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EXHIBIT 10.1
CREDIT AGREEMENT
AMONG
NORWEST BANK TEXAS, NATIONAL ASSOCIATION,
AS LENDER
AND
▇▇▇▇▇▇▇▇▇ ENERGY, INC.,
AS BORROWER
AND
▇▇▇▇▇▇▇▇▇ DRILLING COMPANY,
▇▇▇▇▇▇▇▇▇ PETROLEUM, INC.,
AND
▇▇▇▇▇▇▇▇▇ PETROLEUM TRADING COMPANY, INC.,
AS GUARANTORS
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 CERTAIN DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 OTHER DEFINITIONAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II
CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 SHORT-TERM CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 MINIMUM AMOUNT OF EACH ADVANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 COMMITMENT FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 BORROWING NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 LONG-TERM CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 INTEREST RATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 INTEREST PAYMENT DATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.8 INTEREST BASIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.9 DEFAULT RATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.10 METHOD OF PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.11 PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 INITIAL ADVANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 EACH ADVANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV
SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 SECURITY AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE V
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 CORPORATE EXISTENCE AND STANDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 AUTHORIZATION AND VALIDITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 NO CONFLICT; GOVERNMENT CONSENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.4 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.5 MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.6 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.7 LITIGATION AND CONTINGENT OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.8 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.9 ACCURACY OF INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.10 REGULATION U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.11 MATERIAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.12 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.13 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.14 LICENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.15 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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ARTICLE VI
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 FINANCIAL REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.2 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.3 NOTICE OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.4 CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.5 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.6 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.7 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.8 MAINTENANCE OF PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.9 INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.10 MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.11 ACCOUNT PAYABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.12 DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.13 INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.14 SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.15 SALE AND LEASEBACK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.16 GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.17 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.18 LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.19 CASH FLOW COVERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.20 DEBT TO TANGIBLE NET WORTH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.21 CURRENT RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.22 NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.23 PRIMARY DEPOSITORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.24 PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII
DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS, REMEDIES, AND SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1 ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.2 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.3 PRESERVATION OF RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.4 SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IX
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.1 SURVIVAL OF REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.2 GOVERNMENTAL REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.3 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.4 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.5 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.6 BENEFITS OF THIS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.7 EXPENSES; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.8 ACCOUNTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.9 SEVERABILITY OF PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.10 NONLIABILITY OF LENDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.11 CHOICE OF LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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9.12 CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.13. WAIVER OF JURY TRIAL24
9.14 MAXIMUM INTEREST RATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.15 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.16 INDEMNIFICATION REGARDING ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.17 SURVIVAL OF REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.18 GOVERNMENTAL REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.19 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.20 PERMITTED PARTICIPANTS: EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.21 DISSEMINATION OF INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.22 BUSINESS DAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.23 FINAL AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.24 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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LIST OF EXHIBITS
EXHIBIT "A" GUARANTY
EXHIBIT "B" NOTE
EXHIBIT "C" SECURITY AGREEMENT
EXHIBIT "D" FORM OF OPINION OF COUNSEL
EXHIBIT "E" COMPLIANCE CERTIFICATE
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of December 9, 1997, and is by and
among ▇▇▇▇▇▇▇▇▇ ENERGY, INC., A DELAWARE CORPORATION (THE "BORROWER");
▇▇▇▇▇▇▇▇▇ DRILLING COMPANY, A DELAWARE CORPORATION ("PDC"); ▇▇▇▇▇▇▇▇▇
PETROLEUM, INC., A TEXAS CORPORATION ("PPI"); AND ▇▇▇▇▇▇▇▇▇ PETROLEUM TRADING
COMPANY, INC., A TEXAS CORPORATION ("PPTC"); and NORWEST BANK TEXAS, NATIONAL
ASSOCIATION, a national banking association (THE "BANK").
RECITALS:
WHEREAS, the Borrower has requested the Bank to extend an advancing,
non-revolving credit to it in an amount not to exceed $60,000,000 until May 31,
1998, when all amounts due to the Bank will become payable on a seven-year,
level-principal amortization schedule with a final maturity on January 1, 2001
(the "Credit"); and
WHEREAS, the Bank is willing to make the Credit available to the
Borrower subject to the provisions of this Credit Agreement;
WHEREAS, the Credit is in substitution of, and certain proceeds of
which will retire amounts due under, the Existing Agreement on the Closing Date
(as defined in Section 1.1 hereof).
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
In addition to terms defined in the above recitals, as used herein:
"ADVANCE" means any disbursement to or on behalf of the Borrower under
this Agreement, including, without limitation, all amounts advanced under the
Note.
"AGREEMENT" means this Credit Agreement and all amendments and
supplements to it which become effective hereafter in accordance with its
terms.
"ARTICLE" means an article of this Agreement unless another document
is specifically referenced.
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"AUTHORIZED OFFICER" means any of the Chairman of the Board and Chief
Executive Officer, the President and Chief Operating Officer, or the Vice
President - Finance, Chief Financial Officer, Treasurer, and Secretary of the
Borrower, acting singly.
"BORROWED MONEY" means funds obtained by incurring contractual
indebtedness and shall not include trade accounts payable or money borrowed
from the Bank.
"BORROWING DATE" means a date on which an Advance is made hereunder.
"BORROWING NOTICE" is defined in Article II.
"BUSINESS DAY" means every day (other than Saturday and Sunday) on
which the Bank is open to the public generally for the transaction of business
in Wichita Falls, Texas.
"CAPITALIZED LEASE" of a Person means any lease of Property by the
Person as lessee which would be capitalized on a balance sheet of the Person
prepared in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of the Person under Capitalized Leases which would be shown as a
liability on a balance sheet of the Person prepared in accordance with GAAP.
"CASH FLOW" means, for any 12-month period ending on the last day of
any quarterly fiscal period of the Borrower, the aggregate amount of the
following items properly shown on its income statement, determined in
accordance with GAAP: net income after taxes plus (i) amortization,
depreciation, and depletion expenses; less (ii) dividends, extraordinary
income, and noncash charges against income, which the Bank determines, in its
sole discretion, to be appropriate.
"CHANGE" is defined in Article II.
"CLOSING DATE" means the date of this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed,
or otherwise modified from time to time.
"COMMITMENT" means the obligation of the Bank to make Advances not
exceeding $60,000,000.
"COMMITMENT TERMINATION DATE" means May 31, 1998.
"CONDEMNATION" is defined in Article VII.
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"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, with the Borrower or any of its Subsidiaries, are or were
treated as a single employer under Section 414 of the Code.
"CURRENT ASSETS" means the aggregate amount of the Borrower's assets
on a consolidated basis properly shown as current assets on its balance sheet,
determined in accordance with GAAP, less (i) receivables, loans, and other
amounts due from any shareholder, director, officer, or employee of the
Borrower; and (ii) receivables, loans, and other amounts due from any other
related or affiliated person, corporation, partnership, trust, or other entity
of the Borrower.
"CURRENT LIABILITIES" means the aggregate amount of the Borrower's
liabilities on a consolidated basis properly shown as current liabilities on
its balance sheet, determined in accordance with GAAP.
"CURRENT MATURITIES OF LONG-TERM DEBT" means that portion of the
Borrower's Long-Term Debt that matures or is scheduled to be paid during the
next four fiscal quarters.
"DEBT" means the aggregate amount of all of the Borrower's liabilities
on a consolidated basis properly shown as liabilities on its balance sheet,
determined in accordance with GAAP.
"DEFAULT" means an event described in Article VII.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ENVIRONMENTAL LAWS" is defined in Article V.
"ENVIRONMENTAL MATTERS" is defined in Article V.
"EXISTING AGREEMENT" means that certain Credit Agreement dated as of
June 3, 1997, among the Borrower, the Bank, the Guarantors, and ▇▇▇▇▇▇▇▇▇
Drilling Programs, Inc.
"FINAL MATURITY DATE" means January 1, 2001.
"GAAP" means generally accepted accounting principles as in effect
from time to time, applied in a manner consistent with those used in preparing
the financial statements referred to in Section 5.4 hereof.
"GUARANTORS" means PDC, PPI, and PPTC.
"GUARANTY" means that guaranty dated as of this Agreement in the form
attached hereto as Exhibit "A" and executed and delivered to the Bank by the
Guarantors on the Closing Date.
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"INDEBTEDNESS" means as to the Borrower or any Subsidiary all items of
indebtedness, obligations, or liabilities, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several, all as
determined in accordance with GAAP.
"LENDING INSTITUTION" means any office, branch, subsidiary, or
affiliate of the Bank.
"LETTER OF CREDIT" of a Person means a letter of credit or similar
instrument which is issued upon the application of the Person or upon which the
Person is an account party or for which the Person is in any way liable.
"LIBOR RATE" shall mean, for any one-month period commencing on a
Payment Date, an interest rate per annum equal to the one-month LIBOR rate as
published in the "Money Rates" section of The Wall Street Journal on the second
business day preceding the first day of such Payment Date.
"LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, or preference,
priority, or other security agreement or preferential arrangement (including,
without limitation, the interest of a vendor or lessor under any conditional
sale, Capitalized Lease, or other title retention agreement).
"LOAN DOCUMENTS" means this Agreement, the Note, the Security
Agreement, the Guaranty, and other agreements, documents, certificates,
letters, and instruments delivered or executed by the Borrowers and the
Guarantors pursuant to, or in connection with, this Agreement, as any of them
may hereafter be amended, supplemented, or restated, and all future renewals
and extensions or restatements of, or amendments or supplements to, any of the
foregoing.
"LONG-TERM CREDIT" is defined in Article II.
"LONG-TERM DEBT" shall mean the aggregate amount of the Borrower's
liabilities on a consolidated basis properly shown as non-current liabilities
on its balance sheet, determined in accordance with GAAP, as of the last day of
any quarter.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, Property, or financial condition, or results of operations, of the
Borrower and the Subsidiaries taken as a whole; or (ii) the ability of the
Borrower to perform its obligations under the Loan Documents.
"MATURITY DATE" means January 1, 2001.
"MAXIMUM RATE" is defined in Article IX.
"MULTI-EMPLOYER PLAN" means a Plan maintained pursuant to a collective
bargaining agreement to which the Borrower or any member of the Controlled
Group is a party and to which more than one employer is or was obligated to
make contributions.
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"NET WORTH" means the aggregate amount of the Borrower's consolidated
assets on its balance sheet minus the aggregate amount of the Borrower's
consolidated liabilities on its balance sheet, determined in accordance with
GAAP.
"NOTE" means a promissory note in substantially the form of Exhibit
"B" hereto, duly executed and delivered by the Borrower and payable to the
order of the Bank in the amount of its Commitment, including any amendment,
modification, renewal, or replacement of the promissory note.
"OBLIGATION" means all unpaid principal of and accrued and unpaid
interest on the Note, all accrued and unpaid fees, and all expenses,
reimbursements, indemnities, and other obligations of the Borrower to the Bank
or any indemnified party hereunder arising under the Loan Documents.
"PARTICIPANTS" is defined in Article IX.
"PAYMENT DATE" means the first day of each calendar month.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PERSON" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust, or other entity or organization,
or any governmental or political subdivision, or any agency, department, or
instrumentality thereof.
"PLAN" means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code as to which the Borrower or any member of the Controlled Group may
have any liability.
"PROPERTY" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of the Person, or other assets owned,
leased, or operated by the Person.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of the Board of Governors relating
to extension of credit by banks to purchase or carry margin stocks applicable
to member banks of the Federal Reserve System.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043
or 4063(a) of ERISA and the regulations issued under it with respect to a Plan,
excluding, however, events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the event, but a failure to meet the minimum funding standard of Section 412 of
the Code and of Section 302 of ERISA shall be a Reportable Event regardless of
any waiver of the notice requirement in accordance with either Section 4043(a)
of ERISA or Section 412(d) of the Code.
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"SECTION" means a numbered section of this Agreement, unless another
document is specifically referenced.
"SECURITY AGREEMENT" means that security agreement dated as of the
date of this Agreement in the form attached hereto as Exhibit "C" and executed
and delivered to the Bank by PDC on the Closing Date.
"SHORT-TERM CREDIT" is defined in Article II.
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Borrower and/or
any member of the Controlled Group for employees of the Borrower or any member
of the Controlled Group, and any Multi-employer Plan covering any employees of
the Borrower and/or the Controlled Group.
"SUBSIDIARY" of a Person means (i) any corporation more than 50
percent of the outstanding securities having ordinary voting power of which is
at the time owned or controlled, directly or indirectly, by the Person or by
one or more of its Subsidiaries, or by the Person and one or more of its
Subsidiaries; or (ii) any partnership, association, joint venture, or similar
business organization more than 50 percent of the ownership interests having
ordinary voting power of which is at the time so owned or controlled. Unless
otherwise expressly provided, all references herein to a "Subsidiary" shall
mean a Subsidiary of the Borrower.
"SUBSTANTIAL PORTION" means, with respect to the Property of the
Borrower and the Subsidiaries, Property which (i) represents more than 10
percent of the consolidated assets of the Borrower and the Subsidiaries as
shown in the consolidated financial statements of the Borrower and the
Subsidiaries prepared in accordance with GAAP as of the end of the most recent
fiscal quarter before the date of determination; or (ii) produces more than 10
percent of the consolidated net sales or the consolidated net income of the
Borrower and the Subsidiaries as reflected in the financial statements referred
to in clause (i) above.
"TANGIBLE NET WORTH" means Net Worth minus the aggregate amount of the
Borrower's items on a consolidated basis properly shown as the following types
of assets on its balance sheet, determined in accordance with GAAP: (i)
goodwill, patents, copyrights, mailing lists, trade names, trademarks,
servicing rights, organizational and franchise costs, bond underwriting costs,
and similar assets properly classified as intangible; (ii) leasehold
improvements; (iii) receivables, loans, and other amounts due from any
shareholder, director, officer, or employee of the Borrower, and receivables,
loans, and other amounts due from any other related or affiliated person,
corporation, partnership, trust, or other entity of the Borrower (other than
those created in the normal course of business); and (iv) investments or
interests in non-public companies, cooperatives, or partnerships.
"TRANSFEREE" is defined in Article IX.
"UNFUNDED LIABILITIES" means the accumulated funding deficiency as
that term is defined in Code Section 412(a), for each Single Employer Plan or
Multi-employer Plan covering any
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employees of the Borrower and/or any member of the Controlled Group, determined
as of the end of the most recent plan year for each Plan.
"UNMATURED DEFAULT" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the
above-described meanings when used in any other Loan Documents or in
any certificate, report, or other document made or delivered pursuant
to this Agreement, unless the context otherwise expressly requires.
(b) Terms used herein in the singular shall import the plural
and vice versa.
(c) The words "hereof," "herein," "hereinafter,"
"hereinabove," "hereto," "hereunder," and similar terms in this
Agreement shall refer to this Agreement as a whole and not to any
particular provisions.
(d) In this Agreement, in computing periods of time from a
specified date to a later specified date, the word "from" means "from
and including," and the words "to" and "until" each mean "to but
excluding."
(e) All accounting terms not specifically defined herein
shall be construed in accordance with GAAP.
ARTICLE II
CREDIT FACILITIES
2.1 SHORT-TERM CREDIT. From and including the date of this
Agreement and to and including the Commitment Termination Date, the Bank
agrees, on the terms and conditions of this Agreement, to make Advances from
time to time in amounts not to exceed the Commitment (the "Short-Term Credit").
Interest only is payable on the Short-Term Credit. The Bank is hereby
authorized to record the principal amount of each of its Advances on the
schedule attached to the Note.
2.2 MINIMUM AMOUNT OF EACH ADVANCE. Each Advance shall be in the
minimum amount of $100,000.
2.3 COMMITMENT FEE. The Borrower agrees to pay the Bank on the
Commitment Termination Date a fee of 0.25 percent of any portion of the
Commitment which was not advanced to the Borrower.
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2.4 BORROWING NOTICE. The Borrower shall give the Bank
irrevocable notice (the "Borrowing Notice") not later than 10:00 A.M. (Wichita
Falls, Texas, time) at least two Business Days before the Borrowing Date for
each Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of
the Advance, and
(ii) the amount of the Advance.
The Bank will make the funds comprising each Advance available to the
Borrower no later than noon (Wichita Falls, Texas, time) on each Borrowing
Date.
2.5 LONG-TERM CREDIT. On the Commitment Termination Date, the
Bank agrees, on the terms and conditions of this Agreement, to convert all the
outstanding Advances comprising the Short-Term Credit into a long-term credit
(the "Long-Term Credit"). The Long-Term Credit will mature on the Maturity
Date and is payable in monthly installments commencing on July 1, 1998, each
equal to 1/84 of the principal amount outstanding under the Note on May 31,
1998. A final payment of all remaining outstanding principal plus accrued
interest shall be due and payable on the Maturity Date.
2.6 INTEREST RATE. Interest on the unpaid principal amount of the
Note shall be calculated at an annual rate equal to the LIBOR Rate plus 2.375
percent, which rate will change on each Payment Date. If for any reason the
Bank determines that adequate and reasonable means do not exist for
ascertaining the LIBOR Rate, the Bank shall establish in good faith an
alternative interest rate index which will result in an overall interest rate
which approximates as closely as possible the interest rate that would have
been determined under this Section.
2.7 INTEREST PAYMENT DATES. Interest accrued on each Advance
under the Short-Term Credit shall be payable on each Payment Date, commencing
with the first Payment Date after the date hereof, on any date on which the
Short-Term Credit is prepaid, whether by acceleration or otherwise, and on May
31, 1998. Interest accrued on the Long-Term Credit shall be payable on each
Payment Date commencing after June 30, 1998, on any date on which the Long-Term
Credit is prepaid, whether by acceleration or otherwise, and on the Maturity
Date. If any payment of principal of or interest on the Credit becomes due on a
day which is not a Business Day, the payment shall be made on the next Business
Day, and, in the case of a principal payment, the extension of time shall be
included in computing interest for the payment.
2.8 INTEREST BASIS. Interest shall be calculated for actual days
elapsed on the basis of a 365-day year.
2.9 DEFAULT RATE. If any portion of the Note is not paid when due
and payable, whether by acceleration or otherwise, it shall bear interest until
paid in full at a rate per annum equal to the interest rate provided in Section
2.6 hereof on the Note plus 2 percent per annum.
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2.10 METHOD OF PAYMENT. All payments of the Obligations hereunder
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Bank at the Bank's address specified in Article IX, by
noon (Wichita Falls, Texas, time) on the date when due. The Bank shall send
the Borrower statements of all amounts due under this Agreement, which shall be
conclusively binding on the Borrower, unless the Borrower notifies the Bank to
the contrary within 15 days of the receipt of such a statement that the
Borrower deems to be incorrect.
2.11 PREPAYMENT. Upon at least 30 days prior written notice, all
or a portion of the Credit may be prepaid without premium or penalty.
ARTICLE III
CONDITIONS PRECEDENT
3.1 INITIAL ADVANCE. The Bank shall not be required to make the
initial Advance hereunder unless the Borrower has furnished to the Bank:
(i) Copies of the articles of incorporation of the Borrower
and each of the Guarantors, together with all amendments thereto, and
certificates of good standing, all of which are certified by the
appropriate governmental officer in their jurisdictions of
incorporation.
(ii) Copies, certified by the Secretary or Assistant
Secretary of the Borrower and each of the Guarantors, of their bylaws
and of their Boards of Directors' resolutions authorizing the
execution of the Loan Documents.
(iii) Incumbency certificates, executed by the Secretary or
Assistant Secretary of the Borrower and each of the Guarantors, which
identify by name and title and bear the signature of the officers of
the Borrower and each of the Guarantors authorized to sign the Loan
Documents and to make borrowings hereunder, upon which certificate the
Bank shall be entitled to rely until informed of any change in writing
by the Borrower.
(iv) Evidence, in form and substance satisfactory to the
Bank, that the Borrower and each of the Guarantors have obtained all
governmental approvals necessary for them to enter into the Loan
Documents.
(v) A written opinion of the Borrower's counsel, addressed to
the Bank, in substantially the same form attached hereto as Exhibit
"D" and satisfactory to counsel to the Bank.
(vi) Executed Note payable to the order of the Bank.
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(vii) Written money transfer instructions addressed to the
Bank and signed by an Authorized Officer, with any other money
transfer authorizations the Bank has reasonably requested.
(viii) Evidence, in form and substance satisfactory to the
Bank, of the termination of the Existing Agreement and the repayment
in full of all outstanding obligations of the Borrower thereunder,
including the return to the Borrower of the original promissory note
evidencing the obligations created by the Existing Agreement marked
paid in full and cancelled.
(ix) Executed Guaranty.
(x) Executed Security Agreement.
(xi) Financing Statement to be filed with the Secretary of
State of Texas.
(xii) Financing Statement to be filed with the Secretary of
State of New Mexico.
(xiii) Financing Statement to be filed with the Oklahoma
County Clerk in Oklahoma City.
(xiv) The consolidated and consolidating financial
statements of the Borrower and the Subsidiaries for the nine-month
period ending September 30, 1997.
(xv) Any other documents the Bank or its counsel has
reasonably requested.
3.2 EACH ADVANCE. The Bank shall not be required to make any
Advance, unless on the applicable Borrowing Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties in Article V are true
and correct as of the Borrowing Date.
(iii) All legal matters incident to making the Advance are
satisfactory to the Bank and its counsel.
Each Borrowing Notice for each Advance shall constitute a
representation and warranty by the Borrower that the conditions in Sections
3.2(i) and (ii) have been satisfied.
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ARTICLE IV
SECURITY
4.1 SECURITY INTEREST. The Note shall be an unsecured obligation
of the Borrower.
4.2 GUARANTY. The Borrower shall cause to be executed and
delivered to the Bank the Guaranty from each of the Guarantors, whereby each
Guarantor shall guaranty the obligations of the Borrower to the Bank.
4.3 SECURITY AGREEMENT. The Borrower shall cause to be executed
and delivered to the Bank from PDC the Security Agreement, whereby PDC will
secure its Obligations to the Bank under the Guaranty.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower and the Guarantors hereby, each Guarantor for itself and
not one for the other, represent and warrant to the Bank as follows and
acknowledge that the Bank is relying on these representations and warranties in
connection with the transactions contemplated by this Agreement:
5.1 CORPORATE EXISTENCE AND STANDING. Each of the Borrower and
the Guarantors is a corporation duly incorporated, validly existing, and in
good standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted.
5.2 AUTHORIZATION AND VALIDITY. Each of the Borrower and the
Guarantors has the corporate power and authority and legal right to execute and
deliver the Loan Documents and to perform its obligations thereunder. The
execution and delivery of the Borrower and the Guarantors of the Loan Documents
and the performance of their obligations thereunder have been duly authorized
by proper corporate proceedings, and the Loan Documents constitute legal,
valid, and binding obligations of the Borrower and the Guarantors enforceable
against each of them in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance, or similar
laws affecting the enforcement of creditors' rights generally.
5.3 NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and
delivery by each of the Borrower and the Guarantors of the Loan Documents, nor
the consummation of the transactions therein contemplated, nor compliance with
the provisions thereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree, or award binding on the Borrower or any of the
Guarantors or the Borrower's or any Guarantor's articles or certificate of
incorporation or bylaws or any indenture, instrument, or agreement to which the
Borrower or any of the Guarantors is a party or is subject, or by which they
are, or their Property is, bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien in, of, or on
the Property of
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the Borrower or a Guarantor pursuant to any such indenture, instrument, or
agreement, other than the Lien created by the Loan Documents and other than any
such violations, conflicts, or defaults that would not reasonably be expected
to have a Material Adverse Effect. No order, consent, approval, license,
authorization, or validation of, or filing, recording, or registration with, or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with the
execution, delivery, and performance of, or the legality, validity, binding
effect, or enforceability of, any of the Loan Documents, except for (a) the
filing of financing statements and the Security Agreement, (b) in connection,
or in compliance, with the provisions of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, and (c) such other orders, consents,
approvals, licenses, authorizations, validations, filings, recordings,
registrations, and exemptions the failure of which to be obtained or made would
not reasonably be expected to have a Material Adverse Effect.
5.4 FINANCIAL STATEMENTS. The audited consolidated financial
statements of the Borrower and the Guarantors for the 12-month period ending
December 31, 1996, and the consolidated and consolidating financial statements
of the Borrower and the Guarantors for the nine-month period ending September
30, 1997, heretofore delivered to the Bank, were prepared in accordance with
GAAP in effect when the statements were prepared and fairly present the
consolidated and consolidating (for the period ending September 30, 1997)
financial condition and operations of the Borrower and the Guarantors at those
dates and the consolidated results of their operations for the periods then
ended.
5.5 MATERIAL ADVERSE CHANGE. Since September 30, 1997, there has
been no change in the business, Property, condition (financial or otherwise),
or results of operations of the Borrower and the Guarantors which could
reasonably be expected to have a Material Adverse Effect.
5.6 TAXES. The Borrower and the Guarantors have filed all United
States federal tax returns and all other tax returns due before the date hereof
and have paid all taxes due pursuant to these returns or pursuant to any
assessment received by the Borrower or any of the Guarantors, except any taxes
being contested in good faith and as to which adequate reserves have been
provided. No tax liens have been filed, and no claims are being asserted for
any such taxes. The charges, accruals, and reserves on the books of the
Borrower and the Guarantors for any taxes or other governmental charges are
adequate.
5.7 LITIGATION AND CONTINGENT OBLIGATIONS. There is no
litigation, arbitration, governmental investigation, proceeding, or inquiry
pending or, to the knowledge of any of their officers, threatened against or
affecting the Borrower or any of the Guarantors which would reasonably be
expected to have a Material Adverse Effect. Other than any liability incident
to such litigation, arbitration, or proceedings, the Borrower has no material
contingent obligations not provided for or disclosed in the financial
statements referred to in Section 5.4.
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5.8 ERISA. The Unfunded Liabilities of all Single Employer Plans
do not in the aggregate exceed $1,000,000. Each Plan complies in all material
respects with all applicable requirements of law and regulations, no Reportable
Event has occurred with respect to any Plan, neither the Borrower nor any other
members of the Controlled Group have withdrawn from any Plan or initiated steps
to do so, and no steps have been taken to reorganize, terminate, or freeze any
Plan except for the ▇▇▇▇▇▇ Cattle Company, Inc., Profit Sharing Plan. Neither
the Borrower nor any other member of the Controlled Group has been a party to
any Multi-employer Plan.
5.9 ACCURACY OF INFORMATION. No information, exhibit, or report
furnished by the Borrower or any of the Guarantors to the Bank in connection
with the negotiation of, or compliance with, the Loan Documents contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements therein not misleading.
5.10 REGULATION U. Margin stock (as defined in Regulation U)
constitutes less than 25 percent of the assets of the Borrower and the
Guarantors which are subject to any limitation on sale, pledge, or other
restriction hereunder.
5.11 MATERIAL AGREEMENTS. Neither the Borrower nor any Guarantor
is in default in the performance, observance, or fulfillment of any
obligations, covenants, or conditions in any agreement to which it is a party
(other than any agreement or instrument evidencing or governing Indebtedness),
which default could reasonably be expected to have a Material Adverse Effect.
5.12 COMPLIANCE WITH LAWS. The Borrower and the Guarantors have
complied in all material respects with all applicable statutes, rules,
regulations, orders, and restrictions of any domestic or foreign government or
any instrumentality or agency thereof having jurisdiction over the conduct of
their respective businesses or the ownership of their respective Property.
Neither the Borrower nor any Guarantor has received any notice that its
operations are not in material compliance with any applicable federal, state,
and local environmental, health, and safety statutes and regulations or the
subject of any federal or state investigation evaluating whether remedial
action is needed to respond to a release of any toxic or hazardous waste or
substance into the environment, which non-compliance or remedial action could
reasonably be expected to have a Material Adverse Effect.
5.13 LIENS. The Property of the Borrower and each Guarantor is not
subject to any Lien except:
(a) Liens for taxes, assessments, or governmental charges or
levies if they are not then delinquent or thereafter can be paid
without penalty, or are being contested in good faith and by
appropriate proceedings;
(b) Liens imposed by law, such as carriers', warehousemen's,
and mechanics' liens and other similar liens arising in the ordinary
course of business, which secure payment of
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obligations not more than 60 days past due, or are being contested in
good faith and by appropriate proceedings;
(c) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation;
(d) Utility easements, building restrictions, and any other
encumbrances or charges against real property which generally exist
for properties of a similar character and which do not in any material
way affect their marketability or interfere with their use in the
business of the Borrower or the Guarantors;
(e) Liens existing on the date hereof and listed in the
Borrower's consolidated financial statements described in Section 5.4
of this Agreement;
(f) Liens of the Bank or any of its predecessors-in-interest;
(g) Liens of The CIT Group/Equipment Financing, Inc. securing
obligations that have been paid in full and for which a termination
statement has been executed and forwarded to the Office of the
Secretary of State of Texas for filing;
(h) Liens of ▇▇▇▇▇▇ National Bank securing obligations that
have been paid in full and for which a termination statement has been
executed and forwarded to the Office of the Secretary of State of
Texas for filing; and
(i) Liens created under operating agreements with respect to
oil or gas ▇▇▇▇▇.
5.14 LICENSES. The Borrower and each Guarantor possess adequate
licenses, permits, franchises, patents, copyrights, trademarks, and trade
names, or rights thereto, to conduct their businesses substantially as now
conducted and as presently proposed to be conducted.
5.15 ENVIRONMENTAL MATTERS. To their knowledge, the Borrower and
each Guarantor have obtained all material permits, licenses, and other
authorizations which are required under federal, state, and/or local laws
("Environmental Laws") relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, and hazardous or toxic materials or
wastes into ambient air, surface water, groundwater, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or hazardous or
toxic materials or wastes ("Environmental Matters"). To their knowledge, the
Borrower and each Guarantor are in compliance in all material respects with all
terms and conditions of the required permits, licenses, and authorizations and
are also in full compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables in the Environmental Laws or in any plan, order, decree, judgment,
or notice. To their knowledge,
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no events, conditions, circumstances, activities, practices, incidents,
actions, or plans have occurred on the Borrower's or any Guarantor's Property
which may interfere with or prevent continued compliance or which may give rise
to any liability under any Environmental Laws or the common law. The Borrower
and the Guarantors have received no summons, citation, directive, letter, or
other communication, written or oral, from any agency or department of any
state, federal, or local government relating to any Environmental Matters or
any alleged Environmental Matters. No investigation, administrative order,
consent order and agreement, litigation, or settlement with respect to any
Environmental Matters or any alleged Environmental Matters has been received by
the Borrower or any Guarantor or, to the best of their knowledge, is proposed,
threatened, anticipated, or in existence with respect to the Borrower or the
Guarantors.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Bank otherwise consents
in writing:
6.1 FINANCIAL REPORTING. The Borrower will maintain, for itself
and each Guarantor, a system of accounting established and administered in
accordance with GAAP and furnish to the Bank:
(i) Within 95 days after the close of each of its fiscal
years, an unqualified (except for qualifications relating to changes
in accounting principles or practices reflecting changes in GAAP and
required or approved by the Borrower's independent certified public
accountants) audit report certified by nationally recognized
independent certified public accountants, prepared in accordance with
GAAP on a consolidated basis for itself and the Subsidiaries.
(ii) Within 50 days after the close of the first three
quarterly periods of each of its fiscal years, for itself and the
Subsidiaries, consolidated reviewed balance sheets at the close of
each such period and consolidated profit and loss and a statement of
cash flows from the beginning of the fiscal year to the end of the
quarter, all certified by an Authorized Officer.
(iii) Simultaneously with the submission of the financial
information required by Section 6.1(i) and (ii) hereof, a Compliance
Certificate in substantially the form of Exhibit "E" hereto executed
by the Chief Financial Officer of the Borrower.
(iv) As soon as possible and in any event within 10 days
after the Borrower knows that any Reportable Event has occurred with
respect to any Plan, a statement, signed by an Authorized Officer,
describing the Reportable Event and the action which the Borrower
proposes to take with respect thereto.
(v) As soon as possible and in any event within 10 days after
receipt by the Borrower, a copy of (a) any notice or claim that the
Borrower or any of the Subsidiaries is
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or may be liable to any Person as a result of the release by the
Borrower, any of its Subsidiaries, or any other Person of any toxic or
hazardous waste or substance into the environment; and (b) any notice
alleging any violation of any federal, state, or local environmental,
health, or safety law or regulation by the Borrower or any of its
Subsidiaries, which, in either case, could reasonably be expected to
have a Material Adverse Effect.
(vi) Promptly after the furnishing thereof to the
shareholders of the Borrower, copies of all financial statements,
reports, and proxy statements so furnished.
(vii) Promptly after the filing thereof, copies of all
registration statements and annual, quarterly, monthly, or other
regular reports which the Borrower or any of the Subsidiaries files
with the Securities and Exchange Commission.
(viii) Any other information (including non-financial
information) the Bank reasonably requests.
6.2 USE OF PROCEEDS. The Borrower and its Subsidiaries will use
the proceeds of the Advances to acquire or make improvements to drilling rigs,
rolling stock, and related drilling equipment, to pay all amounts due under
the Existing Agreement, and to acquire other drilling companies or the assets
related to their drilling operations. The Borrower will not use the proceeds
of the Advances for general corporate purposes without prior written permission
of the Bank. The Borrower will not, nor will it permit any Subsidiary to, use
any of the proceeds of the Advances to purchase or carry any "margin stock" (as
defined in Regulation U).
6.3 NOTICE OF DEFAULT. The Borrower will, and will cause each
Subsidiary to, give notice in writing to the Bank within five Business Days of
the occurrence of any Default or Unmatured Default. The Borrower and the
Subsidiaries shall not be required to make separate disclosure under this
Section 6.3 of occurrences or developments which have previously been disclosed
to the Bank in any financial statements or other information delivered to the
Bank pursuant to Section 6.1.
6.4 CONDUCT OF BUSINESS. The Borrower will, and will cause each
Guarantor to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as presently
conducted and do all things necessary to remain duly incorporated, validly
existing, and in good standing as a domestic corporation in its jurisdiction of
incorporation and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted.
6.5 TAXES. The Borrower will, and will cause each Subsidiary to,
pay when due all taxes, assessments, and governmental charges and levies upon
it or its income, profits, or Property, except those contested in good faith by
appropriate proceedings and for which adequate reserves have been set aside.
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6.6 INSURANCE. The Borrower will, and will cause each Subsidiary
to, adequately insure its and their Properties of an insurable nature by
reputable and solvent insurance companies against loss or damages customarily
insured against by Persons operating similar properties and similarly situated,
and carry other insurance as usually carried by Persons engaged in the same or
similar business and similarly situated, and the Borrower will furnish to the
Bank upon request full information as to the insurance carried.
6.7 COMPLIANCE WITH LAWS. The Borrower will, and will cause each
Subsidiary to, comply in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees, or awards to which
it may be subject.
6.8 MAINTENANCE OF PROPERTIES. The Borrower will, and will cause
each Subsidiary to, do all things necessary to maintain, preserve, protect, and
keep its Property in good repair, working order, and condition, normal wear and
tear excepted.
6.9 INSPECTION. The Borrower will, and will cause each Subsidiary
to, permit the Bank, by its representatives and agents, to inspect any of the
Property, corporate books, and financial records of the Borrower and each
Subsidiary, to examine and make copies of the books of accounts and other
financial records of the Borrower and each Subsidiary, and to discuss the
affairs, finances, and accounts of the Borrower and each Subsidiary at
reasonable times and intervals.
6.10 MERGER. The Borrower will not, nor will it permit any
Guarantor to, merge or consolidate with or into any other Person, unless, as
long as both immediately before and after giving effect to the merger or
consolidation, no Default or Unmatured Default has occurred and is continuing;
but (i) any Guarantor may merge with the Borrower or another Guarantor, (ii)
the Borrower or any Guarantor may merge or consolidate with any other Person as
long as the Borrower or the Guarantor is the surviving entity, and (iii) any
Guarantor may merge or consolidate with any other Person as long as the
surviving entity of the merger or consolidation is a Subsidiary.
6.11 ACCOUNT PAYABLE. The Borrower will, and will cause each
Guarantor to, pay all of its accounts payable within 120 days, except for any
accounts payable being disputed in good faith and for which, if requested by
the Bank, adequate reserves have been made.
6.12 DIVIDENDS. The Borrower will not, nor will it permit any
Guarantor to, declare or pay any dividends on its capital stock (other than
dividends payable in its own capital stock) or redeem, repurchase, or otherwise
acquire or retire any of its capital stock at any time outstanding, but any
Guarantor may declare and pay dividends to the Borrower.
6.13 INDEBTEDNESS. The Borrower will not, nor will it permit any
Guarantor to, create, incur, or suffer to exist any indebtedness for Borrowed
Money or Capitalized Lease Obligations, except:
(a) the Advances.
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(b) Indebtedness existing on the date hereof and listed in the
Borrower's consolidated financial statements described in Section 5.4
of this Agreement.
6.14 SALE OF ASSETS. The Borrower will not, nor will it permit any
Guarantor to, lease, sell, or otherwise dispose of all, or a substantial
portion, of its property, assets, or business to any other Person except for
sales of inventory in the ordinary course of business. The Borrower will not,
nor will it permit any Guarantor to, sell or otherwise dispose of any note
receivable or accounts receivable, with or without recourse, except to the
Borrower, PPI, or PDC.
6.15 SALE AND LEASEBACK. The Borrower will not, nor will it permit
any Guarantor to, sell or transfer any property in order to concurrently or
subsequently lease as lessee such or similar property.
6.16 GUARANTIES. The Borrower will not, nor will it permit any
Guarantor to, make or suffer to exist any guaranty (including, without
limitation, any guaranty of the obligations of a Guarantor), except by
endorsement of instruments for deposit or collection in the ordinary course of
business and except for the Obligations.
6.17 LIENS. The Borrower will not, nor will it permit any
Guarantor to, create, incur, or suffer to exist any Lien in, of, or on the
Property of the Borrower or any Guarantor, except:
(a) Liens for taxes, assessments, or governmental charges or
levies if they are not then delinquent or thereafter can be paid
without penalty, or are being contested in good faith and by
appropriate proceedings;
(b) Liens imposed by law, such as carriers', warehousemen's,
and mechanics' liens and other similar liens arising in the ordinary
course of business which secure payment of obligations not more than
60 days past due or are being contested in good faith and by
appropriate proceedings;
(c) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation;
(d) Utility easements, building restrictions, and any other
encumbrances or charges against real property which generally exist
for properties of a similar character and which do not in any material
way affect the marketability of the properties or interfere with their
use in the business of the Borrower or the Guarantors;
(e) Liens existing on the date hereof and listed in the
Borrower's consolidated financial statements described in Section 5.4
of this Agreement;
(f) Liens of the Bank or any of its predecessors-in-interest;
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(g) Liens of The CIT Group/Equipment Financing, Inc. securing
obligations that have been paid in full and for which a termination
statement has been executed and forwarded to the Office of the
Secretary of State of Texas for filing;
(h) Liens of ▇▇▇▇▇▇ National Bank securing obligations that
have been paid in full and for which a termination statement has been
executed and forwarded to the Office of the Secretary of State of
Texas for filing; and
(i) Liens created under operating agreements with respect to
oil or gas ▇▇▇▇▇.
6.18 LETTERS OF CREDIT. The Borrower will not, nor will it permit
any Guarantor to, apply for or become liable upon any Letter of Credit.
6.19 CASH FLOW COVERAGE. The Borrow will maintain the Borrower's
ratio of (i) Cash Flow to (ii) Current Maturities of Long-Term Debt plus
current Capital Lease Obligations, on a consolidated basis measured on the last
day of each quarterly fiscal period of the Borrower for the 12-month period
ending on that day, at not less than 2.0 to 1.0.
6.20 DEBT TO TANGIBLE NET WORTH. The Borrower will maintain the
Borrower's ratio of Debt to Tangible Net Worth, on a consolidated basis,
measured on the last day of each quarterly fiscal period of the Borrower, at
not more than 1.20 to 1.0.
6.21 CURRENT RATIO. The Borrower will maintain the Borrower's
ratio of Current Assets to Current Liabilities, on a consolidated basis,
measured on the last day of each quarterly fiscal period of the Borrower, at
not less than 1.25 to 1.0.
6.22 NET INCOME. The Borrower will maintain a positive net income
on a consolidated basis measured on the last day of each quarterly fiscal
period of the Borrower for the 12-month period ending on that day.
6.23 PRIMARY DEPOSITORY. The Borrower will maintain the Borrower's
and each Guarantor's primary operating accounts with the Bank.
6.24 PARTICIPATIONS. The Borrower shall cooperate with the
participation efforts of the Bank by providing information reasonably requested
by the Bank. This information may be distributed on a confidential basis to
selected financial institutions. In addition, representatives of the
Borrower's management shall be available for one or more bankers' meetings and
to answer questions during the participation process.
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ARTICLE VII
DEFAULT
The occurrence of any of the following events shall constitute a
Default:
7.1 Any representation or warranty made by or on behalf of the
Borrower or any Guarantor to the Bank under or in connection with this
Agreement, any Advance, or any certificate or information delivered in
connection with this Agreement or any other Loan Document is materially false
on the date as of which made.
7.2 Nonpayment of principal of the Note within five days after it
becomes due or nonpayment of interest upon the Note or of any other Obligations
within five days after it becomes due.
7.3 The breach by the Borrower of any terms or provisions of
Section 6.2 or 6.10.
7.4 The breach by the Borrower (other than a breach which
constitutes a Default under Section 7.1, 7.2, or 7.3) of any of the terms or
provisions of this Agreement which is not remedied within 30 days after written
notice from the Bank.
7.5 Failure of the Borrower and/or any Guarantor to pay
indebtedness for Borrowed Money in an aggregate principal amount exceeding
$100,000 when due; or the default by the Borrower and/or any Guarantor in the
performance of any term, provision, or condition in any agreement under which
indebtedness for Borrowed Money in an aggregate principal amount exceeding
$100,000 is outstanding, or any other event or condition, the effect of which
is to cause, or to permit the holder or holders of the aggregate indebtedness
for Borrowed Money to cause, the aggregate indebtedness for Borrowed Money in
excess of $100,000 to become due before its stated maturity; or the Borrower or
any Guarantor does not pay, or admits in writing its inability to pay, its
debts generally as they become due.
7.6 The Borrower or any Guarantor (i) has an order for relief
entered for it under the federal bankruptcy laws as now or hereafter in effect;
(ii) makes an assignment for the benefit of creditors; (iii) applies for,
seeks, consents to, or acquiesces in the appointment of a receiver, custodian,
trustee, examiner, liquidator, or similar official for it or any Substantial
Portion of its Property; (iv) institutes any proceeding seeking an order for
relief under the federal bankruptcy laws as now or hereafter in effect, or
seeking to adjudicate it a bankrupt or an insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment, or
composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization, or relief of debtors, or fails to file an answer or
other pleading denying the material allegations of any such proceeding filed
against it; (v) takes any corporate action to authorize or effect any of the
foregoing actions; or (vi) fails to contest in good faith any appointment or
proceeding described in Section 7.7.
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7.7 Without the application, approval, or consent of the Borrower
or any Guarantor, a receiver, trustee, examiner, liquidator, or similar
official is appointed for the Borrower or any Guarantor for any Substantial
Portion of the Property of the Borrower and the Guarantors, or a proceeding
described in Section 7.6(iv) is instituted against the Borrower or any
Guarantor, and the appointment continues undischarged or the proceeding
continues undismissed or unstayed for 60 consecutive days.
7.8 Any court, government, or governmental agency condemns,
seizes, or otherwise appropriates or takes custody or control of (each a
"Condemnation") all or any portion of the Property of the Borrower or any
Guarantors which, when taken together with all other Property of the Borrower
and the Guarantors so condemned, seized, appropriated, or taken custody or
control of, during the 12-month period ending with the month in which the
Condemnation occurs, constitutes a Substantial Portion of the Property of the
Borrowers and the Guarantors.
7.9 The Borrower or any Guarantor fails within 30 days to pay,
bond, or otherwise discharge any judgment or order for the payment of money in
excess of $500,000 which is not stayed on appeal or is otherwise appropriately
contested in good faith.
7.10 The Unfunded Liabilities of all Single Employer Plans exceed
in the aggregate $1,000,000; any Reportable Event occurs in connection with any
Plan; or the Borrower or any other member of the Controlled Group becomes party
to any Multi-employer Plan.
7.11 The Borrower or any Guarantor is the subject of any proceeding
pertaining to the release by the Borrower or any Guarantor, or any other
Person, of any toxic or hazardous waste or substance into the environment, or
any violation of any federal, state, or local environmental, health, or safety
law or regulation, which could reasonably be expected to have a Material
Adverse Effect unless it is being contested in good faith and by appropriate
proceedings.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS, REMEDIES, AND SETOFF
8.1 ACCELERATION. If any Default described in Section 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Bank to make
Advances hereunder shall automatically terminate, and the Obligations shall
immediately become due and payable without election or action on the part of
the Bank. If any other Default occurs, the Bank may terminate or suspend its
obligations to make Advances hereunder, or declare the Obligations to be due
and payable, or both; if the Bank declares the Obligations due and payable
after a Default occurs, then the Obligations shall become immediately due and
payable, without presentment, demand, protest, or notice of any kind, all of
which the Borrower hereby expressly waives.
If, within 30 days after acceleration of the maturity of the
Obligations or termination of the obligation of the Bank to make Advances
hereunder as a result of any Default (other than any Default as described in
Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or
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decree for the payment of the Obligations due has been obtained or entered, the
Bank, by notice to the Borrower, may rescind and annul the acceleration and/or
termination.
8.2 AMENDMENTS. The Bank, the Borrower, and the Guarantors may
enter into agreements supplemental hereto to add or modify any provisions of
the Loan Documents or to change in any manner the rights of the Bank, the
Borrower, or the Guarantors or waive any Default hereunder.
8.3 PRESERVATION OF RIGHTS. No delay or omission of the Bank to
exercise any right under the Loan Documents shall impair the right or be
construed as a waiver of any Default or an acquiescence therein, and the making
of an Advance notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to the Advance shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment, or other variation of the terms,
conditions, or provisions of the Loan Documents shall be valid unless in
writing signed by the Bank, and then only to the extent specifically stated.
All remedies in the Loan Documents or afforded by law shall be cumulative, and
all shall be available to the Bank until the Obligations have been paid in
full.
8.4 SETOFF. In addition to, and without limitation of, any rights
of the Bank under applicable law, if the Borrower fails to pay any Obligations
when due hereunder, any deposits (including all account balances, whether
provisional or final, and whether or not canceled or available) at any time
held or owing by the Bank to or for the account of the Borrower or any
Guarantor in the Borrower's and the Guarantor's operating accounts may be
offset and applied toward the payment of the Obligations owing to the Bank; but
the Bank waives (and shall not have) any right of setoff against accounts
numbers 5140244244 and 5140259697 maintained by PPI with the Bank.
ARTICLE IX
GENERAL PROVISIONS
9.1 SURVIVAL OF REPRESENTATIONS. All representations and
warranties of the Borrower in this Agreement shall survive delivery of the Note
and the making of the Advances herein contemplated.
9.2 GOVERNMENTAL REGULATION. Anything in this Agreement to the
contrary notwithstanding, the Bank shall not be obligated to extend credit to
the Borrower in violation of any limitation or prohibition in any applicable
statute or regulation.
9.3 TAXES. Any taxes (excluding federal income taxes on the
overall net income of the Bank) or other similar assessments or charges payable
or ruled payable by any governmental authority in respect of the Loan Documents
shall be paid by the Borrower, with any interest and penalties.
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9.4 HEADINGS. Section headings in the Loan Documents are for
convenience of reference only and shall not govern the interpretation of any of
their provisions.
9.5 ENTIRE AGREEMENT. The Loan Documents embody the entire
agreement and understanding among the Borrower, the Guarantors, and the Bank
and supersede all prior agreements and understandings among the Borrower, the
Guarantors, and the Bank as to the subject matter thereof.
9.6 BENEFITS OF THIS AGREEMENT. This Agreement shall not be
construed to confer any right or benefit upon any Person other than the parties
to this Agreement and their respective successors and assigns.
9.7 EXPENSES; INDEMNIFICATION. The Borrower shall reimburse the
Bank for all reasonable costs and out-of- pocket expenses (including reasonable
attorneys' fees and reasonable time charges of attorneys for the Bank, who may
be employees of the Bank) paid or incurred by the Bank for the preparation,
negotiation, execution, delivery, review, amendment, modification, and
administration of the Loan Documents. The Borrower also agrees to reimburse the
Bank for all reasonable costs and out-of-pocket expenses (including reasonable
attorneys' fees and reasonable time charges of attorneys for the Bank, who may
be employees of the Bank) paid or incurred by the Bank for the collection and
enforcement of the Loan Documents. The Borrower further agrees to indemnify
the Bank, its directors, officers, and employees against all other losses,
claims, damages, penalties, judgments, liabilities, and reasonable expenses
(including, without limitation, all reasonable expenses of litigation or
preparation therefor) which any of them pay or incur arising out of or relating
to this Agreement, the other Loan Documents, the transactions contemplated
hereby, or the direct or indirect application or proposed application of the
proceeds of any Advance hereunder, except to the extent that any of the
foregoing arises out of the gross negligence or willful misconduct of the Bank.
The obligations of the Borrower under this Section shall survive the
termination of this Agreement.
9.8 ACCOUNTING. Except as provided to the contrary herein, all
accounting terms herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with GAAP.
9.9 SEVERABILITY OF PROVISIONS. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
9.10 NONLIABILITY OF LENDERS. The relationship between the
Borrower and the Bank shall be solely that of borrower and lender. The Bank
shall have no fiduciary responsibilities to the Borrower. The Bank undertakes
no responsibility to the Borrower to review or inform the Borrower of any
matter in connection with any phase of the Borrower's business or corporation.
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9.11 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF TEXAS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.12 CONSENT TO JURISDICTION. EACH OF THE BORROWER AND THE BANK
HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR TEXAS STATE COURT SITTING IN LUBBOCK, TEXAS, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT, AND EACH OF THE
BORROWER AND THE BANK HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE
OF ANY SUCH SUIT, ACTION, OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT THE
COURT IS AN INCONVENIENT FORUM. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST
THE BANK OR ANY AFFILIATE OF THE BANK OR BY THE BANK AGAINST THE BORROWER OR
ANY AFFILIATE OF THE BORROWER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL
BE BROUGHT ONLY IN A COURT IN LUBBOCK, TEXAS.
9.13. WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE BANK
HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
9.14 MAXIMUM INTEREST RATE. No provision of the Loan Documents
shall require the payment or permit the collection of interest in excess of the
maximum permitted by applicable law ("Maximum Rate"). If any interest in
excess of the Maximum Rate is provided for or is adjudicated to be provided
for in the Note or otherwise in connection with this Agreement, this Section
9.14 shall govern and prevail, and neither the Borrower nor the sureties,
guarantors, successors, or assigns of the Borrower shall be obligated to pay
the excess amount of the interest or any other excess sum for the use,
forbearance, or detention of sums loaned. If the Bank ever receives, collects,
or applies as interest any amount in excess of the Maximum Rate, the amount by
which it exceeds the Maximum Rate shall be applied as a payment to the
principal amount of indebtedness evidenced by the Note, and, if the principal
amount of the Note has been paid in full, any remaining excess shall forthwith
be paid to the Borrower.
9.15 NOTICES. Any notices or consents required or permitted by
this Agreement shall be in writing and shall be deemed delivered in person or
if sent by certified mail, postage prepaid, return
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receipt requested, or by telegraph, as follows, unless the address is changed
by written notice hereunder:
A. If to the Borrower: ▇▇▇▇▇▇▇▇▇ Energy, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
B. If to the Bank: Norwest Bank Texas, National Association
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Business Banking Manager
C. If to the Guarantors: ▇▇▇▇▇▇▇▇▇ Drilling Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
▇▇▇▇▇▇▇▇▇ Petroleum, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
▇▇▇▇▇▇▇▇▇ Petroleum Trading Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
9.16 INDEMNIFICATION REGARDING ENVIRONMENTAL MATTERS. The Borrower
agrees to indemnify the Bank and hold the Bank harmless from and against any
and all claims, demands, losses, damages, liabilities, causes of action,
judgments, penalties, costs, and expenses (including attorney's fees and court
costs), known or unknown, fixed or contingent, imposed on, asserted against, or
incurred by the Bank at any time and from time to time because of, in
connection with, or arising out of (a) the breach of any representation or
warranty stated herein regarding the applicable environmental laws, (b) the
failure to perform any obligation herein required to be performed regarding
the applicable environmental laws, (c) any violation of any applicable
environmental laws in effect on or before the Closing Date, (d) the removal of
hazardous substances or solid wastes from the Property of the Borrower or any
Guarantor and/or (e) any act, omission,
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event, or circumstance relating to compliance by the Borrower and its
Subsidiaries with applicable environmental laws existing or occurring on or
before the full and final payment of the Credit. The foregoing indemnification
shall apply also to the directors, officers, employees, and agents of the Bank,
and to claims, demands, losses, damages, liabilities, causes of action,
judgments, penalties, costs, and expenses (including attorney's fees and court
costs) which in whole or in part are caused by or arise out of the negligence
(but not the gross negligence or willful misconduct) of each indemnified party.
If any claim or demand is asserted against the Bank for which the Bank
may be entitled to indemnification under this Section 9.16, the Borrower shall
have the right, by notifying the Bank within 10 days of its receipt of notice
of claim or demand, to assume the entire control (subject to the right of the
Bank to participate, at its expense and with counsel of its choice) of the
defense, compromise, or settlement of the matter, including, at the Borrower's
expense, employment of counsel of the Borrower's choice. Written notice of any
such claim or demand must be given by the Bank to the Borrower within 30 days
after receipt by the Bank of notice of the claim or demand. Selection of
counsel by the Borrower shall be subject to the approval of the Bank, which
approval shall not be unreasonably withheld. If the Borrower formally notifies
the Bank that it will assume control of the defense, compromise, or settlement
of the matter, the Borrower will be deemed to have waived all defenses to the
claims for indemnification by the Bank for the matter. If the Borrower has
assumed control of the defense, compromise, or settlement as provided in this
paragraph and a judgment is entered against the Bank, the Bank shall be
entitled to an indemnification payment from the Borrower when the judgment
creditor is entitled to execute on the judgment. The Borrower may prosecute
one or more appeals from the judgment only as long as execution on the judgment
is stayed. The cost of any bond or proceeding to stay execution shall be borne
by the Borrower.
9.17 SURVIVAL OF REPRESENTATIONS. All representations and
warranties of the Borrower in this Agreement shall survive delivery of the Note
and the making of the Advances herein contemplated.
9.18 GOVERNMENTAL REGULATION. Anything in this Agreement to the
contrary notwithstanding, the Bank shall not be obligated to extend credit to
the Borrower in violation of any limitation or prohibition in any applicable
statute or regulation.
9.19 SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and
the Bank and their respective successors and assigns, but the Borrower may not
assign its rights or obligations under the Loan Documents. The Bank may at any
time, without the consent of the Borrower, assign all or any portion of its
rights under this Agreement and the Note to a Federal Reserve Bank; but no such
assignment shall release the Bank from its obligations hereunder. Any assignee
or transferee of the Note agrees by acceptance thereof to be bound by all terms
and provisions of the Loan Documents. Any request, authority, or consent of
any Person, who at the time of making the request, authority, or consent is the
holder of the Note, shall be conclusive and binding on any subsequent holder,
transferee, or assignee of the Note or of any note or notes issued in exchange
therefor.
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9.20 PERMITTED PARTICIPANTS: EFFECT. The Bank may, in the ordinary
course of its business and in accordance with applicable law, at any time sell
to one or more banks or other entities (the "Participants") participating
interests in the Advances owing to the Bank, the Note held by the Bank, any
Commitment of the Bank, or any other interest of the Bank under the Loan
Documents.
9.21 DISSEMINATION OF INFORMATION. The Borrower authorizes the
Bank to disclose to any Participant or any other Person acquiring an interest
in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in the Bank's possession
concerning the creditworthiness of the Borrower and the Guarantors.
9.22 BUSINESS DAY. Whenever any installment of the principal or
interest on the Note becomes due and payable on a day which is not a Business
Day, the maturity or due date thereof shall be extended to the next Business
Day, and, in the case of principal of the Note, interest shall be payable
thereon at the rate per annum specified in the Note during the extension.
9.23 FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
ORAL AGREEMENTS BETWEEN THE PARTIES.
9.24 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any
counterpart. This Agreement shall be effective when it has been executed by
the Borrower.
IN WITNESS WHEREOF, the Borrower, the Guarantors, and the Bank have
executed this Agreement as of the date first above written.
NORWEST BANK TEXAS, ▇▇▇▇▇▇▇▇▇ ENERGY, INC.
NATIONAL ASSOCIATION AS BORROWER
AS LENDER
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------- ---------------------------------
NAME: ▇▇▇▇▇ ▇. ▇▇▇▇▇
TITLE: SENIOR VICE PRESIDENT NAME: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
TITLE: C.F.O.
------------------------------
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▇▇▇▇▇▇▇▇▇ DRILLING COMPANY
AS GUARANTOR
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
NAME: ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
TITLE: C.F.O.
-----------------------------
▇▇▇▇▇▇▇▇▇ PETROLEUM, INC.
AS GUARANTOR
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
NAME: ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
TITLE: C.F.O.
-----------------------------
▇▇▇▇▇▇▇▇▇ PETROLEUM TRADING
COMPANY, INC.
AS GUARANTOR
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
NAME: ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
TITLE: C.F.O.
-----------------------------
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