1
CONFORMED COPY
$1,394,846,122
REIMBURSEMENT AGREEMENT
dated as of
January 30, 1998
among
K N Energy, Inc.,
The Banks Listed Herein,
and
▇▇▇▇▇▇ Guaranty Trust Company of New York,
as Administrative Agent
----------------------
▇. ▇. ▇▇▇▇▇▇ Securities Inc.,
BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ Securities Inc.
and
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC,
Syndication Agents
2
TABLE OF CONTENTS
PAGE
----
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions.................................................... 1
SECTION 1.2. Accounting Terms and Determinations............................ 10
ARTICLE 2
THE LETTER OF CREDIT
SECTION 2.1. Issuance of the Letter of Credit............................... 10
SECTION 2.2. Drawings under the Letter of Credit............................ 11
SECTION 2.3. Reimbursement Obligation....................................... 11
SECTION 2.4. Fees........................................................... 11
SECTION 2.5. General Provisions as to Payments.............................. 12
SECTION 2.6. Obligations.................................................... 12
SECTION 2.7. Indemnification................................................ 13
SECTION 2.8. Mandatory Reductions........................................... 14
3
ARTICLE 3
CONDITIONS
SECTION 3.1. Effectiveness.................................................. 15
SECTION 3.2. Borrowings and Issuances of Letters of Credit.................. 16
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Corporate Existence and Power.................................. 17
SECTION 4.2. Corporate and Governmental Authorization; No
Contravention.............................................. 17
SECTION 4.3. Binding Effect................................................. 17
SECTION 4.4. Financial Information.......................................... 17
SECTION 4.5. Litigation..................................................... 18
SECTION 4.6. Compliance with ERISA.......................................... 18
SECTION 4.7. Environmental Matters.......................................... 18
SECTION 4.8. Taxes.......................................................... 19
SECTION 4.9. Subsidiaries................................................... 19
SECTION 4.10. Not an Investment Company...................................... 19
SECTION 4.11. Full Disclosure................................................ 19
SECTION 4.12. MidCon Acquisition............................................. 20
4
ARTICLE 5
COVENANTS
SECTION 5.1. Information.................................................... 20
SECTION 5.2. Payment of Obligations......................................... 22
SECTION 5.3. Maintenance of Property; Insurance............................. 22
SECTION 5.4. Conduct of Business and Maintenance of Existence............... 23
SECTION 5.5. Compliance with Laws........................................... 23
SECTION 5.6. Inspection of Property, Books and Records...................... 24
SECTION 5.7. Debt........................................................... 24
SECTION 5.8. Minimum Net Worth.............................................. 25
SECTION 5.9. Minimum Interest Coverage Ratio................................ 25
SECTION 5.10. Negative Pledge................................................ 25
SECTION 5.11. Consolidations, Mergers and Sales of Assets.................... 26
SECTION 5.12. Transactions with Affiliates................................... 26
ARTICLE 6
DEFAULTS
SECTION 6.1. Events of Default............................................... 27
5
ARTICLE 7
THE AGENTS
SECTION 7.1. Appointment and Authorization.................................. 29
SECTION 7.2. Administrative Agent and Affiliates............................ 29
SECTION 7.3. Action by Administrative Agent................................. 30
SECTION 7.4. Consultation with Experts...................................... 30
SECTION 7.5. Liability of Administrative Agent.............................. 30
SECTION 7.6. Indemnification................................................ 30
SECTION 7.7. Credit Decision................................................ 31
SECTION 7.8. Successor Administrative Agent................................. 31
SECTION 7.9. Agents' Fees................................................... 31
SECTION 7.10. Other Agents................................................... 31
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.1. Increased Cost and Reduced Return.............................. 32
SECTION 8.2. Taxes.......................................................... 33
6
ARTICLE 9
MISCELLANEOUS
SECTION 9.1. Notices........................................................ 35
SECTION 9.2. No Waivers..................................................... 35
SECTION 9.3. Expenses; Indemnification...................................... 35
SECTION 9.4. Sharing of Set-offs............................................ 36
SECTION 9.5. Amendments and Waivers......................................... 37
SECTION 9.6. Successors and Assigns......................................... 37
SECTION 9.7. Collateral..................................................... 38
SECTION 9.8. Governing Law; Submission to Jurisdiction...................... 38
SECTION 9.9. Counterparts; Integration...................................... 38
SECTION 9.10. WAIVER OF JURY TRIAL........................................... 38
SECTION 9.11. Obligations Several............................................ 38
7
PRICING SCHEDULE
EXHIBIT A - LETTER OF CREDIT
EXHIBIT B - BENEFICIARY UNDERTAKING
EXHIBIT C - OPINION OF SPECIAL COUNSEL FOR THE BORROWER
EXHIBIT D - OPINION OF KANSAS COUNSEL FOR THE BORROWER
EXHIBIT E - OPINION OF GENERAL COUNSEL OF THE BORROWER
EXHIBIT F - OPINION OF ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, SPECIAL
COUNSEL FOR THE AGENTS
8
REIMBURSEMENT AGREEMENT
AGREEMENT dated as of January 30, 1998 among K N ENERGY, INC., the
BANKS listed on the signature pages hereof and ▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein, have
the following meanings:
"Acquisition" means the purchase of MidCon Corp. by the Borrower from
Occidental Petroleum Corporation pursuant to the Stock Purchase Agreement.
"Acquisition Revolver" means the $2,100,000,000 Credit Agreement of
even date herewith among the Borrower, the banks parties thereto and ▇▇▇▇▇▇
Guaranty Trust Company of New York, as amended and in effect from time to time.
"Administrative Agent" means ▇▇▇▇▇▇ Guaranty Trust Company of New York
in its capacity as administrative agent for the Banks under this Agreement, and
its successors in such capacity.
9
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Administrative Agent
and submitted to the Administrative Agent (with a copy to the Borrower) duly
completed by such Bank.
"Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person") or
(ii) any Person (other than the Borrower or a Subsidiary) which is controlled by
or is under common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agent" means each of the Administrative Agent and the Syndication
Agents, and "Agents" means any combination of them, as the context may require.
"Bank" means each bank listed on the signature pages hereof and their
respective successors.
"Base Rate" means, for any day, a rate per annum equal to the higher
of (i) the Prime Rate for such day or (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
10
"Beneficiary" means Occidental Petroleum Corporation, as Beneficiary
under the Letter of Credit or any transferee thereof as provided in the Letter
of Credit.
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" means K N Energy, Inc., a Kansas corporation, and its
successors.
"Borrower's 1996 Form 10-K" means the Borrower's annual report on Form
10-K for 1996, as filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934.
"Borrower's Latest Form 10-Q" means the Borrower's quarterly report on
Form 10-Q for the quarter ended September 30, 1997, as filed with the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934.
"Commitment" means, for any Bank, the several obligation of such Bank
to issue the Letter of Credit to the extent of such Bank's Commitment Percentage
of $1,394,846,122, as such amount may be reduced from time to time in accordance
with Section 2.8(b).
11
"Commitment Percentage" means, for any Bank, the Commitment Percentage
specified for such Bank in paragraph 3 of the Letter of Credit.
"Consolidated Assets" means the total amount of assets appearing on
the consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries, prepared in accordance with generally accepted accounting
principles as of the date of the most recent regularly prepared consolidated
financial statements prior to the taking of any action for the purposes of which
the determination is being made.
"Consolidated Debt" of any Person means at any date the sum (without
duplication) of (i) the Debt of such Person and its Consolidated Subsidiaries,
determined on a consolidated basis as of such date plus (ii) the excess (if any)
of the Trust Preferred Securities of such Person over 10% of the Consolidated
Total Capitalization of such Person at such date minus (iii) the portion of the
Substitute Note collateralized as contemplated by Section 5.10(b) hereof.
"Consolidated EBITDA" means, for any period, Consolidated Net Income
for such period plus, to the extent deducted in determining Consolidated Net
Income for such period, the aggregate amount of (i) Consolidated Interest
Expense, (ii) income tax expense and (iii) depreciation and amortization
expense.
"Consolidated Interest Expense" means, for any period, the interest
expense of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis for such period.
12
"Consolidated Subsidiary" of any Person means at any date any
Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in its consolidated financial statements if such statements
were prepared as of such date.
"Consolidated Net Income" means, for any period, the net income of the
Borrower and its Consolidated Subsidiaries before extraordinary items,
determined on a consolidated basis for such period.
"Consolidated Net Worth" of any Person means at any date the sum
(without duplication) of (i) the consolidated stockholders' equity of such
Person and its Consolidated Subsidiaries, determined as of such date plus (ii)
the Mandatorily Convertible Preferred Stock of such Person plus (iii) the Trust
Preferred Securities of such Person; provided that the amount of Trust Preferred
Securities added pursuant to this clause (iii) shall not exceed 10% of
Consolidated Total Capitalization of such Person at such date.
"Consolidated Total Capitalization" of any Person means at any date
the sum of Consolidated Debt of such Person and Consolidated Net Worth of such
Person, each determined as of such date.
"Date of Issuance" means the date of issuance of the Letter of Credit.
13
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable or deferred employee and director
compensation arising in the ordinary course of business, (iv) all obligations of
such Person as lessee which are capitalized in accordance with generally
accepted accounting principles, (v) all non-contingent obligations (and, for
purposes of Section 5.11 and the definitions of Material Debt and Material
Financial Obligations, all contingent obligations) of such Person to reimburse
any bank or other Person in respect of amounts paid under a letter of credit or
similar instrument, (vi) all Debt secured by a Lien on any asset of such Person,
whether or not such Debt is otherwise an obligation of such Person, and (vii)
all Debt of others Guaranteed by such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
14
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Expiration Date" has the meaning set forth in the Letter of Credit.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 3.01.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
15
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Event of Default" has the meaning set forth in Section 6.1.
"Facility Office" means, as to each Bank, its office located at its
address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Facility Office) or such other office as
such Bank may hereafter designate as its Facility Office by notice to the
Borrower and the Administrative Agent.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to ▇▇▇▇▇▇ Guaranty Trust Company of New
York on such day on such transactions as determined by the Administrative Agent.
16
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 9.3(b).
