Exhibit 10.2
EXECUTION VERSION
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CREDIT AGREEMENT
among
SOUTHERN STAR CENTRAL GAS PIPELINE, INC.,
as Borrower,
THE LENDERS NAMED HEREIN,
and
UNION BANK OF CALIFORNIA, N.A.,
as Lead Arranger, as Collateral Agent, and as Administrative Agent
Dated as of August 8, 2003
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; PRINCIPLES OF CONSTRUCTION.......................................................1
SECTION 1.01. Defined Terms; Principles of Construction...............................1
ARTICLE II COMMITMENTS AND BORROWINGS...................................................................2
SECTION 2.01. Commitments.............................................................2
SECTION 2.02. Loans...................................................................3
SECTION 2.03. Notice of Borrowings....................................................4
SECTION 2.04. Notes; Repayment of Loans...............................................5
SECTION 2.05. Fees....................................................................5
SECTION 2.06. Interest on Loans.......................................................6
SECTION 2.07. Default Interest........................................................6
SECTION 2.08. Alternate Rate of Interest..............................................7
SECTION 2.09. Repayment of Term Loans and Working Capital Loans.......................7
SECTION 2.10. Optional and Mandatory Prepayment.......................................8
SECTION 2.11. Conversion and Continuation of Borrowings...............................9
SECTION 2.12. Reserve Requirements; Change in Circumstances..........................11
SECTION 2.13. Change in Legality.....................................................12
SECTION 2.14. Indemnity..............................................................13
SECTION 2.15. Taxes..................................................................14
SECTION 2.16. Pro Rata Treatment.....................................................16
SECTION 2.17. Sharing of Setoffs.....................................................17
SECTION 2.18. Payments...............................................................17
SECTION 2.19. Replacement of Lender in Respect of Increased Costs....................18
SECTION 2.20. Change of Lending Office; Filing of Certificates.......................18
ARTICLE III CONDITIONS PRECEDENT.......................................................................19
SECTION 3.01. Financial Closing Date.................................................19
SECTION 3.02. Working Capital Loans..................................................24
SECTION 3.03. Conditions; General Principles.........................................25
ARTICLE IV REPRESENTATIONS AND WARRANTIES..............................................................26
SECTION 4.01. Organization; Powers; Capitalization...................................26
SECTION 4.02. Authorization; Enforceability..........................................26
SECTION 4.03. Compliance.............................................................27
SECTION 4.04. No Violation...........................................................27
SECTION 4.05. Ownership of Collateral................................................27
SECTION 4.06. Litigation.............................................................27
SECTION 4.07. Security Interests.....................................................27
SECTION 4.08. Insurance..............................................................28
SECTION 4.09. Tax Matters............................................................29
SECTION 4.10. Material Project Documents; Technology; Utilities......................29
SECTION 4.11. ERISA Matters..........................................................30
SECTION 4.12. Status.................................................................31
SECTION 4.13. Contingent Obligations.................................................31
SECTION 4.14. Nature of Business.....................................................31
SECTION 4.15. [INTENTIONALLY OMITTED.]...............................................32
SECTION 4.16. Environmental Matters..................................................32
SECTION 4.17. Information............................................................32
SECTION 4.18. Subsidiaries...........................................................33
SECTION 4.19. Use of Proceeds........................................................33
SECTION 4.20. Fees...................................................................33
SECTION 4.21. Governmental Approvals.................................................33
SECTION 4.22. No Default, Event of Damage, or Event of Taking........................34
SECTION 4.23. Material Adverse Change................................................34
ARTICLE V AFFIRMATIVE COVENANTS........................................................................34
SECTION 5.01. Existence..............................................................34
SECTION 5.02. Maintenance and Operation of Property..................................34
SECTION 5.03. Material Project Documents.............................................35
SECTION 5.04. Notices and Information................................................35
SECTION 5.05. Compliance with Laws...................................................37
SECTION 5.06. Governmental Approvals.................................................38
SECTION 5.07. Insurance..............................................................38
SECTION 5.08. Taxes..................................................................44
SECTION 5.09. Pipeline Assets........................................................44
SECTION 5.10. Intellectual Property..................................................44
SECTION 5.11. Security...............................................................44
SECTION 5.12. Use of Proceeds........................................................44
SECTION 5.13. Books of Record and Access.............................................45
SECTION 5.14. Exemptions from Regulations............................................45
SECTION 5.15. Interest Rate Protection Agreements....................................45
SECTION 5.16. Further Assurances.....................................................45
SECTION 5.17. Damage or Destruction..................................................46
SECTION 5.18. Taking.................................................................47
SECTION 5.19. Borrower's Bank Accounts...............................................48
SECTION 5.20. Operating Budget.......................................................48
SECTION 5.21. Pari Passu Status......................................................49
SECTION 5.22. Debt to Total Capitalization Ratio.....................................49
SECTION 5.23. Acknowledgements.......................................................49
SECTION 5.24. Opposition to Proceedings..............................................49
SECTION 5.25. Current Fixed Charge Coverage Ratio....................................49
SECTION 5.26. Tax Sharing Agreement..................................................50
SECTION 5.27. Management of Borrower.................................................50
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ARTICLE VI NEGATIVE COVENANTS..........................................................................51
SECTION 6.01. Fundamental Change.....................................................51
SECTION 6.02. Pipeline Additions and Modifications; Capital Expenditures.............51
SECTION 6.03. Material Project Documents; Additional Contracts.......................51
SECTION 6.04. Restricted Payments....................................................53
SECTION 6.05. ERISA..................................................................54
SECTION 6.06. [INTENTIONALLY OMITTED]................................................54
SECTION 6.07. Environmental Matters..................................................54
SECTION 6.08. Transactions with Affiliates...........................................55
SECTION 6.09. Investments, Loans, and Advances.......................................55
SECTION 6.10. No Liens...............................................................56
SECTION 6.11. Disposition of Assets..................................................56
SECTION 6.12. Indebtedness...........................................................57
SECTION 6.13. Operation of Pipeline..................................................57
ARTICLE VII EVENTS OF DEFAULT..........................................................................57
SECTION 7.01. Events of Default......................................................57
ARTICLE VIII THE ADMINISTRATIVE AGENT AND THE LEAD ARRANGER............................................62
SECTION 8.01. Appointment of the Administrative Agent and the Lead Arranger..........62
ARTICLE IX MISCELLANEOUS...............................................................................66
SECTION 9.01. Notices................................................................66
SECTION 9.02. Survival of Agreement..................................................67
SECTION 9.03. Binding Effect.........................................................67
SECTION 9.04. Successors and Assigns.................................................67
SECTION 9.05. Expenses; Indemnity....................................................69
SECTION 9.06. Right of Setoff........................................................70
SECTION 9.07. Applicable Law and Jurisdiction........................................71
SECTION 9.08. Waivers; Amendment.....................................................72
SECTION 9.09. Entire Agreement.......................................................73
SECTION 9.10. Cumulative Remedies....................................................73
SECTION 9.11. WAIVER OF JURY TRIAL...................................................73
SECTION 9.12. Severability...........................................................74
SECTION 9.13. Counterparts...........................................................74
SECTION 9.14. Headings...............................................................74
SECTION 9.15. Confidentiality........................................................74
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SCHEDULES AND EXHIBITS
Schedule X Definitions
Schedule 2.01 Lenders and Commitments
Schedule 4.05 Permitted Encumbrances
Schedule 4.06 Litigation
Schedule 4.07(b) UCC Filings
Schedule 4.07(c) Location of Collateral Consisting of Equipment and Fixtures
Schedule 4.10 Material Project Documents
Schedule 4.11 ERISA
Schedule 4.16 Environmental Matters
Schedule 5.07(a)(i) Borrower's General Insurance
Schedule 6.09 Permitted Investments, Loans, and Advances
Schedule 6.12 Permitted Indebtedness
Exhibit A-1 Form of Term Loan Note
Exhibit A-2 Form of Working Capital Loan Note
Exhibit B Form of Borrowing Notice
Exhibit C Base Case Projections
Exhibit D Form of Monthly Operating Report
Exhibit E Form of Operating Budget
Exhibit F Form of Conversion or Continuation Notice
Exhibit G Subordination Provisions
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This CREDIT AGREEMENT, dated as of August 8, 2003 (this
"Agreement"), is made by and among SOUTHERN STAR CENTRAL GAS PIPELINE, INC., a
Delaware corporation(1) (the "Borrower"), each of the lenders that is a
signatory hereto or that, pursuant to Section 9.04 hereof, shall become a
"Lender" hereunder (individually, a "Lender" and, collectively, the "Lenders"),
and UNION BANK OF CALIFORNIA, N.A. ("Union Bank of California"), acting in its
capacity as Lead Arranger, as Collateral Agent, and as Administrative Agent.
W I T N E S S E T H :
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WHEREAS, the Borrower has requested (a) the Lenders to extend
credit in order to enable the Borrower, on the terms and subject to the
conditions of this Agreement, to borrow on the Financial Closing Date (such term
and all other capitalized terms used herein having the respective meanings
assigned thereto in Schedule X) Term Loans in an aggregate principal amount not
in excess of the Aggregate Term Loan Commitment and (b) the Lenders to extend
credit in order to enable the Borrower, on the terms and subject to the
conditions of this Agreement, to borrow Working Capital Loans in an aggregate
principal amount not in excess of the Aggregate Working Capital Loan Commitment;
WHEREAS, the proceeds of the Term Loans will be used by the
Borrower to pay fees and expenses incurred in connection with the transactions
contemplated by this Agreement and for general corporate purposes and the
proceeds of the Working Capital Loans will be used by the Borrower to finance
the Borrower's working capital requirements, including the payment of Operating
Expenses, Capital Expenditures, and Debt Service; and
WHEREAS, the Lenders are willing to extend such credit to the
Borrower on the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.01. Defined Terms; Principles of Construction. As
used in this Agreement and unless otherwise expressly indicated, or unless the
context clearly requires
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(1) The FERC Gas Tariff indicates that this entity is a Delaware limited
liability company.
otherwise, for all purposes of this Agreement (a) capitalized terms shall have
the meanings set forth in Schedule X hereto and (b) the principles of
construction set forth in Schedule X shall apply.
ARTICLE II
COMMITMENTS AND BORROWINGS
SECTION 2.01. Commitments. On the terms, subject to the
conditions, and relying upon the representations and warranties herein set
forth:
(a) Term Loans. Each Lender agrees, severally and not jointly,
on the terms and conditions of this Agreement, to make a loan to the Borrower
(each, a "Term Loan") on the Financial Closing Date in a principal amount equal
to such Lender's Term Loan Commitment; provided, however, that in no event shall
the aggregate principal amount of all Term Loans exceed the Aggregate Term Loan
Commitment. Proceeds of each Term Loan shall be used by the Borrower solely for
the purpose of paying fees and expenses incurred in connection with the
transactions contemplated by this Agreement and for general corporate purposes.
Proceeds of each Term Loan (net of a pro-rata portion of the Fees, expenses, and
other amounts that are to be paid out of the Term Loans in accordance with
Section 3.01(s)) shall be deposited into the Concentration Account. Term Loans
repaid or prepaid may not be reborrowed.
(b) Working Capital Loans. Each Lender agrees, severally and
not jointly, on the terms and conditions of this Agreement, to make loans to the
Borrower (each, a "Working Capital Loan") at any time and from time to time on
and after the Financial Closing Date and until the Working Capital Loan Maturity
Date in an aggregate principal amount at any time outstanding not in excess of
such Lender's Working Capital Loan Commitment; provided, however, that in no
event shall the aggregate principal amount of all Working Capital Loans at any
one time outstanding exceed the Aggregate Working Capital Loan Commitment as in
effect from time to time. Proceeds of each Working Capital Loan shall be used by
the Borrower solely for the purpose of financing its working capital
requirements, including paying Operating Expenses, Capital Expenditures, and
Debt Service. Each Borrowing of Working Capital Loans shall be, as to all such
Loans made on any single date, in an aggregate minimum amount equal to the
lesser of (i) five hundred thousand Dollars ($500,000) or any integral multiple
of one hundred thousand Dollars ($100,000) in excess thereof and (ii) the then
unutilized amount of the Aggregate Working Capital Loan Commitment. Proceeds of
each Working Capital Loan shall be deposited into the Concentration Account.
Within the limits set forth in the preceding sentence, the Borrower may borrow,
pay or prepay, and, subject to Section 2.10(f), reborrow Working Capital Loans.
If the Borrower shall fail to make any payment of principal, interest, Fees, or
any other amounts when and as due under this Agreement or the other Loan
Documents, then the Administrative Agent shall have the right to make such
payment on behalf of the Borrower
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and any payment so made by the Administrative Agent shall be deemed to
constitute a Working Capital Loan in an amount equal to such payment.
SECTION 2.02. Loans. (a) Subject to clause (d) below, each
Borrowing shall consist of Loans made by the Lenders ratably in accordance with
their respective Commitment Percentages in respect of such Borrowing; provided,
however, that the failure of any Lender to make any Loan shall not in itself
relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such other Lender).
(b) Each Borrowing shall consist of Base Rate Loans or LIBOR
Loans, as the Borrower may request pursuant to Section 2.03. Each Lender may
(without relieving the Borrower of its obligation to repay such Loan in
accordance with the terms of this Agreement and the Notes) at its option fulfill
its Commitment with respect to any LIBOR Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan so long as the making of
such Loan through any such domestic or foreign branch or Affiliate, as the case
may be, will not result in any increased withholding or similar taxes or any
other increased cost of borrowing payable by the Borrower. Borrowings of more
than one Type may be outstanding at the same time; provided, however, that the
Borrower shall not be entitled to request any Borrowing that, if made, would
result in an aggregate of more than three (3) separate LIBOR Loans being
outstanding hereunder at any one time. For purposes of the foregoing, LIBOR
Loans having different Interest Periods, regardless of whether they commence on
the same date, shall be considered separate LIBOR Loans.
(c) Subject to clause (d) below, each Lender shall make a Loan
in the amount of its applicable Commitment Percentage of each Borrowing
hereunder on the proposed date thereof by wire transfer of immediately available
funds to the Administrative Agent, not later than 12:00 noon, New York City
time, and the Administrative Agent shall deposit the amounts so received into
the Concentration Account or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not have been met, return
the amounts so received to the respective Lenders. Without in any way limiting
any parties' rights or remedies under Applicable Law, the parties hereto
acknowledge that, in the event that a Lender shall fail to make available to the
Administrative Agent, within one (1) Business Day after receiving notice from
the Administrative Agent in accordance with the last sentence of Section 2.03,
any Loan as required by the provisions of this Agreement (such Lender, a
"Delinquent Lender"), any other Lender shall have the right (subject to
pro-ration, if necessary), but not the obligation, to fund such Loan and the
Borrower shall have the right to seek against the Delinquent Lender specific
performance of its obligations hereunder or any other relief as may be available
under Applicable Law. Notwithstanding anything contained herein to the contrary,
a Delinquent Lender shall have no voting, approval, or consent rights and shall
be deemed to have assigned any and all payments due to it from the Borrower,
whether on account of outstanding Loans, interest, fees, or otherwise, to the
remaining non-delinquent Lenders for application to, and reduction of, their
respective pro rata shares of all outstanding Loans. The existence of a
Delinquent Lender shall not relieve the other Lenders
3
of their obligations under this Agreement and the other Loan Documents. Unless
the Administrative Agent shall have been notified by any Lender prior to the
date of a Borrowing that such Lender does not intend to make available to the
Administrative Agent its portion of the Borrowing to be made on such date, the
Administrative Agent may assume that such Lender has made such amounts available
to the Administrative Agent on such date, and the Administrative Agent, in its
sole discretion, may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Lender and the Administrative
Agent has made such amount available to the Borrower, the Administrative Agent
shall be entitled to recover such corresponding amount on demand from such
Lender. If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify the Borrower and the Borrower (without prejudice to any rights the
Borrower may have with respect to the Delinquent Lender to seek specific
performance of such Delinquent Lender's obligations hereunder or any other
relief as may be available under Applicable Law) shall repay such corresponding
amount to the Administrative Agent within five (5) Business Days of such notice.
The Administrative Agent also shall be entitled to recover from such Lender or
the Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made available
by the Administrative Agent to the Borrower to the date such corresponding
amount is recovered by the Administrative Agent, at the rate per annum equal to
the then applicable rate of interest, calculated pursuant to Section 2.06, for
the respective Type of Loans. Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its Commitments hereunder. Notwithstanding
anything contained herein or in any other Loan Document to the contrary, the
Administrative Agent may, subject to the rights of the other Secured Parties
under the Security Documents and with prior notice to the Borrower, upon the
Borrower's failure to make payment as required pursuant to this Section 2.02(c),
apply all funds and proceeds of Collateral available for the payment of any
Obligation to repay any amount owing by any Lender to the Administrative Agent
as a result of such Lender's failure to fund its pro rata share of any Borrowing
hereunder.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Borrowing of a Term Loan or
Working Capital Loan if the Interest Period requested with respect thereto would
end after the Term Loan Maturity Date or the Working Capital Loan Maturity Date,
respectively.
SECTION 2.03. Notice of Borrowings. In connection with any
proposed Borrowing (other than a Borrowing being converted or continued as
provided in Section 2.11), the Borrower shall deliver to the Administrative
Agent a Borrowing Notice, appropriately completed, not later than 12:00 noon,
New York City time, one (1) Business Day (in the case of a Base Rate Borrowing),
two (2) Business Days (in the case of the initial LIBOR Borrowing with respect
to the Term Loans), or three (3) Business Days (in the case of all other LIBOR
Borrowings) prior to the date of a proposed Borrowing. Each Borrowing Notice
delivered pursuant to this Section 2.03 shall be irrevocable, shall be
substantially in the form of Exhibit B, and shall specify (a) whether the
Borrowing of Loans then being requested
4
is to be a LIBOR Borrowing and/or a Base Rate Borrowing, (b) the date of such
Borrowing (which shall be a Business Day) and the amount thereof, (c) whether
such Loans shall be Term Loans or Working Capital Loans, and (d) if such
Borrowing is to be a LIBOR Borrowing, the Interest Period with respect thereto.
If no election as to the Type of Loan is specified in any such Borrowing Notice,
then the requested Borrowing shall be a Base Rate Borrowing. If no Interest
Period with respect to any LIBOR Borrowing is specified in any such Borrowing
Notice, then an Interest Period of one (1) month's duration shall be deemed to
have been selected. The Administrative Agent promptly shall advise the Lenders
of any notice given pursuant to this Section 2.03, the proposed Borrowing date,
the Type of requested Borrowing, and the amount of each Lender's portion of the
requested Borrowing.
SECTION 2.04. Notes; Repayment of Loans. The Loans made by
each Lender shall be evidenced in each case by a Note or Notes duly executed by
the Borrower, dated the Financial Closing Date, with the blanks appropriately
filled, payable to the order of such Lender in a principal amount equal to such
Lender's Term Loan Commitment or Working Capital Loan Commitment, as applicable.
If not earlier paid in accordance with the terms of this Agreement and the
applicable Notes, the outstanding principal balance of the Term Loans and the
Working Capital Loans, as evidenced by such Notes, shall be payable on the Term
Loan Maturity Date or the Working Capital Loan Maturity Date, respectively. Each
Note shall bear interest from the date of the first Borrowing evidenced thereby
on the outstanding principal balance thereof as set forth in Section 2.06. Each
Lender shall, and is hereby authorized by the Borrower to, endorse on the
applicable schedule attached to each Note delivered to such Lender (or on a
continuation of such schedule attached to such Note and made a part thereof), or
otherwise to record in such Lender's internal records, an appropriate notation
evidencing the date and amount of each Loan made by such Lender, each payment
and prepayment of principal of any such Loan, each payment of interest on any
such Loan, and the other information provided for on such schedule. The
endorsements made and the records kept by the Lenders shall, absent manifest
error, be prima facie evidence of the existence and amounts of the Obligations
indicated by such endorsement or record; provided, however, that the failure of
any Lender to make such a notation or any error therein shall not affect any
obligation of the Borrower to repay the Loans made by such Lender to the
Borrower in accordance with the terms of this Agreement and the Notes or any
obligation of the Borrower to pay any other Obligation.
SECTION 2.05. Fees. (a) From and including the Financial
Closing Date to but excluding the earlier of the Working Capital Loan Maturity
Date and the date the Working Capital Loan Commitment terminates as provided
herein, the Borrower shall pay to the Administrative Agent, in arrears, for the
account of the Lenders having a Working Capital Loan Commitment Percentage
greater than zero, on each Quarterly Date in each year and on the Working
Capital Loan Maturity Date, a commitment fee (a "Commitment Fee") equal to
three-eighths of one percent (0.375%) per annum on the average daily amount by
which the Aggregate Working Capital Loan Commitment exceeds the sum of the
aggregate outstanding principal amount of Working Capital Loans during the
calendar quarter or portion thereof then ended. All Commitment Fees shall be
computed on the basis of the actual number of
5
days elapsed in a year of three hundred sixty-five (365) or three hundred
sixty-six (366) days, as pro-rated for any partial quarter, as applicable.
(b) The Borrower shall pay when due to the Administrative
Agent and the Lead Arranger such other fees as shall have been separately agreed
by the Administrative Agent and the Lead Arranger and the Borrower in the Fee
Letter.
(c) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lead Arranger and the Lenders (it being agreed that
payments by the Administrative Agent to the Lead Arranger and the Lenders shall
not be the Borrower's responsibility). Once paid, none of the Fees shall be
refundable in whole or in part under any circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions
of Section 2.07 and the Fee Letter, each Loan that is a Base Rate Loan shall
bear interest at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of three hundred sixty-five (365) or three hundred
sixty-six (366) days, as the case may be) equal to the sum of (i) the Base Rate
plus (ii) in the case of any Working Capital Loan, one and three-quarters
percent (1.75%), or, in the case of any Term Loan, one and one-quarter percent
(1.25%).
(b) Subject to the provisions of Sections 2.07 and 2.08 and
the Fee Letter, each Loan that is a LIBOR Loan shall bear interest at a rate per
annum (computed on the basis of the actual number of days elapsed over a year of
three hundred sixty (360) days) equal to the sum of (i) the Adjusted LIBOR Rate
plus (ii) in the case of any Working Capital Loan, two and three-quarters
percent (2.75%), or, in the case of any Term Loan, two and one-quarter percent
(2.25%).
(c) Interest on each Loan shall be payable by the Borrower to
the Administrative Agent for the account of the Lenders on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The applicable Base Rate or Adjusted LIBOR Rate for each Interest Period or day
within an Interest Period, as the case may be, shall be determined by the
Administrative Agent and notified to the Borrower, and each such determination
shall be conclusive absent manifest error. The Administrative Agent will give
the Borrower prompt notice of any change in the Base Rate and such change in the
Base Rate shall become effective as of the opening of the Business Day on which
such change is announced.
SECTION 2.07. Default Interest. If the Borrower shall default
in the payment of any amount owing hereunder (whether fees, interest, principal,
expenses, indemnities, or other amounts) when due, then to the extent permitted
by Applicable Law, such past due amount shall bear interest until paid in full,
accruing after as well as before judgment, payable on demand, at a rate per
annum equal to the then-applicable interest rate (computed as provided in
Section 2.06) on such past due amount plus two percent (2%) per annum.
6
SECTION 2.08. Alternate Rate of Interest. In the event, and on
each occasion, that on or before the commencement of any Interest Period for a
LIBOR Loan, (a) the Administrative Agent shall have determined in good faith
that (i) Dollar deposits in the amount of such LIBOR Loan are not generally
available in the London interbank market or (ii) reasonable means do not exist
for ascertaining the Adjusted LIBOR Rate or (b) the Administrative Agent is
advised by the Majority Lenders that (i) the rate at which such Dollar deposits
are being offered will not adequately and fairly reflect the cost to such
Majority Lenders of making or maintaining the principal amount of such LIBOR
Loan during such Interest Period or (ii) such Majority Lenders shall incur
increased costs or reduction in amounts received or receivable hereunder in
respect of any LIBOR Loan, the Administrative Agent shall, as soon as
practicable thereafter, give written or telecopy notice of such determination to
the Borrower and the Lenders, as applicable, setting forth in reasonable detail
the basis for such determination. In the event of any such determination
pursuant to clause (a), the Borrower's right to request LIBOR Loans shall be
suspended and any request by the Borrower for a LIBOR Loan or for conversion to
or maintenance of a LIBOR Loan pursuant to Section 2.11 shall be deemed to be a
request for a Base Rate Loan until the Administrative Agent determines that the
circumstances giving rise to such notice no longer exist. In the event of any
determination pursuant to clause (b), each affected Lender may, and is hereby
authorized by the Borrower to, fund its portion of the relevant LIBOR Loan as a
Base Rate Loan. Each determination by the Administrative Agent or the Majority
Lenders hereunder shall be conclusive absent manifest error. In the event that
the Administrative Agent determines at any time following its giving of notice
set forth above that the conditions in such notice no longer exist, the
Administrative Agent shall, as soon as reasonably practicable thereafter, give
notice thereof to the Borrower and the Lenders, whereupon the Borrower's right
to request LIBOR Loans and the Lenders' obligation to make such LIBOR Loans
shall be restored.
SECTION 2.09. Repayment of Term Loans and Working Capital
Loans. (a) Each Term Loan shall be due and payable in full by the Borrower
without demand on the Term Loan Maturity Date. In addition, during the
continuance of each Amortization Event, the Term Loans shall be repaid in two
million Dollar ($2,000,000) quarterly installments, which installments shall be
paid (i) within five (5) Business Days after the date on which the Borrower
becomes aware (whether by notice from the Administrative Agent or otherwise) of
the occurrence of each Amortization Event and (ii) on each Quarterly Date
occurring at least ninety (90) days after the occurrence of such Amortization
Event; provided, that in no event shall more than one such installment be due in
any calendar quarter. Each payment of Term Loans under this Section 2.09(a)
shall be made by the Borrower to the Administrative Agent for the account of the
Lenders and shall be accompanied by interest on the principal amount being paid
accrued to but excluding the date of payment.
(b) Each Working Capital Loan shall be due and payable in full
by the Borrower without demand on the Working Capital Loan Maturity Date. In
addition, all or any portion of any Working Capital Loan may be repaid, at the
election of the Borrower, on any Business Day prior to the Working Capital Loan
Maturity Date upon not fewer than one (1)
7
Business Day's (in the case of the Base Rate Loans) or three (3) Business Days'
(in the case of LIBOR Loans) prior written or telecopy notice (or telephone
notice promptly confirmed by written or telecopy notice) to the Administrative
Agent; provided, however, that (i) any such repayment must occur on an Interest
Payment Date or, if not on an Interest Payment Date, must be accompanied by all
break funding costs incurred by the relevant Lenders associated with such
repayment and (ii) each partial repayment shall be in a minimum amount equal to
the lesser of (A) five hundred thousand Dollars ($500,000) or any integral
multiple of one hundred thousand Dollars ($100,000) in excess thereof and (B)
the remaining amount of such Working Capital Loan then outstanding; provided,
further, that such amounts may be reborrowed in accordance with Section 2.01(b).
Each payment of Working Capital Loans under this Section 2.09(b) shall be made
by the Borrower to the Administrative Agent for the account of the Lenders and
shall be accompanied by interest on the principal amount being paid accrued to
but excluding the date of payment.
SECTION 2.10. Optional and Mandatory Prepayment. (a) The
Borrower shall have the right at any time and from time to time to prepay (in a
manner indicated by the Borrower that is not otherwise inconsistent with the
terms of this Agreement) any Term Loans, in whole or in part, upon not fewer
than five (5) Business Days' prior written or telecopy notice (or telephone
notice promptly confirmed by written or telecopy notice) to the Administrative
Agent; provided, however, that (i) any prepayment must occur on an Interest
Payment Date or, if not on an Interest Payment Date, must be accompanied by all
break funding costs incurred by the relevant Lenders associated with such
prepayment and (ii) each partial prepayment of Term Loans shall be in a minimum
amount equal to the lesser of (A) five million Dollars ($5,000,000) or any
integral multiple of one million Dollars ($1,000,000) in excess thereof and (B)
the remaining amount of such Term Loan then outstanding.
(b) Upon the occurrence of an Event of Damage (excluding a
Minor Loss but including an Event of Total Loss) or an Event of Taking
(excluding a Minor Loss but including an Event of Total Taking) (i) in which the
Borrower is not permitted to Restore the Pipeline pursuant to Section 5.17 or
5.18, as applicable, or (ii) in which the conditions to disbursement set forth
in Section 5.17(c) are not satisfied, or (iii) in the event that there are
excess Insurance Proceeds or Condemnation Proceeds available once Restoration
has been completed, any associated Insurance Proceeds or Condemnation Proceeds
(in the case of clauses (i) and (ii) above) or such excess Insurance Proceeds or
Condemnation Proceeds (in the case of clause (iii) above) shall be used to
prepay the principal amount of the outstanding Loans.
(c) The proceeds of any sale, lease, licensing, transfer,
assignment, or other disposition of any Pipeline Asset in excess of five million
Dollars ($5,000,000) and of all such transactions in the aggregate in excess of
five million Dollars ($5,000,000) (other than proceeds expended or to be
expended by the Borrower to replace such Pipeline Asset in accordance with
Section 6.11) shall be used to prepay, on a pro rata basis, the principal
8
amount of the outstanding Loans and the principal amount of the Borrower's
outstanding obligations under the Indenture in accordance with the terms of the
Intercreditor Agreement.
(d) In the event that (i) a mandatory redemption or prepayment
is required pursuant to the Indenture or any other Permitted Indebtedness
described in clause (c), (e) (other than clause (i) thereof), or (g) of the
definition of "Permitted Indebtedness" or (ii) the Borrower optionally redeems
or prepays any amounts outstanding under the Indenture or any such other
Permitted Indebtedness, the Borrower shall prepay a percentage of the then
outstanding Loans equal to the percentage that the amounts redeemed or prepaid
under the Indenture or such other Permitted Indebtedness represents of the
aggregate amount outstanding under the Indenture or such other Permitted
Indebtedness immediately prior to such redemption or prepayment, in each case in
accordance with the terms of the Intercreditor Agreement.
(e) Each notice of voluntary prepayment given by the Borrower
under this Section 2.10 shall specify the prepayment date and the portion of the
principal amount of the Borrowing to be prepaid. Each prepayment under this
Section 2.10 shall be applied, first, to prepay, on a pro rata basis, the
principal amount of the outstanding Working Capital Loans and, second, to
prepay, on a pro rata basis, the principal amount, if any, of the outstanding
Term Loans. All prepayments under this Section 2.10 shall be subject to Section
2.14 but shall otherwise be without premium or penalty, except as otherwise
specified in Section 2.10(a)(i). All prepayments under this Section 2.10 shall
be made by or on behalf of the Borrower to the Administrative Agent for the
account of the Lenders and shall be accompanied by accrued interest on the
principal amount being prepaid to but excluding the date of payment.
(f) Amounts prepaid pursuant to this Section 2.10 may not be
reborrowed.
