EXHIBIT 10.2
ACQUISITION CREDIT AGREEMENT
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▇▇▇▇▇▇▇▇ ENERGY, INC.,
AS THE BORROWER,
THE BANKS NAMED HEREIN,
AND
BANKERS TRUST COMPANY,
AS AGENT
AND
UNION BANK OF CALIFORNIA, N.A.,
AS CO-AGENT
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DATED AS OF AUGUST 28, 1997
ACQUISITION FACILITY
TABLE OF CONTENTS
PRELIMINARY STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I DEFINITIONS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Certain Defined Terms. . . . . . . . . . . . . . . . . . . 1
Section 1.02. Accounting Terms . . . . . . . . . . . . . . . . . . . . . 1
Section 1.03. Computation of Time Periods. . . . . . . . . . . . . . . . 1
Section 1.04. References, Etc. . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II COMMITMENTS AND TERMS OF CREDIT. . . . . . . . . . . . . . . . . . 2
Section 2.01. Commitments. . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.02. Borrowing Procedures; Conversions. . . . . . . . . . . . . 2
Section 2.03. Borrowing Base . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.04. The Notes. . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.05. Mandatory Repayment of Loans . . . . . . . . . . . . . . . 5
Section 2.06. Interest Accrual, Payments . . . . . . . . . . . . . . . . 6
Section 2.07. Optional Prepayments . . . . . . . . . . . . . . . . . . . 7
Section 2.08. Payments, Notice of Certain Repayments and Computations. . 7
Section 2.09. Setoff, Counterclaims and Taxes. . . . . . . . . . . . . . 8
Section 2.10. Funding Losses . . . . . . . . . . . . . . . . . . . . . .10
Section 2.11. Change of Law. . . . . . . . . . . . . . . . . . . . . . .11
Section 2.12. Increased Costs. . . . . . . . . . . . . . . . . . . . . .12
ARTICLE III CONDITIONS OF CREDIT. . . . . . . . . . . . . . . . . . . . . .13
Section 3.01. Conditions Precedent to Loans. . . . . . . . . . . . . . .13
ARTICLE IV REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . .15
Section 4.01. Corporate Existence. . . . . . . . . . . . . . . . . . . .15
Section 4.02. Corporate Authority; Binding Obligations . . . . . . . . .16
Section 4.03. No Conflict. . . . . . . . . . . . . . . . . . . . . . . .16
Section 4.04. No Consent . . . . . . . . . . . . . . . . . . . . . . . .16
Section 4.05. No Defaults or Violations of Law . . . . . . . . . . . . .16
Section 4.06. Financial Position . . . . . . . . . . . . . . . . . . . .17
Section 4.07. Litigation . . . . . . . . . . . . . . . . . . . . . . . .17
Section 4.08. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . .17
Section 4.09. Governmental Regulation. . . . . . . . . . . . . . . . . .17
Section 4.10. Disclosure . . . . . . . . . . . . . . . . . . . . . . . .18
Section 4.11. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . .18
Section 4.12. Payment of Taxes . . . . . . . . . . . . . . . . . . . . .19
Section 4.13. Title and Liens. . . . . . . . . . . . . . . . . . . . . .19
Section 4.14. Gas Imbalances . . . . . . . . . . . . . . . . . . . . . .19
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Section 4.15. Environmental Matters. . . . . . . . . . . . . . . . . . .20
Section 4.16. Consummation of Acquisition. . . . . . . . . . . . . . . .20
ARTICLE V AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . .20
Section 5.01. Reporting Requirements . . . . . . . . . . . . . . . . . .21
Section 5.02. Taxes; Claims. . . . . . . . . . . . . . . . . . . . . . .23
Section 5.03. Compliance with Laws . . . . . . . . . . . . . . . . . . .23
Section 5.04. Insurance. . . . . . . . . . . . . . . . . . . . . . . . .23
Section 5.05. Corporate Existence. . . . . . . . . . . . . . . . . . . .24
Section 5.06. Inspections. . . . . . . . . . . . . . . . . . . . . . . .24
Section 5.07. Maintenance of Properties. . . . . . . . . . . . . . . . .24
Section 5.08. Accounting Systems . . . . . . . . . . . . . . . . . . . .25
Section 5.09. Use of Loans . . . . . . . . . . . . . . . . . . . . . . .25
Section 5.10. Reserve Reports. . . . . . . . . . . . . . . . . . . . . .25
Section 5.11. Title. . . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 5.12. Further Assurances in General. . . . . . . . . . . . . . .26
Section 5.13. Enforcement of Acquisition Documents . . . . . . . . . . .27
Section 5.14. Derivative Transactions. . . . . . . . . . . . . . . . . .27
ARTICLE VI NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .27
Section 6.01. Indebtedness Restriction . . . . . . . . . . . . . . . . .27
Section 6.02. Lien Restriction . . . . . . . . . . . . . . . . . . . . .28
Section 6.03. [Intentionally Omitted]. . . . . . . . . . . . . . . . . .29
Section 6.04. Interest Coverage Ratio. . . . . . . . . . . . . . . . . .29
Section 6.05. Current Ratio. . . . . . . . . . . . . . . . . . . . . . .30
Section 6.06. Tangible Net Worth . . . . . . . . . . . . . . . . . . . .30
Section 6.07. Sales of Properties. . . . . . . . . . . . . . . . . . . .30
Section 6.08. Consolidation and Mergers. . . . . . . . . . . . . . . . .30
Section 6.09. Restricted Disbursements . . . . . . . . . . . . . . . . .30
Section 6.10. Lines of Business. . . . . . . . . . . . . . . . . . . . .31
Section 6.11. Transactions with Affiliates . . . . . . . . . . . . . . .31
ARTICLE VII DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . .31
Section 7.01. Events of Default. . . . . . . . . . . . . . . . . . . . .31
Section 7.02. Setoff in Event of Default . . . . . . . . . . . . . . . .34
Section 7.03. No Waiver; Remedies. . . . . . . . . . . . . . . . . . . .34
Section 7.04. Hydrocarbon Proceeds . . . . . . . . . . . . . . . . . . .34
Section 7.05. Application of Proceeds After Acceleration . . . . . . . .35
ARTICLE VIII THE AGENT AND THE CO-AGENT . . . . . . . . . . . . . . . . . . .36
Section 8.01. Authorization and Action . . . . . . . . . . . . . . . . .36
Section 8.02. Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . .36
Section 8.03. BTCo and Affiliates. . . . . . . . . . . . . . . . . . . .37
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Section 8.04. Bank Credit Decision . . . . . . . . . . . . . . . . . . .38
Section 8.05. Indemnification. . . . . . . . . . . . . . . . . . . . . .38
Section 8.06. Employees of the Agent . . . . . . . . . . . . . . . . . .39
Section 8.07. Successor Agent. . . . . . . . . . . . . . . . . . . . . .39
Section 8.08. Successor Co-Agent . . . . . . . . . . . . . . . . . . . .39
Section 8.09. Notice of Default. . . . . . . . . . . . . . . . . . . . .40
Section 8.10. Execution of Loan Documents. . . . . . . . . . . . . . . .40
ARTICLE IX MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . .40
Section 9.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . .40
Section 9.02. Participation Agreements and Assignments . . . . . . . . .41
Section 9.03. Notices. . . . . . . . . . . . . . . . . . . . . . . . . .44
Section 9.04. Costs and Expenses . . . . . . . . . . . . . . . . . . . .44
Section 9.05. Successors and Assigns . . . . . . . . . . . . . . . . . .45
Section 9.06. Independence of Covenants. . . . . . . . . . . . . . . . .45
Section 9.07. Survival of Representations and Warranties . . . . . . . .45
Section 9.08. Separability . . . . . . . . . . . . . . . . . . . . . . .45
Section 9.09. Captions . . . . . . . . . . . . . . . . . . . . . . . . .46
Section 9.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . .46
Section 9.11. Governing Law. . . . . . . . . . . . . . . . . . . . . . .46
Section 9.12. Submission to Jurisdiction . . . . . . . . . . . . . . . .46
Section 9.13. Limitation on Interest . . . . . . . . . . . . . . . . . .47
Section 9.14. Indemnification. . . . . . . . . . . . . . . . . . . . . .47
Section 9.15. Confidentiality. . . . . . . . . . . . . . . . . . . . . .48
Section 9.16. Final Agreement of the Parties . . . . . . . . . . . . . .49
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EXHIBITS AND SCHEDULES
Exhibit 2.02(a) Form of Borrowing Request
Exhibit 2.02(c) Form of Conversion Notice
Exhibit 2.04 Form of Term Note
Exhibit 9.02 Form of Assignment and Acceptance Agreement
Schedule 4.01 List of Borrower's Subsidiaries
Schedule 4.04 Consents
Schedule 4.07 Litigation
Schedule 4.13 Titles and Liens
Schedule 4.14 Gas Imbalances
Schedule 6.01 Indebtedness
Schedule 6.09 Restricted Disbursements
Schedule 6.11 Affiliate Transactions
ACQUISITION FACILITY
ACQUISITION CREDIT AGREEMENT
THIS ACQUISITION CREDIT AGREEMENT dated as of August 28, 1997 is among
▇▇▇▇▇▇▇▇ ENERGY, INC., a Delaware corporation (the "BORROWER"), the banks named
on the signature pages hereto (together with their respective successors and
assigns in such capacity, the "BANKS"), and BANKERS TRUST COMPANY, as agent for
the Banks (together with its successors and assigns in such capacity, the
"AGENT"), and UNION BANK OF CALIFORNIA, N.A., as co-agent for the Banks
(together with its successors and assigns in such capacity, the "CO-AGENT").
Unless otherwise defined herein, all capitalized terms used herein and defined
in ARTICLE I are used herein as so defined.
PRELIMINARY STATEMENT
The Borrower has requested that the Banks provide the Borrower with a
$30,000,000 term loan facility which will be used as specified herein. The
Banks have agreed to provide the Borrower with such facility upon the terms and
conditions set forth in this Agreement.
Accordingly, in consideration of the foregoing and the mutual
covenants set forth herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS, ETC.
Section 1.01. CERTAIN DEFINED TERMS. Capitalized terms used in this
Agreement and not otherwise defined herein, shall have the respective meanings
set forth in ANNEX A hereto (such meanings to be equally applicable to both
singular and plural forms of the terms defined).
Section 1.02. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the consolidated financial statements referred to in SECTION 4.06.
Section 1.03. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding."
Section 1.04. REFERENCES, ETC. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All references herein to Sections, Annexes, Exhibits and Schedules
shall, unless the context requires a different construction, be deemed to be
references to the Sections of this Agreement and the Annexes, Exhibits and
Schedules attached
ACQUISITION FACILITY
hereto and made a part hereof. In this Agreement, unless a clear contrary
intention appears the word "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term. No provision of this Agreement shall be
interpreted or construed against any Person solely because that Person or its
legal representative drafted such provision.
ARTICLE II
COMMITMENTS AND TERMS OF CREDIT
Section 2.01. COMMITMENTS. (a) Each Bank severally agrees, on the
terms and conditions hereinafter set forth, to make a term loan to the Borrower
(the "LOANS") on the Effective Date in an aggregate amount equal to such Bank's
Commitment. The Loans shall be made as a single Borrowing comprised of Loans
made ratably by the Banks. Each Base Rate Borrowing shall be in an aggregate
amount not less than $2,000,000. Each Eurodollar Rate Borrowing shall be in an
aggregate amount not less than $2,000,000 or an integral multiple of $1,000,000
in excess thereof. Loans, once repaid, may not be reborrowed.
(b) Subject to SECTION 5.14, Loans of more than one Type may be
outstanding at the same time, but the Borrower shall not be entitled to request
any Borrowing or to Convert Loans comprising any Borrowing into Loans of another
Type, if after giving effect to such Borrowing or Conversion, as the case may
be, any Bank would have outstanding (i) at any one time more than four (4)
different Types of Loans. Loans having different Interest Periods, regardless
of whether they commence on the same date or have the same type of interest
rate, shall be considered different Types of Loans; provided, however, that all
Base Rate Loans are the same type of Loan so long as they remain Base Rate
Loans.
Section 2.02. BORROWING PROCEDURES; CONVERSIONS. (a) The Borrowing to
be funded on the Effective Date shall be made upon the written, telecopied or
facsimile transmitted request of the Borrower, given to the Agent not later than
11:00 a.m. (New York time) on (i) the third Business Day prior to the Effective
Date in the case of a Eurodollar Rate Borrowing, or (ii) the Business Day prior
to the Effective Date in the case of a Base Rate Borrowing, and the Agent shall
give each other member of the Bank Group prompt notice of such request by
telecopier, telex or cable. The request for such Borrowing (a "BORROWING
REQUEST") made by the Borrower shall be in substantially the form of
EXHIBIT 2.02(a), specifying therein (A) the Type of Loans comprising such
Borrowing, and (B) in the case of a Eurodollar Rate Borrowing, the Interest
Period for the Loans comprising such Borrowing. Each Bank shall, before 12:00
Noon (New York time) on the date of such Borrowing, make available for the
account of its Applicable Lending Office to the Agent at its address referred to
in SECTION 9.03, in same day funds, such Bank's ratable portion of such
Borrowing. After the Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in ARTICLE III, the Agent will make such funds
available to the Borrower at the Agent's aforesaid address. Each Borrowing
Request shall be irrevocable and binding on the Borrower.
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(b) Unless the Agent shall have received notice from a Bank prior to
the Effective Date that such Bank will not make available to the Agent such
Bank's ratable portion of the Borrowing to be made on such date, the Agent may
assume that such Bank has made such portion available to the Agent on the date
of such Borrowing in accordance with subsection (a) of this SECTION 2.02 and the
Agent may, in reliance upon such assumption, make available to the Borrower on
such date a corresponding amount. If and to the extent that such Bank shall not
have so made such ratable portion available to the Agent, such Bank and the
Borrower severally agree to repay to the Agent forthwith on demand such
corresponding amount, together with interest thereon for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Bank, the Federal Funds Rate. If such Bank shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Bank's Loan as part of such Borrowing for purposes of this Agreement, and
Borrower shall be relieved of Borrower's obligation to repay such amount under
this SECTION 2.02(b). The failure of any Bank to make the Loan to be made by it
as part of any Borrowing shall not relieve any other Bank of its obligation, if
any, hereunder to make its Loan on the date of such Borrowing or any subsequent
Borrowing Date, but no Bank shall be responsible for the failure of any other
Bank to make the Loan to be made by such other Bank on the date of any
Borrowing.
(c) The Borrower may, subject to the terms of this Agreement, on any
Business Day, upon written, telecopied or facsimile transmitted notice to the
Agent, given not later than 11:00 a.m. (New York time) on (i) the third Business
Day prior to the proposed Conversion Date in the case of a Conversion of Loans
into Eurodollar Rate Loans, or (ii) the Business Day immediately preceding the
proposed Conversion Date in the case of a Conversion of Loans into Base Rate
Loans, Convert Loans into Borrowings comprised of Loans of another Type, and the
Agent shall promptly transmit the contents of such notice to each other member
of the Bank Group by telecopier, telex or cable. Notwithstanding any other term
or provision hereof, after giving effect to any such Conversion, the size of all
Borrowings outstanding hereunder, and the number of different Types of Loans
outstanding hereunder, shall conform to the requirements of SECTION 2.01 and
SECTION 5.14. In the event of any Conversion of Eurodollar Rate Loans on any
day other than the last day of the Interest Period applicable thereto, the
Borrower shall be obligated to reimburse the Banks in respect thereof pursuant
to SECTION 2.10. Each notice of a Conversion (a "CONVERSION NOTICE") given by
the Borrower shall be in substantially the form of EXHIBIT 2.02(c) hereto,
specifying therein (A) the Conversion Date for such Conversion, (B) the Type of
Loans to which such Loans are to be Converted and (C) in the case of a
Conversion into Eurodollar Rate Loans, the Interest Period for such Converted
Loans. If the Borrower shall fail to give a timely Conversion Notice conforming
to the requirements of this Agreement with respect to any Eurodollar Rate Loans
prior to the expiration of the Interest Period applicable thereto, such
Eurodollar Rate Loans shall, automatically on the last day of such Interest
Period, be Converted into Base Rate Loans.
Section 2.03. BORROWING BASE. (a) During the period from and after
the Effective Date until the Borrowing Base is redetermined in accordance with
this Section, the amount of the Borrowing Base shall be $30,000,000. The
Borrowing Base shall be determined in accordance with
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SECTION 2.03(b) by the Agent and approved by the Majority Banks. The Borrowing
Base is subject to redetermination in accordance with SECTION 2.03(d). Upon
any redetermination of the Borrowing Base, such redetermination shall remain
in effect until the next successive date that the redetermined Borrowing Base
becomes effective subject to the notice requirements specified in SECTION
2.03(e) for both the scheduled redetermination and unscheduled redeterminations.
Until all of the Loans outstanding hereunder are paid in full, this Agreement
shall be governed by the then effective Borrowing Base.
(b) The Agent will within thirty (30) days after receipt of the most
recent Reserve Report covering the Acquisition Properties delivered to the Banks
under SECTION 5.10, and such other data and supplemental information as may
from time to time be reasonably requested by the Agent, but in no event later
than March 15 and September 15 of each year commencing March 15, 1998,
redetermine the Borrowing Base based on the Acquisition Properties covered by
such Reserve Report. The Agent will redetermine the Borrowing Base in
accordance with its normal and customary oil and gas lending criteria as such
exist at that particular time taking into account all of the assets and
liabilities of the Borrower and its Subsidiaries including, without limitation,
liabilities arising under the Revolving Credit Agreement. The Agent and each
Bank, in their sole discretion, may make adjustments to the rates, volumes and
prices and other assumptions set forth in the Reserve Reports and such other
data and supplemental information. Each redetermination of the Borrowing Base
must be approved by the Majority Banks. Failure of a Bank to object to a
redetermination within 14 days after notice of such redetermination is given to
such Bank by the Agent shall be deemed an approval of such redetermination by
such Bank. Notwithstanding anything herein to the contrary, no redetermination
of the Borrowing Base will increase the Borrowing Base above the amount of the
Borrowing Base in effect at the time of such redetermination.
(c) The Agent may exclude any Acquisition Property or a portion of
production therefrom from the Borrowing Base, at any time, because the status of
title to such Acquisition Property is not reasonably satisfactory to Agent or
because such Acquisition Property is not subject to a first priority lien in
favor of the Agent as security for the Obligations.
(d) Until payment in full of all Loans hereunder, effective on or
about March 15 and September 15 of each year commencing March 15, 1998 (each
being a "SCHEDULED REDETERMINATION DATE"), the Agent with the approval of the
Majority Banks shall redetermine the amount of the Borrowing Base in accordance
with SECTION 2.03(b). In addition, at any time after the first scheduled
Redetermination Date, the Agent may request a redetermination of the Borrowing
Base on its own initiation at any time; provided, however, that the Agent may
initiate only one such unscheduled redetermination during any consecutive twelve
(12) month period (each being an "UNSCHEDULED REDETERMINATION DATE"). Any
redetermination of the Borrowing Base on an Unscheduled Redetermination Date
shall be in accordance with SECTION 2.03(b).
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(e) The Agent shall promptly notify in writing the Borrower and the
Banks of the new Borrowing Base. Such redetermination of the Borrowing Base
shall not be in effect until notice is sent to the Borrower.
Section 2.04. THE NOTES. The Loans made by each Bank shall be
evidenced by a single Note issued to such Bank by the Borrower, (i) dated the
date of this Agreement (or such other date as may be specified in SECTION 9.02),
(ii) payable to the order of such Bank in a principal amount equal to such
Bank's Commitment and (iii) otherwise duly completed.
Section 2.05. MANDATORY REPAYMENT OF LOANS.