"Interest Coverage Ratio" means, at any date, the ratio of
Consolidated EBITDA to Consolidated Interest Expense for the period of four
consecutive fiscal quarters most recently ended on or before such date.
17
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise.
"Letter of Credit" means a Letter of Credit to be issued hereunder by
the Banks severally and not jointly, which shall be in the form of Exhibit A and
dated the Date of Issuance, as the same may be amended from time to time in
accordance with the terms thereof. Exhibit A, for purposes of illustration, is
completed as if the Date of Issuance were January 30, 1998.
"Letter of Credit Amount" has the meaning set forth in the Letter of
Credit.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, the
Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Mandatorily Convertible Preferred Stock", means, with respect to the
Borrower, preferred securities of a Subsidiary which are (i) mandatorily
convertible into common equity securities of the Borrower within approximately
18
three years of their date of issuance, (ii) issued in conjunction with, and
pledged to secure, an obligation to purchase common equity securities of the
Borrower within approximately three years for an equal amount or (iii) otherwise
structured in a manner satisfactory to the Administrative Agent so as to ensure
the issuance of incremental common equity securities of the Borrower in a
substantially equal amount within approximately three years.
"Material Debt" means Debt (other than (i) the Notes and (ii) Debt
owing to the Borrower or a Subsidiary) of the Borrower and/or one or more of its
Subsidiaries, arising in one or more related or unrelated transactions, in an
aggregate principal or face amount exceeding $75,000,000.
"Material Financial Obligations" means a principal or face amount of
Debt (other than (i) the Notes and (ii) Debt owing to the Borrower or a
Subsidiary) and/or payment obligations in respect of Derivatives Obligations of
the Borrower and/or one or more of its Subsidiaries, arising in one or more
related or unrelated transactions, exceeding in the aggregate $125,000,000.
"Material Subsidiary" means any Subsidiary the consolidated assets of
which constitute 10% or more of Consolidated Assets.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the
19
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 9.6(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than
a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Purchase Agreement" means the Purchase and Sale Agreement dated as of
January 28, 1994, among K N Gas Supply Services, Inc., the Borrower, Bank of
20
America National Trust and Savings Association, as the initial Purchaser (as
defined therein), and Bank of America National Trust and Savings Association, as
agent for the Purchasers.
"Pricing Schedule" means the Schedule attached hereto identified as
such.
"Prime Rate" means the rate of interest publicly announced by ▇▇▇▇▇▇
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Reimbursable Amount" has the meaning set forth in Section 2.3.
"Required Banks" means at any time Banks having Commitment Percentages
aggregating at least 66 2/3 %.
"S&P" means Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Stock Purchase Agreement" means the Stock Purchase Agreement dated as
of December 18, 1997, between Occidental Petroleum Corporation, a Delaware
corporation, and the Borrower as amended and in effect from time to time;
21
provided that any such amendment from the form thereof heretofore furnished to
each of the Banks which could reasonably be expected to materially adversely
affect the business, consolidated financial position or consolidated results of
operations of the Borrower and its Consolidated Subsidiaries, considered as a
whole, shall be effective for purposes of references thereto in this Agreement
only if such amendment shall have received the written consent of the Required
Banks (which shall not be unreasonably withheld).
"Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person; unless
otherwise specified, "Subsidiary" means a Subsidiary of the Borrower.
"Substitute Note" means the Substitute Note (as defined in the Stock
Purchase Agreement) issued by the Borrower to Occidental Petroleum Corporation
in connection with the Acquisition.
"Syndication Agent" means either ▇.▇. ▇▇▇▇▇▇ Securities Inc.,
BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Securities Inc. or NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities LLC in its capacity as a syndication agent in respect of
this Agreement, and "Syndication Agents" means all of them.
"Termination Date" means (i) March 31, 1998, if the Letter of Credit
shall not have been issued on or prior to such date, or (ii) the first date
after the Date of Issuance on which there are no Reimbursable Amounts and no
Undrawn Amounts, in all other cases.
22
"Trust Preferred Securities" means, with respect to the Borrower,
mandatorily redeemable capital trust securities of trusts which are Subsidiaries
and the subordinated debentures of the Borrower in which the proceeds of the
issuance of such capital trust securities are invested, including, without
limitation, (i) the 8.56% Series B Capital Trust Pass-through Securities of K N
Capital Trust I and (ii) the capital trust securities of K N Capital Trust II
anticipated to be issued after the Effective Date.
"Undrawn Amount" means, for any Bank, the amount equal to the product
of such Bank's Commitment Percentage and the Letter of Credit Amount.
"Unfunded Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
23
"Wholly-Owned Consolidated Subsidiary" of any Person means any
Consolidated Subsidiary all of the shares of capital stock or other ownership
interests of which (except directors' qualifying shares) are at the time
directly or indirectly owned by such Person.
SECTION 1.2. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks; provided that, if the Borrower notifies the Administrative Agent
that the Borrower wishes to amend any covenant in Article 5 to eliminate the
effect of any change in generally accepted accounting principles on the
operation of such covenant (or if the Administrative Agent notifies the Borrower
that the Required Banks wish to amend Article 5 for such purpose), then the
Borrower's compliance with such covenant shall be determined on the basis of
generally accepted accounting principles in effect immediately before the
relevant change in generally accepted accounting principles became effective,
until either such notice is withdrawn or such covenant is amended in a manner
satisfactory to the Borrower and the Required Banks.
24
ARTICLE 2
THE LETTER OF CREDIT
SECTION 2.1. Issuance of the Letter of Credit. Subject to the terms
and conditions hereof, the Banks severally agree to issue the Letter of Credit
to the Beneficiary on a date, not later than March 31, 1998, and in an initial
Letter of Credit Amount, not greater than $1,394,846,122, specified by the
Borrower by at least three Domestic Business Days' notice to the Administrative
Agent. The Administrative Agent shall promptly notify each Bank of the Date of
Issuance so specified by the Borrower.
SECTION 2.2. Drawings under the Letter of Credit. (a) Upon receipt
from the Beneficiary of a demand for payment under the Letter of Credit, the
Administrative Agent shall determine in accordance with the terms and conditions
of the Letter of Credit whether such demand for payment should be honored.
(b) If the Administrative Agent determines that a demand for payment
by the Beneficiary should be honored in accordance with the terms and conditions
set forth in the Letter of Credit, the Administrative Agent shall promptly
notify the Borrower and each Bank as to the aggregate amount to be paid as a
result of such demand and shall promptly notify each Bank as to its share of
such amount. Each Bank shall make available to the Beneficiary through the
Administrative Agent its share of the amount so demanded in accordance with the
terms of the Letter of Credit.
SECTION 2.3. Reimbursement Obligation. If any Bank pays any portion of
any draft presented under the Letter of Credit, the Borrower agrees to pay to
25
such Bank on the date of such payment ("Reimbursement Due Date") an amount equal
to the amount paid by such Bank under the Letter of Credit ("Reimbursable
Amount"). If any Reimbursable Amount is not paid on or before the relevant
Reimbursement Due Date, the overdue amount shall bear interest until paid as
provided in Section 2.5(c).
SECTION 2.4. Fees. (a) The Borrower shall pay to the Administrative
Agent, for the account of the Banks ratably in proportion to their Commitment
Percentages, a facility fee at the Facility Fee Rate (determined daily in
accordance with the Pricing Schedule) on (i) to but not including the earlier of
the Termination Date and the Date of Issuance, the aggregate amount of the
Commitments and (ii) on and after the Date of Issuance, the sum of the aggregate
Undrawn Amounts of the Banks and the aggregate Reimbursable Amounts of the
Banks. Such facility fee shall accrue from and including the date of this
Agreement to but excluding the Termination Date and shall be payable in arrears
on each March 31, June 30, September 30 and December 31, and on the Termination
Date.
(b) The Borrower shall pay to the Administrative Agent, for the
account of the Banks ratably in proportion to their Commitment Percentages, a
letter of credit fee at the Letter of Credit Fee Rate (determined daily in
accordance with the Pricing Schedule) on the aggregate Undrawn Amounts of the
Banks. Such letter of credit fee shall accrue from and including the Date of
Issuance to and including the Expiration Date and shall be payable in arrears on
each March 31, June 30, September 30 and December 31, and on the Expiration
Date.
26
(c) All fees payable hereunder shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed (including the
first day but excluding the last day (or, if such last day is the Expiration
Date, including the last day)).
SECTION 2.5. General Provisions as to Payments. (a) All payments to be
made by the Borrower under this Agreement shall be made not later than 12:00
Noon (New York City time) on the date when due, in Federal or other funds
immediately available in New York City, to the Administrative Agent at its
address referred to in Section 9.1 for the account of the party entitled
thereto. The Administrative Agent shall promptly distribute to each of the Banks
its ratable share of each such payment received by the Administrative Agent for
the account of the Banks.
(b) Whenever any payment shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. If the date for any payment of a
Reimbursable Amount is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(c) All Reimbursable Amounts not repaid by the Borrower on the
Reimbursement Due Date shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of 2% plus the Base Rate for
such day. Such interest shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day).
27
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Banks pursuant
to Section 2.3 or Section 2.4 that the Borrower will not make such payment in
full, the Administrative Agent may assume that the Borrower has made such
payment in full to the Administrative Agent on such date and the Administrative
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank. If and
to the extent that the Borrower shall not have so made such payment, each Bank
shall repay to the Administrative Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 2.6. Obligations. The obligations of the Borrower under this
Agreement shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including without limitation the following
circumstances:
(a) any lack of validity or enforceability of this Agreement or the
Letter of Credit or any document related hereto or thereto;
(b) any amendment or waiver of or any consent to departure from all
or any of the provisions of this Agreement, the Letter of Credit or
any document related hereto or thereto;
(c) the existence of any claim, set-off, defense or other rights that
the Borrower may have at any time against the Beneficiary (or any
28
Person for whom the Beneficiary may be acting), the Banks or any other
Person, whether in connection with this Agreement or the Letter of
Credit or any document related hereto or thereto or any unrelated
transactions;
(d) any statement or any other document presented under the Letter of
Credit proving to be forged, fraudulent or invalid in any respect or
any statement therein being untrue or inaccurate in any respect
whatsoever;
(e) payment by any Bank under the Letter of Credit to the Beneficiary
of such Letter of Credit against presentation to the Administrative
Agent of a draft or certificate that does not comply with the terms of
the Letter of Credit; or
(f) any other act or omission to act or delay of any kind by any
Bank, the Administrative Agent or any other Person or any other event
or circumstance whatsoever that might, but for the provisions of this
subsection (f), constitute a legal or equitable discharge of the
Borrower's obligations.
