Exhibit 10.02
U.S. $100,000,000
Credit Agreement
Dated as of February 11, 1997
Among
LG&E Energy Systems Inc.
as Borrower
The Banks Named Herein
as Banks
And
Bank of Montreal
As Agent
Table of Contents
Section Description Page
Article I Definitions and Accounting Terms 1
Section 1.01. Certain Defined Terms 1
Section 1.02. Computation of Time Periods. 9
Section 1.03. Accounting Terms. 9
Article II Amounts and Terms of the Advances 9
Section 2.01. The Advances 9
Section 2.02. Manner of Borrowing 9
Section 2.03. Fees 11
Section 2.04. Reduction of the Commitments 11
Section 2.05. Repayment of Advances 11
Section 2.06. Interest on Advances 11
Section 2.07. Additional Interest on Advances 11
Section 2.08. Interest Rate Determination 12
Section 2.09. Conversion of Advances 12
Section 2.10. Prepayments 13
Section 2.11. Increased Costs 14
Section 2.12. Illegality 15
Section 2.13. Payments and Computations 15
Section 2.14. Taxes 17
Section 2.15. Sharing of Payments, Etc 19
Article III Conditions of Borrowings 19
Section 3.01. Conditions Precedent to Initial Borrowings 19
Section 3.02. Condition Precedent to Each Borrowing 21
Section 3.03. Condition Precedent to Certain Conversions 22
Article IV Representations and Warranties 22
Section 4.01. Representations and Warranties of the Borrower 22
Article V Covenants of the Borrower 24
Section 5.01. Affirmative Covenants 24
Section 5.02. Negative Covenants 27
Article VI Events of Default 29
Section 6.01. Events of Default 29
Article VII The Agent 32
Section 7.01. Authorization and Action 32
Section 7.02. Agent's Reliance, Etc. 32
Section 7.03. Bank of Montreal and Affiliates 33
Section 7.04. Lender Credit Decision 33
Section 7.05. Indemnification 33
Section 7.06. Successor Agent 34
Article VIII Miscellaneous 34
Section 8.01. Amendments, Etc. 34
Section 8.02. Notices, Etc. 34
Section 8.03. No Waiver; Remedies. 35
Section 8.04. Costs and Expenses; Indemnification. 35
Section 8.05. Right of Set-off 36
Section 8.06. Binding Effect 36
Section 8.07. Assignments and Participations 36
Section 8.08. Governing Law 39
Section 8.09. Waiver of Jury Trial 39
Section 8.10. Execution in Counterparts 39
Section 8.11. Confidentiality 39
Signature 41
Schedule I - List of Applicable Lending Offices
Exhibit A - Form of Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Opinion of Special Counsel for the Borrower and
the Parent
Exhibit E - Form of Opinion of Corporate Attorney for the Borrower
and the Parent
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Credit Agreement
Dated as of February 11, 1997
LG&E Energy Systems Inc., a Kentucky corporation (the "Borrower"), the
banks (the "Banks") listed on the signature pages hereof, Bank of Montreal
("Bank of Montreal"), as agent (the "Agent") for the Lenders hereunder
agree as follows:
Article I
Definitions and Accounting Terms
Section 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined):
"Acquisition" means the acquisition by the Borrower or any of its
Subsidiaries of:
(i) 5,100,900 common book entry shares, entitled to one vote per share, of
par value $10.00 (Pesos ten) per share, that represent 75% of the capital
and votes of Inversora de Gas del Centro S.A. ("Inversora Centro"), owned
by Sideco Americana S.A. (the "Seller"), (the "Inversora Centro Shares");
(ii) 1,440,288 common book entry shares, entitled to one vote per share,
of par value $10.00 (Pesos ten) per share, that represent 24% of the
capital and votes of Inversora de Gas Cuyana S.A. ("Inversora Cuyana"),
owned by the Seller, (the "Inversora Cuyana Shares");
(iii) 12,274,975 common book entry Class "B" shares, entitled to one vote
per share, of par value $1 (Pesos one) per share, that represent 7.65% of
the capital and votes of Distribuidora de Gas del Centro S.A. ("Centro"),
owned by Seller, (the "Centro Shares"); and
(iv) 4,370,788 common book entry Class "B" shares, entitled to one vote
per share of par value $1 (Pesos one) per share, that represent 2.16% of
the capital and votes of Distribuidora de Gas Cuyana S.A. ("Cuyana"), owned
by Seller, (the "Cuyana Shares").
"Adjusted Debt" means Debt of the Parent and its consolidated Subsidiaries
minus (or plus in the case of a deficit) Excess Liquidity.
"Adjusted Net Working Capital" means the excess of the current assets of
the Parent and its consolidated Subsidiaries other than the Utility over
current liabilities of the Parent and its consolidated Subsidiaries other
than the Utility, computed on a consolidated basis in accordance with GAAP
except that any Debt otherwise included in such consolidated current
liabilities shall be excluded if the same is due within twelve months of
its incurrence.
"Advance" means an advance by a Lender to the Borrower as part of a
Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance,
each of which shall be a "Type" of Advance.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
"Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit C hereto.
"Base Rate" means, for any period, a fluctuating interest rate per annum as
shall be in effect from time to time which rate per annum shall at all
times be equal to the highest of:
(a) the rate of interest announced publicly by Bank of Montreal as its
prime commercial rate, or equivalent, for U.S. dollar loans to borrowers
located in the United States;
(b) 1/2 of one percent per annum above the latest three-week moving
average of secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money market
banks, such three-week moving average being determined weekly by Bank of
Montreal on the basis of such rates reported by certificate of deposit
dealers to and published by the Federal Reserve Bank of New York, if such
publication shall be suspended or terminated, on the basis of quotations
for such rates received by Bank of Montreal from three New York certificate
of deposit dealers of recognized standing selected by Bank of Montreal, in
either case rounded upward to the nearest 1/16 of one percent; and
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(c) 1/2 of one percent per annum above the Federal Funds Rate in effect
from time to time.
"Base Rate Advance" means an Advance that bears interest as provided in
Section 2.06(a).
"Borrowing" means a borrowing consisting of simultaneous Advances of the
same Type made by each of the Lenders pursuant to Section 2.01 or Converted
pursuant to Section 2.08 or 2.09.
"Business Day" means a day of the year on which banks are not required or
authorized to close in Chicago, Illinois and, if the applicable Business
Day relates to any Eurodollar Rate Advances, on which dealings are carried
on in the London interbank market.
"Capitalization Ratio" means the ratio of Adjusted Debt of the Parent and
its consolidated Subsidiaries to the sum of Adjusted Debt plus capital
stock (including capital in excess of par and any other capital surplus)
accounts (net of treasury shares) plus (or minus in the case of a deficit)
the retained earnings of the Parent and its consolidated Subsidiaries, all
computed in accordance with GAAP.
"Commitment" has the meaning specified in Section 2.01.
"Commitment Fee" means, on any date of determination for any Lender, a fee
payable on the average daily aggregate unused amount of such Lender's
Commitment, at the rate of 0.08% per annum .
"Consolidated Net Worth" means, as to any Person, the Net Worth of such
Person and its Subsidiaries determined on a consolidated basis after
appropriate deduction for any minority interests in Subsidiaries.
"Convert," "Conversion" and "Converted" each refers to a conversion of
Advances of one Type into Advances of another Type or the selection of a
new, or the renewal of the same, Interest Period for Eurodollar Rate
Advances pursuant to Section 2.08 or 2.09.
"Debt" of any Person means (without duplication) all liabilities,
obligations and indebtedness of such Person (i) for borrowed money,
(ii) evidenced by bonds, indentures, notes, or other similar instruments,
(iii) to pay the deferred purchase price of property or services, (iv) as
lessee under leases that shall have been or should be, in accordance with
GAAP, recorded as capital leases, (v) under reimbursement agreements or
similar agreements with respect to the issuance of letters of credit (other
than obligations in respect of letters of credit opened to provide
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for the payment of goods or services purchased in the ordinary course of
business), (vi) in respect of equity or debt commitments to the extent
reasonably quantifiable, (vii) arising as a result of a default or failure
to perform by such Person or any of its Subsidiaries or any third party
under any guaranty or other contract or agreement (including liabilities
for liquidated damages) but only to the extent that any such liabilities or
obligations are then due and payable and are not subject to a good faith
dispute, (viii) under direct guaranties and indemnities in respect of, and
to purchase or otherwise acquire, or otherwise to assure a creditor against
loss in respect of, or to assure an obligee against failure to make payment
in respect of, liabilities obligations or indebtedness of others of the
kinds referred to in clauses (i) through (vii) above, in each case to the
extent reasonably quantifiable, and (ix) liabilities in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; provided,
however, that "Debt" shall not include any Nonrecourse Debt.
"Domestic Lending Office" means, with respect to any Lender, the office of
such Lender specified as its "Domestic Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender, or such other office of such Lender as such Lender may
from time to time specify to the Borrower and the Agent.
"Eligible Assignee" means (i) a commercial bank organized under the laws of
the United States, or any State thereof; (ii) a commercial bank organized
under the laws of any other country that is a member of the OECD or has
concluded special lending arrangements with the International Monetary Fund
associated with its General Arrangements to Borrow, or a political
subdivision of any such country, provided that such bank is acting through
a branch or agency located in the United States; (iii) a finance company,
insurance company or other financial institution or fund (whether a
corporation, partnership or other entity) engaged generally in making,
purchasing or otherwise investing in commercial loans in the ordinary
course of its business; (iv) the central bank of any country that is a
member of the OECD; or (v) any Lender or any Affiliate of any Lender;
provided, however, that (A) any such Person described in clause (i), (ii),
(iii) or (iv) above shall also (x) have outstanding unsecured indebtedness
that is rated A- or better by S&P or A3 or better by ▇▇▇▇▇'▇ (or an
equivalent rating by another nationally recognized credit rating agency of
similar standing if neither such corporations is in the business of rating
unsecured indebtedness of entities engaged in such businesses) and (y) have
combined capital and surplus (as established in its most recent report of
condition to its primary regulator) of not less than $250,000,000 (or its
equivalent in foreign currency), and (B) any Person described in
clause (ii), (iii) or (iv) above shall, on the date on which it is to
become a Lender hereunder, be entitled to receive payments hereunder
without deduction or withholding of any United States Federal income taxes
(as contemplated by Section 2.14(d)).
"Environmental Laws" means any federal, state or local laws, ordinances or
codes, rules, orders, or regulations relating to pollution or protection of
the environment, including, without
Page 8
limitation, laws relating to hazardous substances, laws relating to
reclamation of land and waterways and laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollution, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder, each as in effect and amended and modified from time to
time.
"ERISA Affiliate" of a person or entity means any trade or business
(whether or not incorporated) that is a member of a group of which such
person or entity is a member and that is under common control with such
person or entity within the meaning of Section 414 of the Internal Revenue
Code of 1986, and the regulations promulgated and rulings issued
thereunder, each as in effect and amended or modified from time to time.
"ERISA Plan" means an employee benefit plan maintained for employees of any
Person or any ERISA Affiliate of such Person subject to Title IV of ERISA.
"ERISA Termination Event" means (i) a Reportable Event described in
Section 4043 of ERISA and the regulations issued thereunder (other than a
Reportable Event not subject to the provision for 30-day notice to PBGC),
or (ii) the withdrawal of the Borrower or any of its ERISA Affiliates from
an ERISA Plan during a plan year in which the Borrower or any of its ERISA
Affiliates was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, or (iii) the filing of a notice of intent to terminate an ERISA Plan
or the treatment of an ERISA Plan amendment as a termination under
Section 4041 of ERISA, or (iv) the institution of proceedings to terminate
an ERISA Plan by the PBGC or to appoint a trustee to administer any ERISA
Plan, or (v) any other event or condition that would constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer any ERISA Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Eurodollar Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to
which it became a Lender (or, if no such office is specified, its Domestic
Lending Office), or such other office of such Lender as such Lender may
from time to time specify to the Borrower and the Agent.
Page 9
"Eurodollar Margin" means, for any Eurodollar Rate Advance, 0.15% per
annum.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar Rate
Advance made as part of the same Borrowing, an interest rate per annum
equal to the average (rounded upward to the nearest whole multiple of 1/16
of 1% per annum, if such average is not such a multiple) of the rate per
annum at which deposits in U.S. dollars are offered to the Agent in London,
England, by prime banks in the London interbank market at 11:00 A.M.
(London time) two Business Days before the first day of such Interest
Period in an amount substantially equal to the Agent's Eurodollar Rate
Advance made as part of such Borrowing and for a period equal to such
Interest Period. The Eurodollar Rate for the Interest Period for each
Eurodollar Rate Advance made as part of the same Borrowing shall be
determined by the Agent on the basis of applicable rates received by the
Agent two Business Days before the first day of such Interest Period,
subject, however, to the provisions of Section 2.08.
"Eurodollar Rate Advance" means an Advance that bears interest as provided
in Section 2.06(b).
"Eurodollar Rate Reserve Percentage" of any Lender for the Interest Period
for any Eurodollar Rate Advance means the reserve percentage applicable
during such Interest Period (or if more than one such percentage shall be
so applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable)
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for such Lender with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Excess Liquidity" means, for the Parent and its consolidated Subsidiaries
other than the Utility, the lesser of cash and marketable securities
(determined in accordance with GAAP, but valued at their market value) or
Adjusted Net Working Capital.