(a) On each Quarterly Payment Date, Borrower shall repay the Loans in
an amount equal to the Repayment Amount for such Quarterly Payment Date. As
used herein, "Repayment Amount" means, for any Quarterly Payment Date, the
amount specified below for such Quarterly Payment Date:
Quarterly Payment Date Repayment Amount
---------------------- ----------------
February 28, 1998 $1,700,000
May 31, 1998 $1,700,000
August 31, 1998 $1,700,000
November 30, 1998 $1,700,000
February 28, 1999 $1,400,000
May 31, 1999 $1,400,000
August 31, 1999 $1,400,000
November 30, 1999 $1,400,000
February 28, 2000 $1,400,000
May 31, 2000 $1,400,000
August 31, 2000 $1,400,000
November 30, 2000 $1,400,000
February 28, 2001 $12,000,000
(b) In addition to the scheduled repayments required under SECTION
2.05(a), if a Borrowing Base Deficiency exists, the Borrower shall from time to
time repay the Loans comprising part of the same Borrowing in whole or ratably
in part in an amount equal to the Borrowing Base Deficiency. Any repayment
required by this SECTION 2.05(b) shall be due and payable in six (6) equal
monthly installments, each in an amount equal to one-sixth (1/6th) of the
original amount of such Borrowing Base Deficiency, commencing on the last day of
the calendar month immediately following such redetermination of the Borrowing
Base and continuing on the same day of each subsequent calendar month. Any
repayments of the Loans required under this SECTION 2.05(b) shall be applied
against the installments required under SECTION 2.05(a) in inverse order of
maturity.
(c) At any time prior to the Maturity Date, if all of the
Indebtedness under the Revolving Credit Agreement shall be paid in full and the
Revolving Credit Agreement shall have
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terminated, all outstanding Loans shall be fully due and payable at such
time, together with any unpaid interest accrued thereon.
(d) All outstanding Loans shall be fully due and payable on the
Maturity Date, together with any unpaid interest and fees accrued thereon.
(e) Each repayment of Loans required by this SECTION 2.05 shall be
accompanied by payment of accrued interest to the date of such payment on the
principal amount paid. In the event of any payment of a Eurodollar Rate Loan,
the Borrower shall be obligated to reimburse the Banks in respect thereof
pursuant to SECTION 2.10. All principal payments required by this SECTION 2.05
shall first be applied to Base Rate Borrowings, and second to Eurodollar Rate
Borrowings.
Section 2.06. INTEREST ACCRUAL, PAYMENTS. (a) ACCRUAL AND PAYMENT.
Subject to the provisions of SECTION 9.13, the Borrower shall pay interest on
the unpaid principal amount of each Loan made by each Bank from the date of such
Loan until such principal amount shall be paid in full, on the dates and at the
rates per annum specified as follows:
(i) BASE RATE LOANS. If such Loan is a Base Rate Loan, a rate per
annum equal at all times to the lesser of (A) the Highest Lawful Rate and
(B) the Base Rate in effect from time to time PLUS the Applicable Margin in
effect from time to time, and unpaid accrued interest on such Loans shall
be due and payable on each Quarterly Payment Date commencing November 30,
1997 and on the date such Base Rate Loan shall be paid in full.
(ii) EURODOLLAR RATE LOANS. If such Loan is a Eurodollar Rate Loan, a
rate per annum equal at all times during the Interest Period for such Loan
to the lesser of (A) the Highest Lawful Rate and (B) the sum of the
Eurodollar Rate for such Interest Period PLUS the Applicable Margin in
effect as of the first day of such Interest Period, and unpaid accrued
interest on such Loans shall be due and payable on the last day of such
Interest Period.
Any amount of principal or, to the extent permitted by applicable law, interest
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) shall bear interest from the date on which such amount is due until
such amount is paid in full, at a rate per annum equal at all times to the
lesser of (A) the Highest Lawful Rate and (B) the Base Rate in effect from time
to time during the applicable period PLUS the Applicable Margin in effect from
time to time during such period PLUS two percent (2%) (the "DEFAULT RATE"),
payable on demand.
(b) DETERMINATION OF INTEREST RATES. (i) The Agent shall give
prompt notice to the Borrower and each other member of the Bank Group of the
applicable interest rate determined by the Agent hereunder for each Borrowing.
Each determination by the Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
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(ii) If the Majority Banks shall, at least one Business Day before the
date of any requested Eurodollar Rate Borrowing, notify the Agent that the
Eurodollar Rate applicable to such Borrowing will not adequately reflect the
cost to such Banks of making, funding or maintaining their respective Eurodollar
Rate Loans for such Borrowing, the right of the Borrower to select Eurodollar
Rate Loans for such Borrowing or any subsequent Borrowing shall be suspended
until the Agent shall notify the Borrower and each other member of the Bank
Group that the circumstances causing such suspension no longer exist, and each
Loan comprising such Borrowing shall be made as, or Converted into, as
applicable, a Base Rate Loan.
(c) APPLICABLE MARGIN. As used in this Agreement and the other Loan
Documents, "APPLICABLE MARGIN" means, as to Loans consisting of a single
Borrowing, a rate per annum determined by reference to the Type of Loans
comprising such Borrowing shall be three-quarters of one percent (3/4%) for
Base Rate Loans, and two percent (2%) for Eurodollar Rate Loans.
Section 2.07. OPTIONAL PREPAYMENTS. (a) The Borrower may, from time
to time on any Business Day, upon notice to the Agent stating the proposed date
and aggregate principal amount thereof, and if such notice is given the Borrower
shall, prepay the outstanding principal amount of the Base Rate Loans (without
premium or penalty) comprising part of the same Borrowing in whole or ratably in
part; PROVIDED, that any partial prepayment of such Base Rate Loans shall be in
an aggregate principal amount of not less than $1,000,000. The Borrower may
from time to time upon at least three Business Days' notice to the Agent stating
the proposed date and the aggregate principal amount thereof, and if such notice
is given the Borrower shall, prepay the outstanding principal amount of the
Eurodollar Rate Loans comprising part of the same Borrowing in whole or ratably
in part; PROVIDED, that any partial prepayment of such Eurodollar Rate Loans
shall be in an aggregate principal amount of not less than $1,000,000 or an
integral multiple of $500,000 in excess thereof.
(b) Each prepayment of Loans made pursuant to this SECTION 2.07 shall
be accompanied by a payment of accrued interest to the date of such prepayment
on the principal amount prepaid. In the event of any prepayment of a Eurodollar
Rate Loan, the Borrower shall be obligated to reimburse the Banks in respect
thereof pursuant to SECTION 2.10.
Section 2.08. PAYMENTS, NOTICE OF CERTAIN REPAYMENTS AND
COMPUTATIONS. (a) All payments of principal, interest, commitment fees and
other amounts hereunder, under the Notes and the other Loan Documents (other
than Bank Group Derivatives) shall be made in Dollars to the Agent at its
address specified in SECTION 9.03 for the account of each of the Banks, in
immediately available funds not later than 10:00 a.m. (New York time) on the
date when due. Upon receipt of such payments, the Agent will promptly cause to
be distributed like funds relating to the payment of principal or interest
ratably (other than amounts payable pursuant to SECTION 2.09, SECTION 2.10,
SECTION 2.11 or SECTION 2.12) to the Banks, for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other
amount payable to any Bank, to such Bank for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this
Agreement.
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(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks under the Loan
Documents that the Borrower will not make such payment in full, the Agent may
assume that the Borrower has made such payment in full to the Agent on such date
and the Agent may, in reliance upon such assumption, cause to be distributed to
each Bank on such due date an amount equal to the amount then due such Bank. If
and to the extent the Borrower shall not have made such payment in full to the
Agent each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank, together with interest thereon for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Agent at the Federal Funds Rate.
(c) All payments by the Borrower of the fees payable to the Agent
shall be made in Dollars directly to such Person at its address specified in
SECTION 9.03 in immediately available funds not later than 10:00 a.m. (New York
time) on the date when due.
(d) All computations of interest based on the Base Rate shall be made
on the basis of a year of 365 or 366 days, as the case may be, and all
computations of interest based on the Eurodollar Rate or the Federal Funds Rate
shall be made on the basis of a year of 360 days (unless use of a 360 day year
would cause the interest contracted for, charged or received hereunder to exceed
the Highest Lawful Rate, in which case such computations shall be made on the
basis of a year of 365 or 366 days, as the case may be), in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
(e) Whenever any payment under the Loan Documents shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest; PROVIDED, if such extension
would cause payment of interest on or principal of Eurodollar Rate Loans to be
made in the next following calendar month, such payment shall be made on the
immediately preceding Business Day.
(f) If any Bank shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of setoff, or otherwise) on
account of the Loans made by it (other than pursuant to SECTION 2.09,
SECTION 2.10, SECTION 2.11 or SECTION 2.12), in excess of its ratable share of
payments on account of the Loans obtained by all the Banks, such Bank shall
forthwith purchase from the other Banks such participations in the Loans made by
such other Banks, as shall be necessary to cause such purchasing Bank to share
the excess payment ratably with each of them. The Borrower agrees that any Bank
so purchasing a participation from another Bank pursuant to this SECTION 2.08(f)
may, to the fullest extent permitted by law and this Agreement, exercise all its
rights of payment (including the right of setoff) with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation.
Section 2.09. SETOFF, COUNTERCLAIMS AND TAXES. (a) All payments of
principal, interest, expenses, reimbursements, compensation, arrangement fees or
administration fees and any
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other amount from time to time due under the Notes, this Agreement or any
other Loan Document shall be made by the Borrower without setoff or
counterclaim and shall be made free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the
case of each member of the Bank Group, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which
such member of the Bank Group is organized or any political subdivision
thereof and, in the case of each Bank, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction of such Bank's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities
being hereinafter referred to as "TAXES"). If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable hereunder or
under any Loan Document to any member of the Bank Group, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this SECTION 2.09) such member of the Bank Group receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under the Notes or
the other Loan Documents or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement, the Notes or the other Loan Documents
(hereinafter referred to as "OTHER TAXES").
(c) The Borrower will indemnify each member of the Bank Group for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this SECTION
2.09) paid, by such member of the Bank Group (whether paid on its own behalf or
on behalf of any other member of the Bank Group) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be made within 10 days from the date such member of
the Bank Group makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Agent, at its address referred to in SECTION 9.03,
the original or a certified copy of a receipt evidencing payment thereof. If no
Taxes are payable in respect of any payment hereunder or under the Notes or the
other Loan Documents, upon the reasonable request of the Agent, the Borrower
will furnish to the Agent at its address referred to in SECTION 9.03, a
certificate from each appropriate taxing authority, or an opinion of counsel
acceptable to the Agent stating that such payment is exempt from or not subject
to Taxes.
(e) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this SECTION 2.09 shall
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survive the payment in full of the Credit Outstanding and all other amounts
owing under the other Loan Documents. The provisions of this SECTION 2.09
are in all respects subject to SECTION 9.13 hereof.
(f) Each Bank represents and warrants to the Agent and the Borrower
that such Bank is either (i) a corporation organized under the laws of the
United States or a state thereof or (ii) entitled to complete exemption from
United States withholding tax imposed on or with respect to any payments,
including fees, to be made to it pursuant to this Agreement and the other Loan
Documents (x) under an applicable provision of a tax convention to which the
United States is a party or (y) because it is acting through a branch, agency or
office in the United States and any payment to be received by it hereunder is
effectively connected with a trade or business in the United States. Upon
becoming a party to this Agreement (whether by assignment or as an original
signatory hereto), and in any event, from time to time upon the request of the
Agent or the Borrower, each Bank which is not a corporation organized under the
laws of the United States or any state thereof shall deliver to the Agent and
the Borrower such forms, certificates or other instruments as may be required by
the Agent in order to establish that such Bank is entitled to complete exemption
from United States withholding taxes imposed on or with respect to any payments,
including fees, to be made to such Bank under this Agreement and the other Loan
Documents. Each Bank also agrees to deliver to the Borrower and the Agent and
such other supplemental forms as may at any time be required as a result of the
passage of time or changes in applicable law or regulation in order to confirm
or maintain in effect its entitlement to exemption from U.S. withholding tax on
any payments hereunder; PROVIDED, that the circumstances of the Bank at the
relevant time and applicable laws permit it to do so. If a Bank determines, as
a result of any change in either (1) applicable law, regulation or treaty, or in
any official application thereof or (2) its circumstances, that it is unable to
submit any form or certificate that it is obligated to submit pursuant to this
SECTION 2.09(f), or that it is required to withdraw or cancel any such form or
certificate previously submitted, it shall promptly notify the Borrower and the
Agent of such fact. If a Bank is organized under the laws of a jurisdiction
outside the United States, and the Borrower and the Agent have not received
forms, certificates or other instruments indicating to their satisfaction that
all payments to be made to such Bank hereunder are not subject to United States
withholding tax or the Agent otherwise has reason to believe that such Bank is
subject to U.S. withholding tax, the Borrower shall withhold taxes from such
payments at the applicable statutory rate. Each Bank shall indemnify and hold
the Borrower and the Agent harmless from any United States taxes, penalties,
interest and other expenses, costs and losses incurred or payable by them as a
result of either (A) such Bank's failure to submit any form or certificate that
it is required to provide pursuant to this SECTION 2.09(f) or (B) reliance by
the Borrower or the Agent on any such form or certificate which such Bank has
provided to them pursuant to this SECTION 2.09(f).
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Section 2.10. FUNDING LOSSES. The Borrower shall indemnify each
Bank against any loss or reasonable expense (including, but not limited to,
any loss or reasonable expense sustained or incurred or to be sustained or
incurred in liquidating or reemploying deposits from third parties acquired
to effect or maintain such Loan or any part thereof as a Eurodollar Rate
Loan) which such Bank may sustain or incur as a consequence of (a) any
failure by the Borrower to fulfill on the date of any Borrowing hereunder the
applicable conditions set forth in ARTICLE III, (b) any failure by the
Borrower to borrow hereunder, or to Convert Loans hereunder after a Borrowing
Request, or Conversion Notice, respectively, has been given, (c) any payment,
prepayment or Conversion of a Eurodollar Rate Loan required or permitted by
any other provisions of this Agreement, including, without limitation,
payments made due to the acceleration of the maturity of the Notes pursuant
to SECTION 7.01, or otherwise made on a date other than the last day of the
applicable Interest Period, (d) any default in the payment or prepayment of
the principal amount of any Loan or any part thereof or interest accrued
thereon, as and when due and payable (at the due date thereof, by notice of
prepayment or otherwise) or (e) the occurrence of an Event of Default. Such
loss or reasonable expense shall include, without limitation, an amount equal
to the excess, if any, as determined by each Bank of (i) its cost of
obtaining the funds for the Loan being paid, prepaid or Converted or not
borrowed or Converted (based on the Eurodollar Rate applicable thereto) for
the period from the date of such payment, prepayment or Conversion or failure
to borrow or Convert to the last day of the Interest Period for such Loan
(or, in the case of a failure to borrow or Convert, the Interest Period for
the Loan which would have commenced on the date of such failure to borrow or
Convert) over (ii) the amount of interest (as estimated by such Bank) that
would be realized by such Bank in reemploying the funds so paid, prepaid or
Converted or not borrowed or Converted for such period or Interest Period, as
the case may be. A certificate of each Bank setting forth any amount or
amounts which such Bank is entitled to receive pursuant to this SECTION 2.10
shall be delivered to the Borrower (with a copy to the Agent) and shall be
conclusive, if made in good faith, absent manifest error. The Borrower shall
pay to the Agent for the account of each Bank the amount shown as due on any
certificate within 10 days after its receipt of the same. Notwithstanding
the foregoing, in no event shall any Bank be permitted to receive any
compensation hereunder constituting interest in excess of the Highest Lawful
Rate. Without prejudice to the survival of any other obligations of the
Borrower hereunder, the obligations of the Borrower under this SECTION 2.10
shall survive the termination of this Agreement and/or the payment or
assignment of any of the Notes.
Section 2.11. CHANGE OF LAW. (a) If at any time any Bank
determines in good faith (which determination shall be conclusive) that any
change in any applicable law, rule or regulation or in the interpretation,
application or administration thereof makes it unlawful, or any central bank
or other Governmental Authority asserts that it is unlawful, for such Bank or
its foreign branch or branches to fund or maintain any Eurodollar Rate Loan
(any of the foregoing determinations being a "EURODOLLAR EVENT"), then, such
Bank, at its option, may: (i) declare that Eurodollar Rate Loans will no
longer be made or maintained by such Bank, whereupon the right of the
Borrower to select Eurodollar Rate Loans for any Borrowing shall be suspended
until such Bank shall notify the Agent that the circumstances causing such
Eurodollar Event no longer exist; (ii) with respect to any Eurodollar Rate
Loans of such Bank then outstanding, require that all such Eurodollar Rate
Loans be Converted to Base Rate Loans, in which event all such Eurodollar
Rate Loans shall automatically
-11- ACQUISITION FACILITY
be Converted into Base Rate Loans on the effective date of such notice and
all payments or prepayments of principal that would have otherwise been
applied to repay such Converted Eurodollar Rate Loans shall instead be
applied to repay the Base Rate Loans resulting from such Conversion; and/or
(iii) with respect to any Eurodollar Rate Loans requested of such Bank but
not yet made as or Converted into such, require that such Eurodollar Rate
Loans be made as or Converted into, as applicable, Base Rate Loans.
(b) Upon the occurrence of any Eurodollar Event, and at any time
thereafter so long as such Eurodollar Event shall continue, such Bank may
exercise its aforesaid option by giving written notice thereof to the Agent
and the Borrower, such notice to be effective upon receipt thereof by the
Borrower. Any Conversion of any Eurodollar Rate Loan which is required under
this SECTION 2.11 shall be made, together with accrued and unpaid interest
and all other amounts payable to such Bank under this Agreement with respect
to such Converted Loan (including, without limitation, amounts payable
pursuant to SECTION 2.10 hereof), on the date stated in the notice to the
Borrower referred to above.
Section 2.12. INCREASED COSTS. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline issued or request made
by any central bank or other Governmental Authority (whether or not having
the force of law), there shall be any increase in the cost to any Bank of
agreeing to make or making, funding or maintaining Eurodollar Rate Loans,
then the Borrower shall from time to time, subject to the provisions of
SECTION 9.13, pay to the Agent for the account of such Bank additional
amounts sufficient to compensate such Bank for such increased cost upon
demand by such Bank.
(b) If any Bank shall have determined in good faith that any law,
rule, regulation or guideline adopted pursuant to or arising out of the July
1988 report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and
Capital Standards" or that the adoption of any applicable law, rule,
regulation or guideline regarding capital adequacy, or any change in any of
the foregoing or in the interpretation or administration thereof by any
central bank or other Governmental Authority charged with the interpretation
or administration thereof, or compliance by such Bank (or any lending office
of such Bank) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such Governmental Authority
or comparable agency, affects or would affect the amount of capital required
or expected to be maintained by such Bank or any corporation controlling such
Bank, then the Borrower shall from time to time, subject to the provisions of
SECTION 9.13, pay to such Bank upon demand additional amounts sufficient to
compensate such Bank or such corporation in the light of such circumstances,
to the extent that such Bank reasonably determines such increase in capital
to be allocable to the existence of such Bank's Commitment hereunder.
(c) If any law, executive order or regulation is adopted or
interpreted by any central bank or other Governmental Authority so as to
affect any of the Borrower's obligations or the compensation to any Bank,
then the Borrower shall from time to time upon demand, subject to
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the provisions of SECTION 9.13, reimburse or indemnify such Bank, with
respect thereto so that such Bank shall be in the same position as if there
had been no such adoption or interpretation.
