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Exhibit 10.1
FIFTH RESTATEMENT OF CREDIT AGREEMENT
FORCENERGY INC
and
ING (U.S.) CAPITAL CORPORATION
as Agent
and
CERTAIN FINANCIAL INSTITUTIONS
as Lenders
$250,000,000
April 13,1998
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EXECUTION COUNTERPART
--------------------------------------------------------------------------------
FIFTH RESTATEMENT OF CREDIT AGREEMENT
-------------------------------------
FORCENERGY INC
AND
ING (U.S.) CAPITAL CORPORATION
AS AGENT
AND
CERTAIN FINANCIAL INSTITUTIONS
AS LENDERS
-------------------------------------
$250,000,000
APRIL 13, 1998
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ARTICLE I - Definitions and References............................................................................2
Section 1.1. Defined Terms..........................................................................2
Section 1.2. Exhibits and Schedules; Additional Definitions........................................15
Section 1.3. Amendment of Defined Instruments......................................................15
Section 1.4. References and Titles.................................................................15
Section 1.5. Calculations and Determinations.......................................................16
ARTICLE II - The Loans...........................................................................................16
Section 2.1. Advances..............................................................................16
Section 2.2. Requests for Advances.................................................................17
Section 2.3. Use of Proceeds.......................................................................17
Section 2.4. Rate Elections........................................................................18
Section 2.5. Commitment and Facility Fees..........................................................18
Section 2.6. Up-front Fees.........................................................................19
Section 2.7. Agent's Fees..........................................................................19
Section 2.8. Optional Prepayments..................................................................19
Section 2.9. Mandatory Prepayments.................................................................19
Section 2.10. Payments to Lenders...................................................................20
Section 2.11. Initial Borrowing Base................................................................21
Section 2.12. Subsequent Determinations of Borrowing Base...........................................21
Section 2.13. Capital Reimbursement.................................................................22
Section 2.14. Increased Cost of Fixed Rate Portions.................................................22
Section 2.15. Transfer of Loans and Participations..................................................23
Section 2.16. Availability..........................................................................23
Section 2.17. Funding Losses........................................................................23
Section 2.18. Reimbursable Taxes....................................................................24
ARTICLE 2A. - Letters of Credit.................................................................................25
Section 2A.1. Letters of Credit.....................................................................25
Section 2A.2. Reimbursement of Letters of Credit....................................................26
Section 2A.3. Transferees of Letters of Credit......................................................27
Section 2A.4. Extension of Maturity of Letters of Credit............................................27
Section 2A.5. Restriction on Liability..............................................................27
Section 2A.6. No Duty to Inquire....................................................................28
Section 2A.7. Letter of Credit Fees.................................................................28
Section 2A.8. Acceleration of LC Obligations........................................................29
Section 2A.9. Purposes..............................................................................29
Section 2A.10. Increased Costs for Letters of Credit.................................................29
ARTICLE III - Conditions Precedent to Lending....................................................................30
Section 3.1. Documents to be Delivered.............................................................30
Section 3.2. Additional Conditions Precedent.......................................................31
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ARTICLE IV - Representations and Warranties.....................................................................32
Section 4.1. Borrower's Representations and Warranties.................................................32
Section 4.2. Representation by Lenders.................................................................38
ARTICLE V - Covenants of Borrower................................................................................38
Section 5.1. Affirmative Covenants.....................................................................38
Section 5.2. Negative Covenants........................................................................45
ARTICLE VI - Security............................................................................................51
Section 6.1. The Security..............................................................................51
Section 6.2. Agreement to Deliver Security Documents...................................................51
Section 6.3. Perfection and Protection of Security Interests and Liens.................................51
