EXHIBIT 4.13
CREDIT AGREEMENT
among
THE WISER OIL COMPANY,
as Borrower,
NATIONSBANK OF TEXAS, N.A.,
as Agent
and
The Financial Institutions Listed on the
Signature Pages Hereto, as Banks
$150,000,000
dated
December 23, 1997
TABLE OF CONTENTS
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ARTICLE I
TERMS DEFINED
SECTION 1.1. Definitions................................................ -1-
SECTION 1.2. Accounting Terms and Determinations........................ -16-
SECTION 1.3. Petroleum Terms............................................ -17-
ARTICLE II
THE CREDIT
SECTION 2.1. Commitments................................................ -17-
SECTION 2.2. Method of Borrowing (including Refunding Borrowings)....... -20-
SECTION 2.3. Method of Obtaining Letters of Credit...................... -20-
SECTION 2.4. Notes...................................................... -21-
SECTION 2.5. Refunding of Eurodollar Advances........................... -21-
SECTION 2.6. Interest Rates............................................. -21-
SECTION 2.7. Mandatory Termination of Commitments....................... -22-
SECTION 2.8. Voluntary Reduction of Commitments........................ -22-
SECTION 2.9. Commitment Fee............................................. -22-
SECTION 2.10. Agency Fee................................................. -22-
ARTICLE III
BORROWING BASE
SECTION 3.1. Reserve Report; Proposed Borrowing Base.................... -22-
SECTION 3.2. Determination of Borrowing Base............................ -23-
SECTION 3.3. Borrowing Base Deficiency.................................. -23-
SECTION 3.4. Initial Borrowing Base..................................... -23-
SECTION 3.5. Procedure for Determining Borrowing Base................... -24-
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.1. Delivery and Endorsement of Notes.......................... -24-
SECTION 4.2. General Provisions as to Payments.......................... -24-
SECTION 4.3. Computation of Interest.................................... -25-
SECTION 4.4. Overdue Principal and Interest............................. -25-
SECTION 4.5. Limitation on Number of Eurodollar Advances................ -25-
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ARTICLE V
CHANGE IN CIRCUMSTANCES
SECTION 5.1. Increased Cost and Reduced Return.......................... -25-
SECTION 5.2. Limitation on Types of Advances............................ -26-
SECTION 5.3. Illegality................................................. -27-
SECTION 5.4. Treatment of Advances...................................... -27-
SECTION 5.5. Compensation............................................... -27-
SECTION 5.6 Taxes...................................................... -28-
SECTION 5.7. Discretion of Banks as to Manner of Funding................ -29-
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Initial Borrowing and Participation in
Letter of Credit Exposure.................................. -29-
SECTION 6.2. Conditions to Each Borrowing and Participation in Letter of
Credit Exposure............................................ -31-
SECTION 6.3. Materiality of Conditions.................................. -32-
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Existence and Power........................................ -32-
SECTION 7.2. Necessary Authorization; Contravention..................... -32-
SECTION 7.3. Binding Effect............................................. -33-
SECTION 7.4. Financial Information...................................... -33-
SECTION 7.5. Litigation................................................. -33-
SECTION 7.6. ERISA...................................................... -33-
SECTION 7.7. Taxes and Filing of Tax Returns............................ -34-
SECTION 7.8. Ownership of Properties Generally.......................... -34-
SECTION 7.9. Mineral Interests.......................................... -34-
SECTION 7.10. Material Agreements........................................ -35-
SECTION 7.11. Licenses, Permits, Etc..................................... -35-
SECTION 7.12. Compliance with Law........................................ -35-
SECTION 7.13. Full Disclosure............................................ -35-
SECTION 7.14. Corporate Structure........................................ -35-
SECTION 7.15. Environmental Matters...................................... -36-
SECTION 7.16. Burdensome Obligations..................................... -36-
SECTION 7.17. Fiscal Year................................................ -36-
SECTION 7.18. No Default................................................. -36-
SECTION 7.19. Government Regulation...................................... -36-
SECTION 7.20. Insider.................................................... -37-
SECTION 7.21. Gas Balancing Agreements and Advance Payment Contracts..... -37-
SECTION 7.22. Existing Credit Agreement.................................. -37-
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ARTICLE VIII
AFFIRMATIVE COVENANTS
SECTION 8.1. Information................................................ -37-
SECTION 8.2. Business of Borrower....................................... -39-
SECTION 8.3. Maintenance of Existence................................... -39-
SECTION 8.4. Right of Inspection........................................ -39-
SECTION 8.5. Maintenance of Insurance................................... -39-
SECTION 8.6. Payment of Taxes and Claims................................ -40-
SECTION 8.7. Compliance with Laws and Documents......................... -40-
SECTION 8.8. Operation of Properties and Equipment...................... -40-
SECTION 8.9. Environmental Law Compliance............................... -40-
SECTION 8.10. ERISA Reporting Requirements............................... -41-
SECTION 8.11. Additional Documents....................................... -42-
SECTION 8.12. Subsidiary Guarantees...................................... -42-
ARTICLE IX
NEGATIVE COVENANTS
SECTION 9.1. Incurrence of Debt......................................... -42-
SECTION 9.2. Restrictions on Distributions.............................. -42-
SECTION 9.3. Negative Pledge............................................ -43-
SECTION 9.4. Consolidations, Mergers.................................... -43-
SECTION 9.5. Asset Dispositions......................................... -43-
SECTION 9.6. Use of Proceeds........................................... -43-
SECTION 9.7. Investments................................................ -43-
SECTION 9.8. Transactions with Affiliates............................... -43-
SECTION 9.9. ERISA...................................................... -43-
SECTION 9.10. Hedge Transactions......................................... -44-
SECTION 9.11. Fiscal Year................................................ -44-
SECTION 9.12. Capital Stock of Subsidiaries.............................. -44-
ARTICLE X
FINANCIAL COVENANTS
SECTION 10.1. Current Ratio of Borrower.................................. -45-
SECTION 10.2. Ratio of Consolidated Funded Debt to Consolidated
Total Capital of Borrower.................................. -45-
SECTION 10.3. Consolidated Interest Coverage Ratio....................... -45-
ARTICLE XI
DEFAULTS
SECTION 11.1. Events of Default.......................................... -45-
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ARTICLE XII
AGENT
SECTION 12.1. Appointment, Powers, and Immunities........................ -47-
SECTION 12.2. Reliance by Agent.......................................... -47-
SECTION 12.3. Defaults................................................... -48-
SECTION 12.4. Rights as Bank............................................. -48-
SECTION 12.5. Indemnification............................................ -48-
SECTION 12.6. Non-Reliance on Agent and Other Banks...................... -49-
SECTION 12.7. Resignation of Agent....................................... -49-
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Notices.................................................... -49-
SECTION 13.2. No Waivers................................................. -49-
SECTION 13.3. Expenses; Indemnification.................................. -50-
SECTION 13.4. Right of Set-off; Adjustments.............................. -51-
SECTION 13.5. Amendments and Waivers..................................... -51-
SECTION 13.6. Survival................................................... -51-
SECTION 13.7. Limitation on Interest..................................... -52-
SECTION 13.8. Invalid Provisions......................................... -52-
SECTION 13.9. Waiver of Consumer Credit Laws............................. -52-
SECTION 13.10. Assignments and Participations............................. -52-
SECTION 13.11. TEXAS LAW.................................................. -54-
SECTION 13.12. Consent to Jurisdiction; Waiver of Immunities.............. -54-
SECTION 13.13. Counterparts; Effectiveness................................ -54-
SECTION 13.14. No Third Party Beneficiaries............................... -54-
SECTION 13.15. COMPLETE AGREEMENT......................................... -54-
SECTION 13.16. WAIVER OF JURY TRIAL....................................... -55-
SECTION 13.17. Confidentiality............................................ -55-
EXHIBIT A NOTICE OF BORROWING
EXHIBIT B REQUEST FOR LETTER OF CREDIT
EXHIBIT C PROMISSORY NOTE
EXHIBIT D THE WISER OIL COMPANY FINANCIAL OFFICER'S CERTIFICATE
EXHIBIT E ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT F SUBORDINATE NOTES INDENTURE
SCHEDULE 1 LITIGATION
SCHEDULE 2 CORPORATE STRUCTURE
SCHEDULE 3 EXISTING LETTERS OF CREDIT
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CREDIT AGREEMENT
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THIS CREDIT AGREEMENT (this "Agreement") is entered into as of the 23rd day
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of December, 1997, among THE WISER OIL COMPANY, a Delaware corporation
("Borrower"), NATIONSBANK OF TEXAS, N.A., as Agent ("Agent"), and the financial
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institutions listed on the signature pages hereto as Banks (individually a
"Bank" and collectively "Banks").
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W I T N E S S E T H:
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WHEREAS, Borrower has requested that Banks provide Borrower with a
revolving credit facility; and
WHEREAS, Banks are willing to provide such credit facility upon the terms
and subject to the conditions hereinafter set forth; and
WHEREAS, pursuant to Article XII of this Agreement, NationsBank of Texas,
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N.A. has been appointed Agent for Banks hereunder.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, Agent and Banks agree as follows:
ARTICLE I
TERMS DEFINED
SECTION 1.1. Definitions. The following terms, as used herein, have the
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following meanings:
"Adjusted Consolidated Current Liabilities" means, for any Person at any
time, the Consolidated Current Liabilities of such Person and its Consolidated
Subsidiaries at such time, excluding, however, any portion of the Long Term Debt
of such Person and its Consolidated Subsidiaries outstanding at such time which
would otherwise be classified as a current liability on a consolidated balance
sheet of such Person as of such time, prepared in accordance with GAAP.
Notwithstanding the foregoing, no portion of the principal balance of the Loan
shall be considered Adjusted Consolidated Current Liabilities.
"Adjusted Eurodollar Rate" means, for any Eurodollar Advance for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by Agent to be equal to the quotient
obtained by dividing (a) the Eurodollar Rate for such Eurodollar Advance for
such Interest Period by (b) 1.00 minus the Reserve Requirement for such
Eurodollar Advance for such Interest Period.
"Advance" means an advance by a Bank of proceeds of the Loan. Each Advance
shall either (a) bear interest at the Base Rate (in which case such Advance is a
Base Rate Advance), or (b) bear interest for a specified Interest Period at a
rate determined with reference to the Adjusted Eurodollar Rate (in which case
such Advance is a Eurodollar Advance). Advances may be made up in whole or in
part of (i) new
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advances of funds by a Bank to Borrower, or (ii) Refunding Advances. "Advances"
means any of such Advances, collectively.
"Advance Payment Contract" means any contract whereby Borrower or any of
its Subsidiaries either (a) receives or becomes entitled to receive (either
directly or indirectly) any payment (an "Advance Payment") to be applied toward
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payment of the purchase price of hydrocarbons produced or to be produced from
Mineral Interests owned by Borrower or any of its Subsidiaries and which Advance
Payment is paid or to be paid in advance of actual delivery of such production
to or for the account of the purchaser regardless of such production, or (b)
grants an option or right of refusal to the purchaser to take delivery of such
production in lieu of payment, and, in either of the foregoing instances, the
Advance Payment is, or is to be, applied as payment in full for such production
when sold and delivered or is, or is to be, applied as payment for a portion
only of the purchase price thereof or of a percentage or share of such
production; provided that, inclusion of the standard "take or pay" provision in
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any gas sales or purchase contract or any other similar contract shall not, in
and of itself, constitute such contract as an Advance Payment Contract for the
purposes hereof.
"Affiliate" means, as to any Person, any Subsidiary of such Person, or any
other Person which, directly or indirectly, controls, is controlled by, or is
under common control with, such Person and, with respect to Borrower or any of
its Subsidiaries, means, any director or executive officer of Borrower or any of
its Subsidiaries and any Person who holds ten percent (10%) or more of the
voting stock of Borrower. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or partnership interests, or by contract or
otherwise.
"Agent" means NationsBank of Texas, N.A. in its capacity as agent for Banks
hereunder or any successor thereto.
"Agreement" means this Agreement, as the same may be further modified,
amended or supplemented pursuant to Section 13.5.
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"Applicable Environmental Law" means any Law affecting any real or personal
property owned, operated or leased by Borrower or any Subsidiary of Borrower or
any other operation of Borrower or any Subsidiary of Borrower in any way
pertaining to the environment, including, without limitation, (a) the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986 (as
amended from time to time, herein referred to as "CERCLA"), (b) the Resource
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Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act
of 1980, the Solid Waste Recovery Act of 1976, as amended by the Solid Waste
Disposal Act of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as
amended from time to time, herein referred to as "RCRA"), (c) the Safe Drinking
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Water Act, as amended, (d) the Toxic Substances Control Act, as amended, (e) the
Clean Air Act, as amended, and (f) any federal, state or municipal Laws,
ordinances or regulations which may now or hereafter require removal of asbestos
or other hazardous wastes or impose any liability related to asbestos or other
hazardous wastes. The terms "hazardous substance", "petroleum", "release" and
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"threatened release" have the meanings specified in CERCLA, and the terms "solid
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waste" and "disposal" (or "disposed") have the meanings specified in RCRA;
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provided,
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however, in the event either CERCLA or RCRA is amended so as to broaden the
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meaning of any term defined thereby, such broader meaning shall apply subsequent
to the effective date of such amendment with respect to all provisions of this
Agreement; and provided further that, to the extent the Laws of the state in
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which any real or personal property owned, operated or leased by Borrower or any
Subsidiary of Borrower is located establish a meaning for "hazardous substance",
"petroleum", "release", "solid waste" or "disposal" which is broader than that
specified in either CERCLA or RCRA, such broader meaning shall apply in so far
as such broader meaning is applicable to the real or personal property owned,
operated or leased by Borrower or any Subsidiary of Borrower and located in such
state.
"Applicable Lending Office" means, for each Bank and for each Type of
Advance, the Domestic Lending Office or Eurodollar Lending Office of such Bank
(or of an Affiliate of such Bank) designated for such Type of Advance set forth
on the signature pages hereto or such other office of such Bank (or an Affiliate
of such Bank) as such Bank may from time to time specify to Agent and Borrower
by written notice in accordance with the terms hereof as the office by which its
Advances of such Type are to be made and maintained.
"Applicable Margin" means, for any day, the percentage determined pursuant
to the table below based on the ratio of (a) Outstanding Credit on such date, to
(b) the Borrowing Base in effect on such date:
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Ratio of Outstanding Credit Applicable Margin
to Borrowing Base
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Base Rate Advance Eurodollar Advance
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less than .5 to 1 0% .625%
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p .5 to 1 less than .75 to 1 0% .875%
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p .75 to 1 .375% 1.25%
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"Approved Petroleum Engineer" means ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ or any other
reputable firm of independent petroleum engineers as shall be selected by
Borrower and approved by Majority Banks; provided, however, that with respect to
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any Reserve Reports other than those required to be prepared as of January 1 of
each year, Borrower's in-house staff shall also be deemed an Approved Petroleum
Engineer.
"Assignment and Acceptance Agreement" has the meaning given such term in
Section 13.10(a).
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"Authorized Officer" means, as to any Person, its Chairman, its Chief
Executive Officer, its President, its Chief Financial Officer, any of its Vice
Presidents, its Treasurer, its corporate Secretary and, solely with respect to
any certificate to be delivered pursuant to Section 6.1, any of its Assistant
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Secretaries.
"Average Projected Daily Production" means for Borrower and its
Consolidated Subsidiaries for any calendar year and with respect to a particular
type of hydrocarbons (gas or oil), the quotient obtained by dividing (a) the
projected production of hydrocarbons of such type by Borrower and its
Consolidated Subsidiaries for such calendar year from Proved Producing Mineral
Interests, determined as of the commencement of such year by Borrower in good
faith and which is consistent with the production forecast
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for such year reflected in the Reserve Report prepared as of January 1 of such
year and delivered to Banks pursuant to Section 3.1, by (b) 365.
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"Bank" means any bank listed on the signature pages hereof as having a
Commitment and its successors and assigns, and "Banks" shall mean all of such
Banks.
"Base Rate" means, for any day, the rate per annum equal to the higher of
(a) the Federal Funds Rate for such day plus one-half of one percent (.5%), or
(b) the Prime Rate for such day. Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Rate shall be effective automatically and
without notice to Borrower or any Bank on the effective date of such change in
the Prime Rate or Federal Funds Rate.
"Base Rate Advance" means an Advance bearing interest with reference to the
Base Rate.
"Base Rate Borrowing" means any Borrowing of Base Rate Advances.
"Borrower" means The Wiser Oil Company, a Delaware corporation.
"Borrowing" means a borrowing hereunder consisting of Advances of the same
Type and Interest Period.
"Borrowing Base" has the meaning set forth in Section 3.2 hereof.
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"Borrowing Base Deficiency" means, as of any day, the amount, if any, by
which the aggregate Outstanding Credit exceeds the Borrowing Base in effect on
such day.
"Canadian Dollar" means the lawful currency of Canada.
"Canadian Limit" means the greater of $5,000,000 in U.S. Dollars and
$5,000,000 in Canadian Dollars.
"Change of Control" means that any Person or group (as defined in section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) shall become the
beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of
1934) of more than forty percent (40%) of the total voting power of all classes
of capital stock then outstanding of Borrower entitled to vote in elections of
directors of Borrower.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means, with respect to each Bank, the commitment of such Bank
to lend its Commitment Percentage of the Loan. The amount of each Bank's
Commitment is the amount set forth opposite the name of such Bank on the
signature pages hereto, as such amount is reduced from time to time in
accordance with the provisions hereof.
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"Commitment Fee Percentage" means, for any day, the percentage determined
pursuant to the table below based on the ratio of (a) Outstanding Credit on such
day, to (b) the Borrowing Base in effect on such day:
Ratio of Outstanding
Credit to Borrowing Base Commitment Fee Percentage
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less than .75 to 1 .25%
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p .75 to 1 .375%
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"Commitment Percentage" means, with respect to each Bank, the percentage
determined by dividing its Commitment by the Total Commitment.
"Consolidated Current Assets" means, for any Person at any time,
consolidated current assets of such Person and its Consolidated Subsidiaries at
such time.
"Consolidated Current Liabilities" means, for any Person at any time, the
consolidated current liabilities of such Person and its Consolidated
Subsidiaries at such time. Notwithstanding the foregoing, no portion of the
principal balance of the Loan shall be considered Consolidated Current
Liabilities.
"Consolidated Funded Debt" means, for any Person at any time, the
consolidated Debt of such Person and its Consolidated Subsidiaries at such time.
"Consolidated Net Income" means, for any Person for any period,
consolidated net earnings (after income Taxes) of such Person and its
Consolidated Subsidiaries for such period, determined in accordance with GAAP.
"Consolidated Senior Funded Debt" means, at any time, the remainder of (a)
Consolidated Funded Debt, minus (b) the principal outstanding under the
Subordinate Notes.
"Consolidated Subsidiary" or "Consolidated Subsidiaries" means, for any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial statements.
"Consolidated Total Capital" means, for any Person as of any time, the sum
of such Person's (a) consolidated liabilities at such time, plus (b)
consolidated shareholder's equity at such time, in each case as such amounts
would be reflected on a consolidated balance sheet of such Person as of such
time prepared in accordance with GAAP.
"Continue", "Continuation", and "Continued" shall refer to the continuation
pursuant to Article V hereof of a Eurodollar Advance from one Interest Period
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to the next Interest Period.
"Conversion Date" means April 1, 1999.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Article V hereof of one Type of Advance into another Type of
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Advance.
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"Debt" means, for any Person at any time, 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 instruments, (c)
all other indebtedness (including capitalized lease obligations, other than
usual and customary oil and gas leases) of such Person on which interest charges
are customarily paid or accrued, (d) all Guarantees by such Person, (e) the
unfunded or unreimbursed portion of all letters of credit issued for the account
of such Person, (f) any amount owed by such Person representing the deferred
purchase price of property or services other than accounts payable incurred in
the ordinary course of business and in accordance with customary trade terms,
(g) all obligations of such Person secured by a Lien (other than Liens described
in clauses (c), (d), (e), (f) and (g) of the definition of Permitted
Encumbrances, securing obligations which are not delinquent (except to the
extent permitted by Section 8.6)) on any property or asset owned by such Person,
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regardless of whether the obligation secured thereby shall have been assumed by
that Person or is non-recourse to the credit of that Person, and (h) all
liability of such Person as a general partner of a partnership for obligations
of such partnership of the nature described in (a) through (g) preceding.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice, lapse of time or both would, unless
cured or waived, become an Event of Default.
"Determination Date" means each March 31 and September 30 commencing March
31, 1998.
"Distribution" by any Person, means (a) with respect to any stock issued by
such Person or any partnership, limited liability company or other equity
interest of such Person, the retirement, redemption, purchase, or other
acquisition for value of any such stock, limited liability company, partnership
or other equity interest, (b) the declaration or payment of any dividend or
other distribution on or with respect to any stock or any limited liability
company, partnership or other equity interest of any Person, and (c) any other
payment by such Person with respect to such stock or limited liability company,
partnership or other equity interest.
"Dollar Equivalent" means, with respect to an amount denominated in
Canadian Dollars, the amount of U.S. Dollars required to purchase the relevant
stated amount of Canadian Dollars on the date of determination. For purposes of
this Agreement, the Dollar Equivalent amount of any Debt or other obligation of
Borrower or any of its Subsidiaries which is denominated in Canadian Dollars
shall be determined based on the Exchange Rate in effect on the date as of which
the amount of such Debt is being stated or determined as the case may be.
"Domestic Business Day" means any day except a Saturday, Sunday or other
day on which national banks in Dallas, Texas, are authorized by Law to close.
"Domestic Lending Office" means, as to each Bank, its office located at its
address set forth on the signature pages hereof (or identified on the signature
pages hereof as its Domestic Lending Office) or such other office as such Bank
may hereafter designate as its Domestic Lending Office by notice to Borrower and
Agent.
"Eligible Assignee" means (i) a Bank, (ii) an Affiliate of a Bank, and
(iii) any other Person approved by Agent and, unless an Event of Default has
occurred and is continuing at the time any
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assignment is effected in accordance with Section 13.10, Borrower, such approval
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not to be unreasonably withheld or delayed by Borrower and such approval to be
deemed given by Borrower if no objection is received by the assigning Bank and
Agent from Borrower within five (5) Domestic Business Days after notice of such
proposed assignment has been provided by the assigning Bank to Borrower;
provided, however, that neither Borrower nor an Affiliate of Borrower shall
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qualify as an Eligible Assignee.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and regulations promulgated thereunder.