(d) Each Bank will notify the Borrower of any event occurring
after the date of this Agreement which will entitle such Bank to compensation
pursuant to this SECTION 2.12 as promptly as practicable after such Bank
obtains knowledge of the occurrence of such event. A certificate of such
Bank setting forth in reasonable detail (i) such amount or amounts as shall
be necessary to compensate such Bank (or participating banks or other
entities pursuant to SECTION 9.02) as specified above and (ii) the
calculation of such amount or amounts shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay to such
Bank the amount shown as due on any such certificate within ten (10) days
after its receipt of the same. The failure of any Bank to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
the right of such Bank or any other Bank to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction
in return on capital as such rights are set forth herein. The protection of
this SECTION 2.12 shall be available to the Banks regardless of any possible
contention of invalidity or inapplicability of law, regulation or condition
which shall have been imposed.
ARTICLE III
CONDITIONS OF CREDIT
Section 3.01. CONDITIONS PRECEDENT TO LOANS. The obligation of
each Bank to make its Loan is subject to the conditions precedent that the
Agent shall have received on or before the date of such Borrowing, all of the
following, each in form and substance reasonably satisfactory to the Bank
Group and in such number of counterparts as may be reasonably requested by
the Agent:
(a) The following Loan Documents duly executed by the Persons
indicated below:
(i) this Agreement executed by the Borrower and each member of the
Bank Group,
(ii) the Notes executed by the Borrower, and
(iii) the Acquisition Mortgage executed by the Borrower.
(b) Evidence that the Liens created by the Security Documents have
been duly perfected, or will be duly perfected upon the filing of the
instruments referred to in subsections (i) and (ii) below, and constitute
valid first priority Liens, which shall include, without limiting the
generality of the foregoing:
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(i) the delivery to the Agent of such financing statements under the
Uniform Commercial Code for filing in such jurisdictions as the Agent may
require, and
(ii) the delivery to the Agent of the Acquisition Mortgage for filing
in such jurisdictions as the Agent may require.
(c) A certificate of the secretary or an assistant secretary of
the Borrower certifying, INTER ALIA, (i) true and correct copies of
resolutions adopted by the Board of Directors of the Borrower (A) authorizing
the execution, delivery and performance by the Borrower of the Loan Documents
to which it is or will be a party and the Borrowings to be made thereunder
and the consummation of the transactions contemplated thereby, (B)
authorizing officers of the Borrower to negotiate the Loan Documents to which
it is a party and which will be delivered at or prior to the date of the
initial Borrowing and (C) authorizing officers of the Borrower to execute and
deliver the Loan Documents to which it is or will be a party and any related
documents, including, without limitation, any agreement or security document
contemplated by this Agreement, (ii) true and correct copies of the
certificate of incorporation and bylaws (or other similar charter documents)
of the Borrower and (iii) the incumbency and specimen signatures of the
officers of the Borrower executing any documents on behalf of it.
(d) Certificates of appropriate public officials as to the
existence and good standing of the Borrower in the States of Texas, Delaware,
Wyoming, Montana, Colorado, New Mexico and Oklahoma.
(e) An engineering report covering Acquisition Properties prepared
by ▇▇▇▇▇ ▇▇▇▇▇ & Co. dated as of July 1, 1997 (the "INITIAL RESERVE REPORT").
(f) The fully executed Acquisition Documents, together with any
disclosure schedules delivered pursuant thereto, containing such terms and
conditions as are satisfactory to the Bank Group, as well as evidence
satisfactory to the Agent that the Acquisition has been consummated in
accordance with the Acquisition Documents and all Requirements of Law and
original counterparts of the assignment of the Acquisition Properties to the
Borrower.
(g) Title opinions covering at least 80% of the value of the
Acquisition Properties included in the Initial Reserve Report in form, scope
and substance satisfactory to the Agent.
(h) Copies of all authorizations, consents, approvals, licenses,
filings or registrations obtained from or made with any Governmental
Authority or any other Person in connection with the Acquisition or the
execution, delivery and performance of the Loan Documents, together with a
certificate from a Responsible Officer of the Borrower to the effect that all
such authorizations, consents, approvals, licenses, filings or registrations
have been obtained or made, as applicable, and are in full force and effect,
other than governmental approvals and consents that are typically obtained
subsequent to the closing of such an acquisition.
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(i) A list of all insurance policies and programs in effect with
respect to the properties and businesses of the Borrower and its
Subsidiaries, specifying for each such policy or program the amount thereof,
the risks insured against thereby, the name of the insurer and each insured
party thereunder and the policy or other identification number thereof,
together with (i) a certificate from a Responsible Officer of the Borrower to
the effect that all such policies and programs are in full force and effect
and (ii) evidence that such policies have the endorsements required under
SECTION 5.04.
(j) Environmental reports covering the Acquisition Properties in
form, scope and substance satisfactory to the Agent.
(k) Releases of the Liens in favor of Union Bank of California,
N.A. covering the Acquisition Properties in form and substance satisfactory
to the Agent.
(l) A certificate signed by a Responsible Officer of the Borrower
certifying as to the satisfaction of the following conditions: (i) the
representations and warranties contained in ARTICLE IV are true and correct
on and as of such date, before and after giving effect to the Loan and as
though made on and as of such date, (ii) no Default or Event of Default has
occurred and is continuing, or would result from the Loan and (iii) no event
has occurred since the Execution Date that could reasonably be expected to
have a Material Adverse Effect on the Borrower or any of its Subsidiaries.
(m) The favorable, signed opinions of Cotton, ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇▇, special counsel to the Borrower and its Subsidiaries, addressed to
the Agent and the Bank Group, in form and substance reasonably satisfactory
to the Agent and its counsel.
(n) A written confirmation from the Process Agent of its
appointment and acceptance as process agent for the Borrower.
(o) The payment to the Bank Group of the fees due to them as of
such date under the Loan Documents and that certain fee letter dated August
26, 1997.
(p) Such other documents, certificates and opinions as the Agent
may reasonably request relating to this Agreement and the other Loan
Documents.
(q) All of the conditions to the effectiveness of the Revolving
Credit Agreement have been satisfied.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank Group to enter into this Agreement, the
Borrower hereby represents and warrants to the Bank Group as follows:
Section 4.01. CORPORATE EXISTENCE. The Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and ▇▇▇▇▇▇▇▇ Redeco is a limited liability
company duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation. Both the Borrower and ▇▇▇▇▇▇▇▇ Redeco
are duly qualified or licensed to transact business as a foreign corporation
or limited liability company, as the case may be, and is in good standing
under the laws of each jurisdiction in which the conduct of its operations or
the ownership or leasing of its properties requires such qualification or
licensing, except where the failure to be so qualified or licensed will not
have a Material Adverse Effect on such Person. SCHEDULE 4.01 is a complete
list of the Borrower's Subsidiaries.
Section 4.02. CORPORATE AUTHORITY; BINDING OBLIGATIONS. Each of
the Borrower and its Subsidiaries has all requisite power and authority,
corporate or otherwise, to conduct its business, to own, operate and encumber
its Property, and to execute, deliver and perform all of its obligations
under the Loan Documents executed by, or to be executed by, such Person. The
execution, delivery and performance of each of the Loan Documents to which
the Borrower or any of its Subsidiaries is a party and the consummation of
the transactions contemplated thereby, including, without limitation, the
consummation of the Acquisition, have been duly authorized by all necessary
corporate and stockholder action. Each of the Loan Documents to which the
Borrower or any of its Subsidiaries is a party has been duly executed and
delivered by such Person, is in full force and effect and constitutes the
legal, valid and binding obligation of such Person, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditor's rights generally and general
principles of equity. The Security Documents create valid Liens in the
collateral described therein, securing the secured obligations described
therein.
Section 4.03. NO CONFLICT. The execution, delivery and
performance by the Borrower or any of its Subsidiaries of each Loan Document
to which such Person is a party and the consummation of each of the
transactions contemplated thereby, including, without limitation, the
consummation of the Acquisition, do not and shall not, by the lapse of time,
the giving of notice or otherwise: (a) constitute a violation of any
Requirement of Law or a breach of any provision contained in the articles or
certificate of incorporation or bylaws (or certificate of organization or
regulations, if applicable) of such Person, or any shareholder agreement
pertaining to such Person, or contained in any material agreement, instrument
or document to which it is now a party or by which it or its Properties is
bound, except for such violations or breaches that will not have a Material
Adverse Effect on any such Person; or (b) result in or require the creation
or imposition of any Lien whatsoever upon any of the Properties of the
Borrower or any of its Subsidiaries (other than Excepted Liens and Liens in
favor of the Agent arising pursuant to the Loan Documents).
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Section 4.04. NO CONSENT. No authorization, consent, approval,
license, or exemption of or filing or registration with, any Governmental
Authority or any other Person, which has not been obtained, was, is or will
be necessary for the valid execution, delivery or performance by the Borrower
or any of its Subsidiaries of any of the Loan Documents to which it is a
party and the consummation of each of the transactions contemplated thereby,
including, without limitation, the consummation of the Acquisition, or the
Borrower's or any of its Subsidiaries' ownership, use or operation of any of
their Properties other than (a) those listed on SCHEDULE 4.04 and (b) those
that the failure to obtain, file or make will not have a Material Adverse
Effect on any such Person.
Section 4.05. NO DEFAULTS OR VIOLATIONS OF LAW. No Default or
Event of Default has occurred and is continuing. No default (or event or
circumstance occurred which, but for the passage of time or the giving of
notice, or both, would constitute a default) has occurred and is continuing
with respect to any note, indenture, loan agreement, mortgage, lease, deed or
other agreement to which the Borrower or any of its Subsidiaries is a party
or by which any of them or their Properties is bound, except for such
defaults that will not have a Material Adverse Effect on the Borrower or any
of its Subsidiaries. Neither the Borrower nor any of its Subsidiaries is in
violation of any applicable Requirement of Law except for such violations
that will not have a Material Adverse Effect on any such Person.
Section 4.06. FINANCIAL POSITION. (a) Prior to the Execution
Date, the Borrower has furnished to the Agent and the Bank Group audited
financials of the Borrower and its Subsidiaries as of December 31, 1996 and
unaudited financials of the Borrower as of June 30, 1997. The audited
financials referred to in the previous sentence have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved and present fairly the financial condition of
the Borrower and its Subsidiaries as of the dates thereof and the results of
their operations for the periods then ended. No event has occurred since June
30, 1997 that could reasonably be expected to have a Material Adverse Effect
on the Borrower or any of its Subsidiaries.
(b) Except as fully reflected in the unaudited financials referred
to in paragraph (a) of this SECTION 4.06, as of the date hereof, there are no
liabilities or obligations of the Borrower or any of its Subsidiaries of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, would have a
Material Adverse Effect on the Borrower or any of its Subsidiaries.
Section 4.07. LITIGATION. Except as set out in SCHEDULE 4.07,
there are no actions, suits or proceedings pending or, to the knowledge of
the Borrower threatened against or affecting the Borrower or any of its
Subsidiaries, or the Properties of any such Person, before or by any
Governmental Authority or other Person, which, if determined adversely to
such Person could have a Material Adverse Effect on any such Person.
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Section 4.08. USE OF PROCEEDS. (a) The Borrower's uses of the
proceeds of the Loans are, and will continue to be, legal and proper
corporate uses (duly authorized by Borrower's board of directors to the
extent required), and such uses are consistent with the terms of the Loan
Documents, including, without limitation, SECTION 5.09, and all Requirements
of Law.
(b) Neither the Borrower nor any of its Subsidiaries is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U), and no part of the
proceeds of any Loan will be used, directly or indirectly, (i) to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or (ii) for the purpose of
purchasing, carrying or trading in any securities under such circumstances as
to involve the Borrower or any of its Subsidiaries in a violation of
Regulation X.
Section 4.09. GOVERNMENTAL REGULATION. Neither the Borrower nor
any of its Subsidiaries is subject to regulation under the Public Utility
Holding Company Act, as amended, the Investment Company Act of 1940, as
amended, or any other Requirement of Law such that the ability of any such
Person to incur indebtedness is limited or its ability to consummate the
transactions contemplated by this Agreement, the other Loan Documents or any
document executed in connection therewith is impaired.
Section 4.10. DISCLOSURE. The schedules, documents, exhibits,
reports, certificates and other written statements and information furnished
by or on behalf of the Borrower or any of its Subsidiaries to the Bank Group
do not contain any material misstatement of fact, or omit to state a material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. Neither the
Borrower nor any of its Subsidiaries has intentionally withheld any fact
known to it which has or is reasonably likely to have a Material Adverse
Effect on the Borrower or any of its Subsidiaries.
Section 4.11. ERISA. (a) The Borrower, and each ERISA Affiliate
and Subsidiary have operated and administered each Pension Plan and Other
Benefit Plan in compliance with all applicable laws, except for such
instances of noncompliance as have not resulted in and could not reasonably
be expected to result in a Material Adverse Effect. Neither the Borrower nor
any ERISA Affiliate or Subsidiary has incurred any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the
Internal Revenue Code relating to employee benefit plans (as defined in
Section 3 of ERISA), and no event, transaction or condition has occurred or
exists or is threatened that could reasonably be expected to result in the
incurrence of any such liability by the Borrower or any ERISA Affiliate or
Subsidiary, or in the imposition of any Lien on any of the rights, properties
or assets of the Borrower or any ERISA Affiliate or Subsidiary, in either
case pursuant to Title I or IV of ERISA or to such penalty or excise tax
provisions or to Section 401(a)(29) or 412 of the Internal Revenue Code,
other than such liabilities or Liens as would not be, individually or in the
aggregate, Material.
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(b) The present value of the aggregate benefit liabilities under
each Pension Plan subject to Title IV of ERISA, determined as of the end of
such Pension Plan's most recently ended plan year on the basis of the
actuarial assumptions specified for funding purposes in such Pension Plan's
most recent actuarial valuation report, did not exceed the aggregate current
value of the assets of such Pension Plan allocable to such benefit
liabilities. The term "benefit liabilities" has the meaning specified in
section 4001 of ERISA and the terms "current value" and "present value" have
the meaning specified in Section 3 of ERISA.
(c) The Borrower and its ERISA Affiliates and Subsidiaries do not
currently and have never had any liability or obligation with respect to any
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of any Multiemployer Plan.
(d) The expected post-retirement benefit obligation (determined as
of the last day of the Borrower's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated
by section 4980B of the Internal Revenue Code ("COBRA")) of the Borrower and
its ERISA Affiliates and Subsidiaries is not Material and, except as modified
by COBRA, such obligations can be unilaterally terminated at any time by the
Borrower, or its ERISA Affiliates and Subsidiaries without any Material
liability.
Section 4.12. PAYMENT OF TAXES. The Borrower has filed, and has
caused each of its Subsidiaries to file, all federal, state and local tax
returns and other reports that the Borrower and each such Subsidiary are
required by law to file and have paid all taxes and other similar charges
that are due and payable pursuant to such returns and reports, except to the
extent any of the same may be contested in good faith by appropriate
proceedings promptly initiated and diligently conducted, and with respect to
which adequate reserves have been set aside on the books of such Person in
accordance with generally accepted accounting principles.
Section 4.13. TITLE AND LIENS. (a) Except as set out in SCHEDULE
4.13 each of the Borrower and its Subsidiaries have good and defensible title
to the Mortgaged Property, free and clear of all Liens except Liens permitted
by SECTION 6.02. Except as set forth in SCHEDULE 4.13, after giving full
effect to the Excepted Liens, the Borrower owns the net interests in
production attributable to the Oil and Gas Properties reflected in the
Initial Reserve Report and the ownership of such Oil and Gas Properties shall
not in any material respect obligate the Borrower to bear the costs and
expenses relating to the maintenance, development and operations of each such
Oil and Gas Property in an amount in excess of the working interest of each
Oil and Gas Property set forth in the Initial Reserve Report. Further, upon
delivery of each Reserve Report, the statements made in the preceding
sentence shall be true with respect to such furnished Reserve Reports
including the ownership of the Oil and Gas Properties set forth therein. To
the best of the Borrower's knowledge, all information contained in the
Initial Reserve Report is true and correct in all material respects as of the
date thereof.
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(b) All material leases and agreements necessary for the conduct
of the business of the Borrower and its Subsidiaries are valid and
subsisting, in full force and effect and, to the knowledge of the Borrower,
there exists no default or event or circumstance which with the giving of
notice or the passage of time or both would give rise to a default under any
such lease or leases, which would affect in any material respect the conduct
of the business of the Borrower and its Subsidiaries.
(c) The rights and Properties presently owned, leased or licensed
by the Borrower and its Subsidiaries including, without limitation, all
easements and rights of way, include all rights and Properties necessary to
permit the Borrower and its Subsidiaries to conduct their business in all
material respects in the same manner as their business has been conducted
prior to the date hereof.
(d) All of the Properties of the Borrower and its Subsidiaries
which are reasonably necessary for the operation of its business are in good
working condition and are maintained in accordance with prudent business
standards.
Section 4.14. GAS IMBALANCES. As of the date of this Agreement,
except as set forth in SCHEDULE 4.14 or on the most recent certificate
delivered pursuant to SECTION 5.10(c), on a net basis there are no gas
imbalances, take or pay or other prepayments with respect to the Borrower's
Oil and Gas Properties which would require the Borrower to deliver
Hydrocarbons produced from the Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor exceeding a market
value of $100,000 in the aggregate.
Section 4.15. ENVIRONMENTAL MATTERS. Except as disclosed in the
environmental reports delivered to the Bank Group on the Effective Date
pursuant to SECTION 3.01 hereof, (a) (i) the Borrower and each of its
Subsidiaries possess all environmental, health and safety licenses, permits,
authorizations, registrations, approvals and similar rights necessary under
law or otherwise for such Person to conduct its operations as now being
conducted, (ii) each of such licenses, permits, authorizations,
registrations, approvals and similar rights is valid and subsisting, in full
force and effect and enforceable by such Person, and (iii) such Person is in
compliance with all terms, conditions or other provisions of such permits,
authorizations, registrations, approvals and similar rights, except to the
extent that the failure to do so will not have a Material Adverse Effect on
such Person; (b) neither the Borrower nor any of its Subsidiaries has
received any notices of any violation of, noncompliance with, or remedial
obligation under, Requirements of Environmental Laws, and there are no writs,
injunctions, decrees, orders or judgments outstanding, or lawsuits, claims,
proceedings, investigations or inquiries pending or, to the knowledge of the
Borrower, threatened, relating to the ownership, use, condition, maintenance,
or operation of, or conduct of business related to, any Property owned,
leased or operated by the Borrower or any of its Subsidiaries, other than
those violations, instances of noncompliance, obligations, writs,
injunctions, decrees, orders, judgments, lawsuits, claims, proceedings,
investigations or inquiries that will not have a Material Adverse Effect on
such Person; (c) there are no material obligations, undertakings or
liabilities arising out of or relating to Environmental Laws to which the
Borrower or any of its Subsidiaries has agreed to, assumed or retained, or by
which the Borrower or any of its Subsidiaries is adversely
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affected, by contract or otherwise; and (d) neither the Borrower nor any of
its Subsidiaries has received a written notice or claim to the effect that
such Person is or may be liable to any Person as the result of a release or
threatened release of a hazardous material or solid waste.
Section 4.16. CONSUMMATION OF ACQUISITION. The transactions
described in the Acquisition Documents, including, without limitation, the
Acquisition, have been completed in accordance with the terms of the
Acquisition Documents, and with all Requirements of Law.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any principal amount of any Loan, any amount of interest
accrued under the Notes or any commitment or other fee, expense, compensation
or any other amount payable to any member of the Bank Group under the Loan
Documents shall remain unpaid or outstanding, unless the Majority Banks shall
otherwise consent in writing:
Section 5.01. REPORTING REQUIREMENTS. The Borrower shall deliver
or cause to be delivered to the Agent (with sufficient copies for the Agent
to distribute the same to the other members of the Bank Group):
(a) As soon as available and in any event within sixty (60) days
after the end of each of the first three fiscal quarters of the Borrower:
(i) copies of the unaudited consolidated balance sheets of the
Borrower and its Subsidiaries as of the end of such period, and unaudited
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for that fiscal period and for the portion of
the fiscal year ending with such period, in each case setting forth in
comparative form (on a consolidated basis) the figures for the
corresponding period of the preceding fiscal year, all in reasonable
detail; and
(ii) a certificate of a Responsible Officer of the Borrower (1)
stating that (A) such financial statements fairly present in all material
respects the consolidated financial position and results of operations of
the Borrower and its Subsidiaries in accordance with generally accepted
accounting principles consistently applied, subject to year-end adjustments
and the absence of notes and (B) no Default or Event of Default has
occurred and is continuing or, if any such event has occurred and is
continuing, the action the Borrower is taking or proposes to take with
respect thereto, and (2) setting forth calculations demonstrating
compliance by the Borrower with SECTIONS 6.04, 6.05 AND 6.06.
(b) As soon as available and in any event within one hundred five
(105) days after the end of each fiscal year of the Borrower (i) copies of
(A) the audited consolidated balance sheet of the Borrower and its
Subsidiaries as of the close of such fiscal year and audited consolidated
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statements of income and retained earnings and a statement of cash flows of
the Borrower and its Subsidiaries for such fiscal year, and (B) upon the
request of the Agent delivered not more than ninety (90) days after the end
of each fiscal year, an unaudited consolidating balance sheet of the Borrower
and its Subsidiaries as of the close of such fiscal year and unaudited
consolidating statements of income and retained earnings of the Borrower and
its Subsidiaries for such fiscal year, in each case setting forth in
comparative form (on a consolidated basis) the figures for the preceding
fiscal year, all in reasonable detail and accompanied, in the case of the
audited financial statements required by SECTION 5.01(b)(i)(A) above, by an
opinion thereon (which shall not be qualified by reason of any limitation
imposed by the Borrower) of independent accountants of recognized national
standing selected by the Borrower and reasonably satisfactory to the Majority
Banks, to the effect that such consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied (except for changes in which such accountants concur)
and that such audit has been made in accordance with generally accepted
auditing standards and (ii) a certificate of a Responsible Officer of the
Borrower (A) setting forth calculations demonstrating compliance by the
Borrower with SECTIONS 6.04, 6.05 AND 6.06 and (B) stating that no Default or
Event of Default has occurred and is continuing or, if any such event has
occurred and is continuing, the action the Borrower is taking or proposes to
take with respect thereto.
(c) Promptly after the sending or filing thereof, copies of all
reports and shareholder information which the Borrower or any of its
Subsidiaries sends to any holders of its respective securities, in their
capacities as holders of such securities and not in their capacities as
directors, officers or employees of the Borrower or any of the Borrower's
Subsidiaries, or to the SEC.
(d) As soon as possible and in any event within ten (10) days
after the Borrower or any of its Subsidiaries becomes aware of the occurrence
of a Default or Event of Default, a certificate of a Responsible Officer of
the Borrower setting forth details of such Default or Event of Default and
the action which has been taken or is to be taken with respect thereto.
(e) As soon as possible and in any event within ten (10) days
after the Borrower or any of its Subsidiaries becomes aware thereof, written
notice from a Responsible Officer of the Borrower of (i) the institution of
or threat of, any action, suit, proceeding, governmental investigation or
arbitration by any Governmental Authority or other Person against or
affecting the Borrower or any of its Subsidiaries that could have a Material
Adverse Effect on any such Person and that has not been previously disclosed
in writing to the Bank Group pursuant to this SECTION 5.01 or (ii) any
material development in any action, suit, proceeding, governmental
investigation or arbitration already disclosed to the Bank Group pursuant to
this SECTION 5.01 or SECTION 3.01.
(f) As soon as reasonably possible and in any event within ten
(10) days after the Borrower or any of its Subsidiaries becomes aware
thereof, written notice from a Responsible Officer of the Borrower of (i) any
violation of, noncompliance with, or remedial obligations under, Requirements
of Environmental Laws, (ii) any release or threatened release affecting any
Property owned, leased or operated by the Borrower or any of its
Subsidiaries, (iii) the amendment or revocation of any permit, authorization,
registration, approval or similar right that could have a
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Material Adverse Effect on the Borrower or any of its Subsidiaries or (iv)
changes to Requirements of Environmental Laws that could have a Material
Adverse Effect on the Borrower or any of its Subsidiaries.
(g) Promptly, and in any event within five (5) days after becoming
aware of any of the following, a written notice setting forth the nature
thereof and the action, if any, that the Borrower or an ERISA Affiliate or
Subsidiary proposes to take with respect thereto: (i) with respect to any
Pension Plan, any Reportable Event, for which notice thereof has not been
waived pursuant to such regulations as in effect on the date hereof; or (ii)
the taking by the PBGC of steps to institute, or the threatening by the PBGC
of the institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan, or the receipt by the Borrower or any ERISA Affiliate or Subsidiary of
a notice from a Multiemployer Plan that such action has been taken by the
PBGC with respect to such Multiemployer Plan; or (iii) any event, transaction
or condition that could result in the incurrence of any liability by the
Borrower or any ERISA Affiliate or Subsidiary pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Internal Revenue Code
relating to employee benefit plans, or in the imposition of any Lien on any
of the rights, properties or assets of the Borrower or any ERISA Affiliate or
Subsidiary pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions; or (iv) the inability or failure of the Borrower or any ERISA
Affiliate or Subsidiary to make timely any payment or contribution to or with
respect to any Pension Plan, Multiemployer Plan or Other Benefit Plan, if
such failure, either separately or together with all other such failures
could reasonably be expected to be Material; or (v) any event with respect to
any Pension Plan, Multiemployer Plan and/or Other Benefit Plan, individually
or in the aggregate, that could reasonably be expected to be a Material
liability.
(h) As soon as available and in any event simultaneously with the
delivery of the financial statements delivered pursuant to SECTION 5.01(b),
copies of the budget of the Borrower and its Subsidiaries containing a
consolidated balance sheet, and detailed statements of income, cash flow and
projected capital expenditures for the then current fiscal year, together
with a narrative business plan describing the expected results of operation
of the Borrower and its Subsidiaries.
(i) As soon as possible and in any event ten (10) days after the
Borrower becomes aware thereof, any claim by or against the Borrower under
the Acquisition Documents, including claims for breach of warranty and claims
for indemnity.
(j) Such other information as any member of the Bank Group may
from time to time reasonably request respecting the business, properties,
operations or condition, financial or otherwise, of the Borrower or any of
its Subsidiaries.
Section 5.02. TAXES; CLAIMS. The Borrower will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon such Person or
upon its income or profits, or upon any properties belonging to such Person,
prior to the date on which penalties attach thereto, and all lawful claims
which, if
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unpaid, might become a Lien upon any properties of such Person, other than
any such tax, assessment, charge, levy or claim which is being contested in
good faith by appropriate proceedings promptly initiated and diligently
conducted, and with respect to which adequate reserves are set aside on the
books of such Person in accordance with generally accepted accounting
principles.
Section 5.03. COMPLIANCE WITH LAWS. The Borrower will comply, and
will cause each of its Subsidiaries to comply, with all applicable
Requirements of Law imposed by, any Governmental Authority, non-compliance
with which might have a Material Adverse Effect on any such Person. Without
limitation of the foregoing, the Borrower shall, and shall cause each of its
Subsidiaries to, comply with all Requirements of Environmental Laws, operate
properties and conduct its business in accordance with good environmental
practices, and handle, treat, store and dispose of hazardous materials or
solid waste in accordance with such practices, except where the failure to do
so will not have a Material Adverse Effect on any such Person.
Section 5.04. INSURANCE. The Borrower will maintain, and will
cause each of its Subsidiaries to maintain, with financially sound and
reputable insurance companies or associations, or self-insure against such
risks, and in such amounts (and with co-insurance and deductibles), as are
usually insured against by Persons of similar size and established reputation
engaged in the same or similar businesses and similarly situated, including
insurance against fire, casualty, business interruption, injury to Persons or
property and other normal hazards normally insured against, but, in any
event, such insurance shall not be substantially dissimilar from that
described in the insurance schedule delivered on the Effective Date pursuant
to SECTION 3.01. In addition, if requested by the Agent, on or before
January 31 of each year commencing January 31, 1998, the Borrower will
deliver to the Agent a report prepared by Borrower's insurance broker listing
all insurance policies and programs then in effect with respect to the
properties and businesses of the Borrower and each of its Subsidiaries,
specifying for each such policy and program, (a) the amount thereof, (b) the
risks insured against thereby, (c) the name of the insurer and each insured
party thereunder and (d) the policy or other identification number thereof.
Each policy listed on the schedule delivered pursuant to SECTION 3.01 and
each additional policy maintained in compliance with this Agreement shall be
endorsed showing the Agent as an additional insured, or a loss payee, as
applicable. All policies of insurance required by the terms of this
Agreement or any Security Document shall provide that at least 30 days' prior
written notice be given to the Agent of any termination, cancellation,
reduction or other modification of such insurance.
Section 5.05. CORPORATE EXISTENCE. The Borrower will preserve and
maintain, and will cause each of its Subsidiaries to preserve and maintain,
its existence, rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified, and cause each of its
Subsidiaries to qualify and remain qualified, as a foreign corporation in
each jurisdiction in which such qualification is material to the business and
operations of such Person or the ownership or leasing of the properties of
such Person except to the extent that a Subsidiary merges or consolidates in
compliance with SECTION 6.08 or ceases to be a Subsidiary of Borrower if such
cessation is permitted under this Agreement.
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Section 5.06. INSPECTIONS. From time to time during regular business
hours upon reasonable prior notice, the Borrower will permit, and will cause
each of its Subsidiaries to permit, any agents or representatives of any member
of the Bank Group to examine and make copies of and abstracts from the records
and books of account of, and visit the properties of the Borrower and its
Subsidiaries and to discuss the affairs, finances and accounts of any such
Person with any of its independent public accountants, officers or directors,
all at the expense of the Borrower.
Section 5.07. MAINTENANCE OF PROPERTIES. The Borrower will maintain
and preserve, and will cause each Subsidiary of the Borrower to maintain and
preserve, all of its Properties necessary for the proper conduct of its business
in good working order and condition, ordinary wear and tear excepted. The
Borrower shall cause, or in the event the Borrower is not the operator of its
Oil and Gas Properties, use reasonable best efforts consistent with its rights
under applicable operating agreements to cause, its Oil and Gas Properties to be
maintained, developed, protected against drainage and operated in a good and
workmanlike manner as would a reasonably prudent operator and in compliance with
all operating agreements, other applicable agreements and all applicable
Requirements of Law.
Section 5.08. ACCOUNTING SYSTEMS. The Borrower will keep, and will
cause each of its Subsidiaries to keep, adequate records and books of account in
which complete entries will be made in accordance with generally accepted
accounting principles consistently applied (subject to year end adjustments),
reflecting all financial transactions of such Person. The Borrower shall
maintain or cause to be maintained a system of accounting established and
administered in accordance with sound business practices to permit preparation
of financial statements in conformity with generally accepted accounting
principles, and each of the financial statements described herein shall be
prepared from such system and records.
Section 5.09. USE OF LOANS. The Borrower will use the proceeds of
all Loans hereunder to finance a portion of the Acquisition consistent with the
terms of this Agreement and all Requirements of Law.
Section 5.10. RESERVE REPORTS. (a) By February 15 of each year
commencing February 15, 1998, the Borrower shall furnish to the Agent and the
Banks a Reserve Report dated as of the immediately preceding December 31. Each
such Reserve Report shall be prepared by independent petroleum engineers
acceptable to the Agent. Each such Reserve Report shall be in form and
substance satisfactory to the Agent and shall set forth, as of the immediately
preceding December 31: (i) the Proved Reserves attributable to the Acquisition
Properties together with a projection of the rate of production and future net
income, taxes, operating expenses and capital expenditures with respect thereto
as of such dates, based upon pricing and escalation assumptions consistent with
SEC reporting requirements at the time and (ii) such other information as the
Agent may reasonably request. By August 15 of each year commencing August 15,
1998, the Borrower shall furnish to the Agent and the Banks a Reserve Report
dated as of the immediately preceding June 30. Each such Reserve Report shall
be prepared by or under the supervision of the chief engineer of the Borrower
who shall certify, to the best of his knowledge and in all material respects,
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such Reserve Report to be true and accurate and to have been prepared in
accordance with the procedures used in the immediately preceding Reserve Report
delivered to the Banks under this SECTION 5.10(a).
(b) With respect to any unscheduled redetermination of the Borrowing
Base, the Borrower shall furnish to the Bank Group a Reserve Report prepared by
or under the supervision of the chief engineer of the Borrower (or upon the
request of the Agent prepared by independent petroleum engineers acceptable to
the Agent) covering the Acquisition Properties. Such Reserve Report shall be
prepared in accordance with the procedures set forth in SECTION 5.10(a), shall
contain such other information as the Agent may reasonably request and shall
have an "as of date" as requested by the Agent. For any unscheduled
redetermination of the Borrowing Base the Borrower shall provide such Reserve
Report as soon as possible, but in any event no later than 30 days following the
Borrower's receipt of notice of such unscheduled redetermination from the Agent.
(c) With the delivery of each Reserve Report, the Borrower shall
provide to the Bank Group, a certificate from the Responsible Officer that, to
the best of his knowledge and in all material respects, (i) the information
contained in the Reserve Report and any other information delivered therewith is
true and correct, (ii) the Borrower owns good and defensible title to the
Acquisition Properties evaluated in such Reserve Report free of all Liens except
for Excepted Liens and that the Borrower has created or allowed to be created no
new Liens on such Acquisition Properties except for Excepted Liens, (iii)
except as set forth on an exhibit to the certificate, on a net basis there are
no gas imbalances, take or pay or other prepayments with respect to the
Acquisition Properties evaluated in such Reserve Report which would require the
Borrower to delivery Hydrocarbons produced from such Acquisition Properties at
some future time without then or thereafter receiving full payment therefor,
(iv) none of the Acquisition Properties have been sold (other than Hydrocarbons
produced and sold in the ordinary course of business) since the date of the last
Borrowing Base determination except as set forth on an exhibit to the
certificate, which certificate shall list all of the Acquisition Properties sold
(other than Hydrocarbons produced and sold in the ordinary course of business)
and in such detail as reasonably required by the Agent, (v) attached to the
certificate is a list of the Acquisition Properties added to and deleted from
the immediately prior Reserve Report and an updated list of all Persons (with
their addresses) disbursing proceeds to the Borrower from the Acquisition
Properties, (vi) except as set forth on a schedule attached to the certificate,
all of the Acquisition Properties evaluated by such Reserve Report are Mortgaged
Property, and (vii) any change in working interest or net revenue interest in
the Acquisition Properties occurring since the last Reserve Report and the
reason for such change.
(d) As soon as available and in any event within 45 days after the
end of each calendar quarter commencing with September 30, 1997, the Borrower
shall provide the Bank Group production reports for the Acquisition Properties
certified by an officer of the Borrower, which reports shall include quantities
or volume of production or gas throughput which have accrued to the Borrower's
accounts for each month in such period, and such other information with respect
thereto as the Agent may reasonably request.
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Section 5.11. TITLE. Promptly and in any event within 30 days after
written request therefor by the Agent, the Borrower will provide the Agent with
title opinions reasonably satisfactory to the Agent with respect to the
Acquisition Properties which are included in the most recent Reserve Report
delivered to the Bank Group and for which title opinions have not been
previously delivered so that the Agent will have acceptable title opinions on at
least eighty percent (80%) of the value of the Acquisition Properties included
in such Reserve Report. In addition, within 60 days after the Effective Date,
the Borrower shall provide evidence reasonably satisfactory to the Agent that
all of the title requirements pertaining to the Acquisition Properties set forth
in the title opinions delivered to the Agent under SECTION 3.01(g) have been
satisfied except for any such title requirements that have been waived in
writing by the Agent prior to such date.
Section 5.12. FURTHER ASSURANCES IN GENERAL. The Borrower shall, and
shall cause each of its Subsidiaries to, protect and perfect the Liens
contemplated by the Security Documents. The Borrower at its expense shall, and
shall cause each of its Subsidiaries to, promptly execute and deliver all such
other and further documents, agreements and instruments in compliance with or
accomplishment of the covenants and agreements of the Borrower or any of its
Subsidiaries in the Loan Documents, including, without limitation, the
accomplishment of any condition precedent that may have been waived by the Banks
prior to the initial Borrowing or any subsequent Borrowings.
Section 5.13. ENFORCEMENT OF ACQUISITION DOCUMENTS. The Borrower
will enforce in all material respects all of the terms, covenants, warranties
and representations in favor of the Borrower under the Acquisition Documents.
Section 5.14. DERIVATIVE TRANSACTIONS. (a) Within six months
following the Execution Date, the Borrower shall enter into one or more oil and
gas price Derivatives, providing for monthly settlements and having the economic
effect of establishing a floor or fixed price of not less than $18.00 per barrel
for oil production and $2.00 per MMBtu for gas production from the Borrower's
Oil and Gas Properties in volumes sufficient to assure the receipt by the
Borrower of the following gross amounts from such volumes for the years
indicated: (i) 1998 - $8,995,000 and (ii) 1999 - $7,288,000; (b) within twelve
months following the Execution Date, the Borrower shall enter into one or more
oil and gas price Derivatives, providing for monthly settlements and having the
economic effect of establishing a floor or fixed price of not less than $18.00
per barrel for oil production and $2.00 per MMBtu for gas production from the
Borrower's Oil and Gas Properties in volumes sufficient to assure the receipt by
the Borrower of $6,840,000 from such volumes for the calendar year 2000; and (c)
within six months following the Execution Date, the Borrower shall enter into
one or more fixed-for-floating interest rate Derivatives, with the Borrower as
fixed rate payer at a rate per annum not greater than 8%, the floating rate
payers' obligations to be based on one month or three month London interbank
offering rate, the notional principal amount thereof for each calculation period
to be not less than seventy-five percent (75%) of the corresponding amount of
Credit Outstanding during such period and the term of such interest rate
Derivative to be for a period initially equal to at least twenty-four months
from the effective date of such Derivatives, and, after the first six months of
such initial twenty-four month period, for a period at all times equal to at
least the following eighteen months not to exceed the Maturity Date. All such
Derivatives shall
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be with creditworthy counterparties and otherwise on terms and conditions
satisfactory to the Majority Banks and shall provide that all payments to the
Borrower shall be made to an account of the Borrower maintained with the
Agent. Upon the occurrence of an Event of Default the Borrower shall cause
such payments to be applied to the Obligations.
ARTICLE VI
NEGATIVE COVENANTS
So long as any principal amount of any Loan, any amount of interest
accrued under the Notes or any commitment, facility or other fee, expense,
compensation or any other amount payable to any member of the Bank Group under
the Loan Documents shall remain unpaid or outstanding, unless the Majority Banks
shall otherwise consent in writing:
Section 6.01. INDEBTEDNESS RESTRICTION. The Borrower will not
create, incur, assume or suffer to exist, any Indebtedness other than:
(a) Indebtedness of the Borrower under the Loan Documents;
(b) Indebtedness of the Borrower under the Revolving Loan Documents;
(c) Indebtedness of the Borrower in respect of any Derivatives
permitted by SECTION 6.03 of the Revolving Credit Agreement;
(d) the Indebtedness of the Borrower under the Senior Unsecured
Notes;
(e) Indebtedness set out on SCHEDULE 6.01;
(f) Indebtedness of Borrower in the aggregate amount not to exceed
$1,000,000 in addition to all other Indebtedness permitted by this SECTION 6.01.
