EXHIBIT 10.2 (a)
CREDIT AGREEMENT
DATED TO BE EFFECTIVE AS OF DECEMBER 1, 2001
AMONG
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
AS BORROWER,
FORTIS CAPITAL CORP.,
AS AGENT, AN ISSUING BANK, AND A BANK,
BNP PARIBAS,
AS AN ISSUING BANK, AND A BANK
AND
THE OTHER FINANCIAL INSTITUTIONS WHICH
MAY BECOME PARTIES HERETO
THIS AGREEMENT PROVIDES FOR AN
UNCOMMITTED FACILITY WITH A DEMAND FEATURE.
ALL ADVANCES AND ISSUANCES OF LETTERS OF CREDIT
ARE DISCRETIONARY ON THE PART OF THE BANKS
IN THEIR SOLE AND ABSOLUTE DISCRETION.
THE BANKS MAY MAKE DEMAND FOR PAYMENT AT ANY TIME
IN THEIR SOLE AND ABSOLUTE DISCRETION.
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.....................................................1
1.01 Certain Defined Terms...............................................1
1.02 Other Interpretive Provisions......................................25
1.03 Accounting Principles..............................................26
ARTICLE II THE CREDITS....................................................26
2.01 Amounts and Terms of Uncommitted Line (Excluding Overdraft Line)...26
2.02 Loan Accounts......................................................28
2.03 Procedure for Borrowing............................................29
2.04 Conversion and Continuation Elections..............................30
2.05 Optional Prepayments...............................................31
2.06 Mandatory Prepayments of Loans; Mandatory Commitment Reductions....31
2.07 Repayment..........................................................32
2.08 Interest...........................................................32
2.09 Agent Fees.........................................................33
2.10 Computation of Fees and Interest...................................33
2.11 Payments by the Borrower...........................................34
2.12 Payments by the Banks to Agent.....................................34
2.13 Sharing of Payments, Etc...........................................35
2.14 The Election of One Bank to Continue Funding.......................35
2.15 Payments from Guarantor and Liquidation of Collateral..............36
ARTICLE III THE LETTERS OF CREDIT..........................................36
3.01 The Letter of Credit Lines.........................................36
3.02 Issuance, Amendment and Renewal of Letters of Credit...............38
3.03 Risk Participations, Drawings, Reducing Letters of Credit and
Reimbursements...................................................40
3.04 Repayment of Participations........................................42
3.05 Role of the Issuing Banks..........................................43
3.06 Obligations Absolute...............................................44
3.07 Cash Collateral Pledge.............................................45
3.08 Letter of Credit Fees..............................................46
3.09 Uniform Customs and Practice.......................................46
3.10 BofA Letter of Credit..............................................46
ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY.........................46
4.01 Taxes..............................................................46
4.02 Illegality.........................................................47
4.03 Increased Costs and Reduction of Return............................48
4.04 Funding Losses.....................................................49
4.05 Inability to Determine Rates.......................................49
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4.06 Reserves on Offshore Rate Loans....................................50
4.07 Certificates of Banks..............................................50
4.08 Substitution of Banks..............................................50
4.09 Survival...........................................................50
ARTICLE V CLOSING ITEMS..................................................51
5.01 Matters to be Satisfied Upon Execution of Agreement................51
ARTICLE VI REPRESENTATIONS AND WARRANTIES.................................53
6.01 Existence and Power................................................53
6.02 Authorization; No Contravention....................................53
6.03 Governmental Authorization.........................................53
6.04 Binding Effect.....................................................54
6.05 Litigation.........................................................54
6.06 No Default.........................................................54
6.07 ERISA Compliance...................................................54
6.08 Use of Proceeds; Margin Regulations................................55
6.09 Title to Properties................................................55
6.10 Taxes..............................................................55
6.11 Financial Condition................................................55
6.12 Environmental Matters..............................................56
6.13 Regulated Entities.................................................56
6.14 No Burdensome Restrictions.........................................56
6.15 Copyrights, Patents, Trademarks and Licenses, Etc..................56
6.16 Subsidiaries.......................................................56
6.17 Insurance..........................................................56
6.18 Full Disclosure....................................................57
ARTICLE VII AFFIRMATIVE COVENANTS..........................................57
7.01 Financial Statements...............................................57
7.02 Certificates; Other Information....................................58
7.03 Notices............................................................58
7.04 Preservation of Corporate Existence, Etc...........................59
7.05 Maintenance of Property............................................60
7.06 Insurance..........................................................60
7.07 Payment of Obligations.............................................60
7.08 Compliance with Laws...............................................60
7.09 Compliance with ERISA..............................................60
7.10 Inspection of Property and Books and Records.......................61
7.11 Environmental Laws.................................................61
7.12 Use of Proceeds....................................................61
7.13 Collateral Position Audit..........................................61
7.14 Payments to Bank Blocked Account...................................61
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TABLE OF CONTENTS
(continued)
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7.15 Financial Covenants................................................62
7.16 Separate Operations................................................64
7.17 Post-Closing Matters...............................................64
ARTICLE VIII NEGATIVE COVENANTS.............................................64
8.01 Limitation on Liens................................................64
8.02 Consolidations and Mergers.........................................66
8.03 Limitation on Indebtedness.........................................66
8.04 Transactions with Affiliates.......................................66
8.05 Use of Proceeds....................................................66
8.06 Contingent Obligations.............................................67
8.07 Restricted Payments................................................67
8.08 ERISA..............................................................67
8.09 Change in Business.................................................67
8.10 Accounting Changes.................................................67
8.11 Net Position.......................................................67
8.12 Loans and Investments..............................................68
8.13 Change of Management...............................................68
8.14 Deposit Accounts...................................................68
8.15 Risk Management Policy.............................................68
ARTICLE IX EVENTS OF DEFAULT..............................................69
9.01 Event of Default...................................................69
9.02 Remedies...........................................................71
9.03 Rights Not Exclusive...............................................71
ARTICLE X AGENT..........................................................72
10.01 Appointment and Authorization......................................72
10.02 Delegation of Duties...............................................72
10.03 Liability of Agent.................................................73
10.04 Reliance by Agent..................................................73
10.05 Notice of Default..................................................74
10.06 Credit Decision....................................................74
10.07 Indemnification....................................................74
10.08 Agent in Individual Capacity.......................................75
10.09 Successor Agent....................................................75
10.10 Withholding Tax....................................................76
10.11 Collateral Matters.................................................77
10.12 Monitoring Responsibility..........................................78
ARTICLE XI MISCELLANEOUS..................................................78
11.01 Amendments and Waivers.............................................78
11.02 Notices............................................................78
11.03 No Waiver; Cumulative Remedies.....................................79
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11.04 Costs and Expenses.................................................79
11.05 Indemnity..........................................................79
11.06 Payments Set Aside.................................................80
11.07 Successors and Assigns.............................................80
11.08 Assignments, Participations, Etc...................................80
11.09 Set-off............................................................83
11.10 Automatic Debits of Fees...........................................83
11.11 Notification of Addresses, Lending Offices, Etc....................83
11.12 Bank Blocked Account Charges and Procedures........................83
11.13 Counterparts.......................................................84
11.14 Severability.......................................................84
11.15 No Third Parties Benefited.........................................84
11.16 Governing Law and Jurisdiction.....................................84
11.17 Waiver of Jury Trial...............................................85
11.18 Discretionary Facility.............................................86
11.19 Entire Agreement...................................................86
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CREDIT AGREEMENT
This
CREDIT AGREEMENT (the "Agreement") is entered into effective as of
December 1, 2001, among ▇▇▇▇▇▇▇▇ MARKETING, L.L.C., a Delaware limited liability
company (the "Borrower"), FORTIS CAPITAL CORP., a Connecticut corporation
("Fortis"), as a Bank, as an Issuing Bank, and as Agent for the Banks, BNP
PARIBAS, a bank organized under the laws of France ("BNP Paribas"), as a Bank
and an Issuing Bank, and each other financial institution which may become a
party hereto (collectively the "Banks").
WHEREAS, Banks and the Borrower desire to enter into this facility to
provide for an "uncommitted borrowing base demand credit facility" such facility
to be in an aggregate amount of up to $125,000,000, including an uncommitted
Letter of Credit facility to facilitate the Borrower's purchase of natural gas,
an uncommitted advance facility for the Borrower's working capital requirements
related to the purchase of natural gas, and an uncommitted overdraft line, all
as set forth below.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings:
"Account" has the meaning stated in the
New York Uniform
Commercial Code.
"Account Debtor" means a Person who is obligated to the Borrower
under an Account of the Borrower.
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of any
business or division of a Person, (b) the acquisition of in excess of 50% of the
capital stock, partnership interests or equity of any Person, or otherwise
causing any Person to become a Subsidiary, or (c) a merger or consolidation or
any other combination with another Person (other than a Person that is a
Subsidiary); provided, however, that the relevant Borrower or the Subsidiary is
the surviving entity.
"Adjusted Pro Rata Share" means, as to any Bank at any particular
time, the percentage equivalent (expressed as a decimal, rounded to the ninth
decimal place) at such time of (a) an amount equal to such Bank's Uncommitted
Line Portion plus, in the
case of Fortis, the amount of advances made in excess of the Borrowing Base
Advance Cap under the Overdraft Line and/or to fund the Obligations of the
Borrower under the Overdraft Line and in the case of BNP Paribas, the amount of
advances made in excess of the Borrowing Base Advance Cap to fund Obligations of
the Borrower under Swap Contracts, divided by (b) the combined total of the
Uncommitted Line Portion of all the Banks plus, in the case of Fortis, the
amount of advances made in excess of the Borrowing Base Advance Cap under the
Overdraft Line and/or in the case of BNP Paribas, to fund Obligations of the
Borrower under Swap Contracts.
"Advance Maturity Date" means the maturity date of advances made
hereunder which for Base Rate Loans will be the earliest to occur of (a) written
demand by Agent, or (b) 30 days from the date of the Borrowing, and for Offshore
Rate Loans will be the earliest to occur of (i) written demand by Agent, or (ii)
30 days from the date of the Borrowing, or (iii) the end of the Interest Period
for such Offshore Rate Loan.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another Person if
the controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Agent" means Fortis in its capacity as agent for the Banks
hereunder, and any successor agent arising under Section 10.09.
"Agent-Related Persons" means Fortis and any successor agent
arising under Section 10.09, together with their respective Affiliates and the
officers, directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Agent's Payment Office" means the address for payments set forth
on Schedule 11.02 hereto in relation to Agent, or such other address as Agent
may from time to time specify.
"Agreement" means this
Credit Agreement.
"Applicable Margin" means:
(a) with respect to Base Rate Loans, one-half percent
(0.50%); and
(b) with respect to Offshore Rate Loans, two and
one-half percent (2.50%).
"Approving Banks" has the meaning set forth in Section 2.14.
"Assignee" has the meaning specified in Subsection 11.08(a).
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"Atmos Support Agreement" means an agreement of
Atmos Energy
Corporation to provide certain support for Borrower and its operations, such
agreement to be in form and substance acceptable to Agent.
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"Bank Blocked Account" means Fortis' account no. 323373461
maintained with Chase into which collections from the Borrower's Accounts will
be deposited pursuant to Section 7.14.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978,
as amended (11 U.S.C. Section 101, et seq.).
"Banks" shall initially mean Fortis and BNP Paribas. At such time
as additional lending institutions are added to this Agreement, either through
an amendment to this Agreement or through an Assignment and Acceptance in
accordance with Subsection 11.08(a) hereof, the term "Bank" shall mean Fortis,
BNP Paribas and each such additional lending institution. References to the
"Banks" shall include Fortis, including in its capacity as an Issuing Bank; for
purposes of clarification only, to the extent that Fortis may have any rights or
obligations in addition to those of the Banks due to its status as an Issuing
Bank and as Agent, Fortis' status as such will be specifically referenced.
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; or (b) the per annum rate of interest
established by Chase from time to time at its principal office in
New York City
as its "prime rate" or "base rate" for U.S. dollar loans (with any change in
such prime rate or base rate to become effective as and when such prime rate or
base rate changes). (The "prime rate" or "base rate" is a rate set by Chase
based upon various factors including Chase's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above or below such announced rate.)
"Base Rate Loan" means any Loan bearing interest based upon the
Base Rate.
"BNP Paribas" means BNP Paribas, a bank organized under the laws
of France.
"BofA Letter of Credit" means the Letter of Credit Issued by the
Issuing Banks for the account of the Borrower to Bank of America, N.A. in
connection with the closing of the transactions contemplated by this Agreement.
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"Borrower" means ▇▇▇▇▇▇▇▇ Marketing, L.L.C., a Delaware limited
liability company.
"Borrowing" means a borrowing hereunder consisting of Revolving
Loans made to the Borrower on the same day by the Banks under Article II.
"Borrowing Base Advance Cap" means at any time an amount equal to
the least of:
(a) $125,000,000.00;
(b) the Borrowing Base Sub-Cap; or
(c) the sum of:
(i) the amount of Cash Collateral and other liquid
investments which are acceptable to the Banks in their sole discretion
and which are subject to a first perfected security interest in favor
of Agent, as collateral agent for the Banks, and which have not been
used in determining availability for any other advance (other than
advances made under the Borrowing Base Line) or Letter of Credit
Issuance; plus
(ii) 90% of Borrower's equity in BNP Paribas Commodity
Futures, Inc. accounts from and after the date that a tri-party
agreement with respect to such accounts is entered into among Borrower,
Agent and BNP Paribas Commodity Futures, Inc., to the extent such
equity is not being used in determining availability for any other
advance (other than advances made under the Borrowing Base Line) or
Letter of Credit Issuance; plus
(iii) 90% of the amount of Tier I Accounts which are not
being used in determining availability for any other advance (other
than advances made under the Borrowing Base Line) or Letter of Credit
Issuance, net of deductions, offsets and counterclaims; plus
(iv) 85% of the amount of Tier II Accounts and which are
not being used in determining availability for any other advance (other
than advances made under the Borrowing Base Line) or Letter of Credit
Issuance, net of deductions, offsets and counterclaims; plus
(v) 85% of the amount of Tier I Unbilled Accounts which are
not being used in determining availability for any other advance (other
than advances made under the Borrowing Base Line) or Letter of Credit
Issuance; plus
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(vi) 80% of the amount of Tier II Unbilled Accounts which
are not being used in determining availability for any other advance
(other than advances made under the Borrowing Base Line) or Letter of
Credit Issuance; plus
(vii) 80% of the amount of Eligible Inventory which are not
being used in determining availability for any other advance (other
than advances made under the Borrowing Base Line) or Letter of Credit
Issuance; plus
(viii) 80% of the amount of Eligible Exchange Receivables
which are not being used in determining availability for any other
advance (other than advances made under the Borrowing Base Line) or
Letter of Credit Issuance; plus
(ix) 80% of the amount of Undelivered Product Value; less
(x) the amounts which would be subject to a so-called
"First Purchaser Lien" as defined in Texas Bus. & Com. Code Section
9.343, comparable laws of the states of Oklahoma, Kansas, Wyoming or
New Mexico, or any other comparable law, unless a Letter of Credit
secures payment of all amounts subject to such First Purchaser Lien;
less
(xi) 125% of the ▇▇▇▇ to market amounts owed to BNP Paribas
and/or its Affiliates under Swap Contracts; and
(xii) 100% of Borrower's Unrealized ▇▇▇▇-to-Market Losses
as of the date of determination of the Borrowing Base Advance Cap.
In no event shall any amounts described in (c)(i) through (c)(xi)
above which may fall into more than one of such categories be counted more than
once when making the calculation under this definition.
"Borrowing Base Collateral Position Report" means a report
detailing all Collateral which has been or is being used in determining
availability for an advance or letter of credit issuance under the Borrowing
Base Line, such report to be in the form attached hereto as Exhibit E.
"Borrowing Base Line" means the uncommitted line of credit for the
purpose of (a) providing working capital and to fund payments to suppliers of
Product; (b) to provide for Letters of Credit to secure suppliers of Product;
and (c) to fund payments due to Fortis under the Overdraft Line or any Swap
Contract.
"Borrowing Base Sub-Cap" means, initially, an amount equal to
$50,000,000.00; provided, however, that Borrower may elect from time to time any
of $50,000,000.00, $60,000,000.00, $70,000,000.00, $75,000,000.00,
$80,000,000.00, $90,000,000.00, $95,000,000.00, $100,000,000.00,
$110,000,000.00, $120,000,000.00 or
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$125,000,000.00 as the Borrowing Base Sub-cap; provided, however, that
Borrower's Net Working Capital and Tangible Net Worth at the time of election
are greater than, or equal to, the amounts specified below:
(a) If Borrower elects $125,000,000.00, Borrower's Net Working
Capital must be at least $25,000,000.00 and Tangible Net Worth must be at least
$26,000,000.00; or
(b) If Borrower elects $120,000,000.00, Borrower's Net Working
Capital must be at least $24,000,000.00 and Tangible Net Worth must be at least
$25,000,000.00; or
(c) If Borrower elects $110,000,000.00, Borrower's Net Working
Capital must be at least $22,000,000.00 and Tangible Net Worth must be at least
$23,000,000.00; or
(d) If Borrower elects $100,000,000.00, Borrower's Net Working
Capital must be at least $20,000,000.00 and Tangible Net Worth must be at least
$21,000,000.00; or
(e) If Borrower elects $95,000,000.00, Borrower's Net Working
Capital must be at least $19,000,000.00 and Tangible Net Worth must be at least
$20,000,000.00; or
(f) If Borrower elects $90,000,000.00, Borrower's Net Working
Capital must be at least $18,000,000.00 and Tangible Net Worth must be at least
$19,000,000.00; or
(g) If Borrower elects $80,000,000.00, Borrower's Net Working
Capital must be at least $16,000,000.00 and Tangible Net Worth must be at least
$17,000,000.00; or
(h) If Borrower elects $75,000,000.00, Borrower's Net Working
Capital must be at least $15,000,000.00 and Tangible Net Worth must be at least
$16,000,000.00; or
(i) If Borrower elects $70,000,000.00, Borrower's Net Working
Capital must be at least $14,000,000.00 and Tangible Net Worth must be at least
$15,000,000.00; or
(j) If Borrower elects $60,000,000.00, Borrower's Net Working
Capital must be at least $12,000,000.00 and Tangible Net Worth must be at least
$13,000,000.00; or
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(k) If Borrower elects $50,000,000.00, Borrower's Net Working
Capital must be at least $10,000,000.00 and Tangible Net Worth must be at least
$11,000,000.00.
Borrower shall elect which Borrowing Base Sub-Cap is in effect
from time to time by delivering to Agent a written notice of such election,
together with a Compliance Certificate in the form of Exhibit C which is
attached hereto but modified to include a certification that upon the
effectiveness of such election, no Default or Event of Default will exist.
"Borrowing Date" means any date on which a Borrowing occurs under
Section 2.03.
"Business Day" (a) with respect to all matters other than those
related to Offshore Rate Loans, means any day other than a Saturday, Sunday or
other day on which commercial banks in
New York,
New York, are authorized, or
required, by law to close and (b) means, for purposes of determining business
days in connection with Offshore Rate Loans, any day on which transactions are
made in the applicable offshore dollar interbank market other than a Saturday,
Sunday or other day on which commercial banks in
New York,
New York, are
authorized or required, by law to close.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any Bank or of any corporation controlling a Bank.
"Capital Stock" means capital stock, membership interest, equity
interest or other obligations or securities of, or any interest in, any Person.
"Cash Collateral" means currency issued by the United States and
Marketable Securities which have been Cash Collateralized for the benefit of the
Banks.
"Cash Collateralize" means to pledge and deposit with or deliver
to Agent, for the benefit of Agent, the Issuing Banks and the Banks, Cash
Collateral as collateral for the Obligations pursuant to documentation in form
and substance satisfactory to Agent (which documents are hereby consented to by
the Banks). The Borrower hereby grants Agent, for the benefit of Agent, the
Issuing Banks and the Banks, a security interest in all such Cash Collateral.
Cash Collateral shall be maintained in the Bank Blocked Account.
"Change of Control" means the sale, pledge, hypothecation,
assignment or other transfer of more than twenty-five percent (25%) of the
Capital Stock or other ownership rights in the Borrower without the prior
written consent of the Banks, except for any such sale, pledge, hypothecation,
assignment or other transfer of the Capital Stock or other ownership rights in
the Borrower to Atmos Energy Marketing LLC.
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"Chase" means The Chase Manhattan Bank (or any successor).
"Closing Date" means the date on which all conditions precedent
set forth in Section 5.01 are satisfied or waived by all Banks.
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Collateral" means all assets of the Borrower including, without
limitation, all accounts, equipment, chattel paper, inventory, natural gas in
transit, instruments, contract rights, the Bank Blocked Account, stock,
partnership interests, and general intangibles, whether presently existing or
hereafter acquired or created and the proceeds thereof.
"Collateral Position" means the total availability under the
Borrowing Base Advance Cap.
"Collateralized L/C Line" means that certain uncommitted line of
credit in an amount of up to $15,000,000.00 for the purpose of providing Cash
Collateralized Letters of Credit with tenors not to exceed 90 days.
"Compliance Certificate" means a certificate, in form attached
hereto as Exhibit C, whereby the Borrower certifies that it is in compliance
with this Agreement.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or without
recourse, (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligations") of another Person (which
obligations and Person are referred to herein as the "primary obligation" and
the "primary obligor," respectively), including any obligation of that Person
(i) to purchase, repurchase or otherwise acquire such primary obligations or any
security therefor, (ii) to advance or provide funds for the payment or discharge
of any such primary obligation, or to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each, a "Guaranty Obligation"); (b) with
respect to any Surety Instrument (other than any Letter of Credit) issued for
the account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings or payments; (c) to purchase any materials, supplies
or other property from, or to obtain the services of, another Person if the
relevant contract or other related document or obligation requires that payment
for such materials, supplies or other property, or for such services, shall be
made regardless of whether delivery of such materials, supplies or
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other property is ever made or tendered, or such services are ever performed or
tendered; or (d) in respect of any swap contract.
"Contractual Obligation" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Borrower (a) converts Loans of one Type to another Type, or
(b) continues such Loans as Loans of the same Type, but with a new Interest
Period.
"Conversion to Single Funding Bank Date" has the meaning specified
in Section 2.14.
"Credit Extension" means and includes (a) the making of any Loans
hereunder, and (b) the Issuance of any Letters of Credit hereunder.
"Current Assets" means those assets of the Borrower and its
consolidated subsidiaries which would in accordance with GAAP be classified as
current assets of a corporation conducting a business the same as or similar to
the businesses of the Borrower and its consolidated subsidiaries.
"Current Liabilities" means Indebtedness of the Borrower and its
consolidated subsidiaries which would in accordance with GAAP be classified as
current liabilities of a corporation conducting a business the same as or
similar to the businesses of the Borrower and its consolidated subsidiaries.
"Declining Bank" has the meaning specified in Section 2.14.
"Default" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would constitute an Event of Default.
"Default Rate" has the meaning specified in Subsection 2.08(a).
"Documentary L/Cs" means a Letter of Credit which is intended at
the time of Issuance to be drawn upon and excludes standby letters of credit.
"Dollar Advance Cap" means a cap upon Revolving Loans under the
Borrowing Base Line with the following limits:
(a) $50,000,000.00 at such times as the Borrowing Base Sub-Cap is
$125,000,000.00;
(b) $48,000,000.00 at such times as the Borrowing Base Sub-Cap is
$120,000,000.00;
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(c) $44,000,000.00 at such times as the Borrowing Base Sub-Cap is
$110,000,000.00; and
(d) $40,000,000.00 at such times as the Borrowing Base Sub-Cap is
$100,000,000.00; and
(e) $38,000,000.00 at such times as the Borrowing Base Sub-Cap is
$95,000,000.00; and
(f) $36,000,000.00 at such times as the Borrowing Base Sub-Cap is
$90,000,000.00; and
(g) $32,000,000.00 at such times as the Borrowing Base Sub-Cap is
$80,000,000.00; and
(h) $30,000,000.00 at such times as the Borrowing Base Sub-Cap is
$75,000,000.00; and
(i) $28,000,000.00 at such times as the Borrowing Base Sub-Cap is
$70,000,000.00; and
(j) $24,000,000.00 at such times as the Borrowing Base Sub-Cap is
$60,000,000.00; and
(k) $20,000,000.00 at such times as the Borrowing Base Sub-Cap is
$50,000,000.00.
"Dollars," and "$" each mean lawful money of the United States.
"Effective Amount" means (a) with respect to any Loans on any
date, the aggregate outstanding principal amount thereof after giving effect to
any Borrowings and prepayments or repayments of Loans occurring on such date;
and (b) with respect to any outstanding L/C Obligations on any date, the amount
of such L/C Obligations on such date after giving effect to any Issuances of
Letters of Credit occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including changes as a result of
expiration or cancellation, any reimbursements of outstanding unpaid drawings
under any Letters of Credit or any reductions in the maximum amount available
for drawing under Letters of Credit taking effect on such date.
