Exhibit 10.2
AMENDED AND RESTATED
WORKING CAPITAL
LOAN AGREEMENT
Among
MARKWEST HYDROCARBON, INC.
and
NORWEST BANK COLORADO, NATIONAL ASSOCIATION,
individually and as Agent,
and
FIRST AMERICAN NATIONAL BANK,
N M ROTHSCHILD AND SONS LIMITED
and
THE FIRST NATIONAL BANK OF CHICAGO
October 8, 1996
TABLE OF CONTENTS
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Page
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SECTION 1. DEFINITIONS................................... 1
SECTION 2. THE WORKING CAPITAL LOAN...................... 12
(a) Terms of the Working Capital Loan............. 12
(b) Borrowing Procedures.......................... 12
(c) The Loan Date................................. 13
(d) Computation and Payment of Interest; Lat...... 13
(e) Payments by Borrower.......................... 13
(f) Payments to Lenders........................... 13
(g) Optional Payments............................. 14
(h) Mandatory Payments............................ 14
(i) Fees.......................................... 14
(j) Adjustments................................... 15
(k) Increased Capital............................. 15
SECTION 3. LETTERS OF CREDIT............................. 15
(a) Issuance of Standby Letters of Credit......... 15
(b) Payments Treated as an Advance................ 16
(c) Restriction on Liability...................... 16
(d) No Duty to Inquire............................ 17
(e) Reimbursement by Lenders...................... 17
SECTION 4. CONDITIONS TO EFFECTIVENESS; CONDITIONS OF
LENDING...................................... 17
(b) Initial Advance............................... 18
(c) Subsequent Advances........................... 20
SECTION 5. BORROWING BASE................................ 21
(a) Initial Borrowing Base........................ 21
(b) Information................................... 21
(c) Subsequent Determinations of Borrowing Base... 21
SECTION 6. BORROWING BASE DEFICIENCY..................... 23
(a) Add Additional Collateral..................... 23
(b) Repay Excess Debt............................. 23
SECTION 7. SECURITY...................................... 23
SECTION 8. REPRESENTATIONS AND WARRANTIES................ 23
(a) Existence..................................... 23
(b) Non-Contravention............................. 24
(c) Third Party Authorization..................... 24
(d) Authorization; Binding Effect................. 24
i
(e) Litigation 25
(f) Taxes 25
(g) Liens 25
(h) Names and Places of Business............25
(i) Use of Proceeds.........................25
(j) Other Obligations.......................25
(k) Full Disclosure.........................26
(l) Margin Stock............................26
(m) ERISA 26
(n) Security Documents......................26
(o) Compliance with Laws....................26
(p) Financial Condition.....................26
(q) Environmental Matters...................27
(r) Investment Company Act..................27
(s) Public Utility Holding Company Act......27
(t) Title to Properties; First Priority
Security Interest.......................27
(u) Subsidiaries of Borrower and of
Related Persons.........................27
(v) Location of Inventory...................27
(w) Eligibility of Items Included in
Borrowing Base..........................28
(x) Reorganization..........................28
SECTION 9. AFFIRMATIVE COVENANTS................30
(a) Payment and Performance of Working
Capital Loan............................30
(b) Financial Statements....................30
(c) Preservation of Existence, Etc..........31
(d) Maintenance of Property.................31
(e) Payment of Other Obligations............31
(f) Insurance...............................32
(g) Inspection of Property, Books and
Records; Confidentiality Agreement
(h) Notices.................................33
(i) Compliance with Laws....................34
(j) Further Assurances......................34
(k) Current Ratio...........................35
(l) Funded Debt to Total Capitalization.....35
(m) Tangible Net Worth......................35
(n) Fixed Charge Coverage Ratio.............35
(o) Environmental Matters...................35
SECTION 10. NEGATIVE COVENANTS
(a) Debt 36
(b) Liens 36
(c) Guaranty Obligations....................37
(d) Loans and Advances......................37
(e) Limitation on Investments and New
Businesses..............................37
ii
(f) Mergers and Consolidations..............38
(g) Location of Inventory...................38
(h) Burdensome Undertakings.................38
(i) Change in Location of Business..........38
(j) Restricted Distributions................39
(k) Disposition of Assets...................39
(l) ERISA...................................39
(m) Use of Proceeds.........................39
(n) Transactions with Affiliates............39
(o) Contracts; Take-or-Pay Agreements.......40
(p) Amendments to Organizational Documents..40
SECTION 11. EVENTS OF DEFAULT.......................40
(a) Non-Payment.............................40
(b) Certain Defaults........................41
(c) Other Defaults..........................41
(d) Representation or Warranty..............41
(e) Security Documents......................41
(f) Judgments...............................41
(g) Insolvency..............................41
(h) Bankruptcy, Etc.........................42
(i) Cross-Default...........................42
(j) ERISA...................................42
(k) Loan Documents..........................42
(l) Material Adverse Change.................43
(m) ........................................43
Change in Control................................43
(n) ........................................43
Columbia Contracts...............................43
(o) Regulatory Change.......................43
SECTION 12. REMEDIES................................43
(a) Automatic Acceleration of Loan..........43
(b) Optional Acceleration of Loan...........43
(c) Setoff..................................44
SECTION 13. THE AGENT...............................44
(a) Appointment.............................44
(b) Delegation of Duties....................45
(c) Exculpatory Provisions..................45
(d) Reliance by Agent.......................45
(e) Notice of Default.......................46
(f) Non-Reliance on Agent and Other Lenders.46
(g) Indemnification.........................46
iii
(h) Agent and Lenders in Their Individual
Capacity................................47
(i) Successor Agent.........................47
(j) Borrower Entitled to Rely on Agent......47
SECTION 14. MISCELLANEOUS...........................47
(a) No Waiver; Cumulative Remedies..........47
(b) Notices.................................48
(c) Counterpart Execution...................49
(d) Governing Law; Entire Agreement.........49
(e) Amendments and Waivers..................50
(f) Costs, Expenses and Indemnity...........50
(g) Inconsistent Provisions; Severability...51
(h) Incorporation of Exhibits and Schedules.51
(i) Amendment of Defined Instruments........51
(j) References and Titles...................52
(k) Calculations and Determinations.........52
(l) Usury...................................52
(m) Waiver of Right to Trial by Jury........52
(n) Successors and Assigns..................53
(o) Term of Agreement.......................53
(p) Jurisdiction............................53
iv
LIST OF EXHIBITS
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Exhibit Title
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A Form of Working Capital Note
B Credit and Collection Policy of Borrower
C Request for Advance
D Borrower's Counsel Opinion
E Borrowing Base Certification
F Litigation
G Subsidiaries of Borrower
H Location of Borrower's Products and Inventory
I Compliance Certificate
J Loans and Advances to Officers and Employees
K Letter of Credit Application Form
v
AMENDED AND RESTATED
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WORKING CAPITAL LOAN AGREEMENT
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THIS WORKING CAPITAL LOAN AGREEMENT (this "Agreement"), dated as of October
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8, 1996, is among MARKWEST HYDROCARBON INC., a Delaware corporation,
("Borrower"), the successor to MarkWest Hydrocarbon Partners, Ltd., a Colorado
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limited partnership (the "Partnership"), NORWEST BANK COLORADO, NATIONAL
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ASSOCIATION (successor to Norwest Bank Denver National Association), a national
banking association ("Norwest"), FIRST AMERICAN NATIONAL BANK, a national
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banking association ("First American"), N M ROTHSCHILD AND SONS LIMITED, a
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company organized under the laws of England ("Rothschild"), and THE FIRST
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NATIONAL BANK OF CHICAGO, a national banking association ("First Chicago"),
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(Norwest, First American, Rothschild and First Chicago are referred to
individually as a "Lender" and collectively as the "Lenders"), and NORWEST, AS
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AGENT FOR THE BANKS (in such capacity, the "Agent").
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Borrower desires to borrow from the Lenders to provide funds for the
purposes set forth below, and the Lenders are willing to lend such funds to
Borrower to accomplish those purposes, subject to the terms and conditions
contained or referred to herein. Accordingly, in consideration of the mutual
agreements, provisions and covenants contained herein, the parties agree as
follows:
SECTION 1. DEFINITIONS. As used herein, each of the following capitalized
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terms shall have the meaning given it in this Section 1:
"Adjusted Prime Rate" shall mean an annual rate which equals the sum of the
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floating commercial loan rate of the Agent announced from time to time as its
prime rate but which may not be the lowest or best rate charged by the Agent to
any customer (the "Prime Rate") plus one-quarter percentage point per year,
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adjusted in each case as of the banking day in which a change in the Prime Rate
occurs.
"Advances" shall have the meaning given it in Section 2(a).
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"Affiliate" shall mean as to any Person, each other Person which, directly
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or indirectly (through one or more intermediaries or otherwise), is in control
of, is controlled by, or is under common control with, such Person.
"Borrowing Base" shall mean, at the particular time in question, either the
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amount provided for in Section 5(a) or the amount determined by the Lenders in
accordance with the provisions of Section 5(c); provided, however, that in no
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event shall the Borrowing Base exceed $7,500,000.
"Borrowing Base Certification" shall have the meaning set forth in Section
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5(b).
"Borrowing Base Deficiency" shall have the meaning set forth in Section 6.
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"Business Day" shall mean a day other than Saturdays or Sundays on which
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commercial banks are open for business with the public in Chicago, Denver,
London and Memphis.
"Cash Collateral" means Cash Collateral Instruments pledged by Borrower to
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the Agent on behalf of the Lenders in which the Agent has a perfected, first
priority security interest, together with any funds on deposit in, or otherwise
to the credit of, any deposit account of Borrower with the Agent, to the extent
such deposit account is pledged as collateral to the Agent on behalf of the
Lenders.
"Cash Collateral Instruments" means, collectively, (a) open market
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commercial paper maturing within 120 days after acquisition thereof, which has
the highest credit rating of either Standard & Poor's Corporation or ▇▇▇▇▇'▇
Investors Service, Inc., (b) certificates of deposit maturing within six (6)
months from the date thereof issued by the Agent, (c) direct obligations of the
United States Government or any agency thereof maturing within one hundred
eighty (180) days after the acquisition thereof, and (d) other instruments that
have been previously approved by the Lenders in writing for inclusion as Cash
Collateral Instruments.
"Code" means the Internal Revenue Code of 1986, as amended, together with
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the regulations promulgated thereunder.
"Collateral" shall mean all tangible or intangible, real or personal
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property subject to any of the Security Agreements, including without
limitation, all right, title and interest of Borrower in and to its Receivables,
Products, inventory, Eligible Product Inventory, Exchange Balances, contract
rights (including the Contracts), general intangibles and Cash Collateral.
"Columbia Contracts" shall mean (a) Natural Gas Liquids Purchase Agreement
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dated as of April 26, 1988 between Columbia Gas Transmission Corporation
("Columbia") and the Partnership as amended November 4, 1988, July 31, 1989,
December 24, 1990 and January 28, 1991 (Siloam); (b) the Natural Gas Liquids
Purchase Agreement dated as of December 24, 1990, between Columbia and Borrower
as amended January 28, 1991 (▇▇▇▇▇▇▇); and (c) the Contract for Construction and
Lease of ▇▇▇▇▇▇▇ Plant dated December 24, 1990 between Columbia and the
Partnership; (d) Letter Agreement dated March 9, 1995 between Columbia and the
Partnership; and (e) the following agreements relating to the Kenova Processing
Plant: (i) Agreement to Design and Construct New Facilities (the "Construction
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Agreement"), (ii) Purchase and Demolition Agreement-Construction Premises (the
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"Demolition Agreement"), (iii) Purchase and Demolition Agreement-Remaining
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Premises (the "Purchase Agreement"), and (iv) Processing Agreement-Kenova
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Processing Plant (the "Processing Agreement"), all dated March 15, 1995 between
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Columbia and the Partnership, together with any and all amendments now existing
or hereafter created to any of the foregoing to the extent such amendments are
otherwise permitted hereunder, and together with any gas processing contracts
between the Partnership or Borrower and any shippers on Columbia's system
covering processing of such
2
shippers' gas at the Kenova Processing Plant. All of the Columbia Contracts have
been assigned to and assumed by Borrower pursuant to the Reorganization.
"Commitment" means the amount of the Borrowing Base at the time in question
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minus the aggregate face amount of all outstanding Letters of Credit at the time
in question; provided that in no event shall the Commitment exceed $7,500,000 at
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any time from the date hereof until and including June 30, 1998.
"Commitment Period" shall mean the period from the date of this Agreement
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to and including June 30, 1998, or such earlier date as described by Borrower
(upon thirty days prior notice to the Agent) on which the Working Capital Notes
become due and payable or such earlier date on which the Working Capital Notes
become due and payable under the terms hereof, by acceleration or otherwise.
"Consolidated" refers to the consolidation of any Person, in accordance
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with GAAP, with its properly consolidated Subsidiaries. Reference herein to
Borrower's financial statements, financial position, financial condition,
liabilities, etc. refer to the consolidated financial statements, position,
condition, liabilities, etc. of Borrower and its properly consolidated
Subsidiaries.
"Consolidating", when reference is made herein to Borrower's financial
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statements, financial condition, liabilities, etc., shall mean a presentation of
such information in accordance with GAAP that sets forth separately the
financial statements, etc. for each of Borrower and its properly consolidated
Subsidiaries.
"Contract" means a contract or contractual arrangement, whether oral or
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written (or both), between Borrower and an Obligor evidencing a valid and
binding obligation of such Obligor to pay for Products purchased from, or
services rendered by, Borrower.
"Controlled Group" means the Borrower and all Persons under common control
----------------
or treated as a single employer with the Borrower pursuant to Section 414(b),
(c), (n) or (o) of the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
"Credit and Collection Policy" means those credit and collection policies
----------------------------
and practices of Borrower in effect on the date hereof relating to Borrower's
Receivables, except for modifications that would not impair the collectability
of any Eligible Receivable of Borrower and modifications consented to by Agent.
The Credit and Collection Policy of Borrower is described in Exhibit B hereto.
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"Current Ratio" shall mean the ratio of Borrower's current assets to
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current liabilities, both determined in accordance with GAAP.
"Debt" shall mean as to any Person, at a particular date, the sum (without
----
duplication) of (a) all indebtedness of such Person for borrowed money or for
the deferred purchase price of
3
property or services, (b) all obligations of such Person in respect of surety
bonds, letters of credit, bankers' acceptances, or similar obligations issued or
created for the account of such Person, (c) all capitalized lease obligations of
such Person, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement, (e) open lines of credit to finance futures
contracts, commodities and/or options contracts, (f) all indebtedness referred
to in clauses (a) through (e) above secured by a lien, encumbrance or security
interest on or in property owned by such Person, even though such Person has not
assumed or become liable for the payment of such indebtedness, and (g) all
guaranties in respect of indebtedness or obligations of other Persons of the
kinds referred to in clauses (a) through (f) above.
"Delinquent Receivable" means a Receivable of Borrower:
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(i) as to which any payment, or part thereof, remains unpaid for
45 days from the original invoice date for such payment; or
(ii) which, consistent with the Credit and Collection Policy of
Borrower, would otherwise be classified as delinquent by Borrower.
"Designated Obligor" means, at any time, all Obligors; provided, however,
------------------ -------- -------
that any Obligor shall cease to be a Designated Obligor with respect to
receivables or Exchange Balances upon five (5) Business Days' notice thereof by
Agent to Borrower, which notice shall set forth the reason for such cessation.
"Determination Date" has the meaning given it in Section 5(c)(ii).
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"Eligible Exchange Balances" means an Exchange Balance which:
--------------------------
(i) arises under a Products Agreement;
(ii) arises with a customer located in the United States and
relates to refined petroleum products in good and salable condition
located in the United States;
(iii) is not in dispute in any material respect;
(iv) is not owed by an Obligor who is generally unable to
fulfill its obligations;
(v) with respect to which the likelihood of payment or
performance thereof is not impaired by virtue of three-party exchange
or circumstances whereby the Obligor might satisfy its obligations by
means of satisfying an obligation of Borrower to a third party;
(vi) the Obligor of which is a Designated Obligor; and
4
(vii) has been previously approved in writing by the Lenders
for inclusion in Eligible Exchange Balances.
"Eligible Product Inventory" means any Products:
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(i) to which Borrower has title and which are stored in
(ii) in which the Agent on behalf of the Lenders has a
perfected, first priority security interest; and
(iii) as to which Borrower has furnished to Agent reasonably
detailed information in a Borrowing Base Certification;
reduced by all charges of all kinds against such Products, and transportation,
processing and other handling charges for such Products.
"Eligible Product Inventory Value" means as of any Determination Date an
--------------------------------
amount equal to the market value of the Products comprising the Eligible Product
Inventory. The market value of the Products comprising the Eligible Product
Inventory for any Determination Date shall be the price determined by reference
to a published index, such price to be adjusted for transportation, and market
differential; which determination, including the index and the adjustments, must
be acceptable to Lenders. Oil Price Information Service is acceptable to all
parties hereto.
"Eligible Receivable" means a Receivable of Borrower:
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(i) the Obligor of which is a United States resident, is
not an Affiliate of any of the parties to this Agreement, and is not a
government or a governmental subdivision or agency;
(ii) the Obligor of which is a Designated Obligor;
(iii) the Obligor of which is not the Obligor of any Delinquent
Receivables;
(iv) which is not a Delinquent Receivable;
(v) the Products for which such Receivable represents the
right to payment have been delivered to the purchaser thereof;
5
(vi) in which Lender has a perfected, first priority security
interest prior to all other Liens;
(vii) which is denominated and payable only in United States
dollars in the United States;
(viii) which arises under a Contract which has been duly
authorized and which, together with the Receivable, is in full force
and effect and constitutes the legal, valid and binding obligation of
the Obligor of such receivable enforceable in accordance with its
terms and is not subject to any dispute, offset, counterclaim or
defense whatsoever;
(ix) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection
practices and privacy) and with respect to which no party to the
Contract related thereto is in violation of any such law, rule or
regulation in any material respect;
(x) which satisfies all applicable requirements of the Credit
and Collection Policy; and
(xi) as to which the Agent has not notified Borrower that the
Lenders have determined, in their sole discretion, that such
Receivable (or class of Receivables) is not acceptable collateral.
"Employee Option Agreement" shall mean the 1996 Stock Incentive Plan of
-------------------------
Borrower, as the same may be amended by Borrower from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Plan" shall mean any pension benefit plan subject to Section 302 of
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ERISA or Title IV of ERISA maintained by Borrower or any member of a controlled
group (as defined in Section 4001 (a)(14) of ERISA).
"Event of Default" shall have the meaning set forth in Section 11.
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"Exchange Balance" means a right of Borrower to the delivery of refined
----------------
petroleum products created as a result of a Products Agreement between Borrower
and a customer.
"Existing Loan Agreements" shall mean the Existing Working Capital
------------------------
Agreement and that certain Loan Agreement dated as of November 20, 1992, among
the Partnership, Agent,
6
Norwest and First American, as lenders, and all amendments thereto executed
prior to the date hereof by the Partnership, Agent and any of the Lenders.
"Existing Working Capital Agreement" shall mean that certain Working
----------------------------------
Capital Loan Agreement dated as of November 30, 1992, among the Partnership,
Agent and Norwest and First American, as lenders, as amended by a First
Amendment to Working Capital Loan Agreement dated as of March 23, 1994, a Second
Amendment to Working Capital Loan Agreement dated as of September 8, 1995, and a
Third Amendment to Working Capital Loan Agreement dated as of May 31, 1996.
"Fiscal Quarter" shall mean a three-month period ending on the last day of
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each March, June, September and December of any year.
"Fiscal Year" shall mean a twelve-month period ending on December 31 of any
-----------
year.
"Fixed Charge Coverage Ratio" shall mean for the 12 most recent consecutive
---------------------------
months, the ratio for such period of (a) the sum of net income (or net loss)
plus interest expense and non-cash charges included in determining net income
(or net loss), all as determined in accordance with GAAP, to (b) the sum of
interest expense included in calculating (a).
"Funded Debt" shall mean the aggregate amount of Debt for borrowed money
-----------
with a maturity in excess of one year (including guarantees of such Debt) and
capitalized leases, minus the outstanding principal balance, if any, under this
Working Capital Loan.
"GAAP" shall mean generally accepted accounting principles and practices as
----
consistently applied (except as otherwise required due to changes in GAAP) by
Borrower and certified to by the firm of independent certified public
accountants regularly employed as Borrower's auditors, such principles and
practices at all times being consistent with requirements of the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants in effect from time to time, as applicable to the nature of the
business conducted by Borrower; provided, however, if any change in any
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accounting principle or practice is required by the Financial Accounting
Standards Board (or any such successor), all financial covenants provided for
herein may be prepared in accordance with such change only after notice of such
change is given to the Agent, and the Lenders agree to such change insofar as it
affects the financial covenants.
"Initial Financial Statements" shall mean the audited financial statements
----------------------------
of the Partnership for the Fiscal Year ending December 31, 1995, and the
unaudited quarterly financial statements (consisting of a current balance sheet
and profit and loss statement) for the Partnership as of June 30, 1996.
"Issuer" shall mean Norwest, in its capacity as the issuer of Letters of
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Credit hereunder, and its successors in such capacity.
7
"Late Payment Rate" shall have the meaning set forth in Section 2(d)(ii).
