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EXHIBIT 10.1
CREDIT AGREEMENT
Dated as of April 25, 1996
Among
PETSEC ENERGY, INC.
as Borrower
and
THE BANKS
NAMED HEREIN
as Banks
and
THE CHASE MANHATTAN BANK, N.A.
as Agent
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 1.03. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 1.04. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT
Section 2.01. The Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.02. Making the Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.03. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.04. Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.05. Repayment of the Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.06. Interest on Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.07. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.08. Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.09. Increased Costs and Capital Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.11. Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.12. Conversion of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.13. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.14. Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE III CONDITIONS
Section 3.01. Condition Precedent to Initial Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.02. Conditions Precedent to Each Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.03. Conditions Precedent to Each Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Borrower . . . . . . . . . . . . . . . . . . . . . . 36
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ARTICLE V COVENANTS OF THE BORROWER
Section 5.01. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.02. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VI EVENTS OF DEFAULT
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VII THE AGENT
Section 7.01. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 7.02. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.03. Chase and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.04. Bank Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.05. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7.06. Successor Agent and Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VIII MISCELLANEOUS
Section 8.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 8.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 8.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 8.04. Expenses and Taxes; Compensation; Indemnification; Arranger . . . . . . . . . . . . . . . . 59
Section 8.05. Limitation and Adjustment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.06. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.07. Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.08. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.10. JURISDICTION; DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 8.11. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.12. Hedging Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.13. Special Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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EXHIBITS:
Exhibit A Form of Note
Exhibit B Original Properties
Exhibit C Form of Notice of Borrowing
Exhibit D Form of Mortgage
Exhibit E Form of Opinion of Counsel to the Borrower
Exhibit F Form of Opinion of Special Counsel to the Agent
Exhibit G Form of Notice of Hedging Obligations
Exhibit H Form of Assignment
Exhibit I Form of Notice of Letter of Credit
Exhibit J Form of Subordinated Note
Exhibit J-1 Form of Standstill Agreement
Exhibit K Form of Notice of New Borrowing Base
SCHEDULES:
Schedule I Notice Information for Banks
Schedule II Insurance Requirements
Schedule III Subsidiaries and Partnerships
Schedule IV Hedging Agreements
Schedule V Gas Imbalances
Schedule VI Bank One Liens
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CREDIT AGREEMENT
Dated as of April 25, 1996
Petsec Energy, Inc., a Nevada corporation (the "Borrower"), the
lenders party hereto and The Chase Manhattan Bank, N.A., as Agent hereunder,
agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms. As used in this Agreement,
the term "Borrower" shall have the meaning set forth above and the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Acceptable Security Interest" in any property shall mean a Lien
granted pursuant to a Loan Document (i) which exists in favor of the Collateral
Agent for the benefit of itself, the Banks and the other Persons to be secured
thereby as specified in the Loan Document creating such Lien, (ii) which is
superior to all other Liens other than Permitted Exceptions, (iii) which
secures the Notes and all other Obligations, and (iv) which is perfected and is
enforceable by the Collateral Agent for the benefit of itself and the Banks and
the other beneficiaries to be secured thereby as specified in the Loan Document
creating such Lien against all other Persons.
"Additional Properties" means the Borrower's Oil and Gas Properties
other than the Original Properties, which have been added by the Borrower as
Collateral for the Obligations, by complying with all the requirements of
Section 2.14(a)(iii).
"Advance" means an advance by a Bank to the Borrower as part of a
Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance, each
of which shall be a "Type" of Advance.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such Person or any Subsidiary of such Person.
The term "controls" (including the terms "controlled by" or "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of capital stock, securities, partnership interests
or other ownership interests, by contract or otherwise.
"Agent" means Chase in its capacity as agent pursuant to Article VII
and any successor in such capacity pursuant to Section 7.06.
"Agreement" means this Credit Agreement among the Borrower, the Banks
and the Agent, as amended from time to time in accordance with the terms
hereof.
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"Annual Reserve Report" is defined in the definition of "Reserve
Report".
"Applicable Lending Office" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of a Base Rate Advance, and such
Bank's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
"Applicable Margin" means for any day (i) as to any Advance, a per
annum rate equal to the rate per annum set forth in the following table for the
relevant Type of Advance and for the relevant Percentage Usage of the Borrowing
Base, (ii) as to the commitment fees contemplated by Section 2.03(a), the rate
per annum set forth in the following table for the relevant Percentage Usage of
the Borrowing Base, and (iii) as to the Letter of Credit fees contemplated by
Section 2.13(b)(ii), the rate per annum set forth in the following table for
the relevant Percentage Usage of the available Borrowing Base:
Eurodollar Base Rate Commitment Letter of
Percentage Usage Rate Advance Advance Fee Credit Fee
--------------- --------- ------------ ----------------- ----------------- -------- -----
Less than 50% 1.375% .50 % .50% 1.25 %
Less than 80% and
greater than or equal to
50% 1.50 % .625% .50% 1.375%
Less than 90% and
greater than or equal to
80% 1.625% .725% .50% 1.50%
Greater than or equal to
90% 1.875% .75 % .50% 1.75 %
As used in this definition, "Percentage Usage" means, as of any date of
determination, the quotient (expressed as a percentage) obtained by dividing
the aggregate amount of all Advances outstanding plus all Letter of Credit
Liabilities at the close of business on such date by the Borrowing Base at the
close of business on such date. The Applicable Margin shall change on the same
day as any change in the Percentage Usage.
"Arranger" means Chase Securities Inc.
"Assignment" means an assignment and acceptance entered into by a Bank
and an Eligible Assignee, and accepted by the Agent, in substantially the form
of Exhibit H.
"Bank One Lien" has the meaning specified in Section 3.01(b).
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"Banks" means the lenders listed on the signature pages hereof and
each Eligible Assignee upon its becoming a party hereto pursuant to Section
8.07.
"Base Rate" means, at any time, a fluctuating interest rate per annum
as shall be in effect from time to time which rate per annum shall at all times
be equal to the higher of (i) the Prime Commercial Lending Rate as in effect
from time to time and (ii) the Federal Funds Rate as in effect from time to
time plus 1/2 of 1% per annum.
"Base Rate Advance" means an Advance which bears interest as provided
in Section 2.06(a).
"Borrowing" means a borrowing consisting of simultaneous Advances of
the same Type made by each of the Banks pursuant to Section 2.01.
"Borrowing Base" means at any time an amount equal to the amount
initially stated or subsequently determined and in effect pursuant to Section
2.14, but in no event an amount greater than the aggregate amount of the
Commitments at any time.
"Borrowing Base Deficiency" means at any time the excess of (i) the
aggregate outstanding amount of all of the Advances plus all Letter of Credit
Liabilities at such time over (ii) the Borrowing Base at such time.
"Business Day" means a day of the year on which banks are not required
or authorized to close in New York City or Houston, Texas and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.
"Capitalized Lease Obligations" means, for any Person, all obligations
under leases which, under GAAP, are required to be capitalized on the books of
such Person at the time of determination, in each case taken at the amount
thereof accounted for as indebtedness (net of interest expense) in accordance
with GAAP.
"Capital Expenditure" means, with respect to any Person, any
expenditure that, in accordance with GAAP, is required to be included in or
reflected by the property, plant and equipment account or any other fixed asset
account in the balance sheet of such Person and any expenditure (net of cash
acquired) by such Person to acquire any interest in any other Person.
"CD Deposits" means the sum of $1,936,861 deposited by PSAL as
certificates of deposit with Bank One, Texas, N.A., for the benefit of the
Borrower.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time (by ▇▇▇▇ or otherwise),
set forth at 42 U.S.C. Sections 9601 et seq (1988), state and local analogs and
all rules and regulations promulgated thereunder, in each case as now or
hereafter in effect.
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"Change of Control" means PSAL shall cease to own, legally and
beneficially, directly or through a Subsidiary, at least 80% of the Borrower,
free and clear of all Liens.
"Chase" means The Chase Manhattan Bank, N.A., a national banking
association.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code, and the regulations promulgated and rulings issued
thereunder, in each case as now or hereafter in effect, and any reference to
any statutory provision shall be deemed to be a reference to any successor
provision or provisions.
"Collateral" means all property in which any Lien is granted or
purported to be granted by the Mortgages or any other Loan Document.
"Collateral Agent" means the beneficiary under the Mortgages.
"Commitment" has the meaning specified in Section 2.01.
"Consolidated" refers to the consolidation of the accounts of PSAL,
PetUSA and/or the Borrower and their respective Consolidated Subsidiaries in
accordance with GAAP.
"Consolidated Indebtedness" means all Indebtedness of the Borrower
other than Subordinated Debt.
"Consolidated Interest Expense" means for any period the consolidated
interest expense included in a Consolidated income statement (net of interest
income) of the Borrower and its Consolidated Subsidiaries for such period,
determined in accordance with GAAP, including, without limitation or
duplication (or, to the extent not so included, with the addition of), in
respect of the Borrower or any of its Consolidated Subsidiaries, to the extent
allocable to such period, (i) the portion of any rental obligation in respect
of any Capital Lease Obligation allocable to interest expense in accordance
with GAAP; (ii) the amortization of original issue discounts; (iii) any
interest payments or fees with respect to bankers acceptances or similar
facilities, (iv) net amounts payable by the Borrower or any of its Consolidated
Subsidiaries with respect to interest rate swap, cap, collar or similar
agreements; and (v) Restricted Preferred Interest dividends or distributions
payable during such period.
"Consolidated Net Income" means for any period the sum of (i) the
Consolidated net income (or loss) of the Borrower and its Consolidated
Subsidiaries for such period determined in accordance with GAAP; provided,
however, that in determining such Consolidated net income, there shall be
excluded therefrom (to the extent otherwise included therein) (a) the net
income (or loss) of any Person acquired by the Borrower or a Subsidiary in a
pooling-of-interest transaction for any period prior to the date of such
transaction, (b) the net income (but not loss) of any Person which is subject
to any restriction which prevents the payment of dividends or the making of
distributions on the capital stock, partnership interests or other ownership
interests of such Person to the extent of such
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restrictions, (c) after-tax gains or losses on the sale, transfer or other
disposition by the Borrower or its Consolidated Subsidiaries of (1) Properties,
other than Collateral, to the extent such gains or losses are attributable to
sales in which the aggregate proceeds exceed $2,500,000 during any semi-annual
period ending June 30 and December 31 of each calendar year or (2) any
Collateral (other than produced Hydrocarbons sold in the ordinary course of
business), (d) all extraordinary gains and extraordinary losses, after
applicable income taxes, and (e) any item constituting the cumulative effect of
a change in accounting principles, after applicable income taxes.
"Consolidated Subsidiaries" of PSAL, PetUSA and/or the Borrower means
all Persons that in accordance with GAAP would be accounted for as consolidated
subsidiaries in the respective financial statements of each.
"Convert", "Conversion" and "Converted" each refers to a conversion of
Advances of one Type into Advances of another Type pursuant to Section 2.02(b)
or Section 2.12.
"Default" means any event or condition which, with notice or lapse of
time or both, would, unless cured or waived, become an Event of Default.
"Development Capex" means from time to time the first year of
projected capital expenditures in the most current Annual Reserve Report.
"Distributions" means any direct or indirect dividend, distribution or
other payment of any kind or character (whether in cash, securities or other
property) (i) in respect of the Subordinated Debt, any class of capital stock
or any other ownership interest or to the holders, as such, of any Subordinated
Debt, any class of capital stock or any other ownership interest (including,
without limitation, pursuant to a merger or consolidation) or (ii) in
consideration for or otherwise in connection with any retirement, purchase,
redemption or other acquisition of the Subordinated Debt, capital stock or any
other ownership interest or any options, warrants or rights to purchase or
acquire any Subordinated Debt, any capital stock or any other ownership
interest.
"Dollars" and "$" means lawful money of the United States.
"Domestic Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" opposite its name on
Schedule I hereto or in the Assignment pursuant to which it became a Bank, or
such other office of such Bank as such Bank may from time to time specify to
the Borrower and the Agent.
"EBIT" means for any period, EBITDA for such period less depreciation,
depletion and amortization for such period.
"EBITDA" means for any period the sum of (i) the Consolidated net
income (or loss) of the Borrower and its Consolidated Subsidiaries for such
period determined in accordance with GAAP plus (ii) to the extent included in
the determination of such net income (or loss), the Consolidated
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charges for such period for interest, depreciation, depletion and amortization
plus (or, if there is a benefit from income taxes, minus) (iii) to the extent
included in the determination of such net income, the amount of the provision
for or benefit from income taxes; provided, however, that in determining such
Consolidated net income, such Consolidated charges and such provision for or
benefit from income taxes, there shall be excluded therefrom (to the extent
otherwise included therein) (a) the net income (or loss) of, charges for
interest, depreciation, depletion and amortization of, and such provision for
or benefit from income taxes of, any Person acquired by the Borrower or a
Subsidiary in a pooling-of-interest transaction for any period prior to the
date of such transaction, (b) the net income (but not loss) of, charges for
interest, depreciation, depletion and amortization of, and such provision for
(but not benefit from) income taxes of, any Person which is subject to any
restriction which prevents the payment of dividends or the making of
distributions on the capital stock, partnership interests or other ownership
interests of such Person to the extent of such restrictions, (c) pre-tax gains
or losses on the sale, transfer or other disposition of any Property by the
Borrower or its Consolidated Subsidiaries, other than produced Hydrocarbons
sold in the ordinary course of business, (d) all extraordinary gains and
extraordinary losses, prior to applicable income taxes, and (e) any item
constituting the cumulative effect of a change in accounting principles, prior
to applicable income taxes.
"Eligible Assignee" means any Bank and, with the consent of the Agent,
the Issuing Bank and the Borrower (which consent will not be unreasonably
withheld), any other Person.
"Engineering Reports" has the meaning specified in Section 2.14(a)(i).
"Environment" shall have the meaning set forth in 42 U.S.C. Section
9601(8) (1988).
"Environmental Protection Statute" means any law, statute, ordinance,
rule, regulation, order, decision, decree, judgment, permit, license,
authorization or agreement (all as amended from time to time) arising from, in
connection with, or relating to the pollution, protection or regulation of the
Environment or the protection or regulation of health or safety, whether the
foregoing are required or promulgated by any government or agency or other
authority of or in the United States (whether local, state, or federal) or any
foreign country or subdivision thereof, including without limitation, CERCLA,
RCRA and other laws, statutes, ordinances, rules and regulations relating to
the disposal, removal, remediation, production, storing, refining, handling,
transferring, processing, recycling or transporting of or exposure to any
material or substance, wherever located, and any rule, regulation or decision
issued or promulgated in connection with such laws, statutes, ordinances, rules
or regulations by any government, agency or other authority of or in the United
States (whether local, state or federal) or of any foreign country or
subdivision thereof, in each case as now or hereafter in effect.
"EPA" means the United States Environmental Protection Agency, or any
successor thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
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"ERISA Affiliate" means any trade or business (whether or not
incorporated) which is a member of a group of which the Borrower is a member
and which is under common control within the meaning of the regulations under
Section 414 of the Code.
"ERISA Liabilities" means at any time the minimum liability with
respect to Plans which would be required to be reflected at such time as a
liability on the Consolidated balance sheet of the Borrower and its
Subsidiaries under paragraphs 36 and 70 of Statement of Financial Accounting
Standards No. 87, as such Statement may from time to time be amended, modified
or supplemented, or under any successor statement issued in replacement
thereof.
"Eurodollar Lending Office" means, with respect to any Bank, the
office of such Bank specified as its "Eurodollar Lending Office" opposite its
name on Schedule I hereto or in the Assignment pursuant to which it became a
Bank (or, if no such office is specified, its Domestic Lending Office), or such
other office of such Bank as such Bank may from time to time specify to the
Borrower and the Agent.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Rate Advance comprising part of the same Borrowing, (i) the interest rate per
annum shown on page 3750 of the Dow ▇▇▇▇▇ & Company Telerate screen or any
successor page as the composite offered rate for London interbank, Dollar
deposits, which as of the date of this Agreement appears under the heading
"USD", as of 11:00 a.m. (London time) two Business Days before the first day of
such Interest Period and for a period equal to such Interest Period or (ii) if
such rate is not shown at such place, the rate per annum at which deposits in
Dollars are offered by the principal office of Chase in London, England, to
prime banks in the London interbank market at 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period in an amount
substantially equal to Chase's Eurodollar Rate Advance comprising part of such
Borrowing and for a period equal to such Interest Period.
"Eurodollar Rate Advance" means an Advance which bears interest as
provided in Section 2.06(b).
"Event of Default" has the meaning specified in Section 6.01.
"Expiration Date" means, for any Letter of Credit, the later of (i)
the Stated Expiry Date of such Letter of Credit, (ii) if any Extension Event
referred to in clause (i) of the definition herein of Extension Event shall
occur in respect of such Letter of Credit, the date on which the Issuing Bank
shall receive an opinion from its counsel to the effect that a final and
nonappealable judgment or order has been rendered or issued either terminating
the order, injunction or other process or decree restraining the Issuing Bank
from paying under such Letter of Credit or permanently enjoining the Issuing
Bank from paying under such Letter of Credit, and (iii) if any Extension Event
referred to in clause (ii) of the definition herein of Extension Event shall
occur in respect of such Letter of Credit, the date on which the Issuing Bank
shall receive an opinion from its counsel to the effect that the Issuing Bank
has no further liability under such Letter of Credit. In the determination the
Expiry
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Date pursuant to clauses (ii) and (iii) above, the Issuing Bank agrees to use
reasonable efforts to secure the opinion of its counsel in a timely fashion.
"Extension Event" means, in respect of any Letter of Credit, that at
any time either (i) the Issuing Bank shall have been served with or otherwise
be subjected to a court order, injunction or other process or decree
restraining or seeking to restrain the Issuing Bank from paying any amount
under such Letter of Credit and either (a) there has been a drawing under such
Letter of Credit which the Issuing Bank would otherwise be obligated to pay or
(b) the Stated Expiry Date of such Letter of Credit has occurred but the right
of the beneficiary or transferee to draw under such Letter of Credit has been
extended past such date in connection with the pendency of the related court
action or proceeding; or (ii) the beneficiary or transferee shall have made a
demand, on or prior to the Stated Expiry Date of such Letter of Credit, to the
effect that the Stated Expiry Date be extended or that the value of such Letter
of Credit be held for the account of the beneficiary or transferee, in either
case under circumstances in which the Issuing Bank may incur liability or loss
if the Issuing Bank does not comply with such demand, and either (a) the
Borrower shall have failed to authorize the Issuing Bank to so extend the
Stated Expiry Date within three banking days after the Issuing Bank shall have
notified the Borrower of such demand or (b) the Issuing Bank shall in its sole
discretion decline to extend such Stated Expiry Date.
"Federal Funds Rate" means, for any day, a fluctuating interest rate
per annum equal for such day to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent from three Federal funds brokers of recognized standing
selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereof.
"Financial Statements" means the balance sheets and other financial
statements referred to in Section 4.01(e), copies of which have been delivered
to the Agent and the Banks listed on the signature pages hereof.
"GAAP" means (i) as to the Borrower and PetUSA, United States
generally accepted accounting principles as in effect from time to time ("U.S.
GAAP") and (ii) as to PSAL, Australian generally accepted accounting principles
as in effect from time to time, in each instance applied on a basis consistent
with the requirements of Section 1.03 where applicable.
"Governmental Authority" means the country, state, county, city and
political subdivisions in which any Person or such Person's Property is located
or which exercises valid jurisdiction over any such Person or such Person's
Property, and any court, agency, department, commission, board, bureau or
instrumentality of any of them including monetary authorities which exercise
valid
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13
jurisdiction over any such Person or such Person's Property. Unless otherwise
specified, all references to Governmental Authority herein shall mean a
Governmental Authority having jurisdiction over, where applicable, the
Borrower, its Subsidiaries or any of their Properties or the Agent, any Bank or
any Applicable Lending Office.
"Governmental Requirements" means all judgments, orders, writs,
injunctions, decrees, awards, laws, ordinances, statutes, regulations, rules,
franchises, permits, certificates, licenses, authorizations and the like and
any other requirements of any government or any commission, board, court,
agency, instrumentality or political subdivision thereof.
"Hazardous Materials" means (i) any substance or material identified
as a hazardous substance pursuant to CERCLA; (ii) any substance or material
regulated as a hazardous or solid waste pursuant to RCRA; and (iii) any other
material or substance regulated under any Environmental Protection Statute.
"Hazardous Materials" shall include, without limitation, pollutants,
contaminants, toxic substances, radioactive materials, refined products,
natural gas liquids, crude oil, petroleum and petroleum products,
polychlorinated biphenyls and asbestos.
"Hedging Agreement" means any commodity (whether tangible or
intangible), interest rate or currency swap, cap, floor, forward agreement or
other exchange, price or currency rate or commodity protection agreements or
any option with respect to any such transaction.
"Hedging Obligations" means an aggregate amount not to exceed
$2,500,000, which shall be allocated by the Borrower in accordance with Section
8.12 among those Banks which are party to a Hedging Agreement with the
Borrower, and which shall be secured ratably with all other Obligations
hereunder by the Collateral.
"Hydrocarbon Interests" means all rights, titles, interests and
estates now or hereafter acquired by Borrower or any of its Subsidiaries in and
to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous
hydrocarbon leases, mineral fee interests, overriding royalty and royalty
interests, net profit interests and production payment interests, including any
reserved or residual interests of whatever nature.
"Hydrocarbons" means oil, natural gas, casinghead gas, drip gasoline,
natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous
hydrocarbons and all products refined or separated therefrom.
"Indebtedness" means, for any Person, (a) all liabilities of such
Person for borrowed money or the deferred purchase price of Property or
services (other than accounts payable incurred in the ordinary course of
business and not more than ninety (90) days past due), (b) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all Capitalized Lease Obligations of such Person, (d) all Restricted
Preferred Interests issued by such Person or for which such Person is liable,
(e) all obligations (contingent or otherwise) of such Person to reimburse the
issuer of any letter of credit for drawings that have been or might be made
thereunder, (f) all
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liabilities of such Person in respect of unfunded vested benefits under any
Plan, (g) all Indebtedness of others (1) which is secured by any Lien on
Property owned by such Person, whether or not such Person has assumed or become
liable for the payment of such Indebtedness (other than indebtedness secured by
an operator's, vendor's, carrier's, warehouseman's, repairman's, mechanic's,
▇▇▇▇▇▇▇'▇, materialman's, construction or other like Liens arising by operation
of law in the ordinary course of business or incident to the exploration
development, operation and maintenance of Oil and Gas Properties or statutory
landlord's liens, each of which is in respect of indebtedness that has not been
outstanding more than 90 days or which is being contested in good faith by
appropriate proceedings and for which appropriate reserves have been maintained
in accordance with U.S. GAAP), or (2) the payment of which such Person has
guaranteed or assumed or for the payment or purchase of which such Person has
otherwise become directly or contingently liable, (h) the greater of the fair
market value of any property of such Person sold in connection with, or the
aggregate amount received by such Person in connection with, any production
payment or similar transaction, (i) the maximum aggregate amount which would be
payable by such Person pursuant to forward or prepaid sales of Hydrocarbons or
other minerals (for which consideration has been paid to such Person) if all
such sales were terminated, (j) all obligations of such Person incurred in
connection with any assignment or other conveyance of any right to receive
income that is not accounted for as a sale in accordance with GAAP, (k) all
other obligations of such Person that constitute debt under GAAP, and (l) all
obligations of such Person in connection with securities repurchase
transactions.
"Insufficiency" means, with respect to any Plan, the amount, if any,
by which the present value of the vested benefits under such Plan exceeds the
fair market value of the assets of such Plan allocable to such benefits.
"Interest Period" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such Advance
or the date of the Conversion of any Base Rate Advance into such an Advance and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below and, thereafter, each subsequent period commencing on the last
day of the immediately preceding Interest Period and ending on the last day of
the period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three or six months,
or (subject to Section 2.02(g)) twelve months, in each case as the Borrower
may, upon notice received by the Agent not later than 11:00 a.m. (New York City
time) on the third Business Day prior to the first day of such Interest Period,
select; provided, however, that:
(i) Interest Periods for Advances comprising part of the
same Borrowing shall commence on the same date and shall be of the
same duration;
(ii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided that if such extension would cause the last day
of such Interest Period to occur in the next following calendar month,
the last day of such Interest Period shall occur on the next preceding
Business Day;
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(iii) any Interest Period which begins on the last Business
Day of the calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar
month in which it would have ended if there were a numerically
corresponding day in such calendar month; and
(iv) the Borrower may not select an Interest Period for
any Advance which ends after any principal repayment installment date.
Notwithstanding the foregoing, the initial Interest Period hereunder shall be
one (1) month and shall be subject to early termination by the Majority Banks,
without charge to the Borrower for any costs or expenses relating to such early
termination pursuant to Sections 2.02(c) or 8.04(b), upon four (4) Business
Days prior written notice to the Borrower.
"Investment" means, as applied to any Person, any direct or indirect
(i) purchase or other acquisition by such Person of any interest in stock,
securities, partnership interests or other ownership interests of any other
Person, (ii) loan, advance or other Indebtedness made by such Person to any
other Person, (iii) guaranty, assumption or other incurrence of liability by
such Person of or for any Indebtedness or other obligation of any other Person,
or (iv) capital contribution or other investment by such Person in any other
Person. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment or interest earned on such Investment.
"Issuing Bank" means Chase and any successor issuing bank pursuant to
Section 7.06.
"Letter of Credit" means each letter of credit issued by any Issuing
Bank pursuant to Section 2.13, or by the Banks pursuant to Section 7.06 in the
event there is no Issuing Bank.
"Letter of Credit Liabilities" means the maximum aggregate amount of
all undrawn portions of Letters of Credit (after giving effect to any step up
provision or other mechanism for increases, if any) plus the aggregate amount
of all drawings under Letters of Credit which are unpaid.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien, claim or charge of any kind (including, without limitation, any
production payment, advance payment or similar arrangement with respect to
minerals in place, any agreement to grant any Lien, any agreement to refrain
from granting any Lien granted by or required to be granted by any Loan
Document, any conditional sale or other title retention agreement, the interest
of a lessor under a capital lease and any filing or agreement to provide any
financing statement or other Lien perfection document to secure an obligation,
but excluding filings by lessors under any operating lease of office equipment,
vehicles or other personal property so long as the obligations under such lease
do not constitute Indebtedness), whether or not filed, recorded or otherwise
perfected under applicable law.
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16
"Loan Documents" means this Agreement, the Notes, the Mortgages and
each other agreement, instrument or document executed at any time in connection
with this Agreement which is designated in writing by the Agent and the
Borrower as a Loan Document.
"Majority Banks" means at any time the Agent plus Banks holding at
least 66-2/3% of the sum of the then aggregate unpaid principal amount of the
Advances owing to Banks plus the then existing amount of Letter of Credit
Liabilities, or, if no such principal amount and no Letter of Credit
Liabilities are then outstanding, Banks having at least 66-2/3% of the total of
all Commitments (provided, however, that, for purposes of this definition,
neither the Borrower nor any Subsidiary of Borrower nor PSAL nor any Subsidiary
of PSAL, if a Bank, shall be included in (i) the Banks holding Advances or
Letter of Credit Liabilities or having any of the Commitments or (ii)
determining the aggregate unpaid principal amount of the Advances, the amount
of Letter of Credit Liabilities or the total of all Commitments). For purposes
of this definition and Section 8.07, Letter of Credit Liabilities shall be
considered held by the respective Banks in accordance with the respective
amounts of their participations therein pursuant to Section 2.13, with the
Issuing Bank holding the balance thereof after taking into account such
participations or, in the event there is no Issuing Bank, in the actual amounts
represented by each Bank's Letter of Credit issued pursuant to Section 7.06.
"Maturity Date" means April 19, 2000.
"Mortgages" means collectively the Mortgage, Security Agreement,
Assignment of Security Interests and Liens, Assignment of Production and
Financing Statements dated as of the date hereof, which create an Acceptable
Security Interest in each of the Original Properties, executed by the Borrower
and delivered to the Collateral Agent in connection herewith, together with all
other security documents delivered by Borrower to the Collateral Agent covering
Additional Properties, all as amended or modified from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of
the preceding five plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means an employee benefit plan, other than a
Multiemployer Plan, subject to Title IV of ERISA to which the Borrower or any
ERISA Affiliate, and more than one employer other than the Borrower or an ERISA
Affiliate, is making or accruing an obligation to make contributions or, in the
event that any such plan has been terminated, to which the Borrower or any
ERISA Affiliate made or accrued an obligation to make contributions during any
of the five plan years preceding the date of termination of such plan.
"Note" means a promissory note of the Borrower payable to the order of
any Bank, in substantially the form of Exhibit A, evidencing indebtedness of
the Borrower to such Bank resulting from Advances owing to such Bank.
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"Notice of Borrowing" has the meaning specified in Section 2.02(a).
"Notice of Hedging Obligations" has the meaning specified in Section
8.12.
"Notice of Letter of Credit" has the meaning specified in Section
2.13(a).
"Obligations" means all obligations (liquidated, contingent or
otherwise) from time to time owed by the Borrower pursuant to, as a result of
or in connection with any of the Loan Documents, including, without limitation,
all principal of and interest on the Advances, all Letter of Credit Liabilities
and all obligations to pay fees, costs, expenses, indemnities and other amounts
under any Loan Document, and all Hedging Obligations allocated by the Borrower
pursuant to Section 8.12.
"Oil and Gas Properties" means all Hydrocarbon Interests; any
Properties now or hereafter pooled or unitized with the Hydrocarbon Interests;
all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including without
limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; all operating agreements, contracts and other agreements which
relate to any of the Hydrocarbon Interests or the production, sale, purchase,
exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon
Interests; all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, including all oil in tanks, the
lands covered thereby and all rents, issues, profits, proceeds, products,
revenues and other incomes from or attributable to the Hydrocarbon Interests;
all tenements, hereditaments, appurtenances and Properties in any manner
appertaining, belonging, affixed or incidental to the Hydrocarbon Interests;
and all Properties, rights, titles, interests and estates described or referred
to above, including any and all Property, real or personal, now owned or
hereinafter acquired and situated upon, used, held for use or useful in
connection with the operating, working or development of any of such
Hydrocarbon Interests or Property (excluding drilling rigs, automotive
equipment or other personal property which may be on such premises for the
purpose of drilling a well or for other similar temporary uses) and including
any and all oil ▇▇▇▇▇, gas ▇▇▇▇▇, injection ▇▇▇▇▇ or other ▇▇▇▇▇, buildings,
structures, fuel separators, liquid extraction plans, plant compressors, pumps,
pumping units, field gathering systems, tanks and tank batteries, fixtures,
valves, fittings, machinery and parts, engines, boilers, meters, apparatus,
equipment, appliances, tools, implements, cables, wires, towers, casing, tubing
and rods, surface leases, rights-of-way, easements and servitudes together with
all additions, substitutions, replacements, accessions and attachments to any
and all of the foregoing.
"Original Properties" means all of the Hydrocarbon Interests described
on Exhibit B and all Oil and Gas Properties relating thereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
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"Permitted Exceptions" means (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith by appropriate action and for which appropriate reserves have been
maintained; (ii) Liens in connection with workmen's compensation, unemployment
insurance or other social security, old age pension or public liability
obligations not yet due or which are being contested in good faith by
appropriate action and for which appropriate reserves have been maintained in
accordance with GAAP; (iii) operators', vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction or other like
Liens arising by operation of law in the ordinary course of business or
incident to the exploration, development, operation and maintenance of Oil and
Gas Properties or statutory landlord's liens, each of which is in respect of
obligations that have not been outstanding more than 90 days or which are being
contested in good faith by appropriate proceedings and for which appropriate
reserves have been maintained in accordance with GAAP; (iv) any Liens reserved
in leases or farmout agreements for rent or royalties and for compliance with
the terms of the farmout agreements or leases in the case of leasehold estates,
to the extent that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any of its Subsidiaries or materially
impair the value of such Property subject thereto; (v) encumbrances (other than
to secure the payment of borrowed money or the deferred purchase price of
Property or services), easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any rights of way or other
Property of the Borrower or any of its Subsidiaries for the purpose of roads,
pipelines, transmission lines, transportation lines, distribution lines for the
removal of gas, oil, coal or other minerals or timber, and other like purposes,
or for the joint or common use of real estate, rights of way, facilities and
equipment, and defects, irregularities, zoning restrictions and deficiencies in
title of any rights of way or other Property which in the aggregate do not
materially impair the use of such rights of way or other Property for the
purposes of which such rights of way and other Property are held by the
Borrower or any of its Subsidiaries or materially impair the value of such
Property subject thereto; (vi) deposits of cash in support of bids at auction
for oil and gas leases offered by the Minerals Management Service or any other
Governmental Authority, (vii) deposits of cash and securities (provided such
consensual Liens are subordinated to the Indebtedness in form and substance
satisfactory to the Agent) to secure the payment or performance of tenders,
statutory or regulatory, obligations, surety and appeal bonds, bids, leases,
governmental contracts and leases, performance and return of money bonds and
other similar obligations incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money but including
lessee or operator obligations under statutes, governmental regulations or
instruments related to the ownership, exploration and production of oil, gas
and minerals on state, federal or foreign land or waters) not exceeding
$2,500,000 in the aggregate for all such deposits; (viii) Liens created by the
Mortgages; and (ix) Liens existing on the date hereof on Property securing the
Finova Leases (as defined in Section 5.02(d)).
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"Permitted Investments" means:
(i) investments in direct obligations of the United
States or any agency thereof maturing not more than one year from date
of issue;
(ii) investments in commercial paper, certificates of
deposit and bankers acceptances, maturing not more than one year after
the date of issue, issued by commercial banking institutions each of
which is a member of the Federal Reserve System, has its short-term
deposits rated A- or higher by Moody's or Standard & Poor's and has a
combined capital and surplus and undivided profits of not less than
$100,000,000;
(iii) investments in commercial paper, maturing not more
than one year after the date of issue, issued by a corporation (other
than an Affiliate of the Borrower) with a rating of P-1 by Moody's, or
A-1 by Standard & Poor's;
(iv) Eurodollar deposits, maturing not more than one year
after the date of issue, in banks, each of which has capital of not
less than $100,000,000 and has its short-term deposits rated A- or
higher by Moody's or Standard & Poor's;
(v) investments in mutual funds which hold only
securities which if held directly would be Permitted Investments.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof or any trustee, receiver, custodian or similar official.
"Petroleum Engineer" means ▇▇▇▇▇ ▇▇▇▇▇ Company or a certified
petroleum engineer or other independent petroleum consultant selected by the
Borrower and acceptable to Agent and Majority Banks in their sole discretion.
"PetUSA" means Petsec (U.S.A.) Inc., a Nevada corporation.
"Plan" means an employee benefit plan (other than a Multiemployer
Plan) which is (or, in the event that any such plan has been terminated within
five years after a transaction described in Section 4069 of ERISA, was)
maintained for employees of the Borrower or any ERISA Affiliate and covered by
Title IV of ERISA.
"Preferred Interest" means, as applied to any Person, any capital
stock, partnership interest or other ownership interest of such Person which is
entitled to preference or priority over any other capital stock, partnership
interest or other ownership interest of such Person in respect of either the
payment of dividends or distributions or the distribution of assets upon
liquidation.
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"Prime Commercial Lending Rate" means the per annum rate of interest
from time to time announced by Chase in New York, New York as its prime
commercial lending rate, the Prime Commercial Lending Rate to change when and
as such prime commercial lending rate changes. The Prime Commercial Lending
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. Chase may make commercial loans or
other loans at rates of interest at, above or below the Prime Commercial
Lending Rate.
"Property" or "asset" (in each case, whether or not capitalized) means
any interest in any kind of property or asset, whether real, personal or mixed,
or tangible or intangible.
"PSAL" means Petroleum Securities Australia Limited, an Australian
corporation organized under Australian Company Number ACN 000 602 700.
"Ratable Portion" means as to any Bank at any date the amount obtained
by dividing (i) such Bank's Commitment at such date by (ii) the aggregate
amount at such date of all Commitments of all of the Banks.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as
amended from time to time, set forth at 42 U.S.C. Sections 6901 et seq (1988),
state and local analogs and all rules and regulations promulgated thereunder,
in each case as now or hereafter in effect.
"Redetermination Date" has the meaning specified in Section 2.14.
"Register" has the meaning specified in Section 8.07(c).
"Regulation D" means Regulation D of the Federal Reserve Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation G" means Regulation G of the Federal Reserve Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Federal Reserve Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Reserve Report" means a report, in form and substance satisfactory to
the Agent, setting forth, as of the last day of each fiscal year of the
Borrower (the "Annual Reserve Report") and the last day of the sixth month
following the end of each fiscal year of the Borrower (the "Semi-Annual Reserve
Report") (or such other date in the event of an unscheduled redetermination):
(i) the oil and gas reserves attributable to the Borrower's Oil and Gas
Properties subject thereto together with a projection of the rate of production
and future net income, taxes, operating expenses and capital expenditures with
respect thereto as of such date, based upon the pricing assumptions consistent
with SEC reporting requirements at the time and (ii) such other information as
the Agent may reasonably request.
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"Restricted Preferred Interest" means any Preferred Interest which is
subject to retirement, purchase, redemption, other acquisition or conversion
(other than a conversion into common stock of the Borrower), in whole or in
part, at the option of the holder thereof.
"Revolving Credit Termination Date" means, unless sooner terminated
pursuant to Section 2.04 or Section 6.01, April 19, 1998, as extended pursuant
to Section 2.05.
"▇▇▇▇" means the Superfund Amendments and Reauthorization Act of 1986.
"Scheduled Redetermination Date" has the meaning set forth in Section
2.14(a)(ii).
"SEC" means the Securities and Exchange Commission or any successor
Governmental Authority.
"Semi-Annual Reserve Report" is defined in the definition of "Reserve
Report".
"Stated Expiry Date" means the original expiration date stated on the
face of any Letter of Credit, or such other date, if any, to which the Issuing
Bank extends the expiration of such Letter of Credit at the request of the
Borrower.
"Subordinated Debt" means the unsecured Indebtedness of the Borrower
to PetUSA, provided that, (i) such Indebtedness shall be evidenced by a note in
the form set forth on Exhibit J, (ii) the proceeds thereof shall be used only
for capital expenditures of the Borrower or other general corporate purposes of
the Borrower, (iii) no Subsidiary of the Borrower shall be liable therefor, and
(iv) such Indebtedness shall be subject to a Standstill Agreement between the
holder thereof and the Agent in the form set forth on Exhibit J-1.
"Subordinated Debt Documents" means all notes, subordination
agreements and other documents evidencing, or executed in connection with, any
Subordinated Debt, including the note and Standstill Agreement attached hereto
as Exhibits J and J-1, respectively.
"Subsidiary" means, for any Person, any corporation (including a
business trust), partnership, joint stock company, trust, unincorporated
association, joint venture or other entity of which more than 50% of the
outstanding capital stock, partnership interests or other ownership interests
having ordinary voting power to elect a majority of the board of directors of
such corporation or, in the case of any other entity, a majority of the Persons
performing similar functions (irrespective of whether or not at the time
capital stock, partnership interests or other ownership interests of any other
class or classes of such corporation or such other entity shall or might have
voting power upon the occurrence of any contingency) is at the time directly or
indirectly owned by such Person, by such Person and one or more of its
Subsidiaries, or by one or more other Subsidiaries of such Person.
"Termination Event" means (i) a "reportable event", as such term is
described in Section 4043 of ERISA and the regulations issued thereunder (other
than a "reportable event" not
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subject to the provision for 30-day notice to the PBGC and any "reportable
event" the reporting of which to the PBGC has been waived by ERISA), or an
event described in Section 4062(e) of ERISA, (ii) the distribution of a notice
of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041(c) of ERISA, (iii) the institution of
proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or
(iv) any other event or condition which is reasonably expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan.
"Title Opinions" has the meaning specified in Section 2.14(a)(iii).
"Type" has the meaning specified in the definitions of Advance.
Section 1.02. Computation of Time Periods. In this Agreement in
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each means "to but excluding". The word "through" used herein means "to and
including".
Section 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistent with those applied in the preparation of the Financial Statements,
except as set forth in the notes thereto or as otherwise disclosed in writing
to the Banks.
Section 1.04. Miscellaneous. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section, Schedule and Exhibit references are to
Articles and Sections of and Schedules and Exhibits to this Agreement, unless
otherwise specified.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT
Section 2.01. The Advances.
