CONFORMED COPY
$105,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of
June 8, 1999
among
HALLWOOD ENERGY CORPORATION,
HALLWOOD ENERGY PARTNERS, L.P.,
and
HALLWOOD CONSOLIDATED RESOURCES CORPORATION
as Borrowers,
THE BANKS LISTED HEREIN,
FIRST UNION NATIONAL BANK,
as Collateral Agent
and
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
▇.▇. ▇▇▇▇▇▇ Securities Inc.,
Arranger
First Union National Bank,
Syndication Agent
NationsBank, N.A.,
Documentation Agent
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TABLE OF CONTENTS
----------------------
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.....................................................2
SECTION 1.02. Accounting Terms and Determinations............................19
ARTICLE 2
AMOUNTS AND TERMS OF LOAN
SECTION 2.01. The Loans and Commitment.......................................19
SECTION 2.02. Principal Repayments...........................................20
SECTION 2.03. Borrowing Alternatives.........................................20
SECTION 2.04. Interest Rate..................................................20
SECTION 2.05. Computation of Interest........................................23
SECTION 2.06. Borrowing Procedure............................................23
SECTION 2.07. Continuation Options..........................................24
SECTION 2.08. Conversion Options.............................................25
SECTION 2.09. Optional Prepayments, Termination or Reduction of
Commitments..........................................................26
SECTION 2.10. Mandatory Prepayments..........................................26
SECTION 2.11. Payments.......................................................27
SECTION 2.12. Interest.......................................................27
SECTION 2.13. Reimbursement of Certain Funding Losses........................28
SECTION 2.14. Increased Costs................................................29
SECTION 2.15. Basis for Determining Fixed Rates Inadequate...................30
SECTION 2.16. Illegality.....................................................32
SECTION 2.17. Foreign Taxes..................................................32
SECTION 2.18. Substitution of Banks..........................................34
SECTION 2.19. Participants' Expenses.........................................34
SECTION 2.20. Commitment Fees................................................34
SECTION 2.21. Engineering Fee................................................34
SECTION 2.22. Agents' Fees...................................................34
SECTION 2.23. Participation Fee..............................................34
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Existence......................................................35
SECTION 3.02. Authorization..................................................36
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PAGE
SECTION 3.03. Binding Obligations............................................36
SECTION 3.04. No Legal Bar or Resultant Lien.................................36
SECTION 3.05. No Consent.....................................................36
SECTION 3.06. Financial Condition............................................37
SECTION 3.07. Investments and Guaranties.....................................37
SECTION 3.08. Liabilities; Litigation........................................37
SECTION 3.09. Taxes; Governmental Charges....................................37
SECTION 3.10. Titles, etc....................................................38
SECTION 3.11. Defaults.......................................................38
SECTION 3.12. Casualties; Taking of Property.................................38
SECTION 3.13. Use of Proceeds; Margin Stock..................................38
SECTION 3.14. Compliance with the Law........................................39
SECTION 3.15. Compliance with Erisa..........................................39
SECTION 3.16. No Material Misstatements......................................39
SECTION 3.17. Investment Company Act.........................................39
SECTION 3.18. Public Utility Holding Company Act.............................40
SECTION 3.19. Corporate Documents and HEP Partnership Agreement..............40
SECTION 3.20. Location of the Borrowers......................................40
SECTION 3.21. Gas Imbalances.................................................40
SECTION 3.22. Foreign Corporation............................................40
SECTION 3.23. Other Financing Documents......................................41
SECTION 3.24. Environmental Matters..........................................41
SECTION 3.25. Subsidiaries...................................................41
SECTION 3.26. Solvency, etc..................................................41
SECTION 3.27. Year 2000 Compliance...........................................41
SECTION 3.28. Reorganization.................................................42
ARTICLE 4
COVENANTS
SECTION 4.01. Financial Statements and Reports...............................43
SECTION 4.02. Annual Certificates of Compliance..............................44
SECTION 4.03. Quarterly Certificates of Compliance...........................44
SECTION 4.04. Taxes and Other Liens..........................................45
SECTION 4.05. Maintenance; Abandonment.......................................45
SECTION 4.06. Further Assurances.............................................45
SECTION 4.07. Performance of Obligations.....................................46
SECTION 4.08. Reimbursement of Expenses......................................46
SECTION 4.09. Insurance.....................................................46
SECTION 4.10. Right of Inspection............................................46
SECTION 4.11. Notice of Certain Events.......................................47
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PAGE
SECTION 4.12. ERISA Information and Compliance...............................47
SECTION 4.13. Collateral Security............................................48
SECTION 4.14. Performance of Partnership Agreement...........................49
SECTION 4.15. Notice to Purchasers of Oil and Gas............................49
SECTION 4.16. Engineering Reports...........................................49
SECTION 4.17. Debt...........................................................50
SECTION 4.18. Liens..........................................................52
SECTION 4.19. Investments, Loans and Advances................................52
SECTION 4.20. Subsidiaries...................................................54
SECTION 4.21. Distributions, Etc.............................................54
SECTION 4.22. Mergers, Etc...................................................55
SECTION 4.23. Nature of Business.............................................55
SECTION 4.24. ERISA Compliance...............................................55
SECTION 4.25. Sale or Discount of Receivables................................56
SECTION 4.26. Transactions with Affiliates...................................57
SECTION 4.27. Sale of Assets.................................................57
SECTION 4.28. Annual Coverage Ratio..........................................57
SECTION 4.29. Additional Information.........................................58
SECTION 4.30. Information Meetings...........................................58
SECTION 4.31. Compliance with Laws, etc......................................58
SECTION 4.32. Covenant to Secure Indebtedness Equally........................58
SECTION 4.33. Inconsistent Provisions........................................58
SECTION 4.34. Interest Coverage Ratio........................................58
SECTION 4.35. Hedging Transactions...........................................59
SECTION 4.36. Incorporation By Reference of Certain Covenants.................59
SECTION 4.37. Restrictions with Respect to Subordinated Debt..................59
SECTION 4.38. Additional Guarantors..........................................60
ARTICLE 5
DEFAULTS
SECTION 5.01. Events of Defaults.............................................60
SECTION 5.02. Notice of Default..............................................62
ARTICLE 6
CONDITIONS
SECTION 6.01. Effectiveness..................................................63
SECTION 6.02. Transitional Provisions........................................64
SECTION 6.03. All Loans......................................................65
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PAGE
ARTICLE 7
THE AGENT AND THE COLLATERAL AGENT
SECTION 7.01. Appointment and Authorization..................................66
SECTION 7.02. Agent and Collateral Agent and Affiliates......................66
SECTION 7.03. Action by Agent or Collateral Agent............................66
SECTION 7.04. Consultation with Experts......................................66
SECTION 7.05. Liability of Agent and Collateral Agent........................67
SECTION 7.06. Indemnification................................................67
SECTION 7.07. Credit Decision................................................67
SECTION 7.08. Successor Agent or Collateral Agent............................68
ARTICLE 8
MISCELLANEOUS
SECTION 8.01. Notices........................................................68
SECTION 8.02. No Waivers.....................................................69
SECTION 8.03. Expenses; Documentary Taxes....................................69
SECTION 8.04. Sharing of Set-offs............................................69
SECTION 8.05. Amendments and Waivers.........................................70
SECTION 8.06. Successors and Assigns.........................................70
SECTION 8.07. New York Law...................................................72
SECTION 8.08. Counterparts; Integration......................................72
SECTION 8.09. Collateral.....................................................72
SECTION 8.10. WAIVER OF JURY TRIAL...........................................72
SECTION 8.11. Joint and Several Obligations..................................72
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SCHEDULES
SCHEDULE A Compliance Certificate
SCHEDULE B Disclosure Schedule
SCHEDULE C Collateral Documents
EXHIBITS
EXHIBIT A Note
EXHIBOpinions of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel of HEC and King & Spalding,
special New York counsel to the Obligors
EXHIBIT C Opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to the Agent
EXHIBIT D Assignment and Assumption Agreement
EXHIBIT E Guaranty Agreement
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AMENDED AND RESTATED CREDIT AGREEMENT
AGREEMENT dated as of June 8, 1999 among HALLWOOD ENERGY CORPORATION,
HALLWOOD ENERGY PARTNERS, L.P. and HALLWOOD CONSOLIDATED RESOURCES CORPORATION,
as Borrowers, the BANKS listed on the signature pages hereof, FIRST UNION
NATIONAL BANK, as Collateral Agent, and ▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW
YORK, as Agent.
WHEREAS, Hallwood Energy Partners, L.P., a Delaware limited partnership
(with its successors, "HEP"), HEP Operating Partners, L.P., a Delaware limited
partnership, EDP Operating, Ltd., a Colorado limited partnership, EM Nominee
Partnership Company, a Colorado general partnership, Concise Oil and Gas
Partnership, a Colorado general partnership, May Energy Partners Operating
Partnership LTD., a Texas limited partnership (together with HEP, the "HEP
Borrowers" and each, an "HEP Borrower"), the banks listed on the signature pages
thereof (the "HEP Banks"), ▇▇▇▇▇▇ Guaranty Trust Company of New York, as agent
and First Union National Bank, as collateral agent, are parties to a Third
Amended and Restated Credit Agreement dated as of May 31, 1997 (as in effect
immediately prior to the effectiveness of this Amended Agreement (as defined
below), the "Original HEP Agreement"); and
WHEREAS, Hallwood Consolidated Resources Corporation, a Delaware
corporation (with its successors, "HCRC"), Hallwood Consolidated Partners, L.P.,
a Colorado limited partnership (with its successors, "HCP" and, together with
HCRC, the "HCRC Borrowers" and each, an "HCRC Borrower"), the banks party
thereto (the "HCRC Banks"), First Union National Bank, as collateral agent and
▇▇▇▇▇▇ Guaranty Trust Company of New York, as agent are parties to a Second
Amended and Restated Credit Agreement dated as of May 31, 1997 (as in effect
immediately prior to the effectiveness of this Amended Agreement, the "Original
HCRC Agreement"); and
WHEREAS, Hallwood Energy Corporation, a Delaware corporation (with its
successors, "HEC"), HEP and HCRC are planning to consummate a reorganization
(the "Reorganization"), the terms and conditions of which are set forth in the
definitive Proxy Statement prepared by HEC, HEP and HCRC, first mailed on May 4,
1999 and supplemented on May 17, 1999 (the "Proxy Statement"), a copy of which
HEP and HCRC have delivered to each of the HEP Banks and the HCRC Banks; and
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WHEREAS, in connection with the consummation of the Reorganization, the
HEP Borrowers have asked the HEP Banks , and the HEP Banks have agreed, on the
terms and conditions set forth below, to amend and restate the Original HEP
Agreement as set forth below;
WHEREAS, in connection with the consummation of the Reorganization, the
HCRC Borrowers have asked the HCRC Banks, and the HCRC Banks have agreed, on the
terms and conditions set forth below, to amend and restate the Original HCRC
Agreement as set forth below;
NOW, THEREFORE, the parties hereto hereby agree that, on and as of the
Effective Date (as defined below), each of the Original HEP Agreement and the
Original HCRC Agreement is hereby amended and restated in its entirety as
follows:
ARTICLE
DEFINITIONS
SECTION . Definitions. The following terms as used herein, have the
following meanings:
"Adjusted CD Rate" has the meaning set forth in Section .
"Adjusted Euro-Dollar Rate" has the meaning set forth in Section .
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Borrowers) duly completed by such Bank.
"Advance Notice" means written, telegraphic or telecopier notice (which
in each case shall be irrevocable except as otherwise provided in Section ) from
the Borrowers to be received by the Agent before 11:00 a.m., New York time, by
the number of Domestic Business Days or Euro-Dollar Business Days in advance of
any borrowing, conversion, continuation or prepayment of any Loan pursuant to
this Agreement as respectively indicated below:
(a) CD Loans -- 2 Domestic Business Days;
(b) Euro-Dollar Loans -- 3 Euro-Dollar Business Days; and
(c) Base Rate Loans -- Same Day Notice
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For the purpose of determining the respectively applicable Loan in the
case of the conversion from one type of Loan into another, the Loan with respect
to which the longer period applies shall control.
"Affiliate" means each Person, other than an Obligor, who controls, is
controlled by or is under common control with HEC. For purposes of this
definition, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means ▇▇▇▇▇▇ Guaranty Trust Company of New York in its capacity
as agent for the Banks under the Financing Documents, and its successors in such
capacity.
"Agreement" means the Original HEP Agreement or the Original HCRC
Agreement, as the context may require, in each case as amended and restated by
this Amended Agreement and as the same may be further amended from time to time
in accordance with the terms hereof.
"Amended Agreement" means this Amended and Restated Credit Agreement
dated as of June 8, 1999 among the Borrowers, the Banks, the Collateral Agent
and the Agent.
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, and (ii) in the case of
its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Approved Petroleum Engineer" means ▇▇▇▇▇▇▇▇▇▇ Petroleum
Consultants, Inc. or any other independent petroleum engineers acceptable to the
Required Banks.
"Assessment Rate" has the meaning set forth in Section .
"Assignee" has the meaning set forth in Section .
"Authorized Person" means (a) for a corporation, the chief executive
officer, chief financial officer, chief accounting officer, controller, general
counsel or executive vice president of such corporation, and (b) for a
partnership, the chief executive officer, chief financial officer, chief
accounting officer, controller, general counsel or executive vice president of
each general partner of such partnership; provided that for the purposes of
certificates delivered pursuant to Article hereof, Authorized Person means (x)
for a corporation, the chief executive officer, chief financial officer or chief
accounting officer of such
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corporation, and (y) for a partnership, the chief executive officer, chief
financial officer or chief accounting officer of each general partner of such
partnership.
"Availability Limit" means, on any date, an amount equal to the lesser
of (i) the aggregate amount of the Commitments at such date and (ii)
$84,500,000. The Availability Limit may be increased only by an amendment in
accordance with Section 8.05, which the Banks may agree to or not agree to in
their sole discretion.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section , and their respective
successors and assigns.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(a) the Prime Rate for such day and (b) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"Base Rate Loan" means a Loan made by a Bank under this Agreement at
such time as it is made or maintained at an interest rate based on the Base
Rate.
"Base Rate Margin" means, on any date, (i) 0.25%, if on such date Level
I Status exists, (ii) 0.50%, if on such date Level II Status exists, (iii)
0.75%, if on such date Level III Status exists and (iv) 1%, if on such date
Level IV Status exists.
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by any member of the
Controlled Group.
"Borrowing" means a borrowing hereunder consisting of Loans made to the
Borrowers at the same time by the Banks pursuant to Article or continued or
converted pursuant to Section or , respectively. A Borrowing is a "Domestic
Borrowing" if such Loans are Domestic Loans or a "Euro-Dollar Borrowing" if such
Loans are Euro-Dollar Loans. A Domestic Borrowing is a "CD Borrowing" if such
Domestic Loans are CD Loans or a "Base Rate Borrowing" if such Domestic Loans
are Base Rate Loans.
"CD Loan" means a Loan made by a Bank under this Agreement at such time
as it is made or maintained at an interest rate based on the Adjusted CD Rate.
"CD Margin" means, on any date, (i) 1.375%, if on such date Level I
Status exists, (ii) 1.625%, if on such date Level II Status exists, (iii)
1.875%, if on
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such date Level III Status exists and (iv) 2.125%, if on such date Level IV
Status exists.
"CD Rate" has the meaning set forth in Section .
"CFADS" means, for any period, gross cash operating revenues properly
allocable to Petroleum Property for such period less the following cash items:
royalties, operating costs, severance, windfall profits and other wellhead
taxes, general and administrative expenses and current income and other taxes
properly allocable to such period and cash capital expenditures made during such
period and properly allocable to Petroleum Property. CFADS shall be determined
by the Banks based on the most recent Reserve Report and financial statements
(and supplemental information), as the case may be, furnished to the Banks and
prepared on the same basis as those provided under Section , subject to approval
of such Reserve Report (and supplemental information) by the Required Banks. For
purposes of Section , "general and administrative expenses" shall mean for each
fiscal year the higher of (a) $2,000,000 or (b) the product of (i) CFADS for
such year without deduction for the general and administrative expenses
allocable to that fiscal year multiplied by (ii) the previous fiscal year's
general and administrative expenses and then divided by (iii) the previous
year's CFADS without deduction for the general and administrative expenses
allocable to that fiscal year.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Collateral" has the meaning set forth in Schedule C.
"Collateral Agent" means First Union National Bank in its capacity as
collateral agent for the Banks under the Financing Documents, and its successors
in such capacity.
"Collateral Documents" means, upon the execution and delivery thereof
pursuant to Section , each document set forth in Schedule C, and all
supplementary assignments, security agreements, pledge agreements,
acknowledgements or other documents delivered or to be delivered pursuant to the
Financing Documents. Until such time, "Collateral Documents" has the meaning set
forth in each of the Original HEP Agreement and the Original HCRC Agreement.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature pages hereof, as such amount may
be reduced from time to time pursuant to Section hereof.
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"Commitment Fee Rate" means, on any date, (i) 0.375%, if on such date
Level I Status or Level II Status exists and (ii) 0.50%, if on such date Level
III Status or Level IV Status exists.
"Concise" means Concise Oil and Gas Partnership, a Colorado general
partnership, and its successors.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with HEC, are treated as a single employer under
Section 414 of the Code.
"Debt" of any Person means at any date, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instrument, (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (d) all obligations of such Person as lessee under capital leases, (e)
all Reimbursement Obligations, except to the extent (measured by collateral
value) such Reimbursement Obligations are (i) secured by cash, United States
Treasury obligations or time deposits or certificates of deposit issued by any
Bank or any other bank or savings and loan association rated "AA" or its
equivalent by S&P and ▇▇▇▇▇'▇ and (ii) payable to a Bank, (f) all Debt of others
secured by a Lien on any asset of such Person, whether or not such Debt is
assumed by such Person, and (g) all Debt of others directly or indirectly
guaranteed by such Person or in respect of which such Person is otherwise
liable, contingently or otherwise.
"Debt Limit" has the meaning set forth in Section hereof.
"Default" means the occurrence of any of the events or conditions
specified in Section 5.01, whether or not any requirement for notice or lapse of
time or other condition precedent has been satisfied.
"Derivative Obligations" means all obligations of any Person with
respect to any Hedging Transaction to which such Person is a party.
"Dollars" and the sign "$" means lawful currencyof the United States of
America.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
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"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrowers and the Agent; provided that any Bank may so designate
separate Domestic Lending Offices for its Base Rate Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references herein to the
Domestic Lending Office of such Bank shall be deemed to refer to either or both
or such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in Section
.
"Drawdown Termination Date" means the earlier to occur of May 31, 2002
or the date on which the Borrowers elect to commence the Term Period.
"Effective Date" means the date this Amended Agreement becomes
effective in accordance with Section .
"Enron Agreement" means the Loan Agreement dated as of December 29,
1994 between HSDC and Joint Energy Development Investments Limited
Partnership, as amended from time to time.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
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"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrowers and the Agent.
