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EXHIBIT 10.1
[Execution]
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CREDIT AGREEMENT
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WESTPORT OIL AND GAS COMPANY, INC.
as Borrower
and
BANK OF AMERICA, N.A.
as Administrative Agent
BANC OF AMERICA SECURITIES LLC
as Lead Arranger and Book Manager
CHASE BANK OF TEXAS, N.A.
as Syndication Agent
U.S. BANK NATIONAL ASSOCIATION
as Managing Agent
BANK ONE, NA and CREDIT LYONNAIS NEW YORK BRANCH
as Co-Agents
and CERTAIN FINANCIAL INSTITUTIONS
as Lenders
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$325,000,000
March 31, 2000
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TABLE OF CONTENTS
Page
CREDIT AGREEMENT.....................................................................................1
ARTICLE I - Definitions and References...............................................................1
Section 1.1. Defined Terms.............................................................1
Section 1.2. Exhibits and Schedules; Additional Definitions...........................16
Section 1.3. Amendment of Defined Instruments.........................................16
Section 1.4. References and Titles....................................................16
Section 1.5. Calculations and Determinations..........................................16
Section 1.6. Construction of Indemnities and Releases.................................17
ARTICLE II - The Loans..............................................................................17
Section 2.1. Commitments to Lend; Notes...............................................17
Section 2.2. Requests for New Loans...................................................17
Section 2.3. Continuations and Conversions of Existing Loans..........................18
Section 2.4. Use of Proceeds..........................................................19
Section 2.5. Interest Rates and Fees..................................................19
Section 2.6. Optional Prepayments.....................................................20
Section 2.7. Mandatory Prepayments....................................................20
Section 2.8. Initial Borrowing Base...................................................21
Section 2.9. Subsequent Determinations of Borrowing Base..............................21
Section 2.10. Borrower's Reduction of Borrowing Base...................................22
Section 2.11. Letters of Credit........................................................22
Section 2.12. Requesting Letters of Credit.............................................23
Section 2.13. Reimbursement and Participations.........................................23
Section 2.14. Letter of Credit Fees....................................................24
Section 2.15. No Duty to Inquire.......................................................24
Section 2.16. LC Collateral............................................................25
ARTICLE III - Payments to Lenders...................................................................27
Section 3.1. General Procedures.......................................................27
Section 3.2. Change of Applicable Lending Office......................................28
Section 3.3. Replacement of Lenders...................................................28
Section 3.4. Increased Cost and Reduced Return........................................28
Section 3.5. Limitation on Types of Loans.............................................30
Section 3.6. Illegality...............................................................30
Section 3.7. Treatment of Affected Loans..............................................30
Section 3.8. Compensation.............................................................31
Section 3.9. Taxes....................................................................31
ARTICLE IV - Conditions Precedent to Lending........................................................33
Section 4.1. Documents to be Delivered................................................33
Section 4.2. Closing of Acquisition...................................................34
Section 4.3. Additional Conditions Precedent..........................................35
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ARTICLE V - Representations and Warranties..........................................................36
Section 5.1. No Default...............................................................36
Section 5.2. Organization and Good Standing...........................................36
Section 5.3. Authorization............................................................36
Section 5.4. No Conflicts or Consents.................................................36
Section 5.5. Enforceable Obligations..................................................36
Section 5.6. Initial Financial Statements.............................................36
Section 5.7. Other Obligations and Restrictions.......................................37
Section 5.8. Full Disclosure..........................................................37
Section 5.9. Litigation...............................................................37
Section 5.10. Labor Disputes and Acts of God...........................................37
Section 5.11. ERISA Plans and Liabilities..............................................38
Section 5.12. Environmental and Other Laws.............................................38
Section 5.13. Names and Places of Business.............................................38
Section 5.14. Borrower's Subsidiaries..................................................39
Section 5.15. Title to Properties; Licenses............................................39
Section 5.16. Government Regulation....................................................39
Section 5.17. Insider..................................................................40
Section 5.18. Solvency.................................................................40
Section 5.19. Mortgaged Properties.....................................................40
Section 5.20. Year 2000 Compliance.....................................................40
ARTICLE VI - Affirmative Covenants of Borrower......................................................40
Section 6.1. Payment and Performance..................................................40
Section 6.2. Books, Financial Statements and Reports..................................40
Section 6.3. Other Information and Inspections........................................42
Section 6.4. Notice of Material Events and Change of Address..........................43
Section 6.5. Maintenance of Properties................................................43
Section 6.6. Maintenance of Existence and Qualifications..............................43
Section 6.7. Payment of Trade Liabilities, Taxes, etc.................................43
Section 6.8. Insurance................................................................44
Section 6.9. Performance on Borrower's Behalf.........................................44
Section 6.10. Interest.................................................................44
Section 6.11. Compliance with Agreements and Law.......................................44
Section 6.12. Environmental Matters; Environmental Reviews.............................44
Section 6.13. Evidence of Compliance...................................................45
Section 6.14. Agreement to Deliver Security Documents..................................45
Section 6.15. Perfection and Protection of Security Interests and Liens................46
Section 6.16. Bank Accounts; Offset....................................................46
Section 6.17. Guaranties of Borrower's Subsidiaries....................................46
Section 6.18. Production Proceeds......................................................46
Section 6.19. Year 2000 Compliance.....................................................47
Section 6.20. Maintenance of Liens on Eighty Percent Properties........................47
ARTICLE VII - Negative Covenants of Borrower........................................................47
Section 7.1. Indebtedness.............................................................47
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Section 7.2. Limitation on Liens......................................................48
Section 7.3. Hedging Contracts........................................................48
Section 7.4. Limitation on Mergers, Issuances of Securities...........................49
Section 7.5. Limitation on Sales of Property..........................................49
Section 7.6. Limitation on Dividends and Redemptions..................................50
Section 7.7. Limitation on Investments and New Businesses.............................50
Section 7.8. Limitation on Credit Extensions..........................................50
Section 7.9. Transactions with Affiliates.............................................50
Section 7.10. Prohibited Contracts.....................................................50
Section 7.11. Current Ratio............................................................51
Section 7.12. Interest Coverage Ratio..................................................51
ARTICLE VIII - Events of Default and Remedies.......................................................51
Section 8.1. Events of Default........................................................51
Section 8.2. Remedies.................................................................53
ARTICLE IX - Agent..................................................................................54
Section 9.1. Appointment, Powers, and Immunities......................................54
Section 9.2. Reliance by Agent........................................................54
Section 9.3. Defaults.................................................................54
Section 9.4. Rights as Lender.........................................................55
Section 9.5. Indemnification..........................................................55
Section 9.6. Non-Reliance on Agent and Other Lenders..................................55
Section 9.7. Rights as Lender.........................................................56
Section 9.8. Sharing of Set-Offs and Other Payments...................................56
Section 9.9. Investments..............................................................56
Section 9.10. Benefit of Article IX....................................................56
Section 9.11. Resignation..............................................................57
Section 9.12. Lead Arranger, Book Manager, Syndication Agent, Managing Agent and
Co-Agent...............................................................................57
ARTICLE X - Miscellaneous...........................................................................57
Section 10.1. Waivers and Amendments; Acknowledgments..................................57
Section 10.2. Survival of Agreements; Cumulative Nature................................59
Section 10.3. Notices..................................................................59
Section 10.4. Payment of Expenses; Indemnity...........................................60
Section 10.5. Joint and Several Liability; Parties in Interest.........................61
Section 10.6. Assignments and Participations...........................................61
Section 10.7. Confidentiality..........................................................63
Section 10.8. Governing Law; Submission to Process.....................................63
Section 10.9. Limitation on Interest...................................................64
Section 10.10. Termination; Limited Survival............................................64
Section 10.11. Severability.............................................................65
Section 10.12. Counterparts; Fax........................................................65
Section 10.13. Waiver of Jury Trial, Punitive Damages, etc..............................65
Section 10.14. Restatement..............................................................65
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Schedules and Exhibits:
Schedule 1 - Lender's Schedule
Schedule 2 - Disclosure Schedule
Schedule 3 - Security Schedule
Schedule 4 - Insurance Schedule
Schedule 5 - Examined Properties
Exhibit A - Promissory Note
Exhibit B - Borrowing Notice
Exhibit C - Continuation/Conversion Notice
Exhibit D - Certificate Accompanying Financial Statements
Exhibit E - Assignment and Acceptance Agreement
Exhibit F - Letter of Credit Application and Agreement
Exhibit G-1 - Opinion of ▇▇▇▇▇ ▇▇▇▇▇▇, Esq., counsel for Restricted Persons in connection with
this Agreement
Exhibit G-2 - Opinion of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., counsel for Restricted
Persons in connection with the Equitable Acquisition
Exhibit H - Certificate Regarding Mortgaged Properties
Exhibit I - Form of Guaranty
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of March 31, 2000, by and among
Westport Oil And Gas Company, Inc., a Delaware corporation (herein called
"Borrower"), Bank of America, N.A., individually and as administrative agent
(herein called "Agent") and the Lenders referred to below. In consideration of
the mutual covenants and agreements contained herein the parties hereto agree as
follows:
ARTICLE I - Definitions and References
Section 1.1. Defined Terms. As used in this Agreement, each of the
following terms has the meaning given to such term in this Section 1.1 or in the
sections and subsections referred to below:
"Acquisition Documents" means (a) the Agreement and Plan of Merger
dated March 9, 2000 among Borrower, Parent, Equitable Production Company,
Westport Energy Corporation and EPGC Merger Sub Corporation, (b) the
Shareholders Agreement among Parent, Westport Energy Corporation and Equitable
Production Company to be executed in connection with the Equitable Acquisition,
(c) the Shareholders Agreement among the shareholders of Parent to be executed
in connection with the Equitable Acquisition, and (d) any other agreements
delivered in connection therewith to consummate the Equitable Acquisition.
"Adjusted Base Rate" means the Base Rate plus the Base Rate Margin,
provided that the Adjusted Base Rate charged by any Person shall never exceed
the Highest Lawful Rate.
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum equal to the sum of (a) the
Eurodollar Margin plus (b) the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by Agent to be equal to the quotient
obtained by dividing (i) the Eurodollar Rate for such Eurodollar Loan for such
Interest Period by (ii) 1 minus the Reserve Requirement for such Eurodollar Loan
for such Interest Period, provided that no Adjusted Eurodollar Rate charged by
any Person shall ever exceed the Highest Lawful Rate. The Adjusted Eurodollar
Rate for any Eurodollar Loan shall change whenever the Eurodollar Margin or the
Reserve Requirement changes.
"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
(a) to vote 20% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing general
partners; or
(b) to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
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"Agent" means Bank of America, N.A., as Administrative Agent hereunder,
and its successors in such capacity.
"Aggregate Value" means with respect to any period of time the Value of
all oil and gas properties of the Restricted Persons sold during such period, in
each case taking into account all categories of proved reserves. "Value" of any
oil and gas property means the value determined at the time of sale by reference
to the Engineering Report (or supplement thereto) most recently furnished to
Agent.
"Agreement" means this Credit Agreement.
"Applicable Lending Office" means, for each Lender and for each Type of
Loan, the "Lending Office" of such Lender (or of an Affiliate of such Lender)
designated for such Type of Loan on Schedule 1 or such other office of such
Lender (or an Affiliate of such Lender) as such Lender may from time to time
specify to Agent and Borrower by written notice in accordance with the terms
hereof as the office by which its Loans of such Type are to be made and
maintained.
"Base Rate" means, for any day, the rate per annum equal to the higher
of (a) the Federal Funds Rate for such day plus one-half of one percent (.5%)
and (b) the Prime Rate for such day. Any change in the Base Rate due to a change
in the Prime Rate or the Federal Funds Rate shall be effective on the effective
date of such change in the Prime Rate or Federal Funds Rate. As used in this
definition, "Prime Rate" means the per annum rate of interest established from
time to time by Agent as its prime rate, which rate may not be the lowest rate
of interest charged by Agent to its customers.
"Base Rate Margin" means, on each day:
(a) zero basis points (0%) per annum when the Facility Usage on such
day is less than seventy-five percent (75%) of the Borrowing Base on such day,
(b) twenty-five basis points (0.25%) per annum when the Facility Usage
on such day is greater than or equal to seventy-five percent (75%) of the
Borrowing Base on such day.
"Borrower" means Westport Oil And Gas Company, Inc., a Delaware
corporation.
"Borrowing" means a borrowing of new Loans of a single Type pursuant to
Section 2.2 or a Continuation or Conversion of existing Loans into a single Type
(and, in the case of Eurodollar Loans, with the same Interest Period) pursuant
to Section 2.3.
"Borrowing Base" means, at the particular time in question, either the
amount provided for in Section 2.8 or the amount determined by Agent and
Majority Lenders in accordance with the provisions of Section 2.9, as reduced by
Borrower pursuant to Section 2.10; provided, however, that in no event shall the
Borrowing Base ever exceed the Maximum Loan Amount.
"Borrowing Base Deficiency" has the meaning given to such term in
Section 2.7(b).
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"Borrowing Notice" means a written or telephonic request, or a written
confirmation, made by Borrower which meets the requirements of Section 2.2.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Dallas, Texas. Any
Business Day in any way relating to Eurodollar Loans (such as the day on which
an Interest Period begins or ends) must also be a day on which, in the judgment
of Agent, significant transactions in dollars are carried out in the interbank
eurocurrency market.
"Cash Equivalents" means Investments in:
(a) marketable obligations, maturing within twelve 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;
(b) demand deposits, and time deposits (including certificates of
deposit) maturing within twelve months from the date of deposit thereof, with
any office of any Lender or 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 ▇▇▇▇▇'▇ or AA- by S & P;
(c) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in subsection (a) above entered
into with any commercial bank meeting the specifications of subsection (b)
above;
(d) open market commercial paper, maturing within 270 days after
acquisition thereof, which are rated at least P-1 by ▇▇▇▇▇'▇ or A-1 by S & P;
and
(e) money market or other mutual funds substantially all of whose
assets comprise securities of the types described in subsections (a) through (d)
above.
"Change of Control" means any of the following:
(a) prior to the consummation of the Equitable Acquisition, Westport
Energy Corporation, the ▇▇▇▇▇▇ ▇. ▇▇▇▇ Family Limited Partnership and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ (in this definition collectively called the "Westport Group") cease to
own, collectively, one hundred percent (100%) of Voting Power of Borrower, and
(b) after the consummation of the Equitable Acquisition:
(i) Parent ceases to own one hundred percent (100%) of the
Voting Power of Borrower, or
(ii) the Westport Group and Equitable Production Company cease
to own, collectively, fifty-one percent (51%) or more of the Voting
Power of Parent, or
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(iii) Except for Equitable, any Person or two or more Persons
acting as a group shall acquire beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under
the Securities Act of 1934, as amended, and including holding proxies
to vote for the election of directors other than proxies held by
Parent's management or their designees to be voted in favor of Persons
nominated by Parent's Board of Directors) of 10% or more of the Voting
Power of Parent, or
(iv) one or more of the directors of Parent shall consist of
Persons not nominated by Parent's Board of Directors (not including as
Board nominees any directors which the Board is obligated to nominate
pursuant to shareholders agreements, voting trust arrangements or
similar arrangements).
"Collateral" means all property of any kind which is subject to a Lien
in favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
"Commitment Fee Rate" means:
(a) twenty five basis points (0.25%) per annum when the Facility Usage
on such day is less than twenty five percent (25%) of the Borrowing Base on such
day,
(b) thirty basis points (0.30%) per annum when the Facility Usage on
such day is greater than or equal to twenty-five percent (25%) and less than
fifty percent (50%) of the Borrowing Base on such day,
(c) thirty-five basis points (0.35%) per annum when the Facility Usage
on such day is greater than or equal to fifty percent (50%) and less than
seventy-five percent (75%) of the Borrowing Base on such day, and
(d) forty basis points (0.40%) per annum when the Facility Usage on
such day is greater than or equal to seventy-five percent (75%) of the Borrowing
Base on such day.
"Commitment Period" means the period from and including the date hereof
until the earliest of (a) the Maturity Date, (b) the day on which the
obligations of Lenders to make Loans hereunder or the obligations of LC Issuer
to issue Letters of Credit hereunder have been terminated or the Notes first
become due and payable in full, or (c) April 15, 2000, if the Equitable
Acquisition has not been consummated by such date.
"Consolidated" refers to 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 Interest Expense" means, for any Person for any period,
such Person's total interest expense, calculated on a Consolidated basis,
whether paid or accrued, including without
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limitation all commissions, discounts and other fees and charges owed with
respect to Letters of Credit.
"Continuation" shall refer to the continuation pursuant to Section 2.3
hereof of a Eurodollar Loan as a Eurodollar Loan from one Interest Period to the
next Interest Period.
"Continuation/Conversion Notice" means a written or telephonic request,
or a written confirmation, made by Borrower which meets the requirements of
Section 2.3.
"Conversion" shall refer to a conversion pursuant to Section 2.3 or
Article III of one Type of Loan into another Type of Loan.
"Default" means any Event of Default and any default, event or
condition which 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, at the time in question (a) with respect to any
Base Rate Loan, the rate per annum equal to two percent (2%) above the Adjusted
Base Rate then in effect and (b) with respect to any Eurodollar Loan, the rate
per annum equal to two percent (2%) above the Adjusted Eurodollar Rate then in
effect for such Loan, provided in each case that no Default Rate charged by any
Person shall ever exceed the Highest Lawful Rate.
"Determination Date" has the meaning given to such term in Section 2.9.
"Disclosure Report" means either a notice given by Borrower under
Section 6.4 or a certificate given by Borrower's chief financial officer under
Section 6.2(b).
"Disclosure Schedule" means Schedule 2 hereto.
"Distribution" means (a) any dividend or other distribution made by a
Restricted Person on or in respect of any stock, partnership interest, or other
equity interest in such Restricted Person or any other Restricted Person
(including any option or warrant to buy such an equity interest), or (b) any
payment made by a Restricted Person to purchase, redeem, acquire or retire any
stock, partnership interest, or other equity interest in such Restricted Person
or any other Restricted Person (including any such option or warrant).
"Domestic Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Domestic Lending Office" on Schedule 1, or such
other office as such Lender may from time to time specify to Borrower and Agent;
with respect to LC Issuer, the office, branch, or agency through which it issues
Letters of Credit; and, with respect to Agent, the office, branch, or agency
through which it administers this Agreement.
"EBITDA" means, for any Person for any period, calculated on a
Consolidated basis, the sum of such Person's Consolidated net income,
Consolidated Interest Expense, depreciation expense, depletion expense,
amortization expense, federal, state, and provincial income taxes, exploration
and abandonment expense and other non-cash charges and expenses (excluding gains
or losses from dispositions of assets).
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"Eligible Transferee" means a Person which either (a) is a Lender or an
Affiliate of a Lender, or (b) is consented to as an Eligible Transferee by Agent
and, so long as no Default or Event of Default is continuing, by Borrower, which
consents in each case will not be unreasonably withheld (provided that no Person
organized outside the United States may be an Eligible Transferee if Borrower
would be required to pay withholding taxes on interest or principal owed to such
Person).
"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 6.2.
"Environmental Laws" means any and all Laws relating to the environment
or to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
"Equitable" means Equitable Resources, Inc., a Delaware corporation.
"Equitable Acquisition" means the transaction contemplated by the
Acquisition Documents.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statutes or statute, together with
all rules and regulations promulgated with respect thereto.
"ERISA Affiliate" means Borrower and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control that, together with Borrower, are treated as a single employer
under Section 414 of the Internal Revenue 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
Restricted Person has a fixed or contingent liability.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" on Schedule 1
(or, if no such office is specified, its Domestic Lending Office), or such other
office of such Lender as such Lender may from time to time specify to Borrower
and Agent.
"Eurodollar Loan" means a Loan that bears interest at the Adjusted
Eurodollar Rate.