(a) Each Bank severally agrees, on the terms and conditions herein
set forth, to make Advances to the Borrower from time to time on any Business
Day during the period from the date hereof until the Termination Date in an
aggregate amount not to exceed at any time outstanding an amount equal to (i)
the lesser of (A) the amount set opposite such Bank's name on the signature
pages hereof as its Commitment, or if such Bank has entered into any
Assignment, set forth for such Bank as its Commitment in the Register
maintained by the Agent pursuant to Section 8.07(c), as such amount may be
reduced pursuant to Section 2.04 (such Bank's "Commitment") or (B) the Bank's
Ratable Portion of the Borrowing Base as of the date of each Advance, minus
(ii) such Bank's Ratable Portion of the aggregate of all Letter of Credit
Liabilities at such time.
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(b) Each Borrowing shall consist of Advances of the same Type made
on the same day by the Banks ratably according to their respective Commitments.
Each Borrowing shall be in an aggregate amount not less than $2,000,000 and in
integral multiples of $1,000,000. Within the limits set forth in Section
2.01(a), the Borrower may from time to time borrow, prepay pursuant to Section
2.07 and Section 2.14(b), and reborrow under this Section 2.01.
Section 2.02. Making the Advances.
(a) Borrowing Procedure. Each Borrowing shall be made on notice,
given not later than 11:00 a.m. (New York City time) on the Business Day prior
to the date (which shall be a Business Day) of a proposed Borrowing comprised
of Base Rate Advances and not later than 11:00 a.m. (New York City time) on the
third Business Day prior to the date of a proposed Borrowing comprised of
Eurodollar Rate Advances, by the Borrower to the Agent, which shall give to
each Bank prompt notice thereof by telecopier or telex. Each such notice of a
Borrowing (a "Notice of Borrowing") shall be by telephone or telecopier,
confirmed promptly in writing if by telephone, in substantially the form of
Exhibit C, specifying therein the requested (i) date of such Borrowing, (ii)
Type of Advances comprising such Borrowing, (iii) aggregate amount of such
Borrowing, and (iv) if such Borrowing is to be comprised of Eurodollar Rate
Advances, the initial Interest Period for each such Advance. Each Bank shall,
before 12:00 noon (New York City time) on the date of each Borrowing, make
available for the account of its Applicable Lending Office to the Agent at its
address referred to in Section 8.02, in same day funds, such Bank's ratable
portion of such Borrowing. After the Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the Agent
will make such funds available to the general deposit account of the Borrower
with the Agent.
(b) Certain Limitations. Notwithstanding any other provision in
this Agreement:
(i) at no time shall there be more than seven Interest
Periods applicable to outstanding Eurodollar Rate Advances;
(ii) the Borrower may not select Eurodollar Rate Advances
for any Borrowing if the aggregate amount of such Borrowing is less
than $2,000,000;
(iii) if any Bank shall notify the Agent that the
introduction of or any change in or in the interpretation of any law
or regulation makes it unlawful, or that any central bank or other
Governmental Authority asserts that it is unlawful, for such Bank or
its Eurodollar Lending Office to perform its obligations hereunder to
make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate
Advances hereunder, (A) the obligation of the Banks to make, or to
Convert Advances into, Eurodollar Rate Advances shall be suspended
until the Agent shall notify the Borrower and the Banks that the
circumstances causing such suspension no longer exist and (B) the
Borrower shall forthwith prepay in full all Eurodollar Rate Advances
of all Banks then outstanding, together with interest accrued thereon,
unless the Borrower, within five Business Days of notice from the
Agent, Converts all Eurodollar
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Rate Advances of all Banks then outstanding into Base Rate Advances in
accordance with Section 2.12;
(iv) if, with respect to any Eurodollar Rate Advances, the
Majority Banks shall notify the Agent either (A) that the Eurodollar
Rate for any Interest Period for such Advances will not adequately
reflect the cost to such Majority Banks of making, funding or
maintaining their respective Eurodollar Rate Advances for such
Interest Period as a result of changes in the London interbank
eurodollar market occurring after the date of this Agreement, or (B)
that after making all reasonable efforts, Dollar deposits for the
relevant amounts and Interest Period for their respective Advances are
not available to them in the London interbank market, the Agent shall
forthwith so notify the Borrower and the Banks, whereupon (i) each
Eurodollar Rate Advance will automatically, on the last day of the
then existing Interest Period therefor, Convert into a Base Rate
Advance, and (ii) the obligation of the Banks to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower and the Banks that the circumstances
causing such suspension no longer exist;
(v) if the Borrower shall fail to select the duration of
any Interest Period for any Eurodollar Rate Advances in accordance
with the provisions contained in the definition of "Interest Period"
in Section 1.01, the Agent will forthwith so notify the Borrower and
the Banks and such Advances will automatically, on the last day of the
then existing Interest Period therefor, Convert into Base Rate
Advances; and
(vi) if the aggregate unpaid principal amount of
Eurodollar Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $2,000,000, such
Advances shall automatically, on the last day of the then existing
Interest Period therefor, Convert into Base Rate Advances.
(c) Notice Irrevocable. Each Notice of Borrowing, each notice of
an Interest Period and each notice of Conversion pursuant to Section 2.12 shall
be irrevocable and binding on the Borrower. The Borrower shall indemnify each
Bank against any loss, cost or expense incurred by such Bank as a result of (i)
in the case of any Borrowing which the related Notice of Borrowing specifies is
to be comprised of Eurodollar Rate Advances, any failure to fulfill on or
before the date specified in such Notice of Borrowing for such Borrowing the
applicable conditions set forth in Article III, or any failure to borrow for
any other reason, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to fund the
Advance to be made by such Bank as part of such Borrowing when such Advance, as
a result of such failure, is not made on such date, (ii) following any Default
by Borrower, the failure of any Conversion to Eurodollar Rate Advances to occur
when specified in the relevant notice of Conversion, (iii) following any
Default by Borrower the failure of any Interest Period to be applicable as
specified in the relevant notice of Interest Period, (iv) any notice having
been given by a Bank to the Agent as described in Section 2.02(b)(iii), except
to the extent attributable to the gross negligence of any Bank, or (v) any
notice having been given
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by the Majority Banks to the Agent as described in Section 2.02(b)(iv), except
to the extent attributable to the gross negligence of any Bank.
(d) Agent Reliance. Unless the Agent shall have received notice
from a Bank prior to the date of any Borrowing that such Bank will not make
available to the Agent such Bank's Ratable Portion of such Borrowing, the Agent
may assume that such Bank has made such portion available to the Agent on the
date of such Borrowing in accordance with Section 2.02(a) and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so
made such Ratable Portion available to the Agent, such Bank and the Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount
is made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to Advances comprising such Borrowing and (ii) in the case of such Bank,
the Federal Funds Rate. If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Bank's
Advance as part of such Borrowing for purposes of this Agreement.
(e) Obligations of Banks Several. The failure of any Bank to make
the Advance to be made by it as part of any Borrowing shall not relieve any
other Bank of its obligation hereunder to make its Advance on the date of such
Borrowing, but no Bank shall be responsible for the failure of any other Bank
to make the Advance to be made by such other Bank on the date of any Borrowing.
(f) Notes. The indebtedness of the Borrower to each Bank
resulting from Advances owing to such Bank shall be evidenced by the Note of
the Borrower payable to the order of such Bank in substantially the form of
Exhibit A hereto.
(g) Twelve Month Interest Periods. The Borrower shall notify the
Agent and the Banks at least six Business Days in advance of any Borrowing of
or Conversion to Eurodollar Rate Advances with an Interest Period of twelve
months. The Borrower will be entitled to select such twelve month Interest
Period unless any Bank notifies the Agent (before 10:00 A.M. on the fourth
Business Day preceding the date of the proposed Borrowing or Conversion) that
deposits corresponding to such Bank's Eurodollar Rate Advance and the proposed
Interest Period are not expected to be available to such Bank in the London
interbank market on the first day of such Interest Period.
Section 2.03. Fees. (a) Commitment Fee. The Borrower agrees to
pay to the Agent for the account of each Bank a commitment fee on the average
daily unused amount of the lesser of (i) such Bank's Commitment or (ii) such
Bank's Ratable Portion of the Borrowing Base, from the date hereof in the case
of each Bank listed on the signature pages hereof and from the effective date
specified in the Assignment pursuant to which it became a Bank in the case of
each other Bank until the Termination Date, payable quarterly in arrears on the
last Business Day of March, June, September and December hereafter, commencing
June 30, 1996, and on the Revolving Credit
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Termination Date, at a rate per annum equal at all times to the Applicable
Margin for commitment fees as contemplated by clause (ii) of the definition of
Applicable Margin.
(b) Agent Fee. The Borrower agrees to pay to the Agent for its
sole account such fees as may be agreed to in writing by it and the Agent.
Section 2.04. Reduction of Commitments. The Borrower shall have
the right at any time and from time to time, upon at least three Business Days'
written notice to the Agent, to terminate in whole or permanently reduce
ratably in part the aggregate Commitments of the Banks; provided that each
partial reduction shall be in the minimum aggregate amount of $1,000,000 and in
an integral multiple of $100,000; and provided further that the aggregate
amount of the Commitments of the Banks shall not be reduced to an amount which
is less than the sum of the then amount of the Letter of Credit Liabilities
plus the aggregate principal amount of the Advances then outstanding.
Section 2.05. Repayment of the Advances. The Borrower shall repay
to the Banks all of the Advances in eight quarterly installments, the first of
which shall be due and payable on the last Business Day (as such term is used
in relation to Eurodollar Rate Advances) of the third calendar month following
the Revolving Credit Termination Date, the next six of which shall be due and
payable on the last Business Day (as that term is used in relation to
Eurodollar Rate Advances) of the 6th, 9th, 12th, 15th, 18th and 21st calendar
month following the Revolving Credit Termination Date, and the final one of
which shall be due and payable on the last Business Day (as such term is used
in relation to Eurodollar Rate Advances) of the 24th calendar month following
the Revolving Credit Termination Date, with each installment being in the
amount equal to one-eighth (1/8th) of the aggregate amount of all Advances
outstanding as of the Revolving Credit Termination Date (which amount is an
aggregate amount for all of the Banks and is to be allocated ratably among the
Banks as contemplated by Section 2.08(a)). On or prior to the 90th day
preceding the then current Revolving Credit Termination Date, the Borrower may
request in writing to the Agent and the Banks that the Banks extend the
Revolving Credit Termination Date for a period of one year; provided however,
that any such extension shall require the consent of all the Banks, which
consent may be withheld by each Bank in its sole discretion, and provided
further that if any Bank has not responded to such request in writing within 30
days after receipt of the written request of the Borrower by the Agent, such
failure shall be deemed a denial of such request.
Section 2.06. Interest on Advances. The Borrower shall pay
interest on the unpaid principal amount of each Advance from the date of such
Advance until such principal amount shall be paid in full, at the following
rates per annum:
(a) Base Rate Advances. During such periods as such Advance is a
Base Rate Advance, a rate per annum equal at all times to the sum of the Base
Rate in effect from time to time plus the Applicable Margin for Base Rate
Advances in effect from time to time, payable quarterly in arrears on the last
day of each March, June, September and December and on the date such Base Rate
Advance shall be Converted or paid in full; provided that any amount of
principal (other than principal of any Eurodollar Rate Advance) which is not
paid when due (whether at stated maturity,
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by acceleration or otherwise) shall bear interest, from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate
per annum equal at all times to the sum of 2% per annum plus the Base Rate in
effect from time to time plus the Applicable Margin for Base Rate Advances in
effect from time to time.
(b) Eurodollar Rate Advances. During such periods as such Advance
is a Eurodollar Rate Advance, a rate per annum equal at all times during the
Interest Period for such Advance to the sum of the Eurodollar Rate for such
Interest Period plus the Applicable Margin for Eurodollar Rate Advances in
effect from time to time, payable on the last day of such Interest Period and,
if such Interest Period is longer than three months, at three-month intervals
following the first day of such Interest Period; provided that any amount of
principal of any Eurodollar Rate Advance which is not paid when due (whether at
stated maturity, by acceleration or otherwise) shall bear interest, from the
date on which such amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to the greater of (x) the sum of
2% per annum plus the Base Rate in effect from time to time plus the Applicable
Margin for Base Rate Advances in effect from time to time and (y) the sum of 2%
per annum plus the rate per annum required to be paid on such Advance
immediately prior to the date on which such amount became due.
Section 2.07. Prepayments. The Borrower shall have no optional
right to prepay any principal amount of any Advance other than as provided in
this Section 2.07. The Borrower may, upon at least three Business Days' prior
written notice to the Agent in the case of a prepayment of a Eurodollar Rate
Advance and one (1) Business Days' prior written notice to the Agent in the
case of a prepayment of a Base Rate Advance, in each case stating the proposed
date (which shall be a Business Day) and aggregate principal amount of the
prepayment, and if such notice is given the Borrower shall, prepay the
outstanding principal amounts of the Advances comprising part of the same
Borrowing in whole or ratably in part, together with accrued interest to the
date of such prepayment on the principal amount prepaid; provided, however,
that (x) each partial prepayment of a Borrowing comprised of Base Rate Advances
(as opposed to any payment in full) shall be in an aggregate principal amount
not less than $2,000,000 and an integral multiple of $1,000,000, and after
giving effect thereto such Borrowing shall not have an outstanding principal
amount less than $2,000,000, (y) each partial prepayment of a Borrowing
comprised of Eurodollar Rate Advances (as opposed to any payment in full) shall
be in an aggregate principal amount not less than $2,000,000 and an integral
multiple of $1,000,000, and after giving effect thereto such Borrowing shall
not have an outstanding principal amount less than $2,000,000; and (z) in the
case of any such prepayment of a Eurodollar Rate Advance, the Borrower shall be
obligated to reimburse the Banks in respect thereof pursuant to Section
8.04(b). Each voluntary prepayment of principal following the Revolving Credit
Termination Date shall reduce each subsequent installment of principal due
under Section 2.05 by an amount equal to the principal amount of such voluntary
prepayment divided by the number of regular quarterly payments remaining due on
the Notes under Section 2.05. Notwithstanding the foregoing, any prepayment of
principal following the Revolving Credit Termination Date resulting from a
Borrowing Base Deficiency shall be applied to installments of principal in
inverse order of their maturity.
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Section 2.08. Payments and Computations.
(a) Procedure for Payments by Borrower. Except for payments to be
made to the Issuing Bank as contemplated by Section 2.13, the Borrower shall
make each payment hereunder and under the Notes not later than 12:00 noon (New
York City time) on the day when due in Dollars to the Agent at its address
referred to in Section 8.02 in same day funds. The Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal, interest, commissions on Letters of Credit as contemplated by
Section 2.13(b) or commitment fees ratably to the Banks for the account of
their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any Bank to such Bank for the account of
its Applicable Lending Office, in each case to be applied in accordance with
the terms of this Agreement. Upon its acceptance of an Assignment and
recording of the information contained therein in the Register pursuant to
Section 8.07(d), from and after the effective date specified in such
Assignment, the Agent shall make all payments hereunder and under the Notes in
respect of the interest assigned thereby to the Bank assignee thereunder, and
the parties to such Assignment shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
All payments shall be applied first to the payment of Base Rate Advances and
second to Eurodollar Rate Advances.
(b) Computation of Interest and Fees. All computations of
interest based on the Base Rate (except during such times as the Base Rate is
determined pursuant to clause (ii) of the definition thereof) and of commitment
fees shall be made by the Agent on the basis of a year of 365 or 366 days, as
the case may be, and all computations of interest based on the Eurodollar Rate,
the Federal Funds Rate or, during such times as the Base Rate is determined
pursuant to clause (ii) of the definition thereof, the Base Rate shall be made
by the Agent on the basis of a year of 360 days, in each case for the actual
number of days (including the first day but excluding the last day) occurring
in the period for which such interest or fees are payable. Each determination
by the Agent of an interest rate hereunder shall be conclusive and binding for
all purposes, absent manifest error. The Agent shall promptly notify the
Borrower and each Bank of each determination by it of the Eurodollar Rate
applicable to any Advance.
(c) Payment on Non-Business Days. Whenever any payment hereunder
or under the Notes shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of interest or commitment fees, as the case may be; provided, however, if such
extension would cause payment of interest on or principal of Eurodollar Rate
Advances to be made in the next following calendar month, such payment shall be
made on the next preceding Business Day.
(d) Agent Reliance. Unless the Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the Banks
hereunder that the Borrower will not make such payment in full, the Agent may
assume that the Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed
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to each Bank on such due date an amount equal to the amount then due such Bank.
If and to the extent that the Borrower shall not have so made such payment in
full to the Agent, each Bank shall repay to the Agent forthwith on demand such
amount distributed to such Bank together with interest thereon, for each day
from the date such amount is distributed to such Bank until the date such Bank
repays such amount to the Agent, at the Federal Funds Rate.
(e) Past Due Amounts. All interest, fees and other amounts due
hereunder (other than principal) that are not paid when due shall bear
interest, from the date on which such amount is due until such amount is paid
in full, at a rate per annum equal at all times to the sum of 2% per annum plus
the Base Rate in effect from time to time plus the Applicable Margin for Base
Rate Advances in effect from time to time.
Section 2.09. Increased Costs and Capital Requirements.
(a) Change of Law. If, due to either (i) the introduction of or
any change in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Bank of agreeing to make or making, funding or
maintaining Eurodollar Rate Advances, then the Borrower shall from time to
time, upon demand by such Bank (with a copy of such demand to the Agent),
promptly pay to such Bank additional amounts sufficient to compensate such Bank
for such increased cost. A certificate as to the amount of such increased
cost, submitted to the Borrower and the Agent by such Bank, shall be conclusive
and binding for all purposes, absent manifest error; provided that no Bank may
charge the Borrower for any such increased costs incurred by such Bank for more
than 180 days prior to the date such demand is delivered to the Borrower by
such Bank.
(b) Capital Adequacy. If any Bank determines that either (i) the
introduction of or any change in the interpretation of any law or regulation or
(ii) compliance by such Bank with any law or regulation or any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount of capital required
or expected to be maintained by such Bank or any corporation controlling such
Bank and that the amount of such capital is increased by or based upon the
existence of such Bank's commitment to lend hereunder and other commitments of
this type or the existence of any Letter of Credit (or similar contingent
obligations), then, upon demand by such Bank (with a copy of such demand to the
Agent), the Borrower shall promptly pay to such Bank, from time to time as
specified by such Bank, additional amounts sufficient to compensate such Bank
or such corporation in the light of such circumstances, to the extent that such
Bank reasonably determines such increase in capital to be allocable to the
existence of such Bank's commitment to lend hereunder or the existence of any
Letter of Credit. A certificate as to such amounts submitted to the Borrower
and the Agent by such Bank shall be conclusive and binding for all purposes,
absent manifest error; provided that no Bank may charge the Borrower for any
such increased amounts incurred by such Bank for more than 180 days prior to
the date such demand is delivered to the Borrower by such Bank.
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(c) Reserves. In the event that any Bank shall determine (which
determination shall, absent manifest error, be conclusive and binding for all
purposes) at any time that by reason of Regulation D or other law or regulation
such Bank is required to maintain reserves in respect of eurocurrency loans or
liabilities during any period that it has a Eurodollar Rate Advance
outstanding, then the Borrower shall from time to time, upon demand by such
Bank (with a copy of such demand to the Agent), promptly pay to such Bank
additional amounts sufficient to compensate such Bank for the cost of
maintaining such reserves. A certificate as to such amounts submitted to the
Borrower and the Agent by such Bank shall be conclusive and binding for all
purposes, absent manifest error; provided that no Bank may charge the Borrower
for any such increased costs incurred by such Bank for more than 180 days prior
to the date such demand is delivered to the Borrower by such Bank.
Section 2.10. Taxes.
(a) No Deduction for Certain Taxes. Any and all payments by the
Borrower hereunder or under the Notes shall be made, in accordance with Section
2.08, free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Bank or the Agent (as the case may
be) is organized or any political subdivision thereof and, in the case of each
Bank, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction of such Bank's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder or under any Note to any Bank or the
Agent, (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.10) such Bank or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii)
the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) Other Taxes. In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
under the Notes or from the execution, delivery, filing, recording or
registration of, or otherwise with respect to, this Agreement, the Mortgages,
the Notes or any other Loan Document (hereinafter referred to as "Other
Taxes").
(c) Indemnification. The Borrower will indemnify each Bank and
the Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.10) paid by such Bank or the Agent (as the case
may be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. Payments under any indemnification
provided for in this Section 2.10(c) shall be made within 30
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days from the date such Bank or the Agent (as the case may be) makes written
demand therefor and provides reasonable evidence of any Taxes, Other Taxes or
other amounts paid. Each Bank shall use reasonable efforts (consistent with
its internal policies and legal and regulatory restrictions) to select a
jurisdiction for its Applicable Lending Office or change the jurisdiction of
its Applicable Lending Office, as the case may be, so as to avoid the
imposition of any Taxes or Other Taxes or to eliminate the amount of any such
additional amounts which may thereafter accrue; provided that no such election
or change of the jurisdiction for its Applicable Lending Office shall be made
if, in the reasonable judgment of such Bank, such selection or change would be
disadvantageous to such Bank.
