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EXHIBIT 10.1
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FOURTH RESTATEMENT OF CREDIT AGREEMENT
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FORCENERGY INC
AND
ING (U.S.) CAPITAL CORPORATION
AS AGENT
AND
CERTAIN FINANCIAL INSTITUTIONS
AS LENDERS
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$200,000,000
MARCH 31, 1997
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ARTICLE I - Definitions and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2. Exhibits and Schedules; Additional Definitions . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1.3. Amendment of Defined Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1.4. References and Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1.5. Calculations and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE II - The Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.1. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.2. Requests for Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.3. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.4. Rate Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.5. Commitment & Facility Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.6. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.7. Regular Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.8. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.9. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.10. Payments to Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.11. Initial Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.12. Subsequent Determinations of Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.13. Capital Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.14. Increased Cost of Fixed Rate Portions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.15. Transfer of Loans and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.16. Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.17. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.18. Reimbursable Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 2A. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2A.1. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2A.2. Reimbursement of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2A.3. Transferees of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2A.4. Extension of Maturity of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2A.5. Restriction on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2A.6. No Duty to Inquire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2A.7. Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2A.8. Acceleration of LC Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2A.9. Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2A.10 Increased Costs for Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE III - Conditions Precedent to Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.1. Documents to be Delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.2. Additional Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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ARTICLE IV - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.1. Borrower's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.2. Representation by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE V - Covenants of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI - Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.1. The Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.2. Agreement to Deliver Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.3. Perfection and Protection of Security Interests and Liens . . . . . . . . . . . . . . . . . . 51
Section 6.4. Bank Accounts; Offset. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.5. Guaranties of Borrower's Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.6. Production Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VII - Events of Default and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.3. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE VIII - Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 8.1. Appointment and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 8.2. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 8.3. Lenders' Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 8.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 8.5. Rights as Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 8.6. Sharing of Set-Offs and Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 8.7. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 8.8. Benefit of Article VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 8.9. Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE IX - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 9.1. Waivers and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 9.2. Governing Law: Submission To Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 9.3. Limitation on Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 9.4. Termination; Limited Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 9.5. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.8. Waiver of Jury Trial, Punitive Damages, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 63
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Section 9.9. Restatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SCHEDULES AND EXHIBITS
SCHEDULE 1 - Disclosure Schedule
SCHEDULE 2 - Required Insurance Coverage
SCHEDULE 3 - Existing Debt
SCHEDULE 4 - Existing Liens
EXHIBIT A - Note
EXHIBIT B - Request for Advance
EXHIBIT C - Rate Election
EXHIBIT D - Form of Opinion of Borrower's Counsel
EXHIBIT E - Application for Letter of Credit
EXHIBIT F - Certificate Accompanying Financial Statements
EXHIBIT G - Environmental Compliance Certificate
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FOURTH RESTATEMENT OF CREDIT AGREEMENT
THIS FOURTH RESTATEMENT OF CREDIT AGREEMENT is made as of March 31,
1997, by and among Forcenergy Inc, a Delaware corporation (formerly known as
Forcenergy Gas Exploration, Inc. and herein called "Borrower"), ING (U.S.)
Capital Corporation, a Delaware corporation (formerly known as Internationale
Nederlanden (U.S.) Capital Corporation and herein called "ING "), as agent
hereunder (in such capacity being herein called "Agent"), and the Lenders
referred to below.
RECITALS
1. Forcenergy Partners, L.P. (the "Partnership"), Internationale
Nederlanden Bank, N.V., New York Branch ("ING Bank") and certain lenders party
thereto entered into that certain Credit Agreement dated as of July 26, 1991,
as amended by (i) that certain First Amendment to Credit Agreement dated as of
November 15, 1991, (ii) that certain Second Amendment to Credit Agreement dated
as of September 1, 1992, (iii) that certain Third Amendment to Credit Agreement
dated as of December 30, 1992, and (iv) that certain Fourth Amendment to Credit
Agreement dated as of February 17, 1993 (as so amended, the "Original
Agreement").
2. Pursuant to an Agreement and Plan of Merger dated September 14,
1993, the Partnership merged with and into Forcenergy AB Subsidiary, Inc., a
Delaware corporation ("AB Sub"). AB Sub, the surviving entity from such
merger, changed its name to Forcenergy Gas Exploration, Inc. and by operation
of law assumed all of the obligations of the Partnership under the Original
Agreement and the Promissory Notes issued thereunder (the "Original Notes").
3. The Original Agreement was restated in its entirety pursuant to
that certain Fifth Amendment to and Restatement of Credit Agreement dated as of
September 15, 1993 among Borrower, Agent and certain financial institutions
(including certain Lenders), as amended by (i) a First Amendment to Fifth
Amendment to and Restatement of Credit Agreement dated December 21, 1993, (ii)
a Second Amendment to Fifth Amendment to and Restatement of Credit Agreement
dated June 15, 1994, (iii) a Third Amendment to Fifth Amendment to and
Restatement of Credit Agreement dated September 1, 1994, (iv) a Fourth
Amendment to Fifth Amendment to and Restatement of Credit Agreement dated June
21, 1995 and (v) a Fifth Amendment to Fifth Amendment to and Restatement of
Credit Agreement dated September 15, 1995 (as so amended, the "First Restated
Agreement"), pursuant to which Borrower issued Renewal Promissory Notes in
renewal and increase of, and in substitution for, the Original Notes (the
"First Renewal Notes").
4. The First Restated Agreement was restated in its entirety pursuant
to that certain Second Restatement of Credit Agreement dated as of December 1,
1995 among Borrower, Agent and certain financial institutions (including
certain Lenders), as amended by a First Amendment to Second Restatement of
Credit Agreement dated March 8, 1996 (as so amended, the "Second Restated
Agreement"), pursuant to which Borrower issued Renewal Promissory Notes in
renewal and increase of, and in substitution for, the First Renewal Notes (the
"Second Renewal Notes").
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4. The Second Restated Agreement was restated in its entirety
pursuant to that certain Third Restatement of Credit Agreement dated as of July
11, 1996 among Borrower, Agent and Lenders, as amended by (i) a First Amendment
to Third Restatement of Credit Agreement dated July 11, 1996, (ii) a Second
Amendment to Third Restatement of Credit Agreement dated November 6, 1996, and
(iii) a Third Amendment to Third Restatement of Credit Agreement dated February
12, 1997 (as so amended, the "Existing Agreement"), pursuant to which Borrower
issued Renewal Promissory Notes in renewal and increase of, and in substitution
for, the Second Renewal Notes (the "Existing Notes").
5. Borrower desires to amend and restate the Existing Agreement in
its entirety and to renew and increase the indebtedness evidenced by the
Existing Notes by issuing the Notes as provided herein.
In consideration of the mutual covenants and agreements contained
herein, the parties hereto agree to restate the Existing Agreement in its
entirety on the terms and conditions hereinafter provided:
ARTICLE I - Definitions and References
Section 1.1. Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it in this Section 1.1 or in the sections
and subsections referred to below:
"AB Sub" has the meaning given it in the Recitals to this Agreement.
"Advance" has the meaning given it in Section 2.1.
"Affiliate" means, as to any Person, each other Person that directly
or indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person.
"Agent" means ING (U.S.) Capital Corporation (formerly known as
Internationale Nederlanden (U.S.) Capital Corporation), and its successors in
such capacity.
"Agreement" means this Fourth Restatement of Credit Agreement, as the
same may from time to time be amended, supplemented or otherwise modified.
"Back-to-Back Letter of Credit" means any Letter of Credit issued
hereunder by an Issuing Bank that is backed by a letter of credit issued for
the benefit of the Issuing Bank by a financial institution acceptable to the
Issuing Bank and otherwise issued on terms and conditions acceptable to the
Issuing Bank in its sole discretion; provided that the aggregate amount of
Back-to-Back Letters of Credit outstanding any time shall not exceed
$5,000,000.
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"Back-to-Back LC Obligation" means at the time in question, the sum of
the Matured LC Obligations related to Back-to-Back Letters of Credit plus the
aggregate amounts which Lenders might be called upon to advance under all Back-
to-Back Letters of Credit then outstanding.
"Base Rate" means the rate of interest from time to time established
by Agent at its principal office in New York City as its prime commercial
lending rate; provided, however, that if Agent shall cease to announce a prime
commercial lending rate, then "Base Rate" shall mean the arithmetic average of
the rates of interest publicly announced by The Chase Manhattan Bank, Citibank,
N.A. and ▇▇▇▇▇▇ Guaranty Trust Company of New York (or their respective
successors) as their respective prime commercial lending rates (or, as to any
such bank that does not announce such a rate, such bank's 'base' or other rate
determined by Agent to be the equivalent rate announced by such bank), except
that, if any such bank shall, for any period, cease to announce publicly its
prime commercial lending (or equivalent) rate, Agent shall, during such period,
determine the "Base Rate" based upon the prime commercial lending (or
equivalent) rates announced publicly by the other such banks. The Base Rate
shall in no event, however, exceed the Highest Lawful Rate.
"Base Rate Portion" means that portion of the unpaid principal balance
of a Loan which is not made up of Fixed Rate Portions.
"Borrower" means Forcenergy Inc (formerly known as Forcenergy Gas
Exploration, Inc.), a Delaware corporation.
"Borrowing Base" means, at the particular time in question, either the
amount provided for in Section 2.11 or the amount determined by Agent in
accordance with the provisions of Section 2.12; provided, however, that in no
event shall the Borrowing Base ever exceed the Maximum Loan Amount and provided
further that in no event shall (i) more than $195,000,000 of the Borrowing Base
be composed of Advances and LC Obligations and (ii) more than $5,000,000 of the
Borrowing Base be composed of Back-to-Back LC Obligations.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in New York, New York.
Any Business Day in any way relating to Fixed Rate Portions (such as the day on
which an Interest Period begins or ends) must also be a day on which, in the
judgment of Agent, significant transactions in dollars are carried out in the
interbank eurocurrency market.
"Change of Control" means the occurrence of any of the following
events at any time after the execution and delivery of this Agreement, except
to the extent any of the following events occurs with the prior written consent
of Majority Lenders: (i) any Person or two or more Persons acting as a group
shall acquire beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
as amended, and including holding proxies to vote for the election of
directors) of 33 1/3% or more of the outstanding shares of voting common stock
of Borrower, (ii) there is a sale of all or substantially all of the assets of
Borrower or a distribution of assets of Borrower upon any dissolution, winding
up, liquidation or
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reorganization of Borrower or (iii) there is a Change of Control as defined in
the Subordinated Debt Documents.
"Collateral" means all property of any kind which is subject to a Lien
in favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
"Commitment Period" means the period from and including the date
hereof until and including the Termination Date (or, if earlier, the day on
which the Notes first become due and payable in full).
"Consolidated" refers to the consolidation of any Person, in
accordance with GAAP, with its properly consolidated subsidiaries. References
herein to a Person's Consolidated financial statements, financial position,
financial condition, liabilities, etc. refer to the consolidated financial
statements, financial position, financial condition, liabilities, etc. of such
Person and its properly consolidated subsidiaries.
"Debt" means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
"Default" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.
"Determination Date" has the meaning given it in Section 2.12.
"Disclosure Schedule" means (a) Schedule 1 hereto and (b) any
documents listed on such schedule and expressly incorporated therein by
reference, so long as Borrower has heretofore delivered true and correct copies
of such documents to Agent and each Lender. Insofar as any representations and
warranties made herein are incorporated by reference or otherwise remade in
Loan Documents delivered as of a date after the date hereof, the term
"Disclosure Schedule" shall in such representations and warranties be deemed to
refer as well to all other documents which Borrower has at the time in question
delivered to Agent and each Lender.
"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 5.1(b)(iv).
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including ambient air, surface water, ground
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water, or land, or otherwise relating to the manufacture, processing,
distribution use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Plan" means any pension benefit plan subject to Title IV of
ERISA maintained by any Related Person or any Affiliate thereof with respect to
which any Related Person has a fixed or contingent liability.
"Eurodollar Rate" means, with respect to each particular Fixed Rate
Portion within a Tranche and with respect to the related Interest Period, a
rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%)
quoted by Agent at approximately 11:00 a.m. London time (or as soon thereafter
as practicable) on the date two Business Days prior to the first day of such
Interest Period for the offering by Agent to leading banks in the London
interbank market of dollar deposits having a term comparable to such Interest
Period and in an amount comparable to the principal amount of Agent's Fixed
Rate Portion within such Tranche; provided, however, that if Agent shall cease
to make such offers "Eurodollar Rate" shall mean, with respect to such Fixed
Rate Portion, the rate per annum (rounded upwards, if necessary, to the nearest
1/16 of 1%) reported, on the date two Business Days prior to the first day of
such Interest Period, on Telerate Access Service Page 3750 (British Bankers
Association Settlement Rate) as the London Interbank Offered Rate for dollar
deposits having a term comparable to such Interest Period and in an amount of
$1,000,000 or more (or, if such Page shall cease to be publicly available or if
the information contained on such Page, in Agent's sole judgment, shall cease
to accurately reflect such London Interbank Offered Rate, as reported by any
publicly available source of similar market data selected by Agent that, in
Agent's sole judgment, accurately reflects such London Interbank Offered Rate).
"Event of Default" has the meaning given it in Section 7.1, provided
that any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Existing Agreement" has the meaning given it in the Recitals to this
Agreement.
"Existing Notes" has the meaning given it in the Recitals to this
Agreement.
"First Renewal Notes" has the meaning given it in the Recitals to this
Agreement.
"First Restated Agreement" has the meaning given it in the Recitals to
this Agreement.
"Fiscal Quarter" means a three-month period ending on March 31, June
30, September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December 31 of any
year.
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"Fixed Rate" means, with respect to each particular Fixed Rate Portion
and the associated Eurodollar Rate and Reserve Percentage, the rate per annum
calculated by Agent (rounded upwards, if necessary, to the next higher 0.01%)
determined on a daily basis pursuant to the following formula:
Fixed Rate =
Eurodollar Rate + A
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100.0% - Reserve Percentage
where A means one percent (1.0%). If the Reserve Percentage changes during the
Interest Period for a Fixed Rate Portion, Agent may, at its option, either
change the Fixed Rate for such Fixed Rate Portion or leave it unchanged for the
duration of such Interest Period. The Fixed Rate shall in no event, however,
exceed the Highest Lawful Rate.
"Fixed Rate Portion" means any portion of the unpaid principal balance
of a Loan which Borrower designates as such in a Rate Election.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of
Borrower and its Consolidated subsidiaries, are applied for all periods after
the date hereof in a manner consistent with the manner in which such principles
and practices were applied to the audited Initial Financial Statements. If any
change in any accounting principle or practice is required by the Financial
Accounting Standards Board (or any such successor) in order for such principle
or practice to continue as a generally accepted accounting principle or
practice, all reports and financial statements required hereunder with respect
to Borrower or with respect to Borrower and its Consolidated subsidiaries may
be prepared in accordance with such change, but all calculations and
determinations to be made hereunder which are materially affected by such
change may be made in accordance with such change only after prior notice of
such change is given to each Lender.
"Grace Period" has the meaning given it in Section 7.1.
"Guarantor" means any Subsidiary of Borrower now in existence or
hereafter created which now or hereafter executes and delivers a guaranty to
Agent pursuant to Section 6.5.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious rate of interest that such Lender is permitted under applicable law
to contract for, take, charge, or receive with respect to its Loan. All
determinations herein of the Highest Lawful Rate, or of any interest rate
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determined by reference to the Highest Lawful Rate, shall be made separately
for each Lender as appropriate to assure that the Loan Documents are not
construed to obligate any Person to pay interest to any Lender at a rate in
excess of the Highest Lawful Rate applicable to such Lender.
"ING" means ING (U.S.) Capital Corporation (formerly known as
Internationale Nederlanden (U.S.) Capital Corporation), a Delaware corporation.
"ING Bank" has the meaning given it in the Recitals to this Agreement.
"Initial Engineering Report" means[, COLLECTIVELY,] the engineering
report concerning oil and gas properties of Borrower dated
____________________________, 1997 prepared by Netherland, ▇▇▇▇▇▇ & Associates,
Inc. as of January 1, 1997 [AND THE ENGINEERING REPORT CONCERNING OIL AND GAS
PROPERTIES OF BORROWER DATED ____________________________________________ ,
1997 PREPARED BY COLLARINI & ASSOCIATES AS OF JANUARY 1, 1997].
"Initial Financial Statements" means the audited annual Consolidated
financial statements of Borrower dated as of December 31, 1996.
"Interest Period" means, with respect to each particular Fixed Rate
Portion of a Loan, a period of 1, 2, 3 or 6 months, as specified in the Rate
Election applicable thereto, beginning on and including the date specified in
such Rate Election (which must be a Business Day), and ending on but not
including the same day of the month as the day on which it began (e.g., a
period beginning on the third day of one month shall end on but not include the
third day of another month), provided that each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (unless such next succeeding Business Day is in the
next following calendar month, in which case such Interest Period shall end on
the immediately preceding Business Day) and provided that each Interest Period
which begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall 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. No Interest Period may be elected which would
extend past the date on which the associated Note is due and payable in full.
"Issuing Bank" means any of the Lenders acting in its capacity as an
issuer of Letters of Credit hereunder.
"Late Payment Rate" means, at the time in question, two percent (2.0%)
per annum plus the Base Rate then in effect; provided that, with respect to any
Fixed Rate Portion with an Interest Period extending beyond the date such Fixed
Rate Portion becomes due and payable, "Late Payment Rate" shall mean two
percent (2.0%) per annum plus the related Fixed Rate. The Late Payment Rate
shall in no event, however, exceed the Highest Lawful Rate.
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"LC Application" means any application or agreement for a standby
Letter of Credit executed by Borrower pursuant to Section 2A.1.
"LC Obligation" means at the time in question, the sum of the Matured
LC Obligations of Borrower plus the aggregate amounts which Lenders might be
called upon to advance under all Letters of Credit then outstanding; provided
that LC Obligations shall not include Back-to-Back LC Obligations.
"Lenders" means each signatory hereto other than Borrower, including
ING, in its capacity as a lender hereunder rather than as Agent, and the
successors of each as holder of a Note.
"Letter of Credit" has the meaning given it in Section 2A.1.
"Lien" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Debt owed to him or any other
arrangement with such creditor which provides for the payment of such Debt out
of such property or assets or which allows him to have such Debt satisfied out
of such property or assets prior to the general creditors of any owner thereof,
including any lien, mortgage, security interest, pledge, deposit, production
payment, rights of a vendor under any title retention or conditional sale
agreement or lease substantially equivalent thereto, tax lien, mechanic's or
materialman's lien, or any other charge or encumbrance for security purposes,
whether arising by law or agreement or otherwise, but excluding any right of
offset which arises without agreement in the ordinary course of business.
"Lien" also means any filed financing statement (other than protective filings
for operating leases), any registration of a pledge (such as with an issuer of
unregistered securities), or any other arrangement or action which would serve
to perfect a Lien described in the preceding sentence, regardless of whether
such financing statement is filed, such registration is made, or such
arrangement or action is undertaken before or after such Lien exists.
"Loan" has the meaning given it in Section 2.1. "Loans" means
collectively each Lender's Loan.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, any guaranty given in accordance with Section 6.5, the Letters of
Credit, the LC Applications, and all other agreements, certificates, documents,
instruments and writings at any time delivered in connection herewith or
therewith (exclusive of term sheets, commitment letters, correspondence and
similar documents used in the negotiation hereof).
"Majority Lenders" means at any time Lenders the Percentage Shares of
which aggregate at least 75%.
"Matured LC Obligations" has the meaning given it in Section 2A.2(a).
"Maximum Loan Amount" means the amount of $200,000,000.
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"1997 Indenture" means that certain Indenture entered into on February
14, 1997 between Borrower and Bankers Trust Company, as trustee, pursuant to
which the 2007 Senior Subordinated Notes were issued, as such instrument was in
effect on the date of execution.
"1996 Indenture" means that certain Indenture entered into on or about
November 6, 1996 between Borrower and Bankers Trust Company, as trustee,
pursuant to which the 2006 Senior Subordinated Notes were issued, as such
instrument was in effect on the date of execution.