"Exchange Act" means the Securities Exchange Act of 1934, and the
regulations promulgated thereunder, in each case as amended from time to
time.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business
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Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by it.
"GAAP" means generally accepted accounting principles, applied on a basis
consistent with those applied in the preparation of the financial
statements referred to in Section 4.01(f), as modified from time to time in
filings made in accordance with applicable regulations issued by the
Securities and Exchange Commission regarding changes in accounting
principles.
"Governmental Approval" means an authorization, consent, approval, license,
or exemption of, registration or filing with, or report to any Governmental
Authority.
"Governmental Authority" means any nation or government, any state,
department, agency or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government, and any corporation or other
entity owned or controlled (through stock or capital ownership or
otherwise) by any of the foregoing.
"Interest Period" means, for each Advance made as part of the same
Borrowing, the period commencing on the date of such Advance or the date of
the Conversion of any Advance into such an Advance and ending on the last
day of the period selected by the Borrower pursuant to the provisions below
and, thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be 1, 2, 3 or 6 months in the
case of a Eurodollar Rate Advance as the Borrower may select, upon notice
received by the Agent not later than 10:00 A.M. (Chicago time) on the third
Business Day prior to the first day of such Interest Period: provided,
however, that:
(i) the Borrower may not select any Interest Period that ends after the
Maturity Date;
(ii) Interest Periods commencing on the same date for Advances made as
part of the same Borrowing shall be of the same duration; and
(iii) whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, provided,
in the case of any Interest Period for a Eurodollar Rate Advance, that if
such extension would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day.
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"Lenders" means the Banks listed on the signature pages hereof and each
Eligible Assignee that shall become a party hereto pursuant to
Section 8.07.
"Majority Lenders" means, at any time prior to the Termination Date,
Lenders having at least 66-2/3% of the Commitments (without giving effect
to any termination in whole of the Commitments pursuant to Section 6.01)
and at any time on or after the Termination Date, Lenders having at least
66-2/3% of the Advances outstanding, (provided that, for purposes hereof,
neither the Borrower, nor any of its Affiliates, if a Lender, shall be
included in (i) the Lenders having such amount of the Commitments or the
Advances or (ii) determining the total amount of the Commitments or the
Advances).
"Maturity Date" means June 15, 1998 or the earlier date of maturity of the
Advances pursuant to Section 6.01 hereof.
"Multiemployer Plan " means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any
of the preceding three plan years made or accrued an obligation to make
contributions.
"Net Worth" means, with respect to any Person, the excess of such Person's
total assets over its total liabilities, with total assets and total
liabilities each to be determined in accordance with GAAP consistently
applied, excluding, however, from the determination of total assets
(i) goodwill, organizational expenses, research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses
and rights in any thereof, and other similar intangibles, (ii) cash held in
a sinking or other analogous fund established for the purpose of
redemption, retirement or prepayment of capital stock or Debt (provided
that the corresponding liability is excluded from the calculation of Net
Worth) and (iii) any items not included in clause (i) or (ii) above that
are treated as intangibles in conformity with GAAP.
"Nonrecourse Debt" means all liabilities, obligations and indebtedness of
any Person of the types described in clauses (i) through (ix) of the
definition of "Debt" (such liabilities, obligations and indebtedness being
hereinafter referred to as "Obligations"), which Obligations are
nonrecourse to such Person (unless such Person is a special-purpose entity)
and any Affiliate of such Person, other than with respect to the interest
of such Person in the collateral, if any, securing such Obligations.
"Note" means a promissory note of the Borrower payable to the order of any
Lender, in substantially the form of Exhibit A hereto, evidencing the
aggregate indebtedness of the Borrower to such Lender resulting from the
Advances made by such Lender.
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"Notice of Borrowing" has the meaning specified in Section 2.02(a).
"OECD" means the Organization for Economic Cooperation and Development.
"Parent" means LG&E Energy Corp., a Kentucky corporation.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any political subdivision
or agency thereof.
"Register" has the meaning specified in Section 8.07(c).
"Reportable Event" has the meaning assigned to that term in Title IV of
ERISA.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which more than 50% of (i) the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time capital stock of
any other class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency) or (ii) other comparable
equity interest, is at the time directly or indirectly owned by such
Person, by such Person and one or more of its Subsidiaries, or by one or
more other Subsidiaries.
"Support Agreement" means that certain Support Agreement, dated as of
December 6, 1995, between the Parent and the Borrower, as the same may be
amended or modified from time to time in accordance with the terms thereof
and of this Agreement.
"Termination Date" means March 31, 1997, or the earlier date of termination
in whole of the Commitments pursuant to Section 2.04 or Section 6.01
hereof.
"U.S. Dollars" means the lawful currency, of the United States of America.
"Utility" means Louisville Gas and Electric Company, a Kentucky
corporation, and any successor thereto.
Section 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and
"until" each means "to but excluding".
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Section 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
Article II
Amounts and Terms of the Advances;
Section 2.01. The Advances. Each Lender severally agrees, on the terms
and conditions hereinafter set forth, to make Advances to the Borrower from
time to time on any Business Day during the period from the date hereof
until the Termination Date in an aggregate amount not to exceed at any time
outstanding the amount set opposite such Lender's name on the signature
pages hereof or, if such Lender has entered into any Assignment and
Acceptance, set forth for such Lender in the Register maintained by the
Agent pursuant to Section 8.07(c), as such amount may be reduced pursuant
to Section 2.04 (such Lenders "Commitment"). Each Borrowing, shall be in
an aggregate amount not less than $5,000,000 or an integral multiple of
$500,000 in excess thereof and shall consist of Advances of the same Type
and having the same Interest Period made or Converted on the same day by
the Lenders ratably according to their respective Commitments. No Advance
paid or prepaid may be reborrowed.
Section 2.02. Manner of Borrowing. (a) Each Borrowing shall be made on
notice, given not later than 10:00 A.M. (Chicago time) on the third
Business Day prior to the date of the proposed Borrowing comprising
Eurodollar Rate Advances and on the date of any proposed Borrowing
comprising Base Rate Advances, by the Borrower to the Agent, which shall
give to each Lender prompt notice thereof. Each such notice of a Borrowing
(a "Notice of Borrowing") shall be by telecopier, telex or cable, confirmed
immediately in writing, in substantially the form of Exhibit B hereto,
specifying therein the requested (i) date of such Borrowing, (ii) Type of
Advances to be made in connection with such Borrowing, (iii) aggregate
amount of such Borrowing, and (iv) in the case of a Borrowing comprising
Eurodollar Rate Advances, initial Interest Period for each such Advance;
provided that the Borrower may not deliver more than three (3) Notice of
Borrowings hereunder. Each Lender shall, before 11:00 A.M. (Chicago time)
on the date of such Borrowing, make available for the account of its
applicable Lending Office to the Agent at its address referred to in
Section 8.02, in same day funds, such Lender's ratable portion (according
to the Lenders' respective Commitments) of such Borrowing. After the
Agent's receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article III, the Agent will make such funds
available to the Borrower at the Agent's aforesaid address.
(b) Each notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Borrowing that the related Notice of
Borrowing specifies is to comprise Eurodollar Rate Advances, the Borrower
shall indemnify each Lender against any loss
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(excluding any loss of anticipated profits), cost or expense incurred by
such Lender as a result of any failure to fulfill on or before the date
specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article III, including, without limitation, any
such loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Advance to be made by such Lender as part of such Borrowing when such
Advance, as a result of such failure, is not made on such date.
(c) Unless the Agent shall have received notice from a Lender prior to the
date of any Borrowing that such Lender will not make available to the Agent
such Lender's ratable portion of such Borrowing, the Agent may assume that
such Lender has made such portion available to the Agent on the date of
such Borrowing, in accordance with subsection (a) of this Section 2.02 and
the Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent that
such Lender shall not have so made such ratable portion available to the
Agent, such Lender and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent, at (i) in the
case of the Borrower, the interest rate applicable at the time to Advances
made in connection with such Borrowing, and (ii) in the case of such
Lender, the Federal Funds Rate. If such Lender shall repay to the Agent
such corresponding amount, such amount so repaid shall constitute such
Lender's Advance as part of such Borrowing for purposes of this Agreement.
Nothing in this subsection shall be deemed to relieve any Lender from its
obligation to make any Advance required to be made by such Lender hereunder
or to prejudice any rights the Borrower may have against any Lender as a
result of any default by such Lender hereunder.
(d) The failure of any Lender to make the Advance to be made by it as part
of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on the date of any Borrowing.
(e) Notwithstanding anything, to the contrary contained herein, no more
than six Borrowings may be outstanding, at any time.
Section 2.03. Fees. The Borrower agrees to pay to the Agent for the
account of each Lender the Commitment Fee for such Lender calculated from
the date hereof in the case of each Bank and from the effective date
specified in the Assignment and Acceptance pursuant to which it became a
Lender in the case of each other Lender until the Termination Date, payable
in arrears on the Termination Date.
Page 15
Section 2.04. Reduction of the Commitments. The Borrower shall have the
right, upon at least two Business Days' notice to the Agent, to terminate
in whole or reduce ratably in part the unused portions of the respective
Commitments of the Lenders, provided that the aggregate amount of the
Commitments of the Lenders shall not be reduced to an amount that is less
than the sum of the aggregate principal amount of the Advances then
outstanding and provided, further, that each partial reduction shall be in
the aggregate amount of $500,000 or an integral multiple thereof. Any
portion of the Commitments of the Lenders so terminated may not thereafter
be reinstated.
Section 2.05. Repayment of Advances. The Borrower shall repay the
principal amount of each Advance made by each Lender on the Maturity Date
in accordance with the Note payable to the order of such Lender. No
Advance repaid or prepaid may be reborrowed.
Section 2.06. Interest on Advances. The Borrower shall pay interest on
the unpaid principal amount of each Advance made by each Lender from the
date of such Advance until such principal amount shall be paid in full, at
the following rates per annum:
(a) Base Rate Advances. If such Advance is a Base Rate Advance, a rate
per annum equal at all times to the Base Rate in effect from time to time,
payable quarterly on the last day of each March, June, September and
December during such periods and on the date such Base Rate Advance shall
be Converted or paid in full.
(b) Eurodollar Rate Advances. Subject to Section 2.07, if such Advance is
a Eurodollar Rate Advance, a rate per annum equal at all times during the
Interest Period for such Advance to the sum of the Eurodollar Rate for such
Interest Period plus the Eurodollar Margin for such Eurodollar Rate
Advance, payable on the last day of each Interest Period for such
Eurodollar Rate Advance (and, in the case of any Interest Period of six
months, on the last day of the third month of such Interest Period) and on
the date such Eurodollar Rate Advance shall be Converted or paid in full.
Section 2.07. Additional Interest on Advances. The Borrower shall pay to
each Lender, so long as such Lender shall be required under regulations of
the Board of Governors of the Federal Reserve System to maintain reserves
with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, additional interest on the unpaid principal
amount of each Eurodollar Rate Advance of such Lender, from the date of
such Advance until such principal amount is paid in full, at an interest
rate per annum equal at all times to the remainder obtained by subtracting,
(i) the Eurodollar Rate for the Interest Period for such Advance from
(ii) the rate obtained by dividing such Eurodollar Rate by a percentage
equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender
for such Interest Period, payable on each date on which interest is payable
on such Advance. Such additional interest shall be determined by such
Lender
Page 16
and notified to the Borrower through the Agent, and such determination
shall be conclusive and binding for all purposes, absent manifest error.
Section 2.08. Interest Rate Determination. (a) The Agent shall determine
each interest rate applicable to the Advances and its determination thereof
shall be conclusive and binding except in the case of manifest error or
willful misconduct.
(b) The Agent shall give prompt notice to the Borrower and the Lenders of
the applicable interest rate determined by the Agent for purposes of
Section 2.06(a) or (b).
(c) If, with respect to any Eurodollar Rate Advances, (a) the Agent
determines that deposits in U.S. Dollars (in the applicable amounts) are
not being offered to it in the London interbank market for such Interest
Period or (b) the Majority Lenders notify, the Agent that the Eurodollar
Rate for any Interest Period for such Advances will not adequately reflect
the cost to such Majority Lenders of making, funding or maintaining their
respective Eurodollar Rate Advances for such Interest Period, the Agent
shall forthwith so notify the Borrower and the Lenders,
(i) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate
Advance, and
(ii) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Agent shall notify
the Borrower and the Lenders that the circumstances causing such suspension
no longer exist.
Section 2.09. Conversion of Advances. (a) Voluntary. The Borrower may on
any Business Day, upon notice given to the Agent not later than 10:00 A.M.