"Eligible Accounts" means, at the time of any determination
thereof, each of the Borrower's Accounts as to which the following requirements
have been fulfilled to the satisfaction of the Banks:
-10-
(a) Such Account (if for an amount in excess of $750,000.00)
either (i) is the result of a sale to a Tier I or Tier II Account Party, or (ii)
is secured by letters of credit in form acceptable to the Banks in their sole
discretion and issued by banks approved by the Banks in their sole discretion;
(b) Borrower has lawful and absolute title to such Account;
(c) Such Account is a valid, legally enforceable obligation of the
Person who is obligated under such Account for goods actually delivered to such
Account Debtor in the ordinary course of the Borrower's business;
(d) Such Account shall have excluded therefrom any portion that is
subject to any dispute, offset, counterclaim or other claim or defense on the
part of the Account Debtor or to any claim on the part of the Account Debtor
denying liability under such Account; provided, however, that in the event that
the portion that is subject to any such dispute, counterclaim or other claim or
defense is secured with a Letter of Credit, such portion secured by the Letter
of Credit shall not be excluded;
(e) Such Account is not evidenced by any chattel paper, promissory
note or other instrument;
(f) Such Account is subject to a fully perfected first priority
security interest (or properly filed and acknowledged assignment, in the case of
U.S. government contracts, if any) in favor of Agent pursuant to the Loan
Documents, prior to the rights of, and enforceable as such against, any other
Person, and such Account is not subject to any security interest or Lien in
favor of any Person other than the Liens of the Banks pursuant to the Loan
Documents;
(g) Such Account shall have excluded therefrom any portion which
is not payable in Dollars in the U.S.;
(h) Such Account has been due and payable for 15 days or less (or
30 days or less, if the Account Debtor is a governmental entity) from the date
of the invoice and no extension or indulgence has been granted extending the due
date beyond a 15 day period (or 30 days, as the case may be), except if such
Account by its terms provides for a 15 day payment period, then such Account
shall be eligible for up to 30 days from the date of invoice, or as otherwise
approved by Banks in writing; and
(i) No Account Debtor in respect of such Account is (i) an
Affiliate of the Borrower, or (ii) incorporated in or primarily conducting
business in any jurisdiction outside of the U.S., unless such Account Debtor and
the Account is approved in writing by the Banks; provided, however, that as long
as
Atmos Energy Corporation maintains an S&P rating of BBB+ or better, and such
Accounts would otherwise qualify as Eligible Accounts, Accounts of
Atmos Energy
Corporation (and its Subsidiaries and Affiliates that have been approved by
Agent as Tier I Account Debtors) may be included as Tier I
-11-
Accounts to the extent that such Accounts do not exceed 50% of Borrower's total
Accounts.
"Eligible Assignee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000.00; (b) a commercial bank organized
under the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision of
any such country, and having a combined capital and surplus of at least
$100,000,000.00, provided, however, that such bank is acting through a branch or
agency located in the United States; and (c) a Person that is primarily engaged
in the business of commercial lending and that is (i) a Subsidiary of a Bank (or
bank referred to in the preceding clauses (a) or (b)), (ii) a Subsidiary of a
Person of which a Bank (or bank referred to in the preceding clauses (a) or (b))
is a Subsidiary, or (iii) a Person of which a Bank (or bank referred to in the
preceding clauses (a) or (b)) is a Subsidiary.
"Eligible Broker" means any broker approved in writing by Agent
and the Banks.
"Eligible Commodity Futures Accounts" means an account or accounts
with an Eligible Broker, in which Agent is granted a first and prior security
interest as Agent for the Banks pursuant to Hedging Assignments which security
interest is subject only to the rights of the Eligible Broker under such
accounts.
"Eligible Exchange Receivables" means all enforceable rights of
the Borrower to receive Product in exchange for the sale or trade of Product
previously delivered to the exchange debtor by the Borrower valued at an
independent posting and which (a) are evidenced by a written agreement
enforceable against the exchange debtor thereof, (b) are current pursuant to the
terms of the contract or invoice, (c) are subject to a perfected, first Lien in
favor of Agent for the benefit of the Banks subject only to Permitted Liens, and
no other Lien, charge, offset or claim, (d) are not the subject of a dispute
between the exchange debtor and the Borrower, (e) are valued at ▇▇▇▇▇'▇ spot
market price or an independent posting acceptable to the Banks in their sole
discretion, (f) if arising pursuant to contracts involving an amount in excess
of $750,000, are contracts by exchangers pre-approved by the Banks in their sole
discretion, or contracts secured by letters of credit in form acceptable to the
Banks in their sole discretion and issued by banks approved by the Banks in
their sole discretion, and (g) have not been otherwise determined by the Banks
in their sole discretion to be unacceptable to them. The Product and Account
relating to or creating any Eligible Exchange Receivable shall not be
simultaneously included in any other availability calculation, including,
without limitation, Undelivered Product Value, Eligible Inventory or Eligible
Accounts.
"Eligible Inventory" means, at the time of determination thereof,
all of the Borrower's inventory stored in terminals (and provided the Banks must
have approved all terminal owners) valued at the lower of cost or current market
(as referenced by a
-12-
published source acceptable to Banks in their sole discretion), and in all
instances as to which the following requirements have been fulfilled to the
satisfaction of the Banks:
(a) The inventory is owned by the Borrower free and clear of all
Liens in favor of third parties, except Liens in favor of the Banks under the
Loan Documents and except for Permitted Liens;
(b) The inventory has not been identified to deliveries with the
result that a buyer would have rights to the inventory that would be superior to
Agent's security interest for the benefit of the Banks, nor shall such inventory
have become the subject of a customer's ownership or Lien;
(c) The inventory is in transit in the U.S. under the control and
ownership of the Borrower or is in a pipeline or a ▇▇▇▇ of lading has been
issued to Agent if such inventory is in the hands of a third party carrier or is
located in the U.S. at the locations described on Schedule 7.03(f), or at such
other place as has been specifically agreed to in writing by the Banks and the
Borrower; and
(d) The inventory is subject to a fully perfected first priority
security interest in favor of Agent for the benefit of the Banks pursuant to the
Loan Documents.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters.
"ERISA" means the Employee Retirement Income Security Act of 1974,
and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any
ERISA Affiliate from a Multiemployer Plan or
-13-
notification that a Multiemployer Plan is in reorganization; (d) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon the Borrower or any
ERISA Affiliate.
"Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on such day (whether or not applicable to any
Bank) under regulations issued from time to time by the FRB for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities").
"Event of Default" means any of the events or circumstances
specified in Section 9.01.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended, and regulations promulgated thereunder.
"Expiration Date" means the earliest to occur of:
(a) February 28, 2002; or
(b) the date demand for payment is made by Agent; or
(c) the date an Event of Default occurs.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of
New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by Agent of the rates for the last transaction in
overnight Federal Funds arranged prior to 9:00 a.m. (
New York City time) on that
day by each of three leading brokers of Federal Funds transactions in
New York
City selected by Agent.
-14-
"Fortis" means Fortis Capital Corp., a Connecticut corporation.
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal functions.
"Further Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholding or similar charges
(including, without limitation, net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account of
amount payable or paid pursuant to Section 4.01.
"GAAP" means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
date of determination.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantor" means Atmos Energy Marketing LLC.
"Guaranty" means a Guaranty Agreement, in form and substance
acceptable to the Banks in their sole discretion, which has been executed by
Guarantor and delivered to Agent for the benefit of the Banks.
"Guaranty Obligation" has the meaning specified in the definition
of "Contingent Obligation."
"Hedging Assignment" means a security agreement among Borrower,
Agent and an Eligible Broker relating to the collateral assignment to Agent, as
collateral agent for the Banks, of all sums owing from time to time to Borrower
with respect to an Eligible Commodities Futures Account, such agreement to be in
form and substance acceptable to the Banks in their sole discretion.
"Honor Date" has the meaning specified in Subsection 3.03(b).
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into
-15-
in the ordinary course of business on ordinary terms); (c) all non-contingent
reimbursement or payment obligations with respect to Surety Instruments; (d) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses; (e) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the Person (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property); (f) all
obligations with respect to capital leases; (g) all obligations with respect to
swap contracts; (h) all indebtedness referred to in clauses (a) through (g)
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such indebtedness;
and (i) all Guaranty Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (a) through (g) above.
"Indemnified Liabilities" has the meaning specified in Section
11.05.
"Indemnified Person" has the meaning specified in Section 11.05.
"Independent Auditor" has the meaning specified in Subsection
7.01(a).
"Insolvency Proceeding" means, with respect to any Person (a) any
case, action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors, or (b)
any general assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
"Interest Payment Date" means, as to any Loan other than a Base
Rate Loan, the last day of each Interest Period applicable to such Loan and, as
to any Base Rate Loan, the fifth Business Day of each month.
"Interest Period" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as an Offshore Rate Loan,
and ending on the date selected by the Borrower as the ending date thereof, not
to exceed a period of 30 days, in its Notice of Borrowing or Notice of
Conversion/Continuation;
provided, however, that:
(a) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the following
Business Day unless
-16-
the result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the preceding
Business Day;
(b) any Interest Period pertaining to an Offshore Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period; and
(c) no Interest Period shall extend beyond the Expiration Date.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Issuance Date" means the date on which any Letter of Credit is
actually Issued hereunder.
"Issue" means, with respect to any Letter of Credit, to issue or
to extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.
"Issuing Banks" initially means Fortis and BNP Paribas, and in the
future means any Bank which Issues Letters of Credit hereunder, in such Bank's
capacity as an issuer of one or more Letters of Credit hereunder, together with
any replacement letter of credit issuer arising under Section 2.14.
"L/C Advance" means each Bank's participation in any L/C Borrowing
or Reducing L/C Borrowing in accordance with (i) its Pro Rata Share with respect
to Letters of Credit Issued prior to the Conversion to Single Funding Bank Date
and (ii) its proportionate share, if any, as an Approving Bank with respect to
all Letters of Credit Issued thereafter.
"L/C Amendment Application" means an application form for
amendment of outstanding standby or commercial documentary letters of credit as
shall at any time be in use at any Issuing Bank, as such Issuing Bank shall
request.
"L/C Application" means an application form for Issuances of
standby or commercial documentary letters of credit as shall at any time be in
use at any Issuing Bank, as such Issuing Bank shall request.
"L/C Borrowing" means an extension of credit resulting from either
a drawing under any Letter of Credit or a Reducing L/C Borrowing, which
extension of credit shall not have been reimbursed on the date when made nor
converted into a Borrowing of Revolving Loans under Subsection 3.03(c).
-17-
"L/C Cap" means the maximum availability for Issuance of Letters
of Credit under the Borrowing Base Line which shall be an amount equal to the
total Effective Amount of L/C Obligations plus the Effective Amount of then
outstanding Loans not to exceed the Borrowing Base Advance Cap.
"L/C Obligations" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of
all unreimbursed drawings under all Letters of Credit, including all outstanding
L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including, but not limited to, any Issuing Bank's standard
form documents for letter of credit issuances.
"Lending Office" means, as to any Bank, the office or offices of
such Bank specified as its "Lending Office" on Schedule 11.02, or such other
office or offices as such Bank may from time to time notify the Borrower and
Agent.
"Letters of Credit" means (a) any letters of credit (whether
standby letters of credit or commercial documentary letters of credit) Issued by
an Issuing Bank pursuant to Article III and (b) any Reducing Letters of Credit.
"LIBOR" means the rate of interest per annum determined by Agent
as the rate at which dollar deposits in the approximate amount of Fortis'
Offshore Rate Loan for such Interest Period would be offered by Fortis' London
branch as stated on Telerate News Service Page 3750 as of 11:00 a.m. (London
time) two (2) Business Days prior to the Borrowing Date. If such interest rates
shall cease to be available from Telerate News Service, the LIBOR Rate shall be
determined from such financial reporting service or other information as shall
be mutually acceptable to Agent and the Borrower.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge, encumbrance, or lien, statutory or
other in respect of any property, including those created by, arising under or
evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such lien relates
as debtor, under the Uniform Commercial Code or any comparable law.
"Line" means either the Borrowing Base Line, or the Collateralized
L/C Line or the Overdraft Line.
"Loan" means (a) any extension of credit by a Bank to the Borrower
under Article II or Article III in the form of a Revolving Loan or an L/C
Advance and (b) any Overdraft Advance. All Loans are demand in nature and
Borrower hereby acknowledges
-18-
and agrees the Banks' right to demand payment at any time and for any reason or
for no reason, and such right is absolute and unconditional.
"Loan Documents" means this Agreement, the Notes, the Guaranty,
the Security Agreement, the L/C-Related Documents, Swap Contracts and all other
documents delivered to Agent or any Bank in connection herewith.
"Lock Box" has the meaning specified in Section 7.14.
"Long Position" means the aggregate number of MMBTUS of Product
which are either held in inventory by the Borrower or which the Borrower has
contracted to purchase (whether by purchase of a contract on a commodities
exchange or otherwise), or which the Borrower will receive on exchange or the
notional quantity under a swap contract including, without limitation, all
option contracts representing the obligation of the Borrower to purchase Product
at the option of a third party, and in each case, for which a fixed purchase
price has been set. Long Positions will be expressed as a positive number.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"▇▇▇▇-to-Market" means, the method of accounting used to account
for derivative commodity instruments entered into for trading purposes, in
accordance with EITF 98-10, "Accounting for Energy Trading and Risk Management
Activities" and any future open obligation.
"Marketable Securities" means (a) certificates of deposit issued
by any bank with a Thomson Watch rating of B or better, (b) commercial paper
rated P-1, A-1 or F-1, (c) bankers acceptances rated prime, or (d) U.S.
Government obligations with tenors of 90 days or less.
"Material Adverse Effect" means (a) a material adverse change in,
or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Borrower or the Borrower
and its Subsidiaries taken as a whole, (b) a material impairment of the ability
of the Borrower to perform under any Loan Document and to avoid any Event of
Default, or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against the Borrower or any of its Subsidiaries.
"Maturity Date" means May 29, 2002.
"Multiemployer Plan" means a "multiemployer plan," within the
meaning of Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate makes, is making, or is obligated to make contributions or, during the
preceding three (3) calendar years, has made, or been obligated to make,
contributions.
-19-
"Net Position" means the sum of all Long Positions and Short
Positions of the Borrower.
"Net Position Report" means a report in form attached hereto as
Exhibit F.
"Net Working Capital" means the excess of Current Assets (minus
all amounts due from employees, owners, Subsidiaries and Affiliates other than
Accounts of
Atmos Energy Corporation and its Subsidiaries and Affiliates
permitted to be included as Eligible Accounts in the calculation of the
Borrowing Base Advance Cap and minus the amount of any Cash Collateral pledged
by the Borrower to secure a Letter of Credit under the Collateralized L/C Line)
over Current Liabilities (excluding the current portion of Subordinated Debt),
less investments in Capital Stock. In calculating Net Working Capital, the
amount of Subordinated Debt excluded from liabilities in such calculation shall
not exceed 50% of the resultant Net Working Capital.
"Notes" means the promissory notes executed by the Borrower in
favor of a Bank pursuant to Subsection 2.02(b), in form approved by the Banks. A
Note will be issued by the Borrower to each entity that becomes a Bank hereunder
from time to time, but will not be issued to Participants of a Bank.
"Notice of Borrowing" means the applicable notice in substantially
the form of Exhibit A.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document, owing by the Borrower to
any Bank, or any affiliate of any Bank, Agent, or any Indemnified Person,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising, including,
without limitation, all obligations of the Borrower under Revolving Loans,
Letters of Credit, the Overdraft Line and any Swap Contracts.
"Offshore Effective Amount" means the product of the principal
amount of an Offshore Rate Loan or requested Offshore Rate Loan and the number
of days in the applicable Interest Period for such Offshore Rate Loan.
"Offshore Rate" means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of interest
per annum (rounded upward to the next 1/16th of 1%) determined by Agent as
follows:
Offshore Rate = LIBOR
-----------------
1.00 - Eurodollar Reserve Percentage
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The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of any change in
the Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on the
Offshore Rate.
"Organization Documents" means (a) for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of preferred shareholders of
such corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation, and (b) for any partnership, the partnership agreement, and all
other documents or filings as may be required by the Secretary of State (or
other applicable governmental agency) in the state of such partnership's
formation.
"Other Taxes" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents.
"Overdraft Advance" means any advance made hereunder by Fortis
under the Overdraft Line.
"Overdraft Line" means that certain discretionary overdraft line
the Borrower maintains with Fortis in a maximum amount of $30,000,000.
"Participant" has the meaning specified in Subsection 11.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Borrower sponsors, maintains, or
to which it makes, is making, or is obligated to make contributions, or in the
case of a multiple employer plan (as described in Section 4064(a) of ERISA) has
made contributions at any time during the immediately preceding five (5) plan
years.
"Performance/Financial L/C" means all performance and financial
standby Letters of Credit.
"Permitted Liens" has the meaning specified in Section 8.01.
-21-
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture or
Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) which the Borrower sponsors or maintains or to which the Borrower
makes, is making, or is obligated to make contributions and includes any Pension
Plan.
"Product" means natural gas.
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Bank's Uncommitted Line Portion divided by the combined total of
the Uncommitted Line of all the Banks.
"Reducing Letters of Credit" means any letters of credit (whether
standby letters of credit or commercial documentary letters of credit) that (a)
are Issued by an Issuing Bank pursuant to Article III, and (b) specifically
provide that the amount available for drawing under such letters of credit will
be reduced, automatically and without any further amendment or endorsement to
such letters of credit, by the amount of any payment or payments made to the
beneficiary of such Letter of Credit by the Borrower if such payment or payments
(i) are made through such Issuing Bank and (ii) reference such letters of credit
by the letter of credit numbers thereof, notwithstanding the fact that such
payment or payments are not made pursuant to conforming and proper draws under
such letters of credit.
"Reducing L/C Borrowing" means any extension of credit by the
Banks to the Borrower for the purpose of funding any payment or payments made to
the beneficiary of a Reducing Letter of Credit by the Borrower if such payment
or payments (a) are made through the Issuing Bank of such Reducing Letter of
Credit, (b) reference the Reducing Letter of Credit by the letter of credit
number thereof, and (c) are not made pursuant to a conforming and proper draws
under such Reducing Letter of Credit.
"Replacement Bank" has the meaning specified in Section 4.08.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
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"Responsible Officer" means any of the following: ▇.▇. ▇▇▇▇▇▇▇▇
III, ▇▇▇▇▇▇ ▇. ▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Revolving Loan" has the meaning specified in Section 2.01.
"Security Agreements" means a security agreement, in form and
substance acceptable to Agent and the Banks, duly executed by the Borrower and
delivered to Agent for the benefit of the Banks granting to Agent, as collateral
agent for the Banks, a first and prior security interest in and Lien upon the
Collateral, and all Hedging Assignments.
"Short Position" means the aggregate number of MMBTUS of Product
which the Borrower has contracted to sell (whether by sale of a contract on a
commodities exchange or otherwise) or deliver on exchange or under a swap
contract, including, without limitation, all option contracts representing the
obligation of the Borrower to sell Product at the option of a third party and in
each case for which a fixed sales price has been set. Short Positions shall be
expressed as a negative number.
"Subordinated Debt" means Indebtedness of the Borrower which has
been reported to the Banks and which has been subordinated to the Obligations
pursuant to a Subordination Agreement substantially in the form attached hereto
as Exhibit H.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture, limited liability company or other business entity
of which more than 50% of the voting stock or other equity interests (in the
case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Borrower.
"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"Swap Contract" means any agreement entered into with BNP Paribas
or any Affiliate of BNP Paribas, whether or not in writing, relating to any
single transaction that is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap or option, bond,
note or ▇▇▇▇ option, interest rate option, forward foreign exchange transaction,
cap, collar or floor transaction, currency swap, cross-currency rate swap,
currency option or any other similar transaction (including any option to enter
into any of the foregoing) or any combination of the foregoing and, unless the
context clearly requires, any master agreement relating to or governing any or
all of the foregoing.
"Tangible Net Worth" means (a) the sum of the Borrower's assets,
as determined in accordance with GAAP, less (b) the sum of the Borrower's
liabilities
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excluding Subordinated Debt, as determined in accordance with GAAP, less (c) all
amounts due from employees, owners, Subsidiaries and Affiliates other than
Accounts permitted to be included as Eligible Accounts in the calculation of the
Borrowing Base Advance Cap, less (d) investments in Capital Stock, less (e) the
intangible assets of the Borrower, as determined in accordance with GAAP. In
calculating Tangible Net Worth, the amount of Subordinated Debt excluded from
liabilities in such calculation shall not exceed 50% of the resultant Tangible
Net Worth.
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings, or similar
charges, and all liabilities with respect thereto, excluding, in the case of
each Bank and Agent, taxes imposed on or measured by each Bank's net income or
capital (with respect to franchise taxes or similar taxes) by the jurisdiction
(or any political subdivision thereof) under the laws of which such Bank or
Agent, as the case may be, is organized or maintains a lending office.
"Tier I Account" means an Eligible Account with a Tier I Account
Party.
"Tier II Account" means Eligible Accounts with a Tier II Account
Party.
"Tier I Account Party" means an Account Debtor which is approved
by the Banks as a Tier I Account Party.
"Tier I Unbilled Account" means Unbilled Eligible Accounts with a
Tier I Account Party.
"Tier II Unbilled Account" means Unbilled Eligible Accounts with a
Tier II Account Party.
"Tier II Account Party" means any Account Debtor approved by the
Banks as a Tier II Account Party.
"Type" means either a Base Rate Loan or an Offshore Rate Loan.
"Unbilled Eligible Accounts" means Accounts of the Borrower for
Product which has been delivered to an Account Debtor and which would be
Eligible Accounts but for the fact that such Accounts have not actually been
invoiced at such time.
"Uncommitted Line" means the aggregate Line limits of all the
Banks as is set forth on Schedule 2.01.
"Uncommitted Line Portion" means for each Bank the portion of each
of the Line limits assigned to such Bank as set forth on Schedule 2.01.
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"Undelivered Product Value" means the lesser of the (a) cost or
(b) current market value of Product purchased by the Borrower under the Letters
of Credit but which has not been physically delivered to the Borrower.
Undelivered Product Value cannot simultaneously be included in an Eligible
Exchange Receivable.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"United States" and "U.S." each means the United States of
America.
"Unrealized ▇▇▇▇-to-Market Losses" means, Borrower's unrealized
▇▇▇▇-to-Market losses as of the day of determination of Borrower's Borrowing
Base Advance Cap to be reported on a Borrowing Base Collateral Position Report,
calculated net of unrealized ▇▇▇▇-to-Market profits. If a loss, deduct the
absolute value of that loss, if a profit the value equals zero.
1.02 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and Subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(i) The term "including" is not limiting and means "including
without limitation."
(ii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding,"
and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as
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including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to Agent, the Banks, the
Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or Agent merely
because of Agent's or Banks' involvement in their preparation.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made in accordance with
GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer
to such fiscal periods of the Borrower.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Uncommitted Line (Excluding Overdraft Line).
(a) Each Bank severally agrees, on an UNCOMMITTED AND ABSOLUTELY
DISCRETIONARY basis, and on the terms and conditions set forth herein, to
consider making Loans, from time to time, to the Borrower under the Borrowing
Base Line (each such loan, a "Revolving Loan") on any Business Day during the
period from the Closing Date to the Expiration Date, in an aggregate amount not
to exceed at any time outstanding (i) such Bank's Uncommitted Line Portion for
the Borrowing Base Line; or (ii) the Dollar Advance Cap; provided, however,
that, after giving effect to any Borrowing of Revolving Loans, the Effective
Amount of all outstanding Revolving Loans, plus the Effective Amount of all L/C
Obligations, shall not exceed the Borrowing Base Advance Cap. At no time shall
the Dollar Advance Cap be exceeded.
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(b) Amount and Terms of Overdraft Line. Fortis agrees, on an
UNCOMMITTED AND ABSOLUTELY DISCRETIONARY basis, and on the terms and conditions
set forth herein, to consider making overdraft advances under the Overdraft
Line, from time-to-time, for the benefit of the Borrower.
(c) Advances Related to the Overdraft Line and Swap Contracts. In
addition to advances requested from time to time by the Borrower, in the event
that either (i) any amounts owing to Fortis or BNP Paribas or any of their
Affiliates under the Overdraft Line or any Swap Contract are not paid within two
(2) Business Days after such obligation arises; or (ii) Fortis or any of its
Affiliates have made an Overdraft Advance in the amount of a drawing under a
Letter of Credit which has not been timely reimbursed by the Borrower in
accordance with Subsection 3.03(b) of this Agreement and such amount has not
been paid by the Borrower within one (1) Business Day after such obligation
arises, then Fortis or BNP Paribas shall notify Agent of such failure to pay and
Agent (without the necessity of any instructions or request from the Borrower)
shall make a Revolving Loan in accordance with the provisions of Section 2.03 of
this Agreement under the Borrowing Base Line for any amounts due by the Borrower
to Fortis or BNP Paribas or any of their Affiliates under the Overdraft Line, or
any Swap Contract, and then apply the proceeds of such advance to pay to Fortis,
or BNP Paribas or any of their Affiliates (as the case may be) all amounts owed
to such Person under the Overdraft Line or such Swap Contract. Upon making any
such Revolving Loan, Agent shall send notice of such Revolving Loan to the
Borrower and the Banks. Any such advance shall initially be a Base Rate Loan. In
the event that any such advance made to fund Fortis or BNP Paribas or any of
their Affiliates, other than an advance to reimburse Fortis for an Overdraft
Advance made to fund a drawing under Letters of Credit or to fund Reducing L/C
Borrowings, results in an advance in excess of the Borrowing Base Advance Cap,
the Banks shall have no duty to fund their pro rata share of any excess
resulting from such advance made to repay amounts owing to Fortis or BNP Paribas
or any of their Affiliates under the Overdraft Line or any Swap Contract, but
Fortis' or BNP Paribas' or any of their Affiliates', as the case may be,
outstandings hereunder shall be deemed to be increased by the amount of such
excess. Notwithstanding the foregoing, the Banks other than Fortis shall have
the duty, however, to fund their pro rata share of all Overdraft Advances made
to fund drawings under Letters of Credit or to fund Reducing L/C Borrowings. In
the event any advance described above does exceed the Borrowing Base Advance
Cap, the Borrower shall pay to Agent, for the benefit of Fortis or BNP Paribas
or any of their Affiliates (as the case may be), the amount of such excess,
together with interest thereon, within one (1) Business Day after the date of
such advance and, notwithstanding anything to the contrary herein, the Banks
other than Fortis shall not share in such payment. Upon the event of an
Overdraft Advance, Borrower shall represent and warrant, as of the date such
advance is made, that (i) no Default or Event of Default has occurred and will
be continuing, nor will any thereof occur after giving effect to such advance;
(ii) that neither the Borrowing Base Advance Cap nor Collateral Position will be
exceeded after giving effect to such advance; and (iii) all of Borrower's
representations and warranties under the Agreement are true and correct as of
such date.