Section 6.4. Bank Accounts; Offset.....................................................................51
Section 6.5. Guaranties of Borrower's Subsidiaries.....................................................52
Section 6.6. Production Proceeds.......................................................................52
ARTICLE VII - Events of Default and Remedies.....................................................................52
Section 7.1. Events of Default.........................................................................52
Section 7.2. Remedies..................................................................................55
SECTION 7.3. INDEMNITY.................................................................................55
ARTICLE VIII - Agent.............................................................................................56
Section 8.1. Appointment and Authority.................................................................56
Section 8.2. Agent's Reliance, Etc.....................................................................57
Section 8.3. Lenders' Credit Decisions.................................................................57
SECTION 8.4. INDEMNIFICATION...........................................................................57
Section 8.5. Rights as Lender..........................................................................58
Section 8.6. Sharing of Set-Offs and Other Payments....................................................58
Section 8.7. Investments...............................................................................59
Section 8.8. Benefit of Article VIII...................................................................59
Section 8.9. Resignation...............................................................................59
ARTICLE IX - Miscellaneous.......................................................................................60
Section 9.1. Waivers and Amendments....................................................................60
SECTION 9.2. GOVERNING LAW; SUBMISSION TO PROCESS......................................................60
Section 9.3. Limitation on Interest....................................................................62
Section 9.4. Termination; Limited Survival.............................................................62
Section 9.5. Notices...................................................................................63
Section 9.6. Severability..............................................................................63
Section 9.7. Counterparts..............................................................................63
SECTION 9.8. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC...............................................63
Section 9.9. Restatement...............................................................................64
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SCHEDULES AND EXHIBITS
SCHEDULE 1 -
SCHEDULE 2 - Required Insurance Coverage
SCHEDULE 3 - Existing Debt
SCHEDULE 4 - Existing Liens
EXHIBIT A - Note
EXHIBIT B - Request for Advance
EXHIBIT C - Rate Election
EXHIBIT D - Form of Opinion of Borrower's Counsel EXHIBIT E - Application for
Letter of Credit EXHIBIT F - Certificate Accompanying Financial Statements
EXHIBIT G - Environmental Compliance Certificate
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FIFTH RESTATEMENT OF CREDIT AGREEMENT
THIS FIFTH RESTATEMENT OF CREDIT AGREEMENT is made as of April 13,
1998, by and among Forcenergy Inc, a Delaware corporation (formerly known as
Forcenergy Gas Exploration, Inc. and herein called "BORROWER"), ING (U.S.)
Capital Corporation, a Delaware corporation (formerly known as Internationale
Nederlanden (U.S.) Capital Corporation and herein called "ING "), as agent
hereunder (in such capacity being herein called "AGENT"), and the Lenders
referred to below.
RECITALS
1. Forcenergy Partners, L.P. (the "PARTNERSHIP"), Internationale
Nederlanden Bank, N.V., New York Branch ("ING BANK") and certain lenders party
thereto entered into that certain Credit Agreement dated as of July 26, 1991, as
amended by (i) a First Amendment to Credit Agreement dated as of November 15,
1991, (ii) a Second Amendment to Credit Agreement dated as of September 1, 1992,
(iii) a Third Amendment to Credit Agreement dated as of December 30, 1992, and
(iv) a Fourth Amendment to Credit Agreement dated as of February 17, 1993 (as so
amended, the "ORIGINAL AGREEMENT").
2. Pursuant to an Agreement and Plan of Merger dated September 14,
1993, the Partnership merged with and into Forcenergy AB Subsidiary, Inc., a
Delaware corporation ("AB SUB"). AB Sub, the surviving entity from such merger,
changed its name to Forcenergy Gas Exploration, Inc. and by operation of law
assumed all of the obligations of the Partnership under the Original Agreement
and the Promissory Notes issued thereunder (the "ORIGINAL NOTES").
3. The Original Agreement was restated in its entirety pursuant to that
certain Fifth Amendment to and Restatement of Credit Agreement dated as of
September 15, 1993 among Borrower, Agent and certain financial institutions
(including certain Lenders), as amended by (i) a First Amendment to Fifth
Amendment to and Restatement of Credit Agreement dated December 21, 1993, (ii) a
Second Amendment to Fifth Amendment to and Restatement of Credit Agreement dated
June 15, 1994, (iii) a Third Amendment to Fifth Amendment to and Restatement of
Credit Agreement dated September 1, 1994, (iv) a Fourth Amendment to Fifth
Amendment to and Restatement of Credit Agreement dated June 21, 1995 and (v) a
Fifth Amendment to Fifth Amendment to and Restatement of Credit Agreement dated
September 15, 1995 (as so amended, the "FIRST RESTATED AGREEMENT"), pursuant to
which Borrower issued Renewal Promissory Notes in renewal and increase of, and
in substitution for, the Original Notes (the "FIRST RENEWAL NOTES").