"Eurodollar Margin" means, on each day:
(a) one hundred basis points (1.00%) per annum when the Facility Usage
on such day is less than twenty-five percent (25%) of the Borrowing Base on such
day,
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(b) one hundred twenty-five basis points (1.25%) per annum when the
Facility Usage on such day is greater than or equal to twenty-five percent (25%)
and less than fifty percent (50%) of the Borrowing Base on such day,
(c) one hundred fifty basis points (1.50%) per annum when the Facility
Usage on such day is greater than or equal to fifty percent (50%) and less than
seventy-five percent (75%) of the Borrowing Base on such day, and
(d) one hundred seventy-five basis points (1.75%) per annum when the
Facility Usage on such day is greater than or equal to seventy-five percent
(75%) of the Borrowing Base on such day.
"Eurodollar Rate" means, for any Eurodollar Loan within a Borrowing and
with respect to the related Interest Period therefor, (a) the interest rate per
annum (carried out to the fifth decimal place) equal to the rate determined by
the Agent to be the offered rate that appears on the page of the Telerate Screen
that displays an average British Bankers Association Interest Settlement Rate
(such page currently being page number 3750) for deposits in U.S. dollars (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period, or (b) in the
event the rate referenced in the preceding subsection (a) does not appear on
such page or service or such page or service shall cease to be available, the
rate per annum (carried out to the fifth decimal place) equal to the rate
determined by the Agent to be the offered rate on such other page or other
service that displays an average British Bankers Association Interest Settlement
Rate for deposits in U.S. dollars (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period, determined as
of approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, or (c) in the event the rates referenced in the
preceding subsections (a) and (b) are not available, the rate per annum
determined by the Agent as the rate of interest at which deposits in U.S.
dollars (for delivery on the first day of such Interest Period) in same day
funds in the approximate amount of the applicable Eurodollar Loan and with a
term equivalent to such Interest Period would be offered by its London branch to
major banks in the offshore U.S. dollar market at their request at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period.
"Evaluation Date" means each of the following:
(a) Each date which Majority Lenders, at their option, specify
as a date as of which the Borrowing Base is to be redetermined,
provided that each such date must be the first or last day of a current
calendar month and that Majority Lenders shall not be entitled to
request any such redetermination more than once during each period
between scheduled redeterminations pursuant to clause (b) herein;
(b) April 1 and October 1 of each year, beginning October 1,
2000;
(c) Each date which Borrower specifies as a date as of which
the Borrowing Base is to be redetermined, provided that each such date
must be the first or last day of a calendar
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month and that Borrower shall not be entitled to request any such
redetermination more than once during any calendar year; and
(d) Each date on which Agent and Majority Lenders exercise
their right to redetermine the Borrowing Base pursuant to Section
7.5(d).
"Event of Default" has the meaning given to such term in Section 8.1.
"Existing Credit Agreement" means that certain Credit Agreement dated
as of December 31, 1996 among Borrower and Bank of America, N.A., f/k/a
NationsBank of Texas, N.A., as agent, and the lenders named thereunder.
"Facility Usage" means, at the time in question, the aggregate amount
of outstanding Loans and existing LC Obligations at such time.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of one percent) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of Dallas on the Business Day next
succeeding such day, provided that (a) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate quoted to Agent on such day on such transactions as determined by Agent.
"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.
"Four Quarter Period" means as of the end of any Fiscal Quarter, the
period of four consecutive Fiscal Quarters then ended.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of Borrower
and its Consolidated Subsidiaries, are applied for all periods after the date
hereof in a manner consistent with the manner in which such principles and
practices were applied to the audited Initial Financial Statements. If any
change in any accounting principle or practice is required by the Financial
Accounting Standards Board (or any such successor) in order for such principle
or practice to continue as a generally accepted accounting principle or
practice, all reports and financial statements required hereunder with respect
to Borrower or with respect to Borrower and its Consolidated Subsidiaries shall
be prepared in accordance with such change, but all calculations and
determinations to be made hereunder may be made in accordance with such change
only after notice of such change is given to each Lender and Majority Lenders
agree to such change insofar as it affects the accounting of Borrower or of
Borrower and its Consolidated Subsidiaries.
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"Guarantor" means any Person who has guaranteed some or all of the
Obligations pursuant to a guaranty listed on the Security Schedule or any other
Person who has guaranteed some or all of the Obligations and who has been
accepted by Agent as a Guarantor or any Subsidiary of Borrower which now or
hereafter executes and delivers a guaranty to Agent pursuant to Section 6.15 and
shall include Parent after the consummation of the Equitable Acquisition.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Hedging Contract" means (a) 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, (b) any option, futures or forward
contract traded on an exchange, and (c) any other derivative agreement or other
similar agreement or arrangement.
"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 Lender Party as
appropriate to assure that the Loan 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 Liabilities in any of the following
categories:
(a) Liabilities for borrowed money,
(b) Liabilities constituting an obligation to pay the deferred purchase
price of property or services,
(c) Liabilities evidenced by a bond, debenture, note or similar
instrument,
(d) Liabilities which (i) would under GAAP be shown on such Person's
balance sheet as a liability, and (ii) are payable more than one year from the
date of creation thereof (other than reserves for taxes and reserves for
contingent obligations),
(e) Liabilities arising under Hedging Contracts,
(f) Liabilities under leases, whether or not capitalized in accordance
with GAAP,
(g) Liabilities arising under conditional sales or other title
retention agreements,
(h) 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
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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,
(i) Liabilities (for example, repurchase agreements, mandatorily
redeemable preferred stock and sale/leaseback agreements) consisting of an
obligation to purchase or redeem securities or other property, if such
Liabilities arises out of or in connection with the sale or issuance of the same
or similar securities or property,
(j) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Liabilities with respect to payments received in consideration of
oil, gas, or other minerals yet to be acquired or produced at the time of
payment (including obligations under "take-or-pay" contracts to deliver gas in
return for payments already received and the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment), or
(l) Liabilities with respect to other 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 by such Person on ordinary trade 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 90 days past the original invoice or
billing date therefor.
"Initial Engineering Report" means (i) the engineering report
concerning oil and gas properties of Borrower dated February 24, 2000, prepared
by ▇▇▇▇▇ ▇▇▇▇▇ Company as of January 1, 2000, and (ii) the engineering report
concerning oil and gas properties of Parent dated February 23, 2000, prepared by
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and Associates as of December 31, 1999.
"Initial Financial Statements" means (a) the audited annual
Consolidated financial statements of Borrower dated as of December 31, 1999, and
(b) the unaudited balance sheet of Parent dated as of October 1, 1999.
"Insurance Schedule" means Schedule 4 attached hereto.
"Interest Payment Date" means (a) with respect to each Base Rate Loan,
the last day of each March, June, September and December, and (b) with respect
to each Eurodollar Loan, the last day of the Interest Period that is applicable
thereto and, if such Interest Period is six months in length, the date specified
by Agent which is approximately three months after such Interest Period begins;
provided that the last day of each calendar month shall also be an Interest
Payment Date for each such Loan so long as any Event of Default exists under
Section 8.1(a).
"Internal Revenue Code" means the United States Internal Revenue Code
of 1986, as amended from time to time and any successor statute or statutes,
together with all rules and regulations promulgated with respect thereto.
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"Interest Period" means, with respect to each particular Eurodollar
Loan in a Borrowing, the period specified in the Borrowing Notice or
Continuation/Conversion Notice applicable thereto, beginning on and including
the date specified in such Borrowing Notice or Continuation/Conversion Notice
(which must be a Business Day), and ending one, two, three, or six months
thereafter, as Borrower may elect in such notice; provided that: (a) any
Interest Period which would otherwise end on a day which is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day
falls in another calendar month, in which case such Interest Period shall end on
the next preceding Business Day; (b) any Interest Period which begins on the
last Business Day in a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day in a calendar month; and (c)
notwithstanding the foregoing, any Interest Period which would otherwise end
after the last day of the Commitment Period shall end on the last day of the
Commitment Period (or, if the last day of the Commitment Period is not a
Business Day, on the next preceding Business Day).
"Investment" means any investment, made directly or indirectly, in any
Person or any property, whether by purchase, 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.
"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 Application" means any application for a Letter of Credit hereafter
made by Borrower to LC Issuer.
"LC Collateral" has the meaning given to such term in Section 2.16(a).
"LC Issuer" means Bank of America, N.A. in its capacity as the issuer
of Letters of Credit hereunder, and its successors in such capacity. Agent may,
with the consent of Borrower and the Lender in question, appoint any Lender
hereunder as an LC Issuer in place of or in addition to Bank of America, N.A.
"LC Obligations" means, at the time in question, the sum of all Matured
LC Obligations plus the maximum amounts which LC Issuer might then or thereafter
be called upon to advance under all Letters of Credit then outstanding.
"LC Sublimit" means $25,000,000.
"Lender Parties" means Agent, LC Issuer, and all Lenders.
"Lenders" means each signatory hereto (other than Borrower and any
Restricted Person that is a party hereto), including Bank of America, N.A., in
its capacity as a Lender hereunder rather than as Agent or LC Issuer, and the
successors of each such party as holder of a Note.
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"Letter of Credit" means any letter of credit issued by LC Issuer
hereunder at the application of Borrower.
"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 which 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 which 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.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Letters of Credit, the LC Applications, and all other agreements,
certificates, documents, instruments and writings at any time delivered in
connection herewith or therewith (exclusive of term sheets and commitment
letters).
"Loans" has the meaning given to such term in Section 2.1.
"Majority Lenders" means Lenders whose aggregate Percentage Shares
equal or exceed sixty-six and two-thirds percent (66 2/3%).
"Material Adverse Change" means a material and adverse change, from the
state of affairs presented in the Initial Financial Statements or as represented
or warranted in any Loan Document, to (a) Borrower's Consolidated financial
condition, (b) Borrower's Consolidated operations, properties or prospects,
considered as a whole, (c) Borrower's ability to timely pay the Obligations, or
(d) the enforceability of the material terms of any Loan Documents.
"Matured LC Obligations" means all amounts paid by LC Issuer on drafts
or demands for payment drawn or made under or purported to be under any Letter
of Credit and all other amounts due and owing to LC Issuer under any LC
Application for any Letter of Credit, to the extent the same have not been
repaid to LC Issuer (with the proceeds of Loans or otherwise).
"Maturity Date" means April 4, 2003.
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"Maximum Drawing Amount" means at the time in question the sum of the
maximum amounts which LC Issuer might then or thereafter be called upon to
advance under all Letters of Credit which are then outstanding.
"Maximum Loan Amount" means the amount of $325,000,000.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or its successor.
"Mortgaged Properties" means the oil and gas properties that are
mortgaged to Agent under the Security Documents.
"Note" has the meaning given to such term in Section 2.1.
"Obligations" means all Liabilities from time to time owing by any
Restricted Person to any Lender Party under or pursuant to any of the Loan
Documents, including all LC Obligations. "Obligation" means any part of the
Obligations.
"Parent" means Equitable Production (Gulf) Company, a Delaware
corporation, the name of which will be changed to Westport Resources Corporation
after the consummation of the Equitable Acquisition.
"Percentage Share" means, with respect to any Lender (a) when used in
Section 2.1, 2.2, 2.5, or 2.13, in any Borrowing Notice or when no Loans are
outstanding hereunder, the percentage set forth opposite such Lender's name on
Schedule 1, and (b) when used otherwise, the percentage obtained by dividing (i)
the sum of the unpaid principal balance of such Lender's Loans at the time in
question plus the Matured LC Obligations which such Lender has funded pursuant
to Section 2.13(c) plus the portion of the Maximum Drawing Amount which such
Lender might be obligated to fund under Section 2.13(c), by (ii) the sum of the
aggregate unpaid principal balance of all Loans at such time plus the aggregate
amount of LC Obligations outstanding at such time.
"Permitted Investments" means (a) Cash Equivalents, (b) property used
in the ordinary course of business of the Restricted Persons, (c) current assets
arising from the sale or lease of goods and services in the ordinary course of
business by the Restricted Persons or from sales permitted under Section 7.5,
and (d) Investments by Borrower in any Guarantor.
"Permitted Liens" means:
(a) statutory Liens for taxes, assessments or other
governmental charges or levies which are not yet delinquent or which
are being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP;
(b) landlords', operators', carriers', warehousemen's,
repairmen's, mechanics', materialmen's, or other like Liens and Liens
incurred in connection with workers' compensation, unemployment
insurance and other types of social security none of which secure
Indebtedness, in each case only to the extent arising in the ordinary
course of
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business and only to the extent securing obligations which are not
delinquent or which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been maintained in
accordance with GAAP;
(c) Liens arising under operating agreements, oil and gas
leases, farm-out agreements, unitization and pooling declarations and
agreements, and area of mutual interest agreements which do not secure
Indebtedness, in each case only to the extent arising in the ordinary
course of business and only to the extent securing obligations which
are not delinquent or which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been
maintained in accordance with GAAP;
(d) minor defects and irregularities in title to any property,
so long as such defects and irregularities neither secure Indebtedness
nor materially impair the value of such property or the use of such
property for the purposes for which such property is held;
(e) deposits of cash or securities to secure the performance
of bids, trade contracts, leases, statutory obligations and other
obligations of a like nature (excluding appeal bonds) incurred in the
ordinary course of business;
(f) Liens under the Security Documents; and
(g) with respect only to property subject to any particular
Security Document, Liens burdening such property which are expressly
allowed by such Security Document.
"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.
"Rating Agency" means either S & P or Moody's.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including any marginal, special, supplemental, or emergency reserves)
are required to be maintained under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) by member
banks of the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks with respect to (a) any category of liabilities which
includes deposits by reference to which the Adjusted Eurodollar Rate is to be
determined, or (b) any category of extensions of credit or other assets which
include Eurodollar Loans.
"Restricted Person" means any of Borrower, each Subsidiary of Borrower,
and each Guarantor.
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"S & P" means Standard & Poor's Ratings Services (a division of McGraw
Hill Companies, Inc.), or its successor.
"Security Documents" means 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 agreements and other agreements or instruments now, heretofore, or
hereafter delivered by any Restricted Person to 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 Restricted
Person's other duties and obligations under the Loan Documents.
"Security Schedule" means Schedule 3 hereto.
"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 by or owned fifty
percent or more by such Person and which owns assets having an aggregate fair
market value in excess of $5,000,000, provided that associations, joint ventures
or other relationships (a) which are established pursuant to a standard form
operating agreement or similar agreement or which are partnerships for purposes
of federal income taxation only, (b) which are not corporations or partnerships
(or subject to the Uniform Partnership Act) under applicable state Law, and (c)
whose businesses are limited to the exploration, development and operation of
oil, gas or mineral properties and interests owned directly by the parties in
such associations, joint ventures or relationships, shall not be deemed to be
"Subsidiaries" of such Person.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Section 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) 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, or (b) 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, or (c) 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, or (d) the institution of
proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty
Corporation under Section 4042 of ERISA, or (e) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any ERISA Plan.
"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.
"Type" means, with respect to any Loans, the characterization of such
Loans as either Base Rate Loans or Eurodollar Loans.
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"Voting Power" means, with respect to any Person, the outstanding
voting securities of such Person, measured by voting power, including both
common stock and any preferred stock or other equity securities entitling the
holders thereof to vote with the holders of common stock in elections for
directors of such Person.
Section 1.2. Exhibits and Schedules; Additional Definitions. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes. Reference is hereby made to the Security Schedule for the meaning of
certain terms defined therein and used but not defined herein, which definitions
are incorporated herein by reference.
Section 1.3. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in this
Agreement which 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 that nothing
contained in this section shall be construed to authorize any such renewal,
extension, modification, amendment or restatement.
Section 1.4. References and Titles. 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.
Section 1.5. Calculations and Determinations. All calculations under
the Loan Documents of interest chargeable with respect to Eurodollar Loans and
of 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. All other calculations of
interest made under the Loan Documents shall be made on the basis of actual days
elapsed (including the first day but excluding the last) and a year of 365 or
366 days, as appropriate. Each determination by a Lender Party of amounts to be
paid under Article III or any other matters which are to be determined hereunder
by a Lender Party (such as any Eurodollar Rate, Adjusted Eurodollar Rate,
Business Day, Interest Period, or Reserve Requirement) shall, in the absence of
manifest error, be conclusive and binding. Unless otherwise expressly provided
herein or unless Majority Lenders otherwise consent all financial statements and
reports furnished to any Lender Party hereunder shall be prepared and all
financial computations and determinations pursuant hereto shall be made in
accordance with GAAP.
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Section 1.6. Construction of Indemnities and Releases. All
indemnification and release provisions of this Agreement shall be construed
broadly (and not narrowly) in favor of the Persons receiving indemnification
from or being released.
ARTICLE II - The Loans and Letters of Credit
Section 2.1. Commitments to Lend; Notes. Subject to the terms and
conditions hereof, each Lender agrees to make loans to Borrower (herein called
such Lender's "Loans") upon Borrower's request from time to time during the
Commitment Period, provided that (a) subject to Sections 3.3, 3.4 and 3.6, all
Lenders are requested to make Loans of the same Type in accordance with their
respective Percentage Shares and as part of the same Borrowing, and (b) after
giving effect to such Loans, the Facility Usage does not exceed the Borrowing
Base determined as of the date on which the requested Loans are to be made. The
aggregate amount of all Loans in any Borrowing must be greater than or equal to
$5,000,000 or must equal the remaining availability under the Borrowing Base.
Borrower may have no more than six Borrowings of Eurodollar Loans outstanding at
any time. The obligation of Borrower to repay to each Lender the aggregate
amount of all Loans made by such Lender, together with interest accruing in
connection therewith, shall be evidenced by a single promissory note (herein
called such Lender's "Note") made by Borrower payable to the order of such
Lender in the form of Exhibit A with appropriate insertions. The amount of
principal owing on any Lender's Note at any given time shall be the aggregate
amount of all Loans theretofore made by such Lender minus all payments of
principal theretofore received by such Lender on such Note. Interest on each
Note shall accrue and be due and payable as provided herein and therein. Each
Note shall be due and payable as provided herein and therein, and shall be due
and payable in full on the Maturity Date. Subject to the terms and conditions
hereof, Borrower may borrow, repay, and reborrow hereunder.
Section 2.2. Requests for New Loans. Borrower must give to Agent
written notice (or telephonic notice promptly confirmed in writing) of any
requested Borrowing of new Loans to be advanced by Lenders. Each such notice
constitutes a "Borrowing Notice" hereunder and must:
(a) specify (i) the aggregate amount of any such Borrowing of new Base
Rate Loans and the date on which such Base Rate Loans are to be advanced, or
(ii) the aggregate amount of any such Borrowing of new Eurodollar Loans, the
date on which such Eurodollar Loans are to be advanced (which shall be the first
day of the Interest Period which is to apply thereto), and the length of the
applicable Interest Period; and
(b) be received by Agent not later than 10:00 a.m., Dallas, Texas time,
on (i) the day on which any such Base Rate Loans are to be made, or (ii) the
third Business Day preceding the day on which any such Eurodollar Loans are to
be made.