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Notwithstanding any provisions to the contrary contained herein, on the date of
an Overdraft Advance and after giving effect to such Overdraft Advance, the
total of the Effective Amount of all Revolving Loans plus the Effective Amount
of all L/C Obligations plus the Effective Amount of such Overdraft Advance may
exceed the Borrowing Base Advance Cap by an amount of such Overdraft Advance,
provided, however, that the Borrower shall either (i) repay such Overdraft
Advance by the next Business Day, (ii) if there is availability under the
Borrowing Base Line as determined by the then current collateral position
report, some or all of such Overdraft Advance may become a Revolving Loan, or
(iii) combine (i) and (ii) to reduce the amount extended to the Borrower to not
exceed the Borrowing Base Advance Cap. Under no event shall the total of the
Effective Amount of all Revolving Loans plus the Effective Amount of all L/C
Obligations plus the Effective Amount of such Overdraft Advance exceed the
Borrowing Base Advance Cap on the next Business Day after the extension of such
Overdraft Advance.
THE BORROWER ACKNOWLEDGES AND AGREES THAT THE BANKS HAVE ABSOLUTELY NO
DUTY TO FUND ANY REVOLVING LOAN REQUESTED BY THE BORROWER BUT WILL EVALUATE EACH
LOAN REQUEST AND IN EACH BANK'S ABSOLUTE AND SOLE DISCRETION WILL DECIDE WHETHER
TO FUND SUCH LOAN REQUEST. THE BORROWER FURTHER ACKNOWLEDGES AND AGREES THAT
FORTIS HAS ABSOLUTELY NO DUTY TO MAKE OR FUND ANY OVERDRAFT ADVANCE OR, IN THE
CASE OF BNP PARIBAS, TO ENTER INTO ANY SWAP CONTRACT, AND ANY OVERDRAFT ADVANCE
SHALL BE AT FORTIS' ABSOLUTE AND SOLE DISCRETION AND THAT BNP PARIBAS HAS
ABSOLUTELY NO DUTY TO ENTER INTO ANY SWAP CONTRACT, AND THE ENTERING INTO OF ANY
SWAP CONTRACT SHALL BE AT BNP PARIBAS' ABSOLUTE AND SOLE DISCRETION.
2.02 Loan Accounts.
(a) The Loans made by each Bank and the Letters of Credit Issued
by an Issuing Bank shall be evidenced by one or more accounts or records
maintained by Agent in the ordinary course of business. The accounts or records
maintained by Agent shall be conclusive absent manifest error of the amount of
the Loans made by the Banks to the Borrower and the Letters of Credit Issued for
the account of the Borrower hereunder, and the interest and payments thereon.
Any failure so to record or any error in doing so shall not, however, limit or
otherwise affect the Obligation of the Borrower hereunder to pay any amount
owing with respect to the Loans or any Letter of Credit.
(b) Upon the request of any Bank made through Agent, the Loans
made by such Bank may be evidenced by one or more Notes, instead of loan
accounts. Each such Bank may endorse on the schedules annexed to its Note(s) the
date, amount and maturity of each Loan made by it and the amount of each payment
of principal made
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by the Borrower with respect thereto. Each such Bank is irrevocably authorized
by the Borrower to endorse its Note(s) and each Bank's record shall be
conclusive absent manifest error; provided, however, that the failure of a Bank
to make, or an error in making, a notation thereon with respect to any Loan
shall not limit or otherwise affect the Obligations of the Borrower hereunder or
under any such Note to such Bank.
2.03 Procedure for Borrowing.
(a) Each Borrowing of Revolving Loans consisting only of Base Rate
Loans, if approved by the Banks in their sole discretion, shall be made upon the
Borrower's irrevocable written notice delivered to Agent and the Banks in the
form of a Notice of Borrowing (Revolving Loan), which notice must be received by
Agent and the Banks prior to 12:00 p.m. noon (
New York City time) on the
Borrowing Date specifying the amount of the Borrowing. Each such Notice of
Borrowing shall be by electronic transfer or facsimile, confirmed immediately in
an original writing. Each Borrowing of Revolving Loans that includes any
Offshore Rate Loans, if approved by the Banks in their sole discretion, shall be
made upon the Borrower's irrevocable written notice delivered to Agent and the
Banks in the form of a Notice of Borrowing (which notice must be received by
Agent and the Banks prior to 12:00 p.m. noon (New York City time) three (3)
Business Days prior to the requested Borrowing Date), specifying the amount of
the Borrowing. Each such Notice of Borrowing shall be by electronic transfer or
facsimile, confirmed immediately in an original writing. Each requested Offshore
Rate Loan must have an Offshore Effective Amount of at least $15,000,000.
(b) Agent will promptly notify each Bank of its receipt of any
Notice of Borrowing and of the amount of such Bank's Pro Rata Share of that
Borrowing.
(c) The Banks will advise Agent by 2:00 p.m. (New York City time)
on the requested Borrowing Date with respect to Base Rate Loans and three (3)
Business Days prior to the requested Borrowing Date with respect to Offshore
Rate Loans whether the Banks approve the Borrowing. If all the Banks approve
such Borrowing, then each Bank will make the amount of its Pro Rata Share of
such Borrowing available to Agent for the account of the Borrower at Agent's
Payment Office by 4:30 p.m. (New York City time) on the Borrowing Date requested
by the Borrower in funds immediately available to Agent. The proceeds of all
such Loans will then be made available to the Borrower by Agent at such office
by crediting the account of the Borrower on the books of Agent with the
aggregate of the amounts made available to Agent by the Banks and in like funds
as received by Agent. If any Bank gives Agent notice of its disapproval of such
Borrowing by 2:00 p.m. (New York City time) on the requested Borrowing Date, if
a Base Rate Loan, or three (3) Business Days prior to the requested Borrowing
Date if an Offshore Rate Loan, then Agent shall notify the Borrower no later
than 4:30 p.m. (New York City time) that one or more of the Banks have elected
not to fund such Borrowing and whether a Bank (or Banks) has (have) elected to
become the Approving Banks thereby triggering the Conversion to Single Funding
Bank Date.
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(d) An Overdraft Advance may be made by Fortis in its sole
discretion or, at Fortis' discretion, upon written request from the Borrower.
2.04 Conversion and Continuation Elections.
(a) Borrower may, upon irrevocable written notice to Agent in
accordance with Subsection 2.04(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the
case of any Offshore Rate Loan, to convert any such Loans into Loans of
any other Type (provided, however, that the Offshore Effective Amount
of each Offshore Rate Loan must be at least $15,000,000); or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any Revolving Loans having Interest Periods
expiring on such day (provided, however, that the Offshore Effective
Amount of each Offshore Rate Loan must be at least $15,000,000);
provided, however, that if at any time the aggregate amount of Offshore Rate
Loans in respect of any Borrowing is reduced, by payment, prepayment, or
conversion of part thereof, to have an Offshore Effective Amount of less than
$15,000,000, such Offshore Rate Loans shall automatically convert into Base Rate
Loans, and on and after such date the right of the Borrower to continue such
Loans as, and convert such Loans into, Offshore Rate Loans shall terminate.
(b) Borrower shall deliver a Notice of Conversion/Continuation to
be received by Agent not later than 1:00 p.m. (New York City time) on the
Conversion/Continuation Date if the Loans are to be converted into Base Rate
Loans; and three (3) Business Day in advance of the Conversion/Continuation
Date, if the Loans are to be converted into or continued as Offshore Rate Loans,
specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or
continued;
(iii) the Type of Loans resulting from the proposed conversion
or continuation; and
(iv) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Borrower has failed to timely select a new Interest
Period to be
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applicable to its Offshore Rate Loans, or if any Default or Event of Default
then exists, the Borrower shall be deemed to have elected to convert such
Offshore Rate Loans into Base Rate Loans effective as of the expiration date of
such Interest Period.
(d) Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuation, or, if no timely notice is provided by the
Borrower, Agent will promptly notify each Bank of the details of any automatic
conversion. All conversions and continuations shall be made ratably according to
the respective outstanding principal amounts of the Loans, with respect to which
the notice was given, held by each Bank.
(e) Unless the Banks otherwise agree, during the existence of a
Default or Event of Default, the Borrower may not elect to have a Loan converted
into or continued as an Offshore Rate Loan.
(f) After giving effect to any Borrowing, conversion or
continuation of Loans, there may not be more than five (5) Interest Periods in
effect.
(g) Agent will promptly notify, in writing, each Bank of the
amount of such Bank's Pro Rata Share of that Borrowing.
(h) The Banks will advise Agent by 2:00 p.m. (New York City time)
on the requested Conversion/Continuation Date whether the Banks approve the
conversion/continuation. If any Bank gives Agent notice of its disapproval of
such conversion/continuation by 2:00 p.m. (New York City time) then Agent shall
notify the Borrower no later than 4:30 p.m. (New York City time) that one or
more of the Banks have elected not to convert/continue such Loan and whether
Bank(s) has (have) elected to become the Approving Bank(s) thereby triggering
the Conversion to Single Funding Bank Date.
2.05 Optional Prepayments. The Borrower may, at any time or from time
to time, upon the Borrower's irrevocable written notice to Agent received prior
to 1:00 p.m. (New York City time) on the date of prepayment, prepay Loans in
whole or in part without premium except any amounts due by Borrower pursuant to
Article IV. Agent will promptly notify each Bank of its receipt of any such
prepayment, and of such Bank's Pro Rata Share of such prepayment.
2.06 Mandatory Prepayments of Loans; Mandatory Commitment Reductions.
If on any date the Effective Amount of L/C Obligations exceeds the L/C Cap, the
Borrower shall Cash Collateralize on such date the outstanding Letters of Credit
in an amount equal to the excess above any such cap. If on any date after giving
effect to any Cash Collateralization made on such date pursuant to the preceding
sentence, the Effective Amount of all Revolving Loans then outstanding plus the
Effective Amount of all L/C Obligations exceeds the lesser of (a) the Collateral
Position or (b) the total Uncommitted Line, or if the Effective Amount of all
Revolving Loans under the Borrowing Base Line then outstanding, plus the
Effective Amount of all L/C Obligations
-31-
under such Line exceed the Borrowing Base Advance Cap, the Borrower shall
immediately, and without notice or demand, prepay the outstanding principal
amount of the Revolving Loans and L/C Advances by an amount equal to the
applicable excess.
2.07 Repayment. The Borrower shall repay the principal amount of each
Revolving Loan to Agent on behalf of the Banks, on the Advance Maturity Date for
such Loan. The Borrower shall repay to Agent for the benefit of Fortis each
Overdraft Advance made under the Overdraft Line on the next Business Day after
such Overdraft Advance is made. Notwithstanding anything to the contrary
contained herein, the Banks other than Fortis shall not share in any payment
made with respect to the Overdraft Line. All amounts owing Fortis under the
Overdraft Line or BNP Paribas under any Swap Contract, to the extent such
amounts have not been repaid from the proceeds of a Revolving Loan, shall be
paid on demand, or if no demand is made, on the first (1st) Business Day after
the Borrower receives notice that such amount was advanced by or becomes owing
to Fortis or BNP Paribas.
2.08 Interest.
(a) Each Revolving Loan and Overdraft Advance (except for a
Revolving Loan made as a result of a drawing under a Letter of Credit or a
Reducing L/C Borrowing) shall bear interest on the outstanding principal amount
thereof from the applicable Borrowing Date at a floating rate per annum equal to
the Base Rate plus the Applicable Margin at all times such Loan is a Base Rate
Loan or at the Offshore Rate plus the Applicable Margin at all times such Loan
is an Offshore Rate Loan. Each Revolving Loan made as a result of a drawing
under a Letter of Credit or a Reducing L/C Borrowing, all amounts owing to
Fortis or any Affiliate of Fortis under the Overdraft Line or BNP Paribas with
respect to any Swap Contract, shall bear interest on the outstanding principal
amount thereof from the date funded at a floating rate per annum equal to the
Base Rate plus the Applicable Margin until such Loan has been outstanding for
more than two (2) Business Days and, thereafter, shall bear interest on the
outstanding principal amount thereof at a floating rate per annum equal to the
Base Rate, plus three percent (3.0%) per annum (the "Default Rate").
(b) Interest on each Revolving Loan shall be paid upon demand, or
if no demand is made, shall be paid in arrears on each Interest Payment Date.
Interest on each Overdraft Advance shall be paid upon demand, or if no demand is
made, on the earlier to occur of the date of repayment of such Overdraft Advance
or the date such Overdraft Advance is due and payable.
(c) Notwithstanding subsection (a) of this Section, if any amount
of principal of or interest on any Loan, or any other amount payable hereunder
or under any other Loan Document is not paid in full when due (whether at stated
maturity, by acceleration, demand or otherwise), the Borrower agrees to pay
interest on such unpaid principal or other amount, from the date such amount
becomes due until the date such amount is paid in full, and after as well as
before any entry of judgment thereon to the
-32-
extent permitted by law, payable on demand, at a fluctuating rate per annum
equal to the Default Rate.
(d) Anything herein to the contrary notwithstanding, the
Obligations of the Borrower to any Bank hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Bank would be contrary to
the provisions of any law applicable to such Bank limiting the highest rate of
interest that may be lawfully contracted for, charged or received by such Bank,
and in such event the Borrower shall pay such Bank interest at the highest rate
permitted by applicable law.
(e) Regardless of any provision contained in any Note or in any of
the Loan Documents, none of the Banks shall ever be deemed to have contracted
for or be entitled to receive, collect or apply as interest under any such Note
or any Loan Document, or otherwise, any amount in excess of the maximum rate of
interest permitted to be charged by applicable law, and, in the event that any
of the Banks ever receive, collect or apply as interest any such excess, such
amount which would be excessive interest shall be applied to the reduction of
the unpaid principal balance of the Note, and, if the principal balance of such
Note is paid in full, any remaining excess shall forthwith be paid to the
Borrower. In determining whether or not the interest paid or payable under any
specific contingency exceeds the highest lawful rate, the Borrower and such Bank
shall, to the maximum extent permitted under applicable law, (i) characterize
any non-principal payment as an expense, fee, or premium, rather than as
interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii)
spread the total amount of interest throughout the entire contemplated term of
such Note so that the interest rate is uniform throughout such term; provided,
however, that if all Obligations under the Note and all Loan Documents are
performed in full prior to the end of the full contemplated term thereof, and if
the interest received for the actual term thereof exceeds the maximum lawful
rate, such Bank shall refund to the Borrower the amount of such excess, or
credit the amount of such excess against the aggregate unpaid principal balance
of such Bank's Note at the time in question.
2.09 Agent Fees. In addition to certain fees described in Section 3.08,
the Borrower shall pay an Agent's fee to Fortis in accordance with a separate
letter agreement between Fortis and the Borrower.
2.10 Computation of Fees and Interest.
(a) All other computations of fees and interest shall be made on
the basis of a 360-day year and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year). Interest
and fees shall accrue during each period during which interest or such fees are
computed from the first day thereof through the last day thereof.
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(b) Each determination of an interest rate by Agent shall be
conclusive and binding on the Borrower and the Banks in the absence of manifest
error.
2.11 Payments by the Borrower.
(a) All payments to be made by the Borrower shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrower shall be made to Agent for the account of
the Banks at Agent's Payment Office, and shall be made in dollars and in
immediately available funds, no later than 1:00 p.m. (New York City time) on the
date specified herein. Agent will promptly distribute to each Bank its Pro Rata
Share or Adjusted Pro Rata Share, as the case may be, of such payment in like
funds as received. Any payment received by Agent later than 1:00 p.m. (New York
City time) shall be deemed to have been received on the following Business Day
and any applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless Agent receives notice from the Borrower prior to the
date on which any payment is due to the Banks that the Borrower will not make
such payment in full as and when required, Agent may assume that the Borrower
has made such payment in full to Agent on such date in immediately available
funds and Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Borrower has not made such
payment in full to Agent, each Bank shall repay to Agent on demand such amount
distributed to such Bank, together with interest thereon at the Federal Funds
Rate for each day from the date such amount is distributed to such Bank until
the date repaid.
2.12 Payments by the Banks to Agent. If and to the extent any Bank
shall not have made its full amount available to Agent in immediately available
funds and Agent in such circumstances has made available to the Borrower such
amount, that Bank shall on the Business Day following such Borrowing Date make
such amount available to Agent, together with interest at the Federal Funds Rate
for each day during such period. A notice of Agent submitted to any Bank with
respect to amounts owing under this Section 2.12 shall be conclusive, absent
manifest error. If such amount is so made available, such payment to Agent shall
constitute such Bank's Loan on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to Agent on the Business Day
following the Borrowing Date, Agent will notify the Borrower of such failure to
fund and, upon demand by Agent, the Borrower shall pay such amount to Agent for
Agent's account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
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2.13 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share or Adjusted Pro Rata
Share, as the case may be at such time (other than payments to Fortis or BNP
Paribas with respect to advances made in excess of the Borrowing Base Advance
Cap as a result of payment under a Swap Contract or advances under the Overdraft
Line), such Bank shall immediately (a) notify Agent of such fact, and (b)
purchase from the other Banks such participations in the Loans made by them as
shall be necessary to cause such purchasing Bank to share the excess payment pro
rata with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from the purchasing Bank, such purchase
shall to that extent be rescinded and each other Bank shall repay to the
purchasing Bank the purchase price paid therefor, together with an amount equal
to such paying Bank's ratable share (according to the proportion of (i) the
amount of such paying Bank's required repayment to (ii) the total amount so
recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered. The
Borrower agrees that any Bank so purchasing a participation from another Bank
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 11.09) with respect to
such participation as fully as if such Bank were the direct creditor of the
Borrower in the amount of such participation. Agent will keep records (which
shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the
Banks following any such purchases or repayments.
2.14 The Election of One Bank to Continue Funding. If one or more Banks
(the "Declining Banks") do not approve a requested Revolving Loan or the
issuance or amendment of a requested Letter of Credit for reasons other than a
Default and the other Bank or Banks do approve such Revolving Loan or the
issuance or amendment of such Letter of Credit, Agent shall notify the Banks. If
the Bank or Banks which are not the Declining Banks desire, they may (on a pro
rata basis among the Banks that have elected to continue funding) make the full
amount of such requested Revolving Loan or issue or amend the requested Letter
of Credit irrespective of the Declining Banks' disapproval (in such case, the
Banks that elect to continue funding shall be referred to as the "Approving
Banks"). In such event, from such date (the "Conversion to Single Funding Bank
Date") forward (a) all subsequent Revolving Loans and Issuances of Letters of
Credit or Amendments to Letters of Credit that increase the face amount of a
Letter of Credit or extend the term of a Letter of Credit shall be made
unilaterally by the Approving Banks and no Letter of Credit thereafter Issued
shall be participated in by the Declining Banks, (b) all Banks' interests in the
Collateral and loan management decisions shall be pro-rata based on each Bank's
total Effective Amount of Revolving Loans, plus the Effective Amounts of such
Bank's L/C Obligations from time to time, and (c) the Approving Banks'
Uncommitted Line Portion shall be increased on the basis of each such advance
and Issuance of a Letter of Credit.
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NOTWITHSTANDING THE FOREGOING, HOWEVER, FOR PURPOSES OF ALLOCATING
REPAYMENTS PRIOR TO THE OCCURRENCE OF A DEFAULT HEREUNDER, THE ADJUSTED PRO RATA
SHARE OF THE UNCOMMITTED LINE OF EACH BANK SHALL REMAIN FIXED AT THE PERCENTAGE
HELD BY SUCH BANK THE DAY BEFORE THE CONVERSION TO SINGLE FUNDING BANK DATE,
WITHOUT RESPECT TO ANY CHANGES WHICH MAY SUBSEQUENTLY OCCUR IN SUCH BANK'S PRO
RATA SHARE OF THE UNCOMMITTED LINE EXCEPT THAT IN THE EVENT THAT OBLIGATIONS
BECOME OWING TO FORTIS OR BNP PARIBAS AND THEIR AFFILIATES AFTER SUCH DATE
PURSUANT TO THE OVERDRAFT LINE OR PURSUANT TO SWAP CONTRACTS AS A RESULT OF
CONTRACTS OR TRANSACTIONS EXISTING ON THE CONVERSION TO SINGLE FUNDING BANK
DATE, THE ADJUSTED PRO RATA SHARE OF EACH BANK SHALL BE RECALCULATED TO ACCOUNT
FOR THE INCREASE IN OBLIGATIONS THAT HAVE BECOME OWING TO FORTIS OR BNP PARIBAS
OR THEIR AFFILIATES UNTIL SUCH TIME, IF ANY, THAT ALL DECLINING BANKS ARE FULLY
REPAID. UPON THE OCCURRENCE OF A DEFAULT AND THEREAFTER, REPAYMENTS SHALL BE
ALLOCATED ACCORDING TO THE ADJUSTED PRO RATA SHARE OF THE OUTSTANDING BALANCES
HELD BY THE BANKS ON THE DATE OF DEFAULT EXCEPT THAT IN THE EVENT THAT
OBLIGATIONS BECOME OWING TO FORTIS OR BNP PARIBAS OR THEIR AFFILIATES AFTER SUCH
DATE PURSUANT TO THE OVERDRAFT LINE OR PURSUANT TO SWAP CONTRACTS AS A RESULT OF
CONTRACTS OR TRANSACTIONS EXISTING ON THE DATE OF SUCH DEFAULT, THE ADJUSTED PRO
RATA SHARE OF EACH BANK SHALL BE RECALCULATED TO ACCOUNT FOR THE INCREASE IN
OBLIGATIONS OWING TO FORTIS OR BNP PARIBAS OR THEIR AFFILIATES.
2.15 Payments from Guarantor and Liquidation of Collateral.
Notwithstanding anything to the contrary contained herein, in the event
repayment is made to the Banks by Guarantor or pursuant to a liquidation of
Collateral, such repayment shall be shared by the Banks on the basis of each
Bank's then existing Adjusted Pro Rata Share rather than each Bank's Pro Rata
Share.
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Lines.
(a) On an uncommitted basis and on the terms and conditions set
forth herein and if the Issuance of such Letter of Credit has been consented to
by the Banks in their sole discretion (i) each Issuing Bank agrees, (A) from
time to time on any Business Day during the period from the Closing Date to the
Expiration Date, to consider the Issuance of Letters of Credit for the account
of the Borrower under the Borrowing Base Line or the Collateralized L/C Line and
to consider whether to amend or renew Letters of Credit previously Issued by it,
in accordance with Subsections 3.02(b) and 3.02(c), and (B) to honor drafts
under the Letters of Credit; and (ii) the Banks shall participate in Letters of
Credit Issued for the account of the Borrower; provided, however, that the
Declining Bank shall not have any obligation to and shall not be deemed to have
participated in any Letters of Credit which are Issued on or after the
Conversion to Single
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Funding Bank Date. Within the foregoing limits, and subject to the other terms
and conditions hereof including, without limitation, the approval of the Banks
in their sole discretion, the Borrower's ability to request that an Issuing Bank
Issue Letters of Credit shall be fully revolving, and, accordingly, the Borrower
may, during the foregoing period, request that an Issuing Bank Issue Letters of
Credit to replace Letters of Credit which have expired or which have been drawn
upon and reimbursed. Borrower acknowledges and agrees that the BofA Letter of
Credit is an Obligation under this Agreement.
