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Exhibit 10.13
Execution Version
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CREDIT AGREEMENT
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NORTH COAST ENERGY, INC.
and
ING (U.S.) CAPITAL CORPORATION
as Agent
and CERTAIN FINANCIAL INSTITUTIONS
as Lenders
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$20,000,000
February 9, 1998
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Exhibit 10.13
TABLE OF CONTENTS
Page
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ARTICLE I - Definitions and References ...................................... 1
Section 1.1. Defined Terms ........................................... 1
Section 1.2. Exhibits and Schedules; Additional Definitions .......... 12
Section 1.3. Amendment of Defined Instruments ........................ 12
Section 1.4. References and Titles ................................... 12
Section 1.5. Calculations and Determinations ......................... 13
ARTICLE II - The Loans ...................................................... 13
Section 2.1. Commitments to Lend; Notes .............................. 13
Section 2.2. Requests for New Loans .................................. 13
Section 2.3. Continuations and Conversions of Existing Loans ......... 14
Section 2.4. Use of Proceeds ......................................... 15
Section 2.5. Fees .................................................... 15
Section 2.6. Optional Prepayments .................................... 16
Section 2.7. Mandatory ............................................... 16
Section 2.8. Initial Borrowing Base .................................. 16
Section 2.9. Subsequent Determinations of Borrowing Base ............. 16
Section 2.10. Borrower's Reduction of Borrowing Base .................. 17
Section 2.11. Letters of Credit ....................................... 17
Section 2.12. Requesting Letters of Credit ............................ 18
Section 2.13. Reimbursement and Participations ........................ 18
Section 2.14. Letter of Credit Fees ................................... 19
Section 2.15. No Duty to Inquire ...................................... 19
Section 2.16. LC Collateral ........................................... 20
ARTICLE III - Payments to Lenders ........................................... 21
Section 3.1. General Procedures ...................................... 21
Section 3.2. Capital Reimbursement ................................... 22
Section 3.3. Increased Cost of Eurodollar Loans or Letters of Credit . 22
Section 3.4. Availability ............................................ 23
Section 3.5. Funding Losses .......................................... 23
Section 3.6. Reimbursable Taxes ...................................... 24
Section 3.7. Change of Applicable Lending Office ..................... 25
ARTICLE IV - Conditions Precedent to Lending ................................ 25
Section 4.1. Documents to be Delivered ............................... 25
Section 4.2. Additional Conditions Precedent ......................... 27
ARTICLE V - Representations and Warranties .................................. 28
Section 5.1. No Default .............................................. 28
Section 5.2. Organization and Good Standing .......................... 28
Section 5.3. Authorization ........................................... 28
Section 5.4. No Conflicts or Consents ................................ 28
Section 5.5. Enforceable Obligations ................................. 28
Section 5.6. Initial Financial Statements ............................ 28
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Exhibit 10.13
Section 5.7. Other Obligations and Restrictions ...................... 29
Section 5.8. Full Disclosure ......................................... 29
Section 5.9. Litigation .............................................. 29
Section 5.10. Labor Disputes and Acts of God .......................... 29
Section 5.11. ERISA Plans and Liabilities ............................. 29
Section 5.12. Environmental and Other Laws ............................ 30
Section 5.13. Names and Places of Business ............................ 31
Section 5.14. Borrower's Subsidiaries ................................. 32
Section 5.15. Title to Properties; Licenses ........................... 32
Section 5.16. Government Regulation ................................... 32
Section 5.17. Officers, Directors and Shareholders .................... 32
ARTICLE VI - Affirmative Covenants of Borrower .............................. 32
Section 6.1. Payment and Performance ................................. 33
Section 6.2. Books, Financial Statements and Reports ................. 33
Section 6.3. Other Information and Inspections ....................... 35
Section 6.4. Notice of Material Events and Change of Address ......... 35
Section 6.5. Maintenance of Properties ............................... 35
Section 6.6. Maintenance of Existence and Qualifications ............. 36
Section 6.7. Payment of Trade Liabilities, Taxes, etc ................ 36
Section 6.8. Insurance ............................................... 36
Section 6.9. Performance on Borrower's Behalf ........................ 36
Section 6.10. Interest ................................................ 36
Section 6.11. Compliance with Agreements and Law ...................... 36
Section 6.12. Environmental Matters; Environmental Reviews ............ 37
Section 6.13. Evidence of Compliance .................................. 37
Section 6.14. Solvency ................................................ 37
Section 6.15. Agreement to Deliver Security Documents ................. 37
Section 6.16. Perfection and Protection of Security Interests
and Liens ............................................. 38
Section 6.17. Bank Accounts; Offset ................................... 38
Section 6.18. Guaranties of Borrower's Subsidiaries ................... 38
Section 6.19. Production Proceeds ..................................... 39
ARTICLE VII - Negative Covenants of Borrower ................................ 39
Section 7.1. Indebtedness ............................................ 39
Section 7.2. Limitation on Liens ..................................... 40
Section 7.3. Hedging Contracts ....................................... 40
Section 7.4. Limitation on Mergers, Issuances of Securities,
Diminution of Interests ................................ 41
Section 7.5. Limitation on Sales of Property ......................... 41
Section 7.6. Limitation on Dividends and Redemptions ................. 42
Section 7.7. Limitation on Investments and New Businesses ............ 43
Section 7.8. Limitation on Credit Extensions ......................... 43
Section 7.9. Transactions with Affiliates ............................ 43
Section 7.10. Certain Contracts; Amendments; Multiemployer ERISA Plans 43
Section 7.11. Working Capital and Current Ratio ....................... 44
Section 7.12. Tangible Net Worth ...................................... 44
Section 7.13. EBITDA .................................................. 44
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Exhibit 10.13
ARTICLE VIII - Events of Default and Remedies ............................... 44
Section 8.1. Events of Default ...................................... 44
Section 8.2. Remedies ............................................... 46
ARTICLE IX - Agent .......................................................... 47
Section 9.1. Appointment and Authority .............................. 47
Section 9.2. Exculpation, Agent's Reliance, Etc ..................... 47
Section 9.3. Credit Decisions ....................................... 47
Section 9.4. Indemnification ........................................ 48
Section 9.5. Rights as Lender ....................................... 48
Section 9.6. Sharing of Set-Offs and Other Payments ................. 48
Section 9.7. Investments ............................................ 49
Section 9.8. Benefit of Article IX .................................. 49
Section 9.9. Resignation ............................................ 49
ARTICLE X - Miscellaneous ................................................... 50
Section 10.1. Waivers and Amendments; Acknowledgments ................ 50
Section 10.2. Survival of Agreements; Cumulative Nature .............. 51
Section 10.3. Notices ................................................ 51
Section 10.4. Payment of Expenses; Indemnity ......................... 52
Section 10.5. Joint and Several Liability; Parties in
Interest; Assignments ................................. 53
Section 10.6. Confidentiality ........................................ 54
Section 10.7. Governing Law; Submission to Process ................... 55
Section 10.8. Limitation on Interest ................................. 56
Section 10.9. Termination; Limited Survival .......................... 56
Section 10.10. Severability ........................................... 56
Section 10.11. Counterparts ........................................... 56
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc ............ 57
Schedules and Exhibits:
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Lender Schedule
Schedule 1 - Disclosure Schedule
Schedule 2 - Security Schedule
Schedule 3 - Insurance Schedule
Exhibit A - Promissory Note
Exhibit B - Borrowing Notice
Exhibit C - Continuation/Conversion Notice
Exhibit D - Certificate Accompanying Financial Statements
Exhibit E - (Intentionally Omitted)
Exhibit F - Environmental Compliance Certificate
Exhibit G - Letter of Credit Application and Agreement
Exhibit H-l - Opinion of Counsel for Restricted Persons
Exhibit H-2 - Opinions of Special Counsel
Exhibit I - Assignment and Assumption Agreement
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Exhibit 10.13
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of February 9, 1998, by and among
NORTH COAST ENERGY, INC., a Delaware corporation (herein called "Borrower"), ING
(U.S.) Capital Corporation, individually and as agent (herein called "Agent")
and the Lenders referred to below. In consideration of the mutual covenants and
agreements contained herein the parties hereto agree as follows:
ARTICLE I - DEFINITIONS AND REFERENCES
Section 1.1. DEFINED TERMS. As used in this Agreement, each of the
following terms has the meaning given it in this Section 1.1 or in the sections
and subsections referred to below:
"AFFILIATE" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 20% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or
managing general partners; or
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"AGENT" means ING (U.S.) Capital Corporation, as Agent hereunder, and
its successors in such capacity; provided, however, that until such time as a
Lender other than ING (U.S.) Capital Corporation becomes a party hereto, "Agent"
shall mean ING (U.S.)Capital Corporation, individually.
"AGREEMENT" means this Credit Agreement.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of Base Rate Loans and such
Lender's Eurodollar Lending Office in the case of Eurodollar Loans.
"BANK PARTIES" means Agent, LC Issuer, and all Lenders.
"BASE RATE" means the Base Rate Margin plus the higher of (a) the
Reference Rate and (b) the Federal Funds Rate plus one-half percent (0.5%) per
annum. For purposes of this definition, "Reference Rate" means the arithmetic
average of the rates of interest publicly announced by The Chase Manhattan Bank
(National Association), Citibank, N.A. and ▇▇▇▇▇▇ Guaranty Trust Company of New
York (or their respective successors) as their respective prime commercial
lending rates (or, as to any such bank that does not announce such a rate, such
bank's `base' or other rate determined by Agent to be the equivalent rate
announced by such bank), except that, if any such bank shall, for any period,
cease to announce publicly its prime commercial lending (or equivalent) rate,
Agent shall, during such period, determine the "Base Rate" based upon the prime
commercial lending (or equivalent) rates announced publicly by the other such
banks. The Base Rate shall in no event, however, exceed the Highest Lawful Rate.
"BASE RATE LOAN" means any Loan which bears interest at the Base Rate.
"BASE RATE MARGIN" means one percent (1%) per annum.
"BORROWER" means North Coast Energy, Inc. a Delaware corporation.
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Exhibit 10.13
"BORROWING" means a borrowing of new Loans of a single Type pursuant to
Section 2.2 or a continuation or conversion of existing Loans into a single Type
(and, in the case of Eurodollar Loans, with the same Interest Period) pursuant
to Section 2.3.
"BORROWING BASE" means, at the particular time in question, either the
amount provided for in Section 2.8 or the amount determined by Agent in
accordance with the provisions of Section 2.9, as reduced by Borrower pursuant
to Section 2.10; provided, however, that in no event shall the Borrowing Base
ever exceed the Maximum Loan Amount.
"BORROWING BASE DEFICIENCY" has the meaning given it in Section 2.7.
"BORROWING NOTICE" means a written or telephonic request, or a written
confirmation, made by Borrower which meets the requirements of Section 2.2.
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in New York, New York.
Any Business Day in any way relating to Eurodollar Loans (such as the day on
which an Interest Period begins or ends) must also be a day on which, in the
judgment of Agent, significant transactions in dollars are carried out in the
interbank eurocurrency market.
"CASH EQUIVALENTS" means investments in:
(a) marketable obligations, maturing within 12 months after acquisition
thereof, issued or unconditionally guaranteed by the United States of America or
an instrumentality or agency thereof and entitled to the full faith and credit
of the United States of America.
(b) demand deposits, and time deposits (including certificates of
deposit) maturing within 12 months from the date of deposit thereof, with any
office of any Lender or with a domestic office of any national or state bank or
trust company which is organized under the Laws of the United States of America
or any state therein, which has capital, surplus and undivided profits of at
least $500,000,000, and whose certificates of deposit have at least the third
highest credit rating given by either Rating Agency.
(c) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a) above entered into
with any commercial bank meeting the specifications of clause (b) above.
(d) open market commercial paper, maturing within 270 days after
acquisition thereof, which has the highest or second highest credit rating given
by either Rating Agency.
(e) investments in money market or other mutual funds substantially all
of whose assets comprise securities of the types described in clauses (a)
through (d) above.
"CHANGE OF CONTROL" means the occurrence of any one or more of the
following events: (i) any Person or two or more Persons acting as a group (other
than Nuon International, b.v. or its parent NV Nuon Energy Group or Lomak
Petroleum, Inc.) shall acquire "beneficial ownership" (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities Act of
1934, as amended, and including holding proxies to vote for the election of
directors other than proxies held by Borrower's management or their designees to
be voted in favor of Persons nominated by Borrower's Board of Directors) of 35%
or more of the outstanding voting securities of Borrower, measured by voting
power (including both common stock and any preferred stock or other equity
securities entitling the holders thereof to vote with the holders of common
stock in elections for directors of Borrower) or (ii) one-third or more of the
directors of Borrower shall consist of Persons not nominated by Borrower's Board
of Directors (not including as Board nominees any directors which the Board is
obligated to nominate pursuant to shareholders agreements, voting trust
arrangements or similar arrangements) or (iii) Lomak Petroleum, Inc.
individually or with other Persons acting as a group shall acquire beneficial
ownership (as defined
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Exhibit 10.13
above) of either (a) 40% or more or (b) more than the percentage held by Nuon
International, b.v. and NV Nuon Energy Group, of the outstanding voting
securities of Borrower, measured by voting power (including both common stock
and any preferred stock or other equity securities entitling the holders
thereof to vote with the holders of common stock in elections for directors of
Borrower).
"COLLATERAL" means all property of any kind which is subject to a Lien
in favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
"COMMITMENT PERIOD" means the period from and including the date hereof
until and including July 1, 1999 (or, if earlier, the day on which the Notes
first become due and payable in full).
"CONSOLIDATED" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.
"CONSOLIDATED EBITDA" means, for each period of four consecutive Fiscal
Quarters, the sum of (1) the Consolidated Net Income of Borrower during such
period, plus (2) Consolidated Interest Expense during such period, plus (3) all
income taxes which were deducted in determining such Consolidated Net Income,
plus (4) all depreciation, amortization (including amortization of good will and
debt issue costs) and other non-cash charges (including any provision for the
reduction in the carrying value of assets recorded in accordance with GAAP)
which were deducted in determining such Consolidated Net Income, minus (5) all
non-cash items of income which were included in determining such Consolidated
net Income.
"CONSOLIDATED INTEREST EXPENSE" means, for any applicable period, all
interest paid or accrued during such period on Indebtedness (including
amortization of original issue discount and the interest component of any
deferred payment obligations and capital lease obligations) which was deducted
in determining Consolidated Net Income.
"CONSOLIDATED NET INCOME" means, for any applicable period on a
Consolidated basis for Borrower and its Consolidated Subsidiaries, the gross
revenues of such Persons for such period, plus any cash dividends or
distributions actually received by such Persons from any other business entity,
minus all expenses and other proper charges (including taxes on income, to the
extent imposed upon such Persons), determined on a Consolidated basis after
eliminating earnings or losses attributable to outstanding minority interests,
but excluding the net earnings of any other business entity in which such
Persons has an ownership interest.
"CONSOLIDATED TANGIBLE NET WORTH" means the remainder of all
Consolidated assets of Borrower and its Subsidiaries, other than intangible
assets (including without limitation as intangible assets such assets as
patents, copyrights, licenses, franchises, goodwill, trade names, trade secrets
and leases other than oil, gas or mineral leases or leases required to be
capitalized under GAAP), minus Consolidated liabilities of Borrower and its
Subsidiaries.
"CONTINUATION/CONVERSION NOTICE" means a written or telephonic request,
or a written confirmation, made by Borrower which meets the requirements of
Section 2.3.
"DEFAULT" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.
"DEFAULT RATE" means, at the time in question, two percent (2.0%) per
annum plus the Base Rate then in effect; provided that, with respect to any
Eurodollar Loan with an Interest Period extending beyond the date such
Eurodollar Loan becomes due and payable, "Default Rate" shall mean two percent
(2.0%) per annum plus the related Eurodollar Rate. The Default Rate shall never
exceed the Highest Lawful Rate.
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Exhibit 10.13
"DETERMINATION DATE" has the meaning given it in Section 2.9.
"DISCLOSURE REPORT" means either a notice given by Borrower under
Section 6.4 or a certificate given by Borrower's chief financial officer under
Section 6.2(b).
"DISCLOSURE SCHEDULE" means Schedule 1 hereto.
"DISTRIBUTION" means (a) any dividend or other distribution made by a
Restricted Person on or in respect of any stock, partnership interest, or other
equity interest in such Restricted Person (including any option or warrant to
buy such an equity interest), or (b) any payment made by a Restricted Person to
purchase, redeem, acquire or retire any stock, partnership interest, or other
equity interest in such Restricted Person (including any such option or
warrant).
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the office
of such Lender specified as its "Domestic Lending Office" below its name on the
Lender Schedule attached hereto, or such other office as such Lender may from
time to time specify to Borrower and Agent.
"ELIGIBLE TRANSFEREE" means a Person which (a) is a Lender or (b) is
consented to as an Eligible Transferee by Agent and, so long as no Event of
Default is continuing by Borrower, which consents in each case will not be
unreasonably withheld (provided that no Person organized outside the United
States may be an Eligible Transferee if Borrower would be required to pay
withholding taxes on interest or principal owed to such Person).
"ENGINEERING REPORT" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 6.2(d).
"ENVIRONMENTAL COMPLAINT" means any written or oral complaint, order,
directive, claim, citation, notice of environmental report or investigation, or
other notice by any Tribunal or any other Person with respect to (a) air
emissions, (b) spills, releases, or discharges to soils, any improvements
located thereon, surface water, groundwater, or the sewer, septic, waste
treatment, storage, or disposal systems servicing any property of any Restricted
Person or any Collateral, (c) solid or liquid waste disposal, (d) the use,
generation, storage, transportation, or disposal of any Hazardous Substance, or
(e) other environmental, health or safety matters affecting any property of any
Restricted Person or any Collateral or the business conducted thereon.
"ENVIRONMENTAL LAWS" means any and all Laws relating to the environment
or to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA AFFILIATE" means Borrower and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control that, together with Borrower, are treated as a single employer
under Section 414 of the Internal Revenue Code of 1986, as amended.
"ERISA PLAN" means any employee pension benefit plan subject to Title
IV of ERISA maintained by any ERISA Affiliate with respect to which any
Restricted Person has a fixed or contingent liability.
"EURODOLLAR LOAN" means a Loan which is properly designated as a
Eurodollar Loan pursuant to Section 2.2 or 2.3.
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Exhibit 10.13
"EURODOLLAR MARGIN" means, on each day two and three-quarters
percent (2.75%) per annum.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office" below its
name on the Lender Schedule attached hereto (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Lender as such Lender
may from time to time specify to Borrower and Agent.
"EURODOLLAR RATE" means, with respect to each particular
Eurodollar Loan and the associated LIBOR Rate and Reserve Percentage, the rate
per annum calculated by Agent (rounded upwards, if necessary, to the next higher
0.01%) determined on a daily basis pursuant to the following formula:
Eurodollar Rate =
LIBOR Rate + Eurodollar Margin
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100.0% - Reserve Percentage
The Eurodollar Rate for any Eurodollar Loan shall change whenever the Eurodollar
Margin or the Reserve Percentage changes. No Eurodollar Rate shall ever exceed
the Highest Lawful Rate.
"EVALUATION DATE" means each of the following:
(a) March 31 and September 30 of each year, beginning with
March 31, 1998;
(b) Each date which either Borrower or Required Lenders, at
their respective options, specifies as a date as of which the Borrowing
Base is to be redetermined, provided that each such date must be the
first or last date of a current calendar month and that neither
Borrower nor Required Lenders shall be entitled to request any such
redetermination more than once during any six (6) month period.
"EVENT OF DEFAULT" has the meaning given it in Section 8.1.
"EXISTING CREDIT DOCUMENTS" means that certain Credit Agreement dated
September 20, 1993 among Borrower and Bank One, Texas, N.A., together with the
promissory notes made by Borrower thereunder.
"FACILITY USAGE" means, at the time in question, the aggregate amount
of outstanding Loans and existing LC Obligations at such time.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of one percent) equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate quoted to Agent on such day on such transactions as determined by Agent.
"FISCAL QUARTER" means a three-month period ending on June 30,
September 30, December 31, or March 31 of any year.
"FISCAL YEAR" means a twelve-month period ending on March 31 of any
year.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of Borrower
and its Consolidated subsidiaries, are applied for all periods after the date
hereof in a manner consistent with the manner in which such principles and
practices were applied to the audited Initial Financial
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Exhibit 10.13
Statements. If any material change in any accounting principle or practice is
required by the Financial Accounting Standards Board (or any such successor) in
order for such principle or practice to continue as a generally accepted
accounting principle or practice, all reports and financial statements required
hereunder with respect to Borrower or with respect to Borrower and its
Consolidated subsidiaries may be prepared in accordance with such change, but
all calculations and determinations to be made hereunder may be made in
accordance with such change only after notice of such change is given to each
Lender and Majority Lenders agree to such change insofar as it affects the
accounting of Borrower or of Borrower and its Consolidated subsidiaries.
"GUARANTOR" means any Person who has guaranteed some or all of the
Obligations and who has been accepted by Agent as a Guarantor.
"HAZARDOUS MATERIALS" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"HEDGING CONTRACT" means (a) any agreement providing for options,
swaps, floors, caps, collars, forward sales or forward purchases involving
interest rates, commodities or commodity prices, equities, currencies, bonds, or
indexes based on any of the foregoing, (b) any option, futures or forward
contract traded on an exchange, and (c) any other derivative agreement or other
similar agreement or arrangement.
"HIGHEST LAWFUL RATE" means, with respect to each Lender, the maximum
nonusurious rate of interest that such Lender is permitted under applicable Law
to contract for, take, charge, or receive with respect to its Loan. All
determinations herein of the Highest Lawful Rate, or of any interest rate
determined by reference to the Highest Lawful Rate, shall be made separately for
each Lender as appropriate to assure that the Loan Documents are not construed
to obligate any Person to pay interest to any Lender at a rate in excess of the
Highest Lawful Rate applicable to such Lender.
"INDEBTEDNESS" of any Person means Liabilities in any of the following
categories:
(a) Liabilities for borrowed money,
(b) Liabilities constituting an obligation to pay the deferred purchase
price of property or services,
(c) Liabilities evidenced by a bond, debenture, note or similar
instrument,
(d) Liabilities which (i) would under GAAP be shown on such Person's
balance sheet as a liability, and (ii) is payable more than one year from the
date of creation thereof (other than reserves for taxes and reserves for
contingent obligations),
(e) Liabilities arising under operating leases, futures contracts,
forward contracts, swap, cap or collar contracts, option contracts, hedging
contracts, other derivative contracts, or similar agreements,
(f) Liabilities constituting principal under leases capitalized in
accordance with GAAP,
(g) Liabilities arising under conditional sales or other title
retention agreements,
(h) Liabilities owing under direct or indirect guaranties of
Liabilities of any other Person or constituting obligations to purchase or
acquire or to otherwise protect or insure a creditor against loss in respect of
Liabilities of any other Person (such as obligations under working capital
maintenance agreements, agreements to keep-well, or agreements to purchase
Liabilities, assets, goods, securities or services), but excluding endorsements
in the ordinary course of business of negotiable instruments in the course of
collection,
(i) Liabilities (for example, repurchase agreements) consisting of an
obligation to purchase securities or other property, if such Liabilities arises
out of or in connection with the sale of the same or similar securities or
property,
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Exhibit 10.13
(j) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Liabilities with respect to payments received in consideration of
oil, gas, or other minerals yet to be acquired or produced at the time of
payment (including obligations under "take-or-pay" contracts to deliver gas in
return for payments already received and the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment), OR
(1) Liabilities with respect to other obligations to deliver goods or
services in consideration of advance payments therefor;
provided, however, that the "Indebtedness" of any Person shall not include
Liabilities that were incurred by such Person on ordinary trade terms to
vendors, suppliers, or other Persons providing goods and services for use by
such Person in the ordinary course of its business, unless and until such
Liabilities are outstanding more than 120 days after the incurrence thereof.
"INITIAL ENGINEERING REPORT" means the engineering report concerning
oil and gas properties of Restricted Persons (limited, in the case of the
Partnerships, to Borrower's applicable interest prepared by ▇ .▇. ▇▇▇▇▇▇▇▇ and
Associates as of April 1, 1997, and the engineering report concerning such oil
and gas properties prepared by Borrower as of September 30, 1997.
"INITIAL FINANCIAL STATEMENTS" means (i) the audited annual
Consolidated financial statements of Borrower dated as of March 31, 1997, and
(ii) the unaudited quarterly Consolidated financial statements of Borrower dated
as of September 30, 1997.
"INSURANCE SCHEDULE" means Schedule 3 attached hereto.
"INTEREST PERIOD" means, with respect to each particular Eurodollar
Loan in a Borrowing, a period of 1, 2, 3 or 6 months, as specified in the
Borrowing Notice applicable thereto, beginning on and including the date
specified in such Borrowing Notice (which must be a Business Day), and ending on
but not including the same day of the month as the day on which it began (e.g.,
a period beginning on the third day of one month shall end on but not include
the third day of another month), provided that each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (unless such next succeeding Business Day is the first
Business Day of a calendar month, in which case such Interest Period shall end
on the immediately preceding Business Day). No Interest Period may be elected
which would extend past the date on which the associated Note is due and payable
in full or would require the repayment of the related Eurodollar Loan prior to
the end of such Interest Period in order to make a scheduled installment payment
on the Notes.