"Note" has the meaning given it in Section 2.1. "Notes" means
collectively each Lender's Note.
"Obligations" means all Debt from time to time owing by any of the
Related Persons to Agent or any Lender under or pursuant to any of the Loan
Documents. "Obligation" means any part of the Obligations.
"Partnership" has the meaning given it in the Recitals to this
Agreement.
"Percentage Share" means, with respect to any Lender (a) when used in
Sections 2.1, 2.5 or 2.A.2(b), in any Request for Advance or when no Loans are
outstanding hereunder, the percentage set forth opposite such Lender's name on
the signature pages of this Agreement, and (b) when used otherwise, the
percentage equal to the unpaid principal balance of such Lender's Loan at the
time in question divided by the aggregate unpaid principal balance of all Loans
at such time.
"Permitted Investments" means:
(a) investments in open market commercial paper, maturing
within 270 days after acquisition thereof, which has the highest or
second highest credit rating given by either Standard & Poor's
Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.
(b) investments in marketable obligations, maturing
within 12 months after acquisition thereof, issued or unconditionally
guaranteed by the United States of America or an instrumentality or
agency thereof and entitled to the full faith and credit of the United
States of America.
(c) investments in demand deposits, and time deposits
(including certificates of deposit) maturing within 12 months from the
date of deposit thereof, with any office of any Lender or with a
domestic office of any national or state bank or trust company which
is organized under the laws of the United States of America or any
state therein, which has capital, surplus and undivided profits of at
least $500,000,000, and whose certificates of deposit have at least
the third highest credit rating given by either Standard & Poor's
Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.
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(d) investments in money market or other mutual funds
substantially all of whose assets comprise securities of the types
described in paragraphs (a) through (c) above.
(e) contracts entered into with the purpose and effect of
fixing prices on oil and/or gas expected to be produced by the Related
Persons, provided that at all times: (1) no such contract fixes a
price for a term of more than twenty-four (24) months without the
prior written consent of Majority Lenders; (2) the aggregate monthly
production covered by all such contracts (determined, in the case of
contracts that are not settled on a monthly basis, by a monthly
proration acceptable to Agent) for any single month does not in the
aggregate exceed seventy-five percent (75%) of the Related Persons'
aggregate Projected Oil and Gas Production anticipated to be sold in
the ordinary course of the Related Persons' businesses for such month,
(3) no such contract requires any Related Person to put up money,
assets, letters of credit or other security against the event of its
nonperformance prior to actual default by such Related Person in
performing its obligations thereunder other than deposits made by
Borrower to satisfy minimum margin requirements in an aggregate amount
not to exceed $5,000,000 outstanding at any time, (4) each such
contract shall be with Agent, any Lender or a counterparty or have a
guarantor of the obligation of the counterparty who, at the time the
contract is made, has long-term obligations rated AA or Aa2 or better,
respectively, by Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors
Services, Inc. (or a successor credit rating agency) and (5) promptly
after entering into such contract if requested by Agent but in any
event on a monthly basis, Borrower gives written notice of such fact
to Agent and all Lenders. As used herein, the term "Projected Oil and
Gas Production" means the projected production of oil and/or gas
(measured by volume unit or BTU equivalent, not sales price) for the
term of the contracts or a particular month, as applicable, from
properties and interests owned by any Related Person which are located
in or offshore of the United States and which have attributable to
them proved oil or gas reserves and, with respect to Borrower, as
reflected in the most recent report delivered pursuant to Section
5.1(b)(iv), after deducting projected production from any properties
or interests sold or under contract for sale that had been included in
such report and after adding projected production from any properties
or interests owned by Borrower that had not been reflected in such
report but that are reflected in a separate or supplemental reports
meeting the requirements of such Section 5.1(b)(iv) and otherwise
satisfactory to Agent. Notwithstanding the foregoing, in the event
that the aggregate monthly production covered by all contracts entered
into with the purpose and effect of fixing prices on oil and/or gas
expected to be produced by the Related Persons (determined, in the
case of contracts that are not settled on a monthly basis, by a
monthly proration acceptable to Agent) for a period of six consecutive
months equals, in the aggregate for such six month period,
seventy-five percent (75%) of the Related Persons' aggregate Projected
Oil and Gas Production anticipated to be sold in the ordinary course
of the Related Persons' businesses during such six month period,
Borrower will notify Agent and each Lender in writing of such fact at
least fifteen (15) days prior to the beginning of such six month
period; and
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(f) upon prior written notice to Agent and all Lenders,
contracts entered into with the purpose and effect of fixing interest
rates on a principal amount of indebtedness of Borrower that is
accruing interest at a variable rate, provided that (1) the aggregate
notional amount of such contracts never exceeds seventy-five percent
(75%) of the anticipated outstanding principal balance of the
indebtedness of Borrower to be hedged by such contracts or an average
of such principal balances calculated using a generally accepted
method of matching interest swap contracts to declining principal
balances, (2) the floating rate index of each such contract generally
matches the index used to determine the floating rates of interest on
the corresponding indebtedness of Borrower to be hedged by such
contract and (3) each such contract shall be with Agent, any Lender or
a counterparty or have a guarantor of the obligation of the
counterparty who, at the time the contract is made, has long-term
obligations rated AA or Aa2 or better, respectively, by Standard &
Poor's Corporation or ▇▇▇▇▇'▇ Investors Services, Inc. (or a successor
credit rating agency).
"Person" means an individual, corporation, partnership, association,
joint stock company, trust or trustee thereof, estate or executor thereof,
unincorporated organization or joint venture, court or governmental unit or any
agency or subdivision thereof, or any other legally recognizable entity.
"Prohibited Lien" means any Lien not expressly allowed under Section
5.2(b).
"Qualified Properties" means at the particular time in question those
oil and gas properties and interests (a) which are owned by Borrower (b) which
are located in or offshore the United States, (c) which have attributable to
them proved oil or gas reserves, and (d) to the extent requested by Agent (i)
which are subject to Security Documents securing the Obligations that
constitute and create legal, valid and duly perfected first deed of trust or
mortgage liens in such properties and interests and first priority assignments
of and security interests in the oil and gas attributable to such properties
and interests and the proceeds thereof, free and clear of all Prohibited Liens,
and (ii) for which Agent has received favorable title opinions from legal
counsel acceptable to it with respect to each of such properties and interests,
based upon abstract or record examinations to dates acceptable to Agent and (A)
stating that Borrower has good and defensible title to such properties and
interests, (B) confirming the requirements provided for in subsection (d)(i) of
this definition, and (C) covering such other matters as Agent may request.
"Rate Election" has the meaning given it in Section 2.4.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.
"Related Person" means any of Borrower, each Subsidiary of Borrower
and each Guarantor.
"Request for Advance" means a written or telephonic request, or a
written confirmation, made by Borrower which meets the requirements of Section
2.2.
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"Required Lenders" means at any time Lenders the Percentage Shares of
which aggregate at least 85%.
"Reserve Percentage" means, on any day with respect to each particular
Fixed Rate Portion in a Tranche, the maximum reserve requirement, as determined
by Agent (including without limitation any basic, supplemental, marginal,
emergency or similar reserves), expressed as a percentage and rounded to the
next higher 0.01%, which would then apply to Agent under Regulation D with
respect to "Eurocurrency liabilities" (as such term is defined in Regulation D)
equal in amount to Agent's Fixed Rate Portion in such Tranche, were Agent to
have any such "Eurocurrency liabilities". If such reserve requirement shall
change after the date hereof, Borrower shall be promptly notified thereof and
the Reserve Percentage shall be automatically increased or decreased, as the
case may be, from time to time as of the effective time of each such change in
such reserve requirement.
"Second Renewal Notes" has the meaning given it in the Recitals to
this Agreement.
'Second Restated Agreement" has the meaning given it in the Recitals
to this Agreement.
"Security Documents" means all security agreements, deeds of trust,
mortgages, chattel mortgages, pledges, guaranties, financing statements,
continuation statements, extension agreements and other agreements or
instruments now, heretofore, or hereafter delivered by any Related Person to
Agent in connection with this Agreement or any transaction contemplated hereby
to secure or guarantee the payment of any part of the Obligations or the
performance of any Related Person's other duties and obligations under the Loan
Documents.
"Senior Subordinated Notes" means collectively the 2006 Senior
Subordinated Notes and the 2007 Senior Subordinated Notes.
"Subordinated Debt" means collectively the Debt evidenced by the 2006
Senior Subordinated Notes and the 2007 Senior Subordinated Notes.
"Subordinated Debt Documents" means collectively the 1996 Indenture
and the 1997 Indenture, and the Senior Subordinated Notes issued thereunder.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person.
"Termination Date" means January 1, 1999.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event
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described in Section 4043(b) of ERISA other than a reportable event not subject
to the provision for 30-day notice to the Pension Benefit Guaranty Corporation
pursuant to a waiver by such corporation under Section 4043(a) of ERISA, or (b)
the withdrawal of any Related Person or of any Affiliate of any Related Person
from an ERISA Plan during a plan year in which it was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of
intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment
as a termination under Section 4041 of ERISA, or (d) the institution of
proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty
Corporation under Section 4042 of ERISA, or (e) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any ERISA Plan.
"Tranche" has the meaning given it in Section 2.4.
"2007 Senior Subordinated Notes" means the 8.5% Senior Subordinated
Notes due 2007 in an original principal amount not to exceed $200,000,000
issued by Borrower pursuant to the 1997 Indenture.
"2006 Senior Subordinated Notes" means the 9.5% Senior Subordinated
Notes due 2006 in an original principal amount not to exceed $175,000,000
issued by Borrower pursuant to the 1996 Indenture.
Section 1.2. Exhibits and Schedules; Additional Definitions. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes.
Section 1.3. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in
this Agreement which refer to a particular agreement, instrument or document
also refer to and include all renewals, extensions, modifications, amendments
and restatements of such agreement, instrument or document, provided that
nothing contained in this section shall be construed to authorize any such
renewal, extension, modification, amendment or restatement.
Section 1.4. References and Titles. All references in this Agreement
to Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without
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limitation". Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
Section 1.5. Calculations and Determinations. All calculations under
the Loan Documents of fees and of interest shall be made on the basis of actual
days elapsed (including the first day but excluding the last) and a year of 360
days. Each determination by Agent or a Lender of amounts to be paid under
Sections 2.13 through 2.18 or any other matters which are to be determined
hereunder by Agent or a Lender (such as any Eurodollar Rate, Fixed Rate,
Business Day, Interest Period, or Reserve Percentage) shall, in the absence of
manifest error, be conclusive and binding. Unless otherwise expressly provided
herein or unless Required Lenders otherwise consent all financial statements
and reports furnished to Agent or any Lender hereunder shall be prepared and
all financial computations and determinations pursuant hereto shall be made in
accordance with GAAP.
ARTICLE II - The Loans
Section 2.1. Advances. Each Lender hereby agrees to renew the
principal indebtedness evidenced by the Existing Notes held by it on the terms
and conditions provided herein and in the other Loan Documents (such
outstanding indebtedness, if any, being herein called the "Initial Advance")
and subject to the terms and conditions hereof, each Lender agrees to make
advances to Borrower (herein, together with the Initial Advance, collectively
called such Lender's "Advances") upon request from time to time during the
Commitment Period so long as (a) each Advance by such Lender does not exceed
such Lender's Percentage Share of the aggregate amount of Advances then
requested from all Lenders, and (b) the aggregate amount of such Lender's
Advances made, plus such Lender's Percentage Share of all outstanding LC
Obligations, does not exceed such Lender's Percentage Share of the Borrowing
Base in effect as of the date on which the requested Advance is to be made.
Each Advance hereunder shall be made by Lenders on a pro-rata basis in
accordance with their respective Percentage Shares. The aggregate amount of
all Advances requested of all Lenders in any Request for Advance must be
greater than or equal to $100,000 or must equal the unadvanced portions of the
Borrowing Base or the Maximum Loan Amount, as applicable. The obligation of
Borrower to repay to each Lender the aggregate amount of all Advances made by
such Lender (herein called such Lender's "Loan"), together with interest
accruing in connection therewith, shall be evidenced by a single renewal
promissory note (herein called such Lender's "Note") made by Borrower payable
to the order of such Lender in the form of Exhibit A with appropriate
insertions. Any reference herein to "the making of the Loan" or words of
similar import shall be deemed to be a reference to the renewal of the Existing
Notes by Lenders and the making of subsequent Advances by Lenders as described
above. The amount of principal owing on any Lender's Note at any given time
shall be the aggregate amount of all Advances theretofore made by such Lender
minus all payments of principal theretofore received by such Lender on such
Note. Interest on each Note shall accrue and be due and payable as provided
herein and therein. During the Commitment Period, Borrower may, at its option,
from time to time, request Advances, prepay
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Loans in whole or in part, and reborrow amounts so paid up to the lesser of the
Borrowing Base or the Maximum Loan Amount in effect at the time of reborrowing,
all in accordance with the terms and conditions hereof.
Section 2.2. Requests for Advances. Borrower must give to Agent at
least three Business Days' prior written notice, or telephonic notice promptly
confirmed in writing, of any requested Advances, after which Agent shall give
each Lender notice thereof within twenty-four hours of Agent's receipt of such
requested Advances. Each such written request or confirmation must be made in
the form and substance of the "Request for Advance" attached hereto as Exhibit
B, duly completed. Each such telephonic request shall be deemed a
representation, warranty, acknowledgment and agreement by Borrower as to the
matters which are required to be set out in such written confirmation. If all
conditions precedent to such Advances have been met, each Lender will on the
date requested promptly remit to Agent at Agent's office in New York, New York
the amount of such Lender's Advance in immediately available funds, and upon
receipt of such funds, unless to its actual knowledge any conditions precedent
to such Advances have been neither met nor waived as provided herein, Agent
shall promptly make the Advances available to Borrower. Each Request for
Advance shall be irrevocable and binding on Borrower. Unless Agent shall have
received prompt notice from a Lender that such Lender will not make available
to Agent such Lender's Advance, Agent may in its discretion assume that such
Lender has made such Advance available to Agent in accordance with this section
and Agent may if it chooses, in reliance upon such assumption, make such
Advance available to Borrower. If and to the extent such Lender shall not so
make its Advance available to Agent, such Lender and Borrower severally agree
to pay or repay to Agent within three days after demand the amount of such
Advance together with interest thereon, for each day from the date such amount
is made available to Borrower until the date such amount is paid or repaid to
Agent, in an amount equal to the Agent's actual cost of such funds; provided
that Agent shall first notify such Lender and if Agent does not receive such
Lender's Advance immediately upon receipt of such notice, then Borrower shall
pay such amount within three (3) days after demand therefor is made upon
Borrower. The failure of any Lender to make any Advance to be made by it
hereunder shall not relieve any other Lender of its obligation hereunder, if
any, to make its Advance, but no Lender shall be responsible for the failure of
any other Lender to make any Advance to be made by such other Lender.
Section 2.3. Use of Proceeds. Borrower shall use all funds from
Advances made after the date hereof for the exploration, acquisition and
development of oil and gas reserves and to provide working capital for other
general business purposes related to the nature of the business currently being
conducted by Borrower. Borrower shall at all times use its reasonable best
efforts to maintain the financial flexibility of Borrower so as to allow it to
continue the development of its proved reserve base. In no event shall the
funds from any Advance be used directly or indirectly by any Person for
personal, family, household or agricultural purposes or for the purpose,
whether immediate, incidental or ultimate, of purchasing, acquiring or carrying
any "margin stock" or any "margin securities" (as such terms are defined
respectively in Regulation U and Regulation G promulgated by the Board of
Governors of the Federal Reserve System) or to extend credit to others directly
or indirectly for the purpose of purchasing or carrying any such margin stock
or margin
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securities. Borrower represents and warrants to Lender that Borrower is not
engaged principally, or as one of Borrower's important activities, in the
business of extending credit to others for the purpose of purchasing or
carrying such margin stock or margin securities.
Section 2.4. Rate Elections. Borrower may from time to time
designate all or any portions of the Loans (including any yet to be made
Advances which are to be made prior to or at the beginning of the designated
Interest Period but excluding any portions of the Loans which are required to
be repaid prior to the end of the designated Interest Period) as a "Tranche",
which term refers to a set of Fixed Rate Portions with identical Interest
Periods and with each Lender participating in such Tranche in accordance with
its Percentage Share. Without the consent of Majority Lenders, Borrower may
make no such election during the continuance of a Default, and Borrower may
make such an election with respect to already existing Fixed Rate Portions only
if such election will take effect at or after the termination of the Interest
Period applicable thereto. Each election by Borrower of a Tranche shall:
(a) Be made in writing in the form and substance of the "Rate
Election" attached hereto as Exhibit C, duly completed;
(b) Specify the aggregate amount of the Loans which Borrower
desires to designate as such Tranche, the first day of the Interest
Period which is to apply thereto, and the length of such Interest
Period; and
(c) Be received by Agent not later than 10:00 a.m., New York,
New York time, on the third Business Day preceding the first day of
the specified Interest Period.
Within twenty-four hours of its receipt of any such election (herein called a
"Rate Election") which meets the requirements of this section, Agent shall
notify each Lender thereof. Each Rate Election shall be irrevocable. Borrower
may make no Rate Election which does not specify an Interest Period complying
with the definition of "Interest Period" in Section 1.1, and the aggregate
amount of the Tranche elected in any Rate Election must be $1,000,000 or a
higher integral multiple of $1,000,000. Upon the termination of each Interest
Period the portion of each Loan within the related Tranche shall, unless the
subject of a new Rate Election then taking effect, automatically become a part
of the Base Rate Portion of such Loan and become subject to all provisions of
the Loan Documents governing such Base Rate Portion. Borrower shall have no
more than five (5) Tranches in effect at any time.
Section 2.5. Commitment and Facility Fees. In consideration of each
Lender's commitment to make Advances up to the amount of the Borrowing Base in
effect from time to time, Borrower will pay to Agent for the account of each
Lender a commitment fee determined on a daily basis by applying a rate of
three-eighths of one percent (0.375%) per annum to such Lender's Percentage
Share of the unused portion of the Borrowing Base on each day during the
Commitment Period, determined for each such day by deducting from the Borrowing
Base the aggregate unpaid principal balance of the Loans and outstanding LC
Obligations at the end of such day. In consideration of
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each Lender's agreement to increase the Maximum Loan Amount provided in the
Existing Agreement, Borrower will pay to Agent for the account of each Lender a
facility fee determined on a daily basis by applying a rate of one-eighth of
one percent (0.125%) per annum to such Lender's Percentage Share of the excess,
if any, of the Maximum Loan Amount over the Borrowing Base on each day during
the Commitment Period, determined for each such day by deducting from the
Maximum Loan Amount the Borrowing Base in effect at the end of such day. The
commitment fee and the facility fee payable hereunder shall be due and payable
in arrears on the last day of each Fiscal Quarter and at the end of the
Commitment Period.
Section 2.6. Agent's Fees. In addition to all other amounts due to
Agent under the Loan Documents, Borrower will pay the fees separately agreed to
between Borrower and Agent in that certain fee letter dated of even date
herewith between Borrower and Agent.
Section 2.7. Regular Prepayments. Borrower hereby promises to pay
after the Termination Date to Agent for the account of each and all of the
Lenders in accordance with their respective Percentage Shares quarterly
installments of principal owing on their respective Notes on the dates
described below and in an amount equal to the product of (i) the outstanding
principal balance of such Lender's Loan at the Termination Date times (ii) the
percentage set forth below with respect to the payment date in question:
Payment Due Date Percentage of Principal Balance
---------------- --------------------------------
at Termination Date
-------------------
3/31/99 9.00%
6/30/99 9.00%
9/30/99 9.00%
12/31/99 9.00%
3/31/00 7.50%
6/30/00 7.50%
9/30/00 7.50%
12/31/00 7.50%
3/31/01 5.75%
6/30/01 5.75%
9/30/01 5.75%
12/31/01 5.75%
3/31/02 5.50%
One final installment of the unpaid principal balance of the Loans
together with all accrued interest thereon shall be due and payable in
full on June 30, 2002. Interest on the Loans shall be due and payable
as provided in the Notes.