"ERISA Affiliate" means any corporation or trade or business under common
control with Borrower as determined under section 414(b), (c), (m) or (o) of the
Code.
"ERISA Event" means, with respect to Borrower and any ERISA Affiliate, (a)
a "reportable event" as defined in section 4043 of ERISA (other than a
reportable event not subject to the provision for thirty (30) days notice to the
PBGC under regulations issued under section 4043 of ERISA), (b) the withdrawal
of Borrower or any ERISA Affiliate from a Plan during a plan year in which it
was a "substantial employer" as defined in section 4001(a)(2) of ERISA, (c) the
filing of a notice of intent to terminate a Plan under section 4041(c) of ERISA,
(d) the institution of proceedings to terminate a Plan by the PBGC, (e) the
failure to make required contributions which could result in the imposition of a
lien under section 412 of the Code or section 302 of ERISA, or (f) any other
event or condition which might reasonably be expected to constitute grounds
under section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the imposition of any liability under Title
IV of ERISA other than PBGC premiums due but not delinquent under Section 4007
of ERISA.
"Eurodollar Advance" means an Advance bearing interest with reference to
the Adjusted Eurodollar Rate. Each Eurodollar Advance having a different
Interest Period shall be deemed to be a separate Eurodollar Advance.
"Eurodollar Borrowing" means any Borrowing of Eurodollar Advances.
"Eurodollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
deposits of U.S. Dollars) in London.
"Eurodollar Lending Office" means, as to each Bank, its office, branch or
affiliate located at its address set forth on the signature pages hereof (or
identified on the signature pages hereof as its Eurodollar Lending Office) or
such other office, branch or affiliate of such Bank as it may hereafter
designate as its Eurodollar Lending Office by notice to Borrower and Agent.
"Eurodollar Rate" means, for any Eurodollar Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in U.S. Dollars at approximately
11:00 a.m. (London time) two (2) Eurodollar Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the term "Eurodollar Rate" shall mean,
for any Eurodollar Advance for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in U.S.
Dollars at approximately 11:00 a.m.
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(London time) two (2) Eurodollar Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
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however, if more than one rate is specified on Reuters Screen LIBO Page, the
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applicable rate shall be the arithmetic mean of all such rates (rounded upwards,
if necessary, to the nearest 1/100 of 1%).
"Events of Default" has the meaning set forth in Section 11.1.
------------
"Exchange Rate" means the rate of exchange of U.S. Dollars with Canadian
Dollars as reported by the Federal Reserve Bank of New York in its ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Market -Consensus Rate on the date the Exchange
Rate is to be determined (or on the immediately preceding Domestic Business Day
if the Exchange Rate is to be determined on a day which is not a Domestic
Business Day) for the spot purchase in the foreign exchange market of the
applicable amount of U.S. Dollars with Canadian Dollars, or if such report
ceases to be published, an equivalent exchange rate as selected by Agent.
"Exhibit" refers to an exhibit attached to this Agreement and incorporated
herein by reference, unless specifically provided otherwise.
"Existing Banks" means the Banks under and as defined in the Existing
Credit Agreement.
"Existing Borrowers" means the Borrowers under and as defined in the
Existing Credit Agreement.
"Existing Credit Agreement" means that certain Credit Agreement dated as of
June 23, 1994, by and among Existing Borrowers, Agent and Existing Banks, as
amended by that certain (i) First Amendment to Credit Agreement dated November
29, 1995, by and among Existing Borrowers, Agent and Existing Banks, and (ii)
letter agreement dated May 20, 1997, by and among Existing Borrowers, Agent and
Existing Banks.
"Existing Letters of Credit" means the letters of credit issued by
NationsBank of Texas, N.A. pursuant to the Existing Credit Agreement for the
account of Borrower and/or its Subsidiaries which are described on Schedule 3
----------
hereto.
"Existing Subsidiaries" means T.W.O.C., Inc., a Delaware corporation
("T.W.O.C."), The Wiser Marketing Company, a Delaware corporation ("Wiser
---------- -----
Marketing"), Wiser Oil Delaware, Inc., a Delaware corporation ("Wiser Oil
--------- ---------
Delaware"), Le Chuza Energy Company, a Delaware corporation, Wiser Canada, Wiser
--------
Delaware LLC, a Delaware limited liability company ("Wiser LLC") and Wiser
---------
Northern Ireland, Ltd., a Delaware corporation, which are the only subsidiaries
of Borrower on the date hereof.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 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, (a) 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
-8-
Domestic Business Day, and (b) 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 charged to Agent (in its individual capacity) on such day on
such transactions as determined by Agent.
"Financial Officer" of any Person means its Chief Financial Officer or its
Treasurer.
"GAAP" means those generally accepted accounting principles and practices
which are recognized as such by the American Institute of Certified Public
Accountants acting through its Accounting Principles Board or by the Financial
Accounting Standards Board or through other appropriate boards or committees
thereof and which are consistently applied for all periods after the date hereof
so as to properly reflect the financial condition, and the results of operations
and changes in financial position, of Borrower and its Consolidated
Subsidiaries, except that any accounting principle or practice required to be
changed by the said Accounting Principles Board or Financial Accounting
Standards Board (or other appropriate board or committee of the said Boards) in
order to continue as a generally accepted accounting principle or practice may
be so changed.
"Gas Balancing Agreement" means any agreement or arrangement whereby
Borrower or any of its Subsidiaries or any other party having an interest in any
hydrocarbons to be produced from Mineral Interests in which Borrower or any of
its Subsidiaries have a right to take more than its proportionate share of
production therefrom.
"Governmental Authority" means any court or governmental department,
commission, board, bureau, agency, or instrumentality of the United States, or
any state, province, commonwealth, nation, territory, possession, county,
parish, or municipality, whether now or hereafter constituted or existing.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt (whether
arising by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions, or other similar undertakings of support or
otherwise), or (b) entered into for the purpose of assuring in any other manner
the obligee of such Debt of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part); provided that, the term
-------- ----
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.
"Hedge Transaction" means a transaction pursuant to which Borrower or any
of its Subsidiaries hedge the price to be received by them for future production
of hydrocarbons, including price swap agreements under which Borrower or its
Subsidiaries agree to pay a price for a specified amount of hydrocarbons
determined by reference to a recognized market on a specified future date and
the contracting party agrees to pay Borrower or its Subsidiaries a fixed price
for the same or similar amount of hydrocarbons; provided, that, "Hedge
-------- ----
Transaction" shall not include the purchase by Borrower or any of its
Subsidiaries of any "floor" or similar transaction by means of which such Person
protects itself from declining prices for its production without fixing any
ceiling price for such production.
"Immaterial Mineral Interests" has the meaning set forth in Section 7.9.
-----------
"Initial Reserve Report" means that certain Appraisal Report prepared as of
January 1, 1997 by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇ containing an engineering analysis of
certain of the Mineral Interests owned by Borrower and Wiser Canada, as such
report has been supplemented by internally prepared engineering
-9-
reports containing an analysis of certain of the Mineral Interests owned by
Borrower and acquired after January 1, 1997, copies of which such reports have
been provided to Banks.
"Initial Subsidiary Guarantors" means T.W.O.C., Wiser Marketing, Wiser Oil
Delaware, Wiser LLC, and Wiser Canada.
"Interest Period" means, with respect to each Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending one (1), two (2),
three (3) or six (6) months thereafter as Borrower may elect in the applicable
Notice of Borrowing; provided, that:
-------- ----
(i) any Interest Period which would otherwise end on a day which
is not a Eurodollar Business Day shall be extended to the next
succeeding Eurodollar Business Day unless such Eurodollar Business Day
falls in another calendar month, in which case such Interest Period
shall end on the next preceding Eurodollar Business Day;
(ii) any Interest Period which begins on the last Eurodollar
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 (iii) below, end on the last
Eurodollar Business Day of a calendar month;
(iii) if any Interest Period includes a date on which any
payment of principal of the Loan which is comprised in part by such
Borrowing is required to be made hereunder, but does not end on such
date, then (A) the principal amount of each Eurodollar Advance
required to be repaid on such date shall have an Interest Period
ending on such date, and (B) the remainder of each such Eurodollar
Advance shall have an Interest Period determined as set forth above;
and
(iv) No Interest Period shall extend past the Termination Date.
"Investment" means, with respect to any Person, any loan, advance,
extension of credit, capital contribution to, investment in or purchase of the
stock or other securities of, or interests in, any other Person; provided, that,
-------- ----
"Investment" shall not include customer and trade accounts which are payable in
accordance with customary trade terms, and advances made in the ordinary course
of business to employees or under operating agreements, drilling contracts,
exploration agreements or similar agreements.
"Issuer" has the meaning set forth in Section 2.1(b).
--------------
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions, or decrees of any state, province, commonwealth,
nation, territory, possession, county, township, parish, municipality or
Governmental Authority.
"Letter of Credit Exposure" of any Bank means such Bank's aggregate
participation in the unfunded portion and the funded but unreimbursed portion of
Letters of Credit outstanding at any time.
"Letters of Credit" means letters of credit issued for the account of
Borrower pursuant to Section 2.1(b).
--------------
-10-
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, Borrower and its Subsidiaries shall be
deemed to own subject to a Lien any asset which is acquired or held 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.
"Loan" means a reducing revolving loan in an amount up to $150,000,000 to
be made to Borrower pursuant to the Commitment of each Bank in accordance with
Section 2.1 hereof. Such Loan shall consist of Eurodollar Advances and Base
-----------
Rate Advances as Borrower may elect pursuant to Sections 2.2 and 6.2 hereof.
------------ ---
"Loan Papers" means this Agreement, the Notes, each Subsidiary Guaranty and
all other certificates, documents, or instruments delivered in connection with
this Agreement, as the foregoing may be amended from time to time.
"Long Term Debt" means any Debt which matures more than one (1) year from
the date it is incurred or which has a maturity date which can be extended
solely at the option of the obligor to a date more than one (1) year from the
date of its incurrence.
"Majority Banks" means Banks holding greater than fifty percent (50%) of
the Total Commitment.
"Margin Regulations" means Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"Margin Stock" means "margin stock" as defined in Regulation U.
"Material Adverse Change" means any circumstance or event that has had or
could reasonably be expected to have a Material Adverse Effect.
"Material Adverse Effect" means, with respect to a Person, a material
adverse effect on the business, financial condition, operations or assets of
such Person or any material adverse effect on such Person and its Subsidiaries
taken as a whole, and shall also mean, with respect to Borrower or any
Subsidiary Guarantor, a material adverse effect on Borrower's or such Subsidiary
Guarantor's ability to pay and perform their debts, liabilities and obligations,
generally, or to pay and perform the Obligations.
"Material Agreement" means any material written or oral agreement,
contract, commitment, or understanding to which a Person is a party, by which
such Person is directly or indirectly bound, or to which any assets of such
Person may be subject, which is not cancelable by such Person upon notice of
thirty (30) days or less without liability for further payment other than
nominal penalty.
"Maximum Borrowing Base" means the maximum Borrowing Base in effect under
this Agreement during the period commencing on the Conversion Date, and
continuing until the Termination Date. The Maximum Borrowing Base shall be
initially the amount of the Borrowing Base in effect on March 31, 1999;
provided, that, such amount shall reduce on June 30, 1999 and on the last day of
-------- ----
each September, December, March and June thereafter until the Termination Date
by an amount equal to one twelfth (1/12) of the Borrowing Base in effect on
March 31, 1999.
-11-
"Maximum Lawful Rate" means, for each Bank, the maximum rate (or, if the
context so permits or requires, an amount calculated at such rate) of interest
which, at the time in question would not cause the interest charged on the
portion of the Loan owed to such Bank at such time to exceed the maximum amount
which such Bank would be allowed to contract for, charge, take, reserve, or
receive under applicable Laws after taking into account, to the extent required
by applicable Laws, any and all relevant payments or charges under the Loan
Papers. To the extent the Laws of the State of Texas are applicable for
purposes of determining the "Maximum Lawful Rate," such term shall mean the
"interest rate ceiling" from time to time in effect under Chapter 1D of the
Texas Credit Title, Revised Civil Statutes of Texas, 1925, as amended,
substituted for or restated, or, if permitted by applicable Law and effective
upon the giving of the notices required by such Chapter 1D (or effective upon
any other date otherwise specified by applicable Law), the "quarterly ceiling"
or "annualized ceiling" from time to time in effect under such Chapter 1D,
whichever Agent (with the approval of Majority Banks) shall elect to substitute
for the "interest rate ceiling," and vice versa, each such substitution to have
---- -----
the effect provided in such Chapter 1D, and Agent (with the approval of Majority
Banks) shall be entitled to make such election from time to time and one or more
times and, without notice to Borrower, to leave any such substitute rate in
effect for subsequent periods in accordance with such Chapter 1D.
"Mineral Interests" means rights, estates, titles, and interests in and to
oil, gas, sulphur, or other mineral leases and any mineral interests, royalty
and overriding royalty interest, production payment, net profits interests,
mineral fee interests, and other rights therein, including, without limitation,
any reversionary or carried interests relating to the foregoing, together with
rights, titles, and interests created by or arising under the terms of any
unitization, communization, and pooling agreements or arrangements, and all
properties, rights and interests covered thereby, whether arising by contract,
by order, or by operation of Laws, which now or hereafter include all or any
part of the foregoing.
"NationsBank" means NationsBank of Texas, N.A., a national banking
association.
"Note" means a promissory note of Borrower, substantially in the form of
Exhibit C attached hereto, payable to the order of a Bank, in the amount of such
---------
Bank's Commitment, evidencing the obligation of Borrower to repay to such Bank
its Commitment Percentage of the Loan, and "Notes" means all of such Notes
collectively.
"Notice of Borrowing" has the meaning set forth in Section 2.2(a).
--------------
"Obligations" means all present and future indebtedness, obligations and
liabilities, and all renewals and extensions thereof, or any part thereof, of
Borrower or any of its Subsidiaries to any Bank arising pursuant to this
Agreement, the Notes, the Letters of Credit, or the other Loan Papers, and all
interest accrued thereon and costs, expenses, and attorneys' fees incurred in
the enforcement or collection thereof, regardless of whether such indebtedness,
obligations and liabilities are direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several or joint and several.
"Outstanding Credit" means, on any date, the sum of (a) the aggregate
outstanding Letter of Credit Exposure on such date including the aggregate
Letter of Credit Exposure related to Letters of Credit to be issued on such
date, plus (b) the outstanding principal balance of the Loan on such date,
including the amount of any Borrowing to be made on such date.
-12-
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Canadian Working Capital Facility" means one or more lines of
credit for senior indebtedness made available to Wiser Canada, which (a) are not
in the aggregate in excess of the Canadian Limit, (b) are unsecured, and (c) do
not otherwise violate this Agreement (including, without limitation, Section
-------
9.1). The Permitted Canadian Working Capital Facility may provide for any
interest rate, fees, amortization or maturity agreed to by Wiser Canada and its
Canadian lenders.
"Permitted Encumbrances" means with respect to any asset:
(a) Liens (if any) securing the Obligations;
(b) minor defects in title which do not secure the payment of money
and otherwise have no material adverse effect on the value or operation of any
material assets encumbered thereby, including, without limitation, easements,
rights-of-way, servitudes, permits, surface leases, restrictions and other
similar charges, encumbrances or title defects;
(c) Liens (other than Liens arising under ERISA) incurred or deposits
made in the ordinary course of business including, (i) mechanic's,
materialman's, warehouseman's, journeyman's, carrier's and other similar Liens,
(ii) in connection with worker's compensation, unemployment insurance and other
types of social security or retirement benefits, (iii) to secure the performance
of statutory or regulatory obligations, surety bonds, appeal bonds and
performance bonds, or (iv) arising under or securing, bids, tenders, leases
(other than capital leases), joint ownership agreements, operating agreements,
seismic agreements, exploration agreements, farmout agreements, drilling
agreements saltwater or other injection or disposal agreements, gas balancing
agreements, construction contracts, production sales contracts, processing
contracts, transportation contracts and similar agreements, in each case which
are customarily entered into in the ordinary course of the oil and gas
exploration and production business; provided, that no Lien or deposit described
in this clause (c) shall secure obligations which are delinquent (except to the
extent permitted by Section 8.6) or secure the borrowing of money, the obtaining
-----------
of advances of money on credit or the payment of the deferred (beyond normal
trade terms) purchase price of property;
(d) [INTENTIONALLY DELETED]
(e) Liens for Taxes, assessments or other governmental charges not
delinquent (except to the extent permitted by Section 8.6);
-----------
(f) any attachment or judgment Lien unless the judgment it secures
shall not, within thirty (30) days after the entry thereof, have been discharged
or execution thereof stayed pending appeal, or shall not have been discharged
within thirty (30) days after the expiration of any such stay;
(g) lease burdens payable to third parties which either (i) are
deducted in the calculation of discounted present value in the Reserve Reports,
including, without limitation, any royalty, overriding royalty, net profits
interest, production payment, carried interest or reversionary working
-13-
interest which has been disclosed to Agent in writing, or (ii) burden properties
which are not included in the Reserve Reports;
(h) Liens (including capital leases) encumbering property of Borrower
securing Debt incurred to finance the purchase price of such property; provided,
--------
that (i) no such Lien shall encumber any property of Borrower other than the
----
property acquired with the proceeds of such Debt (and improvements and
accessions thereto), (ii) the Debt secured by any such Lien shall not exceed the
purchase price of the property purchased with the proceeds of such Debt
(including applicable excise Taxes and transaction costs), and (iii) the
aggregate amount of all such Debt outstanding at any time shall not exceed
$5,000,000; and
(i) Liens securing obligations under Hedge Transactions permitted
hereunder by and between any Bank and/or any Affiliate of any Bank, and Borrower
and/or any Subsidiary of Borrower; provided that such Liens shall only be
permitted to the extent the Obligations are secured on an equal and ratable
basis with the obligations under such Hedge Transactions.
"Permitted Investments" means (a) Permitted Short Term Investments (as
defined in the Subordinate Notes Indenture), (b) Investments by Borrower in any
Subsidiary Guarantor, (c) Investments by any Subsidiary Guarantor in any other
Subsidiary Guarantor, (d) Investments by Subsidiary Guarantors in Borrower, and
(e) other Investments by Borrower and its Subsidiaries which when made, together
with all other Investments made pursuant to this clause (e), do not exceed an
amount equal to $10,000,000 outstanding at any time.
"Person" means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a Governmental Authority.
"Plan" means an employee benefit plan within the meaning of section 3(3) of
ERISA, whether formal or informal and whether legally binding or not, under
which Borrower or an ERISA Affiliate has any current or future obligation or
liability or under which any present or former employee of Borrower or an ERISA
Affiliate, or such present or former employee's dependents or beneficiaries, has
any current or future right to benefits resulting from the present or former
employee's employment relationship with Borrower or an ERISA Affiliate.
"Prime Rate" means the per annum rate of interest established from time to
time by NationsBank as its prime rate, which rate may not be the lowest rate of
interest charged by NationsBank to its customers.
"Proved Mineral Interests" means Proved Producing Mineral Interests, Proved
Nonproducing Mineral Interests, and Proved Undeveloped Mineral Interests.
"Proved Nonproducing Mineral Interests" means all Mineral Interests which
constitute proved developed nonproducing reserves.
"Proved Producing Mineral Interests" means all Mineral Interests (including
all acreage subject to such Mineral Interests that may be perpetuated beyond the
primary term therefor) which constitute proved developed producing reserves.
-14-
"Proved Undeveloped Mineral Interests" means all Mineral Interests which
constitute proved undeveloped reserves.
"Refunding Advances" means Advances made simultaneously with the expiration
of an Interest Period to the extent such Advance is used for the purpose of
refinancing Advances which are subject to the then expiring Interest Period (or
Interest Periods). Refunding Advances can be Refunding Base Rate Advances or
Refunding Eurodollar Advances.
"Refunding Borrowing" means a Borrowing comprised of Refunding Advances of
the same Type and Interest Period.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"Related Asset" means any gathering system, pipeline, processing plant or
similar asset owned by Borrower or any of its Subsidiaries which is used or
useful in the operation of the Mineral Interests owned by Borrower and its
Subsidiaries.
"Request for Letter of Credit" has the meaning set forth in Section 2.3(a).
--------------
"Reserve Report" means an unsuperseded engineering analysis of the Mineral
Interests owned by Borrower, in form and substance acceptable to Majority Banks,
prepared by an Approved Petroleum Engineer in accordance with customary and
prudent practices in the petroleum engineering industry. For purposes of Section
-------
7.9, until superceded, the Initial Reserve Report shall be considered a Reserve
---
Report.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to (i) any
category of liabilities which includes deposits by reference to which the
Adjusted Eurodollar Rate is to be determined, or (ii) any category of extensions
of credit or other assets which include Eurodollar Advances. The Adjusted
Eurodollar Rate shall be adjusted automatically on and as of the effective date
of any change in the Reserve Requirement.
"Schedule" means a "schedule" attached to this Agreement and incorporated
herein by reference, unless specifically indicated otherwise.
"Section" refers to a "section" or "subsection" of this Agreement unless
specifically indicated otherwise.
"Subordinate Notes" means Borrower's Senior Subordinated Notes due 2007 in
an aggregate amount of $125,000,000 issued pursuant to and governed by the
Subordinate Notes Indenture.
-15-
"Subordinate Notes Indenture" means an Indenture dated May 21, 1997,
entered into by and between Borrower and Texas Commerce Bank National
Association as Trustee, a copy of which is attached hereto as Exhibit F.
---------
"Subsidiary" means, for any Person, 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 (including that of a general partner) are at the time directly or
indirectly owned, collectively, by such Person and any Subsidiaries of such
Person. The term Subsidiary shall include Subsidiaries of Subsidiaries (and so
on). Each of the Existing Subsidiaries is a "Subsidiary" of Borrower.
"Subsidiary Guarantors" means any Subsidiary of Borrower which has executed
and delivered a Subsidiary Guaranty which is in full force and effect.