4. The First Restated Agreement was restated in its entirety pursuant
to that certain Second Restatement of Credit Agreement dated as of December 1,
1995 among Borrower, Agent and certain financial institutions (including certain
Lenders), as amended by a First Amendment to Second Restatement of Credit
Agreement dated March 8, 1996 (as so amended, the "SECOND RESTATED AGREEMENT"),
pursuant to which Borrower issued Renewal Promissory Notes in renewal and
increase of, and in substitution for, the First Renewal Notes (the "SECOND
RENEWAL NOTES").
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4. The Second Restated Agreement was restated in its entirety pursuant
to that certain Third Restatement of Credit Agreement dated as of July 11, 1996
among Borrower, Agent and certain of financial institutions (including certain
Lenders), as amended by (i) a First Amendment to Third Restatement of Credit
Agreement dated July 11, 1996, (ii) a Second Amendment to Third Restatement of
Credit Agreement dated November 6, 1996, and (iii) a Third Amendment to Third
Restatement of Credit Agreement dated February 12, 1997 (as so amended, the
"THIRD RESTATED AGREEMENT"),pursuant to which Borrower issued Renewal Promissory
Notes in renewal and increase of, and in substitution for, the Second Renewal
Notes (the "THIRD RENEWAL NOTES").
5. The Third Restated Agreement was restated in its entirety pursuant
to that certain Fourth Restatement of Credit Agreement dated as of March 31,
1997 among Borrower, Agent and certain financial institutions (including certain
Lenders) (the "EXISTING AGREEMENT"), pursuant to which Borrower issued Renewal
Promissory Notes in renewal and increase of, and in substitution for, the Third
Renewal Notes (the "EXISTING NOTES").
6. Borrower desires to amend and restate the Existing Agreement in its
entirety and to renew and increase the indebtedness evidenced by the Existing
Notes by issuing the Notes as provided herein.
In consideration of the mutual covenants and agreements contained
herein, the parties hereto agree to restate the Existing Agreement in its
entirety on the terms and conditions hereinafter provided:
ARTICLE I - DEFINITIONS AND REFERENCES
Section 1.1. DEFINED TERMS. As used in this Agreement, each of the
following terms has the meaning given it in this Section 1.1 or in the sections
and subsections referred to below:
"AB SUB" has the meaning given it in the Recitals to this Agreement.
"ADVANCE" has the meaning given it in Section 2.1.
"AFFILIATE" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person.
"AGENT" means ING (U.S.) Capital Corporation (formerly known as
Internationale Nederlanden (U.S.) Capital Corporation), and its successors in
such capacity.
"AGREEMENT" means this Fifth Restatement of Credit Agreement, as the
same may from time to time be amended, supplemented or otherwise modified.
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"APPLICABLE MARGIN" means from the date hereof until June 30, 1998, the
per annum interest rate set forth in the table below based upon the Debt to
Capitalization Ratio of Borrower as of December 31, 1997. The Applicable Margin
shall be adjusted based upon the Debt to Capitalization Ratio as of June 30,
1998 and as of the end of each Fiscal Quarter thereafter, any such adjustment to
be made effective on the first Business Day following receipt by Agent of a
certificate of the chief financial officer of Borrower demonstrating a change in
the Debt to Capitalization Ratio for such Fiscal Quarter to an amount such that
another Applicable Margin should be applied pursuant to the table set forth
below; PROVIDED that the Applicable Margin shall never be a negative number.