"Euro-Dollar Loan" means a loan made by a Bank under this Agreement at
such time as it is made or maintained at an interest rate based on the Adjusted
Euro-Dollar Rate.
"Euro-Dollar Margin" means, on any date, (i) 1.25%, if on such date
Level I Status exists, (ii) 1.50%, if on such date Level II Status exists, (iii)
1.75%, if on such date Level III Status exists and (iv) 2%, if on such date
Level IV Status exists.
"Euro-Dollar Rate" has the meaning set forth in Section .
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
.
"Event of Default" has the meaning set forth in Section 5.01 hereof.
"Excepted Liens" means: (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been
established in accordance with generally accepted accounting principles; (ii)
Liens in connection with workmen's compensation, unemployment insurance or other
social security, old age pension or public liability obligations; (iii) legal or
equitable encumbrances deemed to exist by reason of negative pledge covenants
(such as those made in Section hereof); (iv) legal or equitable encumbrances
deemed to exist by reason of the existence of any litigation or other legal
proceeding or arising out of a judgment or award with respect to which an appeal
is being prosecuted, but only so long as execution of such judgment and
enforcement of such Lien is effectively stayed and the amount thereof (in excess
of applicable insurance coverage) does not exceed, individually or in the
aggregate, $1,000,000; (v) vendors', carriers', warehousemen's, repairmen's,
mechanics', workmen's, materialmen's, construction or other like Liens arising
by operation of law in the ordinary course of business incident to obligations
which are not yet due or which are being contested in good faith by appropriate
proceedings by or on behalf of HEC or any of its Subsidiaries; (vi) Liens
arising in the ordinary course of business under gas sales contracts, operating
agreements, unitization and pooling agreements, and such other documents as are
customarily found in connection with comparable drilling and producing
operations, incident to obligations which are not yet due or which are being
contested in good faith by
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appropriate proceedings by or on behalf of HEC or any of its Subsidiaries and
for which adequate reserves have been established in accordance with generally
accepted accounting principles; (vii) minor irregularities in title which do not
materially interfere with the occupation, use and enjoyment by HEC or any of its
Subsidiaries of their respective Property in the normal course of business as
presently conducted or materially impair the value thereof for such business;
(viii) Liens on cash, United States Treasury obligations or time deposits or
certificates of deposit issued by any Bank or any other bank or savings and loan
association rated "AA" or its equivalent by S&P and ▇▇▇▇▇'▇ in an aggregate face
amount at any one time subject to such Liens not in excess of $3,000,000 to
secure Reimbursement Obligations and obligations incurred pursuant to interest
rate or commodities swap, or similar hedging, transactions; and (ix) Liens on
the Collateral securing Derivative Obligations of any Borrower in respect of any
Hedging Transaction between such Borrower and any Bank or affiliate of any Bank.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to ▇▇▇▇▇▇ Guaranty Trust Company of New
York on such day on such transactions as determined by the Agent.
"Financial Statements" means (i) the pro forma consolidated financial
statements of HEC and its consolidated Subsidiaries for the fiscal year ended
December 31, 1998, (ii) the audited consolidated financial statements of HEP and
its consolidated Subsidiaries for the fiscal year ended December 31, 1998, and
(iii) the audited consolidated financial statements of HCRC and its consolidated
Subsidiaries for the fiscal year ended December 31, 1998.
"Financing Documents" means this Agreement, the Notes, the Guaranty
Agreement and the Collateral Documents.
"Fixed Rate Borrowing" means a CD Borrowing or a Euro-Dollar
Borrowing.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or both.
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"Foreign Taxes" has the meaning set forth in Section .
"Guaranty Agreement" means the Guaranty Agreement dated as of the
Effective Date substantially in the form of Exhibit E among the Obligors party
thereto and the Agent, as amended from time to time.
"Governmental Requirement" means any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, franchise, permit,
certificate, license, authorization or other direction or requirement
(including, without limitation, any of the foregoing which relate to
environmental standards or controls, energy regulations and occupational, safety
and health standards or controls) of any (domestic or foreign) federal, state,
county, municipal or other government, department, commission, board, court,
agency or any other instrumentality of any of them, which exercises jurisdiction
over HEC or any of its Subsidiaries or any of their respective Property.
"Hallwood Group" has the meaning set forth in Section .
"HCP" has the meaning set forth in the second WHEREAS clause to this
Amended Agreement.
"HCRC" has the meaning set forth in the second WHEREAS clause to
this Amended Agreement.
"HCRC Banks" has the meaning set forth in the second WHEREAS clause to
this Amended Agreement.
"HCRC Borrowers" has the meaning set forth in the second WHEREAS clause
to this Amended Agreement.
"HEC" has the meaning set forth in the third WHEREAS clause to this
Amended Agreement.
"HEP" has the meaning set forth in the first WHEREAS clause to this
Amended Agreement.
"HEP Banks" has the meaning set forth in the first WHEREAS clause to
this Amended Agreement.
"HEP Borrowers" has the meaning set forth in the first WHEREAS clause
to this Amended Agreement.
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10
"HEP General Partner" means The Hallwood Group Incorporated, a Delaware
corporation, in its capacity as general partner of HEP, and its successors in
such capacity.
"HEP Partnership Agreement" means the Partnership Agreement dated as of
December 5, 1996, as amended from time to time.
"Hedging Transaction" means any rate swap transaction, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap transaction,
currency option or any other similar transaction (including any option with
respect to any of the foregoing transactions) or any combination of the
foregoing transactions including, without limitation, any Swap Transaction (as
defined in the Master Exchange Agreement dated as of April 14, 1992 between HCRC
and ▇▇▇▇▇▇ Guaranty Trust Company of New York, as amended from time to time).
"Highest Lawful Rate" means, with respect to any Bank, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Note of such Bank
under laws applicable to such Bank which are presently in effect or, to the
extent allowed by law, under such applicable laws which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.
"HLP" means Hallwood La Plata, LLC, a Colorado limited liability
company, and its successors.
"HSDC" means Hallwood ▇▇▇▇▇▇▇▇▇ Drilling Company, L.L.C., a Colorado
limited liability company, and its successors.
"Hydrocarbon Property Base" means the Petroleum Properties that are
owned directly by the Borrowers or the Property Base Subsidiaries.
"Increased Costs" has the meaning set forth in Section .
"Indebtedness" means any and all amounts owing or to be owing by the
Borrowers to the Banks, the Agent and the Collateral Agent under this Agreement
and the other Financing Documents and all other liabilities of the Borrowers to
the Banks, the Agent and the Collateral Agent from time to time existing under
the Financing Documents and all Derivative Obligations of any Borrower in
respect of any Hedging Transaction between such Borrower and any Bank, and all
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renewals, extensions, rearrangements, amendments or supplements to any of the
foregoing.
"Indemnitee" has the meaning set forth in Section hereof.
"Interest Period" means:(1) with respect to each Euro-Dollar Borrowing,
the period commencing on the date of such Borrowing and ending 1, 2, 3 or 6
months thereafter, as the Borrowers may elect in the applicable Advance Notice;
provided that:
(a) any Interest Period which would otherwise end on a day which is not
a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of
a calendar month; and
(c) if any Interest Period includes a date on which a payment of
principal of the Loans is required to be made under Section but does not end on
such date, then (i) the principal amount (if any) of each Euro-Dollar Loan
required to be repaid on such date shall have an Interest Period ending on such
date and (ii) the remainder (if any) of each such Euro-Dollar Loan shall have an
Interest Period determined as set forth above; and (2) with respect to each CD
Borrowing, the period commencing on the date of such Borrowing and ending 30,
60, 90 or 180 days thereafter, as the Borrowers may elect in the applicable
Advance Notice; provided that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b)(i) below) which would otherwise end on a day which is not
a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar
Business Day; and
(b) if any Interest Period includes a date on which a payment of
principal of the Loans is required to be made under Section but does not end on
such date, then (i) the principal amount (if any) of each CD Loan required to be
repaid on such date shall have an Interest Period ending on such date and (ii)
the remainder (if any) of each such CD Loan shall have an Interest Period
determined as set forth above.
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"Level I Status" exists on any date if on such date the aggregate
outstanding principal amount of the Loans is less than 50% of the Debt Limit.
"Level II Status" exists on any date if on such date (i) the aggregate
outstanding principal amount of the Loans is less than 85% of the Debt Limit and
(ii) Level I Status does not exist on such date.
"Level III Status" exists on any date if on such date (i) the aggregate
outstanding principal amount of the Loans is less than 95% of the Debt Limit and
(ii) neither Level I Status nor Level II Status exists on such date.
"Level IV Status" exists on any date if on such date none of Level I
Status, Level II Status or Level III Status exist.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
(including without limitation any production payment, any obligation to deliver
hydrocarbons in the future in satisfaction of any advance payment previously
received or any similar arrangement with respect to minerals in place) or any
other arrangement the economic effect of which is to give a creditor
preferential access to such asset to satisfy its claim, whether or not filed,
recorded or otherwise perfected under applicable law. For the purpose of the
Financing Documents, a Person shall be deemed to own subject to a Lien (i) any
asset that it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset or any capitalized lease obligation
or (ii) any account receivable transferred by it with recourse (including any
such transfer subject to a holdback or similar arrangement which effectively
imposes the risk of collectibility upon the transferor).
"Loan" means a Domestic Loan or a Euro-Dollar Loan and "Loans" means
Domestic Loans or Euro-Dollar Loans or both.
"LPA" means La Plata Associates, LLC, a Colorado limited liability
company, and its successors.
"Material Adverse Effect" means any material and adverse effect on the
properties, business or financial condition of HEC and its consolidated
Subsidiaries, taken as a whole, determined at any time by reference to the
information disclosed to the Banks at the time of the then next preceding
determination of the Debt Limit.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $2,000,000.
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"Material Subsidiary" means at any time any Subsidiary of HEC that (i)
on a consolidated basis, together with its Subsidiaries, holds assets with an
aggregate fair market value of at least $2,500,000, (ii) on a consolidated
basis, together with its Subsidiaries, accounts for at least 2.5% of the
consolidated cash flows of HEC and its consolidated Subsidiaries or (iii) on a
consolidated basis, together with its Subsidiaries, holds Proved Reserves with a
present value of at least $2,500,000. The determinations in clauses (i) and (ii)
shall be made on the basis of the financial statements of HEC most recently
delivered by the Borrowers to the Banks pursuant to Section 3.06 or 4.01, as the
case may be. The determination in clause (iii) shall be made on the basis of the
Reserve Report most recently delivered by the Borrowers to the Banks pursuant to
Section 4.16.
"MEPO" means May Energy Partners Operating Partnership LTD., a Texas
limited partnership, and its successors.
"Mortgaged Property" means the Property owned by or in which HEC or any
of its Subsidiaries owns an undivided interest and which is subject to the
Liens, privileges, priorities and security interests existing under the terms of
the Collateral Documents.
"▇▇▇▇▇'▇" means ▇▇▇▇▇'▇ Investors Service, Inc., and its successors.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the
Controlled Group during such five year period.
"Nominee" means EM Nominee Partnership Company, a Colorado general
partnership, and its successors.
"Notes" means promissory notes of the Borrowers, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrowers to repay
the Loans, together with any and all renewals, extensions for any period,
increases or rearrangements thereof, and "Note" means any one of such promissory
notes issued hereunder.
"Obligor" means the Borrowers and each Subsidiary of HEC party from
time to time to the Guaranty Agreement.
"Original Agreement" means the Original HEC Agreement or the Original
HCRC Agreement, as the context may require, and "Original Agreements" means both
of them.
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14
"Original HCRC Agreement" has the meaning set forth in the second
WHEREAS clause to this Amended Agreement.
"Original HEP Agreement" has the meaning set forth in the first WHEREAS
clause to this Amended Agreement.
"Original HCRC Notes" and "Original HCRC Note" means, respectively (i)
the promissory notes of the HCRC Borrowers issued pursuant to the Original HCRC
Agreement to evidence loans made by the HCRC Banks thereunder and (ii) a single
such Original HCRC Note.
"Original HEP Notes" and "Original HEP Note" means, respectively (i)
the promissory notes of the HEP Borrowers issued pursuant to the Original HEP
Agreement to evidence loans made by the HEP Banks thereunder and (ii) a single
such Original HEP Note.
"Original Notes" means the Original HEC Notes or the Original HCRC
Notes, as the context may require, and "Original Notes" means all of them.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section .
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust, estate,
unincorporated organization, government or any agency or political subdivision
thereof, or any other form of entity.
"Petroleum Property" means any interest in oil and gas reserves
(including without limitation any production payment with respect to any such
reserves) which is, or is to be taken into account in the determination of the
Debt Limit pursuant to Section .
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and either (i) is
maintained, or contributed to, by any member of the Controlled Group for
employees of any member of the Controlled Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
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was at such time a member of the Controlled Group for employees of any Person
which was at such time a member of the Controlled Group.
"Prime Rate" means the rate of interest publicly announced by ▇▇▇▇▇▇
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Principal Repayment" means the repayment of principal on the Notes
required in Section .
"Principal Repayment Dates" means the dates on which the principal of
the Loans is required to be repaid pursuant to Section .
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Property Base Subsidiaries" means MEPO, Concise, Nominee and HCP, and
any other Subsidiary of any of the Borrowers agreed to from time to time by the
Borrowers and the Required Banks.
"Proved Developed Producing Reserves" has the meaning assigned to that
term by the Society of Petroleum Engineers, as such meaning may be amended from
time to time, but generally means the subcategory of "Proved Developed Reserves"
(as defined by the Society of Petroleum Engineers) which are recoverable by
natural reservoir energies from the completion intervals currently open and
producing to market. Additional oil and gas expected to be obtained through the
application of fluid injection or other improved recovery techniques for
supplementing the natural forces and mechanisms of primary recovery will be
included as "Proved Developed Producing Reserves" only after testing by a pilot
project or after the operation of an installed program has confirmed through
production response through existing completions producing to market that
increased recovery will be achieved. Proved Developed Producing Reserves shall
not include any Proved Developed Non-Producing Reserves.
"Proved Developed Non-Producing Reserves" has the meaning assigned to
that term by the Society of Petroleum Engineers, as such meaning may be amended
from time to time, but generally means the subcategory of "Proved Developed
Reserves" (as defined by the Society of Petroleum Engineers) which will become
"Proved Developed Producing Reserves" upon minor capital expenditures being made
with respect to existing ▇▇▇▇▇ which will cause formerly non-producing
completions or intervals to become open and producing to market.
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"Proved Reserves" means and includes Proved Developed Producing
Reserves, Proved Developed Non-Producing Reserves and Proved Undeveloped
Reserves.
"Proved Undeveloped Reserves" has the meaning assigned to that term by
the Society of Petroleum Engineers, as such meaning may be amended from time to
time, but generally means those reserves that are expected to be recovered from
new ▇▇▇▇▇ on undrilled acreage, or from existing ▇▇▇▇▇ where a relatively major
expenditure is required for recompletion. Proved Undeveloped Reserves on
undrilled acreage shall be limited to those drilling units offsetting productive
units that are reasonably certain of production when drilled. Proved Undeveloped
Reserves for other undrilled units can be claimed only where it can be
demonstrated with certainty that the undrilled units contain reserves that are a
continuation of those formations that are producing from the existing productive
formation. Under no circumstances should estimates for Proved Undeveloped
Reserves be attributable to any acreage for which an application of fluid
injection or other improved recovery technique is contemplated, unless such
techniques have been proved effective by actual tests in the area and in the
same reservoir.
"Proxy Statement" has the meaning set forth in the third WHEREAS clause
to this Amended Agreement.
"Prudential" means The Prudential Insurance Company of America and
its successors and assigns.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means any change after the date of this Amended
Agreement in United States federal, state or foreign laws, rules or regulations
or the adoption or making after such date of any interpretations, directives or
requests of or under any United States federal, state or foreign laws, rules or
regulations (whether or not having the force of law) by any court or
governmental authority or reserve bank or comparable agency charged with the
interpretation or administration thereof.
"Reimbursement Obligations" of any Person means all obligations of such
Person (whether fixed or contingent) to reimburse any bank or other Person in
respect of amounts paid or payable under a letter of credit or similar
instrument.
"Reorganization" has the meaning set forth in the third WHEREAS
clause to this Amended Agreement.
(NY) 27008/757/CA99/ca.99.conf.wpd
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"Reorganization Agreement" has the meaning set forth in Section
.
"Reorganization Documents" has the meaning set forth in Section
.
"Reorganization Parties" has the meaning set forth in Section .
"Required Banks" means at any time Banks having at least 65% of the
aggregate amount of Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 65% of the aggregate unpaid amount
of the Loans.
"Reserve Report" means a report delivered by the Borrowers pursuant to
subsection (a), (b) or (c) of Section hereof.
"Revolving Credit Period" means the period from the Effective Date to
and including the Drawdown Termination Date.
"S&P" means Standard & Poor's Rating Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors.
"Subordinated Guaranty" means the Subsidiary Guaranty by the Initial
Subsidiary Guarantors (as defined in the Subordinated Notes Agreement) and HCP
in favor of Prudential dated as of June 8, 1999, as amended from time to time in
accordance with Section 4.37(b).
"Subordinated Notes" means the 10.32% Senior Subordinated Notes Due
December 23, 2007 issued by HCRC pursuant to the Subordinated Notes Agreement.
"Subordinated Notes Agreement" means the Amended and Restated
Subordinated Note and Warrant Purchase Agreement dated as of June 8, 1999
between HCRC, HEC and Prudential, as amended from time to time in accordance
with Section 4.37(b).
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by HEC.
"Term Date" means the earlier to occur of May 31, 2002 or the last day
of May, August, November or February which first occurs after the date on which
the Borrowers elect to commence the Term Period.
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"Term Period" means the period commencing immediately after the
Drawdown Termination Date during which principal repayments are made pursuant to
Section .
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the actuarial present value of all the benefit
liabilities (as determined for purposes of Title IV of ERISA) under such Plan
exceeds (ii) the fair market value of all Plan assets (excluding any accrued but
unpaid contributions) allocable to such benefit liabilities (computed on a plan
termination basis in accordance with Title IV of ERISA) all determined as of the
then most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the Controlled Group to
the PBGC or any other Person under Title IV of ERISA.
SECTION . Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used in this Agreement shall be
interpreted, all accounting determinations hereunder shall be made and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by HEC's
independent public accountants) with the most recent audited consolidated
financial statements of HEC delivered to the Banks from time to time pursuant to
Section or .
ARTICLE
AMOUNTS AND TERMS OF LOAN
SECTION . The Loans and Commitment. Subject to the terms and conditions
and relying on the representations and warranties contained in the Financing
Documents, the Banks severally agree to make during the Revolving Credit Period
revolving credit Loans to the Borrowers from time to time in such amounts as the
Borrowers may request up to the maximum amount hereinafter stated and the
Borrowers may make borrowings and prepayments (as permitted or required in
Sections and hereof) and reborrowings in respect thereof. Each Borrowing under
this Section shall be made from the several Banks ratably in proportion to their
respective Commitments.
