EXHIBIT 10.1
EXECUTION COPY
$250,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
THE MERIDIAN RESOURCE
CORPORATION,
AS BORROWER,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT,
BANKERS TRUST COMPANY,
AS SYNDICATION AGENT,
CHASE SECURITIES INC.,
AS ADVISOR,
CHASE SECURITIES INC.,
BT ALEX. XXXXX INCORPORATED,
TORONTO DOMINION (TEXAS), INC.,
AND
CREDIT LYONNAIS NEW YORK BRANCH,
AS CO-ARRANGERS,
AND
TORONTO DOMINION (TEXAS), INC.
AND
CREDIT LYONNAIS NEW YORK BRANCH,
AS CO-DOCUMENTATION AGENTS
DATED AS OF MAY 22, 1998
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS...................................................... 2
1.1 Defined Terms................................................... 2
1.2 Other Definitional Provisions................................... 20
SECTION 2. AMOUNT AND TERMS OF REVOLVING
COMMITMENTS ......................................................... 21
2.1 Revolving Credit Commitments.................................... 21
2.2 Procedure for Revolving Credit Borrowing........................ 21
2.3 Repayment of Loans; Evidence of Debt............................ 21
SECTION 3. LETTERS OF CREDIT................................................ 22
3.1 The L/C Commitment.............................................. 22
3.2 Procedure for Issuance of Letters of Credit..................... 23
3.3 Fees, Commissions and Other Charges............................. 23
3.4 L/C Participations.............................................. 24
3.5 Reimbursement Obligation of the Borrower........................ 25
3.6 Obligations Absolute............................................ 25
3.7 Letter of Credit Payments....................................... 25
3.8 L/C Applications................................................ 25
SECTION 4. GENERAL PROVISIONS............................................... 25
4.1 Interest Rates and Payment Dates................................ 25
4.2 Computation of Interest and Fees................................ 26
4.3 Conversion and Continuation Options............................. 26
4.4 Minimum Amounts Maximum Number of Tranches...................... 27
4.5 Optional Prepayments and Commitment Reductions.................. 27
4.6 Commitment Fee; Administrative Agent's Fee; Other Fees.......... 28
4.7 Inability to Determine Interest Rate............................ 29
4.8 Pro Rata Treatment and Payments................................. 29
4.9 Computation of Borrowing Base................................... 30
4.10 Borrowing Base Compliance...................................... 32
4.11 Illegality..................................................... 32
4.12 Requirements of Law............................................ 33
4.13 Taxes.......................................................... 34
4.14 Indemnity...................................................... 35
4.15 Change of Lending Office....................................... 35
SECTION 5. REPRESENTATIONS AND WARRANTIES................................... 36
5.1 Financial Condition............................................. 36
5.2 No Change....................................................... 36
5.3 Corporate Existence; Compliance with Law........................ 36
5.4 Corporate Power; Authorization; Enforceable Obligations......... 37
5.5 No Legal Bar.................................................... 37
5.6 No Material Litigation.......................................... 37
5.7 No Default...................................................... 37
5.8 Ownership of Property; Liens.................................... 37
5.9 Intellectual Property........................................... 38
5.10 No Burdensome Restrictions..................................... 38
5.11 Taxes.......................................................... 38
5.12 Federal Reserve Regulations.................................... 38
PAGE
5.13 ERISA.......................................................... 39
5.14 Investment Company Act; Other Regulations...................... 39
5.15 Subsidiaries................................................... 39
5.16 Purpose of Loans............................................... 39
5.17 Environmental Matters.......................................... 39
5.18 No Material Misstatements...................................... 40
5.19 Insurance...................................................... 41
5.20 Future Commitments............................................. 41
5.21 Security Documents............................................. 41
5.21. Immaterial Subsidiaries....................................... 41
5.22 Year 2000 Matters.............................................. 41
SECTION 6. CONDITIONS PRECEDENT............................................. 42
6.1 Conditions to Closing Date...................................... 42
6.2 Conditions to Each Extension of Credit.......................... 43
6.3 Conditions to Occurrence of Shell Transaction Completion Date... 44
SECTION 7. AFFIRMATIVE COVENANTS............................................ 45
7.1 Financial Statements............................................ 46
7.2 Certificates; Other Information................................. 46
7.3 Payment of Obligations.......................................... 47
7.4 Conduct of Business and Maintenance of Existence; Compliance
with Law and Contractual Obligations.......................... 47
7.5 Maintenance of Property; Insurance.............................. 47
7.6 Inspection of Property; Books and Records; Discussions.......... 47
7.7 Notices......................................................... 48
7.8 Environmental Laws.............................................. 48
7.9 Additional Collateral........................................... 49
7.10 Maintenance and Operation of Property.......................... 49
7.11 Further Assurances............................................. 50
SECTION 8. NEGATIVE COVENANTS............................................... 51
8.1 Financial Covenant Conditions................................... 51
8.2 Limitation on Indebtedness...................................... 51
8.3 Limitation on Liens............................................. 52
8.4 Limitation on Guarantee Obligations............................. 54
8.5 Limitation on Fundamental Changes............................... 54
8.6 Limitation on Sale of Assets.................................... 55
8.7 Limitation on Dividends......................................... 56
8.8 Limitation on Investments, Loans and Advances................... 56
8.9 Limitation on Optional Payments and Modifications of Debt
Instruments, Other Documents.................................. 57
8.10 Limitation on Transactions with Affiliates..................... 57
8.11 Limitation on Sales and Leasebacks............................. 58
8.12 Limitation on Changes in Fiscal Year........................... 58
8.13 Limitation on Negative Pledge Clauses.......................... 58
8.14 Limitation on Lines of Business................................ 58
8.15 Forward Sales.................................................. 58
8.16 Hedging Agreements............................................. 58
8.17 Limitation on Leases........................................... 59
8.18 Limitation on Immaterial Subsidiaries.......................... 59
- ii -
PAGE
SECTION 9. EVENTS OF DEFAULT................................................ 59
SECTION 10. THE ADMINISTRATIVE AGENT; OTHERS................................ 62
10.1 Appointment.................................................... 62
10.2 Delegation of Duties........................................... 62
10.3 Exculpatory Provisions......................................... 62
10.4 Reliance by Administrative Agent............................... 62
10.5 Notice of Default.............................................. 63
10.6 Non-Reliance on Administrative Agent and Other Lenders......... 63
10.7 Indemnification................................................ 63
10.8 Administrative Agent in Its Individual Capacity................ 64
10.9 Successor Administrative Agent................................. 64
10.10 Issuing Lender................................................ 64
10.11 Others........................................................ 64
SECTION 11. MISCELLANEOUS................................................... 64
11.1 Amendments and Waivers......................................... 64
11.2 Notices........................................................ 65
11.3 No Waiver; Cumulative Remedies................................. 66
11.4 Survival of Representations and Warranties..................... 66
11.5 Payment of Expenses and Taxes.................................. 66
11.6 Successors and Assigns; Participations and Assignments......... 67
11.7 Adjustments; Set-off........................................... 69
11.8 Counterparts................................................... 70
11.9 Severability................................................... 70
11.10 Integration................................................... 70
11.11 GOVERNING LAW................................................. 70
11.12 Submission To Jurisdiction; Waivers........................... 70
11.13 Acknowledgments............................................... 71
11.14 WAIVERS OF JURY TRIAL......................................... 71
11.15 Production Proceeds........................................... 71
11.16 Release of Mortgaged Properties............................... 72
11.17 Limitation on Interest........................................ 72
- iii -
SCHEDULES
1.1(a) Commitments
1.1(b) [Reserved]
1.1(c) Assumed Indebtedness
1.1(d) Immaterial Subsidiaries
1.1(e) Southwest Holmwood Properties
3.1 Existing Letters of Credit
5.2 Capital Stock Redemptions
5.15 Subsidiaries
5.20 Future Commitments
8.2 Existing Indebtedness
8.3 Existing Liens
8.4 Guarantee Obligations
8.6 Pennsylvania Properties
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 Existing Mortgage
E-1 Form of Opinion of Fulbright & Xxxxxxxx, L.L.P.,
Counsel to the Borrower and its Subsidiaries
E-2 Form of Opinion of Xxxxxxxx & Knight,
Texas Counsel to the Administrative Agent
E-3 Form of Opinion of Xxxxxxx & Xxxxxxx,
Louisiana Counsel to the Administrative Agent
F Form of Closing Certificate
G Form of Assignment and Acceptance
H Form of Mortgage Amendment
I Form of Officer's Certificate
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 22, 1998,
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"), The Chase Manhattan
Bank, as administrative agent for the Lenders (in such capacity, the
"ADMINISTRATIVE AGENT"), Bankers Trust Company, as syndication agent (in such
capacity, the "SYNDICATION AGENT"), Chase Securities Inc., as advisor to the
Borrower (in such capacity, the "ADVISOR"), Chase Securities Inc., BT Alex.
Xxxxx Incorporated, Toronto Dominion (Texas), Inc. and Credit Lyonnais New York
Branch, as co-arrangers (each in such capacity, a "CO-ARRANGER"), and Toronto
Dominion (Texas), Inc. and Credit Lyonnais New York Branch, as co-documentation
agents (each in such capacity, a "CO-DOCUMENTATION AGENT").
W I T N E S S E T H:
WHEREAS, the Borrower is a party to the Credit Agreement, dated
as of November 5, 1997 (as heretofore amended or otherwise modified, the
"EXISTING CREDIT AGREEMENT"), with the lenders from time to time parties thereto
and The Chase Manhattan Bank, as administrative agent;
WHEREAS, pursuant to the Existing Credit Agreement, the lenders
parties thereto have agreed to make and have made certain loans and other
extensions of credit to or for the account of the Borrower;
WHEREAS, the Borrower, LOPI Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of the Borrower ("TMR-SUB"), Louisiana
Onshore Properties, Inc., a Delaware corporation ("LOPI"), and Shell Louisiana
Onshore Properties, Inc., a Delaware corporation and subsidiary of Shell Oil
Company, the parent company of LOPI ("SLOPI"), have entered into an Agreement
and Plan of Merger, dated March 27, 1998 (the "MERGER AGREEMENT");
WHEREAS, as contemplated by the Merger Agreement, TMR-Sub shall
merge with and into LOPI (the "LOPI MERGER") and each outstanding share of LOPI
common stock will be converted into the right to receive shares of the
Borrower's common stock and preferred stock on the terms set forth in the Merger
Agreement, whereupon LOPI will become a wholly-owned subsidiary of the Borrower;
WHEREAS, the Borrower and Shell Western E&P, Inc., a wholly-owned
subsidiary of Shell Oil Company ("SWEPI"), are currently negotiating an Asset
Purchase Agreement (the "ASSET PURCHASE AGREEMENT"), pursuant to which the
Borrower will purchase from SWEPI certain oil and gas properties (the "SWEPI
PURCHASE");
WHEREAS, in order to permit the consummation of the LOPI Merger
and the SWEPI Purchase and to increase the availability under the Ex isting
Credit Agreement upon the consummation of such transactions, the Borrower has
requested that the Existing Credit Agreement be amended and restated as provided
herein; and
WHEREAS, the Lenders and the other parties hereto wish to amend
and restate the Existing Credit Agreement as provided herein;
2
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereby agree that on the Closing
Date the Existing Credit Agreement shall be amended and restated in its entirety
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 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.
3
"ADVISOR": 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 Amended and Restated Credit Agreement, as
further amended, supplemented or otherwise modified from time to time.
"AMOCO": Amoco Production Company and its Affiliates.
"AMOCO BOND": a bond to be provided by the Borrower to secure
the Borrower's obligations to Amoco in the event that the Borrower's
appeal of the Amoco Litigation judgment is unsuccessful.
"AMOCO LITIGATION": the litigation described in the Borrower's
report on Form 10-K for the year ended December 31, 1997, under the
heading "Litigation."
"APPLICABLE MARGIN": (a) prior to the occurrence of the Shell
Transaction Completion Date, 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:
BORROWING BASE EURODOLLAR ABR
USAGE -------------- MARGIN MARGIN
----- -------- ------
Less than or equal to 1.25% .25%
33%
Greater than 33% and 1.50% .50%
less than or equal to
66%
Greater than 66% and 1.75% .75%
less than or equal to
85%
Greater than 85% 2.00% 1.00%;
(b) on and after the occurrence of the Shell Transaction
Completion Date, 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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BORROWING BASE EURODOLLAR ABR
USAGE -------------- MARGIN MARGIN
----- -------- ------
Less than or equal to 1.00% 0%
33%
Greater than 33% and 1.25% .25%
less than or equal to
66%
Greater than 66% 1.50% .50%
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.
"ASSET PURCHASE AGREEMENT": as defined in the Recitals to this
Agreement.
"ASSET PURCHASE DOCUMENTS": the collective reference to the
Asset Purchase Agreement and any other agreements, instruments or other
documents delivered in connection therewith, as amended, supplemented or
otherwise modified in accordance and with the terms of this Agreement.
"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 until the Borrowing Base is so redetermined in accordance
with subsection 4.9, the Borrowing Base shall be $150,000,000 or, upon
the occurrence of the Shell Transaction Completion Date, $200,000,000
(minus any redetermination previously made pursuant to the first
sentence of subsection 4.9(e)).
"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.
5
"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.
"CAIRN": Cairn Energy USA, Inc., a wholly-owned subsidiary of
the Borrower.
"CAIRN MERGER": the merger of C. Acquisition Corp. with and into
Cairn on November 5, 1997.
"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 Xxxxx'x 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
6
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. ss. 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": (a) any Person or "group" (within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended) (i) shall have acquired 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 (ii) shall obtain
the power (whether or not exercised) to elect a majority of the
Borrower's directors; or (b) the Board of Directors of the Borrower
shall not consist of a majority of Continuing Directors, PROVIDED that
the consummation of the LOPI Merger in accordance with the terms of the
Merger Agreement and the other transactions expressly contemplated by
the Merger Agreement or the Stock Rights and Restrictions Agreement
shall not be deemed to result in a "Change of Control" under clause
(a)(i) above; "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.
"CO-ARRANGERS": as defined in the Preamble to this Agreement.
"CO-DOCUMENTATION AGENTS": as defined in the Preambe to this
Agreement.
"CODE": the Internal Revenue Code of 1986, as amended from time
to time.
"COMMITMENT FEE RATE": (a) prior to the occurrence of the Shell
Transaction Completion Date, for any day, a rate per annum equal to (i)
.375% if
7
the Borrowing Base Usage in effect on such day is less than or equal to
66% and (ii) .500% if the Borrowing Base Usage in effect on such day is
greater than 66% and (b) on and after the occurrence of the Shell
Transaction Completion Date, for any day, a rate per annum equal to (i)
.300% if the Borrowing Base Usage in effect on such day is less than or
equal to 33% and (ii) .375% if the Borrowing Base Usage in effect on
such day is greater than 33%.
"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.
"COMMITMENTS": the collective reference to the Revolving Credit
Commitments and the L/C Commitment.
"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 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.
8
"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 $15,000,000 to the
extent such amounts have resulted in a decrease in shareholders' equity
from the amount of shareholders' equity that would have existed had no
such payment or charge occurred.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONTROL": the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by
contract or otherwise.
"DEFAULT": any of the events specified in Section 8, whether or
not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"DISPOSITION": as defined under the definition of
Redetermination Event.
"DISQUALIFIED STOCK": means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible or for
which it is exchangeable) or upon the happening of any event, matures or
is mandatorily redeemable for any consideration other than Capital
Stock, pursuant to a sinking fund obligation or otherwise, is
convertible or is exchangeable for Indebtedness or Disqualified Stock or
redeemable for any consideration other than Capital Stock at the option
of the holder thereof, in whole or in part on or prior to the date that
is one year after the earlier of (x) the Termination Date or (y) the
date on which there are no Loans or other obligations hereunder
outstanding and the Commitments are terminated.
"DOLLARS" and "$": 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 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 (including without limitation,
non-cash charges and expenses relating to full cost ceiling write-downs)
during that period, (f) transaction fees and expenses relating to the
Cairn Merger and the Shell Transactions and (g) any amounts paid in
respect of the Amoco Litigation up to $15,000,000, and MINUS, to the
extent added to revenues in determining
9
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).
10
"EURODOLLAR LOANS": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"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.
"EXISTING CREDIT AGREEMENT": as defined in the Recitals to this
Agreement.
"EXISTING LETTERS OF CREDIT": as defined in subsection 3.1(a).
"EXISTING MORTGAGE": the collective reference to 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, attached hereto as Exhibit D.
"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 Amended and Restated Guarantee
Agreement to be executed and delivered by each Guarantor 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,
11
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
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.
12
"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; PROVIDED, that for the purposes of subsection 8.1(b)
only, the definition of Indebtedness shall not include the obligations
described in clause (e) above.
"INITIAL PERIOD": the period commencing on the Closing Date and
ending on the earlier of (a) October 1, 1998 and (b) the Shell
Transaction Completion Date.
"INITIAL SCHEDULED BORROWING BASE REDETERMINATION": the first
scheduled redetermination of the Borrowing Base, pursuant to subsection
4.9, which occurs following the delivery by the Borrower to the
Administrative Agent of the Reserve Report dated as of June 30, 1998.
"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 June 30, 1998 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.
13
"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;
(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.
14
"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), but excluding set-off
arrangements under Hedging Agreements.
"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.
"LOPI": as defined in the Recitals to this Agreement.
"LOPI MERGER": as defined in the Recitals to this Agreement.
15
"MAKE-WHOLE PAYMENTS": the payments by the Borrower in cash or
shares of Common Stock made in accordance with the provisions of the
Stock Rights and Restrictions Agreement.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, assets, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole, (b) the
ability of the Borrower or any of the other Loan Parties to perform
their respective obligations under the Loan Documents, or (c) 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 (and $5,000,000 after the occurrence of the Shell
Transaction Completion Date) 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 AGREEMENT": as defined in the Recitals 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.
"MORTGAGE AMENDMENT": the Mortgage Amendment, substantially in
the form of Exhibit H, to be entered into on the Closing Date to amend
the Existing Mortgage.
"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 Existing Mortgage, as amended
by the Mortgage Amendment, 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.
16
"NET PROCEEDS": means with respect to any Redetermination Event
or the sale or Disposition of the Pennsylvania Properties, 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 or such sale or Disposition of the Pennsylvania
Properties, 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
or such sale or Disposition of the Pennsylvania Properties, as the case
may be.
"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
17
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 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.
"PENNSYLVANIA PROPERTIES": Oil and Gas Properties of the
Borrower described on Schedule 8.6 attached hereto.
"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
18
(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 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 Amended and Restated Pledge Agreement to
be executed and delivered by each of the Loan Parties, 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.
19
"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.
"PREFERRED STOCK": the preferred stock to be issued pursuant to
the terms and conditions of the Merger Agreement.
"PREFERRED STOCK DESIGNATION": the Certificate of Designation
dated March 27, 1998 describing the terms and conditions of the
Preferred Stock.
"PRELIMINARY PRO FORMA BALANCE SHEET": the unaudited PRO FORMA
combined balance sheet of the Borrower and its consolidated Subsidiaries
as at December 31, 1997 (including the notes thereto), giving effect (as
if such events had occurred on such date) to the consummation of the
LOPI Merger and the SWEPI Purchase and the payment of the fees and
expenses incurred in connection therewith that is included in the
Confidential Information Memorandum of the Borrower dated April 1998.
"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 for cash, 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 "DISPOSITION"), in one transaction or a
series of transactions, of any Oil and Gas Properties (other than the
Pennsylvania 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
20
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.
"REGISTER": as defined in subsection 11.6(d).
"REGISTRATION RIGHTS AGREEMENT": the Registration Rights
Agreement, substantially in the form attached to the Merger Agreement,
to be entered into by the Borrower and SLOPI in connection with the LOPI
Merger.
"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. ss. 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, 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 with
respect to the Oil and Gas Properties of the Borrower and its
Subsidiaries (a) for all reserve reports as of December 31, prepared by
the Borrower and audited by Xxxxx Xxxxx Company or another independent
engineering firm selected by the Borrower and reasonably acceptable to
the Administrative Agent and (b) for all other reports, prepared by
engineers employed by the Borrower and certified by a Responsible
Officer of the Borrower.
21
"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, shall equal $150,000,000 in the aggregate
or, upon occurrence of the Shell Transaction Completion Date,
$250,000,000), 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).
"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.
"SHELL PROPERTIES": the oil and gas properties to be acquired by
the Borrower in the Shell Transactions.
"SHELL TRANSACTIONS": the LOPI Merger and the separate SWEPI
Purchase, and the transactions contemplated by the Merger Agreement, the
Asset Purchase Agreement, the Stock Rights and Restrictions Agreement,
the Registration Rights Agreement and the Preferred Stock Designation.
"SHELL TRANSACTION COMPLETION DATE": the date on which the
conditions set forth in subsection 6.3 shall have been satisfied;
PROVIDED that such date is no later than November 2, 1998.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"SLOPI": as defined in the Recitals to this Agreement.
"SOUTHWEST HOLMWOOD PROPERTIES": those properties described on
Schedule 1.1(e).
"STOCK RIGHTS AND RESTRICTIONS AGREEMENT": the Stock Rights and
Restrictions Agreement, substantially in the form attached to the Merger
Agreement, to be entered into by the Borrower and SLOPI pursuant to the
terms of the Merger Agreement.
22
"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.
"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%.
"SWEPI": as defined in the Recitals to this Agreement.
"SWEPI PURCHASE": as defined in the Recitals to this Agreement.
"SYNDICATION AGENT": as defined in the Preamble to this
Agreement.
"TERMINATION DATE": the date which is the fifth anniversary of
the Closing Date.
"TMR-SUB": as defined in the Recitals to this Agreement.
"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.
23
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.
(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.
24
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 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
25
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) Pursuant to the Existing Credit
Agreement, the Issuing Lenders specified on Schedule 3.1 have issued the letters
of credit described on Schedule 3.1 (the "EXISTING LETTERS OF CREDIT"), which
from and after the Closing Date shall continue to be "Letters of Credit"
hereunder. 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 (together with the Existing Letters of Credit,
the "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
$15,000,000 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 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
26
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 (or in the case of the Existing Letters of Credit, to the extent such
commissions have not already been paid, from the Closing Date) 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 June 30, 1998, 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.
(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 Closing Date in
respect of Existing Letters of Credit, and effective on the date of issuance of
each Letter of Credit issued after the Closing Date, 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
27
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 required to be returned by the
Issuing Lender, such Participating Lender shall return
28
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
29
Letter of Credit is inconsistent with the provisions of this Section 3, the
provisions of this Section 3 shall prevail.
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).
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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 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.
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(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 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
32
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 June 30, 1998) and on the 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 April 4, 1998, among the Borrower,
Chase and Chase Securities Inc., and the fees set forth in the fee letter
agreement, dated April 4, 1998, between the Borrower and BT Alex.Xxxxx
Incorporated, in each case 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,
33
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
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) BORROWING BASE. (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
34
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 $150,000,000, 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) subject to the last
sentence hereof, after receipt by the Administrative Agent of each scheduled
Reserve Report, commencing with the Reserve Report as of June 30, 1998, (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
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
redetermination of the Borrowing Base, each Lender shall notify the
35
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). The Borrowing Base shall be
redetermined within 45 days after the furnishing of each Reserve Report, subject
to the provisions of this paragraph (c); PROVIDED that the Initial Scheduled
Borrowing Base Redetermination shall become effective within 10 Business Days
following October 1, 1998, unless the Shell Transaction Completion Date shall
have occurred prior to such date, in which case the next sentence shall be
applicable. Notwithstanding anything in this subsection 4.9(c) to the contrary,
(i) upon the occurrence of the Shell Transaction Completion Date, the Borrowing
Base shall be $200,000,000 (minus any redetermination previously made pursuant
to the first sentence of subsection 4.9(e)) and the next scheduled
Redetermination Date shall be effective no later than April 15, 1999 and shall
be based on the December 31, 1998 Reserve Report to be delivered on or prior to
March 1, 1999 and (ii) if the Shell Transaction Completion Date occurs prior to
the effectiveness of the Initial Scheduled Borrowing Base Redetermination, such
Initial Scheduled Borrowing Base Redetermination shall not become effective.
(d) CRITERIA. (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) Subject to the last sentence in clause (c) of this
subsection 4.9, 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 a date within 10 Business Days after October 1, 1998 unless the Shell
Transaction Completion Date shall have occurred prior to such date.
36
(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.
(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) TITLE. 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 pursuant to subsection 4.9(c) other than in connection with
the issuance of Subordinated Indebtedness provided for in subsection 8.2(f), 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 at least 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 (including as a result of a
redetermination in connection with the incurrence of Subordinated Indebtedness
provided for in subsection 8.2(f)), 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
37
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 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.
38
(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.
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
39
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 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
40
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 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 that:
5.1 FINANCIAL CONDITION. (a) The restated consolidated balance
sheets of the Borrower and its consolidated Subsidiaries at December 31, 1996
and December
41
31, 1997 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 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) All such financial statements referred to in subsection
5.1(a), 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, 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 in the
notes thereto to the extent required by GAAP or (ii) in the case of the Amoco
Litigation, does not exceed $15,000,000.
5.2 NO CHANGE. (a) Since December 31, 1997, 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 $15,000,000 in connection with the Amoco Litigation, in
and of itself, and any change in non-cash charges or expenses accrued by the
Borrower to meet ceiling test levels in conformity with Securities and Exchange
Commission Regulation S-X article 4-10(C)(4), in and of itself, shall not be
deemed to be a violation of this subsection 5.2(a)), and (b) during the period
from January 1, 1998 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,
42
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 $15,000,000 in connection with the Amoco
Litigation, in and of itself, shall not be deemed to be a violation of this
subsection 5.6.
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 $15,000,000 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.
43
(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 report of the Borrower on Form 10-K for the year ended December 31, 1997, as
filed with the Securities and Exchange Commission, 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 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 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,
44
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 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 U-1 referred
to in said Regulation U.
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 LOPI 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 certain indebtedness of the Borrower,
and to pay fees and expenses related to the Shell Transactions 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 liability in excess of a Material
Environmental Amount
45
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
46
Borrower's report on Form 10-K for the year ended December 31, 1997, as filed
with the Securities and Exchange Commission) 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 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 Confidential Information Memorandum of the Borrower dated April 1998, a copy
of which has been provided by the Borrower to each of the Lenders prior to the
date hereof), 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.
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; 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.
47
(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 in the mortgaged property described therein. Such
Mortgages have been recorded in the appropriate recording office and 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 (and $1,000,000 after the
occurrence of the Shell Transaction Completion Date) in the aggregate.
5.22 YEAR 2000 MATTERS. Any reprogramming required to permit the
proper functioning (but only to the extent that such proper functioning would
otherwise be impaired by the occurrence of the year 2000) in and following the
year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the Borrower or any of its
Subsidiaries or used or relied upon in the conduct of their business, and the
testing of all such systems and other equipment as so reprogrammed, will be
completed by January 1, 1999, except for such failures to reprogram as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The costs to the Borrower and its Subsidiaries that have not
been incurred as of the date hereof for such reprogramming and testing and for
the other reasonably foreseeable consequences to them of any improper
functioning of other computer systems and equipment containing embedded
microchips due to the occurrence of the year 2000 would not reasonably be
expected to result in a Default or Event of Default or to have a Material
Adverse Effect.
SECTION 6. CONDITIONS PRECEDENT
6.1 CONDITIONS TO CLOSING DATE. This Agreement shall become
effective upon, and the Closing Date shall occur upon satisfaction 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 Mortgage
Amendment, executed and delivered by a duly authorized officer of each
Loan Party thereto.
(b) CLOSING 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.
(c) CORPORATE PROCEEDINGS OF THE LOAN PARTIES. The Administrative
Agent shall have received (with the number of original counterparts
requested
48
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.
(d) 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.
(e) 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
Closing Date as complete and correct copies thereof by the Secretary or
an Assistant Secretary of such Loan Party.
(f) 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 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 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.
(g) FEES. The Lenders, the Administrative Agent, the
Co-Arrangers, the Co-Documentation Agents and the Syndication Agent
shall have received all fees and expenses required to be paid on or
before the Closing Date for which invoices have been presented.
(h) LEGAL OPINIONS. (i) The Administrative Agent shall have
received the executed legal opinion of Fulbright & Xxxxxxxx
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 Xxxxxxxx & Knight, Texas counsel to the
Administrative Agent, substantially in the form of Exhibit E-2.
49
(iii) The Administrative Agent shall have received the
executed legal opinion of Xxxxxxx & Xxxxxxx, 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.
(i) 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).
(j) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on such date.
(k) 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).
(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
50
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.
6.3 CONDITIONS TO OCCURRENCE OF SHELL TRANSACTION COMPLETION
DATE. The Shell Transaction Completion Date shall be deemed to occur on the date
that the following conditions have been satisfied:
(a) RELATED AGREEMENTS. The Administrative Agent shall have
received true and correct copies, certified as to authenticity by the
Borrower, of the Merger Documents, the Asset Purchase Documents and such
other documents or instruments as may be reasonably requested by the
Administrative Agent, each in form and substance reasonably satisfactory
to the Administrative Agent and the Required Lenders.
(b) CONSENTS, LICENSES AND APPROVALS. All governmental and third
party approvals (including consents) necessary or, in the reasonable
discretion of the Administrative Agent, advisable in connection with the
LOPI Merger 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, to the knowledge of the Borrower, threatened by any
competent authority which would restrain, prevent or otherwise impose
adverse conditions on the LOPI Merger and the transactions contemplated
thereby.
(c) MERGER AND PURCHASE. The LOPI Merger and the SWEPI Purchase
shall have been consummated in accordance with the applicable law, the
Merger Documents, the Asset Purchase Documents and all related
documentation on terms acceptable to the Required Lenders and the
Administrative Agent and the capital, corporate and ownership structures
of the Loan Parties, after giving effect to the LOPI Merger and the
SWEPI Purchase, shall be satisfactory to the Required Lenders and the
Adminstrative Agent. None of the material conditions to the obligations
of any of the parties to the Merger Agreement to consummate the LOPI
Merger or the Asset Purchase Agreement to consummate the SWEPI Purchase
shall have been waived, and no material provision of the Merger
Agreement or the Asset Purchase Agreement shall have been amended,
supplemented or otherwise modified, without the prior written consent of
the Administrative Agent, which consent may not be unreasonably
withheld.
(d) COLLATERAL GUARANTEE. All actions required by subsection 7.9
in respect of all Subsidiaries acquired pursuant to the Merger Agreement
(including delivery of legal opinions with respect thereto as provided
in subsection 7.9) shall have been taken so that such Subsidiaries are
parties to the Guarantee Agreement and the Capital Stock of such Person
owned by the Borrower or any Subsidiary is pledged to the Administrative
Agent for the ratable benefit of the Lenders.
51
(e) OFFICER'S CERTIFICATE. The Administrative Agent shall have
received a certificate of the Borrower, dated the proposed Shell
Transaction Completion Date, substantially in the form of Exhibit I,
certifying, among other things certain of the matters set forth in this
subsection 6.3.
(f) CORPORATE PROCEEDINGS OF THE LOAN PARTIES. The Administrative
Agent shall have received (with the number of certified 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 LOPI and each of its Subsidiaries authorizing (i)
the execution, delivery and performance of the Loan Documents to which
it is a party and (ii) the granting by it of the Liens created pursuant
to the Loan Documents, certified by the Secretary or an Assistant
Secretary of such party as of the Shell Transaction Completion 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.
(g) LOAN PARTY INCUMBENCY CERTIFICATES. The Administrative Agent
shall have received (with the number of certified counterparts requested
by the Administrative Agent), a certificate of each of LOPI and its
Subsidiaries, dated the Shell Transaction Completion Date, as to the
incumbency and signature of the officers of such 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 party.
(h) 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 LOPI and each of its Subsidiaries that is a
party to a Loan Document, certified as of the proposed Shell Transaction
Completion Date as complete and correct copies thereof by the Secretary
or an Assistant Secretary of such party.
(i) REPAYMENT OF INDEBTEDNESS. All outstanding Indebtedness of
LOPI and its subsidiaries shall have been repaid in full.
(j) PRO FORMA BALANCE SHEET. The Administrative Agent shall have
received (with a copy for each Lender) copies of the unaudited PRO FORMA
combined balance sheet of the Borrower and its consolidated Subsidiaries
as at December 31, 1997 (including the notes thereto), giving effect (as
if such events had occurred on such date) to the consummation of the
LOPI Merger and the SWEPI Purchase and the payment of the fees and
expenses incurred in connection therewith that was included in the proxy
statement mailed by the Borrower to the Borrower's shareholders relating
to the meeting of such stockholders to be held in connection with the
issuance of capital stock pursuant to the Merger Agreement and such
balance sheet shall not, in the reasonable determination of the
Administrative Agent and the Required Lenders, contain any material
difference from the Preliminary Pro Forma Balance Sheet (it being agreed
that any change in non-cash charges or expenses accrued by the Borrower
to meet ceiling test levels in conformity with Securities and Exchange
Commission Regulation S-X article 4-10(c)(4) shall not be deemed to
constitute such a material difference).
52
(k) FEES. The Lenders, the Administrative Agent, the Co-Arrangers
and the Syndication Agent shall have received all fees and expenses
required to be paid on or before the Shell Transaction Closing Date.
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);
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;
53
(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 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
54
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 (and
$3,000,000 after the occurrence of the Shell Transaction Completion
Date) 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 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
55
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 LOPI 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
56
satisfactory to the Administrative Agent, (ii) 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
57
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.
(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 xxxxx 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
xxxxx 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 xxxxx.
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
(commencing September 30, 1998) the ratio of EBITDA to Consolidated Interest
Expense of the
58
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
(commencing September 30, 1998), 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 the sum of
(i) $100,000,000 plus (ii) amounts accrued in the shareholders' equity section
of the Borrower's balance sheet, on account of the issuance by the Borrower to
Shell Oil Company or its Affiliates of shares of Common Stock, and Preferred
Stock upon the closing of the transactions contemplated in the Merger Agreement
minus (iii) any non-cash charges or expenses accrued by Borrower to meet ceiling
test levels in conformity with Securities and Exchange Commission Regulation S-X
article 4-10(c)(4) and minus (iv) all other non-cash charges or expenses accrued
by Borrower as a result of the Shell Transactions.
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;
59
(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;
(h) Indebtedness of the Borrower in a principal amount of up to
$15,000,000 under the Amoco Bond;
(i) Indebtedness for Make-Whole Payments accruing on or after the
Shell Transaction Completion Date in connection with the consummation of
the Shell Transactions, provided such payments are made in accordance
with the terms of the Merger Agreement and the Stock Rights and
Restrictions Agreement and do not exceed $10,000,000 in the aggregate in
cash and/or an unlimited amount in Common Stock; and
(j) 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 (and $10,000,000 after the occurrence of the Shell
Trnasaction Completion Date) 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:
(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;
60
(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;
(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;
61
(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;
(p) Liens described in subsection 5.8(b); and
62
(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 (and $5,000,000
after the occurrence of the Shell Transaction Completion Date) 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 (other than the LOPI Merger consummated on the
terms set forth in the Merger Agreement) 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
63
limitation, receivables and leasehold interests), whether now owned or hereafter
acquired, or issue or sell any shares of the Borrower's Disqualified Stock
(other than Preferred Stock issued pursuant to the Merger Agreement) or such
Subsidiary's Capital Stock to any Person other than the Borrower or any domestic
Wholly-Owned Subsidiary, except:
(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 subsections 4.9 and 4.10 and (ii)
after the Initial Period, the aggregate value (determined by reference
to the most recent Reserve Report) of all Oil and Gas Properties (other
than the Pennsylvania 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 $5,000,000 after the occurrence of the Shell Transaction
Completion Date);
(e) the sale or other Disposition of the Pennsylvania Properties,
PROVIDED that 100% of the Net Proceeds of such sale or Disposition shall
be applied within three Business Days after the receipt of such Net
Proceeds toward the prepayment of the Loans;
(f) 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
subsections 4.9 and 4.10; and
(g) Dispositions of Oil and Gas Properties not constituting
Proved Reserves 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.
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:
64
(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, (iv) on or after the Shell Transaction Completion Date, the
Borrower may pay dividends on the Preferred Stock and (v) 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 (and $2,000,000 after the Shell Transaction
Completion Date) in the aggregate is expended for such purpose during
any fiscal year of the Borrower.
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 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 (and $1,000,000 after the
occurrence of the Shell Transaction Completion Date) 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) (i) Investments constituting Permitted Business Investments
constituting Dispositions of Oil and Gas Properties which are not Proved
65
Reserves in connection with the farm-out of such Oil and Gas Properties
pursuant to farm-out agreements entered into in the ordinary course of
business of the Borrower and its Subsidiaries, and (ii) other
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 (and $5,000,000 after the occurrence of the Shell Transaction
Completion Date) 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 (and
$10,000,000 after the occurrence of the Shell Transaction Completion
Date);
(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
(and $10,000,000 after the occurrence of the Shell Transaction
Completion Date) 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, (iv) subsection 8.5 or (v) subsection 8.16, as applicable;
(j) Investments in joint ventures made pursuant to exploration
and development activity in the ordinary course of business of the
Borrower and its Subsidiaries to the extent that the Borrower's or a
Subsidiary's Investment therein is limited to the contribution by the
Borrower or such Subsidiary of (i) Oil and Gas Properties which are not
Proved Reserves and (ii) seismic data to the extent that an interest is
retained in such data by the Borrower or its Subsidiaries;
(k) Investments made in LOPI pursuant to the Merger Agreement and
assets purchased pursuant to the Asset Purchase Agreement; and
(l) Investments not otherwise permitted hereunder in an amount at
any time not in excess of $1,000,000 (and $2,500,000 after the
occurrence of the Shell Transaction Completion Date).
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
66
under this Agreement and Make-Whole Payments permitted under subsection 8.2(i))
which has an aggregate principal amount in excess of $2,500,000 (and $5,000,000
after the occurrence of the Shell Transaction Completion Date) 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 (including,
without limitation, the Preferred Stock Designation) or bylaws of the Borrower,
unless such amendment or modification is immaterial to the interests of the
Lenders.
(c) Amend, modify or change in any material respect the terms of
any of the Merger Agreement, the Stock Rights and Restrictions Agreement or the
Registration Rights Agreement.
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 or, if the Shell Transaction Completion
Date has occurred, is expressly contemplated by the Stock Rights and Resolution
Agreement, Registration Rights Agreement and Preferred Stock Designation, (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.
67
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 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 (and $5,000,000 after the
occurrence of the Shell Transaction Completion Date).
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
subsection 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
68
(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
(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 (and $4,000,000 after the occurrence of the Shell Transaction
Completion Date); 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 (and $4,000,000 after the occurrence of the Shell
Transaction Completion Date); 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
69
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 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 (and
$2,000,000 after the occurrence of the Shell Transaction Completion
Date) 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
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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.
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
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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 ADMINISTRATIVE AGENT; OTHERS
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
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
72
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 deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness
73
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
74
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.
10.11 OTHERS. None of the Advisor, the Syndication Agent, the
Co-Arrangers and the Co-Documentation Agents, in such respective capacities,
shall have any duties or responsibilities, or incur any liabilities, under this
Agreement or the other Loan Documents.
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
75
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:
The Borrower: The Meridian Resource Corporation
00000 X. Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Fax: (000)-000-0000
The Administrative
Agent: The Chase Manhattan Bank
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx and Xxxx Xx Xxxxxxxx
Fax: (000) 000-0000
With a copy to:
Chase Manhattan Bank Agency Services
Xxx Xxxxx Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
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.
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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, 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
77
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
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
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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 $10,000,000 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 subsection 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 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.
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(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 subsection 9(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other
80
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.
81
11.12 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby
irrevocably and unconditionally:
(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 xxx 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.
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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 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,
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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/ XXXXXX X. XXXXXX, XX.
Title: Authorized Signatory
THE CHASE MANHATTAN BANK, as
Administrative Agent, Issuing
Lender and as a Lender
By: /s/ AUTHORIZED SIGNATORY
Title:
BANKERS TRUST COMPANY, as
Syndication Agent
By: /s/ AUTHORIZED SIGNATORY
Title:
CHASE SECURITIES INC., as
Advisor and Co-Arranger
By: /s/ AUTHORIZED SIGNATORY
Title:
BT ALEX.XXXXX INCORPORATED, as
Co-Arranger
By: /s/ AUTHORIZED SIGNATORY
Title:
TORONTO DOMINION (TEXAS),
INC., as Co-Arranger, Co-
Documentation Agent and as a
Lender
By: /s/ AUTHORIZED SIGNATORY
Title:
85
CIBC Inc.
By: /s/ AUTHORIZED SIGNATORY
Title:
Mees Pierson, N.V.
By: /s/ AUTHORIZED SIGNATORY
Title:
The Sanwa Bank, Limited
By: /s/ AUTHORIZED SIGNATORY
Title:
Societe Generale, Southwest
Agency
By: /s/ AUTHORIZED SIGNATORY
Title:
The Fuji Bank, Limited
By: /s/ AUTHORIZED SIGNATORY
Title:
NationsBank, N.A.
By: /s/ AUTHORIZED SIGNATORY
Title:
86
CREDIT LYONNAIS NEW YORK
BRANCH, as Co-Arranger, Co-
Documentation Agent and as a
Lender
By: /s/ AUTHORIZED SIGNATORY
Title:
87
Schedule 1.1(a) Commitments
LENDER COMMITMENT COMMITMENT ON
PRIOR TO THE SHELL AND AFTER THE
TRANSACTION SHELL
COMPLETION DATE TRANSACTION
($MM) COMPLETION DATE
($MM)
------------------------------------ ------------------- -------------------
The Chase Manhattan Bank $18,000,000 $30,000,000
Bankers Trust Company $18,000,000 $30,000,000
Credit Lyonnais New York Branch $18,000,000 $30,000,000
Toronto Dominion $18,000,000 $30,000,000
CIBC Xxxxxxxxxxx Corp. $15,000,000 $25,000,000
MeesPierson, N.V. $15,000,000 $25,000,000
The Sanwa Bank, Limited $15,000,000 $25,000,000
Societe Generale, Southwest Agency $15,000,000 $25,000,000
The Fuji Bank, Limited $9,000,000 $15,000,000
NationsBank, N.A. $9,000,000 $15,000,000
TOTAL $150,000,000 $250,000,000