"Subsidiary Guaranty" means a Guaranty in form and substance acceptable to
Agent to be executed by individual Subsidiaries of Borrower pursuant to Sections
--------
6.1(a)(ii) and 8.12 hereof, pursuant to which such Subsidiaries shall guaranty
---------- ----
payment and performance in full of the Obligations.
"Taxes" means all taxes, assessments, filing or other fees, levies,
imposts, duties, deductions, withholdings, stamp taxes, interest equalization
taxes, capital transaction taxes, foreign exchange taxes or other charges of any
nature whatsoever, from time to time or at any time imposed by Law or any
Governmental Authority. "Tax" means any one of the foregoing.
"Termination Date" means March 31, 2002.
"Total Commitment" means the aggregate of all Banks' Commitments.
"Type" shall mean any type of Advance (i.e., a Base Rate Advance or
Eurodollar Advance).
"Unused Availability" means, at any time, the remainder of (a) the
Borrowing Base at such time, minus (b) the Outstanding Credit at such time.
"U.S. Dollars" means the lawful currency of the United States of America.
"Wiser Canada" means The Wiser Oil Company of Canada, a Nova Scotia
unlimited liability company.
SECTION 1.2. Accounting Terms and Determinations. Unless otherwise
-----------------------------------
specified herein, all accounting terms used herein 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 GAAP,
applied on a basis consistent with the most recent audited consolidated
financial statements of Borrower and its Consolidated Subsidiaries delivered to
Banks, except for changes concurred in by Borrower's independent certified
public accountants and which are disclosed to Agent on the next date on which
financial statements are required to be delivered to Banks pursuant to Sections
--------
8.1(a) or (b); provided that, unless Majority Banks and Borrower shall otherwise
------ --- -------- ----
agree in writing, no such change shall modify or affect the manner in which
compliance with the covenants contained in Article X are computed
---------
-16-
such that all such computations shall be conducted utilizing financial
information presented consistently with prior periods.
SECTION 1.3. Petroleum Terms. As used herein, the terms "proved
---------------
reserves," "proved developed reserves," "proved developed producing reserves,"
"proved developed nonproducing reserves," and "proved undeveloped reserves" have
the meaning given such terms from time to time and at the time in question by
the Society of Petroleum Engineers of the American Institute of Mining
Engineers.
SECTION 1.4. Money. Unless expressly stipulated otherwise, all references
-----
herein to "dollars", "money", "funds", "payments", "prepayments", or other
similar financial or monetary terms, are references to currency of the United
States of America.
ARTICLE II
THE CREDIT
SECTION 2.1. Commitments. (a) Each Bank severally agrees, subject to
-----------
Section 2.1(c) and the other terms and conditions set forth in this Agreement,
--------------
to lend to Borrower from time to time until the Termination Date, amounts not to
exceed in the aggregate at any one time outstanding, the amount of its
Commitment reduced by its Letter of Credit Exposure. Each Borrowing under this
Section 2.1(a) shall be (i) in an aggregate principal amount of $1,000,000 or
--------------
any larger amount (except that any Base Rate Borrowing may be in the amount of
the Unused Availability), and (ii) made from Banks ratably. Subject to the
foregoing limitations and the other provisions of this Agreement, Borrower may
borrow under this Section 2.1(a), repay amounts outstanding under the Loan and
--------------
request new Borrowings under this Section 2.1(a).
--------------
(b) Agent, or such Bank designated by Agent which (without obligation
to do so) consents to the same ("Issuer") will, from time to time until the
------
Termination Date, upon request by Borrower, issue Letters of Credit for the
account of Borrower so long as (i) the sum of (A) the total Letter of Credit
Exposure then existing, and (B) the amount of the requested Letter of Credit
does not exceed twenty percent (20%) of the Borrowing Base, and (ii) Borrower
would be entitled to a Borrowing under Section 2.1(a) in an amount greater than
--------------
or equal to the requested Letter of Credit. Not less than three (3) Domestic
Business Days prior to the requested date of issuance of any such Letter of
Credit, Borrower shall execute and deliver to Issuer, Issuer's customary letter
of credit application. Each Letter of Credit shall be in the minimum amount of
$5,000 and shall be in form and substance acceptable to Issuer. No Letter of
Credit shall have an expiration date later than the Termination Date. Upon the
date of issuance of a Letter of Credit, Issuer shall be deemed to have sold to
each other Bank, and each other Bank shall be deemed to have purchased from
Issuer, a participation in the related Letter of Credit and Letter of Credit
Exposure equal to such Bank's Commitment Percentage of such Letter of Credit and
Letter of Credit Exposure at such date. Issuer shall notify each Bank by
telephone, teletransmission or telex of each Letter of Credit issued pursuant to
the terms hereof. At the time of issuance of each Letter of Credit, Borrower
shall pay to Agent a fee equal to the sum of (i) $250, plus (ii) one percent
(1%) per annum (based upon the amount and term of such Letter of Credit). Agent
shall distribute (i) the $250, plus (ii) one-eighth (1/8th) of the one percent
(1%) fee paid on issuance of such Letter of Credit to the Issuer of such Letter
of Credit. The remaining portion of such fee shall be paid to Banks ratably.
-17-
Notwithstanding anything to the contrary contained herein, Borrower hereby
agrees to reimburse each Issuer immediately upon demand by such Issuer, and in
immediately available funds, for any payment or disbursement made by such Issuer
under any Letter of Credit issued by it. So long as no Default, Event of
Default or Borrowing Base Deficiency exists, Banks shall, upon Borrower's
request, fund a Base Rate Borrowing to cover Borrower's reimbursement
obligations described in this paragraph, notwithstanding that Borrower has not
otherwise satisfied any other conditions to such a Borrowing. Payment shall be
made by Borrower with interest on the amount so paid or disbursed by Issuer from
and including the date payment is made under any Letter of Credit to and
including the date of payment, at the lesser of (i) the Maximum Lawful Rate, or
(ii) the sum of (A) the Base Rate in effect from time to time plus (B) three
percent (3%) per annum. The obligations of Borrower under this paragraph will
continue until all Letters of Credit have expired and all reimbursement
obligations with respect thereto have been paid in full by Borrower and until
all other Obligations shall have been paid in full.
Borrower shall be obligated to reimburse each Issuer upon demand for all
amounts paid under Letters of Credit as set forth in the immediately preceding
paragraph hereof; provided, however, if Borrower for any reason fails to
-------- -------
reimburse such Issuer in full upon demand, Banks shall reimburse such Issuer in
accordance with each Banks' Commitment Percentage for amounts due and unpaid
from Borrower as set forth herein below; provided, however, that no such
-------- -------
reimbursement made by Banks shall discharge Borrower's obligations to reimburse
Issuer. All reimbursement amounts payable by any Bank under this Section 2.1(b)
--------------
shall include interest thereon at the Base Rate, from the date of the payment of
such amounts by any Issuer to the date of reimbursement by such Bank. No Bank
shall be liable for the performance or nonperformance of the obligations of any
other Bank under this paragraph. The reimbursement obligations of Banks under
this paragraph shall continue after the Termination Date and shall survive
termination of this Agreement and the other Loan Papers.
Upon the occurrence of any Event of Default, Borrower shall, on the next
succeeding Domestic Business Day, deposit with Agent such funds as Agent may
request, up to a maximum amount equal to the aggregate existing Letter of Credit
Exposure of all Banks. Any funds so deposited shall be held by Agent for the
ratable benefit of all Banks as security for the Loan, and Borrower will, in
connection therewith, execute and deliver such security agreements in form and
substance satisfactory to Agent which it may, in its discretion, require. As
drafts or demands for payment are presented under any Letter of Credit, Agent
shall apply such funds to satisfy such drafts or demands. When all Letters of
Credit have expired and the Obligations have been repaid in full (and no Bank
has any obligation to make further Advances or issue Letters of Credit
hereunder) or such Event of Default has been cured, Agent shall release to
Borrower any remaining funds deposited under this Section 2.1(b).
--------------
Whenever Borrower is required to make deposits under this Section 2.1(b)
--------------
and fails to do so on the day such deposit is due, Agent or any Bank may,
without notice to Borrower, make such deposit (whether by transfers from other
accounts maintained with any Bank or otherwise) using any funds then available
to any Bank of Borrower, any guarantor, or any other Person liable for all or
any part of the Obligations.
BORROWER SHALL INDEMNIFY AND HOLD EACH ISSUER, AGENT AND EACH BANK, AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, REPRESENTATIVES AND EMPLOYEES HARMLESS
FROM LOSS FOR ANY CLAIM, DEMAND OR LIABILITY WHICH MAY BE ASSERTED AGAINST ANY
OR SUCH INDEMNIFIED PARTY IN CONNECTION WITH
-18-
ACTIONS TAKEN UNDER LETTERS OF CREDIT OR IN CONNECTION THEREWITH (INCLUDING
LOSSES RESULTING FROM THE NEGLIGENCE OF SUCH INDEMNIFIED PARTY), AND SHALL PAY
EACH INDEMNIFIED PARTY FOR REASONABLE FEES OF ATTORNEYS AND LEGAL COSTS PAID OR
INCURRED BY EACH INDEMNIFIED PARTY IN CONNECTION WITH ANY MATTER RELATED TO
LETTERS OF CREDIT, EXCEPT FOR LOSSES AND LIABILITIES INCURRED AS A RESULT OF THE
GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY; IT BEING THE
INTENTION HEREBY THAT EACH SUCH INDEMNIFIED PARTY SHALL BE INDEMNIFIED FOR THE
CONSEQUENCES OF ITS OWN ORDINARY NEGLIGENCE. IF BORROWER FOR ANY REASON FAILS TO
INDEMNIFY OR PAY SUCH INDEMNIFIED PARTY AS SET FORTH HEREIN IN FULL, BANKS SHALL
INDEMNIFY AND PAY SUCH INDEMNIFIED PARTY UPON DEMAND, IN ACCORDANCE WITH EACH
BANK'S COMMITMENT PERCENTAGE OF SUCH AMOUNTS DUE AND UNPAID FROM BORROWER. THE
PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.
Neither Agent nor any Issuer makes any representation or warranty, and
neither assumes any responsibility with respect to the validity, legality,
sufficiency or enforceability of any letter of credit application or any
document relative thereto or to the collectibility thereunder. Neither Agent
nor any Issuer assumes any responsibility for the financial condition of
Borrower or any Subsidiary of Borrower or for the performance of any obligation
of Borrower or any Subsidiary of Borrower. Agent and each Issuer may use its
discretion with respect to exercising or refraining from exercising any rights
which may be vested in it, or taking or refraining from taking any action which
it may be entitled to take or assert with respect to any Letter of Credit or any
letter of credit application. Furthermore, except as set forth herein, neither
Agent nor any Issuer shall be under any liability to any Bank, with respect to
anything Agent or any Issuer may do or refrain from doing in the exercise of its
judgment, the sole liability and responsibility of Agent and each Issuer to the
other Banks being to handle each Bank's share on as favorable a basis as Agent
or any Issuer handles its own share. Neither Agent nor any Issuer shall have
any duties or responsibilities except those expressly set forth in the Loan
Papers and those duties and liabilities shall be subject to the limitations and
qualifications set forth therein. FURTHERMORE, NEITHER AGENT, NOR ISSUER, NOR
ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, OR EMPLOYEES SHALL BE LIABLE FOR
ANY ACTION TAKEN OR OMITTED (WHETHER OR NOT SUCH ACTION TAKEN OR OMITTED IS
EXPRESSLY SET FORTH IN THIS SECTION 2.1(B)) UNDER OR IN CONNECTION WITH THIS
--------------
SECTION 2.1(B) OR UNDER ANY OTHER INSTRUMENT OR DOCUMENT IN CONNECTION WITH THIS
--------------
SECTION 2.1(B), INCLUDING THEIR OWN NEGLIGENCE, EXCEPT FOR GROSS NEGLIGENCE OR
--------------
WILLFUL MISCONDUCT. Neither Agent nor Issuer shall incur any liability to any
Bank, Borrower, any Subsidiary of Borrower or any Affiliate of any Bank,
Borrower or any Subsidiary of Borrower in acting upon any notice, document,
order, consent, certificate, warrant or other instrument reasonably believed by
Agent or Issuer to be genuine or authentic and to be signed by the proper party.
(c) No Bank will be obligated to lend to Borrower or incur Letter of
Credit Exposure, and Borrower shall not be entitled to borrow any amount or
obtain Letters of Credit hereunder in an amount which would cause the
Outstanding Credit to exceed the Borrowing Base then in effect under Article
-------
III. Nothing in this Section 2.1(c) shall be deemed to limit any Bank's
--------------
obligation to fund its Commitment Percentage of any Base Rate Borrowing made as
a result of the drawing under any Letter of Credit.
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SECTION 2.2. Method of Borrowing (including Refunding Borrowings). (a)
----------------------------------------------------
Except as excused pursuant to Section 6.2 with respect to certain Refunding
-----------
Borrowings which are Base Rate Borrowings, Borrower shall give Agent notice (a
"Notice of Borrowing") prior to 12:00 noon (Dallas, Texas time) (i) at least
--------------------
one (1) Domestic Business Day before the day of any requested Base Rate
Borrowing, and (ii) at least three (3) Eurodollar Business Days before the day
of any requested Eurodollar Borrowing. Each Notice of Borrowing shall be
substantially in the form of Exhibit A attached hereto, and shall specify:
---------
(i) the date of such Borrowing, which shall be a Domestic Business Day
in the case of a Base Rate Borrowing or a Eurodollar Business Day in
the case of a Eurodollar Borrowing;
(ii) the aggregate amount of such Borrowing; and
(iii) whether the Advances comprising such Borrowing are to be Base Rate
Advances or Eurodollar Advances.
(b) Upon receipt of a Notice of Borrowing, Agent shall promptly notify
each Bank of the contents thereof and of such Bank's ratable share of the
Borrowing requested therein, and such Notice of Borrowing shall not thereafter
be revocable by Borrower.
(c) Not later than 12:00 noon (Dallas, Texas time) on the date of each
Borrowing, each Bank shall make available its ratable share of such Borrowing
(except any portion thereof which is made up of Refunding Advances), in Federal
or other funds immediately available in Dallas, Texas to Agent at its address
referred to in Section 13.1. Notwithstanding the foregoing, if Borrower
------------
delivers to Agent a Notice of Borrowing prior to 10:00 a.m. (Dallas, Texas time)
on a Domestic Business Day requesting a Base Rate Borrowing on such day, each
Bank shall use its best efforts to make available to Agent its ratable share of
such Borrowing by 1:00 p.m. (Dallas, Texas time) on the same day. Unless Agent
determines that any applicable condition specified in Section 6.2 has not been
-----------
satisfied, Agent will make the funds so received from Banks available to
Borrower at Agent's aforesaid address.
SECTION 2.3. Method of Obtaining Letters of Credit. (a) Borrower shall
-------------------------------------
give Agent notice (a "Request for Letter of Credit") prior to 12:00 noon
----------------------------
(Dallas, Texas time) at least three (3) Domestic Business Days before the date
Borrower requests that a Letter of Credit be issued. Each Request for Letter of
Credit shall be substantially in the form of Exhibit B attached hereto and shall
---------
be accompanied by the executed, complete letter of credit application and
agreement referenced in Section 2.1(b).
--------------
(b) Upon receipt of a Request for Letter of Credit, Agent shall promptly
notify each Bank of the contents thereof and of the material provisions of the
related letter of credit application and agreement. Agent shall provide a copy
of the Request for Letter of Credit and the original counterpart of the letter
of credit application and agreement to the proposed Issuer.
(c) Provided that the proposed Issuer agrees to issue the requested Letter
of Credit, and provided further that Agent has not determined that a condition
to such issuance referred to in Section 6.2 has not been satisfied, not later
-----------
than 12:00 noon (Dallas, Texas time) on the date Borrower requests that such
Letter of Credit be issued, Issuer shall issue such Letter of Credit and deliver
the same to the beneficiary
-20-
thereof and shall promptly thereafter deliver the notice to each other Bank
referenced in Section 2.1(b) with respect to such Letter of Credit.
--------------
SECTION 2.4. Notes. Each Bank's Commitment Percentage of the Loan shall
-----
be evidenced by a single Note payable to the order of such Bank in an amount
equal to such Bank's Commitment.
SECTION 2.5. Refunding of Eurodollar Advances. Upon the expiration of
--------------------------------
each Interest Period, each Eurodollar Advance subject to such Interest Period
shall, subject to Sections 2.2 and 6.2, be refinanced pursuant to a Refunding
------------ ---
Borrowing; provided, that, no Refunding Borrowing shall be made with respect to
-------- ----
any Advance upon the expiration of the Interest Period applicable thereto which
is required to be repaid on such date pursuant to Section 3.3. The procedure
-----------
contemplated by this Section 2.5 for refinancing Advances on the expiration of
-----------
the Interest Period applicable thereto with Refunding Borrowings is solely for
the purpose of determining the interest rate applicable to Advances hereunder,
and no repayment or new advance of funds will be deemed to occur as a result of
the expiration of an Interest Period and the refinancing of the Advances subject
thereto with a Refunding Borrowing.
SECTION 2.6. Interest Rates. (a) Subject to Section 4.4, each Base Rate
-------------- -----------
Advance shall bear interest on the outstanding principal balance thereof at a
rate per annum equal to the sum of the Applicable Margin plus the Base Rate in
effect from day to day, each change in the Base Rate to be effective without
notice to Borrower on the effective date of each such change; provided that, in
-------- ----
no event shall the rate charged hereunder or under the Notes exceed the Maximum
Lawful Rate. Interest on each Base Rate Advance shall be payable each March 31,
June 30, September 30 and December 31 and on the Termination Date.
(b) Subject to Section 4.4, each Eurodollar Advance shall bear
-----------
interest on the outstanding principal amount thereof for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the Applicable
Margin plus the applicable Adjusted Eurodollar Rate; provided that, in no event
-------- ----
shall the rate charged hereunder or under the Notes exceed the Maximum Lawful
Rate. Interest on each Eurodollar Advance having an Interest Period of one (1),
two (2) or three (3) months shall be payable on the last day of the Interest
Period applicable thereto. Interest on each Eurodollar Advance having an
Interest Period of six (6) months shall be payable on the last day of the
Interest Period applicable thereto and on each June 30, September 30, December
31 and March 31 during such Interest Period.
(c) Agent shall determine each interest rate applicable to the Loan
(or any portion thereof) in accordance with the terms hereof. Agent shall
promptly notify Borrower and Banks by telex or cable or telecopy of each rate of
interest so determined, and its determination thereof shall be conclusive in the
absence of manifest error.
(d) Notwithstanding the foregoing, if at any time the rate of interest
calculated with reference to the Base Rate or the Eurodollar Rate hereunder (the
"Contract Rate") is limited to the Maximum Lawful Rate, any subsequent
-------------
reductions in the Contract Rate shall not reduce the rate of interest on the
Loan (or any portion thereof) below the Maximum Lawful Rate until the total
amount of interest accrued equals the amount of interest which would have
accrued if the Contract Rate had at all times been in effect. In the event that
at maturity (stated or by acceleration), or at final payment of any Note, the
total amount of interest paid or accrued on such Note is less than the amount of
interest which would have accrued if the Contract Rate had at all times been in
effect with respect thereto, then at such time, to the
-21-
extent such payment would not result in a violation of a Law, Borrower shall be
obligated to pay to the holder of such Note an amount equal to the difference
between (i) the lesser of (a) the amount of interest which would have accrued if
the Contract Rate had at all times been in effect, and (b) the amount of
interest which would have accrued if the Maximum Lawful Rate had at all times
been in effect, and (ii) the amount of interest actually paid on such Note.
SECTION 2.7. Mandatory Termination of Commitments. The Commitments shall
------------------------------------
terminate on the Termination Date, at which time the Loan (together with all
accrued interest thereon) shall be due and payable in full.
SECTION 2.8. Voluntary Reduction of Commitments. Borrower may, by
-----------------------------------
notice to Agent one (1) Domestic Business Day prior to the effective date of any
such reduction, reduce the Total Commitment (and thereby reduce the Commitment
of each Bank ratably) in amounts not less than $1,000,000 or any larger multiple
of $100,000. On the effective date of any such reduction, Borrower shall, to
the extent required as a result of such reduction, make a principal payment on
the Loan (together with accrued interest thereon) in an amount sufficient to
cause the principal balance of the Loan to be equal to or less than the Total
Commitment as thereby reduced. Notwithstanding the foregoing, Borrower shall
not be permitted to voluntarily reduce the Total Commitment to an amount less
than the aggregate Letter of Credit Exposure of all Banks.
SECTION 2.9. Commitment Fee. On the Termination Date and on the last day
--------------
of each June, September, December and March prior to the Termination Date,
commencing on March 31, 1998, Borrower shall pay to Agent for the ratable
benefit of each Bank, a commitment fee equal to the Commitment Fee Percentage in
effect from day to day (computed on the basis of actual days elapsed and as if
each calendar year consisted of 360 days) on the average daily Unused
Availability for the calendar quarter ending on such date.
SECTION 2.10. Agency Fee. Borrower shall pay to Agent such fees and
----------
other amounts as Borrower shall be required to pay to Agent from time to time
pursuant to any separate agreement between Borrower and Agent. Such fees and
other amounts shall be retained by Agent, and no Bank (other than Agent) shall
have any interest therein.
ARTICLE III
BORROWING BASE
SECTION 3.1. Reserve Report; Proposed Borrowing Base. As soon as
---------------------------------------
available and in any event by February 20 and August 20 of each year, Borrower
shall deliver to each Bank a Reserve Report prepared as of the immediately
preceding January 1 and July 1, respectively. Simultaneously with each delivery
of such Reserve Report, Borrower shall notify each Bank of the Borrowing Base
requested by Borrower to become effective on the next Determination Date.