To evidence the Loans made by each Bank pursuant to this Section, the
Borrowers will issue, execute and deliver to each Bank a Note in the principal
amount of the Commitment of such Bank and dated as of the Effective Date and
payable in installments as provided in Section .
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SECTION . Principal Repayments. Pursuant to Section , the Borrowers
will repay the principal amount outstanding on each Note in eight (8) equal
quarterly installments, commencing on the Term Date and thereafter on the last
day of each consecutive 3 month period. Any optional prepayments of principal
made during the Term Period shall be applied ratably to reduce the remaining
quarterly Principal Repayments. Any mandatory prepayments of principal made
during the Term Period as required by Section hereof shall be applied to reduce
the remaining quarterly Principal Repayments in the inverse order of their
maturity.
SECTION . Borrowing Alternatives.
During the Revolving Credit Period, Loans may be either
(i) CD Loans,(ii)Euro-Dollar Loans, (iii) Base Rate Loans or (iv) a combination
thereof, as elected by the Borrowers or otherwise applicable in accordance with
Sections , , or or subsection 2.04(e).
(b) During the Term Period, the Borrowers may have outstanding at any
time either (i) CD Loans, (ii) Euro-Dollar Loans, (iii) Base Rate Loans or (iv)
a combination thereof as elected by the Borrowers or otherwise applicable in
accordance with Sections , or or subsection 2.04(e), but no more than four (4)
Borrowings outstanding at any one time.
SECTION . Interest Rate.
Each Bank's CD Loans shall bear interest on the unpaid principal
amount thereof until payment in full thereof at a rate per annum equal to the
sum of (i) the Adjusted CD Rate for each Interest Period applicable thereto plus
(ii) the CD Margin, but in no event to exceed the Highest Lawful Rate of such
Bank; provided that if any CD Loan or any portion thereof shall, as a result of
clause (2) (b) (i) of the definition of Interest Period, have an Interest Period
of less than 30 days, such CD Loan or portion thereof shall bear interest during
such Interest Period at the rate applicable to Base Rate Loans during such
period.
The "Adjusted CD Rate" applicable to any Interest Period means a rate
per annum (rounded upwards, if necessary, to the next higher 1/100 of 1%)
determined according to the following formula:
[
]
ACDR =
[
CDR
]
+ AR
[
]
ACDR =
Adjusted CD Rate
CDR =
CD Rate
DRP =
Domestic Reserve Percentage
AR =
Assessment Rate
The "CD Rate" applicable to any Interest Period is the rate of interest
determined by the Agent to be the prevailing rate per annum bid at 10:00 AM (New
York City time) (or as soon thereafter as practicable) on the first day of such
Interest Period by two or more New York certificate of deposit dealers of
recognized standing for the purchase of face value from ▇▇▇▇▇▇ Guaranty Trust
Company of New York of its certificates of deposit in an amount comparable to
the unpaid principal amount of the CD Loan of such Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. ss. 327.3(e) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the United
States. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate.
Each Bank's Euro-Dollar Loans shall bear interest on the unpaid
principal amount thereof until payment in full thereof at a rate per annum equal
to the sum of (i) the Adjusted Euro-Dollar Rate for each Interest Period
applicable thereto plus (ii) the Euro-Dollar Margin, but in no event to exceed
the Highest Lawful Rate of such Bank.
The "Adjusted Euro-Dollar Rate" applicable to any Interest Period
means a rate per annum (rounded upwards, if necessary, to the next higher 1/100
of 1%) determined according to the following formula:
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20
AEDR =
Euro-Dollar Rate
(1.00 - Euro-Dollar Reserve Percentage)
AEDR =
Adjusted Euro-Dollar Rate
The "Euro-Dollar Rate" applicable to any Interest Period means the rate
per annum at which deposits in dollars are offered to ▇▇▇▇▇▇ Guaranty Trust
Company of New York in the London interbank market at approximately 11:00 AM
(London time) two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the principal amount of the
Euro-Dollar Loan of such Bank to which such Interest Period is to apply for a
period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents). The Adjusted Euro-Dollar Rate shall be adjusted automatically
on and as of the effective date of any change in the Euro-Dollar Reserve
Percentage.
Each Bank's Base Rate Loans shall bear interest on the unpaid
principal amount thereof until payment in full thereof at a varying rate per
annum at all times equal to the sum of (i) the Base Rate plus (ii) the Base Rate
Margin, but in no event to exceed the Highest Lawful Rate of such Bank.
Interest shall be payable (i) as to any Base Rate Loan on the last day
of each May, August, November and February, commencing on the first of such days
to occur after such Loan is made, and on the maturity of each Bank's Note and
(ii) as to any Fixed Rate Loan, on the last day of each Interest Period
applicable thereto; provided that if any Interest Period of more than three
months or 90 days, as applicable, is selected for any Fixed Rate Loan (if
permitted by other terms of this Agreement), interest shall also be payable with
respect to such Loan at intervals of three months or 90 days, as the case may
be, after the first day thereof.
On each day during which a Default shall occur and be continuing, all
outstanding Loans of each Bank, and all interest which is past due to such Bank
on such day, shall bear interest at a rate per annum equal to the sum of 2% plus
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the Base Rate for such day, but in no event to exceed the Highest Lawful Rate of
such Bank.
(f) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrowers and each
Bank of each rate of interest so determined, and its determination thereof shall
be conclusive in the absence of manifest error. In the absence of notice from
any Bank to the effect that the rate of interest otherwise payable for its
account hereunder (computed as provided herein) exceeds the Highest Lawful Rate
applicable to such Bank, which notice shall specify such Highest Lawful Rate and
the basis of computation thereof, the Agent may conclusively assume that the
rate of interest provided for herein does not exceed such Highest Lawful Rate
and shall incur no liability to any party by virtue thereof.
SECTION . Computation of Interest. Interest based on the Prime Rate
hereunder shall be computed on the basis of a year of 365 days (or 366 days in a
leap year) and paid for the actual number of days elapsed (including the first
day but excluding the last day). Commitment fees and all other interest on all
Loans and other Indebtedness shall be computed on the basis of a 360 day year
and paid for the actual number of days elapsed (including the first day but
excluding the last day), unless such computation would result in a usurious rate
for any Bank, in which case interest for the account of such Bank shall be
computed on the basis of a year of 365 or 366 days, as the case may be. The
Agent shall promptly notify the Borrowers of each determination of an Adjusted
CD Rate or an Adjusted Euro-Dollar Rate.
SECTION . Borrowing Procedure.
The Borrowers shall give Advance Notice to the Agent prior to the
proposed borrowing date. Such notice shall specify (i) the amount to be
borrowed; (ii) the borrowing date (which shall be a Euro-Dollar Business Day, in
the case of Euro-Dollar Loans, or a Domestic Business Day, in the case of CD
Rate Loans or Base Rate Loans); (iii) whether the Loans comprising such
Borrowing are to be Euro-Dollar Loans, Base Rate Loans, CD Loans or a
combination thereof (in which case the portions shall be specified in such
notice); and (iv) in the case of a Fixed Rate Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the definition of
Interest Period. Each Borrowing shall be in the principal amount of $1,000,000
or any whole multiple of $1,000,000 in excess thereof or the amount of the total
remaining Commitment available for borrowing.
Upon receipt of an Advance Notice, the Agent shall promptly notify
each Bank of the contents thereof and of such Bank's ratable share of such
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Borrowing and such Advance Notice shall not thereafter be revocable by the
Borrowers.
Not later than (i) 12:00 Noon (New York City time) on the date of
each Fixed Rate Borrowing and (ii) 12:00 Noon (New York City time) on the date
of each Base Rate Borrowing, each Bank shall (except as provided in subsection
(d) of this Section) make available its ratable share of such Borrowing, in
Federal or other funds immediately available in New York City, to the Agent at
its address specified in or pursuant to Section . Unless the Agent determines
that any applicable condition specified in Article has not been satisfied, the
Agent will make the funds so received from the Banks available to the Borrowers
at the Agent's aforesaid address.
If any Bank makes a new Loan hereunder on a day on which the
Borrowers are to repay all or any part of an outstanding Loan from such Bank,
such Bank shall apply the proceeds of its new Loan to make such repayment and
only an amount equal to the difference (if any) between the amount being
borrowed and the amount being repaid shall be made available by such Bank to the
Agent as provided in subsection (c) of this Section, or remitted by the
Borrowers to the Agent as provided in Section , as the case may be.
Unless the Agent shall have received notice from a Bank prior to the
date of any Borrowing that such Bank will not make available to the Agent such
Bank's share of such Borrowing, the Agent may assume that such Bank has made
such share available to the Agent on the date of such Borrowing in accordance
with subsections (c) and (d) of this Section and the Agent may, in reliance upon
such assumption, make available to the Borrowers on such date a corresponding
amount. If and to the extent that such Bank shall not have so made such share
available to the Agent, such Bank, on the one hand, and the Borrowers, on the
other hand, each agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrowers until the date such amount is
repaid to the Agent, at (i) in the case of the Borrowers, a rate per annum equal
to the higher of the Federal Funds Rate and the interest rate applicable thereto
pursuant to Section and (ii) in the case of such Bank, the Federal Funds Rate.
If such Bank shall repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Bank's Loan included in such Borrowing for purposes
of this Agreement. The failure of any Bank to make such share available to the
Agent on the date specified therefor shall not relieve any other Bank of its
obligation to make its share available to the Agent on such date, but neither
any Bank nor the Agent shall be responsible for the failure of any other Bank to
make such share available to the Agent.
SECTION . Continuation Options.
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The Borrowers may elect to continue all or any part of any CD
Borrowing beyond the expiration of the then current Interest Period relating
thereto by giving Advance Notice to the Agent of such election, specifying the
CD Borrowing or portion thereof to be continued and the Interest Period
therefor. In the absence of such a timely and proper election, the Borrowers
shall be deemed to have elected to convert such CD Borrowing to a Base Rate
Borrowing pursuant to subsection .
The Borrowers may elect to continue all or any part of any
Euro-Dollar Borrowing beyond the expiration of the then current Interest Period
relating thereto by giving Advance Notice to the Agent of such election,
specifying the Euro-Dollar Borrowing or portion thereof to be continued. In the
absence of such a timely and proper election, the Borrowers shall be deemed to
have elected to convert such Euro-Dollar Borrowing to a Base Rate Borrowing
pursuant to subsection .
All or any part of any Fixed Rate Borrowing may be continued as
provided herein, provided that (i) any continuation of any such Borrowing shall
be (as to each Borrowing as continued for an applicable Interest Period) in the
principal amount of $1,000,000 or any whole multiple of $1,000,000 in excess
thereof and (ii) no Default shall have occurred and be continuing. If a Default
shall have occurred and be continuing, each Fixed Rate Borrowing shall be
converted to a Base Rate Borrowing on the last day of the Interest Period
applicable thereto.
SECTION . Conversion Options. The Borrowers may elect to convert any CD
Borrowing on the last day of the then current Interest Period relating thereto
to a Euro-Dollar Borrowing or Base Rate Borrowing, or a combination thereof, by
giving Advance Notice to the Agent of such election, specifying, if electing one
or more Euro-Dollar Borrowings, each Interest Period therefor.
The Borrowers may elect to convert any Euro-Dollar Borrowing on
the last day of the then current Interest Period relating thereto to a CD
Borrowing or Base Rate Borrowing, or a combination thereof, by giving Advance
Notice to the Agent of such election.
The Borrowers may elect to convert a Base Rate Borrowing at any
time or from time to time to a CD Borrowing or Euro-Dollar Borrowing or a
combination thereof by giving Advance Notice to the Agent of such election,
specifying each Interest Period therefor.
All or any part of any outstanding Borrowing may be converted as
provided herein, provided that any conversion of any such Borrowing into a Fixed
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Rate Borrowing shall be (as to each such Borrowing into which there is a
conversion for an applicable Interest Period) in the principal amount of
$1,000,000 or any whole multiple of $1,000,000 in excess thereof. If no Default
shall have occurred and be continuing, each Borrowing may be converted as
provided in this Section. If a Default shall have occurred and be continuing, no
Borrowing may be converted into a Fixed Rate Borrowing.
SECTION . Optional Prepayments, Termination or Reduction of
Commitments. The Borrowers may, at their option, as to any Base Rate Borrowing
at any time and from time to time and as to any Fixed Rate Borrowing only on the
last day of the Interest Period applicable thereto, prepay any Borrowing, in
whole or in part, without premium or penalty, upon giving Advance Notice to the
Agent. Such notice shall specify the date and amount of prepayment and the
Borrowing to which such prepayment is to be applicable.
Upon receipt of a notice of prepayment pursuant to this Section, the
Agent shall promptly notify each Bank of the contents thereof and of such Bank's
ratable share of such prepayment and such notice shall not thereafter be
revocable by the Borrowers. The payment amount specified in such notice shall be
due and payable on the date specified. Each prepayment shall be, in the case of
any Borrowing, in the principal amount of $1,000,000 or any whole multiple of
$1,000,000 in excess thereof or the balance outstanding of such Borrowing. Each
such optional prepayment shall be applied to prepay ratably the Loans of the
several Banks included in such Borrowing.
During the Revolving Credit Period, the Borrowers may, upon at least
three Domestic Business Days' notice to the Agent, terminate at any time, or
proportionately reduce from time to time by an aggregate amount of $1,000,000 or
any whole multiple of $1,000,000 in excess thereof, the unused portions of the
Commitments. If the Commitments are terminated in their entirety, all accrued
commitment fees shall be payable on the effective date of such termination.
SECTION . Mandatory Prepayments. In the event that the aggregate unpaid
principal amount of Debt of the Borrowers at any time exceeds the Debt Limit
then most recently determined, the Borrowers shall, on or before thirty (30)
days from the earlier of the Agent's notification to the Borrowers of such
excess or the Borrowers otherwise becoming aware of such excess, either (i)
cause additional Property to be added to the Hydrocarbon Property Base such that
the Debt Limit as redetermined by the Banks after giving effect thereto will be
increased by an amount at least equal to such excess, and the Borrowers will
deliver to the Agent within said period (a) such title opinions and other title
information that the Borrowers have access to showing that the Borrowers,
individually or jointly, have good and indefeasible title to such Property and
(b) such Collateral Documents as are necessary to comply with Section based
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on such increased Hydrocarbon Property Base; or (ii) prepay the Notes in an
aggregate principal amount which is at least equal to such excess; or (iii)
eliminate such excess by a combination of the actions contemplated by clauses
(i) and (ii); provided that the provisions of this Section shall not prevent an
Event of Default from arising under the provisions of Section or 5.01(b).
SECTION . Payments. All payments (including prepayments) to be made by
the Borrowers on account of principal, interest and fees under a Note or
Commitment or any other Indebtedness shall be made without setoff or
counterclaim not later than 12:00 Noon (New York City time) on the date when
due, in Federal or other funds immediately available in New York City, to the
Agent at its address specified in Section . The Agent will promptly distribute
to each Bank its ratable share of each such payment received by the Agent for
the account of the Banks. If any payment under a Note (other than any payment on
a Euro-Dollar Loan) becomes due and payable on a day other than a Domestic
Business Day, the maturity thereof shall be extended to the next succeeding
Domestic Business Day and with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a Euro-Dollar Loan becomes due and payable on a day other than a
Euro-Dollar Business Day, the maturity thereof shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls
on another calendar month, in which case the date for payment thereof shall be
the next preceding Euro-Dollar Business Day, and interest on the principal
outstanding thereon shall be payable at the then applicable rate during such
extension.
Unless the Agent shall have received notice from the Borrowers prior
to the date on which any payment is due to the Banks hereunder that the
Borrowers will not make such payment in full, the Agent may assume that the
Borrowers have made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Bank on
such due date an amount equal to the amount then due such Bank. If and to the
extent that the Borrowers shall not have so made such payment, each Bank shall
repay to the Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION . Interest. It is the intention of the parties hereto that each
Bank shall conform strictly to usury laws applicable to it. Accordingly, if the
transactions contemplated hereby would be usurious as to a Bank under laws
applicable to it (including the laws of the United States of America or any
other jurisdiction whose laws may be mandatorily applicable notwithstanding the
other provisions of this Agreement), then, in that event, notwithstanding
anything to the
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contrary in a Note or any other Financing Document or other agreement entered
into in connection with or as security for a Note, it is agreed as follows: (i)
the aggregate of all consideration which constitutes interest under law
applicable to a Bank that is contracted for, taken, reserved, charged or
received by such Bank under a Note or any other Financing Document or other
agreements or otherwise in connection with a Note shall under no circumstances
exceed the maximum amount allowed by such applicable law, and any excess shall
be credited by such Bank on the principal amount of its Indebtedness as selected
by such Bank (or, if the principal amount of the Indebtedness shall have been
paid in full, refunded by such Bank to the Borrowers); and (ii) in the event
that the maturity of a Note is accelerated by reason of an election of the
holder or holders thereof resulting from any Event of Default under this
Agreement or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest under law applicable to such
Bank may never include more than the maximum amount allowed by such applicable
law, and excess interest, if any, provided for in this Agreement or otherwise
shall be canceled automatically by such Bank as of the date of such acceleration
or prepayment and if theretofore paid, shall be credited by such Bank on the
principal amount of its Indebtedness as selected by such Bank (or, if the
principal amount of the Indebtedness shall have been paid in full, refunded by
such Bank to the Borrowers). To the extent that any court of competent
jurisdiction determines, notwithstanding the provisions hereof, that any Bank
located in Texas may be subject to Texas law limiting the amount of interest
payable for its account, such Bank shall utilize the indicated (weekly) rate
ceiling from time to time in effect as provided in Chapter 1D of Article 5069
(Tex.Rev.Civ.Stat.▇▇▇. art 5069-1D.001, et seq.), as amended. In no event shall
the provisions of Article 5069, Chapter 15 of the Revised Civil Statutes of
Texas (which regulates certain revolving credit loan accounts and revolving
tri-party accounts) apply to any Loan made hereunder.
SECTION . Reimbursement of Certain Funding Losses. Without prejudice to
any other provision of this Agreement, in the event that a Bank shall incur any
loss or expense after making reasonable efforts to minimize any such loss or
expense (including, without limitation, any loss or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by a Bank
to fund or maintain all or any portion of the outstanding principal amount of
any Fixed Rate Loan, but excluding loss of margin) as a result of
payment, prepayment or conversion of such principal amount of
such Fixed Rate Loan on a date other than the last day of any Interest Period
applicable thereto, whether pursuant to Section , or or otherwise, or
any failure by the Borrowers to borrow, continue or convert into,
such Fixed Rate Loan on the date or in the amount specified in an Advance Notice
given pursuant to this Agreement,
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27
then the Borrowers shall pay to the Agent, on demand, such amount as will
reimburse such Bank for such loss or expense. A certificate setting forth in
reasonable detail any additional amounts payable pursuant to the foregoing
submitted by such Bank shall be prima facie evidence of such amounts, absent
manifest error.
