Term Loan Agreement among EOTT Energy Entities, Lehman Brothers Inc., and Term Lenders (February 11, 2003)

Contract Categories: Business Finance › Loan Agreements
Summary

This agreement, dated February 11, 2003, is between EOTT Energy Operating Limited Partnership and related entities as borrowers, EOTT Energy LLC and EOTT Energy General Partner, L.L.C. as guarantors, and Lehman Brothers Inc. as the term lender agent, along with other term lenders. It sets the terms for a term loan, including borrowing procedures, repayment terms, interest rates, and covenants the borrowers must follow. The agreement also outlines the rights of the lenders, events of default, and the obligations of the guarantors. The loan is subject to specific financial and operational conditions.

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EX-10.43 13 h04843exv10w43.txt TERM LOAN AGREEMENT DATED 2/11/2003 EXHIBIT 10.43 [EXECUTION] ================================================================================ TERM LOAN AGREEMENT dated as of February 11, 2003 among EOTT ENERGY OPERATING LIMITED PARTNERSHIP, EOTT ENERGY CANADA LIMITED PARTNERSHIP, EOTT ENERGY LIQUIDS, L.P. and EOTT ENERGY PIPELINE LIMITED PARTNERSHIP, as joint and several Borrowers, EOTT ENERGY LLC and EOTT ENERGY GENERAL PARTNER, L.L.C. as Guarantors, LEHMAN BROTHERS INC., as Term Lender Agent and THE TERM LENDERS PARTY HERETO ================================================================================ TABLE OF CONTENTS
Page ---- 1. DEFINITIONS AND RULES OF INTERPRETATION................................................................. 3 2. THE TERM LOANS.......................................................................................... 23 (a) Commitment to Lend; Notes...................................................................... 23 (b) Requesting Term Loans.......................................................................... 23 (c) Conditions Precedent to Extension of Credit.................................................... 23 (d) Use of Proceeds................................................................................ 32 (e) Mandatory Prepayments.......................................................................... 32 (f) Optional Prepayment of Term Loans.............................................................. 33 (g) Interest Rates and Fees........................................................................ 33 3. PAYMENTS TO TERM LENDERS................................................................................ 33 (a) General Procedures............................................................................. 33 (b) Payment Obligations Absolute................................................................... 34 (c) Application of Payments made to Term Lender Agent.............................................. 34 (d) Capital Reimbursement.......................................................................... 34 (e) Increased Cost of Term Loans................................................................... 35 (f) Notice; Change of Applicable Lending Office.................................................... 35 (g) Reimbursable Taxes............................................................................. 36 4. INTENTIONALLY OMITTED................................................................................... 37 5. INTENTIONALLY OMITTED................................................................................... 37 6. INTENTIONALLY OMITTED................................................................................... 37 7. OTHER ACTIONS OF CREDIT PARTIES......................................................................... 37 8. REPRESENTATIONS AND WARRANTIES.......................................................................... 38 9. AFFIRMATIVE COVENANTS................................................................................... 46 (a) Payment and Performance........................................................................ 46 (b) Payment of Expenses............................................................................ 46 (c) Instruments, Documents, Securities or Chattel Paper............................................ 46 (d) Books, Financial Statements and Reports........................................................ 46 (e) Other Information and Inspections.............................................................. 49 (f) Notice of Material Events and Change of Address................................................ 50 (g) Maintenance of Properties...................................................................... 52 (h) Discharge of Liens............................................................................. 52 (i) Landlord's Waiver.............................................................................. 52 (j) Maintenance of Existence and Qualifications.................................................... 52 (k) Payment of Trade Liabilities, Taxes, etc....................................................... 52 (l) Insurance...................................................................................... 52
-i- TABLE OF CONTENTS (Continued)
Page ---- (m) Performance on Borrowers' Behalf............................................................... 53 (n) Interest....................................................................................... 53 (o) Compliance with Agreements and Law............................................................. 53 (p) Environmental Matters; Environmental Reviews................................................... 53 (q) Evidence of Compliance......................................................................... 54 (r) Agreement to Deliver Security Documents........................................................ 54 (s) Newly Created or Acquired Subsidiaries......................................................... 54 (t) Compliance with Agreements..................................................................... 54 (u) Risk Management Policies....................................................................... 55 (v) Merger......................................................................................... 55 10. NEGATIVE COVENANTS...................................................................................... 55 (a) Indebtedness................................................................................... 55 (b) Accounts....................................................................................... 56 (c) Limitation on Liens............................................................................ 56 (d) Hedging Contracts.............................................................................. 56 (e) Limitation on Mergers, etc. and Issuances of Securities........................................ 56 (f) Limitation on Asset Sales...................................................................... 57 (g) Limitation on Distributions, Dividends and Redemptions......................................... 58 (h) Limitation on New Businesses, Investments and Capital Expenditures............................. 58 (i) Limitation on Credit Extensions................................................................ 58 (j) Transactions with Affiliates................................................................... 58 (k) Prohibited Contracts........................................................................... 58 (l) Modification of Certain Agreements............................................................. 59 (m) Open Positions................................................................................. 59 (n) Books and Records.............................................................................. 59 (o) Minimum Consolidated EBIDA..................................................................... 59 (p) Minimum Consolidated Tangible Net Worth........................................................ 60 (q) Interest Coverage.............................................................................. 61 (r) Current Ratio.................................................................................. 62 (s) Compliance with Environmental Laws............................................................. 62 11. EVENTS OF DEFAULT....................................................................................... 63 12. RIGHTS AND REMEDIES..................................................................................... 65 13. GUARANTY ............................................................................................... 66 14. TERM LENDER AGENT....................................................................................... 68 (a) Appointment and Authority...................................................................... 67 (b) Exculpation, the Term Lender Agent's Reliance, etc............................................. 68 (c) Credit Decisions............................................................................... 69
-ii- TABLE OF CONTENTS (Continued)
Page ---- (d) Indemnification................................................................................ 69 (e) Rights as Term Lender.......................................................................... 69 (f) Sharing of Set-Offs and Other Payments......................................................... 70 (g) Investments.................................................................................... 70 (h) Benefit of this Section........................................................................ 70 (i) Resignation.................................................................................... 71 (j) Other Lender Parties........................................................................... 71 15. ASSIGNMENTS AND PARTICIPATIONS.......................................................................... 71 16. INDEMNIFICATION......................................................................................... 73 17. MISCELLANEOUS........................................................................................... 75
SCHEDULES AND EXHIBITS: SCHEDULE I TERM LENDER SCHEDULE EXHIBIT A-1 FORM OF TIER-A TERM NOTE EXHIBIT A-2 FORM OF TIER-B TERM NOTE EXHIBIT B BORROWING NOTICE EXHIBIT C CERTIFICATE ACCOMPANYING FINANCIAL STATEMENTS EXHIBIT D CASH FLOW REPORT EXHIBIT E ENVIRONMENTAL COMPLIANCE CERTIFICATE EXHIBIT F OPEN POSITION REPORT EXHIBIT G VOLUME REPORT -iii- TERM LOAN AGREEMENT TERM LOAN AGREEMENT, dated as of February 11, 2003 (as amended, supplemented or otherwise modified from time to time, and including all Schedules and Exhibits attached hereto, this "AGREEMENT"), among : - EOTT ENERGY OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership ("EOTT OLP"), - EOTT ENERGY CANADA LIMITED PARTNERSHIP, a Delaware limited partnership ("EOTT CANADA"), - EOTT ENERGY LIQUIDS, L.P., a Delaware limited partnership ("EOTT LIQUIDS"), - EOTT ENERGY PIPELINE LIMITED PARTNERSHIP, a Delaware limited partnership ("EOTT PIPELINE" and together with EOTT Canada and EOTT Liquids, each an "ADDITIONAL OBLIGOR" and collectively, "ADDITIONAL OBLIGORS" and the Additional Obligors together with EOTT OLP on a joint and several basis, "BORROWERS"), - EOTT ENERGY LLC, a Delaware limited liability company ("EOTT LLC"), - EOTT ENERGY GENERAL PARTNER, L.L.C. a Delaware limited liability company ("EOTT GP" and together with EOTT LLC, each a "GUARANTOR" and collectively, "GUARANTORS" and together with the Borrowers, each a "CREDIT PARTY" and collectively, "CREDIT PARTIES"), - each of the banks or other lending institutions which is a listed as a Term Lender on the signature pages of this Agreement or which may from time to time become a party hereto in such capacity or any successor or assignee thereof (each a "TERM LENDER" and collectively, the "TERM LENDERS"), - and LEHMAN BROTHERS INC., as Term Lender Agent for the Term Lenders (in such capacity, the "TERM LENDER AGENT" and in its individual capacity, "LEHMAN"). WHEREAS, on or about April 23, 2002, EOTT OLP, EOTT Canada, EOTT Liquids, and EOTT Pipeline (collectively, the "PREPETITION BORROWERS"), EOTT Energy Partners, L.P., a Delaware limited partnership ("EOTT MLP") and EOTT GP, as guarantors, the lenders party thereto (the "PREPETITION LENDERS"), and Standard Chartered Bank, as administrative agent for the Prepetition Lenders (the "PREPETITION AGENT") and letter of credit issuer thereunder (the "PREPETITION LC ISSUER") entered into that certain Second Amended and Restated Reimbursement, Loan and Security Agreement (as amended, the "PREPETITION CREDIT AGREEMENT"), pursuant to which the Prepetition Lenders and the Prepetition LC Issuer provided credit extensions to the Prepetition Borrowers on the terms and conditions set forth therein; WHEREAS, on October 8, 2002 (the "FILING DATE"), the Credit Parties (or their predecessor entities, as the case may be) filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (as defined below) (jointly administered under Chapter 11 Case No. 02-21730) (the "CASES") in the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi Division (the "BANKRUPTCY COURT"); WHEREAS, in connection with the Cases, EOTT OLP, EOTT Canada, EOTT Liquids, and EOTT Pipeline (collectively, the "DIP BORROWERS"), EOTT MLP and EOTT GP (collectively, the "DIP GUARANTORS", and together with the DIP Borrowers, the "DEBTORS"), the lenders party thereto (the "DIP LC PARTICIPANTS"), and Standard Chartered Bank, as administrative agent for the DIP LC Participants (the "DIP LC AGENT") and letter of credit issuer thereunder (the "DIP LC ISSUER"), entered into that certain Debtor in Possession Letter of Credit Agreement, dated as of October 18, 2002, (as amended, restated, supplemented, amended and restated or otherwise modified from time to time, the "DIP LC AGREEMENt"), pursuant to which the DIP LC Participants and the DIP LC Issuer extended credit to the DIP Borrowers on the terms set forth therein; WHEREAS, in connection with the Cases, the DIP Borrowers, the DIP Guarantors, the lenders party thereto (the "DIP TERM LENDERS"), and Lehman Brothers, Inc., as term lender agent for the DIP Term Lenders (the "DIP TERM LENDER AGENT") entered into that certain Debtor in Possession Term Loan Agreement dated as of October 18, 2002 (as amended, restated, supplemented, amended and restated or otherwise modified from time to time, the "DIP TERM LOAN AGREEMENt"), pursuant to which the DIP Term Lenders made term loans to DIP Borrowers on the terms set forth therein; WHEREAS, as of the date hereof, under the DIP Term Loan Agreement, the DIP Term Lenders are owed $75,000,000 in principal obligations (the "DIP LOANS") incurred directly by the DIP Borrowers, plus interest, fees and expenses (the "NON-PRINCIPAL DIP OBLIGATIONS"), which DIP Loans and Non-Principal DIP Obligations have been guaranteed by the DIP Guarantors. WHEREAS, on February 12, 2003, a hearing (the "CONFIRMATION HEARING") is scheduled in the Bankruptcy Court with respect to the confirmation of the Reorganization Plan (as defined herein) of the Debtors; WHEREAS, the Borrowers have requested that the Term Lenders provide financing to the Borrowers pursuant to the terms of this Agreement, pursuant to which Term Lenders would make term loans to Borrowers in the aggregate principal amount of $75,000,000 to be used by the Borrowers to repay the DIP Loans; WHEREAS, the Term Lenders have indicated their willingness to agree to extend such credit to the Borrowers, all on the terms and conditions set forth herein and in the other Credit Documents; WHEREAS, subject to the Intercreditor Agreement (as defined herein), the Credit Parties desire to secure all of the Obligations hereunder and under the Credit Documents by granting to -2- the Collateral Agent, for the benefit of the Secured Parties (as defined herein), a perfected first-priority Lien in the Collateral (as defined herein); WHEREAS, each of the Guarantors will derive substantial direct and indirect benefit from the credit made available by the Term Lenders to the Borrowers; and WHEREAS, the Guarantors are willing to guarantee the obligations of the Borrowers hereunder; NOW, THEREFORE, in consideration of these premises and the mutual undertakings set forth herein, the parties hereto hereby agree as follows: 1. DEFINITIONS AND RULES OF INTERPRETATION. As used in this Agreement, unless otherwise defined herein, all terms used herein which are defined in Article 1 or Article 9 of the UCC (as in effect from time to time) shall have the meanings set forth therein unless otherwise defined in this Agreement, and all references to the plural herein shall also mean the singular. As used in this Agreement, each of the following terms has the meaning given to such term in this Section 1 or in the Sections and subsections referred to below: "ACCOUNT" has the meaning given that term in the UCC. "ACCOUNT DEBTOR" means any Person who is or who may become obligated under, with respect to, or on the account of, any Account. "ADMINISTRATIVE AGENTS" means the Term Lender Agent and the LC Agent. "AFFILIATE" means, as to any Person, each other Person that directly or indirectly (through one or more intermediaries or otherwise) controls, is controlled by, or is under common control with, such Person. A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (i) to vote 5% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners or (ii) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "AGREEMENT" has the meaning set forth in the preamble. "ALTERNATE BASE RATE" has the meaning set forth in the DIP Letter of Credit Agreement. "APPLICABLE LENDING OFFICE" means with respect to any Term Lender, the office of such Term Lender specified as its "Applicable Lending Office" in the Term Lender Schedule, or such other office as such Term Lender may from time to time specify to the Borrower Representative and the Term Lender Agent and, with respect to the Term Lender Agent, the office, branch or agency through which it administers this Agreement. "AUTHORIZED ACCOUNTS" has the meaning assigned to such term in the Intercreditor Agreement. -3- "BANKRUPTCY CODE" means Title 11, United States Code. "BANKRUPTCY COURT" has the meaning set forth in the recitals. "BIG WARRIOR SETTLEMENT" means the payment by EOTT Pipeline of an amount not exceeding $1,800,000 in cash to Big Warrior Corporation, and issuance of a promissory note in the original principal amount of up to $2,700,000, by EOTT Pipeline in favor of Big Warrior Corporation, all as part of the settlement of Big Warrior Corp. v. EOTT Energy Corp., No. 2:02CV749PG (S.D. Miss.) filed August 5, 2002. "BORROWER EXPENSES" means, whether or not the transactions contemplated hereby shall be consummated, (a) any and all sums, costs and expenses incurred in connection with (i) the preparation and negotiation of this Agreement, the other Credit Documents and any related agreements or instruments, together with any amendments or supplements hereto or thereto, (ii) defending, protecting, maintaining or enforcing the security interests granted herein or in defending, collecting or attempting to collect the Obligations, including, without limitation, all search, filing and recording fees, taxes, attorneys' fees, legal expenses, (b) reasonable and documented fees, expenses and disbursements of the Term Lender Agent's Special Counsel, and any local counsel for the Term Lender Agent, incurred in connection with (i) the preparation, administration, interpretation or syndication of the Credit Documents and other instruments mentioned hereunder, and any amendments, modifications, approvals, consents or waivers hereto or hereunder of any of the Credit Documents (ii) or services rendered in connection with representing the DIP Collateral Agent, DIP Term Lender Agent, and the DIP Term Lenders in the Cases, (c) the reasonable fees, expenses and disbursements of the Term Lender Agent and any of its affiliates incurred by the Term Lender Agent or such affiliate in connection with the preparation, administration, interpretation or syndication of the Credit Documents and other instruments mentioned herein, including all appraisal charges and charges of other professionals retained by the Term Lender Agent, and all title insurance premiums and surveyor, engineering, appraisal and examination charges, and (d) the reasonable and documented (to the reasonable satisfaction of the Borrowers) fees and expenses of any advisors retained by the Term Lender Agent, including those retained in connection with the Cases. "BORROWERS" has the meaning set forth in the preamble. "BORROWER REPRESENTATIVE" means, for purposes of executing the Borrowing Notice and otherwise communicating with the Term Lender Agent on behalf of the Borrowers, and taking any action required under this Agreement on behalf of the Borrowers (and all of the Borrowers shall be bound thereby), including consent to and any modifications, amendments or supplements to this Agreement or related documents, EOTT OLP. "BORROWING BASE" means, as of any date of determination, the borrowing base determined pursuant to the Letter of Credit Agreement. "BORROWING NOTICE" means a written request made by the Borrower Representative that meets the requirements of Section 2(a)(ii). -4- "BUSINESS DAY" means any day, other than a Saturday, Sunday or day which shall be in the State of New York a legal holiday or day on which banking institutions are required or authorized to close. "BUSINESS PLAN" means the initial Business Plan as defined in Section 2(c)(i)(9), as such Business Plan shall be updated pursuant to Section 9(d)(v). "CAPITAL EXPENDITURES" means for any period, Consolidated expenditures (including the aggregate amount of Capital Lease obligations incurred during such period) made by EOTT LLC and its Consolidated Subsidiaries to acquire or construct fixed assets, plant or equipment (including renewals, improvements or replacements, but excluding repairs) during such period and which, in accordance with GAAP, are classified as capital expenditures. "CAPITAL LEASE" means a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP. "CASES" has the meaning set forth in the recitals. "CASH BUDGET" means the monthly projected cash flows set forth in the Post-Confirmation Projections, as supplemented from time to time pursuant to Section 9(d)(xiii). "CASH EQUIVALENTS" means Investments in: (i) marketable obligations, maturing within 12 months after acquisition thereof, issued or unconditionally guaranteed by the United States of America or an instrumentality or agency thereof and entitled to the full faith and credit of the United States of America; (ii) demand deposits and time deposits (including certificates of deposit) maturing within 180 days from the date of deposit thereof, (A) with any office of any LC Participant or (B) with a domestic office of any national or state bank or trust company which is organized under the Laws of the United States of America or any state therein, which has capital, surplus and undivided profits of at least $500,000,000 and whose long-term certificates of deposit are rated at least Aa3 by Moody's or AA- by S&P; (iii) repurchase obligations with a term of not more than seven days for underlying securities of the types described in subsection (i) above entered into with (A) any LC Participant or (B) any other commercial bank meeting the specifications of subsection (ii) above; (iv) commercial paper, other than commercial paper issued by any Credit Party or its Affiliates, maturing within 180 days after acquisition thereof and having a rating of at least P-1 by Moody's or A-1 by S&P; and -5- (v) money market or other mutual funds substantially all of whose assets comprise securities of the types described in subsections (i) through (iv) above. "CASH FLOW REPORT" means a report prepared on the first Business Day of each month by the Borrower Representative reflecting as of the last day of the immediately preceding month EOTT LLC's and its Subsidiaries' cash flows for such month, on an actual (historical to EOTT MLP or EOTT LLC, as the case may be) and projected (forecast) basis, substantially in the form of Exhibit D hereto to be agreed upon between the parties hereto prior to the Closing Date, and reflecting the cash flows attributable to each of the Designated Assets by facility as a separate item. "CASH WATERFALL" has the meaning set forth in the Intercreditor Agreement. "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System List of the Environmental Protection Agency. "CHANGE IN CONTROL" means the occurrence of any of the following events: (i) any two or more of Tom Matthews, Steve Myers, Dana Gibbs, Lori Maddox and H. Keith Kaelber shall cease for any reason not reasonably acceptable to the Majority Term Lenders to serve as, in the case of Mr. Matthews a director, and in the case of each other person, an executive officer of EOTT LLC (unless any such officer shall have ceased to serve as a result of death, disability, termination for cause as determined by the EOTT LLC Board of Directors or other reason reasonably acceptable to Majority Term Lenders) and such individual has not been replaced by Persons reasonably acceptable to the Majority Term Lenders within a reasonable period of time, and (ii) any Person or group shall be the legal and beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of 50% or more of the combined voting power of the then total membership interests (including all securities that are convertible into membership interests) of EOTT LLC. "CLOSING DATE" means the date agreed to by the Borrower Representative and the Term Lender Agent for the Extension of Credit under this Agreement, which date shall occur after the Confirmation Order becomes the Final Order of the Bankruptcy Court, but not before all of the conditions precedent in this Agreement for such Extension of Credit have been satisfied. "CLOSING DATE CERTIFICATE" means the officer's certificate delivered to the Term Lender Agent pursuant to Section 2(c)(i)(9), attaching (a) the Post-Confirmation Projections, (b) the Business Plan, (c) the Security Schedule, (d) the Disclosure Schedule, (e) the initial Cash Budget and (f) a schedule of all changes anticipated to be made upon application of "fresh start" accounting to the financial statements of EOTT LLC and its Consolidated Subsidiaries that are reflected in the Post-Confirmation Projections. "COLLATERAL" has the meaning set forth in the Intercreditor Agreement. -6- "COLLATERAL AGENT" means Standard Chartered Bank, acting as collateral agent on behalf of the LC Issuer, the LC Participants, SCTSC, the Term Lenders and the Administrative Agents in accordance with the Intercreditor Agreement. "CONFIRMATION HEARING" has the meaning set forth in the recitals. "CONFIRMATION ORDER" means the order of the Bankruptcy Court, dated on or about the date of the Confirmation Hearing, and confirming the Reorganization Plan pursuant to Section 1129 of the Bankruptcy Code. "CONSOLIDATED" means the consolidation of any Person, in accordance with GAAP, with its properly consolidated Subsidiaries. References herein to a Person's Consolidated financial statements, financial position, financial condition, liabilities, etc. refer to the consolidated financial statements, financial position, financial condition, liabilities, etc. of such Person and its properly consolidated Subsidiaries. CONSOLIDATED CURRENT ASSETS" means all assets of the Borrowers and their Subsidiaries on a Consolidated basis that, in accordance with GAAP, are properly classified as current assets, including (without duplication) all crude oil, refined petroleum products or natural gas liquids in pipeline or storage assets owned by a Borrower at the time of determination, valued in accordance with GAAP; provided that, "Consolidated Current Assets" shall exclude (i) all the fixed assets of the Designated Assets during the first three months following the Closing Date, and (ii) in the calculation thereof, those items enumerated in Permitted Adjustments. "CONSOLIDATED CURRENT LIABILITIES" means all Liabilities and other Indebtedness of the Borrowers and their Subsidiaries on a Consolidated basis that, in accordance with GAAP, are properly classified as current liabilities; provided that, "Consolidated Current Liabilities" shall exclude (i) Funded Debt, (ii) all Liabilities and Indebtedness directly attributable to the Designated Assets during the first three months following the Closing Date, and (iii) in the calculation thereof, those items enumerated in Permitted Adjustments. "CONSOLIDATED EBIDA" means, for any period, the sum of (without duplication) (i) Consolidated Net Income (Loss) for such period, plus (ii) all interest expense that was deducted in determining such Consolidated Net Income (Loss), plus (iii) all depreciation, amortization (including amortization of good will and debt issue costs) and other non-cash charges (excluding any non-cash charge to the extent it represents an accrual of, or reserve for, cash disbursement for any of the next succeeding four Fiscal Quarters), minus (iv) all non-cash items of income that were included in determining such Consolidated Net Income (Loss) (excluding any non-cash item to the extent it represents an accrual for cash receipt in any of the next succeeding four Fiscal Quarters); provided that, "Consolidated EBIDA" shall exclude (x) all of the foregoing items directly attributable to the Designated Assets during the first three months following the Closing Date, and (y) in the calculation thereof, those items enumerated in Permitted Adjustments. -7- "CONSOLIDATED NET INCOME (LOSS)" means, for any period, EOTT MLP's or, as the case may be, EOTT LLC's Consolidated gross revenues and expenses for such period, including any cash dividends or distributions actually received from any other Person during such period, minus EOTT MLP's or, as the case may be EOTT LLC's Consolidated expenses and other proper charges against income (including taxes on income to the extent imposed), determined on a Consolidated basis after eliminating earnings or losses attributable to outstanding minority interests and excluding the net earnings of any Person other than a Subsidiary in which EOTT MLP or, as the case may be, EOTT LLC or any of its Subsidiaries has an ownership interest; provided that, "Consolidated Net Income (Loss)" shall exclude (i) gross revenues and expenses directly attributable to the Designated Assets during the first three months following the Closing Date, and (ii) in the calculation thereof, those items enumerated in Permitted Adjustments. "CONSOLIDATED TANGIBLE NET WORTH" means, at any time, (a) the Consolidated members' capital of EOTT LLC and its Subsidiaries plus (b) the principal amount of any payment-in-kind notes issued in lieu of cash payment of interest on the New Senior Notes less (c) Intangible Assets (to the extent included in determining such Consolidated members' capital). For this purpose "INTANGIBLE ASSETS" means, the amounts of (i) all write-ups subsequent to December 31, 2002 in the book value of any non-current asset owned by EOTT LLC or any Subsidiary, (ii) all investments in Persons that are not Subsidiaries, except to the extent included in Cash Equivalents and (iii) all unamortized debt discount and expense (other than fees and expenses related to any Funded Debt), unamortized deferred charges, goodwill, Intellectual Property, organizational or research and developmental expenses and other intangible items (other than with respect to any Designated Asset); provided that, "Consolidated Tangible Net Worth" shall exclude (x) any Consolidated members' capital of EOTT LLC and its Subsidiaries to the extent directly attributable to the Designated Assets during the first three months following the Closing Date, and (y) in the calculation thereof, those items enumerated in Permitted Adjustments.. "CONSOLIDATED TOTAL INTEREST EXPENSE" means, for any period, the aggregate amount of interest required to be paid or accrued by any Borrower or its Subsidiaries during such period on all Indebtedness of such Borrower and its Subsidiaries outstanding during all or any part of such period, whether such interest was or is required to be reflected as an item of expense or capitalized, including payments consisting of interest in respect of any Capital Lease or any Synthetic Lease, and including commitment fees, agency fees, facility fees, balance deficiency fees and similar fees or expenses in connection with the borrowing of money; provided that, "Consolidated Total Interest Expense" shall exclude (i) the Reduction Fee payable pursuant to Section 2(j)(ix), (ii) any such interest, fees or expenses to the extent directly attributable to the Designated Assets during the first three months following the Closing Date, (iii) in the calculation thereof, those items enumerated in Permitted Adjustments, and (iv) the principal amount of any payment-in-kind notes issued in lieu of cash payment of interest on the New Senior Notes. "CONTROL AGREEMENT" has the meaning set forth in the Intercreditor Agreement. -8- "CREDIT DOCUMENTS" means, collectively (i) this Agreement, the Term Notes, and each and every other agreement, document, certificate or instrument between any Lender Party, and any Credit Party or otherwise for the benefit of any Lender Party that is entered into or delivered on or after the date hereof, and (ii) the Security Documents. "CREDIT PARTIES" has the meaning set forth in the preamble as of the date hereof, together with such other Persons who may from time to time become party to this Agreement pursuant to the terms hereof. "CRUDE OIL PURCHASE AGREEMENT" means, that certain Second Amended and Restated Commodities Repurchase Agreement, dated as of the date hereof, by and among SCTSC and EOTT OLP (as amended, amended and restated, supplemented or otherwise modified from time to time). "CURRENTLY APPROVED BY THE TERM LENDER AGENT" means such Person (including a limit on the maximum credit exposure to any such Person), storage location, pipeline, form of letter of credit, event, action, policy, or other matter, as the case may be, as reflected in the most recent written notice given by the Term Lender Agent to the Borrower Representative as then being approved; provided, that, with respect to any Account Debtor, credit limit, inventory storage location, commodity broker, or creditworthiness criteria, the Borrower Representative shall make an initial determination as to their respective identities, levels, location or criteria, as applicable, subject to the consent of the Term Lender Agent (which consent shall not be unreasonably withheld). Each such written notice will supersede and revoke each prior notice relating to the subject thereof. "DEBT RATING" means, with respect to a Person, the rating then in effect by a Rating Agency for the long term senior unsecured non-credit enhanced debt of such Person. "DEBTORS" has the meaning set forth in the recitals. "DEFAULT" means any Event of Default and any default, event or condition that would, with the giving of any requisite notices and the passage of any requisite periods of time, constitute an Event of Default. "DEFAULT RATE" means a rate per annum equal to twelve percent (12%). "DESIGNATED ASSETS" means the following assets: (i) the MTBE Assets and (ii) the West Coast Assets. "DIP BORROWERS" has the meaning set forth in the recitals. "DIP COLLATERAL AGENT" means the Standard Chartered Bank as collateral agent under the DIP Intercreditor Agreement. "DIP GUARANTORS" has the meaning set forth in the recitals. -9- "DIP INTERCREDITOR AGREEMENT" means that certain Intercreditor and Security Agreement, dated as of October 18, 2002, among the Debtors, the DIP LC Agent, the DIP LC Participants, SCTSC, the DIP Term Lender Agent, the DIP Term Lenders and the DIP Collateral Agent. "DIP LC AGENT" has the meaning set forth in the recitals. "DIP LC AGREEMENT" has the meaning set forth in the recitals. "DIP LC ISSUER" has the meaning set forth in the recitals. "DIP LC PARTICIPANTS" has the meaning set forth in the recitals. "DIP LOANS" has the meaning set forth in the recitals. "DIP NON-PRINCIPAL OBLIGATIONS" has the meaning set forth in the recitals. "DIP TERM LENDER AGENT" has the meaning set forth in the recitals. "DIP TERM LENDERS" has the meaning set forth in the recitals. "DIP TERM LOAN" means each term loan extended by the DIP Term Lenders under the DIP Term Loan Agreement. "DIP TERM LOAN AGREEMENT" has the meaning set forth in the recitals. "DISCLOSURE SCHEDULE" means the Disclosure Schedule attached to the Closing Date Certificate, in form and substance satisfactory to the Term Lender Agent. "EMPLOYEE TRANSITION AGREEMENT" means that certain employee transition agreement, dated as of October 7, 2002, by and among the EOTT Parties and the Enron Parties. "ENRON" means Enron Corp., an Oregon corporation and debtor-in-possession in the Enron Bankruptcy Proceedings. "ENRON BANKRUPTCY PROCEEDINGS" means the actions under the petitions for relief filed by Enron and certain of its Affiliates under the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York, In re Enron Corp., et al, jointly administered under Case No. 01-16034. "ENRON PARTIES" means Enron, Enron Energy Services, Inc. a Delaware corporation and a debtor in possession, Enron North America Corp., a Delaware corporation and a debtor in possession, Enron Pipeline Services Company, a Delaware corporation, EGP Fuels Company, a Delaware corporation, and Enron Gas Liquids, Inc., a Delaware corporation and a debtor and a debtor in possession. "ENRON SETTLEMENT AGREEMENT" means the settlement agreement, dated as of October 7, 2002, by and among the EOTT Parties, the Enron Parties, and EOTT Energy Corp. -10- settling, among other things, certain claims owed by each of the EOTT Parties to the Enron Parties. "ENVIRONMENTAL LAWS" means the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, the Occupational Safety and Health Act, the Atomic Energy Act of 1954, and any other federal, state, local or foreign law, statute, treaty, regulation, ordinance, rule, regulation, order, decree, judgment, permit, concession, franchise, license, agreement or other governmental restriction, relating to health, safety or the environment now in effect or hereafter amended or enacted. "EOTT CANADA" has the meaning set forth in the preamble. "EOTT FINANCE CORP." means EOTT Energy Finance Corp., a Delaware corporation. "EOTT GP" has the meaning set forth in the preamble. "EOTT LIQUIDS" has the meaning set forth in the preamble. "EOTT LLC" has the meaning set forth in the preamble. "EOTT MLP" has the meaning set forth in the recitals. "EOTT OLP" has the meaning set forth in the preamble. "EOTT PARTIES" means the Borrowers and the Guarantors. "EOTT TERMINAL" means any storage terminal, tankage or facility owned by any Borrower. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, together with all rules and regulations promulgated with respect thereto. "ERISA AFFILIATE" means each Credit Party and all other Persons that, together with such Credit Party, are treated as a single employer under Section 414 of the Tax Code. "ERISA PLAN" means any employee pension benefit plan subject to Title IV of ERISA maintained by any ERISA Affiliate with respect to which any Credit Party has a fixed or contingent Liability. "EVENT OF DEFAULT" means the occurrence of any event described in Section 11 of this Agreement. "EXTENSION OF CREDIT" means the making of the Term Loans. -11- "FINAL ORDER" means an order, judgment or other decree of the Bankruptcy Court or any other court, judicial body or Tribunal with proper jurisdiction, as the case may be, which is in full force and effect and which has not been reversed, stayed, modified or amended and as to which (i) any right to appeal or seek certiorari, review or rehearing has been waived or (ii) the time to appeal or seek certiorari, review or rehearing has expired and as to which no appeal, position for certiorari, review or rehearing has been filed and is either pending or has been stayed. "FISCAL QUARTER" means a three-month period ending on March 31, June 30, September 30 or December 31 of any year. "FISCAL YEAR" means a twelve-month period ending on December 31 of any year. "FIXED PRICE CONTRACT" means a purchase or sale contract for crude oil, refined petroleum products or NGLs where the price has been fixed. "FUNDED DEBT" means Indebtedness of a Credit Party described in any of clauses (i) through (iii) or (v) through (xii) of the definition of "Indebtedness." "GAAP" means those generally accepted accounting principles and practices recognized as such by the Financial Accounting Standards Board (or any generally recognized successor). "GOVERNING BODY" means the board of directors or other body having the power to direct or cause the direction of the management and policies of a Person that is a corporation, partnership, trust or limited liability company. "GUARANTORS" has the meaning set forth in the preamble. "HAZARDOUS MATERIALS" means any substances regulated under any Environmental Law, whether as pollutants, contaminants or chemicals, as industrial, toxic or hazardous substances or wastes or otherwise. "HEDGING CONTRACT" means (i) any agreement providing for options, swaps, floors, caps, collars, forward sales or forward purchases involving interest rates, commodities or commodity prices, equities, currencies, bonds or indexes based on any of the foregoing, (ii) any option, futures or forward contract traded on an exchange and (iii) any other derivative agreement or other similar agreement or arrangement, excluding in the case of subsection (i), (ii) and (iii), for purposes of Section 10(d) only, any such agreement or contract covering crude oil, refined oil products or NGLs that is entered into by a Borrower (A) in the ordinary course of business, (B) in accordance with the then effective Risk Management Policies and (C) not for speculative purposes. "HIGHEST LAWFUL RATE" means, with respect to each Lender Party to whom Obligations are owed, the maximum nonusurious rate of interest that such Lender Party is permitted under applicable Law to contract for, take, charge or receive with respect to such Obligations. All determinations herein of the Highest Lawful Rate or of any interest rate determined by reference to the Highest Lawful Rate shall be made separately for each -12- Lender Party as appropriate to assure that the Credit Documents are not construed to obligate any Person to pay interest to any Lender Party at a rate in excess of the Highest Lawful Rate applicable to such Lender Party. "INDEBTEDNESS" of any Person means its Liabilities (without duplication) in any of the following categories: (i) Liabilities for borrowed money, (ii) Liabilities constituting an obligation to pay the deferred purchase price of property or services, (iii) Liabilities evidenced by a bond, debenture, note or similar instrument, (iv) Liabilities that would be required under GAAP to be shown on such Person's balance sheet as a liability, (v) Liabilities arising under Hedging Contracts (on a net basis to the extent netting is provided for in the applicable Hedging Contract), (vi) Liabilities constituting principal under Capital Leases, (vii) Liabilities arising under conditional sales or other title retention agreements, (viii) Liabilities owing under direct or indirect guaranties of Liabilities of any other Person or otherwise constituting obligations to purchase or acquire or to otherwise protect or insure a creditor against loss in respect of Liabilities of any other Person (such as obligations under working capital maintenance agreements, agreements to keep-well or agreements to purchase Liabilities, assets, goods, securities or services), but excluding endorsements in the ordinary course of business of negotiable instruments in the course of collection, (ix) Liabilities consisting of an obligation to purchase or redeem commodities, securities or other property, if such Liabilities arise out of or in connection with the sale or issuance of the same or similar commodities, securities or property (for example, repurchase agreements, mandatorily redeemable preferred stock and sale/leaseback agreements), (x) Liabilities with respect to letters of credit or applications or reimbursement agreements therefor, (xi) Liabilities with respect to banker's acceptances or (xii) Liabilities with respect to obligations to deliver goods or services in consideration of advance payments therefor; provided, however, that the "INDEBTEDNESS" of any Person shall not include Liabilities that were incurred in the ordinary course of business by such Person on ordinary trade -13- terms to vendors, suppliers or other Persons providing goods and services for use by such Person in the ordinary course of its business, unless and until such Liabilities are outstanding more than 120 days after the date the respective goods are delivered or the respective services are rendered, other than Liabilities contested in good faith by appropriate proceedings, if required, and for which adequate reserves are maintained on the books of such Person in accordance with GAAP. "INDENTURE TRUSTEE" means The Bank of New York, a New York banking corporation, or its successor, in its capacity as indenture trustee under the Senior Notes Indenture. "INITIAL FINANCIAL STATEMENTS" means the unaudited Consolidated balance sheet of EOTT MLP and its Subsidiaries as of December 31, 2002 and the related Consolidated income statements, statements of cash flows and partners' capital for the year ended December 31, 2002. "INTELLECTUAL PROPERTY" means all patents, trademarks, tradenames, copyrights, technology, software, know-how and processes used in or necessary for the conduct of the business of the Credit Parties as currently conducted or anticipated to be conducted that are material to the condition (financial or otherwise), business or operations of the Credit Parties, taken as a whole. "INTERCREDITOR AGREEMENT" means that certain Intercreditor and Security Agreement, dated on or about the Closing Date, among the Credit Parties, the LC Agent, the LC Participants, SCTSC, the Term Lender Agent, the Term Lenders and the Collateral Agent, as amended, amended and restated, supplemented, or otherwise modified from time to time. "INVESTMENT" means any investment made, directly or indirectly in any Person, whether by acquisition of shares of capital stock, Indebtedness or other obligations or securities or by loan, advance, capital contribution or otherwise and whether made in cash, by the transfer of property or by any other means. "IP COLLATERAL" means the Intellectual Property that constitutes Collateral. "LAW" means any statute, law, regulation, ordinance, rule, treaty, judgment, order, decree, permit, concession, franchise, license, agreement or other governmental restriction of the United States or any state or political subdivision thereof or of any foreign country or any department, province or other political subdivision thereof. "LC AGENT" means Standard Chartered Bank in its capacity as agent for the LC Participants under the Letter of Credit Agreement. "LC ISSUER" means Standard Chartered Bank in its capacity as issuer of letters of credit under the Letter of Credit Agreement. "LC PARTICIPANTS" means the Persons from time to time designated as such participants under the DIP Letter of Credit Agreement. -14- "LEHMAN" has the meaning set forth in the preamble. "LENDER PARTIES" means the Term Lender Agent and all Term Lenders. "LETTER OF CREDIT AGREEMENT" means the Letter of Credit Agreement, dated as of the date hereof, among the Borrowers, the Guarantors, the LC Participants, the LC Issuer, the LC Agent, and the Collateral Agent, as amended, amended and restated, supplemented, or otherwise modified from time to time pursuant to which the participants thereunder will make available to the Borrowers a letter of credit facility not to exceed at any one time outstanding $325,000,000. "LIABILITIES" means, as to any Person, all Indebtedness, liabilities and obligations of such Person, whether matured or unmatured, liquidated or unliquidated, primary or secondary, direct or indirect, absolute, fixed or contingent, and whether or not required to be considered pursuant to GAAP. "LIEN" means, with respect to any property or assets, any right or interest therein of a creditor to secure Liabilities owed to it or any other arrangement with such creditor which provides for the payment of such Liabilities out of such property or assets or which allows such creditor to have such Liabilities satisfied out of such property or assets prior to the general creditors of any owner thereof, including any lien, mortgage, security interest, pledge, deposit, production payment, rights of a vendor under any title retention or conditional sale agreement or lease substantially equivalent thereto, tax lien, mechanic's or materialman's lien or any other charge or encumbrance for security purposes, whether arising by law or agreement or otherwise, but excluding any right of offset that arises without agreement in the ordinary course of business. "LIEN" also means any filed financing statement, any registration of a pledge (such as with an issuer of uncertificated securities) or any other arrangement or action that would serve to perfect a Lien described in the preceding sentence, regardless of whether such financing statement is filed, such registration is made or such arrangement or action is undertaken before or after such Lien exists. "MAJORITY TERM LENDERS" means the Term Lenders whose aggregate Percentage Shares exceed fifty percent (50%) plus, so long as (i) Lehman is the Term Lender Agent and (ii) Lehman Commercial Paper, Inc. or any other Affiliate of Lehman is the beneficial holder of at least twenty-percent of the aggregate outstanding Term Loans, Lehman, in its capacity as Term Lender Agent. "MATERIAL ADVERSE CHANGE" means a material and adverse change, from the state of affairs since December 31, 2002 including any such change (other than any Permitted Adjustment, in and of itself) that may result from the settlement, discharge, release or other resolution of, or any change that may result from any development or event affecting any matter disclosed in the Disclosure Schedule or as represented or warranted in any Credit Document to (i) EOTT LLC's (or its predecessor entity's) Consolidated financial condition, operations, properties, business or prospects, considered as a whole, (ii) the Borrowers' ability to timely pay the Obligations or (iii) the enforceability of any Credit Document or any Lien granted pursuant thereto. -15- "MATURITY DATE" means the date which is the earlier of(a) eighteen (18) calendar months after the Closing Date and (ii) August 30, 2004. "MONTHLY PAYMENT DATE" means the first Business Day of each month. "MOODY'S" means Moody's Investors Service, Inc., or its successor. "MTBE ASSETS" means the MTBE facility in Harris County, Texas and the Mont Belvieu Storage Facility and Grid in Chambers, Harris and Galveston Counties, Texas. "NEW GP INTEREST" means the entire general partner interest in EOTT MLP following the Effective Date (as defined in the Reorganization Plan) of the Reorganization Plan. "NEW LLC UNITS" means the units of member interests in EOTT LLC to be issued by EOTT LLC pursuant to the Reorganization Plan. "NEW LP INTEREST" means the entire limited partner interest in EOTT MLP following the Effective Date (as defined in the Reorganization Plan) of the Reorganization Plan. "NEW SENIOR NOTES" means the 9% Senior Notes due 2009 in the original principal amount of up to $104,000,000, together with all payment-in-kind notes in an aggregate principal amount not to exceed $10,660,000, in each case issued by EOTT LLC pursuant to the Senior Notes Indenture and the Reorganization Plan. "NGLS" means liquid hydrocarbon products extracted from a natural gas stream, including ethane, propane, normal butane, isobutane and natural gasoline. "NYMEX" means the New York Mercantile Exchange. "OBLIGATION" means any part of the Obligations. "OBLIGATIONS" shall mean and include any and all Indebtedness, Liabilities and obligations of every kind, nature and description of each Credit Party to any Lender Party, or any of them, however evidenced, arising under this Agreement or the other Credit Documents, whether now existing or hereafter arising, whether direct or indirect, absolute or contingent, joint and/or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured, or on original, renewed or extended terms and whether arising directly or acquired by any Term Lender from any other party to the Credit Documents (including, without limitation, participations or interests of any Term Lender in the obligations of any Credit Party to others), whether for principal, interest, fees, expenses, indemnities or other amounts and whether incurred by any Credit Party as principal, surety, endorser, guarantor, accommodation party, indemnitor or otherwise. "OFFSETTING POSITION" means any offsetting sale or SCTSC Purchase Agreements, an offsetting NYMEX contract, an offsetting physical inventory position (excluding tank bottoms and pipeline linefill inventory classified as a long term asset and working -16- inventory not held for resale) or an offsetting swap, collar or option contract, in each case eliminating price risk and substantially all basis risk. "OLD SENIOR NOTES" means the 11% Senior Notes due 2009 in the original principal amount of $235,000,000 issued by EOTT MLP, which shall be discharged pursuant to the Reorganization Plan. "OPEN POSITION" means, with respect to crude oil inventory or crude oil purchase or sale contracts, any position that does not have an Offsetting Position. "ORGANIZATIONAL DOCUMENTS" means the documents (including Bylaws, if applicable) pursuant to which a Person that is a corporation, partnership, trust or limited liability company is organized. "OTHER PRIORITY CLAIMS" means any account payable, obligation or liability that the Term Lender Agent has determined has or will have a Lien upon or claim against any Cash Equivalent, Account or inventory of any Borrower senior or equal in priority to the security interests in favor of the Collateral Agent, in each case to the extent such Cash Equivalent, Account or inventory of any Borrower is otherwise included in the determination of the Borrowing Base and the included portion thereof has not already been reduced by such Lien or claim. "PBGC" means the Pension Benefit Guaranty Corporation. "PERCENTAGE SHARE" means, with respect to any Term Lender (1) when used in Section 2(a), the percentage set forth such Term Lender's name on the Term Lender Schedule hereto and (2) when used otherwise, the percentage obtained by dividing (A) the sum of the unpaid principal balance of such Term Lender's Term Loans at the time in question by (B) the sum of the aggregate unpaid principal balance of all Term Loans at such time. "PERMITTED ADJUSTMENTS" means, without duplication, changes to the financial statements of EOTT LLC and its Consolidated Subsidiaries resulting solely from: (i) the bona fide application of "fresh start" accounting promulgated under SOP 90-7 from time to time in accordance with GAAP; provided that, in the case of determining compliance with the covenant set forth in Section 10(p), application of "fresh start" accounting shall not include the changes set forth on the schedule of "fresh start" accounting changes attached to the Closing Date Certificate, but shall include any other changes resulting solely from the bona fide application of "fresh start" accounting promulgated under SOP 90-7 from time to time in accordance with GAAP (it being understood that it is the intent of the parties hereto to exclude any changes resulting solely from the bona fide application of "fresh start" accounting in the determination of covenant compliance in Section 7); (ii) income or expense directly attributable to any Designated Asset in accordance with GAAP; -17- (iii) upon the approval of Term Lender Agent, the cumulative effect of changes to GAAP; (iv) gains or losses realized upon the sale of any assets (other than Designated Assets) not sold in the ordinary course of business; or (v) gains or losses realized upon the sale or other disposition of any Designated Assets, write-ups and write-downs of the Designated Assets. "PERMITTED CAPITAL EXPENDITURES" means (a) cash Capital Expenditures made by EOTT MLP or EOTT LLC, as the case may be, and its consolidated Subsidiaries that (i) in the aggregate, other than Capital Expenditures made in connection with the Designated Assets, do not exceed $12,500,000 during each of the calendar years 2003 and 2004, and (ii) in the aggregate, for Capital Expenditures made in connection with the Designated Assets, do not exceed $3,300,000 during each of the calendar years 2003 and 2004, and (b) cash Capital Expenditures made with the proceeds from the issuance of additional equity by EOTT LLC for the purpose of funding any asset acquisition on terms and conditions, and of an asset, reasonably acceptable to the Majority Term Lenders. "PERMITTED INVESTMENTS" means (i) Cash Equivalents, (ii) Investments described in the Disclosure Schedule, and (iii) Investments by EOTT LLC or any of its Subsidiaries in any Wholly Owned Subsidiary of EOTT LLC that is a Borrower or a Guarantor. "PERMITTED LIEN" shall mean any of the following: (i) pledges or deposits of cash or securities under worker's compensation, unemployment insurance or other social security legislation or deposits with insurers to cover self-retention obligations under employee life or medical insurance programs; (ii) carriers', warehousemen's, mechanics', materialmen's, repairmen's, landlord's or other like Liens (including, without limitation, Liens on property of any Credit Party in the possession of storage facilities, pipelines or barges) arising in the ordinary course of business for amounts that are not more than 60 days past due or the validity of which is being contested in good faith and by appropriate proceedings, if necessary, and for which adequate reserves are maintained on the books of any Credit Party in accordance with GAAP; (iii) Liens under or with respect to accounts with brokers or counterparties with respect to the following commodity accounts maintained by EOTT OLP with Refco, L.L.C.: Account Nos. 1725 43979; 1725 65803; 1725 67320; 1725 67543; 1725 72336; 1725 72611; 1725 67544 and 67544M; and L610 54999 (for transactions effected with or through United Energy, Inc.), consisting of cash, commodities or futures contracts, options, securities, instruments and other like assets; (iv) deposits of cash or securities to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory or regulatory obligations, -18- surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (v) Liens in respect of existing Capital Leases described in the Disclosure Schedule and such other leases but encumbering only the property under lease; (vi) statutory Liens related to the purchase of crude oil by a Borrower in the ordinary course of business; vii) Liens permitted by the Security Documents; (viii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith and by appropriate proceedings, if necessary, and for which adequate reserves are maintained on the books of any Credit Party in accordance with GAAP; (ix) easements, rights-of-way, restrictions, minor defects and irregularities in title and other similar charges or encumbrances not interfering in any material respect with the business of any Credit Party; (x) Liens securing purchase money financing for any property or asset hereafter acquired; and (xi) Liens provided for in the Reorganization Plan, granted by the Person, granted in the assets, and securing the Indebtedness, as set forth in the Disclosure Schedule. "PERSON" means an individual, corporation, partnership, limited liability company, association, joint stock company, trust or trustee thereof, estate or executor thereof, unincorporated organization or joint venture, Tribunal or any other legally recognizable entity. "POST-CONFIRMATION PROJECTIONS" shall have the meaning set forth in Section 2(c)(i)(9)]. "PREPETITION CREDIT AGREEMENT" has the meaning set forth in the recitals. "PREPETITION LENDERS" has the meaning set forth in the recitals. "PRESCRIBED FORMS" has the meaning set forth in Section 3(g)(iii). "PTO" means the United States Patent and Trademark Office or any successor or substitute office in which filings are necessary or, in the opinion of the LC Agent, desirable in order to create or perfect Liens on any Intellectual Property that constitutes Collateral. "PURCHASE AGREEMENTS" means, collectively, the Crude Oil Purchase Agreement and the Receivables Purchase Agreement. "RATING AGENCY" means either S&P or Moody's. -19- "RECEIVABLES PURCHASE AGREEMENT" means that certain Second Amended and Restated Receivables Purchase Agreement, dated as of the date hereof, by and among SCTSC and EOTT OLP (as amended, amended and restated, supplemented or otherwise modified from time to time). "REFERENCE PERIOD" means, (a) for the period ending January 31, 2003, the calendar month ending January 31, 2003, (b) for the period ending February 28, 2003, the period of two consecutive calendar months ending on such date, (c) for the period ending March 31, 2003, the period of three consecutive calendar months ending on such date and (d) for a period ending as of any other date, the period of four (4) consecutive calendar months ending on such date (in each case treated as a single accounting period). "REGISTER" has the meaning set forth in Section 15(e). "REGULATION D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect. "REIMBURSABLE TAXES" has the meaning set forth in Section 3(d)(i). "RELEASE" has the meaning given such term in 42 U.S.C. Section 9601(22). "REORGANIZATION PLAN" means that Third Amended Joint Chapter 11 Plan of the Debtors dated December 6, 2002, and filed with the Bankruptcy Court in connection with the Cases. "RISK MANAGEMENT POLICIES" means, with respect to any Borrower, such risk management procedures and internal controls and such trading policies with such Open Position limits, with such changes thereto in effect at any time after the Closing Date, as are then currently approved by the EOTT LLC board of directors. "S&P" means Standard & Poor's Ratings Group (a division of McGraw Hill, Inc.) or its successor. "SCTSC" means, Standard Chartered Trade Services Corporation, a Delaware corporation, as purchaser under the Purchase Agreements. "SECURED PARTIES" shall have the meaning set forth in the Intercreditor Agreement. "SECURITY" means any rights, properties or interests of any Lender Party and the Collateral Agent under the Credit Documents, which provide recourse or other benefits to any Lender Party or the Collateral Agent in connection with the Obligations or the non-payment or non-performance thereof, including any Collateral, guaranties of the payment of any Obligation, bonds, surety agreements, keep-well agreements, letters of credit, rights of subrogation, rights of offset and other rights provided for thereunder. "SECURITY DOCUMENTS" means the Intercreditor Agreement, the instruments listed in the Security Schedule and all other security agreements, deeds of trust, mortgages, chattel mortgages, pledges, guaranties, financing statements, continuation statements, extension -20- agreements, Control Agreements and other agreements or instruments now, heretofore or hereafter delivered by any Credit Party to the Collateral Agent in connection with this Agreement or any transaction contemplated hereby to secure or guarantee the payment of any part of the Obligations or the performance of any Credit Party's other duties and obligations under the Credit Documents. "SECURITY SCHEDULE" means the Security Schedule attached to the Closing Date Certificate, in form and substance satisfactory to Term Lender Agent. "SENIOR NOTES INDENTURE" means that certain indenture, dated on or about the Closing Date, among EOTT LLC, EOTT Finance Corp., the Subsidiary Guarantors (as defined therein), and the Indenture Trustee, pursuant to which EOTT LLC will issue the New Senior Notes. "SUBSIDIARY" means, with respect to any Person, any corporation, association, partnership, limited liability company, joint venture or other business or corporate entity, enterprise or organization which is directly or indirectly (through one or more intermediaries) controlled or owned more than 50% by such Person. "SYNTHETIC LEASE" means, as applied to any Person, any lease (including leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) (a) that is not a Capital Lease and (b) in respect of which the lessee retains or obtains ownership of the property so leased for federal income tax purposes, other than any such lease under which that Person is the lessor. "TAX CODE" means the Internal Revenue Code of 1986, as amended from time to time, together with all rules and regulations promulgated with respect thereto. "TERM LENDER AGENT" has the meaning set forth in the preamble. "TERM LENDERS" each signatory hereto other than any Credit Party that is a party hereto and other than Lehman, in its capacity as Term Lender Agent, and the successors of each such party. "TERM LENDER SCHEDULE" means Schedule I hereto. "TERM LOANS" has the meaning set forth in Section 2(a)(i). "TERM LENDER AGENT'S SPECIAL COUNSEL" means Thompson & Knight L.L.P. or such other counsel as may be approved by the Term Lender Agent. "TERM NOTES" means the promissory notes of Borrowers dated the date hereof and made payable to the order of Term Lenders in accordance with their respective Percentage Shares, all of which shall evidence the aggregate joint and several Indebtedness of Borrowers in respect of the Term Loans. -21- "TERMINATION DECLARATION DATE" means the earlier to occur of (i) the date on which the Term Lender Agent declares all Obligations to be due and payable on account of an Event of Default and (ii) the Maturity Date. "TERMINATION EVENT" means (i) the occurrence with respect to any ERISA Plan of (A) a reportable event described in Sections 4043(c)(5) or (6) of ERISA or (B) any other reportable event described in Section 4043(c) of ERISA other than a reportable event not subject to the provision for 30-day notice to the Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation under Section 4043(a) of ERISA, (ii) the withdrawal of any ERISA Affiliate from an ERISA Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (iii) the filing of a notice of intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment as a termination under Section 4041 of ERISA, (iv) the institution of proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty Corporation under Section 4042 of ERISA or (v) any other event or condition that might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any ERISA Plan. "TIER-A OBLIGATIONS" shall have the meaning set forth in the Intercreditor Agreement. "TIER-B OBLIGATIONS" shall have the meaning set forth in the Intercreditor Agreement. "TIER-A TERM LOANS" means Term Loans in the aggregate principal amount of $50,000,000 evidenced, or to be evidenced, by Term Notes in the form of Exhibit A-1. "TIER-B TERM LOANS" means Term Loans in the aggregate principal amount of $25,000,000 evidenced, or to be evidenced, by Term Notes in the form of Exhibit A-2. "TRIBUNAL" means any government, any arbitration panel, any court or any governmental department, commission, board, bureau, agency or instrumentality of the United States of America or any state, province, commonwealth, nation, territory, possession, county, parish, town, township, village or municipality, whether now or hereafter constituted or existing. "UCC" means the Uniform Commercial Code as in effect in the State of New York. "WEST COAST ASSETS" means the gas processing, storage and transportation facilities at Tupnam, Kern County, California. "WHOLLY OWNED SUBSIDIARY" means any Subsidiary of a Person, all of the issued and outstanding stock, limited liability company membership interests or partnership interests of which (including all rights or options to acquire such stock or interests) are directly or indirectly (through one or more Subsidiaries) owned by such Person, excluding any general partner interests owned by EOTT GP in any such Subsidiary that is a partnership, such general partner interests not to exceed two percent (2%) of the aggregate ownership interests of any such partnership and directors' qualifying shares if applicable. -22- 2. THE TERM LOANS. (a) Commitment to Lend; Notes. (i) Subject to the terms and conditions hereof, each Term Lender agrees to exchange its DIP Loans and the promissory notes evidencing such DIP Loans, for new term loans maturing on the Maturity Date (collectively, the "TERM LOANS") and new Term Notes, in the same principal amounts, provided that such exchange must occur on or before March 1, 2003. (ii) The obligation of Borrowers to repay to each Term Lender the amount of the Term Loans owed to such Term Lender, together with interest accruing in connection therewith, shall be evidenced by two Term Notes made by Borrowers payable to the order of such Term Lender in the form of Exhibit A-1 and Exhibit A-2 with appropriate insertions. One such Note will evidence two-thirds of such Term Lender's Term Loans, will be in the form of Exhibit A-1 and will state that it is a "Tier-A Term Note". The other Note will evidence one-third of such Term Lender's Term Loans, will be in the form of Exhibit A-2 and will state that it is a "Tier-B Term Note." Interest on each Term Note shall accrue as provided herein and therein. The Obligations shall be due and payable as provided in the Term Notes and herein. Borrowers shall be jointly and severally liable for the payment of the Obligations. (b) Requesting Term Loans. The Borrower Representative must give to each Term Lender a written request for the exchange of Term Loans to be received by the Term Lender Agent on or before the Closing Date. Such written request must be made in the form and substance of the Borrowing Notice attached hereto as Exhibit B, duly completed. If all conditions precedent to the Term Loans have been met, each Term Lender will on the date requested make the exchange described in subsection (a)(i) above as provided herein. (c) Conditions