Nothing in this Agreement and no failure by the Borrower to perform any of its
obligations hereunder shall affect the several obligations of the Banks under
the Letter of Credit.
SECTION 2.7. Indemnification. The Borrower hereby indemnifies and
holds harmless each Bank and the Administrative Agent from and against any and
all
29
claims, damages, losses, liabilities, costs or expenses which such Bank or the
Administrative Agent may incur, and none of the Banks nor the Administrative
Agent nor any of their officers or directors or employees or agents shall be
liable or responsible, by reason of or in connection with the execution and
delivery or transfer of or payment or failure to pay under the Letter of Credit,
including without limitation any of the circumstances enumerated in Section 2.6
above, as well as (i) any error, omission, interruption or delay in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise, (ii)
any error in interpretation of technical terms, (iii) any loss or delay in the
transmission of any document required in order to make a drawing under the
Letter of Credit, (iv) any consequences arising from causes beyond the control
of a Bank, including without limitation any government acts, or any other
circumstances whatsoever in making or failing to make payment under the Letter
of Credit; provided that the Borrower shall not be required to indemnify any
Bank for any claims, damages, losses, liabilities, costs or expenses, and the
Borrower shall have a claim against the indicated party for direct (but not
consequential) damage suffered by it, to the extent found by a court of
competent jurisdiction to have been caused by (x) the gross negligence or
willful misconduct of the Administrative Agent in determining whether a request
presented under the Letter of Credit complied with the terms of the Letter of
Credit or (y) a Bank's failure to pay under the Letter of Credit after receipt
of notice from the Administrative Agent of the presentation to it of a request
strictly complying with the terms and conditions of the Letter of Credit.
Nothing in this Section 2.7 is intended to limit the obligations of the Borrower
under Section 2.3 of this Agreement. To the extent the Borrower is obligated to
but does not indemnify the Administrative Agent as required by this Section, the
Banks agree to do so ratably in accordance with their Commitment Percentages.
30
SECTION 2.8. Mandatory Reductions. (a) If the Borrower or any of its
Subsidiaries issues debt or equity securities prior to January 29, 1999 (other
than (w) equity securities issued in consideration for the acquisition of any
assets (including, without limitation, any equity interests of any other
Person), (x) equity securities issued to the Borrower or any of its
Subsidiaries, (y) directors' qualifying shares and (z) equity securities issued
in the ordinary course of business in connection with now or hereafter existing
employee stock purchase plans and other employee compensation arrangements and
dividend reinvestment plans), the Borrower shall apply the net cash proceeds
thereof until such amount has been fully applied either (I) to the
collateralization of the Substitute Note so as to cause an equivalent reduction
in the aggregate Letter of Credit Amount (or, if the Letter of Credit shall not
have been issued, the aggregate Commitments) until the Letter of Credit Amount
(or Commitments) has been reduced to zero; or (II) to the prepayment of
outstanding Loans under the Acquisition Revolver, and simultaneously to the
reduction of the aggregate Commitments thereunder, until such Loans and
Commitments have been reduced to zero, or to a combination of (I) and (II) as
the Borrower may elect. Each such reduction and payment or prepayment shall
occur within five Euro-Dollar Business Days of the receipt by the Borrower or
any of its Subsidiaries of such net cash proceeds, provided that if such net
cash proceeds are less than $10,000,000, such reduction and payment or
prepayment shall be effective upon receipt of proceeds such that, together with
all other such amounts not previously applied, the net cash proceeds are equal
to at least $20,000,000. The Borrower shall give the Administrative Agent at
least five Euro-Dollar Business Days' notice of each application required to be
made pursuant to this subsection (a).
31
(b) If, prior to the Date of Issuance, collateral is pledged to
secure the Substitute Note, the aggregate amount of the Commitments shall be
reduced in the same manner as the Letter of Credit Amount would have been
reduced had such collateral been pledged on or after the Date of Issuance. Each
reduction of Commitments under this Agreement shall be applied ratably to the
respective Commitments of all Banks.
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become effective
upon receipt by the Administrative Agent of the following documents, each dated
the Effective Date unless otherwise indicated:
(a) counterparts hereof signed by each of the parties hereto (or, in
the case of any party as to which an executed counterpart shall not have been
received, receipt by the Administrative Agent in form satisfactory to it of
telegraphic, telex, facsimile or other written confirmation from such party of
execution of a counterpart hereof by such party);
(b) a letter from Occidental Petroleum Corporation to the Agent
substantially in the form of Exhibit B hereto and evidencing the obligation of
Occidental Petroleum Corporation to accept a substitute Letter of Credit to be
issued on the Syndication Date;
32
(c) opinions of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for the
Borrower, Polsinelli, White, ▇▇▇▇▇▇▇▇ & Shalton, Kansas counsel for the
Borrower, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel of the Borrower, substantially
in the respective forms of Exhibits C, D and E hereto and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
(d) an opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for the
Administrative Agent, substantially in the form of Exhibit F hereto and covering
such additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request; and
(e) all documents the Administrative Agent may reasonably request
relating to the existence of the Borrower, the corporate authority for and the
validity of this Agreement and any other matters relevant hereto, all in form
and substance satisfactory to the Administrative Agent.
The Administrative Agent shall promptly notify the Borrower and each Bank of
the effectiveness of this Agreement, and such notice shall be conclusive and
binding on all parties hereto.
SECTION 3.2. Issuances of Letter of Credit. The obligation of any Bank
to issue the Letter of Credit is subject to the satisfaction of the following
conditions:
(a) the fact that the Closing Date shall have occurred on or prior to
March 31, 1998;
33
(b) the fact that prior to or substantially simultaneously with such
issuance, the Borrower shall have consummated the Acquisition in accordance with
the Stock Purchase Agreement without waiver of any material condition specified
therein;
(c) the fact that the Borrower shall have paid or shall concurrently
pay all fees then due and payable to the Administrative Agent for the account of
any Agent or Bank, as previously agreed;
(d) receipt by the Administrative Agent of notice as required by
Section 2.1;
(e) the fact that, immediately before and after such issuance no
Default shall have occurred and be continuing; and
(f) the fact that the representations and warranties of the Borrower
contained in this Agreement shall be true on and as of the date of such
issuance;
The issuance of the Letter of Credit hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of such issuance as to
the facts specified in clauses (b), (c), (e) and (f) of this Section.
34
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.1. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of Kansas, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
SECTION 4.2. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement are within the Borrower's corporate powers, have been duly authorized
by all necessary corporate action, require no action by or in respect of, or
filing with, any governmental body, agency or official (other than filing of
this Agreement with the Securities and Exchange Commission pursuant to the
reporting requirements of the Securities Exchange Act of 1934) and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the articles of incorporation or by-laws of the Borrower or of
any agreement, judgment, injunction, order, decree or other instrument binding
upon the Borrower or any of its Subsidiaries or result in the creation or
imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.
SECTION 4.3. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower enforceable in accordance with its terms.
35
SECTION 4.4. Financial Information. (a) The consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries as of December 31, 1996 and
the related consolidated statements of income, cash flows and common
stockholders' equity for the fiscal year then ended, reported on by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP and set forth in the Borrower's 1996 Form 10-K, a copy of which has
been delivered to each of the Banks, fairly present, in conformity with
generally accepted accounting principles, the consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of September 30, 1997 and the related unaudited
consolidated statements of income and cash flows for the nine months then ended,
set forth in the Borrower's Latest Form 10-Q, a copy of which has been delivered
to each of the Banks, fairly present, in conformity with generally accepted
accounting principles applied on a basis consistent with the financial
statements referred to in subsection (a) of this Section, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and cash flows for such
nine-month period (subject to normal year-end adjustments).
(c) Since September 30, 1997 there has been no material adverse
change in the business, financial position, results of operations or prospects
of the Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.5. Litigation. Except as disclosed in the most recent Annual
Report on Form 10-K delivered by the Borrower to the Banks, there is no action,
36
suit or proceeding pending against, or to the knowledge of the Borrower
threatened against or affecting, the Borrower or any of its Subsidiaries before
any court or arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an adverse decision which would materially
adversely affect the business, consolidated financial position or consolidated
results of operations of the Borrower and its Consolidated Subsidiaries,
considered as a whole, or which in any manner draws into question the validity
of this Agreement.
SECTION 4.6. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA, which waiver, failure or
liability could reasonably be expected to materially adversely affect the
business, consolidated financial position or consolidated results of operations
of the Borrower and its Consolidated Subsidiaries, considered as a whole.
37
SECTION 4.7. Environmental Matters. In the ordinary course of its
business, the Borrower conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Borrower and its
Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, the Borrower has reasonably concluded that such associated
liabilities and costs, including the costs of compliance with Environmental
Laws, are unlikely to have a material adverse effect on the business, financial
condition, results of operations or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.8. Taxes. The Borrower and its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes shown to be due
on such returns or pursuant to any assessment received by the Borrower or any
Subsidiary to the extent that such taxes have become due and before they have
become delinquent, except such taxes as are being contested in good faith by
38
appropriate proceedings for which adequate reserves have been established in
accordance with generally accepted accounting principles.
SECTION 4.9. Subsidiaries. Each of the Borrower's corporate Material
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
SECTION 4.10. Not an Investment Company. The Borrower is not an
"investment company" or controlled by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 4.11. Full Disclosure. All information heretofore furnished by
the Borrower to any Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by the Borrower to any Agent or any Bank will be, true and
accurate in all material respects on the date as of which such information is
stated or certified. The Borrower has disclosed to the Banks in writing any and
all facts peculiar to the business of the Company or any of its Subsidiaries
which materially and adversely affect or may affect (to the extent the Borrower
can now reasonably foresee), the business, operations or financial condition of
the Borrower and its Consolidated Subsidiaries, taken as a whole, or the ability
of the Borrower to perform its obligations under this Agreement.
