Exhibit 10.1
Execution Copy
CREDIT AGREEMENT
DEVON ENERGY CORPORATION
and
DEVON ENERGY CORPORATION (NEVADA),
as Borrowers,
NATIONSBANK, N.A.
as Agent,
and
CERTAIN FINANCIAL INSTITUTIONS
as Lenders
$200,000,000 (U.S.)
May 15, 1998
CREDIT AGREEMENT
Table of Contents
Page
ARTICLE I -- Definitions and References 1
Section 1.1. Defined Terms 1
Section 1.2. Exhibits and Schedules; Additional Definitions
10
Section 1.3. Amendment of Defined Instruments 10
Section 1.4. References and Titles 10
Section 1.5. Calculations and Determinations 11
ARTICLE II -- The Loans 11
Section 2.1. Loans 11
Section 2.2. Requests for Advances 11
Section 2.3. Proportionate and Disproportionate Loans 12
Section 2.4. Cancellation of Old Agreement 13
Section 2.5. Use of Proceeds 14
Section 2.6. Rate Elections 14
Section 2.7. Advances Constituting Offered Rate Portions 15
Section 2.8. Fees 16
Section 2.9. Optional Prepayments 16
Section 2.10. Mandatory Prepayments 16
Section 2.11. Payments to Lenders 17
Section 2.12. Increased Cost of Fixed Rate Portions 17
Section 2.13. Change of Law 18
Section 2.14. Funding Losses 18
Section 2.15. Reimbursable Taxes; Capital Adequacy 19
ARTICLE II-A -- Letters of Credit 20
Section 2A.1. Letters of Credit 20
Section 2A.2. Requesting Letters of Credit 21
Section 2A.3. Reimbursement and Participations 21
Section 2A.4. Letter of Credit Fees 22
Section 2A.5. No Duty to Inquire 23
Section 2A.6. LC Collateral 23
ARTICLE III -- Conditions Precedent to Lending 25
Section 3.1. Documents to be Delivered 25
Section 3.2. Additional Conditions Precedent 25
ARTICLE IV -- Representations and Warranties 26
Section 4.1. Borrowers' Representations and Warranties 26
Section 4.2. Representation by Lenders 29
ARTICLE V -- Covenants of Borrowers 29
Section 5.1. Affirmative Covenants 29
Section 5.2. Negative Covenants 33
ARTICLE VI -- Guaranties and Offset 39
Section 6.1. Bank Accounts; Offset 39
Section 6.2. Guaranties of Subsidiaries 39
Section 6.3. Guarantors' Right of Setoff 40
ARTICLE VII -- Events of Default and Remedies 40
Section 7.1. Events of Default 40
Section 7.2. Remedies 42
ARTICLE VIII -- Agent 42
Section 8.1. Appointment and Authority 42
Section 8.2. Agent's Reliance, Etc. 43
Section 8.3. Lenders' Credit Decisions 43
Section 8.4. Indemnification 43
Section 8.5. Rights as Lender 44
Section 8.6. Sharing of Set-Offs and Other Payments 44
Section 8.7. Investments 45
Section 8.8. Benefit of Article VIII 45
Section 8.9. Resignation 45
ARTICLE IX -- Miscellaneous 45
Section 9.1. Waivers and Amendments; Acknowledgements 45
Section 9.2. Survival of Agreements; Cumulative Nature 47
Section 9.3. Notices 47
Section 9.4. Joint and Several Liability; Parties in
Interest; Purchases of Notes 47
Section 9.5. Governing Law; Waiver of Jury Trial; Etc. 48
Section 9.6. Limitation on Interest 49
Section 9.7. Optional Termination 50
Section 9.8. Severability 50
Section 9.9. Counterparts 50
LIST OF SCHEDULES AND EXHIBITS
Schedule 1 - Disclosure Schedule
Exhibit A -- Promissory Note
Exhibit B -- Request for Advances
Exhibit C -- Rate Election
Exhibit D -- Officer's Certificate Accompanying Financial
Statements
Exhibit E -- Opinion of McAfee & Xxxx, A Professional Corporation
Counsel for Borrowers and DBC
Exhibit F -- Notice of Final Agreement
Exhibit G -- Letter of Credit Application and Agreement
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of the 15th day of May,
1998, by and among Devon Energy Corporation, an Oklahoma
corporation ("Parent"), and Devon Energy Corporation (Nevada), a
Nevada corporation ("Devon Nevada"), as Borrowers (Parent and
Devon Nevada each individually a "Borrower", and collectively,
"Borrowers"), NationsBank, N.A., a national banking association,
as Agent ("Agent"), and the financial institutions named below,
as Lenders ("Lenders"). In consideration of the mutual covenants
and agreements contained herein the parties hereto agree as
follows:
ARTICLE I -- Definitions and References
Section 1.1. Defined Terms. As used in this Agreement,
each of the following terms has the meaning given it in this
Section 1.1 or in the sections and subsections referred to below:
"Adjusted Eurodollar Rate" means, with respect to each
particular Eurodollar Portion of a Loan and the associated
Eurodollar Rate and Reserve Percentage, the rate per annum
calculated by Agent (rounded upwards, if necessary, to the next
higher 0.01%) determined on a daily basis pursuant to the
following formula:
Adjusted Eurodollar Rate =
Eurodollar Rate + Euro Margin
100.0% - Reserve Percentage
Such Adjusted Eurodollar Rate shall change as the Euro Margin and
the associated Reserve Percentage change.
"Advance" means an advance under Section 2.1 or 2.7(a).
"Affiliate" means, as to any Person, each other Person that
directly or indirectly (through one or more intermediaries or
otherwise) controls, is controlled by, or is under common control
with, such Person.
"Agent" means NationsBank, N.A., as Agent hereunder and as
issuer of Letters of Credit hereunder, and its successors in such
capacity.
"Agreement" means this Credit Agreement.
"Authorized Officer" means, with respect to any act to be
performed or duty to be discharged by or on behalf of any Person
who is not an individual, any officer, agent or representative
thereof who is at the time in question authorized to perform such
act or discharge such duty on behalf of such Person.
"Borrower's Rating" means from time to time the rating set
forth in the fourth column of the following table, based upon the
rating (or its then equivalent) at such time given by at least
two Rating Agencies as set forth in the first three columns
below, to Borrower's non-credit enhanced, senior unsecured long-
term debt securities:
S&P Moody's Duff & Xxxxxx
Rating Rating Rating Borrower's Rating
BBB+ or higher Baa1 or higher BBB+ or higher BBB+/Baa1
BBB or higher Baa2 or higher BBB or higher BBB/Baa2
BBB- or higher Baa3 or higher BBB- or higher BBB-/Baa3
lower than BBB- lower than Baa3 lower than BBB- Non-Investment
"Base Rate" means the per annum rate of interest equal to
Agent's Prime Rate. As used in this paragraph, Agent's "Prime
Rate" means the rate of interest established by Agent from time
to time as its "prime rate". Such rate is set by Agent as a
general reference rate of interest, taking into account such
factors as it may deem appropriate, it being understood that many
of Agent's commercial or other loans are priced in relation to
such rate, that it is not necessarily the lowest or the best rate
actually charged to any customer, that it may not correspond with
further increases or decreases in interest rates charged by other
lenders or market rates in general and that Agent may make
various commercial or other loans at rates of interest having no
relationship to such rate. If Agent's Prime Rate changes after
the date hereof the Base Rate shall be automatically increased or
decreased, as the case may be, without notice to Borrower from
time to time as of the effective time of each change in Agent's
Prime Rate.
"Base Rate Portion" means that portion of the unpaid
principal balance of any Loan which is not made up of Fixed Rate
Portions.
"Basis Point" means one one-hundredth of one percent (0.01%)
"Borrower" means each of Parent and Devon Nevada, and
"Borrowers" means, collectively, each Borrower.
"Business Day" means a day on which commercial banks are
open for business with the public in Dallas, Texas. Any Business
Day in any way relating to Eurodollar Portions (such as the day
on which a Eurodollar Interest Period begins or ends) must also
be a day on which, in the judgment of Agent, significant
transactions in dollars are carried out in the interbank
eurocurrency market.
"Canadian Facility" means an unsecured revolving credit
facility, between Devon Canada as borrower and one or more
lenders in an aggregate amount not to exceed U.S. $50,000,000,
and any unsecured guaranty by Borrowers and/or Guarantors,
guaranteeing such facility.
"Commitment Period" means the period from and including the
date on which the Notes are delivered and accepted as
contemplated in Section 2.4 until and including April 30, 2003
(or any date on which the Notes otherwise become due and payable
in full as provided in the Loan Documents).
"Consolidated" refers to the consolidation of any Person, in
accordance with GAAP, with its properly consolidated
subsidiaries. References herein to a Person's Consolidated
financial statements, financial position, financial condition,
liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of
such Person and its properly consolidated subsidiaries.
"DBC" means DBC, Inc., an Oklahoma corporation.
"Debt" means, as to any Person, all indebtedness,
liabilities and obligations of such Person, whether matured or
unmatured, liquidated or unliquidated, primary or secondary,
direct or indirect, absolute, fixed or contingent, and whether or
not required to be considered pursuant to GAAP.
"Default" means any Event of Default and any default, event
or condition which would, with the giving of any requisite
notices and the passage of any requisite periods of time,
constitute an Event of Default.
"Devon Canada" means Devon Energy Canada Corporation and
Devon Energy Canada Holding Corporation, each a Canadian
corporation organized under the laws of Alberta.
"Devon Nevada" means Devon Energy Corporation (Nevada), a
Nevada corporation.
"Devon Trust" means Devon Financing Trust, a statutory
business trust formed under the laws of the State of Delaware.
"Devon Trust Securities" means those certain Trust
Convertible Preferred Securities, issued by Devon Trust in an
amount of 2,990,000.
"Disclosure Schedule" means (a) Schedule 1 hereto and (b)
any documents listed on such schedule and expressly incorporated
therein by reference, so long as Borrower has heretofore
delivered true and correct copies of such documents to Agent and
each Lender. Insofar as any representations and warranties made
herein are incorporated by reference or otherwise remade in Loan
Documents delivered as of a date after the date hereof, the term
"Disclosure Schedule" shall in such representations and
warranties be deemed to refer as well to (i) all documents which
Borrower has at the time in question delivered to Agent and each
Lender under Sections 5.1(b), (c), or (d), and (ii) all other
documents which Borrower has at the time in question delivered to
Agent and each Lender and which expressly refer to the Disclosure
Schedule and state that they are given to supplement or amend it.
"Drawing Amount" means, with respect to each Letter of
Credit at the time in question, the maximum amount which Agent
would be called upon to advance under such Letter of Credit if
such Letter of Credit were then drawn upon in full. If any
Letter of Credit provides that the amount which may be drawn upon
thereunder shall increase or decrease according to a schedule set
forth therein, the Drawing Amount for such Letter of Credit shall
increase or decrease in accordance with such schedule.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, together with all rules and regulations
promulgated with respect thereto.
"ERISA Plan" means any pension benefit plan subject to Title
IV of ERISA maintained by any Related Person or any Affiliate
thereof to which any Related Person has a fixed or contingent
liability.
"Euro Margin" means the Euro Margin per annum set forth in
the following table in accordance with Borrower's Rating (as
defined herein) from time to time:
Borrower's Rating Euro Margin per annum
BBB+/Baa1 20 Basis Points
BBB/Baa2 22.5 Basis Points
BBB-/Baa3 25 Basis Points
Non-Investment 45 Basis Points
"Eurodollar Interest Period" means, with respect to each
particular Eurodollar Portion of a Loan, a period of 1, 2, or 3
months, as specified in the Rate Election applicable thereto,
beginning on and including the date specified in such Rate
Election (which must be a Business Day), and ending on but not
including the same day of the month as the day on which it began
(e.g., a period beginning on the third day of one month shall end
on but not include the third day of another month), provided that
each Eurodollar Interest Period which would otherwise end on a
day which is not a Business Day shall end on the next succeeding
Business Day (unless such next succeeding Business Day is the
first Business Day of a calendar month, in which case such
Eurodollar Interest Period shall end on the immediately preceding
Business Day). No Eurodollar Interest Period may be elected
which would extend past the date on which the associated Note is
due and payable in full.
"Eurodollar Portion" means any portion of the unpaid
principal balance of a Loan which Borrower designates as such in
a Rate Election.
"Eurodollar Rate" means, with respect to each particular
Eurodollar Portion within a Tranche and with respect to the
related Interest Period, the rate of interest per annum
determined by Agent in accordance with its customary general
practices to be representative of the rates at which deposits of
dollars are offered to Agent at approximately 9:00 a.m. Dallas,
Texas time two Business Days prior to the first day of such
Interest Period (by prime banks in the interbank eurocurrency
market which have been selected by Agent in accordance with its
customary general practices) for delivery on the first day of
such Interest Period in an amount equal or comparable to the
amount of Agent's Eurodollar Portion within such Tranche and for
a period of time equal or comparable to the length of such
Interest Period. The Eurodollar Rate determined by Agent with
respect to a particular Eurodollar Portion shall be fixed at such
rate for the duration of the associated Interest Period. If
Agent is unable so to determine the Eurodollar Rate for any
Eurodollar Portion, Borrower shall be deemed not to have elected
such Eurodollar Portion.
"Event of Default" has the meaning given it in Section 7.1.
"Fiscal Quarter" means a three-month period ending on March
31, June 30, September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December
31 of any year.
"Fixed Rate" means, with respect to any Fixed Rate Portion,
the related Adjusted Eurodollar Rate or Offered Rate.
"Fixed Rate Portion" means any Eurodollar Portion or Offered
Rate Portion.
"GAAP" means those generally accepted accounting principles
and practices which are recognized as such by the Financial
Accounting Standards Board (or any generally recognized
successor) and which, in the case of Parent and its Consolidated
subsidiaries, (i) are applied for all periods after the date
hereof in a manner consistent with the manner in which such
principles and practices were applied to the audited Initial
Financial Statements of Parent, and (ii) are consistently applied
for all periods after the date hereof so as to properly reflect
the financial condition, and the results of operations and cash
flows, of Parent and, on a Consolidated basis, of Parent and its
Consolidated subsidiaries. If any change in any accounting
principle or practice is required by the Financial Accounting
Standards Board (or any such successor) in order for such
principle or practice to continue as a generally accepted
accounting principle or practice, all reports, financial
statements and calculations required hereunder may be prepared in
accordance with such change only after notice of such change is
given to Agent and after Borrower and Majority Lenders agree to
such change and to any appropriate corresponding changes to the
provisions hereof.
"Grace Period" has the meaning given it in Section 7.1.
"Guarantor" means any Person who has guaranteed some or all
of the Obligations and who has been accepted by Agent as a
Guarantor, or any Subsidiary of Parent which now or hereafter
executes and delivers a guaranty to Agent pursuant to Section
6.2. DBC is hereby recognized as a Guarantor.
"Initial Financial Statements" means the audited annual
Consolidated financial statements of Parent dated as of December
31, 1997 and the unaudited consolidating financial statements of
Parent dated as of December 31, 1997, copies of which financial
statements have heretofore been delivered to Agent and each
Lender.
"Interest Period" means, with respect to any Fixed Rate
Portion, the related Eurodollar Interest Period or Offered Rate
Interest Period.
"Late Payment Rate" means at the time in question four
percent (4.0%) per annum plus the Base Rate then in effect;
provided that, with respect to any Fixed Rate Portion of a Loan
with an Interest Period extending beyond the date such Fixed Rate
Portion becomes due and payable, "Late Payment Rate" shall mean
four percent (4.0%) per annum plus the related Fixed Rate.
"LC Application" means any application for a letter of
credit hereafter made by Borrower to Agent.
"LC Collateral" has the meaning given it in Section 2A.6(a).
"LC Obligations" means at the time in question, the sum of
the Matured LC Obligations plus the Maximum Drawing Amount. A
"Lender's LC Obligations" means at the time in question, the sum
of (i) the portion of the Maximum Drawing Amount for which such
Lender is liable to purchase participations under Section
2A.3(c), plus (ii) the Matured LC Obligations which have been
funded by such Lender under such section.
"Lenders" means each signatory hereto (other than
Borrowers), including NationsBank, N.A. in its capacity as a
Lender hereunder rather than as Agent or LC Issuer, and their
respective successors and assigns. "Lender" means any of the
Lenders.
"Letter of Credit Rate" means one-half percent (0.5%) per
annum.
"Letters of Credit" means any letter of credit issued
hereunder by Agent at the application of Borrower.
"Lien" means, with respect to any property or assets, any
right or interest therein of a creditor to secure Debt owed to
such creditor or any other arrangement with such creditor which
provides for the payment of such Debt out of such property or
assets or which allows him to have such Debt satisfied out of
such property or assets prior to the general creditors of any
owner thereof, including any lien, mortgage, security interest,
pledge, deposit, production payment, rights of a vendor under any
title retention or conditional sale agreement or lease
substantially equivalent thereto, tax lien, mechanic's or
materialman's lien, or any other charge or encumbrance for
security purposes, whether arising by law or agreement or
otherwise, but excluding any right of offset which arises in the
ordinary course of business.
"Loan" has the meaning given it in Section 2.1.
"Loan Balance" means, at the time in question, the sum of
the outstanding principal balances of the Loans at such time plus
the LC Obligations at such time.
"Loan Documents" means this Agreement, the Notes, the LC
Applications, the Letters of Credit, any Guaranties, and all
other agreements, certificates, legal opinions and other
documents, instruments and writings heretofore or hereafter
delivered in connection herewith or therewith (exclusive of
commitment letters, term sheets, and similar documents used in
the negotiation hereof, except to the extent the same contain
information about Borrowers or their Affiliates, properties,
businesses or prospects).
"Majority Lenders" means Agent and Lenders whose aggregate
Percentage Shares equal or exceed ninety percent (90%), provided
that whenever the Loan Balance is less than $150,000,000 and
Lenders have been requested to give a waiver (as opposed to a
permanent amendment) of one or more provisions of Section 5.2(d),
such waiver shall be deemed to have been given by "Majority
Lenders" when given by Agent and Lenders whose aggregate
Percentage Shares equal or exceed sixty-six percent (66%).
"Matured LC Obligations" means all amounts paid by Agent on
drafts or demands for payment drawn or made under or purported to
be under any Letter of Credit (or under or in connection with any
LC Application) which have not been repaid to Agent by or on
behalf of Borrower (with the proceeds of an Advance or otherwise,
but excluding payments made by Lenders on account of their
participation interests hereunder).
"Maximum Drawing Amount" means at the time in question the
sum of all Drawing Amounts at such time for all Letters of Credit
then outstanding.
"Maximum Loan Amount" means, with respect to each Lender,
the amount set forth opposite its name on the signature pages
hereto, and "Maximum Loan Amounts" means the sum of all such
amounts.
"Note" has the meaning given it in Section 2.1.
"Obligations" means all Debt from time to time owing by any
of the Related Persons to Agent or any Lender under or pursuant
to any of the Loan Documents, including all LC Obligations.
"Obligation" means any part of the Obligations.
"Offered Rate" has the meaning given it in Section 2.7.
"Offered Rate Portion" has the meaning given it in Section
2.7.
"Old Agreement" has the meaning given it in Section 2.4.
"Parent" means Devon Energy Corporation, an Oklahoma
corporation.
"Percentage Share" means, with respect to any Lender (a)
when used in Sections 2.1, 2.3, 2.8, Article II-A, or in any
Request for Advances (other than a Request for Advances
constituting an Offered Rate Portion) or when no Default exists
or when the Loan Balance equals zero, the percentage obtained by
dividing (i) such Lender's Maximum Loan Amount, by (ii) the
aggregate amount of all Lenders' Maximum Loan Amounts, and (b)
when used when a Default exists and the Loan Balance at such time
is greater than zero, the percentage obtained by dividing (i) the
sum of (A) the unpaid principal balance of such Lender's Loans at
the time in question plus (B) such Lender's LC Obligations at
such time, by (ii) the Loan Balance at such time.
"Person" means an individual, corporation, partnership,
association, joint stock company, trust or trustee thereof,
estate or executor thereof, unincorporated organization or joint
venture, court or governmental unit or any agency or subdivision
thereof, or any other legally recognizable entity.
"Prohibited Lien" means any Lien not expressly allowed under
Section 5.2(b).
"Rate Election" has the meaning given it in Section 2.6.
"Rating Agency" means any of Standard & Poor's Ratings Group
(a division of McGraw Hill, Inc.) ("S&P"), Xxxxx'x Investors
Service, Inc. ("Moody's"), and Duff & Xxxxxx Credit Rating Co.
("Duff & Xxxxxx"), or their respective successors at the time in
question.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect.
"Related Person" means any of Borrowers, Guarantors, and the
Subsidiaries of Borrowers; provided, the following Subsidiaries
of Parent shall not be deemed to be Related Persons:
(a) BN Co. A Limited Partnership, a New Mexico limited
partnership;
(b) BN Coal, L.L.C., a New Mexico limited liability
company;
(c) BN Non-Coal, L.L.C., a New Mexico limited liability
company; and
(d) Devon-Xxxxxx Company, an Oklahoma general partnership.
"Request for Advances" means a written or telephonic
request, or a written confirmation, made by Borrower which meets
the requirements of Section 2.2.
"Reserve Percentage" means, in relation to each particular
Eurodollar Portion in a Tranche, the maximum reserve requirement,
as determined by Agent (including without limitation any basic,
supplemental, marginal, emergency or similar reserves), expressed
as a percentage and rounded to the next higher 0.01%, which would
apply to Agent under Regulation D on the first day of the
associated Interest Period with respect to "Eurocurrency
liabilities" (as such term is defined in Regulation D) equal in
amount to Agent's Eurodollar Portion in such Tranche, were Agent
to have any such "Eurocurrency liabilities".
"Restricted Debt" means all Debt of any Person:
(a) for borrowed money,
(b) constituting an obligation to pay the deferred purchase
price of property, other than customary payment terms taken in
the ordinary course of such Person's business,
(c) evidenced by bonds, debentures, notes or similar
instruments,
(d) upon which interest or finance charges are customarily
paid,
(e) arising under conditional sales or other title retention
agreements or under leases serving as a source of financing or
otherwise capitalized in accordance with GAAP, but excluding
customary oil, gas or mineral leases,
(f) under direct or indirect guaranties of Debt of any
Person or constituting obligations to purchase or acquire or to
otherwise protect or insure a creditor against loss in respect of
Debt of any Person (such as obligations under working capital
maintenance agreements, agreements to keep-well, or agreements to
purchase Debt, assets, goods, securities or services, but
excluding endorsements in the ordinary course of business of
negotiable instruments in the course of collection),
(g) with respect to letters of credit or applications or
reimbursement agreements therefor, or
(h) with respect to payments received in consideration of
oil, gas, or other minerals yet to be produced at the time of
payment (including without limitation obligations under
"take-or-pay" contracts to deliver gas in return for payments
already received and the undischarged balance of any production
payment created by such Person or for the creation of which such
Person directly or indirectly received payment) or with respect
to other obligations to deliver goods or services in
consideration of advance payments therefor;
provided, however, that the term "Restricted Debt" shall not
include Debt which is thirty days or less past due that was
incurred on ordinary trade terms and is owed by the Person
incurring the same to vendors, suppliers, or other Persons
providing goods and services for use by such Person in the
ordinary course of its business. Any Restricted Debt owed by a
partnership shall be deemed Restricted Debt of any partner in
such partnership to the extent such partner has any liability of
any kind therefor.
"Restricted Person" means any Related Person which is not an
Unrestricted Subsidiary.
"Subordinated Parent Debentures" means those certain
Convertible Junior Subordinated Debentures issued by Parent to
Devon Trust pursuant to the Subordinated Parent Indenture and
subordinated to the Obligations, in the aggregate principal
amount of approximately $154,500,000.
"Subordinated Parent Guarantee" means that certain Guarantee
dated July 1, 1996, by Parent in favor of the holders of the
Devon Trust Securities pursuant to the Subordinated Parent
Indenture and subordinated to the Obligations, guaranteeing
certain payments to be made by Devon Trust pursuant to the Devon
Trust Securities.
"Subordinated Parent Indenture" means that certain Trust
Indenture dated July 1, 1996, between Parent and The Bank of New
York, as indenture trustee.
"Subsidiary" means, with respect to any Person, any
corporation, association, partnership, joint venture, or other
business or corporate entity, enterprise or organization which is
directly or indirectly (through one or more intermediaries)
controlled by or owned fifty percent or more by such Person,
provided that associations, joint ventures or other relationships
(a) which are established pursuant to a standard form operating
agreement or similar agreement or which are partnerships for
purposes of federal income taxation only, (b) which are not
corporations or partnerships (or subject to the Uniform
Partnership Act) under applicable state law, and (c) whose
businesses are limited to the exploration, development and
operation of oil, gas or mineral properties and interests owned
directly by the parties in such associations, joint ventures or
relationships, shall not be deemed to be "Subsidiaries" of such
Person.
"Termination Event" means (a) the occurrence with respect to
any ERISA Plan of (i) a reportable event described in Sections
4043(b)(5) or (6) of ERISA or (ii) any other reportable event
described in Section 4043(b) of ERISA other than a reportable
event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such
corporation under Section 4043(a) of ERISA, or (b) the withdrawal
of any Related Person or of any Affiliate of any Related Person
from an ERISA Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA,
or (c) the filing of a notice of intent to terminate any ERISA
Plan or the treatment of any ERISA Plan amendment as a
termination under Section 4041 of ERISA, or (d) the institution
of proceedings to terminate any ERISA Plan by the Pension Benefit
Guaranty Corporation under Section 4042 of ERISA, or (e) any
other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any ERISA Plan.
"Tranche" has the meaning given it in Section 2.6.
"Unrestricted Subsidiary" means any corporation or limited
partnership in which Parent does not presently own an interest
(directly or indirectly) which hereafter becomes a Subsidiary of
Parent and which, within 90 days thereafter, is designated as an
Unrestricted Subsidiary by Parent to Agent, provided that Parent
may not designate as an Unrestricted Subsidiary any Subsidiary in
which it has invested more than $25,000,000 (directly or
indirectly) by any means other than newly issued stock or
treasury stock of Parent, which may be invested in Unrestricted
Subsidiaries without limit; provided further, that in the event
the book value of the assets of any Unrestricted Subsidiary at
any time exceeds $25,000,000, such Subsidiary shall cease to be
an Unrestricted Subsidiary and shall automatically become a
Restricted Person.
Section 1.2. Exhibits and Schedules; Additional
Definitions. All Exhibits and Schedules attached to this
Agreement are a part hereof for all purposes.
Section 1.3. Amendment of Defined Instruments. Unless the
context otherwise requires or unless otherwise provided herein
the terms defined in this Agreement which refer to a particular
agreement, instrument or document also refer to and include all
renewals, extensions, modifications, amendments and restatements
of such agreement, instrument or document, provided that nothing
contained in this section shall be construed to authorize any
such renewal, extension, modification, amendment or restatement.
Section 1.4. References and Titles. All references in this
Agreement to Exhibits, Schedules, articles, sections, subsections
and other subdivisions refer to the Exhibits, Schedules,
articles, sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing
at the beginning of any subdivisions are for convenience only and
do not constitute any part of such subdivisions and shall be
disregarded in construing the language contained in such
subdivisions. The words "this Agreement", "this instrument",
"herein", "hereof", "hereby", "hereunder" and words of similar
import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases
"this section" and "this subsection" and similar phrases refer
only to the sections or subsections hereof in which such phrases
occur. The word "or" is not exclusive, and the word "including"
(in its various forms) means "including without limitation".
Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular
form shall be construed to include the plural and vice versa,
unless the context otherwise requires.
Section 1.5. Calculations and Determinations. All
calculations under the Loan Documents of interest chargeable with
respect to Fixed Rate Portions and of fees shall be on the basis
of actual days elapsed (including the first day but excluding the
last) and a year of 360 days. All other calculations of interest
made under the Loan Documents shall be made on the basis of
actual days elapsed (including the first day but excluding the
last) and a year of 365 or 366 days, as appropriate. Each
determination by Agent or a Lender of amounts to be paid under
Sections 2.15 through 2.18 or any other matters which are to be
determined hereunder by Agent or any Lender (such as any Adjusted
Eurodollar Rate, Eurodollar Rate, Business Day, Interest Period,
or Reserve Percentage) shall, in the absence of manifest error,
be conclusive and binding. Unless otherwise expressly provided
herein or unless Majority Lenders otherwise consent all financial
statements and financial reports furnished to Agent or any Lender
hereunder shall be prepared and all financial computations and
financial determinations pursuant hereto shall be made in
accordance with GAAP.
ARTICLE II -- The Loans
Section 2.1. Loans. Subject to the terms and conditions
hereof, each Lender agrees to make Advances to Borrower from time
to time during the Commitment Period so long as (i) the aggregate
outstanding amount of such Lender's Advances under this Section
2.1, plus (ii) such Lender's LC Obligations, does not exceed such
Lender's Maximum Loan Amount, all determined as of the date on
which the requested Advances under this Section 2.1 are to be
made. The aggregate amount of such Advances under this Section
2.1 requested of all Lenders in any Request for Advances under
this Section 2.1 must be an integral multiple of $100,000 which
equals or exceeds $200,000 or must equal the unadvanced portion
of the aggregate amount of all Lenders' Maximum Loan Amounts.
The obligation of Borrower to repay to each Lender the aggregate
amount of all Advances (whether under this Section 2.1 or Section
2.7(a)) made by such Lender (herein called such Lender's "Loan"),
together with interest accruing in connection therewith, shall be
evidenced by a single promissory note (herein called such
Lender's "Note") made by Borrower payable to the order of such
Lender in the form of Exhibit A with appropriate insertions. The
amount of principal owing on any Lender's Note at any given time
shall be the aggregate amount of all Advances (whether under this
Section 2.1 or Section 2.7(a)) theretofore made by such Lender
minus all payments of principal theretofore received by such
Lender on such Note. Interest on each Note shall accrue and be
due and payable as provided herein and therein. Subject to the
terms and conditions hereof, Borrower may borrow, repay, and
reborrow under the Notes.
Section 2.2. Requests for Advances. Prior to 11:00 a.m.
Dallas time, on the date requested by Borrowers for the making of
any Advances, Borrowers must give to Agent written notice, or
telephonic notice promptly confirmed in writing, of such request,
after which Agent shall give each Lender prompt notice thereof.
Each such written request or confirmation must be made in the
form and substance of the "Request for Advances" attached hereto
as Exhibit B, duly completed and signed by an Authorized Officer
of Borrowers. Each such telephonic request shall be deemed a
representation, warranty, acknowledgment and agreement by
Borrowers as to the matters which are required to be set out in
such written confirmation. If all conditions precedent to such
Advances have been met, each Lender will promptly remit to Agent
in favor of Borrowers the amount of such Lender's Advance in
immediately available funds, and upon receipt of such funds,
unless to its actual knowledge any conditions precedent to such
Advances have neither been met nor waived by Lenders as provided
herein, Agent shall promptly make the Advances available to
Borrowers in immediately available funds at Agent's office in
Dallas, Texas. Each Request for Advances shall be irrevocable
and binding on Borrowers. Unless Agent shall have received
prompt notice from a Lender that such Lender will not make
available to Agent such Lender's Advance, Agent may in its
discretion assume that such Lender has made such Advance
available to Agent in accordance with this section and Agent may
if it chooses, in reliance upon such assumption, make such
Advance available to Borrowers. If and to the extent such Lender
shall not so make its Advance available to Agent, such Lender and
Borrowers severally agree to pay or repay to Agent within three
days after demand the amount of such Advance together with
interest thereon, for each day from the date such amount is made
available to Borrowers until the date such amount is paid or
repaid to Agent, at the interest rate applicable at the time to
the other Advances made on such date. The failure of any Lender
to make any Advance to be made by it hereunder shall not relieve
any other Lender of its obligation hereunder, if any, to make its
Advance, but no Lender shall be responsible for the failure of
any other Lender to make any Advance to be made by such other
Lender.
Section 2.3. Proportionate and Disproportionate Loans.
(a) So long as no Offered Rate Portions or disproportionate
Advances made pursuant to Section 2.3(b) below are outstanding,
all Advances (other than Advances constituting Offered Rate
Portions under Section 2.7(a)) requested by Borrowers shall be
made pro rata by each Lender in proportion to the Lenders'
respective Percentage Shares.
(b) If any Offered Rate Portions or disproportionate
Advances previously made pursuant to this Section 2.3(b) are
outstanding, all Advances (other than Advances constituting
Offered Rate Portions under Section 2.7(a)) requested by
Borrowers shall be made disproportionately by each Lender
according to such Lender's Adjusted Advance Amount. Furthermore,
any such Advance consisting of Fixed Rate Portions shall be for
an Interest Period ending on the latest termination date of all
outstanding Offered Rate Portions at such time, such date to be
designated a "Reconciliation Date", provided, however, that in
the event a Reconciliation Date has been previously designated
pursuant to this Section 2.3(b), such Interest Period shall end
on such previously designated Reconciliation Date.
For purposes of this Section 2.3(b), the following terms shall be
defined as follows:
"Advance Amount" means, with respect to each Lender at
the time in question, the remainder (if positive or
negative) of:
(i) such Lender's Percentage Share times the Loan
Balance (including requested Advances) minus
(ii) the aggregate amount of such Lender's outstanding
Loan.
"Advancing Lender" means, with respect to any requested
Advance (other than an Advance constituting an Offered Rate
Portion under Section 2.7(a)), any Lender whose Advance
Amount is greater than zero.
"Non-Advancing Lender" means, with respect to any
requested Advance (other than an Advance constituting an
Offered Rate Portion under Section 2.7(a)), any Lender whose
Advance Amount is less than or equal to zero.
"Adjusted Advance Amount" means, with respect to each
Lender at the time in question:
(i) if each Lender is an Advancing Lender, such
Lender's Advance Amount; or
(ii) if any Lender is a Non-Advancing Lender:
(A) if such Lender is a Non-Advancing Lender,
zero, and
(B) if such Lender is an Advancing Lender,
(I) such Lender's Percentage Share
divided by the sum of all Advancing
Lenders' Percentage Shares times
(II) the amount of the requested Advance.
(c) At the termination of any Offered Rate Interest Period,
the related Offered Rate Portion of such Lender's Loan shall
automatically terminate and become part of the Base Rate Portion
of such Lender's Loan, provided that Borrowers may (i) request
Advances under Section 2.1 and/or Section 2.7(a), if all
conditions to Advances have been met, or (ii) prepay such
Lender's Loan in an amount equal to the terminating Offered Rate
Portion, or (iii) take such other action allowed hereunder as may
be necessary to cause the Loans to be held pro rata by Lenders in
accordance with their respective Percentage Shares, after giving
effect to any outstanding Offered Rate Portions.
(d) Notwithstanding anything in this section to the
contrary, no Lender may make any Advance under any Note which
would cause the aggregate outstanding principal balance of such
Note to exceed the stated maximum principal balance of such Note,
nor may any Lender make any Advance which would cause the Loan
Balance to exceed the aggregate amount of Lenders' Maximum Loan
Amounts.
Section 2.4. Cancellation of Old Agreement. Borrower has
heretofore been indebted to one or more Lenders under a Credit
Agreement dated as of August 30, 1996 (as heretofore amended,
herein called the "Old Agreement") originally entered into by
Borrowers, Devon Energy Operating Corporation, Agent and Lenders.
As of the date hereof, no "Loans" (as such term is defined in the
Old Agreement) are outstanding under the Old Agreement. Upon the
execution and delivery of this Agreement by each of the parties
hereto:
(a) Any letters of credit issued under the Old Agreement
and outstanding as of the date hereof shall be deemed Letters of
Credit issued hereunder as of the date hereof and shall be
subject to the terms and conditions hereof, including without
limitation Borrower's reimbursement obligations under Section
2A.3(a) and Lenders' participation obligations under Section
2A.3(c); and
(b) Borrower shall be deemed to have terminated the Old
Agreement as provided in Section 9.7 thereof.
Section 2.5. Use of Proceeds. Borrower shall use all funds
from Advances (a) as provided in Section 2.4, (b) to refinance
its Matured LC Obligations, (c) to finance the acquisition of oil
and gas properties, (d) to finance working capital and capital
expenditures that are standard in the oil and gas industry, and
(e) for other general corporate purposes. Borrower shall use all
Letters of Credit for its general corporate purposes. In no
event shall the funds from any Advance or any Letter of Credit be
used directly or indirectly for the purpose, whether immediate,
incidental or ultimate, of purchasing, acquiring or carrying any
"margin stock" or any "margin securities" (as such terms are
defined respectively in Regulation U and Regulation G promulgated
by the Board of Governors of the Federal Reserve System) or to
extend credit to others directly or indirectly for the purpose of
purchasing or carrying any such margin stock or margin
securities. Borrower represents and warrants to Lenders that
Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit to others for the
purpose of purchasing or carrying such margin stock or margin
securities.
Section 2.6. Rate Elections. Borrowers may from time to
time designate all or any portions of the Loans (including any
yet to be made Advances which are to be made prior to or at the
beginning of the designated Interest Period but excluding any
portions of the Loans which are required to be repaid prior to
the end of the designated Interest Period) as a "Tranche", which
term refers to a set of Eurodollar Portions of the same type with
identical Interest Periods. The amounts of Lenders' Eurodollar
Portions within a Tranche shall be in proportion to their
respective Percentage Shares, subject to the provisions of
Section 2.3. Borrowers may make no such election during the
continuance of a Default, and Borrowers may make such an election
with respect to already existing Fixed Rate Portions only if such
election will take effect at or after the termination of the
Interest Period applicable to such already existing Fixed Rate
Portions. Each election by Borrowers of a Tranche shall:
(a) Be made by written notice to Agent or by
telephonic notice to Agent promptly confirmed in writing, in
the form and substance of the "Rate Election" attached
hereto as Exhibit C, duly completed and signed by an
Authorized Officer of Borrowers.
(b) Specify the aggregate amount of the Loans which
Borrowers desire to designate as such Tranche, the first day
of the Interest Period which is to apply thereto, and the
length of such Interest Period; and
(c) Be received by Agent not later than 9:00 a.m.,
Dallas time, on the second Business Day preceding the first
day of the specified Interest Period.
Promptly after receiving any such election (herein called a "Rate
Election") which meets the requirements of this section, Agent
shall notify each Lender of the contents thereof. Each Rate
Election shall be irrevocable. Borrowers may make no Rate
Election which does not specify an Interest Period complying with
the definition of "Eurodollar Interest Period" in Section 1.1,
and the aggregate amount of each Tranche elected in any Rate
Election must be $1,000,000 or a higher integral multiple of
$500,000. Upon the termination of each Interest Period the
portion of each Loan theretofore constituting the related Fixed
Rate Portion shall, unless the subject of a new Rate Election
then taking effect, automatically become a part of the Base Rate
Portion of such Loan and become subject to all provisions of the
Loan Documents governing such Base Rate Portion. Borrowers shall
have no more than six Tranches or Offered Rate Portions in effect
at any time.
Section 2.7. Advances Constituting Offered Rate Portions.
(a) Borrowers may from time to time request each Lender to
quote an interest rate for a specified interest period
(identifying the days on which such interest period is to begin
and end) and a specified portion of the unpaid principal balance
of (or amounts available for borrowing under) such Lender's Note;
provided that no such request may be made with respect to an
already existing Fixed Rate Portion unless it is to take effect
at or after the termination of the Interest Period applicable to
such already existing Fixed Rate Portion. Any amounts so
requested by Borrowers must be $1,000,000 or a multiple thereof.
Each such request must be made to all Lenders and may be made no
later than 9:00 a.m. (Dallas time) on the day such interest
period is to begin. No Lender has any obligation to make any
such quotation and may do so or decline to do so (and may make
quotations for interest periods and amounts different from those
specified by Borrowers) in its sole and absolute discretion. Any
Lender which makes such a quotation, however, must do so by
telecopy or telex (or by telephone notice promptly confirmed by
telecopy or telex) to Borrowers no later than 10:15 a.m. (Dallas
time) on the day such interest period is to begin, specifying an
interest rate, the amount to which such interest rate is to
apply, and the days on which the related interest period is to
begin and end. The rate (if any) quoted by such Lender is herein
called an "Offered Rate"; the amount of the Loan to which such
Offered Rate is to apply is herein called an "Offered Rate
Portion" of such Loan; and the period during which such rate is
to apply is herein called the related "Offered Rate Interest
Period". Borrowers may choose to accept or reject any such
quotation in its sole and absolute discretion; to accept any such
quotation Borrowers must, by 11:30 a.m. (Dallas time) on the same
day, give written notice (or telephonic notice promptly confirmed
by telecopy, telex or letter) to the Lender making such
quotation. After accepting any such quotation from a Lender,
Borrowers may not revoke its acceptance without the consent of
such Lender, and such Lender shall in accordance with Section
2.7(d) make an Advance constituting such Offered Rate Portion.
After accepting or rejecting any such quotation from any Lender,
Borrowers shall on the same day notify all Lenders of the terms
of the quotations, if any, made by each.
(b) Notwithstanding anything in this section to the
contrary, Borrowers may not, without the consent of all Lenders:
(i) agree with any Lender on any Offered Rate Interest Period
which is longer than three months, (ii) agree with any Lender for
any Offered Rate Portion when any Default is continuing, or (iii)
have more than six Offered Rate Portions outstanding at the same
time.
(c) For the purposes of Section 2.17 hereof, any agreement
as to an Offered Rate Portion shall be deemed a "Rate Election".
(d) Prior to or concurrently with any such Advance
constituting an Offered Rate Portion under Section 2.7(a),
Borrowers shall deliver a Request for Advances, modified to
specify the Lender who is making such Advance, and otherwise
comply with the requirements of Section 2.2.
Section 2.8. Fees.
(a) Facility Fee. In consideration of each Lender's
commitment to make Advances, Borrowers will pay to Agent for the
account of each Lender a facility fee, determined on a daily
basis, equal to the Rate Per Annum set forth in the following
table, in accordance with Borrower's Rating (as defined herein)
from time to time, times such Lender's Percentage Share of the
Maximum Loan Amount:
Borrower's Rating Rate Per Annum
BBB+/Baa1 10 Basis Points
BBB/Baa2 12.5 Basis Points
BBB-/Baa3 20 Basis Points
Non-Investment 30 Basis Points
The facility fee shall be due and payable in arrears on the last
day of each August, November, February and May, beginning May 31,
1998, and at the termination of the Commitment Period.
(b) Agency Fee. In addition to all other amounts due to
Agent under the Loan Documents, Borrowers will pay to Agent an
annual agency fee pursuant to a letter agreement of even date
herewith between Agent and Borrower.
Section 2.9. Optional Prepayments. Borrowers may, upon
concurrent notice to Agent (which shall give each Lender prompt
notice thereof), from time to time and without premium or penalty
prepay the Loans, in whole or in part, so long as all partial
prepayments of principal concurrently paid on the Loans are in
increments of $100,000 and in an aggregate amount greater than or
equal to $200,000 and so long as Borrowers do not prepay any
Fixed Rate Portion. Each prepayment of principal under this
section shall be accompanied by all interest then accrued and
unpaid on the principal so prepaid. Any principal or interest
prepaid pursuant to this section shall be in addition to, and not
in lieu of, all payments otherwise required to be paid under the
Loan Documents at the time of such prepayment.
Section 2.10. Mandatory Prepayments. If the Loan Balance
ever exceeds the Maximum Loan Amount, Borrower shall immediately
prepay the principal of the Loans in an amount at least equal to
such excess. Each prepayment of principal under this section
shall be accompanied by all interest then accrued and unpaid on
the principal so prepaid. Any principal or interest prepaid
pursuant to this section shall be in addition to, and not in lieu
of, all payments otherwise required to be paid under the Loan
Documents at the time of such prepayment.
Section 2.11. Payments to Lenders. Borrowers will make
each payment which they owe under the Loan Documents to Agent for
the account of the Lender to whom such payment is owed. Each
such payment must be received by Agent not later than 11:00 a.m.
Dallas, Texas time, on the date such payment becomes due and
payable, in lawful money of the United States of America and in
immediately available funds. Any payment received by Agent after
such time will be deemed to have been made on the next following
Business Day. Agent will promptly remit each such payment to
such Lender. Should any such payment become due and payable on a
day other than a Business Day, the maturity of such payment shall
be extended to the next succeeding Business Day, and, in the case
of a payment of principal or past due interest, interest shall
accrue and be payable thereon for the period of such extension as
provided in the Loan Document under which such payment is due.
Each payment under a Loan Document shall be due and payable at
the place provided therein and, if no specific place of payment
is provided, shall be due and payable at Agent's office at
NationsBank Plaza, 000 Xxxx Xxxxxx, Xxxxxx, Xxxxxx Xxxxxx, Xxxxx.
When Agent collects or receives money on account of the
Obligations, Agent shall distribute all money so collected or
received, and Lenders shall apply all such money they receive
from Agent, as follows:
(a) first, to the payment of all Obligations which are
then due (and if such money is insufficient to pay all such
Obligations, first to any reimbursements due Agent under
Section 5.1(i) or (j) and then to the partial payment of all
other Obligations then due in proportion to the amounts
thereof, or as Lenders shall otherwise agree);
(b) then to the prepayment of amounts owing under the
Loan Documents (other than principal on the Notes) if so
specified by Borrower;
(c) then to the prepayment of principal on the Notes,
together with accrued and unpaid interest on the principal
so prepaid; and
(d) last, to the payment or prepayment of any other
Obligations.
All payments applied to principal or interest on any Note shall
be applied first to any interest then due and payable, then to
principal then due and payable, and last to any prepayment of
principal and interest in compliance with Sections 2.9 and 2.10.
All distributions of amounts described in any of subsections (b),
(c), or (d) above shall be made by Agent pro rata to Agent and
each Lender then owed Obligations described in such subsection in
proportion to all amounts owed to Agent and all Lenders which are
described in such subsection; provided that if any Lender then
owes payments to Agent for the purchase of a participation under
Section 2A.3(c), any amounts otherwise distributable under this
section to such Lender shall be deemed to belong to Agent, to the
extent of such unpaid payments, and Agent shall apply such
amounts to make such unpaid payments rather than distribute such
amounts to such Lender.
Section 2.12. Increased Cost of Fixed Rate Portions. If
any applicable domestic or foreign law, treaty, rule or
regulation (whether now in effect or hereinafter enacted or
promulgated, including Regulation D) or any interpretation or
administration thereof by any governmental authority charged with
the interpretation or administration thereof (whether or not
having the force of law):
(a) shall change the basis of taxation of payments to
Agent or any Lender of any principal, interest, or other
amounts attributable to any Fixed Rate Portion or otherwise
due under this Agreement in respect of any Fixed Rate
Portion or Letter of Credit (other than taxes imposed on the
overall net income of Agent or such Lender or any lending
office of Agent or such Lender by any jurisdiction in which
Agent or such Lender or any such lending office is located);
or
(b) shall change, impose, modify, apply or deem
applicable any insurance fees or premiums or any reserve,
special deposit or similar requirements in respect of any
Fixed Rate Portion or Letter of Credit (excluding those for
which there is full compensation pursuant to adjustments
made in the definition of Adjusted Eurodollar Rate) or
against assets of, deposits with or for the account of, or
credit extended by, Agent or any Lender; or
(c) shall impose on Agent or any Lender or the
interbank eurocurrency deposit market any other condition
affecting any Fixed Rate Portion or Letter of Credit, the
result of which is to increase the cost to Agent or any
Lender of funding or maintaining any Fixed Rate Portion or
of issuing any Letter of Credit or to reduce the amount of
any sum receivable by Agent or any Lender in respect of any
Fixed Rate Portion or Letter of Credit by an amount deemed
by Agent or such Lender to be material,
then Agent or such Lender shall promptly notify Borrowers in
writing (with a copy to Agent) of the happening of such event and
(1) Borrowers shall upon demand pay to Agent for the account of
Agent or such Lender such additional amount or amounts as will
compensate Agent or such Lender for such event and (2) Borrowers
may elect, by giving to Agent and such Lender not less than three
Business Days' notice, to convert all (but not less than all) of
any such Fixed Rate Portion into a part of the Base Rate Portion.
Section 2.13. Change of Law. If any change in applicable
laws, treaties, rules or regulations or in the interpretation or
administration thereof or in any jurisdiction whatsoever,
domestic or foreign, shall make it unlawful or impracticable for
any Lender to fund or maintain Fixed Rate Portions, or shall
materially restrict the authority of Agent or any Lender to
purchase, sell or take offshore deposits of dollars (i.e.,
"eurodollars") or to issue or participate in Letters of Credit,
then Borrowers' right to elect Fixed Rate Portions or to apply
for Letters of Credit shall be suspended to the extent and for
the duration of such illegality, impracticability or restriction
and all Fixed Rate Portions (or portions thereof) which are then
outstanding or are then the subject of any Rate Election and
which cannot lawfully or practicably be maintained or funded
shall immediately become or remain part of the Base Rate Portion
of the related Loan. Borrowers agree to indemnify Agent and any
such Lender and hold it harmless against all costs, expenses,
claims, penalties, liabilities and damages which actually result
from any such change in law, treaty, rule, regulation,
interpretation or administration.
Section 2.14. Funding Losses. Borrowers will indemnify
Agent and each Lender against, and reimburse Agent and each
Lender on demand for, any loss or expense incurred or sustained
by Agent or such Lender (including without limitation any loss or
expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund or
maintain Fixed Rate Portions or Advances hereunder), as a result
of (a) any payment or prepayment (whether authorized or required
hereunder or otherwise) of all or a portion of a Fixed Rate
Portion on a day other than the day on which the applicable
Interest Period ends, (b) any payment or prepayment, whether
required hereunder or otherwise, of a Loan made after the
delivery, but before the effective date, of a Rate Election, if
such payment or prepayment prevents such Rate Election from
becoming fully effective, (c) the failure of any Advance to be
made hereunder or of any Rate Election to become effective due to
any condition precedent to such Advance not being satisfied or
due to any other action or inaction of any Related Person, or (d)
any conversion (whether authorized or required hereunder or
otherwise) of all or any portion of any Fixed Rate Portion into a
Base Rate Portion or into a different Fixed Rate Portion on a day
other than the day on which the applicable Interest Period ends.
Section 2.15. Reimbursable Taxes; Capital Adequacy.
Borrowers covenant and agree that, whether or not any Fixed Rate
Portion is ever elected:
(a) Borrowers will reimburse Agent and each Lender on
demand, on an after-tax basis, for all present and future income,
stamp and other taxes, levies, costs and charges whatsoever
actually paid by Agent or such Lender (or required to be withheld
and paid on account of Agent or such Lender) in respect of any
Fixed Rate Portions or Letters of Credit, excluding, however, any
thereof imposed on or measured by the overall net income of Agent
or any Lender or any lending office of Agent or any Lender by any
jurisdiction in which Agent or any Lender or any such lending
office is located (all such non-excluded taxes, levies, costs and
charges being collectively called "Reimbursable Taxes" in this
section), and Borrowers will pay directly to the appropriate
authority any Reimbursable Taxes which Borrowers are required to
withhold and pay. Promptly after the date on which payment of
any such Reimbursable Tax to be paid directly by Borrowers is due
or claimed to be due, Borrowers will, at the request of Agent or
any Lender, furnish to Agent and such Lender evidence in form and
substance satisfactory to Agent and such Lender that Borrowers
have met their obligations under this section.
(b) Borrowers will indemnify Agent and each Lender against
any loss, liability, claim or expense, including interest,
penalties and legal fees, that Agent or such Lender may incur at
any time arising out of or in connection with the failure of
Borrower to make any reimbursement required under subsection (a)
above or to make any payment, when due or claimed to be due, of
Reimbursable Taxes to be withheld and paid directly by Borrowers.
(c) All payments on account of the principal of, and
interest on, the Loans and the Notes, and all other amounts
payable by Borrowers to Agent or any Lender hereunder shall be
made free and clear of and without reduction by reason of any
Reimbursable Taxes, all of which will be for the account of
Borrowers and reimbursed or paid by Borrowers.
(d) If Borrowers are ever required to reimburse or pay any
Reimbursable Tax with respect to any Fixed Rate Portion,
Borrowers may elect, by giving to Agent and each Lender not less
than three Business Days' notice, to convert all (but not less
than all) of any such Fixed Rate Portion into a part of the Base
Rate Portion of the related Loan, but such election shall not
diminish Borrowers' obligation to pay all Reimbursable Taxes.
(e) If at any time after the date hereof, and from time to
time, Agent or any Lender determines that the adoption or
modification of any applicable law, rule or regulation regarding
taxation, Agent's or such Lender's required levels of reserves,
deposits, insurance or capital (including any allocation of
capital requirements or conditions), or similar requirements, or
any interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation, administration or compliance of Agent or such
Lender with any of such requirements (including any
interpretation at any time made with respect to any Letter of
Credit, whether on, before or after the date hereof, that
requires Agent or any Lender to allocate capital, maintain
reserves, or take any other action or incur any cost based on an
amount higher than the Drawing Amount from time to time in effect
under such Letter of Credit), has or would have the effect of (a)
increasing Agent's or such Lender's costs relating to the
Obligations or the Letters of Credit, or (b) reducing the yield
or rate of return of Agent or such Lender on the Obligations or
the Letters of Credit, to a level below that which Agent or such
Lender could have achieved but for such adoption, modification,
interpretation or application, then Borrowers shall, within 15
days after any request by Agent or such Lender, pay to Agent or
such Lender such additional amounts as (in Agent's or such
Lender's sole judgment, after reasonable computation) will
compensate Agent or such Lender for such increase in costs or
reduction in yield or rate of return. No failure by Agent or any
Lender to immediately demand payment of any additional amounts
payable hereunder shall constitute a waiver of Agent's or such
Lender's right to demand payment of such amounts at any
subsequent time. Nothing herein contained shall be construed or
so operate as to require Borrower to pay any interest, fees,
costs or charges not permitted by Section 9.6.
ARTICLE II-A -- Letters of Credit
Section 2A.1. Letters of Credit. Subject to the terms and
conditions hereof, Borrowers may during the Commitment Period
request Agent to issue one or more Letters of Credit, provided
that, after taking such Letter of Credit into account:
(a) the sum of the aggregate amount of Advances
outstanding at such time plus the aggregate amount of LC
Obligations at such time does not exceed the Available
Borrowing Base at such time; and
(b) the aggregate amount of LC Obligations at such time
does not exceed $30,000,000; and
(c) the expiration date of such Letter of Credit is
prior to the end of the Commitment Period;
and further provided that:
(d) such Letter of Credit is to be used for general
corporate purposes of Borrowers;
(e) such Letter of Credit is not directly or indirectly
used to assure payment of or otherwise support any Person's
Restricted Debt other than Restricted Debt permitted under
Section 5.2(a)(vi);
(f) the issuance of such Letter of Credit will be in
compliance with all applicable governmental restrictions,
policies, and guidelines and will not subject Agent to any
cost not anticipated on the date hereof;
(g) the form and terms of such Letter of Credit are
acceptable to Agent in its sole and absolute discretion; and
(h) all other conditions in this Agreement to the
issuance of such Letter of Credit have been satisfied.
Agent will honor any such request if the foregoing conditions (a)
through (h) (in the following Section 2A.2 called the "LC
Conditions") have been met as of the date of issuance of such
Letter of Credit.
Section 2A.2. Requesting Letters of Credit. Borrowers must
make written application for any Letter of Credit at least three
Business Days before the date on which Borrowers desire for Agent
to issue such Letter of Credit. By making any such written
application Borrowers shall be deemed to have represented and
warranted that the LC Conditions described in Section 2A.1 will
be met as of the date of issuance of such Letter of Credit. Each
such written application for a Standby Letter of Credit must be
made in writing in the form and substance of Exhibit G, the terms
and provisions of which are hereby incorporated herein by
reference (or in such other form as may mutually be agreed upon
by Agent and Borrowers). Three Business Days after the LC
Conditions for a Letter of Credit have been met as described in
Section 2A.1 (or if Agent otherwise desires to issue such Letter
of Credit), Agent will issue such Letter of Credit at Agent's
office in Dallas, Texas. If any provisions of any LC Application
conflict with any provisions of this Agreement, the provisions of
this Agreement shall govern and control.
Section 2A.3. Reimbursement and Participations.
(a) Reimbursement by Borrowers. Each Matured LC Obligation
shall constitute a loan by Agent to Borrowers. Borrowers hereby
promise to pay to Agent, or to Agent's order, on demand, the full
amount of each Matured LC Obligation, together with interest
thereon at the Late Payment Rate.
(b) Letter of Credit Advances. If the beneficiary of any
Letter of Credit presents a draft or other demand for payment
thereunder then Borrowers may, during the interval between the
presentation thereof and the honoring thereof by Agent, request
Lenders to make Advances to Borrowers in the amount of such draft
or demand, which Advances shall be made concurrently with Agent's
payment of such draft or demand and shall be immediately used by
Agent to repay the amount of the resulting Matured LC Obligation.
Such a request by Borrowers shall be made in compliance with all
of the provisions hereof, provided that for the purposes of the
first sentence of Section 2.1 the amount of such Advances shall
be considered but the amount of the Matured LC Obligation to be
concurrently paid by such Advances shall not be considered.
(c) Participation by Lenders. Agent irrevocably agrees to
grant and hereby grants to each Lender, and -- to induce Agent to
issue Letters of Credit hereunder -- each Lender irrevocably
agrees to accept and purchase and hereby accepts and purchases
from Agent, on the terms and conditions hereinafter stated and
for such Lender's own account and risk, an undivided interest
equal to such Lender's Percentage Share of Agent's obligations
and rights under each Letter of Credit issued hereunder and the
amount of each Matured LC Obligation paid by Agent thereunder.
Each Lender unconditionally and irrevocably agrees with Agent
that, if a Matured LC Obligation is paid under any Letter of
Credit for which Agent is not reimbursed in full by Borrower in
accordance with the terms of this Agreement and the related LC
Application (including any reimbursement by means of concurrent
Advances or by the application of LC Collateral), such Lender
shall (in all circumstances and without set-off or counterclaim)
pay to Agent on demand, in immediately available funds at Agent's
address for notices hereunder, such Lender's Percentage Share of
such Matured LC Obligation (or any portion thereof which has not
been reimbursed by Borrower). Each Lender's obligation to pay
Agent pursuant to the terms of this subsection is irrevocable and
unconditional. If any amount required to be paid by any Lender
to Agent pursuant to this subsection is paid by such Lender to
Agent within three Business Days after the date such payment is
due, Agent shall in addition to such amount be entitled to
recover from such Lender, on demand, interest thereon calculated
from such due date at the Base Rate. If any amount required to
be paid by any Lender to Agent pursuant to this subsection is not
paid by such Lender to Agent within three Business Days after the
date such payment is due, Agent shall in addition to such amount
be entitled to recover from such Lender, on demand, interest
thereon calculated from such due date at the Late Payment Rate.
(d) Distributions to Participants. Whenever Agent has in
accordance with this section received from any Lender payment of
such Lender's Percentage Share of any Matured LC Obligation, if
Agent thereafter receives any payment of such Matured LC
Obligation or any payment of interest thereon (whether directly
from Borrowers or by application of LC Collateral or otherwise,
and excluding only interest for any period prior to Agent's
demand that such Lender make such payment of its Percentage
Share), Agent will distribute to such Lender its Percentage Share
of the amounts so received by Agent; provided, however, that if
any such payment received by Agent must thereafter be returned by
Agent, such Lender shall return to Agent the portion thereof
which Agent has previously distributed to it.
(e) Calculations. A written advice setting forth in
reasonable detail the amounts owing under this section, submitted
by Agent to Borrowers or any Lender from time to time, shall be
conclusive, absent manifest error, as to the amounts thereof.
Section 2A.4. Letter of Credit Fees. In consideration of
Agent's issuance of any Letter of Credit and each other Lender's
agreement to purchase a risk participation therein, Borrowers
agree to pay a letter of credit fee to Agent (for the account of
the Lenders) for each Letter of Credit in the amount of the
Letter of Credit Rate times the Drawing Amount for such Letter of
Credit. Each letter of credit fee will be calculated on a daily
basis (on the basis of a year of 360 days) based on the Drawing
Amount of such Letter of Credit and the applicable Letter of
Credit Rate in effect on each day and shall be payable quarterly
in arrears and at the expiration or termination of such Letter of
Credit. Upon receipt of such letter of credit fee for each
Letter of Credit, Agent will pay to each Lender such Lender's
Percentage Share of such fee. In addition, Borrowers agree to
pay a fronting fee to Agent (for its own account) for each Letter
of Credit, in an amount to be agreed on by Borrowers and Agent
for each separate Letter of Credit. Each such fronting fee will
be for the account of Agent alone, and no other Lender shall have
any right or interest therein.
Section 2A.5. No Duty to Inquire.
(a) Drafts and Demands. Agent is authorized and instructed
to accept and pay drafts and demands for payment under any Letter
of Credit without requiring, and without responsibility for, any
determination as to the existence of any event giving rise to
said draft, either at the time of acceptance of payment or
thereafter. Agent and Lenders are under no duty to determine the
proper identity of anyone presenting such a draft or making such
a demand (whether by tested telex or otherwise) as the officer,
representative or agent of any beneficiary under any Letter of
Credit, and payment by Agent to any such beneficiary when
requested by any such purported officer, representative or agent
is hereby authorized and approved. Borrowers agree to hold Agent
and each Lender harmless and indemnified against any liability or
claim in connection with or arising out of the subject matter of
this section, WHICH INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH
LIABILITY OR CLAIM IS IN ANY WAY OR TO ANY EXTENT CAUSED, IN
WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY
AGENT OR ANY LENDER, provided only that neither Agent nor any
Lender shall be entitled to indemnification for that portion, if
any, of any liability or claim which is proximately caused by its
own individual gross negligence or willful misconduct, as
determined in a final judgment.
(b) Extension of Maturity. If the maturity of any Letter
of Credit is extended by its terms or by law or governmental
action, if any extension of the maturity or time for presentation
of drafts or any other modification of the terms of any Letter of
Credit is made at the request of any Related Person, or if the
amount of any Letter of Credit is increased at the request of any
Related Person, the Loan Documents shall be binding upon all
Related Persons with respect to such Letter of Credit as so
extended, increased or otherwise modified, with respect to drafts
and property covered thereby, and with respect to any action
taken by Agent or any of Agent's correspondents in accordance
with such extension, increase or other modification.
(c) Transferees of Letters of Credit. If any Letter of
Credit provides that it is transferable, Agent shall have no duty
to determine the proper identity of anyone appearing as
transferee of such Letter of Credit, nor shall Agent be charged
with responsibility of any nature or character for the validity
or correctness of any transfer or successive transfers, and
payment by Agent to any purported transferee or transferees as
determined by Agent is hereby authorized and approved, and
Borrowers further agree to hold Agent and each Lender harmless
and indemnified against any liability or claim in connection with
or arising out of the foregoing, WHICH INDEMNITY SHALL APPLY
WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY OR TO
ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR
OMISSION OF ANY KIND BY AGENT OR ANY LENDER, provided only that
neither Agent nor any Lender shall be entitled to indemnification
for that portion, if any, of any liability or claim which is
proximately caused by its own individual gross negligence or
willful misconduct, as determined in a final judgment.
Section 2A.6. LC Collateral.
(a) LC Obligations in Excess of Maximum Loan Amount.
Section 2.10 requires Borrower to make certain mandatory
prepayments if the Loan Balance shall exceed the Maximum Loan
Amount. These payments shall be applied to the payment of the
Loans and any Matured LC Obligations before being held as LC
Collateral as provided below. If, however, such excess is
greater than the unpaid balance of the Loans and any Matured LC
Obligations and, after the Loans are paid in full, the remaining
outstanding LC Obligations will exceed the Maximum Loan Amount,
then Borrowers will continue to make such payments and Agent will
hold the same as security for the remaining LC Obligations (all
such amounts held as security for LC Obligations being herein
collectively called "LC Collateral") until such LC Obligations
become Matured LC Obligations, at which time such LC Collateral
may be applied to such Matured LC Obligations. Neither this
subsection nor the following subsection shall, however, limit or
impair any rights which Agent may have under any other document
or agreement relating to any Letter of Credit or LC Obligation,
including any LC Application, or any rights which Agent or
Lenders may have to otherwise apply any payments by Borrowers and
any LC Collateral under Section 2.11.
(b) Acceleration of LC Obligations. If the Obligations or
any part thereof become immediately due and payable pursuant to
Section 7.1 then, unless Majority Lenders otherwise specifically
elect to the contrary (which election may thereafter be retracted
by Majority Lenders at any time), all LC Obligations shall become
immediately due and payable without regard to whether or not
actual drawings or payments on the Letters of Credit have
occurred, and Borrowers shall be obligated to pay to Agent
immediately an amount equal to the aggregate LC Obligations which
are then outstanding. All amounts so paid shall first be applied
to Matured LC Obligations and then held by Agent as LC Collateral
until the remaining LC Obligations become Matured LC Obligations,
at which time such LC Collateral shall be applied to such Matured
LC Obligations.
(c) Investment of LC Collateral. Pending application
thereof, all LC Collateral shall be invested by Agent in such
investments as Agent may choose in its sole discretion. All
interest on such investments shall be reinvested or applied to
Matured LC Obligations and other past due Obligations. When all
Obligations have been satisfied in full, including all LC
Obligations, all Letters of Credit have expired or been
terminated, and all of Borrowers' reimbursement obligations in
connection therewith have been satisfied in full, Agent shall
release any remaining LC Collateral. Borrowers hereby assign and
grant to Agent a continuing security interest in all LC
Collateral at any time held by Agent, all investments purchased
with such LC Collateral, and all proceeds thereof to secure its
Matured LC Obligations and its Obligations under this Agreement,
the Note, and the other Loan Documents. Borrowers further agree
that Agent shall have all of the rights and remedies of a secured
party under the Uniform Commercial Code as adopted in the State
of Texas with respect to such security interest and that an Event
of Default under this Agreement shall constitute a default for
purposes of such security interest.
(d) Payment of LC Collateral. When Borrowers are required
to provide LC Collateral for any reason and fails to do so on the
day required, Agent may without notice to Borrowers or any other
Related Person provide such LC Collateral (whether by application
of proceeds of other Collateral, by transfers from other accounts
maintained with Agent, or otherwise) using any available funds of
Borrowers or any other Person also liable to make such payments.
Any such amounts which are required to be provided as LC
Collateral and which are not provided on the date required shall
be considered past due Obligations owing hereunder, and Agent and
Lenders are hereby authorized to exercise their respective rights
to obtain such amounts.
ARTICLE III -- Conditions Precedent to Lending
Section 3.1. Documents to be Delivered. No Lender has any
obligation to make its first Advance unless Agent shall have
received all of the following, at Agent's office in Dallas,
Texas, duly executed and delivered and in form, substance and
date satisfactory to Agent:
(a) Each Note.
(b) An "Omnibus Certificate" of the Secretary or Assistant
Secretary and of the Chairman of the Board, President, or Vice
President-Finance of each Borrower, which shall contain the names
and signatures of the officers of Borrowers authorized to execute
Loan Documents and which shall certify to the truth, correctness
and completeness of the following exhibits attached thereto: (i)
copies of resolutions duly adopted by the Boards of Directors of
Borrowers and in full force and effect at the time this Agreement
is entered into, authorizing the execution of this Agreement and
the other Loan Documents delivered or to be delivered in
connection herewith and the consummation of the transactions
contemplated herein and therein, (ii) a copy of the charters of
Borrowers and all amendments thereto, certified by the
appropriate officials of the States of Nevada and Oklahoma, and
(iii) copies of the bylaws of Borrowers.
(c) A certificate (or certificates) of the due
organization, valid existence and good standing of Parent in the
State of Oklahoma and Devon Nevada in the State of Nevada, issued
by the appropriate officials of such States.
(d) A "Compliance Certificate" of the Chairman of the Board
or President and of the Vice President-Finance of Borrowers, of
even date with such first Advance, in which such officers certify
to the satisfaction of the conditions set out in subsections (a),
(b) and (c) of Section 3.2.
(e) A favorable opinion of McAfee & Xxxx, A Professional
Corporation, counsel for Borrowers and DBC, substantially in the
form set forth in Exhibit E.
(f) Documents similar to those specified in subsections (b)
and (c) of this section with respect to each Guarantor, and the
execution by it of its guaranty of Borrowers' Obligations.
(g) A Notice of Final Agreement in the form of the attached
Exhibit F.
Section 3.2. Additional Conditions Precedent. No Lender
has any obligation to make any Advance (including its first) and
Agent has no obligation to issue any Letter of Credit (whether or
not otherwise agreed to by Agent) unless the following conditions
precedent have been satisfied:
(a) All representations and warranties made by any Related
Person in any Loan Document shall be true on and as of the date
of such Advance or the date of issuance of such Letter of Credit
(except to the extent that the facts upon which such
representations are based have been changed by the transactions
herein contemplated) as if such representations and warranties
had been made as of the date of such Advance or the date of
issuance of such Letter of Credit.
(b) No Default shall exist at the date of such Advance or
the date of issuance of such Letter of Credit.
(c) Each Related Person shall have performed and complied
with all agreements and conditions required in the Loan Documents
to be performed or complied with by it on or prior to the date of
such Advance or the date of issuance of such Letter of Credit.
(d) The making of such Advance or the issuance of such
Letter of Credit shall not be prohibited by any law or any
regulation or order of any court or governmental agency or
authority and shall not subject Agent or any Lender to any
penalty or other onerous condition under or pursuant to any such
law, regulation or order.
(e) Agent shall have received all documents and instruments
which Agent has then reasonably requested, in addition to those
described in Section 3.1 (including opinions of legal counsel for
the Related Persons and Agent; corporate documents and records;
documents evidencing governmental authorizations, consents,
approvals, licenses and exemptions; and certificates of public
officials and of officers and representatives of the Related
Persons and other Persons), as to (i) the accuracy and validity
of or compliance with all representations, warranties and
covenants made by any of the Related Persons in this Agreement
and the other Loan Documents, (ii) the satisfaction of all
conditions contained herein or therein, and (iii) all other
matters pertaining hereto and thereto. All such additional
documents and instruments shall be satisfactory to Agent in form,
substance and date.
(f) All legal matters relating to the Loan Documents and
the consummation of the transactions contemplated thereby shall
be satisfactory to Xxxxxxxx & Knight, a Professional Corporation,
counsel to Agent.
ARTICLE IV -- Representations and Warranties
Section 4.1. Borrowers' Representations and Warranties. To
induce Agent and Lenders to enter into this Agreement and to make
the Loans, Borrowers jointly and severally represent and warrant
to Agent and each Lender that:
(a) No Default. No Restricted Person is in default in the
performance of any of the covenants and agreements contained
herein. No event has occurred and is continuing which
constitutes a Default.
(b) Organization and Good Standing. Each Restricted Person
which is a corporation, partnership or business trust is duly
organized, validly existing and in good standing under the laws
of its state of organization or formation, having all corporate,
partnership or business trust powers required to carry on its
business and enter into and carry out the transactions
contemplated hereby. Each such Person is duly qualified, in good
standing, and authorized to do business in all other
jurisdictions within the United States wherein the character of
the properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary. Each such
Person has taken all actions and procedures customarily taken in
order to enter, for the purpose of conducting business or owning
property, each jurisdiction outside the United States wherein the
character of the properties owned or held by it or the nature of
the business transacted by it makes such actions and procedures
desirable.
(c) Authorization. Each Restricted Person which is a
corporation or partnership has duly taken all corporate or
partnership action necessary to authorize the execution and
delivery by it of the Loan Documents to which it is a party and
to authorize the consummation of the transactions contemplated
thereby and the performance of its obligations thereunder.
Borrowers are duly authorized to borrow funds hereunder.
(d) No Conflicts or Consents. The execution and delivery
by the various Related Persons of the Loan Documents to which
each is a party, the performance by each of its obligations under
such Loan Documents, and the consummation of the transactions
contemplated by the various Loan Documents, do not and will not
(i) conflict with any provision of (A) any domestic or foreign
law, statute, rule or regulation, (B) the articles or certificate
of incorporation, bylaws, charter, or partnership agreement or
certificate of any Related Person, or (C) any agreement,
judgment, license, order or permit applicable to or binding upon
any Related Person, (ii) result in the acceleration of any Debt
owed by any Related Person, or (iii) result in or require the
creation of any Lien upon any assets or properties of any Related
Person except as expressly contemplated in the Loan Documents.
Except as expressly contemplated in the Loan Documents no
consent, approval, authorization or order of, and no notice to or
filing with, any court or governmental authority or third party
is required in connection with the execution, delivery or
performance by any Related Person of any Loan Document or to
consummate any transactions contemplated by the Loan Documents.
(e) Enforceable Obligations. This Agreement is, and the
other Loan Documents when duly executed and delivered will be,
legal and binding obligations of each Related Person which is a
party hereto or thereto, enforceable in accordance with their
respective terms except as limited by bankruptcy, insolvency,
moratorium, fraudulent conveyance, or similar laws of general
application relating to the enforcement of creditors' rights and
as limited by general equitable principles.
(f) Initial Financial Statements. The Initial Financial
Statements fairly present the Consolidated financial position at
the respective dates thereof and the Consolidated results of
operations and the changes in Consolidated financial position for
the respective periods thereof for each entity for which Initial
Financial Statements have been provided. Since the date of such
audited annual Initial Financial Statements no material adverse
change has occurred in the financial condition or businesses or
in Consolidated financial condition or businesses of such entity,
except as reflected in the Disclosure Schedule. All Initial
Financial Statements were prepared in accordance with GAAP.
(g) Other Obligations. No Related Person has any
outstanding Debt of any kind (including contingent obligations,
tax assessments, and unusual forward or long-term commitments)
which is, in the aggregate, material with respect to Borrowers'
Consolidated financial condition and not shown in the Initial
Financial Statements or disclosed in the Disclosure Schedule.
(h) Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Related
Person to Agent or any Lender in connection with the negotiation
of this Agreement or in connection with any transaction
contemplated hereby contains any untrue statement of a material
fact or omits to state any material fact known to any Related
Person (other than industry risks normally associated with the
types of businesses conducted by the Related Persons) necessary
to make the statements contained herein or therein not misleading
as of the date made or deemed made. There is no fact known to
any Related Person (other than industry risks normally associated
with the types of businesses conducted by the Related Persons)
that has not been disclosed to Agent and each Lender in writing
which could materially and adversely affect Borrowers'
Consolidated properties, business, prospects or condition
(financial or otherwise). Borrowers have heretofore delivered to
Agent and each Lender true, correct and complete copies of any
letters and documents listed in the Disclosure Schedule.
(i) Litigation. Except as disclosed in the Initial
Financial Statements or in the Disclosure Schedule: (i) there
are no actions, suits or legal, equitable, arbitrative or
administrative proceedings pending, or to the knowledge of any
Related Person threatened, against any Related Person before any
federal, state, municipal or other court, department, commission,
body, board, bureau, agency, or instrumentality, domestic or
foreign, and there are no outstanding judgments, injunctions,
writs, rulings or orders by any such governmental entity against
any Related Person or any Related Person's stockholders,
partners, directors or officers, which do or may materially and
adversely affect any Borrower individually or on a Consolidated
basis any Borrower and its Consolidated Subsidiaries, their
ownership or use of any of their assets or properties, their
businesses or financial condition or prospects, or the right or
ability of any Related Person to enter into the Loan Documents to
which it is a party or to consummate the transactions
contemplated thereby or to perform its obligations thereunder.
(j) ERISA Liability. Except as disclosed in the Initial
Financial Statements or in the Disclosure Schedule, no
Termination Event has occurred with respect to any ERISA Plan and
the Related Persons are in compliance with ERISA in all material
respects. No Related Person is required to contribute to, or has
any other absolute or contingent liability in respect of, any
"multiemployer plan" as defined in Section 4001 of ERISA.
(k) Names and Places of Business. No Borrower has, during
the preceding five years, been known by or used any other
corporate, partnership or fictitious name, except as disclosed in
the Disclosure Schedule. Except as otherwise indicated in the
Disclosure Schedule, the chief executive office and principal
place of business of Borrowers are located at the address of
Borrowers set out in Section 9.3 hereof.
(l) Subsidiaries. No Borrower (i) has any Subsidiary which
has assets of $1,000,000 or more, or (ii) owns any stock in any
other corporation or association which is not a Subsidiary,
except as listed in the Disclosure Schedule. No Related Person
is a member of any general or limited partnership, joint venture
or association of any type whatsoever except those listed in the
Disclosure Schedule and associations, joint ventures or other
relationships (a) which are established pursuant to a standard
form operating agreement or similar agreement or which are
partnerships for purposes of federal income taxation only, (b)
which are not corporations or partnerships (or subject to the
Uniform Partnership Act) under applicable state law, and (c)
whose businesses are limited to the exploration, development and
operation of oil, gas or mineral properties and interests owned
directly by the parties in such associations, joint ventures or
relationships. As of the date hereof each Borrower owns,
directly or indirectly, the equity interest in each of its
Subsidiaries which is indicated in the Disclosure Schedule.
(m) Title to Properties. Each Restricted Person has
defensible title to all of its properties and assets, free and
clear of all Prohibited Liens and of all impediments to the use
of such properties and assets in such Restricted Person's
business, except that no representation or warranty is made with
respect to any oil, gas or mineral property or interest to which
no proved oil or gas reserves are properly attributed.
(n) Year 2000 Compliance. Borrowers have (i) initiated a
review and assessment of all areas within their and each of their
Subsidiaries' business and operations (including those affected
by suppliers and vendors) that could be adversely affected by the
"Year 2000 Problem" (that is, the risk that computer applications
used by Borrowers and their Subsidiaries may be unable to
recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999, (ii)
developed a plan and timeline for addressing the Year 2000
Problem on a timely basis, and (iii) to date, implemented that
plan in accordance with that timetable. Borrowers reasonably
believe that all computer applications (including those of its
suppliers and vendors) that are material to their or any of their
Subsidiaries' business and operations will on a timely basis be
able to perform properly date-sensitive functions for all dates
before and after January 1, 2000 (that is, be "Year 2000
compliant"), except to the extent that a failure to do so could
not reasonably be expected to materially and adversely affect
Borrowers on a Consolidated basis.
Section 4.2. Representation by Lenders. Each Lender hereby
represents that it will acquire its Note for its own account in
the ordinary course of its commercial lending business; however,
the disposition of such Lender's property shall at all times be
and remain within its control and, in particular and without
limitation, such Lender may sell or otherwise transfer its Note,
any participation interest or other interest in its Note, or any
of its other rights and obligations under the Loan Documents.
ARTICLE V -- Covenants of Borrowers
Section 5.1. Affirmative Covenants. Each Borrower jointly
and severally warrants, covenants and agrees that until the full
and final payment of the Obligations and the termination of this
Agreement, unless Majority Lenders have previously agreed
otherwise in writing:
(a) Payment and Performance. Each Borrower will pay all
amounts owed by it under the Loan Documents in accordance with
the terms thereof and will observe, perform and comply with every
covenant, term and condition expressed or implied in the Loan
Documents. Each Borrower will cause the other Related Persons to
observe, perform and comply with every such term, covenant and
condition.
(b) Books, Financial Statements and Reports. Each Related
Person will at all times maintain full and accurate books of
account and records. Borrowers will maintain and will cause
their respective Subsidiaries to maintain a standard system of
accounting and will furnish the following statements and reports
to Agent and each Lender at Borrowers' expense:
(i) As soon as available, and in any event within 105
days after the end of each Fiscal Year, complete
Consolidated financial statements of Parent, together with
all notes thereto, prepared in reasonable detail in
accordance with GAAP, together with an opinion, based on an
audit using generally accepted auditing standards, by KPMG
Peat Marwick, or other independent certified public
accountants selected by Parent and acceptable to Agent,
stating that such Consolidated financial statements have
been so prepared. These Consolidated financial statements
shall contain a Consolidated balance sheet as of the end of
such Fiscal Year and Consolidated statements of earnings, of
cash flows, and of changes in stockholders' equity for such
Fiscal Year, each setting forth in comparative form the
corresponding figures for the preceding Fiscal Year. In
addition, within 105 days after the end of each Fiscal Year
Borrowers will furnish to Agent and each Lender a
certificate in the form of Exhibit D signed by the President
or Vice President-Finance of Borrowers, stating that such
financial statements are accurate and complete, stating that
he has reviewed the Loan Documents, containing all
calculations required to be made to show compliance or
non-compliance with the provisions of Sections 5.2(g)(i) and
(ii), and further stating that there is no condition or
event at the end of such Fiscal Year or at the time of such
certificate which constitutes a Default or specifying the
nature and period of existence of any such condition or
event.
(ii) As soon as available, and in any event within 50
days after the end of each Fiscal Quarter:
(A) a Consolidated and consolidating balance sheet
and income statement of Parent, as at the end of such
Fiscal Quarter and for the period from the beginning of
the then current Fiscal Year to the end of such Fiscal
Quarter, all in reasonable detail and prepared in
accordance with GAAP, subject to changes resulting from
normal year-end adjustments;
(B) a Consolidated statement of cash flows of
Parent for the period from the beginning of the then
current Fiscal year to the end of such Fiscal Quarter,
in reasonable detail and prepared in accordance with
GAAP, subject to changes resulting from normal year-end
adjustments; and
(C) a certificate in the form of Exhibit D signed
by the President or Vice President-Finance of
Borrowers, stating that such financial statements are
accurate and complete, stating that he has reviewed the
Loan Documents, containing all calculations required to
be made by Borrowers to show compliance or
non-compliance with the provisions of Sections
5.2(g)(i) and (ii), and further stating that there is
no condition or event at the end of such Fiscal Quarter
or at the time of such certificate which constitutes a
Default or specifying the nature and period of
existence of any such condition or event.
(iii) Promptly upon their becoming available,
copies of all financial statements, reports, notices and
proxy statements sent by any Restricted Person to its
stockholders or partners and all registration statements,
periodic reports and other statements and schedules filed by
any Restricted Person with any securities exchange, the
Securities and Exchange Commission or any similar
governmental authority, including any information or
estimates with respect to Parent's oil and gas business
(including its exploration, development and production
activities) which are required to be furnished in Parent's
annual report pursuant to Sections 13 or 15(d) of the
Securities Exchange Act of 1934, as amended.
(c) Other Information and Inspections. Borrowers will, and
will cause each Restricted Person to, furnish to Agent any
information which Agent may from time to time request concerning
any covenant, provision or condition of the Loan Documents or any
matter in connection with the Restricted Persons' businesses and
operations. Each Restricted Person will permit representatives
appointed by Agent, including independent accountants, agents,
attorneys, appraisers and any other persons, to visit and inspect
any of such Restricted Person's property during normal office
hours, including its books of account, other books and records,
and any facilities or other business assets, and to make extra
copies therefrom and photocopies and photographs thereof, and to
write down and record any information such representatives
obtain, and each Restricted Person shall permit Agent or its
representatives to investigate and verify the accuracy of the
information furnished to Agent in connection with the Loan
Documents and to discuss all such matters with its officers,
employees and representatives. Each of Agent and Lenders agrees
that it will take all reasonable steps to keep confidential any
information given to it by any Restricted Person, provided,
however, that this restriction shall not apply to information
which (i) has at the time in question entered the public domain,
(ii) is required to be disclosed by law or by any order, rule or
regulation (whether valid or invalid) of any court or
governmental agency or authority, (iii) is disclosed to Agent or
any Lender or any of their respective examiners, Affiliates,
auditors, attorneys or agents (which Affiliates, auditors,
attorneys, and agents shall be deemed bound by the restrictions
of this sentence), (iv) is furnished to prospective successor
Agents or to purchasers or prospective purchasers of
participations or interests in the Loans or the Notes (provided
that any such Persons who are not Affiliates of a Lender have
agreed to be bound by the restrictions of this sentence), or (v)
is disclosed in connection with enforcement of the Loan Documents
during the continuance of a Default.
(d) Notice of Material Events and Change of Address.
Borrowers will promptly notify Agent and each Lender (i) of any
material adverse change in any Borrower's individual financial
condition or in Parent's Consolidated financial condition, (ii)
of the occurrence of any Default, (iii) of the acceleration of
the maturity of any Debt owed by any Related Person or of any
default by any Related Person under any indenture, mortgage,
agreement, contract or other instrument to which any of them is a
party or by which any of them or any of their properties is
bound, if such acceleration or default might have a material
adverse effect upon any Borrower's individual financial condition
or upon Parent's Consolidated financial condition, (iv) of any
material adverse claim (or any claim of $5,000,000 or more)
asserted against any Related Person or with respect to any
Related Person's properties, (v) of the occurrence of any
Termination Event, and (vi) of the filing of any suit or
proceeding against any Related Person in which an adverse
decision could have a material adverse effect upon any Borrower's
individual financial condition, business, or operations or upon
Parent's Consolidated financial condition, business or
operations. Upon the occurrence of any of the foregoing the
Restricted Persons will take all necessary or appropriate steps
to remedy promptly any such material adverse change, Default or
default, to protect against any such adverse claim, to defend any
such suit or proceeding, and to resolve all controversies on
account of any of the foregoing. Borrowers will also notify
Agent in writing at least twenty Business Days prior to the date
that any Related Person which is a party to any Loan Document
changes its name or the location of its chief executive office.
(e) Maintenance of Properties. Each Restricted Person will
maintain, preserve, protect, and keep all property used or useful
in the conduct of its business in good condition and in
compliance with all applicable laws, rules and regulations, and
will from time to time make all repairs, renewals and
replacements needed to enable the business and operations carried
on in connection therewith to be promptly and advantageously
conducted at all times.
(f) Maintenance of Existence and Qualifications. Each
Restricted Person which is a corporation, partnership or business
trust will maintain and preserve its corporate, partnership or
business trust existence and its rights and franchises in full
force and effect and will qualify to do business as a foreign
corporation, partnership or business trust in all states or
jurisdictions where required by applicable law.
(g) Payment of Trade Debt, Taxes, etc. Each Restricted
Person will (i) timely file all required tax returns; (ii) timely
pay all taxes, assessments, and other governmental charges or
levies imposed upon it or upon its income, profits or property;
(iii) within thirty days after the same becomes due pay all Debt
owed by it on ordinary trade terms to vendors, suppliers and
other Persons providing goods and services used by it in the
ordinary course of its business; (iv) pay and discharge when due
all other Debt now or hereafter owed by it; and (v) maintain
appropriate accruals and reserves for all of the foregoing Debt
in accordance with GAAP. Each Restricted Person may, however,
delay paying or discharging any such Debt so long as it is in
good faith contesting the validity thereof by appropriate
proceedings and it has set aside on its books adequate reserves
therefor to the extent required by GAAP.
(h) Insurance. Each Restricted Person will keep or cause
to be kept adequately insured by financially sound and reputable
insurers, its surface equipment and other property of a character
usually insured by similar Persons engaged in the same or similar
businesses. Each Restricted Person shall at all times maintain
(1) adequate insurance against fire, casualty and any other
hazards normally insured against, and (2) adequate insurance
against its liability for injury to persons or property, which
insurance shall be by financially sound and reputable insurers.
(i) Payment of Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, Borrowers will
pay all reasonable costs and expenses (including attorneys' fees
but excluding normal overhead) (i) of Agent in connection with
the preparation, execution and delivery of the Loan Documents,
and any and all consents, waivers or other documents or
instruments relating thereto, (ii) of any Person in connection
with the filing, recording, refiling and re-recording of any Loan
Documents and any other documents or instruments or further
assurances required to be filed or recorded or refiled or
re-recorded by the terms of any Loan Document, (iii) of Agent in
connection with the borrowings hereunder and other action
reasonably required in the course of administration hereof, and
(iv) of Agent or any Lender in connection with the defense at any
time of the Loan Documents and the Obligations, or, after the
occurrence of a Default, in connection with the enforcement of
the Loan Documents and the Obligations or the defense of Agent's
or such Lender's exercise of its rights in respect thereof.
(j) Performance on Restricted Person's Behalf. If any
Restricted Person fails to pay any taxes, insurance premiums,
expenses, fees, or other amounts it is required to pay under any
Loan Document, Agent may pay the same, and shall use its best
efforts to notify Borrowers prior to making any such payment;
provided, however, that any failure by Agent to so notify
Borrowers shall not limit or otherwise impair Agent's ability to
make any such payment. Borrowers shall immediately reimburse
Agent for any such payments and each amount paid by Agent shall
constitute an Obligation owed hereunder and shall bear interest
at the Late Payment Rate from the date such amount is paid by
Agent until the date such amount is repaid to Agent.
(k) Compliance with Agreements and Law. Each Restricted
Person will perform all material obligations it is required to
perform under the terms of each indenture, mortgage, deed of
trust, security agreement, lease, franchise, agreement, contract
or other instrument or obligation to which it is a party or by
which it or any of its properties is bound. Each Restricted
Person will conduct its business and affairs in compliance with
all laws, regulations, and orders applicable thereto (including
those relating to pollution and other environmental matters).
(l) Evidence of Compliance. Each Restricted Person will
furnish to Agent and each Lender at such Restricted Person's or
Borrowers' expense all evidence which Agent or Majority Lenders
from time to time reasonably request, including the forms of
evidence and assurance described in Section 3.2(e), as to the
accuracy and validity of or compliance with all representations,
warranties and covenants made by any Related Person in the Loan
Documents, the satisfaction of all conditions contained therein,
and all other matters pertaining thereto.
(m) Year 2000 Compliance. Borrower will promptly notify
Agent in the event Borrowers discover or determine that any
computer application (including those of their suppliers and
vendors) that is material to their or any of their Subsidiaries'
business and operations will not be Year 2000 compliant on timely
basis, except to the extent that such failure could not
reasonably be expected to have a material and adverse effect on
Borrowers on a Consolidated basis.
Section 5.2. Negative Covenants. Borrowers jointly and
severally warrant, covenant and agree that until the full and
final payment of the Obligations and the termination of this
Agreement, unless Majority Lenders have previously agreed
otherwise in writing:
(a) Limitation on Debt. No Restricted Person will in any
manner owe or be liable for Restricted Debt except:
(i) the Obligations;
(ii) capital lease obligations (excluding oil, gas or
mineral leases) entered into in the ordinary course of the
Restricted Persons' businesses in arm's length transactions
at competitive market rates under competitive terms and
conditions in all respects, provided that the obligations
required to be paid in any Fiscal Year under any such
capital leases do not in the aggregate exceed $20,000,000
for all Restricted Persons;
(iii) unsecured Debt owed among Restricted Persons;
(iv) Debt which, at the time incurred, is at prevailing
market rates of interest and contains covenants and
conditions and events of default no more onerous to
Restricted Persons than the terms of this Agreement;
provided that no Default or Event of Default will result
from the incurrence of such Debt and be continuing;
(v) guaranties by one Restricted Person of Debt owed
by another Restricted Person, if such Debt either (1) is not
Restricted Debt, or (2) is allowed under subsections (i),
(ii), (iii) or (iv) of this subsection 5.2(a);
(vi) Debt of the Restricted Persons for plugging and
abandonment bonds or for letters of credit issued by any
Lender in place thereof which are required by regulatory
authorities in the area of operations, and Debt of the
Restricted Persons for other bonds or letters of credit
issued by any Lender which are required by such regulatory
authorities with respect to other normal oil and gas
operations;
(vii) obligations under the Subordinated Parent
Indenture, the Subordinated Parent Debentures and the
Subordinated Parent Guarantee;
(viii) non-recourse Restricted Debt as to which no
Restricted Person (A) provides any guaranty or credit
support of any kind (including any undertaking, guarantee,
indemnity, agreement or instrument that would constitute
Restricted Debt) or (B) is directly or indirectly liable (as
a guarantor or otherwise); provided, that after giving
effect to such Restricted Debt outstanding from time to
time, Borrowers are not in violation of Sections 5.2(g)(i)
and (ii);
(ix) Debt arising under forward, future, swap or
hedging contracts permitted pursuant to Section 5.2(i); and
(x) the Canadian Facility.
(b) Limitation on Liens. No Restricted Person will create,
assume or permit to exist any Lien upon any of the properties or
assets which it now owns or hereafter acquires, except:
(i) operators' liens under customary operating
agreements, statutory Liens for taxes, statutory mechanics'
and materialmen's Liens, and other similar statutory Liens,
provided such Liens secure only Debt which is not delinquent
or which is being contested as provided in Section 5.1(g);
(ii) Liens on any oil and gas properties which neither
have developed reserves (producing or non-producing)
properly attributable thereto nor are otherwise held under
lease by production of other reserves;
(iii) Liens on the Restricted Persons' office
facilities;
(iv) Liens to secure the Obligations;
(v) Liens on property securing Debt permitted under
Section 5.2(a)(viii) incurred to finance the purchase price
of such property and not secured by other property (except
for such property and receivables, contract rights and
similar intangibles related thereto and the proceeds
thereof); and
(vi) Liens described in Section 5.2(i)(i)(B) to secure
Debt arising under forward, future, swap or hedging
contracts permitted pursuant to Section 5.2(i)(i).
No Restricted Person will allow the filing or continued existence
of any financing statement describing as collateral any assets or
property of such Restricted Person, other than financing
statements which describe only collateral subject to a Lien
permitted under this section and which name as secured party or
lessor only the holder of such Lien.
(c) Limitation On Intercompany Transfers. No Restricted
Person will engage in any transaction with any other Restricted
Person or Unrestricted Subsidiary which involves the transfer of
assets by a Restricted Person in any manner (whether by loan,
purchase, dividend, capital contribution, or otherwise) except
(to the extent not otherwise prohibited hereunder or under the
other Loan Documents) as follows:
(i) Provided no Default exists immediately before or
immediately after such transaction: (A) Restricted Persons
(other than Devon Canada) may make loans among one another,
any Subsidiary may pay dividends to Borrowers or any
Guarantor, and Restricted Persons may make capital
contributions to or purchase additional shares of capital
stock in Restricted Persons (other than Devon Canada), all
without limit, and (B) Restricted Persons may make loans or
capital contributions to or purchase additional shares of
capital stock in Devon Canada, provided that the aggregate
amount of all such loans, capital contributions, purchases
of shares, and other provisions of funds to Devon Canada
made after the date hereof shall not exceed $25,000,000;
(ii) So long as no Default exists immediately before or
immediately after such transaction, Restricted Persons may
make loans or capital contributions to, purchase shares of
common stock from, or otherwise provide funds to
Unrestricted Subsidiaries, provided that (A) the aggregate
amount of all such loans and capital contributions
(excluding any such loans which have at the time in question
been repaid) may at no time in the aggregate with respect to
all such Unrestricted Subsidiaries exceed in any Fiscal Year
(I) $50,000,000 minus (II) the aggregate amount of any
dividends made by Parent in such Fiscal Year as permitted
pursuant to Section 5.2(d), and (B) in the event the book
value of the assets of any Unrestricted Subsidiary at any
time exceeds $25,000,000, such Subsidiary shall cease to be
an Unrestricted Subsidiary and shall automatically become a
Restricted Person and a Guarantor, to the extent provided in
Section 6.2;
(iii) Any Restricted Person other than Parent may
pay dividends to its shareholders so long as the full amount
of such dividends is received (either directly or through a
series of concurrent transactions) by any or all of
Borrowers or Guarantors;
(iv) The Restricted Persons may sell (and pay for)
goods and services to each other, at fair prices obtainable
in arm's-length transactions with third parties, in
transactions which do not involve the payment of cash or
cash equivalents by Borrowers to any Person other than each
other; and
(v) Parent may pay quarterly interest payments on
the Subordinated Parent Debentures to Devon Trust, pursuant
to the express terms thereof, and Devon Trust may pay
quarterly cash dividends to the holders of the Devon Trust
Securities pursuant to the express terms thereof, provided
that both immediately before and immediately after any such
proposed interest payment and dividend payment, Parent is in
compliance with Section 5.2(g)(i) and (ii) and no Default
under Section 7.1(a), 7.1(f) or 7.1(h) is continuing.
In addition to the foregoing, Borrowers and Guarantors may,
without regard to the $50,000,000 limit referred to in subsection
(ii) of this section, acquire interests from unaffiliated third
parties in corporations or limited partnerships who thereby
become (or already are) Subsidiaries of Parent, provided that (1)
no such corporation or limited partnership may be designated as
an Unrestricted Subsidiary, (2) Borrowers or Guarantors must
acquire directly more than 50% (by vote) of the voting stock of
any corporation so acquired, and (3) Borrowers or Guarantors must
acquire directly 100% of the general partner interests in any
limited partnership so acquired.
(d) Limitation on Distributions and Repurchases; Dividends
and Redemptions; Investments. Except as permitted in Section
5.2(c) or in the last sentence of this subsection, no Restricted
Person will otherwise declare or pay any dividends on, or make
any distribution or other payment in respect of, any class of its
capital stock or any partnership or other interests in it, nor
will any Restricted Person directly or indirectly make, cause or
permit any capital contribution to or purchase, redeem, acquire
or retire any shares of the capital stock of or partnership
interests or other interests in any Related Person (whether such
interests are now or hereafter issued, outstanding or created),
or cause or permit any reduction or retirement of the capital
stock of any Related Person, or agree to do any of the foregoing.
Each Restricted Person may declare and pay to any Persons
dividends payable only in its common or preferred stock, so long
as Parent's direct or indirect interest in any of its
Subsidiaries is not thereby reduced. In addition to the
foregoing, Parent may declare and pay to any Persons dividends or
distributions on, or purchase, redeem, acquire or otherwise
retire shares of, the capital stock of Parent in an aggregate
amount not to exceed in any Fiscal Year (I) $50,000,000 minus
(II) the aggregate amount of any loans or capital contributions
made to Unrestricted Subsidiaries by Restricted Persons in such
Fiscal Year as permitted pursuant to Section 5.2(c)(ii), provided
that both immediately before and immediately after any such
proposed dividend, distribution or repurchase, no Default is
continuing. Notwithstanding the foregoing, so long as no Default
is continuing, Restricted Persons may make:
(A) investments in direct obligations of, or
obligations guaranteed by the full faith and credit of, the
United States of America, maturing in twelve months or less
from the date of acquisition thereof by such Restricted
Person,
(B) demand deposits, and time deposits (including
certificates of deposit) maturing within one year from the
date of deposit thereof, with a domestic office (1) of Agent
or any Lender, or (2) of any bank or trust company organized
under the laws of the United States of America or any State
therein, provided that (a) the full amount of each such
deposit in such bank or trust company is insured by the
Federal Deposit Insurance Corporation or (b) such bank or
trust company has capital, surplus and undivided profits
aggregating at least $50,000,000,
(C) investments in (1) publicly traded debt securities
with an original term of 270 days or less or (2) interest
bearing securities issued to the public by banks, associated
entities or similar institutions, which can be put to the
issuer at the investor's unconditional option within one
month after acquisition, so long as in each case such
securities have a credit rating of at least A-1 from
Standard & Poor's Corporation or P-1 from Xxxxx'x Investors
Service, Inc.
(e) Limitation on Mergers, Issuances of Securities. No
Restricted Person will merge or consolidate with or into any
other Person, except that (i) any Related Person which is a
Subsidiary of Parent may be consolidated with Borrowers or any
other Guarantor so long as Borrowers or a Guarantor is the
surviving entity and (ii) any Subsidiaries of Parent may merge or
consolidate with or into each other so long as the surviving
entity is a Guarantor. No Restricted Person (other than Parent
and Devon Trust) will issue any additional shares of its capital
stock, additional partnership interests or other securities or
any options, warrants or other rights to acquire such additional
shares, partnership interests or other securities except to a
Restricted Person of which such issuer is already directly or
indirectly a Subsidiary and only to the extent not otherwise
forbidden under the terms hereof. Devon Trust will not issue any
securities except common securities to Parent and the Devon Trust
Securities. Devon Nevada and each Guarantor will at all times
remain wholly-owned direct or indirect Subsidiaries of Parent,
Parent will at all times own all of the outstanding common
securities of Devon Trust, and no Restricted Person will allow
any diminution of Borrowers' or any Guarantor's interest (direct
or indirect) therein. Parent will not issue or have outstanding
any securities other than its common or preferred stock and the
Subordinated Parent Debentures.
(f) Fiscal Year. No Related Person will change its fiscal
year.
(g) Financial Covenants.
(i) Funded Debt to Total Capitalization. The ratio of
Parent's Consolidated Total Funded Debt to Parent's Total
Capitalization will never exceed 65%. As used herein,
"Total Funded Debt" means (A) Restricted Debt referred to in
clauses (a), (b), (c), (d), (e) and (h) of the definition of
"Restricted Debt" plus (B) 30% of the outstanding balance of
the Devon Trust Securities, and "Total Capitalization" means
the sum (without duplication) of (I) Parent's Consolidated
Total Funded Debt plus (II) Parent's Consolidated
shareholder's equity plus (III) 70% of the outstanding
balance of the Devon Trust Securities.
(ii) Funded Debt to EBITDA. The ratio of Parent's
Consolidated Total Funded Debt (as defined in clause (i)
above) to EBITDA, on a rolling four-quarter basis, will
never exceed 3.75 to 1. As used herein, "EBITDA" means, for
any period, the sum of the amount for such period of
Consolidated net income, Consolidated Interest Expense,
depreciation expense, depletion expense, amortization
expense, federal and state income taxes, exploitation and
abandonment expense and other non-cash charges and expenses,
and "Consolidated Interest Expense" means, for any period,
total interest expense (including distributions on the Devon
Trust Securities treated as interest expense), whether paid
or accrued, including without limitation all commissions,
discounts and other fees and charges owed with respect to
Letters of Credit.
(h) Devon Trust; Devon Trust Securities. Devon Trust shall
exist for the exclusive purposes of (A) issuing the Devon Trust
Securities, (B) investing the gross proceeds of the Devon Trust
Securities in the Subordinated Parent Debentures and (C) engaging
in only those other activities necessary or incidental thereto.
Parent shall exercise its option to defer interest payments on
the Subordinated Parent Debentures rather than default on such
interest payments. Devon Trust shall not be dissolved without
prior written notice by Parent to Majority Lenders. Devon Trust
shall not redeem the Devon Trust Securities prior to their stated
maturity, and Parent shall not prepay or redeem the Subordinated
Parent Debentures prior to their stated maturity, unless both
immediately before and immediately after any such proposed
prepayment or redemption, Parent is in compliance with Section
5.2(g) and no Default under Section 7.1(a), 7.1(f) or 7.1(h) is
continuing.
(i) Hedging Contracts. No Restricted Person will be a
party to or in any manner be liable on any forward, future, swap
or hedging contract, unless such contracts qualify under GAAP as
a hedge of oil and gas production, floating rate Debt or foreign
currency needs (and not as a speculative investment), such
contracts are entered into in the ordinary course of the
Restricted Persons' businesses, and
(i) if such contracts are entered into with the
purpose and effect of fixing prices on oil or gas expected
to be produced by the Restricted Persons:
(A) such contracts for any single month (determined,
in the case of contracts that are not settled on a
monthly basis, by a monthly proration acceptable to
Agent) do not, in the aggregate, cover amounts greater
than seventy-five percent (75%) of the Related Persons'
aggregate Projected Oil and Gas Production anticipated
to be sold in the ordinary course of the Restricted
Persons' businesses for such month;
(B) such contracts do not require any Related Person
to provide any Lien to secure Borrower's obligations
thereunder, other than Liens on cash or cash
equivalents in an aggregate amount not more than
$25,000,000; and
(C) each such contract is with a counterparty or has a
guarantor of the obligation of the counterparty who
(unless such counterparty is Agent, any Lender or any
of their Affiliates) at the time the contract is made
has long-term obligations rated AA or better by S&P or
Aa2 or better by Xxxxx'x or is an investment grade-
rated industry participant.
As used in this subsection (i), the term "Projected Oil and
Gas Production" means the projected production of oil or gas
(measured by volume unit or BTU equivalent, not sales price)
for the term of the contracts or a particular month, as
applicable, from properties and interests owned by any
Restricted Person which have attributable to them proved oil
or gas reserves.
(ii) if such contracts are entered into with the
purpose and effect of fixing interest rates on a principal
amount of indebtedness of such Restricted Person that is
accruing interest at a variable rate, the aggregate notional
amount of such contracts never exceeds the anticipated
outstanding principal balance of the indebtedness to be
hedged by such contracts or an average of such principal
balances calculated using a generally accepted method of
matching interest swap contracts to declining principal
balances, and the floating rate index of each such contract
generally matches the index used to determine the floating
rates of interest on the corresponding indebtedness to be
hedged by such contract.
ARTICLE VI -- Guaranties and Offset
Section 6.1. Bank Accounts; Offset. To secure the
repayment of the Obligations, Borrowers and Guarantors hereby
grant to Agent and each Lender a security interest, a lien, and a
right of offset, each of which shall be upon and against all
right, title, and interest of any Restricted Person in (a) any
and all moneys, securities or other property (and the proceeds
therefrom) of Borrowers and Guarantors now or hereafter held or
received by or in transit to Agent or such Lender from or for the
account of Borrowers or Guarantors, whether for safekeeping,
custody, pledge, transmission, collection or otherwise, (b) any
and all deposits (general or special, time or demand, provisional
or final) of Borrowers or Guarantors with Agent or such Lender,
and (c) any other credits and claims of Borrowers or Guarantors
at any time existing against Agent or such Lender, including
claims under certificates of deposit. Upon the occurrence of any
Default, each of Agent and Lenders is hereby authorized to
foreclose upon, offset, appropriate, and apply, at any time and
from time to time, without notice to Borrowers or Guarantors, any
and all items hereinabove referred to against the Obligations
(whether or not such Obligations are then due and payable). To
the extent that Borrowers or Guarantors have accounts designated
as royalty or joint interest owner accounts, the foregoing
security interest, lien and right of offset shall not extend to
funds in such accounts which belong to, or otherwise arise from
payments to Borrowers or Guarantors for the account of, third
party royalty or joint interest owners.
Section 6.2. Guaranties of Subsidiaries. Each Related
Person (other than Borrowers and Devon Trust) which is now
existing or is created, acquired or comes into existence after
the date hereof and which after the date hereof has assets with a
book value of $25,000,000 or more shall be designated a
Restricted Person and, except as to Devon Canada, shall promptly
execute and deliver to Agent for the benefit of Agent and Lenders
an absolute and unconditional guaranty of the timely repayment of
the Obligations and the due and punctual performance of the
obligations of Borrowers hereunder, which guaranty shall be
satisfactory to Agent in form and substance. Borrowers and
Guarantors will cause each such Related Person to deliver to
Agent, simultaneously with its delivery of such a guaranty,
written evidence satisfactory to Agent and its counsel that such
Related Person has taken all corporate or partnership action
necessary to duly approve and authorize its execution, delivery
and performance of such guaranty and any other documents which it
is required to execute. Notwithstanding the foregoing, if any
Related Person not wholly owned (directly or indirectly) by
Parent would violate a duty to its minority interest owners by
becoming a Guarantor, such Related Person need not become a
Guarantor and Parent will instead, if requested by Agent, give
(or cause to be given) a first security interest (under documents
in form and substance acceptable to Agent) in its entire
ownership interest in such Related Person to Agent for the
benefit of Lenders.
Section 6.3. Guarantors' Right of Setoff. Insofar as any
Guarantor and Borrowers are concerned, any payment by any such
Guarantor under its guaranty of the Obligations shall be deemed
to be a repayment of, and shall be set off against any
intercompany loans made by Borrowers to such Guarantor.
ARTICLE VII -- Events of Default and Remedies
Section 7.1. Events of Default. Each of the following
events constitutes an Event of Default under this Agreement:
(a) Any Related Person fails to pay any Obligation when due
and payable, whether at a date for the payment of a fixed
installment or contingent or other payment to Agent or a Lender
or as a result of acceleration or otherwise;
(b) Any "default", "event of default", "Default" or "Event
of Default" occurs under any Loan Document (other than this
Agreement) which defines any such term, and the same is not
remedied within the applicable period of grace (if any) provided
in such Loan Document;
(c) Any Related Person fails (other than as referred to in
subsections (a) and (b) above) to duly observe, perform or comply
with any covenant, agreement, condition or provision of any Loan
Document, and such failure is not remedied within the applicable
Grace Period;
(d) Any representation or warranty previously, presently or
hereafter made in or in writing by or on behalf of any Related
Person in connection with any Loan Document shall prove to have
been false or incorrect in any material respect on any date on or
as of which made, and the represented or warranted facts do not
become true and correct within the applicable Grace Period;
(e) Any Restricted Person fails to duly observe, perform or
comply with any agreement with any Person or any term or
condition of any instrument, if such agreement or instrument is
materially significant to Borrowers on a Consolidated basis, and
such failure is not remedied within the applicable period of
grace (if any) provided in such agreement or instrument;
(f) Any Related Person (i) fails to duly pay any Debt
constituting principal or interest owed by it with respect to
borrowed money or money otherwise owed under any note, bond, or
similar instrument, including without limitation the Subordinated
Parent Debentures, the Subordinated Parent Indenture, the
Subordinated Parent Guarantee and the Devon Trust Securities, or
(ii) fails to pay when the same becomes due and payable any other
Debt in excess of $1,000,000 (other than trade payables
outstanding in compliance with Section 5.1(g)(iii)), or (iii)
breaches or defaults in the performance of any agreement or
instrument by which any Debt described in the preceding clauses
(i) or (ii) is issued, evidenced, governed, or secured, and any
such failure, breach or default continues beyond any applicable
period of grace provided therefor;
(g) Either (i) any "accumulated funding deficiency" (as
defined in Section 412(a) of the Internal Revenue Code of 1986,
as amended) in excess of $1,000,000 exists with respect to any
ERISA Plan, whether or not waived by the Secretary of the
Treasury or his delegate, provided, pursuant to Section
412(c)(10) of the Internal Revenue Code of 1986, as amended, any
contribution for an ERISA Plan year made during the period set
forth in Section 412(c)(10) shall be deemed to have been made on
the last day of such ERISA Plan year, or (ii) any Termination
Event occurs with respect to any ERISA Plan and the then current
value of such ERISA Plan's benefit liabilities exceeds the then
current value of such ERISA Plan's assets available for the
payment of such benefit liabilities by more than $1,000,000 (or
in the case of a Termination Event involving the withdrawal of a
substantial employer, the withdrawing employer's proportionate
share of such excess exceeds such amount);
(h) Any Related Person:
(i) suffers the entry against it of a judgment, decree
or order for relief by a court of competent jurisdiction in
an involuntary case commenced under any applicable
bankruptcy, insolvency or other similar law of any
jurisdiction now or hereafter in effect, including the
federal Bankruptcy Code, as from time to time amended, or
has any such case commenced against it which remains
undismissed for a period of thirty days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in
effect, including the federal Bankruptcy Code, as from time
to time amended; or applies for or consents to the entry of
an order for relief in an involuntary case under any such
law; or makes a general assignment for the benefit of
creditors; or fails generally to pay its debts as such debts
become due; or takes corporate or other action to authorize
any of the foregoing; or
(iii) suffers the appointment of or taking
possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of all or any
substantial part of its property in a proceeding brought
against or initiated by it, and such appointment or taking
possession is neither made ineffective nor discharged within
thirty days after the making thereof, or such appointment or
taking possession is consented to, requested by, or
acquiesced to by it; or
(iv) suffers the entry against it of a final judgment
for the payment of money in excess of $5,000,000, unless the
same is discharged within thirty days after the date of
entry thereof or an appeal or appropriate proceeding for
review thereof is taken within said period and a stay of
execution pending such appeal is obtained; or
(v) suffers a writ or warrant of attachment or any
similar process to be issued by any court against all or any
substantial part of its property, and such writ or warrant
of attachment or any similar process is not stayed or
released within thirty days after the entry or levy thereof
or after any stay is vacated or set aside;
(j) any Person (or syndicate or group of Persons which is
deemed a "person" for the purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) acquires more than
thirty percent (30%) of the outstanding stock of Parent having
ordinary voting power (disregarding changes in voting power based
on the occurrence of contingencies) for the election of
directors, or during any period of twelve successive months a
majority of the Persons who were directors of Parent at the
beginning of such period cease to be directors of Parent; and
Upon the occurrence of an Event of Default described in
subsection (h)(i), (h)(ii) or (h)(iii) of this section with
respect to Borrowers, all of the Obligations shall thereupon
become immediately due and payable, without presentment, demand,
protest, notice of protest, declaration or notice of acceleration
or intention to accelerate, or other notice or declaration of any
kind, all of which are hereby expressly waived by Borrowers and
each Restricted Person who at any time guaranties, ratifies or
approves this Agreement. During the continuance of any other
Event of Default, and with the consent of Majority Lenders, Agent
may at any time and from time to time (unless all Defaults have
theretofore been remedied) without notice to Borrowers or any
Guarantor declare any or all of the Obligations immediately due
and payable, and all such Obligations shall thereupon be
immediately due and payable, without presentment, demand,
protest, notice of protest, declaration or notice of acceleration
or intention to accelerate, or other notice or declaration of any
kind, all of which are hereby expressly waived by Borrowers and
each Restricted Person who at any time guaranties, ratifies or
approves this Agreement. After any such acceleration neither
Agent nor any Lender shall have any obligation to make any
further Advances or Loans of any kind under any agreement with
any Restricted Person. The term "Grace Period" as used herein
with respect to an Event of Default for which a Grace Period is
specifically provided shall mean the period beginning on the date
of the related Default and ending thirty days after written
notice of such Default is given by Agent to Borrowers, provided
that such period shall be reduced to two days if Borrowers have
not previously given written notice of such Default to Agent and
Lenders as required in Section 5.1(d).
Section 7.2. Remedies. If any Default shall occur and be
continuing, Agent and Lenders may protect and enforce their
rights under the Loan Documents by any appropriate proceedings,
including proceedings for specific performance of any covenant or
agreement contained in any Loan Document, and Agent and Lenders
may enforce the payment of any Obligations due or enforce any
other legal or equitable right. All rights, remedies and powers
conferred upon Agent or Lenders under any Loan Document shall be
deemed cumulative and not exclusive of any other rights, remedies
or powers available under the other Loan Documents or at law or
in equity.
ARTICLE VIII -- Agent
Section 8.1. Appointment and Authority. Each Lender hereby
irrevocably authorizes Agent, and Agent hereby undertakes, to
receive payments of principal, interest and other amounts due
hereunder as specified herein and to take all other actions and
to exercise such powers under the Loan Documents as are
specifically delegated to Agent by the terms hereof or thereof,
together with all other powers reasonably incidental thereto.
The relationship of Agent to Lenders is only that of one
commercial bank acting as administrative agent for others, and
nothing in the Loan Documents shall be construed to constitute
Agent a trustee or other fiduciary for any holder of any of the
Notes or of any participation therein nor to impose on Agent
duties and obligations other than those expressly provided for in
the Loan Documents. With respect to any matters not expressly
provided for in the Loan Documents and any matters which the Loan
Documents place within the discretion of Agent, Agent shall not
be required to exercise any discretion or take any action, and it
may request instructions from Lenders with respect to any such
matter, in which case it shall be required to act or to refrain
from acting (and shall be fully protected and free from liability
to all Lenders in so acting or refraining from acting) upon the
instructions of Majority Lenders (including itself), provided,
however, that Agent shall not be required to take any action
which exposes it to a risk of personal liability that it
considers unreasonable or which is contrary to the Loan Documents
or to applicable law. Upon receipt by Agent from Borrowers of
any communication calling for action on the part of Lenders or
upon notice from any Lender to Agent of any Default or Event of
Default, Agent shall promptly notify each Lender thereof.
Section 8.2. Agent's Reliance, Etc. Neither Agent nor any
of its directors, officers, agents, attorneys, or employees shall
be liable for any action taken or omitted to be taken by any of
them under or in connection with the Loan Documents, including
their negligence of any kind, except that each shall be liable
for its own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, Agent (a) may treat the
payee of any Note as the holder thereof until Agent receives
written notice of the assignment or transfer thereof in
accordance with this Agreement, signed by such payee and in form
satisfactory to Agent; (b) may consult with legal counsel
(including counsel for Borrowers), independent public accountants
and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements,
warranties or representations made in or in connection with the
Loan Documents; (d) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms,
covenants or conditions of the Loan Documents on the part of any
Related Person or to inspect the property (including the books
and records) of any Related Person; (e) shall not be responsible
to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan
Document or any instrument or document furnished in connection
therewith; (f) may rely upon the representations and warranties
of the Related Persons and the Lenders in exercising its powers
hereunder; and (g) shall incur no liability under or in respect
of the Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (including any
telecopy, telegram, cable or telex) believed by it to be genuine
and signed or sent by the proper Person or Persons.
Section 8.3. Lenders' Credit Decisions. Each Lender
acknowledges that it has, independently and without reliance upon
Agent or any other Lender, made its own analysis of Borrowers and
the transactions contemplated hereby and its own independent
decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will,
independently and without reliance upon 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
decisions in taking or not taking action under the Loan
Documents.
Section 8.4. Indemnification. Each Lender agrees to
indemnify Agent (to the extent not reimbursed by Borrowers within
ten (10) days after demand) from and against such Lender's
Percentage Share of any and all liabilities, obligations, claims,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (including reasonable fees of
attorneys, accountants, experts, and advisors) of any kind or
nature whatsoever (in this section collectively called
"liabilities and costs") which to any extent (in whole or in
part) may be imposed on, incurred by, or asserted against Agent
growing out of, resulting from or in any other way associated
with any of the Loan Documents and the transactions and events
(including the enforcement thereof) at any time associated
therewith or contemplated therein. The foregoing indemnification
shall apply whether or not such liabilities and costs are in any
way or to any extent caused, in whole or in part, by any
negligent act or omission of any kind by Agent or any of its
officers, agents, attorneys, employees or representatives,
provided only that no Lender shall be obligated under this
section to indemnify Agent for that portion, if any, of any
liabilities and costs which is proximately caused by (and
attributed under any applicable principles of comparative fault
to) Agent's own individual gross negligence or willful
misconduct, as determined in a final judgment. Without
limitation of the foregoing, each Lender agrees to reimburse
Agent promptly upon demand for such Lender's Percentage Share of
any out-of-pocket expenses (including without limitation fees of
attorneys, accountants, and other experts and advisors) incurred
by Agent in connection with the preparation, execution,
administration, or enforcement of, or advice in respect of rights
and responsibilities under, the Loan Documents, all as reasonably
allocated by Agent, to the extent that Agent is not reimbursed
for such expenses by Borrowers as provided in such section. As
used in this section the term "Agent" shall refer not only to the
Person designated as such in Section 1.1 but also to each
director, officer, agent, attorney, employee, representative and
Affiliate of such Person.
Section 8.5. Rights as Lender. In its capacity as a
Lender, Agent shall have the same rights and obligations as any
Lender and may exercise such rights as though it were not Agent.
Agent may accept deposits from, lend money to, act as Trustee
under indentures of, and generally engage in any kind of business
with any of the Related Persons or their Affiliates, all as if it
were not Agent hereunder and without any duty to account therefor
to any other Lender.
Section 8.6. Sharing of Set-Offs and Other Payments. Each
of Agent and Lender agrees that if it shall, whether through the
exercise of rights of banker's lien, set off, or counterclaim
against Borrowers or otherwise, obtain payment of a portion of
the aggregate Obligations owed to it which, taking into account
all distributions made by Agent under Section 2.11, causes Agent
or such Lender to have received more than it would have received
had such payment been received by Agent and distributed pursuant
to Section 2.11, then (i) it shall be deemed to have
simultaneously purchased and shall be obligated to purchase
interests in the Obligations as necessary to cause Agent and all
Lenders to share all payments as provided for in Section 2.11,
and (ii) such other adjustments shall be made from time to time
as shall be equitable to ensure that Agent and all Lenders share
all payments of Obligations as provided in Section 2.11;
provided, however, that nothing herein contained shall in any way
affect the right of Agent or any Lender to obtain payment
(whether by exercise of rights of banker's lien, set-off or
counterclaim or otherwise) of indebtedness other than the
Obligations. Borrowers expressly consent to the foregoing
arrangements and agrees that any holder of any such interest or
other participation in the Obligations, whether or not acquired
pursuant to the foregoing arrangements, may to the fullest extent
permitted by law exercise any and all rights or banker's lien,
set-off, or counterclaim as fully as if such holder were a holder
of the Obligations in the amount of such interest or other
participation. If all or any part of any funds transferred
pursuant to this section is thereafter recovered from the seller
under this section which received the same, the purchase provided
for in this section shall be deemed to have been rescinded to the
extent of such recovery together with interest, if any, if
interest is required pursuant to court order to be paid on
account of the possession of such funds prior to such recovery.
Notwithstanding anything herein to the contrary, no Lender shall
be obligated to take any action described in this section which
would cause such Lender to purchase a participation in any
Offered Rate Portion of a second Lender's Loan or which would
otherwise obligate such first Lender to share in any loss or
delay caused by an Offered Rate Portion of a second Lender's Loan
not being paid when due.
Section 8.7. Investments. Whenever Agent in good faith
determines that it is uncertain about how to distribute to
Lenders any funds which it has received, or whenever Agent in
good faith determines that there is any dispute among Lenders
about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such
uncertainty or dispute. If Agent in good faith believes that the
uncertainty or dispute will not be promptly resolved, or if Agent
is otherwise required to invest funds pending distribution to
Lenders, Agent shall invest such funds pending distribution; all
interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to
the same Persons as such investment. All moneys received by
Agent for distribution to Lenders (other than to the Person who
is Agent in its separate capacity as a Lender) shall be held by
Agent pending such distribution solely as Agent for such Lenders,
and Agent shall have no equitable title to any portion thereof.
Section 8.8. Benefit of Article VIII. The provisions of
Sections 8.1 through 8.7 are intended solely for the benefit of
Agent and Lenders, and no Related Person shall be entitled to
rely on any such provision or assert any such provision in a
claim or defense against Agent or any Lender. Agent and Lenders
may amend such provisions as they desire without the consent of
Borrowers.
Section 8.9. Resignation. Agent may resign at any time by
giving written notice thereof to Lenders and Borrowers. Each
such notice shall set forth the date of such resignation. Upon
any such resignation Borrowers may, with the written concurrence
of Lenders whose aggregate Percentage Shares equal or exceed
fifty percent (50%), designate a successor Agent. If within
fifteen days after the date of such resignation Borrower makes no
such designation or such written concurrence is not given,
Majority Lenders shall have the right to appoint a successor
Agent. A successor must be appointed for any retiring Agent, and
such Agent's resignation shall become effective when such
successor accepts such appointment. If, within thirty days after
the date of the retiring Agent's resignation, no successor Agent
has been appointed and has accepted such appointment, then the
retiring Agent may appoint a successor Agent, which shall be a
commercial bank organized or licensed to conduct a banking or
trust business under the laws of the United States of America or
of any state thereof. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, the retiring Agent shall be
discharged from its duties and obligations under this Agreement
and the other Loan Documents. After any retiring Agent's
resignation hereunder the provisions of this Article VIII shall
continue to inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under the Loan
Documents.
ARTICLE IX -- Miscellaneous
Section 9.1. Waivers and Amendments; Acknowledgements.
(a) Waivers and Amendments. No failure or delay by Agent
or any Lender in exercising any right, power or remedy which
Agent or such Lender may have under any of the Loan Documents
shall operate as a waiver thereof or of any other right, power or
remedy, nor shall any single or partial exercise by Agent or such
Lender of any such right, power or remedy preclude any other or
further exercise thereof or of any other right, power or remedy.
No waiver of any provision of any Loan Document and no consent to
any departure therefrom shall ever be effective unless it is in
writing and signed as provided below in this section, and then
such waiver or consent shall be effective only in the specific
instances and for the purposes for which given and to the extent
specified in such writing. No notice to or demand on any Related
Person shall in any case of itself entitle any Related Person to
any other or further notice or demand in similar or other
circumstances. This Agreement and the other Loan Documents set
forth the entire understanding between the parties hereto with
respect to the transactions contemplated herein and therein and
supersede all prior discussions and understandings with respect
to the subject matter hereof and thereof, and no waiver, consent,
release, modification or amendment of or supplement to this
Agreement or the other Loan Documents shall be valid or effective
against any party hereto unless the same is in writing and
signed: (i) if such party is Borrowers, by such party, (ii) if
such party is Agent, by Agent, and (iii) if such party is a
Lender, by such Lender or by Agent on behalf of Lenders with the
written consent of Majority Lenders (or without further consent
than that already provided herein in the circumstances provided
in Section 9.7). Notwithstanding the foregoing or anything to
the contrary herein, Agent shall not, without the prior consent
of all Lenders, execute and deliver on behalf of Lenders any
waiver or amendment which would: (i) waive any of the conditions
specified in Article III (provided that Agent may in its
discretion withdraw any request it has made under Section
3.2(e)), (ii) increase the Maximum Loan Amount of any Lender or
subject any Lender to any additional obligations, (iii) reduce
any fees hereunder, or the principal of, or interest on, the
Notes, (iv) postpone any date fixed for any payment of any fees
hereunder, or principal of, or interest on, the Notes, (v) amend
the definition herein of "Majority Lenders" or otherwise change
the aggregate amount of Percentage Shares which is required for
Agent, Lenders or any of them to take any particular action under
the Loan Documents, or (vi) release Borrowers from its obligation
to pay the Notes or any Guarantor from its guaranty of such
payment.
(b) Acknowledgements and Admissions. Borrowers hereby
represent, warrant, acknowledge and admit that (i) they have been
advised by counsel in the negotiation, execution and delivery of
the Loan Documents to which they are a party, (ii) they have made
an independent decision to enter into this Agreement and the
other Loan Documents to which they are a party, without reliance
on any representation, warranty, covenant or undertaking by Agent
or any Lender, whether written, oral or implicit, other than as
expressly set out in this Agreement, (iii) neither Agent nor any
Lender has made any such representation, covenant or undertaking
to Borrowers pursuant to any such Loan Document, (iv) there are
no representations, warranties, covenants, undertakings or
agreements by Agent or any Lender as to the Loan Documents except
as expressly set out herein or therein, (v) neither Agent nor any
Lender has any fiduciary obligation toward Borrowers with respect
to any Loan Document or the transactions contemplated thereby,
(vi) the relationship pursuant to the Loan Documents between
Borrowers, on one hand, and Agent and each Lender, on the other
hand, is and shall be solely that of debtor and creditor,
respectively, (vii) no partnership or joint venture exists with
respect to the Loan Documents between any of Borrowers, Agent and
Lenders, (viii) Agent is not Borrowers' agent, but Agent for
Lenders, (ix) should an Event of Default or Default occur or
exist Agent and each Lender will determine in its sole discretion
and for its own reasons what remedies and actions it will or will
not exercise or take at that time, (x) without limiting any of
the foregoing, Borrowers are not relying upon any representation
by Agent or any Lender, or any representative thereof, and no
such representation has been made, that Agent or any Lender will,
at the time of an Event of Default or Default, or at any other
time, waive, negotiate, discuss, or take or refrain from taking
any action with respect to any such Event of Default or Default
or any other term of the Loan Documents, and (xi) Agent and all
Lenders have relied upon the truthfulness of the foregoing
acknowledgements in deciding to execute and deliver this
Agreement and to accept the Notes.
Section 9.2. Survival of Agreements; Cumulative Nature.
All of the Related Persons' various representations, warranties,
covenants and agreements in the Loan Documents shall survive the
execution and delivery of this Agreement and the other Loan
Documents and the performance hereof and thereof, including the
making or granting of the Loans and the delivery of the Notes and
the other Loan Documents, and shall further survive until all of
the Obligations are paid in full to Lenders and all of Lenders'
obligations to Borrowers are terminated. All statements and
agreements contained in any certificate or other instrument
delivered by any Related Person to Agent or Lenders under any
Loan Document shall be deemed representations and warranties by
Borrowers or agreements and covenants of Borrowers under this
Agreement. The representations, warranties, indemnities, and
covenants made by the Related Persons in the Loan Documents, and
the rights, powers, and privileges granted to Agent and Lenders
in the Loan Documents, are cumulative, and, except for express
waivers and consents, no Loan Document shall be construed in the
context of another to diminish, nullify, or otherwise reduce the
benefit to Agent or any Lender of any such representation,
warranty, indemnity, covenant, right, power or privilege. In
particular and without limitation, no exception set out in this
Agreement to any representation, warranty, indemnity, or covenant
herein contained shall apply to any similar representation,
warranty, indemnity, or covenant contained in any other Loan
Document, and each such similar representation, warranty,
indemnity, or covenant shall be subject only to those exceptions
which are expressly made applicable to it by the terms of the
various Loan Documents.
Section 9.3. Notices. All notices, requests, consents,
demands and other communications required or permitted under any
Loan Document shall be in writing, unless otherwise specifically
provided in such Loan Document (provided that Agent may give
telephonic notices to Lenders), and shall be deemed sufficiently
given or furnished if delivered by personal delivery, by telecopy
or telex, by expedited delivery service with proof of delivery,
or by registered or certified mail, postage prepaid, to Borrowers
and the Related Persons at the address of Borrowers specified on
the signature pages hereto and to Agent and the other Lenders at
their addresses specified on the signature pages hereto (unless
changed by similar notice in writing given by the particular
Person whose address is to be changed). Any such notice or
communication shall be deemed to have been given (a) in the case
of expedited personal delivery or delivery service, as of the
date of first attempted delivery at the address provided herein,
(b) in the case of telecopy or telex, upon receipt, or (c) in the
case of registered or certified mail, three days after deposit in
the mail; provided, however, that no Request for Advances or Rate
Election shall become effective until actually received by Agent.
Section 9.4. Joint and Several Liability; Parties in
Interest; Purchases of Notes. All Obligations which are incurred
by two or more Related Persons shall be their joint and several
obligations and liabilities. All grants, covenants and
agreements contained in the Loan Documents shall bind and inure
to the benefit of the parties thereto and their respective
successors and assigns; provided, however, that no Related Person
may assign or transfer any of its rights or delegate any of its
duties or obligations under any Loan Document without the prior
written consent of Majority Lenders. Neither Borrowers nor any
Affiliates of Borrowers shall directly or indirectly purchase or
otherwise retire any Obligations owed to any Lender, nor will any
Lender accept any offer to do so, unless each Lender shall have
received substantially the same offer with respect to the same
Percentage Share of the Obligations owed to it. If Borrowers or
any Affiliate of Borrowers at any time purchases some but less
than all of the Obligations owed to Agent and all Lenders, such
purchaser shall not be entitled to any rights of Agent or a
Lender under the Loan Documents unless and until Borrower or its
Affiliates have purchased all of the Obligations.
SECTION 9.5. GOVERNING LAW; WAIVER OF JURY TRIAL; ETC. THE
LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS
MADE UNDER THE LAWS OF THE STATE OF TEXAS AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF LAW RULES) AND THE
LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT
THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN
DOCUMENT. CHAPTER 15 OF TEXAS REVISED CIVIL STATUTES ANNOTATED
ARTICLE 5069 (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN
ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) SHALL NOT APPLY TO
THIS AGREEMENT OR TO THE NOTES. BORROWERS HEREBY IRREVOCABLY
SUBMIT THEMSELVES AND EACH OTHER RESTRICTED PERSON TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE
STATE OF TEXAS AND AGREES AND CONSENTS THAT SERVICE OF PROCESS
MAY BE MADE UPON THEM OR ANY OF THE RESTRICTED PERSONS IN ANY
LEGAL PROCEEDING RELATING TO THE LOAN DOCUMENTS OR THE
OBLIGATIONS IN ACCORDANCE WITH ANY APPLICABLE PROVISIONS OF TEXAS
LAW GOVERNING SERVICE OF PROCESS. EACH OF BORROWERS, AGENT AND
LENDERS HEREBY (A) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME
ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR
ANY TRANSACTION CONTEMPLATED THEREBY OR ASSOCIATED THEREWITH,
BEFORE OR AFTER MATURITY; (B) IRREVOCABLY WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE
OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION
TO, ACTUAL DAMAGES, PROVIDED, HOWEVER, THAT THE FOREGOING SHALL
NOT APPLY TO ANY TRANSACTION SUBJECT TO THE TEXAS DECEPTIVE TRADE
PRACTICE ACT OR GOVERNED BY CHAPTER 6, 6A OR 7 OF THE TEXAS
CONSUMER CREDIT CODE; (C) CERTIFIES THAT NEITHER AGENT NOR ANY
LENDER NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY OF THEM
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT AGENT
AND LENDERS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS, AND (D) ACKNOWLEDGES THAT IT HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
CONTAINED IN THIS SECTION.
Section 9.6. Limitation on Interest. Agent, Lenders, the
Related Persons and the other parties to the Loan Documents
intend to contract in strict compliance with applicable usury law
from time to time in effect. In furtherance thereof such Persons
stipulate and agree that none of the terms and provisions
contained in the Loan Documents shall ever be construed to create
a contract to pay, for the use, forbearance or detention of
money, interest in excess of the maximum amount of interest
permitted to be charged by applicable law from time to time in
effect. Neither any Related Person nor any present or future
guarantors, endorsers, or other Persons hereafter becoming liable
for payment of any Obligation shall ever be liable for unearned
interest thereon or shall ever be required to pay interest
thereon in excess of the maximum amount that may be lawfully
charged under applicable law from time to time in effect, and the
provisions of this section shall control over all other
provisions of the Loan Documents which may be in conflict or
apparent conflict herewith. Agent and 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) Agent or any Lender
or any 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 such
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
Agent's or such Lender's or holder's option, promptly returned to
Borrowers 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, Agent, Lenders and the Related Persons (and
any other payors 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. In the event applicable
law provides for an interest ceiling under Chapter 303 of the
Texas Finance Code (the "Texas Finance Code") and Chapter 1D of
Title 79, Tex. Rev. Civ. Stats. 1925 ("Chapter 1D)"), as amended,
respectively, that ceiling shall be the "indicated rate ceiling"
or "weekly ceiling" as defined in the Texas Finance Code and
Chapter 1D and shall be used when appropriate in determining the
maximum legal rate of interest. As used in this section the term
"applicable law" means the laws of the State of Texas or the laws
of the United States of America, whichever laws allow the greater
interest, as such laws now exist or may be changed or amended or
come into effect in the future.
Section 9.7. Optional Termination. In its sole and
absolute discretion Borrowers may -- at any time that no
Obligations are owing hereunder -- elect in a written notice
delivered to Agent to terminate this Agreement. Upon receipt by
Agent of such a notice, if such requirements are then satisfied,
this Agreement and all other Loan Documents shall thereupon be
terminated and the parties thereto released from all prospective
obligations thereunder, provided that any waivers made in the
Loan Documents, any Obligations under Sections 2.15 through 2.18
and any obligations which any Person may have to indemnify or
compensate Agent or any Lender shall survive such termination.
At the request and expense of Borrowers, Agent and Lenders shall
prepare and execute all necessary instruments to reflect and
effect such termination of the Loan Documents. Agent is hereby
authorized to execute all such instruments on behalf of all
Lenders, without the joinder of or further action by any Lender.
Section 9.8. Severability. If any term or provision of any
Loan Document shall be determined to be illegal or unenforceable
all other terms and provisions of the Loan Documents shall
nevertheless remain effective and shall be enforced to the
fullest extent permitted by applicable law.
Section 9.9. Counterparts. This Agreement may be
separately executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which
when so executed shall be deemed to constitute one and the same
Agreement.
IN WITNESS WHEREOF, this Agreement is executed as of the
date first written above.
DEVON ENERGY CORPORATION,
an Oklahoma corporation
By:
Xxxxxxx X. Xxxxxx, Vice President-
Finance
DEVON ENERGY CORPORATION (NEVADA),
a Nevada corporation
By:
Xxxxxxx X. Xxxxxx, Vice President-
Finance
Address:
00 Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Vice President-Finance
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Maximum NATIONSBANK, N.A.,
Loan Amount Agent and Lender
$80,000,000 By:
Xxxx X. Xxxxxx, Vice President
Address:
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Energy Finance Division
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
NationsBank Plaza
000 Xxxx Xx., 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Energy Finance Division
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Telex: 163542
Maximum BANK ONE, TEXAS, N.A., Lender
Loan Amount
$48,000,000 By:
Xxxx X. Xxxxx, Asst. Vice President
Address:
400 Bank One Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Energy Group
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Telex: 163102
Maximum BANK OF MONTREAL, Lender
Loan Amount
$48,000,000 By:
Xxxxxxx X. Xxxxxxx, Director
Address:
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Maximum FIRST UNION NATIONAL BANK, Lender
Loan Amount
$24,000,000 By:
Xxxxxx Xxxxxxxxx, Senior Vice
President
Address:
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