(d) Evidence of Tax Payments. As soon as available following the
date of any payment of Taxes, the Borrower will furnish to the Agent, at its
address referred to in Section 8.02, the original or a certified copy of a
receipt evidencing payment thereof (and the Agent will forward a copy of such
receipt to any Bank referenced in the receipt).
(e) Foreign Bank Withholding Exemption. Each Bank organized under
the laws of a jurisdiction outside the United States, on or prior to the date
of the initial Borrowing in the case of each such Bank listed on the signature
pages hereof and on the date of the Assignment pursuant to which it becomes a
Bank in the case of each other foreign Bank, and from time to time thereafter
if requested by the Borrower or the Agent, shall provide the Agent and the
Borrower with the forms prescribed by the Internal Revenue Service of the
United States certifying as to such Bank's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to such Bank hereunder and under the Notes or other documents
satisfactory to the Borrower and the Agent indicating that all payments to be
made to such Bank hereunder and under the Notes are subject to such taxes at a
rate reduced by an applicable tax treaty. Unless the Borrower and the Agent
have received forms or other documents reasonably satisfactory to them
indicating that payments hereunder and under the Notes are not subject to
United States withholding tax or are subject to such tax at a rate reduced by
an applicable tax treaty, the Borrower or the Agent may withhold taxes from
such payments at the applicable statutory rate in the case of payments to or
for any Bank organized under the laws of a jurisdiction outside the United
States. Should any Bank ever receive any refund, credit or deduction from any
taxing authority to which such Bank would not be entitled but for the payment
by the Borrower or Agent of Taxes withheld pursuant to this Section 2.10(e) (it
being understood that the decision as to whether or not to claim, and if
claimed, as to the amount of any such refund, credit or deduction shall be made
by such Bank, in its sole discretion), such Bank thereupon shall repay to the
Borrower an amount with respect to such refund, credit or deduction equal to
any net reduction in Taxes actually obtained by such Bank, and determined by
such Bank to be attributable to such refund, credit or deduction.
Notwithstanding the foregoing, should any payments hereunder and under the
Notes to any Bank be subject to United States withholding tax, or is subject to
any double taxation due to the lack of an applicable tax treaty, resulting in
increased costs to the Borrower for Taxes or Other Taxes, the Borrower may
require that such Bank assign the entirety of its Commitment, the Advances
owing to it and the Notes held by it, and such Bank's percentage of the
interest in the Letter of Credit Liabilities, to an Eligible Assignee to be
identified by the Borrower at its sole cost and expense.
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(f) Survival of Obligations. Without prejudice to the survival of
any other agreement of the Borrower hereunder, the agreements and obligations
of the Borrower contained in this Section 2.10 shall survive the termination of
the Commitments and this Agreement and the payment in full of principal and
interest hereunder and under the Notes.
Section 2.11. Sharing of Payments, Etc.
(a) If any Bank shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, realization on any
Collateral or otherwise) on account of the principal of or interest on the
Advances owed to it in excess of its ratable share of payments on account of
the principal of or interest on the Advances obtained by all the Banks, such
Bank shall forthwith purchase from the other Banks such participations in the
Advances owed to them as shall be necessary to cause such purchasing Bank to
share the excess payment ratably with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Bank, such purchase from each Bank shall be rescinded and each such
Bank shall repay to the purchasing Bank the purchase price to the extent of
such Bank's ratable share (according to the proportion of (i) the amount of the
participation purchased from such Bank as a result of such excess payment to
(ii) the total amount of such excess payment) of such recovery together with an
amount equal to such Bank's ratable share (according to the proportion of (i)
the amount of such Bank's required repayment to (ii) the total amount so
recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered.
(b) The Borrower agrees that any Bank purchasing a participation
from another Bank pursuant to this Section 2.11 may, to the fullest extent
permitted by law, exercise all its rights hereunder (including the right of
set-off) with respect to such participation as fully as if such Bank were the
direct creditor of the Borrower in the amount of such participation.
Section 2.12. Conversion of Advances. The Borrower may on any
Business Day, upon notice given to the Agent no later than 11:00 a.m. (New York
City time) on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of Section 2.02, Convert all Advances
of one Type comprising the same Borrowing into Advances of the other Type;
provided, however, that (i) any Conversion of any Eurodollar Rate Advances into
Base Rate Advances shall be made on, and only on, the last day of an Interest
Period for such Eurodollar Rate Advances, except as provided in Section
2.02(b)(iii), and (ii) Advances comprising a Borrowing may not be Converted
into Eurodollar Rate Advances if the outstanding principal amount of such
Borrowing is less than $2,000,000. Each such notice of a Conversion shall,
within the restrictions specified above, specify (i) the date of such
Conversion, (ii) the Advances to be Converted, and (iii) if such Conversion is
into Eurodollar Rate Advances, the duration of the Interest Period for each
such Advance.
Section 2.13. Letters of Credit.
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(a) The Issuing Bank agrees, on the terms and conditions herein
set forth, to issue Letters of Credit for the account of the Borrower from time
to time on any Business Day during the period from the date hereof until one
month before the Revolving Credit Termination Date; provided, however, that (i)
at no time shall the Letter of Credit Liabilities exceed $15,000,000, (ii) at
no time shall the sum of the Letter of Credit Liabilities plus the aggregate
unpaid principal amount of all Advances exceed the lesser of (A) the aggregate
amount of the Commitments at such time or (B) the Borrowing Base at such time,
(iii) no Letter of Credit shall have a Stated Expiry Date later than the
earlier of one year from the date of its issuance or the Revolving Credit
Termination Date, and (iv) the Issuing Bank shall not be obligated to issue any
Letter of Credit if it reasonably believes that the prospect of payment from
any Bank pursuant to Section 2.13(f) as to such Letter of Credit may be
impaired. Each Letter of Credit shall be issued on notice given by the
Borrower to the Issuing Bank and the Agent (which shall give to each Bank
prompt notice thereof) not later than 11:00 A.M. (New York City time) on the
third Business Day prior to the date of the issuance of the proposed Letter of
Credit. Each such notice of a Letter of Credit (a "Notice of Letter of
Credit") shall be by telecopier or telex, in substantially the form of Exhibit
I, specifying therein the requested (i) date of issuance of such Letter of
Credit (which shall be a Business Day), (ii) amount of such Letter of Credit
(which must be in Dollars), (iii) expiration date of such Letter of Credit, and
(iv) purpose of such Letter of Credit (which shall not be to secure
Indebtedness). Additionally, if requested by the Issuing Bank, the Borrower
shall execute and deliver to the Issuing Bank, an application for letter of
credit on the Issuing Bank's standard form.
(b) With respect to each Letter of Credit, the Borrower agrees to
pay (i) to the Issuing Bank for its own account, in advance on the date each
Letter of Credit is issued, an issuance fee equal to the greater of $500 or
.10% per annum of the maximum face amount of such Letter of Credit, for the
life of each Letter of Credit, and (ii) to the Agent, a commission, computed
(on the basis of a year of 360 days for the actual number of days elapsed) at a
rate per annum equal to the Applicable Margin for Letter of Credit Fees in
effect from time to time as contemplated by clause (iii) of the definition of
Applicable Margin, on the maximum face amount of such Letter of Credit from the
date of issuance of such Letter of Credit until the Expiration Date for such
Letter of Credit payable quarterly in arrears on the last Business Day of each
month and on such Expiration Date (which commission shall be shared ratably by
all Banks (including the Issuing Bank) based on their respective Ratable
Portions).
(c) The Borrower will immediately and unconditionally pay to the
Issuing Bank upon demand the amount of each payment made under any Letter of
Credit. If the Borrower shall fail to pay to the Issuing Bank the amount of
any such payment immediately upon demand in accordance with the terms of this
Agreement, such payment shall immediately constitute, without necessity of
further act or evidence, a loan (a "Demand Loan") made by the Issuing Bank to
the Borrower on the date of such payment in a principal amount equal to such
payment and repayable upon demand, together with interest on the principal
amount of such Demand Loan remaining unpaid from time to time, payable on
demand and computed from the date such Demand Loan is made as specified above
to the date of repayment in full thereof, at a rate per annum equal to the sum
of the Base Rate
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in effect from time to time plus the Applicable Margin for Base Rate Advances
in effect from time to time plus 2% per annum.
(d) The obligations of the Borrower under this Agreement and any
other agreement or instrument relating to any Letter of Credit shall be
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement and such other agreement or instrument under all
circumstances, including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of this
Agreement, any Letter of Credit or any other agreement or instrument
relating thereto (collectively, the "L/C Related Documents");
(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the obligations of the
Borrower in respect of any Letter of Credit or any other amendment or
waiver of or any consent to departure from all or any of the L/C
Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary
or transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or
any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C Related Documents or
any other transaction;
(iv) any statement or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by the Issuing Bank under any Letter of
Credit against presentation of a draft or document that does not
comply with the terms of such Letter of Credit; or
(vi) any exchange, release or non-perfection of any
collateral for, or any release or amendment or waiver of or consent to
departure from any guarantee of, all or any of the obligations of the
Borrower in respect of any Letter of Credit.
However, this Section 2.13(d) shall not limit any right of the
Borrower to make a claim against the Issuing Bank to the extent provided in
Section 2.13(e).
(e) The Borrower assumes all risks of the acts or omissions of any
beneficiary or transferee of any Letter of Credit with respect to the use of
such Letter of Credit. Neither the Issuing Bank nor any branch, affiliate or
correspondent bank of the Issuing Bank nor any of their respective employees,
agents, officers or directors shall be liable or responsible for: (a) the use
that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee of any Letter of Credit in connection therewith; (b)
the validity, sufficiency or genuineness of documents, or of
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any endorsement thereon, even if such documents should prove to be invalid,
insufficient, fraudulent or forged; (c) payment by the Issuing Bank against
presentation of documents that do not comply with the terms of the relevant
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to the relevant Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, except that the Borrower shall have a claim against the Issuing
Bank, and the Issuing Bank shall be liable to the Borrower, to the extent of
any direct, but not consequential, damages suffered by the Borrower that the
Borrower proves were caused by (i) the Issuing Bank's willful misconduct or
gross negligence in determining whether documents presented under a Letter of
Credit comply with the terms of such Letter of Credit or (ii) the Issuing
Bank's willful failure to make lawful payment under a Letter of Credit after
the presentation to it of a draft and documents strictly complying with the
terms and conditions of such Letter of Credit. In furtherance and not in
limitation of the foregoing, the Issuing Bank may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
(f) Upon the date of the issuance of a Letter of Credit, the
Issuing Bank shall be deemed to have sold to each other Bank and each other
Bank shall have been deemed to have purchased from the Issuing Bank a ratable
participation in the related Letter of Credit Liabilities and all related
Demand Loans equal to such Bank's Ratable Portion at such date and such sale
and purchase shall otherwise be in accordance with the terms of this Agreement.
The Issuing Bank shall promptly notify each such participant Bank by telex or
telecopy of each Letter of Credit issued or increased, the amount of such
Bank's participation in such Letter of Credit and each payment thereunder.
Upon the making of any payment under any Letter of Credit, each Bank (other
than the Issuing Bank) shall pay for the purchase of its participation therein
by immediate payment to the Issuing Bank of same day funds in the amount of its
participation in such payment.
Section 2.14. Borrowing Base.
(a) Determination of Borrowing Base. During the period from and
after the date hereof until October 31, 1996, unless redetermined pursuant to
Section 2.14(a)(ii) or adjusted pursuant to Section 5.01(i), the amount of the
Borrowing Base shall be $62,500,000. The Borrowing Base shall be redetermined
from time to time by the Agent with the concurrence of the Majority Banks in
accordance with this Section 2.14. Upon any redetermination of the Borrowing
Base, such redetermination shall remain in effect until the next successive
Redetermination Date. "Redetermination Date" shall mean the date that the
redetermined Borrowing Base becomes effective subject to the notice
requirements specified in Section 2.14(a)(i) both for scheduled
redeterminations and unscheduled redeterminations. So long as any of the
Commitments are in effect or any Obligations are outstanding hereunder, this
facility shall be governed by the then effective Borrowing Base.
(i) Upon receipt of the reports required by Section
5.01(h) and such other reports, data and supplemental information as
may from time to time be reasonably requested by the Agent (the
"Engineering Reports"), the Agent will redetermine the Borrowing Base.
Such
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redetermination will be in accordance with the Agent's normal and
customary procedures for evaluating oil and gas reserves and other
related assets as such exist at that particular time. The Agent may
make adjustments to the rates, volumes and prices and other
assumptions set forth therein in accordance with its normal and
customary procedures for evaluating oil and gas reserves and other
related assets as such exist at that particular time. The Agent shall
propose to the Banks a new Borrowing Base within 30 days following
receipt by the Agent and the Banks of the Engineering Reports in a
timely and complete manner. After having received notice of such
proposal by the Agent, the Majority Banks shall have 15 days to agree
or disagree with such proposal. If at the end of the 15 days, the
Majority Banks have not communicated their disapproval such silence
shall be deemed to be an approval and the Agent's proposal shall be
the new Borrowing Base. If however, the Majority Banks notify Agent
within 15 days of their disapproval, the Majority Banks shall, within
a reasonable period of time, agree on a new Borrowing Base. The Agent
shall promptly notify the Borrower and Banks in writing of the new
Borrowing Base by delivering to the Borrower and the Banks written
notice thereof in the form of Exhibit K hereto. Any redetermination
of the Borrowing Base shall not be in effect until written notice is
received by the Borrower.
(ii) So long as any of the Commitments are in effect and
until payments in full of all Obligations hereunder, on or around the
last Business Day of each April and October, commencing October 31,
1996 (each being a "Scheduled Redetermination Date"), the Banks shall
redetermine the amount of the Borrowing Base in accordance with
Section 2.14(a)(i). In addition, the Majority Banks may initiate one
unscheduled redetermination of the Borrowing Base between consecutive
Scheduled Redetermination Dates by specifying in writing to the
Borrower the date on which the Borrower is to furnish the Engineering
Reports in accordance with Section 5.01(h) and the date on which such
redetermination is to occur. The Borrower may also request one
unscheduled redetermination between consecutive Scheduled
Redetermination Dates by providing a written request to the Agent
together with new Engineering Reports.
(iii) The Borrower may include additional Oil and Gas
Properties of the Borrower acquired from time to time as Collateral
for the Obligations, which may then be included in the calculation of
the Borrowing Base by Borrower (A) giving written notice to the Agent
of such Properties to be included, (B) subjecting such Properties to
an Acceptable Security Interest (pursuant to security instruments
satisfactory to the Agent), (C) including such Properties in a Reserve
Report prepared by a Petroleum Engineer and submitted to Agent
together with the certificate required under Section 5.01(h)(iii) and
(D) delivering to the Agent title opinions addressed to the Agent for
the benefit of the Banks covering all of such Properties and other
legal opinions in form, scope and substance acceptable to the Agent
opining favorably as to, among such other matters as may be required
by the Agent, (1) the Borrower's ownership of such Properties, (2) the
existence of an Acceptable Security Interest on such Properties, and
(3) matters of the type covered by the opinion attached hereto as
Exhibit K ("Title Opinions") and the opinion attached hereto as
Exhibit E.
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(b) Borrowing Base Deficiency. If, following the determination of
a new Borrowing Base in accordance with Section 2.14(a), there exists a
Borrowing Base Deficiency, the Borrower shall, within 90 days of the first date
on which such Borrowing Base Deficiency existed:
(i) make, in addition to any regularly scheduled
principal payments, mandatory prepayments of principal on the Notes in
an aggregate principal amount that equals or exceeds the amount of
such Borrowing Base Deficiency, together with accrued interest on each
such prepayment to the date of prepayment; and/or
(ii) include as additional Collateral for the Obligations,
Additional Properties of the Borrower complying with all the
requirements of Section 2.14(a)(iii), satisfactory to the Agent and
the Majority Banks, having a loan value (determined by the Agent and
the Majority Banks in their sole discretion in accordance with Section
2.14(a)(i) above) in an amount such that the sum of such loan value
amount plus the aggregate principal amounts of prepayments made
pursuant to Section 2.14(b)(i) in respect of such Borrowing Base
Deficiency equals or exceeds the amount of such Borrowing Base
Deficiency.
ARTICLE III
CONDITIONS
Section 3.01. Condition Precedent to Initial Credit. The
obligation of the Issuing Bank to issue the initial Letter of Credit and of
each Bank to make the initial Advance is subject to the condition precedent
that the Agent shall have received on or before the day of the initial Letter
of Credit or the initial Borrowing (whichever first occurs) the following, each
dated on or before such day, in form and substance satisfactory to the Agent
and (except for the Notes) in sufficient copies for each Bank:
(a) The Notes payable to the order of the respective Banks, duly
executed by the Borrower.
(b) Mortgages duly executed by the Borrower, together with
accompanying financing statements, each of which shall have been properly filed
and recorded in the appropriate offices to establish, which perfect a first and
prior Lien and security interest in favor of the Collateral Agent in each of
the Original Properties subject only to Permitted Exceptions and the liens and
security interests identified in Schedule VI hereto in favor of Bank One,
Texas, N.A. (the "Bank One Liens"), which Bank One Liens shall each be released
of record on or before the date referred to in the first sentence of, and as
contemplated by, Section 8.13; and "letters in lieu" addressed to each
purchaser of Hydrocarbons produced from the Original Properties instructing
such purchasers to make payment for such Hydrocarbons direct to Agent upon
receipt of written notice from Agent.
(c) A certificate of the Secretary or an Assistant Secretary of
the Borrower certifying (i) copies of the resolutions of the Board of Directors
of the Borrower approving this Agreement,
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the Notes, the Mortgages and the other Loan Documents to be executed by the
Borrower and of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement, the Notes and
the other Loan Documents to be executed by the Borrower; (ii) that attached
thereto are true and complete copies of the articles of incorporation and
by-laws of the Borrower as in effect on such date; and (iii) the names and true
signatures of the officers of the Borrower authorized to sign this Agreement,
the Notes and the other Loan Documents to be executed by the Borrower.
(d) Certificates from the appropriate state agencies with respect
to the existence, qualification and good standing of the Borrower.
(e) A certificate of insurance coverage of the Borrower evidencing
that the Borrower is carrying the insurance specified on Schedule II attached
hereto, naming the Agent, the Collateral Agent and each of the Banks as an
additional insured.
(f) One or more Phase I environmental surveys satisfactory to the
Agent and the Banks in their reasonable discretion, evidencing that the
Original Properties are not in violation of any Environmental Protection
Statute.
(g) Title Opinions of Gordon, Arata, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.,
counsel to the Borrower, in form and content satisfactory to the Agent and the
Banks, covering each of the Original Properties evidencing that Borrower owns
good and indefeasible title in and to each of the Original Properties, that the
Mortgages and related financing statements covering such Properties have been
duly filed in all necessary offices in order to provide constructive notice to
third parties of the existence of such Mortgages and financing statements, and
that, upon the filing of duly executed and acknowledged releases of the Bank
One Liens, in the form attached to each opinion, the Mortgages and financing
statements shall constitute a first and prior Lien and security interest in and
to the Original Properties covered thereby.
(h) Each of the parties thereto shall have executed the
Subordinated Debt Documents.
(i) An opinion of Gordon, Arata, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.,
counsel to the Borrower, substantially in the form of Exhibit E and as to such
other matters as the Agent may reasonably request.
(j) An opinion of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., special counsel
to the Agent, substantially in the form of Exhibit F.
(k) Engineering Reports, including Reserve Reports prepared by a
Petroleum Engineer, satisfactory to the Banks covering all of the Original
Properties.
Section 3.2. Conditions Precedent to Each Advance. The obligation
of each Bank to make an Advance (including, without limitation, the initial
Advance) shall be subject to the further
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conditions precedent that on the date of such Advance (a) the following
statements shall be true (and each of the giving of the applicable Notice of
Borrowing regarding the Borrowing of which such Advance is a part and the
acceptance by the Borrower of the proceeds of such Advance shall constitute a
representation and warranty by the Borrower that on the date of such Advance
such statements are true):
(i) the representations and warranties contained in Section 4.01
and the representations and warranties contained in the
Mortgages are correct on and as of the date of such Advance,
before and after giving effect to such Advance and the
Borrowing of which such Advance is a part and to the
application of the proceeds therefrom, as though made on and
as of such date;
(ii) no event has occurred and is continuing, or would result from
such Advance or the Borrowing of which such Advance is a part
or from the application of the proceeds therefrom, which
constitutes, a Default or an Event of Default; and
(iii) following such Advance there shall not exist a Borrowing Base
Deficiency;
and (b) the Agent shall have received such other approvals, opinions or
documents as the Agent may reasonably request.
Section 3.03. Conditions Precedent to Each Letter of Credit. The
obligation of the Issuing Bank to issue each Letter of Credit shall be subject
to the further conditions precedent that on the date of such Letter of Credit
(a) the following statements shall be true (and each of the giving of the
applicable Notice of Letter of Credit and the acceptance by the Borrower of the
issuance of such Letter of Credit shall constitute a representation and
warranty by the Borrower that on the date of issuance of such Letter of Credit
such statements are true):
(i) the representations and warranties contained in Section 4.01
and the representations and warranties contained in the
Mortgages are correct on and as of the date of issuance of
such Letter of Credit, before and after giving effect to such
issuance, as though made on and as of such date;
(ii) no event has occurred and is continuing, or would result from
such Letter of Credit, which constitutes a Default or an Event
of Default; and
(iii) following the issuance of such Letter of Credit, there shall
not exist a Borrowing Base Deficiency;
and (b) the Agent shall have received such other approvals, opinions or
documents as any Bank through the Agent may reasonably request.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) Existence, etc. The Borrower and each of its Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the respective jurisdiction of its incorporation and each has all
requisite power and authority to own its Properties and to carry on its
business as now being conducted and is duly qualified to do business and is in
good standing in every jurisdiction where the failure to maintain such
qualification could reasonably be expected to have a material adverse effect on
the Borrower's ability to perform its obligations under the Loan Documents or
to conduct its business.
(b) Power. The execution, delivery and performance by the
Borrower of each Loan Document and the consummation of the transactions
contemplated hereby (i) are within the Borrower's corporate powers, (ii) have
been duly authorized by all necessary corporate action, (iii) do not contravene
(A) the articles of incorporation or by-laws of the Borrower, (B) any
applicable rule, regulation, order, writ, injunction or decree, or (C) law or
any agreement binding on or affecting the Borrower, and (iv) will not result in
or require the creation or imposition of any Lien prohibited by this Agreement.
At the time of each Borrowing hereunder, such Borrowing and the use of the
proceeds of such Borrowing will be within the Borrower's corporate ▇▇▇▇▇▇, ▇▇▇▇
have been duly authorized by all necessary corporate action, will not
contravene (i) the articles of incorporation or by-laws of the Borrower, (ii)
any applicable rule, regulation, order, writ, injunction or decree, or (iii)
law or any agreement binding on or affecting the Borrower and will not result
in or require the creation or imposition of any Lien prohibited by this
Agreement.
(c) Authorization and Approvals. No authorization, approval,
consent, license or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for the due execution,
delivery and performance by the Borrower of the Loan Documents, or for the
consummation of the transactions contemplated thereby, other than the approval
of the Louisiana State Mineral Board to the Mortgages covering Collateral
located on lands owned or under the jurisdiction of the State of Louisiana. At
the time of each Borrowing hereunder, no authorization, approval, consent,
license or other action by, and no notice to or filing with, any governmental
authority or regulatory body will be required for such Borrowing or the use of
the proceeds of such Borrowing. All authorizations, licenses, consents,
filings, approvals and certificates which are necessary (i) to enable the
Borrower and each Subsidiary of Borrower to carry on any material aspect of the
business in which it is engaged, the lack of which could reasonably be expected
to subject the Borrower or any Subsidiary of Borrower to any liability or
disability which is material to the business, financial condition, assets,
prospects or results of operations of the Borrower and its Subsidiaries, taken
as a whole, or (ii) to enable the Borrower to perform its obligations under the
Loan Documents have been obtained or made and are in full force and effect, and
there has been no material default by the Borrower under any of the terms
thereof applicable to it.
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(d) Enforceable Obligations. This Agreement, the Notes and the
Mortgages have been duly executed and delivered by the Borrower and constitute,
and each other Loan Document, when executed and delivered by the Borrower in
accordance with this Agreement, will constitute, the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
their respective terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally.
(e) Financial Statements.
(i) The Consolidated and consolidating balance sheets of
PSAL, each as at June 30, 1995, and the corresponding Consolidated and
consolidating statements of earnings, stockholders equity and
cashflows of PSAL for the eighteen month period of January 1, 1991 to
June 30, 1992 and each of the three fiscal years ending June 30, 1993,
1994 and 1995, copies of which have been delivered to each Bank listed
on the signature pages hereof, have been audited by KPMG Peat Marwick,
and present fairly the financial position of PSAL as at such date and
the combined results of the operations and cashflows of PSAL and its
Subsidiaries for each of such periods and fiscal years. The
Consolidated balance sheet of the Borrower and the consolidating
balance sheet of PetUSA, each as at June 30, 1995, and the
corresponding Consolidated and consolidating statements of earnings,
stockholders' equity and cash flows of each of the Borrower and PetUSA
for each of the three fiscal years ending June 30, 1993, 1994 and
1995, copies of which have been delivered to each Bank listed on the
signature pages hereof, have been audited by KPMG Peat Marwick, and
present fairly the financial position of the Borrower and PetUSA as at
such date and the combined results of the operations and cash flows of
the Borrower and PetUSA and their respective Subsidiaries, for each of
the three fiscal years ending June 30, 1993, 1994 and 1995.
(ii) The Consolidated balance sheet of the Borrower, the
consolidating balance sheet of PetUSA, and the Consolidated and
consolidating balance sheets of PSAL, each as at December 31, 1995,
and the corresponding Consolidated and consolidating statements of
earnings, stockholders equity and cash flows of each of the Borrower,
PetUSA and PSAL, duly certified by a financial officer of each, copies
of which have been delivered to each Bank listed on the signature
pages hereof, fairly present, subject to year-end audit adjustments,
the financial condition of the Borrower, PetUSA and PSAL as at such
date and the combined results of the operations of and cash flows of
the Borrower, PetUSA and PSAL for the six (6) months ended on such
date.
(iii) Since June 30, 1995, there has been no material
adverse change in the business, financial condition, assets, prospects
or results of operations of the Borrower or any of its Subsidiaries.
(iv) Since the date of this Agreement (after giving effect
to the incurrence by the Borrower of all of the Advances as of such
date), there has been no material adverse change in (A) the business,
financial condition, assets, prospects or results of operations of the
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Borrower, or (B) the ability of the Borrower to perform its
obligations under the Loan Documents.
(f) Litigation. There are no actions, suits or proceedings
pending or, to the best knowledge of the Borrower, threatened against or
affecting the Borrower, any of its Subsidiaries or any of its or their
respective rights or Properties before any court or by or before any
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which could reasonably be expected to have a material
adverse effect on the business, financial condition, assets or results of
operations or prospects of the Borrower or to impair materially the Borrower's
ability to perform its obligations under the Loan Documents or which in any
manner draws into question the validity of any Loan Document. Neither the
Borrower nor, to the best knowledge of the Borrower, any of its Subsidiaries is
in default in any material respect with respect to any applicable order, writ,
injunction or decree of any court, governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which default could
reasonably be expected to have a material adverse effect on the business,
financial condition, assets, results of operations or prospects of the Borrower
or to impair materially the Borrower's ability to perform its obligations under
the Loan Documents or which in any manner draws into question the validity of
any Loan Document.
(g) ERISA Compliance. No Termination Event has occurred or is
reasonably expected to occur with respect to any Plan, except where the
Borrower and its Subsidiaries could not reasonably be expected to have or incur
any fine, penalty or other liability (including, without limitation, liability
to the PBGC, in excess of $1,000,000 in the aggregate). No employee of the
Borrower or any Subsidiary is covered by any Multiemployer Plan or Multiple
Employer Plan. Neither the Borrower nor any ERISA Affiliate has received any
notification that any Plan is in reorganization or has been terminated, within
the meaning of Title IV of ERISA, and the Borrower is not aware of any reason
to expect that any Plan is to be in reorganization or to be terminated within
the meaning of Title IV of ERISA, except where the Borrower and its
Subsidiaries could not reasonably be expected to have or incur any fine,
penalty or other liability (including, without limitation, liability to the
PBGC, in excess of $1,000,000 in the aggregate).
(h) Tax Returns Filed. The Borrower and its Subsidiaries have
filed all United States Federal, state and local income tax returns and all
other material domestic tax returns which are required to be filed by them and
have paid, or provided for the payment before the same became delinquent of,
all taxes due pursuant to such returns or pursuant to any assessment received
by the Borrower or any Subsidiary, other than those taxes contested in good
faith by appropriate proceedings, except where the failure to file such tax
returns or to pay such taxes could not reasonably be expected to have a
material adverse effect on the Borrower's business, financial condition,
assets, prospects or results of operations. The charges, accruals and reserves
on the books of the Borrower and its Subsidiaries in respect of taxes are, in
the opinion of the Borrower, adequate. The Borrower and its Subsidiaries have
set up such reserves as are required by GAAP for the payment of additional
taxes.
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(i) Investment Company Act. The Borrower is not an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(j) Public Utility Holding Company Act. The Borrower is not a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", or a "public utility", as such terms are used in the Public Utility
Holding Company Act of 1935, as amended, any rule or regulation promulgated
thereunder or any order or interpretation of the Securities and Exchange
Commission or its staff issued pursuant thereto.
(k) Regulation U. Neither the Borrower nor any Subsidiary is
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U) or margin stock
(within the meaning of Regulation G). Following the application of the
proceeds of each Advance, not more than 25% of the value of the assets of the
Borrower will consist of assets which are margin stock (within the meaning of
Regulation U) or margin stock (within the meaning of Regulation G) and not more
than 25% of the value of the assets of the Borrower and its Subsidiaries will
consist of assets which are margin stock (within the meaning of Regulation U)
or margin stock (within the meaning of Regulation G). No proceeds of any
Advance have been or will be used in any manner that is not permitted by
Section 5.02(q).
(l) Other Defaults. Neither the Borrower nor any Subsidiary of
Borrower is in default under or with respect to, nor has any event or
circumstance occurred which, but for the passage of time or the giving of
notice or both, would constitute a default under or with respect to, any
contract, agreement, lease or other instrument to which the Borrower or such
Subsidiary is a party and which could reasonably be expected to cause a
material adverse effect on the business, financial condition, assets, results
of operations or reasonably foreseeable prospects of the Borrower, and no
Default or Event of Default exists.
(m) Environmental Matters. The Borrower and each of the
Subsidiaries have been and are in compliance in all respects with all
applicable Environmental Protection Statutes, except to the extent that failure
to comply with such Environmental Protection Statutes could not reasonably be
expected to have a material adverse effect on the business, financial
condition, assets, results of operations or reasonably foreseeable prospects of
the Borrower. There is (1) no presently outstanding allegation by government
officials or other third parties that the Borrower or any of the Subsidiaries
or any of their respective Properties is now or at any time prior to the date
hereof was in violation of any applicable Environmental Protection Statute, (2)
no administrative or judicial proceeding presently pending against the Borrower
or any of the Subsidiaries or against any of their respective Properties
pursuant to such Environmental Protection Statute, and (3) no claim presently
outstanding against the Borrower or any of the Subsidiaries or against any of
their respective Properties, businesses or operations which was asserted
pursuant to any applicable Environmental Protection Statute that, in the case
of all matters described in clauses (1), (2) or (3) above in the aggregate
could reasonably be expected to have a material adverse effect on the
Borrower's business,
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financial condition, assets, reasonably foreseeable prospects or results of
operations. There are no facts or conditions or circumstances known to the
Borrower that the Borrower reasonably believes could form the basis for any
action, lawsuit, claim or proceeding (regulatory or otherwise) involving the
Borrower or any of the Subsidiaries or their respective past or present
Properties, businesses or operations relating to the Environment or
environmental matters, including without limitation any action, lawsuit, claim
or proceeding arising from past or present practices or operations asserted
under any Environmental Protection Statute, that in the aggregate could
reasonably be expected to have a material adverse effect on the Borrower's
business, financial condition, assets, prospects or results of operations.
(n) Title. Other than Permitted Exceptions, the Borrower and its
Subsidiaries have good and indefeasible title to their respective properties
and to all properties reflected by the balance sheet referred to in Section
4.01(e)(i) as being owned by the Borrower or its Subsidiaries. There exists an
Acceptable Security Interest in all of the Oil and Gas Properties set forth in
the most current Reserve Report. After giving full effect to all Permitted
Exceptions, the Borrower owns the net interests in production attributable to
the lands and leases reflected in the most recently delivered Reserve Report
and the ownership of such Properties shall not in any material respect obligate
the Borrower to bear the costs and expenses relating to the maintenance,
development and operations of such Property in an amount in excess of the
working interest of each Property set forth in the most recently delivered
Reserve Report. All information contained in the most recently delivered
Reserve Report is true and correct in all material respects as of the date
thereof. All material leases and agreements necessary for the conduct of the
business of the Borrower and its Subsidiaries are valid and subsisting and are
in full force and effect.
(o) Restrictions. Neither the Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any other restriction which
could reasonably be expected to materially impair the operation of their
respective businesses.
(p) Accuracy of Statements. No statement, information, exhibit,
representation, warranty or report contained in any Loan Document or furnished
to the Agent or any Bank in connection with or pursuant to any Loan Document or
the preparation or negotiation of any Loan Document contains any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements contained therein not misleading when taken as a whole.
There is no fact which the Borrower has not disclosed to the Agent and the
Banks in writing and of which any of its officers or directors are aware which
could reasonably be expected to have a material adverse effect on the Borrower
or any of its Subsidiaries.
(q) Governmental Requirements. Neither the Borrower nor any
Subsidiary of the Borrower (i) is in violation of any Governmental Requirement
or (ii) has failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of any of their
respective properties or the conduct of their respective businesses, except
such violations and failures which could not reasonably be expected to have in
the aggregate (in the event that such violation or failure were asserted by any
Person through appropriate action) a material adverse effect on the
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business, financial condition, assets, reasonably foreseeable prospects or
results of operations of the Borrower.
(r) Operations. The Borrower and its Subsidiaries are in
possession of, and operating in compliance in all material respects with, all
franchises, grants, authorizations, approvals, leases, licenses, permits,
easements, rights- of-way, consents, certificates and orders required to own,
lease, operate or use its respective Properties and to operate its business as
now conducted and proposed to be conducted.
(s) Fiscal Periods. The fiscal year of each of the Borrower,
PetUSA and PSAL is the twelve month period ending on June 30 of each year, and
the fiscal quarters of each of the Borrower, PetUSA and PSAL are each of the
three month periods ending on September 30, December 31, March 31 and June 30
of each year.
(t) Subsidiaries and Partnerships. Except as set forth on
Schedule III, the Borrower has no Subsidiaries and has no interest in any
partnerships.
(u) Location of Business and Offices. The Borrower's principle
place of business and chief executive offices are located at the address set
forth in Section 8.02. The principle place of business and chief executive
office of each Subsidiary of Borrower is located at the addresses stated on
Schedule 8.02.
(v) Insurance. Schedule II attached hereto contains an accurate
and complete description of all material policies of fire, liability, workmens'
compensation and other forms of insurance owned or held by the Borrower and
each of its Subsidiaries. All such policies are in full force and effect, all
premiums with respect thereto have been paid, and no notice of cancellation or
termination has been received with respect to any such policies. Such policies
are sufficient for compliance with all requirements of law and of all
agreements to which the Borrower or any of its Subsidiaries is a party; are
valid, outstanding and enforceable policies; provide adequate insurance
coverage in at least such amounts and against at least such risks (but
including in any event public liability) as are usually insured against in the
same general area by companies engaged in the same or similar business for the
assets and operations of the Borrower and each of its Subsidiaries; will remain
in force and effect through the respect dates set forth in Schedule II without
the payment of additional premiums; and will not in any way be effected by or
terminate or lapse by reason of, the transactions contemplated by this
Agreement. Schedule II identifies all material risks, if any, which the
Borrower and its Subsidiaries and their respective Board of Directors or
officers have designated as being self- insured. Neither the Borrower nor any
of its Subsidiaries has been refused any insurance with respect to its assets
or operations, nor has its coverage been limited below usual and customary
policy limits, by an insurance carrier to which has applied for any insurance
or with which it has carried insurance during the last three years.
(w) Hedging Agreements. As of the date hereof, Schedule IV sets
forth, and as of the effective date of the most recent report pursuant to
Section 5.01(e)(vii), each such report sets forth,
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a true and complete list of all Hedging Agreements (including commodity price
swap agreements, forward agreements or contracts of sale which provide for
prepayment for deferred shipment or delivery of oil, gas or other commodities)
of the Borrower and each of its Subsidiaries, the material terms thereof
(including the type, term, effective date, termination date and notional
amounts or volumes), the net ▇▇▇▇ to market value thereof, all credit support
agreements relating thereto (including any margin required or supplies), and
the counterparty to each such agreement.
(x) Gas Imbalances. As of the date hereof, except as set forth on
Schedule V, and as of the "as of" date of each Reserve Report delivered
hereunder, except as set forth in the certificate delivered with such Reserve
Report pursuant to Section 5.01(i)(iii), on a net basis there are no gas
imbalances, take or pay or other prepayments with respect to the Collateral
which would require the Borrower to deliver Hydrocarbons produced from the
Collateral at some future time without then or thereafter receiving full
payment therefor.
(y) Parent Liabilities. The Borrower has not guaranteed, nor is
subject to liability for, any obligation of PetUSA or PSAL. The Borrower and
PetUSA file consolidated U.S. tax returns.
ARTICLE V
COVENANTS OF THE BORROWER
Section 5.01. Affirmative Covenants. So long as any amount payable
by the Borrower hereunder or under any Note shall remain unpaid or any Bank
shall have any obligation to lend hereunder, and until all of the Commitments
and all of the Letters of Credit are terminated, the Borrower will, unless the
Majority Banks shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders; provided, however, that this Section 5.01(a)
shall not prevent the Borrower or any of its Subsidiaries from, in good faith
and with reasonable diligence, contesting the validity or application of any
such laws or regulations by appropriate proceedings, if appropriate reserves
(to the extent required by GAAP) in conformity with GAAP have been provided.
(b) Preservation of Existence, Etc. Preserve and maintain, and
cause each of its Subsidiaries to preserve and maintain, its existence, rights,
franchises and privileges in the jurisdiction of its formation, and qualify and
remain qualified, and cause each of its Subsidiaries to qualify and remain
qualified to do business in each jurisdiction in which qualification is
required under applicable law in view of its business and operations or the
ownership of its Properties, except where failure to maintain such rights,
franchises, privileges and qualifications could not reasonably be expected to
have a material adverse effect on the business, financial condition, assets,
reasonably foreseeable prospects or results of operations of the Borrower.
(c) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, (i) insurance with insurance companies or
associations with a Best Rating of no less than the Best
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Rating as of the date of this Agreement of the respective carriers set forth on
Schedule II, in such amounts and covering such risks as are usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Borrower or such Subsidiary operates, but in no
event in amounts, or with coverages, less than those set forth on Schedule II
hereto, in each case naming the Agent, Collateral Agent and each of the Banks
as an Additional Insured, and (ii) such other insurance as may be required by
the Mortgages. Within fifteen (15) days prior to the scheduled date of
expiration of each policy of insurance, the Borrower shall furnish, or cause to
be furnished to the Agent and the Banks a certificate of insurance coverage
from the insurer in form and substance satisfactory to the Agent and, if
requested, will furnish the Agent and the Banks copies of the applicable
policies.
(d) Payment of Taxes, Etc. Pay and discharge and cause each
Subsidiary to pay and discharge, before the same shall become delinquent, (i)
all taxes, assessments and charges and like levies imposed upon it or upon its
income, profits or Property, prior to the date on which penalties attach
thereto, and (ii) all lawful claims that, if unpaid, might by law become a Lien
upon its Property, except where failure to pay such taxes, assessments,
charges, levies and claims could not reasonably be expected to have a material
adverse effect on the business, financial condition, assets, reasonably
foreseeable prospects or results of operations of the Borrower; provided,
however, that neither the Borrower nor any Subsidiary shall be required by this
Section 5.01(d) to pay and discharge any such tax, assessment, charge, levy, or
claim which is being contested in good faith and by appropriate proceedings and
with respect to which reserves in conformity with U.S. GAAP have been provided.