SECTION 2.11. Conversion and Continuation of Borrowings. The
Borrower shall have the right at any time by delivery of an irrevocable
Conversion or Continuation Notice to the Administrative Agent not later than
12:00 (noon), New York City time, one (1) Business Day (in the case of clause
(a) below) or three (3) Business Days (in the case of clauses (b) and (c) below)
prior to conversion or continuation, as the case may be, (a) to convert any
LIBOR Borrowing into a Base Rate Borrowing on the expiration date of the
Interest Period applicable thereto, (b) to convert any Base Rate Borrowing into
a LIBOR Borrowing, or (c) to continue any LIBOR Borrowing as a LIBOR Borrowing
for an additional Interest Period on the expiration of the Interest Period
applicable thereto, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective outstanding
principal amounts of the Loans made by such Lenders comprising the
converted or continued Borrowing;
9
(ii) accrued interest on a Borrowing (or portion thereof)
being converted shall be paid by the Borrower at the time of
conversion;
(iii) if any LIBOR Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Lenders pursuant to
Section 2.14;
(iv) any portion of a Borrowing maturing in less than one
(1) month may not be converted into or continued as a LIBOR Borrowing;
(v) any portion of a Borrowing that cannot be converted
into or continued as a LIBOR Borrowing by reason of clause (iv) above
automatically shall be converted at the end of the Interest Period in
effect for such Borrowing into or continued as a Base Rate Borrowing;
(vi) no Borrowing of Term Loans shall be converted into or
continued as a LIBOR Borrowing with an Interest Period ending later
than the Term Loan Maturity Date and no Borrowing of Working Capital
Loans shall be converted into or continued as a LIBOR Borrowing with an
Interest Period ending later than the Working Capital Loan Maturity
Date; and
(vii) following the occurrence of an Event of Default and
so long as the same shall be continuing, (A) no Interest Period in
respect of a LIBOR Borrowing shall exceed one (1) month and (B) upon
notice from the Administrative Agent to the Borrower, no Borrowing
shall be converted to or continued as a LIBOR Borrowing but, instead
shall accrue interest at the rate specified in Section 2.06 for a Base
Rate Borrowing from the beginning of the next Interest Period.
Each Conversion or Continuation Notice delivered pursuant to this Section 2.11
shall be irrevocable and shall refer to this Agreement and specify (a) the
identity and amount of the Borrowing requested to be converted or continued, (b)
whether such Borrowing is to be converted to or continued as a LIBOR Borrowing
or a Base Rate Borrowing, (c) if such notice requests a conversion, the date of
such conversion (which shall be a Business Day), and (d) if such Borrowing is to
be converted to or continued as a LIBOR Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such Conversion or
Continuation Notice with respect to any conversion to or continuation as a LIBOR
Borrowing, an Interest Period of one (1) month's duration shall be deemed to
have been selected. The Administrative Agent shall advise the Lenders of any
Conversion or Continuation Notice given pursuant to this Section 2.11, the
proposed date for such conversion or continuation, the Type of Loan subject to
such conversion or continuation, and each Lender's portion of any converted or
continued Borrowing. If no Conversion or Continuation Notice shall have been
given in accordance with this Section 2.11 to continue any Borrowing into a
subsequent Interest Period (and the Borrower shall not otherwise have given
notice in accordance with this Section 2.11 to convert such Borrowing), such
Borrowing shall, at the end of the Interest Period applicable thereto (unless
repaid pursuant to the terms hereof), automatically be
10
converted into a Base Rate Borrowing until the Borrower delivers a Conversion or
Continuation Notice with respect thereto. Each Lender may (without relieving the
Borrower of its obligation to repay such Loan in accordance with the terms of
this Agreement and the Notes) at its option fulfill its obligation to continue
any LIBOR Loan or to convert any Base Rate Loan to any LIBOR Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan so long
as the making of such Loan through any such domestic or foreign branch or
Affiliate, as the case may be, will not result in any increased withholding or
similar taxes or any other increased cost of Borrowing payable by the Borrower.
SECTION 2.12. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in Applicable Law or regulation or in the interpretation or
administration thereof, or any direction, requirement, or request issued, by any
Governmental Authority charged with the interpretation or administration thereof
(whether or not having the force of law) (i) shall impose, modify, or deem
applicable any reserve, special deposit, or similar requirement against assets
of, deposits with, or for the account of or credit extended by any Lender or any
corporation controlling such Lender (except any such reserve requirement that is
reflected in the Adjusted LIBOR Rate) or (ii) shall impose on any Lender or any
corporation Controlling such Lender or the London interbank market any other
condition affecting this Agreement or LIBOR Loans made by such Lender under this
Agreement, and the result of any of the foregoing shall be to increase the cost
to such Lender of making or maintaining any LIBOR Loan or to reduce the amount
of any sum received or receivable by such Lender hereunder or under the Notes
(whether of principal, interest, or otherwise) by an amount deemed by such
Lender to be material, then the Borrower will pay to such Lender upon demand and
the Borrower's receipt of the notice and certification described in Section
2.12(c) such additional amount or amounts as will compensate such Lender for
such additional costs incurred or reduction suffered, as set forth in such
certificate.
(b) If any Lender shall have determined that the applicability
of any Applicable Law, guideline, request, or directive adopted after the date
hereof pursuant to or arising out of the July 1988 report of the Basle Committee
on Banking Regulations and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards," or the adoption by
any applicable Governmental Authority after the date hereof of any other
Applicable Law, guideline, request, or directive regarding capital adequacy, or
any change after the date hereof in any of the foregoing or in the
interpretation or administration of any of the foregoing by any Governmental
Authority, central bank, or comparable governmental agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or any Lender's holding company with any
requirement or directive regarding capital adequacy (whether or not having the
force of law) made after the date hereof by any such authority, central bank, or
comparable governmental agency, has or would have the effect of reducing the
rate of return on such Lender's capital or on the capital of such Lender's
holding company, if any, as a consequence of this Agreement or the Loans made or
participated in by such Lender to a level below that which such Lender or such
Lender's holding company would have achieved but
11
for such adoption, change, or compliance (taking into consideration such
Lender's policies and the policies of such Lender's holding company with respect
to capital adequacy) by an amount deemed by such Lender to be material and such
amount is not already reflected in the interest rate on the Loans, then from
time to time the Borrower shall pay to such Lender following the Borrower's
receipt of the notice and certificate described in Section 2.12(c) such
additional amount or amounts as will compensate such Lender or such Lender's
holding company for any such reduction suffered, as set forth in such
certificate.
(c) Each Lender agrees to notify the Borrower of any event
referred to in clause (a) or (b) above as soon as practicable after becoming
aware of the circumstances giving rise to such event; provided, however, that
the failure to give such notice shall not affect the rights of any Lender under
this Section 2.12. Such notice shall contain a certificate in reasonable detail
as to the amount and calculation of any such increased cost, submitted promptly
to the Borrower and the Administrative Agent by such Lender, which shall be
conclusive and binding for all purposes, absent manifest error.
(d) Failure on the part of any Lender to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to any period shall not constitute a
waiver of such Lender's right to demand compensation with respect to any other
period, subject to clause (g) below. The protection of this Section 2.12 shall
be available to each Lender regardless of any possible contention of the
invalidity or inapplicability of the Applicable Law or guideline or other change
or condition that shall have occurred or been imposed.
(e) In the event that a Lender determines at any time
following its giving of notice based on any of the conditions described in this
Section 2.12 that such conditions no longer exist, such Lender shall promptly
give notice thereof to the Borrower and the Lenders, whereupon the Borrower
shall no longer be required to compensate such Lender for such amounts.
(f) Notwithstanding anything to the contrary in this
Agreement, no Lender shall be entitled to compensation under Section 2.12, 2.14,
or 2.15 for any amounts incurred or accruing more than ninety (90) days prior to
the giving of notice by such Lender to the Borrower of additional costs of the
type described in such Sections.
(g) The provisions in this Section 2.12 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
SECTION 2.13. Change in Legality. (a) Notwithstanding anything
to the contrary herein contained, if any change on or after the date hereof in
any Applicable Law or in the interpretation thereof by any Governmental
Authority charged with the administration or interpretation thereof shall make
it unlawful for any Lender to make or maintain any LIBOR Loan or to give effect
to its obligations as contemplated hereby with respect to a
12
LIBOR Loan, then, by written notice to the Borrower and to the Administrative
Agent (such notice to contain the circumstances of such unlawfulness), such
Lender may:
(i) declare that LIBOR Loans will not thereafter be made
by such Lender hereunder, whereupon the Borrower shall be prohibited
from requesting LIBOR Loans from such Lender hereunder unless such
declaration is subsequently withdrawn; and
(ii) require that all outstanding LIBOR Loans made by it
be converted to Base Rate Loans, in which event (A) all such LIBOR
Loans automatically shall be converted to Base Rate Loans as of the
effective date of such notice as provided in clause (b) below and (B)
all payments and prepayments of principal that otherwise would have
been applied to repay the converted LIBOR Loans instead shall be
applied to repay the Base Rate Loans resulting from the conversion of
such LIBOR Loans.
(b) For purposes of Section 2.13(a), a notice to the Borrower
by any Lender shall be effective, if lawful, on the last day of the then current
Interest Period; otherwise, such notice shall be effective on the date of
receipt by the Borrower.
(c) Each Lender agrees to notify the Borrower of any event
referred to in Section 2.13(a) as soon as practicable after becoming aware of
the circumstances giving rise to such event; provided, however, that the failure
to give such notice shall not affect the rights of any Lender under this Section
2.13. Each Lender agrees to use its best efforts (including, without limitation,
a reasonable effort to change its lending office or to transfer its affected
Loans to an Affiliate of such Lender) to avoid such illegality.
(d) In the event that a Lender determines at any time
following its giving of notice based on the conditions described in clause (a)
above that such conditions no longer exist, such Lender shall promptly give
notice thereof to the Borrower and the other Lenders, whereupon the Borrower's
right to request LIBOR Loans from such Lender and such Lender's obligation to
make such LIBOR Loans shall be restored.
(e) The provisions in this Section 2.13 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
SECTION 2.14. Indemnity. Subject to the terms of Section
2.12(f), the Borrower shall indemnify each Lender against any actual loss or
reasonable expense (including any loss or expense actually incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain any Loan or part thereof as a LIBOR Loan) that such Lender may sustain
or incur (other than loss of profit) as a consequence of (a) any failure of the
Borrower to convert or continue any LIBOR Loan hereunder after irrevocable
Notice of Conversion or Continuation pursuant to Section 2.11 has been given,
(b) any payment, prepayment, or conversion of a LIBOR Loan required by any
provision of this Agreement is
13
made on a date other than the last day of the applicable Interest Period, (c)
any prepayment of any LIBOR Loans being made on a date other than the date
specified in a notice of prepayment given by the Borrower, or (d) any failure of
the Borrower in repaying its LIBOR Loans or any other amounts owing hereunder in
respect of its LIBOR Loans when required by the terms of this Agreement. Such
actual loss or reasonable expense shall only include an amount, with respect to
such Lender, equal to the excess, if any, of (x) its cost of obtaining the funds
for the Loan being paid, prepaid, converted, or not converted or continued
(assumed to be the Adjusted LIBOR Rate applicable thereto) for the period from
the date of such payment, prepayment, conversion, or failure to convert or
continue to the last day of the Interest Period for such Loan (or, in the case
of a failure to borrow, convert, or continue, the Interest Period for such Loan
that would have commenced on the date of such failure) over (y) the amount of
interest (as reasonably determined by such Lender) that would be realized by
such Lender in reemploying the funds so paid, prepaid, converted, or not
borrowed, converted, or continued for such period or Interest Period, as the
case may be. A certificate of such Lender setting forth in reasonable detail the
basis for determining any amount or amounts that such Lender is entitled to
receive pursuant to this Section 2.14 and the calculation thereof shall be
delivered to the Borrower and shall be conclusive absent manifest error. Nothing
in this Section 2.14 shall prevent any Lender from funding its LIBOR Loans in
the manner it so chooses in its sole discretion. The provisions of this Section
2.14 shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
SECTION 2.15. Taxes. (a) Any and all payments by the Borrower
hereunder shall be made free and clear of and without deduction or withholding
for or on account of any and all present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on the Administrative Agent's, the Lead Arranger's, or
any Lender's net income by the United States or any jurisdiction under the laws
of which it is organized or any political subdivision thereof or any taxing
jurisdiction where by reason of the Administrative Agent's, the Lead Arranger's,
or such Lender's business activities therein such taxes are imposed on the
Administrative Agent's, the Lead Arranger's, or such Lender's net income (all
such nonexcluded taxes, levies, imposts, deductions, charges, or withholdings,
and all liabilities with respect thereto being hereinafter referred to as
"Taxes"). If the Borrower shall be required by Applicable Law to deduct or
withhold any Taxes from or in respect of any sum payable hereunder to the
Lenders, the Lead Arrangers, or the Administrative Agent, (i) the sum payable
shall be increased by the amount necessary so that after making all required
deductions or withholdings (including deductions or withholdings applicable to
additional sums payable under this Section 2.15) such Lender, the Lead Arranger,
or the Administrative Agent, as the case may be, shall receive an amount equal
to the sum it would have received had no such deductions or withholdings been
made, (ii) the Borrower shall make such deductions or withholdings, and (iii)
the Borrower shall pay the full amount deducted or withheld to the relevant
taxing authority or other Governmental Authority within the period permitted by
Applicable Law.
(b) In addition, the Borrower agrees to pay any present and
future stamp and documentary taxes and any other excise and property taxes,
fees, charges, and similar
14
levies that arise from any payment made hereunder or from the execution,
delivery, or registration or nonregistration of, or otherwise with respect to,
this Agreement or any other Loan Document (hereinafter referred to as "Other
Taxes").
(c) Subject to Sections 2.12(f) and 2.15(f), the Borrower will
indemnify each Lender, the Lead Arranger, and the Administrative Agent for the
full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 2.15) paid by such
Lender, the Lead Arranger, or the Administrative Agent, as the case may be, with
respect to this Agreement or any other Loan Document and any liability
(including penalties, interest, additions to tax, and other charges arising
through no failure on the part of such Lender, the Lead Arranger, or the
Administrative Agent, as the case may be, promptly to notify the Borrower of
such Tax or Other Tax) arising therefrom or with respect thereto. Such
indemnification shall be made within thirty (30) days after the date any Lender,
the Lead Arranger, or the Administrative Agent, as the case may be, makes
written demand therefor pursuant to a certificate setting forth the amount of
such indemnification and the basis for calculation thereof in reasonable detail,
which certificate shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall not be obligated to indemnify a
Lender, the Lead Arranger, or the Administrative Agent, as the case may be, for
any Tax, Other Tax, or other amount payable under this Section 2.15, paid or
incurred by such Lender, the Lead Arranger, or the Administrative Agent, as the
case may be, unless such Lender, the Lead Arranger, or the Administrative Agent,
as the case may be, makes written demand therefor from the Borrower as provided
in this Section 2.15(c). If a Lender, the Lead Arranger, or the Administrative
Agent, as the case may be, receives a refund or credit with respect to any Tax
or Other Tax that the Borrower has either paid on behalf of the Lender, the Lead
Arranger, or the Administrative Agent, as the case may be, or for which the
Lender, the Lead Arranger, or the Administrative Agent, as the case may be, was
indemnified, then the Lender, the Lead Arranger, or the Administrative Agent, as
the case may be, shall pay over such refund or the amount equal to such credit
to the Borrower within thirty (30) days of receipt thereof.
(d) Except as provided in the last sentence of this Section
2.15(d), within thirty (30) days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Lender, the Lead
Arranger, or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and such party, at its address referred to in Section 9.01,
the original or a certified copy of a receipt evidencing payment thereof or, if
such receipt is not available within such period, a certificate of a Responsible
Officer of the Borrower setting forth the details of such payment. To the extent
a receipt is not available within the period specified above, the Borrower will
furnish such receipt to the Administrative Agent and such party within ten (10)
days after it becomes available.
(e) The provisions of this Section 2.15 shall survive the
payment of the Loans and all other amounts payable hereunder.
(f) Each Lender that is organized outside the United States
shall on or prior to the Financial Closing Date or, if later, the date on which
it becomes a Lender
15
hereunder, deliver to the Administrative Agent and the Borrower such
certificates, documents, or other evidence, as required by the Code or Treasury
Regulations, including copies of Internal Revenue Service Form W-8BEN, W-8ECI,
or any applicable successor form and any other certificate or statement or
exemption required by Treasury Regulations, properly completed and duly executed
by such Lender, establishing that payments by the Borrower hereunder are (i) not
subject to withholding under the Code or (ii) exempt from United States tax
under any provision of an applicable tax treaty. Thereafter and from time to
time (but only so long as such Lender remains lawfully able to do so), each such
Lender shall submit to the Borrower such additional duly completed signed copies
of one or the other of such forms (or such successor form as shall be adopted
from time to time by the relevant United States taxing authorities) as may be
(i) notified by the Borrower to such Lender and (ii) required under then current
United States law or regulation to avoid United States withholding taxes on
payments in respect of all amounts to be received by such Lender hereunder.
Notwithstanding anything to the contrary contained in this Section 2.15, but
subject to the immediately succeeding sentence, (i) the Borrower or the
Administrative Agent shall be entitled, to the extent it is required to do so by
Applicable Law, to deduct or withhold income or other similar Taxes imposed by
the United States (or any political subdivision or taxing authority thereof or
therein) from interest, Fees, or other amounts payable hereunder for the account
of any Lender organized under the laws of a jurisdiction outside of the United
States that has not provided to the Borrower and the Administrative Agent such
forms that establish a complete exemption from such deduction or withholding and
(ii) the Borrower shall not be obligated pursuant to Section 2.15 hereof to
gross-up payments to be made to a Lender in respect of income or similar Taxes
imposed by the United States (or any political subdivision or taxing authority
thereof or therein) or any additional amounts with respect thereto if the
obligation to withhold amounts with respect to such tax existed on (A) the date
such Lender became a party to this Agreement, (B) the date such Lender
designated a new lending office, provided such tax arose out of the transfer of
the Loan to the new lending office, or (C) the date on which such Lender
transferred a Loan to an Affiliate, provided such tax arose out of the transfer
of the Loan to such Affiliate. Notwithstanding anything to the contrary
contained in the preceding sentence or elsewhere in this Section 2.15, but
subject to Section 2.12(f), the Borrower agrees to pay additional amounts and
indemnify each Lender in the manner set forth in Section 2.15 in respect of any
Taxes deducted or withheld as a result of any changes after the Financial
Closing Date in any Applicable Law or in the interpretation thereof, relating to
the deducting or withholding of income or similar Taxes.
SECTION 2.16. Pro Rata Treatment. Except as required under
Sections 2.13 and 2.02(c), each Borrowing, each payment of Commitment Fees, and,
except as provided otherwise in Section 2.02, each reduction of the Commitments
of any type shall be allocated by the Administrative Agent pro rata among the
Lenders in accordance with their respective applicable Term Loan Commitment
Percentage or Working Capital Loan Commitment Percentage, as the case may be,
and, subject to the provision of Section 2.02(c), each payment or prepayment of
principal of any Borrowing, each payment of interest on the Loans comprising any
Borrowing, each conversion of any Borrowing to a Borrowing of any Type, and any
continuation of any Borrowing as a Borrowing of any Type shall be allocated by
the
16
Administrative Agent pro rata among the Lenders in accordance with the
respective applicable principal amounts of their outstanding Term Loans or
Working Capital Loans, as the case may be, comprising such Borrowing. Each
Lender agrees that in computing such Lender's portion of any Borrowing to be
made hereunder, the Administrative Agent may, in its discretion, round each
Lender's percentage of such Borrowing to the next higher or lower whole Dollar
amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if
it shall, through the exercise of a right of banker's lien, setoff, or
counterclaim against the Borrower, or pursuant to a secured claim under Section
506 of Title 11 of the United States Code or other security or interest arising
from, or in lieu of, such secured claim, received by such Lender under any
applicable bankruptcy, insolvency, or other similar Applicable Law or otherwise,
or by any other means, obtain payment (voluntary or involuntary) in respect of
any Loan as a result of which the unpaid principal portion of its Loans shall be
proportionately less than the unpaid principal portion of such Loans of any
other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in such Loans of such other Lender, such
that the aggregate unpaid principal amount of the Loans and participations in
Loans held by each Lender shall be in the same proportion to the aggregate
unpaid principal amount of all such Loans then outstanding as the principal
amount of its Loans prior to such exercise of banker's lien, setoff, or
counterclaim or other event was to the principal amount of all such Loans
outstanding prior to such exercise of banker's lien, setoff, or counterclaim or
other event; provided, however, that, if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.17 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest. The Borrower expressly
consents to the foregoing arrangements and agrees that any Lender holding a
participation in a Loan deemed to have been so purchased pursuant to this
Section 2.17 may exercise any and all rights of banker's lien, setoff, or
counterclaim with respect to any and all moneys owing by the Borrower to such
Lender by reason thereof as fully as if such Lender had made a Loan directly to
the Borrower in the amount of such participation.
SECTION 2.18. Payments. (a) The Borrower shall make each
payment (including any payment of principal of or interest on any Borrowing or
any Fees or other amounts) hereunder and under any other Loan Document not later
than 12:00 (noon), New York City time, on the date when due in Dollars in
immediately available funds to the Administrative Agent at ABA No. ▇▇▇-▇▇▇-▇▇▇,
Credit Clearing No. 77070-196431, Reference: Southern Star Central, Obligor No.
8501579942, for the account of Union Bank of California, N.A., Monterey Park,
California, or at such other office or account as shall from time to time be
specified by the Administrative Agent upon prior notice to the Borrower.
17
(b) Whenever any payment (including any payment of principal
of or interest on any Borrowing or any Fees or other amounts) hereunder or under
any other Loan Document shall become due, or otherwise would occur, on a day
that is not a Business Day, such payment shall be made on the next succeeding
Business Day, and if such payment is a payment of principal, then such extension
of time shall be included in the computation of interest or Fees, as applicable.
SECTION 2.19. Replacement of Lender in Respect of Increased
Costs. (a) Within fifteen (15) days after receipt by the Borrower of written
notice and demand from any Lender (an "Affected Lender") for payment of
additional amounts or increased costs as provided in Sections 2.08(b)(ii), 2.12,
or 2.15 or notice that it is unlawful for such Lender to make LIBOR Loans as
provided in Section 2.13 or additional amounts are payable pursuant to the
definition of Adjusted LIBOR Rate, the Borrower may, at its option, notify the
Administrative Agent and such Affected Lender of its intention to replace the
Affected Lender. So long as no Event of Default shall have occurred and be
continuing, the Borrower may obtain, at the Borrower's expense, one or more
replacement Lenders (each, a "Replacement Lender") for the Affected Lender,
which Replacement Lenders must be reasonably satisfactory to the Administrative
Agent. If the Borrower obtains Replacement Lenders within ninety (90) days
following notice of its intention to do so, the Affected Lender must sell and
assign its Loans and Commitments to such Replacement Lenders for an aggregate
amount equal to the principal balance of all Loans held by the Affected Lender
and all accrued interest and Fees with respect thereto through the date of such
sale; provided, however, that the Borrower shall have reimbursed such Affected
Lender for the additional amounts, increased costs, and any other amounts that
it is entitled to receive under this Agreement through the date of such sale and
assignment. Nothing herein shall affect any Lender's obligations under any
Interest Rate Protection Agreement.
(b) Notwithstanding the foregoing, the Borrower shall not have
the right to obtain a Replacement Lender if the Affected Lender rescinds its
demand for increased costs or additional amounts within fifteen (15) days
following its receipt of the Borrower's notice of intention to replace such
Affected Lender. Furthermore, if the Borrower gives a notice of intention to
replace and does not so replace such Affected Lender within ninety (90) days
thereafter, the Borrower's rights relating to any previously incurred increased
costs or additional amounts under this Section 2.19 shall terminate and the
Borrower shall promptly pay all increased costs or additional amounts previously
demanded by such Affected Lender pursuant to Sections 2.12 and 2.15.
SECTION 2.20. Change of Lending Office; Filing of
Certificates. Any Lender claiming any additional amount payable pursuant to
Section 2.12, Section 2.13, or Section 2.15 shall use its reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate or
document requested by the Borrower or to change the jurisdiction of its
applicable lending office if the making of such a filing or the change in such
lending office would avoid the need for, or reduce the amount of, any such
additional amounts that may
18
thereafter accrue or allow such Lender to make or maintain LIBOR Loans, as the
case may be, and would not, in the sole determination of such Lender, be
otherwise disadvantageous to such Lender or contrary to such Lender's policy.