(b) Each Issuing Bank is under no obligation to consider the
Issuance of or to Issue any Letter of Credit unless all Banks shall have
consented to the Issuance of such Letter of Credit in their sole discretion. An
Issuing Bank is under no obligation to Issue any Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or
restrain such Issuing Bank from Issuing such Letter of Credit, or any
Requirement of Law applicable to such Issuing Bank or any request or
directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over such Issuing Bank shall
prohibit, or request that such Issuing Bank refrain from, the issuance
of letters of credit generally or such Letter of Credit in particular
or shall impose upon such Issuing Bank with respect to such Letter of
Credit any restriction, reserve or capital requirement (for which such
Issuing Bank is not otherwise compensated hereunder) not in effect on
the Closing Date, or shall impose upon such Issuing Bank any
unreimbursed loss, cost or expense which was not applicable on the
Closing Date and which such Issuing Bank in good ▇▇▇▇▇ ▇▇▇▇▇ material
to it;
(ii) such Issuing Bank has received written notice from any
Bank, any other Issuing Bank, Agent or the Borrower, on or prior to the
Business Day prior to the requested date of Issuance of such Letter of
Credit, that one or more of the applicable conditions contained in
Article V is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is
after the earlier to occur of (A) 90 days after the date of Issuance of
such Letter of Credit or (B) the Maturity Date, unless all the Banks
have approved such expiry date in writing;
(iv) the expiry date of any such requested Letter of Credit is
prior to the maturity date of any financial obligation to be supported
by the requested Letter of Credit;
(v) such requested Letter of Credit is not in form and
substance acceptable to such Issuing Bank, or the Issuance of a Letter
of Credit shall violate any applicable policies of such Issuing Bank;
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(vi) such Letter of Credit is for the purpose of supporting
the Issuance of any letter of credit by any other Person;
(vii) such Letter of Credit is denominated in a currency other
than Dollars; or
(viii) the amount of such requested Letter of Credit exceeds
the Borrowing Base Advance Cap or Collateralized L/C Line limit.
3.02 Issuance, Amendment and Renewal of Letters of Credit.
(a) Each Letter of Credit which is Issued hereunder shall be
Issued upon the irrevocable written request of the Borrower pursuant to a Notice
of Borrowing (Letter of Credit) in the applicable form attached hereto as
Exhibit A received by an Issuing Bank (with a copy sent by the Borrower to Agent
and to the Banks) by no later than 5:00 p.m. (New York City time) on the date
one day prior to the proposed date of Issuance. Each such request for Issuance
of a Letter of Credit shall be by electronic transfer or facsimile, confirmed
immediately in an original writing or by electronic transfer, in the form of an
L/C Application, and shall specify in form and detail satisfactory to such
Issuing Bank: (i) the proposed date of Issuance of the Letter of Credit (which
shall be a Business Day); (ii) the face amount of the Letter of Credit; (iii)
the expiry date of the Letter of Credit; (iv) the name and address of the
beneficiary thereof; (v) the documents to be presented by the beneficiary of the
Letter of Credit in case of any drawing thereunder; (vi) the full text of any
certificate to be presented by the beneficiary in case of any drawing
thereunder; and (vii) such other matters as such Issuing Bank may require. Upon
receipt of such request, each of the Banks will notify Agent whether it consents
to the Issuance of such Letter of Credit by 2:00 p.m. (New York City time) on
the proposed date of Issuance. If any Bank fails to notify Agent that it
approves the Issuance of a Letter of Credit, Agent shall notify the Borrower and
such Issuing Bank by 3:00 p.m. (New York City time) on the proposed date of
Issuance, and the proposed Letter of Credit will not be Issued, unless one or
more of the Banks have elected to become Approving Banks thereby triggering the
Conversion to Single Funding Bank Date.
(b) From time to time while a Letter of Credit is outstanding and
prior to the Expiration Date, an Issuing Bank will, upon the written request of
the Borrower received by such Issuing Bank (with a copy sent by the Borrower to
Agent and the Banks) prior to 12:00 p.m. noon (New York City time) on the
proposed date of amendment, consider the amendment of any Letter of Credit
Issued by it. Each such request for amendment of a Letter of Credit shall be
made by electronic transfer or facsimile, confirmed immediately in an original
writing or by electronic transfer, made in the form of an L/C Amendment
Application and shall specify in form and detail satisfactory to such Issuing
Bank and the Banks: (i) the Letter of Credit to be amended; (ii) the proposed
date of amendment of the Letter of Credit (which shall be a Business Day); (iii)
the nature of the proposed amendment; and (iv) such other matters as such
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Issuing Bank may require. Such Issuing Bank shall be under no obligation to
amend any Letter of Credit. Agent will promptly notify the Banks of the receipt
by it of any L/C Application or L/C Amendment Application. No such amendment
will be made unless the Banks agree to such amendment. Upon receipt of such
notice by Agent to the Banks, each of the Banks will notify Agent whether it
consents to the amendment of such Letter of Credit by 2:00 p.m. (New York City
time). If all Banks fail to notify Agent that they approve the amendment of a
Letter of Credit, Agent shall notify the Borrower and such Issuing Bank by 3:00
p.m. (New York City time), and the Letter of Credit will not be amended;
provided, however, that if one or more Banks do not approve the amendment and
one or more Banks do approve such amendment, Agent shall notify all Banks and
the approving Banks may elect to become the Approving Banks and amend such
Letter of Credit, thereby triggering the Conversion to Single Funding Bank Date.
(c) The Issuing Banks and the Banks agree that, while a Letter of
Credit is outstanding and prior to the Expiration Date, at the option of the
Borrower and upon the written request of the Borrower received by an Issuing
Bank (with a copy sent to Agent, the other Issuing Banks and the Banks) at least
one Business Day (or such shorter time as the Banks and the other Issuing Banks
may agree in a particular instance in their sole discretion) prior to the
proposed date of notification of renewal, if such renewal is approved by all the
Banks by 3:00 p.m. (New York City time) on the proposed date of notification of
renewal, such Issuing Bank shall be entitled to authorize the renewal of any
Letter of Credit Issued by it. Each such request for renewal of a Letter of
Credit made by the Borrower shall be made by electronic transfer or facsimile,
confirmed immediately in an original writing or by electronic transfer, in the
form of an L/C Amendment Application, and shall specify in form and detail
satisfactory to such Issuing Bank and the Banks: (i) the Letter of Credit to be
renewed; (ii) the proposed date of renewal of the Letter of Credit (which shall
be a Business Day); (iii) the revised expiry date of the Letter of Credit; and
(iv) such other matters as such Issuing Bank may require. The Issuing Banks
shall be under no obligation to renew any Letter of Credit. If any outstanding
Letter of Credit Issued by an Issuing Bank shall provide that it shall be
automatically renewed unless the beneficiary thereof receives notice from such
Issuing Bank that such Letter of Credit shall not be renewed, and if at the time
of renewal such Issuing Bank would be entitled to authorize the automatic
renewal of such Letter of Credit in accordance with this Subsection 3.02(c) upon
the request of the Borrower, then, provided no Bank has objected in writing to
such renewal, such Issuing Bank shall nonetheless be permitted to allow such
Letter of Credit to renew, and the Borrower and the Banks hereby authorize such
renewal, and, accordingly, such Issuing Bank shall be deemed to have received an
L/C Amendment Application from the Borrower requesting such renewal.
(d) Any Issuing Bank may, at its election, deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time,
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in order to cause the expiry date of such Letter of Credit to be a date not
later than the Expiration Date.
(e) This Agreement shall control in the event of any conflict with
any L/C-Related Document (other than any Letter of Credit).
(f) Each Issuing Bank will also deliver to Agent a true and
complete copy of each Letter of Credit or amendment to or renewal of a Letter of
Credit Issued by it.
3.03 Risk Participations, Drawings, Reducing Letters of Credit and
Reimbursements.
(a) Immediately upon the Issuance of each Letter of Credit by an
Issuing Bank which is Issued prior to the Conversion to Single Funding Bank
Date, each Bank shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from such Issuing Bank a participation in such Letter of
Credit and each drawing or Reducing Letter of Credit Borrowing thereunder in an
amount equal to the product of (i) the Pro Rata Share of such Bank, times (ii)
the maximum amount available to be drawn under such Letter of Credit and the
amount of such drawing or Reducing Letter of Credit Borrowing, respectively. All
Letters of Credit Issued after the Conversion to Single Funding Bank Date shall
be participated in only by the Approving Banks. For purposes of Section 2.01,
each Issuance of a Letter of Credit shall be deemed to utilize the Uncommitted
Line Portion of each Bank by an amount equal to the amount of such
participation.
(b) In the event of any request for a drawing under a Letter of
Credit Issued by an Issuing Bank by the beneficiary or transferee thereof, such
Issuing Bank will promptly notify the Borrower. Any notice given by an Issuing
Bank or Agent pursuant to this Subsection 3.03(b) may be oral if immediately
confirmed in writing (including by facsimile); provided, however, that the lack
of such an immediate confirmation shall not affect the conclusiveness or binding
effect of such notice. The Borrower shall reimburse an Issuing Bank prior to
5:00 p.m. (New York City time), on each date that any amount is paid by such
Issuing Bank under any Letter of Credit or to the beneficiary of a Reducing
Letter of Credit in the form of a Reducing L/C Borrowing (each such date, an
"Honor Date"), in an amount equal to the amount so paid by such Issuing Bank. In
the event the Borrower fails to reimburse such Issuing Bank for the full amount
of any drawing under any Letter of Credit or of any Reducing L/C Borrowing, as
the case may be, by 5:00 p.m. (New York City time) on the Honor Date, such
Issuing Bank will promptly notify Agent and Agent will promptly notify each Bank
thereof, and Fortis may, in its discretion, make an Overdraft Advance under the
Overdraft Line and reimburse such Issuing Bank for the amount of the drawing
under the Letter of Credit or Reducing L/C Borrowing, as the case may be. If
Fortis determines, in its sole discretion, not to make an Overdraft Advance,
then the Borrower shall be deemed to have requested that Revolving Loans be made
by the Banks to be disbursed to such Issuing Bank not later than one (1)
Business Day after
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the Honor Date under such Letter of Credit, subject to the amount of the
unutilized portion of the Borrowing Base Line.
(c) In the event of any request for a Reducing L/C Borrowing by
the Borrower in association with any Reducing Letter of Credit, the amount
available for drawing under such Reducing Letter of Credit will be reduced
automatically, and without any further amendment or endorsement to such Reducing
Letter of Credit, by the amount actually paid to such beneficiary,
notwithstanding the fact that the payment creating such Reducing L/C Borrowing
is not made pursuant to a conforming and proper draw under the corresponding
Reducing Letter of Credit; provided, however, that if any Bank has given the
Issuing Banks, Agent, the Borrower and each of the other Banks written notice
that such Bank objects to further Reducing L/C Borrowings at least three (3)
Business Days prior to the date the Borrower requests the Reducing L/C
Borrowing, then the relevant Issuing Bank will not make such Reducing L/C
Borrowing unless all Banks consent thereto.
(d) Each Bank shall upon any notice pursuant to Subsection 3.03(b)
make available to Agent for the account of any Issuing Bank an amount in Dollars
and in immediately available funds equal to its Pro Rata Share of the amount of
the drawing or of the Reducing L/C Borrowing, as the case may be, whereupon the
participating Banks shall (subject to Subsection 3.03(e)) each be deemed to have
made a Revolving Loan to the Borrower in that amount. If any Bank so notified
fails to make available to Agent for the account of such Issuing Bank the amount
of such Bank's Pro Rata Share of the amount of the drawing or of the Reducing
L/C Borrowing, as the case may be, by no later than 3:00 p.m. (New York City
time) on the Business Day following the Honor Date, then interest shall accrue
on such Bank's obligation to make such payment, from the Honor Date to the date
such Bank makes such payment, at a rate per annum equal to the Federal Funds
Rate in effect from time to time during such period. Agent will promptly give
notice of the occurrence of the Honor Date, but failure of Agent to give any
such notice on the Honor Date or in sufficient time to enable any Bank to effect
such payment on such date shall not relieve such Bank from its obligations under
this Section 3.03.
(e) With respect to any unreimbursed drawing or Reducing L/C
Borrowing, as the case may be, that is not converted into Revolving Loans in
whole or in part for any reason, the Borrower shall be deemed to have incurred
from the relevant Issuing Bank an L/C Borrowing in the amount of such drawing or
Reducing L/C Borrowing, as the case may be, which L/C Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at a rate per
annum equal to the Default Rate, and each Bank's payment to such Issuing Bank
pursuant to Subsection 3.03(d) shall be deemed payment in respect of its
participation in such L/C Borrowing and shall constitute an L/C Advance from
such Bank in satisfaction of its participation obligation under this Section
3.03.
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(f) In the event that payment under any Letter of Credit Issued by
an Issuing Bank is drawn or purported to be drawn in a currency other than
United States Dollars, the amount of reimbursement to such Issuing Bank therefor
shall be calculated on the basis of such Issuing Bank's selling rate of exchange
in effect (for the date on which such Issuing Bank pays such draft or reimburses
any of its correspondents which paid such draft) for cable transfers to the
place where and in the currency in which such draft is payable. The Borrower
shall comply with any and all governmental exchange regulations now or hereafter
applicable to any foreign exchange, and shall indemnify and hold the Banks
harmless from any failure of the Borrower so to comply. If for any cause
whatsoever, there exists at the time in question no rate of exchange generally
current at such Issuing Bank for effective cable transfer of the sort above
provided for, the Borrower agrees to pay the Banks on demand an amount in United
States Dollars equivalent to the actual cost of settlement of such Issuing
Bank's obligation to the payor of the draft or acceptance or any holder thereof,
as the case may be, and however and whenever such settlement may be made by such
Issuing Bank.
(g) Each Bank's obligation in accordance with this Agreement to
make the Revolving Loans or L/C Advances, as contemplated by this Section 3.03,
as a result of a drawing under a Letter of Credit or Reducing L/C Borrowing,
shall be absolute and unconditional and without recourse to the relevant Issuing
Bank and shall not be affected by any circumstance, including (i) any set-off,
counterclaim, recoupment, defense or other right which such Bank may have
against such Issuing Bank, the Borrower or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default, an Event of Default
or a Material Adverse Effect; or (iii) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.
(h) Notwithstanding the foregoing, each Revolving Loan and L/C
Advance made to fund payment of any Letter of Credit which was Issued or amended
on or after the Conversion to Single Funding Bank Date shall be made only by the
Approving Banks.
3.04 Repayment of Participations.
(a) Upon (and only upon) receipt by Agent for the account of an
Issuing Bank of immediately available funds from the Borrower (i) in
reimbursement of any payment made by such Issuing Bank under a Letter of Credit
or in connection with a Reducing L/C Borrowing with respect to which any Bank
has paid Agent for the account of such Issuing Bank for such Bank's
participation in the Letter of Credit pursuant to Section 3.03 or (ii) in
payment of interest thereon, Agent will pay to each Bank, in the same funds as
those received by Agent for the account of such Issuing Bank, the amount of such
Bank's Pro Rata Share of such funds, and such Issuing Bank shall receive the
amount of the Pro Rata Share of such funds of any Bank that did not so pay Agent
for the account of such Issuing Bank.
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(b) If Agent or an Issuing Bank is required at any time to return
to the Borrower, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by the
Borrower to Agent for the account of such Issuing Bank pursuant to Subsection
3.04(a) in reimbursement of a payment made under a Letter of Credit or in
connection with a Reducing L/C Borrowing or interest or fee thereon, each Bank
shall, on demand of such Issuing Bank, forthwith return to Agent or such Issuing
Bank the amount of its Pro Rata Share of any amounts so returned by Agent or
such Issuing Bank plus interest thereon from the date such demand is made to the
date such amounts are returned by such Bank to Agent or such Issuing Bank, at a
rate per annum equal to the Federal Funds Rate in effect from time to time.
3.05 Role of the Issuing Banks.
(a) Each Bank and the Borrower agree that, in paying any drawing
under a Letter of Credit Issued by an Issuing Bank or funding any Reducing L/C
Borrowing, such Issuing Bank shall not have any responsibility to obtain any
document (other than any sight draft or certificates expressly required by such
Letter of Credit, but with respect to Reducing Letter of Credit Borrowings, no
document of any kind need be obtained) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority of the Person
executing or delivering any such document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of any Issuing Bank shall be liable to
any Bank for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Banks; (ii) any action taken or omitted in
the absence of gross negligence or willful misconduct; or (iii) the due
execution, effectiveness, validity or enforceability of any L/C-Related
Document.
(c) The Borrower hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; provided, however, that this assumption is not intended to, and shall
not, preclude the Borrower pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. No
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of any Issuing Bank shall be liable or responsible for any of the
matters described in clauses (a) through (g) of Section 3.06; provided, however,
that anything in such clauses or elsewhere herein to the contrary
notwithstanding, that the Borrower may have a claim against an Issuing Bank, and
such Issuing Bank may be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrower which the Borrower proves were caused by such Issuing
Bank's willful misconduct or gross negligence or such Issuing Bank's willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in limitation
of the foregoing: (i) the Issuing Banks may accept documents that appear on
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their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary; and (ii) the Issuing
Banks shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason.
3.06 Obligations Absolute. The Obligations of the Borrower under this
Agreement and any L/C-Related Document to reimburse an Issuing Bank for a
drawing under a Letter of Credit or for a Reducing L/C Borrowing, and to repay
any L/C Borrowing and any drawing under a Letter of Credit or Reducing L/C
Borrowing converted into Revolving Loans, shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all circumstances,
including the following:
(a) any lack of validity or enforceability of this Agreement or
any L/C-Related Document;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of the Borrower in respect of
any Letter of Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C-Related Documents;
(c) the existence of any claim, set-off, defense or other right
that the Borrower may have at any time against any beneficiary or any transferee
of any Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), any Issuing Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by the
L/C-Related Documents or any unrelated transaction; (d) any draft, demand,
certificate or other document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit;
(e) any payment by any Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly comply
with the terms of any Letter of Credit; or any payment made by any Issuing Bank
under any Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any beneficiary
or any transferee of any Letter of Credit, including any arising in connection
with any Insolvency Proceeding;
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(f) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the Obligations of the Borrower in respect of any
Letter of Credit; or
(g) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Borrower.
Notwithstanding anything to the contrary in this Section 3.06 or
in the Continuing Agreement for Letters of Credit, the Issuing Banks shall not
be excused from liability to Borrower to the extent of any direct damages (as
opposed to consequential, indirect and punitive damages, claims in respect of
which are hereby waived by Borrower) suffered by Borrower that are caused by any
of the Issuing Bank's gross negligence or willful misconduct when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof, provided, however, that the parties hereto expressly
agree that:
(i) the Issuing Banks may accept documents that appear on
their face to be in substantial compliance with the terms of a Letter
of Credit without responsibility for further investigation, regardless
of any notice or information to the contrary, and may make payment upon
presentation of documents that appear on their face to be in
substantial compliance with the terms of such Letter of Credit;
(ii) the Issuing Banks shall have the right, in their sole
discretion, to decline to accept documents and to make such payment if
such documents are not in strict compliance with the terms of such
Letter of Credit; and
(iii) this sentence shall establish the standard of care to be
exercised by the Banks when determining whether drafts and other
documents presented under a Letter of Credit comply with the terms
thereof (and the parties hereto hereby waive, to the extent permitted
by applicable law, any standard of care inconsistent with the
foregoing).
3.07 Cash Collateral Pledge. Upon the request of Agent, (i) if an
Issuing Bank has honored any full or partial drawing request on any Letter of
Credit and such drawing has resulted in an L/C Borrowing hereunder, or (ii) if,
as of the Expiration Date, any Letters of Credit may for any reason remain
outstanding and partially or wholly undrawn, the Borrower shall immediately Cash
Collateralize the L/C Obligations in an amount equal to such L/C Obligations.
Upon the occurrence of the circumstances described in Section 2.06 requiring the
Borrower to Cash Collateralize Letters of Credit, then, the Borrower shall
immediately Cash Collateralize the L/C Obligations in an amount equal to the
applicable excess. In addition, the Borrower shall Cash Collateralize any Letter
of
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Credit to be Issued under the Collateralized L/C Line on or before such Letter
of Credit is actually Issued in an amount equal to such Letter of Credit.
3.08 Letter of Credit Fees.
(a) The Borrower shall pay to Agent for the account of each of the
Banks a letter of credit fee with respect to each of the Letters of Credit
Issued hereunder equal to the greater of (i) $700 or (ii) 1.50% per annum,
together with any related fees such as telecopy, facsimile and courier fees.
(b) Such letter of credit fees as described in sub-paragraph (a)
above for each Letter of Credit, unless otherwise specified, shall be due and
payable monthly in arrears for the preceding quarter during which Letters of
Credit are outstanding, commencing on the first such quarterly date to occur
after the Closing Date.
3.09 Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit shall (unless otherwise
expressly provided in the Letters of Credit) apply to the Letters of Credit.
3.10 BofA Letter of Credit. Borrower hereby acknowledges and agrees
that the BofA Letter of Credit shall be deemed to be a Letter of Credit Issued
under this Agreement for all purposes.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes.
(a) Any and all payments by the Borrower to each Bank or Agent
under this Agreement and any other Loan Document shall be made free and clear
of, and without deduction or withholding for, any Taxes. In addition, the
Borrower shall pay all Other Taxes.
(b) If the Borrower shall be required by law to deduct or withhold
any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank or Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section) such Bank or Agent, as the case may be, receives and
retains an amount equal to the sum it would have received and retained
had no such deductions or withholdings been made;
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(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Borrower shall also pay to each Bank or Agent for the
account of such Bank, at the time interest is paid, Further Taxes in
the amount that Bank specifies as necessary to preserve the after-tax
yield the Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed.
(c) The Borrower agrees to indemnify and hold harmless each Bank
and Agent for the full amount of (i) Taxes, (ii) Other Taxes, and (iii) Further
Taxes in the amount that Agent or such Bank specifies as necessary to preserve
the after-tax yield Agent or such Bank would have received if such Taxes, Other
Taxes or Further Taxes had not been imposed, and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes, Other Taxes or Further Taxes were
correctly or legally asserted, provided, however, that the Borrower shall not be
required to indemnify or hold harmless any Bank to the extent (but only to the
extent) of such Bank's gross negligence or willful misconduct. Payment under
this indemnification shall be made within 30 days after the date the Bank or
Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the Borrower
of Taxes, Other Taxes or Further Taxes, the Borrower shall furnish Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to Agent.
(e) If the Borrower is required to pay any amount to Agent or any
Bank pursuant to subsection (b) or (c) of this Section, then such Bank shall use
reasonable efforts (consistent with legal and regulatory restrictions) to change
the jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Borrower which may thereafter accrue, if such change in the
judgment of such Bank is not otherwise disadvantageous to such Bank.
4.02 Illegality.
(a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for such Bank or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by such Bank to the Borrower
through Agent, any obligation of that Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies Agent and the Borrower that the circumstances
giving rise to such determination no longer exist.
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(b) If a Bank determines that it is unlawful to maintain any
Offshore Rate Loan, the Borrower shall, upon receipt of notice of such fact and
demand from such Bank (with a copy to Agent), prepay in full, without premium or
penalty, such Offshore Rate Loans of that Bank then outstanding, together with
interest accrued thereon either on the last day of the Interest Period thereof,
if the Bank may lawfully continue to maintain such Offshore Rate Loans to such
day, or immediately, if the Bank may not lawfully continue to maintain such
Offshore Rate Loan. If the Borrower is required to so prepay any Offshore Rate
Loan, then concurrently with such prepayment, the Borrower shall borrow from the
affected Bank, in the amount of such repayment, a Base Rate Loan.
4.03 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i) the
introduction of or any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the Offshore
Rate or in respect of the assessment rate payable by any Bank to the FDIC for
insuring U.S. deposits) in or in the interpretation of any law or regulation or
(ii) the compliance by that Bank with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law),
there shall be any increase in the cost to such Bank of agreeing to make or
making, funding or maintaining any Offshore Rate Loans or participating in
Letters of Credit, or, in the case of an Issuing Bank, any increase in the cost
to such Issuing Bank of agreeing to issue, issuing or maintaining any Letter of
Credit or of agreeing to make or making, funding or maintaining any unpaid
drawing under any Letter of Credit, then the Borrower shall be liable for, and
shall from time to time, within 30 days of demand (with a copy of such demand to
be sent to Agent), pay to Agent for the account of such Bank, additional amounts
as are sufficient to compensate such Bank for such increased costs, provided,
however, that the Borrower shall not be required to pay any such amount to the
extent that such amount is reflected in changes in the Base Rate, the Offshore
Rate or other fees or charges of such Bank.
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased as a
consequence of its loans, credits or obligations under this Agreement, then,
within 30 days of demand of such Bank to the Borrower through Agent, the
Borrower shall pay to the Bank, from time to time as specified by the Bank,
additional amounts sufficient to compensate the Bank for such increase,
provided, however, that the Borrower shall not be
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required to pay any such amount to the extent that such amount is reflected in
changes in the Base Rate.
4.04 Funding Losses. The Borrower shall reimburse each Bank and hold
each Bank harmless from any loss or expense which the Bank may sustain or incur
as a consequence of:
(a) the failure of the Borrower to make on a timely basis any
payment of principal of any Offshore Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert a
Loan after the Borrower has given (or are deemed to have given) a Notice of
Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Borrower to make any prepayment in
accordance with any notice delivered under Section 2.06;
(d) the prepayment (including prepayments made pursuant to Article
II but excluding prepayments made pursuant to Section 4.02) or other payment
(including after acceleration thereof) of an Offshore Rate Loan on a day that is
not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any Offshore
Rate Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period except any such automatic conversion resulting from prepayments
required by Section 4.02;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Borrower to the Banks under this Section and
under Section 4.03, each Offshore Rate Loan made by a Bank (and each related
reserve, special deposit or similar requirement) shall be conclusively deemed to
have been funded at the LIBOR used in determining the Offshore Rate for such
Offshore Rate Loan by a matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Offshore Rate Loan is in fact so funded.