Notwithstanding the foregoing, if at any time during a Fiscal Quarter Borrower
consummates an equity offering (i) the proceeds of which are used to repay
Consolidated Debt of Borrower and (ii) the effect of which is to change the Debt
to Capitalization Ratio such that on a pro forma basis as of the end of the
immediately preceding Fiscal Quarter another Applicable Margin would apply based
upon the table set forth below, then on the first Business Day after receipt by
Agent of a certificate from the chief financial officer of Borrower
demonstrating such fact, the Applicable Margin shall be adjusted in accordance
with the table set forth below and shall remain in effect until readjusted based
upon a change in the Debt to Capitalization Ratio at the end of a subsequent
Fiscal Quarter.
DEBT TO CAPITALIZATION RATIO APPLICABLE MARGIN
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Greater than or equal to 70% 1.25%
Greater than or equal to 60% but less
than 70% 1.125%
Greater than or equal to 50% but less
than 60% 1.00%
Less than 50% 0.75%
"BACK-TO-BACK LETTER OF CREDIT" means any Letter of Credit issued
hereunder by an Issuing Bank that is backed by a letter of credit issued for the
benefit of the Issuing Bank by a financial institution acceptable to the Issuing
Bank and otherwise issued on terms and conditions acceptable to the Issuing Bank
in its sole discretion; provided that the aggregate amount of Back-to-Back
Letters of Credit outstanding any time shall not exceed $5,000,000.
"BACK-TO-BACK LC OBLIGATION" means at the time in question, the sum of
the Matured LC Obligations related to Back-to-Back Letters of Credit plus the
aggregate amounts which Lenders might be called upon to advance under all
Back-to-Back Letters of Credit then outstanding.
"BASE RATE" means the rate of interest from time to time established by
Agent at its principal office in New York City as its prime commercial lending
rate; PROVIDED, HOWEVER, that if Agent shall cease to announce a prime
commercial lending rate, then "Base Rate" shall mean the arithmetic
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average of the rates of interest publicly announced by The Chase Manhattan Bank,
Citibank, N.A. and Xxxxxx Guaranty Trust Company of New York (or their
respective successors) as their respective prime commercial lending rates (or,
as to any such bank that does not announce such a rate, such bank's 'base' or
other rate determined by Agent to be the equivalent rate announced by such
bank), except that, if any such bank shall, for any period, cease to announce
publicly its prime commercial lending (or equivalent) rate, Agent shall, during
such period, determine the "Base Rate" based upon the prime commercial lending
(or equivalent) rates announced publicly by the other such banks. The Base Rate
shall in no event, however, exceed the Highest Lawful Rate.
"BASE RATE PORTION" means that portion of the unpaid principal balance
of a Loan which is not made up of Fixed Rate Portions.
"BORROWER" means Forcenergy Inc (formerly known as Forcenergy Gas
Exploration, Inc.), a Delaware corporation.
"BORROWING BASE" means, at the particular time in question, either the
amount provided for in Section 2.11 or the amount determined by Agent in
accordance with the provisions of Section 2.12; provided, however, that in no
event shall the Borrowing Base ever exceed the Maximum Loan Amount.
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in New York, New York.
Any Business Day in any way relating to Fixed Rate Portions (such as the day on
which an Interest Period begins or ends) must also be a day on which, in the
judgment of Agent, significant transactions in dollars are carried out in the
interbank eurocurrency market.
"CAPITAL LEASES" means capital leases and subleases as defined in
accordance with GAAP.
"CHANGE OF CONTROL" means the occurrence of any of the following events
at any time after the execution and delivery of this Agreement, except to the
extent any of the following events occurs with the prior written consent of
Majority Lenders: (i) any Person or two or more Persons acting as a group shall
acquire beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended,
and including holding proxies to vote for the election of directors) of 33 1/3%
or more of the outstanding shares of voting common stock of Borrower, (ii) there
is a sale of all or substantially all of the assets of Borrower or a
distribution of assets of Borrower upon any dissolution, winding up, liquidation
or reorganization of Borrower or (iii) there is a Change of Control as defined
in the Subordinated Debt Documents.