Section 2.8. Optional Prepayments. Borrower may, upon three Business
Days' notice to Agent, at any time and from time to time and without premium or
penalty prepay the Notes, in whole
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or in part, so long as the aggregate amount of all partial prepayments of
principal concurrently paid on the Notes equals $100,000 or any higher integral
multiple of $100,000, and so long as Borrower does not prepay any Fixed Rate
Portion. Each partial prepayment of principal made after the end of the
Commitment Period shall be applied to the regular installments of principal due
under the Notes in the direct order of their maturities. Each prepayment of
principal under this section shall be accompanied by all interest then accrued
and unpaid on the principal amount so prepaid. Any principal or interest
prepaid pursuant to this section shall be in addition to, and not in lieu of,
all payments otherwise required to be paid under the Loan Documents at the time
of such prepayment.
Section 2.9. Mandatory Prepayments. If (a) the aggregate unpaid
principal balance of the Loans, together with all outstanding LC Obligations,
ever exceed that portion of the Borrowing Base available for such Obligations,
or (b) the aggregate unpaid principal balance of the Loans, together with all
outstanding LC Obligations and Back-to-Back LC Obligations, ever exceed the
aggregate amount of the Borrowing Base, Borrower shall, within forty-five (45)
days after Agent gives notice of such fact to Borrower, either (i) prepay the
principal of the Loans in an amount at least equal to such excess or (ii) grant
a first priority Lien in favor of Agent on its additional oil and gas
properties or other assets acceptable to Majority Lenders with a collateral
value satisfactory to Majority Lenders in their sole discretion. Each
prepayment of principal under this section shall be accompanied by all interest
then accrued and unpaid on the principal amount so prepaid and each prepayment
of principal under this section after the Termination Date shall
proportionately reduce each remaining regular installment of principal due
under the Notes so that such reduced payment shall be equal to the product
obtained by multiplying each such payment by a fraction (i) the numerator of
which shall equal the amount of the outstanding Loans on the date of such
prepayment after giving effect to such prepayment and (ii) the denominator of
which shall equal the amount of the outstanding Loans on the date of such
prepayment before giving effect to such prepayment. Any principal or interest
prepaid pursuant to this section shall be in addition to, and not in lieu of,
all payments otherwise required to be paid under the Loan Documents at the time
of such prepayment. In the event Borrower fails to make such prepayment or
provide additional Collateral acceptable to Majority Lenders within the time
period set forth above, such failure shall constitute an Event of Default
hereunder without any further notice to Borrower or the availability of any
additional Grace Period.
Section 2.10. Payments to Lenders. Borrower will make each payment
which it owes under the Loan Documents to Agent for the account of the Lender
to whom such payment is owed. Each such payment must be received by Agent not
later than 12:00 p.m., Noon, New York, New York time, on the date such payment
becomes due and payable, in lawful money of the United States of America and in
immediately available funds. Any payment received by Agent after such time
will be deemed to have been made on the next following Business Day. Should
any such payment become due and payable on a day other than a Business Day, the
due date of such payment shall be extended to the next succeeding Business Day,
and, in the case of a payment of principal or past due interest, interest shall
accrue and be payable thereon for the period of such extension as provided in
the Loan Document under which such payment is due. Each payment under a Loan
Document shall be due and payable at the place provided therein and, if no
specific place of payment is provided,
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shall be due and payable at the place of payment of Agent's Note. When Agent
collects or receives money on account of the Obligations, Agent shall promptly
distribute all money so collected or received, and Lenders shall apply all such
money they receive from Agent, as follows:
(a) first, for the payment of all Obligations which are then
due (and if such money is insufficient to pay all such Obligations,
first to any reimbursements due Agent under Section 5.1(i) or (j) and
then to the partial payment of all other Obligations then due in
proportion to the amounts thereof, or as Lenders shall otherwise
agree);
(b) then for the prepayment of amounts owing under the Loan
Documents (other than principal on the Notes) but only if so
specifically requested by Borrower;
(c) then for the prepayment of principal on the Notes,
together with accrued and unpaid interest on the principal so prepaid;
and
(d) last, after full repayment of the Notes, for the payment
or prepayment of any other Obligations.
All payments applied to principal or interest on any Note shall be applied
first to any interest then due and payable, then to principal then due and
payable, and last to any prepayment of principal and interest in compliance
with Section 2.8. All distributions of amounts described in any of subsections
(a) (unless for reimbursements due Agent under Section 5.1(i) or (j)), (b), (c)
or (d) above shall be made by Agent pro rata to Agent and each Lender then owed
Obligations described in such subsection in proportion to all amounts owed to
Agent and all Lenders which are described in such subsection.
Section 2.11. Initial Borrowing Base. During the period from the
date hereof to the first Determination Date the Borrowing Base shall be
$50,000,000.
Section 2.12. Subsequent Determinations of Borrowing Base. By April
1 and October 1 of each year, on each date on which Borrower requests that the
Borrowing Base be redetermined (which request shall not be made more than two
times during any Fiscal Year) and within fifteen (15) days of each date on
which Agent, on behalf of Majority Lenders, requests that the Borrowing Base be
redetermined, Borrower shall furnish to each Lender all information, reports
and data which Agent has then requested concerning the Qualified Properties and
the reserves and production relating thereto, together with the Engineering
Report described in Section 5.1(b)(iv). Within thirty (30) days after
receiving such information, reports and data, or as promptly thereafter as
practicable, Majority Lenders shall agree upon an amount for the Borrowing Base
and Agent shall by notice to Borrower designate such amount as the new
Borrowing Base available to Borrower hereunder during the period beginning on
and including the date such notice is sent (herein called a "Determination
Date") and continuing until but not including the next date as of which the
Borrowing Base is redetermined. A Determination Date may (but need not) occur
during the period beginning on the date on which a Request for Advance is
submitted and ending on the date on which such Advances
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are to be made. If Borrower does not furnish all such information, reports and
data by the date specified in the first sentence of this section, Agent may
nonetheless designate the Borrowing Base at any amount which Majority Lenders
determine and may redesignate the Borrowing Base from time to time thereafter
until each Lender receives all such information, reports and data, whereupon
Majority Lenders shall designate a new Borrowing Base as described above. Each
determination of the Borrowing Base shall be made by Majority Lenders in the
exercise of their sole discretion in accordance with the then current standards
and practices of Lenders for similar oil and gas loans taking into account such
factors as Lenders may deem appropriate, including, without limitation, (i) the
nature and extent of the oil and gas reserves attributable to the oil and gas
properties of Borrower and the anticipated timing and extent of net operating
income therefrom, (ii) any litigation or other proceedings or facts, including,
without limitation, defects in or uncertainties as to Borrower's title to such
oil and gas properties or encumbrances on the title to such oil and gas
properties or encumbrances on the Qualified Properties, that may affect the
value of any of such oil and gas properties and (iii) the amount of Debt or
other obligations, if any, of Borrower and its Subsidiaries. Each such
determination shall be binding on and non-reviewable by Borrower and no Lender
shall be required to disclose to Borrower its standards and practices for oil
and gas loans. It is expressly understood that Lenders and Agent have no
obligation to agree upon or designate the Borrowing Base at any particular
amount, whether in relation to the Maximum Loan Amount or otherwise, and that
Lenders' commitments to advance funds hereunder are determined by reference to
the Borrowing Base from time to time in effect, which Borrowing Base shall be
used to the extent permitted by law and regulatory authorities for the purposes
of Section 2.13. If Borrower requests Majority Lenders to redetermine the
Borrowing Base at any date in addition to the redetermination dates provided
above, upon the consent of Majority Lenders to such redetermination, Borrower
shall within five (5) days after receipt of such consent pay each Lender a
redetermination fee in the amount of $5,000 for each such redetermination.
Section 2.13. Capital Reimbursement. If either (a) the introduction
or implementation of or the compliance with any change in or in the
interpretation of any law, rule or regulation, or (b) the introduction or
implementation of or the compliance with any request, directive or guideline
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 any Lender or any corporation controlling any
Lender so that the same is increased from that currently required in an amount
a Lender deems material in its sole discretion, then, such Lender shall
promptly notify Borrower and Lender in writing of the happening of such event
and thereafter, upon demand by such Lender, Borrower will pay to Agent for the
benefit of such Lender, from time to time as specified by such Lender, such
additional amount or amounts which such Lender shall determine to be
appropriate to compensate such Lender or any corporation controlling such
Lender in light of such circumstances, to the extent that such Lender
reasonably determines that the amount of any such capital would be increased or
the rate of return on any such capital would be reduced by or in whole or in
part based on the existence of the face amount of such Lender's Loan or
commitments under this Agreement.
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Section 2.14. Increased Cost of Fixed Rate Portions. If any
applicable domestic or foreign law, treaty, rule or regulation (whether now in
effect or hereinafter enacted or promulgated, including Regulation D) or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law):
(a) shall change the basis of taxation of payments to any
Lender of any principal, interest, or other amounts attributable to
any Fixed Rate Portion or otherwise due under this Agreement in
respect of any Fixed Rate Portion (other than franchise taxes or taxes
imposed on the overall net income of such Lender or any lending office
of such Lender by any jurisdiction in which such Lender or any such
lending office is located); or
(b) shall change, impose, modify, apply or deem applicable
any reserve, special deposit or similar requirements in respect of any
Fixed Rate Portion of any Lender (excluding those for which such
Lender is fully compensated pursuant to adjustments made in the
definition of Fixed Rate) or against assets of, deposits with or for
the account of, or credit extended by, such Lender; or
(c) shall impose on any Lender or the interbank eurocurrency
deposit market any other condition affecting any Fixed Rate Portion,
the result of which is to increase the cost to any Lender of funding
or maintaining any Fixed Rate Portion or to reduce the amount of any
sum receivable by any Lender in respect of any Fixed Rate Portion by
an amount deemed by such Lender to be material, so that any of the
foregoing is increased from that currently required in an amount a
Lender deems material in its sole discretion, then such Lender shall
promptly notify Agent and Borrower in writing of the happening of such
event and (i) Borrower shall upon demand pay to Agent for the account
of such Lender such additional amount or amounts as will compensate
such Lender for such event (on an after-tax basis) and (ii) Borrower
may elect, by giving to Agent and such Lender not less than three
Business Days' notice, to convert all (but not less than all) of any
such Fixed Rate Portion into a part of the Base Rate Portion.
Section 2.15. Transfer of Loans and Participations. Each Lender will
(and will cause its participants to), if an event occurs that makes Section
2.13 or 2.14 applicable, upon the written request of Borrower, use reasonable
efforts to transfer the affected Loan or Loans or participations therein to an
Affiliate of such Lender, provided that such transfer would not, in the sole
discretion of such Lender, be disadvantageous to such Lender in any manner
(except for the disadvantage of not being a Lender). A Lender may from time to
time transfer any Loan to any Affiliate of such Lender and shall give notice to
Borrower and Agent of such transfer provided that no such transfer will be made
if it would render applicable the provisions of Section 2.13 or 2.14.
Section 2.16. Availability. If (a) any change in applicable laws,
treaties, rules or regulations or in the interpretation or administration
thereof of or in any jurisdiction whatsoever, domestic or
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foreign, shall make it unlawful or impracticable for any Lender to fund or
maintain Fixed Rate Portions, or shall materially restrict the authority of any
Lender to purchase or take offshore deposits of dollars (i.e., "eurodollars"),
or (b) any Lender determines that matching deposits appropriate to fund or
maintain any Fixed Rate Portion are not available to it, or (c) any Lender
determines that the formula for calculating the Fixed Rate does not fairly
reflect the cost to such Lender of making or maintaining loans based on such
rate, then, such Lender shall promptly notify Borrower and Agent in writing of
the happening of such event , and upon notice by such Lender to Borrower and
Agent, Borrower's right to elect Fixed Rate Portions of such Lender's Loan
shall be suspended to the extent and for the duration of such illegality,
impracticability or restriction and all Fixed Rate Portions of such Lender's
Loan (or portions thereof) which are then outstanding or are then the subject
of any Rate Election and which cannot lawfully or practicably be maintained or
funded shall immediately become or remain part of the Base Rate Portion of such
Lender's Loan. Borrower agrees to indemnify Agent and each Lender and hold it
harmless against all costs, expenses, claims, penalties, liabilities and
damages applicable to the Loans which may result from any such change in law,
treaty, rule, regulation, interpretation or administration.
Section 2.17. Funding Losses. In addition to its other obligations
hereunder, Borrower will indemnify Agent and each Lender against, and reimburse
Agent and each Lender on demand for, any loss or expense incurred or sustained
by Agent or such Lender (including without limitation any loss or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by a Lender to fund or maintain Fixed Rate Portions or
Advances), as a result of (a) any payment or prepayment (whether authorized or
required hereunder or otherwise) of all or a portion of a Fixed Rate Portion on
a day other than the day on which the applicable Interest Period ends, (b) any
payment or prepayment, whether required hereunder or otherwise, of a Loan made
after the delivery, but before the effective date, of a Rate Election, if such
payment or prepayment prevents such Rate Election from becoming fully
effective, (c) the failure of any Advance to be made or of any Rate Election to
become effective due to any condition precedent not being satisfied or due to
any other action or inaction of any Related Person, or (d) any conversion
(whether authorized or required hereunder or otherwise) of all or any portion
of any Fixed Rate Portion into a Base Rate Portion or into a different Fixed
Rate Portion on a day other than the day on which the applicable Interest
Period ends.
Section 2.18. Reimbursable Taxes. Borrower covenants and agrees
that:
(a) Borrower will indemnify Agent and each Lender against and
reimburse Agent and each Lender for all present and future income,
stamp and other taxes, levies, costs and charges whatsoever imposed,
assessed, levied or collected on or in respect of this Agreement or
any Fixed Rate Portions (whether or not legally or correctly imposed,
assessed, levied or collected), excluding, however, any taxes imposed
on or measured by the overall net income of Agent or such Lender or
any lending office of Agent or such Lender by any jurisdiction in
which Agent or such Lender or any such lending office is located (all
such non-excluded taxes, levies, costs and charges being collectively
called "Reimbursable Taxes" in this section). Such indemnification
shall be on an after-tax basis, taking into account any income
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taxes imposed on the amounts paid as indemnity. Such Lender shall
promptly notify Borrower and Agent in writing of the happening of such
event giving rise to a claim for Reimbursable Taxes.
(b) All payments on account of the principal of, and interest
on, each Lender's Loan and each Lender's Note, and all other amounts
payable by Borrower to Agent and each Lender hereunder, shall be made
in full without set-off or counterclaim and shall be made free and
clear of and without deductions or withholdings of any nature by
reason of any Reimbursable Taxes, all of which will be for the account
of Borrower. In the event of Borrower being compelled by law or other
regulations to make any such deduction or withholding from any payment
to Agent or any Lender, Borrower shall pay on the due date of such
payment, by way of additional interest, such additional amounts as are
needed to cause the amount receivable by Agent or such Lender after
such deduction or withholding to equal the amount which would have
been receivable in the absence of such deduction or withholding. If
Borrower should make any deduction or withholding as aforesaid,
Borrower shall within 60 days thereafter forward to Agent or such
Lender, if reasonably available, an official receipt or other official
document evidencing payment of such deduction or withholding.
(c) If Borrower is ever required to pay or notified of the
possible liability for any Reimbursable Tax with respect to any Fixed
Rate Portion, Borrower may elect, by giving to Agent and each Lender
not less than three Business Days' notice, to convert all (but not
less than all) of any such Fixed Rate Portion into a part of the Base
Rate Portion, but such election shall not diminish Borrower's
obligation to pay all accrued Reimbursable Taxes.
(d) Agent or any Lender shall, at Borrower's expense, take
such action as Borrower may reasonably request in writing with respect
to such asserted liability, and if requested by Borrower and upon the
prior payment to Agent or any Lender by Borrower of an amount equal to
such Reimbursable Tax, shall make payment of such Reimbursable Tax
under protest, if payment under protest is necessary in order to
contest the claim for Reimbursable Taxes. If contest is made, Agent
or any Lender shall, at Borrower's expense, take such action as
Borrower may reasonably request to contest the claim for Reimbursable
Taxes and shall, if requested, permit Borrower to file a claim or
prosecute an action to contest the claim for Reimbursable Taxes and to
recover any payment made under protest. Such Lender shall remit to
Borrower the full amount of all taxes paid by Borrower and refunded to
Lender by any applicable authority.
Notwithstanding the above or any conflicting or inconsistent
provisions in the Loan Documents, no Related Person shall pay or
indemnify Agent or any Lender for:
(i) Reimbursable Taxes incurred for a failure by
Agent or any Lender to comply with any information (including
certificates, reports, and documents) or
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filing requirement which is required by law as a precondition
to exemption or other relief from such tax; or
(ii) Reimbursable Taxes imposed upon the transfer by
Agent or any Lender of all or any part of its right, title or
interest in any Note or Loan Document, including but not
limited to participations.
ARTICLE 2A. Letters of Credit
Section 2A.1. Letters of Credit. From time to time during the
Commitment Period, Borrower may request through Agent an Issuing Bank to issue,
in reliance on the agreements of Lenders set forth in Section 2A.2(b), letters
of credit (each herein called a "Letter of Credit") by means of an application
in the form of Exhibit E, appropriately completed and with a proposed form of
Letter of Credit attached. No Issuing Bank shall have any obligation
whatsoever to issue any such requested Letter of Credit, but any terms and
provisions hereof relating to Letters of Credit, shall be subject to the
following restrictions: (a) no Letter of Credit issued hereunder shall have an
expiration date later than the earlier of one year after the date of issuance
thereof or the end of the Commitment Period; (b) no Letter of Credit issued
hereunder shall be issued in an amount greater than $5,000,000 without the
prior written consent of Majority Lenders; (c) the LC Obligations shall never
exceed $20,000,000 in the aggregate outstanding at any one time; (d)
Back-to-Back LC Obligations shall never exceed $5,000,000 in the aggregate
outstanding at any one time, (e) the sum of (i) the LC Obligations after giving
effect to any request for the issuance of any Letter of Credit plus (ii) the
aggregate amount of the Loans then outstanding shall not exceed that portion of
the Borrowing Base available for such Obligations, and (f) the sum of (x) the
LC Obligations and Back-to-Back LC Obligations after giving effect to any
request for the issuance of any Letter of Credit plus (y) the aggregate amount
of the Loans then outstanding shall not exceed the aggregate amount of the
Borrowing Base. Neither Agent, Issuing Banks, Lenders nor Borrower presently
expect Letters of Credit to be applied for or issued hereunder on a regular
basis, and this section is included in this Agreement solely to facilitate the
application and issuance of any letter of credit which Borrower hereafter, in
its sole and absolute discretion, chooses to request and which each Issuing
Bank hereafter, in its sole and absolute discretion, chooses to issue. Each
Issuing Bank shall promptly notify Agent and each Lender of any request by
Borrower for the issuance of a Letter of Credit.
Section 2A.2. Reimbursement of Letters of Credit.
(a) Reimbursement by Borrower. Each payment by any Issuing Bank
pursuant to any Letter of Credit (whether in response to a draft, a demand for
payment, or otherwise), shall constitute a loan to and an obligation of
Borrower. Borrower hereby promises to pay to such Issuing Bank, or to such
Issuing Bank's order, at Issuing Bank's office at the address set forth for
such Issuing Bank on the signature pages hereto, on demand, any and all amounts
paid by such Issuing Bank pursuant to any and all Letters of Credit (such
amount being herein called the "Matured LC Obligations"). Borrower hereby
promises to pay to each Issuing Bank, or to each Issuing Bank's order, at the
address set forth for such Issuing Bank on the signature pages hereto, on
demand, interest at the Late
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Payment Rate on (a) any outstanding Matured LC Obligations and (b) any fees or
other amounts due with respect to Letters of Credit (to the extent the same can
legally bear interest). Borrower hereby promises to pay, when due, all present
and future taxes, levies, costs and charges whatsoever imposed, assessed,
levied or collected on, under or in respect of this Agreement or any Letter of
Credit and any payments of principal, interest or other amounts made on or in
respect of any thereof (excluding, however, franchise taxes and any such taxes,
levies, costs and charges imposed on or measured by the overall net income of
Issuing Bank). Borrower promises to indemnify each Issuing Bank against, and
to reimburse each Issuing Bank on demand for, any of the foregoing taxes,
levies, costs or charges paid by an Issuing Bank and any loss, liability, claim
or expense, including interest, penalties and legal fees, that an Issuing Bank
may incur because of or in connection with the failure of Borrower to make any
such payment of taxes, levies, costs or charges when due or any payment of
Matured LC Obligations when due. Borrower hereby acknowledges that each and
every LC Obligation shall constitute Obligations secured by and subject to the
terms of the Security Documents.
(b) Reimbursement by Lenders. Each Issuing Bank irrevocably
agrees to grant and hereby grants to each Lender, and, to induce each Issuing
Bank to issue Letters of Credit hereunder, each Lender irrevocably agrees to
accept and purchase from any Issuing Bank, on the terms and conditions
hereinafter stated, for such Lender's own account and risk an undivided
interest equal to such Lender's Percentage Share of any Issuing Bank's
obligations and rights under each Letter of Credit issued hereunder and the
amount of each draft paid by any Issuing Bank thereunder. In the event that
Borrower should fail to pay any Issuing Bank on demand the amount of any draft
or other request for payment drawn under or purporting to be drawn under a
Letter of Credit as provided in subsection (a) above and actually disbursed by
Issuing Bank under a Letter of Credit, each Lender shall, before 2:00 p.m. (New
York City time) on the Business Day any Issuing Bank shall have given notice to
Lenders of Borrower's failure to so pay such Issuing Bank, if such notice is
given by 10:00 a.m., New York City time (or on the Business Day immediately
succeeding the day such notice is given after 10:00 a.m., New York City time),
pay to such Issuing Bank at such Issuing Bank's offices at the address set
forth for such Issuing Bank on the signature pages hereto, in legal tender of
the United States of America, in same day funds, such Lender's Percentage Share
of the amount of such draft or other request for payment from Borrower plus
interest on such amount from the date such Issuing Bank shall have paid such
draft or request for payment to the date of such payment by such Lender at the
Late Payment Rate. Each Lender's obligation to reimburse each Issuing Bank
pursuant to the terms of this Section 2A.2(b) is irrevocable and unconditional.
If any such amount required to be paid by any Lender pursuant to this Section
2A.2(b) is not in fact made available by such Lender to an Issuing Bank within
three Business Days after the date such payment is due, such Issuing Bank shall
be entitled to recover from such Lender, on demand, such amount with interest
thereon calculated from such due date at the Late Payment Rate. A written
advice(s) setting forth in reasonable detail the amounts owing under this
Section 2A.2, submitted by an Issuing Bank to Borrower from time to time, shall
be conclusive, absent manifest error, as to the amounts thereof. Whenever, at
any time after an Issuing Bank has made payment under any Letter of Credit, and
has received from any Lender its Percentage Share of such payment in accordance
with this Section 2A.2(b), such Issuing Bank receives any payment related to
such Letter of Credit (whether directly from Borrower or otherwise, including
proceeds of collateral applied thereto by Issuing
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Bank), or any payment of interest on account thereof, such Issuing Bank will
distribute to such Lender its Percentage Share thereof; provided, however, that
in the event that any such payment received by such Issuing Bank shall be
required to be returned by Issuing Bank, such Lender shall return to such
Issuing Bank the portion thereof previously distributed by such Issuing Bank to
it.
Section 2A.3. Transferees of Letters of Credit. Borrower agrees
that if any Letter of Credit provides that it is transferable, no Issuing Bank
is under any duty to determine the proper identity of anyone appearing as
transferee of such Letter of Credit, nor shall any Issuing Bank be charged with
responsibility of any nature or character for the validity or correctness of
any transfer or successive transfers. Subject to the provisions of Section
2A.5. payment by an Issuing Bank to any purported transferee or transferees as
determined by an Issuing Bank is hereby authorized and approved, and Borrower
further agrees to hold each Issuing Bank and each Lender harmless and
indemnified against any liability or claim in connection with or arising out of
the foregoing except in the case of such Lender's gross negligence or willful
misconduct..
Section 2A.4. Extension of Maturity of Letters of Credit. Borrower
agrees that in the event of any extension of the maturity or time for
presentation of drafts or demands for payment or any other modification of the
terms of any Letter of Credit at the request of Borrower or by order of any
court or tribunal, with or without notification to others, or in the event of
any increase in the amount of any Letter of Credit at the request of Borrower
or by order of any court or tribunal, this Agreement shall be binding upon
Borrower with respect to the Letter of Credit so increased or otherwise
modified, with respect to drafts and demands for payment thereunder, and with
respect to any action taken in accordance with such extension, increase or
other modification by any Issuing Bank or by any bank which is a confirming
bank or an advising bank with respect to any Letter of Credit.
Section 2A.5. Restriction on Liability. No Issuing Bank nor any
bank which is a confirming bank or an advising bank with respect to any Letter
of Credit (in this section called a "correspondent") shall be responsible for
(a) the use which may be made of any Letter of Credit or for any acts or
omissions of the users of any Letter of Credit; (b) the existence or
nonexistence of a default under any instrument secured or supported by any
Letter of Credit or any other event which gives rise to a right to call upon
any Letter of Credit; (c) the validity, sufficiency or genuineness of any
document delivered in connection with any Letter of Credit, even if such
documents should in fact prove to be in any or all respects invalid, fraudulent
or forged; (d) except as specifically required by any Letter of Credit, failure
of any instrument to bear any reference or adequate reference to any Letter of
Credit, or failure of documents to accompany any draft at negotiation or
failure of any person to note the amount of any draft on the reverse of any
Letter of Credit or surrender or takeup any Letter of Credit; or (e) errors,
omissions, interruptions or delays in transmission or delivery of any messages
by mail, cable, telegraph, wireless or otherwise. No Issuing Bank shall be
responsible for any act, error, neglect or default, omission, insolvency or
failure in the business of any of the correspondents or any refusal by an
Issuing Bank or any of the correspondents to pay or honor drafts drawn under
any Letter of Credit because of any applicable law, decree or edict, legal or
illegal, of any governmental agency now or hereafter enforced or for any matter
beyond the control of an Issuing Bank. The happening of any one or more of the
contingencies referred to in the preceding clauses of this paragraph shall not
affect, impair or prevent the vesting of any of the rights or powers
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of Issuing Banks and Lenders under this Agreement, or the obligation of
Borrower to make reimbursement. In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth Borrower agrees
that any action, not contrary to the terms of any Letter of Credit issued on
its behalf, which is taken or omitted to be taken by any Issuing Bank or any
Lender or by any correspondent under or in connection with any Letter of Credit
shall be binding on Borrower and shall not put any Issuing Bank or any Lender
or any correspondent under any resulting liability to Borrower unless grossly
negligent or in breach of good faith.
Section 2A.6. No Duty to Inquire. Borrower agrees that each
Issuing Bank is authorized and instructed to accept and pay drafts and demands
for payment under the Letters of Credit without requiring, and without
responsibility for, either at the time of acceptance or payment or thereafter,
the determination as to the existence of any event giving rise thereto or the
proper identity or authority of anyone appearing on behalf of the beneficiary
of any Letter of Credit. Borrower further agrees to hold each Issuing Bank and
each Lender harmless and indemnified against any liability or claim in
connection with or arising out of the foregoing except in the case of such
Lender's gross negligence or willful misconduct.
Section 2A.7. Letter of Credit Fees. In consideration of any
issuance by any Issuing Bank of Letters of Credit hereunder and of each
Lender's incurrence of a reimbursement obligation with respect to such Letters
of Credit, Borrower agrees to pay to Agent a Letter of Credit fee, for pro rata
distribution to each Lender in accordance with its Percentage Share, promptly
upon the issuance of each Letter of Credit in an amount equal to the greater
of (i) $500 or (ii) one percent(1.0%) per annum of the face amount of such
Letter of Credit. Borrower shall also pay to Agent for distribution to the
Lender issuing any Letter of Credit a fee of $250 immediately upon any drawing
under such Letter of Credit.
Section 2A.8. Acceleration of LC Obligations. If the Loans, or any
part thereof, become immediately due and payable pursuant to Section 7.1 of
this Agreement, then all LC Obligations shall become immediately due and
payable without regard for actual drawings or payments on the Letters of Credit
and Borrower shall be obligated to pay Agent immediately an amount equal to the
LC Obligations. All amounts made due and payable by Borrower under this
Section 2A.8 may be applied as Agent elects to any of the various LC
Obligations then due and payable; provided, however, that all such amounts
applied by the Agent to the LC Obligations shall be (a) first applied to the
Matured LC Obligations, and (b) second held by Agent as security for the
remaining LC Obligations (in this section all such amounts held as security for
LC Obligations of Borrower are collectively called "LC Collateral") until such
LC Obligations have either (a) become Matured LC Obligations at which time the
LC Collateral paid to Agent shall be applied to such Matured LC Obligations, or
(b) have expired undrawn at which time an amount of the LC Collateral equal to
such expired and undrawn LC Obligation shall be promptly returned to Borrower.
This Section 2A.8 shall not limit or impair any rights which Agent or Lenders
may have under any other document or agreement relating to any Letter of Credit
or LC Obligation, including without limitation, any LC Application.
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Section 2A.9. Purposes. Borrower shall request Letters of Credit
for the purpose of securing bonding obligations and plugging and abandonment
liabilities and for other general business purposes. In no event shall funds
advanced under any Letter of Credit be used directly or indirectly by any
Person for personal, family, household or agricultural purposes or for the
purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or
carrying "margin stock" or any "margin securities" (as such terms are defined
respectively in Regulation U and Regulation G promulgated by the Board of
Governors of the Federal Reserve System) or to extend credit to others directly
or indirectly for the purpose of purchasing or carrying any such margin stock
or margin securities.
Section 2A.10. Increased Costs for Letters of Credit. If any change
in any applicable law or regulation or in the interpretation thereof by any
court or governmental authority charged with the administration thereof shall
either (a) impose, modify or apply any reserve, special deposit or similar
requirement against Letters of Credit issued by Issuing Bank or (b) impose on
Agent, any Lender or Issuing Bank any other condition regarding this Agreement
or any Letter of Credit, and the result of any event referred to in clause (a)
or (b) above shall be to increase the cost to Issuing Bank of issuing or
maintaining a Letter of Credit or materially affect the profitability to
Issuing Bank of any or all Letter of Credit transactions contemplated by this
Agreement, then, within two Business Days after demand by Issuing Bank,
Borrower shall immediately pay to Issuing Bank such additional amount or
amounts as shall be sufficient to compensate Issuing Bank for such increased
cost. Issuing Bank will promptly notify Borrower of any event of which Issuing
Bank has knowledge occurring after the date hereof which will entitle Issuing
Bank to compensation pursuant to this Section 2A.10; provided that failure by
Issuing Bank to give such notice shall not adversely affect the right of
Issuing Bank to such compensation pursuant to this Section 2A.10.
ARTICLE III - Conditions Precedent to Lending
Section 3.1. Documents to be Delivered. No Lender has any obligation
to renew and restate its loan under the Existing Agreement or make any Advance
hereunder unless Agent shall have received all of the following, at Agent's
office in New York, New York, duly executed and delivered and in form,
substance and date satisfactory to Agent:
(a) This Agreement and any other documents that Lenders
are to execute in connection herewith.
(b) Each Note.
(c) Certain certificates of Borrower including:
(i) An "Omnibus Certificate" of the Secretary and of
the Chairman of the Board or President of Borrower and each
Guarantor, which shall contain the names and signatures of the
officers of such Person authorized to execute Loan Documents
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on behalf of such Person and which shall certify to the truth,
correctness and completeness of the following exhibits
attached thereto: (1) a copy of resolutions duly adopted by
the Board of Directors of such Person and in full force and
effect at the time this Agreement is entered into, authorizing
the execution of the Loan Documents delivered or to be
delivered in connection herewith and the consummation of the
transactions contemplated therein, (2) a copy of the charter
documents of such Person and all amendments thereto,
certified by the appropriate official of such Person's state
of incorporation, and (3) a copy of any bylaws of such Person.
(ii) A "Compliance Certificate" of the Chairman of
the Board or President and of the chief financial officer of
Borrower, of even date herewith, in which such officers
certify to the satisfaction of the conditions set out in
subsections (a), (b), (c) and (d) of Section 3.2.
(d) A certificate (or certificates) of the due formation,
valid existence and good standing of each of Borrower and each
Subsidiary of Borrower in its respective state of organization, issued
by the appropriate authorities of such jurisdiction.
(e) A favorable opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel
for Borrower, substantially in the form set forth in Exhibit E.
(f) Certificates of Borrower's good standing and due
qualification to do business, issued by appropriate officials in any
states in which Borrower owns property subject to Security Documents.
Section 3.2. Additional Conditions Precedent. No Lender has any
obligation to renew its Loan under the Existing Agreement or make any Advance
(including its first) unless the following conditions precedent have been
satisfied:
(a) All representations and warranties made by any Related
Person in any Loan Document shall be true on and as of the date of
such renewal or Advance (except to the extent that the facts upon
which such representations are based have been changed by the
extension of credit hereunder) as if such representations and
warranties had been made as of the date of such renewal or Advance.
(b) No Default shall have occurred and be continuing at the
date of such renewal or Advance.
(c) No material adverse change shall have occurred to
Borrower's Consolidated financial condition or businesses, or to the
aggregate value of the Collateral, since the date of this Agreement.
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(d) Each Related Person shall have performed and complied
with all agreements and conditions required in the Loan Documents to
be performed or complied with by it on or prior to the date of such
renewal or Advance.
(e) Neither the renewal of the Loans under the Existing
Agreement nor the making of such Advance shall be prohibited by any
law or any regulation or order of any court or governmental agency or
authority and shall not subject any Lender to any penalty or other
onerous condition under or pursuant to any such law, regulation or
order.
(f) Agent shall have received all documents and instruments
which Agent has then requested, in addition to those described in
Section 3.1 (including opinions of legal counsel for the Related
Persons and Agent; corporate documents and records; documents
evidencing governmental authorizations, consents, approvals, licenses
and exemptions; and certificates of public officials and of officers
and representatives of Borrower and other Persons), as to (i) the
accuracy and validity of or compliance with all representations,
warranties and covenants made by any of the Related Persons in this
Agreement and the other Loan Documents, (ii) the satisfaction of all
conditions contained herein or therein, and (iii) all other matters
pertaining hereto and thereto. All such additional documents and
instruments shall be satisfactory to Agent in form, substance and
date.
(g) Borrower shall have paid the fees provided for in the
letter agreement of even date herewith between Agent and Borrower.
ARTICLE IV - Representations and Warranties
Section 4.1. Borrower's Representations and Warranties. To confirm
each Lender's understanding concerning Borrower and Borrower's business,
properties and obligations and to induce Agent and each Lender to enter into
this Agreement and to make the Loans, Borrower represents and warrants to Agent
and each Lender that:
(a) No Default. Borrower is not in default in the
performance of any of the covenants and agreements contained herein.
No event has occurred and is continuing which constitutes a Default.
(b) Organization and Good Standing. Each Related Person
which is a corporation or partnership is duly organized, validly
existing and in good standing under the laws of its state of
organization, having all corporate or partnership powers required to
carry on its business and enter into and carry out the transactions
contemplated hereby. Each such Related Person is duly qualified, in
good standing, and authorized to do business in all other
jurisdictions within the United States wherein the character of the
properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary except where the
failure to so qualify would not have any material adverse effect on
Borrower or its financial condition or businesses. Each such Related
Person has taken all actions and
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procedures customarily taken in order to enter, for the purpose of
conducting business or owning property, each jurisdiction outside the
United States wherein the character of the properties owned or held by
it or the nature of the business transacted by it makes such actions
and procedures desirable.
(c) Authorization. Each Related Person which is a
corporation or partnership has duly taken all corporate or partnership
action necessary to authorize the execution and delivery by it of the
Loan Documents to which it is a party and to authorize the
consummation of the transactions contemplated thereby and the
performance of its obligations thereunder. Borrower is duly
authorized to borrow funds hereunder.
(d) No Conflicts or Consents. The execution and delivery by
the various Related Persons of the Loan Documents to which each is a
party, the performance by each of its obligations under such Loan
Documents, and the consummation of the transactions contemplated by
the various Loan Documents, do not and will not (i) conflict with any
provision of (1) any domestic or applicable foreign law, statute, rule
or regulation, (2) the articles or certificate of incorporation,
bylaws, charter, or partnership agreement or certificate of any
Related Person, or (3) any material agreement, judgment, license,
order or permit applicable to or binding upon any Related Person, (ii)
result in the acceleration of any Debt owed by any Related Person, or
(iii) result in or require the creation of any Lien upon any assets or
properties of any Related Person except as expressly contemplated in
the Loan Documents. Except as expressly contemplated in the Loan
Documents no consent, approval, authorization or order of, and no
notice to or filing with, any court or governmental authority or third
party is required in connection with the execution, delivery or
performance by any Related Person of any Loan Document or to
consummate any transactions contemplated by the Loan Documents.
(e) Enforceable Obligations. This Agreement is, and the
other Loan Documents when duly executed and delivered will be, legal,
valid and binding obligations of each Related Person which is a party
hereto or thereto, enforceable in accordance with their terms except
as such enforcement may be limited by bankruptcy, insolvency or
similar laws of general application relating to the enforcement of
creditors' rights and by equitable principles.
(f) Initial Financial Statements. The Initial Financial
Statements fairly present Borrower's Consolidated financial position
at the date thereof and the Consolidated results of Borrower's
operations and Borrower's Consolidated cash flows for the period
thereof. Since the date of the Initial Financial Statements no
material adverse change has occurred in Borrower's financial condition
or businesses or in Borrower's Consolidated financial condition or
businesses, except as reflected in the Disclosure Schedule. All
Initial Financial Statements were prepared in accordance with GAAP.
(g) Other Obligations and Restrictions. No Related Person
has any outstanding Debt of any kind (including contingent
obligations, tax assessments, and unusual forward or
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long-term commitments) which is, in the aggregate, material to
Borrower or material with respect to Borrower's Consolidated financial
condition and not shown in the Initial Financial Statements or
disclosed in the Disclosure Schedule. Except as shown in the Initial
Financial Statements or disclosed in the Disclosure Schedule, no
Related Person is subject to or restricted by any franchise, contract,
deed, charter restriction, or other instrument or restriction which is
reasonably likely in the foreseeable future to materially and
adversely affect the businesses, properties, prospects, operations, or
financial condition of such Related Person or of Borrower on a
Consolidated basis.
(h) Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Related Person to
Agent or any Lender in connection with the negotiation of this
Agreement or in connection with any transaction contemplated hereby
contains any untrue statement of a material fact or, when all such
information is taken as a whole, omits to state any material fact
known to any Related Person (other than industry-wide risks normally
associated with the types of businesses conducted by the Related
Persons) necessary to make the statements contained herein or therein
not misleading as of the date made or deemed made. There is no fact
known to any Related Person (other than industry-wide risks normally
associated with the types of businesses conducted by the Related
Persons) that has not been disclosed to Agent and each Lender in
writing which could materially and adversely affect Borrower's
Consolidated properties, businesses, prospects or condition (financial
or otherwise). There are no statements or conclusions in any
Engineering Report which are based upon or include misleading
information or fail to take into account material information
regarding the matters reported therein, it being understood that each
Engineering Report is necessarily based upon professional opinions,
estimates and projections and that Borrower does not warrant that such
opinions, estimates and projections will ultimately prove to have been
accurate. Borrower has heretofore delivered to Agent and each Lender
true, correct and complete copies of the Initial Financial Statements
and the Initial Engineering Report.
(i) Litigation. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (i) there are no actions,
suits or legal, equitable, arbitrative or administrative proceedings
pending, or to the knowledge of any Related Person threatened, against
any Related Person before any federal, state, municipal or other
court, department, commission, body, board, bureau, agency, or
instrumentality, domestic or foreign, which do or may reasonably be
expected to materially and adversely affect Borrower or, on a
Consolidated basis, Borrower and its properly Consolidated
subsidiaries, their ownership or use of any material part of their
assets or properties, their businesses or financial condition or
prospects, or the right or ability of any Related Person to enter into
the Loan Documents to which it is a party or to consummate the
transactions contemplated thereby or to perform its obligations
thereunder and (ii) there are no outstanding judgments, injunctions,
writs, rulings or orders by any such governmental entity against any
Related Person or any Related Person's stockholders, partners,
directors or officers which have or may have any such effect.
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(j) ERISA Liabilities. All currently existing ERISA Plans
are listed in the Disclosure Materials. Except as disclosed in the
Initial Financial Statements or in the Disclosure Schedule, no
Termination Event has occurred with respect to any ERISA Plan and the
Related Persons are in compliance with ERISA in all material respects.
No Related Person is required to contribute to, or has any other
absolute or contingent liability in respect of, any "multiemployer
plan" as defined in Section 4001 of ERISA. Except as set forth in the
Disclosure Materials: (i) no "accumulated funding deficiency" (as
defined in Section 412(a) of the Internal Revenue Code of 1986, as
amended) exists with respect to any ERISA Plan, whether or not waived
by the Secretary of the Treasury or his delegate, and (ii) the current
value of each ERISA Plan's benefits does not exceed the current value
of such ERISA Plan's assets available for the payment of such benefits
by more than $500,000.
(k) Environmental and Other Laws. As used in this
subsection: "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, "CERCLIS" means
the Comprehensive Environmental Response, Compensation and Liability
Information System List of the Environmental Protection Agency, and
"Release" has the meaning given such term in 42 U.S.C. Section
9601(22). Except as set forth in the Disclosure Schedule:
(i) the Related Persons are conducting their
businesses in material compliance with all applicable federal,
state and local laws, including Environmental Laws.
(ii) to the best of the knowledge of the executive
officers of the Related Persons after due inquiry, none of the
operations of any Related Person is the subject of federal,
state or local investigation evaluating whether any material
remedial action is needed to respond to a release of any
Hazardous Materials into the environment.
(iii) no Related Person (and to the best knowledge
of the executive officers of Borrower, no other Person) has
filed any notice under any federal, state or local law
indicating that any Related Person is responsible for a
Release, or the improper storage, of any material amount of
Hazardous Materials or any Hazardous Materials have been
released, or are improperly stored, upon any property of any
Related Person.
(iv) no Related Person otherwise has any known
material contingent liability in connection with a Release, or
the improper storage, of any Hazardous Materials.
(v) each Related Person has obtained
authorizations or has caused third party operators to
represent that such operators have obtained authorizations
which are required under all Environmental Laws, except to the
extent failure to have any such permit, license or
authorization would not have a material adverse effect on the
financial condition, operations, business or prospects of any
Related Person.
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(vi) each Related Person is in material compliance
with the terms and conditions of all permits, licenses and
authorizations described in clause (v) above, and is also in
material compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any
applicable Environmental Law or in any notice or demand letter
issued, entered, promulgated or approved thereunder, except to
the extent failure to comply would not have a material adverse
effect on the financial condition, operations, business or
prospect of any Related Person.
(vii) no Related Person has handled any Hazardous
Materials on any properties now or previously owned or leased
by any Related Person to an extent that such handling has, or
may reasonably be expected to have, a material adverse effect
on the financial condition, operations, business or prospects
of any Related Person; and to the best of the Related Person's
knowledge after reasonably prudent inquiry
(1) no PCBs are present at any properties now or
previously owned or leased by any Related
Person;
(2) no asbestos is present at any properties now
or previously owned or leased by any Related
Person;
(3) except for production, storage and shipment
of oil and gas production in the ordinary
course of Borrower's business, there are no
underground or above-ground storage tanks,
vessels, landfills, pits or lagoons for
Hazardous Materials, active or abandoned, at
any properties now or previously owned or
leased by any Related Person;
(4) no Hazardous Materials have been Released, in
a reportable quantity, where such a quantity
has been established by statute, ordinance,
rule, regulation or order, at, on or under
any properties now or previously owned or
leased by any Related Person;
(5) no Hazardous Materials have been otherwise
Released at, on or under any properties now
or previously owned or leased by any Related
Person to an extent that such release has, or
may reasonably be expected to have, a
material adverse effect on the financial
condition, operations, business or prospects
of any Related Person;
(6) there has been no material release of or
contamination by any material or substance
contained or stored in any salt water
disposal pit, vessel, pond or lagoon, any mud
pit, or any other pit, pond, vessel or lagoon
used as a part of drilling or well operations
by any Related Person or for which any
Related Person may be responsible;
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(7) no Related Person is responsible for the
release, clean up or remediation of any
naturally occurring radioactive material;
(8) no Related Person is the subject of or
responsible for any material pending or
threatened claims, suits, demands or
proceedings for personal injury, property
damage, Natural Resources Damages as used in
"CERCLA", remediation costs, environmental
restoration or remediation or any other form
of legal or equitable relief whatsoever
arising from or in any way connected with the
actual or alleged release or discharge of or
exposure to any substance or material alleged
to be toxic or hazardous.
(viii) no Related Person has transported or arranged
for the transportation of any Hazardous Material to any
location which is listed on the National Priorities List under
CERCLA, listed for possible inclusion on the National
Priorities List by the Environmental Protection Agency in
CERCLIS, or listed on any similar state list or which is the
subject of federal, state or local enforcement actions or
other investigations which may lead to claims against any
Related Person for clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including,
but not limited to, claims under CERCLA.
(ix) No Hazardous Material generated by any
Related Person has been recycled, treated, stored, disposed of
or released by any Related Person at any location other than
those listed in Disclosure Schedule.
(x) No oral or written notification of a Release
of a Hazardous Material has been filed by or, to the best of
the Related Persons' knowledge, on behalf of any Related
Person, and no property now or previously owned or leased by
any Related Person is listed, to the best of the Related
Persons' knowledge, or proposed for listing on the National
Priority list promulgated pursuant to CERCLA, in CERCLIS, or
on any similar state list of sites requiring investigation or
clean-up.
(xi) There are no Liens arising under or pursuant
to any Environmental Laws on any of the real properties or
properties owned or leased by any Related Person, and no
government actions have been taken or, to the best of the
Related Persons' knowledge after due inquiry, are in process
which could subject any of such properties to such Liens; nor
would any Related Person be required to place any notice or
restriction relating to the presence of Hazardous Materials at
any properties owned by it in any deed to such properties.
(xii) There have been no environmental
investigations, studies, audits, tests, reviews or other
analyses conducted by or which are in the possession of any
Related Person in relation to any properties or facility now
or previously owned or leased by any Related Person which have
not been made available to Agent.
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(l) Names and Places of Business. Borrower has not been
known by, or used any other corporate, partnership, trade, or
fictitious name, except as disclosed in the Disclosure Schedule.
Except as otherwise indicated in the Disclosure Schedule, the chief
executive office and principal place of business of Borrower are (and
for the preceding five years have been) located at the address of
Borrower set out in the signature pages hereto. Except as indicated
in the Disclosure Schedule, Borrower has no other office or place of
business.
(m) Borrower's Subsidiaries. Borrower does not presently
have any Subsidiary or own any stock in any other corporation or
association except those listed in the Disclosure Schedule. Borrower
is not a member of any general or limited partnership, joint venture
or association of any type whatsoever except those listed in the
Disclosure Schedule. As of the date hereof Borrower owns, directly or
indirectly, the equity interest in each of its Subsidiaries which is
indicated in the Disclosure Schedule.
(n) Title to Properties. Each Related Person has good record
and marketable title in fee simple to, or a valid leasehold interest
in (i) all of its drill sites and all of its properties where proven
reserves exist, and (ii) all of its real property (other than any real
property in which any Related Person has not, in accordance with
customary practice in oil and gas business, verified the marketability
and status of title or the validity of such leasehold interest), and
such good title to all its other property, and none of such property
is subject to any Lien except as expressly permitted by subsection
5.2(b).
Section 4.2. Representation by Lenders. Each Lender hereby
represents that it will acquire its Note for its own account in the ordinary
course of its commercial lending business; however, the disposition of such
Lender's Note shall at all times be and remain within its control and, in
particular and without limitation, such Lender may sell or otherwise transfer
its Note, any participation interest or other interest in its Note, or any of
its other rights and obligations under the Loan Documents.
ARTICLE V - Covenants of Borrower
Section 5.1. Affirmative Covenants. To conform with the terms and
conditions under which each Lender is willing to have credit outstanding to
Borrower, and to induce Agent and each Lender to enter into this Agreement and
make the Loans, Borrower warrants, covenants and agrees that until the full and
final payment of the Obligations and the termination of this Agreement, unless
Majority Lenders have previously agreed otherwise:
(a) Payment and Performance. Borrower will pay all amounts
due under the Loan Documents in accordance with the terms thereof and
will observe, perform and comply with every covenant, term and
condition set forth in the Loan Documents. Borrower will cause the
other Related Persons to observe, perform and comply with every such
term, covenant and condition.
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(b) Books, Financial Statements and Reports. Each Related
Person will at all times maintain full and accurate books of account
and records. Borrower will maintain and will cause its Subsidiaries
to maintain a standard system of accounting and will furnish the
following statements and reports to Agent and each Lender at
Borrower's expense:
(i) As soon as available, and in any event within
ninety (90) days after the end of each Fiscal Year, complete
Consolidated financial statements of Borrower together with
all notes thereto and the consolidating financial statements
prepared in connection with the preparation of such
Consolidated financial statements, all prepared in reasonable
detail in accordance with GAAP, together with an opinion,
based on an audit using generally accepted auditing standards,
by Price Waterhouse, or other independent certified public
accountants selected by Borrower and reasonably acceptable to
Majority Lenders, stating that such Consolidated financial
statements have been so prepared. These financial statements
shall contain a Consolidated and consolidating balance sheet
as of the end of such Fiscal Year and Consolidated and
consolidating statements of earnings, of cash flows, and of
changes in owners' equity for such Fiscal Year, each setting
forth in comparative form the corresponding figures for the
preceding Fiscal Year. In addition, within ninety (90) days
after the end of each Fiscal Year Borrower will furnish a
report signed by such accountants stating that they have read
this Agreement, containing calculations showing compliance (or
non-compliance) at the end of such Fiscal Year with the
requirements of Sections 5.2(k), 5.2(l), 5.2(m) and 5.2(n),
and further stating that in making the examination and
reporting on the Consolidated financial statements described
above no knowledge was obtained that any Default existed at
the end of such Fiscal Year or at the time of their report,
or, if they did obtain knowledge that a Default existed,
specifying its nature and period of existence.
(ii) As soon as available, and in any event within
forty-five (45) days after the end of the first three Fiscal
Quarters in each Fiscal Year, Borrower's unaudited
Consolidated and consolidating balance sheet as of the end of
such Fiscal Quarter and Consolidated and consolidating
statements of Borrower's earnings and cash flows for the
period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter, all in reasonable detail and
prepared in accordance with GAAP, subject to changes resulting
from normal year-end and audit adjustments. In addition
Borrower will, together with each such set of financial
statements and each set of financial statements furnished
under subsection (i) of this section, furnish a certificate in
the form of Exhibit F signed by the chief financial officer of
Borrower stating that such financial statements are accurate
and complete in all material respects, stating that he has
reviewed the Loan Documents, containing calculations showing
compliance (or non-compliance) at the end of such Fiscal
Quarter with the requirements of Sections 5.2(k), 5.2(l),
5.2(m) and 5.2(n), and stating that no Default exists at the
end of such Fiscal Quarter or at the time of such certificate
or specifying the nature and period of existence of any such
Default.
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(iii) Promptly upon their becoming available, copies
of all financial statements, reports, notices and proxy
statements sent by any Related Person to its stockholders and
all registration statements, periodic reports and other
statements and schedules filed by any Related Person with any
securities exchange, the Securities and Exchange Commission or
any similar governmental authority.
(iv) By April 1 of each year, an engineering report
prepared by independent petroleum engineers chosen by Borrower
and reasonably acceptable to Majority Lenders, concerning all
oil and gas properties and interests relating to proven oil or
gas reserves owned by Borrower. In addition to the annual
report required pursuant to the preceding sentence, Borrower
will by October 1 of each year, unless previously waived in
writing by Majority Lenders, furnish to Agent and each Lender,
at Borrower's expense, an additional engineering report
prepared by Borrower, concerning all oil and gas properties
and interests relating to proven oil or gas reserves owned by
Borrower; provided that Borrower shall have no obligation to
furnish more than one such additional report in any Fiscal
Year. Each report shall be satisfactory to Agent and shall
contain information and analysis comparable in scope to that
contained in the Initial Engineering Report. Each report
shall distinguish (or shall be delivered together with a
certificate from an appropriate officer of Borrower which
distinguishes) those properties treated in the report which
are Collateral from those properties treated in the report
which are not Collateral.
(v) As soon as available, and in any event within
forty-five (45) days after the end of each month, Borrower's
internal financial summaries for such month, subject to
adjustments resulting from the final closing of such month's
books, together with all other financial information requested
by Agent.
(vi) As soon as available, and in any event within
thirty (30) days after the end of each Fiscal Year, Borrower
shall deliver to Agent an environmental compliance certificate
signed by the president or chief executive officer of Borrower
in the form attached hereto as Exhibit G. Further, if
requested by Agent, Borrower shall permit and cooperate with
an environmental and safety review made in connection with the
operations of Borrower's oil and gas properties one time
during each Fiscal Year beginning with the Fiscal Year 1996,
by Pilko & Associates or other consultants jointly selected by
Agent and Borrower which review shall, if requested by Agent,
be arranged and supervised by environmental legal counsel for
Agent, all at Borrower's cost and expense. The consultant
shall render a verbal or written report to both Agent and
Borrower, as specified by Agent, based upon such review at
Borrower's cost and expense.
(vii) Concurrently with the annual renewal of
Borrower's insurance policies, Borrower shall, if requested by
Agent in writing, cause a certificate or report to be issued
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, CPCU, ARM or other insurance consultants
satisfactory to Agent certifying that Borrower's insurance for
the next succeeding year after such
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renewal (or for such longer period for which such insurance is
in effect) complies with the provisions of this Agreement and
the Security Documents.
(viii) If, at the time of any redetermination of the
Borrowing Base or at any time during a Fiscal Quarter, the
aggregate value of gas attributable to "over-produced" status
under gas balancing arrangements exceeds $10,000,000 (without
giving effect to any offsetting of "under-produced" gas), then
(a) concurrently with the information furnished to Lenders in
connection with each such redetermination of the Borrowing
Base pursuant to the provisions of Section 2.12 and (b) as
soon as available, and in any event within forty-five (45)
days after the end of such Fiscal Quarter, an internally
prepared report concerning all gas properties and interests of
Borrower which are "over- produced" under gas balancing
arrangements. This report shall be satisfactory to Agent and
shall distinguish (or shall be delivered together with a
certificate from an appropriate officer of Borrower which
distinguishes) those properties treated in the report which
are Collateral from those properties treated in the report
which are not Collateral.
(c) Other Information and Inspections. Each Related Person
will furnish to Agent and each Lender any information which Agent may
from time to time reasonably request in writing concerning any
covenant, provision or condition of the Loan Documents or any matter
in connection with the Related Persons' businesses and operations.
Each Related Person will permit representatives appointed by Agent
(including independent accountants, agents, attorneys, appraisers and
any other Persons) to visit and inspect any of such Related Person's
property, including its books of account, other books and records, and
any facilities or other business assets, and to make extra copies
therefrom and photocopies and photographs thereof, and to write down
and record any information such representatives obtain, and each
Related Person shall permit Agent or its representatives to
investigate and verify the accuracy of the information furnished to
Agent or any Lender in connection with the Loan Documents and to
discuss all such matters with its officers, employees and
representatives. Each of Agent and Lenders, and their respective
successors and assigns, agrees that, except upon the occurrence and
during the continuance of a Default, it will take all reasonable steps
to keep confidential any confidential or proprietary information given
to it by any Related Person, provided, however, that this restriction
shall not apply to information which (i) has at the time in question
entered the public domain, or (ii) is required to be disclosed by law
or by any order, rule or regulation (whether valid or invalid) of any
court or governmental agency or authority, and provided further that
Agent and each Lender may disclose proprietary or confidential
information (a) to Agent's or any Lender's Affiliates, auditors,
attorneys, or agents or (b) to any other Lender or to any purchaser or
prospective purchaser of participations or other interests in any Loan
or Note, provided that Agent or such Lender, as the case may be, shall
request such other Lender, purchaser or prospective purchaser to agree
to be bound by the confidentiality provisions contained in this
Section 5.1(c).
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(d) Notice of Material Events and Change of Address.
Borrower will promptly notify Agent and each Lender:
(i) of any material adverse change in Borrower's
financial condition or Borrower's Consolidated financial
condition or in the aggregate value of the Collateral,
(ii) of the occurrence of any Default of which
Borrower has knowledge,
(iii) of the acceleration of the maturity of any
Debt owed by any Related Person or of any default by any
Related Person under any indenture, mortgage, agreement,
contract or other instrument to which any of them is a party
or by which any of them or any of their properties is bound,
if such acceleration or default might have a material adverse
effect upon Borrower's Consolidated financial condition or on
the value of any material part of the Collateral,
(iv) of the occurrence of any Termination Event,
(v) of any claim of $1,000,000 or more, any
notice of potential liability under any Environmental Laws
which could reasonably be expected to exceed such amount, any
claim, suit, demand or proceeding for personal injury,
property damage, Natural Resources Damages as used in
"CERCLA", remediation costs, environmental restoration or
remediation or any other form of legal or equitable relief
whatsoever arising from or in any way connected with the
actual or alleged release or discharge of or exposure to any
substance or material alleged to be toxic or hazardous which
could reasonably be expected to exceed such amount, or any
other material adverse claim asserted against any Related
Person or with respect to any Related Person's properties, and
(vi) of the filing of any suit or proceeding
against any Related Person in which an adverse decision could
have a material adverse effect upon any Related Person's
financial condition, business or operations or on the value of
any Collateral.
Upon the occurrence of any of the foregoing the Related Persons will
take all necessary or appropriate steps to remedy promptly any such
material adverse change, Default, acceleration, default or Termination
Event, to protect against any such adverse claim, to defend any such
suit or proceeding, and to resolve all controversies on account of any
of the foregoing. Borrower will also notify Agent and Agent's counsel
in writing at least twenty Business Days prior to the date that any
Related Person changes its name or the location of its chief executive
office or principal place of business or the place where it keeps its
books and records concerning the Collateral, furnishing with such
notice any necessary financing statement amendments or requesting
Agent and its counsel to prepare the same.
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(e) Maintenance of Properties. Each Related Person will
maintain, preserve, protect, and keep all Collateral and all other
material assets used or useful in the conduct of its business in good
condition (subject to the repair and/or replacement in the ordinary
course of business and events of casualty and force majeure) and in
material compliance with all applicable laws, rules and regulations,
and will from time to time make all repairs, renewals and replacements
needed to enable the business and operations carried on in connection
therewith to be promptly and advantageously conducted at all times.
(f) Maintenance of Existence and Qualifications. Each
Related Person which is a corporation or partnership will maintain and
preserve its corporate or partnership existence and its rights and
franchises in full force and effect and will qualify to do business as
a foreign corporation or partnership in all states or jurisdictions
where required by applicable law, except where the failure so to
qualify will not have any material adverse effect on Borrower.
(g) Payment of Trade Debt, Taxes, etc. Each Related Person
will (i) timely (giving effect to any proper extensions) file all
required tax returns; (ii) timely pay all taxes, assessments, and
other governmental charges or levies imposed upon it or upon its
income, profits or property; (iii) within sixty (60) days after the
same becomes due pay all Debt owed by it on ordinary trade terms to
vendors, suppliers and other Persons providing goods and services used
by it in the ordinary course of its business; (iv) pay and discharge
when due all other Debt now or hereafter owed by it; and (v) maintain
appropriate accruals and reserves for all of the foregoing Debt in
accordance with GAAP. Each Related Person may, however, delay paying
or discharging any such taxes, assessments, charges, levies and/or
Debt so long as it is in good faith contesting the validity or amount
thereof by appropriate proceedings and has set aside on its books
adequate reserves therefor to the extent required by GAAP.
(h) Insurance. Each Related Person will keep or cause to be
kept insured by financially sound and reputable insurers its property
in accordance with Schedule 2. Borrower will maintain the additional
insurance coverage as described in the respective Security Documents.
Upon demand by Agent any insurance policies covering Collateral shall
be endorsed (i) to provide for payment of property losses to Agent as
its interests may appear, (ii) to provide that such policies may not
be cancelled or reduced or affected in any material manner for any
reason without thirty days' prior notice to Agent, (iii) to provide
for any other matters specified in any applicable Security Document or
which Agent may reasonably require; and (iv) to provide for insurance
against fire, casualty and any other hazards normally insured against,
in the amount of the full value (less a reasonable deductible not to
exceed amounts customary in the industry for similarly situated
businesses and properties) of the property insured. Each Related
Person shall at all times maintain insurance against its liability for
injury to persons or property in accordance with Schedule 2, which
insurance shall be by financially sound and reputable insurers.
Without limiting the foregoing, each Related Person shall at all time
maintain liability insurance in the amounts set out on Schedule 2.
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(i) Payment of Expenses. Borrower will, subject to the terms
of the fee letter agreement of even date herewith between Borrower and
Agent, promptly (and in any event, within 30 days after any invoice
or other statement or notice) pay (a) all reasonable attorneys' fees
and other legal expenses incurred by or on behalf of Agent in
connection with (i) the negotiation, preparation, execution and
delivery of the Loan Documents, and any and all consents, waivers or
other documents or instruments relating thereto, (ii) the filing,
recording, refiling and re-recording of any Loan Documents and any
other documents or instruments or further assurances required to be
filed or recorded or refiled or re-recorded by the terms of any Loan
Document, (iii) the borrowings hereunder and other action reasonably
required in the course of administration hereof, (iv) the defense or
enforcement of the Loan Documents or the defense of Agent's or any
Lender's exercise of their rights thereunder, (v) monitoring or
confirming (or preparation or negotiation of any document related to)
Borrower's compliance with any covenants or conditions contained in
this Agreement or in any Loan Document, and (vi) the enforcement of
this Section 5.1(i); and (b) except as otherwise provided in Section
5.1(g) above, all transfer, stamp, mortgage, documentary or other
similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any of the other
Loan Documents or any other document referred to herein or therein.
In addition to the foregoing, upon the occurrence and continuance of
an Event of Default and until all of the Obligations have been paid in
full, Borrower will also pay or reimburse Agent for all reasonable
fees and expenses of Agent's (1) outside counsel, (2) reserve
engineers and (3) consultants engaged in connection with the Loan
Documents.
(j) Performance on Borrower's Behalf. If any Related Person
fails to pay any taxes, expenses, attorneys' fees or other amounts it
is required to pay under any Loan Document, Agent may, upon five (5)
days prior written notice to Borrower, pay the same; provided,
however, that if Borrower is contesting any such amount in accordance
with the terms of the Loan Documents and gives Agent written notice
thereof at least one (1) day prior to the date contained in Agent's
notice to Borrower on which Agent intends to pay such amount, Agent
will refrain from making such payment for so long as Borrower is
contesting such amount in accordance with the terms of the Loan
Documents. If any Related Person fails to pay any insurance premiums
it is required to pay under any Loan Document, Agent may pay the same.
Notwithstanding the foregoing, Agent may pay any taxes, expenses,
attorneys' fees, premiums or other amounts required to be paid by any
Related Person under any Loan Document to prevent the attachment of
any lien on any of such Related Person's assets. Borrower shall
immediately reimburse Agent for any payment made hereunder and each
amount paid by Agent shall constitute an Obligation owed hereunder
which is due and payable on the date such amount is paid by Agent.
(k) Interest. Borrower hereby promises to Agent and Lenders
to pay interest at the Late Payment Rate on all Obligations which
Borrower has in this Agreement promised to pay (including Obligations
to pay fees or to reimburse or indemnify Agent or any Lender) and
which are not paid when due or within any applicable grace period.
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(l) Compliance with Agreements and Law. Each Related Person
will perform all material obligations it is required to perform under
the terms of each indenture, mortgage, deed of trust, security
agreement, lease, franchise, agreement, contract or other instrument
or obligation to which it is a party or by which it or any of its
properties is bound. Each Related Person will conduct its business
and affairs in material compliance with all laws, regulations, and
order applicable thereto.
(m) Environmental Matters; Environmental Reviews.
(i) Each Related Person will comply with all
Environmental Laws now or hereafter applicable to such Related
Person and shall obtain or cause third-party operators to
represent that they have obtained, at or prior to the time
required by applicable Environmental Laws, all environmental,
health and safety permits, licenses and other authorizations
necessary for its operations and will maintain such
authorizations in full force and effect. Without limiting the
foregoing, Borrower will, as recommended by Pilko and
Associates, Inc. or such other environmental consultant
jointly selected by Agent and Borrower, promptly develop and
carry out a plan of action to plug abandoned ▇▇▇▇▇, as
discovered, as required to be plugged under applicable
governmental requirements, that are not expected to be
returned to service.
(ii) Borrower will promptly furnish to Agent all
written notices of violation, orders, claims, demands,
notices, citations, complaints, penalty assessments, suits or
other proceedings received by Borrower or of which it has
notice, which involve or could reasonably be expected to
involve asserted damages in excess of $100,000, pending or
threatened against any Related Person, by any person, firm, or
public or governmental authority with respect to any alleged
violation of or non- compliance with any Environmental Laws,
any alleged personal injury, property damages, Natural
Resources Damages as used in "CERCLA", remediation costs,
environmental restoration or remediation or any other form of
legal or equitable relief whatsoever arising from or in any
way connected with the actual or alleged release or discharge
of or exposure to any substance or material alleged to be
toxic or hazardous or any permits, licenses or authorizations
in connection with its ownership or use of its properties or
the operation of its business, regardless of where conducted.
(iii) Borrower will promptly furnish to Agent all
requests for information, notices of claim, demand letters,
and other notifications, received by Borrower in connection
with its ownership or use of its properties or the conduct of
its business, relating to potential responsibility with
respect to any investigation or clean-up of Hazardous Material
at any location, or with respect to any alleged personal
injury, property damages, Natural Resources Damages as used in
"CERCLA", remediation costs, environmental restoration or
remediation or any other form of legal or equitable relief
whatsoever arising from or in any way connected with the
actual or
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alleged release or discharge of or exposure to any substance
or material alleged to be toxic or hazardous.
(n) Evidence of Compliance. Each Related Person will furnish
to each Lender at such Related Person's or Borrower's expense all
evidence which Agent from time to time reasonably requests in writing
as to the accuracy and validity of or compliance with all
representations, warranties and covenants made by any Related Person in
the Loan Documents, the satisfaction of all conditions contained
therein, and all other matters pertaining thereto.
Section 5.2. Negative Covenants. To conform with the terms and
conditions under which each Lender is willing to have credit outstanding to
Borrower, and to induce Agent and each Lender to enter into this Agreement and
make the Loans, Borrower warrants, covenants and agrees that until the full and
final payment of the Obligations and the termination of this Agreement, unless
Majority Lenders have previously agreed otherwise:
(a) Restricted Debt. No Related Person shall create, incur,
assume or suffer to exist (i) any Debt for borrowed money or for the
deferred purchase price of property or services (other than current
trade liabilities which is 60 days or less past due and which is
incurred in the ordinary course of business and payable in accordance
with customary practices) or which is evidenced by a note, bond,
debenture or similar instrument, (ii) any obligations of such Related
Person under any leases of property, real or personal, with respect to
which the obligations of the lessee are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee (other than
leases of equipment which are made in the ordinary course of
business), (iii) any obligations of such Related Person in respect of
letters of credit and acceptances issued or created for the account of
such Related Person, (iv) any liabilities secured by any Lien on any
property owned by such Related Person even though such Related Person
has not assumed or otherwise become liable for the payment thereof,
(v) any obligations arising under futures contracts, swap contracts,
or similar speculative agreements (other than option contracts giving
such Related Person the right - and not the duty - to buy or sell
goods expected to be bought or sold by such Related Person in the
ordinary course of its business, so long as such Related Person has no
obligation other than the initial payment in full of the purchase
price for the option), (vi) any obligations arising under conditional
sales or other title retention agreements, (vii) any obligations owing
under direct or indirect guaranties of Debt of any other Person or
constituting obligations to purchase or acquire or to otherwise
protect or insure a creditor against loss in respect of Debt of any
other Person (such as obligations under working capital maintenance
agreements, agreements to keep-well, or agreements to purchase Debt,
assets, goods, securities or services), but excluding endorsements in
the ordinary course of business of negotiable instruments in the
course of collection, (viii) any obligations with respect to payments
received in consideration of oil, gas, or other minerals yet to be
acquired or produced at the time of payment (including obligations
under "take-or-pay" contracts to deliver gas in return for payments
already received and the undischarged balance of any production
payment created by such Related Person or for the creation of which
such Related Person directly or indirectly received
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payment), or (ix) any obligations to deliver goods or services in
consideration of advance payments therefor, except:
(1) Debt in respect of the Loans, the Notes, and
other Obligations of Borrower under this Agreement;
(2) Debt on account of trade credit or other
accounts payable incurred in the ordinary course of business;
(3) Debt outstanding on the date of this
Agreement and listed on Schedule 3 hereto, provided that the
amount of any such Debt may not be increased;
(4) Debt of Borrower owing to any Guarantor and
Debt of any Guarantor owing to Borrower;
(5) Debt arising under contracts entered into in
accordance with subsections (e) and (f) of the definition of
Permitted Investments;
(6) the Subordinated Debt, provided that the
amount of such Subordinated Debt may not be increased, prepaid
in cash prior to its stated maturity date or refinanced prior
to its stated maturity date (except on terms and conditions
acceptable to Required Lenders);
(7) guaranties by any Related Person of Debt of
any other Related Person, which Debt is expressly permitted
pursuant to the provisions of this Section 5.2(a);
(8) Debt evidenced by the 2006 Senior
Subordinated Notes; provided that (i) the 2006 Senior
Subordinated Notes shall not be repurchased or redeemed in
whole or in part prior to their stated maturity date, whether
at the option of Borrower or pursuant to a mandatory
redemption requirement under the 1996 Indenture; (ii) the
principal amount of such Debt shall not be increased,
refinanced, or refunded prior to its stated maturity date;
(iii) the interest rate thereon shall not be increased above
its stated rate; (iv) any prepayment charges, fees, expenses
or other amounts payable with respect to such Debt shall not
be increased; and (v) such Debt shall not be defeased in whole
or in part by Borrower pursuant to an election under Article 8
of the ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or otherwise; and
(9) Debt evidenced by the 2007 Senior
Subordinated Notes; provided that (i) the 2007 Senior
Subordinated Notes shall not be repurchased or redeemed in
whole or in part prior to their stated maturity date, whether
at the option of Borrower or pursuant to a mandatory
redemption requirement under the 1997 Indenture; (ii) the
principal amount of such Debt shall not be increased,
refinanced, or refunded prior to its stated maturity date;
(iii) the interest rate thereon shall not be increased above
its stated rate; (iv) any prepayment charges, fees, expenses
or other amounts payable
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with respect to such Debt shall not be increased; and (v) such
Debt shall not be defeased in whole or in part by Borrower
pursuant to an election under Article 8 of the 1997 Indenture
or otherwise.
(b) Limitation on Liens. No Related Person shall create,
incur, assume or suffer to exist any Lien upon any of their respective
properties, assets or revenues, whether now owned or hereafter
acquired, except for:
(i) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided
that adequate reserves with respect thereto are maintained on
the books of such Related Person in conformity with GAAP;
(ii) carriers', warehousemen's, lessors', mechanics',
materialmen's, repairmen's or other like Liens arising in the
ordinary course of business which are not overdue for a period
of more than 60 days or which are being contested in good
faith by appropriate proceedings; provided that adequate
reserves with respect thereto are maintained on the books of
such Related Person in conformity with GAAP;
(iii) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance
carriers under insurance or self-insurance arrangements;
(iv) deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance
bonds, and other obligations of a like nature incurred in the
ordinary course of business;
(v) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in
amount and which do not in any case materially detract from
the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the
relevant Related Person;
(vi) Liens in existence on the date of this Agreement
listed on Schedule 4, securing Debt permitted by subsection
5.2(a)(3), provided that no such Lien is spread to cover any
additional property after the date of this Agreement and that
the amount of Debt secured thereby is not increased;
(vii) Liens which arise pursuant to the specific
terms of any license, joint operating agreement, unitization
agreement or other similar agreement evidencing the interest
of the relevant Person in any oil and gas producing property,
provided
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that such Lien is not securing any Debt other than Debt
incurred in connection with the specific terms of any such
license, joint operating agreement, unitization agreement or
other similar agreement;
(viii)Liens which arise pursuant to leases of
equipment entered into in the ordinary course of business,
provided that such Lien is not securing any Debt other than
Debt incurred in connection with the specific terms of such
equipment lease; and
(ix) Liens created pursuant to the Security Documents
or otherwise contemplated by this Agreement or the other Loan
Documents.
(c) Limitation on Mergers. No Related Person will merge
or consolidate with or into any other business entity. Any Subsidiary
of Borrower may, however, be merged into or consolidated with (i)
another Subsidiary of Borrower, so long as a Guarantor is the
surviving business entity, or (ii) Borrower, so long as Borrower is
the surviving business entity.
(d) Limitation on Sales of Property. No Related Person will
sell, transfer, lease, exchange, alienate or dispose of any of its
material assets or properties or any material interest therein except,
to the extent not otherwise forbidden under the Security Documents:
(i) equipment or other assets which are worthless
or obsolete or which are replaced by equipment or similar
assets of equal suitability and value.
(ii) inventory (including oil and gas sold as
produced and seismic data) which is sold in the ordinary
course of business on ordinary trade terms.
(iii) oil and gas properties which are sold for
fair consideration not to exceed $15,000,000 in the aggregate
in any calendar year during the term of this Agreement;
provided, however, that Borrower may sell for fair
consideration oil and gas properties in excess of $15,000,000
in the aggregate during any calendar year so long as within
five (5) days of consummation of any such sale all such sale
proceeds (net of reasonable costs incurred in connection with
such sale) shall be prepaid to Agent as a mandatory
prepayment, which proceeds shall (a) prior to the Termination
Date cause the Borrowing Base to be reduced by an amount
determined by Majority Lenders in their sole discretion to be
attributable to the oil and gas properties sold and (b) after
the Termination Date proportionately reduce each remaining
regular installment of principal due under the Notes so that
such reduced payment shall be equal to the product obtained by
multiplying each such payment by a fraction (1) the numerator
of which shall equal the amount of the outstanding Loans on
the date of prepayment of such sale proceeds to Agent after
giving effect to such prepayment
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and (2) the denominator of which shall equal the amount of the
outstanding Loans on the date of prepayment of such sale
proceeds to Agent before giving effect to such prepayment.
Neither Borrower nor any of Borrower's Subsidiaries will sell,
transfer or otherwise dispose of capital stock of any of Borrower's
Subsidiaries except that any Subsidiary of Borrower may sell or issue
its own capital stock to the extent not otherwise prohibited
hereunder. No Related Person will discount, sell, pledge or assign
any notes payable to it, accounts receivable or future income except
to the extent expressly permitted under the Loan Documents.
(e) Limitation on Dividends and Redemptions. No Related
Person will declare or pay any dividends on, or make any other
distribution in respect of, any class of its capital stock or any
partnership or other interest in it, nor will any Related Person
directly or indirectly make any capital contribution to or purchase,
redeem, acquire or retire any shares of the capital stock of or
partnership interests in any Related Person (whether such interests
are now or hereafter issued, outstanding or created), or cause or
permit any reduction or retirement of the capital stock of any Related
Person, except:
(i) such dividends, distributions, contributions,
purchases, redemptions, acquisitions, retirements or
reductions may be made by any Related Person without
limitation to Borrower and to Guarantors which are
Subsidiaries of Borrower, and
(ii) Borrower may make distributions to its
shareholders in any Fiscal Year which, in the aggregate
together with all other dividends and distributions made by
Borrower during such Fiscal Year and all Consolidated income
taxes of Borrower incurred by Borrower during the immediately
preceding Fiscal Year and actually paid by Borrower, do not
exceed sixty percent (60%) of the Consolidated net income of
Borrower calculated in accordance with GAAP before income
taxes and non-cash extraordinary items for the immediately
preceding Fiscal Year; provided that (a) at the time of each
such distribution, the Borrowing Base exceeds the aggregate
unpaid principal balance of the Loans, (b) no amounts are due
and owing under the Loan Documents at such time and (c) no
Default or Event of Default has occurred and is continuing at
the time of such distribution or would arise as a result of
the making of such distribution.
(f) Limitation on Investments and New Businesses. No Related
Person will (i) make any expenditure or commitment or incur any
obligation or enter into or engage in any transaction except in the
ordinary course of business, (ii) engage directly or indirectly in any
business or conduct any operations except in connection with or
incidental to its present businesses and operations, (iii) make any
acquisitions of or capital contributions to or other investments in
any Person, or be a party to or in any manner be liable on any
forward, future,
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swap or hedging contract, other than Permitted Investments, or (iv)
make any significant acquisitions or investments in any properties
other than oil and gas properties which are expressly permitted
hereunder.
(g) Limitation on Credit Extensions. Except for Permitted
Investments, no Related Person will extend credit, make advances or
make loans other than normal and prudent extensions of credit to
customers buying goods and services in the ordinary course of
business, which extensions shall not be for longer periods than those
extended by similar businesses operated in a normal and prudent
manner.
(h) Transactions with Affiliates. Neither Borrower nor any
of its Subsidiaries will engage in any material transaction with any
of its Affiliates on terms which are less favorable to it than those
which would have been obtainable at the time in arm's-length dealing
with Persons other than such Affiliates, provided that such
restriction shall not apply to transactions among Borrower and its
Subsidiaries.
(i) Certain Contracts; Amendments; Multiemployer ERISA Plans.
Except as expressly provided for in the Loan Documents, no Related
Person will, directly or indirectly, enter into, create, or otherwise
allow to exist any contract or other consensual restriction on the
ability of any Subsidiary of Borrower to: (i) pay dividends or make
other distributions to Borrower, (ii) to redeem equity interests held
in it by Borrower, (iii) to repay loans and other indebtedness owing
by it to Borrower, or (iv) to transfer any of its assets to Borrower.
No Related Person will enter into any "take-or-pay" contract or other
contract or arrangement for the purchase of goods or services which
obligates it to pay for such goods or service regardless of whether
they are delivered or furnished to it. No Related Person will amend
or permit any amendment to any contract or lease which releases,
qualifies, limits, makes contingent or otherwise detrimentally affects
the rights and benefits of Agent or any Lender under or acquired
pursuant to any Security Documents. No Related Person will incur any
obligation to contribute to any "multiemployer plan" as defined in
Section 4001 of ERISA. No Related Person will amend or modify or
permit any amendment or modification to any contract or instrument
governing the Debt evidenced by the 2006 Senior Subordinated Notes or
the 2007 Senior Subordinated Notes the effect of which would be to
change any of the material terms of such contract or instrument,
including without limitation, any amendment or modification that (i)
would increase the amount of, or shorten the maturity of, any payment
of any principal amount of the 2006 Senior Subordinated Notes or the
2007 Senior Subordinated Notes; (ii) would change the terms of
subordination of such Debt to the Obligations; or (iii) would be, in
the opinion of Majority Lenders, materially more burdensome to
Borrower than the obligations and requirements imposed by the 2006
Senior Subordinated Notes and the 1996 Indenture or the 2007 Senior
Subordinated Notes and the 1997 Indenture, as the case may be
(j) Fiscal Year. No Related Person will change its fiscal
year.
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(k) Current Ratio. The ratio of Borrower's Consolidated
current assets to Borrower's Consolidated current liabilities will
never be less than 1.0 to 1.0. For purposes of this subsection,
Borrower's Consolidated current liabilities will be calculated without
including any payments of principal on the Note which are required to
be repaid within one year from the time of calculation. For purposes
of this subsection, until the date which is one year and one day
before the due date of the first installment of principal on the Notes
Borrower's Consolidated current assets shall be increased by an amount
equal to the lesser of (i) the amount of available credit under the
Borrowing Base at the time of such calculation or (ii) $25,000,000.
(l) Fixed Charge Coverage. The ratio of Borrower's
Consolidated Cash Flow for any Fiscal Quarter to Borrower's
Consolidated Fixed Charges for such Fiscal Quarter will never be less
than 1.5 to 1.0. As used in this Section 5.2 (l), "Borrower's
Consolidated Cash Flow" means for any Fiscal Quarter, the sum of
Consolidated net income of Borrower plus depreciation, depletion,
amortization and interest expense deducted in determining such net
income. "Borrower's Consolidated Fixed Charges" means for any Fiscal
Quarter the sum of (i) the aggregate principal amount of all Debt of
Borrower and its Subsidiaries paid (other than voluntary prepayments)
or due and payable during such Fiscal Quarter plus (ii) all interest
paid or accrued by Borrower and its Subsidiaries, including all
interest paid (but excluding any accrued interest) with respect to the
Subordinated Debt during such Fiscal Quarter; provided, however, that
any principal amount of Debt and any interest payable in one Fiscal
Quarter and paid in another shall not be twice included in
Consolidated Fixed Charges.
(m) Interest Coverage. The ratio of Borrower's Consolidated
Cash Flow for any Fiscal Quarter to Borrower's Interest Expense for
such Fiscal Quarter will never be less than 2.5 to 1.0. As used in
this subsection, "Borrower's Interest Expense" means for any Fiscal
Quarter the sum of (i) interest payable on the Obligations for such
Fiscal Quarter plus (ii) interest payable (excluding any accrued but
unpaid interest) on the Subordinated Debt.
(n) Tangible Net Worth. Borrower's Consolidated Tangible Net
Worth will never be less than $120,000,000. As used in this
subsection the term "Borrower's Consolidated Debt" means all
Consolidated liabilities and similar balance sheet items of Borrower,
together with all other Debt of any Related Person. As used in this
subsection the term "Borrower's Consolidated Tangible Net Worth" means
the remainder of (I) all Consolidated assets of Borrower, other than
intangible assets (including without limitation as intangible assets
such assets as patents, copyrights, licenses, franchises, goodwill,
trade names, trade secrets and leases other than oil, gas or mineral
leases or leases required to be capitalized under GAAP), minus (II)
Borrower's Consolidated Debt (other than the Subordinated Debt).
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ARTICLE VI - Security
Section 6.1. The Security. The Obligations will be secured by the
Security Documents heretofore or hereafter delivered by any Related Person and
accepted by Agent.
Section 6.2. Agreement to Deliver Security Documents. Borrower
agrees to deliver and to cause its Subsidiaries to deliver, to further secure
the Obligations whenever requested by Agent in its sole and absolute
discretion, deeds of trust, mortgages, chattel mortgages, security agreements,
financing statements and other Security Documents in form and substance
satisfactory to Agent for the purpose of granting, confirming, and perfecting
first and prior liens or security interests in any real or personal property
now owned or hereafter acquired by Borrower or any Guarantor.
Section 6.3. Perfection and Protection of Security Interests and
Liens. Borrower will from time to time deliver to Agent any financing
statements, continuation statements, extension agreements and other documents,
properly completed and executed (and acknowledged when required) by the Related
Persons in form and substance satisfactory to Agent, which Agent requests for
the purpose of perfecting, confirming, or protecting any Liens or other rights
in Collateral securing any Obligations.
Section 6.4. Bank Accounts; Offset. To secure the repayment of the
Obligations Borrower hereby grants to Agent and each Lender a security
interest, a lien, and a right of offset, each of which shall be in addition to
all other interests, liens, and rights of Agent or any Lender at common law,
under the Loan Documents, or otherwise, and each of which shall be upon and
against (a) any and all moneys, securities or other property (and the proceeds
therefrom) of Borrower now or hereafter held or received by or in transit to
Agent or any Lender from or for the account of Borrower, whether for
safekeeping, custody, pledge, transmission, collection or otherwise, (b) any
and all deposits (general or special, time or demand, provisional or final) of
Borrower with Agent or any Lender, and (c) any other credits and claims of
Borrower at any time existing against Agent or any Lender, including claims
under certificates of deposit. At any time and from time to time after the
occurrence of any Default, each of Agent and Lenders is hereby authorized to
foreclose upon, or to offset against the Obligations then due and payable (in
either case without notice to Borrower), any and all items hereinabove referred
to. The remedies of foreclosure and offset are separate and cumulative, and
either may be exercised independently of the other without regard to procedures
or restrictions applicable to the other.
Section 6.5. Guaranties of Borrower's Subsidiaries. Each Subsidiary
of Borrower now existing or created, acquired or coming into existence after
the date hereof shall, promptly upon request by Agent, execute and deliver to
Agent an absolute and unconditional guaranty of the timely repayment of the
Obligations and the due and punctual performance of the obligations of Borrower
hereunder, which guaranty shall be satisfactory to Agent in form and substance.
Borrower will cause each of its Subsidiaries to deliver to Agent,
simultaneously with its delivery of such a guaranty,
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written evidence satisfactory to Agent and its counsel that such Subsidiary has
taken all corporate or partnership action necessary to duly approve and
authorize its execution, delivery and performance of such guaranty and any
other documents which it is required to execute.
Section 6.6. Production Proceeds. Notwithstanding that, by the terms
of certain of the Security Documents, Borrower and certain of the Related
Persons are and will be assigning to Agent and Lenders all of the proceeds of
production from the oil and gas properties constituting Collateral (the
"Production Proceeds"), so long as no Event of Default has occurred Borrower
and such Related Persons may continue to receive from the purchasers of
production all such Production Proceeds, subject, however, to the Liens created
under the Security Documents, which Liens are hereby affirmed and ratified.
Upon the occurrence of a Default, Agent and the Lenders shall have the right to
obtain possession of all Production Proceeds then held by Borrower or such
Related Persons and to receive directly from the purchasers of production all
other Production Proceeds. Upon the occurrence of an Event of Default, Agent
and Lenders may exercise all other rights and remedies granted under the
Security Documents. In no case shall any failure, whether purposed or
inadvertent, by Agent or Lenders to collect directly any such Production
Proceeds constitute in any way a waiver, remission or release of any of their
rights under the Security Documents, nor shall any release of any Production
Proceeds by Agent or Lenders to Borrower or such Related Persons constitute a
waiver, remission, or release of any other Production Proceeds or of any rights
of Agent or Lenders to collect other Production Proceeds thereafter.
ARTICLE VII - Events of Default and Remedies
Section 7.1. Events of Default. Each of the following events
constitutes an Event of Default under this Agreement:
(a) Any Related Person fails to pay any Obligation when due
and payable, whether at a date for the payment of a fixed installment
or as a contingent or other payment becomes due and payable or as a
result of acceleration or otherwise; provided that with respect to any
failure to pay interest on any of the Obligations when due and
payable, such failure shall not constitute an Event of Default
hereunder if remedied within three (3) days after such interest first
becomes due and payable;
(b) Any "default" or "event of default" occurs under any Loan
Document which defines either such term, and the same is not remedied
within the applicable period of grace (if any) provided in such Loan
Document;
(c) Any Related Person fails (other than as referred to in
subsections (a) and (b) above) to duly observe, perform or comply with
any covenant, agreement, condition or provision of any Loan Document,
and such failure is not remedied within the applicable Grace Period;
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(d) Any representation or warranty previously, presently or
hereafter made in writing by or on behalf of any Related Person in any
Loan Document shall prove to have been false or incorrect in any
material respect on any date on or as of which made, or any Loan
Document at any time ceases to be valid, binding and enforceable as
warranted in Section 4.1(e) for any reason other than its release or
subordination by Agent;
(e) Any Related Person fails to duly observe, perform or
comply with any agreement with any Person or any term or condition of
any instrument (including the Subordinated Debt Documents), if such
agreement or instrument is materially significant to Borrower or to
Borrower and its subsidiaries on a Consolidated basis or materially
significant to Guarantor, and such failure is not remedied within the
applicable period of grace (if any) provided in such agreement or
instrument;
(f) Any Related Person (i) fails to pay any portion, when
such portion is due, of the Subordinated Debt, (ii) fails to pay any
portion, when such portion is due, of any of its other Debt in excess
of $500,000, or (iii) breaches or defaults in the performance of any
of the Subordinated Debt Documents or any other agreement or
instrument by which the Subordinated Debt or any such other Debt is
issued, evidenced, governed, or secured, and any such failure, breach
or default is not waived and continues beyond any applicable period of
grace provided therefor;
(g) Any of the principal indebtedness evidenced by the
Subordinated Debt Documents becomes due prior to its stated maturity
date (by acceleration or otherwise) or Borrower or any holder of the
Subordinated Debt exercises any right of repurchase or redemption with
respect thereto;
(h) Either (i) any "accumulated funding deficiency" (as
defined in Section 412(a) of the Internal Revenue Code of 1986, as
amended) in excess of $100,000 exists with respect to any ERISA Plan,
whether or not waived by the Secretary of the Treasury or his
delegate, or (ii) any Termination Event occurs with respect to any
ERISA Plan and the then current value of such ERISA Plan's benefit
liabilities exceeds the then current value of such ERISA Plan's assets
available for the payment of such benefit liabilities by more than
$100,000 (or in the case of a Termination Event involving the
withdrawal of a substantial employer, the withdrawing employer's
proportionate share of such excess exceeds such amount);
(i) Any Related Person:
(A) suffers the entry against it of a judgment,
decree or order for relief by a court of competent
jurisdiction in an involuntary proceeding commenced under any
applicable bankruptcy, insolvency or other similar law of any
jurisdiction now or hereafter in effect, including the federal
Bankruptcy Code, as from time to time amended, or has any such
proceeding commenced against it which remains undismissed for
a period of sixty days; or
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(B) commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in
effect, including the federal Bankruptcy Code, as from time to
time amended; or applies for or consents to the entry of an
order for relief in an involuntary case under any such law; or
makes a general assignment for the benefit of creditors; or
fails generally to pay (or admits in writing its inability to
pay) its debts as such debts become due; or takes corporate or
other action to authorize any of the foregoing; or
(C) suffers the appointment of or taking possession
by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of all or a substantial part
of its assets or of any part of the Collateral in a proceeding
brought against or initiated by it, and such appointment or
taking possession is neither made ineffective nor discharged
within sixty days after the making thereof, or such
appointment or taking possession is at any time consented to,
requested by, or acquiesced to by it; or
(D) suffers the entry against it of a final judgment
for the payment of money in excess of $1,000,000, unless the
same is discharged within thirty days after the date of entry
thereof or an appeal or appropriate proceeding for review
thereof is taken within such period and a stay of execution
pending such appeal is obtained; or
(E) suffers a writ or warrant of attachment or any
similar process to be issued by any court against all or any
substantial part of its assets or any part of the Collateral,
and such writ or warrant of attachment or any similar process
is not stayed or released within sixty days after the entry or
levy thereof or after any stay is vacated or set aside;
(j) For any reason a Change of Control shall occur; and
(k) Any material adverse change occurs in Borrower's
individual or Consolidated financial condition or businesses or
operations.
Upon the occurrence of an Event of Default described in subsection (i)(A),
(i)(B) or (i)(C) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Related Person who at any time
ratifies or approves this Agreement. During the continuance of any other Event
of Default, Agent at any time and from time to time may (and upon written
instructions from Majority Lenders, Agent shall), without notice to Borrower or
any other Related Person, declare any or all of the Obligations immediately due
and payable, and all such Obligations shall thereupon be immediately due and
payable, without demand, presentment, notice of demand or of dishonor and
nonpayment, protest, notice of protest, notice of intention to accelerate,
declaration or notice of acceleration, or any other notice or declaration of
any kind, all of which are hereby
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expressly waived by Borrower and each Related Person who at any time ratifies
or approves this Agreement. After any such acceleration (whether automatic or
due to any declaration by Agent), any obligation of any Lender to make any
further Advances shall be permanently terminated. The term "Grace Period", as
used herein with respect to a Default or an Event of Default for which a Grace
Period is expressly provided, means the period beginning on the date of the
related Default and ending thirty days after written notice of such Default is
given by Agent to Borrower, provided that (i) no Grace Period shall ever apply
to any Default under Sections 5.1(d)(ii) or 5.2 and (ii) no Grace Period shall
apply to any other Default if Borrower has not given notice of such Default to
Agent as required in Section 5.1(d)(ii) prior to Agent's giving notice thereof
to Borrower or Agent's exercising any of its rights or remedies in connection
therewith.
Section 7.2. Remedies. If any Default shall occur and be continuing,
each Lender may protect and enforce its rights under the Loan Documents by any
appropriate proceedings, including proceedings for specific performance of any
covenant or agreement contained in any Loan Document, and each Lender may
enforce the payment of any Obligations due it or enforce any other legal or
equitable right which it may have; provided, however, that without the prior
written consent of Required Lenders, no Lender shall have the right to enforce
any of its rights or remedies under the Security Documents or otherwise with
respect to any of the Collateral and, in the event any Lender obtains such
prior written consent, such Lender shall notify Agent and Agent shall, on
behalf of such Lender, seek to enforce such Lender's rights and remedies under
the Security Documents. All rights, remedies and powers conferred upon Agent
and Lenders under the Loan Documents shall be deemed cumulative and not
exclusive of any other rights, remedies or powers available under the Loan
Documents or at law or in equity.
SECTION 7.3. INDEMNITY. EACH RELATED PERSON AGREES TO INDEMNIFY
AGENT AND EACH LENDER, UPON DEMAND, FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS,
SUITS, SETTLEMENTS, COSTS, EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES
OF ATTORNEYS, ACCOUNTANTS, EXPERTS AND ADVISORS) OF ANY KIND OR NATURE
WHATSOEVER (IN THIS SECTION COLLECTIVELY CALLED "LIABILITIES AND COSTS") WHICH
TO ANY EXTENT (IN WHOLE OR IN PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST AGENT OR SUCH LENDER GROWING OUT OF, RESULTING FROM OR IN ANY OTHER WAY
ASSOCIATED WITH ANY OF THE COLLATERAL, THE LOAN DOCUMENTS AND THE TRANSACTIONS
AND EVENTS (INCLUDING THE ENFORCEMENT OR DEFENSE THEREOF) AT ANY TIME
ASSOCIATED THEREWITH OR CONTEMPLATED THEREIN (INCLUDING ANY VIOLATION OR
NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAWS BY ANY RELATED PERSON OR ANY ALLEGED
PERSONAL INJURY, PROPERTY DAMAGES, NATURAL RESOURCES DAMAGES AS USED IN
"CERCLA", REMEDIATION COSTS, ENVIRONMENTAL RESTORATION OR REMEDIATION OR ANY
OTHER FORM OF LEGAL OR EQUITABLE RELIEF WHATSOEVER SOUGHT AGAINST ANY RELATED
PERSON, AGENT OR ANY LENDER ARISING FROM OR IN ANY WAY CONNECTED WITH THE
ACTUAL OR ALLEGED RELEASE OR DISCHARGE OF OR EXPOSURE TO
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ANY SUBSTANCE OR MATERIAL ALLEGED TO BE TOXIC OR HAZARDOUS OR ANY OTHER
LIABILITIES OR DUTIES OF ANY RELATED PERSON, AGENT OR ANY LENDER WITH RESPECT
TO HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT). THE
FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS
ARE IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT
ACT OR OMISSION OF ANY KIND BY AGENT OR ANY LENDER, PROVIDED ONLY THAT NEITHER
AGENT NOR ANY LENDER SHALL BE ENTITLED UNDER THIS SECTION TO RECEIVE
INDEMNIFICATION FOR THAT PORTION, IF ANY, OF ANY LIABILITIES AND COSTS WHICH IS
PROXIMATELY CAUSED BY ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AS
DETERMINED IN A FINAL JUDGMENT. IF ANY PERSON (INCLUDING ANY RELATED PERSON OR
ANY OF THEIR AFFILIATES) EVER ALLEGES SUCH GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT BY AGENT OR ANY LENDER, THE INDEMNIFICATION PROVIDED FOR IN THIS
SECTION SHALL NONETHELESS BE PAID UPON DEMAND, SUBJECT TO LATER ADJUSTMENT OR
REIMBURSEMENT, UNTIL SUCH TIME AS A COURT OF COMPETENT JURISDICTION ENTERS A
FINAL JUDGMENT AS TO THE EXTENT AND EFFECT OF THE ALLEGED GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. AS USED IN THIS SECTION THE TERMS "AGENT" AND "LENDER"
SHALL REFER NOT ONLY TO THE PERSONS DESIGNATED AS SUCH IN SECTION 1.1 BUT ALSO
TO EACH DIRECTOR, OFFICER, AGENT, ATTORNEY, EMPLOYEE, REPRESENTATIVE AND
AFFILIATE OF SUCH PERSON.
ARTICLE VIII - Agent
Section 8.1. Appointment and Authority. Each Lender hereby
irrevocably authorizes Agent, and Agent hereby undertakes, to receive on behalf
of the Lenders payments of principal, interest and other amounts due hereunder
as specified herein and to take all other actions and to exercise on behalf of
the Lenders such powers under the Loan Documents as are specifically delegated
to Agent by the terms hereof or thereof, together with all other powers
reasonably incidental thereto. The relationship of Agent to Lenders is only
that of one commercial bank acting as administrative agent for others, and
nothing in the Loan Documents shall be construed to constitute Agent a trustee
or other fiduciary for any holder of any of the Notes or of any participation
therein nor to impose on Agent duties and obligations other than those
expressly provided for in the Loan Documents. With respect to any matters not
expressly provided for in the Loan Documents and any matters which the Loan
Documents place within the discretion of Agent, Agent shall not be required to
exercise any discretion or take any action, and it may request instructions
from Lenders with respect to any such matter, in which case it shall be
required to act or to refrain from acting (and shall be fully protected and
free from liability to all Lenders in so acting or refraining from acting) upon
the instructions of Majority Lenders (including itself), provided, however,
that Agent shall not be required to take any action which exposes it to a risk
of personal liability that it considers unreasonable or which is
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contrary to the Loan Documents or to applicable law. Upon receipt by Agent
from Borrower of any communication calling for action on the part of Lenders or
upon notice from any Lender to Agent of any Default or Event of Default, Agent
shall promptly notify each Lender thereof.
Section 8.2. Agent's Reliance, Etc. Neither Agent nor any of its
directors, officers, agents, attorneys, or employees shall be liable for any
action taken or omitted to be taken by any of them under or in connection with
the Loan Documents, including their negligence of any kind, except that each
shall be liable for its own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, Agent (a) may treat the payee of any
Note as the holder thereof until Agent receives written notice of the
assignment or transfer thereof in accordance with this Agreement, signed by
such payee and in form satisfactory to Agent; (b) may consult with legal
counsel (including counsel for 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; (c) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements,
warranties or representations made in or in connection with the Loan Documents;
(d) 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 the Loan Documents
on the part of any Related Person or to inspect the property (including the
books and records) of any Related Person; (e) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any instrument or document
furnished in connection therewith; (f) may rely upon the representations and
warranties of the Related Persons and the Lenders in exercising its powers
hereunder; and (g) shall incur no liability under or in respect of the Loan
Documents by acting upon any notice, consent, certificate or other instrument
or writing (including any telecopy, telegram, cable or telex) believed by it to
be genuine and signed or sent by the proper Person or Persons.
Section 8.3. Lenders' Credit Decisions. Each Lender acknowledges
that it has, independently and without reliance upon Agent or any other Lender,
made its own analysis of Borrower and the transactions contemplated hereby and
its own independent decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and
without reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents.
SECTION 8.4. INDEMNIFICATION. EACH LENDER AGREES TO INDEMNIFY AGENT
(TO THE EXTENT NOT REIMBURSED BY BORROWER WITHIN TEN (10) DAYS AFTER DEMAND)
FROM AND AGAINST SUCH LENDER'S PERCENTAGE SHARE OF ANY AND ALL LIABILITIES,
OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS,
SUITS, SETTLEMENTS, COSTS, EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES
OF ATTORNEYS, ACCOUNTANTS, EXPERTS AND ADVISORS) OF ANY KIND OR NATURE
WHATSOEVER (IN THIS SECTION COLLECTIVELY CALLED "LIABILITIES AND COSTS") WHICH
TO ANY EXTENT (IN WHOLE OR IN PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST AGENT GROWING
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OUT OF, RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED WITH ANY OF THE
COLLATERAL, THE LOAN DOCUMENTS AND THE TRANSACTIONS AND EVENTS (INCLUDING THE
ENFORCEMENT THEREOF) AT ANY TIME ASSOCIATED THEREWITH OR CONTEMPLATED THEREIN
(INCLUDING ANY VIOLATION OR NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAWS BY ANY
PERSON OR ANY ALLEGED PERSONAL INJURY, PROPERTY DAMAGES, NATURAL RESOURCES
DAMAGES AS USED IN "CERCLA", REMEDIATION COSTS, ENVIRONMENTAL RESTORATION OR
REMEDIATION OR ANY OTHER FORM OF LEGAL OR EQUITABLE RELIEF WHATSOEVER SOUGHT
AGAINST ANY PERSON ARISING FROM OR IN ANY WAY CONNECTED WITH THE ACTUAL OR
ALLEGED RELEASE OR DISCHARGE OF OR EXPOSURE TO ANY SUBSTANCE OR MATERIAL
ALLEGED TO BE TOXIC OR HAZARDOUS OR ANY OTHER LIABILITIES OR DUTIES OF ANY
PERSON WITH RESPECT TO HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE
ENVIRONMENT). THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH
LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN
PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT, PROVIDED ONLY THAT
NO LENDER SHALL BE OBLIGATED UNDER THIS SECTION TO INDEMNIFY AGENT FOR THAT
PORTION, IF ANY, OF ANY LIABILITIES AND COSTS WHICH IS PROXIMATELY CAUSED BY
AGENT'S OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AS DETERMINED IN
A FINAL JUDGMENT. CUMULATIVE OF THE FOREGOING, EACH LENDER AGREES TO REIMBURSE
AGENT PROMPTLY UPON DEMAND FOR SUCH LENDER'S PERCENTAGE SHARE OF ANY COSTS AND
EXPENSES TO BE PAID TO AGENT BY BORROWER UNDER SECTION 5.1(I) TO THE EXTENT
THAT AGENT IS NOT TIMELY REIMBURSED FOR SUCH EXPENSES BY BORROWER AS PROVIDED
IN SUCH SECTION. AS USED IN THIS SECTION THE TERM "AGENT" SHALL REFER NOT ONLY
TO THE PERSON DESIGNATED AS SUCH IN SECTION 1.1 BUT ALSO TO EACH DIRECTOR,
OFFICER, AGENT, ATTORNEY, EMPLOYEE, REPRESENTATIVE AND AFFILIATE OF SUCH
PERSON.
Section 8.5. Rights as Lender. In its capacity as a Lender, Agent
shall have the same rights and obligations as any Lender and may exercise such
rights as though it were not Agent. Agent may accept deposits from, lend money
to, act as Trustee under indentures of, and generally engage in any kind of
business with any of the Related Persons or their Affiliates, all as if it were
not Agent hereunder and without any duty to account therefor to any other
Lender.
Section 8.6. Sharing of Set-Offs and Other Payments. Each of Agent
and Lender agrees that if it shall, whether through the exercise of rights
under Security Documents or rights of banker's lien, set off, or counterclaim
against Borrower or otherwise, obtain payment of a portion of the aggregate
Obligations owed to it which, taking into account all distributions made by
Agent under Section 2.10, causes Agent or such Lender to have received more
than it would have received had such payment been received by Agent and
distributed pursuant to Section 2.10, then (a) it shall be deemed to have
simultaneously purchased and shall be obligated to purchase interests in the
Obligations as necessary to cause Agent and all Lenders to share all payments
as provided for in Section 2.10, and
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(b) such other adjustments shall be made from time to time as shall be
equitable to ensure that Agent and all Lenders share all payments of
Obligations as provided in Section 2.10; provided, however, that nothing herein
contained shall in any way affect the right of Agent or any Lender to obtain
payment (whether by exercise of rights of banker's lien, set-off or
counterclaim or otherwise) of indebtedness other than the Obligations.
Borrower expressly consents to the foregoing arrangements and agrees that any
holder of any such interest or other participation in the Obligations, whether
or not acquired pursuant to the foregoing arrangements, may to the fullest
extent permitted by law exercise any and all rights of banker's lien, set-off,
or counterclaim as fully as if such holder were a holder of the Obligations in
the amount of such interest or other participation. If all or any part of any
funds transferred pursuant to this section is thereafter recovered from the
seller under this section which received the same, the purchase provided for in
this section shall be deemed to have been rescinded to the extent of such
recovery, together with interest, if any, if interest is required pursuant to
court order to be paid on account of the possession of such funds prior to such
recovery.
Section 8.7. Investments. Whenever Agent in good faith determines
that it is uncertain about how to distribute to Lenders any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lenders about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Agent is otherwise required to invest funds
pending distribution to Lenders, Agent shall invest such funds pending
distribution; all interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to the same
Persons as such investment. All moneys received by Agent for distribution to
Lenders (other than to the Person who is Agent in its separate capacity as a
Lender) shall be held by Agent pending such distribution solely as Agent for
such Lenders, and Agent shall have no equitable title to any portion thereof.
Section 8.8. Benefit of Article VIII. The provisions of this Article
(other than the following Section 8.9) are intended solely for the benefit of
Agent and Lenders, and no Related Person shall be entitled to rely on any such
provision or assert any such provision in a claim or defense against Agent or
any Lender. Agent and Lenders may waive or amend such provisions as they
desire without any prior notice to or consent of Borrower or any Related
Person.
Section 8.9. Resignation. Agent may resign at any time by giving ten
(10) days' prior written notice thereof to Lenders and Borrower. Each such
notice shall set forth the date of such resignation. Upon any such resignation
Required Lenders shall have the right to appoint a successor Agent. Except as
provided in the following sentence, a successor must be appointed for any
retiring Agent, and such Agent's resignation shall only become effective when
such successor accepts such appointment. If, within thirty days after the date
of the retiring Agent's resignation, no successor Agent has been appointed and
has accepted such appointment, then the retiring Agent may appoint a successor
Agent, which shall be a domestic or foreign commercial bank organized or
licensed to conduct a banking or trust business under the laws of the United
States of America or of any state thereof. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, the retiring Agent shall
be discharged from its duties and obligations under this Agreement and the
other Loan Documents. After any retiring Agent's resignation hereunder the
provisions of this Article VIII
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shall continue to inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under the Loan Documents.
ARTICLE IX - Miscellaneous
Section 9.1. Waivers and Amendments. No failure or delay (whether by
course of conduct or otherwise) by Agent or any Lender in exercising any right,
power or remedy which Agent or such Lender may have under any of the Loan
Documents shall operate as a waiver thereof or of any other right, power or
remedy, nor shall any single or partial exercise by Agent or such Lender of any
such right, power or remedy preclude any other or further exercise thereof or
of any other right, power or remedy. No waiver of any provision of any Loan
Document and no consent to any departure therefrom shall ever be effective
unless it is in writing and signed as provided below in this section, and then
such waiver or consent shall be effective only in the specific instances and
for the purposes for which given and to the extent specified in such writing.
No notice to or demand on any Related Person shall in any case of itself
entitle any Related Person to any other or further notice or demand in similar
or other circumstances. This Agreement and the other Loan Documents set forth
the entire understanding between the parties hereto with respect to the
transactions contemplated herein and therein and supersede all prior
discussions and understandings with respect to the subject matter hereof and
thereof, and no waiver, consent, release, modification or amendment of or
supplement to this Agreement or the other Loan Documents shall be valid or
effective against any party hereto unless the same is in writing and signed by
(i) if such party is Borrower, by Borrower, (ii) if such party is Agent, by
Agent and (iii) if such party is a Lender, by such Lender, or if all Lenders,
by Agent on behalf of Lenders with the written consent of Majority Lenders.
Notwithstanding the foregoing or anything to the contrary herein, Agent shall
not, without the prior consent of each individual Lender, release, subordinate
or impair any Collateral or any Lien securing the Obligations or execute and
deliver on behalf of such Lender any waiver or amendment which would: (1)
waive any of the conditions specified in Article III (provided that Agent may
in its discretion withdraw any request it has made under Section 3.2(f)), (2)
increase the Percentage Share of such Lender or subject such Lender to any
additional obligations, (3) reduce any fees hereunder, or the principal of, or
interest on, such Lender's Note, (4) postpone any date fixed for any payment of
any fees hereunder, or principal of, or interest on, such Lender's Note, (5)
amend the definition herein of "Majority Lenders" or "Required Lenders" or
otherwise change the aggregate amount of Percentage Shares which is required
for Agent, Lenders or any of them to take any particular action under the Loan
Documents, or (6) release Borrower from its obligation to pay such Lender's
Note or Guarantor from its guaranty of such payment.
SECTION 9.2. GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE
EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN
DOCUMENT, THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE LAWS
OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF
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CONFLICTS OF LAW. BORROWER HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING
AGAINST BORROWER WITH RESPECT TO THIS AGREEMENT, THE NOTE OR ANY OF THE LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS AGENT AND
LENDERS MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, BORROWER ACCEPTS AND
CONSENTS FOR ITSELF AND IN RESPECT TO ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS AND AGREES THAT SUCH
JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY AGENT AND LENDERS IN WRITING,
WITH RESPECT TO ANY ACTION OR PROCEEDING BROUGHT BY IT AGAINST AGENT AND
LENDERS AND ANY QUESTIONS RELATING TO USURY. BORROWER AGREES THAT SECTIONS
5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL
APPLY TO THE LOAN DOCUMENTS AND WAIVES ANY RIGHT TO STAY OR TO DISMISS ANY
ACTION OR PROCEEDING BROUGHT BEFORE SAID COURTS ON THE BASIS OF FORUM NON
CONVENIENS. IN FURTHERANCE OF THE FOREGOING, BORROWER HEREBY IRREVOCABLY
DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, AS AGENT OF BORROWER TO RECEIVE SERVICE OF ALL PROCESS BROUGHT AGAINST
BORROWER WITH RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT IN NEW YORK,
SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT. COPIES OF ANY SUCH PROCESS SO SERVED SHALL ALSO, IF
PERMITTED BY LAW, BE SENT BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS SET
FORTH BELOW, BUT THE FAILURE OF BORROWER TO RECEIVE SUCH COPIES SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS AS AFORESAID. BORROWER SHALL
FURNISH TO AGENT AND LENDERS A CONSENT OF CT CORPORATION SYSTEM AGREEING TO ACT
HEREUNDER PRIOR TO THE DATE OF THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF AGENT AND LENDERS TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT OF AGENT AND LENDERS TO BRING PROCEEDINGS AGAINST
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. IF FOR ANY REASON CT
CORPORATION SYSTEM SHALL RESIGN OR OTHERWISE CEASE TO ACT AS AGENT, BORROWER
HEREBY IRREVOCABLY AGREES TO (A) IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT
ACCEPTABLE TO AGENT AND LENDERS TO SERVE IN SUCH CAPACITY AND, IN SUCH EVENT,
SUCH NEW AGENT SHALL BE DEEMED TO BE SUBSTITUTED FOR CT CORPORATION SYSTEM FOR
ALL PURPOSES HEREOF AND (B) PROMPTLY DELIVER TO AGENT AND LENDERS THE WRITTEN
CONSENT (IN FORM AND SUBSTANCE SATISFACTORY TO AGENT AND LENDERS) OF SUCH NEW
AGENT AGREEING TO SERVE IN SUCH CAPACITY.
Section 9.3. Limitation on Interest. Agent, Lenders, the Related
Persons and the other parties to the Loan Documents intend to contract in
strict compliance with applicable usury law from
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time to time in effect. In furtherance thereof such persons stipulate and
agree that none of the terms and provisions contained in the Loan Documents
shall ever be construed to provide for interest in excess of the maximum amount
of interest permitted to be charged by applicable law from time to time in
effect. Neither any Related Person nor any present or future guarantors,
endorsers, or other Persons hereafter becoming liable for payment of any
Obligation shall ever be liable for unearned interest thereon or shall ever be
required to pay interest thereon in excess of the maximum amount that may be
lawfully charged under applicable law from time to time in effect, and the
provisions of this section shall control over all other provisions of the Loan
Documents which may be in conflict or apparent conflict herewith. Agent and
Lenders expressly disavow any intention to charge or collect excessive unearned
interest or finance charges in the event the maturity of any Obligation is
accelerated. If (a) the maturity of any Obligation is accelerated for any
reason, (b) any Obligation is prepaid and as a result any amounts held to
constitute interest are determined to be in excess of the legal maximum, or (c)
Agent or any Lender or any other holder of any or all of the Obligations shall
otherwise collect moneys which are determined to constitute interest which
would otherwise increase the interest on any or all of the Obligations to an
amount in excess of that permitted to be charged by applicable law then in
effect, then all such sums determined to constitute interest in excess of such
legal limit shall, without penalty, be promptly applied to reduce the then
outstanding principal of the related Obligations or, at Agent's or such
Lender's or holder's option, promptly returned to Borrower or the other payor
thereof upon such determination. In determining whether or not the interest
paid or payable, under any specific circumstance, exceeds the maximum amount
permitted under applicable law, Agent, Lenders and the Related Persons (and any
other payors thereof) shall to the greatest extent permitted under applicable
law, (i) characterize any non-principal payment as an expense, fee or premium
rather than as interest, (ii) exclude voluntary prepayments and the effects
thereof, and (iii) amortize, prorate, allocate, and spread the total amount of
interest throughout the entire contemplated term of the instruments evidencing
the Obligations in accordance with the amounts outstanding from time to time
thereunder and the maximum legal rate of interest from time to time in effect
under applicable law in order to lawfully charge the maximum amount of interest
permitted under applicable law. As used in this section the term "applicable
law" means the laws of the State of New York or the laws of the United States
of America, whichever laws allow the greater interest, as such laws now exist
or may be changed or amended or come into effect in the future.
Section 9.4. Termination; Limited Survival. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
written notice delivered to Agent to terminate this Agreement. Upon receipt by
Agent of such a notice, if no Obligations are then owing this Agreement and all
other Loan Documents shall thereupon be terminated and the parties thereto
released from all prospective obligations thereunder. Notwithstanding the
foregoing or anything herein to the contrary, any waivers or admissions made by
any Related Person in any Loan Document, any Obligations under Sections 2.14
through 2.18, and any obligations which any Person may have to indemnify or pay
accrued compensation to Agent or any Lender shall survive any termination of
this Agreement or any other Loan Document. At the request and expense of
Borrower, Agent shall prepare and execute all necessary instruments to reflect
and effect such termination of the Loan Documents. Agent is hereby authorized
to execute all such instruments on behalf of all Lenders, without the joinder
of or further action by any Lender.
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Section 9.5. Notices. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Agent may give telephonic notices to Lenders), and shall be deemed
sufficiently given or furnished if delivered by personal delivery, by telecopy
or telex, by delivery service with proof of delivery, or by registered or
certified United States mail, postage prepaid, to Borrower and the Related
Persons at the address of Borrower specified on the signature pages hereto, and
to Agent and the other Lenders at their addresses specified on the signature
pages hereto (unless changed by similar notice in writing given by the
particular Person whose address is to be changed). Any such notice or
communication shall be deemed to have been given (a) in the case of personal
delivery or delivery service, as of the date of first attempted delivery at the
address provided herein, (b) in the case of telecopy or telex, upon receipt, or
(c) in the case of registered or certified United States mail, three days after
deposit in the mail; provided, however, that no Request for Advance or Rate
Election shall become effective until actually received by Agent.
Section 9.6. Severability. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable law.
Section 9.7. Counterparts. This Agreement may be separately executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
SECTION 9.8. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. TO THE
EXTENT PERMITTED BY LAW, AGENT, LENDERS AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF SUCH PERSONS OR BORROWER. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR AGENT'S AND LENDERS' ENTERING INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS. EACH OF BORROWER, AGENT AND LENDERS HEREBY FURTHER
(A) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL
FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT
SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS, AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY
AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
CONTAINED IN THIS SECTION.
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Section 9.9. Restatement. This Agreement restates and amends the
Existing Agreement in its entirety, effective as of the date hereof, and all of
the terms and provisions hereof shall supersede the terms and provisions
thereof. It is the intention of the parties hereto that the Debt evidenced by
the Existing Agreement and the Existing Notes, together with all liens and
security interests granted by Borrower in favor of the Existing Lenders in
connection therewith, is to be carried forward pursuant to the terms contained
herein and in the other Loan Documents. The Notes are being executed and given
in partial renewal and restatement of (but not in extinguishment or novation
of) the Existing Notes.
IN WITNESS WHEREOF, this Agreement is executed as of the date first written
above.
[INTENTIONALLY LEFT BLANK]
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Borrower
FORCENERGY INC (FORMERLY KNOWN AS FORCENERGY
GAS EXPLORATION, INC.)
By:
-------------------------------------------
Name:
Title:
Address:
▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
[INTENTIONALLY LEFT BLANK]
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ING (U.S.) CAPITAL CORPORATION (FORMERLY KNOWN
AS INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL
CORPORATION), AGENT AND LENDER
Share of
Percentage Maximum
Share Loan Amount
----------- -----------
By:
---------------------------------------------------------------------------
22.500% $45,000,000 Name:
Title:
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇. ▇▇▇▇ Grant
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telex: TRT 177792
[INTENTIONALLY LEFT BLANK]
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MEESPIERSON N.V., LENDER
Share of
Percentage Maximum
Share Loan Amount
----------- -----------
By:
---------------------------------------------------------------------------
15.000% $30,000,000 ▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
For funding or operational instructions:
Address:
▇▇▇▇▇▇▇▇▇▇ ▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇ ▇▇ ▇▇▇▇
Telephone: ▇▇-▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇-▇▇-▇▇▇-▇▇▇▇
Telex: 21231
with a copy of:
MeesPierson N.V.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
For notices and other communications:
Address:
Coolsingel 93
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ van der Klaauw
Telephone: ▇▇-▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇-▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇
MeesPierson N.V.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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BANK OF SCOTLAND, LENDER
Share of
Percentage Maximum
Share Loan Amount
----------- -----------
By:
---------------------------------------------------------------------------
15.000% $30,000,000 Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telex: 6801012 ubiforn
[INTENTIONALLY LEFT BLANK]
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DEN NORSKE BANK ASA, LENDER
Share of
Percentage Maximum
Share Loan Amount
----------- -----------
By:
---------------------------------------------------------------------------
17.500% $35,000,000 Name:
Title:
By:
---------------------------------------------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Customer Service Dept.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telex: WU426357
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Den Norske Bank AS
Representative Office
Three ▇▇▇▇▇ Center
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
[INTENTIONALLY LEFT BLANK]
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CREDIT LYONNAIS NEW YORK BRANCH,
Lender
Share of
Percentage Maximum
Share Loan Amount
----------- -----------
By:
-------------------------------
17.500% $35,000,000 Name:
Title:
Address for Notices:
c/o Credit Lyonnais Representative
▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
[INTENTIONALLY LEFT BLANK]
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CAISSE NATIONALE DE CREDIT
AGRICOLE, Lender
Share of
Percentage Maximum
Share Loan Amount
----------- -----------
By:
-------------------------------------------------------------------
12.500% $25,000,000 Name:
Title:
Address: ▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Caisse Nationale de Credit Agricole
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
[INTENTIONALLY LEFT BLANK]
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