(Chicago time) on the third Business Day prior to the date of any proposed
Conversion into Eurodollar Rate Advances and on the date of any proposed
Conversion into Base Rate Advances, and subject to the provisions of
Sections 2.08 and 2.12, Convert Advances constituting all or any portion
(in an aggregate principal amount of not less $5,000,000 and in integral
multiples of $500,000 in excess thereof) of any Borrowing, into Advances of
the other Type or Advances of the same Type having the same or a new
Interest Period; provided, however, that any Conversion of, or with respect
to, any Eurodollar Rate Advances into Advances of another Type or Advances
of the same Type having the same or new Interest Periods shall be made on,
and only on, the last day of an Interest Period for such Eurodollar Rate
Advances, unless the Borrower shall also reimburse the Lenders in respect
thereof pursuant to Section 8.04(b) on the date of such Conversion. Each
such notice of a Conversion shall, within the restrictions specified above,
specify (i) the date of such Conversion, (ii) the Advances to be Converted,
and (iii) if such Conversion is into, or with respect to, Eurodollar Rate
Advances, the duration of the Interest Period for each such Advance.
Page 17
(b) Mandatory. If the Borrower shall fail to select the Type of any
Advance or the duration of any Interest Period for any Borrowing comprising
Eurodollar Rate Advances in accordance with the provisions contained in the
definition of "Interest Period" in Section 1.01 and Section 2.09(a), or if
any proposed Conversion of a Borrowing that is to comprise Eurodollar Rate
Advances upon Conversion shall not occur as a result of the circumstances
described in paragraph (c) below, the Agent will forthwith so notify the
Borrower and the Lenders and such Advances will automatically, on the last
day of the then existing Interest Period therefor, Convert into Base Rate
Advances.
(c) Failure to Convert. Each notice of Conversion given pursuant to
subsection (a) above shall be irrevocable and binding on the Borrower. In
the case of any Borrowing that is to comprise Eurodollar Rate Advances
upon Conversion, the Borrower shall indemnify each Lender against any loss
(excluding any loss of anticipated profits), cost or expense incurred by
such Lender as a result of any failure to fulfill on the date specified for
such Conversion the applicable conditions set forth in Article III,
including without limitation, any such loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund such Eurodollar Rate Advances, as the case
may be, upon such Conversion, when such Conversion, as a result of such
failure, does not occur.
Section 2.10. Prepayments. (a) Optional. The Borrower may, upon at least
two Business Days' notice (or same day notice not later than 10:00 A.M.
(Chicago time) in the case of any prepayment of Base Rate Advances) to the
Agent stating the proposed date and aggregate principal amount of the
prepayment, and if such notice is given the Borrower shall, prepay the
outstanding principal amounts of the Advances made as part of the same
Borrowing in whole or ratably in part, together with accrued interest to
the date of such prepayment on the principal amount prepaid; provided,
however, that (i) each partial prepayment of any Borrowing shall be in an
aggregate principal amount not less than $5,000,000 or an integral multiple
of $500,000 in excess thereof and (ii) in the case of any such prepayment
of a Eurodollar Rate Advance, the Borrower shall be obligated to reimburse
the Lenders in respect thereof pursuant to Section 8.04(b) on the date of
such prepayment.
(b) Mandatory. If and to the extent that the aggregate principal amount
of Advances outstanding on any date prior to the Termination Date hereunder
shall exceed the aggregate amount of the Commitments hereunder on such
date, the Borrower shall prepay on such date a principal amount of Advances
in an aggregate amount at least equal to such excess, together with accrued
interest to the date of such prepayment on such principal amount and, in
the case of any such prepayment of Eurodollar Rate Advances, the Borrower
shall be obligated to reimburse the Lenders in respect thereof pursuant to
Section 8.04(b) on the date of such prepayment.
Page 18
(c) Application. Upon each prepayment of the principal amount of Advances
hereunder, the Agent shall apply amounts received from the Borrower to the
prepayment of the principal amount of Advances outstanding in the following
order of priority:
First, to the prepayment in whole or ratably in part of the principal
amount of all outstanding Base Rate Advances, and
Second, to the prepayment in whole or ratably in part of the principal
amount of outstanding Eurodollar Rate Advances, in such order of maturity
as will, in the reasonable judgment of the Agent, minimize to the fullest
extent practicable amounts payable by the Borrower in respect of such
prepayment pursuant to Section 8.04(b),
Section 2.11. Increased Costs. (a) If, due to either (i) the introduction
of or any change (other than any change by way of imposition or increase of
reserve requirements included in the Eurodollar Rate Reserve Percentage in
the case of Eurodollar Rate Advances) in or in the interpretation of any
law or regulation or (ii) the compliance with any guideline or request from
any central bank or other governmental authority (whether or not having the
force of law) issued, promulgated or made, as the case may be, after the
date hereof, there shall be any increase in the cost to any Lender of
agreeing, to make or making, funding or maintaining Eurodollar Rate
Advances or any other Advances, then the Borrower shall from time to time,
upon demand by such Lender (with a copy of such demand to the Agent), pay
to the Agent for the account of such Lender additional amounts sufficient
to compensate such Lender for such increased cost. Without prejudice to
any other agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section 2.11(a) shall survive
the payment in full of principal and interest hereunder and under the
Notes; provided, that no Lender shall be entitled to demand such
compensation more than 90 days following the last day of the Interest
Period in respect of which such demand is made; provided further, however,
that the foregoing proviso shall in no way limit the right of any Lender to
demand or receive such compensation to the extent that such compensation
relates to the retroactive application of any law, regulation, guideline or
request described in clause (i) or (ii) above if such demand is made within
90 days after the implementation of such retroactive law, interpretation,
guideline or request. A certificate as to the nature and amount of such
increased cost, submitted to the Borrower and the Agent by such Lender in
good faith, shall be conclusive and binding for all purposes, absent
manifest error.
(b) If any Lender determines that compliance with any law or regulation or
any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect
the amount of capital required or expected to be maintained by such Lender
or any corporation controlling such Lender and that the amount of such
capital is increased by or based upon the existence of such Lender's
commitment to lend
Page 19
hereunder and other commitments of this type or the Advances, then, upon
demand by such Lender (with a copy of such demand to the Agent), the
Borrower shall immediately pay to the Agent for the account of such Lender,
from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender or such corporation in the light of
such circumstances, to the extent that such Lender determines such increase
in capital to be allocable to the existence of such Lender's commitment to
lend hereunder or the participation in or issuance or maintenance of any
Advance or other commitments of the type hereunder. Without prejudice to
any other agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section 2.11(b) shall survive
the payment in full of principal and interest hereunder and under the
Notes; provided, that no Lender shall be entitled to demand such
compensation more than one year following the last day of the fiscal year
of such Lender during which such capital requirement was applicable and in
respect of which such Lender is seeking compensation; provided further,
however, that the foregoing proviso shall in no way limit the right of any
Lender to demand or receive such compensation to the extent that such
compensation relates to the retroactive application of any law, regulation,
guideline or request described above if such demand is made within one year
after the implementation of such retroactive law, interpretation, guideline
or request. A certificate as to such amounts submitted to the Borrower and
the Agent by such Lender in good faith shall be conclusive and binding for
all purposes, absent manifest error.
(c) Notwithstanding the foregoing, no Lender shall give notice or demand
for payment of any increased costs or compensation under this Section 2.11
unless such Lender is generally imposing such increased costs on its
similarly situated customers.
Section 2.12. Illegality. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Agent that the introduction of or
any change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that
it is unlawful, for any Lender or its Eurodollar Lending Office to perform
its obligations hereunder to make Eurodollar Rate Advances or to fund or
maintain Eurodollar Rate Advances hereunder, (i) the obligation of the
Lenders to make, or to Convert Base Rate Advances into, Eurodollar Rate
Advances shall be suspended until the Agent shall notify the Borrower and
the Lenders that the circumstances causing such suspension no longer exist
and (ii) the Borrower shall forthwith prepay in full all Eurodollar Rate
Advances of all Lenders then outstanding, together with interest accrued
thereon, unless the Borrower, within five Business Days of notice from the
Agent, Converts all Eurodollar Rate Advances of all Lenders then
outstanding into Advances of another Type in accordance with Section 2.09.
Any Lender that has notified the Agent of any illegality under this
Section 2.12 shall use its best efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of
its Applicable Lending Office if the making of such change would avoid or
eliminate such
Page 20
illegality and would not, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender.
Section 2.13. Payments and Computations. (a) Except as otherwise
expressly provided herein, the Borrower shall make each payment hereunder
and under the Notes not later than 11:00 A.M. (Chicago time) on the day
when due in U.S. dollars to the Agent at its address referred to in
Section 8.02 in same day funds, and any such payment to the Agent shall
constitute payment by the Borrower hereunder or under the Notes, as the
case may be, for all purposes, and upon such payment the Lenders shall look
solely to the Agent for their respective interests in such payment. The
Agent will promptly after any such payment cause to be distributed like
funds relating to the payment of principal, interest or Commitment Fees
ratably (other than amounts payable pursuant to Section 2.02(c), 2.07,
2.11, 2.14 or 8.04(b)) (according to the Lenders' respective Commitments)
to the Lenders for the account of their respective Applicable Lending
Offices, and like funds relating to the payment of any other amount payable
to any Lender to such Lender for the account of its Applicable Lending
Office, in each case to be applied in accordance with the terms of this
Agreement. Upon its acceptance of an Assignment and Acceptance and
recording of the information contained therein in the Register pursuant to
Section 8.07(d), from and after the effective date specified in such
Assignment and Acceptance, the Agent shall make all payments hereunder and
under the Notes in respect of the interest assigned thereby to the Lender
assignee thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for periods prior
to such effective date directly between themselves.
(b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or under any
Note held by such Lender, to charge from time to time against any or all of
the Borrower's accounts with such Lender any amount so due.
(c) All computations of Commitment Fees and interest based on the Base
Rate shall be made by the Agent on the basis of a year of 365 or 366 days,
as the case may be, and all computations of interest based on the
Eurodollar Rate or the Federal Funds Rate shall be made by the Agent, and
all computations of interest pursuant to Section 2.07 shall be made by a
Lender, on the basis of a year of 360 days, in each case for the actual
number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable. Each
determination by the Agent (or, in the case of Section 2.07, by a Lender)
of an interest rate or fee hereunder shall be conclusive and binding for
all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes shall be stated to
be due on a day other than a Business Day, such payment shall be made on
the next succeeding Business
Page 21
Day, and such extension of time shall in such case be included in the
computation of payment of interest or facility fees, as the case may be;
provided, however, if such extension would cause payment of interest on or
principal of Eurodollar Rate Advances to be made in the next following
calendar month, such payment shall be made on the next preceding Business
Day, and such reduction of time shall in such case be taken into account in
the computation of interest or Commitment Fees, as the case may be.
(e) Unless the Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Lenders hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to
each Lender on such due date an amount equal to the amount then due such
Lender. If and to the extent that the Borrower shall not have so made such
payment in full to the Agent, each Lender shall repay to the Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to
such Lender until the date such Lender repays such amount to the Agent, at
the Federal Funds Rate.
(f) Notwithstanding anything to the contrary contained herein, upon the
occurrence and during the continuance of an Event of Default, all Advances
shall bear interest (computed on the basis of a year of 360 days and actual
days elapsed or, if based on the Base Rate, on the basis of a year of 365
or 366 days, as applicable, and the actual number of days elapsed), payable
on demand, at a rate per annum equal to:
(1) for any Base Rate Advance, the sum of two percent (2%) plus the Base
Rate from time to time in effect: and
(2) for any Eurodollar Rate Advance, the sum of two percent (2%) plus the
rate of interest in effect thereon at the time of such default until the
end of the Interest Period applicable thereto and, thereafter, at a rate
per annum equal to the sum of two percent (2%) plus the Base Rate from time
to time in effect.
Section 2.14. Taxes. (a) Any and all payments by the Borrower hereunder
or under the Notes shall be made, in accordance with Section 2.13, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Lender and the Agent,
taxes imposed on its income and any withholdings in connection therewith,
and franchise taxes imposed on it, by the jurisdiction under the laws of
which such Lender or the Agent (as the case may be) is organized or any
political subdivision thereof and, in the case of each Lender, taxes
imposed on its income, and franchise taxes imposed on it, by the
jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof (all such non-excluded
Page 22
taxes, levies, imposts, deductions, charges, withholdings and liabilities
being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Lender or the Agent, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section 2.14) such Lender or the 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 and
(iii) the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Notes or
from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or the Notes (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.14) paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, interest and expenses, other than those
arising from such Lender's gross negligence) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from
the date such Lender or the Agent (as the case may be) makes written demand
therefor.
(d) Prior to the date of the initial Borrowing in the case of each Bank,
and on the date of the Assignment and Acceptance pursuant to which it
became a Lender in the case of each other Lender, and from time to time
thereafter if requested by the Borrower or the Agent, each Lender organized
under the laws of a jurisdiction outside the United States shall provide
the Agent and the Borrower with the forms prescribed by the Internal
Revenue Service of the United States certifying that such Lender is exempt
from United States withholding taxes with respect to all payments to be
made to such Lender hereunder and under the Notes. If for any reason
during the term of this Agreement, any Lender becomes unable to submit the
forms referred to above or the information or representations contained
therein are no longer accurate in any material respect, such Lender shall
promptly notify the Agent and the Borrower in writing to that effect.
Unless the Borrower and the Agent have received forms or other documents
satisfactory to them indicating that payments hereunder or under any Note
are not subject to United States withholding tax, the Borrower or the Agent
shall withhold taxes from such payments at the applicable statutory rate in
the case of payments to or for any Lender organized under the laws of a
jurisdiction outside the United States.
Page 23
(e) Any Lender claiming any additional amounts payable pursuant to this
Section 2.14 shall use its best efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of
its Applicable Lending Office if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which
may thereafter accrue and would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender.
(f) If the Borrower makes any additional payment to any Lender pursuant to
this Section 2.14 in respect of any Taxes or Other Taxes, and such Lender
determines that it has received (i) a refund of such Taxes or Other Taxes
or (ii) a credit against or relief or remission for, or a reduction in the
amount of, any tax or other governmental charge solely as a result of any
deduction or credit for any Taxes or Other Taxes with respect to which it
has received payments under this Section 2.14, such Lender shall, to the
extent that it can do so without prejudice to the retention of such refund,
credit, relief, remission or reduction, pay to the Borrower such amount as
such Lender shall have determined to be attributable to the deduction or
withholding of such Taxes or Other Taxes. If such Lender later determines
that it was not entitled to such refund, credit, relief, remission or
reduction to the full extent of any payment made pursuant to the first
sentence of this Section 2.14(f), the Borrower shall upon demand of such
Lender promptly repay the amount of such overpayment. Any determination
made by such Lender pursuant to this Section 2.14(f) shall in the absence
of bad faith or manifest error be conclusive, and nothing in this
Section 2.14(f) shall be construed as requiring any Lender to conduct its
business or to arrange or alter in any respect its tax or financial affairs
so that it is entitled to receive such a refund, credit or reduction or as
allowing any person to inspect any records, including tax returns, of any
Lender.
(g) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.14 shall survive the payment in full of
principal and interest hereunder and under the Notes; provided, that no
Lender shall be entitled to demand any payment under this Section 2.14 more
than one year following the last day of the fiscal year of such Lender
during which the liability in respect of such Taxes or Other Taxes was
incurred; provided further, however, that the foregoing proviso shall in no
way limit the right of any Lender to demand or receive any payment under
this Section 2.14 to the extent that such payment relates to the
retroactive application of any Taxes or Other Taxes if such demand is made
within one year after the implementation of such Taxes or Other Taxes.
Section 2.15. Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Advances made by it (other than
pursuant to Section 2.02(c), 2.07, 2.11, 2.14 or 8.04(b)) in excess of its
ratable share of payments on account of the Advances obtained by all
Page 24
the Lenders, such Lender shall forthwith purchase from the other Lenders
such participations in the Advances made by them as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each
of them, provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase
from each Lender shall be rescinded and such Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such Lender's ratable share (according to
the proportion of (i) the amount of such Lender's required repayment to
(ii) the total amount so recovered from the purchasing Lender) of any
interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrower agrees that any
Lender so purchasing a participation from another Lender pursuant to this
Section 2.15 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
Page 25
Article III
Conditions of Borrowings;
Section 3.01. Conditions Precedent to Initial Borrowings. The obligation
of each Lender to make its initial Advance is subject to the satisfaction,
prior to or concurrently with the making of such initial Advance, of each
of the following conditions precedent:
(a) Documents and Other Agreements. The Agent shall have received on or
before the day of the initial Borrowing the following, each dated the same
date, in form and substance satisfactory to the Agent and (except for the
Notes) with one copy for each Lender:
(i) The Notes payable to the order of each of the Lenders, respectively;
(ii) A true and correct copy of the Support Agreement, together with (1) a
schedule of all "Obligations" thereunder and (2) a letter from the Parent
to the Agent and the Lenders confirming that the obligations of the
Borrower hereunder and under the Notes constitute "Obligations" under the
Support Agreement and that the Lenders constitute "Lenders" under the
Support Agreement;
(iii) Certified copies of the resolutions of the Board of Directors of the
Borrower approving this Agreement, the Notes and the Support Agreement and
of all documents evidencing other necessary corporate action with respect
to this Agreement, the Notes and the Support Agreement;
(iv) A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying (A) the names and true signatures of the officers of
the Borrower authorized to sign this Agreement, the Notes and the Support
Agreement and the other documents to be delivered hereunder; (B) that
attached thereto are true and correct copies of the Articles of
Incorporation and the By-laws of the Borrower, in each case as in effect on
such date; (C) that attached thereto are true and correct copies of all
governmental and regulatory authorizations and approvals required for the
due execution, delivery and performance by the Borrower of this Agreement,
the Notes and the Support Agreement;
Page 26
(v) Certified copies of the minutes of the Board of Directors of the
Parent approving the Support Agreement;
(vi) A certificate of the Secretary or an Assistant Secretary of the
Parent certifying (A) the names and true signatures of the officers of the
Parent authorized to sign the Support Agreement and the other documents to
be delivered by the Parent hereunder; (B) that attached thereto are true
and correct copies of the Articles of Incorporation and By-laws of the
Parent, in each case as in effect on such date; and (C) that attached
thereto are true and correct copies of all governmental and regulatory
authorizations and approvals required for the due execution, delivery and
performance by the Parent of the Support Agreement;
(vii) A certificate of the chief financial officer or treasurer of the
Borrower, or such other officer of the Borrower acceptable to the Agent,
stating, that (A) the representations and warranties contained in
Section 4.01 of this Agreement are correct in all material respects on and
as of the date of such certificate as though made on and as of such date
and (B) no Event of Default, and no event that with the giving, of notice
or the passage of time, or both, would constitute an Event of Default, has
occurred and is continuing;
(viii) A favorable opinion of ▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇, special counsel
for the Borrower and the Parent, substantially in the form of Exhibit D
hereto and as to such other matters as any Lender through the Agent may
reasonably request;
(ix) A favorable opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., Managing Attorney,
Corporate Transactions, substantially in the form of Exhibit E hereto and
to such other matters as any Lender through the Agent may reasonably
request; and
(x) The balance sheets of the Parent and its Subsidiaries as at
December 31, 1995, and the related statements of income and retained
earnings of the Parent and its Subsidiaries for the fiscal year then ended,
certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., and the unaudited balance sheets of the
Parent and its Subsidiaries as at September 30, 1996 and the related
statements of income and retained earnings of the Parent and its
Subsidiaries for the nine-month period then ended, accompanied by a
certificate of the chief financial officer or treasurer of the Borrower
stating that (A) such financial statements fairly present (subject, in the
case of such financial statements as at September 30, 1996, to year-end
adjustments) the financial condition of the Parent and its Subsidiaries for
the
Page 27
periods ended on such dates, all in accordance with GAAP, and (B) except as
disclosed in the Parent Reports (as hereinafter defined) there has been no
material adverse change in the financial condition, operations, business or
prospects of the Borrower or the Parent and its Subsidiaries, taken as a
whole, as reflected in such financial statements for the fiscal year ended
December 31, 1995.
Section 3.02. Condition Precedent to Each Borrowing. The obligations of
each Lender to make an Advance (including, the initial Advance, but
excluding, Conversions) shall be subject to the further condition precedent
that on the date of such Advance the following statements shall be true
(and each of the giving of the applicable notice or request with respect
thereto and the making of such Advance shall constitute a representation
and warranty by the Borrower on the date of such Advance such statements
are true):
(i) The representations and warranties contained in Section 4.01 are
correct in all material respects on and as of the date of such Advance,
before and after giving effect to such Advance and to the application of
the proceeds therefrom, as though made on and as of such date, except to
the extent that any such representation or warranty relates solely to an
earlier date and except that the references set forth in Section 4.01(f) to
the December 31, 1995 financial statements of the Parent and its
Subsidiaries shall be deemed a reference to the financial statements of the
Parent and its Subsidiaries most recently submitted to the Lenders;
(ii) The Borrower shall have received all Governmental Approvals necessary
or advisable in connection with the Acquisition;
(iii) No event has occurred and is continuing, or would result from such
Advance or from the application of the proceeds therefrom, that constitutes
an Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both; and
(iv) The Agent shall have received a certificate of the chief financial
officer or the treasurer of the Borrower stating that the Borrower has
completed its environmental due diligence on the projects that are part of
the Acquisition and in the course of such due diligence the Borrower has
not become aware of any material violations of Environmental Laws or any
outstanding litigation regarding Environmental Laws relating to any
projects that are part of the Acquisition which could reasonably be
expected to result in a material adverse change in the financial condition,
operations, business or prospects of the Parent and its Subsidiaries taken
as a whole.
Page 28
Section 3.03. Condition Precedent to Certain Conversions. The obligation
of each Lender to Convert any Borrowing that, upon such Conversion, is to
comprise Eurodollar Rate Advances is subject to the condition precedent
that on the date of such Conversion no Event of Default shall have occurred
and be continuing, and the giving by the Borrower of the applicable notice
of Conversion described in Section 2.09(a) shall constitute a
representation and warranty by the Borrower that no Event of Default has
occurred and is continuing.
Page 29
Article IV
Representations and Warranties;
Section 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) Each of the Borrower and each of its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and is duly qualified to do business as a
foreign corporation in each jurisdiction in which the nature of the
business conducted or the property owned, operated or leased by it requires
such qualification, except where failure to so qualify would not materially
adversely affect the financial condition, operations, business, properties,
or prospects of the Borrower or the Borrower and its Subsidiaries, taken as
a whole.
(b) The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the Borrower's corporate powers, have
been duly authorized by all necessary corporate action, and do not
contravene (i) the Borrower's Articles of Incorporation or By-laws,
(ii) any law applicable to the Borrower or (iii) any contractual or legal
restriction binding on or affecting the Borrower or its properties.
(c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body (each, a
"Governmental Approval") is required as of the date of this Agreement for
the due execution, delivery and performance by the Borrower of this
Agreement or the Notes or by the Parent of the Support Agreement; and no
Governmental Approval will be required after the date of this Agreement for
the performance by the Borrower of this Agreement or the Notes or the
performance of the Support Agreement by the Parent except for such
Governmental Approvals (notice of each of which shall be promptly given to
the Lenders) that shall be in full force and effect as and when required
and not subject to appeal.
(d) This Agreement is, and the Notes when delivered hereunder will be,
legal, valid and binding, obligations of the Borrower enforceable against
the Borrower in accordance with their respective terms, except as the
enforceability thereof may be limited by equitable principles or
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally.
Page 30
(e) The Support Agreement is in full force and effect and has not been
amended, modified, waived or terminated, except in accordance with the
terms hereof and thereof, and the Parent is not in default of any of its
obligations thereunder.
(f) The balance sheets of the Parent and its Subsidiaries as at
December 31, 1995, and the related statements of income and retained
earnings of the Parent and its Subsidiaries for the fiscal year then ended,
certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., and the unaudited balance sheets of the
Parent and its Subsidiaries as at September 30, 1996 and the related
statements of income and retained earnings of the Parent and its
Subsidiaries for the nine-month period then-ended, copies of each of which
have been furnished to each Bank, fairly present (subject, in the case of
such financial statements as at September 30, 1996, to year-end
adjustments) the financial condition of the Parent and its Subsidiaries as
at such dates and the results of the operations of the Parent and its
Subsidiaries for the periods ended on such dates, all in accordance with
GAAP (except as otherwise noted therein), and, except as disclosed in the
Parent's Reports, since December 31, 1995, there has been no material
adverse change in the financial condition, operations, business or
prospects of the Borrower or the Parent and its Subsidiaries, taken as a
whole, as reflected in such financial statements.
(g) Except as disclosed in the Parent's Annual Report to Stockholders for
the year ended December 31. 1995, and in the Parent's Quarterly Reports on
Form 10-Q filed with the Securities and Exchange Commission for the fiscal
quarters ended March 31, 1996, June 30, 1996 and September 30, 1996, and
reports on Form 8-K dated March 7, 1996, June 10, 1996, June 14, 1996,
November 5, 1996, November 22, 1996, December 20, 1996 and January 6, 1997
(collectively, the "Parent Reports") there is no pending or threatened
action or proceeding affecting the Borrower, the Parent or any of its
Subsidiaries before any court, governmental agency or arbitrator that could
reasonably be expected to have a material adverse effect on the financial
condition, operations, business or prospects of the Borrower or the Parent
and its Subsidiaries, taken as a whole, or that purports to affect the
legality, validity, binding effect or enforceability of this Agreement, any
Note or the Support Agreement. Except as disclosed in the Parent Reports,
there has been no change in any such matter disclosed in such Annual Report
the effect of which could reasonably be expected to cause any such material
adverse effect.
(h) Without the prior consent of the Agent and the Lenders, no proceeds of
any Advance have been or will be used directly or indirectly in connection
with any transaction subject to the requirements of Section 14 of the
Exchange Act with respect to which proxies, consents or authorizations are
being sought by any person (as defined in the Exchange Act) other than the
majority of the board of directors of the issuer in respect of which such
proxies, consents or authorizations, as the case may be, are being sought.
Page 31
(i) The Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve
System). Not more than 25% of the value of the assets of the Parent or of
the Borrower and its Subsidiaries is, on the date hereof, represented by
margin stock.