SECTION 3.2. Determination of Borrowing Base. Based in part on the
-------------------------------
Reserve Reports delivered pursuant to Section 3.1, Banks shall determine the
-----------
Borrowing Base to become effective on the next succeeding Determination Date in
accordance with the procedure set forth in Section 3.5 hereof; provided,
--------
-22-
that, in no event shall the Borrowing Base (a) exceed the Borrowing Base
----
requested by Borrower pursuant to Section 3.1, or (b) exceed the Maximum
-----------
Borrowing Base at any time on or after the Conversion Date. Subject to the
foregoing and to Banks' consistent application of their respective standards for
similar credits (which may vary from Bank to Bank), the Borrowing Base shall be
determined by Banks in their sole discretion, but in accordance with the
procedures set forth in Section 3.5 hereof. Without limiting the discretion of
-----------
Banks in determining the Borrowing Base, Borrower acknowledges and agrees that,
subject as aforesaid, Banks (i) may make such assumptions regarding appropriate
existing and projected pricing for hydrocarbons as they deem appropriate in
their sole discretion, (ii) may make such assumptions regarding projected rates
and quantities of future production of hydrocarbons from the Mineral Interests
owned by Borrower and its Subsidiaries as they deem appropriate in their sole
discretion, (iii) may consider the projected cash requirements of Borrower and
its Subsidiaries, (iv) are not required to consider any asset other than Mineral
Interests, (v) will give no consideration to any asset owned by a Person other
than Borrower and Subsidiary Guarantors, and (vi) may make such other
assumptions, considerations and exclusions as Banks deem appropriate in the
exercise of their sole discretion. Agent shall notify Borrower of the Borrowing
Base to become effective on each Determination Date no later than 2:00 p.m.,
Dallas, Texas time on such Determination Date.
SECTION 3.3. Borrowing Base Deficiency. (a) If, on any Determination
-------------------------
Date, a Borrowing Base Deficiency exists as a result of a redetermination of the
Borrowing Base on such date, Borrower shall either (i) on or before the
thirtieth (30th) day following such Determination Date, make a prepayment of
principal on the Loan in an amount equal to the amount of such Borrowing Base
Deficiency, or (ii) make six (6) equal consecutive monthly prepayments of
principal on the Loan, each of which shall be in the amount of one sixth
(1/6th) of such Borrowing Base Deficiency. The first of such six (6)
prepayments shall be due on the thirtieth (30th) day following such
Determination Date, and each subsequent prepayment shall be due on the same day
of each month thereafter (or if there is no corresponding day of any subsequent
month, then on the last day of such month).
(b) If a Borrowing Base Deficiency occurs or an existing Borrowing Base
Deficiency increases as a result of any quarterly reduction of the Maximum
Borrowing Base, then, on the date of such quarterly reduction in the Maximum
Borrowing Base, Borrower shall make a prepayment of principal on the Loan in
the amount of such Borrowing Base Deficiency. For purposes of this Section
-------
3.3(b) and Section 3.3(a) above, if (i) a Determination Date is also the date of
------ --------------
any quarterly reduction in the Maximum Borrowing Base, and (ii) the Borrowing
Base in effect immediately prior to such Determination Date is higher than the
amount of the Maximum Borrowing Base as reduced on such Determination Date, then
the reduction in the Borrowing Base which becomes effective on such
Determination Date will be deemed to have resulted from the reduction in the
Maximum Borrowing Base to the extent of the difference between the Borrowing
Base in effect immediately prior to such Determination Date and the Maximum
Borrowing Base in effect as reduced on such Determination Date.
SECTION 3.4. Initial Borrowing Base. Notwithstanding anything to the
----------------------
contrary contained herein, the Borrowing Base shall be $80,000,000 for the
period commencing on the date hereof and continuing until the first
Determination Date after the Closing Date.
SECTION 3.5. Procedure for Determining Borrowing Base. Following
----------------------------------------
delivery of each Reserve Report required to be delivered to Banks pursuant to
Section 3.1, Banks shall attempt to mutually agree among themselves on the
-----------
Borrowing Base to become effective on the next Determination Date. In the
-23-
event (a) such Borrowing Base represents an increase from the Borrowing Base in
effect prior to such Determination Date, such Borrowing Base shall be approved
by all Banks, and (b) such Borrowing Base represents a decrease in the Borrowing
Base in effect prior to such Determination Date, or a reaffirmation of such
prior Borrowing Base, such Borrowing Base shall be approved by Banks holding
seventy-five percent (75%) of the Total Commitment (whenever such decision is
reached).
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.1. Delivery and Endorsement of Notes. Simultaneously with the
---------------------------------
execution of this Agreement, Agent shall deliver to each Bank the Notes payable
to such Bank referenced in Section 6.1(a). Each Bank may endorse (and prior to
--------------
any transfer of its Note shall endorse) on the schedules forming a part thereof
appropriate notations to evidence the date and amount of each Advance made by
it, the Interest Period applicable thereto, and the date and amount of each
payment of principal made by Borrower with respect thereto; provided that, the
-------- ----
failure by any Bank to so endorse any Note held by it shall not affect the
liability of the maker of such Note for the repayment of all amounts outstanding
under such Note together with interest thereon. Each Bank is hereby irrevocably
authorized by Borrower to endorse its Notes and to attach to and make a part of
any Note a continuation of any such schedule as required.
SECTION 4.2. General Provisions as to Payments. (a) Each payment of
---------------------------------
principal of, and interest on, the Loan and all fees payable hereunder shall be
paid not later than 12:00 noon (Dallas, Texas time) on the date when due, in
Federal or other immediately available funds to Agent at its address referred to
in Section 13.1.
------------
(b) Prior to the occurrence of an Event of Default, all principal
payments received by Banks shall be applied, first, to Advances with Interest
Periods ending on the date of such payment, then to Base Rate Advances, then to
Eurodollar Advances (as Borrower shall elect but in the absence of such
election, in such order as Agent shall elect), next maturing until such
principal payment is fully applied, with such adjustments in such order of
payment as Agent shall specify in order that each Bank receives its ratable
share of each such payment.
(c) After the occurrence of an Event of Default, all amounts collected
or received by Agent or any Bank shall be applied first to the payment of all
proper costs incurred by Agent in connection with the collection thereof
(including reasonable expenses and disbursements of Agent), second to the
payment of all proper costs incurred by Banks in connection with the collection
thereof (including reasonable expenses and disbursements of Banks, but only to
the extent Borrower is obligated therefor under the Loan Papers), third to the
reimbursement of any advances made by Banks to effect performance of any
unperformed covenants of Borrower under any of the Loan Papers, fourth to the
payment of any unpaid agency fees required pursuant to Section 2.10, fifth to
------------
the payment of any unpaid interest on the Loan or any unpaid fees required
pursuant to Sections 2.1(b) and 2.9, and sixth, to payment of the Loan in the
--------------- ---
manner provided in Section 4.2(b).
--------------
SECTION 4.3. Computation of Interest. Interest payable on the Loan
-----------------------
hereunder shall be computed based on the number of actual days elapsed assuming
that each calendar year consisted of 360
-24-
days. The annual rates of interest to which rates determined assuming a calendar
year of 360 days are equivalent, are the rates so determined multiplied by the
actual number of days in a period of one (1) year commencing on the first day of
the period for which such interest is payable and divided by 360.
SECTION 4.4. Overdue Principal and Interest. Any overdue principal of
------------------------------
and, to the extent permitted by Law, overdue interest on the Loan shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to the sum of three percent (3%) plus the Base Rate.
SECTION 4.5. Limitation on Number of Eurodollar Advances. Unless
-------------------------------------------
otherwise agreed by Agent with the consent of Majority Banks, there may be no
more than six (6) Eurodollar Borrowings outstanding at any time in favor of each
Bank.
ARTICLE V
CHANGE IN CIRCUMSTANCES
SECTION 5.1. Increased Cost and Reduced Return.
---------------------------------
(a) If, after the date hereof, the adoption of any applicable Law, rule, or
regulation, or any change in any applicable Law, rule, or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive adopted after the date hereof (whether or
not having the force of Law) of any such Governmental Authority, central bank,
or comparable agency:
(i) shall subject such Bank (or its Applicable Lending Office) to any
Tax, duty, or other charge with respect to any Eurodollar Advances, its
Note, or its obligation to make Eurodollar Advances, or change the basis of
taxation of any amounts payable to such Bank (or its Applicable Lending
Office) under this Agreement or its Note in respect of any Eurodollar
Advances (other than Taxes imposed on the overall net income of such Bank
by the jurisdiction in which such Bank has its principal office or such
Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve, special
deposit, assessment, or similar requirement (other than the Reserve
Requirement utilized in the determination of the Adjusted Eurodollar Rate)
relating to any extensions of credit or other assets of, or any deposits
with or other liabilities or commitments of, such Bank (or its Applicable
Lending Office), including the Commitment of such Bank hereunder; or
(iii) shall impose on such Bank (or its Applicable Lending Office) or
on the London interbank market any other condition affecting this Agreement
or its Note or any of such extensions of credit or liabilities or
commitments;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Advances or to reduce any sum
-25-
received or receivable by such Bank (or its Applicable Lending Office) under
this Agreement or its Note with respect to any Eurodollar Advances, then
Borrower shall pay to such Bank on demand such amount or amounts as will
compensate such Bank for such increased cost or reduction. If any Bank requests
compensation by Borrower under this Section 5.1(a), Borrower may, by notice to
--------------
such Bank (with a copy to Agent), suspend the obligation of such Bank to make or
Continue Advances of the Type with respect to which such compensation is
requested, or to Convert Advances of any other Type into Advances of such Type,
until the event or condition giving rise to such request ceases to be in effect
(in which case the provisions of Section 5.4 shall be applicable); provided that
----------- --------
such suspension shall not affect the right of such Bank to receive the
compensation so requested.
(b) If, after the date hereof, any Bank shall have determined that the
adoption of any applicable Law, rule, or regulation regarding capital adequacy
or any change therein or in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or directive adopted
after the date hereof regarding capital adequacy (whether or not having the
force of Law) of any such Governmental Authority, central bank, or comparable
agency, has or would have the effect of reducing the rate of return on the
capital of such Bank or any corporation controlling such Bank as a consequence
of such Bank's obligations hereunder to a level below that which such Bank or
such corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand Borrower shall pay to such Bank
such additional amount or amounts as will compensate such Bank for such
reduction.
(c) Each Bank shall promptly notify Borrower and 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 5.1 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 it. Any Bank claiming compensation under this
Section 5.1 shall furnish to Borrower and Agent a statement setting forth the
-----------
additional amount or amounts to be paid to it hereunder which shall be
conclusive in the absence of manifest error. In determining such amount, such
Bank may use any reasonable averaging and attribution methods.
SECTION 5.2. Limitation on Types of Advances. If on or prior to the
-------------------------------
first day of any Interest Period for any Eurodollar Advance:
(a) Agent determines (which determination shall be conclusive) that by
reason of circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for such Interest
Period; or
(b) Majority Banks determine (which determination shall be conclusive) and
notify Agent that the Adjusted Eurodollar Rate will not adequately and fairly
reflect the cost to Banks of funding Eurodollar Advances for such Interest
Period;
then Agent shall give Borrower prompt notice thereof specifying the relevant
Type of Advances and the relevant amounts or periods, and so long as such
condition remains in effect, Banks shall be under no obligation to make
additional Advances of such Type, Continue Advances of such Type, or to Convert
Advances of any other Type into Advances of such Type and Borrower shall, on the
last day(s) of the then
-26-
current Interest Period(s) for the outstanding Advances of the affected Type,
either prepay such Advances or Convert such Advances into another Type of
Advance in accordance with the terms of this Agreement.
SECTION 5.3. Illegality. Notwithstanding any other provision of this
----------
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to make, maintain, or fund Eurodollar Advances hereunder, then
such Bank shall promptly notify Borrower thereof and such Bank's obligation to
make or Continue Eurodollar Advances and to Convert other Types of Advances into
Eurodollar Advances shall be suspended until such time as such Bank may again
make, maintain, and fund Eurodollar Advances (in which case the provisions of
Section 5.4 shall be applicable).
-----------
SECTION 5.4. Treatment of Advances. If the obligation of any Bank to
---------------------
make a Eurodollar Advance or to Continue, or to Convert Advances of any other
Type into, Eurodollar Advances shall be suspended pursuant to Section 5.1 or 5.3
----------- ---
hereof, such Bank's Eurodollar Advances shall be automatically Converted into
Base Rate Advances on the last day(s) of the then current Interest Period(s) for
Eurodollar Advances (or, in the case of a Conversion required by Section 5.3
-----------
hereof, on such earlier date as such Bank may specify to Borrower with a copy to
Agent) and, unless and until such Bank gives notice as provided below that the
circumstances specified in Section 5.1 or 5.3 hereof that gave rise to such
----------- ---
Conversion no longer exist:
(a) to the extent that such Bank's Eurodollar Advances have been so
Converted, all payments and prepayments of principal that would otherwise be
applied to such Bank's Eurodollar Advances shall be applied instead to its Base
Rate Advances; and
(b) all Advances that would otherwise be made or Continued by such Bank as
Eurodollar Advances shall be made or Continued instead as Base Rate Advances,
and all Advances of such Bank that would otherwise be Converted into Eurodollar
Advances shall be Converted instead into (or shall remain as) Base Rate
Advances.
If such Bank gives notice to Borrower (with a copy to Agent) that the
circumstances specified in Section 5.1 or 5.3 hereof that gave rise to the
----------- ---
Conversion of such Bank's Eurodollar Advances pursuant to this Section 5.4 no
-----------
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Advances made by other Banks are
outstanding, such Bank's Base Rate Advances shall be automatically Converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Advances to the extent necessary so that, after giving effect
thereto, all Advances held by Banks holding Eurodollar Advances are held pro
rata (as to principal amounts, Types, and Interest Periods) in accordance with
their respective Commitments.
SECTION 5.5. Compensation. Upon the request of any Bank, Borrower shall
------------
pay to such Bank such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost, or expense
incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Advance for any
reason (including, without limitation, the acceleration of the Loan pursuant to
Section 11.1) on a date other than the last day of the Interest Period for such
------------
Advance; or
-27-
(b) any failure by Borrower for any reason (including, without limitation,
the failure of any condition precedent specified in Article VI to be satisfied)
----------
to borrow, Convert, Continue, or prepay a Eurodollar Advance on the date for
such Borrowing, Conversion, Continuation, or prepayment specified in the
relevant Request for Borrowing, or notice of prepayment, Continuation, or
Conversion under this Agreement.
SECTION 5.6 Taxes. (a) Any and all payments by Borrower to or for the
-----
account of any Bank or Agent hereunder or under any other Loan Paper shall be
made free and clear of and without deduction for any and all present or future
Taxes, and all liabilities with respect thereto, excluding, in the case of each
---------
Bank and Agent, Taxes imposed on its income, and franchise Taxes imposed on it,
by the jurisdiction under the Laws of which such Bank (or its Applicable Lending
Office) or Agent (as the case may be) is organized or any political subdivision
thereof. If Borrower shall be required by Law to deduct any Taxes from or in
respect of any sum payable under this Agreement or any other Loan Paper to any
Bank or Agent, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 5.6) such Bank or Agent receives an amount equal
-----------
to the sum it would have received had no such deductions been made, (ii)
Borrower shall make such deductions, (iii) Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable Law, and (iv) Borrower shall furnish to Agent, at its address
set forth on the signature pages hereto, evidence of payment thereof.
(b) In addition, Borrower agrees to pay any and all present or future stamp
or documentary Taxes and any other excise or property Taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Loan Paper or from the execution or delivery of, or otherwise with respect
to, this Agreement or any other Loan Paper (hereinafter referred to as "Other
-----
Taxes").
-----
(c) Borrower agrees to indemnify each Bank and Agent for the full amount of
Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this Section
-------
5.6) paid by such Bank or Agent (as the case may be) and any liability
---
(including penalties, interest, and expenses) arising therefrom or with respect
thereto.
(d) Each Bank organized under the Laws of a jurisdiction outside the United
States, on or prior to the date of its execution and delivery of this Agreement
in the case of each Bank listed on the signature pages hereto and on or prior to
the date on which it becomes a Bank in the case of each other Bank, and from
time to time thereafter if requested in writing by Borrower or Agent (but only
so long as such Bank remains lawfully able to do so), shall provide Borrower and
Agent with (i) Internal Revenue Service Form 1001 or 4224, as appropriate, or
any successor form prescribed by the Internal Revenue Service, certifying that
such Bank is entitled to benefits under an income Tax treaty to which the United
States is a party which reduces the rate of withholding Tax on payments of
interest or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States, (ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any
successor form prescribed by the Internal Revenue Service, and (iii) any other
form or certificate required by any taxing authority (including any certificate
required by Sections 871(h) and 881(c) of the Code), certifying that such Bank
is entitled to an exemption from or a reduced rate of Tax on payments pursuant
to this Agreement or any of the other Loan Papers.
-28-
(e) For any period with respect to which a Bank has failed to provide
Borrower and Agent with the appropriate form pursuant to Section 5.6(d) (unless
--------------
such failure is due to a change in treaty, Law, or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Bank shall not be entitled to indemnification under Section 5.6(a) or
--------------
5.6(b) with respect to Taxes imposed by the United States; provided, however,
------ -------- -------
that should a Bank, which is otherwise exempt from or subject to a reduced rate
of withholding Tax, become subject to Taxes because of its failure to deliver a
form required hereunder, Borrower shall take such steps as such Bank shall
reasonably request to assist such Bank to recover such Taxes.
(f) If Borrower is required to pay additional amounts to or for the account
of any Bank pursuant to this Section 5.6, then such Bank will agree to use
-----------
reasonable efforts to change the jurisdiction of its Applicable Lending Office
so as to eliminate or reduce any such additional payment which may thereafter
accrue if such change, in the judgment of such Bank, is not otherwise
disadvantageous to such Bank.
(g) Within thirty (30) days after the date of any payment of Taxes,
Borrower shall furnish to Agent evidence of such payment.
(h) Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this Section
-------
5.6 shall survive the termination of the Commitments and the payment in full of
---
the Notes.
SECTION 5.7. Discretion of Banks as to Manner of Funding.
-------------------------------------------
Notwithstanding any provisions of this Agreement to the contrary, each Bank
shall be entitled to fund and maintain its funding of all or any part of its
Advances in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if such
Bank had actually funded and maintained each Eurodollar Advance during the
Interest Period for such Eurodollar Advance through the purchase of deposits in
the London interbank market having a maturity corresponding to the last day of
such Interest Period and bearing an interest rate equal to the Eurodollar Rate
for such Interest Period.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Initial Borrowing and Participation in Letter
-----------------------------------------------------------
of Credit Exposure. The obligation of each Bank to make an Advance in
------------------
connection with the initial Borrowing under the Loan and to participate in
Letter of Credit Exposure hereunder is subject to the satisfaction of each of
the following conditions:
(a) Closing Deliveries. Agent shall have received each of the
------------------
following documents, instruments and agreements, each of which shall be in date,
form and substance and executed in such counterparts as shall be acceptable to
Agent:
(i) a Note payable to the order of each Bank in the amount such
Bank's Commitment, duly executed by Borrower;
-29-
(ii) a Subsidiary Guaranty, duly executed by each Initial Subsidiary
Guarantor;
(iii) copies of the certificate of incorporation, bylaws, partnership
agreement, regulations, operating agreements, certificate of limited partnership
or other comparable organizational documents of Borrower and each Initial
Subsidiary Guarantor, accompanied by a certificate of an Authorized Officer of
each such Person certifying that such copies are true and correct copies of such
documents and that such documents have not been amended, modified or revoked in
any respect and are in full force and effect as of the date of such certificate;
(iv) certain certificates and other documents issued by appropriate
Governmental Authorities of such jurisdictions as Agent has requested, relating
to the existence of Borrower and each Initial Subsidiary Guarantor and to the
effect that Borrower and each Initial Subsidiary Guarantor is in good standing
with respect to the payment of franchise and similar Taxes and is duly qualified
to transact business in such jurisdictions;
(v) a certificate of incumbency of all officers of Borrower and
each Initial Subsidiary Guarantor who will be authorized to execute or attest to
any Loan Paper, executed by an Authorized Officer of Borrower or such
Subsidiaries (as applicable);
(vi) copies of resolutions approving the Loan Papers and authorizing
the transactions contemplated by this Agreement and the other Loan Papers, duly
adopted by the Boards of Directors of Borrower and each Initial Subsidiary
Guarantor accompanied by certificates of an Authorized Officer of Borrower and
each Initial Subsidiary Guarantor, that such copies are true and correct copies
of resolutions duly adopted at meetings of or (if permitted by applicable Law
and, if required by such Law, by the Bylaws of Borrower and each Initial
Subsidiary Guarantor, [as applicable]) by the unanimous written consent of the
Boards of Directors of Borrower and each Initial Subsidiary Guarantor, and that
such resolutions have not been amended, modified, or revoked in any respect, and
are in full force and effect as of the date hereof;
(vii) an opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel for Borrower and
each Initial Subsidiary Guarantor favorably opining as to the enforceability of
each of the Loan Papers and otherwise in form and substance satisfactory to
Agent;
(viii) a certificate signed by an Authorized Officer of Borrower
stating that (i) the representations and warranties contained in this Agreement
are true and correct in all material respects, (ii) no Default has occurred and
none is in existence, and (iii) all conditions set forth in Section 6.2 have
-----------
been satisfied; and
(ix) such other documents, instruments, agreements and actions as may
reasonably be required by Agent.
(b) Refinancing of Existing Credit Agreement. Borrower shall have
----------------------------------------
refinanced in full (or simultaneously with the initial Borrowing hereunder,
Borrower shall refinance in full with proceeds of a Borrowing under this
Agreement), (i) all Obligations accrued and outstanding under the Existing
Credit Agreement as of the Closing Date, including, without limitation, the
entire outstanding principal balance of the Loan made (and as defined)
thereunder, (ii) all accrued but unpaid interest in connection therewith,
-30-
(iii) all accrued but unpaid commitment, borrowing base increase, letter of
credit, agency and other fees thereunder, and (iv) all amounts payable under
Section 5.1 of the Existing Credit Agreement as a result of the prepayment of
-----------
the other Obligations thereunder. Contemporaneous with such refinancing, the
Existing Credit Agreement shall have been terminated and all obligations of
Borrower and its Subsidiaries thereunder shall have been paid and performed in
full.
(c) No Material Adverse Change. In the sole discretion of each Bank,
--------------------------
since June 30, 1997, no Material Adverse Change shall have occurred.
(d) No Legal Prohibition. The transactions contemplated by this
--------------------
Agreement and the other Loan Papers shall be permitted by applicable Law and
regulation and shall not subject Agent, any Bank, Borrower or any of its
Subsidiaries to any Material Adverse Change.
(e) No Litigation. No litigation, arbitration or similar proceeding
-------------
shall be pending which calls into question the validity or enforceability of
this Agreement or the other Loan Papers.