4.05 Inability to Determine Rates. If Agent and the Banks determine
that for any reason adequate and reasonable means do not exist for determining
the Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the Offshore Rate applicable pursuant to Subsection
2.08(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to the Banks of
funding such Loan, Agent will promptly so notify the Borrower and each Bank.
Thereafter, the obligation of the Banks to make or maintain Offshore Rate Loans,
as the case may be, hereunder shall be suspended until Agent upon
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the instruction of the Banks revokes such notice in writing. Upon receipt of
such notice, the Borrower may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Borrower does not revoke
such Notice, the Banks shall make, convert or continue the Loans, as proposed by
the Borrower, in the amount specified in the applicable notice submitted by the
Borrower, but such Loans shall be made, converted or continued as Base Rate
Loans instead of Offshore Rate Loans.
4.06 Reserves on Offshore Rate Loans. The Borrower shall pay to each
Bank, as long as such Bank shall be required under regulations of the FRB to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), additional costs on the unpaid principal amount of each Offshore
Rate Loan equal to the actual costs of such reserves allocated to such Loan by
the Bank (as determined by the Bank in good faith, which determination shall be
conclusive), payable on each date on which interest is payable on such Loan,
provided, however, that the Borrower shall have received at least 15 days' prior
written notice (with a copy to Agent) of such additional interest from the Bank.
If a Bank fails to give notice 15 days prior to the relevant Interest Payment
Date, such additional interest shall be payable 15 days from receipt of such
notice.
4.07 Certificates of Banks. Together with any demand by a Bank for
reimbursement or compensation pursuant to this Article IV, such Bank shall
provide to the Borrower (with a copy to Agent) a certificate signed by an
authorized officer of the Bank (a) describing the event giving rise to such
demand, and (b) showing the method and detailed calculations (which may include
any reasonable averaging, attribution or allocation procedures) used by the Bank
to determine the amount demanded by the Bank. In calculating the amount of
costs, expenses, capital requirements or rate of reduction allocable to the
Borrower, such Bank shall use such reasonable methods as such Bank shall
determine. Such calculation and certification shall be conclusive and binding on
the Borrower in the absence of manifest error.
4.08 Substitution of Banks. Upon the receipt by the Borrower from any
Bank (an "Affected Bank") of a claim for compensation under Section 4.03, the
Borrower may: (a) request the Affected Bank to use its best efforts to obtain a
replacement bank or financial institution satisfactory to the Borrower to
acquire and assume all or a ratable part of all of such Affected Bank's Loans
and Uncommitted Line Portion (a "Replacement Bank"); (b) request one or more of
the other Banks to acquire and assume all or part of such Affected Bank's Loans
and Uncommitted Line Portion; or (c) designate a Replacement Bank. Any such
designation of a Replacement Bank under clause (a) or (c) shall be subject to
the prior written consent of Agent (which consent shall not be unreasonably
withheld).
4.09 Survival. The agreements and Obligations of the Borrower in this
Article IV shall survive the payment of all other Obligations.
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ARTICLE V
CLOSING ITEMS
5.01 Matters to be Satisfied Upon Execution of Agreement. At the time
the Banks execute this Agreement, unless otherwise waived by the Banks, Agent
shall have received all of the following, in form and substance satisfactory to
Agent and each Bank, and in sufficient copies for each Bank:
(a) Loan Documents. This Agreement, the Notes, the Guaranty, the
Security Agreements, the Atmos Support Agreement, a Tri-party Agreement among
Borrower, Agent and each Eligible Broker, financing statements and financing
statement amendments and each other document or certificate executed in
connection with this Agreement, executed by each party thereto;
(b) Resolutions; Incumbency. Copies of the resolutions of the
members of the Borrower authorizing the transactions contemplated hereby,
certified as of the Closing Date by the Secretary of the Borrower, and
certifying the names and true signatures of the officers of the Borrower
authorized to execute, deliver and perform, as applicable, this Agreement, and
all other Loan Documents to be delivered by the Borrower hereunder;
(c) Organization Documents; Existence; Good Standing. The articles
or certificate of formation and the regulations of the Borrower as in effect on
the Closing Date, all certified by the Secretary of the Borrower as of the
Closing Date, and the articles or certificate of formation and the Bylaws or
regulations of
Atmos Energy Corporation and Atmos Energy Marketing LLC as in
effect on the Closing Date, all certified by the Secretary of
Atmos Energy
Corporation and Atmos Energy Marketing LLC as of the Closing Date together with
certificates of existence and good standing for the Borrower,
Atmos Energy
Corporation and Atmos Energy Marketing LLC from the Secretary of State (or
similar, applicable Governmental Authority) of its state of incorporation and
each state where the general partner of the Borrower is qualified to do business
as a foreign corporation, certified as of, or reasonably close to, the Closing
Date;
(d) Legal Opinions. Legal opinion of counsel to the Borrower and
counsel to Atmos Energy Marketing, L.L.C. each addressed to Agent and the Banks,
in form and substance acceptable to Agent and the Banks;
(e) Payment of Fees. Evidence of payment by the Borrower of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with Attorney Costs of Agent to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute Fortis' reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided,
however, that such estimate shall not thereafter preclude final settling of
accounts between the Borrower and Agent); including any such costs,
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fees and expenses arising under or referenced in Sections 2.09 and 11.04(a) and
all costs of the auditors and consultants retained by the Banks in connection
with the Obligations of the Borrower to Agent;
(f) Certificate. A certificate signed by a Responsible Officer of
the Borrower, dated as of the Closing Date, stating to the best of such
officer's knowledge that:
(i) The representations and warranties contained in Article VI
are true and correct on and as of such date, as though made on and as
of such date; and
(ii) No Default or Event of Default exists or would result
from the Credit Extension.
(iii) There has occurred since April 30, 2001, no event or
circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect;
(g) Insurance. Evidence of insurance required to be maintained by
the Borrower hereunder;
(h) Filings. Evidence that all filings needed to perfect the
security interests granted by the Security Agreements have been completed or due
provision has been made therefor;
(i) Payoff Letter. A fully executed original of a payoff letter
(the "Payoff Letter") in form and substance satisfactory to Agent and Bank of
America, N.A.;
(j) Request to Issue BofA Letter of Credit. A written request of
the Borrower to Fortis to Issue the BofA Letter of Credit in the form required
by the Payoff Letter;
(k) Service of Process Form. An acknowledgement letter from
Corporation Service Company as contemplated by Subsection 11.16(b);
(l) Due Diligence. Agent shall have completed its business and
legal due diligence, including a Lien search of the Borrower, with results
satisfactory to Agent; and
(m) Other Documents. Such other approvals, opinions, documents or
materials as Agent or any Bank may request.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to Agent and each Bank that:
6.01 Existence and Power. Each of the Borrower, its Subsidiaries and
Atmos Energy Marketing LLC:
(a) is a limited liability company or corporation, as the case may
be, duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on their
business and to execute, deliver, and perform their respective Obligations under
the Loan Documents;
(c) is duly qualified as a foreign limited liability company or
corporation, as the case may be, and is licensed and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification or license; and
(d) to the best knowledge of such Person, is in compliance with
all Requirements of Law.
6.02 Authorization; No Contravention. The execution, delivery and
performance by the Borrower and Guarantor of each Loan Document to which such
Person is party, have been duly authorized, and do not and will not:
(a) contravene the terms of the Organization Documents of such
Person;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its property is
subject; or
(c) to the best knowledge of the Borrower, violate any Requirement
of Law.
6.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Borrower or
any of its Subsidiaries or Guarantor, as applicable, of any Loan Document.
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6.04 Binding Effect. This Agreement and each other Loan Document to
which the Borrower or any of its Subsidiaries or Guarantor is a party constitute
the legal, valid and binding obligations of such Person to the extent it is a
party thereto, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by general principles of equity.
6.05 Litigation. Except as specifically disclosed in Schedule 6.05,
there are no actions, suits or proceedings, pending, or to the knowledge of the
Borrower, or Guarantor threatened at law, in equity, in arbitration or before
any Governmental Authority, against the Borrower, or any of its Subsidiaries or
Guarantor or any of their respective properties which purport to affect or
pertain to this Agreement or any other Loan Document, or any of the transactions
contemplated hereby or thereby; and no injunction, writ, temporary restraining
order or any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the execution, delivery
or performance of this Agreement or any other Loan Document, or directing that
the transactions provided for herein or therein not be consummated as herein or
therein provided.
6.06 No Default. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Borrower. As of the Closing Date,
neither the Borrower nor any of its Subsidiaries are in default under or with
respect to any Contractual Obligation in any respect which, individually or
together with all such defaults, could reasonably be expected to have a Material
Adverse Effect.
6.07 ERISA Compliance. Except as specifically disclosed in Schedule
6.07:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best knowledge of the
Borrower, nothing has occurred which would cause the loss of such qualification.
The Borrower and each ERISA Affiliate have made all required contributions to
any Plan subject to Section 412 of the Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the
Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of the
Borrower, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which have resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) To the Borrower's best knowledge, no ERISA Event has
occurred or is reasonably expected to occur; (ii) no Pension Plan has any
Unfunded
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Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of ERISA
with respect to any Pension Plan (other than premiums due and not delinquent
under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) or
ERISA.
6.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for the purposes set forth in and permitted by Section 7.12.
Neither the Borrower nor any Subsidiary is generally engaged in the business of
purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock.
6.09 Title to Properties. The Borrower and each of its Subsidiaries
have good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of
their respective businesses, except for such defects in title as could not,
individually or in the aggregate, have a Material Adverse Effect. As of the
Closing Date, the property of the Borrower and its Subsidiaries is subject to no
Liens, other than Permitted Liens.
6.10 Taxes. The Borrower and its Subsidiaries have filed all Federal
and other material tax returns and reports required to be filed, and have paid
all Federal and other material taxes, assessments, fees and other governmental
charges shown thereon to be due and payable, and have paid all material taxes,
assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets as due and payable, except those which are
being contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax
assessment against the Borrower or any of its Subsidiaries that would, if made,
have a Material Adverse Effect.
6.11 Financial Condition.
(a) The unaudited balance sheet of the Borrower dated as of
September 30, 2001:
(i) fairly presents the financial condition of the Borrower as
of the date thereof; and
(ii) shows all material indebtedness and other liabilities,
direct or contingent, of the Borrower and as of the date thereof,
including liabilities for taxes, material commitments and Contingent
Obligations.
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(b) Since September 30, 2001, there has been no Material Adverse
Effect.
6.12 Environmental Matters. The Borrower conducts in the ordinary
course of business a review of the effect of existing Environmental Laws and
existing Environmental Claims on its business, operations and properties, and as
a result thereof the Borrower has reasonably concluded that, except as
previously specifically disclosed in Schedule 6.12, such Environmental Laws and
Environmental Claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
6.13 Regulated Entities. Neither the Borrower, nor any Person
controlling the Borrower, or any of its Subsidiaries, is an "Investment Company"
within the meaning of the Investment Company Act of 1940. The Borrower is not
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public utilities code,
or any other Federal or state statute or regulation limiting its ability to
incur Indebtedness.
6.14 No Burdensome Restrictions. Neither the Borrower nor any of its
Subsidiaries is a party to or bound by any Contractual Obligation, or subject to
any restriction in any Organization Document, or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.
6.15 Copyrights, Patents, Trademarks and Licenses, Etc. To the
Borrower's best knowledge, the Borrower or its Subsidiaries own or are licensed
or otherwise have the right to use all of the patents, trademarks, service
marks, trade names, copyrights, contractual franchises, authorizations and other
rights that are reasonably necessary for the operation of their respective
businesses, without conflict with the rights of any other Person. To the
knowledge of the Borrower, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Borrower or any Subsidiary infringes upon
any rights held by any other Person. Except as specifically disclosed in
Schedule 6.05, no claim or litigation regarding any of the foregoing is pending
or threatened, and no patent, invention, device, application, principle or any
statute, law, rule, regulation, standard or code is pending or, to the knowledge
of the Borrower, proposed.
6.16 Subsidiaries. The Borrower has no Subsidiaries other than those
specifically disclosed in part (a) of Schedule 6.16 hereto and have no equity
investments in any other corporation or entity other than those specifically
disclosed in part (b) of Schedule 6.16.
6.17 Insurance. Except as specifically disclosed in Schedule 6.17, the
properties of the Borrower and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Borrower, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in
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similar businesses and owning similar properties in localities where the
Borrower or such Subsidiary operates.
6.18 Full Disclosure. To the Borrower's best knowledge, none of the
representations or warranties made by the Borrower or any of its Subsidiaries in
the Loan Documents as of the date such representations and warranties are made
or deemed made, and none of the statements contained in any exhibit, report,
statement or certificate furnished by or on behalf of the Borrower or any of its
Subsidiaries in connection with the Loan Documents (including the offering and
disclosure materials delivered by or on behalf of the Borrower to the Banks
prior to the Closing Date), contains any untrue statement of a material fact or
omits any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Bank shall be continuing to consider making Revolving
Loans or Issuing Letters of Credit hereunder, or any Loan or other Obligation
shall remain unpaid or unsatisfied, or any Letter of Credit shall remain
outstanding:
7.01 Financial Statements. The Borrower shall deliver to the Banks, in
form and detail satisfactory to the Banks:
(a) as soon as available, but not later than 120 days after the
end of each fiscal year, a copy of the audited financial statements to include a
balance sheet as at the end of such year for the Borrower, with schedules and
the related statements of income or operations, members' capital and cash flows
for such year for the Borrower, setting forth in each case in comparative form
the figures for the previous fiscal year, and accompanied by the opinion of a
nationally-recognized independent public accounting firm ("Independent Auditor")
which report shall state that such financial statements present fairly the
financial position for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years. Such opinion shall not be qualified or
limited because of a restricted or limited examination by the Independent
Auditor of any material portion of the Borrower's or any Subsidiary's records;
and
(b) as soon as available, but not later than 45 days after the end
of each month, the Borrower prepared financial statements for the Borrower in
form acceptable to Banks.
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7.02 Certificates; Other Information. The Borrower shall furnish to
Agent and the Banks:
(a) concurrently with the delivery of the financial statements
referred to in Subsections 7.01(a) and (b), a Compliance Certificate executed by
a Responsible Officer of the Borrower;
(b) a Borrowing Base Collateral Position Report executed by a
Responsible Officer of the Borrower as of 15th and as of the last Business Day
of each month, in each case delivered within ten (10) days of such reporting
date;
(c) on the tenth day of each month, a Net Position Report, as of
the last business day of the preceding month, certified by a Responsible Officer
of the Borrower;
(d) promptly when available, such additional information regarding
the business, financial or corporate affairs of the Borrower or any Subsidiary
as Agent, at the request of any Bank, may from time to time reasonably request;
and
(e) a quarterly report of inventory storage locations at each
quarter end.
7.03 Notices. The Borrower shall promptly notify Agent and each Bank:
(a) of the occurrence of any Default or Event of Default, and of
the occurrence or existence of any event or circumstance that could reasonably
be expected to become a Default or Event of Default;
(b) of the occurrence of any event which could reasonably be
expected to cause a material impairment of the Collateral Position;
(c) of the occurrence of any event which could reasonably be
expected to cause a Material Adverse Effect, including (i) breach or
non-performance of, or any default under, a material Contractual Obligation of
the Borrower or any Subsidiary; (ii) any material dispute, litigation,
investigation, proceeding or suspension between the Borrower or any Subsidiary
and any Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting the Borrower or any
Subsidiary, including pursuant to any applicable Environmental Laws;
(d) of the occurrence of any of the following events affecting the
Borrower or any ERISA Affiliate (but in no event more than 10 days after the
Borrower receives notice or becomes aware of such event), and deliver to Agent
and each Bank a copy of any notice with respect to such event that is filed with
a Governmental Authority and any notice delivered by a Governmental Authority to
the Borrower or any ERISA Affiliate with respect to such event:
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(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability of
any Pension Plan;
(iii) the adoption of, or the commencement of contributions
to, any Plan subject to Section 412 of the Code by the Borrower or any
ERISA Affiliate; or
(iv) the adoption of any amendment to a Plan subject to
Section 412 of the Code, if such amendment results in a material
increase in contributions or Unfunded Pension Liability;
(e) of any material change in accounting policies or financial
reporting practices by the Borrower; and
(f) of any intended relocation of inventory or any intended new
location of inventory owned by the Borrower, at least ten (10) Business Days
prior to the date such inventory is to be stored at such location.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein, and stating what action the Borrower or any
affected Subsidiary proposes to take with respect thereto and at what time. Each
notice under Subsection 7.03(a) shall describe with particularity any and all
clauses or provisions of this Agreement or other Loan Document that have been
(or reasonably could be expected to be) breached or violated as therein
provided.
7.04 Preservation of Corporate Existence, Etc. The Borrower shall, and
shall cause each of its Subsidiaries to:
(a) preserve and maintain in full force and effect its existence
and good standing under the laws of its state or jurisdiction of organization;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
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7.05 Maintenance of Property. The Borrower shall maintain, and shall
cause each of its Subsidiaries to maintain, and preserve all its property which
is used or useful in its business in good working order and condition, ordinary
wear and tear excepted and make all necessary repairs thereto and renewals and
replacements thereof except in any case where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
7.06 Insurance. The Borrower shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons, including, without
limitation, marine cargo insurance, if appropriate. Agent, for the benefit of
the Banks, shall be named as an additional insured and loss payee under all such
polices, without liability for premiums or club calls.
7.07 Payment of Obligations. The Borrower shall, and shall cause each
of its Subsidiaries to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Borrower or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property unless the same are being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are being
maintained by the Borrower or Subsidiary, and provided that at such time the
claim becomes a Lien (other than a lis pendens notice), it shall be promptly
paid; and
(c) all indebtedness, as and when due and payable, but subject to
any subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
7.08 Compliance with Laws. The Borrower shall comply, and shall cause
each of its Subsidiaries to comply, with all Requirements of Law of any
Governmental Authority having jurisdiction over it or its business (including
the Federal Fair Labor Standards Act).
7.09 Compliance with ERISA. The Borrower shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance with the
applicable provisions of ERISA, the Code and other federal or state law; (b)
cause each Plan which is qualified under Section 401(a) of the Code to maintain
such qualification; and (c) make all required contributions to any Plan subject
to Section 412 of the Code.
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7.10 Inspection of Property and Books and Records. The Borrower shall
maintain and shall cause each of its Subsidiaries to maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Borrower and such Subsidiary.
The Borrower shall permit, and shall cause each of its Subsidiaries to permit
representatives and independent contractors of Agent or any Bank to visit and
inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public accountants, all at
the expense of Agent or Bank causing such inspection and at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Borrower; provided, however, that when an
Event of Default exists Agent or any Bank may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice.
7.11 Environmental Laws. The Borrower shall, and shall cause each of
its Subsidiaries to, conduct its operations and keep and maintain its property
in compliance in all material respects with all Environmental Laws.
7.12 Use of Proceeds. The Borrower shall use the proceeds of the Loans
for the uses described in this Agreement and not in contravention of any
Requirement of Law or of any Loan Document restrictions on use of loan proceeds.
The Borrower shall not use the proceeds of the Loan or any Letter
of Credit to acquire, directly or indirectly, any Margin Stock.
7.13 Collateral Position Audit. At such times as Agent deems advisable,
the Borrower will allow Agent or an entity satisfactory to Agent to conduct a
thorough examination of the Collateral, and the Borrower will fully cooperate in
such examination. The Borrower will pay the costs and expenses of one such
examination each calendar year.
7.14 Payments to Bank Blocked Account. The Borrower promptly, and from
time to time, shall (i) establish a lock box ("Lock Box") and shall notify in
writing and otherwise take such reasonable steps to ensure that all Account
Debtors under any of its Accounts forward payment in the form of cash, checks,
drafts or other similar items of payment directly to such Lock Box or directly
by wire transfer to the Bank Blocked Account and shall provide Banks with
reasonable evidence of such notification, and (ii) deposit and cause its
Subsidiaries to deposit or cause to be deposited all payments under such
Accounts to the Bank Blocked Account. In the event that any Account Debtor does
make any payment directly to the Borrower at the Lock Box or into any account
other than the Bank Blocked Account that Borrower maintains with Chase or any
other bank or financial institution acceptable to Agent, the Borrower shall
promptly deposit such amounts into the Bank Blocked Account. The Borrower and
each other Bank other than
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Fortis acknowledge and agree that the Bank Blocked Account is owned by Fortis
and is under the exclusive dominion and control of Fortis. If Borrower desires
that funds be transferred from the Bank Blocked Account into Borrower's
operating account, Borrower shall request such a transfer by facsimile
transmission utilizing the form approved by Fortis and provided to Borrower for
such request. Although Fortis may from day to day transfer proceeds from such
account into the Borrower's operating account, Fortis has absolutely no duty to
make any such transfer and at any time may refuse to transfer any funds until
all Obligations have been satisfied. Fortis at any time may apply amounts
contained in the Bank Blocked Account toward satisfaction of the Obligations.
7.15 Financial Covenants. The Borrower will, at all times, observe the
following financial covenants:
(a) minimum Net Working Capital as follows:
(i) $10,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $50,000,000.00 or less;
(ii) $12,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $60,000,000.00 or less but greater
than $50,000,000.00;
(iii) $14,000,000.00 at such time as the elected Borrowing
Base Sup-Cap is $70,000,000.00 or less but greater
than $60,000,000.00;
(iv) $15,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $75,000,000.00 or less but greater
than $70,000,000.00;
(v) $16,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $80,000,000.00 or less but greater
than $75,000,000.00;
(vi) $18,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $90,000,000.00 or less but greater
than $80,000,000.00;
(vii) $19,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $95,000,000.00 or less but greater
than $90,000,000.00;
(viii) $20,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $100,000,000.00 or less but greater
than $95,000,000.00;
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(ix) $22,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $110,000,000.00 or less but greater
than $100,000,000.00;
(x) $24,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $120,000,000.00 or less but greater
than $110,000,000.00; and
(xi) $25,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $125,000,000.00 or less but greater
than $120,000,000.00.
(b) minimum Tangible Net Worth as follows:
(i) $11,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $50,000,000.00 or less;
(ii) $13,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $60,000,000.00 or less but greater
than $50,000,000.00;
(iii) $15,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $70,000,000.00 or less but greater
than $60,000,000.00;
(iv) $16,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $75,000,000.00 or less but greater
than $70,000,000.00;
(v) $17,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $80,000,000.00 or less but greater
than $75,000,000.00;
(vi) $19,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $90,000,000.00 or less but greater
than $80,000,000.00;
(vii) $20,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $95,000,000.00 or less but greater
than $90,000,000.00;
(viii) $21,000,000.00 at such time as the elected Borrowing
Base Sub-Cap is $100,000,000.00 or less but greater
than $95,000,000.00;
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(ix) $23,000,000.00 at such time as the elected
Borrowing Base Sub-Cap is $110,000,000.00 or
less but greater than $100,000,000.00;
(x) $25,000,000.00 at such time as the elected
Borrowing Base Sub-Cap is $120,000,000.00 or
less but greater than $110,000,000.00; and
(xi) $26,000,000.00 at such time as the elected
Borrowing Base Sub-Cap is $125,000,000.00 or
less but greater than $120,000,000.00.
(c) at all times, a ratio of total liabilities (excluding
the amount of Subordinated Debt that is included in
the calculation of Tangible Net Worth) to Tangible
Net Worth not to exceed 5.0:1.0; and
In calculating the Net Working Capital coverages set forth above, the
amount of Subordinated Debt excluded in such calculation shall not exceed 50% of
the resultant Net Working Capital. In calculating the Tangible Net Worth
coverages set forth above, the amount of Subordinated Debt excluded in such
calculation shall not exceed 50% of the resultant Tangible Net Worth.
7.16 Separate Operations. The Borrower will at all times maintain and
observe policies and procedures to insure that its operations are separate and
distinct from the operations of Borrower's Affiliates.
7.17 Post-Closing Matters. On or before December 31, 2001, the Borrower
shall provide to the Banks certificates of existence and good standing from the
State of Delaware and each other state in which the Borrower conducts business.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Loan or other Obligation shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, unless the Banks
waive compliance in writing:
8.01 Limitation on Liens. The Borrower shall not, and shall not suffer
or permit any Subsidiary to, directly or indirectly, make, create, incur, assume
or suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("Permitted
Liens"):
(a) any Lien existing on property of the Borrower or any of its
Subsidiaries on the Closing Date and set forth in Schedule 8.01 securing
Indebtedness outstanding on such date;
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(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 7.07, provided, however,
that no notice of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary course
of business which are not delinquent or remain payable without penalty and, with
respect to any such warehousemen's or landlord's lien, such liens only secure
accrued rental charges;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on the property of the Borrower or its Subsidiaries
securing (i) the non-delinquent performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, (ii) contingent obligations
on surety and appeal bonds, and (iii) other non-delinquent obligations of a like
nature; in each case, incurred in the ordinary course of business; provided,
however, that all such Liens in the aggregate would not (even if enforced) cause
a Material Adverse Effect;
(g) Liens consisting of judgment or judicial attachment liens;
provided, however, that the enforcement of such Liens is effectively stayed and
all such unstayed liens in the aggregate at any time outstanding for the
Borrower and its Subsidiaries do not exceed $100,000.00;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially interfere with the ordinary conduct of the business of the Borrower
and its Subsidiaries;
(i) purchase money security interests (other than capital leases)
on any property acquired or held by the Borrower or its Subsidiaries in the
ordinary course of business, securing Indebtedness incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such property;
provided, however, that (i) any such Lien attaches to such property concurrently
with or within 20 days after the acquisition thereof, (ii) such Lien attaches
solely to the property so acquired in such transaction, (iii) the principal
amount of the debt secured thereby does not exceed 100% of the cost of such
property, and (iv) the principal amount of the Indebtedness secured by any and
all such purchase money security interests shall not at any time exceed
$100,000.00;
(j) Liens of interest owners, including without limitation, Liens
arising as would be defined in Texas Bus. & Com. Code Section 9.343, comparable
laws
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of the states of Oklahoma, Kansas, Wyoming or New Mexico, or other comparable
law; and
(k) Liens not permitted by clause 8.01 (a), (b), (c), (d), (e),
(f), (g), (h) or (i), in an aggregate amount not to exceed $100,000.
