1
AS EXECUTED
U.S. $100,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of September 30, 1999,
among
▇▇▇▇▇ ENERGY COMPANY,
as the Borrower,
CERTAIN FINANCIAL INSTITUTIONS,
as the Lenders
and
BANK OF AMERICA, N.A.,
as Administrative Agent for the Lenders
BANC OF AMERICA SECURITIES LLC
as Sole Lead Arranger and Book Manager
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.......................................................2
1.1. Defined Terms.................................................................................2
1.2. Use of Defined Terms.........................................................................29
1.3. Cross-References.............................................................................30
1.4. Accounting and Financial Determinations......................................................31
ARTICLE II COMMITMENTS, BORROWING PROCEDURES AND NOTE............................................31
2.1. Commitments..................................................................................31
2.1.1. Revolving Credit Loans.............................................................31
2.1.2. Letters of Credit..................................................................32
2.1.3. Lenders Not Required To Make Loans Under Certain Circumstances.....................32
2.2. Reduction of Commitment Amount...............................................................32
2.2.1. Optional...........................................................................32
2.2.2. Mandatory..........................................................................33
2.3. Borrowing Procedure..........................................................................33
2.4. Continuation and Conversion Elections........................................................33
2.5. Funding......................................................................................33
2.6. Loan Accounts and Notes......................................................................34
2.7. Borrowing Base Redetermination...............................................................35
2.8. Purposes.....................................................................................36
ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES............................................37
3.1. Repayments and Prepayments and Certain Borrowing
Base Matters.................................................................................37
3.1.1. Repayments and Prepayments.........................................................37
3.1.2. Borrowing Base Deficiencies and Asset Sales........................................38
3.2. Interest Provisions..........................................................................39
3.2.1. Rates .............................................................................39
3.2.2. Post-Maturity Rates................................................................40
3.2.3. Payment Dates......................................................................40
3.3. Fees.........................................................................................41
3.3.1. Closing Fee........................................................................41
3.3.2. Administrative Agent's Fees........................................................41
3.3.3. Commitment Fees....................................................................41
3.3.4. Letter of Credit Face Amount Fee...................................................42
3.3.5. Letter of Credit Issuance Fee......................................................42
3.3.6. Letter of Credit Administrative Fee................................................42
3.3.7. Engineering Fees...................................................................42
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3.4. Proceeds Account.............................................................................42
ARTICLE IV LETTERS OF CREDIT.....................................................................43
4.1. Issuance Requests............................................................................43
4.2. Issuances and Extensions.....................................................................44
4.3. Lenders' Participation.......................................................................45
4.4. Disbursements................................................................................46
4.5. Reimbursement................................................................................46
4.6. Deemed Disbursements.........................................................................47
4.7. Nature of Reimbursement Obligations..........................................................47
4.8. Increased Costs; Indemnity...................................................................49
ARTICLE V CERTAIN INTEREST RATE AND OTHER PROVISIONS............................................50
5.1. LIBO Rate Lending Unlawful...................................................................50
5.2. Deposits Unavailable.........................................................................51
5.3. Increased LIBO Rate Loan Costs, etc..........................................................51
5.4. Funding Losses...............................................................................52
5.5. Increased Capital Costs......................................................................53
5.6. Taxes........................................................................................53
5.7. Payments, Computations, etc..................................................................55
5.8. Sharing of Payments..........................................................................55
5.9. Setoff.......................................................................................56
5.10. Use of Proceeds..............................................................................57
5.11. Change of Lender.............................................................................57
ARTICLE VI CONDITIONS PRECEDENT..................................................................58
6.1. Initial Credit Extension.....................................................................58
6.1.1. Resolutions, etc...................................................................58
6.1.2. Delivery of Notes..................................................................59
6.1.3. Guaranties.........................................................................59
6.1.4. Pledge Agreements..................................................................59
6.1.5. Security Agreement.................................................................59
6.1.6. Amendment to Existing Mortgages....................................................60
6.1.7. Opinions of Counsel................................................................60
6.1.8. UCC Searches.......................................................................60
6.1.9. Evidence of Insurance..............................................................61
6.1.10. Engineering Report.................................................................61
6.1.11. Environmental Report and Questionnaire.............................................61
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6.1.12. Budget.............................................................................61
6.1.13. Financial Statements...............................................................61
6.1.14. Consents, etc......................................................................61
6.1.15. Shareholder Acknowledgment.........................................................62
6.1.16. Compliance with Representations and Warranties.....................................62
6.1.17. Amended Security Documents, etc....................................................62
6.1.18. Closing Fees, Expenses, etc........................................................62
6.1.19. Other Documents....................................................................62
6.2. Inclusion of Hydrocarbon Interests in the Borrowing Base.....................................62
6.2.1. Environmental Report and Questionnaire.............................................63
6.2.2. Mortgage...........................................................................63
6.2.3. UCC Searches.......................................................................63
6.2.4. Evidence of Insurance..............................................................64
6.2.5. Engineering Reports................................................................64
6.2.6. Material Contracts; Security Agreement.............................................64
6.2.7. Guaranties.........................................................................64
6.2.8. Pledge Agreement...................................................................64
6.2.9. Other Documents....................................................................65
6.3. All Credit Extensions........................................................................65
6.3.1. Compliance with Warranties, No Default, etc........................................65
6.3.2. Credit Request.....................................................................65
6.3.3. Satisfactory Legal Form............................................................66
ARTICLE VII REPRESENTATIONS AND WARRANTIES........................................................66
7.1. Organization, etc............................................................................66
7.2. Due Authorization, Non-Contravention, etc....................................................67
7.3. Government Approval, Regulation, etc.........................................................67
7.4. Investment Company Act.......................................................................67
7.5. Public Utility Holding Company Act...........................................................67
7.6. Validity, etc................................................................................67
7.7. Financial Information........................................................................68
7.8. No Material Adverse Change...................................................................68
7.9. Litigation, Labor Controversies, etc.........................................................68
7.10. Ownership of Properties......................................................................68
7.11. Taxes........................................................................................69
7.12. Pension and Welfare Plans....................................................................69
7.13. Compliance with Law..........................................................................69
7.14. Claims and Liabilities.......................................................................69
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7.15. No Prohibition on Perfection of Security Documents...........................................69
7.16. Solvency.....................................................................................70
7.17. Environmental Warranties.....................................................................70
7.18. Regulations T, U and X.......................................................................72
7.19. Insurance....................................................................................72
7.20. Year 2000 Compliance.........................................................................72
7.21. Accuracy of Information......................................................................72
ARTICLE VIII COVENANTS.............................................................................73
8.1. Affirmative Covenants........................................................................73
8.1.1. Financial Information, Reports, Notices, etc.......................................73
8.1.2. Compliance with Laws, etc..........................................................76
8.1.3. Maintenance and Development of Properties..........................................77
8.1.4. Insurance..........................................................................77
8.1.5. Books and Records..................................................................78
8.1.6. Environmental Covenant.............................................................78
8.1.7. Further Assurances.................................................................79
8.1.8. Year 2000 Compliance...............................................................80
8.2. Negative Covenants...........................................................................80
8.2.1. Business Activities................................................................80
8.2.2. Indebtedness.......................................................................80
8.2.3. Liens .............................................................................82
8.2.4. Financial Condition................................................................85
8.2.5. Investments........................................................................85
8.2.6. Restricted Payments, etc...........................................................87
8.2.7. Rental Obligations.................................................................87
8.2.8. Consolidation, Merger, etc.........................................................88
8.2.9. Asset Dispositions, etc............................................................88
8.2.10. Modification of Certain Documents..................................................89
8.2.11. Transactions with Affiliates.......................................................89
8.2.12. Negative Pledges, Restrictive Agreements, etc......................................89
8.2.13. Take or Pay Contracts..............................................................90
8.2.14. Sale/Leasebacks....................................................................90
8.2.15. Hydrocarbon Hedging................................................................90
ARTICLE IX EVENTS OF DEFAULT.....................................................................91
9.1. Listing of Events of Default.................................................................91
9.1.1. Non-Payment of Obligations.........................................................91
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9.1.2. Breach of Warranty.................................................................91
9.1.3. Non-Performance of Certain Covenants and Obligations...............................91
9.1.4. Non-Performance of Other Covenants and Obligations.................................92
9.1.5. Default on Other Indebtedness......................................................92
9.1.6. Judgments..........................................................................92
9.1.7. Pension Plans......................................................................92
9.1.8. Control of the Borrower............................................................93
9.1.9. Bankruptcy, Insolvency, etc........................................................93
9.1.10. Impairment of Security, etc........................................................94
9.1.11. Material Adverse Effect............................................................94
9.1.12. Borrowing Base Deficiency..........................................................94
9.2. Action if Bankruptcy.........................................................................94
9.3. Action if Other Event of Default.............................................................94
9.4. Rights Not Exclusive.........................................................................94
ARTICLE X THE ADMINISTRATIVE AGENT..............................................................95
10.1. Actions......................................................................................95
10.2. Funding Reliance, etc........................................................................95
10.3. Exculpation..................................................................................96
10.4. Successor....................................................................................96
10.5. Loans or Letters of Credit Issued by Bank of America.........................................97
10.6. Credit Decisions.............................................................................97
10.7. Copies, etc..................................................................................97
ARTICLE XI MISCELLANEOUS PROVISIONS..............................................................98
11.1. Waivers, Amendments, etc.....................................................................98
11.2. Notices......................................................................................99
11.3. Payment of Costs and Expenses...............................................................100
11.4. Indemnification.............................................................................100
11.5. Survival....................................................................................101
11.6. Severability................................................................................102
11.7. Headings....................................................................................102
11.8. Execution in Counterparts, Effectiveness, etc...............................................102
11.9. Governing Law; Entire Agreement.............................................................102
11.10. Successors and Assigns......................................................................102
11.11. Sale and Transfer of Loans and Notes; Participations in
Loans and Notes.............................................................................103
11.11.1. Assignments.......................................................................103
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11.11.2. Participations....................................................................104
11.12. Forum Selection and Consent to Jurisdiction.................................................105
11.13. Waiver of Jury Trial........................................................................106
11.14. Other Transactions..........................................................................106
11.15. Maximum Interest............................................................................106
11.16. Controlling Document........................................................................108
11.17. Notice......................................................................................109
SCHEDULE I Disclosure Schedule
SCHEDULE II Subsidiaries
SCHEDULE III Administrative Details
SCHEDULE IV Existing Mortgages
SCHEDULE V Existing Hedging Agreements
SCHEDULE VI Updated Title Searches
EXHIBIT A Form of Amended and Restated Secured Promissory Note
EXHIBIT B Form of Security Agreement
EXHIBIT C-1 Form of Borrowing Request
EXHIBIT C-2 Form of Continuation/Conversion Notice
EXHIBIT D Form of Guaranty
EXHIBIT E-1 Form of Mortgage
EXHIBIT E-2 Form of California Mortgage
EXHIBIT F-1 Form of Pledge Agreement (Stock)
EXHIBIT F-2 Form of Pledge Agreement (Partnership Interests)
EXHIBIT G Form of Lender Assignment Notice
EXHIBIT H Form of Opinions of Counsel to the Borrower, et al.
EXHIBIT I-1 Form of Pre-Closing Title Opinions of Special Counsel
to the Borrower
EXHIBIT I-2 Form of Post-Closing Title Opinions of Special Counsel
to the Borrower
EXHIBIT J Form of Issuance Request
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
September 30, 1999, among ▇▇▇▇▇ ENERGY COMPANY, a Texas corporation (the
"Borrower"), the various financial institutions as are now or may hereafter
become parties hereto (collectively, the "Lenders") and BANK OF AMERICA, N.A., a
national banking association, formerly Bank of America National Trust and
Savings Association ("Bank of America"), as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"),
W I T N E S S E T H:
WHEREAS, the Borrower is engaged in the business of oil and gas
exploration and production, and activities related or ancillary thereto; and
WHEREAS, Future Petroleum Corporation, a Utah corporation ("Old FPC"),
and Bank of America are parties to that certain Amended and Restated Credit
Agreement dated as of December 4, 1998 (as amended, the "Existing Credit
Agreement") pursuant to which Bank of America made commitments to make loans to
Old FPC from time to time prior to the applicable commitment termination date in
the maximum aggregate principal amount of loans at any one time not to exceed in
the aggregate the lesser of (x) the collateral value, or (y) $50,000,000; and
WHEREAS, Old FPC has, prior to the Effective Date, merged with and into
the Borrower, such that the Borrower has assumed all of the liabilities and
obligations, and is the owner of all of the assets, of Old FPC pursuant to the
Merger Agreement (hereinafter defined); and
WHEREAS, the Borrower desires to obtain Commitments from the Lenders
and the Issuer pursuant to which
(a) Loans will be made to the Borrower from time to time prior to
the Commitment Termination Date; and
(b) Letters of Credit will be issued by the Issuer for the account
of the Borrower from time to time prior to the Commitment
Termination Date;
in maximum aggregate principal amount of Loans and Letter of Credit Outstandings
at any one time not to exceed in the aggregate the lesser of (x) the Borrowing
Base, or (y) $100,000,000; and
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WHEREAS, the Lenders and the Issuer are willing, on the terms and
subject to the conditions hereinafter set forth (including Article VI), to
extend such Commitments, make such Loans to the Borrower and issue and
participate in such Letters of Credit; and
WHEREAS, the parties have agreed that it is in their respective best
interests to enter into this Agreement amending, restating and superseding the
Existing Credit Agreement; and
WHEREAS, the proceeds of such Loans will be used
(a) to refinance all Indebtedness under the Existing
Credit Agreement; and
(b) for Capital Expenditures, working capital and general
corporate purposes of the Borrower and its Material
Subsidiaries.
NOW, THEREFORE, the parties hereto agree to amend and restate the
Existing Credit Agreement in its entirety as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. DEFINED TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Administrative Agent" is defined in the preamble and includes each
other Person as shall have subsequently been appointed as the successor
Administrative Agent pursuant to Section 10.4.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or
managing general partners; or
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(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Agreement" means, on any date, this Second Amended and Restated Credit
Agreement as originally in effect on the Effective Date and as thereafter from
time to time amended, supplemented, amended and restated, or otherwise modified
and in effect on such date.
"Alternate Base Rate" means, on any date and with respect to all Base
Rate Loans, a fluctuating rate of interest per annum equal to the higher of
(a) the rate of interest as announced from time to time by the
Administrative Agent as its "prime rate" at its Domestic Office; or
(b) the Federal Funds Effective Rate most recently determined
by the Administrative Agent plus 1/2%.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest in connection with extensions of credit. Changes in the rate of
interest on that portion of any Loans maintained as Base Rate Loans will take
effect simultaneously with each change in the Alternate Base Rate. The
Administrative Agent will give notice to the Borrower and the Lenders of changes
in the Alternate Base Rate.
"Applicable Law" means with respect to any Person or matter, any
federal, state, regional, tribal or local statute, law, code, rule, treaty,
convention, application, order, decree, consent decree, injunction, directive,
determination or other requirement (whether or not having the force of law)
relating to such Person or matter and, where applicable, any interpretation
thereof by a Government Agency having jurisdiction with respect thereto or
charged with the administration or interpretation thereof.
"Applicable Margin" means, with respect to any Credit Extension of any
type and at any time of determination, a margin above the interest rate or fee
applicable to such type of Credit Extension determined by reference to the
utilization of the Borrowing Base, as follows:
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Percentage of Alternate
Borrowing Base Utilized Commitment Fee LIBO Rate Margin Base Rate Margin
----------------------- -------------- ---------------- ----------------
Less than 40% 0.30% 1.50% 0.50%
40% or more, but
less than 80% 0.40% 1.75% 0.75%
Equal to or greater than 80% 0.50% 2.00% 1.00%
Changes in the Applicable Margin with respect to any Credit Extension and
Commitment Fee shall take effect, as applicable, upon the effective date of each
Borrowing Base Redetermination and immediately upon any Credit Extension.
"Utilization" and "utilized" means, at any time, the percentage obtained by
dividing (i) the sum of all outstanding Loans plus Letter of Credit Outstandings
by (ii) the Borrowing Base.
Notwithstanding the foregoing, as required by Section 3.2.2(z) and without
duplication, after any Borrowing Base Deficiency has existed for more than
ninety (90) consecutive days, each LIBO Rate Margin and Alternate Base Rate
Margin shall be the rate set forth above plus 3.00% per annum until such
Borrowing Base Deficiency has been eliminated.
"Approval" means each and every approval, authorization, license,
permit, consent, variance, land use entitlement, franchise, agreement, filing or
registration by or with any Government Agency or other Person necessary for all
stages of developing, operating, maintaining and abandoning Oil and Gas
Properties.
"Arco East Texas Property" means those Oil and Gas Properties acquired
by a Subsidiary of the Company from Atlantic Richfield Company pursuant to that
certain Purchase and Sale Agreement dated August 3, 1999, effective October 1,
1999.
"Arco Title Indemnity" means that certain Title Indemnity Agreement
dated as of September 8, 1999, between Atlantic Richfield Company and Future
Acquisition 1995, Ltd., pursuant to which Atlantic Richfield Company indemnifies
and holds harmless Future Acquisition 1995, Ltd. and other parties described
therein from and against losses and claims arising from the "▇▇▇▇▇▇▇▇ Title
Defect" and the "▇▇▇▇▇▇▇▇ Judgment" (as such terms are defined therein) which
may burden the Arco East Texas Property.
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"Assignee Lender" is defined in Section 11.11.1.
"Authorized Officer" means, relative to any Obligor, those of its
officers whose signatures and incumbency shall have been certified to the
Administrative Agent and the Lenders pursuant to Section 6.1.1.
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Bank of America" means Bank of America, N.A., formerly Bank of America
National Trust and Savings Association.
"Borrower" is defined in the preamble.
"Borrowing" means the Loans of the same type and, in the case of LIBO
Rate Loans, having the same Interest Period, made by all Lenders on the same
Business Day and pursuant to the same Borrowing Request in accordance with
Section 2.3.
"Borrowing Base" shall mean, as at any date, (a) prior to the initial
Borrowing Base Redetermination, $40,000,000, (b) prior to the initial Borrowing
Base Redetermination, but after the satisfaction of the conditions precedent set
forth in Section 6.2 pertaining to the Arco East Texas Property and upon its
inclusion in the Borrowing Base, $55,000,000, and (c) thereafter, the amount
determined from time to time pursuant to Section 2.7.
"Borrowing Base Deficiency" means at any time the amount by which (a)
the sum of the aggregate outstanding principal amount of all Loans plus Letter
of Credit Outstandings exceeds (b) the then current Borrowing Base.
"Borrowing Base Deficiency Notification Date" shall mean the date on
which any notice of a Borrowing Base Deficiency is received by the Borrower.
"Borrowing Base Determination Date" is defined in Section 2.7(c).
"Borrowing Base Redetermination" shall mean a Scheduled Redetermination
or a Requested Redetermination, as the case may be.
"Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of Exhibit
C-1 hereto.
"Business Day" means (a) any day which is neither a Saturday or Sunday
nor a legal holiday on which banks are authorized or required to be closed in
Dallas, Texas; and (b) relative to the making, continuing, prepaying or repaying
of any LIBO Rate Loans, any day on which dealings in Dollars are carried on in
the London interbank market.
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"Capital Expenditures" means, for any period, the sum of (without
duplication) (a) all expenditures of the Borrower and its consolidated
Subsidiaries for fixed or capital assets made during such period which, in
accordance with GAAP, would be classified as capital expenditures; and (b) the
aggregate amount of all Capitalized Lease Liabilities incurred during such
period.
"Capital Stock" means any and all shares, interests, participations or
other equivalents in the equity interest (however designated) in such Person and
any rights (other than debt securities convertible into an equity interest),
warrants or options to subscribe for or to acquire interest in such Person.
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrower or any of its consolidated Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, would be classified as capitalized
leases, and, for purposes of this Agreement and each other Loan Document, the
amount of such obligations shall be the capitalized amount thereof, determined
in accordance with GAAP.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one
(1) year after such time, issued or guaranteed by the United States
Government;
(b) commercial paper, maturing not more than nine (9) months
from the date of issue, which is issued by
(i) a corporation (other than an Affiliate of the
Borrower) organized under the laws of any state of the United
States or of the District of Columbia and rated at least A-1
by Standard & Poor's Corporation or P-1 by ▇▇▇▇▇'▇ Investors
Service, Inc., or
(ii) a Lender which is rated at least A-1 by Standard
& Poor's Corporation or P-1 by ▇▇▇▇▇'▇ Investors Service,
Inc.;
(c) any certificate of deposit or bankers acceptance, maturing
not more than one (1) year after such time, which is issued by
(i) a commercial banking institution that is
organized under the laws of the United States, or any state
thereof, or that is organized under the laws of any other
country which is a member of the Organization for Economic
Development, or a political subdivision of any such country,
and has a combined capital and surplus and undivided profits
of not less than $500,000,000, or
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(ii) a Lender which is rated at least A-1 by Standard
& Poor's Corporation or P-1 by ▇▇▇▇▇'▇ Investors Service,
Inc.; or
(d) any repurchase agreement entered into with any Lender (or
other commercial banking institution of the stature referred to in
clause (c)) which
(i) is secured by a fully perfected security interest
in any obligation of the type described in any of clauses (a)
through (c); and
(ii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the
repurchase obligation of such Lender (or other commercial
banking institution) thereunder.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change of Control" means, with respect to the Borrower, the occurrence
of:
(a) At such time as any Person or "group" (within the meaning
of Section 13(d)(3) of the Exchange Act), (other than the Principal
Shareholders), is or becomes the beneficial owner, directly or
indirectly, of outstanding shares of the Capital Stock of the Borrower
entitling such Person or Persons to exercise 50% or more of the total
votes entitled to be cast at a regular or special meeting, or by action
by written consent, of the stockholders of the Borrower in the election
of directors (the term "beneficial owner" shall be determined in
accordance with Rule 13d-3 of the Exchange Act);
(b) At such time as the Borrower shall have consummated a
reorganization, merger or consolidation or similar transaction, in each
case, with respect to which all or substantially all the Principal
Shareholders who were beneficial owners of the outstanding shares of
Capital Stock of the Borrower immediately prior to such reorganization,
merger or consolidation, beneficially own, directly or indirectly, less
than 50% of the combined voting power of the then outstanding shares of
Capital Stock of the Borrower resulting from such reorganization,
merger or consolidation; or
(c) Unless otherwise permitted under Section 8.2.8, if the
Borrower ceases to own beneficially and of record 100% of the Capital
Stock of each of Future Texas, Future Nevada and Future California, or
if Future Texas or Future Nevada ceases to own beneficially and of
record 100% of the general
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partner and limited partner interests, respectively, in the Partnership
Subsidiaries;
provided that, the following shall not be deemed a Change of Control:
(a) the acquisition or beneficial ownership of voting securities by the Initial
Holders, any Principal Shareholder Affiliate, or any group of which an Initial
Holder or its respective Principal Shareholder Affiliates is a member; (b) any
repurchase of voting securities by the Borrower or any Subsidiary of the
Borrower; (c) any transaction that causes a Person to become the beneficial
owner of voting securities of the Borrower as a result of acquiring an interest
in an Initial Holder, a Principal Shareholder Affiliate of an Initial Holder or
a transferee of an Initial Holder, or (d) any distribution or dividend to
equity-holders otherwise permitted by this Agreement made by any of the
following entities to their current equity-holders -- BER Partnership L.P.,
formerly known as ▇▇▇▇▇ Energy Resources, Ltd., a Texas limited partnership; TJG
Investments, Inc., a Texas corporation; BEC Partnership, formerly known as ▇▇▇▇▇
Energy Company, a Texas general partnership; and BOC Operating Corporation,
formerly known as ▇▇▇▇▇ Operating Company, Inc., a Texas corporation.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act of 1933,
and the rules and regulations of the Commission thereunder and under the
Exchange Act.
"Commitment" means, relative to any Lender, such Lender's obligation
pursuant to Sections 2.1.1 and 2.1.2 to make Loans to the Borrower and to issue
(in the case of an Issuer) or participate in (in the case of all Lenders)
Letters of Credit pursuant to Section 2.1.3.
"Commitment Amount" means the lesser of (i) the Total Commitment, as
reduced from time to time pursuant to the provisions of Section 2.2, or (ii) the
Borrowing Base.
"Commitment Fee" is defined in Section 3.3.3.
"Commitment Availability" means, on any date, the excess of
(a) the then Commitment Amount, over
(b) the sum of
(i) the aggregate outstanding principal amount of all
Loans on such date, plus
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(ii) the Letter of Credit Outstandings on such date.
"Commitment Termination Date" means the earliest of
(a) the Stated Maturity Date;
(b) the date on which the Commitment Amount is terminated in
full or reduced to zero pursuant to Section 2.2; and
(c) the date on which any Commitment Termination Event occurs.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses (a)
through (d) of Section 9.1.9 with respect to the Borrower or any
Subsidiary; or
(b) the occurrence and continuance of any other Event of
Default and either
(i) the declaration of the Loans and other
Obligations to be due and payable pursuant to Section 9.3, or
(ii) in the absence of such declaration, the giving
of notice by the Administrative Agent, acting at the direction
of the Required Lenders, to the Borrower that the Commitments
have been terminated.
"Consents" means a Consent to Assignment executed and delivered
pursuant to Section 6.1.15 or Section 6.2.6, in form and substance satisfactory
to the Administrative Agent, pursuant to which the counterparty to each Material
Contract (i) consents to the assignment of each such Material Contract to the
Administrative Agent as security for the Obligations, and (ii) provides the
Administrative Agent an independent right to cure defaults under such Material
Contract.
"Consolidated Net Income" means, with respect to the Borrower and its
consolidated Subsidiaries for any period, the consolidated net income (or loss)
of the Borrower and its consolidated Subsidiaries for such period.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any
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17
other Person. The amount of any Person's obligation under any Contingent
Liability shall (subject to any limitation set forth therein) be deemed to be
the outstanding principal amount (or maximum principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C-2 hereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.
"Credit Extension" means and includes
(a) the advancing of any Loans by the Lenders in connection
with a Borrowing, and
(b) any issuance by an Issuer, or extension of the Stated
Expiry Date by an Issuer, of a Letter of Credit.
"Current Ratio" means, at the end of each Fiscal Quarter, the ratio of
(a) the current assets (including the unused portion of the
Commitment Amount) of the Borrower and its consolidated Subsidiaries
to
(b) the current liabilities (minus the current portion of long
term Debt (including Debt under this Agreement)) of the Borrower and
its consolidated Subsidiaries.
"Debt" means the outstanding principal amount of all Indebtedness of
the Borrower and its consolidated Subsidiaries of the nature referred to in
clauses (a) and (b) of the definition of "Indebtedness".
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.
"Disbursement Date" is defined in Section 4.4.
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18
"Disbursement" means the amount disbursed by the Issuer on a
Disbursement Date.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Administrative Agent and
the Required Lenders.
"Distribution Payments" is defined in Section 8.2.6.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such on Schedule III hereto or designated in a Lender
Assignment Notice or such other office of a Lender (or any successor or assign
of such Lender) within the United States as may be designated from time to time
by notice from such Lender, as the case may be, to each other Person party
hereto.
"EBITDA" means for any period, the sum, without duplication,
(a) Consolidated Net Income for such period, plus
(b) Interest Expense for such period, plus
(c) all depreciation and amortization of assets (including
goodwill and other intangible assets) of the Borrower and its
consolidated Subsidiaries deducted in determining Consolidated Net
Income for such period, plus (minus)
(d) all federal, state, local and foreign income taxes of the
Borrower and its consolidated Subsidiaries deducted (or credits added)
in determining Consolidated Net Income for such period, plus (minus)
(e) other non-cash items deducted or added in determining
Consolidated Net Income for such period, including non-cash write-downs
in connection with ceiling tests as calculated in accordance with GAAP.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 11.8.
"Eligible Assignee" means a Person which either: (a) is primarily
engaged in the business of commercial banking and is (i) a Lender, (ii) a
Subsidiary of a Lender, (iii) a Subsidiary of a Person of which a Lender is a
Subsidiary, or (iv) a Person of which a Lender is a Subsidiary, or (b) is
consented to as an assignee by the Borrower, the Issuer, and the Administrative
Agent, which consents will not be unreasonably
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19
withheld, and represents that it is either (i) a commercial bank organized under
the laws of the United States, or any state thereof, having a combined capital
and surplus of at least $500,000,000, or (ii) a commercial bank organized under
the laws of any other country which is a member of the Organization for Economic
Development, or a political subdivision of any such country, having a combined
capital and surplus of at least $100,000,000, provided that such bank is acting
through a branch or agency located in the United States and further provided
that Borrower is not required to pay withholding taxes on interest or principal
owed to such bank based on Applicable Law at the time of the assignment.
Notwithstanding the foregoing, after the occurrence of a Default, any assignment
under clause (b) above shall not require the consent of the Borrower, and after
the occurrence of an Event of Default under Section 9.1.1 or 9.1.9, any
assignment under clause (b) above shall not require the consent of the Borrower
and may be made to a commercial bank or any other Person.
"Engineering Report" means one or more reports, in form and substance
satisfactory to the Administrative Agent and the Required Lenders, prepared at
the sole cost and expense of the Borrower by a petroleum engineer acceptable to
the Administrative Agent in its reasonable business judgment, which shall
evaluate the Proven Reserves and probable reserves attributable to the
Hydrocarbon Interests owned directly by the Borrower and any of its Material
Subsidiaries, as of the immediately preceding January 1 or July 1. Each
Engineering Report shall set forth volumes, a projection of the future rate of
production, present value of the net proceeds of production, estimated costs of
actions described in subsection (a) of the definition of Remedial Action,
operating expenses and Capital Expenditures, in each case based upon updated
economic assumptions (including Hydrocarbon prices, escalation rates, discount
rate assumptions and other general economic assumptions) acceptable to the
Administrative Agent.
"Environmental Laws" means all Applicable Laws, (including consent
decrees and administrative orders) relating to public health and safety through
protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, and the rules
and regulations of the Commission thereunder.
"Existing Credit Agreement" is defined in the second recital.
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20
"Existing Mortgages" means the mortgages and other security instruments
described on Schedule IV hereto.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to
(a) the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New
York; or
(b) if such rate is not so published for any day
which is a Business Day, the average of the quotations for
such day on such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing
selected by it.
Upon written request from the Borrower, the Lender shall advise the
Borrower as to the details of the method of calculation of Federal Funds
Effective Rate then utilized by the Lender.
"Fee Letter" means that certain letter agreement dated June 4, 1999,
between the Administrative Agent and the Borrower.
"Fiscal Quarter" means any quarter ending on the last day of March,
June, September or December of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g., "Fiscal Year 1999") refer to the Fiscal Year ending
on the December 31 occurring during such calendar year.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"Future California" means Future Cal-Tex Corporation, a Texas
corporation, the Subsidiary of the Borrower that owns interests in the South
Coles Levee Unit Property in ▇▇▇▇ County, California.
"Future Nevada" means Future Energy Corporation, a Nevada corporation,
the Subsidiary of the Borrower that is the sole limited partner of each of the
Partnership Subsidiaries, and any successor limited partner or limited partners
of any of the Partnership Subsidiaries.
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21
"Future Texas" means Future Petroleum Corporation, a Texas corporation,
the Subsidiary of the Borrower that is the sole general partner of each of the
Partnership Subsidiaries, and any successor general partner or general partners
of any of the Partnership Subsidiaries.
"GAAP" is defined in Section 1.4.
"Government Agency" means any federal, state, regional, tribal or local
government or governmental department or other entity charged with the
administration, interpretation or enforcement of any Applicable Law.
"Guaranties" means the guaranties of the Obligations, executed and
delivered pursuant to Section 6.1.3, Section 6.2.3 or Section 8.1.7,
substantially in the form of Exhibit D, given by each of the Material
Subsidiaries.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum, crude oil or fraction thereof;
(d) any hazardous, dangerous or toxic chemical, material,
waste or substance within the meaning of any Environmental Law;
(e) any radioactive material, including any naturally
occurring radioactive material, and any source, special or by-product
material as defined in 42 U.S.C. Section 2011 et seq., and any
amendments or reauthorizations thereof;
(f) asbestos-containing materials in any form or condition; or
(g) polychlorinated biphenyls in any form or condition.
"Hedging Agreements" means
(a) interest rate swap agreements, basis swap agreements,
interest rate cap agreements, forward rate agreements, interest rate
floor agreements, and interest rate collar agreements, and all other
agreements or arrangements designed to protect such Person against
fluctuations in interest rates or currency exchange rates, and
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22
(b) forward contracts, options, futures contracts, futures
options, commodity swaps, commodity options, commodity collars,
commodity caps, commodity floors, and all other agreements or
arrangements designed to protect such Person against fluctuations in
the price of commodities.