Section 6.02. LIEN RESTRICTION. The Borrower will not create,
incur, assume or suffer to be created, assumed or incurred or to exist, any Lien
upon any of the Borrower's Properties, whether now owned or hereafter acquired
other than the following Liens ("EXCEPTED LIENS"):
(a) Liens created pursuant to this Agreement or any other Loan
Document;
(b) Liens created pursuant to any of the Revolving Loan Documents;
(c) Liens in favor of the trustee under Section 7.07 of the
Indenture;
(d) royalties, overriding royalties, reversionary interests,
production payments and similar burdens with respect to the Borrower's Oil and
Gas Properties to the extent such burdens do not reduce the Borrower's net
interests in production in its Oil and Gas Properties below the
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interests reflected in each Reserve Report or the interests warranted under
this Agreement and the Acquisition Mortgage, and do not operate to deprive
the Borrower or its Subsidiaries of any material rights in respect of its
assets or properties (except for rights customarily granted with respect to
such interests);
(e) statutory liens, including liens for taxes or other assessments
that are not yet delinquent (or that, if delinquent, are being contested in good
faith by appropriate proceedings and for which the Borrower has set aside on
their books adequate reserves in accordance with generally accepted accounting
principles consistently applied);
(f) easements, rights of way, servitudes, permits, surface leases and
other rights in respect to surface operations, pipelines, grazing, logging,
canals, ditches, reservoirs or the like, conditions, covenants and other
restrictions, and easements of streets, alleys, highways, pipelines, telephone
lines, power lines, railways and other easements and rights of way on, over or
in respect of the Borrower's Properties;
(g) materialmen's, mechanic's, repairman's, contractor's, sub-
contractor's, operator's and other Liens incidental to the construction,
maintenance, development or operation of the Borrower's Properties to the extent
not delinquent (or which, if delinquent, are being contested in good faith by
appropriate proceedings and for which the Borrower has set aside on its books
adequate reserves in accordance with generally accepted accounting principles
consistently applied);
(h) all contracts, agreements and instruments, and all defects and
irregularities and other matters affecting the Borrower's Properties which were
in existence at the time such Properties were originally acquired by the
Borrower and all routine operational agreements entered into in the ordinary
course of business, which contracts, agreements, instruments, defects,
irregularities and other matters and routine operational agreements do not
reduce the Borrower's net interest in production in its Oil and Gas Properties
below the interests reflected in each Reserve Report or the interests warranted
under this Agreement or the Acquisition Mortgage and do not interfere materially
with the operation, value or use of the Borrower's Properties;
(i) landlord's liens securing obligations that are not yet delinquent
(or that, if delinquent, are being contested in good faith by appropriate
proceedings and for which the Borrower has set aside on its books adequate
reserves in accordance with generally accepted accounting principles
consistently applied);
(j) Liens in connection with workmen's compensation, unemployment
insurance or other social security, old age pension or public liability
obligations that are not yet delinquent (or that, if delinquent, are being
contested in good faith by appropriate proceedings and for which the Borrower or
its Subsidiaries have set aside on their books adequate reserves in accordance
with generally accepted accounting principles consistently applied);
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(k) rights reserved to or vested in any municipality, governmental,
statutory or other public authority to control or regulate the Borrower's
Properties in any manner, and all applicable laws, rules and orders from any
Governmental Authority;
PROVIDED, HOWEVER, that the definition of the term "Excepted Liens" does not
include Liens of any kind or character which are prior by perfection to the
Liens on the Mortgaged Property under the Security Documents, or which may, by
operation of law, become prior to such Liens under the Security Documents.
Section 6.03. [INTENTIONALLY OMITTED].
Section 6.04. INTEREST COVERAGE RATIO. The Borrower will not permit
the ratio of (a) EBITDA to (b) Interest Expense, measured as of the last day of
any calendar quarter for the twelve month period then ended, to be less than
2.25 to 1.00 as of the last day of any calendar quarter through September 30,
1997 or to be less than 2.50 to 1.00 as of the last day of any calendar quarter
after September 30, 1997.
Section 6.05. CURRENT RATIO. The Borrower will not permit the ratio
of (i) its consolidated current assets, plus that portion of any unfunded
Revolving Facility Commitment available based on the most recent determination
of the "Borrowing Base" under the Revolving Credit Agreement that can be
borrowed without causing a "Default" or "Event of Default" to occur under the
Indenture, to (ii) its consolidated current liabilities, excluding current
maturities of Indebtedness under this Agreement and the Revolving Credit
Agreement, at the end of any calendar quarter ending on or after September 30,
1997 to be less than 1.00 to 1.00.
Section 6.06. TANGIBLE NET WORTH. The Borrower will not permit its
Consolidated Tangible Net Worth at the end of any calendar quarter ending after
the Effective Date to be less than the sum of (a) $30,000,000.00 plus (b)
seventy-five percent (75%) of Net Income for each fiscal quarter ending after
the Effective Date (excluding any such calendar quarter in which Net Income is a
loss), plus (c) seventy-five percent (75%) of the proceeds of any equity
offering or similar capital infusion after the Effective Date.
Section 6.07. SALES OF PROPERTIES. The Borrower will not sell,
transfer, assign, farm-out, lease or otherwise transfer or dispose of any
Properties other than (a) sales of Hydrocarbon production in the ordinary course
of business and sales of obsolete or worn-out equipment in the ordinary course
of business, and (b) any other sale of Properties sold at fair market value, so
long as the aggregate Net Proceeds for all such sales made under this subclause
(b) during the period between each redetermination of the Borrowing Base does
not exceed $1,000,000.
Section 6.08. CONSOLIDATION AND MERGERS. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, consolidate
with or merge into any Person or permit any Person to consolidate with or merge
into it, except that any Subsidiary of the Borrower may merge into or
consolidate with any other Subsidiary of the Borrower and any Subsidiary of the
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Borrower may merge into or consolidate with the Borrower, provided in each case
that, immediately after giving effect and pro forma effect thereto, no event
shall occur and be continuing which constitutes either a Default or an Event of
Default, and if the Borrower is a party to such merger, the Borrower is the
surviving entity.
Section 6.09. RESTRICTED DISBURSEMENTS. The Borrower will not
approve, make, incur or commit to incur any Restricted Disbursements other than:
(a) advances or extensions of credit on terms customary in the
industry involved in the form of accounts receivable incurred, and investments,
loans, and advances made in settlement of such accounts receivable, all in the
ordinary course of business;
(b) Permitted Investments;
(c) purchases of not more than 402,000 shares of the Borrower's
common stock under the Borrower's previously announced stock repurchase program;
(d) investments or capital contributions made by the Borrower in or
to ▇▇▇▇▇▇▇▇ Redeco not to exceed $2,500,000 during any calendar year or
$5,000,000 in the aggregate; and
(e) the Restricted Disbursements set out on SCHEDULE 6.09.
Section 6.10. LINES OF BUSINESS. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly engage in any business
other than the acquisition, disposition, exploration, ownership, development and
operation of Oil and Gas Properties.
Section 6.11. TRANSACTIONS WITH AFFILIATES. Except as set out in
SCHEDULE 6.11, neither the Borrower nor any of its Subsidiaries, will enter into
any transaction with an Affiliate other than (a) transactions entered into in
the ordinary course of business and upon terms no less favorable than those that
the Borrower or its Subsidiary, as applicable, could obtain in an arms length
transaction with a Person that is not an Affiliate and (b) transactions between
the Borrower and any of its Subsidiaries, or between such Subsidiaries, that do
not and will not, either directly or indirectly, cause an Event of Default.
ARTICLE VII
DEFAULT AND REMEDIES
Section 7.01. EVENTS OF DEFAULT. If any of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:
(a) the Borrower shall fail to pay when due any installment of
principal of the Notes; or
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(b) the Borrower shall fail to pay any interest on any Loan or any
arrangement fee, administration fee, funding fee, commission, expense,
compensation, reimbursement or other amount when due and such failure shall not
have been remedied within four (4) days of such due date; or
(c) the Borrower shall fail to perform any term, covenant or
agreement contained in ARTICLE VI or SECTION 5.01(e) of this Agreement; or
(d) the Borrower shall fail to perform any term, covenant or
agreement contained in this Agreement (other than those referenced in
subsections (a), (b) and (c) of this SECTION 7.01) and such failure shall not
have been remedied within twenty (20) days after notice thereof from the Agent
to the Borrower; or
(e) the Borrower or any of its Subsidiaries shall fail to perform any
term, covenant or agreement contained in any Loan Document (other than those
referenced in subsections (a), (b), (c) and (d) of this SECTION 7.01) and such
failure shall not have been remedied within twenty (20) days after notice
thereof from the Agent to the Borrower; or
(f) any representation or warranty made by the Borrower, or any of
its officers, in any Loan Document or in any certificate, agreement, instrument
or statement contemplated by or delivered pursuant to, or in connection with,
any Loan Document shall prove to have been incorrect in any material respect
when made; or
(g) the Borrower or any of its Subsidiaries shall (i) fail to pay
Indebtedness having a principal amount in excess of $500,000 in the aggregate
(other than the amounts referred to in subsections (a) and (b) of this
SECTION 7.01) owing by such Person, or any interest or premium thereon, when due
(or, if permitted by the terms of the relevant document, within any applicable
grace period), whether such Indebtedness shall become due by scheduled maturity,
by required prepayment, by acceleration, by demand or otherwise; or (ii) fail to
perform any term, covenant or condition on its part to be performed under any
agreement or instrument evidencing, securing or relating to any such
Indebtedness, when required to be performed, and such failure shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such failure is to accelerate, or to permit the
holder or holders of such Indebtedness to accelerate, the maturity of such
Indebtedness; or
(h) any Loan Document shall (other than with the consent of the
Majority Banks), at any time after its execution and delivery and for any
reason, cease to be in full force and effect or to provide the Liens
contemplated thereby, or shall be declared to be null and void, or the validity
or enforceability thereof or of the Liens contemplated thereby shall be
contested by any Person party to the Loan Documents or any such Person shall
deny that it has any or further liability or obligation under any Loan Document;
or
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(i) the Borrower or any of its Subsidiaries shall be adjudicated
insolvent, or shall generally not pay, or admit in writing its inability to pay,
its debts as they mature, or make a general assignment for the benefit of
creditors, or any proceeding shall be instituted by any such Person seeking to
adjudicate it insolvent, seeking liquidation, winding-up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any substantial part
of its property, or the Borrower or any of its Subsidiaries shall take any
action in furtherance of any of the actions set forth above in this
SECTION 7.01(i); or
(j) any proceeding of the type referred to in SECTION 7.01(i) is
filed, or any such proceeding is commenced against the Borrower or any of its
Subsidiaries or any such Person by any act indicates its approval thereof,
consent thereto or acquiescence therein, or an order for relief is entered in an
involuntary case under the bankruptcy law of the United States, or an order,
judgment or decree is entered appointing a trustee, receiver, custodian,
liquidator or similar official or adjudicating any such Person insolvent, or
approving the petition in any such proceedings, and such order, judgment or
decree remains in effect for sixty (60) days; or
(k) a final judgment or order for the payment of money in excess of
$500,000 (net of acknowledged, uncontested insurance coverage) shall be rendered
against the Borrower or any of its Subsidiaries and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) a stay of enforcement of such judgment or order by reason of a
pending appeal or otherwise, shall not be in effect for any period of thirty
(30) consecutive days; or
(l) if (i) any Pension Plan shall fail to satisfy the minimum funding
standards of ERISA or the Internal Revenue Code for any plan year or part
thereof or a waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Internal Revenue Code, (ii) a notice
of intent to terminate any Pension Plan shall have been or is reasonably
expected to be filed with the PBGC or the PBGC shall have instituted proceedings
under Section 4042 of ERISA to terminate or appoint a trustee to administer any
Pension Plan or the PBGC shall have notified the Borrower or any ERISA Affiliate
or Subsidiary that a Pension Plan may become a subject to any such proceedings,
(iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning
of Section 4001(a)(18) of ERISA) under all Pension Plans, determined in
accordance with Title IV of ERISA, shall exceed $100,000, (iv) the Borrower or
any ERISA Affiliate or Subsidiary shall have incurred or is reasonably expected
to incur any liability pursuant to Title I or IV of ERISA, the penalty or excise
tax provisions of the Internal Revenue Code relating to employee benefit plans
and/or other liability with respect to one or more Other Benefit Plans, (v) the
Borrower or any ERISA Affiliate or Subsidiary withdraws from any Multiemployer
Plan, (vi) the Borrower or any ERISA Affiliate or Subsidiary fails to make any
contribution due, or payment to, any Pension Plan, Multiemployer Plan and/or
Other Benefit Plan, or (vii) the Borrower or any ERISA Affiliate or Subsidiary
establishes or amends any employee welfare benefit plan that provides post-
employment welfare benefits in a manner that would increase the liability of the
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Borrower or any ERISA Affiliate or Subsidiary thereunder, and any such event or
events described in clauses (i) through (vii) above, either individually or
together with any other such event or events, could reasonably be expected to
have a Material Adverse Effect; or
(m) any event which has a Material Adverse Effect shall occur; or
(n) a Change of Control shall occur; or
(o) an "Event of Default" shall occur under the Indenture; or
(p) an "Event of Default" shall occur under the Revolving Credit
Agreement;
then, (i) upon the occurrence of any Event of Default described in
SECTION 7.01(i) or SECTION 7.01(j), (A) the Commitments shall automatically
terminate and (B) the entire unpaid principal amount of all Loans, all interest
accrued and unpaid thereon, and all other amounts payable by the Borrower under
this Agreement, the Notes, the other Loan Documents and any other agreement or
security document contemplated by or delivered in connection with this Agreement
shall automatically become immediately due and payable, without presentment for
payment, demand, protest, notice of intent to accelerate, notice of acceleration
or further notice of any kind, all of which are hereby expressly waived by the
Borrower, and (ii) upon the occurrence of any Event of Default, the Agent may,
and upon the direction of the Majority Banks shall, by notice to the Borrower
(A) declare the Commitments to be terminated, whereupon the same shall forthwith
terminate and (B) declare the entire unpaid principal amount of all Loans, all
interest accrued and unpaid thereon, and all other amounts payable by the
Borrower under this Agreement, the Notes, the other Loan Documents and any other
agreement or security document contemplated by or delivered in connection with
this Agreement, to be forthwith due and payable, whereupon all such amounts
shall become and be forthwith due and payable, without presentment for payment,
demand, protest, notice of intent to accelerate, notice of acceleration or
further notice of any kind, all of which are hereby expressly waived by the
Borrower.
Section 7.02. SETOFF IN EVENT OF DEFAULT. Upon the occurrence and
during the continuance of any Event of Default, each member of the Bank Group is
hereby authorized, at any time and from time to time, without notice to the
Borrower (any such notice being expressly waived by the Borrower) and to the
fullest extent permitted by applicable law, to setoff and apply any and all
deposits at any time held and other indebtedness at any time owing by such
member of the Bank Group (or any branch, subsidiary or affiliate of such member
of the Bank Group) to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower or any other Person, now or
hereafter existing under this Agreement, the Notes or the other Loan Documents,
irrespective of whether or not such member of the Bank Group shall have made any
demand for satisfaction of such obligations and although such obligations may be
unmatured. Any member of the Bank Group exercising such right agrees to notify
the Borrower promptly after any such setoff and application made by such Person;
PROVIDED, that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of the Bank Group under this
SECTION 7.02 are
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in addition to other rights and remedies (including, without limitation,
other rights of setoff) which the Bank Group may have hereunder or under any
applicable law.
Section 7.03. NO WAIVER; REMEDIES. No failure on the part of any
member of the Bank Group to exercise, or any delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided in any of the other Loan
Documents or by law.
Section 7.04. HYDROCARBON PROCEEDS. Notwithstanding that, by the
terms of the various Security Documents, Borrower is and will be absolutely and
unconditionally assigning to the Agent for the ratable benefit of the Banks all
Hydrocarbons and all proceeds therefrom accruing to the interest of the Borrower
in the Mortgaged Property, so long as no Event of Default has occurred the
Borrower shall have the right (revocable at any time by the Agent upon the
occurrence of an Event of Default) to receive from the purchasers of production
all such Hydrocarbon proceeds, subject, however, to the Liens created under the
Security Documents, which Liens are hereby affirmed and ratified. Upon the
occurrence of an Event of Default, the Agent may exercise all rights and
remedies granted under the Security Documents, including the right to obtain
possession of all such Hydrocarbon proceeds then held by the Borrower or to
receive directly from the purchasers of production all other such Hydrocarbon
proceeds. In no case shall any failure, whether purposed or inadvertent, by the
Agent to collect directly any such Hydrocarbon proceeds constitute in any way a
waiver, remission or release of any of its rights under the Security Documents,
nor shall any release of any such Hydrocarbon proceeds by the Agent to the
Borrower constitute a waiver, remission or release of any other such Hydrocarbon
proceeds or of any rights of the Agent to collect other such proceeds
thereafter.
Section 7.05. APPLICATION OF PROCEEDS AFTER ACCELERATION. If any
Event of Default shall have occurred and be continuing, and if the Obligations
have become due and payable, all cash collateral held by the Agent under this
Agreement and the proceeds of any sale, disposition or other realization by the
Agent upon the Mortgaged Property (or any portion thereof) pursuant to the
Security Documents, shall be distributed in whole or in part by the Agent in the
following order of priority, unless otherwise directed by all of the Banks:
FIRST, to the Agent and the Co-Agent, ratably, in an amount equal to
all costs and expenses of the Agent and the Co-Agent due and payable as of
the date of such distribution;
SECOND, to the Banks, ratably, in an amount equal to all accrued
interest and fees owing to the Banks under the Credit Agreement due and
payable as of the date of such distribution; PROVIDED, HOWEVER, that in
case such proceeds shall be insufficient to pay in full all such
Obligations, then to the payment thereof to the Banks, ratably, in
proportion to its percentage of the sum of the aggregate amounts of all
such Obligations;
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THIRD, to the Banks, ratably, in an amount equal to the principal of
all Loans owing to the Banks under the Credit Agreement due and payable as
of the date of such distribution; PROVIDED, HOWEVER, that in case such
proceeds shall be insufficient to pay in full all such Obligations, then to
the payment thereof to the Banks, ratably, in proportion to its percentage
of the sum of the aggregate amounts of all such Obligations;
FOURTH, to the Banks, ratably, in an amount equal to all amounts owing
to the Banks under all Bank Group Derivatives due and payable as of the
date of such distribution; PROVIDED, HOWEVER, that in case such proceeds
shall be insufficient to pay in full all such Obligations, then to the
payment thereof to the Banks, ratably, in proportion to its percentage of
the sum of the aggregate amounts of all such Obligations;
FIFTH, to the Banks in an amount equal to all other Obligations due
and payable as of the date of such distribution; PROVIDED, HOWEVER, that in
case such proceeds shall be insufficient to pay in full all such
Obligations, then to the payment thereof to the Banks, ratably, in
proportion to its percentage of the sum of the aggregate amounts of all
such Obligations; and
SIXTH, to the extent of any surplus, to the Borrower, as its interests
may appear, except as may be provided otherwise by law;
it being understood that the Borrower shall remain liable to the extent of any
deficiency between the amount of the proceeds of the Mortgaged Property and the
aggregate of the sums referred to in clauses FIRST through FIFTH above.
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ARTICLE VIII
THE AGENT AND THE CO-AGENT
Section 8.01. AUTHORIZATION AND ACTION. Each Bank hereby appoints
and authorizes the Agent to take such action in such capacity on such Bank's
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto. As to any
matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes or of amounts owing under the
other Loan Documents), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Banks, and such instructions shall be
binding upon all Banks and any other holders of Notes; PROVIDED, HOWEVER, that
the Agent shall not be required to take any action which exposes it to personal
liability or which is contrary to the Loan Documents or applicable law. The
Agent is hereby expressly authorized on behalf of the other members of the Bank
Group, without hereby limiting any implied authority, (a) to receive on behalf
of each of the other members of the Bank Group any payment of principal of or
interest on the Loans outstanding hereunder, and all other amounts accrued
hereunder paid to such Persons, and promptly to distribute to each other member
of the Bank Group its proper share of all payments so received; (b) to give
notice within a reasonable time on behalf of each other member of the Bank Group
to the Borrower of any Default or Event of Default specified in this Agreement
of which the Agent has actual knowledge as provided in SECTION 8.09; (c) to
distribute to the other members of the Bank Group copies of all notices,
agreements and other material as provided for in this Agreement as received by
such Person; and (d) to distribute to the Borrower any and all requests, demands
and approvals received by such Person from any other member of the Bank Group.