SECTION 4.12. MidCon Acquisition. The representations and warranties
of all parties contained in the Stock Purchase Agreement will be true and
correct
39
on and as of the date of the first Borrowing under this Agreement except to the
extent that the failure of the same to be true and correct could not reasonably
be expected to materially adversely affect the business, consolidated financial
position or consolidated results of operations of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
ARTICLE 5
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any Undrawn Amount or any Reimbursable Amount payable under any
Note remains unpaid:
SECTION 5.1. Information. The Borrower will deliver to each of the
Banks:
(a) as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and
the related consolidated statements of income, cash flows and common
stockholder's equity for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all audited by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP or other independent public accountants of nationally recognized
standing; provided, however, that delivery pursuant to clause (g) below of
copies of the Annual Report on Form 10- K (without exhibits) of the Borrower for
such fiscal year filed with the Securities and Exchange Commission shall be
deemed to satisfy the requirements of this clause (a);
40
(b) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of the end of such quarter and the related consolidated statements of income and
cash flows for such quarter (in the case of such statements of income) and for
the portion of the Borrower's fiscal year ended at the end of such quarter,
setting forth in the case of such income and cash flows in comparative form the
figures for the corresponding quarter (in the case of such statements of income)
and the corresponding portion of the Borrower's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by an
authorized financial or accounting officer of the Borrower; provided, however,
that delivery pursuant to clause (g) below of copies of the Quarterly Report on
Form 10-Q (without exhibits) of the Borrower for such quarter filed with the
Securities and Exchange Commission shall be deemed to satisfy the requirements
of this clause (b);
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of an
authorized financial or accounting officer of the Borrower (i) setting forth in
reasonable detail the calculations required to establish whether the Borrower
was in compliance with the requirements of Section 5.7 and, if applicable,
Sections 5.8 and 5.9 on the date of such financial statements and (ii) stating
whether any Default exists on the date of such certificate and, if any Default
then exists, setting forth the details thereof and the action which the Borrower
is taking or proposes to take with respect thereto;
41
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i) whether
anything has come to their attention to cause them to believe that any Default
existed on the date of such statements and (ii) confirming the calculations set
forth in the officer's certificate delivered simultaneously therewith pursuant
to clause (c) above; provided, however, that such accountants shall not be
liable to anyone by reason of their failure to obtain knowledge of any Default
which would not be disclosed in the course of an audit conducted in accordance
with generally accepted auditing standards;
(e) within five Domestic Business Days after any officer of the
Borrower obtains knowledge of any Default, if such Default is then continuing, a
certificate of the chief financial officer or the chief accounting officer of
the Borrower setting forth the details thereof and the action which the Borrower
is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the public shareholders of
the Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents, in each case without exhibits) which the Borrower shall have filed
with the Securities and Exchange Commission;
42
(h) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) (other than such event as to which the 30-day notice
requirement is waived or which is triggered by the Acquisition) with respect to
any Plan which might constitute grounds for a termination of such Plan under
Title IV of ERISA, or knows that the plan administrator of any Plan has given or
is required to give notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA or
notice that any Multiemployer Plan is in reorganization, is insolvent or has
been terminated, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose liability (other than
for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under Section 412 of the Internal Revenue Code, a copy
of such application; (v) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and other information filed with
the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063
of ERISA, a copy of such notice; or (vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit Arrangement which has
resulted or could result in the imposition of a Lien or the posting of a bond or
other security, a certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth details as to such occurrence
and action, if any, which the Borrower or applicable member of the ERISA Group
is required or proposes to take; and
43
(i) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Administrative Agent, at the request of any Bank, may reasonably request.
SECTION 5.2. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings, and will maintain, and will cause each
Subsidiary to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.
SECTION 5.3. Maintenance of Property; Insurance. (a) The Borrower will
keep, and will cause each Subsidiary to keep, all property useful and necessary
in its business in good working order and condition, ordinary wear and tear
excepted.
(b) The Borrower will maintain or cause to be maintained with, in the
good faith judgment of the Borrower, financially sound and reputable insurers,
or through self-insurance, insurance with respect to its properties and business
and the properties and businesses of its Subsidiaries against loss or damage of
the kinds customarily insured against by corporations of established reputation
engaged in the same or similar business and similarly situated, of such types
and in such amounts as are customarily carried under similar circumstances by
such other corporations. Such insurance may include self-insurance or be subject
to co-insurance, deductibility or similar clauses which, in effect, result in
self-insurance of certain losses, provided that such self-insurance is in accord
with the approved practices of corporations similarly situated and adequate
44
insurance reserves are maintained in connection with such self-insurance, and,
notwithstanding the foregoing provisions of this Section 5.3 the Borrower or any
Subsidiary may effect workers' compensation or similar insurance in respect of
operations in any state or other jurisdiction either through an insurance fund
operated by such state or other jurisdiction or by causing to be maintained a
system or systems of self-insurance in accord with applicable laws.
SECTION 5.4. Conduct of Business and Maintenance of Existence. The
Borrower will continue, and will cause each Material Subsidiary to continue, to
engage in business of the same general type as now conducted by the Borrower and
its Subsidiaries, and will preserve, renew and keep in full force and effect,
and will cause each Subsidiary to preserve, renew and keep in full force and
effect their respective corporate existence and their respective rights,
privileges and franchises necessary or desirable in the normal conduct of
business; provided that nothing in this Section 5.4 shall prohibit (i) the
merger of a Subsidiary into the Borrower or the merger or consolidation of a
Subsidiary with or into another Person if the corporation surviving such
consolidation or merger is a Subsidiary and if, in each case, after giving
effect thereto, no Default shall have occurred and be continuing, (ii) the sale
or other disposition (whether by merger or otherwise) of the capital stock or
assets of any Subsidiary, if such transaction complies with the provisions of
Section 5.11 or (iii) the termination of the corporate existence of any
Subsidiary if the Borrower in good faith determines that such termination is in
the best interest of the Borrower and is not materially disadvantageous to the
Banks.
45
SECTION 5.5. Compliance with Laws. The Borrower will comply, and cause
each Subsidiary to comply, in all respects with all applicable laws, ordinances,
rules, regulations, and requirements of governmental authorities (including,
without limitation, Environmental Laws and ERISA and the rules and regulations
thereunder) except (i) where the necessity of compliance therewith is contested
in good faith by appropriate proceedings or (ii) where failure to comply could
not reasonably be expected to materially adversely affect the business,
consolidated financial position or consolidated results of operations of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 5.6. Inspection of Property, Books and Records. The Borrower
will keep, and will cause each Subsidiary to keep, proper books of record and
account in which full, true and correct entries, as required by generally
accepted accounting principles, shall be made of all dealings and transactions
in relation to its business and activities; and will permit, and will cause each
Subsidiary to permit, representatives of any Bank at such Bank's expense to
visit and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records (subject to compliance
with confidentiality agreements, copyrights and the like) and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants, all at such reasonable times and
as often as may reasonably be desired.
SECTION 5.7. Debt. (a) Consolidated Debt of the Borrower will at no
time exceed the MLP of Consolidated Total Capitalization. "MLP" means Maximum
Leverage Percentage, which is 87.00%, subject to adjustment from time to time
46
after the date hereof as follows: (a) upon the issuance of Trust Preferred
Securities in the amount of $300,000,000, the MLP will be reduced by 5.25%; (b)
upon issuance of common equity securities in the amount of $500,000,000, the MLP
will be reduced by 8.75%; and (c) upon issuance of Mandatorily Convertible
Preferred Stock in the amount of $400,000,000, the MLP will be reduced by 6.00%.
In the event of issuance of securities of the type described above in an amount
different from that specified, the consequent reduction of the MLP will be
adjusted on a pro rata basis; provided that in the event of issuance of Trust
Preferred Securities or Mandatorily Convertible Preferred Stock in an amount
greater than the indicated amount, there will not be an additional reduction in
the MLP to the extent that the Trust Preferred Securities exceed 10% of the
Consolidated Total Capitalization of the Borrower. Upon issuance of all
securities of the types and in the amounts described above, the MLP will at all
times thereafter be 67.00%.
(b) Total Debt of all Consolidated Subsidiaries (excluding Debt of a
Consolidated Subsidiary of the Borrower to the Borrower or to another
Consolidated Subsidiary of the Borrower) will at no time exceed 10% of
Consolidated Debt of the Borrower.
(c) Consolidated Debt of each Material Subsidiary will at no time
exceed 65% of the Consolidated Total Capitalization of such Material Subsidiary.
SECTION 5.8. Minimum Net Worth. Consolidated Net Worth will at no time
be less than an amount equal to the sum of (a) $570,000,000 plus (b) 50% of
Consolidated Net Income for each fiscal quarter of the Borrower ending after the
date hereof and at or prior to such time (but only if such Consolidated Net
47
Income for such fiscal quarter is a positive amount) plus (c) for any issuance
of securities resulting in a reduction of the MLP pursuant to Section 5.7(a), an
amount equal to 80% of the increase in Consolidated Net Worth resulting from
such issuance of securities, if at such time the Borrower's senior unsecured
long-term debt is not rated at least Baa2 by ▇▇▇▇▇'▇ and BBB by S&P.
SECTION 5.9. Minimum Interest Coverage Ratio. At any time at which the
Borrower's senior unsecured long-term debt is not rated at least Baa3 by ▇▇▇▇▇'▇
and BBB- by S&P, the Interest Coverage Ratio will not be less than (i) 2.25:1,
if such time is prior to March 31, 1999, and (ii) 2.75:1, if such time is on or
after March 31, 1999.
