1
EXHIBIT 10.1
CREDIT AGREEMENT
among
ENCORE OPERATING, L.P.,
as Borrower,
ENCORE ACQUISITION PARTNERS, INC.,
as Parent Guarantor,
NATIONSBANK, N.A.,
as Administrative Agent
FIRST UNION NATIONAL BANK,
as Syndication Agent,
BANKBOSTON, N.A.,
as Documentary Agent
and
The Financial Institutions Listed on Schedule 1 Hereto,
as Banks
$300,000,000
dated as of
May 7, 1999
NATIONSBANC XXXXXXXXXX SECURITIES LLC,
as Sole Lead Arranger and Book Manager
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TABLE OF CONTENTS
ARTICLE I TERMS DEFINED .....................................................1
SECTION 1.1. Definitions..............................................1
SECTION 1.2. Accounting Terms and Determinations.....................21
SECTION 1.3. Petroleum Terms.........................................22
SECTION 1.4. Money...................................................22
ARTICLE II THE CREDIT.......................................................22
SECTION 2.1. Commitments.............................................22
SECTION 2.2. Notes...................................................27
SECTION 2.3. Interest Rates; Payments................................27
SECTION 2.4. Mandatory Prepayments Resulting from Borrowing Base
Deficiency............... ..............................29
SECTION 2.5. Voluntary Reduction of Total Commitment.................30
SECTION 2.6. Termination of Commitments; Final Maturity..............30
SECTION 2.7. Voluntary Prepayments...................................30
SECTION 2.8. Unused Commitment Fee...................................31
SECTION 2.9. Agency and other Fees...................................31
ARTICLE III GENERAL PROVISIONS .............................................31
SECTION 3.1. Delivery and Endorsement of Notes.......................31
SECTION 3.2. General Provisions as to Payments.......................31
ARTICLE IV CHANGE IN CIRCUMSTANCES .........................................32
SECTION 4.1. Increased Cost and Reduced Return.......................32
SECTION 4.2. Limitation on Types of Loans............................34
SECTION 4.3. Illegality..............................................34
SECTION 4.4. Treatment of Affected Loans.............................34
SECTION 4.5. Compensation............................................35
SECTION 4.6. Taxes...................................................35
SECTION 4.7. Discretion of Banks as to Manner of Funding.............37
ARTICLE V BORROWING BASE ...................................................37
SECTION 5.1. Reserve Report; Proposed Borrowing Base.................37
SECTION 5.2. Scheduled Redeterminations of the Borrowing Base;
Procedures and Standards................................37
SECTION 5.3. Special Redetermination.................................38
SECTION 5.4. Borrowing Base Deficiency...............................38
SECTION 5.5. Initial Borrowing Base..................................39
ARTICLE VI COLLATERAL AND GUARANTEES........................................39
SECTION 6.1. Security................................................39
SECTION 6.2. Guarantees..............................................39
ARTICLE VII CONDITIONS PRECEDENT ...........................................40
SECTION 7.1. Conditions to Effectiveness, Initial Borrowing and
Participation in Letter of Credit Exposure..............40
SECTION 7.2. Conditions to Each Borrowing and each Letter of
Credit..................................................44
SECTION 7.3. Materiality of Conditions...............................44
SECTION 7.4. Effectiveness of Agreement; Early Termination...........44
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ARTICLE VIII REPRESENTATIONS AND WARRANTIES.................................45
SECTION 8.1. Existence and Power of Each Credit Party................45
SECTION 8.2. Credit Party and Governmental Authorization;
Contravention...........................................46
SECTION 8.3. Binding Effect..........................................46
SECTION 8.4. Financial Information...................................46
SECTION 8.5. Litigation..............................................47
SECTION 8.6. ERISA...................................................47
SECTION 8.7. Taxes and Filing of Tax Returns.........................48
SECTION 8.8. Ownership of Properties Generally.......................48
SECTION 8.9. Mineral.................................................48
SECTION 8.10. Licenses, Permits, Etc..................................49
SECTION 8.11. Compliance with Law.....................................49
SECTION 8.12. Full Disclosure.........................................49
SECTION 8.13. Organizational Structure; Nature of Business............49
SECTION 8.14. Environmental Matters...................................50
SECTION 8.15. Burdensome Obligations..................................50
SECTION 8.16. Fiscal Year.............................................51
SECTION 8.17. No Default..............................................51
SECTION 8.18. Government Regulation...................................51
SECTION 8.19. Insider.................................................51
SECTION 8.20. Gas Balancing Agreements and Advance Payment
Contracts...............................................51
SECTION 8.21. Shell Acquisition Documents; Material Agreements........51
SECTION 8.22. Year 2000 Matters.......................................52
ARTICLE IX AFFIRMATIVE COVENANTS ...........................................52
SECTION 9.1. Information.............................................52
SECTION 9.2. Business of Credit Parties..............................54
SECTION 9.3. Maintenance of Existence................................54
SECTION 9.4. Title Data..............................................55
SECTION 9.5. Right of Inspection.....................................55
SECTION 9.6. Maintenance of Insurance................................55
SECTION 9.7. Payment of Taxes and Claims.............................55
SECTION 9.8. Compliance with Laws and Documents......................56
SECTION 9.9. Operation of Properties and Equipment...................56
SECTION 9.10. Environmental Law Compliance............................56
SECTION 9.11. ERISA Reporting Requirements............................56
SECTION 9.12. Additional Documents....................................57
SECTION 9.13. Environmental Review....................................58
SECTION 9.14. Year 2000 Compatibility.................................58
ARTICLE X NEGATIVE COVENANTS ...............................................58
SECTION 10.1. Incurrence of Debt......................................58
SECTION 10.2. Restricted Payments.....................................58
SECTION 10.3. Negative Pledge.........................................58
SECTION 10.4. Consolidations and Mergers..............................59
SECTION 10.5. Asset Dispositions......................................59
SECTION 10.6. Amendments to Organizational Documents..................59
SECTION 10.7. Use of Proceeds........................................59
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SECTION 10.8. Investments.............................................60
SECTION 10.9. Transactions with Affiliates............................60
SECTION 10.10. ERISA...................................................60
SECTION 10.11. Hedge Transactions......................................60
SECTION 10.12. Fiscal Year.............................................60
SECTION 10.13. Change in Business......................................60
ARTICLE XI FINANCIAL COVENANTS .............................................60
ARTICLE XII DEFAULTS .......................................................61
SECTION 12.1. Events of Default.......................................61
ARTICLE XIII AGENTS ........................................................63
SECTION 13.1. Appointment, Powers, and Immunities.....................63
SECTION 13.2. Reliance by Agents......................................63
SECTION 13.3. Defaults................................................64
SECTION 13.4. Rights as Bank..........................................64
SECTION 13.5. Indemnification.........................................64
SECTION 13.6. Non-Reliance on Agents and Other Banks..................65
SECTION 13.7. Resignation of Agents...................................65
ARTICLE XIV MISCELLANEOUS ..................................................65
SECTION 14.1. Notices.................................................65
SECTION 14.2. No Waivers..............................................66
SECTION 14.3. Expenses; Indemnification...............................66
SECTION 14.4. Right of Set-off; Adjustments...........................67
SECTION 14.5. Amendments and Waivers..................................67
SECTION 14.6. Survival................................................68
SECTION 14.7. Limitation on Interest..................................68
SECTION 14.8. Invalid Provisions......................................68
SECTION 14.9. Waiver of Consumer Credit Laws..........................68
SECTION 14.10. Assignments and Participations..........................69
SECTION 14.11. TEXAS LAW...............................................70
SECTION 14.12. Consent to Jurisdiction; Waiver of Immunities...........70
SECTION 14.13. Counterparts; Effectiveness.............................71
SECTION 14.14. No Third Party Beneficiaries............................71
SECTION 14.15. COMPLETE AGREEMENT......................................71
SECTION 14.16. WAIVER OF JURY TRIAL....................................71
SECTION 14.17. Confidentiality.........................................72
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EXHIBITS
EXHIBIT A FORM OF CERTIFICATE OF OWNERSHIP INTERESTS
EXHIBIT B FORM OF FACILITY GUARANTY
EXHIBIT C FORM OF NOTE
EXHIBIT D FORM OF PARENT PLEDGE AGREEMENT
EXHIBIT E FORM OF SUBSIDIARY PLEDGE AGREEMENT
EXHIBIT F FORM OF LETTER OF CREDIT APPLICATION
EXHIBIT G FORM OF REQUEST FOR BORROWING
EXHIBIT H FORM OF REQUEST FOR LETTER OF CREDIT
EXHIBIT I FORM OF NOTICE OF CONTINUATION OR CONVERSION
EXHIBIT J FORM OF CERTIFICATE OF EFFECTIVENESS
EXHIBIT K FORM OF CERTIFICATE OF FINANCIAL OFFICER OF PARENT
EXHIBIT L FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULES
SCHEDULE 1 FINANCIAL INSTITUTIONS
SCHEDULE 2 LITIGATION
SCHEDULE 3 CAPITALIZATION
SCHEDULE 4 ENVIRONMENTAL MATTERS
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") is entered into as of the 7th
day of May, 1999, to be effective as of the Closing Date (as hereinafter
defined), among ENCORE OPERATING, L.P., a Texas limited partnership
("Borrower"), ENCORE ACQUISITION PARTNERS, INC., a Delaware corporation
("Parent"), NATIONSBANK, N.A., a national banking association, as Administrative
Agent ("Administrative Agent"), FIRST UNION NATIONAL BANK, a national banking
association, as Syndication Agent ("Syndication Agent"), BANKBOSTON, N.A., a
national banking association, as Documentary Agent ("Documentary Agent") and the
financial institutions listed on Schedule 1 hereto as Banks (individually a
"Bank" and collectively "Banks").
WITNESSETH:
WHEREAS, Parent and Borrower have requested that Banks provide Borrower
with a revolving credit facility, and Banks are willing to provide such facility
on the terms and subject to the conditions hereinafter set forth; and
WHEREAS, pursuant to Article XIII of this Agreement, NationsBank, N.A.
has been appointed Administrative Agent for Banks hereunder, BankBoston, N.A.
has been appointed Documentary Agent for Banks hereunder and First Union
National Bank has been appointed Syndication Agent for Banks hereunder; and
WHEREAS, pursuant to certain separate agreements among NationsBank,
N.A., NationsBanc Xxxxxxxxxx Securities LLC ("NMS"), Parent and Borrower, NMS
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, Parent, Borrower, Administrative Agent, Syndication Agent,
Documentary Agent and Banks agree as follows:
ARTICLE I
TERMS DEFINED
SECTION 1.1. Definitions. The following terms, as used herein, have the
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) 1.00 minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period.
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"Administrative Agent" means NationsBank, N.A. in its capacity as
administrative agent for Banks hereunder or any successor thereto.
"Advance Payment Contract" means any contract whereby Borrower or any
Subsidiary of Borrower either (a) receives or becomes entitled to receive
(either directly or indirectly) any payment (an "Advance Payment") to be applied
toward payment of the purchase price of Hydrocarbons produced or to be produced
from Mineral Interests owned by Borrower or any Subsidiary of Borrower and which
Advance Payment is paid or 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 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 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 other Person which, directly or indirectly, controls, is controlled by, or
is under common control with, such Person, and (a) with respect to any Credit
Party, means any director, executive officer, general partner or manager of such
Credit Party and any Person who holds five percent (5%) or more of the voting
stock, partnership interests, membership interests or other ownership interests
of such Credit Party, and (b) with respect to any Bank, means any Person who
holds fifty-one percent (51%) or more of the voting stock or other ownership
interests of such Bank. For the purposes of this definition, "control"
(including, 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, Sole Lead Arranger, Book Manager,
Syndication Agent or Documentary Agent and "Agents" means Administrative Agent,
Sole Lead Arranger, Book Manager, Syndication Agent or Documentary Agent,
collectively.
"Agreement" means this Agreement as the same may hereafter be modified,
amended or supplemented from time to time.
"Applicable Environmental Law" means any Law, statute, ordinance, rule,
regulation, order or determination of any Tribunal or any board of fire
underwriters (or other body exercising similar functions), affecting any real or
personal property owned, operated or leased by any Credit Party or any other
operation of any Credit Party in any way pertaining to health, safety or the
environment, including, without limitation, all applicable zoning ordinances and
building codes, flood disaster Laws and health, safety and environmental Laws
and regulations, and further including, without limitation, (a) the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986 (as
amended from time to time, herein referred to as "CERCLA"),
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(b) 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 amended from time to time, herein referred to as "RCRA"),
(c) the Safe Drinking Water Act, as amended, (d) the Toxic Substances Control
Act, as amended, (e) the Clean Air Act, as amended, (f) the Occupational Safety
and Health Act of 1970, as amended, (g) the Laws, rules and regulations of any
state having jurisdiction over any real or personal property owned, operated or
leased by any Credit Party or any other operation of any Credit Party which
relates to health, safety or the environment, as each may be amended from time
to time, and (h) any federal, state or municipal Laws, ordinances or regulations
which may now or hereafter require removal of asbestos or other hazardous wastes
or impose any liability related to asbestos or other hazardous wastes. The terms
"hazardous substance," "petroleum," "release" and "threatened release" have the
meanings specified in CERCLA, and the terms "solid waste" and "disposal" (or
"disposed") have the meanings specified in RCRA; provided, however, in the event
either CERCLA or RCRA is amended so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply subsequent to the effective
date of such amendment with respect to all provisions of this Agreement; and
provided further that, to the extent the Laws of the state in which any real or
personal property owned, operated or leased by any Credit Party is located
establish a meaning for "hazardous substance," "petroleum," "release," "solid
waste" or "disposal" which is broader than that specified in either CERCLA or
RCRA, such broader meaning shall apply in so far as such broader meaning is
applicable to the real or personal property owned, operated or leased by any
Credit Party and located in such state.
"Applicable Lending Office" means, for each Bank and for each Type of
Loan, the Domestic Lending Office or Eurodollar Lending Office of such Bank (or
of an Affiliate of such Bank) designated for such Type of Loan set forth on
Schedule 1 hereto 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 its Loans of such Type are to be made and maintained.
"Applicable Margin" means, on any date, with respect to each Eurodollar
Loan, an amount determined by reference to the ratio of Outstanding Credit to
the Borrowing Base on such date in accordance with the table below:
Ratio of Outstanding Credit Applicable Margin for
to Borrowing Base Eurodollar Loans
----------------------------- ----------------------
< or = to .50 to 1 0.750%
----------------------------- ----------------------
> .50 to 1 < or = to .75 to 1 1.000%
----------------------------- ----------------------
> .75 to 1 < or = to .90 to 1 1.250%
----------------------------- ----------------------
> .90 to 1 1.500%
----------------------------- ----------------------
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"Approved Petroleum Engineer" means Xxxxxx and Xxxxx or any other
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 Section 14.10(a).
"Authorized Officer" means, as to any Person, its Chief Executive
Officer, its President, its Chief Financial Officer, any of its Executive Vice
Presidents, 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 1 hereto
as having a Commitment and its successors and permitted Eligible Assignees, and
"Banks" shall mean all Banks.
"Base Rate" means, for any day, the rate per annum equal to the higher
of (a) the Federal Funds Rate for such day plus one-half of one percent (.5%),
or (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 a Loan bearing interest with reference to the
Base Rate.
"Book Manager" means NationsBanc Xxxxxxxxxx Securities LLC in its
capacity as book manager for the credit facility hereunder or any successor
thereto.
"Borrower" means Encore Operating, L.P., a Texas limited partnership.
"Borrower Shell Indemnification Agreement" means that certain Agreement
for Indemnification and Responsibility for Damages to the Subject Properties in
Connection with Site Visits and Investigation dated March 12, 1999, executed by
Borrower in favor of Shell, pursuant to which Borrower agrees to indemnify Shell
for certain losses and damages arising out of, or resulting from, Borrower's
activities in connection with site visits and physical investigation of the
Shell Property in accordance with the terms of the Shell Acquisition Agreement.
"Borrower Shell Pledge Agreement" means that certain Pledge Agreement
to be executed and delivered by Borrower in favor of Shell in connection with,
and upon the closing of, the Shell Acquisition, pursuant to which Borrower shall
grant to Shell a security interest in the collateral described therein to secure
the payment and performance of certain obligations of Borrower under Section 21
of the Shell Acquisition Agreement.
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"Borrowing" means any disbursement to Borrower under, or to satisfy the
obligations of any Credit Party under, any of the Loan Papers. Any Borrowing of
Base Rate Loans is referred to herein as a "Base Rate Borrowing," and any
Borrowing of Eurodollar Loans is referred to herein as a "Eurodollar Borrowing."
"Borrowing Base" means the loan value attributable to certain of
Borrower's Mineral Interests as determined in accordance with Article V hereof.
"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 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 2.1(b).
"Borrowing Base Properties" means all Mineral Interests (excluding the
Rejected Shell Properties) evaluated by Banks for purposes of establishing the
Borrowing Base. The Borrowing Base Properties on the Closing Date constitute all
of the Mineral Interests described in the Shell Reserve Report.
"Borrowing Date" means the Eurodollar Business Day or the Domestic
Business 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.
"Xxxxxxx Controlled Entity" means (a) I. Xxx Xxxxxxx, (b) any trust in
which there are and continue to be during the term of this Agreement no
beneficiaries other than I. Xxxx Xxxxxxx and any spouse, child (natural or
adopted), spouse of any such child, grandchild, sister, brother or parent of I.
Xxx Xxxxxxx, and (c) any limited partnership provided that (i) the only general
partners are Persons specified in clause (a) or (b) of this definition or a
corporation or limited liability company the sole shareholders or members of
which are Persons described in clause (a) or (b) of this definition, and (ii)
the sole limited partners of which are Persons described in clause (a) or (b) of
this definition.
"Certificate of Effectiveness" has the meaning set forth in Section 7.4
hereof.
"Certificate of Ownership Interests" means a Certificate of Ownership
Interests in the form of Exhibit A attached hereto to be executed and delivered
by an Authorized Officer of Borrower pursuant to Section 7.1(a)(xv) hereof.
"Change of Control" means the occurrence of any of the following
whether voluntarily or involuntarily, including by operation of law: (a)
Borrower or any other Credit Party (other than Parent) shall cease to be a
wholly owned Subsidiary of Parent, (b) the Designated Stockholders or their
Affiliates shall cease to hold at least fifty one percent (51%) of the
outstanding Voting Stock of Parent, (c) at any time prior to the completion of a
Qualified IPO, a Xxxxxxx Controlled Entity shall cease to hold at least ten
percent (10%) of the outstanding Voting Stock of Parent, or (d) I. Xxx Xxxxxxx
shall cease to be actively employed on a full time basis as the Chief Executive
Officer of Parent (subject to usual and customary vacations, sick days, personal
days and other
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routine absences) (each Bank acknowledges that I. Xxx Xxxxxxx'x engagement in
Permitted Business Activities shall not, in and of itself, be construed to mean
that I. Xxx Xxxxxxx is not employed on a full time basis as the Chief Executive
Officer of Parent).
"Closing Date" means the date upon which all of the conditions
precedent set forth in Section 7.1 have been satisfied and the Certificate of
Effectiveness has been delivered; provided, that in no event shall such date be
later than the date set forth in Section 7.4 hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means, with respect to any Bank, the commitment of such
Bank to lend its Commitment Percentage of the Total Commitment to Borrower
pursuant to Section 2.1 hereof, as such Commitment may be terminated and/or
reduced from time 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 1 hereto; provided, that, after giving
effect to any 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 14.10(b).
"Commitment Fee Percentage" means, for any day, the percentage
determined pursuant to the table below based on the ratio of the Outstanding
Credit on such date to the Borrowing Base in effect on such date:
Ratio of Outstanding Credit Commitment Fee
to Borrowing Base Percentage
------------------------------ ----------------
< or = to .50 to 1 0.300%
------------------------------ ----------------
> .50 to 1 < or = to .75 to 1 0.350%
------------------------------ ----------------
> .75 to 1 0.375%
------------------------------ ----------------
"Commitment Percentage" means, with respect to each Bank, the
Commitment Percentage for such Bank set forth on Schedule 1 hereto.
"Consolidated Current Assets" means, for any Person at any time, the
sum of (a) the current assets of such Person and its Consolidated Subsidiaries
at such time, plus (b) the Availability at such time.
"Consolidated Current Liabilities" means, for any Person at any time,
the current liabilities of such Person and its Consolidated Subsidiaries at such
time, but, in the case of Parent, excluding current maturities of Long Term Debt
of Parent and its Consolidated Subsidiaries outstanding at such time.
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"Consolidated Subsidiary" or "Consolidated Subsidiaries" means, for any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial statements.
"Continue," "Continuation," and "Continued" shall refer to the
continuation pursuant to Section 2.3(c) and/or Article IV 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 2.3(c) and/or Article IV hereof of one Type of Loan into
another Type of Loan.
"Credit Parties" means, collectively, Parent, Borrower and each other
Subsidiary of Parent and "Credit Party" means any one of the foregoing.
"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 have not been outstanding for more than ninety (90) days past the invoice
date, (g) all obligations of such Person secured by a Lien on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is non-recourse to the
credit of that Person, and (h) all liability of such Person as a general partner
of a partnership for obligations of such partnership of the nature described in
(a) through (g) 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 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) two percent (2%), plus (ii) 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) two percent (2%), plus (b) the
Applicable Margin, plus (c) the Eurodollar Rate for such Borrowing for such
Interest Period as provided in Section 2.3 hereof, and thereafter, the rate
provided for above in this definition).
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"Designated Stockholders" means Chase Venture Capital Associates, L.P.,
Warburg, Xxxxxx & Company, as nominee, Natural Gas Partners V, L.P. and First
Union Capital Partners, Inc.
"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.
"Documentary Agent" means BankBoston, N.A. in its capacity as
documentary agent for the credit facility provided pursuant hereto or any
successor thereto.
"Dollars" means the lawful currency of the United States of America.
"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 1 hereto as its Domestic Lending
Office, (b) its office located at its address identified on the Register (as
defined in Section 14.10(b)) as its Domestic Lending 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 (i) a Bank, (ii) an Affiliate of a Bank, and
(iii) 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 14.10, Borrower, such approval not to be unreasonably
withheld or delayed by Borrower and such approval to be deemed given by Borrower
if no objection is received by the assigning Bank and Administrative Agent from
Borrower within five (5) 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.
"Environmental Liability" means, without duplication, any liability,
loss, fine, penalty, charge, Lien, damage, cost, or expense of any kind that
results directly or indirectly, in whole or
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in part (a) from the violation of any Applicable Environmental Law, (b) from the
release or threatened release of any Hazardous Substance, (c) from removal,
remediation, or other actions in response to the release or threatened release
of any Hazardous Substance, (d) from actual or threatened damages to natural
resources, (e) from the imposition of injunctive relief or other orders, (f)
from personal injury, death, or property damage which occurs as a result of any
Credit Party's use, storage, handling, or the release or threatened release of a
Hazardous Substance, or (g) from any environmental investigation performed at,
on, or for any real property owned by any Credit Party.
"Equity" means shares of capital stock or a partnership, profits,
capital or member interest, or options, warrants or any other right to
substitute for or otherwise acquire the capital stock or a partnership, profits,
capital or member interest of any Credit Party.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder as from time to time
in effect.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group including any Credit Party, or is
under common control with any Credit Party, as determined under Section 414(b),
(c), (m) or (o) of the Internal Revenue Code of 1986, as amended, and the
regulations and rulings issued thereunder.
"ERISA Event" means, with respect to any Credit Party and any ERISA
Affiliate, (a) a "reportable event" as defined in section 4043 of ERISA (other
than a reportable event not subject to the provision for thirty (30) days notice
to the PBGC under regulations issued under section 4043 of ERISA), (b) the
withdrawal of any Credit Party or any ERISA Affiliate from a Plan during a plan
year in which it was a "substantial employer" as defined in section 4001(a)(2)
of ERISA, (c) the filing of a notice of intent to terminate a Plan under section
4041(c) of ERISA, (d) the institution of proceedings to terminate a Plan by the
PBGC, (e) the failure to make required contributions which could result in the
imposition of a Lien under section 412 of the Internal Revenue Code of 1986, as
amended or section 302 of ERISA, or (f) any other event or condition which might
reasonably be expected to constitute grounds under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or the
imposition of any liability under Title IV of ERISA other than PBGC premiums due
but not delinquent under Section 4007 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 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 14.10(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.
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"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 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.
"Exhibit" refers to an exhibit attached to this Agreement and
incorporated herein by reference, unless specifically provided otherwise.
"Facility Guaranty" means a Guaranty substantially in the form of
Exhibit B attached hereto to be executed by Parent and each existing and future
Subsidiary of Parent (other than Borrower) in favor of Banks, pursuant to which
Parent and each such Subsidiary of Parent 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 such day 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 no such rate is so published on
such next succeeding Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate charged to Administrative Agent (in its individual
capacity) on such day on such transactions as determined by Administrative
Agent.
"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.
"First Tier Subsidiary" has the meaning given such term in the
definition of "Subsidiary Pledge Agreement."
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"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 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 a Person and its
Consolidated Subsidiaries, except that any accounting principle or practice
required to be changed by the said Accounting Principles Board or Financial
Accounting Standards Board (or other appropriate board or committee of the said
Boards) 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, 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.
"Hazardous Substance" means any pollutant, toxic substance, hazardous
waste, compound, element or chemical that is defined as hazardous, toxic,
noxious, dangerous or
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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 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 percentage 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
two percent (2%) of the Recognized Value of all such Borrowing Base Properties.
"Interest Period" means, with respect to each Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending one (1), two (2),
three (3), and, if available to all Banks, six (6), nine (9) and twelve (12)
months thereafter, as Borrower may elect in the applicable Request for
Borrowing; provided that:
(i) 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;
(ii) 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
(iii) below, end on the last Eurodollar Business Day of a
calendar month;
(iii) if any Interest Period includes a date on which any
payment of principal of any Eurodollar Loan is required to be
made hereunder, but does not end on such date, then (A) the
principal amount of each Eurodollar Loan required to be repaid
on such date shall have an Interest Period ending on such
date, and (B) the remainder of each other Eurodollar Loan
shall have an Interest Period determined as set forth above;
and
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(iv) no Interest Period applicable to a Eurodollar Loan 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.
"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.
"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 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
Outstanding Credit to the Borrowing Base in effect on the date such Letter of
Credit is issued in accordance with the table below:
Ratio of Outstanding Credit to Per Annum
Borrowing Base Letter of Credit Fee
----------------------------- --------------------
< or = to .50 to 1 0.750%
----------------------------- --------------------
> .50 to 1 < or = to .75 to 1 1.000%
----------------------------- --------------------
> .75 to 1 < or = to .90 to 1 1.250%
----------------------------- --------------------
> .90 to 1 1.500%
----------------------------- --------------------
"Letter of Credit Fronting Fee" means, with respect to any Letter of
Credit issued hereunder, a fee equal to one hundred twenty five one thousandths
of one percent (.125%) per annum of the stated amount of such Letter of Credit
for the period the Letter of Credit is outstanding.
"Letters of Credit" means letters of credit issued for the account of
Borrower pursuant to Section 2.1(b).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, financing statement, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, Borrower and its
Subsidiaries shall be deemed to own subject to a
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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" means an advance by a Bank to or for the account of Borrower
pursuant to such Bank's Commitment, including any advance to satisfy any
obligation of any Credit Party under any of the Loan Papers. Each Loan shall be
either a Base Rate Loan or a Eurodollar Loan as selected by Borrower.