ARTICLE III
CONDITIONS PRECEDENT
The obligations of the Lenders to make Loans hereunder are
subject to the satisfaction or waiver of the following conditions precedent:
SECTION 3.01. Financial Closing Date. The obligation of the
Lenders to make Term Loans is subject to the fulfillment, to the satisfaction of
or waiver by the Administrative Agent, of the following:
(a) each of the Loan Documents (other than the
Acknowledgements) shall have been duly executed and delivered and be in full
force and effect, and each Lender shall have received a Term Loan Note payable
to such Lender in the amount of such Lender's Term Loan Commitment, duly
executed by the Borrower and otherwise complying with the provisions of Section
2.04;
(b) copies of each of the Material Project Documents in form
and substance reasonably satisfactory to the Administrative Agent shall have
been made available to the Administrative Agent, and the Administrative Agent
shall have received a certificate of a Responsible Officer of the Borrower
certifying that (i) each such copy is true, correct, and complete, (ii) each
such Material Project Document has been duly executed and delivered by each of
the parties thereto and is in full force and effect, (iii) neither the Borrower
nor, to the Borrower's knowledge, any other party to any such Material Project
Document is in default thereunder and, to the Borrower's knowledge, no event has
occurred or condition exists that with the passage of time or the giving of
notice or both could result in such a default, in each case where such default
could reasonably be expected to have a Material Adverse Effect, and (iv) no
condition exists that permits any party to any such Material Project Document to
terminate such Material Project Document;
(c) the Administrative Agent shall have received a copy of the
FERC Gas Tariff, together with a certificate of a Responsible Officer of the
Borrower certifying that (i) such copy is true, correct, and complete, (ii) the
FERC Gas Tariff is on file with the FERC and is in full force and effect except
for such provisions as are under review by the FERC and that, whether or not
accepted and permitted to become effective by the FERC, could not reasonably be
expected to interfere with the Operation of the Pipeline in a manner at least as
favorable as the assumptions set forth in the Base Case Projections, and (iii)
there are no proposed amendments to the FERC Gas Tariff pending before the FERC
or on file and suspended except for such provisions as are under review by the
FERC and provisions newly filed in the ordinary course of business of the
Borrower and upon which the FERC has not yet
19
acted with administrative finality, in each case that, whether or not accepted
and permitted to become effective by the FERC, could not reasonably be expected
to interfere with the Operation of the Pipeline in a manner at least as
favorable as the assumptions set forth in the Base Case Projections;
(d) the Administrative Agent shall have received the Base Case
Projections and the Operating Budget for the remainder of the current operating
calendar year of the Borrower, in each case in form and substance reasonably
satisfactory to the Administrative Agent in consultation with the Independent
Engineer and with a certificate of a Responsible Officer of the Borrower stating
that such documents were prepared in good faith by the Borrower and are based
upon assumptions that the Borrower believes to be reasonable;
(e) the Administrative Agent shall have confirmed, after
consultation with the Independent Engineer (if such consultation is requested by
the Administrative Agent), that, as of the Financial Closing Date, (i) the
projected Fixed Charge Coverage Ratio for the immediately succeeding period of
twelve (12) full calendar months is at least 1.85 to 1.0 and (ii) after giving
effect to the Loans (whether or not then outstanding), the Borrower's Debt to
Total Capitalization Ratio is not greater than 0.45 to 1.0;
(f) the Administrative Agent and the Collateral Agent shall
have received the following: (i) each document (including each UCC financing
statement but excluding any mortgage, deed of trust, or other document or
instrument purporting to ▇▇▇▇▇ ▇ ▇▇▇▇ on real property) required by the UCC or
reasonably requested by the Administrative Agent or the Collateral Agent to be
filed, registered, or recorded in order to create for the benefit of the Secured
Parties a valid, legal, and perfected first-priority Lien on the Collateral
prior to all Liens (subject to Permitted Encumbrances) and each such document
shall have been properly filed, registered, or recorded in each jurisdiction in
which the filing, registration, or recordation thereof shall be so required or
reasonably requested; provided, that no such document shall be required to be
filed in any filing office other than the office of the secretary of state of
each applicable state and, provided further, that, except as set forth in this
Agreement and the other Loan Documents, the Borrower makes no representation or
warranty regarding the effectiveness of any such document to create or perfect
any such Lien; and (ii) satisfactory results of a search of the UCC filings made
in respect of the Borrower and the Parent in each jurisdiction in which the
filings referred to in clause (i) are to be made;
(g) the Borrower shall have provided the Administrative Agent
with evidence of delivery to each Material Contract Party of notice from the
Borrower regarding the appointment of the Collateral Agent as irrevocable agent
of the Borrower with respect to directing all future payments thereunder, in
each case in form and substance reasonably satisfactory to the Administrative
Agent;
(h) the Administrative Agent shall have received evidence
satisfactory to it in its reasonable discretion, including an opinion of counsel
in form and from counsel reasonably acceptable to the Administrative Agent, that
(i) all Governmental Approvals necessary and required for the Operation of the
Pipeline have been duly obtained except for
20
those Governmental Approvals that can reasonably be expected to be granted in
the ordinary course at a later stage of Operation of the Pipeline, (ii) such
Governmental Approvals are final and nonappealable and are in full force and
effect, except to the extent that FERC review is pending or other steps
necessary to secure such final and nonappealable Governmental Approvals are
being taken by the Borrower in the ordinary course of its business, (iii) all
conditions expressly set forth in such Governmental Approvals that are required
to have been satisfied by the Financial Closing Date have been satisfied, (iv)
such Governmental Approvals do not contain any Burdensome Condition, (v) the
Borrower is in compliance with all Applicable Laws and all Governmental
Approvals, (vi) there is no proceeding pending or to the knowledge of the
Borrower threatened that could reasonably be expected to rescind, terminate,
modify, condition, suspend, or otherwise alter any such Governmental Approval
except for routine proceedings that are in the ordinary course of the Borrower's
business and that could not reasonably be expected to interfere with the
Operation of the Pipeline in a manner at least as favorable as the assumptions
set forth in the Base Case Projections, (vii) there shall exist no impediment
that would prevent the obtaining in due course without Burdensome Conditions of
all other Governmental Approvals necessary for the Operation of the Pipeline,
and (viii) all Governmental Approvals obtained by the Borrower on or prior to
the Financial Closing Date shall have been made available to the Administrative
Agent and certified by a Responsible Officer of the Borrower as true, correct,
complete, and in full force and effect;
(i) except as set forth on Schedule 4.06, no actions, suits,
proceedings, investigations, or similar actions (i) pending against the Borrower
or any of the Pipeline Assets or, to the knowledge of the Borrower, threatened
against the Borrower or any of the Pipeline Assets, or (ii) to the knowledge of
the Borrower, pending or threatened against the Parent, any Material Contract
Party, or any Material Project Documents, shall have occurred and be continuing
that, in the case of clause (ii) could reasonably be expected to have a Material
Adverse Effect;
(j) no Default, Event of Default, or Material Adverse Effect
shall have occurred and be continuing;
(k) the Administrative Agent shall have received a report of
the Independent Engineer as to technical matters regarding the Pipeline in form
and substance satisfactory to the Administrative Agent in its reasonable
discretion, which report shall, among other things, (i) contain an analysis of
the reasonableness of certain operating assumptions upon which the Base Case
Projections are based and (ii) address the status of all Governmental Approvals
that are necessary for the Operation of the Pipeline;
(l) [INTENTIONALLY OMITTED]
(m) the Administrative Agent shall have received written
opinions in form and substance satisfactory to the Administrative Agent in its
reasonable discretion, each dated the Financial Closing Date and addressed to
the Lenders, of each of:
21
(i) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, special New York counsel for
the Borrower;
(ii) ▇▇▇▇▇▇▇ ▇. Griffith, in-house counsel for the
Borrower, and ▇▇▇ ▇▇▇▇▇▇▇▇, in-house counsel for the Borrower;
(iii) Hall, Estill, Hardwick, Gable, Golden & ▇▇▇▇▇▇,
P.C., special Oklahoma counsel for the Borrower;
(iv) Martin, Pringle, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.,
special Kansas counsel for the Borrower; and
(v) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special Oklahoma counsel for the
Borrower;
(n) the Administrative Agent shall have received the most
recent audited financial statements of the Borrower, in form and substance
reasonably satisfactory to the Administrative Agent, certified by a Financial
Officer of the Borrower that (i) such financial statements are true, correct,
and complete in all material respects and have been prepared in accordance with
the reporting requirements of the FERC, (ii) as of the Financial Closing Date,
there has been no material adverse change in the Borrower's financial position
from that set forth in such financial statements that could reasonably be
expected to have a Material Adverse Effect, and (iii) all respective
liabilities, contingent or otherwise, are disclosed by, or reserved against in,
such financial statements or the footnotes thereto to the extent required by the
reporting requirements of the FERC;
(o) the Administrative Agent shall have received copies of the
organizational documents of the Borrower, in form and substance reasonably
satisfactory to the Administrative Agent, certified by a Responsible Officer of
the Borrower as being true, correct, and complete and in full force and effect
as of the Financial Closing Date;
(p) the Administrative Agent shall have received a corporate
authorizing resolution or other constitutive document of the Borrower, in form
and substance satisfactory to the Administrative Agent in its reasonable
discretion, evidencing the power and authority of the Borrower to enter into and
perform the transactions contemplated by the Loan Documents and the Material
Project Documents to which it is a party;
(q) the Administrative Agent shall have received a certificate
from a Responsible Officer of the Borrower, in a form satisfactory to the
Administrative Agent in its reasonable discretion, certifying that (i) all of
the insurance policies required by Section 5.07 are in full force and effect,
(ii) all premiums then due and payable in respect thereof have been paid, (iii)
the Collateral Agent, for the benefit of the Secured Parties, has been named as
loss payee and as an additional insured on all such policies in accordance with
Section 5.07, and (iv) all such policies are not subject to cancellation without
prior notice and otherwise conform with the requirements specified in Section
5.07;
22
(r) the Administrative Agent shall have received a certificate
from the Insurance Consultant, addressed to the Administrative Agent on behalf
of the Lenders, in a form satisfactory to the Administrative Agent in its
reasonable discretion, as to (i) the adequacy of the insurance coverage required
by Section 5.07, (ii) the fulfillment of the insurance requirements of this
Agreement and the other Operative Documents, including an opinion that the
Borrower has made adequate arrangements for insurance in accordance with the
requirements of all the Material Project Documents, and (iii) such other matters
as the Administrative Agent may reasonably request;
(s) all Fees, expenses, and other amounts due and payable on
or prior to the Financial Closing Date by the Borrower to the Administrative
Agent, the Lead Arranger, the Accounts Agent, and the Lenders shall have been
paid or shall have been arranged to be paid out of the Term Loans;
(t) all representations and warranties of the Borrower
contained in the Loan Documents shall be true, correct, and complete in all
material respects on and as of the Financial Closing Date with the same effect
as though made on and as of such date except to the extent such representations
and warranties expressly relate to an earlier date; provided, that each instance
in such representations and warranties of the phrase "to result in the Borrower
having a Current Fixed Charge Coverage Ratio of less than 1.85 to 1.0" shall be
deemed to be replaced with the phrase "to interfere with the Operation of the
Pipeline in a manner at least as favorable as the assumptions set forth in the
Base Case Projections";
(u) no Event of Abandonment shall have occurred and be
continuing and no Event of Damage or Event of Taking that could reasonably be
expected to interfere with the Operation of the Pipeline in a manner at least as
favorable as the assumptions set forth in the Base Case Projections shall have
occurred and be continuing;
(v) the Accounts shall have been established in accordance
with the Account Control Agreement and the UBOC Accounts shall have been
established in accordance with the UBOC Account Control Agreement;
(w) [INTENTIONALLY OMITTED]
(x) the Administrative Agent shall have received written
evidence that, as of the Financial Closing Date, the Borrower (i) has a credit
rating on its long-term debt of not less than "BB" from Standard & Poor's and
not less than "Ba2" from ▇▇▇▇▇'▇ and (ii) is not on "negative watch" (or other
equivalent notification) by Standard & Poor's or ▇▇▇▇▇'▇;
(y) the Administrative Agent shall have received written
evidence that all obligations under (i) the Credit Agreement, dated as of
November 15, 2002, among the Parent, as borrower, the financial institutions
named therein, as lenders, and WestLB AG, New York Branch, as administrative
agent, as amended, and (ii) each of the "Loan Documents" referred to therein,
each as amended, have been indefeasibly paid and satisfied in
23
full by each party thereto and that each such document has been terminated by
the parties thereto in accordance with the terms thereof;
(z) the Administrative Agent shall have received written
evidence that the affirmative vote or consent, and any other necessary action,
of the Majority Series A Preferred Holder (as defined in the Amended and
Restated Certificate of Incorporation of Southern Star Central Corp. (the
"Amended Certificate")) necessary for the Borrower to enter into this Agreement
pursuant to the Amended Certificate has been obtained;
(aa) the Administrative Agent shall have received a copy of
the Parent Side Letter, in form and substance reasonably satisfactory to the
Administrative Agent, together with a certificate of a Responsible Officer of
the Borrower certifying that (i) such copy is true, correct, and complete, (ii)
the Parent Side Letter has been duly executed and delivered by each of the
parties thereto and is in full force and effect, (iii) neither the Borrower nor
the Parent is in default thereunder and no event has occurred or condition
exists that with the passage of time or the giving of notice or both could
result in such a default, and (iv) no condition exists that permits the Borrower
or the Parent to terminate the Parent Side Letter;
(bb) the Administrative Agent shall have received written
evidence that the Parent Indenture has been duly executed and delivered by each
of the parties thereto and is in full force and effect and that the Initial
Notes (as defined therein) have been issued and are outstanding in accordance
therewith; and
(cc) the Administrative Agent shall have received a Borrowing
Notice in accordance with Section 2.03.
SECTION 3.02. Working Capital Loans. The obligation of the
Lenders to make Working Capital Loans is subject to the fulfillment, on and as
of the date of any such Borrowing, to the satisfaction of or waiver by the
Administrative Agent, of the following:
(a) the Financial Closing Date shall have occurred;
(b) each Lender shall have received a Working Capital Note
payable to such Lender in the amount of such Lender's Working Capital Loan
Commitment, duly executed by the Borrower and otherwise complying with the
provisions of Section 2.04;
(c) the Administrative Agent shall have received a certificate
in form and substance satisfactory to the Administrative Agent from a
Responsible Officer of the Borrower setting forth the Operating Expenses,
Capital Expenditures, and Debt Service that will be funded by the requested
Borrowing of Working Capital Loans;
(d) no Default or Event of Default shall have occurred and be
continuing (other than any such Default or Event of Default that would be cured
as a result of such Borrowing);
24
(e) the Administrative Agent shall have received a certificate
in form and substance satisfactory to the Administrative Agent from a
Responsible Officer of the Borrower that no action, event, or circumstance shall
have occurred and be continuing that could reasonably be expected to have a
Material Adverse Effect;
(f) all representations and warranties of the Borrower
contained in the Loan Documents shall be true, correct, and complete in all
material respects on and as of the date of such Borrowing with the same effect
as though made on and as of such date except to the extent such representations
and warranties expressly relate to an earlier date;
(g) the Administrative Agent shall have received a certificate
in form and substance satisfactory to the Administrative Agent from a
Responsible Officer of the Borrower that (i) the Borrower has provided to the
Administrative Agent copies of each Additional Contract, if any, and the
Ancillary Documents relating thereto, each of which (A) shall have been duly
authorized, executed, and delivered by the Borrower and, to the Borrower's
knowledge, by each other Person party thereto and (B) shall be in full force and
effect, and (ii) Schedule 4.10 has been amended to include each such Additional
Contract;
(h) copies of all Governmental Approvals obtained and all
applications and filings for Governmental Approvals made by the Borrower since
the later of the Financial Closing Date and the last Borrowing shall have been
made available to the Administrative Agent and certified by a Responsible
Officer of the Borrower as true, correct, complete, and in full force and
effect;
(i) the execution and delivery of the Security Documents, the
filing of the UCC financing statements, and the delivery of the Collateral
covered by the Security Documents required to be delivered thereunder and any
other necessary action taken by the Borrower shall have created, as security for
the Obligations of the Borrower hereunder and under the other Loan Documents,
valid and perfected first-priority Liens on the Collateral described therein
(subject only to the exceptions expressly set forth therein with respect to the
Section 7 Assets, the Collateral described in Section 2(a)(iii)(B) of the
Security Agreement, and Permitted Encumbrances) with priority dating from no
later than the Financial Closing Date;
(j) no Event of Abandonment shall have occurred and be
continuing and no Event of Damage or Event of Taking that could reasonably be
expected to result in the Borrower having a Current Fixed Charge Coverage Ratio
of less than 1.85 to 1.0 shall have occurred and be continuing; and
(k) the Administrative Agent shall have received a Borrowing
Notice in accordance with Section 2.03.
SECTION 3.03. Conditions; General Principles. (a) The
Borrower's acceptance of the proceeds of each Loan shall constitute a
representation and warranty by the
25
Borrower to each of the Lenders and the Administrative Agent that all of the
conditions required to be satisfied under Section 3.01 or Section 3.02, as the
case may be, in connection with the making of such Loan have been satisfied,
unless expressly waived in writing by the Administrative Agent.
(b) All of the agreements, instruments, reports, opinions, or
other documents referred to in this Article III, unless otherwise expressly
specified, shall be delivered to the Administrative Agent for the account of the
Lenders and, except for the Notes, in sufficient counterparts for each of the
Lenders and such delivery shall not be effective unless such agreement,
instrument, report, opinion, or other document is reasonably satisfactory to the
Administrative Agent in accordance with the relevant provision of this Article
III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the Lenders
and the Administrative Agent as of and on each of the (a) Financial Closing Date
and (b) the date of any Borrowing that:
SECTION 4.01. Organization; Powers; Capitalization. The
Borrower is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware and is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction in which such
qualification is necessary in view of its current or proposed business and
operations or the ownership of its properties. The Borrower has the requisite
power and authority to own its properties and carry on its business as now being
conducted and currently proposed to be conducted and to execute, deliver, and
perform its obligations under the Operative Documents to which it is a party. As
of the Financial Closing Date, (i) the sole shareholder of the Borrower is the
Parent, (ii) the Parent's ownership interests in the Borrower are duly and
validly issued, and (iii) there are no ownership or other equity interests in
the Borrower, rights to acquire or subscribe for any such interests, or
instruments convertible into or exchangeable or exercisable for any such
interests.
SECTION 4.02. Authorization; Enforceability. (a) The Borrower
has taken all action necessary to authorize it to execute, deliver, and perform
the Loan Documents and the Material Project Documents to which it is a party.
Each of this Agreement, the Notes, the other Loan Documents, and the Material
Project Documents to which the Borrower is a party has been duly executed and
delivered by the Borrower. Each of the Loan Documents and the Material Project
Documents to which the Borrower is a party constitutes a legal, valid, and
binding obligation of the Borrower, enforceable in accordance with its terms,
subject to bankruptcy, reorganization, moratorium, or other similar laws
affecting the enforcement of the rights of creditors generally and to general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
26
(b) Each of the Loan Documents and the Material Project
Documents constitutes a legal, valid, and binding obligation of each Material
Contract Party that is a party thereto, enforceable in accordance with its
terms, subject to bankruptcy, reorganization, moratorium, or other similar laws
affecting the enforcement of the rights of creditors generally and to general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
SECTION 4.03. Compliance. The Borrower is in compliance in all
material respects with all Applicable Laws applicable to the Borrower, all
Governmental Approvals applicable to the Borrower, all Material Project
Documents, and the FERC Gas Tariff.
SECTION 4.04. No Violation. The execution and delivery by the
Borrower of each Loan Document and Material Project Document to which it is a
party and the performance of its obligations thereunder will not (a) violate any
provision of the organizational documents of the Borrower or any provision of
any Applicable Law, (b) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease, or
instrument to which the Borrower is a party or by which it or its properties may
be bound or affected, or (c) result in or require the creation or imposition of
any Lien of any nature (other than any Permitted Encumbrance) upon or with
respect to any of the properties now owned or hereafter acquired by the
Borrower. The Borrower is not in violation, breach, or default of any provision
of the organizational documents of the Borrower or any Applicable Law or any
agreement referred to in clause (b) immediately above, which violation could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.05. Ownership of Collateral. The Borrower has a
good, marketable, and valid ownership interest in all property and assets (real
and personal and tangible and intangible), or rights thereto, included in the
Collateral. None of said properties or assets are subject to any Liens or, to
the knowledge of the Borrower, any other claims of any Person, other than
Permitted Encumbrances.
SECTION 4.06. Proceedings. Except as set forth on Schedule
4.06, there are no actions, suits, proceedings, investigations, or similar
actions (a) pending against the Borrower or any of the Pipeline Assets or, to
the knowledge of the Borrower, threatened against the Borrower or any of the
Pipeline Assets or (b) to the knowledge of the Borrower, pending or threatened
against the Parent, any Material Contract Party, any Material Project Document,
or the FERC Gas Tariff that, in each case, could reasonably be expected to have
a Material Adverse Effect.
SECTION 4.07. Security Interests. (a) The Security Documents
create, as security for the Obligations, valid and enforceable Liens on the
Collateral (other than the Section 7 Assets and the Collateral described in
Section 2(a)(iii)(B) of the Security
27
Agreement) in favor of the Collateral Agent for the benefit of the Secured
Parties. All Governmental Approvals necessary to perfect such Liens have been
obtained.
(b) The Liens on the Collateral (other than the Section 7
Assets and the Collateral described in Section 2(a)(iii)(B) of the Security
Agreement) granted to the Collateral Agent pursuant to the Security Documents
(i) constitute perfected security interests under the UCC to the extent a
security interest can be perfected by filing or, in the case of the Account
Collateral, by "control" (as defined in the UCC) and (ii) are, as to the
Collateral (other than the Section 7 Assets and the Collateral described in
Section 2(a)(iii)(B) of the Security Agreement) perfected under the UCC as
aforesaid, superior and prior to the rights of all third Persons now existing or
hereafter arising whether by way of mortgage, deed of trust, Lien, security
interest, encumbrance, assignment, or otherwise, subject to Permitted
Encumbrances. All action that is necessary or required by the Administrative
Agent or the Collateral Agent has been taken in order to establish and perfect
the Collateral Agent's Lien on the Collateral (other than the Section 7 Assets
and the Collateral described in Section 2(a)(iii)(B) of the Security Agreement)
and no action, filing, recordation, re-filing, or re-recording is necessary to
perfect and maintain the perfection of the Liens on the Collateral (other than
the Section 7 Assets and the Collateral described in Section 2(a)(iii)(B) of the
Security Agreement) in favor of the Collateral Agent, for the benefit of the
Secured Parties, prior to all Liens other than Permitted Encumbrances. On the
Financial Closing Date, all such actions, filings, recordations, re-filings, and
re-recordings listed on Schedule 4.07(b), other than the continuation statements
identified thereon, will have been made. The descriptions of the Collateral
(other than the Section 7 Assets and the Collateral described in Section
2(a)(iii)(B) of the Security Agreement) set forth in the Security Documents are
true, complete, and correct in all material respects and are adequate for the
purpose of creating, attaching, and perfecting the Collateral Agent's Liens on
the Collateral (other than the Section 7 Assets and the Collateral described in
Section 2(a)(iii)(B) of the Security Agreement).
(c) The Borrower is a corporation organized under the laws of
the State of Delaware and, for the purposes of the UCC, (i) is deemed to be
organized and located in the State of Delaware and (ii) is a "transmitting
utility" (as defined in the UCC). The Collateral consisting of "equipment" or
"fixtures" (each as defined in the UCC) is and will be located only in the
jurisdictions set forth on Schedule 4.07(c).
(d) The Borrower makes no representation or warranty regarding
the creation, attachment, perfection, or priority of any Lien on the Section 7
Assets, the Collateral described in Section 2(a)(iii)(B) of the Security
Agreement, or any portion of either thereof.
SECTION 4.08. Insurance. All insurance satisfying the
requirements of Section 5.07, together with such certificates and other
instruments as shall be required to comply with Section 5.07, and all other
insurance required to be obtained in the other Operative Documents are in full
force and effect and all premiums thereon that are due and payable have been
paid or will be paid from the proceeds of the Borrowing in connection with which
this representation and warranty is made.
28
SECTION 4.09. Tax Matters. The Borrower has filed or caused to
be filed all tax and information returns that it is required to file by
Applicable Law and has paid or caused to be paid all taxes it is required to pay
to the extent due (other than those taxes it is contesting in good faith and by
appropriate proceedings diligently conducted and for which adequate reserves, as
determined in accordance with the reporting requirements of the FERC, have been
established). No additional assessments for any of the Borrower's taxable years
are anticipated and all changes, accruals, and reserves for taxes applicable to
the Borrower are adequate.
SECTION 4.10. Material Project Documents; Technology;
Utilities. (a) Schedule 4.10 contains a complete and accurate list of all of the
Material Project Documents as of the date on which this representation and
warranty is made. All Material Project Documents are in full force and effect,
except as may otherwise be permitted under this Agreement. All conditions
precedent to the obligations of the Material Contract Parties under the
Significant Material Project Documents have been satisfied or waived except for
such conditions precedent that need not and cannot be satisfied until a later
date in the ordinary course, and the Borrower has no reason to believe that any
such condition precedent cannot be satisfied on or prior to the date that is
appropriate for the Operation of the Pipeline. The Borrower is not in default in
the performance of any covenant or obligation set forth in any Material Project
Document except to the extent that any such default could not reasonably be
expected to result in a Material Adverse Effect, and no event has occurred that,
with the giving of notice or the passage of time or both, would constitute such
a default. To the knowledge of the Borrower, no Material Contract Party is in
default in the performance of any covenant or obligation set forth in a Material
Project Document, except to the extent that any such default could not
reasonably be expected to result in a Material Adverse Effect. No event,
occurrence, or condition that would constitute an event of force majeure under
any Material Project Document and that could reasonably be expected to result in
the Borrower having a Current Fixed Charge Coverage Ratio of less than 1.85 to
1.0 has occurred and is continuing. The Borrower has not entered into any
agreements, including any agreements for account receivables financings or other
factoring arrangements, with a third Person that grants to such third Person any
Lien on any of the Material Project Documents. Each Shipper is a Qualified
Shipper.
(b) The FERC Gas Tariff is in full force and effect and is on
file with, and all tariff pages thereto have been accepted by, the FERC, except
to the degree that the FERC permits the inclusion in the FERC Gas Tariff of
pages not yet accepted. The economic effect of the tariff sheets that the
Borrower currently has on file with the FERC for insertion into the FERC Gas
Tariff, the effectiveness of which has been suspended by the FERC, upon becoming
effective could not reasonably be expected to result in the Borrower having a
Current Fixed Charge Coverage Ratio of less than 1.85 to 1.0.
(c) All licenses, trademarks, patents, or agreements with
respect to the usage of technology or other property that are necessary for the
Operation of the Pipeline have been obtained, are final, and are in full force
and effect.
29
(d) All utility services necessary for the Operation of the
Pipeline are, or will be when needed, available to the Pipeline and, to the
extent necessary, arrangements in respect thereof have been made on commercially
reasonable terms consistent with those reflected in the Operating Budget.
SECTION 4.11. ERISA Matters. (a) Schedule 4.11(i) hereto lists
each Plan maintained or contributed to by the Borrower or any ERISA Affiliate,
or to which the Borrower or any ERISA Affiliate has any liability, potential
liability, or obligation to contribute.
(b) With respect to each Plan that any of the Borrower or any
ERISA Affiliate maintains, to which any of them contributes or has any
obligation to contribute, or with respect to which any of them has any liability
or potential liability:
Each Plan (and each related trust, insurance contract, or fund) of the Borrower
or any ERISA Affiliate has been maintained, funded and administered in
accordance with the terms of such Plan and the terms of any applicable
collective bargaining agreement and complies in form and in operation in all
material respects with the applicable requirements of ERISA, the Code, and other
applicable laws. No "accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred with respect to
any Plan, and no Lien has arisen with respect to any Plan under Section 412 of
the Code or Section 302 of ERISA. Each Plan that is intended to meet the
requirements of a "qualified plan" under Code 'SS' 401(a) has received a current
determination letter from the Internal Revenue Service that such Plan is so
qualified, such Plan has been amended to include all amendments for which the
remedial amendment period has expired and nothing has occurred since the date of
such determination letter that could reasonably be expected to adversely affect
the qualified status of any such Plan. Except as set forth on Schedule 4.11(ii)
hereto, the market value of assets under each Plan of the Borrower or any ERISA
Affiliate that is an Employee Pension Benefit Plan within the meaning of Section
3(2) of ERISA (other than any Multiemployer Plan) equals or exceeds the present
value of all vested and unvested liabilities thereunder determined in accordance
with factors used in preparing the most recent actuarial report. Neither the
Borrower nor any ERISA Affiliate contributes to, sponsors, or has withdrawn
from, or has any liability or potential liability to any Multiemployer Plan, and
neither the Borrower nor any ERISA Affiliate has been the subject of a
Reportable Event. Neither the Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability to the PBGC (other than with respect
to PBGC premium payments not yet due) or otherwise under Title IV of ERISA
(including any withdrawal liability as defined in ERISA 'SS' 4201 or liability
under Section 4062(e) or 4069) or under the Code with respect to any defined
benefit pension plan (including any Plan or any other plan), and no Lien on any
assets of the Borrower or any ERISA Affiliate in favor of the PBGC has arisen
during the last five years. All contributions and PBGC premium payments have
been timely made and there are no contributions or premium payments that are
past due and owing. No amendment to such Plan has been adopted that would
require the provision of security to such plan pursuant to Section 307 of ERISA.
Nothing has occurred or is reasonably expected to occur that could be
30
expected to result in the termination of, or the appointment of a trustee to
administer such Plan. Neither the Borrower nor any ERISA Affiliate has engaged
in a "prohibited transaction," as defined in Section 406 of ERISA and Section
4975 of the Code, in connection with any Plan, that could reasonably be expected
to subject the Borrower or any ERISA Affiliate to a material tax on prohibited
transactions imposed by Section 502(i) of ERISA or Section 4975 of the Code.
(c) Except as set forth on Schedule 4.11(iii) hereto, neither
the Borrower nor any ERISA Affiliate maintains, contributes to or has obligation
to contribute to, or has any liability or potential liability with respect to,
current or future retired or terminated directors, officers or employees of the
Borrower or any ERISA Affiliate (or any spouse of other dependent thereof) other
than in accordance with COBRA.
SECTION 4.12. Status. (a) Pipeline Regulation. The Borrower is
a Person subject to regulation under (i) the Natural Gas Act, as amended, as a
"natural gas company," (ii) the Natural Gas Pipeline Safety Act of 1968, as
amended, and (iii) the Natural Gas Policy Act of 1978, as amended.
(b) Holding Company Regulation. The Borrower is not a "holding
company," or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company," and is
not a "gas utility company," within the meaning of PUHCA.
(c) State Regulation. The Borrower is not subject to
regulation as a public utility company or a gas company by any state utility
regulatory commission.
(d) Investment Company Regulation. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940.
SECTION 4.13. Contingent Obligations. No Guarantee or other
contingent obligation of the Borrower that would be required to be disclosed on
the Borrower's financial statements in accordance with the reporting
requirements of the FERC is outstanding, other than in respect of Permitted
Indebtedness or as set forth in the financial statements of the Borrower most
recently furnished to the Administrative Agent prior to the Financial Closing
Date.
SECTION 4.14. Nature of Business. Since the date of the most
recent financial statements of the Borrower furnished to the Administrative
Agent, the Borrower has not engaged in any business other than the Operation of
the Pipeline in a manner at least as favorable (in the Administrative Agent's
determination) as the assumptions set forth in the Base Case Projections.
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SECTION 4.15. [INTENTIONALLY OMITTED.]
SECTION 4.16. Environmental Matters. Except as set forth in
Schedule 4.16:
(a) there are no facts, circumstances, conditions, or
occurrences regarding the Pipeline known to the Borrower that could reasonably
be expected (i) to form the basis of an Environmental Claim, (ii) other than as
contemplated by the Material Project Documents, to cause the Pipeline to be
subject to any restrictions on ownership, occupancy, use, or transferability
under any Environmental Laws, or (iii) to require the filing or recording of any
notice, registration, permit, or disclosure documents under any Applicable Laws
relating to Environmental Laws, and that, individually or in the aggregate,
could reasonably be expected to result in the Borrower having a Current Fixed
Charge Ratio of less than 1.85 to 1.0;
(b) there are no pending or, to the knowledge of the Borrower,
any past or threatened Environmental Claims against the Pipeline, the Borrower,
or the Parent, that, individually or in the aggregate, could reasonably be
expected to result in the Borrower having a Current Fixed Charge Ratio of less
than 1.85 to 1.0;
(c) to the knowledge of the Borrower, Hazardous Substances
have not at any time been Used or Released at, on, under, or from the Pipeline
or the Site other than in compliance at all times with all applicable
Environmental Laws, except to the extent the failure to so comply could not
reasonably be expected to result in the Borrower having a Current Fixed Charge
Coverage Ratio of less than 1.85 to 1.0; and
(d) the operations of the Borrower and, to the knowledge of
the Borrower, the Parent with respect to the Pipeline, are, and have at all
relevant times been, in compliance with all Environmental Laws, except to the
extent the failure to so comply could not reasonably be expected to result in
the Borrower having a Current Fixed Charge Coverage Ratio of less than 1.85 to
1.0.
SECTION 4.17. Information. The financial statements of the
Borrower furnished to the Lenders, together with any notes or schedules related
thereto, are true, complete, and correct in all material respects (subject, as
to interim statements, to changes resulting from audits and year-end adjustments
and footnote disclosures), have been prepared in accordance with the reporting
requirements of the FERC applied on a consistent basis and show all liabilities,
direct and contingent, required to be shown in accordance with such
requirements. The Borrower does not have any material liabilities, contingent or
otherwise, that are not disclosed by, or reserved against in, the most recent
balance sheet of the Borrower delivered to the Lenders or in the notes thereto
that, under the reporting requirements of the FERC, are of a nature and an
amount required to be so disclosed or reserved. No document furnished to any of
the Lenders, the Administrative Agent, the Lead Arranger, the Accounts Agent,
the UBOC Accounts Agent, or the Collateral Agent, nor any consultants therefor
(including the Independent Engineer) by the Borrower or the Parent pursuant to
this
32
Agreement or the other Loan Documents or in connection with the syndication of
the Loans by the Lead Arranger or any Borrowing (other than documents not
prepared by the Borrower or its Affiliates) contains any untrue statement of a
material fact or, to the knowledge of the Borrower, omits to state a material
fact necessary in order to make the statements therein not materially misleading
as at the date thereof.
SECTION 4.18. Subsidiaries. The Borrower has no Subsidiaries.
SECTION 4.19. Use of Proceeds. The proceeds of (a) the Term
Loans will be used solely for the purpose of paying fees and expenses incurred
in connection with the transactions contemplated by this Agreement and for
general corporate purposes and (b) the Working Capital Loans will be used solely
to finance the Borrower's working capital requirements, including the payment of
Operating Expenses, Capital Expenditures, and Debt Service. No part of the
proceeds of any Loan will be used for the purpose, whether immediate,
incidental, or ultimate, of buying or carrying any Margin Stock or to extend
credit to others for such purpose.
SECTION 4.20. Fees. The Borrower does not have any obligation
to any Person in respect of any finder's, broker's, investment banking, or other
similar fee in connection with any of the transactions contemplated by the Loan
Documents other than fees payable to the Administrative Agent, the Lead
Arranger, the Accounts Agent, the Lenders or as otherwise set forth in the
Operating Budget.
SECTION 4.21. Governmental Approvals. (a) The Borrower has
obtained, and currently holds in its name, all Governmental Approvals necessary
and required for the Operation of the Pipeline. All such Governmental Approvals
have been duly obtained, are in full force and effect, are final and
nonappealable, except to the extent that FERC review is pending or other steps
necessary to secure such final and nonappealable Governmental Approvals are
being taken by the Borrower in the ordinary course of its business and the
absence of such finality and nonappealability could not reasonably be expected
to result in the Borrower having a Current Fixed Charge Coverage Ratio of less
than 1.85 to 1.0, and constitute all Governmental Approvals that are required to
be obtained for the Operation of the Pipeline as of the Financial Closing Date.
All conditions contained in such Governmental Approvals required to have been
satisfied have been satisfied except to the extent that failure to satisfy such
a condition could not reasonably be expected to result in a Material Adverse
Effect, and such Governmental Approvals do not contain any Burdensome
Conditions. There is no proceeding pending or, to the knowledge of the Borrower,
threatened that could reasonably be expected to rescind, terminate, modify,
condition, suspend, or otherwise alter any such Governmental Approval except for
routine proceedings that are in the ordinary course of the Borrower's business
and that could not reasonably be expected to result in the Borrower having a
Current Fixed Charge Coverage Ratio of less than 1.85 to 1.0.
33
(b) The Borrower has duly applied for, or will in a timely
manner apply for, all Governmental Approvals necessary or required for the
Operation of the Pipeline but not presently required to be obtained in light of
the status of the Operation of the Pipeline as of the date this representation
is made. Although the issuer of any such Governmental Approval has the
discretion to issue or withhold such Governmental Approval, the Borrower has no
reason to believe that such Governmental Approvals will not be granted in the
ordinary course within a reasonable time after application therefor, without
Burdensome Conditions, and prior to the time the same is required under
Applicable Laws.
SECTION 4.22. No Default, Event of Damage, or Event of Taking.
As of the date hereof, no Default or Event of Default has occurred and is
continuing. No Event of Damage or Event of Taking that could reasonably be
expected to result in the Borrower having a Current Fixed Charge Coverage Ratio
of less than 1.85 to 1.0 has occurred and is continuing.