"INVESTMENT" means any investment, in cash or by delivery of
property made, directly or indirectly in any Person, whether by acquisition of
shares of capital stock, indebtedness or other obligations or securities or by
loan, advance, capital contribution or otherwise.
"LAW" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction of the United States or any state or political
subdivision thereof or of any foreign country or any department, province or
other political subdivision thereof.
"LC Application" means any application for a Letter of Credit
hereafter made by Borrower to LC Issuer.
"LC COLLATERAL" has the meaning given it in Section 2.16.
"LC ISSUER" means ING Capital in its capacity as the issuer of Letters
of Credit hereunder, and its successors in such capacity. Agent may, with the
consent of Borrower and the Lender in question, appoint any Lender hereunder as
the LC Issuer in place of or in addition to ING Capital.
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Exhibit 10.13
"LC OBLIGATIONS" means, at the time in question, the sum of all Matured
LC Obligations plus the maximum amounts which LC Issuer might then or thereafter
be called upon to advance under all Letters of Credit then outstanding.
"LENDERS" means each signatory hereto (other than Borrower and
Restricted Persons a party hereto), including ING Capital in its capacity as a
lender hereunder rather than as Agent or LC Issuer, and the successors of each
such party as holder of a Note.
"LENDING OFFICE" means, with respect to any Lender, the office, branch,
or agency through which it funds its Eurodollar Loans; with respect to LC
Issuer, the office, branch, or agency through which it issues Letters of Credit;
and, with respect to Agent or Collateral Agent, the office, branch, or agency
through which it administers this Agreement.
"LETTER OF CREDIT" means any letter of credit issued by Issuing Bank
hereunder at the application of Borrower.
"LIABILITIES" means, as to any Person, all indebtedness, liabilities
and obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
"LIBOR RATE" means, with respect to each particular Eurodollar Loan and
the related Interest Period, the rate per annum (rounded upwards, if necessary,
to the nearest 1/16 of 1%) reported, on the date two Business Days prior to the
first day of such Interest Period, on Telerate Access Service Page 3750 (British
Bankers Association Settlement Rate) as the London Interbank Offered Rate for
dollar deposits having a term comparable to such Interest Period and in an
amount of $1,000,000 or more (or, if such Page shall cease to be publicly
available or if the information contained on such Page, in Agent's sole
judgment, shall cease to accurately reflect such London Interbank Offered Rate,
as reported by any publicly available source of similar market data selected by
Agent that, in Agent's sole judgment, accurately reflects such London Interbank
Offered Rate).
"LIEN" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Liabilities owed to him or any other
arrangement with such creditor which provides for the payment of such
Liabilities out of such property or assets or which allows him to have such
Liabilities satisfied out of such property or assets prior to the general
creditors of any owner thereof, including any lien, mortgage, security interest,
pledge, deposit, production payment, rights of a vendor under any title
retention or conditional sale agreement or lease substantially equivalent
thereto, tax lien, mechanic's or materialman's lien, or any other charge or
encumbrance for security purposes, whether arising by Law or agreement or
otherwise, but excluding any right of offset which arises without agreement in
the ordinary course of business. "Lien" also means any filed financing
statement, any registration of a pledge (such as with an issuer of
uncertificated securities), or any other arrangement or action which would serve
to perfect a Lien described in the preceding sentence, regardless of whether
such financing statement is filed, such registration is made, or such
arrangement or action is undertaken before or after such Lien exists.
"LOAN" has the meaning given it in Section 2.1.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security
Documents, the Letters of Credit, the LC Applications, and all other agreements,
certificates, documents, instruments and writings at any time delivered in
connection herewith or therewith (exclusive of term sheets, commitment letters,
correspondence and similar documents used in the negotiation hereof, except to
the extent the same contain information about Borrower or its Affiliates,
properties, business or prospects).
"MAJORITY LENDERS" means Lenders whose aggregate Percentage Shares
equal or exceed sixty-six and two-thirds percent (66_%).
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Exhibit 10.13
"MATERIAL ADVERSE CHANGE" means a material and adverse change, from the
state of affairs presented in the Initial Financial Statements, to (a)
Borrower's and its Subsidiaries' Consolidated financial condition, (b) the
operations or properties of Borrower and its Subsidiaries, considered as a
whole, (c) Borrower's ability to timely pay the Obligations, or (d) the
enforceability of the material terms of any Loan Documents.
"MATURED LC OBLIGATIONS" means all amounts paid by LC Issuer on drafts
or demands for payment drawn or made under or purported to be under any Letter
of Credit and all other amounts due and owing to LC Issuer under any LC
Application for any Letter of Credit, to the extent the same have not been
repaid to LC Issuer (with the proceeds of Loans or otherwise).
"MAXIMUM DRAWING AMOUNT" means at the time in question the sum of the
maximum amounts which Agent might then or thereafter be called upon to advance
under all Letters of Credit then outstanding.
"MAXIMUM LOAN AMOUNT" means the amount of $20,000,000.
"NOTE" has the meaning given it in Section 2.1.
"OBLIGATIONS" means all Liabilities from time to time owing by any
Restricted Person to any Bank Party under or pursuant to any of the Loan
Documents, including all LC Obligations. "OBLIGATION" means any part of the
Obligations.
"PARTNERSHIPS" means the partnerships listed on the Disclosure Schedule
and any other partnership of which Borrower or one of its Subsidiary is general
partner.
"PERCENTAGE SHARE" means, with respect to any Lender (a) when used in
Sections 2.1 or 2.5, in any Borrowing Notice or when no Loans are outstanding
hereunder, the percentage set forth opposite such Lender's name on Lender
Schedule attached hereto, and (b) when used otherwise, the percentage obtained
by dividing (i) the sum of the unpaid principal balance of such Lender's Loans
at the time in question plus the Matured LC Obligations which such Lender has
funded pursuant to Section 2.13(c) plus the portion of the Maximum Drawing
Amount which such Lender might be obligated to fund under Section 2.14(c), by
(ii) the sum of the aggregate unpaid principal balance of all Loans at such time
plus the aggregate amount of LC Obligations outstanding at such time.
"PERMITTED INVESTMENTS" means (i) Cash Equivalents, (ii) Investments in
wholly-owned Subsidiaries of Borrower and (iii) the following Investments in a
Partnership: (a) transfers to a newly formed Partnership of oil and gas
properties which have no developed reserves associated therewith, (b) operating
expenses and capital contributions not in excess of the Borrower's partnership
percentage of the operating expenses and capital expenditures by the
Partnership, consistent with the terms of the applicable partnership agreement,
and (c) normal and prudent extensions of credit by Borrower to the Partnership
in connection with the incurrence of lease operating expenses and other
reimbursable expenses on behalf of the Partnership in the ordinary course of
business, which extensions shall not be for longer periods than those extended
by other similar oil and gas businesses.
"PERMITTED LIEN" has the meaning given to such term in Section 7.2.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or trustee thereof,
estate or executor thereof, unincorporated organization or joint venture,
Tribunal, or any other legally recognizable entity.
"RATING AGENCY" means either Standard & Poor's Ratings Group (a
division of McGraw Hill, Inc.) or ▇▇▇▇▇'▇ Investors Service, Inc., or their
respective successors.
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Exhibit 10.13
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.
"RESTRICTED PERSON" means any of Borrower, each Subsidiary of Borrower,
and each Guarantor.
"RESERVE PERCENTAGE" means, on any day with respect to each particular
Eurodollar Loan, the maximum reserve requirement, as determined by Agent
(including without limitation any basic, supplemental, marginal, emergency or
similar reserves), expressed as a percentage and rounded to the next higher 0.01
%, which would then apply under Regulation D with respect to "Eurocurrency
liabilities", as such term is defined in Regulation D, of $1,000,000 or more. If
such reserve requirement shall change after the date hereof, the Reserve
Percentage shall be automatically increased or decreased, as the case may be,
from time to time as of the effective time of each such change in such reserve
requirement.
"SECURITY DOCUMENTS" means the instruments listed in the Security
Schedule and all other security agreements, deeds of trust, mortgages, chattel
mortgages, pledges, guaranties, financing statements, continuation statements,
extension agreements and other agreements or instruments now, heretofore, or
hereafter delivered by any Restricted Person to Agent in connection with this
Agreement or any transaction contemplated hereby to secure or guarantee the
payment of any part of the Obligations or the performance of any Restricted
Person's other duties and obligations under the Loan Documents.
"SECURITY SCHEDULE" means Schedule 2 hereto.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person;
provided that the particular relationship (a) which is established pursuant to a
standard form operating agreement or similar agreement or which is a partnership
for purposes of federal income taxation only, (b) which is not a corporation or
partnership (or subject to the Uniform Partnership Act) under applicable state
Law and (c) whose business is limited to the exploration, development and
operation of oil, gas or mineral properties and interests owned directly by the
parties in such relationship, shall not be deemed to be "Subsidiaries" of such
Person. Notwithstanding the forgoing nor limiting the foregoing, the
Partnerships shall be deemed to be Subsidiaries of Borrower.
"TERMINATION EVENT" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of any ERISA Affiliate
from an ERISA Plan during a plan year in which it was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of
intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment
as a termination under Section 4041 of ERISA, or (d) the institution of
proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty
Corporation under Section 4042 of ERISA, or (e) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any ERISA Plan.
"TRIBUNAL" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or any state, province,
commonwealth, nation, territory, possession, county, parish, town, township,
village or municipality, whether now or hereafter constituted and/or existing.
"TYPE" means, with respect to any Loans, the characterization of such
Loans as either Base Rate Loans or Eurodollar Loans.
Section 1.2. EXHIBITS AND SCHEDULES; ADDITIONAL DEFINITIONS. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes. Reference is hereby made to the Security Schedule for the meaning
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Exhibit 10.13
of certain terms defined therein and used but not defined herein, which
definitions are incorporated herein by reference.
Section 1.3. AMENDMENT OF DEFINED INSTRUMENTS. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in this
Agreement which refer to a particular agreement, instrument or document also
refer to and include all renewals, extensions, modifications, amendments and
restatements of such agreement, instrument or document, provided that nothing
contained in this section shall be construed to authorize any such renewal,
extension, modification, amendment or restatement.
Section 1.4. REFERENCES AND TITLES. All references in this Agreement to
Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation". Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
Section 1.5. CALCULATIONS AND DETERMINATIONS. All calculations under
the Loan Documents of interest chargeable with respect to Eurodollar Loans and
of fees shall be made on the basis of actual days elapsed (including the first
day but excluding the last) and a year of 360 days. All other calculations of
interest made under the Loan Documents shall be made on the basis of actual days
elapsed (including the first day but excluding the last) and a year of 365 or
366 days, as appropriate. Each determination by a Bank Party of amounts to be
paid under Sections 3.2 through 3.6 or any other matters which are to be
determined hereunder by a Bank Party (such as any Eurodollar Rate, LIBOR Rate,
Business Day, Interest Period, or Reserve Percentage) shall, in the absence of
manifest error, be conclusive and binding. Unless otherwise expressly provided
herein or unless Majority Lenders otherwise consent all financial statements and
reports furnished to any Bank Party hereunder shall be prepared and all
financial computations and determinations pursuant hereto shall be made in
accordance with GAAP.
ARTICLE II - THE LOANS AND LETTERS OF CREDIT
Section 2.1. COMMITMENTS TO LEND; NOTES. Subject to the terms and
conditions hereof, each Lender agrees to make loans to Borrower (herein called
such Lender's "Loans") upon Borrower's request from time to time during the
Commitment Period, provided that (a) subject to Sections 3.3, 3.4 and 3.6, all
Lenders are requested to make Loans of the same Type in accordance with their
respective Percentage Shares and as part of the same Borrowing, and (b) after
giving effect to such Loans, the Facility Usage does not exceed the Borrowing
Base determined as of the date on which the requested Loans are to be made. The
aggregate amount of all Loans in any Borrowing must be greater than or equal to
$100,000 or must equal the remaining availability under the Borrowing Base.
Borrower may have no more than five Borrowings of Eurodollar Loans outstanding
at any time and the amount of each Eurodollar Loan must equal $100,000 or any
higher integral multiple of $50,000. The obligation of Borrower to repay to each
Lender the aggregate amount of all Loans made by such Lender, together with
interest accruing in connection therewith, shall be evidenced by a single
promissory note (herein called such Lender's "Note") made by Borrower payable to
the order of such Lender in the form of Exhibit A with appropriate insertions.
The amount of principal owing on any Lender's Note at any given time shall be
the aggregate amount of all Loans theretofore made by such Lender minus all
payments of principal theretofore received by such Lender on such Note. Interest
on each Note shall accrue and be due and payable as provided herein and therein,
with Eurodollar Loans bearing interest at the Eurodollar Rate and Base Rate
Loans bearing interest at the Base Rate (subject to the applicability of the
Default Rate and limited by the provisions of Section 10.8). Subject to the
terms and conditions hereof, Borrower may borrow, repay, and reborrow hereunder.
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Exhibit 10.13
Section 2.2. REQUESTS FOR NEW LOANS. Borrower must give to Agent
written notice (or telephonic notice promptly confirmed in writing) of any
requested Borrowing of new Loans to be advanced by Lenders. Each such notice
constitutes a "Borrowing Notice" hereunder and must:
(a) specify (i) the aggregate amount of any such Borrowing of
new Base Rate Loans and the date on which such Base Rate Loans are to
be advanced, or (ii) the aggregate amount of any such Borrowing of new
Eurodollar Loans, the date on which such Eurodollar Loans are to be
advanced (which shall be the first day of the Interest Period which is
to apply thereto), and the length of the applicable Interest Period;
and
(b) be received by Agent not later than noon, New York, New
York time, on (i) the day on which any such Base Rate Loans are to be
made, or (ii) the third Business Day preceding the day on which any
such Eurodollar Loans are to be made.
Each such written request or confirmation must be made in the form and substance
of the "Borrowing Notice" attached hereto as Exhibit B, duly completed. Each
such telephonic request shall be deemed a representation, warranty,
acknowledgment and agreement by Borrower as to the matters which are required to
be set out in such written confirmation. Upon receipt of any such Borrowing
Notice, Agent shall give each Lender prompt notice of the terms thereof. If all
conditions precedent to such new Loans have been met, each Lender will on the
date requested promptly remit to Agent at Agent's office in New York, New York
the amount of such Lender's new Loan in immediately available funds, and upon
receipt of such funds, unless to its actual knowledge any conditions precedent
to such Loans have been neither met nor waived as provided herein, Agent shall
promptly make such Loans available to Borrower. Unless Agent shall have received
prompt notice from a Lender that such Lender will not make available to Agent
such Lender's new Loan, Agent may in its discretion assume that such Lender has
made such Loan available to Agent in accordance with this section and Agent may
if it chooses, in reliance upon such assumption, make such Loan available to
Borrower. If and to the extent such Lender shall not so make its new Loan
available to Agent, such Lender and Borrower severally agree to pay or repay to
Agent within three days after demand the amount of such Loan together with
interest thereon, for each day from the date such amount was made available to
Borrower until the date such amount is paid or repaid to Agent, with interest at
(i) the Federal Funds Rate, if such Lender is making such payment and (ii) the
interest rate applicable at the time to the other new Loans made on such date,
if Borrower is making such repayment. If neither such Lender nor Borrower pay or
repay to Agent such amount within such three-day period, Agent shall in addition
to such amount be entitled to recover from such Lender and from Borrower, on
demand, interest thereon at the Default Rate, calculated from the date such
amount was made available to Borrower. The failure of any Lender to make any new
Loan to be made by it hereunder shall not relieve any other Lender of its
obligation hereunder, if any, to make its new Loan, but no Lender shall be
responsible for the failure of any other Lender to make any new Loan to be made
by such other Lender.
Section 2.3. CONTINUATIONS AND CONVERSIONS OF EXISTING LOANS. Borrower
may make the following elections with respect to Loans already outstanding: to
convert Base Rate Loans to Eurodollar Loans, to convert Eurodollar Loans to Base
Rate Loans on the last day of the Interest Period applicable thereto, or to
continue Eurodollar Loans beyond the expiration of such Interest Period by
designating a new Interest Period to take effect at the time of such expiration.
In making such elections, Borrower may combine existing Loans made pursuant to
separate Borrowings into one new Borrowing or divide existing Loans made
pursuant to one Borrowing into separate new Borrowings. To make any such
election, Borrower must give to Agent written notice (or telephonic notice
promptly confirmed in writing) of any such conversion or continuation of
existing Loans, with a separate notice given for each new Borrowing. Each such
notice constitutes a "Continuation/Conversion Notice" hereunder and must:
(a) specify the existing Loans which are to be continued or
converted;
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Exhibit 10.13
(b) specify (i) the aggregate amount of any Borrowing of Base
Rate Loans into which such existing Loans are to be continued or
converted and the date on which such continuation or conversion is to
occur, or (ii) the aggregate amount of any Borrowing of Eurodollar
Loans into which such existing Loans are to be continued or converted,
the date on which such continuation or conversion is to occur (which
shall be the first day of the Interest Period which is to apply to such
Eurodollar Loans), and the length of the applicable Interest Period;
and
(c) be received by Agent not later than 10:00 a.m., New York,
New York time, on the third Business Day preceding the day on which any
such continuation or conversion to Eurodollar Loans is to occur.
Each such written request or confirmation must be made in the form and substance
of the "Continuation/Conversion Notice" attached hereto as Exhibit C, duly
completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by Borrower as to the matters which are
required to be set out in such written confirmation. Upon receipt of any such
Borrowing Notice, Agent shall give each Lender prompt notice of the terms
thereof. Each Borrowing Notice shall be irrevocable and binding on Borrower.
During the continuance of any Default, Borrower may not make any election to
convert existing Loans into Eurodollar Loans or continue existing Loans as
Eurodollar Loans. If (due to the existence of a Default or for any other reason)
Borrower fails to timely and properly give any notice of continuation or
conversion with respect to a Borrowing of existing Eurodollar Loans at least
three days prior to the end of the Interest Period applicable thereto, such
Eurodollar Loans shall automatically be converted into Base Rate Loans at the
end of such Interest Period. No new funds shall be repaid by Borrower or
advanced by any Lender in connection with any continuation or conversion of
existing Loans pursuant to this section, and no such continuation or conversion
shall be deemed to be a new advance of funds for any purpose; such continuations
and conversions merely constitute a change in the interest rate applicable to
already outstanding Loans.
Section 2.4. USE OF PROCEEDS. Borrower shall use all Loans to refinance
existing indebtedness, to finance capital expenditures, to refinance Matured LC
Obligations, and provide working capital for its operations and for other
general business purposes. Borrower shall use all Letters of Credit for its
general corporate purposes. In no event shall the funds from any Loan or any
Letter of Credit be used directly or indirectly by any Person for personal,
family, household or agricultural purposes or for the purpose, whether
immediate, incidental or ultimate, of purchasing, acquiring or carrying any
"margin stock" or any "margin securities" (as such terms are defined
respectively in Regulation U and Regulation G promulgated by the Board of
Governors of the Federal Reserve System) or to extend credit to others directly
or indirectly for the purpose of purchasing or carrying any such margin stock or
margin securities. Borrower represents and warrants that Borrower is not engaged
principally, or as one of Borrower's important activities, in the business of
extending credit to others for the purpose of purchasing or carrying such margin
stock or margin securities.
Section 2.5. FEES.
(a) COMMITMENT FEES. In consideration of each Lender's commitment to
make Loans, Borrower will pay to Agent for the account of each Lender a
commitment fee determined on a daily basis by applying a rate of one-half of one
percent (0.50%) per annum to such Lender's Percentage Share of the unused
portion of the Borrowing Base on each day during the Commitment Period,
determined for each such day by deducting from the amount of the Borrowing Base
at the end of such day the Facility Usage. This commitment fee shall be due and
payable in arrears on the last day of each Fiscal Quarter and at the end of the
Commitment Period.
(b) AGENT'S FEES. In addition to all other amounts due to Agent under
the Loan Documents, Borrower will pay fees to Agent as described in a letter
agreement of even
date herewith between Agent and Borrower.
Section 2.6. OPTIONAL PREPAYMENTS. Borrower may, upon five Business
Days' notice to each Lender, from time to time and without premium or penalty
prepay the Notes, in whole or in part, so long as the aggregate amounts of all
partial prepayments of principal on the Notes is an integral multiple of
$50,000, so long as
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Exhibit 10.13
Borrower does not prepay any Eurodollar Loan, and so long as Borrower does not
make any prepayments which would reduce the unpaid principal balance of any Loan
to less than $100,000 without first either (a) terminating this Agreement or (b)
providing assurance satisfactory to Agent in its discretion that Lenders' legal
rights under the Loan Documents are in no way affected by such reduction. Each
partial prepayment of principal made after the end of the Commitment Period
shall be applied to the regular installments of principal due under the Notes in
the inverse order of their maturities. Each prepayment of principal under this
section shall be accompanied by all interest then accrued and unpaid on the
principal so prepaid. Any principal or interest prepaid pursuant to this section
shall be in addition to, and not in lieu of, all payments otherwise required to
be paid under the Loan Documents at the time of such prepayment.
Section 2.7. MANDATORY PREPAYMENTS. If at any time the Facility Usage
is in excess of the Borrowing Base (such excess being herein called a "Borrowing
Base Deficiency"), Borrower shall, within forty-five Business Days after Agent
gives notice of such fact to Borrower, prepay the principal amount of the Loans
in an aggregate amount at least equal to such Borrowing Base Deficiency (or, if
the Loans have been paid in full, pay to LC issuer LC Collateral as required
under Section 2.16(a)). Each prepayment of principal under this section shall be
accompanied by all interest then accrued and unpaid on the principal so prepaid.
Any principal or interest prepaid pursuant to this section shall be in addition
to, and not in lieu of, all payments otherwise required to be paid under the
Note or the other Loan Documents at the time of such prepayment.
Section 2.8. INITIAL BORROWING BASE. During the period from the date
hereof to the first Determination Date the Borrowing Base shall be $ 10,000,000.
Section 2.9. SUBSEQUENT DETERMINATIONS OF BORROWING BASE.
By May 15 and November 15 of each year, or within 30 days after notice of an
Evaluation Date, Borrower shall furnish to each Lender all information, reports
and data which Agent has then requested concerning Restricted Persons'
businesses and properties (including Borrower's oil and gas properties and
interests and the reserves and production relating thereto), together with the
Engineering Reports described in Section 6.2(d) or (e) as applicable. Within
thirty days after receiving such information, reports and data, or as promptly
thereafter as practicable, Majority Lenders shall agree upon an amount for the
Borrowing Base (provided that all Lenders must agree to any increase in the
Borrowing Base) and Agent shall by notice to Borrower designate such amount as
the new Borrowing Base available to Borrower hereunder, which designation shall
take effect immediately on the date such notice is sent (herein called a
"DETERMINATION DATE") and shall remain in effect until but not including the
next date as of which the Borrowing Base is redetermined. If Borrower does not
furnish all such information, reports and data by the date specified in the
first sentence of this section, Agent may nonetheless designate the Borrowing
Base at any amount which Majority Lenders determine and may redesignate the
Borrowing Base from time to time thereafter until each Lender receives all such
information, reports and data, whereupon Majority Lenders shall designate a new
Borrowing Base as described above. Majority Lenders shall determine the amount
of the Borrowing Base based upon the loan collateral value which they in their
sole discretion assign to the various oil and gas properties which constitute
Collateral of Restricted Persons at the time in question and based upon such
other credit factors (including without limitation the assets, liabilities, cash
flow, hedged and unhedged exposure to price, foreign exchange rate, and interest
rate changes, business, properties, prospects, management and ownership of
Borrower and its Affiliates) as they in their discretion deem significant. It is
expressly understood that Lenders and Agent have no obligation to agree upon or
designate the Borrowing Base at any particular amount, whether in relation to
the face amount of the Notes, the Maximum Loan Amount or otherwise, and that
Lenders' commitments to advance funds hereunder is determined by reference to
the Borrowing Base from time to time in effect, which Borrowing Base shall be
used for calculating commitment fees under Section 2.5 and, to the extent
permitted by Law and regulatory authorities, for the purposes of capital
adequacy determination and reimbursements under Section 3.2.
Section 2.10. BORROWER'S REDUCTION OF BORROWING BASE.
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Exhibit 10.13
Until the termination of the Commitment Period Borrower may, during the
fifteen-day period beginning on each Determination Date (each such period being
called in this section an "Option Period"), reduce the Borrowing Base from the
amount designated by Agent to any lesser amount. To exercise such option
Borrower must within an Option Period send notice to Agent of the amount of the
Borrowing Base chosen by Borrower. If Borrower does not affirmatively exercise
this option during an Option Period the Borrowing Base shall be the amount
designated by Agent. Any choice by Borrower of a Borrowing Base shall be
effective as of the first day of the Option Period during which such choice was
made and shall continue in effect until the next date as of which the Borrowing
Base is redetermined.
Section 2.11. LETTERS OF CREDIT. Subject to the terms and conditions
hereof, Borrower may during the Commitment Period request LC Issuer to issue one
or more Letters of Credit, provided that, after taking such Letter of Credit
into account:
(a) the Facility Usage does not exceed the Borrowing Base at
such time; and
(b) the aggregate amount of LC Obligations at such time does
not exceed $2,000,000; and
(c) the expiration date of such Letter of Credit is prior to
the end of the Commitment Period; provided, however, up to $200,000 of
Letters of Credit may be outstanding at any one time with expiration
dates of up to one year after the end of the Commitment Period;
and further provided that:
(d) such Letter of Credit is to be used to satisfy state
regulatory bonding requirements and similar performance obligations of
the Restricted Persons arising in the ordinary course of business and
payment obligations under gas purchase contracts arising in the
ordinary course of the Restricted Persons' gas marketing business;
(e) such Letter of Credit is not directly or indirectly used
to assure payment of or otherwise support any Indebtedness of any
Person other than Indebtedness of any Restricted Person;
(f) the issuance of such Letter of Credit will be in
compliance with all applicable governmental restrictions, policies, and
guidelines and will not subject LC Issuer to any cost which is note
reimbursable under Article III;
(g) the form and terms of such Letter of Credit are acceptable
to LC Issuer in its sole and absolute discretion; and
(h) all other conditions in this Agreement to the issuance of
such Letter of Credit have been satisfied.
LC Issuer will honor any such request if the foregoing conditions (a) through
(h) (in the following Section 2.12 called the "LC CONDITIONS") have been met as
of the date of issuance of such Letter of Credit. LC Issuer may choose to honor
any such request for any other Letter of Credit but has no obligation to do so
and may refuse to issue any other requested Letter of Credit for any reason
which LC Issuer in its sole discretion deems relevant.
Section 2.12. REQUESTING LETTERS OF CREDIT. Borrower must make written
application for any Letter of Credit at least five Business Days before the date
on which Borrower desires for LC Issuer to issue such Letter of Credit. By
making any such written application Borrower shall be deemed to have represented
and warranted that the LC Conditions described in Section 2.11 will be met as of
the date of issuance of such Letter of Credit. Each such written application for
a Letter of Credit must be made in writing in the form and substance of Exhibit
G, the terms and provisions of which are hereby incorporated herein by reference
(or in such other form as may mutually be agreed upon by LC Issuer and
Borrower). Two Business Days after the LC Conditions for a Letter of Credit
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Exhibit 10.13
have been met as described in Section 2.11 (or if LC Issuer otherwise desires to
issue such Letter of Credit), LC Issuer will issue such Letter of Credit at LC
Issuer's office in New York, New York. If any provisions of any LC Application
conflict with any provisions of this Agreement, the provisions of this Agreement
shall govern and control.
Section 2.13. REIMBURSEMENT AND PARTICIPATIONS.
(a) REIMBURSEMENT BY BORROWER. Each Matured LC Obligation shall
constitute a loan by LC Issuer to Borrower. Borrower promises to pay to LC
Issuer, or to LC Issuer's order, on demand, the full amount of each Matured LC
Obligation, together with interest thereon at the Default Rate.
(b) LETTER OF CREDIT ADVANCES. If the beneficiary of any Letter of
Credit makes a draft or other demand for payment thereunder then Borrower may,
during the interval between the making thereof and the honoring thereof by LC
Issuer, request Lenders to make Loans to Borrower in the amount of such draft or
demand, which Loans shall be made concurrently with LC Issuer's payment of such
draft or demand and shall be immediately used by LC Issuer to repay the amount
of the resulting Matured LC Obligation. Such a request by Borrower shall be made
in compliance with all of the provisions hereof, provided that for the purposes
of the first sentence of Section 2.1 the amount of such Loans shall be
considered but the amount of the Matured LC Obligation to be concurrently paid
by such Loans shall not be considered.
(c) PARTICIPATION BY LENDERS. LC Issuer irrevocably agrees to grant and
hereby grants to each Lender, and -- to induce LC Issuer to issue Letters of
Credit hereunder -- each Lender irrevocably agrees to accept and purchase and
hereby accepts and purchases from LC Issuer, on the terms and conditions
hereinafter stated and for such Lender's own account and risk an undivided
interest equal to such Lender's Percentage Share of LC Issuer's obligations and
rights under each Letter of Credit issued hereunder and the amount of each
Matured LC Obligation paid by LC Issuer thereunder. Each Lender unconditionally
and irrevocably agrees with LC Issuer that, if a Matured LC Obligation is paid
under any Letter of Credit for which LC Issuer is not reimbursed in full by
Borrower in accordance with the terms of this Agreement and the related LC
Application (including any reimbursement by means of concurrent Loans or by the
application of LC Collateral), such Lender shall (in all circumstances and
without set-off or counterclaim) pay to LC Issuer on demand, in immediately
available funds at LC Issuer's address for notices hereunder, such Lender's
Percentage Share of such Matured LC Obligation (or any portion thereof which has
not been reimbursed by Borrower). Each Lender's obligation to pay LC Issuer
pursuant to the terms of this subsection is irrevocable and unconditional. If
any amount required to be paid by any Lender to LC Issuer pursuant to this
subsection is not paid by such Lender to LC Issuer within three Business Days
after the date such payment is due, LC Issuer shall in addition to such amount
be entitled to recover from such Lender, on demand, interest thereon calculated
from such due date at the Federal Funds Rate. If any amount required to be paid
by any Lender to LC Issuer pursuant to this subsection is not paid by such
Lender to LC Issuer within three Business Days after the date such payment is
due, LC Issuer shall in addition to such amount be entitled to recover from such
Lender, on demand, interest thereon calculated from such due date at the Default
Rate.
(d) DISTRIBUTIONS TO PARTICIPANTS. Whenever LC Issuer has in
accordance with this section received from any Lender payment of such Lender's
Percentage Share of any Matured LC Obligation, if LC Issuer thereafter receives
any payment of such Matured LC Obligation or any payment of interest thereon
(whether directly from Borrower or by application of LC Collateral or otherwise,
and excluding only interest for any period prior to LC Issuer's demand that such
Lender make such payment of its Percentage Share), LC Issuer will distribute to
such Lender its Percentage Share of the amounts so received by LC Issuer;
provided, however, that if any such payment received by LC Issuer must
thereafter be returned by LC Issuer, such Lender shall return to LC Issuer the
portion thereof which LC Issuer has previously distributed to it.
(e) CALCULATIONS. A written advice setting forth in reasonable detail
the amounts owing under this section, submitted by LC Issuer to Borrower or any
Lender from time to time, shall be prima facie evidence of the
amounts thereof.
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Exhibit 10.13
Section 2.14. LETTER OF CREDIT FEES. In consideration of LC Issuer's
issuance of any Letter of Credit, Borrower agrees to pay (a) to Agent, for the
account of all Lenders in accordance with their respective Percentage Shares, a
letter of credit issuance fee at a rate equal to one and one-half percent (1.5%)
per annum. Each such fee will be calculated based on the term and face amount of
such Letter of Credit and the above applicable rate and will be payable upon
issuance. In addition, Borrower will pay to LC Issuer a minimum administrative
issuance fee of $100 for each Letter of Credit and an administrative drawing fee
of $250 upon any drawing under a Letter of Credit.
Section 2.15. NO DUTY TO INQUIRE.
(a) DRAFTS AND DEMANDS. LC Issuer is authorized and instructed to
accept and pay drafts and demands for payment under any Letter of Credit without
requiring, and without responsibility for, any determination as to the existence
of any event giving rise to said draft, either at the time of acceptance of
payment or thereafter. LC Issuer is under no duty to determine the proper
identity of anyone presenting such a draft or making such a demand (whether by
tested telex or otherwise) as the officer, representative or agent of any
beneficiary under any Letter of Credit, and payment by LC Issuer to any such
beneficiary when requested by any such purported officer, representative or
agent is hereby authorized and approved. Borrower agrees to hold LC Issuer and
each other Bank Party harmless and indemnified against any liability or claim in
connection with or arising out of the subject matter of this section, WHICH
INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY
OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION
OF ANY KIND BY ANY BANK PARTY, provided only that no Bank Party shall be
entitled to indemnification for that portion, if any, of any liability or claim
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment.
(b) Extension of Maturity. If the maturity of any Letter of Credit is
extended by its terms or by Law or governmental action, or if any extension of
the maturity or time for presentation of drafts or any other modification of the
terms of any Letter of Credit is made at the request of any Restricted Person,
or if the amount of any Letter of Credit is increased at the request of any
Restricted Person, this Agreement shall be binding upon all Restricted Persons
with respect to such Letter of Credit as so extended, increased or otherwise
modified, with respect to drafts and property covered thereby, and with respect
to any action taken by LC Issuer, LC Issuer's correspondents, or any Bank Party
in accordance with such extension, increase or other modification.
(c) Transferees of Letters of Credit. If any Letter of Credit provides
that it is transferable, LC Issuer shall have no duty to determine the proper
identity of anyone appearing as transferee of such Letter of Credit, nor shall
LC Issuer be charged with responsibility of any nature or character for the
validity or correctness of any transfer or successive transfers, and payment by
LC Issuer to any purported transferee or transferees as determined by LC Issuer
is hereby authorized and approved, and Borrower further agrees to hold LC Issuer
and each other Bank Party harmless and indemnified against any liability or
claim in connection with or arising out of the foregoing, WHICH INDEMNITY SHALL
APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY OR TO ANY EXTENT
CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY
BANK PARTY, provided only that no Bank Party shall be entitled to
indemnification for that portion, if any, of any liability or claim which is
proximately caused by its own individual gross negligence or willful misconduct,
as determined in a final judgment.
Section 2.16. LC COLLATERAL.
(a) LC OBLIGATIONS IN EXCESS OF BORROWING BASE. If, after the making of
all mandatory prepayments required under Section 2.7, the outstanding LC
Obligations will exceed the Borrowing Base, then in addition to prepayment of
the entire principal balance of the Loans Borrower will immediately pay to LC
Issuer an amount equal to such excess. LC Issuer will hold such amount as
security for the remaining LC Obligations (all such amounts held as security for
LC Obligations being herein collectively called "LC COLLATERAL") until such LC
Obligations become Matured LC Obligations, at which time such LC Collateral may
be applied to such Matured LC Obligations. Neither this subsection nor the
following subsection shall, however, limit or impair any rights
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Exhibit 10.13
which LC Issuer may have under any other document or agreement relating to any
Letter of Credit or LC Obligation, including any LC Application, or any rights
which any Bank Party may have to otherwise apply any payments by Borrower and
any LC Collateral under Section 3.1.
(b) ACCELERATION OF LC OBLIGATIONS. If the Obligations or any part
thereof become immediately due and payable pursuant to Section 8.1 then, unless
Majority Lenders otherwise specifically elect to the contrary (which election
may thereafter be retracted by Majority Lenders at any time), all LC Obligations
shall become immediately due and payable without regard to whether or not actual
drawings or payments on the Letters of Credit have occurred, and Borrower shall
be obligated to pay to LC Issuer immediately an amount equal to the aggregate LC
Obligations which are then outstanding. All amounts so paid shall first be
applied to Matured LC Obligations and then held by LC Issuer as LC Collateral
until such LC Obligations become Matured LC Obligations, at which time such LC
Collateral shall be applied to such Matured LC Obligations.
(c) INVESTMENT OF LC COLLATERAL. Pending application thereof, all LC
Collateral shall be invested by LC Issuer in such investments as LC Issuer may
choose in its sole discretion. All interest on such investments shall be
reinvested and constitute additional LC Collateral. To the extent
all other Obligations have been satisfied in full, including all Matured LC
Obligations and all of Borrower's reimbursement obligations in connection
therewith, as Letters of Credit expire or are terminated, LC Issuer shall
release the amount of any LC Collateral in excess of the remaining outstanding
LC Obligations. Borrower hereby assigns and grants to LC Issuer a continuing
security interest in all LC Collateral paid by it to LC Issuer, all investments
purchased with such LC Collateral, and all proceeds thereof to secure its
Matured LC Obligations and its Obligations under this Agreement, the Note, and
the other Loan Documents, and Borrower agrees that such LC Collateral and
investments shall be subject to all of the terms and conditions of the Security
Documents. Borrower further agrees that LC Issuer shall have all of the rights
and remedies of a secured party under the Uniform Commercial Code as adopted in
the State of New York with respect to such security interest and that an Event
of Default under this Agreement shall constitute a default for purposes of such
security interest.
(d) PAYMENT OF LC COLLATERAL. When Borrower is required to provide LC
Collateral for any reason and fails to do so on the day when required, LC Issuer
may without notice to Borrower or any other Restricted Person provide such LC
Collateral (whether by application of proceeds of other Collateral, by transfers
from other accounts maintained with LC Issuer, or otherwise) using any available
funds of Borrower or any other Person also liable to make such payments. Any
such amounts which are required to be provided as LC Collateral and which are
not provided on the date required shall, for purposes of each Security Document,
be considered past due Obligations owing hereunder, and LC Issuer is hereby
authorized to exercise its respective rights under each Security Document to
obtain such amounts.
ARTICLE III - PAYMENTS TO LENDERS
Section 3.1. GENERAL PROCEDURES. Borrower will make each payment which
it owes under the Loan Documents to Agent for the account of the Bank Party to
whom such payment is owed. Each such payment must be received by Agent not later
than 11:00 a.m., New York, New York time, on the date such payment becomes due
and payable, in lawful money of the United States of America, without set-off,
deduction or counterclaim, and in immediately available funds. Any payment
received by Agent after such time will be deemed to have been made on the next
following Business Day. Should any such payment become due and payable on a day
other than a Business Day, the maturity of such payment shall be extended to the
next succeeding Business Day, and, in the case of a payment of principal or past
due interest, interest shall accrue and be payable thereon for the period of
such extension as provided in the Loan Document under which such payment is due.
Each payment under a Loan Document shall be due and payable at the place
provided therein and, if no specific place of payment is provided, shall be due
and payable at the place of payment of Agent's Note. When Agent collects or
receives money on account of the Obligations, Agent shall distribute all money
so collected or received, and each Bank Party shall apply all such money so
distributed, as follows:
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Exhibit 10.13
(a) first, for the payment of all Obligations which are then
due (and if such money is insufficient to pay all such Obligations,
first to any reimbursements due Agent under Section 6.9 or 10.4 and
then to the partial payment of all other Obligations then due in
proportion to the amounts thereof, or as Bank Parties shall otherwise
agree);
(b) then for the prepayment of amounts owing under the Loan
Documents (other than principal on the Notes) if so specified by
Borrower;
(c) then for the prepayment of principal on the Notes,
together with accrued and unpaid interest on the principal so prepaid;
and
(d) last, for the payment or prepayment of any other
Obligations.
All payments applied to principal or interest on any Note shall be applied first
to any interest then due and payable, then to principal then due and payable,
and last to any prepayment of principal and interest in compliance with Sections
2.6 and 2.7. All distributions of amounts described in any of subsections (b),
(c) or (d) above shall be made by Agent pro rata to each Bank Party then owed
Obligations described in such subsection in proportion to all amounts owed to
all Bank Parties which are described in such subsection; provided that if any
Lender then owes payments to LC Issuer for the purchase of a participation under
Section 2.13 hereof, any amounts otherwise distributable under this section to
such Lender shall be deemed to belong to LC Issuer, to the extent of such unpaid
payments, and Agent shall apply such amounts to make such unpaid payments rather
than distribute such amounts to such Lender.
Section 3.2. CAPITAL REIMBURSEMENT. If either (a) the introduction or
implementation of or the compliance with or any change in or in the
interpretation of any Law, or (b) the introduction or implementation of or the
compliance with any request, directive or guideline from any central bank or
other governmental authority (whether or not having the force of Law) affects or
would affect the amount of capital required or expected to be maintained by any
Bank Party or any corporation controlling any Bank Party, then, upon demand by
such Bank Party, Borrower will pay to Agent for the benefit of such Bank Party,
from time to time as specified by such Bank Party, such additional amount or
amounts which such Bank Party shall determine to be appropriate to compensate
such Bank Party or any corporation controlling such Bank Party in light of such
circumstances, to the extent that such Bank Party reasonably determines that the
amount of any such capital would be increased or the rate of return on any such
capital would be reduced by or in whole or in part based on the existence of the
face amount of such Bank Party's Loans, Letters of Credit, participations in
Letters of Credit or commitments under this Agreement.
Section 3.3. INCREASED COST OF EURODOLLAR LOANS OR LETTERS OF CREDIT.
If any applicable Law (whether now in effect or hereinafter enacted or
promulgated, including Regulation D) or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of Law):
(a) shall change the basis of taxation of payments to any Bank
Party of any principal, interest, or other amounts attributable to any
Eurodollar Loan or Letter of Credit or otherwise due under this
Agreement in respect of any Eurodollar Loan or Letter of Credit (other
than taxes imposed on the overall net income of such Bank Party or any
lending office of such Bank Party by any jurisdiction in which such
Bank Party or any such lending office is located); or
(b) shall change, impose, modify, apply or deem applicable any
reserve, special deposit or similar requirements in respect of any
Eurodollar Loan or any Letter of Credit (excluding those for which such
Bank Party is fully compensated pursuant to adjustments made in the
definition of Eurodollar Rate) or against assets of, deposits with or
for the account of, or credit extended by, such Bank Party; or
(c) shall impose on any Bank Party or the interbank
eurocurrency deposit market any other condition affecting any
Eurodollar Loan or Letter of Credit, the result of which is to increase
the cost to
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Exhibit 10.13
any Bank Party of funding or maintaining any Eurodollar Loan or of
issuing any Letter of Credit or to reduce the amount of any sum
receivable by any Bank Party in respect of any Eurodollar Loan or
Letter of Credit by an amount deemed by such Bank Party to be material,
then such Bank Party shall promptly notify Agent and Borrower in writing of the
happening of such event and of the amount required to compensate such Bank Party
for such event (on an after-tax basis, taking into account any taxes on such
compensation), whereupon (i) Borrower shall pay such amount to Agent for the
account of such Bank Party and (ii) Borrower may elect, by giving to Agent and
such Bank Party not less than three Business Days' notice, to convert all (but
not less than all) of any such Eurodollar Loans into Base Rate Loans.
Section 3.4. AVAILABILITY. If (a) any change in applicable Laws, or in
the interpretation or administration thereof of or in any jurisdiction
whatsoever, domestic or foreign, shall make it unlawful or impracticable for any
Bank Party to fund or maintain Eurodollar Loans or to issue or participate in
Letters of Credit, or shall materially restrict the authority of any Bank Party
to purchase or take offshore deposits of dollars (i.e., "eurodollars"), or (b)
any Bank Party determines that matching deposits appropriate to fund or maintain
any Eurodollar Loan are not available to it, or (c) any Bank Party determines
that the formula for calculating the Eurodollar Rate does not fairly reflect the
cost to such Bank Party of making or maintaining loans based on such rate, then,
upon notice by such Bank Party to Borrower and Agent, Borrower's right to elect
Eurodollar Loans from such Bank Party (or, if applicable, to obtain Letters of
Credit) shall be suspended to the extent and for the duration of such
illegality, impracticability or restriction and all Eurodollar Loans of such
Bank Party which are then outstanding or are then the subject of any Borrowing
Notice and which cannot lawfully or practicably be maintained or funded shall
immediately become or remain, or shall be funded as, Base Rate Loans of such
Bank Party. Borrower agrees to indemnify each Bank Party and hold it harmless
against all costs, expenses, claims, penalties, liabilities and damages which
may result from any such change in Law, interpretation or administration. Such
indemnification shall be on an after-tax basis, taking into account any taxes
imposed on the amounts paid as indemnity.
Section 3.5. FUNDING LOSSES. In addition to its other obligations
hereunder, Borrower will indemnify each Bank Party against, and reimburse each
Bank Party on demand for, any loss or expense incurred or sustained by such Bank
Party (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by a Bank Party to fund or
maintain Eurodollar Loans), as a result of (a) any payment or prepayment
(whether authorized or required hereunder or otherwise) of all or a portion of a
Eurodollar Loan on a day other than the day on which the applicable Interest
Period ends, (b) any payment or prepayment, whether required hereunder or
otherwise, of a Loan made after the delivery, but before the effective date, of
a Continuation/Conversion Notice, if such payment or prepayment prevents such
Continuation/Conversion Notice from becoming fully effective, (c) the failure of
any Loan to be made or of any Continuation/Conversion Notice to become effective
due to any condition precedent not being satisfied or due to any other action or
inaction of any Restricted Person, or (d) any conversion (whether authorized or
required hereunder or otherwise) of all or any portion of any Eurodollar Loan
into a Base Rate Loan or into a different Eurodollar Loan on a day other than
the day on which the applicable Interest Period ends. Such indemnification shall
be on an after-tax basis, taking into account any taxes imposed on the amounts
paid as indemnity.
Section 3.6. REIMBURSABLE TAXES. Borrower covenants and agrees that:
(a Borrower will indemnify each Bank Party against and
reimburse each Bank Party for all present and future income, stamp and
other taxes, levies, costs and charges whatsoever imposed, assessed,
levied or collected on or in respect of this Agreement or any
Eurodollar Loans or Letters of Credit (whether or not legally or
correctly imposed, assessed, levied or collected), excluding, however,
any taxes imposed on or measured by the overall net income of Agent or
such Bank Party or any lending office of such Bank Party by any
jurisdiction in which such Bank Party or any such lending office is
located (all such non-excluded taxes, levies, costs and charges being
collectively called "Reimbursable Taxes" in this section). Such
indemnification shall be on an after-tax basis, taking into account any
taxes imposed on the amounts paid as indemnity.
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Exhibit 10.13
(b All payments on account of the principal of, and interest
on, each Bank Party's Loans and Note, and all other amounts payable by
Borrower to any Bank Party hereunder, shall be made in full without
set-off or counterclaim and shall be made free and clear of and without
deductions or withholdings of any nature by reason of any Reimbursable
Taxes, all of which will be for the account of Borrower. In the event
of Borrower being compelled by Law to make any such deduction or
withholding from any payment to any Bank Party, Borrower shall pay on
the due date of such payment, by way of additional interest, such
additional amounts as are needed to cause the amount receivable by such
Bank Party after such deduction or withholding to equal the amount
which would have been receivable in the absence of such deduction or
withholding. If Borrower should make any deduction or withholding as
aforesaid, Borrower shall within 60 days thereafter forward to such
Bank Party an official receipt or other official document evidencing
payment of such deduction or withholding.
(c If Borrower is ever required to pay any Reimbursable Tax
with respect to any Eurodollar Loan, Borrower may elect, by giving to
Agent and such Bank Party not less than three Business Days' notice, to
convert all (but not less than all) of any such Eurodollar Loan into a
Base Rate Loan, but such election shall not diminish Borrower's
obligation to pay all Reimbursable Taxes .
(d Notwithstanding the foregoing provisions of this section,
Borrower shall be entitled, to the extent it is required to do so by
Law, to deduct or withhold (and not to make any indemnification or
reimbursement for) income or other similar taxes imposed by the United
States of America (other than any portion thereof attributable to a
change in federal income tax Laws effected after the date hereof) from
interest, fees or other amounts payable hereunder for the account of
any Bank Party, other than a Bank Party (i) who is a U.S. person for
Federal income tax purposes or (ii) who has the Prescribed Forms on
file with Agent (with copies provided to Borrower) for the applicable
year to the extent deduction or withholding of such taxes is not
required as a result of the filing of such Prescribed Forms, provided
that if Borrower shall so deduct or withhold any such taxes, it shall
provide a statement to Agent and such Bank Party, setting forth the
amount of such taxes so deducted or withheld, the applicable rate and
any other information or documentation which such Bank Party may
reasonably request for assisting such Bank Party to obtain any
allowable credits or deductions for the taxes so deducted or withheld
in the jurisdiction or jurisdictions in which such Bank Party is
subject to tax. As used in this section, "Prescribed Forms" means such
duly executed forms or statements, and in such number of copies, which
may, from time to time, be prescribed by Law and which, pursuant to
applicable provisions of (x) an income tax treaty between the United
States and the country of residence of the Bank Party providing the
forms or statements, (y) the Internal Revenue Code of 1986, as amended
from time to time, or (z) any applicable rules or regulations
thereunder, permit Borrower to make payments hereunder for the account
of such Bank Party free of such deduction or withholding of income or
similar taxes.
Section 3.7. CHANGE OF APPLICABLE LENDING OFFICE. Each Bank Party
agrees that, upon the occurrence of any event giving rise to the operation of
Sections 3.2 through 3.6 with respect to such Bank Party, it will, if requested
by Borrower, use reasonable efforts (subject to overall policy considerations of
such Bank Party) to designate another Lending Office, provided that such
designation is made on such terms that such Bank Party and its Lending Office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of any such
section. Nothing in this section shall affect or postpone any of the obligations
of Borrower or the rights of any Bank Party provided in Sections 3.2 through
3.6.