"Loan Papers" means this Agreement, the Notes, each Parent Pledge
Agreement, each Subsidiary Pledge Agreement, each Facility Guaranty, and all
other certificates, documents or instruments delivered in connection with this
Agreement, as the foregoing may be amended from time to time.
"Long Term Debt" means Debt which matures more than one year from the
date it is incurred, or which can be extended at the option of the obligor(s) to
a date more than one year from the date it is incurred.
"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.
"Material Adverse Change" means any circumstance or event that has had
a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on (a) the
assets, properties, financial condition or business operations of any Credit
Party, (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 Paper against any Credit Party (to the extent a party
thereto), or (d) the validity, perfection or priority of any Lien on any of the
assets 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 $250,000.
"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 Loans owed to such Bank at such time to exceed the maximum
amount which such Bank would be allowed to contract for, charge, take,
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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 "interest rate ceiling" from time to time in effect under Chapter
1D of the Texas Credit Title, Revised Civil Statutes of Texas, 1925, as amended,
substituted for or restated, or, if permitted by applicable Law and effective
upon the giving of the notices required by such Chapter 1D (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 1D,
whichever Administrative Agent (with the approval of Required Banks) shall elect
to substitute for the "interest rate ceiling," and vice versa, each such
substitution to have the effect provided in such Chapter 1D, 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 1D.
"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, communitization, 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.
"Monthly Date" means the last day of each calendar month.
"NationsBank" means NationsBank, N.A., a national banking association.
"NMS" means NationsBanc Xxxxxxxxxx Securities LLC.
"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
the Loans made by such Bank, together with all modifications, extensions,
renewals and rearrangement thereof, and "Notes" means all of such Notes
collectively.
"Notice of Continuation or Conversion" has the meaning set forth in
Section 2.3(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 each Agent or to any Bank or any Affiliate of any Bank
arising pursuant to the Loan Papers or pursuant to any 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.
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"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 aggregate
Letter of Credit Exposure related to Letters of Credit to be issued on such
date, plus (b) the aggregate outstanding principal balance of the Loans on such
date, including the amount of any Borrowing to be made on such date.
"Parent" means Encore Acquisition Partners, Inc., a Delaware
corporation.
"Parent Pledge Agreement" means a Pledge Agreement substantially in the
form of Exhibit D attached hereto to be executed by Parent, pursuant to which
Parent shall pledge to Administrative Agent, for the ratable benefit of Banks,
all of the issued and outstanding Equity owned by Parent of each existing or
hereafter created or acquired Subsidiary of Parent to secure the Obligations.
"Parent Shell Guaranty" means that certain Guaranty dated March 12,
1999, executed by Parent in favor of Shell, pursuant to which Parent guarantees
the obligations of Borrower under the Shell Acquisition Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Business Activities" means, with respect to I. Xxx Xxxxxxx,
(i) the management of personal business interests, and (ii) serving in the
capacity of a non-management director and/or non-management chairman of other
businesses; provided, that such activities do not consume a material part of I.
Xxx Xxxxxxx'x business time
"Permitted Encumbrances" means with respect to any asset:
(a) Liens (if any) 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, zoning
restrictions, 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 the properties of
any Credit Party that are customarily granted in the oil and gas industry;
(c) contractual or statutory Liens securing obligations for
labor, services, materials and supplies furnished to Mineral Interests and Liens
arising under joint operating agreements entered into in the ordinary course of
business, in each case securing obligations which are not delinquent (except to
the extent permitted by Section 9.7);
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(d) contractual or statutory mechanic's, materialmen's,
warehouseman's, journeyman's and carrier's Liens and other similar Liens arising
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 not required to be paid subject to
satisfaction of the conditions set forth in 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) Liens evidenced by, or created pursuant to, the Borrower
Shell Pledge Agreement encumbering the collateral described therein;
(h) defects and deficiencies in title to any Shell Property to
the extent that Borrower has been indemnified by Shell from any loss or damage
which may be sustained by it as a result of such defect or deficiency pursuant
to an Indemnification Agreement in form and substance reasonably acceptable to
Administrative Agent; and
(i) Liens encumbering assets securing Debt incurred to finance
the purchase of such assets, provided, that (i) the principal amount of the Debt
secured by a purchased asset shall not exceed one hundred percent (100%) of the
purchase price of such asset, (ii) such Liens shall not extend to or encumber
any other asset of any Credit Party, (iii) such Liens shall attach to such
purchased asset substantially simultaneously with the purchase of such asset,
and (iv) the aggregate amount of all Debt secured by such Liens shall not exceed
$6,000,000.
"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 in
a Subsidiary that has provided a Facility Guaranty and the Equity of which has
been pledged to Administrative Agent pursuant to a Parent Pledge Agreement or a
Subsidiary Pledge Agreement; and (e) other Investments made with proceeds of
(and in an amount not exceeding the amount of) substantially contemporaneous
contributions to the common equity of Parent.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
Governmental 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
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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 NationsBank as its prime rate, which rate may not be the lowest rate
of interest charged by NationsBank to its customers.
"Property Description" means the legal description of Mineral Interests
attached to the Certificate of Ownership Interests.
"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 IPO" means an underwritten initial public offering of Common
Stock of Parent which results in net proceeds to Parent of not less than
$25,000,000.
"Quarterly Date" means the last day of each March, June, September and
December.
"Recognized Value" means, with respect to Mineral Interests, the
discounted present value of the estimated net cash flow to be realized from the
production of Hydrocarbons from such Mineral Interests as determined by
NationsBank for purposes of determining the portion of the Borrowing Base which
it attributes to such Mineral Interests in accordance with Article V hereof.
"Redetermination" means (i) any Scheduled Redetermination, or (ii) any
Special Redetermination.
"Redetermination Date" means (a) with respect to any Scheduled
Redetermination, each June 1, 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.
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"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 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.
"Rejected Shell Properties" has the meaning set forth in Section 7.1(g)
hereof.
"Request for Borrowing" has the meaning set forth in Section 2.1(d)
hereof.
"Request for Letter of Credit" has the meaning set forth in Section
2.1(g) hereof.
"Required Banks" means Banks holding at least sixty six and two-thirds
percent (66_%) of the Total Commitment.
"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 pursuant to Section
5.1 shall be prepared by the Approved Petroleum Engineer. Each other Reserve
Report shall be prepared by 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 Shell Reserve Report shall be
considered a 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 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 "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, (other than Distributions by one Credit Party to
another Credit Party) or (b) the retirement, redemption or prepayment prior to
scheduled maturity by such Person or any Affiliates of such Person of any Debt
of such Person other than the Obligations.
"Schedule" means a "schedule" attached to this Agreement and
incorporated herein by reference, unless specifically indicated otherwise.
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"Scheduled Redetermination" means any Redetermination of the Borrowing
Base pursuant to Section 5.2.
"Section" refers to a "section" or "subsection" of this Agreement
unless specifically indicated otherwise.
"Shell" means, collectively, Shell Western E&P, Inc. and Shell Onshore
Ventures, Inc., each a Delaware corporation, and shall also mean either of such
entity (as applicable).
"Shell Acquisition" means the purchase by Borrower of the Shell
Property pursuant to the Shell Acquisition Agreement.
"Shell Acquisition Agreement" means that certain Purchase and Sale
Agreement dated as of March 12, 1999, by and between Borrower and Shell.
"Shell Acquisition Documents" means the Shell Acquisition Agreement,
the Parent Shell Guaranty, the Borrower Shell Indemnification Agreement, the
Borrower Shell Pledge Agreement and all agreements, assignments, deeds,
conveyances, certificates and other documents and instruments now or hereafter
executed and delivered by or between Borrower and Shell pursuant to the Shell
Acquisition Agreement or in connection with the Shell Acquisition.
"Shell Property" means the "Property" as defined in the Shell
Acquisition Agreement.
"Shell Reserve Report" means the internal engineering and economic
analysis of the Shell Property prepared as of June 1, 1999 by Borrower's
in-house staff.
"Shell Security Documents" means the Parent Shell Guaranty, the
Borrower Shell Indemnification Agreement and the Borrower Shell Pledge
Agreement.
"Shell Security Obligations" means the Debt, obligations and other
liabilities of Parent and Borrower evidenced by the Shell Security Documents.
"Sole Lead Arranger" means NationsBanc Xxxxxxxxxx Securities LLC in its
capacity as sole lead arranger for the credit facility hereunder or any
successor thereto.
"Solvent" means, with respect to any Person on a particular date, the
condition that, on such date (a) the fair value of the property of such Person
is greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair salable value of
the assets of such Person is not less than the amount that will be required to
pay the liability of such Person on its debts as they become absolute and
matured, and (c) such Person is able to realize upon its assets and pay its
debts and other liabilities, contingent obligations and other commitments as
they mature in the normal course of business.
"Special Redetermination" means any Redetermination of the Borrowing
Base pursuant to Section 5.3.
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"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).
"Subsidiary Pledge Agreement" means a Pledge Agreement substantially in
the form of Exhibit E attached hereto to be executed by each existing and future
Subsidiary of Parent (any such Subsidiary is referred to herein as a "First Tier
Subsidiary"), pursuant to which such First Tier Subsidiary shall pledge to
Administrative Agent, for the ratable benefit of Banks, all of the issued and
outstanding Equity owned by such First Tier Subsidiary of each existing or
hereafter created Subsidiary of such First Tier Subsidiary to secure the
Obligations.
"Syndication Agent" means First Union National Bank in its capacity as
syndication agent for the credit facility provided pursuant hereto or any
successor thereto.
"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 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 May 7, 2004.
"Total Commitment" means the Commitments of all Banks in an initial
aggregate amount of $300,000,000 as such amount may be reduced from time to time
pursuant to Section 2.5.
"Tribunal" means any state, commonwealth, federal, foreign, territorial
or other court or governmental body, subdivision, agency, department,
commission, board, bureau or instrumentality of a governmental body.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or
Eurodollar Loan).
"Voting Stock" of any Person shall mean capital stock of such Person
which ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
SECTION 1.2. 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 prepared in accordance with GAAP,
applied on a basis consistent with the most recent audited consolidated
financial statements of Parent and its Consolidated Subsidiaries delivered to
Banks prior to the date hereof except for changes concurred in by Parent'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.
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SECTION 1.3. 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 1.4. Money. Unless expressly stipulated otherwise, all
references herein to "dollars," "money," "funds," "payments," "prepayments" or
other similar financial or monetary terms, are references to currency of the
United States of America.
ARTICLE II
THE CREDIT
SECTION 2.1. Commitments. (a) Each Bank severally agrees, subject to
Sections 2.1(c), 2.1(d), 7.1, 7.2 and 7.4 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 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 (i) 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) made from 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 2.1(a), repay amounts borrowed and
request new Borrowings to be made under this Section 2.1.
(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, 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, or
(z) the Borrowing Base, and (ii) Borrower would be entitled to a Borrowing under
Sections 2.1(a), 2.1(c) and 2.1(d) 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 shall execute and
deliver to Administrative Agent, Administrative Agent's customary letter of
credit application (the form of letter of credit application customarily used by
Administrative Agent on the date hereof is attached hereto as Exhibit F). Each
Letter of Credit shall be in the minimum amount of $10,000 and shall be in form
and substance reasonably 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
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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) 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 2.1(b).
Immediately upon the Notes becoming due and payable pursuant to the
provisions of Section 12.1 hereof, an amount equal to the aggregate existing
Letter of Credit Exposure of all Banks shall be deemed to be forthwith due and
owing by Borrower to Banks as of the date such Notes become due and payable
pursuant to Section 12.1 hereof, and 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.
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 it 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
2.1(b). Whenever Borrower is required to make deposits under this Section 2.1(b)
and fails to do so on the day such deposit is due, Administrative Agent or any
Bank may, without prior 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 under a Facility
Guaranty, or any other party liable for repayment of the Obligations. Borrower's
obligation to pay such amounts as provided herein shall be absolute and
unconditional and without regard to whether any beneficiary of any such Letter
of Credit has attempted to draw down all or a portion of such amount under the
terms of any such Letter of Credit, and shall not be subject to any defense or
be affected by any right of setoff, counterclaim or recoupment which Borrower
may now have or hereafter have against any such beneficiary, any Bank and/or
Administrative Agent or any other Person for any reason whatsoever.
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
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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 paragraph will continue until all Letters of Credit have
expired and all reimbursement obligations with respect thereto have been paid in
full by Borrower.
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 Bank's 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 2.1(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
such indemnified party in connection with actions taken under Letters of Credit
or in connection therewith (including losses resulting from the negligence of
any 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 wilful
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 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. 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 collectability thereunder. Administrative
Agent does not assume any responsibility for the financial condition of any
Credit Party or for the performance of any obligation of any Credit Party.
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 DO OR
REFRAIN FROM DOING IN THE EXERCISE OF ITS
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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, any Credit Party, or any
Affiliate of any Bank or any Credit Party, 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 2.1(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 2.1(b).
(d) In order to request any Borrowing under this Section 2.1,
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 G 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
(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.
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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. 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 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 or waived pursuant to
a written waiver which conforms to the requirements of Section 14.5,
Administrative Agent will make the funds so received from Banks available to
Borrower by (at Borrower's option) (i) wiring the funds to or for the account of
Borrower, or (ii) depositing the funds in Borrower's account with Administrative
Agent.
(e) The failure of any Bank to remit its Commitment Percentage
of any requested Borrowing shall not relieve any other Bank of its obligation to
remit its Commitment Percentage of that Borrowing. If any Bank wrongfully fails
to so remit its Commitment Percentage (such Bank being referred to as
"Non-Funding Bank"), all conditions to the related Borrowing have been
satisfied, and that related Borrowing is in compliance with Section 2.1, then:
(i) Administrative Agent shall make available such
funds as shall have been received by it from the
other Banks in accordance with clause (d) above; and
(ii) Administrative Agent shall use good faith
efforts to obtain one or more financial institutions,
reasonably acceptable to Borrower, to replace the
Non-Funding Bank, but neither any Agent nor any other
Bank shall have any liability or obligation
whatsoever as a result of the failure to obtain a
replacement for Non-Funding Bank.