"Hedging Obligations" means, with respect to any Person, all
liabilities (including but not limited to obligations and liabilities arising in
connection with or as a result of early or premature termination of a Hedging
Agreement, whether or not occurring as a result of a default thereunder) of such
Person under Hedging Agreements.
"Highest Lawful Rate" is defined in Section 11.15.
"Hydrocarbon Interests" means all rights, titles and interests in and
to oil and gas leases; oil, gas and mineral leases; other Hydrocarbon leases;
mineral interests; mineral servitudes; overriding royalty interests; royalty
interests; net profits interests; production payment interests; and other
similar interests.
"Hydrocarbons" means, collectively, oil, gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate and all other liquid or
gaseous hydrocarbons and related minerals and all products therefrom, in each
case whether in a natural or a processed state.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of the Borrower, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of
matters relevant to such financial statement;
(c) which relates to the treatment or classification of any
item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of which
would be to cause the Borrower to be in default of any of its
obligations under Section 8.2.4; or
(d) which relates to possible errors generated by financial
reporting and related systems due to the Year 2000 Problem.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an
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23
enumeration of specific matters, to matters similar to the matters specifically
mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
(c) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance sheet of
such Person as of the date at which Indebtedness is to be determined;
(d) net liabilities of such Person under all Hedging
Obligations;
(e) whether or not so included as liabilities in accordance
with GAAP, all obligations of such Person to pay the deferred purchase
price of property or services, and indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being
purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited
in recourse;
(f) all monetary obligations of such Person with respect to
Production Payments;
(g) all obligations of such Person as lessee under leases
which have been or should be, in accordance with GAAP, recorded as
Capitalized Lease Liabilities; and
(h) all Contingent Liabilities of such Person.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer, unless such Indebtedness contains
non-recourse provisions acceptable to the Administrative Agent.
"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
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24
"Initial Holders" means Energy Capital Investment Company PLC, an
English investment company, EnCap Energy Capital Fund III-B, L.P., a Texas
limited partnership, BOCP Energy Partners, L.P., a Texas limited partnership,
EnCap Energy Capital Fund III, L.P., a Texas limited partnership, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Energy Fund, L.P., a Delaware limited partnership, BancAmerica Capital Investors
SBICI, L.P., a Delaware limited partnership, Eos Partners, L.P., a Delaware
limited partnership, Eos Partners SBIC, L.P., a Delaware limited partnership,
Eos Partners SBIC II, L.P., a Delaware limited partnership, and SGC Partners II
LLC, a Delaware limited liability company.
"Interest Coverage Ratio" means, (i) at September 30, 1999, for the
Fiscal Quarter ending on such date, (ii) at December 31, 1999, for the two
consecutive Fiscal Quarters ending on such date, (iii) at March 31, 2000, for
the three consecutive Fiscal Quarters ending on such date, and (iv) at the end
of any Fiscal Quarter commencing with the Fiscal Quarter ending June 30, 2000,
for the four consecutive Fiscal Quarters ending on such date, the ratio of (a)
EBITDA of the Borrower and its consolidated Subsidiaries for such Fiscal
Quarter(s) to (b) Interest Expense for such Fiscal Quarter(s).
"Interest Expense" means, for any period, the consolidated interest
expense of the Borrower and its consolidated Subsidiaries for such period
(including all imputed interest under interest rate swaps constituting Hedging
Agreements and including all capitalized interest, but excluding all fees paid
under Section 3.3), as determined in accordance with GAAP, including that
portion of any Capitalized Lease Liabilities of the Borrower and its
Subsidiaries allocable to interest expense.
"Interest Period" means, relative to any LIBO Rate Loans, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.3 or 2.4
and ending on (but excluding) the day which numerically corresponds to such date
one, two, three or six months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), in each case as the
Borrower may select in its relevant notice pursuant to Section 2.3 or 2.4;
provided, however, that
(a) no more than six (6) different Interest Periods may be in
effect at any time;
(b) Interest Periods commencing on the same date for Loans
comprising part of the same Borrowing shall be of the same duration;
(c) if such Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day (unless, if such Interest Period applies to LIBO
Rate Loans, such next following Business Day is the first Business Day
of another calendar month, in
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which case such Interest Period shall end on the Business Day next preceding
such numerically corresponding day);
(d) no Interest Period may end later than the Stated Maturity
Date; and
(e) the Borrower shall select each Interest Period for a
particular LIBO Rate Loan so as not to require (as reasonably
foreseeable as possible) a prepayment of such LIBO Rate Loan during
such Interest Period.
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other
Person (excluding commission, travel and similar advances to officers
and employees made in the ordinary course of business and excluding
prepaid expenses incurred in the ordinary course of business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such Person in
any other Person;
provided, however, that (i) Hedging Obligations and (ii) Production Payments
where the Borrower or its Subsidiary is the grantor or transferor thereof shall
not be considered Investments. The amount of any Investment shall be the
original principal or capital amount thereof less all returns of principal or
equity thereon (and without adjustment by reason of the financial condition of
such other Person) and shall, if made by the transfer or exchange of property
other than cash, be deemed to have been made in an original principal or capital
amount equal to the fair market value of such property.
"Issuance Request" means a request for the issuance of a Letter of
Credit and certificate duly executed by the chief executive, accounting or
financial Authorized Officer of the Borrower, in substantially the form of
Exhibit J attached hereto (with such changes thereto as may be agreed upon from
time to time by the Administrative Agent and the Borrower).
"Issuer" means Bank of America or any affiliate, unit or agency of Bank
of America which has agreed to issue one or more Letters of Credit at the
request of the Administrative Agent (which shall, at the Borrower's request,
notify the Borrower from time to time of the identity of any such Issuer).
"Lender Assignment Notice" means a Lender Assignment Notice
substantially in the form of Exhibit G hereto.
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26
"Lenders" is defined in the preamble.
"Letter of Credit" is defined in Section 4.1.
"Letter of Credit Availability" means, at any time, the lesser of
(a) the excess of
(i) $5,000,000
minus
(ii) the then Letter of Credit Outstandings,
or
(b) the Commitment Availability at such time.
"Letter of Credit Outstandings" means, at any time, an amount equal to
the sum of
(a) the aggregate Stated Amount at such time of all Letters of
Credit then outstanding and undrawn (as such aggregate Stated Amount
shall be adjusted, from time to time, as a result of drawings, the
issuance of Letters of Credit, or otherwise),
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"LIBO Office" means, relative to any Lender, the office of such Lender
designated as such on Schedule III hereto or designated in a Lender Assignment
Notice or such other office of a Lender (or any successor or assign of such
Lender) as designated from time to time by notice from such Lender to the
Borrower and the Administrative Agent, whether or not outside the United States,
which shall be making or maintaining LIBO Rate Loans of such Lender hereunder.
"LIBO Rate" means, with respect to each Interest Period for a LIBO Rate
Loan:
(a) the rate of interest per annum (carried out to the fifth
decimal place) equal to the rate determined by the Administrative 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 Dollars (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period,
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27
determined as of approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of such Interest Period;
(b) in the event that the rate referenced in the preceding
clause (a) does not appear on such page or service or such page or
service shall cease to be available, the rate of interest per annum
(carried out to the fifth decimal place) equal to the rate determined
by the Administrative 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 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 (2) Business Days prior to the first day of such Interest
Period; or
(c) in the event that the rates referenced in the preceding
clauses (a) and (b) are not available, the rate of interest per annum
determined by the Administrative Agent as the rate of interest at which
Dollar deposits (for delivery on the first day of such Interest Period)
in same day funds in the approximate amount of the applicable LIBO Rate
Loan and with a term equivalent to such Interest Period would be
offered by its London Branch to major banks in the offshore Dollar
market at their request at approximately 11:00 a.m. (London time) two
(2) Business Days prior to the first day of such Interest Period.
"LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary, to the nearest 0.01 of
1%) determined pursuant to the following formula:
LIBO Rate
LIBO Rate = -------------------------------
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be determined by the Administrative Agent on the basis of the LIBOR
Reserve Percentage in effect on, and the applicable rates furnished to and
received by the Administrative Agent, two (2) Business Days before the first day
of such Interest Period.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate.
"LIBOR Reserve Percentage" means, relative to any Interest Period for
LIBO Rate Loans, the reserve percentage (expressed as a decimal and rounded
upward, if necessary, to the nearest 0.01 of 1%) equal to the maximum aggregate
reserve
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28
requirements (including all basic, emergency, supplemental, marginal and other
reserves and taking into account any transitional adjustments or other scheduled
changes in reserve requirements) specified under regulations issued from time to
time by the F.R.S. Board and then applicable to assets or liabilities consisting
of and including "Eurocurrency Liabilities," as currently defined in Regulation
D of the F.R.S. Board, having a term approximately equal or comparable to such
Interest Period.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), charge against or interest in Property to secure (i) the payment of
a debt or (ii) the performance of an obligation or other priority or
preferential arrangement of any kind or nature whatsoever in respect of any
Property (including those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest of a lessor
under a capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any financing
statement naming the owner of the asset to which such lien relates as debtor,
under the Uniform Commercial Code or any comparable law) and any contingent or
other agreement to provide any of the foregoing.
"Loans" means the loans provided for by Section 2.1 and shall include
Revolving Credit Loans.
"Loan Document" means this Agreement, the Notes, the Security
Documents, the Letters of Credit, the Fee Letter and all other agreements
(including Hedging Agreements) relating to this Agreement entered into from time
to time between or among the Borrower (or any or all of its Subsidiaries) and
the Administrative Agent or any Lender (or, with respect to the Hedging
Agreements, any Affiliates of any Lender), and any document delivered by the
Borrower or any of its Subsidiaries in connection with the foregoing.
"Material Adverse Effect" means with respect to any matter that such
matter
(a) could reasonably be expected materially and adversely to
affect the assets, business, properties, condition (financial or
otherwise), prospects, or results of operations of the Borrower and its
Subsidiaries taken as a whole, or the value or condition of the
Properties of the Borrower and its Subsidiaries taken as a whole, or
the ability of the Borrower or any other Obligor to perform its
obligations under any of the Loan Documents, or
(b) has been brought by or before any court or arbitrator or
any governmental body, agency or official, and draws into question or
otherwise has or reasonably could be expected to have a material
adverse effect on the validity or enforceability of any material
provision of any Loan Document
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against any Obligor party thereto or the rights, remedies and benefits
available to the Administrative Agent and the Lenders under the Loan
Documents.
"Material Contract" means each acquisition agreement, Hydrocarbon
purchase and sale agreement, or similar contract relating to any Hydrocarbon
Interests included in the Mortgaged Properties or other agreement, in each case
as designated by the Administrative Agent.
"Material Subsidiary" means, at any particular time, any Subsidiary (i)
that has assets included in the Borrowing Base; (ii) that, together with its
Subsidiaries, (a) accounted for more than 5% of the consolidated EBITDA of the
Borrower and its Subsidiaries for the most recently completed Fiscal Quarter
(computed on a retroactive proforma basis with respect to acquired
Subsidiaries), or (b) was the owner of more than 5% of the consolidated assets
of the Borrower and its Subsidiaries at the end of such Fiscal Quarter or, with
respect to acquired or newly formed Subsidiaries, on the date of acquisition or
formation of such acquired Subsidiary, all as shown in the case of (a) and (b)
on the consolidated financial statements of the Borrower and its Subsidiaries
for such Fiscal Quarter or on such acquisition or formation date; or (iii) that
is designated by the Borrower in writing to the Administrative Agent as a
Material Subsidiary.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
April 26, 1999, by and between Future Petroleum Corporation, a Utah corporation,
and FPT Corporation, a Texas corporation.
"Mortgage Consents" means all consents required under existing oil and
gas leases or other agreements and Approvals by Government Agencies to the
granting of a Mortgage to the Administrative Agent, and as reasonably determined
by the Administrative Agent with respect to Properties that become Mortgaged
Properties after the Effective Date.
"Mortgaged Properties" means the Hydrocarbon Interests, Properties and
interests described in and secured by the Mortgages, as such Properties and
interests are from time to time constituted.
"Mortgages" means the Mortgage, Deed of Trust, Assignment, Security
Agreement, Financing Statement and Fixture Filings executed and delivered
pursuant to Section 6.2.2 or Section 8.1.7, substantially in the form of Exhibit
E hereto, as amended, supplemented, restated or otherwise modified from time to
time, and includes the Existing Mortgages and the New Mortgages.
"New Mortgages" means Mortgages granted by the Borrower and its
Subsidiaries encumbering the Hydrocarbon Interests and Properties of the
Borrower
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30
and its Subsidiaries which did not secure the obligations under the Existing
Credit Agreement.
"Non-Redeemable Stock" means stock issued by the Borrower, provided
that such stock is not considered debt for GAAP, tax law or any other purpose
and provided further that neither the Borrower nor any of its Subsidiaries has
any obligation to redeem or purchase or pay dividends on such stock or to
exchange such stock for, or convert such stock to, any other security (other
than "Non-Redeemable Common Stock"), whether such obligation arises pursuant to
the terms of such stock or any other agreement relating thereto or otherwise and
whether or not such obligation exists in all circumstances or only upon the
occurrence of a particular event or condition or upon the passage of time or
otherwise. "Non-Redeemable Common Stock" means Non-Redeemable Stock that is
common stock issued by the Borrower.
"Note" means the promissory note of the Borrower payable to the order
of a Lender, in the form of Exhibit A hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower and/or each other Obligor arising under or in connection with this
Agreement, the Notes and each other Loan Document, including without limitation,
all Hedging Obligations arising under Hedging Agreements between the Borrower or
any of its Subsidiaries and a Lender or any Affiliate of a Lender.
"Obligor" means the Borrower, any of its Subsidiaries, or any other
Person (other than the Administrative Agent or a Lender) obligated under or
otherwise a party to any Loan Document.
"Oil and Gas Properties" means Hydrocarbon Interests; the Properties
now or hereafter pooled or unitized with Hydrocarbon Interests; all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Government Agency having
jurisdiction) which may affect all or any portion of the Hydrocarbon Interests;
all operating agreements, joint venture agreements, contracts and other
agreements which relate to any of the Hydrocarbon Interests or the production,
sale, purchase, exchange or processing of Hydrocarbons from or attributable to
such Hydrocarbon Interests; all Hydrocarbons in and under and which may be
produced and saved or attributable to the Hydrocarbon Interests, the lands
covered thereby and all oil in tanks and all rents, issues, profits, proceeds,
products, revenues and other incomes from or attributable to the Hydrocarbon
Interests; all tenements, profits a prendre, hereditaments, appurtenances and
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Properties in anywise appertaining, belonging, affixed or incidental to the
Hydrocarbon Interests, Properties, rights, titles, interests and estates
described or referred to above, including any and all Property, real or
personal, now owned or hereinafter acquired and situated upon, used, held for
use or useful in connection with the operating, working or development of any of
such Hydrocarbon Interests or Property (excluding drilling rigs, automotive
equipment or other personal property which may be on such premises for the
purpose of drilling a well or for other similar temporary uses) and including
any and all oil ▇▇▇▇▇, gas ▇▇▇▇▇, water ▇▇▇▇▇, injection ▇▇▇▇▇ or other ▇▇▇▇▇,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.
"Old FPC" is defined in the second recital.
"Organic Document" means, relative to any corporate Obligor, its
certificate of incorporation, its by-laws and all shareholder agreements, voting
trusts and similar arrangements applicable to any of its authorized shares of
Capital Stock, and, relative to any partnership Obligor, its partnership
agreement.
"Participant" is defined in Section 11.11.2.
"Partners" means the general and limited partners of the Partnership
Subsidiaries, being Future Texas as the general partner, and Future Nevada as
the limited partner, and any successor general partner or limited partner of any
Partnership Subsidiary.
"Partnership Subsidiary" means any direct or indirect Subsidiary of the
Borrower that is a limited partnership, including Future Acquisition 1995, Ltd.,
a Texas limited partnership, BMC Development No. 1 Limited Partnership, a Texas
limited partnership and NCI Shawnee Limited Partnership, a Texas limited
partnership.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the
Borrower or any corporation, trade or business that is, along with the Borrower,
a member of a Controlled Group, may have liability, including any liability by
reason of having been a substantial employer within the meaning of section 4063
of ERISA at any time
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during the preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage set forth on
Schedule III hereto, as such percentage may be adjusted from time to time
pursuant to Lender Assignment Notice(s) executed by such Lender and its Assignee
Lender(s) and delivered pursuant to Section 11.11.
"Person" means any natural person, corporation, partnership, limited
liability company, firm, association, trust, Government Agency or any other
entity, whether acting in an individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Pledge Agreements" means the Pledge Agreements executed and delivered
pursuant to Section 6.1.4, Section 6.2.8 or Section 8.1.7, substantially in the
form of Exhibit F-1 (from the Borrower) or F-2 (from each of the Partners)
hereto, as applicable, as amended, supplemented, restated or otherwise modified
from time to time.
"Principal Shareholders" means each of the Initial Holders, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇.
"Principal Shareholder Affiliate" means any Person which, directly or
indirectly, controls, is controlled by or is under common control with a
Principal Shareholder (excluding any trustee under, or any committee with
responsibility for administering, any Plan). A Person shall be deemed to be
"controlled by" any other Person if such other Person possesses, directly or
indirectly, power
(a) to vote 50% 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.
"Proceeds Account" is defined in Section 3.4.
"Production Payments" means the grant or transfer to any Person of a
production payment (whether volumetric or dollar denominated) or similar
royalty, overriding royalty, net profits interest or other similar interest in
Oil and Gas Properties, or the right to receive all or a portion of the
production or the proceeds from the sale of production attributable to such Oil
and Gas Properties where the holder of such interest has recourse solely to such
interest and the grantor or transferor thereof has
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an express contractual obligation to produce and sell Hydrocarbons from such Oil
and Gas Properties, or to cause such Oil and Gas Properties to be so operated
and maintained, in each case in a reasonably prudent manner.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Proven Reserves" means collectively, "proved oil and gas reserves,"
"proved developed producing oil and gas reserves," "proved developed
non-producing oil and gas reserves" (consisting of proved developed shut-in oil
and gas reserves and proved developed behind pipe oil and gas reserves), and
"proved undeveloped oil and gas reserves," as such terms are defined by the U.S.
Securities and Exchange Commission in its standards and guidelines.
"Quarterly Payment Date" means, commencing December 31, 1999, the last
Business Day of each March, June, September and December.
"Reimbursement Obligation" is defined in Section 4.5.
"Release" means a "release," as such term is defined in CERCLA.
"Remedial Action" means any action under Environmental Laws required to
(a) clean up, remove, treat, dispose of, ▇▇▇▇▇, or in any other way address
pollutants (including Hazardous Materials) in the environment, (b) prevent the
Release or threat of a Release or minimize the further Release of pollutants, or
(c) investigate and determine if a remedial response is needed and to design
such a response and any post-remedial investigation, monitoring, operation, and
maintenance and care.
"Requested Redetermination" is defined in Section 2.7.
"Required Lenders" means, at any time, Lenders holding, in the
aggregate, at least 66-2/3% of the then outstanding principal amount of all
Loans or, if no such principal amount is outstanding, Lenders having Percentages
aggregating at least 66-2/3% of the Total Commitment.
"Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect
from time to time.
"Restricted Payment Tests" means compliance with each of the following
restrictions (both before and immediately after giving effect to the applicable
Distribution Payment):
(a) Tangible Net Worth shall not be less than the sum of (i)
$44,574,521 plus (ii) fifty percent (50%) of consolidated net income of
the
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Borrower and its Subsidiaries (excluding the effects of consolidated
net losses), for each Fiscal Quarter beginning on or after July 1,
1999, plus (iii) one-hundred percent (100%) of the net proceeds of any
Non-Redeemable Stock offering by the Borrower or any of its
Subsidiaries at any time after the Effective Date;
(b) the Current Ratio shall be not less than 1.0:1.0;
(c) the Interest Coverage Ratio shall be not less than
3.0:1.0;
(d) there shall exist no Borrowing Base Deficiency;
(e) no Default shall have occurred and be continuing; and
(f) the Lenders shall have consented in writing to such
Distribution Payment with respect to the Series B
Preferred.
"Revolving Credit Loans" means the loans provided for by Section 2.1.
"Scheduled Redetermination" is defined in Section 2.7.
"Security Agreement" means the Amended and Restated Security Agreement
executed and delivered pursuant to Section 6.1.5, Section 6.2.6 or Section 8.1.7
substantially in the form of Exhibit B, as amended, supplemented, restated or
otherwise modified from time to time pursuant to which the Borrower or its
Subsidiaries, as the case may be, pledges to the Administrative Agent as
security for the Obligations the Material Contracts and the Borrower's or its
Subsidiaries', as the case may be, bank accounts and intercompany accounts and
loans receivable.
"Security Documents" means, collectively, (a) the Guaranties, (b) the
Pledge Agreements, (c) the Mortgages, (d) the Security Agreements, (e) the
Consents and (f) the Mortgage Consents, together with any exhibits, schedules
and other attachments to such documents and any financing statements related
thereto, as such documents, exhibits, schedules, attachments or financing
statements may be, from time to time, amended, supplemented, restated or
otherwise modified.
"Series B Preferred" means that portion of the Capital Stock of the
Borrower known as the "Cumulative Redeemable Preferred Stock, Series B" issued
by the Borrower to the Initial Holders pursuant to the Stock Purchase Agreement.
"Shareholders' Agreement" means the Second Amended and Restated
Shareholders' Agreement dated as of May 14, 1999, among the Borrower, B. ▇▇▇▇
▇▇▇▇▇, a Texas resident, Don Wm. ▇▇▇▇▇▇▇▇, a Texas resident, Energy Capital
Investment Company PLC, an English investment company, EnCap Equity 1994 Limited
Partnership, a Texas limited partnership, ▇▇▇▇▇ Energy Resources, Ltd., a
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Texas limited partnership, TJG Investments, Inc., a Texas corporation, ▇▇▇▇▇
Energy Company, a Texas general partnership, ▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇ Operating Company, Inc., a Texas corporation, EnCap Energy
Capital Fund III-B, L.P., a Texas limited partnership, BOCP Energy Partners,
L.P., a Texas limited partnership, EnCap Energy Capital Fund III, L.P., a Texas
limited partnership, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy Fund, L.P., a Delaware limited
partnership, Banc America Capital Investors SBIC I, L.P., a Delaware limited
partnership, Eos Partners, L.P., a Delaware limited partnership, Eos Partners
SBIC, L.P., a Delaware limited partnership, Eos Partners SBIC II, L.P., a
Delaware limited partnership, and SGC Capital Partners II LLC, a Delaware
limited liability company, as the same may be, from time to time, amended,
supplemented, restated or otherwise modified.
"Stated Amount" of each Letter of Credit means the face amount or the
"Stated Amount" of such Letter of Credit (as defined therein).
"Stated Expiry Date" is defined in Section 4.1.
"Stated Maturity Date" means September 30, 2002.
"Stock Purchase Agreement" means the Stock Purchase Agreement dated as
of May 14, 1999, among the Borrower and Energy Capital Investment Company PLC,
an English investment company, EnCap Energy Capital Fund III-B, L.P., a Texas
limited partnership, BOCP Energy Partners, L.P., a Texas limited partnership,
EnCap Energy Capital Fund III, L.P., a Texas limited partnership, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Energy Fund, L.P., a Delaware limited partnership, BancAmerica Capital Investors
SBIC I, L.P., a Delaware limited partnership, Eos Partners, L.P., a Delaware
limited partnership, Eos Partners SBIC, L.P., a Delaware limited partnership,
Eos Partners SBIC II, L.P., a Delaware limited partnership, and SGC Partners II
LLC, a Delaware limited liability company as the same may be, from time to time,
amended, supplemented, restated or otherwise modified.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which more than 50% of the outstanding Capital Stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time Capital Stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, (b) any
partnership, limited liability company, association or firm of which more than
50% of the equity interest or voting power is at the time directly or indirectly
owned by such Person, by such Person and one or more other Subsidiaries of such
Person, or by one or more other Subsidiaries of such Person or (c) any
partnership in which such Person is a general partner; provided that
associations, joint ventures or other relationships (i) which are established
pursuant to a standard form AAPL Form 610 operating agreement or similar
agreement and which are partnerships for purposes of income taxation only, (ii)
which are not
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corporations, trusts, limited liability companies or partnerships (or subject to
the Uniform Partnership Act) under applicable state law, and (iii) 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.
"Surety Instruments" means all letters of credit (including standby and
commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds
and similar instruments.
"Tangible Net Worth" means the consolidated net worth of the Borrower
and its Subsidiaries (including therein the net amount received by the Borrower
in respect of the issuance of the Series B Preferred) after subtracting
therefrom the aggregate amount of any intangible assets of the Borrower and its
Subsidiaries, including goodwill, franchises, licenses, patents, trademarks,
trade names, copyrights, service marks and brand names.
"Taxes" is defined in Section 5.6.
"Total Commitment" means $100,000,000.
"type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Unsecured Indemnity" means that certain Amended and Restated Hazardous
Materials Undertaking and Unsecured Indemnity dated as of September 30, 1999,
from Future California, in favor of the Administrative Agent, as amended.
"Welfare Plan" means a "welfare plan", as such term is defined in
section 3(1) of ERISA.
"Year 2000 Compliant" is defined in Section 7.20.
"Year 2000 Problem" is defined in Section 7.20.
SECTION 1.2. USE OF DEFINED TERMS. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Continuation/Conversion Notice, notice and other
communication or other Loan Document delivered from time to time in connection
with this Agreement or any other Loan Document.
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SECTION 1.3. CROSS-REFERENCES. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
(a) The meanings of defined terms are equally applicable to
the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar
words refer to this Agreement as a whole and not to any particular
provision of this Agreement; and subsection, Section, Schedule and
Exhibit references are to this Agreement or such other Loan Document,
as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such
clause of such Article, Section or definition.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from
and including"; the words "to" and "until" each mean "to but
excluding," and the word "through" means "to and including."
(iii) The term "property" includes any kind of
property or asset, real, personal or mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and
other modifications thereto, but only to the extent such amendments and
other modifications are not prohibited by the terms of any Loan
Document, and (ii) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.
(e) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are
cumulative and shall each be performed in accordance with their terms.
Unless otherwise expressly provided, any reference to any action of the
Administrative Agent or the
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Lenders by way of consent, approval or waiver shall be deemed modified
by the phrase "in its sole discretion" or "in their sole discretion,"
as applicable.
(f) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Lenders,
the Borrower and the other parties, and are the products of all
parties. Accordingly, they shall not be construed against the Lenders
merely because of the Lenders' involvement in their preparation.
SECTION 1.4. ACCOUNTING AND FINANCIAL DETERMINATIONS. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 8.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles ("GAAP") applied
in the preparation of the financial statements referred to in Section 7.7.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTE
SECTION 2.1. COMMITMENTS.
SECTION 2.1.1. REVOLVING CREDIT LOANS. On the terms and subject to the
conditions of this Agreement (including Article VI), each Lender severally
agrees to make loans (relative to such Lender, its "Revolving Credit Loans") to
the Borrower equal to such Lender's Percentage of the aggregate amount of the
Borrowing of Revolving Credit Loans requested by the Borrower to be made on such
day described in this Section 2.1.1. On the terms and subject to the conditions
hereof, the Borrower may from time to time borrow, prepay and reborrow Revolving
Credit Loans. From time to time on any Business Day during the period from and
after the Effective Date to but not including the Commitment Termination Date,
each Lender will make Revolving Credit Loans to the Borrower equal to such
Lender's Percentage of the amount of the Revolving Credit Loans requested by the
Borrower to be made on such day in the applicable Borrowing Request therefor.
The Borrower acknowledges that, as of the Effective Date, the aggregate
outstanding amount of all loans under the Existing Credit Agreement is
$19,605,000.00. On the Effective Date, each of the Lenders other than Bank of
America shall be deemed to have purchased from Bank of America such Lender's
Percentage share of the outstanding principal amount of such loans and shall pay
to Bank of America an amount equal to the product of its Percentage multiplied
by $19,605,000.00.
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SECTION 2.1.2. LETTERS OF CREDIT. From time to time on any Business
Day prior to the Commitment Termination Date, each Issuer will issue, and each
Lender severally will participate in, the Letters of Credit, in accordance with
Article IV.
SECTION 2.1.3. LENDERS NOT REQUIRED TO MAKE LOANS UNDER CERTAIN
CIRCUMSTANCES. No Lender shall be permitted or required to
(a) make any Loan if, after giving effect thereto
(i) the aggregate outstanding principal amount of all
Loans of all Lenders, together with all the Letter of Credit
Outstandings, would exceed the Commitment Amount; or
(ii) the aggregate outstanding principal amount of
all Loans of such Lender, together with its Percentage of all
Letter of Credit Outstandings, would exceed such Lender's
Percentage of the Commitment Amount; or
(iii) a Borrowing Base Deficiency would exist; or
(b) issue (in the case of any Issuer) or participate in (in
the case of any Lender) any Letter of Credit if, after giving effect
thereto
(i) all Letter of Credit Outstandings together with
the aggregate outstanding principal amount of all Loans of all
Lenders would exceed the Commitment Amount; or
(ii) such Lender's Percentage of all Letter of Credit
Outstandings together with the aggregate outstanding principal
amount of all Loans of such Lender would exceed such Lender's
Percentage of the Commitment Amount; or
(iii) a Borrowing Base Deficiency would exist; or
(iv) all Letter of Credit Outstandings would exceed
$5,000,000.
SECTION 2.2. REDUCTION OF COMMITMENT AMOUNT. The Commitment Amount is
subject to reduction from time to time pursuant to this Section 2.2.
SECTION 2.2.1. OPTIONAL. The Borrower may, from time to time on any
Business Day, voluntarily reduce the Total Commitment; provided, however, that
all such reductions shall require at least three (3) Business Days' prior notice
to the Administrative Agent and be permanent, and any partial reduction of the
Commitment
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Amount shall be in a minimum amount of $5,000,000 and in an integral multiple of
$1,000,000.
SECTION 2.2.2. MANDATORY. On any Commitment Termination Date, the
Commitment Amount shall, without any further action, automatically and
permanently be reduced to zero.
SECTION 2.3. BORROWING PROCEDURE. By delivering a Borrowing Request to
the Administrative Agent on or before 10:00 a.m. (Dallas time) on a Business
Day, the Borrower may from time to time irrevocably request, on (i) such
Business Day, in the case of Base Rate Loans and (ii) not less than three (3)
nor more than five (5) Business Days' notice in the case of LIBO Rate Loans,
that a Borrowing be made in a minimum amount of $1,000,000 and an integral
multiple of $500,000, or in the unused amount of the Commitment Amount. On the
terms and subject to the conditions of this Agreement, each Borrowing shall be
comprised of the type of Loans and shall be made on the Business Day specified
in such Borrowing Request. On or before 1:00 p.m. (Dallas time) on such Business
Day each Lender shall deposit with the Administrative Agent same day funds in an
amount equal to such Lender's Percentage of the requested Borrowing. Such
deposit will be made to an account which the Administrative Agent shall specify
from time to time by notice to the Lenders. To the extent funds are received
from the Lenders, the Administrative Agent shall make such funds available to
the Borrower by wire transfer to the accounts the Borrower shall have specified
in its Borrowing Request. No Lender's obligation to make any Loan shall be
affected by any other Lender's failure to make any Loan.
SECTION 2.4. CONTINUATION AND CONVERSION ELECTIONS. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 10:00
a.m. (Dallas time) on a Business Day, the Borrower may from time to time
irrevocably elect, on not less than three (3) nor more than five (5) Business
Days' notice that all, or any portion in an aggregate minimum amount of
$1,000,000 and an integral multiple of $500,000, of any Loans be, in the case of
Base Rate Loans, converted into LIBO Rate Loans or, in the case of LIBO Rate
Loans, be converted into a Base Rate Loan or continued as a LIBO Rate Loan (in
the absence of delivery of a Continuation/Conversion Notice with respect to any
LIBO Rate Loan at least three (3) Business Days before the last day of the then
current Interest Period with respect thereto, such LIBO Rate Loan shall, on such
last day, automatically convert to a Base Rate Loan); provided, however, that
(a) each such conversion or continuation shall be pro rated among the applicable
outstanding Loans of all Lenders, and (b) no portion of the outstanding
principal amount of any Loan may be continued as, or be converted into, LIBO
Rate Loans when any Default has occurred and is continuing.
