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EXHIBIT 10.30
Subordinated Loan Agreement
Dated as of November 30, 1998
Between
The Houston Exploration Company
and
MarketSpan Corporation d/b/a KeySpan Energy
Borrower: The Houston Exploration Company ("Houston
Exploration"), a publicly-traded Delaware
corporation.
Guarantors: All Significant Subsidiaries of the Borrower
which may execute a Guaranty Agreement. (There
are currently no Significant Subsidiaries.)
Lender: MarketSpan Corporation d/b/a KeySpan Energy
(the "Lender").
Type of Facility: Subordinated Loan which will be a six month
Revolving Credit Facility.
Total Commitment Amount: $150,000,000
Purpose: Proceeds of the Facility will be utilized to
temporarily finance hydrocarbon acquisitions.
Maturity Date: All outstanding principal, unpaid accrued
interest and fees will be repaid at maturity,
January 1, 2000. Any principal amount that
remains outstanding subsequent to the Maturity
Date will be converted into equity (the number
of shares to be issued to the Lender will be
determined based upon the average of the closing
prices of Houston Exploration's common stock,
rounded to three decimal places, as reported
under "NYSE Composite Transactions Reports" in
the Wall Street Journal during 20 consecutive
trading days ending three days prior to January
1, 2000. Because the market value represents an
average of Houston Exploration's common stock
over twenty consecutive trading days, ending
three days prior to maturity, the market price
may be higher or lower than the price of the
common stock on the conversion date). The total
amount converted to equity shall not exceed the
Total Commitment Amount. Any unpaid accrued
interest or fees that remain outstanding
subsequent to the Maturity Date will be paid in
cash.
Security: Unsecured. The Borrower provides a negative
pledge on unencumbered assets.
Availability: The borrowings may be repaid and reborrowed in
minimum amounts of $5 million (or increments of
$1 million in excess thereof) under the
Facility. Subject to the provisions of Section 3
of the Subordination Agreement (see Schedule
II).
Optional Commitment
Reductions: The Revolving Credit commitment may be
permanently reduced upon 3 days notice from the
Borrower in minimum amounts of $5 million (and
integral amounts of $5 million) subject to
Prepayments below, provided that any amounts
outstanding which would exceed the total
commitment
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as reduced, must be prepaid together with
interest thereon and any relevant costs. Subject
to the provisions of Section 3 of the
Subordination Agreement (see Schedule II).
Optional Prepayments: Borrowings may be prepaid, along with associated
interest, subject to one business day notice to
the Lender. Subject to the provisions of Section
3 of the Subordination Agreement (see Schedule
II).
Mandatory Prepayments: Upon any default of payment of interest or fees,
property sales, or casualty losses, the Borrower
shall make a Mandatory Repayment in the amount
of such excess amount. Subject to the provisions
of Section 3 of the Subordination Agreement
(see Schedule II).
Interest Rates: See Schedule 1.
Fees: See Schedule 1.
Interest Periods: The one month LIBOR rate will be set on
the date of each drawndown, as quoted in that
day's Wall Street Journal (which reflects the
previous business day's market rates). The rate
will be effective until the rate is reset on the
first business day of each month.
Notification Schedule: The Borrower must provide notice prior to the
proposed date of borrowing, in accordance with
the following schedule:
Amounts greater than $10 million - 5 business
days Amounts equal to, or less than, $10 million
- 3 business days
Default Interest Rate: Default interest will be 2% in excess of the
LIBOR Rate, plus margins referred to in Schedule
1, subject to applicable law. Interest shall
accrue at the post-default rates stated above on
amounts which remain unpaid after they become
due and payable.