Precedent to Extension of Credit. (i) Extension of Credit. No Term Lender has any obligation to make its Extension of Credit unless the following conditions precedent have been satisfied: (1) Reorganization Plan. The Reorganization Plan and all amendments, modifications, revisions and restatements thereof, if any, shall have been delivered to the Term Lender Agent and shall be in form and substance satisfactory to the Term Lender Agent (in such form approved by the Term Lender Agent, the "APPROVED PLAN"). Except as set forth in modification motions filed with the Bankruptcy Court and served upon and approved by the Term Lender Agent, there shall have been no modifications, amendments, revisions or restatements of the Approved Plan. Any representation or warranty made by any Debtor in the Approved Plan shall be accurate, true, correct and complete in all material respects as of the Closing Date. All conditions precedent to the effectiveness of the Approved Plan shall have been satisfied pursuant to Article 18 of the Reorganization Plan and the Approved Plan shall have -23- achieved substantial completion as described in Section 17.1 of the Reorganization Plan. (2) Confirmation Order. The Confirmation Order shall have been delivered to the Term Lender Agent and shall be in form and substance satisfactory to the Term Lender Agent. The Confirmation Order shall have been entered by the Bankruptcy Court, shall be a Final Order and the Term Lender Agent shall have received evidence satisfactory to it demonstrating such fact. (3) Release of Claims. All prior claims against each present and former party (other than any Credit Party or predecessor entity thereto) to the DIP Term Loan Agreement (and their agents, representatives, affiliates, professionals, etc.) shall have been released and waived by each Credit Party, which releases and waivers shall be in form and substance satisfactory to the Term Lender Agent in its sole discretion. (4) Other Agreements. Each of the Letter of Credit Agreement and the Purchase Agreements shall have been executed by the Borrowers and the other parties thereto, shall be in full force and effect and shall be in form and substance satisfactory to the Term Lender Agent. (5) Credit Documents. Each of the Credit Documents shall have been duly executed and delivered by the respective Credit Parties thereto, shall be in full force and effect and shall be in form and substance satisfactory to the Term Lender Agent. All Schedules to this Agreement and each other Credit Document shall be satisfactory in form and substance to the Term Lender Agent. Each Term Lender shall have received a fully executed copy of each such document. (6) Governmental and Third-Party Approvals; Judgments, Etc. All necessary governmental and all material third-party approvals and/or consents, as the case may be, in connection with the consummation of the Reorganization Plan, the Credit Documents and the transaction contemplated therein, shall have been obtained and remain in full force and effect, subject to no unsatisfied conditions, and all applicable waiting periods shall have expired without any action being taken by any competent authority which restrains, prevents or imposes materially adverse conditions upon the consummation of the Reorganization Plan, any Credit Document, or any of the transactions contemplated therein. In addition, there shall not exist any judgment, order, injunction or other restraint prohibiting or imposing materially adverse conditions on the consummation or performance of this Agreement, any other Credit Document or any of the transactions contemplated therein. (7) Financial Statements. To the extent not previously received, the Term Lender Agent shall have received (A) the Initial Financial Statements -24- certified by the chief financial officer of EOTT LLC as accurately reflecting the financial position of the Credit Parties as of the date of, and for the periods covered by, such financial statements (subject to changes resulting from normal and recurring adjustments made in conformity with GAAP) and (B) such receivables analyses as the Term Lender Agent shall request, in each case in form and substance satisfactory to the Term Lender Agent. (8) Financial Condition. No Material Adverse Change shall have occurred since December 31, 2002. The Term Lender Agent shall be satisfied in all respects with the projected amount of available cash, Cash Equivalents, other credit lines (on terms and conditions satisfactory to the Term Lender Agent, other than credit extended pursuant to this Agreement, the Letter of Credit Agreement, the New Senior Notes or the Purchase Agreements) or other sources of liquidity acceptable to the Term Lender Agent, available to the Credit Parties during each period from the Closing Date through the Maturity Date. (9) Disclosure Schedule; Closing Date Certificate. Not less than five (5) Business Days prior to the Closing Date, the Term Lender Agent shall have received the Disclosure Schedule, which shall be satisfactory in form and substance to the Term Lender Agent in its sole discretion. In addition, the Term Lender Agent shall have received a certificate of an executive officer of EOTT LLC attaching thereto, and (A) certifying that as of the Closing Date such projections, business plans, budgets and statements are their best estimate of such matters: (1) financial projections regarding the Credit Parties in form and substance satisfactory to the Term Lender Agent in its sole and absolute discretion for the period commencing January 1, 2003 and ending September 30, 2004 (collectively, the "POST-CONFIRMATION PROJECTIONS") with respect to which and the Term Lender Agent shall be satisfied with the accounting practices and procedures utilized by the Credit Parties in connection with such Post-Confirmation Projections, (2) a business and financial plan for EOTT LLC (in form and detail satisfactory to the LC Agent), prepared or caused to be prepared by a senior financial officer thereof, setting forth for Fiscal Years 2003 and 2004, (a) monthly balance sheets, income statements and statements of cash flows for the following year, including the availability projections and plans for personnel, capital expenditures and facilities, and (b) a statement of all of the material assumptions on which such plan is based (collectively, the "BUSINESS PLAN"), (3) the initial Cash Budget, which shall be in form and substance satisfactory to the Term Lender Agent, and (4) a statement (which may be unaudited) in detail satisfactory to the Term Lender Agent of changes to the financial statements of EOTT LLC and its Consolidated Subsidiaries anticipated to result from the application of "fresh start" accounting that have been reflected in the Post-Confirmation Projections, which shall be satisfactory to the Term Lender Agent, and (B) certifying as true and correct as of the Closing Date (1) the Security -25- Schedule, setting forth the Security Documents, which schedule shall be satisfactory to the Term Lender Agent, and (2) the Disclosure Schedule referred to in the first sentence of this Section 2(d)(i)(9). (10) Solvency Certificate. The Term Lenders shall have received an officer's certificate of EOTT LLC dated as of the Closing Date as to the solvency of each of the Credit Parties following the consummation of the transactions contemplated herein, in form and substance satisfactory to the Term Lender Agent. (11) Licenses, Etc. All franchises, licenses, permits, certifications, accreditation and other rights, consents and approvals which are necessary for the operations of the Credit Parties' respective business (after giving effect to the transactions contemplated hereby) shall have been obtained and shall be in full force and effect and all necessary applications for renewals pertaining thereto shall have been submitted to the proper issuing governmental authority or Tribunal. (12) Labor and Employee Agreements. All labor and related employee agreements and liabilities, and all pension and other employee benefit plans and liabilities of the Credit Parties, after giving effect to the Reorganization Plan, shall be satisfactory to the Term Lender Agent. (13) Reorganization of Corporate Structure. The Term Lender Agent shall have received evidence which shall be satisfactory to the Term Lender Agent that (A) EOTT LLC shall have been formed as a limited liability company under Delaware state law, (B) all necessary action shall have been taken by EOTT MLP to transfer all of its equity interest in EOTT GP to EOTT LLC and (C) all necessary action shall have been taken to authorize and issue the New GP Interest to EOTT GP and the New LP Interest to EOTT LLC. (14) Documentation Regarding New Senior Notes. The Old Senior Notes shall have been cancelled in accordance with the terms and conditions of the Reorganization Plan. The Senior Notes Indenture shall have been executed by the respective parties thereto, substantially in the form delivered to the Term Lender Agent prior to the date hereof, with only such changes as shall be acceptable to Term Lender Agent and each of the representations, covenants, events of default (and any remedies arising as a result thereof) and other provisions shall as determined by the Term Lender Agent be substantially identical to those contained in the indenture and the other documents evidencing or relating to the Old Senior Notes, or otherwise acceptable to Term Lender Agent. (15) Equity Structure and Corporate Governance. All aspects of the equity ownership and corporate and operational governance of the Credit Parties (including the composition of each Credit Party's respective Governing -26- Body and other management and the terms of any management agreements), to the extent not expressly set forth in the Reorganization Plan or referred to in clause (13) of this Section 2(f), shall be satisfactory to the Term Lender Agent. In addition, Term Lender Agent shall have been provided with true and correct copies of all documents with respect to the Credit Parties' existing or proposed capital structure (both debt and equity or other interests) and shall be satisfied with the terms and provisions thereof. (16) Certified Copy of Organizational Documents. The Term Lender Agent shall have received from each of the Credit Parties a copy, certified by a duly authorized officer of such Person to be true and complete as of the Closing Date, of each of its Organizational Documents as in effect on such date. (17) Corporate Action. All corporate action necessary for the valid execution, delivery and performance by each of the Credit Parties of this Agreement and the other Credit Documents to which it is or is to become a party, and the transactions contemplated therein, shall have been duly and effectively taken, and evidence thereof satisfactory to the Term Lender Agent and the Term Lenders shall have been provided to the Term Lender Agent. (18) Incumbency Certificate. The Term Lender Agent shall have received from each of the Credit Parties an incumbency certificate, dated as of the Closing Date, certified by a duly authorized officer of such Credit Party, and giving the name and bearing a specimen signature of each individual who shall be authorized: (A) to sign, in the name and on behalf of the each such Credit Party, each of the Credit Documents to which such Person is or is to become a party, (B) to request the Term Loans, and (C) to give notices and to take other action on its behalf under the Credit Documents. (19) Insurance. The Collateral Agent shall have received (A) a certificate of insurance from an independent insurance broker acceptable to the Term Lender Agent dated as of the Closing Date, identifying insurers, types of insurance, insurance limits, and policy terms, and otherwise describing the insurance obtained in accordance with the provisions hereof and the Security Documents and (B) a detailed schedule describing all insurance coverage maintained by or for any Credit Party together with copies of the underlying policies, each of (A) and (B) in form and substance satisfactory to the Term Lender Agent. (20) Opinions of Counsel. Each of the Term Lenders and the Term Lender Agent shall have received a favorable opinion addressed to the Term Lender Agent, dated as of the Closing Date, in form and substance satisfactory to the Term Lender Agent and the Term Lenders, from counsel to the Credit Parties. -27- (21) Payment of Fees. The Borrowers shall have paid to the Term Lender Agent, for the account of the Term Lenders and the Term Lender Agent, as applicable, all accrued and unpaid fees, costs and expenses incurred by the Term Lenders and the Term Lender Agent to the extent invoiced. (22) Security Interests in Personal and Mixed Property. The Collateral Agent shall have received evidence satisfactory to it that each Credit Party shall have taken or caused to be taken all such actions, executed and delivered or caused to be executed and delivered all such agreements, documents and instruments, and made or caused to be made all such filings and recordings (other than the filing or recording of items described in clauses (C) and (D) below) that may be necessary or, in the opinion of the Collateral Agent, desirable in order to create in favor of the Collateral Agent, for the benefit of the Secured Parties a valid and (upon such filing and recording) perfected first-priority Lien in the Collateral. Such actions shall include, without limitation, the following: (A) Schedules to Credit Documents. Delivery to Collateral Agent of accurate and complete schedules to all of the applicable Credit Documents. (B) Instruments. Delivery to Collateral Agent all promissory notes or other instruments (duly endorsed, where appropriate, in a manner satisfactory to the Collateral Agent) evidencing any Collateral. (C) UCC Termination Statements. Delivery to the Collateral Agent of UCC termination statements duly executed by all applicable Persons for filing in all applicable jurisdictions as may be necessary in the determination of the Collateral Agent to terminate any effective UCC financing statements or fixture filings (other than any such financing statements or fixture filings in respect of Liens permitted to remain outstanding pursuant to the terms of this Agreement). (D) UCC Financing Statements. Delivery to the Collateral Agent of UCC financing statements and, where appropriate, duly executed by each applicable Credit Party with respect to all personal and mixed property Collateral of such Credit Party, for filing by the Closing Date in all jurisdictions as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interests created in such Collateral pursuant to the Credit Documents (E) PTO Cover Sheets, Etc. Delivery to the Collateral Agent of all cover sheets and other documents or instruments required to be filed with the PTO in order to create or perfect Liens in respect of any IP Collateral. -28- (F) Certificates of Title, Etc. If requested by the Collateral Agent, delivery to the Collateral Agent of certificates of title with respect to all motor vehicles and the taking of all actions necessary to cause the Collateral Agent to be noted as lienholder thereon or otherwise necessary to perfect the first-priority Lien granted to Collateral Agent on behalf of the Secured Parties in such motor vehicles. (G) Control Agreements. Delivery to the Collateral Agent of such control agreements with such financial institutions and other Persons in order to perfect Liens in respect of the Authorized Accounts, securities accounts, if any, and other Collateral pursuant to the Credit Documents. (23) Security Interests in Real Property. The Collateral Agent shall have received from all applicable Credit Parties: (A) Mortgages, Deeds of Trust, Etc. All mortgages, deeds of trust and any other Security Documents, including any fixture filings, relating to the Collateral Agent's first-priority Lien in real property Collateral, duly executed and notarized by each applicable Credit Party with respect to such Collateral of such Credit Party, for filing by the Closing Date in all jurisdictions as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interests or liens created in such Collateral pursuant to the Credit Documents. (B) Opinions of Local Counsel. Delivery to the Collateral Agent of an opinion of counsel (which counsel shall be satisfactory to the Collateral Agent and the Term Lender Agent) under the laws of each jurisdiction in which any Credit Party or any real property Collateral is located with respect to the creation and perfection of the security interests in favor of the Collateral Agent in such Collateral and such other matters governed by the laws of such jurisdiction regarding such security interests as the Collateral Agent and/or the Term Lender Agent may request, in each case in form and substance satisfactory to such Person. (24) Outstanding Indebtedness. The Indebtedness of the Borrowers and Guarantors existing on the Closing Date set forth on the Disclosure Schedule shall be satisfactory in all respects to the Term Lender Agent. (25) No Litigation. No litigation, investigation or inquiry by any entity (private or governmental) shall be pending or threatened with respect to this Agreement, any of the transactions contemplated hereby or any documentation executed in connection herewith, or with respect to any material debt of the Borrowers or the Guarantors which is to remain -29- outstanding after the Closing Date, or which the Term Lender Agent shall determine could cause a Material Adverse Change. (26) DIP Term Loan Agreement. No Default or Event of Default (as such terms are defined in the DIP Term Loan Agreement) shall have occurred or be continuing. (27) Enron Settlement Agreement. The performance of all actions required to consummate the Enron Settlement Agreement (including the payment of any amounts due the Enron Parties under the Enron Settlement Agreement, the execution of any required documents, and the delivery of any required instruments or other documents) shall have occurred to the satisfaction of the Term Lender Agent. (28) Environmental and Hazardous Waste Assessments. Delivery to the Term Lender Agent of any and all non-confidential environmental and hazardous waste site assessments, reports or analyses that have been obtained on or before the Closing Date (including, without limitation, any drafts thereof to the extent not yet completed), covering any real property presently or formerly owned, operated or leased by the Credit Parties and any other real property in respect of which the Credit Parties may have material liability, whether contingent or otherwise, relating to the presence of Hazardous Substances or noncompliance with Environmental Laws, together with such information as the Term Lender Agent may request with respect to any such assessment, report or analyses ongoing as of the Closing Date, to the extent requested by the Term Lender Agent. (29) PBGC. All claims against any Credit Party with respect to the alleged joint and several liability of EOTT GP for underfunded benefits liabilities upon the termination of the benefit pension plan known as the "Enron Corp. Cash Balance Plan", shall have been resolved to the satisfaction of the Term Lender Agent. (30) Big Warrior Settlement. An order of the Bankruptcy Court shall have been entered approving the Big Warrior Settlement, and such order shall be a Final Order. (31) Texas-New Mexico Pipeline Cases. Progress satisfactory to the Term Lender Agent shall have been made with respect to litigation (A) over alleged indemnification liability of EOTT Pipeline to the Texas-New Mexico Pipeline Company ("TEX-NEW MEX CO.") with respect to environmental claims against Tex-New Mex Co., and (B) over any alleged liability of EOTT Pipeline under any of John H. Roam, et al. vs. Texas-New Mexico Pipe Line Company and EOTT Energy Pipeline Limited Partnership, Cause No. CV43296, District Court of Midland County, Texas, 238th Judicial District; Jerry W. Holmes and Barbara I. Holmes vs. EOTT Energy Pipeline Limited Partnership and Texas-New Mexico Pipe -30- Line Company, Cause No. CV438000, District Court of Midland County, Texas, 385th Judicial District; Jimmie B. Cooper and Shryl S. Cooper vs. Texas-New Mexico Pipe Line Company, Inc., EOTT Energy Pipeline Limited Partnership and Amerada Hess Corporation, Case No. CIV 01-1321 M/JHG, United States District Court for the District of New Mexico; Bernard Lankford and Bette Lankford vs. Texas-New Mexico Pipe Line Company, TXNMX and EOTT Energy Pipeline Limited Partnership, Cause No. CV11176, County Court at Law of Midland County, Texas; Richard D. Warden and Nancy J. Warden vs. EOTT Energy Pipeline Limited Partnership and EOTT Energy Corp., Case No. CIV-02-370 L, United States District Court for the Western District of Oklahoma; Jimmie T. Cooper and Betty P. Cooper vs. Texas-New Mexico Pipe Line Company, Inc., EOTT Energy Pipeline Limited Partnership, and EOTT Energy Corp., Case No. D-0101-CV-2002-02122, 1st Judicial District Court, Santa Fe County, New Mexico. (32) Letter of Credit Agreement. The Letter of Credit Agreement, satisfactory to the Term Lender Agent and the Term Lenders shall concurrently be executed. (33) Funding Conditions. All the conditions precedent to extension of credit under the Letter of Credit Agreement shall concurrently be satisfied or waived. (34) Fees. The Term Lenders shall have received payment of the fees described in Section 2(g)(iii) and (iv) of this Agreement. (ii) Extension of Credit. In addition to the foregoing, no Term Lender has any obligation to make the Extension of Credit unless the following conditions precedent have been satisfied: (1) Representations True; No Event of Default. Each of the representations and warranties of any of the Credit Parties contained in this Agreement, the other Credit Documents or in any document or instrument delivered pursuant to or in connection with this Agreement shall be true as of the time which they were made and shall also be true at and as of the time of the making of the Extension of Credit, with the same effect as if made at and as of that time (except to the extent that such representations and warranties relate expressly to an earlier date) and no Default or Event of Default shall have occurred and be continuing or would result from the making of the Extension of Credit. (2) No Material Adverse Change. No Material Adverse Change shall have occurred. (3) No Legal Impediment. No change shall have occurred in any Law or regulations thereunder or interpretations thereof that in the opinion of any -31- Term Lender would make it illegal for such Term Lender to make such Extension of Credit. (4) Governmental Regulation. Each Term Lender shall have received such statements in form and substance satisfactory to such Term Lender as such Term Lender shall require for the purpose of compliance with any applicable regulations of the Comptroller of the Currency or the Board of Governors of the Federal Reserve System. (5) Proceedings and Documents. All proceedings in connection with the transactions contemplated by this Agreement, the other Credit Documents and all other documents incident thereto shall be satisfactory in form and substance to the Term Lenders and to the Term Lender Agent and the Term Lender Agent's Special Counsel, and the Term Lenders, the Term Lender Agent and such counsel shall have received all information and such counterpart originals or certified or other copies of such documents as the Term Lender Agent shall reasonably request. (d) Use of Proceeds. In no event shall the proceeds of any Term Loan be used directly or indirectly by any Person for personal, family, household or agricultural purposes, (A) for the purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or carrying any "margin stock" (as such term is defined in Regulation U promulgated by the Board of Governors of the Federal Reserve System) or (B) to extend credit to others directly or indirectly for the purpose of purchasing or carrying any such margin stock. The Borrowers represent and warrant that no Borrower is engaged principally in, or has as one of any Borrower's important activities, the business of extending credit to others for the purpose of purchasing or carrying such margin stock. (e) Mandatory Prepayments. (i) The Borrowers shall make any prepayment or other payment required from time to time under the Intercreditor Agreement. (ii) If any Credit Party or any Subsidiary of any Credit Party shall receive or be entitled to receive any proceeds with respect to any sale or issuance by such Person of (a) any Indebtedness not permitted by Section 10(a) or (b) any additional equity (other than as described in clause (b) of the definition of Permitted Capital Expenditures), the Borrowers shall pay to the Collateral Agent, an amount equal to such proceeds to be applied in accordance with the Cash Waterfall. (iii) If at any time any Credit Party or any Subsidiary of any Credit Party shall receive or be entitled to receive proceeds of any Designated Assets, the Borrowers shall pay to the Collateral Agent, an amount equal to such proceeds, to be applied by the Collateral Agent in accordance with the Cash Waterfall. (iv) Any amounts prepaid pursuant to this Section shall be in addition to, and not in lieu of, all payments otherwise required to be paid under the Credit Documents at the time of such prepayment. -32- (f) Optional Prepayment of Term Loans. The Borrowers may, upon five Business Days' notice to the Term Lender Agent (and the Term Lender Agent will promptly give notice to the other Term Lenders), from time to time and without premium or penalty, prepay the Term Loans in whole or in part, so long as the aggregate amount of all partial prepayments of principal on the Term Loans equals $5,000,000 or any higher integral multiple thereof. Any amounts prepaid pursuant to this Section shall be in addition to, and not in lieu of, all payments otherwise required to be paid under the Credit Documents at the time of such prepayment. Any such payment will be paid to the Collateral Agent for application in accordance with the Cash Waterfall and, in any event, shall be applied first to the Tier-A Term Loans and then to the Tier-B Term Loans. (g) Interest Rates and Fees. (i) The Obligations under the Term Notes shall bear interest as provided therein. (ii) Upon the occurrence and during the continuance of a Default or Event of Default, all Obligations shall bear interest on each day outstanding at the Default Rate. (iii) In consideration of each Term Lender's commitment to exchange its DIP Loans for the Term Loans, Borrowers will pay to Term Lender Agent, for the account of each Term Lender in accordance with such Term Lender's Percentage Share, an extension fee in the aggregate amount of $750,000, which fee shall be fully earned and due and payable on the Closing Date. (v) Pursuant to Section 2(g)(v) of the DIP Term Loan Agreement, Borrowers agreed to pay to Term Lender Agent, for the account of each Term Lender in accordance with such Term Lender's Percentage Share, a deferred financing fee in the aggregate amount of $2,000,000, on the effective date of the Reorganization Plan. Borrower, Term Lender Agent and the Term Lenders agree that such fee shall be paid on, at Borrower's option, either (1) the Closing Date or (2) the earlier to occur of (A) the Maturity Date and (B) the date the Term Loans are paid in full (whether by prepayment or upon acceleration). The deferred financing fee shall be fully earned on the Closing Date 3. PAYMENTS TO TERM LENDERS. (a) General Procedures. The Credit Parties will make each payment that they owe under the Credit Documents (other than fees payable to the Lender Parties on the Closing Date) to the Collateral Agent for the account of the Lender Party to whom such payment is owed in lawful money of the United States of America, without set-off, deduction or counterclaim and in immediately available funds. Each such payment must be received by the Collateral Agent not later than noon, New York, New York time, on the date such payment becomes due and payable. Any payment received by the Collateral Agent after such time will be deemed to have been made on the next following Business Day. Should any such payment become due and payable on a day other than a Business Day, the maturity of such payment shall be extended to the next succeeding Business Day, and, in the case of a payment of principal, past due interest, fees or expenses, interest shall accrue and be payable thereon for the period of such extension in -33- the Credit Document under which such payment is due. Each payment under a Credit Document shall be due and payable at the place provided therein. The Collateral Agent shall distribute all money so collected or received in accordance with the Cash Waterfall. (b) Payment Obligations Absolute. Notwithstanding any payment by the Credit Parties to the Collateral Agent pursuant to Section 3(a), nothing contained in this Agreement is intended to or shall (a) impair, as among the Credit Parties and the Lender Parties, the obligation of the Credit Parties, which is absolute and unconditional, to pay to the Lender Parties any Obligations payable by the Credit Parties under this Agreement or any other Credit Document as and when the same shall become due and payable in accordance with their respective terms, or (b) prevent the Lender Parties from exercising all remedies otherwise permitted by applicable law upon default under this Agreement or any other Credit Document, subject to the Intercreditor Agreement and the Confirmation Order. (c) Application of Payments made to Term Lender Agent. Subject to the provisions of the Intercreditor Agreement, funds received by the Term Lender Agent in accordance with the Cash Waterfall shall be applied as follows: (1) first, to pay expenses incurred by the Term Lender Agent; (2) second, for the payment of interest on the Tier-A Term Loans which is then due; (3) third, to the payment of required principal payments on the Tier-A Term Loans which are then due; (4) fourth, to the payment of interest on the Tier-B Term Loans which is then due; (5) fifth, to the payment of required principal payments on the Tier-B Term Loans which are then due; and (6) last, for the payment or prepayment of any other Obligations. If any Term Lender owes payments to the Term Lender Agent hereunder, any amounts otherwise distributable under this Section to such Term Lender shall be deemed to belong to Term Lender Agent to the extent of such unpaid payments, and the Term Lender Agent shall apply such amounts to make such unpaid payments rather than distribute such amounts to such Term Lender. All distributions of amounts described in subsections 2 through 5 shall be made by Term Lender Agent to each Term Lender in accordance with such Term Lender's Percentage Share. (d) Capital Reimbursement. If either (i) the introduction or implementation of or the compliance with or any change in or in the interpretation of any Law or (ii) the introduction or implementation of or the compliance with any request, directive or guideline from any central bank or other governmental authority (whether or not having the force of Law) affects or would affect the amount of capital required or expected to be maintained by any Lender Party or any Person controlling any Lender Party, then, within five Business Days after -34- demand by such Lender Party, Borrowers will pay to such Lender Party, from time to time as specified by such Lender Party, such additional amount or amounts as such Lender Party shall determine to be appropriate to compensate such Lender Party or any Person controlling such Lender Party in light of such circumstances, to the extent that such Lender Party reasonably determines that the amount of any such capital would be increased or the rate of return on any such capital would be reduced by, or in whole or in part based on, the existence of the face amount of such Lender Party's Term Loans. (e) Increased Cost of Term Loans. If any applicable Law (whether now in effect or hereinafter enacted or promulgated, including Regulation D) or any interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof (whether or not having the force of Law): (i) shall change the basis of taxation of payments to any Lender Party of any principal, interest or other amounts attributable to any Term Loan or otherwise due under this Agreement in respect of any Term Loan (other than taxes imposed on, or measured by, the overall net income of such Lender Party or any Applicable Lending Office of such Lender Party by any jurisdiction in which such Lender Party or any such Applicable Lending Office is located); or (ii) shall change, impose, modify, apply or deem applicable any reserve, special deposit or similar requirements in respect of any Term Loan or against assets of, deposits with or for the account of, or credit extended by, such Lender Party; or (iii) shall impose on any Lender Party any other condition affecting any Term Loan, the result of which is to increase the cost to any Lender Party of making any Term Loan or to reduce the amount of any sum receivable by any Lender Party in respect of any Term Loan by an amount deemed by any Lender Party to be material, then such Lender Party shall promptly notify the Term Lender Agent and the Borrower Representative in writing of the happening of such event and of the amount required to compensate such Lender Party for such event (on an after-tax basis, taking into account any taxes on such compensation), whereupon Borrower shall, within five Business Days after demand therefor by such Lender Party, pay such amount to the Term Lender Agent for the account of such Lender Party. (f) Notice; Change of Applicable Lending Office. A Lender Party shall notify the Borrower Representative of any event occurring after the date of this Agreement that will entitle such Lender Party to compensation under Section 3(d) or (e) as promptly as practicable, but in any event within 90 days after such Lender Party obtains actual knowledge thereof; provided, however, that (i) if such Lender Party fails to give such notice within 90 days after it obtains actual knowledge of such an event, such Lender Party shall, with respect to compensation payable pursuant to Section 3(d) or (e) in respect of any costs or compensation resulting from such event, only be entitled to payment under Section 3(d) or (e) for costs or compensation incurred from and after the date 90 days prior to the date that such Lender Party does give such notice and (ii) such Lender Party will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation -35- and will not, in the sole determination of such Lender Party, be disadvantageous to such Lender Party, except that such Lender Party shall have no obligation to designate an Applicable Lending Office located outside the United States of America. Each Lender Party will furnish to the Borrower Representative a certificate setting forth the basis and amount of each request by such Lender Party for compensation under Section 3 (d) or (e). (g) Reimbursable Taxes. Borrowers covenant and agree that: (i) Borrowers will indemnify each Lender Party against and reimburse each Lender Party for all present and future stamp and other taxes, levies, costs and charges whatsoever imposed, assessed, levied or collected on or in respect of this Agreement (whether or not legally or correctly imposed, assessed, levied or collected), excluding, however, any taxes imposed on or measured by the overall net income of such Lender Party or any Applicable Lending Office of such Lender Party by any jurisdiction in which such Lender Party or any such Applicable Lending Office is located (all such non-excluded taxes, levies, costs and charges being collectively called "REIMBURSABLE TAXES" in this Section). Such indemnification shall be on an after-tax basis, taking into account any taxes imposed on the amounts paid as indemnity. (ii) All payments on account of the principal of, and interest on, each Lender Party's Term Loan, and all other amounts payable by Borrowers to any Lender Party hereunder, shall be made in full without set-off or counterclaim and shall be made free and clear of and without deductions or withholdings of any nature by reason of any Reimbursable Taxes, all of which will be for the account of Borrowers. In the event of Borrowers being compelled by Law to make any such deduction or withholding from any payment to any Lender Party, Borrowers shall pay on the due date of such payment, by way of additional interest, such additional amounts as are needed to cause the amount receivable by such Lender Party after such deduction or withholding to equal the amount which would have been receivable in the absence of such deduction or withholding. If Borrowers shall make any deduction or withholding as aforesaid, Borrowers shall within 60 days thereafter forward to such Lender Party an official receipt or other official document evidencing payment of such deduction or withholding. (iii) Notwithstanding the foregoing provisions of this Section, Borrowers shall be entitled, to the extent they are required to do so by Law, to deduct or withhold (and not to make any indemnification or reimbursement for) income or other similar taxes imposed by the United States of America (other than any portion thereof attributable to a change in federal income tax Laws effected after the date hereof) from interest, fees or other amounts payable hereunder for the account of any Lender Party, other than Lender Party (A) who is a U.S. person for Federal income tax purposes or (B) who has the Prescribed Forms on file with the Term Lender Agent (with copies provided to the Borrower Representative) for the applicable year to the extent deduction or withholding of such taxes is not required as a result of the filing of such Prescribed Forms; provided, however, that if Borrower shall so deduct or withhold any such taxes, it shall provide a statement to the Term Lender Agent and such Lender Party, setting forth the amount of such taxes so deducted or withheld, the applicable rate and any other information or documentation which such Lender Party may request for assisting such Lender Party to -36- obtain any allowable credits or deductions for the taxes so deducted or withheld in the jurisdiction or jurisdictions in which such Lender Party is subject to tax. As used in this Section, "PRESCRIBED FORMS" means such duly executed forms or statements, and in such number of copies, which may, from time to time, be prescribed by Law and which, pursuant to applicable provisions of (i) an income tax treaty between the United States and the country of residence of such Lender Party providing the forms or statements, (ii) the Tax Code or (iii) any applicable rules or regulations thereunder, permit Borrowers to make payments hereunder for the account of such Lender Party free of such deduction or withholding of income or similar taxes. 