"COLLATERAL" means all property of any kind which is subject to a Lien
in favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
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"COMMITMENT PERIOD" means the period from and including the date hereof
until and including the Termination Date (or, if earlier, the day on which the
Notes first become due and payable in full).
"CONSOLIDATED" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.
"CONSOLIDATED ASSETS" means, as of any date of determination, the total
amount of all assets of Borrower and its Subsidiaries on a Consolidated basis in
accordance with GAAP.
"CONSOLIDATED CASH FLOW" means for any Fiscal Quarter, the sum of
Consolidated net income of Borrower calculated in accordance with GAAP plus
depreciation, depletion, amortization and interest expense deducted in
determining such net income.
"CONSOLIDATED DEBT" means, as of any date of determination, the total
of all Debt of Borrower and its Subsidiaries outstanding on such date, after
eliminating all offsetting debits and credits between Borrower and its
Subsidiaries and all other items required to be eliminated in the course of the
preparation of Consolidated financial statements of Borrower in accordance with
GAAP.
"CONSOLIDATED FIXED CHARGES" means for any Fiscal Quarter the sum of
(i) lease payments paid pursuant to Capital Leases, (ii) the aggregate principal
payments made with respect to Funded Debt of Borrower and its Subsidiaries
(other than voluntary prepayments) or due and payable during such Fiscal Quarter
PLUS (ii) all interest paid or accrued by Borrower and its Subsidiaries with
respect to Funded Debt, including all interest paid (but excluding any accrued
interest) with respect to the Subordinated Debt during such Fiscal Quarter;
PROVIDED, HOWEVER, that any principal or interest payments with respect to
Funded Debt that are payable in one Fiscal Quarter and actually paid in another
Fiscal Quarter shall not be twice included in Consolidated Fixed Charges.
"CONSOLIDATED NET WORTH" means, as of any date of determination, the
remainder of (i) all Consolidated Assets of Borrower MINUS (ii) Borrower's
Consolidated Debt.
"CONSOLIDATED TANGIBLE NET WORTH" means, as of any date of
determination, the remainder of (i) all Consolidated Assets of Borrower, other
than intangible assets (including, without limitation, as intangible assets such
assets as patents, copyrights, licenses, franchises, goodwill, trade names,
trade secrets, and leases other than oil, gas or mineral leases or leases
required to be capitalized under GAAP), MINUS (ii) Borrower's Consolidated Debt
(other than Subordinated Debt).
"CONSOLIDATED TOTAL CAPITALIZATION" means, as of the date of
determination, the sum of Consolidated Net Worth and Consolidated Debt of
Borrower.
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"CURRENT ASSETS" means the current assets of Borrower and its
Subsidiaries on a Consolidated basis determined in accordance with GAAP.
"CURRENT LIABILITIES" means the current liabilities of Borrower and its
Subsidiaries on a Consolidated basis determined in accordance with GAAP.
"DEBT" means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
"DEBT TO CAPITALIZATION RATIO" means, at the time in question, the
ratio of the Consolidated Debt of Borrower to the Consolidated Total
Capitalization of Borrower.
"DEFAULT" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.
"DETERMINATION DATE" has the meaning given it in Section 2.12.
"DISCLOSURE SCHEDULE" means (a) Schedule 1 hereto and (b) any documents
listed on such schedule and expressly incorporated therein by reference, so long
as Borrower has heretofore delivered true and correct copies of such documents
to Agent and each Lender. Insofar as any representations and warranties made
herein are incorporated by reference or otherwise remade in Loan Documents
delivered as of a date after the date hereof, the term "Disclosure Schedule"
shall in such representations and warranties be deemed to refer as well to all
other documents which Borrower has at the time in question delivered to Agent
and each Lender.
"EFFECTIVE DATE" means April 13, 1998.
"ENGINEERING REPORT" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 5.1(b)(iv).
"ENVIRONMENTAL LAWS" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
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"ERISA PLAN" means any pension benefit plan subject to Title IV of
ERISA maintained by any Related Person or any Affiliate thereof with respect to
which any Related Person has a fixed or contingent liability.