SECTION 4.23. Material Adverse Change. Since the ending date
of the most recent audited (or certified) financial statements of the Borrower
that have been delivered to the Administrative Agent, there has occurred no
material adverse change in the financial condition, operations, or properties of
the Borrower that could reasonably be expected to result in a Material Adverse
Effect.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as this Agreement shall remain in effect or the
principal of or interest on any Loan, any Fees, or any other Obligations shall
remain outstanding, the Borrower covenants and agrees with each Lender and the
Administrative Agent as follows:
SECTION 5.01. Existence. The Borrower will preserve and
maintain in full force and effect its existence as a corporation under the laws
of the State of Delaware and its qualification to do business in each
jurisdiction where such qualification is necessary.
SECTION 5.02. Maintenance and Operation of Property. The
Borrower will (a) maintain all of its rights, privileges, and franchises
necessary for the Operation of the Pipeline, (b) maintain or cause to be
maintained in good repair, working order, and condition the Pipeline and each
material portion thereof, reasonable wear and tear excepted, and (c) operate the
Pipeline, or cause the Pipeline to be operated, in accordance with, and with
such reliability as shall be consistent with, the Material Project Documents,
Applicable Laws, and Prudent Utility Practice if, in the case of clause (c), at
such time, the Borrower's Current Fixed Charge Coverage Ratio is less than 1.85
to 1.0 or if the failure to so comply could
34
reasonably be expected to result in the Borrower having a Current Fixed Charge
Coverage Ratio of less than 1.85 to 1.0.
SECTION 5.03. Material Project Documents. (a) The Borrower
will (i) maintain in full force and effect, enforce, and preserve all its rights
and remedies under all Material Project Documents to which it is a party and all
guarantees, warranties, and indemnities in favor of the Borrower arising
thereunder and (ii) duly perform and observe all covenants, agreements, and
conditions under all Material Project Documents and the FERC Gas Tariff if, in
each case, at such time, the Borrower's Current Fixed Charge Coverage Ratio is
less than 1.85 to 1.0 or if the failure to so comply could reasonably be
expected to result in the Borrower having a Current Fixed Charge Coverage Ratio
of less than 1.85 to 1.0. Except as otherwise required by Section 5.23, the
Borrower will designate an Account as the location of payment in each invoice
sent to a Shipper seeking payment under a Gas Service Agreement.
(b) The Borrower shall take all such actions as are necessary
or appropriate to ensure that each Shipper is at all times a Qualified Shipper.
SECTION 5.04. Notices and Information. The Borrower will
furnish to the Administrative Agent:
(a) (i) as soon as available and in any event within
forty-five (45) days after the end of each of the first three (3)
quarters of each fiscal year of the Borrower, complete unaudited
financial statements of the Borrower, including the balance sheet of
the Borrower as of the end of such quarter, and profit and loss
statements, and statements of cash flows of the Borrower for such
quarter and for the elapsed portion of such fiscal year, in each case
prepared in accordance with the reporting requirements of the FERC
(subject to normal year-end audit adjustments) and setting forth in
comparative form the figures for the corresponding period of the
previous fiscal year of the Borrower; and, at the same time the Parent
is required to deliver them pursuant to the Parent Indenture (but in no
event later than one hundred twenty (120) days after the end of each of
the first three (3) quarters of each fiscal year of the Parent), copies
of all quarterly financial statements of the Parent that the Parent is
required to deliver pursuant to the Parent Indenture;
(ii) as soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year of the
Borrower, complete audited financial statements of the Borrower,
including the balance sheet of the Borrower as of the end of such
fiscal year, and a profit and loss statement, and a statement of cash
flows of the Borrower for such fiscal year, in each case prepared in
accordance with the reporting requirements of the FERC, setting forth
in comparative form the figures for the previous fiscal year of the
Borrower, and certified without qualification by an independent
certified public accountant of recognized national standing acceptable
to
35
the Administrative Agent; and, at the same time the Parent is
required to deliver them pursuant to the Parent Indenture (but in no
event later than one hundred fifty (150) days after the end of each
fiscal year of the Parent), copies of all annual financial statements
of the Parent that the Parent is required to deliver pursuant to the
Parent Indenture; and
(iii) at the time of delivery of the financial statements
pursuant to Sections 5.04(a)(i) and (ii) above, a certificate of a
Financial Officer of the Borrower (A) to the effect that (1) such
financial statements present fairly in all material respects the
financial position and results of operations of the Borrower, in
accordance with the reporting requirements of the FERC, for the periods
indicated in such financial statements and (2) based on such Financial
Officer's review of the Loan Documents, such Financial Officer has
concluded that no Default or Event of Default has occurred during the
period covered by the relevant financial statements or, if any Default
or Event of Default has occurred, specifying the nature and extent
thereof and, if continuing, the action the Borrower proposes to take in
respect thereof and (B) setting forth the Debt to Total Capitalization
Ratio and the Consolidated Debt to Total Capitalization Ratio as at
such date and setting forth in reasonable detail the calculations used
to arrive at such Debt to Total Capitalization Ratio and Consolidated
Debt to Total Capitalization Ratio, which calculations shall be subject
to audit by the Administrative Agent;
(b) prompt notice of (i) any Default, Event of Default, Event
of Abandonment, Event of Damage (other than a Minor Loss), or Event of Taking,
or any threat of any of the foregoing of which a Responsible Officer of the
Borrower shall have actual knowledge, generally describing the nature and extent
thereof and the Borrower's best estimate of the cost of Restoration, where
applicable, (ii) the commencement or threatened (in writing) commencement of any
action, suit, litigation, investigation, or other proceeding (other than (A)
where the amount involved is less than two million five hundred thousand Dollars
($2,500,000), with respect to any such matters not before the FERC, and (B)
where such matters could not reasonably be expected to result in a Material
Adverse Effect, with respect to any such matters before the FERC), (iii) any
citation or notice of material non-compliance with Applicable Laws (other than
with respect to ministerial matters) that could reasonably be expected to result
in a Material Adverse Effect, (iv) the existence of any Environmental Claim or
threatened Environmental Claim, in each case in writing, if, at such time, the
Borrower's Current Fixed Charge Coverage Ratio is less than 1.85 to 1.0 or if
such Environmental Claim or threatened Environmental Claim could reasonably be
expected to result in the Borrower having a Current Fixed Charge Coverage Ratio
of less than 1.85 to 1.0, (v) any termination, suspension, or modification of
any Governmental Approval obtained by the Borrower and any action or proceeding
that could reasonably be expected to result in any of the foregoing, (vi) any
adverse claim against any of the Collateral of which the Borrower is aware or
reasonably should have become aware or the occurrence of any event, occurrence,
or condition that could reasonably be expected to result in a Material Adverse
Effect with respect to the value of the Collateral or on the Collateral Agent's
Lien thereon, (vii) any
36
Amortization Event of which the Borrower is aware, and (viii) the Borrower
having a Current Fixed Charge Coverage Ratio of less than 2.0 to 1.0;
(c) within fifteen (15) Business Days after the last day of
each calendar month, (i) a Monthly Operating Report substantially in the form of
Exhibit D and (ii) a certificate of a Financial Officer of the Borrower setting
forth the Current Fixed Charge Coverage Ratio as at such date and setting forth
in reasonable detail the calculations used to arrive at such Current Fixed
Charge Coverage Ratio, which calculations shall be subject to audit by the
Administrative Agent;
(d) promptly following the receipt by the Borrower of each
Governmental Approval, a written summary description of such Governmental
Approval;
(e) promptly upon the execution and delivery of each
Additional Contract and each Ancillary Document executed and delivered in
respect thereof, an amended version of Schedule 4.10, which shall include any
such Additional Contract and any permitted amendment to any Material Project
Document;
(f) any pending or threatened (in writing) condemnation or
appropriation proceeding affecting the Pipeline or any portion thereof;
(g) any event or claim of force majeure under any Material
Project Document if, at such time, the Borrower's Current Fixed Charge Coverage
Ratio is less than 1.85 to 1.0 or if such event or claim could reasonably be
expected to result in the Borrower having a Current Fixed Charge Coverage Ratio
of less than 1.85 to 1.0;
(h) from time to time and promptly upon request, such data,
certificates, reports, statements, documents, and further information regarding
the business, assets, liabilities, financial condition, results of operations,
or business prospects of the Borrower, in each case prepared by the Borrower in
the ordinary course, as the Administrative Agent may reasonably request;
(i) within five (5) Business Days of becoming aware of any
event described in Section 7.01(m)(i) through (v), the Borrower will notify the
Administrative Agent in writing of such event regardless of whether such event
has had or could reasonably be expected to result in a Material Adverse Effect;
and
(j) if and to the extent the Borrower prepares financial
statements in accordance with GAAP, the Borrower shall provide copies of such
financial statements to the Administrative Agent as soon as they become
available.
SECTION 5.05. Compliance with Laws. The Borrower will comply
with all Applicable Laws, except to the extent that failure to so comply could
not reasonably be expected to result in a Material Adverse Effect.
37
SECTION 5.06. Governmental Approvals. The Borrower will obtain
on or prior to the time required and maintain in full force and effect and
comply in all respects with the conditions and obligations under all applicable
Governmental Approvals that may from time to time become necessary in connection
with (a) the Operation of the Pipeline in a manner at least as favorable (as the
Administrative Agent determines) as the assumptions set forth in the Base Case
Projections to the extent such Operation is permitted by Applicable Law, (b) the
execution, delivery, and performance of the Operative Document to which it is a
party in accordance with their respective terms, or (c) the taking of any action
contemplated by the Operative Documents or such Governmental Approvals, except
to the extent that failure to so comply could not reasonably be expected to have
a Material Adverse Effect.
SECTION 5.07. Insurance.
(a) General Insurance Maintained By Borrower.
(i) The Borrower will procure at its own expense and
maintain in full force and effect at all times throughout the term of
this Agreement insurance policies with insurance companies authorized
to do business in the States of Texas, Oklahoma, Missouri, Nebraska,
Kansas, Colorado, and Wyoming with a Best Insurance Reports rating of
"A" or better and a financial size category of "IX" or higher or, if
not rated by AM Best, a Standard & Poor's financial strength rating of
not less than "A-" (and other companies acceptable to the
Administrative Agent, which acceptance shall not be unreasonably
withheld; underwriters at Lloyds of London are deemed acceptable), with
limits and coverage provisions sufficient to satisfy the requirements
set forth in each of the Material Project Documents, but in no event
less than the limits and coverage provisions set forth on Schedule
5.07(a)(i).
(ii) All policies of liability, property, boiler and
machinery, and business interruption insurance to the extent required
to be maintained by the Borrower in accordance with Section 5.07(a)(i)
shall provide for waivers of subrogation in favor of the Administrative
Agent and the Collateral Agent on behalf of the Secured Parties and
their respective officers and employees. All property, builders' risk,
builders' risk delayed start up, marine cargo and marine cargo delayed
start up, boiler and business interruption policies to the extent
required to be maintained by the Borrower in accordance Section
5.07(a)(i) shall name the Collateral Agent as sole loss payee for all
Insurance Proceeds above one million Dollars ($1,000,000) and contain
loss payable provisions in accordance with either Lender's Loss Payable
Endorsement 438BFU or CP 12 18 06 95, or equivalent. All policies of
liability insurance, except workers' compensation and employers'
liability, required to be maintained by the Borrower under Section
5.07(a)(i) shall contain the endorsements (or their equivalent) set
forth in Section 5.07(b).
(iii) Except for Restoration permitted by the Lenders in
accordance with the terms of this Agreement, the Borrower hereby waives
any and every claim for
38
recovery from the Lenders for any and all loss or damage covered by any
of the insurance policies to be maintained under this Agreement to the
extent that such loss or damage is recovered under any such policy.
Inasmuch as the foregoing waiver will preclude the assignment of any
such claim to the extent of such recovery, by subrogation (or
otherwise), to an insurance company (or other Person), the Borrower
shall give written notice of the terms of such waiver to each insurance
company that has issued, or that may issue in the future, any such
policy of insurance (if such notice is required by the insurance
policy) and shall cause each such insurance policy to be properly
endorsed by the issuer thereof to, or to otherwise contain one or more
provisions that, prevent the invalidation of the insurance coverage
provided thereby by reason of such waiver.
(b) Required Endorsements. All policies of insurance required
to be maintained pursuant to Section 5.07(a) shall be endorsed:
(i) to provide a severability of interests or cross
liability clause if more than one party is insured;
(ii) that the insurance shall be primary and not excess to
or contributing with any insurance or self-insurance maintained by the
Borrower or the Secured Parties;
(iii) to name the Borrower, the Administrative Agent, and
the Collateral Agent on behalf of the Secured Parties and their
respective officers, agents, and employees (and such other Persons as
may be required by the Material Project Documents) as additional
insureds; and
(iv) contain equivalent wording to the following, unless
waived in writing by the Administrative Agent:
(A) Errors and Omissions - It is hereby understood
and agreed that the coverage afforded by this policy shall not
be invalidated or affected by any unintentional errors,
omissions, or in any information required to be reported.
(B) Notice of Injurious Exposure to Conditions (third
party liability policies only) - It is agreed that failure of
any agent, servant, or employee of the insured other than the
owner or a partner of any partnership of the insured, or an
executive officer of the insured to notify the company of any
occurrence of which he has knowledge shall not invalidate the
insurance afforded by this policy as respects the named
insured.
(C) Knowledge of Injurious Exposure to Conditions
(third party liability policies only) - It is hereby
understood and agreed that knowledge of an occurrence by the
agent, servant, or employee of the insured
39
shall not in itself constitute knowledge by the insured,
unless an executive officer of the insured or the owner or a
partner of any partnership of the insured shall have received
such notice from its or their agent, servant, or employee.
(c) Amendment of Requirements. The Administrative Agent may
upon notice to the Borrower at any time amend the requirements and approved
insurance companies of this Section 5.07 due to (i) new information not known by
the Lenders on the Financial Closing Date or (ii) changed circumstances after
the Financial Closing Date, in either case that in the judgment of the
Administrative Agent either renders such insurance coverage materially
inadequate or materially reduces the financial ability of the approved insurance
companies to pay claims under the insurance policies contemplated by this
Agreement. The Borrower shall have thirty (30) days from the date of such notice
to implement any such change and achieve compliance with this Section 5.07(c).
(d) Unavailable Insurance. Notwithstanding any other provision
of this Section 5.07, in the event any insurance (including the limits or
deductibles thereof) hereby required to be maintained shall not be available on
commercially reasonable terms in the commercial insurance market for natural gas
pipelines of a similar size, type, location, and capacity as the Pipeline, the
Administrative Agent shall not unreasonably withhold its agreement to waive such
requirement to the extent the maintenance thereof is not so available; provided,
however, that (i) the Borrower shall first request any such waiver in writing
from the Administrative Agent, which request shall be accompanied by a written
report prepared by an independent insurance broker satisfactory to the
Administrative Agent stating that such insurance is not available in the
commercial insurance market for natural gas pipelines of similar size type,
location, and capacity as the Pipeline (and, in any case where the required
amount is not so available, providing information as to the maximum amount that
is so available) and explaining in reasonable detail the basis for such
conclusions, (ii) at any time after the granting of any such waiver, but not
more often than once per year, the Administrative Agent may request, and the
Borrower shall furnish to the Administrative Agent within fifteen (15) Business
Days after such request, supplemental reports reasonably acceptable to the
Administrative Agent from such insurance broker updating its prior reports and
reaffirming such conclusion, and (iii) any such waiver shall be effective only
so long as such insurance shall not be available on commercially reasonable
terms in the commercial insurance market for natural gas pipelines of a similar
size, type, location, and capacity as the Pipeline, it being understood that the
failure of the Borrower to timely furnish any such supplemental report, after
the request of the Administrative Agent, shall be conclusive evidence that such
waiver is no longer effective because such condition no longer exists, but that
such failure to timely furnish any such supplemental report is not the only way
to establish that the waiver is no longer effective. The failure at any time to
satisfy the condition to any waiver of an insurance requirement set forth in the
proviso to the preceding sentence shall not impair or be construed as a
relinquishment of the Borrower's ability to obtain a waiver of an insurance
requirement pursuant to the preceding sentence at any other time upon
satisfaction of such conditions.
40
(e) Application of Proceeds. All insurance proceeds recovered
by the Collateral Agent as aforesaid on account of damage or destruction to the
Pipeline shall be applied pursuant to Section 2.10 or Section 5.17 of this
Agreement and the UBOC Account Control Agreement, as applicable.
(f) Conditions. The Borrower shall comply with the following
conditions:
(i) The Borrower shall promptly notify the Administrative
Agent of any losses to the extent required by Section 5.04(b) as
applicable.
(ii) All policies of insurance required to be maintained
pursuant to clauses 1(a), 1(b), and 1(c) of Schedule 5.07(a)(i) shall
provide that the proceeds of such policies, for all claims exceeding
one million Dollars ($1,000,000), shall be payable solely to the
Collateral Agent pursuant to a standard first mortgage endorsement
substantially equivalent to the Lenders Loss Payable Endorsement 438BFU
or CP 12 18 06 95 without contribution. The Administrative Agent shall
have the right but not the duty to join the Borrower in the evaluation
of any loss that is not a Minor Loss. All policies (other than in
respect to employers' liability or workers' compensation insurance)
shall name as additional insureds the interests of the Administrative
Agent and the Collateral Agent on behalf of the Secured Parties
regardless of any breach or violation by the Borrower of warranties,
declarations, or conditions contained in such policies, any action or
inaction of the Borrower or others, or any foreclosure relating to the
Pipeline or any change in ownership of all or any portion of the
Pipeline (the foregoing may be accomplished by the use of the Lenders
Loss Payable Endorsement required above).
(iii) A loss under any insurance required to be maintained
under Sections 5.07(a) shall be adjusted with the insurance companies,
including the filing in a timely manner of appropriate proceedings, by
the Borrower, subject to notification of the Administrative Agent if
such loss is in excess of a Minor Loss. In addition, the Borrower may
in its reasonable judgment consent to the settlement of any loss;
provided, however, that in the event that the amount of the loss
exceeds three million Dollars ($3,000,000), the terms of such
settlement is concurred with by the Administrative Agent (not to be
unreasonably withheld).
(iv) All policies of insurance required to be maintained
pursuant to this Section 5.07 shall be further subject to the
following:
(A) such policies of insurance shall be endorsed so
that if at any time should they be canceled, such cancellation
shall not be effective as to the Secured Parties for
forty-five (45) days, except for non-payment of premium which
shall be for ten (10) days, after receipt by the Collateral
Agent of written notice from such insurer of such
cancellation;
41
(B) such policies of insurance, to the extent
maintained pursuant to Sections 5.07(a), shall not include any
annual or term aggregate limits of liability or clause
requiring the payment of additional premium to reinstate the
limits after loss except as regards liability insurance and
the insurance applicable to the perils of terrorism, flood,
and earth movement;
(C) such policies of insurance shall allow any of the
Secured Parties to pay any premium that the Borrower is
required to pay under any such policy of insurance; provided,
that the insurance companies issuing such policies of
insurance shall have no recourse to any Secured Party for the
payment of any such premiums or other amounts with respect
thereto;
(D) such policies of insurance, to the extent they
are placed with insurers that do not meet the rating
requirements under, and are not acceptable to the
Administrative Agent in accordance with, Section 5.07(a)(i),
shall contain provisions allowing the Borrower, the
Administrative Agent, and the Collateral Agent direct access
to any facultative reinsurers for payment of premiums and
losses (or other provisions acceptable to the Administrative
Agent), or else be assigned to the Borrower (or the Collateral
Agent with respect to loss payments) and contain provisions
requiring the reinsurers to notify the Borrower and the
Administrative Agent forty-five (45) days (except in the case
of non-payment of premium, in which case the notification
should be ten (10) days) prior to any cancellation or material
reduction in the reinsurance coverage and the exact language
of such provisions shall be subject to the approval of the
Administrative Agent; and
(E) Any reinsurer of the policies of insurance
specified in Section 5.07(f)(iv)(D) shall be required to meet
the financial requirements, set forth in Section 5.07(a)(i),
imposed upon the primary insurers providing such policies.
(g) Evidence of Insurance. On the Financial Closing Date and
on an annual basis thereafter, the Borrower shall furnish the Administrative
Agent with certification of all required insurance. Such certification shall be
executed by each insurer or by an authorized representative of each insurer
where it is not practical for such insurer to execute the certificate itself.
Such certification shall identify underwriters, the type of insurance, the
insurance limits, and the policy term and shall specifically list the special
provisions enumerated for such insurance required by this Section 5.07. Upon
request, the Borrower will promptly furnish the Administrative Agent with copies
of all insurance policies, binders, and cover notes and other evidence of such
insurance relating to the Pipeline.
(h) Insurance Report. Concurrently with the furnishing of the
certification referred to in Section 5.07(g), the Borrower shall furnish the
Administrative Agent with a report of an independent insurance broker, signed by
an officer of the broker, stating that all
42
premiums then due have been paid and that, in the opinion of such broker, the
insurance then carried or to be renewed is in accordance with the terms of this
Section 5.07.
(i) Failure to Maintain Insurance. In the event the Borrower
fails to take out or maintain the full insurance coverage required by this
Section 5.07, the Administrative Agent, upon at least thirty (30) days' prior
notice (unless the aforementioned insurance would lapse within such period, in
which event notice should be given as soon as reasonably possible) to the
Borrower of any such failure, may (but shall not be obligated to) take out the
required policies of insurance and pay the premiums on the same. All amounts so
advanced thereof by the Administrative Agent shall become an additional
Obligation of the Borrower to the Administrative Agent, and the Borrower shall
forthwith pay such amounts to the Administrative Agent, together with interest
thereon at the Base Rate plus two percent (2%) per annum from the date so
advanced.
(j) No Duty of Agent to Verify. No provision of this Section
5.07 or any other provision of this Agreement, any other Loan Document, or any
Material Project Document shall impose on the Administrative Agent any duty or
obligation to verify the existence or adequacy of the insurance coverage
maintained by the Borrower, nor shall the Administrative Agent be responsible
for any representations or warranties made by or on behalf of the Borrower to
any insurance company or underwriter.
(k) "Claims Made" Policies for Certain Types of Insurance. If
any liability insurance required under the provisions of this Section 5.07 is
allowed to be written on a "claims made" basis, then such insurance shall
include the following:
(i) the retroactive date (as such term is specified in
each of such policies) shall be no later than November 15, 2002; and
(ii) each time any policy written on a "claims made" basis
is not renewed or the retroactive date of such policy is to be changed,
the Borrower shall, subject to and in accordance with Section 5.07(c),
obtain or cause to be obtained for each such policy or policies the
broadest extended reporting period coverage, or "tail," as determined
in the Administrative Agent's reasonable judgment, but in no event less
than four (4) years after the expiration of such policy or policies.
(l) Maintenance of Insurance. On and after the Financial
Closing Date, the Borrower shall at all times maintain the insurance coverage
required under the terms of the Material Project Documents and not allow work
performed by others for the Borrower to commence until a certificate of
insurance has been delivered to the Borrower verifying coverages required by the
Material Project Documents to be in place and naming such other party and the
Borrower as insured or additional insured, and the Administrative Agent and the
Collateral Agent on behalf of the Secured Parties as additional insureds.
(m) Notice of Default. The Borrower shall cause the insurers
with whom it maintains policies of insurance pursuant to this Section 5.07 to
agree to advise the Borrower
43
and the Administrative Agent in writing promptly of any default in the payment
of any premiums or any other act or omission on the part of the Borrower of
which such insurers have knowledge and that likely would invalidate or render
unenforceable, in whole or in part, any such policy of insurance.
SECTION 5.08. Taxes. The Borrower will pay and discharge all
(a) taxes, assessments, payments in lieu of tax, and governmental charges or
levies imposed upon the Borrower, the Pipeline Assets, or the Borrower's income
or profits due and payable on or prior to the date due and (b) claims, levies,
or liabilities (including claims for labor, services, materials, and supplies)
for sums that have become due and payable and that have or, if unpaid, are
reasonably likely to become a Lien (other than a Permitted Encumbrance);
provided, however, no such tax, assessment, charge, claim, or levy need be paid
(x) that is not yet delinquent or (y) that is being contested in good faith and
by appropriate proceedings diligently conducted and for which adequate reserves
have been established or funds have been set aside (by surety bond, escrowed
funds, or other means acceptable to the Administrative Agent) that, in
accordance with the reporting requirements of the FERC, are sufficient to effect
satisfaction and discharge thereof.
SECTION 5.09. Pipeline Assets. The Borrower will maintain good
and marketable title to all Pipeline Assets, free and clear of all Liens other
than Permitted Encumbrances.
SECTION 5.10. Intellectual Property. The Borrower will obtain
and maintain in full force and effect or cause to be obtained and maintained in
full force and effect all patents, copyrights, and intellectual property rights
required (a) for the Operation of the Pipeline and (b) so that the use of such
patents, copyrights, and intellectual property rights shall not infringe in any
material respect upon the rights of any other Person if, in each case, at such
time, the Borrower's Current Fixed Charge Coverage Ratio is less than 1.85 to
1.0 or if its failure to obtain and maintain or to cause to be obtained and
maintained in full force and effect such patents, copyrights, and intellectual
property could reasonably be expected to result in the Borrower having a Current
Fixed Charge Coverage Ratio of less than 1.85 to 1.0.
SECTION 5.11. Security. The Borrower will establish, attach,
perfect, protect, preserve, and maintain the Secured Parties' first-priority
Liens on the Collateral (other than Section 7 Assets and the Collateral
described in Section 2(a)(iii)(B) of the Security Agreement) prior to all Liens
other than Permitted Encumbrances.
SECTION 5.12. Use of Proceeds. The Borrower will use the
proceeds of the Term Loans and the Working Capital Loans only for the purposes
expressly provided therefor in the Loan Documents.
44
SECTION 5.13. Books of Record and Access. The Borrower will
keep proper books of record and accounts in which full, true, and correct
entries in conformity with the reporting requirements of the FERC will be made
of all dealings and transactions in relation to its business and activities.
Upon reasonable prior notice, the Borrower will permit the Administrative Agent
and its agents and consultants during normal business hours and in a manner that
does not unreasonably interfere with the Borrower's business, to inspect the
Pipeline, including the operation and maintenance of the Pipeline, and permit
the Administrative Agent and its agents and consultants to inspect all books,
contracts, records, and papers of the Borrower relating thereto. The Borrower
will maintain (to the extent required by the FERC) and keep on file a copy of
the "as-built" drawings and specifications of the fully completed Pipeline,
which should at all times be available during inspections by the Administrative
Agent and its agents and consultants and the Independent Engineer permitted by
the previous sentence.
SECTION 5.14. Exemptions from Regulations. The Borrower shall
not change its status so as to subject the Pipeline to regulation as a
"public-utility company," or as a "holding company," or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company," or a "gas
utility company" within the meaning of PUHCA and shall not be subject to
regulation as a public utility company or a gas company by any state utility
regulatory commission.
SECTION 5.15. Interest Rate Protection Agreements. On or prior
to the Financial Closing Date, the Borrower shall enter into a Master Agreement
and the confirmation letters and the schedule(s) referred to in the definition
of "Interest Rate Protection Agreements" and thereafter maintain in full force
and effect the Interest Rate Protection Agreements with the Administrative Agent
at rates and on terms acceptable to the Administrative Agent, the effect of
which shall be to fix or limit for a period expiring no sooner than the Term
Loan Maturity Date the interest payable in connection with one hundred percent
(100%) of the aggregate principal amount of Term Loans outstanding from time to
time. The obligations of the Borrower under the Interest Rate Protection
Agreements required by this Section 5.15 shall rank pari passu with the other
Obligations.
SECTION 5.16. Further Assurances. The Borrower will (a)
execute, acknowledge where appropriate, and deliver, and cause to be executed,
acknowledged where appropriate, and delivered, from time to time promptly at the
request of the Administrative Agent all such instruments and documents as in the
reasonable opinion of the Administrative Agent are necessary to carry out the
interest and purposes of this Agreement and the other Loan Documents, including
any instruments and documents (including any UCC financing statements or
assignment thereto) intended to maintain the Liens on the Collateral granted to
the Collateral Agent as valid and perfected first-priority security interests
(subject only to Permitted Encumbrances) with a priority dating from no later
than the Financial Closing Date, (b) file or caused to be filed such documents,
instruments, and filings and take such other
45
action as is reasonably requested by the Administrative Agent to maintain in
full force and effect as security for the obligations of the Borrower hereunder
and under the other Loan Documents the Liens on the Collateral granted to the
Collateral Agent as valid and perfected first-priority security interests
(subject only to Permitted Encumbrances) with a priority dating from no later
than the Financial Closing Date, and (c) take all actions that in the reasonable
opinion of the Administrative Agent are required to cause each Additional
Contract to be or become subject to the Lien on the Collateral granted to the
Collateral Agent (whether by amendment to the Security Agreement or otherwise)
and deliver or cause to be delivered to the Administrative Agent all Ancillary
Documents with respect to such Additional Contract as the Administrative Agent
may reasonably request; provided, however, that (i) no UCC financing statements
shall be required to be filed in any filing office other than the office of the
secretary of state of each applicable state, (ii) the Borrower shall not be
required to execute any mortgage, deed of trust, or other document or instrument
purporting to ▇▇▇▇▇ ▇ ▇▇▇▇ on real property, and (iii) except as expressly set
forth in this Agreement and the other Loan Documents, the Borrower makes no
representation or warranty regarding the creation, attachment, perfection, or
priority of any Lien on the Section 7 Assets, the Collateral described in
Section 2(a)(iii)(B) of the Security Agreement, or any portion of either
thereof.
SECTION 5.17. Damage or Destruction. (a) The Borrower shall
notify the Administrative Agent promptly of any Event of Damage (other than a
Minor Loss) in accordance with the terms of Section 5.04(b)(i). All amounts and
proceeds (including instruments) in respect of the proceeds of any property,
builders' risk, delayed start up, marine cargo and marine cargo delayed start
up, boiler and business interruption policies (the "Insurance Proceeds") (other
than for a Minor Loss) shall be paid by the respective insurers directly to the
Collateral Agent for the benefit of the Secured Parties and the Borrower as set
forth in this Agreement and the UBOC Account Control Agreement and, except for
the proceeds of delayed start-up and business interruption insurance, which
shall be deposited into the Concentration Account, all such proceeds shall be
deposited into the Insurance/Condemnation Proceeds Account. All Insurance
Proceeds with respect to any Minor Loss shall be paid by the respective insurers
directly to the Borrower.
(b) If there shall occur any Event of Damage (other than a
Minor Loss) and if either (i) the Administrative Agent shall have received
certifications of the Borrower and opinions of the Independent Engineer
acceptable to the Administrative Agent to the effect that the Restoration
Conditions are satisfied or (ii) if such Restoration Conditions are not
satisfied, the Required Lenders shall consent, the Borrower shall commence and
complete such Restoration diligently and promptly at its expense to the extent
not otherwise paid or reimbursed in accordance with the next clause (c). The
Administrative Agent shall direct the Collateral Agent to disburse to the
Borrower the Insurance Proceeds received with respect to such Event of Damage
from time to time as provided in the UBOC Account Control Agreement to pay or to
reimburse the Borrower for the cost of Restoration. The plans and specifications
for the Restoration shall be subject to prior review and approval in all
respects by the Administrative Agent in consultation with the Independent
Engineer. Provided that no Default other than any Default caused by such Event
of Damage shall have occurred and be
46
continuing and that all Restoration Conditions shall have been satisfied, all
Insurance Proceeds received by the Collateral Agent in an amount of ten million
Dollars ($10,000,000) or less per occurrence shall be paid to the Borrower in a
lump sum payment and applied to the prompt payment of the cost of Restoration.