Conditions to Lending: This Agreement shall be come effective on the
date hereof, if this Agreement shall have been
executed by the Borrower and the Lender, and the
Lender shall have received on or before the
effective date:
a) A Promissory Note payable to the order
of the Lender;
b) A counterpart of this Agreement duly
executed by the Borrower and the Lender,
which shall constitute the valid and
legal binding obligation of the
Borrower, legally enforceable in
accordance with its terms. Accompanied
by legal opinions of the Borrower's
counsel, certificates of the Borrower
and other supporting documents as the
Lender may reasonably request.
c) A certificate of the Secretary or an
Assistant Secretary of the Borrower
certifying copies (i) of the resolutions
of the Board of Directors of the
Borrower approving such Agreement, (ii)
of all documents evidencing other
necessary corporate action and
approvals, and (iii) that all lenders
and other parties in privity with the
Borrower whose consents are, or with
reasonable certainty may be,
prerequisite to the consummation of the
Facility or of the transactions
contemplated hereunder, shall have
consented to the same.
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d) A certificate of an officer of the
Borrower certifying the names and true
signatures of the officers of the
Borrower authorized to sign this
Agreement and the other documents and
instruments to be delivered hereunder
and thereunder.this Agreement and each
this Agreement and the other documents
and instruments to be delivered
hereunder and thereunder.
e) All fees and costs required under the
Agreement to be paid by the Closing Date
shall have been paid in full. Subject to
the provisions of Section 3 of the
Subordination Agreement (see Schedule
II).
f) Since September 30, 1998, there shall
not have occurred any material adverse
change in the financial condition,
business, properties or results of
operations of the Borrower.
g) After consummation of this financing and
after giving effect to the transactions
contemplated hereunder, such
consummation and transactions will not
violate any other material agreement or
contractual obligation of the Borrower
or its subsidiaries.
h) Written certification of the completion
of the Chevron acquisition for total
consideration of no more than $86
million.
Representations and
Warranties: The Borrower hereby represents and warrants to
the Lender, on and as of the date hereof, and
after giving effect to this Agreement
a) Corporate authority;
b) Execution, delivery and performance of
Loan Documents do not violate existing
law or existing agreements or require
consents;
c) No material litigation;
d) No material adverse change in the
financial condition or results of
operations;
e) Accuracy of financial statements;
f) Material compliance with ERISA;
g) No material environmental issues;
h) Legality, validity, binding effect and
enforceability of this Agreement;
i) Solvency
j) Compliance with laws;
k) Not an investment company or a "holding
company" within the meaning of the
Public Utility Holding Company Act of
1935, as amended; and
l) Title to properties.
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Financial Covenants: So long as any Note shall remain unpaid or the
Lender shall have any commitment hereunder, the
Borrower will not, without the written consent
of the Lender:
a) permit the total debt to capitalization
ratio to exceed 60%. Total Debt shall be
defined as (a) all borrowed money, (b)
trade debt which is past due, c)
liabilities under any bond, note,
security, letter of credit (other than
L/C's issued hereunder for trade credit
but including L/C's issued hereunder as
performance guarantees) or acceptance
financing, (d) guarantees, (e) capital
lease obligations and (f) all Hedging
Agreement obligations once such
obligations become "debt"; and
b) permit the interest Coverage Ratio
(EBITDA / Interest Expense) to be
greater than or equal to 2.5x.
Covenants: Customary for transactions of this nature,
including but not limited to, the following:
a) Reporting requirement;
b) Negative pledge of unencumbered assets;
c) Limitation on additional indebtedness;
d) Limitation on liens except permitted
liens;
e) Restriction on mergers, consolidations
and sale of oil and gas properties in
excess of $500,000;
f) Use of proceeds;
g) Maintenance of insurance;
h) Maintenance of books and records;
i) Visitation rights;
j) Material compliance with all laws and
payment of taxes;
k) Maintenance of title;
l) Limitations on Dividends;
m) Transactions with affiliates on an arms
length basis;
n) Limitations on creation of Subsidiaries;
and
o) Hedging limited to 70% of projected
production and may not exceed beyond 2
years.