"EURODOLLAR RATE" means, with respect to each particular Fixed Rate
Portion within a Tranche and with respect to the related Interest Period, a rate
per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) quoted by
Agent at approximately 11:00 a.m. London time (or as soon thereafter as
practicable) on the date two Business Days prior to the first day of such
Interest Period for the offering by Agent to leading banks in the London
interbank market of dollar deposits having a term comparable to such Interest
Period and in an amount comparable to the principal amount of Agent's Fixed Rate
Portion within such Tranche; provided, however, that if Agent shall cease to
make such offers "Eurodollar Rate" shall mean, with respect to such Fixed Rate
Portion, the rate per annum (rounded upwards, if necessary, to the nearest 1/16
of 1%) reported, on the date two Business Days prior to the first day of such
Interest Period, on Page 3750 (British Bankers Association Settlement Rate) on
the "Telerate" system of Dow Xxxxx Market Services, Inc. (or its successor) as
the London Interbank Offered Rate for dollar deposits having a term comparable
to such Interest Period and in an amount of $1,000,000 or more (or, if such Page
shall cease to be publicly available or if the information contained on such
Page, in Agent's sole judgment, shall cease to accurately reflect such London
Interbank Offered Rate, as reported by any publicly available source of similar
market data selected by Agent that, in Agent's sole judgment, accurately
reflects such London Interbank Offered Rate).
"EVENT OF DEFAULT" has the meaning given it in Section 7.1, provided
that any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"EXISTING AGREEMENT" has the meaning given it in the Recitals to this
Agreement.
"EXISTING NOTES" has the meaning given it in the Recitals to this
Agreement.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or , if such rate is not so published for any
day which is a Business Day, the average of the quotations for such date on such
transactions received by Agent from three federal funds brokers of recognized
standing selected by it.
"FIRST RENEWAL NOTES" has the meaning given it in the Recitals to this
Agreement.
"FIRST RESTATED AGREEMENT" has the meaning given it in the Recitals to
this Agreement.
"FISCAL QUARTER" means a three-month period ending on March 31, June
30, September 30 or December 31 of any year.
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"FISCAL YEAR" means a twelve-month period ending on December 31 of any
year.
"FIXED RATE" means, with respect to each particular Fixed Rate Portion
and the associated Eurodollar Rate and Reserve Percentage, the rate per annum
calculated by Agent (rounded upwards, if necessary, to the next higher 0.01%)
determined on a daily basis pursuant to the following formula:
Fixed Rate =
EURODOLLAR RATE + A
---------------------------
100.0% - Reserve Percentage
where A equals the Applicable Margin. If the Reserve Percentage changes during
the Interest Period for a Fixed Rate Portion, Agent may, at its option, either
change the Fixed Rate for such Fixed Rate Portion or leave it unchanged for the
duration of such Interest Period. The Fixed Rate shall in no event, however,
exceed the Highest Lawful Rate.
"FIXED RATE PORTION" means any portion of the unpaid principal balance
of a Loan which Borrower designates as such in a Rate Election.
"FUNDED DEBT" means, as to any Person, at any date, 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 and (c) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable arising in
the ordinary course of business.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of Borrower
and its Consolidated subsidiaries, are applied for all periods after the date
hereof in a manner consistent with the manner in which such principles and
practices were applied to the audited Initial Financial Statements. If any
change in any accounting principle or practice is required by the Financial
Accounting Standards Board (or any such successor) in order for such principle
or practice to continue as a generally accepted accounting principle or
practice, all reports and financial statements required hereunder with respect
to Borrower or with respect to Borrower and its Consolidated subsidiaries may be
prepared in accordance with such change, but all calculations and determinations
to be made hereunder which are materially affected by such change may be made in
accordance with such change only after prior notice of such change is given to
each Lender.
"GRACE PERIOD" has the meaning given it in Section 7.1.
"GUARANTOR" means any Subsidiary of Borrower now in existence or
hereafter created which now or hereafter executes and delivers a guaranty to
Agent pursuant to Section 6.5.