(j) The Borrower (i) is not a "public utility holding company" within the
meaning of the Public Utility Holding, Company Act of 1935, as amended, and
(ii) is not an "investment company" or a company "controlled" by an
"investment company" within the meaning, of the Investment Company Act of
1940, as amended, or an "investment advisor" within the meaning of the
Investment Company Act of 1940, as amended.
(k) No ERISA Termination Event has occurred, or is reasonably expected to
occur, with respect to any ERISA Plan that may materially and adversely
affect the financial condition, operations, business or prospects of the
Borrower or of the Parent and its Subsidiaries, taken as a whole.
(1) The Borrower is in compliance in all material respect with all
applicable laws, rules, regulations and orders, including, without
limitation, all Environmental Laws.
Article V
Covenants of the Borrower;
Section 5.01. Affirmative Covenants. Unless the Majority Lenders shall
otherwise consent in writing, so long as any Note or any amount payable by
the Borrower hereunder shall remain unpaid, any Letter of Credit shall
remain outstanding or any Lender shall have any Commitment hereunder, the
Borrower will, and, in the case of Section 5.01(b), will cause its
Subsidiaries to:
(a) Reporting Requirements. Furnish to the Lenders:
(i) 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,
consolidated and consolidating (showing each direct Subsidiary of the
Parent) balance sheets of the Parent and its Subsidiaries as of the end of
such quarter, consolidated and consolidating (showing each direct
Subsidiary of the Parent) statements of income and retained earnings of the
Parent and its Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter,
Page 32
consolidated balance sheets of the Borrower as of the end of such quarter
and consolidated statements of income and retained earnings of the Borrower
for the period commencing at the end of the previous fiscal year and ending
with the end of such quarter, each certified by the chief financial officer
or treasurer of the Borrower, or such other officer of the Borrower
acceptable to the Agent;
(ii) as soon as available and in any event within 120 days after the end
of each fiscal year of the Borrower, a copy of the annual report for such
year for the Parent and its Subsidiaries, containing consolidated financial
statements for such year, certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or another
nationally recognized firm of independent public accountants, and a copy of
the unaudited consolidating (showing each direct Subsidiary of the Parent)
financial statements of the Parent and its Subsidiaries and the
consolidated financial statements of the Borrower for such year;
(iii) 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 and
within 120 days after the end of the fiscal year of the Borrower, a
certificate of the chief financial officer or treasurer of the Borrower, or
such other officer of the Borrower acceptable to the Agent,
(A) demonstrating, in reasonable detail and with supporting calculations,
compliance with the ratio set forth in Section 6.01(k) hereof and
(B) stating that no Event of Default and no event that, with the giving of
notice or lapse of time or both, will constitute an Event of Default has
occurred and is continuing, or if an Event of Default or such event has
occurred and is continuing, a statement setting forth details of such Event
of Default or event and the action that the Borrower has taken and proposes
to take with respect thereto;
(iv) 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 Parent and
within 120 days after the end of the fiscal year of the Parent, a
certificate of the chief financial officer or treasurer of the Parent, or
such other officer of the Parent acceptable to the Agent,
(A) demonstrating, in reasonable detail and with supporting calculations,
compliance by the Parent with the financial covenants set forth in
Sections 4 and 6 of the Support Agreement and (B) stating that the Parent
is not in default in the performance or observance of any term, covenant or
agreement contained in the Support Agreement;
(v) as soon as possible and in any event within five days after the
occurrence of each Event of Default and each event that, with the giving of
notice or lapse of time or both, would constitute an Event of Default,
continuing on the
Page 33
date of such statement, a statement of the chief financial officer or
treasurer of the Borrower, or such other officer of the Borrower acceptable
to the Agent, setting forth details of such Event of Default or event and
the actions that the Borrower has taken and proposes to take with respect
thereto;
(vi) as soon as possible and in any event within five days after the
commencement of litigation against the Borrower or any of its Subsidiaries,
or the receipt of a notice of default by the Borrower or any of its
Subsidiaries, in either case, that could reasonably be expected to have a
material adverse effect on the Borrower and its Subsidiaries taken as a
whole, notice of such litigation or notice of default describing in
reasonable detail the facts and circumstances concerning such litigation or
default and the Borrower's or such Subsidiary's proposed actions in
connection therewith;
(vii) promptly after the sending or filing thereof, copies of annual,
quarterly or current reports on Forms 10-K, 10-Q or 8-K (or any successor
forms thereto) and registration statements (other than any registration
statement on Form S-8 and any registration statement in connection with a
dividend reinvestment plan) that the Parent or the Borrower or any other
Subsidiary of the Parent files which the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, or the Exchange Act, or
with any national securities exchange; and
(viii) such other information respecting the condition or operations,
financial or otherwise, of the Parent, the Utility, the Borrower or any of
the Parent's other Subsidiaries as any Lender through the Agent may from
time to time reasonably request.
(b) Keep Books; Corporate Existence; Maintenance of Properties; Compliance
with Laws; Insurance; Rights of Inspection; Payment of Material
Obligations.
(i) keep proper books of record and account, all in accordance with GAAP;
(ii) preserve and keep in full force and effecting its existence (except
in each instance to the extent otherwise permitted pursuant to
Section 5.02(c)) and preserve and keep in full force and effect its
licenses, rights and franchises to the extent necessary to carry on its
business;
Page 34
(iii) maintain and keep, or cause to be maintained and kept, its
properties in good repair, working order and condition, and from time to
time make or cause to be made all needful and proper repairs, renewals,
replacements and improvements, in each case to the extent such properties
are not obsolete and are necessary to carry on its business;
(iv) comply in all material respects with all applicable laws, rules,
regulations and orders, such compliance to include, without limitation,
paying before the same become delinquent all taxes, assessments and
governmental charges imposed upon it or its property, except to the extent
being contested in good faith by appropriate proceedings, and compliance
with ERISA and Environmental Laws, except in each case to the extent that
any noncompliance could not reasonably be expected to have a material
adverse effect on the financial condition, operations, business or
prospects of the Borrower or the Borrower and its Subsidiaries, taken as a
whole;
(v) maintain insurance with responsible and reputable insurance companies
or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which it operates;
(vi) subject to the requirements of laws or regulations applicable to the
Borrower and in effect at the time, at any time and from time to time upon
reasonable notice and during normal business hours, the Borrower shall
permit (A) the Agent, any Lender, and their respective agents and
representatives to examine and make copies of and abstracts from the
records and books of account of, and the properties of, the Borrower and
(B) the Agent, each of the Lenders, and their respective agents and
representatives to discuss the affairs, finances and accounts of the
Borrower with the Borrower and its officers, directors and accountants; and
(vii) the Borrower shall pay when due, any and all obligations in respect
of which the failure to pay when due could have a material adverse effect
on the financial condition, results of operations, business or prospects of
the Borrower or its ability to perform under this Agreement or any Note.
(c) Use of Proceeds. Use the proceeds of each Borrowing hereunder
exclusively to finance the cost of the Acquisition.
Page 35
Section 5.02. Negative Covenants. Unless the Majority Lenders shall
otherwise consent in writing, so long as any Note or any amount payable by
the Borrower hereunder shall remain unpaid or any Lender shall have any
Commitment hereunder, the Borrower will not:
(a) Disposition of Assets. Sell, lease, transfer, convey or otherwise
dispose of (whether in one transaction or in a series of transactions) all
or substantially all of the assets purchased or acquired with the proceeds
of all or any portion of any Advance to any Person, or permit any of its
Subsidiaries to do so, except that, (i) any such Subsidiary may transfer
such assets to any other such Subsidiary or to the Borrower, (ii) any such
Subsidiary may sell, lease, transfer, convey or otherwise dispose of all or
substantially all of such assets to a Person other than the Borrower and
its Subsidiaries (each a "Disposition"), (iii) any such Subsidiary may
transfer its assets to any other Person in connection with a sale and
leaseback financing entered into by such Subsidiary, and (iv) the Borrower
and any of its Subsidiaries may sell such assets in a cash transaction,
provided, in the case of any transaction described in clause (ii), (iii) or
(iv), the consideration (as hereinafter defined) received for such assets
is at least equal to the fair value (as determined in good faith by the
board of directors of the Borrower) thereof, and (A) such consideration is
reinvested, or held in cash or cash equivalents for reinvestment, in other
energy-related projects owned or to be owned by the Borrower or any of its
Subsidiaries or (B) such consideration is applied immediately to the
payment or prepayment of Debt of the Borrower or any of its Subsidiaries,
provided further in each case, that immediately after giving effect to any
such transaction, no Event of Default or event that with the giving of
notice or the passage of time, or both, would constitute an Event of
Default shall have occurred and be continuing. As used in this
Section 5.02(a), the term "consideration" shall mean cash consideration or
the fair value of non-cash consideration (as determined in good faith by
the board of directors of the Borrower) less (i) any provision for income
or other taxes payable as a result of such Disposition and (ii) all
brokerage commissions and other fees and expenses incurred in respect of
such Disposition.
(b) Liens, Etc. Create or suffer to exist, or permit any of its direct or
indirect Subsidiaries to create or suffer to exist, any lien, security
interest or other charge or encumbrance, or any other type of preferential
arrangement, upon or with respect to any of its properties, whether now
owned or hereafter acquired, or assign, or permit any of its direct or
indirect Subsidiaries to assign, any right to receive income, in each case
to secure or provide for the payment of any Debt, other than (i) liens or
security interests existing on such property at the time of its acquisition
(other than any such lien or security interest created in the contemplation
of such acquisition), (ii) liens created by purchase money mortgages or
other security interests upon or in any property acquired or held by the
Borrower or any Subsidiary in the ordinary course of business to secure
Page 36
the purchase price of such property or to secure indebtedness incurred
solely for the purpose of financing the acquisition of such property,
(iii) liens or security interests upon or with respect to any of the
Borrower's interests in its Subsidiaries (other than direct Subsidiaries of
the Borrower) or any of the Borrower's Subsidiaries' assets incurred solely
to secure repayment of project financing, for, or utility obligations of,
such Subsidiary, (iv) liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's liens and other similar
liens arising in the ordinary course of business, securing obligations that
are not overdue for a period of more than 30 days after the filing of any
notice with respect to, or the Borrower's otherwise having notice of, such
lien or that are being contested in good faith, (v) liens or security
interests on assets of a Subsidiary securing Debt of such Subsidiary,
provided that the aggregate principal amount of Debt of Subsidiaries
secured by liens or security interests incurred pursuant to this subsection
(v) shall not exceed $10,000,000 at any time, (vi) liens on any assets of
any Subsidiary of the Borrower in favor of the Borrower or any Subsidiary
of the Borrower, and (vii) extensions and renewals of any lien or security
interest described in clauses (i) through (vi) above, provided that (A) any
such extension or renewal shall be limited to the property theretofore
subject to such lien or security interest and (B) the principal amount of
the Debt secured by such lien or security interest shall not be increased.
(c) Mergers and Consolidations. Merge or consolidate with or into any
Person, or permit any of its Subsidiaries to do so, except (i) any
Subsidiary of the Borrower may merge or consolidate with or into any other
Subsidiary of the Borrower, (ii) any Subsidiary of the Borrower may merge
with the Borrower and (iii) the Borrower may merge with the Parent,
provided in each case that, immediately after giving effect to such
proposed transaction, (A) no Event of Default or event that, with the
giving of notice or lapse of time, or both, would constitute an Event of
Default would exist and (B) in the case of any such transaction to which
the Borrower is a party, the Borrower is the surviving corporation or the
survivor shall have expressly assumed the obligations of the Borrower
hereunder and under the Notes pursuant to an assumption agreement in form
and substance satisfactory to the Majority Lenders.
(d) Modification of Support Agreement. Amend, modify, terminate or waive
any provision of the Support Agreement, or consent to any of the foregoing,
except in each case in accordance with the terms of the Support Agreement.
Article VI
Events of Default;
Page 37
Section 6.01. Events of Default. If any of the following events (each, an
"Event of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Advance when the
same becomes due and payable, or interest thereon or any other amount
payable under this Agreement within two Business Days after the same
becomes due and payable; or
(b) Any representation or warranty made by the Borrower herein or by the
Borrower (or any of its officers) in connection with this Agreement or by
the Parent (or any of its officers) in connection with this Agreement or
the Support Agreement shall prove to have been incorrect in any material
respect when made; or
(c) (i) The Borrower shall fail to perform or observe any term, covenant
or agreement contained in Section 5.02, (ii) the Parent shall fail to
perform or observe any term, covenant or agreement contained in the Support
Agreement or (iii) the Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement on its part to be
performed or observed if the failure to perform or observe such other term,
covenant or agreement shall remain unremedied for 20 days after written
notice thereof shall have been given to the Borrower by the Agent or any
Lender; or
(d) (i) The Borrower, the Parent, the Utility or LG&E Gas Systems, Inc.