Nothing herein contained shall be construed to constitute the Agent as a trustee
for any holder of the Notes or of a participation therein, nor to impose on the
Agent any duties or obligations other than those expressly provided for in the
Loan Documents.
Section 8.02. RELIANCE, ETC. None of the Agent, its Affiliates and
their directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement (INCLUDING ANY ACT OR OMISSION CONSTITUTING ORDINARY NEGLIGENCE,
WHETHER SOLE OR CONTRIBUTORY, ON BEHALF OF SUCH PERSON), except for its or their
own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, the Agent: (a) may treat the payee of any Note as
the holder thereof until the Agent receives and accepts an Assignment and
Acceptance entered into by the Bank which is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, as provided in SECTION 9.02;
(b) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or representation to any Bank and shall not be responsible to any Bank
for any statements, warranties or representations (whether written or oral) made
in or in connection with this Agreement or the other Loan Documents; (d) shall
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not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of the Borrower or any other Person or to inspect the
property (including the books and records) of the Borrower or any other Person;
(e) shall not be responsible to any Bank for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Loan
Document, any collateral provided for therein, or any other instrument or
document furnished pursuant thereto; and (f) shall incur no liability under or
in respect of this Agreement by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopier, telegram, cable or
telex) believed by it to be genuine and signed or sent by the proper party or
parties. None of the Agent, its Affiliates and their directors, officers,
employees or agents shall have any responsibility to the Borrower on account of
the failure or delay in performance or breach by any Bank of any of its
obligations hereunder or to any Bank on account of the failure of or delay in
performance or breach by any other Bank or the Borrower of any of its
obligations hereunder or in connection herewith.
Section 8.03. BTCO AND AFFILIATES. Without limiting the right of any
other Bank to engage in any business transactions with the Borrower or any of
its Affiliates, with respect to its Commitment, the Loans made by it and the
Notes issued to it, Bankers Trust Company ("BTCO") shall have the same rights
and powers under this Agreement as any other Bank and may exercise the same as
though it were not the Bank or the Agent; and the term "Bank" or "Banks" shall,
unless otherwise expressly indicated, include BTCo in its individual capacity.
BTCo, or any of its Affiliates, may be engaged in, or may hereafter engage in,
one or more loan, letter of credit, leasing, derivative or other financing
activities not the subject of the Loan Documents (collectively, the "OTHER
FINANCINGS") with the Borrower or any of its Affiliates, or may act as trustee
on behalf of, or depositary for, or otherwise engage in other business
transactions with the Borrower or any of its Affiliates (all Other Financings
and other such business transactions being collectively, the "OTHER ACTIVITIES")
with no responsibility to account therefor to the Banks. Without limiting the
rights and remedies of the Banks specifically set forth in the Loan Documents,
no other Bank shall have any interest in (a) any Other Activities, (b) any
present or future guarantee by or for the account of the Borrower not
contemplated or included in the Loan Documents, (c) any present or future offset
exercised by BTCo in respect of any such Other Activities, (d) any present or
future property taken as security for any such Other Activities or (e) any
property now or hereafter in the possession or control of BTCo which may be or
become security for the obligations of the Borrower under the Loan Documents by
reason of the general description of indebtedness secured, or of property,
contained in any other agreements, documents or instruments related to such
Other Activities; PROVIDED, that if any payment in respect of such guarantees or
such property or the proceeds thereof shall be applied to reduction of the
obligations evidenced hereunder and by the Notes, then each Bank shall be
entitled to share in such application according to its pro rata portion of such
obligations.
Section 8.04. BANK CREDIT DECISION. Each Bank acknowledges that it
has, independently and without reliance upon any other member of the Bank Group
and based on the financial statements referred to in SECTION 4.06 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each
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Bank also acknowledges that it will, independently and without reliance upon
any other member of the Bank Group and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement.
Section 8.05. INDEMNIFICATION. The Banks agree to indemnify each of
the Agent and the Co-Agent, its Affiliates or any of their respective directors,
officers, agents or employees (to the extent not reimbursed by the Borrower),
ratably according to its Commitment Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against any such Person in any way relating
to or arising out of this Agreement or the other Loan Documents or any action
taken or omitted by any such Person under this Agreement or the other Loan
Documents, PROVIDED, that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Person's gross negligence
or willful misconduct. IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT
THE AGENT, THE CO-AGENT AND AFFILIATES AND THEIR RESPECTIVE DIRECTORS, OFFICERS,
AGENTS OR EMPLOYEES SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND ARISING OUT OF OR RESULTING FROM
THE ORDINARY NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OF SUCH PERSON. Neither
the Agent nor the Co-Agent shall be required to do any act hereunder or under
any other document or instrument delivered hereunder or in connection herewith
or take any action toward the execution or enforcement of the agencies hereby
created, or to prosecute or defend any suit in respect of this Agreement or the
Loan Documents or any collateral security, unless indemnified to its
satisfaction by the holders of the Notes against loss, cost, liability, and
expense. If any indemnity furnished to the Agent and the Co-Agent, for any
purpose is, in the opinion of such Person insufficient or becomes impaired, such
Person may call for additional indemnity and not commence or cease to do the
acts indemnified against until such additional indemnity is furnished. Without
limitation of the foregoing, each Bank agrees to reimburse the Agent or the
Co-Agent, promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by such Person in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and the other Loan Documents, to the extent that the Agent is not reimbursed for
such expenses by the Borrower.
Section 8.06. EMPLOYEES OF THE AGENT. The Agent may execute any of
its duties under this Agreement, the other Loan Documents and any instrument,
agreement or document executed, issued or delivered pursuant hereto or thereto
or in connection herewith or therewith, by or through employees, agents and
attorneys-in-fact, and shall not be answerable for the default or misconduct of
any such employee, agent or attorney-in-fact selected by it with reasonable
care. The Agent may, and upon the written instruction of the Majority Banks
shall, enforce on behalf of the
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Banks any claims which the Agent and/or the Banks may have against any such
employee, agent or attorney-in-fact, and any recovery therefrom shall be
applied for the pro rata benefit of the Banks.
Section 8.07. SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the other members of the Bank Group and the
Borrower and may be removed at any time with or without cause by the Majority
Banks. Upon any such resignation or removal, the Majority Banks shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Majority Banks, and shall have accepted such appointment,
within thirty (30) days after the retiring Agent's giving of notice of
resignation or the Majority Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be a commercial bank or corporation organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement, subject to the requirement that
such retiring Agent will execute such documents and take such actions as may be
necessary or desirable to cause the successor Agent to be vested with all such
rights, powers, privileges and duties. After any retiring Agent's resignation
or removal hereunder as Agent, the provisions of this ARTICLE VIII shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. All reasonable costs and expenses incurred by the
Bank Group in connection with any amendments or other documentation required by
this SECTION 8.07 shall be paid by the Borrower pursuant to SECTION 9.04 hereof.
Section 8.08. SUCCESSOR CO-AGENT. The Co-Agent may resign at any
time by giving written notice thereof to the other members of the Bank Group and
the Borrower and may be removed at any time with or without cause by the
Majority Banks. Upon any such resignation or removal, the Majority Banks shall
have the right to appoint a successor Co-Agent. If no successor Co-Agent shall
have been so appointed by the Majority Banks, and shall have accepted such
appointment, within thirty (30) days after the retiring Co-Agent's giving of
notice of resignation or the Majority Banks' removal of the retiring Co-Agent,
then the retiring Co-Agent may, on behalf of the Banks, appoint a successor Co-
Agent, which shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as Co-
Agent hereunder by a successor Co-Agent, such successor Co-Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Co-Agent, and the retiring Co-Agent shall be discharged from its
duties and obligations under this Agreement, subject to the requirement that
such retiring Co-Agent will execute such documents and take such actions as may
be necessary or desirable to cause the successor Co-Agent to be vested with all
such rights, powers, privileges and duties. After any retiring Co-Agent's
resignation or removal hereunder as Co-Agent, the provisions of this
ARTICLE VIII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Co-Agent under this Agreement. All reasonable costs
and expenses incurred by the Bank Group in connection with any amendments or
other documentation required by this SECTION 8.08 shall be paid by the Borrower
pursuant to SECTION 9.04 hereof.
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Section 8.09. NOTICE OF DEFAULT. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless it shall have received notice from a Bank or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default" or "notice of event of
default," as applicable. If the Agent receives such a notice from the Borrower,
the Agent shall give notice thereof to the other members of the Bank Group and,
if such notice is received from a Bank, the Agent shall give notice thereof to
the other members of the Bank Group and the Borrower. The Agent shall be
entitled to take action or refrain from taking action with respect to such
Default or Event of Default as provided in this ARTICLE VIII.
Section 8.10. EXECUTION OF LOAN DOCUMENTS. Each member of the Bank
Group hereby authorizes and directs the Agent to execute and deliver on its
behalf each Loan Document to be executed by the Agent pursuant to the terms of
this Agreement.
ARTICLE IX
MISCELLANEOUS
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Section 9.01. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement, any Note or any other Loan Document, or consent to
any departure by any Person herefrom or therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Borrower and the
Majority Banks, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; PROVIDED, that
no amendment, waiver or consent shall, unless in writing and signed by all the
Banks, do any of the following: (a) waive any of the conditions specified in
ARTICLE III, (b) increase the Commitments of the Banks or subject the Banks to
any additional obligations, (c) reduce the principal of, or interest on, the
Notes or any fees or other amounts payable hereunder, (d) postpone any date
fixed for any payment of principal of, or interest on, the Notes or any fees or
other amounts payable hereunder, (e) release the Borrower or any other Person
from its payment obligations to the Bank Group, regardless of whether such
obligations are those of a primary obligor, a guarantor or surety, or otherwise,
(f) authorize the Agent to release Liens against a substantial portion of any
collateral covered by the Security Documents, (g) take action which expressly
requires the signing of all the Banks pursuant to the terms of this Agreement,
(h) reduce the Commitment Percentages or the aggregate unpaid principal amount
of the Notes, or the number of Banks, as the case may be, required for the Agent
or the Banks or any of them to take any action under this Agreement or reduce
the percentage of Majority Banks or (i) amend this SECTION 9.01; PROVIDED,
FURTHER, that no amendment, waiver or consent shall, (1) unless in writing and
signed by the Co-Agent in addition to the Banks required above to take such
action, effect the rights or duties of the Co-Agent under this Agreement or any
other Loan Documents and (2) unless in writing and signed by the Agent in
addition to the Banks required above to take such action, affect the rights or
duties of the Agent under this Agreement or any other Loan Document.
Notwithstanding the foregoing, the Agent may (without the consent of the Banks)
release the Lien created under the Security Documents on any assets of the
Borrower or any of its Subsidiaries if the sale of such assets is permitted
under SECTION 6.07.
Section 9.02. PARTICIPATION AGREEMENTS AND ASSIGNMENTS. (a) Each
Bank may assign to one or more Eligible Assignees all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the Loans owing to it, the Note or the Notes held
by it and the other Loan Documents); PROVIDED, that (i) each such assignment
shall be of a constant, and not a varying, percentage of all rights and
obligations of the assignor under this Agreement, the other Loan Documents, and
the Revolving Loan Documents and no assignment shall be made unless it covers a
pro rata share of all rights and obligations of such assignor under this
Agreement, the other Loan Documents and the Revolving Loan Documents, (ii) the
amount of the Commitment of the assigning Bank being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall, unless otherwise agreed to by the Agent or
unless such assignment is to a member of the Bank Group, in no event be less
than $5,000,000, (iii) each such assignment to an Eligible Assignee who is not a
member of the Bank Group must be approved by the Agent and, so long as no
Default exists, the Borrower, which approval shall not be unreasonably withheld
and (iv) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register (defined below), an
Assignment and Acceptance, together with any Note subject to such assignment and
a recordation fee in the aggregate amount of $3,500 for processing such
assignment and the
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related assignment under the Revolving Credit Agreement. Upon such execution,
delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (x) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations under
the Loan Documents have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Bank under the Loan
Documents, (y) the assigning Bank thereunder shall, to the extent that rights
and obligations under the Loan Documents have been assigned by it pursuant to
such Assignment and Acceptance, relinquish its rights and be released from
further obligations under the Loan Documents (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an
assigning Bank's rights and obligations under this Agreement, such Bank shall
cease to be a party hereto) and (z) be deemed to have made, as of such
effective date, to the Agent and the Borrower the representations and
warranties set forth in SECTION 2.09(f) hereof.
(b) By executing and delivering an Assignment and Acceptance, the
assigning Bank thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Bank makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or any other instrument or document furnished
pursuant hereto; (ii) such assigning Bank makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or any other Person or the performance or observance by the Borrower or
any other Person of any of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement and the other Loan Documents,
together with copies of the financial statements referred to in SECTION 4.06 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon any member of
the Bank Group (including such assigning Bank) and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Agent, to take such action on its behalf and to exercise such
powers under this Agreement and the other Loan Documents as are delegated to
such Person by the terms thereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement and the other Loan Documents are required to be performed by it as a
Bank.
(c) The Agent shall maintain at its address referred to in
SECTION 9.03 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the Banks
and the Commitment of, and principal amount of the Loans owing to, each Bank
from time to time (the "REGISTER"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the Borrower
and each member of the Bank Group may treat each Person whose name is recorded
in the Register as a Bank
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hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any member of the Bank Group at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an assignee representing that it is an Eligible Assignee,
together with any Notes subject to such assignment and the administrative fee
payable to the Agent for such assignment, the Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of
EXHIBIT 9.02 hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower. Within five (5) Business Days after its receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Agent, in exchange for the surrendered Notes, new Notes to the order of such
Eligible Assignee in an amount corresponding to the Commitment assumed by such
Eligible Assignee pursuant to such Assignment and Acceptance and, if the
assigning Bank has retained a Commitment hereunder, new Notes to the order of
the assigning Bank in an amount corresponding to the Commitment retained by it
hereunder. Such new Notes shall be in an aggregate principal amount equal to
the aggregate principal amount of such surrendered Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form prescribed by SECTION 2.04 hereto.
(e) Each Bank may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment and
the Loans owing to it); PROVIDED, that (i) such Bank's obligations under this
Agreement (including, without limitation, its Commitment to the Borrower
hereunder) and the other Loan Documents shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the performance
of such obligations, and the participating banks or other entities shall not be
considered a "Bank" for purposes of the Loan Documents, (iii) the participating
banks or other entities shall be entitled to the cost protection provisions
contained in SECTIONS 2.09 through 2.12 to the same extent that the Bank from
which such participating bank or other entity acquired its participation would
be entitled to the benefit of such cost protection provisions, and (iv) the
Borrower and the other members of the Bank Group shall continue to deal solely
and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement and the other Loan Documents, and such Bank
shall retain the sole right to enforce the obligations of the Borrower relating
to the Loans and to approve any amendment, modification or waiver of any
provision of this Agreement (other than amendments, modifications or waivers
with respect to the amounts of any fees payable hereunder or the amount of
principal of or the rate at which interest is payable on the Loans or the dates
fixed for payments of principal or interest on the Loans).
(f) Any Bank may at any time pledge or assign all or any portion of
its rights under this Agreement and the other Loan Documents to any Federal
Reserve Bank without notice to or consent of the Borrower. No such pledge or
assignment shall release the assigning Bank from its obligations hereunder.
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(g) The Agent and each Bank may furnish any information concerning
the Borrower or its Subsidiaries in the possession of the Agent or such Bank
from time to time to Affiliates of the Agent or such Bank (including without
limitation, in the case of Bankers Trust Company, BT Securities Corporation and
its employees, to the extent necessary for the purposes contemplated by this
Agreement, including, without limitation, the syndication of the credit
facilities contemplated hereby) and, in the case of each Bank, to assignees and
participants (including prospective assignees and participants) of such Bank.
Each Bank will take reasonable steps to protect the confidentiality of any
information concerning the Borrower or its Subsidiaries provided to a respective
participant or assignee and known by such Bank to be confidential, and, if
requested by the Borrower, such Bank will identify the prospective assignees and
participants that have received such information.
Section 9.03. NOTICES. All correspondence, statements, notices,
requests and demands (collectively "COMMUNICATIONS") shall be in writing
(including telegraphic Communications) and mailed, telegraphed, telecopied,
facsimile transmitted or delivered as follows:
if to the Borrower --
▇▇▇▇▇▇▇▇ Energy, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
P. O. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ Page
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
if to the Agent--
Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Deal Administrator
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇ or ▇▇▇-▇▇▇-▇▇▇▇
with a copy to --
BT Securities Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
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if to any Bank, at its Domestic Lending Office, or as to each such party, at
such other address as such party shall designate in a written Communication to
each of the other parties hereto. All such Communications shall be effective,
in the case of written or telegraphed Communications, when deposited in the
mails or delivered to the telegraph company, respectively, and, in the case of a
Communication by telecopy or facsimile transmission, when telecopied or
transmitted against receipt of a confirmation, in each case addressed as
aforesaid, except that Communications to any member of the Bank Group pursuant
to ARTICLE II and ARTICLE VIII shall not be effective until received by such
Persons.
Section 9.04. COSTS AND EXPENSES. The Borrower agrees to pay on
demand (a) all reasonable costs and expenses of the Agent (including, without
limitation, fees and expenses of legal counsel, consultants and engineers of the
Agent), incurred in connection with the preparation, execution, delivery,
filing, administration and recording of the Loan Documents and any other
agreements or security documents delivered in connection with or pursuant to any
of the Loan Documents, any amendment, waiver or other modification relating to
the foregoing, and the syndication of this Agreement both before and after the
date hereof (other than the legal fees of the Agent's counsel incurred in
connection with the initial preparation and execution of the Loan Documents to
be borne by the Agent under that certain fee letter dated July 31, 1997), and
(b) all reasonable costs and expenses of any member of the Bank Group incurred
in connection with the enforcement of the Loan Documents and any other
agreements or security documents executed in connection with or pursuant to any
of the Loan Documents, including, but not limited to, the reasonable fees and
out-of-pocket expenses of counsel for any member of the Bank Group, and local
counsel who may be retained by such counsel, with respect thereto, and the costs
and expenses in connection with the custody, preservation, use or operation of,
or the sale of, or collection from, or other realization upon the sale of, or
collection from, or other realization upon any collateral covered by any of the
other documents executed in connection with or pursuant to any of the Loan
Documents. The agreements of Borrower contained in this SECTION 9.04 shall
survive the termination of the Commitments and the payment of all other amounts
owing hereunder or under any of the other Loan Documents.
Section 9.05. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the Borrower, the Agent, the Banks and
their respective successors and assigns, except that the Borrower may not assign
or transfer its rights hereunder without the prior written consent of the Banks.
Section 9.06. INDEPENDENCE OF COVENANTS. All covenants contained in
the Loan Documents and the Revolving Loan Documents shall be given independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that such action or condition would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default hereunder or a
"Default" or an "Event of Default" under the Revolving Credit Agreement if such
action is taken or condition exists.
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Section 9.07. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement and the other Loan
Documents or made in writing by the Borrower in connection herewith or
therewith, shall survive the execution and delivery of this Agreement, the Notes
and the other Loan Documents, and the repayment of the Loans. Any investigation
by any member of the Bank Group shall not diminish in any respect whatsoever its
right to rely on such representations and warranties.