4. INTENTIONALLY OMITTED. 5. INTENTIONALLY OMITTED. 6. INTENTIONALLY OMITTED. 7. OTHER ACTIONS OF CREDIT PARTIES. (a) Each Credit Party shall at any time and from time to time take such steps as the Term Lender Agent may request for the Collateral Agent to (i) obtain an acknowledgment, in form and substance satisfactory to the Collateral Agent, of any bailee having possession of any of the Collateral that the bailee holds such Collateral for the Collateral Agent, (ii) obtain "control" of any investment property, deposit accounts, letter-of-credit rights or electronic chattel paper (as such terms are defined in Article 9 of the UCC with corresponding provisions in Sections 9-104, 9-105, 9-106 and 9-107, relating to what constitutes "control" for such items of Collateral), with any agreements establishing control to be in form and substance satisfactory to the Collateral Agent, and (iii) otherwise insure the continued perfection and priority of the Collateral Agent's security interest in any of the Collateral and of the preservation of its rights therein. (b) Each Credit Party shall at any time and from time to time take such steps as the Collateral Agent may request with respect to the creation and perfection of valid, enforceable, first priority mortgage Liens on and/or security interests in any real property or fixtures included in the Collateral owned or leased by such Credit Party, including, without limitation, (i) the execution, delivery, acknowledgement, filing and recordation of such mortgages, deeds of trust, fixture filings and similar instruments as the Collateral Agent deems necessary or desirable to the granting of a valid, enforceable first priority mortgage Lien on any such property or fixtures and (ii) the delivery of such mortgagee's title insurance (other than with respect to the real property underlying pipelines, to the extent not typically obtained by lenders taking a lien in similar assets), title opinions and other legal opinions as the Collateral Agent deems necessary or desirable to better confirm the granting to the Collateral Agent by the applicable Credit -37- Party of such Lien on such Credit Party's real property or fixtures included in the Collateral owned or leased by such Credit Party. (c) Nothing contained in this Agreement shall be construed to narrow the scope of the Collateral Agent's security interests in or liens on any of the Collateral or the perfection or priority thereof or to impair or otherwise limit any of the rights, powers, privileges or remedies of the Collateral Agent. 8. REPRESENTATIONS AND WARRANTIES. Each Credit Party hereby makes the following representations and warranties, each of which is a continuing representation and warranty, the continuing truth and accuracy of each of such representations and warranties being a continuing condition of financing of Borrowers by the Term Lenders: (a) Such Credit Party is duly organized, formed or incorporated and validly existing under the Laws of its jurisdiction of organization or incorporation, having all powers required to carry on its business. Such Credit Party has the partnership, corporate or limited liability company, as applicable, power to execute, deliver and perform the terms and provisions of this Agreement and the other Credit Documents. Such Credit Party has taken or caused to be taken all necessary partnership, corporate or limited liability company, as applicable, action to authorize the execution, delivery and performance of this Agreement and the other Credit Documents. Each Borrower is duly authorized to borrow funds hereunder. (b) Such Credit Party is duly qualified, in good standing and authorized to do business in the jurisdictions in the United States identified in Section 5(b) of the Disclosure Schedule. Such jurisdictions comprise all jurisdictions within the United States wherein the character of the properties owned or held by it or the nature of business transacted by it makes such qualification necessary, except to the extent that such non-qualification, lack of good standing or non-authorization could not result in a Material Adverse Change. Such Credit Party has taken all actions and procedures customarily taken in order to enter, for the purpose of conducting business or owning property, each jurisdiction outside the United States wherein the character of the properties owned or held by it or the nature of the business transacted by it makes such actions and procedures necessary, except for such actions which if not taken, could not result in a Material Adverse Change. (c) This Agreement and the other Credit Documents constitute and will constitute legal, valid and binding obligations of such Credit Party, enforceable against it in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally. -38- (d) Except as set forth in Section 8(d) of the Disclosure Schedule such Credit Party is in compliance with the requirements of all applicable laws, rules, regulations and orders of any governmental authority or Tribunal relating to its business as presently conducted or contemplated and relating to all real estate formerly or presently owned, operated or leased by any Credit Party, including, without limitation, all permits, licensing and approval requirements; ERISA; the Tax Code; all limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in any Environmental Law, or in any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, except to the extent that any such non-compliance (alone or in the aggregate with other such instances of non-compliance) could not result in a Material Adverse Change. (e) No action of, or filing with, any governmental or public body or authority (other than, as of the Closing Date, the filing or recording of such UCC financing statements, mortgages, deeds of trust, fixture filings and other documents evidencing security interests and Liens in favor of the Collateral Agent as have been delivered, in form and substance satisfactory, to the Term Lender Agent on or prior to the Closing Date) is required in connection with the execution, delivery and performance of this Agreement, the other Credit Documents or any of the instruments or documents to be delivered pursuant hereto or thereto. (f) The execution and delivery by such Credit Party of the Credit Documents to which it is a party, the performance by such Credit Party of its obligations under such Credit Documents and the consummation of the transactions contemplated by the various Credit Documents do not and will not (i) except as set forth in Section 8(f) of the Disclosure Schedule, conflict with any provision of (1) any Law, or (2) the Organizational Documents of such Credit Party, (ii) conflict with the terms of or result in a breach or default under any material contract, indenture, lease, license or other agreement to which such Credit Party is party or (iii) result in or require the creation of any Lien upon any assets or properties of such Credit Party or any of its Affiliates, except as expressly contemplated in the Credit Documents. Except as expressly contemplated in the Credit Documents, no permit, consent, approval, authorization or order of and no notice to or filing, registration or qualification with, any Tribunal or third party is required in connection with the execution, delivery or performance by such Credit Party of any Credit Document or to consummate any transactions contemplated by the Credit Documents, other than consents, approvals, authorizations or orders that have been obtained or notices given or filings made prior to the date hereof. (g) Such Credit Party's place of incorporation, organization or formation, as applicable, is the State of Delaware, and its principal place of business and -39- chief executive office, where its records are maintained are disclosed on the signature page hereto. Except as set forth in Section 8(g) of the Disclosure Schedule, such Credit Party does not use any trade styles, trade names or fictitious partnership names. (h) All filings, assignments, pledges and deposits of documents or instruments will have been made and all other actions have been taken that are necessary or advisable (other than, as of the Closing Date, the filing or recording of such UCC financing statements, mortgages, deeds of trust, fixture filings and other documents evidencing security interests and Liens in favor of the Collateral Agent as have been delivered, in form and substance satisfactory, to the Term Lender Agent on or prior to the Closing Date), under applicable law, to establish and perfect the Collateral Agent's first-priority security interest in and Liens on the Collateral. The Collateral and the Collateral Agent's rights with respect to the Collateral are not subject to any set-off, claims, recoupment, withholdings or other defenses. The Credit Parties are the owners of the Collateral, free from any lien, security interest, encumbrance or any other claim of demand except for Permitted Liens. (i) After giving effect to the transactions contemplated by this Agreement and the other Credit Documents, there does not exist at the date hereof any condition or event which constitutes a Default hereunder or which after notice or lapse of time, or both, would constitute such a Default hereunder. (j) Except as set forth in Section 8(j) of the Disclosure Schedule: (a) no Termination Event has occurred with respect to any ERISA Plan and all ERISA Affiliates are in compliance with ERISA in all material respects, (b) no ERISA Affiliate is required to contribute to, or has any other absolute or contingent Liability in respect of, any "multiemployer plan" as defined in Section 4001 of ERISA, and (c) no "accumulated funding deficiency" (as defined in Section 412(a) of the Tax Code) exists with respect to any ERISA Plan, whether or not waived by the Secretary of the Treasury or his delegate and the current value of each ERISA Plan's benefits does not exceed the current value of such ERISA Plan's assets available for the payment of such benefits. (k) Except as set forth in Section 8(k) of the Disclosure Schedule: (i) No notice, notification, demand, request for information, citation, summons, order, notice of violation, or notice of non-compliance has been issued, no complaint, consent order or consent decree has been filed, no fine or penalty has been assessed and no investigation or review is pending or threatened by any Tribunal or any other Person with respect to any of the following: (A) any alleged generation, treatment, storage, recycling, transportation, disposal or Release of any Hazardous Materials, either by any Credit Party or on any property owned by such Credit Party, (B) any -40- remedial action that might be needed to respond to any such alleged generation, treatment, storage, recycling, transportation, disposal or Release (C) any alleged failure by any Credit Party to have any permit, license or authorization required in connection with the conduct of its business or with respect to any such generation, treatment, storage, recycling, transportation, disposal or Release or (D) the failure of any Credit Party to comply in any manner and to any extent with any Environmental Law. (ii) No Credit Party has any known material contingent Liability in connection with any alleged generation, treatment, storage, recycling, transportation, disposal or Release of any Hazardous Materials at any location. (iii) No Credit Party has handled any Hazardous Materials, other than as a generator, on any properties now or previously owned, operated or leased by any Credit Party. (iv) Each Credit Party represents and warrants that: (1) no PCBs are or have been present at any properties now or previously owned, operated or leased by any Credit Party; (2) no asbestos is or has been present at any properties now or previously owned, operated or leased by any Credit Party; (3) there are no underground storage tanks for Hazardous Materials, active or abandoned, at any properties now or previously owned, operated or leased by any Credit Party; and (4) no Hazardous Materials have been Released at, on or under or are migrating from or to any properties now or previously owned, operated or leased by any Credit Party. (v) No Credit Party has transported or arranged for the transportation of any Hazardous Material to any location listed on the National Priorities List under CERCLA, any location listed for possible inclusion on the National Priorities List by the Environmental Protection Agency in CERCLIS, nor, any location listed on any similar state list or which is the subject of federal, state or local enforcement actions or other investigations, other than as could not, alone or in the aggregate, result in a Material Adverse Change. (vi) Any Hazardous Substances that have been generated by any Credit Party business or at any properties presently or formerly owned, operated or leased by any Credit Party have, if required pursuant to applicable Environmental Laws, been transported offsite only by carriers having an identification number issued by the EPA (or the equivalent thereof in any -41- foreign jurisdiction), and treated or disposed of only by treatment or disposal facilities maintaining valid permits as required under applicable Environmental Laws, which transporters and facilities have been and are, to the best of the Credit Parties' knowledge, operating in compliance with such permits and applicable Environmental Laws, other than as could not, alone or in the aggregate, result in a Material Adverse Change. (vii) No property now or previously owned, operated or leased by any Credit Party is listed or proposed for listing on the National Priorities List promulgated pursuant to CERCLA, in CERCLIS, nor on any similar state list of sites requiring investigation or clean-up, other than as could not, alone or in the aggregate, result in a Material Adverse Change. (viii) There are no Liens arising under or pursuant to any Environmental Laws on any of the real properties or properties owned or leased by any Credit Party, and no governmental actions of which any Credit Party is aware have been taken or are in process that could subject any of such properties to such Liens; nor would any Credit Party be required to place any notice or restriction relating to the presence of Hazardous Materials at any properties owned by it or in any deed to such properties, other than that as could not, alone or in the aggregate, result in a Material Adverse Change. (ix) All environmental investigations, studies, audits, tests, reviews or other analyses for ground water or soil contamination relating to the Release of Hazardous Materials conducted by or which are in the possession or control of such Credit Party in relation to any properties or facility now or previously owned or leased by such Credit Party are available for inspection by the Term Lender Agent or the Collateral Agent at the Borrower Representative's offices or facilities. (x) None of the Credit Parties or any real property is subject to any applicable Environmental Law requiring the performance of Hazardous Substances site assessments, or the removal or remediation of Hazardous Substances, or the giving of notice to any Tribunal or governmental authority or the recording or delivery to other Persons of an environmental disclosure document or statement by virtue of or as a condition to the transactions set forth herein and contemplated hereby. (l) No Credit Party is subject to regulation under the Public Utility Holding Company Act of 1935, the Investment Company Act of 1940 (as any of the preceding acts have been amended) or any other law which regulates the incurring by such Credit Party of indebtedness, including laws relating to common contract carriers or the sale of electricity, gas, steam, water or other public utility services. Such Credit Party is not subject to regulation under the Federal Power Act that would violate, result in a default under or prohibit the effectiveness or the performance of any of the provisions of the Credit Documents. -42- (m) This Agreement is a "Credit Facility" for purposes of the Senior Notes Indenture, as defined therein. Neither the execution of any Credit Document executed in connection therewith, nor the making of the Term Loans hereunder or the consummation of any other transaction contemplated by any of the foregoing is prohibited by, or conflicts with the terms of the Senior Notes Indenture; and furthermore, none of the execution, issuance, extension or consummation requires EOTT LLC to make any provision for the granting of any Lien in favor of the holders of the notes issued under the New Senior Notes. (n) None of the following securities is evidenced by a certificate: (i) the limited partner interest of EOTT LLC in EOTT OLP; (ii) the membership interest of EOTT LLC in EOTT GP; (iii) the limited partner interest of EOTT OLP in any of EOTT Canada, EOTT Liquids or EOTT Pipeline; or (iv) the general partner interest of EOTT GP in any of EOTT OLP, EOTT Canada, EOTT Liquids or EOTT Pipelines. (o) No Credit Party is in default in the performance of any of the covenants and agreements contained in any Credit Document. No event has occurred and is continuing that constitutes a Default. (p) The Initial Financial Statements, taken as a whole, fairly present EOTT MLP's Consolidated financial position at the date thereof, the Consolidated results of EOTT MLP's operations for the periods thereof and Consolidated cash flows for the periods thereof. The Initial Financial Statements were prepared in accordance with GAAP. (q) Other than as set forth in Section 8(q) of the Disclosure Schedule, no Credit Party has any outstanding Liabilities of any kind (including contingent obligations, tax assessments and unusual forward or long-term commitments) which are, in the aggregate, material to such Credit Party or material with respect to EOTT LLC's Consolidated financial condition. (r) Other than as set forth in Section 8(r) of the Disclosure Schedule, no Credit Party is subject to or restricted by any franchise, contract, deed, Organizational Document restriction or other instrument or restriction that could cause a Material Adverse Change. (s) No certificate, statement or other information delivered herewith or heretofore by any Credit Party to the Term Lender Agent or to any Lender Party in connection with this Agreement or any other Credit Document or in connection with any transaction contemplated herein or therein contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading as of the date made or deemed made. All written information furnished after the date hereof by or on behalf of any Credit Party to the Lender Parties in -43- connection with this Agreement or any other Credit Documents, or the transactions contemplated hereby or thereby will be true, complete and accurate in every material respect in light of the circumstances in which made, or based on reasonable estimates on the date as of which such information is stated or certified. There is no fact known to any Credit Party that has not been disclosed to the Term Lender Agent that could cause a Material Adverse Change. (t) Other than as set forth in Section 8(t) of the Disclosure Schedule: (i) there are no actions, suits or legal, equitable, arbitrative or administrative proceedings pending or, to the knowledge of any Credit Party threatened, against any Credit Party or affecting any Collateral (including, without limitation, any that challenge or otherwise pertain to any Credit Party's title to any Collateral) before any Tribunal and (ii) there are no outstanding judgments, injunctions, writs, rulings or orders by any such Tribunal against any Credit Party or any Credit Party's stockholders, partners, directors or officers or affecting any Collateral, that in either case could result in a Material Adverse Change. (u) Since December 31, 2002, neither the business nor the properties of any Credit Party has been affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance). (v) Neither EOTT LLC nor any Credit Party presently has any Subsidiary or owns any capital stock in any other corporation or association except those listed in Section 8(v) of the Disclosure Schedule. No Credit Party is a member or partner of any general or limited partnership, limited liability company, joint venture or association of any type whatsoever except those listed in Section 8(v) of the Disclosure Schedule. Each of the Credit Parties owns, directly or indirectly, the entire equity interest in each of its Subsidiaries listed in Section 8(v) of the Disclosure Schedule. (w) EOTT LLC and its Subsidiaries on a Consolidated basis is solvent (as such term is used in applicable bankruptcy, liquidation, receivership, insolvency or similar Laws), and the absolute and contingent Liabilities of EOTT LLC and its Subsidiaries on a Consolidated basis, including the Obligations, will not exceed the fair market value of the assets of EOTT LLC and its Subsidiaries on a Consolidated basis and (ii) the capital of EOTT LLC and its Subsidiaries on a Consolidated basis is adequate for the businesses in which the Credit Parties are engaged and intend to be engaged. No Credit Party has incurred (whether under the Credit Documents or otherwise), nor does any Credit Party intend to incur or believe that it will incur, debts that will be beyond its ability to pay (on a basis Consolidated with EOTT LLC and its Subsidiaries) as such debts mature. -44- (x) Section 8(x) of the Disclosure Schedule contains a complete and correct list, as of the date of this Agreement, of each credit agreement, loan agreement, indenture, purchase agreement, guaranty or other arrangement providing for or otherwise relating to any Indebtedness or any extension of credit (or commitment for any extension of credit), or guaranty by, any Credit Party, or to which any Credit Party is subject, in excess of $1,000,000 with respect to any single Person and such Person's Affiliates taken as whole, other than the Credit Documents. The aggregate principal or face amount outstanding or that may become outstanding under each such arrangement is correctly described in Section 8(x) of the Disclosure Schedule. (y) The Credit Parties have delivered (or will have delivered by the Closing Date) to the Term Lender Agent and each of the Term Lenders the Post-Confirmation Projections. The Post-Confirmation Projections have been prepared in good faith based on reasonable estimates and assumptions, and on the basis of assumptions stated therein, and reflect the reasonable estimates of the Borrowers of the results of operations and other information projected therein. (z) Subject to the rights of the Credit Parties set forth in the proviso below, the Credit Parties acknowledge and agree that (i) they have no claims or causes of actions against the DIP Collateral Agent, the DIP Term Lender Agent or any DIP Term Lender under the DIP Term Loan Agreement or the DIP Intercreditor Agreement, as applicable (or any their directors, officers, employees, or agents), (ii) have no offset right, counterclaim or defense of any kind against any of the obligations, indebtedness or liabilities to the agent or the lenders under the DIP Term Loan Agreement or the DIP Intercreditor Agreement, and (iii) the DIP Term Lender Agent and the DIP Term Lenders under the DIP Term Loan Agreement and the DIP Collateral Agent under the DIP Intercreditor Agreement have properly performed and satisfied in a timely manner all of their obligations to any Credit Party. (aa) Section 8(aa) of the Disclosure Schedule contains a complete and correct list, as of the date of this Agreement, of each commodity, investment, securities and deposit account opened or maintained by each of the Credit Parties. (bb) No "Default" or "Event of Default" (as each such term is defined in the Letter of Credit Agreement) has occurred and is continuing, and there exists no event or circumstance that, with the passage of time or giving of notice, could result in a "Default" or "Event of Default" (as defined in the Letter of Credit Agreement). (cc) No "Default or "Event of Default" (as each such term is defined in the Senior Notes Indenture) has occurred and is continuing, and there exists -45- no event or circumstance that, with the passage of time or giving of notice could result in a "Default" or "Event of Default" (as defined in the Senior Notes Indenture). (dd) Each "Subsidiary Guarantor" (as such term is defined in the Senior Notes Indenture) is a Guarantor hereunder. 9. AFFIRMATIVE COVENANTS. To conform with the terms and conditions under which each Term Lender is willing to have its Extension of Credit outstanding to Borrower, and to induce each Term Lender to enter into this Agreement and to make an Extension of Credit, the Credit Parties covenant and agree jointly and severally that until the full and final payment in cash of the Obligations, unless the Majority Term Lenders have has previously agreed otherwise: (a) Payment and Performance. Each Credit Party will pay all amounts due under the Credit Documents to which it is a party in accordance with the terms thereof and will observe, perform and comply with every covenant, term and condition expressed in the Credit Documents to which it is a party. (b) Payment of Expenses. All Borrower Expenses shall be part of the Obligations. Borrower shall pay any Lender Party, on such Lender Party's demand, any and all Borrower Expenses which such Lender Party may pay in connection with the provisions hereof. (c) Instruments, Documents, Securities or Chattel Paper. Each Credit Party shall promptly notify the Collateral Agent of any instruments, documents, securities or chattel paper that are owned or acquired by such Credit Party. At any time and from time to time, upon the demand of the Term Lender Agent, such Credit Party shall deliver and pledge to the Collateral Agent, duly endorsed and/or accompanied by such instruments of assignment and transfer in such form and substance as the Term Lender Agent may request, any and all instruments, documents, securities and/or chattel paper which are included in the Collateral as the Term Lender Agent may request. Such Credit Party shall maintain and safeguard any and all documents, instruments and chattel paper in its possession and its individual books and records relating to the Collateral in a commercially reasonable manner and cause the security interest granted herein to the Collateral Agent to be marked thereon. (d) Books, Financial Statements and Reports. Each Credit Party will at all times maintain full and accurate books of account and records. EOTT LLC will maintain and will cause its Subsidiaries to maintain a standard system of accounting, will maintain its Fiscal Year and will furnish the following statements and reports to the Term Lender Agent at Borrowers' expense: (i) As soon as available, and in any event within 120 days after the end of each Fiscal Year, commencing with Fiscal Year 2003 (A) complete Consolidated balance sheets and statements of income and cash flows of EOTT LLC as of, or for the period ending, December 31 of the preceding year, together with all notes thereto, prepared in reasonable detail in accordance with GAAP, together with an unqualified opinion, based on an audit using generally accepted auditing standards, by PricewaterhouseCoopers, or other independent certified public accountants selected by EOTT and acceptable to the -46- LC Agent, stating that such Consolidated financial statements have been so prepared; provided, however, that with respect to such balance sheets and statements of income and cash flows as of, and for the period ending, December 31, 2002, the opinion by such independent certified public accountant may be subject to the following qualifications: (x) qualification relating to issues between PBGC and the Credit Parties to the extent disclosed in the Disclosure Schedule, and (y) qualification relating to the Credit Parties' status ad debtors and debtors-in-possession under Chapter 11 in the Bankruptcy Court, and (B) consolidating unaudited balance sheets and statements of income of each consolidated Subsidiary of EOTT LLC. The Consolidated financial statements referred to in subclause (A) of the preceding sentence shall set forth in comparative form the corresponding figures for the preceding Fiscal Year for the corresponding predecessor entities. In addition, within 90 days after the end of each Fiscal Year, commencing with Fiscal Year 2003 EOTT LLC will furnish a certificate signed by such accountants (1) stating that they have read this Agreement, and (2) further stating that in making their examination and reporting on the Consolidated financial statements described above they obtained no knowledge of any Default existing at the end of such Fiscal Year, or, if they did so conclude that a Default existed, specifying its nature and period of existence. (ii) As soon as available, and in any event within 45 days after the end of each of Fiscal Quarter of each Fiscal Year, (1) EOTT LLC's unaudited Consolidated balance sheet as of the end of such Fiscal Quarter and unaudited Consolidated statements of EOTT LLC's income and cash flows for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year (or, in the case of each Fiscal Quarter in 2003, from the date that the Reorganization Plan becomes effective as described in Section 2(d)(i)(1)) to the end of such Fiscal Quarter, (2) unaudited consolidating balance sheets and statements of income of each consolidated Subsidiary as of (A) the end of such Fiscal Quarter or (B) for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, all in reasonable detail and prepared in accordance with GAAP, subject to changes resulting from normal and recurring adjustments made in conformity with GAAP, and as soon as available, and in any event within 60 days after the end of the last Fiscal Quarter of each Fiscal Year, EOTT LLC's unaudited Consolidated balance sheet as of the end of such Fiscal Quarter and unaudited Consolidated statement of income and operations for such Fiscal Quarter and for the period from the beginning of the current Fiscal Year to the end of such Fiscal Quarter. (iii) As soon as available, and in any event within 45 days after the end of each calendar month, (1) EOTT LLC's unaudited Consolidated balance sheet as of the end of such month and an unaudited Consolidated statement of EOTT LLC's income for such calendar month, all in reasonable detail and prepared in accordance with GAAP, subject to changes resulting from normal and recurring adjustments made in conformity with GAAP and (2) a volume report in the form of Exhibit G hereto to be agreed upon by the parties hereto prior to the Closing Date, setting forth for such month aggregate volumes for all marketing and pipeline activities of all Credit Parties. (iv) Together with each set of financial statements furnished under subsections (i), (ii) and (iii) above, a certificate in the form of Exhibit C signed by the chief financial officer or treasurer of EOTT LLC stating that such financial statements are -47- accurate and complete in all material respects, stating that he or she has reviewed the Credit Documents containing the calculations and stating that no Default exists at the end of such Fiscal Quarter or month, respectively, or at the time of such certificate or specifying the nature and period of existence of any such Default. (v) As soon as is available, and