any Lien or security interest on the voting stock, membership
interests or partnership interests, as the case may be, of the Guarantors),
directly or indirectly through any of its Subsidiaries, 100% of the outstanding
voting stock, membership interests or partnership interests, as the case may be,
of the Guarantors (other than failure to own 100% of such outstanding voting
stock, membership interests or partnership interests, as the case may be, as a
result of Transfers of minority interests in Subsidiaries permitted by SECTION
9.3.8(III)).
SECTION 12.1.9 JUDGMENTS. A judgment, decree or order for the payment of
money in an amount of $5,000,000 or more in excess of valid and collectible
insurance in respect thereof the payment of which is not being disputed or
contested by the insurer or insurers shall be rendered against the Borrower or
any of its Subsidiaries (or, in the event the Borrower or such Subsidiary shall
have an indemnity reasonably acceptable to the Required Lenders from a Person
satisfactory to the Required Lenders (which Person acknowledges in writing its
liability for such indemnity) in respect of such judgment, decree or order for
the payment of money, after giving effect to such indemnity, the Borrower's or
such Subsidiary's liability in respect of such judgment, decree or order is in
excess of $5,000,000, as the case may be), and either (a) enforcement
proceedings shall have been commenced by any creditor upon such judgment, decree
or order or (b) such judgment shall become final and non-appealable and shall
have remained outstanding for a period of sixty (60) consecutive days.
SECTION 12.1.10 EMPLOYEE BENEFIT PLANS. With respect to any Pension Plan,
there shall exist a deficiency of more than $5,000,000 in the aggregate in the
plan assets available to
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satisfy the benefit liabilities under such plan on account of which the Borrower
or any of its Subsidiaries could incur a liability in excess of $5,000,000 in
the aggregate, and steps are or have been undertaken to terminate such plan or
such plan is terminated or the Borrower or any of its Subsidiaries withdraws
from or institutes steps to withdraw from such plan or any Reportable Event with
respect to such plan shall occur.
SECTION 12.1.11 LIEN OR GUARANTY FAILURE. The failure of any of the
Security Documents to constitute a valid and perfected first and prior lien
upon, and security interest in, any property or properties purported to be
pledged or covered thereby, or, if for any reason whatsoever, any of the
Guaranties or Security Documents becomes unenforceable or the security afforded
thereby becomes unenforceable with respect to any property or properties
purported to be pledged or covered thereby; or the Borrower or any Subsidiary of
the Borrower or the Parent Company shall, directly or indirectly, contest in any
manner the effectiveness, validity, binding nature or enforceability of, or
disclaim their liability under, this Agreement or any other Loan Document to
which it is a party.
SECTION 12.1.12 DEFAULT UNDER ANY SECURITY DOCUMENT. A default shall occur
under the terms of any Security Document or Guaranty and continue for more than
the applicable period of grace, if any, therein set forth.
SECTION 12.1.13 [INTENTIONALLY OMITTED].
SECTION 12.1.14 BREACH OF WARRANTIES UNDER MERGER AGREEMENT; FAILURE OR
BREACH OF INDEMNITIES; FAILURE TO CONSUMMATE MERGER. (i) Transok's financial
statements as at December 31, 1995 shall fail to present fairly the financial
condition of Transok as at such date and the results of its operations for the
periods then ended, (ii) the Seller (as defined in the Merger Agreement) shall
default under any indemnity in the Merger Agreement and such default in the
opinion of the Required Lenders could reasonably be expected to have a material
adverse effect on the business, assets, properties, operations, conditions or
prospects (financial or otherwise) of the Borrower and its Subsidiaries taken as
a whole or on their ability to perform their Obligations under this Agreement
and the other Loan Documents, (iii) the Seller or any of its Affiliates shall
challenge pursuant to appropriate proceedings the validity or enforceability of
such indemnities, (iv) the Seller and/or the Borrower and/or the Parent Company
and/or Tejas Transok Holding Company shall attempt to amend or modify the Merger
Agreement (including any Exhibit or Schedule thereto) or waive any provision
thereof, without the Majority Lenders' prior written consent (such consent being
hereby acknowledged to the letter agreement dated May 9, 1996, relating to the
Palo Duro matters referenced in SECTION 9.3.8(VII), waiver of the matters
described in the Letter to Counsel and EXHIBIT 8.17, and the First Amendment to
Agreement of Merger dated the date of the Merger), or (v) the Merger is not
consummated as provided in SECTION 9.2.10.
SECTION 12.1.15 [INTENTIONALLY OMITTED].
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SECTION 12.1.16 NON-PAYMENT OF OTHER INDEBTEDNESS FOR BORROWED MONEY BY
THE PARENT COMPANY. Default in the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, of any indebtedness for
borrowed money of, or guaranteed by, the Parent Company and/or Tejas Transok
Holding Company, having a principal amount, individually or in the aggregate, in
excess of $25,000,000; or any indebtedness for borrowed money of the Parent
Company and/or Tejas Transok Holding Company having a principal amount,
individually or in the aggregate, in excess of $25,000,000 shall become due
before its stated maturity by acceleration of the maturity thereof PROVIDED that
default in respect of indebtedness for borrowed money guaranteed by the Parent
Company and/or Tejas Transok Holding Company (other than indebtedness for
borrowed money of the Borrower) shall not be an Event of Default under this
SECTION 12.1.16 unless either (i) a request or demand for payment in respect of
such guaranty shall have been made or (ii) enforcement proceedings in respect of
such guaranty shall have been commenced.
SECTION 12.2 EFFECT OF EVENT OF DEFAULT. If any Event of Default described
in SECTION 12.1.4 shall occur, the Commitments of the Lenders hereunder (if not
theretofore terminated) shall immediately terminate and the outstanding
principal amount of the Loans and all other Obligations shall automatically be
and become immediately due and payable, all without notice or demand of any
kind; and, in the case of any other Event of Default, the Administrative Agent
may (and, upon written request of the Required Lenders, shall) declare the
Commitments of the Lenders hereunder (if not theretofore terminated) to be
terminated and/or declare all or any portion of the outstanding principal amount
of the Loans and other Obligations to be due and payable, whereupon the
Commitments of the Lenders hereunder (if not theretofore terminated) shall
immediately terminate and/or, as the case may be, the full unpaid amount of such
Loans and other Obligations which shall be so declared due and payable shall be
and become immediately due and payable, all without notice of any kind. The
Administrative Agent shall promptly advise the Borrower and each Lender of any
such declaration, but failure to do so shall not impair the effect of such
declaration. Notwithstanding the foregoing, the effect as an Event of Default of
any event described in SECTION 12.1.1 or SECTION 12.1.4 may be waived by the
written concurrence of the holders of one hundred percent (100%) of the
aggregate unpaid principal amount of the Borrowings and the effect as an Event
of Default of any other event described in SECTION 12.1 may be waived by the
written concurrence of the Required Lenders.
SECTION 12.3 CASH COLLATERALIZATION OF LETTERS OF CREDIT UPON EVENT OF
DEFAULT. Upon the occurrence of an Event of Default, an amount equal to the
amount of the then contingent liability of the Issuing Bank (and the other
Lenders) under each outstanding Letter of Credit shall, at the option of the
Majority Lenders and without demand upon or notice to the Borrower, be deemed
(as between the Borrower, Issuing Bank and the Lenders) to have been paid or
disbursed by the Issuing Bank (and the other Lenders) under such Letter of
Credit (notwithstanding that such amount may not in fact have been so paid or
disbursed), and the Borrower shall be obligated forthwith, upon demand or notice
to the Borrower, to reimburse the Lenders for, by depositing with the Collateral
Agent, which amount may be invested as provided in SECTION 2.4.4, the
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amount deemed to have been so paid or disbursed. Any amounts so received by the
Collateral Agent pursuant to the provisions of the preceding sentence shall be
held as collateral security as provided in SECTION 2.4.4 until such time as such
Event of Default is waived or remedied, at which time, if no other Event of
Default shall then exist, any such cash collateral and any interest thereon not
theretofore applied to reduce amounts payable by the Borrower to the Issuing
Bank under such Letter of Credit and not required to remain on deposit as a
result of SECTION 5.7 shall be returned promptly to the Borrower.
ARTICLE XIII
THE ADMINISTRATIVE AGENT, DOCUMENTATION AGENT AND ISSUING BANK
SECTION 13.1 AUTHORIZATION. Each Lender and the holder of each Note
authorizes each of the Administrative Agent, the Documentation Agent and the
Issuing Bank to act on behalf of such Lender or holder to the extent provided
herein or in any document or instrument delivered hereunder or in connection
herewith, and to take such other action as may be reasonably incidental thereto.
The Lenders hereby authorize the Collateral Agent and the Administrative Agent
to execute and deliver all documents for and on behalf of the Lenders pursuant
to SECTION 11.1.14. The Lenders hereby further authorize the Collateral Agent to
release any Collateral constituting any interest in a Guarantor or a Subsidiary
owning an interest in any Guarantor in connection with a disposition of a
minority interest in such Subsidiary permitted by this Agreement.
SECTION 13.2 POWER. Each of the Administrative Agent and the
Documentation Agent shall have and may exercise such powers under this Agreement
and the other Loan Documents as are specifically delegated to the Administrative
Agent and the Documentation Agent by the terms hereof, together with such powers
as are reasonably incidental thereto. The Administrative Agent and the
Documentation Agent and the Issuing Bank shall not have any implied duties or
any obligation to take any action under this Agreement except any action
specifically provided by this Agreement to be taken by the Administrative Agent
or the Documentation Agent or the Issuing Bank, as the case may be.