Section 9.08. SEPARABILITY. Should any clause, sentence, paragraph,
subsection, Section or Article of this Agreement be judicially declared to be
invalid, unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement, and the parties hereto
agree that the part or parts of this Agreement so held to be invalid,
unenforceable or void will be deemed to have been stricken herefrom by the
parties hereto, and the remainder will have the same force and effectiveness as
if such stricken part or parts had never been included herein.
Section 9.09. CAPTIONS. The captions in this Agreement have been
inserted for convenience only and shall be given no substantive meaning or
significance whatsoever in construing the terms and provisions of this
Agreement.
Section 9.10. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original, and all of
which taken together shall constitute one and the same agreement.
Section 9.11. GOVERNING LAW. THIS AGREEMENT (INCLUDING THE VALIDITY
AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. Chapter 15, Subtitle 3, Title 79, of
the Revised Civil Statutes of Texas, 1925, as amended (relating to revolving
loans and revolving triparty accounts), shall not apply to this Agreement or the
Notes or the transactions contemplated hereby.
Section 9.12. SUBMISSION TO JURISDICTION. (a) The Borrower hereby
irrevocably submits to the non-exclusive jurisdiction of any New York state
court located in the Borough of Manhattan, City and State of New York, or any
federal court located in the Southern District of New York over any action or
proceeding arising out of or relating to this Agreement or any of the other Loan
Documents, and the Borrower irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such New York state or
federal court; PROVIDED, nothing in this SECTION 9.12 is intended to waive the
right of any member of the Bank Group to remove any such action or proceeding
commenced in any such New York state court to an appropriate New York federal
court to the extent the basis for such removal exists under applicable law. The
Borrower hereby irrevocably appoints CT Corporation (the "PROCESS AGENT"), with
an office on the date hereof at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its
agent to receive on behalf of it and its
-47- ACQUISITION FACILITY
properties service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Such service
may be made by mailing by certified mail a copy of such process to the
Borrower in care of the Process Agent at the Process Agent's above address,
with a copy to such Person at its address specified herein and the Borrower
hereby irrevocably authorizes and directs the Process Agent to accept such
service on its behalf. As an alternative method of service, the Borrower
also irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing by certified mail of copies of such
process to it at its address specified herein. The Borrower agrees that a
final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
(b) Nothing in this SECTION 9.12 shall affect the right of any member
of the Bank Group to serve legal process in any other manner permitted by law or
affect the right of any member of the Bank Group to bring any action or
proceeding against the Borrower, or such Person's properties, in the courts of
any other jurisdiction.
Section 9.13. LIMITATION ON INTEREST. Each provision in this
Agreement and each other Loan Document is expressly limited so that in no event
whatsoever shall the amount paid, or otherwise agreed to be paid, by the
Borrower for the use, forbearance or detention of the money to be loaned under
this Agreement or any other Loan Document or otherwise (including any sums paid
as required by any covenant or obligation contained herein or in any other Loan
Document which is for the use, forbearance or detention of such money), exceed
that amount of money which would cause the effective rate of interest to exceed
the Highest Lawful Rate, and all amounts owed under this Agreement and each
other Loan Document shall be held to be subject to reduction to the effect that
such amounts so paid or agreed to be paid which are for the use, forbearance or
detention of money under this Agreement or such Loan Document shall in no event
exceed that amount of money which would cause the effective rate of interest to
exceed the Highest Lawful Rate. To the extent that the Highest Lawful Rate
applicable to a Bank is at any time determined by Texas law, such rate shall be
the "indicated rate ceiling" described in Section (a)(1) of Article 1.04 of
Chapter 1, Subtitle 1, Title 79, of the Revised Civil Statutes of Texas, 1925,
as amended; PROVIDED, to the extent permitted by such Article, the Banks from
time to time by notice from the Agent to Borrower may revise the aforesaid
election of such interest rate ceiling as such ceiling affects the then-current
or future balances of the Loans outstanding under the Notes. Notwithstanding
any provision in this Agreement or any other Loan Document to the contrary, if
the maturity of the Notes or the obligations in respect of the other Loan
Documents are accelerated for any reason, or in the event of prepayment of all
or any portion of the Notes or the obligations in respect of the other Loan
Documents by the Borrower or in any other event, earned interest on the Loans
and such other obligations of the Borrower may never exceed the maximum amount
permitted by applicable law, and any unearned interest otherwise payable under
the Notes or the obligations in respect of the other Loan Documents that is in
excess of the maximum amount permitted by applicable law shall be cancelled
automatically as of the date of such acceleration or prepayment or other such
event and, if theretofore paid, shall be credited on the principal of the Notes
or, if the principal of the Notes has been paid in full, held as collateral for
any contingent or unmatured obligation of the Borrower, or,
-48- ACQUISITION FACILITY
if there are no contingent or unmatured obligations of the Borrower then
outstanding, refunded to the Borrower. In determining whether or not the
interest paid or payable, under any specific contingency, exceeds the Highest
Lawful Rate, the Borrower and the Banks shall, to the maximum extent
permitted by applicable law, amortize, prorate, allocate and spread, in equal
parts during the period of the actual term of this Agreement, all interest at
any time contracted for, charged, received or reserved in connection with
this Agreement.
Section 9.14. INDEMNIFICATION. The Borrower agrees to indemnify,
defend and hold the Agent and each member of the Bank Group, their Affiliates
and their officers, employees, agents, directors, shareholders and Affiliates
(collectively, "INDEMNIFIED PERSONS") harmless from and against any and all
loss, liability, damage, judgment, claim, deficiency or reasonable expense
(including interest, penalties, reasonable attorneys' fees and amounts paid in
settlement) incurred by or asserted against any Indemnified Person arising out
of, in any way connected with, or as a result of (i) the execution and delivery
of this Agreement and the other documents contemplated hereby, the performance
by the parties hereto and thereto of its obligations hereunder and thereunder
(including but not limited to the making of the Commitments of each Bank) and
consummation of the transactions contemplated hereby and thereby, (ii) the
actual or proposed use of the proceeds of the Loans, (iii) any violation by the
Borrower or any of its Subsidiaries of any Requirement of Law, including but not
limited to Environmental Laws, (iv) ownership by the Bank Group of any real or
personal property following foreclosure under the Security Documents, to the
extent such losses, liabilities, damages, judgments, claims, deficiencies or
expenses arise out of or result from the presence, disposal or release of any
hazardous materials or solid waste in, on or under such property during the
period owned, leased or operated by the Borrower or any of its Subsidiaries,
including, without limitation, losses, liabilities, damages, judgments, claims,
deficiencies or expenses which are imposed under Environmental Laws upon Persons
by virtue of their ownership, (v) any member of the Bank Group being deemed an
operator of any such real or personal property in circumstances in which no
member of the Bank Group is generally operating or generally exercising control
over such property, to the extent such losses, liabilities, damages, judgments,
claims, deficiencies or expenses arise out of or result from any hazardous
materials or solid waste located in, on or under such property or (vi) any
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnified Person is a party thereto; PROVIDED that such
indemnity shall not apply to any such losses, claims, damages, liabilities or
related expenses that are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. WITHOUT LIMITING ANY PROVISION
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, IT IS THE EXPRESS
INTENTION OF THE BORROWER THAT EACH INDEMNIFIED PERSON SHALL BE INDEMNIFIED AND
HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DEFICIENCIES,
JUDGMENTS OR REASONABLE EXPENSES ARISING OUT OF OR RESULTING FROM THE ORDINARY
NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OF SUCH INDEMNIFIED PERSON. THE
OBLIGATIONS OF THE BORROWER UNDER THIS SECTION 9.14 SHALL SURVIVE THE
TERMINATION OF THIS AGREEMENT.
-49- ACQUISITION FACILITY
Section 9.15. CONFIDENTIALITY. In the event that the Borrower
provides to the Agent or the Banks written confidential information belonging to
the Borrower, if the Borrower shall denominate such information in writing as
"confidential," the Agent and the Banks shall thereafter maintain such
information in confidence in accordance with the standards of care and diligence
that each utilizes in maintaining its own confidential information. This
obligation of confidence shall not apply to such portions of the information
which (i) are in the public domain, (ii) hereafter become part of the public
domain without the Agent or the Banks breaching their obligation of confidence
to the Borrower, (iii) are previously known by the Agent or the Banks from some
source other than the Borrower, (iv) are hereafter obtained by or available to
the Agent or the Banks from a third party who owes no obligation of confidence
to the Borrower with respect to such information or through any other means
other than through disclosure by the Borrower, (vi) are disclosed with the
Borrower's consent, (vii) must be disclosed either pursuant to any Requirements
of Law or to Persons regulating the activities of the Agent or the Banks, or
(viii) as may be required by law or regulation or order of any Governmental
Authority in any judicial, arbitration or governmental proceeding. Further, the
Agent or a Bank may disclose any such information to any other Bank, any
independent petroleum engineers or consultants, any independent certified public
accountants, any legal counsel employed by such Person in connection with this
Agreement or any Security Document, including without limitation, the
enforcement or exercise of all rights and remedies thereunder, or any assignee
or participant (including prospective assignees and participants) in the Loans;
provided, however, that the Agent or Bank imposes on the Person to whom such
information is disclosed the same obligation to maintain the confidentiality of
such information as is imposed upon it hereunder. Notwithstanding anything to
the contrary provided herein, this obligation of confidence shall cease three
(3) years from the date the information was furnished, unless the Borrower
requests in writing at least thirty (30) days prior to the expiration of such
three year period, to maintain the confidentiality of such information for an
additional three year period. The Borrower waives any and all other rights
it may have to confidentiality as against the Agent and the Banks arising by
contract, agreement, statute or law except as expressly stated in this
SECTION 9.15.
Section 9.16. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.
-50- ACQUISITION FACILITY
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by its officers thereunto duly authorized as of the date first above
written.
▇▇▇▇▇▇▇▇ ENERGY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
BANKERS TRUST COMPANY,
as Agent
By: /s/
------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Co-Agent
By: /s/
------------------------------------
Name:
Title:
-51- ACQUISITION FACILITY
Bank:
-----
Commitment: $15,000,000.00 BANKERS TRUST COMPANY
By: /s/
------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
DOMESTIC LENDING OFFICE
Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
EURODOLLAR LENDING OFFICE
Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ACQUISITION FACILITY
Bank:
-----
Commitment: $15,000,000.00 UNION BANK OF CALIFORNIA, N.A.
By: /s/
------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
DOMESTIC LENDING OFFICE
Union Bank of California, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
EURODOLLAR LENDING OFFICE
Union Bank of California, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ACQUISITION FACILITY
ANNEX A
DEFINITIONS
"ACQUISITION" means the transfer of the Acquisition Properties by
▇▇▇▇▇▇▇ Petroleum LLC to the Borrower.
"ACQUISITION DOCUMENTS" means, collectively, the Purchase and Sale
Agreement among the Borrower and ▇▇▇▇▇▇▇ Petroleum LLC dated as of July 2, 1997,
and all documents, assignments and agreements related thereto.
"ACQUISITION MORTGAGE" means the Mortgage-Collateral Real Estate
Mortgage, Deed of Trust, Line of Credit Mortgage, Assignment of Production,
Security Agreement and Financing Statement of even date herewith executed by the
Borrower in favor of the Agent covering the Acquisition Properties, as same may
be amended, supplemented, restated or otherwise modified from time to time.
"ACQUISITION PROPERTIES" means the Oil and Gas Properties and other
related assets owned by ▇▇▇▇▇▇▇ Petroleum LLC, that are to be sold and assigned
to the Borrower under the terms of the Acquisition Documents.
"AFFILIATE" means, when used with respect to any Person, any other
Person (including any member of the immediate family of any such natural person)
who directly or indirectly beneficially owns or controls five percent (5%) or
more of the total voting power of shares of capital stock of such Person having
the right to vote for directors under ordinary circumstances, any person
controlling, controlled by or under common control with any such person. As used
in this definition, "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGENT" has the meaning specified in the introduction to this
Agreement.
"AGREEMENT" means this Acquisition Credit Agreement, as the same may
from time to time be amended, supplemented, restated or modified and in effect.
"APPLICABLE LENDING OFFICE" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of a Base Rate Loan and such Bank's
Eurodollar Lending Office in the case of a Eurodollar Rate Loan.
"APPLICABLE MARGIN" has the meaning specified in SECTION 2.06.
ACQUISITION FACILITY
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Bank and an Eligible Assignee and accepted by the Agent, in
substantially the form of EXHIBIT 9.02 hereto.
"BANK GROUP" means, collectively, the Agent, the Co-Agent and the
Banks.
"BANK GROUP DERIVATIVES" means any Derivative entered into between the
Borrower and any member of the Bank Group.
"BANKS" has the meaning specified in the introduction to this
Agreement.
"BASE RATE" means, as of any particular date, the rate per annum
(rounded upward to the nearest whole multiple of 1/16 of 1% per annum) equal to
the greater of (a) the Prime Rate per annum in effect on such day, and (b) the
Federal Funds Rate in effect on such day plus 1/2 of 1% per annum.
"BORROWER" has the meaning specified in the introduction to this
Agreement.
"BORROWING" means a group of Loans of a single Type made by the Banks,
or Converted into such, as applicable, on a single date and, in the case of a
Eurodollar Rate Loan, as to which a single Interest Period is in effect.
"BORROWING BASE" means as of the date of determination an amount equal
to the amount determined and in effect in accordance with SECTION 2.03.
"BORROWING BASE DEFICIENCY" means, the excess of (i) the Credit
Outstanding as of any redetermination of the Borrowing Base pursuant to SECTION
2.03 over (ii) the Borrowing Base as of such date.
"BORROWING DATE" means, when used with respect to the initial funding
of any Borrowing, the date upon which the proceeds of such Borrowing are to be
made available to the Borrower.
"BORROWING REQUEST" has the meaning specified in SECTION 2.02.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in New York and, if the applicable Business Day relates
to any Eurodollar Rate Loans, on which dealings are carried on in the applicable
Eurodollar interbank market.
"CAPITAL EXPENDITURES" means, as to the Borrower and its Subsidiaries
on a consolidated basis and for any period, the expenditures and costs made by
the Borrower and its
-2- ACQUISITION FACILITY
Subsidiaries during such period (whether paid in cash or accrued as
liabilities during that period and including that portion of Capital Leases
that is capitalized on the consolidated balance sheet of the Borrower and its
Subsidiaries) that, in accordance with generally accepted accounting
principles consistently applied, are costs incurred in the acquisition or
exploration of Oil and Gas Properties, or are required to be included in or
reflected by the other property, plant or equipment or similar fixed asset
accounts reflected in the consolidated balance sheet of such Person.
"CAPITAL LEASE" means, as to the Borrower and its Subsidiaries, any
lease or rental agreement in respect of which such Person's obligations as
lessee under such lease or rental agreement constitute obligations which shall
have been in accordance with generally accepted accounting principles
consistently applied, capitalized on the balance sheet of such Person.
"CERCLA" shall have the meaning provided in the definition of
"Environmental Laws."
"CHANGE OF CONTROL" means any of (a) the acquisition by any Person or
two or more Persons (excluding underwriters in the course of their distribution
of voting stock in an underwritten public offering) acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Security Exchange Act of 1934, as amended) of 35% or more of the outstanding
shares of voting stock of the Borrower, (b) 50% or more of the members of the
Board of Directors of the Borrower on any date shall not have been (i) members
of the Board of Directors of the Borrower on the date 12 months prior to such
date or (ii) approved (by recommendation, nomination, election or otherwise) by
Persons who constitute at least a majority of the members of the Board of
Directors of the Borrower as constituted on the date 12 months prior to such
date, (c) all or substantially all of the assets of the Borrower are sold in a
single transaction or series or related transactions to any Person or (d) the
Borrower merges or consolidates with or into any other Person, with the effect
that immediately after such transaction the stockholders of the Borrower
immediately prior to such transaction hold less than 75% of the total voting
power entitled to vote in the election of directors, managers or trustees of the
Person surviving such transaction.
"CO-AGENT" has the meaning specified in the introduction to this
Agreement.
"COMMITMENT" means as to any Bank an amount equal to such Bank's
Commitment set forth on the signature page of such Bank hereto.
"COMMITMENT PERCENTAGE" means, as to any Bank, a percentage
determined pursuant to the following formula: (C DIVIDED BY T) TIMES 100 =
CP; where C is such Bank's Commitment (without giving effect to any
termination of the Commitments pursuant to SECTION 7.01), T is the Total
Commitment (without giving effect to any termination of the Commitments
pursuant to SECTION 7.01) and CP is such percentage as modified from time to
time to reflect any assignments permitted by SECTION 9.02.
-3- ACQUISITION FACILITY
"CONSOLIDATED TANGIBLE NET WORTH" means, the sum of the par value or
stated value of the capital stock (excluding treasury stock), capital in excess
of par or stated value of shares of capital stock, retained earnings (or minus
accumulated deficit) and any other account which, in accordance with generally
accepted accounting principles consistently applied, constitute stockholders'
equity of the Borrower and its Subsidiaries determined on a consolidated basis,
excluding any effect of foreign currency translation computed pursuant to
Financial Accounting Standards Board Statement No. 52, as amended, supplemented
or modified from time to time, or otherwise in accordance with generally
accepted accounting principles consistently applied LESS the amount of any items
which are treated as intangible assets in accordance with generally accepted
accounting principles consistently applied.
"CONVERSION DATE" means, when used with respect to the Conversion of
any group of Loans, the date such Loans are to be Converted into Loans of
another Type pursuant to SECTION 2.02 or otherwise in accordance with
ARTICLE II.
"CONVERSION NOTICE" has the meaning specified in SECTION 2.02(c).
"CONVERT," "CONVERSION" AND "CONVERTED" each refers to a conversion of
Loans of one Type into Loans of another Type pursuant to SECTION 2.02(c) or
otherwise in accordance with ARTICLE II.
"▇▇▇▇▇▇▇▇ REDECO" means ▇▇▇▇▇▇▇▇ Redeco Energy, L.L.C., a Texas
limited liability company.
"CREDIT OUTSTANDING" means, at any time, without duplication, the
aggregate unpaid principal amount of the Loans.
"DEFAULT" means an Event of Default or an event which with the giving
of notice or the lapse of time or both could, unless cured or waived, become an
Event of Default.
"DEFAULT RATE" has the meaning specified in SECTION 2.06.
"DERIVATIVES" means, with respect to any Person, foreign exchange
transactions and commodity, currency and interest rate swaps, floors, caps,
collars, forward sales, options, other similar transactions and combinations of
the foregoing.
"DOLLARS" and "$" each means lawful money of the United States.
-4- ACQUISITION FACILITY
"DOMESTIC LENDING OFFICE" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" below its name on
SCHEDULE I hereto, or such other office of such Bank as such Bank may from time
to time specify to the Borrower and the Agent.
"EBITDA" means, as to the Borrower and its Subsidiaries on a
consolidated basis and for any period, the sum of the following: (a) the Net
Income for such period, (b) all non-cash charges (such as deferred taxes,
depreciation and depletion expense and amortization of intangibles and
capitalized debt issuance costs) which were deducted from gross income in
determining such Net Income for such period, (c) the amount of Interest Expense
which was deducted in the calculation of such Net Income for such period, (d)
the amount of income taxes deducted in the calculation of such Net Income for
such period, (e) exploration and abandonment costs and (f) extraordinary loss
resulting from extinguishment of indebtedness taken into account in determining
the Net Income for such period.
"EFFECTIVE DATE" means the date on which the conditions set forth in
ARTICLE III to this Agreement are first satisfied.