(e) Reporting Requirements. Furnish to each Bank:
(i) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal year
of the Borrower and PetUSA, respectively, the Consolidated balance
sheet of the Borrower, the consolidating balance sheet of PetUSA as at
the end of such quarter and the corresponding Consolidated and
consolidating statements of earnings, stockholders' capital and cash
flows of each of the Borrower and PetUSA for the period commencing at
the end of the previous fiscal year and ending with the end of such
quarter, setting forth, in comparative form, the corresponding figures
for the corresponding period of the preceding fiscal year, all in
reasonable detail and duly certified by a financial officer of the
Borrower and PetUSA, respectively, as having been prepared in
accordance with GAAP subject, however, to year-end audit adjustments,
together with a certificate of a financial officer of the Borrower
showing in detail (1) the calculation of the financial covenant set
forth in Section 5.02(a) for the two quarter period ending at the end
of each such quarter and the calculation of the financial covenant set
forth in Section 5.02(b) for each such quarter and (2) the amount of
any payments made on the Subordinated Debt during such quarter, the
Consolidated Net Income of the Borrower for such quarter, the
calculation of the Available Cash Ratio under Section 5.02(m) for such
quarter, and the date of repayment, if any, during such quarter, of
the CD Deposits.
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(ii) as soon as available and in any event not later than
90 days after the end of each fiscal year of each of the Borrower and
PetUSA, respectively (and in the event of a change in the fiscal year
of either the Borrower or PetUSA no more than 15 months following the
end of their respective preceding fiscal years), copies of the
Consolidated balance sheet of the Borrower and the consolidating
balance sheet of PetUSA as at the end of such fiscal year and related
statements of earnings, stockholders' capital and cash flows of each
of the Borrower and PetUSA for such fiscal year, all certified by KPMG
Peat Marwick or other independent certified public accountants of
recognized national standing, together with a certificate of a
financial officer of the Borrower showing in detail (1) the
calculation of the financial covenants set forth in Section 5.02(a)
for the two quarter period ending at the end of such year and the
calculation of the financial covenant set forth in Section 5.02(b) for
the last fiscal quarter of such year and (2) the amount of any
payments made on the Subordinated Debt during the last fiscal quarter
of such year, the Consolidated Net Income of the Borrower for such
quarter, the calculation of the Available Cash Ratio under Section
5.02(m) for such quarter, and the date of repayment, if any, during
such quarter, of the CD Deposits.
(iii) promptly after the sending or filing thereof, copies
of all reports which the Borrower, PSAL and PetUSA sends to any of its
stockholders generally, and copies of all reports and registration
statements which PSAL, PetUSA or the Borrower or any of their
respective Subsidiaries files with the Securities and Exchange
Commission, or any Governmental Authority succeeding to the functions
of said Commission, or with any national securities exchange;
(iv) as soon as possible, and in any event within five
Business Days after an officer of the Borrower has obtained knowledge
of the existence of any Default or Event of Default, written notice
thereof setting forth details of such Default or Event of Default and
the actions which the Borrower has taken and proposes to take with
respect thereto;
(v) as soon as possible and in any event within 30 days
after any officer of the Borrower knows or has reason to know that any
Termination Event with respect to any Plan has occurred, a statement
of a financial officer of the Borrower describing such Termination
Event and the action, if any, which the Borrower or its ERISA
Affiliate (as applicable) proposes to take with respect thereto,
unless the aggregate liability (including, without limitation,
liability to the PBGC) of the Borrower and its Subsidiaries pertaining
to all such Plans and Termination Events could not reasonably be
expected to exceed $1,000,000;
(vi) promptly upon the receipt thereof by the Borrower or
any Subsidiary of the Borrower, a copy of any form of notice,
complaint, request for information under CERCLA or corresponding state
law, summons or citation received from the EPA, or any other domestic
or foreign governmental agency or instrumentality, federal, state or
local, in any way concerning any action or omission on the part of the
Borrower or any of its present or former Subsidiaries in connection
with Hazardous Materials or the Environment if the
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amount involved could reasonably be expected to result in a liability
of the Borrower or any Subsidiary in excess of $500,000 in the
aggregate, or concerning the filing of a Lien upon, against or in
connection with the Borrower, its present or former Subsidiaries, or
any of their leased or owned Property, wherever located;
(vii) as soon as available and in any event within thirty
(30) days after each calendar month, a report, in form and substance
satisfactory to the Agent, setting forth as of the last Business Day
of each calendar month, a true and complete list of all Hedging
Agreements (including commodity price swap agreements, forward
agreements or contracts of sale which provide for prepayment for
deferred shipment or delivery of oil, gas or other commodities) of the
Borrower and each of its Subsidiaries, the material terms thereof
(including the type, term, effective date, termination date and
notional amounts or volumes), the net ▇▇▇▇ to market value therefore,
any new credit support agreements relating thereto not listed on
Schedule IV, any margin required or supplied under any credit support
document, and the counterparty to each such agreement;
(viii) promptly upon the determination or proposal by the
Borrower to make any Distribution, a calculation of the Available Cash
Flow (after giving effect to such Distribution), and setting forth in
reasonable detail the various components necessary to make such
calculation; and
(ix) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of the
Subsidiaries as any Bank through the Agent may from time to time
reasonably request.
(f) Acceptable Security Interest. Cause an Acceptable Security
Interest to exist at all times in all Properties covered by the Reserve
Reports.
(g) Maintenance of Properties. The Borrower will, and will cause
each of its Subsidiaries to, at its own expense, do or cause to be done all
things reasonably necessary to preserve and keep in good repair, working order
and efficiency all of the Collateral including, without limitation, all
equipment, machinery and facilities constituting Collateral, and from time to
time will make all the reasonably necessary repairs, renewals and replacements
so that at all times the state and condition of the Collateral will be fully
preserved and maintained, except to the extent a portion of the Collateral is
no longer capable of producing Hydrocarbons in economically reasonable amounts.
The Borrower will and will cause each of its Subsidiaries to promptly: (a) pay
and discharge, or make reasonable and customary efforts to cause to be paid and
discharged, all royalties, expenses and indebtedness accruing under the leases
or other agreements affecting or pertaining to the Collateral, (b) perform or
make reasonable and customary efforts to cause to be performed, in accordance
with industry standards, the obligations required by each and all of the
assignments, deeds, leases, sub-leases, contracts and agreements affecting its
interest in the Collateral, (c) will and will cause each of its Subsidiaries to
do all other things necessary to keep unimpaired, except for Permitted
Exceptions, its rights with respect thereto and prevent any forfeiture thereof
or a default
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thereunder, except to the extent a portion of the Collateral is no longer
capable of producing Hydrocarbons in economically reasonable amounts. The
Borrower will and will cause each of its Subsidiaries to operate the Collateral
or cause or make reasonable and customary efforts to cause the Collateral to be
operated in a careful and efficient manner in accordance with the practices of
the industry and in compliance in all material respects with all applicable
contracts and agreements and in compliance in all material respects with all
Governmental Requirements.
(h) Engineering Reports. Deliver to the Agent and the Banks the
following:
(i) A Reserve Report not less than 45 days prior to each
Scheduled Redetermination Date, commencing with the Scheduled
Redetermination Date to occur on October 31, 1996. The Annual Reserve
Report of each year shall be prepared by a Petroleum Engineer and the
Semi-Annual Reserve Report of each year shall be prepared by or under
the supervision of the chief engineer of the Borrower who shall
certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the immediately
preceding Annual Reserve Report.
(ii) For any unscheduled redetermination requested by the
Borrower (1) pursuant to Section 2.14(a)(ii) or (2) pursuant to
Section 2.14(b)(ii) in conjunction with the addition of Additional
Properties to the Collateral following a Borrowing Base Deficiency,
the Borrower shall provide a Reserve Report, at its sole cost and
expense, prepared by a Petroleum Engineer (in the event of a
redetermination pursuant to clause (1) or (2) above) or under the
supervision of the chief engineer of the Borrower who shall certify
such Reserve Report to be true and accurate and to have been prepared
in accordance with the procedures used in the immediately preceding
Annual Reserve Report (in the event of a redetermination under clause
(1) above which does not include Additional Properties) with an "as
of" date no more than 45 days prior to the date the request for a
redetermination of the Borrowing Base is made by the Borrower. For
any unscheduled redetermination requested by the Banks pursuant to
Section 2.14(a)(ii), the Borrower shall provide a Reserve Report, at
its sole cost and expense, prepared by a Petroleum Engineer or under
the supervision of the chief engineer of the Borrower who shall
certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the immediately
preceding Annual Reserve Report, with an "as of" date as required by
the Majority Banks as soon as possible, but in any event no later than
45 days following the receipt of the request by the Agent.
(iii) With the delivery of each Reserve Report, the
Borrower shall provide to the Agent and the Banks, a certificate from
the President or a Vice President of the Borrower, certifying that, to
the best of his or her knowledge and in all material respects: (a) the
information contained in the Reserve Report and any other information
delivered in connection therewith is true and correct; (b) except for
Permitted Exceptions, the Borrower owns good and indefeasible title to
its Oil and Gas Properties evaluated in such Reserve Report and such
Properties are free of all Liens except for Permitted Exceptions; (c)
except
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as set forth on an exhibit to the certificate, on a net basis there
are no gas imbalances, take or pay or other prepayments with respect
to its Oil and Gas Properties evaluated in such Reserve Report which
would require the Borrower to delivery Hydrocarbons produced from such
Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor; (d) none of its Oil and Gas
Properties have been sold since the date of the last Borrowing Base
determination except as set forth on an exhibit to the certificate,
which certificate shall list all of its Oil and Gas Properties sold
and in such detail as reasonably required by the Majority Banks; (e)
attached to the certificate is a list of its Oil and Gas Properties
added to and deleted from the immediately prior Reserve Report and a
list of all Persons disbursing proceeds to the Borrower from its Oil
and Gas Properties; (f) except as set forth on a schedule attached to
the certificate, all of the Oil and Gas Properties evaluated by such
Reserve Report are subject to Acceptable Security Instruments; (g) any
change in working interest or net revenue interest in its Oil and Gas
Properties occurring and the reason for such change; and (h) with
regard to any Semi-Annual Reserve Report, any other material
differences contained in such Reserve Report from the immediately
preceding Annual Reserve Report.
(iv) As soon as available and in any event within 60 days
after the end of each fiscal quarter, production reports and general
and administrative cost summaries for its Oil and Gas Properties,
which reports shall include quantities or volume of production,
revenue, realized product prices, operating expenses, taxes, capital
expenditures and lease operating costs which have accrued to the
Borrower's accounts in such period, and such other information with
respect thereto as the Agent or any Bank may reasonably require.
(i) Title Information. On or before the delivery to the Agent and
the Banks of each Reserve Report required by Section 5.01(h), the Borrower will
deliver Title Opinions in form and substance reasonably satisfactory to the
Agent covering the Oil and Gas Properties evaluated by such Reserve Report that
were not included in the immediately preceding Reserve Report, so that the
Agent shall have received together with Title Opinions previously delivered to
the Agent, satisfactory Title Opinions on at least 100% of the value of the Oil
and Gas Properties evaluated by such Reserve Report and included in the
Borrowing Base. The Borrower shall cure any title defects or exceptions which
are not Permitted Exceptions raised by the Title Opinions within 60 days after
a request by the Agent or the Banks to cure such defects or exceptions. If the
Borrower is unable to cure any title defect requested by the Agent or the Banks
to be cured within the 60 day period, such default shall not be a Default or an
Event of Default, but instead the Agent and the Banks shall have the right to
exercise the following remedy in their sole discretion from time to time, and
any failure to so exercise this remedy at any time shall not be a waiver as to
future exercise of the remedy by the Agent or the Banks. To the extent that
the Agent or the Banks are not satisfied with title to any Collateral after the
time period in this section has elapsed, such unacceptable Collateral shall not
count towards the Borrowing Base, and the Agent may send a notice to the
Borrower and the Banks that the then outstanding Borrowing Base shall be
reduced by an amount as determined by all of the Agent and Majority Banks in
accordance with Section 2.14(a)(i) sufficient to cause the Borrower to be in
compliance with the requirement to provide acceptable title information on 100%
of the value
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of the Oil and Gas Properties included in the Borrowing Base. This new
Borrowing Base shall become effective immediately after receipt of such notice.
(j) Additional Collateral.
(i) Should any Properties be made subject to a Reserve
Report, the Borrower will grant to the Collateral Agent, as security
for the Obligations, an Acceptable Security Interest (subject only to
Permitted Exceptions) on the Borrower's interest in such Properties
not already subject to the Lien of the Mortgages, which Lien will be
created and perfected by and in accordance with the provisions of
deeds of trust, security agreements and financing statements, or other
Loan Documents, all in form and substance satisfactory to the Agent in
its sole discretion and in sufficient executed (and acknowledged where
necessary or appropriate) counterparts for recording purposes.
(ii) Concurrently with the granting of the Lien or other
action referred to in this subsection (j), the Borrower will provide
to the Agent Title Opinions in form and substance satisfactory to the
Agent in its sole discretion with respect to the Borrower's interests
in such Properties.
(iii) Also, promptly after the filing of any new Mortgage
in any state, upon the reasonable request of the Agent, the Borrower
will provide to the Agent Title Opinions in accordance with Section
2.14(a)(iii).
Section 5.02. Negative Covenants. So long as any amount payable by
the Borrower hereunder or under any Note shall remain unpaid or any Bank shall
have any obligation to lend hereunder, and until all of the Commitments and all
of the Letters of Credit are terminated, the Borrower will not, without the
written consent of the Majority Banks:
(a) Senior Debt to EBITDA Ratio. For each period of two
consecutive fiscal quarters of the Borrower, permit the ratio of (i)
Consolidated Indebtedness as of the end of such period (but excluding any
amounts identified under clause (e) of the definition of "Indebtedness") to
(ii) two (2) times EBITDA for such period to be greater than 2.75 to 1.00;
(b) Ratio of EBIT to Interest Expense. Permit, for any fiscal
quarter of the Borrower, the ratio of EBIT for such period to Consolidated
Interest Expense for such period to be less than the amount set forth in the
following table for such period:
Minimum Ratio of
Quarter Period Ending EBIT to Interest Expense
------- ------ ------ ---- -- -------- -------
September 30, 1996 2.5:1.0
December 31, 1996 2.5:1.0
Each fiscal quarter thereafter 3.0:1.0
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(c) Liens. Other than Permitted Exceptions, create, assume,
incur or suffer to exist or permit any Subsidiary to create, assume, incur or
suffer to exist, any Lien on or in respect of any Property of the Borrower or
any Subsidiary whether now owned or hereafter acquired, or assign or otherwise
convey any right to receive income.
(d) Indebtedness. Create, incur, assume, guarantee, otherwise
become liable for or suffer to exist, or permit any Subsidiary to create,
incur, assume, guarantee, otherwise become liable for or suffer to exist, any
Indebtedness other than (i) Indebtedness under this Agreement, (ii) the
Subordinated Debt, and (iii) Indebtedness of the Borrower existing on the date
hereof not exceeding $325,000 in the aggregate under the Lease Agreement
numbered 7142413, the Lease Agreement numbered 7172711 and the Lease Agreement
numbered 7182793, each between Finova Capital Corp. and the Borrower
(collectively, the "Finova Leases").
(e) Mergers, Etc. Merge or consolidate with or into any Person,
or permit any Subsidiary to merge or consolidate with or into any Person, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions), or permit any Subsidiary to convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions), all or substantially all of its assets (whether now owned or
hereafter acquired).
(f) Restrictions on Dividends, Intercompany Loans, or Investments.
Create or otherwise cause or permit to exist or become effective, or permit any
Subsidiary of the Borrower to create or otherwise cause or permit to exist or
become effective, any consensual encumbrance or restriction (other than the
Loan Documents) on the ability of any Subsidiary of the Borrower to (i) pay
dividends or make any other distributions to, or pay any Indebtedness owed to,
the Borrower, or (ii) make any loans or advances to or investments in the
Borrower.
(g) Letters of Credit. Incur, or permit any Subsidiary to incur,
any liability in connection with any letter of credit, other than Letters of
Credit.
(h) Multiemployer Plans or Multiple Employer Plans. Create or
otherwise cause or permit to exist or become effective, or permit any
Subsidiary to create or otherwise cause or permit to exist or become effective,
any Multiemployer Plan or Multiple Employer Plan to which the Borrower or any
Subsidiary makes or accrues an obligation to make any contribution.
(i) Compliance with ERISA. (i) Terminate, or permit any ERISA
Affiliate to terminate any Plan so as to result in any liability of the
Borrower or any Subsidiary to the PBGC in excess of $1,000,000, or (ii) permit
to exist any occurrence of a Termination Event with respect to any Plan for
which there is an Insufficiency in excess of $1,000,000.
(j) ERISA Liabilities. Create or suffer to exist, or permit any
ERISA Affiliate to create or suffer to exist, any ERISA Liabilities if
immediately after giving effect to such ERISA Liabilities, the aggregate amount
of ERISA Liabilities of the Borrower and its Subsidiaries would exceed
$1,000,000.
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(k) Affiliate Transaction. Except as permitted by Section
5.02(m), make or permit any Subsidiary of Borrower to make, directly or
indirectly: (i) any Investment in any Affiliate; (ii) any transfer, sale,
lease or other disposition of any Property to any Affiliate or any purchase or
acquisition of any Property from an Affiliate; (iii) any material arrangement
or other material transaction directly or indirectly with or for the benefit of
an Affiliate (including without limitation, guaranties and assumptions of
obligations of an Affiliate); provided, that this Section 5.02(k) shall not
prohibit the Borrower and any Subsidiary of Borrower from entering into any
arrangement or other transaction with an Affiliate providing for the leasing of
property, the rendering or receipt of services or the purchase or sale of
inventory and other assets if the monetary or business consideration arising
therefrom would be substantially as advantageous to the Borrower or such
Subsidiary as the monetary or business consideration which would be obtained in
a comparable arm's length transaction with a Person not an Affiliate; or (iv)
any guaranty of any obligation of PSAL, PetUSA, any Affiliate of PSAL or
PetUSA, or any other Person.
(l) Preferred Interest and Options. Issue or cause to become
outstanding any Restricted Preferred Interest, or permit any Subsidiary of
Borrower to issue or cause to become outstanding, any Preferred Interest, or
permit any option, warrant or other right to acquire any capital stock,
partnership interest or other ownership interest of any Subsidiary of Borrower
to be outstanding.
(m) Restricted Payments. Directly or indirectly, declare, pay or
make any Distribution, other than principal payments under the Subordinated
Debt; provided Distributions on the Subordinated Debt may be made only if (i)
no Default or Event of Default exists at the time of such Distribution, (ii) no
Default or Event of Default would result from such Distribution, (iii) on the
date of such Distribution (1) no Borrowing Base Deficiency exists and (2) the
Available Cash Ratio (as defined below, but specifically (X) giving effect to
such Distribution and all other Distributions made since the end of the fiscal
quarter of the Borrower most recently ended prior to such date as if such
Distribution and all such other Distributions were made during such fiscal
quarter and (Y) not giving effect to the first Distribution, if any, made
during the earliest of the four consecutive fiscal quarters immediately
preceding such date) for the four consecutive fiscal quarters of the Borrower
immediately preceding such date is no less than 3.0:1.0, and (iv) in no period
of four consecutive fiscal quarters of the Borrower shall the aggregate of all
such Distributions exceed the lesser of (i) 50% of Consolidated Net Income of
the Borrower for such four quarters or (ii) an amount that does not cause the
ratio of (x) EBITDA for such four quarters less Development Capex to (y) cash
taxes for such four quarters plus the largest Borrowing Base Deficiency if any,
at any date during such four quarters or the next following quarter plus
Consolidated Interest Expense for such four quarters plus the amount of any
payments or proposed payments on the Subordinated Note during such four
quarters (other than repayment of the CD Deposits to PSAL) (the "Available Cash
Ratio"), to fall below 3.0:1.0.
(n) Investments. Make any Investment or permit any Subsidiary to
make any Investment except (i) Investments in Subsidiaries approved in writing
by the Majority Banks, and (ii) Permitted Investments.
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(o) Asset Disposition. Sell, lease, transfer or otherwise dispose
of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise
dispose of, any of the Collateral, except (i) sales of Hydrocarbons in the
ordinary course of business and on reasonable terms, (ii) sales of worn-out or
obsolete equipment in the normal course of business, if no Event of Default
exists at the time of such sale, (iii) replacement of equipment in the normal
course of business with other equipment at least as useful and beneficial to
the Borrower and its Subsidiaries and their respective businesses as the
equipment replaced if no Event of Default exists at the time of such
replacement and (iv) farm-outs of horizons which are not included in any
Reserve Report provided such farm-out is to a Person which is not an Affiliate,
the Borrower has given the Agent advance written notice of the proposed
farm-out and no Default exists at the time of such farm-out.