SECTION . Increased Costs. If, as the result of any Regulatory
Change:
a Bank (or its Applicable Lending Office) shall be subjected
to any tax of any kind whatsoever with respect to the Agreement, a Note or any
Fixed Rate Loan made by it, or the basis of taxation of payments to the Bank of
principal, interest, fees or any other amount payable under this Agreement or a
Note shall be changed (except for changes in the rate of tax on the overall net
income of such Bank or such Applicable Lending Office imposed by the
jurisdiction in which such Bank's principal office or such Applicable Lending
Office is located); or
any reserve, special deposit, compulsory loan, insurance
assessment or similar requirement is imposed, modified or deemed applicable
against assets held by, or deposits or other liabilities in or for the account
of, advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of a Bank (in excess, and without duplication, of those
taken into account in computing the Domestic Reserve Percentage, Euro-Dollar
Reserve Percentage and Assessment Rate); or
any other condition affecting this Agreement, a Note or any
of its Fixed Rate Loans is imposed on a Bank;
and the result of any of the foregoing is to increase the cost to such Bank of
making, maintaining or funding any of its Fixed Rate Loans or to reduce any
amount receivable in respect of such Fixed Rate Loans (such increases in cost
and reductions in amounts receivable being hereinafter called "Increased
Costs"), then, in any such case, the Borrowers shall promptly pay to such Bank,
within ten Domestic Business Days of its demand, such additional amount which
will compensate such Bank for such Increased Cost as determined by such Bank.
Upon receiving demand from a Bank pursuant to subsection (a) of this Section and
at any time thereafter (unless and until such Bank has rescinded such demand) at
the option of the Borrowers and upon giving Advance Notice to the Agent, the
Borrowers may (A) in any case where such Increased Costs are applicable to
Euro-Dollar Loans, convert to Base Rate Loans or CD Loans all outstanding
Euro-Dollar Loans made by such Bank or (B) in any case where such Increased
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Costs are applicable to CD Loans, convert to Base Rate Loans or Euro-Dollar
Loans all outstanding CD Rate Loans made by such Bank. Upon any such conversion
of the Fixed Rate Loans of any Bank, the Borrowers shall pay to such Bank, in
accordance with Section , such amounts as may be necessary to compensate such
Bank for any loss or expense sustained or incurred by such Bank in respect of
such Fixed Rate Loans as a result of such conversion.
It is understood that in compensating a Bank for taxes pursuant to the
preceding paragraph, the amount of compensation shall include such additional
amounts as may be necessary so that every net payment of principal, interest,
fees or other amount payable under this Agreement, after taxes (including taxes
levied on any additional interest paid pursuant to this subsection), will not be
less than the corresponding amount provided for in this Agreement.
If any Bank shall have determined that any Regulatory Change has
or would have the effect of reducing the rate of return on capital of such Bank
(or its Parent) as a consequence of such Bank's obligations hereunder to a level
below that which it or its Parent could have achieved but for such Regulatory
Change (taking into consideration its policies with respect to capital adequacy)
by an amount deemed by such Bank to be material, then from time to time, within
15 days after demand by such Bank (with a copy to the Agent), the Borrowers
shall pay to such Bank such additional amount or amounts as will compensate such
Bank (or its Parent) for such reduction.
Each Bank will promptly notify the Borrowers and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth in reasonable detail
the calculation of the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining such
amount, such Bank may use any reasonable averaging and attribution methods.
If a Bank receives a refund or credit in respect of such Increased
Costs from a Person other than the Borrowers, such Bank shall reimburse the
Borrowers for the amount of such refund or credit not to exceed the amount
actually paid by the Borrowers to such Bank in respect of such Increased Costs.
SECTION . Basis for Determining Fixed Rates Inadequate. In the
event that:
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the Agent shall have determined in good faith that by reason of
circumstances affecting the domestic market for certificates of deposit
generally, adequate and reasonable means do not exist for ascertaining the
Adjusted CD Rate applicable pursuant to subsection 2.04(a) for any Interest
Period elected by the Borrowers with respect to (1) a proposed Borrowing that
the Borrowers have requested be made as a CD Borrowing, (2) a CD Borrowing that
will result from the requested conversion of a Base Rate or Euro-Dollar
Borrowing into a CD Borrowing, or (3) the continuation of an outstanding CD
Borrowing beyond the expiration of the then current Interest Period applicable
thereto, or the Agent shall have determined in good faith that the Adjusted CD
Rate will not adequately and fairly reflect the cost to the Banks of making,
maintaining or funding a proposed Borrowing that the Borrowers have requested be
made or continued as or converted into a CD Borrowing, then the Agent shall
promptly give notice of such determination to the Borrowers on the borrowing
date for such CD Borrowing, the conversion date of such Base Rate Borrowing or
Euro-Dollar Borrowing or the last day of such Interest Period. If such notice is
given, and subject to the Borrowers' right (if the required Advance Notice can
then be given) pursuant to Section , or to request a Euro-Dollar Borrowing in
lieu of a requested CD Borrowing or to convert to or to continue a Euro-Dollar
Borrowing in lieu of converting to a CD Borrowing (for which limited purpose the
Advance Notice pertaining to such CD Borrowing shall be revocable), (i) any
requested CD Borrowing shall be made as a Base Rate Borrowing; (ii) any Base
Rate Borrowing that was to have been converted to a CD Borrowing shall be
continued as a Base Rate Borrowing; (iii) any Euro-Dollar Borrowing that was to
have been converted to a CD Borrowing shall be converted to a Base Rate
Borrowing and (iv) any outstanding CD Borrowing shall be converted, on the last
day of the then current Interest Period applicable thereto, to a Base Rate
Borrowing. Until such notice has been withdrawn by the Agent, no further CD
Loans shall be made nor shall the Borrowers have the right to convert Base Rate
Loans or Euro-Dollar Loans to CD Loans;
the Agent shall have determined in good faith that by reason of
circumstances affecting the interbank Euro-Dollar market generally adequate and
reasonable means do not exist for ascertaining the Adjusted Euro-Dollar Rate
applicable pursuant to subsection 2.04(b) for any Interest Period elected by the
Borrowers with respect to (1) a proposed Borrowing that the Borrowers have
requested be made as a Euro-Dollar Borrowing, (2) a Euro-Dollar Borrowing that
will result from the requested conversion of a Base Rate Borrowing or a CD
Borrowing into a Euro-Dollar Borrowing or (3) the continuation of an outstanding
Euro-Dollar Borrowing beyond the expiration of the then current Interest Period
applicable thereto, or the Agent shall have determined in good faith that the
Adjusted Euro-Dollar Rate will not adequately and fairly reflect the cost to the
Banks of making, maintaining or funding a proposed Borrowing that the Borrowers
have requested be made or continued as or converted into a
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Euro-Dollar Borrowing, then the Agent shall promptly give notice of such
determination to the Borrowers at least one Euro-Dollar Business Day prior to,
as the case may be, the borrowing date for such Euro-Dollar Borrowing, the
conversion date of such Base Rate Borrowing or CD Borrowing or the last day of
such Interest Period. If such notice is given, and subject to the Borrowers'
right (if the required Advance Notice can then be given) pursuant to Section ,
or to request a CD Borrowing in lieu of a requested Euro-Dollar Borrowing or to
convert to or to continue a CD Borrowing in lieu of converting to a Euro-Dollar
Borrowing (for which limited purpose the Advance Notice pertaining to such
Euro-Dollar Borrowing shall be revocable), (i) any requested Euro-Dollar
Borrowing shall be made as a Base Rate Borrowing, (ii) any Base Rate Borrowing
that was to have been converted to a Euro-Dollar Borrowing shall be continued as
a Base Rate Borrowing, (iii) any CD Borrowing that was to have been converted to
a Euro-Dollar Borrowing shall be converted to a Base Rate Borrowing and (iv) any
outstanding Euro-Dollar Borrowing shall be converted on the last day of the then
current Interest Period applicable thereto to a Base Rate Borrowing. Until such
notice has been withdrawn by the Agent, no further Euro-Dollar Loans shall be
made nor shall the Borrowers have the right to convert Base Rate Loans or CD
Rate Loans to Euro-Dollar Loans.
SECTION . Illegality. Notwithstanding any other provision in this
Agreement, if, as a result of any Regulatory Change, it shall be unlawful or
impossible for a Bank (or its Applicable Lending Office) to make, maintain or
fund any Fixed Rate Loans as contemplated by this Agreement, such Bank's
obligation hereunder to make the affected Fixed Rate Loans shall forthwith be
canceled provided that such Bank shall designate a different Applicable Lending
Office if such designation will avoid the need for such cancellation and will
not be otherwise disadvantageous to such Bank. Immediately upon any such
cancellation, if it shall be unlawful or impossible to maintain any Fixed Rate
Loans then outstanding, all such Fixed Rate Loans of such Bank then outstanding
shall be converted automatically to Base Rate Loans. Such Bank shall promptly
give written notice to the Borrowers and the Agent of any such conversion. If
any such conversion of a Fixed Rate Loan is made prior to the last day of the
then current Interest Period therefor, the Borrowers shall pay to such Bank in
accordance with Section , such amount or amounts as may be necessary to
compensate such Bank for any loss or expense sustained or incurred by such Bank
in respect of such Fixed Rate Loan as a result of such conversion. A certificate
setting forth in reasonable detail any additional amounts payable pursuant to
the foregoing sentence submitted by such Bank to the Borrowers shall be prima
facie evidence of such amounts, absent manifest error.
SECTION . Foreign Taxes. All payments made by the Borrowers
for the account of any Bank under its Note or this Agreement or any other
Financing Document shall be made free and clear of, and without reduction for or
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on account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, restrictions or
conditions of any nature whatsoever now or hereafter imposed, levied, collected,
withheld or assessed by any country including the United States of America (or
by any political subdivision or taxing authority thereof or therein), excluding
net income and franchise taxes now or hereafter imposed by the United States of
America, by any state of the United States of America or by any political
subdivision or taxing authority thereof or therein, or by the country in which
such Bank's Applicable Lending Office is located or any political subdivision or
taxing authority thereof or therein (such non-excluded taxes being hereinafter
called "Foreign Taxes"). If any Foreign Taxes are required to be withheld from
any amounts payable to such Bank under its Note or this Agreement, the amounts
so payable to such Bank shall be increased to the extent necessary to yield to
such Bank (after payment of all Foreign Taxes) interest or any such other
amounts payable thereunder or hereunder at the rates or in the amounts specified
in its Note or this Agreement. Whenever any Foreign Tax is payable by the
Borrowers, as promptly as possible thereafter, the Borrowers shall send the
Agent an original official receipt showing payment thereof. If a Bank receives a
refund or credit in respect of such Foreign Taxes from a Person other than the
Borrowers, such Bank shall reimburse the Borrowers for the amount of such refund
or credit not to exceed the amount actually paid by the Borrowers to or for the
account of such Bank in respect of such Foreign Taxes.
At least five Domestic Business Days prior to the first date on which
interest or fees are payable hereunder for the account of any Bank, each Bank
that is not incorporated under the laws of the United States of America or a
state thereof agrees that it will deliver to the Borrowers and the Agent two
duly completed copies of United States Internal Revenue Service Form 1001 or
4224, certifying in either case that such Bank is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of any
United States federal income taxes. Each Bank which so delivers a Form 1001 or
4224 further undertakes to deliver to the Borrowers and the Agent two additional
copies of such form (or a successor form) on or before the date that such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by the
Borrowers or the Agent, in each case certifying that such Bank is entitled to
receive payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank from duly completing and delivering any such form with respect to it and
such Bank advises the Borrowers and the Agent that it
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is not capable of receiving payments without any deduction or withholding of
United States federal income tax.
SECTION . Substitution of Banks. If (i) the obligation of any Bank to
make Euro-Dollar Loans has been canceled pursuant to Section or (ii) any Bank
has demanded compensation under Section or , the Borrowers shall have the right,
with the assistance of the Agent, to seek a mutually satisfactory substitute
bank or banks (which may be one or more of the Banks) to purchase the Note and
assume the Commitment of such Bank.
SECTION . Participants' Expenses. All costs, losses, expenses, or
liabilities of a Bank reimbursable pursuant to this Article by the Borrowers
shall also include all costs, losses, expenses, or liabilities of any lenders
participating through such Bank in this Agreement, a Note, or any Fixed Rate
Loan. A certificate setting forth in reasonable detail any additional amounts
payable pursuant to the foregoing sentence submitted by such Bank to the
Borrowers shall be prima facie evidence of such amounts, absent manifest error.
SECTION . Commitment Fees. During the Revolving Credit Period, the
Borrowers shall pay to the Agent for the account of each Bank (which payment
shall be distributed to each Bank ratably in accordance with each Bank's
Commitment) a commitment fee at the Commitment Fee Rate calculated for each day
on the daily average amount by which the Availability Limit exceeds the
aggregate outstanding principal amount of the Loans. Subject to Section 2.09(b)
hereof, such commitment fees shall accrue from and including the Effective Date
to but excluding the last day of the Revolving Credit Period and shall be
payable quarterly on each March 31, June 30, September 30 and December 31 during
the Revolving Credit Period and on the last day of the Revolving Credit Period.
SECTION . Engineering Fee. The Borrowers agree to pay to the Agent and
each of the Banks a non-refundable fee of $10,000 and $7,500, respectively, on
March 31, 2000 and on each anniversary thereof to reimburse them for certain
engineering and other costs. If the Petroleum Property changes substantially
after the date hereof, the Agent shall have the right, in its reasonable
discretion, to modify such fee to reflect increased engineering and other costs.
SECTION . Agents' Fees. The Borrowers agree to pay to each of the Agent
and the Collateral Agent $15,000 on March 31, 2000 and on each anniversary
thereof to reimburse the Agent and the Collateral Agent for certain
administrative costs in connection with the Financing Documents.
SECTION . Participation Fee. The Borrowers shall pay on the
Effective Date to the Agent for the account of the Banks ratably in accordance
with their respective Commitments as in effect of the Effective Date immediately
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after giving effect to this Amended Agreement a participation fee equal to 0.45%
of the Debt Limit then in effect.
ARTICLE
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Amended Agreement, the
Borrowers represent and warrant to the Banks (which representations and
warranties will survive the delivery of the Notes and the making of the Loans)
that:
SECTION . Existence. HEC is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and has
all corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
HCRC is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has all corporate
powers and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
HEP is a limited partnership duly formed pursuant to the Uniform
Limited Partnership Act of the State of Delaware and has all partnership powers
and all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
(d) HEP General Partner is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
all corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
(e) HLP and LPA are each a limited liability company duly formed,
validly existing and in good standing under the laws of the state of Colorado.
MEPO is a limited partnership duly formed pursuant to the Uniform Limited
Partnership Act of the State of Texas. Nominee and Concise are each a general
partnership duly formed pursuant to the Uniform Partnership Act of the State of
Colorado. HCP is a limited partnership duly formed pursuant to the Uniform
Limited Partnership Act of the State of Colorado. Each of HLP, LPA, MEPO,
Nominee, Concise and HCP has all partnership or limited liability company powers
and all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
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34
SECTION . Authorization. The execution, delivery and performance by
each Borrower of the Financing Documents to which it is a party and the creation
and issuance of the Notes are within such Borrower's corporate or partnership
powers, as the case may be, and have been duly authorized by all necessary
corporate or partnership action, as the case may be (including, in the case of
HEP, all corporate action on the part of the HEP General Partner). All necessary
action on the part of each Borrower (and on the part of the HEP General Partner
in its capacity as general partner of HEP) requisite for the due creation and
issuance of the Notes and for the due execution, delivery and performance by
such Borrower of the Financing Documents to which it is a party has been duly
and effectively taken. No action or consent is required of the limited partners
of HEP in connection with the due creation and issuance of the Notes by HEP and
for the due execution, delivery and performance by HEP of the Financing
Documents to which it is a party, including this Agreement.
SECTION . Binding Obligations. This Agreement and other Financing
Documents do, and the Notes, upon their creation, issuance, execution and
delivery in accordance with this Agreement will, constitute valid and binding
obligations of the Borrowers party thereto or which have created, issued,
executed and delivered such Notes, as the case may be, enforceable in accordance
with their terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability.
SECTION . No Legal Bar or Resultant Lien. The Notes and the other
Financing Documents to which each Borrower is a party, including this Agreement,
and the compliance with and performance by such Borrower of the terms thereof do
not and will not violate any provisions of certificate of incorporation or
by-laws or partnership agreement of such Borrower, as the case may be, or any
material contract, agreement, instrument or Governmental Requirement presently
in effect to which such Borrower is subject, or result in the creation or
imposition of any Lien upon Property of such Borrower, other than those
permitted by the Financing Documents.
SECTION . No Consent. Each Borrower's execution, delivery and
performance of the Notes and the Financing Documents to which such Borrower is a
party, including this Agreement, do not require the consent or approval of any
Person which has not been obtained, including, without limitation, any
regulatory authority or governmental body of the United States of America or any
state thereof or any political subdivision of the United States of America or
any state thereof, except for approvals or consents required for the transfer of
interests in oil and gas leases by certain governmental bodies under the terms
of the oil and gas leases issued by such governmental bodies.
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SECTION . Financial Condition. The Financial Statements, which have
been delivered to the Banks, have been prepared in accordance with generally
accepted accounting principles, consistently applied, and present fairly (i) in
the case of the Financial Statements of HEC, the consolidated financial
condition, results of operations of HEC as at the date or dates and for the
period or periods stated giving effect to the Reorganization as if the
Reorganization has been consummated (x) on December 31, 1998, in the case of the
consolidated balance sheet of HEC and (y) January 1, 1998, in the case of the
consolidated statement of operations of HEC, (ii) in the case of the Financial
Statements of HEP, the consolidated financial condition, results of operations
and cash flows of HEP as at the date or dates and for the period or periods
stated and (iii) in the case of the Financial Statements of HCRC, the
consolidated financial condition, results of operations and cash flows of HCRC
as at the date or dates and for the period or periods stated. No change, either
individually or in the aggregate, has occurred since December 31, 1998 in the
condition, financial or otherwise, of HEC which would have a Material Adverse
Effect.
SECTION . Investments and Guaranties. At the date of this Amended
Agreement, neither HEC nor any of its Subsidiaries has made investments in,
advances to or guaranties of the obligations of any Person, except as reflected
in the Financial Statements or disclosed to the Banks in Schedule B hereto.
SECTION . Liabilities; Litigation. Except for liabilities incurred in
the normal course of business, neither HEC nor any of its Subsidiaries has at
the date of this Amended Agreement any material (individually or in the
aggregate) liabilities, direct or contingent, except as disclosed or referred to
in the Financial Statements or disclosed to the Banks in Schedule B hereto.