"ELIGIBLE ASSIGNEE" means (i) any Bank or any Affiliate of any Bank;
(ii) a commercial bank organized under the laws of the United States, or any
state thereof, having deposits rated in either of the two highest generic letter
rating categories (without regard to subcategories) from either Standard &
Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.; (iii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development ("OECD"), or a political
subdivision of any such country, and having total assets in excess of
$1,000,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of the OECD; (iv) the central bank of any country which is a member of
the OECD; (v) any other Person which is an "accredited investor" (as defined in
Regulation D of the Securities Act of 1933) that extends credit or buys loans as
one of its businesses, including insurance companies mutual funds and lease
financing companies; and (vi) any other financial institution approved by the
Agent and, so long as no Default exists, the Borrower.
"ENVIRONMENTAL LAWS" means federal, state or local laws, rules or
regulations, and any judicial, arbitral or administrative interpretations
thereof, including, without limitation, any judicial, arbitral or administrative
order, judgment, permit, approval, decision or determination pertaining to
health, safety or the environment in effect at the time in question, including,
without limitation, the Clean Air Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended ("CERCLA"),
the Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act, as amended, the Resource Conservation and Recovery Act, as amended,
the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendment and Reauthorization Act of 1986, as amended,
-5- ACQUISITION FACILITY
the Hazardous Materials Transportation Act, as amended, comparable state and
local laws, and other environmental conservation and protection laws. The terms
"hazardous substance," "release" and "threatened release" shall have the
meanings specified in CERCLA, and the terms "solid waste" and "disposal" (or
"disposed") shall have the meanings specified in RCRA and the term "oil" shall
have the meaning specified in the Oil Pollution Act, as amended ("OPA");
PROVIDED, that (i) in the event either CERCLA, RCRA or OPA is amended so as to
broaden the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment with respect to all
provisions of this Agreement, (ii) to the extent the laws of the state or states
in which any Property of the Borrower or its Subsidiaries is located establish a
meaning for "hazardous substance," "release," "threatened release," "solid
waste," "disposal" or "oil" which is broader than that specified in CERCLA, RCRA
or OPA, such broader meaning shall apply.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time.
"ERISA AFFILIATE" means any (i) corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Internal Revenue Code) as the Borrower, (ii) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Internal Revenue Code) with the Borrower, (iii) member
of the same affiliated service group (within the meaning of Section 414(m) of
the Internal Revenue Code) as the Borrower, any corporation described in clause
(i) above or any partnership or trade or business described in clause (ii) above
or (iv) other Person required to be aggregated with the Borrower or an ERISA
Affiliate thereof, as defined above, pursuant to Section 414(o) of the Internal
Revenue Code.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System (or any
other successor category of liabilities under Regulation D), as in effect from
time to time.
"EURODOLLAR EVENT" has the meaning specified in SECTION 2.11(a).
"EURODOLLAR LENDING OFFICE" means, with respect to any Bank, the
office of such Bank specified as its "Eurodollar Lending Office" below its name
on SCHEDULE I hereto (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Bank as such Bank may from time to time
specify to the Borrower and the Agent.
"EURODOLLAR RATE" means, with respect to each Interest Period for each
Eurodollar Rate Loan, (i) the arithmetic average (rounded to the nearest 1/16
of 1%) of the offered quotation to first-class banks in the interbank Eurodollar
market by the Agent for US dollar deposits of an
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amount in same day funds comparable to the outstanding principal amount of
the Eurodollar Rate Loan of the Agent for which an interest rate is then
being determined with maturities comparable to the Interest Period to be
applicable to such Eurodollar Rate Loan, determined as of 10:00 a.m. (New
York time) on the date which is two Business Days prior to the commencement
of such Interest Period, divided (and rounded upward to the next whole
multiple of 1/16 of 1%) by (ii) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including without
limitation, any marginal, emergency, supplemental, special or other reserves)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency Liabilities.
"EURODOLLAR RATE BORROWING" means a Borrowing consisting of Eurodollar
Rate Loans.
"EURODOLLAR RATE LOAN" means a Loan that the Borrower has designated,
or is deemed to have designated, as such in accordance with ARTICLE II.
"EVENTS OF DEFAULT" has the meaning specified in SECTION 7.01.
"EXCEPTED LIENS" has the meaning specified in SECTION 6.02.
"EXECUTION DATE" means the date upon which this Agreement shall have
been executed by the Borrower, the Banks, the Agent and the Co-Agent.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, province, city, town, municipality, county, local or other political
subdivision thereof or thereto and any court, tribunal, department, commission,
board, bureau, instrumentality, agency or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GUARANTIES" means, as to any Person, all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or, in effect, guaranteeing
any Indebtedness, dividend or other obligation, of any other Person (the
"primary obligor') in any manner, whether directly or indirectly, including all
-7- ACQUISITION FACILITY
obligations incurred through an agreement, contingent or otherwise, by such
Person: (a) to purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (b) to advance or supply funds (i) for
the purchase or payment of such Indebtedness or obligation or (ii) to maintain
working capital or other balance sheet condition or otherwise to advance or make
available funds for the purchase or payment of such Indebtedness or obligation,
(c) to lease property or to purchase securities or other property or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary obligor to make payment of the
Indebtedness or obligation or (d) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"HIGHEST LAWFUL RATE" means, as to any Bank, at the particular time in
question, the maximum nonusurious rate of interest which, under applicable law,
such Bank is then permitted to charge the Borrower on the Loans or the other
obligations of the Borrower hereunder, and as to any other Person, at the
particular time in question, the maximum nonusurious rate of interest which,
under applicable law, such Person is then permitted to charge with respect to
the obligation in question. If the maximum rate of interest which, under
applicable law, the Banks are permitted to charge the Borrower on the Loans or
the other obligations of the Borrower hereunder shall change after the date
hereof, the Highest Lawful Rate shall be automatically increased or decreased,
as the case may be, as of the effective time of such change without notice to
the Borrower or any other Person.
"HYDROCARBON INTEREST" means all rights, titles, interests and estates
now or hereafter acquired in and to oil and gas leases, oil, gas and mineral
leases or other liquid or gaseous hydrocarbon leases, mineral fee interests,
overriding royalty and royalty interests, operating rights, net profit
interests, production payment interests and other similar types of interests,
including any reserved or residual interest of whatever nature.
"HYDROCARBONS" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom, and all other substances produced
in association therewith.
"INDEBTEDNESS" of any Person shall mean, without duplication: (a) any
obligation of such Person for borrowed money, including: (i) any obligation of
such Person evidenced by bonds, debentures, notes or other similar debt
instruments and (ii) any obligation for borrowed money which is non-recourse to
the credit of such Person but which is secured by any asset of such Person,
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(b) all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person, (c) any
obligation of such Person for the deferred purchase price of any property or
services, except accounts payable arising in the ordinary course of such
Person's business that have been outstanding less than ninety (90) days since
the due date, (d) all liabilities appearing on its balance sheet in
accordance with generally accepted accounting principles in respect of
Capital Leases, (e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account by
banks and other financial institutions (whether or not representing
obligations for borrowed money), (f) liabilities in respect of Derivatives,
(g) Guaranties by such Person to the extent required pursuant to the
definition thereof, and (h) any Indebtedness of another Person secured by a
Lien on any asset of such first Person, whether or not such Indebtedness is
assumed by such first Person.
"INDENTURE" means that certain indenture by and between the Borrower
as issuer and State Street Bank & Trust Company as trustee, pursuant to which
the Borrower issued the Senior Unsecured Notes.
"INITIAL RESERVE REPORT" has the meaning specified in SECTION 3.01(e).
"INTEREST EXPENSE" means, for any period, the aggregate of all
interest expense deducted in the calculation of the Net Income for such period
excluding amortized loan fees.
"INTEREST PERIOD" means, for each Eurodollar Rate Loan comprising part
of the same Borrowing, the period commencing on the date of such Eurodollar Rate
Loan or the date of the Conversion of such Eurodollar Rate Loan, as applicable,
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each such Interest Period shall be 1 or 3
months; PROVIDED, that:
(i) the Borrower may not select any Interest Period for a Loan that
ends after the Maturity Date;
(ii) the Borrower may not select any Interest Period for a Loan that
ends after a Quarterly Payment Date unless, after giving effect thereto,
the aggregate amount of Eurodollar Rate Loans with Interest Periods ending
on or before such Quarterly Payment Date and Base Rate Loans equals or
exceeds the amount of principal due and payable on such Quarterly Payment
Date;
(iii) Interest Periods commencing on the same date for Loans
comprising part of the same Borrowing shall be of the same duration; and
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(iv) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business Day,
PROVIDED that if such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time (or any successor statute), and the regulations
promulgated thereunder.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or capital lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"LOAN" has the meaning specified in Section 2.01. Each Loan shall be
either a Base Rate Loan or a Eurodollar Rate Loan (each of which shall be a
"TYPE" of Loan).
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Security
Documents, any agreement evidencing any Bank Group Derivatives, and all other
agreements, instruments and documents, including, without limitation, security
agreements, notes, warrants, guaranties, mortgages, deeds of trust,
subordination agreements, pledges, powers of attorney, consents, assignments,
collateral assignments, letter agreements, contracts, notices, leases,
amendments, financing statements, letter of credit applications and
reimbursement agreements, and all other writings heretofore, now, or hereafter
executed by or on behalf of the Borrower or any of its Subsidiaries, any of
their respective Affiliates or any other Person in connection with or relating
to this Agreement, together with all agreements, instruments and documents
referred to therein or contemplated thereby.
"MAJORITY BANKS" means at any time (a) the Agent, regardless of the
amounts held and (b) Banks holding at least seventy-five percent (75%) of the
then aggregate unpaid principal amount of the Loans or, if no Loans are
outstanding, Banks having Commitment Percentages in the aggregate equal to at
least seventy-five percent (75%).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Borrower or any of its Subsidiaries, or (b) the ability of the Borrower or any
of its Subsidiaries to perform their obligations under this Agreement and the
other Loan Documents, or (c) the validity or enforceability of this Agreement or
the other Loan Documents or (d) the value of the Borrower's interest in its Oil
and Gas Properties.
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"MATURITY DATE" means February 28, 2001.
"MORTGAGED PROPERTY" means the Property owned by the Borrower which is
subject to the Liens, privileges, priorities and security interest existing and
to exist under the terms of the Security Documents.
"MULTIEMPLOYER PLAN" means any employee benefit plan that is a
"multiemployer plan," as such term is defined in section 4001(a)(3) of ERISA.
"NET INCOME" means, for any period, the consolidated net earnings or
loss of the Borrower and its Subsidiaries for such period, determined in
accordance with generally accepted accounting principles.
"NET PROCEEDS" means with respect to any sale of an interest in an
asset of the Borrower (other than sales of Hydrocarbon production in the
ordinary course of business and sales of obsolete or worn-out equipment in the
ordinary course of business), the gross proceeds thereof received by the
Borrower, less the reasonable fees, taxes and expenses paid by the Borrower and
directly related to the consummation of such transaction.
"NOTES" means the Term Notes of the Borrower payable to the order of
each Bank, in substantially the form of EXHIBIT 2.04 hereto, evidencing the
aggregate indebtedness of the Borrower to such Bank resulting from the Loans
made by such Bank, together with all modifications, extensions, renewals and
rearrangements thereof from time to time in effect.
"OBLIGATIONS" means all obligations, Indebtedness and liabilities of
the Borrower or any of its Subsidiaries to any member of the Bank Group, now
existing or hereafter arising under or in connection with any Loan Document,
whether direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, including the obligations,
Indebtedness and liabilities of the Borrower under the Notes or otherwise
pursuant to the terms of the other Loan Documents, and all interest accruing
thereon (including any interest that accrues after the commencement of any
proceeding by or against the Borrower or any other Person under any bankruptcy,
insolvency, liquidation, moratorium, receivership, reorganization or other
debtor relief law) and all attorneys' fees and other expenses incurred in the
collection or enforcement thereof.
"OIL AND GAS PROPERTIES" means Hydrocarbon Interests; the Properties
now or hereafter pooled or unitized with Hydrocarbon Interests; all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Governmental Authority have
jurisdiction) which may affect all or any portion of the Hydrocarbon Interests;
all operating agreements, contracts and other agreements which relate to any of
the Hydrocarbon Interests or the
-11- ACQUISITION FACILITY
production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interest; all Hydrocarbons in and under and
which may be produced and saved or attributable to the Hydrocarbon Interests,
the lands covered thereby and all oil in tanks and all rents, issues,
profits, proceeds, products, revenues and other income from or attributable
to the Hydrocarbon Interests; all tenements, hereditaments, appurtenances and
Properties in any manner appertaining, belonging, affixed or incidental to
the Hydrocarbon Interests, Properties, rights, titles, interests and estates
described or referred to above, including any and all Property, real or
personal, now owned or hereinafter acquired and situated upon, used, held for
use or useful in connection with the operating, working or development of any
of such Hydrocarbon Interests or Property (excluding drilling rigs,
automotive equipment or other personal property which may be on such premises
for the purpose of drilling a well or for other similar temporary uses) and
including any and all oil ▇▇▇▇▇, gas ▇▇▇▇▇, injection ▇▇▇▇▇ or other ▇▇▇▇▇,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.
"OTHER BENEFIT PLAN" means any employee benefit plan, within the
meaning of Section 3(3) of ERISA, employment or other compensation plan, program
or contract, including, without limitation, a "cafeteria plan" under Section 125
of the Internal Revenue Code, under any of which the Borrower or any ERISA
Affiliate or Subsidiary has any liability or obligation, but excluding any
Pension Plan or Multiemployer Plan.
"OTHER TAXES" has the meaning specified in SECTION 2.09.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereto.
"PENSION PLAN" means any employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code, and in respect of which the Borrower,
or any ERISA Affiliate. or Subsidiary is an "employer" as defined in
Section 3(5) of ERISA or has any liability or obligations.
"PERMITTED INVESTMENTS" means any of the following investments:
(a) securities issued or directly and fully guaranteed or insured by the United
States or any agency or instrumentality thereof (PROVIDED that the full faith
and credit of the United States of America is pledged in support thereof) having
a maturity not exceeding thirty (30) days from the date of acquisition; (b) time
deposits and certificates of deposit of any commercial bank of recognized
standing having capital and surplus in excess of $500,000,000, PROVIDED that the
long-term senior
-12- ACQUISITION FACILITY
unsecured debt of such bank is rated at least A+ or the equivalent thereof by
Standard & Poor's Rating Group (a division of McGraw Hill) ("S&P") or at
least A1 or the equivalent thereof by ▇▇▇▇▇'▇ Investor Services, Inc.
("MOODY'S"), having a maturity not exceeding thirty (30) days from the date
of acquisition; (c) commercial paper issued by the parent corporation of any
commercial bank or by any domestic corporation, PROVIDED that such commercial
paper is rated at least A-1 or the equivalent thereof by S&P or at least P-1
or the equivalent thereof by Moody's, having a maturity not exceeding thirty
(30) days from the date of acquisition; and (d) investments in money market
funds having a rating in the highest rating category by S&P or Moody's for
which Bankers Trust Company or any Affiliates is investment manager or
advisor.
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or other entity, or Governmental Authority.
"PRIME RATE" means, the rate per annum which BTCo announces from time
to time as its "prime lending rate," the Prime Rate to change when and as such
prime lending rate changes. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
BTCo may make commercial loans or other loans at rates of interest at, above or
below the Prime Rate.
"PROPERTY" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"PROVED PRODUCING RESERVES" means Proved Reserves that are recoverable
from existing ▇▇▇▇▇ with current operating methods and expenses and are
producing.
"PROVED RESERVES" means recoverable Hydrocarbon reserves that have
been proved to a high degree of certainty by analysis of the producing history
of a reservoir and/or by volumetric analysis of adequate geological and
engineering data. Commercial productivity has been established by actual
production, successful testing, or in certain cases by favorable core analyses
and electrical-log interpretation when the producing characteristics of the
formation are known from nearby fields.
"QUARTERLY PAYMENT DATE" means the last Business Day of each of
August, November, February and May.
"REGISTER" has the meaning specified in SECTION 9.02.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System (respecting margin credit extended by banks), as the same
is from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
-13- ACQUISITION FACILITY
"REGULATION X" means Regulation X of the Board of Governors of the
Federal Reserve System (respecting borrowers who obtain margin credit) as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"REPORTABLE EVENT" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder.
"REQUIREMENTS OF ENVIRONMENTAL LAWS" means the requirements of any
applicable Environmental Law relating to or affecting the Borrower or any of its
Subsidiaries or the condition or operation of such Person's business or its
properties, both real and personal.
"REQUIREMENTS OF LAW" shall mean any applicable federal, state or
local law, rule or regulation, permit or other binding determination of any
Governmental Authority.
"RESERVE REPORT" means each of the Initial Reserve Report and each
report delivered to the Agent and the Banks under SECTION 5.10(a) or 5.10(b).
"RESPONSIBLE OFFICER" means, as to any Person, the Chief Executive
Officer, the President, the Chief Financial Officer or the Treasurer of such
Person, or any employee of such Person designated in writing as a Responsible
Officer by the Chief Executive Officer of such Person.
"RESTRICTED DISBURSEMENT" means, as to any Person, any: (a) loan or
advance to or investment in any other Person, or any commitment to make such a
loan, advance or investment in any other Person; (b) acquisition by such Person
of or investments by such Person in the debt of or equity of, and any capital
contribution (including capital contributions by transfer of assets or services)
by such Person to, another Person; (c) purchase, redemption or exchange of any
shares of any class of capital stock of such Person or any options, rights or
warrants to purchase any such stock or setting aside funds for any such purpose;
(d) declaration or payment of any dividends on shares of any class of capital
stock of such Person (other than dividends payable in capital stock, or rights
to acquire capital stock, of such Person); (e) distribution to a sinking fund or
other payment or distribution made to or for the benefit of any holders of the
capital stock of such Person with respect to such capital stock (other than
distributions payable in capital stock, or rights to acquire capital stock, of
such Person) or setting aside funds for any such purpose; and (f) payment,
purchase or redemption by such Person of Indebtedness owing by such Person to
any of its Affiliates.
"REVOLVING CREDIT AGREEMENT" means that certain Revolving Credit
Agreement by and among, the Borrower, the Agent and the Banks dated of even date
herewith as the same may from time to time be amended, supplemented, restated or
modified and in effect.
-14- ACQUISITION FACILITY
"REVOLVING FACILITY COMMITMENT" means, as of any date, the amount
equal to the sum of the Banks' commitments under the Revolving Credit Agreement.
"REVOLVING LOAN DOCUMENTS" means the Loan Documents (as defined in the
Revolving Credit Agreement).
"SCHEDULED REDETERMINATION DATE" has the meaning specified in SECTION
2.03(d).
"SEC" means the Securities and Exchange Commission.
"SECURITY DOCUMENTS" means the Acquisition Mortgage and, when executed
and delivered, as each may be amended from time to time, and any other security
agreement or pledge agreement, hypothecation agreement, fixed charge agreement,
floating charge agreement, deed of trust, mortgage or any other agreement, in
form and substance satisfactory to the Agent and the Majority Banks, executed
and delivered by the Borrower or any other Person in connection with or pursuant
to this Agreement for the purpose of creating a Lien on any of its property or
assets, as it may be modified or amended from time to time.
"SENIOR UNSECURED NOTES" means the $100,000,000 of Senior Unsecured
Notes due 2006 issued under the Indenture.
"SUBSIDIARY" means, as to any Person, any other Person in which such
Person or one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries owns sufficient equity or voting interests to enable it or them (as
a group) ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such other Person, and
any partnership or joint venture if either (i) more than a 50% interest in the
profits or capital thereof is owned by such Person or one or more of its
Subsidiaries or (ii) such Person or one or more of its Subsidiaries is a general
partner in such partnership or joint venture.
"TAXES" has the meaning specified in SECTION 2.09(a).
"TOTAL COMMITMENT" means $30,000,000.
"TYPE" has the meaning set forth in the definition of Loan.
"UNSCHEDULED REDETERMINATION DATE" has the meaning specified in
SECTION 2.03(d).
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