(f) Closing Fees. Borrower shall have paid all fees and other amounts
------------
then due pursuant to Section 2.10.
------------
(g) Designated Senior Indebtedness. Borrower shall have delivered
------------------------------
written notice to the Trustee under the Subordinate Notes Indenture, specifying
that Borrower has entered into this Agreement and that the Obligations
constitute "Designated Senior Indebtedness" as defined in such Indenture.
(h) Other Matters. All matters related to this Agreement, the other
-------------
Loan Papers, Borrower and its Subsidiaries shall be acceptable to Agent and each
Bank in their sole discretion, and Borrower shall have delivered to Agent and
each Bank such evidence as they shall request to substitute any matters related
to this Agreement, the other Loan Papers, Borrower and its Subsidiaries as Agent
or any Bank shall request.
SECTION 6.2. Conditions to Each Borrowing and Participation in Letter of
-----------------------------------------------------------
Credit Exposure. The obligation of each Bank to make an Advance on each
---------------
Borrowing and to participate in Letter of Credit Exposure hereunder is subject
to the further satisfaction of each of the following conditions:
(a) timely receipt by Agent of a Notice of Borrowing or a Request for
a Letter of Credit (as applicable);
(b) unless such Borrowing is a Refunding Borrowing comprised of Base
Rate Advances, immediately before and after giving effect to such Borrowing or
issuance of such Letter of Credit, no Default shall have occurred and be
continuing and the making of any Advance in connection with such Borrowing or
the issuance of the requested Letter of Credit (as applicable) shall not cause a
Default;
(c) unless such Borrowing is a Refunding Borrowing, the
representations and warranties of Borrower contained in this Agreement shall be
true and correct in all material respects, on and as of the date of such
Borrowing or issuance of such Letter of Credit (as applicable); and
-31-
(d) the sum of the amount of the requested Borrowing or the amount of
the requested Letter of Credit plus the Outstanding Credit prior to giving
effect to such Borrowing and prior to issuance of such Letter of Credit shall
not exceed the Borrowing Base then in effect.
Each Borrowing and the issuance of each Letter of Credit hereunder shall
constitute a representation and warranty by Borrower on the date of such
Borrowing or issuance of such Letter of Credit as to the facts specified in
Sections 6.2(b) through (d). Notwithstanding the foregoing, each Bank and Agent
--------------- ---
hereby agree that if, at the expiration of any Interest Period, Borrower has not
given Agent in a timely manner either (i) a Notice of Borrowing pursuant to
which Borrower has requested a Borrowing at least in an amount sufficient to
refinance in full the Advances maturing on the expiration of such Interest
Period, or (ii) notice of its intent to repay all Advances maturing on the
expiration of such Interest Period, Borrower will be deemed to have requested a
Refunding Borrowing which shall be a Base Rate Borrowing to be made on the
expiration of such Interest Period in an amount equal to the Advances then
maturing for the purpose of refinancing all such Advances, and in such
circumstances, Borrower will not be required to satisfy the conditions precedent
to such Base Rate Borrowing set forth in Section 2.2(a) and Section 6.2(a).
-------------- --------------
SECTION 6.3. Materiality of Conditions. Each condition precedent herein
-------------------------
is material to the transactions contemplated herein, and time is of the essence
in respect of each thereof.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent and each Bank as follows:
SECTION 7.1. Existence and Power. Each of Borrower and its Subsidiaries
-------------------
(a) is duly incorporated or duly organized, as applicable, validly existing and
in good standing under the Laws of its respective jurisdiction of incorporation,
(b) has all power and all material governmental licenses, authorizations,
consents and approvals required to carry on its businesses as now conducted and
as proposed to be conducted, and (c) is duly qualified to transact business in
each jurisdiction where a failure to be so qualified could have a Material
Adverse Effect.
SECTION 7.2. Necessary Authorization; Contravention. The execution,
--------------------------------------
delivery and performance of this Agreement, the Notes and the other Loan Papers
by Borrower and each Subsidiary of Borrower are within Borrower's and each such
Subsidiary's corporate, partnership or limited liability company powers, when
executed will be duly authorized by all necessary partnership or limited
liability company action, require no action by or in respect of, or filing with,
any Governmental Authority and do not contravene, or constitute a default under,
any provision of applicable Law (including, without limitation, the Margin
Regulations) or of the certificates of incorporation, bylaws, partnership
agreement, operating agreement, regulations or comparable charter documents of
Borrower or any of its Subsidiaries or of any agreement, judgment, injunction,
order, decree or other instrument binding upon Borrower or any of its
Subsidiaries or result in the creation or imposition of any Lien on any asset of
Borrower or any of its Subsidiaries.
-32-
SECTION 7.3. Binding Effect. This Agreement constitutes a valid and
--------------
binding agreement of Borrower; the Notes and the other Loan Papers when executed
and delivered in accordance with this Agreement, will constitute valid and
binding obligations of Borrower and each of its Subsidiaries executing same; and
each Loan Paper is enforceable in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency or similar Laws
affecting creditors rights generally, or by equitable principles of general
applicability.
SECTION 7.4. Financial Information. (a) The most recent annual audited
---------------------
consolidated balance sheet of Borrower and the related consolidated statements
of operations and cash flows for the fiscal year then ended, copies of which
have been delivered to each Bank, fairly present, in conformity with GAAP, the
consolidated financial position of Borrower as of the end of such fiscal year
and its consolidated results of operations and cash flows for such fiscal year.
(b) The most recent quarterly unaudited consolidated balance sheet of
Borrower delivered to Banks, and the related unaudited consolidated statements
of operations and cash flows for the portion of Borrower's fiscal year then
ended, fairly present, in conformity with GAAP applied on a basis consistent
with the financial statements referred to in Section 7.4(a), the consolidated
--------------
financial position of Borrower as of such date and its consolidated results of
operations and cash flows for such portion of Borrower's fiscal year.
(c) Except as disclosed in writing to Banks prior to the execution
and delivery of this Agreement, since the date of the most recent quarterly
consolidated balance sheet and consolidated statements of operations and cash
flow delivered to each Bank for Borrower, there has been no Material Adverse
Change.
SECTION 7.5. Litigation. Except for matters disclosed on Schedule 1
---------- ----------
attached hereto, there is no action, suit or proceeding pending against, or to
the knowledge of Borrower, threatened against or affecting Borrower or any of
its Subsidiaries before any Governmental Authority in which there is a
reasonable possibility of an adverse decision which would have a Material
Adverse Effect, or which is reasonably expected to draw into question the
validity of the Loan Papers in any material respect.
SECTION 7.6. ERISA. Neither Borrower nor any ERISA Affiliate maintains
-----
or contributes to any Plan other than those disclosed to Agent in writing. Each
Plan maintained by Borrower or any ERISA Affiliate is in compliance in all
material respects with the applicable provisions of ERISA, the Code and any
other applicable Federal or state Law, rule or regulation. No Plan of Borrower
or any ERISA Affiliate has been terminated under section 4041(c) of ERISA nor
has any "accumulated funding deficiency" (as defined in section 412(a) of the
Code) been incurred (without regard to any waiver granted under section 412 of
the Code), nor has any funding waiver from the Internal Revenue Service been
received or requested. Neither Borrower nor any ERISA Affiliate has failed to
make any contribution or pay any amount due or owing as required by the terms of
any Plan, or by section 412 of the Code or section 302 of ERISA. There are no
pending or, to the best of Borrower's knowledge, threatened claims, lawsuits or
actions (other than routine claims for benefits in the ordinary course) asserted
or instituted against, and neither Borrower nor any ERISA Affiliate has
knowledge of any threatened litigation or claims against, the assets of any Plan
or its related trust or against any fiduciary of a Plan with respect to the
operation of such Plan that are likely to result in liability of Borrower having
a Material Adverse Effect. Neither Borrower nor any ERISA Affiliate has
incurred any material withdrawal liability (and no event has
-33-
occurred which with the giving of notice under section 4219 of ERISA would
result in such liability) under section 4201 of ERISA as a result of a complete
or partial withdrawal (within the meaning of section 4203 or 4205 or ERISA) from
a multiemployer plan, or any material liability under section 4062 of ERISA to
the PBGC or to a trustee appointed under section 4042 of ERISA. Neither
Borrower, any ERISA Affiliate nor any organization to which Borrower or any
ERISA Affiliate is a successor or parent corporation within the meaning of
section 4069(b) of ERISA, has engaged in a transaction within the meaning of
section 4069(a) of ERISA. Each Plan that is intended to be "qualified" within
the meaning of section 401(a) of the Code is, and has been during the period
from its adoption to date, so qualified, both as to form and operation and all
necessary governmental approvals, including a favorable determination as to the
qualification under the Code of such Plan and each amendment thereto, have been
or will be timely obtained. Neither Borrower nor any ERISA Affiliate has engaged
in any prohibited transactions, within the meaning of section 406 of ERISA or
section 4975 of the Code, in connection with any Plan which would result in
liability of Borrower having a Material Adverse Effect. Neither Borrower nor any
ERISA Affiliate maintains, has established or has ever participated in a
multiple employer welfare benefit arrangement within the meaning of section
3(40)(A) of ERISA.
SECTION 7.7. Taxes and Filing of Tax Returns. Borrower and each of its
-------------------------------
Subsidiaries have filed all material Tax returns required to have been filed and
have paid all Taxes shown to be due and payable on such returns, including
interest and penalties, and all other Taxes which are payable by such party, to
the extent the same have become due and payable, other than Taxes with respect
to which a failure to pay would not have a Material Adverse Effect or which are
being contested in good faith as permitted by Section 8.6. All Tax liabilities
-----------
of each of Borrower and its Subsidiaries including, without limitation, any
proposed material Tax assessment against it or any of its Subsidiaries, are
adequately provided for. Except as hereinafter disclosed in writing to Banks,
no income Tax liability of Borrower or any of its Subsidiaries has been asserted
by the Internal Revenue Service for Taxes in excess of those already paid.
SECTION 7.8. Ownership of Properties Generally. Borrower and each of its
---------------------------------
Subsidiaries have good and indefeasible fee simple or leasehold title to all
material properties and assets purported to be owned by them, including, without
limitation, all assets reflected in the balance sheets referred to in Section
-------
7.4 (a) and (b) and all assets which are used by Borrower and its Subsidiaries
-------- ---
in the operation of their respective businesses, and none of such properties or
assets is subject to any Lien other than Permitted Encumbrances.
SECTION 7.9. Mineral Interests. Borrower has good and indefeasible title
-----------------
to all Mineral Interests described in the Reserve Report other than Immaterial
Mineral Interests, free and clear of all Liens except Permitted Encumbrances.
With the exception of Immaterial Mineral Interests, all such Mineral Interests
are valid, subsisting, and in full force and effect, and all rentals, royalties,
and other amounts due and payable in respect thereof have been duly paid.
Except with respect to Immaterial Mineral Interests, but without regard to any
consent or non-consent provisions of any joint operating agreement covering any
of Borrower's Proved Mineral Interests, Borrower's share of (a) the costs for
each Proved Mineral Interest described in the Reserve Report is not greater than
the decimal fraction set forth in the Reserve Report, before and after payout,
as the case may be, and described therein by the respective designations
"working interests", "WI", "gross working interest", "GWI", or similar terms,
and (b) production from, allocated to, or attributed to each such Proved Mineral
Interest is not less than the decimal fraction set forth in the Reserve Report,
before and after payout, as the case may be, and described therein by the
designations net revenue interest, NRI, or similar terms. Except with respect
to Immaterial Mineral Interests, each well
-34-
drilled in respect of each Proved Producing Mineral Interest described in the
Reserve Report (y) is capable of, and is presently, producing hydrocarbons in
commercially profitable quantities, and Borrower is currently receiving payments
for its share of production, with no funds in respect of any thereof being
presently held in suspense, other than any such funds being held in suspense
pending delivery of appropriate division orders, and (z) has been drilled,
bottomed, completed, and operated in compliance with all applicable Laws and no
such well which is currently producing hydrocarbons is subject to any penalty in
production by reason of such well having produced in excess of its allowable
production. For purposes of this Section 7.9, "Immaterial Mineral Interests"
-----------
means Mineral Interests which, in the aggregate, do not represent more than five
percent (5%) of the discounted present value of all Mineral Interests as set
forth in the Reserve Report.
SECTION 7.10. Material Agreements. Borrower and each of its Subsidiaries
-------------------
have complied in all material respects with all obligations required to be
performed by them under all Material Agreements, except to the extent a failure
to comply could not reasonably be expected to have a Material Adverse Effect.
Borrower is not aware of any default by any other party to any Material
Agreement.
SECTION 7.11. Licenses, Permits, Etc. Borrower and each of its
----------------------
Subsidiaries possess such valid franchises, certificates of convenience and
necessity, operating rights, licenses, permits, consents, authorizations,
exemptions and orders of Governmental Authorities, as are necessary to carry on
their respective businesses as now conducted and as proposed to be conducted,
except to the extent a failure to obtain any such item would not have a Material
Adverse Effect.
SECTION 7.12. Compliance with Law. The business and operations of
-------------------
Borrower and its Subsidiaries have been and are being conducted in accordance
with all applicable Laws other than violations of Laws which do not (either
individually or collectively) have a Material Adverse Effect.
SECTION 7.13. Full Disclosure. All information heretofore furnished by
---------------
Borrower (or any other party on Borrower's behalf) to Agent or any Bank for
purposes of or in connection with this Agreement or any transaction contemplated
hereby is, and all such information hereafter furnished by Borrower or in its
behalf to Agent or any Bank will be, true, complete and accurate in every
material respect or (to the extent disclosed) based on reasonable estimates on
the date as of which such information is stated or certified. Borrower has
disclosed to Banks in writing any and all facts (other than facts of general
public knowledge) which might reasonably be expected to have a Material Adverse
Effect.
SECTION 7.14. Corporate Structure. Schedule 2 attached hereto contains a
------------------- ----------
complete and accurate (as of the date hereof) (a) list of all Subsidiaries of
Borrower, (b) description of the issued and outstanding capital stock of each
Subsidiary, (c) list of all the record owners of such capital stock or other
equity interests on the date hereof, and (d) list of each partnership or joint
venture in which Borrower or any Subsidiary of Borrower is a partner or joint
venturer; provided, that, Banks acknowledge that certain third party operators
-------- ----
of Mineral Interests owned jointly by Borrower and other Persons prepare
partnership Tax returns with respect to those properties and the joint ownership
interests; provided, further, that, Mineral Interests owned by Borrower
-------- ------- ----
representing no more than two percent (2%) of all Mineral Interests owned by
Borrower (based on the discounted present values set forth in the Reserve
Report) are subject to such reporting.
-35-
SECTION 7.15. Environmental Matters. No real or personal property owned
---------------------
or leased by Borrower or any Subsidiary of Borrower (including, without
limitation, Mineral Interests owned by Borrower and its Subsidiaries) and no
operations conducted thereon, and to Borrower's knowledge, no operations of any
prior owner, lessee or operator of any such properties, is or has been in
violation of any Applicable Environmental Law other than violations which
neither individually or in the aggregate will have a Material Adverse Effect.
Neither Borrower, any Subsidiary of Borrower, nor any such property or operation
is the subject of any existing, pending or, to Borrower's knowledge, threatened
action, suit, investigation, inquiry or proceeding with respect to Applicable
Environmental Laws which is reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect. All notices, permits, licenses, and similar
authorizations, required to be obtained or filed in connection with the
ownership or operation of each tract of real property and each item of personal
property owned, leased or operated by Borrower or any of its Subsidiaries,
including, without limitation, notices, licenses, permits and authorizations
required in connection with any past or present treatment, storage, disposal, or
release of hazardous substances, petroleum, or solid waste into the environment,
have been duly obtained or filed except to the extent the failure to obtain or
file such notices, licenses, permits and authorizations would not have a
Material Adverse Effect. To Borrower's knowledge, all hazardous substances
generated at each tract of real property and by each item of personal property
owned, leased or operated by Borrower or any of its Subsidiaries have been
transported, treated, and disposed of only by carriers maintaining valid permits
under all Applicable Environmental Laws. There has been no release or
threatened release of any quantity of any hazardous substances or petroleum on,
to or from any real or personal property owned, leased, or operated by Borrower
or any Subsidiary which was not in compliance with Applicable Environmental Laws
other than releases which would not, individually or in the aggregate, have a
Material Adverse Effect. Neither Borrower nor any Subsidiary of Borrower has any
contingent liability in connection with any release or threatened release of any
hazardous substance, petroleum, or solid waste into the environment which could
reasonably be expected to have a Material Adverse Effect.
SECTION 7.16. Burdensome Obligations. Neither Borrower, nor any
----------------------
Subsidiary of Borrower, nor any of their respective properties is subject to any
restriction under its certificate (or articles) of incorporation, bylaws or
similar charter document or under any agreement or instrument to which Borrower
or any Subsidiary of Borrower is a party or by which Borrower or any Subsidiary
of Borrower or any of their respective properties may be subject or bound, which
is so unusual or burdensome as to be likely in the foreseeable future to have a
Material Adverse Effect. Without limiting the foregoing, neither Borrower nor
any of its Subsidiaries is a party to or bound by any agreement or subject to
any order of any Governmental Authority which prohibits or restricts in any way
the right of any Subsidiary of Borrower to make Distributions to Borrower
SECTION 7.17. Fiscal Year. Borrower's fiscal year is January 1 through
-----------
December 31.
SECTION 7.18. No Default. Neither a Default nor an Event of Default has
----------
occurred or will exist after giving effect to the transactions contemplated by
this Agreement.
SECTION 7.19. Government Regulation. Neither Borrower nor any of its
---------------------
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act (as any of the
preceding acts have been amended), the Investment Company Act of 1940 or any
other Law which regulates the incurring by Borrower of Debt, including, but not
limited to, Laws
-36-
relating to common contract carriers or the sale of electricity, gas, stream,
water or other public utility services.
SECTION 7.20. Insider. Neither Borrower nor any of its Subsidiaries is,
-------
and no Person having "control" (as that term is defined in 12 U.S.C. Section
375(b) or regulations promulgated thereunder) of Borrower or any of its
Subsidiaries is an "executive officer", "director" or "shareholder" of any Bank
or any bank holding company of which any Bank is a Subsidiary or of any
Subsidiary of such bank holding company.
SECTION 7.21. Gas Balancing Agreements and Advance Payment Contracts. On
------------------------------------------------------
the date of this Agreement, (a) the net gas imbalances to Borrower and its
Subsidiaries (considered in the aggregate) under all Gas Balancing Agreements to
which Borrower or any of its Subsidiaries is a party or by which any Mineral
Interest owned by Borrower or any of its Subsidiaries is bound, are not
material, and (b) the aggregate amount of all Advance Payments received by
Borrower or any of its Subsidiaries under Advance Payment Contracts which have
not been satisfied by delivery of production is not material.
SECTION 7.22. Existing Credit Agreement. As of the date hereof (or
-------------------------
immediately after the refinancing of the Existing Credit Agreement with the
initial Borrowing hereunder), (a) there is no Debt outstanding under the
Existing Credit Agreement, (b) there are no fees, including, without limitation,
letter of credit fees, due or owing under or in connection with the Existing
Credit Agreement or with respect to any letters of credit issued in connection
therewith, and (c) the only letters of credit outstanding under and in
connection with the Existing Credit Agreement are the Existing Letters of
Credit, which are henceforth deemed to be Letters of Credit outstanding
hereunder.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Borrower agrees that, so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:
SECTION 8.1. Information. Borrower will deliver, or cause to be
-----------
delivered, to each Bank:
(a) as soon as available and in any event within one hundred (100)
days after the end of each fiscal year of Borrower, consolidated and
consolidating balance sheets of Borrower as of the end of such fiscal year and
the related consolidated and consolidating statements of income and changes in
financial position for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported by
Borrower in accordance with GAAP and audited by a firm of independent public
accountants of nationally recognized standing;
(b) (i) as soon as available and in any event within fifty (50) days
after the end of each of the first three (3) quarters of each fiscal year of
Borrower, consolidated and consolidating balance sheets of Borrower as of the
end of such quarter and the related consolidated and consolidating statements of
income and changes in financial position for such quarter and for the portion of
Borrower's fiscal year
-37-
ended at the end of such quarter, setting forth in each case in comparative form
the figures for the corresponding quarter and the corresponding portion of
Borrower's previous fiscal year. All financial statements delivered pursuant to
this Section 8.1(b) shall be certified as to fairness of presentation, GAAP and
--------------
consistency by a Financial Officer of Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in Sections 8.1(a) and (b), a certificate of a Financial
--------------- ---
Officer of Borrower in the form of Exhibit D attached hereto, (i) setting forth
---------
in reasonable detail the calculations required to establish whether Borrower was
in compliance with the requirements of Article X on the date of such financial
---------
statements, (ii) stating whether there exists on the date of such certificate
any Default and, if any Default then exists, setting forth the details thereof
and the action which Borrower is taking or proposes to take with respect
thereto, and (iii) stating whether or not such financial statements fairly
reflect the business and financial condition of Borrower and its Subsidiaries as
of the date of such financial statements;
(d) promptly upon the mailing thereof to the stockholders of Borrower
generally, copies of all financial statements, reports and proxy statements so
mailed;
(e) promptly upon the filing thereof, copies of all final registration
statements, post effective amendments thereto and annual, quarterly or special
reports which Borrower shall have filed with the Securities and Exchange
Commission; provided, that, Borrower must deliver, or cause to be delivered, any
-------- ----
annual reports which Borrower shall have filed with the Securities and Exchange
Commission, within one hundred (100) days after the end of each fiscal year of
Borrower, and any quarterly reports which Borrower shall have filed with the
Securities and Exchange Commission, within fifty (50) days after the end of each
of the first three (3) quarters of each fiscal year of Borrower;
(f) promptly upon request therefor by Agent, such title opinions and
other information in Borrower's possession, control or direction regarding title
to the Mineral Interests owned by Borrower or its Subsidiaries as are
appropriate to determine the status thereof;
(g) promptly upon receipt of same, any notice or other information
received by Borrower or any Subsidiary of Borrower indicating any potential,
actual or alleged (i) non-compliance with or violation of the requirements of
any Applicable Environmental Law which might reasonably be expected to result in
liability to Borrower or any Subsidiary of Borrower for fines, clean up or any
other remediation obligations or any other liability in excess of $1,000,000 in
the aggregate; (ii) release or threatened release of any toxic or hazardous
waste, substance, or constituent, or other substance into the environment which
release would impose on Borrower or any Subsidiary of Borrower to pay cleanup
costs or to take remedial action under any Applicable Environmental Law which
might reasonably be expected to result in liability to Borrower or any
Subsidiary of Borrower for fines, clean up and other remediation obligations or
any other liability in excess of $1,000,000 in the aggregate; or (iii) the
existence of any Lien arising under any Applicable Environmental Law securing
any obligation to pay fines, clean up or other remediation costs or any other
liability in excess of $1,000,000 in the aggregate. Without limiting the
foregoing, Borrower shall provide to Agent, promptly upon request, copies of
all environmental consultants or engineers reports received by Borrower or any
Subsidiary of Borrower which reflect the existence of any circumstance or
condition which would require delivery of a notice or other information to Banks
pursuant to this Section 8.1(g);
--------------
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(h) In the event any notification is provided by Borrower to any Bank
or Agent pursuant to Section 8.1(g) hereof or Agent or any Bank otherwise learns
--------------
of any event or condition under which any such notice would be required, then,
upon request of Majority Banks, Borrower shall, within ninety (90) days of such
request, cause to be furnished to each Bank a report by an environmental
consulting firm acceptable to Agent and Banks, stating that a review of such
event, condition or circumstance has been undertaken (the scope of which shall
be acceptable to Agent and Banks) and detailing the findings, conclusions, and
recommendations of such consultant. Borrower shall bear all expenses and costs
associated with such review and updates thereof, as well as all remediation or
curative action recommended by any such environmental consultant;
(i) promptly (but in all events within three (3) Domestic Business
Days) after any Authorized Officer becomes aware of the occurrence of any
Default, a certificate of an Authorized Officer setting forth the details
thereof and the action which the Borrower is taking or proposes to take with
respect thereto;
(j) promptly notify Banks of any Material Adverse Change; and
(k) from time to time such additional information regarding the
financial position or business of Borrower and its Subsidiaries as Agent, at the
request of any Bank, may reasonably request.