Section 3.8 PROCEEDS OF SALES OF MORTGAGED OR PLEDGED PROPERTIES. In
respect to each Partnership formed on or before December 31, 1992, and in order
to comply with Section 6.8 of the partnership agreement of each such Partnership
(pursuant to which each such Partnership shall have the authority to mortgage an
undivided percentage working interest in the Partnership's producing oil and gas
properties to secure borrowings by Borrower), if any property of such
Partnership which is subject to the Security Documents shall be sold or
otherwise disposed of for value by such Partnership, the Borrower's interest
therein shall be released from the Security Documents; provided that (i) all of
Borrower's portion of such proceeds of any such sale must be applied against the
Obligations and the Majority Lenders shall have the right to reduce the
Borrowing Base by such value
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Exhibit 10.13
as they ascribe to Borrower's portion of such sold properties, and (ii) Borrower
will make each such payment of proceeds to Agent no later than 11:00 a.m., New
York, New York time, on the first Business Day following any such sale, in
lawful money of the United States of America, without set-off, deduction or
counterclaim, and in immediately available funds. Such payment shall be applied
to the Obligations as set forth in Section 3.1.
ARTICLE IV - CONDITIONS PRECEDENT TO LENDING
Section 4.1. DOCUMENTS TO BE DELIVERED. No Lender has any obligation to
make its first Loan, and LC Issuer has no obligation to issue the first Letter
of Credit unless Agent shall have received all of the following, at Agent's
office in New York, New York, duly executed and delivered and in form, substance
and date satisfactory to Agent:
(a This Agreement and any other documents that Lenders are to
execute in connection herewith.
(b Each Note.
(c Each Security Document listed in the Security Schedule.
(d Certain certificates of Borrower including:
(i) An "Omnibus Certificate" of the Secretary and of the
Chairman of the Board or President of Borrower, which shall contain the
names and signatures of the officers of Borrower authorized to execute
Loan Documents and which shall certify to the truth, correctness and
completeness of the following exhibits attached thereto: (1) a copy of
resolutions duly adopted by the Board of Directors of Borrower and in
full force and effect at the time this Agreement is entered into,
authorizing the execution of this Agreement and the other Loan
Documents delivered or to be delivered in connection herewith and the
consummation of the transactions contemplated herein and therein, (2) a
copy of the charter documents of Borrower and all amendments thereto,
certified by the appropriate official of Borrower's state of
organization, and (3) a copy of any bylaws of Borrower; and
(ii) A "Compliance Certificate" of the Chairman of the Board
or President and of the chief financial officer of Borrower, of even
date with such Loan or such Letter of Credit, in which such officers
certify to the satisfaction of the conditions set out in subsections
(a), (b), (c) and (d) of Section 4.2.
(e A certificate (or certificates) of the due formation, valid
existence and good standing of Borrower in its state of organization,
issued by the appropriate authorities of such jurisdiction, and
certificates of Borrower's good standing and due qualification to do
business, issued by appropriate officials in any states in which
Borrower owns property subject to Security Documents.
(f Documents similar to those specified in subsections (d)(i)
and (e) of this section with respect to each Guarantor and the
execution by it of its guaranty of Borrower's Obligations.
(g A favorable opinion of ▇▇▇▇▇▇ ▇▇▇▇ Esq., General Counsel
for Restricted Persons, substantially in the form set forth in Exhibit
H-i, and ▇▇▇▇▇▇▇, Kotjarapoglus & ▇▇▇▇▇▇▇, P.C., special Pennsylvania
counsel for Agent, and Bowles, Rice, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Love, special
Ohio counsel for Agent, both substantially in the form set forth in
Exhibit H-2.
(h The Initial Engineering Report and the Initial Financial
Statements.
(i Certificates or binders evidencing Restricted Persons'
insurance in effect on the date hereof.
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Exhibit 10.13
(j A favorable report of Pilko & Associates, Inc. regarding
their environmental assessment of the material properties of Restricted
Persons, in scope and results acceptable to Agent.
(k Title review in form, substance and authorship satisfactory
to Agent.
(1 A favorable report of Agent's professional insurance
consultants regarding their assessment of the insurance maintained by
Restricted Persons, in scope and results acceptable to Agent. A
certificate signed by the chief executive officer of Borrower in form
and detail acceptable to Agent confirming the insurance that is in
effect as of the date hereof and certifying that such insurance is
customary for the businesses conducted by Restricted Persons and is in
compliance with the requirements of this Agreement.
(m Payment of all commitment, facility, agency and other fees
required to be paid to any Bank Party pursuant to any Loan Documents or
any commitment agreement heretofore entered into.
(n Documents (i) confirming the payment in full of all
Indebtedness under the Existing Credit Documents, (ii) releasing and
terminating all Liens on any Restricted Person's property securing such
Indebtedness (or assigning such Liens to Agent for the benefit of
Lenders, and (iii) terminating the credit facility under the Existing
Credit Documents.
Section 4.2. ADDITIONAL CONDITIONS PRECEDENT. No Lender has any
obligation to make any Loan (including its first), and LC Issuer has no
obligation to issue any Letter of Credit (including its first), unless the
following conditions precedent have been satisfied:
(a All representations and warranties made by any Restricted
Person in any Loan Document shall be true on and as of the date of such
Loan or the date of issuance of such Letter of Credit (except to the
extent that the facts upon which such representations are based have
been changed by the extension of credit hereunder) as if such
representations and warranties had been made as of the date of such
Loan or the date of issuance of such Letter of Credit.
(b No Default shall exist at the date of such Loan or the date
of issuance of such Letter of Credit.
(c No Material Adverse Change shall have occurred to, and no
event or circumstance shall have occurred that could cause a Material
Adverse Change to, Borrower's Consolidated financial condition or
businesses since the date of this Agreement.
(d Each Restricted Person shall have performed and complied
with all agreements and conditions required in the Loan Documents to be
performed or complied with by it on or prior to the date of such Loan
or the date of issuance of such Letter of Credit.
(e The making of such Loan or the issuance of such Letter of
Credit shall not be prohibited by any Law and shall not subject any
Lender or any LC Issuer to any penalty or other onerous condition under
or pursuant to any such Law.
(f Agent shall have received all documents and instruments
which Agent has then requested, in addition to those described in
Section 4.1 (including opinions of legal counsel for Restricted Persons
and Agent; corporate documents and records; documents evidencing
governmental authorizations, consents, approvals, licenses and
exemptions; and certificates of public officials and of officers and
representatives of Borrower and other Persons), as to (i) the accuracy
and validity of or compliance with all representations, warranties and
covenants made by any Restricted Person in this Agreement and the other
Loan Documents, (ii) the satisfaction of all conditions contained
herein or therein, and (iii) all other
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Exhibit 10.13
matters pertaining hereto and thereto. All such additional documents
and instruments shall be satisfactory to Agent in form, substance and
date.
ARTICLE V - REPRESENTATIONS AND WARRANTIES
To confirm each Bank Party's understanding concerning Restricted
Persons and Restricted Persons' businesses, properties and obligations and to
induce each Bank Party to enter into this Agreement and to extend credit
hereunder, Borrower represents and warrants to each Bank Party that:
Section 5.1. NO DEFAULT. No Restricted Person is in default in the
performance of any of the covenants and agreements contained in any Loan
Document. No event has occurred and is continuing which constitutes a Default.
Section 5.2. ORGANIZATION AND GOOD STANDING. Each Restricted Person is
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization, having all powers required to carry on its
business and enter into and carry out the transactions contemplated hereby.
Each Restricted Person is duly qualified, in good standing, and authorized to do
business in all other jurisdictions within the United States wherein the
character of the properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary. Each Restricted Person has
taken all actions and procedures customarily taken in order to enter, for the
purpose of conducting business or owning property, each jurisdiction outside the
United States wherein the character of the properties owned or held by it or the
nature of the business transacted by it makes such qualification necessary.
Section 5.3. AUTHORIZATION. Each Restricted Person has duly taken all
action necessary to authorize the execution and delivery by it of the Loan
Documents to which it is a party and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
thereunder. Borrower is duly authorized to borrow funds hereunder.
Section 5.4. NO CONFLICTS OR CONSENTS. The execution and delivery by
the various Restricted Persons of the Loan Documents to which each is a party,
the performance by each of its obligations under such Loan Documents, and the
consummation of the transactions contemplated by the various Loan Documents, do
not and will not (i) conflict with any provision of (1) any Law, (2) the
organizational documents of any Restricted Person, or (3) any agreement,
judgment, license, order or permit applicable to or binding upon any Restricted
Person, (ii) result in the acceleration of any Indebtedness owed by any
Restricted Person, or (iii) result in or require the creation of any Lien upon
any assets or properties of any Restricted Person except as expressly
contemplated in the Loan Documents. Except as expressly contemplated in the Loan
Documents no consent, approval, authorization or order of, and no notice to or
filing with, any Tribunal or third party is required in connection with the
execution, delivery or performance by any Restricted Person of any Loan Document
or to consummate any transactions contemplated by the Loan Documents.
Section 5.5. ENFORCEABLE OBLIGATIONS. This Agreement is, and the other
Loan Documents when duly executed and delivered will be, legal, valid and
binding obligations of each Restricted Person which is a party hereto or
thereto, enforceable in accordance with their terms except as such enforcement
may be limited by bankruptcy, insolvency or similar Laws of general application
relating to the enforcement of creditors' rights.
Section 5.6. INITIAL FINANCIAL STATEMENTS. Borrower has heretofore
delivered to each Bank Party true, correct and complete copies of the Initial
Financial Statements. The Initial Financial Statements fairly present Borrower's
Consolidated financial position at the respective dates thereof and the
Consolidated results of Borrower's operations and Borrower's Consolidated cash
flows for the respective periods thereof. Since the date of the annual Initial
Financial Statements no Material Adverse Change has occurred, except as
reflected in the quarterly Initial Financial Statements or in the Disclosure
Schedule. All Initial Financial Statements were prepared in accordance with
GAAP.
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Exhibit 10.13
Section 5.7. OTHER OBLIGATIONS AND RESTRICTIONS. No Restricted Person
has any outstanding Liabilities of any kind (including contingent obligations,
tax assessments, and unusual forward or long-term commitments) which is, in the
aggregate, material to Borrower or material with respect to Borrower's
Consolidated financial condition and not shown in the Initial Financial
Statements or disclosed in the Disclosure Schedule or a Disclosure Report.
Except as shown in the Initial Financial Statements or disclosed in the
Disclosure Schedule or a Disclosure Report, no Restricted Person is subject to
or restricted by any franchise, contract, deed, charter restriction, or other
instrument or restriction which could cause a Material Adverse Change.
Section 5.8. FULL DISCLOSURE. No certificate, statement or other
information delivered herewith or heretofore by any Restricted Person to any
Bank Party in connection with the negotiation of this Agreement or in connection
with any transaction contemplated hereby contains any untrue statement of a
material fact or omits to state any material fact known to any Restricted Person
(other than industry-wide risks normally associated with the types of businesses
conducted by Restricted Persons) necessary to make the statements contained
herein or therein not misleading as of the date made or deemed made. There is
no fact known to any Restricted Person (other than industry-wide risks normally
associated with the types of businesses conducted by Restricted Persons) that
has not been disclosed to each Bank Party in writing which could cause a
Material Adverse Change. There are no statements or conclusions in any
Engineering Report which are based upon or include misleading information or
fail to take into account material information regarding the matters reported
therein, it being understood that each Engineering Report is necessarily based
upon professional opinions, estimates and projections and that Borrower does not
warrant that such opinions, estimates and projections will ultimately prove to
have been accurate. Borrower has heretofore delivered to each Bank Party true,
correct and complete copies of the Initial Engineering Report.
Section 5.9. LITIGATION. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (i) there are no actions, suits or
legal, equitable, arbitrative or administrative proceedings pending, or to the
knowledge of any Restricted Person threatened, against any Restricted Person
before any Tribunal which could cause a Material Adverse Change, and (ii) there
are no outstanding judgments, injunctions, writs, rulings or orders by any such
Tribunal against any Restricted Person or any Restricted Person's stockholders,
partners, directors or officers which could cause a Material Adverse Change.
Section 5.10. LABOR DISPUTES AND ACTS OF GOD. Except as disclosed in
the Disclosure Schedule or a Disclosure Report, neither the business nor the
properties of any Restricted Person has been affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), which could cause a Material Adverse
Change.
Section 5.11. ERISA PLANS AND LIABILITIES. All currently existing
ERISA Plans are listed in the Disclosure Schedule or a Disclosure Report. Except
as disclosed in the Initial Financial Statements or in the Disclosure Schedule
or a Disclosure Report, no Termination Event has occurred with respect to any
ERISA Plan and all ERISA Affiliates are in compliance with ERISA in all material
respects. No ERISA Affiliate is required to contribute to, or has any other
absolute or contingent liability in respect of, any "multiemployer plan" as
defined in Section 4001 of ERISA. Except as set forth in the Disclosure Schedule
or a Disclosure Report: (i) no "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code of 1986, as amended) exists with
respect to any ERISA Plan, whether or not waived by the Secretary of the
Treasury or his delegate, and (ii) the current value of each ERISA Plan's
benefits does not exceed the current value of such ERISA Plan's assets available
for the payment of such benefits by more than $500,000.
SECTION 5.12. ENVIRONMENTAL AND OTHER LAWS.
As used in this section: "CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, "CERCLIS" means
the Comprehensive Environmental Response, Compensation and Liability Information
System List of the Environmental Protection Agency, and "RELEASE" has
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Exhibit 10.13
the meaning given such term in 42 U.S.C. 9601(22). Except as set forth in the
Disclosure Schedule or a Disclosure Report:
(a) Restricted Persons are conducting their businesses in compliance
with all applicable Laws, including Environmental Laws, and have all permits,
licenses and authorizations required in connection with the conduct of their
businesses, except to the extent failure to have any such permit, license or
authorization could not cause a Material Adverse Change. Each Restricted Person
is in compliance with the terms and conditions of all such permits, licenses and
authorizations, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any applicable Environmental Law or in any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, except to the extent
failure to comply could not cause a Material Adverse Change.
(b) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed, and no investigation or review is pending or threatened by any
Tribunal or any other Person with respect to (i) any alleged generation,
treatment, storage, recycling, transportation, disposal, or Release of any
Hazardous Materials, either by any Restricted Person or on any property owned by
any Restricted Person, (ii) any material remedial action which might be needed
to respond to any such alleged generation, treatment, storage, recycling,
transportation, disposal, or Release, or (1) any alleged failure by any
Restricted Person to have any permit, license or authorization required in
connection with the conduct of its business or with respect to any such
generation, treatment, storage, recycling, transportation, disposal, or Release.
(c) No Restricted Person otherwise has any known material contingent
liability in connection with any alleged generation, treatment, storage,
recycling, transportation, disposal, or Release of any Hazardous Materials.
(d) No Restricted Person has handled any Hazardous Materials, other
than as a generator, on any properties now or previously owned or leased by any
Restricted Person to an extent that such handling has caused, or could cause, a
Material Adverse Change; and further, except to an extent that the following has
not caused, and could not have cause, a Material Adverse Change:
(i) no PCBs are or have been present at any properties now or
previously owned or leased by any Restricted Person;
(ii) no asbestos is or has been present at any properties now or
previously owned or leased by any Restricted Person;
(iii) there are no underground storage tanks for Hazardous
Materials, active or abandoned, at any properties now or
previously owned or leased by any Restricted Person;
(iv) no Hazardous Materials have been Released, in a reportable
quantity, where such a quantity has been established by
statute, ordinance, rule, regulation or order, at, on or under
any properties now or previously owned or leased by any
Restricted Person;
(v) no Hazardous Materials have been otherwise Released at, on or
under any properties now or previously owned or leased by any
Restricted Person to an extent that such release has caused,
or could cause, a Material Adverse Change.
(e) No Restricted Person has transported or arranged for the
transportation of any Hazardous Material to any location which is listed on the
National Priorities List under CERCLA, listed for possible inclusion on the
National Priorities List by the Environmental Protection Agency in CERCLIS, or
listed on any similar state list or which is the subject of federal, state or
local enforcement actions or other investigations which may lead to claims
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Exhibit 10.13
against any Restricted Person for clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including, but not limited to,
claims under CERCLA.
(f) No material amount of Hazardous Material generated by any
Restricted Person has been recycled, treated, stored, disposed of or released by
any Restricted Person at any location other than those listed in Disclosure
Schedule.
(g) No oral or written notification of a Release of a Hazardous
Material in any material amount has been filed by or on behalf of any Restricted
Person (and to the best knowledge of Borrower, no such notification has been
filed with respect to any Restricted Person by any other Person), and no
property now or previously owned or leased by any Restricted Person is listed or
proposed for listing on the National Priority list promulgated pursuant to
CERCLA, in CERCLIS, or on any similar state list of sites requiring
investigation or clean-up.
(h) There are no Liens arising under or pursuant to any Environmental
Laws on any of the real properties or properties owned or leased by any
Restricted Person, and no government actions have been taken or are in process
which could subject any of such properties to such Liens; nor would any
Restricted Person be required to place any notice or restriction relating to the
presence of Hazardous Materials at any properties owned by it in any deed to
such properties.
(i) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or which are in the possession of
any Restricted Person in relation to any properties or facility now or
previously owned or leased by any Restricted Person which have not been made
available to Agent.
Section 5.13. NAMES AND PLACES OF BUSINESS. No Restricted Person has,
during the preceding five years, had, been known by, or used any other trade or
fictitious name, except as disclosed in the Disclosure Schedule. Except as
otherwise indicated in the Disclosure Schedule or a Disclosure Report, the chief
executive office and principal place of business of each Restricted Person are
(and for the preceding five years have been) located at the address of Borrower
set out m Section 10.3. Except as indicated in the Disclosure Schedule or a
Disclosure Report, no Restricted Person has any other office or place of
business.
Section 5.14. BORROWER'S SUBSIDIARIES. Borrower does not presently have
any Subsidiary or own any stock in any other corporation or association except
those listed in the Disclosure Schedule or a Disclosure Report. Neither Borrower
nor any Restricted Person is a member of any general or limited partnership,
joint venture or association of any type whatsoever except those listed in the
Disclosure Schedule or a Disclosure Report and associations, joint ventures or
other relationships (i) which are established pursuant to a standard form
operating agreement or similar agreement or which are partnerships for purposes
of federal income taxation only, (ii) which are not corporations or partnerships
(or subject to the Uniform Partnership Act) under applicable state Law and (iii)
whose businesses are limited to the exploration, development and operation of
oil, gas or mineral properties and interests owned directly by the parties in
such associations, joint ventures or relationships. Except as otherwise revealed
in a Disclosure Report, Borrower owns, directly or indirectly, the equity
interest in each of its Subsidiaries which is indicated in the Disclosure
Schedule.
Section 5.15. TITLE TO PROPERTIES; LICENSES. Each Restricted Person has
good and defensible title to all of its material properties and assets, free and
clear of all Liens other than Permitted Liens and of all impediments to the use
of such properties and assets in such Restricted Person's business, except that
no representation or warranty is made with respect to any oil, gas or mineral
property or interest to which no proved oil or gas reserves are properly
attributed. Each Restricted Person possesses all licenses, permits, franchises,
patents, copyrights, trademarks and trade names, and other intellectual property
(or otherwise possesses the right to use such intellectual property without
violation of the rights of any other Person) which are necessary to carry out
its business as presently conducted and as presently proposed to be conducted
hereafter, and no Restricted Person is in violation in any material respect of
the terms under which it possesses such intellectual property or the right to
use such intellectual property.
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Exhibit 10.13
Section 5.16. GOVERNMENT REGULATION. Neither Borrower nor any other
Restricted Person owing Obligations is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Investment
Company Act of 1940 (as any of the preceding acts have been amended) or any
other Law which regulates the incurring by such Person of Indebtedness. Neither
Borrower nor any other Restricted Person owing Obligations is subject to
regulation under any Laws relating to common contract carriers or the sale of
electricity, gas, steam, water or other public utility services other than
reporting related to incidental gas utility supply.
Section 5.17. OFFICERS. Directors and Shareholders. The officers and
directors of Borrower are those persons disclosed in the definitive proxy
statement prepared by Borrower and filed with the Securities and Exchange
Commission in connection with Borrower's most recent annual meeting, copies of
which proxy statement have been previously furnished in connection with the
negotiation hereof.
ARTICLE VI - AFFIRMATIVE COVENANTS OF BORROWER
To conform with the terms and conditions under which each Bank Party is
willing to have credit outstanding to Borrower, and to induce each Bank Party to
enter into this Agreement and extend credit hereunder, Borrower warrants,
covenants and agrees that until the full and final payment of the Obligations
and the termination of this Agreement, unless Majority Lenders have previously
agreed otherwise:
Section 6.1. PAYMENT AND PERFORMANCE. Borrower will pay all amounts due
under the Loan Documents in accordance with the terms thereof and will observe,
perform and comply with every covenant, term and condition expressed or implied
in the Loan Documents. Borrower will cause each other Restricted Person to
observe, perform and comply with every such term, covenant and condition.
Section 6.2. BOOKS. FINANCIAL STATEMENTS AND REPORTS. Each Restricted
Person will at all times maintain full and accurate books of account and records
. Borrower will maintain and will cause its Subsidiaries to maintain a standard
system of accounting, will maintain its Fiscal Year, and will furnish the
following statements and reports to each Bank Party at Borrower's expense:
(a As soon as available, and in any event within one hundred
(100) days after the end of each Fiscal Year, complete Consolidated and
consolidating financial statements of Borrower together with all notes
thereto, prepared in reasonable detail in accordance with GAAP,
together with an unqualified opinion, based on an audit using generally
accepted auditing standards, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or other independent
certified public accountants selected by Borrower and acceptable to
Majority Lenders, stating that such Consolidated financial statements
have been so prepared. These financial statements shall contain a
Consolidated and consolidating balance sheet as of the end of such
Fiscal Year and Consolidated and consolidating statements of earnings,
of cash flows, and of changes in owners' equity for such Fiscal Year,
each setting forth in comparative form the corresponding figures for
the preceding Fiscal Year.
(b As soon as available, and in any event within fifty-five
(55) days after the end of each Fiscal Quarter, Borrower's Consolidated
and consolidating balance sheet as of the end of such Fiscal Quarter
and Consolidated and consolidating statements of Borrower's earnings
and cash flows for the period from the beginning of the then current
Fiscal Year to the end of such Fiscal Quarter, all in reasonable detail
and prepared in accordance with GAAP, subject to changes resulting from
normal year-end adjustments. In addition Borrower will, together with
each such set of financial statements and each set of financial
statements furnished under subsection (a) of this section, furnish a
certificate in the form of Exhibit D signed by the chief financial
officer of Borrower stating that such financial statements are accurate
and complete (subject to normal year-end adjustments), stating that he
has reviewed the Loan Documents, containing calculations showing
compliance (or non-compliance) at the end of such Fiscal Quarter with
the requirements of Sections 7.11, 7.12 and 7.13 and stating that no
Default exists at the end of such Fiscal Quarter or at the time of such
certificate or specifying the nature and period of existence of any
such Default.
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Exhibit 10.13
(c Promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent by any
Restricted Person to its stockholders and all registration statements,
periodic reports and other statements and schedules filed by any
Restricted Person with any securities exchange, the Securities and
Exchange Commission or any similar governmental authority.
(d By May 31 of each year, an engineering report (as of the
March 31 Evaluation Date) prepared by ▇. ▇. ▇▇▇▇▇▇▇▇ and Associates, or
other independent petroleum engineers chosen by Borrower and acceptable
to Majority Lenders, concerning all oil and gas properties and
interests owned by any Restricted Person which are located in or
offshore of the United States and which have attributable to them
proved oil or gas reserves. This report shall be satisfactory to Agent,
shall contain sufficient information to enable Borrower to meet the
reporting requirements concerning oil and gas reserves contained in
Regulations S-K and S-X promulgated by the Securities and Exchange
Commission, shall take into account any "over-produced" status under
gas balancing arrangements, and shall contain information and analysis
comparable in scope to that contained in the Initial Engineering
Report. This report shall distinguish (or shall be delivered together
with a certificate from an appropriate officer of Borrower which
distinguishes) those properties treated in the report which are
Collateral from those properties treated in the report which are not
Collateral.
(e By November 30 of each year, an engineering report (as of
the September 30 Evaluation Date) prepared by petroleum engineers
employed by Borrower, concerning all oil and gas properties and
interests owned by any Restricted Person which are located in or
offshore of the United States and which have attributable to them
proved oil and gas reserves. This report shall be in form and substance
as the report delivered under Section 6.2(d) and otherwise satisfactory
to Majority Lenders.
(f As soon as available, and in any event within fifty-five
(55) days after the end of each Fiscal Quarter, a report setting forth
volumes, prices and margins for all marketing activities of Borrower
and its Restricted Subsidiaries.