SECTION 5.10. Negative Pledge. Neither the Borrower nor any Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) any Liens deemed to exist on the date of this Agreement under the
Purchase Agreement;
(b) Liens on cash and cash equivalents securing the Substitute Note,
as contemplated by Section 2.8;
(c) Liens on assets of any Person existing at the time such Person
becomes a Subsidiary and not created in contemplation of such event;
(d) Liens arising in the ordinary course of its business which (i) do
not secure Debt or Derivatives Obligations, (ii) do not secure any obligation in
an amount exceeding $150,000,000 and (iii) do not in the aggregate materially
detract from the value of its assets or materially impair the use thereof in the
operation of its business;
48
(e) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash equivalents
subject to such Liens may at no time exceed $75,000,000;
(f) statutory or common law Liens of or upon deposits of cash in
favor of banks or other depository institutions; and
(g) Liens not otherwise permitted by the foregoing clauses of this
Section securing Debt in an aggregate principal or face amount at any date not
to exceed 10% of Consolidated Net Worth of the Borrower.
SECTION 5.11. Consolidations, Mergers and Sales of Assets. The
Borrower will not (i) consolidate or merge with or into any other Person or (ii)
sell, lease or otherwise transfer, directly or indirectly, all or substantially
all of its assets to any other Person, unless:
(i) immediately after giving effect to the transaction, no Default
shall have occurred and be continuing; and
(ii) except in the case of a merger in which the Borrower is the
surviving corporation:
(x) the Person formed by or surviving such transaction, in
the case of a consolidation or merger, and the transferee, in the
case of a transfer, assumes all obligations of the Borrower
hereunder;
49
(y) the Person formed by or surviving such transaction, in
the case of a consolidation or merger, and the transferee, in the
case of a transfer, is organized under the laws of the United
States or any state thereof; and
(z) the Borrower has delivered to the Administrative Agent
an officer's certificate and opinion of counsel, each stating
that such consolidation, merger, or transfer and such assumption
comply with the provisions hereof.
No such sale, lease or other transfer of assets shall have the effect of
releasing the Borrower (or any successor that shall have become such in the
manner prescribed in this Section) from its liability under this Agreement.
SECTION 5.12. Transactions with Affiliates. The Borrower will not
participate in any material transaction with an affiliate (other than a
Subsidiary) unless such transaction is in the ordinary course of its business
and on terms no less advantageous to the Borrower than could be obtained in such
a transaction with an unaffiliated party.
ARTICLE 6
DEFAULTS
SECTION 6.1. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
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(a) the Borrower shall fail to reimburse any drawing under the Letter
of Credit when required hereunder or shall fail to pay within three Domestic
Business Days of the due date thereof any interest, any fees or any other amount
payable hereunder;
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.7 to 5.12, inclusive;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a) or
(b) above) for 10 days after notice thereof has been given to the Borrower by
the Administrative Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made by
the Borrower in this Agreement or in any certificate, financial statement or
other document delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of any Material Financial Obligations when due or within any applicable
grace period; provided, however, that if any such failure is cured by the
Borrower or such Subsidiary or is waived by the requisite percentage of holders
of such Material Financial Obligations entitled to so waive, then the Event of
Default under this Agreement by reason of such failure shall be deemed to have
been cured;
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(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or, with the
giving of notice or lapse of time or both, would enable) the holder of such Debt
or any Person acting on such holder's behalf to accelerate the maturity thereof;
provided, however, that if any such acceleration is rescinded, or any such event
or condition is cured by the Borrower or any Subsidiary or is waived by the
requisite percentage of holders of such Material Debt entitled to so waive, then
the Event of Default under this Agreement by reason of such acceleration, event
or condition shall be deemed to have been cured;
(g) the Borrower or any Material Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Material Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any
52
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Borrower or any Material Subsidiary under
the federal bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount which it shall have become liable to pay under Title IV of ERISA; or
notice of intent to terminate a Plan shall be filed under Title IV of ERISA by
any member of the ERISA Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or to cause a trustee to be appointed to administer any
Plan; or a condition shall exist by reason of which the PBGC would be entitled
to obtain a decree adjudicating that any Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a current
payment obligation; and in each of the foregoing instances such condition (i)
could reasonably be expected to materially adversely affect the business,
consolidated financial position or consolidated results of operations of the
Borrower and its Consolidated Subsidiaries, considered as a whole, and (ii)
shall continue for 10 days after notice thereof has been given to the Borrower
by the Administrative Agent at the request of any Bank;
(j) a judgment or judgments for the payment of money (not paid or
fully covered by insurance or indemnification) in excess of $60,000,000 in the
aggregate shall be rendered against the Borrower or any Material Subsidiary and
53
such judgment or judgments are not, within 30 days after entry thereof, bonded,
discharged or stayed pending appeal, or are not discharged within 30 days after
the expiration of such stay; or
(k) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 30% or more of the
outstanding shares of common stock of the Borrower; or, during any period of
twelve consecutive calendar months, individuals who were directors of the
Borrower on the first day of such period shall cease to constitute a majority of
the board of directors of the Borrower;
then, and in every such event, the Borrower shall, if requested by the
Administrative Agent upon the instruction of the Banks having Commitment
Percentages aggregating more than 50%, forthwith pay to the Administrative Agent
an amount in immediately available funds (which funds shall be held as
collateral pursuant to arrangements satisfactory to the Administrative Agent)
equal to the Letter of Credit Amount at such time, provided that, upon the
occurrence of any Event of Default specified in Section 6.1(g) or (h) with
respect to the Borrower, the Borrower shall pay such amount forthwith without
any notice or demand or any other act by the Administrative Agent or the Banks.
ARTICLE 7
THE AGENTS
SECTION 7.1. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the Letter of
Credit as are delegated to the Administrative Agent by the terms hereof or
thereof, together with all such powers as are reasonably incidental thereto.
54
SECTION 7.2. Administrative Agent and Affiliates. ▇▇▇▇▇▇ Guaranty
Trust Company of New York shall have the same rights and powers under this
Agreement and the Letter of Credit as any other Bank and may exercise or refrain
from exercising the same as though it were not the Administrative Agent, and
▇▇▇▇▇▇ Guaranty Trust Company of New York and its affiliates may accept deposits
from, lend money to, and generally engage in any kind of business with the
Borrower or any Subsidiary or affiliate of the Borrower as if it were not the
Administrative Agent hereunder.
SECTION 7.3. Action by Administrative Agent. The obligations of the
Administrative Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Administrative Agent shall
not be required to take any action with respect to any Default, except as
expressly provided in Article 6.
SECTION 7.4. Consultation with Experts. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
SECTION 7.5. Liability of Administrative Agent. Neither the
Administrative Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action taken or
not taken by it in connection herewith (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Administrative Agent nor any of its affiliates nor any
of their respective directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
55
statement, warranty or representation made in connection with this Agreement,
the issuance of the Letter of Credit hereunder or any drawing thereunder; (ii)
the performance or observance of any of the covenants or agreements of the
Borrower; (iii) the satisfaction of any condition specified in Article 3, except
receipt of items required to be delivered to the Administrative Agent; or (iv)
the validity, effectiveness or genuineness of this Agreement, the Letter of
Credit or any other instrument or writing furnished in connection herewith. The
Administrative Agent shall not incur any liability by acting in reliance upon
any notice, consent, certificate, statement, or other writing (which may be a
bank wire, telex, facsimile transmission or similar writing) believed by it to
be genuine or to be signed by the proper party or parties. Without limiting the
generality of the foregoing, the use of the term "agent" in this Agreement with
reference to the Administrative 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.
SECTION 7.6. Indemnification. Each Bank shall, ratably in accordance
with its Commitment Percentage, indemnify any Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder.
56
SECTION 7.7. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon any Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon any Agent 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 any action under this Agreement.
SECTION 7.8. Successor Administrative Agent. The Administrative Agent
may resign at any time by giving notice thereof to the Banks and the Borrower.
Upon any such resignation, the Required Banks shall have the right to appoint a
successor Administrative Agent, with the consent of the Borrower, which shall
not be unreasonably withheld. If no successor Administrative Agent shall have
been so appointed by the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent gives notice
of resignation, then the retiring Administrative Agent may, on behalf of the
Banks, appoint a successor Administrative Agent, which shall be a commercial
bank organized or licensed under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation hereunder as Administrative Agent,
the provisions of this Article shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent.
57
SECTION 7.9. Agents' Fees. The Borrower shall pay to the
Administrative Agent for the account of the Agents fees in the amounts and at
the times previously agreed upon between the Borrower and the Agents.
SECTION 7.10. Other Agents. Nothing contained in this Agreement
shall be construed to impose any obligation or duty whatsoever on any
Syndication Agent, in its capacity as such an Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.1. Increased Cost and Reduced Return. (a) If on or after the
date hereof, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Facility Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall impose, modify or deem applicable any
reserve (including, without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System), special deposit, insurance
assessment or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Bank (or its Facility Office) or shall
impose on any Bank (or its Facility Office) any other condition affecting the
Letter of Credit or its obligation to issue the Letter of Credit and the result
of any of the foregoing is to increase the cost to such Bank (or its Facility
Office) of issuing or maintaining the Letter of Credit, or to reduce the amount
of any sum received or receivable by such Bank (or its Facility Office) under
this Agreement with respect thereto, by an amount deemed by such Bank to be
material, then, within 15 days after demand by such Bank (with a copy to the
Administrative Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such increased cost or
reduction.
58
(b) If any Bank shall have determined that, after the date hereof,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within 15 days after
demand by such Bank (with a copy to the Administrative Agent), the Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Bank to compensation pursuant to this
Section and will designate a different Facility Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will not, in
the judgment of such Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this Section and setting
forth in reasonable detail the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In determining
such amount, such Bank may use any reasonable averaging and attribution methods.
Notwithstanding the foregoing subsections (a) and (b) of this Section 8.1, the
Borrower shall only be
59
obligated to compensate any Bank for any amount arising or accruing during (i)
any time or period commencing not more than 90 days prior to the date on which
such Bank notifies the Administrative Agent and the Borrower that it proposes to
demand such compensation and identifies to the Administrative Agent and the
Borrower the statute, regulation or other basis upon which the claimed
compensation is or will be based and (ii) any time or period during which,
because of the retroactive application of such statute, regulation or other such
basis, such Bank did not know that such amount would arise or accrue.