The Borrower shall undertake and complete such Restoration promptly and
diligently at its expense to the extent not covered by such Insurance Proceeds
in accordance with the plans and specifications for Restoration as approved by
the Administrative Agent in consultation with the Independent Engineer.
(c) In all other cases, all Insurance Proceeds (other than
proceeds of delayed start-up and business interruption insurance) held by the
Collateral Agent arising out of such Event of Damage (after deducting all
reasonable expenses of the Collateral Agent and the Borrower in collecting the
same) shall be disbursed to pay the cost of the Restoration in accordance with
the UBOC Account Control Agreement. All proceeds of delayed start-up and
business interruption insurance shall be promptly deposited into the
Concentration Account and shall constitute Project Revenues of the Borrower for
all purposes hereunder and under the other Loan Documents.
(d) In the event (i) the conditions to disbursement provided
in the UBOC Account Control Agreement are not satisfied and such failure
continues unremedied for six (6) months, (ii) any Insurance Proceeds remain with
the Collateral Agent after completion of Restoration, or (iii) the Restoration
Conditions are not satisfied and such failure continues unremedied for six (6)
months, the Insurance Proceeds shall be applied in accordance with Section
2.10(b).
SECTION 5.18. Taking. (a) If an Event of Taking (other than a
Minor Loss) shall have occurred, or the Borrower shall have received written
notice from the relevant Governmental Authority having jurisdiction that an
Event of Taking (other than a Minor Loss) will occur, the Borrower (i) shall
diligently pursue all its rights to compensation against the condemning
authority in respect of such Event of Taking and (ii) so long as no Default
(other than a Default caused by such Event of Taking) or Event of Default shall
have occurred and be continuing, may, with the written consent of the
Administrative Agent, compromise or settle any claim against the condemning
authority. The right to compromise or settle any claim against the condemning
authority (if a Default or Event of Default shall have occurred and be
continuing) is hereby assigned to the Administrative Agent and the right to
collect all amounts and proceeds (including instruments) payable in respect of
an Event of Taking ("Condemnation Proceeds") is hereby assigned to the
Collateral Agent, in each case as Collateral for the Obligations, for the
benefit of the Secured Parties and the Borrower as set forth in this Agreement.
All Condemnation Proceeds (other than for a Minor Loss) shall be paid to the
Collateral Agent and the Administrative Agent shall direct the Collateral Agent
to (after deducting all reasonable expenses incurred by the Administrative
Agent, the Collateral Agent, and the Borrower in litigating, arbitrating,
compromising, or settling any claims against the condemning authority) hold such
Condemnation Proceeds as security for the Obligations and apply the same in
accordance with the provisions of this Section 5.18. The Administrative Agent
may participate in any proceedings relating to any such Event of Taking
47
and the Borrower shall from time to time deliver to the Administrative Agent all
instruments requested by either of them to permit such participation. All
Condemnation Proceeds with respect to any Minor Loss shall be paid directly to
the Borrower.
(b) In the case of an Event of Taking (other than for a Minor
Loss), all Condemnation Proceeds shall be applied to pay or reimburse the
Borrower for the cost of Restoration in accordance with the same procedures as
provided in the UBOC Account Control Agreement with respect to Insurance
Proceeds or, if the Borrower is not permitted to Restore the Pipeline pursuant
to Section 5.17, such Condemnation Proceeds shall be applied in accordance with
Section 2.10(b).
SECTION 5.19. Borrower's Bank Accounts. The Borrower shall
maintain all its bank accounts with the Accounts Agent, except for such bank
accounts that are required to be maintained with the UBOC Accounts Agent
pursuant to the UBOC Account Control Agreement.
SECTION 5.20. Operating Budget. (a) The Borrower shall, no
later than thirty (30) days before the commencement of each calendar year,
submit a proposed Operating Budget with respect to such calendar year to the
Administrative Agent, which proposed Operating Budget automatically shall become
the Operating Budget of the Borrower for such calendar year if no Account
Trigger Event shall have occurred and be continuing as of the first day of such
calendar year. Upon the occurrence of any Account Trigger Event, the future
portion of the current Operating Budget shall be subject to review and approval
by the Administrative Agent in consultation with the Independent Engineer, which
approval shall not be unreasonably withheld or delayed and shall be granted or
withheld in light of Prudent Utility Practices. Failure by the Administrative
Agent to provide a notice of approval or non-approval within thirty (30) days
after the later of (i) the occurrence of the Account Trigger Event and (ii) the
date of the Administrative Agent's receipt of such Operating Budget, shall be
deemed approval thereof. If the Borrower has not submitted a proposed Operating
Budget in accordance with this Section 5.20(a) or if the Operating Budget is
subject to the approval of the Administrative Agent but has not been so
approved, the Pipeline may continue to operate in accordance with the Operating
Budget for the immediately preceding calendar year, as increased by ten percent
(10%) for each item therein for so long as the Operating Budget for the calendar
year in question is not so submitted by the Borrower or approved by the
Administrative Agent.
(b) If an Account Trigger Event shall have occurred and be
continuing, the Borrower will not, without the consent of the Administrative
Agent, expend any amount or incur any obligations (i) for any classification of
Operating Expenses during any calendar year that exceed, by more than ten
percent (10%), the amount provided for such classification of Operating Expenses
set forth in the Operating Budget in effect for such calendar year or (ii) for
aggregate Operating Expenses during any calendar year that exceed, by more than
five percent (5%), the amount provided for aggregate Operating Expenses set
forth in the Operating Budget in effect for such calendar year.
48
(c) The Borrower may from time to time adopt an amended Operating Budget
for the remainder of any calendar year; provided, however, that if an Account
Trigger Event shall have occurred and be continuing, such amended Operating
Budget shall be effective as the Operating Budget for the remainder of such
calendar year only upon the approval of the Administrative Agent in consultation
with the Independent Engineer, which approval shall not be unreasonably withheld
or delayed and shall be granted or withheld in light of Prudent Utility
Practices and the provisions of Section 5.20(a).
SECTION 5.21. Pari Passu Status. The Borrower will insure that the claims
and rights of the Secured Parties against the Borrower under the Loan Documents
will not be subordinated to, and will rank at all times at least pari passu
with, the claims and rights of all other holders of the Indebtedness of the
Borrower, including, without limitation, the holders of the Borrower's
obligations under the Indenture.
SECTION 5.22. Debt to Total Capitalization Ratio. The Borrower shall, as of
any date of determination, maintain a Debt to Total Capitalization Ratio of not
greater than 0.45 to 1.0.
SECTION 5.23. Acknowledgements. The Borrower (a) shall, and shall use its
commercially reasonable efforts to cause each Material Contract Party that is a
party to a Material Project Document on the Financial Closing Date to, enter
into and deliver to the Administrative Agent an Acknowledgement within ninety
(90) days after the Financial Closing Date with respect to each Material Project
Document to which such Material Contract Party is a party and (b) shall, within
five (5) Business Days after the expiration of the period set forth in the
preceding clause (a), together with the Collateral Agent direct each Material
Contract Party that has not so entered into and delivered an Acknowledgement to
make all payments that are required to be made by such Material Contract Party
under a Material Project Document directly to the Collateral Agent for
application in accordance with the UBOC Account Control Agreement.
SECTION 5.24. Opposition to Proceedings. The Borrower shall oppose
diligently any filing made with the FERC (other than filings made by the
Borrower) or any proceeding initiated by the FERC if, at such time, (a)(i) the
Borrower's Current Fixed Charge Coverage Ratio is less than 1.85 to 1.0 and (ii)
the failure to make such opposition could reasonably be expected to adversely
affect the Borrower's Current Fixed Charge Coverage Ratio or (b) if the failure
to make such opposition could reasonably be expected to result in the Borrower
having a Current Fixed Charge Coverage Ratio of less than 1.85 to 1.0.
SECTION 5.25. Current Fixed Charge Coverage Ratio. If at any time the
Borrower shall have a Current Fixed Charge Coverage Ratio of less than 2.0 to
1.0, the Borrower shall (a) notify the Administrative Agent promptly of such
condition in accordance with the terms of Section 5.04(b)(vii), (b) deliver to
the Administrative Agent within thirty
49
(30) days of the date on which the Borrower becomes aware of such condition (i)
an explanation therefor and (ii) either (A) a plan, which shall be prepared by
the Borrower in good faith, in accordance with industry standards, and based on
reasonable assumptions, to increase the Borrower's Fixed Charge Coverage Ratio
to at least 2.0 to 1.0 as soon as could be achieved in a prudent and efficient
manner with the exercise of commercially reasonable efforts or (B)(1) a report
demonstrating that the Borrower's Fixed Charge Coverage Ratio cannot be
increased in accordance with the parameters specified in the immediately
preceding clause (A) and (2) a plan, which shall be prepared by the Borrower in
good faith, in accordance with industry standards, and based on reasonable
assumptions, to increase the Borrower's Fixed Charge Coverage Ratio to as high a
level as is reasonably achievable with the exercise of commercially reasonable
efforts, and (c) promptly and diligently implement any such plan that is so
delivered by the Borrower to the Administrative Agent.
SECTION 5.26. Tax Sharing Agreement. Within ninety (90) days of the
Financial Closing Date, the Borrower will enter into a tax sharing agreement
(the "Tax Sharing Agreement") with the Parent, in form and substance reasonably
satisfactory to the Administrative Agent, (a) pursuant to which the Parent
agrees, among other things, to indemnify and hold the Borrower harmless from and
against any liability that the Borrower incurs for taxes of the affiliated group
of which the Parent and Borrower are members under Treasury Regulations section
1.1502-6 (or any analogous or similar provision of state or local law), (b) that
provides that the Secured Parties are intended third-party beneficiaries thereof
and, as such, are entitled to exercise all of the Borrower's rights thereunder
if the Borrower fails to do so, and (c) that provides that, without the prior
written consent of the Administrative Agent, neither party thereto may take any
action to cancel, terminate, assign (other than to the Collateral Agent pursuant
to the Security Documents), or permit the assignment or termination of, waive
any default under, breach of, or right under, or amend, supplement, or modify in
any respect such agreement, in each case described in this clause (c) if such
action could have the effect of (i) reducing the amount of any payment to which
the Borrower is entitled or (ii) increasing the amount of any payment for which
the Borrower is responsible, in either case, under the Tax Sharing Agreement.
SECTION 5.27. Management of Borrower. The Borrower shall at all times
maintain and employ senior management personnel necessary and advisable for the
Operation of the Pipeline in accordance with Prudent Utility Practices.
50
ARTICLE VI
NEGATIVE COVENANTS
So long as this Agreement shall remain in effect or the principal of or
interest on any Loan, any Fees, or any other Obligations shall remain
outstanding, the Borrower covenants and agrees with each Lender and the
Administrative Agent as follows:
SECTION 6.01. Fundamental Change. The Borrower shall not (a) directly or
indirectly liquidate, wind up, terminate, reorganize, or dissolve itself (or
suffer any liquidation, winding up, termination, reorganization, or
dissolution), (b) merge or consolidate with or into any other Person, (c) engage
in any business or activities, or permit the Site or the Pipeline Assets to be
used for any purpose, other than the Operation of the Pipeline, or (d) change
its legal form.
SECTION 6.02. Pipeline Additions and Modifications; Capital Expenditures.
(a) The Borrower shall not undertake or permit any expansions, modifications, or
additions to or alterations of the Pipeline that changes the overall design,
scope, or nature of the Pipeline if, at such time, the Borrower's Current Fixed
Charge Coverage Ratio is less than 1.85 to 1.0 or if such action could
reasonably be expected to result in the Borrower having a Current Fixed Charge
Coverage Ratio of less than 1.85 to 1.0, except to the extent otherwise
permitted by the Loan Documents.
(b) If an Account Trigger Event shall have occurred and be continuing, the
Borrower shall not make or incur any Capital Expenditures other than (i) Capital
Expenditures not in excess of three million Dollars ($3,000,000) in the
aggregate in any calendar year, (ii) Required Capital Expenditures, (iii)
Capital Expenditures included in the Operating Budget, or (iv) any other Capital
Expenditures so long as in the case of such other Capital Expenditures (A) cash
in an amount that the Independent Engineer has certified would be sufficient to
pay for such Capital Expenditures in full (plus a reasonable or prudent
contingency in respect thereof) has been deposited into the Concentration
Account and is maintained therein until such Capital Expenditures are paid in
full and (B) the Independent Engineer has certified that such Capital
Expenditures could not reasonably be expected to (1) interfere with the
operation of the Pipeline in a manner at least as favorable (as the
Administrative Agent determines) as the assumptions set forth in the Base Case
Projections or (2) materially and adversely affect any Governmental Approvals
required for the Operation of the Pipeline.
SECTION 6.03. Material Project Documents; Additional Contracts. (a) Except
as otherwise permitted in this Agreement, without the prior written consent of
the Administrative Agent (not to be unreasonably withheld, conditioned, or
delayed), the Borrower shall not:
(i) terminate or suffer the termination of any Material Project
Document prior to its stated termination date, unless (A) the Borrower
shall have
51
entered into one or more agreements to replace revenues previously provided
to the Borrower pursuant to such Material Project Document (1) prior or
concurrently with the termination thereof, if such Material Project
Document is a Significant Material Project Document, or (2) not later than
ninety (90) days after the termination thereof, if such Material Project
Document is not a Significant Material Project Document, which replacement
agreement shall be a Replacement Gas Service Agreement and (B) the Borrower
shall have complied with each of its other obligations under this Agreement
with respect to Additional Contracts;
(ii) amend or otherwise modify in any respect, or suffer any such
amendment or modification, or grant any waiver of material and timely
performance with respect to, any Significant Material Project Document or
provision thereof, except to the extent that such waivers, amendments, and
other modifications (A) add to the obligations of a Material Contract Party
thereunder, (B) cure any ambiguity therein, or (C) correct any provision
thereof that is inconsistent with any other provision thereof and that, in
the case of each of clauses (A), (B), and (C), could not reasonably be
expected to cause a Material Adverse Effect;
(iii) amend or otherwise modify in any respect, or suffer any such
amendment or modification, or grant any waiver of material and timely
performance with respect to, any Material Project Document that is not also
a Significant Material Project Document or provision thereof if, at such
time, the Borrower's Current Fixed Charge Coverage Ratio is less than 1.85
to 1.0 or if such action could reasonably be expected to result in the
Borrower having a Current Fixed Charge Coverage Ratio of less than 1.85 to
1.0;
(iv) assign any of its rights or obligations under any Operative
Document;
(v) amend or file any application for the amendment of any
Governmental Approval (other than the applications to obtain the Part B
Approvals, applications to renew Part A Approvals or Part B Approvals, and
ministerial filings) if, at such time, the Borrower's Current Fixed Charge
Coverage Ratio is less than 1.85 to 1.0 or if such amendment could
reasonably be expected to result in the Borrower having a Current Fixed
Charge Coverage Ratio of less than 1.85 to 1.0; or
(vi) amend or file any application for the amendment of the FERC Gas
Tariff, or grant any waiver of material and timely performance with respect
thereto, if, in each case, at such time, the Borrower's Current Fixed
Charge Coverage Ratio is less than 1.85 to 1.0 or if the economic effect of
such action could reasonably be expected to result in the Borrower having a
Current Fixed Charge Coverage Ratio of less than 1.85 to 1.0.
(b) The Borrower shall not, without the prior written consent of the
Administrative Agent, (i) enter into any Additional Contract without prior or
concurrent
52
delivery to the Administrative Agent of an Acknowledgement and all other
Ancillary Documents with respect to such Additional Contract as the
Administrative Agent may reasonably request, in each case executed by the
Borrower and each other party to such Additional Contract, in form and substance
satisfactory to the Administrative Agent in its reasonable discretion, or (ii)
enter into any contract, lease, instrument, or agreement pursuant to which the
Borrower would incur aggregate payment obligations in excess of two million five
hundred thousand Dollars ($2,500,000) annually if, in the case of clause (ii),
at such time, the Borrower's Current Fixed Charge Coverage Ratio is less than
1.85 to 1.0 or if such action could reasonably be expected to result in the
Borrower having a Current Fixed Charge Coverage Ratio of less than 1.85 to 1.0.
SECTION 6.04. Restricted Payments. (a) The Borrower shall not declare or
pay any dividends, distributions, payments, returns of capital, transfers, or
credits of any kind to the Parent or to any Affiliate of the Parent or make any
payments with respect to Subordinated Indebtedness or management fees payable to
the Parent or to any Affiliate of the Parent (collectively, "Restricted
Payments") unless, at the time of and after giving effect to such declaration or
payment, the following conditions (the "Restricted Payment Conditions") have
been fulfilled to the satisfaction of, or waived, by the Administrative Agent:
(i) the Borrower shall have given the Administrative Agent written
notice of its intention to make such Restricted Payment not fewer than
three (3) Business Day's prior to the date on which such Restricted Payment
is to be made;
(ii) no Default or Event of Default shall have occurred and be
continuing or would occur as a result of such Restricted Payment;
(iii) after giving effect to such Restricted Payment, the annualized
historical Fixed Charge Coverage Ratio for the six (6)-month period
immediately prior to the Quarterly Date on or after which such Restricted
Payment is to be made and the projected Fixed Charge Coverage Ratio for the
twelve (12)-month period immediately after such Quarterly Date shall, in
each case, be equal to or greater than 1.85 to 1.0;
(iv) such Restricted Payment would not cause the sum of (A) the amount
of funds on deposit in the Accounts after giving effect to such Restricted
Payment and (B) the amount, if any, by which the Working Capital Loan
Commitment exceeds the sum of the outstanding amount of Working Capital
Loans, in each case as of the date on which such Restricted Payment is to
be made, to be less than the Borrower's projected total expenditures for
the immediately following three (3) calendar months as set forth in the
Operating Budget;
(v) such Restricted Payment is otherwise in accordance with the UBOC
Account Control Agreement, the Account Control Agreement, and the other
Loan Documents; and
53
(vi) the Borrower shall have delivered to the Administrative Agent a
certificate of a Responsible Officer of the Borrower, dated the date of the
applicable Restricted Payment, certifying as to the matters set forth in
the immediately preceding clauses (i) - (v);
provided, however, that notwithstanding the failure to fulfill any of the
conditions in clauses (i) through (vi) above, the Borrower may make payments to
the Parent to reimburse the Parent (x) for taxes imposed upon the Borrower and
previously paid by the Parent to the extent of such payment and (y) for amounts
paid by the Parent on the Borrower's behalf in the ordinary course of business
in an aggregate amount of payments under this clause (y) not to exceed two
hundred fifty thousand Dollars ($250,000) per fiscal year, in each case only
after the Administrative Agent has received the original or a certified copy of
a receipt evidencing payment of such amounts by the Parent or, if such a receipt
is not available, a certificate of a Responsible Officer of the Borrower setting
forth the details of such payment.
(b) Restricted Payments may be made on any Quarterly Date and in accordance
with the UBOC Account Control Agreement and the Account Control Agreement.
Restricted Payments will be made no more frequently than quarterly and only
after full payment of all amounts required to be paid, under the terms of the
UBOC Account Control Agreement and the Account Control Agreement, before a
Restricted Payment is made.
SECTION 6.05. ERISA. The Borrower shall not establish or become obligated
to contribute to any Plan other than a Plan disclosed on Schedule 4.11 on the
Financial Closing Date without the prior written consent of the Administrative
Agent. The Borrower shall ensure that each ERISA Affiliate of the Borrower shall
not permit any of the representations set forth in Section 4.11 to be inaccurate
and the Borrower shall ensure that it and each of its ERISA Affiliates shall
take any and all reasonable and necessary actions to assure the continuing
accuracy of such representations as aforesaid.
SECTION 6.06. [INTENTIONALLY OMITTED]
SECTION 6.07. Environmental Matters. The Borrower shall not permit the
Pipeline to use or dispose of any Hazardous Substance, or allow any Hazardous
Substance to be brought onto or stored or used on or transported or released
from the Pipeline or the Site, other than in the ordinary course of business and
in compliance with all applicable Environmental Laws if, at such time, the
Borrower's Current Fixed Charge Coverage Ratio is less than 1.85 to 1.0 or if
such action could reasonably be expected to result in the Borrower having a
Current Fixed Charge Coverage Ratio of less than 1.85 to 1.0. In the event of
any breach of the foregoing or in the event of the presence of any Hazardous
Substances or of any conditions at the Pipeline or the Site that could
reasonably result in an Environmental Claim, the Borrower will, if, at the time
of such breach, the Borrower's Current Fixed Charge Coverage Ratio is less than
1.85 to 1.0 or if such breach could reasonably be expected to result in the
Borrower having a Current Fixed Charge Coverage Ratio of less than 1.85 to 1.0,
contain, remediate, clean-up, or remove or cause to be contained, remediated,
cleaned-up, or removed from the Pipeline or the Site or any real property
underlying any thereof, or other
54
location, as the case may be, such Hazardous Substances or conditions to the
extent required by any Applicable Law to be contained, remediated, cleaned-up,
or removed by the Borrower but only in any case in a manner that such release,
discharge, transportation, or disposal could not reasonably be expected to
result in any Material Adverse Effect, individually or in the aggregate with any
other release, discharge, transportation, or disposal by the Borrower of any
Hazardous Substances. The Borrower will promptly notify the Administrative Agent
of the discovery of any condition (including the presence of Hazardous
Substances, endangered or threatened species, or regulated historic resources)
that could reasonably be expected to have a Material Adverse Effect. During the
continuance of any Default or Event of Default with respect to this Section
6.07, the Administrative Agent and the Collateral Agent and their agents,
employees, and contractors shall have the right (but not the obligation) at the
expense of the Borrower, to access the Pipeline and the Site and any real
property underlying any thereof (to the extent the Borrower has access to such
property), following reasonable notice to the Borrower, to take such action as
may be reasonably necessary to cure any such default or to comply with such
Applicable Law.
SECTION 6.08. Transactions with Affiliates. Except with the prior written
consent of the Administrative Agent, the Borrower shall not effect any
transaction with any Affiliate of the Borrower, except (a) to the extent the
Borrower is required by Applicable Law to effect such a transaction, (b) the
payment of management fees in accordance with the Operating Budget, (c) the
renewal of existing insurance policies to the extent the insurance coverage
provided thereunder is required by this Agreement, and (d) additional insurance
coverage reasonably approved by the Administrative Agent in consultation with
the Insurance Consultant.
SECTION 6.09. Investments, Loans, and Advances. The Borrower shall not,
directly or indirectly, purchase, hold, or acquire any capital stock, evidences
of Indebtedness, or other securities of, make or permit to exist any loans,
advances, or capital contributions to, or make or permit to exist any investment
or other interest in, any other Person, except for the following:
(a) Permitted Investments;
(b) loans to wholly-owned Subsidiaries of the Borrower if, at the time of
the making of any such loan, (i) no Default or Event of Default has occurred and
is continuing and (ii) after giving effect to the making of such loan, the
annualized historical Fixed Charge Coverage Ratio for the six (6)-month period
immediately prior to the date on which such loan is to be made and the projected
Fixed Charge Coverage Ratio for the twelve (12)-month period immediately after
such date is, in each case, not less than 1.85 to 1.0; provided, however, that
the aggregate outstanding amount of loans made pursuant to this clause (b) shall
not at any time exceed ten million Dollars ($10,000,000);
(c) investments constituting accounts receivable arising in the ordinary
course of business or deposits made in connection with the purchase price of
goods or services in the ordinary course of business;
55
(d) investments permitted as Capital Expenditures in accordance with the
terms of this Agreement;
(e) loans and advances to employees of the Borrower in the ordinary course
of business (including for travel, entertainment, and relocation expenses) in an
aggregate amount not to exceed two million Dollars ($2,000,000) at any time
outstanding;
(f) investments existing on the Financial Closing Date and set forth on
Schedule 6.09; and
(g) investments in any Guarantee obligations in accordance with the terms
of this Agreement.
SECTION 6.10. No Liens. The Borrower will not create, assume, incur, suffer
to exist, or permit to be created, assumed, incurred, or suffered to exist,
directly or indirectly, any Lien upon any Pipeline Asset or any other property
or asset of the Borrower, other than Permitted Encumbrances.
SECTION 6.11. Disposition of Assets. The Borrower shall not sell, lease,
license, transfer, assign, or otherwise dispose of any part of the Pipeline
Assets or of its business or any interest therein, whether in one or a series of
transactions, or otherwise undertake the sale or disposal of any asset, other
than:
(a) sales or other dispositions of obsolete, worn out, or defective
equipment or equipment or other property or rights no longer necessary to the
Operation of the Pipeline; provided that (i) the cumulative book value of the
equipment or other property sold or disposed of in connection with any
transaction permitted pursuant to this clause (a) shall not exceed five million
Dollars ($5,000,000) and (ii) except in the case of obsolete equipment and
equipment or other property or rights no longer necessary to the Operation of
the Pipeline, such equipment is promptly replaced by the Borrower with suitable
substitute equipment of substantially the same character and quality and at
least equivalent useful life and utility to the extent that the failure to
replace such equipment could reasonably be expected to have a Material Adverse
Effect;
(b) sales or other dispositions of equipment or other property in the
ordinary course of the business of the Borrower; provided that (i) at the time
of such sale or disposition and after giving effect thereto, no Default or Event
of Default exists, (ii) the cumulative book value of the equipment or other
property sold or disposed of in connection with (A) any one transaction
permitted pursuant to this clause (b) shall not exceed five million Dollars
($5,000,000) and (B) all transactions permitted pursuant to this clause (b) in
the aggregate shall not exceed ten million Dollars ($10,000,000), and (iii) the
proceeds received from such sale or disposition are applied promptly to the
replacement of such sold or disposed property with property of the same
character and quality and at least equivalent useful life and utility to the
extent that the failure to replace such equipment could reasonably be expected
to have a Material Adverse Effect; and
56
(c) sales of Permitted Investments for cash or other Permitted Investments.
SECTION 6.12. Indebtedness. The Borrower shall not create, assume, incur,
or otherwise become or remain directly or indirectly obligated in respect of, or
permit to be outstanding, any Indebtedness, except Permitted Indebtedness.
