EXHIBIT 10.71
LOAN AGREEMENT
This Loan Agreement (hereinafter called "Agreement") is effective June 30, 1999
and is between SouthStar Energy Services, LLC (hereinafter called "SouthStar"),
Georgia Natural Gas Company (hereinafter called "GNG"), Piedmont Energy Company
(hereinafter called "Piedmont") and Dynegy Hub Services Inc. (hereinafter called
"Dynegy").
WHEREAS, SouthStar, a joint venture of GNG, Piedmont and Dynegy, was formed for
the purpose of selling, on a non-regulated basis, energy commodities to retail
customers; and
WHEREAS, SouthStar wishes to establish lines of credit in the maximum aggregate
available principal amount of $75,000,000.00 which lines of credit contemplate
borrowing directly from GNG and Piedmont and Dynegy; and
WHEREAS, GNG, Piedmont and Dynegy wish to facilitate such credit arrangements on
the terms and conditions set forth herein.
NOW, THEREFORE FOR AND IN CONSIDERATION of the premises, the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. GNG agrees to loan to SouthStar, from time to time upon the terms and
conditions set forth herein, up to Thirty-Seven Million Five Hundred
Thousand and no/100 Dollars (US$37,500,000.00). Piedmont agrees to loan to
SouthStar, from time to time upon the terms and conditions set forth herein,
up to Twenty-Two Million Five Hundred Thousand and no/100 Dollars
(US$22,500,000.00). Dynegy agrees to loan to SouthStar, from time to time
upon the terms and conditions set forth herein, up to Fifteen Million and
no/100 Dollars (US$15,000,000.00).
Whenever SouthStar shall desire to borrow funds pursuant to this Agreement
(each such borrowing being hereinafter referred to as a "Loan" and all such
borrowings requested or outstanding at any given time being hereinafter
referred to as "Loans"), SouthStar shall borrow 50% of the requested Loan
amount from GNG, 30% of the requested Loan amount from Piedmont and 20% of
the requested Loan amount from Dynegy.
Neither GNG, Piedmont nor Dynegy shall have any obligation to SouthStar
whatsoever to make any Loan pursuant to this Agreement if at the time of the
proposed funding thereof the aggregate principal amount of all Loans then
outstanding exceeds, or upon the funding of such proposed Loan would exceed,
$75,000,000.00. Similarly, (i) GNG shall have no obligation to SouthStar
whatsoever to make any Loan pursuant to this Agreement if at the time of the
proposed funding thereof the aggregate principal amount of all Loans then
outstanding from GNG to SouthStar exceeds, or upon the funding of such
proposed Loan would exceed, Thirty-Seven Million Five Hundred Thousand and
no/100 Dollars (US$37,500,000.00), (ii) Piedmont, shall have no obligation
to SouthStar
whatsoever to make any Loan pursuant to this Agreement if at the time of the
proposed funding thereof the aggregate principal amount of all Loans then
outstanding exceeds, or upon the funding of such proposed Loan would exceed,
Twenty-Two Million Five Hundred Thousand and no/100 Dollars
(US$22,500,000.00), and (iii) Dynegy, shall have no obligation to SouthStar
whatsoever to make any Loan pursuant to this Agreement if at the time of the
proposed funding thereof the aggregate principal amount of all Loans then
outstanding exceeds, or upon the funding of such proposed Loan would exceed,
Fifteen Million and no/100 Dollars (US$15,000,000.00). In the event that any
one of the parties, GNG, Piedmont or Dynegy, shall fail to fund all or part
of their respective portions of a SouthStar requested Loan pursuant to a
Loan request made by SouthStar under this Agreement, neither of the other
parties shall have any obligation to make a loan pursuant to that SouthStar
request.
Any person listed in Appendix A is authorized to consummate Loans from GNG,
Piedmont and Dynegy under this Agreement on behalf of SouthStar. Each of
GNG, Piedmont and Dynegy shall designate in writing one contact person for
all matters concerning Loans to SouthStar which designee may be changed by
GNG, Piedmont or Dynegy, respectively, upon written notice to all parties
to this Agreement.