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"HAZARDOUS MATERIALS" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"HIGHEST LAWFUL RATE" means, with respect to each Lender, the maximum
non-usurious rate of interest that such Lender is permitted under applicable law
to contract for, take, charge, or receive with respect to its Loan. All
determinations herein of the Highest Lawful Rate, or of any interest rate
determined by reference to the Highest Lawful Rate, shall be made separately for
each Lender as appropriate to assure that the Loan Documents are not construed
to obligate any Person to pay interest to any Lender at a rate in excess of the
Highest Lawful Rate applicable to such Lender.
"ING" means ING (U.S.) Capital Corporation (formerly known as
Internationale Nederlanden (U.S.) Capital Corporation), a Delaware corporation.
"ING BANK" has the meaning given it in the Recitals to this Agreement.
"INITIAL ENGINEERING REPORT" means, collectively, the engineering
report concerning oil and gas properties of Borrower dated March 4, 1998
prepared by Netherland, Xxxxxx & Associates, Inc. as of January 1, 1998 and the
engineering report concerning oil and gas properties of Borrower dated February
16, 1998 prepared by Borrower and reviewed by Collarini & Associates as of
January 1, 1998.
"INITIAL FINANCIAL STATEMENTS" means the audited annual Consolidated
financial statements of Borrower dated as of December 31, 1997.
"INTEREST EXPENSE" means for any Fiscal Quarter the sum of (i) interest
payable on the Obligations for such Fiscal Quarter PLUS (ii) interest payable
(excluding any accrued but unpaid interest) on the Subordinated Debt.
"INTEREST PERIOD" means, with respect to each particular Fixed Rate
Portion of a Loan, a period of 1, 2, 3 or 6 months, as specified in the Rate
Election applicable thereto, beginning on and including the date specified in
such Rate Election (which must be a Business Day), and ending on but not
including the same day of the month as the day on which it began (e.g., a period
beginning on the third day of one month shall end on but not include the third
day of another month), provided that each Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next succeeding
Business Day (unless such next succeeding Business Day is in the next following
calendar month, in which case such Interest Period shall end on the immediately
preceding Business Day) and provided that each Interest Period which begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month in which it
would have ended if there were a numerically corresponding day in such calendar
month. No Interest Period may be elected which would extend past the date on
which the associated Note is due and payable in full.
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"ISSUING BANK" means any of the Lenders acting in its capacity as an
issuer of Letters of Credit hereunder.
"LATE PAYMENT RATE" means, at the time in question, two percent (2.0%)
per annum plus the Base Rate then in effect; provided that, with respect to any
Fixed Rate Portion with an Interest Period extending beyond the date such Fixed
Rate Portion becomes due and payable, "Late Payment Rate" shall mean two percent
(2.0%) per annum plus the related Fixed Rate. The Late Payment Rate shall in no
event, however, exceed the Highest Lawful Rate.
"LC APPLICATION" means any application or agreement for a standby
Letter of Credit executed by Borrower pursuant to Section 2A.1.
"LC OBLIGATION" means at the time in question, the sum of the Matured
LC Obligations of Borrower plus the aggregate amounts which Lenders might be
called upon to advance under all Letters of Credit then outstanding.
"LENDERS" means each signatory hereto other than Borrower, including
ING, in its capacity as a lender hereunder rather than as Agent, and the
successors of each as holder of a Note.
"LETTER OF CREDIT" has the meaning given it in Section 2A.1.
"LIEN" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Debt owed to him or any other
arrangement with such creditor which provides for the payment of such Debt out
of such property or assets or which allows him to have such Debt satisfied out
of such property or assets prior to the general creditors of any owner thereof,
including any lien, mortgage, security interest, pledge, deposit, production
payment, rights of a vendor under any title retention or conditional sale
agreement or lease substantially equivalent thereto, tax lien, mechanic's or
materialman's lien, or any other charge or encumbrance for security purposes,
whether arising by law or agreement or otherwise, but excluding any right of
offset which arises without agreement in the ordinary course of business. "Lien"
also means any filed financing statement (other than protective filings for
operating leases), any registration of a pledge (such as with an issuer of
unregistered securities), or any other arrangement or action which would serve
to perfect a Lien described in the preceding sentence, regardless of whether
such financing statement is filed, such registration is made, or such
arrangement or action is undertaken before or after such Lien exists.