SECTION 8.2. Business of Borrower. The primary business of Borrower and
--------------------
its Subsidiaries on a consolidated basis is and will continue to be the
acquisition, exploration for, development, production, transportation,
processing and marketing of liquid or gaseous hydrocarbons and accompanying
elements.
SECTION 8.3. Maintenance of Existence. Borrower will maintain, and will
------------------------
cause each Subsidiary of Borrower to maintain, at all times (a) its existence in
its jurisdiction of incorporation or organization except to the extent any
Subsidiary ceases to be in existence as a result of a merger or consolidation
expressly permitted pursuant to Section 9.4, and (b) its good standing and
-----------
qualified to transact business in all jurisdictions where the failure to
maintain good standing or qualification to transact business could have a
Material Adverse Effect.
SECTION 8.4. Right of Inspection. Borrower will permit, and will cause
-------------------
each Subsidiary of Borrower to permit, any officer, employee or agent of Agent
or any Bank to visit and inspect any of the assets of Borrower and its
Subsidiaries, examine Borrower's and its Subsidiaries' books of record and
accounts, take copies and extracts therefrom, and discuss the affairs, finances
and accounts of Borrower and its Subsidiaries with Borrower's and its
Subsidiaries' officers, accountants and auditors, all at such reasonable times
and as often as Agent or any Bank may desire, all at the expense of Borrower;
provided, that, prior to the occurrence of an Event of Default, neither Agent
-------- ----
nor any Bank will require Borrower or any of its Subsidiaries to incur any
unreasonable expense as a result of the exercise by Agent or any Bank of its
rights pursuant to this Section 8.4.
-----------
SECTION 8.5. Maintenance of Insurance. Borrower will maintain or cause
------------------------
to be maintained, and will cause each Subsidiary of Borrower to maintain or
cause to be maintained (and will use its reasonable efforts to cause all
operators of Mineral Interests owned by Borrower and any of its Subsidiaries to
maintain or cause to be maintained) at all times, insurance covering such risks
as are customarily carried by businesses similarly situated.
-39-
SECTION 8.6. Payment of Taxes and Claims. Borrower will pay, and will
---------------------------
cause each Subsidiary of Borrower to pay, (a) all Taxes imposed upon it or any
of its assets or with respect to any of its franchises, business, income or
profits before any material penalty or interest accrues thereon, and (b) all
material claims (including, without limitation, claims for labor, services,
materials and supplies) for sums which have become due and payable and which by
Law have or might become a Lien (other than a Permitted Encumbrance) on any of
its assets; provided, however, no payment of Taxes or claims shall be required
-------- -------
if (i) the amount, applicability or validity thereof is currently being
contested in good faith by appropriate action promptly initiated and diligently
conducted in accordance with good business practices and no material part of the
property or assets of Borrower or any of its Subsidiaries are subject to levy or
execution, (ii) Borrower as and to the extent required in accordance with GAAP,
shall have set aside on its books reserves (segregated to the extent required by
GAAP) deemed by it to be adequate with respect thereto, and (iii) to the extent
the amount of the contested Taxes or claims are in excess of $1,000,000 (in the
aggregate), Borrower has notified Agent of such circumstances, in detail
satisfactory to Agent.
SECTION 8.7. Compliance with Laws and Documents. Borrower will comply,
----------------------------------
and will cause each Subsidiary of Borrower to comply, with all Laws, their
respective certificates (or articles) of incorporation, bylaws and similar
charter documents and all Material Agreements to which Borrower or any of its
Subsidiaries is a party, if a violation, alone or when combined with all other
such violations, might reasonably be expected to have a Material Adverse Effect.
SECTION 8.8. Operation of Properties and Equipment. (a) Borrower will
-------------------------------------
maintain and operate, and will cause each Subsidiary of Borrower to maintain and
operate, their respective Mineral Interests in a good and workmanlike manner,
and observe and comply with all of the terms and provisions, express or implied,
of all oil and gas leases relating to such Mineral Interests so long as such
Mineral Interests are capable of producing hydrocarbons and accompanying
elements in paying quantities.
(b) Borrower will comply, and will cause each Subsidiary of Borrower
to comply, in all respects with all contracts and agreements applicable to or
relating to their respective Mineral Interests or the production and sale of
hydrocarbons and accompanying elements therefrom, except to the extent a failure
to so comply is not reasonably expected to have a Material Adverse Effect.
(c) Borrower will maintain, preserve and keep, and will cause each
Subsidiary of Borrower to maintain, preserve and keep, at all times, all
operating equipment used with respect to their respective Mineral Interests in
proper repair, working order and condition, and make all necessary or
appropriate repairs, renewals, replacements, additions and improvements thereto
so that the efficiency of such operating equipment shall at all times be
properly preserved and maintained; provided, that, no item of operating
-------- ----
equipment need be so repaired, renewed, replaced, added to or improved, if
Borrower shall in good faith determine that such action is not necessary or
desirable for the continued efficient and profitable operation of the business
of Borrower and its Subsidiaries.
SECTION 8.9. Environmental Law Compliance. Except to the extent a
----------------------------
failure to comply would not have a Material Adverse Effect, Borrower will
comply, and will cause each Subsidiary of Borrower to comply, with all
Applicable Environmental Laws, including, without limitation, (a) all licensing,
permitting, notification and similar requirements of Applicable Environmental
Laws, and (b) all provisions of all Applicable Environmental Laws regarding
storage, discharge, release, transportation, treatment and disposal of hazardous
substances, petroleum, solid waste or other contaminants. Borrower will
promptly
-40-
pay and discharge when due, and will cause each Subsidiary of Borrower to
promptly pay and discharge when due, all debts, claims, liabilities and
obligations with respect to any clean-up or remediation measures necessary to
comply with Applicable Environmental Laws.
SECTION 8.10. ERISA Reporting Requirements. Borrower shall furnish or
----------------------------
cause to be furnished to Agent:
(a) Promptly and in any event (i) within thirty (30) days after Borrower or
any ERISA Affiliate knows or has reason to know that any ERISA Event described
in clause (a) of the definition of ERISA Event or any event described in section
4063(a) of ERISA with respect to any Plan of Borrower or any ERISA Affiliate has
occurred, and (ii) within ten (10) days after Borrower or any ERISA Affiliate
knows or has reason to know that any other ERISA Event with respect to any Plan
of Borrower or any ERISA Affiliate has occurred or a request for minimum funding
waiver under section 412 of the Code with respect to any Plan of Borrower or any
ERISA Affiliate has been made, a written notice describing such event and
describing what action is being taken or is proposed to be taken with respect
thereto, together with a copy of any notice of event that is given to the PBGC;
(b) Promptly and in any event within five (5) Domestic Business Days after
receipt thereof by Borrower or any ERISA Affiliate from the PBGC, copies of each
notice received by Borrower or any ERISA Affiliate of the PBGC's intention to
terminate any Plan or to have a trustee appointed to administer any Plan;
(c) Promptly and in any event within thirty (30) days after the receipt by
Borrower of a request therefor by a Bank, copies of any annual and other report
(including Schedule B thereto) with respect to a Plan filed by Borrower or any
ERISA Affiliate with the United States Department of Labor, the Internal Revenue
Service or the PBGC;
(d) Promptly, and in any event within ten (10) Domestic Business Days after
receipt thereof, a copy of any correspondence Borrower or any ERISA Affiliate
receives from the Plan Sponsor (as defined by section 4001(a)(10) of ERISA) of
any Plan asserting withdrawal liability pursuant to section 4219 or 4202 of
ERISA upon Borrower or any ERISA Affiliate, and a statement from a Financial
Officer of Borrower or such ERISA Affiliate setting forth details as to the
events giving rise to such withdrawal liability and the action which Borrower or
such ERISA Affiliate is taking or proposes to take with respect thereto;
(e) Notification within thirty (30) days of the effective date thereof of
any material increases in the benefits of any existing Plan which is not a
multiemployer plan (as defined in section 4001(a)(3) of ERISA), or the
establishment of any new Plans, or the commencement of contributions to any Plan
to which Borrower or any ERISA Affiliate was not previously contributing;
(f) Notification within five (5) Domestic Business Days after Borrower or
any ERISA Affiliate knows or has reason to know that Borrower or any such ERISA
Affiliate has or intends to file a notice of intent to terminate any Plan under
a distress termination within the meaning of section 4041(c) of ERISA and a copy
of such notice; and
-41-
(g) Promptly after receipt of written notice of commencement thereof,
notice of all (i) claims made by participants or beneficiaries with respect to
any Plan, and (ii) actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting Borrower or any ERISA Affiliate with respect to
any Plan, except those which, in the aggregate, if adversely determined could
not have a Material Adverse Effect on Borrower or any ERISA Affiliate.
SECTION 8.11. Additional Documents. Borrower will cure promptly, and
--------------------
will cause each Subsidiary of Borrower to cure promptly, any defects in the
creation and issuance of each Note, and the execution and delivery of this
Agreement and the other Loan Papers and, at Borrower's expense, Borrower shall
promptly and duly execute and deliver, and cause each Subsidiary of Borrower to
promptly execute and deliver, to each Bank, upon reasonable request, all such
other and further documents, agreements and instruments in compliance with or
accomplishment of the covenants and agreements of Borrower and each Subsidiary
of Borrower in this Agreement and the other Loan Papers as may be reasonably
necessary or appropriate in connection therewith.
SECTION 8.12. Subsidiary Guarantees. At any time at which any Subsidiary
---------------------
of Borrower is required to execute any Guarantee of the Subordinate Notes
pursuant to Section 4.13 of the Subordinate Notes Indenture, Borrower will (a)
------------
cause such Subsidiary to execute and deliver to Banks a Subsidiary Guaranty, and
(b) deliver to Agent such (i) resolutions of the board of directors of such
Subsidiary Guarantor, (ii) certificates of officers of such Subsidiary
Guarantor, (iii) certificates of Governmental Authorities, and (iv) opinions of
counsel, as Agent shall reasonably request to evidence the valid organization
and existence of such Guarantor and the due authorization, execution, delivery
and enforceability of such Subsidiary Guaranty and such other matters related to
such Subsidiary and Subsidiary Guaranty as Agent shall request.
ARTICLE IX
NEGATIVE COVENANTS
Borrower agrees that, so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:
SECTION 9.1. Incurrence of Debt. Borrower will not incur, and Borrower
------------------
will not permit any Subsidiary of Borrower to incur, any Debt other than (a) the
Obligations, (b) Debt outstanding under the Subordinate Notes, (c) the Permitted
Canadian Working Capital Facility, and (d) other Debt (including but not
limited to capital leases) in the aggregate amount outstanding at any time not
to exceed $5,000,000.
SECTION 9.2. Restrictions on Distributions. Borrower will not directly
-----------------------------
or indirectly declare or make or incur any liability to make, and Borrower will
not permit any Subsidiary of Borrower to directly or indirectly declare or make,
or incur any liability to make, Distributions in any fiscal year in excess of
the greater of (i) 80% of Borrower's Consolidated Net Income for such fiscal
year, or (ii) $4,500,000. Notwithstanding the foregoing, any Subsidiary of
Borrower may make Distributions to Borrower, and to any other Subsidiary of
Borrower which is a Subsidiary Guarantor. Borrower will not enter into or
become subject to, and Borrower will not permit any Subsidiary of Borrower to
enter into or become subject to,
-42-
any agreement or become subject to any order of any Governmental Authority which
prohibits or restricts in any way the right of any of Borrower's Subsidiaries to
make such Distributions.
SECTION 9.3. Negative Pledge. Borrower will not create, assume or suffer
---------------
to exist, and Borrower will not permit any Subsidiary of Borrower to create,
assume or suffer to exist, any Lien on any asset of Borrower or any of its
Subsidiaries other than Permitted Encumbrances. Borrower will not enter into or
become subject to, and Borrower will not permit any Subsidiary of Borrower to
enter into or become subject to, any agreement (other than this Agreement) that
prohibits or otherwise restricts the right of Borrower or any of its
Subsidiaries to create, assume or suffer to exist any Lien in favor of Agent or
any Bank on any of Borrower's or any of its Subsidiaries' assets.
SECTION 9.4. Consolidations, Mergers. Borrower will not consolidate or
-----------------------
merge with or into any Person, and Borrower will not permit any Subsidiary of
Borrower to consolidate or merge with or into any other Person; provided, that,
-------- ----
so long as no Default or Event of Default exists or will result (a) Borrower may
merge or consolidate with or into another Person so long as Borrower is the
surviving corporation, (b) any wholly owned Subsidiary of Borrower may merge,
consolidate, amalgamate or enter into a plan of arrangement with any other
Person so long as a wholly owned Subsidiary of Borrower is the surviving or
resulting corporation, and (c) any Subsidiary of Borrower which is not wholly
owned may merge with any other Person so long as the surviving corporation
remains a Subsidiary of Borrower after giving effect to such merger.
SECTION 9.5. Asset Dispositions. Borrower will not sell, lease, abandon
------------------
or otherwise transfer, and Borrower will not permit any Subsidiary of Borrower
to sell, lease, abandon or otherwise transfer, Mineral Interests or any Related
Assets during any fiscal year with an aggregate value greater than five percent
(5%) of the value of such Mineral Interests and/or Related Assets as shown on
the Reserve Report prepared as of the beginning of such fiscal year.
SECTION 9.6. Use of Proceeds. The proceeds of Borrowings will be used
----------------
for general business purposes. None of such proceeds (including, without
limitation, proceeds of Letters of Credit issued hereunder) will be used,
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock, and none of such proceeds
will be used in violation of applicable Law (including, without limitation, the
Margin Regulations).
SECTION 9.7. Investments. Except for Permitted Investments, Borrower
-----------
will not make any Investment, and Borrower will not permit any Subsidiary of
Borrower to make any Investment.
SECTION 9.8. Transactions with Affiliates. Borrower will not engage, and
----------------------------
Borrower will not permit any Subsidiary of Borrower to engage, in any
transaction with an Affiliate (other than with Borrower or a Subsidiary of
Borrower) unless such transaction is at least as favorable to Borrower or such
Subsidiary as could reasonably be obtained in an arm's length transaction with
an unaffiliated Person in accordance with prevailing industry customs and
practices.
SECTION 9.9. ERISA. Borrower will not knowingly take action or fail to
-----
take action which would result in a material violation of ERISA, the Code or
other Laws applicable to the Plans maintained by it or any ERISA Affiliate.
Borrower shall not, without the prior written consent of Majority Banks,
-43-
modify the term of, or the funding obligations under any existing Plan or
establish a new Plan which could, in any case, reasonably result in liability of
Borrower which could have a Material Adverse Effect.
SECTION 9.10. Hedge Transactions. Borrower will not enter into, and
------------------
Borrower will not permit any Subsidiary of Borrower to enter into (and neither
Borrower nor any of its Subsidiaries are currently parties to), Hedge
Transactions which cause the amount (including any notional amount) of
hydrocarbons of a particular type with respect to which a settlement payment is
calculated to exceed sixty-five percent (65%) of the product of (i) Borrower's
and its Subsidiaries' Average Projected Daily Production of hydrocarbons of such
type during the relevant calendar year, multiplied by (ii) the number of days in
the period from the immediately preceding date on which a settlement payment was
due (or the commencement of such Hedge Transaction if there is no prior
settlement payment date) to the date such settlement payment is due.
SECTION 9.11. Fiscal Year. Borrower shall not change its fiscal year.
-----------
SECTION 9.12. Capital Stock of Subsidiaries. Borrower will not, and will
-----------------------------
not permit any of its Subsidiaries to, sell, assign, transfer or convey all or
any part of the outstanding capital stock, partnership interests, limited
liability company interests or other equity interests in any Subsidiary
Guarantor to any Person other than Borrower or another Subsidiary Guarantor, and
Borrower will not permit any Subsidiary Guarantor to issue or sell or enter into
any agreement to issue or sell any of its capital stock, partnership interests,
limited liability company interests or other equity interest or any option,
warrant or other right to acquire its capital stock, partnership interests,
limited liability company interests or other equity interest to any Person other
than Borrower or another Subsidiary Guarantor.
SECTION 9.13. Covenants Regarding Subordinate Notes. Borrower will not,
-------------------------------------
and will not permit any of its Subsidiaries to (a) repay, redeem, repurchase or
create any defeasance trust for Debt outstanding under the Subordinate Notes
prior to their stated maturity, or (b) make any payment in respect of the
Subordinate Notes which is prohibited pursuant to the subordination provisions
applicable thereto. Notwithstanding the foregoing, Borrower will not be
prohibited, solely as a result of this Section 9.14, from (x) exchanging the
------------
Subordinate Notes for Borrower's common stock, (y) prepaying or redeeming the
Subordinate Notes with the proceeds of a substantially simultaneous issue of new
subordinate debt which (i) contains subordination provisions which are identical
to the subordination provisions applicable to the Subordinate Notes, (ii)
provides for no amortization of principal prior to maturity and provides for a
final maturity no earlier than the maturity of the Subordinate Notes, (iii)
bears interest at a rate (taking into account any original issue discount) no
higher than the rate applicable to the Subordinate Notes, and (iv) is otherwise
on terms not materially less favorable to Borrower and its Subsidiaries than the
terms of the Subordinate Notes, or (z) making other prepayments or redemptions
of the Subordinate Notes provided, that, (i) no Default exists at the time such
-------- ----
Subordinate Notes are called for redemption or prepayment or on the effective
date of such redemption or prepayment, (ii) Borrower gives Agent and each Bank
notice of any such proposed prepayments or redemption at least forty-five (45)
days prior to the date any notice is delivered to any holder of Subordinate
Notes (or the trustee under the Subordinate Notes Indenture) pursuant to which
such Subordinate Notes are called for redemption or prepayment, (iii) upon
receipt of such notice, Majority Banks shall be permitted to redetermine the
Borrowing Base in connection with and prior to delivery of any such call for
redemption or prepayment (in accordance with the procedures set forth in Article
-------
III hereof but in addition to any redetermination of the Borrowing Base
---
contemplated by Section 3.2), and (iv) no Borrowing Base Deficiency shall exist
-----------
after giving effect to such redetermination. The Obligations constitute
"Designated Senior Indebtedness" as such term is defined in the Subordinate
-44-
Notes Indenture. Borrower shall not designate any other indebtedness as
Designated Senior Indebtedness. Borrower will not enter into any amendment or
modification of the Senior Notes Indenture.
ARTICLE X
FINANCIAL COVENANTS
Borrower agrees that, so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:
SECTION 10.1. Current Ratio of Borrower. Borrower's ratio of
-------------------------
Consolidated Current Assets to Adjusted Consolidated Current Liabilities will
not be less than 1.0 to 1.0 at any time.
SECTION 10.2. Ratio of Consolidated Funded Debt to Consolidated Total
-------------------------------------------------------
Capital of Borrower. Borrower's Consolidated Funded Debt will not exceed sixty-
-------------------
five percent (65%) of its Consolidated Total Capital at any time.
SECTION 10.3. Consolidated Interest Coverage Ratio. Borrower will not
------------------------------------
permit its Consolidated Interest Coverage Ratio (as defined in the Subordinate
Notes Indenture) to be less than 2.5 to 1 as of the end of any fiscal quarter.