(p) Use of Proceeds. Use any proceeds of any Advance (i) for any
purpose other than working capital for the Borrower (but not for any payment of
the Subordinated Debt), (ii) in any manner which violates or results in a
violation of any law or regulation or (iii) to purchase or carry any margin
stock (as defined in Regulation U) or any margin stock (as defined in
Regulation G) or to extend credit to others for that purpose.
(q) Line of Business. Engage, or permit any of its Subsidiaries
to engage, in any business other than the business currently engaged in and
other businesses not materially different therefrom.
(r) Agreements. Amend, waive, terminate or otherwise modify, or
agree to the amendment, waiver, termination or other modification of, any of
the Subordinated Debt Documents.
(s) Rental Payments. Create, incur, assume, guarantee, otherwise
become liable for or suffer to exist, or permit any Subsidiary to create,
incur, assume, guarantee, otherwise become liable for or suffer to exist, any
obligation to make any payment under any lease or other rental contract (other
than leases constituting Oil and Gas Properties and Capitalized Lease
Obligations), unless (i) the aggregate amount of all such payments actually
made does not exceed $1,000,000 in any year and (ii) the aggregate amount of
all such payments scheduled or required to be made does not exceed $5,000,000
in any year.
(t) Hedging Agreements. Be a party to any Hedging Agreement (i)
for volumes (in the aggregate) in the then current fiscal quarter of the
Borrower in excess of 75% of the net quarterly production of Hydrocarbons
(using standard 6:1 conversion rates for differing Hydrocarbons) from any
Collateral for the then most recently completed fiscal quarter of the Borrower,
or (ii) if the total aggregate volumes of oil (for all Hedging Agreements) or
the total aggregate volumes of natural gas (for all Hedging Agreements) would
exceed 75% of projected oil or natural gas net volumes, respectively, as stated
in the most recent Reserve Report for the next three year period.
Additionally, the Borrower agrees that in no event shall any Hedging Agreement
extend beyond one (1) year following the Revolving Credit Termination Date,
without the written consent of the Majority Banks.
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ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any amount payable pursuant to
Section 2.13(c), under any Hedging Agreement with any Bank, or any principal of
any Note when such amount or principal becomes due and payable, whether at the
due date thereof or by acceleration thereof or otherwise, or shall fail to pay
any interest on any Note or any fees hereunder within five Business Days of
when the same becomes due and payable, whether at the due date thereof or by
acceleration thereof or otherwise; or
(b) Any (i) representation, warranty or certification made by the
Borrower herein or in any other Loan Document, or by the Borrower (or any
officer of the Borrower) in connection with any Loan Document or in any
certificate or document furnished to the Banks pursuant to any Loan Document,
or (ii) representation or warranty deemed to have been made by the Borrower
pursuant to Section 3.02 or Section 3.03 shall prove to have been incorrect or
misleading in any material respect when made or so deemed to have been made; or
(c) The Borrower shall fail to perform or observe (i) any term,
covenant or agreement contained in this Agreement (other than Section 5.02,
Section 8.13 and provisions covered by Section 6.01(a)) on its part to be
performed or observed if the failure to perform or observe such term, covenant
or agreement shall remain unremedied for 10 Business Days after the earlier of
(x) the date written notice thereof has been given to the Borrower by the Agent
or any Bank and (y) the date an officer of the Borrower has knowledge of such
failure, (ii) any term, covenant, condition, or agreement contained in any
other Loan Document or in Section 5.02 or Section 8.13 of this Agreement (other
than Section 5.02(t)(ii) if such failure is due to a decrease in Hydrocarbon
production) on its part to be performed or (iii) any term, covenant, condition
or agreement contained in Section 5.02(t)(ii) if such failure is due to a
decrease in Hydrocarbon production, in which event such deficiency shall not
constitute an Event of Default provided that the Borrower remedies such
deficiency within 90 days of its occurrence; or
(d) PSAL, the Borrower or any Subsidiary of either shall fail to
pay any principal of or premium or interest on any Indebtedness (other than the
Subordinated Debt) which is outstanding in the principal amount of at least
$2,000,000 in the aggregate, of PSAL, the Borrower or such Subsidiary (as the
case may be), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Indebtedness; or any other event
shall occur or condition shall exist under any agreement or instrument relating
to any such Indebtedness and shall continue after the applicable grace period,
if any, specified in such agreement or instrument, if the effect of such event
or condition is to accelerate, or to permit the acceleration of, the maturity
of such Indebtedness (whether or not such
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default is waived by the holder of such Indebtedness); or any such Indebtedness
shall be declared to be due and payable, or required to be prepaid, prior to
the stated maturity thereof; or
(e) PSAL, the Borrower or any Subsidiary of either, shall be
adjudicated a bankrupt or insolvent by a court of competent jurisdiction, or
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against the Borrower or any Subsidiary, seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 60 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur; or
the Borrower or any of Subsidiary shall take any action to authorize any of the
actions set forth above in this subsection (e); or any judgment, writ, warrant
of attachment or execution or similar process shall be issued or levied against
a substantial part of the property of the Borrower or any Subsidiary and such
judgment, writ, warrant of attachment or execution or similar process shall not
be released, stayed, vacated or fully bonded within 30 days after its issue or
levy; or
(f) A final judgment or order for the payment of money in excess
of $5,000,000 shall be rendered against PSAL, the Borrower or any Subsidiary of
either by any court of competent jurisdiction and such judgment or order shall
continue unsatisfied or unstayed (by appeal or otherwise) and shall be in
effect for a period of 30 days; or
(g) Any Change of Control occurs; or
(h) any Mortgage shall at any time, for any reason, cease to be in
full force and effect or shall be declared to be null and void in whole or in
any part by any court or other governmental or regulatory authority having
competent jurisdiction in respect thereof, or the validity or the
enforceability of any Mortgage shall be contested by the Borrower, or the
Borrower shall renounce any of the terms of any Mortgage or shall deny that it
is bound by any of the terms thereof that purport to apply to it; or
(i) any material portion of the Collateral that is not covered by
adequate insurance shall be destroyed or any material portion of the Collateral
shall otherwise become unavailable for use by the Borrower for a period in
excess of 45 days (or 180 days if the Borrower has business interruption
insurance adequate to cover the loss to it resulting from such Collateral being
unavailable for use) or title to any material portion of the Collateral shall
be successfully challenged; or
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(j) Any Termination Event with respect to a Plan shall have
occurred and, 60 days after notice thereof shall have been given to the
Borrower by the Agent, (i) such Termination Event shall still exist and (ii)
the sum (determined as of the date of occurrence of such Termination Event) of
the Insufficiency of such Plan and the Insufficiency of any and all other Plans
with respect to which a Termination Event shall have occurred and then exist
(or in the case of a Plan with respect to which a Termination Event described
in clause (ii) of the definition of Termination Event shall have occurred and
then exist, the liability related thereto) is equal to or greater than
$1,000,000; or
(k) The Borrower and/or PetUSA violates any of the terms and
obligations of any of the Subordinated Debt Documents;
then, and in any such event, the Agent (i) shall at the request, or may with
the consent, of the Majority Banks, by notice to the Borrower, declare the
obligation of the Issuing Bank to issue Letters of Credit, the Commitment of
each Bank and the obligation of each Bank to make Advances to be terminated,
whereupon the same shall forthwith terminate, (ii) shall at the request, or may
with the consent, of the Majority Banks, by notice to the Borrower, declare the
Notes, all interest thereon and all other amounts payable under this Agreement
to be forthwith due and payable, whereupon the Notes, all such interest and all
such amounts shall become and be forthwith due and payable, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or any other notice of any kind, all of which are hereby expressly
waived by the Borrower and (iii) shall at the request, or may with the consent,
of the Majority Banks, by notice to the Borrower, and in addition to the
Issuing Bank's continuing right to demand payment of all Demand Loans, demand
payment of the maximum amount remaining available to be drawn under then
outstanding Letters of Credit (assuming compliance with all conditions for
drawing thereunder), and immediately upon the making of such demand by the
Agent, the Borrower shall pay to the Agent such amount so demanded; provided,
however, that in the event of any Event of Default described in Section
6.01(e), (A) the obligation of the Issuing Bank to issue Letters of Credit, the
Commitment of each Bank and the obligation of each Bank to make Advances shall
automatically be terminated and (B) the Notes, all such interest, all other
amounts payable under this Agreement and the maximum amount remaining available
to be drawn under then outstanding Letters of Credit (assuming compliance with
all conditions for drawing thereunder) shall automatically and immediately
become and be due and payable, without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration, or any other notice of any kind,
all of which are hereby expressly waived by the Borrower.
ARTICLE VII
THE AGENT
Section 7.01. Authorization and Action. Each Bank hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
As to any matters not expressly provided for by this Agreement (including,
without limitation, enforcement or collection of the Notes), the Agent shall
not be required to
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exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Banks and such instructions
shall be binding upon all Banks and all holders of Notes; provided, however,
that the Agent shall not be required to take any action which exposes the Agent
to personal liability or which is contrary to this Agreement or applicable law.
The Agent agrees to give to each Bank prompt notice of each notice given to it
by the Borrower pursuant to the terms of this Agreement.
Section 7.02. Agent's Reliance, Etc. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may treat
the payee of any Note as the holder thereof until the Agent receives and
accepts an Assignment entered into by the Bank which is the payee of such Note,
as assignor, and an Eligible Assignee, as assignee, as provided in Section
8.07; (ii) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Bank or any other Person and shall not be
responsible to any Bank or any other Person for any statements, warranties or
representations made in or in connection with any Loan Document or any other
instrument or document; (iv) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of any Loan Document on the part of the Borrower or any Subsidiary
or to inspect the Property (including the books and records) of the Borrower or
any Subsidiary; (v) shall not be responsible to any Bank or any other Person
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any other instrument or document
or for the existence, sufficiency or value of any Collateral or for the
existence, perfection or priority of any Lien thereon; and (vi) shall incur no
liability under or in respect of any Loan Document by acting upon any notice
(including telephonic notice), consent, certificate or other instrument or
writing (which may be by telecopier, telegram, telex or otherwise) believed by
it to be genuine and signed, given or sent by the proper party or parties.
Section 7.03. Chase and Affiliates. With respect to its
Commitment, its interest in Letter of Credit Liabilities, the Advances made by
it and the Notes issued to it, Chase shall have the same rights and powers
under this Agreement as any other Bank and may exercise the same as though it
were not the Agent or the Issuing Bank; and the term "Bank" or "Banks" shall,
unless otherwise expressly indicated, include Chase in its individual capacity.
Chase and its affiliates may act as the Collateral Agent and may accept
deposits from, lend money to, act as trustee under indentures of, and generally
engage in any kind of business with, the Borrower, any Subsidiary, any Person
who may do business with or own securities of the Borrower or any Subsidiary
and any other Person, all as if Chase were not the Agent or the Issuing Bank
and without any duty to account therefor to the Banks.
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Section 7.04. Bank Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other Bank and
based on the Financial Statements and such other documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Bank also acknowledges that it will, independently
and without reliance upon the 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 credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.
Section 7.05. Indemnification. THE BANKS AGREE TO INDEMNIFY THE
AGENT (TO THE EXTENT NOT REIMBURSED BY THE BORROWER), RATABLY ACCORDING TO THE
RESPECTIVE PRINCIPAL AMOUNTS OF THE NOTES THEN HELD BY EACH OF THEM (OR IF NO
ADVANCES ARE AT THE TIME OUTSTANDING OR IF ANY NOTES ARE HELD BY PERSONS WHICH
ARE NOT BANKS, RATABLY ACCORDING TO EITHER (A) THE RESPECTIVE AMOUNTS OF THEIR
COMMITMENTS, OR (B) IF NO COMMITMENTS ARE AT THE TIME OUTSTANDING, THE
RESPECTIVE AMOUNTS OF THEIR COMMITMENTS IMMEDIATELY PRIOR TO THE TIME THE
COMMITMENTS CEASED TO BE OUTSTANDING), FROM AND AGAINST ANY AND ALL CLAIMS,
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH
MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT IN ANY WAY
RELATING TO OR ARISING OUT OF ANY LOAN DOCUMENT OR ANY OTHER INSTRUMENT OR
DOCUMENT REFERRED TO IN OR PERTAINING TO ANY LOAN DOCUMENT, OR ANY ACTION TAKEN
OR OMITTED BY THE AGENT UNDER ANY LOAN DOCUMENT OR ANY OTHER INSTRUMENT OR
DOCUMENT REFERRED TO IN OR PERTAINING TO ANY LOAN DOCUMENT, INCLUDING, WITHOUT
LIMITATION, IN EACH OF THE FOREGOING CASES, ANY SUCH CLAIM, LIABILITY,
OBLIGATION, LOSS, DAMAGE, PENALTY, ACTION, JUDGMENT, SUIT, COST, EXPENSE OR
DISBURSEMENT RESULTING FROM THE NEGLIGENCE OF THE AGENT, PROVIDED THAT NO BANK
SHALL BE LIABLE FOR ANY PORTION OF SUCH CLAIMS, LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR
DISBURSEMENTS RESULTING FROM THE AGENT'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, EACH BANK AGREES TO REIMBURSE
THE AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE OF ANY REASONABLE
OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE COUNSEL FEES) INCURRED BY THE
AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL
PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR
RESPONSIBILITIES UNDER ANY LOAN DOCUMENT OR ANY OTHER INSTRUMENT OR DOCUMENT
REFERRED TO IN OR PERTAINING TO ANY LOAN DOCUMENT TO THE EXTENT THAT THE AGENT
IS NOT REIMBURSED FOR SUCH
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EXPENSES BY THE BORROWER. IN THE EVENT THAT THE AGENT RECEIVES REIMBURSEMENT
FOR SUCH EXPENSES FROM THE BORROWER AT ANY TIME SUBSEQUENT TO THE AGENT'S
RECEIPT OF THE INDEMNIFICATION REQUIRED BY THE PRECEDING SENTENCE FROM ANY
BANK, THE AGENT SHALL PROMPTLY REFUND TO SUCH BANK ITS RATABLE SHARE OF SUCH
REIMBURSED AMOUNT.
Section 7.06. Successor Agent and Issuing Bank. Subject to the
appointment and acceptance of a successor Agent or Issuing Bank, as applicable
and provided below, the Agent or the Issuing Bank may resign at any time by
giving notice thereof to the Banks and the Borrower and may be removed at any
time with or without cause by the Majority Banks. Upon any such resignation or
removal, the Majority Banks shall have the right to appoint a successor Agent
or Issuing Bank, as the case may be. If no successor Agent shall have been so
appointed by the Majority Banks, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation or
the Majority Banks' removal of the retiring Agent, then the retiring Agent may,
on behalf of the Banks, appoint a successor Agent. If no successor to the
retiring Issuing Bank shall have been appointed by the Majority Banks, or shall
have accepted such appointment, then, in such event, each Bank shall, following
the receipt by the Agent of a Notice of Letter of Credit pursuant to Section
2.13, be obligated (subject, however, to all of the provisions hereof,
including without limitation, all conditions precedent to the issuance of
Letters of Credit) to issue a Letter of Credit in accordance with the
provisions of Section 2.13 equal to its Ratable Portion of the Letter of Credit
requested in such Notice of Letter of Credit. In such event, the Banks issuing
such Letter of Credit shall not be entitled to any issuance fee pursuant to
Section 2.13(b)(i). Each such Letter of Credit, shall contain identical
provisions for a drawing thereunder by the beneficiary, and shall require that
in the event of a draw thereunder, the Beneficiary shall make such draw ratably
in accordance with the respective amounts of each such Letter of Credit. The
obligation of the Banks to issue Letters of Credit pursuant to this Section
7.06 shall be subject to all the terms and conditions of Sections 2.13(a), (b)
(other than as provided above), (c), (d) and (e) and each reference therein to
the Issuing Bank shall be deemed a reference to each Bank issuing a Letter of
Credit pursuant to this Section 7.06. Upon the acceptance of any appointment
as Agent or Issuing Bank hereunder by a successor Agent or Issuing Bank, such
successor Agent or Issuing Bank shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent or
Issuing Bank, and the retiring Agent or Issuing Bank shall be discharged from
its duties and obligations under the Loan Documents, except that the retiring
Issuing Bank shall remain the Issuing Bank with respect to any Letter of Credit
outstanding on the effective date of its resignation or removal and the
provisions affecting the Issuing Bank with respect to such Letters of Credit
shall inure to the benefit of the retiring Issuing Bank. After any retiring
Agent's or Issuing Bank's resignation or removal hereunder as Agent or Issuing
Bank, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent or Issuing Bank.
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ARTICLE VIII
MISCELLANEOUS
Section 8.01. Amendments, Etc. No amendment or waiver of any
provision of any Loan Document executed by the Borrower, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Majority Banks, and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such amendment,
waiver or consent shall, unless in writing and signed by all the Banks, do any
of the following: (a) waive any of the conditions specified in Section 3.01,
3.02 or 3.03, (b) increase the Commitment of any Bank or subject any Bank to
any additional obligations, (c) reduce the principal of, or interest on, the
Notes or any fees or other amounts payable hereunder, (d) postpone any date
fixed for any payment of principal of, or interest on, the Notes or any fees or
other amounts payable hereunder, (e) take any action which requires the signing
of all the Banks pursuant to the terms of any Loan Document, (f) change the
percentage of the Commitments or of the aggregate unpaid principal amount of
the Notes which shall be required for the Banks or any of them to take any
action hereunder, (g) release a material amount of the Collateral, or (h) amend
this Section 8.01; and provided, further, that no amendment, waiver or consent
shall, unless in writing and signed by the Agent in addition to the Banks
required above to take such action, affect the rights or duties of the Agent
under any Loan Document; and provided, further, that no amendment, waiver or
consent shall, unless in writing and signed by the Issuing Bank in addition to
the Banks required above to take such action, affect the rights or duties of
the Issuing Bank under any Loan Document.
Section 8.02. Notices, Etc. Except as provided in Section 2.02(a),
all notices and other communications provided for hereunder shall be in writing
(including telecopier or telex communication) and mailed, telecopied, telexed,
or delivered, (a) if to the Borrower, at the address at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇; Attention: Vice President, Land,
Legal & Administration, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇; (b) if to any Bank listed on
the signature pages hereof, at its Domestic Lending Office specified opposite
its name on Schedule I hereto; (c) if to any other Bank, at its Domestic
Lending office specified in the Assignment pursuant to which it became a Bank;
(d) if to the Agent, to Chemical Bank, as administrative agent on behalf of the
Agent, at such administrative agent's address at Chemical Bank, Agent Bank
Services, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇,
with a copy to The Chase Manhattan Bank, N.A., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇,
(but references herein to the address of the Agent for purposes of payments or
making available funds shall not include the address to which copies are to be
sent) and (e) if to the Issuing Bank, at its address at The Chase Manhattan
Bank, N.A., ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇/▇▇▇▇ ▇▇▇▇▇, Trade Finance, Telecopy: (718) 242- 3819, with a
copy to The Chase Manhattan Bank, N.A., ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇; or, as to the
Borrower, the Issuing Bank or the Agent, at such other address as shall be
designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party
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in a written notice to the Borrower and the Agent. Each such notice or
communication shall be effective (i) if mailed, on the date it is received,
(ii) if delivered by hand, upon delivery with written receipt, and (iii) if
telecopied, when receipt is confirmed by telephone, except that any notice or
communication to the Agent pursuant to this Agreement shall not be effective
until received by the Agent, and any notice or communication to the Issuing
Bank pursuant to this Agreement shall not be effective until received by the
Issuing Bank. Notices by telephone pursuant to Section 2.02(a) shall be given
to the Agent at (▇▇▇) ▇▇▇-▇▇▇▇ or at such other telephone number as shall be
designated by the Agent in a written notice to the Borrower. A notice received
by the Agent by telephone pursuant to Section 2.02(a) shall be effective and
binding on the Borrower if the Agent believes in good faith that it was given
by an authorized representative of the Borrower and acts pursuant thereto,
notwithstanding the absence of written confirmation or any contradictory
provision thereof.
Section 8.03. No Waiver; Remedies. No failure on the part of the
Issuing Bank, any Bank or the Agent to exercise, and no delay in exercising,
any right under any Loan Document shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies provided in
the Loan Documents are cumulative and not exclusive of any remedies provided by
law.