Except as disclosed in the Financial Statements or disclosed to the Banks in
Schedule B hereto, at the date of this Amended Agreement there is no litigation,
legal, administrative or arbitral proceeding, investigation or other action of
any nature pending or, to the knowledge of the Borrowers, threatened against or
affecting HEC or any of its Subsidiaries which involves the reasonable
possibility of any judgment or liability not fully covered by insurance, and
which would have a Material Adverse Effect. No unusual or unduly burdensome
restriction, restraint, or hazard exists by contract, law or governmental
regulation or otherwise relative to the business or Property of HEC and its
Subsidiaries, except as disclosed to the Banks in the Financial Statements or
disclosed in Schedule B hereto.
SECTION . Taxes; Governmental Charges. HEC and its Subsidiaries have
filed all Federal and, to the best of their knowledge, all material state and
local tax returns and reports required to be filed and have paid all taxes,
assessments, fees and other governmental charges levied upon each of them or
upon their respective Property or income which are due and payable, including
interest and penalties, except for any taxes, assessments, fees and other
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36
governmental charges with respect to which HEC and its Subsidiaries have set
aside on their books any reserve required by generally accepted accounting
principles.
SECTION . Titles, etc. Except as disclosed on Schedule B hereto, HEC
and its Subsidiaries, individually and collectively, have good title to their
material (individually or in the aggregate) Property (including, without
limitation, all Petroleum Property) and the Borrowers and the Property Base
Subsidiaries have record title to and beneficial ownership of all Petroleum
Property which the Borrowers have identified to the Banks for use in determining
the Debt Limit, in each case free and clear of all Liens except (i) Liens
referred to in the Financial Statements, (ii) Liens disclosed to the Banks in
Schedule B hereto, (iii) Excepted Liens, or (iv) Liens otherwise permitted by
this Agreement or the other Financing Documents. The Borrowers have delivered
(or have caused the Property Base Subsidiaries to deliver) to the Collateral
Agent copies of the most recent title opinions with respect to the Petroleum
Property included in the Hydrocarbon Property Base having a fair market value in
excess of $100,000; provided that the Collateral Agent shall not have any duty
to review such title opinions or determine the ownership of any such Petroleum
Property.
SECTION . Defaults. Neither HEC nor any of its Subsidiaries is in
default nor has any event or circumstance occurred which, but for the passage of
time or the giving of notice, or both, would constitute a default (in any
respect which would have a Material Adverse Effect) under any loan or credit
agreement, indenture, mortgage, deed of trust, security agreement or other
agreement or instrument evidencing or pertaining to any Debt, or under any
material agreement or instrument to which HEC or such Subsidiary is a party or
by which it is bound, except as disclosed to the Banks in Schedule B-2 hereto.
No Default has occurred and is continuing.
SECTION . Casualties; Taking of Property. Since the date of the
Financial Statements, neither the business nor the Property of HEC and its
Subsidiaries has been affected as a result of any fire, explosion, earthquake,
flood, drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of Property of HEC and its Subsidiaries or cancellation of
contracts, permits or concessions by any domestic or foreign government or any
agency thereof, riot, activities of armed forces or acts of God or of any public
enemy, the occurrence of which would have a Material Adverse Effect.
SECTION . Use of Proceeds; Margin Stock. The proceeds of the Loans
shall be used for working capital purposes and acquisitions. No proceeds of any
Loan will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any "margin stock" within the
meaning of Regulation U. None of the Borrowers is engaged principally, or as
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one of such Borrower's important activities, in the business of extending credit
for the purpose of purchasing or carrying margin stocks. None of the Borrowers
nor any Person acting on behalf of the Borrowers has taken or will take any
action which might cause any of the Financing Documents to violate Regulation U
or any other regulation of the Board of Governors of the Federal Reserve System
or to violate Section of the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect.
SECTION . Compliance with the Law. Neither HEC nor any of its
Subsidiaries:
is in violation of any Governmental Requirement; or
has failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of any of its Property or
the conduct of its business;
which violation or failure would have (in the event such violation or failure
were asserted by any Person through appropriate action) a Material Adverse
Effect.
SECTION . Compliance with Erisa. Each member of the Controlled Group
has fulfilled its obligations under the minimum funding standards of ERISA and
the Code with respect to each Plan and is in compliance in all material respects
with the presently applicable provisions of ERISA and the Code with respect to
each Plan. No member of the Controlled Group has (i) sought a waiver of the
minimum funding standard under Section 412 of the Code in respect of any Plan,
(ii) failed to make any contribution or payment to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan
or Benefit Arrangement, which in either case has resulted or could result in the
imposition of a Lien under ERISA or the Code or the posting of a bond or other
security under ERISA or the Code or (iii) incurred any liability under Title IV
of ERISA other than a liability to the PBGC for premiums under Section 4007 of
ERISA.
SECTION . No Material Misstatements. No information, exhibit or report
furnished to the Banks by the Borrowers in connection with the negotiation of
this Amended Agreement contained any material misstatement of fact or omitted to
state a material fact or any fact necessary to make the statements contained
therein not misleading.
SECTION . Investment Company Act. None of the Borrowers is an
"investment company" or a company "controlled" by an "investment
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38
company," within the meaning of the Investment Company Act of 1940, as
amended.
SECTION . Public Utility Holding Company Act. None of the Borrowers 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," or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
SECTION . Corporate Documents and HEP Partnership Agreement. Each of
HEC and HCRC has delivered to the Banks true and correct copies of its
certificate of incorporation and by-laws, and each such certificate of
incorporation and by-laws is in full force and effect as of the date hereof. HEP
has delivered to the Banks a true and correct copy of the HEP Partnership
Agreement and its certificate of limited partnership and such HEP Partnership
Agreement and certificate of limited partnership have not been modified or
terminated except for non-material changes to the names and addresses of the
limited partners, if any; and such HEP Partnership Agreement and such
certificate of limited partnership are in full force and effect as of the date
hereof. Neither HEP nor HEP General Partner nor, to the best knowledge of the
Borrowers, any other Person is in default under the HEP Partnership Agreement or
the certificate of limited partnership of HEP, except as disclosed to the Banks
in Schedule B hereto.
SECTION . Location of the Borrowers. Each Borrower's principal place of
business is Denver, Colorado and each Borrower's chief executive office is
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION . Gas Imbalances. Except as set forth on Schedule B or
specifically disclosed in the consolidated financial statements of HEC and its
consolidated Subsidiaries or a Reserve Report, there are no gas imbalances, take
or pay or other prepayments with respect to the Borrowers' or the Property Base
Subsidiaries' oil and gas Property which would require the Borrowers or the
Property Base Subsidiaries to deliver hydrocarbons produced from any of the
Borrowers' or the Property Base Subsidiaries' oil and gas Property at some
future time without then or thereafter receiving full payment therefor which
would exceed $200,000 in the aggregate.
SECTION . Foreign Corporation. Each of the Borrowers and each
Subsidiary of HEC pledging Mortgaged Property is duly qualified as a foreign
corporation or partnership, as the case may be, in all jurisdictions where any
Mortgaged Property pledged by it is located.
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SECTION . Other Financing Documents. The representations and
warranties contained in the other Financing Documents are true and correct as of
the date of this Amended Agreement.
SECTION . Environmental Matters. In the ordinary course of its
business, HEC conduct an ongoing review of the effect of Environmental Laws on
the business, operations and properties of HEC and its Subsidiaries in the
course of which HEC identifies and evaluates associated liabilities and costs
(including, without limitation, any capital or operating expenditures required
for clean-up or closure of properties presently or previously owned, any capital
or operating expenditures required to achieve or maintain compliance with
environmental protection standards imposed by law or as a condition of any
license, permit 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, HEC has reasonably concluded
that such associated liabilities and costs, including the costs of compliance
with Environmental Laws are unlikely to have a material adverse effect on the
business (as it is being conducted on the date this representation is being
made), financial condition, results of operations or prospects of HEC and its
Subsidiaries, taken as a whole.
SECTION . Subsidiaries. The Subsidiaries party to the Guaranty
Agreement constitute all of the Material Subsidiaries of HEC.
Each Borrower (other than HEC) is a wholly-owned Subsidiary of HEC.
Each Material Subsidiary of HEC (other than any Borrower) is a
corporation or partnership duly incorporated or formed, validly existing and in
good standing under the laws of its jurisdiction of incorporation or formation,
and has all corporate or partnership powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
SECTION . Solvency, etc. [Intentionally deleted]
SECTION . Year 2000 Compliance. HEC has (i) initiated a review and
assessment of all areas within the business and operations of HEC and each of
its Subsidiaries (including those areas affected by suppliers and vendors) that
could suffer a Material Adverse Effect by the "Year 2000 Problem" (that is, the
risk that computer applications used by it or any of its Subsidiaries (or their
respective suppliers and vendors) may be unable to recognize and perform
properly date- sensitive functions involving certain dates prior to and any date
after December
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40
31, 1999), (ii) developed a plan and timeline for addressing the Year 2000
Problem on a timely basis and (iii) to date, implemented or is implementing such
plan in accordance with such timetable. HEC reasonably believes that all
computer applications (including those of suppliers and vendors) that are
material to the business or operations of HEC or any of its Subsidiaries will on
a timely basis be able to perform properly date-sensitive functions for all
dates before and from 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 a Material Adverse Effect.
SECTION . Reorganization. Each of HEC, HEC Acquisition Partnership,
L.P., HEC Acquisition Corp., HCRC, HCRC Acquisition Corp., HEP and HEPGP Ltd.
(collectively, the "Reorganization Parties") has all requisite partnership or
corporate power and authority, as the case may be, to execute, deliver and
perform the Merger and Asset Contribution Agreement as amended, (the
"Reorganization Agreement") entered into by them on December 15, 1998 and to
consummate the Reorganization and the other transactions contemplated thereby.
The execution, delivery and performance by each of the Reorganization
Parties of the Reorganization Agreement and the other documents delivered by
such Reorganization Party pursuant thereto or in connection therewith (with
respect to each Reorganization Party, the "Reorganization Documents") have been
duly authorized by all necessary corporate or partnership action, as the case
may be.
There is no action, suit or proceeding pending or threatened which
questions the validity or legality of, or seeks damages in connection with the
Reorganization Documents, the Reorganization or any actions contemplated
thereby.
The execution, delivery and performance by each of the
Reorganization Parties of the Reorganization Documents to which it is a party
and the consummation of the Reorganization do not and will not conflict with or
violate the constituent documents of such Reorganization Party or any law,
statute, or published rule or regulation, or any writ, order or decision of any
court or governmental instrumentality binding on HEC or any of its Subsidiaries
or any indenture, mortgage, contract, instrument or agreement to which HEC or
any of its Subsidiaries is a party or by which it or its assets is bound.
Neither the execution, delivery or performance by each of the
Reorganization Parties of the Reorganization Documents to which it is a party
nor the consummation of the Reorganization require the consent or approval or
other action of, or the making of any filing with, any governmental authority,
other than
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such consents and approvals that have been obtained, such other actions that
have been taken and such other filings that have been made and that, in each
case, are in full force and effect on the date hereof.
All conditions precedent set forth in Article VIII of the
Reorganization Agreement have been satisfied.
ARTICLE
COVENANTS
SECTION . Financial Statements and Reports. The Borrowers will promptly
furnish to each of the Banks from time to time upon request such information
regarding the business and affairs and financial condition of the Borrowers as
any Bank may reasonably request, and will furnish to each Bank:
Annual Financial Statements - as soon as available and in any event
within one hundred (100) days after the close of each fiscal year of HEC, two
(2) copies of the audited consolidated balance sheet of HEC and its consolidated
Subsidiaries as of the end of such fiscal year and two (2) copies of the audited
consolidated statements of operations, of cash flows and changes in
shareholders' equity of HEC and its consolidated Subsidiaries for such fiscal
year, which fairly present the information included therein (showing any
material change in the consistency of the application of accounting principles
from the prior period) accompanied by an opinion without material qualification
of independent certified public accountants of national repute;
Quarterly Statements - as soon as available and in any event within
sixty (60) days after the close of each of the first three fiscal quarters of
each fiscal year of HEC, two (2) copies of the consolidated balance sheet of HEC
and its consolidated Subsidiaries as at the close of such fiscal quarter, and
two (2) copies of the consolidated statements of operations and of cash flows of
HEC and its consolidated Subsidiaries for such fiscal quarter and for the
portion of HEC's fiscal year ended at the end of such fiscal quarter, all in
such detail as the Required Banks may reasonably request and certified by an
Authorized Person of HEC as complete and correct and that the quarterly
financial statements were prepared on the same accounting basis as the annual
financial statements;
Audit Reports - promptly upon receipt thereof, one copy of each
other report submitted to HEC by independent accountants in connection with any
annual, interim or special audit made by them of the books of HEC, including,
without limitation, any comment letter submitted by such accountants to
management in connection with such audit;
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Subordinated Notes Agreement - contemporaneously with the
delivery of any information (including without limitation financial
information), reports or notices to Prudential pursuant to Section 5A of the
Subordinated Notes Agreement, a copy thereof to each Bank (unless previously
delivered to such Bank under this Agreement);
SEC and Other Reports - promptly upon their becoming available,
one copy of each financial statement and proxy statement sent or made available
by HEC to its security holders, of each regular or periodic report and any
registration statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by HEC with any securities
exchange or the Securities and Exchange Commission or any successor agency, and
of all press releases and other statements made available generally by HEC and
its Subsidiaries to the public concerning material developments in the business
of HEC and its Subsidiaries; and
Hedging Transactions - concurrently with the furnishing of each set
of financial statements pursuant to Section 4.01(a) or 4.01(b) hereof, a report
setting forth in reasonable detail the terms of each Hedging Transaction between
HEC or any of its Subsidiaries and any Bank or affiliate of any Bank as of the
last day of the fiscal quarter or fiscal year to which such financial statements
relate, together with a calculation of the payment obligations of HEC or any of
its Subsidiaries thereunder (calculated on a marked-to market basis) as of such
day.
SECTION . Annual Certificates of Compliance. Concurrently with the
furnishing of the annual financial statements pursuant to Section hereof, HEC
will furnish or cause to be furnished to each of the Banks certificates of
compliance, as follows:
a certificate signed by an Authorized Person (i) in the form of
Schedule A hereto; and (ii) containing or accompanied by such financial or other
details, information, calculations and material as the Required Banks may
reasonably request to evidence such compliance; and
a certificate from the independent public accountants stating that
their audit has not disclosed the existence of any condition which constitutes a
Default, or if their audit has disclosed the existence of any such condition,
specifying the nature, period of existence and status thereof.
SECTION . Quarterly Certificates of Compliance.Concurrently with the
furnishing of the quarterly financial statements pursuant to subsection 4.01(b)
hereof, HEC will furnish or cause to be furnished to each of the Banks a
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certificate signed by an Authorized Person in the same form as the certificate
required by Section hereof.
SECTION . Taxes and Other Liens. HEC will, and will cause each of its
Subsidiaries to, pay and discharge promptly all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or upon any of
its Property as well as all claims of any kind (including claims for labor,
materials, supplies and rent) which, if unpaid, might become a material Lien
upon any or all of its Property; provided, however, HEC shall not be required to
pay, or to cause any of its Subsidiaries to pay, any such tax, assessment,
charge, levy or claim if the amount, applicability or validity thereof shall
currently be contested in good faith by appropriate proceedings diligently
conducted by or on behalf of HEC or such Subsidiary and if HEC shall have set up
reserves therefor adequate under generally accepted accounting principles.
SECTION . Maintenance; Abandonment. HEC will, and will cause each of
its Subsidiaries to, (i) maintain its partnership, limited liability company or
corporate, as applicable, existence, rights and franchises; (ii) qualify to do
business as a partnership or a foreign corporation, as the case may be, in each
jurisdiction where the failure to do so would have a Material Adverse Effect;
(iii) observe and comply (to the extent necessary so that any failure would not
have a Material Adverse Effect) with all Governmental Requirements, and (iv) to
the extent it is within HEC's or such Subsidiary's direct control, maintain its
Property (and any Property leased by or consigned to it or held by it under
title retention or conditional sales contracts) in good and workable condition
at all times and make all repairs, replacements, additions, betterments and
improvements to its Property as are necessary so that the business carried on in
connection therewith may be conducted at all times in accordance with industry
standards. None of HEC or any of its Subsidiaries shall abandon or permit any
Petroleum Property to become abandoned, unless such Petroleum Property is
incapable of producing hydrocarbons such that the marginal revenue associated
with the production of each additional unit of such hydrocarbon is greater than
the marginal direct costs of such production, including royalties and taxes and
excluding non-cash charges.
SECTION . Further Assurances. HEC will, and will cause each other
Obligor to, promptly cure, any defects in the execution and delivery of the
Financing Documents. HEC at its expense will, and will cause each other Obligor
to, promptly execute and deliver to each of the Banks upon request of the
Required Banks all such other and further documents, agreements and instruments
in compliance with or accomplishment of the covenants and agreements of each
Obligor in the Financing Documents, or to further evidence and more fully
describe the collateral intended as security for the Indebtedness, or to correct
any omissions in the Collateral Documents, or more fully to state the security
obligations set out herein or in any of the Collateral Documents, or to perfect,
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protect or preserve any Liens created pursuant to any of the Collateral
Documents, or to make any recordings, to file any notices, or obtain any
consents, all as may be necessary or appropriate in connection therewith.
SECTION . Performance of Obligations. HEC will, and will cause other
Obligor to, do and perform every act and discharge all of the obligations
provided to be performed and discharged by HEC or such other Obligor under the
Financing Documents at the time or times and in the manner specified.
SECTION . Reimbursement of Expenses. The Borrowers will, upon request,
promptly reimburse each of the Banks for all reasonable amounts expended,
advanced or incurred by any Bank to satisfy any obligation of the Borrowers
under the Financing Documents, or to enforce the rights of any Bank under the
Financing Documents, which amounts will include all court costs, reasonable
attorneys' fees (including, without limitation, for trial, appeal or other
proceedings), fees of auditors and accountants, and investigation expenses
reasonably incurred by any Bank in connection with any such matters. The
Borrowers agree to pay, indemnify and hold each of the Banks and their
respective affiliates and the respective directors, officers, employees and
agents of the foregoing ("Indemnitees") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever (collectively
a "Claim") caused by any act or omission of the Borrowers or any Indemnitee
relating to the Financing Documents, except for a Claim caused by the gross
negligence or willful misconduct of the Indemnitee, but expressly including any
Claim based on ordinary negligence.
SECTION . Insurance. HEC and each of its Subsidiaries maintains, and
HEC will maintain, and will cause each of its Subsidiaries to maintain, with
financially sound and reputable insurers, insurance with respect to the Property
and business of HEC and its Subsidiaries against such liabilities, casualties,
risks and contingencies and in such types and amounts as is customary in the
case of Persons engaged in the same or similar businesses and similarly
situated. Upon request of any Bank, HEC will furnish or cause to be furnished to
such Bank from time to time a summary of such insurance in form and substance
satisfactory to the Required Banks. In the case of any fire, accident or other
casualty causing loss or damage to any Property of HEC or any of its
Subsidiaries, the proceeds of such policies shall be used (i) to repair or
replace the damaged Property, or (ii) to prepay the Indebtedness, which
prepayment shall be made ratably among all of the Banks in proportion to their
Commitments.
SECTION . Right of Inspection. HEC will permit, and will cause each
of its Subsidiaries to permit, any officer, employee or agent of any Bank to
visit and inspect any of its Property, examine its books of record and accounts,
take
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copies and extracts therefrom, and discuss its affairs, finances and accounts
with HEC's or such Subsidiary's officers, as the case may be, and with HEC's
independent public accountants and auditors in the presence of HEC's or such
Subsidiary's officers, all at such reasonable times and as often as such Bank
may reasonably desire.
SECTION . Notice of Certain Events. HEC shall promptly notify each of
the Banks in writing if HEC or any of its Subsidiaries learns of the occurrence
of (i) any event which constitutes a Default, together with a detailed statement
by an Authorized Person of HEC of the steps being taken to cure the effect of
such Default; or (ii) the receipt of any notice from or the taking of any other
action by, the holder of any promissory note, debenture or other evidence of
Debt of any Obligor, including the Notes and the Subordinated Notes, or of any
security (as defined in the Securities Act of 1933, as amended) of any Obligor
with respect to a claimed default, together with a detailed statement by an
Authorized Person of HEC specifying the notice given or other action taken by
such holder and the nature of the claimed default and what action HEC and its
Subsidiaries are taking or propose to take with respect thereto; or (iii) any
legal, judicial or regulatory proceedings affecting HEC or any of its
Subsidiaries or any of their respective Property in which the amount involved
exceeds $500,000 (individually or in the aggregate) or which, if adversely
determined, would have a Material Adverse Effect; or (iv) any dispute between
HEC or any of its Subsidiaries and any governmental or regulatory body or any
other Person which, if adversely determined, would have a Material Adverse
Effect; or (v) any dispute between HEC and any of its stockholders; or (vi) any
material default or noncompliance of any party to the HEP Partnership Agreement
with any of the terms and conditions thereof, or any notice of termination or
other material proceedings or actions which might materially adversely affect
the HEP Partnership Agreement; (vii) any amendment of the HEP Partnership
Agreement or the Certificate of Incorporation or Bylaws of HCRC or HEC, together
with a copy of such amendment except, in the case of the HEP Partnership
Agreement, for amendments which only change the names and addresses of the
limited partners of HEP; or (viii) any event or condition having a Material
Adverse Effect.
SECTION . ERISA Information and Compliance. HEC will promptly furnish
to each of the Banks, if and when any member of the Controlled Group (i) gives
or is required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows that
the plan administrator of any Plan has given or is required to give notice of
any such reportable event, a copy of the notice of such reportable event; (ii)
receives notice of complete or partial withdrawal liability under Title IV of
ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent
or has been terminated; (iii) receives notice from the PBGC under Title IV of
ERISA
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of an intent to terminate, impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or appoint a trustee to administer any
Plan; (iv) applies for a waiver of the minimum funding standard under Section
412 of the Code; (v) gives notice of intent to terminate any Plan under Section
4041(c) of ERISA; (vi) gives notice of withdrawal from any Plan pursuant to
Section 4063 of ERISA; or (vii) fails to make any payment or contribution to any
Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which in either case has resulted
or could result in the imposition of a Lien under ERISA or the Code or the
posting of a bond or other security under ERISA or the Code, a certificate or
notice as described in the last sentence of this Section . Promptly after the
occurrence of any event set forth in clauses (i) - (vii) above, HEC will furnish
to each of the Banks a certificate or written notice signed by an Authorized
Person of HEC setting forth details as to each such occurrence and action, if
any, which HEC or the applicable member of the Controlled Group is required or
proposes to take.
SECTION . Collateral Security. The Borrowers will at all times cause
(i) Petroleum Property representing in value, as determined by reference to the
most recent Reserve Report, not less than 60% of the Hydrocarbon Property Base
and (ii) all outstanding capital stock, limited liability company interests or
partnership interests directly or indirectly owned by HEC of each wholly-owned
and (to the extent not restricted by customary provisions in joint venture
agreements or similar agreements) non-wholly owned Material Subsidiary of HEC
(including without limitation any Person (including without limitation any
Subsidiary) which becomes a Material Subsidiary after the date hereof), to be
subject to valid first-priority Liens in favor of the Collateral Agent for the
benefit of the Banks pursuant to the Collateral Documents. In the event that the
daily average aggregate unpaid principal amount of Debt of the Borrowers exceeds
50% of the Debt Limit for a period of ninety (90) days, the Required Banks may
deliver to the Borrowers a written demand for additional collateral security
pursuant to this Section. Upon receipt of such demand, the Borrowers will, or
will cause its Subsidiaries to, grant to the Collateral Agent for the benefit of
the Banks, within sixty (60) days of receipt of such demand, as security for the
Indebtedness, a first-priority Lien on additional Petroleum Property such that
Petroleum Property representing in value, as determined by reference to the most
recent Reserve Report, not less than 80% of the Hydrocarbon Property Base shall
thereafter be subject to such first-priority Liens. The Liens will be created
and perfected by and in accordance with the provisions of security agreements
and financing statements, deeds of trust or other Collateral Documents, all in
form and substance satisfactory to the Required Banks in sufficient executed
(and acknowledged where necessary or appropriate) counterparts for recording
purposes. The Borrowers will furnish or cause to be furnished to each of the
Banks in connection therewith opinions satisfactory in form and substance to the
Required Banks from counsel satisfactory to the Required Banks as to such
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Collateral Documents and the validity and perfection of the Liens created
thereby. The Borrowers shall also furnish to each of the Banks a certificate,
within 30 days of any Reserve Report prepared pursuant to Section , signed by an
Authorized Person of each of the Borrowers, confirming compliance with the above
collateral security requirement and stating the percent of Petroleum Property
subject to valid first-priority Liens in favor of the Collateral Agent for the
benefit of the Banks pursuant to the Collateral Documents.
The Borrowers shall deliver to the Collateral Agent executed
counterparts of each Collateral Document set forth in Schedule C within two
Domestic Business Days of receipt by the Borrowers of such Collateral Document
in final form.
SECTION . Performance of Partnership Agreement. HEP will perform and
observe in all material respects the provisions of its Partnership Agreement on
its part to be performed or observed prior to the termination thereof, unless
and to the extent only that the same shall be contested in good faith by
appropriate action by or on behalf of HEP.
SECTION . Notice to Purchasers of Oil and Gas. Each Borrower will, and
will cause each Property Base Subsidiary to, upon request of the Required Banks,
join with the Banks in notifying the purchaser or purchasers of oil and gas of
the existence of the Collateral Documents, such notification to be in writing
and accompanied (if necessary) by certified copies of the Collateral Documents.
SECTION . Engineering Reports.
By April 1 and August 1 of each year, the Borrowers shall furnish to
each of the Banks a report in form and substance reasonably satisfactory to the
Required Banks which may be prepared by or under the supervision of a petroleum
engineer who may be an employee of any Borrower or an Affiliate, which shall
evaluate each Petroleum Property as of the preceding December 31 or June 30,
respectively, and which shall, together with any other information reasonably
requested by any Bank, set forth the information necessary to determine the
Hydrocarbon Property Base as of such date; provided that, if the Required Banks
so request by no later than November 1 of any year, such report as of December
31 of such year shall be prepared by Approved Petroleum Engineers and shall
evaluate a portion of Petroleum Property having a value at least equal to 80% of
the aggregate value of all Petroleum Property.
If the Required Banks have not requested a Reserve Report to be
prepared by Approved Petroleum Engineers as of December 31 of any year pursuant
to the proviso in subsection (a), the Borrowers shall furnish to each of the
Banks, together with the Reserve Report furnished pursuant to subsection (a)
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as of December 31 of such year, an audit report by April 1 of such year thereon
in form and substance reasonably satisfactory to the Required Banks by Approved
Petroleum Engineers. Such audit report shall state that such independent
petroleum engineers have reviewed at least 70% in value of the Petroleum
Property each year in detail to confirm the Borrowers' reserve figures and have
conducted a general review of the remaining properties. The reviews contained in
each audit report shall separately cover Proved Developed Producing Reserves,
Proved Developed Non-Producing Reserves and Proved Undeveloped Reserves.
At any time and upon request by the Required Banks, the Borrowers
shall furnish to each of the Banks, within 30 days of such written request, a
report which shall evaluate each Petroleum Property as of the date of the most
recent Reserve Report or as of such other date as the Required Banks specify, in
form and substance reasonably satisfactory to the Required Banks (a "Special
Engineering Report"), together with any other information reasonably requested
by any Bank. The Special Engineering Report shall use production and cost
profiles from the most recent Reserve Report, unless otherwise requested by the
Required Banks, with such other information as supplied by the Required Banks.
No more than two (2) Special Engineering Reports may be requested by the
Required Banks during the term of the Financing Documents.
The reports contemplated by this Section shall be prepared on
the basis of price and other economic assumptions specified by the Required
Banks to the Borrowers in accordance with their customary oil and gas lending
practices not less than thirty (30) days prior to the date the related report is
due.
SECTION . Debt. HEC will not, and will not permit any of its
Subsidiaries to, incur, create, assume or suffer to exist any Debt, except:
the Indebtedness;
Debt existing on the Effective Date and listed on
Schedule B, but not any renewals, extensions or increases thereof;
Debt of any Obligor owed to any other Obligor;
Debt in an aggregate principal amount at any time
outstanding not to exceed $1,000,000 secured by a Lien permitted under
clause (d) or (e) of Section ;
Reimbursement Obligations constituting Debt;
the Subordinated Notes and the Subordinated Guaranty;
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and additional Debt in an aggregate principal amount at any time
outstanding not to exceed $100,000;
provided that, the aggregate outstanding principal or face amount of Debt of HEC
and its Subsidiaries (other than Debt permitted by clauses (iii) and (vi)) shall
at no time exceed the Debt Limit (as defined below) in effect at such time.
"Debt Limit" means an amount which shall be determined by the
Required Banks as set forth on subsection (c) in accordance with their customary
oil and gas lending practices, provided that in making such determination, the
Required Banks shall consider only the Petroleum Property which is included in
the Hydrocarbon Property Base.
The Debt Limit will be determined and adjusted periodically as
follows:
Prior to a determination pursuant to subparagraph (iii) below
on the basis of the initial Reserve Report delivered subsequent to the Effective
Date, and subject to adjustment in accordance with subparagraphs (ii) and (iv)
below, the Debt Limit shall be $84,500,000.
Upon any sale by the Borrowers or the Property Base
Subsidiaries of Petroleum Property under circumstances when subparagraph (iv) is
not applicable, or, if subparagraph (iv) is applicable, until the Debt Limit is
redetermined pursuant to subparagraph (iv), the Debt Limit shall be reduced,
effective on the date of consummation of such sale, by an amount equal to 50% of
the net proceeds to the Borrowers and the Property Base Subsidiaries of such
sale.
Within 60 days of delivery of each Reserve Report pursuant
to Section , and within 60 days after the Borrowers have notified the Agent that
the Borrowers or the Property Base Subsidiaries have sold Petroleum Property
having an aggregate fair market value of greater than $5,000,000 since the date
of the most recent Reserve Report, the Agent shall determine a proposed Debt
Limit on the basis of such Reserve Report or such information, and promptly
notify the Borrowers and the Banks of such proposed Debt Limit. Such proposed
Debt Limit shall become the Debt Limit within 30 days of such notice, and
binding on all parties, unless Banks having more than 30% of the aggregate
amount of the Commitments reject such proposed Debt Limit by notice to the
Agent. In the event of such a rejection, the Banks shall consult with one
another with a view to agreement on the Debt Limit to be determined, and the
Debt Limit shall be determined by Banks having at least 70% of the aggregate
amount of the Commitments. Any Debt Limit so determined by the Banks
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shall be promptly communicated in writing to the Borrowers, and upon such
notification shall be binding on all parties. In no event shall the Debt Limit
increase pursuant to this subparagraph (iii), unless all the Banks agree.
The Borrowers may request that the Banks redetermine the
Debt Limit, provided that no more than one such request may be made by the
Borrowers in any one-year period. In the event of such a request by the
Borrowers, the Banks will consult with one another to determine the Debt Limit
in accordance with their customary oil and gas lending practices. Any Debt Limit
so determined by the Banks shall be promptly communicated in writing to the
Borrowers, and upon such notification shall be binding on all parties.
The Borrowers shall notify each Bank at the earliest
practicable time in advance of any transactions which entail a reasonable
likelihood of an adjustment to the Debt Limit pursuant to subparagraph (ii),
(iii) or (iv) above, and shall furnish each Bank with such information with
respect thereto as any Bank may reasonably request.
SECTION . Liens. HEC will not, and will not permit any of its
Subsidiaries to,incur, assume or suffer to exist any Lien on any of its Property
(now owned or hereafter acquired), except:
Liens created by the Collateral Documents;
Excepted Liens;
Liens existing on Property and disclosed to the Banks
in Schedule B hereto, but not any renewals and extensions thereof;
subject to Section 4.17(a)(iv), a Lien existing on any
asset prior to the acquisition thereof, but not created in contemplation of such
acquisition; and
subject to Section 4.17(a)(iv), a Lien on any asset securing Debt
incurred or assumed for the purpose of financing of any part of the cost of
acquiring such asset, provided that such Lien attaches to such asset
concurrently with or within 90 days after the acquisition thereof.
SECTION . Investments, Loans and Advances. HEC will not make or permit
to remain outstanding, or permit any Subsidiary to make or permit to remain
outstanding, any loans or advances to, or acquire (other than pursuant to
Section 4.21) or hold any capital stock, partnership interest or other security
of or in, any Person, except that the foregoing restriction shall not apply to:
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investments, loans or advances the material details of which have
been set forth in the Financial Statements or are disclosed to the Banks in
Schedule B hereto;
investments in direct obligations of the United States of America or
any agency thereof;
investments in certificates of deposit of maturities less than one year,
issued by commercial banks in the United States of America having capital and
surplus (net of loan loss reserves) in excess of $250,000,000;
investments in Euro-Dollar obligations of maturities less than one
year, issued by (and supported by the full faith and credit, and representing
direct obligations of) commercial banks in the United States of America having
capital and surplus (net of loan loss reserves) in excess of $250,000,000;
investments in commercial paper of maturities of ninety days or less
if at the time of purchase such paper is rated in either of the two highest
rating categories of S&P, ▇▇▇▇▇'▇, or any other rating agency selected by the
Borrowers and satisfactory to the Required Banks, or investments in commercial
paper of any Bank or of a holding company controlling any Bank;
notes received from purchasers of Property sold in the ordinary
course of business and not considered to represent a material portion of the
Borrowers' or Subsidiaries' Property; provided that in no event shall the
principal amount of such notes at any time outstanding exceed $2,000,000 in the
aggregate;
investments (other than investments pursuant to subparagraph (a)
above or subparagraph (h) or (j) below) in common stock of publicly traded
companies or in partnership interests and which companies or partnerships are
primarily engaged in the oil and gas business; provided that the historical
costs of such investments at any one time held shall not exceed $2,000,000 in
the aggregate, unless the Required Banks otherwise agree in writing in advance;
investments (other than investments pursuant to subparagraph (a) or
(g) above or subparagraph (j) below) in common stock, interests in a limited
liability company, joint venture interests, co-ownership interests or
partnership interests which provide the Borrowers the right to receive the
income from, control the operations of and direct the disposition of the oil and
gas assets of such company or partnership; provided that the historical costs of
such investments at any one time held shall not exceed $2,000,000 in the
aggregate, unless the Required Banks otherwise agree in writing in advance;
direct ownership in oil and gas properties and related assets;
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investments by any Obligor in any other Person that was an Obligor
immediately prior to the making of such investment, and loans and advances by
any Obligor to any other Obligor;
investments (other than investments permitted by clause (j)) by any
Obligor in any Subsidiary; provided that immediately after giving effect to such
investment, (i) no Default exists and (ii) the aggregate amount of all
investments in Subsidiaries made in reliance on this clause (k) does not exceed
$500,000 in fair market value.
other investments, loans or advances approved of, in writing in
advance, by the Required Banks.
SECTION . Subsidiaries. [Intentionally Deleted].
SECTION . Distributions, Etc. HEC will not make, pay or declare any
dividend or distribution on any class of its stock or any distribution of
profits or purchase, redeem or otherwise acquire for value any shares of any
class of its stock now or hereafter outstanding ("Distributions") (a) if an
Event of Default has occurred and is continuing and the Required Banks have
notified HEC in writing not to make such Distributions; (b) if the aggregate
Debt of HEC and its Subsidiaries exceeds, or would immediately after such
Distribution exceed, 100% of the Debt Limit; or (c) on any date (a "Measuring
Date") in any fiscal quarter of HEP if at such Measuring Date, after giving
effect to any such proposed Distribution to be made on such Measuring Date, the
aggregate amount of Distributions made in the period of twelve consecutive
calendar months ended on such Measuring Date would exceed the Distribution
Percentage of an amount equal to, subject to the last sentence of this Section
4.21, the sum of cash provided by operations before working capital changes plus
distributions received from Affiliates, as reported in the consolidated
statements of cash flows of HEC for the period of four consecutive fiscal
quarters most recently ended on or prior to such Measuring Date and with respect
to which the Borrowers have delivered to the Banks the financial statements
required to delivered by them pursuant to Section 4.01; provided, however, that
the provisions of subparagraphs (b) and (c) of this Section 4.21 shall not
prevent the payment of any Distribution within 60 days of the declaration
thereof, if at said date of declaration such payment would have complied with
the provisions hereof. In addition, for purposes of this Section 4.21:
"Distribution Percentage" means, at any date, (i) 65%, if on such date
Monthly Exposure is less than 50% of the Debt Limit on such date and (ii)
otherwise, 50%.
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"Monthly Exposure" means, on any date, the daily average outstanding
principal amount of Debt of HEC and its Subsidiaries (including without
limitation the loans under the Credit Agreement) during the 30-day period ending
on the date immediately preceding such date.
The amount described in clause (c) above for any period of four
consecutive fiscal quarters ended after the Effective Date and prior to June 30,
2000 shall be equal to the sum of cash provided by operations before working
capital changes plus distributions received from Affiliates, as reported in the
consolidated statements of cash flows of HEC for the period from and including
the date of consummation of the Reorganization to and including the last day of
such period, annualized on a simple arithmetic basis.
SECTION . Mergers, Etc. HEC will not, and will not permit any of its
Subsidiaries to, merge or consolidate with, or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its Property (whether now owned or hereafter acquired),
other than inventory in the ordinary course of business, to, any Person;
provided that (i) any Borrower may merge with another Person if (1) such Person
was an Obligor immediately prior to giving effect to such merger and (2)
immediately after giving effect to such merger, no Default shall have occurred
and be continuing and (ii) any Subsidiary of HEC (other than a Borrower) may
merge with another Person if after giving effect to such merger, (1) no Default
exists and (2) the surviving entity is or becomes an Obligor and satisfies the
requirements set forth in clauses (i) and (ii) of Section 4.38 hereof on or
prior to the consummation of such merger.