SECTION 2.5. FUNDING. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to
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make or maintain such LIBO Rate Loan; provided, however, that such LIBO Rate
Loan shall nonetheless be deemed to have been made and to be held by such
Lender, and the obligation of the Borrower to repay such LIBO Rate Loan shall
nevertheless be to such Lender for the account of such foreign branch, Affiliate
or international banking facility. In addition, the Borrower hereby consents and
agrees that, for purposes of any determination to be made for purposes of
Section 5.1, 5.2, 5.3 or 5.4, it shall be conclusively assumed that each Lender
elected to fund all LIBO Rate Loans by purchasing Dollar deposits in its LIBO
Office's interbank Eurodollar market.
SECTION 2.6. LOAN ACCOUNTS AND NOTES.
(a) The Loans made by the Lenders shall be evidenced by one or
more loan accounts or records maintained by each Lender in the ordinary
course of business. The loan accounts or records maintained by such
Lender shall be rebuttable presumptive evidence of the amount of the
Loans made by such Lender to the Borrower and the interest and payments
thereon. Any failure so to record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing with respect to the Loans.
(b) Each Lender's Loans shall also be evidenced by a Note
payable to the order of such Lender in a maximum principal amount equal
to such Lender's Percentage of the Total Commitment. The Borrower
hereby irrevocably authorizes each Lender to make (or cause to be made)
appropriate notations on the grid attached to such Lender's Note (or on
any continuation of such grid) or in other books and records maintained
by such Lender, which notations, if made, shall evidence, inter alia,
the date of, the outstanding principal of, and the interest rate and
Interest Period applicable to the Loans evidenced thereby (the Borrower
may from time to time reasonably request a copy of such grid). Such
notations shall be conclusive and binding on the Borrower absent
manifest error; provided, however, that the failure of any Lender to
make any such notations shall not limit or otherwise affect any
Obligations of the Borrower or any other Obligor.
(c) The Borrower acknowledges that the Notes delivered to the
Lenders as of the Effective Date amend, restate and renew the
promissory notes given by the Borrower under the Existing Credit
Agreement, and nothing in this Agreement or the other Loan Documents is
intended to novate or discharge the indebtedness of the Borrower or the
other Obligors under the Existing Credit Agreement.
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SECTION 2.7. BORROWING BASE REDETERMINATION.
(a) Within fifteen (15) Business Days after receipt of the
Engineering Report required to be delivered semi-annually, commencing
with the Engineering Report required to be delivered not later than
September 1, 1999, the Administrative Agent shall, based upon a review
of such Engineering Report, propose to all of the Lenders a
redetermined Borrowing Base. All of the Lenders shall, within ten (10)
Business Days after receipt from the Administrative Agent of a proposal
for a redetermined Borrowing Base, approve a redetermined Borrowing
Base either (i) at the amount proposed by the Administrative Agent, or
(ii) such other amount as all of the Lenders may approve, as provided
in Section 2.7(d). Upon approval of a redetermined Borrowing Base, the
Administrative Agent shall notify the Borrower in writing of the
Borrowing Base determined by all of the Lenders on the basis of such
Engineering Report. Each such determination is herein called a
"Scheduled Redetermination". Each Scheduled Redetermination shall be
effective as of (i) April 1st (with respect to Engineering Reports
effective January 1st), and (ii) October 1st (with respect to
Engineering Reports effective July 1st) upon notification of the
Borrower by the Administrative Agent.
(b) The Administrative Agent (on behalf of the Lenders) or the
Borrower may, from time to time (but not more frequently than (i) one
time during any calendar year by the Lenders, (ii) one time during any
calendar year by the Borrower and (iii) in connection with any
acquisition by the Borrower or its Subsidiaries of Oil and Gas
Properties having a purchase price of $25 million or more), request a
redetermination (at the sole cost and expense of the Borrower) of the
Borrowing Base based upon the most recently received Engineering
Report. Each such requested redetermination is herein called a
"Requested Redetermination." The Lenders shall establish the
redetermined Borrowing Base, and the Administrative Agent shall notify
the Borrower in writing of the Borrowing Base determined by the
Lenders, not later than thirty (30) days after such Requested
Redetermination by the Borrower. Each Requested Redetermination shall
be effective when the Borrower is notified of the amount of the
redetermined Borrowing Base by the Administrative Agent.
(c) Within five (5) Business Days after receipt of a notice
from the Administrative Agent of the amount of a redetermined Borrowing
Base, the Borrower shall by notice to the Administrative Agent either
accept such amount as the new Borrowing Base or reduce the Borrowing
Base from the amount proposed by the Administrative Agent to any lesser
amount. Failure by the Borrower to take either such action within such
five (5) Business Day period shall be deemed acceptance of such amount
as the Borrowing Base. Upon any such acceptance or deemed acceptance by
the Borrower, a new Borrowing Base in the amount accepted shall take
effect on such date (herein called a
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"Borrowing Base Determination Date") and shall remain in effect until
but not including the next Borrowing Base Determination Date. Upon any
such reduction by the Borrower, a new Borrowing Base in the reduced
amount specified by the Borrower shall take effect on such date (herein
also called a "Borrowing Base Determination Date") and shall remain in
effect until but not including the next Borrowing Base Determination
Date.
(d) Each determination or redetermination of the Borrowing
Base pursuant to this Section 2.7 and Section 3.1.2 shall be made by
all of the Lenders and the Administrative Agent, in the exercise of
their reasonable discretion and in accordance with their customary and
prudent standards for oil and gas lending and credit transactions as
they exist at such time (which standards may change from time to time).
In each case where the Administrative Agent shall propose a
redetermined Borrowing Base, any Lender who objects to the proposed
Borrowing Base shall, within the prescribed time period, simultaneously
notify the Administrative Agent of the amount of the redetermined
Borrowing Base that it believes appropriate, and such objecting Lender
shall be deemed to have approved any Borrowing Base which is less than
the Borrowing Base it believes is appropriate. Any Lender that does not
object to the redetermined Borrowing Base proposed by the
Administrative Agent within the prescribed time period shall be deemed
to have approved the redetermined Borrowing Base proposed by the
Administrative Agent. In the event that the Lenders do not so approve
the redetermined Borrowing Base as proposed by the Administrative
Agent, the Administrative Agent shall consult with each Lender that has
so objected and thereafter establish a redetermined Borrowing Base that
is so approved by the Lenders.
(e) The Borrowing Base is also subject to adjustment as
provided for in Section 3.1.2.
SECTION 2.8. PURPOSES. The Borrower shall apply the proceeds of each
Loan only
(a) to refinance all Indebtedness under the Existing Credit
Agreement; and
(b) for Capital Expenditures, working capital and general
corporate purposes of the Borrower and its Material
Subsidiaries.
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ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. REPAYMENTS AND PREPAYMENTS AND CERTAIN BORROWING BASE
MATTERS. The Borrower shall repay the unpaid principal amount of the Loans as
set forth in this Section 3.1.
SECTION 3.1.1. REPAYMENTS AND PREPAYMENTS. The Borrower shall repay in
full the unpaid principal amount of each Revolving Credit Loan, and each
Revolving Credit Loan shall mature, on the Stated Maturity Date. Prior thereto,
the Borrower
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding principal
amount of any Loans; provided, however, that
(i) in the case of a prepayment of a LIBO Rate Loan,
all such voluntary prepayments shall require at least three
(3) but no more than five (5) Business Days' prior written
notice to the Administrative Agent (which notice is
irrevocable);
(ii) any such prepayment shall be made pro rata among
Loans of the same type and, if applicable, having the same
Interest Period; and
(iii) all such voluntary partial prepayments shall be
in an aggregate minimum amount of $250,000 and an integral
multiple of $50,000;
(b) shall, on each date when any reduction in the Commitment
Amount shall become effective, including pursuant to Section 2.2, make
a mandatory prepayment (which shall be applied (or held for
application, as the case may be) by each Lender first to the payment of
the aggregate unpaid principal amount of those Loans then outstanding
and then to the payment of the then Letter of Credit Outstandings)
equal to the excess, if any, of the aggregate outstanding principal
amount of all Loans and Letter of Credit Outstandings over the
Commitment Amount as so reduced;
(c) shall make prepayments as specified in Section 3.1.2; and
(d) shall, immediately upon any acceleration of the Loans
pursuant to Section 9.2 or Section 9.3, repay all Loans, unless,
pursuant to Section 9.3, only a portion of all Loans is so accelerated.
Each payment or prepayment of any Loans made pursuant to this Section shall be
without premium or penalty except as may be required by Section 5.4, and shall
be applied, to the extent of such prepayment. No voluntary prepayment of
principal of any Loans or any prepayment pursuant to the preceding clause (c)
shall cause a reduction in any Commitment Amount.
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SECTION 3.1.2. BORROWING BASE DEFICIENCIES AND ASSET SALES.
(a) Upon the occurrence of a Borrowing Base Deficiency, the
Administrative Agent may (and, at the direction of the Required
Lenders, shall) notify the Borrower of such Borrowing Base Deficiency.
Within ten (10) days from and after the Borrowing Base Deficiency
Notification Date, the Borrower shall notify the Administrative Agent
that it shall, at its election, take one of the following actions
within ninety (90) days after the occurrence of such Borrowing Base
Deficiency:
(i) it will execute and deliver to the Administrative
Agent supplemental or additional Security Documents, in form
and substance satisfactory to the Administrative Agent and its
counsel, securing payment of the Notes and the other
Obligations and covering additional Oil and Gas Properties
directly owned by the Borrower or one or more of its Material
Subsidiaries which are not then covered by any Security
Document and which are of a type and nature, and having a
value (as determined by the Administrative Agent and the
Required Lenders, and in addition to other Oil and Gas
Properties already subject to a Mortgage) and/or other
collateral of a type, in an amount, and in all other respects
satisfactory to the Administrative Agent and the Required
Lenders, sufficient to eliminate the Borrowing Base
Deficiency, all as more particularly described in Section
8.1.7(a) and (b), or
(ii) it will pay an amount in respect of the
Obligations (which shall be applied (or held for application,
as the case may be) by the Administrative Agent to the payment
of the aggregate unpaid principal amount of those Loans then
outstanding and then Letter of Credit Outstandings) in an
aggregate principal amount sufficient to eliminate such
Borrowing Base Deficiency.
If the Borrower shall elect to execute and deliver supplemental or
additional Security Documents to the Administrative Agent pursuant to
clause (i), it shall provide the Administrative Agent and each Lender
with descriptions of the additional assets to be collaterally assigned
(together with current valuations, Engineering Reports, Security
Documents described in clause (i) and title evidence applicable
thereto, each of which shall be in form and substance satisfactory to
the Administrative Agent) within thirty (30) days after the Borrowing
Base Deficiency Notification Date. Such supplemental or additional
Security Documents shall be subject to the terms of Section 8.1.7. If
the Borrower fails to take either of the actions described above within
such ten (10)-day period, then without any necessity for notice to the
Borrower or any other person, the Borrower shall become obligated
immediately to pay
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Obligations in an aggregate principal amount equal to the applicable
Borrowing Base Deficiency.
(b) If the Borrower or any Subsidiary sells, transfers or
otherwise disposes of Properties included in the most recent
determination of the Borrowing Base and that have an aggregate sales
price in excess of three percent (3%) of the then current Borrowing
Base during the period from the effective date of the most recent
Borrowing Base Determination until the effective date of the next
Borrowing Base Determination, the Borrowing Base shall be immediately
reduced, until the effective date of the next Borrowing Base
Determination, by an amount as reasonably determined by the
Administrative Agent and approved by the Required Lenders.
If such reduction shall result in a Borrowing Base Deficiency, then in
lieu of the provisions of clause (a) of Section 3.1.2, the Borrower
shall immediately make a payment with respect to the Obligations in an
amount equal to such Borrowing Base Deficiency. In addition to and
cumulative of the foregoing, if a Borrowing Base Deficiency exists
prior to such sale, transfer or other disposition of assets, then in
lieu of the provisions of clause(a) of Section 3.1.2, the Borrower
shall immediately make a payment with respect to the Obligations (which
shall be applied (or held for application, as the case may be) by the
Lenders first to the payment of the aggregate unpaid principal amount
of those Loans then outstanding, and then to the payment of the then
Letter of Credit Outstandings) in an aggregate principal amount equal
to the lesser of the amount of the Borrowing Base Deficiency (after
giving effect to the applicable sale, transfer or other disposition) or
100% of the sales proceeds from the applicable sale, transfer or other
disposition, net of usual and customary fees, expenses and taxes.
In addition, if the Borrower or any of its Subsidiaries raises capital
through the issuance of any type of equity or issues any subordinated
debt or senior unsecured debt otherwise permitted by this Agreement,
the proceeds of such issuance, net of usual and customary fees,
expenses and taxes, will first be applied to cure any Borrowing Base
Deficiency.
SECTION 3.2. INTEREST PROVISIONS. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
SECTION 3.2.1. RATES. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing accrue interest at a rate per annum:
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(a) on that portion maintained from time to time as a Base
Rate Loan, equal to the lesser of (I) the sum of the Alternate Base
Rate from time to time in effect plus the Applicable Margin, and (ii)
the Highest Lawful Rate; and
(b) on that portion maintained as LIBO Rate Loans, during each
Interest Period applicable thereto, equal to the lesser of (I) the sum
of the LIBO Rate (Reserve Adjusted) for such Interest Period plus the
Applicable Margin, and (ii) the Highest Lawful Rate.
Notwithstanding the foregoing limitations pertaining to the Highest Lawful Rate,
in the event that the amount payable under this Section 3.2.1 is limited to the
Highest Lawful Rate, the Lenders and Issuers shall have the benefit of the
provisions of Section 11.15 including Section 11.15(a)(iv).
SECTION 3.2.2. POST-MATURITY RATES. After (w) the date any principal
amount of any Loan shall have become due and payable (whether on the Stated
Maturity Date, upon acceleration or otherwise, but only so long as such
principal amount has not been paid), (x) any other monetary Obligation of the
Borrower shall have become due and payable beyond any applicable grace period
(including the failure of the Borrower to pay in full the amount of any
Reimbursement Obligation on the applicable Disbursement Date, but only so long
as such monetary Obligation has not been paid), (y) the date any other Event of
Default shall have occurred (and so long as such Event of Default shall be
continuing), and (z) the date that is ninety (90) days after a Borrowing Base
Deficiency Notification Date, if the applicable Borrowing Base Deficiency has
not been cured, the Borrower shall pay, but only to the extent permitted by
Applicable Law, interest (after as well as before judgment) on all Obligations
at a rate per annum equal to
(a) with respect to LIBO Rate Loans for the period from the
date such Loan becomes due and payable to the end of the then current
Interest Period, the higher of (i) the sum of the LIBO Rate (Reserve
Adjusted) for such Interest Period plus the Applicable Margin plus a
margin of 3%, or (ii) the sum of the Alternate Base Rate plus the
Applicable Margin plus a margin of 3%; or
(b) in all other cases, the sum of the Alternate Base Rate
plus the Applicable Margin plus a margin of 3%.
SECTION 3.2.3. PAYMENT DATES. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date;
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(b) on the date of any optional or required payment or
prepayment, in whole or in part, of principal outstanding on such Loan
and on that portion of such Loan so paid or prepaid;
(c) with respect to Base Rate Loans, on each Quarterly Payment
Date occurring after the Effective Date;
(d) with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed
three months, on the 90th day of such Interest Period);
(e) with respect to any Base Rate Loans converted into LIBO
Rate Loans on a day when interest would not otherwise have been payable
pursuant to clause (c), on the date of such conversion; and
(f) on that portion of any Loans which is accelerated pursuant
to Section 9.2 or Section 9.3, immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount shall have
become due and payable (whether on the Stated Maturity Date, upon acceleration
or otherwise) shall be payable upon demand.
SECTION 3.3. FEES. The Borrower agrees to pay the fees set forth in
this Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. CLOSING FEE. On the Effective Date, the Borrower
agrees to pay to the Administrative Agent, at the closing for the pro rata
account of each of the Lenders, an upfront fee in an amount based on each
Lender's Percentage of the Total Commitment as the Borrower and the Lenders have
previously agreed.
SECTION 3.3.2. ADMINISTRATIVE AGENT'S FEES. The Borrower shall pay to
the Administrative Agent for its own account the fees set forth in the Fee
Letter on the respective dates for such payment prescribed in the Fee Letter.
SECTION 3.3.3. COMMITMENT FEES. The Borrower shall pay to the
Administrative Agent, for the pro rata account of each Lender, a Commitment Fee
(the "Commitment Fee"), for the period from and including the Effective Date to
but not including any Commitment Termination Date, equal to an amount determined
in accordance with the utilization of the Borrowing Base as set forth in the
definition of "Applicable Margin," of such Lender's Percentage of the daily
average Total Commitment less the sum of (i) the aggregate outstanding principal
amount of all Loans on such date, plus (ii) the Letter of Credit Outstandings on
such date. Accrued
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Commitment Fees shall be payable by the Borrower in arrears on each Quarterly
Payment Date and on the earlier of any Commitment Termination Date.
SECTION 3.3.4. LETTER OF CREDIT FACE AMOUNT FEE. The Borrower agrees
to pay to the Administrative Agent, for the pro rata account of each Lender, a
fee for each Letter of Credit for the period from and including the date of the
issuance of such Letter of Credit to (but not including) the date upon which
such Letter of Credit expires or is fully drawn, at a rate per annum equal to
the Applicable Margin (LIBO Rate column) per annum on the Stated Amount of such
Letter of Credit. Such fee shall be payable by the Borrower in arrears on each
Quarterly Payment Date, and on any Commitment Termination Date for any period
then ending for which such fee shall not theretofore have been paid, commencing
on the first such date after the issuance of such Letter of Credit.
SECTION 3.3.5. LETTER OF CREDIT ISSUANCE FEE. The Borrower shall pay
to the Administrative Agent, for the account of the applicable Issuer, a letter
of credit issuance fee for each Letter of Credit issued by such Issuer equal to
the greater of (x) 1/8 of 1% of the Stated Amount of such Letter of Credit or
(y) $300. Such Letter of Credit fronting fee shall be due and payable on the
date of such issuance.
SECTION 3.3.6. LETTER OF CREDIT ADMINISTRATIVE FEE. The Borrower
shall pay to the Administrative Agent, for the account of each Issuer, from time
to time on demand the normal issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of the Issuer relating to
letters of credit as from time to time in effect.
SECTION 3.3.7. ENGINEERING FEES. For each Requested Redetermination
in connection with an acquisition of Oil and Gas Properties pursuant to Section
2.7(b)(iii), the Borrower shall pay fees in the amount of $10,000 to the
Administrative Agent (for its own account) and $5,000 to each other Lender.
SECTION 3.4. PROCEEDS ACCOUNT. The Security Documents contain an
assignment to the Administrative Agent by the Borrower and its Subsidiaries of
all production of Hydrocarbons and all proceeds attributable thereto properly
allocable to the Mortgaged Properties. Notwithstanding such assignment of
production, the Borrower or such Subsidiaries, as applicable, may, until the
Administrative Agent shall give notice to the contrary, receive such proceeds.
Thereafter, all such proceeds from the sale of such production shall be paid
directly into an account of the Borrower maintained with the Administrative
Agent (the "Proceeds Account"). The Borrower hereby grants to the Administrative
Agent a security interest in the Proceeds Account and all proceeds thereof.
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ARTICLE IV
LETTERS OF CREDIT
SECTION 4.1. ISSUANCE REQUESTS. By delivering to the Administrative
Agent an Issuance Request on or before 12:00 noon (Dallas time), the Borrower
may request, from time to time prior to any Commitment Termination Date, and on
not less than three (3) nor more than ten (10) Business Days' notice, that such
Issuer issue an irrevocable standby letter of credit in such form as may be
mutually agreed by the Borrower and such Issuer (each a "Letter of Credit"), in
support of financial or performance obligations of the Borrower incurred in the
Borrower's ordinary course of business and which are described in such Issuance
Request. Upon receipt of an Issuance Request, the Administrative Agent shall
promptly notify the Lenders and the Issuer thereof. Each Letter of Credit shall
by its terms:
(a) be issued in a Stated Amount which
(i) is at least $50,000;
(ii) does not exceed (or would not exceed) the then
Letter of Credit Availability;
(b) be stated to expire on a date (its "Stated Expiry Date")
no later than the earlier of (i) one (1) year after its date of
issuance, or (ii) the Stated Maturity Date; and
(c) on or prior to its Stated Expiry Date
(i) terminate immediately upon notice to the Issuer
from the beneficiary thereunder that all obligations covered
thereby have been terminated, paid, or otherwise satisfied in
full, or
(ii) reduce in part immediately and to the extent the
beneficiary thereunder has notified the Issuer that the
obligations covered thereby have been paid or otherwise
satisfied in part.
So long as no Default has occurred and is continuing, by delivery to the
Administrative Agent and to the applicable Issuer of an Issuance Request at
least five (5) but not more than ten (10) Business Days prior to the Stated
Expiry Date of any Letter of Credit, the Borrower may request such Issuer to
extend the Stated Expiry Date of such Letter of Credit for an additional period
not to exceed the earlier of one (1) year from its date of extension, the Stated
Maturity Date or the Commitment Termination Date.
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SECTION 4.2. ISSUANCES AND EXTENSIONS. On the terms and subject to the
conditions of this Agreement (including Article VI), the applicable Issuer shall
issue Letters of Credit, and extend the Stated Expiry Dates of outstanding
Letters of Credit, in accordance with the Issuance Requests made therefor. Each
Issuer will make available the original of each Letter of Credit which it issues
in accordance with the Issuance Request therefor to the beneficiary thereof (and
will promptly provide the Administrative Agent and each of the Lenders with a
copy of such Letter of Credit) and will notify the beneficiary under any Letter
of Credit of any extension of the Stated Expiry Date thereof.
The Issuer is under no obligation to issue any Letter of Credit if:
(a) any order, judgment or decree of any Government Agency or
arbitrator shall by its terms purport to enjoin or restrain the Issuer
from issuing such Letter of Credit, or any requirement of Applicable
Law or any request or directive (whether or not having the force of
law) from any Government Agency with jurisdiction over the Issuer shall
prohibit, or request that the Issuer refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or
shall impose upon the Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the Issuer is
not otherwise compensated hereunder) not in effect on the Effective
Date, or shall impose upon the Issuer any unreimbursed loss, cost or
expense which was not applicable on the Effective Date and which the
Issuer in good ▇▇▇▇▇ ▇▇▇▇▇ material to it;
(b) one or more of the applicable conditions contained in
Article VI is not then satisfied;
(c) the expiry date of any requested Letter of Credit is prior
to the maturity date of any financial obligation to be supported by the
requested Letter of Credit;
(d) any requested Letter of Credit does not provide for
drafts, or is not otherwise in form and substance acceptable to the
Issuer, or the issuance of a Letter of Credit shall violate any
applicable policies of the Issuer;
(e) any standby Letter of Credit is for the purpose of
supporting the issuance of any letter of credit by any other Person; or
(f) such Letter of Credit is in a face amount denominated in a
currency other than Dollars.
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The International Standby Practices as published by the International
Chamber of Commerce most recently at the time of issuance of any Letter of
Credit shall (unless otherwise expressly provided in the Letters of Credit)
apply to the Letters of Credit.
SECTION 4.3. LENDERS' PARTICIPATION. Each Letter of Credit issued
pursuant to Section 4.2 shall, effective upon its issuance and without further
action, be issued on behalf of all Lenders (including the Issuer thereof, if it
is a Lender) pro rata according to their respective Percentages. Each Lender
shall, to the extent of its Percentage, be deemed irrevocably to have
participated in the issuance of such Letter of Credit and shall be responsible
to reimburse promptly the Issuer thereof for Reimbursement Obligations which
have not been reimbursed by the Borrower in accordance with Section 4.5, or
which have been reimbursed by the Borrower but must be returned, restored or
disgorged by such Issuer for any reason, and each Lender shall, to the extent of
its Percentage, be entitled to receive from the Administrative Agent a ratable
portion of the Letter of Credit fees received by the Administrative Agent
pursuant to Section 3.3.4, with respect to each Letter of Credit. In the event
that the Borrower shall fail to reimburse any Issuer, or if for any reason Loans
shall not be made to fund any Reimbursement Obligation, all as provided in
Section 4.5 and in an amount equal to the amount of any drawing honored by such
Issuer under a Letter of Credit issued by it, or in the event such Issuer must
for any reason return or disgorge such reimbursement, such Issuer shall promptly
notify each Lender of the unreimbursed amount of such drawing and of such
Lender's respective participation therein. Each Lender shall make available to
such Issuer, whether or not any Default shall have occurred and be continuing,
an amount equal to its respective participation in same day or immediately
available funds at the office of such Issuer specified in such notice not later
than 11:00 a.m. (Dallas time) on the Business Day (under the laws of the
jurisdiction of such Issuer) after the date notified by such Issuer. In the
event that any Lender fails to make available to such Issuer the amount of such
Lender's participation in such Letter of Credit as provided herein, such Issuer
shall be entitled to recover such amount on demand from such Lender together
with interest at the daily average Federal Funds Rate for three (3) Business
Days (together with such other compensatory amounts as may be required to be
paid by such Lender to the Administrative Agent pursuant to the Rules for
Interbank Compensation of the Council on International Banking or the
Clearinghouse Compensation Committee, as the case may be, as in effect from time
to time) and thereafter at the Alternate Base Rate plus 3%. Nothing in this
Section shall be deemed to prejudice the right of any Lender to recover from any
Issuer any amounts made available by such Lender to such Issuer pursuant to this
Section in the event that it is determined by a court of competent jurisdiction
that the payment with respect to a Letter of Credit by such Issuer in respect of
which payment was made by such Lender constituted gross negligence or wilful
misconduct on the part of such Issuer. Each Issuer shall distribute to each
other Lender which has paid all amounts payable by it under this Section with
respect to any Letter of Credit issued by such Issuer such other Lender's
Percentage of all payments
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received by such Issuer from the Borrower in reimbursement of drawings honored
by such Issuer under such Letter of Credit when such payments are received.
SECTION 4.4. DISBURSEMENTS. Each Issuer will notify the Borrower and
the Administrative Agent promptly of the presentment for payment of any Letter
of Credit, together with notice of the date (the "Disbursement Date") such
payment shall be made. Subject to the terms and provisions of such Letter of
Credit, the applicable Issuer shall make such payment to the beneficiary (or its
designee) of such Letter of Credit. In paying any drawing under a Letter of
Credit, the applicable Issuer shall not have any responsibility to obtain any
document (other than any sight draft and certificates expressly required by the
Letter of Credit) or to ascertain or inquire as to the validity or accuracy of
any such document or the authority of the Person executing or delivering any
such document. Prior to 12:00 noon (Dallas time) on the Disbursement Date, the
Borrower will reimburse the applicable Issuer for all amounts which have been
disbursed under the Letter of Credit. To the extent the applicable Issuer is not
reimbursed in full in accordance with the preceding sentence, the Borrower's
Reimbursement Obligation shall accrue interest at a fluctuating rate determined
by reference to the Alternate Base Rate, plus the Applicable Margin, plus a
margin of 3% per annum, payable on demand. In the event the applicable Issuer is
not reimbursed by the Borrower on the Disbursement Date, or if such Issuer must
for any reason return or disgorge such reimbursement, the Lenders (including
such Issuer) shall, on the terms and subject to the conditions of this
Agreement, fund the Reimbursement Obligation therefor by making, on the next
Business Day, Loans, which are Base Rate Loans, as provided in Section 2.1.1,
bearing interest at the rate provided in Section 3.2.2 (the Borrower being
deemed to have given a timely Borrowing Request therefor for such amount);
provided, however, for the purpose of determining the availability of the
Commitments to make Loans immediately prior to giving effect to the application
of the proceeds of such Loans, such Reimbursement Obligation shall be deemed not
to be outstanding at such time.
SECTION 4.5. REIMBURSEMENT. The Borrower's obligation (a "Reimbursement
Obligation") under Section 4.4 to reimburse the applicable Issuer with respect
to each Disbursement (including interest thereon), and each Lender's obligation
to make participation payments in each drawing which has not been reimbursed by
the Borrower, shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim, or defense to
payment which the Borrower may have or have had against such Issuer or any
Lender or any beneficiary of a Letter of Credit, including any defense based
upon the occurrence of any Default, any draft, demand or certificate or other
document presented under a Letter of Credit proving to be forged, fraudulent,
invalid or insufficient, the failure of any Disbursement to conform to the terms
of the applicable Letter of Credit (if, in the applicable Issuer's good faith
opinion, such Disbursement is determined to be appropriate) or any
non-application or misapplication by the beneficiary of the proceeds of such
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Disbursement, or the legality, validity, form, regularity, or enforceability of
such Letter of Credit;
SECTION 4.6. DEEMED DISBURSEMENTS. Upon the occurrence of any
Commitment Termination Date, an amount equal to that portion of Letter of Credit
Outstandings attributable to outstanding and undrawn Letters of Credit shall, at
the election of the applicable Issuer, acting on instructions from the Required
Lenders, and without demand upon or notice to the Borrower, be deemed to have
been paid or disbursed by such Issuer under such Letters of Credit
(notwithstanding that such amount may not in fact have been so paid or
disbursed), and, upon notification by such Issuer to the Administrative Agent
and the Borrower of its obligations under this Section, the Borrower shall be
immediately obligated to reimburse such Issuer the amount deemed to have been so
paid or disbursed by such Issuer. Any amounts so received by such Issuer from
the Borrower pursuant to this Section shall be held as collateral security for
the repayment of the Borrower's obligations in connection with the Letters of
Credit issued by such Issuer. At any time when such Letters of Credit shall
terminate and all Obligations to such Issuer are either terminated or paid or
reimbursed to such Issuer in full, the Obligations of the Borrower under this
Section shall be reduced accordingly (subject, however, to reinstatement in the
event any payment in respect of such Letters of Credit is recovered in any
manner from such Issuer), and such Issuer will return to the Borrower the
excess, if any, of
(a) the aggregate amount deposited by the Borrower with such
Issuer and not theretofore applied by such Issuer to any Reimbursement
Obligation
over
(b) the aggregate amount of all Reimbursement Obligations to
such Issuer pursuant to this Section, as so adjusted.
At such time when all Events of Default shall have been cured or waived, such
Issuer shall return to the Borrower all amounts then on deposit with such Issuer
pursuant to this Section. All amounts on deposit pursuant to this Section shall,
until their application to any Reimbursement Obligation or their return to the
Borrower, as the case may be, bear interest at the daily average Federal Funds
Rate from time to time in effect (net of the costs of any reserve requirements,
in respect of amounts on deposit pursuant to this Section, pursuant to F.R.S.
Board Regulation D), which interest shall be held by such Issuer as additional
collateral security for the repayment of the Borrower's Obligations in
connection with the Letters of Credit issued by such Issuer.
SECTION 4.7. NATURE OF REIMBURSEMENT OBLIGATIONS. The Borrower shall
assume all risks of the acts, omissions, or misuse of any Letter of Credit by
the
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beneficiary thereof. Neither the Issuer nor any Lender (except to the extent of
its own gross negligence or wilful misconduct) shall be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any Letter of Credit or any document submitted by any
party in connection with the application for and issuance of a Letter
of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent, or forged;
(b) the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any instrument transferring or assigning or purporting
to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof in whole or in part, which may prove to
be invalid or ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex, facsimile or otherwise;
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under a
Letter of Credit or of the proceeds thereof;
(f) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Borrower in
respect of any Letter of Credit;
(g) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the applicable
Issuer or any other Person, whether in connection with this Agreement,
the transactions contemplated hereby or by the Letters of Credit or any
unrelated transaction;
(h) any payment by the applicable Issuer under any Letter of
Credit against presentation of a draft or certificate that does not
strictly comply with the terms of any Letter of Credit; or any payment
made by the applicable Issuer under any Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of
any Letter of Credit, including any arising in connection with any
insolvency proceeding; or
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(i) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance
that might otherwise constitute a defense available to, or a discharge
of, the Borrower or a guarantor.
None of the foregoing shall affect, impair, or prevent the vesting of any of the
rights or powers granted any Issuer or any Lender hereunder. In furtherance and
extension, and not in limitation or derogation, of any of the foregoing, any
action taken or omitted to be taken by any Issuer or any Lender in good faith
with respect to any Letter of Credit shall be binding upon the Borrower and
shall not put such Issuer or such Lender under any resulting liability to the
Borrower.