(g Promptly, and in any event within 30 days following a
request by Agent but in no event more often than once during any fiscal
year unless for cause in the good faith determination of Agent or
Majority Lenders specified by Agent in such request, a list, by name
and address, of those Persons who have purchased production during such
Fiscal Year from the Mortgaged Properties, giving each such purchaser's
owner number for Borrower and each other grantor of a Lien on Mortgaged
Properties and each such purchaser's property number for each such
Mortgaged Property.
(h As soon as available, and in any event within thirty (30)
days after the end of each Fiscal Year, Borrower shall deliver to Agent
an environmental compliance certificate signed by the president or
chief executive officer of Borrower in the form attached hereto as
Exhibit F. Further, if requested by Agent for cause, Borrower shall
permit and cooperate with an environmental and safety review made in
connection with the operations of Restricted Persons' oil and gas
properties one time during each Fiscal Year beginning with the Fiscal
Year 1998, by Pilko & Associates, Inc. or other consultants selected by
Agent which review shall, if requested by Agent, be arranged and
supervised by environmental legal counsel for Agent, all at Borrower's
cost and expense. As used in this subsection 6.2(h) "cause" shall mean
an event or condition making such request appropriate in the good faith
determination of Agent or Majority Lenders, including, without
limitation, the existence of a Default or Event of Default or the
occurrence of any event of the type specified in Section 6.12. The
consultant shall render a verbal or written report, as specified by
Agent, based upon such review at Borrower's cost and expense.
(i Concurrently with the annual renewal of the Borrower's s
insurance policies, Borrower shall, if requested by Agent in writing,
cause a certificate or report to be issued by Agent's professional
insurance consultants or other insurance consultants satisfactory to
Agent certifying that Borrower's insurance for the next succeeding year
after such renewal (or for such longer period for which such insurance
is in effect) complies with the provisions of this Agreement and the
Security Documents.
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Exhibit 10.13
Section 6.3. OTHER INFORMATION AND INSPECTIONS. Each Restricted Person
will furnish to each Bank Party any information which Agent may from time to
time request in writing concerning any covenant, provision or condition of the
Loan Documents or any matter in connection with Restricted Persons' businesses
and operations. Each Restricted Person will permit representatives appointed by
Agent (including independent accountants, auditors, agents, attorneys,
appraisers and any other Persons) to visit and inspect during normal business
hours any of such Restricted Person's property, including its books of account,
other books and records, and any facilities or other business assets, and to
make extra copies therefrom and photocopies and photographs thereof, and to
write down and record any information such representatives obtain, and each
Restricted Person shall permit Agent or its representatives to investigate and
verify the accuracy of the information furnished to Agent or any Lender in
connection with the Loan Documents and to discuss all such matters with its
officers, employees and representatives.
Section 6.4. NOTICE OF MATERIAL EVENTS AND CHANGE OF ADDRESS. Borrower
will promptly notify each Bank Party in writing, stating that such notice is
being given pursuant to this Agreement, of:
(a) the occurrence of any Material Adverse Change,
(b) the occurrence of any Default,
(c) the acceleration of the maturity of any Indebtedness owed
by any Restricted Person or of any default by any Restricted Person
under any indenture, mortgage, agreement, contract or other instrument
to which any of them is a party or by which any of them or any of their
properties is bound, if such acceleration or default could cause a
Material Adverse Change,
(d) the occurrence of any Termination Event,
(e) any claim of $250,000 or more or any other material
adverse claim asserted against any Restricted Person or with respect to
any Restricted Person's properties, and
(f) the filing of any suit or proceeding against any
Restricted Person in which the amount involved is $250,000 or more or
in which an adverse decision could cause a Material Adverse Change.
Upon the occurrence of any of the foregoing Restricted Persons will take all
necessary or appropriate steps to remedy promptly any such Material Adverse
Change, Default, acceleration, default or Termination Event, to protect against
any such adverse claim, to defend any such suit or proceeding, and to resolve
all controversies on account of any of the foregoing. Borrower will also notify
Agent and Agent's counsel in writing at least twenty Business Days prior to the
date that any Restricted Person changes its name or the location of its chief
executive office or principal place of business or the place where it keeps its
books and records concerning the Collateral, furnishing with such notice any
necessary financing statement amendments or requesting Agent and its counsel to
prepare the same.
Section 6.5. MAINTENANCE OF PROPERTIES. Each Restricted Person will
maintain, preserve, protect, and keep all Collateral and all other property used
or useful in the conduct of its business in good condition and in compliance
with all applicable Laws, and will from time to time make all repairs, renewals
and replacements needed to enable the business and operations carried on in
connection therewith to be promptly and advantageously conducted at all times.
Section 6.6. MAINTENANCE OF EXISTENCE AND QUALIFICATIONS. Each
Restricted Person will maintain and preserve its existence and its rights and
franchises in full force and effect and will qualify to do business in all
states or jurisdictions where required by applicable Law, except where the
failure so to qualify will not cause a Material Adverse Change.
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Exhibit 10.13
Section 6.7. PAYMENT OF TRADE LIABILITIES. Taxes. etc. Each Restricted
Person will (a) timely file all required tax returns; (b) timely pay all taxes,
assessments, and other governmental charges or levies imposed upon it or upon
its income, profits or property; (c) within one hundred twenty (120) days after
the occurrence thereof, pay all Liabilities owed by it on ordinary trade terms
to vendors, suppliers and other Persons providing goods and services used by it
in the ordinary course of its business; (d) pay and discharge when due all other
Liabilities now or hereafter owed by it; and (e) maintain appropriate accruals
and reserves for all of the foregoing in accordance with GAAP. Each Restricted
Person may, however, delay paying or discharging any of the foregoing so long as
it is in good faith contesting the validity thereof by appropriate proceedings
and has set aside on its books adequate reserves therefor.
Section 6.8. INSURANCE. Each Restricted Person will keep or cause to be
kept insured by financially sound and reputable insurers its property in
accordance with the Insurance Schedule. Upon demand by Agent any insurance
policies covering Collateral shall be endorsed (a) to provide for payment of
losses to Agent as its interests may appear, (b) to provide that such policies
may not be canceled or reduced or affected in any material manner for any reason
without fifteen days prior notice to Agent, (c) to provide for any other matters
specified in any applicable Security Document or which Agent may reasonably
require; and (d) to provide for insurance against fire, casualty and any other
hazards normally insured against, in the amount of the full value (less a
reasonable deductible not to exceed amounts customary in the industry for
similarly situated businesses and properties) of the property insured; provided
that Restricted Persons may maintain a self insurance program on well site
equipment losses (excluding individual assets with a replacement value in excess
of $100,000) consistent with the practices of normal prudent operators. Each
Restricted Person shall at all times maintain insurance against its liability
for injury to persons or property in accordance with the Insurance Schedule,
which insurance shall be by financially sound and reputable insurers. Without
limiting the foregoing, each Restricted Person shall at all time maintain
liability insurance in the amounts set out on the Insurance Schedule.
Section 6.9. PERFORMANCE ON BORROWER'S BEHALF. If any Restricted Person
fails to pay any taxes, insurance premiums, expenses, attorneys' fees or other
amounts it is required to pay under any Loan Document, Agent may pay the same.
Borrower shall immediately reimburse Agent for any such payments and each amount
paid by Agent shall constitute an Obligation owed hereunder which is due and
payable on the date such amount is paid by Agent.
Section 6.10. INTEREST. Borrower hereby promises to each Bank Party to
pay interest at the Default Rate on all Obligations (including Obligations to
pay fees or to reimburse or indemnify any Bank Party) which Borrower has in this
Agreement promised to pay to such Bank Party and which are not paid when due.
Such interest shall accrue from the date such Obligations become due until they
are paid.
Section 6.11. COMPLIANCE WITH AGREEMENTS AND LAW. Each Restricted
Person will perform all material obligations it is required to perform under the
terms of each indenture, mortgage, deed of trust, security agreement, lease,
franchise, agreement, contract or other instrument or obligation to which it is
a party or by which it or any of its properties is bound. Each Restricted Person
will conduct its business and affairs in compliance with all Laws applicable
thereto.
Section 6.12. ENVIRONMENTAL MATTERS; ENVIRONMENTAL REVIEWS.
(a) Each Restricted Person will comply in all material respects with
all Environmental Laws now or hereafter applicable to such Restricted Person and
shall obtain, at or prior to the time required by applicable Environmental Laws,
all environmental, health and safety permits, licenses and other authorizations
necessary for its operations and will maintain such authorizations in full force
and effect.
(b) Borrower will promptly furnish to Agent notice of the following:
(i) The receipt by any Restricted Person of any Environmental
Complaint other than relating to a matter where any potential fines and
costs to remedy and comply could not reasonably exceed $2,500 or
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Exhibit 10.13
any formal request from any governmental authority or other Person for
information (other than requirements for compliance reports) regarding
any Release (as defined in Section 5.12) of Hazardous Substances by any
Restricted Person or from, affecting, or related to any property of any
Restricted Person or adjacent to any property of any Restricted Person
other than relating to a matter where any potential fines and costs to
remedy and comply could not reasonably exceed $2,500.
(ii) Any actual, proposed, or threatened testing or other
investigation by any governmental authority or other Person concerning
the environmental condition of, or relating to, any property of any
Restricted Person or adjacent to any property of any Restricted Person
following any allegation of a violation of any requirement of Law,
which violation, if proved, could reasonably be expected to cause a
Material Adverse Change.
(iii) Any Release of Hazardous Substances by any Restricted
Person or from, affecting, or related to any property of any Restricted
Person or adjacent to any property of any Restricted Person except in
accordance with applicable requirements of law or the terms of a valid
permit, license, certificate, or approval of the relevant governmental
authority, or the violation of any Environmental Law, or the
revocation, suspension, or forfeiture of or failure to renew, any
permit, license, registration, approval, or authorization which could
reasonably be expected to cause a Material Adverse Change.
Section 6.13. EVIDENCE OF COMPLIANCE. Each Restricted Person will
furnish to each Bank Party at such Restricted Person's or Borrower's expense all
evidence which Agent from time to time reasonably requests in writing as to the
accuracy and validity of or compliance with all representations, warranties and
covenants made by any Restricted Person in the Loan Documents, the satisfaction
of all conditions contained therein, and all other matters pertaining thereto.
Section 6.14. SOLVENCY. Upon giving effect to the issuance of the
Notes, the execution of the Loan Documents by Borrower and the consummation of
the transactions contemplated hereby, Borrower will be solvent (as such term is
used in applicable bankruptcy, liquidation, receivership, insolvency or similar
laws).
Section 6.15. Agreement to Deliver Security Documents. Borrower agrees
to deliver and to cause each other Restricted Person to deliver, to further
secure the Obligations whenever requested by Agent in its sole and absolute
discretion, deeds of trust, mortgages, chattel mortgages, security agreements,
financing statements and other Security Documents in form and substance
satisfactory to Agent for the purpose of granting, confirming, and perfecting
first and prior liens or security interests in any real or personal property now
owned or hereafter acquired by any Restricted Person and first and prior liens
or security interests in any real or personal property which is at such time
Collateral or which was intended to be Collateral pursuant to any Security
Document previously executed and not then released by Agent. Borrower also
agrees to deliver, whenever requested by Agent in its sole and absolute
discretion, favorable title opinions (or title review letters of the type
accepted by the Borrower under its practices existing prior to the date hereof)
from legal counsel acceptable to Agent with respect to any Restricted Person's
properties and interests designated by Agent which have not previously been
subject to a title review by Agent, based upon abstract or record examinations
to dates acceptable to Agent and (a) stating that such Restricted Person has
good and defensible title to such properties and interests, free and clear of
all Liens other than Permitted Liens, (b) confirming that such properties and
interests are subject to Security Documents securing the Obligations that
constitute and create legal, valid and duly perfected first deed of trust or
mortgage liens in such properties and interests and first priority assignments
of and security interests in the oil and gas attributable to such properties and
interests and the proceeds thereof, and (c) covering such other matters as Agent
may request.
Section 6.16. Perfection and Protection of Security Interests and
Liens. Borrower will from time to time deliver, and will cause each other
Restricted Person from time to time to deliver, to Agent any financing
statements, continuation statements, extension agreements and other documents,
properly completed and executed (and acknowledged when required) by Restricted
Persons in form and substance satisfactory to Agent, which
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Exhibit 10.13
Agent requests for the purpose of perfecting, confirming, or protecting any
Liens or other rights in Collateral securing any Obligations.
Section 6.17. BANK ACCOUNTS; OFFSET. To secure the repayment of the
Obligations Borrower hereby grants to each Bank Party a security interest, a
lien, and a right of offset, each of which shall be in addition to all other
interests, liens, and rights of any Bank Party at common law, under the Loan
Documents, or otherwise, and each of which shall be upon and against (a) any and
all moneys, securities or other property (and the proceeds therefrom) of
Borrower now or hereafter held or received by or in transit to any Bank Party
from or for the account of Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, (b) any and all deposits (general or
special, time or demand, provisional or final) of Borrower with any Bank Party,
and (c) any other credits and claims of Borrower at any time existing against
any Bank Party, including claims under certificates of deposit. At any time and
from time to time after the occurrence of any Default, each Bank Party is hereby
authorized to foreclose upon, or to offset against the Obligations then due and
payable (in either case without notice to Borrower), any and all items
hereinabove referred to. The remedies of foreclosure and offset are separate and
cumulative, and either may be exercised independently of the other without
regard to procedures or restrictions applicable to the other.
Section 6.18. GUARANTIES OF BORROWER'S SUBSIDIARIES. Each Subsidiary of
Borrower now existing or created, acquired or coming into existence after the
date hereof (other than the Partnerships, NCE Securities, Inc. and any
Immaterial Subsidiaries) shall, promptly upon request by Agent, execute and
deliver to Agent an absolute and unconditional guaranty of the timely repayment
of the Obligations and the due and punctual performance of the obligations of
Borrower hereunder, which guaranty shall be satisfactory to Agent in form and
substance. Each Subsidiary of Borrower existing on the date hereof (other than
the Partnerships, NCE Securities, Inc. and any Immaterial Subsidiaries) shall
duly execute and deliver such a guaranty prior to the making of any Loan
hereunder. Borrower will cause each of such Subsidiaries to deliver to Agent,
simultaneously with its delivery of such a guaranty, written evidence
satisfactory to Agent and its counsel that such Subsidiary has taken all
corporate or partnership action necessary to duly approve and authorize its
execution, delivery and performance of such guaranty and any other documents
which it is required to execute. As used herein "Immaterial Subsidiary" means
any Subsidiary which has no operations and whose assets, together with the
assets of all other Subsidiaries who are not Guarantors (other than the
Partnerships or NCE Securities, Inc.) have a value (at the greater of fair
market value or book value) of less than $150,000).
Section 6.19. PRODUCTION PROCEEDS. Notwithstanding that, by the terms
of the various Security Documents, Restricted Persons are and will be assigning
to Agent and Lenders all of the "Production Proceeds" (as defined therein)
accruing to the property covered thereby, so long as no Default has occurred
Restricted Persons may continue to receive from the purchasers of production all
such Production Proceeds, subject, however, to the Liens created under the
Security Documents, which Liens are hereby affirmed and ratified. Upon the
occurrence of a Default, Agent and Lenders may exercise all rights and remedies
granted under the Security Documents, including the right to obtain possession
of all Production Proceeds then held by Restricted Persons or to receive
directly from the purchasers of production all other Production Proceeds. In no
case shall any failure, whether purposed or inadvertent, by Agent or Lenders to
collect directly any such Production Proceeds constitute in any way a waiver,
remission or release of any of their rights under the Security Documents, nor
shall any release of any Production Proceeds by Agent or Lenders to Restricted
Persons constitute a waiver, remission, or release of any other Production
Proceeds or of any rights of Agent or Lenders to collect other Production
Proceeds thereafter.
Section 6.20. MORTGAGES. Within ninety (90) days after the request by
Agent, Borrower will provide to Agent executed mortgages and property
descriptions in form and substance satisfactory to Agent covering Borrower's
interests in the properties of Borrower and the Partnerships located in Summit
County, Ohio and ▇▇▇▇▇▇▇▇ and Indiana Counties, Pennsylvania.
ARTICLE VII - NEGATIVE COVENANTS OF BORROWER
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Exhibit 10.13
To conform with the terms and conditions under which each Bank Party is
willing to have credit outstanding to Borrower, and to induce each Bank Party to
enter into this Agreement and make the Loans, Borrower warrants, covenants and
agrees that until the full and final payment of the Obligations and the
termination of this Agreement, unless Majority Lenders have previously agreed
otherwise:
Section 7.1. INDEBTEDNESS. No Restricted Person will in any manner owe
or be liable for Indebtedness except:
(a) the Obligations.
(b) guaranties of Indebtedness which is the primary obligation of
Borrower.
(c) obligations under operating leases entered into in the ordinary
course of such Restricted Person's business in arm's length transactions at
competitive market rates under competitive terms and conditions in all respects,
provided that the obligations required to be paid in any Fiscal Year under any
such operating leases do not in the aggregate exceed $150,000. (d) unsecured
Indebtedness among Borrower and the Guarantors arising in the ordinary course of
business.
(e) Indebtedness outstanding under the instruments and agreements
described on the Disclosure Schedule, excluding any renewals or extensions of
such Liabilities.
(f) Indebtedness arising under futures contracts or swap contracts
permitted under Section 7.3.
(g) Indebtedness in an aggregate principal amount not to exceed
$400,000 at any time outstanding consisting of (i) Indebtedness existing on the
date hereof described on the Disclosure Schedule secured only by Liens securing
such Indebtedness on the date hereof described with Disclosure Schedule, (ii)
purchase money Indebtedness, provided that the original principal amount of any
such Indebtedness shall not be in excess of the purchase price of the asset
acquired thereby and such Indebtedness shall be secured only by the acquired
asset, or (iii) capital leases.
Section 7.2. LIMITATION ON LIENS. No Restricted Person will create,
assume or permit to exist any Lien upon any of the properties or assets which it
now owns or hereafter acquires, except, to the extent not otherwise forbidden by
the Security Documents the following ("Permitted Liens"):
(a) Liens which secure Obligations only.
(b) statutory Liens for taxes, statutory or contractual mechanics' and
materialmen' s Liens incurred in the ordinary course of business, and other
similar Liens incurred in the ordinary course of business, provided such
Liens do not secure Indebtedness and secure only obligations which are not
delinquent or which is being contested as provided in Section 6.7.
(c) Liens securing Indebtedness described in Section 7.1(g).
(d) as to property which is Collateral, any Liens expressly permitted
to encumber such Collateral under any Security Document covering such Collateral
(e) Liens on oil and gas leasehold interests of a Restricted Person
created by the owner of the surface estate prior to the creation of the oil and
gas leases: provided that reasonable efforts have been made by the Restricted
Persons to obtain a release or subordination in accordance with their customary
practices, and such lien shall secure an individual debt which is not in default
and not in excess of $50,000.
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Exhibit 10.13
Section 7.3. HEDGING CONTRACTS. No Restricted Person will be a party to
or in any manner be liable on any forward, future, swap or hedging contract,
except:
(a) contracts entered into with the purpose and effect of fixing prices
on oil or gas expected to be produced by Restricted Persons, provided that at
all times: (1) no such contract fixes a price for a term of more than twelve
(12) months; (2) the aggregate monthly production covered by all such contracts
(determined, in the case of contracts that are not settled on a monthly basis,
by a monthly proration acceptable to Agent) for any single month does not in the
aggregate exceed eighty-five percent (85%) of Restricted Persons' aggregate
Projected Oil and Gas Production anticipated to be sold in the ordinary course
of Restricted Persons' businesses for such month, (3) no such contract requires
any Restricted Person to put up money, assets, letters of credit or other
security against the event of its nonperformance prior to actual default by such
Restricted Person in performing its obligations thereunder, and (4) each such
contract is with a counterparty or has a guarantor of the obligation of the
counterparty who (unless such counterparty is a Bank Party or one of its
Affiliates) at the time the contract is made has long-term obligations rated AA
or Aa2 or better, respectively, by either Rating Agency or is an investment
grade-rated industry participant. As used in this subsection, the term
"Projected Oil and Gas Production" means the projected production of oil or gas
(measured by volume unit or BTU equivalent, not sales price) for the term of the
contracts or a particular month, as applicable, from properties and interests
owned by any Restricted Person which are located in or offshore of the United
States and which have attributable to them proved oil or gas reserves, as such
production is projected in the most recent report delivered pursuant to Section
6.2(d), after deducting projected production from any properties or interests
sold or under contract for sale that had been included in such report and after
adding projected production from any properties or interests that had not been
reflected in such report but that are reflected in a separate or supplemental
reports meeting the requirements of such Section 6.3(d) above and otherwise are
satisfactory to Agent.
(b) contracts entered into by a Restricted Person with the purpose and
effect of fixing interest rates on a principal amount of indebtedness of such
Restricted Person that is accruing interest at a variable rate, provided that
(1) the aggregate notional amount of such contracts never exceeds seventy-five
percent (75%) of the anticipated outstanding principal balance of the
indebtedness to be hedged by such contracts or an average of such principal
balances calculated using a generally accepted method of matching interest swap
contracts to declining principal balances, (2) the floating rate index of each
such contract generally matches the index used to determine the floating rates
of interest on the corresponding indebtedness to be hedged by such contract and
(3) each such contract is with a counterparty or has a guarantor of the
obligation of the counterparty who (unless such counterparty is a Bank Party or
one of its Affiliates) at the time the contract is made has long-term
obligations rated AA or Aa2 or better, respectively, by either Rating Agency or
is an investment grade-rated industry participant.
Section 7.4. LIMITATION ON MERGERS. ISSUANCES OF SECURITIES. Diminution
of Interests. Except as expressly provided in this subsection no Restricted
Person will merge or consolidate with or into any other business entity. Any
Partnership or other Subsidiary of Borrower may, however, be merged into or
consolidated with (i) another Partnership or other Subsidiary of Borrower, so
long as no diminution of Borrower's interest (direct or indirect) therein shall
occur, and if one such entity is a Guarantor, a Guarantor is the surviving
business entity, or (ii) Borrower, so long as Borrower is the surviving business
entity. Borrower may merge with another business entity in the business of
exploration, development and production of oil and gas in the same regions as
Borrower; provided that the consideration to the owners of the other business
entity shall consist solely of common stock of Borrower and/or up to $500,000 of
cash consideration, Borrower is the surviving entity from such merger, no
Default or Event of Default shall have occurred or will occur after giving
effect to such merger, all representations and warranties contained herein and
in the other Loan Documents shall be true and correct after giving effect to the
merger, and the management and directors of Borrower shall be the management and
directors of the surviving entity. Borrower will not issue any securities other
than shares of its common stock and any options or warrants giving the holders
thereof only the right to acquire such shares. Borrower shall not permit any
Partnership or other Subsidiary of Borrower to issue any additional partnership
interests or shares of capital stock or other securities or any options,
warrants or other rights to acquire such additional shares or other securities
or otherwise permit any diminution of Borrower's interest (direct or indirect)
in any Partnership, except (i) to
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Exhibit 10.13
Borrower or (ii) sales of limited partnership interests in Partnerships for fair
consideration consistent with Borrower's practices as in effect on and prior to
the date hereof.
Section 7.5. LIMITATION ON SALES OF PROPERTY. No Restricted Person
will sell, transfer, lease, exchange, alienate or dispose of any Collateral or
any of its material assets or properties or any material interest therein
except, to the extent not otherwise forbidden under the Security Documents:
(a) equipment which is worthless or obsolete or which is replaced by
equipment of equal suitability and value.
(b) inventory (including oil and gas sold as produced and seismic data)
which is sold in the ordinary course of business on ordinary trade terms.
(c) interests in oil and gas leases, or portions thereof (if released
or abandoned but not otherwise sold or transferred), so long as no well situated
on the property transferred, or located on any unit containing all or any part
thereof, is capable (or is subject to being made capable through commercially
feasible operations) of producing oil, gas or other hydrocarbons or minerals in
commercial quantities.
(d) interests in oil and gas properties, specified as to lands and
depths: (1) so long as there is no well which is capable (or is subject to being
made capable through commercially feasible operations) of producing oil, gas or
other hydrocarbons or minerals in commercial quantities from the transferred
lands and depths or from any part of any unit which includes the transferred
lands and depths, or (2) with respect to which one or more such ▇▇▇▇▇ exist,
provided that all such ▇▇▇▇▇ have been drilled by Persons who are not Affiliates
of the transferor pursuant to contracts entered into at a time when no such
▇▇▇▇▇ existed, which contracts provided for the drilling of such ▇▇▇▇▇ on and to
the specified lands and depths in consideration for the transfer of interests
therein, with neither the transferor nor its Affiliates having made any material
expenditures in connection with the drilling of such ▇▇▇▇▇ following the
execution of such contracts.
(e) interests in oil and gas properties, or portions thereof, to which
no proved reserves of oil, gas or other liquid or gaseous hydrocarbons are
properly attributed.
(f) other property (excluding Collateral) which is sold for fair
consideration not in excess of $100,000 in the case of any single transaction
(or group of related transactions) and not in the aggregate in excess of
$250,000 in any Fiscal Year, the sale of which will not materially impair or
diminish the value of the Collateral or Borrower's Consolidated financial
condition, business or operations.