2. The Loans shall be made by GNG, Piedmont and Dynegy under this Agreement
from time to time upon telephonic request from any person listed in Appendix
A. At the time of each Loan, SouthStar will confirm the details of such Loan
by transmitting a written notice to GNG, Piedmont and Dynegy, substantially
in the form of Appendix B, detailing
the borrowing including: (i) the date of the notice; (ii) the requested date
of the Loan; (iii) the aggregate principal amount of the Loan requested;
(iv) the bank account to which Loan funds are to be disbursed; and (v) that
the Loan is being requested pursuant to this Agreement. Further, such notice
shall contain an affirmative representation and warranty that each of GNG,
Piedmont and Dynegy are participating in the Loan pro rata based upon the
following percentages: 50% for GNG; 30% for Piedmont; and 20% for Dynegy.
3. Any and all payments (whether consisting of principal or interest) on an
outstanding Loan shall be made by SouthStar to GNG, Piedmont and Dynegy pro
rata based on the percentage of the Loan amount lent by each. In other
words, assuming all Loans outstanding at the time of the payment were made
by the Parties in percentages required in Paragraph 2 above, GNG, Piedmont
and Dynegy shall each receive the following percentage of any principal
payment or interest payment by SouthStar: 50% for GNG; 30% for Piedmont; and
20% for Dynegy. All payments by SouthStar to GNG, Piedmont and Dynegy shall
be applied first to accrued interest, then to principal. All payments shall
be applied to Loans in the order in which each Loan was made, such that
payments are applied first to repayment of interest and principal on the
Loan that has been outstanding for the longest period of time. The principal
balance of Loans outstanding to GNG, Piedmont and Dynegy may be prepaid, in
whole or in part, at any time without penalty (provided that prepayments are
applied in the order described in the immediately preceding sentence).
Principal amounts repaid to GNG, Piedmont and Dynegy may be re-borrowed by
SouthStar, provided that the aggregate outstanding principal balance of all
Loans does not at any time exceed Seventy-Five Million and no/100 Dollars
(US$75,000,000.00) and provided further that all other terms and conditions
of this Agreement are complied with.
4. Interest will accrue on the outstanding principal balance of each Loan made
by GNG, Piedmont, and Dynegy at an annual fixed rate equal to LIBOR
(hereinafter defined), plus eighty-five basis points. Interest shall be
calculated based upon the actual number of days the principal amount in
question has been outstanding and based upon a year consisting of 360 days.
Payments of interest on the outstanding principal balance of Loans shall be
due and payable, in arrears, quarterly on September 30, 1999, December 31,
1999, March 31, 2000, and June 27, 2000. If the due date for an interest
payment is not a business day, then such payment shall be due on the next
succeeding business day.
Notwithstanding anything herein to the contrary, any Loan payments (whether
principal or interest) not made as and when due shall bear interest from the
date due until paid at a floating rate equal to the Prime Rate (hereinafter
defined) plus 200 basis points. Such interest shall be calculated on the
basis of a 360 day year for the actual number of days elapsed.
For purposes of this Agreement, LIBOR shall mean the London Interbank
Offered Rate for the Applicable Period (hereinafter defined) as published in
the "Money Rates" column of the Eastern Edition of the Wall Street Journal
on the effective date of the Loan
in question, or if the Wall Street Journal is not published on such date,
then as published in the Wall Street Journal on the next preceding business
day.
For purposes of this Agreement, "Applicable Period" shall mean: (i) one year
for Loans with an effective date on or after June 30, 1999, but before
December 28, 1999; (ii) six months for Loans with an effective date on or
after December 28, 1999, but before March 28, 2000; (iii) three months for
Loans with an effective date on or after March 28, 2000, but before May 28,
2000; and (iv) one month for Loans with an effective date on or after May
28, 2000.