IN ANY EVENT, ANY NON-FUNDING BANK SHALL INDEMNIFY, DEFEND, AND HOLD EACH AGENT
AND EACH OTHER BANK HARMLESS FROM AND AGAINST ANY AND ALL LOSSES, DAMAGES,
LIABILITIES, OR EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE ATTORNEY'S
FEES AND INTEREST AT THE FEDERAL FUNDS RATE FOR FUNDS ADVANCED BY ADMINISTRATIVE
AGENT OR ANY OTHER BANK ON ACCOUNT OF ANY NON-FUNDING BANK) WHICH THEY MAY
SUSTAIN OR INCUR BY REASON OF OR IN CONSEQUENCE OF NON-FUNDING BANK'S FAILURE OR
REFUSAL TO ABIDE BY ITS OBLIGATIONS UNDER THIS AGREEMENT. ADMINISTRATIVE AGENT
MAY SET OFF AGAINST PAYMENTS DUE TO ANY NON-FUNDING BANK UNDER THE TERMS OF THIS
AGREEMENT FOR THE
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CLAIMS OF ADMINISTRATIVE AGENT AND OTHER BANKS AGAINST NON-FUNDING BANK.
(f) Absent contrary written notice from a Bank, Administrative
Agent may assume that each Bank has made its Commitment Percentage of the
requested Borrowing available to Administrative Agent on the date of the
relevant Borrowing, and Administrative Agent may, in reliance upon such
assumption (but shall not be required to), make available to Borrower a
corresponding amount. If a Bank fails to make its Commitment Percentage of any
requested Borrowing available to Administrative Agent on the relevant Borrowing
Date, Administrative Agent may recover the applicable amount on demand (i) from
that Bank together with interest, commencing on the date of the relevant
Borrowing and ending on (but excluding) the date Administrative Agent recovers
the amount from that Bank, at an annual interest rate equal to the Federal Funds
Rate, or (ii) if that Bank fails to pay its applicable amount upon demand, then
from Borrower together with interest, commencing on the date of the relevant
Borrowing and ending on (but excluding) the date Administrative Agent recovers
the amount from Borrower, at an annual interest rate equal to the Base Rate.
(g) 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 H hereto, shall be
accompanied by Administrative Agent's duly completed and executed letter of
credit application 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.
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. No later than 12:00 noon (Dallas, Texas
time) on the date each Letter of Credit is requested to be issued, 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.
SECTION 2.2. Notes. The Loans made by each Bank shall be evidenced by a
single Note payable to the order of such Bank in an amount equal to such Bank's
Commitment.
SECTION 2.3. Interest Rates; Payments. (a) The principal amount of each
Base Rate Loan outstanding from day to day shall bear interest at a rate per
annum equal to the Base Rate
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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
principal of each 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 having an Interest Period of more than three
(3) 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 2.3, Borrower shall have
the option of having all or any portion of the principal outstanding under the
Loan be a Base Rate Loan and/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 the principal balance of each Base
Rate Loan and Eurodollar Loan shall be in a minimum amount of $1,000,000 and
shall be in an amount which is an integral multiple of $100,000. 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 I 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 at least 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 a 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 2.3(c) on the minimum amount of Eurodollar Loans, Borrower
shall have the right to Convert all or any part of the principal 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 Days prior to 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 2.3 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
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Rate Loan on the last day of each applicable Interest Period. Borrower shall not
be permitted to have more than five (5) Interest Periods in effect with respect
to Eurodollar Loans at any time.
(d) Notwithstanding anything to the contrary set forth in
Section 2.3(a) or (b) above, all overdue principal and, to the extent permitted
by law, overdue interest, shall bear interest from the date due, payable on
demand, for each day until paid 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 Loans 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, to the extent permitted by
law, reduce the rate of interest on the affected 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 computed by reference to the
Eurodollar Rate shall be computed based on the number of actual days elapsed
assuming that each calendar year consisted of 360 days. Interest payable
hereunder computed by reference to the Base Rate shall be computed based on the
actual number of days elapsed assuming that each calendar year consisted of 365
or 366 (as applicable) days.
SECTION 2.4. Mandatory Prepayments Resulting from Borrowing Base
Deficiency. Except with respect to a Special Redetermination pursuant to Section
5.3(a)(i) or reduction in the initial Borrowing Base as provided in Section 5.5,
in the event a Borrowing Base Deficiency exists after giving effect to any
Redetermination, Borrower shall, at its option, either (a) eliminate such
Borrowing Base Deficiency by making a single mandatory prepayment of principal
on the Loans in an amount equal to the entire amount of such Borrowing Base
Deficiency on the first Monthly Date following the date on which such Borrowing
Base Deficiency is determined to exist, or (b) eliminate such Borrowing Base
Deficiency by making six (6) consecutive mandatory prepayments of principal on
the Loan each of which shall be in the amount of one sixth (1/6th) of the amount
of such Borrowing Base Deficiency commencing on the first Monthly Date following
the date on which such Borrowing Base Deficiency is determined to exist and
continuing on each Monthly Date thereafter. If a Borrowing Base
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Deficiency cannot be eliminated pursuant to this Section 2.4 by prepayment of
the Loan in full (as a result of outstanding Letter of Credit Exposure), on each
Monthly 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 2.1(b), in 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 Loan on the date such Borrowing Base Deficiency
is first determined to occur). In the event a Borrowing Base Deficiency shall
occur (or an increase in any pre-existing Borrowing Base Deficiency shall occur)
as a result of a Special Redetermination pursuant to Section 5.3(a)(i) or
reduction in the initial Borrowing Base as provided in Section 5.5, Borrower
shall be required to make a mandatory prepayment of the Loans within thirty (30)
days following receipt of notice of such Borrowing Base Deficiency (or increase
in any pre-existing Borrowing Base Deficiency) in an amount equal to the amount
of such Borrowing Base Deficiency (or increase in any pre-existing Borrowing
Base Deficiency).
SECTION 2.5. Voluntary Reduction of Total Commitment. Borrower may, by
notice to Administrative Agent five (5) Domestic Business Days prior to the
effective date of any such reduction, permanently reduce the Total Commitment
(and thereby permanently reduce the Commitment of each Bank ratably in
accordance with such Bank's Commitment Percentage) 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 Loans in an amount
sufficient to cause the principal balance of the Loans then outstanding to be
equal to or less than the Total Commitment as thereby reduced (and
Administrative Agent shall distribute to each Bank in like funds that portion of
any such payment as is required to cause the principal balance of the Loan held
by such Bank to be not greater than its Commitment as thereby reduced).
Notwithstanding the foregoing, Borrower shall not be permitted to voluntarily
reduce the Total Commitment (a) if, as a result of such reduction, Borrower
would be required to prepay all or any portion of the principal amount of any
Eurodollar Loan prior to the last day of the Interest Period applicable thereto,
or (b) to an amount less than the aggregate Letter of Credit Exposure of all
Banks.
SECTION 2.6. Termination of Commitments; Final Maturity of Loans. The
Total Commitment (and the Commitment of each Bank) shall terminate, and the
entire outstanding principal balance of the Loans, 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 2.7. Voluntary Prepayments. Borrower may, subject to the other
provisions of this Agreement, upon (A) one (1) Domestic Business Day advance
notice to Administrative Agent with respect to Base Rate Borrowings, and (B)
three (3) Domestic Business Days advance notice to Administrative Agent with
respect to Eurodollar Borrowings, prepay the principal of the Loan in whole or
in part. Any partial prepayment shall be in a minimum amount of $1,000,000 and
shall be in an integral multiple of $100,000 and to the extent made with respect
to any Eurodollar Loan, may be made only on the last day of the Interest Period
applicable thereto.
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SECTION 2.8. Unused 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 computed on the basis of actual days elapsed and as if each
calendar year consisted of 360 days) of the average daily Availability from and
after July 1, 1999 for the Fiscal Quarter (or portion thereof) ending on the
date such payment is due. Notwithstanding anything to the contrary contained
herein, in the event Borrower elects to extend the Early Termination Date (as
provided in Section 7.4 hereof) to a date beyond June 30, 1999, the accrual of
the commitment fee described in this Section 2.8 shall, notwithstanding such
election, commence on July 1, 1999 and shall, until the initial Borrowing
hereunder, be computed on Availability of $95,000,000.
SECTION 2.9. Agency and other Fees. Borrower shall pay to each Agent
and their Affiliates such other fees and amounts as Borrower shall be required
to pay to each such Agent and their Affiliates from time to time pursuant to any
separate agreement between Borrower and each such Agent or such Affiliates. Such
fees and other amounts shall be retained by each such Agent and their
Affiliates, and no Bank (other than Administrative Agent) shall have any
interest therein. Administrative Agent may disburse any fees paid to
Administrative Agent and its Affiliates pursuant to this Section 2.9 in any
manner Administrative Agent desires in its sole discretion.
ARTICLE III
GENERAL PROVISIONS
SECTION 3.1. Delivery and Endorsement of Notes. Promptly after receipt
of the executed Notes from Borrower pursuant to Section 7.1(a)(i),
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, amount and type of each Loan made by it, 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 Note a continuation of any such schedule as
required.
SECTION 3.2. General Provisions as to Payments. (a) Borrower shall make
each payment of principal of, and interest on, the Loans and all fees payable
hereunder shall be paid not later than 1:00 p.m. (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 1 hereto.
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
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such payment received by Administrative Agent for the account of Banks. Whenever
any payment of (a) principal of, or interest on, any portion of any Base Rate
Loan, or (b) 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
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 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) If no Event of Default then exists, all principal payments
received by Banks shall be applied first to Eurodollar Loans outstanding with
Interest Periods ending on the date of such payment, then to Base Rate Loans,
and then to Eurodollar Loans, next maturing until such principal payment is
fully applied.
(c) After the occurrence and during the existence 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 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 2.9, fifth to the
payment of any unpaid fees required pursuant to Sections 2.1(b) and 2.8, sixth
to payment to each Bank of its Commitment Percentage of the outstanding
principal of the Loans and accrued but unpaid interest thereon, and seventh to
establish the deposits required in Section 2.1(b). All payments received by a
Bank after the occurrence and during the continuance of an Event of Default for
application to the principal of its Loans shall be applied by such Bank in the
manner provided in Section 3.2(b).
ARTICLE IV
CHANGE IN CIRCUMSTANCES
SECTION 4.1. 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:
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(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 by the jurisdiction in which such Bank has its
principal office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, 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 Borrower shall pay to such Bank
within five (5) days after 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 4.1(a), Borrower may, by notice to such Bank (with a
copy to Administrative Agent), suspend the obligation of such Bank to make or
Continue Loans of the Type with respect to which such compensation is requested,
or to Convert Loans of any other Type into Loans of such Type, until the event
or condition giving rise to such request ceases to be in effect (in which case
the provisions of Section 4.4 shall be applicable); provided that such
suspension shall not affect the right of such Bank to receive the compensation
so requested.
(b) If any Bank shall have determined that the adoption, after
the date hereof, 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 made after the date hereof 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 within
five (5) days after demand 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
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Bank to compensation pursuant to this Section 4.1 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 4.1 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.
(d) The provisions of the undertakings and indemnifications in
this Section 4.1 shall survive for one year after the satisfaction and payment
of the Obligations and terminations of this Agreement.
SECTION 4.2. Limitation on Types 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 in good faith (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, and so long
as such condition remains in effect, Banks shall be under no obligation to make
additional Eurodollar Loans for such Interest Period, Continue Eurodollar Loans
for such Interest Period, or to Convert Loans of any other Type into Eurodollar
Loans for such Interest Period, and Borrower shall, on the last day(s) of the
then current Interest Period(s) for the outstanding Eurodollar Loans for such
Interest Period, either prepay such Eurodollar Loans or Convert such Eurodollar
Loans into another Type of Loan in accordance with the terms of this Agreement.
SECTION 4.3. 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 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 4.4 shall be
applicable).
SECTION 4.4. Treatment of Affected Loans. If the obligation of any Bank
to make a Eurodollar Loan or to Continue, or to Convert Loans of any other Type
into, Loans of a particular Type shall be suspended pursuant to Section 4.1 or
4.3 hereof (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 Base Rate Loans on the last day(s) of the then
current Interest Period(s) for Affected Loans (or, in the case of a Conversion
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required by Section 4.3 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 4.1
or 4.3 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 its Base Rate
Loans; and
(b) all Loans that would otherwise be made or Continued by
such Bank as Loans of the Affected Type shall be made or Continued instead as
Base Rate Loans, and all Loans of such Bank that would otherwise be Converted
into Loans of the Affected Type shall be Converted instead into (or shall remain
as) Base Rate Loans.
If such Bank gives notice to Borrower (with a copy to Administrative Agent) that
the circumstances specified in Section 4.1 or 4.3 hereof that gave rise to the
Conversion of such Bank's Affected Loans pursuant to this Section 4.4 no longer
exist (which such Bank agrees to do promptly upon such circumstances ceasing to
exist) at a time when Loans of the Affected Type made by other Banks are
outstanding, such Bank's Base Rate Loans shall be automatically Converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Loans of the Affected Type, to the extent necessary so that, after giving effect
thereto, all Loans held by Banks holding 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.
SECTION 4.5. 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
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
Loans pursuant to Section 12.1) on a date other than the last day of the
Interest Period for such Loan; or
(b) any failure by 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, or notice of prepayment, Continuation, or
Conversion under this Agreement.