ARTICLE XI
DEFAULTS
SECTION 11.1. Events of Default. If one or more of the following events
-----------------
(collectively "Events of Default" and individually an "Event of Default") shall
----------------- ----------------
have occurred and be continuing:
(a) Borrower shall fail to pay when due (i) any principal of or
interest on any Note with respect to which Borrower is the maker, or (ii) any
fees or any other amount payable by Borrower hereunder, and such failure shall
continue for a period of five (5) days;
(b) Borrower shall fail to observe or perform any covenant or
agreement contained in Sections 8.1(a), (b), (c) or (e), 8.10, Article IX or
------------------------- --- ---- ----------
Article X of this Agreement;
---------
(c) Borrower or any Subsidiary of Borrower shall fail to observe or
perform any covenant or agreement contained in this Agreement or the other Loan
Papers (other than those referenced in Sections 11.1(a) and (b)) and such
---------------- ---
failure continues for a period of thirty (30) days after written notice of such
failure has been given to Borrower by Agent;
(d) any representation, warranty, certification or statement made or
deemed to have been made by Borrower in this Agreement or by Borrower, any
Subsidiary of Borrower, or any other Person on behalf of Borrower or on behalf
of any Subsidiary of Borrower in any certificate, financial
-45-
statement or other document delivered pursuant to this Agreement shall prove to
have been incorrect in any material respect when made;
(e) Borrower or any Subsidiary Guarantor shall fail to make any
payment when due on any Debt of such Person in a principal amount equal to or
greater than $2,500,000 or any other event or condition shall occur which (i)
results in the acceleration of the maturity of any such Debt, or (ii) entitles
the holder of such Debt to accelerate the maturity thereof;
(f) Borrower or any Subsidiary Guarantor 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;
(g) an involuntary case or other proceeding shall be commenced against
Borrower or any Subsidiary Guarantor 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 sixty (60) days; or an
order for relief shall be entered against Borrower or any Subsidiary Guarantor
under the U.S. or Canadian federal bankruptcy Laws (including, without
limitation, the Bankruptcy and Insolvency Act (Canada), the Company's Creditors
Arrangement Act (Canada) or the Winding Up Act (Canada)) as now or hereafter in
effect;
(h) one (1) or more judgments or orders for the payment of money
aggregating in excess of $2,500,000 shall be rendered against Borrower or any
Subsidiary Guarantor and such judgment or order shall continue unsatisfied and
unstayed for thirty (30) days;
(i) with respect to any Plan of Borrower or any ERISA Affiliate: (i)
Borrower or any ERISA Affiliate shall incur any accumulated funding deficiency,
as defined in section 412 of the Code, in the aggregate in excess of $1,000,000,
or request a funding waiver from the Internal Revenue Service for contributions
to a Plan or Plans in the aggregate in excess of $1,000,000; (ii) Borrower or
any ERISA Affiliate shall incur any withdrawal liability in the aggregate in
excess of $1,000,000 as a result of a complete or partial withdrawal within the
meaning of section 4203 or 4205 of ERISA; (iii) any ERISA Event occurs with
respect to any Plan and the then current value of such Plan's benefit
liabilities exceeds the then current value of such Plan's assets available for
the payment of such benefit liabilities (determined on an ongoing Plan funding
basis and not on a PBGC termination basis) by more than $1,000,000 (or in the
case of an ERISA Event involving the withdrawal of a substantial employer, the
withdrawing employer's proportionate share of such excess exceeds such amount);
(iv) any event occurs with respect to any Plan or Plans pursuant to which
Borrower and/or any ERISA Affiliate incur a liability due and owing at the time
of such event, without existing funding therefor, for benefit payments under
such Plan or Plans in excess of $1,500,000; or (v) Borrower, any ERISA
Affiliate, or any other "party-in-interest" or "disqualified person", as such
terms are defined in section 3(14) of ERISA and section 4975(e)(2) of the
-46-
Code, shall engage in transactions which in the aggregate would reasonably
result in a direct or indirect liability to Borrower or any ERISA Affiliate in
excess of $1,000,000 under section 409 or 502 of ERISA or section 4975 of the
Code; or
(j) a Change of Control;
then, and in every such event, Agent shall without presentment, notice or demand
(unless expressly provided for herein) of any kind (including, without
limitation, notice of intention to accelerate and acceleration), all of which
are hereby waived, (a) if requested by Majority Banks, terminate the Commitments
and they shall thereupon terminate, and (b) if requested by Majority Banks, take
such other actions as may be permitted by the Loan Papers including, declaring
the Notes (together with accrued interest thereon) to be, and the Notes shall
thereupon become, immediately due and payable; provided, that, in the case of
-------- ----
any of the Events of Default specified in Sections 11.1(f) or (g) with respect
---------------- ---
to Borrower, without any notice to Borrower or any other act by Agent or Banks,
the Commitments shall thereupon terminate and the Notes (together with accrued
interest thereon) shall become immediately due and payable.
ARTICLE XII
AGENT
SECTION 12.1. Appointment, Powers, and Immunities. Each Bank hereby
-----------------------------------
irrevocably appoints and authorizes Agent to act as its agent under this
Agreement and the other Loan Papers with such powers and discretion as are
specifically delegated to Agent by the terms of this Agreement and the other
Loan Papers, together with such other powers as are reasonably incidental
thereto. Agent (which term as used in this sentence and in Section 12.5 and the
------------
first sentence of Section 12.6 hereof shall include its Affiliates and its own
------------
and its Affiliates' officers, directors, employees, and agents): (a) shall not
have any duties or responsibilities except those expressly set forth in this
Agreement and shall not be a trustee or fiduciary for any Bank; (b) shall not be
responsible to Banks for any recital, statement, representation, or warranty
(whether written or oral) made in or in connection with any Loan Paper or any
certificate or other document referred to or provided for in, or received by any
of them under, any Loan Paper, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Loan Paper, or any other
document referred to or provided for therein or for any failure by Borrower, any
Subsidiary of Borrower or any other Person to perform any of its obligations
thereunder; (c) shall not be responsible for or have any duty to ascertain,
inquire into, or verify the performance or observance of any covenants or
agreements by Borrower or any Subsidiary of Borrower or the satisfaction of any
condition or to inspect the property (including the books and records) of
Borrower or any Subsidiary of Borrower or any of its Subsidiaries or Affiliates;
(d) shall not be required to initiate or conduct any litigation or collection
proceedings under any Loan Paper; and (e) shall not be responsible for any
action taken or omitted to be taken by it under or in connection with any Loan
Paper, except for its own gross negligence or willful misconduct. Agent may
employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care.
SECTION 12.2. Reliance by Agent. Agent shall be entitled to rely upon any
-----------------
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or
-47-
telecopy) believed by it to be genuine and correct and to have been signed, sent
or made by or on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel for Borrower or any Subsidiary of
Borrower), independent accountants, and other experts selected by Agent. Agent
may deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until Agent receives and accepts an Assignment and Acceptance
Agreement executed in accordance with Section 13.10 hereof. As to any matters
-------------
not expressly provided for by this Agreement, Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of Majority Banks, and such instructions
shall be binding on Banks; provided, however, that Agent shall not be required
-------- -------
to take any action that exposes Agent to personal liability or that is contrary
to any Loan Paper or applicable Law or unless it shall first be indemnified to
its satisfaction by Banks against any and all liability and expense which may be
incurred by it by reason of taking any such action.
SECTION 12.3. Defaults. Agent shall not be deemed to have knowledge or
--------
notice of the occurrence of a Default or Event of Default unless Agent has
received written notice from a Bank or Borrower specifying such Default or Event
of Default and stating that such notice is a "Notice of Default". In the event
that Agent receives such a notice of the occurrence of a Default or Event of
Default, Agent shall give prompt notice thereof to Banks. Agent shall (subject
to Section 12.2 hereof) take such action with respect to such Default or Event
------------
of Default as shall reasonably be directed by Majority Banks; provided that,
-------- ----
unless and until Agent shall have received such directions, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interest of Banks.
SECTION 12.4. Rights as Bank. With respect to its Commitment and the
--------------
Advances made by it, NationsBank (and any successor acting as Agent) in its
capacity as a Bank hereunder shall have the same rights and powers hereunder as
any other Bank and may exercise the same as though it were not acting as Agent,
and the term "Bank" or "Banks" shall, unless the context otherwise indicates,
include Agent in its individual capacity. NationsBank (and any successor acting
as Agent) and its Affiliates may (without having to account therefor to any
Bank) accept deposits from, lend money to, make investments in, provide services
to, and generally engage in any kind of lending, trust, or other business with
Borrower or any of its Subsidiaries or Affiliates as if it were not acting as
Agent, and NationsBank (and any successor acting as Agent) and its Affiliates
may accept fees and other consideration from Borrower or any of its Subsidiaries
or Affiliates for services in connection with this Agreement or otherwise
without having to account for the same to Banks.
SECTION 12.5. Indemnification. Banks agree to indemnify Agent (to the
---------------
extent not reimbursed by Borrower or any Subsidiary of Borrower hereof, but
without limiting the obligations of Borrower or any Subsidiary of Borrower to so
reimburse) ratably in accordance with their respective Commitments, for any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including attorneys' fees), or disbursements of any kind
and nature whatsoever that may be imposed on, incurred by or asserted against
Agent (including by any Bank) in any way relating to or arising out of any Loan
Paper or the transactions contemplated thereby or any action taken or omitted by
Agent under any Loan Paper (including any of the foregoing arising from the
negligence of Agent); provided that no Bank shall be liable for any of the
--------
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Person to be indemnified. Without limitation of the
foregoing, each Bank agrees to reimburse Agent promptly upon demand for its
ratable share of any costs or expenses payable by Borrower
-48-
hereunder, to the extent that Agent is not promptly reimbursed for such costs
and expenses by Borrower. The agreements contained in this Section 12.5 shall
------------
survive payment and performance in full of the Obligations and all other amounts
payable under this Agreement.
SECTION 12.6. Non-Reliance on Agent and Other Banks. Each Bank agrees
-------------------------------------
that it has, independently and without reliance on Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of Borrower and its Subsidiaries and decision to enter into
this Agreement and that it will, independently and without reliance upon Agent
or any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under the Loan Papers. Except for notices, reports,
and other documents and information expressly required to be furnished to Banks
by Agent hereunder, Agent shall not have any duty or responsibility to provide
any Bank with any credit or other information concerning the affairs, financial
condition, or business of Borrower or any of its Subsidiaries or Affiliates that
may come into the possession of Agent or any of its Affiliates.
SECTION 12.7. Resignation of Agent. Agent may resign at any time by
--------------------
giving notice thereof to Banks and Borrower. Upon any such resignation,
Majority Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by Majority Banks and shall have
accepted such appointment within thirty (30) days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf of
Banks, appoint a successor Agent which shall be a commercial bank organized
under the Laws of the United States of America having combined capital and
surplus of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article XII shall continue in effect for its
-----------
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Notices. All notices, requests and other communications to
-------
any party hereunder shall be in writing (including bank wire, telecopy or
similar writing) and shall be given to such party at its address or telecopy
number set forth on the signature pages hereof or such other address or telecopy
number as such party may hereafter specify for the purpose by notice to Agent
and Borrower. Each such notice, request or other communication shall be
effective (a) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section 13.1 and the appropriate answerback is
------------
received or receipt is otherwise confirmed, (b) if given by mail, three (3)
Domestic Business Day after deposit in the mails with first class postage
prepaid, addressed as aforesaid, or (c) if given by any other means, when
delivered at the address specified in this Section 13.1; provided that, notices
------------ -------- ----
to Agent under Article II or VI shall not be effective until received.
---------- --
SECTION 13.2. No Waivers. No failure or delay by Agent or any Bank in
----------
exercising any right, power or privilege hereunder or under any Note or other
Loan Paper shall operate as a waiver thereof nor
-49-
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 herein provided shall be cumulative and not exclusive of any
rights or remedies provided by Law or in any of the other Loan Papers.
SECTION 13.3. Expenses; Indemnification. (a) Borrower agrees to pay on
-------------------------
demand all costs and expenses of Agent in connection with the syndication,
preparation, execution, delivery, modification, and amendment of this Agreement,
the other Loan Papers, and the other documents to be delivered hereunder,
including, without limitation, the reasonable fees and expenses of counsel for
Agent (including the cost of internal counsel) with respect thereto and with
respect to advising Agent as to its rights and responsibilities under the Loan
Papers; provided that Agent agrees that in the case of the initial preparation
of the Loan Papers and the initial closing of the transactions contemplated
thereby, the costs and expenses Borrower is obligated to pay pursuant to this
sentence shall be limited to the fees referred to in Section 2.10 and the fees
------------
and expenses of counsel to Agent. Borrower further agrees to pay on demand all
costs and expenses of Agent and Banks, if any (including, without limitation,
reasonable attorneys' fees and expenses and the cost of internal counsel), in
connection with the enforcement (whether through negotiations, legal
proceedings, or otherwise) of the Loan Papers and the other documents to be
delivered hereunder.
(b) BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS AGENT AND EACH BANK AND
EACH OF THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, AND ADVISORS (EACH, AN "INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL
-----------------
CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS, AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS' FEES) THAT MAY BE INCURRED BY OR ASSERTED OR
AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT OF OR IN
CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN CONNECTION
WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING OR PREPARATION OF DEFENSE IN
CONNECTION THEREWITH) THE LOAN PAPERS, ANY OF THE TRANSACTIONS CONTEMPLATED
HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE LOAN (INCLUDING ANY
OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT
TO THE EXTENT SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN
A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE
RESULTED FROM SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
IN THE CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE
INDEMNITY IN THIS SECTION 13.3 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE
------------
WHETHER OR NOT SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY
BORROWER, ITS DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR
ANY OTHER PERSON OR ANY INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND
WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED. BORROWER
AGREES NOT TO ASSERT ANY CLAIM AGAINST AGENT, ANY BANK, ANY OF THEIR AFFILIATES,
OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, AGENTS,
AND ADVISERS, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL,
OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO THE LOAN PAPERS, ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE
PROCEEDS OF THE LOAN.
-50-
(c) Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this Section
-------
13.3 shall survive the payment in full of the Loan and all other amounts payable
----
under this Agreement.
SECTION 13.4. Right of Set-off; Adjustments. (a) Upon the occurrence and
-----------------------------
during the continuance of any Event of Default, each Bank (and each of its
Affiliates) is hereby authorized at any time and from time to time, to the
fullest extent permitted by Law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank (or any of its Affiliates) to
or for the credit or the account of Borrower against any and all of the
Obligations, irrespective of whether such Bank shall have made any demand under
this Agreement or Note held by such and although such obligations may be
unmatured. Each Bank agrees promptly to notify Borrower after any such set-off
and application made by such Bank; provided, however, that the failure to give
-------- -------
such notice shall not affect the validity of such set-off and application. The
rights of each Bank under this Section 13.4 are in addition to other rights and
------------
remedies (including, without limitation, other rights of set-off) that such Bank
may have.
(b) If any Bank (a "benefitted Bank") shall at any time receive any
---------------
payment of all or part of the Advances owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, or otherwise), in a greater proportion than any such payment to or
collateral received by any other Bank, if any, in respect of such other Bank's
Advances owing to it, or interest thereon, such benefitted Bank shall purchase
for cash from the other Banks a participating interest in such portion of each
such other Bank's Advances owing to it, or shall provide such other Banks with
the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Bank to share the excess payment or benefits
of such collateral or proceeds ratably with each Bank; provided, however, that
-------- -------
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Bank, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest. Borrower agrees that any Bank so purchasing a participation from a
Bank pursuant to this Section 13.4 may, to the fullest extent permitted by Law,
------------
exercise all of its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Person were the direct
creditor of Borrower in the amount of such participation.
SECTION 13.5. Amendments and Waivers. Any provision of this Agreement or
----------------------
any other Loan Paper may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by Borrower and Majority Banks (and, if
Article XII or the rights or duties of Agent are affected thereby, by Agent);
-----------
provided that no such amendment or waiver shall, unless signed by each Bank
--------
directly affected thereby, (i) increase the Commitments of Banks, (ii) reduce
the principal of or rate of interest on any Advance or any fees or other amounts
payable hereunder, (iii) postpone any date fixed for the payment of any
scheduled installment of principal of or interest on any Advance or any fees or
other amounts payable hereunder or for termination of any Commitment, (iv)
change the percentage of the Commitments or of the unpaid principal amount of
the Notes, or the number of Banks, which shall be required for Banks or any of
them to take any action under this Section 13.5 or any other provision of this
------------
Agreement, or (v) release any guarantor (including, without limitation, any
Subsidiary Guarantor) of the Obligations or all or substantially all of the
collateral securing the Obligations.
-51-
SECTION 13.6. Survival. All representations, warranties and covenants
--------
made by Borrower or any Subsidiary of Borrower herein or in any certificate or
other instrument delivered by it or in its behalf under the Loan Papers shall be
considered to have been relied upon by Banks and shall survive the delivery to
Banks of such Loan Papers or the extension of the Loan (or any part thereof),
and the issuance of Letters of Credit regardless of any investigation made by or
on behalf of Banks. The provisions of Section 13.3 hereof shall survive payment
------------
in full of the Obligations and the termination of this Agreement.
SECTION 13.7. Limitation on Interest. Regardless of any provision
----------------------
contained in the Loan Papers, Banks shall never be entitled to receive, collect,
or apply, as interest on the Loan, any amount in excess of the Maximum Lawful
Rate, and in the event any Bank ever receives, collects or applies as interest
any such excess, such amount which would be deemed excessive interest shall be
deemed a partial prepayment of principal and treated hereunder as such; and if
the Loan is paid in full, any remaining excess shall promptly be paid to
Borrower. In determining whether or not the interest paid or payable under any
specific contingency exceeds the Maximum Lawful Rate, Borrower and Banks shall,
to the extent permitted under applicable Law, (a) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate and spread, in equal parts, the total amount of the interest throughout
the entire contemplated term of the Notes, so that the interest rate is the
Maximum Lawful Rate throughout the entire term of the Notes; provided, however,
-------- -------
that, if the unpaid principal balance thereof is paid and performed in full
----
prior to the end of the full contemplated term thereof, and if the interest
received for the actual appropriate period of existence thereof exceeds the
Maximum Lawful Rate, Banks shall refund to Borrower the amount of such excess
and, in such event, Banks shall not be subject to any penalties provided by any
Laws for contracting for, charging, taking, reserving or receiving interest in
excess of the Maximum Lawful Rate.
SECTION 13.8. Invalid Provisions. If any provision of the Loan Papers is
------------------
held to be illegal, invalid, or unenforceable under present or future Laws
effective during the term thereof, such provision shall be fully severable, the
Loan Papers shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of the Loan Papers a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION 13.9. Waiver of Consumer Credit Laws. Pursuant to Article
------------------------------
15.10(b) of Chapter 15, Subtitle 79, Revised Civil Statutes of Texas, 1925, as
amended, Borrower agrees that such Chapter 15 shall not govern or in any manner
apply to the Loan.
SECTION 13.10. Assignments and Participations. (a) Each Bank may assign
------------------------------
to one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Advances, its Note and its Commitment); provided, however, that
-------- -------
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Bank or an
assignment of all of a Bank's rights and obligations under this Agreement, any
such partial assignment shall be in an amount at least equal to $10,000,000 or
an integral multiple of $100,000 in excess thereof;
-52-
(iii) each such assignment by a Bank shall be of a constant, and not
varying, percentage of all of its rights and obligations under this Agreement
and its Note; and
(iv) the parties to such assignment shall execute and deliver to Agent
for its acceptance an Assignment and Acceptance Agreement (herein so called) in
the form of Exhibit E hereto, together with any Note subject to such assignment
---------
and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance
Agreement, the assignee thereunder shall be a party hereto and, to the extent of
such assignment, have the obligations, rights, and benefits of a Bank hereunder
and the assigning Bank shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section 13.10(a), the assignor,
----------------
Agent and Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is not
incorporated under the Laws of the United States of America or a state thereof,
it shall deliver to Borrower and Agent certification as to exemption from
deduction or withholding of Taxes in accordance with Section 5.6(d).
--------------
(b) Agent shall maintain at its address set forth on the signature pages
hereto, a copy of each Assignment and Acceptance Agreement delivered to and
accepted by it and a register for the recordation of the names and addresses of
Banks and the Commitment of, and principal amount of the Loan owing to, each
Bank from time to time (the "Register"). The entries in the Register shall be
--------
conclusive and binding for all purposes, absent manifest error, and Borrower,
Agent and Banks may treat each Person whose name is recorded in the Register as
a Bank hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Borrower or any Bank at any reasonable time and from
time to time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance Agreement executed by
the parties thereto, together with any Note subject to such assignment and
payment of the processing fee, Agent shall, if such Assignment and Acceptance
Agreement has been completed and is in substantially the form of Exhibit E
---------
hereto, (i) accept such Assignment and Acceptance Agreement, (ii) record the
information contained therein in the Register, and (iii) give prompt notice
thereof to the parties thereto.
(d) Each Bank may sell participations to one or more Persons in all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and its Advances); provided, however, that (i) such
-------- -------
Bank's obligations under this Agreement shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) the participant shall be entitled to the benefit of
the yield protection provisions contained in Article V and the right of set-off
---------
contained in Section 13.4, and (iv) Borrower shall continue to deal solely and
------------
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement, and such Bank shall retain the sole right to enforce the
obligations of Borrower relating to its Advances and its Note and to approve any
amendment, modification, or waiver of any provision of this Agreement (other
than amendments, modifications, or waivers decreasing the amount of principal of
or the rate at which interest is payable on such Advances or Note, extending any
scheduled principal payment date or date fixed for the payment of interest on
such Advances or Note, or extending its Commitment).
-53-
(e) Notwithstanding any other provision set forth in this Agreement, any
Bank may at any time assign and pledge all or any portion of its Advances and
its Note to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Bank from its obligations hereunder.
(f) Any Bank may furnish any information concerning Borrower or any of its
Subsidiaries in the possession of such Bank from time to time to assignees and
participants (including prospective assignees and participants), subject,
however, to the provisions of Section 13.17 hereof.
-------------
SECTION 13.11. TEXAS LAW. THIS AGREEMENT AND EACH NOTE AND THE OTHER
---------
LOAN PAPERS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF TEXAS.
SECTION 13.12. Consent to Jurisdiction; Waiver of Immunities. (a)
----------------------------------------------
Borrower hereby irrevocably submits to the jurisdiction of any Texas State or
Federal court sitting in the Northern District of Texas over any action or
proceeding arising out of or relating to this Agreement or any other Loan
Papers, and Borrower hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such Texas State or
Federal court. As an alternative method of service, Borrower also irrevocably
consents to the service of any and all process in any such action or proceeding
by the mailing of copies of such process to Borrower at its address specified in
Section 13.1. Borrower agrees that a final judgment on any such action or
------------
proceeding shall be conclusive and may be enforced in any other jurisdiction by
suit on the judgment or in any other manner provided by Law.
(b) Nothing in this Section 13.12 shall affect any right of Banks to
-------------
serve legal process in any other manner permitted by Law or affect the right of
any Bank to bring any action or proceeding against Borrower or its Subsidiaries
or their properties in the courts of any other jurisdictions.