Section 8.04. Expenses and Taxes; Compensation; Indemnification;
Arranger.
(a) Expenses and Taxes. The Borrower agrees to pay on demand all
reasonable costs and expenses of the Agent in connection with the preparation,
execution, delivery, administration, modification and amendment of the Loan
Documents, and the other documents to be delivered hereunder, including,
without limitation, the reasonable out-of- pocket expenses of the Agent and the
reasonable fees and out-of-pocket expenses of counsel for the Agent with
respect thereto and with respect to advising the Agent as to its rights and
responsibilities under the Loan Documents, and all costs and expenses of the
Agent, the Issuing Bank and each Bank, if any (including, without limitation,
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of the Loan
Documents and the other documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 8.04(a). In addition, the Borrower
shall pay any and all stamp and other taxes payable or determined to be payable
in connection with the execution and delivery of the Loan Documents and the
other documents to be delivered hereunder, and agrees to save the Agent, the
Issuing Bank and each Bank harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omitting to pay such
taxes.
(b) Compensation. If any payment, or purchase pursuant to Section
2.09(e), of principal of, or Conversion of, any Eurodollar Rate Advance is made
other than on the last day of the Interest Period for such Eurodollar Rate
Advance, as a result of a payment or Conversion pursuant to Section 2.02,
Section 2.07, Section 2.08 or Section 2.12 or purchase pursuant to Section
2.09(e) or acceleration of the maturity of the Notes pursuant to Section 6.01
or for any other reason, the
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Borrower shall, upon demand by any Bank (with a copy of such demand to the
Agent together with the Bank's calculations of the amount owed), pay to the
Agent for the account of such Bank any amounts required to compensate such Bank
for any additional losses, costs or expenses which it may reasonably incur as a
result of such purchase, payment or Conversion, including, without limitation,
any loss (including loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by any Bank to fund or maintain such Advance.
(c) Indemnification. THE BORROWER AGREES TO INDEMNIFY AND HOLD
HARMLESS THE AGENT, THE COLLATERAL AGENT, THE ARRANGER, EACH BANK, THE ISSUING
BANK AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS FROM AND
AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, OBLIGATIONS,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, DISBURSEMENTS AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, REASONABLE FEES AND DISBURSEMENTS OF COUNSEL)
FOR WHICH ANY OF THEM BECOME LIABLE OR WHICH ARE INCURRED BY ANY OF THEM IN
CONNECTION WITH OR ARISING OUT OF (I) BREACH BY THE BORROWER OF ANY LOAN
DOCUMENT, (II) VIOLATION BY THE BORROWER OR ANY SUBSIDIARY OF ANY ENVIRONMENTAL
PROTECTION LAW OR ANY OTHER LAW, RULE, REGULATION OR ORDER, (III) ANY LIEN
GRANTED PURSUANT TO ANY LOAN DOCUMENT, (IV) OWNERSHIP BY SUCH BANK, THE
COLLATERAL AGENT, THE ARRANGER, THE ISSUING BANK OR THE AGENT OF ANY PROPERTY
FOLLOWING FORECLOSURE UNDER ANY OF THE LOAN DOCUMENTS, TO THE EXTENT SUCH
CLAIMS, DAMAGES, LOSSES, LIABILITIES, OBLIGATIONS, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, DISBURSEMENTS OR EXPENSES ARISE OUT OF OR RESULT FROM
ANY HAZARDOUS MATERIALS LOCATED IN, ON OR UNDER THE PROPERTY OF THE BORROWER OR
ANY SUBSIDIARY ON OR BEFORE THE DATE OF SUCH FORECLOSURE, INCLUDING, WITHOUT
LIMITATION, CLAIMS, DAMAGES, LOSSES, LIABILITIES, OBLIGATIONS, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, DISBURSEMENTS OR EXPENSES WHICH ARE IMPOSED
UPON PERSONS UNDER ANY ENVIRONMENTAL PROTECTION LAW SOLELY BY VIRTUE OF
OWNERSHIP, (V) SUCH BANK'S, THE COLLATERAL AGENT'S, THE ARRANGER'S, THE ISSUING
BANK'S OR THE AGENT'S BEING DEEMED AN OPERATOR OF ANY PROPERTY OF THE BORROWER
OR ANY SUBSIDIARY BY A COURT OR OTHER PERSON, TO THE EXTENT SUCH CLAIMS,
DAMAGES, LOSSES, LIABILITIES, OBLIGATIONS, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, DISBURSEMENTS OR EXPENSES ARISE OUT OF OUR RESULT FROM ANY
HAZARDOUS MATERIALS LOCATED IN, ON OR UNDER SUCH PROPERTY, OR (VI) ANY
INVESTIGATION, LITIGATION, OR PROCEEDING, WHETHER OR NOT THE AGENT, THE
COLLATERAL AGENT, THE ARRANGER, THE ISSUING BANK OR SUCH BANK IS A PARTY
THERETO, RELATED TO OR IN CONNECTION WITH ANY OF THE FOREGOING OR ANY LOAN
DOCUMENT, INCLUDING, WITHOUT LIMITATION, ANY TRANSACTION IN WHICH ANY PROCEEDS
OF ANY ADVANCE ARE APPLIED
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OR ANY LETTER OF CREDIT IS USED, INCLUDING, WITHOUT LIMITATION, IN EACH OF THE
FOREGOING CASES, ANY SUCH CLAIM, DAMAGE, LOSS, LIABILITY, OBLIGATION, PENALTY,
ACTION, JUDGMENT, SUIT, COST, DISBURSEMENT OR EXPENSE RESULTING FROM THE
NEGLIGENCE OF THE AGENT, THE COLLATERAL AGENT, THE ARRANGER, THE ISSUING BANK,
SUCH BANK OR THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS, UNLESS
SUCH CLAIM, DAMAGE, LOSS, LIABILITY, OBLIGATION, PENALTY, ACTION, JUDGMENT,
SUIT, COST, DISBURSEMENT OR EXPENSE IS FOUND TO HAVE RESULTED FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY.
(d) Arranger. The Arranger shall have no duties, obligations,
responsibilities or liabilities whatsoever under or in connection with any Loan
Document.
(e) Survival of Covenants. Without prejudice to the survival of
any other agreement of the Borrower or the Banks hereunder, all obligations of
the Borrower under Section 2.02, Section 2.09, Section 2.10 and this Section
8.04 shall survive the termination of the Commitments, the Letters of Credit
and this Agreement and the payment in full of principal, interest and all other
amounts hereunder and under the Notes.
Section 8.05. Limitation and Adjustment of Interest. (a)
Notwithstanding anything to the contrary set forth herein, in any other Loan
Document or in any other document or instrument, no provision of any of the
Loan Documents or any other instrument or document furnished pursuant hereto or
in connection herewith is intended or shall be construed to require the payment
or permit the collection of interest in excess of the maximum non-usurious rate
permitted by applicable law. Accordingly, if the transactions with any Bank
contemplated hereby would be usurious under applicable law, if any, then, in
that event, notwithstanding anything to the contrary in any Note payable to
such Bank, this Agreement, any other Loan Document or any other document or
instrument, it is agreed as follows: (i) the aggregate of all consideration
which constitutes interest under applicable law that is contracted for, taken,
reserved, charged or received by such Bank under any Note payable to such Bank,
this Agreement or any other Loan Document or under any other document or
instrument shall under no circumstances exceed the maximum amount allowed by
such applicable law, and any excess shall be cancelled automatically and, if
theretofore paid, shall, at the option of such Bank, be credited by such Bank
on the principal amount of the indebtedness owed to such Bank by the Borrower
or refunded by such Bank to the Borrower, and (ii) in the event that the
maturity of any Note payable to such Bank is accelerated or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest under law applicable to such Bank may never include more than the
maximum amount allowed by such applicable law and excess interest, if any, to
such Bank provided for in this Agreement or otherwise shall be cancelled
automatically as of the date of such acceleration or prepayment and, if
theretofore paid, shall, at the option of such Bank, be credited by such Bank
on the principal amount of the indebtedness owed to such Bank by the Borrower
or refunded by such Bank to the Borrower. In determining whether or not the
interest contracted for, taken, reserved, charged or received by any Bank
exceeds the
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maximum non-usurious rate permitted by applicable law, such determination shall
be made, to the extent that doing so does not result in a violation of
applicable law, by amortizing, prorating, allocating and spreading, in equal
parts during the period of the full stated term of the loans hereunder, all
interest at any time contracted for, taken, charged, received or reserved by
such Bank in connection with such loans.
(b) In the event that at any time the interest rate applicable to
any Advance made by any Bank would exceed the maximum non-usurious rate allowed
by applicable law, the rate of interest to accrue on the Advances by such Bank
shall be limited to the maximum non-usurious rate allowed by applicable law,
but shall accrue, to the extent permitted by law, on the principal amount of
the Advances made by such Bank from time to time outstanding, if any, at the
maximum non-usurious rate allowed by applicable law until the total amount of
interest accrued on the Advances made by such Bank equals the amount of
interest which would have accrued if the interest rates applicable to the
Advances pursuant to Article II had at all times been in effect. In the event
that upon the final payment of the Advances made by any Bank and termination of
the Commitments of such Bank, the total amount of interest paid to such Bank
hereunder and under the Notes is less than the total amount of interest which
would have accrued if the interest rates applicable to such Advances pursuant
to Article II had at all times been in effect, then the Borrower agrees to pay
to such Bank, to the extent permitted by law, an amount equal to the excess of
(a) the lesser of (i) the amount of interest which would have accrued on such
Advances if the maximum non-usurious rate allowed by applicable law had at all
times been in effect or (ii) the amount of interest which would have accrued on
such Advances if the interest rates applicable to such Advances pursuant to
Article II had at all times been in effect over (b) the amount of interest
otherwise accrued on such Advances in accordance with this Agreement.
Section 8.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower and the Agent and
when the Agent shall have, as to each Bank, either received a copy of a
signature page hereof executed by such Bank or been notified by such Bank that
such Bank has executed it and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Agent and each Bank and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of all of the Banks.
Section 8.07. Assignments and Participations.
(a) Each Bank may, after the date hereof, assign to one or more
banks or other entities all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, the Advances owing to it and the Notes held by it); provided,
however, that, except as provided in Section 8.07(g), (i) each such assignment
shall be of a constant, and not a varying, percentage of all rights and
obligations under this Agreement and the Notes, and the same constant
percentage of the interests in the Letter of Credit Liabilities held by the
assigning Bank pursuant to Section 2.13, the Advances and Commitment shall be
assigned by the assigning Bank to the assignee pursuant to the Assignment with
respect to such assignment, (ii) the amount
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of the Commitment and Advances of the assigning Bank being assigned pursuant to
each such assignment (determined as of the date of the Assignment with respect
to such assignment) shall in no event be less than the lesser of $10,000,000 or
the total of the assigning Bank's Commitments and shall (iii) each such
assignment shall be to an Eligible Assignee, and (iv) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment, together with the Notes subject to
such assignment and a processing and recordation fee of $3,000. Upon such
execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment, have the rights and obligations of
a Bank hereunder and (y) the Bank assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment, relinquish its rights and be released from its obligations under
this Agreement.
(b) By executing and delivering an Assignment, the Bank assignor
thereunder and the assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than as provided in such
Assignment, such assigning Bank makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with any Loan Document or any other instrument or
document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any other instrument or document
or the existence, sufficiency or value of any Collateral or the existence,
perfection or priority of any Lien thereon; (ii) such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any other Person or the performance or
observance by the Borrower or any other Person of any of its respective
obligations under any Loan Document or any other instrument or document; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the Financial Statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment; (iv) such assignee will, independently
and without reliance upon the Agent, the Collateral Agent, the Issuing Bank,
the Arranger, such assigning Bank 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 or related to any of
the Loan Documents or any other instrument or document; (v) such assignee
confirms that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto and
appoints and authorizes the Collateral Agent to take such action as agent on
its behalf and to exercise such powers under the Deed of Trust as are delegated
to the Collateral Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Bank.
(c) The Agent shall maintain at its address referred to in Section
8.02 a copy of each Assignment delivered to and accepted by it and a register
for the recordation of the names and addresses of the Banks and the Commitment
of, and principal amount of the Advances owing to,
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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
the Borrower, the Agent and the 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 the Borrower or
any Bank at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of an Assignment executed by an assigning
Bank and an assignee representing that it is an Eligible Assignee, together
with the Notes subject to such assignment, the Agent shall, if such Assignment
has been completed and is in substantially the form of Exhibit H hereto, (i)
accept such Assignment, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower. Within five
Business Days after its receipt of such notice, the Borrower, at the expense of
such Eligible Assignee, shall execute and deliver to the Agent (i) if such
assignment is made prior to the Revolving Credit Termination Date, in exchange
for the surrendered Note a new Note payable to the order of such Eligible
Assignee in an amount equal to the Commitment assumed by it pursuant to such
Assignment and, if the assigning Bank has retained a Commitment hereunder, a
new Note payable to the order of the assigning Bank in an amount equal to the
Commitment retained by it hereunder (such new Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note, shall be dated the effective date of such Assignment and shall otherwise
be in substantially the form of Exhibit A); and (ii) if such assignment is made
on or after the Revolving Credit Termination Date, in exchange for the
surrendered Note, a new Note payable to the order of such Eligible Assignee in
an amount equal to the portion of the Advances assigned to it pursuant to such
Assignment and, if the assigning Bank has retained a portion of the Advances a
new Note payable to the order of the assigning Bank in an amount equal to the
portion of the Advances retained by it (such new Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note, shall be dated the effective date of such Assignment and shall otherwise
be in substantially the form of Exhibit A).
(e) Each Bank may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitments and the Advances owing to it and one or more of the Notes held by
it); provided, however, that (i) such Bank's obligations under this Agreement
(including, without limitation, its Commitments to the Borrower hereunder)
shall remain unchanged, (ii) such Bank shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Bank
shall remain the holder of any such Notes for all purposes of this Agreement,
(iv) the Borrower, the Agent, the Issuing Bank and the other Banks shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement and (v) the terms of any
such participation shall not restrict such Bank's ability to make any
amendment, waiver or other modification of this Agreement or any other Loan
Document without the consent of the participant, except that the consent of the
participant may be required to (a) extend the final maturity of any Advance or
Note, reduce the amount or rate of, or extend the time of payment of, interest
fees, principal or any other amount payable hereunder, or increase the amount
of the participant's participation, (b) consent to the assignment or the
transfer by the Borrower of any of its rights and obligations under this
Agreement, or (c) consent to the release of any Collateral.
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(f) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Bank by
or on behalf of the Borrower.
(g) Any Bank may assign, as collateral or otherwise, any of its
rights (including, without limitation, rights to payments of principal of
and/or interest on the Notes) under any Loan Document to any Federal Reserve
Bank without notice to or consent of the Borrower or the Agent.
Section 8.08. Execution in Counterparts. This 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.
Section 8.09. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York. Without limiting the intent of the parties set forth above, (i) Chapter
15, Subtitle 3, Title 79, of the Revised Civil Statutes of Texas, 1925, as
amended (relating to revolving loans and revolving triparty accounts), shall
not apply to this Agreement, the Notes or the transactions contemplated hereby
and (ii) to the extent that any Bank may be subject to Texas law limiting the
amount of interest payable for its account, such Bank shall utilize the
indicated (weekly) rate ceiling from time to time in effect as provided in
Article 5069-1.04 of the Revised Civil Statutes of Texas, as amended.
Section 8.10. JURISDICTION; DAMAGES. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT
SITTING IN NEW YORK CITY, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THE LETTERS OF CREDIT, THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH COURT.
THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING. THE BORROWER HEREBY IRREVOCABLY APPOINTS CT
CORPORATION SYSTEM (THE "PROCESS AGENT"), WITH AN OFFICE ON THE DATE HEREOF AT
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, AS ITS AGENT TO RECEIVE ON BEHALF OF
THE BORROWER AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT
AND ANY OTHER PROCESS WHICH MAY BE SERVED BY THE AGENT, THE ARRANGER, ANY BANK,
THE ISSUING BANK OR ANY OTHER PERSON IN ANY SUCH ACTION OR PROCEEDING. THE
BORROWER HEREBY AGREES THAT SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND
ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING MAY BE
MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS EITHER (A) TO THE PROCESS
AGENT AT
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THE PROCESS AGENT'S ABOVE ADDRESS OR (B) TO THE BORROWER AT ITS ADDRESS
SPECIFIED IN SECTION 8.02. THE BORROWER AGREES THAT A FINAL JUDGMENT, AS TO
WHICH ALL RIGHTS TO APPEAL HAVE TERMINATED, IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING HEREIN SHALL AFFECT
THE RIGHTS OF ANY BANK, THE AGENT, THE ARRANGER, THE ISSUING BANK OR ANY OTHER
PERSON TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
THE RIGHT OF ANY BANK, THE AGENT, THE ARRANGER, THE ISSUING BANK OR ANY OTHER
PERSON TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTION. THE BORROWER HEREBY FURTHER
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION 8.10 ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
SECTION 8.11. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT, THE
ISSUING BANK AND THE BANKS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
ANY OTHER LOAN DOCUMENT TO WHICH THE BORROWER IS A PARTY OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 8.12. Hedging Obligations. The Borrower may from time to
time elect pursuant to this Section 8.12 to have Hedging Obligations secured by
the Mortgages, if at the time of such election no Default or Event of Default
exists; provided, however, that in no event shall Hedging Obligations include
obligations under any Hedging Agreement between the Borrower and any party
other than a Bank nor shall there ever be Hedging Obligations in excess of
$2,500,000 in the aggregate secured by the Mortgages. As to each such
election, the Borrower shall (a) give the Agent notice in the form of Exhibit G
attached hereto (a "Notice of Hedging Obligations") signed by the Borrower and
the proposed secured party describing the proposed Hedging Agreement (including
the type, term, effective date, termination date and notional amounts or
volumes), and the proposed effective date of such election (which shall be a
Business Day not less than 1, nor more than 5, Business Days following such
notice), and (b) deliver to the Agent a copy of the proposed Hedging Agreement.
On the effective date of such election, the obligations of the Borrower under
the proposed Hedging Agreement shall be secured by the Mortgages up to the
maximum amount identified in such notice (in no event to exceed an aggregate
amount of $2,500,000 for all Notices of Hedging Obligations delivered pursuant
to this Section 8.12). From and after the effective date of such election the
proposed secured party who has signed such Notice of Hedging Obligations shall
be, subject to the next succeeding sentence, deemed to be secured by the
Mortgages up to the amount specified in such Notice of Hedging Obligations,
ratably as to all other amounts secured thereby, including all Advances, all
Letter of Credit Liabilities and all other Hedging Obligations designated
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by the Borrower pursuant to a Notice of Hedging Obligation, until the Borrower
and such secured party notify the Agent in writing that there are no
obligations under such Hedging Agreement that are secured by the Mortgages. In
the event the Borrower should at any time deliver a Notice of Hedging
Obligations to the Agent and the Agent should determine that the Hedging
Obligations of the Borrower to the proposed secured party who is party to such
Notice, when taken together with all amounts identified in all prior Notices of
Hedging Obligations delivered to the Agent, would exceed the aggregate sum of
$2,500,000, the amount of the Hedging Obligations to the proposed secured party
identified in the most recent Notice of Hedging Obligations shall automatically
be reduced to an amount that, when taken together with all such other amounts
allocated by the Borrower pursuant to Notices of Hedging Obligations, will not
exceed $2,500,000 in the aggregate.
Section 8.13. Special Provisions. On or before the seventh
Business Day after the date of issuance of the initial Letters of Credit, the
Borrower will deliver to the Agent (i) a release and termination of each of the
Bank One Liens duly executed by Bank One, Texas, N.A., and (ii) termination of
each letter of credit issued in connection with the loan secured by the Bank
One Liens. Notwithstanding anything to the contrary herein, in no event shall
the Borrower be entitled to have any Advance made (other than the initial
Advance) or any Letter of Credit issued (other than Letters of Credit
aggregating not more than $10,000,000) until such release and termination and
such terminations of each such letter of credit are delivered to the Agent.
Until the date referred to in the first sentence of this Section 8.13, the Bank
One Liens shall constitute Permitted Exceptions and such letters of credit
shall not constitute Indebtedness.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
BORROWER:
PETSEC ENERGY, INC., a Nevada corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: President
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AGENT:
THE CHASE MANHATTAN BANK, N.A.,
as Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: Vice President
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BANKS:
Commitment:
$75,000,000 THE CHASE MANHATTAN BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: Vice President
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