SECTION 4.6. Taxes. (a) Any and all payments by Borrower to or for the
account of any Bank or any 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, and all liabilities with respect thereto, excluding, in the case
of each Bank and any Agent, Taxes imposed on its income, and franchise Taxes
imposed on it (or on any other Person with whom such Bank, Applicable Lending
Office or Agent files a consolidated, combined, unitary or similar Tax return),
and excluding interest and penalties incurred as a result of the gross
negligence or willful misconduct of any Bank,
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Applicable Lending Office or Agent. If Borrower shall be required by Law to
deduct any Taxes from or in respect of any sum payable under this Agreement or
any other Loan Paper to any Bank or any Agent, subject to the provisions of
Section 4.6(c) hereof, (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 4.6) such Bank or such 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 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 each Agent for
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 4.6) paid by such Bank or such Agent (as the case may be) and
any liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto. This indemnification shall be made within thirty (30) days
from the date such Bank or Agent makes written demand therefor, which demand
shall contain an invoice itemizing in reasonable detail the Taxes, Other Taxes
and liability which is subject to Borrower's indemnification according to this
Section 4.6.
(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 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 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 4.6(d) (unless such failure is due to a change in treaty, Law, or
regulation occurring subsequent to the date on
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which a form originally was required to be provided), such Bank shall not be
entitled to indemnification under Section 4.6(a), 4.6(b) or 4.6(c) with respect
to 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 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 Taxes.
(f) If Borrower is required to pay additional amounts to or
for the account of any Bank pursuant to this Section 4.6, 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 good faith judgment of such Bank,
is not otherwise disadvantageous to such Bank.
(g) Within thirty (30) days after the date of any payment of
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 4.6 shall survive the termination of the Commitments and the
payment in full of the Notes.
SECTION 4.7. 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, 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 through the
purchase of deposits having a maturity corresponding to the last day of the
Interest Period applicable to such Eurodollar Loan and bearing an interest rate
equal to the Adjusted Eurodollar Rate for such Interest Period.
ARTICLE V
BORROWING BASE
SECTION 5.1. Reserve Report; Proposed Borrowing Base. As soon as
available and in any event by March 31 of each year commencing March 31, 2000,
Borrower shall deliver to Administrative Agent and each Bank a Reserve Report
prepared as of the immediately preceding December 31. 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).
SECTION 5.2. Scheduled Redeterminations of the 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 on or
prior to the next Redetermination Date
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(or such date promptly thereafter as reasonably possible based on the
engineering and other information available to Banks). Any Borrowing Base which
becomes effective as a result of any Redetermination of the Borrowing Base shall
be subject to the following restrictions: (a) such Borrowing Base shall not
exceed the Borrowing Base requested by Borrower pursuant to Sections 5.1 or 5.3
(as applicable), (b) such Borrowing Base shall not exceed the Total Commitment
then in effect, (c) to the extent such Borrowing Base represents an increase
from the Borrowing Base in effect prior to such Redetermination, such Borrowing
Base shall be approved by all Banks, and (d) any Borrowing Base which represents
a decrease in the Borrowing Base in effect prior to such Redetermination, or a
reaffirmation of such prior 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; provided, that
such assumptions shall be consistent with the pricing assumptions made by such
Banks with respect to similar credits (it being acknowledged that such
assumptions may vary from Bank to Bank), (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, and (iv) 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 in effect prior to such Redetermination.
Promptly following any Redetermination of the Borrowing Base, Administrative
Agent shall notify Borrower of the amount of the Borrowing Base as redetermined,
which 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 make
(i) a Special Redetermination pursuant to Section 8.9, and (ii) other Special
Redeterminations of the Borrowing Base; provided, that, Required Banks and
Borrower shall be permitted to make only one (1) Special Redetermination
pursuant to this clause (ii) in each period between Scheduled Redeterminations.
Any request for a Special Redetermination shall be made pursuant to a written
notice to the other parties to this Agreement, and, in the case of a request by
Borrower, such notice shall be accompanied by a Reserve Report and a
notification 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 clause (a) above.
SECTION 5.4. Borrowing Base Deficiency. If a Borrowing Base Deficiency
exists after giving effect to any Redetermination, Borrower shall be obligated
to eliminate such Borrowing Base Deficiency by making the mandatory prepayments
of the Loans required by Section 2.4.
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SECTION 5.5. Initial Borrowing Base. Notwithstanding anything to the
contrary contained herein, the 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 $95,000,000; provided, that in
the event the Rejected Shell Properties have a Recognized Value of $6,000,000 or
greater, Required Banks may establish a lower initial Borrowing Base which gives
effect to Borrower's rejection of such properties, such lower initial Borrowing
Base to be reflected in a written notice from Administrative Agent to Borrower
delivered on or promptly following the Closing Date. Any action taken by
Required Banks hereunder to lower the initial Borrowing Base shall not
constitute or be deemed a Special Redetermination hereunder.
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 all of the issued and outstanding Equity owned by Parent of each
existing and future Subsidiary of Parent and all of the issued and outstanding
Equity owned by each First Tier Subsidiary of each existing and future
Subsidiary of any such First Tier Subsidiary. On or prior to the Closing Date,
Parent shall deliver to Administrative Agent the Parent Pledge Agreement, and
each First Tier Subsidiary shall deliver to Administrative Agent a Subsidiary
Pledge Agreement, in form and substance acceptable to Administrative Agent and
duly executed by Parent and each such First Tier Subsidiary, respectively,
together with (i) all certificates (or other evidence acceptable to
Administrative Agent) evidencing the issued and outstanding Equity of all such
Subsidiaries of every class which shall be duly evidenced or accompanied by
stock powers executed in blank (as applicable), and (ii) such 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 Equity required by this Section 6.1(a).
(b) On the date of the creation or acquisition by Parent of
any Subsidiary, or on the date of creation or acquisition by any First Tier
Subsidiary of any Subsidiary, Parent or such First Tier Subsidiary (as
applicable) shall execute and deliver to Administrative Agent a Parent 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 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) in the issued and outstanding Equity of each such
Subsidiary.
SECTION 6.2. Guarantees. Payment and performance of the Obligations
shall be fully guaranteed by Parent and each existing or hereafter created or
acquired Subsidiary of Parent (other than Borrower) pursuant to a Facility
Guaranty. On the date of creation or acquisition by Parent of any Subsidiary, or
on the date of creation or acquisition by any First Tier Subsidiary of
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any Subsidiary, Parent shall cause such Subsidiary to execute and deliver to
Administrative Agent a Facility Guaranty.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. Conditions to Effectiveness, Initial Borrowing and
Participation in Letter of Credit Exposure. The effectiveness of this Agreement,
the obligation of each Bank to loan its Commitment Percentage of the initial
Borrowing made hereunder, and the obligation of Administrative Agent to issue
(or cause another Bank to issue) the initial 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 date hereof:
(i) a Note payable to the order of each Bank, each in the
amount of such Bank's Commitment, duly executed and delivered
by Borrower;
(ii) the Parent Pledge Agreement duly executed and delivered
by Parent, together with (a) all certificates (or other
evidence acceptable to Administrative Agent) evidencing one
hundred percent (100%) of the issued and outstanding Equity of
each Subsidiary of Parent of every class, which certificates
shall be duly endorsed or accompanied by appropriate stock
powers (as applicable) executed in blank, and (b) such other
agreements and writings, including, without limitation, UCC-1
financing statements, in form and substance satisfactory to
Administrative Agent;
(iii) the Subsidiary Pledge Agreements duly executed and
delivered by each First Tier Subsidiary, together with (a) all
certificates evidencing one hundred percent (100%) of the
issued and outstanding Equity of each Subsidiary of each such
First Tier Subsidiary of every class, which certificates shall
be duly endorsed or accompanied by appropriate stock powers
(as applicable) executed in blank (provided that no such
certificates shall be required in the case of any Equity which
is not evidenced by a certificated security), and (b) such
other agreements and writings, including, without limitation,
UCC-1 financing statements, in form and substance satisfactory
to Administrative Agent;
(iv) Facility Guarantees duly executed and delivered by Parent
and each Subsidiary of Parent other than Borrower;
(v) a copy of the certificate of limited partnership, articles
of organization, articles or certificate of incorporation or
comparable charter documents, and all
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amendments thereto, of each Credit Party accompanied by a
certificate that such copy is true, correct and complete, and
dated within ten (10) days of the date hereof, issued by the
appropriate Governmental Authority of the jurisdiction of
incorporation or organization of each Credit Party, and
accompanied by a certificate of the Secretary or comparable
Authorized Officer of each Credit Party (as applicable) that
such copy is true, correct and complete on the date hereof;
(vi) a copy of the partnership agreement, bylaws or comparable
charter documents, and all amendments thereto, of each Credit
Party accompanied by a certificate of the Secretary or
comparable Authorized Officer of each Credit Party (as
applicable) that such copy is true, correct and complete as of
the date hereof;
(vii) certain certificates and other documents issued by the
appropriate Governmental Authorities of such jurisdictions as
Administrative Agent has requested relating to the existence
of each Credit Party and to the effect that each such Credit
Party is in good standing with respect to the payment of
franchise and similar Taxes and is duly qualified to transact
business in such jurisdictions;
(viii) a certificate of incumbency of all officers of each
Credit Party (to the extent a party to any Loan Paper) who
will be authorized to execute or attest to any Loan Paper,
dated as of the date hereof, executed by the Secretary or
comparable Authorized Officer of each such Credit Party (as
applicable);
(ix) 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 or comparable governing
authority of each Credit Party accompanied by certificates of
the Secretary or comparable officer of each such Credit Party
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 partnership
agreement, bylaws or other charter documents of such Credit
Party) by the unanimous written consent of the Board of
Directors or comparable governing authority of each Credit
Party (as applicable), 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 date hereof;
(x) copies of consents of partners of each Credit Party which
is a partnership (to the extent required) to the transactions
contemplated by this Agreement and the other Loan Papers, duly
executed by each partner of such Credit Party required to
consent to such transactions, accompanied by certificates of
the Secretary or comparable officer of Parent that such copies
are true and correct copies of all consents of the partners of
the Credit Parties required to be executed and granted
pursuant to such Credit Party's partnership agreement and all
other comparable charter documents of such Credit Party;
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(xi) an opinion of Xxxxxx & Xxxxxx L.L.P., special counsel to
Administrative Agent, in form and substance satisfactory to
Administrative Agent;
(xii) an opinion of Xxxxx, Xxxx & Xxxxxxx, special counsel for
the Credit Parties, dated as of the date hereof, favorably
opining as to the enforceability of each of the Loan Papers
and otherwise in form and substance satisfactory to
Administrative Agent and Banks;
(xiii) such UCC-11 search reports as Administrative Agent
shall require, prepared as of a date not more than twenty (20)
days prior to the Closing Date, conducted in such
jurisdictions and reflecting such names as Administrative
Agent shall request;
(xiv) a certificate dated the Closing Date 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;
(xv) a Certificate of Ownership Interests signed by an
Authorized Officer of Borrower in the form of Exhibit A
attached hereto dated the Closing Date;
(xvi) a copy of each Shell Acquisition Document and all other
material documents, instruments and agreements executed and/or
delivered by any Credit Party in connection with the Shell
Acquisition Agreement and the closing of the Shell
Acquisition, together with a certificate from an Authorized
Officer of Borrower dated the Closing Date certifying that (A)
such copies are accurate and complete and represent the
complete understanding and agreement of the parties with
respect to the subject matter thereof, and (B) subject only to
funding the initial Borrowing to be made hereunder, the Shell
Acquisition has been consummated on the terms set forth in
such Shell Acquisition Documents;
(xvii) certificates from Borrower's insurance broker dated not
more than twenty (20) days prior to the Closing Date setting
forth the insurance maintained by Borrower, and stating that
such insurance is in full force and effect and that all
premiums due have been paid; and
(xviii) a report or reports in form, scope and detail
acceptable to Administrative Agent and Banks setting forth the
results of a review of Borrower's Mineral Interests and other
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/or otherwise reveal any conditions or circumstances which
would reflect that the representations and warranties
contained in Section 8.14 hereof are inaccurate in any
respect.
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(b) Title Review. Administrative Agent or its counsel shall
have completed a review of title to that portion of the Shell Property that
represents seventy percent (70%) of the Recognized Value of all of the Shell
Property, and such review shall not have revealed any condition or circumstance
which would reflect that the representations and warranties contained in Section
8.9 hereof are inaccurate in any respect except with respect to the Rejected
Shell Properties.
(c) No Material Adverse Change. In the sole discretion of each
Bank, no Material Adverse Change shall have occurred with respect to any Credit
Party (including, without limitation, no Material Adverse Change with respect to
any facts or information regarding such Persons as represented to any Agent or
any Bank on or prior to the Closing Date).
(d) No Legal Prohibition. The transactions contemplated by
this Agreement shall be permitted by applicable Law and regulation and shall not
subject Administrative Agent, any Bank, or any Credit Party to any Material
Adverse Change.
(e) 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.
(f) Closing Fees. All fees and expenses of each Agent and
their Affiliates in connection with the credit facilities provided herein shall
have been paid, including, without limitation, any fees payable to each such
Agent or any Affiliate of each such Agent to be paid on the Closing Date
pursuant to Section 2.9.
(g) Shell Acquisition. Subject only to the disbursement and
application of the initial Borrowing, the Shell Acquisition shall have been
completed pursuant to, and in accordance with, the terms of the Shell
Acquisition Documents as in effect on the date hereof, and as a result thereof,
Borrower shall have acquired good and defensible title to all Shell Property,
free and clear of all Liens except Permitted Encumbrances, with the exception of
those Mineral Interests comprising a portion of the Shell Property which
Borrower elects not to purchase due to title or environmental defects. In the
event Borrower elects not to purchase certain Mineral Interests comprising the
Shell Property as a result of such environmental or title defects, it shall
deliver a written notice of such election to Administrative Agent (not less than
three (3) days prior to the Closing Date), specifying that portion of the Shell
Property which it has elected not to purchase (the "Rejected Shell Properties").
If the Recognized Value of such Rejected Shell Properties is greater than
$6,000,000 (in the aggregate), Required Banks shall have the right to lower the
initial Borrowing Base (prior to or subsequent to the Closing Date) as provided
in Section 5.5.
(h) Contribution. Subsequent to March 1, 1999, Borrower shall
have received contributions of not less than $80,000,000 in cash to the equity
of Borrower.
(i) 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
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shall request to substantiate any matters related to this Agreement and the
other Loan Papers, as Administrative Agent or any Bank shall request.
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 a Letter of Credit on the
date such Letter of Credit is to be issued 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;
(c) the representations and warranties of each Credit Party
contained in this Agreement and the other Loan Papers shall be true and correct
in all material respects on and as of the date of such Borrowing or issuance of
such Letter of Credit (as applicable), with the same effect as though such
representations and warranties had been made on and as of the date of such
Borrowing or issuance of such Letter of Credit (as applicable) or, if such
representations and warranties are expressly limited to particular dates, as of
such particular dates;
(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 Sections 7.2(b) through (f).
SECTION 7.3. 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.
SECTION 7.4. Effectiveness of Agreement; Early Termination.
Notwithstanding anything to the contrary contained in this Agreement (including,
without limitation, Section 2.1 hereof) or in any other Loan Paper, the
effectiveness of this Agreement, the obligation of each Bank to loan its
Commitment Percentage of the initial Borrowing, the obligation of Administrative
Agent to issue (or cause another Bank to issue) the initial Letter of Credit
hereunder, and all other rights, duties, obligations and agreements of Borrower,
Administrative Agent and Banks hereunder and under the other Loan Papers are
subject to the satisfaction of all conditions precedent set forth in Section 7.1
hereof, including, without limitation (subject only to
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the disbursement and application of the initial Borrowing) the completion of the
Shell Acquisition, and upon the satisfaction of each such condition, Borrower
and Administrative Agent shall enter into a Certificate of Effectiveness (herein
so called), in the form of Exhibit J hereto, confirming the satisfaction of each
such condition precedent and specifying the Closing Date. Upon the satisfaction
of each such condition and the execution and delivery of such Certificate of
Effectiveness, this Agreement shall become effective as of the Closing Date.
Notwithstanding the foregoing or anything to the contrary contained in this
Agreement (including, without limitation, Section 2.1 hereof) or in any other
Loan Paper, in the event that all conditions precedent set forth in Section 7.1
hereof, including, without limitation (subject only to the disbursement and
application of the initial Borrowing) the completion of the Shell Acquisition,
have not been satisfied and the Certificate of Effectiveness has not been
executed and delivered on or prior to June 30, 1999, Required Banks may, by
notice to Administrative Agent and Borrower, and subject to the right of
Borrower to extend such date beyond June 30, 1999 as set forth below, terminate
this Agreement and the Total Commitment (and the Commitment of each Bank) as of
any date specified in such notice (the "Early Termination Date"), whereupon this
Agreement and the Total Commitment (and the Commitment of each Bank) shall
terminate, and all accrued but unpaid fees hereunder and all other outstanding
Obligations shall be due and payable in full on the Early Termination Date.
Notwithstanding anything to the contrary contained herein, Borrower, at its
option, may extend the Early Termination Date to a date not later than July 30,
1999 by giving written notice to Administrative Agent on or before June 25, 1999
of (a) Borrower's election to extend the Early Termination Date, (b) the date to
which Borrower elects to extend such Early Termination Date (if other than July
30, 1999), and (c) the proposed Closing Date. If Borrower elects to so extend
the Early Termination Date, all of the other terms and conditions of this
Agreement and the other Loan Papers shall remain in full force and effect and
unmodified except that (i) Borrower shall have no further right to extend the
Early Termination Date, (ii) the commitment fee payable by Borrower pursuant to
Section 2.8 of this Agreement shall begin to accrue as of July 1, 1999, and
shall, until the initial Borrowing hereunder, be computed on Availability of
$95,000,000, and (iii) in the event all conditions precedent set forth in
Section 7.1 hereof have not been satisfied and the Certificate of Effectiveness
has not been executed and delivered on or prior to July 30, 1999, this Agreement
and the Total Commitment (and the Commitment of each Bank) shall automatically
terminate, and all accrued but unpaid fees hereunder and all other outstanding
Obligations shall be due and payable in full on such date.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Parent and Borrower jointly and severally represent and warrant to
Administrative Agent and each Bank that each of the following statements is true
and correct on the date hereof, will be true and correct on the Closing Date
after giving effect to the Shell Acquisition, and will be true and correct on
the occasion of each Borrowing and the issuance of each Letter of Credit:
SECTION 8.1. Existence and Power of Each Credit Party. Each Credit
Party (a) is a corporation, limited liability company or partnership duly
incorporated or organized (as applicable), validly existing and in good standing
under the Laws of its jurisdiction of incorporation or organization (as
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applicable), (b) has all corporate, limited liability company or partnership
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, foreign limited liability company or foreign partnership
(as applicable) in each jurisdiction where a failure to be so qualified would
not reasonably be expected to result in a Material Adverse Change.
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 partnership agreement, the
articles or certificate of incorporation, bylaws, regulations or comparable
charter or organizational 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 and Parent; 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
consolidated and consolidating balance sheet of Parent and the related
consolidated and consolidating statements of operations and cash flows for the
Fiscal Year then ended (which shall be the audited balance sheets, audited
statements of operations and audited statements of cash flows to the extent this
Section 8.4 is referring to consolidated balance sheets and consolidated
statements of operations and cash flows for any Fiscal Year ending on or after
December 31, 1999), copies of which have been delivered to each Bank, fairly
present, in conformity with GAAP, the consolidated financial position of Parent
as of the end of such Fiscal Year and its consolidated results of operations and
cash flows for such Fiscal Year.
(b) The most recent quarterly unaudited consolidated and
consolidating balance sheet of Parent delivered to Banks, and the related
unaudited consolidated statements of operations and cash flows for the portion
of Parent's Fiscal Year then ended, fairly present, in conformity with GAAP
applied on a basis consistent with the financial statements referred to in
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Section 8.4(a), the consolidated financial position of Parent as of such date
and its consolidated results of operations and cash flows for such portion of
Parent's Fiscal Year.
(c) Except as disclosed in writing to Banks prior to the
execution and delivery of this Agreement, since the date of Parent's most recent
annual and quarterly consolidated balance sheet and consolidated statements of
operations and cash flow delivered to Banks, no Material Adverse Change has
occurred (including, without limitation, no Material Adverse Change with respect
to any facts or information regarding any Credit Party as represented to any
Agent or any Bank on or prior to the date hereof.
(d) After giving effect to the transactions contemplated by
this Agreement, (i) Parent and its Subsidiaries, taken as a whole, and each of
Parent and Borrower, are Solvent, (ii) no Credit Party intends to, and no Credit
Party believes that it will, incur debts or liabilities beyond its ability to
pay as such debts and liabilities mature, and (iii) no Credit Party is engaged
in a business or transaction, and no Credit Party is about to engage in business
or a transaction for which such Credit Party's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Credit Party is engaged.
SECTION 8.5. Litigation. Except for matters disclosed on Schedule 2,
there is no action, suit or proceeding pending against, or to the knowledge of
Parent or Borrower, threatened against or affecting any Credit Party before any
Governmental Authority in which there is a reasonable possibility of an adverse
decision which would reasonably be expected to result in a Material Adverse
Change or which could in any manner draw into question the validity of the Loan
Papers or the Shell Acquisition Documents.
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 result in a Material Adverse Change on the
business, financial condition or prospects of any Credit Party, (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 Parent's or 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 causing a Material Adverse Change.
Except in such instances where an omission or failure would not result in a
Material Adverse Change, 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
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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
causing a Material Adverse Change. 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 result in a Material Adverse Change. No Credit Party nor any ERISA Affiliate
of any Credit Party 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. Except to the extent
being contested by appropriate proceedings in accordance with Section 9.7
hereof, 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. Neither Parent nor Borrower
knows of any proposed material Tax assessment against any Credit Party 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
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 (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 and Immaterial Title Deficiencies.
SECTION 8.9. Mineral Interests. Upon completion of the Shell
Acquisition, Borrower will have good and defensible title to all Borrowing Base
Properties, free and clear of all Liens except Permitted Encumbrances and
Immaterial Title Deficiencies. Subject only to Immaterial Title Deficiencies and
Permitted Encumbrances, all Borrowing Base Properties 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, upon completion of the Shell Acquisition,
but subject to Immaterial Title Deficiencies and Permitted Encumbrances,
Borrower's share of (a) the costs for each Borrowing Base Property 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
Borrowing Base Property 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.
Each well drilled in respect of each Borrowing Base Property which is
categorized as proved developed producing reserves and described in the Reserve
Report (y) is capable of, and, with the exception of xxxxx which are presently
not producing Hydrocarbons pending the completion of workovers and
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repairs to such xxxxx, is presently, producing Hydrocarbons in commercially
profitable quantities, and, in due course following completion of the Shell
Acquisition, Borrower will receive payments for its share of production, and no
material amount of funds in respect of any thereof will be held in suspense,
other than any such funds being held in suspense pending delivery of appropriate
division orders related to the Shell Acquisition, and (z) has been drilled,
bottomed, completed, and operated in compliance with all applicable Laws in all
material respects 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. Borrower's breach of any representation or
warranty set forth in this Section 8.9 shall not automatically cause an Event of
Default under Section 12.1(e) hereof. Instead, upon becoming aware that Borrower
has breached any representation or warranty set forth in this Section 8.9,
Required Banks may cause to be made a Special Redetermination of the Borrowing
Base according to Section 5.3(a)(i) hereof, in which case that portion of the
Borrowing Base Properties as to which the representations and warranties of this
Section 8.9 have been breached shall be excluded from the Mineral Interests
evaluated for purposes of the Borrowing Base; provided, however, an Event of
Default shall occur if, upon redetermination of the Borrowing Base, the
Borrowing Base as so redetermined has been reduced by more than twenty-five
percent (25%) from the Borrowing Base in effect immediately prior to such
Redetermination or Borrower fails to pay in full when due any mandatory
prepayment required by Section 2.4 hereof as a result of such Borrowing Base
Deficiency.
SECTION 8.10. Licenses, Permits, Etc. 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 reasonably be expected to result in a Material
Adverse Change.
SECTION 8.11. Compliance with Law. The business and operations of the
Credit Parties have been and are being conducted in accordance with all
applicable Laws other than violations of Laws which would not reasonably be
expected to (either individually or collectively) result in a Material Adverse
Change.
SECTION 8.12. Full Disclosure. All information heretofore furnished by
each Credit Party to any 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 any 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 materially and adversely
affect the assets, liabilities, financial condition, operations or prospects of
any Credit Party or the ability of any Credit Party to perform its obligations
under this Agreement and the other Loan Papers.
SECTION 8.13. Organizational Structure; Nature of Business. The Credit
Parties are engaged only in the business of acquiring, exploring, developing and
operating Mineral Interests and the production, marketing, processing and
transporting of Hydrocarbons therefrom. Schedule 3 hereto accurately reflects
(i) the jurisdiction of incorporation or organization of each
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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
interests of each Credit Party (and the record, and to the knowledge of Parent
and Borrower, beneficial owners of such Equity interests), and (iv) all
outstanding warrants, options, subscription rights, convertible securities or
other rights to purchase Equity interests of each Credit Party.
SECTION 8.14. Environmental Matters. Except for matters disclosed on
Schedule 4 hereto, upon completion of, and after giving effect to, the Shell
Acquisition, 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, Borrower's Mineral Interests and further, including, the
Shell Property (other than Rejected Shell Properties)) and no operations
conducted thereon, and to Parent's or Borrower's 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 would reasonably be expected to result
in a Material Adverse Change. Except for matters disclosed on Schedule 4 hereto,
no Credit Party, nor any such property or operation is the subject of any
existing, pending or, to Parent's or Borrower's knowledge, threatened
Environmental Complaint which would reasonably be expected to, individually or
in the aggregate, result in Material Adverse Change. 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 (after giving effect to the Shell Acquisition but
excluding the Rejected Shell Properties) 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 or will be obtained or filed
in due course following completion of the Shell Acquisition except to the extent
the failure to obtain or file such notices, licenses, permits and authorizations
would not reasonably be expected to result in a Material Adverse Change. 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 (after giving
effect to the Shell Acquisition but excluding the Rejected Shell Properties)
have been transported, treated, and disposed of only by carriers or facilities
maintaining valid permits under RCRA 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 reasonably be expected to, individually or in the
aggregate, result in a Material Adverse Change. Except for matters disclosed on
Schedule 4 hereto, there have been no Hazardous Discharges which were not in
compliance with Applicable Environmental Laws other than Hazardous Discharges
which would not reasonably be expected to, individually or in the aggregate,
result in a Material Adverse Change. Except for matters disclosed on Schedule 4
hereto, no Credit Party has any contingent liability in connection with any
Hazardous Discharge which would reasonably be expected to result in a Material
Adverse Change.
SECTION 8.15. Burdensome Obligations. No Credit Party, nor any of the
properties of any Credit Party (after giving effect to the Shell Acquisition but
excluding the Rejected Shell Properties) is subject to any Law or any pending or
threatened change of Law or subject to any restriction under its partnership
agreement, regulations, certificate of limited
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partnership, articles of organization, articles (or certificate) of
incorporation, bylaws or comparable charter or other organizational 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 result in a
Material Adverse Change. Without limiting the foregoing, no Credit Party is a
party to or bound by any agreement or subject to any order of any Governmental
Authority which prohibits or restricts in any way the right of such Credit Party
to make Distributions other than restrictions binding on the Credit Parties set
forth in this Agreement.
SECTION 8.16. Fiscal Year. Parent'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 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, and on the Closing Date, (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.
SECTION 8.21. Shell Acquisition Documents; Material Agreements.
Borrower has provided each Bank with a true and correct copy of each of the
Shell Acquisition Documents which have been executed as of the date hereof, and
all Material Agreements, including all amendments and modifications thereto. No
material rights or obligations of any party to any of such Shell Acquisition
Documents or Material Agreements have been (or will be on the Closing Date)
waived and neither Borrower nor any other Credit Party, nor to the best
knowledge of Borrower or Parent, any other party to any of such Shell
Acquisition Documents or Material Agreements, is (or will be on the Closing
Date) in default of its obligations thereunder. Each of the Shell Acquisition
Documents and the Material Agreements will be, on the Closing Date, a valid,
binding and enforceable obligation of the parties thereto in accordance with its
terms and will be on the Closing Date in full force and effect to the extent
represented by the parties
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thereto. Each representation and warranty made by Borrower and/or Parent, and to
the best knowledge of Borrower or Parent, by Shell in the Shell Acquisition
Agreement and the other Shell Acquisition Documents was true and correct when
made, and will be true and correct on the Closing Date.
SECTION 8.22. Year 2000 Matters. Any reprogramming required to permit
the proper functioning (but only to the extent that such proper functioning
would otherwise be impaired by the occurrence of the year 2000) in and following
the year 2000 of computer systems and other equipment containing imbedded
microchips, in either case owned or operated by any Credit Party or used or
relied upon in the conduct of their business (including, to Borrower's and
Parent's knowledge, any such systems and other equipment supplied by others or
with which the computer systems of any Credit Party interface), and the testing
of all such systems and other equipment as so reprogrammed, was completed by
January 1, 1999. The costs to Borrower and any other Credit Party that have not
been incurred as of the date hereof for such reprogramming and testing and for
other reasonably foreseeable consequences to them of any improper functioning of
other computer systems and equipment containing embedded microchips due to the
occurrence of the year 2000 could not reasonably be expected to result in a
Default or Event of Default or to have a Material Adverse Effect. Except for any
reprogramming referred to above, the computer systems of each Credit Party are
and, with ordinary course upgrading and maintenance, will continue for the term
of this Agreement to be sufficient for the conduct of their business as
currently conducted.
ARTICLE IX
AFFIRMATIVE COVENANTS
Parent and Borrower jointly and severally covenant and agree 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. Parent and Borrower will deliver, or cause to
be delivered, to each Bank:
(a) as soon as available and in any event within one hundred
five (105) days after the end of each Fiscal Year, beginning with the Fiscal
Year ended December 31, 1999, a consolidated and consolidating balance sheet of
Parent as of the end of such Fiscal Year and the related consolidated and
consolidating statements of income and statements of cash flow for such Fiscal
Year, setting forth in each case (as applicable), in comparative form the
figures for the previous Fiscal Year, all reported by Parent in accordance with
GAAP and audited by Xxxxxx Xxxxxxxx, L.L.P. or another firm of independent
public accountants of nationally recognized standing and acceptable to
Administrative Agent;
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(b) as soon as available and in any event within sixty (60)
days after the end of each of the first three (3) Fiscal Quarters of each Fiscal
Year, beginning with the Fiscal Quarter ending June 30, 1999, consolidated and
consolidating balance sheets of Parent as of the end of such Fiscal Quarter and
the related consolidated and consolidating statements of income and statements
of cash flow for such quarter and for the portion of Parent's Fiscal Year ended
at the end of such Fiscal Quarter, setting forth in each case (as applicable),
in comparative form the figures for the corresponding quarter and the
corresponding portion of Parent's previous Fiscal Year;
(c) simultaneously with the delivery of each set of financial
statements referred to in Sections 9.1(a) and (b), a certificate of a Financial
Officer of Parent in the form of Exhibit K attached hereto, (i) setting forth in
reasonable detail the calculations required to establish whether Parent was in
compliance with the requirements of Article XI on the date of 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 Parent and/or Borrower are taking or propose 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 the Credit Parties 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 any Credit
Party 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 any Credit Party 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) a summary of the Hedge Transactions to which each
Credit Party is a party on such date;
(d) promptly upon the mailing thereof to the stockholders of
Parent generally, copies of all financial statements, material 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 Parent and 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 $250,000 in the aggregate; (ii) any potential, actual, alleged or 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
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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 $250,000 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 $250,000
in the aggregate. Without limiting the foregoing, Parent and Borrower shall
provide, and cause each other Credit Party to provide, to Banks promptly upon
receipt of same by any Credit Party copies of all environmental consultants or
engineers reports received by any other Credit Party which would render the
representations and warranties 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, Parent and
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 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. Parent and
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 (i) the occurrence of any Default, or (ii) the breach of
any material representation or warranty set forth herein or in any other Loan
Paper, a certificate of an Authorized Officer of Parent or Borrower setting
forth the details thereof and (as applicable) the action which Parent and/or
Borrower are taking or propose to take with respect thereto;
(i) no later than March 31, and September 30 of each year,
reports of production, volumes, revenue, expenses and product prices for all
Mineral Interests owned by Borrower 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 an accounting key code basis;
(j) promptly notify Banks of any Material Adverse Change
affecting any Credit Party; and
(k) 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 principal business of the
Credit Parties shall continue to be the acquisition, exploration, development
and operation of Mineral Interests and the production, marketing, processing and
transportation of Hydrocarbons therefrom.
SECTION 9.3. Maintenance of Existence. Each of Parent and Borrower
shall at all times (a) maintain its corporate, partnership or limited liability
company existence in its state of
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incorporation or organization, and (b) maintain, and cause each other Credit
Party to 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 result in a Material Adverse Change.
SECTION 9.4. Title Data. Parent and Borrower shall, upon request of
Required Banks, cause to be 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.
SECTION 9.5. Right of Inspection. Parent and Borrower will permit, and
will cause each other Credit Party to permit, any officer, employee or agent of
any Agent or of any Bank, at their own risk, 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 any Agent or any Bank
may reasonably request, all at the expense of Borrower.
SECTION 9.6. Maintenance of Insurance. Parent and 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 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 the Credit Parties
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, and Borrower shall obtain a written obligation on the part of each
insurance company to notify Administrative Agent at least thirty (30) days
before cancellation of any such insurance.
SECTION 9.7. Payment of Taxes and Claims. Parent and 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 any Credit Party is subject to any pending levy or
execution, (ii) the Credit Parties, 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) the Credit Parties have notified Administrative Agent of such
circumstances in detail satisfactory to Administrative Agent.
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SECTION 9.8. Compliance with Laws and Documents. Parent and Borrower
will, and will cause each other Credit Party to, comply with all Laws, their
respective partnership agreements, regulations, certificates of limited
partnership, articles of organization, certificates (or articles) of
incorporation, bylaws, and similar organizational documents, all Shell
Acquisition Documents (to the extent a party thereto), 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 result in a Material Adverse
Change.
SECTION 9.9. Operation of Properties and Equipment. (a) Borrower will,
and will cause each other Credit Party to, maintain, develop and operate (or
cause the operator to maintain and operate to the extent any such Credit Party
is not the operator) its Mineral Interests in a good and workmanlike manner, and
observe and comply in all material respects 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.
(b) Borrower will, and will cause each other Credit Party to,
comply in all material 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.
(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; provided, 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. Parent and 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, a violation of which would result in a Material Adverse Change.
Parent and 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. Parent and Borrower shall
furnish, or cause to be furnished, to Administrative Agent:
(a) promptly, and in any event (i) within thirty (30) days
after any Credit Party or any ERISA Affiliate knows or has reason to know that
any ERISA Event described in clause (a) of the definition of ERISA Event or any
event described in Section 4063(a) of ERISA with respect to any Plan of any
Credit Party or any ERISA Affiliate has occurred, and (ii) within
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fifteen (15) days after any Credit Party or any ERISA Affiliate knows or has
reason to know that any other ERISA Event with respect to any Plan of any Credit
Party or any ERISA Affiliate has occurred or a request for minimum funding
waiver under Section 412 of the Code with respect to any Plan of any Credit
Party or any ERISA Affiliate has been made, 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 event that is given to
the PBGC;
(b) promptly, and in any event within five (5) Domestic
Business Days after receipt thereof by any Credit Party or any ERISA Affiliate
from the PBGC, copies of each notice received by any Credit Party or any ERISA
Affiliate of the PBGC's intention to terminate any Plan or to have a trustee
appointed to administer any Plan;
(c) promptly, and in any event within thirty (30) days after
the receipt by any Credit Party 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 any Credit Party or any ERISA Affiliate with the United States
Department of Labor, the Internal Revenue Service or the PBGC;
(d) promptly, and in any event within ten (10) Domestic
Business Days after receipt thereof, a copy of any correspondence any Credit
Party or any ERISA Affiliate receives from the Plan Sponsor (as defined in
Section 4001(a)(10) of ERISA) of any Plan asserting withdrawal liability
pursuant to Section 4219 or 4202 of ERISA upon any Credit Party or any ERISA
Affiliate, and a statement from the chief financial officer of such Credit Party
or such ERISA Affiliate setting forth details as to the events giving rise to
such withdrawal liability and the action which such Credit Party or such ERISA
Affiliate is taking or proposes to take with respect thereto;
(e) notification within thirty (30) days of the effective date
thereof of any material increases in the benefits of any existing Plan which is
not a multiemployer plan (as defined in Section 4001(a)(3) of ERISA), or the
establishment of any new Plans, or the commencement of contributions to any Plan
to which any Credit Party or any ERISA Affiliate was not previously
contributing;
(f) notification within five (5) Domestic Business Days after
any Credit Party or any ERISA Affiliate knows or has reason to know that any
such Credit Party or any such ERISA Affiliate has or intends to file a notice of
intent to terminate any Plan under a distress termination within the meaning of
Section 4041(c) of ERISA and a copy of such notice; and
(g) 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 any Credit Party or any ERISA Affiliate with
respect to any Plan, except those which, in the aggregate, if adversely
determined would not result in a Material Adverse Change.
SECTION 9.12. Additional Documents. Parent and Borrower will, and will
cause each other Credit Party (to the extent each is party thereto) to, cure
promptly any defects in the
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creation and issuance of each Note, and the execution and delivery of this
Agreement and the other Loan Papers and, at Parent's and Borrower's expense,
Parent and 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 of any acquisition by Borrower of
Mineral Interests or related assets, other than an acquisition of additional
interests in Mineral Interests in which Borrower previously held an interest, a
report 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.
SECTION 9.14. Year 2000 Compatibility. Parent and Borrower will, and
will cause each other Credit Party to, take all actions reasonably necessary to
assure that Parent's and Borrower's and each such other Credit Party's computer
based systems are able to operate and effectively process data which includes
dates on and after January 1, 2000. At the request of Administrative Agent or
any Bank, Parent, Borrower and each other Credit Party shall provide reasonable
assurances satisfactory to Administrative Agent and any such Bank of Parent's
and Borrower's and each such other Credit Party's year 2000 compatibility.
ARTICLE X
NEGATIVE COVENANTS
Parent and Borrower agree 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. Parent and Borrower will not, nor
will Parent and/or Borrower permit any other Credit Party to, incur, become or
remain liable for any Debt other than (a) the Obligations, (b) the Shell
Security Obligations, and (c) other Debt in an aggregate amount outstanding at
any time not to exceed $6,000,000.
SECTION 10.2. Restricted Payments. Parent and Borrower will not, nor
will Parent and/or Borrower permit any other Credit Party to, directly or
indirectly, declare or pay, or incur any liability to declare or pay, any
Restricted Payment.
SECTION 10.3. Negative Pledge. Parent and Borrower will not, nor will
Parent and/or Borrower permit any other Credit Party to, create, assume or
suffer to exist any Lien on any asset of any Credit Party other than Permitted
Encumbrances and Immaterial Title Deficiencies. Parent and Borrower will not,
nor will Parent and/or Borrower permit any other
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Credit Party to, enter into or become bound by any agreement (other than this
Agreement) that prohibits or otherwise restricts the right of any Credit Party
to create, assume or suffer to exist any Lien on any Credit Party's assets in
favor of Administrative Agent for the ratable benefit of Banks.
SECTION 10.4. Consolidations and Mergers. Parent and Borrower will not,
nor will Parent and/or 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 (a) Borrower may merge or consolidate
with another Person so long as Borrower is the surviving entity and continues to
be a wholly owned Subsidiary of Parent, and (b) 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 entity.
SECTION 10.5. Asset Dispositions. Parent and Borrower will not, nor
will Parent and/or 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, and (b) Mineral Interests during any period between Scheduled
Redeterminations with an aggregate Recognized Value (measured at the time of
such sale or disposition) not in excess of five percent (5%) of the Borrowing
Base in effect during such period. In no event will Parent or Borrower sell,
transfer or dispose of, or permit any other Credit Party to sell, transfer or
dispose of any capital stock of, or other equity interest in, any Subsidiary of
such Credit Party nor will Parent or Borrower permit any other Credit Party to
issue or sell any capital stock or other equity interest or any option, warrant
or other right to acquire such capital stock or equity interest or security
convertible into such capital stock or equity interest to any Person other than
the Credit Party which is the direct parent of such issuer on the date hereof.
SECTION 10.6. Amendments to Organizational Documents; Other Material
Agreements. Parent and Borrower will not, nor will Parent and/or Borrower permit
any other Credit Party to, enter into or permit any material modification or
amendment of, or waive any material right or obligation of any Person under, (a)
its certificate or articles of incorporation, bylaws, partnership agreement,
regulations or other organizational documents, or (b) the Shell Acquisition
Documents.
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 and related
capital assets, and (c) for general corporate purposes. 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 providing credit enhancement with respect to any Debt or equity
security of any
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Credit Party or to secure any Credit Party's obligations with respect to Hedge
Transactions other than Hedge Transactions with a Bank or an Affiliate of such
Bank.
SECTION 10.8. Investments. Parent and Borrower will not, nor will
Parent and/or 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. Parent and Borrower will
not, nor will Parent and/or 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 result in a Material Adverse Change, Parent and Borrower will
not, nor will Parent and/or Borrower permit any of their Subsidiaries 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 Parent, Borrower or any ERISA Affiliate as of
the date hereof.