(g) permitted Investments
No Restricted Person will sell, transfer or otherwise dispose of capital stock
of or interest in any of the Restricted Persons except as permitted by Section
7.4 hereof. No Restricted Person will discount, sell, pledge or assign any notes
payable to it, accounts receivable or future income.
Section 7.6. LIMITATION ON DIVIDENDS AND REDEMPTIONS. No Restricted
Person will declare or pay any dividends on, or make any other distribution in
respect of, any class of its capital stock or any partnership or other interest
in it, nor will any Restricted Person directly or indirectly make any capital
contribution to or purchase, redeem, acquire or retire any shares of the capital
stock of or partnership interests in any Restricted Person (whether such
interests are now or hereafter issued, outstanding or created), or cause or
permit any reduction or retirement of the capital stock of any Restricted
Person, except (i) Borrower may make normal quarterly dividends on Borrower's
Class B preferred stock outstanding on the date of this Agreement so long as
both before and after giving effect to such dividend, no Event of Default shall
have occurred and be continuing, (ii) Borrower may declare and pay dividends
payable only in its common stock, (iii) Borrower may redeem Borrower's Class B
preferred stock for consideration consisting only of its common stock plus cash
consideration of up to the lesser of
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Exhibit 10.13
(a) accumulated unpaid dividends or (b) $1.00 per share and (iii) each
Partnerships may make distributions in compliance with the applicable
partnership agreement.
Section 7.7. LIMITATION ON INVESTMENTS AND NEW BUSINESSES. No
Restricted Person will (i) make any expenditure or commitment or incur any
obligation or enter into or engage in any transaction except in the ordinary
course of business, (ii) engage directly or indirectly in any business or
conduct any operations except in connection with or incidental to its present
businesses and operations, (iii) make any acquisitions of or capital
contributions to or other investments in any Person, other than Permitted
Investments, or (iv) make any significant acquisitions or investments in any
properties other than oil and gas properties, gas pipelines, and co-generation
facilities. Notwithstanding the foregoing, Borrower may acquire all of the stock
of another business entity (including but not limited to a merger permitted
pursuant to Section 7.4) in the business of exploration, development and
production of oil and gas in the same regions as Borrower; provided that the
consideration to the owners of the other business entity shall consist solely of
common stock of Borrower and/or up to $500,000 of cash consideration, no Default
or Event of Default shall have occurred or will occur after giving effect to
such acquisition, all representations and warranties contained herein and in the
other Loan Documents shall be true and correct after giving effect to the
acquisition, and the management and directors of Borrower shall become the
management and directors of the other business entity.
Section 7.8. LIMITATION ON CREDIT EXTENSIONS. Except for Permitted
Investments, no Restricted Person will extend credit, make advances or make
loans other than (i) normal and prudent extensions of credit to customers buying
goods and services in the ordinary course of business, which extensions shall
not be for longer periods than those extended by similar businesses operated in
a normal and prudent manner and (ii) advances to employees for reimbursable
expenses of such employees in the ordinary course of business.
Section 7.9. TRANSACTIONS WITH AFFILIATES AND PARTNERSHIPS. No
Restricted Person will engage in any material transaction with any of its
Affiliates on terms which are less favorable to it than those which would have
been obtainable at the time in arm's-length dealing with Persons other than such
Affiliates, provided that such restriction shall not apply to (i) transactions
among Borrower and its wholly owned Subsidiaries, (ii) transactions between the
Borrower and a Partnership which are entered into in the ordinary course of
business and either (a) are not less favorable to Borrower than those which
would have been obtainable at the time in arm' s-length dealing with Persons
other than such Partnership or (b) only involve a reasonable delay in billing or
collection for costs or expenses incurred on behalf of the Partnership or (iii)
transactions between the Borrower and a Partnership which are expressly provided
for in the applicable partnership agreement.
Section 7.10. CERTAIN CONTRACTS; AMENDMENTS; MULTIEMPLOYER ERISA PLANS.
Except as expressly provided for in the Loan Documents, no Restricted Person
will, directly or indirectly, enter into, create, or otherwise allow to exist
any contract or other consensual restriction on the ability of any Subsidiary of
Borrower to: (i) pay dividends or make other distributions to Borrower, (ii) to
redeem equity interests held in it by Borrower, (iii) to repay loans and other
indebtedness owing by it to Borrower, or (iv) to transfer any of its assets to
Borrower. No Restricted Person will amend or permit any amendment to any
contract or lease which releases, qualifies, limits, makes contingent or
otherwise detrimentally affects the rights and benefits of Agent or any Lender
under or acquired pursuant to any Security Documents. No ERISA Affiliate will
incur any obligation to contribute to any "multiemployer plan" as defined in
Section 4001 of ERISA. No Restricted Person will amend the partnership agreement
with respect to any Partnership in a manner which would be adverse to Borrower
in any material respect.. With respect to each Partnership formed after the date
hereof: (i) the partnership agreement shall be not less favorable in any
material respect to Borrower than the partnership agreements entered into prior
to the date hereof, and (ii) such Partnership shall be formed, and interests
therein shall be offered, sold and issued, in compliance with applicable Law.
Section 7.11. WORKING CAPITAL AND CURRENT RATIO. The ratio of
Borrower's Consolidated current assets to Borrower's Consolidated current
liabilities will never be less than 1.0 to 1.0. For purposes of this section,
all LC Obligations shall be included as current liabilities, regardless of
whether or not contingent (but without duplication). For purposes of this
section, Borrower's Consolidated current assets will include any unused portion
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Exhibit 10.13
of the Borrowing Base which is then available for borrowing. For purposes of
this subsection, Borrower's Consolidated current liabilities will be calculated
without including ▇▇▇▇▇▇▇▇ in excess of cost.
Section 7.12. TANGIBLE NET WORTH. Borrower will not, at any time,
permit Consolidated Net Worth to be less than the sum of (a) $10,000,000 plus
(b) an aggregate amount equal to fifty percent (50%) of its Consolidated Net
Income for each Fiscal Quarter (but, in each case, only including such Fiscal
Quarters for which Consolidated Net Income is a positive number) from and after
December 31, 1997 to and including the date of determination thereof, computed
on a cumulative basis for such period plus (c) one hundred percent (100%) of the
net proceeds (after costs of sale) of any stock hereafter issued by Borrower.
For purposes of this section, the net proceeds of that portion of any stock
which is issued for assets other than cash shall be equal to the increase in
Borrower's Consolidated tangible assets derived from such assets.
Section 7.13. EBITDA. At the end of any Fiscal Quarter, the ratio of
(a) Borrower's Consolidated EBITDA to (b) Consolidated Interest Expense, for the
four-Fiscal Quarter period ending with such Fiscal Quarter will not be less than
2.25 to 1 for any such period ending prior to June 30, 1999 and not less than
1.5 to 1 for any such period ending after June 30, 1999.
ARTICLE VIII - EVENTS OF DEFAULT AND REMEDIES
Section 8.1. EVENTS OF DEFAULT. Each of the following events
constitutes an Event of Default under this Agreement:
(a) Any Restricted Person fails to pay the principal component of any
Obligation when due and payable, whether at a date for the payment of a fixed
installment or as a contingent or other payment becomes due and payable or as a
result of acceleration or otherwise;
(b) Any Restricted Person fails to pay any Obligation (other than the
Obligations in clause (a) above) when due and payable, whether at a date for the
payment of a fixed installment or as a contingent or other payment becomes due
and payable or as a result of acceleration or otherwise, within three Business
Days after the same becomes due;
(c) Any "default" or "event of default" occurs under any Loan Document
which defines either such term, and the same is not remedied within the
applicable period of grace (if any) provided in such Loan Document;
(d) Any Restricted Person fails to duly observe, perform or comply with
any covenant, agreement or provision of Section 6.4 or Article VII;
(e) Any Restricted Person fails (other than as referred to in
subsections (a), (b), (c) or (d) above) to duly observe, perform or comply with
any covenant, agreement, condition or provision of any Loan Document, and such
failure remains unremedied for a period of thirty (30) days after notice of such
failure is given by Agent to Borrower;
(f) Any representation or warranty previously, presently or hereafter
made in writing by or on behalf of any Restricted Person in connection with any
Loan Document shall prove to have been false or incorrect in any material
respect on any date on or as of which made, or any Loan Document at any time
ceases to be valid, binding and enforceable as warranted in Section 5.5 for any
reason other than its release or subordination by Agent;
(g) Any Restricted Person fails to duly observe, perform or comply with
any agreement with any Person or any term or condition of any instrument, if
such agreement or instrument is materially significant to Borrower or to
Borrower and its subsidiaries on a Consolidated basis or materially significant
to any Guarantor, and such failure is not remedied within the applicable period
of grace (if any) provided in such agreement or instrument;
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Exhibit 10.13
(h) Any Restricted Person (i) fails to pay any portion, when such
portion is due, of any of its Indebtedness in excess of $50,000 (other than
Indebtedness contested in good faith by appropriate proceedings and for which
such Restricted Person has set aside on its books adequate reserves, or (ii)
breaches or defaults in the performance of any agreement or instrument by which
any such Indebtedness is issued, evidenced, governed, or secured, and any such
failure, breach or default continues beyond any applicable period of grace
provided therefor;
(i) Either (i) any "accumulated funding deficiency's' (as defined in
Section 412(a) of the Internal Revenue Code of 1986, as amended) in excess of
$100,000 exists with respect to any ERISA Plan, whether or not waived by the
Secretary of the Treasury or his delegate, or (ii) any Termination Event occurs
with respect to any ERISA Plan and the then current value of such ERISA Plan's
benefit liabilities exceeds the then current value of such ERISA Plan's assets
available for the payment of such benefit liabilities by more than $100,000 (or
in the case of a Termination Event involving the withdrawal of a substantial
employer, the withdrawing employer's proportionate share of such excess exceeds
such amount); and
(j) Any Restricted Person:
(i) suffers the entry against it of a judgment, decree or
order for relief by a Tribunal of competent jurisdiction in an
involuntary proceeding commenced under any applicable bankruptcy,
insolvency or other similar Law of any jurisdiction now or hereafter in
effect, including the federal Bankruptcy Code, as from time to time
amended, or has any such proceeding commenced against it which remains
undismissed for a period of thirty days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar Law now or hereafter in effect,
including the federal Bankruptcy Code, as from time to time amended; or
applies for or consents to the entry of an order for relief in an
involuntary case under any such Law; or makes a general assignment for
the benefit of creditors; or fails generally to pay (or admits in
writing its inability to pay) its debts as such debts become due; or
takes corporate or other action to authorize any of the foregoing; or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of all or a substantial part of its assets or of any
part of the Collateral in a proceeding brought against or initiated by
it, and such appointment or taking possession is neither made
ineffective nor discharged within thirty days after the making thereof,
or such appointment or taking possession is at any time consented to,
requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $150,000 (not covered by insurance
satisfactory to Agent in its discretion), unless the same is discharged
within thirty days after the date of entry thereof or an appeal or
appropriate proceeding for review thereof is taken within such period
and a stay of execution pending such appeal is obtained; or
(v) suffers a writ or warrant of attachment or any similar
process to be issued by any Tribunal against all or any substantial
part of its assets or any part of the Collateral, and such writ or
warrant of attachment or any similar process is not stayed or released
within thirty days after the entry or levy thereof or after any stay is
vacated or set aside; and
(k) Any Change in Control occurs; and
(1) Any Material Adverse Change occurs.
Upon the occurrence of an Event of Default described in subsection (j)(i),
(j)(ii) or (j)(iii) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to
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Exhibit 10.13
accelerate, declaration or notice of acceleration, or any other notice or
declaration of any kind, all of which are hereby expressly waived by Borrower
and each Restricted Person who at any time ratifies or approves this Agreement.
Upon any such acceleration, any obligation of any Lender to make any further
Loans shall be permanently terminated. During the continuance of any other Event
of Default, Agent at any time and from time to time may (and upon written
instructions from Majority Lenders, Agent shall), without notice to Borrower or
any other Restricted Person, do either or both of the following: (1) terminate
any obligation of Lenders to make Loans hereunder, and (2) declare any or all of
the Obligations immediately due and payable, and all such Obligations shall
thereupon be immediately due and payable, without demand, presentment, notice of
demand or of dishonor and nonpayment, protest, notice of protest, notice of
intention to accelerate, declaration or notice of acceleration, or any other
notice or declaration of any kind, all of which are hereby expressly waived by
Borrower and each Restricted Person who at any time ratifies or approves this
Agreement.
Section 8.2. REMEDIES. If any Default shall occur and be continuing,
each Bank Party may protect and enforce its rights under the Loan Documents by
any appropriate proceedings, including proceedings for specific performance of
any covenant or agreement contained in any Loan Document, and each Bank Party
may enforce the payment of any Obligations due it or enforce any other legal or
equitable right which it may have. All rights, remedies and powers conferred
upon Bank Parties under the Loan Documents shall be deemed cumulative and not
exclusive of any other rights, remedies or powers available under the Loan
Documents or at Law or in equity.
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Exhibit 10.13
ARTICLE IX - AGENT
Section 9.1. APPOINTMENT AND AUTHORITY. Each Bank Party hereby
irrevocably authorizes Agent, and Agent hereby undertakes, to receive payments
of principal, interest and other amounts due hereunder as specified herein and
to take all other actions and to exercise such powers under the Loan Documents
as are specifically delegated to Agent by the terms hereof or thereof, together
with all other powers reasonably incidental thereto. The relationship of Agent
to the other Bank Parties is only that of one commercial lender acting as
administrative agent for others, and nothing in the Loan Documents shall be
construed to constitute Agent a trustee or other fiduciary for any holder of any
of the Notes or of any participation therein nor to impose on Agent duties and
obligations other than those expressly provided for in the Loan Documents. With
respect to any matters not expressly provided for in the Loan Documents and any
matters which the Loan Documents place within the discretion of Agent, Agent
shall not be required to exercise any discretion or take any action, and it may
request instructions from Lenders with respect to any such matter, in which case
it shall be required to act or to refrain from acting (and shall be fully
protected and free from liability to all Lenders in so acting or refraining from
acting) upon the instructions of Majority Lenders (including itself), provided,
however, that Agent shall not be required to take any action which exposes it to
a risk of personal liability that it considers unreasonable or which is contrary
to the Loan Documents or to applicable Law. Upon receipt by Agent from Borrower
of any communication calling for action on the part of Lenders or upon notice
from any other Bank Party to Agent of any Default or Event of Default, Agent
shall promptly notify each other Bank Party thereof.
Section 9.2. EXCULPATION. Agent's Reliance, Etc. Neither Agent nor any
of its directors, officers, agents, attorneys, or employees shall be liable for
any action taken or omitted to be taken by any of them under or in connection
with the Loan Documents, INCLUDING THEIR NEGLIGENCE OF ANY KIND, except that
each shall be liable for its own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, Agent (a) may treat the payee of any
Note as the holder thereof until Agent receives written notice of the assignment
or transfer thereof in accordance with this Agreement, signed by such payee and
in form satisfactory to Agent; (b) may consult with legal counsel (including
counsel for Borrower), independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any other Bank Party and
shall not be responsible to any other Bank Party for any statements, warranties
or representations made in or in connection with the Loan Documents; (d) shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of the Loan Documents on the part
of any Restricted Person or to inspect the property (including the books and
records) of any Restricted Person; (e) shall not be responsible to any other
Bank Party for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Loan Document or any instrument or
document furnished in connection therewith; (f) may rely upon the
representations and warranties of each Restricted Person and the Lenders in
exercising its powers hereunder; and (g) shall incur no liability under or in
respect of the Loan Documents by acting upon any notice, consent, certificate or
other instrument or writing (including any telecopy, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper Person or Persons.
Section 9.3. Credit Decisions. Each Bank Party acknowledges that it
has, independently and without reliance upon any other Bank Party, made its own
analysis of Borrower and the transactions contemplated hereby and its own
independent decision to enter into this Agreement and the other Loan Documents.
Each Bank Party also acknowledges that it will, independently and without
reliance upon any other Bank Party and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Documents.
Section 9.4. Indemnification. Each Lender agrees to indemnify Agent (to
the extent not reimbursed by Borrower within ten (10) days after demand) from
and against such Lender's Percentage Share of any and all liabilities,
obligations, claims, losses, damages, penalties, fines, actions, judgments,
suits, settlements, costs, expenses or disbursements (including reasonable fees
of attorneys, accountants, experts and advisors) of any kind or nature
whatsoever (in this section collectively called "liabilities and costs") which
to any extent (in whole or in part) may be imposed on, incurred by, or asserted
against Agent growing out of, resulting from or in any other
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Exhibit 10.13
way associated with any of the Collateral, the Loan Documents and the
transactions and events (including the enforcement thereof) at any time
associated therewith or contemplated therein (including any violation or
noncompliance with any Environmental Laws by any Person or any liabilities or
duties of any Person with respect to Hazardous Materials found in or released
into the environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT,
provided only that no Lender shall be obligated under this section to indemnify
Agent for that portion, if any, of any liabilities and costs which is
proximately caused by Agent's own individual gross negligence or willful
misconduct, as determined in a final judgment. Cumulative of the foregoing, each
Lender agrees to reimburse Agent promptly upon demand for such Lender's
Percentage Share of any costs and expenses to be paid to Agent by Borrower under
Section 10.4(a) to the extent that Agent is not timely reimbursed for such
expenses by Borrower as provided in such section. As used in this section the
term "Agent" shall refer not only to the Person designated as such in Section
1.1 but also to each director, officer, agent, attorney, employee,
representative and Affiliate of such Person.
Section 9.5. RIGHTS AS LENDER. In its capacity as a Lender, Agent shall
have the same rights and obligations as any Lender and may exercise such rights
as though it were not Agent. Agent may accept deposits from, lend money to, act
as Trustee under indentures of, and generally engage in any kind of business
with any Restricted Person or their Affiliates, all as if it were not Agent
hereunder and without any duty to account therefor to any other Lender.
Section 9.6. SHARING OF SET-OFFS AND OTHER PAYMENTS. Each Bank Party
agrees that if it shall, whether through the exercise of rights under Security
Documents or rights of banker's lien, set off, or counterclaim against Borrower
or otherwise, obtain payment of a portion of the aggregate Obligations owed to
it which, taking into account all distributions made by Agent under Section 3.1,
causes such Bank Party to have received more than it would have received had
such payment been received by Agent and distributed pursuant to Section 3.1,
then (a) it shall be deemed to have simultaneously purchased and shall be
obligated to purchase interests in the Obligations as necessary to cause all
Bank Parties to share all payments as provided for in Section 3.1, and (b) such
other adjustments shall be made from time to time as shall be equitable to
ensure that Agent and all Lenders share all payments of Obligations as provided
in Section 3.1; provided, however, that nothing herein contained shall in any
way affect the right of any Bank Party to obtain payment (whether by exercise of
rights of banker's lien, set-off or counterclaim or otherwise) of indebtedness
other than the Obligations. Borrower expressly consents to the foregoing
arrangements and agrees that any holder of any such interest or other
participation in the Obligations, whether or not acquired pursuant to the
foregoing arrangements, may to the fullest extent permitted by Law exercise any
and all rights of banker's lien, set-off, or counterclaim as fully as if such
holder were a holder of the Obligations in the amount of such interest or other
participation. If all or any part of any funds transferred pursuant to this
section is thereafter recovered from the seller under this section which
received the same, the purchase provided for in this section shall be deemed to
have been rescinded to the extent of such recovery, together with interest, if
any, if interest is required pursuant to Tribunal order to be paid on account of
the possession of such funds prior to such recovery.
Section 9.7. INVESTMENTS. Whenever Agent in good faith determines that
it is uncertain about how to distribute to Lenders any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lenders about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Agent is otherwise required to invest funds
pending distribution to Lenders, Agent shall invest such funds pending
distribution; all interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to the same
Persons as such investment. All moneys received by Agent for distribution to
Lenders (other than to the Person who is Agent in its separate
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Exhibit 10.13
capacity as a Lender) shall be held by Agent pending such distribution solely as
Agent for such Lenders, and Agent shall have no equitable title to any portion
thereof.
Section 9.8. BENEFIT OF ARTICLE IX. The provisions of this Article
(other than the following Section 9.9) are intended solely for the benefit of
Bank Parties, and no Restricted Person shall be entitled to rely on any such
provision or assert any such provision in a claim or defense against any Bank
Party. Bank Parties may waive or amend such provisions as they desire without
any notice to or consent of Borrower or any Restricted Person.
Section 9.9. RESIGNATION. Agent may resign at any time by giving
written notice thereof to Lenders and Borrower. Each such notice shall set forth
the date of such resignation. Upon any such resignation Borrower may, with the
written concurrence of Majority Lenders designate a successor Agent. If within
fifteen days after the date of such resignation Borrower makes no such
designation or such written concurrence is not given, Majority Lenders shall
have the right to appoint a successor Agent. A successor must be appointed for
any retiring Agent, and such Agent's resignation shall become effective when
such successor accepts such appointment. If, within thirty days after the date
of the retiring Agent's resignation, no successor Agent has been appointed and
has accepted such appointment, then the retiring Agent may appoint a successor
Agent, which shall be a commercial bank organized or licensed to conduct a
banking or trust business under the Laws of the United States of America or of
any state thereof. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any
retiring Agent's resignation hereunder the provisions of this Article IX shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under the Loan Documents.
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Exhibit 10.13
ARTICLE X - MISCELLANEOUS
SECTION 10.1. WAIVERS AND AMENDMENTS; ACKNOWLEDGMENTS.
(a) WAIVERS AND AMENDMENTS. No failure or delay (whether by course of
conduct or otherwise) by any Bank Party in exercising any right, power or remedy
which such Bank Party may have under any of the Loan Documents shall operate as
a waiver thereof or of any other right, power or remedy, nor shall any single or
partial exercise by any Bank Party of any such right, power or remedy preclude
any other or further exercise thereof or of any other right, power or remedy. No
waiver of any provision of any Loan Document and no consent to any departure
therefrom shall ever be effective unless it is in writing and signed as provided
below in this section, and then such waiver or consent shall be effective only
in the specific instances and for the purposes for which given and to the extent
specified in such writing. No notice to or demand on any Restricted Person shall
in any case of itself entitle any Restricted Person to any other or further
notice or demand in similar or other circumstances. This Agreement and the other
Loan Documents set forth the entire understanding between the parties hereto
with respect to the transactions contemplated herein and therein and supersede
all prior discussions and understandings with respect to the subject matter
hereof and thereof, and no waiver, consent, release, modification or amendment
of or supplement to this Agreement or the other Loan Documents shall be valid or
effective against any party hereto unless the same is in writing and signed by
(i) if such party is Borrower, by Borrower, (ii) if such party is Agent or LC
Issuer, by such party, and (iii) if such party is a Lender, by such Lender or by
Agent on behalf of Lenders with the written consent of Majority Lenders (which
consent has already been given as to the termination of the Loan Documents as
provided in Section 10.9). Notwithstanding the foregoing or anything to the
contrary herein, Agent shall not, without the prior consent of each individual
Lender, execute and deliver on behalf of such Lender any waiver or amendment
which would: (1) waive any of the conditions specified in Article IV (provided
that Agent may in its discretion withdraw any request it has made under Section
4.2(f)), (2) increase the Maximum Loan Amount of such Lender or subject such
Lender to any additional obligations, (3) reduce any fees payable to such lender
hereunder, or the principal of, or interest on, such Lender's Note, (4) postpone
any date fixed for any payment of any such fees, principal or interest, (5)
amend the definition herein of "Majority Lenders" or otherwise change the
aggregate amount of Percentage Shares which is required for Agent, Lenders or
any of them to take any particular action under the Loan Documents, or (6)
release Borrower from its obligation to pay such Lender's Note or any Guarantor
from its guaranty of such payment.
(b) ACKNOWLEDGMENTS AND ADMISSIONS. Borrower hereby represents,
warrants, acknowledges and admits that (i) it has been advised by counsel in the
negotiation, execution and delivery of the Loan Documents to which it is a
party, (ii) it has made an independent decision to enter into this Agreement and
the other Loan Documents to which it is a party, without reliance on any
representation, warranty, covenant or undertaking by Agent or any Lender,
whether written, oral or implicit, other than as expressly set out in this
Agreement or in another Loan Document delivered on or after the date hereof,
(iii) there are no representations, warranties, covenants, undertakings or
agreements by any Bank Party as to the Loan Documents except as expressly set
out in this Agreement or in another Loan Document delivered on or after the date
hereof, (iv) no Bank Party has any fiduciary obligation toward Borrower with
respect to any Loan Document or the transactions contemplated thereby, (v) the
relationship pursuant to the Loan Documents between Borrower and the other
Restricted Persons, on one hand, and each Bank Party, on the other hand, is and
shall be solely that of debtor and creditor, respectively, (vi) no partnership
or joint venture exists with respect to the Loan Documents between any
Restricted Person and any Bank Party, (vii) Agent is not Borrower's Agent, but
Agent for Lenders, (viii) should an Event of Default or Default occur or exist,
each Bank Party will determine in its sole discretion and for its own reasons
what remedies and actions it will or will not exercise or take at that time,
(ix) without limiting any of the foregoing, Borrower is not relying upon any
representation or covenant by any Bank Party, or any representative thereof, and
no such representation or covenant has been made, that any Bank Party will, at
the time of an Event of Default or Default, or at any other time, waive,
negotiate, discuss, or take or refrain from taking any action permitted under
the Loan Documents with respect to any such Event of Default or Default or any
other provision of the Loan Documents, and (x) all Bank Parties have relied upon
the truthfulness of the acknowledgments in this section in deciding to execute
and deliver this Agreement and to become obligated hereunder.