(c) To the extent that Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Borrower hereby irrevocably waives such immunity in respect of its obligations
under this Agreement and the other Loan Papers.
SECTION 13.13. Counterparts; Effectiveness. 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 shall become effective when Agent shall have received
counterparts hereof signed by all of the parties hereto or, in the case of any
Bank as to which an executed counterpart shall not have been received, Agent
shall have received telegraphic or other written confirmation from such Bank of
execution of a counterpart hereof by such Bank.
SECTION 13.14. No Third Party Beneficiaries. It is expressly intended
----------------------------
that there shall be no third party beneficiaries of the covenants, agreements,
representations or warranties herein contained other than transferees or
assignees of all or any part of any Bank's interest hereunder permitted pursuant
to Section 13.10(b).
----------------
-54-
SECTION 13.15. COMPLETE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
------------------
PAPERS COLLECTIVELY REPRESENT THE FINAL AGREEMENT BY AND AMONG BANKS, AGENT AND
BORROWER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF BANKS, AGENT AND BORROWER. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN BANKS, AGENT AND BORROWER.
SECTION 13.16. WAIVER OF JURY TRIAL. BORROWER AND EACH BANK HEREBY
--------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN PAPERS AND FOR
ANY COUNTERCLAIM THEREIN.
SECTION 13.17. Confidentiality. Agent and each Bank (each, a "Lending
--------------- -------
Party") agrees to keep confidential any information furnished or made available
-----
to it by Borrower pursuant to this Agreement that is marked confidential;
provided that nothing herein shall prevent any Lending Party from disclosing
--------
such information (a) to any other Lending Party or any Affiliate of any Lending
Party, or any officer, director, employee, agent, or advisor of any Lending
Party or Affiliate of any Lending Party, (b) to any other Person if reasonably
incidental to the administration of the credit facility provided herein, (c) as
required by any Law, rule, or regulation, (d) upon the order of any court or
administrative agency, (e) upon the request or demand of any regulatory agency
or authority, (f) that is or becomes available to the public or that is or
becomes available to any Lending Party other than as a result of a disclosure by
any Lending Party prohibited by this Agreement, (g) in connection with any
litigation to which such Lending Party or any of its Affiliates may be a party,
(h) to the extent necessary in connection with the exercise of any remedy under
this Agreement or any other Loan Paper, and (i) subject to provisions
substantially similar to those contained in this Section 13.17, to any actual or
-------------
proposed participant or assignee.
-55-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers on the day and year first
above written.
BORROWER:
--------
THE WISER OIL COMPANY,
a Delaware corporation
By:
--------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Vice President and Chief Financial Officer
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
BANKS: COMMITMENTS:
----- -----------
NATIONSBANK OF TEXAS, N.A. Commitment:
----------
$90,000,000
By:
--------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇,
Vice President
Domestic Lending Office:
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Eurodollar Lending Office:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
BANK OF MONTREAL Commitment:
----------
$60,000,000
-56-
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
Domestic Lending Office:
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Eurodollar Lending Office:
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
AGENT:
NATIONSBANK OF TEXAS, N.A.
By:
--------------------------
▇▇▇▇ ▇▇▇▇▇▇,
Vice President
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-57-
EXHIBIT A
NOTICE OF BORROWING
Reference is made to that certain Credit Agreement dated as of December 23,
1997, by and among The Wiser Oil Company, a Delaware corporation ("Borrower"),
--------
certain Banks named therein ("Banks") and NationsBank of Texas, N.A. as agent
-----
for Banks (in such capacity, "Agent") (as same may be from time to time amended,
-----
the "Credit Agreement"). Terms which are defined in the Credit Agreement and
----------------
which are used but not defined herein are used herein with the meanings given
them in the Credit Agreement.
1. Pursuant to the terms of the Credit Agreement, Borrower hereby
requests each Bank to fund such Bank's Commitment Percentage of a Borrowing to
Borrower (the "Proposed Borrowing").
------------------
2. In connection with the Proposed Borrowing, Borrower sets forth below
the information required by Section 2.2 of the Credit Agreement (complete the
applicable portions):
(a) The Type of Rate applicable to the Proposed Borrowing is (check
one):
p Adjusted Eurodollar Rate. The applicable Interest Period is
(check one):
p one (1) month
p two (2) months
p three (3) months
p six (6) months
p Base Rate;
(b) The Borrowing date of the Proposed Borrowing is
__________________, ______; and
(c) The amount of the Proposed Borrowing is $__________________.
Borrower will use the proceeds hereby requested in compliance with the
applicable provisions of the Credit Agreement.
3. Borrower and the officer of Borrower signing this instrument hereby
certify that:
(a) Such officer is the duly elected, qualified and acting officer of
Borrower as indicated below such officer's signature hereto;
(b) To the best knowledge of the undersigned, unless such Borrowing is
a Refunding Borrowing, the representations and warranties of Borrower set
forth in the Credit Agreement and the other Loan Papers delivered to Banks
are true and correct on and as of the date hereof, with the same effect as
though such representations and warranties had been made on and as of the
date hereof or, if such representations and warranties are expressly
limited to particular dates, as of such particular dates;
-1-
(c) To the best knowledge of the undersigned, unless such Borrowing is
a Refunding Borrowing comprised of Base Rate Advances, there does not exist
on the date hereof any condition or event which constitutes a Default, nor
will any such Default exist upon Borrower's receipt and application of the
proceeds requested hereby;
(d) To the best knowledge of the undersigned, each of the conditions
precedent to making the Proposed Borrowing contained in the Credit
Agreement is satisfied in all material respects; and
(e) After the making of the Advances requested hereby, the Outstanding
Credit will not be in excess of the Borrowing Base on the date requested
for the making of such Advances.
IN WITNESS WHEREOF, this instrument is executed as of _____________, _____.
THE WISER OIL COMPANY,
a Delaware corporation
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
-2-
EXHIBIT B
REQUEST FOR LETTER OF CREDIT
Reference is made to that certain Credit Agreement dated as of December 23,
1997 by and among The Wiser Oil Company, a Delaware corporation ("Borrower"),
--------
certain Banks named therein (the "Banks") and NationsBank of Texas, N.A. as
-----
agent for Banks (in such capacity, "Agent") (as same may be from time to time
-----
amended, the "Credit Agreement"). Terms which are defined in the Credit
----------------
Agreement and which are used but not defined herein are used herein with the
meanings given them in the Credit Agreement.
1. Pursuant to the terms of the Agreement, Borrower hereby requests
_________________ ("Issuer") to issue a Letter of Credit for the account of
------
Borrower as follows:
Requested Amount $________________
Requested Date of Issuance _________________
Requested Expiration Date _________________
Beneficiary _________________
Borrower will use the Letter of Credit solely for purposes permitted by the
Credit Agreement.
2. Borrower and the officer of Borrower signing this instrument hereby
certify that:
(a) Such officer is the duly elected, qualified and acting officer of
Borrower as indicated below such officer's signature hereto;
(b) To the best knowledge of the undersigned, the representations and
warranties of Borrower set forth in the Credit Agreement and the other Loan
Papers delivered to Banks are true and correct on and as of the date
hereof, with the same effect as though such representations and warranties
had been made on and as of the date hereof or, if such representations and
warranties are expressly limited to particular dates, as of such particular
dates. To the best knowledge of the undersigned, no Material Adverse
Change has occurred since the date of the last financial reports delivered
to Banks pursuant to Section 8.1 of the Credit Agreement;
-----------
(c) To the best knowledge of the undersigned, there does not exist on
the date hereof any condition or event which constitutes a Default, nor
will any such Default exist upon the issuance of the Letter of Credit
requested hereby.
(d) To the best knowledge of the undersigned, each of the conditions
precedent to the issuance of Letters of Credit contained in the Credit
Agreement is satisfied in all material respects; and
(e) After the issuance of the Letter of Credit requested hereby,
Borrower's Outstanding Credit will not be in excess of the Borrowing Base
on the date requested for the issuance of such Letter of Credit.
-1-
IN WITNESS WHEREOF, this instrument is executed as of ________, ______.
THE WISER OIL COMPANY,
a Delaware corporation
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
-2-
EXHIBIT C
PROMISSORY NOTE
$__________ Dallas, Texas December 23, 1997
FOR VALUED RECEIVED, the undersigned, The Wiser Oil Company, a Delaware
corporation ("Maker"), hereby promises to pay to the order of [Name of Bank]
----- ------------
("Payee"), at the offices of NationsBank of Texas, N.A., as Agent (herein so
-------
called) for Payee and the other Banks hereinafter described, ▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Dallas County, Texas, the principal sum of
____________________________ ($______________), or so much thereof as may be
advanced and outstanding, together with interest, as hereinafter described.
This Note has been executed and delivered pursuant to, and is subject to
and governed by, the terms of that certain Credit Agreement (as hereafter
renewed, extended, amended, or supplemented, the "Agreement") dated as of
---------
December 23, 1997, among Maker, Agent, Payee, and the other Banks named therein
and is one of the "Notes" referred to therein. Unless otherwise defined herein
-----
or unless the context hereof otherwise requires, each term used herein with its
initial letter capitalized has the meaning given to such term in the Agreement.
Maker also promises to pay interest on the unpaid principal amount hereof
in like money at the offices of Agent above referenced from the date hereof at
the rates provided in the Agreement.
Accrued interest shall be due and payable at the times and in the amounts
set forth in Sections 2.6 and 4.2 of the Agreement. The principal balance of
------------ ---
the Loan evidenced by this Note shall be paid at the times and in the amounts
required by Sections 2.7, 2.8, 3.3 and 4.2 of the Agreement. The entire
---------------------- ---
outstanding principal balance hereof and all accrued but unpaid interest therein
shall be due and payable in full on the Termination Date.
Upon and subject to the terms and conditions of the Agreement, Maker shall
be entitled to prepay the principal of or interest on this Note from time to
time and at any time, in whole or in part without premium or penalty.
Upon the occurrence and during the continuance of an Event of Default, and
upon the conditions stated in the Agreement, the holder hereof may, at its
option, declare the entire unpaid principal of and accrued interest on this Note
immediately due and payable (provided, that, upon the occurrence of certain
-------- ----
Events of Default, and upon the conditions stated in the Agreement, such
acceleration shall be automatic), without notice (except as otherwise required
by the Agreement), demand, or presentment, all of which are hereby waived, and
the holder hereof shall have the right to offset against this Note any sum or
sums owed by the holder hereof to Maker. All past-due principal of and, to the
extent permitted by Law, accrued interest on this Note shall, at the option of
the holder hereof, bear interest at the lesser of (a) the Maximum Lawful Rate,
and (b) the Base Rate plus three percent (3%) until paid.
Notwithstanding the foregoing, if at any time, any rate of interest
calculated under Section 2.6(a) or (b) of the Agreement (the "Contract Rate")
-------------- --- -------------
exceeds the Maximum Lawful Rate, the rate of interest hereunder shall be limited
to the Maximum Lawful Rate, but any subsequent reductions in the Contract
-1-
Rate shall not reduce the rate of interest on this Note below the Maximum Lawful
Rate until the total amount of interest accrued equals the amount of interest
which would have accrued (including the amount of interest which would have
accrued prior to the payment or prepayment of any portion of this Note) if the
Contract Rate had at all times been in effect. In the event that at maturity
(stated or by acceleration), or at final payment of this Note, the total amount
of interest paid or accrued on this Note is less than the amount of interest
which would have accrued if the Contract Rate had at all times been in effect
with respect thereto, then at such time, to the extent such payment would not
result in a violation of Law, the Maker shall be obligated to pay to the holder
of this Note an amount equal to the difference between (a) the lesser of (i) the
amount of interest which would have accrued if the Contract Rate had at all
times been in effect, and (ii) the amount of interest which would have accrued
if the Maximum Lawful Rate had at all times been in effect, and (b) the amount
of interest actually paid or accrued on this Note.
THE WISER OIL COMPANY,
a Delaware corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
-2-
ADVANCES AND PAYMENT
TRANSACTIONS SCHEDULE
============================================================================================
Interest Period Amount of Date of Initials of
Date of Type of Amount (if applicable) Principal Principal Person
Advance Advance of Payment Payment Making Notation
Advance
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-3-
EXHIBIT D
THE WISER OIL COMPANY
FINANCIAL OFFICER'S CERTIFICATE
The undersigned, _________________ of The Wiser Oil Company, a Delaware
corporation ("Borrower"), hereby (a) delivers this Certificate pursuant to
--------
Section 8.1(c) of that certain Credit Agreement ("Credit Agreement") dated as of
-------------- ----------------
December 23, 1997, by and among Borrower, NationsBank of Texas, N.A. as Agent
("Agent"), and the financial institutions listed on the signature pages thereto,
-------
as Banks ("Banks"), and (b) certifies to Banks, with the knowledge and intent
-----
that Banks may, without any independent investigation, rely fully on the matters
herein in connection with the Credit Agreement, as follows:
1. Attached hereto as Exhibit A are the consolidated and consolidating
---------
financial statements of Borrower and its Subsidiaries as of and for the fiscal
p year p quarter (check one) ended _____________, ________.
2. As of the date of such financial statements, Borrower's ratio of
Consolidated Current Assets to Adjusted Consolidated Current Liabilities was
______ to 1.0, as evidenced by the following calculations:
Consolidated Current Assets (per Credit Agreement) $_______________
Consolidated Current Liabilities $_______________
Less: Long Term Debt ($________________)
----------------------------
Adjusted Consolidated Current Liabilities (per Credit Agreement)
$_______________
Consolidated Current Assets $_______________
------------------------------------------ = --------- = ---------
Adjusted Consolidated Current Liabilities $_______________ 1.0
3. As of the date of such financial statements, Borrower's Consolidated
Funded Debt was _____% of Borrower's Consolidated Total Capital, as evidenced by
the following calculations:
Consolidated Funded Debt $_______________
Consolidated Liabilities $________________
Plus: Consolidated Shareholders Equity ($________________)
-----------------------------
Consolidated Total Capital $________________
Consolidated Funded Debt $____
--------------------------- = ----- = ----- ________________%
Consolidated Total Capital $____ 1.0
-1-
4. For the period of four (4) fiscal quarters ending on the date of such
financial statements, Borrower's Consolidated Interest Coverage Ratio (as
defined in the Subordinate Notes Indenture) was _________ to 1.
5. Such financial statements have been prepared on a consistent basis in
accordance with GAAP (except as otherwise noted therein) and fairly present, on
a consolidated basis, the financial condition of Borrower and its Subsidiaries
as of the respective dates indicated therein and the results of operations for
the respective periods indicated therein.
6. As of the date of such financial statements, neither Borrower nor any
of its Subsidiaries had any liabilities or obligations (absolute, accrued,
contingent or otherwise) of a nature required by GAAP to be reflected in such
financial statements which are, individually or in the aggregate, material to
the condition, financial or otherwise, or operations of Borrower and its
Subsidiaries on a consolidated basis as of that date, which are not reflected on
such financial statements.
7. Unless otherwise disclosed on Exhibit B attached hereto and
---------
incorporated herein by reference for all purposes, neither a Default nor an
Event of Default has occurred which is in existence on the date hereof;
provided, that, for any Default or Event of Default disclosed on Exhibit B
-------- ---- ---------
attached hereto, Borrower is taking or proposes to take the action to cure such
Default or Event of Default set forth on Exhibit B.
---------
Unless otherwise defined herein, all capitalized terms used herein shall
have the meaning given such terms in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Financial
Officer's Certificate as of _______________________, ________.
THE WISER OIL COMPANY,
a Delaware corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-2-
Exhibit A
---------
Consolidated and Consolidating Financial Statements
(to be attached)
-3-
Exhibit B
---------
Disclosure of Defaults/Curative Action
(to be attached if applicable)
-4-
EXHIBIT E
ASSIGNMENT AND ACCEPTANCE AGREEMENT
Reference is made to the Credit Agreement dated as of December 23, 1997
(the "Credit Agreement") among The Wiser Oil Company, a Delaware corporation
----------------
("Borrower"), certain Banks as named and defined therein ("Banks") and
---------- -----
NationsBank of Texas, N.A., as agent for Banks ("Agent"). Terms defined in the
-----
Credit Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, without
recourse and without representation or warranty except as expressly set forth
herein, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under the Credit
Agreement and the other Loan Papers as of the date hereof equal to the
percentage interest specified on Schedule 1 of all outstanding rights and
obligations under the Credit Agreement and the other Loan Papers. After giving
effect to such sale and assignment, the Assignee's Commitment and the amount of
the Advances owing to the Assignee will be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Papers or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Loan Papers or any other instrument or document furnished pursuant
thereto; (iii) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of Borrower or any Subsidiary of
Borrower or the performance or observance by Borrower or any Subsidiary of
Borrower of any of its obligations under the Loan Papers or any other instrument
or document furnished pursuant thereto; and (iv) attaches the Note held by the
Assignor and requests that Agent exchange such Note for new Notes payable to the
order of the Assignee in an amount equal to the Commitment assumed by the
Assignee pursuant hereto and to the Assignor in an amount equal to the
Commitment retained by the Assignor, if any, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 8.1 thereof and such other documents and information as it has deemed
-----------
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance Agreement; (ii) agrees that it will, independently and
without reliance upon Agent, the Assignor or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and
authorizes Agent to take such action as agent on its behalf and to exercise such
powers and discretion under the Credit Agreement as are delegated to Agent by
the terms thereof, together with such powers and discretion as are reasonably
incidental thereto; (v) agrees that it will perform in accordance with their
terms all of the obligations that by the terms of the Credit Agreement are
required to be performed by it as a Bank; and (vi) attaches any U.S. Internal
Revenue Service or other forms required under Section 5.6(d) of the Credit
--------------
Agreement.
4. Following the execution of this Assignment and Acceptance Agreement,
it will be delivered to Agent for acceptance and recording by Agent. The
effective date for this Assignment and Acceptance
Agreement (the "Effective Date") shall be the date of acceptance hereof by
----------------
Agent, unless otherwise specified on Schedule 1.
5. Upon such acceptance and recording by Agent, as of the Effective Date,
(i) the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance Agreement, have the rights and
obligations of a Bank thereunder, and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance Agreement, relinquish its rights and
be released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by Agent, from and after the
Effective Date, Agent shall make all payments under the Credit Agreement and the
Notes in respect of the interest assigned hereby (including, without limitation,
all payments of principal, interest and commitment fees with respect thereto) to
the Assignee. The Assignor and Assignee shall make all appropriate adjustments
in payments under the Credit Agreement and the Notes for periods prior to the
Effective Date directly between themselves.
7. This Assignment and Acceptance Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Texas.
8. This Assignment and Acceptance Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of this Assignment and Acceptance Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this
Assignment and Acceptance Agreement.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to
this Assignment and Acceptance Agreement to be executed by their duly
Authorized Officers as of the date specified thereon.
SCHEDULE 1
to
Assignment and Acceptance Agreement
Percentage interest assigned: ________%
Assignee's Commitment: $_______
Aggregate outstanding principal amount
of Loan assigned: $_______
Principal amount of Note payable to Assignee: $_______
Principal amount of Note payable to Assignor: $_______
Effective Date (if other than date
of acceptance by Agent): *_______, 199__
[NAME OF ASSIGNOR], as Assignor
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Dated: , 199___
[NAME OF ASSIGNEE], as Assignee
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Domestic Lending Office:
Eurodollar Lending Office:
* This date should be no earlier than five (5) Domestic Business Days after
the delivery of this Assignment and Acceptance Agreement to Agent.
-3-
Accepted [and Approved] **
this ___ day of ___________, 199__
NATIONSBANK OF TEXAS, N.A., as Agent
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[Approved this ____ day
of ____________, 199___
THE WISER OIL COMPANY
By: ]**
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
**Required if the Assignee is an Eligible Assignee solely by reason of clause
(iii) of the definition of "Eligible Assignee".
-4-
EXHIBIT F
SUBORDINATE NOTES INDENTURE
[To be attached]
-1-
SCHEDULE 1
LEGAL PROCEEDINGS
1. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ v. The Wiser Oil Company, Clay Circuit Court,
---------------------------------------------------
Civil Action No. 94-CI-357.
2. Davidson v. The Wiser Oil Company, ▇▇▇▇▇▇ Circuit Court, Civil Action No.
---------------------------------
91-CI-176.
3. The Wiser Oil Company ▇. ▇▇▇▇▇▇▇▇, Clay Circuit Court, Civil Action No.
---------------------------------
82-CI-102.
4. The Wiser Oil Company v. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ Circuit Court, Civil
-----------------------------------------
Action No. 92-CI-281.
5. The Wiser Oil Company v. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Circuit Court, Civil Action No.
---------------------------------
88-CI-063.
6. The Wiser Oil Company v. Indigo Oil, Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇, 193/rd/
-----------------------------------------------------------
Judicial District.
7. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ v. The Wiser Oil Company, U.S. District Court Eastern
--------------------------------------------
District of Kentucky London Division, Civil Action No. 97-420.
SCHEDULE 2
CORPORATE STRUCTURE
1. Borrower owns of record 100% of the issued and outstanding shares (975
shares) of the common stock of T.W.O.C., Inc., a Delaware corporation.
2. T.W.O.C. owns of record 100% of the issued and outstanding shares (1,000
shares) of the common stock of The Wiser Marketing Company, a Delaware
corporation.
3. Borrower owns of record 100% of the issued and outstanding shares (1,000
shares) of the common stock of Wiser Oil Delaware, Inc., a Delaware
corporation.
4. Borrower owns a ninety nine percent (99%) membership interest and Wiser
Oil Delaware, Inc. owns a one percent (1%) membership interest in Wiser
Delaware LLC, a Delaware limited liability company.
5. Wiser Delaware LLC owns of record ninety nine percent (99 shares) and
Wiser Oil Delaware, Inc. owns of record one percent (1 share) of the
issued and outstanding shares (100 shares) of common stock of The Wiser
Oil Company of Canada, a Nova Scotia unlimited liability company.
SCHEDULE 3
LETTERS OF CREDIT OUTSTANDING
L/C Number Issue Date Amount Beneficiary Maturity Date
------------ ---------- ---------- -------------------------- -------------
L916100 9/30/96 $10,000.00 Bureau of Land Management 10/22/98
L916110 9/30/96 $10,000.00 State Oil & Gas Comm. N.M. 10/18/98
L916120 9/30/96 $ 7,500.00 State of Tennessee 10/18/98