(l) Liens securing contractual obligations permitted by section
8.06.
8.02 Consolidations and Mergers. The Borrower shall not suffer or
permit any of its Subsidiaries to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person.
8.03 Limitation on Indebtedness. The Borrower shall not suffer or
permit any of its Subsidiaries to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness incurred pursuant to or in accordance with, this
Agreement;
(b) Indebtedness consisting of trade payables in the ordinary
course of business;
(c) Indebtedness existing on the Closing Date, and described on
Schedule 8.01;
(d) Indebtedness in respect of purchase money security interests
permitted by Section 8.01 hereof; and
(e) Indebtedness in respect of Contingent Obligations permitted by
Section 8.06 hereof.
8.04 Transactions with Affiliates. The Borrower shall not, and shall
not suffer or permit any of its Subsidiaries to, enter into any transaction with
any Affiliate of the Borrower, except upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Borrower or such
Subsidiary. Without limiting the foregoing, all sales of Product by Borrower to,
and purchases of Product by Borrower from, any Affiliate of Borrower shall be at
the market price on the day of sale, except for transactions made in connection
with Borrower's Index Sales Strategies which strategies shall have been approved
by the Banks prior to any such transactions.
8.05 Use of Proceeds. The Borrower shall not suffer or permit any of
its Subsidiaries to, use any portion of the Loan proceeds or any Letter of
Credit, directly or
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indirectly, (a) to purchase or carry Margin Stock, (b) to repay or otherwise
refinance indebtedness of the Borrower or others incurred to purchase or carry
Margin Stock, (c) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (d) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Exchange Act.
8.06 Contingent Obligations. The Borrower shall not suffer or permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course
of business;
(b) swap contracts entered into in the ordinary course of business
as bona fide hedging transactions; and
(c) Contingent Obligations of the Borrower and its Subsidiaries
existing as of the Closing Date and described on Schedule 8.07.
8.07 Restricted Payments. The Borrower shall not suffer or permit any
of its Subsidiaries to, directly or indirectly declare or make, any distribution
of income or capital on account of any membership interest of the Borrower now
or hereafter in existence ("Distributions"), or set aside or otherwise deposit
or invest any sums for such purpose, except Distributions to its members, so
long as no Default or Event of Default has occurred or would result therefrom.
8.08 ERISA. The Borrower shall not, nor suffer or permit any of its
ERISA Affiliates to: (a) engage in a prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan; or (b) engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
8.09 Change in Business. The Borrower shall not, nor suffer or permit
any of its Subsidiaries to, engage in any line of business different from the
line of business carried on by the Borrower and its Subsidiaries on the date
hereof.
8.10 Accounting Changes. The Borrower shall not, nor suffer or permit
any of its Subsidiaries to, make any significant change in accounting treatment
or reporting practices, except as required by GAAP, or change the fiscal year of
the Borrower (except in connection with the acquisition of Borrower by Atmos
Energy Marketing LLC) or of any Subsidiary.
8.11 Net Position. At no time will the Borrower allow its Net Position
to exceed 5,000,000 MMBTUS of natural gas. At no time will the Borrower allow
the sum of the following: (a) 25% of the Borrower's Net Position Value, plus (b)
Borrower's Transportation and Storage Exposure, plus (c) Borrower's
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Below Index Sales Exposure, to exceed 33% of Borrower's Net Working Capital at
such time, where,
"Net Position Value" means Borrower's Net Position valued at
$3.00/MMBTU.
"Below Index Sales Exposure" means (the maximum volume of gas
required to be sold at below index prices multiplied by the
discount from index), minus (the net positive value of all
hedge contracts related to the utilization of the related
storage & transportation assets).
"Transportation and Storage Exposure" means the aggregate
contractual cost of transportation & storage contracts for a
term of in excess of 3 months.
8.12 Loans and Investments. The Borrower shall not purchase or acquire,
or suffer or permit any Subsidiary to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any obligations or
other securities of, or any interest in, any Person, or make or commit to make
any Acquisitions, or make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any Person
including any Affiliate of Borrower, except for:
(a) investments in cash equivalents and Marketable Securities; and
(b) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in the
ordinary course of business.
8.13 Change of Management. Borrower shall not permit any Change of
Management. For purposes of this Section 8.13, "Change of Management" shall mean
that ▇. ▇. ▇▇▇▇▇▇▇▇ has ceased to act in his capacity as chief executive officer
of the Borrower.
8.14 Deposit Accounts. Borrower shall not maintain any deposit accounts
with a bank or financial institution other than Chase with arrangements for such
deposit accounts to be owned and under the exclusive dominion and control of
Fortis, provided however, that Borrower may maintain operating and payroll
accounts with Bank of America, N.A., and provided, further, that Borrower may
maintain the Lock Box with Bank of America, N.A. which shall be pledged to
Agent, for the benefit of Agent, the Issuing Banks and the Banks.
8.15 Risk Management Policy. The Borrower will not materially change
its risk management policies without the prior written consent of Agent and the
Banks. Borrower agrees that upon request by Agent, from time to time, the
Borrower and the Banks will review and evaluate Borrower's risk management
policies.
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ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following shall constitute an "Event
of Default":
(a) Non-Payment. The Borrower fails to pay any amount payable
hereunder or under any other Loan Document when due including without limitation
such amounts as may come due as a result of a "demand" made by the Banks under
the Notes; or
(b) Representation or Warranty. Any representation or warranty
made or deemed made herein, in any other Loan Document, or which is contained in
any certificate, document or financial or other statement by the Borrower, or
any Responsible Officer furnished at any time under this Agreement, or in or
under any other Loan Document, is incorrect or incomplete in any respect on or
as of the date made or deemed made; or
(c) Covenant Defaults. The Borrower fails to perform or observe
any other term, covenant or agreement contained in any of the Loan Documents; or
(d) Cross-Default. The Borrower or any Subsidiary of the Borrower
(i) fails to make any payment in respect of any Indebtedness or Contingent
Obligation having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $100,000.00 when due
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise); or (ii) fails to perform or observe any other material condition or
covenant, or any other event shall occur or condition exist, under any agreement
or instrument relating to any such Indebtedness or Contingent Obligation, if,
after expiration of any grace or cure period therein provided, the effect of
such failure, event or condition is to cause, or to permit the holder or holders
of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Indebtedness to be declared to be due and payable
prior to its stated maturity, or such Contingent Obligation to become payable or
cash collateral in respect thereof to be demanded, except to the extent that any
such amounts are in bona fide dispute in an aggregate amount not exceeding
$250,000 for which adequate reserves are maintained in accordance with GAAP; or
(e) Insolvency; Voluntary Proceedings. The Borrower or any
Subsidiary of the Borrower (i) ceases or fails to be solvent, or generally fails
to pay, or admits in writing its inability to pay, its debts as they become due,
whether at stated maturity or otherwise; (ii) commences any Insolvency
Proceeding with respect to itself; or (iii) takes any action to effectuate or
authorize any of the foregoing; or
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(f) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Borrower or any Subsidiary of the
Borrower, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Borrower or any
Subsidiary or any of any of the Borrower's properties, and any such proceeding
or petition shall not be dismissed, or such writ, judgment, warrant of
attachment, execution or similar process shall not be released, vacated or fully
bonded within 60 days after commencement, filing or levy; (ii) the Borrower or
any Subsidiary of the Borrower admits the material allegations of a petition
against it in any Insolvency Proceeding, or an order for relief (or similar
order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the
Borrower or any Subsidiary of the Borrower acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor), or other similar Person for itself or a substantial portion
of its property or business; or
(g) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Borrower under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$100,000.00; (ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds $100,000.00; or (iii) the Borrower or any
ERISA Affiliate shall fail to pay when due, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $100,000.00; or
(h) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Borrower or any Subsidiary of the Borrower, which such judgment, order, decree
or award is not effectively stayed pending appeal thereof, involving in the
aggregate a liability as to any single or related series of transactions,
incidents or conditions, to pay an amount of $250,000.00 or more; or
(i) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Borrower or any Subsidiary of the Borrower which
does or would reasonably be expected to have a Material Adverse Effect; or
(j) Change of Control. There occurs any Change of Control not
previously approved by the Banks; or
(k) Adverse Change. There occurs a Material Adverse Effect; or
(l) Guarantor Defaults. Guarantor fails in any material respect to
perform or observe any term, covenant or agreement in the Guaranty executed by
Guarantor; or the Guaranty is for any reason (other than satisfaction in full of
all Obligations and the termination of the Loans) partially (including with
respect to future advances) or wholly revoked or invalidated, or otherwise
ceases to be in full force and effect, or Guarantor or any other Person contests
in any manner the validity or
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enforceability thereof or denies that it has any further liability or obligation
thereunder; or any event described at subsections (e) or (f) of this Section
occurs with respect to Guarantor.
IN NO EVENT SHALL ANY PROVISION OF THIS AGREEMENT PROVIDING FOR SPECIFIC EVENTS
OF DEFAULT BE CONSTRUED TO WAIVE, LIMIT OR OTHERWISE MODIFY THE DEMAND NATURE OF
THE LOANS WHICH MAY BE MADE PURSUANT TO THIS AGREEMENT, AND THE BORROWER HEREBY
ACKNOWLEDGES AND AGREES THAT THE BANKS' RIGHT TO DEMAND PAYMENT AT ANY TIME FOR
ANY REASON OR FOR NO REASON IS ABSOLUTE AND UNCONDITIONAL.
9.02 Remedies. If any Event of Default occurs, Agent may and shall, at
the request of all of the Banks:
(a) declare an amount equal to the maximum aggregate amount that
is or at any time thereafter may become available for drawing by the beneficiary
under any outstanding Letters of Credit (whether or not any beneficiary shall
have presented, or shall be entitled at such time to present, the drafts or
other documents required to draw under such Letters of Credit) to be immediately
due and payable, and declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Borrower; and
(b) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law including, without limitation, seeking to lift the stay in effect under the
Proceeding; provided, however, that upon the occurrence of any event specified
in subsection (e) or (f) of Section 9.01, the obligation of each Bank to make
Loans and any obligation of an Issuing Bank to Issue Letters of Credit shall
automatically terminate and an amount equal to the maximum aggregate amount that
is or at any time thereafter may become available for drawing by the beneficiary
under any outstanding Letters of Credit (whether or not any beneficiary shall
have presented, or shall be entitled at such time to present, the drafts or
other documents required to draw under such Letters of Credit) together with the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of Agent, any Issuing Bank or any Bank.
9.03 Rights Not Exclusive. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
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ARTICLE X
AGENT
10.01 Appointment and Authorization.
(a) Each Bank hereby irrevocably (subject to Section 10.09)
appoints, designates and authorizes Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent. Without
limiting the generality of the foregoing sentence, the use of the term "agent"
in this Agreement with reference to Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom and is intended to create or reflect only an administrative
relationship between independent contracting parties.
(b) EACH ISSUING BANK SHALL ACT ON BEHALF OF THE BANKS WITH
RESPECT TO ANY LETTERS OF CREDIT ISSUED BY IT AND THE DOCUMENTS ASSOCIATED
THEREWITH UNTIL SUCH TIME AND EXCEPT FOR SO LONG AS AGENT MAY AGREE AT THE
REQUEST OF THE BANKS TO ACT FOR SUCH ISSUING BANK WITH RESPECT THERETO;
PROVIDED, HOWEVER, THAT SUCH ISSUING BANK SHALL HAVE ALL OF THE BENEFITS AND
IMMUNITIES (i) PROVIDED TO AGENT IN THIS ARTICLE X WITH RESPECT TO ANY ACTS
TAKEN OR OMISSIONS SUFFERED BY SUCH ISSUING BANK IN CONNECTION WITH LETTERS OF
CREDIT ISSUED BY IT OR PROPOSED TO BE ISSUED BY IT AND THE APPLICATION AND
AGREEMENTS FOR LETTERS OF CREDIT PERTAINING TO THE LETTERS OF CREDIT AS FULLY AS
IF THE TERM "AGENT," AS USED IN THIS ARTICLE X, INCLUDED SUCH ISSUING BANK WITH
RESPECT TO SUCH ACTS OR OMISSIONS, AND (ii) AS ADDITIONALLY PROVIDED IN THIS
AGREEMENT WITH RESPECT TO SUCH ISSUING BANKS. PRIOR TO THE ISSUANCE OF A LETTER
OF CREDIT BY AN ISSUING BANK OTHER THAN AGENT, SUCH ISSUING BANK SHALL PROVIDE
WRITTEN NOTICE TO AGENT OF THE DOLLAR AMOUNT, THE DATE OF SUCH ISSUANCE AND THE
EXPIRY DATE OF SUCH LETTER OF CREDIT. SUCH ISSUANCE SHALL BE SUBJECT TO THE
CONSENT OF AGENT. SUCH CONSENT SHALL NOT RESULT IN THE IMPOSITION OF ANY
LIABILITY UPON AGENT.
10.02 Delegation of Duties. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters
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pertaining to such duties. Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects with reasonable
care.
10.03 Liability of Agent. None of Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Borrower or any Subsidiary or
Affiliate of the Borrower, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by Agent under or in
connection with, this Agreement or any other Loan Document, or for the value of
or title to any Collateral, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Borrower or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Borrower or any of the Borrower's Subsidiaries or
Affiliates.
10.04 Reliance by Agent.
(a) Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to the Borrower), independent
accountants and other experts selected by Agent. 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 all of the
Banks, as applicable, as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of all of the Banks, as
applicable, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.
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10.05 Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, except with respect
to defaults in the payment of principal, interest and fees required to be paid
to Agent for the account of the Banks, unless Agent shall have received written
notice from a Bank or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default." Agent will notify the Banks of its receipt of any such notice. Agent
shall take such action with respect to such Default or Event of Default as may
be requested by all of the Banks, as applicable, in accordance with Article IX;
provided, however, that unless and until Agent has received any such request,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable or in the best interest of the Banks.
10.06 Credit Decision. Each Bank acknowledges that none of
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of the
Borrower and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrower and its Subsidiaries, the value of and title to any Collateral, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrower hereunder. Each Bank also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly herein required to be furnished to the Banks by Agent, Agent
shall not have any duty or responsibility to provide any Bank with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Borrower which may come
into the possession of any of Agent-Related Persons.
10.07 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrower and
without limiting the obligation of the Borrower to do so), pro rata, from and
against any and all Indemnified Liabilities; provided, however, that no Bank
shall be liable for the payment to Agent-Related Persons of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank shall
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reimburse Agent upon demand for its ratable share of any costs or out-of-pocket
expenses (including Attorney Costs) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
the Borrower. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
10.08 Agent in Individual Capacity. Fortis and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrower and its
Subsidiaries and Affiliates as though Fortis were not Agent or an Issuing Bank
hereunder and without notice to or consent of the Banks. The Banks acknowledge
that, pursuant to such activities, Fortis or its Affiliates may receive
information regarding the Borrower or its Affiliates (including information that
may be subject to confidentiality obligations in favor of the Borrower or such
Subsidiary) and acknowledge that Agent shall be under no obligation to provide
such information to them. With respect to its Loans, Fortis shall have the same
rights and powers under this Agreement as any other Bank and may exercise the
same as though it were not Agent or an Issuing Bank, and the terms "Bank" and
"Banks" include Fortis in its individual capacity.
10.09 Successor Agent. Agent may resign as Agent upon thirty (30) days'
notice to the Banks. If Agent resigns under this Agreement, the Banks shall
appoint, from among the Banks, a successor agent for the Banks. If no successor
agent is appointed prior to the effective date of the resignation of Agent,
Agent may appoint, after consulting with the Banks, a successor agent from among
the Banks. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article X and Sections 11.04 and 11.05 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is thirty (30) days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and the Banks shall perform all of the duties of Agent hereunder until such
time, if any, as the Banks appoint a successor agent as provided for above.
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10.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of Agent, to deliver to Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed
and executed copies of IRS Form W-8BEN before the payment of any
interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which interest
may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Bank, two properly completed and executed copies of IRS Form W-8ECI
before the payment of any interest is due in the first taxable year of
such Bank and in each succeeding taxable year of such Bank during which
interest may be paid under this Agreement; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify Agent of any change in circumstances which
would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Bank sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Borrower to such Bank, such Bank agrees to
notify Agent of the percentage amount in which it is no longer the beneficial
owner of Obligations of the Borrower to such Bank. To the extent of such
percentage amount, Agent will treat such Bank's IRS Form W-8BEN as no longer
valid.
(c) If any Bank claiming exemption from United States withholding
tax by filing IRS Form W-8ECI with Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of the Borrower to
such Bank, such Bank agrees to undertake sole responsibility for complying with
the withholding tax requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Bank an
amount equivalent to the applicable withholding tax after taking into account
such reduction. However, if the forms or other documentation required by
subsection (a) of this Section are not
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delivered to Agent, then Agent may withhold from any interest payment to such
Bank not providing such forms or other documentation an amount equivalent to the
applicable withholding tax imposed by Sections 1441 and 1442 of the Code,
without reduction.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered, was not properly executed, or because such
Bank failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Bank shall indemnify Agent fully for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section, together with all costs and expenses (including Attorney
Costs), except to the extent caused solely by the gross negligence or willful
misconduct of Agent. The obligation of the Banks under this Subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.
10.11 Collateral Matters. (a) Agent is authorized on behalf of all the
Banks, without the necessity of any notice to or further consent from the Banks,
from time to time to take any action with respect to any Collateral or the Loan
Documents which may be necessary to perfect and maintain perfected the security
interest in and Liens upon the Collateral granted pursuant to the Loan
Documents.
(b) The Banks irrevocably authorize Agent, at its option and in
its discretion, to release any Lien granted to or held by Agent upon any
Collateral (I) upon payment in full of all Loans and all other Obligations known
to Agent and payable under this Agreement or any other Loan Document; (ii)
constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; (iii) constituting property
in which the Borrower or any Subsidiary owned no interest at the time the Lien
was granted or at any time thereafter; (iv) constituting property leased to the
Borrower or any Subsidiary under a lease which has expired or been terminated in
a transaction permitted under this Agreement or is about to expire and which has
not been, and is not intended by the Borrower or such Subsidiary to be, renewed
or extended; (v) consisting of an instrument evidencing Indebtedness or other
debt instrument, if the indebtedness evidenced thereby has been paid in full; or
(vi) if approved, authorized or ratified in writing by the all of the Banks.
Upon request by Agent at any time, the Banks will confirm in writing Agent's
authority to release particular types or items of Collateral pursuant to this
Subsection 10.11(b); provided, however, that the absence of any such
confirmation for whatever reason shall not affect Agent's rights under this
Section 10.11.
(c) Each Bank agrees with and in favor of each other (which
agreement shall not be for the benefit of the Borrower or any Subsidiary) that
the Borrower's obligations to such Bank under this Agreement and the other Loan
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Documents is not and shall not be secured by any real property collateral now or
hereafter acquired by such Bank.
10.12 Monitoring Responsibility. Each Bank will make its own credit
decisions hereunder, including the decision whether or not to make advances or
consent to the Issuance of Letters of Credit, thus Agent shall have no duty to
monitor the Collateral Position, the amounts outstanding under sub-lines or the
reporting requirements or the contents of reports delivered by the Borrower.
Each Bank assumes the responsibility of keeping itself informed at all times.
ARTICLE XI
MISCELLANEOUS
11.01 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower therefrom, shall be effective unless the same shall be
in writing and signed by all the Banks (or by Agent at the written request of
all the Banks) and the Borrower and acknowledged by Agent, and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
11.02 Notices.
(a) All notices, requests and other communications shall be in
writing (including, unless the context expressly otherwise provides, by
facsimile transmission; provided, however, that any matter transmitted by the
Borrower by facsimile (i) shall be immediately confirmed by a telephone call to
the recipient at the number specified on Schedule 11.02, and (ii) shall be
followed promptly by delivery of a hard copy original thereof) and mailed, faxed
or delivered, to the address or facsimile number specified for notices on
Schedule 11.02; or, as directed to the Borrower or Agent, to such other address
as shall be designated by such party in a written notice to the other parties,
and as directed to any other party, at such other address as shall be designated
by such party in a written notice to the Borrower and Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Articles II, III or X shall not be effective until actually
received by Agent.
(c) Any agreement of Agent and the Banks herein to receive certain
notices by telephone or facsimile is solely for the convenience and at the
request of the Borrower. Agent and the Banks shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by the Borrower to
give such notice and Agent and
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the Banks shall not have any liability to the Borrower or other Person on
account of any action taken or not taken by Agent or the Banks in reliance upon
such telephonic or facsimile notice, except to the extent of the gross
negligence or willful misconduct of Agent or any Bank. The obligation of the
Borrower to repay the Loans and L/C Obligations shall not be affected in any way
or to any extent by any failure by Agent and the Banks to receive written
confirmation of any telephonic or facsimile notice or the receipt by Agent and
the Banks of a confirmation which is at variance with the terms understood by
Agent and the Banks to be contained in the telephonic or facsimile notice.
11.03 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of Agent or any Bank, any right, remedy, power
or privilege hereunder, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.
11.04 Costs and Expenses. The Borrower shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse Fortis (including in its capacity as Agent) within
five (5) Business Days after demand (subject to Subsection 5.01(e)) for all the
actual and reasonable costs and expenses incurred by Fortis (including in its
capacity as Agent) in connection with the preparation, delivery, and execution
of, and any amendment, supplement, waiver or modification to (in each case,
whether or not consummated), this Agreement, any Loan Document and any other
documents prepared in connection herewith or therewith, and the consummation of
the transactions contemplated hereby and thereby, including reasonable Attorney
Costs and costs of commercial finance examinations, incurred by Fortis
(including in its capacity as Agent) excluding, however, any costs or expenses
incurred in connection with any negotiation, dispute or claim solely between or
among Agent and/or one or more of the Banks; and
(b) pay or reimburse Agent and each Bank within five Business Days
after demand (subject to Subsection 5.01(e)) for all actual and reasonable costs
and expenses (including Attorney Costs) incurred by them in connection with the
monitoring, administration, enforcement, attempted enforcement, or preservation
of any rights or remedies under this Agreement or any other Loan Document
excluding, however, any costs or expenses incurred in connection with any
negotiation, dispute or claim solely between or among Agent and/or one or more
of the Banks; and all such costs and expenses during the existence of an Event
of Default or after acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding).
11.05 INDEMNITY. WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY
ARE CONSUMMATED, THE BORROWER SHALL INDEMNIFY AND HOLD AGENT-RELATED PERSONS,
AND EACH BANK AND EACH OF ITS RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
COUNSEL, AGENTS AND ATTORNEYS-IN-FACT (EACH, AN "INDEMNIFIED PERSON") HARMLESS
FROM AND AGAINST
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ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, CHARGES, EXPENSES AND DISBURSEMENTS (INCLUDING ATTORNEY
COSTS) OF ANY KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME (INCLUDING AT ANY
TIME FOLLOWING REPAYMENT OF THE LOANS, THE TERMINATION OF THE LETTERS OF CREDIT
AND THE TERMINATION, RESIGNATION OR REPLACEMENT OF AGENT OR REPLACEMENT OF ANY
BANK) BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST ANY SUCH PERSON IN ANY WAY
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED BY OR
REFERRED TO HEREIN, OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY ACTION TAKEN
OR OMITTED BY ANY SUCH PERSON UNDER OR IN CONNECTION WITH ANY OF THE FOREGOING,
INCLUDING WITH RESPECT TO ANY INVESTIGATION, LITIGATION OR PROCEEDING (INCLUDING
ANY INSOLVENCY PROCEEDING OR APPELLATE PROCEEDING) RELATED TO OR ARISING OUT OF
THIS AGREEMENT OR THE LOANS OR LETTERS OF CREDIT OR THE USE OF THE PROCEEDS
THEREOF, WHETHER OR NOT ANY INDEMNIFIED PERSON IS A PARTY THERETO (ALL THE
FOREGOING, COLLECTIVELY, THE "INDEMNIFIED LIABILITIES"); PROVIDED, HOWEVER, THAT
THE BORROWER SHALL HAVE NO OBLIGATION HEREUNDER TO ANY INDEMNIFIED PERSON FOR
THAT PORTION OF ANY INDEMNIFIED LIABILITIES THAT IS ADJUDGED BY A COURT OF
COMPETENT JURISDICTION TO HAVE BEEN CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH INDEMNIFIED PERSON OR THAT PORTION OF ANY INDEMNIFIED
LIABILITIES WHICH ARE OWED BY AN INDEMNIFIED PERSON TO ANY OTHER INDEMNIFIED
PERSON, BUT IN ALL EVENTS, THE BORROWER SHALL REMAIN LIABLE FOR THE REMAINDER OF
THE INDEMNIFIED LIABILITIES NOT SO EXCLUDED. THE AGREEMENTS IN THIS SECTION
SHALL SURVIVE PAYMENT OF ALL OTHER OBLIGATIONS.