SECTION . Nature of Business. HEC will, and will cause each of its
Subsidiaries to, continue to engage in business of the same general character as
now conducted, as disclosed to the Banks in Schedule B hereto.
SECTION . ERISA Compliance. HEC will not, and will not permit any
of its Subsidiaries to:
Engage in, or permit any other member of the Controlled Group to
engage in, any transaction in connection with which any member of the Controlled
Group could be subjected to either a civil penalty assessed pursuant to
subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed by section
4975 of the Code;
Terminate, or permit any other member of the Controlled Group to
terminate, any Plan in a manner, or take any other action with respect to any
Plan, which could result in any liability of a Borrower or any other member of
the Controlled Group to the PBGC;
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Fail to make, or permit any other member of the Controlled Group to
fail to make, full payment when due of all amounts which, under the provisions
of any Plan, agreement relating thereto or applicable law, any member of the
Controlled Group is required to pay as contributions thereto;
Permit to exist, or allow any other member of the Controlled Group
to permit to exist, any accumulated funding deficiency within the meaning of
section 302 of ERISA or section 412 of the Code, whether or not waived, with
respect to any Plan;
Fail to pay or cause to be paid, or permit any other member of the
Controlled Group to fail to pay or cause to be paid, to the PBGC in a timely
manner, without incurring any late payment or underpayment charge or penalty,
all premiums required pursuant to sections 4006 and 4007 of ERISA;
Acquire, or permit any other member of the Controlled Group to
acquire, an interest in any Person that causes such Person to become a member of
the Controlled Group if such Person sponsors, maintains or contributes to, or at
any time in the six-year period preceding such acquisition has sponsored,
maintained or contributed to, (1) any Multiemployer Plan, or (2) any Plan that
is subject to Title IV of ERISA under which the actuarial present value of the
benefit liabilities under such Plan exceeds the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities;
Contribute to or assume an obligation to contribute to, or permit any
other member of the Controlled Group to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in Section 3(1) of
ERISA including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
such entities in their sole discretion at any time without any material
liability; or
Permit, or allow any other member of the Controlled Group to permit
the aggregate potential withdrawal liability with respect to all Multiemployer
Plans to exceed $1,000,000 in the event that all the members of the Controlled
Group, as the case may be, were to completely withdraw from such Multiemployer
Plans.
SECTION . Sale or Discount of Receivables. HEC will not, and will
permit any of its Subsidiaries to, discount or sell with recourse, or sell for
less than the greater of the face or market value thereof, any of its notes
receivable or accounts receivable, except, in any particular case, for a
discount or sale which HEC or such Subsidiary determines in good faith will
maximize the amount realized by HEC or such Subsidiary on such note receivable
or account receivable.
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SECTION . Transactions with Affiliates. HEC will not, and will not
permit any of its Subsidiaries to, directly or indirectly, pay any funds to or
for the account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate; provided, however, that the foregoing provisions of this Section
shall not prohibit (a) HEC or any such Subsidiary from participating in, or
effecting any transaction in connection with, any joint enterprise or other
joint arrangement with any Affiliate if HEC or such Subsidiary participates or
effects any such transaction in the ordinary course of its business and on a
basis no less advantageous than the basis on which HEC or such Subsidiary would
participate in a similar transaction with a Person not an Affiliate and (b) HEC
from making, paying or declaring any Distribution otherwise permitted under this
Agreement.
SECTION . Sale of Assets. HEC will not, and will not permit any of its
Subsidiaries to, sell, transfer or otherwise dispose of any of its Property;
provided, that (a) HEC and any Subsidiary may sell oil, gas and other
hydrocarbons after severance in the ordinary course of business; and (b) HEC and
any Subsidiary may sell Property not constituting, individually or in the
aggregate, all or substantially all of its Property for consideration not less
than the fair market value of such Property so long as the aggregate net
proceeds of all such sales by HEC and its Subsidiaries do not exceed $5,000,000
during any period of six consecutive calendar months. The provisions of this
Section apply to all sales of Petroleum Property and are not affected by any
reduction in the Debt Limit pursuant to Section . HEC shall promptly notify the
Agent of any sale of Property pursuant to clause (b) above.
SECTION . Annual Coverage Ratio. The annual projected CFADS from
Petroleum Property, determined on the basis of each Reserve Report delivered
pursuant to Section , will not be less than 120% of scheduled interest and
principal payments on all Debt of HEC and its Subsidiaries during each of (i)
the calendar year during which the related Reserve Report is delivered and (ii)
the two succeeding calendar years. HEC shall provide a certificate, signed by an
Authorized Person of HEC, 45 days after each Reserve Report is delivered,
certifying the coverage ratio and the method used to calculate such ratio. If
HEC or any of its Subsidiaries discover that they will fail to meet the annual
coverage ratio as described above, HEC shall, or shall cause its Subsidiaries
to, within 45 days of learning of such fact, reduce their Debt maturities in the
affected years or add Petroleum Property acceptable to the Banks so that the
above ratio will be met.
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SECTION . Additional Information. HEC will furnish to each of the
Banks, with reasonable promptness, such other information and data with respect
to HEC and its Subsidiaries as from time to time may be reasonably requested by
any Bank.
SECTION . Information Meetings. [Intentionally deleted]
SECTION . Compliance with Laws, etc. HEC will, and will cause each
of its Subsidiaries to, exercise all due diligence in order to assure that it
complies with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, noncompliance with which would result in a
Material Adverse Effect.
SECTION . Covenant to Secure Indebtedness Equally. If HEC or any
Subsidiary shall create or assume any Lien upon any of its Property, whether now
owned or hereafter acquired, other than Liens permitted by the provisions of
Section , HEC shall make, or shall cause such Subsidiary to make, effective
provision whereby the Indebtedness will be concurrently secured by such Lien
equally and ratably with any and all other Debt thereby secured as long as any
such other Debt shall be so secured; provided that compliance with this Section
shall not prevent an Event of Default from occurring as a result of
noncompliance by HEC with Section hereof. The remedy provided in this Section
shall not be exclusive and shall have no effect on the availability or exercise
of any other remedy that may be available to any Bank under the Financing
Documents.
SECTION . Inconsistent Provisions. In the event of any inconsistency
between the representations, warranties, covenants and undertakings of the
Borrowers in the Collateral Documents, on the one hand, and those in this
Agreement on the other hand, the relevant provisions of this Agreement shall
control.
SECTION . Interest Coverage Ratio. At the end of each fiscal quarter of
HEC, the Historical CFADS from Petroleum Properties for the period of four
consecutive quarters then ending (subject to the last sentence of this Section
4.34), determined on the basis of the financial statements and reports furnished
pursuant to Section , will not be less than 200% of the interest expense of HEC
and its consolidated Subsidiaries for such period. HEC shall provide a
certificate, signed by an Authorized Person of HEC, within 60 days after the end
of each such quarter, certifying the ratio of Historical CFADS from Petroleum
Properties to HEC's and its consolidated Subsidiaries' interest expense for such
period as set forth above and the method used to calculate such ratio. For
purposes of this Section 4.34, "Historical CFADS" means, for any period, gross
cash operating revenues properly allocable to Petroleum Property for such period
less the following cash items: royalties, operating costs, severance, windfall
profits and
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other wellhead taxes, general and administrative expenses and current income and
other taxes properly allocable to such period and cash capital expenditures made
during such period and properly allocable to a Petroleum Property owned as of
the date of the most recent Reserve Report. "Historical CFADS" for any period of
four consecutive quarters ending prior to June 30, 2000 shall be equal to
"Historical CFADS" for the period from and including the date of consummation of
the Reorganization to and including the last day of such period, annualized on a
simple arithmetic basis.
SECTION . Hedging Transactions. HEC will not, and will not permit any
of its Subsidiaries to, at any time become a party to a Hedging Transaction for
any purpose except for bona fide hedging purposes. Without limiting the
generality of the foregoing, at any time during any calendar year, no Borrower
will enter into any Hedging Transaction with respect to natural gas or crude oil
if, immediately after giving effect to such Transaction, the aggregate reference
quantity of hydrocarbons with respect to all Hedging Transactions with respect
to natural gas or crude oil which such Borrower shall have entered into during
such year exceeds 65% of the aggregate natural gas and crude oil production of
such Borrower for such year (calculated on the basis of actual natural gas and
crude oil production for such year to date and a good faith estimate of the
aggregate amount of such production for the remainder of such year).
SECTION . Incorporation By Reference of Certain Covenants. The
provisions of Paragraph 6A of the Subordinated Notes Agreement and related
definitions are hereby incorporated by reference with the same effect as if such
provisions were fully set forth herein; provided that, for purposes of this
Agreement (i) the ratio set forth in Paragraph 6A(1) of the Subordinated Notes
Agreement shall be 3.75, (ii) the Dollar amount set forth in clause (i) of
Paragraph 6A(2) of the Subordinated Notes Agreement shall be $55,000,000 and
(iii) any amendments or waivers of any such provisions or related definitions
shall be effective hereunder solely if consented to in writing by the Required
Banks.
SECTION . Restrictions with Respect to Subordinated Debt. (a) HEC will
not, and shall not permit any of its Subsidiaries (including without limitation
HCRC) to, make any payments with respect to the Subordinated Notes (including
without limitation any payments under the Subordinated Guaranty), other than (i)
scheduled payments of interest, (ii) scheduled repayments of principal, each in
the amount of $5,000,000 on or about December 23 in each of the years 2003
through 2006, inclusive, and (iii) scheduled payments of principal in the amount
of $5,000,000 on or about December 23, 2007, in each case subject to the
subordination provisions set forth in the Subordinated Note Agreement.
(b) HEC will not, and will not permit any of its Subsidiaries to, enter
into any amendment or waiver of any term of the Subordinated Notes Agreement,
the
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Subordinated Guaranty or any Subordinated Notes without the prior written
consent of the Required Banks.
SECTION . Additional Guarantors. HEC shall cause (x) any Person
(including without limitation any Subsidiary) which becomes a Material
Subsidiary after the date hereof and (y) any Person other than a Material
Subsidiary that has entered into, or is proposing to enter into, a guarantee of
the Subordinated Notes (including without limitation the Subordinated Guaranty)
to (i) become bound by the Guaranty Agreement and (ii) deliver such
certificates, evidences of corporate or other organizational actions, opinions
of counsel and other documents relating thereto as the Agent may reasonably
request, all in form and substance reasonably satisfactory to the Agent, on or
prior to the tenth day after the date on which the relevant event described in
clause (x) or (y) occurs (or, if earlier, the date on which the relevant Person
enters into a guarantee of the Subordinated Notes (including without limitation
the Subordinated Guaranty)).
ARTICLE
DEFAULTS
SECTION . Events of Defaults. Events of Default. If one or more of
the following events ("Event of Default") not specifically waived in writing by
the Required Banks shall have occurred:
the Borrowers shall fail to pay when due any principal of or
premium on any Loan or shall fail to pay within five (5) days of the due date
thereof any interest, fees or other amount payable under the Financing
Documents;
any Borrower shall fail to observe or perform any covenant
contained in Sections , 4.17(a), to , inclusive, or , 4.36 or 4.38;
any Obligor shall fail to observe or perform any of its covenants or
agreements contained in any of the Financing Documents (other than those covered
by clause (a) or (b) above) for 30 days after it shall have become aware of such
failure;
any representation, warranty, certification or statement made by any
Obligor in any of the Financing Documents or in any certificate, financial
statement or other document delivered pursuant to any of the Financing Documents
shall prove to have been incorrect in any material respect when made (or deemed
made);
HEC or any of its Subsidiaries shall fail to make any payment or
payments in an aggregate amount exceeding $100,000 in respect of any Debt
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(other than Loans) or Derivative Obligations when due or within any applicable
grace period;
any event or condition shall occur which results in the acceleration of
the maturity of any Debt in an aggregate principal amount exceeding $100,000
(other than Loans) of HEC or any of its Subsidiaries or enables (or, with the
giving of notice or lapse of time or both, would enable) the holder of such Debt
or any Person acting on such holder's behalf to accelerate the maturity thereof;
HEC or any of its Subsidiaries shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
an involuntary case or other proceeding shall be commenced against
HEC or any of its Subsidiaries seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against HEC or any of its Subsidiaries under the federal
bankruptcy laws as now or hereafter in effect;
the PBGC shall institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated;
a judgment or order for the payment of money in excess of $400,000
shall be rendered against HEC or any of its Subsidiaries and such judgment or
order shall continue unsatisfied and unstayed for a period of 30 days;
any of the Collateral Documents after delivery thereof shall for any
reason cease to be in full force and effect and valid, binding and enforceable
(except as enforceability may be subject to any applicable bankruptcy,
insolvency or similar laws or equitable principles generally affecting the
enforcement of
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creditors' rights) in accordance with its terms, or cease to create a valid and
perfected first-priority Lien on any of the Collateral purported to be covered
thereby, or any Borrower (or any other Person who may have granted or purported
to grant such Lien) shall so state in writing;
at any time (i) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended) other than
The Hallwood Group Incorporated, or any of its successors ("Hallwood Group"),
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under said Act) of 20% or
more of the outstanding shares of common stock of HEC or (ii) Hallwood Group
shall have acquired beneficial ownership (within the meaning of said Rule 13d-3)
of 30% or more of the outstanding shares of common stock of HEC; or at any time
a majority of the board of directors of HEC is composed of individuals who were
not elected or appointed as directors by members of such board;
any Borrower (other than HEC) shall cease to be a wholly-owned
Subsidiary of HEC; or
the Guaranty Agreement shall for any reason cease to be in full force
and effect and valid, binding and enforceable (except as enforceability may be
subject to any applicable bankruptcy, insolvency or similar laws or equitable
principles generally affecting the enforcement of creditors' rights) in
accordance with its terms, or any Obligor shall so state in writing;
then, and in every such event, the Agent shall (i) if requested by the Required
Banks, by notice to the Borrowers terminate the Commitments and they shall
thereupon terminate, and (ii) if requested by the Required Banks, by notice to
the Borrowers declare the Notes (together with accrued interest thereon) to be,
and the Notes shall thereupon become, immediately due and payable without
presentment, demand, protest, notice of intent to accelerate or other notice of
any kind, all of which are hereby waived by the Borrowers; provided that in the
case of any of the Events of Default specified in clause (g) or (h) above with
respect to any Borrower, without any notice to any Borrower or any other act by
the Agent or the Banks, the Commitments shall thereupon terminate and the Notes
(together with accrued interest thereon) shall become immediately due and
payable without presentment, demand, protest, notice of intent to accelerate,
notice of acceleration or other notice of any kind, all of which are hereby
waived by the Borrowers.
SECTION . Notice of Default. The Agent shall give notice to the
Borrowers of a Default under Section 5.01(c) promptly upon being requested to do
so by any Bank and shall thereupon notify all the Banks thereof.
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ARTICLE
CONDITIONS
SECTION . Effectiveness. This Amended Agreement shall become effective
on the date that each of the following conditions shall have been satisfied (or
waived in accordance with Section ):
Amended Agreement -- the Agent shall have received counterparts
of this Amended Agreement signed by each of the parties hereto (or, in the case
of any party as to which an executed counterpart shall not have been received,
telegraphic, telex or other written confirmation from such party of execution of
a counterpart hereof by such party);
Guaranty Agreement -- the Agent shall have received counterparts
of the Guaranty Agreement signed by each of the parties thereto (or, in the case
of any party as to which an executed counterpart shall not have been received,
telegraphic, telex or other written confirmation from such party of execution of
a counterpart hereof by such party);
Note -- the Agent shall have received for the account of each Bank
an executed Note,duly and validly issued, dated on or before the Effective Date;
Certificates -- the Agent shall have received a signed copy of a
certificate of the Secretary or an Assistant Secretary or other appropriate
officer of each Obligor and of the general partner of each Obligor than is a
partnership (including without limitation the HEP General Partner) (each, a
"Transaction Party"), certifying (i) the names and true signatures of the
Authorized Persons authorized to sign any Financing Document which such
Transaction Party is a party and the other documents or certificates to be
delivered by such Transaction Party pursuant thereto, (ii) the resolutions of
the Board of Directors of such Transaction Party, authorizing the transactions
contemplated hereby, together with all documents evidencing other necessary
corporate or partnership action with respect to any thereof, and (iii) a true
copy of the certificate of incorporation and by-laws or partnership agreement of
such Transaction Party, as the case may be;
Opinion of Borrowers' Counsel -- the Agent shall have received (i)
from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel of HEC and King & Spalding, special New
York counsel for the Obligors, an opinion substantially to the effect of Exhibit
B hereto, respectively, and each covering such additional matters as the
Required Banks may reasonably request and (ii) from counsel to the Borrowers in
each jurisdiction in which any Collateral pledged under any of the Collateral
Documents set forth in Schedule C is located, an opinion in form and substance
reasonably satisfactory to the Collateral Agent;
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Opinion of Agent's Counsel -- the Agent shall have received from
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for the Agent, an opinion in
substantially the form of Exhibit C hereto;
Participation Fees -- receipt by the Agent for the account of the
Banks of the full amount of the participation fee described in Section 2.23;
Subordinated Note Agreement -- the Agent shall have received
executed counterparts of the Subordinated Note Agreement and the Subordinated
Guaranty, each as in effect on the Effective Date, and all other documents
delivered pursuant thereto or in connection therewith, all in form and substance
satisfactory to the Banks;
Reorganization -- the Banks shall have received evidence
satisfactory to them in their good faith discretion that the Reorganization
shall have been consummated substantially on the terms described in the Proxy
Statement; and
Other -- the Agent shall have received such other documents as it
may reasonably have requested;
provided that this Amended Agreement shall not become effective or be binding on
any party hereto nor shall any representation or warranty contained in Article
hereof be deemed to be made unless and until all of the foregoing conditions are
satisfied not later than June 8, 1999. The Agent shall promptly notify the
Borrowers and the Banks of the Effective Date, and such notice shall be
conclusive and binding on all parties hereto.
On the Effective Date each Original Agreement will each be
automatically amended and restated in its entirety to read as set forth herein.
On and after the Effective Date the rights and obligations of the parties hereto
shall be governed by this Amended Agreement; provided that rights and
obligations of the parties hereto (and of any HEP Borrower or any HCRC Borrower
that is not a party to this Amended Agreement) with respect to the period prior
to the Effective Date shall continue to be governed by the provisions of the
relevant Original Agreement.