SECTION 4.8. INCREASED COSTS; INDEMNITY. If by reason of
(a) any change after the Effective Date in applicable law,
regulation, rule, decree or regulatory requirement or any change in the
interpretation or application by any judicial or regulatory authority
of any law, regulation, rule, decree or regulatory requirement, or
(b) compliance by any Issuer or any Lender with any direction,
request or requirement (whether or not having the force of law) of any
governmental or monetary authority, including Regulation D of the
F.R.S. Board:
(i) any Issuer or any Lender shall be subject to any
tax (other than taxes on net income and franchises), levy,
charge or withholding of any nature or to any variation
thereof or to any penalty with respect to the maintenance or
fulfillment of its obligations under this Article IV, whether
directly or by such being imposed on or suffered by any Issuer
or any Lender;
(ii) any reserve, deposit or similar requirement is
or shall be applicable, increased, imposed or modified in
respect of any Letters of Credit issued by any Issuer or
participations therein purchased by any Lender; or
(iii) there shall be imposed on any Issuer or any
Lender any other condition regarding this Article IV or any
Letter of Credit or any participation therein,
and the result of the foregoing is directly or indirectly to increase the cost
to any Issuer or such Lender of issuing or maintaining any Letter of Credit or
of purchasing or maintaining any participation therein, or to reduce any amount
receivable in respect thereof by any Issuer, then and in any such case any such
Issuer or any such Lender may, at any time after the additional cost is incurred
or the amount received is
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reduced, notify the Administrative Agent and the Borrower thereof, and the
Borrower shall, on demand, pay such amounts as any Issuer or such Lender may
specify to be necessary to compensate any Issuer or such Lender for such
additional cost or reduced receipt, together with interest at a rate equal to
the Alternate Base Rate plus the Applicable Margin on such amount from the date
demanded until the fifth Business Day after such demand and thereafter at a rate
equal at all times to the Alternate Base Rate plus the Applicable Margin, plus
3% per annum until payment in full thereof. The determination by any such Issuer
or any such Lender, as the case may be, of any amount due pursuant to this
Section, as set forth in a statement setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest error, be final and
conclusive and binding on all of the parties hereto.
In addition to amounts payable as elsewhere provided in this Article
IV, the Borrower hereby indemnifies, exonerates and holds each Issuer, the
Administrative Agent and each Lender harmless from and against any and all
actions, causes of action, suits, losses, costs, liabilities and damages, and
expenses incurred in connection therewith (irrespective of whether such Issuer,
the Administrative Agent or such Lender is a party to the action for which
indemnification is sought), including reasonable attorneys' fees and
disbursements, which such Issuer, the Administrative Agent or such Lender may
incur or be subject to as a consequence, direct or indirect, of
(a) the issuance of the Letters of Credit, other than as a
result of the gross negligence or wilful misconduct of such Issuer as
determined by a court of competent jurisdiction, or
(b) the failure of such Issuer to honor a drawing under any
Letter of Credit as a result of any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto Government
Agency.
ARTICLE V
CERTAIN INTEREST RATE AND OTHER PROVISIONS
SECTION 5.1. LIBO RATE LENDING UNLAWFUL. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower, the
Administrative Agent and the other Lenders, be conclusive and binding on the
Borrower) that the introduction of or any change in or in the interpretation by
any governmental or other regulatory authority charged with the administration
thereof of any law makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for such Lender to make, continue or
maintain any Loan as, or to convert any Loan into, a LIBO Rate Loan, the
obligations of all Lenders to make, continue, maintain or convert into any such
LIBO Rate Loans shall, upon such determination,
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forthwith be suspended until such Lender shall notify the Administrative Agent
and the Borrower that the circumstances causing such suspension no longer exist,
and all LIBO Rate Loans shall automatically convert into Base Rate Loans at the
end of the then current Interest Periods with respect thereto or sooner, if
required by such law or assertion; provided that if circumstances subsequently
change so that such Lender shall not continue to be so affected, such Lender
shall by notice to the Borrower reinstate such obligations to make, convert,
maintain or continue loans as, or into, LIBO Rate Loans.
SECTION 5.2. DEPOSITS UNAVAILABLE. If the Administrative Agent shall
have determined that
(a) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to the Administrative Agent
in its relevant market; or
(b) by reason of circumstances affecting the Administrative
Agent's relevant market, adequate means do not exist for ascertaining
the interest rate applicable hereunder to LIBO Rate Loans,
then, upon notice from the Administrative Agent to the Borrower and the Lenders,
the obligations of all Lenders under Section 2.3 and Section 2.4 to make or
continue any Loans as, or to convert any Loans into, LIBO Rate Loans shall
forthwith be suspended until the Administrative Agent shall notify the Borrower
and the Lenders that the circumstances causing such suspension no longer exist.
SECTION 5.3. INCREASED LIBO RATE LOAN COSTS, ETC. If by reason of
(a) after the Effective Date, any change in Applicable Law or
any change in the interpretation or application by any judicial or
regulatory authority of any Applicable Law, or
(b) compliance by any Lender or any Issuer with any direction,
request or requirement (whether or not having the force of law) of any
Government Agency, including Regulation D of the F.R.S. Board:
(i) any Lender or any Issuer shall be subject to any
tax (other than taxes on net income and franchises), levy,
charge or withholding of any nature or to any variation
thereof or to any penalty with respect to any payment due
under any LIBO Rate Loan or other amounts due under this
Agreement, whether directly or by such being imposed on or
suffered by such Lender or any Issuer;
(ii) any reserve, deposit or similar requirement is
or shall be applicable, increased, imposed or modified in
respect of any extensions
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of credit or other assets of, or any deposits with or other
liabilities of, any Lender or Loans made by such Lender or any
Issuer or Letters of Credit issued by such Issuer, or against
any other funds, obligations or other property owned or held
by such Lender or such Issuer and such Lender or such Issuer
actually incurs such additional costs; or
(iii) there shall be imposed on any Lender or any
Issuer any other condition affecting this Agreement (or any of
such extensions of credit or liabilities),
and the result of the foregoing is directly or indirectly to increase the cost
to such Lender of making, continuing or such Issuer of issuing or maintaining
(or of its obligation to make, continue or maintain) any Loans as, or of
converting or such Issuer (or of its obligation to convert) any Loans into, LIBO
Rate Loans, or of the Issuer issuing or maintaining any Letter of Credit or to
reduce any amount receivable in respect thereof by such Lender or such Issuer,
then and in any such case such Lender or such Issuer may, at any time after the
additional cost is incurred or the amount received is reduced, notify the
Administrative Agent and the Borrower thereof, and the Borrower shall pay on
demand such amounts as such Lender or such Issuer may specify to be necessary to
compensate such Lender or such Issuer for such additional cost or reduced
receipt, together with interest at a rate equal to the Alternate Base Rate plus
the Applicable Margin on such amount from the date demanded until the fifth
Business Day after such demand and thereafter at a rate equal at all times to
the Alternate Base Rate plus the Applicable Margin plus 3% per annum until
payment in full thereof. The determination by such Lender or such Issuer of any
amount due pursuant to this Section, as set forth in a statement setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
error, be final and conclusive and binding on all of the parties hereto.
SECTION 5.4. FUNDING LOSSES. In the event any Lender or any Issuer
shall incur any loss or expense (including any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender or such Issuer to make, continue or maintain any portion of the
principal amount of any Loan as, or to convert any portion of the principal
amount of any Loan into, a LIBO Rate Loan) as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any LIBO Rate Loans on a date other than the scheduled last
day of the Interest Period applicable thereto, whether pursuant to
Section 3.1 or otherwise;
(b) any Loans not being made as LIBO Rate Loans in accordance
with the Borrowing Request therefor by reason of any act or omission by
the Borrower or failure of a condition precedent to be satisfied; or
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(c) any Loans not being continued as, or converted into, LIBO
Rate Loans in accordance with the Continuation/Conversion Notice
therefor by reason of any act or omission by the Borrower,
then, upon the written notice of such Lender or such Issuer to the Borrower
(with a copy to the Administrative Agent), the Borrower shall pay directly to
such Lender or such Issuer such amount as will (in the reasonable determination
of such Lender or such Issuer) reimburse such Lender or such Issuer for such
loss or expense, together with interest at a rate equal to the Alternate Base
Rate plus the Applicable Margin on such amount from the date demanded until the
fifth Business Day after such demand and thereafter at a rate equal at all times
to the Alternate Base Rate plus the Applicable Margin plus 3% per annum until
payment in full thereof. Such written notice (which shall include calculations
in reasonable detail) shall, in the absence of manifest error, be conclusive and
binding on the Borrower.
SECTION 5.5. INCREASED CAPITAL COSTS. If, after the Effective Date, any
change in, or the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in of, any Applicable Law of any Government Agency
affects or would affect the amount of capital required or expected to be
maintained by any Issuer or any Lender or any Person controlling such Issuer or
such Lender, and such Issuer or such Lender determines (in its sole and absolute
discretion) that the rate of return on its or such controlling Person's capital
as a consequence of its Commitments, issuance of or participation in Letters of
Credit issued by or the Loans made by such Issuer or such Lender is reduced to a
level below that which such Issuer or such Lender or such controlling Person
could have achieved but for the occurrence of any such circumstance, then, in
any such case upon notice from time to time by such Issuer or such Lender to the
Borrower and the Administrative Agent, the Borrower shall immediately pay
directly to such Issuer or such Lender additional amounts sufficient to
compensate such Issuer or such Lender or such controlling Person for such
reduction in rate of return. A statement of such Issuer or such Lender as to any
such additional amount or amounts (including calculations thereof in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower. In determining such amount, such Issuer or such Lender may use any
method of averaging and attribution that it (in its reasonable discretion) shall
deem applicable.
SECTION 5.6. TAXES.
(a) All payments by the Borrower of principal of, and interest on, the
Loans or Letters of Credit and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by any Lender's or
any Issuer's net income, receipts, total assets, net worth or shareholders'
capital (such non-excluded items being called
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"Taxes"). In the event that any withholding or deduction from any payment to be
made by the Borrower hereunder is required in respect of any Taxes pursuant to
any Applicable Law, then the Borrower will
(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(ii) promptly forward to the Administrative Agent an official
receipt or other documentation satisfactory to the Administrative Agent
evidencing such payment to such authority; and
(iii) pay to the Administrative Agent for the account of the
Lenders or Issuers such additional amount or amounts as is necessary to
ensure that the net amount actually received by each Lender or each
Issuer will equal the full amount such Lender or such Issuer would have
received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Administrative Agent or
any Lender or any Issuer with respect to any payment received by the
Administrative Agent or such Lender or such Issuer hereunder, the Administrative
Agent or such Lender or such Issuer may pay such Taxes and the Borrower will
promptly pay such additional amounts (including any penalties, interest or
expenses) as is necessary in order that the net amount received by such person
after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount such person would have received had not such Taxes been
asserted.
(b) If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent for the account
of the Lenders the required receipts or other required documentary evidence, the
Borrower shall indemnify the Lenders and Issuers for any incremental Taxes,
interest, expenses or penalties that may become payable by any Lender or any
Issuer as a result of any such failure, whether or not such Taxes or liabilities
were correctly or legally asserted. Payment under this indemnity shall be made
within thirty (30) days after the date the Administrative Agent makes written
demand therefore. For purposes of this Section 5.6, a distribution hereunder by
the Administrative Agent or any Lender or any Issuer to or for the account of
any Lender or any Issuer shall be deemed a payment by the Borrower.
(c) Notwithstanding the foregoing provisions of this section, the
Borrower shall be entitled, to the extent it is required to do so by law, to
deduct or withhold (and not to make any indemnification or reimbursement for)
income or other similar taxes imposed by the United States of America (other
than any portion thereof attributable to a change in federal income tax laws
effected after the Effective Date) from interest, fees or other amounts payable
hereunder for the account of any Lender,
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other than a Lender (i) who is a U.S. person for Federal income tax purposes or
(ii) who has the Prescribed Forms (defined below) on file with Administrative
Agent (with copies provided to the Borrower) for the applicable year to the
extent deduction or withholding of such taxes is not required as a result of
such Prescribed Forms, provided that if the Borrower shall so deduct or withhold
any such taxes, it shall provide a statement to the Administrative Agent and
such Lender, setting forth the amount of such taxes so deducted or withheld, the
applicable rate and any other information or documentation which such Lender may
reasonably request for assisting such Lender to obtain any allowable credits or
deductions for the taxes so deducted or withheld in the jurisdiction or
jurisdictions in which such Lender is subject to tax. As used in this section,
"Prescribed Forms" means such duly executed forms or statements, and in such
number of copies, which may, from time to time, be prescribed by law and which,
pursuant to applicable provisions of (x) an income tax treaty between the United
States and the country of residence of the Lender providing the forms or
statements, (y) the Code, or (z) any applicable rules or regulations thereunder,
permit the Borrower to make payments hereunder for the account of such Lender
free of such deduction or withholding of income or similar taxes.
SECTION 5.7. PAYMENTS, COMPUTATIONS, ETC. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Note or
any other Loan Document shall be made by the Borrower to the Administrative
Agent for the pro rata account of the Lenders or Issuers entitled to receive
such payment. All such payments shall be made without setoff, deduction or
counterclaim, not later than 11:00 a.m. (Dallas time) on the date due, in same
day or immediately available funds, to such account with the Administrative
Agent in Dallas, Texas as the Administrative Agent shall specify from time to
time by notice to the Borrower. Funds received after that time shall be deemed
to have been received by the Administrative Agent on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue. The
Administrative Agent shall promptly remit in same day funds to each Lender or
each Issuer its share, if any, of such payments received by the Administrative
Agent for the account of such Lender or such Issuer. All interest and fees shall
be computed on the basis of the actual number of days (including the first day
but excluding the last day) occurring during the period for which such interest
or fees is payable over a year comprised of 360 days (or, in the case of
interest on a Base Rate Loan (other than when calculated with respect to the
Federal Funds Rate), 365 days or, if appropriate, 366 days). Whenever any
payment to be made shall otherwise be due on a day which is not a Business Day,
such payment shall (except as otherwise required by clause (c) of the definition
of the term "Interest Period" with respect to LIBO Rate Loans) be made on the
next succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.
SECTION 5.8. SHARING OF PAYMENTS. If any Lender or Issuer shall obtain
any payment or other recovery (whether voluntary, involuntary, by application of
setoff or
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otherwise) on account of any Loan (other than pursuant to the terms of Sections
5.3, 5.4 and 5.5) or Letter of Credit (other than pursuant to Section 4.8) in
excess of its pro rata share of payments then or therewith obtained by all
Lenders, such Lender shall purchase from the other Lenders or Issuers such
participations in Loans made by them and/or Letters of Credit as shall be
necessary to cause such purchasing Lender to share the excess payment or other
recovery ratably with each of them; provided, however, that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender or Issuer, the purchase shall be rescinded and each
Lender or each Issuer which has sold a participation to the purchasing Lender or
Issuer shall repay to the purchasing Lender or Issuer, the purchase price to the
ratable extent of such recovery together with an amount equal to such selling
Lender's or such Issuer's ratable share (according to the proportion of
(a) the amount of such selling Lender's or such Issuer's
required repayment to the purchasing Lender or Issuer
to
(b) the total amount so recovered from the purchasing Lender
or Issuer)
of any interest or other amount paid by the purchasing Lender or Issuer in
respect of the total amount so recovered. The Borrower agrees that any Lender or
any Issuer so purchasing a participation from another Lender or any Issuer
pursuant to this Section may, to the fullest extent permitted by law, exercise
all its rights of payment (including pursuant to Section 5.9) with respect to
such participation as fully as if such Lender or such Issuer were the direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Lender or any Issuer
receives a secured claim in lieu of a setoff to which this Section applies, such
Lender or such Issuer shall, to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Lenders or Issuers entitled under this Section to share in the benefits of any
recovery on such secured claim.
SECTION 5.9. SETOFF. Each Lender and each Issuer shall, upon the
occurrence of any Default described in clauses (a) through (d) of Section 9.1.9
or, with the consent of the Required Lenders, upon the occurrence of any other
Event of Default, have the right to appropriate and apply to the payment of the
Obligations owing to it (whether or not then due), and (as security for such
Obligations) the Borrower hereby grants to the Administrative Agent, each Lender
and each Issuer a continuing security interest in, any and all balances,
credits, deposits, accounts or moneys of the Borrower then or thereafter
maintained with or otherwise held by the Administrative Agent, each Lender and
each Issuer, including without limitation, the Proceeds Account. The
Administrative Agent, each Lender and each Issuer agree promptly to
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notify the Borrower after any such setoff and application made by the
Administrative Agent or such Lender or such Issuer; provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of the Administrative Agent, each Lender and each Issuer
under this Section 5.9 are in addition to other rights and remedies (including
other rights of setoff under Applicable Law or otherwise) which the
Administrative Agent or such Lender or such Issuer may have.
SECTION 5.10. USE OF PROCEEDS. The Borrower shall apply the proceeds of
each Borrowing only in accordance with Section 2.8; without limiting the
foregoing, no proceeds of any Loan will be used to acquire any equity security
of a class which is registered pursuant to Section 12 of the Securities Exchange
Act of 1934 or any "margin stock", as defined in F.R.S. Board Regulation U, X or
T; provided, however, the Borrower may own, and may use proceeds of the Loans to
acquire, "margin stock" (as such term is defined in F.R.S. Board Regulation U, X
or T) so long as the amount paid for such margin stock does not exceed the
lesser of (i) five percent (5%) of the Borrowing Base at the time of such
acquisition, and (ii) twenty-five percent (25%) (or such lesser percentage as
may be required by then Applicable Law) of the value of the Borrower's assets.
SECTION 5.11. CHANGE OF LENDER.
(a) Each Lender agrees that, upon the occurrence of any event
giving rise to the operation of Sections 4.8, 5.1, 5.3, 5.5 or 5.6 with
respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such
Lender) to designate another lending office for its Loan (provided that
such designation is made on such terms that such Lender and its 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 subsection shall affect
or postpone any of the obligations of the Borrower or the right of any
Lender provided in Sections 4.8, 5.1, 5.3, 5.5 and 5.6.
(b) If any Lender elects to pass through to the Borrower any
charge or cost under Sections 4.8, 5.3, 5.5 or 5.6, and no Default
exists, the Borrower may elect to terminate such Lender as a party to
this Agreement; provided that, prior to or concurrently with such
termination, the Borrower must either (i) if the Administrative Agent
and each non-terminated Lender consent, pay to the terminated Lender
all principal, interest, fees, costs and other Obligations owed to such
Lender and accrued through the date of termination (including
reimbursement of any funding losses of the type described in Section
5.4 that are incurred because of such termination) and terminate such
Lender's Commitment, or (ii) arrange for one or more Eligible Assignees
to purchase the rights and duties of the terminated Lender pursuant to
Section 11.11.1, in
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which event the terminated Lender will assign all of such rights and
duties to such Eligible Assignees. Prior to arranging for any Person
other than an existing Lender to be such an Eligible Assignee, the
Borrower shall notify the other Lenders of its intention to replace the
terminated Lender and, during the sixty day period after such notice,
the other Lenders shall have a right of first refusal to purchase the
rights and duties of the terminated Lender, pro rata in accordance with
their respective Percentages.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. INITIAL CREDIT EXTENSION. The obligation of each Lender
and each Issuer to make the initial Credit Extension shall be subject to the
prior or concurrent satisfaction of each of the conditions precedent set forth
in this Section 6.1.
SECTION 6.1.1. RESOLUTIONS, ETC. The Administrative Agent shall have
received from the Borrower a certificate, dated the date of the initial Credit
Extension, of the respective Secretary or Assistant Secretary of each of the
Borrower, Future California and the Partners, for themselves and on behalf of
the Partnership Subsidiaries, as to
(a) resolutions of the respective Boards of Directors of the
Borrower, Future California and the Partners then in full force and
effect authorizing the execution, delivery and performance of this
Agreement, the Notes and each other Loan Document to be executed by
each of them;
(b) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement, the Notes and each
other Loan Document executed by each of them;
(c) the Organic Documents of the Borrower, Future California,
the Partners and the Partnership Subsidiaries; and
(d) evidence that each of the Borrower, Future California, the
Partners and the Partnership Subsidiaries is in good standing under the
laws of the jurisdiction of its respective organization and, as to the
Future California and the Partnership Subsidiaries, each of the
jurisdictions where the Mortgaged Properties are located,
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upon which certificate the Administrative Agent, the Lenders and the Issuers may
conclusively rely until the Administrative Agent shall have received a further
certificate of the Secretary of the Borrower canceling or amending such prior
certificate.
SECTION 6.1.2. DELIVERY OF NOTES. The Administrative Agent shall have
received, for the account of each Lender, its Note duly executed and delivered
by the Borrower.
SECTION 6.1.3. GUARANTIES. The Administrative Agent shall have
received executed counterparts of the Guaranties, or ratifications or amendments
and restatements of Guaranties previously delivered under the Existing Credit
Agreement, dated as of the date hereof, duly executed by each of the Material
Subsidiaries.
SECTION 6.1.4. PLEDGE AGREEMENTS. The Administrative Agent shall have
received executed counterparts of the Pledge Agreements, or ratifications or
amendments and restatements of Pledge Agreements previously delivered under the
Existing Credit Agreement, dated as of the date hereof, duly executed by (a) the
Borrower pledging 100% of the Capital Stock of each of the Partners and Future
California, (b) each of the Partners, pledging all of its respective partnership
interests in each of the Partnership Subsidiaries, and (c) the Borrower and any
of its Subsidiaries, as applicable, pledging 65% of the Capital Stock or
partnership interests of each of the foreign Material Subsidiaries of the
Borrower or its Subsidiaries, together with the certificates, evidencing all of
the issued and outstanding shares of Capital Stock or partnership interests
pledged pursuant to the Pledge Agreements, which certificates shall in each case
be accompanied by undated stock powers duly executed in blank, or, if any
securities pledged pursuant to the Pledge Agreements are uncertificated
securities, confirmation and evidence satisfactory to the Administrative Agent
that the security interest in such uncertificated securities has been
transferred to and perfected by the Administrative Agent for the benefit of the
Lenders in accordance with Article 8 and/or Article 9 of the Uniform Commercial
Code, as in effect in the State of Texas, and, as applicable, with evidence of
completion (or satisfactory arrangement for the completion) of all filings and
recordings of the Pledge Agreements as may be necessary, or in the reasonable
opinion of the Administrative Agent, desirable, effectively to create a valid,
perfected first priority lien against and security interest in the collateral
covered thereby.
SECTION 6.1.5. SECURITY AGREEMENT. The Administrative Agent shall have
received executed counterparts of the Security Agreement, or ratifications or
amendments and restatements of Security Agreements previously delivered under
the Existing Credit Agreement, dated as of the date hereof, duly executed by the
Borrower and its Material Subsidiaries, together with
(a) executed copies of Uniform Commercial Code financing
statements or amendments to existing financing statements (Forms UCC-1
or UCC-2), in
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proper form for filing, naming the Borrower as the debtor and the
Administrative Agent as the secured party, or other similar instruments
or documents, filed under the Uniform Commercial Code of all
jurisdictions as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the security interest of the
Administrative Agent pursuant to the Security Agreement;
(b) executed copies of proper Uniform Commercial Code Form
UCC-3 termination statements, if any, necessary to release all Liens
and other rights of any Person in any collateral described in the
Security Agreement previously granted by any Person together with such
other Uniform Commercial Code Form UCC-3 termination statements as the
Administrative Agent may reasonably request from the Borrower; and
(c) a Uniform Commercial Code Request for Information or
Copies (UCC Form 11) or similar search report certified by a party
acceptable to the Administrative Agent, dated a date reasonably near to
the date of the initial borrowing, listing all effective financing
statements which name the Borrower, its Subsidiaries and each other
Obligor (under their present names and any previous names) as the
debtor and which are filed in the jurisdictions in which filings were
made pursuant to clause (a) above, together with copies of such
financing statements (none of which shall cover any collateral
described in the Security Agreement), other than financing statements
in favor of Bank of America and financing statements previously
delivered to Bank of America.
SECTION 6.1.6. AMENDMENT TO EXISTING MORTGAGES. The Administrative
Agent shall have received counterparts of amendments or amendments and
restatements of the Existing Mortgages, adding the Obligations to the
obligations secured by the Existing Mortgages, dated as of a recent date, duly
executed by the Borrower and its Material Subsidiaries, as applicable.
SECTION 6.1.7. OPINIONS OF COUNSEL. The Administrative Agent shall have
received opinions, dated the date of the initial Credit Extension and addressed
to the Administrative Agent, the Issuer and all the Lenders, from
(a) ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP, counsel to the Borrower and its
Subsidiaries, substantially in the form of Exhibit H hereto; and
(b) Title counsel listed on Schedule VI hereto, as to the
Mortgaged Properties listed on Schedule VI hereto, substantially in the
form of Exhibit I-1 hereto.
SECTION 6.1.8. UCC SEARCHES. The Administrative Agent shall have
received certified copies of Uniform Commercial Code Request for Information or
Copies (UCC Form 11) or similar search reports certified by a party acceptable
to the Administrative
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Agent, dated a date reasonably near to the date of the initial Credit Extension,
listing all effective financing statements which name the Borrower, its
Subsidiaries and each other Obligor (under their present names and any previous
names) as the debtor and which are filed in the jurisdictions in the States of
California, Texas, Oklahoma, New Mexico and Louisiana in which the Existing
Mortgages were filed and the New Mortgages will be filed, together with copies
of such financing statements (none of which shall cover any collateral described
in the Existing Mortgages or the New Mortgages) other than financing statements
in favor of Bank of America and financing statements previously delivered to
Bank of America and approved.
SECTION 6.1.9. EVIDENCE OF INSURANCE. The Administrative Agent shall
have received certificates of insurance satisfactory to it evidencing the
existence of all insurance required to be maintained by the Borrower by this
Agreement and the other Loan Documents.
SECTION 6.1.10. ENGINEERING REPORT. The Administrative Agent shall
have received an Engineering Report, dated as of January 1, 1999, from ▇.▇.
▇▇▇▇▇ & Company, as to the Mortgaged Properties included in the initial
determination of the Borrowing Base.
SECTION 6.1.11. ENVIRONMENTAL REPORT AND QUESTIONNAIRE. The
Administrative Agent shall have received copies of existing Phase I
environmental assessments in the Borrower's possession with respect to the
Mortgaged Properties and completed and current environmental disclosure
questionnaires and such other information with respect to the ownership and past
use of the Mortgaged Properties included in the initial determination of the
Borrowing Base as the Administrative Agent and the Lenders may reasonably
request, and such reports and questionnaire shall be satisfactory in form,
substance and scope to the Administrative Agent and the Lenders.
SECTION 6.1.12. BUDGET. The Administrative Agent shall have received a
budget for the Borrower for the following twelve (12) month period, in form,
scope and detail reasonably satisfactory to the Administrative Agent and the
Required Lenders.
SECTION 6.1.13. FINANCIAL STATEMENTS. The Administrative Agent shall
have received a consolidated balance sheet, income and cash flow statements and
statement of stockholders' equity of the Borrower and its consolidated
Subsidiaries for the years 1997 and 1998, audited by PriceWaterhouseCoopers LLP
and prepared in accordance with GAAP.
SECTION 6.1.14. CONSENTS, ETC. The Administrative Agent shall have
received certified copies of all documents evidencing any necessary Consents and
Mortgage
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Consents in connection with this Agreement, all in form and substance reasonably
satisfactory to the Administrative Agent.
SECTION 6.1.15. SHAREHOLDER ACKNOWLEDGMENT. The Administrative Agent
shall have received duly executed counterparts of an acknowledgment and consent,
in form and substance satisfactory to the Administrative Agent, from the
Borrower and each Initial Holder to the effect that each of them acknowledges
and agrees that (a) the Restricted Payment Test under this Agreement requires
that, prior to making any Distribution Payment with respect to the Series B
Preferred, the Borrower must obtain the consent of all of the Lenders, and (b)
notwithstanding the terms of any agreement between such Initial Holder and the
Borrower, without the prior written consent of all of the Lenders, no redemption
of any of the Series B Preferred shall be requested, required or exercised so
long as any of the Obligations remain unpaid or unperformed.
SECTION 6.1.16. COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES. The
Administrative Agent shall have received a certificate from an Authorized
Officer of the Borrower stating that all representations and warranties
contained in Article VII are true and correct in all material respects as of the
Effective Date.
SECTION 6.1.17. AMENDED SECURITY DOCUMENTS, ETC. The Administrative
Agent shall have received all documents, instruments and agreements amending,
supplementing or modifying the mortgages, security agreements, pledge
agreements, guaranties and other loan documents previously given under the
Existing Credit Agreement to provide that such documents, instruments and
agreements secure the Obligations, in each case pursuant to instruments in form
and substance satisfactory to the Administrative Agent and its counsel.
SECTION 6.1.18. CLOSING FEES, EXPENSES, ETC. The Administrative Agent
shall have received, for its own account, or for the account of each Lender, as
the case may be, all reasonable fees, costs and expenses due and payable
pursuant to Sections 3.3 and 11.3, if then invoiced.
SECTION 6.1.19. OTHER DOCUMENTS. The Administrative Agent and each
Lender shall have received such other instruments and documents as it may
reasonably request.
SECTION 6.2. INCLUSION OF HYDROCARBON INTERESTS IN THE BORROWING BASE.
The inclusion of any additional Hydrocarbon Interests in the Borrowing Base is
subject to the following conditions having been satisfied and receipt by the
Administrative Agent and the Required Lenders of the following documents, in
each case with respect to each Hydrocarbon Interests and related Oil and Gas
Properties which the Borrower requests be included in the Borrowing Base, each
of which conditions and documents shall be satisfactory to the Administrative
Agent and the Required Lenders in form and substance.
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SECTION 6.2.1. ENVIRONMENTAL REPORT AND QUESTIONNAIRE. The
Administrative Agent shall have received Phase I environmental assessments as of
a recent date prepared by an environmental consulting firm as shall be
acceptable to the Administrative Agent, a completed environmental disclosure
questionnaire and such other information with respect to the ownership and past
use of the Mortgaged Properties relating to such Hydrocarbon Interests as the
Administrative Agent and the Lenders may reasonably request, and such reports
and questionnaire shall be satisfactory in form, substance and scope to the
Administrative Agent and the Required Lenders.
SECTION 6.2.2. MORTGAGE. The Administrative Agent shall have received
counterparts of a Mortgage relating to such Hydrocarbon Interests and related
Oil and Gas Properties, dated as of a recent date, duly executed by the Borrower
and/or its Subsidiaries, as applicable, together with
(a) evidence of the completion (or satisfactory arrangements
for the completion) of all recordings and filings of the Mortgage as
may be necessary or, in the reasonable opinion of the Administrative
Agent, desirable effectively to create a valid, perfected first
priority Lien against the Properties purported to be covered thereby;
(b) favorable mortgagee's title opinions in favor of the
Administrative Agent (in form and substance and issued by title counsel
satisfactory to the Administrative Agent, substantially in the form of
Exhibit I-2 hereto), with respect to the Property purporting to be
covered by the Mortgage setting forth the working interest and net
revenue interest of the Borrower or its Subsidiary in such Properties
and opining that the Borrower's or such Subsidiary's title to such
property is good and marketable and valid and that the interests
created by the Mortgage constitute valid first Liens thereon free and
clear of all defects and encumbrances other than encumbrances permitted
by Section 8.2.3 or otherwise as approved by the Administrative Agent;
and
(c) such other approvals, opinions, or documents as the
Administrative Agent may reasonably request.
SECTION 6.2.3. UCC SEARCHES. The Administrative Agent shall have
received Uniform Commercial Code Requests for Information or Copies (UCC Form
11) or similar search reports certified by a party acceptable to the
Administrative Agent, dated as of a recent date, listing all effective financing
statements which name each Obligor (under its present name and any previous
names) pledging such additional Hydrocarbon Interests as the debtor and which
are filed in the jurisdictions in which a Mortgage is to be filed, together with
copies of such financing
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statements (none of which shall cover any collateral described in any such
Mortgage) other than financing statements in favor of Administrative Agent and
financing statements previously delivered to Administrative Agent and approved.
SECTION 6.2.4. EVIDENCE OF INSURANCE. The Administrative Agent shall
have received certificates of insurance satisfactory to it evidencing the
existence of all insurance required to be maintained by the Borrower by this
Agreement and the other Loan Documents with respect to the Hydrocarbon Interests
and related Oil and Gas Properties being added to the Borrowing Base.
SECTION 6.2.5. ENGINEERING REPORTS. The Administrative Agent and the
Lenders shall have received an Engineering Report, dated as of a recent date
from a petroleum engineer acceptable to the Administrative Agent, as to the
Hydrocarbon Interests being added to the Borrowing Base.