SECTION 13.3 INDEMNIFICATION OF THE ADMINISTRATIVE AGENT, THE
DOCUMENTATION AGENT OR THE ISSUING BANK. The Lenders agree to indemnify and do
hereby indemnify each of the Administrative Agent, the Documentation Agent and
the Issuing Bank (to the extent not reimbursed by the Borrower or the
Guarantors) ratably according to the Lenders' respective Percentages from and
against any and all claims, liabilities, obligations, losses, damages,
penalties, costs, expenses and disbursements of any kind or nature whatsoever
which may be paid by, imposed on, incurred by, or asserted against any of the
Administrative Agent, the Documentation Agent or the Issuing Bank in any way
relating to or arising out of this Agreement, any Note, any Loan Document, any
Letter of Credit, or any other document executed in connection herewith or any
action taken or omitted by any of the Administrative Agent, the
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Documentation Agent or the Issuing Bank under this Agreement, any Note, any
other Loan Document or any other document executed in connection herewith or
therewith, PROVIDED that no Lender shall be liable for any portion of such
claims, liabilities, obligations, losses, damages, penalties, costs, expenses
and disbursements resulting from such Administrative Agent's, Documentation
Agent's or Issuing Bank's gross negligence or wilful misconduct. Without
limiting the generality of the foregoing, each Lender agrees to reimburse each
of the Administrative Agent, the Documentation Agent and the Issuing Bank
promptly upon demand for its ratable share of any out-of-pocket expenses
(including reasonable counsel fees) incurred by any of the Administrative Agent,
the Documentation Agent or the Issuing Bank under, or in the enforcement of, or
for legal advice in respect of rights or responsibilities under, this Agreement,
any Note, any other Loan Document or any other document executed in connection
herewith or therewith to the extent that the Administrative Agent, the
Documentation Agent and the Issuing Bank are not reimbursed for such expenses by
the Borrower or any Guarantor PROVIDED that no Lender shall be liable for any
such expenses resulting from the Administrative Agent's, the Documentation
Agent's or the Issuing Bank's gross negligence or wilful misconduct. If any
indemnity furnished to any of the Administrative Agent, the Documentation Agent
or the Issuing Bank for any purpose shall, in the opinion of such Administrative
Agent, such Documentation Agent or such Issuing Bank, be insufficient or become
impaired, such Administrative Agent, Documentation Agent or such Issuing Bank
may call for additional indemnity and not commence or cease to do the acts
indemnified against until such additional indemnity is furnished.
SECTION 13.4 ACTION ON INSTRUCTIONS OF THE REQUIRED LENDERS. As to any
matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes), neither the Administrative
Agent, the Documentation Agent nor the Issuing Bank shall be required to
exercise any discretion or take any action, but the Administrative Agent, the
Documentation Agent and the Issuing Bank shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders, and such instructions
shall be binding upon the Lenders (including, without limitation, all subsequent
holders of the Notes); PROVIDED, HOWEVER, that neither the Administrative Agent,
the Documentation Agent nor the Issuing Bank shall be required to take any
action which exposes the Administrative Agent, the Documentation Agent or the
Issuing Bank to personal liability or which is contrary to this Agreement, any
Loan Document or applicable law; PROVIDED, FURTHER, HOWEVER, that neither the
Administrative Agent, the Documentation Agent nor the Issuing Bank shall be
required to do any act hereunder or under any Loan Document or any other
document or instrument delivered hereunder or in connection herewith or take any
action toward the execution or enforcement of the agency hereby created, or to
prosecute or defend any suit in respect of this Agreement, any Loan Document,
any Letter of Credit or the Notes or any collateral security, unless the
Administrative Agent, the Documentation Agent and the Issuing Bank are fully and
specifically indemnified to their satisfaction by the Lenders against any and
all claims, liabilities, obligations, losses, damages, penalties, costs,
disbursements
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and expenses of any kind or nature whatsoever relating to or arising out of such
action (other than any portions of such claims, liabilities, obligations,
losses, damages, penalties, costs, disbursements and expenses resulting from
such Administrative Agent's, Documentation Agent's or Issuing Bank's gross
negligence or wilful misconduct). The relationship between the Administrative
Agent, the Documentation Agent and the Issuing Bank on the one hand and the
Lenders on the other hand is and shall be that of agent and principal only and
nothing herein contained shall be construed to constitute the Administrative
Agent, the Documentation Agent or the Issuing Bank a trustee for any holder of a
Note or of a participation therein or in a Letter of Credit nor to impose on the
Administrative Agent, the Documentation Agent or the Issuing Bank duties and
obligations other than those expressly provided for herein.
SECTION 13.5 EXCULPATION. Neither the Administrative Agent nor the
Documentation Agent nor any of their respective directors, officers, employees
or agents shall (i) be responsible to the Lenders for any recitals,
representations or warranties contained in, or for the execution, validity,
genuineness, effectiveness or enforceability of this Agreement, any Note, any
Loan Document or any other instrument or document delivered hereunder or in
connection herewith, (ii) be responsible for the validity, genuineness,
perfection, effectiveness, enforceability, existence, value or enforcement of
any guaranty or collateral security, (iii) be under any duty to inquire into or
pass upon any of the foregoing matters, or to make any inquiry concerning the
performance by the Borrower or any other Obligor of its obligations, or (iv) in
any event, be liable as such for any action taken or omitted by it or them,
except for its or their own gross negligence or willful misconduct. The agency
hereby created shall in no way impair or affect any of the rights and powers of,
or impose any duties or obligations upon, the Administrative Agent and the
Documentation Agent in their individual capacity.
SECTION 13.6 EMPLOYMENT OF COUNSEL, ETC. The Administrative Agent, the
Documentation Agent and the Issuing Bank may execute any of their respective
duties under this Agreement, any Loan Document and any instrument, agreement or
document executed, issued or delivered pursuant hereto or thereto or in
connection herewith or therewith, by or through employees, agents,
correspondents, confirming banks, and attorneys-in-fact and shall not be
answerable to the Lenders for the default or misconduct of any such employee,
agent, correspondents, confirming banks, or attorney-in-fact selected by it with
reasonable care. The Administrative Agent, the Documentation Agent and the
Issuing Bank shall be entitled to rely on advice of counsel (including counsel
who are the employees of the Administrative Agent, the Documentation Agent and
the Issuing Bank) selected by such Administrative Agent or such Documentation
Agent or such Issuing Bank concerning all matters pertaining to the agency
hereby created and its duties to the Lenders under this Agreement, any Loan
Document and any instrument, agreement or document executed, issued or delivered
pursuant hereto or thereto or in connection herewith or therewith.
SECTION 13.7 RELIANCE ON DOCUMENTS. Each of the Administrative Agent, the
Documentation Agent and the Issuing Bank shall be entitled to rely upon any
notice, consent, waiver, amendment, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper Person or Persons.
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SECTION 13.8 CREDIT INVESTIGATION. Each Lender acknowledges that it has
made such inquiries and taken such care on its own behalf (including, without
limitation, that it had this Agreement, the form of its Note and the Guaranties
and the Security Documents and such other documents or matters as it deemed
appropriate relating hereto and thereto reviewed by its own legal counsel as it
deemed appropriate, and it is satisfied with the form of this Agreement, its
Note and the Security Documents) as would have been the case had the Commitments
hereunder been granted and the Borrowings made and the Letters of Credit issued
directly by such Lender to the Borrower without the intervention of the
Collateral Agent, the Administrative Agent, the Documentation Agent, the Issuing
Bank or any other Lender. Each Lender agrees and acknowledges that neither the
Administrative Agent nor the Documentation Agent nor the Issuing Bank make any
representations or warranties about the creditworthiness of the Borrower, any
Subsidiary, any Guarantor, the Parent Company, Tejas Transok Holding Company or
any other party to this Agreement or with respect to the legality, validity,
sufficiency or enforceability of this Agreement, any Note, any other Loan
Document or the existence or value of any collateral security therefor.
SECTION 13.9 RESIGNATION. Any of the Administrative Agent, the Issuing
Bank, and the Documentation Agent may resign as such at any time upon at least
thirty (30) days prior notice to the Borrower and the Lenders. In the event of
any such resignation of the Administrative Agent, the Borrower, with the consent
of the Documentation Agent, shall as promptly as practicable appoint a successor
agent to the Administrative Agent, which shall be the Documentation Agent. In
the event no such successor is appointed, the Required Lenders shall as promptly
as practicable appoint a successor agent to such resigning Administrative Agent.
In the event no such successor is so appointed within thirty (30) days of any
such notice, any Lender may apply to a court of competent jurisdiction for the
appointment of a successor agent hereunder to such resigning Administrative
Agent. After any retiring Administrative Agent's or Documentation Agent's
resignation hereunder as the Administrative Agent or the Documentation Agent or
the Issuing Bank, the provisions of (i) this ARTICLE XIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Agent or Documentation Agent or the Issuing Bank, as the case may
be, under this Agreement; (ii) SECTION 14.8 shall continue to inure to its
benefit; and ARTICLE II shall continue to inure to the benefit of the Issuing
Bank.
SECTION 13.10 ANNUAL ADMINISTRATIVE AGENCY FEES. The obligations of the
Administrative Agent hereunder are subject to the condition precedent that the
Borrower shall pay to the Administrative Agent on each anniversary date of the
Effective Date until the Obligations of the Borrower are paid in full in same
day or immediately available funds a fee in an amount that has been agreed upon
by the Borrower and the Administrative Agent.
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SECTION 13.11 THE ADMINISTRATIVE AGENT, ISSUING BANK AND DOCUMENTATION
AGENT AS LENDERS. With respect to any Note or other Obligation held or issued by
or owed to it, each of the Issuing Bank, the Documentation Agent and the
Administrative Agent shall have and may exercise the same rights and powers
hereunder, under the Notes and under the other Loan Documents and is subject to
the same obligations and liabilities as and to the extent set forth herein for
any other Lender. The terms "Lenders" or "Required Lenders," or "Majority
Lenders" or any similar terms shall, unless the context clearly otherwise
indicates, include the Issuing Bank, the Administrative Agent and the
Documentation Agent in their individual capacity as a Lender or as the, or one
of the, Required Lenders or Majority Lenders. The Issuing Bank, the
Administrative Agent and the Documentation Agent may lend money to and generally
engage in any kind of banking, trust or other business with the Borrower, the
Parent Company, Tejas Transok Holding Company, any Guarantor, any Subsidiary of
any thereof, or any other Person as if it were not acting pursuant hereto.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.1 NO WAIVER. No delay on the part of the Administrative Agent,
the Documentation Agent, the Issuing Bank or any Lender in the exercise of any
right, power or remedy shall operate as a waiver thereof, nor shall any single
or partial exercise by any of them of any right, power or remedy preclude any
other or further exercise thereof, or the exercise of any other right, power or
remedy.