("Gas Systems") shall fail to pay any principal of or premium or interest
on any Debt which is outstanding in a principal amount in excess of
$10,000,000 in the aggregate (but excluding Debt evidenced by the Notes) of
the Borrower, the Parent, the Utility or Gas Systems, as the case may be,
when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure
shall continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or (ii) any other event
shall occur or condition shall exist under any agreement or instrument
relating to any such Debt and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of
such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt; or (iii) any such Debt shall be declared to be
due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof;
provided, however, that clauses (ii) and (iii) above shall not apply to any
Debt described in clause (vi) of the definition of "Debt" or any Debt
described in clause (viii) of the definition of "Debt" in respect of Debt
of others of the kind referred to in clause (vi) of the definition of
"Debt"; or
(e) The Borrower, the Parent, the Utility or Gas Systems shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its
Page 38
debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the
Borrower, the Parent, the Utility or Gas Systems seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for
it or for any substantial part of its property and, in the case of any such
proceeding, instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 90 days, or
any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of
a receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Borrower, the Parent,
the Utility or Gas Systems shall take any corporate action to authorize or
to consent to any of the actions set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against the Borrower, the Parent, the Utility
or Gas Systems and shall remain unpaid and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 30 consecutive days during which
a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(g) (i) An ERISA Plan of the Borrower or any ERISA Affiliate of the
Borrower shall fail to maintain the minimum funding standards required by
Section 412 of the Internal Revenue Code of 1986, as amended from time to
time (the "Code"), for any plan year or a waiver of such standard is sought
or granted under Section 412(d) of the Code, or (ii) an ERISA Plan of the
Borrower or any ERISA Affiliate of the Borrower shall have been terminated
or the subject of termination proceedings under ERISA, or (iii) the
Borrower or any ERISA Affiliate of the Borrower shall have incurred a
liability to or on account of an ERISA Plan under Section 4062, 4063 or
4064 of ERISA and there shall result from such event either a liability or
a material risk of incurring a liability to the PBGC or an ERISA Plan, or
(iv) any ERISA Termination Event with respect to an ERISA Plan of the
Borrower or any ERISA Affiliate of the Borrower shall have occurred, and in
the case of any event described in clauses (i) through (iv) of this
subsection (g), (A) such event (if correctable) shall not have been
corrected and (B) the then-present value of such ERISA Plan's vested
benefits exceeds the then-current value of assets accumulated in such ERISA
Plan by more than the amount of $10,000,000 (or in the case of an ERISA
Termination Event involving the withdrawal of a "substantial employer" (as
defined in Section 4001(a)(2) of ERISA), the withdrawing employer's
proportionate share of such excess shall exceed such amount); or
Page 39
(h) Any provision of the Support Agreement shall for any reason (except
pursuant to the terms thereof) cease to be valid and binding on any party
thereto or any party thereto shall so state in writing; or
(i) Any authorization or approval or other action by any governmental
authority or regulatory body required for the execution, delivery or
performance of (i) this Agreement, the Notes or the Support Agreement by
the Borrower or (ii) the Support Agreement by the Parent shall be
terminated, revoked or rescinded or shall otherwise no longer be in full
force and effect; or
(j) Failure by the Borrower to maintain a Consolidated Net Worth of
$25,000,000 or more for any reason at any time; or
(k) The Capitalization Ratio of the Parent shall exceed 60% for any reason
at any time;
then, and in any such event, the Agent shall at the request, or may with
the consent, of the Majority Lenders, by notice to the Borrower (i) declare
the obligation of each Lender to make Advances to be terminated, whereupon
the same shall forthwith terminate and (ii) declare the Notes, all interest
thereon and all other amounts payable under this Agreement to be forthwith
due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by the Borrower; provided, however, that in the event of
an actual or deemed entry of an order for relief with respect to the
Borrower or any of its Subsidiaries under the Federal Bankruptcy Code,
(A) the obligation of each Lender to make Advances shall automatically be
terminated and (B) the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived
by the Borrower.
Article VII
The Agent
Section 7.01. Authorization and Action. Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement or collection of the Notes),
the Agent shall not be
Page 40
required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in
so acting or refraining from acting) upon the instructions of the Majority
Lenders, and such instructions shall be binding upon all Lenders and all
holders of Notes; provided, however, that the Agent shall not be required
to make any action which exposes the Agent to personal liability or which
is contrary to this Agreement or applicable law. The Agent agrees to give
to each Lender prompt notice of each notice given to it by the Borrower
pursuant to the terms of this Agreement.
Section 7.02. Agent's Reliance, Etc.; Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to any Lender or
the Borrower for any action taken or omitted to be taken by it or them
under or in connection with this Agreement, except for its or their own
gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, the Agent: (i) may treat the payee of any Note
as the holder thereof until the Agent receives and accepts an Assignment
and Acceptance entered into by the Lender which is the payee of such Note,
as assignor, and an Eligible Assignee, as assignee, as provided in
Section 8.07; (ii) may consult with legal counsel (including 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 in
good faith by it in accordance with the advice of such counsel, accountants
or experts; (iii) makes no warranty or representation to any Lender and
shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with
this Agreement; (iv) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower or to inspect the
property (including the books and records) of the Borrower; (v) shall not
be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other instrument or document furnished pursuant hereto; and (vi) shall
incur no liability under or in respect of this Agreement by acting upon any
notice, consent, certificate or other instrument or writing (which may be
by telecopier, telegram, cable or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
Section 7.03. Bank of Montreal and Affiliates. With respect to its
Commitment, the Advances made by it and the Note issued to it, Bank of
Montreal shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though it were not the Agent; and
the term "Lender" or "Lenders" shall, unless otherwise expressly indicated,
include Bank of Montreal in its individual capacity. Bank of Montreal and
its Affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with, the
Borrower, any of its Subsidiaries and any Person who may do business with
or own securities of the Borrower or any such Subsidiary, all as if Bank of
Montreal were not the Agent and without any duty to account therefor to the
Lenders.
Page 41
Section 7.04. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender
and based on the financial statements referred to in Section 4.01(f) and
such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement.
Section 7.05. Indemnification. The Lenders agree to indemnify the Agent
(to the extent not reimbursed by the Borrower), ratably according to (i) at
any time on or prior to the Termination Date, the respective principal
amounts of the Notes then held by each of them (or if no Notes are at the
time outstanding or if any Notes are held by Persons which are not Lenders,
ratably according to the respective amounts of their Commitments) and
(ii) at any time after the Termination Date, the respective principal
amounts of the Notes then held by each of them (or if any Notes are held by
Persons that are not Lenders, ratably according to the respective unpaid
principal amounts of the Advances made by each Lender), from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against the
Agent in any way relating to or arising out of this Agreement or any action
taken or omitted by the Agent under this Agreement, provided that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of any out-
of-pocket expenses (including reasonable counsel fees) incurred by the
Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, to the extent
that such expenses are reimbursable by the Borrower but for which the Agent
is not reimbursed by the Borrower.
Section 7.06. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed
at any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so
appointed by the Majority Lenders, and shall have accepted such
appointment. within 30 days after the retiring Agent's giving of notice of
resignation or the Majority Lenders' removal of the retiring Agent, then
the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a commercial bank described in clause (i) or (ii) of
the definition of "Eligible Assignee" and having a combined capital and
surplus of at least $150,000,000. Upon the
Page 42
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article VII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. Notwithstanding the foregoing, if no Event of
Default, and no event that with the giving of notice or the passage of
time, or both, would constitute an Event of Default, shall have occurred
and be continuing, then no successor Agent shall be appointed under this
Section 7.06 without the prior written consent of the Borrower, which
consent shall not be unreasonably withheld or delayed.
Article VIII
Miscellaneous;
Section 8.01. Amendments, Etc.; No amendment or waiver of any provision
of this Agreement or the Notes, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Majority Lenders (and, in the case of any
amendment or waiver, the Borrower), and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by all the Lenders (other than any Lender that
is the Borrower or an Affiliate of the Borrower), do any of the following:
(a) waive any of the conditions specified in Section 3.01 or 3.02,
(b) increase the Commitments of the Lenders or subject the Lenders to any
additional obligations, (c) reduce the principal of, or interest on, the
Notes or reduce the Eurodollar Margin or any fees or other amounts payable
hereunder, (d) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder,
(e) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the number of Lenders, which shall be
required for the Lenders or any of them to take any action hereunder or
(f) amend this Section 8.01; and provided, further, that no amendment,
waiver or consent shall, unless in writing, and signed by the Agent in
addition to the Lenders required above to take such action, affect the
rights or duties of the Agent under this Agreement or any Note.
Section 8.02. Notices, Etc.; All notices and other communications
provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and mailed, telecopied,
telegraphed, telexed, cabled or delivered, if to the Borrower, at its
address at ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Treasurer; if to any Bank, at its Domestic Lending Office specified
opposite its name on Schedule I hereto; if to any other Lender, at its
Domestic Lending Office specified in the Assignment and Acceptance pursuant
to which it became a Lender; and if to the Agent, at its address at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - 13
Page 43
West, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇; or, as to each
party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and communications
shall, when mailed, telecopied, telegraphed, telexed or cabled, be
effective when deposited in the mails, telecopied, delivered to the
telegraph company, confirmed by telex answerback or delivered to the cable
company, respectively, except that notices and communications to the Agent
pursuant to Article II or VII shall not be effective until received by the
Agent.
Section 8.03. No Waiver; Remedies.'; No failure on the part of any Lender
or the Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 8.04. Costs and Expenses; Indemnification.'; (a) The Borrower
agrees to pay on demand all costs and expenses incurred by the Agent in
connection with the preparation, execution, delivery, syndication
administration, modification and amendment of this Agreement, the Notes,
the Support Agreement and the other documents to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Agent with respect thereto and with respect to
advising the Agent as to its rights and responsibilities under this
Agreement. The Borrower further agrees to pay on demand all costs and
expenses, if any (including, without limitation, counsel fees and expenses
of outside counsel and of internal counsel), incurred by the Agent and the
Lenders in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Agreement, the Notes, the Support
Agreement and the other documents to be delivered hereunder, including,
without limitation, reasonable counsel fees and expenses in connection with
the enforcement of rights under this Section 8.04(a).
(b) If any payment of principal of, or Conversion of, any Eurodollar Rate
Advance is made other than on the last day of the Interest Period for such
Advance, as a result of a payment or Conversion pursuant to Section 2.09 or
2.12 or a prepayment pursuant to Section 2.10 or acceleration of the
maturity of the Notes pursuant to Section 6.01 or for any other reason, the
Borrower shall, upon demand by any Lender (with a copy of such demand to
the Agent), pay to the Agent for the account of such Lender any amounts
required to compensate such Lender for any additional losses (excluding,
any loss of anticipated profits), costs or expenses which it may reasonably
incur as a result of such payment or Conversion, including, without
limitation, any such loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Advance.
Page 44
(c) The Borrower hereby agrees to indemnify and hold each Lender, the
Agent and their respective Affiliates and their respective officers,
directors, employees and professional advisors (each, an "Indemnified
Person") harmless from and against any and all claims, damages, losses,
liabilities, costs or expenses (including reasonable attorney's fees and
expenses, whether or not such Indemnified Person is named as a party to any
proceeding or is otherwise subjected to judicial or legal process arising
from any such proceeding) that any of them may incur or which may be
claimed against any of them by any person or entity by reason of or in
connection with the execution, delivery or performance of this Agreement,
the Notes or any transaction contemplated thereby, or the use by the
Borrower or any of its Subsidiaries of the proceeds of any Advance, except
to the extent such claim, damage, loss, liability, cost or expense is found
in a final, non-appealable judgment by a court of competent jurisdiction to
have resulted from such Indemnified Person's gross negligence or willful
misconduct. The Borrower's obligations under this Section 8.04(c) shall
survive the repayment of all amounts owing to the Lenders and the Agent
under this Agreement and the Notes and the termination of the Commitments.
If and to the extent that the obligations of the Borrower under this
Section 8.04(c) are unenforceable for any reason, the Borrower agrees to
make the maximum contribution to the payment and satisfaction thereof which
is permissible under applicable law.
Section 8.05. Right of Set-off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or
the granting of the consent specified by Section 6.01 to authorize the
Agent to declare the Notes due and payable pursuant to the provisions of
Section 6.01, each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement
and any Note held by such Lender irrespective of whether or not such Lender
shall have made any demand under this Agreement or such Note and although
such obligations may be unmatured. Each Lender agrees promptly to notify
the Borrower after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity
of such set-off and application. The rights of each Lender under this
Section 8.05 are in addition to other right and remedies (including,
without limitation, other rights of set-off) which such Lender may have.
Section 8.06. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Borrower and the Agent and when the
Agent shall have been notified by each Bank that such Bank has executed it
and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agent and each Lender and their respective successors and
permitted assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior
written consent of the Lenders.