SECTION 8.2. Taxes. (a) For purposes of this Section 8.2, the
following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Borrower pursuant to this Agreement or the Letter of Credit, and all liabilities
with respect thereto, excluding (i) in the case of each Bank and the
Administrative Agent, taxes imposed on its income, and franchise or similar
taxes imposed on it, by a jurisdiction under the laws of which such Bank or the
Administrative Agent (as the case may be) is organized or in which its principal
executive office is located or, in the case of each Bank, in which its Facility
Office is located and (ii) in the case of each Bank, any United States
withholding tax imposed on such payments but only to the extent that such Bank
is subject to United States withholding tax at the time such Bank first becomes
a party to this Agreement.
"Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, which
arise from any payment made pursuant to this Agreement or the Letter of Credit
or from the execution or delivery of, or otherwise with respect to, this
Agreement or the Letter of Credit.
60
(b) Any and all payments by the Borrower to or for the account of any
Bank or the Administrative Agent hereunder shall be made without deduction for
any Taxes or Other Taxes; provided that, if the Borrower shall be required by
law to deduct any Taxes or Other Taxes from any such payments, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 8.2) such Bank or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) the Borrower shall
furnish to the Administrative Agent, at its address referred to in Section 9.1,
the original or a certified copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank and the Administrative
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 8.2) paid by such Bank or the Administrative
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be paid within 15 days after such Bank or the Administrative Agent (as the case
may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
61
and from time to time thereafter if requested in writing by the Borrower (but
only so long as such Bank remains lawfully able to do so), shall provide the
Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Bank is entitled to benefits under an income tax treaty to which the United
States is a party which exempts the Bank from United States withholding tax or
reduces the rate of withholding tax on payments of interest for the account of
such Bank or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States.
(e) For any period with respect to which a Bank has failed to provide
the Borrower with the appropriate form pursuant to Section 8.2(d) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which such form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.2(b) or (c) with
respect to Taxes imposed by the United States; provided that if a Bank, which is
otherwise exempt from or subject to a reduced rate of withholding tax, becomes
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower, at such Bank's expense, shall take such steps as such Bank shall
reasonably request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section 8.2, then such Bank will change
the jurisdiction of its Facility Office if, in the judgment of such Bank, such
change (i) will eliminate or reduce any such additional payment which may
thereafter accrue and (ii) is not otherwise disadvantageous to such Bank.
62
ARTICLE 9
MISCELLANEOUS
SECTION 9.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such party: (x)
in the case of the Borrower or the Administrative Agent, at its address,
facsimile number or telex number set forth on the signature pages hereof, (y) in
the case of any Bank, at its address, facsimile number or telex number set forth
in its Administrative Questionnaire or (z) in the case of any party, such other
address, facsimile number or telex number as such party may hereafter specify
for the purpose by notice to the Administrative Agent and the Borrower. Each
such notice, request or other communication shall be effective (i) if given by
telex, when such telex is transmitted to the telex number specified in this
Section and the appropriate answerback is received, (ii) if given by facsimile
transmission, when transmitted to the facsimile number specified in this Section
and confirmation of receipt is received or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Administrative Agent under Article 2 or Article 8 shall not be effective
until received.
SECTION 9.2. No Waivers. No failure or delay by the Administrative
Agent or any Bank in exercising any right, power or privilege hereunder or under
the Letter of Credit shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
63
SECTION 9.3. Expenses; Indemnification. (a) The Borrower shall pay (i)
all reasonable out-of-pocket expenses of the Administrative Agent, including
fees and disbursements of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for the Agents,
in connection with the preparation and administration of this Agreement, any
waiver or consent hereunder or any amendment hereof or any Default or alleged
Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket
expenses incurred by each Agent and Bank, including (without duplication) the
fees and disbursements of outside counsel and the allocated cost of inside
counsel, in connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify each Agent and Bank, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in connection
with any investigative, administrative or judicial proceeding (whether or not
such Indemnitee shall be designated a party thereto) brought or threatened
relating to or arising out of (i) any actual or proposed use of the Letter of
Credit hereunder or (ii) any actual or alleged Default under this Agreement or
any actual or alleged untruth or inaccuracy of any representation or warranty
made by the Borrower in or in connection with this Agreement; provided that no
Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct as finally determined by
a court of competent jurisdiction.
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SECTION 9.4. Sharing of Set-offs. Each Bank agrees that if it shall,
by exercising any right of set-off or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal and interest due with
respect to its Reimbursable Amounts which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to the Reimbursable Amounts of such other Bank, the
Bank receiving such proportionately greater payment shall purchase such
participations in the Reimbursable Amounts of the other Banks, and such other
adjustments shall be made, as may be required so that all such payments of
principal and interest with respect to the Reimbursable Amounts shall be shared
by the Banks pro rata; provided that nothing in this Section shall impair the
right of any Bank to exercise any right of set-off or counterclaim it may have
and to apply the amount subject to such exercise to the payment of indebtedness
of the Borrower other than its indebtedness hereunder. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any
holder of a participation in a Reimbursable Amount, whether or not acquired
pursuant to the foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such participation as fully as if
such holder of a participation were a direct creditor of the Borrower in the
amount of such participation.
SECTION 9.5. Amendments and Waivers. Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by the Borrower and the Required Banks (and, if the rights or
duties of any Agent are affected thereby, by it); provided that no such
amendment or waiver shall, unless signed by all the Banks, (i) increase or
decrease the Commitment or Commitment Percentage of any Bank (except for a
ratable decrease in the Commitments of all Banks) or subject any Bank to any
additional obligation, (ii) reduce the principal of or rate of interest on any
Reimbursable Amount or any fees hereunder, (iii) postpone the date for any
65
payment of principal of or interest on any Reimbursable Amount or any fees
hereunder or for termination of any Commitments or (iv) change the aggregate
Commitment Percentages, or the number of Banks, which shall be required for the
Banks or any of them to take any action under this Section or any other
provision of this Agreement.
SECTION 9.6. Successors and Assigns. (a) 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 otherwise transfer any of its rights under this Agreement without the
prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
its obligations under the Letter of Credit. In the event of any such grant by a
Bank of a participating interest to a Participant, whether or not upon notice to
the Borrower and the Administrative Agent, such Bank shall remain responsible
for the performance of its obligations hereunder and under the Letter of Credit,
and the Borrower and the Administrative Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement and under the Letter of Credit. Any agreement pursuant to
which any Bank may grant such a participating interest shall provide that such
Bank shall retain the sole right and responsibility to enforce the obligations
of the Borrower hereunder including, without limitation, the right to approve
any amendment, modification or waiver of any provision of this Agreement;
provided that such participation agreement may provide that such Bank will not
agree to any modification, amendment or waiver of this Agreement described in
clause (i), (ii) or (iii) of Section 9.5 without the consent of the Participant.
The Borrower agrees that each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of Article 8 with respect
to its participating interest.
66
(c) No Participant or other transferee of any Bank's rights shall be
entitled to receive any greater payment under Section 8.1 or 8.2 than such Bank
would have been entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior written consent or by
reason of the provisions of Section 8.1 or 8.2 requiring such Bank to designate
a different Facility Office under certain circumstances or at a time when the
circumstances giving rise to such greater payment did not exist.
SECTION 9.7. Collateral. Each of the Banks represents to each Agent
and each of the other Banks that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.8. Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York. The Borrower hereby submits to the nonexclusive jurisdiction of the
United States District Court for the Southern District of New York and of any
New York State court sitting in New York City having subject matter jurisdiction
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 9.9. Counterparts; Integration. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof except the obligations of
the Borrower to pay fees and expenses and to assist in the syndication process
as specified in the respective commitment letters and fee letters heretofore
entered into between the Borrower and the Agents.
67
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.11. Obligations Several. The obligations of each Bank
hereunder and under the Letter of Credit are several but not joint. Failure of
any Bank to carry out its obligations hereunder and under the Letter of Credit
shall not relieve any other Bank, the Administrative Agent or the Borrower of
any of their respective obligations hereunder. Neither the Administrative Agent
nor any Bank shall be responsible for the obligations of any other party
hereunder.
68
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
K N ENERGY, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President & Chief
Financial Officer
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
Commitment Percentages
33.34% ▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
Title: Vice President
22.22% BANK OF AMERICA NT & SA
By /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Title: Senior Vice President
69
22.22% THE CHASE MANHATTAN BANK
By /s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Title: Vice President
22.22% NATIONSBANK, N.A.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Title: Senior Vice President
---------------------------
Total
100%
====
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
Title: Vice President
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telex number: 177615
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇
70
PRICING SCHEDULE
The "Euro-Dollar Margin", "CD Margin" and "Facility Fee Rate" for any
day are the respective percentages set forth below in the applicable row under
the column corresponding to the Status that exists on such day:
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ I II III IV V VI
Letter of Credit 0.355% 0.445% 0.515% 0.6875% 0.875% 1.250%
Fee Rate
Facility Fee Rate 0.070% 0.080% 0.110% 0.1875% 0.250% 0.375%
For purposes of this Schedule, the following terms have the following
meanings:
"Level I Status" exists at any date if, at such date, the Borrower's
senior unsecured long-term debt is rated BBB+ or higher by S&P and Baa1 or
higher by ▇▇▇▇▇'▇.
"Level II Status" exists at any date if, at such date, (i) the
Borrower's senior unsecured long-term debt is rated BBB or higher by S&P and
Baa2 or higher by ▇▇▇▇▇'▇ and (ii) Level I Status does not exist.
71
"Level III Status" exists at any date if, at such date, (i) the
Borrower's senior unsecured long-term debt is rated BBB- or higher by S&P and
Baa3 or higher by ▇▇▇▇▇'▇ and (ii) neither Level I Status nor Level II Status
exists.
"Level IV Status" exists at any date if, at such date, (i) the
Borrower's senior unsecured long-term debt is rated BB+ or higher by S&P and Ba1
or higher by ▇▇▇▇▇'▇ and (ii) none of Level I Status, Level II Status and Level
III Status exists.
"Level V Status" exists at any date if, at such date, (i) the
Borrower's senior unsecured long-term debt is rated BB or higher by S&P and Ba2
or higher by ▇▇▇▇▇'▇ and (ii) none of Level I Status, Level II Status, Level III
Status and Level IV Status exists.
"Level VI Status" exists at any date if, at such date, no other Status
exists.
"Status" refers to the determination of which of Level I Status, Level
II Status, Level III Status, Level IV Status, Level V Status or Level VI Status
exists at any date.