For purposes of the Agreement, "Prime Rate" shall mean the "Prime Rate" as
published in the "Money Rates" column of the Eastern Edition of the Wall
Street Journal on the date in question, or if the Wall Street Journal is not
published on such date, then as published in the Wall Street Journal on the
next preceding business day. Changes in the Prime Rate shall become
effective on the date on which they are published in the Wall Street
Journal.
5. The amount borrowed by SouthStar under each Loan shall be deposited in an
account specified by SouthStar in the confirmation notice specified in
Section 2 hereof. Notwithstanding anything to the contrary contained in this
Agreement or in any confirmation notice from SouthStar to GNG, Piedmont or
Dynegy, all Loans (principal and interest) from GNG, Piedmont and Dynegy to
SouthStar shall mature and shall be due and payable in full on June 27,
2000. Simultaneously with its execution of this
Agreement, SouthStar shall execute Master Notes in favor of GNG, Piedmont
and Dynegy in the forms set forth in Exhibit A, Exhibit B and Exhibit C,
respectively.
6. From the date of this Agreement until the later of (i) June 27, 2000, or
(ii) the date on which all outstanding Loans have been paid in full, the
Company covenants and agrees that it will not, without the prior written
consent of each Lender, (a) pledge, sell, assign, or discount any of its
accounts receivable, other than the discount of such accounts in the
ordinary course of business for collection, or (b) pledge, sell or assign
any gas storage inventory.
7. This Agreement shall be governed by and construed under the laws of the
State of Georgia.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their duly authorized officers or other duly authorized representatives as of
the day and year first written above.
SouthStar Energy Services, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Title: President
----------------------
Georgia Natural Gas Company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Title: President
------------------------
Piedmont Energy Company
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Title: Vice President
------------------------
Dynegy Hub Services, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Title: Executive Vice President
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APPENDIX A
Authorized Employees
The following SouthStar employees are authorized under the Agreement to request
Loans from GNG, Piedmont and Dynegy on behalf of SouthStar:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
APPENDIX B
LOAN CONFIRMATION NOTICE
Pursuant to Section 2 of that certain Loan Agreement (the "Agreement") dated as
of June 30, 1999, by and among SouthStar Energy Services, LLC ("SouthStar"),
Georgia Natural Gas Company ("GNG"), Piedmont Energy Company ("Piedmont") and
Dynegy Hub Services, Inc. ("Dynegy"), the undersigned, on behalf of SouthStar,
hereby confirms to GNG, Piedmont and Dynegy the following:
1) The date of this Loan Confirmation Notice is _______________;
2) SouthStar has requested a Loan under the Agreement in the aggregate
principal amount of $_______________ (the "Requested Loan");
3) SouthStar has requested that the Requested Loan be funded on
____________'
4) The Requested Loan is to be funded by GNG, Piedmont and Dynegy as
follows:
GNG: $_______________
Piedmont: $_______________
Dynegy: $_______________
Total Amount of Requested Loan: $_______________
5) The undersigned hereby represents and warrants on behalf of SouthStar
that GNG, Piedmont and Dynegy are participating in the funding of the Requested
Loan as follows:
GNG: 50%
Piedmont: 30%
Dynegy: 20%
6) SouthStar hereby requests that GNG, Piedmont and Dynegy fund their
respective portions of the Requested Loan by wire transferring the applicable
amount to the following SouthStar account:
Financial Institution: _____________________________
ABA#:______________________________________
Account Number:__________________________________
By: ____________________________
Title: _________________________
APPENDIX B
(continued)
SouthStar Energy Services LLC
Requested Loan Journal
Aggregate
Requested Loan Principal Amount Amount of Requested Loan Advanced by:
-------------------------------------
Funding Date of Requested Loan GNG Piedmont Dynegy
------------ ----------------- --- -------- ------
Total _______________ _________ __________ ____________
EXHIBIT A
(GNG)
MASTER NOTE
Effective Date: June 30, 1999
For Value Received, SouthStar Energy Services, LLC (the "Company"), hereby
promises to pay to the order of Georgia Natural Gas Company (the "Lender") at
its office located at ______________________________ or such other place as
Lender may designate, the principal sum of Thirty Seven Million Five Hundred
Thousand and no/100 Dollars ($37,500,000.00) or the aggregate unpaid sum of all
advances which the Lender actually makes hereunder to the Company, whichever
amount is less, together with interest at a rate computed as set forth in that
certain Loan Agreement of even date herewith by and among Company, Lender,
Piedmont Energy Company and Dynegy Hub Services, Inc. (the "Loan Agreement").
The amount of advances hereunder, the interest rate applicable to each such
advance, and the maturity date for the payment of the principal amount of and
interest on each such advance shall be determined in accordance with the Loan
Agreement. The Company hereby agrees to pay all costs of collection hereof,
including, without limitation, reasonable attorneys' fees actually incurred in
the event amounts evidenced by this Master Note are collected by or through an
attorney-at-law. Failure or forbearance of Lender to exercise any right
hereunder or otherwise granted to it by law or another agreement shall not
constitute a waiver of such rights unless so stated by Lender in writing. Time
is of the essence in payment and performance of this Master Note.
SouthStar Energy Services, LLC
By: __________________________________
Title: ________________________________
Exhibit B
(Piedmont)
MASTER NOTE
Effective Date: June 30, 1999
For Value Received, SouthStar Energy Services Inc. (the "Company"), hereby
promises to pay to the order of Piedmont Energy Company (the "Lender") at its
office located at ______________________________ or such other place as Lender
may designate, the principal sum of Twenty Two Million Five Hundred Thousand and
no/100 Dollars ($22,500,000.00) or the aggregate unpaid sum of all advances
which the Lender actually makes hereunder to the Company, whichever amount is
less, together with interest at a rate computed as set forth in that certain
Loan Agreement of even date herewith by and among Company, Lender, Georgia
Natural Gas Company and Dynegy Hub Services, Inc. (the "Loan Agreement"). The
amount of advances hereunder, the interest rate applicable to each such advance,
and the maturity date for the payment of the principal amount of and interest on
each such advance shall be determined in accordance with the Loan Agreement. The
Company hereby agrees to pay all costs of collection hereof, including, without
limitation, reasonable attorneys' fees actually incurred in the event amounts
evidenced by this Master Note are collected by or through an attorney-at-law.
Failure or forbearance of Lender to exercise any right hereunder or otherwise
granted to it by law or another agreement shall not constitute a waiver of such
rights unless so stated by Lender in writing. Time is of the essence in payment
and performance of this Master Note.
SouthStar Energy Services, LLC
By: __________________________________
Title: ________________________________
EXHIBIT C
(Dynegy)
MASTER NOTE
Effective Date: June 30, 1999
For Value Received, SouthStar Energy Services, LLC (the "Company"), hereby
promises to pay to the order of Dynegy Hub Services, Inc. (the "Lender") at its
office located at ______________________________ or such other place as Lender
may designate, the principal sum of Fifteen Million and no/100 Dollars
($15,000,000.00) or the aggregate unpaid sum of all advances which the Lender
actually makes hereunder to the Company, whichever amount is less, together with
interest at a rate computed as set forth in that certain Loan Agreement of even
date herewith by and among Company, Lender, Piedmont Energy Company and Georgia
Natural Gas Company (the "Loan Agreement"). The amount of advances hereunder,
the interest rate applicable to each such advance, and the maturity date for the
payment of the principal amount of and interest on each such advance shall be
determined in accordance with the Loan Agreement. The Company hereby agrees to
pay all costs of collection hereof, including, without limitation, reasonable
attorneys' fees actually incurred in the event amounts evidenced by this Master
Note are collected by or through an attorney-at-law. Failure or forbearance of
Lender to exercise any right hereunder or otherwise granted to it by law or
another agreement shall not constitute a waiver of such rights unless so stated
by Lender in writing. Time is of the essence in payment and performance of this
Master Note.
SouthStar Energy Services, LLC
By: __________________________________
Title: ________________________________