SECTION 6.2.6. MATERIAL CONTRACTS; SECURITY AGREEMENT. The
Administrative Agent shall have received true and correct copies, certified by
the Borrower, and approved the form and substance of, each Material Contract
related to the Hydrocarbon Interests being added to the Borrowing Base. Further,
if requested, the Administrative Agent shall have received duly executed
counterparts of a Security Agreement, or, if applicable, amendments to an
existing Security Agreement, providing that such Material Contracts shall be
collateral for the Obligations (and if requested, such Material Contracts shall
by their terms be assignable to the Administrative Agent as collateral for the
Obligations) and all required Consents and Mortgage Consents.
SECTION 6.2.7. GUARANTIES. The Administrative Agent shall have
received duly executed counterparts of a Guaranty from any Material Subsidiary
of the Borrower which is adding Hydrocarbon Interests to the Borrowing Base,
unless such a Guaranty has already been obtained in connection with a previous
addition to the Borrowing Base.
SECTION 6.2.8. PLEDGE AGREEMENT. The Administrative Agent shall have
received duly executed counterparts of a Pledge Agreement from the Borrower or
any of its Subsidiaries pledging the Capital Stock or partnership interests of
each Material Subsidiary that is acquiring or owns Hydrocarbon Interests being
added to the Borrowing Base, unless such a Pledge Agreement has already been
obtained, accompanied by the original share certificate evidencing such Capital
Stock or partnership interests and executed stock powers (in blank) and the
evidence of satisfactory arrangement for the completion of all filings and
recordings of the Pledge Agreement as may be necessary or, in the reasonable
opinion of the Lender, desirable, effectively to create a valid, perfected first
priority lien against and security interest in the collateral covered thereby.
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SECTION 6.2.9. OTHER DOCUMENTS. The Administrative Agent shall have
received such other instruments and documents as it may reasonably request,
including pursuant to Section 8.1.7.
SECTION 6.3. ALL CREDIT EXTENSIONS. The obligation of each Lender to
make any Credit Extension (including the initial Credit Extension) shall be
subject to the satisfaction of each of the conditions precedent set forth in
this Section 6.3.
SECTION 6.3.1. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both
before and after giving effect to any Credit Extension (but, if any Default of
the nature referred to in Section 9.1.5 shall have occurred with respect to any
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds of any Borrowing) the following statements shall be
true and correct
(a) the representations and warranties set forth in Article
VII (excluding, however, those contained in Section 7.9) shall be true
and correct in all material respects with the same effect as if then
made (unless stated to relate solely to an earlier date, in which case
such representations and warranties shall be true and correct as of
such earlier date);
(b) except as disclosed by the Borrower to the Administrative
Agent and the Lenders pursuant to Section 7.9
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending or,
to the knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries which has or might
reasonably be expected to have a Material Adverse Effect; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section 7.9
which has or might reasonably be expected to have a Material
Adverse Effect; and
(c) no Default shall have then occurred and be continuing, and
neither the Borrower nor any other Obligor shall be in material
violation of any Applicable Law or court order or decree if such
violation has or might reasonably be expected to have a Material
Adverse Effect.
SECTION 6.3.2. CREDIT REQUEST. The Administrative Agent shall have
received a Borrowing Request or Issuance Request, as the case may be, for such
Credit Extension. Each of the delivery of a Borrowing Request or an Issuance
Request and the acceptance by the Borrower of the proceeds of the Borrowing or
the issuance of the Letter of Credit as applicable, shall constitute a
representation and warranty by
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the Borrower that on the date of such Borrowing (both immediately before and
after giving effect to such Borrowing and the application of the proceeds
thereof) or the issuance of the Letter of Credit, as applicable, the statements
made in Section 6.3.1 are true and correct.
SECTION 6.3.3. SATISFACTORY LEGAL FORM. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries shall be reasonably satisfactory in form and substance to the
Administrative Agent and its counsel; the Administrative Agent and its counsel
shall have received all information, approvals, opinions, documents or
instruments as the Administrative Agent or its counsel may reasonably request.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent, each Issuer and each
Lender to enter into this Agreement and to make Loans and to issue Letters of
Credit hereunder, the Borrower represents and warrants unto the Administrative
Agent, each Issuer and each Lender as set forth in this Article VII.
SECTION 7.1. ORGANIZATION, ETC. The Borrower is a Texas corporation and
each of its Subsidiaries is a corporation or limited partnership, validly
organized and existing and in good standing under the laws of the jurisdiction
of its organization, is duly qualified to do business and is in good standing as
a foreign corporation or limited partnership, as the case may be, in each
jurisdiction where the nature of its business requires such qualification, and
has full power and authority and holds all requisite Approvals to enter into and
perform its Obligations under this Agreement, the Notes and each other Loan
Document to which it is a party and to own and hold under lease its Property and
to conduct its business substantially as currently conducted by it (other than
where failure to be so qualified or in good standing or failure to hold such
licenses, permits and other approvals would not reasonably be expected to have a
Material Adverse Effect). On the Effective Date, the Principal Shareholders own,
on a fully diluted basis, not less than 63% of the issued and outstanding shares
of the Capital Stock of the Borrower. The Initial Holders own all of the Series
B Preferred. Other than the Series B Preferred, no holder of any of the Capital
Stock of the Borrower is entitled to receive any Distribution Payment as a
matter of right, and all Distribution Payments to all shareholders of the
Borrower (other than the holders of Series B Preferred) may be made or not at
the discretion of the Borrower. The Borrower is the sole shareholder of Future
California and each of the Partners. The Partners are the sole partners of the
Partnership Subsidiaries. On the Effective Date, the Borrower has no
Subsidiaries other than those listed in Schedule II.
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SECTION 7.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution,
delivery and performance by the Borrower and each other Obligor of this
Agreement, the Notes and each other Loan Document executed or to be executed by
it are within the Borrower's and each such Obligor's corporate (or partnership
or other, as the case may be) powers, have been duly authorized by all necessary
corporate (or partnership or other, as the case may be) action, and do not
(a) contravene the Borrower's or such Obligor's Organic
Documents;
(b) contravene or result in any violation of or default under
any Applicable Law or any contractual restriction, court decree or
order, in each case binding on or affecting the Borrower or any other
Obligor or any of their respective Properties, businesses, assets or
revenues, including the Certificate of Designations of Cumulative
Redeemable Preferred Stock, Series B issued by the Borrower, the
Shareholders' Agreement or the Stock Purchase Agreement; or
(c) result in, or require the creation or imposition of, any
Lien on (except for the Liens of the Loan Documents) any of the
Borrower's or any other Obligor's respective Properties, businesses,
assets or revenues.
SECTION 7.3. GOVERNMENT APPROVAL, REGULATION, ETC. No authorization
or approval or other action by, and no notice to or filing with, any Government
Agency or other Person is required for the due execution, delivery or
performance by the Borrower or any other Obligor of this Agreement, the Notes or
any other Loan Document to which it is a party.
SECTION 7.4. INVESTMENT COMPANY ACT. Neither the Borrower nor any of
its Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 7.5. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower
nor any of its Subsidiaries is a "holding company" or a "subsidiary company" of
a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
SECTION 7.6. VALIDITY, ETC. This Agreement constitutes, and the Notes
and each other Loan Document executed by the Borrower or any of its Subsidiaries
will, on the due execution and delivery thereof, constitute, the legal, valid
and binding obligations of the Borrower or such Subsidiaries, as applicable,
enforceable in accordance with their respective terms, and each Loan Document
executed pursuant hereto by each other Obligor will, on the due execution and
delivery thereof by such Obligor, be the legal, valid and binding obligation of
such Obligor enforceable in
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accordance with its terms, in each case subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally.
SECTION 7.7. FINANCIAL INFORMATION. Each of (i) the audited
consolidated balance sheet of the Borrower and each of its consolidated
Subsidiaries as at December 31, 1998, and the related consolidated audited
statements of operations and cash flow of the Borrower and such Subsidiaries,
and (ii) the unaudited consolidated balance sheet of the Borrower and each of
its consolidated Subsidiaries as at June 30, 1999, and the related consolidated
unaudited statements of operations and cash flow of the Borrower and such
Subsidiaries, copies of which have been furnished to the Administrative Agent
and each Lender, have been prepared in accordance with GAAP consistently
applied, and present fairly the consolidated financial condition of the
partnerships and corporations covered thereby as at the date thereof and the
results of their audited operations for the period then ended.
SECTION 7.8. NO MATERIAL ADVERSE CHANGE. Since the date of the
audited financial statements described in Section 7.7, there has been no change
in the financial condition, operations, assets, business, Properties or
prospects of the Borrower or its Subsidiaries that has or might reasonably be
expected to have a Material Adverse Effect. As at June 30, 1999, the Tangible
Net Worth of the Borrower and its consolidated Subsidiaries was not less than
$52,440,614.
SECTION 7.9. LITIGATION, LABOR CONTROVERSIES, ETC. There is no
pending or, to the knowledge of the Borrower, threatened litigation, action,
proceeding, or labor controversy affecting the Borrower or any of its
Subsidiaries, or any of their respective Properties, businesses, assets or
revenues, which has or might reasonably be expected to have a Material Adverse
Effect, except as disclosed in Item 7.9 ("Litigation") of the Disclosure
Schedule.
SECTION 7.10. OWNERSHIP OF PROPERTIES. The Borrower and each of its
Subsidiaries has good and marketable title to its Properties (including, without
limitation, all Hydrocarbon Interests), free and clear of all Liens except (a)
those referred to in the financial statements referred to in Section 7.7, (b) as
disclosed to the Lenders in the Disclosure Schedule or (c) as permitted by
Section 8.2.3. After giving full effect to all Liens permitted under Section
8.2.3, the Borrower and its Subsidiaries own the net interests in Hydrocarbons
produced from the Oil and Gas Properties as reflected in the most recent
Engineering Report, and neither the Borrower nor any of its Subsidiaries is
obligated to bear costs or expenses in respect of the Oil and Gas Properties in
excess of its working interest percentage as reflected in the most recent
Engineering Report. The Administrative Agent has received currently effective,
duly executed Mortgages and other Loan Documents encumbering Oil and Gas
Properties constituting at least 90% of the amount of Proven Reserves to which
value is given in the determination of the current Borrowing Base.
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SECTION 7.11. TAXES. The Borrower and each of its Subsidiaries has
filed all tax returns and reports required by Applicable Law to have been filed
by it and has paid all taxes and governmental charges thereby shown to be owing,
except any such taxes or charges which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books.
SECTION 7.12. PENSION AND WELFARE PLANS. During the
twelve-consecutive-month period prior to the Effective Date and prior to the
date of any Borrowing hereunder, no steps have been taken to terminate any
Pension Plan, and no contribution failure has occurred with respect to any
Pension Plan sufficient to give rise to a Lien under section 302(f) of ERISA. No
condition exists or event or transaction has occurred with respect to any
Pension Plan which might result in the incurrence by the Borrower or any member
of the Controlled Group of any material liability, fine or penalty. Except as
disclosed in Item 7.12 ("Employee Benefit Plans") of the Disclosure Schedule,
neither the Borrower nor any member of the Controlled Group has any contingent
liability with respect to any post-retirement benefit under a Welfare Plan,
other than liability for continuation coverage described in Part 6 of Title I of
ERISA.
SECTION 7.13. COMPLIANCE WITH LAW. Neither the Borrower nor any of
its Subsidiaries (a) is in violation of any Applicable Law of, or the terms of
any Approval issued by, any Government Agency; or (b) has failed to obtain any
Approval necessary to ownership of any of their respective Properties or the
conduct of their respective business (including without limitation any such
authorization from the Federal Energy Regulatory Commission, the Minerals
Management Service or any state conservation commission or similar body); which
violation or failure could reasonably be expected to have a Material Adverse
Effect.
SECTION 7.14. CLAIMS AND LIABILITIES. Except as disclosed to the
Lenders in Item 7.14 ("Claims and Liabilities") of the Disclosure Schedule,
neither the Borrower nor any of its Subsidiaries has accrued any liabilities
under gas purchase contracts for gas not taken, but for which it is liable to
pay if not made up and which, if not paid, would have a Material Adverse Effect.
Except as disclosed to the Lenders in Item 7.14 of the Disclosure Schedule, no
claims exist against the Borrower or any of its Subsidiaries for gas imbalances
which claims if adversely determined would have a Material Adverse Effect. No
purchaser of product supplied by the Borrower or any of its Subsidiaries has any
claim against the Borrower or any of its Subsidiaries for product paid for, but
for which delivery was not taken as and when paid for, which claim if adversely
determined would have a Material Adverse Effect.
SECTION 7.15. NO PROHIBITION ON PERFECTION OF SECURITY DOCUMENTS. None
of the terms or provisions of any indenture, mortgage, deed of trust, agreement
or other instrument to which the Borrower or any of its Subsidiaries is a party
or by which the
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Borrower or any of its Subsidiaries or the property of the Borrower or any of
its Subsidiaries is bound prohibit the filing or recordation of any of the Loan
Documents or any other action which is necessary or appropriate in connection
with the perfection of the Liens evidenced and created by any of the Loan
Documents.
SECTION 7.16. SOLVENCY. Neither the Borrower nor any of its
Subsidiaries is "insolvent", as such term is used and defined in the United
States Bankruptcy Code, 11 U.S.C. Section 101, et seq.
SECTION 7.17. ENVIRONMENTAL WARRANTIES. As a reasonable and prudent
operator of oil and gas producing properties, in the ordinary course of its
business, the Borrower has conducted, with respect to its existing Oil and Gas
Properties, and, on an ongoing basis, conducts a review of the effect of
Environmental Laws on business, operations and properties of the Borrower and
its Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including any capital or operating expenditures required
for Remedial Action or other clean-up or closure of Properties presently owned
or operated, any capital or operating expenditures required for Remedial Action
or otherwise to achieve or maintain compliance with environmental protection
standards imposed by Environmental Law or as a condition of any Approval or
contract, any related constraints on operating activities, including any
periodic or permanent shutdown of any facility or reduction in the level of or
change in the nature of operations conducted thereat and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses). On the basis of this review, the Borrower has reasonably concluded
that, except as disclosed in Item 7.17 ("Environmental Matters") of the
Disclosure Schedule, to the best of its knowledge after due inquiry:
(a) all facilities and Property (including underlying
groundwater) owned, leased or operated by the Borrower or any of its
Subsidiaries have been, and continue to be, owned, leased or operated
by the Borrower and its Subsidiaries in material compliance with all
Environmental Laws;
(b) there have been no past, and there are no pending or
threatened
(i) claims, complaints, notices or inquiries to, or
requests for information received by, the Borrower or any of
its Subsidiaries with respect to any alleged violation of any
Environmental Law, that, singly or in the aggregate, have or
may reasonably be expected to have a Material Adverse Effect,
or
(ii) claims, complaints, notices or inquiries to, or
requests for information received by, the Borrower or any of
its Subsidiaries regarding potential liability under any
Environmental Law or under any common law theories relating to
operations or the condition of any facilities or
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Property (including underlying groundwater) owned, leased or
operated by the Borrower or any of its Subsidiaries that,
singly or in the aggregate, have, or may reasonably be
expected to have a Material Adverse Effect;
(c) there have been no Releases of Hazardous Materials at, on
or under any Property now or previously owned or leased by the Borrower
or any of its Subsidiaries that, singly or in the aggregate, have, or
may reasonably be expected to have, a Material Adverse Effect;
(d) each of the Borrower or any of its Subsidiaries has been
issued and is in compliance with all Approvals relating to
environmental matters and necessary or desirable for its business
(other than where failure to so obtain or be in compliance with such
Approvals and other Approvals would not reasonably be expected to
result in a Material Adverse Effect);
(e) no Property now or previously owned, leased or operated by
the Borrower or any of its Subsidiaries is listed or proposed for
listing on the National Priorities List pursuant to CERCLA, or, to the
extent that such listing may, singly or in the aggregate, have, or may
reasonably be expected to have a Material Adverse Effect, on the
CERCLIS or on any other federal or state list of sites requiring
investigation or clean-up;
(f) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any Property
now or previously owned, leased or operated by the Borrower or any of
its Subsidiaries that, singly or in the aggregate, have, or may
reasonably be expected to have, a Material Adverse Effect;
(g) neither the Borrower nor any Subsidiary of the Borrower
has directly transported or directly arranged for the transportation of
any Hazardous Material to any location which is listed or proposed for
listing on the National Priorities List pursuant to CERCLA, or, to the
extent that such listing may, singly or in the aggregate, have, or may
reasonably be expected to have a Material Adverse Effect, on the
CERCLIS or on any federal or state list or which is the subject of
federal, state or local enforcement actions or other investigations
which may lead to material claims against the Borrower or such
Subsidiary for any remedial work, damage to natural resources or
personal injury, including claims under CERCLA;
(h) there are no polychlorinated biphenyls, radioactive
materials or friable asbestos present at any Property now or previously
owned or leased by the Borrower or any of its Subsidiaries that, singly
or in the aggregate, have, or may reasonably be expected to have, a
Material Adverse Effect; and
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(i) no condition exists at, on or under any property now or
previously owned or leased by the Borrower or any of its Subsidiaries
which, with the passage of time, or the giving of notice or both, would
give rise to material liability under any Environmental Law that,
singly or in the aggregate have, or may reasonably be expected to have
a Material Adverse Effect.
SECTION 7.18. REGULATIONS T, U AND X. Neither the Borrower nor any of
its Subsidiaries is engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock, and no proceeds of any Loans will be
used for a purpose which violates, or would be inconsistent with, F.R.S. Board
Regulation T, U or X, so long as the amount paid for such margin stock does not
exceed the lesser of (i) five-percent (5%) of the Borrowing Base at the time of
such acquisition, and (ii) twenty-five percent (25%) (or such lesser percentage
as may be required by then Applicable Law) of the value of the Borrower's
assets. Terms for which meanings are provided in F.R.S. Board Regulation T, U or
X or any regulations substituted therefor, as from time to time in effect, are
used in this Section with such meanings.
SECTION 7.19. INSURANCE. The Borrower and its Subsidiaries have the
benefit of the insurance coverage described in the certificates of insurance
delivered pursuant to Section 6.1.9 and required to be maintained pursuant to
Section 8.1.4.
SECTION 7.20. YEAR 2000 COMPLIANCE.
(a) The Borrower has (i) 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 (as well as imbedded microchips) used
by the Borrower or any of its Subsidiaries (or its suppliers and
vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December
31, 1999), (ii) developed a plan and time line for addressing the Year
2000 Problem on a timely basis, and (iii) to date, implemented that
plan in accordance with that timetable.
(b) The Borrower reasonably believes that all computer
applications (including those of its and its Subsidiaries' 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 could not reasonably be expected to have
Material Adverse Effect.
SECTION 7.21. ACCURACY OF INFORMATION. All factual information
heretofore or contemporaneously furnished by or on behalf of the Borrower or any
of its Subsidiaries in writing to the Administrative Agent, the Issuers or the
Lenders for purposes of or
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in connection with this Agreement or any transaction contemplated hereby
(including without limitation each Engineering Report) is, and all other such
factual information hereafter furnished by or on behalf of the Borrower to the
Administrative Agent, the Issuers or the Lenders will be, true and accurate in
every material respect on the date as of which such information is dated or
certified and as of the date of execution and delivery of this Agreement by the
Lenders, and such information is not, or shall not be, as the case may be,
incomplete by omitting to state any material fact necessary to make such
information not misleading. It is understood and agreed, however, that (i) each
Engineering Report is necessarily based upon economic assumptions and
professional opinions, estimates, and projections, (ii) any financial projection
which the Borrower or any of the Borrower's representatives has provided or may
provide in connection with the transactions contemplated hereby (the
"Projections") are similarly based on economic assumptions, opinions and
estimates, (iii) the Borrower makes no representation or warranty that such
assumptions, opinions, estimates and projections will ultimately prove to have
been accurate, (iv) the Borrower makes no representation or warranty with
respect to any price or cost projections furnished by the Administrative Agent
or any Lender for use in preparing any Engineering Report, and (v) no
representation or warranty is made with respect to the extent or value of any
Hydrocarbon Interests to which no Proven Reserves are attributed, so long as
such Hydrocarbon Interests are not shown in or covered by any Engineering Report
as constituting Proven Reserves; provided that, notwithstanding the foregoing
limitations concerning Projections, the Borrower represents and warrants, with
respect to all Projections that have been or will be provided by the Borrower or
any of its representatives or Subsidiaries, that such Projections have been or
will be, as the case may be, prepared in good faith based upon assumptions that
Borrower's management believed or believes, as the case may be, to be reasonable
at the time such Projections were or are prepared and that the factual
information furnished by the Borrower or any of its Subsidiaries to the
engineers and others who prepared such Projections was true and correct in all
material respects.
ARTICLE VIII
COVENANTS
SECTION 8.1. AFFIRMATIVE COVENANTS. The Borrower agrees with the
Administrative Agent, each Lender and each Issuer that, until all Commitments
have terminated and all Obligations have been paid and performed in full, the
Borrower will perform the obligations set forth in this Section 8.1.
SECTION 8.1.1. FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The
Borrower will furnish, or will cause to be furnished, to the Administrative
Agent and each Lender copies of the following financial statements, reports,
notices and information:
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(a) as soon as available and in any event within forty-five
(45) days after the end of each of the first three Fiscal Quarters of
each Fiscal Year of the Borrower, consolidated and consolidating
balance sheets of the Borrower and its consolidated Subsidiaries as of
the end of such Fiscal Quarter and consolidated and consolidating
statements of operations and cash flow of the Borrower and its
consolidated Subsidiaries for such Fiscal Quarter and for the period
commencing at the end of the previous Fiscal Year and ending with the
end of such Fiscal Quarter, certified by the chief financial Authorized
Officer of the Borrower;
(b) as soon as available and in any event within ninety (90)
days after the end of each Fiscal Year of the Borrower, a copy of the
annual audit report for such Fiscal Year for the Borrower and its
consolidated Subsidiaries, including therein the consolidated balance
sheets of the Borrower as of the end of such Fiscal Year and statements
of operations and cash flow of the Borrower and its consolidated
Subsidiaries for such Fiscal Year, in each case certified (without any
Impermissible Qualification) in a manner reasonably acceptable to the
Administrative Agent by PriceWaterhouseCoopers L.L.P. or an independent
public accountant acceptable to the Administrative Agent and the
Required Lenders, together with a report from such accountants
containing a computation of, and showing compliance with, each of the
financial ratios and restrictions contained in Section 8.2.4 and to the
effect that, in making the examination necessary for the signing of
such annual report by such accountants, they have not become aware of
any Default that has occurred and is continuing or, if they have become
aware of such Default, describing such Default and the steps, if any,
being taken to cure it;
(c) concurrently with the delivery of the financial statements
referred to in clauses (a) and (b), a certificate, executed by the
chief financial Authorized Officer of the Borrower, showing (in
reasonable detail and with appropriate calculations and computations in
all respects reasonably satisfactory to the Administrative Agent)
compliance with the financial covenants set forth in Section 8.2.4 and
also certifying, to such Authorized Officer's best knowledge, that no
Default has occurred and is then outstanding;
(d) on or prior to December 31st of each calendar year, annual
financial budget for the Borrower and its Subsidiaries for the
following calendar year, in form, scope and detail reasonably
satisfactory to the Administrative Agent and the Required Lenders;
(e) upon request of the Administrative Agent, on or prior to
December 31st of each calendar year, a capital budget for the Borrower
and its Subsidiaries for the following calendar year, in form, scope
and detail reasonably satisfactory to the Administrative Agent and the
Required Lenders;
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(f) as soon as possible and in any event within three (3)
Business Days after the Borrower knows (or, in the exercise of
reasonable diligence, should have known) of the occurrence of each
Default and any event which has or is reasonably likely to have a
Material Adverse Effect, a statement of the chief financial Authorized
Officer of the Borrower setting forth details of such Default or event
and the action which the Borrower has taken and proposes to take with
respect thereto;
(g) as soon as possible and in any event within three (3)
Business Days after (x) the occurrence of any adverse development with
respect to any litigation, action, proceeding or labor controversy
described in Section 7.9 or (y) the commencement of any litigation,
action, proceeding or labor controversy of the type described in
Section 7.9, notice thereof and copies of all documentation relating
thereto;
(h) as soon as possible and in any event within ten (10) days
after any responsible officer of the Borrower has actual knowledge
thereof, notice of
(i) any claim by any Person against the Borrower or
any of its Subsidiaries of nonpayment of, or
(ii) any attempt by any Person to collect upon or
enforce any accounts payable of the Borrower or any of its
Subsidiaries, in the case of any single account payable in
excess of $250,000, or in the case of all accounts payable in
the aggregate in excess of $500,000;
(i) upon, but in no event later than ten (10) days after, any
responsible officer of the Borrower or any of its Subsidiaries becomes
aware of (i) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened
or other environmental claims against the Borrower or any Subsidiary or
any of its Properties pursuant to any applicable Environmental Laws
which could have a Material Adverse Effect, and (ii) any environmental
or similar condition on any real property adjoining or in the vicinity
of the property of the Borrower or any Subsidiary that could reasonably
be anticipated to cause such property or any part thereof to be subject
to any restrictions on the ownership, occupancy, transferability or use
of such property under any Environmental Laws;
(j) as soon as available and in any event within sixty (60)
days after January 1st of each calendar year, an Engineering Report
from an independent petroleum engineering firm acceptable to the
Administrative Agent, and as soon as available and in any event within
sixty (60) days after July 1st of each calendar year, an Engineering
Report prepared by a reserve engineer employed by the Borrower, unless
the Administrative Agent, at least sixty (60) days
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before the required delivery date of such Engineering Report, has
requested that it be prepared by an independent petroleum engineering
firm reasonably acceptable to the Administrative Agent;
(k) promptly after (i) the sending or filing thereof, copies
of all periodic and other reports distributed by the Borrower to its
shareholders generally, (ii) the sending or filing thereof, all reports
and registration statements which the Borrower or any of its
Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange, (iii) the filing thereof, copies of all
tariff and rate cases and other material reports filed with any
regulatory authority, and (iv) receipt thereof, copies of all notices
received from any regulatory authority concerning noncompliance by the
Borrower or any of its Subsidiaries with any applicable regulations;
(l) immediately upon becoming aware of the institution of any
steps by the Borrower or any other Person to terminate any Pension
Plan, or the failure to make a required contribution to any Pension
Plan if such failure is sufficient to give rise to a Lien under section
302(f) of ERISA, or the taking of any action with respect to a Pension
Plan which could result in the requirement that the Borrower furnish a
bond (other than customary fidelity bonds under section 412 of ERISA)
or other security to the PBGC or such Pension Plan, or the occurrence
of any event with respect to any Pension Plan which could result in the
incurrence by the Borrower of any material liability, fine or penalty,
or any material increase in the contingent liability of the Borrower
with respect to any post-retirement Welfare Plan benefit, notice
thereof and copies of all documentation relating thereto;
(m) promptly after the Borrower discovers or determines that
any computer application (including those of its suppliers or vendors)
that is material to the businesses or operations of the Borrower and
its Subsidiaries taken as a whole will not be Year 2000 Compliant on a
timely basis, notice thereof and a copy of the Borrower's plan for
dealing with such problem, except to the extent such failure could not
reasonably be expected to have a Material Adverse Effect; and
(n) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as any Lender through the Administrative Agent may from
time to time reasonably request.
SECTION 8.1.2. COMPLIANCE WITH LAWS, ETC. The Borrower will, and
will cause each of its Subsidiaries to, comply in all respects with all
Applicable Laws, (except where the failure to so comply would not reasonably be
expected to result in a Material Adverse Effect), such compliance to include
(without limitation):
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(a) the maintenance and preservation of its existence, and
qualification as a foreign entity, other than the failure to maintain,
preserve or qualify a non-Material Subsidiary which would not
reasonably be expected to have a Material Adverse Effect; provided that
nothing in this Section shall prohibit mergers permitted under Section
8.2.8, or the termination of the existence of a Subsidiary (other than
a Material Subsidiary) if the Borrower in good faith determines that
such termination is in the best interest of the Borrower; and
(b) the payment, before the same become delinquent, of all
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
SECTION 8.1.3. MAINTENANCE AND DEVELOPMENT OF PROPERTIES. The
Borrower will, and will cause each of its Subsidiaries to, maintain, preserve,
protect and keep its Properties in good repair, working order and condition
(ordinary wear and tear excepted), and make necessary and proper repairs,
renewals and replacements so that its business carried on in connection
therewith may be properly conducted at all times in accordance with standard
industry practices. In particular, the Borrower will, and will cause each of its
Subsidiaries to, operate or cause to be operated its Oil and Gas Properties as a
reasonable and prudent operator. The Borrower shall use its reasonable best
efforts to develop and bring into production in a prudent and businesslike
manner all proved developed non-producing reserves that the Required Lenders
have considered in their determination of the Borrowing Base.
SECTION 8.1.4. INSURANCE. The Borrower will, and will cause each of
its Subsidiaries to, maintain or cause to be maintained with responsible
insurance companies insurance with respect to its properties and business
against such casualties and contingencies and of such types and in such amounts
as is customary in the case of similar businesses (including, where appropriate,
well control, operator's extra expense and remediation insurance) and will
furnish to the Administrative Agent, on or before December 31st each year, and,
at the Administrative Agent's request, at other reasonable intervals, a
certificate of an Authorized Officer of the Borrower setting forth the nature
and extent of all insurance maintained by the Borrower and its Subsidiaries in
accordance with this Section. The following shall apply to the insurance
required by this Section 8.1.4:
(a) Each policy for property insurance covering the Mortgaged
Property shall show the Administrative Agent as loss payee;
(b) Each policy for liability insurance covering the Mortgaged
Property shall show the Administrative Agent, the Lenders and the
Issuers as additional insured;
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(c) Each insurance policy covering the Mortgaged Property
shall provide that at least thirty (30) days prior written notice of
cancellation, reduction in amount or other change in coverage, or of
lapse shall be given to the Administrative Agent by the insurer; and
(d) The Borrower shall, if so requested by the Administrative
Agent, deliver to the Administrative Agent the original or a certified
copy of each insurance policy covering the Mortgaged Property.
SECTION 8.1.5. BOOKS AND RECORDS. The Borrower will, and will cause
each of its Subsidiaries to, keep books and records which accurately reflect all
of its material business affairs and transactions and permit the Administrative
Agent, each Issuer and each Lender or any of their respective representatives,
at reasonable times and intervals, to visit all of its offices, to discuss its
financial matters with its officers and, upon forty-eight (48) hours prior
notice to the Borrower, with the Borrower's independent public accountant (and
the Borrower hereby authorizes such independent public accountant to discuss the
Borrower's and its Subsidiaries' financial matters with the Administrative
Agent, the Issuers and the Lenders or their representatives whether or not any
representative of the Borrower is present) and to examine (and, at the expense
of the Borrower, photocopy extracts from) any of its books or other corporate
records. The Borrower shall pay any reasonable fees of such independent public
accountant incurred in connection with the Administrative Agent's or any
Issuer's or any Lender's exercise of their rights pursuant to this Section.
Furthermore, the Borrower will permit the Administrative Agent, or its agents,
at the cost and expense of the Borrower, to enter upon the Oil and Gas
Properties and all parts thereof, for the purpose of investigating and
inspecting the condition and operation thereof, and shall permit reasonable
access to the field offices and other offices, including the principal place of
business, of the Borrower to inspect and examine the Oil and Gas Properties.
SECTION 8.1.6. ENVIRONMENTAL COVENANT. The Borrower will, and will
cause each of its Subsidiaries to,
(a) use, operate and maintain all of its facilities and
Properties in material compliance with all Environmental Laws, keep all
necessary Approvals relating to environmental matters in effect and
remain in material compliance therewith, and handle all Hazardous
Materials in material compliance with all applicable Environmental
Laws;
(b) (i) immediately notify the Administrative Agent and
provide copies upon receipt of all written claims, complaints, notices
or inquiries relating to the condition of its facilities and Properties
or compliance with Environmental Laws, (ii) use all reasonable efforts
to have dismissed with prejudice any actions or proceedings relating to
compliance with Environmental Laws which would reasonably be expected
to have a Material Adverse Effect, and (iii) diligently
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pursue cure of any material underlying environmental problem which
forms the basis of any such claim, complaint, notice or inquiry; and
(c) provide such information and certifications which the
Administrative Agent may reasonably request from time to time to
evidence compliance with this Section 8.1.6.
SECTION 8.1.7. FURTHER ASSURANCES.