The credit ratings to be utilized for purposes of this Schedule are
those assigned to the senior unsecured long-term debt securities of the Borrower
without third-party credit enhancement, and any rating assigned to any other
debt security of the Borrower shall be disregarded. The rating in effect at any
date is that in effect at the close of business on such date.
72
EXHIBIT A
IRREVOCABLE STANDBY LETTER OF CREDIT
January 30, 1998
[Letter of Credit Nos.] [Several Banks]
Ladies and Gentlemen:
1. By order of our customer, K N Energy, Inc. ("K N"), we, the banks
listed in paragraph 3 below (each a "Bank" and collectively the "Banks"), hereby
establish (severally in our respective Commitment Percentages specified in
paragraph 3 below) this Irrevocable Standby Letter of Credit ("Letter of
Credit") in favor of Occidental Petroleum Corporation ("Occidental"), a Delaware
corporation, and its permitted transferees ("you" or the "Beneficiary") in the
aggregate amount of US $1,394,846,122 (One Billion, Three Hundred Ninety Four
Million, Eight Hundred Forty-Six Thousand, One Hundred Twenty-Two United States
Dollars) (as such amount may be reduced from time to time in accordance with
paragraph 2 below, the "Letter of Credit Amount") in order to assure payment of
principal of the promissory note of even date herewith executed by K N in favor
of Occidental in the same principal amount ("Substitute Note").
73
2. If so agreed by the Beneficiary, K N may from time to time
pledge collateral to secure payment of the Substitute Note. In accordance with
any such agreement, upon any such pledge, K N and the Beneficiary will jointly
notify the Administrative Agent thereof and specify the amount by which the
Letter of Credit Amount is to be reduced as a result of such pledge. Upon the
date of receipt by the Administrative Agent from the Beneficiary of any such
notice purporting to be signed by an authorized officer of each of K N and the
Beneficiary, the Letter of Credit Amount shall be permanently reduced by the
amount specified therein.
3. Each Bank shall be severally responsible for its following
commitment percentage ("Commitment Percentage") of the drawing hereunder:
Bank Commitment Percentage
---- ---------------------
▇▇▇▇▇▇ Guaranty Trust Company of New York 33.34%
Bank of America NT & SA 22.22%
The Chase Manhattan Bank 22.22%
NationsBank 22.22%
Total 100%
The obligations of the Banks under this Letter of Credit are several and no Bank
shall be liable for the failure of any other Bank to perform its
74
obligations hereunder. ▇▇▇▇▇▇ Guaranty Trust Company of New York, as
Administrative Agent for the Banks ("Administrative Agent"), shall have no
liability for the failure of any Bank to perform its obligations hereunder.
4. Funds are available to you under this Letter of Credit in a
single drawing against your draft, in an amount up to but not exceeding the
Letter of Credit Amount, presented at (or by facsimile transmission to) the
office of the Administrative Agent specified in paragraph 8 below or at its
offices at ▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
Letter of Credit Services Department. Such draft must be in the form of Annex 1
hereto, with blanks appropriately completed, and must be accompanied by a
certificate of one who purports to be an authorized officer of the Beneficiary
in the form of Annex 2 hereto, with blanks appropriately completed. No other
documents or instruments shall be required for drawing under this Letter of
Credit.
5. This Letter of Credit shall be transferable by the Beneficiary
only to a transferee (including a pledgee) of the Substitute Note upon delivery
to the Administrative Agent of a transfer notice in the form of Annex 3 hereto,
with blanks appropriately completed, by certified mail, return receipt
requested, or hand delivery at the office of the Administrative Agent referred
to in paragraph 8 below. Upon such delivery, we shall promptly transfer the same
to your transferee or, if so requested by your transferee, issue upon surrender
of this Letter of Credit a Letter of Credit to your transferee with provisions
therein consistent with this Letter of Credit.
75
6. This Letter of Credit shall expire at 3:00 P.M. (New York City
time) on January 19, 1999 ("Expiration Date"), it being understood that such
expiration shall not affect the obligations of the Administrative Agent and each
Bank hereunder in respect of any drawing duly made on or prior to the Expiration
Date.
7. If the Administrative Agent receives from you the items described
in paragraph 4 above by 3:00 P.M. (New York City time) on a domestic business
day on or before the Expiration Date, each Bank will unconditionally honor the
same in the amount of its Commitment Percentage (as specified in paragraph 3
above) by remitting such amount, in immediately available funds, to the
Administrative Agent at its office at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
for your account, no later than the date one domestic business day after receipt
by the Administrative Agent of such items, and the Administrative Agent shall
pay the total amount so received by it to you on the same day by wire transfer
of immediately available funds to The Chase Manhattan Bank, New York, for credit
to Occidental Petroleum Corporation account number ▇▇▇-▇-▇▇▇▇▇, or to such other
account or accounts as you may specify in writing to the Administrative Agent.
The term "domestic business day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
8. All communications regarding this Letter of Credit shall be
addressed to ▇▇▇▇▇▇ Guaranty Trust Company of New York, c/o ▇.▇. ▇▇▇▇▇▇
Services, Inc., Attention: Letter of Credit Services Department, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ (facsimile number (▇▇▇) ▇▇▇-▇▇▇▇ or (302)
634-1839) and shall reference this Letter of Credit. All such
76
communications shall be effective when received by the Administrative Agent at
the above address (whether by mail delivery, facsimile or otherwise). The
Administrative Agent agrees to notify K N (by facsimile transmission) when it
receives the items required pursuant to paragraph 4 above. Such notice shall be
addressed to: K N Energy, Inc., ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Treasurer (facsimile number (▇▇▇) ▇▇▇-▇▇▇▇).
9. This Letter of Credit sets forth in full the terms of our several
undertakings, and such undertakings shall not in any way be modified by
reference to any document, instrument, or agreement referred to herein. This
Letter of Credit may be amended if, but only if, such amendment is in writing
and is signed by the Beneficiary, the Administrative Agent and each Bank, with
the written consent of K N. This Letter of Credit may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
10. This Letter of Credit is subject to the Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 ("Uniform Customs"), as the same exists on the date
of issuance of this Letter of Credit. Notwithstanding Section 48(g) of the
Uniform Customs, this Letter of Credit my be successively transferred. This
Letter of Credit shall be deemed to be a contract made under the laws of the
State of New York and shall, as to matters not governed by the Uniform Customs,
be governed by and construed in accordance with the laws of the State of New
York.
Very truly yours,
[AUTHORIZED BANK SIGNATURES]
77
ANNEX 1 TO
LETTER OF CREDIT
[FORM OF DRAFT]
U.S. $ [aggregate amount] , 19
------------
[Names of Banks]
[c/o Administrative Agent, name & address]
Pay to the order of [Beneficiary] the aggregate amount of U.S.
$_______ ([insert amount in words] United States Dollars).
Drawn under the Irrevocable Standby Letter of Credit, Nos.
__________ dated __________ (the "Letter of Credit"). All terms defined in
the Letter of Credit have the same meanings as used herein.
The portion of said aggregate amount being drawn on each Bank is
the amount of this draft multiplied by such Bank's Commitment Percentage set
forth in paragraph 3 of the Letter of Credit.
[BENEFICIARY]
By:___________________________
[Name and Title]
78
ANNEX 2 TO
LETTER OF CREDIT
OFFICER'S CERTIFICATE
In [his/her] capacity as [a duly authorized officer] of [Name of
Beneficiary] (the "Beneficiary"), the undersigned hereby certifies as follows:
K N Energy, Inc. ("K N") is in default of its payment obligations
under the promissory note dated January 30, 1998 and executed by K N in favor of
Occidental Petroleum Corporation in the original principal amount of
$1,394,846,122 (the "Substitute Note"). The Beneficiary is entitled
to draw under the Irrevocable Standby Letter of Credit Nos._________________
which supports payment of principal of the Substitute Note in the aggregate
amount of the draft which accompanies this Certificate. The undersigned officer
is duly authorized to deliver this Certificate on behalf of the Beneficiary.
Promptly after the draft which accompanies this Certificate is honored, the
Beneficiary will deliver the original Letter of Credit to ▇▇▇▇▇▇ Guaranty Trust
Company of New York, at its address specified in the Letter of Credit.
IN WITNESS WHEREOF the undersigned has hereunto set [his/her] name this ___ day
of [Month], [Year].
-----------------------------
Title:
79
ANNEX 3 TO
LETTER OF CREDIT
TRANSFER NOTICE
[Date]
TO: [Names of Banks]
[c/o Administrative Agent, name & address]
The undersigned is the Beneficiary of your Irrevocable Standby
Letter of Credit Nos._________ dated __________ ("Letter of Credit"). All terms
defined in the Letter of Credit have the same meanings as used herein.
The undersigned has transferred to _______________ ("Transferee")
the undersigned's rights with respect to the Substitute Note and the Transferee
shall hereafter be the Beneficiary under the Letter of Credit. The Letter of
Credit is returned herewith and in accordance therewith we ask that you issue a
new irrevocable letter of credit in favor of the Transferee with provisions
consistent with the Letter of Credit.
[Name of Beneficiary]
By
--------------------------
Name:
Title:
80
EXHIBIT B
FORM OF BENEFICIARY UNDERTAKING
, 1998
------------
▇▇▇▇▇▇ Guaranty Trust Company
of New York, as Administrative Agent
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We refer to the Reimbursement Agreement dated as of the date
hereof (the "Reimbursement Agreement") among K N Energy, Inc., the banks listed
on the signature pages thereof and ▇▇▇▇▇▇ Guaranty Trust Company of New York, as
Administrative Agent, pursuant to which we understand that the Irrevocable
Standby Letter of Credit Nos._______________ (the "Letter of Credit") has been
issued to us as Beneficiary.
We understand that the parties to the Reimbursement Agreement
intend to syndicate more broadly the participations of the banks thereunder, and
upon completion of such broader syndication, to tender to us a substitute
Irrevocable Standby Letter of Credit in form and substance identical to the
Letter of Credit issued today, but reflecting the identities and relative
participations (which shall aggregate 100%) of the banks at the conclusion of
such syndication.