in any event no later than 45 days after the end of Fiscal Year 2003, a business and financial plan for EOTT LLC (in form and detail satisfactory to the Term Lender Agent), prepared or caused to be prepared by a senior financial officer thereof, setting forth for Fiscal Year 2004, (1) monthly balance sheets, income statements and statements of cash flows for the following year, including the availability projections and plans for personnel, capital expenditures and facilities and (2) a statement of all of the material assumptions on which such plan is based. (vi) At such time as provided to the LC Agent, a true, correct and complete copy of the Borrowing Base Report provided to the LC Agent with such supporting information in detail as may from time to time be prescribed by the LC Agent, duly completed and certified by an authorized officer of EOTT LLC (vii) Promptly upon their becoming available, copies of all financial statements, reports, notices and proxy statements sent by EOTT LLC to its unit holders and all registration statements, prospectus supplements, periodic reports and other statements and schedules filed by EOTT LLC with any securities exchange, the Securities and Exchange Commission or any similar governmental authority. (viii) On the first Business Day of each month, (1) a Cash Flow Report in the form of Exhibit D to be agreed upon by the parties hereto prior to the Closing Date duly completed by an authorized officer of EOTT LLC for the immediately preceding month and (2) a statement reconciling such report with the then-current Cash Budget. (ix) As soon as available, and in any event within 45 days after the end of Fiscal Year 2003, an environmental compliance certificate signed by the chief executive officer of EOTT LLC in the form attached hereto as Exhibit E. Further, if requested by the Term Lender Agent, the Credit Parties shall permit and cooperate with an environmental and safety review made in connection with the operations of the Credit Parties' properties one time during each Fiscal Year, by consultants selected by the Term Lender Agent which review shall, if requested by the Term Lender Agent, be arranged and supervised by environmental legal counsel for the Term Lender Agent, all at the Credit Parties' cost and expense. The consultant shall render an oral or written report, as specified by the Term Lender Agent, based upon such review at the Credit Parties' cost and expense and a copy thereof will be provided to the Credit Parties. (x) Concurrently with the annual renewal of the Credit Parties' insurance policies, the Credit Parties shall at their own cost and expense, if requested by the Term Lender Agent in writing, cause a certificate or report to be issued by the Credit Parties' professional insurance consultants or other insurance consultants satisfactory to the Term Lender Agent certifying that the Credit Parties' insurance for the next succeeding year -48- after such renewal (or for such longer period for which such insurance is in effect) complies with the provisions of this Agreement and the Security Documents. (xi) On or about the fifth (5th) (but no later than the eighth (8th)) and on or about the twentieth (20th) (but no later than the twenty-third (23rd)) day of each calendar month and upon request by the Term Lender Agent an Open Position Report in the form of Exhibit F to be agreed upon by the parties hereto prior to the Closing Date, with such supporting information in detail as may from time to time be prescribed by the Term Lender Agent, duly completed by an authorized officer of EOTT LLC as of the last day of the preceding month if delivered on or about the fifth (5th) day of a month, as of the fifteenth (15th) day if delivered on or about the twentieth (20th) day of a month, or as of the date otherwise requested. Such report shall include (a) net long or net short fixed price crude oil positions, in total, and by delivery month by grade or product, and (b) net long or net short ratably priced crude oil positions, in total and by delivery month by grade or product. (xii) On or before the tenth (10th) Business Day following receipt by any Borrower or any other Credit Party, a copy of any account statement received from any bank, securities intermediary, commodities or futures broker or other institution with whom such Borrower or such Credit Party maintains any deposit, investment, trading or other account. (xiii) Within 30 days after the end of each calendar month, the Cash Budget, which should be in form and substance reasonably satisfactory to the Term Lender Agent. (xiv) As soon as practicable, and in any case no later than June 30, 2003, the Borrowers shall deliver to the Term Lender Agent the Consolidated balance sheet of EOTT LLC dated as of March 1, 2003, reflecting the application of "fresh start" accounting, applied in accordance with GAAP. (xv) Promptly, from time to time, such other information, documents or reports regarding any Borrower or any other Credit Party (including accountants' management letters and updates to the Cash Budget) as the Term Lender Agent may request, including any regulatory filings. (e) Other Information and Inspections. In each case, subject to the last sentence of this Section 9(e), each Credit Party will furnish to each Term Lender any information that the Term Lender Agent or any Term Lender may from time to time request concerning any covenant, provision or condition of the Credit Documents or any matter in connection with the Credit Parties' businesses and operations. In each case, subject to the last sentence of this Section 9(e), each Credit Party will permit representatives appointed by the Term Lender Agent (including independent accountants, auditors, agents, attorneys, appraisers and any other Persons) to visit and inspect during normal business hours any of such Credit Party's property, including its books of account, other books and records and any facilities or other business assets, to make extra copies therefrom and photocopies and photographs thereof and to write down and record any information such representatives obtain, and each Credit Party shall permit the Term Lender Agent or its representatives to investigate and verify the accuracy of the -49- information furnished to the Term Lender Agent or any Term Lender in connection with the Credit Documents and to discuss all such matters with its officers, employees and, upon prior notice to the Borrower Representative, its representatives. Without limitation of the foregoing, at such reasonable times and intervals as the Term Lender Agent and the Term Lenders shall request, Borrowers shall permit the Term Lender Agent and its representatives to conduct an audit, examination, test and verification of the Collateral and the other business and assets of the Credit Parties and in connection with such examination to have full access to and the right to examine, audit, make abstracts and copies from and inspect the Credit Parties' records, files, books of account and all other documents, instruments and agreements to which any Credit Party is a party. Borrowers shall pay all reasonable costs and expenses of the Term Lender Agent associated with any such audits. Additionally, at Borrowers' expense, from time to time the Term Lender Agent may require an inspection of the Collateral in storage at EOTT Terminals to be conducted by an independent appraiser selected by the Term Lender Agent. Each of the foregoing audits, inspections and examinations shall be made subject to compliance with applicable safety standards and the same conditions applicable to any Credit Party in respect of property of that Credit Party on the premises of Persons other than a Credit Party or an Affiliate of a Credit Party, and all information, books and records furnished or requested to be furnished, or of which copies, photocopies or photographs are made or requested to be made, all information to be investigated or verified and all discussions conducted with any officer, employee or representative of any Credit Party shall be subject to any applicable attorney-client privilege exceptions that the Credit Party reasonably determines is necessary and to compliance with conditions to disclosures under non-disclosure agreements between any Credit Party and Persons other than a Credit Party or an Affiliate of a Credit Party, and subject further to the express undertaking of each Person acting at the direction of or on behalf of the Term Lender Agent to be bound by the confidentiality provisions of Section 17(p). (f) Notice of Material Events and Change of Address. Each Credit Party will notify each Term Lender, not later than five (5) Business Days after any executive officer of such Credit Party has knowledge thereof, stating that such notice is being given pursuant to this Agreement, of: (i) the occurrence of any Material Adverse Change, (ii) the occurrence of any Default or Event of Default, (iii) the occurrence of any event or circumstance constituting a "Default" or "Event of Default" (as such terms are defined in the Letter Credit Agreement or the Senior Notes Indenture), (iv) the acceleration of the maturity of any Indebtedness owed by any Credit Party or any default under any indenture, mortgage, agreement, contract or other instrument to which any of them is a party or by which any of them or any of their properties is bound, if such default could cause a Material Adverse Change, (v) the occurrence of any Termination Event, -50- (vi) under any Environmental Law, any claim of $1,000,000 or more, any notice of potential liability that might be reasonably likely to exceed such amount or any other material adverse claim asserted against any Credit Party or with respect to any Credit Party's properties taken as a whole, (vii) any material loss, damage, investigation, action, suit, proceeding, claims, setoff, withholding or other defenses relating to the Collateral or which could result in a Material Adverse Change, and (viii) the filing of any suit or proceeding, or the assertion in writing of a claim against any Credit Party or with respect to any Credit Party's properties. Upon the occurrence of any of the foregoing, the Credit Parties will take all necessary or appropriate steps to remedy promptly any such Material Adverse Change, Default, Event of Default, acceleration, default or Termination Event to protect against any such adverse claim, to defend any such suit or proceeding and to resolve all controversies on account of any of the foregoing. The Credit Parties will also notify the Term Lender Agent and the Term Lender Agent's counsel in writing at least twenty (20) Business Days prior to the date that any Credit Party changes its name or the location of its chief executive office or principal place of business or the place where it keeps its books and records concerning the Collateral, furnishing with such notice any necessary financing statement amendments or requesting the Term Lender Agent and its counsel to prepare the same. -51- (g) Maintenance of Properties. Each Credit Party will maintain, preserve, protect and keep all Collateral and all other property used or useful in the conduct of its business in good condition (ordinary wear and tear excepted) and in material compliance with all applicable Laws and will from time to time make all repairs, renewals and replacements reasonably needed to enable the business and operations carried on in connection therewith to be promptly and advantageously conducted at all times. (h) Discharge of Liens. At its option, should any Credit Party fail to do so, except to the extent permitted hereunder, the Collateral Agent may discharge taxes, Liens or security interests or other encumbrances or charges at any time levied or placed on the Collateral and may pay for the insurance, maintenance and preservation of the Collateral. The Borrowers agree to reimburse the Collateral Agent on demand, together with interest thereon at the Alternate Base Rate, for any payment made or expense incurred by the Collateral Agent in connection with the foregoing or otherwise under this Agreement, and any such payment or expense shall constitute a part of the Obligations secured by the Collateral. (i) Landlord's Waiver. If any Collateral of material value is or may become subject to a landlord's Lien (other than with respect to the realty underlying pipelines, to the extent not typically obtained by lenders taking a lien in similar assets), the applicable Credit Party shall, at the Term Lender Agent's request, furnish the Collateral Agent with a landlord's waiver satisfactory in form and substance to the Term Lender Agent. (j) Maintenance of Existence and Qualifications. Each Credit Party will maintain and preserve (i) its existence and (ii) its rights and franchises in full force and effect and will qualify to do business in all states or jurisdictions where required by applicable Law, other than, in the case of clause (ii), as could not result in a Material Adverse Change. (k) Payment of Trade Liabilities, Taxes, etc. Each Credit Party will (i) timely file all required tax returns including any extensions; (ii) timely pay all taxes, assessments and other governmental charges or levies imposed upon it or upon its income, profits or property; (iii) within 120 days after the date such goods are delivered or such services are rendered, pay all Liabilities owed by it on ordinary trade terms to vendors, suppliers and other Persons providing goods and services used by it in the ordinary course of its business; (iv) pay and discharge when due all other Liabilities now or hereafter owed by it, other than royalty payments suspended in the ordinary course of business; and (v) maintain appropriate accruals and reserves for all of the foregoing in accordance with GAAP. However, each Credit Party may delay paying or discharging any of the foregoing so long as it has set aside on its books adequate reserves therefor in accordance with GAAP and (i) it is in good faith contesting the validity thereof by appropriate proceedings, if necessary or (ii) it is in good faith contesting the validity of such Liability. (l) Insurance. Each Credit Party shall at all times carry insurance for all of its property (irrespective of whether such property is owned or acquired before, on or after the Closing Date) with financially sound and reputable insurers, of a character usually carried by responsible Persons engaged in the same business or a business similarly situated against loss or damage, of the kinds and in the amounts customarily carried by such Persons and carry such other insurance as is usually carried by such Persons, including, without limitation, insurance -52- against its liability for injury to Persons (with the Term Lender Agent, the Term Lenders and the Collateral Agent named as additional insureds and the Collateral Agent as loss payee), all in amounts and of the type currently carried by such Credit Party. All insurance policies covering Collateral shall be endorsed (i) to provide for payment of losses to the Collateral Agent, (ii) to provide that such policies may not be canceled or reduced or affected in any material manner for any reason without 15 days prior notice to the Collateral Agent and (iii) to provide for any other matters specified in any applicable Security Document or which the Collateral Agent may require. (m) Performance on Borrowers' Behalf. If any Credit Party fails to pay any taxes, insurance premiums, expenses, attorneys' fees or other amounts it is required to pay under any Credit Document, the Term Lender Agent may pay the same after notice of such payment by the Term Lender Agent is given to the Borrower Representative. The Borrowers shall immediately reimburse the Term Lender Agent for any such payments and each amount paid by the Term Lender Agent shall constitute an Obligation owed hereunder that is due and payable on the date such amount is paid by the Term Lender Agent. (n) Interest. The Borrowers hereby, on a joint and several basis, agree to pay interest at the Default Rate on all Obligations (including Obligations to pay fees or to reimburse or indemnify any Term Lender) that Borrower has in this Agreement promised to pay to such Term Lender and that are not paid when due. Such interest shall accrue from the date such Obligations become due until they are paid. (o) Compliance with Agreements and Law. Each Credit Party will perform all material obligations it is required to perform under the terms of each indenture, including in the case of EOTT LLC, the New Senior Notes, mortgage, deed of trust, security agreement, lease and franchise and each material agreement, contract or other instrument or obligation to which it is a party or by which it or any of its properties is bound. Each Credit Party will conduct its business and affairs in compliance with all Laws applicable thereto. (p) Environmental Matters; Environmental Reviews. (i) Each Credit Party will comply in all material respects with all Environmental Laws now or hereafter applicable to such Credit Party and any real estate owned, operated or leased thereby as well as all contractual obligations and agreements with respect to environmental remediation or other environmental matters and will obtain, at or prior to the time required by applicable Environmental Laws, all environmental, health and safety permits, licenses and other authorizations necessary for its operations and will maintain such authorizations in full force and effect and will submit timely applications for renewal of such permits licenses and other authorizations. (ii) Each Credit Party will promptly furnish to the Term Lender Agent all written notices of violation, orders, claims, citations, complaints, penalty assessments, suits or other proceedings received by any such Credit Party after the date hereof, or of which it has notice after the date hereof, pending or threatened against such Credit Party, the potential liability of which exceeds $1,000,000 or could cause a Material Adverse Change if resolved adversely against such Credit Party, by any governmental authority -53- with respect to any alleged violation of or non-compliance with any Environmental Laws or any permits, licenses or authorizations in connection with its ownership or use of its properties or the operation of its business. (iii) Each Credit Party will promptly furnish to the Term Lender Agent all requests for information, notices of claim, demand letters and other notifications received after the date hereof by such Credit Party in connection with its ownership or use of its properties or the conduct of its business, relating to potential responsibility with respect to any investigation or clean-up of Hazardous Material at any location, the potential liability of which exceeds $1,000,000. (q) Evidence of Compliance. Subject to the last sentence of Section 9(e), each Credit Party will furnish to each Term Lender at such Credit Party's expense all evidence which the Term Lender Agent from time to time requests in writing as to the accuracy and validity of or compliance with all representations, warranties and covenants made by any Credit Party in the Credit Documents, the satisfaction of all conditions contained therein and all other matters pertaining thereto. (r) Agreement to Deliver Security Documents. To further secure the Obligations whenever requested by the Term Lender Agent in its sole and absolute discretion, the Credit Parties will deliver chattel mortgages, security agreements, financing statements and other Security Documents in form and substance satisfactory to the Term Lender Agent for the purpose of granting, confirming and perfecting first and prior Liens or security interests in any personal property (tangible or intangible) now owned or hereafter acquired by any Credit Party. (s) Newly Created or Acquired Subsidiaries. Each Subsidiary of EOTT LLC created, acquired or coming into existence after the date hereof shall, promptly upon the creation, acquisition or formation thereof, execute and deliver to the Term Lender Agent an instrument of joinder, in form and substance satisfactory to Term Lender Agent, pursuant to which each new Subsidiary (i) shall adopt, ratify, confirm and agree to perform and be bound by Section 13 hereof and the absolute and unconditional guaranty of the timely repayment of the Obligations and the due and punctual performance of the obligations of the Borrowers hereunder set forth therein, (ii) shall join the applicable Security Documents as if such new Subsidiary was an original signatory thereto, and (iii) shall deliver such other instruments and documents, including, without limitation, perfection certificates, UCC financing statements and certificates representing all of the issued and outstanding equity interests of such new Subsidiary, in each case required to be executed or delivered pursuant to such Security Documents in order to grant to or maintain the Collateral Agent's, first-priority perfected security interest in and to the assets of and the interests issued by such new Subsidiary. EOTT LLC will cause each such new Subsidiary to deliver to the Term Lender Agent, simultaneously with its delivery of such an instrument of joinder, written evidence satisfactory to the Term Lender Agent and its counsel that such Subsidiary has taken all corporate, limited liability company or partnership action necessary to duly approve and authorize its execution, delivery and performance of such instrument and any other documents that it is required to execute. (t) Compliance with Agreements. Each Credit Party shall observe, perform or comply with any term or condition under the Reorganization Plan. In addition, each Credit Party -54- shall observe, perform or comply with any agreement with any Person or any term or condition of any instrument, if such agreement or instrument is materially significant to such Credit Party or to EOTT LLC on a Consolidated basis or materially significant to any Guarantor, unless any such failure to so observe, perform or comply is remedied within the applicable period of grace (if any) provided in such agreement or instrument. (u) Risk Management Policies. During the term of this Agreement, EOTT LLC will maintain in effect the Risk Management Policies and adhere to and conduct its risk management activities, and cause the other Credit Parties to adhere to and conduct their respective risk management activities, in accordance with such policies. The Borrower Representative shall provide written notice to the Term Lender Agent of any changes to the Risk Management Policies that the EOTT LLC board of managers adopts promptly upon the EOTT LLC board of managers' action thereon, and in no event more than 30 days after approval by the EOTT LLC board of directors of such changes. (v) Merger. The Credit Parties shall, on or prior to the second Business Day after the Closing Date, cause the merger of EOTT MLP into EOTT OLP, as contemplated in the Reorganization Plan. 10. NEGATIVE COVENANTS. To conform with the terms and conditions under which each Term Lender is willing to have its Extension of Credit outstanding to Borrowers, and to induce each Term Lender to enter into this Agreement and make the Extension of Credit, the Credit Parties covenant and agree jointly and severally that until the full and final payment in cash of the Obligations , unless the Majority Term Lenders have previously agreed otherwise: (a) Indebtedness. No Credit Party will in any manner owe or be liable for Indebtedness except: (i) the Obligations; (ii) Indebtedness arising under Hedging Contracts permitted under Section 10(d) or consisting of options, swaps, collars and similar instruments that relate to crude oil, refined petroleum products or NGLs that satisfy the requirements of subclauses (A), (B) and (C) of the proviso to the definition of "Hedging Contracts"; (iii) Indebtedness of any Borrower owing to any other Borrower; (iv) Liabilities with respect to obligations to deliver crude oil, refined petroleum products or NGLs or to render terminalling or storage services in consideration for advance payments to a Borrower; provided, however, such delivery or rendering, as applicable, is to be made within 60 days after such payment; (v) guaranties by EOTT LLC or any Borrower of trade payables of any Borrower incurred and paid in the ordinary course of business on ordinary trade terms; (vi) any Indebtedness outstanding under the Purchase Agreements; -55- (vii) any Indebtedness existing under the Note (as defined in the Enron Settlement Agreement) not exceeding $6,250,000 in principal amount, plus any deferred interest which is added to the principal thereof in accordance with its terms; (viii) any Indebtedness existing under the Letter of Credit Agreement not exceeding $325,000,000 in principal amount; (ix) any Indebtedness existing under the New Senior Notes not exceeding $114,660,000 ($10,660,000 of which must be payment-in-kind notes issued in lieu of cash payment up to six months interest on the New Senior Notes) in principal amount, provided that no Credit Party shall make any payment of or distribution on account of principal, or make any cash payment of interest, on any New Senior Notes; and (x) Overdraft Obligations (as defined in the Intercreditor Agreement) to Standard Chartered Bank, not to exceed $15,000,000; (xi) Indebtedness under the promissory note to Big Warrior Corporation in connection with the Big Warrior Settlement, not exceeding $2,700,000 in principal amount; and (xii) Indebtedness under promissory notes payable to the order of the taxing authorities set forth in Section 10(a) of the Disclosure Schedule with respect to tax liabilities of the Credit Parties (or their predecessors, as the case may be) incurred prior to the Closing Date and provided for in the Reorganization Plan, in aggregate principal amount not exceeding $9,800,000. (b) Accounts. No Credit Party shall, without the prior written consent of the Majority Term Lenders, open or maintain any commodity, investment, securities or deposit accounts except for those listed on the Disclosure Schedule. (c) Limitation on Liens. No Credit Party will assign, sell, mortgage, lease, transfer, set over, pledge, grant any security interest in or Lien upon, encumber, or otherwise dispose of or abandon any Accounts, inventory, cash, investment securities, margin deposit accounts with commodities brokers or other rights or properties that constitute Collateral, whether now owned or hereafter acquired, nor will any Credit Party permit any such Lien, encumbrance or disposition to exist or occur with respect to such property, except for (i) the sale from time to time in the ordinary course of business of such property as may constitute inventory of such Credit Party; and (ii) Permitted Liens. Except as provided in the Intercreditor Agreement, no Credit Party shall abandon, forfeit, surrender, or release any rights in the Collateral or enter into any operating, joint venture or similar agreement with respect to the Collateral. (d) Hedging Contracts. No Credit Party will be a party to or in any manner be liable on any Hedging Contract, except Hedging Contracts to hedge the Credit Parties' risk from fluctuations in commodity prices in the ordinary course of business or pursuant to the Crude Oil Purchase Agreement. (e) Limitation on Mergers, etc. and Issuances of Securities. Except as expressly provided in this Section, no Credit Party will (i) enter into any transaction of merger or -56- consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), (ii) acquire any business or property from, or capital stock of, or be a party to any acquisition of, any Person except for (1) purchases of inventory and other property to be sold or used in the ordinary course of business, and (2) Investments permitted under Section 10(h) or (iii) sell, transfer, lease, exchange, alienate or otherwise dispose of, in one transaction or a series of transactions, any part of its business or property, whether now owned or hereafter acquired, except for sales or transfers not prohibited by Section 10(f). EOTT LLC will not issue any securities other than membership interests and any options or warrants giving the holders thereof only the right to acquire such interests. No Subsidiary of EOTT LLC will issue any additional partnership or limited liability company interests or shares of its capital stock or other securities or any options, warrants or other rights to acquire such additional partnership or limited liability company interests or shares or other securities, except that a direct Subsidiary of a Credit Party may issue additional partnership or limited liability company interests or shares or other securities to such Credit Party or to EOTT LLC so long as such Subsidiary is a Wholly Owned Subsidiary of EOTT LLC after giving effect thereto. No Subsidiary of a Borrower which is a partnership will allow any diminution of such Borrower's interest (direct or indirect) therein. (f) Limitation on Asset Sales. No Credit Party will sell, transfer, lease, exchange, alienate or dispose of any Collateral or any of its assets or properties or any interest therein, including pursuant to any sale/leaseback transaction, except: (i) equipment that is worthless or obsolete or no longer necessary or useful to the proper conduct of its business or that is replaced by equipment of equal suitability and value; (ii) inventory (including pipeline linefill) sold in the ordinary course of business on ordinary trade terms and such inventory sold pursuant to the Crude Oil Purchase Agreement (including documents of title delivered to SCTSC in connection therewith and all proceeds thereof; (iii) Accounts, contract rights and any proceeds thereof sold pursuant to the Receivables Purchase Agreement; (iv) other dispositions of assets not exceeding (A) $250,000 for any individual disposition or series of related dispositions and (B) $1,000,000 in aggregate amount for all such dispositions during any fiscal year of the Borrowers; and (v) the disposition of the Designated Assets for cash on terms and conditions satisfactory to the Term Lender Agent, provided that the net proceeds therefrom shall be applied in accordance with the Cash Waterfall. All proceeds of any such sales shall be paid directly to the Collateral Agent as provided for in the Intercreditor Agreement. No Credit Party will sell, transfer or otherwise dispose of capital stock of or partnership or other interests in any of its Subsidiaries except to EOTT LLC or a Wholly Owned Subsidiary of EOTT LLC. No Credit Party will discount, sell, pledge or assign any notes payable to it, Accounts or future income. The Collateral Agent will, at the Borrower Representative's request and expense, execute a release, satisfactory to the Borrower Representative and the Term Lender Agent, of any -57- Collateral so sold, transferred, leased, exchanged, alienated or disposed of in compliance with this Section 10(f). (g) Limitation on Distributions, Dividends and Redemptions. No Credit Party will declare or pay any dividends on, or make any other distribution of any kind in respect of, any class of its capital stock or any partnership, limited liability company or other interest in it, nor will any Credit Party directly or indirectly make any capital contribution of any nature to, or purchase, redeem, acquire or retire any shares of the capital stock of or partnership or limited liability company interests in, any Credit Party (whether such interests are now or hereafter issued, outstanding or created), or cause or permit any reduction or retirement of the capital stock of any Credit Party, while any Obligations are outstanding. Notwithstanding the foregoing, Subsidiaries of a Borrower shall not be restricted, directly or indirectly, from declaring and paying dividends or making any other distributions to such Borrower. (h) Limitation on New Businesses, Investments and Capital Expenditures. No Credit Party will (i) make any expenditure or commitment or incur any obligation or enter into or engage in any transaction except in the ordinary course of business and transactions contemplated by the Purchase Agreement, (ii) engage directly or indirectly in any business or conduct any operations except in connection with or incidental to its present businesses and operations, (iii) make any capital contributions to or other Investments in any Person, other than Permitted Investments, or (v) make or incur any Capital Expenditures other than Permitted Capital Expenditures and, to the extent required to be reflected as a Capital Expenditure pursuant to GAAP, payments made with respect to the Big Warrior Settlement. All transactions permitted under this Section are subject to Section 10(f). (i) Limitation on Credit Extensions. Except for Permitted Investments and Hedging Contracts permitted under Section 10(d), no Credit Party will extend credit, make advances or make loans other than normal and prudent extensions of credit to customers buying goods and services in the ordinary course of business or to another Credit Party in the ordinary course of business, which extensions shall not be for longer periods than those extended by similar businesses operated in a normal and prudent manner. (j) Transactions with Affiliates. No Credit Party will engage in any transaction with any Affiliate (other than a Borrower or a Guarantor) on terms more favorable to such Person than would have been obtainable on an arms'-length basis in the ordinary course of business. Further, no Credit Party will engage in any material transaction with Enron or any of its Affiliates, except as contemplated in the Enron Settlement Agreement and the Employee Transition Agreement. (k) Prohibited Contracts. Except as expressly provided for in the Credit Documents and as described in the Disclosure Schedule, no Credit Party will, directly or indirectly, enter into, create or otherwise allow to exist any contract or other consensual arrangement restricting the ability of any Subsidiary of EOTT LLC, including but not limited to any Borrower to: (i) pay dividends or make other distributions, (ii) purchase or redeem equity interests held in it by any Borrower or EOTT LLC, (iii) repay loans and other Indebtedness owing by it to any Borrower or EOTT LLC, (iv) transfer any of its assets to any Borrower or EOTT LLC or (v) create, incur, assume or suffer to exist any Lien upon its property or assets to -58- secure the Obligations. No Credit Party will enter into any "take-or-pay" contract or other contract or arrangement for the purchase of goods or services that obligates it to pay for such goods or service regardless of whether they are delivered or furnished to it other than contracts for pipeline capacity or for services in either case reasonably anticipated to be utilized in the ordinary course of business. No ERISA Affiliate will incur any obligation to contribute to any "multiemployer plan" as defined in Section 4001 of ERISA that is subject to Title IV of ERISA. No Credit Party shall prepay the principal of, or purchase, redeem or otherwise acquire or retire for value, any of the New Senior Notes. (l) Modification of Certain Agreements. No Credit Party will amend, modify, or permit any amendment or modification to (i) its partnership agreement, limited liability company agreement, certificate of formation, certificate of incorporation or other Organizational Document, as applicable (other than solely to effect the merger of EOTT MLP with and into EOTT OLP), (ii) the Senior Notes Indenture, or (iii) any contract or lease, that releases, qualifies, limits, makes contingent or otherwise detrimentally affects the rights and benefits of the Term Lender Agent or any other Lender Party under or acquired pursuant to any Security Documents. (m) Open Positions. The Credit Parties shall at all times limit their Open Positions in accordance with the Risk Management Policies as from time to time in effect. (n) Books and Records. No Credit Party shall permit any material change in the accounting treatment or reporting practices of each Credit Party from those used in preparation of the financial statements referenced in Section 9(d), except as required or permitted under GAAP. (o) Minimum Consolidated EBIDA. The Borrowers shall not permit Consolidated EBIDA to be less than the following for the Reference Periods ending on the dates set forth below:
Minimum Reference Period Ended Consolidated EBIDA - ---------------------- ------------------ January 31, 2003 $ 0 February 28, 2003 $ 0 March 31, 2003 $ 0 April 30, 2003 $ 0 May 31, 2003 $ 750,000 June 30, 2003 $ 1,678,000 July 31, 2003 $ 3,403,000 August 31, 2003 $ 5,098,000 September 30, 2003 $ 6,551,000 October 31, 2003 $ 8,680,000
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Minimum Reference Period Ended Consolidated EBIDA - ---------------------- ------------------ November 30, 2003 $10,440,000 December 31, 2003 $12,684,000 January 31, 2004 $15,969,000 February 29, 2004 $15,670,000 March 31, 2004 $16,895,000 April 30, 2004 $16,532,000 May 31, 2004 $16,531,000 June 30, 2004 $17,333,000 July 31, 2004 $16,972,000 August 31, 2004 $17,386,000 September 30, 2004 $16,998,000
(p) Minimum Consolidated Tangible Net Worth. The Borrowers will not permit Consolidated Tangible Net Worth to be less than the amounts set forth as of each of the corresponding dates set forth below:
Minimum Consolidated Date Tangible Net Worth - ------------------ -------------------- March 31, 2003 $ 8,500,000 April 30, 2003 $ 8,500,000 May 31, 2003 $ 8,500,000 June 30, 2003 $ 8,500,000 July 31, 2003 $ 8,500,000 August 31, 2003 $ 8,500,000 September 30, 2003 $ 8,500,000 October 31, 2003 $ 8,500,000 November 30, 2003 $ 8,500,000 December 31, 2003 $ 8,500,000 January 31, 2004 $10,000,000 February 29, 2004 $10,000,000 March 31, 2004 $10,000,000 April 30, 2004 $10,000,000
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Minimum Consolidated Date Tangible Net Worth - ------------------ -------------------- May 31, 2004 $10,000,000 June 30, 2004 $10,000,000 July 31, 2004 $10,000,000 August 31, 2004 $10,000,000 September 30, 2004 $10,000,000
(q) Interest Coverage. The Borrowers will not permit the ratio of (a) Consolidated EBIDA for any Reference Period ending on a date set forth below to (b) Consolidated Total Interest Expense for such period, to be less than the ratio corresponding to such date set forth below:
Consolidated EBIDA to Consolidated Total Date Interest Expense - ------------------ --------------------- January 31, 2003 0.00 : 1.00 February 28, 2003 0.00 : 1.00 March 31, 2003 0.00 : 1.00 April 30, 2003 0.00 : 1.00 May 31, 2003 0.07 : 1.00 June 30, 2003 0.16 : 1.00 July 31, 2003 0.33 : 1.00 August 31, 2003 0.49 : 1.00 September 30, 2003 0.62 : 1.00 October 31, 2003 0.79 : 1.00 November 30, 2003 0.93 : 1.00 December 31, 2003 1.11 : 1.00 January 31, 2004 1.36 : 1.00 February 29, 2004 1.35 : 1.00 March 31, 2004 1.36 : 1.00 April 30, 2004 1.34 : 1.00 May 31, 2004 1.34 : 1.00 June 30, 2004 1.40 : 1.00 July 31, 2004 1.37 : 1.00
-61- (r) Current Ratio. The Borrowers will not permit the ratio of Consolidated Current Assets to Consolidated Current Liabilities to be less than the ratios set forth below as of each of the corresponding dates set forth below:
Consolidated Current Assets to Consolidated Date Current Liabilities - ------------------ ---------------------- January 31, 2003 0.77 : 1.00 February 28, 2003 0.78 : 1.00 March 31, 2003 0.90 : 1.00 April 30, 2003 0.90 : 1.00 May 31, 2003 0.90 : 1.00 June 30, 2003 0.90 : 1.00 July 31, 2003 0.90 : 1.00 August 31, 2003 0.90 : 1.00 September 30, 2003 0.90 : 1.00 October 31, 2003 0.90 : 1.00 November 30, 2003 0.90 : 1.00 December 31, 2003 0.90 : 1.00 January 31, 2004 0.90 : 1.00 February 29, 2004 0.90 : 1.00 March 31, 2004 0.90 : 1.00 April 30, 2004 0.90 : 1.00 May 31, 2004 0.90 : 1.00 June 30, 2004 0.90 : 1.00 July 31, 2004 0.90 : 1.00
(s) Compliance with Environmental Laws. Other than as set forth in the Disclosure Schedule, no Credit Party will (a) use or allow the use of any real property owned, operated or leased by any Credit Party or any portion thereof for the handling, processing, storage or disposal of Hazardous Substances, (b) cause or permit to be located on any real property owned, operated or leased by any Credit Party any underground tank or other underground storage receptacle for Hazardous Substances, (c) generate any Hazardous Substances on any real property owned, operated or leased by any Credit Party, (d) conduct any activity at or use any real property owned, operated or leased by any Credit Party in any manner so as to cause a release (i.e. releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping) or threatened release of Hazardous Substances on, upon or into the environment or (e) otherwise conduct any activity at or use any real property owned, operated or leased by any Credit Party, in each case, in any -62- manner that would violate any Environmental Law or cause any Credit Party to incur or be subject to any liability under any Environmental Law other than violations and liabilities that could not, in the aggregate, result in a Material Adverse Change. 11. EVENTS OF DEFAULT. Each of the following events constitutes an Event of Default under this Agreement: (a) Borrower fails to pay any Obligations with respect to any Term Loan when due and payable; (b) Any Credit Party fails to pay any Obligation (other than the Obligations in subsection (a) above) when due and payable, whether at a date for the payment of a fixed installment or as a contingent or other payment becomes due and payable or as a result of acceleration or otherwise, within three Business Days after the same becomes due; (c) Any event defined as a "default" or "event of default" in any Credit Document (other than this Agreement and such "events of default" that are defined to have occurred upon the occurrence of Events of Default hereunder) occurs, and the same is not remedied within the applicable period of grace (if any) provided in such Credit Document; (d) Any Credit Party fails to duly observe, perform or comply with any covenant, agreement or provision of Section 2(d), Section 2(e), Section 9(f), Section 9(k), or Section 10; (e) Any Credit Party fails (other than as referred to in subsection (a), (b), (c) or (d) above) to duly observe, perform or comply with any covenant, agreement, condition or provision of any Credit Document to which it is a party, and such failure remains unremedied for a period of 5 Business Days after written notice of such failure from the Term Lender Agent to the Borrower Representative; (f) Any representation or warranty previously, presently or hereafter made or deemed made in writing by or on behalf of any Credit Party in connection with any Credit Document shall prove to have been false or incorrect in any material respect on any date on or as of which made or deemed made, or any Credit Document at any time ceases to be valid, binding and enforceable as warranted in Section 8(b) for any reason other than its release or subordination by all Term Lenders; (g) Any (x) Credit Party shall default in the payment when due of any principal of or interest on any Indebtedness in excess of $2,500,000 in the aggregate (other than Indebtedness the validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves with respect thereto are maintained on the books of such Credit Party in accordance with GAAP), or (y) any event specified in any note, agreement, indenture, mortgage, deed of trust, security agreement or other -63- document evidencing or relating to any such Indebtedness shall occur if the effect of such event is to cause, or (with the giving of any notice or the lapse of time or both) to permit 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, or to be prepaid in full (whether by redemption, purchase, offer to purchase or otherwise), prior to its stated maturity; (h) There shall occur a "Default" or an "Event of Default" (as such terms are defined in the Letter Credit Agreement or the Senior Notes Indenture), and the same shall not be remedied within the applicable period of grace (if any) provided for in the Letter Credit Agreement or Senior Notes Indenture, as applicable; (i) Any Credit Party: (i) has entered against it a judgment, decree or order for relief by a court of competent jurisdiction in an involuntary proceeding commenced under any applicable bankruptcy, insolvency or other similar law of any jurisdiction now or hereafter in effect, including the Bankruptcy Code, as from time to time amended, or has any such proceeding commenced against it, in each case, which remains undismissed for a period of 60 days; (ii) commences a voluntary case under any applicable bankruptcy, insolvency or similar law now or hereafter in effect, including the Bankruptcy Code, as from time to time amended; or applies for or consents to the entry of an order for relief in an involuntary case under any such law; or makes a general assignment for the benefit of creditors; or is generally unable to pay (or admits in writing its inability to so pay) its debts as such debts become due; or takes corporate, partnership, limited liability company or other action to authorize any of the foregoing; (iii) has entered against it the appointment of or taking of possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of any part of the Collateral of a value in excess of $2,500,000 in a proceeding brought against or initiated by it, and such appointment or taking of possession is neither made ineffective nor discharged within 60 days after the making thereof, or such appointment or taking possession is at any time consented to, requested by or acquiesced to by it; (iv) has entered against it a final judgment for the payment of money in excess of $2,500,000 (in each case not covered by insurance satisfactory to the Term Lender Agent in its sole discretion), unless the same is stayed or discharged within 30 days after the date of -64- entry thereof or an appeal or appropriate proceeding for review thereof is taken within such period and a stay of execution pending such appeal is obtained; (v) suffers a writ or warrant of attachment or similar process to be issued by any Tribunal against all or any substantial part of its assets or any part of the Collateral of a value in excess of $2,500,000, and such writ or warrant of attachment or similar process is not stayed or released within 30 days after the entry or levy thereof or after any stay is vacated or set aside; (vi) any Termination Event shall occur with respect to (A) the ERISA Plan known as the "Enron Corp. Cash Balance Plan" resulting in the incurrence of Liability by any Credit Party or (B) any other ERISA Plan of any Credit Party, any Subsidiary of any Credit Party or any of their respective ERISA Affiliates; (j) Any Change in Control occurs; (k) Any Borrower (i) maintains in effect Risk Management Policies that are not Currently Approved by the Term Lender Agent or (ii) fails to adhere to or conduct its risk management activities, or cause any other Credit Party to adhere to or conduct their respective risk management activities, in accordance with the Risk Management Policies as in effect from time to time; (l) Any Material Adverse Change occurs; (m) Any of the Borrowers shall be enjoined from conducting any part of its business. (n) Any event defined as a "default" or "event of default" in either of the Purchase Agreements occurs and is not remedied within the applicable period of grace (if any) provided in such Purchase Agreement. (o) Any Credit Party shall breach any of its obligations under the Reorganization Plan; or (p) Any Credit Party, without the prior written consent of the Term Lender Agent and the Term Lenders, shall breach, modify, terminate, amend, appeal or seek to vacate the Confirmation Order. 12. RIGHTS AND REMEDIES. Upon the occurrence and during the continuance of any Event of Default, the Term Lender Agent may, and upon the direction of the Majority Term Lenders, shall by notice to the Borrower Representative declare all or any portion of the Obligations to be due and payable and/or the commitment to extend credit to the Borrowers (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Obligations which shall be so declared due and payable shall be and become immediately due -65- and payable, without further notice, demand or presentment, and/or, as the case may be, the commitment to extend credit to the Borrowers shall terminate; provided, that in the event of any Event of Default specified in Section 8(i)(i) or (ii), all such amounts shall become immediately due and payable automatically without any requirement of notice from the Term Lender Agent. In addition pursuant to Section 2.3(a) of the Intercreditor Agreement, if the obligations under the DIP Letter of Credit Agreement are accelerated as a result of a continuing "Event of Default" thereunder, the Term Lender Agent, upon the direction of the Majority Term Lenders, shall by notice to the Borrower Representative declare all or any portion of the Obligations to be due and payable at the same time as the obligations under the DIP Letter of Credit Agreement, whereupon the full unpaid amount of such Obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand or presentment. In accordance with the Intercreditor Agreement, the Term Lender Agent shall not exercise certain of its remedies without the consent of the Required Secured Parties (as defined in the Intercreditor Agreement). In addition, the Term Lender Agent will not, without the consent of Majority Term Lenders, direct the Collateral Agent to take any "Enforcement Action" (as defined in the Intercreditor Agreement), give any consent under Section 2.3(e) or 7.3 of the Intercreditor Agreement, or make any election or designation under Section 3.2(d) of the Intercreditor Agreement. 13. GUARANTY. (a) Each Guarantor hereby jointly and severally, irrevocably, absolutely and unconditionally guarantees to the Term Lenders the prompt, complete and full payment and performance when due, no matter how the same shall become due, of all Obligations, including but not limited to: (i) All obligations of Borrowers to pay the principal of and accrued interest on the Term Notes; (ii) All other sums payable under this Agreement and the other Credit Documents, whether for principal, interest, fees or otherwise; and (iii) Any and all other Indebtedness, obligations or Liabilities that may at any time be owed by any Credit Party to the Term Lenders, whether incurred heretofore or hereafter or concurrently herewith, under or pursuant to any of the Credit Documents, and including interest, attorneys' fees and collection costs as may be provided by Law or in any instrument evidencing any such Indebtedness or Liability. Without limiting the generality of the foregoing, the Guarantors' liability hereunder shall extend to and include all postpetition interest, expenses and other Liabilities of Borrowers described above in this subsection (a), or below in the following subsection (b), which would be owed by Borrowers but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving a Borrower. -66- (b) If Borrowers shall for any reason fail to pay any Obligation described in Section 13(a), as and when such Obligation shall become due and payable, whether at its stated maturity, as a result of the exercise of any power to accelerate, or otherwise, the Guarantors will, forthwith upon demand by the Term Lender Agent, pay such Obligation in full to the Collateral Agent for the account of the Term Lenders. (c) If any Guarantor fails to pay any obligation as described in the immediately preceding subsections (a) or (b), each Guarantor will incur the additional joint and several obligation to pay to the Collateral Agent for the account of the Term Lender Agent, and the Guarantors will forthwith upon demand by the Term Lender Agent pay to the Collateral Agent for the account of the Term Lender Agent, the amount of any and all expenses, including fees and disbursements of the Term Lender Agent's counsel and of any experts or agents retained by the Term Lender Agent that the Term Lender Agent may incur as a result of such failure. (d) As between the Guarantors and Term Lenders, this guaranty shall be considered a primary and liquidated Liability of the Guarantors. (e) Each Guarantor hereby waives all defenses based on suretyship and agrees that its obligations shall continue and the enforceability thereof against such Guarantor shall not be affected by: (i) any waiver, delay or failure of any Term Lender to exercise or to exhaust any right or remedy or to bring any right or remedy or action against the Borrowers, the Collateral or any other security available to the Term Lenders in connection with the Obligations; (ii) any extension, renewal, settlement, compromise, modification, amendment, consent, waiver or release in any respect, arising under or in connection with any of the Obligations; (iii) the existence of any claim, set-off, or other rights that any Borrower may have at any time against any Lender Party, whether in connection with the Obligations or any unrelated transactions; (iv) any invalidity or unenforceability relating to or against any Borrower, for any reason, of any of the Obligations or any agreement relating thereto; (v) any Event of Default; or (vi) any other act or failure to act or delay of any kind by any Borrower or Lender Party or any other circumstance whatsoever which might, but for the provisions hereof, constitute a defense available to, or a legal or equitable discharge of, the Borrowers. -67- (f) The obligations of each Guarantor hereunder shall continue to be effective or be reinstated, as the case may be, if at any time, payment, or any part thereof, of any obligation or interest thereon is rescinded or must otherwise be restored by any Lender Party in connection with the bankruptcy of any of the Borrowers. (g) Each Guarantor hereby waives promptness, diligence, presentment, demand of payment, protest, order and receipt of any notice in connection with its obligations hereunder. 14. TERM LENDER AGENT. (a) Appointment and Authority. Each Lender Party hereby irrevocably authorizes the Term Lender Agent, and the Term Lender Agent hereby undertakes, to receive payments of principal, interest and other amounts due hereunder as specified herein and to take all other actions and to exercise such powers under the Credit Documents as are specifically delegated to the Term Lender Agent by the terms hereof or thereof, together with all other powers reasonably incidental thereto. The relationship of the Term Lender Agent to the other Lender Parties is only that of one commercial lender acting as an agent for others, and nothing in the Credit Documents shall be construed to constitute the Term Lender Agent a trustee or other fiduciary for any Lender Party, nor to impose on the Term Lender Agent duties and obligations other than those expressly provided for in the Credit Documents. With respect to any matters not expressly provided for in the Credit Documents and any matters that the Credit Documents place within the discretion of the Term Lender Agent, the Term Lender Agent shall not be required to exercise any discretion or take any action, and it may request instructions from the Lender Parties with respect to any such matter, in which case it shall be required to act or to refrain from acting (and shall be fully protected and free from liability to all Lender Parties in so acting or refraining from acting) upon the instructions of the Majority Term Lenders (including itself); provided, however, that the Term Lender Agent shall not be required to take any action that exposes it to a risk of personal liability that it considers unreasonable or which is contrary to the Credit Documents or to applicable Law. Upon receipt by the Term Lender Agent from the Borrower Representative of any communication calling for action on the part of the Term Lenders or upon notice from the Borrower Representative or any Term Lender to the Term Lender Agent of any Default or Event of Default, the Term Lender Agent shall promptly notify each other Term Lender thereof. (b) Exculpation, the Term Lender Agent's Reliance, etc. Neither the Term Lender Agent nor any of its directors, officers, agents, attorneys or employees shall be liable for any action taken or omitted to be taken by any of them under or in connection with the Credit Documents, including their negligence of any kind, except that each shall be liable for its own gross negligence or willful misconduct. Without limiting the generality of the foregoing, the Term Lender Agent (i) may consult with legal counsel (including counsel for the Borrowers), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any other Lender Party and shall not be responsible to any other Lender Party for any statements, warranties or representations made in or in connection with the Credit Documents; (iii) shall not have any duty -68- to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the Credit Documents on the part of any Credit Party or to inspect the property (including the books and records) of any Credit Party; (iv) shall not be responsible to any other Lender Party for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any Credit Document or any instrument or document furnished in connection therewith; (v) may rely upon the representations and warranties of each Credit Party or any Lender Party in exercising its powers hereunder; and (vi) shall incur no Liability under or in respect of the Credit Documents by acting upon any notice, consent, certificate or other instrument or writing (including any facsimile, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper Person or Persons. (c) Credit Decisions. Each Lender Party acknowledges that it has, independently and without reliance upon any other Lender Party, made its own analysis of the Borrowers and the transactions contemplated hereby and its own independent decision to enter into this Agreement and the other Credit Documents. Each Lender Party also acknowledges that it will, independently and without reliance upon any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Documents. (d) Indemnification. Each Term Lender agrees to indemnify the Term Lender Agent (to the extent not reimbursed by the Borrowers within ten (10) days after demand) from and against such Term Lender's Percentage Share of any and all Liabilities and costs which to any extent (in whole or in part) may be imposed on, incurred by or asserted against the Term Lender Agent growing out of, resulting from or in any other way associated with any of the Collateral, the Credit Documents and the transactions and events (including the enforcement thereof) at any time associated therewith or contemplated therein (whether arising in contract or in tort or otherwise and including any violation or noncompliance with any Environmental Laws by any Person or any Liabilities or duties of any Person with respect to Hazardous Materials found in or released into the environment). The foregoing indemnification shall apply whether or not such Liabilities and Costs are in any way or to any extent owed, in whole or in part, under any claim or theory of strict Liability or caused, in whole or in part, by any negligent act or omission of any kind by the Term Lender Agent; provided, however, only that no Term Lender shall be obligated under this Section to indemnify the Term Lender Agent for that portion, if any, of any Liabilities and costs proximately caused by the Term Lender Agent's own individual gross negligence or willful misconduct, as determined in a final judgment. Cumulative of the foregoing, each Term Lender agrees to reimburse the Term Lender Agent promptly upon demand for such Term Lender's Percentage Share of any costs and expenses to be paid to the Term Lender Agent by Borrowers under this Agreement to the extent that the Term Lender Agent is not timely reimbursed for such expenses by Borrowers as provided for herein. As used in this Section the term "THE TERM LENDER AGENT" shall refer not only to the Person designated as such in Section 1 but also to each director, officer, agent, attorney, employee, representative and Affiliate of such Person. (e) Rights as Term Lender. In its capacity as a Term Lender, the Term Lender Agent shall have the same rights and obligations as any Term Lender and may exercise such rights as though it were not the Term Lender Agent. The Term Lender Agent may accept deposits from, lend money to, act as trustee under indentures of and generally engage in any kind -69- of business with any Credit Party or their Affiliates, all as if it were not the Term Lender Agent hereunder and without any duty to account therefor to any other Term Lender. (f) Sharing of Set-Offs and Other Payments. Each Lender Party agrees that if it shall, whether through the exercise of rights under any Security Document or rights of banker's Lien, set off or counterclaim against any of the Borrowers or otherwise, obtain payment of a portion of the aggregate Obligations owed to it which, taking into account all distributions made by the Term Lender Agent under Section 3(b), causes such Lender Party to have received more than it would have received had such payment been distributed by the Term Lender Agent pursuant Section 3(b), then (i) it shall be deemed to have simultaneously purchased and shall be obligated to purchase interests in the Obligations as necessary to cause all Lender Parties to share all payments and (ii) such other adjustments shall be made from time to time as shall be equitable to ensure that the Term Lender Agent and all Lender Parties share all payments of Obligations as provided in Section 3(b); provided, however, that nothing herein contained shall in any way affect the right of any Lender Party to obtain payment (whether by exercise of rights of banker's Lien, set-off or counterclaim or otherwise) of Indebtedness other than the Obligations. The Borrowers expressly consent to the foregoing arrangements and agree that any holder of any such interest or other participation in the Obligations, whether or not acquired pursuant to the foregoing arrangements, may to the fullest extent permitted by Law and, subject to the Intercreditor Agreement, exercise any and all rights of banker's Lien, set-off or counterclaim as fully as if such holder were a holder of the Obligations in the amount of such interest or other participation. If all or any part of any funds transferred pursuant to this Section is thereafter recovered from the seller under this Section which received the same, the purchase provided for in this Section shall be deemed to have been rescinded to the extent of such recovery, together with interest, if any, if interest is required pursuant to the order of a Tribunal to be paid on account of the possession of such funds prior to such recovery. (g) Investments. Whenever the Term Lender Agent in good faith determines that it is uncertain about how to distribute to the Lender Parties, any funds that it has received, or whenever the Term Lender Agent in good faith determines that there is any dispute among the Lender Parties about how such funds should be distributed, the Term Lender Agent may choose to defer distribution of the funds that are the subject of such uncertainty or dispute. If the Term Lender Agent in good faith believes that the uncertainty or dispute will not be promptly resolved, or if the Term Lender Agent is otherwise required to invest funds pending distribution to the Lender Parties, the Term Lender Agent shall invest such funds pending distribution, and all interest on any such Investment shall be distributed upon the distribution of such Investment in the same proportion and to the same Persons as such Investment. All moneys received by the Term Lender Agent for distribution to the Lender Parties (other than to the Person who is the Term Lender Agent in its separate capacity as Lender Party) shall be held by the Term Lender Agent pending such distribution solely as the Term Lender Agent for such Lender Parties, and the Term Lender Agent shall have no equitable title to any portion thereof. (h) Benefit of this Section. The provisions of this Section are intended solely for the benefit of the Lender Parties and no Credit Party shall be entitled to rely on any such provision or assert any such provision in a claim or defense against any Term Lender (other than in relation to the Intercreditor Agreement contained in Section 14(f). The Lender Parties may -70- waive or amend such provisions as they desire without any notice to or consent of Borrower or any other Credit Party. (i) Resignation. The Term Lender Agent may resign at any time by giving written notice thereof to the Term Lenders and the Borrower Representative. Each such notice shall set forth the date of such resignation. Upon any such resignation, the Majority Term Lenders shall have the right to appoint a successor Term Lender Agent. A successor must be appointed for any retiring Term Lender Agent, and such Term Lender Agent's resignation shall become effective when such successor accepts such appointment. If, within 30 days after the date of the retiring Term Lender Agent's resignation, no successor Term Lender Agent has been appointed and has accepted such appointment, then the retiring Term Lender Agent may appoint a successor Term Lender Agent, which shall be a commercial bank organized or licensed to conduct a banking or trust business under the Laws of the United States of America or of any state thereof. Upon the acceptance of any appointment as the Term Lender Agent hereunder by a successor Term Lender Agent, the retiring Term Lender Agent shall be discharged from its duties and obligations under this Agreement and the other Credit Documents. After any retiring Term Lender Agent's resignation hereunder, the provisions of this Section shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was the Term Lender Agent under the Credit Documents. (j) Other Lender Parties. None of the Lender Parties in such capacities, other than the Term Lender Agent in such capacity, shall have any duties or responsibilities or incur any liabilities in their respective agency capacities (as opposed to their respective capacities as Term Lenders) under or in connection with this Agreement or under any of the other Credit Documents. The relationship between the Borrowers, on the one hand, and the Term Lender Agent and such other Lender Parties, on the other hand, shall be solely that of borrower and lender. The Term Lender Agent and the Lender Parties shall not have any fiduciary responsibilities to the Borrowers or any of their Affiliates. The Term Lender Agent and the Lender Parties do not undertake any responsibility to the Borrowers or any of their Affiliates to review or inform any of the Borrowers of any matter in connection with any phase of any the Borrowers' or their Affiliate's business or operations. 15. ASSIGNMENTS AND PARTICIPATIONS. (a) None of the Credit Parties may, without the consent of the Term Lender Agent, assign or delegate any of its respective rights or obligations under this Agreement or any other Credit Document. Each Term Lender may, without the consent of any other Lender Party or any Credit Party, assign any or all of its rights and obligations under this Agreement to any Person; provided that (i) such assignment shall include the assignment of the same percentage of the assignor's Tier-A Term Loans and Tier-B Term Loans and (ii) any assignment made by Lehman Commercial Paper Inc., in its capacity as a Term Lender, during the two week period following the Closing Date shall solely be to Persons who are Bondholders and their Affiliates. -71- (b) Upon execution and delivery of any assignment permitted hereunder, from and after the closing date specified in the assignment, (i) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such assignment, have the rights and obligations as a Term Lender hereunder and (ii) the assignor Term Lender shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such assignment, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an assignment covering all of such Term Lender's rights and obligations under this Agreement, such Term Lender shall cease to be a party hereto). (c) By executing and delivering an assignment, the assignor Term Lender and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such assignment, such Term Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Credit Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Credit Document or any other instrument or document furnished pursuant hereto; (ii) such Term Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Credit Party or the performance or observance by any Credit Party of any of its obligations under this Agreement or any other Credit Document or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, and such other Credit Documents and other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such assignment; (iv) such assignee will, independently and without reliance upon such Term Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; and (v) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Term Lender. (d) Upon its receipt of an assignment executed by a Term Lender and an assignee, the Term Lender Agent shall give prompt notice thereof to the Borrower Representative. The assignor or assignee shall pay to the Term Lender Agent a processing and recordation fee of $3,500 for each assignment. Within two Business Days after its receipt of such notice, Borrowers shall execute and deliver to the assignor Term Lender and the assignee in exchange for the surrendered Term Note, new Term Notes to the order of the assignor Term Lender and such assignee, respectively. Such new Term Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Term Note. The new -72- Term Notes shall be dated the closing date of such assignment and shall otherwise be in substantially the form of Exhibit A-1 or Exhibit A-2, as applicable. (e) The Term Lender Agent shall maintain a copy of each assignment delivered to it and a register for the recordation of the names and addresses of each assignee and, with respect to the Term Lenders, the principal amount owing to each Term Lender from time to time (the "REGISTER"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower Representative and each Term Lender may treat each person, corporation, partnership, limited liability company or other entity whose name is recorded in the Register as a Term Lender hereunder for the purposes of this Agreement. The Register shall be available for inspection by the Borrower Representative or any Term Lender at any reasonable time and from time to time upon reasonable prior notice. (f) Any Term Lender may sell participations to one or more assignees in or to all or a portion of its rights and obligations under this Agreement; provided, however, that (i) such Term Lender's obligations under this Agreement shall remain unchanged, (ii) such Term Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the Borrower Representative shall continue to deal solely and directly with such Term Lender in connection with such Term Lender's rights and obligations under this Agreement and (iv) in any proceeding under any bankruptcy, insolvency or similar proceeding in respect of any Borrower or any other Credit Party, such Term Lender shall remain and be, to the fullest extent permitted by law, the sole representative with respect to the rights and obligations held in the name of such Term Lender (whether such rights or obligations are for such Term Lender's own account or for the account of any participant). (g) Each Term Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section, disclose to the assignee or participant or proposed assignee or participant any information relating to the Credit Parties or their Affiliates furnished to such Term Lender by or on behalf of the Credit Parties, provided, that such assignees or participants have agreed to be bound by the confidentiality provisions in Section 17(p). 16. INDEMNIFICATION. (a) Subject to Section 16(b) the Credit Parties, on a joint and several basis, shall indemnify each Lender Party, the DIP Term Lender Agent, the DIP Collateral Agent and each DIP Term Lender (each an "Indemnified Party") on demand against any and all Liabilities, costs and claims which to any extent (in whole or in part) may be imposed on, incurred by or -73- asserted against any Indemnified Party growing out of, resulting from or in any other way associated with: (i) the Extension of Credit; (ii) any cash management arrangements with respect to agency accounts and lockbox accounts maintained by any of the Borrowers with any Person; and (iii) any of the Collateral, the Credit Documents, the Reorganization Plan, the DIP Term Lender Agreement, the DIP Intercreditor Agreement and the transactions and events (including the enforcement or defense thereof) at any time associated therewith or contemplated therein, whether arising in contract or in tort or otherwise and including any violation or noncompliance with any Environmental Laws by any Indemnified Party or any other Person or any Liabilities or duties of any Indemnified Party or any other Person with respect to Hazardous Materials found in or Released into the environment. (b) The foregoing indemnification shall apply whether or not such Liabilities, costs and claims are in any way or to any extent owed, in whole or in part, under any claim or theory of strict liability or caused, in whole or in part, by any negligent act or omission of any kind by any Indemnified Party; provided, however, only that Indemnified Party shall not be entitled under this Section to receive indemnification for that portion, if any, of any Liabilities, costs and claims proximately caused by its own individual gross negligence or willful misconduct, as determined in a final judgment. If any Person (including any Credit Party or any of its Affiliates) ever alleges such gross negligence or willful misconduct by Indemnified Party, the indemnification provided for in this Section shall nonetheless be paid upon demand, subject to later adjustment or reimbursement, until such time as a court of competent jurisdiction enters a final judgment as to the extent and effect of the alleged gross negligence or willful misconduct. As used in this Section the term "Indemnified Party" shall refer not only to each Indemnified Party but also to each director, officer, agent, attorney, employee, representative and affiliate of such Indemnified Party. (c) The Credit Parties further agree to indemnify on a joint and several basis the Term Lender Agent's Special Counsel from, and to hold the Term Lender Agent's Special Counsel harmless against, any and all claims, liabilities, costs and expenses relating to the Term Lender Agent's Special Counsel's representation of the Term Lender Agent on matters relating to this Agreement and the Credit Documents and the Cases, except to the extent finally determined to have resulted from the willful misconduct, gross negligence or fraudulent behavior as determined in a final non-appealable judgment of the Term Lender Agent's Special Counsel relating to such services. The Term Lender Agent's Special Counsel may rely -74- upon the provisions contained in this Section 16(c) although such Person is not a party to this Agreement. 17. MISCELLANEOUS. (a) All Exhibits and Schedules attached to or referred to in this Agreement are a part hereof for all purposes. Reference is hereby made to the Security Schedule for a meaning of certain terms defined therein and used but not defined herein, which definitions are incorporated herein by reference. (b) Unless the context otherwise requires or unless otherwise provided herein the terms defined in this Agreement that refer to a particular agreement, instrument or document also refer to and include all renewals, extensions, modifications, amendments and restatements of such agreement, instrument or document; provided, however, that nothing contained in this Section shall be construed to authorize any such renewal, extension, modification, amendment or restatement. (c) All references in this Agreement to Exhibits, Schedules, Articles, Sections, subsections and other subdivisions refer to the Exhibits, Schedules, Articles, Sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any subdivisions are for convenience only and do not constitute any part of such subdivisions and shall be disregarded in construing the language contained in such subdivisions. The words "this Agreement," "this instrument," "herein," "hereof," "hereby," "hereunder" and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The phrases "this Section" and "this subsection" and similar phrases refer only to the Sections or subsections hereof in which such phrases occur. The word "or" is not exclusive, and the word "including" (in its various forms) means "including, without limitation." Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. Except as otherwise specified herein, all references to any Law shall be deemed references to such Law as the same may be modified, amended or supplemented from time to time. (d) All calculations under the Credit Documents of interest and fees shall be made on the basis of actual days elapsed (including the first day but excluding the last) and a year of 360 days. Each determination by Lender Party of amounts to be paid under Section 3 or any other matters that are to be determined hereunder by Lender Party shall, in the absence of manifest error, be conclusive and binding. Unless otherwise expressly provided herein or unless the Majority Term Lenders otherwise consent, all financial statements and reports furnished to any Lender Party -75- hereunder shall be prepared and all financial computations and determinations pursuant hereto shall be made in accordance with GAAP. (e) Notwithstanding that the Collateral Agent, whether on its own behalf and/or on behalf of others, may continue to hold the Collateral, and regardless of the value thereof, each Credit Party shall be and remain liable for the payment in full, including principal and interest, of any balance of the Obligations and expenses hereunder at any time unpaid. (f) Each Credit Party hereby expressly waives demand, presentment, protest, notice of protest and notice of dishonor with respect to any and all instruments and commercial paper included in or evidencing any of the Obligations or the Collateral, and any and all other demands and notices of any kind or nature whatsoever with respect to the Obligations, the Collateral, this Agreement and the other Credit Documents, except such as are expressly provided for herein or therein. (g) Under no circumstances shall any Lender Party be deemed to have assumed any responsibility for or obligation or duty of any nature or kind with respect to any Collateral, or any matter or proceedings arising out of or relating thereto, but the same shall be at the sole risk of Credit Parties at all times. The Credit Parties hereby release each Lender Party from any claims, causes of action and demands at any time arising out of, relating to or with respect to this Agreement, the other Credit Documents, the Obligations, the Collateral and/or any actions taken or omitted to be taken by any Lender Party with respect thereto, and the Credit Parties hereby agree jointly and severally to indemnify and hold each Term Lender harmless from and with respect to any and all such claims, Liabilities, causes of action and demands by any Person. (h) Subject to Section 14(f), upon the occurrence and during the continuance of any Event of Default hereunder, each Term Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by such Term Lender to or for the credit or the account of any Credit Party against any and all of the Obligations which are then liquidated and matured. Such Term Lender agrees promptly to notify the Term Lender Agent and the Borrower Representative after any such set-off and application is made by such Term Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Term Lenders under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Term Lenders may have. (i) No Term Lender shall be liable to any Credit Party for (i) any act or omission of any Person unless due to the gross negligence or willful -76- misconduct of such Term Lender, such Term Lender's own branches or such Term Lender's agents, (ii) loss or destruction of any draft, demand, or document in transit or in the possession of others unless due to the gross negligence or willful misconduct of such Term Lender, such Term Lender's own branches or such Term Lender's agents, (iii) lack of knowledge of any particular trade usage (other than standard banking usage as used in the normal course of business) unless such lack of knowledge is due to the gross negligence or willful misconduct of such Term Lender, such Term Lender's own branches or such Term Lender's agents, or (iv) the genuineness, falsification, or effect of any document which appears on due examination to be regular on its face. (j) This Agreement, the Credit Documents and all the transactions contemplated thereby shall be governed by and construed in accordance with the laws of the State of New York, without regard to choice of law principles, other than New York General Obligations Law Section 5-1401. (k) Each Credit Party hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of New York State or federal court of the United States of America sitting in New York City, whether trial or appellate, in any action or proceeding arising out of, or relating to, this Agreement, or for recognition or enforcement of any judgment in respect thereof, and each Credit Party hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court and consents that any such action or proceeding may be brought in such courts and waives to the fullest extent permitted by law any objection or claim that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same. Each Credit Party hereby agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction. EACH CREDIT PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR RELATING TO, THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR THE ACTIONS OF ANY LENDER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.. (l) The Term Lender Agent may rely on the written notices, requests, waivers and consents of the Borrower Representative, its officers and designated agents, including, without limitation, the Borrowing Notice, as the binding -77- actions of Borrowers hereunder. Any such notices, requests, waivers or consents received by the Term Lender Agent from the Borrower Representative on behalf of Borrowers hereunder shall be deemed to have been sent by Borrowers, and all notices and other information furnished by the Term Lender Agent to the Borrower Representative hereunder will be received by the Borrower Representative on behalf of Borrowers. In addition, the Term Lender Agent may receive from the Borrower Representative, on behalf of Borrowers, all amounts required to be paid by Borrowers and may pay to the Borrower Representative for Borrowers' account, all amounts required to be paid by or on behalf of any Term Lender to Borrowers; provided, however, that the Term Lender Agent shall not have any responsibility to inquire as to the application of such amounts by the Borrower Representative and is hereby released from any liability to Borrowers or any other Credit Party arising from such application by the Borrower Representative. (m) Each Lender Party agrees (on behalf of itself and each of its Affiliates, and each of its and their directors, officers, agents, attorneys, employees and representatives) that it (and each of them) will take all reasonable steps to keep confidential any non-public information supplied to it by or at the direction of any Credit Party; provided, however, that this restriction shall not apply to information which (i) has at the time in question entered the public domain, (ii) is required to be disclosed by Law (whether valid or invalid) of any Tribunal, (iii) is disclosed to any of its Affiliates, auditors, attorneys or agents, (iv) is furnished to any other Lender Party or to any assignee or prospective assignee of, or purchaser or prospective purchaser of participations or other interests in, any interest under the Credit Documents (provided each such assignee or prospective assignee or purchaser or prospective purchaser first agrees to hold such information in confidence on the terms provided in this Section), or (v) is disclosed in the course of enforcing its rights and remedies following the occurrence of an Event of Default. (n) Waivers and Amendments; Acknowledgments. (i) No failure or delay (whether by course of conduct or otherwise) by any Lender Party in exercising any right, power or remedy which such Lender Party may have under any of the Credit Documents shall operate as a waiver thereof or of any other right, power or remedy, nor shall any single or partial exercise by any Lender Party of any such right, power or remedy preclude any other or further exercise thereof or of any other right, power or remedy. No waiver of any provision of any Credit Document and no consent to any departure therefrom shall ever be effective unless it is in writing and signed as provided below in this Section, and then such waiver or consent shall be effective only in the specific instances and for the purposes for which given and to the extent specified in such writing. No notice to or demand on any Credit Party shall in any case of itself -78- entitle any Credit Party to any other or further notice or demand in similar or other circumstances. This Agreement and the other Credit Documents set forth the entire understanding among the parties hereto with respect to the transactions contemplated herein and therein and supersede all prior discussions and understandings with respect to the subject matter hereof and thereof, and no waiver, consent, release, modification or amendment of or supplement to this Agreement or the other Credit Documents shall be valid or effective against any party hereto unless the same is in writing and signed by (A) if such party is a Credit Party, by such party, (B) if such party is the Term Lender Agent, by such party and (C) if such party is a Term Lender, by such Term Lender or by the Term Lender Agent with the consent of the Majority Term Lenders. Notwithstanding the foregoing or anything to the contrary herein, the Term Lender Agent shall not, without the prior consent of each individual Lender Party, execute and deliver on behalf of such Lender Party any waiver or amendment that would: (A) increase or reduce the Percentage Share of any Term Lender or the maximum amount any such Term Lender is committed to fund in respect of the Term Loans or subject such Term Lender to any additional obligations, (B) reduce any principal, interest or fees payable to such Term Lender hereunder, (C) change any date fixed for any payment of any such principal, interest or fees, (D) amend the definition herein of "Majority Term Lenders" or otherwise change the aggregate amount of Percentage Shares required for the Term Lender Agent, the Term Lenders or any of them to take any particular action under the Credit Documents, (E) release Borrower from its requirement to pay the Obligations or any Guarantor from its guaranty of such payment, or (F) except as otherwise expressly provided for in Section 10(c), release any Collateral. (ii) Each Borrower hereby represents, warrants, acknowledges and admits that (A) it has been advised by counsel in the negotiation, execution and delivery of the Credit Documents to which it is a party, (B) it has made an independent decision to enter into this Agreement and the other Credit Documents to which it is a party, without reliance on any representation, warranty, covenant or undertaking by the Term Lender Agent or any Lender Party (C) there are no representations, warranties, covenants, undertakings or agreements by any Lender Party as to the Credit Documents other than as set forth in the Credit Documents, (D) no Lender Party has any fiduciary obligation toward any Credit Party with respect to any Credit Document or the transactions contemplated thereby, (E) the relationship pursuant to the Credit Documents between Borrowers and the other Credit Parties, on one hand, and each Lender Party, on the other hand, is and shall be solely that of debtor and creditor, respectively, (F) no partnership or joint venture exists with respect to the Credit Documents between any Credit Party and any Lender Party, (G) the Term Lender Agent is not Borrowers' agent, but the Term Lender Agent for Term Lenders, (H) should an Event of Default or Default occur or exist, each Lender Party will determine in its sole discretion and for its own -79- reasons what remedies and actions it will or will not exercise or take at that time, (I) without limiting any of the foregoing, the Credit Parties are not relying upon any representation or covenant by any Lender Party, or any representative thereof, and no such representation or covenant has been made, that any Lender Party will, at the time of an Event of Default or Default, or at any other time, waive, negotiate, discuss or take or refrain from taking any action permitted under the Credit Documents with respect to any such Event of Default or Default or any other provision of the Credit Documents and (J) all Lender Parties have relied upon the truthfulness of the acknowledgments in this Section in deciding to execute and deliver this Agreement and to become obligated hereunder. (o) The Lender Parties, the Credit Parties and each other party to the Credit Documents intend to contract in strict compliance with applicable usury Law from time to time in effect. In furtherance thereof such Persons stipulate and agree that none of the terms and provisions contained in the Credit Documents shall ever be construed to create a contract to pay, for the use, forbearance or detention of money, interest in excess of the maximum amount of interest permitted to be contracted for, charged or received by applicable Law from time to time in effect. Neither any Credit Party nor any present or future guarantors, endorsers or other Persons hereafter becoming liable for payment of any Obligation shall ever be liable for unearned interest thereon or shall ever be required to pay interest thereon in excess of the maximum amount that may be lawfully contracted for, charged or received under applicable Law from time to time in effect, and the provisions of this Section shall control over all other provisions of the Credit Documents that may be in conflict or apparent conflict herewith. The Lender Parties expressly disavow any intention to contract for, charge or receive excessive unearned interest or finance charges in the event the maturity of any Obligation is accelerated. If (i) the maturity of any Obligation is accelerated for any reason, (ii) any Obligation is prepaid and as a result any amounts held to constitute interest are determined to be in excess of the legal maximum or (iii) any Term Lender or any other holder of any or all of the Obligations shall otherwise collect moneys that are determined to constitute interest which would otherwise increase the interest on any or all of the Obligations to an amount in excess of that permitted to be contracted for, charged or received by applicable Law then in effect, then all sums determined to constitute interest in excess of such legal limit shall, without penalty, be promptly applied to reduce the then outstanding principal of the related Obligations or, at such Term Lender's or holder's option, promptly returned to Borrower or other payor thereof upon such determination. In determining whether or not the interest paid or payable, under any specific circumstance, exceeds the maximum amount permitted under applicable Law, the Lender Parties and the Credit Parties (and any other payors thereof) shall to the greatest extent permitted under applicable Law, (i) characterize any non- principal payment as an expense, fee or premium -80- rather than as interest, (ii) exclude voluntary prepayments and the effects thereof and (iii) amortize, prorate, allocate and spread the total amount of interest throughout the entire contemplated term of the instruments evidencing the Obligations in accordance with the amounts outstanding from time to time thereunder and the maximum legal rate of interest from time to time in effect under applicable Law in order to lawfully charge the maximum amount of interest permitted under applicable Law. In the event applicable Law provides for an interest ceiling under Chapter 303 of the Texas Finance Code (the "TEXAS FINANCE CODE") as amended, to the extent that the Texas Finance Code is mandatorily applicable to any Term Lender, for that day, the ceiling shall be the "weekly ceiling" as defined in the Texas Finance Code; provided, however, that if any applicable Law permits greater interest, the Law permitting the greatest interest shall apply. (P) THE CREDIT PARTIES AND THE LENDER PARTIES MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE LENDER PARTIES TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND TO MAKE AN EXTENSION OF CREDIT. EACH CREDIT PARTY AND EACH LENDER PARTY HEREBY FURTHER (I) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL DAMAGES, AS DEFINED BELOW, (II) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (III) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS -81- AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION. "SPECIAL DAMAGES" INCLUDES ALL SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OF FUNDS THAT ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY HERETO. (q) All of the Credit Parties' various representations, warranties, covenants and agreements in the Credit Documents shall survive the execution and delivery of this Agreement and the other Credit Documents and the performance hereof and thereof, including the delivery of the Credit Documents and shall further survive until all of the Obligations are paid in full in cash to each Lender Party and all of the Lender Parties' obligations to Borrower are terminated. All statements and agreements contained in any certificate or other instrument delivered by any Credit Party to any Lender Party under any Credit Document shall be deemed representations and warranties by Borrower or agreements and covenants of Borrower under this Agreement. The representations, warranties, indemnities and covenants made by the Credit Parties in the Credit Documents, and the rights, powers and privileges granted to the Lender Parties in the Credit Documents, are cumulative and, except for expressly specified waivers and consents, no Credit Document shall be construed in the context of another to diminish, nullify or otherwise reduce the benefit to any Lender Party of any such representation, warranty, indemnity, covenant, right, power or privilege. In particular and without limitation, no exception set out in this Agreement to any representation, warranty, indemnity or covenant herein contained shall apply to any similar representation, warranty, indemnity or covenant contained in any other Credit Document, and each such similar representation, warranty, indemnity or covenant shall be subject only to those exceptions that are expressly made applicable to it by the terms of the various Credit Documents. (r) Each of the Term Loan Agent and the Term Lenders acknowledges and agrees that the rights and obligations of such parties under this Agreement are subject in all respects to the Intercreditor Agreement. (s) On the Closing Date and concurrently with the Extension of Credit, the DIP Term Loan Agreement is TERMINATED and the parties thereto have no further obligations or liabilities, covenants or representations thereunder; provided that, those obligations or liabilities which by their terms are to survive termination shall not be terminated and shall remain binding upon the parties thereto as provided in the DIP Term Loan -82- Agreement, including, but not limited to, any obligations of one or more parties to indemnify or hold harmless any other party under the DIP Term Loan Agreement. [Remainder of page intentionally left blank.] -83- IN WITNESS WHEREOF, the parties hereto have executed this Term Loan Agreement as of the day and year first above written. EOTT ENERGY OPERATING LIMITED PARTNERSHIP, as a Borrower and as the Borrower Representative By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By:_____________________________________ Name: H. Keith Kaelber Title: Executive Vice President and Chief Financial Officer EOTT ENERGY CANADA LIMITED PARTNERSHIP, as a Borrower By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By:_____________________________________ Name: H. Keith Kaelber Title: Executive Vice President and Chief Financial Officer EOTT ENERGY LIQUIDS, L.P., as a Borrower By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By:_____________________________________ Name: H. Keith Kaelber Title: Executive Vice President and Chief Financial Officer EOTT ENERGY PIPELINE LIMITED PARTNERSHIP, as a Borrower By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By:_____________________________________ Name: H. Keith Kaelber Title: Executive Vice President and Chief Financial Officer EOTT ENERGY LLC, as a Guarantor By:_________________________________________ Name: H. Keith Kaelber Title: Executive Vice President and Chief Financial Officer Address for each Credit Party: Attention: Vice President & General Counsel By courier: 2000 W. Sam Houston Parkway South, Suite 400 Houston, Texas 77042 By mail: P.O. Box 4666 Houston, Texas ###-###-#### Phone: 713 ###-###-#### Fax: 713 ###-###-#### LEHMAN BROTHERS INC. Term Lender Agent By:_____________________________________ Name: Title: LEHMAN COMMERCIAL PAPER, INC. a Term Lender By:_____________________________________ Name: Title: FARALLON CAPITAL PARTNERS, L.P., a California limited partnership, as a Term Lender FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P., a California limited partnership, as a Term Lender FARALLON CAPITAL INSTITUTIONAL PARTNERS II, L.P., a California limited partnership, as a Term Lender FARALLON CAPITAL INSTITUTIONAL PARTNERS III, L.P., a Delaware limited partnership, as a Term Lender TINICUM PARTNERS, L.P., a New York limited partnership, a Term Lender By: Farallon Partners, L.L.C., as General Partner By: ____________________________________ Managing Member, Farallon Partners, L.L.C., FARALLON CAPITAL OFFSHORE INVESTORS, INC. By: Farallon Capital Management, L.L.C., its Agent and Attorney-in-Fact By: ____________________________________ Managing Member, Farallon Capital Management, L.L.C., HIGH YIELD PORTFOLIO, a series of Income Trust By: ________________________________________ Name: Title: AXP VARIABLE PORTFOLIO -EXTRA INCOME FUND, a series of AXP Variable Portfolio Income Series, Inc. By: ________________________________________ Name: Title: DRAWBRIDGE INVESTMENT PARTNERS LLC, a Term Lender By: ________________________________________ Name: Title: SCHEDULE I TERM LENDER SCHEDULE
Percentage Share ---------------- Lehman Commercial Paper Inc. 33.3333% 745 Seventh Avenue New York, New York 10019 Attention: Francis Chang/Diane Albanese Telecopy: (212) 526-0242 ###-###-####
with a copy (excluding financial reports and information) to: John W. Rain Thompson & Knight LLP 1700 Pacific Avenue, Suite 3300 Dallas, Texas 75201 Telecopy: (214) 969-1751 High Yield Portfolio 10.6667% AXP Variable Portfolio - Extra Income Fund 2.6667%
c/o Kris Robinson Assistant Manager - Legal Affairs General Counsel's Office American Express Financial Advisors 50592 AXP Financial Center Minneapolis, Minnesota 55474 Telecopy: (612) 671-3767 Farallon Capital Partners, L.P. 9.8000% Farallon Capital Institutional Partners, L.P. 13.0667% Farallon Capital Institutional Partners II, L.P. 1.8667% Farallon Capital Institutional Partners III, L.P. 1.4000% Farallon Capital Offshore Investors, Inc. 20.0667% Tinicum Partners, L.P. .4667%
c/o Derek Schrier and Mark C. Wehrly Farallon Capital Management, L.L.C. One Maritime Plaza, Suite 1325 San Francisco, California 94111 Telecopy: (415) 421-2133
Percentage Share ---------------- Drawbridge Investment Partners LLC 6.6667% 1251 Avenue of the Americas 16th Floor New York, NY 10020 Attention: Kevin Treacy Telecopy: (212) 798-6151
EXHIBIT A-1 PROMISSORY NOTE TIER-A TERM NOTE $_________________ New York, New York *[Date] FOR VALUE RECEIVED, the undersigned, EOTT ENERGY OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership, EOTT ENERGY CANADA LIMITED PARTNERSHIP, a Delaware limited partnership, EOTT ENERGY LIQUIDS, L.P., a Delaware limited partnership, EOTT ENERGY PIPELINE LIMITED PARTNERSHIP, a Delaware limited partnership (herein collectively called "BORROWERS"), hereby jointly and severally promise to pay to the order of ________________________________________________, a *[____________ ] (herein called "TERM LENDER"), the principal sum of ________________________________________________________________ Dollars ($ __________), together with interest on the unpaid principal balance thereof at the rate of nine percent (9%) per annum, calculated on the basis of a 360 day year and the actual number of days elapsed. Both principal and interest shall be payable as herein provided in lawful money of the United States of America by payment to the Collateral Agent to be applied as set forth in the Intercreditor Agreement. This Note (a) is issued and delivered under that certain Term Loan Agreement dated as of February 11, 2003 among Borrowers, EOTT Energy LLC and EOTT Energy General Partner, L.L.C., as guarantors, Lehman Brothers Inc., as Term Loan Agent, and the term lenders (including Term Lender) referred to therein (herein, as from time to time supplemented, amended or restated, called the "LOAN AGREEMENT"), and is a "TIER-A TERM NOTE" as defined therein, (b) is subject to the terms and provisions of the Loan Agreement, which contains provisions for payments and prepayments hereunder and acceleration of the maturity hereof upon the happening of certain stated events, and (c) is secured by and entitled to the benefits of certain Security Documents (as identified and defined in the Loan Agreement). Payments on this Note shall be made and applied as provided herein and in the Loan Agreement. Reference is hereby made to the Loan Agreement for a description of certain rights, limitations of rights, obligations and duties of the parties hereto and for the meanings assigned to terms used and not defined herein and to the Security Documents for a description of the nature and extent of the security thereby provided and the rights of the parties thereto. The principal amount of this Note, together with all interest accrued hereon, shall be due and payable in full on the Maturity Date. Interest on this Note shall be due and payable monthly as it accrues on each Monthly Payment Date, beginning [April] 1, 2003, and continuing regularly thereafter until this Note has been paid in full. 1 If an Event of Default has occurred and is continuing, all Obligations from time to time outstanding hereunder shall bear interest at the Default Rate. Notwithstanding the foregoing provisions of this Note: (a) this Note shall never bear interest in excess of the Highest Lawful Rate, and (b) if at any time the rate at which interest is payable on this Note is limited by the Highest Lawful Rate this Note shall bear interest at the Highest Lawful Rate and shall continue to bear interest at the Highest Lawful Rate until such time as the total amount of interest accrued hereon equals (but does not exceed) the total amount of interest which would have accrued hereon had there been no Highest Lawful Rate applicable hereto. Notwithstanding the foregoing paragraph and all other provisions of this Note, in no event shall the interest payable hereon, whether before or after maturity, exceed the maximum amount of interest which, under applicable Law, may be contracted for, charged, or received on this Note, and this Note is expressly made subject to the provisions of the Loan Agreement which more fully set out the limitations on how interest accrues hereon. In the event applicable Law provides for an interest ceiling under Chapter 303 of the Texas Finance Code (the "Texas Finance Code") as amended, for that day, the ceiling shall be the "weekly ceiling" as defined in the Texas Finance Code and shall be used in this Note for calculating the Highest Lawful Rate and for all other purposes. The term "applicable Law" as used in this Note shall mean the laws of the State of New York or the laws of the United States, whichever laws allow the greater interest, as such laws now exist or may be changed or amended or come into effect in the future. If this Note is placed in the hands of an attorney for collection after default, or if all or any part of the indebtedness represented hereby is proved, established or collected in any court or in any bankruptcy, receivership, debtor relief, probate or other court proceedings, each Borrower and all endorsers, sureties and guarantors of this Note jointly and severally agree to pay reasonable attorneys' fees and collection costs to the holder hereof in addition to the principal and interest payable hereunder. Each Borrower and all endorsers, sureties and guarantors of this Note hereby severally waive demand, presentment, notice of demand and of dishonor and nonpayment of this Note, protest, notice of protest, notice of intention to accelerate the maturity of this Note, declaration or notice of acceleration of the maturity of this Note, diligence in collecting, the bringing of any suit against any party and any notice of or defense on account of any extensions, renewals, partial payments or changes in any manner of or in this Note or in any of its terms, provisions and covenants, or any releases or substitutions of any security, or any delay, indulgence or other act of any trustee or any holder hereof, whether before or after maturity. 2 This Note and the rights and duties of the parties hereto shall be governed by the Laws of the State of New York (without regard to principles of conflicts of law), except to the extent the same are governed by applicable federal Law. EOTT ENERGY OPERATING LIMITED PARTNERSHIP, as a Borrower and as the Borrower Representative By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By: ----------------------------------- Name: Title: EOTT ENERGY CANADA LIMITED PARTNERSHIP, as a Borrower By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By: ----------------------------------- Name: Title: EOTT ENERGY LIQUIDS, L.P., as a Borrower By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By: ----------------------------------- Name: Title: EOTT ENERGY PIPELINE LIMITED PARTNERSHIP, as a Borrower By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By: ----------------------------------- Name: Title: EXHIBIT A-2 PROMISSORY NOTE TIER-B TERM NOTE $_________________ New York, New York *[Date] FOR VALUE RECEIVED, the undersigned, EOTT ENERGY OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership, EOTT ENERGY CANADA LIMITED PARTNERSHIP, a Delaware limited partnership, EOTT ENERGY LIQUIDS, L.P., a Delaware limited partnership, EOTT ENERGY PIPELINE LIMITED PARTNERSHIP, a Delaware limited partnership (herein collectively called "BORROWERS"), hereby jointly and severally promise to pay to the order of ________________________________________________, a *[____________ ] (herein called "TERM LENDER"), the principal sum of ________________________________________________________________ Dollars ($ __________), together with interest on the unpaid principal balance thereof at the rate of ten percent (10%) per annum, calculated on the basis of a 360 day year and the actual number of days elapsed. Both principal and interest shall be payable as herein provided in lawful money of the United States of America by payment to the Collateral Agent to be applied as set forth in the Intercreditor Agreement. This Note (a) is issued and delivered under that certain Term Loan Agreement dated as of February 11, 2003 among Borrowers, EOTT Energy LLC and EOTT Energy General Partner, L.L.C., as guarantors, Lehman Brothers Inc., as Term Loan Agent, and the term lenders (including Term Lender) referred to therein (herein, as from time to time supplemented, amended or restated, called the "LOAN AGREEMENT"), and is a "TIER-B TERM NOTE" as defined therein, (b) is subject to the terms and provisions of the Loan Agreement, which contains provisions for payments and prepayments hereunder and acceleration of the maturity hereof upon the happening of certain stated events, and (c) is secured by and entitled to the benefits of certain Security Documents (as identified and defined in the Loan Agreement). Payments on this Note shall be made and applied as provided herein and in the Loan Agreement. Reference is hereby made to the Loan Agreement for a description of certain rights, limitations of rights, obligations and duties of the parties hereto and for the meanings assigned to terms used and not defined herein and to the Security Documents for a description of the nature and extent of the security thereby provided and the rights of the parties thereto. The principal amount of this Note, together with all interest accrued hereon, shall be due and payable in full on the Maturity Date. Interest on this Note shall be due and payable monthly as it accrues on each Monthly Payment Date, beginning [April] 1, 2003, and continuing regularly thereafter until this Note has been paid in full. If an Event of Default has occurred and is continuing, all Obligations from time to time outstanding hereunder shall bear interest at the Default Rate. Notwithstanding the foregoing 1 provisions of this Note: (a) this Note shall never bear interest in excess of the Highest Lawful Rate, and (b) if at any time the rate at which interest is payable on this Note is limited by the Highest Lawful Rate this Note shall bear interest at the Highest Lawful Rate and shall continue to bear interest at the Highest Lawful Rate until such time as the total amount of interest accrued hereon equals (but does not exceed) the total amount of interest which would have accrued hereon had there been no Highest Lawful Rate applicable hereto. Notwithstanding the foregoing paragraph and all other provisions of this Note, in no event shall the interest payable hereon, whether before or after maturity, exceed the maximum amount of interest which, under applicable Law, may be contracted for, charged, or received on this Note, and this Note is expressly made subject to the provisions of the Loan Agreement which more fully set out the limitations on how interest accrues hereon. In the event applicable Law provides for an interest ceiling under Chapter 303 of the Texas Finance Code (the "Texas Finance Code") as amended, for that day, the ceiling shall be the "weekly ceiling" as defined in the Texas Finance Code and shall be used in this Note for calculating the Highest Lawful Rate and for all other purposes. The term "applicable Law" as used in this Note shall mean the laws of the State of New York or the laws of the United States, whichever laws allow the greater interest, as such laws now exist or may be changed or amended or come into effect in the future. If this Note is placed in the hands of an attorney for collection after default, or if all or any part of the indebtedness represented hereby is proved, established or collected in any court or in any bankruptcy, receivership, debtor relief, probate or other court proceedings, each Borrower and all endorsers, sureties and guarantors of this Note jointly and severally agree to pay reasonable attorneys' fees and collection costs to the holder hereof in addition to the principal and interest payable hereunder. Each Borrower and all endorsers, sureties and guarantors of this Note hereby severally waive demand, presentment, notice of demand and of dishonor and nonpayment of this Note, protest, notice of protest, notice of intention to accelerate the maturity of this Note, declaration or notice of acceleration of the maturity of this Note, diligence in collecting, the bringing of any suit against any party and any notice of or defense on account of any extensions, renewals, partial payments or changes in any manner of or in this Note or in any of its terms, provisions and covenants, or any releases or substitutions of any security, or any delay, indulgence or other act of any trustee or any holder hereof, whether before or after maturity. 2 This Note and the rights and duties of the parties hereto shall be governed by the Laws of the State of New York (without regard to principles of conflicts of law), except to the extent the same are governed by applicable federal Law. EOTT ENERGY OPERATING LIMITED PARTNERSHIP, as a Borrower and as the Borrower Representative By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By: ----------------------------------- Name: Title: EOTT ENERGY CANADA LIMITED PARTNERSHIP, as a Borrower By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By: ----------------------------------- Name: Title: EOTT ENERGY LIQUIDS, L.P., as a Borrower By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By: ----------------------------------- Name: Title: EOTT ENERGY PIPELINE LIMITED PARTNERSHIP, as a Borrower By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By: ----------------------------------- Name: Title: EXHIBIT B BORROWING NOTICE Reference is made to that certain Term Loan Agreement dated as of February 11, 2003 (as from time to time amended, the "AGREEMENT"), by and among EOTT ENERGY OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership and a debtor and debtor in possession, EOTT ENERGY CANADA LIMITED PARTNERSHIP, a Delaware limited partnership and a debtor and debtor in possession, EOTT ENERGY LIQUIDS, L.P., a Delaware limited partnership and a debtor and debtor in possession, EOTT ENERGY PIPELINE LIMITED PARTNERSHIP, a Delaware limited partnership and a debtor and debtor in possession (collectively, "BORROWERS"), EOTT Energy LLC and EOTT Energy General Partner, L.L.C., as guarantors, Lehman Brothers, Inc., as Term Lender Agent, and the term lenders from time to time party thereto ("TERM LENDERS"). Terms which are defined in the Agreement are used herein with the meanings given them in the Agreement. Pursuant to the terms of the Agreement the Borrower Representative, on behalf of the Borrowers, hereby requests the Term Loans to be exchanged pursuant to Section 2(b) of the Agreement on March 1, 2003. To induce Term Lenders to make the Term Loans, Borrowers hereby represent, warrant, acknowledge, and agree to and with Term Lender Agent and each Term Lender that: (a) The officer of the Borrower Representative signing this instrument is the duly elected, qualified and acting officer of the Borrower Representative as indicated below such officer's signature hereto having all necessary authority to act for the Borrower Representative in making the request herein contained. (b) The representations and warranties of Borrowers set forth in the Agreement and the other Credit Documents are true and correct on and as of the date hereof (except to the extent that the facts on which such representations and warranties are based have been changed by the Extension of Credit under the Agreement), with the same effect as though such representations and warranties had been made on and as of the date hereof. (c) There does not exist on the date hereof any condition or event which constitutes a Default or Event of Default; nor will any such Default or Event of Default exist upon Borrowers' receipt and application of the Term Loans. Borrowers will use the Term Loans in compliance with Section 2(d) of the Agreement. (d) Borrowers have performed and complied with all agreements and conditions in the Agreement required to be performed or complied with by Borrowers on or prior to the date hereof, and each of the conditions precedent to the Extension of Credit contained in the Agreement remains satisfied. (e) The Credit Documents have not been modified, amended or supplemented by any unwritten representations or promises, by any course of dealing, or by any other means not provided for in Section 17(o) of the Agreement. The Agreement and the other Credit Documents are hereby ratified, approved, and confirmed in all respects. The officer of Borrower Representative signing this instrument hereby certifies that, to the best of his knowledge after due inquiry, the above representations, warranties, acknowledgments, and agreements of Borrowers are true, correct and complete. IN WITNESS WHEREOF, this instrument is executed as of March 1, 2003. EOTT ENERGY OPERATING LIMITED PARTNERSHIP As the Borrower Representative By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By: ----------------------------------- H. Keith Kaelber Executive Vice President and Chief Financial Officer EXHIBIT C CERTIFICATE ACCOMPANYING FINANCIAL STATEMENTS Reference is made to the Term Loan Agreement dated as of February 11, 2003 (as from time to time amended, the "AGREEMENT"), among EOTT Energy Operating Limited Partnership ("EOTT OLP"), EOTT Energy Canada Limited Partnership ("EOTT CANADA"), EOTT Energy Liquids, L.P. ("EOTT LIQUIDS"), EOTT Energy Pipeline Limited Partnership ("EOTT PIPELINE" and together with EOTT OLP, EOTT Canada and EOTT Liquids, on a joint and several basis, the "BORROWERS"), EOTT Energy LLC ("EOTT LLC"), EOTT Energy General Partner, L.L.C. ("EOTT GP") and Lehman Brothers Inc., as Term Lender Agent and the other signatories thereto. Capitalized terms used and not defined herein have the meanings given to them in the Agreement. This Certificate is furnished pursuant to Section 9(d) of the Agreement. Together herewith, EOTT LLC is furnishing to the Term Lender Agent and each Term Lender, EOTT LLC's [audited/unaudited] [yearly][quarterly][monthly] consolidated financial statements (the "FINANCIAL STATEMENTS") and supporting consolidating financial statements, if required, as of _____________, 200__ (the "REPORTING DATE"). EOTT LLC hereby certifies, represents, warrants and acknowledges to the Term Lender Agent and each Term Lender that: (a) the officer of EOTT LLC signing this instrument is a duly elected, acting and qualified officer of EOTT LLC as indicated below such officer's signature hereto having all necessary authority to act for EOTT LLC in making the certifications, representations, warranties and acknowledgements set forth herein; (b) the Financial Statements are accurate and complete in all material respects (subject, in the case of such unaudited financial statements, to changes resulting from normal and recurring adjustments made in conformity with GAAP) and satisfy the requirements of the Agreement; (c) on the Reporting Date, each Credit Party was, and on the date hereof is, in full compliance with the disclosure requirements of Section 9(f) of the Agreement, and no Default otherwise existed on the Reporting Date or otherwise exists on the date hereof; (d) the representations and warranties of EOTT LLC and the Borrowers set forth in the Agreement and the other Credit Documents are true and correct on and as of the date hereof (except for changes resulting from the transactions contemplated in the Agreement and the other Credit Documents, or to the extent that such representation or warranty was made as of a specific date), with the same effect as though such representations and warranties had been made on and as of the date hereof; and (e) as of the date hereof: (i) the Consolidated EBIDA for the Reference Period ending on ________, 200_ was $_________, as computed on Attachment 1 hereto. The minimum amount of Consolidated EBIDA for such period permitted pursuant to clause (o) of Section 10 of the Agreement is $________; (ii) the Consolidated Tangible Net Worth as of ________, 200_ is $________, as computed on Attachment 2 hereto. The minimum aggregate amount of Consolidated Tangible Net Worth as of such date permitted pursuant to clause (p) of Section 10 of the Agreement is $________; (iii) the Interest Coverage Ratio for the Reference Period ending on ________, 200_ was ___ to 1.00, as computed on Attachment 3 hereto. The minimum Interest Coverage Ratio for such period permitted pursuant to clause (q) of Section 10 of the Agreement is __ to 1.00; and (iv) the Current Ratio as of ________, 200_ is ___ to 1.00, as computed on Attachment 4 hereto. The minimum Current Ratio for such date permitted pursuant to clause (r) of Section 10 of the Agreement is ___ to 1.00. The officer of EOTT LLC signing this instrument hereby certifies that he/she has reviewed the Credit Documents, the Financial Statements and the supporting consolidating financial statements and has otherwise undertaken such inquiry as is in his/her opinion necessary to enable him/her to express an informed opinion with respect to the above certifications, representations, warranties and acknowledgments made by EOTT LLC and, to the best of his/her knowledge, such certifications, representations, warranties and acknowledgments are true, correct and complete in all material respects. IN WITNESS WHEREOF, this instrument is executed as of __________, 200___. EOTT ENERGY LLC By: --------------------------------------- Name: ---------------------------------- Title: [Chief Financial Officer] [Treasurer] 2 Attachment 1 CONSOLIDATED EBIDA As of _______, 200_ (the "Computation Date") for the Reference Period ending _______, 200_ (the "Computation Period") A. Consolidated Net Income (Loss): (1) EOTT LLC's Consolidated gross revenues for the Computation Period, including any cash dividends or distributions actually received from any other Person during such period....................................................... $__________ (2) EOTT LLC's Consolidated expenses and other proper charges against income (including taxes on income to the extent imposed), determined on a Consolidated basis after eliminating earnings or losses attributable to outstanding minority interests and excluding the net earnings of any Person other than a Subsidiary in which EOTT LLC or any of its Subsidiaries has an ownership interest................................... $__________ (3) Consolidated Net Income (Loss): Item A(1) minus Item A(2).................................................. $__________ B. All interest expense that was deducted in determining such Consolidated Net Income (Loss)............................................................................ $__________ C. Depreciation and amortization (including amortization of good will and debt issue costs) and other non-cash charges (excluding any non-cash charge to the extent it represents an accrual of, or reserve for, cash disbursement for any of the next succeeding four Fiscal Quarters)............................ $__________ D. All non-cash items of income that were included in determining such Consolidated Net Income (Loss) (excluding any non-cash item to the extent it represents an accrual for cash receipt in any of the next succeeding four Fiscal Quarters.............................................................. $__________ E. All of the foregoing items directly attributable to the Designated Assets during the first three months following the Closing Date.............................. $__________ F. Permitted Adjustments........................................................................ $__________ G. Consolidated EBIDA for the Computation Period: Sum of Item A(3), Item B and Item C minus Items D, E and F................................... $__________
Attachment 2 CONSOLIDATED TANGIBLE NET WORTH As of _______, 200_ (the "Computation Date") A. The Consolidated members' capital of EOTT LLC and its Subsidiaries........................... $__________ B. The principal amount of any payment-in-kind notes issued in lieu of cash payment of interest on the New Senior Notes............................................. $__________ C. Intangible Assets (to the extent included in determining such Consolidated members' capital): (1) All write-ups subsequent to December 31, 2002 in the book value of any non-current asset owned by EOTT LLC or any Subsidiary......................................................... $__________ (2) All investments in Persons that are not Subsidiaries, except to the extent included in Cash Equivalents......................... $__________ (3) All unamortized debt discount and expense (other than fees and expenses related to any Funded Debt), unamortized deferred charges, goodwill, Intellectual Property, organizational or research and developmental expenses and other intangible items (other than with respect to any Designated Asset)......................... $__________ (4) Sum of Items C(1) to C(3).................................................. $__________ D. Any Consolidated members' capital of EOTT LLC and its Subsidiaries to the extent directly attributable to the Designated Assets during the first three months following the Closing..................................................... $__________ E. Permitted Adjustments........................................................................ $__________ F. Consolidated Tangible Net Worth as of the Computation Date: Sum of Items A and B minus Items C(4), D and E............................................... $__________
Attachment 3 INTEREST COVERAGE RATIO As of _______, 200_ (the "Computation Date") for the Reference Period ending __________, 200_ (the "Computation Period") A. Consolidated EBIDA for the Computation Period: The amount set forth in Item E of Attachment 1 to this Exhibit B............................. $__________ B. Consolidated Total Interest Expense for the Computation Period: (1) The aggregate amount of interest required to be paid or accrued by EOTT LLC or its Subsidiaries during the Computation Period on all Indebtedness of EOTT LLC and its Subsidiaries outstanding during all or any part of such period, whether such interest was or is required to be reflected as an item of expense or capitalized, including payments consisting of interest in respect of any Capital Lease or any Synthetic Lease, and including commitment fees, agency fees, facility fees, balance deficiency fees and similar fees or expenses in connection with the borrowing of money ...................................................... $__________ (2) The Reduction Fee payable pursuant to Section 2(j)(ix) of the Agreement, to the extent included in Item B(1)................................................................ $__________ (3) Any such interest, fees or expenses to the extent directly attributable to the Designated Assets during the first three months following the Closing Date........................ $__________ (4) Permitted Adjustments...................................................... $__________ (5) The principal amount of any payment-in-kind notes issued in lieu of cash payment of interest on the New Senior Notes............................................................. $__________ (6) Consolidated Total Interest Expense for the Computation Period: Item B(1) minus Items B(2), (3), (4) and (5).............................................................. $__________ C. Interest Coverage Ratio for the Computation Period: The ratio of Item A to Item B(6)............................................................. ____ to 1.0
Attachment 4 CURRENT RATIO As of _______, 200_ (the "Computation Date") A. Consolidated Current Assets: (1) All assets of the Borrowers and their Subsidiaries on a Consolidated basis that, in accordance with GAAP, are properly classified as current assets, including (without duplication) all crude oil, refined petroleum products or natural gas liquids in pipeline or storage assets owned by a Borrower at the time of determination, valued in accordance with GAAP............................. $__________ (2) All the fixed assets of the Designated Assets during the first three months following the Closing Date......................... $__________ (3) Permitted Adjustments (4) Item A(1) minus Items A(2) and (3)......................................... $__________ B. Consolidated Current Liabilities: (1) All Liabilities and other Indebtedness of the Borrowers and their Subsidiaries on a Consolidated basis that, in accordance with GAAP, are properly classified as current liabilities......................................... $__________ (2) Funded Debt................................................................ $__________ (3) All Liabilities and Indebtedness directly attributable to the Designated Assets during the first three months following the Closing Date............................. $__________ (4) Permitted Adjustments (5) Item B(1) minus Items B(2), (3) and (4).................................... $__________ C. Current Ratio as of the Computation Date: The ratio of Item A(4) to Item B(5).......................................................... ____ to 1.0
EXHIBIT D
Beg Bal Beg Bal Beg Bal Beg Bal Beg Bal Beg Bal Beg Bal Beg Bal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Actual Actual Actual Actual Actual Actual Actual Actual [DATE] [DATE] [DATE] [DATE] [DATE] [DATE] [DATE] [DATE] ------- ------- ------- ------- ------- ------- ------- ------- OPERATING RECEIPTS Crude Receipts Crude Disbursements Crude/Product/NGL Payables Royalty Checks Canada Receipts/Disbursements Pipeline Receipts Pipeline Disbursements Pipeline Lockbox NGL & Product-Receipts NGL & Product-Disbursements NGL & Product-Lockbox MTBE Receipts MTBE Disbursements (Working Cap) Storage & Grid Receipts Tax Disbursements Merc Other Miscellaneous Incoming ------ ------ ------ ------ ------ ------ ------ ------ Operating Receipts OPERATING DISBURSEMENTS Payroll Payroll Wires (Benefits) ETS Monthly Operating OLP Monthly Operating Pipeline Monthly Operating MTBE/G&S Monthly Operating Field Account Other A/P ------ ------ ------ ------ ------ ------ ------ ------ Operating Disbursements CASHFLOW - OPERATIONS ------ ------ ------ ------ ------ ------ ------ ------ CAPITAL & NON-OPERATING: Miss #3 Pipeline Professional Fee/Origination Fee Interest/LC Cost - s/t ETS Payable Loan Advances/Payments Unitholder/Senior Debt/New Debt ------ ------ ------ ------ ------ ------ ------ ------ Capital & Non-Operating Net Cash Flows ------ ------ ------ ------ ------ ------ ------ ------ LOAN BALANCE - ALL LOANS ====== ====== ====== ====== ====== ====== ====== ====== CHANGE IN BOOK CASH Beginning Cash Net Cash Flow Difference due to Currency Exchange Rate Ending Cash ------ ------ ------ ------ ------ ------ ------ ------ Daily Conversion Rate ====== ====== ====== ====== ====== ====== ====== ====== FX Buys (Sells) CAD $ FX Buys (Sells) USD $ FX Rate Outstanding Check Total Beg Bal Beg Bal Beg Bal Beg Bal Beg Bal 0.00 0.00 0.00 0.00 0.00 Actual Actual Actual Actual Actual [DATE] [DATE] [DATE] [DATE] [DATE] ------- ------- ------- ------- ------- OPERATING RECEIPTS Crude Receipts Crude Disbursements Crude/Product/NGL Payables Royalty Checks Canada Receipts/Disbursements Pipeline Receipts Pipeline Disbursements Pipeline Lockbox NGL & Product-Receipts NGL & Product-Disbursements NGL & Product-Lockbox MTBE Receipts MTBE Disbursements (Working Cap) Storage & Grid Receipts Tax Disbursements Merc Other Miscellaneous Incoming ------ ------ ------ ------ ------ Operating Receipts OPERATING DISBURSEMENTS Payroll Payroll Wires (Benefits) ETS Monthly Operating OLP Monthly Operating Pipeline Monthly Operating MTBE/G&S Monthly Operating Field Account Other A/P ------ ------ ------ ------ ------ Operating Disbursements CASHFLOW - OPERATIONS ------ ------ ------ ------ ------ CAPITAL & NON-OPERATING: Miss #3 Pipeline Professional Fee/Origination Fee Interest/LC Cost - s/t ETS Payable Loan Advances/Payments Unitholder/Senior Debt/New Debt ------ ------ ------ ------ ------ Capital & Non-Operating Net Cash Flows ------ ------ ------ ------ ------ LOAN BALANCE - ALL LOANS ====== ====== ====== ====== ====== CHANGE IN BOOK CASH Beginning Cash Net Cash Flow Difference due to Currency Exchange Rate Ending Cash ------ ------ ------ ------ ------ Daily Conversion Rate ====== ====== ====== ====== ====== FX Buys (Sells) CAD $ FX Buys (Sells) USD $ FX Rate Outstanding Check Total
Beg Bal Beg Bal Beg Bal Beg Bal Beg Bal Beg Bal Beg Bal Beg Bal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Actual Actual Actual Actual Actual Actual Actual Actual [DATE] [DATE] [DATE] [DATE] [DATE] [DATE] [DATE] [DATE] ------- ------- ------- ------- ------- ------- ------- ------- CHECKS ISSUED Royalty Account Expense Ad Valorem Taxes Environmental West Coast Capital & Other Pipeline Account Ad Valorem Taxes Environmental Payroll Account Trade Payables Crude Payables Product/NGL Payables Field Account MTBE/G&S Monthly Oper. Turnaround Annual Preventive Maintenance ------ ------ ------ ------ ------ ------ ------ ------ SUBTOTAL CHECKS ISSUED CHECKS CLEARED Royalty Account Expense Pipeline Account Payroll Account Trade Payables Field Account MTBE/G&S Monthly Oper. ------ ------ ------ ------ ------ ------ ------ ------ SUBTOTAL CHECKS CLEARED FLOAT BALANCE Beginning O/S Check Balance Checks Issued Checks Cleared ------ ------ ------ ------ ------ ------ ------ ------ Ending Check Float CHANGE IN CHECK FLOAT FLOAT BALANCE-ROYALTY Beginning O/S Check Balance Checks Issued Checks Cleared ------ ------ ------ ------ ------ ------ ------ ------ Ending Check Float FLOAT BALANCE-OTHER Beginning O/S Check Balance Checks Issued Checks Cleared ------ ------ ------ ------ ------ ------ ------ ------ Ending Check Float % of Royalty Checks Cleared % of Other Checks Cleared Checks Cleared Checks issued Check Float Beg Bal Beg Bal Beg Bal Beg Bal Beg Bal 0.00 0.00 0.00 0.00 0.00 Actual Actual Actual Actual Actual [DATE] [DATE] [DATE] [DATE] [DATE] ------- ------- ------- ------- ------- CHECKS ISSUED Royalty Account Expense Ad Valorem Taxes Environmental West Coast Capital & Other Pipeline Account Ad Valorem Taxes Environmental Payroll Account Trade Payables Crude Payables Product/NGL Payables Field Account MTBE/G&S Monthly Oper. Turnaround Annual Preventive Maintenance ------ ------ ------ ------ ------ SUBTOTAL CHECKS ISSUED CHECKS CLEARED Royalty Account Expense Pipeline Account Payroll Account Trade Payables Field Account MTBE/G&S Monthly Oper. ------ ------ ------ ------ ------ SUBTOTAL CHECKS CLEARED FLOAT BALANCE Beginning O/S Check Balance Checks Issued Checks Cleared ------ ------ ------ ------ ------ Ending Check Float CHANGE IN CHECK FLOAT FLOAT BALANCE-ROYALTY Beginning O/S Check Balance Checks Issued Checks Cleared ------ ------ ------ ------ ------ Ending Check Float FLOAT BALANCE-OTHER Beginning O/S Check Balance Checks Issued Checks Cleared ------ ------ ------ ------ ------ Ending Check Float % of Royalty Checks Cleared % of Other Checks Cleared Checks Cleared Checks issued Check Float
EXHIBIT E ENVIRONMENTAL COMPLIANCE CERTIFICATE Reference is made to that certain Term Loan Agreement, dated as of February 11, 2003 (as from time to time amended, the "AGREEMENT"), among EOTT Energy Operating Limited Partnership ("EOTT OLP"), EOTT Energy Canada Limited Partnership ("EOTT CANADA"), EOTT Energy Liquids, L.P. ("EOTT LIQUIDS"), EOTT Energy Pipeline Limited Partnership ("EOTT PIPELINE" and together with EOTT OLP, EOTT Canada and EOTT Liquids, on a joint and several basis, the "BORROWERS"), EOTT Energy LLC ("EOTT LLC"), EOTT Energy General Partner, L.L.C. ("EOTT GP"), and Lehman Brothers, Inc., as Term Lender Agent and the other signatories thereto. Capitalized terms used and not defined herein have the meanings given to them in the Agreement. This Certificate is furnished pursuant to Section 9(d)(ix) of the Agreement. EOTT LLC and the Borrowers hereby jointly and severally represent, warrant, and acknowledge to the Term Lender Agent and each Term Lender that: 1. For the Fiscal Year ending immediately prior to the date hereof, the Credit Parties have complied and are complying with Section 9(o) of the Agreement; 2. Except as disclosed in Section 8(k) of the Disclosure Schedule, to the best knowledge of the undersigned after due inquiry, the Credit Parties are on the date hereof in compliance with all applicable Environmental Laws, noncompliance with which could cause a Material Adverse Change; 3. The Credit Parties have taken (and continue to take) reasonable steps to minimize the generation of potentially harmful effluents; and 4. The Credit Parties have established an ongoing program of conducting an internal audit of each operating facility of the Credit Parties to identify actual or potential environmental Liabilities that could cause a Material Adverse Change. The managers or officers of EOTT GP signing this instrument hereby certifies that (i) such manager or officer is a duly elected, acting and qualified manager or officer of EOTT GP as indicated below such manager's or officer's signature hereto, having all necessary authority to act for EOTT GP in its capacity as the sole General Partner of each Borrower in making the representations, warranties and acknowledgements set forth herein and (ii) to the best of such manager's or officer's knowledge after due inquiry and consultation with the operating officers of each Borrower, such representations, warranties, acknowledgments and agreements are true, correct and complete in all material respects. The managers or officers of EOTT LLC signing this instrument hereby certifies that (i) such manager or officer is a duly elected, acting and qualified manager or officer of EOTT LLC as indicated below such manager's or officer's signature hereto, having all necessary authority to act for EOTT in making the representations, warranties and acknowledgements set forth herein and (ii) to the best of such manager's or officer's knowledge after due inquiry and consultation with the operating officers of each Borrower, such representations, warranties, acknowledgments and agreements are true, correct and complete in all material respects IN WITNESS WHEREOF, this instrument is executed as of __________, 200__. EOTT ENERGY OPERATING LIMITED PARTNERSHIP By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By: ----------------------------------- Name: ------------------------------ Title: ----------------------------- EOTT ENERGY CANADA LIMITED PARTNERSHIP By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By: ----------------------------------- Name: ------------------------------ Title: ----------------------------- EOTT ENERGY LIQUIDS, L.P. By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By: ----------------------------------- Name: ------------------------------ Title: ----------------------------- EOTT ENERGY PIPELINE LIMITED PARTNERSHIP By: EOTT ENERGY GENERAL PARTNER, L.L.C., its General Partner By: ----------------------------------- Name: ------------------------------ Title: ----------------------------- EOTT ENERGY LLC By: ----------------------------------- Name: ------------------------------ Title: ----------------------------- EXHIBIT F OPEN POSITION REPORT [Form to be agreed upon between Credit Parties and Term Lenders.] EXHIBIT G MONTHLY LEASE VOLUME REPORT
CRUDE OIL LEASE VOLUMES 200X --------------- YTD YTD JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER BARRELS BPD - ------------------------------------------------------------------------------------------------------------------------------------ Mid Continent Region Gulf Coast Region Rockies West Texas Canada Accruals/Other ------------------------------------------------------------------------------------------------------------------- Total ------------------------------------------------------------------------------------------------------------------- Total Barrels Per Day ===================================================================================================================
PLP AVERAGE BARRELS 200X -------------- YTD YTD JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER BARRELS BPD - ----------------------------------------------------------------------------------------------------------------------------------- Mid Continent region Gulf Coast Region Rockies West Texas ------------------------------------------------------------------------------------------------------------------- Total ------------------------------------------------------------------------------------------------------------------- PLP Barrels Per Day ===================================================================================================================