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Exhibit 10.13
(c) REPRESENTATION BY LENDERS. Each Lender hereby represents that it
will acquire its Note for its own account in the ordinary course of its
commercial lending business; however, the disposition of such Lender's property
shall at all times be and remain within its control and, in particular and
without limitation, such Lender may sell or otherwise transfer its Note, any
participation interest or other interest in its Note, or any of its other rights
and obligations under the Loan Documents.
(d) JOINT ACKNOWLEDGMENT. THIS WRITTEN 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 UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 10.2. SURVIVAL OF AGREEMENTS; CUMULATIVE NATURE. All of
Restricted Persons' various representations, warranties, covenants and
agreements in the Loan Documents shall survive the execution and delivery of
this Agreement and the other Loan Documents and the performance hereof and
thereof, including the making or granting of the Loans and the delivery of the
Notes and the other Loan Documents, and shall further survive until all of the
Obligations are paid in full to each Bank Party and all of Bank Parties'
obligations to Borrower are terminated. All statements and agreements contained
in any certificate or other instrument delivered by any Restricted Person to any
Bank Party under any Loan Document shall be deemed representations and
warranties by Borrower or agreements and covenants of Borrower under this
Agreement. The representations, warranties, indemnities, and covenants made by
Restricted Persons in the Loan Documents, and the rights, powers, and privileges
granted to Bank Parties in the Loan Documents, are cumulative, and, except for
expressly specified waivers and consents, no Loan Document shall be construed in
the context of another to diminish, nullify, or otherwise reduce the benefit to
any Bank Party of any such representation, warranty, indemnity, covenant, right,
power or privilege. In particular and without limitation, no exception set out
in this Agreement to any representation, warranty, indemnity, or covenant herein
contained shall apply to any similar representation, warranty, indemnity, or
covenant contained in any other Loan Document, and each such similar
representation, warranty, indemnity, or covenant shall be subject only to those
exceptions which are expressly made applicable to it by the terms of the various
Loan Documents.
Section 10.3. NOTICES. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Agent may give telephonic notices to the other Bank Parties), and shall be
deemed sufficiently given or furnished if delivered by personal delivery, by
telecopy or telex, by delivery service with proof of delivery, or by registered
or certified United States mail, postage prepaid, to Borrower and Restricted
Persons at the address of Borrower specified on the signature pages hereto and
to each Bank Party at its address specified on the signature pages hereto
(unless changed by similar notice in writing given by the particular Person
whose address is to be changed). Any such notice or communication shall be
deemed to have been given (a) in the case of personal delivery or delivery
service, as of the date of first attempted delivery during normal business hours
at the address provided herein, (b) in the case of telecopy or telex, upon
receipt, or (c) in the case of registered or certified United States mail, three
days after deposit in the mail; provided, however, that no
Borrowing Notice shall become effective until actually received by Agent.
Section 10.4. PAYMENT OF EXPENSES; INDEMNITY.
(a) PAYMENT OF EXPENSES. Whether or not the transactions contemplated
by this Agreement are consummated, Borrower will promptly (and in any event,
within 30 days after any invoice or other statement or notice) pay: (i) all
transfer, stamp, mortgage, documentary or other similar taxes, assessments or
charges levied by any governmental or revenue authority in respect of this
Agreement or any of the other Loan Documents or any other document referred to
herein or therein, (ii) all reasonable costs and expenses incurred by or on
behalf of Agent (including attorneys' fees, consultants' fees and engineering
fees, travel costs and miscellaneous expenses) in connection with (1) the
negotiation, preparation, execution and delivery of the Loan Documents, and any
and all consents, waivers or other documents or instruments relating thereto,
(2) the filing, recording, refiling and
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Exhibit 10.13
re-recording of any Loan Documents and any other documents or instruments or
further assurances required to be filed or recorded or refiled or re-recorded by
the terms of any Loan Document, (3) the borrowings hereunder and other action
reasonably required in the course of administration hereof, (4) monitoring or
confirming (or preparation or negotiation of any document related to) Borrower's
compliance with any covenants or conditions contained in this Agreement or in
any Loan Document, and (iii) all reasonable costs and expenses incurred by or on
behalf of any Bank Party (including attorneys's fees, consultants' fees and
accounting fees) in connection with the defense or enforcement of any of the
Loan Documents (including this section) or the defense of any Bank Party's
exercise of its rights thereunder. In addition to the foregoing, until all
Obligations have been paid in full, Borrower will also pay or reimburse Agent
for all reasonable out-of-pocket costs and expenses of Agent or its agents or
employees in connection with the continuing administration of the Loans and the
related due diligence of Agent, including travel and miscellaneous expenses and
fees and expenses of Agent's outside counsel, reserve engineers and consultants
engaged in connection with the Loan Documents.
(b) INDEMNITY. Borrower agrees to indemnify each Bank Party, upon
demand, from and against any and all liabilities, obligations, claims, losses,
damages, penalties, fines, actions, judgments, suits, settlements, costs,
expenses or disbursements (including reasonable fees of attorneys, accountants,
experts and advisors) of any kind or nature whatsoever (in this section
collectively called "liabilities and costs") which to any extent (in whole or in
part) may be imposed on, incurred by, or asserted against such Bank Party
growing out of, resulting from or in any other way associated with any of the
Collateral, the Loan Documents and the transactions and events (including the
enforcement or defense thereof) at any time associated therewith or contemplated
therein (including any violation or noncompliance with any Environmental Laws by
any Restricted Person or any liabilities or duties of any Restricted Person or
any Bank Party with respect to Hazardous Materials found in or released into the
environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY BANK PARTY,
provided only that no Bank Party shall be entitled under this section to receive
indemnification for that portion, if any, of any liabilities and costs which is
proximately caused by its own individual gross negligence or willful misconduct,
as determined in a final judgment. If any Person (including Borrower or any of
its Affiliates) ever alleges such gross negligence or willful misconduct by any
Bank Party, the indemnification provided for in this section shall nonetheless
be paid upon demand, subject to later adjustment or reimbursement, until such
time as a court of competent jurisdiction enters a final judgment as to the
extent and effect of the alleged gross negligence or willful misconduct. As used
in this section the term "Bank Parties" shall refer not only to the Persons
designated as such in Section 1.1 but also to each director, officer, agent,
attorney, employee, representative and Affiliate of such Persons.
Section 10.5. JOINT AND SEVERAL LIABILITY; PARTIES IN INTEREST;
ASSIGNMENTS.
(a) All Obligations which are incurred by two or more Restricted
Persons shall be their joint and several obligations and liabilities. All
grants, covenants and agreements contained in the Loan Documents shall bind and
inure to the benefit of the parties thereto and their respective successors and
assigns; provided, however, that no Restricted Person may assign or transfer any
of its rights or delegate any of its duties or obligations under any
Loan Document without the prior consent of Majority Lenders. Neither Borrower
nor any Affiliates of Borrower shall directly or indirectly purchase or
otherwise retire any Obligations owed to any Lender nor will any Lender accept
any offer to do so, unless each Lender shall have received substantially the
same offer with respect to the same Percentage Share of the Obligations owed to
it. If Borrower or any Affiliate of Borrower at any time purchases some but less
than all of the Obligations owed to all Bank Parties, such purchaser shall not
be entitled to any rights of any Bank Party under the Loan Documents unless and
until Borrower or its Affiliates have purchased all of the Obligations.
46
51
Exhibit 10.13
(b) No Lender shall sell any participation interest in its commitment
hereunder or any of its rights under its Loans or under the Loan Documents to
any Person other than an Eligible Transferee, and then only if the agreement
between such Lender and such participant at all times provides: (i) that such
participation exists only as a result of the agreement between such participant
and such Lender and that such transfer does not give such participant any right
to vote as a Lender or any other direct claims or rights against any Person
other than such Lender, (ii) that such participant is not entitled to payment
from any Restricted Person under Sections 3.2 through 3.6 of amounts in excess
of those payable to such Lender under such sections (determined without regard
to the sale of such participation), and (iii) unless such participant is an
Affiliate of such Lender, that such participant shall not be entitled to require
such Lender to take any action under any Loan Document or to obtain the consent
of such participant prior to taking any action under any Loan Document, except
for actions which would require the consent of all Lenders under the
next-to-last sentence of subsection (a) of Section 10.1. No Lender selling such
a participation shall, as between the other parties hereto and such Lender, be
relieved of any of its obligations hereunder as a result of the sale of such
participation. Each Lender which sells any such participation to any Person
(other than an Affiliate of such Lender) shall give prompt notice thereof to
Agent and Borrower.
(c) Except for sales of participations under the immediately preceding
subsection (b), no Lender shall make any assignment or transfer of any kind of
its commitments or any of its rights under its Loans or under the Loan
Documents, except for assignments to an Eligible Transferee, and then only if
such assignment is made in accordance with the following requirements:
(i) Each such assignment shall apply to all Obligations owing
to the assignor Lender hereunder and to the unused portion of the
assignor Lender's commitments, so that after such assignment is made
the assignor Lender shall have a fixed (and not a varying) Percentage
Share in its Loans and Note and be committed to make that Percentage
Share of all future Loans, the assignee shall have a fixed Percentage
Share in such Loans and Note and be committed to make that Percentage
Share of all future Loans, and the Percentage Share of the Maximum Loan
Amount of both the assignor and assignee shall equal or exceed
$5,000,000.
(ii) The parties to each such assignment shall execute and
deliver to Agent, for its acceptance and recording in the "Register"
(as defined below in this section), an Assignment and Acceptance in the
form of Exhibit I, appropriately completed, together with the Note
subject to such assignment and a processing fee payable to Agent of
$2,500. Upon such execution, delivery, and payment and upon the
satisfaction of the conditions set out in such Assignment and
Acceptance, then (i) Borrower shall issue new Notes to such assignor
and assignee upon return of the old Notes to Borrower, and (ii) as of
the "Settlement Date's' specified in such Assignment and Acceptance the
assignee thereunder shall be a party hereto and a Lender hereunder and
Agent shall thereupon deliver to Borrower and each Lender a schedule
showing the revised Percentage Shares of such assignor Lender and such
assignee Lender and the Percentage Shares of all other Lenders.
(iii) Each assignee Lender which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Internal Revenue
Code of 1986, as amended) for Federal income tax purposes, shall (to
the extent it has not already done so) provide Agent and Borrower with
the "Prescribed Forms" referred to in Section 3.6(d).
(d) Nothing contained in this section shall prevent or prohibit any
Lender from assigning or pledging all or any portion of its Loans and Note to
any Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank; provided that no such assignment or pledge
shall relieve such Lender from its obligations hereunder.
(e) By executing and delivering an Assignment and Acceptance, each
assignee Lender thereunder will be confirming to and agreeing with Borrower,
Agents and each other Lender hereunder that such assignee understands and agrees
to the terms hereof, including Article IX hereof.
47
52
Exhibit 10.13
(f) Agent shall maintain a copy of each Assignment and Acceptance and a
register for the recordation of the names and addresses of Lenders and the
Percentage Shares of, and principal amount of the Loans owing to, each Lender
from time to time (in this section called the "Register"). The entries in the
Register shall be conclusive, in the absence of manifest error, and Borrower and
each Bank Party may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes. The Register shall be available for
inspection by Borrower or any Bank Party at any reasonable time and from time to
time upon reasonable prior notice.
Section 10.6. CONFIDENTIALITY. Each Bank Party agrees that it will take
all reasonable steps to keep confidential any proprietary information given to
it by any Restricted Person, provided, however, that this restriction shall not
apply to information which (i) has at the time in question entered the public
domain, (ii) is required to be disclosed by Law (whether valid or invalid) of
any Tribunal, (iii) is disclosed to any Bank Party's Affiliates, auditors,
attorneys, or agents provided such Persons are obligated to hold such
information in confidence on the terms provided in this section), (iv) is
furnished to any other Bank Party or to any purchaser or prospective purchaser
of participations or other interests in any Loan or Loan Document (provided each
such purchaser or prospective purchaser first agrees to hold such information in
confidence on the terms provided in this section), or (v) is disclosed in the
course of enforcing its rights and remedies during the existence of an Event of
Default.
Section 10.7. GOVERNING LAW; SUBMISSION TO PROCESS.
48
53
Exhibit 10.13
EXCEPT TO THE EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED
IN A LOAN DOCUMENT, THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS
MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE
LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW. BORROWER HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST
BORROWER WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OF THE LOAN DOCUMENTS
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS BANK PARTIES MAY ELECT, AND, BY
EXECUTION AND DELIVERY HEREOF, BORROWER ACCEPTS AND CONSENTS FOR ITSELF AND IN
RESPECT TO ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS, AND FURTHER AGREES TO A TRANSFER OF ANY SUCH PROCEEDING TO A
FEDERAL COURT SITTING IN THE STATE OF NEW YoRK TO THE EXTENT THAT IT HAS SUBJECT
MATTER JURISDICTION, AND OTHERWISE TO A STATE COURT IN NEW YORK, NEW YORK, AND
AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY BANK PARTIES
IN WRITING, WITH RESPECT TO ANY ACTION OR PROCEEDING BROUGHT BY IT AGAINST BANK
PARTIES AND ANY QUESTIONS RELATING TO USURY. BORROWER AGREES THAT SECTIONS
5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL
APPLY TO THE LOAN DOCUMENTS AND WAIVES ANY RIGHT TO STAY OR TO DISMISS ANY
ACTION OR PROCEEDING BROUGHT BEFORE SAID COURTS ON THE BASIS OF FORUM NON
CONVENIENS. IN FURTHERANCE OF THE FOREGOING, BORROWER HEREBY IRREVOCABLY
DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇/▇▇▇ PRENTICE HALL, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
AS AGENT OF BORROWER TO RECEIVE SERVICE OF ALL PROCESS BROUGHT AGAINST BORROWER
WITH RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT IN NEW YORK, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. COPIES OF ANY SUCH PROCESS SO SERVED SHALL ALSO, IF PERMITTED BY
LAW, BE SENT BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS SET FORTH BELOW AND
BY REGULAR MAIL, REGISTERED MAIL COURIER OR MESSENGER TO ▇▇▇▇▇▇ HILL, BUT THE
FAILURE OF BORROWER TO RECEIVE SUCH COPIES SHALL NOT AFFECT IN ANY WAY THE
SERVICE OF SUCH PROCESS AS AFORESAID. BORROWER SHALL FURNISH TO BANK PARTIES A
CONSENT OF CT CORPORATION SYSTEM AGREEING TO ACT HEREUNDER PRIOR TO THE
EFFECTIVE DATE OF THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF BANK
PARTIES TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF BANK PARTIES TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY
OTHER JURISDICTION. IF FOR ANY REASON CT CORPORATION SHALL RESIGN OR OTHERWISE
CEASE TO ACT AS BORROWER'S AGENT, BORROWER HEREBY IRREVOCABLY AGREES TO (A)
IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT ACCEPTABLE TO AGENT TO SERVE IN
SUCH CAPACITY AND, IN SUCH EVENT, SUCH NEW AGENT SHALL BE DEEMED TO BE
SUBSTITUTED FOR CT CORPORATION SYSTEM FOR ALL PURPOSES HEREOF AND (B) PROMPTLY
DELIVER TO BANK PARTIES THE WRITTEN CONSENT (IN FORM AND SUBSTANCE SATISFACTORY
TO AGENT) OF SUCH NEW AGENT AGREEING TO SERVE IN SUCH CAPACITY.
Section 10.8. LIMITATION ON INTEREST. Bank Parties, Restricted Persons
and the other parties to the Loan Documents intend to contract in strict
compliance with applicable usury Law from time to time in effect. In furtherance
thereof such persons stipulate and agree that none of the terms and provisions
contained in the Loan Documents shall ever be construed to provide for interest
in excess of the maximum amount of interest permitted to be charged by
applicable Law from time to time in effect. Neither any Restricted Person nor
any present or future guarantors, endorsers, or other Persons hereafter becoming
liable for payment of any Obligation shall ever be liable for unearned interest
thereon or shall ever be required to pay interest thereon in excess of the
maximum amount that may be lawfully charged under applicable Law from time to
time in effect, and the provisions of this section shall control over all other
provisions of the Loan Documents which may be in conflict or apparent conflict
herewith.
Section 10.9. TERMINATION; LIMITED SURVIVAL. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
written notice delivered to Agent to terminate this Agreement. Upon receipt by
Agent of such a notice, if no Obligations are then owing this Agreement and all
other Loan Documents shall thereupon be terminated and the parties thereto
released from all prospective obligations thereunder. Notwithstanding the
foregoing or anything herein to the contrary, any waivers or admissions made by
any
49
54
Exhibit 10.13
Restricted Person in any Loan Document, any Obligations under Sections 3.2
through 3.6, and any obligations which any Person may have to indemnify or
compensate any Bank Party shall survive any termination of this Agreement or any
other Loan Document. At the request and expense of Borrower, Agent shall prepare
and execute all necessary instruments to reflect and effect such termination of
the Loan Documents. Agent is hereby authorized to execute all such instruments
on behalf of all Lenders, without the joinder of or further action by any
Lender.
Section 10.10. SEVERABILITY. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable Law.
Section 10.11. COUNTERPARTS. This Agreement may be separately executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
Section 10.12. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC.
TO THE EXTENT PERMITTED BY LAW, BANK PARTIES AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF SUCH PERSONS OR BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR BANK PARTIES' ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
BORROWER AND EACH BANK PARTY HEREBY FURTHER (A) IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY "SPECIAL DAMAGES", AS DEFINED BELOW, (B) CERTIFIES
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY
HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (C)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
As USED IN THIS SECTION, "SPECIAL DAMAGES" INCLUDES ALL SPECIAL, CONSEQUENTIAL,
EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE
ANY PAYMENTS OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR
DELIVER TO ANY OTHER PARTY HERETO.
IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
NORTH COAST ENERGY, INC.
Borrower
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
Address:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
50
55
Exhibit 10.13
ING (U.S.) CAPITAL CORPORATION
Agent, LC Issuer and Lender
By:
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
51
56
Exhibit 10.13
SCHEDULE 1
DISCLOSURE SCHEDULE
-------------------
To supplement the following sections of the Agreement of which this
Schedule is a part, Borrower hereby makes the following disclosures:
1. Section 1.1 Defined Terms: "Partnerships" means the following entities:
Capital Drilling Fund 1986-1
Limited Partnership
North Coast Energy/Capital 1987-1
Appalachian Private Drilling Program L.P.
North Coast Energy/Capital 1987-2
Appalachian Private Drilling Program L.P.
North Coast Energy/Capital 1988-1
Appalachian Private Drilling Program L.P.
North Coast Energy/Capital 1988-2
Appalachian Private Drilling Program L.P.
North Coast Energy 1989 Appalachian
Public Drilling Program L.P.
North Coast Energy 1990-1
Appalachian Private Drilling Program L.P.
North Coast Energy 1990-2
Appalachian Private Drilling Program L.P.
North Coast Energy 1990-3
Appalachian Private Drilling Program L.P.
North Coast Energy 1991-I
Appalachian Private Drilling Program L.P.
North Coast Energy 199 1-2
Appalachian Private Drilling Program L.P.
North Coast Energy 199 1-3
Appalachian Private Drilling Program L.P.
North Coast Energy 1992-1
Appalachian Private Drilling Program L.P.
North Coast Energy 1992-2
Appalachian Private Drilling Program L.P.
North Coast Energy 1992-3
Appalachian Private Drilling Program L.P.
North Coast Energy 1993-1
Appalachian Private Drilling Program L.P.
1
57
Exhibit 10.13
North Coast Energy 1993-2
Appalachian Private Drilling Program L.P.
North Coast Energy 1993-3
Appalachian Private Drilling Program L.P.
North Coast Energy 1994-1
Appalachian Private Drilling Program L.P.
North Coast Energy 1994-2
Appalachian Private Drilling Program L.P.
North Coast Energy 1994-3
Appalachian Private Drilling Program L.P.
North Coast Energy 1995-1
Appalachian Private Drilling Program L.P.
North Coast Energy 1995-2
Appalachian Private Drilling Program L.P.
North Coast Energy 1996-1
Appalachian Private Drilling Program L.P.
North Coast Energy 1996-2
Appalachian Private Drilling Program L.P.
North Coast Energy 1997-1
Appalachian Private Drilling Program L.P.
North Coast Energy 1997-2
Appalachian Private Drilling Program L.P.
2. Section 5.6 Initial Financial Statements:
3. Section 5.7 Other Obligations:
4. Section 5.9 Litigation:
5. Section 5.11 ERISA Liabilities:
6. Sections 5.13 Names and Places of Business:
7. Section 5.14 Borrower's Subsidiaries and Stockholdings:
2
58
Exhibit 10.13
SCHEDULE 2
SECURITY SCHEDULE
-----------------
1. Open End Mortgage, Assignment, Security Agreement, Fixture Filing and
Financing Statement from Borrower to Agent to be recorded in Ohio.
2. Open End Mortgage, Assignment, Security Agreement, Fixture Filing and
Financing Statement from Borrower to Agent to be recorded in
Pennsylvania.
3. Financing Statements executed by Borrower in connection with the
Mortgages.
4. Partnership Interest Pledge Agreement executed by Borrower in favor of
Agent (the "Pledge Agreement").
5. Financing Statement executed by Borrower in connection with the Pledge
Agreement.
1
59
Exhibit 10.13
SCHEDULE 3
INSURANCE SCHEDULE
------------------
1
60
Exhibit 10.13
EXHIBIT A
PROMISSORY NOTE
---------------
$20,000,000 New York, New York February 9, 1998
FOR VALUE RECEIVED, the undersigned, North Coast Energy, Inc., a
Delaware (herein called "Borrower"), hereby promises to pay to the order of ING
(U.S.) Capital Corporation, (herein called "Lender"), the principal sum of
Twenty Million and No/100 Dollars ($20,000,000), or, if greater or less, the
aggregate unpaid principal amount of the Loan made under this Note by Lender to
Borrower pursuant to the terms of the Credit Agreement (as hereinafter defined),
together with interest on the unpaid principal balance thereof as hereinafter
set forth, both principal and interest payable as herein provided in lawful
money of the United States of America at the offices of the Agent under the
Credit Agreement, as from time to time may be designated by the holder of this
Note.
This Note (a) is issued and delivered under that certain Credit
Agreement of even date herewith among Borrower, Lender, as Agent, and the
lenders (including Lender) referred to therein (herein, as from time to time
supplemented, amended or restated, called the "Credit Agreement"), and is a
"Note" as defined therein, (b) is subject to the terms and provisions of the
Credit Agreement, which contains provisions for payments and prepayments
hereunder and acceleration of the maturity hereof upon the happening of certain
stated events, and (c) is secured by and entitled to the benefits of certain
Security Documents (as identified and defined in the Credit Agreement). Payments
on this Note shall be made and applied as provided herein and in the Credit
Agreement. Reference is hereby made to the Credit Agreement for a description of
certain rights, limitations of rights, obligations and duties of the parties
hereto and for the meanings assigned to terms used and not defined herein and to
the Security Documents for a description of the nature and extent of the
security thereby provided and the rights of the parties thereto.
For the purposes of this Note, the following terms have the meanings
assigned to them below:
"Base Rate Payment Date" means (i) the last day of each Fiscal Quarter,
beginning March 31, 1998, and (ii) any day on which past due interest or
principal is owed hereunder and is unpaid. If the terms hereof or of the Credit
Agreement provide that payments of interest or principal hereon shall be
deferred from one Base Rate Payment Date to another day, such other day shall
also be a Base Rate Payment Date.
"Eurodollar Rate Payment Date" means, with respect to any Eurodollar
Loan: (i) the day on which the related Interest Period ends (and, if such
Interest Period is three months or longer, the three-month anniversary of the
first day of such Interest Period), and (ii) any day on which past due interest
or past due principal is owed hereunder with respect to such Eurodollar Loan and
is unpaid. If the terms hereof or of the Credit Agreement provide that payments
of interest or principal with respect to such Eurodollar Loan shall be deferred
from one Eurodollar Rate Payment Date to another day, such other day shall also
be a Eurodollar Rate Payment Date.
The principal amount of this Note shall be due and payable in twenty
(20) quarterly installments, each of which shall be equal to one-twentieth
(1/20) of the aggregate unpaid principal balance of this Note at the end of the
Commitment Period, and shall be due and payable on the last day of each Fiscal
Quarter, beginning September 30, 1999, and continuing regularly thereafter until
June 30, 2004, at which time the unpaid principal balance of this Note and all
interest accrued hereon shall be due and payable in full.