We hereby agree that, upon tender to us of such a substitute
Irrevocable Standby Letter of Credit, we will surrender for cancellation the
Irrevocable Standby Letter of Credit previously issued to us; provided that the
banks signatories to such substitute Irrevocable Standby Letter of Credit are
all either included in the list attached as Annex A hereto or otherwise
reasonably satisfactory to us.
Very truly yours,
OCCIDENTAL PETROLEUM
CORPORATION
By
-----------------------------
Title:
81
ANNEX A TO EXHIBIT B
ABN AMRO BANK N.V.
Arab Banking Corporation
Banca Commerciale Italiana
Banca di Roma
Bank of America National Trust & Savings Association
Bank of Montreal
Bank of Nova Scotia
Bank of Tokyo-Mitsubishi, Ltd.
Banque Francais Du Commerce Exterieur
Banque Nationale de Paris
Banque Paribas
Barclays Bank PLC
Bayerische Vereinsbank
Caisse Nationale de Credit Agricole
Cariplo-Cassa di Risparmio delle Provincie
Chase Manhattan Bank
Christiana Bank
CIBC Inc.
Citibank
Colorado National
Commerzbank AG
Credit Lyonnais
Credit Suisse
Den Norske Bank ASA
Deutsche ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
DG Bank
Dresdner Bank AG
First Chicago NBD Corporation
First Union National Bank
Fleet Bank
Fleet National Bank
Key Bank National Association
Kredietbank N.V.
Lloyds Bank PLC
Mellon Bank, N.A.
Natexis Banque
NationsBank, N.A.
Norwest Bank Minnesota
PNC Bank, N.A.
Royal Bank of Canada
Sanwa Bank Ltd.
Societe Generale
SunTrust Bank, Atlanta
SunTrust Banks, Central Florida NA
The Bank of New York
The Bank of Nova Scotia
The Fuji Bank, Limited
The Industrial Bank of Japan, Ltd.
The Long-Term Credit Bank of Japan, Ltd.
The Northern Trust Company
The Sumitomo Bank, Limited
The Toronto Dominion Bank
U.S. Bank
Union Bank of California
Union Bank of Switzerland, Houston Agency
Wachovia Bank of Georgia, ▇.▇.
▇▇▇▇▇ Fargo
Westdeutsche Landesbank
82
EXHIBIT C
OPINION OF
SPECIAL COUNSEL FOR THE BORROWER
To the Banks and the Administrative Agent
Referred to Below
c/▇ ▇▇▇▇▇▇ Guaranty Trust Company
of New York, as Administrative Agent
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
We have acted as special counsel for K N Energy, Inc. (the "Borrower")
in connection with the Reimbursement Agreement (the "Reimbursement Agreement")
dated as of January 30, 1998 among the Borrower, the banks listed on the
signature pages thereof and ▇▇▇▇▇▇ Guaranty Trust Company of New York, as
Administrative Agent. Terms defined in the Reimbursement Agreement are used
herein as therein defined. This opinion is being rendered to you at the request
of our client pursuant to Section 3.01(c) of the Reimbursement Agreement.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of the
Reimbursement Agreement and the Letter of Credit require no action by or in
respect of, or filing with, any governmental body, agency or official of the
State of Texas or the United States of America (other than filings of the
Reimbursement Agreement and the Letter of Credit with the Securities and
Exchange Commission pursuant to the reporting requirements of the Securities and
Exchange Act of 1934) and do not contravene, or constitute a default under, any
provision of applicable law or regulation of the State of Texas or the United
States of America, or of the articles of incorporation or by-laws of the
Borrower.
83
2. The Reimbursement Agreement constitutes a valid and binding
agreement of the Borrower and each Note constitutes a valid and binding
obligation of the Borrower, in each case enforceable against the Borrower in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and by general
principles of equity.
We are members of the Bar of the State of Texas and the foregoing
opinion is limited to the laws of the State of Texas, the State of New York and
the federal laws of the United States of America. In giving the foregoing
opinion, we express no opinion as to the effect (if any) of any law of any
jurisdiction in which any Bank is located which limits the rate of interest that
such Bank may charge or collect. Insofar as the foregoing opinion involves
matters governed by the laws of the State of Kansas (which matters do not in our
view include the non-contravention opinion in paragraph 1), we have relied,
without independent investigation, upon the opinion of Polsinelli, White,
▇▇▇▇▇▇▇▇ & Shalton, delivered to you pursuant to Section 3.01(c) of the
Reimbursement Agreement.
This opinion is rendered solely to you and any Assignee or Participant
in connection with the above matter. This opinion may not be relied upon by you
or any Assignee or Participant for any other purpose or relied upon by any other
person without our prior written consent.
Very truly yours,
84
EXHIBIT D
OPINION OF
KANSAS COUNSEL FOR THE BORROWER
To the Banks and the Administrative Agent
Referred to Below
c/▇ ▇▇▇▇▇▇ Guaranty Trust Company
of New York, as Administrative Agent
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
We have acted as counsel in the State of Kansas for K N Energy, Inc.
(the "Borrower") in connection with the Reimbursement Agreement (the
"Reimbursement Agreement") dated as of January 30, 1998 among the Borrower, the
banks listed on the signature pages thereof and ▇▇▇▇▇▇ Guaranty Trust Company of
New York, as Administrative Agent. Terms defined in the Reimbursement Agreement
are used herein as therein defined. This opinion is being rendered to you at the
request of our client pursuant to Section 3.01(c) of the Reimbursement
Agreement.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of Kansas, and has all corporate powers
required to carry on its business as now conducted.
2. The execution, delivery and performance by the Borrower of the
Reimbursement Agreement and the Letter of Credit are within the Borrower's
85
corporate powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any governmental body,
agency or official of the State of Kansas and do not contravene, or constitute a
default under, any provision of applicable law or regulation of the State of
Kansas.
We are members of the Bar of the State of Kansas and the foregoing
opinion is limited to the laws of the State of Kansas.
This opinion is rendered solely to you and any Assignee or Participant
in connection with the above matter. This opinion may not be relied upon by you
or any Assignee or Participant for any other purpose or relied upon by any other
person without our prior written consent.
Very truly yours,
86
EXHIBIT E
OPINION OF
GENERAL COUNSEL OF THE BORROWER
To the Banks and the Administrative Agent
Referred to Below
c/▇ ▇▇▇▇▇▇ Guaranty Trust Company
of New York, as Administrative Agent
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
I am General Counsel of K N Energy, Inc. (the "Borrower"), and I have
represented the Borrower in connection with the Reimbursement Agreement (the
"Reimbursement Agreement") dated as of January 30, 1998 among the Borrower, the
banks listed on the signature pages thereof and ▇▇▇▇▇▇ Guaranty Trust Company of
New York, as Administrative Agent. Terms defined in the Reimbursement Agreement
are used herein as therein defined. This opinion is being rendered to you at the
request of my client pursuant to Section 3.01(c) of the Reimbursement Agreement.
I have examined originals or copies, certified or otherwise identified
to my satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower has all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
2. The execution, delivery and performance by the Borrower of the
Reimbursement Agreement and the Letter of Credit require no action by or in
87
respect of, or filing with, any governmental body, agency or official of the
State of Colorado or, to the best of my knowledge, any other jurisdiction (other
than filings of the Reimbursement Agreement and the Letter of Credit with the
Securities and Exchange Commission pursuant to the reporting requirements of the
Securities Exchange Act of 1934) and do not contravene, or constitute a default
under, any provision of applicable law or regulation of the State of Colorado
or, to the best of my knowledge, any other jurisdiction or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower or any of its Subsidiaries or result in the creation or imposition of
any, Lien on any asset of the Borrower or any of its Subsidiaries.
3. There is no action, suit or proceeding pending against, or to the
best of my knowledge threatened against or affecting, the Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or
official, in which there is a reasonable possibility of an adverse decision
which could materially adversely affect the business, consolidated financial
position or consolidated results of operations of the Borrower and its
Consolidated Subsidiaries, considered as a whole, or which in any manner draws
into question the validity of the Reimbursement Agreement or the Letter of
Credit.
4. Each of the Borrower's corporate Material Subsidiaries is a
corporation validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
I am a member of the Bar of the State of Colorado and the foregoing
opinion is limited to the laws of the State of Colorado and the General
Corporation Law of the State of Delaware. Insofar as paragraph 2 above addresses
the laws of other jurisdictions, I have relied upon my familiarity with advice
given by counsel admitted to practice in those jurisdictions, in connection with
this and other transactions.
This opinion is rendered solely to you and any Assignee or Participant
in connection with the above matter. This opinion may not be relied upon by you
or any Assignee or Participant for any other purpose or relied upon by any other
person without our prior written consent.
Very truly yours,
▇▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, SPECIAL COUNSEL
FOR THE AGENTS
To the Banks and the Administrative Agent
Referred to Below
c/▇ ▇▇▇▇▇▇ Guaranty Trust Company
of New York, as Administrative Agent
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
We have participated in the preparation of the Reimbursement Agreement
(the "Reimbursement Agreement") dated as of January 30, 1998 among K N Energy,
Inc., a Kansas corporation (the "Borrower"), the banks listed on the signature
pages thereof (the "Banks") and ▇▇▇▇▇▇ Guaranty Trust Company of New York, as
Administrative Agent (the "Administrative Agent"), and have acted as special
counsel for the Agents for the purpose of rendering this opinion pursuant to
Section 3.01(c) of the Reimbursement Agreement. Terms defined in the
Reimbursement Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that the
Reimbursement Agreement constitutes a valid and binding agreement of the
Borrower and each Note constitutes a valid and binding obligation of the
Borrower, in each case enforceable in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of
the United States of America. In giving the foregoing opinion, we express no
opinion as to the effect (if any) of any law of any jurisdiction (except the
State of New York) in which any Bank is located which limits the rate of
interest that such Bank may charge or collect. Insofar as the foregoing opinion
involves matters governed by the laws of Kansas, we have relied, without
independent investigation, upon the opinion of Polsinelli, White, ▇▇▇▇▇▇▇▇ &
Shalton, delivered to you pursuant to Section 3.1(c) of the Reimbursement
Agreement.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent.
Very truly yours,