11.06 Payments Set Aside. To the extent that the Borrower makes a
payment to Agent or the Banks, or Agent or the Banks exercise their right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by Agent or
such Bank in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any Insolvency Proceeding or otherwise, then (a) to
the extent of such recovery the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such set-off had not occurred, and (b) each
Bank severally agrees to pay to Agent upon demand its pro rata share of any
amount so recovered from or repaid by Agent.
11.07 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or Obligations under this Agreement without the prior written
consent of Agent and each Bank.
11.08 Assignments, Participations, Etc.
(a) Any Bank, at any time may assign and delegate to one or more
Eligible Assignees (each an "Assignee") all, or any ratable part of all, of the
Loans, the
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Uncommitted Line, the L/C Obligations and the other rights and obligations of
such Bank hereunder, in a minimum amount of $1,000,000.00; provided, however,
that (i) any such disposition shall not, without the prior consent of the
Borrower, require the Borrower to file a registration statement with the
Securities and Exchange Commission or apply to register or qualify the Loan or
any Note under the securities laws of any state, and (ii) the Borrower and Agent
may continue to deal solely and directly with such Bank in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Borrower and Agent by such
Bank and the Assignee; (ii) such Bank and its Assignee shall have delivered to
the Borrower and Agent an Assignment and Acceptance ("Assignment and
Acceptance") in form attached hereto as Exhibit D, together with any Note or
Notes subject to such assignment; and (iii) the assignor Bank or Assignee has
paid to Agent a processing fee in the amount of $2,500.00.
(b) From and after the date that Agent notifies the assignor Bank
that it has received an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Bank under the Loan Documents, and (ii) the assignor Bank
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents.
(c) The Borrower shall execute and deliver to Agent, new Notes
evidencing such Assignee's assigned Loans and Uncommitted Line Portion and, if
the assignor Bank has retained a portion of its Loans and its Uncommitted Line
Portion, replacement Notes in the principal amount of the Loans retained by the
assignor Bank (such Notes to be in exchange for, but not in payment of, the
Notes held by such Bank). Immediately upon each Assignee's making its processing
fee payment under the Assignment and Acceptance, this Agreement shall be deemed
to be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Uncommitted Line
Portion arising therefrom. The Uncommitted Line Portion allocated to each
Assignee shall reduce such Uncommitted Line Portion of the assigning Bank pro
tanto. Upon such Assignment, Agent is authorized to revise Schedule 2.01 and
Schedule 11.02 to reflect the adjusted status of the Banks.
(d) Any Bank may at any time sell to one or more commercial banks
or other Persons not Affiliates of the Borrower (a "Participant") participating
interests in any Loans, the Uncommitted Line Portion of that Bank and the other
interests of that Bank (the "originating Bank") hereunder and under the other
Loan Documents; provided, however, that (i) the originating Bank's and the
Borrower's obligations under this
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Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Borrower, the
Issuing Banks and Agent shall continue to deal solely and directly with the
originating Bank in connection with the originating Bank's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no Bank
shall transfer or grant any participating interest under which the Participant
has rights to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment, consent or waiver would require unanimous consent of the Banks as
described in the first proviso to Section 11.01. In the case of any such
participation, the Participant shall not have any rights under this Agreement,
or any of the other Loan Documents, and all amounts payable by the Borrower
hereunder shall be determined as if such Bank had not sold such participation;
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Bank under this Agreement.
(e) Each Bank agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information identified
as "confidential" or "secret" by the Borrower and provided to it by the Borrower
or any Subsidiary or Affiliate, or by Agent on the Borrower or Subsidiary's or
Affiliate's behalf, under this Agreement or any other Loan Document, and neither
it nor any of its Affiliates shall use any such information other than in
connection with or in enforcement of this Agreement and the other Loan
Documents; except to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by the Bank, or
(ii) was or becomes available on a non-confidential basis from a source other
than the Borrower; provided, however, that such source is not bound by a
confidentiality agreement with, or under obligation of confidentiality, the
Borrower known to the Bank; provided, however, that any Bank may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which Agent, any
Bank or their respective Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Bank's independent auditors and other
professional advisors; (G) to any Affiliate of such Bank, or to any Participant
or Assignee, actual or potential; provided, however, that such Affiliate,
Participant or Assignee agrees to keep such information confidential to the same
extent required of the Banks hereunder, and (H) as to any Bank, as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which the Borrower is party or is deemed party with such
Bank. The foregoing is not
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intended to limit the Banks' obligations to maintain confidential information
received from the Borrower under applicable laws.
(f) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted under
applicable law.
11.09 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Borrower, any such notice being waived by the Borrower to
the fullest extent permitted by law, to set off and apply any and all deposits
at any time held by, and other indebtedness at any time owing by, such Bank to
or for the credit or the account of the Borrower against any and all Obligations
owing to such Bank, now or hereafter existing, irrespective of whether or not
Agent or such Bank shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each Bank
agrees promptly to notify the Borrower and Agent after any such set-off and
application made by such Bank; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application.
11.10 Automatic Debits of Fees. With respect to any letter of credit
fee or other fee, interest or any other cost or expense (including Attorney
Costs) due and payable to Agent, the Issuing Banks, Fortis or the Arranger under
the Loan Documents, the Borrower hereby irrevocably authorizes Fortis to debit
any deposit accounts of the Borrower with Chase (such deposit accounts being
owned by Fortis and under the exclusive dominion and control of Fortis) in an
amount such that the aggregate amount debited from all such deposit accounts
does not exceed such fee or other cost or expense. If there are insufficient
funds in such deposit accounts to cover the amount of the fee or other cost or
expense then due, such debits will be reversed (in whole or in part, in Fortis'
sole discretion) and such amount not debited shall be deemed to be unpaid. No
such debit under this Section shall be deemed a set-off.
11.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify Agent in writing of any changes in the address to which notices to the
Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as Agent shall reasonably request.
11.12 Bank Blocked Account Charges and Procedures. Agent is hereby
authorized to (a) charge the Bank Blocked Account or any deposit account of the
Borrower maintained at Chase for all returned checks, service charges, and other
fees and charges associated with the deposits by the Borrower to and withdrawals
by the Borrower
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from the Bank Blocked Account; (b) follow its usual procedures in the event the
Bank Blocked Account or any check, draft or other order for payment of money
should be or become the subject of any writ, levy, order or other similar
judicial or regulatory order or process; and (c) transfer, at Agent's sole
discretion, any collected and available balances relating to the Borrower in the
Bank Blocked Account each day by wire transfer to the Borrower's operating
account number 375-▇▇▇▇▇▇▇ maintained with Bank of America, N.A. Funds are not
available if, in the reasonable determination of Agent, they are subject to a
hold, dispute or legal process preventing their withdrawal. If the available
balances in the Bank Blocked Account relating to the Borrower are not sufficient
to pay Agent for any returned check, draft or order for the payment of money
relating to the Borrower, or to compensate Agent for any charges or fees due
Agent with respect to the deposits by the Borrower to and withdrawals by the
Borrower from the Bank Blocked Account, the Borrower agrees to pay on demand the
amount due Agent. The Borrower agrees that it cannot, and will not, withdraw any
monies from the Bank Blocked Account and it will not permit the Bank Blocked
Account to become subject to any other pledge, assignment, lien, charge or
encumbrance of any kind, nature or description, other than Agent's security
interest.
11.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
11.14 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
11.15 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Borrower, the Banks, Agent
and Agent-Related Persons, and their permitted successors and assigns, and no
other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any of the other Loan Documents.
11.16 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW (WITHOUT REFERENCE TO PRINCIPLES OF
CONFLICTS OF LAWS) OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT AGENT AND
THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE
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BROUGHT IN THE STATE COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, STATE
OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, AGENT
AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, AGENT AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER HEREBY WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON THE BORROWER AND IRREVOCABLY
APPOINTS CORPORATION SERVICE COMPANY, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, AS
REGISTERED AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE
STATE OF NEW YORK AND AGREES TO OBTAIN A LETTER FROM CORPORATION SERVICE
COMPANY, ACKNOWLEDGING SAME AND CONTAINING THE AGREEMENT OF CORPORATION SERVICE
COMPANY, TO PROVIDE AGENT WITH THIRTY (30) DAYS ADVANCE NOTICE PRIOR TO ANY
RESIGNATION OF CORPORATION SERVICE COMPANY AS SUCH REGISTERED AGENT.
11.17 WAIVER OF JURY TRIAL. THE BORROWER, THE BANKS AND AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER, THE
BANKS AND AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED
BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
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11.18 DISCRETIONARY FACILITY. THE BORROWER ACKNOWLEDGES AND AGREES THAT
THIS AGREEMENT PROVIDES FOR A CREDIT FACILITY THAT IS COMPLETELY DISCRETIONARY
ON THE PART OF THE BANKS AND THAT THE BANKS HAVE ABSOLUTELY NO DUTY OR
OBLIGATION TO ADVANCE ANY REVOLVING LOANS OR TO ISSUE ANY LETTER OF CREDIT. THE
BORROWER UNDERSTANDS THAT WITHOUT REASON, CAUSE OR PRIOR NOTICE, THE BANKS MAY
CEASE ADVANCING REVOLVING LOANS AND ISSUING LETTERS OF CREDIT AND MAKE DEMAND
FOR PAYMENT OF ALL OBLIGATIONS OF BORROWER TO THE BANKS AT ANY TIME. BORROWER
REPRESENTS AND WARRANTS TO THE BANKS THAT BORROWER IS AWARE OF THE RISKS
ASSOCIATED WITH CONDUCTING BUSINESS UTILIZING AN UNCOMMITTED FACILITY.
11.19 Entire Agreement. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING AMONG THE BORROWER,
THE BANKS AND AGENT, AND SUPERSEDES ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS AND
UNDERSTANDINGS OF SUCH PERSONS, VERBAL OR WRITTEN, RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
Borrower's Address:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
FORTIS CAPITAL CORP.,
A CONNECTICUT CORPORATION
as Agent and a Bank
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
[▇▇▇▇▇▇▇▇ -
Credit Agreement]
-87-
FORTIS CAPITAL CORP.,
A CONNECTICUT CORPORATION,
as a Bank and Issuing Bank
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
BNP PARIBAS,
a bank organized under the laws of France
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇ ▇▇▇
Name: ▇▇▇▇▇ ▇▇▇
Title: Director
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
[▇▇▇▇▇▇▇▇ -
Credit Agreement]
-88-
SCHEDULE 2.01
UNCOMMITTED LINE AND
UNCOMMITTED LINE PORTION
(EXCLUDING OVERDRAFT LINES AND SWAP CONTRACTS)
UNCOMMITTED LINE:
Line: Bank Dollar Amount Share
---- ---- ------------- -----
Borrowing Base Line Fortis $ 75,000,000.00 60%
BNP Paribas $ 50,000,000.00 40%
Collateralized L/C Line Fortis $ 9,000,000.00 60%
BNP Paribas $ 6,000,000.00 40%
Schedule 2.01-1
SCHEDULE 6.05
LITIGATION, AND PATENT, TRADEMARK, ETC. CLAIMS
None.
Schedule 6.05-1
SCHEDULE 6.07
ERISA MATTERS
None.
Schedule 6.07-1
SCHEDULE 6.12
ENVIRONMENTAL MATTERS
None.
Schedule 6.12-1
SCHEDULE 6.16
SUBSIDIARIES AND EQUITY INVESTMENTS
Southern Resources, Inc.
Schedule 6.16-1
SCHEDULE 6.17
INSURANCE MATTERS
None.
Schedule 6.17-1
SCHEDULE 7.03(f)
LOCATIONS OF INVENTORY STORAGE
North Liberty, Kansas
Saltville, Virginia
Barnsley, Kentucky
East Diamond, Kentucky
Bearcreek, Louisiana
▇▇▇▇, Louisiana
Schedule 7.03(f)-1
SCHEDULE 8.01
PERMITTED INDEBTEDNESS AND LIENS
None.
Schedule 8.01-1
SCHEDULE 8.07
CONTINGENT OBLIGATIONS
None.
Schedule 8.07-1
SCHEDULE 11.02
LENDING OFFICES AND ADDRESSES FOR NOTICES
FORTIS CAPITAL CORP.,
as Agent
Fortis Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
AGENT'S PAYMENT OFFICE:
Fortis Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
FORTIS CAPITAL CORP.,
as Issuing Bank
Fortis Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Schedule 11.02-1
FORTIS CAPITAL CORP.,
as a Bank
Fortis Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
BNP PARIBAS,
BNP Paribas
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Schedule 11.02-2
EXHIBIT A
FORM OF NOTICE OF BORROWING
(LETTERS OF CREDIT)
[DATE]
Fortis Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Re:
Credit Agreement, dated to be effective as of December 1, 2001
(as amended or supplemented from time to time, the
"Agreement"), by and among ▇▇▇▇▇▇▇▇ Marketing, L.L.C. (the
"Borrower"), the banks that from time to time are parties
thereto, and Fortis Capital Corp., as Agent
Ladies and Gentlemen:
Reference is made to the Agreement (capitalized terms used herein that
are not defined shall have the respective meanings ascribed thereto in the
Agreement). The Borrower hereby gives notice of its intention to request the
[ISSUANCE, AMENDMENT, OR RENEWAL] of Letters of Credit as is further described
on the Letter of Credit Application attached hereto.
The Borrower represents and warrants, as of the date hereof and as of
the date any Letter of Credit is Issued, amended or renewed, that (i) no Default
or Event of Default has occurred and is continuing on the date hereof, nor will
any thereof occur after giving effect to the Letters of Credit requested above;
(ii) that neither the Borrowing Base Advance Cap nor the limit under the
Collateralized L/C Line will be exceeded after giving effect to the Letters of
Credit requested above; and (iii) all of Borrower's representations and
warranties under the Agreement are true and correct, to Borrower's knowledge, as
of the date hereof.
Very truly yours,
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
A-1
FORM OF NOTICE OF BORROWING
(REVOLVING LOAN)
[DATE]
Fortis Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Re:
Credit Agreement, dated to be effective as of December 1, 2001
(as amended or supplemented from time to time, the
"Agreement"), by and among ▇▇▇▇▇▇▇▇ Marketing, L.L.C. (the
"Borrower"), the banks that from time to time are parties
thereto, and Fortis Capital Corp., as Agent
Ladies and Gentlemen:
Reference is made to the Agreement (capitalized terms used herein that
are not defined shall have the respective meanings ascribed thereto in the
Agreement). The Borrower hereby gives notice of its intention to borrow under
the Borrowing Base Line.
Please advance a Revolving Loan as follows:
Date of Borrowing(a-1) :
------------------------------
Amount :
------------------------------
Type of Advance
(Base Rate or Offshore Rate) :
------------------------------
Interest Period
(if Offshore Rate) : .
------------------------------
The Borrower represents and warrants, as of the date hereof and as of
the date any Revolving Loan is made or renewed, that (i) no Default or Event of
Default has occurred and is continuing on the date hereof, nor will any thereof
occur after giving effect to the
(a-1) The aggregate amount of the Borrowing comprised of Offshore Rate Loans
must be made in an amount equal to the Offshore Effective Amount. The date of
the Borrowing must be a Business Day. Borrower must give three(s) Business
Days' advance notice for Borrowings comprised of Offshore Rate Loans, and the
same Business Day advance notice for Borrowings comprised of Base Rate Loans.
A-2
Revolving Loan requested above; (ii) that neither the Borrowing Base Advance Cap
nor the Dollar Advance Cap will be exceeded after giving effect to the Revolving
Loan requested above; and (iii) all of Borrower's representations and warranties
under the Agreement are true and correct, to Borrower's knowledge, as of the
date hereof.
Very truly yours,
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
A-3
EXHIBIT B
FORM OF
NOTICE OF CONVERSION/CONTINUATION
[Date]
Fortis Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Re:
Credit Agreement, dated to be effective as of December 1, 2001
(as amended or supplemented from time to time, the
"Agreement"), by and among ▇▇▇▇▇▇▇▇ Marketing, L.L.C. (the
"Borrower"), the banks that from time to time are parties
thereto, and Fortis Capital Corp., as Agent
Ladies and Gentlemen:
The Borrower hereby gives you irrevocable notice pursuant to Section
2.04 of the Agreement that the undersigned hereby requests a [conversion]
[continuation] of [outstanding Borrowings] [an outstanding Borrowing] into a new
Borrowing (the "Proposed Borrowing") on the terms set forth below:
Outstanding Borrowing #1
Date of Borrowing :
Aggregate Amount for Conversion(2) :
Type of Advance :
Interest Period :
----------
(2) The aggregate amount for conversion with respect to Borrowings
comprised of Offshore Rate Loans must be made in an amount equal to the Offshore
Effective Amount or, if the remaining outstanding amount of such Borrowing would
be less than an amount equal to the Offshore Effective Amount following the
conversion or continuation, in the remaining outstanding amount of such
Borrowing.
B-1
Proposed Borrowing
Date of Conversion or Continuation(3) :
Aggregate Amount :
Type of Advance :
Interest Period :
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing:
(a) the representations and warranties contained in the Agreement
are correct in all material respects, before and after giving effect to the
proposed Borrowing and the application of the proceeds therefrom, as though made
on the date of the proposed Borrowing;
(b) no Default has occurred and remains uncured, nor would result
from the proposed Borrowing; and
(c) the Borrowing Base Advance Cap will not be exceeded after
giving effect to the proposed Borrowing.
Very truly yours,
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
By:
-----------------------------------
Name:
---------------------------------
Title:
------------------------------
----------
(3) The date of the proposed conversion or continuation must be a Business
Day. Borrower must give three(s) Business Days' advance notice for conversions
into or continuations of Borrowings comprised of Offshore Rate Loans, and the
same Business Day advance notice for conversions into or continuations of
Borrowings comprised of Base Rate Loans.
B-2
EXHIBIT C
FORM OF
COMPLIANCE CERTIFICATE
[Date]
Fortis Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Re:
Credit Agreement, dated to be effective as of December 1, 2001
(as amended or supplemented from time to time, the
"Agreement"), by and among ▇▇▇▇▇▇▇▇ Marketing, L.L.C. (the
"Borrower"), the banks that from time to time are parties
thereto, and Fortis Capital Corp., as Agent
Ladies and Gentlemen:
The Borrower, acting through its duly authorized Responsible Officers
(as that term is defined in the Agreement), certifies to each of the Banks that
the Borrower is in compliance with the Agreement and in particular certifies the
following as of ____________:
(i) Net Working Capital $ ;
-----------------
(ii) Tangible Net Worth $ ;
-----------------
(iii) Ratio of Total Liabilities to Tangible
Net Worth :1;
------------------
(iv) Borrowing Base Sub-Cap $ .
-----------------
Further, the undersigned hereby certify that the Net Position has at no
time exceeded the limitations set forth in Section 8.11 of the Agreement and
that the undersigned have no knowledge of any Defaults under the Agreement which
existed as of [______________] or which exist as of the date of this letter.
The undersigned also certifies that the accompanying financial
statements present fairly, in all material respects, the financial condition of
the Borrower as of
C-1
[_____________], and the related results of operations for the [___________]
then ended, in conformity with generally accepted accounting principles.
Very truly yours,
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
C-2
EXHIBIT D
FORM OF
ASSIGNMENT AND ACCEPTANCE
[Date]
Reference is made to the Credit Agreement dated to be effective as of
December 1, 2001 (as amended or supplemented from time to time, the
"Agreement"), among ▇▇▇▇▇▇▇▇ MARKETING, L.L.C. (the "Borrower"), the banks that
from time to time are signatories thereto, and Fortis Capital Corp., as Agent.
Capitalized terms used herein but not defined herein shall have the meanings
specified in the Agreement.
Pursuant to the terms of the Agreement, [_________________]
("Assignor"), wishes to assign and delegate to [________________] ("Assignee"),
[_______]% of its rights and obligations under the Agreement. Therefore,
Assignor, Assignee, and Agent agree as follows:
1. The Assignor hereby sells and assigns and delegates to the Assignee,
and the Assignee hereby purchases and assumes from the Assignor, without
recourse to the Assignor and without representation or warranty except for the
representations and warranties specifically set forth in clauses (i), (ii), and
(iii) of Section 2 of this Assignment and Acceptance, a [_____]% interest in and
to all of the Assignor's rights and obligations under the Agreement and the
other Loan Documents as of the Effective Date (as defined below), including such
percentage interest in the Assignor's Uncommitted Line Portion, the Loans owing
to the Assignor, the Assignor's Pro Rata Share of the Letters of Credit, and the
Note held by the Assignor.
2. The Assignor (i) represents and warrants that, prior to executing
this Assignment and Acceptance, its Uncommitted Line Portion is
$[________________], the aggregate outstanding principal amount of Loans owed by
the Borrower to the Assignor is $[______________], and its Pro Rata Share of the
outstanding Effective Amount of L/C Obligations is $[_____________]; (ii)
represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear
of any adverse claim; (iii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties, or representations
made in or in connection with the Agreement or any other Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency, or
value of the Agreement or any other Loan Document or any other instrument or
document furnished pursuant thereto; (iv) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under the Agreement or any other Loan Document or any other
instrument or document furnished pursuant thereto; and (v) attaches the Note
referred to in Section 1 above and requests that Agent exchange such Note for a
new Note dated [____________], in the principal amount of
D-1
$[_____________] payable to the order of the Assignee[, and a new Note dated in
the principal amount of $[______________] payable to the order of Assignor].
3. The Assignee (i) confirms that it has received a copy of the
Agreement, together with copies of the financial statements referred to in
Section 7.01 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance (ii) agrees that it will, independently and without
reliance upon Agent, the Assignor or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Agreement or any
other Loan Document; (iii) appoints and authorizes Agent to take such action as
agent on its behalf and to exercise such powers under the Agreement and any
other Loan Document as are delegated to Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; (iv) agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Agreement or any other Loan Document are required to be performed by it
as a Bank; (v) specifies as its Lending Office (and address for notices) the
office set forth beneath its name on the signature pages hereof; (vi) attaches
the forms prescribed by the Internal Revenue Service of the United States
certifying as to the Assignee's status for purposes of determining exemption
from United States withholding taxes with respect to all payments to be made to
the Assignee under the Agreement and Notes or such other documents as are
necessary to indicate that all such payments are subject to such rates at a rate
reduced by an applicable tax treaty, and (vii) represents that it is an Eligible
Assignee.
4. The effective date for this Assignment and Acceptance shall be
[___________________] ("Effective Date"), and following the execution of this
Assignment and Acceptance, Agent will record it in its records of the
transactions under the Agreement.
5. Upon such recording, from and after the Effective Date, Agent shall
make all payments under the Agreement and the Notes in respect of the interest
assigned hereby (including all payments of principal, interest, and fees) to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments in
payments under the Agreement and the Notes for periods prior to the Effective
Date directly between themselves.
6. This Assignment and Acceptance shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York.
D-2
The parties hereto have caused this Assignment and Acceptance to be
duly executed as of the date first above written.
[ASSIGNOR]
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Address:
-----------------------------------------
Attention:
---------------------------------------
Telecopy No:
-------------------------------------
[ASSIGNEE]
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Lending Office:
Address:
-----------------------------------------
Attention:
---------------------------------------
Telecopy No:
-------------------------------------
FORTIS CAPITAL CORP., as Agent
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
D-3
EXHIBIT E
FORM OF
BORROWING BASE COLLATERAL POSITION REPORT
[Date]
Fortis Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Re: Credit Agreement, dated to be effective as of December 1, 2001
(as amended or supplemented from time to time, the
"Agreement"), by and among ▇▇▇▇▇▇▇▇ Marketing, L.L.C. (the
"Borrower"), the banks that from time to time are parties
thereto, and Fortis Capital Corp., as Agent
Ladies and Gentlemen:
The Borrower, acting through its duly authorized Responsible Officer
(as that term is defined in the Agreement), deliver the attached report to the
Banks and certify to each of the Banks that it is in compliance with the
Agreement. Further, the undersigned hereby certifies that the Net Position has
at no time exceeded the limitations set forth in Section 8.11 of the Agreement
and that the undersigned has no knowledge of any Defaults or Events of Default
under the Agreement which exist as of the date of this letter.
The undersigned also certifies that the amounts set forth on the
attached report constitute all Collateral which has been or is being used in
determining availability for an advance or letter of credit issued under the
Borrowing Base Line as of the preceding date.
E-1
This certificate and attached reports are submitted pursuant to Section 7.02(b)
of the Agreement. Capitalized terms used herein and in the attached reports have
the meanings specified in the Agreement.