SECTION 6.13. Operation of Pipeline. The Borrower shall not use, maintain,
operate, or allow the use, maintenance, or operation of the Pipeline for any
purpose (a) that may constitute a public or private nuisance that could
reasonably be expected to have a Material Adverse Effect or (b) other than for
the intended purposes thereof as contemplated by the Operative Documents.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. In case of the happening of any of the
following events, whether such event is voluntary or involuntary or results from
the operation of Applicable Law or pursuant to or as a result of compliance by
any Person with any judgment, decree, order, rule, or regulation of any
Governmental Authority ("Events of Default"):
(a) (i) any payment of principal of the Loans or the Notes shall not be
made when and as due (whether at maturity, by reason of required prepayment or
acceleration, or otherwise) in accordance with the terms of this Agreement and
the Notes or (ii) any interest, Fees, or other payment under this Agreement or
any other Loan Document (other than the payment of principal) shall not be made
within three (3) Business Days after the same shall be due;
(b) any representation or warranty made by the Borrower in any Loan
Document shall at any time prove to have been incorrect or misleading when made
and the incorrect or misleading nature of such representation or warranty could
reasonably be expected to have a Material Adverse Effect;
(c) any failure or default in the performance or observance of any covenant
or agreement (i) set forth in Section 5.01 (Existence), Section 5.05 (Compliance
with Laws), Section 5.07 (Insurance), Section 5.12 (Use of Proceeds), Section
5.14 (Exemptions from Regulations), Section 5.15 (Interest Rate Protection
Agreements), Section 5.17 (Damage or Destruction), Section 5.23
(Acknowledgements), Section 5.25 (Current Fixed Charge Coverage Ratio), Section
5.26 (Tax Sharing Agreement), Section 6.01(a), (b), or (d) (Fundamental Change),
Section 6.03 (Material Project Documents; Additional Contracts), Section 6.04
(Restricted Payments), and Section 6.12 (Indebtedness) or (ii) contained in this
Agreement or any other Loan Document in respect of payment requirements relating
to
57
damage or destruction of the Pipeline, including without limitation Section 5.17
(Damage or Destruction);
(d) any failure or default in the performance or observance of any other
covenant or agreement contained in this Agreement or any other Loan Document and
not listed in Sections 7.01(a), (b), or (c) and such failure or default shall
continue unremedied for a period of thirty (30) days after the earlier of (i)
the date notice from the Administrative Agent is given to the Borrower in
accordance with Section 9.01 specifying such failure or default and requiring
that it be remedied and (ii) the date on which a Responsible Officer of the
Borrower becomes aware or reasonably should have become aware of such failure or
default; provided, however, that, if such failure or default (x) is not capable
of being remedied with diligent effort within such thirty (30)-day period, (y)
is capable of being remedied and the Borrower is diligently prosecuting or
pursuing such remedy, and (z) does not impair or otherwise adversely affect the
value of the Collateral or the Liens created therein in favor of the Collateral
Agent in any material respect, such failure or default shall not give rise to an
Event of Default under this clause unless such failure or default shall continue
unremedied for a period of ninety (90) days after the Borrower receives notice
thereof from the Administrative Agent;
(e) (i) the Borrower or the Parent (A) files a petition seeking to take
advantage of any laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up, or composition or adjustment of debts, (B) consents
to or fails to contest in a timely manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws, (C) applies for,
consents to, or fails to contest in a timely manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee, liquidator, or the like
of itself or of a substantial part of its assets, (D) admits in writing its
inability to pay, or generally is not paying, its debts (other than those that
are the subject of bona fide disputes) as they become due, (E) makes a general
assignment for the benefit of creditors, or (F) takes any corporate action for
the purpose of effecting any of the foregoing, or (ii) a case or other
proceeding shall be commenced against the Borrower or the Parent seeking (A)
relief under the federal bankruptcy laws (as now or hereafter in effect) or
under any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up, or composition or adjustment of debts or (B) the
appointment of a trustee, receiver, custodian, liquidator, or the like of the
Borrower or the Parent or of all or any substantial part of its assets, and any
such case, filing, action, or proceeding in any of the foregoing circumstances
shall continue undismissed or unstayed for a period of ninety (90) days;
(f) at any time after the Financial Closing Date, there shall have been
entered by a court of competent jurisdiction against the Borrower and/or the
Parent one or more final, nonappealable judgments, decrees, or orders for (i)
non-monetary relief that individually or in the aggregate have a Material
Adverse Effect or (ii) the payment of money that individually is in an amount
in excess of five million Dollars ($5,000,000) (but only to the extent such
judgment is not covered by the Borrower's insurance) or that in the aggregate is
in an amount in excess of ten million Dollars ($10,000,000) (whether or not such
58
judgment(s) are covered by the Borrower's insurance) and in each case such
judgments, decrees, or orders shall continue undischarged for a period of sixty
(60) days from the dates thereof;
(g) any Material Project Document shall for any reason cease to be valid
and binding on any party thereto or shall be declared null and void or shall
otherwise cease to be in full force and effect (including if certain conditions
precedent to performance are not timely satisfied), in each case prior to its
stated termination date, unless the Borrower is diligently attempting to replace
such Material Project Document with a Replacement Gas Service Agreement, and is
diligently attempting to deliver or cause to be delivered all Ancillary
Documents requested by the Administrative Agent with respect to such Replacement
Gas Service Agreement, as the case may be, and does so within (i) thirty (30)
days, if such Material Project Document is a Significant Material Project
Document, or (ii) one hundred eighty (180) days, if such Material Project
Document is not a Significant Material Project Document, in each case after such
cessation or declaration and (y) during such period there is no material
impairment in the value of the Collateral (other than the termination of such
Material Project Document) or the Liens created therein in favor of the Secured
Parties;
(h) any party (including the Borrower) to a Significant Material Project
Document or any party (other than the Borrower) to a Material Project Document
that is not a Significant Material Project Document shall default in any respect
in the performance or observance of any covenant or agreement contained in such
document after giving effect to any applicable grace period specified therein;
(i) any Lien purported to be created by any Security Document in Collateral
having value in excess of five million Dollars ($5,000,000) in the aggregate
shall cease to be a valid and/or first-priority perfected Lien in such
Collateral in accordance with the terms of the relevant Security Document for
any reason (other than any Material Project Document being replaced in
accordance with clause (g) above or otherwise permitted under Section 6.03),
subject to the exceptions expressly set forth in such Security Document with
respect to Section 7 Assets, the Collateral described in Section 2(a)(iii)(B) of
the Security Agreement, and Permitted Encumbrances;
(j) any Loan Document to which the Borrower is a party shall cease, for any
reason, to be valid and binding or shall be declared (other than by the Secured
Parties) null and void or shall cease to be in full force and effect, or any
party thereto (other than the Secured Parties) shall so assert in writing;
(k) an Event of Abandonment shall have occurred that could reasonably be
expected to have a Material Adverse Effect;
(l) the occurrence of any Event of Total Loss or Event of Total Taking if
the Restoration Conditions are not satisfied in accordance with the terms of
Section 5.17 or
59
Section 5.18, as applicable, and such event could reasonably be expected to have
a Material Adverse Effect;
(m) (i) any Person shall engage in any "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975 of the Code) involving any Plan that is
not otherwise exempt under any statute, regulation, or administrative action,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of the Borrower or any ERISA
Affiliate, (iii) a Reportable Event shall occur with respect to, or proceedings
shall commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Required Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
of Title IV of ERISA or notice is given of intent to terminate any Single
Employer Plan, (v) the Borrower or any ERISA Affiliate shall, or in the
reasonable opinion of the Required Lenders is likely to incur any liability in
connection with (A) a withdrawal from a Multiemployer Plan or Multiple Employer
Plan or (B) the Insolvency or Reorganization of a Multiemployer Plan, or (vi)
any other event or condition shall occur or exist with respect to a Plan and, in
each case in clauses (i) through (vi) above, such event or condition, together
with all other such events or conditions, if any, has had or could reasonably be
expected to have a Material Adverse Effect;
(n) (i) the Parent and its Affiliates shall fail to own collectively at
least fifty-one percent (51%) of the aggregate amount of equity interests in the
Borrower then authorized, (ii) AIG Highstar Capital, LP, a Delaware limited
partnership, shall cease to possess, directly or indirectly, the power to direct
or cause the direction of the management and policies of the Borrower through
the ownership of equity interests in the Borrower, or (iii) the Parent shall
transfer any of its equity interests in the Borrower to any third Person without
the prior written consent of the Required Lenders; provided, however, that it
shall not be an Event of Default under this clause (iii) if (x) the Parent
transfers, without obtaining the prior written consent of the Required Lenders,
its equity interest in the Borrower to any Affiliate of AIG Highstar Capital,
LP, a Delaware limited partnership, or (y) the Parent transfers, without
obtaining the prior written consent of the Required Lenders, up to, in the
aggregate, forty-nine percent (49%) of the aggregate amount of equity interests
in the Borrower then authorized to third-Person industry participants that have,
as of the date of the applicable transfer, a credit rating from Standard &
Poor's of not less than "BBB" and a credit rating from ▇▇▇▇▇'▇ of not less than
"Baa2";
(o) (i) the Borrower shall (A) default in any payment when due, whether at
stated maturity thereof, by acceleration, or otherwise, of principal of or
interest on any Permitted Indebtedness for borrowed money described in clauses
(e) or (g) of the definition thereof involving in the aggregate in excess of
five million Dollars ($5,000,000), beyond the period of grace, if any, provided
in the instrument or agreement under which such Indebtedness was created, and as
a result thereof the maturity of such Indebtedness is accelerated (if such
Indebtedness has not already matured) or (B) default in the observance or
60
performance of any other agreement or condition relating to any such Permitted
Indebtedness or contained in any instrument or agreement evidencing, security,
or relating thereto, in each case beyond the period of grace, if any provided
therein, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders), to
cause such Indebtedness to become due prior to its stated maturity, (ii) an
"Event of Default" (as defined in the Indenture) shall have occurred under the
Indenture, or (iii) an "Event of Default" (as defined in the Parent Indenture)
shall have occurred under the Parent Indenture;
(p) any Governmental Approval that shall at the time be necessary (i) for
the execution, delivery, and performance by the Borrower or any Material
Contract Party of any Operative Document to which it is a party, or for the
performance by the Borrower or any Material Contract Party of its rights and
obligations under any of the Operative Documents to which it is a party, or (ii)
for the Operation of the Pipeline as contemplated by the Operative Documents,
shall not be obtained, renewed, maintained, or complied with in all material
respects, or shall be revoked, terminated, withdrawn, suspended, modified, or
withheld or shall cease to be in full force and effect; or any proceeding shall
be commenced by or before any Governmental Authority for the purpose of so
revoking, terminating, withdrawing, suspending, modifying, or withholding any
such Governmental Approval and such proceeding is not dismissed within ninety
(90) days or stayed within ninety (90) days and remains stayed at all times
until being subsequently dismissed; provided, however, that such failure to
obtain, renew, maintain, or comply with, or such revocation, termination,
withdrawal, suspension, modification, withholding, or cessation, or such
proceeding, had or could reasonably be expected to have a Material Adverse
Effect;
(q) (i) the Parent Side Letter or, after the execution and delivery
thereof, the Tax Sharing Agreement shall for any reason cease to be valid and
binding on any party thereto or shall be declared null and void or shall
otherwise cease to be in full force and effect, (ii) any party to the Parent
Side Letter or, after the execution and delivery thereof, the Tax Sharing
Agreement shall default in any respect in the performance or observance of any
covenant or agreement contained in such document after giving effect to any
applicable grace period specified therein and such default is materially adverse
to the Borrower's rights thereunder, or (iii) the Parent Side Letter or, after
the execution and delivery thereof, the Tax Sharing Agreement shall be amended
or otherwise modified in any respect, or any provision thereof waived by the
Borrower, that is materially adverse to the Borrower; or
(r) the Consolidated Debt to Total Capitalization Ratio shall at any time
be greater than 0.70 to 1.0;
then, and in every such Event of Default (other than an event described in
clause (e) above to the extent relating to the Borrower), and at any time
thereafter during the continuance of such Event of Default, the Administrative
Agent shall, upon the request or with the consent of the Majority Lenders, by
notice to the Borrower, take any or all of the following actions, at the same or
different times: (i) terminate forthwith the Commitments, (ii) exercise, or
direct the Collateral Agent to exercise, any and all rights available under the
Loan Documents or
61
otherwise available to a secured creditor in respect of the Collateral, or (iii)
declare all Obligations then outstanding to be forthwith due and payable in
whole or in part, whereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and any unpaid accrued Fees and
all other liabilities of the Borrower accrued and unpaid hereunder and under any
other Loan Document, shall become forthwith due and payable, without
presentment, demand, protest, or any other notice of any kind (except notices
expressly required by the terms of the Loan Documents), which (other than those
expressly required by the Loan Documents) are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding; and, in any Event of Default relating to the Borrower
described in clause (e) above, the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of the Borrower
accrued and unpaid hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest, or
any other notice of any kind (except notices expressly required by the terms of
the Loan Documents), which (other than those expressly required by the Loan
Documents) are hereby expressly waived by the Borrower, anything contained
herein or in any other Loan Document to the contrary notwithstanding, and the
Administrative Agent shall, upon the request or with the consent of the Majority
Lenders, at the same or different times, exercise, or direct the Collateral
Agent to exercise, any and all rights available under the Security Documents or
otherwise available to a secured creditor in respect of the Collateral.
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE LEAD ARRANGER
SECTION 8.01. Appointment of the Administrative Agent and the Lead
Arranger. (a) Each Lender hereby irrevocably designates and appoints each of the
Administrative Agent and the Lead Arranger as the agent of such Lender under
this Agreement and each other Loan Document, as appropriate, to take such
actions, to perform such duties, and to exercise such powers as are expressly
delegated to them by the terms of this Agreement and the other Loan Documents,
together with such other powers as are reasonably incidental thereto. The
Administrative Agent is hereby appointed by the Secured Parties as the agent of
the Secured Parties for purposes of appointing the Collateral Agent to the
capacity set forth in the Intercreditor Agreement and to take all other actions
contemplated by the Intercreditor Agreement.
(b) Neither the Administrative Agent nor the Lead Arranger shall have any
duties or responsibilities except those expressly set forth in this Agreement or
any other Loan Document, and no implied covenants, functions, responsibilities,
duties, obligations, or liabilities shall be read into this Agreement or any
other Loan Document or otherwise against the Administrative Agent or the Lead
Arranger.
(c) Neither the Administrative Agent nor the Lead Arranger or any officers,
directors, employees, agents, attorneys-in-fact, or Affiliates of the
Administrative
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Agent or the Lead Arranger shall (i) be liable to any Lender or any other Person
for any action taken or omitted to be taken by it or any of them under or in
connection with any of the Loan Documents, except for its or their own gross
negligence or willful misconduct, or (ii) be responsible in any manner to any
Lender or any other Person for, and it is expressly understood and agreed that
each of the Administrative Agent and the Lead Arranger makes no representation
or warranty with respect to, any recital, statement, representation, or warranty
contained in this Agreement, any other Loan Document, or any other document
executed in connection herewith or therewith or in any certificate, report,
statement, or other document referred to or provided for in or received by the
Administrative Agent, the Lead Arranger, or any Lender hereunder or thereunder
or in connection herewith or therewith, or the value, validity, priority,
effectiveness, genuineness, enforceability, or sufficiency of this Agreement,
any other Loan Document, or any other document executed in connection with any
thereof or any of the Collateral, or (iii) be responsible in any manner to any
Lender or any other Person for any failure of any other party to perform its
obligations hereunder or under any other Loan Document or under any other
agreement executed in connection therewith. The Administrative Agent shall not
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Operative Document, or to inspect the
properties, books, or records of the Borrower, the Parent, or any other Material
Contract Party. This Section 8.01(c) shall survive the payment of the Loans and
all other Obligations payable to the Lenders hereunder.
(d) Each of the Administrative Agent and the Lead Arranger shall be
entitled to rely, and shall be fully protected in relying, upon any document or
statement believed by it in good faith to be genuine and to have been furnished
or made by the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel to the Borrower or the Parent), independent
accountants, and other experts selected by it. Each of the Administrative Agent
and the Lead Arranger may execute any of its duties under the Loan Documents by
or through agents or attorneys selected by them using reasonable care and
neither the Administrative Agent nor the Lead Arranger shall be responsible to
any Lender for the negligence or misconduct of any agent or attorney selected by
it with reasonable care. Each of the Administrative Agent and the Lead Arranger
shall be fully justified in failing or refusing to take any action under the
Loan Documents unless it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take such action. Neither the Administrative
Agent nor the Lead Arranger shall have any duty to take any discretionary action
permitted to be taken by it pursuant to the provisions of any Loan Document or
to consent (or withhold its consent) to or approve (or not approve) of any
action required to be consented to or approved by it, unless it shall be
requested in writing to do so by the Majority Lenders. Each of the
Administrative Agent and the Lead Arranger shall in all cases be fully protected
in acting, or in refraining from acting, under the Loan Documents in accordance
with an appropriate request of the appropriate Lenders under the terms of this
Agreement or another Loan Document and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders.
63
(e) Each Lender expressly acknowledges that neither the Administrative
Agent nor the Lead Arranger or any of their officers, directors, employees,
agents, attorneys-in-fact, or Affiliates has made any representations or
warranties to it and that no act by the Administrative Agent or the Lead
Arranger hereafter taken, including any review of the affairs of the Borrower or
the Parent, shall be deemed to constitute any representation or warranty by any
of the Administrative Agent or the Lead Arranger to any Lender. Each Lender
represents to each of the Administrative Agent and the Lead Arranger that it
has, independently and without reliance upon the Administrative Agent, the Lead
Arranger, or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition, and
creditworthiness of the Borrower, the Parent, and the Material Contract Parties
and made its own decision to extend credit hereunder and to enter into this
Agreement and any other Loan Document to which it is a party. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent, the Lead Arranger, or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals, and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition, and creditworthiness of the
Borrower, the Parent, the Material Contract Parties, and any other Person.
Except for notices, reports, and other documents expressly required to be
furnished to the Lenders by the Administrative Agent or the Lead Arranger
hereunder or under any other Loan Document, neither the Administrative Agent nor
the Lead Arranger shall have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations,
property, condition (financial or other), prospects, or creditworthiness of the
Borrower, the Parent, the Material Contract Parties, or any other Person that
may come into the possession of the Administrative Agent or the Lead Arranger or
any of its officers, directors, employees, agents, attorneys-in-fact, or
Affiliates. This Section 8.01(e) shall survive the payment of the Loans and all
other Obligations payable to the Lenders hereunder.
(f) Each Lender hereby severally agrees (i) to reimburse the Administrative
Agent, the Collateral Agent, and the Lead Arranger, in their capacity as such,
for any expenses incurred for the benefit (directly or indirectly) of the
Lenders by the Administrative Agent, the Collateral Agent, and the Lead Arranger
(including counsel fees) and (ii) to indemnify the Administrative Agent, the
Collateral Agent, and the Lead Arranger, in their capacity as such, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including counsel fees), or
disbursements of any kind or nature whatsoever that may at any time (including
at any time following the maturity of the Loans and the payment of all amounts
due and payable hereunder) be imposed on, incurred by, or asserted against the
Administrative Agent, the Collateral Agent, or the Lead Arranger in any way
relating to or arising out of this Agreement, any other Loan Document, the
Collateral, or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Administrative Agent, the Collateral Agent, or the Lead Arranger under or
in connection with any of the foregoing or with respect to the Collateral, in
each case (x) within three (3)
64
Business Days of demand therefor, (y) to the extent not reimbursed by the
Borrower and without limiting the obligation of the Borrower to do so in
accordance with the Loan Documents, and (z) ratably according to its share of
the aggregate Commitments; provided, however, that the Lenders shall not be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
resulting from the Administrative Agent's, the Collateral Agent's, or the Lead
Arranger's willful misconduct or gross negligence as determined by a court of
competent jurisdiction by a final and nonappealable order. This Section 8.01(f)
shall survive the payment of the Loans and all other Obligations payable to the
Lenders hereunder.
(g) Each of the Administrative Agent and the Lead Arranger may resign as
Administrative Agent or Lead Arranger, respectively, upon thirty (30) days'
notice to the Lenders. A copy or any such notice shall also be delivered to the
Borrower for its information; provided, however, that any failure to deliver
such copy of the notice to the Borrower for any reason shall in no way affect
the application of this clause (g). If the Administrative Agent or the Lead
Arranger shall resign as Administrative Agent or Lead Arranger, as applicable,
under this Agreement and the other Loan Documents, then, subject to the last
sentence of this clause, the Required Lenders shall appoint from among the
Lenders a successor administrative agent or lead arranger, as the case may be,
for the Lenders reasonably acceptable to the Borrower, whereupon such successor
administrative agent or lead arranger shall succeed to the rights, powers, and
duties of the Administrative Agent or the Lead Arranger, as applicable, and the
term "Administrative Agent" or "Lead Arranger" shall mean such successor
administrative agent or lead arranger, as the case may be, effective upon such
appointment and approval, and the former Administrative Agent's or Lead
Arranger's, as applicable, rights, powers, and duties as Administrative Agent or
Lead Arranger shall be terminated, without any other or further act or deed on
the part of such former Administrative Agent or Lead Arranger or any of the
parties to this Agreement or any holders of the Loans. After any resigning
Administrative Agent's or Lead Arranger's resignation as Administrative Agent or
Lead Arranger, as applicable, the provisions of this Article VIII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent or Lead Arranger under this Agreement and the other Loan
Documents. Notwithstanding anything to the contrary contained herein, upon the
indefeasible payment in full of all Loans and other Obligations of the Borrower
to the Lenders, the Administrative Agent and the Lead Arranger shall
automatically resign as Administrative Agent and Lead Arranger, respectively,
under this Agreement and the other Loan Documents without any other or further
action on the part of any Person.
(h) Union Bank of California and each of its Affiliates may make loans to,
accept deposits from, and generally engage in any kind of business with the
Borrower and the Parent as though it were not the Administrative Agent, the
Collateral Agent, or the Lead Arranger under this Agreement and the other Loan
Documents. With respect to its respective Loans hereunder, each of the Lenders
shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. (a) All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be delivered to
the intended recipient as provided below:
(i) if to the Borrower, to it at:
Southern Star Central Gas Pipeline, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone (for confirmation): (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Southern Star Central Gas Pipeline, Inc.
c/o AIG Highstar Capital, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone (for confirmation): (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Administrative Agent, the Collateral Agent, or the
Lead Arranger, to it at:
Union Bank of California, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Mail Code ▇▇▇-▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone (for confirmation): (▇▇▇) ▇▇▇-▇▇▇▇
(iii) if to a Lender, to it at its address set forth in Schedule
2.01.
(b) All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have
been given on the date of receipt if delivered by hand or overnight courier
service or sent by telecopy, or on the date five (5) Business Days after
dispatch by certified or registered mail if mailed, in each case delivered,
sent, or mailed (properly addressed) to such party as provided in this
Section
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9.01 or in accordance with the latest unrevoked direction from such party given
in accordance with this Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations, and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the Lenders
of the Loans and the execution and delivery to the Lenders of the Notes
evidencing such Loans, regardless of any investigation made by the Lenders or on
their behalf, and shall continue in full force and effect so long as (a) the
principal of or any accrued interest on any Loan or any Fee or any other amount
payable under this Agreement or any other Loan Document is outstanding and
unpaid or (b) the Commitments have not been terminated.
SECTION 9.03. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower, the Administrative Agent, the
Collateral Agent, the Lead Arranger, and the Lenders and thereafter shall be
binding upon and inure to the benefit of the Borrower, the Administrative Agent,
the Collateral Agent, the Lead Arranger, and each Lender and their respective
successors and permitted assigns.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include,
subject to the provisions of this Section 9.04, the successors and permitted
assigns of such party, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of all the Lenders, and all covenants, promises, and agreements by or on
behalf of the Borrower, the Administrative Agent, the Collateral Agent, the Lead
Arranger, and the Lenders that are contained in this Agreement shall bind and
inure to the benefit of their respective successors and permitted assigns.
(b) Each Lender may assign to one or more assignees all or a portion of its
interests, rights, and obligations under this Agreement and the other Loan
Documents (including all or a portion of any of its Commitments and the Loans at
the time owing to it and any Note held by it); provided, however, that (i)
except in the case of an assignment to a Lender or (so long as such assignment
would not result in increased costs to the Borrower under Sections 2.12, 2.14,
or 2.15) an Affiliate of a Lender, the Administrative Agent and, so long as no
Default or Event of Default shall have occurred and be continuing, the Borrower
must give their respective prior written consent to any such assignment (which
consent shall not be unreasonably withheld), (ii) the parties to each such
assignment shall execute and deliver to the Administrative Agent an assignment
and acceptance in form reasonably satisfactory to the Administrative Agent (an
"Assignment and Acceptance") and a processing and recordation fee of three
thousand Dollars ($3,000), together with the Note or Notes subject to such
assignment, and (iii) the aggregate amount of the Commitments or Loans subject
to each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agent) shall
not be less
67
than five million Dollars ($5,000,000) or all of the Commitments or Loans of
such assigning Lender, whichever is less. Subject to the requirements of the
preceding sentence, from and after the effective date specified in each
Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, shall be and have
the rights and obligations of a Lender under this Agreement and the other Loan
Documents, and Schedule 2.01 shall be deemed automatically to have been amended
to incorporate such Lender, its Commitment or Commitments, and the other
information required by Schedule 2.01 as set forth in such Assignment and
Acceptance and (B) the assigning Lender thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement.
(c) Within fifteen (15) Business Days after notice of the effective date of
any Assignment and Acceptance hereunder of which the Administrative Agent shall
notify the Borrower, the Borrower shall execute and deliver to the
Administrative Agent, in exchange for the surrendered Note or Notes, a new Note
or Notes to the order of such assignee in a principal amount equal to the
applicable Commitment or Loan assumed by such assignee pursuant to such
Assignment and Acceptance, and a new Note or Notes to the order of such
assigning Lender in a principal amount equal to the applicable Commitment or
Loan retained by it, if any.
(d) Each Lender may without the consent of the Administrative Agent or the
Borrower sell participations to one or more banks or other entities in all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans owing to it and any Note held by it);
provided, however, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of its obligations, (iii) the participating
banks or other entities shall be entitled to the benefit of the cost protection
provisions contained in Sections 2.12, 2.14, and 2.15 to the same extent as if
they were the Lenders (except that any such participant shall be entitled to
claim any such amount only to the extent that the Lender from which such
participant acquired its participation is entitled to, and such Lender makes
such claim on its own behalf because it would have otherwise incurred the same
costs), and (iv) the Borrower, the Administrative Agent, the Collateral Agent,
the Lead Arranger, 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 such Lender shall retain the sole right to
enforce the obligations of the Borrower hereunder and to approve any amendment,
modification, or waiver of any provision of this Agreement or any other Loan
Document (other than amendments, modifications, or waivers decreasing any Fees
or the amount of principal of or the rate at which interest is payable on the
Loans or extending the Term Loan Maturity Date, the Working Capital Loan
Maturity Date, or any Interest Payment Date or with respect to the release of
Collateral, in each case only to the extent that the same affects payments to
such participants).
(e) Any Lender may, in connection with any assignment or proposed
assignment or participation pursuant to this Section 9.04, disclose to the
assignee or participant or proposed assignee or proposed participant any
information relating to the
68
Borrower, the Parent, any Material Contract Party, the Pipeline, or the
transactions contemplated hereby furnished to such Lender by or on behalf of the
Borrower or any such party; provided, however, that each such assignee or
participant or proposed assignee or proposed participant shall execute an
agreement whereby it shall agree to be bound by Section 9.15 prior to the
receipt of such information by such assignee or participant.
(f) The Administrative Agent shall maintain at one of its offices a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The Administrative Agent shall
maintain the Register and shall update Schedule 2.01 hereto as appropriate to
reflect any changes made to the Register. The entries in the Register (and not
Schedule 2.01) shall be conclusive in the absence of manifest error and the
Borrower, the Administrative Agent, the Collateral Agent, the Lead Arranger, and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower and
each Lender at any reasonable time and from time to time upon reasonable prior
notice.
(g) Any Lender may at any time assign all or any portion of its rights
under this Agreement and any of its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Lender from its obligations hereunder.
(h) Any attempted assignment not made in accordance with this Section 9.04
shall be void.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay all
reasonable and documented out-of-pocket expenses incurred by each of the
Administrative Agent and the Lead Arranger in connection with (i) the
preparation, execution, negotiation, and delivery of this Agreement and the
other Loan Documents, (ii) any amendments, modifications, or waivers of the
provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated), (iii) the syndication of the Loans (as
disclosed to the Borrower), and (iv) the administration of and performance of
the obligations of the Administrative Agent, the Lead Arranger, or the Lenders
under the Loan Documents or the enforcement or protection of the rights of the
Administrative Agent, the Lead Arranger, or the Lenders to the extent provided
in the Loan Documents or in connection with the Loans made or the Notes issued
hereunder or the other transactions contemplated hereby, in each case including
the reasonable and documented fees and disbursements of counsel and the
reasonable and documented fees and disbursements of the Independent Engineer and
the Insurance Consultant.
(b) The Borrower agrees to indemnify each Lender, the Lead Arranger, the
Administrative Agent, and each of their respective Affiliates and their
respective directors, officers, employees, and agents and each other Person
controlling any of the foregoing Persons within the meaning of either Section 15
of the Securities Act of 1933, as amended, or
69
Section 20 of the Securities Exchange Act of 1934, as amended (each such Person
being called an "Indemnitee") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities, and other costs and
expenses to which any Indemnitee may become subject that arise out of or relate
to or result from (i) the execution or delivery of this Agreement or any other
Loan Document or any agreement or instrument contemplated thereby, the
performance by the parties thereto of their respective obligations thereunder,
or the transactions contemplated thereby, (ii) the Borrower's misuse of the
proceeds of the Loans, (iii) any Environmental Laws (except for claims relating
to conditions arising after, but not existing prior to the time that, any
Indemnitee has taken possession of the Pipeline (or any part thereof to which
such claim relates) or claims specifically arising from actions taken by any
Indemnitee after it has taken possession of the Pipeline or any part thereof to
which such claim relates), or (iv) any claim, litigation, investigation, or
proceeding directly relating to any of the foregoing, whether or not such
Indemnitee is a party thereto; provided, however, that the Borrower shall have
no obligation under the foregoing indemnity to the extent that any such losses,
claims, damages, liabilities, or other costs and expenses are determined by a
court of competent jurisdiction by a final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or
from the breach by such Indemnitee of the applicable Loan Documents giving rise
to such losses, claims, damages, liabilities, or other costs and expenses. In
addition to the foregoing, the Borrower shall reimburse each Indemnitee for all
legal and other out-of-pocket expenses reasonably incurred in connection with
investigating, defending, or participating in any action or other proceeding
relating to any such losses, claims, damages, liabilities, or other costs and
expenses (whether or not such Indemnitee is a party to any such action or
proceeding), except to the extent such losses, claims, damages, liabilities, or
other costs and expenses are determined to have resulted from such Indemnitee's
gross negligence or willful misconduct or a breach by such Indemnitee of the
applicable Loan Documents giving rise to such losses, claims, damages,
liabilities, or other costs and expenses.
(c) The provisions of this Section 9.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of any Indemnitee. All amounts due under this Section 9.05 shall be payable
within five (5) Business Days of written demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each of the Lenders is hereby authorized at any time and from
time to time with prior written notice to the Borrower, 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 the other Loan Documents held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement or such other Loan Document and although such obligations may be
contingent or unmatured.
70
The rights of each of the Lenders under this Section 9.06 are in addition to
other rights and remedies (including other rights of setoff) that it may have.
SECTION 9.07. Applicable Law and Jurisdiction.
(a) Applicable Law. This Agreement shall be governed by and construed in
accordance with the law of the State of New York.
(b) New York Courts. (i) Each party hereto hereby expressly and
irrevocably agrees and consents that any suit, action, or proceeding
arising out of or relating to this Agreement or any other Loan Document to
which it is a party and the transactions contemplated therein may be
instituted by any party hereto in any state or federal court sitting in the
County of ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and, by the execution
and delivery of this Agreement, expressly and irrevocably waives any
objection that it may have now or hereafter to the laying of the venue or
to the jurisdiction of any such suit, action, or proceeding, and
irrevocably submits generally and unconditionally to the non-exclusive
jurisdiction of any such court in any such suit, action, or proceeding.
(ii) In the case of the courts of the State of New York or of the
United States sitting in the County of New York, the Borrower hereby
irrevocably designates, appoints, and empowers CT Corporation System (the
"Process Agent"), which has consented thereto, with offices on the date
hereof at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as agent to receive
for and on behalf of the Borrower service of process in the State of New
York. The Borrower further irrevocably agrees that such service of process
may be made on the Process Agent by personal service on the Process Agent
of a copy of the summons and complaint or other legal process in any such
suit, action, or proceeding or by any other method of service provided for
under Applicable Laws in effect in the State of New York, and the Process
Agent is hereby authorized to accept such service for and on behalf of the
Borrower and to admit service with respect thereto. A copy of any summons,
complaint, or other legal process delivered to the Process Agent by the
Administrative Agent shall also be delivered to the Borrower for its
information; provided, however, that any failure to deliver such copy of
any summons, complaint, or other legal process to the Borrower shall in no
way affect the application of this Section 9.07.
(iii) Upon service of process being made on the Process Agent as
aforesaid, a copy of the summons and complaint or other legal process
served shall be mailed by the Process Agent to the Borrower by Federal
Express, standard air, two (2)-day service, at its address referred to in
Section 9.01, or to such other address as the Borrower may notify the
Process Agent in writing. Service upon the Process Agent as aforesaid shall
be deemed to be personal service on the Borrower and shall be legal and
binding upon the Borrower for all purposes, notwithstanding any failure
71
of the Process Agent to mail a copy of such legal process to the Borrower,
or any failure on the part of the Borrower to receive the same.
(iv) The Borrower irrevocably agrees that it will at all times
continuously maintain an agent to receive service of process in the County
of New York on its behalf with respect to this Agreement or any other Loan
Document to which it is a party. In the event that for any reason the
Process Agent or any successor thereto shall no longer serve as agent for
the Borrower to receive service of process in the County of New York, or
shall have changed its address without notification thereof to the
Administrative Agent, the Borrower will promptly but in no event later than
five (5) Business Days after obtaining knowledge thereof, as applicable,
notify the Administrative Agent of the Process Agent's new address or
irrevocably designate and appoint a substitute agent acceptable to the
Administrative Agent and advise the Administrative Agent thereof.
(c) Other Jurisdictions. Nothing contained in this Section 9.07 shall
affect the right to effect service of process in any manner provided for under
applicable law or preclude any of the Secured Parties from bringing any suit,
action, or proceeding arising out of or relating to the Loan Documents in the
courts of any place where the Borrower or any of its property or assets may be
found or located. To the extent permitted by the Applicable Laws of any such
jurisdiction, the Borrower hereby irrevocably submits to the non-exclusive
jurisdiction of any such court and expressly and irrevocably waives, in respect
of any such suit, action, or proceeding, the jurisdiction of any other court or
courts that now or hereafter, by reason of its present or future domicile, or
otherwise, may be available to it.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, the Lead Arranger, or any Lender in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by clause (b) below, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances except as expressly provided in the Loan Documents.
(b) Neither this Agreement or any Loan Document nor any provision hereof or
thereof may be waived, amended, or modified except pursuant to an agreement or
agreements in writing entered into by the Administrative Agent, the Lead
Arranger, the Collateral Agent, the UBOC Accounts Agent, and/or the Accounts
Agent, as appropriate with respect to the particular agreement and in each case
with the consent of the Majority Lenders, the Borrower, and any other party to
such Loan Document, as applicable; provided, however, that no such agreement
shall (i) change the principal amount of, or extend or advance the
72
maturity of or any Interest Payment Date with respect to any Loan, or waive or
excuse any such payment or any part thereof, or change the rate of interest on
any Loan, without the prior written consent of each holder of a Note affected
thereby, (ii) change any Commitment of or any Fees or other amounts payable to
any Lender, or subject any Lender to additional lending obligations, without the
prior written consent of such Lender, (iii) amend or modify any provision hereof
expressly requiring the consent of all of the Lenders, without the written
consent of all of the Lenders, (iv) amend or modify the provisions of Section
2.16, the provisions of this Section 9.08, or the definition of "Required
Lenders" or "Majority Lenders," in each case within this clause (iv), without
the prior written consent of each Lender, or (v) amend or modify any provision
hereof relating to the release of any of the Collateral, or release any material
portion of the Collateral, without the prior written consent of all of the
Lenders; provided, further, that no such agreement shall amend, modify, or
otherwise affect the rights or duties of the Administrative Agent, the
Collateral Agent, the Lead Arranger, or the Lenders hereunder or under the other
Loan Documents without the prior written consent of the Administrative Agent,
the Collateral Agent, the Lead Arranger, or the Lenders, as applicable. Each
Lender and each holder of a Note shall be bound by any modification or amendment
authorized by this Section 9.08 regardless of whether its Note shall have been
marked to make reference thereto, and any consent by any Lender or holder of a
Note pursuant to this Section 9.08 shall bind any Person subsequently acquiring
a Note from it, whether or not such Note shall have been so marked.
SECTION 9.09. Entire Agreement. This Agreement and the other Loan Documents
constitute the entire contract between the parties relative to the subject
matter hereof. Any previous agreement among the parties with respect to the
subject matter hereof is superseded by this Agreement and the other Loan
Documents. Nothing in this Agreement or the other Loan Documents, expressed or
implied, is intended to confer upon any party other than the parties hereto or
thereto any rights, remedies, obligations, or liabilities under or by reason of
this Agreement or the other Loan Documents.
SECTION 9.10. Cumulative Remedies. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Lead Arranger, and the Lenders
hereunder and under the other Loan Documents will be cumulative, may be
exercised simply or concurrently, and will not be exclusive of any rights or
remedies provided by Applicable Law.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY MATTER DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER, OR
IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS
73
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal, or unenforceable in any respect, the validity, legality, and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal, or unenforceable
provisions with valid provisions, the economic effect of which comes as close as
possible to that of the invalid, illegal, or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in one (1) or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 9.03.
SECTION 9.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement, and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Confidentiality. The Administrative Agent, the Lead Arranger,
and the Lenders agree that they will not disclose to any other Person any
information furnished to them by or on behalf of the Borrower or the Parent
except to the extent such information (a) is required to be disclosed by any
Applicable Law, including, without limitation, any relevant banking statute or
regulation, or any legal process, order, or request by any Governmental
Authority (in each such case, the Borrower shall be given concurrent notice of
such disclosure), (b) is disclosed to their officers, directors, employees, and
agents who have a need to review such information in accordance with customary
borrowing or lending practices, as applicable, (c) is or becomes generally
available to the public other than as a result of a disclosure prohibited
hereby, (d) is or becomes available to such disclosing Person on a
non-confidential basis from a source not known by such disclosing Person to be
bound by this or another confidentiality agreement with the Borrower or the
Parent, (e) is permitted to be disclosed under and in accordance with Sections
9.04(e), or (f) is disclosed to their consultants under a similar
confidentiality requirement. Notwithstanding anything to the contrary set forth
herein or in any other written or oral understanding or agreement to which any
of the Lenders or the Borrower is a party or by which any of the Lenders or the
Borrower is bound, each of the Lenders and the Borrower acknowledges and agrees
that any obligations of confidentiality contained herein and therein shall not
apply to the tax treatment and tax structure of the transactions contemplated by
this Agreement and the other Loan Documents upon the earlier to occur of (i) the
date of the public announcement of discussions relating to the transactions
contemplated by this Agreement and the other Loan Documents, (ii) the date of
the public announcement of the transactions contemplated by this Agreement and
the other Loan Documents, or (iii) the date
74
of the execution of this Agreement, all within the meaning of Treasury
Regulations Section 1.6011-4; provided, however, that each of the Lender and the
Borrower recognizes that the privilege each has to maintain, in its sole
discretion, the confidentiality of a communication relating to the transactions
contemplated by the Loan Documents, including a confidential communication with
its attorney or a confidential communication with a federally authorized tax
practitioner under Section 7525 of the Code, is not intended to be affected by
the foregoing.
[The remainder of this page was left blank intentionally.]
75
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed as of the date and year first above written.
SOUTHERN STAR CENTRAL GAS PIPELINE, INC.,
as Borrower
By
--------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Lead Arranger
By
--------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
By
--------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Lender
By
--------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Collateral Agent
By
--------------------------------------
Name:
Title:
SCHEDULE X
"Accounts" shall have the meaning set forth in Account Control Agreement.
"Accounts Agent" shall mean Bank One, N.A., a national banking association,
in its capacity as accounts agent for the Collateral Agent under the Account
Control Agreement, and any successor accounts agent pursuant thereto.
"Account Control Agreement" shall mean the Account Control Agreement, dated
as of the date hereof, among the Borrower, the Collateral Agent, and the
Accounts Agent.
"Account Collateral" shall have the meaning set forth in the Security
Agreement.
"Account Trigger Event" shall mean the occurrence of (a) an Account Trigger
Event Default, (b) an Event of Default, or (c) a Fixed Charge Coverage Ratio
Failure. Any Account Trigger Event that has occurred shall be deemed to be
"continuing" until (but excluding the day on which) a subsequent Account Trigger
Event Release has occurred with respect thereto.
"Account Trigger Event Default" shall mean any failure or default in the
performance or observance of any covenant or agreement set forth in any of the
following sections of this Agreement that, with notice or lapse of time or both,
would constitute an Event of Default under Section 7.01(a) or Section 7.01(d),
as applicable: Section 2.10(d) (Optional and Mandatory Prepayment); Section
5.04(b)(i) (Notices and Information); Section 5.06 (Governmental Approvals);
Section 5.08 (Taxes); Section 5.11 (Security); Section 5.18 (Taking); Section
5.19 (Borrower's Bank Accounts); Section 5.21 (Pari Passu Status); Section 6.05
(ERISA); Section 6.09 (Investments, Loans, and Advances); Section 6.10 (No
Liens); and Section 6.11 (Disposition of Assets).
"Account Trigger Event Release" shall mean that each Lender has waived or
the Borrower has cured each currently existing Account Trigger Event Default,
Event of Default, and Fixed Charge Coverage Ratio Failure, as applicable, in
accordance with the terms of this Agreement.
"Acknowledgements" shall mean those documents between the Borrower and a
Material Contract Party that are to be delivered after the Financial Closing
Date in accordance with the terms of this Agreement pursuant to which a Material
Contract Party, if executed and delivered by it, acknowledges the appointment of
the Collateral Agent as irrevocable agent of the Borrower with respect to
directing all future payments required to be made by such Material Contract
Party under a Material Project Document and agrees to cause all such payments to
be made only into an Account, which documents shall be substantially in the form
of Exhibit B to the Agency Agreement.
"Additional Contract" shall mean any contract, lease, instrument, or
agreement entered into by the Borrower after the Financial Closing Date that
constitutes a "Material Project Document" pursuant to the definition of that
term in this Agreement, including, but not limited to, any such contract, lease,
instrument, or agreement that the Borrower enters into to replace a Material
Project Document or that results from a capacity release under a Gas Service
Agreement pursuant to the terms of the FERC Gas Tariff.
"Adjusted LIBOR Rate" shall mean, with respect to any LIBOR Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the nearest 1/100th of one percent) equal to (a) LIBOR in effect for such
Interest Period divided by (b) one (1) minus the Reserve Percentage.
"Administrative Agent" shall mean Union Bank of California, in its capacity
as administrative agent for the Lenders under the Loan Documents, and any
successor agent pursuant to Section 8.01.
"Affiliate" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified and, when used with respect to the Borrower, shall also mean the
Parent and each Person who is an Affiliate of the Parent. In no event shall the
Administrative Agent, the Lead Arranger, the UBOC Accounts Agent, or the
Collateral Agent be considered to be an Affiliate of any Person solely because
any Loan Document contemplates that any of them may request or act at the
instruction of any such Person or such Person's Affiliate.
"Agency Agreement" shall mean the Agency Agreement, dated as of the date
hereof, between the Borrower and the Collateral Agent.
"Aggregate Term Loan Commitment" shall mean fifty million Dollars
($50,000,000.00), as such amount may be reduced from time to time pursuant to
the terms of this Agreement.
"Aggregate Working Capital Loan Commitment" shall mean ten million Dollars
($10,000,000.00), as such amount may be reduced from time to time pursuant to
this Agreement.
"Agreement" shall have the meaning specified in the first paragraph of this
Agreement.
"Amortization Event" shall mean the occurrence of any of the following
events: (a) one or more Material Contract Parties representing in the aggregate
annualized revenues equal to or greater than five percent (5%) of the Borrower's
aggregate annualized revenues over the immediately preceding twelve (12) month
calendar year from time to time (i) files a petition seeking to take advantage
of any laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up, or composition or adjustment of debts,
2
(ii) consents to or fails to contest in a timely manner any petition filed
against it in an involuntary case under such bankruptcy laws or other laws,
(iii) applies for, consents to, or fails to contest in a timely manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator, or the like of itself or of a substantial part of its assets, (iv)
admits in writing its inability to pay, or generally is not paying, its debts
(other than those that are the subject of bona fide disputes) as they become
due, (v) makes a general assignment for the benefit of creditors, or (vi) takes
any corporate, partnership, or member action for the purpose of effecting any of
the foregoing; or (b) a case or other proceeding is commenced against such
Person or Persons seeking (i) relief under the federal bankruptcy laws (as now
or hereafter in effect) or under any other laws, domestic or foreign, relating
to bankruptcy, insolvency, reorganization, winding up, or composition or
adjustment of debts or (ii) the appointment of a trustee, receiver, custodian,
liquidator, or the like of any such Person or Persons or of all or any
substantial part of its or their assets, and any such case, filing, action, or
proceeding in any of the foregoing circumstances continues undismissed or
unstayed for a period of ninety (90) days; provided, however, that such
Amortization Event shall be deemed to have ceased if the Borrower replaces the
Material Project Documents to which such Material Contract Party was a party
with one or more Replacement Gas Service Agreements and delivers or causes to be
delivered all Ancillary Documents reasonably requested by the Administrative
Agent with respect to such Replacement Gas Service Agreements.
"Ancillary Documents" shall mean, with respect to each Additional Contract,
(a) each document (which may consist of an amendment to a Security Document)
necessary or desirable to grant to the Collateral Agent for the benefit of the
Secured Parties a valid and perfected first priority Lien (subject to Permitted
Encumbrances) on such Additional Contract and all property interests received by
the Borrower in connection therewith, (b) all recorded financing statements and
other filings required to perfect such Liens, but excluding any mortgage, deed
of trust or other instrument purporting to grant a security interest in real
Property, (c) opinions of counsel for the Borrower in connection with any
Additional Contract that constitutes a Significant Material Project Document,
(d) an Acknowledgement with respect to such Additional Contract in the form
attached as Exhibit B to the Agency Agreement, and (e) evidence of the
Borrower's authorization for such Additional Contract, all in form and substance
reasonably satisfactory to the Administrative Agent.
"Applicable Law" shall mean, with respect to any Person, any constitution,
statute, law, rule, regulation, ordinance, judgment, order, decree, clearance,
concession, Governmental Approval, or any published directive, guideline,
decision, policy, requirement, or any other restriction by any Governmental
Authority that has the force of law, or any determination by, or interpretation
of any of the foregoing by, any Governmental Authority, whether in effect as of
the date of this Agreement or thereafter and in each case as amended, in each
case applicable to and binding upon such Person.
"Assignment and Acceptance" shall have the meaning specified in Section
9.04(b).
3
"Bankruptcy Code" shall mean Title 2 of United States Code entitled
"Bankruptcy" or any successor statute, and all rules promulgated thereunder.
"Base Case Projections" shall mean the projections delivered by the
Borrower and approved by the Administrative Agent on or prior to the
Financial Closing Date and attached hereto as Exhibit C.
"Base Rate" shall mean, for any day, a rate per annum (rounded upwards, if
necessary, to the nearest one one-hundredth of one percent (0.01%) equal to the
greater of (a) the Prime Rate in effect on such day and (b) the sum of (i) the
Federal Funds Effective Rate in effect for such day plus (ii) five-eighths of
one percent (0.625%). If for any reason the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason, the
Base Rate shall be determined without regard to clause (b) of the first sentence
of this definition until the circumstances giving rise to such inability no
longer exist.
"Base Rate Borrowing" shall mean a Borrowing consisting of Base Rate Loans.
"Base Rate Loan" shall mean any Loan bearing interest at a rate determined
by reference to the Base Rate in accordance with the provisions of Article II.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States.
"Borrower" shall have the meaning specified in the first paragraph of this
Agreement.
"Borrowing" shall mean each disbursement of a Loan or Loans made by the
Lenders on any single date.
"Borrowing Notice" shall mean each notice of Borrowing substantially in the
form of Exhibit B delivered in accordance with Section 2.03.
"Burdensome Conditions" shall mean any conditions in any Governmental
Approval that are not capable of being satisfied on or prior to the time
required or that would limit or otherwise restrict the Pipeline's ability to
perform in a manner at least as favorable (as determined by the Administrative
Agent upon consultation with the Independent Engineer) as the assumptions set
forth in the Base Case Projections.
"Business Day" shall mean any day of the year other than a Saturday,
Sunday, or other day on which banks are required or authorized to close in the
State of New York or Los Angeles, California; provided, however, that, when used
with respect to all notices and determinations in connection with, and payments
of principal and interest on, a LIBOR Loan, the term "Business Day" shall
exclude any day on which banks are not open for dealings in Dollar deposits in
the London interbank market.
4
"Capital Expenditures" shall mean, for any period, all capital expenditures
made or liabilities incurred by the Borrower that are or would be set forth as
additions to property, plant, and equipment in a statement of cash flow of the
Borrower for such period prepared in accordance with the reporting requirements
of the FERC.
"Capital Lease Obligations" of any Person shall mean the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, that is required to be classified as a capital lease on a
balance sheet of such Person under GAAP or the reporting requirements of the
FERC, as applicable.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act, as amended by the Superfund Amendments and Reauthorization
Act, 42 U.S.C. 'SS' 9601 et seq., and the regulations promulgated pursuant
thereto, all as amended from time to time.
"Clean Air Act" shall mean the Federal Clean Air Act, 42 U.S.C. 'SS''SS'
7401-7671q, and the regulations promulgated pursuant thereto, all as amended
from time to time.
"Clean Water Acts" shall mean the Federal Water Pollution Control Act, 33
U.S.C.'SS''SS' 1251-1387, and the Safe Drinking Water Act, 42 U.S.C.'SS''SS'
300f-300j-26, and the regulations promulgated pursuant thereto, all as amended
from time to time.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Collateral" shall mean, collectively, (a) the "Collateral" as defined in
the Security Agreement and (b) the Account Collateral.
"Collateral Agent" shall mean Union Bank of California, in its capacity as
collateral agent for the Secured Parties and the Trustee under the Security
Documents, and any successor collateral agent pursuant to the Intercreditor
Agreement.
"Commitment Fee" shall have the meaning specified in Section 2.05(a).
"Commitment Percentage" shall mean, as to any Lender at any time, such
Lender's Term Loan Commitment Percentage at such time or such Lender's Working
Capital Loan Commitment Percentage at such time, as the context may require.
"Commitments" shall mean, with respect to each Lender at any time, as
applicable, such Lender's Term Loan Commitment and Working Capital Loan
Commitment at such time.
"Concentration Account" shall have the meaning set forth in the Account
Control Agreement.
5
"Condemnation Proceeds" shall have the meaning set forth in Section 5.18.
"Consolidated Debt to Total Capitalization Ratio" shall mean, at any time,
the ratio of (a) the aggregate amount of the Borrower's and the Parent's
outstanding Indebtedness at such time to (b) the sum of (i) the aggregate amount
of the Borrower's and the Parent's outstanding Indebtedness and (ii) the
aggregate amount of the Borrower's and the Parent's common and preferred equity
capital, each at such time.
"Control" shall mean the possession, directly or indirectly, of the power
to (i) vote ten percent (10%) or more of the voting securities having ordinary
voting power for the election of directors or other members of the governing
body of such other Person or (ii) direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, general partnership interests, or member interests, by contract, or
otherwise, and "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Conversion or Continuation Notice" shall mean each notice of conversion or
continuation, substantially in the form of Exhibit F, delivered in accordance
with Section 2.11.
"Current Fixed Charge Coverage Ratio" shall mean both the annualized
historical Fixed Charge Coverage Ratio for the six (6)-month period immediately
prior to the date of determination and the projected Fixed Charge Coverage Ratio
for the twelve (12)-month period immediately after such date of determination.
"Debt Service" shall mean, for any designated period, the aggregate amount
of interest, scheduled principal repayments (whether or not paid), fees, and any
other amounts due and payable by the Borrower during such period under this
Agreement and the other Loan Documents and all amounts required to be paid by
the Borrower during such period pursuant to all Interest Rate Protection
Agreements then in effect permitted by this Agreement and the other Loan
Documents.
"Debt to Total Capitalization Ratio" shall mean, at any time, the ratio of
(a) the aggregate amount of the Borrower's outstanding Indebtedness at such time
to (b) the sum of the aggregate amount of the Borrower's outstanding
Indebtedness and the aggregate amount of the Borrower's equity capital, each at
such time.
"Default" shall mean any act, condition, or event that constitutes an Event
of Default or that with notice or lapse of time or both would constitute an
Event of Default.
"Dollars" or "$" shall mean lawful money of the United States.
"Environmental Claim" shall mean, with respect to any Environmental Party,
any notice, claim, administrative, regulatory, or judicial action, suit,
judgment, demand, or other communication (whether written or oral) with respect
to or arising in connection with the Pipeline, by any other Person alleging or
asserting such Environmental Party's liability
6
under any Environmental Law, including, but not limited to, for investigatory
costs, costs of response, removal, remediation or cleanup, governmental response
costs, attorneys' fees, damages to the environment, natural resources, or other
property of such Environmental Party, personal injuries, fines, or penalties
arising out of, based on, or resulting from (a) the presence, Use, or Release
into the environment of any Hazardous Substances, whether or not owned by such
Environmental Party, or (b) any fact, circumstance, condition, or occurrence
forming the basis of any violation or alleged violation of any Environmental
Laws applicable to the Pipeline. The term "Environmental Claim" shall include,
without limitation, any claim by any Governmental Authority against any
Environmental Party for enforcement, cleanup, removal, response, remedial, or
other actions or damages pursuant to any applicable Environmental Laws, and any
claim by any third Person seeking damages, contribution, indemnification, cost
recovery, compensation, or injunctive relief from any Environmental Party
resulting from the presence of Hazardous Substances or arising from alleged
injury or threat of injury to human health, safety, natural resources, or the
environment.
"Environmental Laws" shall mean any and all Applicable Laws applicable to
the Pipeline or any Environmental Party relating to human health, safety,
natural resources, or the environment or the generation, use, treatment,
transport, handling, storage, disposal, or release of any materials into the
environment, including, but not limited to, CERCLA, RCRA, the Clean Air Act, the
Clean Water Acts, the Hazardous Materials Transportation Act (49 U.S.C. Sections
1801 et seq.), and the Toxic Substances Control Act (15 U.S.C. Sections 2601 et
seq.), and the regulations promulgated pursuant to any of the foregoing and
similar state and local statutes, all as may be amended from time to time.
"Environmental Party" shall mean (a) the Borrower and (b) the Parent with
respect to its interest in the Pipeline.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated pursuant thereto.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower is a member and
that is treated as a single employer under Section 414 of the Code or Section
4001(b) of ERISA.
"Event of Abandonment" shall mean (a) the cessation or abandonment for more
than thirty (30) consecutive days of the commercial operation of the Pipeline or
(b) any public announcement by or on behalf of the Borrower or the Parent of any
decision to take any of the foregoing actions.
"Event of Damage" shall mean any event of damage, destruction, or casualty
(other than an Event of Taking) relating to all or any part of the Pipeline
Assets.
"Event of Default" shall have the meaning specified in Section 7.01.
7
"Event of Taking" shall mean the occurrence of any of the following events
carried out by any Governmental Authority: (a) any condemnation,
nationalization, seizure, compulsory acquisition, or expropriation of all or any
substantial portion of the Pipeline Assets, the business operations of the
Borrower, or the Borrower's share capital, (b) any intervention, assumption of
custody, or control of all or any substantial portion of the Pipeline Assets or
the business operations of the Borrower, (c) any action for the dissolution or
disestablishment of the Borrower, or (d) any action that prevents the Borrower
from Operation of the Pipeline, its business operations, or any substantial
portion thereof.
"Event of Total Loss" shall mean the occurrence of an Event of Damage
affecting all or substantially all of the Pipeline Assets.
"Event of Total Taking" shall mean the occurrence of an Event of Taking
affecting all or substantially all of the Pipeline Assets.
"Federal Funds Effective Rate" shall mean, for any period, a fluctuating
interest rate per annum (rounded upwards, if necessary, to the nearest one
one-hundredth of one percent (0.01%) equal to, for each day during such period,
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 Day) by the Federal Reserve Bank of New York or, if such rate
is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by the Administrative
Agent from three (3) federal funds brokers of recognized standing selected by
it.
"Fee Letter" shall mean the letter agreement dated as of the date hereof
between the Lead Arranger and the Borrower.
"Fees" shall mean, collectively, the fees referred to in Section 2.05 and
in the Fee Letter.
"FERC" shall mean the Federal Energy Regulatory Commission or its successor
agency.
"FERC Gas Tariff" shall mean the FERC Gas Tariff, Original Volume No. 1, of
Southern Star Central Gas Pipeline, Inc. Filed With Federal Energy Regulatory
Commission, as it may be amended or modified from time to time or any successor
thereto.
"Financial Closing Date" shall mean the date on which all the conditions
precedent in Section 3.01 have been satisfied or waived in accordance therewith
and Term Loans in the amount of the Aggregate Term Loan Commitment shall have
been disbursed to the Borrower.
"Financial Officer" of any Person shall mean the chief financial officer,
principal accounting officer, treasurer, controller, or similar accounting or
financial principal of such Person.
8
"Fixed Charge Coverage Ratio" shall mean, for any period of determination,
the ratio of (a) the positive difference, if any, of (i) Net Operating Cash Flow
during such period minus (ii) Capital Expenditures during such period to (b) the
sum of (i) payments of premium, if any, and interest scheduled or required to be
paid by the Borrower during such period with respect to all its obligations for
borrowed money, including, without limitation, all such obligations with respect
to the Loans and all rental payments with respect to any Capital Lease
Obligations and synthetic lease obligations of the Borrower plus (ii) repayments
of principal scheduled or required to be repaid by the Borrower during such
period with respect to all Indebtedness of the Borrower (other than (x) with
respect to Subordinated Indebtedness and (y) the principal amount of the Term
Loans (i) then scheduled to be repaid on the Term Loan Maturity Date and (ii)
then due and payable pursuant to Section 2.09(a) in connection with an
Amortization Event), if any.
"Fixed Charge Coverage Ratio Failure" shall mean that, as of any date of
determination, the annualized historical Fixed Charge Coverage Ratio for the six
(6)-month period immediately prior to such date or the projected Fixed Charge
Coverage Ratio for the twelve (12)-month period immediately after such date
shall, in either case, be less than 1.85 to 1.0.
"GAAP" shall mean generally accepted accounting principles in the United
States, applied on a consistent basis.
"Gas Service Agreement" shall mean each Material Project Document pursuant
to which the Borrower provides gas sales, gas storage, and/or gas transportation
services to another Person.
"Governmental Approval" shall mean any currently required authorization,
approval, consent, waiver, exception, license, filing, registration, ruling,
permit, tariff, certification, exemption, franchise, concession, and other
action or requirement by or with any Governmental Authority the failure to
obtain or comply with which could reasonably result in (a) the commencement of a
judicial or administrative proceeding seeking to terminate or suspend Operation
of any portion of the Pipeline, (b) additional restrictions, obligations, or
liabilities affecting the Borrower's Operations, or the revenues from such
Operations, that could reasonably interfere with the ability of the Pipeline to
operate in a manner at least as favorable as the assumptions set forth in the
Base Case Projections, or (c) the commencement of any judicial or administrative
proceeding seeking to impose penalties against the Borrower in excess of five
million Dollars ($5,000,000) individually or ten million Dollars ($10,000,000)
in the aggregate for violation of Applicable Laws.
"Governmental Authority" shall mean any federal, state, regional, local, or
foreign governmental department, commission, board, bureau, authority, agency,
court, instrumentality, or legislative, administrative, executive, judicial, or
regulatory body or entity, or any governmental or other arbitral body or entity
having authority to issue binding awards.
9
"Guarantee" of or by any Person shall mean any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and including
any obligation of such Person, whether or not contingent, (a) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness or
to purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase property, securities, or
services for the purpose of assuring the obligee of such Indebtedness of the
payment of such Indebtedness, (c) to maintain working capital, equity capital,
or other financial condition or liquidity of the primary obligor so as to enable
the primary obligor to pay such Indebtedness, or (d) otherwise to assure or hold
harmless the owner of the primary obligation that is guaranteed by such Person
against loss in respect thereof; provided, however, that the term Guarantee
shall not include endorsements for collection or deposit, in either case in the
ordinary course of business.
"Hazardous Substances" shall mean any hazardous substances, pollutants,
contaminants, wastes, or materials (including, without limitation, petroleum,
including crude oil or any fraction thereof, petroleum wastes, radioactive
material, hazardous wastes, toxic substances, asbestos, or any materials
containing asbestos) designated, regulated, or defined under or with respect to
which any requirement or liability may be imposed pursuant to any Environmental
Law.
"Indebtedness" of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money of any kind, (b) all obligations
of such Person evidenced by bonds, debentures, notes, or similar instruments,
(c) all obligations of such Person under conditional sale or other title
retention agreements relating to property or assets purchased by such Person,
(d) all obligations of such Person issued or assumed as the deferred purchase
price of property or services, (e) all indebtedness of others secured by (or for
which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed, (f)
all Guarantees by such Person of indebtedness of others, (g) all Capital Lease
Obligations of such Person, (h) all obligations of such Person in respect of
Interest Rate Protection Agreements, other interest rate swaps, collars or caps,
and other interest rate protection arrangements, foreign currency exchange
agreements, commodity exchange, commodity future, commodity forward, or
commodity option agreements, or other interest or exchange rate or commodity
hedging arrangements, and (i) all obligations of such Person as an account party
in respect of letters of credit and bankers' acceptances.
"Indemnitee" shall have the meaning specified in Section
9.05(b).
"Indenture" shall mean the Indenture, dated as of November 8, 1999, by and
between the Borrower (as successor in interest to ▇▇▇▇▇▇▇▇ Gas Pipelines
Central, Inc.), as issuer, and the Trustee.
10
"Independent Engineer" shall mean International Gas Consulting, Inc. or any
successor consultant appointed by the Administrative Agent upon prior notice and
reasonably acceptable to the Borrower.
"Insolvent" shall have the meaning given such term in Title IV of ERISA.
"Insurance/Condemnation Proceeds Account" shall have the meaning set forth
in the UBOC Account Control Agreement.
"Insurance Consultant" shall mean ▇▇▇▇▇ USA Inc., a Delaware corporation,
or any successor consultant appointed by the Administrative Agent upon prior
notice and reasonably acceptable to the Borrower.
"Insurance Proceeds" shall have the meaning set forth in Section 5.17.
"Intercreditor Agreement" shall mean the Collateral Agency and
Intercreditor Agreement, dated as of the date hereof, among the Borrower, the
Trustee, the Administrative Agent, and the Collateral Agent.
"Interest Payment Date" shall mean, with respect to any Loan, without
duplication, the last day of the Interest Period applicable to the Borrowing of
which such Loan is a part and each Quarterly Date.
"Interest Period" shall mean (a) as to any LIBOR Borrowing, the period
commencing on the date of such Borrowing or on the last day of the immediately
preceding Interest Period applicable to such Borrowing, as the case may be, and
ending on the earliest of (i) the day that is one (1), two (2), three (3), or
six (6) months thereafter as the Borrower may elect in a Borrowing Notice or in
a Conversion or Continuation Notice (provided, however, that the Interest Period
may be shorter than one month in order to consolidate two (2) or more LIBOR
Borrowings), (ii) the Term Loan Maturity Date or the Working Capital Loan
Maturity Date, as applicable, and (iii) the date such Borrowing is repaid or
prepaid in accordance with Section 2.09 or Section 2.10 or is converted to a
Borrowing of a different Type in accordance with Section 2.11, and (b) as to any
Base Rate Borrowing, the period commencing on the date of such Borrowing or on
the last day of the immediately preceding Interest Period applicable to such
Borrowing, as the case may be, and ending on the earliest of (i) the next
succeeding Quarterly Date, (ii) the Term Loan Maturity Date or the Working
Capital Loan Maturity Date, as applicable, and (iii) the date such Borrowing is
repaid or prepaid in accordance with Section 2.09 or Section 2.10 or is
converted to a Borrowing of a different Type in accordance with Section 2.11;
provided, however, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a LIBOR Borrowing only, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day. Interest shall accrue from
and including the first day of an Interest Period to but excluding the last day
of such Interest Period.
11
"Interest Rate Protection Agreement" shall mean any Master Agreement,
including all schedules thereto and the confirmation letters executed pursuant
thereto.
"Investment Grade Credit Rating" shall mean a long-term credit rating from
both Moody's and Standard & Poor's of "Baa" or better and "BBB" or better,
respectively, or such other credit rating expressly set forth in the FERC Gas
Tariff that the Borrower applies to determine the creditworthiness of any
Shipper.
"Lead Arranger" shall mean Union Bank of California, in its capacity as the
lead arranger of the Term Loans and the Working Capital Loans.
"Lenders" shall have the meaning specified in the first paragraph of this
Agreement.
"LIBOR" shall mean, with respect to any Interest Period, the rate per annum
equal to the rate that appears on Reuters Page LIBOR 01 (or on any successor or
any substitute page of such service, or any successor to or substitute for such
service providing rate quotations comparable to those currently provided on such
page of such service, as determined by the Administrative Agent from time to
time for purposes of providing quotations of interest rates applicable to Dollar
deposits in the London interbank market) at approximately ▇▇ ▇.▇. (▇▇▇▇▇▇,
▇▇▇▇▇▇▇ time) two (2) Business Days before the first day of such Interest Period
as the rate for Dollar deposits with a maturity comparable to such Interest
Period; provided, however, that if such rate is not available at such time for
any reason, LIBOR shall be the rate per annum equal to the average rate per
annum (rounded upward to the nearest whole multiple of one one-hundredth of one
percent (0.01%) if such average is not such a multiple) at which deposits in
Dollars are offered to the Administrative Agent in the London interbank market
as at approximately ▇▇ ▇.▇. (▇▇▇▇▇▇, ▇▇▇▇▇▇▇ time) two (2) Business Days before
the first day of such Interest Period.