SECTION . Transitional Provisions. On the Effective Date but subject to
satisfaction of the conditions set forth in Section hereof, (i) the Euro- Dollar
Loans and Domestic Loans, as such terms are defined under each Original
Agreement, of the HEP Borrowers or the HCRC Borrowers, as applicable,
outstanding to each Bank thereunder shall be deemed to be Euro-Dollar Loans or
Domestic Loans, as the case may be, made by such Bank to the Borrowers under
this Amended Agreement, it being the intention of the parties hereto that (i)
all
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indebtedness evidenced by the Original Notes shall, on and after the Effective
Date, be solely evidenced by the Notes, (ii) the loans outstanding under each
Original Agreement on the Effective Date shall continue to be outstanding on
such date as Domestic Loans or Euro-Dollar Loans under this Amended Agreement,
as appropriate, having Interest Periods identical to the corresponding interest
periods under the relevant Original Agreement and bearing interest (x) in the
case of Domestic Loans that are Base Rate Loans, for each day from and including
the Effective Date, at the interest rate applicable to Base Rate Loans pursuant
to Section 2.04 of this Amended Agreement, (y) in the case of Domestic Loans
that are CD Loans, at the "Adjusted CD Rate" applicable to such Loans under the
Original Credit Agreement pursuant to which such Loans were originally made
plus, for each day from and including the Effective Date to but excluding the
last day of the Interest Period applicable to such Loans, the CD Margin under
this Amended Agreement and (z) in the case of Euro-Dollar Loans, at the
"Adjusted Euro-Dollar Rate" applicable to such Loans under the Original Credit
Agreement pursuant to which such Loans were originally made plus, for each day
from and including the Effective Date to but excluding the last day of the
Interest Period applicable to such Loans, the Euro-Dollar Margin under this
Amended Agreement and (iii) the Liens created by the Collateral Documents on the
properties and assets described therein shall be carried forward and continue in
full force and effect for the purpose of securing the Notes. Upon receipt of its
Note, each Bank will ▇▇▇▇ its Original Notes "Replaced" and in due course return
its Original Notes to HEC.
SECTION . All Loans. The obligation of each Bank to make its Loan
on the occasion of each Borrowing pursuant to this Agreement is subject to the
following conditions precedent:
Advance Notice -- the Agent shall have received Advance Notice in
accordance with Section which shall be true and correct and shall be duly
and properly executed and completed by the Borrowers;
No Default -- immediately before and after such Loan, no Default
shall have occurred and be continuing;
Representations and Warranties -- the representations and
warranties of the Obligors contained in the Financing Documents shall be true
and correct in all material respects on and as of the date of such Loan (other
than, solely with respect to any Borrowing to be made after the Effective Date,
the representations and warranties contained in Sections and );
No Material Adverse Change -- there shall have occurred no event
or condition having, in the sole opinion of the Required Banks, a Material
Adverse Effect; and
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the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans will not exceed the AvailabilityLimit.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrowers on the date of such Borrowing as to the facts
specified in subsections (b) and (c) of this Section.
ARTICLE
THE AGENT AND THE COLLATERAL AGENT
SECTION . Appointment and Authorization. Each Bank irrevocably appoints
and authorizes each of the Agent and the Collateral Agent to take such action as
agent on its behalf and to exercise such powers under the Financing Documents as
are delegated to the Agent or the Collateral Agent, respectively, by the terms
thereof, together with all such powers as are reasonably incidental thereto. The
Collateral Agent is authorized to hold, on behalf of the Banks, all Liens
created by any of the Collateral Documents and to exercise, if directed by the
Required Banks, any and all rights and remedies available under the Collateral
Documents.
SECTION . Agent and Collateral Agent and Affiliates. Each of ▇▇▇▇▇▇
Guaranty Trust Company of New York and First Union National Bank shall have the
same rights and powers under the Financing Documents as any other Bank and may
exercise or refrain from exercising the same as though it were not the Agent or
the Collateral Agent, as the case may be. Each of ▇▇▇▇▇▇ Guaranty Trust Company
of New York and First Union National Bank and their respective affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with any Obligor or any affiliate of any Obligor as if it were not the
Agent or the Collateral Agent, as the case may be, under the Financing
Documents.
SECTION . Action by Agent or Collateral Agent. The obligations of the
Agent and the Collateral Agent under the Financing Documents are only those
expressly set forth therein. Without limiting the generality of the foregoing,
the Agent and the Collateral Agent shall not be required to take any action with
respect to any Default, except as expressly provided therein or as directed by
the Required Banks.
SECTION . Consultation with Experts. Each of the Agent and the
Collateral Agent may consult with legal counsel (who may be counsel for any
Obligor), independent public accountants and other experts selected by the Agent
or the Collateral Agent, respectively, and neither the Agent nor the Collateral
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Agent shall be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
SECTION . Liability of Agent and Collateral Agent. Neither the Agent
nor the Collateral Agent nor any of their affiliates nor any of the directors,
officers, agents or employees of any of the foregoing shall be liable for any
action taken or not taken by the Agent or the Collateral Agent, as the case may
be, in connection with the Financing Documents (i) with the consent or at the
request of the Required Banks or (ii) in the absence of the Agent or the
Collateral Agent's own gross negligence or willful misconduct. Neither the Agent
nor the Collateral Agent nor any of their affiliates nor any of the directors,
officers, agents or employees of any of the foregoing shall be responsible for
or have any duty to ascertain, inquire into or verify (i) any statement,
warranty or representation made in connection with the Financing Documents or
any borrowing under this Agreement; (ii) the performance or observance of any of
the covenants or agreements of any Obligor; (iii) the satisfaction of any
condition specified in Article of this Agreement, except receipt of items
required to be delivered to the Agent; (iv) the validity, effectiveness or
genuineness of any of the Financing Documents or any other instrument or writing
furnished in connection therewith; or (v) the existence, title, value or
marketability of any of the Collateral. Neither the Agent nor the Collateral
Agent shall incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telex,
facsimile or similar writing) believed by it to be genuine or to be signed by
the proper party or parties.
SECTION . Indemnification. Each Bank shall, ratably in accordance with
its Commitment (or, if the Commitments shall have terminated, ratably in
accordance with its Commitment as in effect immediately prior to such
termination), indemnify the Agent and the Collateral Agent, their affiliates and
the directors, officers, employees and agents of any of the foregoing (to the
extent not reimbursed by the Obligors) against any cost, expense (including
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from such indemnitees' gross negligence or willful
misconduct) that the indemnitees may suffer or incur in connection with any of
the Financing Documents or any action taken or omitted by such indemnitees
thereunder, including such indemnitees' ordinary negligence.
SECTION . Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent, the Collateral Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into the
Financing Documents. Each Bank also acknowledges that it will, independently and
without reliance upon the Agent, the Collateral Agent or any other Bank, and
based on such documents and information as it shall deem appropriate at the
time, continue
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to make its own credit decisions in taking or not taking any action under the
Financing Documents. Each Bank further acknowledges that it has not relied on
the Collateral Agent to review the title of any Petroleum Property and that the
Collateral Agent does not have any duty to perform such a review.
SECTION . Successor Agent or Collateral Agent. The Agent or the
Collateral Agent may resign at any time by giving written notice thereof to the
Banks and the Borrowers. Upon any such resignation, the Required Banks shall
have the right to appoint a successor Agent or Collateral Agent, as the case may
be, with the consent of the Borrowers, which consent shall not be unreasonably
withheld. If no successor Agent or Collateral Agent shall have been so
appointed, and shall have accepted such appointment, within 30 days after the
retiring Agent or Collateral Agent gives notice of resignation, then the
retiring Agent or Collateral Agent may, on behalf of the Banks, appoint a
successor Agent or Collateral Agent, which shall be a commercial bank organized
or licensed under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $250,000,000. Upon
the acceptance of its appointment as Agent or Collateral Agent under the
Financing Documents by a successor Agent or Collateral Agent, such successor
Agent or Collateral Agent shall thereupon succeed to and become vested with all
the rights and duties of the retiring Agent or Collateral Agent, and the
retiring Agent or Collateral Agent shall be discharged from its duties and
obligations under the Financing Documents. After any retiring Agent or
Collateral Agent's resignation under the Financing Documents as Agent or
Collateral Agent, as the case may be, the provisions of this Article shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Agent or Collateral Agent.
ARTICLE
MISCELLANEOUS
SECTION . Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be given to such party: (x) in the
case of the Borrowers or the Agent, at the address or telex or facsimile number
set forth on the signature pages hereof, (y) in the case of any Bank, at its
address or telex or facsimile number set forth in its Administrative
Questionnaire or (z) in the case of any party, such other address or telex or
facsimile number as such party may hereafter specify for the purpose by notice
to the Agent and the Borrowers. Each such notice, request or other communication
shall be effective (i) if given by telex, when such telex is transmitted to the
telex number specified in this Section and the appropriate answerback is
received, (ii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid,
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addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Agent under
Article
shall not be effective until received.
SECTION . No Waivers. No failure or delay by the Agent or any Bank in
exercising any right, power or privilege under any Financing Document shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies therein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION . Expenses; Documentary Taxes. The Borrowers shall pay (i) all
out-of-pocket expenses of the Agent and the Collateral Agent, including fees and
disbursements of special counsel for the Agent and special counsel for the
Collateral Agent, in connection with the preparation and administration of the
Financing Documents, any waiver or consent thereunder or any amendment thereof
or any Default or alleged Default thereunder and (ii) if an Event of Default
occurs, all out-of-pocket expenses incurred by the Agent, the Collateral Agent
or any Bank, including fees and disbursements of counsel, in connection with
such Event of Default and collection, bankruptcy, insolvency and other
enforcement proceedings resulting therefrom. The Borrowers shall indemnify each
Bank against any transfer taxes, documentary taxes, assessments or charges made
by any governmental authority by reason of the execution and delivery of any
Financing Document.
SECTION . Sharing of Set-offs. Each Bank agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest due with respect
to any Note held by it which is greater than the proportion received by any
other Bank in respect of the aggregate amount of principal and interest due with
respect to any Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Notes
held by the other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the
Notes held by the Banks shall be shared by the Banks pro rata; provided that
nothing in this Section shall impair the right of any Bank to exercise any right
of set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of obligations of the Borrowers other than obligations
under the Notes. The Borrowers agree, to the fullest extent they may effectively
do so under applicable law, that any holder of a participation in a Note,
whether or not acquired pursuant to the foregoing arrangements, may exercise
rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the Borrowers in the amount of such participation.
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SECTION . Amendments and Waivers. Any provision of this Agreement or
the Notes may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Borrowers and the Required Banks (and, if the
rights or duties of the Agent are affected thereby, by the Agent); provided that
no such amendment or waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank or subject any Bank to any additional
obligation, (ii) increase the Debt Limit, (iii) reduce the principal of or rate
of interest on any Loan or any fees hereunder, (iv) postpone the date fixed for
any payment of principal of or interest on any Loan or any fees hereunder, (v)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes, or the number of Banks, which shall be required for the
Banks or any of them to take any action under this Section or any other
provision of this Agreement or (vi) increase the amount set forth in the
definition of Availability Limit or change the provisions of Section 6.03(e).
Any provision of the Guaranty Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by each Obligor party
thereto and the Agent with the consent of the Required Banks; provided that no
such amendment or waiver shall, unless signed by each Obligor party thereto and
the Agent with the consent of all the Banks, release all or substantially all of
the Obligors from their obligations under the Guaranty Agreement or permit
termination of the Guaranty Agreement, except in each case as expressly
permitted by the terms thereof.
SECTION . Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
except that no Borrower may assign or otherwise transfer any of its rights under
this Agreement without the prior written consent of all Banks.
Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrowers and the Agent, such Bank shall remain responsible for the performance
of its obligations hereunder, and the Borrowers and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrowers 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 Bank will not agree to
any modification, amendment or waiver of this Agreement described in clause (i),
(ii), (iii), (iv) or
(NY) 27008/757/CA99/ca.99.conf.wpd
69
(vi) of Section without the consent of the Participant. An assignment or other
transfer which is not permitted by subsection (c) or (d) below shall be given
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b).
Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit D hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Borrowers (which consent shall not be unreasonably withheld) and
the Agent; provided that if an Assignee is an affiliate of such transferor Bank
or if, at the time of such assignment, an Event of Default has occurred and is
continuing, no such consent shall be required; and provided further that if such
assignment is of a proportionate part of a Bank's rights and obligations, after
giving effect to such assignment the amount of the Commitment of the transferor
Bank (or, if the Commitments have terminated, the aggregate principal amount of
the Loans held by the transferor Bank) and the amount of the Commitment of the
Assignee (or, if the Commitments have terminated, the aggregate principal amount
of the Loans held by the Assignee) in each case shall be not less than
$5,000,000. Upon execution and delivery of such instrument and payment by such
Assignee to such transferor Bank of an amount equal to the purchase price agreed
between such transferor Bank and such Assignee, such Assignee shall be a Bank
party to this Agreement and shall have all the rights and obligations of a Bank
as set forth in such instrument of assumption, and the transferor Bank shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this subsection (c), the transferor Bank, the
Agent and the Borrowers shall make appropriate arrangements so that, if
required, a new Note is issued to the Assignee. In connection with any such
assignment, the transferor Bank shall pay to the Agent an administrative fee for
processing such assignment in the amount of $2,500. If the Assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall, prior to the first date on which interest or fees are payable
hereunder for its account, deliver to the Borrowers and the Agent certification
as to exemption from deduction or withholding of any United States federal
income taxes in accordance with Section .
Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligation hereunder.
No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section than such
(NY) 27008/757/CA99/ca.99.conf.wpd
70
Bank would have been entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrowers' prior written consent or by
reason of the provisions of Section requiring such Bank to designate a different
Applicable Lending Office under certain circumstances or at a time when the
circumstances giving rise to such greater payment did not exist.
SECTION . New York Law. THIS AGREEMENT AND EACH NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAW OF THE STATE OF NEW YORK. The Borrowers hereby submit to
the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York State court sitting in New
York City for purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby. The Borrowers
irrevocably waive, to the fullest extent permitted by law, any objection which
the Borrowers may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
SECTION . Counterparts; Integration. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement and the other Financing Documents constitute the entire agreement
and understanding among the parties hereto and supersede any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof.
SECTION . Collateral. Each of the Banks represents to the Agent and
each of the other Banks that it in good faith is not relying upon any "margin
stock"(as defined in Regulation U) as collateral in the extension or maintenance
of the credit provided for in this Agreement.
SECTION . WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE AGENT AND
THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION . Joint and Several Obligations. The obligations of the
Borrowers under the Financing Documents shall be joint and several. The
obligations of each Borrower under the Financing Documents shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(NY) 27008/757/CA99/ca.99.conf.wpd
71
any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any other Obligor under any
Financing Document, by operation of law or otherwise;
any release, impairment, non-perfection or invalidity of any
direct or indirect security for any obligation of any other Obligor under
any Financing Document;
any change in the existence, structure or ownership of any
other Obligor;
any insolvency, bankruptcy, reorganization or other similar
proceeding affecting any other Obligor or its assets or any resulting release or
discharge of any obligation of any other Obligor under any Financing Document;
any invalidity or unenforceability relating to or against any
other Obligor for any reason of any Financing Document, or any provision of
applicable law or regulation purporting to prohibit the payment by any other
Obligor of the principal of or interest on any Note or any other amount payable
by any other Obligor under any Financing Document; or
any other act or omission to act or delay of any kind by any
other Obligor or any other corporation or person or any other circumstance
whatsoever which might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of the Borrowers' obligations hereunder.
(NY) 27008/757/CA99/ca.99.conf.wpd
72
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
HALLWOOD ENERGY CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President & Secretary
HALLWOOD CONSOLIDATED RESOURCES
CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President & Secretary
HALLWOOD ENERGY PARTNERS, L.P.
By: HEC Acquisition Corp., its
General Partner
By:
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(NY) 27008/757/CA99/ca.99.conf.wpd
Commitments
$ 35,000,000
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK
By:
---------------------------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
$ 35,000,000
FIRST UNION NATIONAL BANK
By:
---------------------------------------------------
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
$ 35,000,000
NATIONSBANK, N.A.
By:
---------------------------------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
Total Commitments
$105,000,000
---------------------
---------------------
FIRST UNION NATIONAL BANK, as
Collateral Agent
By:
---------------------------------------------------
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By:
---------------------------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
(NY) 27008/757/CA99/ca.99.conf.wpd
74
CROSS-REFERENCE TARGET LIST
NOTE: Due to the number of targets some target names may not appear in the
target pull-down list. (This list is for the use of the wordprocessor only, is
not a part of this document and may be discarded.)
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
....................................................amounts&terms
..............................................principal.repayment
....................................................interest.rate
..................................................interest.rate.a
..................................................interest.rate.b
..............................................borrowing.procedure
.............................................continuation.options
...............................................conversion.options
.............................................conversion.options.a
.............................................conversion.options.b
..............................................optional.prepayment
............................................optional.prepayment.b
.................................................mandatory.prepay
.........................................................payments
.........................................................interest
....................................................reimbursement
..................................................increased.costs
............................................basis.for.determining
.......................................................illegality
....................................................foreign.taxes
..............................................financial.condition
.................................................investments&guar
3.28(a)..........................................consummate.reorg
3.28(b).................................................reorg.agt
........................................................covenants
.............................................financial.statements
.................................................▇▇▇▇▇▇.▇▇▇▇▇▇▇▇▇
..............................................annual.certificates
............................................annual.certificates.a
.................................................reimburse.of.exp
..................................................erisa.info.comp
...............................................▇▇▇▇▇▇▇▇▇▇▇.▇▇▇▇▇▇
.............................................................debt
...........................................................debt.a
.......................................................debt.a.iii
........................................................debt.a.iv
...........................................................debt.b
.............................................................lien
................................................▇▇▇▇▇▇▇▇▇▇▇.▇▇▇▇▇
..............................................investments.loans.j
..............................................investments.loans.k
..............................................investments.loans.l
..............................................investments.loans.m
..............................................investments.loans.o
......................................................subsidaries
.................................................distribution.etc
......................................................mergers.etc
............................................transactions.with.aff
...................................................sale.of.assets
..................................................annual.coverage
.................................................▇▇▇▇▇▇▇▇▇▇▇.▇▇▇▇
..............................................▇▇▇▇▇▇▇▇▇▇.▇▇▇▇.▇▇▇
..............................................▇▇▇▇▇▇▇▇▇.▇▇.▇▇▇▇▇▇
..............................................inconsistent.provis
................................................interest.coverage
................................................opinions.of.local
4.38........................................additional.guarantors
...............................................events.of.defaults
.............................................events.of.defaults.b
.......................................................conditions
....................................................effectiveness
..................................................effectiveness.e
.............................................events.of.defaults.l
(NY) 27008/757/CA99/ca.99.conf.wpd
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
.......................................................................the.agent
.........................................................................notices
................................................................amendments&waive
...............................................................successors&assign
.............................................................successors&assign.a
.............................................................successors&assign.b
...............................................................successors&assign
4.13(a).......................................................coll.sec.borrowers
(NY) 27008/757/CA99/ca.99.conf.wpd
2
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
(NY) 27008/757/CA99/ca.99.conf.wpd
3