Page 45
Section 8.07. Assignments and Participations. (a) Each Lender may, with
the prior written consent of the Borrower (which consent shall not be
unreasonably withheld or delayed), assign to one or more banks or other
entities all or a portion of its rights and obligations under this
Agreement (including without limitation, all or a portion of its
Commitment, the Advances owing to it and the Note or Notes held by it);
provided, however, that (i) each such assignment shall be of a constant,
and not a varying, percentage of all rights and obligations under this
Agreement, (ii) the amount of the Commitment of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no
event be less than $10,000,000 (or if less, the entire amount of such
Lender's Commitment) and shall be an integral multiple of $1,000,000,
(iii) each such assignment shall be to an Eligible Assignee, and (iv) the
parties to each such assignment shall execute and deliver to the Agent, for
its acceptance and recording in the Register, an Assignment and Acceptance,
together with any Note or Notes subject to such assignment and a processing
and recordation fee of $3,000. Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in each
Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (y) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and,
in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument
or document furnished pursuant hereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of the Borrower or the performance or observance by
the Borrower of any of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement together with copies
of the financial statements referred to in Section 4.01(f) and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the Agent,
upon such assigning Lender or upon any other Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit
Page 46
decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee
appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of
this Agreement are required to be performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in Section 8.02 a
copy of each Assignment and Acceptance delivered to and accepted by it and
a register for the recordation of the names and addresses of the Lenders
and the Commitment of, and principal amount of the Advances owing to each
Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error,
and the Borrower, the Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible
Assignee, together with any Note or Notes subject to such assignment, the
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Borrower. Within five Business
Days after its receipt of such notice, the Borrower, at its own expense,
shall execute and deliver to the Agent in exchange for the surrendered Note
or Notes a new Note to the order of such Eligible Assignee in an amount
equal to the Commitment (or, if the Commitments have terminated, the
principal amount of the Advances) assumed by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained a Commitment (or,
if the Commitments have terminated, Advances) hereunder, a new Note to the
order of the assigning Lender in an amount equal to the Commitment (or, if
the Commitments have terminated, Advances) retained by it hereunder. Such
new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be
dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A hereto.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement, the Notes (including, without limitation, all or a portion of
its Commitment, the Advances owing to it, and the Note or Notes held by
it); provided, however, that (i) such Lender's obligations under this
Agreement and the Notes, (including, without limitation, its Commitment to
the Borrower hereunder), shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the
Page 47
performance of such obligations, (iii) such Lender shall remain the holder
of any such Note for all purposes of this Agreement and the Notes, and
(iv) the Borrower, the Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the Notes.
(f) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 8.07,
disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such
Lender by or on behalf of the Borrower; provided that, prior to any such
disclosure, the assignee or participant or proposed assignee or participant
shall agree in writing to preserve the confidentiality of any confidential
information relating to the Borrower received by it from such Lender.
(g) Notwithstanding anything to the contrary set forth herein, any Lender
may assign, as collateral or otherwise, any of its rights hereunder and
under the Notes (including, without limitation, its rights to receive
payments of principal and interest hereunder and under the Notes) to any
Federal Reserve Bank without notice to or consent of the Borrower or the
Agent.
(h) If any Lender shall make demand for payment under Section 2.11(a),
2.11(b) or 2.14, or shall deliver any notice to the Agent pursuant to
Section 2.l2 resulting in the suspension of certain obligations of the
Lenders with respect to Eurodollar Rate Advances, then upon termination of
such 60-day period or within 60 days of such demand (if, and only if, such
payment demanded under Section 2.11(a), 2.11(b) or 2.14, as the case may
be, shall have been made by the Borrower) or such notice (if such
suspension is still in effect), as the case may be, the Borrower, may
demand that such Lender assign in accordance with this Section 8.07 to one
or more Eligible Assignees designated by the Borrower all (but not less
than all) of such Lender's Commitment and the Advances owing to it within
the next 30 days. If any such Eligible Assignee designated by the Borrower
shall fail to consummate such assignment on terms reasonably acceptable to
such Lender, or if the Borrower shall fail to designate any such Eligible
Assignee for all of such Lender's Commitment or Advances, then such Lender
may assign such Commitment and Advances to any other Eligible Assignee in
accordance with this Section 8.07 during such 30-day period.
Section 8.08. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of
Illinois.
Section 8.09. Waiver of Jury Trial. The Borrower, the Agent and the
Lenders hereby irrevocably waive all right to trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement or
any Note or any other instrument or document delivered hereunder or
thereunder.
Page 48
Section 8.10. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
Section 8.11. Confidentiality. In connection with this Agreement and the
transactions contemplated hereby (including, without limitation,
Section 5.01(b)(vi) hereof), the Borrower may provide the Agent or any
Lender with certain confidential, non-public or proprietary written
information concerning the Borrower's business ("Confidential Borrower
Information"). The Agent and each Lender agree to hold any Confidential
Borrower Information provided to it hereunder in confidence and agree that
except as otherwise expressly provided herein, they will not disclose to
any Person any portion of the Confidential Borrower Information so provided
without the prior written consent of the Borrower. It is understood
however, that Confidential Borrower Information shall not include
information that is or becomes publicly available, information that was
available to the Agent or any Lender prior to disclosure by the Borrower
hereunder or information which becomes available to the Agent or any Lender
on a non-confidential basis from a source that is not known to such Person
to be subject to a confidentiality agreement with the Borrower. It is
further understood that Confidential Borrower Information may be disclosed
by the Agent or any Lender (i) to such Person's directors, officers,
employees, affiliates, agents, advisors and consultants on a "need to know"
and confidential basis in connection with this Agreement and the
transactions contemplated hereby, (ii) to other Lenders and prospective
Lenders who have agreed in writing to maintain the confidentiality of such
Confidential Borrower Information (it being understood that any prospective
Lenders shall be required to enter into an agreement to maintain the
confidentiality of any Confidential Borrower Information to be provided to
them), (iii) at the request of any regulatory or examining authority having
jurisdiction over such Person, (iv) pursuant to subpoena or other legal
process or as otherwise required by law, in which case, the Agent or any
Lender, as the case may be, shall provide the Borrower with notice of such
disclosure promptly so that the Borrower may seek a protective order or
appropriate remedy if available, unless provision of any such notice would
result in a violation of any such subpoena or order of a court of competent
jurisdiction, and (v) in their respective banking relationships with the
Borrower. The respective obligations of the Agent and each Lender
hereunder with respect to Confidential Borrower Information shall survive
the Termination Date but shall terminate on the date one year subsequent
thereto.
Page 49
In Witness Whereof, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
LG&E Energy Systems Inc.
By
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Title: Treasurer
Commitment: $100,000,000 Bank of Montreal,
individually and as Agent
By
Name:
Title:
Page 50
Schedule I
Lender Domestic Lending Eurodollar
Office Recording Office
Bank of Montreal ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Street
Attention: J. Michael ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇
▇▇▇▇▇▇
Exhibit A
Form of Note
U.S.$____________ Dated: ____________, 19__
For value received, the undersigned, LG&E Energy Systems Inc., a Kentucky
corporation (the "Borrower"), hereby promises to pay to the order of
___________ (the "Lender") for the account of its Applicable Lending Office
(such term and other capitalized terms herein being used as defined in the
Credit Agreement referred to below) the principal sum of
U.S.$_______________ or, if less, the aggregate principal amount of the
Advances made by the Lender to the Borrower pursuant to the Credit
Agreement outstanding on the Maturity Date, payable on the Maturity Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Advance from the date of such Advance until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Bank of Montreal, as Agent, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, in same day funds. Each Advance made by
the Lender to the Borrower pursuant to the Credit Agreement, and all
payments made on account of principal thereof, shall be recorded by the
Lender and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled
to the benefits of, the Credit Agreement, dated as of February 11, 1997
(the "Credit Agreement"), among the Borrower, the Lender and certain other
banks parties thereto, and Bank of Montreal, as Agent for the Lender and
such other banks. The Credit Agreement, among, other things, (i) provides
for the making of Advances by the Lender to the Borrower from time to time
in an aggregate amount not to exceed at any time outstanding the U.S.
dollar amount first above mentioned, the indebtedness of the Borrower
resulting from each such Advance being evidenced by this Promissory Note,
and (ii) contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events and also for prepayments on account
of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
The Borrower hereby waives presentment, demand, protest and notice of any
kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of
such rights.
This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of Illinois.
LG&E Energy Systems Inc.
By
Name:
Title:
Page A-53
Advances, Interest Periods and Payments of Principal
Interest Amount of
Period (if Unpaid
Amount of any) of Principal Principal Notation
Date Advance Advance Paid or Balance Made By
Prepaid
Exhibit B
Form of Notice of Borrowing
[Date]
Bank of Montreal, as Agent
for the Lenders parties
to the Credit Agreement
referred to below
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, LG&E Energy Systems Inc., refers to the Credit Agreement,
dated as of February 11, 1997 (the "Credit Agreement", the terms defined
therein being used herein as therein defined), among the undersigned,
certain Lenders parties thereto and Bank of Montreal, as Agent for said
Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02
of the Credit Agreement that the undersigned hereby requests a Borrowing
under the Credit Agreement, and in connection sets forth below the
information relating to such Borrowing (the "Proposed Borrowing") as
required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is ________, 1997.
(ii) The Type of Advances to be made in connection with the Proposed
Borrowing is [Base Rate Advances ] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed Borrowing is $___________.
(iv) The Interest Period for each Advance made as part of the Proposed
Borrowing is [__ month[s]].
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing:
(A) the representations and warranties contained in Section 4.01 are
correct, in all material respects before and after giving effect to the
Proposed Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date, except to the extent that any such
representation or warranty relates solely to an earlier date and except
that the references set forth in Section 4.01(f) of the Credit Agreement to
the December 31, 1995 financial statements of the Parent and its
Subsidiaries shall be deemed a reference to the financial statements of the
Parent and its Subsidiaries most recently submitted to the Lenders;
(B) no event has occurred and is continuing, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom, that
constitutes an Event of Default or would constitute an Event of Default but
for the requirement that notice be given or time elapse or both; and
(C) including this Notice of Borrowing, the Borrower has not delivered
more than three (3) Notices of Borrowing.
Very truly yours,
LG&E Energy Systems Inc.
By
Name:
Title:
Page B-56
Exhibit C
Form of Assignment and Acceptance
Dated ____________, 19__
Reference is made to the Credit Agreement, dated as of February 11, 1997
(the "Credit Agreement"), among, LG&E Energy Systems Inc., a Kentucky
corporation (the "Borrower"), the Lenders (as defined in the Credit
Agreement) and Bank of Montreal, as Agent for the Lenders (the "Agent").
Terms defined in the Credit Agreement are used herein with the same
meaning.
____________ (the "Assignor") and ____________ (the "Assignee") agree as
follows:
1. The Assignor hereby sells and assigns without recourse to the Assignee,
and the Assignee hereby purchases and assumes from the Assignor, that
interest in and to all of the Assignor's rights and obligations under the
Credit Agreement as of the date hereof which represents the percentage
interest specified on Schedule 1 of all outstanding rights and obligations
under the Credit Agreement, including, without limitation, such interest in
the Assignor's Commitment, the Advances owing to the Assignor, and the
Note[s] held by the Assignor. After giving effect to such sale and
assignment, the Assignee's Commitment and the amount of the Advances owing
to the Assignee will be as set forth in Section 2 of Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
the Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; (iii) makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of the Borrower or the performance or observance by
the Borrower of any of its obligations under the Credit Agreement or any
other instrument or document furnished pursuant thereto; and (iv) attaches
the Note[s] referred to in paragraph 1 above and requests that the Agent
exchange such Note[s] for a new Note payable to the order of the Assignee
in an amount equal to the Commitment assumed by the Assignee pursuant
hereto or new Notes payable to the order of the Assignee in an amount
equal to the Commitment (or, if the Commitments have terminated, the
Advances) assumed by the Assignee pursuant hereto and the Assignor in an
amount equal to the Commitment (or, if the Commitments have terminated, the
Advances) retained by the Assignor under the Credit Agreement,
respectively, as specified on Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) confirms that
it is an Eligible Assignee; (iv) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (v) agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement are required to be performed by
it as a Lender; [and] (vi) specifies as its, Domestic Lending Office (and
address for notices) and Eurodollar Lending Office the offices set forth
beneath its name on the signature pages hereof [and (vii) attaches the
forms prescribed by the Internal Revenue Service of the United States
certifying that it is exempt from United States withholding taxes with
respect to all payments to be made to the Assignee under the Credit
Agreement and the Notes]. (1)
4. Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to the Agent for acceptance
and recording by the Agent. The effective date of this Assignment and
Acceptance shall be the date of acceptance thereof by the Agent, unless
otherwise specified on Schedule 1 hereto (the "Effective Date").
5. Upon such acceptance and recording by the Agent, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the
extent provided in this Agreement and Acceptance, relinquish its rights and
be released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit
Agreement and the Notes in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and
facility fees with respect thereto) to the Assignee. The Assignor and
Assignee shall make all appropriate adjustments in payments under the
Credit Agreement and the Notes for periods prior to the Effective Date
directly between themselves.
(1) If the Assignee is organized under the laws of a jurisdiction outside
the United States
Page C-58
7. This assignment and acceptance shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
In witness whereof, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made
on Schedule 1 hereto.
[Name of Assignor]
By
Name:
Title:
[Name of Assignee]
By
Name:
Title:
Domestic Lending Office (and address for notices):
[Address]
Eurodollar Lending Office:
[Address]
Accepted this _____
day of ____________,
19__
[Name of Agent]
Page C-59
By_____________________
Name:
Title:
Page C-60
Schedule 1
to
Assignment and Acceptance
Dated ____________, 19__
Section 1
Percentage Interest: _____%
Section 2.
