1
EXHIBIT 4.11
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$125,000,000
CREDIT AGREEMENT
among
THE MERIDIAN RESOURCE CORPORATION,
as Borrower
The Several Lenders
from Time to Time Parties Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
Dated as of November 5, 1997
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1 Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.2 Procedure for Revolving Credit Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.3 Repayment of Loans; Evidence of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.1 The L/C Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Procedure for Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.3 Fees, Commissions and Other Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.4 L/C Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.5 Reimbursement Obligation of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.7 Letter of Credit Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.8 L/C Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.1 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.2 Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.3 Conversion and Continuation Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.4 Minimum Amounts Maximum Number of Tranches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.5 Optional Prepayments and Commitment Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.6 Commitment Fee; Administrative Agent's Fee; Other Fees . . . . . . . . . . . . . . . . . . . . . . . . 26
4.7 Inability to Determine Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.8 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.9 Computation of Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.10 Borrowing Base Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.11 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.12 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.14 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.15 Change of Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.4 Corporate Power; Authorization; Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . 35
5.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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5.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.10 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.12 Federal Reserve Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.14 Investment Company Act; Other Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.16 Purpose of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.18 No Material Misstatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.20 Future Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.21 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.21. Immaterial Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.1 Conditions to Initial Extensions of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.2 Conditions to Each Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.3 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.4 Conduct of Business and Maintenance of Existence; Compliance with Law and Contractual Obligations . . 44
7.5 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.6 Inspection of Property; Books and Records; Discussions . . . . . . . . . . . . . . . . . . . . . . . . 45
7.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.9 Additional Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.10 Maintenance and Operation of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.1 Financial Covenant Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.4 Limitation on Guarantee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.5 Limitation on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.6 Limitation on Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.7 Limitation on Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.8 Limitation on Investments, Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.9 Limitation on Optional Payments and Modifications of Debt Instruments, Other Documents . . . . . . . . 54
8.10 Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.11 Limitation on Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.12 Limitation on Changes in Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.13 Limitation on Negative Pledge Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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8.14 Limitation on Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.15 Forward Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.16 Hedging Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.17 Limitation on Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.18 Limitation on Immaterial Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.4 Reliance by Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.6 Non-Reliance on Administrative Agent and Other Lenders . . . . . . . . . . . . . . . . . . . . . . . 60
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.8 Administrative Agent in Its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.9 Successor Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.10 Issuing Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.4 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.6 Successors and Assigns; Participations and Assignments . . . . . . . . . . . . . . . . . . . . . . . 64
11.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.13 Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.15 Production Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.16 Release of Mortgaged Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
11.17 Limitation on Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
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SCHEDULES
1.1(a) Commitments
1.1(b) Refinanced Indebtedness
1.1(c) Assumed Indebtedness
1.1(d) Immaterial Subsidiaries
1.1(e) Southwest Holmwood Properties
5.2 Capital Stock Redemptions
5.15 Subsidiaries
5.20 Future Commitments
6.1(l) Mortgaged Properties
8.2 Existing Indebtedness
8.3 Existing Liens
8.4 Guarantee Obligations
8.8 Existing Investments
11.2 Addresses for Notices
EXHIBITS
A Form of Revolving Credit Note
B Form of Guarantee Agreement
C Form of Pledge Agreement
D Form of Mortgage
E-1 Form of Opinion of Fulbright & ▇▇▇▇▇▇▇▇, L.L.P.,
Counsel to the Borrower and its Subsidiaries
E-2 Form of Opinion of ▇▇▇▇▇▇▇▇ & Knight,
Texas Counsel to the Administrative Agent
E-3 Form of Opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
Louisiana Counsel to the Administrative Agent
F Form of Borrowing Certificate
G Form of Assignment and Acceptance
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CREDIT AGREEMENT, dated as of November 5, 1997, among The
Meridian Resource Corporation, a Texas corporation (the "Borrower"), the
several banks, financial institutions and other entities from time to time
parties to this Agreement (collectively, the "Lenders") and The Chase Manhattan
Bank, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, C. Acquisition Corp., a wholly-owned
subsidiary of the Borrower, and Cairn Energy USA, Inc. ("Cairn"), have entered
into an Agreement and Plan of Merger, dated July 3, 1997 (the "Merger
Agreement");
WHEREAS, as contemplated by the Merger Agreement, C.
Acquisition Corp., simultaneously with the making of the initial Loans (such
term and each other capitalized term used but not defined in these recitals
having the meaning given to it in Section 1), shall merge with and into Cairn
(the "Merger") and each outstanding share of Cairn common stock will be
converted into the right to receive 1.08 shares of the Borrower's common stock,
whereupon Cairn will become a wholly-owned subsidiary of the Borrower;
WHEREAS, the proceeds of the Loans are to be used to refinance
indebtedness of the Borrower and its Subsidiaries (including Cairn and its
Subsidiaries) upon consummation of the Merger, to pay fees and expenses related
to the Merger and for working capital and for the general corporate purposes of
the Borrower and its Subsidiaries in the ordinary course of business;
WHEREAS, the Borrower has requested the Issuing Lender to
issue Letters of Credit to support payment obligations incurred in the ordinary
course of business;
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall
mean the rate of interest per annum publicly announced from time to
time by Chase as its prime rate in effect at its principal office in
New York City (the Prime Rate not being intended to be the lowest rate
of interest charged by Chase in connection with extensions of credit
to debtors); "Base CD Rate" shall mean the sum of (a) the product of
(i) the Three-Month Secondary CD Rate and (ii) a fraction, the
numerator of which is one and the denominator of which is one minus
the C/D Reserve Percentage and (b) the C/D Assessment Rate;
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day shall not be a Business Day,
the next preceding Business Day) by the Board of Governors of the
Federal Reserve System (the "Board") through the public information
telephone line of the Federal Reserve Bank of New
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York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on
such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately
10:00 A.M., New York City time, on such day (or, if such day shall not
be a Business Day, on the next preceding Business Day) by the
Administrative Agent from three New York City negotiable certificate
of deposit dealers of recognized standing selected by it; and "Federal
Funds Effective Rate" shall mean, for any day, 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
on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it. Any change in
the ABR due to a change in the Prime Rate, the Three-Month Secondary
CD Rate or the Federal Funds Effective Rate shall be effective as of
the opening of business on the effective day of such change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which
is based upon the ABR.
"Administrative Agent": as defined in the preamble to this
Agreement.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For
purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors
of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
"Aggregate Revolving Credit Exposure": as to any Lender at
any time, an amount equal to the sum of (a) the aggregate principal
amount of all Loans made by such Lender then outstanding and (b) such
Lender's Commitment Percentage of the Letter of Credit Outstandings at
such time.
"Agreement": this Credit Agreement, as further amended,
supplemented or otherwise modified from time to time.
"Amoco": Amoco Production Company and its Affiliates.
"Amoco Litigation": the litigation described in the S-4 under
the heading "TMRC--Amoco Litigation."
"Applicable Margin": for any day with respect to Eurodollar
Loans and ABR Loans, the applicable per annum rate set forth below
opposite the Borrowing Base Usage in effect on such day:
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Eurodollar ABR
Borrowing Base Usage Margin Margin
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Less than or equal to 30% 1.00% .00%
Greater than 30% and less 1.25% .25%
than or equal to 60%
Greater than 60% and less 1.50% .50%
than or equal to 80%
Greater than 80% 1.75% .75%
As used herein, "Borrowing Base Usage" on any day means the percentage
equivalent of the ratio of (i) the sum of the aggregate principal
amount of the Loans then outstanding and Letter of Credit Outstandings
on such day to (ii) the Borrowing Base in effect on such day.
"Assignee": as defined in subsection 11.6(c).
"Available Commitment": as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's
Revolving Credit Commitment over (b) such Lender's Aggregate Revolving
Credit Exposure.
"Borrower": as defined in the preamble to this Agreement.
"Borrower Redetermination Notice": a notice from the Borrower
to the Administrative Agent requesting that the Administrative Agent
redetermine the Borrowing Base, which notice may be sent by the
Borrower at any time, provided that (i) no more than one such notice
(excluding any redetermination pursuant to subsection 4.9(e)) may be
delivered by the Borrower during any consecutive 12 month period and
(ii) such notice may not be delivered until after the Initial Period.
"Borrowing Base": at any time of determination, the amount
then in effect as determined in accordance with subsection 4.9;
provided, however, that from the date hereof until such time as the
Borrowing Base is so redetermined in accordance with subsection 4.9,
the Borrowing Base shall be $125,000,000.
"Borrowing Base Availability": as to any Lender at any time,
an amount equal to the excess, if any, of (a) such Lender's Commitment
Percentage of the Borrowing Base in effect at such time over (b) such
Lender's Aggregate Revolving Credit Exposure.
"Borrowing Base Deficiency": as defined in subsection 4.10.
"Borrowing Base Usage": as defined under the definition of
Applicable Margin.
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.2 or 3.2 as a date on which the Borrower
requests the Lenders to make Loans or the Issuing Lender to issue a
Letter of Credit hereunder.
"Business Day": any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or
required by law to remain closed; provided that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also
exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.
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"Cairn": as defined in the preamble to this Agreement.
"Capital Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the
lessee.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in
a Person (other than a corporation) and any and all warrants or
options to purchase any of the foregoing.
"Cash Equivalents": (a) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed
or insured by the United States Government or any agency thereof, (b)
certificates of deposit and eurodollar time deposits with maturities
of one year or less from the date of acquisition and overnight bank
deposits of any Lender or of any commercial bank (i) having capital
and surplus in excess of $500,000,000 or (ii) which has a short-term
commercial paper rating which satisfies the requirements set forth in
clause (d) below, (c) repurchase obligations of any Lender or of any
commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days with respect to
securities issued, fully guaranteed or insured by the United States
Government or any agency thereof, (d) commercial paper of a domestic
issuer rated at least A-2 by Standard and Poor's Ratings Group ("S&P")
or P-2 by ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"), (e) securities
with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of
the United States, by any political subdivision or taxing authority of
any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory,
political subdivision, taxing authority or foreign government (as the
case may be) are rated at least A by S&P or A by Moody's, (f)
securities with maturities of one year or less from the date of
acquisition backed by standby letters of credit issued by any Lender
or any commercial bank satisfying the requirements of clause (b) of
this definition or (g) shares of money market mutual or similar funds
which invest exclusively in assets satisfying the requirements of
clauses (a) through (f) of this definition.
"C/D Assessment Rate": for any day as applied to any ABR
Loan, the annual assessment rate in effect on such day which is
payable by a member of the Bank Insurance Fund maintained by the
Federal Deposit Insurance Corporation (the "FDIC") classified as
well-capitalized and within supervisory subgroup "B" (or a comparable
successor assessment risk classification) within the meaning of 12
C.F.R. Section 327.4 (or any successor provision) to the FDIC (or any
successor) for the FDIC's (or such successor's) insuring time deposits
at offices of such institution in the United States.
"C/D Reserve Percentage": for any day as applied to any ABR
Loan, that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) (the "Board"), for determining the
maximum reserve requirement for a Depositary Institution (as defined
in Regulation D of the Board) in respect of new non-personal time
deposits in Dollars having a maturity of 30 days or more.
"Change in Control": (i) any Person or "group" (within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended) (A) shall have acquired
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beneficial ownership of 35% or more of any outstanding class of
Capital Stock having ordinary voting power in the election of
directors of the Borrower or (B) shall obtain the power (whether or
not exercised) to elect a majority of the Borrower's directors; or
(ii) the Board of Directors of the Borrower shall not consist of a
majority of Continuing Directors; "Continuing Directors" shall mean
the directors of the Borrower on the Closing Date and each other
director, if such other director's nomination for election to the
Board of Directors of the Borrower is recommended by a majority of the
then Continuing Directors.
"Chase": The Chase Manhattan Bank.
"Closing Date": the date on which the conditions precedent
set forth in subsection 6.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Commitments": the collective reference to the Revolving
Credit Commitment and the L/C Commitment.
"Commitment Fee Rate": for any day, a rate per annum equal to
(a) .30% if the Borrowing Base Usage in effect on such day is less
than or equal to 30%, (b) .375% if the Borrowing Base Usage in effect
on such day is greater than 30% and less than or equal to 60% and (c)
.50% if the Borrowing Base Usage in effect on such day is greater than
60%.
"Commitment Percentage": as to any Lender at any time, the
percentage which such Lender's Revolving Credit Commitment then
constitutes of the aggregate Revolving Credit Commitments (or, at any
time after the Revolving Credit Commitments shall have expired or
terminated, the percentage which such Lender's Aggregate Revolving
Credit Exposure then outstanding constitutes of the Aggregate
Revolving Credit Exposure then outstanding for all of the Lenders).
"Commitment Period": the period from and including the date
hereof to but not including the Termination Date or such earlier date
on which the Commitments shall terminate as provided herein.
"Commodity Hedging Agreement": a commodity hedging or
purchase agreement or similar arrangement entered into with the intent
of protecting against fluctuations in commodity prices or the exchange
of notional commodity obligations, either generally or under specific
contingencies.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Consolidated Interest Expense": with respect to the Borrower
and its Subsidiaries on a consolidated basis for any period, the sum
of (i) gross interest expense (including all cash and accrued interest
expense) of the Borrower and its Subsidiaries for such period on a
consolidated basis, including to the extent included in interest
expense in accordance with GAAP (x) the amortization of debt discounts
and (y) the portion of any payments or accruals
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with respect to Capital Leases allocable to interest expense and (ii)
capitalized interest of the Borrower and its Subsidiaries on a
consolidated basis.
"Consolidated Lease Expense:" for any period, the aggregate
amount of fixed and contingent rentals payable by the Borrower and any
of its Subsidiaries, determined on a consolidated basis in accordance
with GAAP, for such period with respect to leases (other than oil and
gas leases) of real and personal property which are not capitalized
under GAAP.
"Consolidated Net Income": for any period, net income of the
Borrower and its Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Worth": as of the date of determination,
all items which in conformity with GAAP would be included under
shareholders' equity on a consolidated balance sheet of the Borrower
and its Subsidiaries at such date, plus, amounts paid to Amoco or
charges accrued in respect of the Amoco Litigation up to $10,000,000
to the extent such amounts have resulted in a decrease in
shareholders' equity from the amount of shareholders' equity that
would have existed had no such payment or charge occurred.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or
any of its property is bound.
"Control": the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies
of a Person, whether through the ability to exercise voting power, by
contract or otherwise.
"Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Disposition": as defined under the definition of
Redetermination Event.
"Disqualified Stock": means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or
for which it is exchangeable) or upon the happening of any event,
matures or is mandatorily redeemable for any consideration other than
Capital Stock, pursuant to a sinking fund obligation or otherwise, is
convertible or is exchangeable for Indebtedness or Disqualified Stock
or redeemable for any consideration other than Capital Stock at the
option of the holder thereof, in whole or in part on or prior to the
date that is one year after the earlier of (x) the Termination Date or
(y) the date on which there are no Loans or other obligations
hereunder outstanding and the Commitments are terminated.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Subsidiary": any Subsidiary organized under the
laws of any jurisdiction within the United States of America
(including territories thereof).
"EBITDA": with respect to the Borrower and its Subsidiaries,
for any period, Consolidated Net Income for that period, plus, without
duplication and to the extent deducted from revenues in determining
Consolidated Net Income for that period, the sum of (a) the aggregate
amount of Consolidated Interest Expense for that period, (b) the
aggregate amount
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of letter of credit fees paid during that period, (c) the aggregate
amount of income tax expense for that period, (d) all amounts
attributable to depreciation, depletion and amortization for that
period, (e) all non- cash expenses during that period, (f) transaction
fees and expenses relating to the Merger and (g) any amounts paid in
respect of the Amoco Litigation up to $10,000,000, and minus, to the
extent added to revenues in determining Consolidated Net Income for
that period, all non-cash income during that period, in each case
determined in accordance with GAAP and without duplication of amounts.
"Environmental Laws": any and all laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, or other legally
enforceable requirement (including, without limitation, common law) of
any foreign government, the United States, or any state, local,
municipal or other governmental authority, regulating, relating to or
imposing liability or standards of conduct concerning protection of
the environment or of human health, as has been, is now, or may at any
time hereafter be, in effect.
"Environmental Permits": any and all permits, licenses,
registrations, notifications, approvals, exemptions and any other
authorization required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of
the Federal Reserve System or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained
by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate per annum for Dollar deposits with a maturity
comparable to such Interest Period which appears on the Telerate
British Bankers Assoc. Interest Settlement Rates Page at approximately
10:00 a.m., London time, two Business Days prior to the commencement
of such Interest Period; provided that if there shall no longer exist
a Telerate British Bankers Assoc. Interest Settlement Rates Page (or
if such page is not available on the relevant Business Day), the
Eurodollar Base Rate shall mean an interest rate per annum equal to
the average (rounded upward, if necessary, to the next 1/16th of 1%)
of the respective rates per annum notified to the Administrative Agent
by each of the Reference Banks as the average of the rates at which
Dollar deposits (in an amount comparable to the amount of Chase's
Eurodollar Loan to be outstanding during such Interest Period and for
a maturity comparable to such Interest Period) are offered to such
Reference Bank in immediately available funds by prime banks in the
London interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period.
"Telerate British Bankers Assoc. Interest Settlement Rates Page" shall
mean the display designated as Page 3750 on Teleratesystem
Incorporated (or such other replacement page thereof used to display
London interbank offered rates of major banks).
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
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"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
-----------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 9,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Extension of Credit": as to any Lender, the making of, or
the issuance of, or participation in, a Loan by such Lender, or the
issuance of, or participation in, a Letter of Credit by such Lender.
"Foreign Subsidiary": any Subsidiary which is organized and
existing under the laws of any jurisdiction outside of the United
States of America.
"GAAP": generally accepted accounting principles in the
United States of America in effect from time to time, provided that
for purposes of determining compliance with the covenants contained in
Section 8, "GAAP" shall mean generally accepted accounting principles
in the United States of America as in effect on the date hereof and
applied on a basis consistent with the application used in the
financial statements referred to in subsection 5.1.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee Agreement": the Guarantee Agreement, executed and
delivered by each of the Guarantors, dated as of November 5, 1997,
substantially in the form of Exhibit B, as the same may be amended,
modified or supplemented from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of the guaranteeing person, whether or not contingent, (i) to purchase
any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for
the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of
any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable
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amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person
may be liable are not stated or determinable, in which case the amount
of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as
determined by the Borrower in good faith. Obligations of the Borrower
or any Subsidiary pursuant to indemnities which (a) are granted in the
ordinary course of business, including, without limitation, (i) such
obligations in connection with stock purchase agreements or asset
purchase and sale agreements and (ii) such obligations in connection
with the conduct of the Oil and Gas Business in the ordinary course of
business and (b) do not cover Indebtedness of the types described in
clauses (a) through (f) of the definition of Indebtedness, shall not
constitute "Guarantee Obligations" for purposes of this Agreement.
"Guarantor": Each of the Borrower's direct or indirect
Domestic Subsidiaries, other than the Immaterial Subsidiaries.
"Hedging Agreement": any Interest Rate Protection Agreement,
Commodity Hedging Agreement, foreign currency exchange agreement,
commodity price protection agreement or other interest or currency
exchange rate or commodity price hedging arrangement.
"Hydrocarbon Interests": all rights, titles, interests and
estates now owned or hereafter acquired in and to oil and gas leases,
oil, gas and mineral leases, or other liquid or gaseous hydrocarbon
leases, mineral fee or lease interests, farm-outs overriding royalty
and royalty interests, net profit interests, oil payments, production
payment interests and similar mineral interests, including any
reserved or residual interest of whatever nature.
"Hydrocarbons": oil, gas, casinghead gas, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons, all products
refined, separated, settled and dehydrated therefrom and all products
refined therefrom, including, without limitation, kerosene, liquefied
petroleum gas, refined lubricating oils, diesel fuel, drip gasoline,
natural gasoline, helium, sulfur and all other minerals.
"Immaterial Subsidiaries": the Subsidiaries of the Borrower
listed on Schedule 1.1(d).
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of business
and payable in accordance with customary practices and accrued current
liabilities incurred in the ordinary course of business), (b) any
other indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations of such Person
under Capital Leases, (d) all obligations of such Person in respect of
letters of credit and acceptances issued or created for the account of
such Person, (e) all obligations of such Person under Commodity
Hedging Agreements and Interest Rate Protection Agreements, (f) all
obligations of others of the type referred to in clauses (a) through
(e) above and which are secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise
become liable for the payment thereof, except that the amount of any
nonrecourse obligation shall be deemed to be the lesser of the value
of the property securing such obligation and the amount of such
obligation so secured and (g) all Guarantee Obligations with respect
to the items described in clauses (a) through (e) above.
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"Initial Period": the period commencing on the Closing Date
and ending on April 30, 1998.
"Initial Reserve Report": as defined in subsection 6.1(k).
"Initial Scheduled Borrowing Base Redetermination": the first
scheduled redetermination of the Borrowing Base, pursuant to
subsection 4.9, which occurs following the delivery of the Reserve
Report as of December 31, 1997.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any ABR Loan, the last day
of each March, June, September and December, commencing December 31,
1997 and the Termination Date, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest
Period, and (c) as to any Eurodollar Loan having an Interest Period
longer than three months, each day which is three months, or a whole
multiple thereof, after the first day of such Interest Period and the
last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six (or,
to the extent available to all of the Lenders, nine or twelve)
months thereafter, as selected by the Borrower in its notice
of borrowing or notice of conversion, as the case may be,
given with respect thereto; and
(ii) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to
such Eurodollar Loan and ending one, two, three or six (or, to
the extent available to all of the Lenders, nine or twelve)
months thereafter, as selected by the Borrower by irrevocable
notice to the Administrative Agent not less than three
Business Days prior to the last day of the then current
Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;
(2) any Interest Period pertaining to a Eurodollar
Loan that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month;
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(3) the Borrower shall select Interest Periods so as
not to require a payment or prepayment of any Eurodollar Loan
during an Interest Period for such Loan; and
(4) any Interest Period that would otherwise extend
beyond the Termination Date shall end on the Termination Date.
"Interest Rate Protection Agreement": an interest rate swap,
cap or collar agreement or similar arrangement entered into with the
intent of protecting against fluctuations in interest rates or the
exchange of notional interest obligations, either generally or under
specific contingencies.
"Investments": as defined in subsection 8.8.
"Issuing Lender": Chase or any of its respective Affiliates,
in its capacity as issuer of a Letter of Credit, and any other Lender
to whom Chase or any of its respective Affiliates assigns (with the
prior written consent of the Required Lenders) its obligations to
issue Letters of Credit hereunder.
"L/C Application": as defined in subsection 3.2.
"L/C Commitment": the Issuing Lender's obligation to issue
Letters of Credit pursuant to Section 3 of this Agreement.
"L/C Participating Interest": with respect to any Letter of
Credit (a) in the case of the Issuing Lender with respect thereto, its
interest in such Letter of Credit and any L/C Application relating
thereto after giving effect to the granting of participating interests
therein, if any, pursuant hereto and (b) in the case of each
Participating Lender, its undivided participating interest in such
Letter of Credit and any L/C Application relating thereto.
"Lender Redetermination Notice": a notice from the
Supermajority Lenders to the Borrower giving notice of their election
to redetermine the Borrowing Base, which notice may be sent by the
Supermajority Lenders at any time they so elect, provided that (i)
such an election (excluding any mandatory redetermination of the
Borrowing Base made in connection with the issuance of Subordinated
Indebtedness pursuant to subsection 8.2) can be made by the
Supermajority Lenders no more than once during any consecutive 12
month period and (ii) such an election may not be made until after the
Initial Period.
"Letters of Credit": as defined in subsection 3.1(a).
"Letter of Credit Outstandings": at any time, the sum of (a)
the aggregate amount available for drawing under Letters of Credit
then outstanding and (b) the aggregate amount of drawings under
Letters of Credit which have not then been reimbursed pursuant to
subsection 3.5.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Capital Lease having substantially the
same economic effect as any of the foregoing).
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"Loan": as defined in subsection 2.1(a).
"Loan Documents": the collective reference to this Agreement,
any Notes, the L/C Applications, the Guarantee Agreement, and the
Security Documents.
"Loan Parties": the collective reference to the Borrower,
each Guarantor and any other Subsidiary from time to time party to any
Loan Document.
"Material Adverse Effect": a material adverse effect on (a)
the Merger, (b) the business, assets, property, condition (financial
or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole, (c) the ability of the Borrower or any of the other Loan
Parties to perform their respective obligations under the Loan
Documents, or (d) the validity or enforceability of this or any of the
other Loan Documents or the rights and remedies of the Administrative
Agent or the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount not covered by
insurance that is payable by the Borrower or any of its Subsidiaries
in excess of $1,000,000 for remedial costs, compliance costs,
compensatory damages, punitive damages, fines, penalties or any
combination thereof.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials, or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos or asbestos containing
material, polychlorinated biphenyls, urea-formaldehyde insulation, and
any other substance that is regulated under any Environmental Law.
"Merger": as defined in the preamble to this Agreement.
"Merger Agreement": as defined in the preamble to this
Agreement.
"Merger Documents": the collective reference to the Merger
Agreement and any other agreements, instruments and other documents
delivered in connection therewith, as amended, supplemented or
otherwise modified in accordance with the terms of this Agreement.
"Mortgaged Property": all of the Oil and Gas Properties and
other collateral purported to be subject to the Lien of the Mortgages.
"Mortgages": collectively, (i) the Deed of Trust, Mortgage,
Assignment, Security Agreement and financing statement from Cairn to
the Trustee named therein and the Administrative Agent, covering the
assets of Cairn located in the offshore continental shelf areas
offshore Texas and Louisiana, substantially in the form of Exhibit D
hereto, and (ii) each other mortgage, deed of trust, assignment,
security agreement or mortgage executed by the Borrower or any other
Loan Party and in form and substance reasonably satisfactory to the
Administrative Agent which purports to create a Lien in favor of the
Administrative Agent, in each case as amended, supplemented or
otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
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"Net Proceeds": means with respect to any Redetermination
Event, an amount equal to the gross proceeds in cash (including cash
equivalents and any cash payments received by way of deferred payment
of principal pursuant to a note or installment receivable or purchase
price adjustment receivable or otherwise, but only as and when
received) of such Redetermination Event, net of attorneys' fees,
accountants' fees, brokerage, consultant and other fees, underwriting
commissions and other fees and expenses actually incurred in
connection with such Redetermination Event.
"Non-Excluded Taxes": as defined in subsection 4.13(a).
"Non-U.S. Lender": as defined in subsection 4.13(b).
"Notes": as defined in subsection 2.3(e).
"Obligations": the collective reference to the unpaid
principal of and interest on the Loans and the Reimbursement
Obligations and all other obligations and liabilities of the Borrower
(including, without limitation, interest accruing at the then
applicable rate provided in this Agreement after the maturity of the
Loans and interest accruing at the then applicable rate provided in
this Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) to the
Administrative Agent or any of the Lenders.
"Oil and Gas Business": (a) the acquisition, exploration,
exploitation, development, operation and disposition of interests in
Oil and Gas Properties and Hydrocarbons, (b) the gathering,
marketing, treating, processing, storage, selling and transporting of
any production from such interests or Oil and Gas Properties,
including, without limitation, the marketing of Hydrocarbons obtained
from unrelated Persons; (c) any business relating to or arising from
exploration for or development, production, treatment, processing,
storage, transportation or marketing of oil, gas and other minerals
and products produced in association therewith; (d) any business
relating to oilfield sales and service, and (e) any activity that is
ancillary or necessary or desirable to facilitate the activities
described in clauses (a) through (d) of this definition.
"Oil and Gas Properties": Hydrocarbon Interests; the
Properties now or hereafter pooled or unitized with Hydrocarbon
Interests; all presently existing or future unitization, pooling
agreements and declarations of pooled units and the units created
thereby (including without limitation all units created under orders,
regulations and rules of any Governmental Authority having
jurisdiction) which may affect all or any portion of the Hydrocarbon
Interests; all pipelines, gathering lines, compression facilities,
tanks and processing plants; all interests held in royalty trusts
whether presently existing or hereafter created; all Hydrocarbons in
and under and which may be produced, saved, processed or attributable
to the Hydrocarbon Interests, the lands covered thereby and all
hydrocarbons in pipelines, gathering lines, tanks and processing
plants and all rents, issues, profits, proceeds, products, revenues
and other incomes from or attributable to the Hydrocarbon Interests;
all tenements, hereditaments, appurtenances and Properties in any way
appertaining, belonging, affixed or incidental to the Hydrocarbon
Interests, and all rights, titles, interests and estates described or
referred to above, including any and all real property, now owned or
hereafter acquired, used or held for use in connection with the
operating, working or development of any of such Hydrocarbon Interests
or Property and including any and all surface leases, rights-of-way,
easements and servitude
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together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing; all oil, gas and
mineral leasehold and fee interests, all overriding royalty interests,
mineral interests, royalty interests, net profits interests, net
revenue interests, oil payments, production payments, carried
interests and any and all other interests in Hydrocarbons; in each
case whether now owned or hereafter acquired directly or indirectly.
"Participants": as defined in subsection 11.6(b).
"Participating Lender": with respect to any Letter of Credit,
any Lender (other than the Issuing Lender with respect to such Letter
of Credit) with respect to its L/C Participating Interest in such
Letter of Credit.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Business Acquisition": the formation of a new
Subsidiary or any acquisition of all or substantially all the assets
of, or shares of capital stock, partnership interests, joint venture
interests, limited liability company interests or other similar equity
interests in, a Person or division or line of business of a Person (or
any subsequent investment made in a Person previously acquired in a
Permitted Business Acquisition), if immediately after giving effect
thereto: (a) no Default or Event of Default shall have occurred and be
continuing or would result therefrom, (b) all transactions related
thereto shall be consummated in accordance with applicable laws, (c)
such acquired or newly formed corporation, partnership, association or
other business entity shall be a Guarantor and all of the Capital
Stock of such acquired or newly formed corporation, partnership,
association or other business entity are owned directly by the
Borrower or a domestic Wholly-Owned Subsidiary and all actions
required to be taken, if any, with respect to such acquired or newly
formed Subsidiary under subsection 7.9 shall have been taken, (d)(i)
the Borrower shall be in compliance, on a pro forma basis after giving
effect to such acquisition or formation, with the covenants contained
in subsection 8.1 recomputed as at the last day of the most recently
ended fiscal quarter of the Borrower as if such acquisition had
occurred on the first day of each relevant period for testing such
compliance, and the Borrower shall have delivered to the
Administrative Agent an officers' certificate to such effect, together
with all relevant financial information for such Person or assets and
(ii) any acquired or newly formed Subsidiary (including its direct and
indirect Subsidiaries) shall not be liable for any Indebtedness or
Guarantee Obligations (except for Indebtedness and Guarantee
Obligations permitted by subsections 8.2 and 8.4) and (e) any acquired
or newly formed Subsidiary (including its direct and indirect
Subsidiaries) shall not have any liabilities (contingent or otherwise,
and including, without limitation, liabilities under Environmental
Laws and liabilities with respect to any Plan) other than (x)
Indebtedness and Guarantee Obligations permitted by subsections 8.2
and 8.4 and (y) such liabilities which could not have a Material
Adverse Effect, and the Borrower shall have delivered to the
Administrative Agent a certificate, signed by a Responsible Officer,
that to the best of such officer's knowledge, the conditions set forth
in this clause (e) have been met.
"Permitted Business Investments": investments made in the
ordinary course of, and of a nature that is or shall have become
customary in, the Oil and Gas Business as a means of actively
exploiting, exploring for, acquiring, developing, processing,
gathering, marketing or transporting oil and gas through agreements,
transactions, interests or arrangements which permit one to share
risks or costs, comply with regulatory requirements regarding local
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ownership or satisfy other objectives customarily achieved through the
conduct of Oil and Gas Business jointly with third parties, including,
without limitation, the entry into operating agreements, working
interests, royalty interests, mineral leases, processing agreements,
farm-out and farm-in agreements, division orders, contracts for the
sale, transportation or exchange of oil or natural gas, unitization
and pooling declarations and agreements and area of mutual interest
agreements, production sharing agreements or other similar or
customary agreements, transactions, properties, interests, and
investments and expenditures in connection therewith; provided that an
investment in capital stock, partnership interests, joint venture
interests, limited liability company interests or other similar equity
interests in a Person shall not constitute a Permitted Business
Investment.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, limited liability company, Governmental Authority or other
entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is subject to Title IV of ERISA and in respect of which the Borrower
or a Commonly Controlled Entity is (or, if such plan were terminated
at such time, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement": the Pledge Agreement, executed and
delivered by each of the Loan Parties, dated as of November 5, 1997,
substantially in the form of Exhibit C, as the same may be amended,
modified or supplemented from time to time.
"Pledged Securities": the Capital Stock of each direct and
indirect Subsidiary of the Borrower listed on Schedule 5.15 which is a
Guarantor, and each other Subsidiary of the Borrower (whether now
formed or hereafter acquired) whose Capital Stock is pledged to the
Lenders pursuant to the Pledge Agreement or subsection 7.9.
"Pledgors": the Borrower and each of its Subsidiaries which
is a party to the Pledge Agreement on the Closing Date or which
becomes a party to a pledge agreement pursuant to subsection 7.9.
"Properties": any kind of facility, fixture, property or
asset, whether real, personal or mixed, or tangible or intangible
owned, leased or operated by the Borrower or any Subsidiary.
"Proved Reserves": the estimated quantities of crude oil,
condensate, natural gas and natural gas liquids that adequate
geological and engineering data demonstrate with reasonable certainty
to be recoverable in future years from proved reservoirs under
existing economic and operating conditions (i.e., prices and costs as
of the date the estimate is made).
"Redetermination Date": each date that the redetermined
Borrowing Base becomes effective subject to the notice requirements
specified in subsection 4.9.
"Redetermination Event": the occurrence of the following
events during the Initial Period: (a) the sale or issuance of Capital
Stock of the Borrower or any of its Subsidiaries, in one transaction
or a series of transactions; (b) the incurrence of Subordinated
Indebtedness by the Borrower, in one transaction or a series of
transactions; (c) any sale, issuance, conveyance, transfer, lease or
other disposition (including, without limitation, through a sale and
leaseback transaction or as a result of casualty or condemnation) by
the Borrower or any Subsidiary (a
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"Disposition"), in one transaction or a series of transactions, of any
Oil and Gas Properties to any Person (other than to the Borrower or
any of its Subsidiaries) if such Disposition (or Dispositions) has a
sale price in excess of $250,000 in the aggregate; (d) any
Disposition, in one transaction or a series of transactions, of
Property not constituting Oil and Gas Properties if such Disposition
has a sale price in excess $250,000 (provided that this clause (d)
shall not include the Disposition of equipment used in the ordinary
course of the Oil and Gas Business if the proceeds of such Disposition
are used, within 60 days, to purchase replacement equipment); or (e)
the acquisition of Oil and Gas Properties having Proved Reserves with
a value in excess of $50,000,000 in the aggregate, whether by
acquisition of stock or assets or by merger (an "Oil and Gas
Acquisition"); provided that the definition of "Redetermination Event"
shall not include the Disposition of Oil and Gas Properties which are
not included in the Borrowing Base (determined by reference to the
most recent Reserve Report) pursuant to farm-ins and farm-outs and
transfers of royalty interests, overriding royalty interests, net
revenue interests and other similar transfers, all pursuant to
exploration and development activity in the ordinary course of
business of the Borrower and its Subsidiaries, including the
Disposition of seismic data to the extent that an interest is retained
in such data by the Borrower or its Subsidiaries.
"Reference Banks": four major banks in the London interbank
market selected by the Administrative Agent.
"Refinanced Indebtedness": the Indebtedness of the Borrower
and its Subsidiaries and Cairn and its Subsidiaries described as
"Refinanced Indebtedness" on Schedule 1.1(b), which will constitute
all of the existing Indebtedness of the Borrower and its Subsidiaries
and Cairn and its Subsidiaries on the Closing Date and will be repaid
(or defeased or the provision for repayment is made, in either case on
terms reasonably acceptable to the Administrative Agent) in full on
the Closing Date, except for Indebtedness listed on Schedule 1.1(c).
"Register": as defined in subsection 11.6(d).
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Reimbursement Obligations": the obligation of the Borrower
to reimburse the Issuing Lender pursuant to subsection 3.5(a) for
amounts drawn under Letters of Credit issued by the Issuing Lender in
accordance with the terms of this Agreement and the related L/C
Applications.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. Section 2615.
"Required Lenders": at any time, Lenders the Commitment
Percentages of which aggregate at least 51%.
"Requirement of Law": as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or
governing documents of such Person, and any law,
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treaty, rule or regulation or determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its Property or to which such
Person or any of its Property is subject.
"Reserve Report": a report in form and with attachments
consistent with the Initial Reserve Report with respect to the Oil and
Gas Properties of the Borrower and its Subsidiaries prepared (a) for
all reserve reports as of December 31, by ▇▇▇▇▇ ▇▇▇▇▇ Company or
another independent engineering firm selected by the Borrower and
reasonably acceptable to the Administrative Agent and (b) for all
other reports, by engineers employed by the Borrower and certified by
a Responsible Officer of the Borrower.
"Responsible Officer": of any Loan Party, the chief executive
officer or the president of such Loan Party or, with respect to
financial matters, the chief financial officer or treasurer of such
Loan Party.
"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender to make Loans to the Borrower hereunder in
an aggregate principal amount at any one time outstanding not to
exceed the amount set forth opposite such Lender's name on Schedule
1.1(a) (which amount, with respect to the Lenders, initially shall
equal $125,000,000 in the aggregate), as such amount may be reduced
from time to time in accordance with the provisions of this Agreement.
"Revolving Credit Loans": as defined in subsection 2.1(a).
"Revolving Credit Note": as defined in subsection 2.3(e).
"S-4": the Registration Statement on Form S-4 of the Borrower,
including the Joint Proxy Statement/ Prospectus dated October 6, 1997
included therein and all filings and documents of the Borrower and
Cairn incorporated by reference therein.
"Security Documents": the collective reference to the Pledge
Agreement, the Mortgages and all other security documents hereafter
delivered to the Administrative Agent granting a Lien on any asset or
assets of any Person to secure the obligations and liabilities of the
Borrower hereunder and under any of the other Loan Documents or to
secure any guarantee of any such obligations and liabilities.
"Senior Debt": with respect to the Borrower and its
Subsidiaries, Indebtedness of the Borrower and its Subsidiaries other
than Subordinated Indebtedness.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Southwest Holmwood Properties": those properties described on
Schedule 1.1(e).
"Subordinated Indebtedness": any Indebtedness of the Borrower
contractually subordinated to the prior payment in full of the Loans,
Reimbursement Obligations and any other obligations hereunder in a
manner acceptable to the Required Lenders as evidenced by their
written approval.
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"Subsidiary": as to any Person, a corporation, partnership or
other entity of which more than 50% of the total voting power of
shares of stock or other equity ownership interests having ordinary
voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
vote in the election of directors, a managing general partner, or
majority of general partners or other managers or trustees thereof, is
at the time owned or controlled, directly or indirectly by such Person
or one or more of the other Subsidiaries of such Person (or a
combination thereof). Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to any
direct or indirect Subsidiary or Subsidiaries of the Borrower.
"Supermajority Lenders": at any time, Lenders the Commitment
Percentages of which aggregate at least 75%.
"Termination Date": the date which is the fifth anniversary
of the Closing Date.
"Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on
the same date and end on the same later date (whether or not such
Loans shall originally have been made on the same day); Tranches may
be identified as "Eurodollar Tranches".
"Transferee": as defined in subsection 11.6(f).
"Type": as to any Loan, its nature as an ABR Loan or a
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"Wholly-Owned Subsidiary": a Subsidiary of the Borrower, all
of the outstanding Capital Stock of which (other than directors'
qualifying shares) is owned, directly or indirectly, by the Borrower
or one or more other Wholly-Owned Subsidiaries of the Borrower;
provided that each of the Persons listed on Schedule 1.1(d) shall be
deemed not to be Wholly-Owned Subsidiaries.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in any Loan Document or any certificate or other document
made or delivered pursuant hereto or thereto.
(b) As used herein and in any Loan Document, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower or any Subsidiary of the Borrower not
defined in subsection 1.1 and accounting terms partly defined in subsection
1.1, to the extent not defined, shall have the respective meanings given to
them under GAAP. References in this Agreement or any other Loan Document to
financial statements shall be deemed to include all related schedules and notes
thereto.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
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(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(e) References in this Agreement or any other Loan Document
to knowledge of any Loan Party of events or circumstances shall be deemed to
refer to events or circumstances of which a Responsible Officer has knowledge
or should have had knowledge.
SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms
and conditions hereof, each Lender severally agrees to make revolving credit
loans ("Revolving Credit Loans" or "Loans") to the Borrower from time to time
during the Commitment Period in an aggregate principal amount at any one time
outstanding not to exceed the amount of such Lender's Revolving Credit
Commitment, provided that no Lender shall make any Revolving Credit Loans if,
after giving effect thereto, the sum of such Lender's Revolving Credit Loans
and Commitment Percentage of Letter of Credit Outstandings (in each case, after
giving effect to the Loans requested to be made and the Letters of Credit
requested to be issued on such date) exceeds the lesser of (i) such Lender's
Revolving Credit Commitment and (ii) such Lender's Commitment Percentage of the
Borrowing Base then in effect. During the Commitment Period, the Borrower may
use the Revolving Credit Commitments by borrowing, prepaying the Revolving
Credit Loans in whole or in part, and reborrowing, all in accordance with the
terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined
by the Borrower and notified to the Administrative Agent in accordance with
subsections 2.2 and 4.3, provided that no Revolving Credit Loan shall be made
as a Eurodollar Loan after the day that is one month prior to the Termination
Date.
2.2 Procedure for Revolving Credit Borrowing. The Borrower
may borrow under the Revolving Credit Commitments during the Commitment Period
on any Business Day, provided that the Borrower shall give the Administrative
Agent irrevocable notice (which notice must be received by the Administrative
Agent prior to 10:00 a.m., New York City time, (a) three Business Days prior to
the requested Borrowing Date, if all or any part of the requested Revolving
Credit Loans initially are to be Eurodollar Loans or (b) one Business Day prior
to the requested Borrowing Date, otherwise), specifying (i) the amount to be
borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is to
be of Eurodollar Loans, ABR Loans or a combination thereof and (iv) if the
borrowing is to be entirely or partly of Eurodollar Loans, the respective
amounts of each such Type of Loan and the respective lengths of the initial
Interest Periods therefor. Each borrowing under the Revolving Credit
Commitments shall be in an amount equal to (x) in the case of ABR Loans,
$5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then
Available Commitments are less than $5,000,000, such lesser amount) and (y) in
the case of Eurodollar Loans, $5,000,000 or a whole multiple of $1,000,000 in
excess thereof. Upon receipt of any such notice from the Borrower, the
Administrative Agent shall promptly notify each Lender thereof. Each Lender
will make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in subsection 11.2 prior to 11:00 A.M., New York
City time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent crediting the account of
the Borrower on the books of such office with
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the aggregate of the amounts made available to the Administrative Agent by the
Lenders and in like funds as received by the Administrative Agent.
2.3 Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Loan of such
Lender on the Termination Date (or such earlier date on which the Loans become
due and payable pursuant to Section 9). The Borrower hereby further agrees to
pay interest on the unpaid principal amount of the Loans from time to time
outstanding from the date hereof to but not including the date the Loans are
paid in full at the rates per annum, and on the dates, set forth in subsection
4.1.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain the Register
pursuant to subsection 11.6(d), and a subaccount therein for each Lender, in
which shall be recorded (i) the amount of each Loan made hereunder, the Type
thereof and each Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) both the amount of any sum received
by the Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to subsection 2.3(b) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of the Administrative Agent or any Lender to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made
to such Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing the Revolving Credit
Loans of such Lender, substantially in the form of Exhibit A with appropriate
insertions as to date and principal amount (a "Revolving Credit Note" or
"Note").
SECTION 3. LETTERS OF CREDIT
3.1 The L/C Commitment. (a) Subject to the terms and
conditions hereof, the Issuing Lender, in reliance on the agreements of the
other Lenders set forth in subsection 3.4(a), agrees to issue letters of credit
("Letters of Credit") for the account of the Borrower on any Business Day
during the Commitment Period in such form as may be approved from time to time
by the Issuing Lender; provided that the Issuing Lender shall not issue any
Letter of Credit if, after giving effect to such issuance and after giving
effect to any Loans requested to be made or Letters of Credit requested to be
issued on such date, (i) the Letter of Credit Outstandings would exceed
$10,000,000 or (ii) the sum of the Revolving Credit Loans and Letter of Credit
Outstandings would exceed the lesser of (x) the Revolving Credit Commitments
and (y) the Borrowing Base then in effect. Each Letter of Credit shall (i) be
issued to support obligations of the Borrower or any of its Subsidiaries,
contingent or otherwise, which finance the working capital and business needs
of the Borrower and its
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Subsidiaries, and (ii) shall expire no later than the earlier of (x) one year
(or such later date agreed to by the Issuing Lender) after the date of issuance
and (y) five Business Days prior to the Termination Date, provided that any
Letter of Credit with a one-year tenor may provide for the extension thereof
for additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above). Each Letter of Credit shall be denominated in
Dollars.
(b) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.
(c) The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Lender or any Participating Lender to exceed any limits
imposed by, any applicable Requirement of Law.
3.2 Procedure for Issuance of Letters of Credit. The
Borrower may from time to time request that the Issuing Lender issue a Letter
of Credit by delivering to the Issuing Lender and the Administrative Agent at
their respective addresses for notices specified herein a letter of credit
application in the Issuing Lender's then customary form (an "L/C Application")
completed to the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as may be customary
and as the Issuing Lender may reasonably request. Upon receipt of any L/C
Application, the Issuing Lender will process such L/C Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and, upon
receipt by the Issuing Lender of confirmation from the Administrative Agent
that issuance of such Letter of Credit will not contravene subsection 3.1, the
Issuing Lender shall promptly issue the Letter of Credit requested thereby (but
in no event shall the Issuing Lender be required to issue any Letter of Credit
earlier than three Business Days after its receipt of the L/C Application
therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender
and the Borrower. The Issuing Lender shall furnish a copy of such Letter of
Credit to the Borrower and the Administrative Agent promptly following the
issuance thereof, and, thereafter, the Administrative Agent shall promptly
furnish a copy thereof to the Lenders.
3.3 Fees, Commissions and Other Charges. (a) The Borrower
shall pay to the Administrative Agent, for the account of (i) the Issuing
Lender and the Participating Lenders, a letter of credit commission with
respect to each Letter of Credit, computed for the period from the date such
Letter of Credit is issued to the date upon which the next payment is due under
this subsection (and, thereafter, from the date of payment under this
subsection to the date upon which the next payment is due under this
subsection) at the rate per annum equal to the Applicable Margin in effect from
time to time for Eurodollar Loans of the daily aggregate amount available to be
drawn under such Letter of Credit during such period, and (ii) the Issuing
Lender, a letter of credit commission with respect to each Letter of Credit in
an amount equal to .125% per annum of the daily aggregate amount available to
be drawn under such Letter of Credit. The letter of credit commissions payable
pursuant to clause (i) and (ii) above shall be payable quarterly in arrears on
the last day of each March, June, September and December, commencing December
31, 1997, and on the Termination Date.
(b) In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse the Issuing Lender for such normal and
customary costs and expenses as are incurred or charged by the Issuing Lender
in issuing, effecting payment under, amending, negotiating or otherwise
administering any Letter of Credit.
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(c) The Administrative Agent shall, promptly following its
receipt thereof, distribute to the Issuing Lender and the Participating Lenders
all fees and commissions received by the Administrative Agent for their
respective accounts pursuant to this subsection.
3.4 L/C Participations. (a) Effective on the date of
issuance of each Letter of Credit, the Issuing Lender irrevocably agrees to
grant and hereby grants to each Participating Lender, and each Participating
Lender irrevocably agrees to accept and purchase and hereby accepts and
purchases from the Issuing Lender, on the terms and conditions hereinafter
stated, for such Participating Lender's own account and risk an undivided
interest equal to such Participating Lender's Commitment Percentage in the
Issuing Lender's obligations and rights under each Letter of Credit issued by
the Issuing Lender and the amount of each draft paid by the Issuing Lender
thereunder. Each Participating Lender unconditionally and irrevocably agrees
with the Issuing Lender that, if a draft is paid under any Letter of Credit for
which such Issuing Lender is not reimbursed in full by the Borrower in
accordance with the terms of this Agreement, such Participating Lender shall
pay to the Administrative Agent, for the account of the Issuing Lender, upon
demand at the Administrative Agent's address specified in subsection 11.2, an
amount equal to such Participating Lender's Commitment Percentage of the amount
of such draft, or any part thereof, which is not so reimbursed. On the date
that any Assignee becomes a Lender party to this Agreement in accordance with
subsection 11.6, participating interests in any outstanding Letters of Credit
held by the transferor Lender from which such Assignee acquired its interest
hereunder shall be proportionately reallotted between such Assignee and such
transferor Lender. Each Participating Lender hereby agrees that its obligation
to participate in each Letter of Credit, and to pay or to reimburse the Issuing
Lender for its participating share of the drafts drawn or amounts otherwise
paid thereunder, is absolute, irrevocable and unconditional and shall not be
affected by any circumstances whatsoever (including, without limitation, the
occurrence or continuance of any Default or Event of Default), and that each
such payment shall be made without offset, abatement, withholding or other
reduction whatsoever.
(b) If any amount required to be paid by any Participating
Lender to the Issuing Lender pursuant to subsection 3.4(a) in respect of any
unreimbursed portion of any draft paid by the Issuing Lender under any Letter
of Credit is paid to the Issuing Lender within three Business Days after the
date such payment is due, such Participating Lender shall pay to the
Administrative Agent, for the account of the Issuing Lender, on demand, an
amount equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such
draft is paid to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If
any such amount required to be paid by any Participating Lender pursuant to
subsection 3.4(a) is not in fact made available to the Administrative Agent,
for the account of the Issuing Lender, by such Participating Lender within
three Business Days after the date such payment is due, the Issuing Lender
shall be entitled to recover from such Participating Lender, on demand, such
amount with interest thereon calculated from such due date at the rate per
annum applicable to ABR Loans hereunder. A certificate of the Issuing Lender
submitted to any Participating Lender with respect to any amounts owing under
this subsection shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has paid a
draft under any Letter of Credit and has received from any Participating Lender
its pro rata share of such payment in accordance with subsection 3.4(a), the
Issuing Lender receives any reimbursement on account of such unreimbursed
portion, or any payment of interest on account thereof, the Issuing Lender will
pay to the Administrative Agent, for the account of such Participating Lender,
its pro rata share thereof; provided, however, that in the event that any such
payment received by the Issuing Lender shall be
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required to be returned by the Issuing Lender, such Participating Lender shall
return to the Administrative Agent for the account of the Issuing Lender, the
portion thereof previously distributed to it.
3.5 Reimbursement Obligation of the Borrower. If any draft
shall be presented for payment under any Letter of Credit, the Issuing Lender
shall notify the Borrower and the Administrative Agent of the date and the
amount thereof. The Borrower agrees to reimburse the Issuing Lender (whether
with its own funds or with proceeds of the Revolving Credit Loans) on each date
on which the Issuing Lender pays a draft so presented under any Letter of
Credit for the amount of (i) such draft so paid and (ii) any taxes, fees,
charges or other costs or expenses incurred by the Issuing Lender in connection
with such payment. Each such payment shall be made to the Issuing Lender at
its address for notices specified herein in lawful money of the United States
of America and in immediately available funds. Interest shall be payable on
any and all amounts remaining unpaid by the Borrower under this subsection from
the date of payment of the applicable draft until payment in full thereof, (x)
for the period commencing on the date of payment of the applicable draft to the
date which is 3 days thereafter, at the rate which would be payable on ABR
Loans at such time and (y) thereafter, at the rate which would be payable on
ABR Loans at such time plus 2%.
3.6 Obligations Absolute. The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower or any other Person may have or have had against the
Issuing Lender or any other Lender or any beneficiary of a Letter of Credit.
The Borrower also agrees with the Issuing Lender that the Issuing Lender shall
not be responsible for, and the Borrower's obligations under subsection 3.5
shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or any dispute between or among
the Borrower and any beneficiary of any Letter of Credit or any other party to
which such Letter of Credit may be transferred or any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee. The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except
for errors or omissions caused by the Issuing Lender's gross negligence or
willful misconduct. The Borrower agrees that any action taken or omitted by
the Issuing Lender under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in
the Uniform Commercial Code of the State of New York, including, without
limitation, Article V thereof, shall be binding on the Borrower and shall not
result in any liability of such Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. Without limitation of
subsection 3.6, the responsibility of the Issuing Lender to the Borrower in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such
presentment are in conformity with such Letter of Credit.
3.8 L/C Applications. To the extent that any provision of
any L/C Application, including any reimbursement provisions contained therein,
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall prevail.
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SECTION 4. GENERAL PROVISIONS
4.1 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
Interest Period plus the Applicable Margin in effect on such day.
(b) Each ABR Loan shall bear interest for each day at a rate
per annum equal to the ABR in effect on such day plus the Applicable Margin in
effect on such date.
(c) If all or a portion of (i) any principal of any Loan,
(ii) any interest payable thereon, (iii) any commitment fee or (iv) any other
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), the principal of the Loans and any
such overdue interest, commitment fee or other amount shall bear interest at a
rate per annum which is (x) in the case of principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection plus 2% or (y) in the case of any such overdue interest, commitment
fee or other amount, the ABR plus the Applicable Margin in effect on such date
plus 2%, in each case from the date of such non-payment until such overdue
principal, interest, commitment fee or other amount is paid in full (as well
after as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to subsection 4.1(c)
shall be payable from time to time on demand.
4.2 Computation of Interest and Fees. (a) Whenever, in the
case of ABR Loans, it is calculated on the basis of the Prime Rate, interest
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed; and, otherwise, interest and fees shall be
calculated on the basis of a 360-day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and the
Lenders of each determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the ABR, the Eurocurrency Reserve
Requirements, the C/D Assessment Rate or the C/D Reserve Percentage shall
become effective as of the opening of business on the day on which such change
becomes effective. The Administrative Agent shall as soon as practicable
notify the Borrower and the Lenders of the effective date and the amount of
each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the
Borrower, deliver to the Borrower a statement showing the quotations and
calculations used by the Administrative Agent in determining any interest rate
pursuant to subsection 4.1(a).
4.3 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Eurodollar Loans to ABR Loans by giving
the Administrative Agent at least one Business Day's prior irrevocable notice
of such election, provided that any such conversion of Eurodollar Loans may
only be made on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans
by giving the Administrative Agent at least three Business Days' prior
irrevocable notice of such election. Any such notice of conversion to
Eurodollar Loans shall specify the length of the initial Interest Period or
Interest Periods therefor. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof. All or any part of
outstanding Eurodollar Loans and ABR Loans may be converted as provided herein,
provided that (i) no Loan may be converted into a Eurodollar Loan when any
Event of Default has occurred and is continuing and the Administrative Agent
has or the
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Required Lenders have determined that such a conversion is not appropriate and
(ii) no Loan may be converted into a Eurodollar Loan after the date that is one
month prior to the Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection
1.1, of the length of the next Interest Period to be applicable to such Loans,
provided that no Eurodollar Loan may be continued as such (i) when any Event of
Default has occurred and is continuing and the Administrative Agent has or the
Required Lenders have determined that such a continuation is not appropriate or
(ii) after the date that is one month prior to the Termination Date and
provided, further, that if the Borrower shall fail to give such notice or if
such continuation is not permitted such Loans shall be automatically converted
to ABR Loans on the last day of such then expiring Interest Period.
4.4 Minimum Amounts Maximum Number of Tranches. All
borrowings, conversions and continuations of Loans hereunder and all selections
of Interest Periods hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate principal
amount of the Loans comprising each Eurodollar Tranche shall be equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof. In no event
shall there be more than five Eurodollar Tranches outstanding at any time.
4.5 Optional Prepayments and Commitment Reductions. (a) The
Borrower may, on the last day of any Interest Period with respect thereto, in
the case of Eurodollar Loans, or at any time and from time to time, in the case
of ABR Loans, prepay the Loans, in whole or in part, without premium or
penalty, upon at least one Business Day's irrevocable notice to the
Administrative Agent in the case of ABR Loans, and upon at least three Business
Days' irrevocable notice to the Administrative Agent in the case of Eurodollar
Loans, in each case specifying the date and amount of prepayment and whether
the prepayment is of Eurodollar Loans, ABR Loans or a combination thereof, and,
in each case if of a combination thereof, the amount allocable to each. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
Lender thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with
any amounts payable pursuant to subsection 4.14. Partial prepayments shall be
in an aggregate principal amount of $5,000,000 or a whole multiple thereof.
(b) Subject to subsection 4.5(c), the Borrower shall have the
right, upon not less than three Business Days' notice to the Administrative
Agent, to terminate the Revolving Credit Commitments or, from time to time, to
reduce the amount of the Revolving Credit Commitments. Any such reduction
shall be in an amount equal to $5,000,000 or a whole multiple of $1,000,000 in
excess thereof and shall reduce permanently the Revolving Credit Commitments
then in effect. Termination of the Revolving Credit Commitments shall also
terminate the obligation of the Issuing Lender to issue Letters of Credit.
(c) In the event of any termination of the Revolving Credit
Commitments, the Borrower shall on the date of such termination repay or prepay
all of its outstanding Revolving Credit Loans (together with accrued and unpaid
interest on the Revolving Credit Loans and any amounts payable pursuant to
subsection 4.14 and any other amounts payable hereunder), reduce the Letter of
Credit Outstandings to zero and cause all Letters of Credit to be canceled and
returned to the Issuing Lender (or shall cash collateralize the Letter of
Credit Outstandings (or provide supporting letters of credit from an
institution reasonably acceptable to the Administrative Agent) on terms and
pursuant to documentation reasonably satisfactory to the Issuing Lender and the
Administrative Agent). In the event of any partial reduction of the Revolving
Credit Commitments, then (i) at or prior to the
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effective date of such reduction, the Administrative Agent shall notify the
Borrower and the Lenders of the Aggregate Revolving Credit Exposure of all the
Lenders and (ii) if the Aggregate Revolving Credit Exposure of all the Lenders
would exceed the aggregate Commitments after giving effect to such reduction,
then, prior to giving effect to such reduction, the Borrower shall, on the date
of such reduction, first, repay or prepay Revolving Credit Loans and, second,
reduce the Letter of Credit Outstandings (or cash collateralize the Letter of
Credit Outstandings (or provide supporting letters of credit from an
institution reasonably acceptable to the Administrative Agent) on terms and
pursuant to documentation reasonably satisfactory to the Issuing Lender and the
Administrative Agent), in an aggregate amount sufficient to eliminate such
excess.
(d) The Loans shall be repaid, and the Letter of Credit
Outstandings shall be reduced or cash collateralized, to the extent required by
subsection 4.10. All such repayments and cash collateralization shall be made
in accordance with this subsection 4.5.
(e) In the event the amount of any prepayment of the Loans
required to be made above shall exceed the aggregate principal amount of the
outstanding ABR Loans (the amount of any such excess being called the "Excess
Amount"), the Borrower shall have the right, in lieu of making such prepayment
in full, to prepay all the outstanding applicable ABR Loans and to deposit an
amount equal to the Excess Amount with, and (ii) in the event that Letter of
Credit Outstandings are required to be cash collateralized, the Borrower shall
deposit an amount equal to the aggregate amount of Letter of Credit
Outstandings to be cash collateralized with, the Administrative Agent in a cash
collateral account maintained (pursuant to documentation reasonably
satisfactory to the Administrative Agent) by and in the sole dominion and
control of the Administrative Agent. Any amounts so deposited shall be held by
the Administrative Agent as collateral for the obligations of the Borrower
under this Agreement and applied to the prepayment of the applicable Eurodollar
Loans at the end of the current Interest Periods applicable thereto or Letter
of Credit Outstandings, as the case may be, or, during an Event of Default, to
payment of any obligations under this Agreement (including obligations in
respect of the Letters of Credit). On any Business Day on which (i) collected
amounts remain on deposit in or to the credit of such cash collateral account
after giving effect to the payments made on such day pursuant to this
subsection 4.5(e) and (ii) the Borrower shall have delivered to the
Administrative Agent a written request or a telephonic request (which shall be
promptly confirmed in writing) that such remaining collected amounts be
invested in the Cash Equivalent specified in such request, the Administrative
Agent shall use its reasonable efforts to invest such remaining collected
amounts in such Cash Equivalent, provided, however, that the Administrative
Agent shall have continuous dominion and full control over any such investments
(and over any interest that accrues thereon) to the same extent that it has
dominion and control over such cash collateral account and no Cash Equivalent
shall mature after the end of the Interest Period for which it is to be
applied. The Borrower shall not have the right to withdraw any amount from
such cash collateral account until the applicable Eurodollar Loans and accrued
interest thereon and Letter of Credit Outstandings are paid in full or if a
Default or Event of Default then exists or would result. Any prepayment or
collateralization pursuant to this subsection 4.5(e) shall be applied in the
order set forth in clause (ii) of the second sentence of subsection 4.5(c).
4.6 Commitment Fee; Administrative Agent's Fee; Other Fees.
(a) The Borrower agrees to pay to the Administrative Agent for the account of
each Lender a commitment fee for the period from and including, for each
Lender, the Closing Date to but not including the Termination Date, computed at
the Commitment Fee Rate on the average daily amount of the lesser of (i) the
Available Commitment of such Lender and (ii) the Borrowing Base Availability
with respect to such Lender, during the period for which payment is made,
payable quarterly in arrears on the last day of each March, June, September and
December (commencing on December 31, 1997) and on the
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Termination Date or such earlier date as the Revolving Credit Commitments shall
terminate as provided herein, commencing on the first of such dates to occur
after the date hereof. Commitment fees shall be nonrefundable when paid.
(b) The Borrower shall pay to the Administrative Agent the
fees set forth in the fee letter agreement, dated October 29, 1997, among the
Borrower, Chase and Chase Securities Inc., on the dates specified therein.
4.7 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during such
Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrower and the Lenders as soon as practicable thereafter. If such notice
is given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (y) any Loans that were to have
been converted on the first day of such Interest Period to Eurodollar Loans
shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans shall
be converted, on the first day of such Interest Period, to ABR Loans. Until
such notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall the Borrower
have the right to convert Loans to Eurodollar Loans.
4.8 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the Borrower on
account of any commitment fee hereunder and any reduction of the Revolving
Credit Commitments of the Lenders shall be made pro rata according to the
respective Commitment Percentages of the Lenders. Each payment (including each
prepayment) by the Borrower on account of principal of and interest on the
Loans shall be made pro rata according to the respective outstanding principal
amounts of the Loans then held by the Lenders. All payments (including
prepayments) to be made by the Borrower hereunder, whether on account of
principal, interest, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 12:00 Noon, New York City time, on the
due date thereof to the Administrative Agent, for the account of the Lenders,
at the Administrative Agent's office specified in subsection 11.2, in Dollars
and in immediately available funds. The Administrative Agent shall distribute
such payments to the Lenders promptly upon receipt in like funds as received.
If any payment hereunder becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day, and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.
(b) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make
the amount that would constitute its Commitment Percentage of such borrowing
available to the Administrative Agent, the Administrative Agent may assume that
such Lender is making such amount available to the Administrative Agent, and
the
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Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to
the Administrative Agent by the required time on the Borrowing Date therefor,
such Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available
to the Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error. If such Lender's
Commitment Percentage of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days after such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to ABR Loans
hereunder, on demand, from the Borrower.
4.9 Computation of Borrowing Base. (a) (i) The Borrowing
Base in effect from time to time shall represent the maximum principal amount
(subject to the aggregate amount of the Revolving Credit Commitments) of Loans
and Letter of Credit Outstandings that the Lenders will allow to remain
outstanding during the Commitment Period. During the Initial Period, the
amount of the Borrowing Base shall be $125,000,000, unless revised upon the
occurrence of a Redetermination Event, as set forth in subsection 4.9(e). The
Borrowing Base will be based upon the value of certain Proved Reserves
attributable to the Oil and Gas Properties of the Borrower and its Subsidiaries
and other assets of the Borrower and its Subsidiaries acceptable to the
Administrative Agent in its sole discretion, and will be determined by the
Administrative Agent in accordance with paragraph (d) of this subsection 4.9,
subject to approval by the Supermajority Lenders (or, with respect to the
Initial Scheduled Borrowing Base Redetermination, all of the Lenders). Until
the Commitments are no longer in effect, all Letters of Credit have terminated
and all of the Loans and all other obligations under this Agreement are paid in
full, this Agreement shall be subject to the then effective Borrowing Base.
(b) Reserve Reports. Prior to March 1 and September 1 of
each year, the Borrower shall, at its own expense, furnish to the
Administrative Agent and to each Lender Reserve Reports, which Reserve Reports
shall be dated as of the immediately preceding December 31 (in the case of
Reserve Reports due on March 1) and June 30 (in the case of Reserve Reports due
on September 1), and shall set forth, among other things, (i) the Oil and Gas
Properties, then owned by the Borrower and its Subsidiaries, (ii) the Proved
Reserves attributable to such Oil and Gas Properties and (iii) a projection of
the rate of production and net income of the Proved Reserves as of the date of
such Reserve Report, all in accordance with the guidelines published by the
Securities and Exchange Commission and such assumptions as the Administrative
Agent shall provide. Concurrently with the delivery of the Reserve Reports,
the Borrower shall furnish to the Administrative Agent and to each Lender a
certificate of a Responsible Officer showing any additions to or deletions from
the Oil and Gas Properties listed in the Reserve Report, which additions or
deletions were made by the Borrower and its Subsidiaries since the date of the
previous Reserve Report.
(c) Redeterminations of the Borrowing Base after the Initial
Period. The Borrowing Base shall be redetermined (i) after receipt by the
Administrative Agent of each scheduled Reserve Report, commencing with the
Reserve Report as of December 31, 1997, (ii) upon the delivery, after the
Initial Period, of a Lender Redetermination Notice to the Borrower and (iii)
upon the delivery, after the Initial Period, of a Borrower Redetermination
Notice to the Administrative Agent, all as provided in this subsection 4.9.
Within 15 days after the delivery of a Borrower Redetermination Notice or a
Lender Redetermination Notice, the Borrower shall furnish to the Administrative
Agent and to each Lender a Reserve Report as of the most recent practicable
date. If the Borrower fails to deliver a Reserve Report within the time period
provided for in the preceding sentence, then the
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Administrative Agent shall have the right to rely on the last Reserve Report
previously delivered by the Borrower with any such adjustments and taking into
account any additional information as the Administrative Agent may deem
appropriate, in its sole discretion. On or before the date which is 30 days
after receipt (i) of a scheduled semi- annual Reserve Report or (ii) of a
Reserve Report in connection with a Lender Redetermination Notice or a Borrower
Redetermination Notice, the Administrative Agent shall redetermine the
Borrowing Base in its sole discretion, and the Administrative Agent shall
notify the Borrower and the Lenders of its redetermination of the Borrowing
Base. Within 10 days after receipt from the Administrative Agent of the amount
of the its redetermination of the Borrowing Base, each Lender shall notify the
Administrative Agent stating whether or not such Lender agrees with that
redetermination. Failure of any Lender to give such notice within such period
of time shall be deemed to constitute an acceptance of such redetermination.
If the Supermajority Lenders (or, with respect to the Initial Scheduled
Borrowing Base Redetermination, all of the Lenders) agree with that
redetermination, then the Administrative Agent promptly shall notify the
Borrower of the Borrowing Base as so redetermined, whereupon that redetermined
value shall automatically become effective (and shall remain effective until
the Borrowing Base is again redetermined as provided in this subsection
4.9(c)). If the Supermajority Lenders (or, with respect to the Initial
Scheduled Borrowing Base Redetermination, all of the Lenders) have not approved
or are not deemed to have approved the Borrowing Base within the 10 day period
following their receipt of the proposed amount from the Administrative Agent,
the Borrowing Base shall be set at the amount of the then current Borrowing
Base and the Borrowing Base shall remain at such level until the Supermajority
Lenders (or, with respect to the Initial Scheduled Borrowing Base
Redetermination, all of the Lenders), utilizing the procedure outlined herein,
agree on a new Borrowing Base. Each redetermination provided for by this
subsection 4.9(c) shall be made in accordance with the provisions of subsection
4.9(d). It is the intention of the Borrower and the Lenders that the Borrowing
Base be redetermined within 45 days after the furnishing of each Reserve
Report, subject to the provisions of this paragraph (c); provided that it is
the intention of the Borrower and the Lenders that the Initial Scheduled
Borrowing Base Redetermination shall occur by, and shall become effective at,
the end of the Initial Period.
(d) (i) All determinations and redeterminations by the
Administrative Agent provided for in this subsection 4.9 (and any
determinations and decisions by either or both of the Administrative Agent and
the Supermajority Lenders (or, with respect to the Initial Scheduled Borrowing
Base Redetermination, all of the Lenders) in connection therewith, including
effecting any redetermination of the value of any component contained in a
Reserve Report) shall be made by the Administrative Agent and the Lenders in
their sole discretion and shall be made on a reasonable basis and in good faith
based upon the application by the Administrative Agent and the Lenders of their
respective normal oil and gas lending criteria as they exist at the time of
determination.
(ii) All redeterminations of the Borrowing Base referred to
in this subsection 4.9 shall become effective immediately upon the delivery of
notice by the Administrative Agent to the Borrower of the redetermination;
provided that the Initial Scheduled Borrowing Base Redetermination shall not
become effective until the end of the Initial Period.
(iii) (x) Upon the issuance of Subordinated Indebtedness
pursuant to subsection 8.2(f) during the Initial Period, the Borrowing Base
shall be automatically reduced in accordance with subsection 4.9(e) and (y)
upon the issuance of any such Subordinated Indebtedness following the Initial
Period, the Borrowing Base shall be redetermined in accordance with the
procedures set forth in subsection 4.9 which would have applied had a Borrower
Redetermination Notice or a Lender Redetermination Notice been delivered.
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(e) Redetermination Events during the Initial Period. Upon
the occurrence during the Initial Period of a Redetermination Event described
in clauses (a), (b), (c) or (d) of the definition thereof, the Borrowing Base
shall be automatically reduced by an amount equal to the Net Proceeds of that
Redetermination Event and the Borrower shall promptly provide the
Administrative Agent and the Lenders notice of such a Redetermination Event and
the Net Proceeds realized therefrom (describing the same in reasonable detail).
In addition, an Oil and Gas Acquisition described in clause (e) of the
definition of Redetermination Event shall result in a mandatory redetermination
of the Borrowing Base pursuant to the procedures set forth in this subsection
4.9 for a redetermination following the delivery of a Lender Redetermination
Notice or a Borrower Redetermination Notice; provided that any such
redetermination of the Borrowing Base must be approved by all of the Lenders.
(f) Concurrently with the delivery to the Administrative
Agent of each Reserve Report, the Administrative Agent may request that the
Borrower furnish to the Administrative Agent reasonable evidence of the
Borrower's title to the Oil and Gas Properties which have been developed or
acquired by the Borrower subsequent to the Reserve Report immediately preceding
such Reserve Report.
4.10 Borrowing Base Compliance. If, upon any redetermination
of the Borrowing Base, the Aggregate Revolving Credit Exposure of the Lenders
exceeds the Borrowing Base then in effect (any such excess, the "Borrowing Base
Deficiency"), the Borrower shall prepay the Revolving Credit Loans and then
cash collateralize the Letter of Credit Outstandings in an amount equal to 50%
of the Borrowing Base Deficiency within 90 days after the effective date of the
redetermination resulting in such Borrowing Base Deficiency, and within the
next 90 days prepay the Revolving Credit Loans and then cash collateralize the
Letter of Credit Outstandings in an amount equal to the balance of such
Borrowing Base Deficiency in each case together with interest accrued to the
date of such payment or prepayment and any amounts payable under subsection
4.14; provided that, if there exists a Borrowing Base Deficiency upon the
termination of the Initial Period after giving effect to the Initial Scheduled
Borrowing Base Redetermination, the Borrower shall, within 60 days of the
Initial Scheduled Borrowing Base Redetermination, prepay the Revolving Credit
Loans and then cash collateralize the Letter of Credit Outstandings (together
with interest accrued to the date of such payment or prepayment and any amounts
payable under subsection 4.14) in an amount equal to such Borrowing Base
Deficiency. If at any other time there exists a Borrowing Base Deficiency, the
Borrower shall immediately prepay the Loans and then cash collateralize the
Letter of Credit Outstandings in an amount equal to 100% of such Borrowing Base
Deficiency together with (i) interest accrued to the date of such payment or
prepayment and (ii) any amounts payable under subsection 4.14. Notwithstanding
the foregoing, the Borrower shall immediately apply 100% of the Net Proceeds of
any Redetermination Event described in clauses (a), (b) (c) or (d) of the
definition thereof to prepay outstanding Loans and then cash collateralize the
Letter of Credit Outstandings. Prepayments and collateralization pursuant to
this subsection 4.10 shall be made as set forth in subsection 4.5(c).
4.11 Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof after the date hereof shall make it
unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by
this Agreement (a) the commitment of such Lender hereunder to make Eurodollar
Loans, continue Eurodollar Loans as such and convert ABR Loans to Eurodollar
Loans shall forthwith be canceled and (b) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to ABR Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the
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Borrower shall pay to such Lender such amounts, if any, as may be required
pursuant to subsection 4.14.
4.12 Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof after the date hereof or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note, any Letter of
Credit, any L/C Application or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect
thereof (except for Non-Excluded Taxes covered by subsection 4.13,
changes in the rate or computation of tax on the overall net income of
such Lender, franchise taxes imposed in lieu of net income taxes and
doing business taxes);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender
such additional amount or amounts as will compensate such Lender for such
increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under any Letter of Credit to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, the
Borrower shall promptly pay to such Lender such additional amount or amounts as
will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower
(with a copy to the Administrative Agent) of the event by reason of which it
has become so entitled. A certificate as to any additional amounts payable
pursuant to this subsection submitted by such Lender to the Borrower (with a
copy to the Administrative Agent) shall be conclusive in the absence of
manifest error. The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
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4.13 Taxes. (a) All payments made by the Borrower under
this Agreement and any Notes shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding net income taxes, franchise taxes
(imposed in lieu of net income taxes) and doing business taxes imposed on the
Administrative Agent or any Lender as a result of a present or former
connection between the Administrative Agent or such Lender and the jurisdiction
of the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from the Administrative Agent or such Lender having executed, delivered
or performed its obligations or received a payment under, or enforced, this
Agreement or any Note). If any such non-excluded taxes, levies, imposts,
duties, charges, fees deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to the Administrative Agent or
any Lender hereunder or under any Note, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent necessary
to yield to the Administrative Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement, provided, however, that
the Borrower shall not be required to increase any such amounts payable to any
Non-U.S. Lender if such Non-U.S. Lender fails to comply with the requirements
of paragraph (b) of this subsection. Whenever any Non-Excluded Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the Administrative Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If, when the Borrower is
required by this subsection 4.14(a) to pay any Non-Excluded Taxes, the Borrower
fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts
or other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as
a result of any such failure. The agreements in this subsection shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
(b) Each Lender (or Transferee) that is not a citizen or
resident of the United States of America, a corporation, partnership or other
entity created or organized in or under the laws of the United States of
America, or any estate or trust that is subject to federal income taxation
regardless of the source of its income (a "Non-U.S. Lender") shall deliver to
the Borrower and the Administrative Agent (or, in the case of a Participant, to
the Lender from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service form 1001 or Form 4224, or, in
the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding
tax under Section 871(h) or 881(c) of the Code with respect to payments of
"portfolio interest," a Form W-8, or any subsequent versions thereof or
successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, an annual
certificate representing that such Non-U.S. Lender (i) is not a "bank" for
purposes of Section 881(c) of the Code (and is not subject to regulatory or
other legal requirements as a bank in any jurisdiction, and has not been
treated as a bank in any filing with or submission made to any Governmental
Authority or rating agency), (ii) is not a 10% shareholder (within the meaning
of Section 871(h)(3)(B) of the Code) of the Borrower and (iii) is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from U.S. federal withholding tax
on all payments by the Borrower under this Agreement and the other Loan
Documents, along with such other additional forms as the Borrower, the
Administrative Agent (or, in the case of a Participant, the Lender from which
the related participation shall have been purchased) may reasonably request to
establish the availability of such exemption. Such forms shall be delivered
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by each Non-U.S. Lender on or before the date it becomes a party to this
Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation).
4.14 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur (other than through such Lender's gross negligence or willful
misconduct) as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of a Eurodollar Loan after the Borrower has given a notice thereof
in accordance with the provisions of this Agreement or (c) the making of a
prepayment of or a conversion of Eurodollar Loans on a day which is not the
last day of an Interest Period with respect thereto. Such indemnification may
include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the amount so prepaid, or converted, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or conversion or of such failure to borrow, convert or continue to
the last day of the applicable Interest Period (or, in the case of a failure to
borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Eurodollar Loans provided for herein (excluding, however, the percentage
added to the Eurodollar Rate pursuant to subsection 4.1(a) to the extent
included therein) over (ii) the amount of interest (as reasonably determined by
such Lender) which would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market. This covenant shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
4.15 Change of Lending Office. (a) Each Lender agrees that
if it makes any demand for payment under subsection 4.12 or 4.13(a), or if any
adoption or change of the type described in subsection 4.11 shall occur with
respect to it, it will use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions and so long as such efforts would
not be disadvantageous to it, as determined in its sole discretion) to
designate a different lending office if the making of such a designation would
reduce or obviate the need for the Borrower to make payments under subsection
4.12 or 4.13(a), or would eliminate or reduce the effect of any adoption or
change described in subsection 4.11.
(b) If any Lender requests compensation under subsection
4.12, or if the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to
subsection 4.13, or if any Lender defaults in its obligation to fund Loans
hereunder, then the Borrower may, at its expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to, and such
Lender promptly shall, assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in subsection 11.6), all its
interests, rights and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) if such assignee is not a
Lender or an Affiliate thereof, the Borrower shall have received the prior
written consents of the Administrative Agent and Issuing Lender which consents
shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in Letters of Credit, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (at least to the
extent of such outstanding principal) and the Borrower (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under subsection 4.12 or payments required to be made
pursuant to subsection 4.13, such assignment will result in a reduction in such
compensation or payments compared to the compensation or payments payable to
the assigning
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Lender. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation no longer exist or cease to apply.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into this Agreement and to make the Loans and issue or participate in the
Letters of Credit, the Borrower hereby represents and warrants to the
Administrative Agent and each Lender (unless otherwise provided, after giving
effect to the Merger) that:
5.1 Financial Condition. (a) The consolidated balance
sheets of the Borrower and its consolidated Subsidiaries, and the consolidated
balance sheets of Cairn and its consolidated Subsidiaries, at December 31, 1995
and December 31, 1996 and the related consolidated statements of operations, of
cash flows and of changes in stockholders' equity for the respective fiscal
years ended on such dates, together with the related notes and schedules
thereto, reported on by Ernst & Young LLP, copies of which have heretofore been
furnished to each Lender, present fairly in all material respects the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries, and Cairn and its consolidated Subsidiaries, respectively, as at
such dates, and the consolidated results of their operations and their
consolidated cash flows for the respective fiscal years then ended, in
conformity with GAAP.
(b) The unaudited consolidated balance sheet of the Borrower
and its consolidated Subsidiaries, and the unaudited consolidated balance sheet
of Cairn and its consolidated Subsidiaries, at June 30, 1997 and the related
unaudited consolidated statements of operations, of cash flows and of changes
in stockholders' equity for the 6-month period ended on such dates, together
with the related notes and schedules thereto, certified by a Responsible
Officer, copies of which have heretofore been furnished to each Lender, present
fairly in all material respects the consolidated financial condition of each of
the Borrower and its consolidated Subsidiaries, and Cairn and its consolidated
Subsidiaries, respectively, as at such dates, and the consolidated results of
their respective operations and their consolidated cash flows for the 6-month
period then ended (subject to normal year-end audit adjustments), in conformity
with GAAP.
(c) All such financial statements referred to in subsections
5.1(a) and (b), including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer, as the
case may be, and as disclosed therein). On the Closing Date, after giving
effect to the Merger, neither the Borrower nor any of its consolidated
Subsidiaries have, at the date of the most recent balance sheet referred to
above, any material Guarantee Obligation, contingent liability or liability for
taxes, or any long-term lease, outstanding debt or Lien or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which (i) is not disclosed in
the financial statements referred to in subsection 5.1(a) or 5.1(b) or in the
notes thereto to the extent required by GAAP or (ii) in the case of the Amoco
Litigation, does not exceed $10,000,000.
5.2 No Change. (a) Since December 31, 1996, there has been
no development, circumstance or event which has had or could reasonably be
expected to have a Material Adverse Effect (provided that liability or accrued
charges of the Borrower of up to $10,000,000 in connection with the Amoco
Litigation, in and of itself, shall not be deemed to be a violation of this
subsection
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5.2(a)), and (b) during the period from January 1, 1997 to and including the
date hereof, no dividends or other distributions have been declared, paid or
made upon the Capital Stock of the Borrower nor, except as set forth on
Schedule 5.2, has any of the Capital Stock of the Borrower been redeemed,
retired, purchased or otherwise acquired for value by the Borrower or any of
its Subsidiaries.
5.3 Corporate Existence; Compliance with Law. Each of the
Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority, and the legal right, to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification except to the extent that the failure to be so
qualified and in good standing could not reasonably be expected to have, in the
aggregate, a Material Adverse Effect and (d) is in compliance with all
applicable Requirements of Law (including, without limitation, Environmental
Laws) except to the extent that the failure to comply therewith could not
reasonably be expected to have, in the aggregate, a Material Adverse Effect.
5.4 Corporate Power; Authorization; Enforceable Obligations.
The Borrower and each of the other Loan Parties has the corporate power and
authority, and the legal right, to make, deliver and perform the Loan Documents
to which it is a party and, in the case of the Borrower, to borrow hereunder
and has taken all necessary corporate action to authorize the execution,
delivery and performance of the Loan Documents to which it is a party. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or the delivery, performance, validity
or enforceability of the Loan Documents to which each Loan Party is a party
other than those which have been obtained and are in full force and effect.
This Agreement has been, and each other Loan Document to which any Loan Party
is a party will be, duly executed and delivered on behalf of such Loan Party.
This Agreement constitutes, and each other Loan Document to which any Loan
Party is a party when executed and delivered will constitute, a legal, valid
and binding obligation of such Loan Party enforceable against such Loan Party
in accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent transfer or conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
5.5 No Legal Bar. The execution, delivery and performance of
the Loan Documents, the granting of the Liens under the Security Documents, the
borrowings hereunder and the use of the proceeds thereof will not violate any
applicable Requirement of Law or Contractual Obligation of the Borrower or of
any of its Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of its or their respective Properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation, other than
any Lien created pursuant to the Security Documents.
5.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Subsidiaries or against any of its or their respective Properties or
revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) which could reasonably be
expected to have a Material Adverse Effect; provided that liability or accrued
charges of the Borrower of up to $10,000,000 in connection with the Amoco
Litigation, in and of itself, shall not be deemed to be a violation of this
subsection 5.6.
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5.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a
Material Adverse Effect; provided that liability of the Borrower of up to
$10,000,000 in connection with the Amoco Litigation, in and of itself, shall
not be deemed to be a violation of this subsection 5.7. No Default or Event of
Default has occurred and is continuing.
5.8 Ownership of Property; Liens. (a) Except for the Oil
and Gas Properties, the Borrower and its Subsidiaries each have good title in
fee simple to, or a valid leasehold interest in, all its material real Property
and material interests in real Property, and good title to, or a valid
leasehold interest in, all its other material Property, and none of such
Property is subject to any Lien except as permitted by subsection 8.3.
(b) The Borrower and its Subsidiaries each have good and
defensible title to all of its Oil and Gas Properties which are not personal
property and good title to all such Oil and Gas Properties which are personal
property and material to the Borrower and its Subsidiaries taken as a whole,
except for (i) such imperfections of title as do not in the aggregate
materially detract from the value thereof to, or the use thereof in, the
business of the Borrower or any of its Subsidiaries, (ii) Oil and Gas
Properties and interests therein disposed of since the date of the most recent
Reserve Report as permitted by subsection 8.6 hereof, (iii) imperfections of
title relating to the rights of Amoco in the Southwest Holmwood Properties, to
the extent described in the S-4, and(iv) Liens permitted by subsection 8.3
hereof. The quantum and nature of the interest of the Borrower and its
Subsidiaries in and to the Oil and Gas Properties as set forth in each Reserve
Report (including the Initial Reserve Report) includes the entire interest of
the Borrower and its Subsidiaries in such Oil and Gas Properties as of the date
of such Reserve Report and are complete and accurate in all material respects
as of the date of such Reserve Report; and there are no "back-in" or
"reversionary" interests held by third parties which could materially reduce
the interest of the Borrower and its Subsidiaries in such Oil and Gas
Properties except as expressly set forth in such Reserve Report. The ownership
of the Oil and Gas Properties by the Borrower and its Subsidiaries shall not in
any material respect obligate any such Person to bear the costs and expenses
relating to the maintenance, development or operations of each such Oil and Gas
Property in an amount in excess of the working interest of such Person in each
Oil and Gas Property set forth in the most recent Reserve Report.
5.9 Intellectual Property. Each of the Borrower and its
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does the
Borrower know of any valid basis for any such claim which could reasonably be
expected to have a Material Adverse Effect. The use of such Intellectual
Property by the Borrower and its Subsidiaries does not infringe on the rights
of any Person, except for such claims and infringements that, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
5.10 No Burdensome Restrictions. No applicable Requirement
of Law or Contractual Obligation of the Borrower or any of its Subsidiaries has
had during the last fiscal year of the Borrower, or could reasonable be
expected to have, a Material Adverse Effect.
5.11 Taxes. Each of the Borrower and its Subsidiaries has
filed all material tax returns which, to the knowledge of such Loan Party, are
required to be filed by it and has paid or caused to be paid all taxes shown on
said returns and all assessments, fees and other governmental
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charges levied upon it or upon any of its Property or income which are due and
payable, other than such taxes, assessments, fees and other governmental
charges, if any, as are being diligently contested in good faith and by
appropriate proceedings and with respect to which there have been established
adequate reserves on the books of the Borrower or its Subsidiaries, as the case
may be, in accordance with GAAP. No tax lien has been filed and, to the
knowledge of the Borrower, no claim is being asserted, with respect to any such
taxes or assessments, fees or other governmental charges.
5.12 Federal Reserve Regulations. No part of the proceeds
of any Loans will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under Regulation G
or Regulation U of the Board of Governors of the Federal Reserve System as now
and from time to time hereafter in effect. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-1 or FR Form U-1 referred to in said Regulation G or
Regulation U, as the case may be.
5.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits. Neither the Borrower nor any Commonly Controlled Entity
has had a complete or partial withdrawal from any Multiemployer Plan, and
neither the Borrower nor any Commonly Controlled Entity would become subject to
any liability under ERISA if the Borrower or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date on which this representation is
made or deemed made. No such Multiemployer Plan is in Reorganization or
Insolvent.
5.14 Investment Company Act; Other Regulations. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company", or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended or (b) a "holding company" as
defined in, or subject to regulation under, the Public Utility Holding Company
Act of 1935. Neither the Borrower nor any of its Subsidiaries is subject to
regulation under any Federal or State statute or regulation (other than
Regulation X of the Board of Governors of the Federal Reserve System) which
limits its ability to incur Indebtedness.
5.15 Subsidiaries. The Persons listed on Schedule 5.15
constitute all the Subsidiaries of the Borrower and Cairn at the date hereof.
5.16 Purpose of Loans. The proceeds of the Loans and the
Letters of Credit will be used (a) to refinance the Refinanced Indebtedness,
and to pay fees and expenses related to the Merger, on the Closing Date and (b)
after the Closing Date, for working capital and for the general corporate
purposes of the Borrower and its Subsidiaries in the ordinary course of
business.
5.17 Environmental Matters. Other than exceptions to any of
the following that could not, in the aggregate, reasonably be expected to
either (a) result in the existence of an unsatisfied
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liability in excess of a Material Environmental Amount or (b) give rise to a
Material Adverse Effect or materially adversely affect the value of the
Mortgaged Properties taken as a whole:
(a) each of the Borrower and its Subsidiaries: (i) is, and
within the period of all applicable statutes of limitation has been,
in compliance with all applicable Environmental Laws; (ii) holds all
Environmental Permits (each of which is in full force and effect)
required for any of its current or planned operations or for any
Property owned, leased, or otherwise operated by it; (iii) is, and
within the period of all applicable statutes of limitation has been,
in compliance with all of its Environmental Permits; and (iv)
reasonably believes that (A) each of its Environmental Permits will be
timely renewed without expense, (B) any additional Environmental
Permits which it has reason to believe will be required will be timely
obtained without expense, and (C) the costs of complying with such
renewed or additional Environmental Permits and any other
Environmental Laws applicable to or reasonably expected to apply to
the Borrower and its Subsidiaries will not exceed the Borrower's and
its Subsidiaries' existing costs of complying with Environmental
Permits and Environmental Laws.
(b) Materials of Environmental Concern have not been
transported, disposed of, emitted, discharged, or otherwise released
or threatened to be released, to or at any real Property presently or
formerly owned, leased or operated by the Borrower or any Subsidiary
or at any other location, which could reasonably be expected to (i)
give rise to liability of the Borrower or any Subsidiary under any
applicable Environmental Law or (ii) interfere with the Borrower's
continued operations.
(c) no judicial, administrative, or arbitral proceeding
(including any notice of violation or alleged violation) under or
relating to any Environmental Law to which the Borrower or any
Subsidiary is, or to the knowledge of the Borrower will be, named as a
party is pending or, to the knowledge of the Borrower, threatened.
(d) the Borrower has not received any written request for
information, or been notified that it or any Subsidiary is a
potentially responsible party under the federal Comprehensive
Environmental Response, Compensation, and Liability Act or any similar
Environmental Law, or with respect to any Materials of Environmental
Concern.
(e) neither the Borrower nor any Subsidiary has entered into
or agreed to any consent decree, order, or settlement or other
agreement, nor is subject to any judgment, decree, or order or other
agreement, in any judicial, administrative, arbitral, or other forum,
relating to compliance with or liability under any Environmental Law.
(f) neither the Borrower nor any Subsidiary has assumed or
retained, by contract or operation of law, any liabilities of any
kind, fixed, contingent or otherwise, under any Environmental Law.
5.18 No Material Misstatements. (a) All written
information, reports, financial statements, exhibits and schedules (including,
without limitation, the S-4) furnished to the Administrative Agent or any
Lender by or on behalf of the Borrower or any of its Subsidiaries in connection
with the negotiation of any Loan Document or included therein or delivered
pursuant thereto, when taken as a whole, did not contain, and as they may be
amended, supplemented or
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modified from time to time, will not contain, as of the date such statements
were made, any untrue statements of a material fact and did not omit, and as
they may be amended, supplemented or modified from time to time, will not omit,
to state as of the date such statements were made, any material fact necessary
in order to make the statements contained therein, in the light of the
circumstances under which they were, are or will be made, not materially
misleading.
(b) All projections and estimates concerning the Borrower and
its Subsidiaries that are or have been made available to the Administrative
Agent or any Lender by or on behalf of the Borrower or any of its Subsidiaries
(including, without limitation, the pro forma financial statements included in
the S-4), have been or will be prepared based on good faith estimates and based
upon assumptions believed by the Borrower to be reasonable in all material
respects at the time of such preparation, and the unaudited pro forma combined
balance sheet of the Borrower and Cairn included in the S-4 represents in all
material respects the pro forma consolidated financial condition of the
Borrower and its consolidated Subsidiaries after giving effect to the Merger
and the initial Loans under this Agreement, as if the Merger occurred on June
30, 1997.
5.19 Insurance. Each of the Borrower and its Subsidiaries
carries and maintains with respect to its insurable properties insurance
(including, to the extent consistent with past practices, self-insurance) with
financially sound and reputable insurers of the types, to such extent and
against such risks as is customary with companies in the same or similar
businesses.
5.20 Future Commitments. As of the date hereof and as of the
Closing Date, except as set forth on Schedule 5.20, on a net basis there are no
material gas imbalances, material take-or-pay or other prepayments with respect
to any Oil and Gas Property of the Borrower or any Subsidiary (or, in the case
of Oil and Gas Properties operated by operators other than the Borrower or its
Subsidiaries, to the Borrower's knowledge after reasonable investigation) which
would require the Borrower or any Subsidiary to deliver Hydrocarbons produced
from Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor.
5.21 Security Documents. (a) The provisions of the Pledge
Agreement delivered to the Administrative Agent are effective to create in
favor of the Administrative Agent, for the ratable benefit of the Lenders, a
legal, valid and enforceable security interest in the Pledged Securities and
proceeds thereof and, when certificates representing or constituting the
Pledged Securities are delivered to the Administrative Agent, the Pledge
Agreement shall constitute a fully perfected first priority lien on, and
security interest in, all right, title and interest of the pledgor party
therein in such Pledged Securities and the proceeds thereof, in each case prior
and superior in right to any other Person.
(b) On the Closing Date, the shares of Capital Stock listed
on Schedule I to the Pledge Agreement will constitute all the issued and
outstanding shares of Capital Stock of the direct and indirect Subsidiaries of
the Borrower (including Cairn and its Subsidiaries); all such shares have been
duly and validly issued and are fully paid and nonassessable; and the relevant
Pledgor of said shares is the record and beneficial owner of said shares.
(c) The provisions of the Mortgages will be effective to
grant to the Administrative Agent, for the ratable benefit of the Lenders,
legal, valid and enforceable mortgage liens on all of the right, title and
interest of the Borrower and its Subsidiaries (including Cairn and its
Subsidiaries) in the mortgaged property described therein. Such Mortgages,
when recorded in the appropriate recording office, will constitute perfected
first liens on, and security interest in, such mortgaged property.
5.21. Immaterial Subsidiaries. The value of the assets owned
by the Immaterial Subsidiaries does not exceed $500,000 in the aggregate.
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SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Initial Extensions of Credit. The
agreement of each Lender to make the initial Loan requested to be made by it
and of the Issuing Lender to issue the initial Letter of Credit to be issued by
it is subject to the satisfaction, immediately prior to or concurrently with
the making of such Loan and the issuance of such Letter of Credit on the
Closing Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have
received (with the number of original counterparts requested by the
Administrative Agent) (i) this Agreement, executed and delivered by a
duly authorized officer of the Borrower, (ii) the Guarantee Agreement,
executed and delivered by a duly authorized officer of each Loan Party
thereto, (iii) the Pledge Agreement, executed and delivered by a duly
authorized officer of each Loan Party thereto and (iv) the Mortgages,
executed and delivered by a duly authorized officer of each Loan Party
thereto.
(b) Related Agreements. The Administrative Agent shall have
received true and correct copies, certified as to authenticity by the
Borrower, of Merger Documents, such other documents or instruments as
may be reasonably requested by the Administrative Agent, including,
without limitation, a copy of any debt instrument or security
agreement to which the Borrower and its Subsidiaries will be a party
after the Closing Date.
(c) Borrowing Certificate. The Administrative Agent shall
have received (with the number of original counterparts requested by
the Administrative Agent), a certificate of the Borrower, dated the
Closing Date, substantially in the form of Exhibit F, with appropriate
insertions and attachments, satisfactory in form and substance to the
Administrative Agent, executed by a Responsible Officer of the
Borrower.
(d) Corporate Proceedings of the Loan Parties. The
Administrative Agent shall have received (with the number of original
counterparts requested by the Administrative Agent), a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of each Loan Party authorizing (i)
the execution, delivery and performance of this Agreement and the Loan
Documents to which it is a party, (ii) in the case of the Borrower,
the borrowings contemplated hereunder and (iii) the granting by it of
the Liens created pursuant to the Loan Documents, certified by the
Secretary or an Assistant Secretary of such Loan Party as of the
Closing Date, which certificate shall be in form and substance
reasonably satisfactory to the Administrative Agent and shall state
that the resolutions thereby certified have not been amended,
modified, revoked or rescinded.
(e) Loan Party Incumbency Certificates. The Administrative
Agent shall have received (with the number of original counterparts
requested by the Administrative Agent), a certificate of each Loan
Party, dated the Closing Date, as to the incumbency and signature of
the officers of such Loan Party executing any Loan Document reasonably
satisfactory in form and substance to the Administrative Agent,
executed by the President or any Vice President and the Secretary or
any Assistant Secretary of such Loan Party.
(f) Corporate Documents. The Administrative Agent shall have
received (with the number of original counterparts requested by the
Administrative Agent), true and complete copies of the certificate of
incorporation and by-laws of each Loan Party, certified as of the
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Closing Date as complete and correct copies thereof by the Secretary
or an Assistant Secretary of such Loan Party.
(g) Consents, Licenses and Approvals. All governmental and
third party approvals (including consents) necessary or, in the
discretion of the Administrative Agent, advisable in connection with
the Merger, the continuing operations of the Borrower and its
Subsidiaries and the execution, delivery and performance of the Loan
Documents shall have been obtained and be in full force and effect,
and all applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority which
would restrain, prevent or otherwise impose adverse conditions on the
Merger and this Agreement and the other Loan Documents and the
transactions contemplated hereby and thereby. The Administrative
Agent shall have received, with a counterpart for each Lender, a
certificate of the Borrower as to the foregoing.
(h) Fees. The Lenders and the Administrative Agent shall
have received all fees and expenses required to be paid on or before
the Closing Date for which invoices have been presented.
(i) Legal Opinions. (i) The Administrative Agent shall have
received the executed legal opinion of Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.,
counsel to the Borrower and each other Loan Party, substantially in
the form of Exhibit E-1.
(ii) The Administrative Agent shall have received the
executed legal opinion of ▇▇▇▇▇▇▇▇ & Knight, Texas counsel to the
Administrative Agent, substantially in the form of Exhibit E-2.
(iii) The Administrative Agent shall have received the
executed legal opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Louisiana
counsel to the Administrative Agent, substantially in the form of
Exhibit E-3.
Such legal opinions shall cover such other matters incident to the
transactions contemplated by this Agreement and the other Loan
Documents as the Administrative Agent may reasonably require.
(j) Lien Searches. The Administrative Agent shall have
received the results of recent UCC lien searches by Persons reasonably
satisfactory to the Administrative Agent, in such jurisdictions and
offices as it shall request and such searches shall reveal no Liens on
any assets of the Borrower and each of its Subsidiaries, except for
(i) Liens permitted by subsection 8.3 and (ii) Liens to be released,
on the Closing Date.
(k) Reserve Report. The Administrative Agent shall have
received a Reserve Report from a firm satisfactory to the
Administrative Agent and other reserve information with respect to the
Oil and Gas Properties of the Borrower and its Subsidiaries, all of
which shall be satisfactory in form and substance to the
Administrative Agent (collectively, the "Initial Reserve Report").
(l) Title to Oil and Gas Properties; Mortgages. The Lenders
shall be satisfied as to the title to the Oil and Gas Properties
representing all of the Oil and Gas Properties included in the Initial
Reserve Report and the Borrower and its Subsidiaries shall have
executed and delivered Mortgages covering the Oil and Gas Properties
described on Schedule 6.1(l).
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(m) Pledged Stock; Stock Powers. The Administrative
Agent shall have received the certificates representing the Pledged
Securities pledged pursuant to the Pledge Agreement, together with an
undated stock power for each such certificate executed in blank by a
duly authorized officer of the Pledgor thereof, and the notes pledged,
if any, pursuant to the Pledge Agreement, each endorsed in blank by a
duly authorized officer of the pledgor thereof.
(n) Actions to Perfect Liens. The Administrative Agent
shall have received evidence in form and substance satisfactory to it
that all filings, recordings, registrations and other actions,
including, without limitation, the filing of duly executed financing
statements on Form UCC-1 necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Liens created by the
Security Documents shall have been completed.
(o) Merger. The Merger shall have been consummated
simultaneously with the initial Loans hereunder in accordance with
applicable law, the Merger Documents and all related documentation on
terms acceptable to the Lenders and the Administrative Agent and the
capital, corporate and ownership structures of the Loan Parties, after
giving effect to the Merger, shall be satisfactory to the Lenders.
None of the material conditions to the obligations of any of the
parties to the Merger Agreement to consummate the Merger shall have
been waived, and the Merger Agreement shall not have been amended,
supplemented or otherwise modified, without the prior written consent
of the Administrative Agent, which consent may not be unreasonably
withheld.
(p) Refinanced Indebtedness. The Administrative Agent
shall have received evidence satisfactory to it that, simultaneously
with the making of the initial Loans, the Refinanced Indebtedness
shall have been paid in full, all commitments relating thereto shall
have been terminated and all Liens securing the Refinanced
Indebtedness shall have been terminated in a manner satisfactory to
the Administrative Agent for the benefit of the Lenders.
(q) Copies of Documents. If requested by the
Administrative Agent, the Administrative Agent shall have received a
copy, certified by such parties as the Administrative Agent may
reasonably deem appropriate, of any document burdening the property
covered by any Mortgage.
(r) Additional Matters. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement and
the other Loan Documents shall be reasonably satisfactory in form and
substance to the Administrative Agent, and the Administrative Agent
shall have received such other documents and legal opinions in respect
of any aspect or consequence of the transactions contemplated hereby
or thereby as it shall reasonably request.
6.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any Extension of Credit requested to be made by it on any
date (including, without limitation, its initial Loans) is subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by each Loan Party in or pursuant
to the Loan Documents shall be true and correct on and as of such date
as if made on and as of such date (unless such representations and
warranties are stated to relate to a specific earlier date, in which
case such representations and warranties shall be true and correct as
of such earlier date).
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(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Extensions of Credit requested to be made on such date.
(c) Maintenance of Borrowing Base. After giving effect to
the Extensions of Credit requested to be made on any date, the
Aggregate Revolving Credit Exposure of the Lenders shall not exceed
the Borrowing Base then in effect.
(d) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance
to the Administrative Agent, and the Administrative Agent shall have
received such other documents and legal opinions in respect of any
aspect or consequence of the transactions contemplated hereby or
thereby as it shall reasonably request.
Each borrowing by, and Letter of Credit issued on behalf of, the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date thereof that the conditions contained in (a) and (b) of this
subsection have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Loan, or Letter of Credit or Note remains outstanding
and unpaid or any amount is owing to any Lender or the Administrative Agent
hereunder or under any other Loan Document, the Borrower shall and (except in
the case of delivery of financial information, reports and notices) shall cause
each of its Subsidiaries to:
7.1 Financial Statements. Furnish to the Administrative
Agent and to each of the Lenders:
(a) as soon as available, but in any event within 105 days
after the end of each fiscal year of the Borrower, (i) a copy of the
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related consolidated
statements of operations, cash flows and changes in stockholders'
equity for such year, setting forth in each case in comparative form
the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising
out of the scope of the audit, by Ernst & Young LLP or other
independent certified public accountants of nationally recognized
standing reasonably acceptable to the Required Lenders; and
(b) as soon as available, but in any event not later than 50
days after the end of each of the first three quarterly fiscal periods
of each fiscal year of the Borrower and its consolidated Subsidiaries,
the unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidated statements of operations, cash flows
and changes in stockholders' equity of the Borrower and its
consolidated Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each
case in comparative form the figures for the previous year, certified
by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end and audit adjustments);
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all such financial statements shall be complete and correct in all material
respects and shall be prepared in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods (except as
approved by such accountants or officer, as the case may be, and disclosed
therein).
7.2 Certificates; Other Information. Furnish to the
Administrative Agent and to each of the Lenders:
(a) concurrently with the delivery of the financial
statements referred to in subsection 5.1(a), a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except
as specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsections 7.1(a) and (b), a certificate of
a Responsible Officer stating that, to the best of such Officer's
knowledge, during such period (i) no Subsidiary has been formed or
acquired (or, if any such Subsidiary has been formed or acquired, the
Borrower has complied with the requirements of subsection 7.9 with
respect thereto) and (ii) the Borrower has observed or performed all
of its covenants (and setting forth the calculations used to determine
compliance with the covenants set forth in subsection 8.1) and other
agreements, and satisfied every condition, contained in this Agreement
and the other Loan Documents to be observed, performed or satisfied by
it, and that such officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate;
(c) within five Business Days after the same are sent, copies
of all financial statements and reports which the Borrower sends to
its stockholders, and within five days after the same are filed,
copies of all financial statements and reports, if any, which the
Borrower may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;
(d) promptly upon receipt thereof, copies of all reports and
management letters submitted to the Borrower or any Subsidiary by
independent public accountants in connection with any interim or
special audit of the books or operations of the Borrower or such
Subsidiary made by such accountants;
(e) together with any Reserve Report delivered pursuant to
subsection 4.9, a schedule identifying as of the last day of the
fiscal period for which the financial statements are delivered or as
of the date of delivery of such Reserve Report, as the case may be,
each commodity fixed price contract having a term longer than one year
then in effect as to which the Borrower or any of its Subsidiaries is
bound which provides for payments during any year of such contract of
$1,000,000 or more, and setting forth the names of the parties thereto
and of any guarantees thereof, and the volumes attributable to each
such contract; and
(f) promptly, such additional financial and other information
concerning the Borrower and its Subsidiaries as any Lender (acting
through the Administrative Agent) may from time to time reasonably
request.
7.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all of its obligations of whatever nature, except where (x) the amount or
validity thereof is currently being contested in good faith by appropriate
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proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or the applicable Subsidiary, as the case
may be, or (y) the failure to pay, discharge or otherwise satisfy such
obligations, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
7.4 Conduct of Business and Maintenance of Existence;
Compliance with Law and Contractual Obligations. Continue to engage in
business of the same general type as now conducted by it and preserve, renew
and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary
or desirable in the normal conduct of its business, except as otherwise
permitted by subsection 8.5; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not reasonably be expected to have, in the aggregate, a Material Adverse
Effect.
7.5 Maintenance of Property; Insurance. Maintain all
Property useful and necessary in its business in accordance with past practices
and customary industry norms, (x) ordinary wear and tear and (y) casualty
events which could not reasonably be expected to have a Material Adverse Effect
excepted; maintain with financially sound and reputable insurance companies
insurance of such types, in such amounts and against such risks as is customary
to be maintained by companies engaged in the same or a similar business in the
same general area; and furnish to the Administrative Agent, upon written
request, full information as to the insurance carried.
7.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and activities; and
permit representatives of any Lender to visit and inspect any of its properties
and examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be requested through the
Administrative Agent and to discuss the business, operations, properties and
financial and other condition of the Borrower and its Subsidiaries with
officers and employees of the Borrower and its Subsidiaries and with its
independent certified public accountants.
7.7 Notices. Promptly give notice to the Administrative
Agent of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental
Authority, which in the case of either clause (i) or (ii), if not
cured or if adversely determined, as the case may be, could have, in
the opinion of a Responsible Officer, a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or
any of its Subsidiaries which could reasonably be expected, in the
opinion of a Responsible Officer, to result in an adverse judgment of
$1,500,000 or more not covered by insurance or in which injunctive or
similar relief is sought;
(d) the following events, as soon as possible and in any
event within 30 days after the Borrower knows or has reason to know
thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Plan, a failure to make any required
contribution to a Plan, the creation of any Lien in favor of the PBGC
or a Plan or any withdrawal from, or the
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termination, Reorganization or Insolvency of, any Multiemployer Plan
or (ii) the institution of proceedings or the taking of any other
action by the PBGC or the Borrower or any Commonly Controlled Entity
or any Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan;
(e) any Redetermination Event that has occurred, describing
the same in reasonable detail; and
(f) any event or circumstance which has had a Material
Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what the Borrower and its Subsidiaries have taken or
propose to take with respect thereto.
7.8 Environmental Laws. (a) Except as, individually or in
the aggregate, could not reasonably be expected to either (i) result in the
payment of a Material Environmental Amount or (ii) have a Material Adverse
Effect, (x) comply with all Environmental Laws, and obtain, comply with and
maintain any and all Environmental Permits necessary for its operations as
conducted and as planned; and (y) take all reasonable efforts to ensure that
all of its tenants, subtenants, contractors, subcontractors, and invitees
comply with all Environmental Laws, and obtain, comply with and maintain any
and all Environmental Permits, applicable to any of them.
(b) Except to the extent that the failure to comply could not
reasonably be expected either to (i) result in the payment of a Material
Environmental Amount or (ii) give rise to a Material Adverse Effect, comply
with all orders and directives of all Governmental Authorities regarding
Environmental Laws, other than such orders and directives as to which an appeal
or other appropriate action to contest such order or directive has been timely
and properly taken in good faith.
(c) Prior to acquiring any ownership or leasehold interest in
real property or other interest in any real property that could give rise to
the Borrower being subject to potential significant liability under or
violations of any Environmental Law, which potential liabilities or violations,
if incurred, could reasonably be expected to have a Material Adverse Effect:
(i) notify the Administrative Agent; and (ii) if requested by the
Administrative Agent, provide to the Administrative Agent a written report by
an environmental consultant reasonably acceptable to the Administrative Agent
assessing the presence or potential presence of significant levels of any
Materials of Environmental Concern on, under, in, or about the property, or of
other conditions that could give rise to potentially significant liability or
violations of any Environmental Law.
(d) On or prior to the end of the Initial Period, the
Administrative Agent shall have received environmental assessment reports
reasonably acceptable to it with respect to processing and other facilities and
other parcels of real property which are owned or leased by the Borrower and
its Subsidiaries and which were acquired pursuant to the Merger.
7.9 Additional Collateral. (a) With respect to any Person
that, subsequent to the Closing Date, becomes a Subsidiary (other than a
Foreign Subsidiary), promptly: (i) cause such Person to become a party to the
Guarantee Agreement, pursuant to documentation which is in form and substance
reasonably satisfactory to the ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇
▇▇
▇▇▇▇▇, (▇▇) cause the Capital Stock of such Person owned by the Borrower or any
Subsidiary to be pledged to the Administrative Agent, for the ratable benefit
of the Lenders, pursuant to documentation reasonably satisfactory to the
Administrative Agent, and take all actions reasonably necessary or advisable to
cause the Lien thereon to be duly perfected in accordance with all applicable
Requirements of Law, and deliver any certificates representing such Capital
Stock to the Administrative Agent, together with undated stock powers executed
and delivered in blank by a duly authorized officer of the Borrower or such
Subsidiary, as the case may be, and (iii) if requested by the Administrative
Agent, deliver to the Administrative Agent legal opinions relating to the
matters described in clauses (i) and (ii) immediately preceding, which opinions
shall be in form and substance, and from counsel, reasonably satisfactory to
the Administrative Agent.
(b) With respect to any Person that, subsequent to the Closing Date,
becomes a Subsidiary and is a Foreign Subsidiary, promptly: execute and
deliver to the Administrative Agent a new pledge agreement as the
Administrative Agent shall deem reasonably necessary or advisable to grant to
the Administrative Agent, for the benefit of the Lenders, a Lien on the Capital
Stock of such Subsidiary which is owned by the Borrower or any Subsidiary
(provided that in no event shall more than 65% of the Capital Stock of any such
Subsidiary be required to be so pledged), (ii) deliver to the Administrative
Agent any certificates representing such Capital Stock, together with undated
stock powers executed and delivered in blank by a duly authorized officer of
the Borrower or such Subsidiary, as the case may be, and take or cause to be
taken all such other actions under the law of the jurisdiction of organization
of such Foreign Subsidiary as may be reasonably necessary or advisable to
perfect such Lien on such Capital Stock and (iii) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described in clauses (i) and (ii) immediately
preceding, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.
7.10 Maintenance and Operation of Property. Except to the
extent that the failure to comply could not reasonably be expected to have a
Material Adverse Effect and consistent with the standards of a reasonably
prudent operator under the same circumstances:
(a) Maintain, develop, and operate Borrower's and
the Guarantors' Oil and Gas Properties, and oil and gas gathering
assets in a good and workmanlike manner, and observe and comply with
all of the terms and provisions, express or implied, of all oil and
gas leases relating to the Properties so long as the oil and gas
leases are capable of producing Hydrocarbons in quantities and at
prices providing for continued efficient and profitable operation of
business;
(b) Comply in all material respects with all
contracts and agreements applicable to or relating to Borrower's and
the Guarantors' Oil and Gas Properties or the production and sale of
hydrocarbons and accompanying elements therefrom;
(c) At all times, maintain, preserve, and keep all
operating equipment used with respect to Borrower's and the
Guarantors' Oil and Gas Properties, and oil and gas gathering assets
in proper repair, working order and condition, and make all necessary
or appropriate repairs, renewals, replacements, additions and
improvements thereto so that the efficiency of the operating equipment
shall at all times be properly preserved and maintained, provided that
no item of operating equipment need be so repaired, renewed, replaced,
added to or improved, if Borrower or its Subsidiaries shall in good
faith determine that the action is not necessary or desirable for such
Person's continued efficient and profitable operation of business.
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(d) With respect to Borrower's and the Guarantors'
Oil and Gas Properties, and oil and gas gathering assets which are
operated by operators other than Borrower or a Subsidiary, seek to
enforce the operators' contractual obligations to maintain, develop,
and operate such Properties subject to the applicable operating
agreements.
(e) If and when any of the ▇▇▇▇▇ located on the
Oil and Gas Properties of the Borrower or its Subsidiaries ceases
producing Hydrocarbons in paying quantities and is of no further use
and the Borrower or any other Person is required to do so under any
agreement or law or when doing so would be in conformity with
generally accepted practices then prevalent in the Borrower's
industry, the Borrower will plug and abandon, or cause to be plugged
and abandoned, any and all such ▇▇▇▇▇ in accordance in all material
respects with industry practice and the local state and/or federal
laws and regulations then in force and regulating the plugging of
Hydrocarbon ▇▇▇▇▇.
7.11 Further Assurances. Upon the request of the
Administrative Agent, promptly perform or cause to be performed any and all
acts and execute or cause to be executed any and all documents (including,
without limitation, financing statements and continuation statements) for
filing under the provisions of the Uniform Commercial Code or any other
Requirement of Law which are necessary or advisable to maintain in favor of the
Administrative Agent, for the benefit of the Lenders, Liens on the Pledged
Securities and on the Oil and Gas Properties subject to the Mortgages that are
duly perfected in accordance with all applicable Requirements of Law; provided
that the Liens created by such Mortgages shall be released after the end of the
Initial Period (pursuant to documentation reasonably satisfactory to the
Administrative Agent) if, at such time, (x) no Default or Event of Default has
occurred and is continuing and (y) the Borrower has made any mandatory
prepayment required by subsection 4.10 to be made within 60 days after the
Initial Scheduled Borrowing Base Redetermination.
SECTION 8. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Loan, Letter of Credit or any Note remains outstanding
and unpaid or any amount is owing to any Lender or the Administrative Agent
hereunder or under any other Loan Document, the Borrower shall not, and shall
not (except with respect to subsection 8.1) permit any Subsidiary to, directly
or indirectly:
8.1 Financial Covenant Conditions. (a) Total Debt Interest
Coverage Ratio. Permit, for any period of four consecutive fiscal quarters
ending after the date hereof (commencing December 31, 1997) the ratio of EBITDA
to Consolidated Interest Expense of the Borrower and its Subsidiaries for such
four consecutive fiscal quarters to be less than 3.0 to 1.0.
(b) Total Debt Leverage Ratio. Permit the ratio of
Indebtedness of the Borrower and its Subsidiaries as of the last day of any
fiscal quarter to EBITDA for the period of four consecutive fiscal quarters
then ended to be greater than 3.25 to 1.0.
(c) Consolidated Net Worth. Permit the Consolidated Net
Worth of the Borrower and its Subsidiaries during any period to be less than
$165,000,000.
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8.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness of the Borrower or any Guarantor under any
Loan Document;
(b) Indebtedness outstanding on the date hereof and listed on
Schedule 8.2 and any refinancings, refundings, renewals or extensions
thereof on terms and conditions reasonably acceptable to the
Administrative Agent;
(c) Indebtedness of the Borrower under Interest Rate
Protection Agreements entered into in the ordinary course of business
of the Borrower and not for speculative purposes, in each case having
terms and conditions reasonably satisfactory to the Administrative
Agent;
(d) Indebtedness of the Borrower under Commodity Hedging
Agreements entered into in the ordinary course of business of the
Borrower and not for speculative purposes, in each case having terms
and conditions reasonably satisfactory to the Administrative Agent;
provided that the aggregate amount of such Commodity Price Risk
Management Agreements may not exceed the following: (i) for oil, the
total volumes to be hedged for any year shall not exceed 80% of
expected oil production of the Borrower and (ii) for gas, the total
volumes to be hedged for any year shall not exceed 80% of expected gas
production of the Borrower for such year;
(e) Indebtedness of the Borrower issued or owed to any
Wholly-Owned Subsidiary which is a Guarantor (other than Indebtedness
incurred at any time when a Default or Event of Default shall have
occurred and be continuing) and Indebtedness of any Wholly-Owned
Subsidiary which is a Guarantor issued or owed to the Borrower or to
any other Wholly-Owned Subsidiary which is a Guarantor;
(f) Subordinated Indebtedness that is issued on terms which
are satisfactory to the Administrative Agent and the Required Lenders
with respect to provisions regarding maturity, interest rate,
covenants, events of default and subordination language, provided that
after giving effect to the issuance of such Subordinated Indebtedness,
the Borrower is in compliance with the covenants contained in
subsection 8.1 and subsection 8.7 hereof, provided further that (i)
upon the issuance of any such Subordinated Indebtedness during the
Initial Period, the Borrowing Base shall be automatically reduced in
accordance with subsection 4.9(e) and (ii) upon the issuance of any
such Subordinated Indebtedness following the Initial Period, the
Borrowing Base shall be redetermined in accordance with the procedures
set forth in subsection 4.9(c);
(g) Guarantee Obligations permitted by subsection 8.4; and
(h) Indebtedness of the Borrower and its Wholly-Owned
Subsidiaries created, incurred or assumed after the date hereof not
otherwise permitted pursuant to this subsection 8.2, provided that the
aggregate outstanding principal amount of such Indebtedness shall not
exceed $5,000,000 at any one time outstanding.
8.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
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(a) Liens for taxes, assessments or other governmental
charges or levies not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
applicable Subsidiary, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
landlords', repairmen's or other like Liens arising in the ordinary
course of business securing obligations which are not overdue for a
period of more than 60 days or which are being contested in good faith
by appropriate proceedings, which proceedings would have the effect of
preventing the forfeiture or sale of the property or assets subject to
any such Lien;
(c) pledges or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other social security legislation;
(d) deposits made to secure the performance of bids, tenders,
trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance and return-of-money
bonds and other obligations of a like nature incurred in the ordinary
course of business;
(e) easements, rights-of-way, servitudes, permits,
reservations, exceptions, covenants and other restrictions as to the
use of real property and other similar encumbrances incurred in the
ordinary course of business which, with respect to all of the
foregoing, do not secure the payment of Indebtedness of the type
described in clauses (a)-(d) of the definition thereof and which, in
the aggregate, are not substantial in amount and which do not in any
case materially detract from the value of the Property subject thereto
or materially interfere with the ordinary conduct of the business of
the Borrower or any Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule
8.3, securing Indebtedness permitted by subsection 8.2(b), provided
that no such Lien is amended after the date of this Agreement to cover
any additional Property or to secure additional Indebtedness and that
the amount of Indebtedness secured thereby is not increased;
(g) Liens created pursuant to the Security Documents and
other Liens created after the date hereof and securing Indebtedness
hereunder or under any other Loan Document;
(h) Liens reserved in customary oil, gas and/or mineral
leases for bonus or rental payments and for compliance with the terms
of such leases and Liens reserved in customary operating agreements,
farm-out and farm-in agreements, exploration agreements, development
agreements and other similar agreements for compliance with the terms
of such agreements, to the extent that (x) any such Lien referred to
in this clause (h) does not materially impair the use or value of the
property subject to such Lien for the purposes for which such property
is held and (y) in the case of customary operating agreements,
farm-out and farm-in agreements, exploration agreements, development
agreements and other similar agreements, the amount of any obligations
secured thereby that are delinquent, that are not diligently contested
in good faith and for which adequate reserves are not maintained by
the Borrower or the applicable Subsidiary, as the case may be, do not
exceed, at any time outstanding, the amount owing by the Borrower or
any Subsidiary, as applicable, for one month's billed operating
expenses or other expenditures attributable to such entity's interest
in the Property covered thereby;
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(i) defects, irregularities and deficiencies in the title of
any rights of way or other Property of the Borrower or any Subsidiary
of the Borrower which in the aggregate do not materially impair the
use of such rights of way or other property for the purposes for which
such rights of way and other Property are held by the Borrower or any
Subsidiary of the Borrower, and defects, irregularities and
deficiencies in title to any property of the Borrower or any
Subsidiary of the Borrower, which defects, irregularities or
deficiencies have been cured by possession under applicable statutes
of limitation;
(j) royalties, overriding royalties, revenue interests, net
revenue interests, production payments (other than production payments
granted or created in connection with the incurrence of Indebtedness)
and advance payment obligations (other than obligations in respect of
advance payments received in connection with the incurrence of
Indebtedness), provided that the value of the Oil and Gas Properties
shown on the Borrower's Reserve Reports is net of such Liens;
(k) any Lien securing Indebtedness, neither assumed nor
guaranteed by the Borrower or any of its Subsidiaries nor on which it
customarily pays interest, existing upon real estate or rights in or
relating to real estate acquired by the Borrower for substation,
metering station, pump station, storage gathering line, transmission
line, transportation line, distribution line or for right-of-way
purposes, and any Liens reserved in leases for rent and for compliance
with the terms of the leases in the case of leasehold estates, to the
extent that any such Lien referred to in this paragraph (k) does not
materially impair the use or value of the property subject to such
Lien for the purposes for which such property is held;
(l) Liens on Property of a Subsidiary of the Borrower,
provided that such Liens secure only obligations owing to the
Borrower;
(m) judgment and other similar Liens arising in connection
with court proceedings, provided that the judgment relating thereto
shall have been stayed or bonded pending appeal, provided that no such
Lien shall encumber any Oil and Gas Property;
(n) Liens arising out of all presently existing and future
division and transfer orders, advance payment agreements, processing
contracts, gas processing plant agreements, operating agreements, gas
balancing or deferred production agreements, pooling, unitization or
communitization agreements, pipeline, gathering or transportation
agreements, platform agreements, drilling contracts, injection or
repressuring agreements, cycling agreements, construction agreements,
salt water or other disposal agreements, leases or rental agreements,
farm-out and farm-in agreements, exploration and development
agreements, and any and all other contracts or agreements covering,
arising out of, used or useful in connection with or pertaining to the
exploration, development, operation, production, sale, use, purchase,
exchange, storage, separation, dehydration, treatment, compression,
gathering, transportation, processing, improvement, marketing,
disposal or handling of any property of the Borrower or any Subsidiary
of the Borrower, provided that such agreements are entered into in the
ordinary course of business and contain terms customary for such
agreements in the industry and provided further that no Liens
described in this paragraph (n) shall be granted or created in
connection with the incurrence of Indebtedness;
(o) customary preferential rights to purchase and calls on
productions by sellers relating to Properties acquired by the Borrower
or any Subsidiary of the Borrower after the date hereof;
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(p) Liens described in subsection 5.8(b); and
(q) Liens securing any other Indebtedness expressly permitted
by subsection 8.2 provided that (i) the aggregate outstanding
principal amount of such Indebtedness does not exceed $2,500,000 at
any one time and (ii) no such Lien shall encumber any Oil & Gas
Property.
8.4 Limitation on Guarantee Obligations. Create, incur,
assume or suffer to exist any Guarantee Obligation except (a) Guarantee
Obligations in existence on the date hereof and listed on Schedule 8.4, (b)
Guarantee Obligations arising under the Loan Documents, (c) Guarantee
Obligations with respect to Indebtedness permitted by subsection 8.2 and (d)
Guarantee Obligations issued by the Borrower or by any of its Subsidiaries in
the ordinary course of business of obligations of other Persons (other than in
respect of Indebtedness) in connection with current oil and gas drilling, oil
and gas production, oil and gas transportation, crude oil purchasing, oil and
gas exploration or other similar programs or operations.
8.5 Limitation on Fundamental Changes. Enter into any
merger, consolidation or amalgamation as a constituent party, or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution), or
convey, sell, lease, assign, transfer or otherwise dispose of, all or
substantially all of its property, business or assets, or make any material
change in its present method of conducting business except:
(a) (i) any Subsidiary of the Borrower (including a Foreign
Subsidiary) may be merged or consolidated with or into the Borrower
(provided that the Borrower shall be the continuing or surviving
corporation) or with or into any one or more Wholly-Owned Subsidiaries
which are Domestic Subsidiaries (provided that such Wholly- Owned
Subsidiary or Subsidiaries shall be the continuing or surviving
Person) and (ii) any Foreign Subsidiary of the Borrower may be merged
or consolidated with or into any one or more Wholly-Owned Subsidiaries
which are Foreign Subsidiaries (provided that such Wholly-Owned
Subsidiary or Subsidiaries shall be the continuing or surviving
Person);
(b) (i) any Wholly-Owned Subsidiary (including a Wholly-Owned
Subsidiary which is a Foreign Subsidiary) of the Borrower may sell,
lease, transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or any
Wholly-Owned Subsidiary which is a Domestic Subsidiary and (ii) any
Wholly-Owned Subsidiary of the Borrower which is a Foreign Subsidiary
may sell, lease, transfer or otherwise dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to any Wholly-Owned
Subsidiary which is a Foreign Subsidiary; and
(c) any Wholly-Owned Subsidiary may be merged or consolidated
with any Person acquired in connection with a Permitted Business
Acquisition, which acquisition complies with subsection 8.8(g) and is
made in the ordinary course of the Oil and Gas Business, provided that
such Wholly-Owned Subsidiary shall be the continuing or surviving
Person.
8.6 Limitation on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or issue or sell any shares of the
Borrower's Disqualified Stock or such Subsidiary's Capital Stock to any Person
other than the Borrower or any domestic Wholly-Owned Subsidiary, except:
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(a) the sale or other disposition of obsolete or worn out
property in the ordinary course of business;
(b) the sale of inventory (including Hydrocarbons or other
mineral products or surplus) in the ordinary course of business;
(c) as permitted by subsection 8.5(b);
(d) the sale or other Disposition of any Oil and Gas
Properties included in the Borrowing Base, provided that (i) during
the Initial Period, the Net Proceeds of any such sale or other
Disposition which constitutes a Redetermination Event are used to
reduce the Borrowing Base and prepay Loans pursuant to subsection 4.9
and 4.10 and (ii) the aggregate value (determined by reference to the
most recent Reserve Report) of all Oil and Gas Properties included in
the Borrowing Base so sold or disposed of in any fiscal year of the
Borrower shall not exceed $2,500,000; and
(e) sales or other Dispositions of Property not constituting
Oil and Gas Properties included in the Borrowing Base (other than the
Capital Stock of any direct or indirect Subsidiaries of the Borrower);
provided that during the Initial Period, the Net Proceeds of any such
sale or other Disposition which constitutes a Redetermination Event
are used to reduce the Borrowing Base and prepay Loans pursuant to
subsection 4.9 and 4.10.
8.7 Limitation on Dividends. Declare or pay any dividend on
(other than dividends payable solely in common stock of the Borrower), or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any shares of any class of Capital Stock of the Borrower or any Subsidiary
or any warrants or options to purchase any such Capital Stock, whether now or
hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
the Borrower or any Subsidiary, except that:
(a) any Subsidiary may declare and pay dividends to or make
other distributions to the Borrower or to any other Wholly-Owned
Subsidiary which is a Guarantor; and
(b) so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom, (i) the
Borrower, following the Initial Period, may redeem or purchase Capital
Stock or rights to acquire Capital Stock using proceeds from the
issuance of Capital Stock or rights to acquire Capital Stock, (ii) the
Borrower may use and issue its own Capital Stock (A) to purchase or
acquire issued and outstanding shares of its Capital Stock, warrants,
options, debt instruments convertible into or other rights to purchase
the Borrower's Capital Stock, (B) to satisfy the exercise of stock
options or warrants or (C) in connection with any employee benefit
plan of the Borrower or its Subsidiaries, (iii) the Borrower may
redeem rights to purchase preferred stock or common stock issued to
the Borrower's shareholders for an aggregate amount not to exceed
$250,000 during the term of this Agreement and (iv) the Borrower,
following the Initial Period, may declare and pay cash dividends or,
repurchase, redeem or acquire shares of its Capital Stock, so long as
no more than $1,000,000 in the aggregate is expended for such purpose
during the term of this Agreement.
8.8 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or incur any
Guarantee Obligation on behalf or for the
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benefit of, or purchase any stock, bonds, notes, debentures or other securities
of or any assets constituting a business unit of, or make any other investment
(including by the issuance of letters of credit) in (collectively,
"Investments"), any Person, except:
(a) extensions of trade credit in the ordinary course of
business;
(b) Investments in Cash Equivalents;
(c) loans and advances to officers and employees of the
Borrower or any Subsidiary for travel, entertainment and relocation
expenses in the ordinary course of business in an aggregate amount for
the Borrower and its Subsidiaries not to exceed $500,000 at any one
time outstanding;
(d) investments, loans or advances, the material details of
which have been set forth on Schedule 8.8;
(e) so long as no Default or Event of Default shall have
occurred and be continuing, Investments by the Borrower in any
Wholly-Owned Subsidiary which is a Guarantor and Investments by any
Wholly-Owned Subsidiary which is a Guarantor in the Borrower or in
other Wholly-Owned Subsidiaries which are Guarantors;
(f) Investments constituting Permitted Business Investments
made or entered into in the ordinary course of the Oil and Gas
Business in an amount (valued at the time of making thereof) not to
exceed, in the aggregate, $2,500,000 during any fiscal year of the
Borrower;
(g) Investments constituting Permitted Business Acquisitions
made or entered into in the ordinary course of the Oil and Gas
Business; provided that with respect to a Permitted Business
Acquisition which is not an acquisition funded entirely with the
common stock of the Borrower, after giving effect to the consummation
of the transactions contemplated by such Permitted Business
Acquisition and the Loans to be made and the Letters of Credit to be
issued hereunder in connection therewith, the sum of (i) the cash and
Cash Equivalents then held by the Borrower and (ii) an amount equal to
the difference between (A) the aggregate Revolving Credit Commitments
(or, if less, the Borrowing Base) in effect at such time and (B) the
Aggregate Revolving Credit Exposure of all the Lenders at such time,
equals at least $20,000,000;
(h) obligations (in each case not outstanding for more than
90 days) owed by or to Affiliates under operating agreements relating
to Oil and Gas Properties in an aggregate amount not to exceed
$5,000,000 at any time;
(i) transactions expressly permitted under (i) subsection 8.2
(provided, that no loans may be made by the Borrower pursuant to
subsection 8.2(e) at any time when a Default or Event of Default shall
have occurred and be continuing), (ii) subsection 8.3, (iii)
subsection 8.4 or (iv) subsection 8.5 or (v) subsection 8.16, as
applicable; and
(j) Investments not otherwise permitted hereunder in an
amount at any time not in excess of $1,000,000.
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8.9 Limitation on Optional Payments and Modifications of Debt
Instruments, Other Documents. (a) Make any optional payment or prepayment on
or redemption, defeasance or purchase of (i) any Indebtedness (other than
Indebtedness under this Agreement) which has an aggregate principal amount in
excess of $2,500,000 or (ii) any Subordinated Indebtedness, or (b) amend,
modify or change, or consent or agree to any amendment, modification or change
to any of the terms (including the subordination provisions) of any such
Indebtedness described in clauses (i) or (ii) immediately preceding (other than
any such amendment, modification or change which would extend the maturity or
reduce the amount of any payment of principal thereof or which would reduce the
rate or extend the date for payment of interest thereon).
(b) Amend or modify the certificate of incorporation or bylaws
of the Borrower, unless such amendment or modification is immaterial to the
interests of the Lenders.
8.10 Limitation on Transactions with Affiliates. Enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of Property or the rendering of any service, with any Affiliate (other
than transactions between or among the Borrower and its Wholly-Owned
Subsidiaries which are Domestic Subsidiaries) unless such transaction is (a)
otherwise permitted under this Agreement, (b) in the ordinary course of the
Borrower's or the applicable Subsidiary's business and (c) upon fair and
reasonable terms no less favorable to the Borrower or the applicable
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate or, in the event no
comparable transaction with an unaffiliated Person is available, on terms that
are fair from a financial point of view to the Borrower or the applicable
Subsidiary provided, however, this subsection 8.10 shall not apply to (i) the
payment of reasonable and customary fees to directors of the Borrower who are
not employees of the Borrower; (ii) loans or advances made pursuant to
subsection 8.8(c); or (iii) any other transaction with any employee, officer or
director of the Borrower pursuant to drilling arrangements, exploration and
production arrangements, Plans, compensation or other similar arrangements
entered into the ordinary course of business and approved by a majority of the
disinterested members of the Board of Directors of the Borrower.
8.11 Limitation on Sales and Leasebacks. Enter into any
arrangement (a "Sale and Leaseback Transaction") with any Person providing for
the leasing by the Borrower or any Subsidiary of real or personal property
which has been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of the Borrower or any Subsidiary.
8.12 Limitation on Changes in Fiscal Year. Permit the fiscal
year of the Borrower and its Subsidiaries to end on a day other than December
31.
8.13 Limitation on Negative Pledge Clauses. Enter into with
any Person any agreement, other than this Agreement, which prohibits or limits
the ability of the Borrower or any of its Subsidiaries to create, incur, assume
or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired.
8.14 Limitation on Lines of Business. Enter into any
business, either directly or through any Subsidiary, except for those
businesses in which the Borrower and its Subsidiaries are engaged on the date
of this Agreement or which are directly related thereto or to the Oil and Gas
Business.
8.15 Forward Sales. Except in accordance with ordinary
practice in the Oil and Gas Business, enter into or permit to exist any advance
payment agreement or other arrangement pursuant
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to which the Borrower or any of its Subsidiaries, having received full or
substantial payment of the purchase price for a specified quantity of
Hydrocarbons upon entering such agreement or arrangement, is required to
deliver, in one or more installments subsequent to the date of such agreement
or arrangement, such quantity of Hydrocarbons pursuant to and during the terms
of such agreement or arrangement.
8.16 Hedging Agreements. Enter into any Hedging Agreement,
other than Hedging Agreements entered into in the ordinary course of business
to hedge or mitigate risks to which the Borrower or any of its Subsidiaries is
exposed in the conduct of its business or the management of its liabilities;
provided that the aggregate amount of Commodity Price Risk Management
Agreements may not exceed the following: (i) for oil, the total volumes to be
hedged for any year shall not exceed 80% of expected oil production of the
Borrower and (ii) for gas, the total volumes to be hedged for any year shall
not exceed 80% of expected gas production of the Borrower for such year;
8.17 Limitation on Leases. Permit Consolidated Lease Expense
for any fiscal year of the Borrower to exceed $2,500,000.
8.18 Limitation on Immaterial Subsidiaries. Permit each
direct or indirect Immaterial Subsidiary to acquire any additional assets or to
conduct any material additional business, either directly or indirectly, unless
prior to owning such assets or conducting such business such Immaterial
Subsidiary executes and delivers to the Administrative Agent those documents
set forth in Section 7.9(a).
SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
or any Reimbursement Obligation when due in accordance with the terms
thereof or hereof; or the Borrower shall fail to pay any interest on
any Loan, or any other amount payable hereunder, within three Business
Days after any such interest or other amount becomes due in accordance
with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by any
Loan Party herein or in any other Loan Document or which is contained
in any certificate, document or financial or other statement furnished
by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
(c) The Borrower or any of its Subsidiaries shall default in
the observance or performance of any agreement applicable to it
contained in subsections 4.10, 7.7(a) or 7.9 of this Agreement,
Section 8 of this Agreement or Section 5(b) of the Pledge Agreement;
or
(d) The Borrower or any of its Subsidiaries shall default in
the observance or performance of any other agreement applicable to it
contained in this Agreement or any other Loan Document (other than as
provided in paragraphs (a) through (c) of this Section), and such
default shall continue unremedied for a period of 30 consecutive days;
or
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(e) The Borrower or any of its Subsidiaries shall (i) default
in any payment of principal of or interest of any Indebtedness
(excluding the Loans or any guarantee thereof), or in the payment of
any Guarantee Obligation, beyond the period of grace (not to exceed 30
days), if any, provided in the instrument or agreement under which
such Indebtedness or Guarantee Obligation was created; provided that
the aggregate principal amount of such Indebtedness and Guarantee
Obligations equals or exceeds $2,000,000; or (ii) default in the
observance or performance of any other agreement or condition relating
to any such Indebtedness or Guarantee Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries
of such Guarantee Obligation (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to become due prior to
its stated maturity or such Guarantee Obligation to become payable,
provided that the aggregate principal amount of all such Indebtedness
and Guarantee Obligations which would then become due and payable
would equal or exceed $2,000,000; or
(f) (i) The Borrower or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of
its assets, or the Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there
shall be commenced against the Borrower or any of its Subsidiaries any
case, proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall
be commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order
for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof;
or (iv) the Borrower or any of its Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) the Borrower or any of its Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor of
the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion
of the
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Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with
a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
the Borrower or any Subsidiary involving in the aggregate a liability
(to the extent not paid or covered by insurance) of $1,000,000 or
more, and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal (or otherwise paid or
satisfied in full) within 90 days after the entry thereof; or
(i) A material provision of any Loan Document or the
guarantee of any of the Guarantors under the Guarantee Agreement shall
cease, for any reason, to be in full force and effect, or any Loan
Party, any of their Affiliates, or any officer or employee of any of
the foregoing, shall so assert; or
(j) The subordination provisions contained in any
Subordinated Indebtedness shall cease, for any reason, to be in full
force and effect, or any Person that is a party thereto or holders of
at least 25% of the aggregate principal amount of such Subordinated
Indebtedness shall so assert in writing; or
(k) Environmental liabilities aggregating in excess of a
Material Environmental Amount shall be outstanding at any time with
respect to the Borrower or any of its Subsidiaries and the Borrower
and such Subsidiaries are not using their best efforts to remedy the
liability; or
(l) Any Lien created by the Pledge Agreement or any other
Security Document shall cease to be enforceable and of the same effect
and priority purported to be created thereby; or
(m) A Change of Control shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section, automatically the
Commitments shall immediately terminate and the Loans hereunder (with accrued
and unpaid interest thereon) and all other amounts owing under this Agreement
(including, without limitation, all Letter of Credit Outstandings, whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) and the other Loan Documents shall
immediately become due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be taken: (i) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by written
notice to the Borrower, declare the Commitments to be terminated forthwith,
whereupon the Commitments shall immediately terminate; and (ii) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by written
notice to the Borrower, declare the Loans hereunder (with accrued and unpaid
interest thereon) and all other amounts owing under this Agreement (including,
without limitation, all amounts of Letter of Credit Outstandings, whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) and the other Loan Documents to be
due and payable forthwith, whereupon the same shall immediately become due and
payable.
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With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Administrative Agent an amount equal to
the aggregate then unexpired amount that is available to be drawn under such
Letters of Credit. The Borrower hereby grants to the Administrative Agent, for
the benefit of the Issuing Lender and the L/C Participants, a security interest
in such cash collateral to secure all obligations of the Borrower under this
Agreement and the other Loan Documents. Amounts held in such cash collateral
account shall be applied by the Administrative Agent to the payment of drafts
drawn under such Letters of Credit, and the unused portion thereof after all
such Letters of Credit shall have expired, been cancelled or been fully drawn
upon, if any, shall be applied to repay other obligations of the Borrower
hereunder and under the Notes. After all such Letters of Credit shall have
expired, been cancelled or been fully drawn upon, all Reimbursement Obligations
shall have been satisfied and all other obligations of the Borrower hereunder
and under the other Loan Documents shall have been paid in full, the balance,
if any, in such cash collateral account shall be returned to the Borrower. The
Borrower shall execute and deliver to the Administrative Agent, for the account
of the Issuing Lender and the L/C Participants, such further documents and
instruments as the Administrative Agent may reasonably request to evidence the
creation and perfection of the within security interest in such cash collateral
account. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 10. THE AGENT
10.1 Appointment. Each Lender hereby irrevocably designates
and appoints Chase as Administrative Agent of such Lender under this Agreement
and the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
10.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents
or attorneys in-fact selected by it with reasonable care.
10.3 Exculpatory Provisions. Neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates shall be (i) liable for any action lawfully taken or omitted to
be taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by any Loan Party
or any officer thereof contained in this Agreement or any other Loan Document
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Administrative Agent under or in connection
with, this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or for any failure of any Loan Party to perform its
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obligations hereunder or thereunder. The Administrative Agent shall not be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party.
10.4 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any Note, writing, resolution, notice, consent, certificate, affidavit, letter,
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Loan Parties),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Required Lenders (or, where
unanimous consent of the Lenders is expressly required hereunder, such Lenders)
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders (or, where unanimous consent
of the Lenders or the Supermajority Lenders is expressly required hereunder,
such Lenders or Supermajority Lenders, as applicable), and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
10.5 Notice of Default. The Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless the Administrative Agent has received notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Lenders.
10.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that no act by
the Administrative Agent hereafter taken, including any review of the affairs
of any Loan Party, shall be deemed to constitute any representation or warranty
by the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of each Loan Party and made its own decision to
make its Extensions of Credit hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it
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deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of each Loan Party. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent hereunder, the Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of any Loan Party which
may come into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
10.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation the Borrower to do so),
ratably according to their respective Commitment Percentages in effect on the
date on which indemnification is sought, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
obligations under this Agreement) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the
Administrative Agent's gross negligence or willful misconduct. The agreements
in this subsection shall survive the payment of all obligations under this
Agreement and all other amounts payable hereunder.
10.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with any Loan Party as though the
Administrative Agent were not the Administrative Agent hereunder and under the
other Loan Documents. With respect to the Extensions of Credit made by it, the
Administrative Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not the Administrative Agent, and the terms "Lender" and "Lenders"
shall include the Administrative Agent in its individual capacity.
10.9 Successor Administrative Agent. The Administrative
Agent may resign as Administrative Agent upon 30 days' notice to the Lenders.
If the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, which successor
agent, with the consent of the Borrower (such consent not to be unreasonably
withheld or delayed), shall succeed to the rights, powers and duties of the
Administrative Agent hereunder. Effective upon such appointment and approval,
the term "Administrative Agent" shall mean such successor agent, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 10 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
10.10 Issuing Lender. The provisions of this Section 10
applicable to the Administrative Agent shall apply to the Issuing Lender in the
performance of its duties under the Loan Documents, mutatis mutandis.
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SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Agreement nor any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Required Lenders may, or, with the written consent of the
Required Lenders, the Administrative Agent may, from time to time, (a) enter
into with the applicable Loan Parties written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the applicable Loan Parties hereunder or
thereunder or (b) waive, on such terms and conditions as the Required Lenders
or the Administrative Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (i) reduce the amount, or extend the scheduled date of final maturity, of
any Loan, or reduce the stated rate of any interest or fee payable hereunder or
extend the scheduled date of any payment thereof or increase the amount or
extend the expiration date of any Lender's Commitments, in each case without
the consent of each Lender affected thereby, or (ii) amend, modify or waive any
provision of this subsection or reduce the percentage specified in the
definition of Required Lenders or Supermajority Lenders (or modify any
provision of this Agreement or any other Loan Document to provide that an
action currently requiring the approval of or consent by the Supermajority
Lenders may be taken with the consent or approval by a lower percentage of
Lenders), or consent to the assignment or transfer by any Loan Party of any of
its rights and obligations under this Agreement and the other Loan Documents
other than in accordance with the terms of the applicable Loan Documents, in
each case without the written consent of all the Lenders, (iii) release, or
subordinate the interest of the Administrative Agent in, all or substantially
all of the collateral for the obligations hereunder or release all or
substantially all of the Guarantors from their respective obligations under the
Guarantee Agreement without the written consent of each Lender, (iv) change
subsection 4.8(a) or subsection 11.7(a) in a manner that would alter the pro
rata sharing of payments required thereby, without the written consent of each
Lender, or (v) amend, modify or waive any provision of Section 10 without the
written consent of the then Administrative Agent and Issuing Lender. Any such
waiver and any such amendment, supplement or modification shall apply equally
to each of the Lenders and shall be binding upon the Loan Parties, the Lenders,
the Administrative Agent and all future holders of the Loans. In the case of
any waiver, the Loan Parties, the Lenders and the Administrative Agent shall be
restored to their former positions and rights hereunder and under the other
Loan Documents, and any Default or Event of Default waived shall be deemed to
be cured and not continuing; no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
11.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand
or by courier service, when delivered, (b) in the case of delivery by mail,
three Business Days after being deposited in the mails, postage prepaid, or (c)
in the case of delivery by facsimile transmission, when sent and receipt has
been confirmed, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth in Schedule 11.2 in the case of the
other parties hereto, or to such other address as may be hereafter notified by
the respective parties hereto:
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The Borrower: The Meridian Resource Corporation
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Fax: (▇▇▇)-▇▇▇-▇▇▇▇
The Administrative
Agent: The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Chase Manhattan Bank Agency Services
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.2, 4.3, 4.5 or 4.8 shall not be
effective until received.
11.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent, the
Issuing Lender or any Lender, any right, remedy, power or privilege hereunder
or under the other Loan Documents shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Extensions of Credit hereunder.
11.5 Payment of Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse the Administrative Agent and its Affiliates for all their
reasonable and documented out-of-pocket costs and expenses incurred in
connection with the development, syndication, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation,
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the reasonable fees and disbursements of (i) counsel to the Administrative
Agent and (ii) the Administrative Agent customarily charged by it in connection
with syndicated credits, (b) to pay or reimburse each Lender and the
Administrative Agent for all its reasonable and documented costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the other Loan Documents and any such other documents,
including, without limitation, the reasonable fees and disbursements of counsel
to the Administrative Agent and to the several Lenders, (c) to pay, indemnify,
and hold each Lender and the Administrative Agent (and their respective
Affiliates and their respective directors, officers, employees and agents)
harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender, the Administrative Agent (and their
respective directors, officers, employees, agents and affiliates) harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents or
the use or the proposed use of proceeds contemplated by this Agreement,
including, without limitation, any of the foregoing relating to the violation
of, noncompliance with or liability under, any Environmental Law applicable to
any Loan Party or any of the Properties (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), provided that the Borrower shall
have no obligation under this clause (d) to any Administrative Agent or any
Lender (or any of their respective directors, officers, employers, agents or
affiliates), with respect to indemnified liabilities to the extent such
liabilities are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Person. Without limiting the foregoing, and to the extent
permitted by applicable law, the Borrower agrees not to assert, and hereby
waives, and agrees to cause each of its Subsidiaries not to assert and to so
waive, all rights for contribution or any other rights of recovery with respect
to all claims, demands, penalties, fines, liabilities, settlements, damages,
costs and expenses of whatever kind or nature, under or related to
Environmental Laws, that any of them might have by statute or otherwise against
any Person entitled to indemnification under this subsection 11.5. The
agreements in this subsection shall survive repayment of the Loans and all
other amounts payable hereunder and the termination of this Agreement.
11.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent, all future holders of the
Loans and any Notes hereunder and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking or lending business and in accordance with applicable law and at no
cost or expense to the Borrower, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing to such
Lender, any Commitment of such Lender or any other interest of such Lender
hereunder and under the other Loan Documents. In the event of any such sale by
a Lender of a participating interest to a Participant, (i) such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible for the
performance thereof, (iii) such Lender shall remain the holder of any such Loan
(and any Note evidencing such Loan) for all purposes under this Agreement and
the other Loan Documents, (iv) the Borrower and the Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Loan
Documents, and (v) in any proceeding under the Bankruptcy Code the Lender shall
be, to the extent permitted by law, the sole representative with respect to the
obligations held in the name of such Lender, whether for its own account or for
the account of any Participant. No Lender shall be entitled to create in favor
of any Participant, in the participation agreement pursuant to which such
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Participant's participating interest shall be created or otherwise, any right
to vote on, consent to or approve any matter relating to this Agreement or any
other Loan Document except for those specified in clauses (i) and (ii) of the
proviso to subsection 11.1. The Borrower agrees that each Participant shall be
entitled to the benefits of subsections 4.13 and 4.14 with respect to its
participation in the Commitments and the Loans and Letters of Credit
outstanding from time to time as if it was a Lender; provided that, in the case
of subsection 4.13, such Participant shall have complied with the requirements
of said subsection and provided, further, that no Participant shall be entitled
to receive any greater amount pursuant to any such subsection than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking or lending business and in accordance with applicable law, at any time
and from time to time assign to any Lender or, with the prior consent of each
Issuing Lender, any Affiliate thereof or, with the prior written consent of the
Administrative Agent, the Borrower and each Issuing Lender (which in each case
shall not be unreasonably withheld), to an additional bank or financial
institution or other entity (an "Assignee") all or any part of its rights and
obligations under this Agreement and the other Loan Documents including,
without limitation, its Revolving Credit Commitments, L/C Commitments,
Revolving Credit Loans and L/C Participating Interests, pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit G, executed by
such Assignee, such assigning Lender (and, in the case of an Assignee that is
not then a Lender, by the Borrower, the Administrative Agent and each Issuing
Lender) and delivered to the Administrative Agent for its acceptance and
recording in the Register, provided that (i) (unless the Borrower and the
Administrative Agent otherwise consent in writing) no such transfer to an
Assignee (other than a Lender or any Affiliate thereof) shall be in an
aggregate principal amount less than $5,000,000 in the aggregate (or, if less,
the full amount of such assigning Lender's Revolving Credit Loans, L/C
Participating Interests and Revolving Credit Commitments) and (ii) if any
Lender assigns all or any part of its rights and obligations under this
Agreement to one of its Affiliates in connection with or in contemplation of
the sale or other disposition of its interest in such Affiliate, the Borrower's
prior written consent shall be required for such assignment. Upon such
execution, delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Revolving Credit Commitment and L/C Commitment as set forth
therein, and (y) the assigning Lender thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) and paragraph (e) of this
subsection, the consent of the Borrower shall not be required, and, unless
requested by the Assignee and/or the assigning Lender, new Notes shall not be
required to be executed and delivered by the Borrower, for any assignment which
occurs at any time when any of the events described in Section 9(f) shall have
occurred and be continuing.
(d) The Administrative Agent, on behalf of the Borrower,
shall maintain at the address of the Administrative Agent referred to in
subsection 11.2 a copy of each Assignment and Acceptance delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Lenders and the Commitments of, and principal amounts of the Loans owing to,
each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent and the Lenders may (and, in the case of any Loan or other
obligation hereunder not evidenced by a Note, shall) treat each Person whose
name is
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recorded in the Register as the owner of a Loan or other obligation hereunder
as the owner thereof for all purposes of this Agreement and the other Loan
Documents, notwithstanding any notice to the contrary. Any assignment of any
Loan or other obligation hereunder not evidenced by a Note shall be effective
only upon appropriate entries with respect thereto being made in the Register.
The Register shall be available for inspection by the Borrower or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(e) Notwithstanding anything in this Agreement to the
contrary, no assignment under subsection 11.6(c) of any rights or obligations
under or in respect of the Loans, the Notes or the Letters of Credit shall be
effective unless and until the Administrative Agent shall have recorded the
assignment pursuant to subsection 11.6(d). Upon its receipt of an Assignment
and Acceptance executed by an assigning Lender and an Assignee (and, in the
case of an Assignee that is not then a Lender or an affiliate thereof, by the
Borrower and the Administrative Agent) together with payment to the
Administrative Agent of a registration and processing fee of $3,500 (other than
in the case of an assignment by a Lender to an affiliate of such Lender), the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and the Borrower. On or prior to
such effective date, the assigning Lender shall surrender any outstanding Notes
held by it all or a portion of which are being assigned, and the Borrower, at
its own expense, shall, upon the request to the Administrative Agent by the
assigning Lender or the Assignee, as applicable, execute and deliver to the
Administrative Agent (in exchange for the outstanding Notes of the assigning
Lender) a new Revolving Credit Note to the order of such Assignee in an amount
equal to the lesser of (A) the amount of such Assignee's Revolving Credit
Commitment and (B) the aggregate principal amount of all Revolving Credit Loans
made by such Assignee, after giving effect to such Assignment and Acceptance
and, if the assigning Lender has retained a Revolving Credit Commitment
hereunder, a new Revolving Credit Note to the order of the assigning Lender in
an amount equal to the lesser of (A) the amount of such Lender's Revolving
Credit Commitment and (B) the aggregate principal amount of all Revolving
Credit Loans made by such Lender, after giving effect to such Assignment and
Acceptance. Any such new Notes shall be dated the Closing Date and shall
otherwise be in the form of the Note replaced thereby. Any Notes surrendered
by the assigning Lender shall be returned by the Administrative Agent to the
Borrower marked "canceled".
(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee,
any and all financial information in such Lender's possession concerning the
Loan Parties and their Affiliates which has been delivered to such Lender by or
on behalf of the Borrower pursuant to this Agreement or which has been
delivered to such Lender by or on behalf of the Borrower in connection with
such Lender's credit evaluation of the Loan Parties and their Affiliates prior
to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
11.7 Adjustments; Set-off. (a) If any Lender (a "Benefitted
Lender") shall at any time receive any payment of all or part of its Loans or
Reimbursement Obligations, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 9(f), or otherwise),
in a greater proportion
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than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans or Reimbursement Obligations, or interest
thereon, such Benefitted Lender shall purchase for cash from the other Lenders
a participating interest in such portion of each such other Lender's Loans or
Reimbursement Obligations, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be necessary
to cause such Benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however,
that if all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded, and
the purchase price and benefits returned, to the extent of such recovery, but
without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower, as the case may
be. Each Lender agrees promptly to notify the Borrower and the Administrative
Agent after any such set-off and application made by such Lender, provided
that, to the extent permitted by applicable law, the failure to give such
notice shall not affect the validity of such set-off and application.
11.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of
the copies of this Agreement signed by all the parties shall be lodged with the
Borrower and the Administrative Agent.
11.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.10 Integration. This Agreement and the other Loan
Documents represent the agreement of the Borrower, the other Loan Parties, the
Administrative Agent and the Lenders with respect to the subject matter hereof,
and there are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
11.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
11.12 Submission To Jurisdiction; Waivers. The Borrower
hereby irrevocably and unconditionally:
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(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents
to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate
courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in subsection 11.2
or at such other address of which the Administrative Agent shall have
been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to ▇▇▇ in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this subsection any special, exemplary,
punitive or consequential damages.
11.13 Acknowledgments. The Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or
in connection with this Agreement or any of the other Loan Documents,
and the relationship between Administrative Agent and Lenders, on one
hand, and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders.
11.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY KNOWINGLY AND INTENTIONALLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
11.15 Production Proceeds. Notwithstanding that, by the
terms of the Mortgages, Cairn is and will be assigning to the Administrative
Agent and Lenders all of the "Production Proceeds" (as defined in the Mortgage)
accruing to the property covered thereby, so long as no Event of Default has
occurred Cairn may continue to receive from the purchasers of production all
such Production Proceeds, and the Administrative Agent shall reasonably
cooperate with Cairn so that the purchasers of production pay such Production
Proceeds directly to Cairn and not to the Administrative
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Agent nor the Lenders. Upon the occurrence and continuation of an Event of
Default, the Administrative Agent and Lenders may exercise all rights and
remedies granted under the Mortgages, including the right to obtain possession
of all Production Proceeds then held by Cairn or to receive directly from the
purchasers of production all other Production Proceeds. In no case shall any
failure, whether purposed or inadvertent, by the Administrative Agent or
Lenders to collect directly any such Production Proceeds constitute in any way
a waiver, remission or release of any of their rights under the Mortgages, nor
shall any release of any Production Proceeds by Administrative Agent or Lenders
to Cairn constitute a waiver, remission, or release of any other Production
Proceeds or of any rights of Administrative Agent or Lenders to collect other
Production Proceeds thereunder.
11.16 Release of Mortgaged Properties. The Administrative
Agent is hereby authorized by the Lenders to execute, at the cost and expense
of the Borrower and pursuant to documentation reasonably acceptable to the
Administrative Agent, partial releases of the Mortgaged Properties to the
extent such Mortgaged Properties are sold in accordance with the terms of the
Mortgage and subsection 8.6.
11.17 Limitation on Interest. The Borrower, the Loan
Parties, the Administrative Agent and the Lenders intend to contract in strict
compliance with applicable usury law from time to time in effect. In
furtherance thereof such persons stipulate and agree that none of the terms and
provisions contained in the Loan Documents shall ever be construed to provide
for interest in excess of the maximum amount of interest permitted to be
charged by applicable law from time to time in effect. Neither any Loan Party
nor any present or future guarantors, endorsers, or other Persons hereafter
becoming liable for payment of any Obligation shall ever be liable for unearned
interest thereon or shall ever be required to pay interest thereon in excess of
the maximum amount that may be lawfully charged under applicable law from time
to time in effect, and the provisions of this section shall control over all
other provisions of the Loan Documents which may be in conflict or apparent
conflict herewith. The Administrative Agent and the Lenders expressly disavow
any intention to charge or collect excessive unearned interest or finance
charges in the event the maturity of any Obligation is accelerated. If (a) the
maturity of any Obligation is accelerated for any reason, (b) any Obligation is
prepaid and as a result any amounts held to constitute interest are determined
to be in excess of the legal maximum, or (c) any Lender or may other holder of
any or all of the Obligations shall otherwise collect moneys which are
determined to constitute interest which would otherwise increase the interest
on any or all of the Obligations to an amount in excess of that permitted to be
charged by applicable law then in effect, then all sums determined to
constitute interest in excess of such legal limit shall, without penalty, be
promptly applied to reduce the then outstanding principal of the related
Obligations or, at such Lender's or holder's option, promptly returned to
Borrower or the other payor thereof upon such determination. In determining
whether or not the interest paid or payable, under any specific circumstance,
exceeds the maximum amount permitted under applicable law, Lenders, the
Administrative Agent and the Loan Parties (and any other payers thereof) shall
to the greatest extent permitted under applicable law, (i) characterize any
non-principal payment as an expense, fee or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate, and spread the total amount of interest throughout the
entire contemplated term of the instruments evidencing the Obligations in
accordance with the amounts outstanding from time to time thereunder and the
maximum legal rate of interest from time to time in effect under applicable law
in order to lawfully charge the maximum amount of interest permitted under
applicable law.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
THE MERIDIAN RESOURCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Title: President
THE CHASE MANHATTAN BANK, as
Administrative Agent, Issuing Lender
and as a Lender
By:
-----------------------------------
Title:
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇▇▇), INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
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THE SANWA BANK, LIMITED
By: /s/ C. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: C. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
and Manager
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CREDIT LYONNAIS NEW YORK BRANCH
By:
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Name:
Title:
79
HIBERNIA NATIONAL BANK
By:
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Name:
Title:
80
MEESPIERSON CAPITAL CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
By:
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Name:
Title:
