SECOND AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
DENBURY RESOURCES, INC.,
AS BORROWER,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 2.1 HERETO,
AS BANKS,
BANK OF AMERICA, N.A.,
AS ADMINISTRATIVE AGENT,
FLEET NATIONAL BANK,
BANK ONE, TEXAS, N.A.
AND
THE BANK OF NOVA SCOTIA,
AS CO-AGENTS
$300,000,000
DATED AS OF
OCTOBER 13, 0000
XXXX XX XXXXXXX SECURITIES LLC,
AS SOLE LEAD ARRANGER AND BOOK MANAGER
TABLE OF CONTENTS
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ARTICLE I AMENDMENT AND RESTATEMENT...............................................................................2
ARTICLE II TERMS DEFINED..........................................................................................2
Section 2.1. Definitions.................................................................................2
Section 2.2. Accounting Terms and Determinations........................................................21
Section 2.3. Petroleum Terms............................................................................22
Section 2.4. Money......................................................................................22
ARTICLE III THE CREDIT...........................................................................................22
Section 3.1. Commitments................................................................................22
Section 3.2. Method of Borrowing........................................................................25
Section 3.3. Method of Requesting Letters of Credit.....................................................26
Section 3.4. Notes......................................................................................27
Section 3.5. Interest Rates; Payments...................................................................27
Section 3.6. Mandatory Prepayments......................................................................28
Section 3.7. Voluntary Prepayments......................................................................29
Section 3.8. Voluntary Reduction of Commitments.........................................................29
Section 3.9. Termination of Commitments; Final Maturity of Revolving Loan...............................29
Section 3.10. Application of Payments....................................................................29
Section 3.11. Commitment Fee.............................................................................29
Section 3.12. Agency and other Fees......................................................................29
ARTICLE IV GENERAL PROVISIONS....................................................................................30
Section 4.1. Delivery and Endorsement of Notes..........................................................30
Section 4.2. General Provisions as to Payments..........................................................30
ARTICLE V BORROWING BASE.........................................................................................31
Section 5.1. Reserve Report; Proposed Borrowing Base and Conforming Borrowing Base......................31
Section 5.2. Scheduled Redeterminations of the Borrowing Base and the Conforming Borrowing
Base; Procedures and Standards...........................................................31
Section 5.3. Special Redetermination....................................................................32
Section 5.4. Borrowing Base Deficiency..................................................................33
Section 5.5. Initial Borrowing Base and Conforming Borrowing Base.......................................33
ARTICLE VI COLLATERAL AND GUARANTEES.............................................................................33
Section 6.1. Security...................................................................................33
Section 6.2. Guarantees.................................................................................35
ARTICLE VII CONDITIONS PRECEDENT.................................................................................35
Section 7.1. Conditions to Amendment and Restatement and Initial Borrowing and
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Participation in Letter of Credit Exposure.................................................35
Section 7.2. Conditions to Each Borrowing and each Letter of Credit.....................................38
Section 7.3. Materiality of Conditions..................................................................39
ARTICLE VIII REPRESENTATIONS AND WARRANTIES......................................................................40
Section 8.1. Corporate Existence and Power..............................................................40
Section 8.2. Credit Party and Governmental Authorization; Contravention.................................40
Section 8.3. Binding Effect.............................................................................40
Section 8.4. Financial Information......................................................................40
Section 8.5. Litigation.................................................................................41
Section 8.6. ERISA......................................................................................41
Section 8.7. Taxes and Filing of Tax Returns............................................................42
Section 8.8. Ownership of Properties Generally..........................................................42
Section 8.9. Mineral Interests..........................................................................42
Section 8.10. Licenses, Permits, Etc.....................................................................43
Section 8.11. Compliance with Law........................................................................43
Section 8.12. Full Disclosure............................................................................43
Section 8.13. Organizational Structure; Nature of Business...............................................43
Section 8.14. Environmental Matters......................................................................43
Section 8.15. Burdensome Obligations.....................................................................44
Section 8.16. Fiscal Year................................................................................44
Section 8.17. No Default.................................................................................44
Section 8.18. Government Regulation......................................................................44
Section 8.19. Insider....................................................................................44
Section 8.20. Gas Balancing Agreements and Advance Payment Contracts.....................................45
ARTICLE IX AFFIRMATIVE COVENANTS.................................................................................45
Section 9.1. Information................................................................................45
Section 9.2. Business of Credit Parties.................................................................47
Section 9.3. Maintenance of Existence...................................................................47
Section 9.4. Title Data.................................................................................47
Section 9.5. Right of Inspection........................................................................48
Section 9.6. Maintenance of Insurance...................................................................48
Section 9.7. Payment of Taxes and Claims................................................................48
Section 9.8. Compliance with Laws and Documents.........................................................49
Section 9.9. Operation of Properties and Equipment......................................................49
Section 9.10. Environmental Law Compliance...............................................................49
Section 9.11. ERISA Reporting Requirements...............................................................49
Section 9.12. Additional Documents.......................................................................50
Section 9.13. Environmental Review.......................................................................50
ARTICLE X NEGATIVE COVENANTS.....................................................................................51
Section 10.1. Incurrence of Debt.........................................................................51
Section 10.2. Restricted Payments........................................................................51
Section 10.3. Negative Pledge............................................................................51
Section 10.4. Consolidations and Mergers.................................................................52
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Section 10.5. Asset Dispositions.........................................................................52
Section 10.6. Amendments to Organizational Documents.....................................................52
Section 10.7. Use of Proceeds...........................................................................52
Section 10.8. Investments................................................................................53
Section 10.9. Transactions with Affiliates...............................................................53
Section 10.10. ERISA......................................................................................53
Section 10.11. Hedge Transactions.........................................................................53
Section 10.12. Fiscal Year................................................................................53
Section 10.13. Change in Business.........................................................................53
Section 10.14. Qualified Purpose. ........................................................................53
ARTICLE XI FINANCIAL COVENANTS...................................................................................54
Section 11.1. Current Ratio of Borrower..................................................................54
Section 11.2. Minimum Consolidated Tangible Net Worth....................................................54
Section 11.3. Consolidated EBITDA to Consolidated Net Interest Expense...................................54
ARTICLE XII DEFAULTS.............................................................................................54
Section 12.1. Events of Default..........................................................................54
ARTICLE XIII AGENTS..............................................................................................56
Section 13.1. Appointment, Powers, and Immunities........................................................56
Section 13.2. Reliance by Agents.........................................................................57
Section 13.3. Defaults...................................................................................57
Section 13.4. Rights as Bank.............................................................................57
Section 13.5. Indemnification............................................................................58
Section 13.6. Non-Reliance on Agent and Other Banks......................................................58
Section 13.7. Resignation of Agents......................................................................58
ARTICLE XIV CHANGE IN CIRCUMSTANCES..............................................................................59
Section 14.1. Increased Cost and Reduced Return..........................................................59
Section 14.2. Limitation on Type of Loans................................................................60
Section 14.3. Illegality.................................................................................61
Section 14.4. Treatment of Affected Loans................................................................61
Section 14.5. Compensation...............................................................................62
Section 14.6. Taxes......................................................................................62
Section 14.7. Discretion of Banks as to Manner of Funding................................................63
ARTICLE XV MISCELLANEOUS.........................................................................................64
Section 15.1. Notices....................................................................................64
Section 15.2. No Waivers.................................................................................64
Section 15.3. Expenses; Indemnification..................................................................64
Section 15.4. Right of Set-off; Adjustments..............................................................65
Section 15.5. Amendments and Waivers.....................................................................66
Section 15.6. Survival...................................................................................66
Section 15.7. Limitation on Interest.....................................................................67
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Section 15.8. Invalid Provisions.........................................................................67
Section 15.9. Waiver of Consumer Credit Laws.............................................................67
Section 15.10. Assignments and Participations.............................................................67
Section 15.11. TEXAS LAW..................................................................................69
Section 15.12. Consent to Jurisdiction; Waiver of Immunities..............................................69
Section 15.13. Counterparts; Effectiveness................................................................70
Section 15.14. No Third Party Beneficiaries...............................................................70
Section 15.15. COMPLETE AGREEMENT.........................................................................70
Section 15.16. WAIVER OF JURY TRIAL.......................................................................70
Section 15.17. Confidentiality............................................................................70
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EXHIBITS
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EXHIBIT A FORM OF AMENDMENT TO MORTGAGES
EXHIBIT B FORM OF FACILITY GUARANTY
EXHIBIT C FORM OF PROMISSORY NOTE
EXHIBIT D FORM OF BORROWER PLEDGE AGREEMENT
EXHIBIT E FORM OF SUBSIDIARY PLEDGE AGREEMENT
EXHIBIT F FORM OF REQUEST FOR BORROWING
EXHIBIT G FORM OF REQUEST FOR LETTER OF CREDIT
EXHIBIT H FORM OF NOTICE OF CONTINUATION OR CONVERSION
EXHIBIT I FORM OF CERTIFICATE OF OWNERSHIP INTERESTS
EXHIBIT J FORM OF CERTIFICATE OF FINANCIAL OFFICER
EXHIBIT K FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT L FORM OF CERTIFICATE OF EFFECTIVENESS
SCHEDULES
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SCHEDULE 2.1 FINANCIAL INSTITUTIONS
SCHEDULE 2.2 EXISTING MORTGAGES
SCHEDULE 8.5 LITIGATION
SCHEDULE 8.10 LICENSES, PERMITS, ETC.
SCHEDULE 8.13 JURISDICTIONS, ETC.
SCHEDULE 9.10 ENVIRONMENTAL DISCLOSURE
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
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THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "AGREEMENT") is
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entered into as of the 13th day of October, 2000, among DENBURY RESOURCES, INC.,
a corporation previously incorporated under the Canadian Business Corporation
Act which has been domesticated in the State of Delaware ("BORROWER") and which
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is the successor by merger to Denbury Management, Inc., a Texas corporation
("MANAGEMENT"), BANK OF AMERICA, N.A., successor by merger to NationsBank, N.A.,
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successor by merger to NationsBank of Texas, N.A., as Administrative Agent
("ADMINISTRATIVE AGENT"), FLEET NATIONAL BANK, BANK ONE, TEXAS, N.A. and THE
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BANK OF NOVA SCOTIA, as Co-Agents ("CO-AGENTS") and the financial institutions
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listed on Schedule 2.1 hereto as Banks (individually a "BANK" and collectively
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"BANKS").
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W I T N E S S E T H:
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WHEREAS, Management, Borrower, Administrative Agent and the other financial
institutions named and defined therein as Banks (the "EXISTING BANKS") are
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parties to that certain First Restated Credit Agreement dated as of December 29,
1997, pursuant to which Existing Banks provided certain loans and extensions of
credit to Management and Borrower (as amended, the "EXISTING CREDIT AGREEMENT");
-------------------------
and
WHEREAS, Borrower was formerly incorporated under the Canadian Business
Corporation Act and was domesticated in the State of Delaware; and
WHEREAS, Management merged with and into Borrower with Borrower being the
surviving corporation (the "MERGER"), and as a result of such Merger, Borrower
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assumed and is primarily liable for all of the debts, obligations and
liabilities of Management under the Existing Credit Agreement and the other Loan
Papers (as defined in the Existing Credit Agreement) and Borrower became the
"Borrower" under and as defined in the Existing Credit Agreement and such other
Loan Papers; and
WHEREAS, immediately prior to the execution of this Agreement, certain of
the Existing Banks have purchased and assumed all of the rights and interests of
The Chase Manhattan Bank, successor by merger to Chase Bank of Texas, N.A., as a
Bank under the Existing Credit Agreement (the "CHASE ASSIGNMENT"); and
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WHEREAS, immediately after giving effect to the Chase Assignment, the
parties hereto desire to amend and restate the Existing Credit Agreement in the
form of this Agreement, and Borrower desires to obtain Borrowings (as herein
defined) (a) to refinance the indebtedness under the Existing Credit Agreement,
and (b) for other purposes permitted herein; and
WHEREAS, after giving effect to the Chase Assignment and the amendment and
restatement of the Existing Credit Agreement pursuant to the terms hereof, the
Commitment Percentage (as herein defined) of each Bank hereunder will be as set
forth on Schedule 2.1 hereto; and
------------
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WHEREAS, pursuant to Article XIV of this Agreement, Bank of America,
------------
N.A.has been appointed Administrative Agent for Banks hereunder, and Fleet
National Bank, Bank One, Texas, N.A. and The Bank of Nova Scotia have been
appointed Co-Agents for Banks hereunder; and
WHEREAS, pursuant to certain separate agreements among Bank of America,
N.A., Banc of America Securities LLC ("BAS") and Borrower, BAS has been
---
appointed Sole Lead Arranger and Book Manager for the credit facility provided
herein.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, Administrative Agent and Banks agree as follows:
ARTICLE I
AMENDMENT AND RESTATEMENT
-------------------------
Subject to the satisfaction of each condition precedent contained in
Section 7.1 hereof, the satisfaction of which shall be evidenced by the
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execution by Borrower and Administrative Agent of the Certificate of
Effectiveness (as herein defined), the Existing Credit Agreement shall be
amended and restated as of the Closing Date in the form of this Agreement.
ARTICLE II
TERMS DEFINED
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Section 2.1. DEFINITIONS. The following terms, as used herein, have the
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following meanings:
"ADJUSTED EURODOLLAR RATE" means, for any Eurodollar Loan for any Interest
-------------------------
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by Administrative Agent to be equal to the
quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar Loan
for such Interest Period by (b) 1 minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"ADMINISTRATIVE AGENT" means Bank of America, N.A., successor by merger to
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NationsBank, N.A., successor by merger to NationsBank of Texas, N.A., in its
capacity as Administrative Agent for Banks hereunder or any successor thereto.
"ADVANCE PAYMENT CONTRACT" means any contract whereby any Credit Party
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either (a) receives or becomes entitled to receive (either directly or
indirectly) any payment (an "ADVANCE PAYMENT") to be applied toward payment of
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the purchase price of Hydrocarbons produced or to be produced from Mineral
Interests owned by any Credit Party and which Advance Payment is, or is to be,
paid in advance of actual delivery of such production to or for the account of
the purchaser regardless of such production, or (b) grants an option or right of
refusal to the purchaser to take delivery of such production in lieu of payment,
and, in either of
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the foregoing instances, the Advance Payment is, or is to be, applied as payment
in full for such production when sold and delivered or is, or is to be, applied
as payment for a portion only of the purchase price thereof or of a percentage
or share of such production; provided that inclusion of the standard "take or
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pay" provision in any gas sales or purchase contract or any other similar
contract shall not, in and of itself, constitute such contract as an Advance
Payment Contract for the purposes hereof.
"AFFILIATE" means, as to any Person, any Subsidiary of such Person, or any
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other Person which, directly or indirectly, controls, is controlled by, or is
under common control with, such Person and, with respect to any Credit Party,
means, any director, executive officer, general partner or manager of such
Credit Party and any Person who holds ten percent (10%) or more of the voting
stock, partnership interests, membership interests or other ownership interests
of such Credit Party. For the purposes of this definition, "CONTROL" (including,
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with correlative meanings, the terms "CONTROLLED BY" and "UNDER COMMON CONTROL
------------- --------------------
WITH"), as used with respect to any Person, shall mean the possession, directly
----
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the
ownership of voting securities, membership interests or partnership interests,
or by contract or otherwise.
"AGENT" means Administrative Agent, any Co-Agent, Sole Lead Manager or Book
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Manager, and "AGENTS" means Administrative Agent, Co-Agents, Sole Lead Arranger
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and Book Manager, collectively.
"AGREEMENT" means this Second Amended and Restated Credit Agreement as the
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same may hereafter be modified, amended or supplemented from time to time.
"AMENDMENT TO EXISTING MORTGAGES" means an Amendment to Mortgages to be
---------------------------------
entered into between Borrower and Administrative Agent, substantially in the
form of Exhibit A attached hereto, pursuant to which the Existing Mortgages
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shall be amended to reflect the amendment and restatement of the Existing Credit
Agreement pursuant hereto.
"APPLICABLE ENVIRONMENTAL LAW" means any federal, state or local law,
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common law, ordinance, regulation or policy, as well as order, decree, permit,
judgment or injunction issued, promulgated, approved, or entered thereunder,
relating to the environment, health and safety, or Hazardous Substances
(including, without limitation, the use, handling, transportation, production,
disposal, discharge or storage thereof) or to industrial hygiene or the
environmental conditions on, under, or about any real property owned, leased or
operated at any time by any Credit Party or any real property owned, leased or
operated by any other party including, without limitation, soil, groundwater,
and indoor and ambient air conditions.
"APPLICABLE LENDING OFFICE" means, for each Bank and for each Type of Loan,
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the "Lending Office" of such Bank (or of an affiliate of such Bank) designated
for such Type of Loan on the signature pages hereof or such other office of such
Bank (or an affiliate of such Bank) as such Bank may from time to time specify
to Administrative Agent and Borrower by written notice in accordance with the
terms hereof as the office by which Loans of such Type are to be made and
maintained.
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"APPLICABLE MARGIN" means, on any date, with respect to each Type of Loan,
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an amount determined by reference to the ratio of Outstanding Credit to the
Conforming Borrowing Base on such date in accordance with the table below:
Ratio of Outstanding Credit to Applicable Margin for Applicable Margin for
Conforming Borrowing Base Eurodollar Loans Base Rate Loans
<= .50 to 1 1.250% 0%
> .50 to 1 and <= .75 to 1 1.500% 0%
> .75 to 1 and <= .90 to 1 1.750% .250%
> .90 to 1 and <= 1.0 to 1 2.000% .500%
> 1.0 to 1 2.375% .750%
==================================== ============================ ===============================
"APPROVED PETROLEUM ENGINEER" means XxXxxxxx and XxxXxxxxxxx or any other
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reputable firm of independent petroleum engineers as shall be selected by
Borrower and approved by Required Banks, such approval not to be unreasonably
withheld.
"ASSIGNMENT AND ACCEPTANCE AGREEMENT" has the meaning given such term in
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Section 15.10(a).
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"AUTHORIZED OFFICER" means, as to any Person, its Chief Executive Officer,
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its President, its Chief Financial Officer, any of its Vice Presidents, its
Treasurer or its corporate Secretary.
"AVAILABILITY" means, as of any date, the remainder of (a) the Borrowing
------------
Base in effect on such date, minus (b) the Outstanding Credit on such date.
"BANK" means any financial institution reflected on Schedule 2.1 hereto as
---- ------------
having a Commitment and its successors and permitted Assignees, and "BANKS"
-----
shall mean all Banks.
"BANK OF AMERICA" means Bank of America, N.A., a national banking
-----------------
association, successor by merger to NationsBank, N.A., successor by merger to
NationsBank of Texas, N.A., in its capacity as a Bank.
"BAS" means Banc of America Securities LLC.
---
"BASE RATE" means, for any day, the rate per annum equal to the higher of
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(a) the Federal Funds Rate for such day plus one-half of one percent (.5%) and
(b) the Prime Rate for such day. Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Rate shall be effective automatically and
without notice to Borrower or any Bank on the effective date of such change in
the Prime Rate or Federal Funds Rate.
"BASE RATE LOAN" means the portion of the principal of the Revolving Loan
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bearing interest with reference to the Base Rate.
"BOOK MANAGER" means Banc of America Securities LLC in its capacity as book
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manager for the credit facility hereunder or any successor thereto.
"BORROWER" means Denbury Resources, Inc., a Delaware corporation
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"BORROWER PLEDGE AGREEMENT" means a Pledge Agreement substantially in the
--------------------------
form of Exhibit D attached hereto (with applicable conforming changes) which may
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be executed by Borrower pursuant to which Borrower shall pledge to
Administrative Agent, for the ratable benefit of Banks, all of the issued and
outstanding Equity owned by Borrower of each Subsidiary of Borrower described
therein to secure the Obligations.
"BORROWING" means any disbursement to Borrower under, or to satisfy the
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obligations of any Credit Party under, any of the Loan Papers. Any Borrowing
which will constitute a part of the Base Rate Loan is referred to herein as a
"BASE RATE BORROWING," and any Borrowing which will constitute a Eurodollar
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Loan, is referred to herein as a "EURODOLLAR BORROWING."
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"BORROWING BASE" has the meaning set forth in Section 5.1 hereof.
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"BORROWING BASE DEFICIENCY" means, as of any date, the amount, if any, by
-------------------------
which the Outstanding Credit on such date exceeds the Borrowing Base in effect
on such date; provided, that, for purposes of determining the existence and
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amount of any Borrowing Base Deficiency, Letter of Credit Exposure will not be
deemed to be outstanding to the extent it is secured by cash in the manner
contemplated by Section 3.1(b).
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"BORROWING BASE PROPERTIES" means all Mineral Interests evaluated by Banks
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for purposes of establishing the Borrowing Base.
"BORROWING DATE" means the Eurodollar Business Day or the Domestic Business
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Day, as the case may be, upon which the proceeds of any Borrowing are made
available to Borrower or to satisfy any obligation of any Credit Party.
"CERTIFICATE OF EFFECTIVENESS" means a Certificate of Effectiveness in the
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form of Exhibit L attached hereto to be executed by Borrower and Administrative
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Agent upon the satisfaction of each of the conditions precedent contained in
Section 7.1 hereof.
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"CERTIFICATE OF OWNERSHIP INTERESTS" means a Certificate of Ownership
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Interests in the form of Exhibit I attached hereto to be executed and delivered
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by an Authorized Officer of Borrower pursuant to
Section 7.1(a)(xiii) hereof.
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"CHANGE OF CONTROL" means that, for any reason, any Person or group (as
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defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act) other than the
Texas Pacific Group shall become (i) the direct or indirect beneficial owner (as
defined in Rule 13(d)(3) of the Exchange Act) of greater than thirty percent
(30%) of the total voting power of all classes of capital stock then outstanding
of Borrower entitled (without regard to the occurrence of any contingency) to
vote in elections of directors of Borrower, and (ii) the largest shareholder of
the total voting power of all classes of capital stock then outstanding of
Borrower entitled (without regard to the occurrence of any contingency) to vote
in elections of directors of Borrower.
"CHASE ASSIGNMENT" has the meaning assigned to such term in the recitals
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hereto.
"CLOSING DATE" means the date upon which all of the conditions precedent
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set forth in Section 7.1 have been satisfied, and Borrower and Administrative
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Agent have executed and
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delivered the Certificate of Effectiveness; provided, that, in no event shall
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such date be later than October 13, 2000.
"CODE" means the Internal Revenue Code of 1986, as amended.
----
"CO-AGENT" means Fleet National Bank, Bank One, Texas, N.A. or The Bank of
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Nova Scotia, in its capacity as Co-Agent for Banks hereunder or any successor
thereto, and "CO-AGENTS" means Fleet National Bank, Bank One, Texas, N.A. and
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The Bank of Nova Scotia, collectively, in their capacities as Co-Agents for
Banks hereunder.
"COMMITMENT" means, with respect to any Bank, the commitment of such Bank
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to lend its Commitment Percentage of the Total Commitment to Borrower pursuant
to Section 3.1 hereof, as such Commitment may be terminated or reduced from time
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to time in accordance with the provisions hereof. On the Closing Date, the
amount of each Bank's Commitment is the amount set forth opposite such Bank's
name on Schedule 2.1 hereto; provided, that after giving effect to any
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Assignment and Acceptance Agreement, the Commitment of each Bank shall be the
amount set forth in the Register maintained by Administrative Agent pursuant to
Section 15.10(b) hereof.
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"COMMITMENT FEE PERCENTAGE" means, on any date, the percentage determined
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by reference to the ratio of Outstanding Credit to the Conforming Borrowing Base
on such date in accordance with the table below:
Ratio of Outstanding Credit to Commitment Fee
Conforming Borrowing Base Percentage
<= .50 to 1 .350%
> .50 to 1 and <= .75 to 1 .375%
> .75 to 1 and <= .90 to 1 .500%
> .90 to 1 and <= 1.0 to 1 .500%
> 1.0 to 1 .500%
==================================== =========================================
"COMMITMENT PERCENTAGE" means, with respect to each Bank, the Commitment
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Percentage for such Bank set forth on Schedule 2.1 hereto; provided, that after
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giving effect to any Assignment and Acceptance Agreement, the Commitment
Percentage of each Bank shall be the amount set forth in the Register maintained
by Administrative Agent pursuant to Section 15.10(b) hereof.
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"CONFORMING BORROWING BASE" has the meaning set forth in Section 5.1
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hereof.
"CONSOLIDATED CURRENT ASSETS" means, for any Person at any time, the
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current assets of such Person and its Consolidated Subsidiaries at such time,
plus, in the case of Borrower, the Availability at such time.
"CONSOLIDATED CURRENT LIABILITIES" means, for any Person at any time, the
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current liabilities of such Person and its Consolidated Subsidiaries at such
time, but, in the case of
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Borrower, excluding the current portion (if any) of the outstanding principal
balance of the Revolving Loan.
"CONSOLIDATED EBITDA" means, for any Person for any period: (a)
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Consolidated Net Income of such Person for such period; plus, to the extent
deducted in the calculation of Consolidated Net Income, (b) the sum of (i)
income or franchise Taxes paid or accrued; (ii) Consolidated Net Interest
Expense; (iii) amortization, depletion and depreciation expense; (iv) any
non-cash losses or charges on any Hedge Agreement resulting from the
requirements of SFAS 133 for that period; and (v) other non-cash charges
(excluding accruals for cash expenses made in the ordinary course of business);
less, to the extent included in the calculation of Consolidated Net Income, (c)
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the sum of (i) the income of any Person (other than wholly-owned Subsidiaries of
such Person) unless such income is received by such Person in a cash
distribution; (ii) gains or losses from sales or other dispositions of assets
(other than Hydrocarbons produced in the normal course of business); (iii) any
non-cash gains on any Hedge Agreement resulting from the requirements of SFAS
133 for that period; and (iv) extraordinary or non-recurring gains, but not net
of extraordinary or non-recurring "cash" losses.
"CONSOLIDATED NET INCOME" means, for any Person for any period, the net
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income (or loss) of such Person and its Consolidated Subsidiaries for such
period.
"CONSOLIDATED NET INTEREST EXPENSE" means, for any Person for any period,
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the remainder of the following for such Person and its Consolidated Subsidiaries
for such period: (a) interest expense, minus (b) interest income.
"CONSOLIDATED SUBSIDIARY" or "CONSOLIDATED SUBSIDIARIES" means, for any
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Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial statements.
"CONSOLIDATED TANGIBLE NET WORTH" means, with respect to any Person at any
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time, (a) the consolidated shareholder's equity of such Person at such time,
less (b) the consolidated Intangible Assets of such Person at such time. For
purposes of this definition, (i) any non-cash gains, losses or charges on any
Hedge Agreement resulting from the requirements of SFAS 133 for any period of
determination shall be excluded from the determination of such shareholder's
equity, and (ii) "INTANGIBLE ASSETS" means the amount (to the extent reflected
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in determining such consolidated shareholder's equity) of all unamortized debt
discount and expense, unamortized deferred charges, goodwill, patents,
trademarks, service marks, trade names, copyrights, organization expenses and
other intangible items.
"CONTINUE," "CONTINUATION" and "CONTINUED" shall refer to the continuation
-------- ------------ ---------
pursuant to Section 3.5 hereof and/or Article XIV hereof of a Eurodollar Loan
----------- -----------
from one Interest Period to the next Interest Period.
"CONVERT," "CONVERSION" and "CONVERTED" shall refer to a conversion
------- ---------- ---------
pursuant to Section 3.5 and/or Article XIV hereof of all or a portion of one
------------ ------------
Type of Loan into another Type of Loan.
"CREDIT PARTIES" means, collectively, Borrower and each Subsidiary of
---------------
Borrower and "CREDIT PARTY" means any one of the foregoing.
------------
10-7
"DEBT" means, for any Person at any time, without duplication, (a) all
----
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all other indebtedness (including capitalized lease obligations, other than
usual and customary oil and gas leases) of such Person on which interest charges
are customarily paid or accrued, (d) all Guarantees by such Person, (e) the
unfunded or unreimbursed portion of all letters of credit issued
for the account of such Person, (f) any amount owed by such Person representing
the deferred purchase price of property or services other than accounts payable
incurred in the ordinary course of business and in accordance with customary
trade terms and which are not more than one hundred twenty (120) days past the
invoice date, and (g) all liability of such Person as a general partner of a
partnership for obligations of such partnership of the nature described in (a)
through (f) preceding.
"DEFAULT" means any condition or event which constitutes an Event of
-------
Default or which with the giving of notice, lapse of time or both would, unless
cured or waived, become an Event of Default.
"DEFAULT RATE" means, in respect of any principal of the Revolving Loan or
------------
any other amount payable by Borrower under any Loan Paper which is not paid when
due (whether at stated maturity, by acceleration, or otherwise), a rate per
annum during the period commencing on the due date until such amount is paid in
full equal to the sum of (i) three percent (3%), plus (ii) the Applicable
Margin, plus (iii) the Base Rate as in effect from time to time (provided, that
-------- ----
if such amount in default is principal of a Eurodollar Borrowing and the due
date is a day other than the last day of an Interest Period therefor, the
"Default Rate" for such principal shall be, for the period from and including
the due date and to but excluding the last day of the Interest period therefor,
the sum of (a) three percent (3%), plus (b) the Applicable Margin, plus (c) the
Eurodollar Rate for such Borrowing for such Interest Period as provided in
Section 3.5 hereof, and thereafter, the rate provided for above in this
------------
definition).
"DES" means Denbury Energy Service, Inc., which is a wholly owned
---
Subsidiary of Borrower.
"DISTRIBUTION" by any Person, means (a) with respect to any stock issued by
------------
such Person or any partnership, joint venture, limited liability company,
membership or other interest of such Person, the retirement, redemption,
purchase, or other acquisition for value of any such stock or partnership, joint
venture, limited liability company, membership or other interest, (b) the
declaration or payment of any dividend or other distribution on or with respect
to any stock, partnership, joint venture, limited liability company, membership
or other interest of any Person, and (c) any other payment by such Person with
respect to such stock, partnership, joint venture, limited liability company,
membership or other interest of such Person.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or other
-----------------------
day on which national banks in Dallas, Texas, are authorized by Law to close.
"DOMESTIC LENDING OFFICE" means, as to each Bank, (a) its office located at
-----------------------
its address identified on Schedule 2.1 hereto as its Domestic Lending Office,
------------
(b) its office located at its address identified on the Register (as defined in
Section 15.10(b)) as its Domestic Lending
10-8
Office, or (c) such other office as such Bank may hereafter designate as its
Domestic Lending Office by notice to Borrower and Administrative Agent.
"ELIGIBLE ASSIGNEE" means (a) a Bank; (b) an affiliate of a Bank; and (c)
------------------
any other Person approved by Administrative Agent and, unless an Event of
Default has occurred and is continuing at the time any assignment is effected in
accordance with Section 15.10, Borrower, such approval not to be unreasonably
-------------
withheld or delayed by Borrower or Administrative Agent, and such approval to be
deemed given by Borrower if no objection is received by the assigning Bank and
Administrative Agent from Borrower within two (2) Domestic Business Days after
notice of such proposed assignment has been provided by the assigning Bank to
Borrower; provided, however, that neither Borrower nor an affiliate of Borrower
-------- ------- ----
shall qualify as an Eligible Assignee.
"ENVIRONMENTAL COMPLAINT" means any complaint, summons, citation, notice,
-----------------------
directive, order, claim, litigation, investigation, proceeding, judgment, letter
or other communication from any federal, state or municipal authority or any
other party against any Credit Party involving (a) a Hazardous Discharge from,
onto or about any real property owned, leased or operated at any time by any
Credit Party, (b) a Hazardous Discharge caused, in whole or in part, by any
Credit Party or by any Person acting on behalf of or at the instruction of any
Credit Party, or (c) any violation of any Applicable Environmental Law by any
Credit Party.
"EQUITY" means shares of capital stock or a partnership, profits, capital,
------
member or other equity interest, or options, warrants or any other rights to
substitute for or otherwise acquire the capital stock or a partnership, profits,
capital, member or other equity interest of any Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"ERISA AFFILIATE" means any corporation or trade or business under common
----------------
control with any Credit Party as determined under section 4001(a)(14) of ERISA.
"EURODOLLAR BUSINESS DAY" means any Domestic Business Day on which
-------------------------
commercial banks are open for international business (including dealings in
dollar deposits) in the applicable Eurodollar interbank market.
"EURODOLLAR LENDING OFFICE" means, as to each Bank, (a) its office, branch
-------------------------
or affiliate located at its address identified on Schedule 2.1 hereto as its
------------
Eurodollar Lending Office, (b) its office, branch or affiliate located at its
address identified on the Register (as defined in Section 15.10(b)) as its
-----------------
Eurodollar Lending Office, or (c) such other office, branch or affiliate of such
Bank as it may hereafter designate as its Eurodollar Lending Office by notice to
Borrower and Administrative Agent.
"EURODOLLAR LOANS" means Loans that bear interest at rates based upon the
-----------------
Adjusted Eurodollar Rate.
"EURODOLLAR RATE" means, for any Eurodollar Loan for any Interest Period
----------------
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two (2) Eurodollar Business Days prior to the first day
10-9
of such Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the term "EURODOLLAR RATE" shall mean,
----------------
for any Eurodollar Loan for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Eurodollar Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is specified on Reuters Screen
-------- -------
LIBO Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%).
"EVENTS OF DEFAULT" has the meaning set forth in Section 12.1.
----------------- ------------
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
------------
"EXHIBIT" refers to an exhibit attached to this Agreement and incorporated
-------
herein by reference, unless specifically provided otherwise.
"EXISTING CREDIT AGREEMENT" has the meaning assigned to such term in the
---------------------------
recitals hereto.
"EXISTING MORTGAGES" means the mortgages, deeds of trust, security
-------------------
agreements, assignments, pledges and other documents, instruments and agreements
described on Schedule 2.2 hereto, which establish Liens on certain of Borrower's
------------
Mineral Interests to secure Borrower's obligations under the Existing Credit
Agreement.
"EXISTING RESERVE REPORT" means, collectively, (i) an engineering and
-------------------------
economic analysis of certain of the Borrowing Base Properties prepared as of
June 30, 2000 by XxXxxxxx and XxxXxxxxxxx, and (ii) an engineering and economic
analysis of all Borrowing Base Properties not covered by the Reserve Report
described in clause (i), prepared as of June 30, 2000 by Borrower's in-house
staff.
"FACILITY GUARANTY" means a Guaranty substantially in the form of Exhibit B
----------------- ---------
attached hereto which may be executed by a Subsidiary of Borrower in favor of
Banks, pursuant to which such Subsidiary of Borrower guarantees payment and
performance in full of the Obligations.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
--------------------
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day; provided that (a) if the day for which such rate is to be
-------- ----
determined is not a Domestic Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business Day, and (b) if
such rate is not so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for any day shall be the average rate charged to
Administrative Agent on such day on such transactions as determined by
Administrative Agent.
10-10
"FINANCIAL OFFICER" of any Person means its Chief Financial Officer;
------------------
provided, that if no Person serves in such capacity, "FINANCIAL OFFICER" shall
-----------------
mean the highest ranking executive officer of such Person with responsibility
for accounting, financial reporting, cash management and similar functions.
"FISCAL QUARTER" means the three (3) month periods ending on March 31, June
--------------
30, September 30 and December 31 of each Fiscal Year.
"FISCAL YEAR" means a twelve (12) month period ending December 31.
-----------
"GAAP" means those generally accepted accounting principles and practices
----
which are recognized as such by the Securities and Exchange Commission, the
American Institute of Certified Public Accountants acting through its Accounting
Principles Board or by the Financial Accounting Standards Board or through other
appropriate boards or committees thereof and which are consistently applied for
all periods after the Closing Date so as to properly reflect the financial
condition, and the results of operations and changes in financial position, of
Borrower and its Consolidated Subsidiaries, except that any accounting principle
or practice required to be changed by the said Securities and Exchange
Commission, Accounting Principles Board or Financial Accounting Standards Board
(or other appropriate board or committee thereof) in order to continue as a
generally accepted accounting principle or practice may be so changed.
"GAS BALANCING AGREEMENT" means any agreement or arrangement whereby any
------------------------
Credit Party, or any other party having an interest in any Hydrocarbons to be
produced from Mineral Interests in which any Credit Party owns an interest, has
a right to take more than its proportionate share of production therefrom.
"GOVERNMENTAL AUTHORITY" means any court or governmental department,
-----------------------
commission, board, bureau, agency, or instrumentality of any nation or of any
province, state, commonwealth, nation, territory, possession, county, parish, or
municipality, whether now or hereafter constituted or existing.
"GUARANTEE" by any Person means any obligation, contingent or otherwise, of
---------
such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions, by "comfort letter"
or other similar undertaking of support or otherwise) or (b) entered into for
the purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided, that the term "GUARANTEE" shall
-------- ---- ---------
not include endorsements for collection or deposit in the ordinary course of
business.
"HAZARDOUS DISCHARGE" means any releasing, spilling, leaking, pumping,
--------------------
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of any Hazardous Substance from or onto any real property
owned, leased or operated at any time by any Credit Party or any real property
owned, leased or operated by any other party.
10-11
"HAZARDOUS SUBSTANCE" means any pollutant, toxic substance, hazardous
--------------------
waste, compound, element or chemical that is defined as hazardous, toxic,
noxious, dangerous or infectious pursuant to any Applicable Environmental Law or
which is otherwise regulated by any Applicable Environmental Law or is required
to be investigated and/or remediated by or pursuant to any Applicable
Environmental Law.
"HEDGE AGREEMENTS" means, collectively, any agreement, instrument,
-----------------
arrangement or schedule or supplement thereto evidencing any Hedge Transaction.
"HEDGE TRANSACTION" means any commodity, interest rate, currency or other
------------------
swap, option, collar, futures contract or other contract pursuant to which a
Person xxxxxx risks related to commodity prices, interest rates, currency
exchange rates, securities prices or financial market conditions. Hedge
Transactions expressly includes Oil and Gas Hedge Transactions.
"HYDROCARBONS" means oil, gas, casinghead gas, drip gasolines, natural
------------
gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons
produced or to be produced in conjunction therewith, and all products,
by-products and all other substances derived therefrom or the processing
thereof, and all other minerals and substances, including, but not limited to,
sulphur, lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon
dioxide, helium, and any and all other minerals, ores, or substances of value,
and the products and proceeds therefrom, including, without limitation, all gas
resulting from the in-situ combustion of coal or lignite.
"IMMATERIAL TITLE DEFICIENCIES" means, with respect to Borrowing Base
-------------------------------
Properties, defects or clouds on title, discrepancies in reported net revenue
and working interest ownership percentages and other Liens, defects,
discrepancies and similar matters which do not, individually or in the
aggregate, affect Borrowing Base Properties with a Recognized Value greater than
five percent (5%) of the Recognized Value of all of such Borrowing Base
Properties.
"INDIRECT SUBSIDIARY" has the meaning given such term in the definition of
--------------------
"SUBSIDIARY PLEDGE AGREEMENT."
---------------------------
"INITIAL BORROWING BASE" means a Borrowing Base in the amount of
-------------------------
$110,000,000, which shall be in effect during the period commencing on the
Closing Date and continuing until the first Redetermination after the Closing
Date.
"INITIAL CONFORMING BORROWING BASE" means a Conforming Borrowing Base in
-----------------------------------
the amount of $110,000,000, which shall be in effect during the period
commencing on the Closing Date and continuing until the first Redetermination
after the Closing Date.
"INITIAL REQUIRED RESERVE VALUE" means Proved Mineral Interests that have a
------------------------------
Recognized Value of not less than seventy-three percent (73%) of the Recognized
Value of all Proved Mineral Interests held by Borrower and its Subsidiaries.
"INTEREST PERIOD" means, with respect to each Eurodollar Borrowing and each
---------------
Continuation of Eurodollar Loans and each Conversion of all or part of the Base
Rate Loan to Eurodollar Loans, the period commencing on the date of such
Borrowing, Continuation or Conversion and ending one (1), two (2), three (3) or
six (6), and, if available to all Banks, nine
10-12
(9) or twelve (12) months thereafter, as Borrower may elect in the applicable
Request for Borrowing or Notice of Continuation or Conversion; provided, that:
-------- ----
(a) any Interest Period which would otherwise end on a day which
is not a Eurodollar Business Day shall be extended to the next
succeeding Eurodollar Business Day unless such Eurodollar
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Eurodollar
Business Day;
(b) any Interest Period which begins on the last Eurodollar
Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end
of such Interest Period) shall, subject to clause (c) below, end
on the last Eurodollar Business Day of a calendar month;
(c) if any Interest Period includes a date on which any payment
of principal of the Eurodollar Loans which are the subject of
such Borrowing, Continuation or Conversion is required to be made
hereunder, but does not end on such date, then (i) the principal
amount of such Eurodollar Loans required to be repaid on such
date shall have an Interest Period ending on such date, and (ii)
the remainder of each such Eurodollar Loans shall have an
Interest Period determined as set forth above; and
(d) no Interest Period shall extend past the Termination Date.
"INVESTMENT" means, with respect to any Person, any loan, advance,
----------
extension of credit, capital contribution to, investment in or purchase of the
stock or other securities of, or interests in, any other Person; provided, that,
-------- ----
"INVESTMENT" shall not include current customer and trade accounts which are
----------
payable in accordance with customary trade terms.
"LAWS" means all applicable statutes, laws, ordinances, regulations,
----
orders, writs, injunctions, or decrees of any state, commonwealth, nation,
territory, possession, county, township, parish, municipality or Governmental
Authority.
"LENDING OFFICE" means, as to any Bank, its Domestic Lending Office or its
---------------
Eurodollar Lending Office, as the context may require.
"LETTER OF CREDIT EXPOSURE" of any Bank means such Bank's aggregate
----------------------------
participation in the unfunded portion and the funded but unreimbursed portion of
Letters of Credit outstanding at any time.
"LETTER OF CREDIT FEE" means, with respect to any Letter of Credit issued
--------------------
hereunder, a fee in an amount equal to the greater of (a) $500, or (b) a
percentage of the stated amount of such Letter of Credit (calculated on a per
annum basis based on the stated term of such Letter of Credit) determined by
reference to the ratio of the Outstanding Credit to the Conforming Borrowing
Base in effect on the date such Letter of Credit is issued in accordance with
the table below:
10-13
Ratio of Outstanding Credit to Per Annum Letter of Credit Fee
Conforming Borrowing Base Percentage
<=. 50 to 1 1.250%
>. 50 to 1 and <= .75 to 1 1.500%
>. 75 to 1 and <= .90 to 1 1.750%
> .90 to 1 and <= 1.0 to 1 2.000%
> 1.0 to 1 2.375%
==================================== =========================================
"LETTER OF CREDIT FRONTING FEE" means, with respect to any Letter of Credit
-----------------------------
issued hereunder with a stated amount of $1,000,000 or greater, a fee equal to
one eighth of one percent (.125%) per annum of the stated amount of such Letter
of Credit.
"LETTERS OF CREDIT" means letters of credit issued for the account of
-------------------
Borrower pursuant to Section 3.1(b).
--------------
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest, financing statement or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, the Credit Parties
shall be deemed to own subject to a Lien any asset which is acquired or held
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.
"LOAN PAPERS" means this Agreement, the Notes, each Facility Guaranty which
-----------
may now or hereafter be executed, each Borrower Pledge Agreement which may now
or hereafter be executed, each Subsidiary Pledge Agreement which may now or
hereafter be executed, the Existing Mortgages (as amended by the Amendments to
Existing Mortgages), all Mortgages now or at any time hereafter delivered
pursuant to Section 6.1, and all other certificates, documents or instruments
-----------
delivered in connection with this Agreement, as the foregoing may be amended
from time to time.
"MARGIN REGULATIONS" means Regulations T, U and X of the Board of Governors
------------------
of the Federal Reserve System, as in effect from time to time.
"MARGIN STOCK" means "margin stock" as defined in Regulation U.
------------
"MARINE" means Denbury Marine L.L.C., a Louisiana limited liability
------
company, which is a wholly owned Subsidiary of Borrower.
"MATERIAL ADVERSE CHANGE" means any circumstance or event that has or would
-----------------------
reasonably be expected to have a Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
-------------------------
assets, liabilities, financial condition, results of operations or prospects of
any Credit Party, or the Credit Parties taken as a whole, (b) the right or
ability of any Credit Party to fully, completely and timely perform its
obligations under the Loan Papers, (c) the validity or enforceability of any
Loan
10-14
Paper against any Credit Party which is a party thereto, or (d) the validity,
perfection or priority of any material Lien intended to be created under or
pursuant to any Loan Paper to secure the Obligations.
"MATERIAL AGREEMENT" means any material written or oral agreement,
--------------------
contract, commitment, or understanding to which a Person is a party, by which
such Person is directly or indirectly bound, or to which any assets of such
Person may be subject, which is not cancelable by such Person upon notice of
thirty (30) days or less without liability for further payment other than
nominal penalty.
"MATERIAL GAS IMBALANCE" means, with respect to all Gas Balancing
------------------------
Agreements to which any Credit Party is a party or by which any Mineral Interest
owned by any Credit Party is bound, a net gas imbalance to any Credit Party in
excess of $1,000,000.
"MAXIMUM LAWFUL RATE" means, for each Bank, the maximum rate (or, if the
--------------------
context so permits or requires, an amount calculated at such rate) of interest
which, at the time in question would not cause the interest charged on the
portion of the Revolving Loan owed to such Bank at such time to exceed the
maximum amount which such Bank would be allowed to contract for, charge, take,
reserve, or receive under applicable Laws after taking into account, to the
extent required by applicable Laws, any and all relevant payments or charges
under the Loan Papers. To the extent the Laws of the State of Texas are
applicable for purposes of determining the "MAXIMUM LAWFUL RATE," such term
---------------------
shall mean the "indicated rate ceiling" from time to time in effect under
Chapter 303 of the Texas Finance Code, as amended, substituted for or restated,
or, if permitted by applicable Law and effective upon the giving of the notices
required by such Chapter 303 (or effective upon any other date otherwise
specified by applicable Law), the "quarterly ceiling" or "annualized ceiling"
from time to time in effect under such Chapter 303, whichever Administrative
Agent (with the approval of Required Banks) shall elect to substitute for the
"indicated rate ceiling," and vice versa, each such substitution to have the
effect provided in such Chapter 303, and Administrative Agent (with the approval
of Required Banks) shall be entitled to make such election from time to time and
one or more times and, without notice to Borrower, to leave any such substitute
rate in effect for subsequent periods in accordance with such Chapter 303.
"MINERAL INTERESTS" means rights, estates, titles, and interests in and to
-----------------
oil and gas leases and any oil and gas interests, royalty and overriding royalty
interest, production payment, net profits interests, oil and gas fee interests,
and other rights therein, including, without limitation, any reversionary or
carried interests relating to the foregoing, together with rights, titles, and
interests created by or arising under the terms of any unitization,
communization, and pooling agreements or arrangements, and all properties,
rights and interests covered thereby, whether arising by contract, by order, or
by operation of Laws, which now or hereafter include all or any part of the
foregoing.
"MORTGAGES" means all mortgages, deeds of trust, amendments to mortgages,
---------
security agreements, assignments of production, pledge agreements, collateral
mortgages, collateral chattel mortgages, collateral assignments, financing
statements and other documents, instruments and agreements evidencing, creating,
perfecting or otherwise establishing the Liens required by
10-15
Section 6.1 hereof. All Mortgages shall be in form and substance satisfactory to
-----------
Administrative Agent in its sole discretion.
"NET CASH PROCEEDS" means (a) the gross proceeds received by any Credit
------------------
Party from any Securities Offering, less (b) underwriters discounts and
commissions, legal, accounting and other professional fees and expenses and
other usual and customary transaction costs, in each case only to the extent
paid or payable by a Credit Party in cash.
"NOTE" means a promissory note of Borrower payable to the order of a Bank,
----
in substantially the form of Exhibit C hereto, in the amount of such Bank's
---------
Commitment, evidencing the obligation of Borrower to repay to such Bank its
Commitment Percentage of the Revolving Loan, together with all modifications,
extensions, renewals, and rearrangements thereof, and "NOTES" means all of such
-----
Notes collectively.
"NOTICE OF CONTINUATION OR CONVERSION" has the meaning set forth in Section
------------------------------------ -------
3.5(c).
------
"OBLIGATIONS" means all present and future indebtedness, obligations and
-----------
liabilities, and all renewals and extensions thereof, or any part thereof, of
each Credit Party to Administrative Agent or to any Bank or any Affiliate of any
Bank arising pursuant to the Loan Papers or pursuant to any Hedge Agreement or
Hedge Transaction entered into with any Bank or any Affiliate of any Bank, and
all interest accrued thereon and costs, expenses, and attorneys' fees incurred
in the enforcement or collection thereof, regardless of whether such
indebtedness, obligations and liabilities are direct, indirect, fixed,
contingent, liquidated, unliquidated, joint, several or joint and several.
"OIL & GAS HEDGE TRANSACTION" means a Hedge Transaction pursuant to which
---------------------------
any Person xxxxxx the price to be received by it for future production of
Hydrocarbons.
"OUTSTANDING CREDIT" means, on any date, the sum of (a) the aggregate
-------------------
outstanding Letter of Credit Exposure on such date including the Letter of
Credit Exposure attributable to Letters of Credit to be issued on such date,
plus (b) the aggregate outstanding principal balance of the Revolving Loan on
such date, including the amount of any Borrowing to be made on such date.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"PERMITTED ENCUMBRANCES" means with respect to any asset:
----------------------
(a) Liens securing the Obligations;
(b) minor defects in title which do not secure the payment of
money and otherwise have no material adverse effect on the value
or the operation of the subject property, and for the purposes of
this Agreement, a minor defect in title shall include, but not be
limited to, easements, rights-of-way, servitudes, permits,
surface leases and other similar rights in respect of surface
operations, and easements for pipelines, streets, alleys,
highways, telephone lines, power lines, railways and other
easements and rights-of-way, on, over or in respect of any of
10-16
the properties of any Credit Party that are customarily granted
in the oil and gas industry;
(c) inchoate statutory or operators' Liens securing obligations
for labor, services, materials and supplies furnished to Mineral
Interests which are not delinquent (except to the extent
permitted by Section 9.7);
-----------
(d) mechanic's, materialmen's, warehouseman's, journeyman's and
carrier's Liens and other similar Liens arising by operation of
Law in the ordinary course of business which are not delinquent
(except to the extent permitted by Section 9.7);
-----------
(e) Liens for Taxes or assessments not yet due or not yet
delinquent, or, if delinquent, that are being contested in good
faith in the normal course of business by appropriate action, as
permitted by Section 9.7;
-----------
(f) lease burdens payable to third parties which are deducted in
the calculation of discounted present value in the Reserve Report
including, without limitation, any royalty, overriding royalty,
net profits interest, production payment, carried interest or
reversionary working interest;
(g) "Permitted Encumbrances" as that term is defined in the
Existing Mortgages; and
(h) Liens, charges and encumbrances upon Borrower's assets, other
than Proved Mineral Interests, which in the aggregate, do not
have a value in excess of $1,000,000.
"PERMITTED INVESTMENTS" means (a) readily marketable direct obligations of
----------------------
the United States of America (or investments in mutual funds or similar funds
which invest solely in such obligations), (b) fully insured time deposits and
certificates of deposit with maturities of one year or less of any commercial
bank operating in the United States having capital and surplus in excess of
$500,000,000, (c) commercial paper of a domestic issuer if at the time of
purchase such paper is rated in one of the two highest ratings categories of
Standard and Poor's Corporation or Xxxxx'x Investors Service, (d) Investments by
any Credit Party in a Subsidiary of Borrower that has provided a Facility
Guaranty and the Equity of which has been pledged to Administrative Agent
pursuant to a Borrower Pledge Agreement or a Subsidiary Pledge Agreement, and
(e) other Investments; provided, that, the aggregate amount of all other
-------- ----
Investments made pursuant to this clause (e) outstanding at any time shall not
exceed $1,000,000 (measured on a cost basis).
"PERMITTED SUBORDINATE DEBT" means Debt of Borrower resulting from a single
--------------------------
issue of Borrower's 9% Senior Subordinated Notes Due 2008 in an aggregate
outstanding principal balance of not greater than $125,000,000, and which (a) is
fully subordinated to the Obligations pursuant to subordination provisions which
have been approved by Required Banks, and (b) is not subject to negative
covenants or events of default (or other provisions which have the same effect
as negative covenants or events of default) which have not been approved by
Required Banks.
10-17
"PERSON" means an individual, a corporation, a partnership, an association,
------
a trust or any other entity or organization, including a Government Authority.
"PLAN" means an employee benefit plan within the meaning of section 3(3) of
----
ERISA, and any other similar plan, policy or arrangement, including an
employment contract, whether formal or informal and whether legally binding or
not, under which any Credit Party or an ERISA Affiliate of a Credit Party has
any current or future obligation or liability or under which any present or
former employee of any Credit Party or an ERISA Affiliate of a Credit Party, or
such present or former employee's dependents or beneficiaries, has any current
or future right to benefits resulting from the present or former employee's
employment relationship with any Credit Party or an ERISA Affiliate of a Credit
Party.
"PRIME RATE" means the per annum rate of interest established from time to
----------
time by Administrative Agent as its prime rate, which rate may not be the lowest
rate of interest charged by Administrative Agent to its customers.
"PROVED MINERAL INTERESTS" means, collectively, Proved Producing Mineral
-------------------------
Interests, Proved Nonproducing Mineral Interests, and Proved Undeveloped Mineral
Interests.
"PROVED NONPRODUCING MINERAL INTERESTS" means all Mineral Interests which
---------------------------------------
constitute proved developed nonproducing reserves.
"PROVED PRODUCING MINERAL INTERESTS" means all Mineral Interests which
-------------------------------------
constitute proved developed producing reserves.
"PROVED UNDEVELOPED MINERAL INTERESTS" means all Mineral Interests which
---------------------------------------
constitute proved undeveloped reserves.
"QUALIFIED PURPOSE" means (i) the purchase by Borrower of Proved Mineral
------------------
Interests, or (ii) capital expenditures made by Borrower to maintain, enhance or
develop Proved Mineral Interests owned by Borrower; provided, that, the portion
-------- ----
of the aggregate amount of all Borrowings made during any period during which
Section 10.14 is in effect hereunder which is utilized to purchase Proved
--------------
Mineral Interests which is in excess of the "QUALIFIED AMOUNT" will not be
-----------------
deemed to be utilized for a "Qualified Purpose." As used herein, "qualified
amount" means, with respect to Proved Mineral Interests acquired with the
proceeds of Borrowings made during any period during which Section 10.14 is in
-------------
effect hereunder, an amount equal to two hundred percent (200%) of the
Recognized Value of that portion of such Proved Mineral Interests which
constitute Proved Producing Mineral Interests.
"QUARTERLY DATE" means the last day of each March, June, September and
---------------
December.
"RECOGNIZED VALUE" means, with respect to Mineral Interests, the portion of
----------------
the Borrowing Base which Bank of America attributes to such Mineral Interests
for purposes of the most recent redetermination of the Borrowing Base pursuant
to Article V hereof (or for purposes of determining the initial Borrowing Base
---------
in the event no such redetermination has occurred), based upon the discounted
present value of the estimated net cash flow to be realized from the production
of Hydrocarbons from such Mineral Interests.
10-18
"REDETERMINATION" means any Scheduled Redetermination or Special
---------------
Redetermination.
"REDETERMINATION DATE" means (a) with respect to any Scheduled
----------------------
Redetermination, each October 1 and April 1, commencing April 1, 2001, and (b)
with respect to any Special Redetermination, the first day of the first month
which is not less than twenty (20) Domestic Business Days following the date of
a request for a Special Redetermination.
"REGULATION A" means Regulation A of the Board of Governors of the Federal
------------
Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"REGULATION D" means Regulation D of the Board of Governors of the Federal
------------
Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"REGULATION U" means Regulation U of the Board of Governors of the Federal
------------
Reserve System, 12 C.F.R. Part 221, as in effect from time to time.
"REQUEST FOR BORROWING" has the meaning set forth in Section 3.2(a).
--------------------- --------------
"REQUEST FOR LETTER OF CREDIT" has the meaning set forth in Section 3.3(a).
---------------------------- --------------
"REQUIRED BANKS" means Banks holding at least sixty-six and two-thirds
---------------
percent (66 2/3%) of the Total Commitment.
"REQUIRED CONSOLIDATED TANGIBLE NET WORTH" means, initially, $50,000,000;
----------------------------------------
provided, that, the Required Consolidated Tangible Net Worth shall increase (but
-------- ----
not decrease) above the Required Consolidated Tangible Net Worth previously in
effect pursuant to this definition (i) on each Quarterly Date (commencing
December 31, 2000) by an amount equal to fifty percent (50%) of Borrower's
Consolidated Net Income for the Fiscal Quarter then ended, and (ii) on the date
of any issuance by Borrower of its equity securities by an amount equal to fifty
percent (50%) of the net proceeds received by Borrower from the issuance of such
securities.
"REQUIRED RESERVE VALUE" means Proved Mineral Interests that have a
------------------------
Recognized Value of not less than eighty-five percent (85%) of the Recognized
Value of all Proved Mineral Interests held by Borrower and its Subsidiaries.
"RESERVE REPORT" means an unsuperseded engineering analysis of the Mineral
--------------
Interests owned by Borrower, in form and substance reasonably acceptable to
Required Banks, prepared in accordance with customary and prudent practices in
the petroleum engineering industry and Financial Accounting Standards Board
Statement 69. Each Reserve Report required to be delivered by February 28 of
each year pursuant to Section 5.1 shall be prepared by the Approved Petroleum
-----------
Engineer. Each other Reserve Report shall be prepared by either (i) the Approved
Petroleum Engineer, or (ii) Borrower's in-house staff. Notwithstanding the
foregoing, in connection with any Special Redetermination requested by Borrower,
the Reserve Report shall be in form and scope mutually acceptable to Borrower
and Required Banks. Until superseded, the Existing Reserve Report shall be
considered the Reserve Report.
"RESERVE REQUIREMENT" means, at any time, the maximum rate at which
--------------------
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are
10-19
required to be maintained under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) by member
banks of the Federal Reserve System against in the case of Eurodollar Loans,
"Eurocurrency liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks with respect to
(i) any category of liabilities which includes deposits by reference to which
the Adjusted Eurodollar Rate is to be determined, or (ii) any category of
extensions of credit or other assets which include Eurodollar Loans. The
Adjusted Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"RESTRICTED PAYMENT" means, with respect to any Person, (a) any
--------------------
Distribution by such Person, (b) the retirement, redemption, defeasance,
repurchase or prepayment prior to scheduled maturity by such Person or any
Affiliate of such Person of any Debt of such Person, or (c) except as otherwise
approved by Required Banks, the retirement, redemption or payment by Borrower or
any affiliate of Borrower of any part of the principal of the Permitted
Subordinate Debt at any time prior to the termination of all Commitments and the
payment and performance in full of the Obligations.
"REVOLVING LOAN" means the revolving credit loan in an amount outstanding
--------------
at any time not to exceed the amount of the Total Commitment then in effect less
the amount of the Letter Credit Exposure then outstanding to be made by Banks to
Borrower in accordance with Section 3.1 hereof. The Revolving Loan may be
-----------
comprised of the Base Rate Loan and one or more Eurodollar Loans as Borrower may
select in a Request for Borrowing or a Notice of Continuation or Conversion.
"SCHEDULE" means a "schedule" attached to this Agreement and incorporated
--------
herein by reference, unless specifically indicated otherwise.
"SCHEDULED REDETERMINATION" means any Redetermination of the Borrowing Base
-------------------------
and the Conforming Borrowing Base pursuant to Section 5.2.
-----------
"SECTION" refers to a "section" or "subsection" of this Agreement unless
-------
specifically indicated otherwise.
"SECURITIES OFFERING" means the issuance or sale by any Credit Party of
--------------------
Debt securities at any time on or after the Closing Date.
"SOLE LEAD ARRANGER" means Banc of America Securities LLC in its capacity
------------------
as sole lead arranger for the credit facility hereunder or any successor
thereto.
"SPECIAL REDETERMINATION" means any Redetermination of the Borrowing Base
------------------------
pursuant to Section 5.3.
-----------
"SUBSIDIARY" means, for any Person, any corporation or other entity of
----------
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions (including that of a general partner) are at the time directly or
indirectly owned, collectively, by such Person and any Subsidiaries of such
Person. The term "SUBSIDIARY" shall include Subsidiaries of Subsidiaries (and so
----------
on).
10-20
"SUBSIDIARY PLEDGE AGREEMENT" means a Pledge Agreement substantially in the
---------------------------
form of Exhibit E attached hereto (with applicable conforming changes) which may
---------
be executed by each existing and/or future Subsidiary of Borrower to the extent
such Subsidiary owns any outstanding Equity of any other Subsidiary of Borrower
(for purposes of this definition and Section 6.1(d) hereof, such Subsidiary is
--------------
referred to herein and therein as an "INDIRECT SUBSIDIARY"), pursuant to which
--------------------
such Indirect Subsidiary shall pledge to Administrative Agent, for the ratable
benefit of Banks, all of the issued and outstanding Equity owned by such
Indirect Subsidiary of each Subsidiary of such Indirect Subsidiary described
therein to secure the Obligations.
"TAXES" means all taxes, assessments, filing or other fees, levies,
-----
imposts, duties, deductions, withholdings, stamp taxes, capital transaction
taxes, foreign exchange taxes or other charges, or other charges of any nature
whatsoever, from time to time or at any time imposed by Law or any Governmental
Authority. "TAX" means any one of the foregoing.
---
"TERMINATION DATE" means December 31, 2003.
----------------
"TEXAS PACIFIC GROUP" means, collectively, TGP Partners, L.P., T.G.P.
---------------------
Parallel, L.P., and any of their Affiliates.
"TOTAL COMMITMENT" means the Commitments of all Banks in an initial
-----------------
aggregate amount of $300,000,000 as such amount shall be reduced from time to
time pursuant to Section 3.8 and Section 3.9.
----------- -----------
"TRI" means Tallahatchie Resources, Inc., a Texas corporation which is a
---
wholly owned Subsidiary of Borrower.
"TYPE" means, with reference to a Revolving Loan, the characterization of
----
such Revolving Loan as the Base Rate Loan or a Eurodollar Loan based on the
method by which the accrual of interest on such Revolving Loan is calculated.
"UNPROVED RESERVES" means Mineral Interests which do not constitute Proved
------------------
Mineral Interests.
Section 2.2. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
---------------------------------------
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be expressed in U.S. dollars and shall
be prepared in accordance with GAAP, applied on a basis consistent with the most
recent audited consolidated financial statements of Borrower and its
Consolidated Subsidiaries delivered to Banks except for changes concurred in by
Borrower's independent certified public accountants and which are disclosed to
Administrative Agent on the next date on which financial statements are required
to be delivered to Banks pursuant to Section 9.1(a) or Section 9.1(b); provided
-------------- -------------- --------
that, unless Required Banks shall otherwise agree in writing, no such change
----
shall modify or affect the manner in which compliance with the covenants
contained in Article XI are computed such that all such computations shall be
---------
conducted utilizing financial information presented consistently with prior
periods.
10-21
Section 2.3. PETROLEUM TERMS. As used herein, the terms "PROVED RESERVES,"
--------------- ---------------
"PROVED DEVELOPED RESERVES," "PROVED DEVELOPED PRODUCING RESERVES," "PROVED
-------------------------- ------------------------------------- ------
DEVELOPED NONPRODUCING RESERVES," and "PROVED UNDEVELOPED RESERVES" have the
--------------------------------- -----------------------------
meaning given such terms from time to time and at the time in question by the
Society of Petroleum Engineers of the American Institute of Mining Engineers.
Section 2.4. MONEY. Unless expressly stipulated otherwise, all references
-----
herein to "DOLLARS," "MONEY," "FUNDS," "PAYMENTS," "PREPAYMENTS" or similar
------- ----- ----- -------- -----------
financial or monetary terms, are references to currency of the United States of
America.
ARTICLE III
THE CREDIT
----------
Section 3.1. COMMITMENTS.
-----------
(a) Each Bank severally agrees, subject to Section 3.1(c), Section 7.1 and
-------------- -----------
Section 7.2 and the other terms and conditions set forth in this Agreement, to
-----------
lend to Borrower from time to time prior to the Termination Date amounts
requested by Borrower not to exceed in the aggregate at any one time
outstanding, the amount of such Bank's Commitment reduced by an amount equal to
such Bank's Letter of Credit Exposure. Each Borrowing shall be in an aggregate
principal amount of $1,000,000 or any larger integral multiple of $100,000
(except that any Base Rate Borrowing may be in an amount equal to the
Availability at such time), and (ii) shall be made from the Banks ratably in
accordance with their respective Commitment Percentages. Subject to the
foregoing limitations and the other provisions of this Agreement, prior to the
Termination Date Borrower may borrow under this Section 3.1(a), repay amounts
---------------
borrowed and request new Borrowings to be made under this Section 3.1(a).
--------------
(b) Administrative Agent will, from time to time prior to the Termination
Date, upon request by Borrower, issue Letters of Credit for the account of
Borrower or any Subsidiary of Borrower designated by Borrower, so long as (i)
the sum of (A) the total Letter of Credit Exposure then existing, and (B) the
amount of the requested Letter of Credit does not exceed ten percent (10%) of
the lesser of (y) the Total Commitment, and (z) the Conforming Borrowing Base,
and (ii) Borrower would be entitled to a Borrowing under Section 3.1(a) and
---------------
Section 3.1(c) in the amount of the requested Letter of Credit. Not less than
---------------
three (3) Domestic Business Days prior to the requested date of issuance of any
such Letter of Credit, Borrower (and any Subsidiary for whose account such
Letter of Credit is being issued) shall execute and deliver to Administrative
Agent, Administrative Agent's customary letter of credit application. Each
Letter of Credit shall be in the minimum amount of $10,000 and shall be in form
and substance acceptable to Administrative Agent. No Letter of Credit shall have
an expiration date later than the earlier of (i) the Termination Date, or (ii)
one (1) year from the date of issuance. Upon the date of issuance of a Letter of
Credit, Administrative Agent shall be deemed to have sold to each other Bank,
and each other Bank shall be deemed to have unconditionally and irrevocably
purchased from Administrative Agent, a non recourse participation in the related
Letter of Credit and Letter of Credit Exposure equal to such Bank's Commitment
Percentage of such Letter of Credit and Letter of Credit Exposure. Upon request
of any Bank, but not less often than quarterly, Administrative Agent shall
provide notice to each Bank by telephone, teletransmission
10-22
or telex setting forth each Letter of Credit issued and outstanding pursuant to
the terms hereof and specifying the beneficiary and expiration date of each such
Letter of Credit, each Bank's percentage of each such Letter of Credit and the
actual dollar amount of each Bank's participation held by Administrative Agent
thereof for such Bank's account and risk. At the time of issuance of each Letter
of Credit, Borrower shall pay to Administrative Agent in respect of such Letter
of Credit (a) the applicable Letter of Credit Fee, and (b) to the extent the
stated amount of such Letter of Credit is equal to or in excess of $1,000,000,
the applicable Letter of Credit Fronting Fee. Administrative Agent shall
distribute the Letter of Credit Fee payable upon the issuance of each Letter of
Credit to Banks in accordance with their respective Commitment Percentages, and
Administrative Agent shall retain the Letter of Credit Fronting Fee for its own
account. Any (y) material amendment or modification, or (z) renewal or extension
of any Letter of Credit shall be deemed to be the issuance of a new Letter of
Credit for purposes of this Section 3.1(b). Notwithstanding anything to the
---------------
contrary contained herein, Borrower shall pay to Administrative Agent in
connection with any amendment or modification of any nature, Administrative
Agent's usual and customary fees for amendments or modifications to, and
processing of, Letters of Credit.
Immediately upon the occurrence of an Event of Default and the acceleration
of the Obligations hereunder, Borrower shall deposit with Administrative Agent
cash in such amounts as Administrative Agent may request, up to a maximum amount
equal to the aggregate existing Letter of Credit Exposure of all Banks;
provided, that, in the case of any of the Events of Default specified in Section
-------- ---- -------
12.1(g) or Section 12.1(h), an amount equal to the aggregate existing Letter of
------- ---------------
Credit Exposure of all Banks shall be due and payable without any notice to
Borrower or any other act by Administrative Agent or any Bank. Any amounts so
deposited shall be held by Administrative Agent for the ratable benefit of all
Banks as security for the outstanding Letter of Credit Exposure and the other
Obligations, and Borrower will, in connection therewith, execute and deliver
such security agreements in form and substance satisfactory to Administrative
Agent which Administrative Agent may, in its discretion, require. As drafts or
demands for payment are presented under any Letter of Credit, Administrative
Agent shall apply such cash to satisfy such drafts or demands. When all Letters
of Credit have expired and the Obligations have been repaid in full (and no Bank
has any obligation to lend or issue Letters of Credit hereunder) or such Event
of Default has been cured to the satisfaction of Required Banks, Administrative
Agent shall release to Borrower any remaining cash deposited under this Section
-------
3.1(b). Whenever Borrower is required to make deposits under this Section 3.1(b)
------ --------------
and fails to do so on the day such deposit is due, Administrative Agent or any
Bank may, without notice to Borrower, make such deposit (whether by application
of proceeds of any collateral for the Obligations, by transfers from other
accounts maintained with any Bank or otherwise) using any funds then available
to any Bank of any Credit Party, any guarantor or any other party liable for
repayment of the Obligations.
Notwithstanding anything to the contrary contained herein, Borrower hereby
agrees to reimburse Administrative Agent immediately upon demand by
Administrative Agent, and in immediately available funds, for any payment or
disbursement made by Administrative Agent under any Letter of Credit issued by
it. Payment shall be made by Borrower with interest on the amount so paid or
disbursed by Administrative Agent from and including the date payment is made
under any Letter of Credit to and including the date of payment, at the lesser
of (i) the Maximum Lawful Rate, or (ii) the Default Rate. The obligations of
Borrower under this
10-23
paragraph will continue until all Letters of Credit have expired and all
reimbursement obligations with respect thereto have been paid in full by
Borrower and until all other Obligations shall have been paid in full.
Borrower shall be obligated to reimburse Administrative Agent upon demand
for all amounts paid under Letters of Credit as set forth in the immediately
preceding paragraph hereof; provided, however, if Borrower for any reason fails
-------- -------
to reimburse Administrative Agent in full upon demand, Banks shall reimburse
Administrative Agent in accordance with each Banks' Commitment Percentage for
amounts due and unpaid from Borrower as set forth hereinbelow; provided,
--------
however, that no such reimbursement made by Banks shall discharge Borrower's
-------
obligations to reimburse Administrative Agent. All reimbursement amounts payable
by any Bank under this Section 3.1(b) shall include interest thereon at the
---------------
Federal Funds Rate, from the date of the payment of such amounts by
Administrative Agent to the date of reimbursement by such Bank. No Bank shall be
liable for the performance or nonperformance of the obligations of any other
Bank under this paragraph. The reimbursement obligations of Banks under this
paragraph shall continue after the Termination Date and shall survive
termination of this Agreement and the other Loan Papers.
Borrower shall indemnify and hold Administrative Agent and each Bank, and
their respective officers, directors, representatives and employees harmless
from loss for any claim, demand or liability which may be asserted against any
or such indemnified party in connection with actions taken under Letters of
Credit or in connection therewith (including losses resulting from the
negligence of any or such indemnified party), and shall pay each indemnified
party for reasonable fees of attorneys and legal costs paid or incurred by each
indemnified party in connection with any matter related to Letters of Credit,
except for losses and liabilities incurred as a direct result of the gross
negligence or willful misconduct of such indemnified party, IT BEING THE EXPRESS
INTENTION OF THE PARTIES THAT EACH INDEMNIFIED PARTY SHALL BE INDEMNIFIED FOR
THE CONSEQUENCES OF ITS OWN ORDINARY NEGLIGENCE. If Borrower for any reason
fails to indemnify or pay such indemnified party as set forth herein in full,
Banks shall indemnify and pay such indemnified party upon
demand, in accordance with each Bank's Commitment Percentage of such amounts due
and unpaid from Borrower; provided, however, that, no such payment made by Banks
-------- ------- ----
shall discharge Borrower's obligation to indemnify or pay such indemnified party
in accordance with the terms hereof. The provisions of this paragraph shall
survive the termination of this Agreement.
Administrative Agent does not make any representation or warranty, and does
not assume any responsibility with respect to the validity, legality,
sufficiency or enforceability of any letter of credit application executed and
delivered in connection with any Letter of Credit issued hereunder or any
document relative thereto or to the collectibility thereunder. Administrative
Agent does not assume any responsibility for the financial condition of Borrower
or for the performance of any obligation of Borrower. Administrative Agent may
use its discretion with respect to exercising or refraining from exercising any
rights, or taking or refraining from taking any action which may be vested in it
or which it may be entitled to take or assert with respect to any Letter of
Credit or any letter of credit application. FURTHERMORE, EXCEPT AS SET FORTH
HEREIN, ADMINISTRATIVE AGENT SHALL BE UNDER NO LIABILITY TO ANY BANK, WITH
RESPECT TO ANYTHING ADMINISTRATIVE AGENT MAY
10-24
DO OR REFRAIN FROM DOING IN THE EXERCISE OF ITS JUDGMENT, THE SOLE LIABILITY AND
RESPONSIBILITY OF ADMINISTRATIVE AGENT BEING TO HANDLE EACH BANK'S SHARE ON AS
FAVORABLE A BASIS AS ADMINISTRATIVE AGENT HANDLES ITS OWN SHARE. ADMINISTRATIVE
AGENT SHALL NOT HAVE ANY DUTIES OR RESPONSIBILITIES EXCEPT THOSE EXPRESSLY SET
FORTH HEREIN AND THOSE DUTIES AND LIABILITIES SHALL BE SUBJECT TO THE
LIMITATIONS AND QUALIFICATIONS SET FORTH HEREIN. FURTHERMORE, NEITHER
ADMINISTRATIVE AGENT, NOR ANY OF ITS DIRECTORS, OFFICERS, OR EMPLOYEES SHALL BE
LIABLE FOR ANY ACTION TAKEN OR OMITTED (WHETHER OR NOT SUCH ACTION TAKEN OR
OMITTED IS EXPRESSLY SET FORTH HEREIN) UNDER OR IN CONNECTION HEREWITH OR UNDER
ANY OTHER INSTRUMENT OR DOCUMENT IN CONNECTION HEREWITH, EXCEPT FOR GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. Administrative Agent shall not incur any
liability to any Bank, Borrower, or any Affiliate of any Bank or Borrower, in
acting upon any notice, document, order, consent, certificate, warrant or other
instrument reasonably believed by Administrative Agent to be genuine or
authentic and to be signed by the proper party.
(c) No Bank will be obligated to lend to Borrower hereunder or incur Letter
of Credit Exposure, and Borrower shall not be entitled to borrow hereunder or
obtain Letters of Credit hereunder, in an amount which would cause the
Outstanding Credit to exceed the Borrowing Base then in effect. No Bank shall be
obligated to fund Borrowings hereunder and Borrower shall not be entitled to
Borrowings hereunder during the existence of a Borrowing Base Deficiency.
Nothing in this Section 3.1(c) shall be deemed to limit any Bank's obligation to
--------------
reimburse Administrative Agent with respect to its participation in Letters of
Credit as a result of the drawing under any Letter of Credit pursuant to Section
-------
3.1(b).
------
Section 3.2. METHOD OF BORROWING.
-------------------
(a) In order to request any Borrowing under Section 3.1, Borrower shall
-----------
hand deliver, telex or telecopy to Administrative Agent a duly completed Request
for Borrowing (herein so called) prior to 12:00 noon (Dallas, Texas time), (i)
at least one (1) Domestic Business Day before the Borrowing Date specified for a
proposed Base Rate Borrowing, and (ii) at least three (3) Eurodollar Business
Days before the Borrowing Date of a proposed Eurodollar Borrowing. Each such
Request for Borrowing shall be substantially in the form of Exhibit F attached
---------
hereto, and shall specify:
(i) the Borrowing Date of such Borrowing, which shall be a
Domestic Business Day in the case of a Base Rate Borrowing or a
Eurodollar Business Day in the case of a Eurodollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether such Borrowing is to be a Base Rate Borrowing or a
Eurodollar Borrowing; and
10-25
(iv) in the case of a Eurodollar Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
(b) Upon receipt of a Request for Borrowing, Administrative Agent shall
promptly notify each Bank of the contents thereof and the amount of the
Borrowing to be loaned by such Bank pursuant thereto, and such Request for
Borrowing shall not thereafter be revocable by Borrower.
(c) Not later than 12:00 noon (Dallas, Texas time) on the date of each
Borrowing, each Bank shall make available its Commitment Percentage of such
Borrowing, in Federal or other funds immediately available in Dallas, Texas to
Administrative Agent at its address set forth on Schedule 2.1 hereto.
-------------
Notwithstanding the foregoing, if Borrower delivers to Administrative Agent a
Request for Borrowing prior to 10:00 a.m. (Dallas, Texas time) on a Domestic
Business Day requesting a Base Rate Borrowing on such day, each Bank shall use
its best efforts to make available to Administrative Agent its Commitment
Percentage of such Borrowing by 1:00 p.m. (Dallas, Texas time) on the same day.
Unless Administrative Agent determines that any applicable condition specified
in Section 7.2 has not been satisfied, Administrative Agent will make the funds
-----------
so received from Banks available to Borrower at Administrative Agent's aforesaid
address.
Section 3.3. METHOD OF REQUESTING LETTERS OF CREDIT.
--------------------------------------
(a) In order to request any Letter of Credit hereunder, Borrower shall hand
deliver, telex or telecopy to Administrative Agent a duly completed Request for
Letter of Credit (herein so called) prior to 12:00 noon (Dallas, Texas time) at
least three (3) Domestic Business Days before the date specified for issuance of
such Letter of Credit. Each Request for Letter of Credit shall be substantially
in the form of Exhibit G attached hereto, shall be accompanied by the
----------
Administrative Agent's duly completed and executed letter of credit application
and agreement and shall specify:
(i) the requested date for issuance of such Letter of Credit;
(ii) the terms of such requested Letter of Credit, including the
name and address of the beneficiary, the stated amount, the
expiration date and the conditions under which drafts under such
Letter of Credit are to be available; and
(iii) the purpose of such Letter of Credit.
(b) Upon receipt of a Request for Letter of Credit, Administrative Agent
shall promptly notify each Bank of the contents thereof, including the amount of
the requested Letter of Credit, and such Request for Letter of Credit shall not
thereafter be revocable by Borrower.
(c) No later than 12:00 noon (Dallas, Texas time) on the date each Letter
of Credit is requested, unless Administrative Agent determines that any
applicable condition precedent set forth in Section 7.2 hereof has not been
satisfied, Administrative Agent will issue and deliver such Letter of Credit
pursuant to the instructions of Borrower.
10-26
Section 3.4. NOTES. Each Bank's Commitment Percentage of the Revolving Loan
-----
shall be evidenced by a single Note payable to the order of such Bank in an
amount equal to such Bank's Commitment.
Section 3.5. INTEREST RATES; PAYMENTS.
------------------------
(a) The principal amount of the Base Rate Loan outstanding from day to day
shall bear interest at a rate per annum equal to the sum of (i) the Applicable
Margin plus (ii) the applicable Base Rate in effect from day to day; provided
--------
that in no event shall the rate charged hereunder or under the Notes exceed the
----
Maximum Lawful Rate. Interest on the Base Rate Loan shall be payable as it
accrues on each Quarterly Date, and on the Termination Date.
(b) The principal amount of each Eurodollar Loan outstanding from day to
day shall bear interest for the Interest Period applicable thereto at a rate per
annum equal to the sum of (i) the Applicable Margin plus (ii) the applicable
Adjusted Eurodollar Rate; provided that in no event shall the rate charged
-------- ----
hereunder or under the Notes exceed the Maximum Lawful Rate. Interest on any
portion of the principal of each Eurodollar Loan subject to an Interest Period
of one (1), two (2) or three (3) months shall be payable on the last day of the
Interest Period applicable thereto. Interest on any portion of the principal of
each Eurodollar Loan subject to an Interest Period of six (6), nine (9), or
twelve (12) months shall be payable on the last day of the Interest Period
applicable thereto and on each Quarterly Date.
(c) So long as no Default or Event of Default shall be continuing,
subject to the provisions of this Section 3.5, Borrower shall have the option of
-----------
having all or any portion of the principal outstanding under the Revolving Loan
be a Base Rate Loan or one (1) or more Eurodollar Loans, which shall bear
interest at rates determined by reference to the Base Rate and the Adjusted
Eurodollar Rate, respectively; provided, that each Eurodollar Loan shall be in a
-------- ----
minimum amount of $2,000,000 and shall be in an amount which is an integral
multiple of $500,000. Prior to the termination of each Interest Period with
respect to each Eurodollar Loan, Borrower shall give written notice (a "NOTICE
------
OF CONTINUATION OR CONVERSION") in the form of Exhibit H attached hereto to
-------------------------------- ---------
Administrative Agent of the Type of Loan which shall be applicable to the
principal of such Eurodollar Loan upon the expiration of such Interest Period.
Such Notice of Continuation or Conversion shall be given to Administrative Agent
at least one (1) Domestic Business Day, in the case of a Base Rate Loan
selection and three (3) Eurodollar Business Days, in the case of a Eurodollar
Loan selection, prior to the termination of the Interest Period then expiring.
If Borrower shall specify a Eurodollar Loan, such Notice of Continuation or
Conversion shall also specify the length of the succeeding Interest Period
(subject to the provisions of the definition of such term) selected by Borrower.
Each Notice of Continuation or Conversion shall be irrevocable and effective
upon notification thereof to Administrative Agent. If the required Notice of
Continuation or Conversion shall not have been timely received by Administrative
Agent, Borrower shall be deemed to have elected that the principal of the
Eurodollar Loan subject to the Interest Period then expiring be Converted to the
Base Rate Loan upon the expiration of such Interest Period and Borrower will be
deemed to have given Administrative Agent notice of such election. Subject to
the limitations set forth in this Section 3.5(c) on the amount and number of
---------------
Eurodollar Loans, Borrower shall have the right to Convert all or any part of
the Base Rate Loan to a Eurodollar Loan by giving Administrative Agent a Notice
of Continuation or Conversion of such election at least three (3) Eurodollar
Business
10-27
Days prior to the date on which Borrower elects to make such Conversion (a
"CONVERSION DATE"). The Conversion Date selected by Borrower shall be a
----------------
Eurodollar Business Day. Notwithstanding anything in this Section 3.5 to the
-----------
contrary, no portion of the principal of the Base Rate Loan may be Converted to
a Eurodollar Loan and no Eurodollar Loan may be Continued as such when any
Default or Event of Default has occurred and is continuing, but each such
Eurodollar Loan shall be automatically Converted to the Base Rate Loan on the
last day of each applicable Interest Period. Borrower shall not be permitted to
have more than seven (7) Eurodollar Loans in effect at any time.
(d) Notwithstanding anything to the contrary set forth in Section 3.5(a) or
--------------
Section 3.5(b) above, after the occurrence of an Event of Default, interest
---------------
shall accrue on the outstanding principal balance of the Revolving Loan, and to
the extent permitted by Law, on the accrued but unpaid interest on the Revolving
Loan and all other Obligations from the period from and including the occurrence
of such Event of Default to but excluding the date the same is remedied at a
rate per annum equal to the lesser of (a) the Default Rate, and (b) the Maximum
Lawful Rate.
(e) Administrative Agent shall determine each interest rate applicable to
the Revolving Loan in accordance with the terms hereof. Administrative Agent
shall promptly notify Borrower and Banks by telex, telecopy or cable of each
rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
(f) Notwithstanding the foregoing, if at any time the rate of interest
calculated with reference to the Base Rate or the Eurodollar Rate hereunder (the
"CONTRACT RATE") is limited to the Maximum Lawful Rate, any subsequent
--------------
reductions in the contract rate shall not reduce the rate of interest on the
Revolving Loan below the Maximum Lawful Rate until the total amount of interest
accrued equals the amount of interest which would have accrued if the contract
rate had at all times been in effect. In the event that at maturity (stated or
by acceleration), or at final payment of any Note, the total amount of interest
paid or accrued on such Note is less than the amount of interest which would
have accrued if the contract rate had at all times been in effect with respect
thereto, then at such time, to the extent permitted by law, Borrower shall pay
to the holder of such Note an amount equal to the difference between (i) the
lesser of the amount of interest which would have accrued if the contract rate
had at all times been in effect and the amount of interest which would have
accrued if the Maximum Lawful Rate had at all times been in effect, and (ii) the
amount of interest actually paid on such Note.
(g) Interest payable hereunder on each Eurodollar Loan shall be computed
based on the number of actual days elapsed assuming that each calendar year
consisted of 360 days. Interest payable hereunder on the Base Rate Loan shall be
computed based on the actual number of days elapsed assuming that each calendar
year consisted of 365 days.
Section 3.6. MANDATORY PREPAYMENTS. Simultaneously with any reduction of
----------------------
the Borrowing Base pursuant to Section 5.5 hereof, Borrower shall make a
------------
mandatory prepayment on the Revolving Loan in an amount sufficient to reduce the
Outstanding Credit to the amount of the Borrowing Base as thereby reduced. Upon
the occurrence of any other Borrowing Base Deficiency, Borrower shall make the
mandatory prepayments of the Revolving Loan required by Section 5.4 hereof.
-----------
10-28
Section 3.7. VOLUNTARY PREPAYMENTS. Borrower may, subject to Section 3.3
---------------------- -----------
and the other provisions of this Agreement, upon three (3) Domestic Business
Days advance notice to Administrative Agent, prepay the principal of the
Revolving Loan in whole or in part. Any partial prepayment shall be in a minimum
amount of $500,000 and shall be in an integral multiple of $100,000.
Section 3.8. VOLUNTARY REDUCTION OF COMMITMENTS. Borrower may, by notice to
----------------------------------
Administrative Agent five (5) Domestic Business Days prior to the effective date
of any such reduction, reduce the Total Commitment (and thereby reduce the
Commitment of each Bank ratably) in amounts not less than $5,000,000 and in an
amount which is an integral multiple of $1,000,000. On the effective date of any
such reduction, Borrower shall, to the extent required as a result of such
reduction, make a principal payment on the Revolving Loan in an amount
sufficient to cause the principal balance of the Revolving Loan then outstanding
to be equal to or less than the Total Commitment as thereby reduced.
Notwithstanding the foregoing, Borrower shall not be permitted to voluntarily
reduce the Total Commitment to an amount less than the aggregate Letter of
Credit Exposure of all Banks.
Section 3.9. TERMINATION OF COMMITMENTS; FINAL MATURITY OF REVOLVING LOAN.
-------------------------------------------------------------
The Total Commitment (and the Commitment of each Bank) shall terminate, and the
entire outstanding principal balance of the Revolving Loan, all interest accrued
thereon, all accrued but unpaid fees hereunder and all other outstanding
Obligations shall be due and payable in full on the Termination Date.
Section 3.10. APPLICATION OF PAYMENTS. Each repayment pursuant to Section
----------------------- -------
3.6, Section 3.7, Section 3.8, Section 3.9, Section 5.4 and Section 5.5 shall be
--- ----------- ----------- ----------- ----------- -----------
made together with accrued interest on the amount repaid to the date of payment,
and shall be applied in accordance with Section 4.2 and the other provisions of
-----------
this Agreement.
Section 3.11. COMMITMENT FEE. On the Termination Date, on each Quarterly
--------------
Date prior to the Termination Date, and, in the event the Commitments are
terminated in their entirety prior to the Termination Date, on the date of such
termination, Borrower shall pay to Administrative Agent, for the ratable benefit
of each Bank based on each Bank's Commitment Percentage, a commitment fee equal
to the Commitment Fee Percentage in effect from day to day (applied on a per
annum basis and computed on the basis of actual days elapsed and as if each
calendar year consisted of 365 days) of the average daily Availability for the
Fiscal Quarter (or portion thereof) ending on the date such payment is due.
Section 3.12. AGENCY AND OTHER FEES. Borrower shall pay to Administrative
---------------------
Agent and its Affiliates such other fees and amounts as Borrower shall be
required to pay to Administrative Agent and its Affiliates from time to time
pursuant to any separate agreement between Borrower and Administrative Agent or
such Affiliates. Such fees and other amounts shall be retained by Administrative
Agent and its Affiliates, and no Bank (other than Bank of America) shall have
any interest therein. Administrative Agent may disburse any fees paid to
Administrative Agent and its Affiliates pursuant to this Section 3.12 in any
------------
manner Administrative Agent desires in its sole discretion.
10-29
ARTICLE IV
GENERAL PROVISIONS
------------------
Section 4.1. Delivery and Endorsement of Notes. On the Closing Date,
------------------------------------
Administrative Agent shall deliver to each Bank the Note payable to such Bank.
Each Bank may endorse (and prior to any transfer of its Note shall endorse) on
the schedules attached and forming a part thereof appropriate notations to
evidence the date and amount of its Commitment Percentage of each Borrowing, the
Interest Period applicable thereto, and the date and amount of each payment of
principal made by Borrower with respect thereto; provided that the failure by
any Bank to so endorse its Note shall not affect the liability of Borrower for
the repayment of all amounts outstanding under such Note together with interest
thereon. Each Bank is hereby irrevocably authorized by Borrower to endorse its
Note and to attach to and make a part of any such Note a continuation of any
such schedule as required.
Section 4.2. GENERAL PROVISIONS AS TO PAYMENTS.
---------------------------------
(a) Borrower shall make each payment of principal of, and interest on, the
Revolving Loan, and all fees payable hereunder shall be paid, not later than
12:00 noon (Dallas, Texas time) on the date when due, in Federal or other funds
immediately available in Dallas, Texas, to Administrative Agent at its address
set forth on Schedule 2.1 hereto, without defense, set-off, deduction or
-------------
counterclaim. Administrative Agent will promptly (and if such payment is
received by Administrative Agent by 10:00 a.m. (Dallas, Texas time), and
otherwise if reasonably possible, on the same Domestic Business Day) distribute
to each Bank its Commitment Percentage of each such payment received by
Administrative Agent for the account of Banks. Whenever any payment of principal
of, or interest on, the Base Rate Loan or of fees shall be due on a day which is
not a Domestic Business Day, the date for payment thereof shall be extended to
the next succeeding Domestic Business Day. Whenever any payment of principal of,
or interest on, any portion of any Eurodollar Loan shall be due on a day which
is not a Eurodollar Business Day, the date for payment thereof shall be extended
to the next succeeding Eurodollar Business Day (subject to the provisions of the
definition of Interest Period). If the date for any payment of principal is
extended by operation of Law or otherwise, interest thereon shall be payable for
such extended time. Borrower hereby authorizes Administrative Agent to charge
from time to time against Borrower's accounts with Administrative Agent any
amount then due.
(b) Prior to the occurrence of an Event of Default, all principal payments
received by Banks with respect to the Revolving Loan shall be applied first to
Eurodollar Loans outstanding with Interest Periods ending on the date of such
payment, then to the Base Rate Loan, and then to Eurodollar Loans next maturing
until such principal payment is fully applied.
(c) After the occurrence of an Event of Default, all amounts collected or
received by Administrative Agent or any Bank shall be applied first to the
payment of all proper costs incurred by Administrative Agent in connection with
the collection thereof (including reasonable expenses and disbursements of
Administrative Agent), second to the payment of all proper costs incurred by
Banks in connection with the collection thereof (including reasonable expenses
and disbursements of Banks), third to the reimbursement of any advances made by
Banks to effect
10-30
performance of any unperformed covenants of any Credit Party under any of the
Loan Papers, fourth to the payment of any unpaid fees required pursuant to
Section 3.11, fifth to the payment of any unpaid fees required pursuant to
-------------
Section 3.1(b) and Section 3.10, sixth, to payment to each Bank of its
--------------- -------------
Commitment Percentage of the outstanding principal of the Revolving Loan and
accrued but unpaid interest thereon, and seventh to establish the deposits
required in Section 3.1(b). All payments received by a Bank after the occurrence
--------------
of an Event of Default for application to the principal of the Revolving Loan
shall be applied by such Bank in the manner provided in Section 4.2(b).
--------------
ARTICLE V
BORROWING BASE
--------------
Section 5.1. RESERVE REPORT; PROPOSED BORROWING BASE AND CONFORMING
------------------------------------------------------------
BORROWING BASE . The aggregate amount of credit available to Borrower under this
--------------
Agreement shall be limited by a Borrowing Base (herein so called) which shall be
determined by Banks at the times and in accordance with the standards and
procedures set forth in this Article V. As soon as available and in any event by
---------
February 28 and August 31 of each year commencing February 28, 2001, Borrower
shall deliver to Administrative Agent and each Bank a Reserve Report prepared as
of the immediately preceding December 31 and June 30 respectively.
Simultaneously with the delivery to Administrative Agent and each Bank of each
Reserve Report, Borrower shall notify Administrative Agent and each Bank of the
amount of the Borrowing Base which Borrower requests become effective on the
next Redetermination Date (or such date promptly following such Redetermination
Date as Required Banks shall elect). Banks may, in their sole discretion,
establish a Borrowing Base which is higher than the Borrowing Base that would
otherwise be in effect if Banks determined the Borrowing Base based on each
Bank's application of the credit standards and other criteria customarily
applied by such Bank in the determination of credit limitations for companies
similar to Borrower ("CONFORMING CREDIT CRITERIA"). At the time of each
----------------------------
Redetermination, Banks shall also determine what the Borrowing Base would be if
they applied Conforming Credit Criteria (the "CONFORMING BORROWING BASE"). If
--------------------------
Banks do not determine a Conforming Borrowing Base, the Borrowing Base as
redetermined shall also be the Conforming Borrowing Base for purposes of this
Agreement.
Section 5.2. SCHEDULED REDETERMINATIONS OF THE BORROWING BASE AND THE
------------------------------------------------------------
CONFORMING BORROWING BASE; PROCEDURES AND STANDARDS. Based in part on the
--------------------------------------------------------
Reserve Reports made available to Banks pursuant to Section 5.1, Banks shall
-----------
redetermine the Borrowing Base and the Conforming Borrowing Base on or prior to
the next Redetermination Date (or such date promptly thereafter as reasonably
possible based on the engineering and other information available to Banks). Any
Borrowing Base or Conforming Borrowing Base which becomes effective as a result
of any Redetermination of the Borrowing Base or Conforming Borrowing Base shall
be subject to the following restrictions: (a) such Borrowing Base or Conforming
Borrowing Base shall not exceed the Borrowing Base requested by Borrower
pursuant to Section 5.1 or Section 5.3 (as applicable), (b) such Borrowing Base
----------- -----------
or Conforming Borrowing Base shall not exceed the Total Commitment then in
effect, (c) to the extent such Borrowing Base or Conforming Borrowing Base
represents an increase from the Borrowing Base or the Conforming
10-31
Borrowing Base (as applicable) in effect prior to such Redetermination, such
Borrowing Base or Conforming Borrowing Base shall be approved by all Banks, and
(d) to the extent such Borrowing Base or Conforming Borrowing Base represents a
decrease in the Borrowing Base or the Conforming Borrowing Base (as applicable)
in effect prior to such Redetermination, or a reaffirmation of such prior
Borrowing Base or Conforming Borrowing Base, such Borrowing Base or Conforming
Borrowing Base shall be approved by Required Banks. Each Redetermination shall
be made by Banks in their sole discretion. Without limiting such discretion,
Borrower acknowledges and agrees that Banks (i) may make such assumptions
regarding appropriate existing and projected pricing for Hydrocarbons as they
deem appropriate in their sole discretion, (ii) may make such assumptions
regarding projected rates and quantities of future production of Hydrocarbons
from the Mineral Interests owned by Borrower as they deem appropriate in their
sole discretion, (iii) may consider the projected cash requirements of the
Credit Parties, (iv) except with respect to the Initial Borrowing Base and the
Initial Conforming Borrowing Base set forth in Section 5.5 hereof, are not
------------
required to consider any asset other than Proved Mineral Interests owned by
Borrower which are subject to first and prior Liens in favor of Administrative
Agent for the ratable benefit of Banks to the extent required by Section 6.1
-----------
hereof, and (v) may make such other assumptions, considerations and exclusions
as Banks deem appropriate in the exercise of their sole discretion. It is
further acknowledged and agreed that each Bank may consider such other credit
factors as it deems appropriate in the exercise of its sole discretion and shall
have no obligation in connection with any Redetermination to approve any
increase from the Borrowing Base or the Conforming Borrowing Base in effect
prior to such Redetermination. The Conforming Borrowing Base shall also be
determined by Banks in their sole discretion, and in determining the amount of
the Conforming Borrowing Base, each Bank may make the assumptions and consider
the factors and criteria set forth in subclauses (a) through (d) and (i) through
(v) above; provided, that each Bank shall apply Conforming Credit Criteria.
-------- ----
Promptly following any Redetermination of the Borrowing Base and the Conforming
Borrowing Base, Administrative Agent shall notify Borrower of the amount of the
Borrowing Base and the Conforming Borrowing Base as redetermined, which
Borrowing Base and Conforming Borrowing Base shall be effective as of the date
specified in such notice, and shall remain in effect for all purposes of this
Agreement until the next Redetermination.
Section 5.3. SPECIAL REDETERMINATION.
-----------------------
(a) In addition to Scheduled Redeterminations, Borrower and Required Banks
shall each be permitted to request a Special Redetermination of the Borrowing
Base and the Conforming Borrowing Base once in each Fiscal Year. Any request by
Required Banks pursuant to this Section 5.3(a) shall be submitted to
---------------
Administrative Agent and Borrower. Any request by Borrower pursuant to this
Section 5.3(a) shall be submitted to Administrative Agent and each Bank and at
--------------
the time of such request Borrower shall (i) deliver to Administrative Agent and
each Bank a Reserve Report, and (ii) also notify Administrative Agent and each
Bank of the Borrowing Base requested by Borrower in connection with such Special
Redetermination.
(b) Any Special Redetermination shall be made by Banks in accordance with
the procedures and standards set forth in Section 5.2; provided, that, no
----------- -------- ----
Reserve Report will be required to be delivered to Administrative Agent and
Banks in connection with any Special Redetermination requested by Required Banks
pursuant to Section 5.3(a) above.
--------------
10-32
Section 5.4. BORROWING BASE DEFICIENCY. Except as provided in Section 5.5,
------------------------- -----------
to the extent a Borrowing Base Deficiency exists after giving effect to any
Redetermination, Borrower shall be obligated to eliminate such Borrowing Base
Deficiency over a period not to exceed six (6) months from the effective date of
such Redetermination by making six (6) mandatory, equal, consecutive, monthly
payments of principal on the Revolving Loan, each of which shall be in the
amount of one sixth (1/6th) of such Borrowing Base Deficiency, or in the event
that the remaining principal outstanding under the Revolving Loan is less than
the Borrowing Base Deficiency, then in the amount of one sixth (1/6th) of the
remaining principal outstanding under the Revolving Loan. The first of such six
(6) payments shall be due on the thirtieth (30th) day following the effective
date of each such Redetermination and each subsequent payment shall be due on
the same day of each month thereafter (or if there is no corresponding day of
any subsequent month, then on the last day of such month) (each such date is
referred to herein as a "BORROWING BASE DEFICIENCY PAYMENT DATE"). If a
------------------------------------------
Borrowing Base Deficiency cannot be eliminated pursuant to this Section 5.4 by
-----------
prepayment of the Revolving Loan in full (as a result of outstanding Letter of
Credit Exposure), on each borrowing base deficiency payment date, Borrower shall
also deposit cash with Administrative Agent, to be held by Administrative Agent
to secure outstanding Letter of Credit Exposure in the manner contemplated by
Section 3.1(b), an amount at least equal to one sixth (1/6th) of the balance of
--------------
such Borrowing Base Deficiency (i.e., one-sixth of the difference between the
Borrowing Base Deficiency and the remaining outstanding principal under the
Revolving Loan on the effective date of such Redetermination).
Section 5.5. INITIAL BORROWING BASE AND INITIAL CONFORMING BORROWING BASE.
-------------------------------------------------------------
Notwithstanding anything to the contrary contained herein, the Borrowing Base
and the Conforming Borrowing Base in effect during the period commencing on the
Closing Date and ending on the effective date of the first Redetermination after
the Closing Date shall be the Initial Borrowing Base and the Initial Conforming
Borrowing Base, respectively. The Borrowing Base in effect under this Section
-------
5.5 shall reduce (but not below the Conforming Borrowing Base) immediately upon
---
the consummation of any Securities Offering by any Credit Party in an amount
equal to the Net Cash Proceeds resulting from such Securities Offering.
Simultaneously with any such reduction, Borrower shall make a mandatory
prepayment of the Revolving Loan in an amount sufficient to eliminate any
Borrowing Base Deficiency resulting from such reduction in the Borrowing Base.
ARTICLE VI
COLLATERAL AND GUARANTEES
-------------------------
Section 6.1. SECURITY.
--------
(a) The Obligations shall be secured by first and prior Liens (subject only
to Permitted Encumbrances) covering and encumbering (i) one hundred percent
(100%) of all Borrowing Base Properties, and (ii) prior to any Distributions
being permitted to be made to any Subsidiary of Borrower pursuant to the terms
of Section 10.2(b) and/or the definition of "Permitted Investments," all of the
---------------
issued and outstanding Equity owned by Borrower and each Subsidiary of Borrower
of each such Subsidiary of Borrower (other than DES, Marine and TRI). On the
Closing Date, Borrower shall deliver to Administrative Agent for the ratable
benefit of each Bank, the Mortgages and Amendments to Existing Mortgages in form
and substance
10-33
acceptable to Administrative Agent and duly executed by Borrower, together with
such other assignments, conveyances, amendments, agreements and other writings,
including, without limitation, UCC-1 and UCC-3 financing statements (each duly
authorized and executed) as Administrative Agent shall deem necessary or
appropriate to grant, evidence and perfect first and prior Liens in not less
than ninety-five percent (95%) of all Borrowing Base Properties and other
interests of Borrower required by this Section 6.1(a). Additionally, on or prior
--------------
to January 13, 2001, Borrower shall deliver to Administrative Agent for the
ratable benefit of each Bank, additional Mortgages in form and substance
acceptable to Administrative Agent and duly executed by Borrower, together with
such other assignments, conveyances, amendments, agreements and other writings,
including, without limitation, UCC- 1 financing statements (each duly authorized
and executed) as Administrative Agent shall deem necessary or appropriate to
grant, evidence and perfect first and prior Liens in all Borrowing Base
Properties and other interests of Borrower required by this Section 6.1(a).
--------------
(b) On or before each Redetermination Date after the Closing Date and at
such other times as Administrative Agent or Required Banks shall request,
Borrower and its Subsidiaries shall execute and deliver to Administrative Agent,
for the ratable benefit of each Bank, Mortgages in form and substance acceptable
to Administrative Agent and duly executed by Borrower and any such Subsidiary
(as applicable) together with such other assignments, conveyances, amendments,
agreements and other writings, including, without limitation, UCC-1 financing
statements (each duly authorized and executed) as Administrative Agent shall
deem necessary or appropriate to grant, evidence and perfect the Liens required
by Section 6.1(a) preceding with respect to Borrowing Base Properties acquired
--------------
by Borrower and its Subsidiaries subsequent to the last date on which Borrower
or any such Subsidiary was required to execute and deliver Mortgages pursuant to
this Section 6.1(b), or which, for any other reason are not the subject of
---------------
valid, enforceable, perfected first priority Liens (subject only to Permitted
Encumbrances) in favor of Administrative Agent for the ratable benefit of Banks.
(c) At any time Borrower or any of its Subsidiaries is required to execute
and deliver Mortgages to Administrative Agent pursuant to this Section 6.1 or
-----------
Section 7.3 (other than Mortgages to be delivered on the Closing Date, which
-----------
shall only require evidence of title to verify Borrower's or any such
Subsidiary's (as applicable) title to the Initial Required Reserve Value of the
Proved Mineral Interests which are subject to such Mortgages to be delivered on
the Closing Date), Borrower shall also deliver to Administrative Agent such
opinions of counsel (including, if so requested, title opinions, and in each
case addressed to Administrative Agent) and other evidence of title as
Administrative Agent shall deem necessary or appropriate to verify (i)
Borrower's or such Subsidiary's title to the Required Reserve Value of the
Proved Mineral Interests which are subject to such Mortgages, and (ii) the
validity, perfection and priority of the Liens created by such Mortgages and
such other matters regarding such Mortgages as Administrative Agent shall
reasonably request.
(d) To the extent required or contemplated by the terms of Section
-------
6.1(a)(ii), Section 10.2 and the definition of "Permitted Investments," Borrower
---------- ------------
or any Indirect Subsidiary (as applicable) shall execute and deliver to
Administrative Agent a Borrower Pledge Agreement or a Subsidiary Pledge
Agreement (as applicable) together with (i) all certificates (or other evidence
acceptable to Administrative Agent) evidencing the issued and outstanding Equity
of any such Subsidiary of every class owned by Borrower or such Indirect
Subsidiary (as
10-34
applicable) which shall be duly endorsed or accompanied by stock powers executed
in blank (as applicable), and (ii) such UCC-1 financing statements as
Administrative Agent shall deem necessary or appropriate to grant, evidence and
perfect the Liens required by Section 6.1(a)(ii) and Section 10.2 in the issued
------------------- ------------
and outstanding Equity of each such Subsidiary.
Section 6.2. GUARANTEES. Prior to any Distributions being permitted to be
----------
made to any Subsidiary of Borrower pursuant to the terms of Section 10.2(b),
----------------
payment and performance of the Obligations shall be fully guaranteed by each
such Subsidiary of Borrower (other than DES, Marine and TRI) pursuant to a
Facility Guaranty, and Borrower shall cause any such applicable Subsidiary to
execute and deliver to Administrative Agent such Facility Guaranty.
ARTICLE VII
CONDITIONS PRECEDENT
--------------------
Section 7.1. CONDITIONS TO AMENDMENT AND RESTATEMENT AND INITIAL BORROWING
-------------------------------------------------------------
AND PARTICIPATION IN LETTER OF CREDIT EXPOSURE. The amendment and restatement of
----------------------------------------------
the Existing Credit Agreement on the terms set forth herein, and the obligation
of each Bank to loan its Commitment Percentage of the initial Borrowing
hereunder and the obligation of Administrative Agent to issue (or cause another
Bank to issue) any Letter of Credit issued hereunder is subject to the
satisfaction of each of the following conditions:
(a) CLOSING DELIVERIES. Administrative Agent shall have received each
------------------
of the following documents, instruments and agreements, each of which shall be
in form and substance and executed in such counterparts as shall be acceptable
to Administrative Agent and each Bank and each of which shall, unless otherwise
indicated, be dated the Closing Date:
(i) a Note payable to the order of each Bank, each in the amount
of such Bank's Commitment, duly executed by Borrower;
(ii) the Mortgages and Amendments to Existing Mortgages to be
executed on the Closing Date pursuant to Section 6.1(a), duly
---------------
executed and delivered by Borrower, together with such other
assignments, conveyances, amendments, agreements and other
writings, including, without limitation, UCC-1 and UCC-3
financing statements, in form and substance satisfactory to
Administrative Agent, creating first and prior Liens in all
Borrowing Base Properties;
(iii) such financing statements (including, without limitation,
the financing statements referenced in subclause (ii) above) in
form and substance acceptable to Administrative Agent and
executed by each Credit Party as Administrative Agent shall
specify to fully evidence and perfect all Liens contemplated by
the Loan Papers, all of which shall be filed of record in such
jurisdictions as Administrative Agent shall require in its sole
discretion;
10-35
(iv) a copy of the certificate of incorporation, and all
amendments thereto, of Borrower accompanied by a certificate that
such copy is true, correct and complete, and dated within ten
(10) days of the Closing Date (or within such other period as
acceptable to Administrative Agent), issued by the appropriate
Governmental Authority of the jurisdiction of incorporation of
Borrower, and accompanied by a certificate of the Secretary or
comparable Authorized Officer of Borrower that such copy is true,
correct and complete on the Closing Date;
(v) a copy of the bylaws, and all amendments thereto, of Borrower
accompanied by a certificate of the Secretary or comparable
Authorized Officer of Borrower that such copy is true, correct
and complete as of Closing Date;
(vi) certain certificates and other documents issued by the
appropriate Governmental Authorities of such jurisdictions as
Administrative Agent has requested relating to the existence of
Borrower and to the effect that Borrower is in good standing with
respect to the payment of franchise and similar Taxes and is duly
qualified to transact business in such jurisdictions;
(vii) a certificate of incumbency of all officers of Borrower who
will be authorized to execute or attest to any Loan Paper, dated
the Closing Date, executed by the Secretary or comparable
Authorized Officer of Borrower;
(viii) copies of resolutions or comparable authorizations
approving the Loan Papers and authorizing the transactions
contemplated by this Agreement and the other Loan Papers, duly
adopted by the Board of Directors of Borrower accompanied by
certificates of the Secretary or comparable officer of Borrower
that such copies are true and correct copies of resolutions duly
adopted at a meeting of or (if permitted by applicable Law and,
if required by such Law, by the bylaws of Borrower) by the
unanimous written consent of the Board of Directors of Borrower,
and that such resolutions constitute all the resolutions adopted
with respect to such transactions, have not been amended,
modified, or revoked in any respect, and are in full force and
effect as of the Closing Date;
(ix) an opinion of Jenkens & Xxxxxxxxx, P.C., special counsel for
Borrower dated the Closing Date, favorably opining as to the
enforceability of each of the Loan Papers and otherwise in form
and substance satisfactory to Administrative Agent and Banks;
(x) an opinion of Cliffe X. Xxxxxxx III, special Louisiana
counsel for Administrative Agent dated the Closing Date,
favorably opining as
10-36
to the enforceability of the Mortgages and Amendments to Existing
Mortgages in Louisiana and otherwise in form and substance
satisfactory to Administrative Agent and Banks;
(xi) an opinion of Young, Williams, Xxxxxxxxx & Xxxxxxxx, P.A.,
special Mississippi counsel for Administrative Agent dated the
Closing Date, favorably opining as to the enforceability of the
Mortgages and Amendments to Existing Mortgages in Mississippi and
otherwise in form and substance satisfactory to Administrative
Agent and Banks;
(xii) a certificate signed by an Authorized Officer of Borrower
stating that (a) the representations and warranties contained in
this Agreement and the other Loan Papers are true and correct in
all respects, (b) no Default or Event of Default has occurred and
is continuing, and (c) all conditions set forth in this Section
-------
7.1 and Section 7.2 have been satisfied;
--- -----------
(xiii) a Certificate of Ownership Interests signed by an
Authorized Officer of Borrower in the form of Exhibit I attached
---------
hereto;
(xiv) a report or reports in form, scope and detail acceptable to
Administrative Agent from environmental engineering firms
acceptable to Administrative Agent setting forth the results of a
review of Borrower's Mineral Interests and operations, which
report(s) shall not reflect the existence of facts or
circumstances which would constitute a material violation of any
Applicable Environmental Law or which are likely to result in a
material liability to any Credit Party; and
(xv) certificates from Borrower's insurance broker setting forth
the insurance maintained by Borrower, stating that such insurance
is in full force and effect, that all premiums due have been paid
and stating that such insurance is adequate and complies with the
requirements of Section 9.6.
-----------
(b) TITLE REVIEW. Administrative Agent or its counsel shall have
-------------
completed a review of title to the Initial Required Reserve Value of all
Borrowing Base Properties and such review shall not have revealed any condition
or circumstance which would reflect that the representations and warranties
contained in Section 8.8 hereof are inaccurate in any respect.
-----------
(c) CLOSING TRANSACTIONS. Subject only to the disbursement and
---------------------
application of the initial Borrowing, Borrower shall have refinanced in full
with proceeds of a Borrowing under this Agreement, all Obligations accrued and
outstanding under the Existing Credit Agreement as of the Closing Date,
including, without limitation, (i) the entire outstanding principal balance of
the "Revolving Loan" made thereunder, (ii) all accrued but unpaid interest, and
(iii) all accrued but unpaid commitment and other fees.
10-37
(d) NO MATERIAL ADVERSE CHANGE. In the sole discretion of each Bank,
---------------------------
no Material Adverse Change shall have occurred.
(e) NO LEGAL PROHIBITION. The transactions contemplated by this
----------------------
Agreement shall be permitted by applicable Law and regulation and shall not
subject any Agent or any Bank to any material adverse change in its assets,
liabilities, financial condition, operations or prospects or subject any Credit
Party to a Material Adverse Change.
(f) NO LITIGATION. No litigation, arbitration or similar proceeding
-------------
shall be pending or threatened which calls into question the validity or
enforceability of this Agreement, the other Loan Papers or the transactions
contemplated hereby or thereby.
(g) CLOSING FEES. Borrower shall have paid to Administrative Agent for
------------
the ratable benefit of each Bank, and shall have paid to Administrative Agent
and its Affiliates (for its own account), the fees to be paid on the Closing
Date pursuant to Section 3.12.
------------
(h) OTHER MATTERS. All matters related to this Agreement, the other
-------------
Loan Papers and the Credit Parties shall be acceptable to each Bank in its sole
discretion, and each Credit Party shall have delivered to Administrative Agent
and each Bank such evidence as they shall request to substantiate any matters
related to this Agreement and the other Loan Papers as Administrative Agent or
any Bank shall request.
Upon satisfaction of each of the conditions set forth in this Section 7.1,
-----------
Borrower and Administrative Agent shall execute the Certificate of
Effectiveness. Upon the execution and delivery of the Certificate of
Effectiveness, the Existing Credit Agreement shall automatically and completely
be amended and restated on the terms set forth herein without necessity of any
other action on the part of any Bank, any Agent or Borrower. Until execution and
delivery of the Certificate of Effectiveness, the Existing Credit Agreement
shall remain in full force and effect in accordance with its terms. Each Bank
hereby authorizes Administrative Agent to execute the Certificate of
Effectiveness on its behalf and acknowledges and agrees that the execution of
the Certificate of Effectiveness by Administrative Agent shall be binding on
each such Bank.
Section 7.2. CONDITIONS TO EACH BORROWING AND EACH LETTER OF CREDIT. The
-------------------------------------------------------
obligation of each Bank to loan its Commitment Percentage of each Borrowing and
the obligation of Administrative Agent to issue, extend, amend or renew any
Letter of Credit on the date such Letter of Credit is to be issued, extended,
amended or renewed is subject to the further satisfaction of the following
conditions:
(a) timely receipt by Administrative Agent of a Request for Borrowing
or a Request for Letter of Credit (as applicable);
(b) immediately before and after giving effect to such Borrowing or
issuance of such Letter of Credit, no Default or Event of Default shall have
occurred and be continuing and the funding of such Borrowing or the issuance of
the requested Letter of Credit (as applicable) shall not cause a Default or
Event of Default;
10-38
(c) the representations and warranties of each Credit Party contained
in this Agreement and the other Loan Papers shall be true and correct on and as
of the date of such Borrowing or issuance of such Letter of Credit (as
applicable);
(d) the amount of the requested Borrowing or the amount of the
requested Letter of Credit (as applicable) shall not exceed the Availability;
(e) no Material Adverse Change shall have occurred; and
(f) the funding of such Borrowing or the issuance of such Letter of
Credit (as applicable) shall be permitted by applicable Law.
The funding of each Borrowing and the issuance of each Letter of Credit
hereunder shall be deemed to be a representation and warranty by Borrower on the
date of such Borrowing and the date of issuance of each Letter of Credit as to
the facts specified in Section 7.2(b) through Section 7.2(e).
-------------- --------------
Section 7.3. POST-CLOSING DELIVERIES. On or prior to January 13, 2001,
------------------------
Borrower shall (a) execute and deliver to Administrative Agent the Mortgages and
other instruments required by the last sentence of Section 6.1(a) hereof, and
--------------
(b) deliver, or cause to be delivered, opinions of title or other evidence of
title in form and substance acceptable to Administrative Agent and its counsel
regarding that portion of the Borrowing Base Properties which is not less than
the Required Reserve Value.
Section 7.4. AGREEMENTS REGARDING INITIAL BORROWING. Borrower,
--------------------------------------------
Administrative Agent and each Bank acknowledge that all the proceeds of the
initial Borrowing to be made on the Closing Date are to be applied to refinance
in full all Obligations outstanding under and as defined in the Existing Credit
Agreement (the "REFINANCING BORROWING"). Administrative Agent and each Bank
----------------------
hereby waive the requirements of Section 3.2(a) and Section 7.2(a) with respect
-------------- --------------
to the Refinancing Borrowing to the extent, but only to the extent, such
Sections require the delivery of a Request for Borrowing as a condition
precedent to the obligation of each Bank to loan its Commitment Percentage of
each Borrowing. Each Bank, Administrative Agent and Borrower further acknowledge
and agree that, notwithstanding the contrary provisions of Section 3.2(c), each
--------------
Bank shall only be required to fund as part of such Refinancing Borrowing the
remainder, if any (and as applicable), of (a) its Commitment Percentage of such
Refinancing Borrowing, minus (b) the amount it is to receive as a result of the
application of the proceeds of the Refinancing Borrowing to refinance all
obligations outstanding under and as defined in the Existing Credit Agreement.
Section 7.5. MATERIALITY OF CONDITIONS. Each condition precedent herein is
-------------------------
material to the transactions contemplated herein, and time is of the essence in
respect of each thereof.
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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower represents and warrants to Administrative Agent and each Bank that
each of the following statements is true and correct on the date hereof, and
will be true and correct on the occasion of each Borrowing and the issuance of
each Letter of Credit:
Section 8.1. CORPORATE EXISTENCE AND POWER. Each Credit Party (a) is a
-------------------------------
corporation, partnership or limited liability company duly incorporated or
organized (as applicable), validly existing and in good standing under the Laws
of its jurisdiction of incorporation or organization, (b) has all corporate,
partnership or limited liability company power (as applicable) and all material
governmental licenses, authorizations, consents and approvals required to carry
on its businesses as now conducted and as proposed to be conducted, and (c) is
duly qualified to transact business as a foreign corporation, partnership or
limited liability company (as applicable) in each jurisdiction where a failure
to be so qualified could have a Material Adverse Effect.
Section 8.2. CREDIT PARTY AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION.
-------------------------------------------------------------
The execution, delivery and performance of this Agreement and the other Loan
Papers by each Credit Party (to the extent each Credit Party is a party to this
Agreement and such Loan Papers) are within such Credit Party's corporate,
partnership or limited liability company powers (as applicable), when executed
will be duly authorized by all necessary corporate, partnership or limited
liability company action (as applicable), require no action by or in respect of,
or filing with, any Governmental Authority and do not contravene, or constitute
a default under, any provision of applicable Law (including, without limitation,
the Margin Regulations) or of the articles or certificate of incorporation,
bylaws, regulations, partnership agreement or comparable charter documents of
any Credit Party or of any agreement, judgment, injunction, order, decree or
other instrument binding upon any Credit Party or result in the creation or
imposition of any Lien on any asset of any Credit Party other than the Liens
securing the Obligations.
Section 8.3. BINDING EFFECT. This Agreement constitutes a valid and binding
--------------
agreement of Borrower; the other Loan Papers when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
each Credit Party executing the same; and each Loan Paper is, or when executed
and delivered, will be, enforceable against each Credit Party which executes the
same in accordance with its terms except as (i) the enforceability thereof may
be limited by bankruptcy, insolvency or similar Laws affecting creditors rights
generally, and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.
Section 8.4. FINANCIAL INFORMATION.
---------------------
(a) The most recent annual audited consolidated balance sheet of
Borrower and the related consolidated statements of operations and cash flows
for the Fiscal Year then ended, copies of which have been delivered to each
Bank, fairly present, in conformity with GAAP, the consolidated financial
position of Borrower as of the end of such Fiscal Year and its consolidated
results of operations and cash flows for such Fiscal Year.
10-40
(b) The most recent quarterly unaudited consolidated balance sheet of
Borrower delivered to Banks, and the related unaudited consolidated statements
of operations and cash flows for the portion of Borrower's Fiscal Year then
ended, fairly present, in conformity with GAAP applied on a basis consistent
with the financial statements referred to in Section 8.4(a), the consolidated
--------------
financial position of Borrower as of such date and its consolidated results of
operations and cash flows for such portion of Borrower's Fiscal Year.
(c) Except as disclosed in writing to Banks prior to the execution and
delivery of this Agreement, since the date of Borrower's most recent annual and
quarterly consolidated balance sheet and consolidated statements of operations
and cash flow delivered to Banks, there has been no material adverse change in
the assets, liabilities, financial position, results of operations or prospects
of any Credit Party.
Section 8.5. LITIGATION. Except for matters disclosed on Schedule 8.5
----------
attached hereto, there is no action, suit or proceeding pending against, or to
the knowledge of any Credit Party, threatened against or affecting any Credit
Party before any Governmental Authority in which there is a reasonable
possibility of an adverse decision which could have a Material Adverse Effect or
which could in any manner draw into question the validity of the Loan Papers.
Section 8.6. ERISA. No Credit Party nor any ERISA Affiliate of any Credit
-----
Party maintains or has ever maintained or been obligated to contribute to any
Plan covered by Title IV of ERISA or subject to the funding requirements of
Section 412 of the Code or Section 302 of ERISA. Each Plan maintained by any
Credit Party or any ERISA Affiliate of any Credit Party is in compliance in all
material respects with all applicable Laws. Except in such instances where an
omission or failure would not have a Material Adverse Effect, (a) all returns,
reports and notices required to be filed with any regulatory agency with respect
to any Plan have been filed timely, and (b) no Credit Party nor any ERISA
Affiliate of any Credit Party has failed to make any contribution or pay any
amount due or owing as required by the terms of any Plan. There are no pending
or, to the best of Borrower's knowledge, threatened claims, lawsuits,
investigations or actions (other than routine claims for benefits in the
ordinary course) asserted or instituted against, and no Credit Party nor any
ERISA Affiliate of any Credit Party has knowledge of any threatened litigation
or claims against, the assets of any Plan or its related trust or against any
fiduciary of a Plan with respect to the operation of such Plan that are likely
to result in liability of any Credit Party having a Material Adverse Effect.
Except in such instances where an omission or failure would not have a Material
Adverse Effect, each Plan that is intended to be "qualified" within the meaning
of section 401(a) of the Code is, and has been during the period from its
adoption to date, so qualified, both as to form and operation and all necessary
governmental approvals, including a favorable determination as to the
qualification under the Code of such Plan and each amendment thereto, have been
or will be timely obtained. No Credit Party nor any ERISA Affiliate of any
Credit Party has engaged in any prohibited transactions, within the meaning of
section 406 of ERISA or section 4975 of the Code, in connection with any Plan
which would result in liability of any Credit Party having a Material Adverse
Effect. No Credit Party nor any ERISA Affiliate of any Credit Party maintains or
contributes to any Plan that provides a post-employment health benefit, other
than a benefit required under Section 601 of ERISA, or maintains or contributes
to a Plan that provides health benefits that is not fully funded except where
the failure to fully fund such Plan would not have a Material Adverse Effect. No
Credit Party nor any ERISA Affiliate of any Credit Party
10-41
maintains, has established or has ever participated in a multiple employer
welfare benefit arrangement within the meaning of section 3(40)(A) of ERISA.
Section 8.7. TAXES AND FILING OF TAX RETURNS. Each Credit Party has filed
-------------------------------
all tax returns required to have been filed and has paid all Taxes shown to be
due and payable on such returns, including interest and penalties, and all other
Taxes which are payable by such party, to the extent the same have become due
and payable, other than Taxes with respect to which a failure to pay would not
have a Material Adverse Effect. No Credit Party knows of any proposed material
Tax assessment against it and all Tax liabilities of each Credit Party are
adequately provided for. Except as disclosed in writing to Banks prior to the
date hereof, no income tax liability in excess of $50,000 of any Credit Party
has been asserted by the Internal Revenue Service or other Governmental
Authority for Taxes in excess of those already paid.
Section 8.8. OWNERSHIP OF PROPERTIES GENERALLY. Each Credit Party has good
---------------------------------
and valid fee simple or leasehold title to all material properties and assets
purported to be owned by it, including, without limitation, all assets reflected
in the balance sheets referred to in Section 8.4(a) and Section 8.4(b) and all
------------- -------------
assets which are used by the Credit Parties in the operation of their respective
businesses, and none of such properties or assets is subject to any Lien other
than Permitted Encumbrances.
Section 8.9. MINERAL INTERESTS. Borrower has good and defensible title to
------------------
all Mineral Interests described in the Reserve Report, including, without
limitation, all Borrowing Base Properties, free and clear of all Liens except
Permitted Encumbrances and Immaterial Title Deficiencies. With the exception of
Immaterial Title Deficiencies, all such Mineral Interests are valid, subsisting,
and in full force and effect, and all rentals, royalties, and other amounts due
and payable in respect thereof have been duly paid. Without regard to any
consent or non-consent provisions of any joint operating agreement covering any
of Borrower's Proved Mineral Interests, and with the exception of Immaterial
Title Deficiencies, Borrower's share of (a) the costs for each Proved Mineral
Interest described in the Reserve Report is not greater than the decimal
fraction set forth in the Reserve Report, before and after payout, as the case
may be, and described therein by the respective designations "working
interests," "WI," "gross working interest," "GWI," or similar terms, and (b)
production from, allocated to, or attributed to each such Proved Mineral
Interest is not less than the decimal fraction set forth in the Reserve Report,
before and after payout, as the case may be, and described therein by the
designations "net revenue interest," "NRI," or similar terms. Except in the case
of xxxxx which, in the aggregate, represent less than two percent (2%) of the
production from the Proved Producing Mineral Interests described in the Reserve
Report, each well drilled in respect of each Proved Producing Mineral Interest
described in the Reserve Report (y) is capable of, and is presently, producing
hydrocarbons in commercially profitable quantities, and Borrower is currently
receiving payments for its share of production, with no funds in respect of any
thereof being presently held in suspense, other than any such funds being held
in suspense pending delivery of appropriate division orders, and (z) has been
drilled, bottomed, completed, and operated in compliance with all applicable
Laws and no such well which is currently producing Hydrocarbons is subject to
any penalty in production by reason of such well having produced in excess of
its allowable production.
10-42
Section 8.10. LICENSES, PERMITS, ETC. Except as disclosed on Schedule 8.10
----------------------- -------------
attached hereto, each Credit Party possesses such valid franchises, certificates
of convenience and necessity, operating rights, licenses, permits, consents,
authorizations, exemptions and orders of Governmental Authorities, as are
necessary to carry on its business as now conducted and as proposed to be
conducted, except to the extent a failure to obtain any such item would not have
a Material Adverse Effect.
Section 8.11. COMPLIANCE WITH LAW. The business and operations of each
--------------------
Credit Party have been and are being conducted in accordance with all applicable
Laws other than violations of Laws which do not (either individually or
collectively) have a Material Adverse Effect.
Section 8.12. FULL DISCLOSURE. All information heretofore furnished by each
---------------
Credit Party to Administrative Agent or any Bank for purposes of or in
connection with this Agreement, any Loan Paper or any transaction contemplated
hereby or thereby is, and all such information hereafter furnished by or on
behalf of any Credit Party to Administrative Agent or any Bank will be, true,
complete and accurate in every material respect. The Credit Parties have
disclosed or have caused to be disclosed to Banks in writing any and all facts
(other than facts of general public knowledge) which might reasonably be
expected to result in a Material Adverse Change.
Section 8.13. ORGANIZATIONAL STRUCTURE; NATURE OF BUSINESS. Borrower owns
---------------------------------------------
one hundred percent (100%) of the issued and outstanding common stock in TRI and
DES and one hundred percent (100%) of the issued and outstanding limited
liability company interests in Marine. Borrower has no Subsidiaries other than
Marine, DES and TRI. Neither Marine nor DES has any Subsidiaries. Borrower is
engaged only in the business of acquiring, exploring, developing and operating
Mineral Interests and the production and marketing of hydrocarbons therefrom.
Marine is engaged only in the business of marine oil field services. DES is
engaged only in the business of oil and gas marketing and related services. TRI
does not have any assets, operations, liabilities, employees or contractual
relationships. Schedule 8.13 attached hereto accurately reflects (i) the
--------------
jurisdiction of incorporation or organization of each Credit Party, (ii) each
jurisdiction in which each Credit Party is qualified to transact business as a
foreign corporation, foreign partnership or foreign limited liability company,
(iii) the authorized, issued and outstanding Equity of each Credit Party, and
(iv) all outstanding warrants, options, subscription rights, convertible
securities or other rights to purchase Equity of each Credit Party.
Section 8.14. ENVIRONMENTAL MATTERS. Except for matters disclosed on
----------------------
Schedule 9.10 attached hereto, no operation conducted by any Credit Party and no
-------------
real or personal property now or previously owned or leased by any Credit Party
(including, without limitation, any Credit Party's Mineral Interests) and no
operations conducted thereon, and to any Credit Parties' knowledge, no
operations of any prior owner, lessee or operator of any such properties, is or
has been in violation of any Applicable Environmental Law other than violations
which neither individually nor in the aggregate will have a Material Adverse
Effect. Except for matters disclosed on Schedule 9.10 attached hereto, no Credit
-------------
Party, nor any such property nor operation is the subject of any existing,
pending or, to any Credit Parties' knowledge, threatened Environmental Complaint
which could, individually or in the aggregate, have a Material Adverse Effect.
All notices, permits, licenses, and similar authorizations, required to be
obtained or filed in connection with the ownership of each tract of real
property or operations of any Credit Party thereon and each item of personal
property owned, leased or operated by any Credit Party,
10-43
including, without limitation, notices, licenses, permits and authorizations
required in connection with any past or present treatment, storage, disposal, or
release of Hazardous Substances into the environment, have been duly obtained or
filed except to the extent the failure to obtain or file such notices, licenses,
permits and authorizations would not have a Material Adverse Effect. All
Hazardous Substances, generated at each tract of real property and by each item
of personal property owned, leased or operated by any Credit Party have been
transported, treated, and disposed of only by carriers or facilities maintaining
valid permits under RCRA (as hereinafter defined) and all other Applicable
Environmental Laws for the conduct of such activities except in such cases where
the failure to obtain such permits would not, individually or in the aggregate,
have a Material Adverse Effect. Except for matters disclosed on Schedule 9.10
-------------
attached hereto, there have been no Hazardous Discharges which were not in
compliance with Applicable Environmental Laws other than Hazardous Discharge
which would not, individually or in the aggregate, have a Material Adverse
Effect. Except for matters disclosed on Schedule 9.10 attached hereto, no Credit
-------------
Party has any contingent liability in connection with any Hazardous Discharge
which could reasonably be expected to have a Material Adverse Effect. As used in
this Section 8.14, the term "RCRA" shall mean the Resource Conservation and
------------- ----
Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the
Solid Waste Recovery Act of 1976, as amended by the Solid Waste Disposal Act of
1980, and the Hazardous and Solid Waste Amendments of 1984, as the same may be
further amended and in effect from time to time.
Section 8.15. BURDENSOME OBLIGATIONS. No Credit Party, nor any of the
-----------------------
properties of any Credit Party, is subject to any Law or any pending or
threatened change of Law or subject to any restriction under its articles (or
certificate) of incorporation, bylaws, regulations, partnership agreement or
comparable charter documents or under any agreement or instrument to which any
Credit Party or by which any Credit Party or any of their properties may be
subject or bound, which is so unusual or burdensome as to be likely in the
foreseeable future to have a Material Adverse Effect. Without limiting the
foregoing, no Credit Party is a party to or bound by any agreement (other than
the Loan Papers) or subject to any order of any Governmental Authority which
prohibits or restricts in any way the right of such Credit Party or any
Subsidiary of any Credit Party to make Distributions.
Section 8.16. FISCAL YEAR. Borrower's Fiscal Year is January 1 through
------------
December 31.
Section 8.17. NO DEFAULT. Neither a Default nor an Event of Default has
-----------
occurred or will exist after giving effect to the transactions contemplated by
this Agreement or the other Loan Papers.
Section 8.18. GOVERNMENT REGULATION. No Credit Party is subject to
----------------------
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act (as any of the preceding acts have been
amended), the Investment Company Act of 1940 or any other Law which regulates
the incurring by such Credit Party of Debt, including, but not limited to Laws
relating to common contract carriers or the sale of electricity, gas, steam,
water or other public utility services.
Section 8.19. INSIDER. No Credit Party is, and no Person having "control"
-------
(as that term is defined in 12 U.S.C. Section 375(b) or regulations promulgated
thereunder) of any Credit
10-44
Party is an "executive officer," "director" or "shareholder" of any Bank or any
bank holding company of which any Bank is a Subsidiary or of any Subsidiary of
such bank holding company.
Section 8.20. GAS BALANCING AGREEMENTS AND ADVANCE PAYMENT CONTRACTS. On
--------------------------------------------------------
the date of this Agreement, (a) there is no Material Gas Imbalance, and (b) the
aggregate amount of all Advance Payments received by any Credit Party under
Advance Payment Contracts which have not been satisfied by delivery of
production does not exceed $1,000,000.
ARTICLE IX
AFFIRMATIVE COVENANTS
---------------------
Borrower covenants and agrees that, so long as any Bank has any commitment
to lend or participate in Letter of Credit Exposure hereunder or any amount
payable under any Note remains unpaid or any Letter of Credit remains
outstanding:
Section 9.1. INFORMATION. Borrower will deliver, or cause to be delivered,
-----------
to each Bank:
(a) as soon as available and in any event within ninety (90) days
after the end of each Fiscal Year, consolidated balance sheets of Borrower as of
the end of such Fiscal Year and the related consolidated statements of income
and statements of cash flow for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal Year, all reported by
Borrower in accordance with GAAP and audited by a firm of independent public
accountants of nationally recognized standing and acceptable to Administrative
Agent; to the extent Borrower's Form of 10-K filed with the Securities and
Exchange Commission for each Fiscal Year contains all information required by
this Section 9.1(a), Borrower may satisfy its obligations under this Section
--------------- -------
9.1(a) for each Fiscal Year by delivering to Banks a copy of such Form 10-K for
------
such Fiscal Year;
(b) as soon as available and in any event within forty-five (45) days
after the end of each of the first three (3) Fiscal Quarters of each Fiscal
Year, consolidated balance sheets of Borrower as of the end of such Fiscal
Quarter and the related consolidated statements of income and statements of cash
flow for such quarter and for the portion of Borrower's Fiscal Year ended at the
end of such Fiscal Quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of
Borrower's previous Fiscal Year; to the extent Borrower's Form 10-Q filed with
the Securities and Exchange Commission for each Fiscal Quarter contains all
information required by this Section 9.1(b), Borrower may satisfy its
---------------
obligations under this Section 9.1(b) for each Fiscal Quarter by delivering to
---------------
Banks a copy of such Form 10-Q for such Fiscal Quarter. All financial statements
delivered pursuant to this Section 9.1(b) shall be certified as to fairness of
---------------
presentation, GAAP and consistency by a Financial Officer of Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in Section 9.1(a) and Section 9.1(b) a certificate of a
--------------- --------------
Financial Officer of Borrower in the form of Exhibit J attached hereto, (i)
---------
setting forth in reasonable detail the calculations required to establish
whether Borrower was in compliance with the requirements of Article XI on the
----------
date of
10-45
such financial statements, (ii) stating whether there exists on the date of such
certificate any Default and, if any Default then exists, setting forth the
details thereof and the action which Borrower is taking or proposes to take with
respect thereto, (iii) stating whether or not such financial statements fairly
reflect in all material respects the results of operations and financial
condition of Borrower as of the date of the delivery of such financial
statements and for the period covered thereby, (iv) setting forth (A) whether as
of such date there is a Material Gas Imbalance and, if so, setting forth the
amount of net gas imbalances under Gas Balancing Agreements to which Borrower is
a party or by which any Mineral Interests owned by Borrower is bound, and (B)
the aggregate amount of all Advance Payments received under Advance Payment
Contracts to which Borrower is a party or by which any Mineral Interests owned
by Borrower is bound which have not been satisfied by delivery of production, if
any, and (v) setting forth a summary of the Hedge Transactions to which Borrower
is a party on such date;
(d) promptly upon the mailing thereof to the stockholders of any
Credit Party generally, copies of all financial statements, reports and proxy
statements so mailed;
(e) promptly upon the filing thereof, copies of all final registration
statements, post effective amendments thereto and annual, quarterly or special
reports which any Credit Party shall have filed with the Securities and Exchange
Commission; provided, that Borrower must deliver, or cause to be delivered, any
-------- ----
annual reports which any Credit Party shall have filed with the Securities and
Exchange Commission, within ninety (90) days after the end of each Fiscal Year
of such Credit Party, and any quarterly reports which any Credit Party shall
have filed with the Securities and Exchange Commission, within forty-five (45)
days after the end of each of the first three (3) Fiscal Quarters of each Fiscal
Year of such Credit Party;
(f) promptly upon receipt of same, any notice or other information
received by any Credit Party indicating (i) any potential, actual or alleged
non-compliance with or violation of the requirements of any Applicable
Environmental Law which could result in liability to any Credit Party for fines,
clean up or any other remediation obligations or any other liability in excess
of $500,000 in the aggregate; (ii) any threatened Hazardous Discharge which
Hazardous Discharge would impose on any Credit Party a duty to report to a
Governmental Authority or to pay cleanup costs or to take remedial action under
any Applicable Environmental Law which could result in liability to any Credit
Party for fines, clean up and other remediation obligations or any other
liability in excess of $500,000 in the aggregate; or (iii) the existence of any
Lien arising under any Applicable Environmental Law securing any obligation to
pay fines, clean up or other remediation costs or any other liability in excess
of $500,000 in the aggregate. Without limiting the foregoing, each Credit Party
shall provide to Banks promptly upon receipt of same by any Credit Party copies
of all environmental consultants or engineers reports received by any Credit
Party which would render the representation and warranty contained in Section
-------
8.14 untrue or inaccurate in any respect;
----
(g) In the event any notification is provided to any Bank or
Administrative Agent pursuant to Section 9.1(f) hereof or Administrative Agent
--------------
or any Bank otherwise learns of any event or condition under which any such
notice would be required, then, upon request of Required Banks, Borrower shall
within thirty (30) days of such request, cause to be furnished to Administrative
Agent and each Bank a report by an environmental consulting firm acceptable to
Administrative Agent and Required Banks, stating that a review of such event,
condition or
10-46
circumstance has been undertaken (the scope of which shall be acceptable to
Administrative Agent and Required Banks) and detailing the findings, conclusions
and recommendations of such consultant. Borrower shall bear all expenses and
costs associated with such review and updates thereof;
(h) immediately upon any Authorized Officer of any Credit Party
becoming aware of the occurrence of any Default, a certificate of an Authorized
Officer of Borrower setting forth the details thereof and the action which
Borrower is taking or proposes to take with respect thereto;
(i) no later than February 28, and August 31 of each year, reports of
production volumes, revenue, expenses and product prices for all oil and gas
properties owned by Borrower with a Recognized Value of $500,000 or more for the
periods of six (6) months ending the preceding December 31 and June 30,
respectively. Such reports shall be prepared on an accrual basis and shall be
reported on a field by field basis;
(j) promptly notify Banks of any Material Adverse Change;
(k) promptly notify Banks of any material litigation involving any
Credit Party; and
(l) from time to time such additional information regarding the
financial position or business of any Credit Party as Administrative Agent, at
the request of any Bank, may reasonably request.
Section 9.2. BUSINESS OF CREDIT PARTIES. The sole business of Borrower will
--------------------------
continue to be (a) the issuance of equity and debt securities not prohibited
pursuant to the provisions of this Agreement, (b) the acquisition, exploration,
development and operation of Mineral Interests and the production and marketing
of Hydrocarbons therefrom, (c) the ownership of one hundred percent (100%) of
the issued and outstanding limited liability company interests of Marine and one
hundred percent (100%) of the issued and outstanding common stock of DES, and
(d) activities reasonably related to the businesses of Borrower described in the
foregoing clauses (a) and (c), including, without limitation, activities
necessary to comply with the reporting requirements of the Exchange Act, and
with rules and regulations of applicable securities exchanges or which are
otherwise incident to being a publicly traded company. The sole business of
Marine will continue to be marine oil field services. The sole business of DES
will continue to be oil and gas marketing and related services. TRI will remain
a shell corporation with no assets or operations.
Section 9.3. MAINTENANCE OF EXISTENCE. Borrower shall, and shall cause each
------------------------
other Credit Party to, at all times (a) maintain its corporate, partnership or
limited liability company existence in its state of incorporation or
organization, and (b) maintain its good standing and qualification to transact
business in all jurisdictions where the failure to maintain good standing or
qualification to transact business could have a Material Adverse Effect.
Notwithstanding the foregoing, TRI may dissolve at anytime.
Section 9.4. TITLE DATA. In addition to the title information required by
----------
Section 6.1(c) and Section 7.1(b) hereof, Borrower shall, upon the request of
-------------- --------------
Required Banks, cause to be
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delivered to Administrative Agent such title opinions and other information
regarding title to Mineral Interests owned by Borrower as are appropriate to
determine the status thereof; provided, however, that, Banks may not require the
-------- ------- ----
Credit Parties to furnish title opinions (except pursuant to Section 6.1 and
-----------
Section 7.1(b)) unless (a) an Event of Default shall have occurred and be
---------------
continuing, or (b) Required Banks have reason to believe that there is a defect
in or encumbrance upon Borrower's title to such Mineral Interests that is not a
Permitted Encumbrance.
Section 9.5. RIGHT OF INSPECTION. Borrower will permit, and will cause each
-------------------
other Credit Party to permit, any officer, employee or agent of Administrative
Agent or of any Bank to visit and inspect any of the assets of any Credit Party,
examine each Credit Party's books of record and accounts, take copies and
extracts therefrom, and discuss the affairs, finances and accounts of each
Credit Party with such Credit Party's officers, accountants and auditors, all at
such reasonable times and as often as Administrative Agent or any Bank may
desire, all at the expense of Borrower.
Section 9.6. MAINTENANCE OF INSURANCE. Borrower will, and will cause each
------------------------
other Credit Party to, at all times maintain or cause to be maintained insurance
covering such risks as are customarily carried by businesses similarly situated,
including, without limitation, the following: (a) workmen's compensation
insurance; (b) employer's liability insurance; (c) comprehensive general public
liability and property damage insurance; (d) insurance against (other than
losses or damage to property owned by Borrower which is self insured) losses
customarily insured against as a result of damage by fire, lightning, hail,
tornado, explosion and other similar risk; and (e) comprehensive automobile
liability insurance. All loss payable clauses or provisions in all policies of
insurance maintained by any Credit Party pursuant to this Section 9.6 shall be
-----------
endorsed in favor of and made payable to Administrative Agent for the ratable
benefit of Banks, as their interests may appear. Administrative Agent shall have
the right, for the ratable benefit of Banks, to collect, and Borrower hereby
assigns to Administrative Agent for the ratable benefit of Banks (and hereby
agrees to cause each other Credit Party to assign), any and all monies that may
become payable under any such policies of insurance by reason of damage, loss or
destruction of any of property which stands as security for the Obligations or
any part thereof, and Administrative Agent may, at its election, either apply
for the ratable benefit of Banks all or any part of the sums so collected toward
payment of the Obligations, whether or not such Obligations are then due and
payable, in such manner as Administrative Agent may elect or release same to the
applicable Credit Party.
Section 9.7. PAYMENT OF TAXES AND CLAIMS. Borrower will, and will cause
---------------------------
each other Credit Party to, pay (a) all Taxes imposed upon it or any of its
assets or with respect to any of its franchises, business, income or profits
before any material penalty or interest accrues thereon, and (b) all material
claims (including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by Law have or
might become a Lien (other than a Permitted Encumbrance) on any of its assets;
provided, however, no payment of Taxes or claims shall be required if (i) the
-------- -------
amount, applicability or validity thereof is currently being contested in good
faith by appropriate action promptly initiated and diligently conducted in
accordance with good business practices and no material part of the property or
assets of Borrower, and no part of the assets of any Subsidiary of Borrower
which would be material to Borrower, is subject to any pending levy or
execution, (ii) Borrower, and any
10-48
Subsidiary of Borrower, as and to the extent required in accordance with GAAP,
shall have set aside on their books reserves (segregated to the extent required
by GAAP) deemed by them to be adequate with respect thereto, and (iii) Borrower
has notified Administrative Agent of such circumstances, in detail satisfactory
to Administrative Agent.
Section 9.8. COMPLIANCE WITH LAWS AND DOCUMENTS. Borrower will, and will
-----------------------------------
cause each other Credit Party to, comply with all Laws, their respective
certificates (or articles) of incorporation, bylaws, regulations and similar
organizational documents and all Material Agreements to which any Credit Party
is a party, if a violation, alone or when combined with all other such
violations, could have a Material Adverse Effect.
Section 9.9. OPERATION OF PROPERTIES AND EQUIPMENT.
-------------------------------------
(a) Borrower will, and will cause each other Credit Party to,
maintain, develop and operate its Mineral Interests in a good and workmanlike
manner, and observe and comply with all of the terms and provisions, express or
implied, of all oil and gas leases relating to such Mineral Interests so long as
such Mineral Interests are capable of producing Hydrocarbons and accompanying
elements in paying quantities, except where such failure to comply would not
have a Material Adverse Effect.
(b) Borrower will, and will cause each other Credit Party to, comply
in all respects with all contracts and agreements applicable to or relating to
its Mineral Interest or the production and sale of Hydrocarbons and accompanying
elements therefrom, except to the extent a failure to so comply would not have a
Material Adverse Effect.
(c) Borrower will, and will cause each other Credit Party to, at all
times maintain, preserve and keep all operating equipment used with respect to
its Mineral Interests in proper repair, working order and condition, and make
all necessary or appropriate repairs, renewals, replacements, additions and
improvements thereto so that the efficiency of such operating equipment shall at
all times be properly preserved and maintained, except where such failure to
comply would not have a Material Adverse Effect; provided, further that, no item
-------- ------------
of operating equipment need be so repaired, renewed, replaced, added to or
improved, if Borrower shall in good faith determine that such action is not
necessary or desirable for the continued efficient and profitable operation of
the business of such Credit Party.
Section 9.10. ENVIRONMENTAL LAW COMPLIANCE. Except to the extent a failure
----------------------------
to comply would not have a Material Adverse Effect, Borrower will, and will
cause each other Credit Party to, comply with all Applicable Environmental Laws,
including, without limitation, (a) all licensing, permitting, notification and
similar requirements of Applicable Environmental Laws, and (b) all provisions of
all Applicable Environmental Laws regarding storage, discharge, release,
transportation, treatment and disposal of Hazardous Substances. Borrower will,
and will cause each other Credit Party to, promptly pay and discharge when due
all legal debts, claims, liabilities and obligations with respect to any
clean-up or remediation measures necessary to comply with Applicable
Environmental Laws.
Section 9.11. ERISA REPORTING REQUIREMENTS. Borrower shall furnish, or
------------------------------
cause to be furnished, to Administrative Agent:
10-49
(a) promptly and in any event (i) within thirty (30) days after
Borrower or any ERISA Affiliate receives notice from any regulatory agency of
the commencement of an audit, investigation or similar proceeding with respect
to a Plan, and (ii) within ten (10) days after Borrower or any ERISA Affiliate
contacts the Internal Revenue Service for the purpose of participation in a
closing agreement or any voluntary resolution program with respect to a Plan
which could have a Material Adverse Effect or knows or has reason to know that
any event with respect to any Plan of Borrower or any ERISA Affiliate has
occurred that is reasonably believed by Borrower to potentially have a Material
Adverse Effect, a written notice describing such event and describing what
action is being taken or is proposed to be taken with respect thereto, together
with a copy of any notice of such event that is given to the PBGC;
(b) promptly and in any event within thirty (30) days after the
receipt by Borrower of a request therefor by a Bank, copies of any annual and
other report (including Schedule B thereto) with respect to a Plan filed by
----------
Borrower or any ERISA Affiliate with the United States Department of Labor, the
Internal Revenue Service or the PBGC;
(c) notification within thirty (30) days of the effective date thereof
of any material increases in the benefits, or material change in the funding
method, of any existing Plan which is not a multiemployer plan (as defined in
section 4001(a)(3) of ERISA), or the establishment of any material new Plans, or
the commencement of contributions to any Plan to which Borrower or any ERISA
Affiliate was not previously contributing; and
(d) promptly after receipt of written notice of commencement thereof,
notice of all (i) claims made by participants or beneficiaries with respect to
any Plan, and (ii) actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting Borrower or any ERISA Affiliate with respect to
any Plan, except those which, in the aggregate, if adversely determined could
not have a Material Adverse Effect.
Section 9.12. ADDITIONAL DOCUMENTS. Borrower will, and will cause each
---------------------
other Credit Party to, cure promptly any defects in the creation and issuance of
each Note, and the execution and delivery of this Agreement and the other Loan
Papers and, at Borrower's expense, Borrower shall promptly and duly execute and
deliver to each Bank, and cause each other Credit Party to promptly and duly
execute and deliver to each Bank, upon reasonable request, all such other and
further documents, agreements and instruments in compliance with or
accomplishment of the covenants and agreements of the Credit Parties in this
Agreement and the other Loan Papers as may be reasonably necessary or
appropriate in connection therewith.
Section 9.13. ENVIRONMENTAL REVIEW. Borrower shall deliver to
----------------------
Administrative Agent prior to the completion by any Credit Party of any material
acquisition of Mineral Interests or related assets, other than an acquisition of
additional interests in Mineral Interests in which a Credit Party previously
held an interest, a report or reports obtained by Borrower in the course of such
acquisition, which report or reports shall set forth the results of a Phase I
environmental review of such Mineral Interests and related assets. Borrower
shall deliver to Administrative Agent a report or reports related to any
material acquisition by any Credit Party of Mineral Interests or related assets,
other than an acquisition of additional interests in Mineral Interests in which
a Credit Party previously held an interest, as requested by Administrative Agent
or
10-50
Required Banks in writing, which report shall be delivered within forty-five
(45) days of Administrative Agent's or Required Banks' written request and shall
be in form, scope and detail acceptable to Administrative Agent from
environmental engineering firms acceptable to Administrative Agent, which report
or reports shall set forth the results of a Phase I environmental review of such
Mineral Interests and related assets. All of the reports delivered to
Administrative Agent pursuant to this Section 9.13 shall not reflect the
-------------
existence of facts or circumstances which would constitute a material violation
of any Applicable Environmental Law or which are likely to result in a material
liability to any Credit Party.
ARTICLE X
NEGATIVE COVENANTS
------------------
Borrower agrees that, so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:
Section 10.1. INCURRENCE OF DEBT. Borrower will not, nor will permit any
-------------------
other Credit Party to, incur, become or remain liable for any Debt; provided,
--------
that (a) Borrower may incur, become or remain liable for (i) the Obligations,
----
and (ii) other unsecured Debt in an aggregate amount outstanding at any time not
to exceed $10,000,000, (b) Borrower may incur, become and remain liable for
Permitted Subordinate Debt, and (c) any Subsidiary of Borrower may incur, become
and remain liable for Permitted Subordinate Debt as a guarantor; provided, that
-------- ----
(i) such Guarantees of Permitted Subordinate Debt shall be subordinated to the
Obligations pursuant to subordination provisions approved by Required Banks,
such approval to not be unreasonably withheld, and (ii) prior to the execution
and delivery by any Subsidiary of Borrower of any Guaranty of Permitted
Subordinate Debt, such Subsidiary shall have executed and delivered to
Administrative Agent for the ratable benefit of Banks a Facility Guaranty, and
all the Equity of such Subsidiary owned by Borrower shall have been pledged to
Administrative Agent pursuant to a Borrower Pledge Agreement.
Section 10.2. RESTRICTED PAYMENTS. Borrower will not, nor will Borrower
--------------------
permit any other Credit Party to, directly or indirectly, declare or pay, or
incur any liability to declare or pay, any Restricted Payment; provided, that
-------- ----
(a) any Subsidiary of Borrower may make Distributions to Borrower, (b) any
Credit Party may make Distributions to any other Credit Party that has provided
a Facility Guaranty, and all of the Equity of which owned by Borrower or any
Indirect Subsidiary (as applicable) has been pledged to Administrative Agent
pursuant to a Borrower Pledge Agreement or a Subsidiary Pledge Agreement (as
applicable), and (c) so long as (i) no Default or Borrowing Base Deficiency
exists on the date any such Distribution is declared or paid and no Default or
Event of Default would result therefrom, and (ii) the Borrowing Base does not
exceed the Conforming Borrowing Base on the date such Restricted Payments are
declared or paid, in addition to Distributions permitted under the preceding
clauses (a) and (b), Borrower may make Restricted Payments up to $5,000,000 in
the aggregate in any Fiscal Year.
Section 10.3. NEGATIVE PLEDGE. Borrower will not, nor will Borrower permit
---------------
any other Credit Party to, create, assume or suffer to exist any Lien on any of
their respective assets, other than Permitted Encumbrances. Borrower will not,
nor will Borrower permit any other Credit
10-51
Party to, enter into or become bound by any agreement (other than this
Agreement) that prohibits or otherwise restricts the right of Borrower or any
other Credit Party to create, assume or suffer to exist any Lien on any of their
respective assets in favor of Administrative Agent for the ratable benefit of
Banks.
Section 10.4. CONSOLIDATIONS AND MERGERS. Borrower will not, nor will
---------------------------
Borrower permit any other Credit Party to, consolidate or merge with or into any
other Person; provided, that, so long as no Default or Event of Default exists
-------- ----
or will result, any wholly owned Subsidiary of Borrower may merge or consolidate
with any other Person so long as a wholly owned Subsidiary of Borrower is the
surviving Person.
Section 10.5. ASSET DISPOSITIONS. Borrower will not, nor will Borrower
-------------------
permit any other Credit Party to, sell, lease, transfer, abandon or otherwise
dispose of any asset other than (a) the sale in the ordinary course of business
of Hydrocarbons produced from Borrower's Mineral Interests, (b) the sale, lease,
transfer, abandonment, exchange or other disposition of other assets, provided
that the aggregate value (which, in the case of assets consisting of Mineral
Interests, shall be the Recognized Value of such Mineral Interests and in the
case of any exchange, shall be the net value or net Recognized Value realized or
resulting from such exchange) of all assets sold, leased, transferred or
disposed of pursuant to this clause (b) in any period between Scheduled
Redeterminations shall not exceed five percent (5%) of the Conforming Borrowing
Base then in effect (for purposes of this clause (b) the Closing Date will be
deemed to be a Scheduled Redetermination), and (c) the sale, lease, transfer,
abandonment or disposition of Unproved Reserves. In no event will Borrower sell,
transfer or dispose of any Equity in any Subsidiary of Borrower nor will any
Credit Party issue or sell any Equity or any option, warrant or other right to
acquire such Equity or security convertible into such Equity to any Person other
than the Credit Party which is the direct parent of such issuer on the Closing
Date.
Section 10.6. AMENDMENTS TO ORGANIZATIONAL DOCUMENTS. Borrower will not,
---------------------------------------
nor will Borrower permit any other Credit Party to, enter into or permit any
modification or amendment of, or waive any material right or obligation of any
Person under, its certificate or articles of incorporation, bylaws, partnership
agreement, regulations or other organizational documents other than amendments,
modifications and waivers which will not, individually or in the aggregate, have
a Material Adverse Effect.
Section 10.7. USE OF PROCEEDS. The proceeds of Borrowings will not be used
---------------
for any purpose other than (a) working capital, (b) to finance the acquisition,
exploration and development of Mineral Interests, (c) for general corporate
purposes, and (d) to refinance the obligations outstanding under the Existing
Credit Agreement. None of such proceeds (including, without limitation, proceeds
of Letters of Credit issued hereunder) will be used, directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any Margin Stock, and none of such proceeds will be used in violation
of applicable Law (including, without limitation, the Margin Regulations).
Letters of Credit will be issued hereunder only for the purpose of securing
bids, tenders, bonds, contracts and other obligations entered into in the
ordinary course of Borrower's business. Without limiting the foregoing, no
Letters of Credit will be issued hereunder for the purpose of or providing
credit enhancement with respect to any Debt or equity security of any Credit
Party or to secure any Credit Party's
10-52
obligations with respect to Hedge Transactions other than Hedge Transactions
with a Bank or an Affiliate of such Bank.
Section 10.8. INVESTMENTS. Borrower will not, nor will Borrower permit any
-----------
other Credit Party to, directly or indirectly, make or have outstanding any
Investment other than Permitted Investments.
Section 10.9. TRANSACTIONS WITH AFFILIATES. Borrower will not, nor will
------------------------------
Borrower permit any other Credit Party to, engage in any transaction with an
Affiliate unless such transaction is as favorable to such party as could be
obtained in an arm's length transaction with an unaffiliated Person in
accordance with prevailing industry customs and practices.
Section 10.10. ERISA. Except in such instances where an omission or failure
-----
would not have a Material Adverse Effect, Borrower will not, nor will Borrower
permit any other Credit Party to (a) take any action or fail to take any action
which would result in a violation of ERISA, the Code or other Laws applicable to
the Plans maintained or contributed to by it or any ERISA Affiliate, or (b)
modify the term of, or the funding obligations or contribution requirements
under any existing Plan, establish a new Plan, or become obligated or incur any
liability under a Plan that is not maintained or contributed to by Borrower or
any ERISA Affiliate as of the Closing Date.
Section 10.11. HEDGE TRANSACTIONS. Borrower will not, nor will Borrower
-------------------
permit any other Credit Party to, enter into any Hedge Transactions which would
cause the amount of Hydrocarbons which are the subject of Hedge Transactions in
existence at such time to exceed eighty five percent (85%) of Borrower's
anticipated production from Proved Producing Mineral Interests during the term
of such existing Hedge Transactions; provided, that, Borrower may enter into
-------- ----
Hedge Transactions consisting solely of a floor price (i.e. floor, put or
option) so long as the amount of Hydrocarbons which are the subject of any such
Hedge Transaction in existence at any such time do not exceed one- hundred
percent (100%) of Borrower's anticipated production from Proved Mineral
Interests during the term of any such existing Hedge Transaction.
Section 10.12. FISCAL YEAR. Borrower will not, nor will Borrower permit any
-----------
other Credit Party to, change its Fiscal Year.
Section 10.13. CHANGE IN BUSINESS. Borrower will not, nor will Borrower
------------------
permit any other Credit Party to, engage in any business other than the
businesses engaged in by such parties on the date hereof as described in Section
-------
8.13 hereof.
----
Section 10.14. QUALIFIED PURPOSE. Borrower will not request or receive any
-----------------
Borrowing hereunder if, after giving effect thereto and the use of the proceeds
thereof, that portion of the principal balance of the Revolving Loan which is
outstanding at such time and was utilized for any purpose other than a Qualified
Purpose exceeds twenty five percent (25%) of the Conforming Borrowing Base in
effect at such time. Borrower agrees that each Request for Borrowing will
include in addition to the information described in Section 3.2 hereof, a
------------
certification from an Authorized Officer of Borrower as to the purpose and
utilization of the proceeds of such Borrowing. Additionally, notwithstanding
anything to the contrary contained in
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Section 4.2 hereof, all principal payments received by Banks with respect to the
-----------
Revolving Loan shall be applied first to that portion of the outstanding
principal balance of the Revolving Loan utilized for purposes other than
Qualified Purposes. Notwithstanding the foregoing, Borrower shall not be
required to comply with this Section 10.14 at any time that the Borrowing Base
-------------
is equal to the Conforming Borrowing Base.
ARTICLE XI
FINANCIAL COVENANTS
-------------------
Borrower agrees that so long as any Bank has any commitment to lend or
participate in Letter of Credit Exposure hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:
Section 11.1. CURRENT RATIO OF BORROWER. Borrower will not permit its ratio
-------------------------
of Consolidated Current Assets to its Consolidated Current Liabilities as of the
end of any Fiscal Quarter to be less than 1.0 to 1.0.
Section 11.2. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Borrower will not
-----------------------------------------
permit its Consolidated Tangible Net Worth to be less than the Required
Consolidated Tangible Net Worth on any Quarterly Date.
Section 11.3. CONSOLIDATED EBITDA TO CONSOLIDATED NET INTEREST EXPENSE.
-----------------------------------------------------------
Borrower will not permit its ratio of Consolidated EBITDA to Consolidated Net
Interest Expense to be less than (a) 2.25 to 1.0 for the periods of four (4)
consecutive Fiscal Quarters ending on each of December 31, 2000 and March 31,
2001, and (b) 2.50 to 1.0 for any period of four (4) consecutive Fiscal Quarters
ending on or after June 30, 2001.
ARTICLE XII
DEFAULTS
--------
Section 12.1. EVENTS OF DEFAULT. If one or more of the following events
-----------------
(collectively "EVENTS OF DEFAULT" and individually an "EVENT OF DEFAULT") shall
----------------- ----------------
have occurred and be continuing:
(a) Borrower shall fail to pay when due any principal on any Note;
(b) Borrower shall fail to pay when due accrued interest on any Note
or any fees or any other amount payable hereunder and such failure shall
continue for a period of three (3) days following the due date;
(c) Borrower shall fail to observe or perform any covenant or
agreement contained in Section 7.3, Article X or Article XI of this Agreement;
----------- --------- ----------
(d) any Credit Party shall fail to observe or perform any covenant or
agreement contained in this Agreement or the other Loan Papers (other than those
referenced in Section
-------
10-54
12.1(a), Section 12.1(b) and Section 12.1(c)) and such failure continues for a
------- --------------- ---------------
period of thirty (30) days after the earlier of (i) the date any Authorized
Officer of any Credit Party acquires knowledge of such failure, or (ii) written
notice of such failure has been given to any Credit Party by Administrative
Agent or any Bank;
(e) any representation, warranty, certification or statement made or
deemed to have been made by any Credit Party in any certificate, financial
statement or other document delivered pursuant to this Agreement shall prove to
have been incorrect in any material respect when made;
(f) any Credit Party shall fail to make any payment when due on any
Debt of such Person in a principal amount equal to or greater than $500,000 or
any other event or condition shall occur which (i) results in the acceleration
of the maturity of any such Debt, or (ii) entitles the holder of such Debt to
accelerate the maturity thereof;
(g) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar Law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate, partnership or limited liability company
action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced against
any Credit Party seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar Law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of sixty (60) days; or an order for relief
shall be entered against any Credit Party under the federal bankruptcy Laws as
now or hereafter in effect;
(i) one (1) or more final judgments or orders for the payment of money
aggregating in excess of $500,000 shall be rendered against any Credit Party and
such judgment or order shall continue unsatisfied and unstayed for thirty (30)
days;
(j) (i) any event occurs with respect to any Plan or Plans pursuant to
which any Credit Party and/or any ERISA Affiliate incur a liability due and
owing at the time of such event, without existing funding therefor, for benefit
payments under such Plan or Plans in excess of $500,000; or (ii) any Credit
Party, any ERISA Affiliate, or any other "party-in-interest" or "disqualified
person," as such terms are defined in section 3(14) of ERISA and section
4975(e)(2) of the Code, shall engage in transactions which in the aggregate
results in a direct or indirect liability to any Credit Party or any ERISA
Affiliate in excess of $500,000 under section 409 or 502 of ERISA or section
4975 of the Code which either (A) results in a Lien on any Credit Party's assets
which is not a Permitted Encumbrance, or (B) continues unsatisfied for a
10-55
period of thirty (30) days after any Authorized Officer of any Credit Party
first acquires knowledge of such liability;
(k) a Change of Control shall occur; or
(l) this Agreement or any other Loan Paper shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Credit Party, or
any Credit Party shall deny that it has any further liability or obligation
under any of the Loan Papers, or any Lien created by the Loan Papers shall for
any reason (other than the release thereof in accordance with the Loan Papers)
cease to be a valid, first priority, perfected Lien upon any of the Proved
Mineral Interests purported to be covered thereby;
then, and in every such event, Administrative Agent shall without presentment,
notice or demand (unless expressly provided for herein) of any kind (including,
without limitation, notice of intention to accelerate and acceleration), all of
which are hereby waived, (a) if requested by Required Banks, terminate the
Commitments and they shall thereupon terminate, and (b) if requested by Required
Banks, take such other actions as may be permitted by the Loan Papers including,
declaring the Notes (together with accrued interest thereon) to be, and the
Notes shall thereupon become, immediately due and payable; provided that, in the
-------- ----
case of any of the Events of Default specified in Section 12.1(g) or Section
---------------- -------
12.1(h), without any notice to any Credit Party or any other act by
-------
Administrative Agent or Banks, the Commitments shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become immediately due and
payable.
ARTICLE XIII
AGENTS
------
Section 13.1. APPOINTMENT, POWERS, AND IMMUNITIES. Each Bank hereby
--------------------------------------
irrevocably appoints and authorizes each Agent to act as its agent under this
Agreement and the other Loan Papers with such powers and discretion as are
specifically delegated to each such Agent by the terms of this Agreement and the
other Loan Papers, together with such other powers as are reasonably incidental
thereto. No Agent (which term as used in this sentence and in Section 13.5 and
------------
the first sentence of Section 13.6 hereof shall include their affiliates and
------------
their own and their affiliates' officers, directors, employees, and agents): (a)
shall have any duties or responsibilities except those expressly set forth in
this Agreement and no Agent shall be a trustee or fiduciary for any Bank; (b)
shall be responsible to Banks for any recital, statement, representation, or
warranty (whether written or oral) made in or in connection with any Loan Paper
or any certificate or other document referred to or provided for in, or received
by any of them under, any Loan Paper, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Loan Paper, or any other
document referred to or provided for therein or for any failure by any Credit
Party or any other Person to perform any of its obligations thereunder; (c)
shall be responsible for or have any duty to ascertain, inquire into, or verify
the performance or observance of any covenants or agreements by any Credit Party
or the satisfaction of any condition or to inspect the property (including the
books and records) of any Credit Party or any of their Subsidiaries or
affiliates; (d) shall be required to initiate or conduct any litigation or
collection proceedings
10-56
under any Loan Paper; and (e) shall be responsible for any action taken or
omitted to be taken by it under or in connection with any Loan Paper, except for
its own gross negligence or willful misconduct. Each Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with reasonable care.
Banks identified as Co-Agents under this Agreement shall not have any right,
power, obligation, liability, responsibility or duty under this Agreement in
such capacity. Each Bank acknowledges that it has not relied, and will not rely,
on any Bank identified as a Co-Agent in deciding to enter into this Agreement or
in taking or not taking action hereunder.
Section 13.2. RELIANCE BY AGENTS. Each Agent shall be entitled to rely upon
------------------
any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telecopy) believed
by it to be genuine and correct and to have been signed, sent or made by or on
behalf of the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel for any Credit Party), independent accountants, and
other experts selected by any such Agent. Each Agent may deem and treat the
payee of any Note as the holder thereof for all purposes hereof unless and until
Administrative Agent receives and accepts an Assignment and Acceptance Agreement
executed in accordance with Section 15.10 hereof. As to any matters not
--------------
expressly provided for by this Agreement, no Agents shall be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of Required Banks, and such instructions
shall be binding on Banks; provided, however, that, no Agent shall be required
-------- ------- ----
to take any action that exposes such Agent to personal liability or that is
contrary to any Loan Paper or applicable Law or unless it shall first be
indemnified to its satisfaction by Banks against any and all liability and
expense which may be incurred by it by reason of taking any such action.
Section 13.3. DEFAULTS. No Agent shall be deemed to have knowledge or
--------
notice of the occurrence of a Default or Event of Default unless such Agent has
received written notice from a Bank or Borrower specifying such Default or Event
of Default and stating that such notice is a "Notice of Default". In the event
that Administrative Agent receives such a notice of the occurrence of a Default
or Event of Default, Administrative Agent shall give prompt notice thereof to
Banks. Administrative Agent shall (subject to Section 13.2 hereof) take such
-------------
action with respect to such Default or Event of Default as shall reasonably be
directed by Required Banks; provided that, unless and until Administrative Agent
-------- ----
shall have received such directions, Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interest of Banks.
Section 13.4. RIGHTS AS BANK. With respect to its Commitment and the
--------------
portion of the Revolving Loan made by it, Bank of America (and any successor
acting as Administrative Agent) in its capacity as a Bank hereunder shall have
the same rights and powers hereunder as any other Bank and may exercise the same
as though it were not acting as Administrative Agent, and the term "Bank" or
"Banks" shall, unless the context otherwise indicates, include Administrative
Agent in its individual capacity. Bank of America (and any successor acting as
Administrative Agent), each other Agent and their affiliates may (without having
to account therefor to any Bank) accept deposits from, lend money to, make
investments in, provide services to, and generally engage in any kind of
lending, trust, or other business with Borrower
10-57
or any other Credit Party or their affiliates as if it were not acting as Agent,
and Bank of America (and any successor acting as Administrative Agent), each
other Agent and their affiliates may accept fees and other consideration from
Borrower or any other Credit Party or any of their affiliates for services in
connection with this Agreement or otherwise without having to account for the
same to Banks.
Section 13.5. INDEMNIFICATION. Banks agree to indemnify each Agent (to the
---------------
extent not reimbursed by Borrower or any other Credit Party hereof, but without
limiting the obligations of any Credit Party to so reimburse) ratably in
accordance with their respective Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees), or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against any such
Agent (including by any Bank) in any way relating to or arising out of any Loan
Paper or the transactions contemplated thereby or any action taken or omitted by
any Agent under any Loan Paper (INCLUDING ANY OF THE FOREGOING ARISING FROM THE
NEGLIGENCE OF ANY AGENT); provided that no Bank shall be liable for any of the
-------- ----
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Person to be indemnified. Without limitation of the foregoing,
each Bank agrees to reimburse each Agent promptly upon demand for its ratable
share of any costs or expenses payable by Borrower under Section 15.3, to the
------------
extent that any such Agent is not promptly reimbursed for such costs and
expenses by Borrower. The agreements contained in this Section 13.5 shall
-------------
survive payment in full of the portion of the Revolving Loan and all other
amounts payable under this Agreement.
Section 13.6. NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank agrees that
-------------------------------------
it has, independently and without reliance on any Agent or any Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of each Credit Party and decision to enter into this Agreement
and that it will, independently and without reliance upon any Agent or any Bank,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under the Loan Papers. Except for notices, reports, and other documents
and information expressly required to be furnished to Banks by Administrative
Agent hereunder, no Agent shall have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition, or business of any Credit Party or their affiliates that may come
into the possession of any such Agent or any of their affiliates.
Section 13.7. RESIGNATION OF AGENTS. Any Agent may resign at any time by
----------------------
giving notice thereof to Banks and Borrower. Upon any such resignation, Required
Banks shall have the right to appoint a successor Agent, which shall be approved
by Borrower, such approval to not be unreasonably withheld; provided, that,
-------- ----
Borrower shall not have the right to approve any successor Agent appointed
during the continuance of any Default. If no successor Agent shall have been so
appointed by Required Banks and shall have accepted such appointment within
thirty (30) days after the retiring Agent's giving of notice of resignation,
then the retiring Agent may, on behalf of Banks, appoint a successor Agent which
shall be a commercial bank organized under the Laws of the United States of
America having combined capital and surplus of at least $100,000,000 and which
shall be approved by Borrower, such approval to not be unreasonably withheld;
provided, that, Borrower shall not have the right to approve any successor Agent
-------- ----
appointed during the continuance of any Default. Upon the acceptance of any
appointment as
10-58
Agent hereunder by a successor (and approval of such successor by Borrower to
the extent Borrower's approval is required), such successor shall thereupon
succeed to and become vested with all the rights, powers, discretion,
privileges, and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as an Agent, the provisions of this Article XIII shall
------------
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as an Agent.
ARTICLE XIV
CHANGE IN CIRCUMSTANCES
-----------------------
Section 14.1. INCREASED COST AND REDUCED RETURN.
---------------------------------
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or regulation,
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank, or
comparable agency:
(i) shall subject such Bank (or its Applicable Lending Office) to
any tax, duty, or other charge with respect to any Eurodollar
Loans, its Note, or its obligation to make Eurodollar Loans, or
change the basis of taxation of any amounts payable to such Bank
(or its Applicable Lending Office) under this Agreement or its
Note in respect of any Eurodollar Loans (other than taxes imposed
on the overall net income of such Bank or such Applicable Lending
Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, compulsory loan, or similar
requirement (other than the Reserve Requirement utilized in the
determination of the Adjusted Eurodollar Rate) relating to any
extensions of credit or other assets of, or any deposits with or
other liabilities or commitments of, such Bank (or its Applicable
Lending Office), including the Commitment of such Bank hereunder;
or
(iii) shall impose on such Bank (or its Applicable Lending
Office) or on the London interbank market any other condition
affecting this Agreement or its Note or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Bank (or its Applicable Lending Office) under this Agreement or its Note
with respect to any Eurodollar Loans, then the Borrower shall pay to
10-59
such Bank on demand such amount or amounts as will compensate such Bank for such
increased cost or reduction. If any Bank requests compensation by Borrower under
this Section 14.1(a), the Borrower may, by notice to such Bank (with a copy to
Administrative Agent), suspend the obligation of such Bank to make or Continue
Eurodollar Loans or to Convert all or part of the Base Rate Loan owing to such
Bank into Eurodollar Loans, until the event or condition giving rise to such
request ceases to be in effect (in which case the provisions of Section 14.4
shall be applicable); provided, that such suspension shall not affect the right
of such Bank to receive the compensation so requested.
(b) If, after the date hereof, any Bank shall have determined that the
adoption of any applicable law, rule, or regulation regarding capital adequacy
or any change therein or in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank, or comparable agency, has or would have
the effect of reducing the rate of return on the capital of such Bank or any
corporation controlling such Bank as a consequence of such Bank's obligations
hereunder to a level below that which such Bank or such corporation could have
achieved but for such adoption, change, request, or directive (taking into
consideration its policies with respect to capital adequacy), then, from time to
time upon demand, Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank for such reduction.
(c) Each Bank shall promptly notify Borrower and Administrative Agent
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section 14.1 and will
------------
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to it. Any Bank claiming
compensation under this Section 14.1 shall furnish to Borrower and
--------------
Administrative Agent a statement setting forth the additional amount or amounts
to be paid to it hereunder which shall be conclusive in the absence of manifest
error. In determining such amount, such Bank may use any reasonable averaging
and attribution methods.
Section 14.2. LIMITATION ON TYPE OF LOANS. If on or prior to the first day
---------------------------
of any Interest Period for any Eurodollar Loan:
(a) Administrative Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period; or
(b) Required Banks determine (which determination shall be conclusive)
and notify Administrative Agent that the Adjusted Eurodollar Rate will not
adequately and fairly reflect the cost to Banks of funding Eurodollar Loans for
such Interest Period;
then Administrative Agent shall give Borrower prompt notice thereof specifying
the relevant Type of Revolving Loans and the relevant amounts or periods, and so
long as such condition remains in effect, Banks shall be under no obligation to
make additional Revolving Loans of such Type, Continue Revolving Loans of such
Type, or to Convert Revolving Loans of any other
10-60
Type into Revolving Loans of such Type, and Borrower shall, on the last day(s)
of the then current Interest Period(s) for the outstanding Revolving Loans of
the affected Type, either prepay such Revolving Loans or Convert such Revolving
Loans into another Type of Revolving Loan in accordance with the terms of this
Agreement.
Section 14.3. ILLEGALITY. Notwithstanding any other provision of this
----------
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to make, maintain, or fund Eurodollar Loans hereunder, then such
Bank shall promptly notify Borrower thereof and such Bank's obligation to make
or Continue Eurodollar Loans and to Convert other Types of Revolving Loans into
Eurodollar Loans shall be suspended until such time as such Bank may again make,
maintain, and fund Eurodollar Loans (in which case the provisions of Section
-------
14.4 shall be applicable).
----
Section 14.4. TREATMENT OF AFFECTED LOANS. If the obligation of any Bank to
---------------------------
make particular Eurodollar Loans or to Continue Revolving Loans, or to Convert
Revolving Loans of another Type into Revolving Loans of a particular Type shall
be suspended pursuant to Section 14.1 or Section 14.3 hereof (Revolving Loans of
------------ ------------
such Type being herein called "AFFECTED LOANS" and such Type being herein called
--------------
the "AFFECTED TYPE"), such Bank's Affected Loans shall be automatically
--------------
Converted into the Base Rate Loan on the last day(s) of the then current
Interest Period(s) for Affected Loans (or, in the case of a Conversion required
by Section 14.3 hereof, on such earlier date as such Bank may specify to
-------------
Borrower with a copy to Administrative Agent) and, unless and until such Bank
gives notice as provided below that the circumstances specified in Section 14.1
------------
or Section 14.3 hereof that gave rise to such Conversion no longer exist:
------------
(a) to the extent that such Bank's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise be
applied to such Bank's Affected Loans shall be applied instead to the Base Rate
Loan; and
(b) all Revolving Loans that would otherwise be made or Continued by
such Bank as Revolving Loans of the Affected Type shall be made or Continued
instead as part of the Base Rate Loan, and all Revolving Loans of such Bank that
would otherwise be Converted into Revolving Loans of the Affected Type shall be
Converted instead into (or shall remain) as part of the Base Rate Loan.
If such Bank gives notice to Borrower (with a copy to Administrative Agent) that
the circumstances specified in Section 14.1 or Section 14.3 hereof that gave
------------- ------------
rise to the Conversion of such Bank's Affected Loans pursuant to this Section
-------
14.4 no longer exist (which such Bank agrees to do promptly upon such
----
circumstances ceasing to exist) at a time when Revolving Loans of the Affected
Type made by other Banks are outstanding, such Bank's portion of the Base Rate
Loan shall be automatically Converted, on the first day(s) of the next
succeeding Interest Period(s) for such outstanding Revolving Loans of the
Affected Type, to the extent necessary so that, after giving effect thereto, all
Revolving Loans held by Banks holding Revolving Loans of the Affected Type and
by such Bank are held pro rata (as to principal amounts, Types and Interest
Periods) in accordance with their respective Commitments.
10-61
Section 14.5. COMPENSATION. Upon the request of any Bank, Borrower shall
------------
pay to such Bank such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost, or expense
(including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the Revolving
Loan) on a date other than the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Article VII to
-----------
be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan on the
date for such Borrowing, Conversion, Continuation, or prepayment specified in
the relevant Request for Borrowing, Notice of Continuation or Conversion, or
other notice of Borrowing, prepayment, Continuation, or Conversion under this
Agreement.
Section 14.6. TAXES.
-----
(a) Any and all payments by Borrower to or for the account of any Bank
or Administrative Agent hereunder or under any other Loan Paper shall be made
free and clear of and without deduction for any and all present or future Taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank and
---------
Administrative Agent, Taxes imposed on its income, and franchise Taxes imposed
on it, by the jurisdiction under the Laws of which such Bank (or its Applicable
Lending Office) or Administrative Agent (as the case may be) is organized or any
political subdivision thereof (all such non-excluded Taxes, duties, levies,
imposts, deductions, charges, withholdings, and liabilities being hereinafter
referred to in this Section 14.6 as "NON-EXCLUDED TAXES"). If Borrower shall be
------------ -------------------
required by Law to deduct any Non-Excluded Taxes from or in respect of any sum
payable under this Agreement or any other Loan Paper to any Bank or
Administrative Agent, (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 14.6 such Bank or Administrative
-------------
Agent receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions, (iii) Borrower
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable Law, and (iv) Borrower shall furnish to
Administrative Agent, at its address set forth on Schedule 2.1 hereto, the
-------------
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all present or future
stamp or documentary Taxes and any other excise or property Taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Loan Paper or from the execution or delivery of, or otherwise with respect
to, this Agreement or any other Loan Paper (hereinafter referred to as "OTHER
-----
TAXES").
-----
(c) Borrower agrees to indemnify each Bank and Administrative Agent
for the full amount of Taxes and Other Taxes (including, without limitation, any
Non-Excluded Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 14.6)
------------
10-62
paid by such Bank or Administrative Agent (as the case may be) and any liability
(including penalties, interest, and expenses) arising therefrom or with respect
thereto.
(d) Each Bank organized under the Laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on Schedule 2.1 hereto and on or prior
------------
to the date on which it becomes a Bank in the case of each other Bank, and from
time to time thereafter if requested in writing by Borrower or Administrative
Agent (but only so long as such Bank remains lawfully able to do so), shall
provide Borrower and Administrative Agent with (i) Internal Revenue Service Form
1001 or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Bank is entitled to benefits under an
income tax treaty to which the United States is a party which reduces the rate
of withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States, (ii) Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor form prescribed by the Internal
Revenue Service, and (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and 881(c) of
the Internal Revenue Code), certifying that such Bank is entitled to an
exemption from or a reduced rate of tax on payments pursuant to this Agreement
or any of the other Loan Papers.
(e) For any period with respect to which a Bank has failed to provide
Borrower and Administrative Agent with the appropriate form pursuant to Section
-------
14.6(d) (unless such failure is due to a change in treaty, law, or regulation
-------
occurring subsequent to the date on which a form originally was required to be
provided), such Bank shall not be entitled to indemnification under Section
-------
14.6(a) or Section 14.6(b) with respect to Non-Excluded Taxes imposed by the
------- ----------------
United States; provided, however, that should a Bank, which is otherwise exempt
-------- -------
from or subject to a reduced rate of withholding Tax, become subject to
Non-Excluded Taxes because of its failure to deliver a form required hereunder,
Borrower shall take such steps as such Bank shall reasonably request to assist
such Bank to recover such Non-Excluded Taxes.
(f) If Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 14.6, then such Bank will agree to
------------
use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Bank, is not otherwise
disadvantageous to such Bank.
(g) Within thirty (30) days after the date of any payment of
Non-Excluded Taxes, Borrower shall furnish to Administrative Agent the original
or a certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
Section 14.6 shall survive the termination of the Commitments and the payment in
------------
full of the Notes.
Section 14.7. DISCRETION OF BANKS AS TO MANNER OF FUNDING. Notwithstanding
-------------------------------------------
any provisions of this Agreement to the contrary, each Bank shall be entitled to
fund and maintain its funding of all or any part of its Commitment in any manner
it sees fit, it being understood,
10-63
however, that for the purposes of this Agreement all determinations hereunder
shall be made as if such Bank had actually funded and maintained each Eurodollar
Loan during the Interest Period for such Eurodollar Loan through the purchase of
deposits having a maturity corresponding to the last day of such Interest Period
and bearing an interest rate equal to the Adjusted Eurodollar Rate for such
Interest Period.
ARTICLE XV
MISCELLANEOUS
-------------
Section 15.1. NOTICES. All notices, requests and other communications to
-------
any party hereunder shall be in writing (including bank wire, telecopy or
similar writing) and shall be given, if to Administrative Agent or any Bank, at
its address or telecopier number set forth on Schedule 2.1 hereto, and if given
------------
to Borrower, at its address or telecopy number set forth on the signature pages
hereof (or in either case, at such other address or telecopy number as such
party may hereafter specify for the purpose by notice to the other parties
hereto). Each such notice, request or other communication shall be effective (a)
if given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section 15.1 and the appropriate answerback is received or
------------
receipt is otherwise confirmed, (b) if given by mail, three (3) Domestic
Business Days after deposit in the mails with first class postage prepaid,
addressed as aforesaid, or (c) if given by any other means, when delivered at
the address specified in this Section 15.1; provided that notices to
------------- -------- ----
Administrative Agent under Article III or Article IV shall not be effective
------------ ----------
until received.
Section 15.2. NO WAIVERS. No failure or delay by Administrative Agent or
----------
any Bank in exercising any right, power or privilege hereunder or under any Note
or other Loan Paper shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by Law or in any of the other Loan Papers.
Section 15.3. EXPENSES; INDEMNIFICATION.
-------------------------
(a) Borrower agrees to pay on demand all reasonable costs and expenses
of each Agent (other than any Co-Agent) in connection with the syndication,
preparation, execution, delivery, modification, and amendment of this Agreement,
the other Loan Papers, and the other documents to be delivered hereunder,
including, without limitation, the reasonable fees and expenses of counsel for
Administrative Agent with respect thereto and with respect to advising
Administrative Agent as to its rights and responsibilities under the Loan
Papers. Borrower further agrees to pay on demand all costs and expenses of
Administrative Agent and Banks, if any (including, without limitation,
reasonable attorneys' fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings, or otherwise) of the Loan
Papers and the other documents to be delivered hereunder.
(b) BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS EACH AGENT AND EACH
BANK AND EACH OF THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, AND ADVISORS
10-64
(EACH, AN "INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES,
------------------
LOSSES, LIABILITIES, COSTS, AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS' FEES) THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED
AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT OF OR IN CONNECTION WITH
OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY
INVESTIGATION, LITIGATION, OR PROCEEDING OR PREPARATION OF DEFENSE IN CONNECTION
THEREWITH) THE LOAN PAPERS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE
ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE REVOLVING LOAN (INCLUDING ANY OF
THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT TO
THE EXTENT SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A
FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE
RESULTED FROM SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
IN THE CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE
INDEMNITY IN THIS SECTION 15.3 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE
-------------
WHETHER OR NOT SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY CREDIT
PARTIES, ITS DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR ANY
OTHER PERSON OR ANY INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND WHETHER
OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED. BORROWER AGREES NOT
TO ASSERT ANY CLAIM AGAINST ANY AGENT, ANY BANK, ANY OF THEIR AFFILIATES, OR ANY
OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, AGENTS, AND
ADVISERS, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL, OR
PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO THE LOAN PAPERS, ANY OF
THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE
PROCEEDS OF THE REVOLVING LOAN.
(c) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
Section 15.3 shall survive the payment in full of the Revolving Loan and all
-------------
other amounts payable under this Agreement.
Section 15.4. RIGHT OF SET-OFF; ADJUSTMENTS.
-----------------------------
(a) Upon the occurrence and during the continuance of any Event of
Default, each Bank (and each of its Affiliates) is hereby authorized at any time
and from time to time, to the fullest extent permitted by Law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Bank
(or any of its Affiliates) to or for the credit or the account of any Credit
Party against any and all of the Obligations, irrespective of whether such Bank
shall have made any demand under this Agreement or Note held by such and
although such obligations may be unmatured. Each Bank agrees promptly to notify
the affected Credit Party after any such set-off and application made by such
Bank; provided, however, that the failure to give such notice shall not
-------- -------
10-65
affect the validity of such set-off and application. The rights of each Bank
under this Section 15.4 are in addition to other rights and remedies (including,
------------
without limitation, other rights of set-off) that such Bank may have.
(b) If any Bank (a "BENEFITTED BANK") shall at any time receive any
----------------
payment of all or part of the amounts owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, or otherwise), in a greater proportion than any such payment to or
collateral received by any other Bank, if any, in respect of such other Bank's
amounts owing to it, or interest thereon, such benefitted Bank shall purchase
for cash from the other Banks a participating interest in such portion of each
such other Bank's amounts owing to it, or shall provide such other Banks with
the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Bank to share the excess payment or benefits
of such collateral or proceeds ratably with each other Bank; provided, however,
-------- -------
that if all or any portion of such excess payment or benefits is thereafter
recovered from such benefitted Bank, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest. Borrower agrees that any Bank so purchasing a participation
from a Bank pursuant to this Section 15.4 may, to the fullest extent permitted
------------
by Law, exercise all of its rights of payment (including the right of set-off)
with respect to such participation as fully as if such Person were the direct
creditor of Borrower in the amount of such participation.
Section 15.5. AMENDMENTS AND WAIVERS. Any provision of this Agreement, the
----------------------
Notes or any other Loan Paper may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by Borrower and Required Banks
(and, if the rights or duties of any Agent are affected thereby, by such Agent);
provided that no such amendment or waiver shall, unless signed by all Banks, (a)
-------- ----
increase the Commitment of any Bank, (b) reduce the principal of or rate of
interest on any Revolving Loan or any fees or other amounts payable hereunder or
for termination of any Commitment, (c) change the percentage of the Total
Commitment, or the number of Banks which shall be required for Banks or any of
them to take any action under this Section 15.5 or any other provision of this
------------
Agreement, (d) extend the due date for, or forgive any principal, interest, fees
or reimbursement obligations due hereunder, (e) release any material guarantor
or other material party liable for all or any part of the Obligations or release
any material part of the collateral for the Obligations or any part thereof
other than releases required pursuant to sales of collateral which are expressly
permitted by Section 10.5 hereof, or (f) amend or modify any of the provisions
------------
of Article V hereof or the definitions of any terms defined therein.
---------
Section 15.6. SURVIVAL. All representations, warranties and covenants made
--------
by any Credit Party herein or in any certificate or other instrument delivered
by it or in its behalf under the Loan Papers shall be considered to have been
relied upon by Banks and shall survive the delivery to Banks of such Loan Papers
or the extension of the Revolving Loan (or any part thereof), regardless of any
investigation made by or on behalf of Banks. The indemnity provided in Section
-------
15.3(b) herein shall survive the repayment of all credit advances hereunder
-------
and/or the discharge or release of any Lien granted hereunder or in any other
Loan Paper, contract or agreement between Borrower or any other Credit Party and
any Agent or any Bank.
00-00
Xxxxxxx 00.0. XXXXXXXXXX XX INTEREST. Regardless of any provision contained
----------------------
in the Loan Papers, Banks shall never be entitled to receive, collect, or apply,
as interest on the Revolving Loan, any amount in excess of the Maximum Lawful
Rate, and in the event any Bank ever receives, collects or applies as interest
any such excess, such amount which would be deemed excessive interest shall be
deemed a partial prepayment of principal and treated hereunder as such; and if
the Revolving Loan is paid in full, any remaining excess shall promptly be paid
to Borrower. In determining whether or not the interest paid or payable under
any specific contingency exceeds the Maximum Lawful Rate, Borrower and Banks
shall, to the extent permitted under applicable Law, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effects thereof and (c) amortize, prorate,
allocate and spread, in equal parts, the total amount of the interest throughout
the entire contemplated term of the Notes, so that the interest rate is the
Maximum Lawful Rate throughout the entire term of the Notes; provided, however,
-------- -------
that if the unpaid principal balance thereof is paid and performed in full prior
to the end of the full contemplated term thereof, and if the interest received
for the actual period of existence thereof exceeds the Maximum Lawful Rate,
Banks shall refund to Borrower the amount of such excess and, in such event,
Banks shall not be subject to any penalties provided by any Laws for contracting
for, charging, taking, reserving or receiving interest in excess of the Maximum
Lawful Rate.
Section 15.8. INVALID PROVISIONS. If any provision of the Loan Papers is
-------------------
held to be illegal, invalid, or unenforceable under present or future Laws
effective during the term thereof, such provision shall be fully severable, the
Loan Papers shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of the Loan Papers a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid and enforceable.
Section 15.9. WAIVER OF CONSUMER CREDIT LAWS. Pursuant to Chapter 346 of
-------------------------------
the Texas Finance Code, as amended, Borrower agrees that such Chapter 346 shall
not govern or in any manner apply to the Revolving Loan.
Section 15.10. ASSIGNMENTS AND PARTICIPATIONS.
------------------------------
(a) Each Bank may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its interest in the Revolving Loan, its Note,
and its Commitment); provided, however, that
-------- ------- ----
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Bank or an
assignment of all of a Bank's rights and obligations under this
Agreement, any such partial assignment shall be in an amount at
least equal to $5,000,000 or an integral multiple of $100,000 in
excess thereof;
10-67
(iii) each such assignment by a Bank shall be of a constant, and
not varying, percentage of all of its rights and obligations
under this Agreement and its Note; and
(iv) the parties to such assignment shall execute and deliver to
Administrative Agent for its acceptance an Assignment and
Acceptance Agreement (herein so called) in the form of Exhibit K
---------
attached hereto, together with any Notes subject to such
assignment and a processing fee to be paid by the assigning Bank
of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance
Agreement, the assignee thereunder shall be a party hereto and, to the extent of
such assignment, have the obligations, rights, and benefits of a Bank hereunder
and the assigning Bank shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section 15.10(a), the assignor,
----------------
Administrative Agent and Borrower shall make appropriate arrangements so that,
if required, new Notes are issued to the assignor and the assignee. If the
assignee is not incorporated under the Laws of the United States of America or a
state thereof, it shall deliver to Borrower and Administrative Agent
certification as to exemption from deduction or withholding of Taxes in
accordance with Section 14.6(d).
---------------
(b) Administrative Agent shall maintain at its address set forth on
Schedule 2.1 hereto, a copy of each Assignment and Acceptance Agreement
-------------
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Banks and the Commitment and Commitment Percentage of, and
principal amount of the Revolving Loan owing to, each Bank from time to time
(the "REGISTER"). The entries in the Register shall be conclusive and binding
--------
for all purposes, absent manifest error, and Borrower, Administrative Agent and
Banks may treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Bank at any reasonable time and from time
to time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance Agreement
executed by the parties thereto, together with any Notes subject to such
assignment and payment of the processing fee, Administrative Agent shall, if
such Assignment and Acceptance Agreement has been completed and is in
substantially the form of Exhibit K attached hereto, (i) accept such Assignment
---------
and Acceptance Agreement, (ii) record the information contained therein in the
Register, and (iii) give prompt notice thereof to the parties thereto.
(d) Each Bank may sell participations to one or more Persons in all or
a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and its interest in the Revolving Loan); provided,
--------
however, that (i) such Bank's obligations under this Agreement shall remain
------- ----
unchanged, (ii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the participant shall be
entitled to the benefit of the yield protection provisions contained in Article
-------
XIV and the right of set-off contained in Section 15.4, and (iv) Borrower shall
--- ------------
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement, and such
10-68
Bank shall retain the sole right to enforce the obligations of Borrower relating
to its interest in the Revolving Loan and its Note and to approve any amendment,
modification, or waiver of any provision of this Agreement (other than
amendments, modifications, or waivers decreasing the amount of principal of or
the rate at which interest is payable on the Revolving Loan or the Notes,
extending any scheduled principal payment date or date fixed for the payment of
interest on the Revolving Loan or the Notes, or extending its Commitment).
(e) Notwithstanding any other provision set forth in this Agreement,
any Bank may at any time assign and pledge all or any portion of its interest in
the Revolving Loan and its Note to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank. No such assignment shall release the assigning Bank from
its obligations hereunder.
(f) Any Bank may furnish any information concerning the Borrower or
any of its Subsidiaries in the possession of such Bank from time to time to
assignees and participants (including prospective assignees and participants).
(g) Each Loan Paper binds and inures to the parties to it, any
intended beneficiary of it, and each of their respective successors and
permitted assigns. Borrower shall not assign or transfer any rights or
obligations under any Loan Paper or permit any Credit Party to assign or
transfer any rights or obligations under any Loan Paper without first obtaining
all Banks' consent, and any purported assignment or transfer without all Banks'
consent is void.
Section 15.11. TEXAS LAW. THIS AGREEMENT, EACH NOTE AND THE OTHER LOAN
---------
PAPERS HAVE BEEN EXECUTED AND DELIVERED IN THE STATE OF TEXAS AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND
THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE LAWS OF
ANY STATE IN WHICH ANY PROPERTY INTENDED AS SECURITY FOR THE OBLIGATIONS IS
LOCATED NECESSARILY GOVERN (A) THE PERFECTION AND PRIORITY OF THE LIENS IN FAVOR
OF ADMINISTRATIVE AGENT AND BANKS WITH RESPECT TO SUCH PROPERTY, AND (B) THE
EXERCISE OF ANY REMEDIES (INCLUDING FORECLOSURE) WITH RESPECT TO SUCH PROPERTY.
Section 15.12. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES.
---------------------------------------------
(a) Borrower hereby irrevocably submits to the jurisdiction of any
Texas State or Federal court sitting in the Northern District of Texas over any
action or proceeding arising out of or relating to this Agreement or any other
Loan Papers, and Borrower hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such Texas State or
Federal court. As an alternative, Borrower irrevocably consents to the service
of any and all process in any such action or proceeding by the mailing of copies
of such process to such Person at its address specified in Section 15.1.
-------------
Borrower agrees that a final judgment on any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by Law.
10-69
(b) Nothing in this Section 15.12 shall affect any right of Banks to serve legal
-------------
process in any other manner permitted by Law or affect the right of any Bank to
bring any action or proceeding against any Credit Party or their properties in
the courts of any other jurisdictions.
(c) To the extent that Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, such
Person hereby irrevocably waives such immunity in respect of its obligations
under this Agreement and the other Loan Papers.
Section 15.13. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
---------------------------
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
Subject to the terms and conditions herein set forth (including, without
limitation, the execution and delivery of the Certificate of Effectiveness),
this Agreement shall become effective when Administrative Agent shall have
received counterparts hereof signed by all of the parties hereto or, in the case
of any Bank as to which an executed counterpart shall not have been received,
Administrative Agent shall have received telegraphic or other written
confirmation from such Bank of execution of a counterpart hereof by such Bank.
Section 15.14. NO THIRD PARTY BENEFICIARIES. Except for the provisions
-----------------------------
hereof inuring to the benefit of Agents not a party to this Agreement, it is
expressly intended that there shall be no third party beneficiaries of the
covenants, agreements, representations or warranties herein contained other than
third party beneficiaries permitted pursuant to Section 15.10.
-------------
Section 15.15. COMPLETE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN PAPERS
------------------
COLLECTIVELY REPRESENT THE FINAL AGREEMENT BY AND AMONG BANKS, AGENTS AND THE
CREDIT PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF BANKS, AGENTS, AND THE CREDIT
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG BANKS, AGENTS, AND THE
CREDIT PARTIES.
Section 15.16. WAIVER OF JURY TRIAL. BORROWER, ADMINISTRATIVE AGENT AND
--------------------
BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN PAPERS
AND FOR ANY COUNTERCLAIM THEREIN.
Section 15.17. CONFIDENTIALITY. Administrative Agent and each Bank (each, a
---------------
"LENDING PARTY") agrees to keep confidential any information furnished or made
-------------
available to it by Borrower pursuant to this Agreement that is marked
confidential; provided that nothing herein shall prevent any Lending Party from
-------- ----
disclosing such information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director, employee, agent, or advisor of any
Lending Party or any Affiliate of any Lending Party, (b) to any other Person if
reasonably incidental to the administration of the credit facility provided
herein, (c) as required by any Law, rule or regulation, (d) upon the order of
any court or administrative agency, (e) upon the request
10-70
or demand of any regulatory agency or authority, (f) that is or becomes
available to the public or that is or becomes available to any Lending Party
other than as a result of a disclosure by any Lending Party prohibited by this
Agreement, (g) in connection with any litigation to which such Lending Party or
any of its affiliates may be a party, (h) to the extent necessary in connection
with the exercise of any remedy under this Agreement or any other Loan Paper,
and (i) subject to provisions substantially similar to those contained in this
Section 15.17, to any actual or proposed participant or assignee.
-------------
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective Authorized Officers on the day and year first
above written.
[signature pages to follow]
10-71
SIGNATURE PAGE TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES, INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
BORROWER:
--------
DENBURY RESOURCES, INC.,
a Delaware corporation
By:
-------------------------------------------------
Xxxx Xxxxxxx,
Chief Financial Officer
Address for Notice:
0000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxx, Xxxxx 00000
Fax No. (000) 000-0000
SIGNATURE PAGE TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES, INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
ADMINISTRATIVE AGENT:
--------------------
BANK OF AMERICA, N.A.,
as Administrative Agent
By:
--------------------------------------------------
J. Xxxxx Xxxxxx
Managing Director
BANKS:
-----
BANK OF AMERICA, N.A.
By:
--------------------------------------------------
J. Xxxxx Xxxxxx,
Managing Director
SIGNATURE PAGE TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES, INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
CO-AGENT:
--------
FLEET NATIONAL BANK,
successor in interest to BankBoston, N.A.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
BANKS:
-----
FLEET NATIONAL BANK,
successor in interest to BankBoston, N.A.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
SIGNATURE PAGE TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES, INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
CO-AGENT:
--------
BANK ONE, TEXAS, N.A.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
BANKS:
-----
BANK ONE, TEXAS, N.A.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
SIGNATURE PAGE TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES, INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
CO-AGENT:
--------
THE BANK OF NOVA SCOTIA
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
BANKS:
-----
THE BANK OF NOVA SCOTIA
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
SIGNATURE PAGE TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES, INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
BANKS:
-----
CHRISTIANIA BANK OG KREDITKASSE ASA
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
SIGNATURE PAGE TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES, INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
BANKS:
-----
CREDIT LYONNAIS NEW YORK BRANCH
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
SIGNATURE PAGE TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES, INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
BANKS:
-----
NATEXIS BANQUES POPULAIRES
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
SIGNATURE PAGE TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
DENBURY RESOURCES, INC., AS BORROWER,
BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT,
THE OTHER AGENTS A PARTY THERETO, AND
THE FINANCIAL INSTITUTIONS LISTED
ON SCHEDULE 2.1 THERETO, AS BANKS
BANKS:
-----
XXXXX FARGO BANK TEXAS, N.A.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
SCHEDULE 2.1
------------
Financial Institutions
Banks Commitment Amount Commitment Percentage
----- ----------------- ---------------------
Bank of America, N.A $42,272,727.27 14.0909090909%
Fleet National Bank $40,909,090.91 13.6363636364%
Bank One, Texas, N.A. $40,909,090.91 13.0000000000%
The Bank of Nova Scotia $40,909,090.91 13.0000000000%
Credit Lyonnais - New York Branch $39,545,454.55 13.1818181818%
Xxxxx Fargo Bank Texas, N.A. $34,090,909.09 11.3636363636%
Christiania Bank OG Kreditkasse ASA $34,090,909.09 11.3636363636%
Natexis Banques Populaires $27,272,727.27 9.0909090909%
Totals: $300,000,000.00 100.00%
======================================= ========================= ============================
Banks Domestic Lending Office Eurodollar Lending Office Address for Notice
----- ----------------------- ------------------------- ------------------
Bank of America, N.A. 000 Xxxx Xxxxxx, 00xx Xxxxx 000 Xxxx Xxxxxx, 00xx Xxxxx 000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
Bank One, Texas, NA 910 Xxxxxx 910 Xxxxxx 000 Xxxxxx Xxxxxx
XX0-0000 TX2-4330 TX1-1420
Xxxxxxx, Xxxxx 00000 Xxxxxxx, Xxxxx 00000 Xxxx Xxxxx, Xxxxx 00000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
with a copy to:
910 Xxxxxx
TX2-4330
Xxxxxxx, Xxxxx 00000
Fax No. (000) 000-0000
Fleet National Bank 000 Xxxxxxx Xxxxxx 000 Xxxxxxx Xxxxxx 000 Xxxxxxx Xxxxxx
01-08-04 01-08-04 01-08-04
Xxxxxx, XX 00000 Xxxxxx, XX 00000 Xxxxxx, XX 00000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
Christiania Bank OG 00 Xxxx 00xx Xxxxxx, 0xx Xxxxx 00 Xxxx 00xx Xxxxxx,0xx Floor 00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Kreditkasse ASA Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
Credit Lyonnais New York 1301 Avenue of the Americas 1301 Avenue of the Americas 0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxx Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000 Xxxxxxx, Xxxxx 00000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
Natexis Banques Populaires 000 Xxxx Xxxxxx, Xxxxx 0000 000 Xxxx Xxxxxx, Xxxxx 0000 000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000 Xxxxxxx, Xxxxx 00000 Xxxxxxx, Xxxxx 00000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
The Bank of Nova Scotia The Bank of Nova Scotia The Bank of Nova Scotia The Bank of Nova Scotia
Atlanta Agency Atlanta Agency Atlanta Agency
000 Xxxxxxxxx Xx. N.E., 000 Xxxxxxxxx Xx. N.E., 600 Peachtree St. N.E.,
Xxxxx 0000 Xxxxx 0000 Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000 Xxxxxxx, Xxxxxxx 00000 Xxxxxxx, Xxxxxxx 00000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
Xxxxx Fargo Bank Texas, N.A. 0000 Xxxx Xxxxxx, Xxxxx 000 0000 Xxxxxxxx, 0xx Xxxxx 0000 Xxxx Xxxxxx, Xxxxx 000
MAC# T5303-029 Xxxxxx, Xxxxxxxx 00000 MAC# T5303-029
Xxxxxx, Xxxxx 00000 Attn: Xxxxx Xxxx, Prod. Mgr. Xxxxxx, Xxxxx 00000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
============================== =============================== ================================ ================================
Administrative Agent - Address:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Fax No. (000) 000-0000
Schedule 2.1 - 1
SCHEDULE 2.2
------------
Existing Mortgages
1. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the County Clerk of
Xxxxxx County, Mississippi on April 8, 1999 at Book DT220, Page(s)
732-810.
2. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the County Clerk of
Franklin County, Mississippi on March 12, 1999, as File Number 024152
in Book 214, Page(s) 231-263.
3. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the County Clerk of
Jasper County, Mississippi on March 15, 1999, in Book 106, Page(s)
586-663.
4. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the County Clerk of
Xxxxxxxxx Xxxxx County, Mississippi on March 18, 1999, in Book 450,
Page 296 as Document Number 9900823 .
5. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the County Clerk of
Xxxxx County, Mississippi on March 18, 1999, as File Number 106313 in
Book 334, Page 525.
6. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Second District
County Clerk of Xxxxx County, Mississippi on March 19, 1999, in Book
1192, Page 521.
7. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the County Clerk of
Lowndes County, Mississippi on March 15, 1999, as Trust Deed Number
1270, Page(s) 417-449.
8. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the County Clerk of
Madison County, Mississippi on March 12, 1999, in Book 1159, Page 738,
as Document Number 276499.
Schedule 2.2 - 1
9. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the County Clerk of
Xxxxxx County, Mississippi on March 12, 1999, in Book 1394, Page 560.
10. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the County Clerk of
Xxxxx County, Mississippi on March 12, 1999, in OGL Book 404, Page(s)
405- 439.
11. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the County Clerk of
Xxxxxxxx County, Mississippi on March 12, 1999, in Land Deed Trust Book
258, Page 224.
12. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the County Clerk of
Xxxxx County, Mississippi on March 12, 1999, in Deed Book 975, Page
365.
13. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Acadia Parish, Louisiana on March 12, 1999 as Document Number 658835 in
MOB 562, Page 36 and COB N56, Page 91.
14. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Avoyelles Parish, Louisiana on March 12, 1999, as Clerk's File Number
9901907, MOB Book Number 450 and MIN Book Number 194.
15. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Cameron Parish, Louisiana on March 12, 1999, as Clerk File's Number
259143 and Conveyance Book Number 892 and Mortgage Book Number 239.
16. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Concordia Parish, Louisiana on March 12, 1999, in COB Book Number 377,
Folio 508 and MOB Book Xxxxxx 000, Xxxxx 000 xx Xxxxxxxx Xxxxxx 000000.
17. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Desoto Parish, Louisiana on March 12, 1999, as Clerk's File Number
571636.
Schedule 2.2 - 2
18. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Iberia Parish, Louisiana on March 16, 1999, in Mortgage Book Number
A753, Entry Number 99-3310.
19. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Xxxxxxx Parish, Louisiana on March 12, 1999, as Clerk's File Number
328899 in Conveyance Book Number 306, Page 71 and Mortgage Book Number
184, Page 721.
20. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Xxxxxxxxx Xxxxxx, Louisiana on March 15, 1999, as Clerk's File Number
560349 in MOB Book Number 413, Page 299.
21. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
LaFourche Parish, Louisiana on March 17, 1999, in Mortgage Book Number
806, Folio Number 30, as Entry Number 849538.
22. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Point Coupee Parish, Louisiana on March 12, 1999, in MB Book 269 as
Clerk's Number 82.
23. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Rapides Parish, Louisiana on March 12, 1999, in Mortgage Book 1556,
Page 153, and Conveyance Book 1553, Page 897 and as Clerk's File Number
1097748.
24. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Red River Parish, Louisiana on March 15, 1999, as Instrument Number
191,356.
25. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
St. Xxxxxxx Xxxxxx, Louisiana on March 12, 1999, in Mortgage Book
Number 703, Folio Number 20, as Clerk's File Number 230509.
26. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
St. Xxxxxx Xxxxxx, Louisiana on March 12, 1999, in Mortgage Book Number
809, Folio Number 423, and as Clerk's File Number 001623.
Schedule 2.2 - 3
27. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
St. Xxxx Xxxxxx, Louisiana on March 12, 1999, in Mortgage Book Number
807, Entry Number 232,984, Page Number 477.
28. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Terrebonne Parish, Louisiana on March 12, 1999, as Clerk's File Number
1041400.
29. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Vermilion Parish, Louisiana on March 16, 1999, as Clerk's File Number
9902951.
30. Mortgage, Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production dated as of March 1, 1999, from Borrower to
Administrative Agent, recorded in the office of the Clerk of Court for
Webster Parish, Louisiana on March 16, 1999, as Registry Number 427114.
Schedule 2.2 - 4
SCHEDULE 8.5
------------
Litigation
None
Schedule 8.5 - 1
SCHEDULE 8.10
-------------
Licenses, Permits, Etc.
None
Schedule 8.10 - 1
SCHEDULE 8.13
-------------
Jurisdictions, Etc.
Schedule 8.13 - 1
SCHEDULE 9.10
-------------
Environmental Disclosure
None
Schedule 9.10 - 1