Assignee's Commitment: $_____
Aggregate Outstanding Principal
Amount of Advances owing to the Assignee: $_____
A Note payable to the order of the Assignee
Dated: ____________, 19__
Principal Amount: $_____
A Note payable to the order of the Assignor
Dated: ____________, 19__
Principal Amount: $_____
Section 3.
Effective Date (2): ____________, 19__
(2) This date should be no earlier than the date of acceptance by the
Agent.
Exhibit D
Form of Opinion of Special Counsel
for the Borrower and the Parent
[Date]
To each of the Banks which is a
party to the Credit Agreement,
dated as of February 11, 1997,
among LG&E Energy Systems
Inc., said Banks and Bank of
Montreal, as Agent for said
Banks
LG&E Energy Systems Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01 of the Credit
Agreement, dated as of February 11, 1997 (the "Credit Agreement"), among
LG&E Energy Systems Inc., a Kentucky corporation (the "Borrower"), the
Banks named therein and Bank of Montreal, as Agent for said Banks. Terms
defined in the Credit Agreement are used herein as therein defined.
We have acted as counsel to LG&E Energy Corp., a Kentucky corporation (the
"Parent"), and have served as counsel to the Parent and the Borrower in
connection with the preparation, execution and delivery of the Credit
Agreement, the Notes and the Support Agreement.
In that connection, we have examined:
(1) the Credit Agreement;
(2) the Notes executed and delivered on the date hereof (the "Initial
Notes");
(3) the Support Agreement;
(4) the documents furnished by the Borrower and the Parent pursuant to
Section 3.01 of the Credit Agreement;
(5) the Articles of Incorporation of the Borrower and all amendments
thereto (the "Borrower Charter");
(6) the by-laws of the Borrower and all amendments thereto (the "Borrower
By-laws");
(7) a certificate of the Secretary of Commonwealth of Kentucky, dated
February 10, 1997, attesting to the continued corporate existence and good
standing of the Borrower in that State;
(8) the Articles of Incorporation of the Parent and all amendments thereto
(the "Parent Charter");
(9) the by-laws of the Parent and all amendments thereto (the "Parent By-
laws"); and
(10) a certificate of the Secretary of Commonwealth of Kentucky, dated
February 10, 1997, attesting to the continued corporate existence and good
standing of the Parent in that State.
We have also examined the originals, or copies certified to our
satisfaction, of such other corporate records of the Borrower and the
Parent, certificates of public officials and of officers of the Borrower
and the Parent, and agreements, instruments and other documents, as we have
deemed necessary as a basis for the opinions expressed below. As to
questions of fact material to such opinions, we have, when relevant facts
were not independently established by us, relied upon certificates of the
Borrower or the Parent, or their respective officers, or of public
officials. We have assumed the due execution and delivery, pursuant to due
authorization, of the Credit Agreement by the Banks and the Agent.
We are qualified to practice law in the State of Illinois and do not
purport to be expert on any laws other than the laws of the State of
Illinois and the Federal laws of the United States. With your permission,
we have relied without independent investigation upon the opinion being
delivered to you of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., a member of the Kentucky Bar,
as to all matters of Kentucky law involved in opinions set forth below. In
our opinion, you and we are justified in so relying, upon the opinion of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Page D-63
Based upon the foregoing, and upon such investigation as we have deemed
necessary, we are of the following opinion:
1. Each of the Borrower and the Parent is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Kentucky.
2. The execution, delivery and performance by the Borrower of the Credit
Agreement, the Notes and the Support Agreement are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate
action, and do not contravene (i) the Borrower Charter or the Borrower By-
laws or (ii) any Federal law, rule or regulation applicable to the Borrower
(including, without limitation, Regulation X of the Board of Governors of
the Federal Reserve System) or (iii) any contractual or legal restriction
contained in any indenture, loan or credit agreement, mortgage or note of
the Borrower or, to our knowledge, contained in any other similar agreement
or instrument to which the Borrower is a party.
3. No authorization, approval or other action by, and no notice to or
filing with, any agency or instrumentality of the government of the United
States is required for the due execution, delivery and performance by the
Borrower of the Credit Agreement, the Notes and the Support Agreement or by
the Parent of the Support Agreement.
4. The Credit Agreement and the Initial Notes have been duly executed and
delivered on behalf of the Borrower. The Credit Agreement and the Initial
Notes are the legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms.
5. The execution, delivery and performance by the Parent of the Support
Agreement are within the Parent's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene (i) the
Parent Charter or the Parent By-laws or (ii) any Federal law, rule or
regulation applicable to the Parent (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve System) or
(iii) any contractual or legal restriction contained in any indenture, loan
or credit agreement, mortgage or note of the Parent or, to our knowledge,
contained in any other similar agreement or instrument to which the Parent
is a party.
6. The Support Agreement has been duly executed and delivered by the
Parent and the Borrower. The Support Agreement is the legal, valid and
binding obligation of the Parent and the Borrower enforceable against the
Parent and the Borrower, respectively, in accordance with its terms.
Page D-64
The opinions set forth above are subject to the following qualifications:
(a) Our opinions in paragraphs 4 and 6 above are subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally.
(b) Our opinions in paragraphs 4 and 6 above are subject to the effect of
general principles of equity, including (without limitation) concepts of
materiality, reasonableness, good faith and fair dealing (regardless of
whether considered in a proceeding in equity or at law).
(c) Except as set forth below, we express no opinion herein as to the
validity or enforceability of any provision regarding choice of law to
govern the Credit Agreement and the Notes or of any provision of the Credit
Agreement for indemnification. However, we understand that this
transaction was principally negotiated in Illinois and the Credit Agreement
and the Notes were delivered by the Borrower in Illinois and the monetary
obligations of the Borrower are payable in Illinois. Accordingly, we
believe that an Illinois court would have a reasonable basis to and should
recognize and give effect to the provisions of Section 8.08 of the Credit
Agreement wherein the parties thereto agree that the Credit Agreement and
the Notes shall be governed by, and construed in accordance with, the laws
of the State of Illinois
(d) We express no opinion as to whether the execution, delivery and
performance of the Credit Agreement and the Notes by the Borrower or of the
Support Agreement by the Parent will constitute a breach of, or constitute
a default under, any convenant or provision with respect to financial
ratios or tests or any aspect of the financial condition or results of
operations of the Parent or the Borrower contained in any agreement to
which the Parent or the Borrower is a party.
This opinion is rendered only with respect to the laws and the regulations
which are in effect as of the date hereof. We assume no responsibility for
updating this opinion to take into account any event, action,
interpretation or change of law occurring subsequent to the date hereof
that may affect the validity of any of the opinions expressed herein.
The foregoing opinion is furnished solely for the benefit of the addressees
hereof in connection with the Credit Agreement, the Notes and the Support
Agreement and the transactions contemplated thereby, and may not be relied
upon by an other Person (other than
Page D-65
any Person that may become a Lender under the Credit Agreement after the
date hereof) or for any other purpose without our prior written consent.
Very truly yours,
Page D-66
Exhibit E
Form of Opinion of Corporate Attorney
for the Borrower and the Parent
[Date]
To each of the Banks which is a
party to the Credit Agreement,
dated as of February 11, 1997,
among LG&E Energy Systems
Inc., said Banks and Bank of
Montreal, as Agent for said
Banks
LG&E Energy Systems Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01 of the Credit
Agreement, dated as of February 11, 1997 (the "Credit Agreement"), among,
LG&E Energy Systems Inc., a Kentucky corporation (the "Borrower"), the
Banks named therein and Bank of Montreal., as Agent for said Banks. Terms
defined in the Credit Agreement are used herein as therein defined.
I am Associate Corporate Attorney for LG&E Energy Corp., a Kentucky
corporation (the "Parent") and have served as counsel to the Parent and the
Borrower in connection with the preparation, execution and delivery of the
Credit Agreement, the Notes and the Support Agreement.
In that connection, I have examined:
(1) the Credit Agreement;
(2) the Notes executed and delivered on the date hereof (the "Initial
Notes");
(3) the Support Agreement;
(4) the documents furnished by the Borrower and the Parent pursuant to
Section 3.01 of the Credit Agreement;
(5) the Articles of Incorporation of the Borrower and all amendments
thereto (the "Borrower Charter");
(6) the by-laws of the Borrower and all amendments thereto (the "Borrower
By-laws");
(7) a certificate of the Secretary of Commonwealth of Kentucky, dated
February 10, 1997, attesting to the continued corporate existence and good
standing of the Borrower in that State;
(8) the Articles of Incorporation of the Parent and all amendments thereto
(the "Parent Charter");
(9) the by-laws of the Parent and all amendments thereto (the "Parent By-
laws"); and
(10) a certificate of the Secretary of Commonwealth of Kentucky, dated
February 10, 1997, attesting to the continued corporate existence and good
standing of the Parent in that State.
I have also examined the originals, or copies certified to my satisfaction,
of such other corporate records of the Borrower and the Parent,
certificates of public officials and of officers of the Borrower and the
Parent, and agreements, instruments and other documents, as I have deemed
necessary as a basis for the opinions expressed below. As to questions of
fact material to such opinions, I have, when relevant facts were not
independently established by me, relied upon certificates of the Borrower
or the Parent, or their respective officers, or of public officials. I
have assumed the due execution and delivery, pursuant to due authorization,
of the Credit Agreement by the Banks and the Agent.
I am qualified to practice law in the Commonwealth of Kentucky and do not
purport to be expert on any laws other than the laws of the Commonwealth of
Kentucky.
Based upon the foregoing and upon such investigation as I have deemed
necessary, I am of the following opinion:
1. Each of the Borrower and the Parent is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Kentucky.
Page E-68
2. The execution, delivery and performance of the Borrower of the Credit
Agreement, the Notes and the Support Agreement are with the Borrower's
corporate powers, have been duly authorized by all necessary corporate
action, and do not contravene (i) the Borrower Charter or the Borrower By-
laws or (ii) any law, rule or regulation of the Commonwealth of Kentucky or
(iii) any contractual or legal restriction contained in any indenture, loan
or credit agreement, mortgage or note of the Borrower or, to my knowledge,
contained in any other similar agreement or instrument to which the
Borrower is a party.
3. No authorization, approval or other action by, and no notice to or
filing with, any agency or instrumentality of the government of the
Commonwealth of Kentucky is required for the due execution, delivery and
performance by the Borrower of the Credit Agreement, the Notes and the
Support Agreement or by the Parent of the Support Agreement.
4. The Credit Agreement and the Initial Notes have been duly executed and
delivered on behalf of the Borrower. In any action or proceeding, arising
out of or relating to the Credit Agreement or any Notes in any court of the
Commonwealth of Kentucky or in any federal court sitting in the
Commonwealth of Kentucky, such court would recognize and give effect to the
provisions of Section 8.08 of the Credit Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of
Illinois. Without limiting, the generality of the foregoing, a court of
the Commonwealth of Kentucky or a federal court sitting in the Commonwealth
of Kentucky would apply the usury law of the State of Illinois, and would
not apply the usury law of the Commonwealth of Kentucky, to the Credit
Agreement and the Notes. However, if a court were to hold that the Credit
Agreement and the Notes are covered by, and to be construed in accordance
with, the laws of the Commonwealth of Kentucky, the Credit Agreement and
the Notes would be, under the laws of the Commonwealth of Kentucky, legal,
valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their respective terms.
5. The execution, delivery and performance by the Parent of the Support
Agreement are within the Parent's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene (i) the
Parent Charter or the Parent By-laws or (ii) any law, rule or regulation of
the Commonwealth of Kentucky applicable to the Parent or (iii) any
contractual or legal restriction contained in any indenture, loan or credit
agreement, mortgage or note of the Parent or, to my knowledge, contained in
any other similar agreement or instrument to which the Parent is a party.
Page E-69
6. The Support Agreement has been duly executed and delivered by the
Parent and the Borrower. The Support Agreement is the legal, valid and
binding, obligation of the Parent and the Borrower enforceable against the
Parent and the Borrower, respectively, in accordance with its terms.
7. There are no pending or, to my knowledge, overtly threatened actions or
proceedings against the Borrower, the Parent or any of their respective
Subsidiaries before any court, governmental agency or arbitrator that
purport to effect the legality, validity, binding effect or enforceability
of the Credit Agreement, any Note or the Support Agreement or, except as
disclosed in the Parent Reports, all previously furnished to you, that
could reasonably be expected to have a material adverse effect upon the
financial condition, operations, business or prospects of the Borrower or
the Parent and its Subsidiaries, taken as a whole.
The opinions set forth above are subject to the following qualifications:
(a) The opinions in the last sentence of paragraph 4 and paragraph 6 above
are subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally.
(b) The opinions in the last sentence of paragraph 4 and paragraph 6 above
are subject to the effect of general principles of equity, including
(without limitation) concepts of materiality, reasonableness, good faith
and fair dealing, (regardless of whether considered in a proceeding in
equity or at law).
The foregoing opinion is furnished solely for the benefit of the addressees
hereof and, except as set forth in the immediately succeeding sentence, may
not be relied upon by any other Person (other than any Person that may
become a Lender under the Credit Agreement after the date hereof or for any
other purpose without my prior written consent.
Very truly yours,
Page E-70