"LIBOR Borrowing" shall mean a Borrowing consisting solely of LIBOR Loans.
"LIBOR Loan" shall mean any Loan bearing interest at a rate determined by
reference to the Adjusted LIBOR Rate in accordance with the provisions of
Article II.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, hypothecation, lien, pledge, encumbrance, charge, or security interest in
or on such asset, whether arising by contract or by operation of law, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease, or title retention agreement relating to such asset, (c) in the case of
securities, any purchase option, call, or similar right of a third Person with
respect to such securities, and (d) the filing of any financing statement or
similar instrument under and as property permitted in accordance with the UCC
and Applicable Law.
12
"Loan Documents" shall mean this Agreement, the Notes, the Security
Documents, the Fee Letter, the Interest Rate Protection Agreements, and any
other agreements, filings, or instruments evidencing or securing the Loans or
the Collateral.
"Loans" shall mean the Term Loans and the Working Capital Loans.
"Lone ▇▇▇▇ Compressor Station" shall mean the compressor station known as
"Lone ▇▇▇▇" located in ▇▇▇▇▇▇▇ County, Missouri, together with all real
property, equipment, valueworks, centrifugal pumping apparatus, and all other
machinery located at such facility.
"Majority Lenders" shall mean Lenders whose combined outstanding Term Loans
and Working Capital Loan Commitments then exceed in the aggregate fifty percent
(50%) of the sum of the aggregate outstanding Term Loans and the Aggregate
Working Capital Loan Commitment.
"Margin Stock" shall mean "margin stock" within the meaning of Regulation U
and Regulation X.
"Master Agreement" shall mean any master agreement or interest rate
exchange agreement, substantially in forms published by the International Swaps
and Derivatives Association, Inc., entered into by and between the Borrower and
the Administrative Agent pursuant to Section 5.15.
"Material Adverse Effect" shall mean, in light of all circumstances
prevailing at the time of determination, (a) a material adverse effect on the
business, operations, assets, or financial condition of the Borrower, including
effects attributable to any regulatory rulings or Governmental Approvals
applicable to the Borrower or any of its assets, (b) the illegality, invalidity,
or unenforceability of, or the inability of the Borrower to perform its
obligations under, any Loan Document or Significant Material Project Document,
or (c) the illegality, invalidity, or unenforceability of (i) the Liens in favor
of the Collateral Agent and the Trustee on any material portion of the
Collateral or (ii) the rights and remedies of the Administrative Agent, the Lead
Arranger, the Collateral Agent, or the Lenders under the Loan Documents.
"Material Contract Party" shall mean each party (other than the Borrower)
to a Material Project Document, including, without limitation, each Shipper
party to a Material Project Document, in each case so long as any Material
Project Document to which such Person is a party shall remain in full force and
effect or such Person shall have any rights or obligations under or in
connection with such Material Project Document.
"Material Project Documents" shall mean all Gas Service Agreements,
including Additional Contracts, between the Borrower and third Persons that (a)
individually represents annualized revenues equal to or greater than two percent
(2%) of the Borrower's aggregate annualized revenues and (b) represent, in the
aggregate, annualized revenues of at least eighty-five percent (85%) of the
Borrower's total annualized revenues; provided, however, that (i) "Material
Project Documents" shall in any event include the Significant
13
Material Project Documents, (ii) the Borrower may designate from time to time by
written notice to the Administrative Agent in accordance with this definition
the contracts constituting Material Project Documents, and (iii) on the date
hereof, the Material Project Documents are those listed on Schedule 4.10.
"Minor Loss" shall mean any Event of Damage the Restoration of which is
reasonably estimated by the Borrower to cost, or any Event of Taking the value
of which is reasonably estimated by the Borrower to be, (a) prior to an Account
Trigger Event (or if an Account Trigger Event has occurred, an Account Trigger
Event Release with respect thereto also has occurred), less than three million
Dollars ($3,000,000) individually and, together with the cost or value, as
applicable, of all prior Events of Damage and Events of Taking, less than ten
million Dollars ($10,000,000) in the aggregate, and (b) contemporaneously with
or after an Account Trigger Event and prior to an Account Trigger Event Release
with respect thereto, less than five hundred thousand Dollars ($500,000).
"Monthly Operating Report" shall mean the monthly operating report of the
Pipeline, substantially in the form of Exhibit D, delivered by the Borrower to
the Administrative Agent from time to time pursuant to the terms of Section
5.04(d) of this Agreement.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc. or any successor
thereof.
"Multiemployer Plan" shall have the meaning given such term in Section
3(37)(a) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" shall have the meaning given such term in Section
413(c) of the Code.
"Net Operating Cash Flow" shall mean, for any designated period, the
difference between (a) Project Revenues (other than proceeds from the
termination of any Interest Rate Protection Agreement) during such period and
(b) Operating Expenses during such period.
"Notes" shall mean the Term Loan Notes and the Working Capital Loan Notes.
"Obligations" shall mean all obligations and liabilities of the Borrower in
respect of (a) the principal of and interest on all Loans, (b) all amounts
payable to the Administrative Agent under any Interest Rate Protection
Agreement, (c) the Fees, (e) all other amounts due and to become due to the
Administrative Agent, the Lead Arranger, the Collateral Agent, the UBOC Accounts
Agent, or any Lender pursuant to this Agreement or any Loan Document, including,
without limitation, the expenses and indemnities and interest that would accrue
on any of the foregoing but for the commencement of a case by or against the
Borrower under the Bankruptcy Code, and (f) the performance and observance of
all of
14
the covenants and agreements made by the Borrower for the benefit of the Secured
Parties under and in connection with this Agreement or any Loan Document.
"Operating Budget" shall mean the annual operating budget of the Pipeline,
substantially in the form of Exhibit E, delivered by the Borrower to the
Administrative Agent on or prior to the Financial Closing Date and from time to
time thereafter pursuant to the terms of Section 5.20 of this Agreement.
"Operating Expenses" shall mean, for any designated period, all operating
expenses paid by the Borrower during such period, including, but not limited to,
amounts paid pursuant to management agreements, insurance costs, operating and
maintenance costs (including overhaul costs), property taxes and sales taxes,
general and administrative costs, professional fees, consulting costs, and
utility standby service expenses; provided, however, that Operating Expenses
shall not include any (i) taxes based on or measured by the net income of the
Borrower or the Parent (or its Affiliates), (ii) payments on or in respect of
any Indebtedness, (iii) depreciation, amortization, or any other non-cash
expenses, or (iv) payments of management fees to the Parent or its Affiliates.
"Operation" shall mean, with respect to the Pipeline, the development,
acquisition, ownership, financing, leasing, occupation, construction, equipping,
testing, repair, operation, maintenance, and use of the Pipeline, including,
without limitation, to provide gas transportation or gas storage services and
all operations, business, and services incidental thereto as provided in
connection therewith, in a manner at least as favorable (in the reasonable
determination of the Administrative Agent) as the assumptions set forth in the
Base Case Projections.
"Operative Documents" shall mean, collectively, the Material Project
Documents and the Loan Documents.
"Parent" shall mean Southern Star Central Corp., a Delaware corporation,
and its successors and permitted assigns.
"Parent Indenture" shall mean the Indenture, dated August 8, 2003, between
the Borrower, as Issuer thereunder, and Deutsche Bank Trust Company Americas, as
Trustee thereunder.
"Parent Side Letter" shall mean the letter agreement, dated as of the date
hereof, between the Borrower and the Parent.
"Part A Approvals" shall have the meaning set forth in Section 4.21(a).
"Part B Approvals" shall have the meaning set forth in Section 4.21(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
15
"Permitted Encumbrances" shall mean:
(a) Liens created or otherwise permitted by the Security Documents;
(b) Liens created pursuant to the Indenture;
(c) Liens for taxes not yet delinquent or being contested in good faith by
appropriate proceedings diligently conducted and for which adequate reserves
have been established with respect thereto in accordance with the reporting
requirements of the FERC;
(d) Liens for mechanics or materialmen arising in the ordinary course of
business or incident to the improvement of the Pipeline in respect of
obligations not yet delinquent or being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been
established with respect thereto in accordance with the reporting requirements
of the FERC;
(e) Liens securing Permitted Indebtedness of the type specified in clause
(e) of the definition of "Permitted Indebtedness" and otherwise permitted under
this Agreement; provided, that (i) such Lien is created substantially
simultaneously with (and in any event within sixty (60) days of) the incurrence
of such Indebtedness, (ii) the Indebtedness secured thereby does not exceed the
lesser of the cost or the fair market value of the applicable property,
improvements, or equipment at the time of such acquisition (or construction),
(iii) such Lien encumbers only the specific assets that are financed by such
Indebtedness and does not attach to any of the Collateral or to the assets of
such Person generally, and (iv) the amount of Indebtedness secured thereby is
not increased;
(f) Liens incurred or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance, or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, bids, leases, or other similar obligations (other than
for borrowed money) entered into in the ordinary course of business or to secure
obligations on surety and appeal bonds or performance bonds;
(g) judgment Liens in existence for less than thirty (30) days after the
entry thereof or with respect to which execution has been stayed or the payment
of which is covered in full (subject to a customary deductible) by insurance
maintained with responsible insurance companies and that do not otherwise result
in a Default;
(h) easements, rights-of-way, zoning restrictions, minor defects, or
irregularities in title and other similar encumbrances not interfering in any
material respect with the value or use of the property to which such Lien is
attached;
(i) Liens existing as of the Financial Closing Date and set forth on
Schedule 4.05 hereto; and
16
(j) Liens for taxes, assessments, or other governmental charges or levies
not at the time delinquent or thereafter payable without penalty or being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with the reporting requirements of the FERC
shall have been set aside on the Borrower's books.
"Permitted Indebtedness" shall mean:
(a) the Obligations;
(b) Indebtedness in respect of the Indenture;
(c) Subordinated Indebtedness in a principal amount not in excess of five
million Dollars ($5,000,000) in the aggregate outstanding at any time;
(d) unsecured Indebtedness (i) incurred in the ordinary course of business
of the Borrower (including open accounts extended by suppliers on normal trade
terms in connection with purchases of goods and services that are not overdue
for a period of more than ninety (90) days or, if overdue for more than ninety
(90) days, as to which a dispute exists and adequate reserves in conformity with
the reporting requirements of the FERC have been established on the books of the
Borrower) and (ii) in respect of performance, surety, or appeal bonds provided
in the ordinary course of business of the Borrower, but excluding (in each
case), Indebtedness incurred through the borrowing of money or the incurrence of
Guarantee obligations in respect thereof;
(e) Indebtedness (i) evidencing the deferred purchase price of newly
acquired property or incurred to finance the acquisition of equipment of the
Borrower (pursuant to any purchase money mortgages or otherwise, whether owed to
the seller or a third party) used in the ordinary course of business of the
Borrower and its Subsidiaries (provided, that such Indebtedness is incurred
within sixty (60) days of the acquisition of such property), (ii) in respect of
industrial revenue bonds or other similar governmental or municipal bonds, (iii)
in respect of Capital Lease Obligations, and (iv) in respect of synthetic lease
obligations; provided, that the aggregate amount of all Indebtedness outstanding
pursuant to this clause shall not at any time exceed ten million Dollars
($10,000,000);
(f) Indebtedness existing as of the Financial Closing Date as set forth on
Schedule 6.12; and
(g) (i) unsecured Indebtedness in an aggregate principal amount at anytime
outstanding not to exceed five million Dollars ($5,000,000) and (ii) unsecured
Indebtedness with a maturity date not earlier than May 1, 2007 in an aggregate
principal amount at anytime outstanding not to exceed five million Dollars
($5,000,000); provided, that no Account Trigger Event shall have occurred and be
continuing at the time of the incurrence of any such Indebtedness;
17
provided, however, that none of the foregoing Indebtedness shall in any event
constitute Permitted Indebtedness to the extent that the incurrence thereof
shall result in a default by the Borrower in the observance of its obligations
under Section 5.22.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States), in each case maturing within ninety (90) days from the
date of acquisition thereof;
(b) investments in commercial paper maturing within ninety (90) days from
the date of acquisition thereof and having, at such date of acquisition, a
short-term credit rating of "A1" from Standard & Poor's or "P1" from Moody's;
(c) investments in certificates of deposit, bankers' acceptances, and time
deposits maturing within ninety (90) days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, the Administrative Agent or any Affiliate of the Administrative
Agent or any United States office of any commercial bank organized under the
laws of any member nation of the Organization of Economic Cooperation and
Development and having, at the date of acquisition thereof, a combined capital
and surplus and undivided profits of not less than five hundred million Dollars
($500,000,000);
(d) either (i) direct and general obligations of any state of the United
States or any municipality or other political subdivision thereof or debt
obligations of corporations organized within the United States, in each case if
at the time of acquisition such obligation bears a credit rating of "A1" from
Standard & Poor's or "P1" from Moody's, or (ii) other obligations issued by or
on behalf of any state of the United States or any municipality or other
political subdivision thereof if at the time of acquisition such obligations
have been refunded by investments irrevocably deposited in investments bearing a
credit rating of "A1" from Standard & Poor's or "P1" from Moody's, and in the
case of either (i) or (ii), maturing within ninety (90) days of the acquisition
thereof;
(e) mutual or money market funds, managed by reputable sponsors,
consisting, and that are required by their constituent documents to consist, of
at least ninety-five percent (95%) of investments of the type described in
clauses (a), (b), (c), or (d) above;
(f) obligations to resell under repurchase agreements with a maturity not
in excess of ninety (90) days pursuant to a written agreement with respect to
any security of the type described in clauses (a), (b), (c), or (d) above;
(g) other investments similar to those listed in clauses (a) - (f) above
and reasonably approved in writing by the Administrative Agent; and
(h) deposits in the Accounts.
18
"Person" shall mean any natural person, corporation, business trust, joint
venture, association, limited liability company, partnership, or government or
any agency or political subdivision thereof.
"Pipeline" shall mean the Borrower's natural gas pipeline and compression
stations (other than the Lone ▇▇▇▇ Compressor Station) consisting of
approximately six thousand seventy-six (6,076) miles of mainline and branch
transmission and storage facilities and pipelines, and all ancillary equipment
located in Texas, Oklahoma, Missouri, Nebraska, Kansas, Colorado, and Wyoming,
as the same may be modified from time to time, but excluding the Redbud Project;
provided, however, that on and after the date, if any, on which the Borrower
shall obtain a good, marketable, and valid ownership interest in all property
and assets (real and personal and tangible and intangible) comprising the Lone
▇▇▇▇ Compressor Station, the Lone ▇▇▇▇ Compressor Station shall constitute part
of the Pipeline.
"Pipeline Assets" shall mean and include all property, rights, and assets
of the Borrower other than the Lone ▇▇▇▇ Compressor Station and the Redbud
Project, whether real or personal and whether tangible or intangible, including,
without limitation, the Pipeline; provided, however, that on and after the date,
if any, on which the Borrower shall obtain a good, marketable, and valid
ownership interest in all property and assets (real and personal and tangible
and intangible) comprising the Lone ▇▇▇▇ Compressor Station, the Lone ▇▇▇▇
Compressor Station shall constitute part of the Pipeline Assets.
"Pipeline Collateral" shall have the meaning set forth in the Security
Agreement.
"Plan" shall mean any pension plan (including a Multiemployer Plan) subject
to the provisions of Title IV of ERISA or Section 412 of the Code that is or has
been maintained by the Borrower or any ERISA Affiliate in whole or in part for
current or former employees of the Borrower or any ERISA Affiliate.
"Prime Rate" shall mean the rate of interest per annum adopted and
announced from time to time by Union Bank of California as its prime commercial
lending rate at its primary lending office in the United States. For purposes of
this Agreement, any change in the Base Rate due to a change in the Prime Rate
shall be effective on the date such change in the Prime Rate is adopted.
"Process Agent" shall have the meaning set forth in Section 9.07(b)(ii).
"Project Revenues" shall mean, for any period, the sum of (a) the total
amount of cash received by the Borrower from the sale of gas, gas transportation
service, gas storage service, and ancillary services provided pursuant to the
FERC Gas Tariff, (b) proceeds of any business interruption insurance, (c)
interest and earnings on Permitted Investments on deposit in any Account or UBOC
Account, (d) proceeds from the termination of any Interest Rate Protection
Agreement, and (e) any other revenue received by or on behalf of the Borrower
from any source, in each case received during such period.
19
"Prudent Utility Practices" means those practices, methods, specifications,
and standards of safety and performance, as the same may change from time to
time, as are commonly used by natural gas pipelines in the United States of a
type and size similar to the Pipeline as good, safe, and prudent engineering
practices in connection with the design, construction, operation, maintenance,
repair, and use of gas and other equipment, facilities, and improvements of such
natural gas pipeline, with commensurate standards of safety, performance,
dependability, efficiency, and economy.
"PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
amended.
"Purchase Agreement" shall mean the Purchase Agreement, dated as of
September 13, 2002, by and between ▇▇▇▇▇▇▇▇ Gas Pipeline Company, LLC, a
Delaware limited liability company, as seller, and the Parent, as buyer.
"Qualified Shipper" shall mean, at any time of determination, (a) any
Shipper that has an Investment Grade Credit Rating at such time or whose
obligations under a Gas Service Agreement are unconditionally guaranteed by, or
otherwise constitute a direct liability of, a Person who has an Investment Grade
Credit Rating at such time or (b) any Shipper whose obligations under a Gas
Service Agreement are secured at such time by (i) a letter of credit from a
financial institution with a credit rating of "A2" or better from ▇▇▇▇▇'▇ and
"A" or better from Standard & Poor's, (ii) a cash deposit with the Borrower, or
(iii) other comparable credit support reasonably acceptable to the
Administrative Agent, in each case covering at least three (3) months' of
services under such Gas Service Agreement.
"Quarterly Date" shall mean each March 31, June 30, September 30, and
December 31, commencing September 30, 2003.
"Rate" shall mean the Adjusted LIBOR Rate or the Base Rate, as the context
requires.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq., and the regulations promulgated pursuant thereto, all as
amended from time to time.
"Redbud Project" shall mean the assets originally acquired in connection
with the "Redbud" project to provide gas service to the Redbud electric power
generating station, including materials, engineering, and rights of way.
"Register" shall have the meaning specified in Section 9.04(f).
"Regulation D" shall mean Regulation D of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Regulation U" shall mean Regulation U of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
20
"Regulation X" shall mean Regulation X of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Release" or "Released" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing of any Hazardous Substances.
"Reorganization" shall have the meaning given such term in Title IV of
ERISA.
"Replacement Gas Service Agreement" shall mean an agreement for gas sales,
gas storage, and/or gas transportation services entered into by the Borrower
with a Qualified Shipper in replacement of a Gas Service Agreement that (a)
provides for revenues no less than in the Gas Service Agreement it replaces and
(b) has a fixed expiration date not earlier than the expiration date of such
replaced Gas Service Agreement.
"Reportable Event" shall have the meaning given such term in Section 4043
of ERISA.
"Required Capital Expenditures" shall mean Capital Expenditures required to
be made by the Borrower in an economic manner (using Prudent Utility Practices
and after taking into consideration the amount of time necessary to respond to
the situation giving rise to such Capital Expenditure) during any period in
order to comply with Applicable Laws, Governmental Approvals, or the
requirements of the Loan Documents or to prevent or mitigate an emergency
situation (provided, however, that, in the case of an emergency situation, the
Borrower notifies the Administrative Agent of such emergency situation promptly
after incurring such Capital Expenditures).
"Required Lenders" shall mean Lenders whose combined outstanding Term Loans
and Working Capital Loan Commitments then exceed in the aggregate sixty-six and
two-thirds percent (66 2/3%) of the sum of the aggregate outstanding Term Loans
and the Aggregate Working Capital Loan Commitment.
"Reserve Percentage" shall mean for any Lender for any Interest Period for
any LIBOR Borrowing, the reserve percentage (expressed as a fraction) applicable
during such Interest Period under regulations issued from time to time by the
Board (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) for determining the maximum reserve
requirement for the LIBOR Loans as determined in accordance with Section 2.12
(including, but not limited to, any emergency, supplemental, or other marginal
reserve requirement) for such Lender with respect to liabilities or assets
consisting of or including "Eurocurrency Liabilities" (as defined in Regulation
D as in effect from time to time) having a term equal to such Interest Period.
21
"Responsible Officer" of any corporation, limited liability company,
partnership, or other Person shall mean any executive officer or Financial
Officer of such corporation or partnership or any member or manager of such
limited liability company responsible for the administration of the obligations
of such Person in respect of this Agreement.
"Restoration" shall mean, in the case of any Event of Damage or Event of
Taking, the restoration, repair, replacement, or rebuilding of the Pipeline, the
Pipeline Assets, or the applicable portion thereof subject to the Event of
Damage or Event of Taking so that the Pipeline will be capable of operating in a
manner at least as favorable (as determined by the Administrative Agent after
consultation with the Independent Engineer) as the assumptions set forth in the
Base Case Projections, with such alterations and additions as may be made
pursuant to and subject to the applicable provisions of this Agreement and the
other Loan Documents, together with any temporary repairs and property
protection measures taken pending completion of the work, and "Restore" shall
have the meaning correlative thereto.
"Restoration Conditions" shall mean, in the case of any Event of Damage or
Event of Taking other than a Minor Loss that (a) within not more than thirty
(30) days following the occurrence of any such Event of Damage or Event of
Taking, the Borrower notifies the Administrative Agent of its intent to Restore
the Pipeline, (b) within not more than sixty (60) days of the occurrence of any
such Event of Damage or Event of Taking, the Borrower delivers to the
Administrative Agent and the Independent Engineer a plan for Restoration of the
Pipeline that, among other things, (i) demonstrates that Restoration is
technically feasible and can be completed not later than twelve (12) months
after the commencement of the work and (ii) demonstrates that following such
Restoration, the Pipeline will be capable of operating in a manner at least as
favorable (as determined by the Administrative Agent after consultation with the
Independent Engineer) as the assumptions set forth in the Base Case Projections,
and that the Borrower will be able to satisfy its obligations under Section
5.02, and (iii) sets forth in reasonable detail a budget for such Restoration,
(c) the Administrative Agent, after consultation with the Independent Engineer
concurs with the conclusions set forth in the plan delivered pursuant to clause
(b), (d) the Borrower demonstrates to the reasonable satisfaction of the
Administrative Agent and the Required Lenders that (i) such Restoration can and
will be completed without the proceeds of any Loans, and that the Insurance
Proceeds or Condemnation Proceeds, together with other funds of the Borrower
deposited with the Collateral Agent for such Restoration are sufficient to pay
in full the cost of the Restoration plus all amounts payable under the Material
Project Documents and the Loan Documents, including, without limitation, the
payment in full of all Obligations and Operating Expenses when and as due,
during the period of the Restoration and (ii) as the result of such Restoration,
no Material Adverse Effect could reasonably be expected to occur, nor could any
Event of Default reasonably be expected to result, and (e) no Event of Default
(other than Events of Default that would be cured as a result of such
Restoration) shall then have occurred and be continuing.
"Restricted Payment" shall have the meaning specified in Section 6.04.
22
"Restricted Payment Conditions" shall have the meaning specified in Section
6.04.
"Section 7 Assets" shall mean each of the services, facilities,
rights-of-way, documents, rights, and assets that are subject to or are the
subject of any order of the Federal Power Commission or the FERC under section 7
of the Natural Gas Act or any regulation or order thereunder; provided, that,
for the avoidance of doubt, the Material Project Documents shall not constitute
Section 7 Assets for any purpose under this Agreement or any of the other Loan
Documents.
"Secured Parties" shall mean the Administrative Agent, the Lead Arranger,
the Lenders, and Union Bank of California in its capacity as a counterparty or
intermediary to the Interest Rate Protection Agreement.
"Security Agreement" shall mean the Assignment, Security, and Disbursement
Agreement, dated as of the date hereof, between the Borrower and the Collateral
Agent.
"Security Documents" shall mean the Account Control Agreement, the Security
Agreement, the Agency Agreement, the Intercreditor Agreement, the
Acknowledgements, the UBOC Account Control Agreement, all UCC financing
statements and continuation statements naming the Collateral Agent as Secured
Party, and each other instrument or document delivered by the Borrower to grant
to the Collateral Agent a Lien on any Collateral or to assure or preserve any
such Lien or any rights or remedies created thereby.
"Shipper" shall mean each Person (other than the Borrower) that is or shall
become a party to a Gas Service Agreement.
"Significant Material Project Document" shall mean any Material Project
Document between the Borrower and a third Person providing for annualized
revenues that, when aggregated with all other agreements between the Borrower
and such third Person or such third Person's Affiliates, are in excess of five
percent (5%) of the Borrower's total annualized revenues.
"Single Employer Plan" shall have the meaning given such term in Section
4001(a)(15) of ERISA.
"Site" shall mean the real property on which the Pipeline is located and
all related easements, rights-of-way, and other rights and interests.
"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereof.
"Subordinated Indebtedness" shall mean Indebtedness of the Borrower that is
subordinated to the Obligations on the basis set forth in Exhibit G.
23
"Subsidiary" shall mean, for any Person, any corporation, limited liability
company, partnership, or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions of such corporation, limited liability company,
partnership, or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes of such
corporation, limited liability company, partnership, or other entity shall have
or might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or Controlled by such Person or one or
more Subsidiaries of such Person.
"Tax Sharing Agreement" shall have the meaning set forth in Section 5.26.
"Term Loan Commitment" shall mean, with respect to each Lender at any time,
the commitment of such Lender, at such time, to make Term Loans as set forth
opposite the name of such Lender in Schedule 2.01, as the same may be reduced
from time to time pursuant to Section 2.09 or Section 2.10 or otherwise in
accordance with this Agreement.
"Term Loan Commitment Percentage" shall mean, as to any Lender at any time,
the percentage that such Lender's Term Loan Commitment then constitutes of the
Aggregate Term Loan Commitment.
"Term Loan Maturity Date" shall mean the earlier of (a) May 1, 2006 and (b)
the date on which the Indenture is defeased in its entirety or terminated in
accordance with its terms or is otherwise refinanced or replaced.
"Term Loan Notes" shall mean the promissory notes of the Borrower,
substantially in the form of Exhibit A-1, evidencing Term Loans.
"Term Loans" shall have the meaning set forth in Section 2.01(a).
"Treasury Regulations" shall mean the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"Trustee" shall mean The Bank of New York, a New York banking corporation,
as trustee under the Indenture, or any successor trustee permitted under the
Indenture.
"Type", when used in respect of any Loan or Borrowing related thereto,
shall refer to the particular Rate by reference to which interest on such Loan
or on the Loans constituting such Borrowing is determined.
"UBOC Account Control Agreement" shall mean the UBOC Account Control
Agreement, dated as of the date hereof, among the Borrower, the Collateral
Agent, and the UBOC Accounts Agent.
24
"UBOC Accounts" shall have the meaning set forth in the UBOC Account
Control Agreement.
"UBOC Accounts Agent" shall mean Union Bank of California in its capacity
as accounts agent for the Collateral Agent under the UBOC Account Control
Agreement, and any successor accounts agent pursuant thereto.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time
in the State of New York and any other jurisdiction the laws of which control
the creation or perfection of security interests under the Security Documents.
"Union Bank of California" shall have the meaning specified in the first
paragraph of this Agreement.
"Use" shall mean, with respect to any Hazardous Substances and with respect
to any Person, the generation, manufacture, processing, distribution, handling,
use, transport, treatment, recycling, or storage of such Hazardous Substances by
such Person.
"Working Capital Loan Commitment" shall mean, with respect to each Lender
at any time, the commitment of such Lender, at such time, to make Working
Capital Loans as set forth opposite the name of such Lender in Schedule 2.01, as
the same may be reduced from time to time pursuant to Section 2.09 or Section
2.10 or otherwise in accordance with this Agreement.
"Working Capital Loan Commitment Percentage" shall mean, as to any Lender
at any time, the percentage that such Lender's Working Capital Loan Commitment
then constitutes of the Aggregate Working Capital Loan Commitment.
"Working Capital Loan Maturity Date" shall mean the earlier of (i) the date
that is three hundred sixty-four (364) days after the Financial Closing Date and
(ii) the date on which the Indenture is defeased in its entirety or terminated
in accordance with its terms or is otherwise refinanced or replaced; provided,
however, that, on or after the Working Capital Loan Maturity Date, the Working
Capital Loans may be renewed as new working capital loans if the Borrower so
requests and each Lender in its sole discretion agrees to provide such new
working capital loans and the Working Capital Loan Maturity Date shall be
amended in accordance with such agreement, if any.
"Working Capital Loan Notes" shall mean the promissory notes of the
Borrower, substantially in the form of Exhibit A-2, evidencing Working Capital
Loans.
"Working Capital Loans" shall mean the loans made to the Borrower pursuant
to Section 2.01(b).
25
Principles of Construction:
(a) The meanings set forth for defined terms in this Schedule X or in any
Loan Document shall be equally applicable to both the singular and plural forms
of the terms defined.
(b) All references in any Loan Document (including in any schedules and
exhibits thereto) to articles, sections, clauses, schedules, and exhibits are to
articles, sections, clauses, schedules, and exhibits in or to such Loan Document
unless otherwise specified therein. All references in any Loan Document
(including in any schedules or exhibits thereto) to any agreement, contract, or
document (including any Loan Document) shall include reference to all schedules
and exhibits to such agreement, contract, or document unless otherwise specified
therein. The words "hereof," "herein," "hereunder," and words of similar import
when used in a Loan Document shall refer to such Loan Document as a whole and
not to any particular provision of such Loan Document.
(c) All accounting terms not specifically defined in a Loan Document shall
be construed in accordance with the reporting requirements of the FERC as
amended, modified, or otherwise supplemented (by FERC regulation, order, or
otherwise) and in effect from time to time.
(d) References in any Loan Document to any statute, law, decree, or
regulation shall be construed as a reference to such statute, law, decree, or
regulation as re-enacted, redesignated, consolidated, replaced, amended, or
extended from time to time and any order, decree, proclamation, regulation,
instrument, or other subordinate legislation made thereunder. References in any
Loan Document to any document or agreement shall be deemed to include references
to such document or agreement as amended, varied, supplemented, or replaced from
time to time.
(e) References to any representation by any Person being to such Person's
"knowledge" or "known to" such Person shall be deemed to be to the best of such
Person's knowledge after due inquiry.
(f) If any amount to be determined or measured pursuant to any of the Loan
Documents relates to a transaction in a currency other than Dollars, such
determination shall be made by converting such currency by reference to the
prevailing buying spot market rate of exchange available to the relevant Person
on the date of such transaction.
(g) References to any Person or Persons shall be construed as including a
reference to any permitted successors or assigns of such Person or Persons.
(h) Words importing any gender shall be construed as including the other
genders.
(i) The word "including" shall be construed as "including but not limited
to."
26