Very truly yours,
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
E-2
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
BORROWING BASE COLLATERAL POSITION REPORT
AS OF [DATE]
In my capacity as Responsible Officer for ▇▇▇▇▇▇▇▇ Marketing, L.L.C., I
hereby certify that as of the date written above, the amounts indicated below
were accurate and true as of the date of preparation. I also certify that the
net long or short position has not exceeded the limitations set forth in Section
8.11 of the Credit Agreement.
I. COLLATERAL
A. Cash Collateral $ 100% $
----------- ------------
B. Eligible Broker $ 90% $
----------- ------------
C. Tier I Accounts $ 90% $
----------- ------------
D. Tier II Accounts $ 85% $
----------- ------------
E. Tier I Unbilled Accounts $ 85% $
----------- ------------
F. Tier II Unbilled Accounts $ 80% $
----------- ------------
G. Eligible Inventory $ 80% $
----------- ------------
H. Eligible Exchange Receivables $ 80% $
----------- ------------
I. Undelivered Product Value $ 80% $
----------- ------------
J. First purchaser liability ( ) ( )
----------- ------------
----------- --------- ------------
=========== ========= ============
TOTAL COLLATERAL $ $
----------- ---------
------------
BORROWING BASE SUB-CAP $
------------
BORROWING BASE ADVANCE CAP (Least of $
$125,000,000.00, Borrowing Base Sub-Cap or Total
Collateral)
------------
II. BANK OUTSTANDINGS
A. Loans from the Banks $
------------
B. L/C's from the Banks $
------------
C. 125% of Net amounts due BNP Paribas under
Commodity Swap Contracts $
------------
TOTAL OUTSTANDINGS UNDER BORROWING BASE LINE
III. EXCESS/(DEFICIT) (I-II) $
------------
IV. NET SHORT OR LONG POSITION ___________ MMBTUS $
------------
Attached hereto are (i) an aging report, (ii) a schedule of netted qualified
exchange balances, (iii) a schedule of qualified inventory and (iv) a schedule
of all contras applied against (i), (ii), and (iii).
By:
-----------------------------
Responsible Officer
E-3
EXHIBIT F
FORM OF NET POSITION REPORT
[Date]
Fortis Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Re: Net Positions
In my capacity as Responsible Officer of ▇▇▇▇▇▇▇▇ Marketing, L.L.C., I
hereby certify to you that as of the date written above, such company's
aggregate net positions are as follows:
MMBTUS of
Natural Gas
Long
-----
(Short)
-----
Net Position
-----
To the best of my knowledge, these net positions have at no time
exceeded the limitations set forth in Section 8.11 of that certain Credit
Agreement, dated to be effective as of December 1, 2001, as amended or
supplemented from time to time, by and among ▇▇▇▇▇▇▇▇ Marketing, L.L.C., the
banks that from time to time are parties thereto, and Fortis Capital Corp., as
Agent.
Furthermore, at no time has the sum of the following:
(a) 25% of the Borrower's Net Position Value, $ , plus
----------
(b) Borrower's Transportation
and Storage Exposure, $ , plus
----------
(c) Borrower's Below Index Sales Exposure, $
----------
F-1
exceeded 33% of Borrower's Net Working Capital,
where,
"Net Position Value" means Borrower's Net Position valued at
$3.00/MMBTU.
"Below Index Sales Exposure" means (the maximum volume of gas required
to be sold at below index prices multiplied by the discount from
index), minus (the net positive value of all hedge contracts related to
the utilization of the related storage & transportation assets).
"Transportation and Storage Exposure" means the aggregate contractual
cost of transportation & storage contracts for a term of in excess of 3
months.
Very truly yours,
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
By:
----------------------------------
Name:
---------------------------------
Title:
-------------------------------
Date:
--------
F-2
EXHIBIT G
FORM OF NOTICE
TO TRANSFER FUNDS FROM BANK BLOCKED ACCOUNT
Fortis Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Re: Credit Agreement, dated to be effective as of December 1, 2001
(as amended or supplemented from time to time, the
"Agreement"), by and among ▇▇▇▇▇▇▇▇ Marketing, L.L.C. (the
"Borrower"), the banks that from time to time are parties
thereto, and Fortis Capital Corp., as Agent
Ladies and Gentlemen:
Reference is made to the Agreement (capitalized terms used herein that
are not defined shall have the respective meanings ascribed thereto in the
Agreement). Borrower hereby requests that $___________________________ be
transferred on ___________, 20____ from the Bank Blocked Account No.:
[_________] into Borrower's Operating Account No.: [_________] pursuant to
Section 7.14 and Section 11.12 of the Agreement.
Borrower represents and warrants, as of the date hereof, that (i) no
Default or Event of Default has occurred and is continuing on the date hereof.
Executed this ___ day of _______, 200_
Very truly yours,
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
G-1
EXHIBIT H
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is made as of the _____
day of __________, 2001, by and between FORTIS CAPITAL CORP. a Connecticut
Corporation ("Agent"), as Agent for the ratable benefit of the Banks
(hereinafter defined), ___________________________ (the Subordinated Creditor")
and acknowledged by ▇▇▇▇▇▇▇▇ MARKETING, L.L.C., a Delaware limited liability
company ("Borrower").
RECITALS
WHEREAS, Agent and the Banks have made, or in the future may make,
credit accommodations available to Borrower, pursuant to the terms and
provisions of that certain Credit Agreement dated to be effective as of December
1, 2001 ("Credit Agreement") among Agent, the Borrower and the banks and
financial institutions from time to time party thereto (collectively, the
"Banks"); and
WHEREAS, Subordinated Creditor has made, or in the future may make,
credit accommodations available to Borrower; and
WHEREAS, in order to induce Agent to consider making the credit
accommodations described above available to Borrower in the future, Subordinated
Creditor has agreed to subordinate certain of its rights and claims now existing
or hereafter arising against Borrower to the rights and claims of Agent now
existing or hereafter arising against Borrower, all in accordance with the terms
and provisions of this Agreement; and
WHEREAS, the parties hereto are entering into this Agreement in order
to set forth their agreements as to payment of the Senior Indebtedness
(hereinafter defined) and the Junior Indebtedness (hereinafter defined) and
their agreements as to certain other matters including but not limited to lien
priorities.
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements contained herein, the parties hereto hereby agree as follows:
AGREEMENT
ARTICLE I DEFINITIONS
As used in this Agreement, the terms defined above shall have their
respective meanings set forth above and the following terms shall have the
following meanings:
H-1
"Collateral" shall mean any and all property which now
constitutes or hereafter will constitute collateral or other security
for payment of the Senior Indebtedness pursuant to the Senior Documents
or otherwise.
"Default" shall have the meaning set forth in the Credit
Agreement.
"Distribution" by any Person shall mean (a) with respect to
any stock issued by such Person, the retirement, redemption, purchase
or other acquisition for value of any such stock, (b) the declaration
or payment of any dividend or other distribution on or with respect to
any such stock, (c) any loan or advance by such Person to, or other
investment by such Person in, the holder of any such stock, and (d) any
other payment (other than ordinary salaries to employees or advances
made in the ordinary course of business to employees for travel or
other expenses incurred in the ordinary course of business) by such
Person to or for the benefit of the holder of any such stock.
"Event of Default" shall have the meaning set forth in the
Credit Agreement.
"Federal Bankruptcy Code" shall have the meaning set forth in
Article VIII of this Agreement.
"Junior Creditor" shall mean the Subordinated Creditor and its
successors and assigns.
"Junior Documents" shall mean any and all agreements,
documents and instruments evidencing, governing or executed or
delivered in connection with the Junior Indebtedness.
"Junior Indebtedness" shall mean any and all indebtedness,
obligations and liabilities of every kind and character of Borrower now
or hereafter owing to any party to this Agreement other than Senior
Creditor, including, without limitation, the indebtedness evidenced and
to be evidenced by the Junior Documents, whether such indebtedness,
obligations and liabilities are direct or indirect, primary or
secondary, joint, several or joint and several, fixed or contingent and
whether incurred by Borrower as maker, endorser, guarantor or
otherwise.
"Permitted Payments shall have the meaning set forth in
Article IV of this Agreement.
"Person" shall mean and include an individual, a partnership,
a corporation, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture or other entity or a
governmental authority.
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"Proceeds" shall have the meaning assigned to it under the
Uniform Commercial Code, shall also include "products" (as defined in
the Uniform Commercial Code), and, in any event, shall include, but not
be limited to (a) any and all proceeds of any insurance, indemnity,
warranty, letter of credit or guaranty or collateral security payable
to any grantor from time to time with respect to any of the Collateral,
(b) any and all payments (in any form whatsoever) made or due and
payable to the owner of the Collateral from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture
of all or any part of the Collateral by any governmental body,
authority, bureau or agency (or any Person acting under color of
governmental authority) and (c) any and all other amounts from time to
time paid or payable under or in connection with any of the Collateral.
"Senior Creditor" shall mean Agent and its successors and
assigns.
"Senior Documents" shall mean any and all agreements,
documents and instruments evidencing, governing or executed or
delivered in connection with the Senior Indebtedness or the Senior
Creditor's interests in the Collateral, including, without limitation,
the Credit Agreement.
"Senior Indebtedness" shall mean any and all indebtedness,
obligations and liabilities of every kind and character of Borrower now
or hereafter owing to Senior Creditor, whether such indebtedness,
obligations and liabilities are direct or indirect, primary or
secondary, joint, several or joint and several, fixed or contingent and
whether incurred by Borrower as maker, endorser, guarantor or
otherwise, including, without limitation, any and all indebtedness,
obligations and liabilities of Borrower now or hereafter owing to
Senior Creditor pursuant to or evidenced by the Senior Documents.
ARTICLE II RIGHTS IN COLLATERAL
2.1 Priorities Regarding Collateral. The Junior Creditor covenants and
agrees that it will not take or hold any liens or security interests on any
property of Borrower. If for any reason, however, the Junior Creditor does
obtain a lien or security interest in the Collateral, any and every lien and
security interest in the Collateral in favor of or held for the benefit of the
Senior Creditor has and shall have priority over any lien or security interest
that Junior Creditor has or might have or acquire in the Collateral
notwithstanding any statement or provision contained in the Junior Documents or
otherwise to the contrary and irrespective of the time or order of filing or
recording of financing statements, deeds of trust, mortgages or other notices of
security interests, liens or assignments granted pursuant thereto, and
irrespective of anything contained in any filing or agreement to which any party
hereto or its respective successors and assigns may now or hereafter be a party,
and irrespective of the ordinary rules for determining priorities under the
Uniform Commercial Code or under any other law governing the relative priorities
of secured creditors.
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2.2 Management of Collateral. Senior Creditor shall have the exclusive
right to manage, perform and enforce the terms of the Senior Documents with
respect to the Collateral, to exercise and enforce all privileges and rights
thereunder according to its discretion and the exercise of its business judgment
including, but not limited to, the exclusive right to take or retake possession
of the Collateral and to hold, prepare for sale, process, sell, lease, dispose
of, or liquidate the Collateral, pursuant to a foreclosure or otherwise.
Notwithstanding any rights or remedies available to the Junior Creditor under
applicable law or under any document or instrument evidencing, securing or
otherwise executed in connection with the incurrence of the obligations
contemplated by the Junior Documents, Junior Creditor shall not be permitted to
foreclose upon their security interests in any of the Collateral, or to exercise
similar remedies with respect thereto, so long as any of the Senior Indebtedness
shall continue to exist, and only the Senior Creditor shall have the right to
restrict or permit, or approve or disapprove, the sale, transfer or other
disposition of Collateral. Junior Creditor will not in any manner interfere with
Senior Creditor's security interests in the Collateral unless and until Borrower
has satisfied in full the Senior Indebtedness and Senior Creditor has given
Junior Creditor written notice thereof. The Junior Creditor waives notice of,
and agrees not to challenge the method, manner, time, place or terms, of any
disposition of the Collateral by Senior Creditor. Accordingly, should Senior
Creditor elect to exercise its rights and remedies with respect to any of the
Collateral, Senior Creditor may proceed to do so without regard to any interest
of the Junior Creditor, and the Junior Creditor waives any claims that it may
have against Senior Creditor for any disposition of the Collateral. The Junior
Creditor agrees, whether or not a default has occurred in the payment of any
indebtedness or the performance of any other obligations to it, that any liens
on and security interests in the Collateral or any portion thereof that it might
have or acquire shall automatically be fully released ipso facto as to all
indebtedness and other obligations secured thereby owing to Junior Creditor if
and when Senior Creditor releases its lien in and security interest on such
Collateral in the event of any sale, disposition or other realization by Senior
Creditor (or any agent therefor) upon such Collateral.
ARTICLE III PROCEEDS
3.1 Distribution of Proceeds of Collateral. At any time during which
all or any part of the Senior Indebtedness remains outstanding, and whether or
not the same is then due and payable, the Proceeds of any sale, disposition or
other realization by Senior Creditor (or any agent therefor) upon all or any
part of the Collateral shall be applied first to the payment in full of all
Senior Indebtedness in such order as Senior Creditor shall determine in its sole
discretion.
3.2 Contingent Obligations. For purposes of distributing the Proceeds
of Collateral pursuant to this Article III, the portion of Senior Indebtedness
consisting of loans or advances not yet made by Senior Creditor to Borrower
under the Senior Documents (including, but not limited to, amounts with respect
to letters of credit outstanding and reimbursement for fees, costs and expenses)
shall be considered Senior
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Indebtedness then outstanding, and the Senior Creditor shall have the right to
retain, in a cash collateral account, cash collateral equal to the amount
thereof which Senior Creditor determines, in its sole good faith discretion, may
arise or exist from time to time.
3.3 Holding of Proceeds in Trust. Except as provided for in Article IV
of this Agreement, in the event the Junior Creditor receives Proceeds of the
Collateral, Junior Creditor shall be deemed to hold all of such Proceeds in
trust for the benefit of Senior Creditor until the proper application thereof in
accordance with Section 3.1 hereof. The Junior Creditor shall not seek to
challenge the validity, enforceability, priority or perfection of any of the
Senior Documents if the purpose or effect thereof would in any manner defeat or
delay the distribution of the Proceeds of any Collateral in the manner set forth
in Section 3.1 hereof.
ARTICLE IV SUBORDINATION
The Junior Creditor covenants and agrees that the Junior Indebtedness,
howsoever evidenced and whether now existing or hereafter incurred, shall be
subordinate and junior in right of payment, to the extent and in the manner
hereinafter set forth, to all Senior Indebtedness:
(a) The holder of the Senior Indebtedness shall first be
finally and irrevocably paid in cash an aggregate amount equal to the principal
thereof and termination fees, if any, interest at the time due thereon, and all
other costs, fees, expenses and/or obligations now or hereafter owing
thereunder, before any payment or Distribution of any character, whether in
cash, securities or other property, shall be made on account of the Junior
Indebtedness or otherwise to or for the benefit of Junior Creditor; and any
payment or Distribution of any character, whether in cash, securities or other
property, which would otherwise, but for the provisions of this Article IV, be
payable or deliverable in respect of the Junior Indebtedness or otherwise shall
be paid or delivered directly to the holder of the Senior Indebtedness (or its
duly authorized representatives), until all the Senior Indebtedness shall have
been paid in full.
(b) Notwithstanding the provisions of subparagraph (a) of this
Article IV, Borrower may pay interest on the unpaid principal balance of the
Junior Indebtedness on a monthly basis in arrears and make both scheduled
payments and prepayments of principal on the terms and conditions set forth in
the Junior Documents (the "Permitted Payments"); provided, however, that as a
condition precedent to Borrower's right to make (and the Junior Creditor's
rights to receive) any and all such Permitted Payments, there shall not have
occurred or then exist a Default or Event of Default under any of the Senior
Indebtedness or any of the Senior Documents, or an event or condition which with
notice, lapse of time or the making of such payment would constitute a Default
or Event of Default under any of the foregoing.
(c) The Junior Creditor agrees to promptly notify the Senior
Creditor in writing of any default or event of default on any Junior
Indebtedness or otherwise or
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under any of the Junior Documents and further agrees not to exercise any right
or remedy or take any enforcement action with respect to any default or event of
default on any of the Junior Indebtedness or otherwise or under any of the
Junior Documents until such time as the Senior Indebtedness has been paid in
full. Without limiting any of the foregoing, any failure of Borrower to perform
any of its obligations to Junior Creditor as a result of any of the
prohibitions, restrictions or limitations set forth in this Agreement shall not
constitute the basis for a default or event of default on any Junior
Indebtedness or under any Junior Documents.
(d) No reimbursement, payment, direct or indirect, or
disbursement of other property or assets of Borrower shall be made by Borrower
on account of the Junior Indebtedness or otherwise or received, accepted,
retained or applied by the Junior Creditor (except for the account and benefit
of Senior Creditor, which shall be held in trust for Senior Creditor or except
for Permitted Payments as allowed in subparagraph (b) of this Article IV) until
such time as the Senior Indebtedness has been finally and irrevocably paid in
full in cash.
(e) Without affecting Junior Creditor's obligations set forth
in this Agreement not to exercise any remedy as set forth in this Agreement, in
the event that the Junior Creditor receives any payment of any character,
whether in cash, securities, or other properties, payable or deliverable in
respect of the Junior Indebtedness and (i) such payment would cause an event or
condition to occur which, with notice, lapse of time, or both, would cause a
Default or an Event of Default to occur under the Senior Documents; or (ii) such
payment is made after a Default or an Event of Default has occurred under the
Senior Documents; or (iii) such payment is made at a time that the management of
Borrower knew or reasonably should have known that a Default or an Event of
Default had occurred under the Senior Documents, or that such payment could
reasonably be expected to cause a Default or an Event of Default to occur under
the Senior Documents, then such cash, securities or other properties shall be
held in trust for the benefit of the holder of the Senior Indebtedness and shall
be paid or delivered to the holder of the Senior Indebtedness (or its authorized
representatives), in the proportions in which it holds same, until all the
Senior Indebtedness shall have been paid in full.
(f) The provisions of this Agreement are and are intended
solely for the purpose of defining the relative rights of the holder of the
Junior Indebtedness, on the one hand, and the holder of the Senior Indebtedness
on the other hand. Nothing contained in this Agreement is intended to or shall
impair, as between Borrower and its creditors other than the holder of the
Senior Indebtedness and the holder of the Junior Indebtedness, the obligations
of Borrower which are absolute and unconditional, to pay to the holder of the
Junior Indebtedness the principal thereof and interest thereon as and when the
same shall become due and payable in accordance with its terms, or is intended
to or shall affect the relative rights against Borrower of the holder of the
Senior Indebtedness.
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(g) No right of any present or future holder of any of the
Senior Indebtedness to enforce the subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of Borrower or by any act in good faith or failure to act in good faith by
any such holder, or by any noncompliance by Borrower with the covenants,
agreements and conditions of the Junior Indebtedness, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.
(h) Senior Creditor shall have no obligation to preserve the
rights of the Collateral against any prior parties or to marshal any of the
Collateral for the benefit of any Person.
ARTICLE V BENEFIT OF AGREEMENT; AMENDMENT
This Agreement shall constitute a continuing offer to all persons who,
in reliance upon such provisions, become a Senior Creditor, and such provisions
are made for the benefit of each Senior Creditor and each of them may enforce
such provisions. The Junior Creditor agrees not to assign or transfer, at any
time this Agreement remains in effect, any rights, claim or interest of any kind
in or to any Junior Indebtedness without first notifying Senior Creditor and
making such assignment expressly subject to this Agreement. The provisions of
the Junior Documents as in effect on the date hereof may not be amended or
modified in any respect without the prior written consent of Senior Creditor.
ARTICLE VI FURTHER ASSURANCES
Each of the parties hereto hereby agrees to promptly execute and
deliver to the other parties hereto any and all such further instruments and
documents and take such further action as such other parties may reasonably
request in order to fully effect the purposes of this Agreement.
ARTICLE VII REPRESENTATIONS AND WARRANTIES
7.1 Senior Creditor and Junior Creditor. Each of the parties hereto
hereby represents and warrants to the other party hereto that:
(a) such party has full power, authority and legal right to
execute, deliver and perform this Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement; and
(b) this Agreement constitutes a legal, valid and binding
obligation of such party enforceable against it in accordance with its terms
except as enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws
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affecting creditors rights generally and except as enforceability may be limited
by general principles of equity (whether considered in a suit at law or in
equity).
ARTICLE VIII BANKRUPTCY
The Junior Creditor agrees not to commence, or to join with any other
creditor in commencing, any case under Title 11 of the United States Code, as
amended and/or superseded (the "Federal Bankruptcy Code") by or against Borrower
or any of its property without the prior written consent of Senior Creditor. The
provisions of this Agreement shall continue in full force and effect,
notwithstanding the commencement of a case under the Federal Bankruptcy Code by
or against Borrower. In furtherance of the foregoing, if Junior Creditor
receives any property of, or payments from Borrower after the commencement of
such a case on account of a secured claim which is subordinated by the terms of
this Agreement (whether as "adequate protection" payments or otherwise), Junior
Creditor shall immediately turn such property or payments over to the Senior
Creditor. To the extent that Junior Creditor has or acquires any rights under
Section 363 or Section 364 of the Federal Bankruptcy Code with respect to the
Collateral, the Junior Creditor hereby agrees not to assert such rights without
the prior written consent of the Senior Creditor. The Junior Creditor hereby
grants to the Senior Creditor the right, but Senior Creditor shall not be
obligated, to file, prove and vote claims on account of the Junior Indebtedness
in any receivership, bankruptcy, or other proceeding under the Federal
Bankruptcy Code commenced by or against Borrower.
ARTICLE IX MISCELLANEOUS
9.1 No Waiver, Cumulative Remedies. No failure to exercise, and no
delay in exercising on the part of any party hereto, any right, power or
privilege under this Agreement shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided in this Agreement
are cumulative and shall not be exclusive of any rights or remedies provided by
law.
9.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telegraph, telecopier, or telex) and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by hand,
or five days after being deposited in the mail, postage prepaid, or, in the case
of telegraphic notice, when delivered to the telegraph company, or in the case
of telex notice, when sent, answer back received, addressed as set forth below
or to such address or other address as may be hereafter notified by the
respective parties hereto:
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To Senior Creditor: Fortis Capital Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Junior Creditor:
-------------------------
-------------------------
-------------------------
Attention:
--------------
Telephone:
--------------
Facsimile:
--------------
9.3 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES
HERETO AND THEIR RESPECTIVE SUCCESSORS, TRANSFEREES AND ASSIGNS.
9.4 Amendments and Waivers. Neither this Agreement nor any of the terms
hereof may be amended, waived, discharged or terminated unless such amendment,
waiver, discharge or termination is in writing signed by each of the parties
hereto.
9.5 Exculpation. Neither the Senior Creditor nor its agents have made
to the other parties hereto nor do any of them hereby or otherwise make any
representations or warranties, express or implied, nor do they assume any
liability with respect to (i) obligors under any instruments of guarantee; (ii)
the enforceability, validity, value or collectibility of the Senior
Indebtedness, any Collateral therefor, or any guarantee or security which may
have been granted to any of them in connection with the Senior Documents; or
(iii) Borrower's title or right to transfer any collateral or security. No party
hereto shall be liable to any other party hereto for any action or failure to
act or any error of judgment, negligence, or mistake or oversight whatsoever on
its part or its respective agents, officers, employees or attorneys with respect
to any transaction relating to the Collateral or this Agreement. To the maximum
extent permitted by law, except as otherwise provided herein, the Junior
Creditor waives any claim it might have against Senior Creditor with respect to,
or arising out of, the handling of the Collateral (including, without
limitation, any such claim based upon the timing or method of realizing upon
such Collateral).
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9.6 Third Party Rights. This Agreement is solely for the benefit of the
parties hereto and their respective successors and assigns, and no other Person
shall have any right, benefit, priority or other interest under, or because of
the existence of, this Agreement.
9.7 Termination. This Agreement shall terminate upon the final and
indefeasible payment in full of all the Senior Indebtedness and the termination
of all of the Senior Documents.
9.8 Counterparts. This Agreement may be executed by one or more of the
parties hereto in any number of separate counterparts, each of which shall be an
original, but all of which shall constitute but one agreement.
9.9 Legend. All promissory notes issued in connection with the Junior
Indebtedness shall contain a legend substantially in the form of the following:
"THIS PROMISSORY NOTE, AND PAYMENT AND ENFORCEMENT HEREOF, IS
SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN SUBORDINATION
AGREEMENT DATED AS OF ________________, 2001 BETWEEN FORTIS CAPITAL
CORP., AS AGENT, AND _________________________________ AS SUCH
SUBORDINATION AGREEMENT MAY BE AMENDED FROM TIME TO TIME."
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[EXECUTION PAGES TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their proper and duly authorized officers as of the day and
year first above written.
SENIOR CREDITOR:
FORTIS CAPITAL CORP., as Agent
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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JUNIOR CREDITOR:
--------------------------------------------
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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ACKNOWLEDGMENT BY ▇▇▇▇▇▇▇▇ MARKETING, L.L.C.
▇▇▇▇▇▇▇▇ Marketing, L.L.C. hereby acknowledges receipt of a copy of the
foregoing Subordination Agreement and agrees that, except as otherwise provided
by the foregoing Subordination Agreement, it will not pay any indebtedness
subordinated by the foregoing Subordination Agreement until all the Senior
Indebtedness shall have been paid in full.
▇▇▇▇▇▇▇▇ MARKETING, L.L.C.,
a Delaware limited liability company
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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