(a) The Borrower shall, and shall cause each of its
Subsidiaries, upon the request of the Administrative Agent, to take
such actions and to execute and deliver such documents and instruments
as the Administrative Agent shall require to ensure that the
Administrative Agent shall, at all times, have received currently
effective, duly executed Loan Documents encumbering Oil and Gas
Properties of the Borrower or any of its Subsidiaries not then subject
to a Mortgage constituting 90% of the Proven Reserves to which value
has been given in the then current Borrowing Base and satisfactory
title evidence in form and substance reasonably acceptable to the
Administrative Agent, in its reasonable business judgment, as to
ownership of such Oil and Gas Properties; provided that, upon thirty
(30) days notice to the Borrower, the Administrative Agent may require,
and the Borrower and/or its Subsidiaries, as applicable, shall execute,
acknowledge and deliver to the Administrative Agent, Mortgages
effectively encumbering 100% of the Oil and Gas Properties of the
Borrower and its Subsidiaries to which value is given in the
determination of the then current Borrowing Base.
(b) If the Administrative Agent shall determine that, as of
the date of any Borrowing Base Redetermination, the Borrower shall have
failed to comply with the preceding Subsection (a), the Administrative
Agent may (and, at the direction of the Required Lenders, shall) notify
the Borrower in writing of such failure and, within thirty (30) days
from and after receipt of such written notice by the Borrower, the
Borrower and its Subsidiaries, as applicable, shall execute and deliver
to the Administrative Agent supplemental or additional Loan Documents,
in form and substance satisfactory to the Administrative Agent and its
counsel, securing payment of the Notes and the other Obligations and
covering additional assets not then encumbered by any Loan Documents
(together with current valuations, Engineering Reports, and title
evidence applicable to the additional assets collaterally assigned,
each of which shall be in form and substance satisfactory to the
Administrative Agent) such that the Administrative Agent shall have
received currently effective duly executed Loan Documents encumbering
Oil and Gas Properties constituting at least 90% (or, as provided in
Section 8.1.7(a), 100%) of the amount of Proven Reserves to which value
is given in the determination of the then current Borrowing Base and
satisfactory title evidence in form and substance acceptable to the
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Administrative Agent in its reasonable business judgment as to
ownership of such Oil and Gas Properties and the valid first Liens in
favor of the Administrative Agent.
(c) Promptly upon the determination that any Subsidiary has
become a Material Subsidiary, the Borrower will cause such Material
Subsidiary to execute and deliver to the Administrative Agent a
Guaranty and a Security Agreement and (if such Subsidiary has Oil and
Gas Properties included in the Borrowing Base) a Mortgage, and the
Borrower will enter into such amendments to the Pledge Agreement as are
necessary to cause the stock or partnership interests, as the case may
be, of such Material Subsidiary to become subject to the Pledge
Agreement.
(d) The Borrower shall ensure that all written information,
exhibits, certificates and reports furnished by or on behalf of the
Borrower to the Administrative Agent do not and will not contain any
untrue statement of material fact and do not and will not omit to state
any material fact or any fact necessary to make the statements
contained therein not misleading in light of the circumstances in which
made, and will promptly disclose to the Administrative Agent and
correct any defect or error that may be discovered therein or in any
Loan Document or in the execution, acknowledgment or recordation
thereof.
SECTION 8.1.8. YEAR 2000 COMPLIANCE. The Borrower will promptly
notify the Administrative Agent in the event the 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 will not be Year 2000 Compliant on a timely basis, except to the
extent that such failure could not reasonably be expected to have a Material
Adverse Effect.
SECTION 8.2. NEGATIVE COVENANTS. The Borrower agrees with the
Administrative Agent, each Lender and the Issuer that, until all Commitments
have terminated and all Obligations have been paid and performed in full, the
Borrower will perform the obligations set forth in this Section 8.2.
SECTION 8.2.1. BUSINESS ACTIVITIES. The Borrower will not, and will
not permit any of its Subsidiaries to, engage in any business activity, except
those described in the first recital and such activities as may be incidental or
related thereto.
SECTION 8.2.2. INDEBTEDNESS. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
(a) Indebtedness in respect of the Loans and other
Obligations;
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(b) Indebtedness in an aggregate principal amount not to
exceed (i) $500,000 at any time outstanding which is incurred by the
Borrower or any of its Subsidiaries to a vendor of any assets not
prohibited from being acquired by Section 8.2.8 to finance its
acquisition of such assets and (ii) $250,000 at any one time
outstanding by the Borrower or any of its Subsidiaries which is secured
by Liens described in Section 8.2.3(j);
(c) unsecured Indebtedness incurred in the ordinary course of
business (including (i) open accounts extended by suppliers on normal
trade terms in connection with purchases of goods and services and (ii)
gas balancing, but excluding Indebtedness incurred through the
borrowing of money or Contingent Liabilities);
(d) Hedging Obligations incurred pursuant to Hedging
Agreements approved by the Administrative Agent pursuant to Section
8.2.15;
(e) Contingent Obligations incurred to satisfy bonding
requirements imposed by any Government Agency not to exceed, in the
aggregate, $500,000, excluding any Letters of Credit;
(f) Indebtedness existing as of the Effective Date which is
identified in Item 8.2.2(f) of the Disclosure Schedule and refinancings
thereof; provided that the principal amount thereof is not increased
beyond the amount outstanding thereunder on the Effective Date;
(g) Indebtedness in respect of Capitalized Lease Obligations
in an amount not to exceed $500,000 at any time outstanding;
(h) Indebtedness owed by the Borrower to any of the
Subsidiaries or by any Material Subsidiary of the Borrower to the
Borrower or any Material Subsidiary;
(i) endorsements of negotiable instruments for collection in
the ordinary course of business;
(j) Indebtedness of the Borrower and its Subsidiaries which
are Investments to the extent permitted by Section 8.2.5(b);
(k) Additional Indebtedness not permitted by clauses (a)
through (j) above, provided, however, that the aggregate amount of all
Indebtedness incurred by the Borrower and its Subsidiaries pursuant to
this clause (k) shall not exceed $500,000 at any one time outstanding;
and
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(l) Renewals, extensions, amendments, refinancing,
rearrangements, modifications, restatements, defeasances, purchases or
supplements of any Indebtedness referred to in Subsection 8.2.2(a)
through (k), provided that any such Indebtedness is not increased
beyond the amount thereof outstanding on the Effective Date or on the
date of incurrence of such Indebtedness in accordance with this
Section;
provided, however, that no Indebtedness otherwise permitted by clause (b) shall
be permitted if, after giving effect to the incurrence thereof, any Default
shall have occurred and be continuing.
SECTION 8.2.3. LIENS. The Borrower will not, and will not permit any
of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon
any of its property, revenues or assets, whether now owned or hereafter
acquired, except:
(a) Liens securing payment of the Obligations, granted
pursuant to any Loan Document;
(b) Liens granted to secure payment of Indebtedness of the
type permitted and described in clause (b) of Section 8.2.2 and
covering only those assets acquired with the proceeds of such
Indebtedness;
(c) Hydrocarbon production sales contracts entered into by the
Borrower or its Subsidiaries in the ordinary course of business;
(d) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(e) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business for
claims which are either not delinquent or are being contested in good
faith by appropriate proceedings and as to which the Borrower or its
applicable Subsidiary shall have set aside on its books such reserves
as may be required pursuant to GAAP; provided, that at no time shall
such sums which are being contested exceed in the aggregate $100,000;
(f) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance
of tenders, statutory obligations, leases and contracts (other than for
borrowed money)
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entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds, including lessee or operator
obligations under statutes, governmental regulations or instruments
related to the ownership, exploration and production of oil, gas and
minerals on private, state, federal or foreign lands or waters;
(g) covenants, restrictions, easements, servitudes, permits,
conditions, exceptions, reservations, minor rights, minor encumbrances,
minor irregularities in title or conventional rights of reassignment
prior to abandonment which do not materially interfere with the
occupation, use and enjoyment by the Borrower or any of its
Subsidiaries of their respective assets in the ordinary course of
business as presently conducted, or materially impair the value thereof
for the purpose of such business;
(h) judgment Liens in existence less than thirty (30) days
after the entry thereof or with respect to which execution has been
stayed or the payment of which is covered in full (subject to a
customary deductible) by insurance maintained with responsible
insurance companies;
(i) Liens granted prior to the Effective Date to secure
payment of Indebtedness described in clause (f) of Section 8.2.2;
provided that such Lien does not extend to any other Property;
(j) any Lien, excluding any Lien to secure Indebtedness for
Debt, existing on any asset of any Person that is not included in the
Borrowing Base at the time such Person becomes a Subsidiary of the
Borrower or is merged or consolidated with or into the Borrower or a
Subsidiary of the Borrower, or as of the acquisition of such asset,
provided that such Lien does not extend to any other Property and was
not created in contemplation of such event;
(k) Liens on cash and Cash Equivalent Investments securing
Hedging Obligations, provided that the aggregate amount of cash and
Cash Equivalent Investments subject to such Liens may at no time exceed
$250,000;
(l) Liens which (1) do not secure Debt, (2) arise by statute
or in the ordinary course of business under operating agreements, joint
venture agreements, oil and gas partnership agreements, oil and gas
leases, farm-out agreements, division orders, contracts for the sale,
transportation or exchange of oil and natural gas, unitization and
pooling declarations and agreements, area of mutual interest
agreements, overriding royalty agreements, marketing agreements,
processing agreements, net profits agreements, Production Payments,
development agreements, production sales contracts, gas balancing or
deferred production agreements, injection, repressuring and recycling
agreements, salt water or other disposal agreements, seismic or other
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geophysical permits or agreements, and other agreements which are, in
the Administrative Agent's reasonable judgment, customary in the oil
and gas business, and (3) are for claims which are either not
delinquent or are being contested in good faith by appropriate
proceedings and as to which the Borrower or its applicable Subsidiaries
shall have set aside on its books such reserves as may be required
pursuant to GAAP;
(m) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar
rights and remedies and burdening only deposit accounts or other funds
maintained with a creditor depository institution; provided that (i) no
such deposit account is a dedicated cash collateral account or is
subject to restrictions against access by the depositor in excess of
those set forth by regulations promulgated by the Board of Governors of
the Federal Reserve System, and (ii) no such deposit account is
intended by Borrower or any of its Subsidiaries to provide collateral
to the depository institution;
(n) any Lien arising out of the refinancing, extension,
renewal or refunding of any Indebtedness secured by any Lien permitted
by any of the foregoing clauses of this Section, provided that any such
Indebtedness is not increased beyond the amount thereof outstanding on
the Effective Date or on the date of incurrence of such Lien in
accordance with this Section and is not secured by any additional
assets;
(o) the statutory Lien to secure payment of the proceeds of
Hydrocarbon production established by Texas Bus. & Com. Code Section
9.319 and similar laws of other jurisdictions;
(p) rights reserved to or vested in any Government Agency by
the terms of any right, power, franchise, grant, license, or permit, or
by any provision of law, to terminate such right, power, franchise,
grant, license, or permit or to purchase, condemn, expropriate, or
recapture or to designate a purchaser of any of the Properties of the
Borrower or its Subsidiaries;
(q) rights of a common owner of any interest in real estate,
rights of way, or easements held by the Borrower or its Subsidiary and
such common owner as tenant in common or through other common
ownership;
(r) Liens not otherwise permitted by the foregoing clauses of
this Section 8.2.3 securing Indebtedness in an aggregate principal or
face amount not at any time exceeding $500,000; and
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(s) Liens on the Arco East Texas Property, to the extent the
Company's Subsidiary owning such Property is indemnified against any
loss arising therefrom pursuant to the Arco Title Indemnity.
SECTION 8.2.4. FINANCIAL CONDITION. The Borrower will not permit:
(a) Tangible Net Worth at any time to be less than the sum of
(i) $44,574,521 plus (ii) fifty percent (50%) of consolidated net
income of the Borrower and its Subsidiaries (excluding the effects of
consolidated net losses) for each Fiscal Quarter beginning on or after
July 1, 1999, plus (iii) one-hundred percent (100%) of the net proceeds
of any Non-Redeemable Stock offering by the Borrower or any of its
Subsidiaries at any time after the Effective Date;
(b) the Current Ratio at any time to be less than 1.0:1.0; or
(c) the Interest Coverage Ratio at the end of any Fiscal
Quarter to be less than 3.0:1.0.
The Borrower shall not, and shall not suffer or permit any Subsidiary
to, make any significant change in accounting treatment or reporting
practices, except as required by GAAP, or, without the consent of the
Administrative Agent, such consent not to be unreasonably withheld,
change the fiscal year of the Borrower or of any Subsidiary.
SECTION 8.2.5. INVESTMENTS. The Borrower will not, and will not permit
any of its consolidated or Material Subsidiaries to, make, incur, assume or
suffer to exist any Investment in any other Person, except:
(a) Cash Equivalent Investments;
(b) in the ordinary course of business, Investments by the
Borrower in any of its Material Subsidiaries, or by any such Subsidiary
in the Borrower or any of its Material Subsidiaries, by way of
contributions to capital or loans or advances;
(c) without duplication, Investments in the nature of Capital
Expenditures;
(d) Investments existing on the Effective Date and identified
in Item 8.2.5(d) of the Disclosure Schedule;
(e) Investments permitted by Section 8.2.8;
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(f) Investments in limited partnerships entered into by the
Borrower or a Subsidiary of the Borrower, or general partnerships
entered into by a non-Material Subsidiary of the Borrower, in each case
with industry partners in the ordinary course of its business, or
capital contributions to such partnerships, provided, that (i) such
partnership is engaged exclusively in oil and gas exploration,
development or production activities, (ii) the Borrower's or such
Subsidiary's equity interests in such partnerships were acquired in the
ordinary course of Borrower's or such Subsidiary's business and upon
fair and reasonable terms and (iii) which Investments, in the
aggregate, do not exceed five percent (5%) of the Borrowing Base at the
time of such Investment; and further provided, that the limitations of
this subsection (f) shall not apply to any Investment made in a
Material Subsidiary;
(g) accounts receivable from customers in the ordinary course
of business;
(h) loans and advances to employees not to exceed $100,000 in
the aggregate as to all such loans and advances outstanding at any
time;
(i) Investments in connection with or related to farm-out
agreements, farm-in agreements, joint operating agreements or other
similar arrangements, and the performance of Borrower's or such
Subsidiary's obligations thereunder in accordance with prudent
operating standards and in the ordinary course of business;
(j) Investments made with Non-Redeemable Stock, but only to
the extent allocable to such Non-Redeemable Stock, and subject to the
consequences of a Change of Control;
(k) Investments in "margin stock" (as such term is defined in
F.R.S. Board Regulation U, X or T), to the extent acquisitions of
margin stock are permitted by Section 5.10; and
(l) any Investment not otherwise permitted by the foregoing
clauses of this Section if, immediately after such Investment is made
or acquired, the aggregate net book value of all Investments permitted
by this clause (m) does not exceed $100,000.
provided, however, that
(i) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent
Investment" may continue to be held notwithstanding that such
Investment if made thereafter would not comply with such
requirements; and
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(ii) no Investment otherwise permitted by clause (b)
and (c) shall be permitted to be made if, immediately before
or after giving effect thereto, any Default shall have
occurred and be continuing.
SECTION 8.2.6. RESTRICTED PAYMENTS, ETC. On and at all times after the
Effective Date:
(a) the Borrower will not, and will not permit any of its
Subsidiaries (other than a wholly-owned Subsidiary) to, declare, pay or
make any dividend or distribution (in cash, property or obligations) on
any class or shares of any class of partnership interest or Capital
Stock (now or hereafter outstanding) of the Borrower or such Subsidiary
or on any options, warrants or other rights with respect to any
interest or shares of any class of partnership interest or Capital
Stock (now or hereafter outstanding) of the Borrower or such Subsidiary
or apply, or permit any of its Subsidiaries to apply, any of its funds,
property or assets to the purchase, redemption, sinking fund or other
retirement of, any interest or shares of any class of partnership
interest or Capital Stock (now or hereafter outstanding) of the
Borrower or such Subsidiary or options, warrants or other rights with
respect to any interest or shares of any class of partnership interest
or Capital Stock (now or hereafter outstanding) of the Borrower or such
Subsidiary (such declarations, dividends, distributions or applications
being called "Distribution Payments") other than Distribution Payments
which do not cause the Borrower to be in violation of the Restricted
Payment Tests; provided, however, that the Borrower may make or accrue
Distribution Payments in the form of additional shares of Capital Stock
of the Borrower or accruals thereof, so long as such additional shares
of Capital Stock of the Borrower do not entitle the holder thereof to
receive Distribution Payments payable in cash as a matter of right;
(b) the Borrower will not permit any of its Subsidiaries to
make any Distribution Payments other than to the Borrower; and
(c) the Borrower will not, and will not permit any of its
Subsidiaries to, make any deposit for any of the foregoing purposes.
SECTION 8.2.7. RENTAL OBLIGATIONS. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into at any time any arrangement
(excluding oil and gas leases entered into in the ordinary course of business)
which involves the leasing by the Borrower or any consolidated or Material
Subsidiary from any lessor of any real or personal property (or any interest
therein), except arrangements which, together with all other such arrangements
which shall then be in effect, will not require the payment of an aggregate
amount of rentals by the Borrower or any of its Subsidiaries in excess of
(excluding escalations resulting from a rise in the consumer price or similar
index) $500,000 for any Fiscal Year or $2,000,000 during the full remaining
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term of such arrangements, including any so-called synthetic lease; provided,
however, that any calculation made for purposes of this Section 8.2.7 shall
exclude any amounts (i) required to be expended for maintenance and repairs,
insurance, taxes, assessments, and other similar charges and (ii) any amounts
relating to Capitalized Lease Obligations.
SECTION 8.2.8. CONSOLIDATION, MERGER, ETC. The Borrower will not,
and will not permit any of its Subsidiaries to, liquidate or dissolve,
consolidate with, or merge into or with, any other corporation, partnership or
other Person, or purchase or otherwise acquire all or substantially all of the
assets of any Person (or of any division thereof) except
(a) so long as no Default has occurred and is continuing or
would so occur after giving effect thereto, (i) any such Subsidiary
(other than a Material Subsidiary) may liquidate or dissolve
voluntarily into, and may merge with and into, the Borrower or any
other Subsidiary, (ii) any Material Subsidiary may liquidate or
dissolve voluntarily into, and may merge with and into, the Borrower or
any other Material Subsidiary, (iii) the assets or stock of any
Subsidiary (other than a Material Subsidiary) may be purchased or
otherwise acquired by the Borrower or any other Subsidiary, (iv) the
assets or stock of any Material Subsidiary may be purchased or
otherwise acquired by the Borrower or any other Material Subsidiary,
and (v) the Borrower may merge with or into another Person if the
Borrower is the Person surviving such merger and Principal Shareholders
retain control over the Borrower; and
(b) so long as no Default has occurred and is continuing or
would so occur after giving effect thereto, the Borrower or any of its
Subsidiaries may purchase all or substantially all of the assets of any
Person, or acquire such Person by merger.
The Borrower will not create any Subsidiary unless it shall promptly give notice
thereof to the Administrative Agent.
SECTION 8.2.9. ASSET DISPOSITIONS, ETC.
(a) The Borrower will not, and will not permit any of its
consolidated or Material Subsidiaries to, sell, transfer, lease,
contribute or otherwise convey, or grant options, warrants or other
rights with respect to, all or substantially all of the assets of the
Borrower or any of its consolidated or Material Subsidiaries in any one
transaction or in any series of transactions, whether or not related.
(b) The Borrower will not, and will not permit any of its
consolidated or Material Subsidiaries to, sell, transfer, lease,
contribute or otherwise convey,
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or grant options, warrants or other rights with respect to any
substantial part of its assets (including accounts receivable), to any
Person other than
(i) if such asset(s) are not in the Borrowing Base,
such sale, transfer, lease, contribution or conveyance is for
cash or other consideration having a value at least equal to
the fair market value of such assets;
(ii) if such assets are in the Borrowing Base, the
Borrower complies with the terms of Section 3.1.2 and such
sale, transfer, lease, contribution or conveyance is for cash
in an amount at least equal to the fair market value of such
assets; or
(c) farmouts under standard industry terms of Properties not
holding Proven Reserves.
SECTION 8.2.10. MODIFICATION OF CERTAIN DOCUMENTS.
(a) The Borrower will not, and will not permit any of its
consolidated or Material Subsidiaries to, amend its Organic Documents
or consent to any amendment, supplement or other modification of any of
the terms or provisions contained in, or applicable to, the Material
Contracts or any other agreement affecting the Mortgaged Properties
which could reasonably be expected to have a Material Adverse Effect,
in each case without the prior written consent of the Administrative
Agent.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, amend the Arco Title Indemnity in a manner which
adversely affects the Borrower, its Subsidiaries or the Lenders, waive
any right or claim thereunder or consent to the substitution or
addition of any alternate or substitute indemnitor thereunder, in each
case without the prior written consent of the Required Lenders.
SECTION 8.2.11. TRANSACTIONS WITH AFFILIATES. The Borrower will not,
and will not permit any of its consolidated or Material Subsidiaries to, enter
into, or cause, suffer or permit to exist any arrangement or contract with any
of its other Affiliates unless such arrangement or contract is fair and
equitable to the Borrower or such Subsidiary and is an arrangement or contract
of the kind which would be entered into by a prudent Person in the position of
the Borrower or such Subsidiary with a Person which is not one of its
Affiliates.
SECTION 8.2.12. NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC. The
Borrower will not, and will not permit any of its Subsidiaries to, enter into
any agreement (excluding this Agreement, any other Loan Document and any
agreement
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governing any Indebtedness permitted by clauses (b) or (f) of Section 8.2.2 as
in effect on the Effective Date as to the assets financed with the proceeds of
such Indebtedness) prohibiting
(a) the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or hereafter
acquired, or the ability of the Borrower or any other Obligor to amend
or otherwise modify this Agreement or any other Loan Document; or
(b) the ability of any Material Subsidiary to make any
payments, directly or indirectly, to the Borrower by way of dividends,
advances, repayments of loans or advances, reimbursements of management
and other intercompany charges, expenses and accruals or other returns
on investments, or any other agreement or arrangement which restricts
the ability of any such Material Subsidiary to make any payment,
directly or indirectly, to the Borrower.
SECTION 8.2.13. TAKE OR PAY CONTRACTS. Except as disclosed to the
Lender in Item 8.2.13 of the Disclosure Schedule, and except for reservation
charges payable for reservations of capacity in gathering systems and pipelines
incurred in the ordinary course of business on an arm's length basis for volumes
reasonably expected to be produced from the Borrowers' or its Subsidiaries' Oil
and Gas Properties to be transported through such systems and pipelines, the
Borrower will not, and will not permit any of its Subsidiaries to, enter into or
be a party to any arrangement for the forward sale of Hydrocarbons or the
purchase of materials, supplies, other property (including without limitation
Hydrocarbons), or services if such arrangement requires that payment be made by
the Borrower or such Subsidiary regardless of whether such materials, supplies,
other property, or services are delivered or furnished to it.
SECTION 8.2.14. SALE/LEASEBACKS. Obligors will not enter into any
arrangement, directly or indirectly, with any Person whereby any Obligor shall
sell or transfer any material asset, and whereby any Obligor shall then or
immediately thereafter rent or lease as lessee such asset or any part thereof.
SECTION 8.2.15. HYDROCARBON HEDGING. Commencing October 1, 1999, the
Borrower will not, and will not permit any of its Subsidiaries to, enter into
Hedging Agreements except those that (a) are with a Lender whose senior
unsecured long term debt or certificates of deposit is rated at least A by
Standard & Poor's Corporation or A2 by ▇▇▇▇▇'▇ Investors Service, Inc., such
Lender's Affiliates or other counterparties reasonably acceptable to the
Administrative Agent, (b) do not result in Hedging Obligations that are (i) at
any time during the twenty-four (24) months immediately following the incurrence
of such Hedging Obligation, in excess of seventy-five percent (75%) of the
reasonably anticipated production of Hydrocarbons during such period from the
proved developed producing Hydrocarbon reserves owned by the Borrower and its
Subsidiaries according to the most recent Engineering Report delivered to the
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Administrative Agent or (ii) at any time following the end of such twenty four
(24) month period, in excess of fifty percent (50%) of the reasonably
anticipated production of Hydrocarbons during such period from the proved
developed producing Hydrocarbon reserves owned by the Borrower and its
Subsidiaries according to the most recent Engineering Report delivered to the
Administrative Agent and (c) the amount of the Hedging Obligation for the
particular Hydrocarbon (i.e. - gas or oil) must not be materially in excess of
the proportion that such Hydrocarbon bears to the total amount of proved
developed Hydrocarbon reserves owned by the Borrower and its Subsidiaries. (For
example, if the Borrower and its Subsidiaries owned proved developed producing
Hydrocarbon reserves that were 45% oil-producing Properties and 55%
gas-producing Properties, then any Hedging Obligation of the Borrower or its
Subsidiaries for oil could not be, during the initial 24 month period,
materially more than 45% of 75% of the reasonably anticipated production of
Hydrocarbons from the proved developed producing Hydrocarbon reserves owned by
the Borrower and its Subsidiaries according to the most recent Engineering
Report delivered to the Administrative Agent.) The Borrower has entered into no
other Hedging Agreements other than those listed in Schedule V.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1. LISTING OF EVENTS OF DEFAULT. Each of the following events
or occurrences described in this Section 9.1 shall constitute an "Event of
Default".
SECTION 9.1.1. NON-PAYMENT OF OBLIGATIONS. The Borrower shall default
in the payment or prepayment when due of any principal of any Loan; the Borrower
shall default in the payment when due of any Reimbursement Obligation or Hedging
Agreement in effect between the Borrower and a Lender or Affiliate thereof; or
the Borrower shall default (and such default shall continue unremedied for a
period of five (5) days) in the payment when due of any interest on any Loan or
any fees payable under Section 3.3 or any other Obligation.
SECTION 9.1.2. BREACH OF WARRANTY. Any representation or warranty of
the Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate furnished
by or on behalf of the Borrower or any other Obligor to the Administrative
Agent, any Issuer or any Lender for the purposes of or in connection with this
Agreement or any such other Loan Document (including any certificates delivered
pursuant to Article VI) is or shall be incorrect when made in any material
respect.
SECTION 9.1.3. NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS.
The Borrower shall default in the due performance and observance of any of its
obligations
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under Section 3.1.2, Section 8.1 (other than Sections 8.1.1(j), 8.1.1(n), 8.1.2,
8.1.3, 8.1.6 or 8.1.7) or Section 8.2.
SECTION 9.1.4. NON-PERFORMANCE OF OTHER COVENANTS AND OBLIGATIONS. The
Borrower or any other Obligor shall default in the due performance and
observance of any other agreement contained herein or in any other Loan Document
executed by it, and such default shall continue unremedied for a period of
fifteen (15) days after notice thereof shall have been given to the Borrower by
the Administrative Agent or any Lender.
SECTION 9.1.5. DEFAULT ON OTHER INDEBTEDNESS.
(a) A default shall occur in the payment when due (subject to
any applicable grace period), whether by acceleration or otherwise, of
any Indebtedness (excluding Indebtedness described in Section 9.1.1) of
the Borrower or any other Obligor having a principal amount,
individually or in the aggregate, in excess of $250,000, or a default
shall occur in the performance or observance of any obligation or
condition with respect to such Indebtedness if the effect of such
default is to accelerate the maturity of any such Indebtedness or such
default shall continue unremedied for any applicable period of time
sufficient to permit any holder of such Indebtedness, or any trustee or
Administrative Agent for such holders, to cause such Indebtedness to
become due and payable prior to its expressed maturity.
(b) A failure to pay when due any royalty, overriding royalty
or similar interest burdening the Oil and Gas Properties of the
Borrower or any of its Subsidiaries, in the aggregate, in excess of
$250,000.
SECTION 9.1.6. JUDGMENTS. Any judgment or order for the payment of
money in excess of $250,000 (in excess of valid and collectible insurance in
respect thereof the payment of which is not being disputed or contested by the
insurer or insurers) shall be rendered against the Borrower or any other Obligor
and either
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or
(b) there shall be any period of ten (10) consecutive days
during which a stay of enforcement of such judgment or order, by reason
of a pending appeal or otherwise, shall not be in effect.
SECTION 9.1.7. PENSION PLANS. Any of the following events shall occur
with respect to any Pension Plan
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(a) the institution of any steps by the Borrower, any member
of its Controlled Group or any other Person to terminate a Pension Plan
if, as a result of such termination, the Borrower or any such member
could be required to make a contribution to such Pension Plan in excess
of $100,000, or could reasonably expect to incur a liability or
obligation to such Pension Plan in excess of $100,000; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION 9.1.8. CONTROL OF THE BORROWER. Any Change in Control shall
occur.
SECTION 9.1.9. BANKRUPTCY, INSOLVENCY, ETC. The Borrower or any other
Obligor shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become
due;
(b) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, sequestrator or other custodian for the Borrower
or any other Obligor or any property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or any other
Obligor or for a substantial part of the property of any thereof, and
such trustee, receiver, sequestrator or other custodian shall not be
discharged within sixty (60) days, provided that the Borrower and each
other Obligor hereby expressly authorizes the Administrative Agent and
each Lender to appear in any court conducting any relevant proceeding
during such sixty (60)-day period to preserve, protect and defend its
or their rights under the Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of the Borrower or any
other Obligor, and, if any such case or proceeding is not commenced by
the Borrower or such other Obligor, such case or proceeding shall be
consented to or acquiesced in by the Borrower or such other Obligor or
shall result in the entry of an order for relief or shall remain for
sixty (60) days undismissed, provided that the Borrower and each other
Obligor hereby expressly authorizes the Administrative Agent and each
Lender to appear in any court conducting any such case or proceeding
during
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such sixty (60)-day period to preserve, protect and defend its or their
rights under the Loan Documents; or
(e) take any action authorizing, or in furtherance of, any of
the foregoing.
SECTION 9.1.10. IMPAIRMENT OF SECURITY, ETC. Any Loan Document, or any
Lien granted thereunder, shall (except in accordance with its terms), in whole
or in part, terminate, cease to be effective or cease to be the legally valid,
binding and enforceable obligation of any Obligor party thereto; the Borrower,
any other Obligor or any other party shall, directly or indirectly, contest in
any manner such effectiveness, validity, binding nature or enforceability; or
any Lien securing any Obligation shall, in whole or in part, cease to be a
perfected first priority Lien, subject only to those exceptions expressly
permitted by the Loan Documents.
SECTION 9.1.11. MATERIAL ADVERSE EFFECT. Any Material Adverse Effect
shall occur.
SECTION 9.1.12. BORROWING BASE DEFICIENCY. Any Borrowing Base
Deficiency shall occur and continue for more than ninety (90) days.
SECTION 9.2. ACTION IF BANKRUPTCY. If any Event of Default described in
clauses (a) through (d) of Section 9.1.9 shall occur with respect to the
Borrower or any other Obligor, the Commitments (if not theretofore terminated)
shall automatically terminate and the outstanding principal amount of all
outstanding Loans and all other Obligations shall automatically be and become
immediately due and payable, without notice or demand.
SECTION 9.3. ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of Section
9.1.9 with respect to the Borrower or any other Obligor) shall occur for any
reason, whether voluntary or involuntary, and be continuing, the Administrative
Agent, may (and, upon direction by the Required Lenders, shall) by notice to the
Borrower declare all or any portion of the outstanding principal amount of the
Loans and other Obligations to be due and payable and/or the Commitments (if not
theretofore terminated) to be terminated, whereupon the full unpaid amount of
such Loans and other Obligations which shall be so declared due and payable
shall be and become immediately due and payable, without further notice, demand
or presentment, and/or, as the case may be, the Commitments shall terminate.
SECTION 9.4. RIGHTS NOT EXCLUSIVE. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by Applicable Law or
in equity, or under any other instrument, document or agreement now existing or
hereafter arising.
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ARTICLE X
THE ADMINISTRATIVE AGENT
SECTION 10.1. ACTIONS. Each Lender hereby appoints Bank of America as
its Administrative Agent under and for purposes of this Agreement, the Notes and
each other Loan Document, and Bank of America hereby accepts such appointment.
Each Lender authorizes the Administrative Agent to act on behalf of such Lender
under this Agreement, the Notes and each other Loan Document and, in the absence
of other written instructions from the Required Lenders received from time to
time by the Administrative Agent (with respect to which the Administrative Agent
agrees that it will comply, except as otherwise provided in this Section and to
the extent such instructions may reasonably be expected to comply with
applicable law), to exercise such powers and to perform such duties hereunder
and thereunder as are specifically delegated to or required of the
Administrative Agent by the terms hereof and thereof, together with such powers
as may be reasonably incidental thereto; provided, however, that the
Administrative Agent shall not take any action that requires the consent of any
Lender unless it receives such consent. Each Lender hereby indemnifies (which
indemnity shall survive any termination of this Agreement) the Administrative
Agent, pro rata according to such Lender's Percentage, from and against any and
all liabilities, obligations, losses, damages, claims, costs or expenses of any
kind or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against, the Administrative Agent in any way relating to or arising out
of this Agreement, the Notes and any other Loan Document, including reasonable
attorneys' fees, and as to which the Administrative Agent is not reimbursed by
the Borrower; provided, however, that no Lender shall be liable for the payment
of any portion of such liabilities, obligations, losses, damages, claims, costs
or expenses which are determined by a court of competent jurisdiction in a final
proceeding to have resulted solely from the Administrative Agent's gross
negligence or wilful misconduct. The Administrative Agent shall not be required
to take any action hereunder, under the Notes or under any other Loan Document,
or to prosecute or defend any suit in respect of this Agreement, the Notes or
any other Loan Document, unless it is indemnified hereunder to its satisfaction.
If any indemnity in favor of the Administrative Agent shall be or become, in the
Administrative Agent's determination, inadequate, the Administrative Agent may
call for additional indemnification from the Lenders and cease to do the acts
indemnified against hereunder until such additional indemnity is given.
SECTION 10.2. FUNDING RELIANCE, ETC. Unless the Administrative Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
5:00 p.m. (Dallas time) on the day prior to a Borrowing that such Lender will
not make available the amount which would constitute its Percentage of such
Borrowing on the date specified therefor, the Administrative Agent may assume
that such Lender has made
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such amount available to the Administrative Agent and, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If and to the
extent that such Lender shall not have made such amount available to the
Administrative Agent, such Lender and the Borrower severally agree to repay the
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date the Administrative Agent made such
amount available to the Borrower to the date such amount is repaid to the
Administrative Agent, at the interest rate applicable at the time to Loans
comprising such Borrowing.
SECTION 10.3. EXCULPATION. Neither the Administrative Agent nor any of
its directors, officers, employees or Administrative Agents shall be liable to
any Lender for any action taken or omitted to be taken by it under this
Agreement or any other Loan Document, or in connection herewith or therewith,
except for its own wilful misconduct or gross negligence, nor responsible for
any recitals or warranties herein or therein, nor for the effectiveness,
enforceability, validity or due execution of this Agreement or any other Loan
Document, nor for the creation, perfection or priority of any Liens purported to
be created by any of the Loan Documents, or the validity, genuineness,
enforceability, existence, value or sufficiency of any collateral security, nor
to make any inquiry respecting the performance by the Borrower of its
obligations hereunder or under any other Loan Document. Any such inquiry which
may be made by the Administrative Agent shall not obligate it to make any
further inquiry or to take any action. The Administrative Agent shall be
entitled to rely upon advice of counsel concerning legal matters and upon any
notice, consent, certificate, statement or writing which the Administrative
Agent believes to be genuine and to have been presented by a proper Person.
SECTION 10.4. SUCCESSOR. The Administrative Agent may resign as such at
any time upon at least thirty (30) days' prior notice to the Borrower and all
Lenders, and the Administrative Agent may be removed with or without cause as
such by the Required Lenders upon at least thirty (30) days' prior notice to the
Administrative Agent and the Borrower. If the Administrative Agent at any time
shall resign or be removed, the Required Lenders may appoint another Lender as a
successor Administrative Agent which Lender shall thereupon become the
Administrative Agent hereunder. If no successor Administrative Agent shall have
been so appointed by the Required Lenders, and shall have accepted such
appointment, within thirty (30) days after the giving of notice of resignation
or removal, then the retiring or removed Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, which shall be one of the
Lenders and, if no Lender accepts such appointment, a commercial banking
institution organized under the laws of the United States (or any State thereof)
or a United States branch or agency of a commercial banking institution, and
having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent
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shall be entitled to receive from the retiring or removed Administrative Agent
such documents of transfer and assignment as such successor Administrative Agent
may reasonably request, and shall thereupon succeed to and become vested with
all rights, powers, privileges and duties of the retiring or removed
Administrative Agent, and the retiring or removed Administrative Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Administrative Agent's resignation or removal hereunder as
the Administrative Agent, the provisions of
(a) this Article X shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the
Administrative Agent under this Agreement; and
Section 11.3 and Section 11.4 shall continue to inure to its
benefit.
SECTION 10.5. LOANS OR LETTERS OF CREDIT ISSUED BY BANK OF AMERICA.
Bank of America shall have the same rights and powers with respect to (x) the
Loans made by it or any of its Affiliates, (y) the Notes held by it or any of
its Affiliates, and (z) its participating interests in the Letters of Credit as
any other Lender and may exercise the same as if it were not the Administrative
Agent. Bank of America and its Affiliates and each of the Lenders and each of
the Issuers and their respective Affiliates may accept deposits from, lend money
to, and generally engage in any kind of business with the Borrower or any
Subsidiary or Affiliate of the Borrower as if Bank of America were not the
Administrative Agent hereunder and in the case of each Lender or Issuer, as if
such Lender or such Issuer were not a Lender or Issuer hereunder.
SECTION 10.6. CREDIT DECISIONS. Each Lender and each Issuer
acknowledges that it has, independently of the Administrative Agent, each other
Issuer and each other Lender, and based on such Lender's or such Issuer's review
of the financial information of the Borrower, this Agreement, the other Loan
Documents (the terms and provisions of which being satisfactory to such Lender
or such Issuer) and such other documents, information and investigations as such
Lender or such Issuer has deemed appropriate, made its own credit decision to
extend its Commitments. Each Lender and each Issuer also acknowledges that it
will, independently of the Administrative Agent and each other Lender and each
other Issuer, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.
SECTION 10.7. COPIES, ETC. The Administrative Agent shall give prompt
notice to each Lender and each Issuer of each notice or request required or
permitted to be given to the Administrative Agent by the Borrower pursuant to
the terms of this
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Agreement (unless concurrently delivered to the Lenders and each Issuer by the
Borrower). The Administrative Agent will distribute promptly to each Lender and
each Issuer each document or instrument received for its account and copies of
all other communications received by the Administrative Agent from the Borrower
for distribution to the Lenders and Issuers by the Administrative Agent in
accordance with the terms of this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. WAIVERS, AMENDMENTS, ETC.
(a) This Agreement is an amendment and restatement of, and
replaces and supersedes, the Existing Credit Agreement in its entirety;
provided, however, that no right, interest, claim or cause of action of
any kind of the lender under the Existing Credit Agreement shall in any
way be released, modified, compromised or waived by virtue of this
Agreement superseding and replacing the Existing Credit Agreement, and
nothing in this Agreement or the other Loan Documents is intended to
novate or discharge the indebtedness of the Borrower or the other
Obligors under the Existing Credit Agreement; provided however, upon
the satisfaction of all conditions set forth in Section 6.1, Bank of
America shall terminate its Lien on all shares of the Capital Stock of
the Borrower under Pledge Agreements under the Existing Credit
Agreement that were previously delivered by shareholders of the
Borrower;
(b) The provisions of this Agreement and of each other Loan
Document may from time to time be amended, modified or waived, if such
amendment, modification or waiver is in writing and consented to by the
Borrower and the Required Lenders; provided, however, that no such
amendment, modification or waiver which would:
(i) modify any requirement hereunder that any
particular action be taken by all the Lenders or by the
Required Lenders shall be effective unless consented to by
each Lender;
(ii) modify this Section 11.1, change the definitions
of "Required Lenders", "Restricted Payment Tests," "Total
Commitment", "Letter of Credit Availability", or "Commitment
Amount", increase the Percentage of any Lender, reduce any
fees described in Article III, amend Section 6.1.15 or 8.2.6,
release any collateral security including any Guaranty, except
as otherwise specifically provided in any Loan Document, or
extend the Stated Maturity Date or any Commitment
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Termination Date, shall be made without the consent of each
Lender affected thereby;
(iii) extend the due date for, or reduce the amount
of, any scheduled or mandatory repayment or prepayment of
principal of or interest on any Loan (or reduce the principal
amount of or rate of interest on any Loan) shall be made
without the consent of each Lender affected thereby;
(iv) affect adversely the interests, rights or
obligations of an Issuer in its capacity as Issuer shall be
made without the consent of such Issuer; or
(v) affect adversely the interests, rights or
obligations of the Administrative Agent in its capacity as the
Administrative Agent shall be made without consent of the
Administrative Agent.
No failure or delay on the part of the Administrative Agent, any Issuer or any
Lender in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Administrative Agent, any
Issuer or any Lender under this Agreement or any other Loan Document shall,
except as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 11.2. NOTICES. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing and shall be hand delivered or sent by overnight courier, certified mail
(return receipt requested), or telecopy to such party at its address or telecopy
number set forth on Schedule III hereto or set forth in the Lender Assignment
Notice or at such other address or telecopy number as may be designated by such
party in a notice to the other parties. Without limiting any other means by
which a party may be able to provide that a notice has been received by the
other party, a notice shall be deemed to be duly received (a) if sent by hand,
on the date when left with a responsible person at the address of the recipient;
(b) if sent by certified mail or overnight courier, on the date of receipt (or
refusal to accept delivery) by a responsible person at the address of the
recipient; and (c) if sent by telecopy, on the date of receipt by the sender of
an acknowledgment or transmission reports generated by the machine from which
the telecopy was sent indicating that the telecopy was sent in its entirety to
the recipient's telecopy number.
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SECTION 11.3. PAYMENT OF COSTS AND EXPENSES. The Borrower agrees to pay
on demand all reasonable expenses of the Administrative Agent (including the
fees and out-of-pocket expenses of internal and external counsel to the
Administrative Agent and of local counsel, if any, who may be retained by
counsel to the Administrative Agent) in connection with
(a) the negotiation, preparation, due diligence, execution,
delivery, syndication, administration and enforcement of this Agreement
and of each other Loan Document, including schedules and exhibits, and
any amendments, waivers, consents, supplements or other modifications
to this Agreement or any other Loan Document as may from time to time
hereafter be required, whether or not the transactions contemplated
hereby are consummated,
(b) the filing, recording, refiling or rerecording of the
Mortgages, the Security Agreements and the Pledge Agreements and/or any
Uniform Commercial Code financing statements relating thereto and all
amendments, supplements and modifications to, and releases and
terminations of, any thereof and any and all other documents or
instruments of further assurance required to be filed or recorded or
refiled or rerecorded by the terms hereof or of the Mortgages, the
Security Agreements and the Pledge Agreements, and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save each of the Administrative
Agent, each Issuer and the Lenders harmless from all liability for, any stamp or
other taxes which may be payable in connection with the execution or delivery of
this Agreement, the borrowings hereunder, the issuance of the Notes, the
issuance of the Letters of Credit, or any other Loan Documents. During (i) the
existence of a Default and (ii) whether or not a Default still exists, after any
acceleration of the Obligations, the Borrower also agrees to reimburse the
Administrative Agent, each Lender and each Issuer upon demand for all reasonable
out-of-pocket expenses (including attorneys' fees and legal expenses of internal
and external attorneys, and accountants', engineers' and other consultants' fees
and expenses) incurred by the Administrative Agent, each Lender and each Issuer
in connection with (x) the negotiation of any restructuring or "work-out",
whether or not consummated, of any Obligations and (y) the enforcement of any
Obligations.
SECTION 11.4. INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by the Administrative Agent, each Issuer and each
Lender and the extension of the Commitments, the Borrower hereby indemnifies,
exonerates and holds the Administrative Agent, each Issuer and each Lender and
each of their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") free and harmless from and against any
and all actions, causes of action,
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suits, losses, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan or the use
of any Letter of Credit;
(b) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock or assets of any
Person, whether or not the Administrative Agent or such Issuer or such
Lender is party thereto;
(c) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to
any Environmental Law or the condition of any facility or Property
owned, leased or operated by the Borrower or any of its Subsidiaries;
provided, however, that Indemnified Liabilities under this Section
11.4(c) pertaining to Oil and Gas Properties located in the State of
California shall be governed by the Unsecured Indemnity;
(d) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any
facility or Property owned, leased or operated by the Borrower or any
of its Subsidiaries thereof of any Hazardous Material (including any
losses, liabilities, damages, injuries, costs, expenses or claims
asserted or arising under any Environmental Law), regardless of whether
caused by, or within the control of, the Borrower or any of its
Subsidiaries; provided, however, that Indemnified Liabilities under
this Section 11.4(d) pertaining to Oil and Gas Properties located in
the State of California shall be governed by the Unsecured Indemnity;
or
(e) any misrepresentation, inaccuracy or breach in or of
Section 7.17 or Section 8.1.6, except for any such Indemnified
Liabilities arising for the account of a particular Indemnified Party
by reason of the relevant Indemnified Party's gross negligence or
wilful misconduct. If and to the extent that the foregoing undertaking
may be unenforceable for any reason, the Borrower hereby agrees to make
the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under Applicable Law.
SECTION 11.5. SURVIVAL. The obligations of the Borrower under Sections
5.3, 5.4, 5.5, 5.6, 11.3 and 11.4 shall in each case survive any termination of
this
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Agreement, the payment in full of all Obligations and the termination of all
Commitments. The representations and warranties made by each Obligor in this
Agreement and in each other Loan Document shall survive the execution and
delivery of this Agreement and each such other Loan Document.
SECTION 11.6. SEVERABILITY. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 11.7. HEADINGS. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 11.8. EXECUTION IN COUNTERPARTS, EFFECTIVENESS, ETC. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be executed by the Borrower, the Administrative Agent, each Issuer
and each Lender and be deemed to be an original and all of which shall
constitute together but one and the same agreement. This Agreement shall become
effective when counterparts hereof are executed on behalf of the Borrower, the
Administrative Agent, and each Lender, and the Administrative Agent has
determined that the conditions set forth in Section 6.1 have been satisfied..
This Agreement is made and entered into for the sole protection and legal
benefit of the Borrower, the Administrative Agent and the Lenders and Persons
indemnified hereunder, and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Loan Documents.
SECTION 11.9. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT, THE
NOTES AND EACH OTHER LOAN DOCUMENT (OTHER THAN THE MORTGAGES OR AS EXPRESSLY
PROVIDED IN ANY SUCH DOCUMENT) SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF TEXAS. This Agreement, the
Notes and the other Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.
SECTION 11.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
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(a) the Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of the
Administrative Agent, all Issuers and all Lenders; and
(b) the rights of sale, assignment and transfer of Lenders are
subject to Section 11.11.
SECTION 11.11. SALE AND TRANSFER OF LOANS AND NOTES; PARTICIPATIONS IN
LOANS AND NOTES. Each Lender may assign, or sell participations in, its Loans
and Commitments and participations in Letters of Credit to one or more other
Persons in accordance with this Section 11.11.
SECTION 11.11.1. ASSIGNMENTS. A Lender may at any time assign and
delegate to one or more Eligible Assignees (each Person to whom such assignment
and delegation is to be made, being hereinafter referred to as an "Assignee
Lender"), all or any fraction of such Lender's total Loans and Commitments
(which assignment and delegation shall be of a constant, and not a varying,
percentage of all such Lender's Loans and Commitments) in a minimum aggregate
amount of $5,000,000 (or the entire remaining amount of such Lender's Loans and
Commitments); provided, however, that such Lender is required at all times to
maintain Loans, Letters of Credit Outstandings and Commitments hereunder in an
aggregate amount of $5,000,000 (unless such Lender shall have reduced its Loans,
Letters of Credit Outstandings and Commitments to zero); provided, further,
however, that the Borrower and each other Obligor shall be entitled to continue
to deal solely and directly with such Lender in connection with the interests so
assigned and delegated to an Assignee Lender until
(a) written notice of such assignment and delegation, together
with payment instructions, addresses and related information with
respect to such Assignee Lender, shall have been given to the Borrower
and the Administrative Agent by such Lender and such Assignee Lender,
(b) such Assignee Lender shall have executed and delivered to
the Borrower, the Administrative Agent and such Lender a Lender
Assignment Notice, accepted by such Lender, the Borrower (if required)
and the Administrative Agent, and
(c) the processing fees described below shall have been paid.
From and after the date that the Administrative Agent and the Borrower (if
required) accepts such Lender Assignment Notice, (x) the Assignee Lender
thereunder shall be deemed automatically to have become a party hereto and to
the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee Lender in connection with such Lender Assignment
Notice, shall have the rights and obligations of a Lender hereunder and under
the other Loan Documents, and (y) the assignor
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Lender, to the extent that rights and obligations hereunder have been assigned
and delegated by it in connection with such Lender Assignment Notice, shall be
released from its obligations hereunder and under the other Loan Documents.
Within five (5) Business Days after the later to occur of (i) its receipt of
notice that the Administrative Agent has received and accepted an executed
Lender Assignment Notice and (ii) the Borrower's receipt and acceptance (if
required) of the Lender Assignment Notice executed by the Administrative Agent
and all other parties thereto, the Borrower shall execute and deliver to the
Administrative Agent (for delivery to the relevant Assignee Lender) a new Note
evidencing such Assignee Lender's assigned Loans and Commitments and, if the
assignor Lender has retained Loans and Commitments hereunder, a replacement Note
in the principal amount of the Loans and Commitments retained by the assignor
Lender hereunder (each such Note to be in exchange for, but not in payment of,
the corresponding Note then held by such assignor Lender). The assignor Lender
shall ▇▇▇▇ the predecessor Note "exchanged" and deliver it to the Borrower.
Accrued interest on that part of the predecessor Note evidenced by the new Note,
and accrued fees, shall be paid as provided in the Lender Assignment Notice.
Accrued interest on that part of the predecessor Note evidenced by the
replacement Note shall be paid to the assignor Lender. Accrued interest and
accrued fees shall be paid at the same time or times provided in the predecessor
Notes and in this Agreement. Such assignor Lender or such Assignee Lender must
also pay a processing fee to the Administrative Agent upon delivery of any
Lender Assignment Notice in the amount of $3,500. Any attempted assignment and
delegation not made in accordance with this Section 11.11.1 shall be null and
void. Nothing contained in this Agreement shall prohibit any Lender from
pledging or assigning any Note to any Federal Reserve Bank in accordance with
Applicable Law.
SECTION 11.11.2. PARTICIPATIONS. A Lender may at any time sell to one
or more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a "Participant") participating interests in
any of the Loans, Commitments, or other interests of such Lender hereunder;
provided, however, that
(a) no participation contemplated in this Section 11.11.2
shall relieve a Lender from its Commitments or its other obligations
hereunder or under any other Loan Document,
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations,
(c) the Borrower and each other Obligor shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and each of the other Loan
Documents,
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(d) the Borrower shall not be required to pay any amount under
Section 5.6 that is greater than the amount which it would have been
required to pay had no participating interest been sold, and
(e) any agreement pursuant to which any Lender may grant such
a participating interest shall provide that such Lender shall retain
the sole right and responsibility to enforce the obligations of the
Borrower and the Issuer hereunder including, without limitation, the
right to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such participation agreement may
provide that such Lender will not agree to any modification, amendment
or waiver of this Agreement described in clause (ii) or (iii) of
Section 11.1(b) without the consent of the Participant.
The Borrower acknowledges and agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of Sections
5.3, 5.4, 5.5, and 5.6 (except as provided in Section 11.11.2(d)), 11.3 and 11.4
with respect to its participation interest.
SECTION 11.12. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE
AGENT, ANY ISSUER OR ANY LENDER OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED
IN THE COURTS OF THE STATE OF TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF TEXAS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND
OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY FINAL, NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH
SUCH LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF TEXAS. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE
OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS
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(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE
BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 11.13. WAIVER OF JURY TRIAL. THE ADMINISTRATIVE AGENT, EACH
ISSUER, EACH LENDER AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE
AGENT, EACH ISSUER, ANY LENDER OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND
AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION
(AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY)
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT,
EACH ISSUER AND EACH LENDER ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER
LOAN DOCUMENT.
SECTION 11.14. OTHER TRANSACTIONS. Nothing contained herein shall
preclude the Administrative Agent or any other Lender or any of their respective
Affiliates from engaging in any transaction, in addition to those contemplated
by this Agreement or any other Loan Document, with the Borrower or any of its
Affiliates in which the Borrower or such Affiliate is not restricted hereby from
engaging with any other Person.
SECTION 11.15. MAXIMUM INTEREST.
(a) It is the intention of the parties hereto to comply strictly with
Applicable Laws pertaining to usury, if any; accordingly, notwithstanding any
provision to the contrary in this Agreement or in any of the other Loan
Documents, in no event shall the Loan Documents require or permit the payment,
taking, reserving, receiving, collection or charging of any sums constituting
interest under applicable laws which exceed the maximum amount of interest
permitted by such laws (such maximum lawful interest rate, if any, herein called
the "Highest Lawful Rate"). If any such excess interest is called for,
contracted for, charged, taken, reserved, or received in connection with any
Obligation under this Agreement or in any of the documents securing the payment
hereof or otherwise relating hereto, or in any communication by the
Administrative Agent, any Lender or any other person to the Borrower or any
other person, or in the event all or part of the principal or interest of any
Loan shall be prepaid or accelerated, so that under any of such circumstances
or under any other circumstance whatsoever the amount of interest contracted
for, charged, taken, reserved, or received on the amount of principal actually
outstanding from time to time
-106-
114
under this Agreement or any other Loan Document shall exceed the maximum
amount of interest permitted by Applicable Laws pertaining to usury, then in any
such event it is agreed as follows: (i) the provisions of this Section shall
govern and control, (ii) the aggregate of all consideration which constitutes
interest under Applicable Law that is called for, contracted for, charged,
taken, reserved or received under this Agreement and the other Loan Documents,
or under any of the other aforesaid agreements or otherwise in connection with
this Agreement shall under no circumstances exceed the Highest Lawful Rate, any
such excess shall be credited against the then unpaid principal balance of
Obligations of the Borrower by the Administrative Agent (or, if such Obligations
shall have been paid in full, such excess refunded to Borrower by the Lenders);
(iii) all sums paid, or agreed to be paid, to the Administrative Agent for the
benefit of the Lenders for the use, forbearance and detention of the amounts
owed under this Agreement by the Borrower hereunder shall, to the extent
permitted by Applicable Law, be amortized, prorated, allocated and spread
throughout the full term of the Obligations, including all prior and subsequent
renewals and extensions, owed under this Agreement and the other Loan Documents
until payment in full so that the actual rate of interest is uniform throughout
the full term thereof; and (iv) if at any time the interest provided pursuant to
this Agreement together with any other fees payable pursuant to this Agreement
and the other Loan Documents and deemed interest under Applicable Law, exceeds
that amount which would have accrued at the Highest Lawful Rate, the amount of
interest, swap breakage, and any such fees to accrue pursuant to this Agreement
and the other Loan Documents shall be limited, notwithstanding anything to the
contrary in this Agreement or in any other Loan Document to that amount which
would have accrued at the Highest Lawful Rate, but any reductions in the
interest otherwise provided pursuant to this Agreement, as applicable, shall be
carried forward and collected in periods in which the amount of interest
accruing otherwise pursuant to this Agreement shall be less than the Highest
Lawful Rate until the total amount of interest (including such fees deemed to be
interest) accrued pursuant to this Agreement and the other Loan Documents equals
the amount of interest which would have accrued if a varying rate per annum
equal to the Alternate Base Rate had at all times been in effect plus the amount
of fees which would have been received but for the effect of this Section and
the Highest Lawful Rate limitation imposed in Section 3.2.1. Without limiting
the foregoing, all calculations of the rate of interest contracted for, charged,
taken, reserved, or received in connection herewith which are made for the
purpose of determining whether such rate exceeds the maximum lawful rate shall
be made to the extent permitted by Applicable Laws by amortizing, prorating,
allocating and spreading during the period of the full term of the Obligations,
including all prior and subsequent renewals and extensions, all interest at any
time contracted for, charged, taken, reserved, or received. The terms of this
section shall be deemed to be incorporated in every Loan Document, security
instrument and other document executed in connection therewith, and every
communication relating thereto.
-107-
115
(b) The Borrower, the Administrative Agent, each Issuer and each Lender
agree that Chapter 346 of the Texas Finance Code ("Chapter 346") (which
regulates certain revolving loan accounts and revolving tri-party accounts)
shall not apply to any revolving loan accounts created under this Agreement, the
Notes or the other Loan Documents or maintained in connection therewith.
(c) To the extent that the interest rate laws of the State of Texas are
applicable to this Agreement, any Note or any other Loan Document, the
applicable interest rate ceiling is the indicated "weekly ceiling" determined in
accordance with Chapter 1D of the Texas Credit Code, as amended, and, to the
extent that any Obligation under this Agreement, any Note or any other Loan
Document is deemed an open end account as such term is defined in the Texas
Credit Code, the Administrative Agent retains the right to modify the interest
rate in accordance with Applicable Law.
SECTION 11.16. CONTROLLING DOCUMENT. In the event of actual conflict in
the terms and provisions of this Agreement, the Notes and the other Loan
Documents, the terms and provisions of this Agreement will control.
[Signature pages follow]
-108-
116
SECTION 11.17. NOTICE. THIS WRITTEN AGREEMENT TOGETHER WITH THE OTHER
LOAN DOCUMENTS REPRESENTS 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
BORROWER:
▇▇▇▇▇ ENERGY COMPANY, a Texas corporation
By
--------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A., formerly Bank of America
National Trust and Savings Association
By
--------------------------------------------
Title: Managing Director
Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address for Notices:
Agency Administrative Services
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
-109-
117
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No: ▇▇▇-▇▇▇-▇▇▇▇
with copies to:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-110-
118
LENDERS:
BANK OF AMERICA, N.A.
By
--------------------------------------------
Title: Managing Director
Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-111-
▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇, NA
By
--------------------------------------------
Title:
-112-
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ (▇▇▇▇▇) NA
By
--------------------------------------------
Title:
-113-
121
SCHEDULE I
DISCLOSURE SCHEDULE
ITEM 7.9 Litigation
Falcon Resources, Inc. vs. Atlantic Richfield Company and Future
Acquisition 1995, Ltd. in the District Court of ▇▇▇▇ County,
Texas - This action concerns the purported exercise of a
Preferential Right to Purchase ▇. ▇▇▇▇▇▇▇ Waterflood Unit, which
is a portion of the Arco East Texas Property.
ITEM 7.10 Ownership of Properties
ARCO East Texas Acquisition - In Exhibit A to the Purchase and
Sale Agreement dated August 3, 1999, between Atlantic Richfield
Company and Future Acquisition 1995, Ltd., the parties
identified a Title Defects sometimes called the "▇▇▇▇▇▇▇▇ Title
Defect".
In an action entitled ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ v. ARCO Oil
and Gas Company, a division of Atlantic Richfield Company, Civil
Action ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇, Texas, the court rendered a second modified
judgment on March 19, 1998 against ARCO Oil and Gas Company, a
division of Atlantic Richfield Company, in the amount of
$68,986,926.75, which amount accrues interest at the rate of 10%
compounded annually, as provided in the judgment (such judgment,
as the same may be from time to time revised, re-entered,
amended, partially satisfied, renewed or otherwise modified in
any way, herein called the "▇▇▇▇▇▇▇▇ Judgment").
The ▇▇▇▇▇▇▇▇ Title Defect and the ▇▇▇▇▇▇▇▇ Judgment are the
subject to the Arco Title Indemnity.
An Amended Abstract of Judgment giving notice of the ▇▇▇▇▇▇▇▇
Judgment was recorded in the public records of the following
counties, among others:
▇▇▇▇▇ County, Texas File No. 9807331 on April 14, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ Volume 2069, Page 193 on April 21, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
122
ITEM 7.12 Employee Benefit Plans
None
ITEM 7.14 Claims and Liabilities
None
ITEM 7.17 Environmental Matters
None
ITEM 8.2.2(f) Existing Indebtedness
Indebtedness owed to Bank One Texas in the principal amount
of approximately $9,300.00.
ITEM 8.2.5(c) Existing Investments
None
ITEM 8.2.13 Take or Pay Contracts
None
123
SCHEDULE II
SUBSIDIARIES
TYPE OF AUTHORIZED OUTSTANDING PERCENT
SUBSIDIARY JURISDICTION ENTITY SHARES SHARES OWNERSHIP
---------------------------- ------------ ------------ ---------- ------------ ---------
Future Petroleum Corporation Texas Corporation 10,000 1,000 100%
Alaska Eldorado Gold, Co. Nevada Corporation 1,000 1,000 99.8%
Future Energy Corporation Nevada Corporation 50,000 1,000 100%
Future CAL-TEX Corporation Texas Corporation 1,000,000 1,000 100%
BMC Development No. 1 Texas Limited *
Limited Partnership Partnership
NC1-Shawnee Texas Limited *
Limited Partnership Partnership
Future Acquisition 1995, Ltd. Texas Limited *
Partnership
------------
* Owned 1% by Future Petroleum Corporation (Texas) and 99% by Future Energy
Corporation
a. Future Acquisition 1995 and Future Petroleum Corporation are qualified to do
business in the State of Louisiana, Mississippi, New Mexico.
b. Future Cal-Tex Corporation is qualified to do business in the state of
California.
c. NCI-Shawnee Limited Partnership, Future Petroleum Corporation and BMC
Development No. 1 Limited Partnership are qualified to do business in the State
of Oklahoma.
d. NCI-Shawnee Limited Partnership, BMC Development No. 1 Limited Partnership
and Future Acquisition 1995, Ltd. are qualified to do business in the State of
Nevada.
124
SCHEDULE III
ADMINISTRATIVE DETAILS
BANK OF AMERICA, N.A.
Percentage: 50%
Lending office for Base Rate Loans:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Lending Office for LIBO Rate Loans:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
BANK ONE, TEXAS, NA
Percentage: 30%
Lending office for Base Rate Loans:
Bank One, Texas, NA
910 ▇▇▇▇▇▇
TX2-4330
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Credit Contact: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Operations Contact: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Participation/Syndication Analyst
125
500 Throckmorton
West Complex PG6
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Lending Office for LIBO Rate Loans:
Bank One, Texas, NA
910 ▇▇▇▇▇▇
TX2-4330
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Credit Contact: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Operations Contact: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Participation/Syndication Analyst
Bank One, Texas, NA
500 Throckmorton
West Complex PG6
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇ FARGO BANK (TEXAS), NA
Percentage: 20%
Lending office for Base Rate Loans:
▇▇▇▇▇ Fargo Bank (Texas), NA
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Credit Contact: ▇▇▇▇▇ ▇. ▇▇▇▇, Assistant Vice President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Operations Contact: ▇▇▇▇▇▇▇ Elring, Assistant Vice President
▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Lending Office for LIBO Rate Loans:
▇▇▇▇▇ Fargo Bank (Texas), NA
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Credit Contact: ▇▇▇▇▇ ▇. ▇▇▇▇, Assistant Vice President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Operations Contact: ▇▇▇▇▇▇▇ Elring, Assistant Vice President
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
127
SCHEDULE IV
EXISTING MORTGAGES
A. Mortgage, Deed of Trust, Assignment, Security Agreement and
Financing Statement from Mortgagor to Bank of America was
recorded and filed as follows:
ORIGINAL AMENDMENT
JURISDICTION FILE NO. DATE FILE NO. DATE
------------ -------- ---- -------- ----
1. LOUISIANA
Ouachita Parish, Volume 1630, Page 541 12/2/98 Vol. 1633, Page 784 12/17/98
Louisiana File No. 1243297 File No. 1244887
(Mortgage)
Volume 391, Page 341 1/21/99
File No. 1247111
(Conveyance)
▇▇▇▇▇▇▇▇▇▇ Parish, File No. 9813248 12/2/98 File No. 9813911 12/17/98
Louisiana (Mortgage)
File No. 9900755 1/21/99
(Conveyance)
2. MISSISSIPPI
▇▇▇▇▇▇ County, DT Deed Book 216, Page 7 10/22/98
Mississippi
▇▇▇▇▇ County, DT Deed Book 959, Page 358 10/22/98
Mississippi
3. NEW MEXICO
Lea County, Book 901, Page 276 8/24/98 Book 924, Page 492 12/17/98
New Mexico File No. 36851
Roosevelt County, Book 53, Page 824 10/23/98 Book 55, Page 193 12/17/98
New Mexico
4. OKLAHOMA
Grant County, Book 515, Page 699 8/24/98 Book 518, Page 039 12/17/98
Oklahoma File No. 2088
128
ORIGINAL AMENDMENT
JURISDICTION FILE NO. DATE FILE NO. DATE
------------ -------- ---- -------- ----
▇▇▇▇▇▇▇▇ County, Book 673, Page 659 8/24/98 Book 679, Page 117 12/17/98
Oklahoma File No. SF-4998
Pottawatomie County, Book 2835, Page 232 8/24/98 Book 2883, Page 278 12/17/98
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Book 2859, Page 101 10/20/98
Oklahoma Rec. # 1998-14245
5. TEXAS
Austin County, File No. 994053 7/13/98
Texas
Bastrop County, Volume 955, Page 831 12/31/98
Texas File No. 199814768
Brazos County, Volume 3323, Page 195 12/1/98
Texas File No. 0672275
Volume 3359, Page 119 1/7/99
File ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Volume 163, Page 550 12/1/98
Texas File No. 0003900
Volume 164, Page 175 12/31/98
File ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, Volume 289, Page 756 8/24/98 Vol. 292, Page 780 12/17/98
Texas File No. 0001984
Crane County, Volume 400, Page 89 10/26/98 Vol. 401, Page 732 12/17/98
Texas File. ▇▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, Volume 240, Page 239; 10/22/98 Vol. 240, Page 727 12/17/98
Texas File No. 98-3130 File No. 3634
Ector County, Volume 1433, Page 787 12/1/98 Vol. 1436, Page 0502 12/17/98
Texas File ▇▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Volume 1046, Page 414 12/1/98
Texas
Volume 1049, Page 369 12/31/98
File No. 98-7363
▇▇▇▇ County, Volume 734, Page 398 8/24/98 Vol. 739, Page 189 12/17/98
Texas File No. 141597
129
ORIGINAL AMENDMENT
JURISDICTION FILE NO. DATE FILE NO. DATE
------------ -------- ---- -------- ----
▇▇▇▇▇▇ County, Doc. No. ###-##-#### 10/16/98 Doc. No. ###-##-#### 12/17/98
Texas 300235009 T328911 T443676
▇▇▇▇▇▇▇▇▇▇ County, Volume 902, Page 263 8/24/98 Vol. 921, Page 213 12/17/98
▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Volume 129, Page 212 12/1/98
Texas File No. 26666
Volume 131,Page 228 1/5/99
Jasper County, Volume 222, Page 1 10/22/98 File No. 125171 12/17/98
Texas Document No. 123827
Live Oak County, Volume 360, Page 1 10/22/98 Vol. 362, Page 453 12/17/98
Texas Reg. No. 0141952 File No. 142714
Lubbock County, Volume 5965, Page 10 8/24/98 Vol. 6099, Page 187 12/17/98
Texas File No. 43783
Matagorda County, Volume 521,Page 570 12/1/98 Vol. 523, Page 559 12/17/98
Texas File ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Volume 138, Page 146 12/1/98 Vol. 138, Page 385 12/17/98
Texas File ▇▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Volume 1593, Page 430 8/24/98 Vol. 1628, Page 32 12/17/98
Texas File No. 24121
▇▇▇▇▇▇▇▇▇▇ County, Doc. No. 99047460; 6/14/99 545-00-0999 6/14/99
Texas 545-00-0960
▇▇▇▇▇▇▇▇▇▇ County, File No. 9947462 6/14/99
Texas
▇▇▇▇▇ County, Volume 499, Page 636 8/24/98 Vol. 504, Page 469 12/17/98
Texas File ▇▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ 10/22/98 File No. 469028 12/17/98
Texas
▇▇▇▇▇▇ County, File No. 994753 8/5/99
Texas
▇▇▇▇▇▇▇ County, Volume 299, Page 423 0/26/98 Vol. 305, Page 545 12/17/98
Texas Document ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Volume 2030, Page 280 8/24/98 Vol. 2058, Page 321 12/17/98
Texas File No. 24402
130
ORIGINAL AMENDMENT
JURISDICTION FILE NO. DATE FILE NO. DATE
------------ -------- ---- -------- ----
6. CALIFORNIA
▇▇▇▇ County, Doc. 0198114687 8/24/98 Doc. 0198184114 12/30/98
California Doc. 0198118749 8/31/98
----------------------------
131
SCHEDULE V
HEDGING AGREEMENTS
o Approximately 50% (or 150,000 MMBtu per month) of current gas production
is hedged through calendar year 1999 as follows:
- Collar hedge for 65,000 MMBtu based on the Southern California
Border Index with a floor of $2.00 and a cap of $2.45.
- Collar hedge for 85,000 MMBtu based on the Houston Ship Channel
Index with a floor of $2.00 and a cap of $2.04.
o Approximately 50% of current oil production is hedged as follows:
- 22,800 barrels beginning October 1999 declining each month to
18,750 barrels in September 2000 at a floor of $18.00 and a cap
of $20.75.
- 27,400 barrels beginning October 1999 declining each month to
23,250 barrels in September 2000 at a floor of $18.00 and a cap
of $23.08.
o For the 12 month period October 2000 - September 2001 a straight swap is
in place for approximately 25% of current monthly oil production at
$17.55 per barrel. (18,525 barrels beginning 10/00 declining to 16,200
barrels in 9/01)
o For the 12 month period October 2000 - September 2001 a straight swap is
in place for approximately 25% of current monthly oil production at
$18.05 per barrel. (22,825 barrels beginning 10/00 declining to 18,100
barrels in 9/01)
132
SCHEDULE VI
UPDATED TITLE SEARCHES
TEXAS
▇▇▇▇ ▇▇▇▇ -
1. Crane County - Atlantic State Nos. 1-8, ▇▇▇▇▇▇▇ State, ▇▇▇▇ State ▇▇▇▇▇
2. ▇▇▇▇▇▇▇ County - ▇▇▇▇▇▇▇▇▇ No. 2 Well
3. Jasper County - ▇▇▇▇▇▇ Unit No. 1 and ▇▇▇▇▇▇ No. 1
4. [N/A]
5. San ▇▇▇▇▇▇▇▇ County - ▇▇▇▇▇ ▇▇▇▇▇▇▇ No. 1 GU
6. ▇▇▇▇▇▇▇ County - Bright Falcon Prospect, ▇▇▇▇▇▇▇ No. 1 Well
7. Brazos County - ▇▇▇▇▇ Prospect, ▇▇▇▇▇ #2 Well
8. ▇▇▇▇▇▇▇▇ County - San ▇▇▇▇▇▇ Prospect, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 3, 8, 9 and 15,
San ▇▇▇▇▇▇ Creek Gu, ▇▇▇▇▇ ▇▇▇▇▇▇▇ No. 24
9. Matagorda County - Turtle Creek Prospect, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Gu No. 1
10. Brazos County - Riverside Campus Prospect, Riverside Campus 3 and 6 Oil
▇▇▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇▇ ▇▇▇▇▇ Prospect, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Nos. 1A and 2, ▇▇
▇▇▇▇▇▇ Nos. 1, 2, 11, 12, 14 and 15A
12. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ Counties - Cross Creek Field
13. Austin County - Post-closing opinion for Raccoon Bend
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. (▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇) -
1. ▇▇▇▇▇ County - Panhandle
LOUISIANA
▇▇▇ ▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇ and ▇▇▇▇▇) -
1. Vermilion Parish - North ▇▇▇▇▇ Field
▇▇▇▇ ▇▇▇▇▇▇▇▇ -
1. Ouachita Parish - Cheniere Cadeville
133
OKLAHOMA
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ -
1. Pottawatomie County - Shawnee Townsite (▇▇▇▇▇▇▇) Unit
CALIFORNIA
▇▇▇ ▇▇▇▇ -
1. ▇▇▇▇ County - South Coles Levee
134
EXHIBIT A
FORM OF
SECOND AMENDED AND RESTATED
SECURED PROMISSORY NOTE
$_____________ September 30, 1999
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇ ENERGY COMPANY, a Texas
corporation (the "Borrower"), promises to pay to the order of
___________________ (the "Lender") on the Stated Maturity Date the principal sum
of ___________________________ DOLLARS ($_________) or, if less, the aggregate
unpaid principal amount of all Loans (whether or not shown on the schedule
attached hereto and any continuation thereof) made by the Lender pursuant to
that certain Second Amended and Restated Credit Agreement, dated as of September
30, 1999 (together with all amendments and other modifications, if any, from
time to time thereafter made thereto, the "Credit Agreement"), among the
Borrower, certain financial institutions and the Lender and Bank of America,
N.A., as administrative agent (the "Administrative Agent").
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds to
the account designated by the Administrative Agent pursuant to the Credit
Agreement.
This Note, together with the other Notes made and given in favor of the
other Lenders, amends, restates and consolidates those note(s) previously made
and given by Future Petroleum Corporation, a Utah corporation, to which the
Borrower is the successor-by-merger.
This Note is one of the Notes referred to in, and evidences Indebtedness
incurred under, the Credit Agreement, to which reference is made for a
description of the security for this Note and for a statement of the terms and
conditions on which the Borrower is permitted and required to make prepayments
and repayments of principal of the Indebtedness evidenced by this Note and on
which such Indebtedness may be declared to be immediately due and payable.
Unless otherwise defined, terms used herein have the meanings provided in the
Credit Agreement.
135
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN DALLAS, TEXAS AND SHALL BE DEEMED TO BE
A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF TEXAS.
▇▇▇▇▇ ENERGY COMPANY, a Texas
corporation
By:
---------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
136
LOANS AND PRINCIPAL PAYMENTS
Amount LIBO Amount of Principal Unpaid Principal
of Loan Made Rate Repaid Balance
------------ -------- ------------------- ----------------
Interest Base LIBO Base LIBO Notation
Date Period Rate Rate Rate Rate Total Made By
===================================================================================================================
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
===================================================================================================================
137
EXHIBIT B
FORM OF SECURITY AGREEMENT
138
EXHIBIT C-1
FORM OF
BORROWING REQUEST
BANK OF AMERICA, N.A., as Administrative Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy:
-------------
Attention: [Name]
[Title]
Re: ▇▇▇▇▇ Energy Company
Ladies and Gentlemen:
This Borrowing Request is delivered to you pursuant to Section 2.3 of
the Second Amended and Restated Credit Agreement, dated as of September 30, 1999
(together with all amendments, if any, from time to time made thereto, the
"Credit Agreement"), among ▇▇▇▇▇ Energy Company, a Texas corporation (the
"Borrower"), certain financial institutions (the "Lenders") and BANK OF AMERICA,
N.A., as administrative agent for the Lenders (the "Administrative Agent").
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
The Borrower hereby requests that a Loan be made in the aggregate
principal amount of $__________ on __________, 19__ as a [LIBO Rate Loan having
an Interest Period of ____ months] [Base Rate Loan].
The Borrower hereby acknowledges that, pursuant to Section 6.3.2 of the
Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans requested hereby
constitute a representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the application of
the proceeds therefrom, all statements set forth in Section 6.3.1 are true and
correct in all material respects (unless stated to relate solely to an earlier
date, in which case such statements shall be true and correct as of such earlier
date).
The Borrower agrees that if prior to the time of the borrowing requested
hereby any matter certified to herein by it will not be true and correct at such
time as if then made, it
139
will immediately so notify the Administrative Agent. Except to the extent, if
any, that prior to the time of the borrowing requested hereby the Administrative
Agent shall receive written notice to the contrary from the Borrower, each
matter certified to herein shall be deemed once again to be certified as true
and correct at the date of such borrowing as if then made.
Please wire transfer the proceeds of the borrowing to the following
account[s] ______________________________.
IN WITNESS WHEREOF, the Borrower has caused this request to be executed
and delivered by its duly Authorized Officer as of __________ __, 19__.
▇▇▇▇▇ ENERGY COMPANY, a Texas corporation
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
140
EXHIBIT C-2
FORM OF
CONTINUATION/CONVERSION NOTICE
Bank of America, N.A., as Administrative Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy:
--------------
Attention: [Name]
[Title]
Re: ▇▇▇▇▇ Energy Company
Ladies and Gentlemen:
This Continuation/Conversion Notice is delivered to you pursuant to
Section 2.4 of the Second Amended and Restated Credit Agreement, dated as of
September 30, 1999 (together with all amendments, if any, from time to time made
thereto, the "Credit Agreement"), ▇▇▇▇▇ Energy Company, a Texas corporation (the
"Borrower"), certain financial institutions (the "Lenders") and Bank of America,
N.A., as agent for the Lenders (the "Administrative Agent"). Unless otherwise
defined herein or the context otherwise requires, terms used herein have the
meanings provided in the Credit Agreement.
The Borrower hereby requests that on _______, 19__,
(1) $_________ of the presently outstanding principal amount
of the Loans originally made on _________, 19__ [and $_______ of the
presently outstanding principal amount of the Loans originally made on
_______, 19__],
(2) and all presently being maintained as [LIBO Rate
Loans] [Base Rate Loans],
(3) be [converted into] [continued as],
(4) [LIBO Rate Loans having an Interest Period of ____
months] [Base Rate Loans].
141
The Borrower hereby:
(a) certifies and warrants that no Default has occurred
and is continuing; and
(b) agrees that if prior to the time of such continuation
or conversion any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately notify the
Lender.
Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Administrative Agent shall receive written
notice to the contrary from the Borrower, each matter certified to herein shall
be deemed to be certified at the date of such continuation or conversion as if
then made.
IN WITNESS WHEREOF, the Borrower has caused this request to be executed
and delivered by its duly Authorized Officer as of __________ __, 19__.
▇▇▇▇▇ ENERGY COMPANY, a Texas
corporation
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
142
EXHIBIT D
FORM OF GUARANTY
143
EXHIBIT E-1
FORM OF MORTGAGE
144
EXHIBIT E-2
FORM OF CALIFORNIA MORTGAGE
145
EXHIBIT F-1
FORM OF PLEDGE AGREEMENT (STOCK)
146
EXHIBIT F-2
FORM OF PLEDGE AGREEMENT (PARTNERSHIP INTERESTS)
147
EXHIBIT G
LENDER ASSIGNMENT NOTICE
BANK OF AMERICA, N.A., as Administrative Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy:
---------------
Attention: [Name]
[Title]
Re: ▇▇▇▇▇ Energy Company
Ladies and Gentlemen:
We refer to clause (b) of Section 11.11.1 of the Second Amended and
Restated Credit Agreement, dated as of September 30, 1999 (together with all
amendments and other modifications, if any, from time to time thereafter made
thereto, the "Credit Agreement"), among ▇▇▇▇▇ Energy Company, a Texas
corporation (the "Borrower"), certain financial institutions (the "Lenders") and
BANK OF AMERICA, N.A., as agent for the Lenders (the "Administrative Agent").
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
This notice is delivered to you pursuant to clause (b) of Section
11.11.1 of the Credit Agreement and also constitutes notice to each of you,
pursuant to clause (a) of Section 11.11.1 of the Credit Agreement, of the
assignment and delegation to _______________ (the "Assignee") of ___% (and the
Assignor hereby assigns and delegates to the Assignee __%_) of the Loans and
Commitments of _____________ (the "Assignor") outstanding under the Credit
Agreement on the date hereof. After giving effect to the foregoing assignment
and delegation, the Assignor's and the Assignee's Percentages for the purposes
of the Credit Agreement are set forth on Schedule I hereto. The Assignor makes
such assignment and delegation without any representations, warranties or
recourse whatsoever except that the Assignor is the legal and beneficial owner
of the interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim. [Add paragraph dealing with accrued interest
with respect to Loans assigned.]
The Assignee hereby acknowledges and confirms that it is an Eligible
Assignee and it has received a copy of the Credit Agreement and the other Loan
Documents and the
148
exhibits related thereto, together with copies of the documents which were
required to be delivered under the Credit Agreement as a condition to the making
of the Credit Extensions thereunder.
Except as otherwise provided in the Credit Agreement, effective as of
the date of delivery hereof
(a) the Assignee
(i) shall be deemed automatically to have become a party
to the Credit Agreement, have all the rights and obligations of
a "Lender" under the Credit Agreement and the other Loan
Documents as if it were an original signatory thereto to the
extent specified in the second paragraph hereof; and
(ii) agrees to be bound by the terms and conditions set
forth in the Credit Agreement and the other Loan Documents as if
it were an original signatory thereto; and
(b) the Assignor shall be released from its obligations under
the Credit Agreement and the other Loan Documents to the extent
specified in the second paragraph hereof.
The Assignor and the Assignee hereby agree that the [Assignor]
[Assignee] will pay to the Administrative Agent the processing fee referred to
in Section 11.11.1 of the Credit Agreement upon the delivery hereof.
Administrative information for the Assignee is set forth in Schedule II
hereto.
149
This notice may be executed by the Assignor and Assignee in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
instrument.
[ASSIGNOR]
By:
----------------------------------------
Title:
[ASSIGNEE]
By:
----------------------------------------
Title:
CONSENTED TO AND ACKNOWLEDGED:
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT
By:
---------------------------------
Title:
▇▇▇▇▇ ENERGY COMPANY
By:
---------------------------------
Title:
150
SCHEDULE I
TO LENDER
ASSIGNMENT NOTICE
ASSIGNOR'S ADJUSTED PERCENTAGES:
Commitment and Loans: __%
Letters of Credit: __%
ASSIGNEE'S PERCENTAGES:
Commitment and Loans: __%
Letters of Credit: __%
151
SCHEDULE II
TO LENDER
ASSIGNMENT NOTICE
ADDRESS FOR NOTICES:
Name of Assignee:
---------------------
152
EXHIBIT H
FORM OF OPINIONS OF COUNSEL TO THE BORROWER
153
EXHIBIT I-1
FORM OF PRE-CLOSING TITLE OPINIONS OF SPECIAL
TITLE COUNSEL TO THE BORROWER
Form of Pre-Closing Title Opinion
[Letterhead of Title Counsel]
[Date]
Bank of America, N.A., as Administrative Agent
c/o Mayer, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
PRE-CLOSING TITLE OPINION
Interests of [▇▇▇▇▇ Energy
Company] [Future Acquisition
1995, Ltd.]1, County,
----- --------
Gentlemen:
This opinion is given in connection with the Second Amended and Restated
Credit Agreement ("Credit Agreement") dated as of September 30, 1999, among
▇▇▇▇▇ Energy Company, a Texas corporation, as the borrower [("Borrower")]
[("Mortgagor")]2/, the various financial institutions as are now or may
hereafter become parties thereto (collectively, the "Lenders") and Bank of
America, N.A., formerly Bank of America National Trust and Savings Association,
as Administrative Agent for the Lenders (in such capacity, "Mortgagee").
Capitalized terms used in this opinion but not expressly defined herein shall
have the respective meanings given to them in the Credit Agreement.
----------------------
1/ Select entity as appropriate.
2/ Select entity as appropriate.
154
Please refer to our [Preliminary Title Opinion] ("Title Opinion") dated
__________, 199__, covering lands more particularly described therein
(collectively, the "Lands"). In addition to the title materials examined as
listed in the Title Opinion, we have examined copies of the following documents:
[HERE LIST DOCUMENTS EXAMINED]
We are of the opinion that:
A. Fully executed originals of items _____________________ should be
filed for record in the office of the [Clerk] of _____________ County of the
State of ______________. Upon the accomplishment of such recordation and
filings, the [Borrower] [Mortgagor] will constitute, as security for (i) Credit
Extensions, including the Loans made and to be made pursuant to the Credit
Agreement and to be evidenced by the Notes, and (ii) the obligations of
[Borrower] [Mortgagor] and its Affiliates to the Lenders and their Affiliates
under Hedging Agreements to which they are or may become parties, a legally
valid and enforceable first mortgage lien on the interests of [Borrower]
[Mortgagor] in the Lands and a first perfected security interest in the interest
of [Borrower] [Mortgagor] in all accounts and proceeds resulting from the sale
at the wellhead of minerals to be severed from the aforesaid interests of
[Borrower] [Mortgagor]. No other or further filings or recordings will be
required to establish, perfect and maintain such lien and security interest,
except as expressly set forth herein, subject to our comments and requirements
set forth hereinbelow.
B. Following execution of the documents listed as items ____
_____________________ and recordation of the documents listed as
______________________________________ (in the order listed, and assuming that
no intervening adverse instruments are recorded), the interests of [Borrower]
[Mortgagor] and covered by your Mortgage, will be as follows:
1. [Tract 1:] Operating Net Revenue
Interest Interest
--------- -----------
[Borrower][Mortgagor] --------- -----------
[HERE LIST INTERESTS IN EACH TRACT]
C. Under the applicable laws of the State of _____________, including
applicable recording, filing and registration laws and regulations, no mortgage,
documentary, stamp or similar taxes are payable in connection with the
execution, delivery
155
or recording of the Mortgage or the transactions contemplated thereby,
insofar as the Mortgage and the transactions relate to property located in or
subject to the laws of the State of _______________, other than statutory
recording and filing fees to be paid upon the recording and filing of the
Mortgage and related UCC-1.
D. Under the laws of the State of _______________, the priority of the
Mortgage, to the extent the Mortgage secures obligatory future advances and is a
conveyance of or creates a lien against a real property interest, is determined
by the date on which the Mortgage is recorded.
E. Under the laws of the State of _______________ and local
jurisdictions therein, there is no statutory or regulatory lien in favor of any
governmental entity for (a) liability under _________ environmental laws or
regulations, or (b) damages (including natural resources damages) arising from
or costs incurred by such governmental entity in response to the release of a
hazardous or toxic waste, substance, pollutant, constituent, or other substance
into the environment which, if not of record in the mortgage records in the
County where such lands are located, would have priority over the Mortgage [HERE
STATE EXCEPTIONS, AS APPLICABLE].
F. Under the laws of the State of _____________ and local jurisdictions
therein, there are no statutory and regulatory requirements relating to the
transfer of ownership or operation or sale of premises upon which there are
hazardous or toxic wastes, or upon which there are certain facilities which
indicate a likelihood of such wastes (except for various requirements that
regulatory bodies receive notification when an environmental permittee,
licensee, or notifier changes) which require (i) notification of the State or of
the local jurisdiction of such transfer, or sale, (ii) certification that there
has been no discharge of toxic or hazardous waste or other substances, or (iii)
in the event of a discharge, the assumption prior to such transfer of ownership,
or operation, or sale, of responsibility by the lender for the undertaking of
remedial measures to alleviate environmental contamination resulting from such
discharge.
G. It is necessary that a continuation statement be filed regarding the
Financing Statement within six (6) months prior to the end of each five (5) year
period.
This finding of title, and mortgaged interests of [Borrower] [Mortgagor]
in your favor, is subject to all unsatisfied (in whole or in part) Requirement
of the Title Opinion, as well as all limitations, comments and remarks set forth
therein and herein.
After the proper execution and recordation of the documents listed as
______________________________________, as required above, it will be necessary
to examine the Public Records of ______________________ County, _______________,
to insure that there have been no adverse alienations, liens or encumbrances
recorded or filed, or suffered to be recorded or filed, since the certification
dates of the Abstracts examined in connection with the rendition of the Title
Opinion. We will furnish you a
156
Post-Closing Title Opinion after execution of the documents listed above as
_________________________________________ and recordation of the documents
listed above as _________________________________, completion of the records
search set forth above, and our examination of the documentation in connection
with same, such opinion to be substantially in the form of that attached hereto.
Very truly yours,
--------------------------
157
EXHIBIT I-2
FORM OF POST-CLOSING
TITLE OPINIONS OF SPECIAL
TITLE COUNSEL TO THE BORROWER
Form of Post-Closing Title Opinion
[Letterhead of Title Counsel]
_______________, 199__
Bank of America, N.A., as Administrative Agent
c/o Mayer, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
POST-CLOSING TITLE OPINION
Interests of [▇▇▇▇▇ Energy Company]
[Future Acquisition 1995, Ltd.]1/
__________ County, ___________
Gentlemen:
This opinion is rendered in connection with the closing under that
certain Second Amended and Restated Credit Agreement dated as of September 30,
1999 (the "Credit Agreement"), among ▇▇▇▇▇ Energy Company, a Texas corporation,
as the borrower [(the "Borrower")] [(the "Mortgagor")]2/, the various financial
institutions as are now or may hereafter become parties thereto (collectively,
the "Lenders") and Bank of America, N.A., formerly Bank of America National
Trust and Savings Association, as Administrative Agent for the Lenders (in such
capacity, "Mortgagee"). Capitalized terms used in this opinion but not expressly
defined herein shall have the respective meanings given to them in the Credit
Agreement.
---------------------
1/ Select entity as appropriate.
2/ Select entity as appropriate.
158
Please refer to our [here list prior Title Opinion] ("Title Opinion")
dated __________, 199__, covering lands more particularly described therein
(collectively the "Lands"). In addition to the title materials examined as
listed in the Title Opinion, we have examined executed originals of the
following documents:
[HERE LIST DOCUMENTS EXAMINED]
We are of the opinion that:
A. The Mortgage constitutes, as security for (i) Credit Extensions,
including the Loans made and to be made pursuant to the Credit Agreement and
evidenced by the Notes, and (ii) the obligations of the [Borrower][Mortgagor]
and its Affiliates to the Lenders and their Affiliates under Hedging Agreements
to which they are or may become parties, a legally valid and enforceable first
mortgage lien on the interests of the ("[Borrower] [Mortgagor]") in the Lands,
and a first perfected security interest in the interests of [Borrower]
[Mortgagor] in all accounts and proceeds resulting from the sale at the wellhead
of minerals to be severed from the aforesaid interests of [Borrower]
[Mortgagor]. No other or further filings or recordings are required to
establish, perfect and maintain such lien and security interest, except as
expressly set forth herein, subject to our comments and requirements set forth
hereinbelow.
B. It is our opinion that the interests of [Borrower] [Mortgagor], and
covered by your Mortgage are as follows:
1. [Tract 1:] Operating Net Revenue
Interest Interest
--------- -----------
[Borrower][Mortgagor] --------- -----------
[HERE LIST INTERESTS IN EACH TRACT]
C. Under the applicable laws of the State of _____________, including
applicable recording, filing and registration laws and regulations, no mortgage,
documentary, stamp or similar taxes are payable in connection with the
execution, delivery or recording of the Mortgage or the transactions
contemplated thereby, insofar as the Mortgage and the transactions relate to
property located in or subject to the laws of the State of ________________,
other than statutory recording and filing fees which were paid upon the
recording and filing of the Mortgage and UCC-1.
D. Under the laws of the State of ________________, the priority of the
Mortgage, to the extent the Mortgage secures obligatory future advances and is a
159
conveyance of or creates a lien against a real property interest, was
established as of ___________, 199__.
E. Under the laws of the State of ________________ and local
jurisdictions therein, there is no statutory regulatory lien in favor of any
governmental entity for (a) liability under ______ environmental laws or
regulations, or (b) damages (including natural resources damages) arising from
or costs incurred by such governmental entity in response to the release of a
hazardous or toxic waste, substance, pollutant, constituent, or other substance
into the environment which, if not of record in the mortgage records in the
County where such lands are located, would have priority over the Mortgage [HERE
LIST EXCEPTIONS, AS APPLICABLE].
F. Under the laws of the State of ________________ and local
jurisdictions therein, there are no statutory and regulatory requirements
relating to the transfer of ownership or operation or sale of premises upon
which there are hazardous or toxic wastes, or upon which there are certain
facilities which indicate a likelihood of such wastes (except for various
requirements that regulatory bodies receive notification when an environmental
permittee, licensee, or notifier changes) which require (i) notification of the
State or of the local jurisdiction of such transfer, or sale, (ii) certification
that there has been no discharge of toxic or hazardous waste or other
substances, or (iii) in the event of a discharge, the assumption prior to such
transfer of ownership, or operation, or sale, of responsibility by the lender
for the undertaking of remedial measures to alleviate environmental
contamination resulting from such discharge.
G. The Mortgage contains the terms and provisions necessary to enable
the Lender, following a default under the Mortgage, to exercise remedies which
are customarily available to mortgagees under mortgages encumbering real
property under the laws of the State of ________________.
H. The form of financing statement described in item ___ of this opinion
("Financing Statement") is sufficient in form to perfect the security interest
in [Borrower's] [Mortgagor's] interest in the Mortgaged Property not considered
real property or fixtures, to the extent that such Mortgaged Property is deemed
to be located in the State of ________________, and a security interest in such
Mortgaged Property can be perfected by the filing of a financing statement. To
the extent that the Mortgaged Property owned by [Borrower] [Mortgagor] not
considered real property or fixtures is deemed to be located in the State of
________________ and security interests in the various types of such Mortgaged
Property described in the Financing Statement can be perfected by filing in the
State of ________________ under the provisions of Article 9 of the Uniform
Commercial Code, such security interests have been perfected by filing of the
Financing Statement in the Office of the ________________ Secretary of State.
I. The Lender is not required, solely as a result of the transactions
contemplated by the Loan Documents, to qualify to do business in the State of
160
________________ in order to exercise its rights under the Mortgage. Solely as a
result of the transactions contemplated by the Loan Documents, the Lender will
not become subject to any taxes or fees of any kind under the laws of the State
of ________________.
J. The payment by the Borrower and receipt by the Lender of the
aggregate principal, interest and fees to be paid, and the method of calculation
and payment thereof, pursuant to the Loan Documents is not usurious under, or
otherwise in violation of, the laws of the State of ________________.
K. Certain rights, remedies and waivers contained in the Loan Documents
which relate to the Mortgaged Property may be rendered ineffective, or limited
by applicable State of ________________ laws or judicial decisions (other than
those reflected in the qualifications and assumptions set forth herein)
governing such provisions, but in our opinion such laws and judicial decisions
do not make the Loan Documents invalid as a whole, and there exist, in the Loan
Documents or pursuant to applicable law, legally adequate remedies for a
realization of the principal benefits and/or security reasonably intended to be
provided by the Loan Documents.
L. It is necessary that a continuation statement be filed regarding the
Financing Statement within six (6) months prior to the end of each five (5) year
period.
M. This finding of title in the interests of [Borrower] [Mortgagor]
mortgaged in your favor is subject to all unsatisfied (in whole or in part)
Requirements of the Title Opinion, as well as all limitations, comments and
remarks set forth therein and herein.
Very truly yours,
--------------------------
161
EXHIBIT J
ISSUANCE REQUEST
BANK OF AMERICA, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: ____________
Attention: [Name]
[Title]
▇▇▇▇▇ ENERGY COMPANY
Ladies and Gentlemen:
This Issuance Request is delivered to you pursuant to Section 4.1 of the
Second Amended and Restated Credit Agreement, dated as of September 30, 1999
(together with all amendments, if any, from time to time made thereto, the
"Credit Agreement"), between ▇▇▇▇▇ Energy Company, a Texas corporation (the
"Borrower"), certain financial institutions (the "Lenders") and BANK OF AMERICA,
N.A., a national banking association, as agent for the Lenders (the
"Administrative Agent"). Unless otherwise defined herein or the context
otherwise requires, terms used herein have the meanings provided in the Credit
Agreement.
The Borrower hereby requests that on _________, 19__ (the "Date of
Issuance") you 3/[issue a Letter of Credit on ______________, 19__ in the
initial Stated Amount of $_______________ with a Stated Expiry Date (as defined
therein) of ______________, 19__] [extend the Stated Expiry Date (as defined
under Irrevocable Standby Letter of Credit No.__, issued on
__________________________, 19 __, in the initial Stated Amount of
$______________) to a revised Stated Expiry Date (as defined therein) of
_________________, 19__].
----------------------------
3 Insert as appropriate.
162
The beneficiary of the requested Letter of Credit will be
4/_______________________________, and such Letter of Credit will be in support
of 5/________________________________.
The Borrower hereby acknowledges that, pursuant to Section 6.3.2 of the
Credit Agreement, each of the delivery of this Issuance Request and the
[issuance][extension] of the Letter of Credit requested hereby constitutes a
representation and warranty by the Borrower that, on such date of [issuance]
[extension] all statements set forth in Section 6.3.2 are true and correct in
all material respects (unless such statements relate solely to an earlier date,
in which case such statements shall be true and correct as of such earlier
date).
The Borrower agrees that if, prior to the time of the 6/[issuance]
[extension] of the Letter of Credit requested hereby, any matter certified to
herein by it will not be true and correct at such time as if then made, it will
immediately so notify the Administrative Agent. Except to the extent, if any,
that prior to the time of the issuance or extension requested hereby
Administrative Agent shall receive written notice to the contrary from the
Borrower, each matter certified to herein shall be deemed to be certified at the
date of such issuance or extension.
IN WITNESS WHEREOF, the Borrower has caused this request to be executed
and delivered by its duly Authorized Officer as of __________ __, 19__.
▇▇▇▇▇ ENERGY COMPANY
By
-------------------------------------
Name:
Title:
---------------------
4/ Insert name and address of beneficiary.
5/ Insert description of supported Indebtedness or other obligations and
name of agreement to which it relates.
6/ Complete as appropriate.