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Events of Default: The events of default that follow are
subordinate to the Subordination Agreement
(Schedule II):
a) Failure to pay principal when due; and
interest and fees within three business
days of when due;
b) Representations and Warranties
materially incorrect;
c) Failure to comply with covenants (with
notice and cure periods as applicable);
d) Cross-default to payment defaults on
principal aggregating $500,000 or to
default or event if the effect is to
accelerate principal aggregating
$1,000,000;
e) Bankruptcy / insolvency;
f) Unsatisfied judgment or order in excess
of $1,000,000;
g) ERISA; and
h) Direct or indirect Brooklyn Union Gas
corp. ownership of the Borrower of at
least 60%.
Governing Law: State of New York
Indemnification: Borrower will indemnify the Lender and its
officers, directors, shareholders, employees,
agents and attorneys (the "Indemnitees") against
all costs, expenses (including fees and
disbursements of counsel) and liabilities
arising out of or relating to the Facilities and
the transactions contemplated thereby, including
consequences of their own negligence, provided
that none of the indemnitees will be indemnified
for the consequences of its gross negligence or
willful misconduct.
MARKETSPAN CORPORATION D/B/A KEYSPAN ENERGY
BY: /s/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇
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Vice President, Secretary and Treasurer
One Metrotech Center
Brooklyn, New York
THE HOUSTON EXPLORATION COMPANY
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
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Schedule I
Subordinated Loan Agreement
Dated as of November 30, 1998
Between
The Houston Exploration Company
and
MarketSpan Corporation d/b/a KeySpan Energy
Total Commitment Amount: $150,000,000
Interest Rate and Fees: Interest Rate & Fee Margins
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LIBOR 140 bps
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Commitment Fee 12.5 bps on unused portion of the Total
Commitment Amount
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Upfront Fee $50,000
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Initial Interest Period: November 30, 1998 through January 4, 1999.
Interest Periods: The one month LIBOR rate will be set on
the date of each drawndown, as quoted in that
day's Wall Street Journal (which reflects the
previous business day's market rates). The rate
will be effective until the rate is reset on the
first business day of each month.
Interest Payment Dates: In arrears, on the first business day following
the end of each calendar month.
Payments and
Computations: The Borrower shall make each payment hereunder
to the Lender, on the day when due, in lawful
money of the United States of America in same
day funds, by wire transfer to the Lender's
account (provide wire instructions) not later
than 12:00 noon (New York City time).
Computations of the LIBOR rate, commissions, and
fees shall be made by the Lender on the basis of
a year of 360 days for the actual number of days
(including the first day but excluding the last
day) elapsed.
Whenever any payment to be made hereunder shall
be stated to be due, or whenever the last day of
any Interest Period would otherwise occur, on a
day which is not a Business Day, such payment
shall be made, and the last day of such Interest
Period shall occur, on the next succeeding
Business, and such extension of time shall in
such case be included in the computation of
interest, commission or fee, as the case may be.
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Maturity Date: All outstanding principal, unpaid accrued
interest and fees will be repaid at maturity,
January 1, 2000. Any principal amount that
remains outstanding subsequent to the Maturity
Date will be converted into equity (the number
of shares to be issued to the Lender will be
determined based upon the average of the closing
prices of Houston Exploration's common stock,
rounded to three decimal places, as reported
under "NYSE Composite Transactions Reports" in
the Wall Street Journal during 20 consecutive
trading days ending three days prior to January
1, 2000. Because the market value represents an
average of Houston Exploration's common stock
over twenty consecutive trading days, ending
three days prior to maturity, the market price
may be higher or lower than the price of the
common stock on the conversion date). The total
amount converted to equity shall not exceed the
Total Commitment Amount. Any unpaid accrued
interest or fees that remain outstanding
subsequent to the Maturity Date will be paid in
cash.
MARKETSPAN CORPORATION D/B/A KEYSPAN ENERGY
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President, Secretary and Treasurer
One MetroTech Center
Brooklyn, New York
THE HOUSTON EXPLORATION COMPANY
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Senior Vice President
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