EXHIBIT 10.1
U.S. $375,000,000
CREDIT AGREEMENT,
dated as of August 29, 1996
among
VINTAGE PETROLEUM, INC.,
as the Borrower,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
and
BANK OF MONTREAL,
acting through certain U.S. branches or agencies,
as the Agent for the Lenders.
TABLE OF CONTENTS
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Page
I DEFINITIONS AND ACCOUNTING TERMS.......................... 1
1.1. Defined Terms................................... 1
1.2. Use of Defined Terms............................ 15
1.3. Cross-References................................ 15
1.4. Accounting and Financial Determinations......... 15
II COMMITMENTS, BORROWING PROCEDURES AND NOTES............... 15
2.1. Commitments..................................... 15
2.1.1. Revolving Loan Commitment....................... 16
2.1.2. Term Loan Commitment............................ 16
2.1.3. Lenders Not Permitted or Required To Make
Loans........................................... 16
2.2. Termination and Reduction of Commitment
Amounts......................................... 17
2.2.1. Optional........................................ 17
2.2.2. Mandatory as to Revolving Loans................. 17
2.2.3. Mandatory as to Term Loans...................... 17
2.3. Borrowing Procedure............................. 17
2.4. Continuation and Conversion Elections........... 18
2.5. Funding......................................... 18
2.6. Notes........................................... 18
2.7. Determination of the Aggregate Borrowing
Base............................................ 19
2.7.1. Annual Scheduled Determinations of the U.S.
Borrowing Base and the Argentina Borrowing
Base............................................ 19
2.7.2. Semi-Annual Scheduled Determination of the
U.S. Borrowing Base and the Argentina
Borrowing Base.................................. 20
2.7.3. Discretionary Determination of the U.S.
Borrowing Base and Argentina Borrowing Base..... 21
2.7.4. Reduction of the U.S. Borrowing Base and the
Argentina Borrowing Base Upon Sales of Oil
and Gas Properties or Eligible Assets........... 21
III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES................ 21
3.1. Repayments and Prepayments...................... 21
3.1.1. Repayments...................................... 22
3.1.2. Mandatory Prepayments on Loans.................. 22
3.1.3. Repayment Upon Acceleration..................... 23
3.1.4. Voluntary Repayments............................ 23
3.2. Interest Provisions............................. 23
3.2.1. Rates........................................... 23
3.2.2. Post-Maturity Rates............................. 24
3.2.3. Payment Dates................................... 24
3.3. Fees............................................ 25
3.3.1. Commitment Fee.................................. 25
3.3.2. Agent's Fee..................................... 25
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TABLE OF CONTENTS
(continued)
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IV CERTAIN LIBO RATE AND OTHER PROVISIONS.................... 25
4.1. If LIBO Rate Lending Unlawful................... 25
4.2. If Deposits Unavailable......................... 26
4.3. Increased LIBO Rate Loan Costs, etc............. 26
4.4. Funding Losses.................................. 26
4.5. Increased Capital Costs......................... 27
4.6. Taxes........................................... 27
4.7. Payments, Computations, etc..................... 28
4.8. Sharing of Payments............................. 28
4.9. Setoff.......................................... 29
4.10. Use of Proceeds................................. 29
V CONDITIONS TO BORROWING................................... 29
5.1. Initial Borrowing............................... 29
5.1.1. Resolutions, etc................................ 30
5.1.2. Delivery of Notes............................... 30
5.1.3. Payment of Outstanding Indebtedness, etc........ 30
5.1.4. Compliance with Representations and Warran-
ties............................................ 30
5.1.5. Opinions of Counsel............................. 30
5.1.6. Closing Fees, Expenses, etc..................... 30
5.2. Conditions Precedent to Revolving Loans......... 30
5.2.1. Compliance with Warranties, No Default, etc..... 31
5.2.2. Borrowing Request............................... 31
5.2.3. Satisfactory Legal Form......................... 31
5.3. Conditions Precedent to the Making of the
Term Loans...................................... 31
VI REPRESENTATIONS AND WARRANTIES............................ 32
6.1. Organization, etc............................... 32
6.2. Due Authorization, Non-Contravention, etc....... 32
6.3. Government Approval, Regulation, etc............ 32
6.4. Validity, etc................................... 33
6.5. Financial Information........................... 33
6.6. No Material Adverse Change...................... 33
6.7. Litigation, Labor Controversies, etc............ 33
6.8. Subsidiaries.................................... 33
6.9. Ownership of Properties......................... 33
6.10. Taxes........................................... 34
6.11. Pension and Welfare Plans....................... 34
6.12. Environmental Warranties........................ 34
6.13. Regulations G, U and X.......................... 35
6.14. Accuracy of Information......................... 35
6.15. No Default...................................... 36
6.16. No Violation of Applicable Law.................. 36
6.17. Permits......................................... 36
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TABLE OF CONTENTS
(continued)
Page
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VII COVENANTS................................................. 36
7.1. Affirmative Covenants........................... 36
7.1.1. Financial Information, Reports, Notices,
etc............................................. 37
7.1.2. Compliance with Laws, etc....................... 38
7.1.3. Maintenance of Properties....................... 38
7.1.4. Insurance....................................... 38
7.1.5. Books and Records............................... 39
7.1.6. Environmental Covenant.......................... 39
7.1.7. Employee Benefit Plans.......................... 39
7.1.8. Designated Senior Indebtedness.................. 39
7.2. Negative Covenants.............................. 40
7.2.1. Business Activities............................. 40
7.2.2. Indebtedness.................................... 40
7.2.3. Liens........................................... 41
7.2.4. Financial Condition............................. 42
7.2.5. Take or Pay Contracts........................... 42
7.2.6. Consolidation, Merger, etc...................... 42
7.2.7. Asset Dispositions, etc......................... 42
7.2.8. Guaranties, Loans or Advances................... 43
7.2.9. Other Agreements................................ 43
7.2.10. Transactions with Affiliates.................... 44
7.2.11. Negative Pledges, Restrictive Agreements,
etc............................................. 44
7.2.12. Restricted Payments............................. 44
7.2.13. Investment in Subsidiaries...................... 45
VIII EVENTS OF DEFAULT......................................... 45
8.1. Listing of Events of Default.................... 45
8.1.1. Non-Payment of Obligations...................... 45
8.1.2. Breach of Warranty.............................. 45
8.1.3. Non-Performance of Certain Covenants and
Obligations..................................... 46
8.1.4. Non-Performance of Other Covenants and
Obligations..................................... 46
8.1.5. Default on Other Indebtedness................... 46
8.1.6. Other Material Obligations...................... 46
8.1.7. Judgments....................................... 46
8.1.8. Pension Plans................................... 46
8.1.9. Bankruptcy, Insolvency, etc..................... 47
8.1.10. Change of Control............................... 47
8.2. Action if Bankruptcy............................ 47
8.3. Action if Other Event of Default................ 47
IX THE AGENT................................................. 48
9.1. Actions......................................... 48
9.2. Funding Reliance, etc........................... 49
9.3. Exculpation..................................... 49
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TABLE OF CONTENTS
(continued)
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9.4. Successor....................................... 49
9.5. Loans by Bank of Montreal....................... 50
9.6. Credit Decisions................................ 50
9.7. Copies, etc..................................... 50
X MISCELLANEOUS PROVISIONS.................................. 50
10.1. Waivers, Amendments, etc........................ 50
10.2. Notices......................................... 51
10.3. Payment of Costs and Expenses................... 51
10.4. Indemnification................................. 52
10.5. Survival........................................ 53
10.6. Severability.................................... 53
10.7. Headings........................................ 53
10.8. Execution in Counterparts, Effectiveness,
etc............................................. 53
10.9. Governing Law; Entire Agreement................. 53
10.10. Successors and Assigns.......................... 53
10.11. Sale and Transfer of Loans and Notes;
Participations in Loans and Notes............... 54
10.11.1. Assignments..................................... 54
10.11.2. Participations.................................. 55
10.12. Other Transactions.............................. 56
10.13. Forum Selection and Consent to Jurisdiction..... 56
10.14. Waiver of Jury Trial............................ 56
SCHEDULE I - Disclosure Schedule
EXHIBIT A - Form of Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Lender Assignment Agreement
EXHIBIT E-1 - Form of Opinion of Counsel to the Borrower*
EXHIBIT E-2 - Form of Opinion of Counsel to the Borrower*
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* Omitted.
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THIS CREDIT AGREEMENT, dated as of August 29, 1996, among VINTAGE
PETROLEUM, INC., a Delaware corporation (the "Borrower"), the various financial
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institutions as are or may become parties hereto (collectively, the "Lenders"),
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and BANK OF MONTREAL, acting through certain of its U.S. branches or agencies
("Bank of Montreal"), as agent (the "Agent") for the Lenders.
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W I T N E S S E T H:
WHEREAS, the Borrower is engaged directly and through its various
Subsidiaries in the businesses of exploration for and production of oil and gas,
oil and gas gathering and marketing, and related activities; and
WHEREAS, the Borrower would like to obtain Commitments from the Lenders
pursuant to which Revolving Loans and Term Loans, in a maximum aggregate
principal amount at any one time outstanding not to exceed the amounts
hereinafter provided, will be made to the Borrower from time to time prior to
the applicable Commitment Termination Dates for such Commitments; and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to extend such
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Commitments and make such Loans to the Borrower; and
WHEREAS, the proceeds of such Loans will be used (a) to make payment in
full, concurrently with the initial Borrowing hereunder, of all Indebtedness
identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the Disclosure
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Schedule; (b) for acquisitions of oil and gas properties, gathering systems and
related assets; and (c) for general corporate purposes and working capital
purposes of the Borrower and its Subsidiaries;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
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underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Affiliate" of any Person means any other Person which, directly or
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indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if
such other Person possesses, directly or indirectly, power (a) to vote 10% 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" is defined in the preamble and includes each other Person as shall
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have subsequently been appointed as the successor Agent pursuant to Section 9.4.
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"Agreement" means, on any date, this Credit Agreement as originally in
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effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"Aggregate Borrowing Base" means, (i) before the Revolving Loan Commitment
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Termination Date the sum of the U.S. Borrowing Base and the Argentina Borrowing
Base; provided that in no event will the Aggregate Borrowing Base exceed 125% of
the U.S. Borrowing Base and (ii) commencing on the Revolving Loan Commitment
Termination Date and thereafter the U.S. Borrowing Base.
"Alternate Base Rate" means, on any date and with respect to all Base Rate
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Loans, a fluctuating rate of interest per annum equal to the higher of (a) the
rate of interest most recently announced by Bank of Montreal at its Domestic
Office as its base rate for Dollar loans made in the United States; and (b) the
Federal Funds Rate most recently determined by the Agent plus 1/2%. The
Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by Bank of Montreal in connection with extensions of credit.
Changes in the rate of interest on that portion of any Loans maintained as Base
Rate Loans will take effect simultaneously with each change in the Alternate
Base Rate. The Agent will give notice promptly to the Borrower and the Lenders
of changes in the Alternate Base Rate.
"Applicable Lenders" means, for any determination of the Aggregate
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Borrowing Base, the U.S. Borrowing Base or the Argentina Borrowing Base, Lenders
(including the Agent) with an aggregate Percentage of at least 80%; provided
that for any determination that increases the Aggregate Borrowing Base,
Applicable Lenders means all of the Lenders.
"Argentina Borrowing Base" is defined in Section 2.7.1.
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"Assignee Lender" is defined in Section 10.11.1.
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"Authorized Officer" means, relative to the Borrower, those of its officers
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whose signatures and incumbency shall have been certified to the Agent and the
Lenders pursuant to Section 5.1.1.
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"Bank of Montreal" is defined in the preamble.
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"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
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determined by reference to the Alternate Base Rate.
"Base Rate Applicable Margin" means (a) on any date for which it is
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determined prior to the Revolving Loan Commitment Termination Date and on which
the ratio (expressed as a percentage) of the aggregate outstanding principal
amount of all Senior Debt, including any Revolving Loans outstanding, to the
U.S. Borrowing Base then in effect shall equal those ratios set forth below, the
percentage set forth opposite such ratio:
Ratio of Senior Base Rate
Debt to U. S. Borrowing Base Applicable Margin
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Greater than 115% .50%
Greater than 100% and less
than or equal to 115% .25%
Less than or equal to 100% 0%
(b) on any date for which it is determined on or after the Revolving Loan
Commitment Termination Date and on which the outstanding principal balance of
Senior Debt, including any Term Loans, shall be less than or equal to the
Aggregate Borrowing Base then in effect, one-half of one percent (.50%); and (c)
on any date on which the outstanding principal balance of Senior Debt, including
all Loans, exceeds the Aggregate Borrowing Base then in effect, one percent
(1%).
"Borrower" is defined in the preamble.
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"Borrowing" means the Loans of the same type and, in the case of LIBO
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Rate Loans, having the same Interest Period made by all Lenders on the same
Business Day and pursuant to the same Borrowing Request in accordance with
Section 2.1.
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"Borrowing Request" means a loan request and certificate duly executed
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by an Authorized Officer of the Borrower, substantially in the form of Exhibit B
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hereto.
"Business Day" means (a) any day which is neither a Saturday or Sunday
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nor a legal holiday on which banks are authorized or required to be closed in
Chicago, Illinois; and (b) relative to the making, continuing, prepaying or
repaying of any LIBO Rate Loans, any day described in clause (a) which is also a
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day on which dealings in Dollars are carried on in the London interbank market.
"Cadipsa" means Cadipsa S.A., a Republic of Argentina corporation.
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"Capital Stock" in any Person means, for purposes of the definitions
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of "Voting Stock" and "Change of Control," any and all shares, interests,
participations or other equivalents in the
3
equity interest (however designated) in such Person and any rights (other than
debt securities convertible into an equity interest), warrants or options to
subscribe for or to acquire an equity interest in such Person; provided that
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Capital Stock of such Person shall not include any equity security of such
Person that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or otherwise (including upon the
happening of any event), is or could become required to be redeemed for cash or
other property or is or could become redeemable for cash or other property at
the option of the holder thereof, in whole or in part, or is or could become
exchangeable at the option of the holder thereof for Indebtedness at any time,
in whole or in part, in each case on or prior to the first anniversary of the
Stated Maturity (as defined in the Indenture) for the payment of principal of
the Subordinated Debt permitted by clause (p) of Section 7.2.2, but "Capital
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Stock" shall not exclude any equity security by virtue of the fact that it may
be converted or exchanged at the option of the holder for Capital Stock of the
Borrower having no preference as to dividends or liquidation over any other
Capital Stock of the Borrower.
"Capitalized Lease Liabilities" means all monetary obligations of the
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Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
"CERCLA" means the Comprehensive Environmental Response, Compensation
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and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Liability Information System List.
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"Change of Control" means the occurrence of any of the following
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events: (i) any "person" or "group" (within the meaning of Sections 13(d)(3)
and 14(d)(2) of the Exchange Act or any successor provision to either of the
foregoing, including any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than any one or more of the Permitted Holders, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of 50% or
more of the total voting power of all classes of the Voting Stock of the
Borrower and/or warrants or options to acquire such Voting Stock, calculated on
a fully diluted basis, (ii) the sale, lease, conveyance or transfer of all or
substantially all of the assets of the Borrower (other than to any Restricted
Subsidiary which is wholly-owned by the Borrower or another wholly-owned
Restricted Subsidiary) shall have occurred, (iii) the stockholders of the
Borrower shall have approved any plan
4
of liquidation or dissolution of the Borrower, (iv) the Borrower consolidates
with or merges into another Person or any Person consolidates with or merges
into the Borrower in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Borrower is reclassified into or exchanged for
cash, securities or other property, other than any such transaction where (A)
the outstanding Voting Stock of the Borrower is reclassified into or exchanged
for Voting Stock of the surviving corporation that is Capital Stock and (B) the
holders of the Voting Stock of the Borrower immediately prior to such
transaction own, directly or indirectly, not less than a majority of the Voting
Stock of the surviving corporation immediately after such transaction in
substantially the same proportion as before the transaction, or (v) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Borrower's Board of Directors (together with any new directors
whose election or appointment by such board or whose nomination for election by
the stockholders of the Borrower was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Borrower's Board
of Directors then in office. For purposes of this definition, a wholly-owned
Subsidiary means any Subsidiary all of the Voting Stock of which (except for
director's qualifying shares) is owned directly or indirectly by the Borrower
and its other wholly-owned Subsidiaries. Nothing set forth in this definition
shall be construed to permit any transaction which is prohibited by this
Agreement, including any transaction not permitted by Section 7.2.6.
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"Code" means the Internal Revenue Code of 1986, as amended,
----
reformed or otherwise modified from time to time.
"Commitment" means, as the context may require, a Lender's
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Revolving Loan Commitment or Term Loan Commitment.
"Commitment Amount" means, as the context may require, either the
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Revolving Loan Commitment Amount or the Term Loan Commitment Amount.
"Commitment Termination Date" means, as the context may require,
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either the Revolving Loan Commitment Termination Date or the Term Loan
Commitment Termination Date.
"Commitment Termination Event" means (a) the occurrence of any Default
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described in clauses (a) through (d) of Section 8.1.9 with respect to the
----------- --- -------------
Borrower or any of its Subsidiaries; or (b) the occurrence and continuance of
any other Event of Default and either (i) the declaration of the Loans to be due
and payable pursuant to Section 8.3, or (ii) in the absence of such declaration,
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the giving of notice by the Agent, acting at the direction of the Required
Lenders, to the Borrower that the Commitments have been terminated.
5
"Contingent Liability" means any agreement, undertaking or arrangement
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by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby.
"Continuation/Conversion Notice" means a notice of continuation or
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conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C hereto.
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"Controlled Group" means all members of a controlled group of
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corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.
"Current Ratio" means the ratio of (a) consolidated current assets of
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the Borrower and its Subsidiaries to (b) consolidated current liabilities
--
(excluding the current portion of Senior Debt) of the Borrower and its
Subsidiaries. For purposes of the definition of "Current Ratio", any unused
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portion of the Revolving Loan Commitment Amount is deemed to be a current asset
of the Borrower.
"Default" means any Event of Default or any condition, occurrence or
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event which, after notice or lapse of time or both, would constitute an Event of
Default.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
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Schedule I, as it may be amended, supplemented or otherwise modified from time
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to time by the Borrower with the written consent of the Agent and the Required
Lenders.
"Dollar" and the sign "$" mean lawful money of the United States.
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"Domestic Office" means, relative to any Lender, the office of such
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Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement, or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender, as the case may be, to each other Person
party hereto.
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"Effective Date" means the date this Agreement becomes effective
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pursuant to Section 10.8.
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"Eligible Assets" means oil, gas and other liquid or gaseous
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hydrocarbon properties and interests of an Eligible Subsidiary, whether now
owned or hereafter acquired, that are not encumbered by Liens (other than Liens
permitted by Section 7.2.3) and which properties and interests are located in
Argentina.
"Eligible Subsidiary" means a direct or indirect wholly-owned
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Subsidiary of the Borrower with no Indebtedness other than Indebtedness
permitted by Section 7.2.2.
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"Environmental Laws" means all applicable Argentina, U.S. federal, or
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state or local statutes, laws, ordinances, codes, rules and regulations
(including consent decrees and administrative orders) relating to public health
and safety and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in Section 8.1.
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"Exchange Act" means the United States Securities Exchange Act of 1934
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and any successor statute thereto, in each case as amended from time to time.
"Federal Funds Rate" means, for any period, a fluctuating interest
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rate per annum equal for each day during such period to (a) the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York; or (b) if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by Bank of Montreal from three federal funds brokers
of recognized standing selected by it.
"Fiscal Quarter" means any quarter of a Fiscal Year.
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"Fiscal Year" means any period of twelve consecutive calendar months
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ending on December 31st; references to a Fiscal Year with a number corresponding
to any calendar year (e.g., the "1988 Fiscal Year") refer to the Fiscal Year
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ending on the December 31st occurring during such calendar year.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
------------
System or any successor thereto.
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"GAAP" is defined in Section 1.4.
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"Hazardous Material" means (a) any "hazardous substance", as defined
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by CERCLA; (b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act, as amended; (c) any petroleum product; or (d) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material or substance
within the meaning of any other applicable Argentina, U.S. federal, or state or
local law, regulation, ordinance or requirement (including consent decrees and
administrative orders) relating to or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance or material, all
as amended or hereafter amended.
"Hedging Obligations" means, with respect to any Person, all
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liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates, currency exchange rates or commodity prices.
"herein", "hereof", "hereto", "hereunder" and similar terms contained
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in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"Impermissible Qualification" means, relative to the opinion or
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certification of any independent public accountant as to any financial statement
of the Borrower, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature; (b) which relates to the
limited scope of examination of matters relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in such
financial statement and which, as a condition to its removal, would require an
adjustment to such item the effect of which would be to cause the Borrower to be
in default of any of its obligations under Section 7.2.4.
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"including" means including without limiting the generality of any
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description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
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shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"Indebtedness" of any Person means, without duplication: (a) all
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obligations of such Person for borrowed money and all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (b) all
obligations, contingent or otherwise, relative to the face amount of all letters
of credit, whether or not drawn, and banker's acceptances issued for the account
of such Person; (c) all obligations of such Person as
8
lessee under leases which have been or should be, in accordance with GAAP,
recorded as Capitalized Lease Liabilities; (d) all other items which, in
accordance with GAAP, would be included as liabilities on the liability side of
the balance sheet of such Person as of the date at which Indebtedness is to be
determined; (e) net liabilities of such Person under all Hedging Obligations;
(f) whether or not so included as liabilities in accordance with GAAP, all
obligations of such Person to pay the deferred purchase price of property or
services, and indebtedness (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements), whether or
not such indebtedness shall have been assumed by such Person or is limited in
recourse; and (g) all Contingent Liabilities of such Person in respect of any of
the foregoing. For all purposes of this Agreement, the Indebtedness of any
Person shall include the Indebtedness of any partnership or joint venture in
which such Person is a general partner or a joint venturer.
"Indemnified Liabilities" is defined in Section 10.4.
----------------------- ------------
"Indemnified Parties" is defined in Section 10.4.
------------------- ------- ----
"Indenture" means that certain Indenture of the Borrower to Chemical
---------
Bank as Trustee entered into with respect to the Subordinated Debt permitted by
clause (p) of Section 7.2.2, as such Indenture may from time to time be amended,
---------- -------------
supplemented or otherwise modified.
"Interest Period" means, relative to any LIBO Rate Loans, the period
---------------
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.3 or 2.4
----------- ---
and shall end on (but exclude) the day which numerically corresponds to such
date one, two, three or six months thereafter (or, if such month has no
numerically corresponding day, on the last Business Day of such month), in
either case as the Borrower may select in its relevant notice pursuant to
Section 2.3 or 2.4; provided, however, that (a) the Borrower shall not be
----------- --- -------- -------
permitted to select Interest Periods to be in effect at any one time which have
expiration dates occurring on more than five different dates; (b) Interest
Periods commencing on the same date for Loans comprising part of the same
Borrowing shall be of the same duration; (c) if such Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period shall
end on the next following Business Day (unless such next following Business Day
is the first Business Day of a calendar month, in which case such Interest
Period shall end on the Business Day next preceding such numerically
corresponding day); and (d) no Interest Period for a Revolving Loan may end
later than the date six months after the Revolving Loan Commitment Termination
Date, and no Interest Period for a Term Loan may end after the Stated Maturity
Date for Term Loans.
9
"Lender Assignment Agreement" means a Lender Assignment Agreement
---------------------------
substantially in the form of Exhibit D hereto.
---------
"Lenders" is defined in the preamble.
------- --------
"LIBO Rate" is defined in Section 3.2.1.
--------- -------------
"LIBO Rate Applicable Margin" means (a) on any date for which it is
---------------------------
determined prior to the Revolving Loan Commitment Termination Date and on which
the ratio (expressed as a percentage) of the outstanding principal of Senior
Debt, including any Revolving Loans outstanding, to the U.S. Borrowing Base then
in effect on the first day of the Interest Period to which such margin is
applicable shall equal those ratios set forth below, the percentage set forth
opposite such ratio:
Ratio of Senior Debt LIBO Rate
to U.S. Borrowing Base Applicable Margin
---------------------- -----------------
Greater than 115% 1.500%
Greater than 100% and less than or
equal to 115% 1.250%
Greater than 75% and less than or
equal to 100% 1.125%
Greater than 65% and less than or
equal to 75% .875%
Greater than 50% and less than or
equal to 65% .750%
Less than or equal to 50% .625%
(b) on any date for which it is determined on or after the Revolving Loan
Commitment Termination Date and on which the outstanding principal balance of
Senior Debt, including any Term Loans, shall be less than or equal to the
Aggregate Borrowing Base then in effect, one and one-half percent (1.5%); and
(c) on any date on which the aggregate outstanding principal balance of Senior
Debt, including all Loans, exceeds the Aggregate Borrowing Base then in effect,
two percent (2%).
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
--------------
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" is defined in Section 3.2.1.
---------------------------- -------------
"LIBOR Office" means, relative to any Lender, the office of such
------------
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office
10
of a Lender as designated from time to time by notice from such Lender to the
Borrower and the Agent, whether or not outside the United States, which shall be
making or maintaining LIBO Rate Loans of such Lender hereunder.
"LIBOR Reserve Percentage" is defined in Section 3.2.1.
------------------------ -------------
"Lien" means any security interest, mortgage, pledge, hypothecation,
----
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan" means, as the context may require, either a Revolving Loan or
----
a Term Loan of either type.
"Loan Document" means this Agreement, the Notes, and each other
-------------
document or instrument executed and delivered in connection with this Agreement
and the Notes.
"Non-Recourse Indebtedness" shall mean any Indebtedness of the
-------------------------
Borrower and its Subsidiaries with respect to which the holder thereof agrees
that (i) the Borrower and its Subsidiaries are not personally liable and (ii)
such holder may require payment only to the extent specifically identified
properties of the Borrower and its Subsidiaries are available to provide
therefor, such matters to be set forth in an agreement or other instrument in
form and substance reasonably satisfactory to the Required Lenders, and shall
include such Indebtedness of partnerships and joint ventures with respect to
which the Borrower or any of its Subsidiaries is a partner or joint venturer
which is identified in Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure
------------- --------------------
Schedule.
"Note" means a promissory note of the Borrower payable to any Lender,
----
in the form of Exhibit A hereto (as such promissory note may be amended,
---------
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from outstanding Loans,
and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Obligations" means all obligations (monetary or otherwise) of the
-----------
Borrower arising under or in connection with this Agreement, the Notes and each
other Loan Document.
"Oil and Gas Properties" means oil, gas and other liquid or gaseous
----------------------
hydrocarbon properties and interests of the Borrower, whether now owned or
hereafter acquired, located in the United States.
"Organic Document" means, relative to the Borrower, its certificate of
----------------
incorporation, its by-laws and all shareholder
11
agreements, voting trusts and similar arrangements applicable to any of its
authorized shares of capital stock.
"Participant" is defined in Section 10.11.2.
----------- ---------------
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
----
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
------------
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the
Borrower or any corporation, trade or business that is, along with the Borrower,
a member of a Controlled Group, may have liability, including any liability by
reason of having been a substantial employer within the meaning of section 4063
of ERISA at any time during the preceding five years, or by reason of being
deemed to be a contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage set forth
----------
opposite the name of such Lender below:
Bank of Montreal 100%
as such percentage may be adjusted from time to time pursuant to Lender
Assignment Agreements executed by a Lender and its Assignee Lenders and
delivered pursuant to Section 10.11.
-------------
"Permitted Designee" means (i) a spouse or a child of a Permitted
------------------
Holder, (ii) trusts for the benefit of a Permitted Holder or a spouse or child
of a Permitted Holder, (iii) in the event of the death or incompetence of a
Permitted Holder, his estate, heirs, executor, administrator, committee or other
personal representative, or (iv) any Person so long as a Permitted Holder owns
at least 51% of the voting power of all classes of the Voting Stock of such
Person.
"Permitted Holders" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., Jo ▇▇▇ ▇▇▇▇▇, S.
-----------------
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and their Permitted Designees.
"Person" means any natural person, corporation, partnership, firm,
------
association, trust, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
----
"Quarterly Payment Date" means the first day of each January, April,
----------------------
July and October or, if any such day is not a Business Day, the next succeeding
Business Day.
"Release" means a "release", as such term is defined in CERCLA.
-------
12
"Required Lenders" means, at any time, Lenders (including the Agent)
----------------
holding at least 66-2/3% of the then aggregate outstanding principal amount of
the Notes then held by the Lenders, or, if no such principal amount is then
outstanding, Lenders (including the Agent) having at least 66-2/3% of the
Commitments.
"Restricted Subsidiary" means any Subsidiary of the Borrower that has
---------------------
not been designated an "Unrestricted Subsidiary" pursuant to the Indenture.
"Resource Conservation and Recovery Act" means the Resource
--------------------------------------
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect
-- ---
from time to time.
"Revolving Loan" is defined in Section 2.1.1.
-------------- -------
"Revolving Loan Commitment" is defined in Section 2.1.1.
------------------------- -------------
"Revolving Loan Commitment Amount" means, on any date, the lesser of
--------------------------------
(i) the Aggregate Borrowing Base then in effect, (ii) $375,000,000, as such
amount may be reduced from time to time pursuant to Section 2.2 or (iii) the
-----------
amount (not less than the then outstanding principal amount of the Loans) from
time to time designated by the Borrower in writing to the Agent provided that
the Borrower will not designate an amount pursuant to this clause (iii) which is
an increase over the then Revolving Loan Commitment Amount without the consent
of all the Lenders.
"Revolving Loan Commitment Termination Date" means the earliest of (a)
------------------------------------------
October 1, 1999; (b) the date on which the Revolving Loan Commitment Amount is
terminated in full or reduced to zero pursuant to Section 2.2; and (c) the date
-----------
on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b) or (c), the Revolving
---------- ---
Loan Commitments shall terminate automatically and without any further action.
"Senior Debt" means all Indebtedness for borrowed money of the
-----------
Borrower and its Subsidiaries (including the Loans under this Agreement) other
than Subordinated Debt, Non-Recourse Indebtedness, Indebtedness of any Subject
Subsidiary and any Contingent Liability of the Borrower permitted by clause (n)
----------
of Section 7.2.2.
-------------
"Stated Maturity Date" means (a) in the case of any Revolving Loan,
--------------------
October 1, 1999; and (b) in the case of any Term Loan, October 1, 2002.
"Subject Subsidiary" means Cadipsa or any Subsidiary of Cadipsa; such
------------------
Subsidiaries are sometimes collectively called herein the "Subject
-------
Subsidiaries."
------------
"Subordinated Debt" means all unsecured Indebtedness of the Borrower
-----------------
for money borrowed which is subordinated, upon terms
13
satisfactory to the Agent and the Required Lenders, in right of payment to the
payment in full in cash of all Obligations, and includes Borrower's $150,000,000
Senior Subordinated Notes Due 2005.
"Subsidiary" means, with respect to any Person, any corporation of
----------
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person provided that, notwithstanding the foregoing,
Subsidiaries of the Borrower shall not include, for the purposes of Article VI
----------
(except Sections 6.7 and 6.8), Section 7.1 (except for the purposes of
------------ --- -----------
consolidated financial statements delivered pursuant to Section 7.1.1) and
-------------
Article VIII and the definitions referred to therein, the Subject Subsidiaries.
------------
"Tangible Net Worth" means the consolidated net worth of the Borrower
------------------
and its Subsidiaries after subtracting therefrom the aggregate amount of any
intangible assets of the Borrower and its Subsidiaries, including goodwill,
franchises, licenses, patents, trademarks, trade names, copyrights, service
marks and brand names.
"Taxes" is defined in Section 4.6.
----- -----------
"Term Loan" is defined in Section 2.1.2.
--------- -------------
"Term Loan Commitment" is defined in Section 2.1.2.
-------------------- ------- -----
"Term Loan Commitment Amount" means the least of (i) the aggregate
---------------------------
principal amount of all Revolving Loans outstanding to all Lenders as of the
Revolving Loan Commitment Termination Date, (ii) the Commitment Amount in effect
with respect to Revolving Loans as of the Revolving Loan Commitment Termination
Date, or (iii) the U.S. Borrowing Base in effect as of the Revolving Loan
Commitment Termination Date minus the outstanding principal amount of all Senior
-----
Debt other than the Loans.
"Term Loan Commitment Termination Date" means the earlier of (a) the
-------------------------------------
Business Day after the Stated Maturity Date of the Revolving Loans; and (b) the
date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b), the Term Loan
----------
Commitments shall terminate automatically and without any further action.
"type" means, relative to any Loan, the portion thereof, if any,
----
being maintained as a Base Rate Loan or a LIBO Rate Loan.
14
"United States" or "U.S." means the United States of Amercia, its
------------- ----
fifty States and the District of Columbia.
"U.S. Borrowing Base" is defined in Section 2.7.1.
------------------- ------- -----
"Vintage Argentina" means Vintage Petroleum Argentina, Inc., a
-----------------
Cayman Islands corporation.
"Vintage Oil Argentina" means Vintage Oil Argentina, Inc., a Cayman
---------------------
Islands corporation.
"Voting Stock" of any Person means Capital Stock of such Person which
------------
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Welfare Plan" means a "welfare plan", as such term is defined in
------------
Section 3(1) of ERISA.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
--------------------
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Continuation/Conversion Notice, Loan Document,
notice and other communication delivered from time to time in connection with
this Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified,
----------------
references in this Agreement and in each other Loan Document to any Article or
Section are references to such Article or Section of this Agreement or such
other Loan Document, as the case may be, and, unless otherwise specified,
references in any Article, Section or definition to any clause are references to
such clause of such Article, Section or definition.
SECTION 1.4 Accounting and Financial Determinations. Unless
---------------------------------------
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, all accounting determinations and computations
hereunder or thereunder (including under Section 7.2.4) shall be made, and all
-------------
financial statements required to be delivered hereunder or thereunder shall be
prepared, in accordance with those generally accepted accounting principles
("GAAP") applied in the preparation of the financial statements referred to in
----
Section 6.5.
-----------
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the conditions
-----------
of this Agreement (including Article V), each Lender
---------
15
severally agrees to make Loans pursuant to the Commitments described in this
Section 2.1.
-----------
SECTION 2.1.1. Revolving Loan Commitment. From time to time on any
-------------------------
Business Day occurring prior to the Revolving Loan Commitment Termination Date,
each Lender will make Loans (relative to such Lender, its "Revolving Loans") to
---------------
the Borrower equal to such Lender's Percentage of the aggregate amount of the
Borrowing of Revolving Loans requested by the Borrower to be made on such day.
The Commitment of each Lender described in this Section 2.1.1 is herein referred
-------------
to as its "Revolving Loan Commitment". On the terms and subject to the
-------------------------
conditions hereof, the Borrower may from time to time borrow, prepay and
reborrow Revolving Loans.
SECTION 2.1.2. Term Loan Commitment. On the Revolving Loan
--------------------
Commitment Termination Date (unless such date shall occur as a result of clause
------
(c) of the definition thereof), each Lender will make one term loan (relative to
---
such Lender its "Term Loan") to the Borrower equal to the lesser of its
---------
Revolving Loan and its Percentage of the Term Loan Commitment Amount. The
Commitment of each Lender described in this Section 2.1.2 is herein referred to
-------------
as its "Term Loan Commitment". No amounts paid or prepaid with respect to the
--------------------
Term Loans may be reborrowed. LIBO Rate Loans for which the Interest Period
shall not have terminated as of the Revolving Loan Commitment Termination Date
shall be continued as LIBO Rate Loans for the applicable Interest Period and
Base Rate Loans shall be continued as Base Rate Loans after the Revolving Loan
Commitment Termination Date, unless the Borrower shall have elected otherwise by
delivery of a Continuation/Conversion Notice pursuant to Section 2.4; provided
----------- --------
that such LIBO Rate Loans which shall have converted to Term Loans shall be in a
----
minimum amount of $5,000,000 and an integral multiple of $1,000,000. Any
principal repayments received on the Revolving Loan Commitment Termination Date
for Revolving Loans not converted into Term Loans shall be applied first to Base
Rate Loans and, after Base Rate Loans have been paid in full, to LIBO Rate
Loans, unless the Borrower shall have otherwise instructed the Agent in writing.
Upon a Lender making such Term Loan, its Term Loan Commitment shall terminate
and it shall have no further Commitment to make Loans.
SECTION 2.1.3. Lenders Not Permitted or Required To Make Loans. No
-----------------------------------------------
Lender shall be permitted or required to make (a) any Revolving Loan if, after
giving effect thereto, the aggregate outstanding principal amount of all
Revolving Loans (i) of all Lenders would exceed the lesser of (A) the Revolving
Loan Commitment Amount or (B) the Aggregate Borrowing Base then in effect, less
----
the principal amount of all Senior Debt other than the Revolving Loans then
outstanding, or (ii) of such Lender would exceed such Lender's Percentage of the
Revolving Loan Commitment Amount; or (b) any Term Loan if, after giving effect
thereto, the aggregate original principal amount of all Term Loans (i) of all
Lenders made since the Effective Date would exceed the Term Loan Commitment
Amount, or (ii) of such Lender made since the Effective
16
Date would exceed such Lender's Percentage of the Term Loan Commitment Amount.
SECTION 2.2. Termination and Reduction of Commitment Amounts. Each
-----------------------------------------------
of the Commitment Amounts is subject to reduction from time to time pursuant to
this Section 2.2.
-----------
SECTION 2.2.1. Optional. The Borrower may, from time to time on any
--------
Business Day occurring after the time of the initial Borrowing hereunder,
voluntarily reduce the amount of either Commitment Amount; provided, however,
-------- -------
that all such reductions shall require at least three Business Days' prior
notice to the Agent and be permanent, and any partial reduction of any
Commitment Amount shall be in a minimum amount of $1,000,000 and in an integral
multiple of $1,000,000.
SECTION 2.2.2. Mandatory as to Revolving Loans. The Revolving Loans.
-------------------------------
The Revolving Loan Commitment Amount shall be reduced or terminated as described
below:
(a) Each Lender's Revolving Loan Commitment shall be automatically
terminated on the Revolving Loan Commitment Termination Date.
(b) Each reduction in the Revolving Loan Commitment Amount shall be
made ratably among the Lenders in accordance with their respective
Percentages. The Borrower shall pay to the Agent for the account of the
Lenders, on the date of each termination or voluntary reduction, the
Commitment Fees accrued pursuant to Section 3.3.1 on the amount of
-------------
Commitments so terminated or reduced through the date of such termination
or reduction.
SECTION 2.2.3. Mandatory as to Term Loans. The Term Loan Commitment Amount
--------------------------
shall be reduced or terminated as described below:
(a) Each Lender's Term Loan Commitment shall be automatically
terminated on the Term Loan Commitment Termination Date.
(b) Each reduction in the Term Loan Commitment Amount hereunder shall
be made ratably among the Lenders in accordance with their respective
Percentages.
SECTION 2.3. Borrowing Procedure. The Borrower may from time to time
-------------------
irrevocably request that a Borrowing be made in (a) for Base Rate Loans, a
minimum amount of $300,000 and integral multiple of $100,000, (b) for LIBO Rate
Loans a minimum amount of $5,000,000 and an integral multiple of $1,000,000, or
(c) in the case of Revolving Loans, in the unused amount of the Revolving Loan
Commitment Amount. Such request shall be made by delivering a Borrowing Request
to the Agent on or before 11:00 a.m. U.S. Central time, (x) on the Business Day
of such Borrowing in the case of a
17
Base Rate Borrowing and (y) on a Business Day not less than three nor more than
five Business Days in advance of a LIBO Rate Borrowing. On the terms and
subject to the conditions of this Agreement, each Borrowing shall be comprised
of the type of Loans, and shall be made on the Business Day, specified in such
Borrowing Request. On or before 12:00 Noon (U.S. Central time) on such Business
Day each Lender shall deposit with the Agent same day funds in an amount equal
to such Lender's Percentage of the requested Borrowing. Such deposit will be
made to an account which the Agent shall specify from time to time by notice to
the Lenders. To the extent funds are received from the Lenders, the Agent shall
make such funds available to the Borrower by wire transfer to the accounts the
Borrower shall have specified in its Borrowing Request. No Lender's obligation
to make any Loan shall be affected by any other Lender's failure to make any
Loan.
SECTION 2.4. Continuation and Conversion Elections. By delivering a
-------------------------------------
Continuation/Conversion Notice to the Agent on or before 11:00 a.m., U.S.
Central time, on a Business Day, the Borrower may from time to time irrevocably
elect, on not less than three nor more than five Business Days' notice that all,
or any portion in an aggregate minimum amount of $5,000,000 and an integral
multiple of $1,000,000, of any Loans be, in the case of Base Rate Loans,
converted into LIBO Rate Loans or, in the case of LIBO Rate Loans, converted
into a Base Rate Loan or continued as a LIBO Rate Loan (in the absence of
delivery of a Continuation/Conversion Notice with respect to any LIBO Rate Loan
at least three Business Days before the last day of the then current Interest
Period with respect thereto, such LIBO Rate Loan shall, on such last day,
automatically convert to a Base Rate Loan); provided, however, that (a) each
-------- -------
such conversion or continuation shall be pro rated among the applicable
outstanding Loans of all Lenders, and (b) no portion of the outstanding
principal amount of any Loans may be continued as, or be converted into, LIBO
Rate Loans when any Default has occurred and is continuing.
SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its
-------
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; provided,
--------
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
-------
and to be held by such Lender, and the obligation of the Borrower to repay such
LIBO Rate Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. In addition, the
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of Sections 4.1, 4.2, 4.3 or 4.4, it shall be conclusively
------------ --- --- ---
assumed that each Lender elected to fund all LIBO Rate Loans by purchasing
Dollar deposits in its LIBOR Office's interbank eurodollar market.
SECTION 2.6. Notes. Each Lender's Loans under its Commitment shall be
-----
evidenced by a Note payable to the order of such Lender in a maximum principal
amount equal to such Lender's
18
Percentage of the original applicable Commitment Amount. The Borrower hereby
irrevocably authorizes each Lender to make (or cause to be made) appropriate
notations on the grid attached to such Lender's Notes (or on any continuation of
such grid), which notations, if made, shall evidence, inter alia, the date of,
----- ----
the outstanding principal of, and the interest rate and Interest Period
applicable to the Loans evidenced thereby. Such notations shall be conclusive
and binding on the Borrower absent manifest error; provided, however, that the
-------- -------
failure of any Lender to make any such notations shall not limit or otherwise
affect any Obligations of the Borrower.
SECTION 2.7. Determination of the Aggregate Borrowing Base. During the
---------------------------------------------
period from the date hereof to the date of the first determination of the
Aggregate Borrowing Base pursuant to the further provisions of this Section
-------
2.7., the amount of the Aggregate Borrowing Base shall be $295,000,000, the U.S.
Borrowing Base shall be $250,000,000 and the Argentina Borrowing Base shall be
$45,000,000.
SECTION 2.7.1. Annual Scheduled Determinations of the U.S. Borrowing Base
----------------------------------------------------------
and the Argentina Borrowing Base. Promptly after December 31 of each calendar
--------------------------------
year commencing December 31, 1996, and in any event prior to April 1 of the
following calendar year, the Borrower shall furnish to the Agent and each Lender
a report in form and substance satisfactory to the Agent, prepared or audited by
Netherland, ▇▇▇▇▇▇ and Associates, Inc. or such other engineering firm as may be
selected by the Borrower with the prior approval of the Required Lenders, which
report shall be dated as of December 31st of such calendar year and shall set
forth (i) the proven and producing oil and gas reserves attributable to the Oil
and Gas Properties and a projection of the rate of production and net operating
income with respect thereto, as of such date and (ii) if prior to the Revolving
Loan Commitment Termination Date, the proven and producing oil and gas reserves
attributable to the Eligible Assets, and a projection of the rate of production
and net operating income with respect thereto, as of such date. Upon receipt of
such report relating to the Oil and Gas Properties, the Agent shall make a
determination within 25 days of the receipt of such report of the amount of
Senior Debt which the Borrower may maintain (herein as determined and
redetermined from time to time and in effect on any date called the "U.S.
----
Borrowing Base") on account of such reserves as of such December 31st, subject
--------------
to the approval of the Applicable Lenders as provided in this Section, and upon
such determination the Agent shall promptly notify the Lenders in writing of its
determination of the U.S. Borrowing Base. Upon receipt of such report relating
to the Eligible Assets, the Agent shall make a determination within 25 days of
the receipt of such report of the amount of Senior Debt which the Borrower may
maintain (herein as determined and redetermined from time to time and in effect
on any date called the "Argentina Borrowing Base") on account of such reserves
------------------------
as of December 31st, subject to the approval of the Applicable Lenders as
provided in this Section, and upon such determination the Agent shall promptly
notify the Lenders in writing of its
19
determination of the Argentina Borrowing Base. The determination of the U.S.
Borrowing Base and Argentina Borrowing Base made by the Agent shall each be so
made by the Agent in the exercise of its sole discretion in accordance with the
Agent's customary practices and standards for oil and gas loans. The Applicable
Lenders may approve the Agent's determination of the U.S. Borrowing Base and, if
applicable, the Argentina Borrowing Base by written notice to the Agent within
10 days of the Agent's notification of its determination of the new U.S.
Borrowing Base and, if applicable, the new Argentina Borrowing Base. If the
Applicable Lenders fail to approve the determination of the U.S. Borrowing Base
and, if applicable, the Argentina Borrowing Base made by the Agent hereunder
within such 10 days then, within an additional 5 days, the Applicable Lenders in
their sole discretion shall determine the U.S. Borrowing Base and, if
applicable, the Argentina Borrowing Base in accordance with their respective
customary practices and standards for oil and gas loans. No oil, gas and other
hydrocarbon properties and interests of any Subject Subsidiary, whether now
owned or hereafter acquired, shall be included in the calculation of the U.S.
Borrowing Base for purposes of this Section 2.7.1 or any other provision of
-------------
Section 2.7.
-----------
SECTION 2.7.2. Semi-Annual Scheduled Determination of the U.S. Borrowing
---------------------------------------------------------
Base and the Argentina Borrowing Base. In addition, within ninety (90) days
-------------------------------------
after each June 30 (commencing June 30, 1996) the Borrower will make available
for review by the Agent (i) monthly production data for each property included
within the Oil and Gas Properties for the six (6) month period preceding such
date together with the Borrower's projection of the rate of production and net
operating income for such properties (in the aggregate) and (ii) if prior to the
Revolving Loan Commitment Termination Date, monthly production data for each
property included within the Eligible Assets for the six (6) month period
preceding such date together with the Borrower's projection of the rate of
production and net operating income for such properties (in the aggregate). Also
to be made available are the reserves, projected rate of income and net
operating income on (i) any Oil and Gas Properties and (ii) if prior to the
Revolving Loan Commitment Termination Date, any Eligible Assets, which were
developed by the Borrower subsequent to the preceding December 31 and which are
to be included in the Aggregate Borrowing Base. Upon the receipt of a report
relating to the Oil and Gas Properties, the Agent shall make a determination
within 25 days of the receipt of such report of the U.S. Borrowing Base as of
the preceding June 30. Upon the receipt of a report relating to the Eligible
Assets, the Agent shall make a determination within 25 days of the receipt of
such report of the Argentina Borrowing Base as of the preceding June 30. The
determinations of the U.S. Borrowing Base and Argentina Borrowing Base shall be
made in the same manner and be subject to the same approvals as prescribed above
with respect to the annual review, and likewise the Agent shall communicate the
results of each such determination to the Lenders. The Applicable Lenders may
approve the determination of the U.S. Borrowing Base and, if applicable, the
Argentina Borrowing Base by written notice to the Agent within
20
10 days of the giving of notice of the determination by the Agent to such
Lenders and the Agent will thereupon notify the Borrower of the U.S. Borrowing
Base and, if applicable, the Argentina Borrowing Base approved by the Applicable
Lenders. If the Applicable Lenders fail to approve a determination of the U.S.
Borrowing Base and, if applicable, the Argentina Borrowing Base made by the
Agent pursuant to this Section 2.7.2 within such 10 days, then the Applicable
-------------
Lenders shall, within an additional 5 days, make a determination of the U.S.
Borrowing Base and, if applicable, the Argentina Borrowing Base based on their
sole discretion in accordance with their respective customary practices and
standards for oil and gas loans.
SECTION 2.7.3. Discretionary Determination of the U.S. Borrowing Base and
----------------------------------------------------------
Argentina Borrowing Base. If, in addition to the foregoing scheduled annual and
------------------------
semi-annual determinations of the U.S. Borrowing Base and Argentina Borrowing
Base, the Lenders (or the Applicable Lenders) shall be requested by the Borrower
to redetermine the U.S. Borrowing Base and, if prior to the Revolving Loan
Commitment Termination Date, the Argentina Borrowing Base, in their sole
discretion based on their respective customary practices and standards for oil
and gas loans, then the Borrower shall pay to the Agent a fee of $25,000 and to
each Lender (other than the Agent) a fee of $12,500 in connection with such
redetermination.
SECTION 2.7.4. Reduction of the U.S. Borrowing Base and the Argentina
------------------------------------------------------
Borrowing Base Upon Sales of Oil and Gas Properties or Eligible Assets. In the
----------------------------------------------------------------------
event of a sale, transfer, lease, contribution or other conveyance of an Oil and
Gas Property as permitted pursuant to Section 7.2.7, the U.S. Borrowing Base may
-------------
be automatically reduced by an amount to be determined by the Agent with the
approval of the Applicable Lenders in accordance with their respective customary
standards for oil and gas loans on account of such sale, transfer, assignment,
lease, contribution or other conveyance. In the event of a sale, transfer,
lease, contribution or other conveyance of an Eligible Asset as permitted
pursuant to Section 7.2.7, the Argentina Borrowing Base may be automatically
-------------
reduced by an amount to be determined by the Agent with the approval of the
Applicable Lenders in accordance with their respective customary standards for
oil and gas loans on account of such sale, transfer, assignment, lease,
contribution or other conveyance.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower shall make
--------------------------
mandatory repayments and prepayments and may also make voluntary prepayments
from time to time pursuant to this Section 3.1. Each prepayment made pursuant
-----------
to this Section shall be without premium or penalty, except as may be required
by Section 4.4.
-----------
21
SECTION 3.1.1. Repayments. To the extent that Term Loans are made to the
----------
Borrower on the Revolving Loan Commitment Termination Date, such Term Loans
shall be deemed to be for repayment of the principal of Revolving Loans
outstanding as of the Revolving Loan Commitment Termination Date. The Borrower
shall repay in full the unpaid aggregate principal amount of each Loan upon the
Stated Maturity Date therefor. Prior thereto, the Borrower shall, on each
Quarterly Payment Date occurring after the Revolving Loan Commitment Termination
Date, make a scheduled repayment of the outstanding principal amount of the Term
Loans in an amount equal to one twelfth (1/12) of the original aggregate
principal amount of the Term Loans; provided, that the final scheduled repayment
--------
on the Stated Maturity Date for Term Loans shall be in an amount necessary to
repay in full the unpaid principal of the Term Loans.
SECTION 3.1.2. Mandatory Prepayments on Loans. If at any time, the
------------------------------
aggregate principal amount of all Senior Debt outstanding shall exceed the
Aggregate Borrowing Base then in effect, the Borrower shall, at the Borrower's
option, either (a) forthwith repay a portion of the Loans in an aggregate
principal amount equal to such excess or (b) pay an amount equal to such excess
in no more than six substantially equal monthly installments, the first such
payment to be due within five days after the date on which it is first
determined that such principal amount of Senior Debt exceeds the Aggregate
Borrowing Base, and the remaining payments due on the numerically corresponding
day of each of the subsequent months so that, upon the conclusion of such
mandatory prepayments, the aggregate principal amount of all outstanding Senior
Debt does not exceed the Aggregate Borrowing Base; provided that if the
aggregate principal amount of all Senior Debt outstanding shall exceed the
Aggregate Borrowing Base as a result of the reduction of the Aggregate Borrowing
Base pursuant to Section 7.2.7, then the foregoing clause (b) shall not apply.
If a subsequent month does not contain a numerically corresponding day, the
Borrower shall make such payment on the last Business Day of such month, or if
the numerically corresponding day is not a Business Day, such payment will be
due on the preceding Business Day. Mandatory prepayments pursuant to this
Section 3.1.2 shall be in addition to and not in lieu of principal payments
-------------
required pursuant to Section 3.1.1; provided, that such mandatory prepayments
------------- -------- ----
shall be applied against the next scheduled repayment or repayments required
pursuant to Section 3.1.1 if, as of the date for such scheduled repayment, after
-------------
giving effect to such scheduled repayment, the Senior Debt shall be less than or
equal to the Aggregate Borrowing Base then in effect.
The Borrower shall, on each date when any reduction in the Revolving Loan
Commitment Amount shall become effective pursuant to Section 2.2.1, make a
-------------
mandatory prepayment of all Revolving Loans equal to the excess, if any, of the
aggregate, outstanding principal amount of all Revolving Loans over the
Revolving Loan Commitment Amount as so reduced.
22
SECTION 3.1.3. Repayment Upon Acceleration. The Borrower shall,
---------------------------
immediately upon any acceleration of the Stated Maturity Date of any Loans
pursuant to Section 8.2 or 8.3, repay all Loans.
----------- ---
SECTION 3.1.4. Voluntary Repayments. The Borrower may, from time to time
--------------------
on any Business Day prior to the Stated Maturity Date, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
Loans; provided, however, that (i) any such prepayment shall be made pro rata
-------- ------- --- ----
among Loans of the same type and, if applicable, having the same Interest Period
of all Lenders; (ii) no such prepayment of any LIBO Rate Loan may be made on any
day other than the last day of the Interest Period for such Loan; and (iii) all
such voluntary partial prepayments shall be in an aggregate minimum amount of
$300,000 for Base Rate Loans and $1,000,000 for LIBO Rate Loans and an integral
multiple of $100,000; provided that after giving effect to such partial
prepayment, any outstanding LIBO Rate Loans with the same Interest Period, if
any, shall be in a minimum aggregate principal amount of at least $5,000,000.
Each voluntary prepayment of Term Loans made pursuant to this Section 3.1.4
-------------
shall be applied, to the extent of such prepayment, in the inverse order of the
scheduled repayments of Term Loans set forth in Section 3.1.1. Each prepayment
-------------
of any Loans made pursuant to this Section shall be without premium or penalty,
except as may be required by Section 4.4. No voluntary prepayment of principal
-----------
of any Revolving Loans shall cause a reduction in the Revolving Loan Commitment
Amount. No voluntary prepayment of principal of any Term Loan may be
reborrowed.
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
-------------------
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
-----------
SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing
-----
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing accrue interest at a rate per annum: (a) on that portion
maintained from time to time as a Base Rate Loan, equal to the sum of the
Alternate Base Rate from time to time in effect plus the Base Rate Applicable
Margin; and (b) on that portion maintained as a LIBO Rate Loan, during each
Interest Period applicable thereto, equal to the sum of the LIBO Rate (Reserve
Adjusted) for such Interest Period plus the LIBO Rate Applicable Margin.
The "LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
----------------------------
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of
1%) determined pursuant to the following formula:
LIBO Rate = LIBO Rate
-------------------------------
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be determined by the Agent on the basis of the
23
LIBOR Reserve Percentage in effect on, and the applicable rates furnished to and
received by the Agent from Bank of Montreal, two Business Days before the first
day of such Interest Period.
"LIBO Rate" means, relative to any Interest Period for LIBO Rate
---------
Loans, the rate of interest equal to the average (rounded upwards, if necessary,
to the nearest 1/16 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to Bank of Montreal's LIBOR Office in
the London interbank market as at or about 10:00 a.m. U.S. Central time two
Business Days prior to the beginning of such Interest Period for delivery on the
first day of such Interest Period, and in an amount approximately equal to the
amount of Bank of Montreal's LIBO Rate Loan and for a period approximately equal
to such Interest Period.
"LIBOR Reserve Percentage" means, relative to any Interest Period for
------------------------
LIBO Rate Loans, the reserve percentage (expressed as a decimal) equal to the
maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of and including
"Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
All LIBO Rate Loans shall bear interest from and including the first
day of the applicable Interest Period to (but not including) the last day of
such Interest Period at the interest rate determined as applicable to such LIBO
Rate Loan.
SECTION 3.2.2. Post-Maturity Rates. After the date any principal
-------------------
amount of any Loan is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise), or after any other monetary Obligation of the
Borrower shall have become due and payable, the Borrower shall pay, but only to
the extent permitted by law, interest (after as well as before judgment) on such
amounts at a rate per annum equal to the Alternate Base Rate plus a margin of
2%.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan
-------------
shall be payable, without duplication: (a) on the Stated Maturity Date
therefor; (b) except in the case of voluntary prepayment of Base Rate Loans, on
the date of any payment or prepayment, in whole or in part, of principal
outstanding on such Loan; (c) with respect to Base Rate Loans, on each Quarterly
Payment Date occurring after the date of the initial Borrowing hereunder; (d)
with respect to LIBO Rate Loans, the last day of each applicable Interest Period
(and, if such Interest Period shall exceed 90 days, on the 90th day of such
Interest Period); and (e) on that portion of any Loans the Stated Maturity Date
of which is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon
----------- -----------
such acceleration. Interest accrued on Loans or other monetary Obligations
arising under this
24
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand. Notwithstanding clauses (a) and (b) above, except
----------- ---
as otherwise provided in this Section 3.2.3, no accrued interest shall be due
-------------
and payable on the Revolving Loan Commitment Termination Date on those Revolving
Loans the principal of which is deemed to have been repaid by Term Loans to the
Borrower pursuant to Section 3.1.1.
-------------
SECTION 3.3. Fees. The Borrower agrees to pay the fees set
----
forth in this Section 3.3. All such fees shall be non-refundable.
-----------
SECTION 3.3.1. Commitment Fee. The Borrower agrees to pay to the
--------------
Agent for the account of each Lender, for the period (including any portion
thereof when any of its Commitments are suspended by reason of the Borrower's
inability to satisfy any condition of Article V) commencing on the Effective
---------
Date and continuing through the Revolving Loan Commitment Termination Date, a
commitment fee at the rate of (i) during any period when the ratio (expressed as
a percentage) of the outstanding principal of Senior Debt, including any Loans
outstanding, to the U.S. Borrowing Base then in effect is greater than 100%, 3/8
of 1% per annum and (ii) during all other periods 1/4 of 1% per annum on such
Lender's Percentage of the average daily unused portion of the Revolving Loan
Commitment Amount. Such commitment fees shall be payable by the Borrower in
arrears on each Quarterly Payment Date, commencing on October 1, 1996, and
ending on the Revolving Loan Commitment Termination Date.
SECTION 3.3.2. Agent's Fees. To the Agent for its own account,
------------
the fees as set forth in the letter agreement between the Borrower and the Agent
of even date herewith.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. If LIBO Rate Lending Unlawful. If any Lender shall
-----------------------------
determine (which determination shall, upon notice thereof to the Borrower
and the Lenders, be conclusive and binding on the Borrower) that the
introduction of or any change in or in the interpretation of any law makes it
unlawful, or any central bank or other governmental authority asserts that it is
unlawful, for such Lender to make, continue or maintain any Loan as, or to
convert any Loan into, a LIBO Rate Loan, the obligations of all Lenders to make,
continue, maintain or convert any such Loans shall, upon such determination,
forthwith be suspended until such Lender shall notify the Agent that the
circumstances causing such suspension no longer exist, and all LIBO Rate Loans
shall automatically convert into Base Rate Loans at the end of the then current
Interest Periods with respect thereto or sooner, if required by such law or
assertion.
25
SECTION 4.2. If Deposits Unavailable. If the Agent shall have
-----------------------
determined that (a) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to Bank of Montreal in its relevant market; or
(b) by reason of circumstances affecting Bank of Montreal's relevant market,
adequate means do not exist for ascertaining the interest rate applicable
hereunder to LIBO Rate Loans, then, upon notice from the Agent to the Borrower
and the Lenders, the obligations of all Lenders under Section 2.3 and Section
----------- -------
2.4 to make or continue any Loans as, or to convert any Loans into, LIBO Rate
---
Loans shall forthwith be suspended until the Agent shall notify the Borrower and
the Lenders that the circumstances causing such suspension no longer exist.
SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The Borrower
-----------------------------------
agrees to reimburse each Lender for any increase in the cost to such Lender of,
or any reduction in the amount of any sum receivable by such Lender in respect
of, making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, LIBO Rate Loans; provided, the Borrower shall only be obligated to
reimburse a Lender in respect of such increases or reductions if such Lender is
generally seeking such reimbursement from similar borrowers under similar
circumstances and Borrower shall not be obligated to reimburse a Lender in
respect of such increases or reductions in respect of any period prior to notice
thereof to Borrower. Such Lender shall promptly notify the Agent and the
Borrower in writing of the occurrence of any such event, such notice to state,
in reasonable detail, the reasons therefor and the additional amount required
fully to compensate such Lender for such increased cost or reduced amount. Such
additional amounts shall be payable by the Borrower directly to such Lender
within five days of its receipt of such notice, and such notice shall, in the
absence of manifest error, be conclusive and binding on the Borrower.
SECTION 4.4. Funding Losses. In the event any Lender shall incur
--------------
any loss or expense (including any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to make, continue or maintain any portion of the principal amount of any
Loan as, or to convert any portion of the principal amount of any Loan into, a
LIBO Rate Loan) as a result of (a) any conversion or repayment or prepayment of
the principal amount of any LIBO Rate Loan on a date other than the scheduled
last day of the Interest Period applicable thereto, whether pursuant to Section
-------
3.1 or otherwise; (b) any Loans not being made as LIBO Rate Loans in accordance
---
with the Borrowing Request therefor; or (c) any Loans not being continued as, or
converted into, LIBO Rate Loans in accordance with the Continuation/ Conversion
Notice therefor; then, upon the written notice of such Lender to the Borrower
(with a copy to the Agent), the Borrower shall, within five days of its receipt
thereof, pay directly to such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or expense.
Such written notice (which shall include calculations
26
in reasonable detail) shall, in the absence of manifest error, be conclusive and
binding on the Borrower.
SECTION 4.5. Increased Capital Costs. If any change in, or the
-----------------------
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in its sole and absolute discretion)
that the rate of return on its or such controlling Person's capital as a
consequence of its Commitments or the Loans made by such Lender is reduced to a
level below that which such Lender or such controlling Person could have
achieved but for the occurrence of any such circumstance, then, in any such case
upon notice from time to time by such Lender to the Borrower, the Borrower
shall, within 5 days of its receipt of such notice, pay directly to such Lender
additional amounts sufficient to compensate such Lender or such controlling
Person for such reduction in rate of return; provided, the Borrower shall only
be obligated to pay such amounts to a Lender if such Lender is generally seeking
payment in respect of such amounts from similar borrowers under similar
circumstances and Borrower shall not be obligated to reimburse a Lender in
respect of such amounts in respect of any period prior to such notice to the
Borrower. A statement of such Lender as to any such additional amount or
amounts (including calculations thereof in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on the Borrower. In
determining such amount, such Lender may use any reasonable method of averaging
and attribution that it (in its sole and absolute discretion) shall deem
applicable.
SECTION 4.6. Taxes. In the event that any withholding or
-----
deduction from any payment to be made by the Borrower hereunder is required in
respect of any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, but excluding franchise taxes and
taxes imposed on or measured by any Lender's net income or receipts (such non-
excluded items being called "Taxes") pursuant to any applicable law, rule or
-----
regulation, then the Borrower will (a) pay directly to the relevant authority
the full amount required to be so withheld or deducted; and (b) promptly forward
to the Agent an official receipt or other documentation satisfactory to the
Agent evidencing such payment to such authority.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent, for the account of the
respective Lenders, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this Section 4.6, a distribution hereunder by the
-----------
27
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
Upon the request of the Borrower or the Agent, each Lender that is
organized under the laws of a jurisdiction other than the United States shall,
prior to the due date of any payments under the Notes, execute and deliver to
the Borrower and the Agent, on or about the first scheduled payment date in each
Fiscal Year, one or more (as the Borrower or the Agent may reasonably request)
United States Internal Revenue Service Forms 4224 or Forms 1001 or such other
forms or documents (or successor forms or documents), appropriately completed,
as may be applicable to establish the extent, if any, to which a payment to such
Lender is exempt from withholding or deduction of Taxes.
SECTION 4.7. Payments, Computations, etc. Unless otherwise
---------------------------
expressly provided, all payments by the Borrower pursuant to this Agreement, the
Notes or any other Loan Document shall be made by the Borrower to the Agent for
the pro rata account of the Lenders entitled to receive such payment. All such
--- ----
payments required to be made to the Agent shall be made, without setoff,
deduction or counterclaim, not later than 12:00 Noon, United States Central
time, on the date due, in same day or immediately available funds, to such
account as the Agent shall specify from time to time by notice to the Borrower.
Funds received after that time shall be deemed to have been received by the
Agent on the next succeeding Business Day. The Agent shall promptly remit in
same day funds to each Lender its share, if any, of such payments received by
the Agent for the account of such Lender. All interest and fees shall be
computed on the basis of the actual number of days (including the first day but
excluding the last day) occurring during the period for which such interest or
fee is payable over a year comprised of 360 days (or, in the case of interest on
a Base Rate Loan, 365 days or, if appropriate, 366 days). Whenever any payment
to be made shall otherwise be due on a day which is not a Business Day, such
payment shall (except as otherwise required by clause (c) of the definition of
----------
the term "Interest Period" with respect to LIBO Rate Loans) be made on the next
---------------
succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.
SECTION 4.8. Sharing of Payments. If any Lender shall obtain
-------------------
any payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan (other than pursuant to the terms of
Sections 4.3, 4.4 and 4.5) in excess of its pro rata share of payments then or
------------ --- --- --- ----
therewith obtained by all Lenders, such Lender shall purchase from the other
Lenders such participations in Loans made by them as shall be necessary to cause
such purchasing Lender to share the excess payment or other recovery ratably
with each of them; provided, however, that if all or any portion of the excess
-------- -------
payment or other recovery is thereafter recovered from such purchasing Lender,
the purchase shall be rescinded and each Lender which has sold a participation
to the purchasing Lender shall repay to the purchasing Lender the purchase
28
price to the ratable extent of such recovery together with an amount equal to
such selling Lender's ratable share (according to the proportion of (a) the
amount of such selling Lender's required repayment to the purchasing Lender to
--
(b) the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section may, to the fullest
extent permitted by law, exercise all its rights of payment (including pursuant
to Section 4.9) with respect to such participation as fully as if such Lender
-----------
were the direct creditor of the Borrower in the amount of such participation.
If under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section to share in the benefits of any recovery on such secured
claim.
SECTION 4.9. Setoff. Each Lender shall, upon the occurrence
------
of any Default described in clauses (a) through (d) of Section 8.1.9 with
----------- --- -------------
respect to the Borrower or any of its Subsidiaries or any other Event of
Default, have the right to appropriate and apply to the payment of the
Obligations owing to it (whether or not then due), and (as security for such
Obligations) the Borrower hereby grants to each Lender a continuing security
interest in, any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter maintained with such Lender; provided, however, that
-------- -------
any such appropriation and application shall be subject to the provisions of
Section 4.8. Each Lender agrees promptly to notify the Borrower and the Agent
-----------
after any such setoff and application made by such Lender; provided, however,
-------- -------
that the failure to give such notice shall not affect the validity of such
setoff and application. The rights of each Lender under this Section are in
addition to other rights and remedies (including other rights of setoff under
applicable law or otherwise) which such Lender may have.
SECTION 4.10. Use of Proceeds. The Borrower shall apply the
---------------
proceeds of each Borrowing in accordance with the fourth recital; without
------ -------
limiting the foregoing, no proceeds of any Loan will be used to acquire any
equity security of a class which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934 or any "margin stock", as defined in F.R.S.
Board Regulation U.
ARTICLE V
CONDITIONS TO BORROWING
SECTION 5.1. Initial Borrowing. The obligations of the Lenders
-----------------
to fund the initial Borrowing shall be subject to the prior
29
or concurrent satisfaction of each of the conditions precedent set forth in this
Section 5.1.
-----------
SECTION 5.1.1. Resolutions, etc. The Agent shall have received
----------------
from the Borrower a certificate, dated the date of the initial Borrowing, of its
Secretary or Assistant Secretary as to (a) resolutions of its Board of Directors
then in full force and effect authorizing the execution, delivery and
performance of this Agreement, the Notes and each other Loan Document to be
executed by it; and (b) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement, the Notes and each other Loan
Document executed by it, upon which certificate each Lender may conclusively
rely until it shall have received a further certificate of the Secretary or
Assistant Secretary of the Borrower canceling or amending such prior
certificate.
SECTION 5.1.2. Delivery of Notes. The Agent shall have received,
-----------------
for the account of each Lender, its Note duly executed and delivered by the
Borrower.
SECTION 5.1.3. Payment of Outstanding Indebtedness, etc. All
----------------------------------------
Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the
-------------
Disclosure Schedule, together with all interest, all prepayment premiums and
other amounts due and payable with respect thereto, shall have been paid in full
(including, to the extent necessary, from proceeds of the initial Borrowing).
SECTION 5.1.4. Compliance with Representations and Warranties.
----------------------------------------------
The Agent shall have received a certificate from an Authorized Officer
confirming compliance with Section 5.2.1 and stating that, after giving effect
-------------
to Loans comprising the initial Borrowings, Senior Debt shall not exceed the
Aggregate Borrowing Base then in effect.
SECTION 5.1.5. Opinions of Counsel. The Agent shall have
-------------------
received an opinion, dated the date of the initial Borrowing and addressed to
the Agent and all Lenders, from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, a Professional Corporation,
counsel to the Borrower, substantially in the form of Exhibit E-1 hereto and the
-----------
Agent shall be satisfied that it will receive within 30 days of the initial
Borrowing an opinion from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, a Professional Corporation, counsel
to the Borrower, substantially in the form of Exhibit E-2 hereto.
-----------
SECTION 5.1.6. Closing Fees, Expenses, etc. The Agent shall have
---------------------------
received for its own account, or for the account of each Lender, as the case may
be, all fees, costs and expenses due and payable pursuant to Sections 3.3 and
------------
10.3, if then invoiced.
----
SECTION 5.2. Conditions Precedent to Revolving Loans. The
---------------------------------------
obligation of each Lender to fund any Revolving Loan on the occasion of any
Borrowing (including the initial Borrowing) shall be subject to the satisfaction
of each of the conditions precedent set forth in this Section 5.2.
-----------
30
SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both
-------------------------------------------
before and after giving effect to any Borrowing (but, if any Default of the
nature referred to in Section 8.1.5 shall have occurred with respect to any
-------------
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds thereof) the following statements shall be true and
correct: (a) the representations and warranties set forth in Article VI
----------
(excluding, however, those contained in Section 6.7) shall be true and correct
-----------
with the same effect as if then made (unless stated to relate solely to an early
date, in which case such representations and warranties shall be true and
correct as of such earlier date); (b) except as disclosed by the Borrower to the
Agent and the Lenders pursuant to Section 6.7 (i) no labor controversy,
-----------
litigation, arbitration or governmental investigation or proceeding shall be
pending or, to the knowledge of the Borrower, threatened against the Borrower or
any of its Subsidiaries which might materially adversely affect the Borrower's
consolidated business, operations, assets, revenues, properties or prospects or
which purports to affect the legality, validity or enforceability of this
Agreement, the Notes or any other Loan Document; and (ii) no development shall
have occurred in any labor controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section 6.7 which might
-----------
materially adversely affect the consolidated businesses, operations, assets,
revenues, properties or prospects of the Borrower and its Subsidiaries; (c) no
Default shall have then occurred and be continuing, and neither the Borrower nor
any of its Subsidiaries are in material violation of any law or governmental
regulation or court order or decree; (d) the Borrower is in compliance with the
Current Ratio and Tangible Net Worth tests required by Section 7.2.4, and,
-------------
immediately after giving effect to the proposed Borrowing, the Senior Debt of
the Borrower shall not exceed the Aggregate Borrowing Base and (e) the Loans
requested will constitute "Senior Indebtedness" pursuant to the Indenture, as
defined therein.
SECTION 5.2.2. Borrowing Request. The Agent shall have received
-----------------
a Borrowing Request for such Borrowing. Each of the delivery of a Borrowing
Request and the acceptance by the Borrower of the proceeds of such Borrowing
shall constitute a representation and warranty by the Borrower that, on the date
of such Borrowing (both immediately before and after giving effect to such
Borrowing and the application of the proceeds thereof), the statements made in
Section 5.2.1 are true and correct.
-------------
SECTION 5.2.3. Satisfactory Legal Form. All documents executed
-----------------------
or submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries shall be satisfactory in form and substance to the Agent and its
counsel; the Agent and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Agent or its counsel may
reasonably request.
SECTION 5.3. Conditions Precedent to the Making of the Term
----------------------------------------------
Loans. The obligation of each Lender to make its Term Loan is
-----
31
subject to (a) the condition precedent that the principal of all Revolving Loans
and accrued interest on all Revolving Loans, except those Revolving Loans the
principal of which shall be deemed to have been repaid by Term Loans pursuant to
Section 3.1.1 and for which such interest is not otherwise due and payable,
-------------
shall have been paid in full prior to or concurrently with the making of such
Term Loan; and (b) the conditions precedent set forth in Section 5.2.1. The
-------------
acceptance by the Borrower of the proceeds of the Term Loans shall constitute a
representation and warranty that, on the Revolving Loan Commitment Termination
Date (both before and after giving effect to such Term Loans and the application
of the proceeds thereof), the statements made in Section 5.2.1 are true and
-------------
correct.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Agreement and to make Loans hereunder, the Borrower represents and warrants unto
the Agent and each Lender as set forth in this Article VI.
----------
SECTION 6.1. Organization, etc. The Borrower and each of its
-----------------
Subsidiaries is a corporation validly organized and existing and in good
standing under the laws of the jurisdiction of its incorporation, is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the nature of its business requires such qualification,
and has full power and authority and holds all requisite governmental licenses,
permits and other approvals to enter into and perform its Obligations under this
Agreement, the Notes and each other Loan Document and to own and hold under
lease its property and to conduct its business substantially as currently
conducted by it.
SECTION 6.2. Due Authorization, Non-Contravention, etc. The
-----------------------------------------
execution, delivery and performance by the Borrower of this Agreement, the Notes
and each other Loan Document executed or to be executed by it, are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, and do not (a) contravene the Borrower's Organic Documents;
(b) contravene any contractual restriction, law or governmental regulation or
court decree or order binding on or affecting the Borrower; or (c) result in, or
require the creation or imposition of, any Lien on any of the Borrower's
properties.
SECTION 6.3. Government Approval, Regulation, etc. No
------------------------------------
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or other Person is required for
the due execution, delivery or performance by the Borrower of this Agreement,
the Notes or any other Loan Document. Neither the Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company
32
Act of 1940, as amended, or a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
SECTION 6.4. Validity, etc. This Agreement constitutes, and
-------------
the Notes and each other Loan Document executed by the Borrower will, on the due
execution and delivery thereof, constitute, the legal, valid and binding
obligations of the Borrower enforceable in accordance with their respective
terms except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally.
SECTION 6.5. Financial Information. The consolidated balance
---------------------
sheet of the Borrower and its Subsidiaries as at June 30, 1996, and the related
consolidated statements of earnings and cash flows of the Borrower and its
Subsidiaries, copies of which have been furnished to the Agent and each Lender,
have been prepared in accordance with GAAP consistently applied, and present
fairly the consolidated financial condition of the Borrower and its Subsidiaries
as at the date thereof and the results of their operations for the period then
ended.
SECTION 6.6. No Material Adverse Change. Since the date of the
--------------------------
financial statements described in Section 6.5, other than changes resulting from
-----------
fluctuations in oil and gas prices, there has been no material adverse change in
the financial condition, operations, assets, business, properties or prospects
of the Borrower and its Subsidiaries, taken as a whole.
SECTION 6.7. Litigation, Labor Controversies, etc. There is
------------------------------------
no pending or, to the knowledge of the Borrower, threatened litigation, action,
proceeding, or labor controversy affecting the Borrower or any of its
Subsidiaries, or any of their respective properties, businesses, assets or
revenues, which may materially adversely affect the financial condition,
operations, assets, business, properties or prospects of the Borrower and its
Subsidiaries, taken as a whole, or which purports to affect the legality,
validity or enforceability of this Agreement, the Notes or any other Loan
Document, except as disclosed in Item 6.7 ("Litigation") of the Disclosure
--------
Schedule.
SECTION 6.8. Subsidiaries. The Borrower has no Subsidiaries,
------------
except those Subsidiaries which are identified in Item 6.8 ("Existing
--------
Subsidiaries") of the Disclosure Schedule.
SECTION 6.9. Ownership of Properties. The Borrower and each
-----------------------
of its Subsidiaries owns good and defensible title to all of its properties and
assets, real and personal, tangible and intangible, of any nature whatsoever
(including patents, trade-
33
marks, trade names, service marks and copyrights), free and clear of all Liens,
charges or claims (including infringement claims with respect to patents,
trademarks, copyrights and the like), except those which would not have a
material adverse effect on the financial conditions, operations, assets,
business, properties or prospects of the Borrower and its Subsidiaries, taken as
a whole, and except as permitted pursuant to Section 7.2.3. For the purposes of
-------------
this representation, good and defensible title shall mean record title which may
be subject to minor defects and irregularities which (a) do not materially
reduce Borrower's net revenue interests or increase Borrower's working interests
(without a corresponding and proportional increase in Borrower's net revenue
interests) therein, and (b) are not likely to interfere materially with the
benefit and enjoyment of production from such properties.
SECTION 6.10. Taxes. To the best of the Borrower's knowledge,
-----
Borrower and each of its Subsidiaries has filed all tax returns and reports
required by law to have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing, except any such taxes or charges which are
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books.
SECTION 6.11. Pension and Welfare Plans. No steps have been
-------------------------
taken to terminate any Pension Plan, and no contribution failure has occurred
with respect to any Pension Plan sufficient to give rise to a Lien under section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which might result in the incurrence by the Borrower
or any member of the Controlled Group of any material liability, fine or
penalty. Neither the Borrower nor any member of the Controlled Group has any
contingent liability with respect to any post-retirement benefit under a Welfare
Plan, other than liability for continuation coverage described in Part 6 of
Title I of ERISA.
SECTION 6.12. Environmental Warranties. To the best of
------------------------
Borrower's knowledge after reasonable investigation, except as set forth in Item
----
6.12 ("Environmental Matters") of the Disclosure Schedule: (a) all facilities
----
and property (including underlying groundwater) owned or leased by the Borrower
or any of its Subsidiaries have been, and continue to be, owned or leased by the
Borrower and its Subsidiaries in material compliance with all Environmental
Laws; (b) there have been no past, and there are no pending or threatened (i)
claims, complaints, notices or requests for information received by the Borrower
or any of its Subsidiaries with respect to any alleged violation of any
Environmental Law, or (ii) complaints, notices or inquiries to the Borrower or
any of its Subsidiaries regarding potential liability under any Environmental
Law; (c) there have been no Releases (or, in Argentina, release) of Hazardous
Materials at, on or under any property now or previously owned or leased by the
Borrower or any of its Subsidiaries that, singly or in the aggregate, have, or
may reasonably be expected to have, a material adverse effect on the financial
condition,
34
operations, assets, business, properties or prospects of the Borrower and its
Subsidiaries, taken as a whole; (d) the Borrower and its Subsidiaries have been
issued and are in material compliance with all permits, certificates, approvals,
licenses and other authorizations relating to environmental matters and
necessary or desirable for their businesses; (e) no property now or previously
owned or leased by the Borrower or any of its Subsidiaries is listed or proposed
for listing (with respect to owned property only) on the National Priorities
List pursuant to CERCLA, on the CERCLIS or on any similar state list of sites
requiring investigation or clean-up; (f) there are no underground storage tanks,
active or abandoned, including petroleum storage tanks, on or under any property
now or previously owned or leased by the Borrower or any of its Subsidiaries
that, singly or in the aggregate, have, or may reasonably be expected to have, a
material adverse effect on the financial condition, operations, assets,
business, properties or prospects of the Borrower and its Subsidiaries, taken as
a whole; (g) neither Borrower nor any Subsidiary of the Borrower has directly
transported or directly arranged for the transportation of any Hazardous
Material to any location which is listed or proposed for listing on the National
Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list
or which is the subject of federal, state or local enforcement actions or other
investigations which may lead to material claims against the Borrower or such
Subsidiary thereof for any remedial work, damage to natural resources or
personal injury, including claims under CERCLA; (h) there are no polychlorinated
biphenyls or friable asbestos present at any property now or previously owned or
leased by the Borrower or any Subsidiary of the Borrower that, singly or in the
aggregate, have, or may reasonably be expected to have, a material adverse
effect on the financial condition, operations, assets, business, properties or
prospects of the Borrower and its Subsidiaries, taken as a whole; and (i) no
conditions exist at, on or under any property now or previously owned or leased
by the Borrower or any Subsidiary which, with the passage of time, or the giving
of notice or both, would give rise to liability under any Environmental Law
which singly or in the aggregate have, or may reasonably be expected to have, a
material adverse effect on the financial condition, operations, assets,
business, properties or prospects of the Borrower and its Subsidiaries, taken as
a whole.
SECTION 6.13. Regulations G, U and X. The Borrower is not
----------------------
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock, and no proceeds of any Loans will be used for a purpose
which violates, or would be inconsistent with, F.R.S. Board Regulation G, U or
X. Terms for which meanings are provided in F.R.S. Board Regulation G, U or X
or any regulations substituted therefor, as from time to time in effect, are
used in this Section with such meanings.
SECTION 6.14. Accuracy of Information. All factual information
-----------------------
heretofore or contemporaneously furnished by or on behalf of the Borrower in
writing to the Agent or any Lender for
35
purposes of or in connection with this Agreement or any transaction contemplated
hereby is, and all other such factual information hereafter furnished by or on
behalf of the Borrower to the Agent or any Lender will be, true and accurate in
every material respect on the date as of which such information is dated or
certified and as of the date of execution and delivery of this Agreement by the
Agent and such Lender, and such information is not, or shall not be, as the case
may be, incomplete by omitting to state any material fact necessary to make such
information not misleading.
SECTION 6.15. No Default. Neither the Borrower nor any
----------
Subsidiary is in default in any respect materially and adversely affecting the
business, property, assets, operations or condition, financial or otherwise, of
the Borrower and its Subsidiaries, taken as a whole, with respect to any
indenture, mortgage, deed of trust or other agreement or instrument to which the
Borrower is a party or by which the Borrower or its properties is/are bound or
affected.
SECTION 6.16. No Violation of Applicable Law. To the best of
------------------------------
the Borrower's knowledge, neither the Borrower nor any of its Subsidiaries has
violated any applicable statute, regulation or ordinance of the United States of
America or any foreign country, or any state, municipality or other
jurisdiction, or of any agency thereof in any respect materially and adversely
affecting the business, property, assets, operations or condition, financial or
otherwise, of Borrower and its Subsidiaries, taken as a whole, and the Borrower
has not received any notice of probable violation from the Department of Energy
or the Environmental Protection Agency. The Borrower is using the Borrower's
best efforts to comply or cause its Subsidiaries to comply with all statutes,
rules and regulations relating to environmental standards and controls in all
jurisdictions where the Borrower and its Subsidiaries are presently doing
business.
SECTION 6.17. Permits. The Borrower and its Subsidiaries have
-------
all governmental and private permits, certificates, consents and franchises
which in any respect are material to the business, property, assets, operations
or condition, financial or otherwise, of the Borrower and its Subsidiaries to
carry on the Borrower's and such Subsidiaries' business as now being conducted,
and to own or lease and operate the Borrower's and such Subsidiaries' properties
as now owned or leased. All such governmental and private permits,
certificates, consents and franchises are valid and subsisting, and the Borrower
and its Subsidiaries are not in violation thereof in a manner which would have a
material and adverse effect thereon.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. The Borrower agrees with
---------------------
the Agent and each Lender that, until all Commitments have
36
terminated and all Obligations have been paid and performed in full, the
Borrower will perform the obligations set forth in this Section 7.1.
-----------
SECTION 7.1.1. Financial Information, Reports, Notices, etc. The
--------------------------------------------
Borrower will furnish, or will cause to be furnished, to each Lender and the
Agent copies of the following financial statements, reports, notices and
information: (a) as soon as available and in any event within 45 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year of the
Borrower, consolidated balance sheets of the Borrower and its Subsidiaries as of
the end of such Fiscal Quarter and consolidated statements of earnings and cash
flows of the Borrower and its Subsidiaries for such Fiscal Quarter and for the
period commencing at the end of the previous Fiscal Year and ending with the end
of such Fiscal Quarter, certified by the chief accounting or financial
Authorized Officer of the Borrower; (b) as soon as available and in any event
within 120 days after the end of each Fiscal Year of the Borrower, a complete
copy of the annual audit report for such Fiscal Year for the Borrower and its
Subsidiaries, including therein consolidated balance sheets of the Borrower and
its Subsidiaries as of the end of such Fiscal Year and consolidated statements
of earnings and cash flows of the Borrower and its Subsidiaries for such Fiscal
Year, in each case certified (without any Impermissible Qualification) by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Co. or other independent public accountants selected by the Borrower
and reasonably acceptable to the Agent and the Required Lenders, together with a
certificate from such accountants (i) containing a computation of, and showing
compliance with, each of the financial ratios and restrictions contained in
Section 7.2.4 and (ii) containing a computation of the Consolidated Interest
-------------
Coverage Ratio (as defined in the Indenture) as of the date of such statements
and to the effect that, in making the examination necessary for the signing of
such annual report by such accountants, they have not become aware of any
Default or Event of Default that has occurred and is continuing, or, if they
have become aware of such Default or Event of Default, describing such Default
or Event of Default and the steps, if any, being taken to cure it; (c) as soon
as available and in any event within 45 days after the end of each Fiscal
Quarter, a certificate, executed by the chief accounting or financial Authorized
Officer of the Borrower, showing (in reasonable detail and with appropriate
calculations and computations in all respects satisfactory to the Agent) (i)
compliance with the financial covenants set forth in Section 7.2.4 and (ii)
-------------
containing a computation of the Consolidated Interest Coverage Ratio (as defined
in the Indenture) as of the date of such statements; (d) forthwith upon the
occurrence of each Default, a statement of the chief accounting or financial
Authorized Officer of the Borrower setting forth details of such Default and the
action which the Borrower has taken and proposes to take with respect thereto;
(e) as soon as possible and in any event within three days after (i) the
occurrence of any adverse development with respect to any litigation, action,
proceeding, or labor controversy described in Section 6.7, or (ii) the
-----------
commencement of any labor controversy, litigation, action or
37
proceeding of the type described in Section 6.7, notice thereof and copies of
-----------
all documentation relating thereto; (f) promptly after the sending or filing
thereof, copies of all reports which the Borrower sends to any of its
securityholders, and all reports and registration statements which the Borrower
or any of its Subsidiaries files with the Securities and Exchange Commission or
any national securities exchange; (g) immediately upon becoming aware of the
institution of any steps by the Borrower or any other Person to terminate any
Pension Plan, or the failure to make a required contribution to any Pension
Plan, if such failure is sufficient to give rise to a Lien under section 302(f)
of ERISA, or the taking of any action with respect to a Pension Plan which could
result in the requirement that the Borrower furnish a bond or other security to
the PBGC or such Pension Plan, or the occurrence of any event with respect to
any Pension Plan which could result in the incurrence by the Borrower of any
material liability, fine or penalty, or any material increase in the contingent
liability of the Borrower with respect to any post-retirement Welfare Plan
benefit, notice thereof and copies of all documentation relating thereto; and
(h) such other information respecting the condition or operations, financial or
otherwise, of the Borrower or any of its Subsidiaries as any Lender through the
Agent may from time to time reasonably request.
SECTION 7.1.2. Compliance with Laws, etc. The Borrower will, and
-------------------------
will cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include
(without limitation) the payment, before the same become delinquent, of all
taxes, assessments and governmental charges imposed upon it or upon its property
except to the extent being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books. The Borrower will maintain and preserve its
corporate existence and qualification as a foreign corporation.
SECTION 7.1.3. Maintenance of Properties. The Borrower will, and
-------------------------
will cause each of its Subsidiaries to, maintain, preserve, protect and keep its
material properties in good repair, working order and condition, and make
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times, all
in accordance with approved practices of prudent operators and standards
prevailing in the oil and gas industry and within limits imposed by joint
operating agreements.
SECTION 7.1.4. Insurance. The Borrower will, and will cause each
---------
of its Subsidiaries to, maintain or cause to be maintained, with responsible
insurance companies insurance with respect to its properties and business
against such casualties and contingencies and of such types and in such amounts
as is customary in the case of similar businesses and will, upon request of the
Agent, furnish to each Lender at reasonable intervals a certificate of an
Authorized Officer of the Borrower setting forth the nature and
38
extent of all insurance maintained by the Borrower and its Subsidiaries in
accordance with this Section.
SECTION 7.1.5. Books and Records. The Borrower will, and will
-----------------
cause each of its Subsidiaries to, keep books and records which accurately
reflect all of its business affairs and transactions and permit the Agent and
each Lender or any of their respective representatives, at reasonable times and
intervals, to visit all of its offices, to discuss its financial matters with
its officers and to examine any of its books or other corporate records.
SECTION 7.1.6. Environmental Covenant. The Borrower will, and
----------------------
will cause each of its Subsidiaries to (a) use and operate all of its facilities
and properties in material compliance with all Environmental Laws, keep all
necessary permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material compliance
therewith, and handle all Hazardous Materials in material compliance with all
applicable Environmental Laws; (b) immediately notify the Agent and provide
copies upon receipt of all written claims, complaints, notices or inquiries
relating to the condition of its facilities and properties or compliance with
Environmental Laws, and shall promptly cure and have dismissed with prejudice
any actions and proceedings relating to compliance with Environmental Laws; and
(c) provide such information and certifications which the Agent may reasonably
request from time to time to evidence compliance with this Section 7.1.6.
-------------
SECTION 7.1.7. Employee Benefit Plans. With respect to each Plan
----------------------
of Borrower, if any: (a) at all times make prompt payments of contributions
with respect to each such Plan, so as to meet the minimum funding standards
required by sections 302 through 305 of ERISA; (b) upon the receipt of
reasonable written request from the Lenders, promptly furnish the Lenders with
copies of each report required to be filed pursuant to (S)103 of ERISA in
connection with such Plan for each plan-year, including any certified financial
statements or actuarial statements required under said (S)103; (c) immediately
notify the Lenders of any fact, including, but not limited to, any "Reportable
Event" (as that term is defined in (S)4043 of ERISA) arising in connection with
any such Plan which might constitute grounds for the termination thereof or for
the appointment by the appropriate United States District Court of a trustee to
administer such Plan, and, within thirty (30) days after the occurrence of any
Reportable Event, deliver to the Lenders a statement from Borrower's President
detailing such Reportable Event and Borrower's proposed action with respect
thereto; and (d) promptly upon their request therefor, furnish the Lenders such
additional information concerning any such Plan as the Lenders may reasonably
request.
SECTION 7.1.8. Designated Senior Indebtedness. The Borrower and
------------------------------
the Lenders hereby agree that all Obligations of the Borrower pursuant to this
Agreement and each other Loan Document constitute
39
Designated Senior Indebtedness (as defined in the Indenture) for purposes of the
Indenture. The Borrower furthermore agrees that it shall deliver all notices
and take such other action as may be required by the Indenture such that the
Obligations of the Borrower under this Agreement shall at all times constitute
Designated Senior Indebtedness.
SECTION 7.2. Negative Covenants. The Borrower agrees with the
------------------
Agent and each Lender that, until all Commitments have terminated and all
Obligations have been paid and performed in full, the Borrower will perform the
obligations set forth in this Section 7.2.
-----------
SECTION 7.2.1. Business Activities. The Borrower will not, and
-------------------
will not permit any of its Subsidiaries to, engage in any business activity,
except those described in the first recital and such activities as may be
-------------
incidental or related thereto.
SECTION 7.2.2. Indebtedness. The Borrower will not, and will not
------------
permit any of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following: (a) Indebtedness in respect of the Loans
and other Obligations; (b) Indebtedness existing as of the Effective Date which
is identified in Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure
-------------
Schedule; (c) unsecured trade debt incurred in the ordinary course of business
(including open accounts extended by suppliers on normal trade terms in
connection with purchases of goods and services, but excluding Indebtedness
incurred through the borrowing of money or Contingent Liabilities); (d) lease
obligations under leases covering Borrower's or any of its Subsidiary's business
premises (which shall include storage yard facilities); (e) lease obligations
arising from the leasing of equipment located upon the Borrower's properties and
utilized in the production of oil and gas therefrom; (f) lease obligations, not
to exceed $1,000,000 in any Fiscal Year arising from the lease of equipment used
in the ordinary course of business of the Borrower and its Subsidiaries; (g)
current indebtedness to operators under joint operating agreements or compulsory
pooling orders; (h) advances made as operator on behalf of non-operators
pursuant to joint operating agreements or pooling orders; (i) letter of credit
reimbursement agreements with issuers and any reimbursement obligations that
arise thereunder, provided such letters of credit and reimbursement obligations
are not in excess of $15,000,000 at any time outstanding in the aggregate; (j)
funds held for and payments due to third parties from production from
properties; (k) subject to Section 7.2.12, Indebtedness of the Borrower's
--------------
Subsidiaries owing to the Borrower or to other Subsidiaries of the Borrower and
unsecured Indebtedness of the Borrower owing to its Subsidiaries; (l) deferred
tax liability; (m) Indebtedness of the Borrower in an outstanding amount not to
exceed $25,000,000 in the aggregate, plus interest and premium, if any; (n) the
guaranties by the Borrower of the obligations of its Subsidiaries otherwise
permitted by the terms of this Agreement, provided that the aggregate
outstanding
40
principal amount of Indebtedness and other obligations of Subject Subsidiaries
guaranteed by the Borrower shall not exceed $10,000,000 at any time; (o)
Indebtedness of any Subject Subsidiary, provided that such Indebtedness shall
--------
not be a direct obligation or Contingent Liability of the Borrower or any other
Subsidiary of the Borrower except as permitted by clause (n) above; (p) the
----------
Borrower's $150,000,000 9% Senior Subordinated Notes Due 2005; and (q)
Indebtedness in respect of Hedging Obligations, provided that such Hedging
Obligations in respect of oil and gas do not exceed volumes with respect to any
year in excess of 80% of the projected production attributable to the Borrower's
and its Subsidiaries' then proved developed oil and gas properties in respect of
such year.
SECTION 7.2.3. Liens. The Borrower will not, and will not permit
-----
any of its Subsidiaries (other than any Subject Subsidiary) to, create, incur,
assume or suffer to exist any Lien upon any of its property, revenues or assets,
whether now owned or hereafter acquired, except: (a) Liens granted prior to the
Effective Date to secure payment of Indebtedness of the type permitted and
described in clause (b) of Section 7.2.2; (b) Liens for taxes, assessments or
---------- -------------
other governmental charges or levies not at the time delinquent or thereafter
payable without penalty or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books; (c) Liens of carriers, warehousemen,
mechanics, materialmen and landlords incurred in the ordinary course of business
for sums not overdue or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books; (d) encumbrances created by production sales
contracts, joint operating agreements and other contracts entered into in the
normal course of Borrower's business for exploration, development and/or
operation of the Borrower's properties; (e) easements, servitudes and other
rights of user which do not materially interfere with the use of such assets;
(f) other minor burdens and defects of or in title which do not secure the
payment of money, other than as described in clause (a); (g) those and only
those lease burdens previously disclosed to the Lenders in writing and existing
operating agreements, farmout agreements and other agreements and contractual
obligations related to the Borrower's properties; (h) Liens incurred in the
ordinary course of business in connection with workmen's compensation,
unemployment insurance or other forms of governmental insurance or benefits, or
to secure performance of tenders, statutory obligations, leases and contracts
(other than for borrowed money) entered into in the ordinary course of business
or to secure obligations on surety or appeal bonds; (i) judgment Liens in
existence less than 15 days after the entry thereof or with respect to which
execution has been stayed or the payment of which is covered in full (subject to
a customary deductible) by insurance maintained with responsible insurance
companies; (j) Liens securing Indebtedness to be Paid (as defined in Section
-------
5.1.3), provided Borrower shall cause such Liens to be promptly released; and
-----
(k) Liens affecting the property of the Subject
41
Subsidiaries only securing Indebtedness permitted by clause (o) of Section
---------- -------
7.2.2.
------
SECTION 7.2.4. Financial Condition. The Borrower will not permit:
-------------------
(a) its Tangible Net Worth to be less than the sum of $200,000,000 plus
----
75% of the proceeds from third parties of the sale by the Borrower and its
Subsidiaries of securities (other than securities constituting Indebtedness) net
of reasonable incidental, brokerage, underwriting and legal costs actually paid
to third parties in connection therewith, less the aggregate of the reductions
----
after the Effective Date in the values at which the Borrower's oil and gas
properties are carried on its books in accordance with GAAP in order to comply
with the full cost method of accounting for oil and gas properties or as
required by ceiling tests established by the Securities and Exchange Commission;
and (b) its Current Ratio as of the end of any Fiscal Quarter to be less than
1:1; provided that for purposes hereof, any unused portion of the Revolving Loan
--------
Commitment Amount will be deemed a current asset.
SECTION 7.2.5. Take or Pay Contracts. The Borrower will not, and
---------------------
will not permit any of its Subsidiaries to, enter into or be a party to any
arrangement for the purchase of materials, supplies, other property or services
if such arrangement by its express terms requires that payment be made by the
Borrower or such Subsidiary regardless of whether such materials, supplies,
other property or services are delivered or furnished to it.
SECTION 7.2.6. Consolidation, Merger, etc. The Borrower will
--------------------------
not, and will not permit any of its Subsidiaries to, liquidate or dissolve,
consolidate with, or merge into or with, any other corporation, or purchase or
otherwise acquire all or substantially all of the assets of any Person (or of
any division thereof) except (a) any such Subsidiary may liquidate or dissolve
voluntarily into, and may merge with and into, the Borrower or any other
Subsidiary of the Borrower, and the assets or stock of any Subsidiary of the
Borrower may be purchased or otherwise acquired by the Borrower or any other
Subsidiary of the Borrower; provided, that no Subsidiary of the Borrower which
--------
is not a Subject Subsidiary may dissolve or liquidate voluntarily into, and
neither the Borrower nor any Subsidiary of the Borrower which is not a Subject
Subsidiary may merge with or into, any Subject Subsidiary unless the Borrower or
such Subsidiary which is not a Subject Subsidiary is the surviving entity, and
the assets or stock of any Subsidiary of the Borrower which is not a Subject
Subsidiary may not be purchased or otherwise acquired by any Subject Subsidiary;
and (b) so long as no Default has occurred and is continuing or would occur
after giving effect thereto, the Borrower or any of its Subsidiaries may
purchase all or substantially all of the assets of any Person, or acquire such
Person by merger.
SECTION 7.2.7. Asset Dispositions, etc. The Borrower will not,
-----------------------
and will not permit any of its Subsidiaries to, sell,
42
transfer, lease, contribute or otherwise convey, exchange or lease, or grant
options, warrants or other rights with respect to, all or any substantial part
of its assets (including accounts receivable and capital stock of Subsidiaries)
to any Person (including any Subject Subsidiary), unless it has either given
Lenders 15 Business Days prior written notice thereof or the aggregate
consideration for all such sales, transfers, conveyances, exchanges or leases
made in any six month period ending June 30 or December 31 is less than Ten
Million Dollars ($10,000,000). Notwithstanding anything to the contrary in this
Agreement, the Borrower will not, and will not permit any of its Subsidiaries
(other than a Subject Subsidiary) to, sell, transfer, lease, contribute or
otherwise convey, exchange or lease, or grant options, warrants or other rights
with respect to, all or any substantial part of its assets (including accounts
receivable and capital stock of Subsidiaries) to any Subject Subsidiary. In the
event that the Borrower and its Subsidiaries shall sell, transfer, lease,
contribute or otherwise convey, exchange or lease properties in excess of Ten
Million Dollars ($10,000,000) in the aggregate in any six month period ending
June 30 or December 31, the Applicable Lenders shall have the option to reduce
the Aggregate Borrowing Base.
SECTION 7.2.8. Guaranties, Loans or Advances. Other than Borrower's
-----------------------------
Indebtedness hereunder and other than pursuant to Borrower's current and future
employees' stock option plans, the Borrower will not become or be a guarantor or
surety of, or otherwise become or be responsible in any manner (whether by
agreement to purchase or repurchase any obligation, stock, assets, goods or
services, or to supply or advance any funds, assets, goods or services, or
otherwise, whether directly or indirectly) with respect to, any undertaking of
any other person or entity, nor make or permit to exist any loans or advances to
any other Persons which in the aggregate exceed the amount of $500,000 at any
time outstanding, except for (a) the endorsement, in the ordinary course of
collection, of instruments payable to Borrower, or its order; (b) advances made
and liabilities existing under joint operating agreements and compulsory pooling
orders; (c) the liability to account to third persons for their share of
production proceeds received by Borrower; (d) loans and advances to employees
for the sole purpose of permitting such employees to purchase shares of
Borrower's capital stock; (e) loans and advances to employees of the Borrower
and its Subsidiaries for travel and other business expenses; (f) subject to
Section 7.2.12, loans and advances by the Borrower to any of its Subsidiaries or
--------------
by any Subsidiary of the Borrower to the Borrower or any other Subsidiary of the
Borrower; and (g) guaranties by the Borrower of obligations of its Subsidiaries
otherwise permitted pursuant to this Agreement, provided that the aggregate
outstanding principal amount of Indebtedness and other obligations of Subject
Subsidiaries so guaranteed shall not at any time exceed $10,000,000 in the
aggregate.
SECTION 7.2.9. Other Agreements. The Borrower will not enter
----------------
into any agreement containing any provision which would be violated
43
or breached by the performance of its obligations hereunder or under any
instrument or document delivered or to be delivered by it hereunder or in
connection herewith.
SECTION 7.2.10. Transactions with Affiliates. The Borrower
----------------------------
will not, and will not permit any of its Subsidiaries to, enter into, or cause,
suffer or permit to exist any arrangement or contract with any of its other
Affiliates unless such arrangement or contract is determined by the Board of
Directors of the Borrower to be (a) fair and equitable to the Borrower or such
Subsidiary and (b) an arrangement or contract of the kind which would be entered
into by a prudent Person in the position of the Borrower or such Subsidiary with
a Person which is not one of its Affiliates.
SECTION 7.2.11. Negative Pledges, Restrictive Agreements, etc.
----------------------------------------------
The Borrower will not, and will not permit any of its Subsidiaries to,enter into
any agreement (excluding this Agreement, any other Loan Document, and any
agreement governing any Indebtedness permitted by clause (b) of Section
---------- -------
7.2.2) prohibiting (a) the creation or assumption of any Lien upon its
-----
properties, revenues or assets (other than the properties, revenues or assets of
the Subject Subsidiaries), whether now owned or hereafter acquired, or the
ability of the Borrower to amend or otherwise modify this Agreement or any other
Loan Document; or (b) the ability of any Subsidiary (other than a Subject
Subsidiary) to make any payments, directly or indirectly, to the Borrower by way
of dividends, advances, repayments of loans or advances, reimbursements of
management and other intercompany charges, expenses and accruals or other
returns on investments, or any other agreement or arrangement which restricts
the ability of any such Subsidiary (other than a Subject Subsidiary) to make any
payment, directly or indirectly, to the Borrower. Notwithstanding the
foregoing, any agreement governing any Indebtedness permitted by clause (p) of
----------
Section 7.2.2 shall not prohibit the creation or assumption of any Lien upon the
-------------
properties, revenues or assets of the Borrower or any Subsidiary (other than a
Subject Subsidiary), whether now owned or hereafter acquired securing any Senior
Debt, and no agreement governing any Indebtedness permitted by clause (p) of
----------
Section 7.2.2 shall prohibit the ability of any Subsidiary (other than a Subject
-------------
Subsidiary) to make any payments, directly or indirectly, to the Borrower or the
ability of the Borrower to amend or otherwise modify this Agreement or any other
Loan Document.
SECTION 7.2.12. Restricted Payments. The Borrower hereby
-------------------
agrees that Restricted Payments (as defined in the Indenture) shall be limited
as set forth in Section 1010 of the Indenture as in effect on the date of the
issuance of the Subordinated Debt permitted by clause (p) of Section 7.2.2,
---------- -------------
without giving effect to subsequent amendments, or, with the consent of the
Required Lenders, any similar sections of any extension or replacement of the
Indenture to which the Borrower is a party, and such section, together with (for
purposes of this Section 7.2.12 only) all related definitions and provisions, is
--------------
incorporated by reference as if set forth herein in full, provided that each
-------- ----
reference to the
44
"Company" shall be deemed to be a reference to the "Borrower"; each reference to
a "Default" or an "Event of Default" shall be deemed to be a reference to a
Default or Event of Default pursuant to this Agreement and each reference to a
Section shall be deemed to be a reference to the corresponding Section in the
Indenture (as such Section is in effect on the date of the issuance of
Subordinated Debt permitted by clause (p) of Section 7.2.2). This provision
---------- -------------
shall survive any termination of the Indenture and nothing in this Section shall
be construed or deemed to permit any action by the Borrower which is otherwise
prohibited by this Agreement.
SECTION 7.2.13. Investment in Subsidiaries. If any Default
--------------------------
or Event of Default shall have occurred and is continuing or during any period
in which the aggregate principal amount of Senior Debt shall exceed the
Aggregate Borrowing Base then in effect, the Borrower shall not, and shall not
permit any of its Subsidiaries which are not Subject Subsidiaries to, incur any
Contingent Liabilities for any Indebtedness or other obligations of any Subject
Subsidiary, make any loan or advance to, or assume, redeem, purchase, defease,
pay or forgive any Indebtedness or other obligation of, or make any equity
investment in, or incur any Indebtedness on behalf of, any Subsidiary and the
Borrower shall not, and shall not permit any of its Subsidiaries which are not
Subject Subsidiaries to, apply any of its funds, property or assets to the
purchase, redemption, sinking fund for or other retirement of any shares of any
class of capital stock of a Subsidiary or warrants, options or other rights with
respect to any shares of any class of such capital stock or any Indebtedness or
obligations of any Subsidiary.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the
----------------------------
following events or occurrences described in this Section 8.1 shall constitute
-----------
an "Event of Default".
----------------
SECTION 8.1.1. Non-Payment of Obligations. The Borrower shall
--------------------------
default in the payment or prepayment when due of any principal of or interest on
any Loan, or the Borrower shall default in the payment when due of any
commitment fee or of any other Obligation.
SECTION 8.1.2. Breach of Warranty. Any representation or
------------------
warranty of the Borrower made or deemed to be made hereunder or in any other
Loan Document or any other writing or certificate furnished by or on behalf of
the Borrower to the Agent or any Lender for the purposes of or in connection
with this Agreement or any such other Loan Document (including any certificates
delivered pursuant to Article V) is or shall be incorrect when made in any
---------
material respect.
45
SECTION 8.1.3. Non-Performance of Certain Covenants and
----------------------------------------
Obligations. The Borrower shall default in the due performance and observance
-----------
of any of its obligations under Sections 7.2.4 or 7.2.8.
-----------------------
SECTION 8.1.4. Non-Performance of Other Covenants and
--------------------------------------
Obligations. The Borrower shall default in the due performance and observance
of any other agreement contained herein or in any other Loan Document, and such
default shall continue unremedied for a period of 15 days after the Borrower
shall become aware of such default, whether by notice thereof given to the
Borrower by the Agent or any Lender or otherwise.
SECTION 8.1.5. Default on Other Indebtedness. A default shall
-----------------------------
occur in the payment when due (subject to any applicable grace period), whether
by acceleration or otherwise, of any Indebtedness for borrowed money (other than
Indebtedness described in Section 8.1.1) or Contingent Liability of the Borrower
-------------
or any of its Subsidiaries, or a default shall occur in the performance or
observance of any obligation or condition with respect to such Indebtedness if
the effect of such default is to accelerate the maturity of any such
Indebtedness or such default shall continue unremedied for any applicable period
of time sufficient to permit the holder or holders of such Indebtedness, or any
trustee or agent for such holders, to cause such Indebtedness to become due and
payable prior to its expressed maturity.
SECTION 8.1.6. Other Material Obligations. Default in the
--------------------------
payment for a period in excess of sixty (60) days of when due, or in the
performance or observance of any material obligation of, or condition agreed to
by, the Borrower or any Subsidiary with respect to any material purchase or
lease of goods or services (except those which would not have a material adverse
effect on the financial conditions, operations, assets, business, properties or
prospects of the Borrower and its Subsidiaries, taken as a whole, and except
only to the extent that the existence of any such default is being contested by
the Borrower or such Subsidiary in good faith by appropriate proceedings).
SECTION 8.1.7. Judgments. Any judgment or order for the payment
---------
of money in excess of $10,000,000 (or its equivalent) shall be rendered against
the Borrower or any of its Subsidiaries and either (a) enforcement proceedings
shall have been commenced by any creditor upon such judgment or order; or (b)
there shall be any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect.
SECTION 8.1.8. Pension Plans. Any of the following events shall
-------------
occur with respect to any Pension Plan: (a) the institution of any steps by the
Borrower, any member of its Controlled Group or any other Person to terminate a
Pension Plan if, as a result of such termination, the Borrower or any such
member could be required to make a contribution to such Pension Plan, or could
reasonably expect to incur a liability or obligation to such Pension Plan, in
46
excess of $1,000,000; or (b) a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a Lien under section 302(f) of ERISA.
SECTION 8.1.9. Bankruptcy, Insolvency, etc. The Borrower or any
---------------------------
of its Subsidiaries shall (a) become insolvent or generally fail to pay, or
admit in writing its inability or unwillingness to pay, debts as they become
due; (b) apply for, consent to, or acquiesce in, the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or any of its
Subsidiaries or any property of any thereof, or make a general assignment for
the benefit of creditors; (c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for the Borrower or any of its Subsidiaries or
for a substantial part of the property of any thereof, and such trustee,
receiver, sequestrator or other custodian shall not be discharged within 60
days, provided that the Borrower, for itself and each of its Subsidiaries,
hereby expressly authorizes the Agent and each Lender to appear in any court
conducting any relevant proceeding during such 60-day period to preserve,
protect and defend their rights under the Loan Documents; (d) permit or suffer
to exist the commencement of any bankruptcy, reorganization, debt arrangement or
other case or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect of the Borrower or
any of its Subsidiaries, and, if any such case or proceeding is not commenced by
the Borrower or such Subsidiary, such case or proceeding shall be consented to
or acquiesced in by the Borrower or such Subsidiary or shall result in the entry
of an order for relief or shall remain for 60 days undismissed, provided that
the Borrower, for itself and each of its Subsidiaries, hereby expressly
authorizes the Agent and each Lender to appear in any court conducting any such
case or proceeding during such 60-day period to preserve, protect and defend
their rights under the Loan Documents; or (e) take any corporate action
authorizing, or in furtherance of, any of the foregoing.
SECTION 8.1.10. Change of Control. A Change of Control shall
-----------------
occur.
SECTION 8.2. Action if Bankruptcy. If any Event of Default
--------------------
described in clauses (a) through (d) of Section 8.1.9 shall occur with respect
----------- --- -------------
to the Borrower or any of its Subsidiaries, the Commitments (if not theretofore
terminated) shall automatically terminate and the outstanding principal amount
of all outstanding Loans and all other Obligations shall automatically be and
become immediately due and payable, without notice (including notice of intent
to accelerate and notice of acceleration) or demand and notice and demand, are
hereby waived.
SECTION 8.3. Action if Other Event of Default. If any Event
--------------------------------
of Default (other than any Event of Default described in clauses (a) through (d)
----------- ---
of Section 8.1.9 (with respect to the Borrower or any of its Subsidiaries) shall
-------------
occur for any reason,
47
whether voluntary or involuntary, and be continuing, the Agent, upon the
direction of the Required Lenders, shall by notice to the Borrower declare all
or any portion of the outstanding principal amount of the Loans and other
Obligations to be due and payable and/or the Commitments (if not theretofore
terminated) to be terminated, whereupon the full unpaid amount of such Loans and
other Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice (including notice of intent
to accelerate and notice of acceleration), demand or presentment, and/or, as the
case may be, the Commitments shall terminate, all of which notice, demand and
presentment are hereby waived.
ARTICLE IX
THE AGENT
SECTION 9.1. Actions. Each Lender hereby appoints Bank of
-------
Montreal as its Agent under and for purposes of this Agreement, the Notes and
each other Loan Document. Each Lender authorizes the Agent to act on behalf of
such Lender under this Agreement, the Notes and each other Loan Document and, in
the absence of other written instructions from the Required Lenders received
from time to time by the Agent (with respect to which the Agent agrees that it
will comply, except as otherwise provided in this Section or as otherwise
advised by counsel), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto.
Each Lender hereby indemnifies (which indemnity shall survive any termination of
this Agreement) the Agent, pro rata according to such Lender's Percentage, from
--- ----
and against any and all liabilities, obligations, losses, damages, claims, costs
or expenses of any kind or nature whatsoever which may at any time be imposed
on, incurred by, or asserted against, the Agent in any way relating to or
arising out of its services as Agent under this Agreement, the Notes and any
other Loan Document, including reasonable attorneys' fees, and as to which the
Agent is not reimbursed by the Borrower; provided, however, that no Lender shall
-------- -------
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, claims, costs or expenses which are determined by a court of
competent jurisdiction in a final proceeding to have resulted solely from the
Agent's gross negligence or wilful misconduct. The Agent shall not be required
to take any action hereunder, under the Notes or under any other Loan Document,
or to prosecute or defend any suit in respect of this Agreement, the Notes or
any other Loan Document, unless it is indemnified hereunder to its satisfaction.
If any indemnity in favor of the Agent shall be or become, in the Agent's
determination, inadequate, the Agent may call for additional indemnification
from the Lenders and cease to do the acts indemnified against hereunder until
such additional indemnity is given.
48
SECTION 9.2. Funding Reliance, etc. Unless the Agent shall have been
---------------------
notified by telephone, confirmed in writing, by any Lender by (i) 5:00 p.m.,
United States Central time, on the day prior to a Borrowing in the case of LIBO
Rate Loans and (ii) 11:00 a.m. United States Central time on the day of any
Borrowing in the case of Base Rate Loans that such Lender will not make
available the amount which would constitute its Percentage of such Borrowing on
the date specified therefor, the Agent may assume that such Lender has made such
amount available to the Agent and, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If and to the extent that such
Lender shall not have made such amount available to the Agent, such Lender and
the Borrower severally agree to repay the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
the Agent made such amount available to the Borrower to the date such amount is
repaid to the Agent, at the interest rate applicable at the time to Loans
comprising such Borrowing.
SECTION 9.3. Exculpation. Neither the Agent nor any of its directors,
-----------
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement or any other Loan Document, or
in connection herewith or therewith, except for its own wilful misconduct or
gross negligence, nor responsible for any recitals or warranties herein or
therein, nor for the effectiveness, enforceability, validity or due execution of
this Agreement or any other Loan Document, nor to make any inquiry respecting
the performance by the Borrower of its obligations hereunder or under any other
Loan Document. Any such inquiry which may be made by the Agent shall not
obligate it to make any further inquiry or to take any action. The Agent shall
be entitled to rely upon advice of counsel concerning legal matters and upon any
notice, consent, certificate, statement or writing which the Agent believes to
be genuine and to have been presented by a proper Person.
SECTION 9.4. Successor. The Agent may resign as such at any time upon
---------
at least 30 days' prior notice to the Borrower and all Lenders. If the Agent at
any time shall resign, the Required Lenders may appoint another Lender as a
successor Agent which shall thereupon become the Agent hereunder. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be one of the Lenders or a commercial
banking institution organized under the laws of the U.S. (or any State thereof)
or a U.S. branch or agency of a commercial banking institution, and having a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall be entitled to receive from the retiring Agent such documents of transfer
and assignment as such successor Agent may reasonably request, and shall
thereupon succeed to and become vested with all rights, powers, privileges and
duties
49
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring Agent's
resignation hereunder as the Agent, the provisions of (a) this Article IX shall
----------
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Agent under this Agreement; and (b) Section 10.3 and Section 10.4
------------ ------------
shall continue to inure to its benefit.
SECTION 9.5. Loans by Bank of Montreal. Bank of Montreal shall have
-------------------------
the same rights and powers with respect to (x) the Loans made by it or any of
its Affiliates, and (y) the Notes held by it or any of its Affiliates as any
other Lender and may exercise the same as if it were not the Agent. Bank of
Montreal and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any Subsidiary or
Affiliate of the Borrower as if Bank of Montreal were not the Agent hereunder.
SECTION 9.6. Credit Decisions. Each Lender acknowledges that it has,
----------------
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will, independently of the Agent and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.
SECTION 9.7. Copies, etc. The Agent shall give prompt notice to each
-----------
Lender of each notice or request required or permitted to be given to the Agent
by the Borrower pursuant to the terms of this Agreement (unless concurrently
delivered to the Lenders by the Borrower). The Agent will distribute to each
Lender each document or instrument received for its account and copies of all
other communications received by the Agent from the Borrower for distribution to
the Lenders by the Agent in accordance with the terms of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Waivers, Amendments, etc. The provisions of this
------------------------
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Borrower and the Required Lenders; provided, however,
that-------- ------- no such amendment, modification or waiver which would: (a)
modify any
50
requirement hereunder that any particular action be taken by all the Lenders or
by the Required Lenders shall be effective unless consented to by each Lender;
(b) modify this Section 10.1, change the definition of "Required Lenders",
------------ ----------------
increase any Commitment Amount or the Percentage of any Lender, reduce any fees
described in Article III, or extend any Commitment Termination Date shall be
-----------
made without the consent of each Lender and each holder of a Note; (c) extend
the due date for, or reduce the amount of, any scheduled repayment or prepayment
of principal of or interest on any Loan (or reduce the principal amount of or
rate of interest on any Loan) shall be made without the consent of the holder of
that Note evidencing such Loan; or (d) affect adversely the interests, rights or
obligations of the Agent qua the Agent shall be made without consent of the
---
Agent.
No failure or delay on the part of the Agent, any Lender or the holder
of any Note in exercising any power or right under this Agreement or any other
Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 10.2. Notices. All notices and other communications provided
-------
to any party hereto under this Agreement or any other Loan Document shall be in
writing or by Telex or by facsimile and addressed, delivered or transmitted to
such party at its address, Telex or facsimile number set forth below its
signature hereto or set forth in the Lender Assignment Agreement or at such
other address, Telex or facsimile number as may be designated by such party in a
notice to the other parties. Any notice, if mailed and properly addressed with
postage prepaid or if properly addressed and sent by pre-paid courier service,
shall be deemed given when received; any notice, if transmitted by Telex or
facsimile, shall be deemed given when transmitted (answerback confirmed in the
case of Telexes).
SECTION 10.3. Payment of Costs and Expenses. The Borrower agrees to
-----------------------------
pay on demand all reasonable expenses of the Agent (including the reasonable
fees and out-of-pocket expenses of counsel to the Agent and of local counsel, if
any, who may be retained by counsel to the Agent) in connection with (a) the
negotiation, preparation, execution and delivery of this Agreement and of each
other Loan Document, including schedules and exhibits, and any amendments,
waivers, consents, supplements or other modifications to this Agreement or any
other Loan Document as may from time to time hereafter be required, whether or
not the transactions contemplated hereby are consummated, and (b) the
51
preparation and review of the form of any document or instrument relevant to
this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Agent and the
Lenders harmless from all liability for, any stamp or other taxes which may be
payable in connection with the execution or delivery of this Agreement, the
borrowings hereunder, or the issuance of the Notes or any other Loan Documents.
The Borrower also agrees to reimburse the Agent and each Lender upon demand for
all reasonable out-of-pocket expenses (including attorneys' fees and legal
expenses) incurred by the Agent or such Lender in connection with (x) the
negotiation of any restructuring or "work-out", whether or not consummated, of
any Obligations, and (y) the enforcement of any Obligations.
SECTION 10.4. Indemnification. In consideration of the execution and
---------------
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds the Agent and each Lender
and each of their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") free and harmless from and
-------------------
against any and all actions, causes of action, suits, losses, costs, liabilities
and damages, and expenses incurred in connection therewith (irrespective of
whether any such Indemnified Party is a party to the action for which
indemnification hereunder is sought), including reasonable attorneys' fees and
disbursements (collectively, the "Indemnified Liabilities"), incurred by the
-----------------------
Indemnified Parties or any of them as a result of, or arising out of, or
relating to (a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan; (b) the entering into and
performance of this Agreement and any other Loan Document by any of the
Indemnified Parties (except, with respect to any action brought by or on behalf
of the Borrower, to the extent such Indemnified Party shall be found liable to
the Borrower pursuant to a finding by a court of competent jurisdiction, not
subject to appeal); (c) any investigation, litigation or proceeding related to
any environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the Release by the Borrower or any of its
Subsidiaries of any Hazardous Material; or (d) the presence on or under, or the
escape, seepage, leakage, spillage, discharge, emission, discharging or releases
from, any real property owned or operated by the Borrower or any Subsidiary
thereof of any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any Environmental
Law), regardless of whether caused by, or within the control of, the Borrower or
such Subsidiary, except for any such Indemnified Liabilities arising for the
account of a particular Indemnified Party by reason of the relevant Indemnified
Party's gross negligence or wilful misconduct. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of
52
the Indemnified Liabilities which is permissible under applicable law.
SECTION 10.5. Survival. The obligations of the Borrower under
--------
Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders
------------ --- --- --- ---- ----
under Section 9.1, shall in each case survive any termination of this Agreement,
-----------
the payment in full of all Obligations and the termination of all Commitments.
The representations and warranties made by the Borrower in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.
SECTION 10.6. Severability. Any provision of this Agreement or any
------------
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 10.7. Headings. The various headings of this Agreement and of
--------
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 10.8. Execution in Counterparts, Effectiveness, etc.
---------------------------------------------
This Agreement may be executed by the parties hereto in several counterparts,
each of which shall be executed by the Borrower and the Agent and be deemed to
be an original and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrower and each Lender (or notice thereof
satisfactory to the Agent) shall have been received by the Agent and notice
thereof shall have been given by the Agent to the Borrower and each Lender.
SECTION 10.9. Governing Law; Entire Agreement. THIS AGREEMENT,
-------------------------------
THE NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. This
Agreement, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto.
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG 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 AMONG THE PARTIES.
SECTION 10.10. Successors and Assigns. This Agreement shall be
----------------------
binding upon and shall inure to the benefit of the parties
53
hereto and their respective successors and assigns; provided, however, that:
-------- -------
(a) the Borrower may not assign or transfer its rights or obligations hereunder
without the prior written consent of the Agent and all Lenders; and (b) the
rights of sale, assignment and transfer of the Lenders are subject to Section
-------
10.11.
-----
SECTION 10.11. Sale and Transfer of Loans and Notes;
-------------------------------------
Participations in Loans and Notes. Each Lender may assign, or sell
---------------------------------
participations in, its Loans and Commitments to one or more other Persons in
accordance with this Section 10.11.
-------------
SECTION 10.11.1. Assignments. Any Lender,
-----------
(a) with the written consent of the Borrower (in its sole discretion)
and the Agent (which consent shall not be unreasonably delayed or
withheld), may at any time assign and delegate to one or more commercial
banks or other financial institutions, and
(b) with notice to the Borrower and the Agent, but without the consent
of the Borrower or the Agent, may assign and delegate to any of its
Affiliates or to any other Lender
(each Person described in either of the foregoing clauses as being the Person to
whom such assignment and delegation is to be made, being hereinafter referred to
as an "Assignee Lender"), all or any fraction of such Lender's total Loans and
---------------
Commitments (which assignment and delegation shall be of a constant, and not a
varying, percentage of all the assigning Lender's Loans and Commitments) in a
minimum aggregate amount of $20,000,000 or such Lender's Percentage of the
Commitment Amount, if less; provided, however, that any such Assignee Lender
-------- -------
will comply, if applicable, with the provisions contained in the penultimate
sentence of Section 4.6; and further, provided, however, that, the Borrower and
----------- ------- -------- -------
the Agent shall be entitled to continue to deal solely and directly with such
Lender in connection with the interests so assigned and delegated to an Assignee
Lender until
(c) written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect to
such Assignee Lender, shall have been given to the Borrower and the Agent
by such Lender and such Assignee Lender,
(d) such Assignee Lender shall have executed and delivered to the
Borrower and the Agent a Lender Assignment Agreement, accepted by the
Borrower and the Agent, and
(e) the processing fees described below shall have been paid.
From and after the date that the Borrower and the Agent accepts such Lender
Assignment Agreement, (x) the Assignee Lender
54
thereunder shall be deemed automatically to have become a party hereto and to
the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee Lender in connection with such Lender Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and under
the other Loan Documents, and (y) the assignor Lender, to the extent that rights
and obligations hereunder have been assigned and delegated by it in connection
with such Lender Assignment Agreement, shall be released from its obligations
hereunder and under the other Loan Documents. Within five Business Days after
its receipt of notice that the Agent has received an executed Lender Assignment
Agreement, the Borrower shall execute and deliver to the Agent (for delivery to
the relevant Assignee Lender) new Notes evidencing such Assignee Lender's
assigned Loans and Commitments and, if the assignor Lender has retained Loans
and Commitments hereunder, replacement Notes in the principal amount of the
Loans and Commitments retained by the assignor Lender hereunder (such Notes to
be in exchange for, but not in payment of, those Notes then held by such
assignor Lender). Each such Note shall be dated the date of the predecessor
Notes. The assignor Lender shall ▇▇▇▇ the predecessor Notes "exchanged" and
deliver them to the Borrower. Accrued interest on that part of the predecessor
Notes evidenced by the new Notes, and accrued fees, shall be paid as provided in
the Lender Assignment Agreement. Accrued interest on that part of the
predecessor Notes evidenced by the replacement Notes shall be paid to the
assignor Lender. Accrued interest and accrued fees shall be paid at the same
time or times provided in the predecessor Notes and in this Agreement. Such
assignor Lender or such Assignee Lender must also pay a processing fee to the
Agent upon delivery of any Lender Assignment Agreement in the amount of $2,500.
Any attempted assignment and delegation not made in accordance with this Section
-------
10.11.1 shall be null and void.
-------
SECTION 10.11.2. Participations. Any Lender, with the prior written
--------------
consent of the Borrower in its sole discretion, may at any time sell to one or
more commercial banks (each of such commercial banks being herein called a
"Participant") participating interests in any of the Loans, Commitments, or
------------
other interests of such Lender hereunder; provided, however, that (a) no
-------- -------
participation contemplated in this Section 10.11 shall relieve such Lender from
-------------
its Commitments or its other obligations hereunder or under any other Loan
Document, (b) such Lender shall remain solely responsible for the performance of
its Commitments and such other obligations, (c) the Borrower and each other
Obligor and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and each of the other Loan Documents, (d) no Participant, unless such
Participant is an Affiliate of such Lender, or is itself a Lender, shall be
entitled to require such Lender to take or refrain from taking any action
hereunder or under any other Loan Document, except that such Lender may agree
with any Participant that such Lender will not, without such Participant's
consent, take any actions of the type described in clause (b) or (c) of Section
---------- --- -------
10.1, and (e) the Borrower shall not be required to pay any amount
----
55
under Section 4.6 that is greater than the amount which it would have been
-----------
required to pay had no participating interest been sold.
SECTION 10.12. Other Transactions. Nothing contained herein shall
------------------
preclude the Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person. The
parties hereto agree that if at any time the Borrower or its Subsidiaries shall
grant to the Lenders Liens securing the obligations of the Borrower to the
Lenders hereunder, such Liens shall also secure obligations to any Lender in
respect of any letter of credit reimbursement obligations permitted by
Section 7.2.2.(i) hereof owing to one or more Lenders.
-----------------
SECTION 10.13. Forum Selection and Consent to Jurisdiction. ANY
-------------------------------------------
LITIGATION BASED HEREON, OR 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 THE AGENT, THE
LENDERS OR THE BORROWER MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE
OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION
OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 10.14. Waiver of Jury Trial. THE AGENT, THE LENDERS AND THE
--------------------
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
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 THE AGENT, THE LENDERS OR THE BORROWER. THE
BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION
56
IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS
AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
VINTAGE PETROLEUM, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Vice President and
Chief Financial Officer
Address: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Vice President
and Chief Financial Officer
57
BANK OF MONTREAL
acting through its U.S. branches
and agencies, including initially
its Chicago, Illinois branch,
as Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director, U.S. Corporate Banking
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.:
--------------------------
Telex No.:
-----------------------------
(Answerback )
------------------
Attention:
------------------------------
------------------------------
with copy to:
Bank of Montreal
Houston Agency
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telex No.: 77-5640
(Answerbank: BKMONTREAL HOU)
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Director
58
PERCENTAGE LENDERS
---------- -------
BANK OF MONTREAL
100%
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director, U.S. Corporate Banking
Domestic
Office: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.:
-----------------------
Telex No.:
---------------------------
(Answerback )
---------------
Attention:
---------------------------
---------------------------
LIBOR
Office: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.:
-----------------------
Telex No.:
---------------------------
(Answerback )
---------------
Attention:
---------------------------
---------------------------
with copy to:
Bank of Montreal
Houston Agency
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telex No.: 77-5640
(Answerbank: BKMONTREAL HOU)
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Director
59
SCHEDULE I
DISCLOSURE SCHEDULE
-------------------
ITEM 6.7 Litigation.
-----------
None
ITEM 6.8 Existing Subsidiaries.
---------------------
-----------------------------------------------------------------------------------------------------------
Jurisdiction of
Name Incorporation Ownership % Business Description
---- ------------- ----------- --------------------
-----------------------------------------------------------------------------------------------------------
Vintage Gas, Inc. Oklahoma 100 Gas Marketing
-----------------------------------------------------------------------------------------------------------
Vintage Marketing, Inc. Oklahoma 100 Oil & Gas Gathering
-----------------------------------------------------------------------------------------------------------
Vintage Pipeline, Inc. Oklahoma 100 Oil & Gas Gathering
-----------------------------------------------------------------------------------------------------------
Vintage Oil Argentina, Inc. Cayman Islands 100 Oil & Gas Exploration & Production
-----------------------------------------------------------------------------------------------------------
Cadipsa S.A. Republic of 95.7 Oil & Gas Exploration & Production
Argentina
-----------------------------------------------------------------------------------------------------------
Vintage Petroleum Cayman Islands 100 Oil & Gas Exploration & Production
Argentina, Inc.
-----------------------------------------------------------------------------------------------------------
Vintage Petroleum Oklahoma 100 Oil & Gas Exploration & Production
International, Inc.
-----------------------------------------------------------------------------------------------------------
Vintage Petroleum Cayman Islands 100 Oil & Gas Exploration & Production
Ecuador, Inc.
-----------------------------------------------------------------------------------------------------------
Vintage Petroleum Republic of 100 Oil & Gas Exploration & Production
Argentina, S.A. Argentina
-----------------------------------------------------------------------------------------------------------
VPI Canada, Inc. Alberta, Canada 100 Oil & Gas Exploration & Production
-----------------------------------------------------------------------------------------------------------
ITEM 6.12 Environmental Matters.
---------------------
None
ITEM 7.2.2(b) Indebtedness to be Paid.
-----------------------
Creditor Outstanding
-------- Principal Amount
----------------
Bank of Montreal $ 12,852,921.34
Chase Bank $ 12,108,206.25
NationsBank $ 12,107,677.50
---------------
$ 37,068,805.09
===============
The Prudential Insurance Company
of America $ 9,972,336.39
===============
Bank of Boston $ 8,381,315.62
Bank of Montreal $ 25,145,430.95
Bank of Oklahoma, N.A. $ 4,189,881.08
Chase Bank $ 16,763,243.29
Mellon Bank $ 16,763,394.32
NationsBank $ 16,760,642.14
Societe General $ 8,381,596.30
Union Bank $ 8,379,762.15
---------------
$104,765,265.85
===============
DISCLOSURE SCHEDULE
-------------------
ITEM 7.2.2(c) Ongoing Indebtedness.
--------------------
Creditor Outstanding
-------- Principal Amount
----------------
9% Senior Subordinated Notes
Due 2005 (Face Amount) $ 150,000,000
Shell Deferred Purchase Price
Payment (Undiscounted) $ 4,900,000
International Finance Corpora-
tion Amended and Restated
Investment Agreement Dated
April 28, 1994 $ 28,000,000
Banco Medefin S.A., Banco
Mercantil Argentina S.A. and
ABN Amco Bank Refinancing
Agreement Dated May 19, 1995 $ 3,900,000
2
EXHIBIT A
NOTE
$ , 19
--------------- ---------- --
FOR VALUE RECEIVED, the undersigned, VINTAGE PETROLEUM, INC., a Delaware
corporation (the "Borrower"), promises to pay to the order of __________________
_______________________ (the "Lender") the principal sum of ____________________
------
DOLLARS ($____________) or, if less, the aggregate unpaid principal amount of
all Loans made by the Lender pursuant to that certain Credit Agreement, dated as
of August 29, 1996 (together with all amendments and other modifications, if
any, from time to time thereafter made thereto, the "Credit Agreement"), among
----------------
the Borrower, BANK OF MONTREAL, as Agent, the various financial institutions
(including the Lender) as are, or may from time to time become, parties thereto,
payable in installments as set forth in the Credit Agreement, with a final
installment (in the amount necessary to pay in full this Note) due and payable
on the Stated Maturity Date set forth therein.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Agent pursuant to the Credit Agreement.
This Note is one of the Notes referred to in, and evidences Indebtedness
incurred under, the Credit Agreement, to which reference is made for a statement
of the terms and conditions on which the Borrower is permitted and required to
make prepayments and repayments of principal of the Indebtedness evidenced by
this Note and on which such Indebtedness may be declared to be immediately due
and payable. Unless otherwise defined, terms used herein have the meanings
provided in the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN CHICAGO, ILLINOIS AND SHALL BE DEEMED TO BE
A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
VINTAGE PETROLEUM, INC.
By
-----------------------------
Title:
2
LOANS AND PRINCIPAL PAYMENTS
--------------------------------------------------------------------------------
Amount of Unpaid
Amount of Principal Principal
Loan Made Repaid Balance
--------- ------ -------
Interest
Base LIBO Period (if Base LIBO Base LIBO Notation
Date Rate Rate applicable) Rate Rate Rate Rate Total Made By
---- ---- ---- ----------- ---- ---- ---- ---- ----- --------
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3
EXHIBIT B
BORROWING REQUEST
Bank of Montreal
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: [Name]
[Title]
VINTAGE PETROLEUM, INC.
-----------------------
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to Section 2.3 of
-----------
the Credit Agreement, dated as of August 29, 1996 (together with all amendments,
if any, from time to time made thereto, the "Credit Agreement"), among Vintage
----------------
Petroleum, Inc., a Delaware corporation (the "Borrower"), certain financial
--------
institutions and Bank of Montreal (the "Agent"). Unless otherwise defined
-----
herein or the context otherwise requires, terms used herein have the meanings
provided in the Credit Agreement.
The Borrower hereby requests that a Revolving Loan be made in the
aggregate principal amount of $__________ on __________, 19___ as a [LIBO Rate
Loan having an Interest Period of _______ months] [Base Rate Loan].
The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of
-------------
the Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans requested hereby
constitutes a representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the application of
the proceeds therefrom, all statements set forth in Section 5.2.1 are true and
-------------
correct in all material respects.
The Borrower certifies that the Senior Debt of the Borrower and its
Subsidiaries, other than Loans made pursuant to the Credit Agreement, is
$_____________ as of the date hereof.
The Borrower agrees that if prior to the time of the Borrowing
requested hereby any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify the Agent.
Except to the extent, if any, that prior to the time of the Borrowing requested
hereby the Agent shall receive written notice to the contrary from the Borrower,
each matter certified to herein shall be deemed once again to be certified as
true and correct at the date of such Borrowing as if then made.
Please wire transfer the proceeds of the Borrowing to the accounts of
the following persons at the financial institutions indicated respectively:
Person to be Paid
Amount to be ------------------------------ Name, Address, etc.
Transferred Name Account No. of Transferee Lender
----------- ---- ----------- --------------------
$
------------ ----------------- ---------- --------------------
--------------------
Attention:
---------
$
------------ ----------------- ---------- --------------------
--------------------
Attention:
---------
Balance of The Borrower ---------- --------------------
such proceeds --------------------
Attention:
---------
The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this ___ day of ___________, 19___.
VINTAGE PETROLEUM, INC.
By
----------------------------------------
Title:
2
EXHIBIT C
CONTINUATION/CONVERSION NOTICE
Bank of Montreal
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: [Name]
[Title]
VINTAGE PETROLEUM, INC.
-----------------------
Gentlemen and Ladies:
This Continuation/Conversion Notice is delivered to you pursuant to
Section 2.4 of the Credit Agreement, dated as of August 29, 1996 (together with
all amendments, if any, from time to time made thereto, the "Credit Agreement"),
----------------
among Vintage Petroleum, Inc., a Delaware corporation (the "Borrower"), certain
--------
financial institutions and Bank of Montreal (the "Agent"). Unless otherwise
-----
defined herein or the context otherwise requires, terms used herein have the
meanings provided in the Credit Agreement.
The Borrower hereby requests that on ____________, 19___,
(1) $___________ of the presently outstanding principal amount of the
[Term Loans] [Revolving Loans] originally made on __________, 19___ [and
$__________ of the presently outstanding principal amount of the [Revolving
Loans] originally made on __________, 19___],
(2) and all presently being maintained as /*/[Base Rate Loans] [LIBO
Rate Loans],
(3) be [converted into] [continued as],
(4) /**/[LIBO Rate Loans having an Interest Period of ______ months]
[Base Rate Loans].
The Borrower hereby:
(a) certifies and warrants that no Default has occurred and is
continuing; and
(b) agrees that if prior to the time of such continuation or
conversion any matter certified to herein by
----------------------------
/*/ Select appropriate interest rate option.
/**/ Insert appropriate interest rate option.
it will not be true and correct at such time as if then made,
it will immediately so notify the Agent.
Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Agent shall receive written notice to the
contrary from the Borrower, each matter certified to herein shall be deemed to
be certified at the date of such continuation or conversion as if then made.
The Borrower has caused this Continuation/Conversion Notice to be executed
and delivered, and the certification and warranties contained herein to be made,
by its Authorized Officer this ___ day of _________, 19___.
VINTAGE PETROLEUM, INC.
By
-------------------------------------------
Title:
2
EXHIBIT D
LENDER ASSIGNMENT AGREEMENT
To: Vintage Petroleum, Inc.
To: Bank of Montreal,
as the Agent
VINTAGE PETROLEUM, INC.
-----------------------
Gentlemen and Ladies:
We refer to clause (d) of Section 10.11.1 of the Credit Agreement, dated as
---------- ---------------
of August 29, 1996 (together with all amendments and other modifications, if
any, from time to time thereafter made thereto, the "Credit Agreement"), among
----------------
Vintage Petroleum, Inc., a Delaware corporation (the "Borrower"), the various
--------
financial institutions (the "Lenders") as are, or shall from time to time
-------
become, parties thereto, and Bank of Montreal, as agent (the "Agent") for the
-----
Lenders. Unless otherwise defined herein or the context otherwise requires,
terms used herein have the meanings provided in the Credit Agreement.
This Agreement is delivered to you pursuant to clause (d) of Section
---------- -------
10.11.1 of the Credit Agreement and also constitutes notice to each of you,
-------
pursuant to clause (c) of Section 10.11.1 of the Credit Agreement, of the
---------- ---------------
assignment and delegation to _______________ (the "Assignee") of ___% of the
--------
Loans and Commitments of _____________ (the "Assignor") outstanding under the
--------
Credit Agreement on the date hereof. After giving effect to the foregoing
assignment and delegation, the Assignor's and the Assignee's Percentages for the
purposes of the Credit Agreement are set forth opposite such Person's name on
the signature pages hereof.
[Add paragraph dealing with accrued interest and fees with respect to Loans
assigned.]
The Assignee hereby acknowledges and confirms that it has received a copy
of the Credit Agreement and the exhibits related thereto, together with copies
of the documents which were required to be delivered under the Credit Agreement
as a condition to the making of the Loans thereunder. The Assignee further
confirms and agrees that in becoming a Lender and in making its Commitments and
Loans under the Credit Agreement, such actions have and will be made without
recourse to, or representation or warranty by the Agent.
Except as otherwise provided in the Credit Agreement, effective as of the
date of acceptance hereof by the Agent
(a) the Assignee
(i) shall be deemed automatically to have become a party to the
Credit Agreement, have all the rights and obligations of a "Lender"
under the Credit Agreement and the other Loan Documents as if it were
an original signatory thereto to the extent specified in the second
paragraph hereof; and
(ii) agrees to be bound by the terms and conditions set forth in
the Credit Agreement and the other Loan Documents as if it were an
original signatory thereto; and
(b) the Assignor shall be released from its obligations under the
Credit Agreement and the other Loan Documents to the extent specified in
the second paragraph hereof.
The Assignor and the Assignee hereby agree that the [Assignor] [Assignee]
will pay to the Agent the processing fee referred to in Section 10.11.1 of the
---------------
Credit Agreement upon the delivery hereof.
The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Loans and Commitments and requests the
Agent to acknowledge receipt of this document:
(A) Address for Notices:
Institution Name:
Attention:
Domestic Office:
Telephone:
Facsimile:
Telex (Answerback):
LIBOR Office:
Telephone:
Facsimile:
Telex (Answerback):
(B) Payment Instructions:
The Assignee agrees to furnish the tax form required by the second to last
sentence of Section 4.6 (if so required) of the Credit Agreement no later than
-----------
the date of acceptance hereof by the Agent.
2
This Agreement may be executed by the Assignor and Assignee in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
Adjusted Percentage [ASSIGNOR]
-------------------
Term Loan Commitment
and
Term Loans: __%
Revolving Loan
Commitment
and
Revolving Loans: __%
By:
-------------------------------
Title:
Percentage [ASSIGNEE]
----------
Term Loan Commitment
and
Term Loans: __%
Revolving Loan
Commitment
and
Revolving Loans: __%
By:
-------------------------------
Title:
Accepted and Acknowledged
this __ day of _______, 19__
BANK OF MONTREAL,
as Agent
By:
--------------------------
Title:
3