SECTION 10.11. Hedge Transactions. Parent and Borrower will not, nor
will Parent and/or Borrower permit any other Credit Party to, enter into Oil and
Gas Hedge Transactions which would cause the volume of Hydrocarbons with respect
to which a settlement payment is calculated under such Oil and Gas Hedge
Transactions to exceed seventy-five percent (75%) of Borrower's anticipated
production from Proved Producing Mineral Interests during the period from the
immediately preceding settlement date (or the commencement of such Hedge
Transaction if there is no prior settlement date) to such settlement date.
SECTION 10.12. Fiscal Year. Parent will not change its fiscal year.
SECTION 10.13. Change in Business. Parent and Borrower will not, nor
will Parent and/or Borrower permit any other Credit Party to, be engaged, as its
principal business, in any business other than the businesses engaged in by such
parties on the date hereof as described in Section 8.13 hereof.
ARTICLE XI
FINANCIAL COVENANTS
Parent and Borrower agree 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, Parent will not permit its ratio of
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Consolidated Current Assets to its Consolidated Current Liabilities to be less
than 1.0 to 1.0 at each Quarterly Date.
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 or any reimbursement obligation with respect to any Letters of Credit when
due;
(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) Parent and/or Borrower shall fail to observe or perform
any covenant or agreement contained in Section 9.2, Section 9.3(a), 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 any other Loan Papers
(other than those referenced in Sections 12.1(a), (b) and (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 any
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
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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) any event occurs with respect to any Plan or Plans
pursuant to which (i) 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 would reasonably result 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;
(k) any Credit Party shall incur, in any period of twelve (12)
consecutive months, Environmental Liabilities which, individually or when
considered in the aggregate, exceed $500,000;
(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 to which it is a party, 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 collateral purported to be covered thereby; or
(m) a Change of Control shall occur;
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 Sections 12.1(g) or (h),
without any notice to any Credit Party or any
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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 (and any separate agreements entered into among the parties
regarding same), 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 the other Loan Papers 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 its Subsidiaries or Affiliates; (d) shall be required to initiate or
conduct any litigation or collection proceedings 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 any such Agent with reasonable care.
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 14.10 hereof. As to any matters not
expressly provided for by this Agreement, no Agent 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
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liability or that is contrary to any Loan Paper or applicable Law 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 Administrative
Agent has received written notice from a Bank, Parent 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
Loans made by it, NationsBank (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. NationsBank (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
any Credit Party or Affiliates as if it were not acting as Agent, and
NationsBank (and any successor acting as Administrative Agent), each other Agent
and their Affiliates may accept fees and other consideration from any Credit
Party or 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 Parent and/or Borrower hereof, but without limiting
the obligations of Parent and Borrower 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 Parent and/or Borrower hereunder, to
the extent that any such Agent is not promptly reimbursed for such costs and
expenses by Parent and/or Borrower. The agreements contained in this Section
13.5 shall survive payment and performance in full of the Obligations and all
other amounts payable under this Agreement.
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SECTION 13.6. Non-Reliance on Agents and Other Banks. Each Bank agrees
that it has, independently and without reliance on any Agent or any other 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 other 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. 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. Upon the acceptance of any appointment as
Agent hereunder by a successor, 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
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 Agent.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. 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 1 hereto, and if given to
Parent or Borrower, at their respective addresses or telecopy numbers 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 14.1 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 14.1; provided that notices
to Administrative Agent under Article II or III shall not be effective until
received.
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SECTION 14.2. 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 14.3. Expenses; Indemnification. (a) Parent and Borrower
jointly and severally agree to pay on demand all costs and expenses of
Administrative Agent, Sole Lead Arranger and Book Manager 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, Sole Lead Arranger and Book Manager with
respect thereto and with respect to advising Administrative Agent as to its
rights and responsibilities under the Loan Papers. Parent and Borrower further
jointly and severally agree to pay on demand all costs and expenses of
Administrative Agent, Sole Lead Arranger, Book Manager and Banks, if any
(including, without limitation, reasonable attorneys' fees and expenses and the
cost of internal counsel), 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) Parent and Borrower jointly and severally agree to
indemnify and hold harmless each Agent and each Bank and each of their
Affiliates and their respective officers, directors, employees, agents, and
advisors (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 Loans (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 14.3 applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by
Parent, Borrower, or their 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. Parent and Borrower agree 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 Loans.
(c) Without prejudice to the survival of any other agreement
of Parent and Borrower hereunder, the agreements and obligations of Parent and
Borrower contained in this
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Section 14.3 shall survive the payment in full of the Loans and all other
amounts payable under this Agreement.
SECTION 14.4. 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 Parent, Borrower or any other 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 affect the validity of
such set-off and application. The rights of each Bank under this Section 14.4
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 Loans 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 Loans 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 Loans 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. Parent and Borrower agree that any Bank so purchasing a
participation from a Bank pursuant to this Section 14.4 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 Parent and/or Borrower in the amount of such
participation.
SECTION 14.5. Amendments and Waivers. Any provision of this Agreement
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
Article XIII or the rights or duties of any Agent are affected thereby, by such
Agent); provided that no such amendment or waiver shall, unless signed by each
Bank directly affected thereby, (i) increase the Commitments of Banks, (ii)
reduce the principal of or rate of interest on any Loan or any fees or other
amounts payable hereunder, (iii) postpone any date fixed for the payment of any
scheduled installment of principal of or interest on any Loan or any fees or
other amounts payable hereunder or for termination of any Commitment, (iv)
change the percentage of the Commitments or of the unpaid principal amount of
the Notes, or the number of Banks which shall be required for Banks or any of
them to take any action under this Section 14.5 or any other provision of this
Agreement, (v) amend or waive any of the provisions of Article V or the
definitions contained in
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Section 1.1 applicable thereto, (vi) amend or waive any of the conditions
precedent contained in Section 7.1(a) hereof, or (vii) release Borrower or any
guarantor of the Obligations or all or substantially all of the collateral
securing the Obligations.
SECTION 14.6. 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 Loans (or any part thereof), regardless of
any investigation made by or on behalf of Banks. The indemnity provided in
Section 14.3 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 or among Parent, Borrower or any other
Credit Party and any Agent or any Bank.
SECTION 14.7. Limitation on Interest. Regardless of any provision
contained in the Loan Papers, Banks shall never be entitled to receive, collect,
or apply, as interest on the 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 Loans are 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 14.8. 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 14.9. Waiver of Consumer Credit Laws. Pursuant to Chapter 346
of the Texas Finance Code, as amended, Parent and Borrower agree that such
Chapter 346 shall not govern or in any manner apply to the Loan.
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SECTION 14.10. 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
Loans, 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;
(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 L hereto, together with any
Note subject to such assignment and a processing fee 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 14.10(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 4.6(d).
(b) Administrative Agent shall maintain at its address set
forth on Schedule 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 Banks and the Commitment of, and principal amount of the Loans
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, Agents 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 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 Note 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 L hereto, (i) accept such Assignment
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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 Loans); 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 IV and the
right of set-off contained in Section 14.4, 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 Bank shall retain the sole right
to enforce the obligations of Borrower relating to its Loans 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 such Loans or
Note, extending any scheduled principal payment date or date fixed for the
payment of interest on such Loans or Note, 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
Loans 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 Parent,
Borrower or any other Credit Party in the possession of such Bank from time to
time to assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 14.17 hereof.
(g) Neither Parent nor Borrower shall 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 14.11. TEXAS LAW. THIS AGREEMENT, EACH NOTE AND THE OTHER LOAN
PAPERS 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 COLLATERAL 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 COLLATERAL, AND (B) THE EXERCISE OF ANY REMEDIES WITH RESPECT TO SUCH
COLLATERAL.
SECTION 14.12. Consent to Jurisdiction; Waiver of Immunities. (a)
Parent and Borrower each hereby irrevocably submit to the jurisdiction of any
Texas State or Federal court
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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 Parent and
Borrower each hereby irrevocably agree 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, Parent and Borrower each irrevocably consent 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 14.1. Parent
and Borrower each agree 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.
(b) Nothing in this Section 14.12 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 Parent and Borrower have 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 14.13. 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 provisions hereof, including, without
limitation, Section 7.4 and the satisfaction of each condition precedent set
forth in Section 7.1 hereof, this Agreement shall become effective as of the
Closing Date 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 14.14. 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 14.10.
SECTION 14.15. 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 14.16. WAIVER OF JURY TRIAL. PARENT, BORROWER, ADMINISTRATIVE
AGENT AND BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR
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PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN PAPERS AND FOR
ANY COUNTERCLAIM THEREIN.
SECTION 14.17. Confidentiality. Administrative Agent and each Bank
(each, a "Lending Party") agrees to keep confidential any information furnished
or made available to it by any Credit Party 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 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 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
14.17, to any actual or proposed participant or assignee.
(Remainder of page intentionally left blank)
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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.
BORROWER:
ENCORE OPERATING, L.P.,
a Texas limited partnership
By: EAP Operating, Inc.,
a Delaware corporation,
its sole general partner
By: /s/ XXXXX X. XXXXXXX, III
------------------------------------------
Xxxxx X. Xxxxxxx, III,
Executive Vice President and Chief Financial Officer
Address for Notice:
c/o Encore Acquisition Partners, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxx, III
Fax No. (000) 000-0000
PARENT:
ENCORE ACQUISITION PARTNERS, INC.,
a Delaware corporation
By: /s/ XXXXX X. XXXXXXX, III
------------------------------------------
Xxxxx X. Xxxxxxx, III,
Executive Vice President and Chief Financial Officer
Address for Notice:
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attn: Xxx X. Xxxxxxx
Fax No. (000) 000-0000
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BANKS:
NATIONSBANK, N.A.,
a national banking association
By: /s/ J. XXXXX XXXXXX
------------------------------------------
J. Xxxxx Xxxxxx,
Vice President
FIRST UNION NATIONAL BANK,
a national banking association
By: /s/
------------------------------------------
Its: Managing Director
------------------------------------------
BANKBOSTON, N.A.
a national banking association
By: /s/ XXXXXX X. XXXXXXX
------------------------------
Its: Managing Director
XXXXX FARGO BANK (TEXAS), N.A.
a national banking association
By: /s/ XXXXXXX X. XXXXXXX
------------------------------------------
Its: Vice President
------------------------------------------
FROST NATIONAL BANK
a national banking association
By: /s/
------------------------------------------
Its: Senior Vice President
------------------------------------------
COMERICA BANK TEXAS
By: /s/
------------------------------------------
Its: Assistant Vice President
------------------------------------------
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CIBC, INC.
a national banking association
By: /s/
------------------------------------------
Its: Authorized Signatory
------------------------------------------
ADMINISTRATIVE AGENT:
NATIONSBANK, N.A.,
a national banking association
By: /s/ J. XXXXX XXXXXX
------------------------------------------
J. Xxxxx Xxxxxx,
Vice President
SYNDICATION AGENT:
FIRST UNION NATIONAL BANK,
By: /s/
------------------------------------------
Its: Managing Director
------------------------------------------
DOCUMENTARY AGENT:
BANKBOSTON, N.A.
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------
Its: Managing Director
------------------------------------------
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SCHEDULE 1
FINANCIAL INSTITUTIONS
==============================================================================================================
Bank Commitment Amount Commitment Percentage
----------------------------------------- ------------------------------------- ------------------------------
NationsBank, N.A. $63,157,894.74 21.0526316%
First Union National Bank $55,263,157.89 18.0000000%
BankBoston, N.A. $55,263,157.89 18.4210526%
Xxxxx Fargo $31,578,947.37 10.5263158%
Frost National Bank $31,578,947.37 10.5263158%
Comerica Bank Texas $31,578,947.37 10.5263158%
CIBC, Inc. $31,578,947.37 10.5263158%
Total $300,000,000.00 100%
==============================================================================================================
==============================================================================================================
Domestic Lending Eurodollar Lending
Name of Bank/Agent Office Office Address for Notice
---------------------------- ---------------------------- -------------------------- -------------------------
NationsBank, N.A. 000 Xxxx Xxxxxx, 00xx Xxxxx 000 Xxxx Xxxxxx, 00xx 000 Xxxx Xxxxxx, 00xx
Xxxxxx, Xxxxx 00000 Floor Floor
Fax No. (000) 000-0000 Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000
Fax No. (000) 000-0000 Fax No. (000) 000-0000
First Union National Bank 0000 Xxxxxx Xxxxxx 0000 Xxxxxx Xxxxxx 0000 Xxxxxx Xxxxxx
Xxxxx 0000 Xxxxx 0000 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
BankBoston, N.A. 000 Xxxxxxx Xxxxxx 000 Xxxxxxx Xxxxxx 000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000 Xxxxxx, XX 00000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
Xxxxx Fargo Energy Department Energy Department Energy Department
0000 Xxxx Xxxxxx 1445 Xxxx Avenue 0000 Xxxx Xxxxxx
Xxxxx 000 Xxxxx 000 Xxxxx 000
Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
Frost National Bank 000 Xxxx Xxxxxx, Xxxxx 000 000 Xxxx Xxxxxx, Xxxxx 000 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000 100 Xxxx Xxxxx, Xxxxx 00000
Xxxx Xxxxx, Xxxxx 00000
Comerica Bank Texas X.X. Xxx 000000 X.X. Xxx 000000 P.O. Box 650282
MC6503 MC6503 MC6503
Xxxxxx, Xxxxx 00000-0000 Xxxxxx, Xxxxx 00000-0000 Xxxxxx, Xxxxx 00000-0000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
CIBC, Inc. 0000 Xxxxx Xxxxx Xxxx, 2727 Paces Ferry Road, 0000 Xxxxx Xxxxxx
Xxxxx 0000 Xxxxx 0000 Xxxxx 0000
Xxxxxxx, Xxxxxxx 30339 Xxxxxxx, Xxxxxxx 00000 Xxxxxxx, Xxxxx 00000
Fax No. (000) 000-0000 Fax No. (000) 000-0000 Fax No. (000) 000-0000
==============================================================================================================
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SCHEDULE 2
LITIGATION
None
5
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SCHEDULE 3
CAPITALIZATION
6
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SCHEDULE 4
ENVIRONMENTAL MATTERS
None
7