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"Letter of Credit" shall mean any standby letter of credit issued by the
----------------
Issuer pursuant to Section 3, and all letters of credit so issued shall be
collectively referred to as the "Letters of Credit."
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"Letter of Credit Balance" shall mean the Lenders' maximum aggregate
------------------------
liability under all Letters of Credit outstanding at the time in question.
"Loan Date" shall have the meaning set forth in Section 2(c).
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"Loan Documents" means this Agreement, the Working Capital Notes, the
--------------
Letters of Credit, the Security Documents and all other documents executed and
delivered by or on behalf of Borrower to the Agent or the Lenders in connection
herewith or therewith.
"Loan Share" means with respect to each of Norwest, First American,
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Rothschild and First Chicago, twenty-five percent.
"Mortgages" shall have the meaning set forth in the Revolver/Term Facility.
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"Net Eligible Exchange Balance" means an amount as of any Determination
-----------------------------
Date determined as the difference between (i) the aggregate amount presently due
to Borrower under all Eligible Exchange Balances (such amount to be determined
by multiplying the quantities of Products due Borrower in accordance with the
terms of the Products Agreement giving rise to such Eligible Exchange Balances
times the then applicable Mt. Belvieu price for such Products; provided that
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such amounts shall be included only to the extent they satisfy all applicable
requirements of the Credit and Collection Policy), and (ii) the aggregate amount
owed by Borrower under all Eligible Exchange Balances (such amount to be
determined by multiplying the quantities of Products Borrower owes to third
parties in accordance with the terms of the Products Agreement giving rise to
such Eligible Exchange Balance times the then applicable Mt. Belvieu price for
such Products).
"Obligations" means all Debt from time to time owing by Borrower to the
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Lenders under or pursuant to any of the Loan Documents.
"Obligor" shall mean when used with respect to Receivables, a Person party
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to a Contract and obligated to make payments pursuant thereto and when used with
respect to Exchange Balances, the party obligated to Borrower pursuant to a
Products Agreement.
"Ordinary Course of Business" shall mean, in respect of any transaction,
---------------------------
the ordinary course of such Person's business, substantially as conducted by
such Person prior to or as of the date hereof, and undertaken by such Person in
good faith and not for purposes of evading any covenant or restriction in any
Loan Document.
8
"Person" shall mean an individual, partnership, corporation, association,
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business trust, joint stock company, trust or trustee thereof, unincorporated
association, joint venture, governmental unit or any agency or subdivision
thereof, or any other legally recognizable entity.
"Prepaid Natural Gas" shall mean the volume of natural gas in MMBTU's
-------------------
delivered to Columbia Gas Transmission Corporation pursuant to Paragraph 2 of
the letter agreement dated March 9, 1995 in excess of the volumes required to be
delivered for BTU reimbursement as described in such letter agreement times the
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month-end Gulf Coast price per MMBTU for such calendar month (as quoted in
Inside FERC's Gas Market Report or a mutually acceptable successor publication
if it ceases publication) plus $0.18; provided that any volumes of such over-
delivered natural gas in excess of two billion cubic feet shall not qualify as
Prepaid Natural Gas.
"Products" shall mean all oil, natural gas, unprocessed natural gas,
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natural gas liquids, gaseous or liquid hydrocarbons, processed natural gas,
butane, isobutane, propane, natural gasoline, gasoline, MTBE, other products
obtained from the processing of natural gas or fractionating or processing of
natural gas liquids, now or hereafter located in or on, transported through,
processed in or otherwise related to the Collateral subject to any of the
Mortgages including, without limitation, any and all of the same held as
inventory.
"Products Agreement" shall mean a standard written refined petroleum
------------------
products reciprocal exchange agreement.
"Receivable" means the indebtedness of any Obligor under a Contract arising
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from a sale of Products by Borrower or from services rendered by Borrower, and
includes the right to payment of any interest or finance charges and other
obligations of such Obligor with respect thereto.
"Related Person" shall mean any of Borrower and each Subsidiary of
--------------
Borrower, except for Restricted Subsidiaries.
"Reorganization" shall mean the reorganization and initial public offering
--------------
pursuant to which the Partnership has been dissolved and all of the assets and
liabilities of the Partnership have been assigned to and assumed by Borrower, as
more fully described in the Registration Statement, Form S-1, filed by Borrower
with the Securities and Exchange Commission.
"Request for Advance" shall mean a request for Advance meeting the
-------------------
requirements of Section 2(b) hereof.
"Required Lenders" shall mean at any time Lenders, the Loan Shares of which
----------------
aggregate 100 percent.
"Responsible Person" shall mean any officer of Borrower and any other
------------------
Person employed by a Related Person and who should be aware of the terms of
this Agreement.
9
"Restricted Subsidiaries" shall mean the following Subsidiaries of
-----------------------
Borrower: MarkWest Resources, Inc., a Colorado corporation.
"Revolver/Term Facility" shall mean the loans provided for pursuant to that
----------------------
certain Amended and Restated Loan Agreement dated as of the date hereof between
Borrower, the Lenders and the Agent, providing for a revolving loan, the
principal balance of which at the termination of the revolving period on June
30, 1998 shall be amortized over sixteen equal quarterly principal payments;
which loans shall not exceed $40,000,000 in the aggregate principal amount
outstanding at any one time, as such Agreement may be amended from time to time,
and which loans are secured by various "Security Documents" (as such term is
defined therein).
"Security Agreements" shall mean one or more chattel mortgages, acts of
-------------------
collateral mortgage, security agreements and assignments of proceeds of even
date herewith, in favor of the Agent on behalf of the Lenders, covering all or
any part of the Collateral, and shall also include the "Security Agreement" as
defined in the Revolver/Term Facility.
"Security Documents" means the Mortgages and Security Agreements and all
------------------
other security agreements, deeds of trust, mortgages, chattel mortgages,
assignments, pledges, guaranties, financing statements, continuation statements,
extension agreements and other agreements or instruments now or hereafter
delivered by Borrower to the Agent on behalf of the Lenders or to the Lenders in
connection with this Agreement or any transaction contemplated hereby to secure
or guarantee the payment of any part of the Obligations or the performance of
any other duties and obligations of Borrower under the Loan Documents, whenever
made or delivered, and shall also include all of the "Security Documents" as
defined in the Revolver/Term Facility.
"Stockholders' Equity" shall mean the stockholders' equity in Borrower,
--------------------
determined in accordance with GAAP.
"Subsidiary" means, with respect to any Person, any corporation,
----------
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty-one percent or more by such Person.
"Tangible Net Worth" shall mean the Stockholders' Equity of Borrower less
------------------
intangible assets.
"Total Capitalization" means the sum of Funded Debt plus Stockholders'
--------------------
Equity.
"Unmatured Event of Default" shall mean any event that with the passage of
--------------------------
time or giving of notice, or both, would constitute an Event of Default under
Section 11.
10
"Working Capital Loan" or "Loan" shall mean the loan provided for in
------------------------------
Section 2(a) hereof, together with each additional loan, if any, made to
Borrower by the Lenders, at the option of the Lenders, existing as well as
contemplated, excluding the Revolver/Term Facility.
"Working Capital Note" shall mean a Substitute Working Capital Note dated
--------------------
as of the date hereof, substantially in the form of Exhibit ▇-▇, ▇-▇, ▇-▇ or A-4
attached hereto, made by Borrower and payable to the order of Norwest, First
American, Rothschild or First Chicago, as appropriate, with appropriate
insertions, issued in connection with the assumption by Borrower of the
Partnership's obligations pursuant to the Reorganization and the assignment by
Norwest, First American and Rothschild to First Chicago of a portion of their
interests in the Working Capital Loans, in substitution and replacement of the
Replacement Working Capital Notes, as amended, issued in connection with the
Second Amendment to Working Capital Loan Agreement dated as of September 8,
1995, together with any and all renewals, extensions, amendments and changes of,
or substitutions for, said note; collectively, the "Working Capital Notes."
---------------------
SECTION 2. THE WORKING CAPITAL LOAN.
------------------------
(a) Terms of the Working Capital Loan. Subject to the terms and
----------------------------------
conditions of this Agreement, each Lender agrees to make advances to Borrower
(such advances are called the "Advances") from time to time during the
--------
Commitment Period, in an aggregate principal amount not to exceed its Loan Share
of the Commitment. Advances under the Working Capital Loan shall be evidenced
by the Working Capital Notes. So long as an Event of Default or an Unmatured
Event of Default has not occurred, during the Commitment Period Borrower may
borrow, repay and reborrow under the Working Capital Notes in accordance with
Section 2(b) below. The entire outstanding principal balance of, together with
accrued interest on, the Working Capital Loan shall be due and payable on June
30, 1998.
(b) Borrowing Procedures.
---------------------
(i) Each Request for Advance under the Working Capital Loan
shall be in the form of Exhibit C attached hereto and shall be
---------
submitted to the Agent on or before 11:00 a.m. Denver, Colorado time
on the Business Day immediately preceding the day such Advance is
requested to be made. Upon receipt of a Request for Advance, the
Agent shall promptly notify each Lender thereof. Not later than 11:00
a.m. Denver time on the next Business Day, each Lender shall make
available to the Agent the amount of such Lender's Loan Share of the
amount specified in the Request for Advance in immediately available
funds; provided, however, that the Lenders shall not be obligated to
-----------------
make any Advance to Borrower that would result in the aggregate unpaid
principal balance outstanding under the Working Capital Notes
exceeding the Commitment. If all conditions precedent to such Advance
have been met, Agent will on the date requested make such Advance
available to Borrower in immediately available funds at Agent's office
in Denver, Colorado.
11
(ii) Each Advance under the Working Capital Loan shall be in an
amount of at least $100,000 or such lesser amount equal to the
unadvanced portion of the Working Capital Loan. Each Advance shall be
evidenced by the Working Capital Notes.
(iii) All Advances requested by Borrower shall be made pro rata
by each Lender in proportion to such Lender's Loan Share.
(c) The Loan Date. The initial Advance under the Working Capital
--------------
Loan shall be made on a date and at a time (the "Loan Date") selected by
---------
Borrower, but in no event earlier than the time all conditions of lending
described in Sections 4(a) and 4(b) below have been satisfied or waived by the
Lenders.
(d) Computation and Payment of Interest; Late Payment Rate.
-------------------------------------------------------
(i) Interest on the Working Capital Loan shall accrue daily and
shall be computed on the basis of a year of 365 or 366 days, as
appropriate. Interest on the Working Capital Loan shall be payable in
arrears on the last day of each Fiscal Quarter, beginning December 31,
1996.
(ii) Notwithstanding anything to the contrary contained in this
Agreement, overdue principal, and (to the extent permitted under
applicable law) overdue interest, whether caused by acceleration of
maturity or otherwise, shall bear interest at a fluctuating rate,
adjustable the day of any change in such rate, equal to three
percentage points above the Adjusted Prime Rate (the "Late Payment
------------
Rate)", until paid, and shall be due and payable immediately.
----
(e) Payments by Borrower. All payments of principal and interest
---------------------
hereunder shall be made at the Agent's offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (or at such other place as the Agent shall have designated
to Borrower in writing at least one Business Day prior to the due date or
prepayment date, as the case may be) by 12:00 noon Denver time on the date due
or the date of prepayment (as the case may be) in immediately available funds
and without set-off or counterclaim or deduction of any kind. If any payment to
be made by Borrower hereunder or under the Working Capital Notes shall become
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in
computing any interest and fees in respect of such payment.
(f) Payments to Lenders. Each payment by Borrower to the Agent on
--------------------
account of principal of and interest on the Working Capital Loan or otherwise
hereunder shall be distributed the same day in like funds as received from
Borrower by Agent pro rata according to the Loan Share of each Lender in like
funds; provided that in the event Agent receives less than the aggregate amount
-------- ----
due to all Lenders on any day, Agent shall distribute ratably to each Lender
12
in the case of any payment, the portion of the aggregate amount received by
Agent on such day multiplied by the Loan Share of such Lender.
(g) Optional Payments.
------------------
During the Commitment Period, Borrower may make optional payments on
the outstanding principal balance of the Working Capital Loan without penalty or
premium, at any time, and from time to time, in integral multiples of $100,000,
or such lesser amount equal to the then outstanding principal balance, together
with accrued interest on the principal amount so paid. Borrower shall give the
Agent one Business Day's notice in advance of any optional payment on the
Working Capital Loan.
(h) Mandatory Payments. If at any time, or from time to time, a
-------------------
Borrowing Base Deficiency exists, Borrower shall, within three Business Days
after Agent on behalf of Lenders gives written notice of such fact to Borrower
pursuant to Section 6 hereof, make a mandatory prepayment to Agent for
distribution to Lenders in the principal amount of such Borrowing Base
Deficiency, together with all accrued and unpaid interest on, and fees related
to, the principal amount so prepaid, unless Borrower has satisfied the condition
set out in Section 6(a) hereof. Any such prepayment of principal under this
Section 2 shall be applied pro rata in accordance with each Lender's Loan Share
to the unpaid principal balance of the Working Capital Loan thereof until the
Working Capital Loan is paid in full.
(i) Fees.
-----
(i) During the Commitment Period, Borrower shall pay to the
Lenders an unused commitment fee on the average daily difference
between the Commitment and the aggregate outstanding principal amount
under the Working Capital Notes, at an annual rate of one-half of one
percent (0.5%), payable quarterly in arrears, with the first such
payment due December 31, 1996 (for the period from the date hereof
through December 31, 1996) and ending on the last day of the
Commitment Period.
(ii) The fee for each Letter of Credit shall be an amount equal
to the greater of 1.0% per annum of the face amount of such Letter of
Credit, or $250. The Agent shall retain for its own account annually
the first $250.00 of the Letter of Credit fee for each Letter of
Credit, and shall promptly remit to each Lender pro rata according to
the Loan Share of such Lender, the Letter of Credit fee actually
received in excess of $250.00. The first year's fee shall be payable
by Borrower at the time a Letter of Credit is issued. Subsequent
annual fees shall be due and payable on the anniversary date of the
applicable Letter of Credit. Annual fees shall be prorated for any
period less than a year that any Letter of Credit remains outstanding
pursuant to the terms of such Letter of Credit other than as the
result of one or more draws thereunder.
13
(j) Adjustments. If any Lender (a "benefitted Lender") shall at any
------------
time receive any payment of all or part of its Working Capital Loan, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 12(c), or otherwise), in a greater proportion than its
Loan Share, such benefitted Lender shall purchase for cash from the other Lender
such portion of such other Lender's Working Capital Loan, or shall provide such
other Lender with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with the other
Lender; provided, however, that if all or any portion of such excess payment or
-------- -------
benefits is thereafter recovered from such benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest. Borrower agrees that any Lender so
purchasing a portion of another Lender's Working Capital Loan may exercise all
rights of payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.
(k) Increased Capital. If either (A) the introduction of or any
------------------
change in or in the interpretation of any law or regulation after the date
hereof (and excluding any new laws or changes presently known to Agent even if
they have not yet become effective) or (B) compliance by Issuer or any Lender
with any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by Issuer or any Lender
or any corporation controlling Issuer or any Lender and Issuer or such Lender
determines that the amount of such capital is increased by or based upon the
existence of the Letters of Credit or similar contingent obligations or the
existence of the Revolver Commitment and other commitments of this type then,
upon demand by Issuer or such Lender, Borrower shall immediately pay to Issuer
or such Lender, from time to time as specified by Issuer or such Lender,
additional amounts sufficient to compensate Issuer or such Lender in light of
such circumstances, to the extent that Issuer or such Lender reasonably
determines such increase in capital to be allocable to the issuance or
maintenance of Letters of Credit or the Revolver Commitment. Issuer or such
Lender claiming compensation under this Section 2(k) shall provide Borrower with
a certificate setting forth in reasonable detail the amount payable to Issuer or
such Lender, the reason for the additional compensation and the calculation of
the additional compensation.
SECTION 3. LETTERS OF CREDIT.
-----------------
(a) Issuance of Standby Letters of Credit. Each request of Borrower
--------------------------------------
for the issuance of a Letter of Credit hereunder shall be on the form of the
application for issuance of a Letter of Credit attached hereto as Exhibit L,
---------
properly completed, and shall be received by the Issuer at least three Business
Days prior to the date of proposed issuance. Upon receipt of an application for
the issuance of a Letter of Credit and upon meeting the Conditions of Lending
set forth in Section 4 hereof, the Issuer shall issue standby Letters of Credit
during the Commitment Period, and such Letters of Credit shall be issued in such
amounts and under such circumstances as the Issuer deems appropriate consistent
with its existing policies. Notwithstanding anything to
14
the contrary set forth herein, the Issuer shall not be obligated to issue,
extend or amend any Letter of Credit such that the Letter of Credit (i) would
result in an aggregate unpaid principal balance outstanding under the Working
Capital Notes (including, without limitation, the face amount of any other
Letters of Credit that are still in effect) which exceeds the Commitment, or
(ii) has an expiration date later than the Commitment Period.
(b) Payments Treated as an Advance. Each payment by the Issuer under
-------------------------------
any outstanding Letter of Credit shall be deemed to be an Advance bearing
interest at the Adjusted Prime Rate from the date of such payment, shall be
entitled to all of the benefits of the Security Documents and shall be subject
to all terms of this Agreement. Each Lender, upon receipt of a written advice
of any payment under a Letter of Credit, shall make available to the Agent for
the account of the Issuer, whether or not the conditions of lending set forth in
Section 4 have been complied with, an amount in immediately available funds
equal to its Loan Share of the amount of the drawing, whereupon the Lenders
shall each be deemed to have made an Advance. A written advice(s) setting forth
in reasonable detail the amounts owing under this Section 3, submitted by Issuer
to Borrower from time to time, shall be conclusive, absent manifest error, as to
the amounts thereof.
(c) Restriction on Liability. None of the Issuer, the Agent, any of
-------------------------
the Lenders or their respective correspondents shall be responsible for:
(i) the use which may be made of any Letter of Credit or for any
actions or omissions of the beneficiary of any Letter of Credit;
(ii) the existence or nonexistence of a default under any
instrument secured or supported by any Letter of Credit or any other
event which gives rise to a right to call upon any Letter of Credit;
(iii) the validity, sufficiency or genuineness of any document
delivered in connection with any Letter of Credit, even if such
document should in fact prove to be in any or all respects invalid,
fraudulent or forged;
(iv) except as specifically required by a Letter of Credit,
failure of any instrument to bear any reference or adequate reference
to any Letter of Credit, or failure of documents to accompany any
draft at negotiation, or failure of any person to note the amount of
any draft on the reverse of any Letter of Credit or to surrender or
take up any Letter of Credit; or
(v) errors, omissions, interruptions or delays in transmission or
delivery of any messages by mail, cable, telegraph, wireless, or
otherwise.
The Issuer, the Agent and the Lenders shall not be responsible for any act,
error, neglect or default, omissions, insolvency or failure in the business of
any of the correspondents of the Issuer, for any refusal by the Issuer or any of
its correspondents to pay or honor drafts drawn
15
under any Letter of Credit because of any applicable law, decree or edict, legal
or illegal, of any governmental agency now or hereafter in force, or for any
matter beyond the control of such Person. The happening of any one or more of
the contingencies referred to in the preceding clauses of this Section shall not
affect, impair or prevent the vesting of any of the rights or powers of the
Issuer, the Agent and the Lenders under this Agreement or the obligation of
Borrower to make reimbursements hereunder. In furtherance and extension and not
in limitation of the specific provisions hereinabove set forth, Borrower agrees
that any action, not contrary to the terms of any Letter of Credit, which is
taken by Issuer in issuing such Letter of Credit or by any correspondent of
Issuer under or in connection with such Letter of Credit shall be binding on
Borrower and shall not put Issuer or any of Issuer's correspondents under any
resulting liability to Borrower unless it is the result of such Person's gross
negligence or willful misconduct and Borrower makes a like agreement as to any
inaction or omission on the part of Issuer or any of its correspondents unless
it is the result of such Person's gross negligence or willful misconduct.
(d) No Duty to Inquire. Borrower agrees that Issuer is authorized
-------------------
and instructed to accept and pay drafts under any Letter of Credit without
requiring, and without responsibility for, the determination as to the existence
of any event giving rise to said draft, either at the time of acceptance of
payment or thereafter, other than obtaining any documents expressly required by
the Letter of Credit. Borrower agrees that Issuer is under no duty to ascertain
or inquire as to the validity or accuracy of any such document or the authority
of the Person executing or delivering such document or draft or making such a
demand (whether by tested telex or otherwise). Borrower agrees to hold the
Issuer, the Agent and the Lenders harmless from and indemnified against any
liability or claim in connection with or arising out of the foregoing provisions
and the subject matter of this Section 3.
(e) Reimbursement by Lenders. Issuer irrevocably agrees to grant and
-------------------------
hereby grants to each Lender, and, to induce Issuer to issue Letters of Credit
hereunder, each Lender irrevocably agrees to accept and purchase and hereby
accepts and purchases from Issuer, on the terms and conditions hereinafter
stated, for such Lender's own account and risk an undivided interest equal to
such Lender's Loan Share of Issuer's obligations and rights under each Letter of
Credit issued hereunder and the amount of each draft paid by Issuer thereunder.
SECTION 4. CONDITIONS TO EFFECTIVENESS; CONDITIONS OF LENDING.
--------------------------------------------------
(a) Conditions to Effectiveness. This Agreement shall become
---------------------------
effective on the date that each of the following conditions shall have been
satisfied (or waived in accordance with Section 14(e)):
(i) The Reorganization shall have occurred;
(ii) All conditions to the effectiveness of the Amended and
Restated Loan Agreement executed in connection with the Revolver/Term Facility,
as set forth in Section 4(a) thereof, shall have been satisfied or waived;
16
(iii) Except for the Partnership Distribution (as defined in the
Modification Agreement referenced below) and the other elements of the
Reorganization that would violate the terms of the Existing Loan Agreements but
for the consent set forth in Section 1 of the Modification Agreement (the
"Modification Agreement") dated as of July 31, 1996 among the Partnership,
-----------------------
Borrower, Agent and the Lenders, no Event of Default or Unmatured Event of
Default under the Existing Loan Agreements shall have occurred or be continuing,
all representations and warranties contained in Section 8 of the Existing
Working Capital Agreement shall be true in all material respects (except those
affected by the occurrence of the Reorganization), and Borrower and the
Partnership shall have satisfied in all material respects their covenants and
obligations under the Modification Agreement.
From and after the Loan Date: (x) the Existing Working Capital Agreement will
be automatically amended and restated to read as this Agreement reads, without
further action by any party, (y) Working Capital Loans under (and as defined in)
the Existing Working Capital Agreement outstanding on the Loan Date shall
continue under this Agreement, and (z) the rights and obligations of the parties
hereto shall be governed by the provisions hereof, and the rights and
obligations of the parties to the Existing Working Capital Agreement with
respect to the period prior to the Loan Date shall continue to be governed by
the provisions thereof as in effect prior to the Loan Date, except that fees
accrued under the Existing Working Capital Agreement to the Loan Date shall be
paid on the Loan Date.
(b) Initial Advance. (i) Assuming the conditions for the
----------------
effectiveness of this Agreement set forth in Section 4(a) are satisfied, the
initial Advance hereunder shall be deemed to be the Advances made under the
Existing Working Capital Agreement to the Partnership that are outstanding and
assumed by Borrower pursuant to the Reorganization. In addition to the
conditions in Section 4(a), the Lenders shall have no obligation to make the
initial Advance under the Working Capital Loan unless the Agent shall have
received all of the following, at the Agent's office in Denver, Colorado, duly
executed and delivered and in form and substance satisfactory to the Agent and
its counsel:
(A) This Agreement, executed by Borrower, the Agent and the
Lenders;
(B) The Working Capital Notes;
(C) Counterparts of the Security Documents, duly executed
and acknowledged by Borrower, together with the appropriate
financing statements, as may be necessary or advisable under
applicable law in order to perfect and maintain, to the full
extent permitted by applicable law, the first priority liens and
security interests created thereby;
(D) Evidence that the Agent has been named as
mortgagee/loss payee under all policies of casualty insurance,
and as an additional insured under all policies of liability
insurance, as required by Section 9(f);
17
(E) A certificate, dated the Loan Date and executed by the
president or a vice president of Borrower, stating the substance
of Subsections 4(b)(ii)(A), (C) and (D);
(F) A certificate, dated the Loan Date and executed by the
Secretary or assistant Secretary of Borrower, which shall contain
the names and signature of the officers of Borrower authorized to
execute the Loan Documents on behalf of Borrower, and which shall
certify to the correctness and completeness of the articles of
incorporation and bylaws of Borrower, and the resolutions duly
adopted by the Board of Directors of Borrower authorizing the
execution of the Loan Documents and the consummation of the
transactions contemplated herein and therein;
(G) Certificates from the Delaware Secretary of State as to
the good standing of Borrower and from the Colorado Secretary of
State, Borrower's principal place of business, as to Borrower's
qualification to do business in such state; and
(H) All other documents and assurances which the Agent
reasonably requires or which it may reasonably request in
connection with the transactions contemplated by this Agreement,
and such documents shall be certified, when appropriate, by
proper authorities.
(ii) The Lenders shall have no obligation to make any Advances
hereunder unless the following shall be true and correct on and as of
the date of such Advance:
(A) All representations and warranties contained in Section
8 and in the Security Documents shall be true on the Loan Date as
if then given, and Borrower shall have performed or observed all
terms, agreements, conditions and obligations hereunder and under
the Security Documents to be performed or observed on or prior to
the Loan Date;
(B) All legal matters incident to the Working Capital Loan
shall be satisfactory to counsel to the Agent, and the Agent
shall have received on the Loan Date favorable opinions addressed
to the Agent and the Lenders of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, and ▇▇▇▇▇
▇▇▇▇▇▇▇, Esq., co-counsel for Borrower, substantially in the form
set forth in Exhibit D, together with the certificate provided
---------
for in such Exhibit, which opinions collectively shall cover the
matters set forth in Sections 8(a)(i), (ii) and (iii), (b), (c),
(d), (e), (r) and (s), and such other matters as the Agent or its
counsel may reasonably request;
18
(C) No Event of Default or Unmatured Event of Default shall
have occurred and be continuing or would result from the making
of the requested Advance; and
(D) Since December 31, 1995, there has been no material
adverse change in the business, financial position or results of
operations of the Partnership, as assigned to and assumed by
Borrower pursuant to the Reorganization.
(c) Subsequent Advances. The obligation of the Lenders to make
--------------------
subsequent Advances under the Working Capital Loan as set forth in Section 2 and
issue Letters of Credit is subject to satisfaction of the conditions set forth
in such Section and the following conditions precedent:
(i) The Agent shall have received (with an executed copy for each
of the Lenders), a certificate, dated the date of the requested
Advance or issuance of the Letter of Credit, and executed by the
president or a vice president of Borrower, stating the substance of
Subsections 4(b)(ii)(A), (C) and (D);
(ii) All representations and warranties contained in Section 8
hereof and in the Security Documents shall be true on the date of such
requested Advance as if then given, and Borrower shall have performed
or observed all terms, agreements, conditions and obligations
hereunder and under the Security Documents to be performed or observed
on or prior to the date of such requested Advance;
(iii) No Event of Default or Unmatured Event of Default shall
have occurred and be continuing or would result from the making of the
requested Advance;
(iv) Since December 31, 1995, there has been no material adverse
change in the business, financial position or results of operations of
Borrower as assigned by the Partnership to and assumed by Borrower
pursuant to the Reorganization;
(v) All legal matters relating to the Loan Documents, such
Advance and the consummation of the transactions contemplated thereby
shall be reasonably satisfactory to the Agent's counsel; and
(vi) Such Advance shall not be prohibited by any laws or any
regulation or order of any court or governmental authority or agency
and shall not subject the Lender to any penalty or other onerous
condition under or pursuant to any such law, regulation or order.
19
SECTION 5. BORROWING BASE.
--------------
(a) Initial Borrowing Base. During the period from the date hereof
-----------------------
to the first Determination Date, the Borrowing Base shall be $7,500,000.
(b) Information. Within 10 days of the end of each calendar month,
------------
commencing November 10, 1996, Borrower shall submit to the Agent, a "Borrowing
---------
Base Certification," which shall be substantially in the form of Exhibit E
------------------ ---------
hereto, incorporating the requested information as of the end of the month for
the immediately preceding calendar month as to Borrower's Eligible Receivables,
Prepaid Natural Gas, Eligible Product Inventory Value, Net Eligible Exchange
Balances and Cash Collateral and such other information requested by the Agent,
all in form and substance acceptable to the Agent relating to the Collateral, to
be used by the Lenders in determining the Borrowing Base.
(c) Subsequent Determinations of Borrowing Base. (i) Subject to the
--------------------------------------------
other provisions of this Section 5(c), the Borrowing Base shall be designated on
each Determination Date (as defined below) as the amount equal to the sum of:
(A) eighty percent (80%) of the Eligible Receivables, plus
(B) eighty percent (80%) of the Prepaid Natural Gas, plus
(C) eighty percent (80%) of the Eligible Products Inventory
Value, plus
(D) eighty percent (80%) of the Net Eligible Exchange
Balances, plus
(E) one hundred percent (100%) of the Cash Collateral
as set forth in the Borrowing Base Certification provided to Agent
pursuant to Section 5(b); provided that if in any calendar month the
--------
Net Eligible Exchange Balances is a negative amount, then such
negative amount will be deducted from the Eligible Products Inventory
Value in determining the Borrowing Base for such calendar month.
(ii) Lenders shall have five (5) days after the receipt of a
Borrowing Base Certification to dispute the calculation of the
Borrowing Base in such Borrowing Base Certification. If either Lender
disputes the calculation it shall give Agent notice thereof within the
five-day period. If Agent has received notice from any Lender of any
dispute, it shall within the same five-day period notify Borrower of
such dispute and of the amount of the Borrowing Base as recalculated
by the Lenders. The amount of the Borrowing Base as so recalculated
by the Lenders and set forth in such notice shall take effect on the
20
date specified therein which may not be earlier than the date on which
such notice is received by Borrower and shall continue in effect until
the next Determination Date. Any such recalculation shall be made by
the Lenders in good faith based on the information in such Borrowing
Base Certification and any other information available to the Lenders
at the time in question regarding the Eligible Receivables, Prepaid
Natural Gas, Eligible Product Inventory, Eligible Product Inventory
Value, Net Eligible Exchange Balances and Cash Collateral.
The date on which the Borrowing Base is so designated either by Agent
or by operation of the Borrowing Base Certification if Agent does not
give timely notice objecting thereto, shall be called a "Determination
-------------
Date". A Determination Date may occur during the period between the
----
date on which a Request for Advance is submitted and the day on which
such Advance is to be made. Until the Borrowing Base has been
determined pursuant to this Section 5(c) for any period, the Borrowing
Base shall be the amount determined pursuant to this Section 5 for the
immediately preceding period.
(iii) If Borrower does not furnish to the Agent the information
required by Section 5(b) by the date specified therein, the Agent may
designate the Borrowing Base at any amount which the Lenders determine
based on the relevant information then available to the Lenders and
the Agent. The Agent may redesignate the Borrowing Base from time to
time thereafter until the Lenders receive the required information,
whereupon a new Borrowing Base shall be determined as described above.
SECTION 6. BORROWING BASE DEFICIENCY. If the aggregate unpaid principal
-------------------------
amount outstanding under the Working Capital Notes plus the aggregate face
amount of all outstanding Letters of Credit exceeds the Borrowing Base then in
effect (the "Borrowing Base Deficiency"), Borrower shall take one of the
-------------------------
following actions following receipt of notice from the Agent of the existence of
such Borrowing Base Deficiency:
(a) Add Additional Collateral. Within 3 Business Days following
--------------------------
receipt of such notice from the Agent, provide sufficient additional collateral
or security for the Working Capital Loan, in form and substance acceptable to
the Lenders in their sole discretion; or
(b) Repay Excess Debt. Within 3 Business Days following receipt of
------------------
such notice from the Agent, make a mandatory prepayment on the Working Capital
Loan in accordance with Section 2(h) in an amount equal to the Borrowing Base
Deficiency.
Failure of Borrower to comply with this Section 6 shall be an immediate Event of
Default.
SECTION 7. SECURITY. The repayment of the Working Capital Loan and the
--------
Working Capital Notes and all extensions and renewals thereof, and the
performance of all obligations of Borrower hereunder, shall be secured by the
Security Documents.
21
SECTION 8. REPRESENTATIONS AND WARRANTIES. Borrower represents and
------------------------------
warrants to the Agent and each Lender that:
(a) Existence.
----------
(i) Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and is
qualified to do business in Arkansas, Colorado, Kentucky, Tennessee,
Texas and West Virginia and in every other jurisdiction in which the
nature of its business or the ownership of its assets requires such
qualification and failure to so qualify could have a material adverse
effect on Borrower, its business, operations, assets, property,
prospects or condition (financial or otherwise);
(ii) Each of the Restricted Subsidiaries and Related Persons
other than Borrower is duly organized, validly existing and in good
standing under the laws of the state of its incorporation or formation
and is qualified to do business in every jurisdiction in which the
nature of its business or the ownership of its assets requires such
qualification and failure to so qualify could have a material adverse
effect on Borrower or such Person, its business, operations, assets,
property, prospects or condition (financial or otherwise);
(iii) Each Related Person and Restricted Subsidiary has the
power and authority to own the property which it owns and to carry on
its business as such business is now conducted; and
(iv) Each Related Person and Restricted Subsidiary has all
franchises, permits, licenses and similar agreements necessary to
carry on its business as now conducted, and has not received any
notices of default or termination under any of such agreements.
(b) Non-Contravention. The execution, delivery and performance by
------------------
the Borrower of this Agreement, and the other Loan Documents and the borrowings
hereunder and the consummation of the transactions contemplated herein and
therein will not conflict with the articles of incorporation, bylaws or other
organizational or governing documents of any Related Person or Restricted
Subsidiary, or conflict with or result in any breach of any mortgage, lien,
lease, agreement, instrument, order, judgment, decree, law, rule, regulation or
any other restriction of any kind or character to which any Related Person or
Restricted Subsidiary is a party or is subject or by which any Related Person or
Restricted Subsidiary or its properties are bound or affected or result in the
creation or imposition of any lien, charge or encumbrance upon any property of
any Related Person or Restricted Subsidiary.
(c) Third Party Authorization. No consent, approval, exemption,
--------------------------
authorization or order of or other action by, and no notice to or filing with,
any court or governmental authority or third party is required by any Related
Person or Restricted Subsidiary
22
in connection with the execution, delivery or performance by Borrower of this
Agreement, or any other Loan Document or to consummate any transactions
contemplated hereby or thereby.
(d) Authorization; Binding Effect. Borrower has full power and
------------------------------
authority to enter into this Agreement and the other Loan Documents. The
execution and delivery of this Agreement, and the other Loan Documents, and the
performance and observance of their terms, conditions and obligations, have been
duly authorized by all necessary action by Borrower. This Agreement and the
Working Capital Notes are, and the other Loan Documents when duly executed and
delivered will be, legal, valid and binding obligations of Borrower, enforceable
in accordance with their respective terms, except as such enforcement may be
limited by bankruptcy, insolvency or similar laws of general application
relating to the enforcement of creditors' rights.
(e) Litigation. Except as disclosed in Exhibit F attached hereto,
----------- ---------
there are no actions, suits, proceedings or claims against any Related Person or
Restricted Subsidiary or any of their respective properties pending or, to the
knowledge of Borrower, threatened before any court or by or before any
governmental instrumentality, which could have a material adverse effect on the
business, operations, property, prospects or condition (financial or otherwise)
of any Related Person or Restricted Subsidiary or the ability of Borrower to
perform its obligations under this Agreement, or any of the other Loan
Documents. There exists no default or breach by any Related Person or
Restricted Subsidiary with respect to any order, writ, injunction, decree or
demand of any court or governmental instrumentality, nor does the execution,
delivery or performance by Borrower of this Agreement or any of the other Loan
Documents result in any such default or breach.
(f) Taxes. Each Related Person and Restricted Subsidiary has filed
------
all required tax returns and paid all taxes and other governmental charges or
levies imposed upon or against it or its properties, including the Security
Agreements and the Collateral, or profits before the same became in default,
except those being contested in good faith and by appropriate proceedings, for
which adequate reserves have been set up by such Person, and for which there is
no risk of loss of any of the Collateral.
(g) Liens. All property and assets of Borrower are free and clear of
------
all liens and encumbrances except (i) the liens permitted by Section 10(b)
hereof, and (ii) the lien in connection with the litigation described in Exhibit
-------
F attached hereto.
-
(h) Names and Places of Business. No Related Person or Restricted
-----------------------------
Subsidiary has been known by, or used any other corporate, partnership, trade,
or fictitious name. The chief executive office and principal place of business
of Borrower (and, prior to the Reorganization of the Partnership) have been
located at the address of Borrower set out in Section 14(b) for at least the
four months immediately preceding the date hereof. The places where Borrower
keeps its books and records concerning the Collateral is at Borrower's address
set forth for notices in Section 14(b), and has been there for at least the four
months immediately preceding the date hereof.
23
(i) Use of Proceeds. The proceeds of the Working Capital Loan shall
----------------
be used solely for working capital purposes of Borrower and the issuance of
standby Letters of Credit pursuant to the terms of this Agreement. In no event
shall funds from any Advance be used directly or indirectly by any Person for
personal, family, household or agricultural purposes.
(j) Other Obligations. No Related Person or Restricted Subsidiary
------------------
has any outstanding Debt of any kind (including contingent obligations, tax
assessments, and unusual forward or long-term commitments) which is, in the
aggregate, material to such Person or material with respect to Borrower's
Consolidated financial condition and not shown in the Initial Financial
Statements.
(k) Full Disclosure. No certificate, statement, report or other
----------------
information delivered herewith or heretofore by any Related Person or Restricted
Subsidiary to Agent or the Lenders in connection with the negotiation of this
Agreement or in connection with any transaction contemplated hereby contains any
untrue statement of a material fact or omits to state any material fact known to
such Person necessary to make the statements contained herein or therein not
materially misleading as of the date made or deemed made. There is no fact
known to any Related Person or Restricted Subsidiary that has not been disclosed
to the Agent or the Lenders in writing that could materially and adversely
affect Borrower's properties, business, prospects or condition (financial or
otherwise).
(l) Margin Stock. No Related Person or Restricted Subsidiary is
-------------
engaged principally, or as one of its important activities, in the business of
extending credit to others for the purpose of purchasing or carrying any "margin
stock" or any "margin securities" (as such terms are defined respectively in
Regulation U and Regulation G promulgated by the Board of Governors of the
Federal Reserve System).
(m) ERISA. Neither Borrower nor any member of its Controlled Group
------
maintains, or has ever maintained any ERISA Plan. Borrower and the members of
its Controlled Group are in compliance with ERISA and the Code in all material
respects as to all employee benefit plans maintained by Borrower and the members
of its Controlled Group. Neither Borrower nor any member of its Controlled
Group is, or has ever been, required to contribute to, or has, or has ever had,
any other absolute or contingent liability in respect of, any "multiemployer
plan" as defined in Section 4001 of ERISA. Neither the Borrower nor any member
of its Controlled Group has ever represented, promised, or contracted (whether
in oral or written form) to any current or former employee (either individually
or as a group) that such current or former employee(s) would be provided, at any
cost to any member of the Controlled Group, with any employee welfare benefits
(within the meaning of Section 3(1) of ERISA) following retirement or
termination of employment. All members of the Controlled Group have complied in
all material respects with the notice and continuation coverage requirements of
Section 4980B of the Code.
(n) Security Documents. The warranties and representations contained
-------------------
in the Security Documents are true and correct in all material respects.
24
(o) Compliance with Laws. Each Related Person and Restricted
---------------------
Subsidiary is in material compliance with all laws, rules and regulations, and
determination of any arbitrator or governmental authority applicable to or
binding upon it or any of its property or to which it or any of its property is
subject.
(p) Financial Condition. The Initial Financial Statements fairly
--------------------
present the Partnership's financial position at the date thereof and the results
of the Partnership's operations and cash flows for the period thereof. Since
December 31, 1995, there has been no material adverse change in the business,
financial position or results of operations of the Partnership, as assigned to
and assumed by Borrower pursuant to the Reorganization.
(q) Environmental Matters. (i) The operations of each Related Person
----------------------
and Restricted Subsidiary comply in all material respects with all federal,
state or local laws, statutes, rules, regulations, and all administrative
orders, licenses, authorizations and permits of any governmental authority,
relating to environmental or public health and safety; (ii) none of the
operations of any Related Person or Restricted Subsidiary is the subject of
federal, state or local investigation evaluating whether any material remedial
action is needed to respond to a release of any hazardous or toxic waste,
substance or constituent into the environment; (iii) no Related Person or
Restricted Subsidiary has (and to the best knowledge of Borrower, nor has any
other person) filed any notice under any federal, state or local law indicating
that such Person is responsible for the release into the environment, or the
improper storage, of any material amount of any hazardous or toxic waste,
substance or constituent or that any such waste, substance or constituent has
been released, or is improperly stored, upon any property of such Person; and
(iv) no Related Person or Restricted Subsidiary otherwise has any known material
contingent liability in connection with the release into the environment, or the
improper storage, of any such waste, substance or constituent.
(r) Investment Company Act. No Related Person or Restricted
-----------------------
Subsidiary is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
(s) Public Utility Holding Company Act. No Related Person or
-----------------------------------
Restricted Subsidiary is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(t) Title to Properties; First Priority Security Interest. Each
------------------------------------------------------
Related Person or Restricted Subsidiary has good and indefeasible title to all
of their respective material properties and assets, free and clear of all liens
except those permitted by Section 10(b) hereof. As of the date hereof, the
Agent, on behalf of the Lenders has a perfected first priority lien or security
interest in all of the Collateral.
25
(u) Subsidiaries of Borrower and of Related Persons. Borrower does
------------------------------------------------
not presently have any Subsidiaries or own any stock or equity interest in any
corporation, partnership, joint venture or association, except as set forth in
Exhibit G hereto.
---------
(v) Location of Inventory. The location of all of Borrower's
----------------------
Products and inventory is set forth in Exhibit H hereto.
---------
(w) Eligibility of Items Included in Borrowing Base. Borrower
------------------------------------------------
represents and covenants to and with the Agent and Lenders that each item
included in a Borrowing Base Certificate at any time and from time to time is
one of the following: an Eligible Receivable, Prepaid Natural Gas, Eligible
Product Inventory, an Eligible Exchange Balance or Cash Collateral.
(x) Reorganization. Borrower represents and warrants to the Agent
---------------
and each Lender that:
(i) The execution, delivery and performance by the Partnership
and Borrower of all documents executed in connection with the
Reorganization and the consummation of the transactions contemplated
by the Reorganization will not conflict with the articles of
incorporation, bylaws or other organizational or governing documents
of any Related Person or Restricted Subsidiary, or conflict with or
result in any breach of any mortgage, lien, lease, agreement,
instrument, order, judgment, decree, law, rule, regulation or any
other restriction of any kind or character to which any Related Person
or Restricted Subsidiary is a party or is subject or by which any
Related Person or Restricted Subsidiary or its properties are bound or
affected or result in the creation or imposition of any lien, charge
or encumbrance upon any property of any Related Person or Restricted
Subsidiary.
(ii) No consent, approval, exemption, authorization or order of or
other action by, and no notice to or filing with, any court or
governmental authority or third party is required by any Related
Person or Restricted Subsidiary in connection with the execution,
delivery or performance by the Partnership and Borrower of the
documents executed in connection with the Reorganization or to
consummate any transactions contemplated by the Reorganization, except
such consents, approvals, exemptions, authorizations, orders or
actions the failure of which to obtain or take would not have a
material adverse effect on the transactions contemplated by the
Reorganization, or subsequent to consummation thereof, the business,
assets or financial condition of Borrower;
(iii) Borrower and the Partnership have full power and authority
to enter into all of the documents executed in connection with the
Reorganization. The execution and delivery of such documents, and the
performance and observance of their terms, conditions and obligations,
have been duly authorized by all necessary action by Borrower and the
Partnership. All such documents
26
have been duly executed and delivered and constitute the legal, valid
and binding obligations of Borrower and the Partnership, enforceable
in accordance with their respective terms, except as such enforcement
may be limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights;
(iv) At the consummation of the Reorganization and as of the date
hereof, there does not exist against the Partnership or its assets any
judgment, lien, encumbrance, burden or claim of any kind that attached
to the assets of the Partnership assigned to Borrower in connection
with the Reorganization except liens and encumbrances existing as a
result of the Existing Loan Agreements, and except liens and
encumbrances permitted by Section 10(b) hereof;
(v) Upon consummation of the Reorganization the Lenders received
and continue to have a perfected first priority lien and security
interest in the assets assigned to Borrower by the Partnership;
(vi) Prior to consummation of the Reorganization, the Partnership
obtained all necessary consents, permissions and approvals by third
parties or governmental authorities in connection with the transfer of
the assets of the Partnership to Borrower and the transfer of all
governmental permits and licenses held by the Partnership in
connection with the operation of its business, except to the extent
that the failure to obtain any such consent, permission or approval
would not have a material adverse effect on the business, assets or
financial condition of Borrower, and the Partnership obtained all
necessary waivers of preferential and similar rights of third parties
to purchase any portion of such assets;
(vii) Except for the Partnership Distribution and the other
elements of the Reorganization that would violate the terms of the
Existing Loan Agreements but for the consent set forth in Section 1 of
the Modification Agreement, no Event of Default or Unmatured Event of
Default under the Existing Loan Agreements has occurred or is
continuing, all representations and warranties contained in Section 8
of the Existing Working Capital Loan Agreement are true in all
material respects (except those affected by the occurrence of the
Reorganization), and Borrower and the Partnership have satisfied in
all material respects their covenants and obligations under the
Modification Agreement; and
(viii) No order has been entered by any court or governmental
agency having jurisdiction over the parties or the subject matter of
the Modification Agreement that restrains or prohibits the
Reorganization or which remained in effect at the time of the
Reorganization and the other transactions contemplated by the
Modification Agreement.
27
SECTION 9. AFFIRMATIVE COVENANTS. Until payment in full of the Working
---------------------
Capital Loan and termination of all Commitments by the Lenders to make Advances
hereunder, without the prior written consent of the Required Lenders:
(a) Payment and Performance of Working Capital Loan. Borrower shall
------------------------------------------------
duly and punctually pay or cause to be paid in lawful money of the United
States, the principal and interest on the Working Capital Loan upon the dates,
at the place and in the manner set forth in Section 2 hereof, and perform and
observe all other obligations of Borrower under this Agreement and the other
Loan Documents.
(b) Financial Statements. Each of the Related Persons and Restricted
---------------------
Subsidiaries shall keep proper books of record and account in which full, true
and correct entries will be made of all business, dealings and affairs in
accordance with GAAP, and Borrower shall deliver to the Agent sufficient copies
for each Lender, at Borrower's expense and in an acceptable format:
(i) Within 120 calendar days after the end of each Fiscal Year,
complete audited annual financial statements of Borrower, together
with all notes thereto, prepared in reasonable detail in accordance
with GAAP, and presented on both a Consolidated and Consolidating
basis, together with an unqualified opinion, based on an audit
conducted by Price Waterhouse or other independent certified public
accountants selected by Borrower and acceptable to the Lenders,
stating 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 (except as otherwise required due
to changes in GAAP);
(ii) Within 45 calendar days after the end of each calendar
month, an unaudited monthly income statement, balance sheet and
statement of cash flows for the subject month, prepared in reasonable
detail and in accordance with GAAP and presented on both a
Consolidated and Consolidating basis;
(iii) Together with delivery of each of the financial statements
described in Subsection (i) and (ii) above, a certificate signed by
the president or chief financial officer of Borrower in the form of
Exhibit I attached hereto, stating that he or she has read this
---------
Agreement and made all other necessary investigations, attesting to
the authenticity of such financial statements, showing the calculation
of and compliance with the financial covenants contained in this
Agreement, and stating that in making the examination and reporting on
such financial statements, he or she concluded that there did not
exist any condition or event at the end of such Fiscal Year or at the
time of such certificate which constituted an Event of Default or an
Unmatured Event of Default, or, if such condition or event existed,
specifying the nature and period of existence of any such condition or
event;
28
(iv) As soon as available, and in any event within 10 days after
the end of each month, a Borrowing Base Certification as provided in
Section 5(b);
(v) Within 30 days after the same are filed, copies of all
financial statements, registration statements and regular, periodical
or special reports that any Related Person may make to, or file with,
the Securities and Exchange Commission or any stock exchange; and
(vi) Within 30 days, such additional financial and other
information as any of the Agent or either of the Lenders may from time
to time reasonably request, including without limitation reasonable
detail with respect to the information provided on an aggregate basis.
(c) Preservation of Existence, Etc. (i) Borrower shall maintain in
--------------------------------
full force and effect Borrower's existence as a corporation and its good
standing under the laws of the State of Delaware and its right to transact
business in the States of Arkansas, Colorado, Kentucky, Tennessee, Texas and
West Virginia; and (ii) each Related Person and Restricted Subsidiary shall
maintain its good standing under the laws of the state of its formation and its
right to transact business in all states where its activities and ownership of
assets are such that qualification to transact business is necessary under the
laws of such states and failure to so qualify could have a material adverse
effect on such Person or on Borrower, or on Borrower's business, property,
prospects, assets, operations or condition (financial or otherwise).
(d) Maintenance of Property. Borrower shall maintain, preserve,
------------------------
protect and keep in good repair and in good working order and condition the
Collateral; and each Related Person and Restricted Subsidiary shall maintain all
other properties, real or personal, used or useful in its business in good
repair and in good working order and condition.
(e) Payment of Other Obligations.
-----------------------------
(i) Each Related Person and Restricted Subsidiary shall duly and
punctually pay and discharge (A) all taxes, assessments and other
governmental charges assessed against or imposed upon or with respect
to such Person or its properties or assets prior to the date when they
shall become delinquent unless the same are being contested in good
faith and by appropriate proceedings and appropriate reserves have
been established in accordance with GAAP and there is no risk of loss
of any of the Collateral; (B) all charges for labor, materials and
supplies which if unpaid might become a lien against any part of the
property of such Person unless the same are being contested in good
faith and by appropriate proceedings and appropriate reserves have
been established in accordance with GAAP and there is no risk of loss
of any of the Collateral; and (C) all federal and state social
security, worker's compensation and similar taxes, payments and
contributions for which such Person may be liable, before the same
become delinquent unless the same are being contested in good faith
and by appropriate
29
proceedings and appropriate reserves have been
established in accordance with GAAP and there is no risk of loss of
any of the Collateral; and
(ii) duly and punctually pay all Debt obligations (principal and
interest), including without limitation, accounts payable and lease
obligations, unless the same are being contested in good faith and by
appropriate proceedings and appropriate reserves have been established
in accordance with GAAP.
(f) Insurance. Each Related Person and Restricted Subsidiary shall
----------
keep all of its insurable property, real and personal, adequately insured at all
times against fire and against such other risks as are customarily insured
against by similar businesses of a comparable size, and fully insure against its
employer's and public liability risks in financially sound and reputable
insurance companies, all in such amounts and upon such terms and conditions,
including deductibles, consistent with industry standards. Each insurance
policy covering Collateral shall be endorsed (i) to provide for payment of
losses to the Agent for the benefit of the Lenders as its interests may appear,
(ii) to provide that such policies may not be canceled, reduced or affected in
any manner for any reason without fifteen days prior notice to the Agent, (iii)
to provide for any other matters specified in any applicable Security Document
or which the Lenders or the Agent may reasonably require; (iv) to provide for
insurance against fire, casualty and any other hazards normally insured against,
in the amount of the full value (less a reasonable deductible not to exceed
amounts customary in the industry for similarly situated businesses and
properties) of the property insured, and (v) business interruption insurance in
an amount equal to the cost of operating Borrower's business as reasonably
determined by Borrower for a six-month period, which may change from time to
time depending upon Borrower's costs of operation at the time in question. Each
Related Person shall at all times maintain adequate insurance against its
liability for injury to persons or property, which insurance shall be by
financially sound and reputable insurers. A true and complete list of all
currently existing insurance of Borrower has been furnished to the Agent prior
to the date hereof. It is understood, and Agent and Lenders agree, that based
on existing circumstances Borrower has no obligation to insure inventory.
(g) Inspection of Property, Books and Records; Confidentiality
----------------------------------------------------------
Agreement. Borrower shall permit the Agent's and any Lender's duly authorized
----------
officers, employees and agents to inspect (and make copies of or abstracts
therefrom) the Collateral and the other property, books and records of Borrower
and to discuss Borrower's affairs, finances and accounts with Borrower's
officers and its independent accountants, and furnish any other data which the
Agent or any Lender may reasonably request, all at the expense of Borrower and
at any reasonable time and as often as the Agent or any Lender may reasonably
request; provided that Borrower shall not be liable for expenses arising out of
-------- ----
the gross negligence or willful misconduct of the inspecting party; provided,
--------
further, that Borrower shall not be required to give access to any party
-------
inspecting the property subject to any of the Mortgages, if such inspecting
party refuses or is unwilling or unable to comply with the reasonable safety
requirements of Borrower relating to the property to be inspected. Each Lender
agrees that, until the occurrence of an Event of Default, it will take all
reasonable steps to keep confidential any proprietary information given to it by
any Related Person and Restricted Subsidiary, including without
30
limitation any environmental information or reports pertaining to the property
subject to the Mortgages; provided, however, that this restriction shall not
-------- -------
apply to information which (i) has at the time in question entered the public
domain, (ii) is required to be disclosed by law or by any order, rule or
regulation (whether valid or invalid) of any court or governmental agency, or
authority, (iii) is disclosed to such Lender's external auditors, (iv) is
disclosed to such Lender's affiliates', agents or attorneys, or (v) is furnished
to purchasers or prospective purchasers of participations or other interests in
the Working Capital Loan or the Working Capital Notes; provided that before
-------------
making the disclosures described in the immediately preceding clauses (iv) and
(v), such Lender shall direct in writing the Persons to whom such proprietary
information is to be disclosed to comply with the confidentiality provisions set
forth in this Section 9(g). Borrower agrees that if either Lender breaches its
confidentiality agreement contained in this Section 9(g), Borrower's exclusive
remedy shall be an action for actual damages and such breach shall not be
asserted in any action for payment hereunder or under the Working Capital Notes
or in a foreclosure of any of the Security Documents.
(h) Notices. Borrower shall give written notice to the Agent within
--------
3 days after a Responsible Person becomes aware of any of the following:
(i) Any material adverse change in the business, property,
prospects, assets, operations or condition (financial or otherwise),
of Borrower, any other Related Person or any Restricted Subsidiary;
(ii) Any Event of Default or Unmatured Event of Default;
(iii) The institution of any litigation or other proceeding
before any governmental body or official against any Related Person or
any Restricted Subsidiary or any of their respective assets and any
developments in any pending litigation or other proceeding before any
governmental body or official that could materially affect Borrower,
such Related Person or such Restricted Subsidiary, its business,
property, prospects, assets, operations or condition (financial or
otherwise);
(iv) Any existing or pending investigation or inquiry by any
governmental authority in connection with any applicable Environmental
Laws (as such term is defined in the Mortgages);
(v) The institution of, or material development in, any
litigation affecting any of the Collateral, or any other dispute or
claim that could have a material adverse effect on any of the
Collateral or the calculation of the Borrowing Base;
(vi) Any fact that causes or may cause the Agent, on behalf of
the Lenders, or the Lenders to fail to have a valid, enforceable and
perfected first priority lien on or security interest in any of the
Collateral, except as expressly
31
permitted by this Agreement or the Security Documents and except as a
result of the acts or omissions of the Agent or either Lender; or
(vii) The shut-down of any natural gas liquids processing
facility owned or leased by Borrower for a period of 48 consecutive
hours or more or of any planned shut-down of any such facility that is
expected to be in effect for a period of 48 consecutive hours or more
(notice of any actual shut-down shall be given to Agent within 24
hours after the occurrence thereof and notice of any such planned
shut-down shall be given to Agent in advance).
(i) Compliance with Laws. Each Related Person and Restricted
---------------------
Subsidiary shall comply in all material respects with all applicable laws,
statutes, rules and regulations of the United States and of any state or
municipality, and of any official, arbitrator or governmental authority, in
respect of the conduct of business and ownership of property by such Person.
(j) Further Assurances. Borrower shall promptly and, insofar as not
-------------------
contrary to applicable law, at Borrower's own expense, (i) file and refile in
such offices, at such times and as often as may be reasonably necessary, every
instrument and every amendment thereto, and take such other action, as may be
reasonably necessary or desirable to create, perfect, maintain and preserve all
liens and security interests intended to be created by Borrower under the
Security Documents in favor of the Agent for the benefit of the Lenders or in
favor of the Lenders and to protect and preserve the rights and remedies of the
Agent and the Lenders thereunder, (ii) furnish to the Agent evidence reasonably
satisfactory to the Agent of all such filings and refilings, (iii) otherwise do
all things necessary or expedient to be done to effectively create, perfect,
maintain and preserve the liens and security interests intended to be created by
the Security Documents as a lien on real property and fixtures and a security
interest in personal property and fixtures, and (iv) pay all fees and expenses
(including counsel fees) incident to this Agreement and in compliance with this
Section. In addition, Borrower covenants and agrees that if all or any part of
the Working Capital Loan becomes subject to the provisions of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, as it may be amended
from time to time, or other governmental regulation requiring appraisals,
surveys or similar requirements as to all or any part of the Collateral,
Borrower shall promptly provide the Agent and the Lenders with any appraisals,
surveys or other items required to have the Working Capital Loan be in
compliance with all applicable state and federal laws, at its sole cost and
expense.
(k) Current Ratio. Borrower (excluding Restricted Subsidiaries)
--------------
shall maintain a Current Ratio of not less than 1.1 to 1.0.
(l) Funded Debt to Total Capitalization. Borrower's Funded Debt
------------------------------------
(excluding Restricted Subsidiaries) shall not exceed 60% of its Total
Capitalization.
(m) Tangible Net Worth. Borrower (excluding Restricted Subsidiaries)
-------------------
shall maintain a Tangible Net Worth equal to or greater than the sum of
$38,000,000 plus 50 percent
32
of consolidated net income determined in accordance with GAAP and earned by
Borrower after September 30, 1996 (but excluding any net losses).
(n) Fixed Charge Coverage Ratio. Borrower (excluding Restricted
----------------------------
Subsidiaries) shall maintain a Fixed Charge Coverage Ratio, determined as of the
end of any month commencing with October 31, 1996, calculated on a rolling
twelve month basis, of not less than 1.5.
(o) Environmental Matters. No Related Person or Restricted
----------------------
Subsidiary shall cause or permit the use or storage of Hazardous Substances or
Solid Waste (as such terms are defined in the Mortgages) on, in or in connection
with such Persons's properties or disposal of Hazardous Substances or Solid
Waste from such Person's properties, except in full compliance with all
Environmental Laws (as such term is defined in the Mortgages), or make any use
of such Person's properties that results in any requirement that such Person
apply for or obtain a permit under RCRA (as such term is defined in the
Mortgages) or other Environmental Law for the treatment, storage or disposal of
Hazardous Substances or Solid Waste. Borrower covenants and agrees to keep or
cause each Related Person's properties to be kept free of any Hazardous
Substances or Solid Waste except in full compliance with all Environmental Laws,
and, promptly upon the discovery that the presence of any such substance on any
of their respective properties is not in full compliance, to remove the same (or
if removal is prohibited by law, to take whatever action is required by law) at
Borrower's sole expense.
SECTION 10. NEGATIVE COVENANTS. Until payment in full of the Working
------------------
Capital Loan and termination of all Commitments by the Lenders to make advances
hereunder, neither Borrower, any Restricted Subsidiary nor any of the other
Related Persons shall, without the prior written consent of the Required
Lenders:
(a) Debt. Create, incur, assume or permit to exist any Debt, except:
-----
(i) The Working Capital Loan and the Revolver/Term Facility;
(ii) Debt incurred to finance the acquisition or construction by
Borrower of one or more projects consistent with Borrower's covenant
contained in Section 10(e) hereof and for which recourse is limited to
the property included in the project and is non-recourse to Borrower
and the Collateral;
(iii) Obligations under leases, whether capital or operating
leases, provided that the obligations payable in any one year do not,
-------- ----
in the aggregate, exceed $2,000,000;
(iv) Debt incurred pursuant to Borrower's or any Related
Person's hedging activities related to such Person's line of business
in the futures or commodities market such that (A) the liability under
open lines of credit to finance futures contracts, commodities and/or
options contracts does not exceed
33
$1,000,000 in the aggregate at any one time outstanding, and (B)
recourse is limited to Borrower's or any Related Person's position in
futures contracts; and
(v) Current accounts and charges, payable or accrued, incurred
in the ordinary course of Borrower's or any Related Person's business.
(b) Liens. Create, assume or permit to exist any mortgage, pledge,
------
security interest, lien or other encumbrance upon any Related Person's
properties or assets, whether now owned or hereafter acquired, real or personal,
except:
(i) The Security Documents;
(ii) Liens for taxes not delinquent or being contested in good
faith and by appropriate proceedings and for which adequate reserves
have been set aside on such Person's books;
(iii) Operator's, mechanic's, workmen's, materialmen's and
other like liens arising in the Ordinary Course of Business in respect
of obligations not overdue or which are being contested in good faith
and by appropriate proceedings and for which adequate reserves have
been set aside on such Person's books and for which there is no risk
of loss of any of the Collateral;
(iv) Liens or encumbrances, if any, permitted by the Security
Documents;
(v) Liens securing Debt permitted by Section 10(a) above; and
(vi) Debt incurred by MarkWest Resources, Inc. to Colorado
National Bank, a national banking association, for borrowed money.
(c) Guaranty Obligations. Assume, guarantee, endorse or otherwise
---------------------
become or be contingently liable (by direct or indirect agreement, contingent or
otherwise, or by operation of law, to provide funds for payment, to supply funds
to, or otherwise invest in, a debtor, or otherwise assure a creditor against
loss) for the Debt, obligation, undertaking or other liability of any other
Person, or otherwise become or be responsible in any manner (whether by
agreement to purchase any obligations, stock, assets, goods or services, or to
supply or advance any funds, assets, goods or services, or otherwise) with
respect to any undertaking of any other Person, except (i) guarantees by
Borrower of Debt incurred by MarkWest Resources, Inc. in connection with San
▇▇▇▇ and Piceance Basin projects, so long as such guarantees do not exceed
$1,000,000 in the aggregate at any one time (copies of each such guarantee shall
be provided to Agent within ten days after execution), (ii) the guarantee by
Borrower contained in Section 2.5 of the Participation, Ownership and Operating
Agreement for West Shore Processing Company, LLC dated May 2, 1996, (iii) the
Secured Guarantees dated May 2, 1996 executed by MarkWest Michigan, L.L.C. as
Manager of West Shore Processing Company LLC and Basin Pipeline,
34
L.L.C. in favor of Bank of America Illinois, and (iv) endorsements of negotiable
instruments for deposit or collection and similar transactions in the ordinary
course of its business.
(d) Loans and Advances. Make any loans or advances to any Person,
-------------------
except for (i) accounts receivable or notes receivable arising from the sale or
lease of goods or services in the Ordinary Course of Business; (ii) as part
payment in the Ordinary Course of Business on its ordinary equipment rental,
repair, replacement and operating needs, or (iii) loans and advances to officers
and employees of Borrower to the extent and in the amount reflected in
Exhibit J.
---------
(e) Limitation on Investments and New Businesses. (i) Make any
---------------------------------------------
expenditure or commitment or incur any obligation or enter into or engage in any
transaction except in the Ordinary Course of Business, (ii) engage directly or
indirectly in any business or conduct any operations except in connection with
gas processing and gathering, gas liquids fractionation, gas and gas liquids
marketing, MTBE manufacturing, refining and marketing and gasoline blending and
oil and gas exploration and production, (iii) make any capital contributions to
Restricted Subsidiaries in excess of $5,000,000, (iv) make any acquisitions of
or capital contributions to or other investments in any Person other than
Restricted Subsidiaries unless the following conditions are satisfied: (A) the
investment is in a Person engaged in any of the businesses described in (e)(ii)
above, and (B) Agent has received 10 days' advance notice of such investment.
Notwithstanding the foregoing, the Related Persons may make (1) investments in
open market commercial paper, maturing within 365 days after acquisition
thereof, which has a credit rating of at least A-2 or P-2 by either Standard &
Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc., (2) marketable
obligations issued or unconditionally guaranteed by the United States of America
or an instrumentality or agency thereof and entitled to the full faith and
credit of the United States of America, and (3) demand deposits, time deposits
(including certificates of deposit), repurchase agreements, Eurodollar time
deposits or bankers' acceptances, maturing in each case within 12 months from
the date of deposit thereof, with a domestic office of any Lender.
(f) Mergers and Consolidations. Merge or consolidate into or with
---------------------------
any Person, or sell, lease, convey, transfer or otherwise dispose of all or a
substantial part of its assets to or with any Person, except: (i) a merger or
consolidation in connection with the acquisition by Borrower of property or
facilities as a result of a stock or equity transaction in the ordinary course
of its business and after the consummation of which Borrower is the surviving
entity; (ii) a merger or consolidation of any Consolidated Subsidiary of the
Borrower with or into the Borrower, provided that the Borrower shall be the
--------
continuing or surviving corporation; in both cases, so long as no Event of
Default or Unmatured Event of Default has occurred or is continuing or would be
caused by the consummation of such merger or consolidation and Agent receives
within 10 days after such merger or consolidation a certificate from the chief
financial officer or any Vice President of Borrower that Borrower is in
compliance with the provisions of this Agreement.
(g) Location of Inventory. Borrower shall not store any of its
----------------------
Products or inventory except at the locations described in Exhibit H hereto
---------
without giving the Agent notice of
35
a change within 30 days thereof and the execution of any and all Security
Documents the Agent and its counsel deem necessary or desirable to grant a
perfected first priority lien in favor of Agent for the benefit of the Lenders
in such Products or inventory; notwithstanding the foregoing, Borrower shall
not, under any circumstances, store any of its Products or inventory in a
location outside of the United States.
(h) Burdensome Undertakings. Undertake, or become contractually
------------------------
bound to undertake, any action not in the Ordinary Course of Business that could
materially adversely affect Borrower or its business, properties, prospects,
assets, operations or condition (financial or otherwise).
(i) Change in Location of Business. Move its place of business or
-------------------------------
chief executive office or the place where Borrower keeps its books and records
concerning the Collateral (including, without limitation, the records with
respect to its accounts and contract rights), from one state to another without
giving the Agent 45 days' prior written notice of the proposed new location
thereof.
(j) Restricted Distributions. (i) Make any dividends or
-------------------------
distributions of assets, or (ii) declare or pay any cash or liquidating
distribution or dividends or (iii) make any other distribution to any of its
shareholders, or (iv) redeem, purchase or otherwise acquire any shares of the
capital stock of the Borrower, or (v) prepay, purchase or redeem, any
subordinated indebtedness of Borrower, or (vi) issue any securities or capital
stock or any options, warrants, rights or other agreements to issue any such
securities other than the following:
(x) Dividends paid in common stock of Borrower; and
(y) As to any Subsidiary of Borrower, the foregoing restrictions
of this Section 10(j) shall not apply.
(k) Disposition of Assets. Sell, transfer, lease, exchange or
----------------------
otherwise dispose of any of its assets, real or personal, except as follows:
(i) sales, transfers, leases, exchanges or other dispositions of
assets by Borrower or any other Related Person or Restricted
Subsidiary in the Ordinary Course of Business; and
(ii) sales, transfers, leases, exchanges or other dispositions
of assets by Borrower and the other Related Persons or Restricted
Subsidiaries not in the Ordinary Course of Business, so long as such
transaction is on fair and reasonable terms and the proceeds from all
such transactions do not exceed $250,000 in the aggregate in any
calendar year.
(l) ERISA. Establish, maintain or contribute to any ERISA Plans or
------
incur any obligation to contribute to any "multiemployer plan" as defined in
Section 4001 of ERISA or
36
represent, promise, or contract (in oral or written form) to any current or
former employee (individually or as a group) that such current or former
employee(s) would be provided, at any cost to any member of the Controlled
Group, with any employee welfare benefits (as defined in Section 3(1) of ERISA)
following retirement or termination of employment.
(m) Use of Proceeds. Use any funds from the Working Capital Loan
----------------
directly or indirectly for the purpose, whether immediate, incidental or
ultimate, of purchasing, acquiring or carrying any "margin stock" or any "margin
securities" (as such terms are defined respectively in Regulation U and
Regulation G promulgated by the Board of Governors of the Federal Reserve
System) or to extend credit to others directly or indirectly for the purpose of
purchasing or carrying any such margin stock or margin securities.
(n) Transactions with Affiliates. Enter into any transaction with
-----------------------------
any Affiliate, except any transaction that is in the ordinary course of such
Person's business and that is upon fair and reasonable terms no less favorable
to such Person than would obtain in a comparable arm's-length transaction with a
Person not an Affiliate of such Person.
(o) Contracts; Take-or-Pay Agreements. Amend, modify or terminate
----------------------------------
the Columbia Contracts in any manner or permit any of them to be amended or
modified or any term waived by any party thereto or assign any of its rights
thereunder, unless: (x) the Agent and the Lenders have been notified by the
Borrower of such proposed amendment, modification or termiation, (y) the Lenders
had an opportunity to review such proposed amendment, modification or
termination and (z) the Lenders have consented to such amendment, modification
or termination, which consent shall not be unreasonably wihtheld. Enter into
any "take-or-pay" contract or other contract which requires it to pay for oil,
gas, other hydrocarbons or other minerals prior to taking delivery thereof,
provided that Borrower may enter into such contracts so long as the term thereof
--------
does not exceed one year, and provided further that Borrower may enter into such
-------- -------
contracts if the products purchased thereunder are needed by the associated
facility at the time of delivery thereof. Examples of permitted contracts
include (i) futures contracts to hedge (but not speculate) against future
changes in prices and (ii) reciprocal exchange agreements or back to back
contracts in which Borrower avoids the cost of all or a portion of the cost of
transportation of natural gas or natural gas liquids (in this subsection called
"gas and liquids") processed by it by exchanging such gas and liquids for gas
and liquids processed by others which are closer in location to Borrower's
ultimate purchaser. Examples of prohibited contracts include: (1) essentially
speculative contracts entered into primarily in hopes of benefitting from price
changes and (i) providing for the purchase of gas and liquids not covered by a
back to back contract permitting an exchange or sale thereof within 180 days
after the date of purchase or (ii) providing for the purchase of gas and liquids
that will not be consumed in Borrower's operations within 180 days after the
purchase thereof; and (2) contracts for the future sale or purchase of gas or
liquids that are not for the purpose of facilitating the ultimate sale of gas or
liquids owned, distributed or processed by Borrower. Notwithstanding the
foregoing provisions of this section, Borrower may enter into speculative
contracts not related to Borrower's operations primarily in hopes of benefitting
from price changes so long as the
37
aggregate liability (including contingent or potential liability) and costs of
Borrower thereunder do not exceed $1,250,000 at any time.
(p) Amendments to Organizational Documents. Amend the articles and
---------------------------------------
by-laws of Borrower or any other organizational documents of any Related Person
or Restricted Subsidiary.
SECTION 11. EVENTS OF DEFAULT. The occurrence of any of the following
-----------------
shall constitute an event of default ("Event of Default") hereunder:
----------------
(a) Non-Payment. Failure by Borrower to (i) pay any installment of
------------
principal of, or interest on, the Working Capital Notes, any fees or other
amounts payable hereunder or under the Working Capital Notes or any of the
Security Documents within three Business Days after its due date, or (ii) comply
with the provisions of Section 6 within the 3-day period set forth therein.
(b) Certain Defaults. Failure by Borrower to perform or observe any
-----------------
term, covenant, agreement, condition or provision contained in any of Sections
9(c)(ii), (g), (h), (k), (l), (m) or (n), or Sections 10(a) through (p),
inclusive.
(c) Other Defaults. Failure by Borrower to perform or observe any
---------------
other covenant, agreement, condition or provision contained in this Agreement or
in the Working Capital Notes (which covenant, agreement, condition or provision
is not included in Subsection 11(a) or (b)) and such failure continues
unremedied for a period of 30 days.
(d) Representation or Warranty. Any representation or warranty of
---------------------------
the Borrower, whether contained in this Agreement or in any certificate or other
writing required or contemplated by this Agreement or in the Security Agreement,
shall be false or misleading in any material respect as of the date made or
deemed made.
(e) Security Documents.
-------------------
(i) Occurrence of any of the events of default defined in any of
the Security Documents.
(ii) Any of the Security Documents shall for any reason (other
than pursuant to the terms thereof or as a direct result of any act or
omission of Lenders or Agent) cease to create a valid security
interest in the collateral purported to be covered thereby or such
security interest shall for any reason cease to be a perfected and
first priority lien and security interest, subject only to those
matters expressly permitted by Section 10(b) hereof or by the
applicable Security Document.
38
(iii) Failure by Borrower to perform or observe any term,
covenant, agreement, condition or provision contained in the Security
Agreement.
(f) Judgments. Any money judgment, writ or warrant of attachment, or
----------
similar process in an amount of $250,000 (in the aggregate) or more shall be
entered or filed against any Related Person or Restricted Subsidiary or any of
its assets and shall remain unvacated, unbonded or unstayed for a period of 30
calendar days, or in any event later than five calendar days prior to the date
of any proposed sale thereunder.
(g) Insolvency. Any Related Person or Restricted Subsidiary shall
-----------
become insolvent, admit in writing its inability to pay its debts as they
mature, or make an assignment for the benefit of creditors; or apply for or
consent to the appointment of a receiver or trustee for it or for a substantial
part of its property or business; or such a receiver or trustee otherwise shall
be appointed and shall not be discharged within 30 calendar days after such
appointment.
(h) Bankruptcy, Etc.. Bankruptcy, insolvency, reorganization or
-----------------
liquidation proceedings or other proceedings for relief under any bankruptcy law
or any other law for the relief of debtors shall be instituted by or against any
Related Person or Restricted Subsidiary (except for an involuntary petition
against any Related Person or Restricted Subsidiary, which shall not constitute
an Event of Default if such petition is vacated or dismissed within 15 Business
Days after the filing thereof), or any order, judgment or decree shall be
entered against any Related Person or Restricted Subsidiary decreeing its
dissolution or division.
(i) Cross-Default. Any event of default shall occur as to any other
--------------
agreement now or hereafter existing relating to extensions of credit to any
Related Person or Restricted Subsidiary by the Lenders or any of them, including
without limitation the Revolver/Term Facility, or by any third party, including
without limitation, any extension of credit to MW Michigan, Inc. or its
Subsidiaries, or any event which with the passage of time or giving of notice,
or both, would permit the holder or holders of such indebtedness to cause such
indebtedness to be declared to be due and payable prior to its stated maturity.
(j) ERISA. An employee benefit plan that is intended to be qualified
------
under the Code shall lose its qualification, and the loss can reasonably be
expected to impose on the Controlled Group liability (for additional taxes to
Plan participants, or otherwise) in the aggregate amount of $250,000 or more;
any member of the Controlled Group engages in or becomes liable for a non-exempt
prohibited transaction and the initial tax or additional tax under Section 4975
of the Code might reasonably be expected to exceed $100,000; a violation of
Section 404 or 405 of ERISA or Section 401(a)(2) of the Code that can be
reasonably expected to expose the Controlled Group to liability in excess of
$250,000; any member of the Controlled Group is assessed a tax under Section
4980B of the Code or is liable for failure to comply with the Section 4980B
notice and continuation coverage requirements that can be reasonably expected to
result in liability to the Controlled Group in excess of $250,000; any member of
the Controlled Group is assessed a penalty under Section 502(c)(2) of ERISA or
Section 6652(e) of the Code that can be reasonably expected to expose the
Controlled Group to liability in excess of
39
$250,000; or any combination of the foregoing events that involves potential
liability in excess of $250,000.
(k) Loan Documents. This Agreement, the Working Capital Notes, or
---------------
any of the other Loan Documents shall for any reason be revoked or invalidated,
or otherwise cease to be in full force and effect, except as a direct result of
the acts or omissions of the Agent or the Lenders.
(l) Material Adverse Change. Any material adverse change occurs in
------------------------
Borrower's financial condition or business or operations (including, without
limitation, any material adverse change caused by Borrower becoming subject to
any statute, regulation or order of any governmental authority after the date
hereof).
(m) Change in Control. ▇▇▇▇ ▇▇▇ and the members of his immediate
------------------
family cease to own collectively at least twenty-five percent (25%) of the
issued and outstanding voting stock of Borrower.
(n) Columbia Contracts. Any of the Columbia Contracts shall cease to
-------------------
be in full force and effect for any reason except in conformity with Section
10(o) hereof.
(o) Regulatory Change. There shall be any legislative action by any
------------------
local, state or federal agency or other governmental entity resulting in any
regulatory control of Borrower's operations, the result of which has or could
have, in Lenders' reasonable opinion, a significant financial impact on, or
control of, its financial condition.
SECTION 12. REMEDIES.
--------
(a) Automatic Acceleration of Loan. Upon the occurrence of any Event
-------------------------------
of Default specified in Section 11(g) or (h), the obligation of the Lenders to
make Advances under the Working Capital Loan shall automatically terminate and
the unpaid principal amount of the Working Capital Loan and all interest and
other amounts payable hereunder, under the Working Capital Notes or any of the
Security Documents, shall automatically become due and payable without further
act of the Agent or the Lenders.
(b) Optional Acceleration of Loan. Upon the occurrence of any Event
------------------------------
of Default (other than those specified in Section 12(a) above), the Agent, at
the direction of Lenders whose Loan Shares aggregate 66-2/3 percent, may, from
time to time, do any or all of the following:
(i) Declare all or any part of the Working Capital Loan to be
forthwith due and payable, together with all accrued and unpaid
interest thereon and all other amounts payable hereunder or under any
of the other Loan Documents, without presentment, demand, protest or
other notice of any kind, all of which are expressly waived by
Borrower;
40
(ii) Declare the Commitments terminated;
(iii) With respect to any and all contingent, unmatured or
unliquidated obligations of Borrower hereunder, including without
limitation any and all outstanding Letters of Credit, declare and
require that cash in an amount equal to the aggregate outstanding
amount of all such obligations be immediately paid over, pledged and
delivered to the Agent on behalf of the Lenders to be held as Cash
Collateral for such obligations; and
(iv) Proceed with every remedy provided for herein or in the
Working Capital Notes, the Security Documents or any contract,
agreement or undertaking supplemental hereto and the Lenders shall
have, without limitation, all of the rights of a secured party under
the Uniform Commercial Codes as then in effect with respect to any
security then held for the Loans.
The enforcement of any rights of the Agent and the Lenders as to the
security for the Loans shall not affect the rights of the Agent or the Lenders
to enforce payment of the Working Capital Loan against Borrower and to recover
judgment against Borrower for any portion thereof remaining unpaid.
(c) Setoff. Upon the occurrence of any Event of Default, each Lender
-------
shall have the right at any time and from time to time, without prior notice to
Borrower (which notice is hereby waived by Borrower to the fullest extent
permitted by law), to setoff and apply any debt owing to Borrower by such
Lender, including without limitation, any deposits (general or special, time or
demand, provisional or final) now or hereafter maintained by Borrower with such
Lender, against any and all obligations of Borrower now or hereafter existing
under this Agreement or any of the other Loan Documents, although such
obligations may be contingent or unmatured, and for such purpose Borrower hereby
grants a security interest in and assigns to each Lender all such deposit
accounts.
SECTION 13. THE AGENT.
---------
(a) Appointment. Each Lender hereby irrevocably designates and
------------
appoints Norwest as the Agent of such Lender under this Agreement and the other
Loan Documents, and each such Lender irrevocably authorizes Norwest as the Agent
for such Lender, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, 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.
41
(b) Delegation of Duties. The Agent may execute any of its duties
---------------------
under this Agreement and the other Loan Documents by or through agents 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 to the
Lenders for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
(c) Exculpatory Provisions. Neither the Agent nor any of its
-----------------------
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person or entity under or in connection with this Agreement or any other Loan
Document (except for its or such Person's or entity's own gross negligence or
willful misconduct), or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrower or
any representative thereof contained in this Agreement or 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, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the Working
Capital Notes or any other Loan Document or for any failure of the Borrower to
perform its obligations hereunder or thereunder. The Agent shall not be under
any obligation to any Lender 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.
(d) Reliance by Agent. The Agent shall be entitled to rely, and
------------------
shall be fully protected in relying, upon any Working Capital Note, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy or telex
message, statement, order 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, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Working
Capital Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with 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 Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
and the Working Capital Notes and the other Loan Documents in accordance with a
request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Working Capital Notes.
(e) Notice of Default. The Agent shall not be deemed to have
------------------
knowledge or notice of the occurrence of any Unmatured Event of Default or Event
of Default hereunder unless the Agent has received notice from a Lender or the
Borrower referring to this Agreement,
42
describing such Unmatured Event of Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receives such
a notice, the Agent shall give notice thereof to the Lenders.
(f) Non-Reliance on Agent and Other Lenders. Each Lender expressly
----------------------------------------
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents
to the Agent that it has, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and made its own decision to make its Working Capital Loan hereunder
and enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
(g) Indemnification. The Lenders agree to indemnify the Agent in its
----------------
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to the
respective amounts of their original Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Working
Capital Notes) be imposed on, incurred by or asserted against the Agent in any
way relating to or arising out of this Agreement, any of the other Loan
Documents or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
--------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Agent's gross
negligence or willful misconduct. The agreements in this subsection shall
survive the payment of the Working Capital Notes and all other amounts payable
hereunder.
(h) Agent and Lenders in Their Individual Capacity. Each of the
-----------------------------------------------
Agent, the Lenders and their respective affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower as
though such Person was not the Agent
43
and/or Lender, as the case may be, hereunder and under the other Loan Documents.
With respect to Advances made by it and any Working Capital Note issued to it,
the Agent shall have the same rights and powers under this Agreement and the
other Loan Documents as any Lender and may exercise the same as though it were
not the Agent, and the terms "Lender" and "Lenders" shall include the Agent in
its individual capacity.
(i) Successor Agent. The Agent may resign as Agent upon 10 days'
----------------
notice to the Lenders. If the Agent shall resign as Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall be
approved by the Borrower, whereupon such successor agent shall succeed to the
rights, powers and duties of the Agent, and the term "Agent" shall mean such
successor agent effective upon its appointment, and the former Agent's rights,
powers and duties as Agent shall be terminated, without any other or further act
or deed on the part of such former Agent or any of the parties to this Agreement
or any holders of the Working Capital Notes, other than to give notice of the
appointment of such successor agent to Borrower. Borrower is entitled to rely
upon the existing Agent until Borrower has received notice of the appointment of
a successor agent. After any retiring Agent's resignation as Agent, the
provisions of this subsection shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement and the
other Loan Documents.
(j) Borrower Entitled to Rely on Agent. Borrower shall be entitled
-----------------------------------
to rely upon the Agent's written actions and representations.
SECTION 14. MISCELLANEOUS.
-------------
(a) No Waiver; Cumulative Remedies. No delay on the part of the
-------------------------------
Agent or any Lender in exercising any right, power, privilege or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise or waiver of any right, power, privilege, or remedy hereunder preclude
any other or further exercise of such right, power, privilege, or remedy
hereunder or the exercise of any other right, power or privilege or remedy. The
rights and remedies of the Agent and the Lenders contained herein are cumulative
and not exclusive of any right or remedy which the Agent and the Lenders shall
otherwise have pursuant to the Security Documents, the Working Capital Notes or
applicable law. The obligations of Borrower contained herein are cumulative,
and compliance by Borrower with any covenant shall not excuse compliance by
Borrower with any other covenant.
(b) Notices. All notices given hereunder shall be in writing, shall
--------
be given by certified mail, return receipt requested, overnight courier service,
telecopy, facsimile or copy delivered by hand, and, (i) if mailed, shall be
deemed received three Business Days after having been deposited in a receptacle
for United States mail, postage prepaid, (ii) if delivered by overnight air
courier service, shall be deemed received one Business Day after having been
deposited with such overnight air courier service, postage prepaid, and (iii) if
delivered by telex, telecopy or hand delivery, shall be deemed received on the
day the notice is sent, in each case addressed as follows:
44
If to Borrower, to:
MarkWest Hydrocarbon, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Finance Department
Fax. No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Lenders, to:
Norwest Bank Colorado, National Association
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Energy and Minerals Group
Fax. No.: (▇▇▇) ▇▇▇-▇▇▇▇
First American National Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: National Accounts
Fax. No.: (▇▇▇) ▇▇▇-▇▇▇▇
N M Rothschild and Sons Limited
▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ P 4DU
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Rothschild Denver Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
The First National Bank of Chicago
One First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
45
If to the Agent, to:
Norwest Bank Denver, National Association
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Energy and Minerals Group
Fax. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may, by written notice so delivered to the others, change the address
or facsimile number to which delivery shall thereafter be made.
(c) Counterpart Execution. This Agreement may be executed in any
----------------------
number of counterparts which together will be but one and the same instrument.
This Agreement shall become effective whenever each party shall have signed at
least one counterpart.
(d) Governing Law; Entire Agreement. THIS AGREEMENT AND THE WORKING
--------------------------------
CAPITAL NOTES SHALL BE DEEMED TO BE CONTRACTS UNDER THE LAWS OF COLORADO AND FOR
ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE. Such
documents and any other Loan Documents, together with the Security Documents,
constitute and incorporate the entire agreement between the Agent, the Lenders
and Borrower concerning the subject matter hereof and thereof, and supersede and
cancel any prior or contemporaneous agreements, verbal or written, between the
Agent, the Lenders and Borrower concerning the subject matter hereof and
thereof.
(e) Amendments and Waivers. No waiver of any provision of this
-----------------------
Agreement, the Working Capital Notes, or any of the Security Documents, and no
consent with respect to any departure by Borrower therefrom, shall be in writing
and signed by the Agent, at the direction of the Required Lenders. No amendment
of any provision of this Agreement shall be effective unless the same shall be
in writing and signed by the Agent and the Required Lenders. All consents,
waivers and other action to be taken by the Lenders hereunder shall only be
taken upon approval of the Required Lenders. Any waiver shall be effective only
in the specific instance and for the specific purpose for which given. Any
consent or approval contemplated herein by the Required Lenders or the Lenders
may be granted or withheld in the sole discretion of such Persons.
(f) Costs, Expenses and Indemnity. Borrower shall reimburse and pay
------------------------------
the Agent, the Issuer and the Lenders for all fees, costs and expenses
(including, without limitation, attorneys' fees, court costs and legal expenses
and consultants' and experts' fees and expenses, the costs of the Agent's
inspection of the Collateral and the costs and expenses of title or lien
searches and filing and recording fees and expenses), reasonably incurred or
expended in connection with (i) the preparation, execution and delivery of this
Agreement, the Working Capital Notes and the other Loan Documents, (ii) the
enforcement of this Agreement, the Working Capital Notes and the other Loan
Documents and any amendments, waivers or
46
modifications of such documents, (iii) the breach by Borrower of any
representation or warranty contained in this Agreement, the Security Documents
or any other Loan Document, (iv) the failure by Borrower to perform any
agreement, covenant, condition, indemnity or obligation contained in this
Agreement, the Security Documents or any other Loan Document, (v) the Agent's or
the Lenders' exercise of any of their rights and remedies under this Agreement,
the Security Documents and the other Loan Documents, or (vi) the protection of
the Collateral and the liens thereon and security interests therein. Borrower
shall indemnify, defend and hold harmless the Agent, the Issuer and each Lender
and persons or entities owned or controlled by or affiliated with such Persons
and their respective directors, officers, shareholders, partners, employees,
consultants and agents (herein individually called an "Indemnified Party," and
-----------------
collectively called "Indemnified Parties") from and against, and reimburse and
-------------------
pay Indemnified Parties with respect to, any and all claims, demands,
liabilities, losses, damages (including, without limitation, actual,
consequential, exemplary and punitive damages), causes of action, judgments,
penalties, fees, costs and expenses (including, without limitation, attorneys'
fees, court costs and legal expenses and consultants' and experts' fees and
expenses), of any and every kind or character, known or unknown, fixed or
contingent, that may be imposed upon, asserted against or incurred or paid by or
on behalf of any Indemnified Party on account of, in connection with, or arising
out of (a) any bodily injury or death or property damage occurring in or upon or
in the vicinity of the Collateral through any cause whatsoever, (b) any act
performed or omitted to be performed hereunder or the breach of or failure to
perform any warranty, representation, indemnity, covenant, agreement or
condition contained in this Agreement, the Security Documents or any other Loan
Documents, (c) any transaction, act, omission, event or circumstance arising out
of or in any way connected with the Collateral or with this Agreement, the
Security Documents or any other Loan Documents, and (d) subject to the
exceptions and limitations contained in the Security Agreements, the violation
of or failure to comply with any statute, law, rule, regulation or order now
existing or hereafter occurring, including without limitation, "Environmental
Laws" (as defined in the Security Agreements) and statutes, laws, rules,
regulations and orders relating to "Hazardous Substances" (as defined in the
Security Agreements). The foregoing indemnities shall not apply to any
Indemnified Party to the extent the subject of the indemnification is caused by
or arises out of the gross negligence or willful misconduct of that or another
Indemnified Party or a successful suit by Borrower against such Indemnified
Party. If Borrower and the Indemnified Party are jointly named in any action
covered by this Section 14, the Indemnified Party shall cooperate in the defense
of such action to the extent its own rights or defenses are not compromised
thereby. Subject to the exceptions and limitations contained in the Security
Agreements, the foregoing indemnities shall not terminate upon release,
foreclosure or other termination of this Agreement or the Security Documents,
but shall survive such release, foreclosure or termination and the repayment of
the Loans. Any amount to be paid hereunder by Borrower to the Agent, the Issuer
or any Lender or for which Borrower has indemnified an Indemnified Party shall
be a demand obligation owing by Borrower to the Agent, the Issuer or such Lender
and shall bear interest at the Late Payment Rate until paid, and shall
constitute a part of the Working Capital Loan and be indebtedness secured by the
Security Documents.
47
(g) Inconsistent Provisions; Severability. In case of any
--------------------------------------
irreconcilable conflict between the provisions of this Agreement and those of
the Security Documents and the Working Capital Notes, the provisions of this
Agreement shall govern. The invalidity, illegality or unenforceability of any
provision of any of the Loan Documents shall not in any way affect or impair the
legality or enforceability of the remaining provisions of each of the Loan
Documents.
(h) Incorporation of Exhibits and Schedules. All Exhibits and
----------------------------------------
Schedules attached to this Agreement are a part hereof and are incorporated
herein for all purposes.
(i) Amendment of Defined Instruments. Unless the context otherwise
---------------------------------
requires or unless otherwise provided herein the terms defined in this Agreement
which refer to a particular agreement, instrument or document also refer to and
include all renewals, extensions and modifications of such agreement, instrument
or document, provided that nothing contained in this section shall be construed
to authorize any such renewal, extension or modification.
(j) References and Titles. All references in this Agreement to
----------------------
Exhibits, Schedules, Sections and Subsections and other subdivisions refer to
the Exhibits, Schedules, Sections and Subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Headings are for convenience
only and do not constitute any part of such subdivisions and shall be
disregarded in construing the language contained in such subdivisions. The
words "this Agreement", "this instrument", "herein", "hereof", "hereby",
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. Pronouns in
masculine, feminine and neuter genders shall be construed to include any other
gender, and words in the singular form shall be construed to include the plural
and vice versa, unless the context otherwise requires.
(k) Calculations and Determinations. Unless otherwise expressly
--------------------------------
provided herein or unless the Lenders otherwise consent, all financial
statements and reports furnished to the Agent or the Lenders hereunder shall be
prepared and all financial computations and determinations pursuant hereto shall
be made in accordance with GAAP.
(l) Usury. It is not intended hereby to charge interest at a rate in
------
excess of the maximum rate of interest that the Agent and the Lenders may charge
to Borrower under applicable usury and other laws, but if, notwithstanding,
interest in excess of such rate shall be paid hereunder, the interest rates
provided for herein shall be adjusted to the maximum permitted under applicable
law during the period or periods that any of the interest rates otherwise
provided herein would exceed such rate and any excess amount applied at the
Lenders' option to reduce the outstanding principal balance of the Working
Capital Loans or to be returned to Borrower.
(m) Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT
---------------------------------
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
OR (b) IN ANY WAY CONNECTED WITH OR RELATED TO INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO
48
OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.
(n) Successors and Assigns. This Agreement shall be binding upon and
-----------------------
shall inure to the benefit of the parties hereto and their respective successors
and assigns, except that Borrower may not transfer or assign any of its rights
or obligations hereunder without the Agent's, the Issuer's and each of the
Lenders' prior written consent. The Working Capital Note, this Agreement and
any other Loan Document may be endorsed, assigned, or transferred in whole or in
part by any Lender, and any subsequent holder and assignee of same shall succeed
to and be possessed of the rights of such Lender under such documents to the
extent transferred and assigned; provided however, that such endorsement,
-------- -------
assignment or transfer shall not be binding upon Borrower until Borrower has
received written notice of such endorsement, assignment or transfer.
(o) Term of Agreement. Except as set forth in Section 14(f), this
------------------
Agreement shall continue in full force and effect so long as any indebtedness or
other obligation of Borrower to the Lenders remains unpaid or outstanding or
Borrower has any right to Advances hereunder.
(p) Jurisdiction. At the option of the Agent or the Lenders, an
-------------
action may be brought to enforce this Agreement in the District Court in and for
the City and County of Denver, State of Colorado, in the United States District
Court for the District of Colorado or in any other court in which venue and
jurisdiction are proper. Borrower and all guarantors hereof consent to venue
and jurisdiction in the District Court in and for the City and County of Denver,
State of Colorado and in the United States District Court for the District of
Colorado and to jurisdiction and service of process under Sections 13-1-
124(1)(a) and 13-1-125, Colorado Revised Statutes (1973), as amended, in any
action commenced to enforce this Agreement.
(q) Assignment. Norwest, First American and Rothschild hereby assign
-----------
and transfer to First Chicago, without any warranties either express or implied,
a sufficient part of all their rights, title and interest in, to and under the
Existing Working Capital Agreement, the Loans, the Working Capital Notes and all
other Loan Documents, so that all such rights shall be owned and held by Lenders
on the date hereof in the following percentages:
Norwest 25%
First American 25%
Rothschild 25%
First Chicago 25%
49
EXECUTED to be effective as of the day and year first above written.
MARKWEST HYDROCARBON, INC.
By:
---------------------------------------
▇▇▇▇ ▇. ▇▇▇,
President
By:
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇,
Director of Finance and Treasurer
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION,
individually and as Agent
By:
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Vice President
50
FIRST AMERICAN NATIONAL BANK
By:
--------------------------------
▇▇▇▇▇ ▇. May,
Executive Vice President
N M ROTHSCHILD AND SONS LIMITED,
a company organized and existing under
the laws of England
By:______________________________
Name: ________________________
Title: _________________________
By:______________________________
Name: ________________________
Title: __________________________
THE FIRST NATIONAL BANK OF CHICAGO
By:______________________________
Name: ________________________
Title: _________________________
51
Exhibit A-1
-----------
SUBSTITUTE WORKING CAPITAL NOTE
-------------------------------
$1,875,000.00 Denver, Colorado
October __, 1996
MARKWEST HYDROCARBON, INC., a Delaware corporation ("Borrower"), the successor
--------
to MarkWest Hydrocarbon Partners, Ltd., a Colorado limited partnership (the
"Partnership"), with an address of ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
------------
80111, for value received, hereby promises to pay to the order of Norwest Bank
Colorado, National Association (successor to Norwest Bank Denver, National
Association), a national banking association ("Lender"), on or before June 30,
------
1998, the principal sum of One Million Eight Hundred Seventy-Five Thousand
Dollars ($1,875,000.00), or so much thereof as may be advanced by Lender
pursuant to the Amended and Restated Working Capital Loan Agreement of even
date, between Borrower, Norwest Bank Colorado, National Association,
individually and as agent, First American National Bank, N M Rothschild and Sons
Limited and The First National Bank of Chicago (the "Loan Agreement"), together
--------------
with interest on the outstanding unpaid principal amount at the Adjusted Prime
Rate, as provided in the Loan Agreement.
This Note is one of the notes referred to in the Loan Agreement as the Working
Capital Notes, and is issued pursuant to, and is subject to the terms and
provisions of, the Loan Agreement. This Note is issued in substitution,
replacement and rearrangement, but not in extinguishment or discharge, of the
Replacement Working Capital Notes dated September 8, 1995, as amended by the
First Allonge to Working Capital Note dated as of May 31, 1996, in connection
with the assumption by Borrower of all of the obligations and business of the
Partnership and the assignment by Norwest, First American and Rothschild to
First Chicago of a portion of their interests in the Loan. All capitalized
terms used herein but not otherwise defined shall have the meanings set forth in
the Loan Agreement. All references herein to the "Loan Agreement" refer to such
agreement as such agreement may be amended from time to time.
The entire outstanding principal balance of this Note shall be due and payable
on or before June 30, 1998 (unless payable sooner pursuant to the terms of the
Loan Agreement) together with accrued and unpaid interest thereon. Interest
shall accrue daily, shall be payable on the last day of each calendar quarter,
commencing September 30, 1995 and at the maturity of this Note, and shall be
calculated on the basis of a 365 or 366-day year, as appropriate. All payments
of principal and interest hereof shall be made as provided in the Loan Agreement
in immediately available funds and without set-off or counterclaim or deduction
of any kind.
Notwithstanding anything to the contrary contained in this Note, overdue
principal, and (to the extent permitted under applicable law) overdue interest,
whether caused by acceleration of maturity or otherwise, shall bear interest at
the Late Payment Rate and shall be immediately due and payable.
A-1-1
It is not intended hereby to charge interest at a rate in excess of the
maximum rate of interest that Lender may charge to Borrower under applicable
usury and other laws, but if, notwithstanding, interest in excess of such rate
shall be paid hereunder, the interest rate on this Note shall be adjusted to the
maximum permitted under applicable law during the period or periods that the
interest rate otherwise provided herein would exceed such rate and any excess
amount applied at Lender's option to reduce the outstanding principal balance of
this Note or to be returned to Borrower.
This Note is secured by, and the holder of this Note is entitled to the
benefits of the Security Documents described in the Loan Agreement, and the
liens and security interests under the Security Documents that secure the
obligations under this Note are hereby ratified and confirmed in all respects
and remain in full force and effect. Reference is made to the Security
Documents for a description of the property covered thereby and the rights,
remedies and obligations of the holder hereof in respect thereto.
Lender shall maintain a record of all advances hereunder and all payments made
on this Note and letters of credit issued under this Note until Lender has been
repaid in full; provided, however that the failure, error or omission by Lender
-----------------
to maintain such a record shall not diminish or otherwise affect the obligation
of Borrower to repay the amount outstanding hereunder and any other amounts due
to Lender.
If Borrower fails to pay any amount due under this Note and Lender has to take
any action to collect the amount due or to exercise its rights under this Note
or the Security Documents, including without limitation retaining attorneys for
collection of this Note, or if any suit or proceeding is brought for the
recovery of all or any part of or for protection of the Obligations or to
foreclose the Security Documents or to enforce Lender's rights under the
Security Documents, then Borrower agrees to pay on demand all costs and expenses
of any such action to collect, suit or proceeding, or any appeal of any such
suit or proceeding, incurred by the holder hereof, including without limitation
the fees and disbursements of attorneys for the holder hereof.
Borrower, and all endorsers, sureties and guarantors of this Note, hereby
severally waive demand, presentment for payment, notice of dishonor, notice of
acceleration or intent to accelerate, protest, notice of protest, diligence in
collecting and assents to any extension of time with respect to any payment due
under this Note, to any substitution or release of collateral and to the
addition or release of any party. No waiver by Lender of any payment or other
right under this Note shall operate as a waiver of any other payment or right.
If any provision in this Note shall be held invalid, illegal or unenforceable
in any jurisdiction, the validity, legality or enforceability of any defective
provisions shall not be in any way affected or impaired in any other
jurisdiction, nor shall the invalid, illegal or unenforceable provision affect
or impair any other provision of this Note.
No delay or failure of the holder of this Note in the exercise of any right or
remedy provided for hereunder shall be deemed a waiver of such right or remedy
by the holder hereof, and no
A-1-2
exercise of any right or remedy shall be deemed a waiver of any other right or
remedy that the holder may have.
Any notices given hereunder shall be in writing and shall be given as provided
in the Loan Agreement.
At the option of Lender, an action may be brought to enforce this Note in the
District Court in and for the City and County of Denver, State of Colorado, in
the United States District Court for the District of Colorado or in any other
court in which venue and jurisdiction are proper. Borrower and all endorsers,
sureties and guarantors hereof consent to venue and jurisdiction in the District
Court in and for the City and County of Denver, State of Colorado and in the
United States District Court for the District of Colorado and to jurisdiction
and service of process under Sections 13-1-124(1)(a) and 13-1-125, Colorado
Revised Statutes (1973), as amended, in any action commenced to enforce this
Agreement.
THIS NOTE IS TO BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE
OF COLORADO.
MARKWEST HYDROCARBON, INC.
By:
------------------------------------
▇▇▇▇ ▇. ▇▇▇, President
By:
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Director of Finance and
Treasurer
A-1-3
Exhibit A-2
-----------
SUBSTITUTE WORKING CAPITAL NOTE
-------------------------------
$1,875,000.00 Denver, Colorado
October __, 1996
MARKWEST HYDROCARBON, INC., a Delaware corporation ("Borrower"), the successor
--------
to MarkWest Hydrocarbon Partners, Ltd., a Colorado limited partnership (the
"Partnership"), with an address of ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
------------
80111, for value received, hereby promises to pay to the order of First American
National Bank, a national banking association ("Lender"), on or before June 30,
------
1998, the principal sum of One Million Eight Hundred Seventy-Five Thousand
Dollars ($1,875,000.00), or so much thereof as may be advanced by Lender
pursuant to the Amended and Restated Working Capital Loan Agreement of even
date, between Borrower, Norwest Bank Colorado, National Association,
individually and as agent, First American National Bank, N M Rothschild and Sons
Limited and The First National Bank of Chicago (the "Loan Agreement"), together
--------------
with interest on the outstanding unpaid principal amount at the Adjusted Prime
Rate, as provided in the Loan Agreement.
This Note is one of the notes referred to in the Loan Agreement as the Working
Capital Notes, and is issued pursuant to, and is subject to the terms and
provisions of, the Loan Agreement. This Note is issued in substitution,
replacement and rearrangement, but not in extinguishment or discharge, of the
Replacement Working Capital Notes dated September 8, 1995, as amended by the
First Allonge to Working Capital Note dated as of May 31, 1996, in connection
with the assumption by Borrower of all of the obligations and business of the
Partnership and the assignment by Norwest, First American and Rothschild to
First Chicago of a portion of their interests in the Loan. All capitalized
terms used herein but not otherwise defined shall have the meanings set forth in
the Loan Agreement. All references herein to the "Loan Agreement" refer to such
agreement as such agreement may be amended from time to time.
The entire outstanding principal balance of this Note shall be due and payable
on or before June 30, 1998 (unless payable sooner pursuant to the terms of the
Loan Agreement) together with accrued and unpaid interest thereon. Interest
shall accrue daily, shall be payable on the last day of each calendar quarter,
commencing September 30, 1995 and at the maturity of this Note, and shall be
calculated on the basis of a 365 or 366-day year, as appropriate. All payments
of principal and interest hereof shall be made as provided in the Loan Agreement
in immediately available funds and without set-off or counterclaim or deduction
of any kind.
Notwithstanding anything to the contrary contained in this Note, overdue
principal, and (to the extent permitted under applicable law) overdue interest,
whether caused by acceleration of maturity or otherwise, shall bear interest at
the Late Payment Rate and shall be immediately due and payable.
A-2-1
It is not intended hereby to charge interest at a rate in excess of the
maximum rate of interest that Lender may charge to Borrower under applicable
usury and other laws, but if, notwithstanding, interest in excess of such rate
shall be paid hereunder, the interest rate on this Note shall be adjusted to the
maximum permitted under applicable law during the period or periods that the
interest rate otherwise provided herein would exceed such rate and any excess
amount applied at Lender's option to reduce the outstanding principal balance of
this Note or to be returned to Borrower.
This Note is secured by, and the holder of this Note is entitled to the
benefits of the Security Documents described in the Loan Agreement, and the
liens and security interests under the Security Documents that secure the
obligations under this Note are hereby ratified and confirmed in all respects
and remain in full force and effect. Reference is made to the Security
Documents for a description of the property covered thereby and the rights,
remedies and obligations of the holder hereof in respect thereto.
Lender shall maintain a record of all advances hereunder and all payments made
on this Note and letters of credit issued under this Note until Lender has been
repaid in full; provided, however that the failure, error or omission by Lender
-----------------
to maintain such a record shall not diminish or otherwise affect the obligation
of Borrower to repay the amount outstanding hereunder and any other amounts due
to Lender.
If Borrower fails to pay any amount due under this Note and Lender has to take
any action to collect the amount due or to exercise its rights under this Note
or the Security Documents, including without limitation retaining attorneys for
collection of this Note, or if any suit or proceeding is brought for the
recovery of all or any part of or for protection of the Obligations or to
foreclose the Security Documents or to enforce Lender's rights under the
Security Documents, then Borrower agrees to pay on demand all costs and expenses
of any such action to collect, suit or proceeding, or any appeal of any such
suit or proceeding, incurred by the holder hereof, including without limitation
the fees and disbursements of attorneys for the holder hereof.
Borrower, and all endorsers, sureties and guarantors of this Note, hereby
severally waive demand, presentment for payment, notice of dishonor, notice of
acceleration or intent to accelerate, protest, notice of protest, diligence in
collecting and assents to any extension of time with respect to any payment due
under this Note, to any substitution or release of collateral and to the
addition or release of any party. No waiver by Lender of any payment or other
right under this Note shall operate as a waiver of any other payment or right.
If any provision in this Note shall be held invalid, illegal or unenforceable
in any jurisdiction, the validity, legality or enforceability of any defective
provisions shall not be in any way affected or impaired in any other
jurisdiction, nor shall the invalid, illegal or unenforceable provision affect
or impair any other provision of this Note.
No delay or failure of the holder of this Note in the exercise of any right or
remedy provided for hereunder shall be deemed a waiver of such right or remedy
by the holder hereof, and no
A-2-2
exercise of any right or remedy shall be deemed a waiver of any other right or
remedy that the holder may have.
Any notices given hereunder shall be in writing and shall be given as provided
in the Loan Agreement.
At the option of Lender, an action may be brought to enforce this Note in the
District Court in and for the City and County of Denver, State of Colorado, in
the United States District Court for the District of Colorado or in any other
court in which venue and jurisdiction are proper. Borrower and all endorsers,
sureties and guarantors hereof consent to venue and jurisdiction in the District
Court in and for the City and County of Denver, State of Colorado and in the
United States District Court for the District of Colorado and to jurisdiction
and service of process under Sections 13-1-124(1)(a) and 13-1-125, Colorado
Revised Statutes (1973), as amended, in any action commenced to enforce this
Agreement.
THIS NOTE IS TO BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE
OF COLORADO.
MARKWEST HYDROCARBON, INC.
By:
-----------------------------------
▇▇▇▇ ▇. ▇▇▇, President
By:
___________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, Director of
Finance and Treasurer
A-2-3
Exhibit A-3
-----------
SUBSTITUTE WORKING CAPITAL NOTE
-------------------------------
$1,875,000.00 Denver, Colorado
October __, 1996
MARKWEST HYDROCARBON, INC., a Delaware corporation ("Borrower"), the successor
--------
to MarkWest Hydrocarbon Partners, Ltd., a Colorado limited partnership (the
"Partnership"), with an address of ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
------------
80111, for value received, hereby promises to pay to the order of N M Rothschild
and Sons Limited, a company organized and existing under the laws of England,
("Lender"), on or before June 30, 1998, the principal sum of One Million Eight
--------
Hundred Seventy-Five Thousand Dollars ($1,875,000.00), or so much thereof as may
be advanced by Lender pursuant to the Amended and Restated Working Capital Loan
Agreement of even date, between Borrower, Norwest Bank Colorado, National
Association, individually and as agent, First American National Bank, N M
Rothschild and Sons Limited and The First National Bank of Chicago (the "Loan
----
Agreement"), together with interest on the outstanding unpaid principal amount
---------
at the Adjusted Prime Rate, as provided in the Loan Agreement.
This Note is one of the notes referred to in the Loan Agreement as the Working
Capital Notes, and is issued pursuant to, and is subject to the terms and
provisions of, the Loan Agreement. This Note is issued in substitution,
replacement and rearrangement, but not in extinguishment or discharge, of the
Replacement Working Capital Notes dated September 8, 1995, as amended by the
First Allonge to Working Capital Note dated as of May 31, 1996, in connection
with the assumption by Borrower of all of the obligations and business of the
Partnership and the assignment by Norwest, First American and Rothschild to
First Chicago of a portion of their interests in the Loan. All capitalized
terms used herein but not otherwise defined shall have the meanings set forth in
the Loan Agreement. All references herein to the "Loan Agreement" refer to such
agreement as such agreement may be amended from time to time.
The entire outstanding principal balance of this Note shall be due and payable
on or before June 30, 1998 (unless payable sooner pursuant to the terms of the
Loan Agreement) together with accrued and unpaid interest thereon. Interest
shall accrue daily, shall be payable on the last day of each calendar quarter,
commencing September 30, 1995 and at the maturity of this Note, and shall be
calculated on the basis of a 365 or 366-day year, as appropriate. All payments
of principal and interest hereof shall be made as provided in the Loan Agreement
in immediately available funds and without set-off or counterclaim or deduction
of any kind.
Notwithstanding anything to the contrary contained in this Note, overdue
principal, and (to the extent permitted under applicable law) overdue interest,
whether caused by acceleration of maturity or otherwise, shall bear interest at
the Late Payment Rate and shall be immediately due and payable.
A-3-1
It is not intended hereby to charge interest at a rate in excess of the
maximum rate of interest that Lender may charge to Borrower under applicable
usury and other laws, but if, notwithstanding, interest in excess of such rate
shall be paid hereunder, the interest rate on this Note shall be adjusted to the
maximum permitted under applicable law during the period or periods that the
interest rate otherwise provided herein would exceed such rate and any excess
amount applied at Lender's option to reduce the outstanding principal balance of
this Note or to be returned to Borrower.
This Note is secured by, and the holder of this Note is entitled to the
benefits of the Security Documents described in the Loan Agreement, and the
liens and security interests under the Security Documents that secure the
obligations under this Note are hereby ratified and confirmed in all respects
and remain in full force and effect. Reference is made to the Security
Documents for a description of the property covered thereby and the rights,
remedies and obligations of the holder hereof in respect thereto.
Lender shall maintain a record of all advances hereunder and all payments made
on this Note and letters of credit issued under this Note until Lender has been
repaid in full; provided, however that the failure, error or omission by Lender
-----------------
to maintain such a record shall not diminish or otherwise affect the obligation
of Borrower to repay the amount outstanding hereunder and any other amounts due
to Lender.
If Borrower fails to pay any amount due under this Note and Lender has to take
any action to collect the amount due or to exercise its rights under this Note
or the Security Documents, including without limitation retaining attorneys for
collection of this Note, or if any suit or proceeding is brought for the
recovery of all or any part of or for protection of the Obligations or to
foreclose the Security Documents or to enforce Lender's rights under the
Security Documents, then Borrower agrees to pay on demand all costs and expenses
of any such action to collect, suit or proceeding, or any appeal of any such
suit or proceeding, incurred by the holder hereof, including without limitation
the fees and disbursements of attorneys for the holder hereof.
Borrower, and all endorsers, sureties and guarantors of this Note, hereby
severally waive demand, presentment for payment, notice of dishonor, notice of
acceleration or intent to accelerate, protest, notice of protest, diligence in
collecting and assents to any extension of time with respect to any payment due
under this Note, to any substitution or release of collateral and to the
addition or release of any party. No waiver by Lender of any payment or other
right under this Note shall operate as a waiver of any other payment or right.
If any provision in this Note shall be held invalid, illegal or unenforceable
in any jurisdiction, the validity, legality or enforceability of any defective
provisions shall not be in any way affected or impaired in any other
jurisdiction, nor shall the invalid, illegal or unenforceable provision affect
or impair any other provision of this Note.
No delay or failure of the holder of this Note in the exercise of any right or
remedy provided for hereunder shall be deemed a waiver of such right or remedy
by the holder hereof, and no
A-3-2
exercise of any right or remedy shall be deemed a waiver of any other right or
remedy that the holder may have.
Any notices given hereunder shall be in writing and shall be given as provided
in the Loan Agreement.
At the option of Lender, an action may be brought to enforce this Note in the
District Court in and for the City and County of Denver, State of Colorado, in
the United States District Court for the District of Colorado or in any other
court in which venue and jurisdiction are proper. Borrower and all endorsers,
sureties and guarantors hereof consent to venue and jurisdiction in the District
Court in and for the City and County of Denver, State of Colorado and in the
United States District Court for the District of Colorado and to jurisdiction
and service of process under Sections 13-1-124(1)(a) and 13-1-125, Colorado
Revised Statutes (1973), as amended, in any action commenced to enforce this
Agreement.
THIS NOTE IS TO BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE
OF COLORADO.
MARKWEST HYDROCARBON, INC.
By:
-----------------------------
▇▇▇▇ ▇. ▇▇▇, President
By:
_____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, Director of Finance
and Treasurer
A-3-3
Exhibit A-4
-----------
SUBSTITUTE WORKING CAPITAL NOTE
-------------------------------
$1,875,000.00 Denver, Colorado
October __, 1996
MARKWEST HYDROCARBON, INC., a Delaware corporation ("Borrower"), the successor
--------
to MarkWest Hydrocarbon Partners, Ltd., a Colorado limited partnership (the
"Partnership"), with an address of ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
------------
80111, for value received, hereby promises to pay to the order of The First
National Bank of Chicago, a national banking association ("Lender"), on or
------
before June 30, 1998, the principal sum of One Million Eight Hundred Seventy-
Five Thousand Dollars ($1,875,000.00), or so much thereof as may be advanced by
Lender pursuant to the Amended and Restated Working Capital Loan Agreement of
even date, between Borrower, Norwest Bank Colorado, National Association,
individually and as agent, First American National Bank, N M Rothschild and Sons
Limited and The First National Bank of Chicago (the "Loan Agreement"), together
--------------
with interest on the outstanding unpaid principal amount at the Adjusted Prime
Rate, as provided in the Loan Agreement.
This Note is one of the notes referred to in the Loan Agreement as the Working
Capital Notes, and is issued pursuant to, and is subject to the terms and
provisions of, the Loan Agreement. This Note is issued in substitution,
replacement and rearrangement, but not in extinguishment or discharge, of the
Replacement Working Capital Notes dated September 8, 1995, as amended by the
First Allonge to Working Capital Note dated as of May 31, 1996, in connection
with the assumption by Borrower of all of the obligations and business of the
Partnership and the assignment by Norwest, First American and Rothschild to
First Chicago of a portion of their interests in the Loan. All capitalized
terms used herein but not otherwise defined shall have the meanings set forth in
the Loan Agreement. All references herein to the "Loan Agreement" refer to such
agreement as such agreement may be amended from time to time.
The entire outstanding principal balance of this Note shall be due and payable
on or before June 30, 1998 (unless payable sooner pursuant to the terms of the
Loan Agreement) together with accrued and unpaid interest thereon. Interest
shall accrue daily, shall be payable on the last day of each calendar quarter,
commencing September 30, 1995 and at the maturity of this Note, and shall be
calculated on the basis of a 365 or 366-day year, as appropriate. All payments
of principal and interest hereof shall be made as provided in the Loan Agreement
in immediately available funds and without set-off or counterclaim or deduction
of any kind.
Notwithstanding anything to the contrary contained in this Note, overdue
principal, and (to the extent permitted under applicable law) overdue interest,
whether caused by acceleration of maturity or otherwise, shall bear interest at
the Late Payment Rate and shall be immediately due and payable.
A-4-1
It is not intended hereby to charge interest at a rate in excess of the
maximum rate of interest that Lender may charge to Borrower under applicable
usury and other laws, but if, notwithstanding, interest in excess of such rate
shall be paid hereunder, the interest rate on this Note shall be adjusted to the
maximum permitted under applicable law during the period or periods that the
interest rate otherwise provided herein would exceed such rate and any excess
amount applied at Lender's option to reduce the outstanding principal balance of
this Note or to be returned to Borrower.
This Note is secured by, and the holder of this Note is entitled to the
benefits of the Security Documents described in the Loan Agreement, and the
liens and security interests under the Security Documents that secure the
obligations under this Note are hereby ratified and confirmed in all respects
and remain in full force and effect. Reference is made to the Security
Documents for a description of the property covered thereby and the rights,
remedies and obligations of the holder hereof in respect thereto.
Lender shall maintain a record of all advances hereunder and all payments made
on this Note and letters of credit issued under this Note until Lender has been
repaid in full; provided, however that the failure, error or omission by Lender
-----------------
to maintain such a record shall not diminish or otherwise affect the obligation
of Borrower to repay the amount outstanding hereunder and any other amounts due
to Lender.
If Borrower fails to pay any amount due under this Note and Lender has to take
any action to collect the amount due or to exercise its rights under this Note
or the Security Documents, including without limitation retaining attorneys for
collection of this Note, or if any suit or proceeding is brought for the
recovery of all or any part of or for protection of the Obligations or to
foreclose the Security Documents or to enforce Lender's rights under the
Security Documents, then Borrower agrees to pay on demand all costs and expenses
of any such action to collect, suit or proceeding, or any appeal of any such
suit or proceeding, incurred by the holder hereof, including without limitation
the fees and disbursements of attorneys for the holder hereof.
Borrower, and all endorsers, sureties and guarantors of this Note, hereby
severally waive demand, presentment for payment, notice of dishonor, notice of
acceleration or intent to accelerate, protest, notice of protest, diligence in
collecting and assents to any extension of time with respect to any payment due
under this Note, to any substitution or release of collateral and to the
addition or release of any party. No waiver by Lender of any payment or other
right under this Note shall operate as a waiver of any other payment or right.
If any provision in this Note shall be held invalid, illegal or unenforceable
in any jurisdiction, the validity, legality or enforceability of any defective
provisions shall not be in any way affected or impaired in any other
jurisdiction, nor shall the invalid, illegal or unenforceable provision affect
or impair any other provision of this Note.
No delay or failure of the holder of this Note in the exercise of any right or
remedy provided for hereunder shall be deemed a waiver of such right or remedy
by the holder hereof, and no
A-4-2
exercise of any right or remedy shall be deemed a waiver of any other right or
remedy that the holder may have.
Any notices given hereunder shall be in writing and shall be given as provided
in the Loan Agreement.
At the option of Lender, an action may be brought to enforce this Note in the
District Court in and for the City and County of Denver, State of Colorado, in
the United States District Court for the District of Colorado or in any other
court in which venue and jurisdiction are proper. Borrower and all endorsers,
sureties and guarantors hereof consent to venue and jurisdiction in the District
Court in and for the City and County of Denver, State of Colorado and in the
United States District Court for the District of Colorado and to jurisdiction
and service of process under Sections 13-1-124(1)(a) and 13-1-125, Colorado
Revised Statutes (1973), as amended, in any action commenced to enforce this
Agreement.
THIS NOTE IS TO BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE
OF COLORADO.
MARKWEST HYDROCARBON, INC.
By:
----------------------------------
▇▇▇▇ ▇. ▇▇▇, President
By:
__________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, Director of
Finance and Treasurer
A-4-3
EXHIBIT B
CREDIT AND COLLECTION POLICY
MARKWEST HYDROCARBON, INC.
CREDIT POLICY
-------------
Customers requesting credit must provide current financial statements and
estimated monthly purchases. Bank and trade references are requested if the
financial statements are incomplete and/or weak for additional information on
the company's ability to pay. ▇▇▇▇ & Bradstreet reports are run to review the
customer's payment history and history on the company and its officers.
The following financial ratios are calculated:
Current Ratio less than 1.1 to 1
Total Liabilities to Tangible Net Worth greater than 4.0 to 1
Cash Flow Coverage of Current Debt less than 1.5 to 1
Tangible Net Worth less than $500,000
The customer must meet these criteria to establish a line of credit. However,
if the customer does not meet some of these criteria, the credit committee can
still elect to grant an amount of credit in line with the company's ability to
pay. If no credit is extended, or if the credit limit is insufficient for the
customer's needs, we will require a higher level of security such as a letter of
credit or a prepayment (in the form of a certified check or wire transfer) prior
to delivery of product to the customer. The plan and the terminal are notified
as to which customers must prepay or who cannot pull product out.
COLLECTION POLICY
-----------------
MarkWest's standard terms are net 10 days. Aged account receivable listings are
prepared a minimum of once a week. Large invoices are called prior to the due
date. If any invoices are outstanding longer than terms plus mail time, the
customer is placed on a priority list. They are then called to determine the
reason for the delay, immediate payment is requested and date of anticipated
payment is noted. Calls are made twice weekly until these payments are
received. For invoices outstanding past 30 days, delivery of additional product
is stopped until all payments are received. Extension of credit to these
customers is re-evaluated prior to delivery of new product. At 45 days past
due, the collection of the account is turned over to our attorney, unless other
arrangements with the customer have been made.
▇-▇
▇▇▇▇▇▇▇ ▇
---------
▇▇▇▇▇▇▇▇ HYDROCARBON, INC.
REQUEST FOR ADVANCE UNDER THE
-----------------------------
WORKING CAPITAL LOAN
--------------------
Reference is made to that certain Amended and Restated Working Capital Loan
Agreement dated as of October __, 1996 (as from time to time amended, the
"Agreement"), among MarkWest Hydrocarbon, Inc. ("Borrower"), Norwest Bank
---------- --------
Colorado, National Association, individually and as agent, and First American
National Bank, N M Rothschild and Sons Limited and The First National Bank of
Chicago (collectively, the "Lenders"). Capitalized terms not otherwise defined
herein shall have the meaning assigned to them in the Agreement. Pursuant to
the terms of the Agreement, Borrower hereby requests the Lenders to make an
advance to Borrower in the amount of $_______, such advance being evidenced by
the Revolver Notes, and specifies ___________, 199_, as the date Borrower
desires for the Lenders to make such advance.
Borrower and the officer of Borrower signing this instrument hereby certify
that:
(a) Such officer is the duly elected, qualified and acting officer of
Borrower as indicated below such officer's signature hereto.
(b) The representations and warranties of Borrower set forth in Section 8
of the Agreement and in the Security Documents are true and correct on and as of
the date hereof, with the same effect as though such representations and
warranties had been made on and as of the date hereof.
(c) Borrower has performed or observed all terms, agreements, conditions
and obligations in the Agreement and under the Security Documents required to be
performed or observed by Borrower on or prior to the date hereof (except those
waived in writing by the Lenders), and each of the conditions precedent to
Advances contained in the Agreement remains satisfied in all respects.
(d) No Event of Default or Unmatured Event of Default has occurred and is
continuing, or would result from the making of the requested Advance. Borrower
will use the advance hereby requested in compliance with the Agreement.
C-1
IN WITNESS WHEREOF, this instrument is executed as of _________, 199_.
MARKWEST HYDROCARBON, INC.
By: ________________________________
Name: __________________________
Title: ___________________________
C-2
EXHIBIT D
---------
FORM OF BORROWER'S COUNSEL OPINION
----------------------------------
D-1
EXHIBIT E
---------
MARKWEST HYDROCARBON, INC.
BORROWING BASE CERTIFICATION
Reference is made to that certain Amended and Restated Working Capital Loan
Agreement dated as of October ___, 1996 (as from time to time amended,
supplemented or restated, the "Loan Agreement") between MarkWest Hydrocarbon,
Inc. ("Borrower"), Norwest Bank Colorado, National Association, individually and
as agent, and First American National Bank, N M Rothschild and Sons Limited and
The First National Bank of Chicago (collectively, "Lender"). Terms used but not
defined herein shall have the meanings given them in the Loan Agreement.
The undersigned ______________________ does hereby certify that he/she is
the duly elected qualified and acting ____________________ of Borrower and that
the following information is true, correct and complete.
1. CALCULATION OF ELIGIBLE RECEIVABLES:
a. Receivables, LESS $________
b. Receivables over 45 days $________
from invoice date, LESS
c. Other ineligible Receivables, $________
EQUALS
d. Eligible Receivables $________
e. Eighty percent (80%) of $________
Eligible Receivables
2. CALCULATION OF PREPAID NATURAL GAS:
a. Volume of natural gas (in MMBTU's)
delivered to Columbia Gas Transmission
Corporation pursuant to paragraph 2 of
letter agreement dated March 9, 1995, LESS _____________ (MMBTU's)
b. Volumes required to be delivered for
BTU reimbursement under said letter
agreement, EQUALS _____________ (MMBTU's)
E-1
c. Excess Volumes _____________ (MMBTU's)
[but Excess Volumes shall not exceed
two billion cubic feet]
d. Excess Volumes times [Gulf Coast
month-end natural gas price (as per
Loan Agreement) PLUS $0.18]
EQUALS
e. Prepaid Natural Gas $________
3. CALCULATION OF ELIGIBLE PRODUCT INVENTORY VALUE:
a. Borrower's Product (gallons) _________
b. Market Price per Gallon $________
c. Eligible Product Inventory Value $________
d. Eighty percent (80%) of Eligible $________
Product Inventory Value
4. CALCULATION OF NET ELIGIBLE EXCHANGE BALANCES:
a. Amount due Borrower under $________
Eligible Exchange Balances
(quantities of Products X
Mt. Belvieu price) LESS
b. Exchange Balances that do not $________
satisfy Credit and Collection
Policy LESS
c. Amount Borrower owes under $________
Eligible Exchange Balances
(quantities of Products X
Mt. Belvieu price)
d. Net Eligible Exchange Balances $________
e. Eighty percent (80%) of Net $________
Eligible Exchange Balances.
5. Cash Collateral (100%) $________
E-2
6. Total of (1) through (5) $________
7. BORROWING BASE (lesser of line (6) $________
or $7,500,000)
8. Attached are the following schedules supporting each of the Borrowing Base
components:
a. Receivables aging
b. Other ineligible Receivables
c. Accounts payable aging
d. Product listing by product and location with supporting market value
information
e. Data re Exchange Balances as requested by Agent
f. Data re Prepaid Natural Gas amounts as requested by Agent
9. Borrower represents that its products and inventory are located only at
locations listed on Exhibit H to the Loan Agreement (although it may not
currently be using all places listed on Exhibit H) except as set forth below:
IN WITNESS WHEREOF, this instrument is executed by the undersigned as of
_______________ ____, 199__.
MARKWEST HYDROCARBON, INC.
By:_____________________________
Name:________________________
Title:_________________________
E-3
Exhibit F
---------
LITIGATION
----------
1. Alloyd Insulation Company Inc. v. MarkWest Hydrocarbon Partners, Ltd. d/b/a
---------------------------------------------------------------------------
MarkWest Hydrocarbon Partners, a Limited Partnership, Civil Action No. 96-
----------------------------------------------------
▇-▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, relating to a
mechanic's lien filed by a subcontractor on the Kenova Plant in an amount
of approximately $111,500 in connection with a dispute between Alloyd
Insulation Company Inc. and the general contractor and/or subcontractors on
the plant.
F-1
Exhibit G
---------
SUBSIDIARIES OF BORROWER
------------------------
MW Michigan, Inc.
MarkWest Resources, Inc.
G-1
Exhibit H
---------
LOCATION OF BORROWER'S INVENTORY
--------------------------------
at October 1, 996
MarkWest Hydrocarbon (Siloam plant)
U.S. ▇▇▇▇▇ ▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
MarkWest Hydrocarbon
West Memphis LPG Terminal
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
MarkWest Hydrocarbon
Church Hill LPG Terminal
Church Hill, Tennessee
38-mile pipeline from Kenova, West Virginia to
South Shore, Kentucky
Mapco/Hutchinson, Kansas (a.k.a. ▇▇▇▇▇▇)
Mount Belvieu, Texas
Hattiesburg, Mississippi
H-1
Exhibit I
---------
MARKWEST HYDROCARBON, INC.
COMPLIANCE CERTIFICATE
----------------------
(WORKING CAPITAL LOAN)
(Capitalized terms not otherwise defined herein
shall have the meaning assigned to them in
the Loan Agreement)
The undersigned officer of MARKWEST HYDROCARBON, INC., ("Borrower") pursuant to
--------
Section 9(b)(iii) of the Amended and Restated Working Capital Loan Agreement
---------------------------------------------------
dated as of October __, 1996 (the "Loan Agreement") among Borrower, Norwest Bank
Colorado, National Association, individually and as agent, and First American
National Bank, N M Rothschild and Sons, Limited and The First National Bank of
Chicago, hereby certifies as follows:
Computations showing compliance as of _________, 199_ with:
All computations exclude Restricted Subsidiaries.
1. SECTION 9(k): CURRENT RATIO
(a) Current assets $________
(b) Current liabilities $________
(c) Actual ratio _______________
(d) Minimum per agreement 1.1 to 1.0
2. SECTION 9(l): RATIO OF FUNDED DEBT TO TOTAL
CAPITALIZATION
(a) Funded Debt (including Guarantees) $________
(b) Guarantees $________
(c) Stockholders' equity $________
(d) Total capitalization $________
(a) + (c)
(e) Actual ratio _______________%
(f) Maximum per agreement 60%
I-1
3. SECTION 9(m): TANGIBLE NET WORTH
(a) $38,000,000 PLUS $________
(b) 50% of consolidated net $________
income earned by Borrower
after September 30, 1996
(excluding net losses)
(c) Required: (a) + (b) $______________
(d) Actual $______________
4. SECTION 9(n): FIXED COVERAGE RATIO, AS OF THE END
OF ANY MONTH COMMENCING WITH OCTOBER 31, 1996,
CALCULATED ON A ROLLING TWELVE MONTH BASIS
(a) Cash flow from operations $________
DIVIDED BY
(b) Debt (Interest + Principal) $________
included in (a) (& required
to be repaid) EQUALS
(c) Actual ratio ______________
(d) Minimum per agreement 1.5
5. The undersigned hereby certifies to the authenticity of the financial
statements and that the attached financial statements present fairly the
financial condition of Borrower as of the date hereof to the best of his/her
knowledge and belief after due inquiry.
6. The undersigned has read the covenants and conditions of the Loan Agreement;
this Certificate is based upon an examination of the Loan Agreement and of
the accounts and other pertinent records of Borrower.
7. In the opinion of the undersigned, he/she has made such examination and
investigations as is necessary to enable him/her to express an informed
opinion as to whether or not the covenants and conditions of the Loan
Agreement have been complied with, and, to the best of his/her knowledge:
(check either (a) or (b))
( ) (a) There exists no Unmatured Event of Default or Event of Default on
the date hereof.
( ) (b) There exists no Unmatured Event of Default or Event of Default on
the date hereof except for the following matters: (Describe all
such matters, specifying the nature, duration and status thereof
and what action Borrower has taken or proposes to take with
respect thereto).
BORROWER:
I-2
MARKWEST HYDROCARBON, INC.
By: __________________________
Name:_____________________
Title:______________________
Date:______________________
I-3
Exhibit J
---------
SCHEDULE OF NOTES RECEIVABLE FROM OFFICERS, EMPLOYEES
-----------------------------------------------------
at October 7, 1996
Officers and Directors:
▇▇▇▇ ▇▇▇ $ -
▇▇▇▇▇ ▇'▇▇▇▇▇ $ -
Art ▇▇▇▇▇▇ $ -
▇▇▇ ▇▇▇▇▇▇ $ 6,056.62
▇▇▇▇ ▇▇▇▇▇▇ $ 19,381.49
Employees:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. $ 20,466.59
▇▇▇ ▇▇▇▇▇ $ 17,352.87
▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 27,942.80
▇▇▇▇▇▇▇ ▇▇▇▇▇ $ 97,474.06
▇▇▇ ▇'▇▇▇▇▇ $ 37,169.59
▇▇▇▇▇ ▇▇▇▇▇▇ $ 15,041.22
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $ 54,907.81
▇▇▇▇ ▇▇▇▇▇ $ -
▇▇▇▇▇▇ ▇▇▇▇▇ $ 10,258.58
▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 56,452.74
--------------
$ 362,504.37
==============
J-1
J-2
EXHIBIT K
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Application and Agreement For
Irrevocable Standby Letter of Credit
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To: NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION NORWEST AFFILIATE as indicated on the Date
Investors Building, Third Floor reverse page hereof. -------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ L/C number (for Bank use only)
Attention: International Letters of Credit
------------------------------------------------------------------------------------------------------------------------------------
Please issue an Irrevocable Documentary Standby Credit substantially in accordance with this application and transmit it as
indicated below (by "X"). In issuing the Credit you are expressly authorized to make such changes from the terms herein below set
forth as you, in your sole discretion, may deem advisable provided that no such changes shall vary the principal terms herof.
------------------------------------------------------------------------------------------------------------------------------------
Transmission by:
[ ] Cable (teletransmission) full details [ ] Short Cable - full details to follow by courier [ ] Courier [ ] Other
------------------------------------------------------------------------------------------------------------------------------------
THIS SECTION FOR BANK USE ONLY UNLESS YOU DESIGNATE ADVISING BANK APPLICANT (FULL NAME AND ADDRESS)
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
BENEFICIARY (FULL NAME AND ADDRESS) AMOUNT (UP TO)
-------------------------------------------------------------------
In figures USD unless otherwise specified
--------------------------------------------------------------------
In words:
--------------------------------------------------------------------
Expiry date At your counters
(months in words, day, year) unless otherwise
indicated
-------------------------------------------------------------------
For presentation of documents to you unless otherwise indicated:
-------------------------------------------------------------------
FOR:
[ ] Sight Payment [ ] Negotiation
-----------------------------------------------------------------------------------------------------------------------------------
Draft(s) at sight to be drawn on you or (specify any other drawee) and accompanied by the original Letter of Credit for endorsement
and documents as specified below:
[ ] Issue as per attached example.
[ ] Clean Letter of Credit.
[ ] Beneficiary's signed Statement of Reading:"
-----------------------------------------------------------------------------------------------------------------------------------
OTHER DOCUMENTS/CONDITIONS
-----------------------------------------------------------------------------------------------------------------------------------
This credit is subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), the International Chamber
of Commerce Publication 500 No. ("UCP").
-----------------------------------------------------------------------------------------------------------------------------------
(COMPLETE ONLY WHEN THE BENEFICIARY BANK IS TO ISSUE ITS UNDERTAKING BASED ON THE ISSUED STANDBY LETTER OF CREDIT)
[ ] Request beneficiary bank to issue and deliver their (Specify type of undertaking)
in favor of ____________________________________________________________________
for an amount not exceeding the amount specified above, effective immediately and
expiring at their office on ____________________________________________________
relative to (Specify contract number or other pertinent reference)______________
-------------------------------------------------------------------------------------------------------------------------------
Partial drawings permitted if not checked as [ ] Prohibited
------------------------------------------------------------------------------------------------------------------------------
Should there be a need to clarify our above instructions, please contact:
------------------------------------------------------------------------------------------------------------------------------
Name Telephone number
( )
AGREEMENT
In consideration of your ("you" "your") issuing or amending the standby letter
of credit applied for on the other side of this form (herein called the
"Credit"), we hereby agree as follows:
1. We agree to pay to you on demand, at your above address and in United
States currency, the amount of each draft payable in United States
currency and drawn under the Credit, or purporting to be so drawn.
2. We agree to pay to you on demand, at your above address and in United
States currency, the equivalent (at your then selling rate for cable
transfers to the place where and in the currency in which such draft or
instrument is payable) of the amount of each draft payable in other than
United States currency and drawn under the Credit, or purporting to be so
drawn.
3. We agree to pay to you on demand a commission for the Credit at such rate
as you have quoted to us, together with the amount of any and all charges
and expenses paid or incurred by you or by any of your agents or
correspondents in connection with the Credit. In addition to such
commission and any such charges and expenses, we agree that if at any time
any applicable law, rule or regulation or the interpretation or
administration thereof by any governmental authority:
A. shall subject you to any tax, duty or other charge with respect to this
Agreement, or shall materially change the basis of taxation of payments
to you of the principal of or interest on any amounts payable by us under
this Agreement (except for the imposition of or change in respect of the
rate of tax on your overall net income); or
B. shall impose or deem applicable or increase any reserve, special deposit
or similar requirement against assets of, deposits with or for the
account of, or Credit extended by you because of this Agreement or the
Credit; or
C. shall require you to include the Credit in your calculations relating to
your capitalization,
and the result is to increase the cost to you to maintain the Credit, or to
reduce the amount of any sum received or receivable by you under this
Agreement, then within 30 days after demand we agree to pay you such
additional amount or amounts as will compensate you for such increased cost
or reduction. Your certificate in reasonable detail setting forth the basis
for the determination of such additional amount or amounts shall be
conclusive evidence of such amount or amounts.
4. All amounts payable by us under any provision of this Agreement, except
this paragraph 4, shall, if unpaid, bear interest from the date you are
first entitled to demand payment thereof, regardless of whether you
actually do make demand. In all cases, we agree to pay you interest at an
annual rate equal to ________% in excess of the Base Rate in effect from
time to time (if left blank, then 2.0% in excess of the Base Rate), to
change when and as the Base Rate changes. "Base Rate" means the "base" or
"prime" rate of interest as announced from time to time by
__________________ ___________________ (if left blank, then Norwest Bank
Minnesota, National Association).
5. Except to the extent we may hereafter give you contrary instructions in
writing, which instructions you may, at your sole discretion, accept or
reject:
A. Your duty and that of your correspondents to examine certificates and
other documents received by you or them under, or purporting to be under,
the Credit, shall be fully discharged if you or they exercise reasonable
care to ascertain that they appear on their face to be in accordance with
the terms of the Credit;
B. Your liabilities and responsibilities and those of your correspondents
shall be strictly limited in accordance with the most current revision of
the Uniform Customs and Practice for Documentary Credits -- 1993
Revision, ICC Publication No. 500, effective January 1, 1994;
C. You and your correspondents may receive and accept or pay as complying
with the terms of the Credit any drafts, documents or statements,
otherwise in order, which may be signed by the administrator, executor,
trustee in bankruptcy of or receiver of any of the property of (or any
similar representative or trustee for), the person in whose name the
credit provides that any such drafts, documents or statements must be
drawn or issued.
6. You shall assume no liability or responsibility:
A. For the form, sufficiency, accuracy, genuineness, falsification or legal
effect of any documents or statement;
B. For the consequences arising out of any delay and/or loss in transit of
any messages, letters or documents, or the delay, mutilation or other
errors arising from the transmission of cables, telegrams or telex; or
C. For consequences arising out of the interruption of your business by acts
of God, riots, civil commotions, insurrections, wars or other causes
beyond your control or by any strikes or walkouts.
None of the foregoing acts or things shall in any way affect or impair any
of our obligations or any of your rights and powers specified in or arising
under this Agreement. In furtherance and extension and not in limitation of
the specific provisions set forth above, we agree that any action taken or
omitted by you or by your correspondents under or in connection with the
Credit, if taken or omitted with honesty in fact, shall be binding on us and
shall not put you or your correspondents under any resulting liability to
us. We further agree that we will indemnify you and your correspondents, and
also your and their officers, employees and agents, and hold you and all of
them harmless from and against each and every claim, demand, action or suit
which may arise against you or them by reason of any action taken or omitted
pursuant to this Agreement. In no event shall you be liable for incidental,
consequential or special damages.
7. We agree to pay to you on demand any and all expenses, including
reasonable attorneys' fees and legal expenses, incurred or paid by you
in protecting or collecting our indebtedness to you under this Agreement
or in protecting, exercising or enforcing any or all of your rights and
remedies against us.
8. Should any of the following events occur, and if at the time of any such
event there remains any portion of the Credit undisbursed, we shall, upon
your demand, pledge as collateral security for all of our obligations
under this Agreement, cash in an amount equal to the entire amount
remaining undrawn under the Credit: (i) we default in the payment when due
of any amount due you under this Agreement; (ii) a default occurs under
any agreement between you and us; (iii) any credit agreement made between
you and us expires or is terminated; (iv) we default in the payment of any
indebtedness which we may have for the repayment of borrowed monies; (v)
we become insolvent, fail to pay our debts generally as they become due,
make any assignment for the benefit of creditors, file or suffer the
filing of any petition or action for relief under the provisions of the
United States Bankruptcy Code or other similar laws for the relief of or
relating to, debtors; (vi) there is a voluntary or involuntary appointment
of a receiver, trustee, custodian or similar official to take possession
of any of our property; (vii) there is an attachment of any material
involuntary lien of any kind to our property or assets; or (viii) any
representation made in any financial statement or in any other statement
or document presented to you by us or on our behalf is, in any material
respect, false or misleading when made; or (ix) you believe in good faith
that we may be unwilling or unable to pay our obligations to you when they
come due.
9. We authorize you to charge any of our accounts or other funds in your
possession for the payment of our obligations to you under this
Agreement. We further authorize you to debit any of our accounts or other
funds in the possession of your agents, correspondents or affiliates for
the payment of our obligations to you under this Agreement and hereby
hold you, your agents, correspondents and affiliates and all officers
thereof, harmless from the consequences or results of such debit.
10. We further agree that:
A. This Agreement and your rights hereunder shall continue unimpaired and
shall be binding upon us notwithstanding any delay, extension of time,
increase in amount, renewal, compromise or other indulgence or
modification granted or agreed to by you, with or without notice to or
approval by us (or any of us) in respect of the credit or any of our
indebtedness to you under this Agreement;
B. You shall not be deemed to have waived or released any of your rights or
remedies (whether specified in or arising under this Agreement or
otherwise available to you by law or agreement) unless you have signed a
written waiver or release. Delay or failure to act on your part shall not
constitute a waiver of or otherwise preclude enforcement of any of your
rights and remedies. All of your rights and remedies shall be cumulative
and may be exercised singularly or concurrently. You need not resort to
any particular right or remedy before exercising or enforcing any other,
and your resort to any right or remedy shall not preclude the exercise or
enforcement of each other right and remedy;
C. This Agreement shall be governed by the laws of the state where your main
banking office is located;
D. If any provision or clause of this Agreement or the application thereof to
any person or circumstance is invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect
other provisions, clauses or applications of this Agreement which can be
given effect, and this Agreement shall be construed as if the invalid or
illegal or unenforceable provision, clause or application has never been
contained herein;
E. If the application for the Credit is signed by or on behalf of several of
us, this Agreement shall be construed and interpreted so as to establish
in all instances the joint and several obligations of each of us and this
Agreement shall be fully binding upon and enforceable against either, any
or all of us. Each of us shall be deemed to be the agent of all others,
and except as expressly provided otherwise herein, you may act at the
direction or request of any one or more of us and you may give a notice or
notices (whether or not required to be given), to any one or more of us,
all as you may from time to time elect, without notice to or approval by
the others. You may terminate this Agreement with respect to, or release
or discharge, any one or more of us without affecting or impairing the
obligations of the rest of us. The death, incompetence or dissolution of
any of us or any change in the composition of any partnership or any other
firm which may be a party hereto shall not affect in any way the Credit or
any rights with respect to indebtedness incurred under this Agreement or
with respect to transactions theretofore initiated. In this Agreement, the
terms "we", "us" and "our" refer to any one or more applicants and
correspondent banks that have executed the application for the Credit, and
the terms "you" and "your" refer to the bank to which such application is
directed.
F. This Agreement is without limitation as to duration or amount and shall be
binding upon our respective heirs, legal representatives, successors and
assigns and shall inure to the benefit of and be enforceable by you, your
successors and assigns. You may assign or transfer this Agreement and you
shall thereafter be forever relieved and fully discharged from any
liability or responsibility with respect thereto, but you shall retain all
of your rights and remedies specified in or arising under this Agreement
with respect to any and all instruments and rights not so assigned or
transferred.
G. If one of the applicants for Credit is your correspondent/affiliate, the
applicant(s) who is not a correspondent/affiliate hereby agrees to
reimburse the correspondent/affiliate for all amounts such
corespondent/affiliate may pay you in connection with this Agreement. Such
party further agrees to execute any documents and provide such security as
the correspondent/affiliate may request to evidence and support its co-
applicant's obligation of reimbursement.
H. Unless you agree otherwise, the Credit shall be subject to Uniform Customs
and Practice for Documentary Credits - 1993 revision, ICC Publication No.
500 effective January 1, 1994, or any successor publication, but all of
your rights arising under said Customs and Practice shall be in addition
to, and not in limitation of, your rights under this Agreement.
If the Bank is located in Nebraska: A credit agreement must be in writing to be
enforceable under Nebraska law. To protect you and us from any misunderstandings
or disappointments, any contract, promise, undertaking or offer to forebear
repayment of money or to make any other financial accommodation in connection
with this loan of money or grant or extension of credit, or any amendment of,
cancellation of, waiver of, or substitution for any or all of the terms or
provisions of any instrument or document executed in connection with this loan
of money or grant or extension of credit, must be in writing to be effective.
If the Bank is located in Iowa: IMPORTANT: READ BEFORE SIGNING. THE TERMS OF
THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE
ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN
CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT
ONLY BY ANOTHER WRITTEN AGREEMENT. THIS NOTICE ALSO APPLIES TO ANY OTHER CREDIT
AGREEMENTS (EXCEPT CONSUMER LOANS OR OTHER EXEMPT TRANSACTIONS) NOW IN EFFECT
BETWEEN YOU AND THIS LENDER. BY SIGNING THIS AGREEMENT, THE UNDERSIGNED
ACKNOWLEDGES RECEIPT OF A COPY OF THIS AGREEMENT.
We waive notice of your acceptance of this Agreement.
===============================================================================
This Agreement is binding upon Applicant and Joint Applicant and, if applicable,
upon Correspondent Bank.
Dated, this ______ day of ______________________________, 19_______.
----------------------------------------------------- ---------------------------------------------------------------
APPLICANT (Full name) (Party that is to be named in JOINT APPLICANT (Full name) (Party, if any, co-signing with the
the Credit as "Applicant.") Applicant.) Correspondent banks and/or Norwest affiliates do not
sign here, but complete Section "A" below.
By: ________________________________________________ By: ___________________________________________________________
Individual Name/Aughorized Signature/Title Individual Name/Authorized Signature/Title
By: ________________________________________________ By: ___________________________________________________________
Individual Name/Aughorized Signature/Title Individual Name/Authorized Signature/Title
SECTION A
FOR CORRESPONDENT BANK AND/OR NORWEST AFFILIATE BANK USE ONLY
We hereby appoint you as our agent to establish and issue in your name the
Credit pursuant to this Agreement. We acknowledge that we are primarily liable
and in consideration thereof, we agree to act and assume the duties of all
parties hereto including their respective legal representatives, including
without limitation any executor, trustee or guardian, heirs, successors and
assigns. We agree to reimburse you for any and all amounts paid by you in
connection with the Credit and any and all costs and expenses of every kind and
nature incurred by you with respect to the Credit and the transaction(s) to
which they relate. We shall pay to you charges, commissions and interest due and
owing to you pursuant to the terms of this Agreement. You are hereby expressly
authorized to immediately charge our account with you for any amoaunts as
described herein which are owed to you by us.
______________________________________________________
NORWEST BANK AFFILIATE NAME OR CORRESPONDENT BANK NAME
By:__________________________________________________
Individual Name/Authorized Signature/Title
--------------------------------------------------------------------------------
FOR BANK USE ONLY:
--------------------------------------------------------------------------------
Date Risk Rating:
--------------------------------------------------------------------------------
LDA APPROVAL
--------------------------------------------------------------------------------
Signature (stamp)
--------------------------------------------------------------------------------