SECTION 14.2 AMENDMENTS, MODIFICATIONS, WAIVERS AND CONSENTS. No amendment
to, modification or waiver of, or consent with respect to, any provision of this
Agreement or the Notes shall in any event be effective unless the same shall be
in writing and signed and delivered by the Required Lenders or by the
Administrative Agent on behalf of and with the written consent of the Required
Lenders to the Borrower or, as to any provision of this Agreement or the Notes,
which only may be amended by the Lenders, by the Lenders or by the
Administrative Agent on behalf of and with the written consent of the Lenders,
to the Borrower and then any such amendment, modification, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No amendment, modification, waiver or consent (i) shall affect
this sentence, increase the amount of any of the Commitments of the Lenders
hereunder, extend the maturity of any Borrowing, postpone or forgive the payment
of interest thereon, postpone or reduce the fees hereunder (other than fees
payable to the Issuing Bank pursuant to SECTION 4.5(B) and the fees payable to
the Administrative Agent pursuant to SECTION 13.10), reduce the rate of interest
payable with respect to any Borrowing, release any collateral security for any
Obligation (including without limitation any Guaranty), except as otherwise
specifically provided in any Loan Document, or reduce the aggregate percentage
required to effect an amendment, modification, waiver or consent without the
unanimous consent of the Lenders, or (ii) shall extend the maturity of, postpone
or forgive the payment of interest
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on, extend the due date for any scheduled repayment or prepayment of principal
of, or reduce the principal amount of, or rate of interest on, any Borrowing (A)
without the consent of the holder of the Note evidencing such Borrowing in the
case of any such extension, postponement, forgiveness or reduction relating to
Loans or (B) without the consent of the Issuing Bank and all the Lenders in the
case of any such extension, postponement, forgiveness or reduction relating to
Letters of Credit. No provisions of ARTICLE XIII (or of this sentence) shall be
deleted, amended, modified or waived without the consent of the Administrative
Agent, the Issuing Bank and the Documentation Agent. No provisions of SECTION
2.4 (or of this sentence) shall be deleted, amended, modified or waived without
the consent of the Issuing Bank.
SECTION 14.3 CONFIRMATIONS. The Borrower and each holder of a Note agree
from time to time, upon written request received by it from the other, to
confirm to the other in writing the aggregate unpaid principal amount of the
Loans then outstanding under such Note; and each such holder agrees from time to
time, upon written request received by it from the Borrower, to make that Note
held by it (including the schedule attached thereto) available for reasonable
inspection by the Borrower, at the office of such holder.
SECTION 14.4 NOTICES, DEMANDS, INSTRUCTIONS AND OTHER COMMUNICATIONS. All
notices, demands, instructions and other communications required or permitted to
be given to or made upon any party hereto shall be in writing and shall be
personally delivered or sent by registered or certified mail, postage prepaid,
return receipt requested, or by telecopier; PROVIDED, HOWEVER that no Borrowing
Request and no conversion notice pursuant to ARTICLE VI shall become effective
until actually received by the Administrative Agent and no Issuance Request
shall become effective until actually received by the Issuing Bank, and shall be
deemed to be given for purposes of this Agreement on the day that such writing
is delivered or sent to the intended recipient thereof in accordance with the
provisions of this SECTION 14.4. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this SECTION 14.4,
notices, demands, instructions and other communications shall be given to or
made upon the respective parties hereto at their respective addresses (or to
their respective telecopier numbers) indicated on SCHEDULE I, or as set forth in
the relevant Assignment and Acceptance, as the case may be.
SECTION 14.5 ACCOUNTING TERMS AND COMPUTATIONS. Wherever any accounting
term shall be used herein or in any other Loan Document, or the character or
amount of any asset or liability or item of income or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made, for the purposes of this Agreement and each other Loan Document, such
accounting term, such determination or such computation shall, to the extent
applicable and except as otherwise specified in this Agreement or such other
Loan Document, be defined or made (as the case may be) in accordance with
generally accepted accounting principles ("GAAP") applied (in the case of
determinations or computations) on a basis consistent with those in effect at
the time of such determination or computation. In the event any changes in GAAP
after the Effective Date would materially affect the calculation of the
financial
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covenants in SECTION 9.4 or Consolidated Stockholders' Equity, the Borrower and
the Lenders agree to enter into good faith negotiations for an agreement to
revise such financial covenants or the definitions of "CONSOLIDATED
STOCKHOLDERS' EQUITY" or "STOCKHOLDER'S EQUITY" to take into account such
changes in GAAP; PROVIDED that until the Borrower and the Lenders have entered
into such an agreement, such financial calculations shall continue to be made in
accordance with GAAP as in effect immediately prior to such change.
SECTION 14.6 SALES AND TRANSFERS, ETC., OF BORROWINGS AND NOTES;
PARTICIPATIONS IN BORROWINGS AND NOTES.
(a) Any Lender may at any time sell to one or more banks or other
entities (other than a direct competitor of the Borrower or
any of its Subsidiaries or a person engaged as one of its
principal activities in the Hydrocarbons transportation,
marketing or storage business ("PARTICIPANTS")) participating
interests in any Borrowing owing to such Lender, any Note held
by such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder, PROVIDED that no Lender may
sell any participating interests in any such Borrowing, Note,
Commitment or other interest hereunder without also selling to
such Participant the appropriate PRO RATA share of such
Borrowings, Notes, Commitments and other interests hereunder
and the appropriate PRO RATA share of the A-Notes, the
Lessor's A-Invested Amount, the B-Notes and the Lessor's
B-Invested Amount under the Operative Documents and the
Operative Loan Documents (as defined in the Operative
Documents), and PROVIDED FURTHER that no Lender shall
transfer, grant or assign any participation under which the
participant shall have rights to approve any amendment to or
waiver of this Agreement except to the extent such amendment
or waiver would (i) increase the amount of such Lender's
Commitment, (ii) reduce the principal of, or interest on, any
of such Lender's Borrowings, or any fees payable to such
Lender hereunder, (iii) postpone any date fixed for any
scheduled payment of principal of, or interest on, any of such
Lender's Borrowings, or any fees or other amounts payable to
such Lender hereunder or (iv) release all or substantially all
collateral security for any Obligation (including, without
limitation, any Guaranty), except as otherwise specifically
provided in any Loan Document. In the event of any such sale
by a Lender of participating interests to a Participant, such
Lender's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall
remain solely responsible for the performance thereof, such
Lender shall remain the holder of any such Note for all
purposes under this Agreement and the Borrower, the
Administrative Agent and the Documentation Agent shall
continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under
this
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Agreement. The Borrower agrees that if amounts outstanding
under this Agreement and the Notes are due and unpaid, or
shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement
and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender
under this Agreement or any Note; PROVIDED that such right of
setoff shall be subject to the obligation of such Participant
to share with the Lenders, and the Lenders agree to share with
such Participant, as provided in SECTION 7.2. The Borrower
also agrees that each Participant shall be entitled to the
benefits of SECTIONS 2.6, 4.9, 4.12 and 4.14 with respect to
its participation in the Commitments and the Borrowings
outstanding from time to time; PROVIDED that no Participant
shall be entitled to receive any greater amount pursuant to
such Sections than the transferor Lender would have been
entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such
Participant had no such transfer occurred.
(b) Any Lender may at any time sell to any Lender or any affiliate
thereof, and, with the consent of the Administrative Agent and
the Issuing Bank and the Borrower (which shall not be
unreasonably withheld or delayed), to one or more banks or
financial institutions ("PURCHASING LENDERS") all or any part
of its rights and obligations under this Agreement, the Notes
and the other Loan Documents, pursuant to an Assignment and
Acceptance in the form attached as EXHIBIT 14.6 hereto,
executed by such Purchasing Lender, such transferor Lender
(and, in the case of a Purchasing Lender which is not then a
Lender or an affiliate thereof, consented to by the Borrower
and the Administrative Agent and the Issuing Bank) and the
Administrative Agent and delivered to the Administrative
Agent; PROVIDED that each such sale to a Purchasing Lender
shall be in an amount of $5,000,000 or more; and PROVIDED,
FURTHER, that no Lender may sell any Loans to a Purchasing
Lender without also selling to such Purchasing Lender the
appropriate PRO RATA share of its Borrowings and
participations in Letters of Credit hereunder and its
Commitments hereunder and the appropriate PRO RATA share of
the A-Notes, the Lessor's A-Invested Amount, the B-Notes and
the Lessor's B-Invested Amount under the Operative Documents
and the Operative Loan Documents (as defined in the Operative
Documents. Upon such execution, delivery and acceptance, from
and after the Transfer Effective Date determined pursuant to
such Assignment and Acceptance (x) the Purchasing Lender
thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and under the other Loan
Documents
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with a Commitment as set forth therein and (y) the transferor
Lender thereunder shall, to the extent provided in such
Assignment and Acceptance be released from its obligations
under this Agreement and under the other Loan Documents (and,
in the case of an Assignment and Acceptance covering all or
the remaining portion of a transferor Lender's rights and
obligations under this Agreement and under the other Loan
Documents, such transferor Lender shall cease to be a party
hereto). Such Assignment and Acceptance shall be deemed to
amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Lender
and the resulting adjustment of Commitments and Percentages
arising from the purchase by such Purchasing Lender of all or
a portion of the rights and obligations of such transferor
Lender under this Agreement, the Notes and the other Loan
Documents. On or prior to the Transfer Effective Date
determined pursuant to such Assignment and Acceptance, the
Borrower at its own expense, shall execute and deliver to the
Administrative Agent in exchange for any surrendered Note, a
new Note to the order of such Purchasing Lender in an amount
equal to the Commitments assumed by it pursuant to such
Assignment and Acceptance, and, if the transferor Lender has
retained a Commitment or Borrowing hereunder, a new Note to
the order of the transferor Lender in an amount equal to the
Commitments or Borrowings retained by it hereunder. Such new
Notes shall be dated the Initial Borrowing Date and shall
otherwise be in the form of the Notes replaced thereby. The
Notes surrendered by the transferor Lender shall be returned
by the Administrative Agent to the Borrower marked
"cancelled."
(c) Upon its receipt of an Assignment and Acceptance executed by a
transferor Lender and a Purchasing Lender (and, in the case of
a Purchasing Lender that is not then a Lender or an affiliate
thereof, consented to by the Borrower, the Administrative
Agent and the Issuing Bank (if the consent of the Borrower and
the Administrative Agent and the Issuing Bank is required))
and the Administrative Agent, together with payment to the
Administrative Agent hereunder of a registration and
processing fee of $2,500 and to the Administrative Agent (as
defined in the Participation Agreement) the registration and
processing fee referred to in Section 6.3 of the Participation
Agreement (provided, a Lender being replaced pursuant to
SECTION 4.15 shall have no obligation to pay such registration
and processing fees), the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the
Transfer Effective Date determined pursuant thereto give
notice of such acceptance and recordation to the Lenders and
the Borrower.
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(d) The provisions of the foregoing CLAUSES (B) and (C) shall not
apply to or restrict, or require the consent of or any notice
to any Person to effectuate, the pledge or assignment by any
Lender of its rights under this Agreement and its Notes to any
Federal Reserve Bank.
(e) If, pursuant to this SECTION 14.6 any interest in this
Agreement or any Note is transferred to any transferee (a
"TRANSFEREE") which is organized under the laws of any
jurisdiction other than the United States or any State
thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, (i) to
represent to the transferor Lender (for the benefit of the
transferor Lender, the Administrative Agent, the Issuing Bank,
the Documentation Agent and the Borrower) that under
applicable law and treaties no taxes will be required to be
withheld by the Administrative Agent, the Borrower or the
transferor Lender with respect to any payments to be made to
such Transferee in respect of the Loans or Letters of Credit,
(ii) to furnish to the transferor Lender (and, in the case of
any Purchasing Lender, the Administrative Agent, the Issuing
Bank, the Documentation Agent and the Borrower) either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 (wherein such Transferee claims entitlement
to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) to agree (for the
benefit of the transferor Lender, the Administrative Agent,
the Issuing Bank, the Documentation Agent and the Borrower) to
provide the transferor Lender (and, in the case of any
Purchasing Lender, the Administrative Agent, the Issuing Bank,
the Documentation Agent and the Borrower) a new Form 4224 or
Form 1001 upon the expiration or obsolescence of any
previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such Transferee, and
to comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.
SECTION 14.7 PAYMENT OF COSTS, EXPENSES AND TAXES. The Borrower agrees to
pay on demand all reasonable out-of-pocket costs and expenses of the
Administrative Agent, the Collateral Agent, the Issuing Bank and the
Documentation Agent (including, without limitation, the reasonable fees and
out-of-pocket expenses of Messrs. Mayer, Brown & Platt, and any and all other
special counsel for the Agents, and of local counsel, if any, who may be
retained by said special counsel) in connection with (i) the preparation,
negotiation, execution, delivery, syndication and administration of this
Agreement, the Notes, the Guaranties, the Security Documents, and all other
instruments or documents provided for herein or delivered or to be delivered
hereunder or in connection herewith, (ii) the preparation, negotiation,
execution and delivery of any and all amendments, supplements, renewals,
restatements, rearrangements, extensions,
88
substitutions, or modifications to this Agreement, the Notes, the Guaranties,
the Security Documents, and all other instruments or documents provided for
herein or delivered or to be delivered hereunder or in connection herewith
except for those (excluding the preparation of new Notes) incurred in connection
with SECTION 14.6 unless such sale, assignment, or transfer under SECTION 14.6
results from the exercise of Borrower's rights under SECTION 4.15, and (iii) the
enforcement by the Lenders, the Administrative Agent, the Issuing Bank, the
Collateral Agent and the Documentation Agent of, or the protection of rights
under, this Agreement, the Notes, the Guaranties, the Security Documents, any
such other instruments or documents or any collateral security. The
Administrative Agent, the Collateral Agent, each Lender, the Issuing Bank and
the Documentation Agent agree to the extent feasible, and to the extent a
conflict of interest does not exist in the reasonable opinion of the
Administrative Agent, any Lender, the Collateral Agent, the Issuing Bank, the
Documentation Agent or their counsel, to use the same single counsel (i.e. one
law firm) in connection with the foregoing, to the extent they seek
reimbursement for the expenses thereof from the Borrower. Such requests for
payment shall be accompanied by invoices containing reasonable details. Each
Lender agrees to reimburse each of the Administrative Agent, the Collateral
Agent, the Issuing Bank and the Documentation Agent on demand for such Lender's
PRO RATA share (based upon its respective Percentage) of any such costs or
expenses not paid by the Borrower. In addition, the Borrower agrees to pay, and
to save the Administrative Agent, the Collateral Agent and the Documentation
Agent and the Lenders harmless from all liability for, any stamp or other taxes
which may be payable in connection with the execution or delivery of this
Agreement, the Borrowings hereunder, or the issuance of the Notes, the Letters
of Credit, or of any other instruments or documents provided for herein or
delivered or to be delivered hereunder or in connection herewith. All
obligations provided for in this SECTION 14.7, in the last paragraph of SECTION
2.4.2 and in SECTION 2.6, SECTION 4.9, SECTION 4.10, SECTION 4.12, SECTION 4.14
and SECTION 14.8 shall survive any termination of this Agreement. The
representations and warranties made by the Borrower in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.
SECTION 14.8 INDEMNIFICATION PROVISIONS. IN CONSIDERATION OF THE EXECUTION
AND DELIVERY OF THIS AGREEMENT BY THE ADMINISTRATIVE AGENT, THE COLLATERAL
AGENT, THE ISSUING BANK AND THE DOCUMENTATION AGENT AND EACH LENDER, THE
BORROWER HEREBY AGREES TO INDEMNIFY EACH OF THE ADMINISTRATIVE AGENT, THE
COLLATERAL AGENT, THE ISSUING BANK AND THE DOCUMENTATION AGENT AND EACH LENDER
AND THEIR RESPECTIVE DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES (COLLECTIVELY,
THE "INDEMNIFIED PARTIES") FROM AND AGAINST ANY AND ALL SUITS, LOSSES,
LIABILITIES, CLAIMS AND DAMAGES, AND EXPENSES INCURRED BY ANY OF THE INDEMNIFIED
PARTIES RELATING TO, ARISING OUT OF OR BY REASON OF (I) ANY INVESTIGATION,
LITIGATION OR OTHER PROCEEDING RELATED TO ANY USE MADE OR PROPOSED TO BE MADE BY
THE BORROWER OF THE PROCEEDS OF THE BORROWINGS, OR ANY TRANSACTION FINANCED OR
TO BE FINANCED IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY WITH THE PROCEEDS OF
ANY BORROWING, (II) THE ENTERING INTO AND PERFORMANCE OF THIS AGREEMENT AND ANY
OTHER LOAN DOCUMENT BY ANY OF THE INDEMNIFIED PARTIES (OTHER THAN EXPENSES OF
THE TYPE FOR WHICH THE BORROWER AGREES TO REIMBURSE PURSUANT TO SECTION 14.7),
(III) ANY INVESTIGATION, LITIGATION OR PROCEEDING RELATED TO ANY ENVIRONMENTAL
CLEANUP, AUDIT,
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COMPLIANCE OR OTHER MATTER RELATING TO ANY ENVIRONMENTAL LAW OR THE CONDITION OF
ANY FACILITY OR PROPERTY OWNED, LEASED OR OPERATED BY THE BORROWER, ANY OF ITS
SUBSIDIARIES, OR (IV) THE PRESENCE ON OR UNDER, OR THE ESCAPE, SEEPAGE,
LEAKAGE, SPILLAGE, DISCHARGE, EMISSION, DISCHARGING OR RELEASES FROM, ANY
FACILITY OR PROPERTY OWNED, LEASED OR OPERATED BY THE BORROWER, ANY SUBSIDIARY
THEREOF OF ANY HAZARDOUS MATERIAL (INCLUDING, WITHOUT LIMITATION, ANY LOSSES,
LIABILITIES, DAMAGES, INJURIES, COSTS, EXPENSES OR CLAIMS ASSERTED OR ARISING
UNDER ANY ENVIRONMENTAL LAW), REGARDLESS OF WHETHER CAUSED BY, OR WITHIN THE
CONTROL OF, THE BORROWER OR SUCH SUBSIDIARY (BUT EXCLUDING ANY SUCH LOSSES,
LIABILITIES, CLAIMS, DAMAGES OR EXPENSES TO THE EXTENT THEY RESULTED FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY OR OF ITS
RESPECTIVE DIRECTORS, OFFICERS, AGENTS OR EMPLOYEES OR RESULTED FROM SUCH
INDEMNIFIED PARTY'S OWN UNEXCUSED BREACH OF ANY MATERIAL PROVISION OF ANY LOAN
DOCUMENT), PROVIDED THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT THE
INDEMNIFIED PARTIES BE INDEMNIFIED IN THE CASE OF THEIR OWN NEGLIGENCE. IF AND
TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY BE UNENFORCEABLE FOR ANY
REASON, THE BORROWER HEREBY AGREES, TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND SATISFACTION
OF EACH OF SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES, EXPENSES, FEES AND
DISBURSEMENTS WHICH IS PERMISSIBLE UNDER APPLICABLE LAW. THE COLLATERAL AGENT,
THE ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT, THE ISSUING BANK AND EACH
LENDER AGREE TO THE EXTENT FEASIBLE, AND TO THE EXTENT A CONFLICT OF INTEREST
DOES NOT EXIST IN THE REASONABLE OPINION OF ANY OF THE COLLATERAL AGENT, THE
ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT, THE ISSUING BANK OR ANY LENDER OR
THEIR COUNSEL, TO USE THE SAME SINGLE COUNSEL (I.E. ONE LAW FIRM) IN CONNECTION
WITH ANY SUCH INVESTIGATION, LITIGATION OR OTHER PROCEEDING. ALL OBLIGATIONS
PROVIDED FOR IN THIS SECTION 14.8 SHALL SURVIVE ANY TERMINATION OF THIS
AGREEMENT, THE PAYMENT OF THE OBLIGATIONS AND THE ASSIGNMENT OF THE NOTES.
SECTION 14.9 SUBSIDIARY REFERENCES. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the Borrower has
one or more Subsidiaries.
SECTION 14.10 SECTION CAPTIONS AND TABLE OF CONTENTS. Section captions
used in, and the Table of Contents to, this Agreement are for convenience of
reference only, and shall not affect the construction of this Agreement.
SECTION 14.11 GOVERNING LAW. THIS AGREEMENT AND EACH NOTE SHALL BE DEEMED
TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID
STATE. All obligations of the Borrower and rights of the Collateral Agent, the
Administrative Agent, the Issuing Bank, the Documentation Agent, the Lenders and
any other holders of the Notes expressed herein or in the Notes shall be in
addition to and not in limitation of those provided by applicable law.
SECTION 14.12 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by the different parties on separate
counterparts, and each such
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counterpart shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Agreement.
SECTION 14.13 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the Borrower, the Lenders, the Administrative Agent and the Documentation Agent
and their respective successors and assigns, and shall inure to the benefit of
the Borrower, the Lenders, the Collateral Agent, the Administrative Agent, the
Issuing Bank and the Documentation Agent and the respective successors and
assigns of the Lenders, the Collateral Agent, the Administrative Agent, the
Issuing Bank and the Documentation Agent; PROVIDED, HOWEVER, that the Borrower
may not assign or transfer its rights or obligations hereunder without the prior
written consent of all Lenders; PROVIDED FURTHER, however, that for purposes of
this SECTION 14.13 if the survivor of such a merger is obligated in respect of
all Obligations of the Borrower hereunder and under all other Loan Documents, a
merger permitted pursuant to SECTION 9.3.6 hereof shall not be an assignment or
transfer of the Borrower's rights or obligations hereunder.
SECTION 14.14 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR
UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 14.15 FORUM SELECTION AND CONSENT TO JURISDICTION. TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF THE DOCUMENTATION AGENT, THE ADMINISTRATIVE AGENT, THE ISSUING
BANK, THE COLLATERAL AGENT, THE LENDERS OR THE BORROWER SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER,
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY OBLIGOR, COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT THE COLLATERAL AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH OBLIGOR, COLLATERAL OR OTHER PROPERTY MAY BE FOUND. TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER HEREBY EXPRESSLY
AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
TO THE FULLEST EXTENT
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PERMITTED BY APPLICABLE LAW, THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS, BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF NEW YORK. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
SECTION 14.16 SEVERABILITY. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 14.17 CONFIDENTIALITY. Each Lender agrees that it will use
reasonable efforts not to disclose without the prior written consent of the
Borrower (other than to its employees, affiliates, auditors or counsel or to any
other party hereto) any information with respect to the Borrower, any of its
Subsidiaries, or the Parent Company or any of its Subsidiaries which is
furnished pursuant to this Agreement or any other agreement executed pursuant
hereto and which is clearly designated by the Borrower to each Lender in writing
as confidential, PROVIDED that the foregoing shall not apply to, and each Lender
may disclose any such information, (a) as has become generally available to the
public, (b) to any of its examiners or as may be required or appropriate in any
report, statement or testimony submitted to any municipal, state or Federal
regulatory body having or claiming to have jurisdiction over such Lender or to
the Federal Reserve Board or the Federal Deposit Insurance Corporation or
similar organizations (whether in the United States or elsewhere) or their
successors, (c) as may be required or appropriate in response to any summons or
subpoena or in connection with any litigation, (d) in order to comply with any
law, order, regulation or ruling applicable to such Lender, (e) to the
prospective Transferee, Participant, or Purchasing Lender, in connection with
any contemplated transfer of any of the Notes or any interest therein by such
Lender, PROVIDED, that such prospective Transferee, Participant, or Purchasing
Lender (other than an affiliate of such Lender) executes an agreement with the
Borrower containing provisions substantially identical to those
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contained in this SECTION 14.17, (f) with the prior written authorization of the
Borrower, (g) received by such Lender prior to the Closing Date or already known
by, or in the possession of such Lender without restrictions on the disclosure
thereof at the time such information was received by the Lender (it being
acknowledged by each of the Lenders that all information received from the
Parent Company, any Subsidiary thereof, or the Borrower prior to the Closing
Date was confidential) or (h) in connection with the exercise of any remedies by
any Lender, the Administrative Agent, the Issuing Bank, the Documentation Agent
or the Collateral Agent. Each Lender further agrees that it will use its
reasonable efforts to advise the Borrower, as promptly as practicable, of any
disclosure of information clearly designated by the Borrower to each Lender in
writing as confidential made by such Lender pursuant to CLAUSE (C) of this
SECTION 14.17; PROVIDED, HOWEVER, that the foregoing notwithstanding, such
Lender shall have no obligation to notify the Borrower of any such disclosure
pursuant to such CLAUSE (C) or otherwise and failure to give such notification
shall not give rise to a claim against such Lender.
SECTION 14.18 NOTICE. THIS WRITTEN AGREEMENT TOGETHER WITH THE OTHER LOAN
DOCUMENTS 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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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
TRANSOK ACQUISITION COMPANY
By: /s/ CHRIS TONG
Name: Chris Tong
Title:Vice President - Finance
BANK OF MONTREAL, HOUSTON AGENCY,
as Administrative Agent and as a Lender
By: /s/ DONALD G. WARMINGTON
Name: Donald G. Warmington
Title: Director
CANADIAN IMPERIAL BANK OF COMMERCE,
as Documentation Agent and as a Lender
By:
Name:
Title:
EXHIBIT 10.5A
GUARANTY
THIS GUARANTY (this "GUARANTY"), dated as of June 6, 1996, made by TEJAS
GAS CORPORATION, a Delaware corporation (the "GUARANTOR"), in favor of each of
the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Secured Credit Agreement, dated as of June 6, 1996
(together with all amendments and other modifications, if any, from time to time
thereafter made thereto, the "SECURED CREDIT AGREEMENT" or the "CREDIT
AGREEMENT"), among TRANSOK ACQUISITION COMPANY, a Delaware corporation (the
"BORROWER"), the various financial institutions (individually a "LENDER" and
collectively the "LENDERS") as are, or may from time to time become, parties
thereto, BANK OF MONTREAL, acting through certain of its U.S. branches or
agencies ("BMO"), as administrative agent (in such capacity, together with any
successor(s) thereto in such capacity, the "ADMINISTRATIVE AGENT") for the
Lenders, Canadian Imperial Bank of Commerce, as documentation agent for the
Lenders (in such capacity together with any successor(s) thereto in such
capacity the "DOCUMENTATION AGENT)" the Lenders have extended Commitments to
make Borrowings to the Borrower; and
WHEREAS, as a condition precedent to the making of the initial Borrowings
under the Credit Agreement, the Guarantor is required to execute and deliver
this Guaranty; and
WHEREAS, the Guarantor has duly authorized the execution,
delivery and performance of this Guaranty; and
WHEREAS, the Borrower is a wholly-owned subsidiary of the
Guarantor; and
WHEREAS, it is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Borrowings made from time to time to the Borrower by the
Lenders pursuant to the Secured Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Borrowings
(including the initial Borrowings) to the Borrower pursuant to the Credit
Agreement, the Guarantor agrees, for the benefit of each Lender Party, as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"ADMINISTRATIVE AGENT" is defined in the FIRST RECITAL.
"BMO" is defined in the FIRST RECITAL.
"BORROWER" is defined in the FIRST RECITAL.
"CIBC" is defined in the FIRST RECITAL.
"GUARANTOR" is defined in the PREAMBLE.
"GUARANTY" is defined in the PREAMBLE.
"LENDER" is defined in the FIRST RECITAL.
"LENDER PARTY" means, as the context may require, any Lender, the
Administrative Agent, the Documentation Agent, the Issuing Bank, or the
Collateral Agent and each of their respective
successors, transferees and assigns.
"LENDERS" is defined in the FIRST RECITAL.
"OBLIGOR" means the Borrower, any Subsidiary of the Borrower that may from
time to time execute and deliver a Guaranty pursuant to the Credit Agreement, or
any other Person (other than any Lender Party) obligated under any Loan
Document.
"NET WORTH" means the consolidated net worth of the Guarantor
and its Subsidiaries.
"SECURED CREDIT AGREEMENT" is defined in the FIRST RECITAL.
"TAHC CREDIT AGREEMENT" means the Amended and Restated Secured Credit
Agreement among Tejas-Acadian Holding Company dated as of January 12, 1995 among
Tejas-Acadian Holding Company, certain lending institutions, the Co-Agents
parties thereto and Canadian Imperial Bank of Commerce, as Administrative Agent,
as amended.
"U.C.C." means the Uniform Commercial Code as in effect in the State of
New York, as the same may be amended from time to time.
SECTION 1.2. SECURED CREDIT AGREEMENT DEFINITIONS. Unless otherwise
defined herein or the context otherwise requires, terms used in this Guaranty,
including its preamble and recitals, have the meanings provided in the Secured
Credit Agreement.
2
SECTION 1.3. U.C.C. DEFINITIONS. Unless otherwise
defined herein or the context otherwise requires, terms for which
meanings are provided in the U.C.C. are used in this Guaranty,
including its preamble and recitals, with such meanings.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1. GUARANTY. The Guarantor hereby absolutely,
unconditionally and irrevocably guarantees the full and prompt
payment when due, whether by acceleration or otherwise, and at all
times thereafter, of
(i) all obligations of the Borrower to the Lenders, the Issuing
Bank, the Administrative Agent and the Documentation Agent, howsoever
created, arising or evidenced, whether direct or indirect, primary or
secondary, absolute or contingent, joint or several, or now or hereafter
existing or due or to become due, including, without limitation, all such
amounts which would become due but for the operation of the automatic stay
under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. ss.
362(a), and the operation of Sections 502(b) and 506(b) of such Bankruptcy
Code, 11 U.S.C. ss. 502(b) and ss. 506(b), under and in connection with
the Secured Credit Agreement, including, without limitation, all
obligations of the Borrower under (a) its Notes (as defined in the Secured
Credit Agreement) (herein, as amended, extended, modified, rearranged,
and/or supplemented from time to time, together with any notes given in
extension, renewal, replacement, rearrangement, modification and/or
substitution therefor, collectively called the "NOTES" and individually
called a "NOTE") and (b) the Security Documents (as defined in the Secured
Credit Agreement) excluding any and all Obligations of the Borrower or any
successor thereto or any Subsidiary with respect to the Medium Term Notes,
(ii) all amounts payable by the Borrower under or with respect to any
Hedging Obligations (as defined in the Secured Credit Agreement) entered
into with any counterparty or counterparties who, at the time such Hedging
Obligation was entered into, was a Lender or an affiliate of a Lender
(individually a "HEDGING AFFILIATE" and collectively the "HEDGING
AFFILIATES") and all fees and expenses thereunder (all of the obligations
and liabilities described in the preceding clauses (i) - (ii) being herein
collectively called the "LIABILITIES"), and the undersigned further agrees
to pay all reasonable expenses (including reasonable attorneys' fees and
legal expenses) paid or incurred by the Collateral Agent or the
Documentation Agent (subject to the terms of Section 14.7 of the Secured
Credit Agreement) in endeavoring to collect the Liabilities, or any part
thereof, and in enforcing this guaranty.
3
This Guaranty constitutes a guaranty of payment when due and not of collection,
and the Guarantor specifically agrees that it shall not be necessary or required
that any Lender Party or any holder of any Note exercise any right, assert any
claim or demand or enforce any remedy whatsoever against the Borrower or any
other Obligor (or any other Person) before or as a condition to the obligations
of the Guarantor hereunder. Any amounts received by the Collateral Agent, the
Administrative Agent, the Documentation Agent, any Lender or any Hedging
Affiliate from whatsoever source on account of the Liabilities may be applied by
it toward the payment of such of the Liabilities, and in such order of
application, as the Collateral Agent, the Administrative Agent, the
Documentation Agent, any Lender or any Hedging Affiliate may from time to time
elect.
SECTION 2.2. ACCELERATION OF GUARANTY. The Guarantor agrees that, in the
event of the dissolution or insolvency of the Borrower or the Guarantor, or the
inability or failure of the Borrower or the Guarantor to pay debts as they
become due, or an assignment by the Borrower or the Guarantor for the benefit of
creditors, or the commencement of any case or proceeding in respect of the
Borrower or the Guarantor under any bankruptcy, insolvency or similar laws, and
if such event shall occur at a time when any of the Liabilities may not then be
due and payable, the Guarantor will pay to the Lender Parties forthwith the full
amount which would be payable hereunder by the Guarantor if all such Liabilities
were then due and payable.
SECTION 2.3. GUARANTY ABSOLUTE, ETC. This guaranty shall in all respects
be a continuing, absolute and unconditional guaranty, and shall remain in full
force and effect (notwithstanding, without limitation, the dissolution of the
undersigned or that at any time or from time to time all Liabilities may have
been paid in full), until all Liabilities (including any extensions,
modifications, rearrangements, substitutions, supplements or renewals of any
thereof) and all interest thereon and all reasonable expenses (including
reasonable attorneys' fees and legal expenses) paid or incurred by the
Collateral Agent, the Administrative Agent and the Documentation Agent (subject
to the terms and provisions of Section 14.7 of the Secured Credit Agreement) in
endeavoring to collect the Liabilities and in enforcing this guaranty shall have
been finally paid in full and all Commitments (as defined in the Secured Credit
Agreement) have been permanently terminated. Once the Liabilities have been paid
in full, all obligations of the Guarantor hereunder shall have been paid in full
and all Commitments shall have been terminated, this Guaranty shall terminate
except for the provisions hereof which by their terms expressly survive
termination. The Guarantor guarantees that the Obligations of the Borrower and
each other Obligor with respect to the Liabilities will be paid strictly in
accordance with the terms of the Secured Credit Agreement and each other Loan
Document under which they arise, regardless of any law, regulation or order now
or hereafter in effect in any jurisdiction affecting any of such terms or the
rights of any Lender Party or any holder of any Note with respect thereto. The
liability of the
4
Guarantor under this Guaranty shall be absolute, unconditional and irrevocable
irrespective of:
(a) any lack of validity, legality or enforceability of
the Secured Credit Agreement, any Note or any other Loan
Document;
(b) the failure of any Lender Party or any holder of any
Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person
(including any other guarantor) under the provisions of the Secured
Credit Agreement, any Note, any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor of, or collateral securing, any
Obligations of the Borrower or any other Obligor;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower or any other
Obligor, or any other extension, compromise or renewal of any Obligation
of the Borrower or any other Obligor;
(d) any reduction, limitation, impairment or termination of any
Obligations of the Borrower or any other Obligor for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and the Guarantor hereby waives any right to or
claim of) any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or
occurrence affecting, any Obligations of the Borrower, any other Obligor
or otherwise;
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Secured Credit
Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non- perfection of
any collateral, or any amendment to or waiver or release or addition of,
or consent to departure from, any other guaranty, held by any Lender Party
or any holder of any Note securing any of the Obligations of the Borrower
or any other Obligor;
(g) the merger of the Borrower or any of its
Subsidiaries or Affiliates with or into any other Person and
whether or not the Borrower is the surviving Person; or
5
(h) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower,
any other Obligor, any surety or any guarantor.
The Collateral Agent, the Administrative Agent, the Documentation Agent,
any Lender or any Hedging Affiliate may, from time to time, at its sole
discretion and without notice to the undersigned, take any or all of the
following actions: (a) retain or obtain a Lien (as defined in the Secured Credit
Agreement) upon any property to secure any of the Liabilities or any obligation
hereunder (provided, that this clause (a) does not and shall not be deemed to
constitute a grant of, or consent to, a lien or security interest on any
property of the undersigned), (b) retain or obtain the primary or secondary
obligation of any obligor or obligors, in addition to the undersigned, with
respect to any of the Liabilities, (c) extend or renew for one or more periods
(whether or not longer than the original period), alter or exchange any of the
Liabilities, or release or compromise any obligation of the undersigned
hereunder or any obligation of any nature of any other obligor with respect to
any of the Liabilities, (d) release or fail to perfect its lien upon or security
interest in, or impair, surrender, release or permit any substitution or
exchange for, all or any part of any property securing any of the Liabilities or
any obligation hereunder, or extend or renew for one or more periods (whether or
not longer than the original period) or release, compromise, alter or exchange
any obligations of any nature of any obligor with respect to any such property,
and (e) upon the occurrence and during the continuance of an Event of Default or
upon the maturity thereof, as the case may be, resort to the undersigned for
payment of any of the Liabilities, whether or not the Collateral Agent, the
Administrative Agent, the Documentation Agent, any Lender or any Hedging
Affiliate (i) shall have resorted to any property securing any of the
Liabilities or any obligation hereunder or (ii) shall have proceeded against any
other obligor primarily or secondarily obligated with respect to any of the
Liabilities (all of the actions referred to in preceding clauses (i) and (ii)
being hereby expressly waived by the undersigned).
SECTION 2.4. REINSTATEMENT, ETC. The Guarantor agrees that,
notwithstanding the first and second sentences of SECTION 2.3 hereof, if at any
time all or any part of any payment theretofore applied by the Collateral Agent,
the Administrative Agent, the Documentation Agent, the Issuing Bank, any Lender
or any Hedging Affiliate to any of the Liabilities is or must be rescinded or
returned by the Collateral Agent, the Administrative Agent, the Documentation
Agent, the Issuing Bank, a Lender or a Hedging Affiliate for any reason
whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of any Obligor), such Liabilities shall, for the purposes of this
guaranty, to the extent that such payment is or must be rescinded or returned,
be deemed to have continued in existence, notwithstanding such application by
the Collateral Agent, such Administrative Agent, such Documentation Agent, such
Issuing Bank, such Lender or such Hedging Affiliate, and this guaranty shall
continue to be effective or be reinstated,
6
as the case may be, as to such Liabilities, all as though such application by
the Collateral Agent, such Administrative Agent, such Documentation Agent, such
Issuing Bank, such Lender or such Hedging Affiliate had not been made.
SECTION 2.5. WAIVER, ETC. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Guaranty and any
requirement that the Collateral Agent, any other Lender Party or any holder of
any Note protect, secure, perfect or insure any security interest or Lien, or
any property subject thereto, or exhaust any right or take any action against
the Borrower, any other Obligor or any other Person (including any other
guarantor) or entity or any collateral securing the Obligations of the Borrower
or any other Obligor, as the case may be.
SECTION 2.6. WAIVER OF SUBROGATION. The Guarantor hereby irrevocably
waives any claim or other rights which it may now or hereafter acquire against
the Borrower or any other Obligor that arise from the existence, payment,
performance or enforcement of the Guarantor's obligations under this Guaranty or
any other Loan Document, including any right of subrogation, reimbursement,
exoneration, or indemnification, any right to participate in any claim or remedy
of the Lender Parties against the Borrower or any other Obligor or any
collateral which the Collateral Agent or any other Lender Party now has or
hereafter acquires, whether or not such claim, remedy or right arises in equity,
or under contract, statute or common law, including, without limitation, the
right to take or receive from the Borrower or any other Obligor, directly or
indirectly, in cash or other property or by set-off or in any manner, payment or
security on account of such claim or other rights. If any amount shall be paid
to the Guarantor in violation of the preceding sentence and the Obligations of
the Borrower or any other Obligor with respect to the Liabilities shall not have
been paid in full and the Commitments have not been terminated, such amount
shall be deemed to have been paid to the Guarantor for the benefit of, and held
in trust for, the Lender Parties, and shall forthwith be paid to the Lender
Parties to be credited and applied upon the Obligations of the Borrower or any
other Obligor with respect to the Liabilities, whether matured or unmatured. The
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by the Secured Credit Agreement and that
the waiver set forth in this Section is knowingly made in contemplation of such
benefits.
SECTION 2.7. SUCCESSORS, TRANSFEREES AND ASSIGNS; TRANSFERS
OF NOTES, ETC. This Guaranty shall:
(a) be binding upon the Guarantor, and its successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the
Collateral Agent and each other Lender Party.
7
Without limiting the generality of the foregoing CLAUSE (B), each Lender may,
subject to the terms and provisions of Section 14.6 of the Secured Credit
Agreement, from time to time, without notice to the undersigned, assign or
transfer any or all of the Liabilities or any interest therein, and each Lender
and each Hedging Affiliate may from time to time, without notice to the
undersigned, assign or transfer any or all of the Liabilities with respect to
Hedging Obligations or interest therein to any other Hedging Affiliate of such
Lender; and, notwithstanding any such assignment or transfer or any subsequent
assignment or transfer thereof, such Liabilities shall be and remain Liabilities
for the purposes of this guaranty, and each and every immediate and successive
assignee or transferee of any of the Liabilities or of any interest therein
shall, to the extent of the interest of such assignee or transferee in the
Liabilities, be entitled to the benefits of this guaranty to the same extent as
if such assignee or transferee were the transferring Lender or the transferring
Hedging Affiliate; provided, however, that, unless the transferring Lender or
the transferring Hedging Affiliate, as the case may be, shall otherwise consent
in writing, the transferring Lender or the transferring Hedging Affiliate, as
the case may be, shall have an unimpaired right, prior and superior to that of
any such assignee or transferee, to enforce this guaranty, for the benefit of
the transferring Lender or the transferring Hedging Affiliate, as the case may
be, as to those of the Liabilities which the transferring Lender or the
transferring Hedging Affiliate, as the case may be, has not assigned or
transferred; provided, that the provisions of this paragraph do not constitute a
waiver by the undersigned of any restriction, if any, contained in any agreement
under which the Hedging Obligation arose restricting any such assignment or
transfer and provided further that any such assignment or transfer shall be
subject to the limitations and restrictions in Sections 14.7 and 14.17, if
applicable, of the Secured Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES. The Guarantor
hereby represents and warrants unto each Lender Party as set forth
in this Article.
SECTION 3.1.1. ORGANIZATION, ETC. The Guarantor is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation and is duly qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction where, because of the
nature of its activities or properties, such qualification is required and where
the failure so to qualify would have a material adverse effect on the financial
position, business, operations and prospects of the Guarantor.
SECTION 3.1.2. AUTHORIZATION; NO CONFLICT. The execution and
delivery of this Guaranty and the performance by the Guarantor of
8
its obligations under this Guaranty are within the Guarantor's corporate powers,
have been duly authorized by all necessary corporate action, have received all
necessary governmental approval (if any shall be required), and do not and will
not contravene or conflict with any provision of law or of the charter or
by-laws of the Guarantor or of any material agreement binding upon the
Guarantor.
SECTION 3.1.3. VALIDITY AND BINDING NATURE. This Guaranty is the legal,
valid and binding obligation of the Guarantor enforceable against the Guarantor
in accordance with its terms subject as to enforcement only to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and general principles of equity.
SECTION 3.1.4. REPRESENTATION WITH RESPECT TO TRUE AND COMPLETE DISCLOSURE.
To the best of the Guarantor's knowledge and belief, all factual information
heretofore or contemporaneously furnished by or on behalf of the Guarantor, the
Borrower, or any Subsidiary of the Borrower to any Lender Party for purposes of
or in connection with this Guaranty, the Secured Credit Agreement or any
transaction contemplated hereby or thereby is, and all other such factual
information hereafter furnished by or on behalf of the Guarantor, the Borrower,
or any Subsidiary of the Borrower to any Lender Party will be, true and accurate
(taken as a whole) on the date as of which such information is dated or
certified and does not omit any material fact necessary to make such information
(taken as a whole) not misleading at such time.
SECTION 3.1.5. UNCONDITIONAL PURCHASE OBLIGATIONS. Except as permitted by
Section 9.3.10 of the TAHC Credit Agreement and Section 9.3.9 of the Secured
Credit Agreement, neither the Guarantor nor any of the Material Tejas
Subsidiaries has entered into, or is a party to, or has any obligation under,
any material contract for the purchase of materials, supplies or other property
or services, if such contract requires that payment be made by it regardless of
whether or not delivery is ever made of such materials, supplies or other
property or services.
SECTION 3.1.6. PENDING OR THREATENED LITIGATION AND CONTINGENT LIABILITIES.
No litigation (including, without limitation, derivative actions and take-or-pay
actions), arbitration proceedings or governmental proceedings are pending or to
the best knowledge of the Guarantor threatened against the Guarantor which
would, if adversely determined, materially and adversely effect the financial
condition, operations, assets, business, properties or prospects of the
Guarantor (excluding any rulemaking or similar proceedings of general
applicability to natural gas pipelines and any appeal or petition for review
related thereto) or continued operations of the Guarantor, or which purports to
affect the legality, validity or enforceability of this Guaranty, except as
disclosed in the financial statements referred to in Section 3.1.12. The
Guarantor does not have any contingent liabilities that would be material to the
Guarantor that are not
9
provided for or disclosed in the financial statements referred to
in SECTION 3.1.12.
SECTION 3.1.7. EXISTING EMPLOYEE BENEFIT PLANS. Each employee benefit plan
as to which the Guarantor may have any liability complies in all material
respects with all applicable requirements of law and regulations, and (i) no
Reportable Event (as defined in ERISA) has occurred with respect to any such
plan, (ii) there has been no withdrawal from any such plan or steps taken to do
so which has resulted or could result in any material liability for the
Guarantor, (iii) no steps have been taken to terminate any such plan, (iv) no
contribution failure has occurred with respect to any such plan sufficient to
give rise to a Lien under Section 302(f) of ERISA, and (v) no condition exists
or event or transaction has occurred with respect to any such plan which could
result in material liability for the Guarantor.
SECTION 3.1.8. INVESTMENT COMPANY ACT REPRESENTATION. The
Guarantor is not an "investment company" or a company "controlled"
by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 3.1.9. PUBLIC UTILITY HOLDING COMPANY. The Guarantor is not 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", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
SECTION 3.1.10. REGULATION G, T, U AND X. The execution, performance or
delivery by the Guarantor of this Guaranty will not violate Regulation G, T, U
or X. The Guarantor is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying margin stock (within the meaning of Regulation U), and both before and
after giving effect to all of the transactions contemplated herein and by the
Secured Credit Agreement, including, without limitation, the Merger, the
purchases and acquisitions permitted under the Secured Credit Agreement and all
of the transactions contemplated by the Loan Documents, less than 25% of the
assets of the Guarantor consists of Margin Stock.
SECTION 3.1.11. TAXES. The Guarantor has to the best knowledge of the
Guarantor filed all tax returns or extensions and reports required by law to
have been filed by it and has paid all taxes and governmental charges thereby
shown to be owing, except such taxes or charges which are being contested in
good faith by appropriate proceedings and for which adequate reserves shall have
been set aside on its books.
SECTION 3.1.12. FINANCIAL STATEMENTS. The Guarantor's consolidated
financial statements for the year ended December 31, 1995, and the Guarantor's
unaudited consolidated financial statements as at March 31, 1996, copies of
which have been furnished to each Lender, have been prepared in conformity with
GAAP applied on a basis consistent with that of the preceding
10
fiscal year, and present fairly the consolidated financial condition of the
Guarantor and its Subsidiaries as at such date and the results of its
consolidated operations for the period then ended (subject, with respect to the
March 31, 1996 statements, to normal year-end audit adjustments) and since March
31, 1996 there has been no material adverse change in the Guarantor's financial
condition, operations, assets, business, properties or prospects.
SECTION 3.1.13. STATUS OF TITLE TO ASSETS. The representations and
warranties in Section 8.13 of the TAHC Credit Agreement are each true and
correct. The representations and warranties in Section 8.13 of the Secured
Credit Agreement are each true and correct.
SECTION 3.1.14. ENVIRONMENTAL WARRANTIES. The representations
and warranties in Section 8.16 of the TAHC Credit Agreement are
each true and correct. The representations and warranties in
Section 8.16 of the Secured Credit Agreement are each true and
correct.
SECTION 3.1.15. DIVIDEND AND LOAN RESTRICTIONS OF THE MATERIAL
SUBSIDIARIES. None of the Material Tejas Subsidiaries is a party to, or
otherwise subject to any provision contained in, any agreement or instrument
which restricts the ability of such Material Tejas Subsidiary to pay dividends
to, make loans or advances to, or otherwise make distributions or payments to,
the Guarantor, except the restrictions in (i) the TAHC Credit Agreement, (ii)
the Secured Credit Agreement, (iii) the Secured Credit Agreement dated as of
January 12, 1995, among Tejas Natural Gas Company, certain financial
institutions, BMO, CIBC and Citibank, N.A., as co-agents and CIBC as
administrative agent, as amended, (iv) the Transok Guaranty in favor of Lessor
of even date herewith, (v) the Participation Agreement, (vi) the Participation
Agreement dated as of September 15, 1993, as amended as of January 12, 1995,
among Tejas North Pipeline Partnership, State Street Bank and Trust Company of
Connecticut, National Association, as Trustee, 1993 TX Pipeline I Inc., 1993 TX
Pipeline II Inc., 1993 TX Pipeline General Partnership, the financial
institutions named on Schedule 1 thereto, as purchasers and Citibank, N.A., as
administrative agent, (vii) the Parent Guaranty dated as of September 15, 1993,
as amended as of January 12, 1995, from Tejas Gas Corporation, (viii) the TNG
Guaranty dated as of September 15, 1993, as amended as of January 12, 1995 from
Tejas Natural Gas Company, and (ix) the TAC Guaranty.
SECTION 3.1.16. CREDIT AGREEMENT REPRESENTATIONS. The
representations and warranties of the Borrower and each other
Obligor set forth in the Loan Documents are true and correct on and
as of the date hereof.
SECTION 3.1.17. MERGER AGREEMENT. To the best knowledge of
the Guarantor after completion of its and its Subsidiaries' due
diligence in respect of Transok and its Subsidiaries and the
Merger, except for those matters disclosed by the Guarantor in
writing to the Agents pursuant to the Letter to Counsel (as defined
11
in the Secured Credit Agreement) and Exhibit 8.17 of the Secured Credit
Agreement (i) the representations and warranties of the Seller set forth in the
Merger Agreement are true and correct, (ii) the Seller has not defaulted or
breached any of its obligations under the Merger Agreement, and (iii) no
litigation, arbitration, governmental investigation, or proceeding or inquiry
shall be threatened which seeks to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of, the transactions
contemplated by the Merger Agreement.
ARTICLE IV
COVENANTS, ETC.
SECTION 4.1. AFFIRMATIVE COVENANTS. The Guarantor covenants and agrees
that, so long as any portion of the Liabilities shall remain unpaid, or any
Lender shall have any outstanding Commitment, the Guarantor will perform the
obligations set forth in this Section.
SECTION 4.1.1. OWNERSHIP. The Guarantor will own (free and clear of all
Liens and other encumbrances, other than any agreement prohibiting the creation
or assumption of any Lien upon the capital stock of the Borrower and the
Material Subsidiaries) directly or indirectly through any of its Subsidiaries,
100% of the outstanding capital stock or membership interests (including,
without limitation, the outstanding voting stock) of the Borrower and the
Material Subsidiaries provided that minority interests can be sold in Material
Subsidiaries of the Borrower to the extent permitted by the Secured Credit
Agreement.
SECTION 4.1.2. COMPLIANCE WITH BORROWER'S AND EACH OTHER OBLIGORS'
COVENANTS AS TO AFFILIATE TRANSACTIONS. The Guarantor will not permit the
Borrower, or any of its Subsidiaries, to enter into, or cause, suffer or permit
to exist any arrangement or contract with any of their Affiliates (other than
among the Borrower and its Subsidiaries), except in the ordinary course of
business and pursuant to the reasonable requirements of the Borrower's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Borrower or such Subsidiary than the Borrower or such Subsidiary would
obtain in a comparable arms-length transaction.