Each such written request or confirmation must be made in the form and substance
of the "Borrowing Notice" attached hereto as Exhibit B, duly completed. Each
such telephonic request shall be deemed a representation, warranty,
acknowledgment and agreement by Borrower as to the matters which are required to
be set out in such written confirmation. Upon receipt of any such Borrowing
Notice, Agent shall give each Lender prompt notice of the terms thereof. If all
conditions precedent to such new Loans have been met, each Lender will on the
date requested
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promptly remit to Agent at Agent's office in Dallas, Texas the amount of such
Lender's new Loan in immediately available funds, and upon receipt of such
funds, unless to its actual knowledge any conditions precedent to such Loans
have been neither met nor waived as provided herein, Agent shall promptly make
such Loans available to Borrower. Unless Agent shall have received prompt notice
from a Lender that such Lender will not make available to Agent such Lender's
new Loan, Agent may in its discretion assume that such Lender has made such Loan
available to Agent in accordance with this section and Agent may if it chooses,
in reliance upon such assumption, make such Loan available to Borrower. If and
to the extent such Lender shall not so make its new Loan available to Agent,
such Lender and Borrower severally agree to pay or repay to Agent within three
days after demand the amount of such Loan together with interest thereon, for
each day from the date such amount was made available to Borrower until the date
such amount is paid or repaid to Agent, with interest at (i) the Federal Funds
Rate, if such Lender is making such payment and (ii) the interest rate
applicable at the time to the other new Loans made on such date, if Borrower is
making such repayment. If neither such Lender nor Borrower pays or repays to
Agent such amount within such three-day period, Agent shall in addition to such
amount be entitled to recover from such Lender and from Borrower, on demand,
interest thereon at the Default Rate applicable to Base Rate Loans, calculated
from the date such amount was made available to Borrower. The failure of any
Lender to make any new Loan to be made by it hereunder shall not relieve any
other Lender of its obligation hereunder, if any, to make its new Loan, but no
Lender shall be responsible for the failure of any other Lender to make any new
Loan to be made by such other Lender.
Section 2.3. Continuations and Conversions of Existing Loans. Borrower
may make the following elections with respect to Loans already outstanding: to
convert Base Rate Loans to Eurodollar Loans, to convert Eurodollar Loans to Base
Rate Loans on the last day of the Interest Period applicable thereto, and to
continue Eurodollar Loans beyond the expiration of such Interest Period by
designating a new Interest Period to take effect at the time of such expiration.
In making such elections, Borrower may combine existing Loans made pursuant to
separate Borrowings into one new Borrowing or divide existing Loans made
pursuant to one Borrowing into separate new Borrowings, provided that Borrower
may have no more than six Borrowings of Eurodollar Loans outstanding at any
time. To make any such election, Borrower must give to Agent written notice (or
telephonic notice promptly confirmed in writing) of any such Conversion or
Continuation of existing Loans, with a separate notice given for each new
Borrowing. Each such notice constitutes a "Continuation/Conversion Notice"
hereunder and must:
(a) specify the existing Loans which are to be Continued or Converted;
(b) specify (i) the aggregate amount of any Borrowing of Base Rate
Loans into which such existing Loans are to be continued or converted and the
date on which such Continuation or Conversion is to occur, or (ii) the aggregate
amount of any Borrowing of Eurodollar Loans into which such existing Loans are
to be continued or converted, the date on which such Continuation or Conversion
is to occur (which shall be the first day of the Interest Period which is to
apply to such Eurodollar Loans), and the length of the applicable Interest
Period; and
(c) be received by Agent not later than 10:00 a.m., Dallas, Texas time,
on (i) the day on which any such Continuation or Conversion to Base Rate Loans
is to occur, or (ii) the third
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Business Day preceding the day on which any such Continuation or Conversion to
Eurodollar Loans is to occur.
Each such written request or confirmation must be made in the form and substance
of the "Continuation/Conversion Notice" attached hereto as Exhibit C, duly
completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by Borrower as to the matters which are
required to be set out in such written confirmation. Upon receipt of any such
Continuation/Conversion Notice, Agent shall give each Lender prompt notice of
the terms thereof. Each Continuation/Conversion Notice shall be irrevocable and
binding on Borrower. During the continuance of any Default, Borrower may not
make any election to convert existing Loans into Eurodollar Loans or continue
existing Loans as Eurodollar Loans. If (due to the existence of a Default or for
any other reason) Borrower fails to timely and properly give any
Continuation/Conversion Notice with respect to a Borrowing of existing
Eurodollar Loans at least three days prior to the end of the Interest Period
applicable thereto, such Eurodollar Loans shall automatically be converted into
Base Rate Loans at the end of such Interest Period. No new funds shall be repaid
by Borrower or advanced by any Lender in connection with any Continuation or
Conversion of existing Loans pursuant to this section, and no such Continuation
or Conversion shall be deemed to be a new advance of funds for any purpose; such
Continuations and Conversions merely constitute a change in the interest rate
applicable to already outstanding Loans.
Section 2.4. Use of Proceeds. Borrower shall use all Loans to refinance
existing indebtedness, to finance capital expenditures, to finance the Equitable
Acquisition (including the repayment of the outstanding inter-company
indebtedness of Parent to Equitable Production Company in the aggregate
principal amount of $50,000,000 plus interest and costs), to refinance Matured
LC Obligations, and provide working capital for its operations and for other
general business purposes. Borrower shall use all Letters of Credit for its
general corporate purposes. In no event shall the funds from any Loan or any
Letter of Credit be used directly or indirectly by any Person for personal,
family, household or agricultural purposes or 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 to extend credit to others
directly or indirectly for the purpose of purchasing or carrying any such margin
stock. Borrower represents and warrants that Borrower is not engaged
principally, or as one of Borrower's important activities, in the business of
extending credit to others for the purpose of purchasing or carrying such margin
stock.
Section 2.5. Interest Rates and Fees.
(a) Interest Rates. As provided in the Notes: (i) each Base Rate Loan
shall bear interest on each day outstanding at the Adjusted Base Rate in effect
on such day, (ii) each Eurodollar Loan shall bear interest on each day during
the related Interest Period at the related Adjusted Eurodollar Rate in effect on
such day, and (iii) if an Event of Default has occurred and is continuing, all
Loans shall bear interest on each day outstanding at the applicable Default
Rate. Past due payments of principal and interest shall bear interest at the
rates and in the manner set forth in the Notes.
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(b) Commitment Fees. In consideration of each Lender's commitment to
make Loans, Borrower will pay to Agent for the account of each Lender a
commitment fee determined on a daily basis by applying the applicable Commitment
Fee Rate to such Lender's Percentage Share of the unused portion of the
Borrowing Base on each day during the Commitment Period, determined for each
such day by deducting from the amount of the Borrowing Base at the end of such
day the Facility Usage. This commitment fee shall be due and payable in arrears
on the last day of each Fiscal Quarter and at the end of the Commitment Period.
(c) Agent's Fees. In addition to all other amounts due to Agent under
the Loan Documents, Borrower will pay fees to Agent as described in a letter
agreement dated January 27, 2000 between Agent and Borrower.
Section 2.6. Optional Prepayments. Borrower may from time to time and
without premium or penalty prepay the Notes, in whole or in part, so long as the
aggregate amounts of all partial prepayments of principal on the Notes equals
$1,000,000 or any higher multiple of $500,000, so long as Borrower gives Agent
at least two Business Days' prior written notice of any prepayment of any
Eurodollar Loan and pays all breakage costs associated with the prepayment of
any Eurodollar Loan as provided in Section 3.8, and so long as Borrower does not
make any prepayments which would reduce the aggregate unpaid principal balance
of the Loans to less than $100,000 without first either (a) terminating this
Agreement or (b) providing assurance satisfactory to Agent in its discretion
that Lenders' legal rights under the Loan Documents are in no way affected by
such reduction. Each prepayment of principal under this section shall be
accompanied by all interest then accrued and unpaid on the principal so prepaid.
Any principal or interest prepaid pursuant to this section shall be in addition
to, and not in lieu of, all payments otherwise required to be paid under the
Loan Documents at the time of such prepayment.
Section 2.7. Mandatory Prepayments
(a) If at any time the Facility Usage exceeds the Maximum Loan Amount,
Borrower shall immediately upon demand prepay the principal of the Loans in an
amount at least equal to such excess.
(b) If at any time the Facility Usage is less than the Maximum Loan
Amount but in excess of the Borrowing Base (such excess being herein called a
"Borrowing Base Deficiency"), Borrower shall, within thirty days after Agent
gives notice of such fact to Borrower, either:
(i) prepay the principal of the Loans in an aggregate amount
at least equal to such Borrowing Base Deficiency (or, if the Loans have
been paid in full, pay to LC Issuer LC Collateral as required under
Section 2.16(a)), or
(ii) give notice to Agent electing to prepay the principal of
the Loans in up to six monthly installments in an aggregate amount at
least equal to such Borrowing Base Deficiency, with each such
installment equal to or in excess of one-sixth of such Borrowing Base
Deficiency, and with the first such installment to be paid one month
after the giving of such notice and the subsequent installments to be
due and payable at one month intervals thereafter until such Borrowing
Base Deficiency has been eliminated, or
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(iii) give notice to Agent that Borrower desires to provide
Agent with deeds of trust, mortgages, chattel mortgages, security
agreements, financing statements and other security documents in form
and substance satisfactory to Agent, granting, confirming, and
perfecting first and prior liens or security interests in collateral
acceptable to Majority Lenders, to the extent needed to allow Majority
Lenders to increase the Borrowing Base (as they in their reasonable
discretion deem consistent with prudent oil and gas banking industry
lending standards at the time) to an amount which eliminates such
Borrowing Base Deficiency, and then provide such security documents
within thirty days after Agent specifies such collateral to Borrower.
If, prior to any such specification by Agent, Majority Lenders
determine that the giving of such security documents will not serve to
eliminate such Borrowing Base Deficiency, then, within five Business
Days after receiving notice of such determination, Borrower will elect
to make, and thereafter make, the prepayments specified in either of
the preceding subsections (i) or (ii) of this subsection (b).
(c) Each prepayment of principal under this section shall be
accompanied by all interest then accrued and unpaid on the principal so prepaid.
Any principal or interest prepaid pursuant to this section shall be in addition
to, and not in lieu of, all payments otherwise required to be paid under the
Loan Documents at the time of such prepayment.
Section 2.8. Initial Borrowing Base. During the period from the date
hereof to the first Determination Date the Borrowing Base shall be $200,000,000.
Section 2.9. Subsequent Determinations of Borrowing Base.
By each Evaluation Date (or in the case of an Evaluation Date pursuant
to clause (a) of the definition of "Evaluation Date", within thirty days after
such Evaluation Date), Borrower shall furnish to each Lender all information,
reports and data which Agent has then requested concerning Restricted Persons'
businesses and properties (including their oil and gas properties and interests
and the reserves and production relating thereto), together with the Engineering
Report described in Section 6.2. Within sixty days after receiving such
information, reports and data, or as promptly thereafter as practicable,
Majority Lenders shall agree upon an amount for the Borrowing Base (provided
that all Lenders must agree to any increase in the Borrowing Base) and Agent
shall by notice to Borrower designate such amount as the new Borrowing Base
available to Borrower hereunder, which designation shall take effect immediately
on the date such notice is sent (herein called a "Determination Date") and shall
remain in effect until but not including the next date as of which the Borrowing
Base is redetermined. If Borrower does not furnish all such information, reports
and data by the date specified in the first sentence of this section, Agent may
nonetheless designate the Borrowing Base at any amount which Majority Lenders
determine and may redesignate the Borrowing Base from time to time thereafter
until each Lender receives all such information, reports and data, whereupon
Majority Lenders shall designate a new Borrowing Base as described above.
Majority Lenders shall determine the amount of the Borrowing Base based upon the
loan collateral value which they in their discretion assign to the various oil
and gas properties of Restricted Persons at the time in question and based upon
such other credit factors (including without limitation the assets, liabilities,
cash flow, hedged and unhedged exposure to price, foreign exchange rate, and
interest rate changes,
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business, properties, prospects, management and ownership of Borrower and its
Affiliates) as they in their discretion deem significant. It is expressly
understood that Lenders and Agent have no obligation to agree upon or designate
the Borrowing Base at any particular amount, whether in relation to the Maximum
Loan Amount or otherwise, and that Lenders' commitments to advance funds
hereunder is determined by reference to the Borrowing Base from time to time in
effect, which Borrowing Base shall be used for calculating commitment fees under
Section 2.5 and, to the extent permitted by Law and regulatory authorities, for
the purposes of capital adequacy determination and reimbursements under Section
3.2.
Section 2.10. Borrower's Reduction of Borrowing Base. Until the
termination of the Commitment Period Borrower may, during the fifteen-day period
beginning on each Determination Date (each such period being called in this
section an "Option Period"), reduce the Borrowing Base from the amount
designated by Agent to any lesser amount. To exercise such option Borrower must
within an Option Period send notice to Agent of the amount of the Borrowing Base
chosen by Borrower. If Borrower does not affirmatively exercise this option
during an Option Period, the Borrowing Base shall be the amount designated by
Agent. Any choice by Borrower of a Borrowing Base shall be effective as of the
first day of the Option Period during which such choice was made and shall
continue in effect until the next date as of which the Borrowing Base is
redetermined.
Section 2.11. Letters of Credit. Subject to the terms and conditions
hereof, Borrower may during the Commitment Period request LC Issuer to issue one
or more Letters of Credit, provided that, after taking such Letter of Credit
into account:
(a) the Facility Usage does not exceed the Borrowing Base at such time;
(b) the aggregate amount of LC Obligations at such time does not exceed
the LC Sublimit;
(c) the expiration date of such Letter of Credit is prior to the end of
the Commitment Period;
(d) such Letter of Credit is to be used for general corporate purposes
of Restricted Persons;
(e) such Letter of Credit is not directly or indirectly used to assure
payment of or otherwise support any Indebtedness of any Person other than
Indebtedness of any Guarantor;
(f) the issuance of such Letter of Credit will be in compliance with
all applicable governmental restrictions, policies, and guidelines and will not
subject LC Issuer to any cost which is not reimbursable under Article III;
(g) the form and terms of such Letter of Credit are acceptable to LC
Issuer in the reasonable exercise of its discretion; and
(h) all other conditions in this Agreement to the issuance of such
Letter of Credit have been satisfied.
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LC Issuer will honor any such request if the foregoing conditions (a) through
(h) (in the following Section 2.12 called the "LC Conditions") have been met as
of the date of issuance of such Letter of Credit. LC Issuer may choose to honor
any such request for any other Letter of Credit but has no obligation to do so
and may refuse to issue any other requested Letter of Credit for any reason
which LC Issuer in its sole discretion deems relevant.
Section 2.12. Requesting Letters of Credit. Borrower must make written
application for any Letter of Credit at least three Business Days before the
date on which Borrower desires for LC Issuer to issue such Letter of Credit. By
making any such written application Borrower shall be deemed to have represented
and warranted that the LC Conditions described in Section 2.11 will be met as of
the date of issuance of such Letter of Credit. Each such written application for
a Letter of Credit must be made in writing in the form and substance of Exhibit
F, the terms and provisions of which are hereby incorporated herein by reference
(or in such other form as may mutually be agreed upon by LC Issuer and
Borrower). Two Business Days after the LC Conditions for a Letter of Credit have
been met as described in Section 2.11 (or if LC Issuer otherwise desires to
issue such Letter of Credit), LC Issuer will issue such Letter of Credit at LC
Issuer's office in Dallas, Texas. If any provisions of any LC Application
conflict with any provisions of this Agreement, the provisions of this Agreement
shall govern and control.
Section 2.13. Reimbursement and Participations.
(a) Reimbursement by Borrower. Each Matured LC Obligation shall
constitute a loan by LC Issuer to Borrower. Borrower promises to pay to LC
Issuer, or to LC Issuer's order, on demand, the full amount of each Matured LC
Obligation, together with interest thereon at the Default Rate applicable to
Base Rate Loans.
(b) Letter of Credit Advances. If the beneficiary of any Letter of
Credit makes a draft or other demand for payment thereunder then Borrower may,
during the interval between the making thereof and the honoring thereof by LC
Issuer, request Lenders to make Loans to Borrower in the amount of such draft or
demand, which Loans shall be made concurrently with LC Issuer's payment of such
draft or demand and shall be immediately used by LC Issuer to repay the amount
of the resulting Matured LC Obligation. Such a request by Borrower shall be made
in compliance with all of the provisions hereof, provided that for the purposes
of the first sentence of Section 2.1, the amount of such Loans shall be
considered, but the amount of the Matured LC Obligation to be concurrently paid
by such Loans shall not be considered.
(c) Participation by Lenders. LC Issuer irrevocably agrees to grant and
hereby grants to each Lender, and -- to induce LC Issuer to issue Letters of
Credit hereunder -- each Lender irrevocably agrees to accept and purchase and
hereby accepts and purchases from LC Issuer, on the terms and conditions
hereinafter stated and for such Lender's own account and risk, an undivided
interest equal to such Lender's Percentage Share of LC Issuer's obligations and
rights under each Letter of Credit issued hereunder and the amount of each
Matured LC Obligation paid by LC Issuer thereunder. Each Lender unconditionally
and irrevocably agrees with LC Issuer that, if a Matured LC Obligation is paid
under any Letter of Credit for which LC Issuer is not reimbursed in full by
Borrower in accordance with the terms of this Agreement and the related LC
Application (including any reimbursement by means of concurrent Loans or by the
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application of LC Collateral), such Lender shall (in all circumstances and
without set-off or counterclaim) pay to LC Issuer on demand, in immediately
available funds at LC Issuer's address for notices hereunder, such Lender's
Percentage Share of such Matured LC Obligation (or any portion thereof which has
not been reimbursed by Borrower). Each Lender's obligation to pay LC Issuer
pursuant to the terms of this subsection is irrevocable and unconditional. If
any amount required to be paid by any Lender to LC Issuer pursuant to this
subsection is paid by such Lender to LC Issuer within three Business Days after
the date such payment is due, LC Issuer shall in addition to such amount be
entitled to recover from such Lender, on demand, interest thereon calculated
from such due date at the Federal Funds Rate. If any amount required to be paid
by any Lender to LC Issuer pursuant to this subsection is not paid by such
Lender to LC Issuer within three Business Days after the date such payment is
due, LC Issuer shall in addition to such amount be entitled to recover from such
Lender, on demand, interest thereon calculated from such due date at the Default
Rate applicable to Base Rate Loans.
(d) Distributions to Participants. Whenever LC Issuer has in accordance
with this section received from any Lender payment of such Lender's Percentage
Share of any Matured LC Obligation, if LC Issuer thereafter receives any payment
of such Matured LC Obligation or any payment of interest thereon (whether
directly from Borrower or by application of LC Collateral or otherwise, and
excluding only interest for any period prior to LC Issuer's demand that such
Lender make such payment of its Percentage Share), LC Issuer will distribute to
such Lender its Percentage Share of the amounts so received by LC Issuer;
provided, however, that if any such payment received by LC Issuer must
thereafter be returned by LC Issuer, such Lender shall return to LC Issuer the
portion thereof which LC Issuer has previously distributed to it.
(e) Calculations. A written advice setting forth in reasonable detail
the amounts owing under this section, submitted by LC Issuer to Borrower or any
Lender from time to time, shall be conclusive, absent manifest error, as to the
amounts thereof.
Section 2.14. Letter of Credit Fees.
(a) In consideration of LC Issuer's commitment to issue Letters of
Credit and each other Lender's agreement to purchase a risk participation
therein, Borrower will pay to Agent for the account of LC Issuer and each Lender
(other than LC Issuer), in accordance with its Percentage Share, a letter of
credit fee determined on a daily basis by applying the Eurodollar Margin to the
Maximum Drawing Amount. This letter of credit fee shall be due and payable
quarterly in arrears on each Interest Payment Date for Base Rate Loans.
(b) In consideration of LC Issuer's commitment to issue Letters of
Credit, Borrower will pay to Agent for the account of LC Issuer a letter of
credit issuance fee in the amount of twelve and one half basis points (0.125%)
of the face amount of the Letter of Credit payable on the date of issuance.
Section 2.15. No Duty to Inquire.
(a) Drafts and Demands. LC Issuer is authorized and instructed to
accept and pay drafts and demands for payment under any Letter of Credit without
requiring, and without responsibility for, any determination as to the existence
of any event giving rise to said draft,
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either at the time of acceptance or payment or thereafter. LC Issuer is under no
duty to determine the proper identity of anyone presenting such a draft or
making such a demand (whether by tested telex or otherwise) as the officer,
representative or agent of any beneficiary under any Letter of Credit, and
payment by LC Issuer to any such beneficiary when requested by any such
purported officer, representative or agent is hereby authorized and approved.
BORROWER RELEASES EACH LENDER PARTY FROM, AND AGREES TO HOLD EACH LENDER PARTY
HARMLESS AND INDEMNIFIED AGAINST, ANY LIABILITY OR CLAIM IN CONNECTION WITH OR
ARISING OUT OF THE SUBJECT MATTER OF THIS SECTION, WHICH INDEMNITY SHALL APPLY
WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY OR TO ANY EXTENT
CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY
LENDER PARTY, provided only that no Lender Party shall be entitled to
indemnification for that portion, if any, of any liability or claim which is
proximately caused by its own individual gross negligence or willful misconduct,
as determined in a final judgment.
(b) Extension of Maturity. If the maturity of any Letter of Credit is
extended by its terms or by Law or governmental action, if any extension of the
maturity or time for presentation of drafts or any other modification of the
terms of any Letter of Credit is made at the request of any Restricted Person,
or if the amount of any Letter of Credit is increased at the request of any
Restricted Person, this Agreement shall be binding upon all Restricted Persons
with respect to such Letter of Credit as so extended, increased or otherwise
modified, with respect to drafts and property covered thereby, and with respect
to any action taken by LC Issuer, LC Issuer's correspondents, or any Lender
Party in accordance with such extension, increase or other modification.
(c) Transferees of Letters of Credit. If any Letter of Credit provides
that it is transferable, LC Issuer shall have no duty to determine the proper
identity of anyone appearing as transferee of such Letter of Credit, nor shall
LC Issuer be charged with responsibility of any nature or character for the
validity or correctness of any transfer or successive transfers, and payment by
LC Issuer to any purported transferee or transferees as determined by LC Issuer
is hereby authorized and approved, and BORROWER RELEASES EACH LENDER PARTY FROM,
AND AGREES TO HOLD EACH LENDER PARTY HARMLESS AND INDEMNIFIED AGAINST, ANY
LIABILITY OR CLAIM IN CONNECTION WITH OR ARISING OUT OF THE FOREGOING, WHICH
INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY
OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION
OF ANY KIND BY ANY LENDER PARTY, provided only that no Lender Party shall be
entitled to indemnification for that portion, if any, of any liability or claim
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment.
Section 2.16. LC Collateral.
(a LC Obligations in Excess of Borrowing Base. If, after the making of
all mandatory prepayments required under Section 2.7, the outstanding LC
Obligations will exceed the Borrowing Base, then in addition to prepayment of
the entire principal balance of the Loans Borrower will immediately pay to LC
Issuer an amount equal to such excess. LC Issuer will hold such amount as
security for the remaining LC Obligations (all such amounts and all amounts
delivered to LC Issuer pursuant to subsection (b) below being herein
collectively called
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"LC Collateral") and the other Obligations, and such collateral may be applied
from time to time to any Matured LC Obligations or other Obligations which are
due and payable. Neither this subsection nor the following subsection shall,
however, limit or impair any rights which LC Issuer may have under any other
document or agreement relating to any Letter of Credit, LC Collateral or LC
Obligation, including any LC Application, or any rights which any Lender Party
may have to otherwise apply any payments by Borrower and any LC Collateral under
Section 3.1.
(b) Acceleration of LC Obligations. If the Obligations or any part
thereof become immediately due and payable pursuant to Section 8.1 then, unless
Majority Lenders otherwise specifically elect to the contrary (which election
may thereafter be retracted by Majority Lenders at any time), all LC Obligations
shall become immediately due and payable without regard to whether or not actual
drawings or payments on the Letters of Credit have occurred, and Borrower shall
be obligated to pay to LC Issuer immediately an amount equal to the aggregate LC
Obligations which are then outstanding.
(c) Investment of LC Collateral. Pending application thereof, all LC
Collateral shall be invested by LC Issuer in such Investments as LC Issuer may
choose in its sole discretion. All interest on (and other proceeds of) such
Investments shall be reinvested or applied to Matured LC Obligations or other
Obligations which are due and payable. When all Obligations have been satisfied
in full, including all LC Obligations, all Letters of Credit have expired or
been terminated, and all of Borrower's reimbursement obligations in connection
therewith have been satisfied in full, LC Issuer shall release any remaining LC
Collateral. Borrower hereby assigns and grants to LC Issuer a continuing
security interest in all LC Collateral paid by it to LC Issuer, all Investments
purchased with such LC Collateral, and all proceeds thereof to secure its
Matured LC Obligations and its Obligations under this Agreement, each Note, and
the other Loan Documents, and Borrower agrees that such LC Collateral,
Investments and proceeds shall be subject to all of the terms and conditions of
the Security Documents. Borrower further agrees that LC Issuer shall have all of
the rights and remedies of a secured party under the Uniform Commercial Code as
adopted in the State of Texas with respect to such security interest and that an
Event of Default under this Agreement shall constitute a default for purposes of
such security interest.
(d) Payment of LC Collateral. When Borrower is required to provide LC
Collateral for any reason and fails to do so on the day when required, LC Issuer
may without notice to Borrower or any other Restricted Person provide such LC
Collateral (whether by application of proceeds of other Collateral, by transfers
from other accounts maintained with LC Issuer, or otherwise) using any available
funds of Borrower or any other Person also liable to make such payments. Any
such amounts which are required to be provided as LC Collateral and which are
not provided on the date required shall, for purposes of each Security Document,
be considered past due Obligations owing hereunder, and LC Issuer is hereby
authorized to exercise its respective rights under each Security Document to
obtain such amounts.
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ARTICLE III - Payments to Lenders
Section 3.1. General Procedures. Borrower will make each payment which
it owes under the Loan Documents to 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 Agent not later than 11:00 a.m., Dallas,
Texas time, on the date such payment becomes due and payable. Any payment
received by 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 or past
due interest, interest shall accrue and be payable thereon for the period of
such extension as provided in the Loan Document under which such payment is due.
Each payment under a Loan Document shall be due and payable at the place
provided therein and, if no specific place of payment is provided, shall be due
and payable at the place of payment of Agent's Note. When Agent collects or
receives money on account of the Obligations or otherwise with respect to the
Security Documents, Agent shall distribute all money so collected or received,
and each Lender Party shall apply all such money so distributed, as follows:
(a) first, for the payment of all Obligations which are then due (and
if such money is insufficient to pay all such Obligations, first to any
reimbursements due Agent under Section 6.9 or 10.4 and then to the partial
payment of all other Obligations then due in proportion to the amounts thereof,
or as Lender Parties shall otherwise agree);
(b) then for the prepayment of Obligations owing under the Loan
Documents (other than principal on the Notes) if so specified by Borrower;
(c) then for the prepayment of principal on the Notes, together with
accrued and unpaid interest on the principal so prepaid; provided that
Eurodollar Loans will be prepaid in the order of maturity of the related
Interest Period;
(d) then, for the payment or prepayment of any other Obligations; and
(e) last, for the payment or prepayment of all Indebtedness secured by
the Security Documents other than the Obligations (and if such money is
insufficient to pay all such Indebtedness, to the partial payment of all such
Indebtedness in proportion to the amounts thereof, or as Agent and the Lenders
holding such Indebtedness shall otherwise agree).
All payments applied to principal or interest on any Note shall be applied first
to any interest then due and payable, then to principal then due and payable,
and last to any prepayment of principal and interest in compliance with Sections
2.6 and 2.7. All distributions of amounts described in any of subsections (b),
(c) or (d) above shall be made by Agent pro rata to each Lender Party then owed
Obligations described in such subsection in proportion to all amounts owed to
all Lender Parties which are described in such subsection; provided that if any
Lender then owes payments to LC Issuer for the purchase of a participation under
Section 2.13(c) or to Agent under Section 9.9, any amounts otherwise
distributable under this section to such Lender shall be deemed to belong to LC
Issuer, or Agent, respectively, to the extent of such unpaid payments, and Agent
shall apply such amounts to make such unpaid payments rather than distribute
such amounts to such Lender. All distributions of amounts described in
subsection (e)
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above shall be made by Agent pro rata to each Lender then owed Obligations
described in such subsection in proportion to all amounts owed to all Lenders
which are described in such subsection.
Section 3.2. Change of Applicable Lending Office. Each Lender Party
agrees that, upon the occurrence of any event giving rise to the operation of
Sections 3.4 through 3.9 with respect to such Lender Party, it will, if
requested by Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender Party) to designate another Applicable Lending
Office, provided that such designation is made on such terms that such Lender
Party and its Applicable Lending Office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such section. Nothing in this section shall affect
or postpone any of the obligations of Borrower or the rights of any Lender Party
provided in Sections 3.4 through 3.9.
Section 3.3. Replacement of Lenders. If any Lender Party seeks
reimbursement for increased costs under Sections 3.4 through 3.9, then within
ninety days thereafter -- provided no Event of Default then exists -- Borrower
shall have the right (unless such Lender Party withdraws its request for
additional compensation) to replace such Lender Party by requiring such Lender
Party to assign its Loans and Notes and its commitments hereunder to an Eligible
Transferee reasonably acceptable to Agent and to Borrower, provided that: (a)
all Obligations of Borrower owing to such Lender Party being replaced (including
such increased costs, but excluding principal and accrued interest on the Notes
being assigned) shall be paid in full to such Lender Party concurrently with
such assignment, and (b) the replacement Eligible Transferee shall purchase the
Note being assigned by paying to such Lender Party a price equal to the
principal amount thereof plus accrued and unpaid interest thereon. In connection
with any such assignment Borrower, Agent, such Lender Party and the replacement
Eligible Transferee shall otherwise comply with Section 10.5. Notwithstanding
the foregoing rights of Borrower under this section, however, Borrower may not
replace any Lender Party which seeks reimbursement for increased costs under
Sections 3.4 through 3.9 unless Borrower is at the same time replacing all
Lender Parties which are then seeking such compensation. In connection with any
such replacement of a Lender Party, Borrower shall pay all costs that would have
been due to such Lender Party pursuant to Section 3.8 if such Lender Party's
Loans had been prepaid at the time of such replacement.
Section 3.4. Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable Law,
rule, or regulation, or any change in any applicable Law, rule, or regulation,
or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender Party (or
its Applicable Lending Office) with any request or directive (whether or not
having the force of Law) of any such governmental authority, central bank, or
comparable agency:
(i) shall subject such Lender Party (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any
Eurodollar Loans, its Note, or its obligation to make Eurodollar Loans,
or change the basis of taxation of any amounts payable to such Lender
Party (or its Applicable Lending Office) under this Agreement or its
Note in respect of any Eurodollar Loans (other than taxes imposed on
the overall net income of
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such Lender Party, and franchise taxes imposed on it, by the
jurisdiction in which such Lender Party has its principal office or
such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, or similar requirement (other than the
Reserve Requirement utilized in the determination of the Adjusted
Eurodollar Rate) relating to any extensions of credit or other assets
of, or any deposits with or other liabilities or commitments of, such
Lender Party (or its Applicable Lending Office), including the
commitment of such Lender Party hereunder; or
(iii) shall impose on such Lender Party (or its Applicable
Lending Office) or the London interbank market any other condition
affecting this Agreement or its Notes or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
Party (or its Applicable Lending Office) of making, converting into, continuing,
or maintaining any Eurodollar Loans or to reduce any sum received or receivable
by such Lender Party (or its Applicable Lending Office) under this Agreement or
its Notes with respect to any Eurodollar Loans, then Borrower shall pay to such
Lender Party on demand such amount or amounts as will compensate such Lender
Party for such increased cost or reduction. If any Lender Party requests
compensation by Borrower under this Section 3.4(a), Borrower may, by notice to
such Lender Party (with a copy to Agent), suspend the obligation of such Lender
Party to make or continue Loans of the Type with respect to which such
compensation is requested, or to convert Loans of any other Type into Loans of
such Type, until the event or condition giving rise to such request ceases to be
in effect (in which case the provisions of Section 3.7 shall be applicable);
provided that such suspension shall not affect the right of such Lender Party to
receive the compensation so requested.
(b) If, after the date hereof, LC Issuer or any Lender Party shall have
determined that the adoption of any applicable Law, rule, or regulation
regarding capital adequacy or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
any request or directive regarding capital adequacy (whether or not having the
force of Law) of any such governmental authority, central bank, or comparable
agency, has or would have the effect of reducing the rate of return on the
capital of such Lender Party or any corporation controlling such Lender Party as
a consequence of the obligations of LC Issuer or such Lender Party hereunder to
a level below that which such Lender Party or such corporation could have
achieved but for such adoption, change, request, or directive (taking into
consideration its policies with respect to capital adequacy), then from time to
time upon demand Borrower shall pay to LC Issuer or such Lender Party such
additional amount or amounts as will compensate LC Issuer or such Lender Party
for such reduction, but only to the extent that such Lender Party has not been
compensated therefor by any increase in the Adjusted Eurodollar Rate; provided
that if such Lender Party fails to give notice to Borrower of any additional
costs within one hundred eighty (180) days after it has actual knowledge
thereof, such Lender Party shall not be entitled to compensation for such
additional costs incurred more than one hundred eighty (180) days prior to the
date on which notice is given by such Lender Party.
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(c) LC Issuer and each Lender Party shall promptly notify Borrower and
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle LC Issuer or such Lender Party to compensation pursuant to
this section and will designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of such Lender Party, be otherwise disadvantageous
to it. LC Issuer or any Lender Party claiming compensation under this section
shall furnish to Borrower and Agent a statement setting forth the additional
amount or amounts to be paid to it hereunder which shall be conclusive in the
absence of manifest error. In determining such amount, LC Issuer or such Lender
Party shall act in good faith and may use any reasonable averaging and
attribution methods.
Section 3.5. Limitation on Types of Loans. If on or prior to the first
day of any Interest Period for any Eurodollar Rate Loan:
(a) Agent determines (which determination shall be conclusive) that by
reason of circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate, as the case may be, for
such Interest Period; or
(b) the Majority Lenders determine (which determination shall be
conclusive) and notify Agent that the Adjusted Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding Eurodollar
Loans for such Interest Period;
then Agent shall give Borrower prompt notice thereof specifying the relevant
amounts or periods, and so long as such condition remains in effect, the Lender
Parties shall be under no obligation to make additional Loans, continue
Eurodollar Loans or convert Base Rate Loans into Eurodollar Loans, and Borrower
shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Eurodollar Loans, either prepay such Loans or convert such Loans
into Base Rate Loans in accordance with the terms of this Agreement.
Section 3.6. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender Party or its
Applicable Lending Office to make, maintain, or fund Eurodollar Loans hereunder,
then such Lender Party shall promptly notify Borrower thereof and such Lender
Party's obligation to make or continue Eurodollar Loans and to convert Base Rate
Loans into Eurodollar Loans shall be suspended until such time as such Lender
Party may again make, maintain, and fund Eurodollar Loans (in which case the
provisions of Section 1.5 shall be applicable).
Section 3.7. Treatment of Affected Loans. If the obligation of any
Lender Party to make a particular Type of Loan or to continue, or to convert
Loans of any other Type into, Loans of a particular Type shall be suspended
pursuant to Sections 3.4, 3.5 or 3.6 hereof (Loans of such Type being herein
called "Affected Loans" and such Type being herein called the "Affected Type"),
such Lender Party's Affected Loans shall be automatically converted into Base
Rate Loans on the last day(s) of the then current Interest Period(s) for
Affected Loans (or, in the case of a Conversion required by Section 3.6 hereof,
on such earlier date as such Lender Party may specify to Borrower with a copy to
Agent) and, unless and until such Lender Party gives notice as provided below
that the circumstances specified in Sections 3.4, 3.5, or 3.6 hereof that gave
rise to such Conversion no longer exist:
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(a) to the extent that such Lender Party's Affected Loans have been so
converted, all payments and prepayments of principal that would otherwise be
applied to such Lender Party's Affected Loans shall be applied instead to its
Base Rate Loans; and
(b) all Loans that would otherwise be made or continued by such Lender
Party as Loans of the Affected Type shall be made or continued instead as Base
Rate Loans, and all Loans of such Lender Party that would otherwise be converted
into Loans of the Affected Type shall be converted instead into (or shall remain
as) Base Rate Loans.
If such Lender Party gives notice to Borrower (with a copy to Agent) that the
circumstances specified in Section 3.4, 3.5 or 3.6 hereof that gave rise to the
Conversion of such Lender Party's Affected Loans pursuant to this Section 3.7 no
longer exist (which such Lender Party agrees to do promptly upon such
circumstances ceasing to exist) at a time when Loans of the Affected Type made
by other Lender Parties are outstanding, such Lender Party's Base Rate Loans
shall be automatically converted, on the first day(s) of the next succeeding
Interest Period(s) for such outstanding Loans of the Affected Type, to the
extent necessary so that, after giving effect thereto, all Loans held by the
Lender Parties holding Loans of the Affected Type and by such Lender Party are
held pro rata (as to principal amounts, Types, and Interest Periods) in
accordance with their Percentage Shares of the Maximum Loan Amount.
Section 3.8. Compensation. Upon the request of any Lender Party,
Borrower shall pay to such Lender Party such amount or amounts as shall be
sufficient (in the reasonable opinion of such Lender Party) to compensate it for
any loss, cost, or expense (including loss of anticipated profits) incurred by
it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Rate Loan
for any reason (including, without limitation, the acceleration of the Loans
pursuant to Section 8.1) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Article IV to be
satisfied) to borrow, convert, continue, or prepay a Eurodollar Rate Loan on the
date for such borrowing, Conversion, Continuation, or prepayment specified in
the relevant notice of borrowing, prepayment, Continuation, or Conversion under
this Agreement.
Section 3.9. Taxes.
(a) Any and all payments by Borrower to or for the account of any
Lender Party, Agent or LC Issuer hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of each Lender
Party, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the Laws of which such Lender Party (or its Applicable
Lending Office) is organized or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings,
and liabilities being hereinafter referred to as "Taxes"). If Borrower shall be
required by Law to deduct any Taxes from or in respect of any sum payable under
this
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Agreement or any other Loan Document to any Lender Party, (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this section)
such Lender Party receives an amount equal to the sum it would have received had
no such deductions been made, (ii) Borrower shall make such deductions, and
(iii) Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable Law.
(b) In addition, Borrower agrees to pay any and all present or future
stamp or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Loan Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c) Borrower agrees to indemnify each Lender Party, Agent and LC Issuer
for the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this section) paid by such Lender Party or Agent (as the case may be) and
any liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Lender Party organized under the Laws of a jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this Agreement in the case of each Lender Party listed on the signature pages
hereof and on or prior to the date on which it becomes a Lender Party in the
case of each other Lender Party, and from time to time thereafter if requested
in writing by Borrower or Agent (but only so long as such Lender Party remains
lawfully able to do so), shall provide Borrower and Agent with a properly
executed (i) Internal Revenue Service Form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Lender Party is entitled to benefits under an income tax treaty to which the
United States is a party which reduces the rate of withholding tax on payments
of interest or certifying that the income receivable pursuant to this Agreement
is effectively connected with the conduct of a trade or business in the United
States, (ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any
successor form prescribed by the Internal Revenue Service, and (iii) any other
form or certificate required by any taxing authority (including any certificate
required by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying
that such Lender Party is entitled to an exemption from or a reduced rate of tax
on payments pursuant to this Agreement or any of the other Loan Documents.
(e) For any period with respect to which a Lender Party has failed to
provide Borrower and Agent with the appropriate form pursuant to Section 3.9(d)
(unless such failure is due to a change in treaty, Law, or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Lender Party shall not be entitled to indemnification under Section 3.9(a),
3.9(b) or 3.9(c) with respect to Taxes imposed by the United States; provided,
however, that should a Lender Party, which is otherwise exempt from or subject
to a reduced rate of withholding tax, become subject to Taxes because of its
failure to deliver a form required hereunder, Borrower shall take such steps as
such Lender Party shall reasonably request to assist such Lender Party to
recover such Taxes.
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(f) If Borrower is required to pay additional amounts to or for the
account of any Lender Party pursuant to this section, then such Lender Party
will agree to use reasonable efforts to change the jurisdiction of its
Applicable Lending Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the judgment of such
Lender Party, is not otherwise disadvantageous to such Lender Party and in the
event Lender Party is reimbursed for an amount paid by Borrower pursuant to this
Section 3.9, it shall promptly return such amount to Borrower.
(g) Within thirty (30) days after the date of any payment of Taxes,
Borrower shall furnish to Agent the original or a certified copy of a receipt
evidencing such payment.
(h) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
section shall survive the termination of the Commitment Period and the payment
in full of the Notes.
ARTICLE IV - Conditions Precedent to Lending
Section 4.1. Documents to be Delivered. No Lender has any obligation to
make its first Loan, and LC Issuer has no obligation to issue the first Letter
of Credit, unless Agent shall have received all of the following, at Agent's
office in Dallas, Texas, duly executed and delivered and in form, substance and
date satisfactory to Agent:
(a) This Agreement and any other documents that Lenders are to execute
in connection herewith.
(b) Each Note.
(c) A Guaranty of Parent, substantially in the form attached hereto as
Exhibit I.
(d) Each Security Document listed in the Security Schedule.
(e) Certain certificates of Borrower including:
(i) An "Omnibus Certificate" of the Secretary or Assistant
Secretary and of the Chairman of the Board or President or chief
financial officer of Borrower, which shall contain the names and
signatures of the officers of Borrower authorized to execute Loan
Documents and which shall certify to the truth, correctness and
completeness of the following exhibits attached thereto: (1) a copy of
resolutions duly adopted by the Board of Directors of Borrower and in
full force and effect at the time the first Loan is made or the first
Letter of Credit is issued hereunder, authorizing the execution of this
Agreement and the other Loan Documents delivered or to be delivered in
connection herewith and the consummation of the transactions
contemplated herein and therein, (2) a copy of the charter documents of
Borrower and all amendments thereto, file stamped by the appropriate
official of Borrower's state of organization, (3) a copy of any bylaws
of Borrower, and (4) any other documents pertaining to the merger of
EPGC Merger Sub Corporation into Borrower; and
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(ii) A "Compliance Certificate" of the chief financial officer
of Borrower, of even date with such Loan or such Letter of Credit, in
which such officer certifies to the satisfaction of the conditions set
out in subsections (a), (b), (c) and (d) of Section 4.3.
(f) Certificate (or certificates) of the due formation, valid existence
and good standing of Borrower in its state of organization, issued by the
appropriate authorities of such jurisdiction, and certificates of Borrower's
good standing and due qualification to do business, issued by appropriate
officials in any states in which Borrower owns property subject to Security
Documents.
(g) Documents similar to those specified in subsections (e)(i) and (f)
of this section with respect to Parent and the execution by it of its guaranty
of Borrower's Obligations.
(h) A favorable opinion of ▇▇▇▇▇ ▇▇▇▇▇▇, Esq., counsel for Restricted
Persons in connection with this Agreement, substantially in the form set forth
in Exhibit G-1.
(i) A favorable opinion of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.,
counsel for Restricted Persons in connection with the Equitable Acquisition,
substantially in the form set forth in Exhibit G-2.
(j) Certificates or binders evidencing Restricted Persons' insurance in
effect on the date hereof.
(k) The Initial Engineering Report, satisfactory to Agent in its sole
discretion.
(l) Environmental assessments of the material properties of Parent
constituting Collateral, in scope and results acceptable to Agent.
(m) Title opinions, title reports, or other title information in form,
substance and authorship satisfactory to Agent, concerning the properties of
Borrower and Parent listed on Schedule 5.
(n) Payment of all commitment, facility, agency and other fees required
to be paid to any Lender pursuant to any Loan Documents or any commitment
agreement heretofore entered into.
(o) A copy of each Acquisition Document, duly executed and delivered by
each party thereto.
Section 4.2. Closing of Acquisition. No Lender has any obligation to
make its first Loan, and LC Issuer has no obligation to issue the first Letter
of Credit, unless contemporaneously with the first Loan or Letter of Credit
hereunder, Borrower shall have consummated the transactions contemplated under
the Acquisition Documents, in form and substance satisfactory to Agent.
Borrower, for itself and on behalf of each Restricted Person, hereby
acknowledges and agrees that (a) the consummation of the transactions
contemplated by the Acquisition Documents and the making of the first Loans, are
intended to be simultaneous
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for all intents and purposes, and (b) each Restricted Person shall be deemed to
have executed and delivered each Security Document as set forth in Section 3.1
above, immediately prior to or simultaneously with the making of the Loans
hereunder.
Section 4.3. Additional Conditions Precedent. No Lender has any
obligation to make any Loan (including its first), and LC Issuer has no
obligation to issue any Letter of Credit (including its first), unless the
following conditions precedent have been satisfied:
(a) All representations and warranties made by any Restricted Person in
any Loan Document shall be true on and as of the date of such Loan or the date
of issuance of such Letter of Credit (except to the extent that the facts upon
which such representations are based have been changed by the extension of
credit hereunder) as if such representations and warranties had been made as of
the date of such Loan or the date of issuance of such Letter of Credit.
(b) No Default shall exist at the date of such Loan or the date of
issuance of such Letter of Credit.
(c) No Material Adverse Change shall have occurred since December 31,
1999.
(d) Each Restricted Person shall have performed and complied with all
agreements and conditions required in the Loan Documents to be performed or
complied with by it on or prior to the date of such Loan or the date of issuance
of such Letter of Credit.
(e) The making of such Loan or the issuance of such Letter of Credit
shall not be prohibited by any Law and shall not subject any Lender or any LC
Issuer to any penalty or other onerous condition under or pursuant to any such
Law.
(f) Agent shall have received all documents and instruments which Agent
has then requested, in addition to those described in Section 4.1 (including
opinions of legal counsel for Restricted Persons and Agent; corporate documents
and records; documents evidencing governmental authorizations, consents,
approvals, licenses and exemptions; and certificates of public officials and of
officers and representatives of Borrower and other Persons), as to (i) the
accuracy and validity of or compliance with all representations, warranties and
covenants made by any Restricted Person in this Agreement and the other Loan
Documents, (ii) the satisfaction of all conditions contained herein or therein,
and (iii) all other matters pertaining hereto and thereto. All such additional
documents and instruments shall be satisfactory to Agent in form, substance and
date.
(g) Borrower shall, prior to the making of the first Loan (or using the
proceeds thereof), have deposited with ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for
Agent, an amount designated in writing by such counsel, to be held by such
counsel and applied toward payment of costs and expenses for recordation of the
Security Documents, as provided pursuant to Section 10.4(a). If such deposit
exceeds the amount of such costs and expenses, the excess shall be returned to
Borrower. If such deposit is less than such costs and expenses, the deficit
shall be paid by Borrower pursuant to Section 10.4(a).
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ARTICLE V - Representations and Warranties
To confirm each Lender's understanding concerning Restricted Persons
and Restricted Persons' businesses, properties and obligations and to induce
each Lender to enter into this Agreement and to extend credit hereunder,
Borrower represents and warrants to each Lender that:
Section 5.1. No Default. No event has occurred and is continuing which
constitutes a Default.
Section 5.2. Organization and Good Standing. Each Restricted Person is
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization, having all powers required to carry on its
business and enter into and carry out the transactions contemplated hereby. Each
Restricted Person is duly qualified, in good standing, and authorized to do
business in all other jurisdictions within 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 qualification necessary. Each Restricted Person 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
desirable.
Section 5.3. Authorization. Each Restricted Person has duly taken all
action necessary to authorize the execution and delivery by it of the Loan
Documents to which it is a party and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
thereunder. Borrower is duly authorized to borrow funds hereunder.
Section 5.4. No Conflicts or Consents. The execution and delivery by
the various Restricted Persons of the Loan Documents to which each is a party,
the performance by each of its obligations under such Loan Documents, and the
consummation of the transactions contemplated by the various Loan Documents, do
not and will not (a) conflict with any provision of (i) any applicable Law, (ii)
the organizational documents of any Restricted Person, or (iii) any agreement,
judgment, license, order or permit applicable to or binding upon any Restricted
Person, (b) result in the acceleration of any Indebtedness owed by any
Restricted Person, or (c) result in or require the creation of any Lien upon any
assets or properties of any Restricted Person except as expressly contemplated
or permitted in the Loan Documents. Except as expressly contemplated in the Loan
Documents no consent, approval, authorization or order of, and no notice to or
filing with, any Tribunal or third party is required in connection with the
execution, delivery or performance by any Restricted Person of any Loan Document
or to consummate any transactions contemplated by the Loan Documents.
Section 5.5. Enforceable Obligations. This Agreement is, and the other
Loan Documents when duly executed and delivered will be, legal, valid and
binding obligations of each Restricted Person which is a party hereto or
thereto, enforceable in accordance with their terms except as such enforcement
may be limited by bankruptcy, insolvency or similar Laws of general application
relating to the enforcement of creditors' rights.
Section 5.6. Initial Financial Statements. Borrower has heretofore
delivered to each Lender true, correct and complete copies of the Initial
Financial Statements. The Initial Financial
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Statements fairly present (a) Borrower's Consolidated financial position at the
date thereof and the Consolidated results of Borrower's operations and
Borrower's Consolidated cash flows for the period thereof, and (b) Parent's
Consolidated financial position at the date thereof. Since the date of the
annual Initial Financial Statements no Material Adverse Change has occurred,
except as reflected in Section 5.6 of the Disclosure Schedule. All Initial
Financial Statements were prepared in accordance with GAAP.
Section 5.7. Other Obligations and Restrictions. No Restricted Person
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 Borrower or material with respect to Borrower's
Consolidated financial condition and not shown in the Initial Financial
Statements or disclosed in Section 5.7 of the Disclosure Schedule or a
Disclosure Report. Except as shown in the Initial Financial Statements or
disclosed in Section 5.7 of the Disclosure Schedule or a Disclosure Report, no
Restricted Person is subject to or restricted by any franchise, contract, deed,
charter restriction, or other instrument or restriction which could reasonably
be expected to cause a Material Adverse Change.
Section 5.8. Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Restricted Person to any
Lender in connection with the negotiation of this Agreement or in connection
with any transaction contemplated hereby contains any untrue statement of a
material fact or omits to state any material fact known to any Restricted Person
(other than industry-wide risks normally associated with the types of businesses
conducted by Restricted Persons) necessary to make the statements contained
herein or therein not misleading as of the date made or deemed made. There is no
fact known to any Restricted Person (other than industry-wide risks normally
associated with the types of businesses conducted by Restricted Persons) that
has not been disclosed to each Lender in writing which could reasonably be
expected to cause a Material Adverse Change. There are no statements or
conclusions in any Engineering Report which are based upon or include misleading
information or fail to take into account material information regarding the
matters reported therein, it being understood that each Engineering Report is
necessarily based upon professional opinions, estimates and projections and that
Borrower does not warrant that such opinions, estimates and projections will
ultimately prove to have been accurate. Borrower has heretofore delivered to
each Lender true, correct and complete copies of the Initial Engineering Report.
Section 5.9. Litigation. Except as disclosed in the Initial Financial
Statements or in Section 5.9 of the Disclosure Schedule: (a) there are no
actions, suits or legal, equitable, arbitrative or administrative proceedings
pending, or to the knowledge of any Restricted Person threatened, against any
Restricted Person before any Tribunal which could reasonably be expected to
cause a Material Adverse Change, and (b) there are no outstanding judgments,
injunctions, writs, rulings or orders by any such Tribunal against any
Restricted Person or any Restricted Person's stockholders, partners, directors
or officers which could reasonably be expected to cause a Material Adverse
Change.
Section 5.10. Labor Disputes and Acts of God. Except as disclosed in
Section 5.10 of the Disclosure Schedule or a Disclosure Report, neither the
business nor the properties of any Restricted Person 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
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casualty (whether or not covered by insurance), which could reasonably be
expected to cause a Material Adverse Change.
Section 5.11. ERISA Plans and Liabilities. All currently existing ERISA
Plans are listed in Section 5.11 of the Disclosure Schedule or a Disclosure
Report. Except as disclosed in the Initial Financial Statements or in Section
5.11 of the Disclosure Schedule or a Disclosure Report, no Termination Event has
occurred with respect to any ERISA Plan and all ERISA Affiliates are in
compliance with ERISA in all material respects. 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. Except as set
forth in Section 5.11 of the Disclosure Schedule or a Disclosure Report: (a) no
"accumulated funding deficiency" (as defined in Section 412(a) of the Internal
Revenue Code) exists with respect to any ERISA Plan, whether or not waived by
the Secretary of the Treasury or his delegate, and (b) 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 by more than $500,000.
Section 5.12. Environmental and Other Laws. Except as disclosed in
Section 5.12 of the Disclosure Schedule or a Disclosure Report: (a) Restricted
Persons are conducting their businesses in material compliance with all
applicable Laws, including Environmental Laws, and have and are in compliance
with all licenses and permits required under any such Laws; (b) none of the
operations or properties of any Restricted Person is the subject of federal,
state or local investigation evaluating whether any material remedial action is
needed to respond to a release of any Hazardous Materials into the environment
or to the improper storage or disposal (including storage or disposal at offsite
locations) of any Hazardous Materials; (c) no Restricted Person (and to the best
knowledge of Borrower, no other Person) has filed any notice under any Law
indicating that any Restricted Person is responsible for the improper release
into the environment, or the improper storage or disposal, of any material
amount of any Hazardous Materials or that any Hazardous Materials have been
improperly released, or are improperly stored or disposed of, upon any property
of any Restricted Person; (d) no Restricted Person has transported or arranged
for the transportation of any Hazardous Material to any location which is (i)
listed on the National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, listed for
possible inclusion on such National Priorities List by the Environmental
Protection Agency in its Comprehensive Environmental Response, Compensation and
Liability Information System List, or listed on any similar state list or (ii)
the subject of federal, state or local enforcement actions or other
investigations which may lead to claims against any Restricted Person for
clean-up costs, remedial work, damages to natural resources or for personal
injury claims (whether under Environmental Laws or otherwise); and (e) no
Restricted Person otherwise has any known material contingent liability under
any Environmental Laws or in connection with the release into the environment,
or the storage or disposal, of any Hazardous Materials. Each Restricted Person
undertook, at the time of its acquisition of each of its material properties,
all appropriate inquiry into the previous ownership and uses of the Property and
any potential environmental liabilities associated therewith.
Section 5.13. Names and Places of Business. No Restricted Person has,
during the preceding five years, had, been known by, or used any other trade or
fictitious name, except as disclosed in Section 5.13 of the Disclosure Schedule.
Except as otherwise indicated in Section
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5.13 of the Disclosure Schedule or a Disclosure Report, the chief executive
office and principal place of business of each Restricted Person are (and for
the preceding five years have been) located at the address of Borrower set forth
on the signature pages hereto. Except as indicated in Section 5.13 of the
Disclosure Schedule or a Disclosure Report, no Restricted Person has any other
office or place of business.
Section 5.14. Borrower's Subsidiaries. Borrower does not presently have
any Subsidiary or own any stock in any other corporation or association except
those listed in Section 5.14 of the Disclosure Schedule or a Disclosure Report.
Neither Borrower nor any Restricted Person is a member of any general or limited
partnership, joint venture or association of any type whatsoever except those
listed in Section 5.14 of the Disclosure Schedule or a Disclosure Report and
associations, joint ventures or other relationships (a) which are established
pursuant to a standard form operating agreement or similar agreement or which
are partnerships for purposes of federal income taxation only, (b) which are not
corporations or partnerships (or subject to the Uniform Partnership Act) under
applicable state Law, and (c) whose businesses are limited to the exploration,
development and operation of oil, gas or mineral properties and interests owned
directly by the parties in such associations, joint ventures or relationships.
Except as otherwise revealed in a Disclosure Report, Borrower owns, directly or
indirectly, the equity interest in each of its Subsidiaries which is indicated
in Section 5.14 of the Disclosure Schedule.
Section 5.15. Title to Properties; Licenses. Each Restricted Person has
good and defensible title to all of its material properties and assets, free and
clear of all Liens other than Permitted Liens and of all impediments to the use
of such properties and assets in such Restricted Person's business, except that
no representation or warranty is made with respect to any oil, gas or mineral
property or interest to which no proved oil or gas reserves are properly
attributed. Each Restricted Person owns the net interests in production
attributable to the ▇▇▇▇▇ and units evaluated in the Initial Engineering Report
Reports. The ownership of such Properties does not in the aggregate in any
material respect obligate such Restricted Person to bear the costs and expenses
relating to the maintenance, development and operations of such Properties in an
amount materially in excess of the working interest of such Properties set forth
in the Initial Engineering Reports. Upon delivery of each Engineering Report
furnished to the Lenders pursuant to Sections 6.02(d) and (e), the statements
made in the preceding sentences of this section shall be true with respect to
such Engineering Report. Each Restricted Person possesses all licenses, permits,
franchises, patents, copyrights, trademarks and trade names, and other
intellectual property (or otherwise possesses the right to use such intellectual
property without violation of the rights of any other Person) which are
necessary to carry out its business as presently conducted and as presently
proposed to be conducted hereafter, and no Restricted Person is in violation in
any material respect of the terms under which it possesses such intellectual
property or the right to use such intellectual property.
Section 5.16. Government Regulation. Neither Borrower nor any other
Restricted Person owing Obligations is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, 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 Person of Indebtedness,
including Laws relating to common contract carriers or the sale of electricity,
gas, steam, water or other public utility services.
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Section 5.17. Insider. No Restricted Person, nor any Person having
"control" (as that term is defined in 12 U.S.C. Section 375b(9) or in
regulations promulgated pursuant thereto) of any Restricted Person, is a
"director" or an "executive officer" or "principal shareholder" (as those terms
are defined in 12 U.S.C. Section 375b(8) or (9) or in regulations promulgated
pursuant thereto) of any Lender, of a bank holding company of which any Lender
is a Subsidiary or of any Subsidiary of a bank holding company of which any
Lender is a Subsidiary.
Section 5.18. Solvency. Upon giving effect to the issuance of the
Notes, the execution of the Loan Documents by Borrower and the consummation of
the transactions contemplated hereby and by the Acquisition Documents, each of
Borrower and Parent will be solvent (as such term is used in applicable
bankruptcy, liquidation, receivership, insolvency or similar Laws).
Section 5.19. Mortgaged Properties. The Mortgaged Properties constitute
at least eighty percent (80%) of the total value of the oil and gas properties
of Restricted Persons.
Section 5.20. Year 2000 Compliance. Borrower has (a) initiated a review
and assessment of all areas within its and each of its Subsidiaries' business
and operations (including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by Borrower and its Subsidiaries may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior to
and any date after December 31, 1999), (b) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (c) to date, implemented
that plan in accordance with that timetable. Borrower reasonably believes that
all computer applications (including those of its suppliers and vendors) that
are material to its or any of its Subsidiaries' business and operations will on
a timely basis be able to perform properly date-sensitive functions for all
dates before and after January 1, 2000 (that is, be "Year 2000 compliant"),
except to the extent that a failure to do so would not reasonably be expected to
have a Material Adverse Effect.
ARTICLE VI - Affirmative Covenants of Borrower
To conform with the terms and conditions under which each Lender is
willing to have credit outstanding to Borrower, and to induce each Lender to
enter into this Agreement and extend credit hereunder, Borrower warrants,
covenants and agrees that until the full and final payment of the Obligations
and the termination of this Agreement, unless Majority Lenders have previously
agreed otherwise:
Section 6.1. Payment and Performance. Borrower will pay all amounts due
under the Loan Documents in accordance with the terms thereof and will observe,
perform and comply with every covenant, term and condition expressed or implied
in the Loan Documents. Borrower will cause each other Restricted Person to
observe, perform and comply with every such term, covenant and condition in any
Loan Document applicable to such Restricted Person.
Section 6.2. Books, Financial Statements and Reports. Each Restricted
Person will at all times maintain full and accurate books of account and
records. Borrower will maintain and will cause its Subsidiaries to maintain a
standard system of accounting, will maintain its Fiscal
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Year, and will furnish the following statements and reports to each Lender Party
at Borrower's expense:
(a) As soon as available, and in any event within one hundred and
twenty (120) days after the end of each Fiscal Year, complete Consolidated and
consolidating financial statements of Parent 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ L.L.P., or other independent certified public
accountants selected by Parent and acceptable to Majority Lenders, stating that
such Consolidated financial statements have been so prepared. These financial
statements shall contain Consolidated and consolidating balance sheets as of the
end of such Fiscal Year and Consolidated and consolidating statements of
earnings, of cash flows, and of changes in owners' equity for such Fiscal Year,
each setting forth in comparative form the corresponding figures for the
preceding Fiscal Year.
(b) As soon as available, and in any event within sixty (60) days after
the end of each Fiscal Quarter, Parent's Consolidated and consolidating balance
sheet as of the end of such Fiscal Quarter and Consolidated and consolidating
statements of Borrower's earnings and cash flows 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 year-end adjustments. In addition Borrower will, together
with each such set of financial statements and each set of financial statements
furnished under subsection (a) of this section, furnish a certificate in the
form of Exhibit D signed by the chief financial officer of Borrower stating that
such financial statements are accurate and complete (subject to normal year-end
adjustments), stating that he has reviewed the Loan Documents, containing
calculations showing compliance (or non-compliance) at the end of such Fiscal
Quarter with the requirements of Sections 7.11 and 7.12 and stating that no
Default exists at the end of such Fiscal Quarter or at the time of such
certificate or specifying the nature and period of existence of any such
Default.
(c) Promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent by any Restricted Person
to its stockholders and all registration statements, periodic reports and other
statements and schedules filed by any Restricted Person with any securities
exchange, the Securities and Exchange Commission or any similar governmental
authority.
(d) By April 1 of each year, an Engineering Report dated as of January
1 of such year prepared by ▇▇▇▇▇ ▇▇▇▇▇ Company, or other independent petroleum
engineers chosen by Borrower and acceptable to Majority Lenders, concerning all
oil and gas properties and interests owned by any Restricted Person which are
located in or offshore of the United States and which have attributable to them
proved oil or gas reserves. This report shall be satisfactory to Agent, shall
take into account any "over-produced" status under gas balancing arrangements,
and shall contain information and analysis comparable in scope to that contained
in the Initial Engineering Report. This report shall distinguish (or shall be
delivered together with a certificate from an appropriate officer of Borrower
which distinguishes) those properties treated in the report which are Collateral
from those properties treated in the report which are not Collateral.
(e) By October 1 of each year, and promptly following notice of an
additional Borrowing Base redetermination under Section 2.9, an Engineering
Report prepared as of the
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preceding July 1 (or the first day of the preceding calendar month in the case
of an additional redetermination) by petroleum engineers who are employees of
Borrower, together with an accompanying report on property sales, property
purchases and changes in categories, both in the same form and scope as the
reports in (d) above.
(f) With the delivery of each Engineering Report, Borrower shall
provide to Agent a certificate from the president or chief financial officer of
Borrower in the form of Exhibit H certifying that, to the best of his knowledge
and in all material respects: (i) the information contained in such Engineering
Report and any other information delivered in connection therewith is true and
correct, (ii) each Restricted Person owns good and defensible title to the oil
and gas properties and other assets evaluated in such Engineering Report (herein
called the "Covered Properties") and are free of all Liens except for Permitted
Liens, (iii) none of the Covered Properties has been sold since the date of the
last Borrowing Base determination except as set forth on an exhibit to the
certificate, which certificate shall list all of such properties sold and in
such detail as reasonably required by Agent, and (iv) oil and gas properties
which comprise at least eighty percent (80%) of the total value of the oil and
gas properties which are included within the Covered Properties and which are
owned either directly by any Restricted Person or by partnerships in which any
Restricted Person has an interest are part of the Mortgaged Properties (either
by virtue of a mortgage on the oil and gas properties or a security interest
encumbering the interests owned by such Restricted Person in such partnerships).
(g) As soon as available, and in any event within sixty (60) days after
the end of each Fiscal Quarter, a report describing by lease or unit the gross
volume of production and sales attributable to production during each month
during such Fiscal Quarter from the properties described in subsection (d) above
and describing the related severance taxes, other taxes, and leasehold operating
expenses and capital costs attributable thereto and incurred during such month.
(h) By April 1 of each year beginning April 1, 2001, financial
projections for the next three Fiscal Years prepared by a senior financial
officer of Borrower in form reasonably satisfactory to Agent.
Section 6.3. Other Information and Inspections. Each Restricted Person
will furnish to each Lender any information which Agent may from time to time
request concerning any provision of the Loan Documents or any matter in
connection with Restricted Persons' businesses, properties, financial condition
and operations. Each Restricted Person will permit representatives appointed by
Agent (including independent accountants, auditors, agents, attorneys,
appraisers and any other Persons) to visit and inspect during normal business
hours any of such Restricted Person's property, including its books of account,
other books and records, and any facilities or other business assets, and to
make extra copies therefrom and photocopies and photographs thereof, and to
write down and record any information such representatives obtain, and each
Restricted Person shall permit Agent or its representatives to investigate and
verify the accuracy of the information furnished to Agent or any Lender in
connection with the Loan Documents and to discuss all such matters with its
officers, employees and representatives.
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Section 6.4. Notice of Material Events and Change of Address. Borrower
will promptly notify each Lender in writing, stating that such notice is being
given pursuant to this Agreement, of:
(a) occurrence of any Material Adverse Change,
(b) the occurrence of any Default,
(c) the acceleration of the maturity of any Indebtedness owed by any
Restricted Person or of any default by any Restricted Person 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 acceleration or default could cause a Material Adverse Change,
(d) the occurrence of any Termination Event,
(e) any claim of $2,000,000 or more, any notice of potential liability
under any Environmental Laws which might exceed such amount, or any other
material adverse claim asserted against any Restricted Person or with respect to
any Restricted Person's properties, and
(f) the filing of any suit or proceeding against any Restricted Person
in which an adverse decision could cause a Material Adverse Change.
Upon the occurrence of any of the foregoing Restricted Persons will take all
necessary or appropriate steps to remedy promptly any such Material Adverse
Change, 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. Borrower will also notify
Agent and Agent's counsel in writing at least twenty Business Days prior to the
date that any Restricted Person 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 Agent and its counsel to
prepare the same.
Section 6.5. Maintenance of Properties. Each Restricted Person will
maintain, preserve, protect, and keep all Collateral and all other property used
or useful in the conduct of its business in good condition and in compliance
with all applicable Laws, and will from time to time make all repairs, renewals
and replacements needed to enable the business and operations carried on in
connection therewith to be promptly and advantageously conducted at all times.
Section 6.6. Maintenance of Existence and Qualifications. Each
Restricted Person will maintain and preserve its existence and 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, except where the
failure so to qualify will not cause a Material Adverse Change.
Section 6.7. Payment of Trade Liabilities, Taxes, etc. Each Restricted
Person will (a) timely file all required tax returns; (b) timely pay all taxes,
assessments, and other governmental charges or levies imposed upon it or upon
its income, profits or property; (c) within ninety (90) days after the same
becomes due pay all Liabilities owed by it on ordinary
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trade terms to vendors, suppliers and other Persons providing goods and services
used by it in the ordinary course of its business; (d) pay and discharge when
due all other Liabilities now or hereafter owed by it; and (e) maintain
appropriate accruals and reserves for all of the foregoing in accordance with
GAAP. Each Restricted Person may, however, delay paying or discharging any of
the foregoing so long as it is in good faith contesting the validity thereof by
appropriate proceedings and has set aside on its books adequate reserves
therefor.
Section 6.8. Insurance. Each Restricted Person shall at all times
maintain (at its own expense) insurance for its property in accordance with the
Insurance Schedule and insurance with respect to all Collateral in such amounts,
against such risks, in such form and which such financially sound and reputable
insurers as shall be satisfactory to Agent from time to time. Upon demand by
Agent any insurance policies covering Collateral shall be endorsed (a) to
provide for payment of losses to Agent as its interests may appear, (b) to
provide that such policies may not be canceled or reduced or affected in any
material manner for any reason without fifteen days prior notice to Agent, (c)
to provide for any other matters specified in any applicable Security Document
or which Agent may reasonably require; and (d) to provide for insurance against
fire, casualty and any other hazards normally insured against, in the amount of
the full value (less a reasonable deductible not to exceed amounts customary in
the industry for similarly situated businesses and properties) of the property
insured. Each Restricted Person shall at all times maintain insurance against
its liability for injury to persons or property in accordance with the Insurance
Schedule, which insurance shall be by financially sound and reputable insurers.
Without limiting the foregoing, each Restricted Person shall at all time
maintain liability insurance in accordance with Insurance Schedule.
Section 6.9. Performance on Borrower's Behalf. If any Restricted Person
fails to pay any taxes, insurance premiums, expenses, attorneys' fees or other
amounts it is required to pay under any Loan Document, Agent may pay the same.
Borrower shall immediately reimburse Agent for any such payments and each amount
paid by Agent shall constitute an Obligation owed hereunder which is due and
payable on the date such amount is paid by Agent.
Section 6.10. Interest. Borrower hereby promises to each Lender Party
to pay interest at the Default Rate applicable to Base Rate Loans on all
Obligations (including Obligations to pay fees or to reimburse or indemnify any
Lender) which Borrower has in this Agreement promised to pay to such Lender
Party and which are not paid when due. Such interest shall accrue from the date
such Obligations become due until they are paid.
Section 6.11. Compliance with Agreements and Law. Each Restricted
Person will perform all material obligations it is required to perform under the
terms of each indenture, mortgage, deed of trust, security agreement, lease,
franchise, 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 Restricted Person
will conduct its business and affairs in compliance with all Laws applicable
thereto.
Section 6.12. Environmental Matters; Environmental Reviews.
(a) Each Restricted Person will comply in all material respects with
all Environmental Laws now or hereafter applicable to such Restricted Person, as
well as all
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contractual obligations and agreements with respect to environmental remediation
or other environmental matters, and shall 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. No Restricted Person will
do anything or permit anything to be done which will subject any of its
properties to any remedial obligations under, or result in noncompliance with
applicable permits and licenses issued under, any applicable Environmental Laws,
assuming disclosure to the applicable governmental authorities of all relevant
facts, conditions and circumstances. Upon Agent's reasonable request, at any
time and from time to time, Borrower will provide at its own expense an
environmental inspection of any of the Restricted Persons' material real
properties and audit of their environmental compliance procedures and practices,
in each case from an engineering or consulting firm approved by Agent.
(b) Borrower will promptly furnish to Agent all written notices of
violation, orders, claims, citations, complaints, penalty assessments, suits or
other proceedings received by any Restricted Person, or of which Borrower
otherwise has notice, pending or threatened against any Restricted Person by any
governmental authority with respect to any alleged violation of or
non-compliance with any Environmental Laws or any permits, licenses or
authorizations in connection with any Restricted Person's ownership or use of
its properties or the operation of its business.
(c) Borrower will promptly furnish to Agent all requests for
information, notices of claim, demand letters, and other notifications, received
by Borrower in connection with any Restricted Person's 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.
Section 6.13. Evidence of Compliance. Each Restricted Person will
furnish to each Lender at such Restricted Person's or Borrower's expense all
evidence which Agent from time to time reasonably requests in writing as to the
accuracy and validity of or compliance with all representations, warranties and
covenants made by any Restricted Person in the Loan Documents, the satisfaction
of all conditions contained therein, and all other matters pertaining thereto.
Section 6.14. Agreement to Deliver Security Documents. Borrower agrees
to deliver and to cause each other Restricted Person to deliver, to further
secure the Obligations whenever requested by Agent in its sole and absolute
discretion, deeds of trust, mortgages, chattel mortgages, security agreements,
financing statements and other Security Documents in form and substance
satisfactory to Agent for the purpose of granting, confirming, and perfecting
first and prior liens or security interests in any real or personal property
which is at such time Collateral or which was intended to be Collateral pursuant
to any Security Document previously executed and not then released by Agent.
Borrower also agrees to deliver, whenever reasonably requested by Agent in its
sole and absolute discretion, favorable title opinions from legal counsel
acceptable to Agent with respect to any Restricted Person's properties and
interests designated by Agent, based upon abstract or record examinations to
dates acceptable to Agent and (a) stating that such Restricted Person has good
and defensible title to such properties and interests, free and clear of all
Liens other than Permitted Liens, (b) confirming that such properties and
interests are subject
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to Security Documents securing the Obligations that constitute and create legal,
valid and duly perfected first deed of trust or mortgage liens in such
properties and interests and first priority assignments of and security
interests in the oil and gas attributable to such properties and interests and
the proceeds thereof, and (c) covering such other matters as Agent may
reasonably request.
Section 6.15. Perfection and Protection of Security Interests and
Liens. Borrower will from time to time deliver, and will cause each other
Restricted Person from time to time to deliver, to Agent any financing
statements, continuation statements, extension agreements and other documents,
properly completed and executed (and acknowledged when required) by Restricted
Persons in form and substance satisfactory to Agent, which Agent requests for
the purpose of perfecting, confirming, or protecting any Liens or other rights
in Collateral securing any Obligations.
Section 6.16. Bank Accounts; Offset. To secure the repayment of the
Obligations Borrower hereby grants to each Lender a security interest, a lien,
and a right of offset, each of which shall be in addition to all other
interests, liens, and rights of any Lender at common Law, under the Loan
Documents, or otherwise, and each of which shall be upon and against (a) any and
all moneys, securities or other property (and the proceeds therefrom) of
Borrower now or hereafter held or received by or in transit to any Lender from
or for the account of Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, (b) any and all deposits (general or
special, time or demand, provisional or final) of Borrower with any Lender, and
(c) any other credits and claims of Borrower at any time existing against any
Lender, including claims under certificates of deposit. At any time and from
time to time after the occurrence of any Default, each Lender is hereby
authorized to foreclose upon, or to offset against the Obligations then due and
payable (in either case without notice to Borrower), any and all items
hereinabove referred to. The remedies of foreclosure and offset are separate and
cumulative, and either may be exercised independently of the other without
regard to procedures or restrictions applicable to the other. To the extent that
Borrower has accounts designated as royalty or joint interest owner accounts,
the foregoing right of offset shall not extend to funds in such accounts which
belong to, or otherwise arise from payments to Borrower for the account of,
third party royalty or joint interest owners.
Section 6.17. Guaranties of Borrower's Subsidiaries. Each Subsidiary of
Borrower now existing or created, acquired or coming into existence after the
date hereof shall, promptly upon request by Agent, execute and deliver to Agent
an absolute and unconditional guaranty of the timely repayment of the
Obligations and the due and punctual performance of the obligations of Borrower
hereunder, which guaranty shall be satisfactory to Agent in form and substance.
Each Subsidiary of Borrower existing on the date hereof shall duly execute and
deliver such a guaranty prior to the making of any Loan hereunder. Borrower will
cause each of its Subsidiaries to deliver to Agent, simultaneously with its
delivery of such a guaranty, written evidence satisfactory to Agent and its
counsel that such Subsidiary has taken all corporate or partnership action
necessary to duly approve and authorize its execution, delivery and performance
of such guaranty and any other documents which it is required to execute.
Section 6.18. Production Proceeds. Notwithstanding that, by the terms
of the various Security Documents, Restricted Persons are and will be assigning
to Agent and Lenders all of the "Production Proceeds" (as defined therein)
accruing to the property covered thereby, so long as
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no Default has occurred Restricted Persons may continue to receive from the
purchasers of production all such Production Proceeds, subject, however, to the
Liens created under the Security Documents, which Liens are hereby affirmed and
ratified. Upon the occurrence of a Default, Agent and Lenders may exercise all
rights and remedies granted under the Security Documents, including the right to
obtain possession of all Production Proceeds then held by Restricted Persons or
to receive directly from the purchasers of production all other Production
Proceeds. In no case shall any failure, whether purposed or inadvertent, by
Agent or Lenders to collect directly any such Production Proceeds constitute in
any way a waiver, remission or release of any of their rights under the Security
Documents, nor shall any release of any Production Proceeds by Agent or Lenders
to Restricted Persons constitute a waiver, remission, or release of any other
Production Proceeds or of any rights of Agent or Lenders to collect other
Production Proceeds thereafter.
Section 6.19. Year 2000 Compliance. Borrower will promptly notify Agent
in the event Borrower discovers or determines that any computer application
(including those of its suppliers and vendors) that is material to its or any of
its Subsidiaries' business and operations that will not be Year 2000 compliant
on a timely basis, except to the extent that such failure would not reasonably
be expected to have a Material Adverse Effect.
Section 6.20. Maintenance of Liens on Eighty Percent Properties. The
Mortgaged Properties shall constitute at least eighty percent (80%) of the total
value of the oil and gas properties of Restricted Persons. Within forty-five
(45) days following each Determination Date, Restricted Persons will execute and
deliver documentation in form and substance satisfactory to Agent, granting to
Agent first perfected Liens on and in oil and gas properties that are not then
part of the Mortgaged Properties, sufficient to cause the Mortgaged Properties
to constitute eighty percent (80%) of the total value of the oil and gas
properties directly owned by Restricted Persons and partnership interests that
are not then part of the Mortgaged Properties, sufficient to cause the Mortgaged
Properties to constitute eighty percent (80%) of the total value of the oil and
gas properties owned by Restricted Persons. In addition, Borrower will furnish
to Agent title due diligence in form and substance satisfactory to Agent and
will furnish all other documents and information relating to such properties as
Agent may reasonably request.
ARTICLE VII - Negative Covenants of Borrower
To conform with the terms and conditions under which each Lender is
willing to have credit outstanding to Borrower, and to induce each Lender to
enter into this Agreement and make the Loans, Borrower warrants, covenants and
agrees that until the full and final payment of the Obligations and the
termination of this Agreement, unless Majority Lenders have previously agreed
otherwise:
Section 7.1. Indebtedness. No Restricted Person will in any manner owe
or be liable for Indebtedness except:
(a) the Obligations.
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(b) obligations under operating leases entered into in the ordinary
course of such Restricted Person's business in arm's length transactions at
competitive market rates under competitive terms and conditions in all respects,
provided that the obligations required to be paid in any Fiscal Year under any
such operating leases do not in the aggregate exceed $1,500,000.
(c) unsecured Indebtedness among Borrower and the Guarantors arising in
the ordinary course of business.
(d) Indebtedness in the original principal amount of $8,000,000 with a
present unpaid principal balance of $1,333,000 evidenced by a promissory note
dated January 31, 1995 made by Westport Oil and Gas Company, Inc., payable to
the order of U.S. Bank National Association, maturing on December 31, 2000,
provided that such Indebtedness may not be increased (other than by the accrual
of interest) nor the presently required time or times for payment thereof
extended after the date hereof.
(e) Indebtedness arising under Hedging Contracts permitted under
Section 7.3.
(f) miscellaneous items of unsecured Indebtedness not described in
subsections (a) through (e) which do not in the aggregate (taking into account
all such Indebtedness of all Restricted Persons) exceed $5,000,000 at any one
time outstanding.
(g) prior to the disbursement of the initial Loans hereunder, the
$50,000,000 principal obligation owed by Parent to Equitable Production Company,
together with associated interest and costs.
Section 7.2. Limitation on Liens. Except for Permitted Liens, no
Restricted Person will create, assume or permit to exist any Lien upon any of
the properties or assets which it now owns or hereafter acquires.
Section 7.3. Hedging Contracts. No Restricted Person will be a party to
or in any manner be liable on any Hedging Contract except:
(a) contracts entered into with the purpose and effect of fixing prices
on oil or gas expected to be produced by Restricted Persons, provided that at
all times: (i) no such contract fixes a price for a term of more than eighteen
(18) months; (ii) the aggregate monthly production covered by all such contracts
(determined, in the case of contracts that are not settled on a monthly basis,
by a monthly proration acceptable to Agent) for any single month does not in the
aggregate exceed seventy-five percent (75%) of Restricted Persons' aggregate
Projected Oil and Gas Production anticipated to be sold in the ordinary course
of Restricted Persons' businesses for such month, (iii) no such contract
requires any Restricted Person to put up money, assets, letters of credit or
other security against the event of its nonperformance prior to actual default
by such Restricted Person in performing its obligations thereunder, and (iv)
each such contract is with a counterparty or has a guarantor of the obligation
of the counterparty who (unless such counterparty is a Lender or one of its
Affiliates) at the time the contract is made has long-term obligations rated AA
or Aa2 or better, respectively, by either Rating Agency or is an investment
grade-rated industry participant. As used in this subsection, the term
"Projected Oil and Gas Production" means the projected production of oil or gas
(measured by volume unit or ▇▇▇
▇▇
▇▇
equivalent, not sales price) for the term of the contracts or a particular
month, as applicable, from properties and interests owned by any Restricted
Person which are located in or offshore of the United States and which have
attributable to them proved oil or gas reserves, as such production is projected
in the most recent report delivered pursuant to Section 6.2(d) or (e), after
deducting projected production from any properties or interests sold or under
contract for sale that had been included in such report and after adding
projected production from any properties or interests that had not been
reflected in such report but that are reflected in a separate or supplemental
reports meeting the requirements of such Section 6.2(d) or (e) above and
otherwise are satisfactory to Agent; and
(b) contracts entered into by a Restricted Person with the purpose and
effect of fixing interest rates on a principal amount of indebtedness of such
Restricted Person that is accruing interest at a variable rate, provided that
(i) the aggregate notional amount of such contracts never exceeds seventy-five
percent (75%) of the anticipated outstanding principal balance of the
indebtedness to be hedged by such contracts or an average of such principal
balances calculated using a generally accepted method of matching interest swap
contracts to declining principal balances, (ii) the floating rate index of each
such contract generally matches the index used to determine the floating rates
of interest on the corresponding indebtedness to be hedged by such contract and
(iii) each such contract is with a counterparty or has a guarantor of the
obligation of the counterparty who (unless such counterparty is a Lender or one
of its Affiliates) at the time the contract is made has long-term obligations
rated AA or Aa2 or better, respectively, by either Rating Agency.
Section 7.4. Limitation on Mergers, Issuances of Securities. Except as
contemplated by the Acquisition Documents, no Restricted Person will merge or
consolidate with or into any other Person except that any Subsidiary of Borrower
may be merged into or consolidated with Borrower, so long as Borrower is the
surviving business entity. Borrower will not issue any securities other than
shares of its common stock and any options or warrants giving the holders
thereof only the right to acquire such shares. No Subsidiary of Borrower will
issue any additional shares of its capital stock or other securities or any
options, warrants or other rights to acquire such additional shares or other
securities except to Borrower and only to the extent not otherwise forbidden
under the terms hereof. No Subsidiary of Borrower which is a partnership will
allow any diminution of Borrower's interest (direct or indirect) therein.
Section 7.5. Limitation on Sales of Property. No Restricted Person will
sell, transfer, lease, exchange, alienate or dispose of any of its material
assets or properties or any material interest therein, or discount, sell, pledge
or assign any notes payable to it, accounts receivable or future income, except,
to the extent not otherwise forbidden under the Security Documents:
(a) equipment which is worthless or obsolete or which is replaced by
equipment of equal suitability and value;
(b) inventory (including oil and gas sold as produced and seismic data)
which is sold in the ordinary course of business on ordinary trade terms;
(c) capital stock of any of Borrower's Subsidiaries which is
transferred to Borrower;
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(d) interests in oil and gas leases, or portions thereof; provided that
Agent and Majority Lenders shall have the right to redetermine the Borrowing
Base in the event that the Restricted Persons sell such properties having an
Aggregate Value greater than $5,000,000 during any period between regularly
scheduled Borrowing Base redeterminations.
Section 7.6. Limitation on Dividends and Redemptions. No Restricted
Person will declare or make any Distribution, other than (a) Distributions
payable to Parent by Borrower, (b) Distributions payable to Borrower by
Subsidiaries of Borrower; and (c) Distributions by a Restricted Person payable
only in such Restricted Person's common stock, so long as Borrower's interest in
any of its Subsidiaries is not thereby reduced.
Section 7.7. Limitation on Investments and New Businesses. No
Restricted Person will (a) make any expenditure or commitment or incur any
obligation or enter into or engage in any transaction except in the ordinary
course of business, (b) engage directly or indirectly in any business or conduct
any operations except in connection with or incidental to its present businesses
and operations, or (c) make any acquisitions of or capital contributions to or
other Investments in any Person or property, other than Permitted Investments.
Section 7.8. Limitation on Credit Extensions. Except for Permitted
Investments, no Restricted Person will extend credit, make advances or make
loans other than (a) normal and prudent extensions of credit to customers buying
goods and services in the ordinary course of business and under agreements
described in clause (c) of the definition of Permitted Liens, which extensions
shall not be for longer periods than those extended by similar businesses
operated in a normal and prudent manner and (b) loans and advances to employees
of the Restricted Persons in an aggregate amount not to exceed $25,000 at any
time outstanding.
Section 7.9. Transactions with Affiliates. Neither Borrower nor any of
its Subsidiaries will engage in any material transaction with any of its
Affiliates on terms which are less favorable to it than those which would have
been obtainable at the time in arm's-length dealing with Persons other than such
Affiliates, provided that such restriction shall not apply to transactions among
Borrower and its wholly owned Subsidiaries.
Section 7.10. Prohibited Contracts. Except as expressly provided for in
the Loan Documents, no Restricted Person will, directly or indirectly, enter
into, create, or otherwise allow to exist any contract or other consensual
restriction on the ability of any Subsidiary of Borrower: (a) to pay dividends
or make other distributions to Borrower, (b) to redeem equity interests held in
it by Borrower, (c) to repay loans and other indebtedness owing by it to
Borrower, or (d) to transfer any of its assets to Borrower except, in the case
of this clause (d), restrictions arising under agreements governing Permitted
Liens and under agreements relating to sales of assets to the extent such sales
are permitted under Section 7.5. No Restricted Person will enter into any
"take-or-pay" contract or other contract or arrangement for the purchase of
goods or services which obligates it to pay for such goods or service regardless
of whether they are delivered or furnished to it. No Restricted Person will
amend or permit any amendment to any contract or lease which releases,
qualifies, limits, makes contingent or otherwise detrimentally affects the
rights and benefits of Agent or any Lender under or acquired pursuant to any
Security Documents. No ERISA Affiliate will incur any obligation to contribute
to any "multiemployer plan" as defined in Section 4001 of ERISA.
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Section 7.11. Current Ratio. The ratio of Parent's Consolidated current
assets to Parent's Consolidated current liabilities will never be less than 1.0
to 1.0. For purposes of this subsection, Parent's Consolidated current assets
will include any unused portion of the Borrowing Base which is then available
for borrowing, but in no event to exceed $10,000,000. For purposes of this
subsection, Parent's Consolidated current liabilities will be calculated without
including any payments of principal on any Note or any other long-term
Indebtedness which are required to be repaid within one year from the time of
calculation.
Section 7.12. Interest Coverage Ratio. At the end of any Fiscal Quarter
(beginning with the Fiscal Quarter ended March 31, 2000), the ratio of (a)
Parent's EBITDA to (b) Parent's Consolidated Interest Expense for the Four
Quarter Period then ended shall not be less than 2.5 to 1.0.
ARTICLE VIII - Events of Default and Remedies
Section 8.1. Events of Default. Each of the following events
constitutes an Event of Default under this Agreement:
(a) Any Restricted Person fails to pay any principal component of any
Obligation 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;
(b) Any Restricted Person 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 for any interest component of any such
Obligation and within five Business Days after the same becomes due for any
non-interest component of any such Obligation;
(c) Any "default" or "event of default" occurs under any Loan Document
which defines either such term, and the same is not remedied within the
applicable period of grace (if any) provided in such Loan Document;
(d) Any Restricted Person fails to duly observe, perform or comply with
any covenant, agreement or provision of Section 6.4 or Article VII;
(e) Any Restricted Person fails (other than as referred to in
subsections (a), (b), (c) or (d) above) to duly observe, perform or comply with
any covenant, agreement, condition or provision of any Loan Document, and such
failure remains unremedied for a period of thirty (30) days after notice of such
failure is given by Agent to Borrower;
(f) Any representation or warranty previously, presently or hereafter
made in writing by or on behalf of any Restricted Person in connection with any
Loan Document shall prove to have been false or incorrect in any material
respect on any date on or as of which made, or any Loan Document at any time
ceases to be valid, binding and enforceable as warranted in Section 5.5 for any
reason other than its release or subordination by Agent;
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(g) Any Restricted Person fails to duly 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 Borrower or to
Borrower and its Subsidiaries on a Consolidated basis or materially significant
to any Guarantor, and such failure is not remedied within the applicable period
of grace (if any) provided in such agreement or instrument;
(h) Any Restricted Person (i) fails to pay any portion, when such
portion is due, of any of its Indebtedness in excess of $500,000, or (ii)
breaches or defaults in the performance of any agreement or instrument by which
any such Indebtedness is issued, evidenced, governed, or secured, and any such
failure, breach or default continues beyond any applicable period of grace
provided therefor;
(i) Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code) in excess of $500,000 exists with
respect to any ERISA Plan, whether or not waived by the Secretary of the
Treasury or his delegate, or (ii) any Termination Event occurs with respect to
any ERISA Plan and the then current value of such ERISA Plan's benefit
liabilities exceeds the then current value of such ERISA Plan's assets available
for the payment of such benefit liabilities by more than $500,000 (or in the
case of a Termination Event involving the withdrawal of a substantial employer,
the withdrawing employer's proportionate share of such excess exceeds such
amount);
(j) Any Change of Control occurs;
(k) Any Restricted Person:
(i) suffers the entry against it of a judgment, decree or
order for relief by a Tribunal 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 federal Bankruptcy Code, as from time to time
amended, or has any such proceeding commenced against it which remains
undismissed for a period of thirty days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar Law now or hereafter in effect,
including the federal 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 fails generally to pay (or admits in
writing its inability to pay) its debts as such debts become due; or
takes corporate or other action to authorize any of the foregoing; or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of all or a substantial part of its assets or of any
part of the Collateral in a proceeding brought against or initiated by
it, and such appointment or taking possession is neither made
ineffective nor discharged within thirty days after the making thereof,
or such appointment or taking possession is at any time consented to,
requested by, or acquiesced to by it; or
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(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $2,000,000 (not covered by insurance
satisfactory to Agent in its discretion), unless the same is discharged
within thirty days after the date of 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; or
(v) suffers a writ or warrant of attachment or any similar
process to be issued by any Tribunal against all or any substantial
part of its assets or any part of the Collateral, and such writ or
warrant of attachment or any similar process is not stayed or released
within thirty days after the entry or levy thereof or after any stay is
vacated or set aside;
(l) Any Material Adverse Change occurs; or
(m) ▇▇▇▇▇▇ ▇. ▇▇▇▇ shall cease to act as Chief Executive Officer and
Chairman of the Board of Borrower, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall cease to act as
Chief Operating Officer and President of Borrower.
Upon the occurrence of an Event of Default described in subsection (k)(i),
(k)(ii) or (k)(iii) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Restricted Person who at any time
ratifies or approves this Agreement. Upon any such acceleration, any obligation
of any Lender and any obligation of LC Issuer to issue Letters of Credit
hereunder to make any further Loans shall be permanently terminated. During the
continuance of any other Event of Default, Agent at any time and from time to
time may (and upon written instructions from Majority Lenders, Agent shall),
without notice to Borrower or any other Restricted Person, do either or both of
the following: (1) terminate any obligation of Lenders to make Loans hereunder,
and any obligation of LC Issuer to issue Letters of Credit hereunder, and (2)
declare any or all of the Obligations immediately due and payable, and all such
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Restricted Person who at any time
ratifies or approves this Agreement.
Section 8.2. Remedies. If any Default shall occur and be continuing,
each Lender Party may protect and enforce its rights under the Loan Documents by
any appropriate proceedings, including proceedings for specific performance of
any covenant or agreement contained in any Loan Document, and each Lender Party
may enforce the payment of any Obligations due it or enforce any other legal or
equitable right which it may have. All rights, remedies and powers conferred
upon Lender Parties under the Loan Documents shall be deemed cumulative and not
exclusive of any other rights, remedies or powers available under the Loan
Documents or at Law or in equity.
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ARTICLE IX - Agent
Section 9.1. Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. Agent (which term as used in this sentence and in Section 9.5 and the
first sentence of Section 9.6 hereof shall include its Affiliates and its own
and its Affiliates' officers, directors, employees, and agents): (a) shall not
have any duties or responsibilities except those expressly set forth in this
Agreement and shall not be a trustee or fiduciary for any Lender; (b) shall not
be responsible to the Lenders for any recital, statement, representation, or
warranty (whether written or oral) made in or in connection with any Loan
Document or any certificate or other document referred to or provided for in, or
received by any of them under, any Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability, or sufficiency of any Loan Document,
or any other document referred to or provided for therein or for any failure by
any Restricted Person or any other Person to perform any of its obligations
thereunder; (c) shall not be responsible for or have any duty to ascertain,
inquire into, or verify the performance or observance of any covenants or
agreements by any Restricted Person or the satisfaction of any condition or to
inspect the property (including the books and records) of any Restricted Person
or any of its Subsidiaries or Affiliates; (d) shall not be required to initiate
or conduct any litigation or collection proceedings under any Loan Document; and
(e) shall not be responsible for any action taken or omitted to be taken by it
under or in connection with any Loan Document, except for its own gross
negligence or willful misconduct. Agent may employ agents and attorneys-in-fact
and shall not be responsible for the negligence or misconduct of any such agents
or attorneys-in-fact selected by it with reasonable care.
Section 9.2. Reliance by Agent. Agent shall be entitled to rely upon
any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telecopy) believed
by it to be genuine and correct and to have been signed, sent or made by or on
behalf of the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel for any Restricted Person), independent accountants,
and other experts selected by Agent. Agent may deem and treat the payee of any
Note as the holder thereof for all purposes hereof unless and until Agent
receives and accepts an Assignment and Acceptance executed in accordance with
Section 10.6 hereof. As to any matters not expressly provided for by this
Agreement, Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding on all of the
Lenders; provided, however, that Agent shall not be required to take any action
that exposes Agent to personal liability or that is contrary to any Loan
Document or applicable Law or unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking any such action.
Section 9.3. Defaults. Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless Agent has
received written notice from a Lender or Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default". In the
event that Agent receives such a notice of the occurrence of a Default
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or Event of Default, Agent shall give prompt notice thereof to the Lenders.
Agent shall (subject to Section 9.1 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Required
Lenders, provided that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.
Section 9.4. Rights as Lender. With respect to its Percentage Share of
the Maximum Loan Amount and the Loans made by it, Agent (and any successor
acting as Agent) in its capacity as a Lender hereunder shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not acting as Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include Agent in its individual
capacity. Agent (and any successor acting as Agent) and its Affiliates may
(without having to account therefor to any Lender) accept deposits from, lend
money to, make Investments in, provide services to, and generally engage in any
kind of lending, trust, or other business with any Restricted Person or any of
its Subsidiaries or Affiliates as if it were not acting as Agent, and Agent (and
any successor acting as Agent) and its Affiliates may accept fees and other
consideration from any Restricted Person or any of its Subsidiaries or
Affiliates for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
Section 9.5. Indemnification. The Lenders agree to indemnify Agent (to
the extent not reimbursed under Section 10.4 hereof, but without limiting the
obligations of Borrower under such section) ratably in accordance with their
respective Percentage Shares, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
attorneys' fees), or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Agent (including by any Lender) in
any way relating to or arising out of any Loan Document or the transactions
contemplated thereby or any action taken or omitted by Agent under any Loan
Document (INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF AGENT);
provided that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the Person to be
indemnified. Without limitation of the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any costs or
expenses payable by Borrower under Section 10.4, to the extent that Agent is not
promptly reimbursed for such costs and expenses by Borrower. The agreements
contained in this section shall survive payment in full of the Loans and all
other amounts payable under this Agreement.
Section 9.6. Non-Reliance on Agent and Other Lenders. Each Lender
agrees that it has, independently and without reliance on Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and its Subsidiaries
and decision to enter into this Agreement and that it will, independently and
without reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under the Loan Documents.
Except for notices, reports, and other documents and information expressly
required to be furnished to the Lenders by Agent hereunder, Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or
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business of any Restricted Person or any of its Subsidiaries or Affiliates that
may come into the possession of Agent or any of its Affiliates.
Section 9.7. Rights as Lender. In its capacity as a Lender, Agent shall
have the same rights and obligations as any Lender and may exercise such rights
as though it were not Agent. Agent may accept deposits from, lend money to, act
as trustee under indentures of, and generally engage in any kind of business
with any Restricted Person or their Affiliates, all as if it were not Agent
hereunder and without any duty to account therefor to any other Lender.
Section 9.8. Sharing of Set-Offs and Other Payments. Each Lender Party
agrees that if it shall, whether through the exercise of rights under Security
Documents or rights of banker's lien, set off, or counterclaim against Borrower
or otherwise, obtain payment of a portion of the aggregate Obligations owed to
it which, taking into account all distributions made by Agent under Section 3.1,
causes such Lender Party to have received more than it would have received had
such payment been received by Agent and distributed pursuant to Section 3.1,
then (a) 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 as provided for in Section 3.1, and (b)
such other adjustments shall be made from time to time as shall be equitable to
ensure that Agent and all Lender Parties share all payments of Obligations as
provided in Section 3.1; 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. Borrower expressly consents to the
foregoing arrangements and agrees 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 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 order to be
paid on account of the possession of such funds prior to such recovery.
Section 9.9. Investments. Whenever Agent in good faith determines that
it is uncertain about how to distribute to Lender Parties any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lender Parties about how such funds should be distributed, Agent may
choose to defer distribution of the funds which are the subject of such
uncertainty or dispute. If Agent in good faith believes that the uncertainty or
dispute will not be promptly resolved, or if Agent is otherwise required to
invest funds pending distribution to Lender Parties, Agent shall invest such
funds pending distribution; all interest on any such Investment shall be
distributed upon the distribution of such Investment and in the same proportion
and to the same Persons as such Investment. All moneys received by Agent for
distribution to Lender Parties (other than to the Person who is Agent in its
separate capacity as a Lender Party) shall be held by Agent pending such
distribution solely as Agent for such Lender Parties, and Agent shall have no
equitable title to any portion thereof.
Section 9.10. Benefit of Article IX. The provisions of this Article
(other than the following Section 9.11) are intended solely for the benefit of
Lender Parties, and no Restricted
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Person shall be entitled to rely on any such provision or assert any such
provision in a claim or defense against any Lender. Lender Parties may waive or
amend such provisions as they desire without any notice to or consent of
Borrower or any Restricted Person.
Section 9.11. Resignation. Agent may resign at any time by giving
written notice thereof to Lenders and Borrower. Each such notice shall set forth
the date of such resignation. Upon any such resignation, so long as no Default
has occurred and is continuing, Borrower may, with the written concurrence of
Lenders whose aggregate Percentage Shares exceed fifty percent (50%), designate
a successor Agent. If within fifteen days after the date of such resignation
Borrower makes no such designation or such written concurrence is not given,
Majority Lenders shall have the right to appoint a successor Agent. A successor
must be appointed for any retiring Agent, and such Agent's resignation shall
become effective when such successor accepts such appointment. If, within thirty
days after the date of the retiring Agent's resignation, no successor Agent has
been appointed and has accepted such appointment, then the retiring Agent may
appoint a successor 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 Agent hereunder by a successor Agent, the retiring Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents. After any retiring Agent's resignation hereunder the provisions
of this Article IX shall continue to inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under the Loan Documents.
Section 9.12. Lead Arranger, Book Manager, Syndication Agent, Managing
Agent and Co-Agent. The Lenders identified on the facing page of this Agreement
as "Lead Arranger", "Book Manager", "Syndication Agent", "Managing Agent" and
"Co-Agent", respectively, have no right, power, obligation, liability,
responsibility, or duty under the Loan Documents in such capacities. Without
limiting the foregoing, the Lenders so identified as "Lead Arranger", "Book
Manager", "Syndication Agent", "Managing Agent" and "Co-Agent", respectively,
shall not have and shall not be deemed to have any fiduciary relationship with
any Lender. Each Lender acknowledges that it has not relied, and will not rely,
on any of them taking or not taking action hereunder.
ARTICLE X - Miscellaneous
Section 10.1. Waivers and Amendments; Acknowledgments.
(a) Waivers and Amendments. No failure or delay (whether by course of
conduct or otherwise) by any Lender in exercising any right, power or remedy
which such Lender Party may have under any of the Loan 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 Loan 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
Restricted Person shall in any case of itself entitle any Restricted Person to
any other or
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further notice or demand in similar or other circumstances. This Agreement and
the other Loan Documents set forth the entire understanding between 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 Loan Documents shall
be valid or effective against any party hereto unless the same is in writing and
signed by (i) if such party is Borrower, by Borrower, (ii) if such party is
Agent or LC Issuer, by such party, and (iii) if such party is a Lender, by such
Lender or by Agent on behalf of Lenders with the written consent of Majority
Lenders (which consent has already been given as to the termination of the Loan
Documents as provided in Section 10.10). Notwithstanding the foregoing or
anything to the contrary herein, Agent shall not, without the prior consent of
each individual Lender, execute and deliver on behalf of such Lender any waiver
or amendment which would: (1) waive any of the conditions specified in Article
IV (provided that Agent may in its discretion withdraw any request it has made
under Section 4.3(f), (2) increase the maximum amount which such Lender is
committed hereunder to lend, (3) reduce any fees payable to such Lender
hereunder, or the principal of, or interest on, such Lender's Note, (4) postpone
any date fixed for any payment of any such fees, principal or interest, (5)
amend the definition herein of "Majority Lenders" or otherwise change the
aggregate amount of Percentage Shares which is required for Agent, Lenders or
any of them to take any particular action under the Loan Documents, (6) release
Borrower from its obligation to pay such Lender's Note or any Guarantor from its
guaranty of such payment, (7) permit the Borrowing Base to be increased, or (8)
amend this Section 10.1(a).
(b) Acknowledgments and Admissions. Borrower hereby represents,
warrants, acknowledges and admits that (i) it has been advised by counsel in the
negotiation, execution and delivery of the Loan Documents to which it is a
party, (ii) it has made an independent decision to enter into this Agreement and
the other Loan Documents to which it is a party, without reliance on any
representation, warranty, covenant or undertaking by Agent or any Lender,
whether written, oral or implicit, other than as expressly set out in this
Agreement or in another Loan Document delivered on or after the date hereof,
(iii) there are no representations, warranties, covenants, undertakings or
agreements by any Lender as to the Loan Documents except as expressly set out in
this Agreement or in another Loan Document delivered on or after the date
hereof, (iv) no Lender has any fiduciary obligation toward Borrower with respect
to any Loan Document or the transactions contemplated thereby, (v) the
relationship pursuant to the Loan Documents between Borrower and the other
Restricted Persons, on one hand, and each Lender, on the other hand, is and
shall be solely that of debtor and creditor, respectively, (vi) no partnership
or joint venture exists with respect to the Loan Documents between any
Restricted Person and any Lender, (vii) Agent is not Borrower's Agent, but Agent
for Lenders, (viii) should an Event of Default or Default occur or exist, each
Lender will determine in its sole discretion and for its own reasons what
remedies and actions it will or will not exercise or take at that time, (ix)
without limiting any of the foregoing, Borrower is not relying upon any
representation or covenant by any Lender, or any representative thereof, and no
such representation or covenant has been made, that any Lender 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 Loan
Documents with respect to any such Event of Default or Default or any other
provision of the Loan Documents, and (x) all Lender Parties have relied upon the
truthfulness of the
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acknowledgments in this section in deciding to execute and deliver this
Agreement and to become obligated hereunder.
(c) Joint Acknowledgment. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 10.2. Survival of Agreements; Cumulative Nature. All of
Restricted Persons' various representations, warranties, covenants and
agreements in the Loan Documents shall survive the execution and delivery of
this Agreement and the other Loan Documents and the performance hereof and
thereof, including the making or granting of the Loans and the delivery of the
Notes and the other Loan Documents, and shall further survive until all of the
Obligations are paid in full to each Lender Party and all of Lender Parties'
obligations to Borrower are terminated. All statements and agreements contained
in any certificate or other instrument delivered by any Restricted Person to any
Lender Party under any Loan 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
Restricted Persons in the Loan Documents, and the rights, powers, and privileges
granted to Lender Parties in the Loan Documents, are cumulative, and, except for
expressly specified waivers and consents, no Loan 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 Loan Document, and each such
similar representation, warranty, indemnity, or covenant shall be subject only
to those exceptions which are expressly made applicable to it by the terms of
the various Loan Documents.
Section 10.3. Notices. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Agent may give telephonic notices to the other Lender Parties), and shall
be deemed sufficiently given or furnished if delivered by personal delivery, by
facsimile or other electronic transmission, by delivery service with proof of
delivery, or by registered or certified United States mail, postage prepaid, to
Borrower and Restricted Persons at the address of Borrower specified on the
signature pages hereto and to each Lender Party at its address specified on the
signature pages hereto (unless changed by similar notice in writing given by the
particular Person whose address is to be changed). Any such notice or
communication shall be deemed to have been given (a) in the case of personal
delivery or delivery service, as of the date of first attempted delivery during
normal business hours at the address provided herein, (b) in the case of
facsimile or other electronic transmission, upon receipt, or (c) in the case of
registered or certified United States mail, three
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days after deposit in the mail; provided, however, that no Borrowing Notice
shall become effective until actually received by Agent.
Section 10.4. Payment of Expenses; Indemnity.
(a) Payment of Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, Borrower will promptly (and in any event,
within thirty (30) days after any invoice or other statement or notice) pay: (i)
all transfer, stamp, mortgage, documentary or other similar taxes, assessments
or charges levied by any governmental or revenue authority in respect of this
Agreement or any of the other Loan Documents or any other document or
transaction referred to herein or therein, (ii) all reasonable costs and
expenses incurred by or on behalf of Agent (including without limitation
attorneys' fees, consultants' fees and engineering fees, travel costs and
miscellaneous expenses) in connection with (1) the negotiation, preparation,
execution and delivery of the Loan Documents, and any and all consents, waivers
or other documents or instruments relating thereto, (2) the filing, recording,
refiling and re-recording of any Loan Documents and any other documents or
instruments or further assurances required to be filed or recorded or refiled or
re-recorded by the terms of any Loan Document, (3) the borrowings hereunder and
other action reasonably required in the course of administration hereof, (4)
monitoring or confirming (or preparation or negotiation of any document related
to) the Restricted Person's compliance with any covenants or conditions
contained in this Agreement or in any Loan Document, and (iii) all reasonable
costs and expenses incurred by or on behalf of any Lender Party (including
without limitation attorneys' fees, consultants' fees and accounting fees) in
connection with the defense or enforcement of any of the Loan Documents
(including this section), any attempt to cure any breach thereunder by any
Restricted Person, or the defense of any Lender Party's exercise of its rights
thereunder. In addition to the foregoing, until all Obligations have been paid
in full, Borrower will also pay or reimburse Agent for all reasonable
out-of-pocket costs and expenses of Agent or its agents or employees in
connection with the continuing administration of the Loans and the related due
diligence of Agent, including travel and miscellaneous expenses and fees and
expenses of Agent's outside counsel, reserve engineers and consultants engaged
in connection with the Loan Documents.
(b) Indemnity. Borrower agrees to indemnify each Lender Party , upon
demand, from and against any and all liabilities, obligations, broker's fees,
claims, losses, damages, penalties, fines, actions, judgments, suits,
settlements, costs, expenses or disbursements (including reasonable fees of
attorneys, accountants, experts and advisors) of any kind or nature whatsoever
(in this section collectively called "liabilities and costs") which to any
extent (in whole or in part) may be imposed on, incurred by, or asserted against
such Lender Party growing out of, resulting from or in any other way associated
with any of the Collateral, the Loan Documents 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).
Among other things, the foregoing indemnification covers all liabilities and
costs incurred by any Lender Party related to any breach of a Loan Document by a
Restricted Person, any bodily injury to any Person or damage to any Person's
property, or any violation or noncompliance with any Environmental Laws by any
Lender Party or any other Person or any liabilities or duties of any Lender
Party or any other Person with respect to Hazardous Materials found in or
released into the environment.
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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 ANY LENDER PARTY,
provided only that no Lender Party shall be entitled under this section to
receive indemnification for that portion, if any, of any liabilities and costs
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment. If any Person (including Borrower
or any of its Affiliates) ever alleges such gross negligence or willful
misconduct by any Lender 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 "Lender Party" shall refer
not only to each Person designated as such in Section 1.1 but also to each
director, officer, agent, trustee, attorney, employee, representative and
Affiliate of or for such Person.
Section 10.5. Joint and Several Liability; Parties in Interest. All
Obligations which are incurred by two or more Restricted Persons shall be their
joint and several obligations and liabilities. All grants, covenants and
agreements contained in the Loan Documents shall bind and inure to the benefit
of the parties thereto and their respective successors and assigns; provided,
however, that no Restricted Person may assign or transfer any of its rights or
delegate any of its duties or obligations under any Loan Document without the
prior consent of all of the Lenders. Neither Borrower nor any Affiliates of
Borrower shall directly or indirectly purchase or otherwise retire any
Obligations owed to any Lender nor will any Lender accept any offer to do so,
unless each Lender shall have received substantially the same offer with respect
to the same Percentage Share of the Obligations owed to it. If Borrower or any
Affiliate of Borrower at any time purchases some but less than all of the
Obligations owed to all Lender Parties, such purchaser shall not be entitled to
any rights of any Lender under the Loan Documents unless and until Borrower or
its Affiliates have purchased all of the Obligations.
Section 10.6. Assignments and Participations.
(a) Each Lender may assign to one or more Eligible Transferees all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Loans, its Note, and its Percentage Share of
the Maximum Loan Amount); provided, however, that
(i) each such assignment shall be to an Eligible Transferee;
(ii) except in the case of an assignment to another Lender or
an assignment of all of a Lender's rights and obligations under this
Agreement, any such partial assignment shall be in an amount at least
equal to $10,000,000 or an integral multiple of $1,000,000 in excess
thereof, unless Agent and Borrower have agreed in writing to a lesser
amount;
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(iii) each such assignment by a Lender shall be of a constant,
and not varying, percentage of all of its rights and obligations under
the Loan Documents; and
(iv) the parties to such assignment shall execute and deliver
to Agent for its acceptance an Assignment and Acceptance in the form of
Exhibit E hereto, together with any Note subject to such assignment and
a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this section, the assignor, Agent and
Borrower shall make appropriate arrangements so that, if required, new Notes are
issued to the assignor and the assignee. If the assignee is not incorporated
under the Laws of the United States of America or a state thereof, it shall
deliver to Borrower and Agent certification as to exemption from deduction or
withholding of Taxes in accordance with Section 3.9.
(b) Agent shall maintain at its address referred to in Section 10.3 a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and their
Percentage Share of the Maximum Loan Amount of, and principal amount of the
Loans owing to, each Lender from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and Borrower, Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and payment
of the processing fee, Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit E hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons in all
or a portion of its rights and obligations under this Agreement (including all
or a portion of its Maximum Loan Amount and its Loans); provided, however, that
(i) such Lender's obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participant shall be entitled to the
benefit of the yield protection provisions contained in Article III and the
right of offset contained in Section 6.17, and (iv) Borrower shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and such Lender shall retain the
sole right to enforce the obligations of Borrower relating to its Loans and its
Note and to approve any amendment, modification, or waiver of any provision of
this Agreement (other than amendments, modifications, or waivers decreasing the
amount of principal of or the rate at which interest is payable on such Loans or
Note, extending any scheduled principal payment date or date fixed for the
payment of interest on such Loans or Note, or extending its Maximum Loan
Amount).
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(e) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time assign and pledge all or any portion of its Loans and
its Note to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Lender from its obligations
hereunder.
(f) Any Lender may furnish any information concerning Borrower or any
of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject, however, to the provisions of Section 10.7 hereof.
Section 10.7. Confidentiality. Agent and each Lender (each, a "Lending
Party") agrees to keep confidential any information furnished or made available
to it by Borrower pursuant to this Agreement that is marked confidential;
provided that nothing herein shall prevent any Lending Party from disclosing
such information (a) to any other Lending Party or any Affiliate of any Lending
Party, or any officer, director, employee, agent, or advisor of any Lending
Party or Affiliate of any Lending Party, (b) to any other Person if reasonably
incidental to the administration of the credit facility provided herein, (c) as
required by any Law, rule, or regulation, (d) upon the order of any court or
administrative agency, (e) upon the request or demand of any regulatory agency
or authority, (f) that is or becomes available to the public or that is or
becomes available to any Lending Party other than as a result of a disclosure by
any Lending Party prohibited by this Agreement, (g) in connection with any
litigation to which such Lending Party or any of its Affiliates may be a party,
(h) to the extent necessary in connection with the exercise of any remedy under
this Agreement or any other Loan Document, and (i) subject to provisions
substantially similar to those contained in this section, to any actual or
proposed participant or assignee.
Section 10.8. Governing Law; Submission to Process. EXCEPT TO THE
EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN
DOCUMENT, THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE
UNDER THE LAWS OF THE STATE OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF
THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT
LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) DOES NOT APPLY TO THIS AGREEMENT
OR TO THE NOTES. BORROWER HEREBY IRREVOCABLY SUBMITS ITSELF AND EACH OTHER
RESTRICTED PERSON TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS
SITTING IN THE STATE OF TEXAS AND AGREES AND CONSENTS THAT SERVICE OF PROCESS
MAY BE MADE UPON IT OR ANY RESTRICTED PERSON IN ANY LEGAL PROCEEDING RELATING TO
THE LOAN DOCUMENTS OR THE OBLIGATIONS BY ANY MEANS ALLOWED UNDER TEXAS OR
FEDERAL LAW. ANY LEGAL PROCEEDING ARISING OUT OF OR IN ANY WAY RELATED TO ANY OF
THE LOAN DOCUMENTS SHALL BE BROUGHT AND LITIGATED EXCLUSIVELY IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, TO
THE EXTENT IT HAS SUBJECT MATTER JURISDICTION, AND OTHERWISE IN THE TEXAS
DISTRICT COURTS SITTING IN DALLAS COUNTY, TEXAS. THE PARTIES HERETO HEREBY WAIVE
AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY
SUCH PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER, AND FURTHER AGREE TO A TRANSFER OF ANY SUCH PROCEEDING TO A FEDERAL
COURT SITTING IN THE STATE OF TEXAS TO THE EXTENT THAT IT HAS SUBJECT MATTER
JURISDICTION, AND OTHERWISE TO A STATE COURT IN DALLAS, TEXAS. IN FURTHERANCE
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THEREOF, BORROWER AND LENDER PARTIES EACH HEREBY ACKNOWLEDGE AND AGREE THAT IT
WAS NOT INCONVENIENT FOR THEM TO NEGOTIATE AND RECEIVE FUNDING OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IN SUCH COUNTY AND THAT IT WILL BE
NEITHER INCONVENIENT NOR UNFAIR TO LITIGATE OR OTHERWISE RESOLVE ANY DISPUTES OR
CLAIMS IN A COURT SITTING IN SUCH COUNTY.
Section 10.9. Limitation on Interest. Lender Parties, Restricted
Persons and any other parties to the Loan 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 Loan 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 charged by applicable Law from time
to time in effect. Neither any Restricted Person 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 Loan Documents which may be in conflict or apparent conflict
herewith. Lender Parties expressly disavow any intention to contract for,
charge, or collect excessive unearned interest or finance charges in the event
the maturity of any Obligation is accelerated. If (a) the maturity of any
Obligation is accelerated for any reason, (b) 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 (c) any Lender or any other holder of any or all of the
Obligations shall otherwise collect moneys which 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 charged 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 Lender's or
holder's option, promptly returned to Borrower or the 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, Lender Parties and Restricted Persons (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 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 contract for, charge, or receive 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, for that day, the ceiling
shall be the "weekly ceiling" as defined in the Texas Finance Code, provided
that if any applicable Law permits greater interest, the Law permitting the
greatest interest shall apply. As used in this section the term "applicable Law"
means the Laws of the State of Texas or the Laws of the United States of
America, whichever Laws allow the greater interest, as such Laws now exist or
may be changed or amended or come into effect in the future.
Section 10.10. Termination; Limited Survival. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
written notice delivered to
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Agent to terminate this Agreement. Upon receipt by Agent of such a notice, if no
Obligations are then owing this Agreement and all other Loan Documents shall
thereupon be terminated and the parties thereto released from all prospective
obligations thereunder. Notwithstanding the foregoing or anything herein to the
contrary, any waivers or admissions made by any Restricted Person in any Loan
Document, any Obligations under Sections 3.4 through 3.9, and any obligations
which any Person may have to indemnify or compensate any Lender Party shall
survive any termination of this Agreement or any other Loan Document. At the
request and expense of Borrower, Agent shall prepare and execute all necessary
instruments to reflect and effect such termination of the Loan Documents. Agent
is hereby authorized to execute all such instruments on behalf of all Lenders,
without the joinder of or further action by any Lender.
Section 10.11. Severability. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable Law.
Section 10.12. Counterparts; Fax. This Agreement may be separately
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to
constitute one and the same Agreement. This Agreement and the Loan Documents may
be validly executed and delivered by facsimile or other electronic transmission.
Section 10.13. Waiver of Jury Trial, Punitive Damages, etc. BORROWER
AND EACH LENDER PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND
IRREVOCABLY (a) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH
THE LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED THEREBY OR ASSOCIATED
THEREWITH, BEFORE OR AFTER MATURITY; (b) 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, (c) 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 (d)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
AS USED IN THIS SECTION, "SPECIAL DAMAGES" INCLUDES ALL SPECIAL, CONSEQUENTIAL,
EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE
ANY PAYMENTS OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR
DELIVER TO ANY OTHER PARTY HERETO.
Section 10.14. Restatement. This Agreement restates and amends the
Existing Credit Agreement in its entirety, and all of the terms and provisions
hereof shall supersede the terms and provisions thereof. Borrower hereby agrees
that (a) the Loans outstanding under the Existing Credit Agreement and all
accrued and unpaid interest thereon, and (b) all accrued and unpaid fees under
the Existing Credit Agreement shall be deemed to be outstanding under and
payable by this Agreement; provided that changes in the Percentage Shares,
interest rates, or fee
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rates shall not change the amounts accrued and owing to each Lender under the
Existing Credit Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
WESTPORT OIL AND GAS COMPANY, INC.,
Borrower
By:
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial officer
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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BANK OF AMERICA, N.A.
Agent, LC Issuer and Lender
By:
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Principal
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇, N.A.
Lender
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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U.S. BANK NATIONAL ASSOCIATION
Lender
By:
-----------------------------------------
Name:
Title:
Address:
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CREDIT LYONNAIS NEW YORK BRANCH
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77
BANK ONE, NA (MAIN OFFICE CHICAGO)
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78
NATEXIS BANQUE BFCE
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Southwest Representative ▇▇▇▇▇▇
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Atlanta Agency
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80
COMERICA BANK-TEXAS
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