Base Rate Loans from time to time outstanding shall bear interest on
each day outstanding at the Base Rate in effect on such day; unless the Default
Rate shall apply as provided below. On each Base Rate Payment Date Borrower
shall pay to the holder hereof all unpaid interest which has accrued on the Base
Rate Loans to but not including such Base Rate Payment Date. Each Eurodollar
Loan shall bear interest on each day during the related Interest Period at the
related Eurodollar Rate in effect on such day; unless the Default Rate shall
apply as provided below. On each Eurodollar Rate Payment Date relating to such
Eurodollar Loan, Borrower shall pay to
1
61
Exhibit 10.13
the holder hereof all unpaid interest which has accrued on such Eurodollar Loan
to but not including such Eurodollar Rate Payment Date. All past due principal
of and past due interest on the Loan shall bear interest on each day outstanding
at the Default Rate in effect on such day, notwithstanding the foregoing
provisions of this paragraph, on or after ten days following the occurrence of
an Event of Default, and during the continuance thereof, each Loan shall bear
interest at the Default Rate. All interest at the Default Rate shall be due and
payable daily as it accrues. Notwithstanding the foregoing provisions of this
paragraph: (a) this Note shall never bear interest in excess of the Highest
Lawful Rate, and (b) if at any time the rate at which interest is payable on
this Note is limited by the Highest Lawful Rate (by the foregoing clause (a) or
by reference to the Highest Lawful Rate in the definitions of Base Rate,
Eurodollar Rate, and Late Payment Rate), this Note shall bear interest at the
Highest Lawful Rate and shall continue to bear interest at the Highest Lawful
Rate until such time as the total amount of interest accrued hereon equals (but
does not exceed) the total amount of interest which would have accrued hereon
had there been no Highest Lawful Rate applicable hereto.
Notwithstanding the foregoing paragraph and all other provisions of
this Note, in no event shall the interest payable hereon, whether before or
after maturity, exceed the maximum interest which, under applicable Law, may be
charged on this Note, and this Note is expressly made subject to the provisions
of the Credit Agreement which more fully set out the limitations on how interest
accrues hereon.
If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE
FEDERAL LAW.
NORTH COAST ENERGY, INC.
By:
-------------------------------
Name:
Title:
2
62
Exhibit 10.13
EXHIBIT B
BORROWING NOTICE
Reference is made to that certain Credit Agreement dated as of February
9, 1998 (as from time to time amended, the "Agreement"), by and among North
Coast Energy, Inc. ("Borrower"), ING (U.S.) Capital Corporation, as Agent, and
certain financial institutions ("Lenders"). Terms which are defined in the
Agreement are used herein with the meanings given them in the Agreement.
Pursuant to the terms of the Agreement Borrower hereby requests Lenders to make
Advances to Borrower in the aggregate principal amount of $ ___________ and
specifies _____________, 19__, as the date Borrower desires for Lenders to make
such Advances and for Agent to deliver to Borrower the proceeds thereof.
To induce Lenders to make such Advances, Borrower hereby represents,
warrants, acknowledges, and agrees to and with Agent and each Lender that:
(a) The officer of Borrower signing this instrument is the
duly elected, qualified and acting officer of Borrower as indicated
below such officer's signature hereto having all necessary authority to
act for Borrower in making the request herein contained.
(b) The representations and warranties of Borrower set forth
in the Agreement and the other Loan Documents are true and correct on
and as of the date hereof (except to the extent that the facts on which
such representations and warranties are based have been changed by the
extension of credit under the Agreement), with the same effect as
though such representations and warranties had been made on and as of
the date hereof.
(c) There does not exist on the date hereof any condition or
event which constitutes a Default which has not been waived in writing
as provided in Section 10.1(a) of the Agreement; nor will any such
Default exist upon Borrower's receipt and application of the Advances
requested hereby. Borrower will use the Advances hereby requested in
compliance with Section 2.4 of the Agreement.
(d) Except to the extent waived in writing as provided in
Section 10.1(a) of the Agreement, Borrower has performed and complied
with all agreements and conditions in the Agreement required to be
performed or complied with by Borrower on or prior to the date hereof,
and each of the conditions precedent to Advances contained in the
Agreement remains satisfied.
(e) The Facility Usage, after the making of the Advances
requested hereby, will not be in excess of the Borrowing Base on the
date requested for the making of such Advances.
(f) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other means not provided for in Section
10.1(a) of the Agreement. The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgments, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF, this instrument is executed as of _________, 19__.
NORTH COAST ENERGY, INC.
By:
------------------------------
Name:
Title:
1
63
Exhibit 10.13
EXHIBIT C
CONTINUATION/CONVERSION NOTICE
------------------------------
Reference is made to that certain Credit Agreement dated as of February
9, 1998 (as from time to time amended, the "Agreement"), by and among North
Coast Energy, Inc., as Borrower, ING (U.S.) Capital Corporation, as Agent, and
certain financial institutions, as Lenders. Terms which are defined in the
Agreement are used herein with the meanings given them in the Agreement.
Borrower hereby requests a conversion or continuation of existing Loans
into a new Borrowing pursuant to Section 2.3 of the Agreement as follows:
Existing Borrowing(s) to be continued or converted:
$_________ of Eurodollar Loans with Interest Period ending ___________
$_________ of Base Rate Loans
Aggregate amount of new Borrowing: $_________________
Type of Loans in new Borrowing: _________________
Date of continuation or conversion: _________________
Length of Interest Period for Eurodollar
Loans (1,2,3 or 6 months): _________ months
Borrower hereby represents, warrants, acknowledges, and agrees
to and with each Bank Party that:
(a) The officer of Borrower signing this instrument is the
duly elected, qualified and acting officer of Borrower as indicated
below such officer's signature hereto having all necessary authority to
act for Borrower in making the request herein contained.
(b) There does not exist on the date hereof any condition or
event which constitutes a Default which has not been waived in writing
as provided in Section 10.1(a) of the Agreement; nor will any such
Default exist upon Borrower's receipt and application of the Loans
requested hereby.
(c) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other means not provided for in Section
10.1(a) of the Agreement. The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgments, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF, this instrument is executed as of , 199__.
NORTH COAST ENERGY, INC.
By:_____________________________________
Name:
Title:
1
64
Exhibit 10.13
EXHIBIT D
CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENTS
------------------------
Reference is made to that certain Credit Agreement dated as of February
9, 1998 (as from time to time amended, the "Agreement"), by and among North
Coast Energy, Inc. ("Borrower"), ING (U.S.) Capital Corporation, as Agent, and
certain financial institutions ("Lenders"), which Agreement is in full force and
effect on the date hereof. Terms which are defined in the Agreement are used
herein with the meanings given them in the Agreement.
This Certificate is furnished pursuant to Section 5.6 of the Agreement.
Together herewith Borrower is furnishing to Agent and each Lender Borrower's
audited financial statements (the "Financial Statements") as at _____________
(the "Reporting Date"). Borrower hereby represents, warrants, and acknowledges
to Agent and each Lender that:
(a) the officer of Borrower signing this instrument is the
duly elected, qualified and acting of Borrower and as such is
Borrower's chief financial officer;
(b) the Financial Statements are accurate and complete and
satisfy the requirements of the Agreement;
(c) attached hereto is a schedule of calculations showing
Borrower's compliance as of the Reporting Date with the requirements of
Sections ____________ of the Agreement;
(d) on the Reporting Date Borrower was, and on the date hereof
Borrower is, in full compliance with the disclosure requirements of the
Agreement, and no Default otherwise existed on the Reporting Date or
otherwise exists on the date of this.
(e) The representations and warranties of Borrower set forth
in the Agreement and the other Loan Documents are true and correct on
and as of the date hereof (except to the extent that the facts on which
such representations and warranties are based have been changed by the
extension of credit under the Agreement), with the same effect as
though such representations and warranties had been made on and as of
the date hereof.
The officer of Borrower signing this instrument hereby certifies that
he has reviewed the Loan Documents and the Financial Statements and has
otherwise undertaken such inquiry as is in his opinion necessary to enable him
to express an informed opinion with respect to the above representations,
warranties and acknowledgments of Borrower and, to the best of his knowledge,
such representations, warranties, and acknowledgments are true, correct and
complete.
IN WITNESS WHEREOF, this instrument is executed as of ___________,19__.
NORTH COAST ENERGY, INC.
By:
-----------------------------
Name:
Title:
1
65
Exhibit 10.13
EXHIBIT F
ENVIRONMENTAL COMPLIANCE CERTIFICATE
Reference is made to that certain Credit Agreement dated as of February
9, 1998 (as from time to time amended, the "Agreement"), by and among North
Coast Energy, Inc. ("Borrower"), ING (U.S.) Capital Corporation as Agent, and
certain financial institutions. Terms which are defined in the Agreement are
used herein with the meanings given them in the Agreement. The undersigned,
being the President of Borrower, hereby certifies to Agent and Lenders as
follows:
1. For the Fiscal Year ending immediately prior to the date
hereof, Borrower has complied and is complying with Section 5.1 of the
Credit Agreement;
2. To the best knowledge of the undersigned after due inquiry,
Borrower is on the date hereof in compliance with all applicable
Environmental Laws, noncompliance with which could cause a Material
Adverse Change;
3. Borrower has taken (and continues to take) steps to
minimize the generation of potentially harmful effluents;
4. Borrower has established an ongoing program of conducting
an internal audit of each operating facility of Borrower to identify
actual or potential environmental liabilities which could cause a
Material Adverse Change; and
5. Borrower has established an ongoing program of training its
employees in issues of environmental, health and safety compliance, and
Borrower presently has one or more individuals in charge of
implementing such training program.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry and consultation with the
operating officers of Borrower, the above representations, warranties,
acknowledgments , and agreements of Borrower are true , correct and complete.
IN WITNESS WHEREOF , this instrument is executed as of ________,19__.
NORTH COAST ENERGY, INC.
By: ______________________________
Name:
Title:
2
66
Exhibit 10.13
EXHIBIT H-l
February 9, 1998
ING (U.S.) Capital Corporation, as Agent
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This opinion is being delivered to you pursuant to Section 4.1(g) of
the Credit Agreement dated February 9, 1998 (the "Agreement"), by and between
North Coast Energy, Inc., a Delaware corporation ("Borrower's') and ING (U.S.)
Capital Corporation ("Agent"). Capitalized terms which are defined in the
Agreement and which are used but not defined herein shall have the meanings
given them in the Agreement. Terms defined in Schedule 1 hereto shall have the
same meanings when used in the body of this opinion.
I have acted as counsel for Borrower in connection with the
transactions provided for in the Agreement. As such counsel I have assisted in
the negotiation of the Agreement and the other Loan Documents. I have examined
executed counterparts (or, where indicated, photostatic copies of executed
counterparts) of the documents listed in Schedule 1. (The documents listed in
Section I of Schedule I are hereinafter referred to as the "Principal
Documents".) I have discussed the matters addressed in this opinion with
officers and representatives of Borrower to the extent I have deemed appropriate
to enable us to render this opinion.
In preparing this opinion I have also examined original counterparts or
photostatic or certified copies of all other instruments, agreements,
certificates, records and other documents (whether of Borrower, its officers,
directors, shareholders and representatives, public officials, or other persons)
which I have considered relevant to the opinions hereinafter expressed. In
making this examination I have assumed, with respect to all documents (other
than the Principal Documents) which I have examined: the genuineness of all
signatures thereon, the authenticity of all documents submitted to us as
originals, the conformity to the originals of all documents submitted to us as
copies, and the authenticity of the originals of such copies. As to certain
questions of fact material to such opinions I have, where such facts were not
otherwise verified or established, relied upon certificates listed in Section II
of Schedule 1 of officers of Borrower.
Based upon the foregoing, and subject to the qualifications and
limitations hereinafter set forth, I am of the opinion that:
1. Borrower is duly incorporated, validly existing and in good standing
under the laws of the State of Delaware. Each Partnership is duly organized,
validly existing, and in good standing under the laws of the State of Ohio.
2. Each Restricted Person has the corporate or partnership power and
authority to execute and deliver each Principal Document to which it is a party
and to perform its obligations thereunder. Each Principal Document has been duly
authorized, executed and delivered by Borrower and each Restricted Person.
3. Each Restricted Person is in good standing and duly authorized to do
business in each state within the United States in which such Restricted Person
(a) owns or leases any material property or (b) conducts any material business
or the failure to be qualified would have a material and adverse effect on such
Restricted Person's business, operations, property, or financial condition.
3
67
Exhibit 10.13
4. Each Principal Document is enforceable against each Restricted
Person, to the extent a party thereto, in accordance with its terms. No
Principal Document constitutes a usurious contract.
5. Subject to the filing requirements described in paragraph below, the
Ohio Mortgage creates to secure the Obligations a valid, binding mortgage lien
in the "Mortgaged Properties" (as defined in the Mortgage) located in the State
of Ohio and a security interest in the "Collateral's' and proceeds of
"Collateral's' (as such term is defined in the Mortgage) with respect to which a
security interest can be created under the Uniform Commercial Code of Ohio (the
"Ohio Code") and perfected by the filing of financing statements in such state
pursuant to the Ohio Code. The Pledge Agreement creates to secure the
Obligations a valid, binding security interest in the "Collateral" and the
proceeds of "Collateral's' (as such term is defined in the Pledge Agreement).
6. A fully executed counterpart of the Mortgage is required to be filed
and recorded in the appropriate real estate records of the offices of the County
Clerks of____________________ Counties, Ohio, and fully executed counterparts of
the Ohio Financing Statements are required to be filed in the office of the
Secretary of State of Ohio. Once the Ohio Mortgage and the Ohio Financing
Statements are so filed and recorded, no further or subsequent filing or
refiling will be necessary in the State of Ohio in order to continue the
existence or perfection of the lien and security interests referred to in
paragraph 5 above except that a continuation statement with respect to each Ohio
Financing Statement must be filed under the Ohio Code in the office where each
such financing statement was filed within six months prior to the expiration of
five years from the date of such filing (or otherwise within the time permitted
by Section 1309.40 of the Ohio Code), and subsequent continuation statements
must be filed within six months prior to the end of each subsequent five-year
period, and (c) amendments or supplements to the Ohio Financing Statements or
additional financing statements may be required to be filed in the event of a
change in the name, identity, or corporate or partnership structure of any
Restricted Person or in the event the Ohio Financing Statements otherwise become
inaccurate or incomplete.
7. The acceptance of the Ohio Mortgage and the Ohio Financing
Statements by Agent, its possession and retention of its rights thereunder, and
its presentation of such instruments for filing and recording as described in
paragraph 6 hereof will not require Agent to pay or otherwise subject Agent to
any tax, fee or other charge in the State of Ohio except the customary fee
charged by each filing or recording officer on a per-page or per-instrument
basis. Agent is not required to qualify to do business in the State of Ohio or
to otherwise register or make any filing (other than those described in
paragraph 6 hereof) with any state or local official in the State of Ohio as a
result of its acceptance of such instruments, its possession and retention of
its rights thereunder, or the filing or recording thereof.
8. The execution, delivery and performance by each Restricted Person of
the Principal Documents, and the consummation of the transactions contemplated
by the Principal Documents, will not and did not
(a) violate any provision of the charter or bylaws of Borrower, or the
certificates or agreements of limited partnership of any of the Partnerships, or
(b) to my knowledge, breach or result in a default under or result in
the maturing of any indebtedness pursuant to any indenture, mortgage, deed of
trust, note or loan agreement, material license agreement, or other material
agreement or instrument to which any Restricted Person is a party or by which
any of its properties are bound, or
(c) result in a violation of any law, rule or regulation or, to the
best of my knowledge, any judgment, order, decree, determination or award of any
court or governmental authority which is now in effect and applicable to any
Restricted Person or any of its properties.
To the best of my knowledge no Restricted Person is in default under or in
violation of any law, rule, regulation, judgment, order, decree, determination,
award, indenture, mortgage, deed of trust, note, loan agreement, license
agreement or other material agreement or instrument of which I have knowledge or
in violation of its charter or bylaws or its certificate and agreement of
limited partnership as the case may be.
4
68
Exhibit 10.13
9. Except for any which have been obtained or completed, to my
knowledge no consent, approval, waiver, license, authorization or action by or
filing with any court or governmental authority or any third party is or was
required for the execution and delivery by any Related Person of any of the
Principal Documents, or the consummation of the transactions contemplated
thereby.
10. Other than as revealed in the Disclosure Schedule, to my knowledge
there are no actions, suits, proceedings or investigations pending or threatened
in writing against or affecting any Related Person or any of its properties
before any court, governmental agency or arbitrator (a) seeking to affect the
enforceability or performance by any Related Person of any Principal Document,
or (b) which are otherwise required to be disclosed under Section 5.9 of the
Agreement.
11. Borrower is not an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
This opinion is limited by, subject to and based on the following:
(a) This opinion is limited in all respects to the General Corporation
Law of the State of Delaware, the laws of the State of Ohio and applicable
federal law; however, I am not a member of the bar of the State of Delaware and
my knowledge of its General Corporation Law is derived from a reading of that
statute without consideration of any judicial or administrative interpretations
thereof.
(b) In rendering this opinion I have assumed that each of the Principal
Documents in which Agent's execution is provided for has been duly authorized,
executed and delivered by Agent and that Agent is concurrently herewith
advancing funds to Borrower or otherwise "giving value" as contemplated in
Section 1309.14 of the Ohio Code.
(c) The enforceability of the Principal Documents is subject to (i)
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and (ii) general principles of equity. The
opinion expressed herein that the Principal Documents are enforceable against
each Restricted Person is also subject to the qualification that certain of the
remedial, waiver and other provisions of the Principal Documents may not be
enforceable; but such unenforceability will not, in my judgment, render the
Principal Documents invalid as a whole, or substantially interfere with the
realization of the principal legal benefits provided by the Principal Documents,
except to the extent of any procedural delay which may result therefrom.
(d) Insofar as any of the opinions herein expressed concern the
perfection of a security interest in "proceeds" (as such term is defined in the
Code) please be advised that the continuation of the existence and perfection of
such security interest are limited as provided in Section 1309.25 of the Ohio
Code.
The opinions herein expressed are for the benefit of Agent and may be
relied upon only by Agent and by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. in connection with any
opinion delivered by them to Agent.
Respectfully submitted,
5
69
Exhibit 10.13
SCHEDULE I
SECTION I. PRINCIPAL DOCUMENTS
1. Credit Agreement dated as of February 9, 1998 between Borrower, Agent,
and Lenders
2. Promissory Note payable by Borrower to Agent, as a Lender, in the
stated principal amount of $20,000,000 of even date with the Credit
Agreement.
3. Open End Mortgage, Assignment, Security Agreement, Fixture Filing and
Financing Statement from Borrower to Agent to be recorded in Ohio (the
"Ohio Mortgage")
4. Financing Statements executed by Borrower in connection with the Ohio
Mortgage (the "Ohio Mortgage Financing Statements's')
5. Open End Mortgage, Assignment, Security Agreement, Fixture Filing and
Financing Statement from Borrower to Agent to be recorded in
Pennsylvania (the "Pennsylvania Mortgage's')
6. Financing Statements executed by Borrower in connection with the
Pennsylvania Mortgage (the "Pennsylvania Mortgage Financing
Statements")
7. Partnership Interest Pledge Agreement executed by Borrower in favor of
Agent (the "Pledge Agreement")
8. Financing Statements executed by Borrower in connection with the Pledge
Agreement for filing with the Secretary of State of Ohio (the "Pledge
Agreement Financing Statement"s; the Ohio Mortgage Financing Statement
and the Pledge Agreement Financing Statement are collectively referred
to herein as the "Ohio Financing Statements's')
SECTION II. CORPORATE DOCUMENTS
AND PROCEEDINGS
A. Omnibus Certificate of Borrower
B. Compliance Certificate of Borrower
C. Certificate of Borrower Regarding the Partnerships
SECTION III. GOVERNMENTAL CERTIFICATES
[list certificates]
70
Exhibit 10.13
EXHIBIT I
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
Date ______________, 199
Reference is made to that certain Credit Agreement dated as of February
9, 1998 (as from time to time amended, the "Agreement"), by and among North
Coast Energy, Inc., as Borrower, ING (U.S.) Capital Corporation, as Agent, and
certain financial institutions, as Lenders, which Agreement is in full force and
effect on the date hereof. Terms which are defined in the Agreement are used
herein with the meanings given them in the Agreement.
___________________ ("Assignor's') and ___________________ ("Assignee") hereby
agree as follows:
l. Assignor hereby sells and assigns to Assignee without recourse and
without representation or warranty (other than as expressly provided herein),
and Assignee hereby purchases and assumes from Assignor, that interest in and to
all of Assignor's rights and duties under the Agreement as of the date hereof
which represents the percentage interest specified in Item 3 of Annex I hereto
(the "Assigned Share") of all of the outstanding rights and obligations of all
Lenders under the Agreement, including, without limitation, all rights and
obligations with respect to the Assigned Share in Assignor's Loans and Note.
After giving effect to such sale and assignment, Assignee's Percentage Share
(and Assignor's remaining Percentage Share) will be as set forth in Item 3 of
Annex I hereto.
2. Assignor: (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Agreement, the
other Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Agreement, the other Loan Documents or
any other instrument or document furnished pursuant thereto; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower, any other Related Person or the performance or
observance by any of them of any of their respective obligations under the
Agreement, the other Loan Documents, or any other instrument or document
furnished pursuant thereto.
3. Assignee: (i) confirms that it has received a copy of the Agreement,
together with copies of the financial statements most recently delivered
thereunder and such other Loan Documents and other documents and information as
it has deemed appropriate to make its own analysis of Borrower and the
transactions contemplated by the Agreement and its own independent decision to
enter into this Assignment and Assumption Agreement; (ii) agrees that it will,
independently and without reliance upon Assignor or any other Bank Party and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Agreement; (iii) confirms that it is a an Eligible Transferee under
the Agreement; (iv) appoints and authorizes Agent and Collateral Agent to take
such action as agent on its behalf and to exercise such powers under the
Agreement and the other Loan Documents as are specifically delegated to them,
together with all other powers reasonably incidental thereto; and (v) agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of the Agreement are required to be performed by it as a Lender
(including the obligation to make future Loans). [;and (vi) attaches the
"Prescribed Forms" described in Section 3.6(d) of the Agreement.]
4. Following the execution of this Assignment and Assumption Agreement
by Assignor and Assignee, an executed original hereof (together with all
attachments) will be delivered to Agent. The effective date of this Assignment
and Assumption Agreement (the "Settlement Date") shall be the date specified in
Item 4 of Annex I hereto; provided that this Assignment and Assumption Agreement
shall not be deemed to have taken effect unless (i) the consent hereto of Agent
and Borrower has been obtained (to the extent required in the Agreement),
71
Exhibit 10.13
(ii) Agent has received a fully executed original hereof, and (iii) Agent has
received the processing fee referred to in Section 10.5(c)(ii) of the Agreement.
5. Upon the satisfaction of the foregoing conditions, then as of the
Settlement Date: (i) Assignee shall be a party to the Agreement and, to the
extent provided in this Assignment and Assumption Agreement, have the rights and
obligations of a Lender thereunder and under the other Loan Documents and (ii)
Assignor shall, to the extent provided in this Assignment and Assumption
Agreement, relinquish its rights and be released from its duties under the
Agreement and the other Loan Documents.
6. All interest, fees and other amounts that would otherwise accrue
pursuant to the Agreement and Assignor's Note for the account of Assignor from
and after the Settlement Date shall, instead accrue for the account of, and be
payable to, Assignor and Assignee, as the case may be, in accordance with their
respective interests as reflected in Item 3 to Annex I hereto. All payments of
principal that would otherwise be payable from and after the Settlement Date to
or for the account of Assignor pursuant to the Agreement and Assignor's Note
shall, instead, be payable to or for the account of Assignor and Assignee, as
the case may be, in accordance with their respective interests as reflected in
Item 3 to Annex I hereto. On the Settlement Date, Assignee shall pay to Assignor
an amount specified by Assignor in writing which represents the portion of
Assignor's Loans which is being assigned and which is outstanding on the
Settlement Date, net of any closing costs. Assignor and Assignee shall make all
appropriate adjustments in payments under the Agreement for periods prior to the
Settlement Date directly between themselves on the Settlement Date.
7. Each of the parties to this Assignment and Assumption Agreement
agrees that at any time and from time to time upon the written request of any
other party, it will execute and deliver such further documents and do such
further acts and things as such other party may reasonably request in order to
effect the purposes of this Assignment and Assumption Agreement.
8. This Assignment and Assumption Agreement shall be governed by, and
construed in accordance with, the Laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Assignment and Assumption
Agreement, as of the date first above written, such execution also being made on
Annex I hereto.
[NAME OF ASSIGNOR]
as Assignor
By:____________________
Title:
[NAME OF ASSIGNEE]
By:____________________
Title:
CONSENTED TO AND ACKNOWLEDGED:
ING (U.S.) CAPITAL CORPORATION
as Agent
By:________________________________
Title: