EXHIBIT 10.2
CREDIT AGREEMENT
Dated to be Effective as of August 9, 2000
among
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
as Borrower,
and
BANK OF AMERICA, N. A.,
as Agent, an Issuing Bank, and a Bank
and
THE OTHER FINANCIAL INSTITUTIONS WHICH
MAY BECOME PARTIES HERETO
THIS AGREEMENT PROVIDES FOR AN
UNCOMMITTED FACILITY WITH A DEMAND FEATURE.
ALL ADVANCES AND ISSUANCES OF LETTERS OF CREDIT
ARE DISCRETIONARY ON THE PART OF THE BANKS
IN THEIR SOLE AND ABSOLUTE DISCRETION.
THE BANKS MAY MAKE DEMAND FOR PAYMENT AT ANY TIME
IN THEIR SOLE AND ABSOLUTE DISCRETION.
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms......................................................... 1
1.02 Other Interpretive Provisions................................................. 23
1.03 Accounting Principles......................................................... 24
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Uncommitted Line (Excluding Overdraft Line).............. 25
2.02 Loan Accounts................................................................. 26
2.03 Procedure for Borrowing....................................................... 26
2.04 Conversion and Continuation Elections......................................... 27
2.05 Optional Prepayments.......................................................... 29
2.06 Mandatory Prepayments of Loans; Mandatory Commitment Reductions............... 29
2.07 Repayment..................................................................... 29
2.08 Interest...................................................................... 30
2.09 Agent Fees.................................................................... 31
2.10 Computation of Fees and Interest.............................................. 31
2.11 Payments by the Borrower...................................................... 31
2.12 Payments by the Banks to the Agent............................................ 32
2.13 Sharing of Payments, Etc...................................................... 32
2.14 The Election of One Bank to Continue Funding.................................. 33
2.15 Payments from Guarantors and Liquidation of Collateral........................ 33
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Lines.................................................... 34
3.02 Issuance, Amendment and Renewal of Letters of Credit.......................... 35
3.03 Risk Participations, Drawings, Reducing Letters of Credit and Reimbursements.. 37
3.04 Repayment of Participations................................................... 39
3.05 Role of the Issuing Bank...................................................... 40
3.06 Obligations Absolute.......................................................... 40
3.07 Cash Collateral Pledge........................................................ 41
3.08 Letter of Credit Fees......................................................... 42
3.09 Uniform Customs and Practice.................................................. 42
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ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes......................................................................... 42
4.02 Illegality.................................................................... 44
4.03 Increased Costs and Reduction of Return....................................... 44
4.04 Funding Losses................................................................ 45
4.05 Inability to Determine Rates.................................................. 45
4.06 Reserves on Offshore Rate Loans............................................... 46
4.07 Certificates of Banks......................................................... 46
4.08 Substitution of Banks......................................................... 46
4.09 Survival...................................................................... 47
ARTICLE V
CLOSING ITEMS
5.01 Matters to be Satisfied Upon Execution of Agreement........................... 47
(a) Loan Documents......................................................... 47
(b) Resolutions; Incumbency................................................ 47
(c) Organization Documents; Existence; Good Standing....................... 47
(d) Legal Opinion.......................................................... 47
(e) Payment of Fees........................................................ 47
(f) Certificate............................................................ 48
(g) Insurance.............................................................. 48
(h) Filings................................................................ 48
(i) Other Documents........................................................ 48
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Existence and Power........................................................... 48
6.02 Authorization; No Contravention............................................... 49
6.03 Governmental Authorization.................................................... 49
6.04 Binding Effect................................................................ 49
6.05 Litigation.................................................................... 49
6.06 No Default.................................................................... 50
6.07 ERISA Compliance.............................................................. 50
6.08 Use of Proceeds; Margin Regulations........................................... 51
6.09 Title to Properties........................................................... 51
6.10 Taxes......................................................................... 51
6.11 Financial Condition........................................................... 51
6.12 Environmental Matters......................................................... 51
6.13 Regulated Entities............................................................ 51
6.14 No Burdensome Restrictions.................................................... 52
6.15 Copyrights, Patents, Trademarks and Licenses, etc............................. 52
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6.16 Subsidiaries.................................................................. 52
6.17 Insurance..................................................................... 52
6.18 Full Disclosure............................................................... 52
6.19 Y2K Representation............................................................ 53
ARTICLE VII
AFFIRMATIVE COVENANTS
7.01 Financial Statements.......................................................... 53
7.02 Certificates; Other Information............................................... 53
7.03 Notices....................................................................... 54
7.04 Preservation of Corporate Existence, Etc...................................... 55
7.05 Maintenance of Property....................................................... 55
7.06 Insurance..................................................................... 56
7.07 Payment of Obligations........................................................ 56
7.08 Compliance with Laws.......................................................... 56
7.09 Compliance with ERISA......................................................... 56
7.10 Inspection of Property and Books and Records.................................. 56
7.11 Environmental Laws............................................................ 57
7.12 Use of Proceeds............................................................... 57
7.13 Collateral Position Audit..................................................... 57
7.14 Payments to Bank Blocked Account.............................................. 57
7.15 Financial Covenants........................................................... 58
7.16 Separate Operations........................................................... 58
7.17 Post-Closing Matters.......................................................... 58
ARTICLE VIII
NEGATIVE COVENANTS
8.01 Limitation on Liens........................................................... 59
8.02 Consolidations and Mergers.................................................... 60
8.03 Limitation on Indebtedness.................................................... 60
8.04 Transactions with Affiliates.................................................. 60
8.05 Use of Proceeds............................................................... 61
8.06 Contingent Obligations........................................................ 61
8.07 Restricted Payments........................................................... 61
8.08 ERISA......................................................................... 61
8.09 Change in Business............................................................ 61
8.10 Accounting Changes............................................................ 61
8.11 Net Position.................................................................. 62
8.12 Loans and Investments......................................................... 62
8.13 Change of Management.......................................................... 62
8.14 Deposit Accounts.............................................................. 62
8.15 Risk Management Policy........................................................ 62
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ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default.............................................................. 62
(a) Non-Payment............................................................ 62
(b) Representation or Warranty............................................. 62
(c) Covenant Defaults...................................................... 63
(d) Cross-Default.......................................................... 63
(e) Insolvency; Voluntary Proceedings...................................... 63
(f) Involuntary Proceedings................................................ 63
(g) ERISA.................................................................. 64
(h) Monetary Judgments..................................................... 64
(i) Non-Monetary Judgments................................................. 64
(j) Change of Control...................................................... 64
(k) Adverse Change......................................................... 64
(l) Guarantor Defaults..................................................... 64
9.02 Remedies...................................................................... 65
9.03 Rights Not Exclusive.......................................................... 65
ARTICLE X
THE AGENT
10.01 Appointment and Authorization................................................ 65
10.02 Delegation of Duties......................................................... 66
10.03 Liability of Agent........................................................... 66
10.04 Reliance by Agent............................................................ 67
10.05 Notice of Default............................................................ 67
10.06 Credit Decision.............................................................. 67
10.07 Indemnification.............................................................. 68
10.08 Agent in Individual Capacity................................................. 68
10.09 Successor Agent.............................................................. 68
10.10 Withholding Tax.............................................................. 69
10.11 Collateral Matters........................................................... 70
10.12 Monitoring Responsibility.................................................... 71
ARTICLE XI
MISCELLANEOUS
11.01 Amendments and Waivers....................................................... 71
11.02 Notices...................................................................... 71
11.03 No Waiver; Cumulative Remedies............................................... 72
11.04 Costs and Expenses........................................................... 72
11.05 Indemnity.................................................................... 73
11.06 Payments Set Aside........................................................... 73
11.07 Successors and Assigns....................................................... 73
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11.08 Assignments, Participations, Etc............................................. 74
11.09 Set-off...................................................................... 76
11.10 Automatic Debits of Fees..................................................... 76
11.11 Notification of Addresses, Lending Offices, Etc.............................. 76
11.12 Bank Blocked Account Charges and Procedures.................................. 76
11.13 Counterparts................................................................. 77
11.14 Severability................................................................. 77
11.15 No Third Parties Benefited................................................... 77
11.16 Governing Law and Jurisdiction............................................... 77
11.17 Waiver of Jury Trial......................................................... 78
11.18 Discretionary Facility....................................................... 78
11.19 Entire Agreement............................................................. 78
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SCHEDULES
Schedule 1.01 Existing L/Cs
Schedule 2.01 Uncommitted Line and Uncommitted Line Portion
*Schedule 6.05 Litigation, and Patent, Trademark, etc. Claims
*Schedule 6.07 ERISA Matters
*Schedule 6.12 Environmental Matters
*Schedule 6.16 Subsidiaries and Equity Investments
*Schedule 6.17 Insurance Matters
*Schedule 7.03(f) Locations of Inventory Storage
*Schedule 8.01 Permitted Indebtedness and Liens
*Schedule 8.07 Contingent Obligations
*Schedule 11.02 Lending Offices and Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of Borrowing Base Collateral Position Report
Exhibit F Form of Net Position Report
Exhibit G Form of Funds Transfer Request
* Not filed herewith. Atmos Energy Corporation hereby agrees to furnish
supplementally a copy of any Schedule to the Commission upon request.
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into effective as of August 9, 2000, among
▇▇▇▇▇▇▇▇ MARKETING, L.L.C., a Delaware limited liability company (the
"Borrower"), BANK OF AMERICA, N. A. ("Bank of America"), as a Bank, as an
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Issuing Bank, and as Agent for the Banks, and each other financial institution
which may become a party hereto (the "Banks").
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WHEREAS, Banks and the Borrower desire to enter into this facility to
provide for an "uncommitted borrowing base demand credit facility" such facility
to be in an aggregate amount of up to $100,000,000, including an uncommitted
Letter of Credit facility to facilitate the Borrower's purchase of natural gas,
an uncommitted advance facility for the Borrower's working capital requirements
related to the purchase of natural gas, and an uncommitted overdraft line, all
as set forth below.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
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1.01 Certain Defined Terms. The following terms have the following
---------------------
meanings:
"Account" has the meaning stated in the California Uniform Commercial
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Code.
"Account Debtor" means a Person who is obligated to the Borrower
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under an Account of the Borrower.
"Acquisition" means any transaction or series of related transactions
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for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisition of in excess of
50% of the capital stock, partnership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a
Person that is a Subsidiary) provided that the relevant Borrower or the
Subsidiary is the surviving entity.
"Adjusted Pro Rata Share" means, as to any Bank at any particular
-----------------------
time, the percentage equivalent (expressed as a decimal, rounded to the
ninth decimal place) at such time of (a) an amount equal to such Bank's
Uncommitted Line Portion plus, in the case of Bank of America, the amount
of advances made in excess of the Borrowing Base Advance Cap under the
Overdraft Line, and/or to fund Obligations of the Borrower under Swap
Contracts, and/or to fund overdraft costs arising from of transfers of
funds made
CREDIT AGREEMENT - Page 1
through the automated clearinghouse system, divided by (b) the combined
total of the Uncommitted Line of all the Banks plus the amount of advances
made in excess of the Borrowing Base Advance Cap under the Overdraft Line,
and/or to fund the Obligations of the Borrower under the Overdraft Line
and/or Swap Contracts, and/or to fund overdraft costs arising from of
transfers of funds made through the automated clearinghouse system, if any.
"Advance Maturity Date" means the maturity date of advances made
---------------------
hereunder which for Base Rate Loans will be the earliest to occur of (a)
written demand by the Agent, or (b) 30 days from the date of the Borrowing,
and for Offshore Rate Loans will be the earliest to occur of (i) written
demand by the Agent, or (ii) 30 days from the date of the Borrowing, or
(iii) the end of the Interest Period for such Offshore Rate Loan.
"Affiliate" means, as to any Person, any other Person which, directly
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or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
the other Person, whether through the ownership of voting securities, by
contract, or otherwise.
"Agent" means Bank of America in its capacity as agent for the Banks
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hereunder, and any successor agent arising under Section 10.09.
"Agent-Related Persons" means Bank of America and any successor agent
---------------------
arising under Section 10.09, together with their respective Affiliates and
the officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
"Agent's Payment Office" means the address for payments set forth on
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Schedule 11.02 hereto in relation to the Agent, or such other address as
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the Agent may from time to time specify.
"Agreement" means this Credit Agreement.
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"Applicable Margin" means:
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(a) with respect to Base Rate Loans, one-half percent
(0.50%); and
(b) with respect to Offshore Rate Loans, two and one-half
percent (2.50%).
"Approving Banks" has the meaning set forth in Section 2.14.
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"Assignee" has the meaning specified in Subsection 11.08(a).
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CREDIT AGREEMENT - Page 2
"Atmos Support Agreement" means an agreement of Atmos Energy
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Corporation to provide certain support for Borrower and its operations,
such agreement to be in form and substance acceptable to the Agent.
"Attorney Costs" means and includes all reasonable fees and
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disbursements of any law firm or other external counsel, the allocated cost
of internal legal services and all disbursements of internal counsel.
"Bank Blocked Account" means account no. 375-▇▇▇▇▇▇▇ maintained with
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Bank of America into which collections from the Borrower's Accounts will be
deposited pursuant to Section 7.14 below.
"Bank of America" means Bank of America, N. A., a national banking
---------------
association.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978, as
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amended (11 U.S.C. (S)101, et seq.).
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"Banks" shall initially mean Bank of America. At such time as
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additional lending institutions are added to this Agreement, either through
an amendment to this Agreement or through an Assignment and Acceptance in
accordance with Subsection 11.08(a) hereof, the term "Bank" shall mean Bank
of America and each such additional lending institution. References to the
"Banks" shall include Bank of America, including in its capacity as an
Issuing Bank; for purposes of clarification only, to the extent that Bank
of America may have any rights or obligations in addition to those of the
Banks due to its status as an Issuing Bank and as Agent, Bank of America's
status as such will be specifically referenced.
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
---------
above the latest Federal Funds Rate; or (b) the rate of interest in effect
for such day as publicly announced from time to time by Bank of America as
its "prime rate." (The "prime rate" is a rate set by Bank of America based
upon various factors including Bank of America's costs and desired return,
general economic conditions and other factors, and is used as a reference
point for pricing some loans, which may be priced at, above, or below such
announced rate.) Any change in the reference rate announced by Bank of
America shall take effect at the opening of business on the day specified
in the public announcement of such change.
"Base Rate Loan" means any Loan bearing interest based upon the Base
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Rate.
"Borrower" means ▇▇▇▇▇▇▇▇ Marketing, L.L.C., a Delaware limited
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liability company.
"Borrowing" means a borrowing hereunder consisting of Revolving Loans
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made to the Borrower on the same day by the Banks under Article II.
CREDIT AGREEMENT - Page 3
"Borrowing Base Advance Cap" means at any time an amount equal to the
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least of:
(a) $100,000,000.00;
(b) the Borrowing Base Sub-Cap; or
(c) the sum of:
(i) the amount of Cash Collateral and other liquid
investments which are acceptable to the Banks in their sole
discretion and which are subject to a first perfected security
interest in favor of Agent, as collateral agent for the Banks,
and which have not been used in determining availability for
any other advance (other than advances made under the Borrowing
Base Line) or Letter of Credit Issuance; plus
(ii) 90% of Borrower's equity in Banc of America Futures
Incorporated accounts, to the extent such equity is not being
used in determining availability for any other advance (other
than advances made under the Borrowing Base Line) or Letter of
Credit Issuance; plus
(iii) 90% of the amount of Tier I Accounts which are not
being used in determining availability for any other advance
(other than advances made under the Borrowing Base Line) or
Letter of Credit Issuance, net of deductions, offsets and
counterclaims; plus
(iv) 85% of the amount of Tier II Accounts and which are
not being used in determining availability for any other
advance (other than advances made under the Borrowing Base
Line) or Letter of Credit Issuance, net of deductions, offsets
and counterclaims; plus
(v) 85% of the amount of Tier I Unbilled Accounts which
are not being used in determining availability for any other
advance (other than advances made under the Borrowing Base
Line) or Letter of Credit Issuance; plus
(vi) 80% of the amount of Tier II Unbilled Accounts
which are not being used in determining availability for any
other advance (other than advances made under the Borrowing
Base Line) or Letter of Credit Issuance; plus
(vii) 80% of the amount of Eligible Inventory which are
not being used in determining availability for any other
advance (other than advances made under the Borrowing Base
Line) or Letter of Credit Issuance; plus
CREDIT AGREEMENT - Page 4
(viii) 80% of the amount of Eligible Exchange Receivables
which are not being used in determining availability for any
other advance (other than advances made under the Borrowing
Base Line) or Letter of Credit Issuance; plus
(ix) 80% of the amount of Undelivered Product Value;
less
(x) the amounts which would be subject to a so-called
"First Purchaser Lien" as defined in Texas Bus. & Com. Code
Section 9.319, comparable laws of the states of Oklahoma,
Kansas, Wyoming or New Mexico, or any other comparable law,
unless a Letter of Credit secures payment of all amounts
subject to such First Purchaser Lien; less
(xi) 125% of the ▇▇▇▇-to-market amounts owed to Bank of
America or and its Affiliates under Swap Contracts.
In no event shall any amounts described in (b)(i) through (b)(ix)
above which may fall into more than one of such categories be counted more
than once when making the calculation under of this definition.
"Borrowing Base Collateral Position Report" means a report detailing
-----------------------------------------
all Collateral which has been or is being used in determining availability
for an advance or letter of credit issuance under the Borrowing Base Line,
such report to be in the form attached hereto as Exhibit E.
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"Borrowing Base Line" means the uncommitted line of credit for the
-------------------
purpose of (a) providing working capital and to fund payments to suppliers
of Product; (b) to provide for Letters of Credit to secure suppliers of
Product; and (c) to fund payments due to Bank of America under the
Overdraft Line or any Swap Contract.
"Borrowing Base Sub-Cap" means, initially, an amount equal to
----------------------
$50,000,000.00; provided, however, Borrower may elect from time to time any
of $50,000,000.00, $75,000,000.00 or $100,000,000.00 as the Borrowing Base
Sub-cap provided that Borrower's Net Working Capital and Tangible Net Worth
at the time of election are greater than, or equal to, the amounts
specified below:
(a) If Borrower elects $100,000,000.00, Borrower's Net
Working Capital must be at least $20,000,000.00 and
Tangible Net Worth must be at least $21,000,000.00; or
(b) If Borrower elects $75,000,000.00, Borrower's Net Working
Capital must be at least $15,000,000.00 and Tangible Net
Worth must be at least $16,000,000.00; or
CREDIT AGREEMENT - Page 5
(c) If Borrower elects $50,000,000.00, Borrower's Net Working
Capital must be at least $10,000,000.00 and Tangible Net
Worth must be at least $11,000,000.00.
Borrower shall elect which Borrowing Base Sub-Cap is in effect from
time to time by delivering to Agent a written notice of such election,
together with a Compliance Certificate in the form of Exhibit C which is
attached hereto but modified to include a certification that upon the
effectiveness of such election, no Default or Event of Default will exist.
NOTWITHSTANDING THE FOREGOING, UNTIL SUCH TIME AS ADDITONAL BANKS BECOME
PARTIES TO THIS AGREEMENT THE BORROWING BASE SUB-CAP CANNOT EXCEED
$75,000,000.00.
"Borrowing Date" means any date on which a Borrowing occurs under
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Section 2.03.
"Business Day" (a) with respect to all matters other than those
------------
related to Offshore Rate Loans, means any day other than a Saturday, Sunday
or other day on which commercial banks in any of Los Angeles, California,
Houston, Texas, or Dallas, Texas, are authorized, or required, by law to
close and (b) means, for purposes of determining business days in
connection with Offshore Rate Loans, any day on which transactions are made
in the applicable offshore dollar interbank market other than a Saturday,
Sunday or other day which commercial banks in Los Angeles, California,
Houston, Texas, or Dallas, Texas, are authorized or required, by law to
close.
"Capital Adequacy Regulation" means any guideline, request or
---------------------------
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any Bank or of any corporation
controlling a Bank.
"Capital Stock" means capital stock, membership interest, equity
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interest or other obligations or securities of, or any interest in, any
Person.
"Cash Collateral" means currency issued by the United States and
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Marketable Securities which have been Cash Collateralized for the benefit
of the Banks.
"Cash Collateralize" means to pledge and deposit with or deliver to
------------------
the Agent, for the benefit of the Agent, the Issuing Bank and the Banks,
Cash Collateral as collateral for the Obligations pursuant to documentation
in form and substance satisfactory to the Agent (which documents are hereby
consented to by the Banks). The Borrower hereby grants the Agent, for the
benefit of the Agent, the Issuing Bank and the Banks, a security interest
in all such Cash Collateral. Cash Collateral shall be maintained in the
Bank Blocked Account or the Nations Funds Accounts.
"Change of Control" means the sale, pledge, hypothecation, assignment
-----------------
or other transfer of more than twenty-five percent (25%) of the Capital
Stock or other ownership rights in the Borrower without the prior written
consent of the Banks, except for any such
CREDIT AGREEMENT - Page 6
sale, pledge, hypothecation, assignment or other transfer of the Capital
Stock or other ownership rights in the Borrower to Atmos Energy Marketing
LLC.
"Closing Date" means the date on which all conditions precedent set
------------
forth in Section 5.01 are satisfied or waived by all Banks.
"Code" means the Internal Revenue Code of 1986, and regulations
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promulgated thereunder.
"Collateral" means all assets of the Borrower including, without
----------
limitation, all accounts, equipment, chattel paper, inventory, natural gas
in transit, instruments, contract rights, the Bank Blocked Account, the
Nations Funds Accounts, stock, partnership interests, and general
intangibles, whether presently existing or hereafter acquired or created
and the proceeds thereof.
"Collateral Position" means the total availability under the
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Borrowing Base Advance Cap.
"Compliance Certificate" means a certificate, in form attached hereto
----------------------
as Exhibit C, whereby the Borrower certifies that it is in compliance with
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this Agreement.
"Contingent Obligation" means, as to any Person, any direct or
---------------------
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligations") of another
Person (which obligations and Person are referred to herein as the "primary
obligation" and the "primary obligor," respectively), including any
obligation of that Person (i) to purchase, repurchase or otherwise acquire
such primary obligations or any security therefor, (ii) to advance or
provide funds for the payment or discharge of any such primary obligation,
or to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item,
level of income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary
obligation against loss in respect thereof (each, a "Guaranty Obligation");
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(b) with respect to any Surety Instrument (other than any Letter of Credit)
issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase
any materials, supplies or other property from, or to obtain the services
of, another Person if the relevant contract or other related document or
obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered; or (d) in
respect of any swap contract.
"Contractual Obligation" means, as to any Person, any provision of
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any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage,
CREDIT AGREEMENT - Page 7
deed of trust or other instrument, document or agreement to which such
Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under Section
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2.04, the Borrower (a) converts Loans of one Type to another Type, or (b)
continues such Loans as Loans of the same Type, but with a new Interest
Period.
"Conversion to Single Funding Bank Date" has the meaning specified in
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Section 2.14.
"Credit Extension" means and includes (a) the making of any Loans
----------------
hereunder, and (b) the Issuance of any Letters of Credit hereunder.
"Current Assets" means those assets of the Borrower and its
--------------
consolidated subsidiaries which would in accordance with GAAP be classified
as current assets of a corporation conducting a business the same as or
similar to the businesses of the Borrower and its consolidated
subsidiaries.
"Current Liabilities" means Indebtedness of the Borrower and its
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consolidated subsidiaries which would in accordance with GAAP be classified
as current liabilities of a corporation conducting a business the same as
or similar to the businesses of the Borrower and its consolidated
subsidiaries.
"Declining Bank" has the meaning specified in Section 2.14.
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"Default" means any event or circumstance which, with the giving of
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notice, the lapse of time, or both, would constitute an Event of Default.
"Default Rate" has the meaning specified in Section 2.08(a).
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"Documentary L/Cs" means a Letter of Credit which is intended at the
----------------
time of Issuance to be drawn upon and excludes standby letters of credit.
"Dollar Advance Cap" means a cap upon Revolving Loans under the
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Borrowing Base Line with the following limits:
(a) $40,000,000.00 at such times as the Borrowing Base Sub-
Cap is $100,000,000.00;
(b) $30,000,000.00 at such times as the Borrowing Base Sub-
Cap is $75,000,000.00; and
(c) $20,000,000.00 at such times as the Borrowing Base Sub-
Cap is $50,000,000.00.
"Dollars", and "$" each mean lawful money of the United States.
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CREDIT AGREEMENT - Page 8
"Effective Amount" means (a) with respect to any Loans on any date,
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the aggregate outstanding principal amount thereof after giving effect to
any Borrowings and prepayments or repayments of Loans occurring on such
date; and (b) with respect to any outstanding L/C Obligations on any date,
the amount of such L/C Obligations on such date after giving effect to any
Issuances of Letters of Credit occurring on such date and any other changes
in the aggregate amount of the L/C Obligations as of such date, including
changes as a result of expiration or cancellation, any reimbursements of
outstanding unpaid drawings under any Letters of Credit or any reductions
in the maximum amount available for drawing under Letters of Credit taking
effect on such date.
"Eligible Accounts" means, at the time of any determination thereof,
-----------------
each of the Borrower's Accounts as to which the following requirements have
been fulfilled to the satisfaction of the Banks:
(a) Such Account (if for an amount in excess of $750,000.00)
either (i) is the result of a sale to a Tier I or Tier II Account
Party, or (ii) is secured by letters of credit in form acceptable to
the Banks in their sole discretion and issued by banks approved by
the Banks in their sole discretion;
(b) Borrower has lawful and absolute title to such Account;
(c) Such Account is a valid, legally enforceable obligation
of the Person who is obligated under such Account for goods actually
delivered to such Account Debtor in the ordinary course of the
Borrower's business;
(d) Such Account shall have excluded therefrom any portion
that is subject to any dispute, offset, counterclaim or other claim
or defense on the part of the Account Debtor or to any claim on the
part of the Account Debtor denying liability under such Account;
provided, however, that in the event that the portion that is subject
to any such dispute, counterclaim or other claim or defense is
secured with a Letter of Credit, such portion secured by the Letter
of Credit shall not be excluded;
(e) Such Account is not evidenced by any chattel paper,
promissory note or other instrument;
(f) Such Account is subject to a fully perfected first
priority security interest (or properly filed and acknowledged
assignment, in the case of U.S. government contracts, if any) in
favor of Agent pursuant to the Loan Documents, prior to the rights
of, and enforceable as such against, any other Person, and such
Account is not subject to any security interest or Lien in favor of
any Person other than the Liens of the Banks pursuant to the Loan
Documents;
CREDIT AGREEMENT - Page 9
(g) Such Account shall have excluded therefrom any portion
which is not payable in Dollars in the U.S.;
(h) Such Account has been due and payable for 15 days or less
(or 30 days or less, if the Account Debtor is a governmental entity)
from the date of the invoice and no extension or indulgence has been
granted extending the due date beyond a 15 day period (or 30 days, as
the case may be), except if such Account by its terms provides for a
15 day payment period, then such Account shall be eligible for up to
30 days from the date of invoice, or as otherwise approved by Banks
in writing; and
(i) No Account Debtor in respect of such Account is (i) an
Affiliate of the Borrower, or (ii) incorporated in or primarily
conducting business in any jurisdiction outside of the U.S., unless
such Account Debtor and the Account is approved in writing by the
Banks; provided, however, as long as Atmos Energy, Corporation
maintains an S&P rating of BBB+ or better, and such Accounts would
otherwise qualify as Eligible Accounts, Accounts of Atmos Energy
Corporation (and its Subsidiaries and Affiliates that have been
approved by Agent as Tier I Account Debtors) may be included as Tier
I Accounts to the extent that such Accounts do not exceed 50% of
Borrower's total Accounts.
"Eligible Assignee" means (a) a commercial bank organized under the
-----------------
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000.00; (b) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
----
political subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000.00, provided that such bank is acting
through a branch or agency located in the United States; and (c) a Person
that is primarily engaged in the business of commercial banking and that is
(i) a Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a Bank
is a Subsidiary, or (iii) a Person of which a Bank is a Subsidiary.
"Eligible Broker" means any broker approved in writing by the Agent
---------------
and the Banks.
"Eligible Commodity Futures Accounts" means an account or accounts
-----------------------------------
with an Eligible Broker, including without limitation BA Futures
Incorporated, in which the Agent is granted a first and prior security
interest as Agent for the Banks pursuant to Hedging Assignments which
security interest is subject only to the rights of the Eligible Broker
under such accounts.
"Eligible Exchange Receivables" means all enforceable rights of the
-----------------------------
Borrower to receive Product in exchange for the sale or trade of Product
previously delivered to the exchange debtor by the Borrower valued at an
independent posting and which (a) are evidenced by a written agreement
enforceable against the exchange debtor thereof, (b) are current pursuant
to the terms of the contract or invoice, (c) are subject to a perfected,
CREDIT AGREEMENT - Page 10
first Lien in favor of the Agent for the benefit of the Banks subject only
to Permitted Liens, and no other Lien, charge, offset or claim, (d) are not
the subject of a dispute between the exchange debtor and the Borrower, (e)
are valued at ▇▇▇▇▇'▇ spot market price or an independent posting
acceptable to the Banks in their sole discretion, (f) if arising pursuant
to contracts involving an amount in excess of $750,000, are contracts by
exchangers pre-approved by the Banks in their sole discretion, or contracts
secured by letters of credit in form acceptable to the Banks in their sole
discretion and issued by banks approved by the Banks in their sole
discretion, and (g) have not been otherwise determined by the Banks in
their sole discretion to be unacceptable to them. The Product and Account
relating to or creating any Eligible Exchange Receivable shall not be
simultaneously included in any other availability calculation, including,
without limitation, Undelivered Product Value, Eligible Inventory or
Eligible Accounts.
"Eligible Inventory" means, at the time of determination thereof, all
------------------
of the Borrower's inventory stored in terminals (and provided the Banks
must have approved all terminal owners) valued at the lower of cost or
current market (as referenced by a published source acceptable to Banks in
their sole discretion), and in all instances as to which the following
requirements have been fulfilled to the satisfaction of the Banks:
(a) The inventory is owned by the Borrower free and clear of
all Liens in favor of third parties, except Liens in favor of the
Banks under the Loan Documents and except for Permitted Liens;
(b) The inventory has not been identified to deliveries with
the result that a buyer would have rights to the inventory that would
be superior to the Agent's security interest for the benefit of the
Banks, nor shall such inventory have become the subject of a
customer's ownership or Lien;
(c) The inventory is in transit in the U.S. under the control
and ownership of the Borrower or is in a pipeline or a ▇▇▇▇ of lading
has been issued to the Agent if such inventory is in the hands of a
third party carrier or is located in the U.S. at the locations
described on Schedule 7.03(f), or at such other place as has been
----------------
specifically agreed to in writing by the Banks and the Borrower; and
(d) The inventory is subject to a fully perfected first
priority security interest in favor of the Agent for the benefit of
the Banks pursuant to the Loan Documents.
"Environmental Claims" means all claims, however asserted, by any
--------------------
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
"Environmental Laws" means all federal, state or local laws,
------------------
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements
CREDIT AGREEMENT - Page 11
with, any Governmental Authorities, in each case relating to environmental,
health, safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of 1974,
-----
and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
-----------
Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or a cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the
Borrower or any ERISA Affiliate from a Multiemployer Plan or notification
that a Multiemployer Plan is in reorganization; (d) the filing of a notice
of intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings by
the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the
Borrower or any ERISA Affiliate.
"Eurodollar Reserve Percentage" has the meaning specified in the
-----------------------------
definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances specified
----------------
in Section 9.01.
"Exchange Act" means the Securities and Exchange Act of 1934, as
------------
amended, and regulations promulgated thereunder.
"Expiration Date" means the earliest to occur of:
---------------
(a) June 30, 2001; or
(b) the date demand for payment is made by the Agents; or
(c) the date an Event of Default occurs.
CREDIT AGREEMENT - Page 12
"Existing L/Cs" means the Letters of Credit issued by Bank of
-------------
America for the account of the Borrower, which are outstanding on the date
of this Agreement, as described on Schedule 1.01.
-------------
"FDIC" means the Federal Deposit Insurance Corporation, and any
----
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
------------------
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite the
caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Business Day, the rate for such
day will be the arithmetic mean as determined by the Agent of the rates for
the last transaction in overnight Federal Funds arranged prior to 9:00 a.m.
(New York City time) on that day by each of three leading brokers of
Federal Funds transactions in New York City selected by the Agent.
"FRB" means the Board of Governors of the Federal Reserve System, and
---
any Governmental Authority succeeding to any of its principal functions.
"Further Taxes" means any and all present or future taxes, levies,
-------------
assessments, imposts, duties, deductions, fees, withholding or similar
charges (including, without limitation, net income taxes and franchise
taxes), and all liabilities with respect thereto, imposed by any
jurisdiction on account of amount payable or paid pursuant to Section 4.01.
"GAAP" means generally accepted accounting principles set forth from
----
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to
the circumstances as of the date of determination.
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Guarantors" means ▇▇▇▇▇▇▇▇ Marketing, Inc., Atmos Energy Marketing
----------
LLC, ▇. ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇, and "Guarantor" means any of the
---------
Guarantors.
"Guaranty" means a Guaranty Agreement, in form and substance
--------
acceptable to the Banks in their sole discretion, which has been executed
by each Guarantor and
CREDIT AGREEMENT - Page 13
delivered to Agent for the benefit of the Banks, and "Guaranties" means all
----------
such Guaranty Agreements.
"Guaranty Obligation" has the meaning specified in the definition of
-------------------
"Contingent Obligation."
"Hedging Assignment" means a security agreement among Borrower, Agent
------------------
and an Eligible Broker relating to the collateral assignment to Agent, as
collateral agent for the Banks, of all sums owing from time to time to
Borrower with respect to an Eligible Commodities Futures Account, such
agreement to be in form and substance acceptable to the Banks in their sole
discretion.
"Honor Date" has the meaning specified in Subsection 3.03(b).
----------
"Indebtedness" of any Person means, without duplication, (a) all
------------
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets
or businesses; (e) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the Person
(even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of
such property); (f) all obligations with respect to capital leases; (g) all
obligations with respect to swap contracts; (h) all indebtedness referred
to in clauses (a) through (g) above secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or
become liable for the payment of such indebtedness; and (i) all Guaranty
Obligations in respect of indebtedness or obligations of others of the
kinds referred to in clauses (a) through (g) above.
"Indemnified Liabilities" has the meaning specified in Section 11.05.
-----------------------
"Indemnified Person" has the meaning specified in Section 11.05.
------------------
"Independent Auditor" has the meaning specified in Subsection
-------------------
7.01(a).
"Insolvency Proceeding" means, with respect to any Person (a) any
---------------------
case, action or proceeding with respect to such Person before any court or
other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar
arrangement in respect
CREDIT AGREEMENT - Page 14
of its creditors generally or any substantial portion of its creditors;
undertaken under U.S. Federal, state or foreign law, including the
Bankruptcy Code.
"Interest Payment Date" means, as to any Loan other than a Base Rate
---------------------
Loan, the last day of each Interest Period applicable to such Loan and, as
to any Base Rate Loan, the fifth Business Day of each month.
"Interest Period" means, as to any Offshore Rate Loan, the period
---------------
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date selected by the
Borrower as the ending date thereof, not to exceed a period of 30 days, in
its Notice of Borrowing or Notice of Conversion/Continuation;
provided that:
--------
(a) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the preceding Business Day;
(b) any Interest Period pertaining to an Offshore Rate Loan
that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest
Period; and
(c) no Interest Period shall extend beyond the Expiration
Date.
"IRS" means the Internal Revenue Service, and any Governmental
---
Authority succeeding to any of its principal functions under the Code.
"Issuance Date" means the date on which any Letter of Credit is
-------------
actually Issued hereunder.
"Issue" means, with respect to any Letter of Credit, to issue or to
-----
extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
------ ------- --------
meanings.
"Issuing Bank" initially means Bank of America, and in the future
------------
means any Bank which Issues Letters of Credit hereunder, in such Bank's
capacity as an issuer of one or more Letters of Credit hereunder, together
with any replacement letter of credit issuer arising under Section 2.14.
"L/C Advance" means each Bank's participation in any L/C Borrowing or
-----------
Reducing L/C Borrowing in accordance with (i) its Pro Rata Share with
respect to Letters
CREDIT AGREEMENT - Page 15
of Credit Issued prior to the Conversion to Single Funding Bank Date and
(ii) its proportionate share, if any, as an Approving Bank with respect to
all Letters of Credit Issued thereafter.
"L/C Amendment Application" means an application form for amendment
-------------------------
of outstanding standby or commercial documentary letters of credit as shall
at any time be in use at Issuing Bank, as Issuing Bank shall request.
"L/C Application" means an application form for Issuances of standby
---------------
or commercial documentary letters of credit as shall at any time be in use
at Issuing Bank, as Issuing Bank shall request.
"L/C Borrowing" means an extension of credit resulting from either a
-------------
drawing under any Letter of Credit or a Reducing L/C Borrowing, which
extension of credit shall not have been reimbursed on the date when made
nor converted into a Borrowing of Revolving Loans under Subsection 3.03(c).
"L/C Cap" means the maximum availability for Issuance of Letters of
-------
Credit under the Borrowing Base Line which shall be an amount equal to the
total Effective Amount of L/C Obligations plus the Effective Amount of then
outstanding Loans not to exceed the Borrowing Base Advance Cap.
"L/C Obligations" means at any time the sum of (a) the aggregate
---------------
undrawn amount of all Letters of Credit then outstanding, plus (b) the
amount of all unreimbursed drawings under all Letters of Credit, including
all outstanding L/C Borrowings, plus (c) the amount of the Existing L/Cs.
"L/C-Related Documents" means the Letters of Credit, the L/C
---------------------
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including, but not limited to, any of
Issuing Bank's standard form documents for letter of credit issuances.
"Lending Office" means, as to any Bank, the office or offices of such
--------------
Bank specified as its "Lending Office" on Schedule 11.02, or such other
--------------
office or offices as such Bank may from time to time notify the Borrower
and the Agent.
"Letters of Credit" means (a) any letters of credit (whether standby
-----------------
letters of credit or commercial documentary letters of credit) Issued by an
Issuing Bank pursuant to Article III, (b) the Existing L/Cs, and (c) any
Reducing Letters of Credit.
"Lien" means any security interest, mortgage, deed of trust, pledge,
----
hypothecation, assignment, charge, encumbrance, or lien, statutory or other
in respect of any property, including those created by, arising under or
evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or
CREDIT AGREEMENT - Page 16
the filing of any financing statement naming the owner of the asset to
which such lien relates as debtor, under the Uniform Commercial Code or any
comparable law.
"Line" means either the Borrowing Base Line or the Overdraft Line.
----
"Loan" means (a) any extension of credit by a Bank to the Borrower
----
under Article II or Article III in the form of a Revolving Loan or an L/C
Advance and (b) any Overdraft Advance.
"Loan Documents" means this Agreement, the Notes, the Guaranties, the
--------------
Security Agreement, the Nations Funds Security Agreement, the ▇▇▇▇▇▇▇▇
Pledge, the L/C-Related Documents, Swap Contracts, all documents related to
any activities between Bank of America and its Affiliates relating to
transfers of funds made through the automated clearinghouse system, and all
other documents delivered to the Agent or any Bank in connection herewith.
"Long Position" means the aggregate number of MMBTUS of Product which
-------------
are either held in inventory by the Borrower or which the Borrower has
contracted to purchase (whether by purchase of a contract on a commodities
exchange or otherwise), or which the Borrower will receive on exchange or
the notional quantity under a swap contract including, without limitation,
all option contracts representing the obligation of the Borrower to
purchase Product at the option of a third party, and in each case, for
which a fixed purchase price has been set. Long Positions will be
expressed as a positive number.
"Margin Stock" means "margin stock" as such term is defined in
------------
Regulation G, T, U or X of the FRB.
"Marketable Securities" means (a) certificates of deposit issued by
---------------------
Bank of America or by any other bank, with a Thomson Watch rating of B or
better, (b) commercial paper rated P-1, A-1 or F-1, (c) bankers acceptances
rated prime, or (d) U.S. Government obligations with tenors of 90 days or
less.
"Material Adverse Effect" means (a) a material adverse change in,
-----------------------
or a material adverse effect upon, the operations, business, properties,
condiption (financial or otherwise) or prospects of the Borrower or the
Borrower and its Subsidiaries taken as a whole, (b) a material impairment
of the ability of the Borrower to perform under any Loan Document and to
avoid any Event of Default, or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against the Borrower
or any of its Subsidiaries.
"Maturity Date" means September 30, 2001.
-------------
"Multiemployer Plan" means a "multiemployer plan", within the meaning
------------------
of Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate makes, is
CREDIT AGREEMENT - Page 17
making, or is obligated to make contributions or, during the preceding
three (3) calendar years, has made, or been obligated to make,
contributions.
"Nations Funds Accounts" means the property of the Borrower,
----------------------
described on Exhibit A to the Nations Funds Security Agreement executed by
the Borrower.
"Nations Funds Security Agreement" means the document entitled
--------------------------------
"Security Agreement (Nations Funds)" executed by the Borrower and delivered
to Agent, dated as of the date hereof.
"Net Position" means the sum of all Long Positions and Short
------------
Positions of the Borrower.
"Net Position Report" means a report in form attached hereto as
-------------------
Exhibit F.
---------
"Net Working Capital" means the excess of Current Assets (minus all
-------------------
amounts due from employees, owners, Subsidiaries and Affiliates other than
Accounts of Atmos Energy Corporation and its Subsidiaries and Affiliates
permitted to be included as Eligible Accounts in the calculation of the
Borrowing Base Advance Cap) over Current Liabilities (excluding the current
portion of Subordinated Debt), less investments in Capital Stock. In
calculating Net Working Capital, the amount of Subordinated Debt excluded
from liabilities in such calculation shall not exceed 50% of the resultant
Net Working Capital.
"Notes" means the promissory notes executed by the Borrower in favor
-----
of a Bank pursuant to Subsection 2.02(b), in form approved by the Banks. A
Note will be issued by the Borrower to each entity that becomes a Bank
hereunder from time to time, but will not be issued to Participants of a
Bank.
"Notice of Borrowing" means the applicable notice in substantially
-------------------
the form of Exhibit A.
---------
"Notice of Conversion/Continuation" means a notice in substantially
---------------------------------
the form of Exhibit B.
---------
"Obligations" means all advances, debts, liabilities, obligations,
-----------
covenants and duties arising under any Loan Document owing by the Borrower
to any Bank, or any affiliate of any Bank, the Agent, or any Indemnified
Person, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising, including without limitation overdraft costs arising as
a result of transfers of funds made through the automated clearinghouse
system and all obligations of the Borrower under Revolving Loans, Letters
of Credit, the Overdraft Line and any Swap Contracts.
CREDIT AGREEMENT - Page 18
"Offshore Effective Amount" means the product of the principal amount
-------------------------
of an Offshore Rate Loan or requested Offshore Rate Loan and the number of
days in the applicable Interest Period for such Offshore Rate Loan.
"Offshore Rate" means, for any Interest Period, with respect to
-------------
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined by
the Agent as follows:
Offshore Rate = LIBOR
-----------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
-----------------------------
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on such
day (whether or not applicable to any Bank) under regulations issued
from time to time by the FRB for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum determined by the
-----
Agent as the rate at which dollar deposits in the approximate amount
of Bank of America's Offshore Rate Loan for such Interest Period would
be offered by Bank of America's London branch (or such other office as
may be designated for such purpose by Bank of America), to major banks
in the London interbank market at their request at approximately 11:00
a.m. (London time) two (2) Business Days prior to the Borrowing Date.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on the
------------------
Offshore Rate.
"Organization Documents" means (a) for any corporation, the
----------------------
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement, and all
applicable resolutions of the board of directors (or any committee thereof)
of such corporation, and (b) for any partnership, the partnership
agreement, and all other documents or filings as may be required by the
Secretary of State (or other applicable governmental agency) in the state
of such partnership's formation.
"Other Taxes" means any present or future stamp or documentary taxes
-----------
or any other excise or property taxes, charges or similar levies which
arise from any payment
CREDIT AGREEMENT - Page 19
made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.
"Overdraft Advance" means any advance made hereunder by Bank of
-----------------
America under the Overdraft Line.
"Overdraft Line" means that certain discretionary overdraft line the
--------------
Borrower maintains with Bank of America.
"Participant" has the meaning specified in Subsection 11.08(d).
-----------
"PBGC" means the Pension Benefit Guaranty Corporation, or any
----
Governmental Authority succeeding to any of its principal functions under
ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
------------
ERISA) subject to Title IV of ERISA which the Borrower sponsors, maintains,
or to which it makes, is making, or is obligated to make contributions, or
in the case of a multiple employer plan (as described in Section 4064(a) of
ERISA) has made contributions at any time during the immediately preceding
five (5) plan years.
"Performance/Financial L/C" means all performance and financial
-------------------------
standby Letters of Credit.
"Permitted Liens" has the meaning specified in Section 8.01.
---------------
"Person" means an individual, partnership, corporation, business
------
trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
----
ERISA) which the Borrower sponsors or maintains or to which the Borrower
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Product" means natural gas.
-------
"Pro Rata Share" means, as to any Bank at any time, the percentage
--------------
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Uncommitted Line Portion divided by the combined
total of the Uncommitted Line of all the Banks.
"Reducing Letters of Credit" means any letters of credit (whether
--------------------------
standby letters of credit or commercial documentary letters of credit) that
(a) are Issued by an Issuing Bank pursuant to Article III, and (b)
specifically provide that the amount available for drawing under such
letters of credit will be reduced, automatically and without any further
amendment or endorsement to such letters of credit, by the amount of any
payment or payments made to the beneficiary of such Letter of Credit by the
Borrower if such payment or payments (I) are made through such Issuing Bank
and (ii) reference such
CREDIT AGREEMENT - Page 20
letters of credit by the letter of credit numbers thereof, notwithstanding
the fact that such payment or payments are not made pursuant to conforming
and proper draws under such letters of credit.
"Reducing L/C Borrowing" means any extension of credit by the Banks to
----------------------
the Borrower for the purpose of funding any payment or payments made to the
beneficiary of a Reducing Letter of Credit by the Borrower if such payment
or payments (a) are made through the Issuing Bank of such Reducing Letter
of Credit, (b) reference the Reducing Letter of Credit by the letter of
credit number thereof, and (c) are not made pursuant to a conforming and
proper draws under such Reducing Letter of Credit.
"Replacement Bank" has the meaning specified in Section 4.08.
----------------
"Reportable Event" means, any of the events set forth in Section
----------------
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
------------------
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property
is subject.
"Responsible Officer" means either one of the President or Chief
-------------------
Financial Officer of the Borrower.
"Revolving Loan" has the meaning specified in Section 2.01.
--------------
"Security Agreements" means a security agreement, in form and
-------------------
substance acceptable to Agent and the Banks, duly executed by the Borrower
and delivered to Agent for the benefit of the Banks granting to Agent, as
collateral agent for the Banks, a first and prior security interest in and
Lien upon the Collateral, and all Hedging Assignments.
"Short Position" means the aggregate number of MMBTUS of Product which
--------------
the Borrower has contracted to sell (whether by sale of a contract on a
commodities exchange or otherwise) or deliver on exchange or under a swap
contract, including, without limitation, all option contracts representing
the obligation of the Borrower to sell Product at the option of a third
party and in each case for which a fixed sales price has been set. Short
Positions shall be expressed as a negative number.
"Subordinated Debt" means Indebtedness of the Borrower which has been
-----------------
reported to the Banks and which has been subordinated to the Obligations
pursuant to a Subordination Agreement substantially in the form attached
hereto as Exhibit H.
---------
"Subsidiary" of a Person means any corporation, association,
----------
partnership, joint venture, limited liability company or other business
entity of which more than 50% of the
CREDIT AGREEMENT - Page 21
voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Person,
or one or more of the Subsidiaries of the Person, or a combination thereof.
Unless the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of the Borrower.
"Surety Instruments" means all letters of credit (including standby
------------------
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"Swap Contract" means any agreement entered into with Bank of America
-------------
or any Affiliate of Bank of America, whether or not in writing, relating to
any single transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or ▇▇▇▇ option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap,
cross-currency rate swap, currency option or any other similar transaction
(including any option to enter into any of the foregoing) or any
combination of the foregoing and, unless the context clearly requires, any
master agreement relating to or governing any or all of the foregoing.
"Tangible Net Worth" means (a) the sum of the Borrower's assets, as
------------------
determined in accordance with GAAP, less (b) the sum of the Borrower's
liabilities excluding Subordinated Debt, as determined in accordance with
GAAP, less (c) all amounts due from employees, owners, Subsidiaries and
Affiliates other than Accounts permitted to be included as Eligible
Accounts in the calculation of the Borrowing Base Advance Cap, less (d)
investments in Capital Stock, less (e) the intangible assets of the
Borrower, as determined in accordance with GAAP. In calculating Tangible
Net Worth, the amount of Subordinated Debt excluded from liabilities in
such calculation shall not exceed 50% of the resultant Tangible Net Worth.
"Taxes" means any and all present or future taxes, levies,
-----
assessments, imposts, duties, deductions, fees, withholdings, or similar
charges, and all liabilities with respect thereto, excluding, in the case
of each Bank and the Agent, taxes imposed on or measured by each Bank's net
income or capital (with respect to franchise taxes or similar taxes) by the
jurisdiction (or any political subdivision thereof) under the laws of which
such Bank or the Agent, as the case may be, is organized or maintains a
lending office.
"Tier I Account" means an Eligible Account with a Tier I Account
--------------
Party.
"Tier II Account" means Eligible Accounts with a Tier II Account
---------------
Party.
"Tier I Account Party" means an Account Debtor which is approved by
--------------------
the Banks as a Tier I Account Party.
"Tier I Unbilled Account" means Unbilled Eligible Accounts with a Tier
-----------------------
I Account Party.
CREDIT AGREEMENT - Page 22
"Tier II Unbilled Account" means Unbilled Eligible Accounts with a
------------------------
Tier II Account Party.
"Tier II Account Party" means any Account Debtor approved by the Banks
---------------------
as a Tier II Account Party.
"Type" means either a Base Rate Loan or an Offshore Rate Loan.
----
"Unbilled Eligible Accounts" means Accounts of the Borrower for
--------------------------
Product which has been delivered to an Account Debtor and which would be
Eligible Accounts but for the fact that such Accounts have not actually
been invoiced at such time.
"Uncommitted Line" means the aggregate Line limits of all the Banks as is set
----------------
forth on Schedule 2.01.
--------------
"Uncommitted Line Portion" means for each Bank the portion of each of
------------------------
the Line limits assigned to such Bank as set forth on Schedule 2.01.
-------------
"Undelivered Product Value" means the lesser of the (a) cost or (b)
-------------------------
current market value of Product purchased by the Borrower under the Letters
of Credit but which has not been physically delivered to the Borrower.
Undelivered Product Value cannot simultaneously be included in an Eligible
Exchange Receivable.
"Unfunded Pension Liability" means the excess of a Plan's benefit
--------------------------
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United States of America.
------------- ----
"▇▇▇▇▇▇▇▇ Pledge" means a security agreement, in form and substance
---------------
acceptable to Agent and the Banks, duly executed by ▇▇▇▇▇▇▇▇ Marketing,
Inc. and delivered to Agent for the benefit of the Banks granting to Agent,
as collateral agent for the Banks, a first and prior security interest in
and Lien upon 100% of the ownership interests in Borrower held by ▇▇▇▇▇▇▇▇
Marketing, Inc.
1.02 Other Interpretive Provisions.
-----------------------------
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and Subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
CREDIT AGREEMENT - Page 23
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding", and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Banks,
the Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or the Agent merely
because of the Agent's or Banks' involvement in their preparation.
1.03 Accounting Principles.
---------------------
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made in accordance with
GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Borrower.
CREDIT AGREEMENT - Page 24
ARTICLE II
THE CREDITS
-----------
2.01 Amounts and Terms of Uncommitted Line (Excluding Overdraft Line).
----------------------------------------------------------------
(a) Each Bank severally agrees, on an UNCOMMITTED AND ABSOLUTELY
DISCRETIONARY basis, and on the terms and conditions set forth herein, to
consider making Loans, from time to time, to the Borrower under the Borrowing
Base Line (each such loan, a "Revolving Loan") on any Business Day during the
--------------
period from the Closing Date to the Expiration Date, in an aggregate amount not
to exceed at any time outstanding (i) such Bank's Uncommitted Line Portion for
the Borrowing Base Line; or (ii) the Dollar Advance Cap; provided, however,
-------- -------
that, after giving effect to any Borrowing of Revolving Loans, the Effective
Amount of all outstanding Revolving Loans, plus the Effective Amount of all L/C
Obligations, shall not exceed the Borrowing Base Advance Cap. At no time shall
the Dollar Advance Cap be exceeded.
(b) Amount and Terms of Overdraft Line. Bank of America agrees, on an
----------------------------------
UNCOMMITTED AND ABSOLUTELY DISCRETIONARY basis, and on the terms and conditions
set forth herein, to consider making overdraft advances under the Overdraft
Line, from time-to-time, for the benefit of the Borrower.
(c) Advances Related to the Overdraft Line and Swap Contracts. In
---------------------------------------------------------
addition to advances requested from time to time by the Borrower, in the event
that either (i) any amounts owing to Bank of America or any of its Affiliates
under its Overdraft Line or any Swap Contract are not paid within two (2)
Business Days after such obligation arises; or (ii) Bank of America or any of
its Affiliates have made an Overdraft Advance in the amount of a drawing under a
Letter of Credit which has not been timely reimbursed by the Borrower in
accordance with Section 3.03(b) of this Agreement and such amount has not been
paid by the Borrower within one (1) Business Day after such obligation arises,
then Bank of America shall notify the Agent of such failure to pay and the Agent
(without the necessity of any instructions or request from the Borrower) shall
make a Revolving Loan in accordance with the provisions of Section 2.03 of this
Agreement under the Borrowing Base Line for any amounts due by the Borrower to
Bank of America or any of its Affiliates under the Overdraft Line, or any Swap
Contract, and then apply the proceeds of such advance to pay to Bank of America,
or Bank of America's Affiliate (as the case may be) all amounts owed to such
Person under the Overdraft Line or such Swap Contract. Upon making any such
Revolving Loan, the Agent shall send notice of such Revolving Loan to the
Borrower and the Banks. Any such advance shall initially be a Base Rate Loan.
In the event that any such advance made to fund Bank of America or its
Affiliates, other than an advance to reimburse Bank of America for an Overdraft
Advance made to fund a drawing under Letters of Credit or to fund Reducing L/C
Borrowings, results in an advance in excess of the Borrowing Base Advance Cap,
the Banks other than Bank of America shall have no duty to fund their pro rata
share of any excess resulting from such advance made to repay amounts owing to
Bank of America or its Affiliates under its Overdraft Line or any Swap Contract,
but Bank of America's outstandings hereunder shall be deemed to be increased by
the amount of such excess. Notwithstanding the foregoing, the Banks other than
Bank of America shall have the duty,
CREDIT AGREEMENT - Page 25
however, to fund their pro rata share of all Overdraft Advances made to fund
drawings under Letters of Credit or to fund Reducing L/C Borrowings. In the
event any advance described above does exceed the Borrowing Base Advance Cap,
the Borrower shall pay to Agent, for the benefit of Bank of America or its
Affiliate (as the case may be), the amount of such excess, together with
interest thereon, within one (1) Business Day after the date of such advance
and, notwithstanding anything to the contrary herein, the Banks other than Bank
of America shall not share in such payment.
THE BORROWER ACKNOWLEDGES AND AGREES THAT THE BANKS HAVE ABSOLUTELY NO DUTY
TO FUND ANY REVOLVING LOAN REQUESTED BY THE BORROWER BUT WILL EVALUATE EACH LOAN
REQUEST AND IN EACH BANK'S ABSOLUTE AND SOLE DISCRETION WILL DECIDE WHETHER TO
FUND SUCH LOAN REQUEST. THE BORROWER FURTHER ACKNOWLEDGES AND AGREES THAT BANK
OF AMERICA HAS ABSOLUTELY NO DUTY TO MAKE OR FUND ANY OVERDRAFT ADVANCE OR TO
ENTER INTO ANY SWAP CONTRACT, AND ANY OVERDRAFT ADVANCE OR THE ENTERING INTO OF
ANY SWAP CONTRACT SHALL BE AT BANK OF AMERICA'S ABSOLUTE AND SOLE DISCRETION.
2.02 Loan Accounts.
-------------
(a) The Loans made by each Bank and the Letters of Credit Issued by
an Issuing Bank shall be evidenced by one or more accounts or records maintained
by Agent in the ordinary course of business. The accounts or records maintained
by the Agent shall be conclusive absent manifest error of the amount of the
Loans made by the Banks to the Borrower and the Letters of Credit Issued for the
account of the Borrower hereunder, and the interest and payments thereon. Any
failure so to record or any error in doing so shall not, however, limit or
otherwise affect the Obligation of the Borrower hereunder to pay any amount
owing with respect to the Loans or any Letter of Credit.
(b) Upon the request of any Bank made through the Agent, the Loans
made by such Bank may be evidenced by one or more Notes, instead of loan
accounts. Each such Bank may endorse on the schedules annexed to its Note(s)
the date, amount and maturity of each Loan made by it and the amount of each
payment of principal made by the Borrower with respect thereto. Each such Bank
is irrevocably authorized by the Borrower to endorse its Note(s) and each Bank's
record shall be conclusive absent manifest error; provided, however, that the
-------- -------
failure of a Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the Obligations of the
Borrower hereunder or under any such Note to such Bank.
2.03 Procedure for Borrowing.
-----------------------
(a) Each Borrowing of Revolving Loans consisting only of Base Rate
Loans, if approved by the Banks in their sole discretion, shall be made upon the
Borrower's irrevocable written notice delivered to the Agent and the Banks in
the form of a Notice of Borrowing (Revolving Loan), which notice must be
received by the Agent and the Banks prior to 12:00 p.m.
CREDIT AGREEMENT - Page 26
(Dallas time) on the Borrowing Date specifying the amount of the Borrowing. Each
such Notice of Borrowing shall be by electronic transfer or facsimile, confirmed
immediately in an original writing. Each Borrowing of Revolving Loans that
includes any Offshore Rate Loans, if approved by the Banks in their sole
discretion, shall be made upon the Borrower's irrevocable written notice
delivered to the Agent and the Banks in the form of a Notice of Borrowing (which
notice must be received by the Agent and the Banks prior to 12:00 p.m. Dallas
time three (3) Business Days prior to the requested Borrowing Date), specifying
the amount of the Borrowing. Each such Notice of Borrowing shall be by
electronic transfer or facsimile, confirmed immediately in an original writing.
Each requested Offshore Rate Loan must have an Offshore Effective Amount of at
least $15,000,000.
(b) The Agent will promptly notify each Bank of its receipt of any
Notice of Borrowing and of the amount of such Bank's Pro Rata Share of that
Borrowing.
(c) The Banks will advise Agent by 2:30 p.m. (Dallas time) on the
requested Borrowing Date with respect to Base Rate Loans and three (3) Business
Days prior to the requested Borrowing Date with respect to Offshore Rate Loans
whether the Banks approve the Borrowing. If all the Banks approve such
Borrowing, then each Bank will make the amount of its Pro Rata Share of such
Borrowing available to the Agent for the account of the Borrower at the Agent's
Payment Office by 3:30 p.m. (Dallas time) on the Borrowing Date requested by the
Borrower in funds immediately available to the Agent. The proceeds of all such
Loans will then be made available to the Borrower by the Agent at such office by
crediting the account of the Borrower on the books of Agent with the aggregate
of the amounts made available to the Agent by the Banks and in like funds as
received by the Agent. If any Bank gives Agent notice of its disapproval of
such Borrowing by 2:30 p.m. (Dallas time) on the requested Borrowing Date, if a
Base Rate Loan, or three (3) Business Days prior to the requested Borrowing Date
if an Offshore Rate Loan, then Agent shall notify the Borrower no later than
3:30 p.m. (Dallas time) that one or more of the Banks have elected not to fund
such Borrowing and whether a Bank (or Banks) has (have) elected to become the
Approving Banks thereby triggering the Conversion to Single Funding Bank Date.
(d) An Overdraft Advance may be made by Bank of America in its sole
discretion or, at Bank of America's discretion, upon written request from the
Borrower.
2.04 Conversion and Continuation Elections.
-------------------------------------
(a) Borrower may, upon irrevocable written notice to the Agent in
accordance with Subsection 2.04(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the
case of any Offshore Rate Loan, to convert any such Loans into Loans
of any other Type (provided, however, the Offshore Effective Amount of
-------- -------
each Offshore Rate Loan must be at least $15,000,000); or
CREDIT AGREEMENT - Page 27
(ii) elect, as of the last day of the applicable Interest
Period, to continue any Revolving Loans having Interest Periods
expiring on such day (provided, however, the Offshore Effective Amount
-------- -------
of each Offshore Rate Loan must be at least $15,000,000);
provided, that if at any time the aggregate amount of Offshore Rate Loans in
--------
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof, to have an Offshore Effective Amount of less than $15,000,000,
such Offshore Rate Loans shall automatically convert into Base Rate Loans, and
on and after such date the right of the Borrower to continue such Loans as, and
convert such Loans into, Offshore Rate Loans shall terminate.
(b) Borrower shall deliver a Notice of Conversion/Continuation to be
received by the Agent not later than 12:00 p.m. (Dallas time) on the
Conversion/Continuation Date if the Loans are to be converted into Base Rate
Loans; and three (3) Business Day in advance of the Conversion/Continuation
Date, if the Loans are to be converted into or continued as Offshore Rate Loans,
specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or
continued;
(iii) the Type of Loans resulting from the proposed conversion
or continuation; and
(iv) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Borrower has failed to timely select a new Interest
Period to be applicable to its Offshore Rate Loans, or if any Default or Event
of Default then exists, the Borrower shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuation, or, if no timely notice is provided by the
Borrower, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans, with
respect to which the notice was given, held by each Bank.
(e) Unless the Banks otherwise agree, during the existence of a
Default or Event of Default, the Borrower may not elect to have a Loan converted
into or continued as an Offshore Rate Loan.
(f) After giving effect to any Borrowing, conversion or continuation
of Loans, there may not be more than five (5) Interest Periods in effect.
CREDIT AGREEMENT - Page 28
(g) The Agent will promptly notify, in writing, each Bank of the
amount of such Bank's Pro Rata Share of that Borrowing.
(h) The Banks will advise Agent by 2:30 p.m. (Dallas time) on the
requested Conversion/Continuation Date whether the Banks approve the
conversion/continuation. If any Bank gives Agent notice of its disapproval of
such conversion/continuation by 2:30 p.m. (Dallas time) then Agent shall notify
the Borrower no later than 3:30 p.m. (Dallas time) that one or more of the Banks
have elected not to convert/continue such Loan and whether Bank(s) has (have)
elected to become the Approving Bank(s) thereby triggering the Conversion to
Single Funding Bank Date.
2.05 Optional Prepayments. The Borrower may, at any time or from time to
--------------------
time, upon the Borrower's irrevocable written notice to Agent received prior to
12:00 p.m. (Dallas time) on the date of prepayment, prepay Loans in whole or in
part without premium except any amounts due by Borrower pursuant to Article IV.
The Agent will promptly notify each Bank of its receipt of any such prepayment,
and of such Bank's Pro Rata Share of such prepayment.
2.06 Mandatory Prepayments of Loans; Mandatory Commitment Reductions. If
---------------------------------------------------------------
on any date the Effective Amount of L/C Obligations exceeds the L/C Cap, the
Borrower shall Cash Collateralize on such date the outstanding Letters of Credit
in an amount equal to the excess above any such cap. If on any date after
giving effect to any Cash Collateralization made on such date pursuant to the
preceding sentence, the Effective Amount of all Revolving Loans then outstanding
plus the Effective Amount of all L/C Obligations exceeds the lesser of (a) the
Collateral Position or (b) the total Uncommitted Line, or if the Effective
Amount of all Revolving Loans under the Borrowing Base Line then outstanding,
plus the Effective Amount of all L/C Obligations under such Line exceed the
Borrowing Base Advance Cap, the Borrower shall immediately, and without notice
or demand, prepay the outstanding principal amount of the Revolving Loans and
L/C Advances by an amount equal to the applicable excess.
2.07 Repayment. The Borrower shall repay the principal amount of each
---------
Revolving Loan to the Agent on behalf of the Banks, on the Advance Maturity Date
for such Loan. The Borrower shall repay to the Agent for the benefit of Bank of
America each Overdraft Advance made under the Overdraft Line on the next
Business Day after such Overdraft Advance is made. Notwithstanding anything to
the contrary contained herein, the Banks other than Bank of America shall not
share in any payment made with respect to the Overdraft Line. All amounts owing
Bank of America under the Overdraft Line and all amounts owing to Bank of
America under any Swap Contract, to the extent such amounts have not been repaid
from the proceeds of a Revolving Loan, shall be paid on demand, or if no demand
is made, on the first (1st) Business Day after the Borrower receives notice that
such amount was advanced by or becomes owing to Bank of America.
2.08 Interest.
--------
(a) Each Revolving Loan and Overdraft Advance (except for a
Revolving Loan made as a result of a drawing under a Letter of Credit or a
Reducing L/C Borrowing) shall bear interest on the outstanding principal amount
thereof from the applicable Borrowing Date at
CREDIT AGREEMENT - Page 29
a floating rate per annum equal to the Base Rate plus the Applicable Margin at
----
all times such Loan is a Base Rate Loan or at the Offshore Rate plus the
----
Applicable Margin at all times such Loan is an Offshore Rate Loan. Each
Revolving Loan made as a result of a drawing under a Letter of Credit or a
Reducing L/C Borrowing, all amounts owing to Bank of America or any Affiliate of
Bank of America under the Overdraft Line or with respect to any Swap Contract,
shall bear interest on the outstanding principal amount thereof from the date
funded at a floating rate per annum equal to the Base Rate plus the Applicable
----
Margin until such Loan has been outstanding for more than two (2) Business Days
and, thereafter, shall bear interest on the outstanding principal amount thereof
at a floating rate per annum equal to the Base Rate, plus three percent (3.0%)
----
per annum (the "Default Rate").
------------
(b) Interest on each Revolving Loan shall be paid upon demand, or if
no demand is made, shall be paid in arrears on each Interest Payment Date.
Interest on each Overdraft Advance shall be paid upon demand, or if no demand is
made, on the earlier to occur of the date of repayment of such Overdraft Advance
or the date such Overdraft Advance is due and payable.
(c) Notwithstanding subsection (a) of this Section, if any amount of
principal of or interest on any Loan, or any other amount payable hereunder or
under any other Loan Document is not paid in full when due (whether at stated
maturity, by acceleration, demand or otherwise), the Borrower agrees to pay
interest on such unpaid principal or other amount, from the date such amount
becomes due until the date such amount is paid in full, and after as well as
before any entry of judgment thereon to the extent permitted by law, payable on
demand, at a fluctuating rate per annum equal to the Default Rate.
(d) Anything herein to the contrary notwithstanding, the Obligations
of the Borrower to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
the Borrower shall pay such Bank interest at the highest rate permitted by
applicable law.
(e) Regardless of any provision contained in any Note or in any of
the Loan Documents, none of the Banks shall ever be deemed to have contracted
for or be entitled to receive, collect or apply as interest under any such Note
or any Loan Document, or otherwise, any amount in excess of the maximum rate of
interest permitted to be charged by applicable law, and, in the event that any
of the Banks ever receive, collect or apply as interest any such excess, such
amount which would be excessive interest shall be applied to the reduction of
the unpaid principal balance of the Note, and, if the principal balance of such
Note is paid in full, any remaining excess shall forthwith be paid to the
Borrower. In determining whether or not the interest paid or payable under any
specific contingency exceeds the highest lawful rate, the Borrower and such Bank
shall, to the maximum extent permitted under applicable law, (i) characterize
any non-principal payment as an expense, fee, or premium, rather than as
interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii)
spread the total amount of interest throughout the entire contemplated term of
such Note so that the interest rate
CREDIT AGREEMENT - Page 30
is uniform throughout such term; provided, that if all Obligations under the
Note and all Loan Documents are performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual term
thereof exceeds the maximum lawful rate, such Bank shall refund to the Borrower
the amount of such excess, or credit the amount of such excess against the
aggregate unpaid principal balance of such Bank's Note at the time in question.
2.09 Agent Fees. In addition to certain fees described in Section 3.08,
----------
the Borrower shall pay an Agent's fee to Bank of America in accordance with a
separate letter agreement between Bank of America and the Borrower.
Notwithstanding the foregoing, at all times when Bank of America is the only
Bank, no such Agent's fee shall be due.
2.10 Computation of Fees and Interest.
--------------------------------
(a) All other computations of fees and interest shall be made on the
basis of a 360-day year and actual days elapsed (which results in more interest
being paid than if computed on the basis of a 365-day year). Interest and fees
shall accrue during each period during which interest or such fees are computed
from the first day thereof through the last day thereof.
(b) Each determination of an interest rate by the Agent shall be
conclusive and binding on the Borrower and the Banks in the absence of manifest
error.
2.11 Payments by the Borrower.
------------------------
(a) All payments to be made by the Borrower shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrower shall be made to the Agent for the account
of the Banks at the Agent's Payment Office, and shall be made in dollars and in
immediately available funds, no later than 3:00 p.m. (Dallas time) on the date
specified herein. The Agent will promptly distribute to each Bank its Pro Rata
Share or Adjusted Pro Rata Share, as the case may be, of such payment in like
funds as received. Any payment received by the Agent later than 3:00 p.m.
(Dallas time) shall be deemed to have been received on the following Business
Day and any applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrower prior to the
date on which any payment is due to the Banks that the Borrower will not make
such payment in full as and when required, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Bank on such due date an amount equal
to the amount then due such Bank. If and to the extent the Borrower has not
made such payment in full to the Agent, each Bank shall repay to the Agent on
demand such amount
CREDIT AGREEMENT - Page 31
distributed to such Bank, together with interest thereon at the Federal Funds
Rate for each day from the date such amount is distributed to such Bank until
the date repaid.
2.12 Payments by the Banks to the Agent. If and to the extent any Bank
----------------------------------
shall not have made its full amount available to the Agent in immediately
available funds and the Agent in such circumstances has made available to the
Borrower such amount, that Bank shall on the Business Day following such
Borrowing Date make such amount available to the Agent, together with interest
at the Federal Funds Rate for each day during such period. A notice of the
Agent submitted to any Bank with respect to amounts owing under this Section
2.12 shall be conclusive, absent manifest error. If such amount is so made
available, such payment to the Agent shall constitute such Bank's Loan on the
date of Borrowing for all purposes of this Agreement. If such amount is not
made available to the Agent on the Business Day following the Borrowing Date,
the Agent will notify the Borrower of such failure to fund and, upon demand by
the Agent, the Borrower shall pay such amount to the Agent for the Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Loans comprising such Borrowing.
2.13 Sharing of Payments, Etc. If, other than as expressly provided
-------------------------
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share or Adjusted Pro Rata
Share, as the case may be at such time (other than payments to Bank of America
with respect to advances made in excess of the Borrowing Base Advance Cap as a
result of payment under a Swap Contract or advances under the Overdraft Line),
such Bank shall immediately (a) notify the Agent of such fact, and (b) purchase
from the other Banks such participations in the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment pro rata
with each of them; provided, however, that if all or any portion of such excess
-------- -------
payment is thereafter recovered from the purchasing Bank, such purchase shall to
that extent be rescinded and each other Bank shall repay to the purchasing Bank
the purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower
agrees that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 11.09) with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation. The Agent will keep records (which shall
be conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Banks following
any such purchases or repayments.
2.14 The Election of One Bank to Continue Funding. If one or more Banks
--------------------------------------------
(the "Declining Banks") do not approve a requested Revolving Loan or the
---------------
issuance or amendment of a requested Letter of Credit for reasons other than a
Default and the other Bank or Banks do approve such Revolving Loan or the
issuance or amendment of such Letter of Credit, the Agent shall notify the
Banks. If the Bank or Banks which are not the Declining Banks desire, they may
(on a pro rata basis among the Banks that have elected to continue funding) make
the full amount of such requested Revolving Loan or issue or amend the requested
Letter of Credit irrespective
CREDIT AGREEMENT - Page 32
of the Declining Banks' disapproval (in such case, the Banks that elect to
continue funding shall be referred to as the "Approving Banks"). In such event,
---------------
from such date (the "Conversion to Single Funding Bank Date") forward (a) all
--------------------------------------
subsequent Revolving Loans and Issuances of Letters of Credit shall be made
unilaterally by the Approving Banks and no Letter of Credit thereafter Issued
shall be participated in by the Declining Banks, (b) all Banks' interests in the
Collateral and loan management decisions shall be pro-rata based on each Bank's
total Effective Amount of Revolving Loans, plus the Effective Amounts of such
Bank's L/C Obligations from time to time, and (c) the Approving Banks'
Uncommitted Line Portion shall be increased on the basis of each such advance
and Issuance of a Letter of Credit.
Notwithstanding the foregoing, however, for purposes of allocating
repayments prior to the occurrence of a Default hereunder, the Adjusted Pro Rata
Share of the Uncommitted Line of each Bank shall remain fixed at the percentage
held by such Bank the day before the Conversion to Single Funding Bank Date,
without respect to any changes which may subsequently occur in such Bank's Pro
Rata Share of the Uncommitted Line except that in the event that Obligations
become owing to Bank of America and its Affiliates after such date pursuant to
the Overdraft Line or pursuant to Swap Contracts as a result of contracts or
transactions existing on the Conversion to Single Funding Bank Date, the
Adjusted Pro Rata Share of each Bank shall be recalculated to account for the
increase in Obligations that have become owing to Bank of America or its
Affiliates until such time, if any, that one Bank is fully repaid. Upon the
occurrence of a Default and thereafter, repayments shall be allocated according
to the Adjusted Pro Rata Share of the outstanding balances held by the Banks on
the date of Default except that in the event that Obligations become owing to
Bank of America and its Affiliates after such date pursuant to the Overdraft
Line or pursuant to Swap Contracts as a result of contracts or transactions
existing on the date of such Default, the Adjusted Pro Rata Share of each Bank
shall be recalculated to account for the increase in Obligations owing to Bank
of America or its Affiliates.
2.15 Payments from Guarantors and Liquidation of Collateral.
------------------------------------------------------
Notwithstanding anything to the contrary contained herein, in the event
repayment is made to the Banks by a Guarantor or pursuant to a liquidation of
Collateral, such repayment shall be shared by the Banks on the basis of each
Bank's then existing Adjusted Pro Rata Share rather than each Bank's Pro Rata
Share.
ARTICLE III
THE LETTERS OF CREDIT
---------------------
3.01 The Letter of Credit Lines.
--------------------------
(a) On an uncommitted basis and on the terms and conditions set
forth herein and if the Issuance of such Letter of Credit has been consented to
by the Banks in their sole discretion (i) Issuing Bank agrees, (A) from time to
time on any Business Day during the period from the Closing Date to the
Expiration Date, to consider the Issuance of Letters of Credit for the account
of the Borrower under the Borrowing Base Line and to consider whether to amend
or
CREDIT AGREEMENT - Page 33
renew Letters of Credit previously Issued by it, in accordance with Subsections
3.02(c) and 3.02(d), and (B) to honor drafts under the Letters of Credit; and
(ii) the Banks shall participate in Letters of Credit Issued for the account of
the Borrower; provided, however, the Declining Bank shall not have any
obligation to and shall not be deemed to have participated in any Letters of
Credit which are Issued on or after the Conversion to Single Funding Bank Date.
Within the foregoing limits, and subject to the other terms and conditions
hereof including, without limitation, the approval of the Banks in their sole
discretion, the Borrower's ability to request that Issuing Bank Issue Letters of
Credit shall be fully revolving, and, accordingly, the Borrower may, during the
foregoing period, request that Issuing Bank Issue Letters of Credit to replace
Letters of Credit which have expired or which have been drawn upon and
reimbursed. The Existing L/Cs shall be deemed to be Letters of Credit Issued
under this Agreement and shall be entitled to the benefits of this Agreement.
(b) The Issuing Bank is under no obligation to consider the Issuance
of or to Issue any Letter of Credit unless all Banks shall have consented to the
Issuance of such Letter of Credit in their sole discretion. The Issuing Bank is
under no obligation to Issue any Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or
restrain the Issuing Bank from Issuing such Letter of Credit, or any
Requirement of Law applicable to the Issuing Bank or any request or
directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the Issuing Bank shall
prohibit, or request that the Issuing Bank refrain from, the issuance
of letters of credit generally or such Letter of Credit in particular
or shall impose upon the Issuing Bank with respect to such Letter of
Credit any restriction, reserve or capital requirement (for which the
Issuing Bank is not otherwise compensated hereunder) not in effect on
the Closing Date, or shall impose upon the Issuing Bank any
unreimbursed loss, cost or expense which was not applicable on the
Closing Date and which the Issuing Bank in good ▇▇▇▇▇ ▇▇▇▇▇ material
to it;
(ii) the Issuing Bank has received written notice from any
Bank, the Agent or the Borrower, on or prior to the Business Day prior
to the requested date of Issuance of such Letter of Credit, that one
or more of the applicable conditions contained in Article V is not
then satisfied;
(iii) the expiry date of any requested Letter of Credit is after
the earlier to occur of (A) 90 days after the date of Issuance of such
Letter of Credit or (B) the Maturity Date, unless all the Banks have
approved such expiry date in writing;
(iv) the expiry date of any such requested Letter of Credit is
prior to the maturity date of any financial obligation to be supported
by the requested Letter of Credit;
CREDIT AGREEMENT - Page 34
(v) such requested Letter of Credit is not in form and
substance acceptable to the Issuing Bank, or the Issuance of a Letter
of Credit shall violate any applicable policies of the Issuing Bank;
(vi) such Letter of Credit is for the purpose of supporting the
Issuance of any letter of credit by any other Person;
(vii) such Letter of Credit is denominated in a currency other
than Dollars; or
(viii) the amount of such requested Letter of Credit exceeds the
Borrowing Base Advance Cap.
3.02 Issuance, Amendment and Renewal of Letters of Credit.
----------------------------------------------------
(a) Each Letter of Credit which is Issued hereunder shall be Issued
upon the irrevocable written request of the Borrower pursuant to a Notice of
Borrowing (Letter of Credit) in the applicable form attached hereto as Exhibit A
---------
received by the Issuing Bank (with a copy sent by the Borrower to the Agent and
to the Banks) by no later than 5:00 p.m. (Dallas time) on the date one day prior
to the proposed date of Issuance. Each such request for Issuance of a Letter of
Credit shall be by electronic transfer or facsimile, confirmed immediately in an
original writing or by electronic transfer, in the form of an L/C Application,
and shall specify in form and detail satisfactory to the Issuing Bank: (i) the
proposed date of Issuance of the Letter of Credit (which shall be a Business
Day); (ii) the face amount of the Letter of Credit; (iii) the expiry date of the
Letter of Credit; (iv) the name and address of the beneficiary thereof; (v) the
documents to be presented by the beneficiary of the Letter of Credit in case of
any drawing thereunder; (vi) the full text of any certificate to be presented by
the beneficiary in case of any drawing thereunder; and (vii) such other matters
as the Issuing Bank may require. Upon receipt of such request, each of the
Banks will notify Agent whether it consents to the Issuance of such Letter of
Credit by 1:00 p.m. (Dallas time) on the proposed date of Issuance. If any Bank
fails to notify Agent that it approves the Issuance of a Letter of Credit, Agent
shall notify the Borrower and the Issuing Bank by 2:00 p.m. (Dallas time) on the
proposed date of Issuance, and the proposed Letter of Credit will not be Issued,
unless one or more of the Banks have elected to become Approving Banks thereby
triggering the Conversion to Single Funding Bank Date.
(b) From time to time while a Letter of Credit is outstanding and
prior to the Expiration Date, the Issuing Bank will, upon the written request of
the Borrower received by Issuing Bank (with a copy sent by the Borrower to Agent
and the Banks) prior to 11:00 a.m. (Dallas time) on the proposed date of
amendment, consider the amendment of any Letter of Credit issued by it. Each
such request for amendment of a Letter of Credit shall be made by electronic
transfer or facsimile, confirmed immediately in an original writing or by
electronic transfer, made in the form of an L/C Amendment Application and shall
specify in form and detail satisfactory to the Issuing Bank and the Banks: (i)
the Letter of Credit to be amended; (ii) the proposed date of amendment of the
Letter of Credit (which shall be a Business Day); (iii) the nature of the
proposed amendment; and (iv) such other matters as the Issuing Bank may require.
The Issuing Bank shall be under no obligation to amend any Letter of Credit. The
Agent will
CREDIT AGREEMENT - Page 35
promptly notify the Banks of the receipt by it of any L/C Application or L/C
Amendment Application. No such amendment will be made unless the Banks agree to
such amendment. Upon receipt of such notice by the Agent to the Banks, each of
the Banks will notify Agent whether it consents to the amendment of such Letter
of Credit by 1:00 p.m. (Dallas time). If all Banks fail to notify Agent that
they approve the amendment of a Letter of Credit, Agent shall notify the
Borrower and the Issuing Bank by 2:00 p.m. (Dallas time), and the Letter of
Credit will not be amended; provided, however, that if one or more Banks do not
approve the amendment and one or more Banks do approve such amendment, the Agent
shall notify all Banks and the approving Banks may elect to become the Approving
Banks and amend such Letter of Credit, thereby triggering the Conversion to
Single Funding Bank Date.
(c) The Issuing Bank and the Banks agree that, while a Letter of
Credit is outstanding and prior to the Expiration Date, at the option of the
Borrower and upon the written request of the Borrower received by Issuing Bank
(with a copy sent to the Agent and the Banks) at least one Business Day (or such
shorter time as the Banks and the Issuing Bank may agree in a particular
instance in their sole discretion) prior to the proposed date of notification of
renewal, if such renewal is approved by all the Banks by 2:00 p.m. (Dallas time)
on the proposed date of notification of renewal, Issuing Bank shall be entitled
to authorize the renewal of any Letter of Credit Issued by it. Each such
request for renewal of a Letter of Credit made by the Borrower shall be made by
electronic transfer or facsimile, confirmed immediately in an original writing
or by electronic transfer, in the form of an L/C Amendment Application, and
shall specify in form and detail satisfactory to Issuing Bank and the Banks: (i)
the Letter of Credit to be renewed; (ii) the proposed date of renewal of the
Letter of Credit (which shall be a Business Day); (iii) the revised expiry date
of the Letter of Credit; and (iv) such other matters as the Issuing Bank may
require. Issuing Bank shall be under no obligation to renew any Letter of
Credit. If any outstanding Letter of Credit shall provide that it shall be
automatically renewed unless the beneficiary thereof receives notice from the
Issuing Bank that such Letter of Credit shall not be renewed, and if at the time
of renewal the Issuing Bank would be entitled to authorize the automatic renewal
of such Letter of Credit in accordance with this Subsection 3.02(c) upon the
request of the Borrower, then, provided no Bank has objected in writing to such
renewal, the Issuing Bank shall nonetheless be permitted to allow such Letter of
Credit to renew, and the Borrower and the Banks hereby authorize such renewal,
and, accordingly, the Issuing Bank shall be deemed to have received an L/C
Amendment Application from the Borrower requesting such renewal.
(d) The Issuing Bank may, at its election, deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than the Expiration Date.
(e) This Agreement shall control in the event of any conflict with
any L/C-Related Document (other than any Letter of Credit).
(f) The Issuing Bank will also deliver to the Agent a true and
complete copy of each Letter of Credit or amendment to or renewal of a Letter of
Credit.
CREDIT AGREEMENT - Page 36
3.03 Risk Participations, Drawings, Reducing Letters of Credit and
-------------------------------------------------------------
Reimbursements.
--------------
(a) Immediately upon the Issuance of each Letter of Credit which is
Issued prior to the Conversion to Single Funding Bank Date, each Bank shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
Issuing Bank a participation in such Letter of Credit and each drawing or
Reducing Letter of Credit Borrowing thereunder in an amount equal to the product
of (i) the Pro Rata Share of such Bank, times (ii) the maximum amount available
to be drawn under such Letter of Credit and the amount of such drawing or
Reducing Letter of Credit Borrowing, respectively. All Letters of Credit Issued
after the Conversion to Single Funding Bank Date shall be participated in only
by the Approving Banks. For purposes of Section 2.01, each Issuance of a Letter
of Credit shall be deemed to utilize the Uncommitted Line Portion of each Bank
by an amount equal to the amount of such participation.
(b) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Bank will promptly
notify the Borrower. Any notice given by an Issuing Bank or the Agent pursuant
to this Subsection 3.03(b) may be oral if immediately confirmed in writing
(including by facsimile); provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice. The Borrower shall reimburse the Issuing Bank prior to 5:00 p.m. (Dallas
time), on each date that any amount is paid by the Issuing Bank under any Letter
of Credit or to the beneficiary of a Reducing Letter of Credit in the form of a
Reducing L/C Borrowing (each such date, an "Honor Date"), in an amount equal to
----------
the amount so paid by the Issuing Bank. In the event the Borrower fails to
reimburse the Issuing Bank for the full amount of any drawing under any Letter
of Credit or of any Reducing L/C Borrowing, as the case may be, by 5:00 p.m.
(Dallas time) on the Honor Date, the Issuing Bank will promptly notify the Agent
and the Agent will promptly notify each Bank thereof, and Bank of America may,
in its discretion, make an Overdraft Advance under the Overdraft Line and
reimburse the Issuing Bank for the amount of the drawing under the Letter of
Credit or Reducing L/C Borrowing, as the case may be. If Bank of America
determines, in its sole discretion, not to make an Overdraft Advance, then the
Borrower shall be deemed to have requested that Revolving Loans be made by the
Banks to be disbursed to the Issuing Bank not later than one (1) Business Day
after the Honor Date under such Letter of Credit, subject to the amount of the
unutilized portion of the Borrowing Base Line.
(c) In the event of any request for a Reducing L/C Borrowing by the
Borrower in association with any Reducing Letter of Credit, the amount available
for drawing under such Reducing Letter of Credit will be reduced automatically,
and without any further amendment or endorsement to such Reducing Letter of
Credit, by the amount actually paid to such beneficiary, notwithstanding the
fact that the payment creating such Reducing L/C Borrowing is not made pursuant
to a conforming and proper draw under the corresponding Reducing Letter of
Credit; provided, however, if any Bank has given the Issuing Bank, the Agent,
the Borrower and each of the other Banks written notice that such Bank objects
to further Reducing L/C Borrowings at least three (3) Business Days prior to the
date the Borrower requests the Reducing L/C Borrowing, then the Issuing Bank
will not make such Reducing L/C Borrowing unless all Banks consent thereto.
CREDIT AGREEMENT - Page 37
(d) Each Bank shall upon any notice pursuant to Subsection 3.03(b)
make available to the Agent for the account of the Issuing Bank an amount in
Dollars and in immediately available funds equal to its Pro Rata Share of the
amount of the drawing or of the Reducing L/C Borrowing, as the case may be,
whereupon the participating Banks shall (subject to Subsection 3.03(e)) each be
deemed to have made a Revolving Loan to the Borrower in that amount. If any
Bank so notified fails to make available to the Agent for the account of the
Issuing Bank the amount of such Bank's Pro Rata Share of the amount of the
drawing or of the Reducing L/C Borrowing, as the case may be, by no later than
2:00 p.m. (Dallas time) on the Business Day following the Honor Date, then
interest shall accrue on such Bank's obligation to make such payment, from the
Honor Date to the date such Bank makes such payment, at a rate per annum equal
to the Federal Funds Rate in effect from time to time during such period. The
Agent will promptly give notice of the occurrence of the Honor Date, but failure
of the Agent to give any such notice on the Honor Date or in sufficient time to
enable any Bank to effect such payment on such date shall not relieve such Bank
from its obligations under this Section 3.03.
(e) With respect to any unreimbursed drawing or Reducing L/C
Borrowing, as the case may be, that is not converted into Revolving Loans in
whole or in part for any reason, the Borrower shall be deemed to have incurred
from the relevant Issuing Bank an L/C Borrowing in the amount of such drawing or
Reducing L/C Borrowing, as the case may be, which L/C Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at a rate per
annum equal to the Default Rate, and each Bank's payment to such Issuing Bank
pursuant to Subsection 3.03(c) shall be deemed payment in respect of its
participation in such L/C Borrowing and shall constitute an L/C Advance from
such Bank in satisfaction of its participation obligation under this Section
3.03.
(f) In the event that payment under any Letter of Credit is drawn or
purported to be drawn in a currency other than United States Dollars, the amount
of reimbursement to the Issuing Bank therefor shall be calculated on the basis
of the Issuing Bank's selling rate of exchange in effect (for the date on which
the Issuing Bank pays such draft or reimburses any of its correspondents which
paid such draft) for cable transfers to the place where and in the currency in
which such draft is payable. The Borrower shall comply with any and all
governmental exchange regulations now or hereafter applicable to any foreign
exchange, and shall indemnify and hold the Banks harmless from any failure of
the Borrower so to comply. If for any cause whatsoever, there exists at the
time in question no rate of exchange generally current at Issuing Bank for
effective cable transfer of the sort above provided for, the Borrower agrees to
pay the Banks on demand an amount in United States Dollars equivalent to the
actual cost of settlement of the Issuing Bank's obligation to the payor of the
draft or acceptance or any holder thereof, as the case may be, and however and
whenever such settlement may be made by the Issuing Bank.
(g) Each Bank's obligation in accordance with this Agreement to make
the Revolving Loans or L/C Advances, as contemplated by this Section 3.03, as a
result of a drawing under a Letter of Credit or Reducing L/C Borrowing, shall be
absolute and unconditional and without recourse to the relevant Issuing Bank and
shall not be affected by any circumstance, including (i) any set-off,
counterclaim, recoupment, defense or other right which such Bank may have
against such Issuing Bank, the Borrower or any other Person for any reason
whatsoever; (ii)
CREDIT AGREEMENT - Page 38
the occurrence or continuance of a Default, an Event of Default or a Material
Adverse Effect; or (iii) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
(h) Notwithstanding the foregoing, each Revolving Loan and L/C
Advance made to fund payment of any Letter of Credit which was Issued or amended
on or after the Conversion to Single Funding Bank Date shall be made only by the
Approving Banks.
3.04 Repayment of Participations.
---------------------------
(a) Upon (and only upon) receipt by the Agent for the account of the
Issuing Bank of immediately available funds from the Borrower (i) in
reimbursement of any payment made by Issuing Bank under the Letter of Credit or
in connection with a Reducing L/C Borrowing with respect to which any Bank has
paid the Agent for the account of the Issuing Bank for such Bank's participation
in the Letter of Credit pursuant to Section 3.03 or (ii) in payment of interest
thereon, the Agent will pay to each Bank, in the same funds as those received by
the Agent for the account of the Issuing Bank, the amount of such Bank's Pro
Rata Share of such funds, and the Issuing Bank shall receive the amount of the
Pro Rata Share of such funds of any Bank that did not so pay the Agent for the
account of the Issuing Bank.
(b) If the Agent or an Issuing Bank is required at any time to
return to the Borrower, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by the
Borrower to the Agent for the account of the Issuing Bank pursuant to Subsection
3.04(a) in reimbursement of a payment made under the Letter of Credit or in
connection with a Reducing L/C Borrowing or interest or fee thereon, each Bank
shall, on demand of the Issuing Bank, forthwith return to the Agent or the
Issuing Bank the amount of its Pro Rata Share of any amounts so returned by the
Agent or the Issuing Bank plus interest thereon from the date such demand is
made to the date such amounts are returned by such Bank to the Agent or the
Issuing Bank, at a rate per annum equal to the Federal Funds Rate in effect from
time to time.
3.05 Role of the Issuing Bank.
------------------------
(a) Each Bank and the Borrower agree that, in paying any drawing
under a Letter of Credit or funding any Reducing L/C Borrowing, Issuing Bank
shall not have any responsibility to obtain any document (other than any sight
draft or certificates expressly required by the Letter of Credit, but with
respect to Reducing Letter of Credit Borrowings, no document of any kind need be
obtained) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such
document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of Issuing Bank shall be liable to any
Bank for: (i) any action taken or omitted in connection herewith at the request
or with the approval of the Banks; (ii) any action taken or omitted in the
absence of gross negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any L/C-Related Document.
CREDIT AGREEMENT - Page 39
(c) The Borrower hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; provided, however, that this assumption is not intended to, and shall
--------
not, preclude the Borrower pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. No
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of Issuing Bank shall be liable or responsible for any of the matters
described in clauses (a) through (g) of Section 3.06; provided, however,
--------
anything in such clauses or elsewhere herein to the contrary notwithstanding,
that the Borrower may have a claim against Issuing Bank, and Issuing Bank may be
liable to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Borrower which
the Borrower proves were caused by Issuing Bank's willful misconduct or gross
negligence or Issuing Bank's willful failure to pay under any Letter of Credit
after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing: (i) Issuing Bank
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) Issuing Bank shall not be responsible for
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.
3.06 Obligations Absolute. The Obligations of the Borrower under this
--------------------
Agreement and any L/C-Related Document to reimburse Issuing Bank for a drawing
under a Letter of Credit or for a Reducing L/C Borrowing, and to repay any L/C
Borrowing and any drawing under a Letter of Credit or Reducing L/C Borrowing
converted into Revolving Loans, shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement and each
such other L/C-Related Document under all circumstances, including the
following:
(a) any lack of validity or enforceability of this Agreement or any
L/C-Related Document;
(b) 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 in respect of any
Letter of Credit or any other amendment or waiver of or any consent to departure
from all or any of the L/C-Related Documents;
(c) the existence of any claim, set-off, defense or other right that
the Borrower may have at any time against any beneficiary or any transferee of
any Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Issuing Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by the
L/C-Related Documents or any unrelated transaction;
(d) any draft, demand, certificate or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit;
CREDIT AGREEMENT - Page 40
(e) any payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly comply
with the terms of any Letter of Credit; or any payment made by the Issuing Bank
under any Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any beneficiary
or any transferee of any Letter of Credit, including any arising in connection
with any Insolvency Proceeding;
(f) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the Obligations of the Borrower in respect of any
Letter of Credit; or
(g) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Borrower.
3.07 Cash Collateral Pledge. Upon the request of the Agent, (i) if Issuing
----------------------
Bank has honored any full or partial drawing request on any Letter of Credit and
such drawing has resulted in an L/C Borrowing hereunder, or (ii) if, as of the
Expiration Date, any Letters of Credit may for any reason remain outstanding and
partially or wholly undrawn, the Borrower shall immediately Cash Collateralize
the L/C Obligations in an amount equal to such L/C Obligations. Upon the
occurrence of the circumstances described in Section 2.06 requiring the Borrower
to Cash Collateralize Letters of Credit, then, the Borrower shall immediately
Cash Collateralize the L/C Obligations in an amount equal to the applicable
excess.
3.08 Letter of Credit Fees.
---------------------
(a) The Borrower shall pay to the Agent for the account of each of
the Banks a letter of credit fee with respect to each of the Letters of Credit
Issued hereunder equal to the greater of (i) $700 or (ii) 1.50% per annum,
together with any related fees such as telecopy, facsimile and courier fees.
(b) The Borrower shall pay to the Issuing Bank, a minimum issuance
fee for each Letter of Credit, together with any related fees such as telecopy,
facsimile and courier fees, provided that no issuance fee shall be due in any
case where an amendment fee is paid pursuant to sub-paragraph (c) hereof.
Notwithstanding the foregoing, at all times when Bank of America is the only
Bank, no such issuance fee shall be due. The amount of such fee shall be
negotiated between the Banks and the Borrower at the time an additional Bank
becomes party to this Agreement.
(c) The Borrower shall pay to the Issuing Bank an amendment fee
equal to $100.00 for each amendment to any Letter of Credit, together with any
related fees such as telecopy, facsimile and courier fees.
CREDIT AGREEMENT - Page 41
(d) The Borrower shall pay to the Issuing Bank at the time of
negotiation, a negotiation fee equal to $150.00 for each Letter of Credit
negotiated, together with any related fees such as telecopy, facsimile and
courier fees.
(e) Such letter of credit fees as described in sub-paragraphs (a) -
(c) above for each Letter of Credit, unless otherwise specified, shall be due
and payable quarterly in arrears for the preceding quarter during which Letters
of Credit are outstanding, commencing on the first such quarterly date to occur
after the Closing Date.
3.09 Uniform Customs and Practice. The Uniform Customs and Practice for
----------------------------
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit shall (unless otherwise
expressly provided in the Letters of Credit) apply to the Letters of Credit.
3.10 Existing L/Cs. Co-Borrowers hereby acknowledge and agree that the
-------------
Existing L/Cs shall be deemed to be Letters of Credit Issued under this
Agreement for all purposes.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
4.01 Taxes.
-----
(a) Any and all payments by the Borrower to each Bank or the Agent
under this Agreement and any other Loan Document shall be made free and clear
of, and without deduction or withholding for, any Taxes. In addition, the
Borrower shall pay all Other Taxes.
(b) If the Borrower shall be required by law to deduct or withhold
any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank or the Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable
under this Section) such Bank or the Agent, as the case may be,
receives and retains an amount equal to the sum it would have received
and retained had no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Borrower shall also pay to each Bank or the Agent for
the account of such Bank, at the time interest is paid, Further Taxes
in the amount
CREDIT AGREEMENT - Page 42
that Bank specifies as necessary to preserve the after-tax yield the
Bank would have received if such Taxes, Other Taxes or Further Taxes
had not been imposed.
(c) The Borrower agrees to indemnify and hold harmless each Bank and
the Agent for the full amount of (i) Taxes, (ii) Other Taxes, and (iii) Further
Taxes in the amount that Agent or such Bank specifies as necessary to preserve
the after-tax yield Agent or such Bank would have received if such Taxes, Other
Taxes or Further Taxes had not been imposed, and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes, Other Taxes or Further Taxes were
correctly or legally asserted, provided, however, that the Borrower shall not be
required to indemnify or hold harmless any Bank to the extent (but only to the
extent) of such Bank's gross negligence or willful misconduct. Payment under
this indemnification shall be made within 30 days after the date the Bank or the
Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the Borrower of
Taxes, Other Taxes or Further Taxes, the Borrower shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
(e) If the Borrower is required to pay any amount to Agent or any
Bank pursuant to subsection (b) or (c) of this Section, then such Bank shall use
reasonable efforts (consistent with legal and regulatory restrictions) to change
the jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Borrower which may thereafter accrue, if such change in the
judgment of such Bank is not otherwise disadvantageous to such Bank.
4.02 Illegality.
----------
(a) If any Bank determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for such Bank or its applicable Lending Office to make Offshore Rate Loans,
then, on notice thereof by such Bank to the Borrower through the Agent, any
obligation of that Bank to make Offshore Rate Loans shall be suspended until the
Bank notifies the Agent and the Borrower that the circumstances giving rise to
such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any Offshore
Rate Loan, the Borrower shall, upon receipt of notice of such fact and demand
from such Bank (with a copy to the Agent), prepay in full, without premium or
penalty, such Offshore Rate Loans of that Bank then outstanding, together with
interest accrued thereon either on the last day of the Interest Period thereof,
if the Bank may lawfully continue to maintain such Offshore Rate Loans to such
day, or immediately, if the Bank may not lawfully continue to maintain such
Offshore Rate Loan. If the Borrower is required to so prepay any Offshore Rate
Loan, then concurrently with such prepayment, the Borrower shall borrow from the
affected Bank, in the amount of such repayment, a Base Rate Loan.
CREDIT AGREEMENT - Page 43
4.03 Increased Costs and Reduction of Return.
---------------------------------------
(a) If any Bank determines that, due to either (i) the introduction of
or any change (other than any change by way of imposition of or increase in
reserve requirements included in the calculation of the Offshore Rate or in
respect of the assessment rate payable by any Bank to the FDIC for insuring U.S.
deposits) in or in the interpretation of any law or regulation or (ii) the
compliance by that Bank with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Bank of agreeing to make or making,
funding or maintaining any Offshore Rate Loans or participating in Letters of
Credit, or, in the case of Issuing Bank, any increase in the cost to Issuing
Bank of agreeing to issue, issuing or maintaining any Letter of Credit or of
agreeing to make or making, funding or maintaining any unpaid drawing under any
Letter of Credit, then the Borrower shall be liable for, and shall from time to
time, within 30 days of demand (with a copy of such demand to be sent to the
Agent), pay to the Agent for the account of such Bank, additional amounts as are
sufficient to compensate such Bank for such increased costs, provided that the
--------
Borrower shall not be required to pay any such amount to the extent that such
amount is reflected in changes in the Base Rate, the Offshore Rate or other fees
or charges of such Bank.
(b) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or its
Lending Office) or any corporation controlling the Bank with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
loans, credits or obligations under this Agreement, then, within 30 days of
demand of such Bank to the Borrower through the Agent, the Borrower shall pay to
the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase, provided that the Borrower
--------
shall not be required to pay any such amount to the extent that such amount is
reflected in changes in the Base Rate.
4.04 Funding Losses. The Borrower shall reimburse each Bank and hold each
--------------
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Borrower to make on a timely basis any payment
of principal of any Offshore Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert a Loan
after the Borrower has given (or are deemed to have given) a Notice of Borrowing
or a Notice of Conversion/Continuation;
(c) the failure of the Borrower to make any prepayment in accordance
with any notice delivered under Section 2.06;
CREDIT AGREEMENT - Page 44
(d) the prepayment (including prepayments made pursuant to Article II
but excluding prepayments made pursuant to Section 4.02) or other payment
(including after acceleration thereof) of an Offshore Rate Loan on a day that is
not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any Offshore Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period except any such automatic conversion resulting from prepayments
required by Section 4.02;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Borrower to the Banks under this Section and
under Section 4.03, each Offshore Rate Loan made by a Bank (and each related
reserve, special deposit or similar requirement) shall be conclusively deemed to
have been funded at the LIBOR used in determining the Offshore Rate for such
Offshore Rate Loan by a matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Offshore Rate Loan is in fact so funded.
4.05 Inability to Determine Rates. If the Agent and the Banks determine
----------------------------
that for any reason adequate and reasonable means do not exist for determining
the Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the Offshore Rate applicable pursuant to Subsection
2.08(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to the Banks of
funding such Loan, the Agent will promptly so notify the Borrower and each Bank.
Thereafter, the obligation of the Banks to make or maintain Offshore Rate Loans,
as the case may be, hereunder shall be suspended until the Agent upon the
instruction of the Banks revokes such notice in writing. Upon receipt of such
notice, the Borrower may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Borrower does not revoke
such Notice, the Banks shall make, convert or continue the Loans, as proposed by
the Borrower, in the amount specified in the applicable notice submitted by the
Borrower, but such Loans shall be made, converted or continued as Base Rate
Loans instead of Offshore Rate Loans.
4.06 Reserves on Offshore Rate Loans. The Borrower shall pay to each Bank,
-------------------------------
as long as such Bank shall be required under regulations of the FRB to maintain
reserves with respect to liabilities or assets consisting of or including
Eurocurrency funds or deposits (currently known as "Eurocurrency liabilities"),
additional costs on the unpaid principal amount of each Offshore Rate Loan equal
to the actual costs of such reserves allocated to such Loan by the Bank (as
determined by the Bank in good faith, which determination shall be conclusive),
payable on each date on which interest is payable on such Loan, provided the
Borrower shall have received at least 15 days' prior written notice (with a copy
to the Agent) of such additional interest from the Bank. If a Bank fails to
give notice 15 days prior to the relevant Interest Payment Date, such additional
interest shall be payable 15 days from receipt of such notice.
CREDIT AGREEMENT - Page 45
4.07 Certificates of Banks. Together with any demand by a Bank for
---------------------
reimbursement or compensation pursuant to this Article IV, such Bank shall
provide to the Borrower (with a copy to the Agent) a certificate signed by an
authorized officer of the Bank (a) describing the event giving rise to such
demand, and (b) showing the method and detailed calculations (which may include
any reasonable averaging, attribution or allocation procedures) used by the Bank
to determine the amount demanded by the Bank. In calculating the amount of
costs, expenses, capital requirements or rate of reduction allocable to the
Borrower, such Bank shall use such reasonable methods as such Bank shall
determine. Such calculation and certification shall be conclusive and binding
on the Borrower in the absence of manifest error.
4.08 Substitution of Banks. Upon the receipt by the Borrower from any Bank
---------------------
(an "Affected Bank") of a claim for compensation under Section 4.03, the
-------------
Borrower may: (a) request the Affected Bank to use its best efforts to obtain a
replacement bank or financial institution satisfactory to the Borrower to
acquire and assume all or a ratable part of all of such Affected Bank's Loans
and Uncommitted Line Portion (a "Replacement Bank"); (b) request one or more of
----------------
the other Banks to acquire and assume all or part of such Affected Bank's Loans
and Uncommitted Line Portion; or (c) designate a Replacement Bank. Any such
designation of a Replacement Bank under clause (a) or (c) shall be subject to
the prior written consent of the Agent (which consent shall not be unreasonably
withheld).
4.09 Survival. The agreements and Obligations of the Borrower in this
--------
Article IV shall survive the payment of all other Obligations.
ARTICLE V
CLOSING ITEMS
-------------
5.01 Matters to be Satisfied Upon Execution of Agreement. At the time the
---------------------------------------------------
Banks execute this Agreement, unless otherwise waived by the Banks, the Agent
shall have received all of the following, in form and substance satisfactory to
the Agent and each Bank, and in sufficient copies for each Bank:
(a) Loan Documents. This Agreement, the Notes, the Guaranties, the
--------------
Security Agreements, the Nations Funds Security Agreement, the Atmos Support
Agreement, the ▇▇▇▇▇▇▇▇ Pledge, a Tri-party Agreement among Borrower, Agent and
Banc of America Futures Incorporated, a Blocked Account Agreement, financing
statements and financing statement amendments and each other document or
certificate executed in connection with this Agreement, executed by each party
thereto;
(b) Resolutions; Incumbency. Copies of the resolutions of the
-----------------------
members of the Borrower authorizing the transactions contemplated hereby,
certified as of the Closing Date by the Secretary of the Borrower, and
certifying the names and true signatures of the officers of the Borrower
authorized to execute, deliver and perform, as applicable, this Agreement, and
all other Loan Documents to be delivered by the Borrower hereunder;
CREDIT AGREEMENT - Page 46
(c) Organization Documents; Existence; Good Standing. The articles
------------------------------------------------
or certificate of formation and the regulations of the Borrower as in effect on
the Closing Date, all certified by the Secretary of the Borrower as of the
Closing Date, and the articles or certificate of formation and the Bylaws or
regulations of ▇▇▇▇▇▇▇▇ Marketing, Inc. and Atmos Energy Marketing LLC as in
effect on the Closing Date, all certified by the Secretary of ▇▇▇▇▇▇▇▇
Marketing, Inc. and Atmos Energy Marketing LLC as of the Closing Date together
with certificates of existence and good standing for the Borrower, ▇▇▇▇▇▇▇▇
Marketing, Inc. and Atmos Energy Marketing LLC from the Secretary of State (or
similar, applicable Governmental Authority) of its state of incorporation and
each state where the general partner of the Borrower is qualified to do business
as a foreign corporation, certified as of, or reasonably close to, the Closing
Date;
(d) Legal Opinions. Legal opinion of counsel to the Borrower,
--------------
counsel to Atmos Energy Corporation, counsel to Atmos Energy Marketing, L.L.C.,
and counsel to ▇▇▇▇▇▇▇▇ Marketing, Inc., each addressed to the Agent and the
Banks, in form and substance acceptable to the Agent and the Banks;
(e) Payment of Fees. Evidence of payment by the Borrower of all
---------------
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with Attorney Costs of the Agent to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute Bank of America's reasonable estimate of
Attorney Costs incurred or to be incurred by it through the closing proceedings
(provided that such estimate shall not thereafter preclude final settling of
accounts between the Borrower and the Agent); including any such costs, fees and
expenses arising under or referenced in Sections 2.09 and 11.04(a) and all costs
of the auditors and consultants retained by the Banks in connection with the
Obligations of the Borrower to the Agent;
(f) Certificate. A certificate signed by a Responsible Officer of
-----------
the Borrower, dated as of the Closing Date, stating to the best of such
officer's knowledge that:
(i) The representations and warranties contained in Article VI
are true and correct on and as of such date, as though made on and as
of such date; and
(ii) No Default or Event of Default exists or would result from
the Credit Extension.
(iii) There has occurred since April 30, 2000, no event or
circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect;
(g) Insurance. Evidence of insurance required to be maintained by
---------
the Borrower hereunder;
(h) Filings. Evidence that all filings needed to perfect the
-------
security interests granted by the Security Agreements have been completed or due
provision has been made therefor; and
CREDIT AGREEMENT - Page 47
(i) Other Documents. Such other approvals, opinions, documents or
---------------
materials as the Agent or any Bank may request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants to the Agent and each Bank that:
6.01 Existence and Power. Each of the Borrower, its Subsidiaries,
-------------------
▇▇▇▇▇▇▇▇ Marketing, Inc. and Atmos Energy Marketing LLC:
(a) is a limited liability company or corporation, as the case may be,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on their
business and to execute, deliver, and perform their respective Obligations under
the Loan Documents;
(c) is duly qualified as a foreign limited liability company or
corporation, as the case may be, and is licensed and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification or license; and
(d) to the best knowledge of such Person, is in compliance with all
Requirements of Law.
6.02 Authorization; No Contravention. The execution, delivery and
-------------------------------
performance by the Borrower, the Guarantors and ▇▇▇▇▇▇▇▇ Marketing, Inc. of each
Loan Document to which such Person is party, have been duly authorized, and do
not and will not:
(a) contravene the terms of the Organization Documents of such Person;
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which such Person is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is subject; or
(c) to the best knowledge of the Borrower, violate any Requirement of
Law.
6.03 Governmental Authorization. No approval, consent, exemption,
--------------------------
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the
CREDIT AGREEMENT - Page 48
Borrower or any of its Subsidiaries or any of the Guarantors or ▇▇▇▇▇▇▇▇
Marketing, Inc., as applicable, of any Loan Document.
6.04 Binding Effect. This Agreement and each other Loan Document to which
--------------
the Borrower or any of its Subsidiaries or any of the Guarantors or ▇▇▇▇▇▇▇▇
Marketing, Inc. is a party constitute the legal, valid and binding obligations
of such Person to the extent it is a party thereto, enforceable against such
Person in accordance with their respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity.
6.05 Litigation. Except as specifically disclosed in Schedule 6.05, there
---------- -------------
are no actions, suits or proceedings, pending, or to the knowledge of the
Borrower, or any of the Guarantors or ▇▇▇▇▇▇▇▇ Marketing, Inc. threatened at
law, in equity, in arbitration or before any Governmental Authority, against the
Borrower, or any of its Subsidiaries or any of the Guarantors or ▇▇▇▇▇▇▇▇
Marketing, Inc. or any of their respective properties which purport to affect or
pertain to this Agreement or any other Loan Document, or any of the transactions
contemplated hereby or thereby; and no injunction, writ, temporary restraining
order or any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the execution, delivery
or performance of this Agreement or any other Loan Document, or directing that
the transactions provided for herein or therein not be consummated as herein or
therein provided.
6.06 No Default. No Default or Event of Default exists or would result
----------
from the incurring of any Obligations by the Borrower. As of the Closing Date,
neither the Borrower nor any of its Subsidiaries are in default under or with
respect to any Contractual Obligation in any respect which, individually or
together with all such defaults, could reasonably be expected to have a Material
Adverse Effect.
6.07 ERISA Compliance. Except as specifically disclosed in Schedule 6.07:
---------------- -------------
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best knowledge of the
Borrower, nothing has occurred which would cause the loss of such qualification.
The Borrower and each ERISA Affiliate have made all required contributions to
any Plan subject to Section 412 of the Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the
Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which have resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect.
CREDIT AGREEMENT - Page 49
(c) (i) To the Borrower's best knowledge, no ERISA Event has occurred
or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded
Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of ERISA
with respect to any Pension Plan (other than premiums due and not delinquent
under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) or
ERISA.
6.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
-----------------------------------
be used solely for the purposes set forth in and permitted by Section 7.12.
Neither the Borrower nor any Subsidiary is generally engaged in the business of
purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock. In no event shall the Borrower use any
portion of the Loan proceeds or any Letter of Credit to invest in the Nations
Funds Account.
6.09 Title to Properties. The Borrower and each of its Subsidiaries have
-------------------
good record and marketable title in fee simple to, or valid leasehold interests
in, all real property necessary or used in the ordinary conduct of their
respective businesses, except for such defects in title as could not,
individually or in the aggregate, have a Material Adverse Effect. As of the
Closing Date, the property of the Borrower and its Subsidiaries is subject to no
Liens, other than Permitted Liens.
6.10 Taxes. The Borrower and its Subsidiaries have filed all Federal and
-----
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges shown thereon to be due and payable, and have paid all material taxes,
assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets as due and payable, except those which are
being contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax
assessment against the Borrower or any of its Subsidiaries that would, if made,
have a Material Adverse Effect.
6.11 Financial Condition.
-------------------
(a) The unaudited balance sheet of the Borrower dated as of May 31,
2000:
(i) fairly presents the financial condition of the Borrower as of
the date thereof; and
(ii) shows all material indebtedness and other liabilities,
direct or contingent, of the Borrower and as of the date thereof,
including liabilities for taxes, material commitments and Contingent
Obligations.
(b) Since April 30, 2000, there has been no Material Adverse Effect.
CREDIT AGREEMENT - Page 50
6.12 Environmental Matters. The Borrower conducts in the ordinary course
---------------------
of business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof the Borrower has reasonably concluded that, except as previously
specifically disclosed in Schedule 6.12, such Environmental Laws and
-------------
Environmental Claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
6.13 Regulated Entities. Neither the Borrower, nor any Person controlling
------------------
the Borrower, or any of its Subsidiaries, is an "Investment Company" within the
meaning of the Investment Company Act of 1940. The Borrower is not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur
Indebtedness.
6.14 No Burdensome Restrictions. Neither the Borrower nor any of its
--------------------------
Subsidiaries is a party to or bound by any Contractual Obligation, or subject to
any restriction in any Organization Document, or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.
6.15 Copyrights, Patents, Trademarks and Licenses, etc. To the Borrower's
-------------------------------------------------
best knowledge, the Borrower or its Subsidiaries own or are licensed or
otherwise have the right to use all of the patents, trademarks, service marks,
trade names, copyrights, contractual franchises, authorizations and other rights
that are reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person. To the knowledge of the
Borrower, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Borrower or any Subsidiary infringes upon any rights held by
any other Person. Except as specifically disclosed in Schedule 6.05, no claim
-------------
or litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Borrower,
proposed.
6.16 Subsidiaries. The Borrower has no Subsidiaries other than those
------------
specifically disclosed in part (a) of Schedule 6.16 hereto and have no equity
-------------
investments in any other corporation or entity other than those specifically
disclosed in part (b) of Schedule 6.16.
-------------
6.17 Insurance. Except as specifically disclosed in Schedule 6.17, the
--------- -------------
properties of the Borrower and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Borrower, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Borrower or such Subsidiary operates.
6.18 Full Disclosure. To the Borrower's best knowledge, none of the
---------------
representations or warranties made by the Borrower or any of its Subsidiaries in
the Loan Documents as of the date such representations and warranties are made
or deemed made, and none of the statements contained in any exhibit, report,
statement or certificate furnished by or on behalf of the
CREDIT AGREEMENT - Page 51
Borrower or any of its Subsidiaries in connection with the Loan Documents
(including the offering and disclosure materials delivered by or on behalf of
the Borrower to the Banks prior to the Closing Date), contains any untrue
statement of a material fact or omits any material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
6.19 Y2K Representation. On the basis of a comprehensive review and
------------------
assessment of the Borrower's systems and equipment and inquiry made of the
Borrower's material suppliers, vendors and customers, the Borrower's management
is of the view that the "Year 2000 problem" (that is, the inability of computer,
as well as embedded microchips in non-computing devices, to perform date-
sensitive functions with respect to certain dates prior to and after December
31, 1999) (the "Year 2000 Problem"), including costs of remediation, has not
-----------------
resulted in and will not result in a material adverse change in the operations,
business, properties, condition (financial or otherwise) or prospects of the
Borrower. The Borrower has developed feasible contingency plans adequately to
ensure uninterrupted and unimpaired business operation in the event of failure
of its own or a third party's systems or equipment due to the Year 2000 Problem,
including those of vendors, customers, and suppliers, as well as a general
failure of or interruption in its communications and delivery infrastructure.
ARTICLE VII
AFFIRMATIVE COVENANTS
---------------------
So long as any Bank shall be continuing to consider making Revolving Loans
or Issuing Letters of Credit hereunder, or any Loan or other Obligation shall
remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding:
7.01 Financial Statements. The Borrower shall deliver to the Banks, in
--------------------
form and detail satisfactory to the Banks:
(a) as soon as available, but not later than 120 days after the end of
each fiscal year, a copy of the audited financial statements to include a
balance sheet as at the end of such year for the Borrower, with schedules and
the related statements of income or operations, members' capital and cash flows
for such year for the Borrower, setting forth in each case in comparative form
the figures for the previous fiscal year, and accompanied by the opinion of a
nationally-recognized independent public accounting firm ("Independent Auditor")
-------------------
which report shall state that such financial statements present fairly the
financial position for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years. Such opinion shall not be qualified or
limited because of a restricted or limited examination by the Independent
Auditor of any material portion of the Borrower's or any Subsidiary's records;
and
(b) as soon as available, but not later than 45 days after the end of
each month, the Borrower prepared financial statements for the Borrower in form
acceptable to Banks.
CREDIT AGREEMENT - Page 52
7.02 Certificates; Other Information. The Borrower shall furnish to the
-------------------------------
Agent and the Banks:
(a) concurrently with the delivery of the financial statements
referred to in Subsections 7.01(a) and (b), a Compliance Certificate executed by
a Responsible Officer of the Borrower;
(b) a Borrowing Base Collateral Position Report executed by a
Responsible Officer of the Borrower as of 15th and as of the last Business Day
of each month, in each case delivered within ten (10) days of such reporting
date;
(c) on the tenth day of each month, a Net Position Report, as of the
last business day of the preceding month, certified by a Responsible Officer of
the Borrower;
(d) promptly when available, such additional information regarding the
business, financial or corporate affairs of the Borrower or any Subsidiary as
the Agent, at the request of any Bank, may from time to time reasonably request;
and
(e) a quarterly report of inventory storage locations at each quarter
end.
7.03 Notices. The Borrower shall promptly notify the Agent and each Bank:
-------
(a) of the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that could reasonably be
expected to become a Default or Event of Default;
(b) of the occurrence of any event which could reasonably be expected
to cause a material impairment of the Collateral Position;
(c) of the occurrence of any event which could reasonably be expected
to cause a Material Adverse Effect, including (i) breach or non-performance of,
or any default under, a material Contractual Obligation of the Borrower or any
Subsidiary; (ii) any material dispute, litigation, investigation, proceeding or
suspension between the Borrower or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary, including
pursuant to any applicable Environmental Laws;
(d) of the occurrence of any of the following events affecting the
Borrower or any ERISA Affiliate (but in no event more than 10 days after the
Borrower receives notice or becomes aware of such event), and deliver to the
Agent and each Bank a copy of any notice with respect to such event that is
filed with a Governmental Authority and any notice delivered by a Governmental
Authority to the Borrower or any ERISA Affiliate with respect to such event:
(i) an ERISA Event;
CREDIT AGREEMENT - Page 53
(ii) a material increase in the Unfunded Pension Liability of any
Pension Plan;
(iii) the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by the Borrower or any
ERISA Affiliate; or
(iv) the adoption of any amendment to a Plan subject to Section
412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability;
(e) of any material change in accounting policies or financial
reporting practices by the Borrower; and
(f) of any intended relocation of inventory or any intended new
location of inventory owned by the Borrower, at least ten (10) Business Days
prior to the date such inventory is to be stored at such location.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein, and stating what action the Borrower or any
affected Subsidiary proposes to take with respect thereto and at what time.
Each notice under Subsection 7.03(a) shall describe with particularity any and
all clauses or provisions of this Agreement or other Loan Document that have
been (or reasonably could be expected to be) breached or violated as therein
provided.
7.04 Preservation of Corporate Existence, Etc. The Borrower shall, and
-----------------------------------------
shall cause each of its Subsidiaries to:
(a) preserve and maintain in full force and effect its existence and
good standing under the laws of its state or jurisdiction of organization;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks, trade
names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
7.05 Maintenance of Property. The Borrower shall maintain, and shall cause
-----------------------
each of its Subsidiaries to maintain, and preserve all its property which is
used or useful in its business in good working order and condition, ordinary
wear and tear excepted and make all necessary
CREDIT AGREEMENT - Page 54
repairs thereto and renewals and replacements thereof except in any case where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect.
7.06 Insurance. The Borrower shall maintain, and shall cause each of its
---------
Subsidiaries to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons, including, without
limitation, marine cargo insurance, if appropriate. Agent, for the benefit of
the Banks, shall be named as an additional insured and loss payee under all such
polices, without liability for premiums or club calls.
7.07 Payment of Obligations. The Borrower shall, and shall cause each of
----------------------
its Subsidiaries to, pay and discharge as the same shall become due and payable,
all their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or levies
upon it or its properties or assets, unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by the Borrower or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien upon
its property unless the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained
by the Borrower or Subsidiary, and provided that at such time the claim becomes
a Lien (other than a lis pendens notice), it shall be promptly paid; and
(c) all indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
7.08 Compliance with Laws. The Borrower shall comply, and shall cause each
--------------------
of its Subsidiaries to comply, with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business (including the Federal
Fair Labor Standards Act).
7.09 Compliance with ERISA. The Borrower shall, and shall cause each of
---------------------
its ERISA Affiliates to: (a) maintain each Plan in compliance with the
applicable provisions of ERISA, the Code and other federal or state law; (b)
cause each Plan which is qualified under Section 401(a) of the Code to maintain
such qualification; and (c) make all required contributions to any Plan subject
to Section 412 of the Code.
7.10 Inspection of Property and Books and Records. The Borrower shall
--------------------------------------------
maintain and shall cause each of its Subsidiaries to maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Borrower and such Subsidiary.
The Borrower shall permit, and shall cause each of its Subsidiaries to permit
CREDIT AGREEMENT - Page 55
representatives and independent contractors of the Agent or any Bank to visit
and inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public accountants, all at
the expense of the Agent or Bank causing such inspection and at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Borrower; provided, however, when an Event
-------- -------
of Default exists the Agent or any Bank may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice.
7.11 Environmental Laws. The Borrower shall, and shall cause each of its
------------------
Subsidiaries to, conduct its operations and keep and maintain its property in
compliance in all material respects with all Environmental Laws.
7.12 Use of Proceeds. The Borrower shall use the proceeds of the Loans for
---------------
the uses described in this Agreement and not in contravention of any Requirement
of Law or of any Loan Document restrictions on use of loan proceeds.
The Borrower shall not use the proceeds of the Loan or any Letter of
Credit to acquire, directly or indirectly, any Margin Stock.
7.13 Collateral Position Audit. At such times as Agent deems advisable,
-------------------------
the Borrower will allow Agent or an entity satisfactory to Agent to conduct a
thorough examination of the Collateral, and the Borrower will fully cooperate in
such examination. The Borrower will pay the costs and expenses of one such
examination each calendar year.
7.14 Payments to Bank Blocked Account. The Borrower promptly, and from
--------------------------------
time to time, shall notify all Account Debtors under any of its Accounts to make
all payments under such Accounts to the Bank Blocked Account and shall provide
Banks with reasonable evidence of such notification. In the event that any
Account Debtor does make any payment directly to the Borrower or into any other
account that Borrower maintains with Bank of America, the Borrower shall
promptly deposit such amounts into the Bank Blocked Account. The Borrower and
each other Bank other than Bank of America acknowledge and agree that the Bank
Blocked Account is under the exclusive dominion and control of Bank of America.
If Borrower desires that funds be transferred from the Bank Blocked Account into
Borrower's operating account, Borrower shall request such a transfer by
facsimile transmission utilizing the form approved by Bank of America and
provided to Borrower for such request. Although Bank of America may from day to
day transfer proceeds from such account into the Borrower's operating account,
Bank of America has absolutely no duty to make any such transfer and at any time
may refuse to transfer any funds until all Obligations have been satisfied.
Bank of America at any time may apply amounts contained in the Bank Blocked
Account toward satisfaction of the Obligations. The Borrower further
acknowledges and agrees that although Bank of America may from time to time
transfer funds into the Nations Funds Account, Bank of America has no duty to
make any such transfer and to the extent of any transfer, all amounts in the
Nations Funds Account are and shall remain in the exclusive dominion and control
of Bank of America.
CREDIT AGREEMENT - Page 56
7.15 Financial Covenants. The Borrower will, at all times, observe the
-------------------
following financial covenants:
(a) minimum Net Working Capital as follows:
(i) $10,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $50,000,000.00;
(ii) $15,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $75,000,000.00; and
(iii) $20,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $100,000,000.00;
(b) minimum Tangible Net Worth as follows:
(iv) $11,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $50,000,000.00;
(v) $16,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $75,000,000.00; and
(vi) $21,000,000.00 at such time as the elected Borrowing Base
Sub-Cap is $100,000,000.00;
(c) at all times, a ratio of total liabilities to Tangible Net Worth
not to exceed 5.0:1.0; and
(d) at all times, a ratio of EBITDA to interest expense not less than
3.0:1.0.
In calculating the Net Working Capital coverages set forth above, the
amount of Subordinated Debt excluded in such calculation shall not exceed 50% of
the resultant Net Working Capital. In calculating the Tangible Net Worth
coverages set forth above, the amount of Subordinated Debt excluded in such
calculation shall not exceed 50% of the resultant Tangible Net Worth.
7.16 Separate Operations. The Borrower will at all times maintain and
-------------------
observe policies and procedures to insure that its operations are separate and
distinct from the operations of Borrower's Affiliates.
7.17 Post-Closing Matters. On or before August 11, 2000, the Borrower shall
--------------------
provide to the Banks a Certificate of compliance from the State of Alabama for
the Borrower.
CREDIT AGREEMENT - Page 57
ARTICLE VIII
NEGATIVE COVENANTS
------------------
So long as any Loan or other Obligation shall remain unpaid or unsatisfied,
or any Letter of Credit shall remain outstanding, unless the Banks waive
compliance in writing:
8.01 Limitation on Liens. The Borrower shall not, and shall not suffer or
-------------------
permit any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("Permitted
---------
Liens"):
-----
(a) any Lien existing on property of the Borrower or any of its
Subsidiaries on the Closing Date and set forth in Schedule 8.01 securing
-------------
Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 7.07, provided that no notice
of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty and, with respect to
any such warehousemen's or landlord's lien, such liens only secure accrued
rental charges;
(e) Liens (other than any Lien imposed by ERISA) consisting of pledges
or deposits required in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on the property of the Borrower or its Subsidiaries securing
(i) the non-delinquent performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, (ii) contingent obligations on
surety and appeal bonds, and (iii) other non-delinquent obligations of a like
nature; in each case, incurred in the ordinary course of business, provided all
such Liens in the aggregate would not (even if enforced) cause a Material
Adverse Effect;
(g) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
unstayed liens in the aggregate at any time outstanding for the Borrower and its
Subsidiaries do not exceed $100,000.00;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially interfere with the ordinary conduct of the business of the Borrower
and its Subsidiaries;
CREDIT AGREEMENT - Page 58
(i) purchase money security interests (other than capital leases) on
any property acquired or held by the Borrower or its Subsidiaries in the
ordinary course of business, securing Indebtedness incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such property;
provided that (i) any such Lien attaches to such property concurrently with or
-------- ----
within 20 days after the acquisition thereof, (ii) such Lien attaches solely to
the property so acquired in such transaction, (iii) the principal amount of the
debt secured thereby does not exceed 100% of the cost of such property, and (iv)
the principal amount of the Indebtedness secured by any and all such purchase
money security interests shall not at any time exceed $100,000.00;
(j) Liens of interest owners, including without limitation, Liens
arising as would be defined in Texas Bus. & Com. Code Section 9.319, comparable
laws of the states of Oklahoma, Kansas, Wyoming or New Mexico, or other
comparable law; and
(k) Liens not permitted by clause 8.01 (a), (b), (c), (d), (e), (f),
(g), (h) or (i), in an aggregate amount not to exceed $100,000.
8.02 Consolidations and Mergers. The Borrower shall not suffer or permit
--------------------------
any of its Subsidiaries to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person.
8.03 Limitation on Indebtedness. The Borrower shall not suffer or permit
--------------------------
any of its Subsidiaries to, create, incur, assume, suffer to exist, or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness incurred pursuant to or in accordance with, this
Agreement;
(b) Indebtedness consisting of trade payables in the ordinary course
of business;
(c) Indebtedness existing on the Closing Date, and described on
Schedule 8.01;
-------------
(d) Indebtedness in respect of purchase money security interests
permitted by Section 8.01 hereof; and
(e) Indebtedness in respect of Contingent Obligations permitted by
Section 8.06 hereof.
8.04 Transactions with Affiliates. The Borrower shall not, and shall not
----------------------------
suffer or permit any of its Subsidiaries to, enter into any transaction with any
Affiliate of the Borrower, except upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Borrower or such
Subsidiary. Without limiting the foregoing, all sales of Product by Borrower
to, and purchases of Product by Borrower from, any Affiliate of Borrower shall
be at the market
CREDIT AGREEMENT - Page 59
price on the day of sale, except for transactions made in connection with
Borrower's Index Sales Strategies which strategies shall have been approved by
the Banks prior to any such transactions.
8.05 Use of Proceeds. The Borrower shall not suffer or permit any of its
---------------
Subsidiaries to, use any portion of the Loan proceeds or any Letter of Credit,
directly or indirectly, (a) to purchase or carry Margin Stock, (b) to repay or
otherwise refinance indebtedness of the Borrower or others incurred to purchase
or carry Margin Stock, (c) to extend credit for the purpose of purchasing or
carrying any Margin Stock, or (d) to acquire any security in any transaction
that is subject to Section 13 or 14 of the Exchange Act.
8.06 Contingent Obligations. The Borrower shall not suffer or permit any
----------------------
of its Subsidiaries to, create, incur, assume or suffer to exist any Contingent
Obligations except:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) swap contracts entered into in the ordinary course of business as
bona fide hedging transactions; and
(c) Contingent Obligations of the Borrower and its Subsidiaries
existing as of the Closing Date and described on Schedule 8.07.
-------------
8.07 Restricted Payments. The Borrower shall not suffer or permit any of
-------------------
its Subsidiaries to, directly or indirectly declare or make, any distribution of
income or capital on account of any membership interest of the Borrower now or
hereafter in existence ("Distributions"), or set aside or otherwise deposit or
invest any sums for such purpose, except Distributions to its members, so long
as no Default or Event of Default has occurred or would result therefrom.
8.08 ERISA. The Borrower shall not, nor suffer or permit any of its
-----
ERISA Affiliates to: (a) engage in a prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan; or (b) engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
8.09 Change in Business. The Borrower shall not, nor suffer or permit any
------------------
of its Subsidiaries to, engage in any line of business different from the line
of business carried on by the Borrower and its Subsidiaries on the date hereof.
8.10 Accounting Changes. The Borrower shall not, nor suffer or permit any
------------------
of its Subsidiaries to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
the Borrower (except in connection with the acquisition of Borrower by Atmos
Energy Marketing LLC) or of any Subsidiary.
8.11 Net Position. At no time will the Borrower allow its Net Position to
------------
exceed 2,500,000 MMBTUS of natural gas.
CREDIT AGREEMENT - Page 60
8.12 Loans and Investments. The Borrower shall not purchase or acquire, or
---------------------
suffer or permit any Subsidiary to purchase or acquire, or make any commitment
therefor, any capital stock, equity interest, or any obligations or other
securities of, or any interest in, any Person, or make or commit to make any
Acquisitions, or make or commit to make any advance, loan, extension of credit
or capital contribution to or any other investment in, any Person including any
Affiliate of Borrower, except for:
(a) investments in cash equivalents and Marketable Securities; and
(b) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business.
8.13 Change of Management. Borrower shall not permit any Change of
--------------------
Management. For purposes of this Section 8.13, "Change of Management" shall
mean that ▇. ▇. ▇▇▇▇▇▇▇▇ has ceased to act in his capacity as chief executive
officer of the Borrower.
8.14 Deposit Accounts. Borrower shall not maintain any deposit accounts
----------------
with a bank or financial institution other than Bank of America.
8.15 Risk Management Policy. The Borrower will not materially change its
----------------------
risk management policies without the prior written consent of Agent and the
Banks. Borrower agrees that upon request by Agent, from time to time, the
Borrower and the Banks will review and evaluate Borrower's risk management
policies.
ARTICLE IX
EVENTS OF DEFAULT
-----------------
9.01 Event of Default. Any of the following shall constitute an "Event of
---------------- --------
Default":
-------
(a) Non-Payment. The Borrower fails to pay any amount payable
-----------
hereunder or under any other Loan Document when due including without limitation
such amounts as may come due as a result of a "demand" made by the Banks under
the Notes; or
(b) Representation or Warranty. Any representation or warranty
--------------------------
made or deemed made herein, in any other Loan Document, or which is contained in
any certificate, document or financial or other statement by the Borrower, or
any Responsible Officer furnished at any time under this Agreement, or in or
under any other Loan Document, is incorrect or incomplete in any respect on or
as of the date made or deemed made; or
(c) Covenant Defaults. The Borrower fails to perform or observe any
-----------------
other term, covenant or agreement contained in any of the Loan Documents; or
(d) Cross-Default. The Borrower or any Subsidiary of the Borrower
-------------
(i) fails to make any payment in respect of any Indebtedness or Contingent
Obligation having an
CREDIT AGREEMENT - Page 61
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $100,000.00 when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise); or (ii) fails to
perform or observe any other material condition or covenant, or any other event
shall occur or condition exist, under any agreement or instrument relating to
any such Indebtedness or Contingent Obligation, if, after expiration of any
grace or cure period therein provided, the effect of such failure, event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause such
Indebtedness to be declared to be due and payable prior to its stated maturity,
or such Contingent Obligation to become payable or cash collateral in respect
thereof to be demanded, except to the extent that any such amounts are in bona
fide dispute in an aggregate amount not exceeding $250,000 for which adequate
reserves are maintained in accordance with GAAP; or
(e) Insolvency; Voluntary Proceedings. The Borrower or any
---------------------------------
Subsidiary of the Borrower (i) ceases or fails to be solvent, or generally fails
to pay, or admits in writing its inability to pay, its debts as they become due,
whether at stated maturity or otherwise; (ii) commences any Insolvency
Proceeding with respect to itself; or (iii) takes any action to effectuate or
authorize any of the foregoing; or
(f) Involuntary Proceedings. (i) Any involuntary Insolvency
-----------------------
Proceeding is commenced or filed against the Borrower or any Subsidiary of the
Borrower, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Borrower or any
Subsidiary or any of any of the Borrower's properties, and any such proceeding
or petition shall not be dismissed, or such writ, judgment, warrant of
attachment, execution or similar process shall not be released, vacated or fully
bonded within 60 days after commencement, filing or levy; (ii) the Borrower or
any Subsidiary of the Borrower admits the material allegations of a petition
against it in any Insolvency Proceeding, or an order for relief (or similar
order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the
Borrower or any Subsidiary of the Borrower acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor), or other similar Person for itself or a substantial portion
of its property or business; or
(g) ERISA. (i) An ERISA Event shall occur with respect to a Pension
-----
Plan or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $100,000.00;
(ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time exceeds $100,000.00; or (iii) the Borrower or any ERISA Affiliate
shall fail to pay when due, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in
an aggregate amount in excess of $100,000.00; or
(h) Monetary Judgments. One or more non-interlocutory judgments,
------------------
non-interlocutory orders, decrees or arbitration awards is entered against the
Borrower or any Subsidiary of the Borrower, which such judgment, order, decree
or award is not effectively
CREDIT AGREEMENT - Page 62
stayed pending appeal thereof, involving in the aggregate a liability as to any
single or related series of transactions, incidents or conditions, to pay an
amount of $250,000.00 or more; or
(i) Non-Monetary Judgments. Any non-monetary judgment, order or
----------------------
decree is entered against the Borrower or any Subsidiary of the Borrower which
does or would reasonably be expected to have a Material Adverse Effect; or
(j) Change of Control. There occurs any Change of Control not
-----------------
previously approved by the Banks; or
(k) Adverse Change. There occurs a Material Adverse Effect; or
--------------
(l) Guarantor Defaults. Any Guarantor fails in any material respect
------------------
to perform or observe any term, covenant or agreement in the Guaranty executed
by Guarantor; or the Guaranty is for any reason (other than satisfaction in full
of all Obligations and the termination of the Loans) partially (including with
respect to future advances) or wholly revoked or invalidated, or otherwise
ceases to be in full force and effect, or Guarantor or any other Person contests
in any manner the validity or enforceability thereof or denies that it has any
further liability or obligation thereunder; or any event described at
subsections (e) or (f) of this Section occurs with respect to any Guarantor.
IN NO EVENT SHALL ANY PROVISION OF THIS AGREEMENT PROVIDING FOR SPECIFIC EVENTS
OF DEFAULT BE CONSTRUED TO WAIVE, LIMIT OR OTHERWISE MODIFY THE DEMAND NATURE OF
THE LOANS WHICH MAY BE MADE PURSUANT TO THIS AGREEMENT, AND THE BORROWER HEREBY
ACKNOWLEDGES AND AGREES THAT THE BANKS' RIGHT TO DEMAND PAYMENT AT ANY TIME FOR
ANY REASON OR FOR NO REASON IS ABSOLUTE AND UNCONDITIONAL.
9.02 Remedies. If any Event of Default occurs, the Agent may and shall, at
--------
the request of the Banks:
(a) declare an amount equal to the maximum aggregate amount that is or
at any time thereafter may become available for drawing by the beneficiary under
any outstanding Letters of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present, the drafts or other
documents required to draw under such Letters of Credit) to be immediately due
and payable, and declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower; and
(b) exercise on behalf of itself and the Banks all rights and remedies
available to it and the Banks under the Loan Documents or applicable law
including, without limitation, seeking to lift the stay in effect under the
Proceeding;
CREDIT AGREEMENT - Page 63
provided, however, that upon the occurrence of any event specified in subsection
-------- -------
(e) or (f) of Section 9.01, the obligation of each Bank to make Loans and any
obligation of an Issuing Bank to Issue Letters of Credit shall automatically
terminate and an amount equal to the maximum aggregate amount that is or at any
time thereafter may become available for drawing by the beneficiary under any
outstanding Letters of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present, the drafts or other
documents required to draw under such Letters of Credit) together with the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of the Agent, the Issuing Bank or any Bank.
9.03 Rights Not Exclusive. The rights provided for in this Agreement and
--------------------
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE X
THE AGENT
---------
10.01 Appointment and Authorization.
-----------------------------
(a) Each Bank hereby irrevocably (subject to Section 10.09) appoints,
designates and authorizes the Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. Without limiting the generality
of the foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
(b) The Issuing Bank shall act on behalf of the Banks with respect to
any Letters of Credit Issued by it and the documents associated therewith until
such time and except for so long as the Agent may agree at the request of the
Banks to act for the Issuing Bank with respect thereto; provided, however, that
-------- -------
the Issuing Bank shall have all of the benefits and immunities (i) provided to
the Agent in this Article X with respect to any acts taken or omissions suffered
by the Issuing Bank in connection with Letters of Credit Issued by it or
proposed to be Issued by it and the application and agreements for letters of
credit
CREDIT AGREEMENT - Page 64
pertaining to the Letters of Credit as fully as if the term "Agent", as used in
this Article X, included the Issuing Bank with respect to such acts or
omissions, and (ii) as additionally provided in this Agreement with respect to
the Issuing Bank.
10.02 Delegation of Duties. The Agent may execute any of its duties under
--------------------
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.03 Liability of Agent. None of the Agent-Related Persons shall (a) be
------------------
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Borrower or any Subsidiary or
Affiliate of the Borrower, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or for the value of
or title to any Collateral, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Borrower or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Borrower or any of the Borrower's Subsidiaries or
Affiliates.
10.04 Reliance by Agent.
-----------------
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to the Borrower), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Banks as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Banks and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the
CREDIT AGREEMENT - Page 65
Agent to such Bank for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Bank.
10.05 Notice of Default. The Agent shall not be deemed to have knowledge
-----------------
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Banks, unless the Agent shall have
received written notice from a Bank or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". The Agent will notify the Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Banks in accordance with Article IX;
provided, however, that unless and until the Agent has received any such
-------- -------
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
10.06 Credit Decision. Each Bank acknowledges that none of the Agent-
---------------
Related Persons has made any representation or warranty to it, and that no act
by the Agent hereinafter taken, including any review of the affairs of the
Borrower and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrower and its Subsidiaries, the value of and title to any Collateral, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrower hereunder. Each Bank also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly herein required to be furnished to the Banks by the Agent,
the Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Borrower
which may come into the possession of any of the Agent-Related Persons.
10.07 Indemnification. Whether or not the transactions contemplated hereby
---------------
are consummated, the Banks shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of the Borrower and without
limiting the obligation of the Borrower to do so), pro rata, from and against
any and all Indemnified Liabilities; provided, however, that no Bank shall be
-------- -------
liable for the payment to the Agent-Related Persons of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent upon demand for its ratable share of any costs or out-of-
pocket expenses (including Attorney Costs) incurred by the Agent in connection
with the preparation, execution, delivery,
CREDIT AGREEMENT - Page 66
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the Agent
is not reimbursed for such expenses by or on behalf of the Borrower. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
10.08 Agent in Individual Capacity. Bank of America and its Affiliates may
----------------------------
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrower and its
Subsidiaries and Affiliates as though Bank of America were not the Agent or an
Issuing Bank hereunder and without notice to or consent of the Banks. The Banks
acknowledge that, pursuant to such activities, Bank of America or its Affiliates
may receive information regarding the Borrower or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Borrower or such Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Loans, Bank
of America shall have the same rights and powers under this Agreement as any
other Bank and may exercise the same as though it were not the Agent or an
Issuing Bank, and the terms "Bank" and "Banks" include Bank of America in its
individual capacity.
10.09 Successor Agent. The Agent may resign as Agent upon thirty (30)
---------------
days' notice to the Banks. If the Agent resigns under this Agreement, the Banks
shall appoint, from among the Banks, a successor agent for the Banks. If no
successor agent is appointed prior to the effective date of the resignation of
the Agent, the Agent may appoint, after consulting with the Banks, a successor
agent from among the Banks. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article X and Sections 11.04 and 11.05 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent
by the date which is thirty (30) days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Banks shall perform all of the duties of the Agent
hereunder until such time, if any, as the Banks appoint a successor agent as
provided for above.
10.10 Withholding Tax.
---------------
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of the Agent, to deliver to the Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed
and executed copies of IRS Form 1001 before the payment of any
interest in the first calendar
CREDIT AGREEMENT - Page 67
year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two
properly completed and executed copies of IRS Form 4224 before the
payment of any interest is due in the first taxable year of such Bank
and in each succeeding taxable year of such Bank during which interest
may be paid under this Agreement; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Borrower to such Bank, such Bank agrees to notify the
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations of the Borrower to such Bank. To the extent of such percentage
amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of the Borrower to
such Bank, such Bank agrees to undertake sole responsibility for complying with
the withholding tax requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into account
such reduction. However, if the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent, then the Agent
may withhold from any interest payment to such Bank not providing such forms or
other documentation an amount equivalent to the applicable withholding tax
imposed by Sections 1441 and 1442 of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered, was not properly executed, or because such
Bank failed to notify the Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Bank shall indemnify the Agent fully for all amounts paid, directly
or indirectly, by the Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all
CREDIT AGREEMENT - Page 68
costs and expenses (including Attorney Costs), except to the extent caused
solely by the gross negligence or willful misconduct of Agent. The obligation of
the Banks under this Subsection shall survive the payment of all Obligations and
the resignation or replacement of the Agent.
10.11 Collateral Matters. (a) The Agent is authorized on behalf of all
------------------
the Banks, without the necessity of any notice to or further consent from the
Banks, from time to time to take any action with respect to any Collateral or
the Loan Documents which may be necessary to perfect and maintain perfected the
security interest in and Liens upon the Collateral granted pursuant to the Loan
Documents.
(b) The Banks irrevocably authorize the Agent, at its option and in
its discretion, to release any Lien granted to or held by the Agent upon any
Collateral (I) upon payment in full of all Loans and all other Obligations known
to the Agent and payable under this Agreement or any other Loan Document; (ii)
constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; (iii) constituting property
in which the Borrower or any Subsidiary owned no interest at the time the Lien
was granted or at any time thereafter; (iv) constituting property leased to the
Borrower or any Subsidiary under a lease which has expired or been terminated in
a transaction permitted under this Agreement or is about to expire and which has
not been, and is not intended by the Borrower or such Subsidiary to be, renewed
or extended; (v) consisting of an instrument evidencing Indebtedness or other
debt instrument, if the indebtedness evidenced thereby has been paid in full; or
(vi) if approved, authorized or ratified in writing by the Banks. Upon request
by the Agent at any time, the Banks will confirm in writing the Agent's
authority to release particular types or items of Collateral pursuant to this
subsection 10.11(b), provided that the absence of any such confirmation for
whatever reason shall not affect the Agent's rights under this Section 10.11.
(c) Each Bank agrees with and in favor of each other (which agreement
shall not be for the benefit of the Borrower or any Subsidiary) that the
Borrower's obligations to such Bank under this Agreement and the other Loan
Documents is not and shall not be secured by any real property collateral now or
hereafter acquired by such Bank.
10.12 Monitoring Responsibility. Each Bank will make its own credit
-------------------------
decisions hereunder, including the decision whether or not to make advances or
consent to the Issuance of Letters of Credit, thus the Agent shall have no duty
to monitor the Collateral Position, the amounts outstanding under sub-lines or
the reporting requirements or the contents of reports delivered by the Borrower.
Each Bank assumes the responsibility of keeping itself informed at all times.
ARTICLE XI
MISCELLANEOUS
-------------
11.01 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower therefrom, shall be effective unless the same shall be
in writing and signed by all the
CREDIT AGREEMENT - Page 69
Banks (or by the Agent at the written request of all the Banks) and the Borrower
and acknowledged by the Agent, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
11.02 Notices.
-------
(a) All notices, requests and other communications shall be in writing
(including, unless the context expressly otherwise provides, by facsimile
transmission, provided that any matter transmitted by the Borrower by facsimile
(i) shall be immediately confirmed by a telephone call to the recipient at the
number specified on Schedule 11.02, and (ii) shall be followed promptly by
--------------
delivery of a hard copy original thereof) and mailed, faxed or delivered, to the
address or facsimile number specified for notices on Schedule 11.02; or, as
--------------
directed to the Borrower or the Agent, to such other address as shall be
designated by such party in a written notice to the other parties, and as
directed to any other party, at such other address as shall be designated by
such party in a written notice to the Borrower and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Articles II, III or X shall not be effective until actually
received by the Agent.
(c) Any agreement of the Agent and the Banks herein to receive certain
notices by telephone or facsimile is solely for the convenience and at the
request of the Borrower. The Agent and the Banks shall be entitled to rely on
the authority of any Person purporting to be a Person authorized by the Borrower
to give such notice and the Agent and the Banks shall not have any liability to
the Borrower or other Person on account of any action taken or not taken by the
Agent or the Banks in reliance upon such telephonic or facsimile notice, except
to the extent of the gross negligence or willful misconduct of the Agent or any
Bank. The obligation of the Borrower to repay the Loans and L/C Obligations
shall not be affected in any way or to any extent by any failure by the Agent
and the Banks to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Agent and the Banks of a confirmation which is at
variance with the terms understood by the Agent and the Banks to be contained in
the telephonic or facsimile notice.
11.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay
------------------------------
in exercising, on the part of the Agent or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
11.04 Costs and Expenses. The Borrower shall:
------------------
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse Bank of America (including in its capacity as
Agent) within five (5) Business
CREDIT AGREEMENT - Page 70
Days after demand (subject to Subsection 5.01(e)) for all the actual and
reasonable costs and expenses incurred by Bank of America (including in its
capacity as Agent) in connection with the preparation, delivery, and execution
of, and any amendment, supplement, waiver or modification to (in each case,
whether or not consummated), this Agreement, any Loan Document and any other
documents prepared in connection herewith or therewith, and the consummation of
the transactions contemplated hereby and thereby, including reasonable Attorney
Costs and costs of commercial finance examinations, incurred by Bank of America
(including in its capacity as Agent) excluding, however, any costs or expenses
incurred in connection with any negotiation, dispute or claim solely between or
among the Agent and/or one or more of the Banks; and
(b) pay or reimburse the Agent and each Bank within five Business Days
after demand (subject to Subsection 5.01(e)) for all actual and reasonable costs
and expenses (including Attorney Costs) incurred by them in connection with the
monitoring, administration, enforcement, attempted enforcement, or preservation
of any rights or remedies under this Agreement or any other Loan Document
excluding, however, any costs or expenses incurred in connection with any
negotiation, dispute or claim solely between or among the Agent and/or one or
more of the Banks; during the existence of an Event of Default or after
acceleration of the Loans (including in connection with any "workout" or
restructuring regarding the Loans, and including in any Insolvency Proceeding or
appellate proceeding).
11.05 Indemnity. Whether or not the transactions contemplated hereby are
---------
consummated, the Borrower shall indemnify and hold the Agent-Related Persons,
and each Bank and each of its respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an "Indemnified Person") harmless
------------------
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans, the termination of
the Letters of Credit and the termination, resignation or replacement of the
Agent or replacement of any Bank) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or the Loans
or Letters of Credit or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Borrower shall have no obligation
------------------------ --------
hereunder to any Indemnified Person for that portion of any Indemnified
Liabilities that is adjudged by a court of competent jurisdiction to have been
caused by the gross negligence or willful misconduct of such Indemnified Person
or that portion of any Indemnified Liabilities which are owed by an Indemnified
Person to any other Indemnified Person, but in all events, the Borrower shall
remain liable for the remainder of the Indemnified Liabilities not so excluded.
The agreements in this Section shall survive payment of all other Obligations.
CREDIT AGREEMENT - Page 71
11.06 Payments Set Aside. To the extent that the Borrower makes a payment
------------------
to the Agent or the Banks, or the Agent or the Banks exercise their right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a)
to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each Bank severally agrees to pay to the Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Agent.
11.07 Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or Obligations under this Agreement without the prior written
consent of the Agent and each Bank.
11.08 Assignments, Participations, Etc.
---------------------------------
(a) Any Bank, at any time may assign and delegate to one or more
Eligible Assignees (each an "Assignee") all, or any ratable part of all, of the
--------
Loans, the Uncommitted Line, the L/C Obligations and the other rights and
obligations of such Bank hereunder, in a minimum amount of $1,000,000.00;
provided, however, that (i) any such disposition shall not, without the prior
-------- -------
consent of the Borrower, require the Borrower to file a registration statement
with the Securities and Exchange Commission or apply to register or qualify the
Loan or any Note under the securities laws of any state, and (ii) the Borrower
and the Agent may continue to deal solely and directly with such Bank in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Borrower
and the Agent by such Bank and the Assignee; (ii) such Bank and its Assignee
shall have delivered to the Borrower and the Agent an Assignment and Acceptance
("Assignment and Acceptance") in form attached hereto as Exhibit D, together
------------------------- ---------
with any Note or Notes subject to such assignment; and (iii) the assignor Bank
or Assignee has paid to the Agent a processing fee in the amount of $2,500.00.
(b) From and after the date that the Agent notifies the assignor
Bank that it has received an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Bank under the Loan Documents, and (ii) the assignor Bank
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents.
(c) The Borrower shall execute and deliver to the Agent, new Notes
evidencing such Assignee's assigned Loans and Uncommitted Line Portion and, if
the assignor Bank has retained a portion of its Loans and its Uncommitted Line
Portion, replacement Notes in
CREDIT AGREEMENT - Page 72
the principal amount of the Loans retained by the assignor Bank (such Notes to
be in exchange for, but not in payment of, the Notes held by such Bank).
Immediately upon each Assignee's making its processing fee payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Uncommitted Line Portion arising
therefrom. The Uncommitted Line Portion allocated to each Assignee shall reduce
such Uncommitted Line Portion of the assigning Bank pro tanto. Upon such
--- -----
Assignment, Agent is authorized to revise Schedule 2.01 and Schedule 11.02 to
------------- --------------
reflect the adjusted status of the Banks.
(d) Any Bank may at any time sell to one or more commercial banks
or other Persons not Affiliates of the Borrower (a "Participant") participating
-----------
interests in any Loans, the Uncommitted Line Portion of that Bank and the other
interests of that Bank (the "originating Bank") hereunder and under the other
Loan Documents; provided, however, that (i) the originating Bank's and the
-------- -------
Borrower's obligations under this Agreement shall remain unchanged, (ii) the
originating Bank shall remain solely responsible for the performance of such
obligations, (iii) the Borrower, the Issuing Bank and the Agent shall continue
to deal solely and directly with the originating Bank in connection with the
originating Bank's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent of the Banks as described in the first proviso to Section
----- -------
11.01. In the case of any such participation, the Participant shall not have
any rights under this Agreement, or any of the other Loan Documents, and all
amounts payable by the Borrower hereunder shall be determined as if such Bank
had not sold such participation; except that, if amounts outstanding under this
Agreement 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 set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Bank under
this Agreement.
(e) Each Bank agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information identified
as "confidential" or "secret" by the Borrower and provided to it by the Borrower
or any Subsidiary or Affiliate, or by the Agent on the Borrowers or Subsidiary's
or Affiliate's behalf, under this Agreement or any other Loan Document, and
neither it nor any of its Affiliates shall use any such information other than
in connection with or in enforcement of this Agreement and the other Loan
Documents; except to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by the Bank, or
(ii) was or becomes available on a non-confidential basis from a source other
than the Borrower, provided that such source is not bound by a confidentiality
agreement with, or under obligation of confidentiality, the Borrower known to
the Bank; provided, however, that any Bank may disclose such information (A) at
-------- -------
the request or pursuant to any requirement of any Governmental Authority to
which the Bank is subject or in connection with an examination of such Bank by
any such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with any
CREDIT AGREEMENT - Page 73
litigation or proceeding to which the Agent, any Bank or their respective
Affiliates may be party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document; (F)
to such Bank's independent auditors and other professional advisors; (G) to any
Affiliate of such Bank, or to any Participant or Assignee, actual or potential,
provided that such Affiliate, Participant or Assignee agrees to keep such
information confidential to the same extent required of the Banks hereunder, and
(H) as to any Bank, as expressly permitted under the terms of any other document
or agreement regarding confidentiality to which the Borrower is party or is
deemed party with such Bank. The foregoing is not intended to limit the Banks'
obligations to maintain confidential information received from the Borrower
under applicable laws.
(f) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR (S)203.14, and such Federal Reserve Bank
may enforce such pledge or security interest in any manner permitted under
applicable law.
11.09 Set-off. In addition to any rights and remedies of the Banks
-------
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Borrower, any such notice being waived by the Borrower to
the fullest extent permitted by law, to set off and apply any and all deposits
at any time held by, and other indebtedness at any time owing by, such Bank to
or for the credit or the account of the Borrower against any and all Obligations
owing to such Bank, now or hereafter existing, irrespective of whether or not
the Agent or such Bank shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each
Bank agrees promptly to notify the Borrower and the Agent after any such set-off
and application made by such Bank; provided, however, that the failure to give
-------- -------
such notice shall not affect the validity of such set-off and application.
11.10 Automatic Debits of Fees. With respect to any letter of credit fee
------------------------
or other fee, or any other cost or expense (including Attorney Costs) due and
payable to the Agent, the Issuing Bank, Bank of America or the Arranger under
the Loan Documents, the Borrower hereby irrevocably authorizes Bank of America
to debit any deposit accounts of the Borrower with Bank of America in an amount
such that the aggregate amount debited from all such deposit accounts does not
exceed such fee or other cost or expense. If there are insufficient funds in
such deposit accounts to cover the amount of the fee or other cost or expense
then due, such debits will be reversed (in whole or in part, in Bank of
America's sole discretion) and such amount not debited shall be deemed to be
unpaid. No such debit under this Section shall be deemed a set-off.
11.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall
------------------------------------------------
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
CREDIT AGREEMENT - Page 74
11.12 Bank Blocked Account Charges and Procedures. Agent is hereby
-------------------------------------------
authorized to (a) charge the Bank Blocked Account for all returned checks,
service charges, and other fees and charges associated with the Bank Blocked
Account; (b) follow its usual procedures in the event the Bank Blocked Account
or any check, draft or other order for payment of money should be or become the
subject of any writ, levy, order or other similar judicial or regulatory order
or process; and (c) transfer, at Agent's sole discretion, any collected and
available balances in the Bank Blocked Account each by wire transfer to the
Borrower's operating account number 375-▇▇▇▇▇▇▇ maintained with Agent. Funds
are not available if, in the reasonable determination of Agent, they are subject
to a hold, dispute or legal process preventing their withdrawal. If the
balances in the Bank Blocked Account are not sufficient to pay Agent for any
returned check, draft or order for the payment of money, or to compensate Agent
for any charges or fees due Agent with respect to the Bank Blocked Account, the
Borrower agrees to pay on demand the amount due Agent. The Borrower agrees that
it cannot, and will not, withdraw any monies from the Bank Blocked Account until
such time as Agent no longer claims any interest in the Bank Blocked Account and
it will not permit the Bank Blocked Account to become subject to any other
pledge, assignment, lien, charge or encumbrance of any kind, nature or
description, other than Agent's security interest.
11.13 Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
11.14 Severability. The illegality or unenforceability of any provision
------------
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
11.15 No Third Parties Benefited. This Agreement is made and entered into
--------------------------
for the sole protection and legal benefit of the Borrower, the Banks, the Agent
and the Agent-Related Persons, and their permitted successors and assigns, and
no other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any of the other Loan Documents.
11.16 Governing Law and Jurisdiction.
------------------------------
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW (WITHOUT REFERENCE TO PRINCIPLES OF
CONFLICTS OF LAWS) OF THE STATE OF CALIFORNIA, PROVIDED THAT THE AGENT AND THE
BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, THE AGENT AND THE
CREDIT AGREEMENT - Page 75
BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. THE BORROWER, THE AGENT AND THE BANKS IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
--------------------
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER HEREBY WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON THE BORROWER AND IRREVOCABLY APPOINTS CT
CORPORATION SYSTEM, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, AS
REGISTERED AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE
STATE OF CALIFORNIA AND AGREES TO OBTAIN A LETTER FROM CT CORPORATION SYSTEM,
ACKNOWLEDGING SAME AND CONTAINING THE AGREEMENT OF CT CORPORATION SYSTEM, TO
PROVIDE THE AGENT WITH THIRTY (30) DAYS ADVANCE NOTICE PRIOR TO ANY RESIGNATION
OF CT CORPORATION SYSTEM AS SUCH REGISTERED AGENT.
11.17 Waiver of Jury Trial. THE BORROWER, THE BANKS AND THE AGENT EACH
--------------------
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER, THE
BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
11.18 Discretionary Facility. THE BORROWER ACKNOWLEDGES AND AGREES THAT
----------------------
THIS AGREEMENT PROVIDES FOR A CREDIT FACILITY THAT IS COMPLETELY DISCRETIONARY
ON THE PART OF THE BANKS AND THAT THE BANKS HAVE ABSOLUTELY NO DUTY OR
OBLIGATION TO ADVANCE ANY REVOLVING LOANS OR TO ISSUE ANY LETTER OF CREDIT. THE
BORROWER UNDERSTANDS THAT WITHOUT REASON, CAUSE OR PRIOR NOTICE, THE BANKS MAY
CEASE ADVANCING REVOLVING LOANS AND ISSUING LETTERS OF CREDIT AND MAKE DEMAND
FOR PAYMENT OF ALL OBLIGATIONS OF BORROWER TO THE BANKS AT ANY TIME. BORROWER
REPRESENTS AND
CREDIT AGREEMENT - Page 76
WARRANTS TO THE BANKS THAT BORROWER IS AWARE OF THE RISKS ASSOCIATED WITH
CONDUCTING BUSINESS UTILIZING AN UNCOMMITTED FACILITY.
11.19 Entire Agreement. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN
----------------
DOCUMENTS, EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING AMONG THE BORROWER,
THE BANKS AND THE AGENT, AND SUPERSEDES ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS
AND UNDERSTANDINGS OF SUCH PERSONS, VERBAL OR WRITTEN, RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF.
CREDIT AGREEMENT - Page 77
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Houston, Texas, by their proper and duly
authorized officers as of the day and year first above written.
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇ ▇. DRILLING
--------------------------------
Name: ▇▇▇▇▇ ▇. Drilling
--------------------------------
Title: Senior Vice President
--------------------------------
Borrower's Address:
------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ Drilling
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
BANK OF AMERICA, N. A.,
as Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Title: Managing Director
--------------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT - SIGNATURE PAGE - Page ▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇. A.,
as a Bank and Issuing Bank
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: Vice President
------------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT - SIGNATURE PAGE - Page 2
SCHEDULE 1.01
-------------
EXISTING L/Cs
L/C# L/C Amount Expiry Date
---- ---------- -----------
03021848 $ 500,000.00 08/15/00
03023354 $ 8,775,000.00 08/15/00
03023715 $ 6,404,000.00 08/15/00
03025294 $ 2,950,000.00 08/15/00
03026346 $ 2,600,000.00 08/15/00
03026377 $ 1,500,000.00 08/15/00
03026517 $ 1,600,000.00 08/15/00
03027008 $ 500,000.00 09/15/00
03027019 $ 2,000,000.00 08/3l/00
TOTAL $26,829,000.00
==============
SCHEDULE 1.01 - Page 1
SCHEDULE 2.01
-------------
UNCOMMITTED LINE AND
UNCOMMITTED LINE PORTION
(EXCLUDING OVERDRAFT LINES AND
SWAP CONTRACTS)
Uncommitted Line:
----------------
Pro Rata
Bank Dollar Amount Share
---- ------------- -----
Bank of America $100,000,000.00 100%
--------------- ---
TOTAL $100,000,000.00 100%
Uncommitted Line Portion:
------------------------
Pro Rata
Bank Dollar Amount Share
---- ------------- -----
Bank of America $100,000,000.00 100%
--------------- ---
TOTAL $100,000,000.00 100%
SCHEDULE 2.01 - Page 1
EXHIBIT A
---------
FORM OF NOTICE OF BORROWING
(LETTERS OF CREDIT)
[Date]
Bank of America, N. A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Re: Credit Agreement, dated to be effective as of August 9, 2000 (as
amended or supplemented from time to time, the "Agreement"), by and
---------
among ▇▇▇▇▇▇▇▇ Marketing, L.L.C. (the "Borrower"), the banks that
--------
from time to time are parties thereto, and Bank of America, N. A.,
as Agent
Ladies and Gentlemen:
Reference is made to the Agreement (capitalized terms used herein that are
not defined shall have the respective meanings ascribed thereto in the
Agreement). The Borrower hereby gives notice of its intention to request the
[issuance, amendment, or renewal] of Letters of Credit as is further described
---------------------------------
on the Letter of Credit Application attached hereto.
The Borrower represents and warrants, as of the date hereof and as of the
date any Letter of Credit is Issued, amended or renewed, that (i) no Default or
Event of Default has occurred and is continuing on the date hereof, nor will any
thereof occur after giving effect to the Letters of Credit requested above; and
(ii) that the Borrowing Base Advance Cap will not be exceeded after giving
effect to the Letters of Credit requested above.
Very truly yours,
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
By:
------------------------------------
Name:
----------------------------------
Title: Responsible Officer
EXHIBIT A - Page 1
FORM OF NOTICE OF BORROWING
(REVOLVING LOAN)
[Date]
Bank of America, N. A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Re: Credit Agreement, dated to be effective as of August 9, 2000 (as
amended or supplemented from time to time, the "Agreement"), by and
---------
among ▇▇▇▇▇▇▇▇ Marketing, L.L.C. (the "Borrower"), the banks that
--------
from time to time are parties thereto, and Bank of America, N. A.,
as Agent
Ladies and Gentlemen:
Reference is made to the Agreement (capitalized terms used herein that are
not defined shall have the respective meanings ascribed thereto in the
Agreement). The Borrower hereby gives notice of its intention to borrow under
the Borrowing Base Line.
Please advance a Revolving Loan as follows:
Date of Borrowing(/a-1/) : ______________________________
Amount : ______________________________
Type of Advance
(Base Rate or Offshore Rate) : ______________________________
Interest Period
(if Offshore Rate) : ______________________________.
The Borrower represents and warrants, as of the date hereof and as of the
date any Revolving Loan is made or renewed, that (i) no Default or Event of
Default has occurred and is continuing on the date hereof, nor will any thereof
occur after giving effect to the Revolving Loan requested above; and (ii) that
neither the Borrowing Base Advance Cap nor the Dollar Advance Cap will be
exceeded after giving effect to the Revolving Loan requested above.
--------------------
(/a-1/) The aggregate amount of the Borrowing comprised of Offshore Rate Loans
must be made in an amount equal to the Offshore Effective Amount. The date of
the Borrowing must be a Business Day. Borrower must give three (s) Business
Days' advance notice for Borrowings comprised of Offshore Rate Loans, and the
same Business Day advance notice for Borrowings comprised of Base Rate Loans.
EXHIBIT A - Page 2
Very truly yours,
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
By:
-----------------------------------
Name:
---------------------------------
Title: Responsible Officer
EXHIBIT A - Page 3
EXHIBIT B
---------
FORM OF
NOTICE OF CONVERSION/CONTINUATION
[Date]
Bank of America, N. A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Re: Credit Agreement, dated to be effective as of August 9, 2000 (as
amended or supplemented from time to time, the "Agreement"), by and
---------
among ▇▇▇▇▇▇▇▇ Marketing, L.L.C. (the "Borrower"), the banks that
--------
from time to time are parties thereto, and Bank of America, N. A.,
as Agent
Ladies and Gentlemen:
The Borrower hereby gives you irrevocable notice pursuant to Section
2.04 of the Agreement that the undersigned hereby requests a [conversion]
[continuation] of [outstanding Borrowings] [an outstanding Borrowing] into a new
Borrowing (the "Proposed Borrowing") on the terms set forth below:
------------------
Outstanding Borrowing #1
------------------------
Date of Borrowing :
Aggregate Amount for Conversion (/2/) :
Type of Advance :
Interest Period :
Proposed Borrowing
------------------
Date of Conversion or Continuation (/3/) :
Aggregate Amount :
--------------------
(/2/) The aggregate amount for conversion with respect to Borrowings comprised
of Offshore Rate Loans must be made in an amount equal to the Offshore Effective
Amount or, if the remaining outstanding amount of such Borrowing would be less
than an amount equal to the Offshore Effective Amount following the conversion
or continuation, in the remaining outstanding amount of such Borrowing.
(/3/) The date of the proposed conversion or continuation must be a Business
Day. Borrower must give three (s) Business Days' advance notice for conversions
into or continuations of Borrowings comprised of Offshore Rate Loans, and the
same Business Day advance notice for conversions into or continuations of
Borrowings comprised of Base Rate Loans.
EXHIBIT B - Page 1
Type of Advance :
Interest Period :
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the proposed Borrowing:
(a) the representations and warranties contained in the Agreement
are correct in all material respects, before and after giving effect to the
proposed Borrowing and the application of the proceeds therefrom, as though made
on the date of the proposed Borrowing;
(b) no Default has occurred and remains uncured, nor would result
from the proposed Borrowing; and
(c) the Borrowing Base Advance Cap will not be exceeded after
giving effect to the proposed Borrowing.
Very truly yours,
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
By:
------------------------------------
Name:
----------------------------------
Title: Responsible Officer
EXHIBIT B - Page 2
EXHIBIT C
---------
FORM OF
COMPLIANCE CERTIFICATE
[Date]
Bank of America, N. A., as Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Re: Credit Agreement, dated to be effective as of August 9, 2000 (as
amended or supplemented from time to time, the "Agreement"), by and
---------
among ▇▇▇▇▇▇▇▇ Marketing, L.L.C. (the "Borrower"), the banks that
--------
from time to time are parties thereto, and Bank of America, N. A.,
as Agent
Ladies and Gentlemen:
The Borrower, acting through its duly authorized Responsible Officers
(as that term is defined in the Agreement), certifies to each of the Banks that
the Borrower is in compliance with the Agreement and in particular certifies the
following as of ____________:
(i) Net Working Capital $-----------;
(ii) Tangible Net Worth $-----------;
(iii) Ratio of Total Liabilities to Tangible
Net Worth -----------:1;
(iv) Ratio of to EBITDA to Interest
Expense -----------:1; and
(iv) Borrowing Base Sub-Cap $-----------.
Further, the undersigned hereby certify that the Net Position has at no
time exceeded the limitations set forth in Section 8.11 of the Agreement and
that the undersigned have no knowledge of any Defaults under the Agreement which
existed as of [______________] or which exist as of the date of this letter.
The undersigned also certifies that the accompanying financial statements
present fairly, in all material respects, the financial condition of the
Borrower as of [_____________], and the related results of operations for the
[___________] then ended, in conformity with generally accepted accounting
principles.
EXHIBIT C - Page 1
Very truly yours,
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.
By:
-----------------------------------
Name:
---------------------------------
Title: Responsible Officer
EXHIBIT C - Page 2
EXHIBIT D
---------
FORM OF
ASSIGNMENT AND ACCEPTANCE
[Date]
Reference is made to the Credit Agreement dated to be effective as of August
9, 2000 (as amended or supplemented from time to time, the "Agreement"), among
---------
▇▇▇▇▇▇▇▇ MARKETING, L.L.C. (the "Borrower"), the banks that from time to time
--------
are signatories thereto, and Bank of America, N. A., as Agent. Capitalized
terms used herein but not defined herein shall have the meanings specified in
the Agreement.
Pursuant to the terms of the Agreement, [_________________] ("Assignor"),
--------
wishes to assign and delegate to [________________] ("Assignee"), [_______]% of
--------
its rights and obligations under the Agreement. Therefore, Assignor, Assignee,
and the Agent agree as follows:
1. The Assignor hereby sells and assigns and delegates to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, without recourse to
the Assignor and without representation or warranty except for the
representations and warranties specifically set forth in clauses (i), (ii), and
(iii) of Section 2 of this Assignment and Acceptance, a [_____]% interest in and
to all of the Assignor's rights and obligations under the Agreement and the
other Loan Documents as of the Effective Date (as defined below), including such
percentage interest in the Assignor's Uncommitted Line Portion, the Loans owing
to the Assignor, the Assignor's Pro Rata Share of the Letters of Credit, and the
Note held by the Assignor.
2. The Assignor (i) represents and warrants that, prior to executing this
Assignment and Acceptance, its Uncommitted Line Portion is $[________________],
the aggregate outstanding principal amount of Loans owed by the Borrower to the
Assignor is $[______________], and its Pro Rata Share of the outstanding
Effective Amount of L/C Obligations is $[_____________]; (ii) represents and
warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim; (iii) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties, or representations made in or in
connection with the Agreement or any other Loan Document or the execution,
legality, validity, enforceability, genuineness, sufficiency, or value of the
Agreement or any other Loan Document or any other instrument or document
furnished pursuant thereto; (iv) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Agreement or any other Loan Document or any other instrument or document
furnished pursuant thereto; and (v) attaches the Note referred to in Section 1
above and requests that the Agent exchange such Note for a new Note dated
[____________], in the principal amount of $[_____________] payable to the order
of the Assignee[, and a new Note dated in the principal amount of
$[______________] payable to the order of Assignor].
3. The Assignee (i) confirms that it has received a copy of the Agreement,
together with copies of the financial statements referred to in Section 7.01
thereof and such other documents
EXHIBIT D - Page 1
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Agreement or any other Loan Document; (iii) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Agreement and any other Loan Document as are delegated to
the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Agreement or any other
Loan Document are required to be performed by it as a Bank; (v) specifies as its
Lending Office (and address for notices) the office set forth beneath its name
on the signature pages hereof; (vi) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to the Assignee's
status for purposes of determining exemption from United States withholding
taxes with respect to all payments to be made to the Assignee under the
Agreement and Notes or such other documents as are necessary to indicate that
all such payments are subject to such rates at a rate reduced by an applicable
tax treaty, and (vii) represents that it is an Eligible Assignee.
4. The effective date for this Assignment and Acceptance shall be
[___________________] ("Effective Date"), and following the execution of this
--------------
Assignment and Acceptance, the Agent will record it in its records of the
transactions under the Agreement.
5. Upon such recording, from and after the Effective Date, the Agent shall
make all payments under the Agreement and the Notes in respect of the interest
assigned hereby (including all payments of principal, interest, and fees) to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments in
payments under the Agreement and the Notes for periods prior to the Effective
Date directly between themselves.
6. This Assignment and Acceptance shall be governed by, and construed and
enforced in accordance with, the laws of the State of California.
EXHIBIT D - Page 2
The parties hereto have caused this Assignment and Acceptance to be duly
executed as of the date first above written.
[ASSIGNOR]
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
Address:
------------------------------------------
--------------------------------------------------
--------------------------------------------------
Attention:
----------------------------------------
Telecopy No:
--------------------------------------
[ASSIGNEE]
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
Lending Office:
Address:
------------------------------------------
--------------------------------------------------
--------------------------------------------------
Attention:
----------------------------------------
Telecopy No:
--------------------------------------
BANK OF AMERICA, N. A., as Agent
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
EXHIBIT D - Page 3
EXHIBIT E
---------
FORM OF
BORROWING BASE COLLATERAL POSITION REPORT
[Date]
Bank of America, N. A., as Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Re: Credit Agreement, dated to be effective as of August 9, 2000 (as
amended or supplemented from time to time, the "Agreement"), by and
---------
among ▇▇▇▇▇▇▇▇ Marketing, L.L.C. (the "Borrower"), the banks that from
--------
time to time are parties thereto, and Bank of America, N. A., as Agent
Ladies and Gentlemen:
The Borrower, acting through its duly authorized Responsible Officer (as
that term is defined in the Agreement), deliver the attached report to the Banks
and certify to each of the Banks that it is in compliance with the Agreement.
Further, the undersigned hereby certifies that the Net Position has at no time
exceeded the limitations set forth in Section 8.11 of the Agreement and that the
undersigned has no knowledge of any Defaults or Events of Default under the
Agreement which exist as of the date of this letter.
The undersigned also certifies that the amounts set forth on the attached
report constitute all Collateral which has been or is being used in determining
availability for an advance or letter of credit issued under the Borrowing Base
Line as of the preceding date. This certificate and attached reports are
submitted pursuant to Section 7.02(b) of the Agreement. Capitalized terms used
herein and in the attached reports have the meanings specified in the Agreement.
Very truly yours,
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.
By:
-----------------------------------------------
Name:
---------------------------------------------
Title: Responsible Officer
EXHIBIT E - Page 1
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
BORROWING BASE COLLATERAL POSITION REPORT
AS OF [DATE]
In my capacity as Responsible Officer for ▇▇▇▇▇▇▇▇ Marketing, L.L.C.,
I hereby certify that as of the date written above, the amounts indicated below
were accurate and true as of the date of preparation. I also certify that the
net long or short position has not exceeded the limitations set forth in Section
8.11 of the Credit Agreement.
I. COLLATERAL
A. Cash Collateral $______ 100% $______
B. BA Futures equity $______ 90% $______
C. Tier I Accounts $______ 90% $______
D. Tier II Accounts $______ 85% $______
E. Tier I Unbilled Accounts $______ 85% $______
F. Tier II Unbilled Accounts $______ 80% $______
G. Eligible Inventory $______ 80% $______
H. Eligible Exchange Receivables $______ 80% $______
I. Undelivered Product Value $______ 80% $______
J. First purchaser liability (______) ____ $______
------- ---- -------
======= ==== =======
TOTAL COLLATERAL $______ ____ $______
BORROWING BASE SUB-CAP $______
BORROWING BASE ADVANCE CAP (Least of
$100,000,000.00, Borrowing Base Sub-Cap or Total Collateral) $______
II. BANK OUTSTANDINGS
A. Loans from the Banks $______
B. L/Cs from the Banks $______
C. 125% of Net amounts due Bank of America
under commodity Swap Contracts $______
TOTAL OUTSTANDINGS UNDER BORROWING BASE LINE $______
III. EXCESS/(DEFICIT) (I-II) $______
IV. NET SHORT OR LONG POSITION __________ MMBTUS
Attached hereto are (i) an aging report, (ii) a schedule of netted qualified
exchange balances, (iii) a schedule of qualified inventory and (iv) a schedule
of all contras applied against (i), (ii), and (iii).
By:
-----------------------------------------------
Responsible Officer
EXHIBIT E - Page 2
EXHIBIT F
---------
FORM OF NET POSITION REPORT
[Date]
Bank of America, N. A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Re: Net Positions
In my capacity as Responsible Officer of ▇▇▇▇▇▇▇▇ Marketing, L.L.C., I
hereby certify to you that as of the date written above, such company's
aggregate net positions are as follows:
MMBTUS of
----------
Natural Gas
-----------
Long _____
(Short) _____
Net Position _____
To the best of my knowledge, these net positions have at no time exceeded
the limitations set forth in Section 8.11 of that certain Credit Agreement,
dated to be effective as of August 9, 2000, as amended or supplemented from time
to time, by and among ▇▇▇▇▇▇▇▇ Marketing, L.L.C., the banks that from time to
time are parties thereto, and Bank of America, N. A., as Agent.
Furthermore, at no time has the sum of the following:
(a) 25% of the Borrower's Net Position Value, $_______________, plus
(b) Borrower's Transportation
and Storage Exposure, $_______________, plus
(c) Borrower's Below Index Sales Exposure, $_______________
exceeded 33% of Borrower's Net Working Capital,
where,
"Net Position Value" means Borrower's Net Position valued at $3.00/MMBTU.
------------------
EXHIBIT F - Page 1
"Below Index Sales Exposure" means (the maximum volume of gas required to
--------------------------
be sold at below index prices multiplied by the discount from index), minus
(the net positive value of all hedge contracts related to the utilization
of the related storage & transportation assets).
"Transportation and Storage Exposure" means the aggregate contractual cost
-----------------------------------
of transportation & storage contracts for a term of in excess of 3 months.
EXHIBIT F - Page 2
Very truly yours,
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.
By:
-----------------------------------------------
Name:
---------------------------------------------
Title: Responsible Officer
Date:
----------------
EXHIBIT F - Page 3
EXHIBIT G
---------
FORM OF NOTICE
TO TRANSFER FUNDS FROM BANK BLOCKED ACCOUNT
Bank of America, N. A., as Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Re: Credit Agreement, dated to be effective as of August 9, 2000 (as
amended or supplemented from time to time, the "Agreement"), by and
---------
among ▇▇▇▇▇▇▇▇ Marketing, L.L.C. (the "Borrower"), the banks that from
--------
time to time are parties thereto, and Bank of America, N. A., as Agent
Ladies and Gentlemen:
Reference is made to the Agreement (capitalized terms used herein that are
not defined shall have the respective meanings ascribed thereto in the
Agreement). Borrower hereby requests that $___________________________ be
transferred on ___________, 20____ from the Bank Blocked Account No.: 375-
▇▇▇▇▇▇▇ into Borrower's Operating Account No.: 375-▇▇▇▇▇▇▇ pursuant to Section
7.14 and Section 11.12 of the Agreement.
Borrower represents and warrants, as of the date hereof, that (i) no
Default or Event of Default has occurred and is continuing on the date hereof.
Executed this ___ day of _______, 200_
Very truly yours,
▇▇▇▇▇▇▇▇ Marketing, L.L.C.
By:
-------------------------------------
Name:
-----------------------------------
Title: Responsible Officer
EXHIBIT G - Page 1
EXHIBIT H
---------
SUBORDINATION AGREEMENT
-----------------------
THIS SUBORDINATION AGREEMENT (this "Agreement") is made as of the
---------
_____ day of __________, 2000, by and between BANK OF AMERICA, N.A. ("Agent"),
-----
as Agent for the ratable benefit of the Banks (hereinafter defined),
___________________________ (the Subordinated Creditor") and acknowledged by
---------------------
▇▇▇▇▇▇▇▇ MARKETING, L.L.C., a Delaware limited liability company ("Borrower").
--------
RECITALS
WHEREAS, Agent has made, or in the future may make, credit
accommodations available to Borrower, pursuant to the terms and provisions of
that certain Credit Agreement dated to be effective as of August 9, 2000
("Credit Agreement"); and
------------------
WHEREAS, Subordinated Creditor has made, or in the future may make,
credit accommodations available to Borrower; and
WHEREAS, in order to induce Agent to consider making the credit
accommodations described above available to Borrower in the future, Subordinated
Creditor has agreed to subordinate certain of its rights and claims now existing
or hereafter arising against Borrower to the rights and claims of Agent now
existing or hereafter arising against Borrower, all in accordance with the terms
and provisions of this Agreement; and
WHEREAS, the parties hereto are entering into this Agreement in order
to set forth their agreements as to payment of the Senior Indebtedness
(hereinafter defined) and the Junior Indebtedness (hereinafter defined) and
their agreements as to certain other matters including but not limited to lien
priorities.
NOW, THEREFORE, for and in consideration of the premises and the
mutual agreements contained herein, the parties hereto hereby agree as follows:
AGREEMENT
ARTICLE I - DEFINITIONS
As used in this Agreement, the terms defined above shall have their
respective meanings set forth above and the following terms shall have the
following meanings:
"Collateral" shall mean any and all property which now
----------
constitutes or hereafter will constitute collateral or other security
for payment of the Senior Indebtedness pursuant to the Senior
Documents or otherwise.
"Default" shall have the meaning set forth in the Credit
-------
Agreement.
EXHIBIT H - Page 1
"Distribution" by any Person shall mean (a) with respect to any
------------
stock issued by such Person, the retirement, redemption, purchase or
other acquisition for value of any such stock, (b) the declaration or
payment of any dividend or other distribution on or with respect to
any such stock, (c) any loan or advance by such Person to, or other
investment by such Person in, the holder of any such stock, and (d)
any other payment (other than ordinary salaries to employees or
advances made in the ordinary course of business to employees for
travel or other expenses incurred in the ordinary course of business)
by such Person to or for the benefit of the holder of any such stock.
"Event of Default" shall have the meaning set forth in the Credit
----------------
Agreement.
"Federal Bankruptcy Code" shall have the meaning set forth in
-----------------------
Article VIII of this Agreement.
"Junior Creditor" shall mean the Subordinated Creditor and its
---------------
successors and assigns.
"Junior Documents" shall mean any and all agreements, documents
----------------
and instruments evidencing, governing or executed or delivered in
connection with the Junior Indebtedness.
"Junior Indebtedness" shall mean any and all indebtedness,
------------------
obligations and liabilities of every kind and character of Borrower
now or hereafter owing to any party to this Agreement other than
Senior Creditor, including, without limitation, the indebtedness
evidenced and to be evidenced by the Junior Documents, whether such
indebtedness, obligations and liabilities are direct or indirect,
primary or secondary, joint, several or joint and several, fixed or
contingent and whether incurred by Borrower as maker, endorser,
guarantor or otherwise.
"Permitted Payments shall have the meaning set forth in Article
------------------
IV of this Agreement.
"Person" shall mean and include an individual, a partnership, a
------
corporation, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture or other entity or a
governmental authority.
"Proceeds" shall have the meaning assigned to it under the
--------
Uniform Commercial Code, shall also include "products" (as defined in
the Uniform Commercial Code), and, in any event, shall include, but
not be limited to (a) any and all proceeds of any insurance,
indemnity, warranty, letter of credit or guaranty or collateral
security payable to any grantor from time to time with respect to any
of the Collateral, (b) any and all payments (in any form whatsoever)
made or due and payable to the owner of the Collateral from time to
time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
governmental body, authority, bureau or agency (or any Person acting
under color of governmental authority) and (c) any and
EXHIBIT H - Page 2
all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
"Senior Creditor" shall mean Agent and its successors and
---------------
assigns.
"Senior Documents" shall mean any and all agreements, documents
----------------
and instruments evidencing, governing or executed or delivered in
connection with the Senior Indebtedness or the Senior Creditor's
interests in the Collateral, including, without limitation, the Credit
Agreement.
"Senior Indebtedness" shall mean any and all indebtedness,
-------------------
obligations and liabilities of every kind and character of Borrower
now or hereafter owing to Senior Creditor, whether such indebtedness,
obligations and liabilities are direct or indirect, primary or
secondary, joint, several or joint and several, fixed or contingent
and whether incurred by Borrower as maker, endorser, guarantor or
otherwise, including, without limitation, any and all indebtedness,
obligations and liabilities of Borrower now or hereafter owing to
Senior Creditor pursuant to or evidenced by the Senior Documents.
ARTICLE II - RIGHTS IN COLLATERAL
2.1 Priorities Regarding Collateral. The Junior Creditor covenants
--------------------------------
and agrees that it will not take or hold any liens or security interests on any
property of Borrower. If for any reason, however, the Junior Creditor does
obtain a lien or security interest in the Collateral, any and every lien and
security interest in the Collateral in favor of or held for the benefit of the
Senior Creditor has and shall have priority over any lien or security interest
that Junior Creditor has or might have or acquire in the Collateral
notwithstanding any statement or provision contained in the Junior Documents or
otherwise to the contrary and irrespective of the time or order of filing or
recording of financing statements, deeds of trust, mortgages or other notices of
security interests, liens or assignments granted pursuant thereto, and
irrespective of anything contained in any filing or agreement to which any party
hereto or its respective successors and assigns may now or hereafter be a party,
and irrespective of the ordinary rules for determining priorities under the
Uniform Commercial Code or under any other law governing the relative priorities
of secured creditors.
2.2 Management of Collateral. Senior Creditor shall have the
-------------------------
exclusive right to manage, perform and enforce the terms of the Senior Documents
with respect to the Collateral, to exercise and enforce all privileges and
rights thereunder according to its discretion and the exercise of its business
judgment including, but not limited to, the exclusive right to take or retake
possession of the Collateral and to hold, prepare for sale, process, sell,
lease, dispose of, or liquidate the Collateral, pursuant to a foreclosure or
otherwise. Notwithstanding any rights or remedies available to the Junior
Creditor under applicable law or under any document or instrument evidencing,
securing or otherwise executed in connection with the incurrence of the
obligations contemplated by the Junior Documents, Junior Creditor shall not be
permitted to foreclose upon their security interests in any of the Collateral,
or to exercise similar remedies with respect thereto, so long as any of the
Senior Indebtedness shall continue to exist, and only
EXHIBIT H - Page 3
the Senior Creditor shall have the right to restrict or permit, or approve or
disapprove, the sale, transfer or other disposition of Collateral. Junior
Creditor will not in any manner interfere with Senior Creditor's security
interests in the Collateral unless and until Borrower has satisfied in full the
Senior Indebtedness and Senior Creditor has given Junior Creditor written notice
thereof. The Junior Creditor waives notice of, and agrees not to challenge the
method, manner, time, place or terms, of any disposition of the Collateral by
Senior Creditor. Accordingly, should Senior Creditor elect to exercise its
rights and remedies with respect to any of the Collateral, Senior Creditor may
proceed to do so without regard to any interest of the Junior Creditor, and the
Junior Creditor waives any claims that it may have against Senior Creditor for
any disposition of the Collateral. The Junior Creditor agrees, whether or not a
default has occurred in the payment of any indebtedness or the performance of
any other obligations to it, that any liens on and security interests in the
Collateral or any portion thereof that it might have or acquire shall
automatically be fully released ipso facto as to all indebtedness and other
obligations secured thereby owing to Junior Creditor if and when Senior Creditor
releases its lien in and security interest on such Collateral in the event of
any sale, disposition or other realization by Senior Creditor (or any agent
therefor) upon such Collateral.
ARTICLE III - PROCEEDS
3.1 Distribution of Proceeds of Collateral. At any time during which
---------------------------------------
all or any part of the Senior Indebtedness remains outstanding, and whether or
not the same is then due and payable, the Proceeds of any sale, disposition or
other realization by Senior Creditor (or any agent therefor) upon all or any
part of the Collateral shall be applied first to the payment in full of all
Senior Indebtedness in such order as Senior Creditor shall determine in its sole
discretion.
3.2 Contingent Obligations. For purposes of distributing the
----------------------
Proceeds of Collateral pursuant to this Article III, the portion of Senior
-----------
Indebtedness consisting of loans or advances not yet made by Senior Creditor to
Borrower under the Senior Documents (including, but not limited to, amounts with
respect to letters of credit outstanding and reimbursement for fees, costs and
expenses) shall be considered Senior Indebtedness then outstanding, and the
Senior Creditor shall have the right to retain, in a cash collateral account,
cash collateral equal to the amount thereof which Senior Creditor determines, in
its sole good faith discretion, may arise or exist from time to time.
3.3 Holding of Proceeds in Trust. Except as provided for in Article
-----------------------------
IV of this Agreement, in the event the Junior Creditor receives Proceeds of the
Collateral, Junior Creditor shall be deemed to hold all of such Proceeds in
trust for the benefit of Senior Creditor until the proper application thereof in
accordance with Section 3.1 hereof. The Junior Creditor shall not seek to
-----------
challenge the validity, enforceability, priority or perfection of any of the
Senior Documents if the purpose or effect thereof would in any manner defeat or
delay the distribution of the Proceeds of any Collateral in the manner set forth
in Section 3.1 hereof.
-----------
EXHIBIT H - Page 4
ARTICLE IV - SUBORDINATION
The Junior Creditor covenants and agrees that the Junior Indebtedness,
howsoever evidenced and whether now existing or hereafter incurred, shall be
subordinate and junior in right of payment, to the extent and in the manner
hereinafter set forth, to all Senior Indebtedness:
(a) The holder of the Senior Indebtedness shall first be finally and
irrevocably paid in cash an aggregate amount equal to the principal thereof and
termination fees, if any, interest at the time due thereon, and all other costs,
fees, expenses and/or obligations now or hereafter owing thereunder, before any
payment or Distribution of any character, whether in cash, securities or other
property, shall be made on account of the Junior Indebtedness or otherwise to or
for the benefit of Junior Creditor; and any payment or Distribution of any
character, whether in cash, securities or other property, which would otherwise,
but for the provisions of this Article IV, be payable or deliverable in respect
----------
of the Junior Indebtedness or otherwise shall be paid or delivered directly to
the holder of the Senior Indebtedness (or its duly authorized representatives),
until all the Senior Indebtedness shall have been paid in full.
(b) Notwithstanding the provisions of subparagraph (a) of this
----------------
Article IV, Borrower may pay interest on the unpaid principal balance of the
----------
Junior Indebtedness on a monthly basis in arrears and make both scheduled
payments and prepayments of principal on the terms and conditions set forth in
the Junior Documents (the "Permitted Payments"); provided, however, that as a
------------------ -------- -------
condition precedent to Borrower's right to make (and the Junior Creditor's
rights to receive) any and all such Permitted Payments, there shall not have
occurred or then exist a Default or Event of Default under any of the Senior
Indebtedness or any of the Senior Documents, or an event or condition which with
notice, lapse of time or the making of such payment would constitute a Default
or Event of Default under any of the foregoing.
(c) The Junior Creditor agrees to promptly notify the Senior Creditor
in writing of any default or event of default on any Junior Indebtedness or
otherwise or under any of the Junior Documents and further agrees not to
exercise any right or remedy or take any enforcement action with respect to any
default or event of default on any of the Junior Indebtedness or otherwise or
under any of the Junior Documents until such time as the Senior Indebtedness has
been paid in full. Without limiting any of the foregoing, any failure of
Borrower to perform any of its obligations to Junior Creditor as a result of any
of the prohibitions, restrictions or limitations set forth in this Agreement
shall not constitute the basis for a default or event of default on any Junior
Indebtedness or under any Junior Documents.
(d) No reimbursement, payment, direct or indirect, or disbursement of
other property or assets of Borrower shall be made by Borrower on account of the
Junior Indebtedness or otherwise or received, accepted, retained or applied by
the Junior Creditor (except for the account and benefit of Senior Creditor,
which shall be held in trust for Senior Creditor or except for Permitted
Payments as allowed in subparagraph (b) of this Article IV) until such time as
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the Senior Indebtedness has been finally and irrevocably paid in full in cash.
(e) Without affecting Junior Creditor's obligations set forth in this
Agreement not to exercise any remedy as set forth in this Agreement, in the
event that the Junior Creditor
EXHIBIT H - Page 5
receives any payment of any character, whether in cash, securities, or other
properties, payable or deliverable in respect of the Junior Indebtedness and (i)
such payment would cause an event or condition to occur which, with notice,
lapse of time, or both, would cause a Default or an Event of Default to occur
under the Senior Documents; or (ii) such payment is made after a Default or an
Event of Default has occurred under the Senior Documents; or (iii) such payment
is made at a time that the management of Borrower knew or reasonably should have
known that a Default or an Event of Default had occurred under the Senior
Documents, or that such payment could reasonably be expected to cause a Default
or an Event of Default to occur under the Senior Documents, then such cash,
securities or other properties shall be held in trust for the benefit of the
holder of the Senior Indebtedness and shall be paid or delivered to the holder
of the Senior Indebtedness (or its authorized representatives), in the
proportions in which it holds same, until all the Senior Indebtedness shall have
been paid in full.
(f) The provisions of this Agreement are and are intended solely for
the purpose of defining the relative rights of the holder of the Junior
Indebtedness, on the one hand, and the holder of the Senior Indebtedness on the
other hand. Nothing contained in this Agreement is intended to or shall impair,
as between Borrower and its creditors other than the holder of the Senior
Indebtedness and the holder of the Junior Indebtedness, the obligations of
Borrower which are absolute and unconditional, to pay to the holder of the
Junior Indebtedness the principal thereof and interest thereon as and when the
same shall become due and payable in accordance with its terms, or is intended
to or shall affect the relative rights against Borrower of the holder of the
Senior Indebtedness.
(g) No right of any present or future holder of any of the Senior
Indebtedness to enforce the subordination as herein provided shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
Borrower or by any act in good faith or failure to act in good faith by any such
holder, or by any noncompliance by Borrower with the covenants, agreements and
conditions of the Junior Indebtedness, regardless of any knowledge thereof any
such holder may have or be otherwise charged with.
(h) Senior Creditor shall have no obligation to preserve the rights
of the Collateral against any prior parties or to marshal any of the Collateral
for the benefit of any Person.
ARTICLE V - BENEFIT OF AGREEMENT; AMENDMENT
This Agreement shall constitute a continuing offer to all persons who, in
reliance upon such provisions, become a Senior Creditor, and such provisions are
made for the benefit of each Senior Creditor and each of them may enforce such
provisions. The Junior Creditor agrees not to assign or transfer, at any time
this Agreement remains in effect, any rights, claim or interest of any kind in
or to any Junior Indebtedness without first notifying Senior Creditor and making
such assignment expressly subject to this Agreement. The provisions of the
Junior Documents as in effect on the date hereof may not be amended or modified
in any respect without the prior written consent of Senior Creditor.
EXHIBIT H - Page 6
ARTICLE VI - FURTHER ASSURANCES
Each of the parties hereto hereby agrees to promptly execute and deliver to
the other parties hereto any and all such further instruments and documents and
take such further action as such other parties may reasonably request in order
to fully effect the purposes of this Agreement.
ARTICLE VII - REPRESENTATIONS AND WARRANTIES
7.1 Senior Creditor and Junior Creditor. Each of the parties hereto
------------------------------------
hereby represents and warrants to the other party hereto that:
(a) such party has full power, authority and legal right to execute,
deliver and perform this Agreement, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement; and
(b) this Agreement constitutes a legal, valid and binding obligation
of such party enforceable against it in accordance with its terms except as
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting creditors rights generally and except as
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
ARTICLE VIII - BANKRUPTCY
The Junior Creditor agrees not to commence, or to join with any other
creditor in commencing, any case under Title 11 of the United States Code, as
amended and/or superseded (the "Federal Bankruptcy Code") by or against Borrower
-----------------------
or any of its property without the prior written consent of Senior Creditor.
The provisions of this Agreement shall continue in full force and effect,
notwithstanding the commencement of a case under the Federal Bankruptcy Code by
or against Borrower. In furtherance of the foregoing, if Junior Creditor
receives any property of, or payments from Borrower after the commencement of
such a case on account of a secured claim which is subordinated by the terms of
this Agreement (whether as "adequate protection" payments or otherwise), Junior
Creditor shall immediately turn such property or payments over to the Senior
Creditor. To the extent that Junior Creditor has or acquires any rights under
Section 363 or Section 364 of the Federal Bankruptcy Code with respect to the
Collateral, the Junior Creditor hereby agrees not to assert such rights without
the prior written consent of the Senior Creditor. The Junior Creditor hereby
grants to the Senior Creditor the right, but Senior Creditor shall not be
obligated, to file, prove and vote claims on account of the Junior Indebtedness
in any receivership, bankruptcy, or other proceeding under the Federal
Bankruptcy Code commenced by or against Borrower.
EXHIBIT H - Page 7
ARTICLE IX - MISCELLANEOUS
9.1 No Waiver, Cumulative Remedies. No failure to exercise, and no
------------------------------
delay in exercising on the part of any party hereto, any right, power or
privilege under this Agreement shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided in this Agreement
are cumulative and shall not be exclusive of any rights or remedies provided by
law.
9.2 Notices. All notices, requests and demands to or upon the
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respective parties hereto to be effective shall be in writing (including by
telegraph, telecopier, or telex) and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by hand,
or five days after being deposited in the mail, postage prepaid, or, in the case
of telegraphic notice, when delivered to the telegraph company, or in the case
of telex notice, when sent, answer back received, addressed as set forth below
or to such address or other address as may be hereafter notified by the
respective parties hereto:
To Senior Creditor: Bank of America, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Junior Creditor:
-------------------------
-------------------------
-------------------------
Attention:
--------------
Telephone:
--------------
Facsimile:
--------------
9.3 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED AND THE
-------------
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF CALIFORNIA AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES
HERETO AND THEIR RESPECTIVE SUCCESSORS, TRANSFEREES AND ASSIGNS.
9.4 Amendments and Waivers. Neither this Agreement nor any of the
----------------------
terms hereof may be amended, waived, discharged or terminated unless such
amendment, waiver, discharge or termination is in writing signed by each of the
parties hereto.
9.5 Exculpation. Neither the Senior Creditor nor its agents have
-----------
made to the other parties hereto nor do any of them hereby or otherwise make any
representations or warranties, express or implied, nor do they assume any
liability with respect to (i) obligors under any instruments of guarantee; (ii)
the enforceability, validity, value or collectibility of the Senior
EXHIBIT H - Page 8
Indebtedness, any Collateral therefor, or any guarantee or security which may
have been granted to any of them in connection with the Senior Documents; or
(iii) Borrower's title or right to transfer any collateral or security. No
party hereto shall be liable to any other party hereto for any action or failure
to act or any error of judgment, negligence, or mistake or oversight whatsoever
on its part or its respective agents, officers, employees or attorneys with
respect to any transaction relating to the Collateral or this Agreement. To the
maximum extent permitted by law, except as otherwise provided herein, the Junior
Creditor waives any claim it might have against Senior Creditor with respect to,
or arising out of, the handling of the Collateral (including, without
limitation, any such claim based upon the timing or method of realizing upon
such Collateral).
9.6 Third Party Rights. This Agreement is solely for the benefit of
------------------
the parties hereto and their respective successors and assigns, and no other
Person shall have any right, benefit, priority or other interest under, or
because of the existence of, this Agreement.
9.7 Termination. This Agreement shall terminate upon the final and
-----------
indefeasible payment in full of all the Senior Indebtedness and the termination
of all of the Senior Documents.
9.8 Counterparts. This Agreement may be executed by one or more of
------------
the parties hereto in any number of separate counterparts, each of which shall
be an original, but all of which shall constitute but one agreement.
9.9 Legend. All promissory notes issued in connection with the
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Junior Indebtedness shall contain a legend substantially in the form of the
following:
"THIS PROMISSORY NOTE, AND PAYMENT AND ENFORCEMENT HEREOF, IS
SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN SUBORDINATION AGREEMENT
DATED AS OF ________________, 2000 BETWEEN BANK OF AMERICA, N.A., AS AGENT,
AND _________________________________ AS SUCH SUBORDINATION AGREEMENT MAY
BE AMENDED FROM TIME TO TIME."
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[EXECUTION PAGES TO FOLLOW]
EXHIBIT H - Page 9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their proper and duly authorized officers as of the day and
year first above written.
SENIOR CREDITOR:
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BANK OF AMERICA, N.A., as Agent
By:
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Name:
-----------------------------------
Title:
----------------------------------
EXECUTION PAGE
SUBORDINATION AGREEMENT - Page 1
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JUNIOR CREDITOR:
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----------------------------------------
By:
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Name:
-----------------------------------
Title:
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EXECUTION PAGE
SUBORDINATION AGREEMENT - Page 2
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ACKNOWLEDGMENT BY ▇▇▇▇▇▇▇▇ MARKETING, L.L.C.
▇▇▇▇▇▇▇▇ Marketing, L.L.C. hereby acknowledges receipt of a copy of the
foregoing Subordination Agreement and agrees that, except as otherwise provided
by the foregoing Subordination Agreement, it will not pay any indebtedness
subordinated by the foregoing Subordination Agreement until all the Senior
Indebtedness shall have been paid in full.
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
a Delaware limited liability company
By:
-------------------------------------
Name:
-----------------------------------
Title:
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ACKNOWLEDGMENT PAGE
SUBORDINATION AGREEMENT
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