SECTION 4.1.3. REPORTS, CERTIFICATES AND OTHER INFORMATION.
The Guarantor will furnish to each Lender and each Agent:
(a) AUDIT REPORT. Within one hundred twenty (120) days after the end of
each fiscal year of the Guarantor, a copy of an annual audit report of the
Guarantor, including therein consolidated balance sheets of the Guarantor as of
the end of such fiscal year and consolidated statements of earnings and cash
flow of the Guarantor for such fiscal year, prepared on a consolidated basis in
conformity with GAAP applied on a basis consistent with the audited consolidated
financial statements of the Guarantor as at
12
December 31, 1995, duly certified by independent certified public accountants of
nationally recognized standing selected by the Guarantor.
(b) INTERIM FINANCIAL REPORTS. Within seventy-five (75) days after the end
of the first three fiscal quarters of each fiscal year commencing with the
fiscal quarter ending after the Effective Date, copies of the unaudited
financial statements of the Guarantor and its Subsidiaries, prepared on a
consolidated basis and in the same manner as the audit report referred to in
CLAUSE (A) of this SECTION 4.1.3, signed by a duly authorized financial officer
of the Guarantor and consisting of at least a balance sheet as at the end of
such quarter, statements of cash flows and statements of earnings for such
quarter.
(c) COMPLIANCE CERTIFICATES. Concurrently with the delivery of the reports
described in CLAUSES (A) and (B) of this SECTION 4.1.3 and from time to time
promptly upon the reasonable request by the Lenders, a compliance certificate
duly executed by an authorized financial officer of the Guarantor, containing a
computation of, and showing compliance with, the financial restriction contained
in SECTION 4.1.5, such computation to be made as of the end of the immediately
preceding fiscal year if furnished concurrently with the report described in
CLAUSE (A) of this SECTION 4.1.3, and as of the end of the immediately preceding
fiscal quarter if furnished concurrently with the report described in CLAUSE (B)
of this SECTION 4.1.3 or upon the reasonable request of the Lenders and
containing a statement by the authorized officer that in examining the
financials and covenants contained in SECTION 4.1.5 the authorized officer did
not become aware of any Event of Default or Unmatured Event of Default, or if
the authorized officer has become aware of any such event, describing it and the
steps, if any, being taken to cure it.
(d) NOTICES RELATING TO DEFAULT. Promptly upon learning of the occurrence
of any Event of Default or Unmatured Event of Default, written notice thereof,
describing the same and the steps being taken by the Guarantor or any of its
Subsidiaries affected with respect thereto.
(e) REGULATORY FILINGS. As may reasonably be requested by any Lender or
any Agent, each material filing and report made by the Guarantor or any Material
Tejas Subsidiary with or to any governmental authority or regulatory body
(including, without limitation, the Securities and Exchange Commission, Federal
Energy Regulatory Commission, the Texas Railroad Commission, the Louisiana
Public Service Commission, the Louisiana Conservation Commission, the Oklahoma
Corporation Commission and any successor agencies) and other customarily
provided material public communications from the Guarantor or any Material Tejas
Subsidiary, promptly upon the filing or making thereof.
SECTION 4.1.4. SECURITY ISSUE. The Guarantor will use or
cause any of its Subsidiaries to use the proceeds (net of
reasonable and customary brokerage, legal and other closing costs
13
and commissions) received from any equity, debenture, note or subordinated
debenture or other securities issue (other than any money market lines, the TAHC
Credit Agreement, the Secured Credit Agreement or any replacement credit
facilities refinancing any outstanding credit facilities) to permanently reduce
the Commitment under the Secured Credit Agreement and to prepay any amount in
excess of such reduced Commitment. To accomplish the foregoing, the Guarantor
may pay or cause any Subsidiary to pay any such amounts directly or Guarantor
may loan to the Borrower under the RSN, on each date of any such equity,
debenture, note or subordinated debenture issue, an amount equal to the proceeds
received by the Guarantor or such Subsidiary from such issuance, net of
reasonable and customary brokerage, legal and other closing costs and
commissions, each such loan to be made promptly, and in any event within three
(3) Business Days of the receipt by the Guarantor or such Subsidiary of such
amounts.
SECTION 4.1.5. MINIMUM NET WORTH. At all times the Guarantor
will maintain a minimum Net Worth equal to at least $226,000,000.
SECTION 4.2. NEGATIVE COVENANTS. The Guarantor covenants and agrees that,
so long as any portion of the Obligations with respect to the Liabilities shall
remain unpaid, or any Lender shall have any outstanding Commitment, the
Guarantor will not do anything prohibited in this Section.
SECTION 4.2.1. RESTRICTIONS ON MERGERS. The Guarantor will not be a party
to any merger into or consolidation with any other Person, except that the
Guarantor may merge into or consolidate with any other Person if, upon the
consummation of any such merger or consolidation, the Guarantor is the surviving
corporation and no Event of Default or Unmatured Event of Default shall have
occurred, exist or be continuing or shall result after giving effect to such
merger or consolidation.
SECTION 4.2.2. DIVIDENDS AND LOANS FROM THE MATERIAL SUBSIDIARIES. The
Guarantor will not permit any of its Material Subsidiaries to enter into any new
agreement, or any amendment, supplement or other modification to any agreement
existing on the date hereof, which is materially more restrictive of any
Material Subsidiary's abilities, taken as whole, to pay dividends, make loans or
advances to, or otherwise make distributions or payments to, the Guarantor than
the restrictions thereto in existence on the date hereof.
SECTION 4.2.3. LIENS. The Guarantor will not create, incur, assume, permit
to exist or guarantee any notes, bonds, debentures or other evidences of
indebtedness for borrowed money (i) which is secured by any lien, mortgage,
security interest, pledge, hypothecation or charge on any asset now owned or
hereafter acquired by it without making effective provision whereby all
obligations of the Guarantor under this Guaranty will be secured equally and
ratably with any and all other obligations thereby secured, so long as any such
obligations shall be so secured or (ii) which is senior in right of payment to
this Guaranty.
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SECTION 4.2.4. ACTIVITIES. The Guarantor will not (i) own any assets other
than the stock of its subsidiaries and immaterial personal property incidental
to the ownership of such stock or (ii) directly engage in any business other
than the ownership of the stock of its subsidiaries.
SECTION 4.2.5. OWNERSHIP. The Guarantor will not at any time own, directly
or indirectly, less than 100% of the issued and outstanding capital stock of the
Borrower or any successor thereof, free and clear of all Liens.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. LOAN DOCUMENT. This Guaranty is a Loan Document executed
pursuant to the Secured Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 5.2. BINDING ON SUCCESSORS, TRANSFEREES AND ASSIGNS; ASSIGNMENT.
In addition to, and not in limitation of, SECTION 2.7, this Guaranty shall be
binding upon the Guarantor and its successors, transferees and assigns and shall
inure to the benefit of and be enforceable by each Lender Party and each holder
of a Note and their respective successors, transferees and assigns (to the full
extent provided pursuant to SECTION 2.7); PROVIDED, HOWEVER, that the Guarantor
may not assign any of its obligations hereunder without the prior written
consent of all Lenders.
SECTION 5.3. AMENDMENTS, ETC. No amendment to or waiver of any provision
of this Guaranty, nor consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Collateral Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 5.4. ADDRESSES FOR NOTICES TO THE GUARANTOR. All notices and other
communications hereunder to the Guarantor shall be in writing (including
telegraphic communication) and mailed or telegraphed or delivered to it,
addressed to it at the address set forth below its signature hereto or at such
other address as shall be designated by the Guarantor in a written notice to the
Administrative Agent at the address specified in the Secured Credit Agreement
complying as to delivery with the terms of this Section. All such notices and
other communications shall, when mailed or telegraphed, respectively, be
effective when deposited in the mails or delivered to the telegraph company,
respectively, addressed as aforesaid.
SECTION 5.5. NO WAIVER; REMEDIES. In addition to, and not
in limitation of, SECTION 2.3 and SECTION 2.5, no failure on the
part of any Lender Party or any holder of a Note to exercise, and
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no delay in exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 5.6. SECTION CAPTIONS. Section captions used in
this Guaranty are for convenience of reference only, and shall not
affect the construction of this Guaranty.
SECTION 5.7. SETOFF. In addition to, and not in limitation of, any rights
of any Lender Party or any holder of a Note under applicable law, each Lender
Party and each such holder shall, upon the occurrence of any Unmatured Event of
Default described in SECTION 12.1.4 of the Secured Credit Agreement or any Event
of Default have the right to appropriate and apply to the payment of the
obligations of the Guarantor owing to it hereunder, whether or not then due, and
the Guarantor hereby grants to each Lender Party and each such holder a
continuing security interest in, any and all balances, credits, deposits,
accounts or moneys of the Guarantor then or thereafter maintained with such
Lender Party or such holder and any and all property of every kind or
description of or in the name of the Guarantor now or hereafter, for any reason
or purpose whatsoever, in the possession or control of, or in transit to, such
Lender Party, such holder or any agent or bailee for such Lender Party or such
holder; PROVIDED, HOWEVER, that any such appropriation and application shall be
subject to the provisions of Section 7.2 of the Secured Credit Agreement.
SECTION 5.8. SEVERABILITY. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 5.9. GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 5.10. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF THE LENDER PARTIES OR THE GUARANTOR. THE GUARANTOR ACKNOWLEDGES
AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION AND THAT THIS PROVISION
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IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT
AGREEMENT.
SECTION 5.11. MEDIUM TERM NOTES. Notwithstanding anything to the contrary
contained herein, including, without limitation, in Section 2.1 hereof, the
Guarantor expressly does not guaranty payment or performance of any obligation
of any Person under the Medium Term Notes.
SECTION 5.12. FORUM SELECTION AND CONSENT TO JURISDICTION. TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
LENDER PARTIES OR THE GUARANTOR SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN
THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY PROPERTY MAY BE BROUGHT, AT THE COLLATERAL AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH PROPERTY MAY BE FOUND. THE
GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. THE GUARANTOR FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE GUARANTOR HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
THE GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY AND THE OTHER LOAN DOCUMENTS.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
TEJAS GAS CORPORATION
By:
Title:
Address: 1301 McKinney, Suite 700
Houston, Texas 77010
Attention:
Telecopy:
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