"LOAN" has the meaning given it in Section 2.1. "LOANS" means
collectively each Lender's Loan.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security
Documents, any guaranty given in accordance with Section 6.5, the Letters of
Credit, the LC Applications, and all other agreements, certificates, documents,
instruments and writings at any time delivered in connection herewith or
therewith (exclusive of term sheets, commitment letters, correspondence and
similar documents used in the negotiation hereof).
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"MAJORITY LENDERS" means at any time Lenders the Percentage Shares of
which aggregate at least sixty-six and two-thirds percent (66 2/3%).
"MATURED LC OBLIGATIONS" has the meaning given it in Section 2A.2(a).
"MAXIMUM LOAN AMOUNT" means the amount of $250,000,000.
"1997 INDENTURE" means that certain Indenture entered into on February
14, 1997 between Borrower and Bankers Trust Company, as trustee, pursuant to
which the 2007 Senior Subordinated Notes were issued, as such instrument was in
effect on the date of execution.
"1996 INDENTURE" means that certain Indenture entered into on or about
November 6, 1996 between Borrower and Bankers Trust Company, as trustee,
pursuant to which the 2006 Senior Subordinated Notes were issued, as such
instrument was in effect on the date of execution.
"NOTE" has the meaning given it in Section 2.1. "NOTES" means
collectively each Lender's Note.
"OBLIGATIONS" means all Debt from time to time owing by any of the
Related Persons to Agent or any Lender under or pursuant to any of the Loan
Documents. "OBLIGATION" means any part of the Obligations.
"PARTNERSHIP" has the meaning given it in the Recitals to this
Agreement.
"PERCENTAGE SHARE" means, with respect to any Lender (a) when used in
Sections 2.1, 2.5 or 2.A.2(b), in any Request for Advance or when no Loans are
outstanding hereunder, the percentage set forth opposite such Lender's name on
the signature pages of this Agreement, and (b) when used otherwise, the
percentage equal to the unpaid principal balance of such Lender's Loan at the
time in question divided by the aggregate unpaid principal balance of all Loans
at such time.
"PERMITTED INVESTMENTS" means:
(a) investments in open market commercial paper, maturing
within 270 days after acquisition thereof, which has the highest or
second highest credit rating given by either Standard & Poor's
Corporation or Xxxxx'x Investors Service, Inc.
(b) investments in marketable obligations, maturing within 12
months after acquisition thereof, issued or unconditionally guaranteed
by the United States of America or an instrumentality or agency thereof
and entitled to the full faith and credit of the United States of
America.
(c) investments in demand deposits, and time deposits
(including certificates of deposit) maturing within 12 months from the
date of deposit thereof, with any office of any
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Lender or with a domestic office of any national or state bank or trust
company which is organized under the laws of the United States of
America or any state therein, which has capital, surplus and undivided
profits of at least $500,000,000, and whose certificates of deposit
have at least the third highest credit rating given by either Standard
& Poor's Corporation or Xxxxx'x Investors Service, Inc.
(d) investments in money market or other mutual funds
substantially all of whose assets comprise securities of the types
described in paragraphs (a) through (c) above.
(e) contracts entered into with the purpose and effect of
fixing prices on oil and/or gas expected to be produced by the Related
Persons, provided that at all times: (1) no such contract fixes a price
for a term of more than twenty-four (24) months without the prior
written consent of Majority Lenders; (2) the aggregate monthly
production covered by all such contracts (determined, in the case of
contracts that are not settled on a monthly basis, by a monthly
proration acceptable to Agent) for any single month does not in the
aggregate exceed seventy-five percent (75%) of the Related Persons'
aggregate Projected Oil and Gas Production anticipated to be sold in
the ordinary course of the Related Persons' businesses for such month,
(3) no such contract requires any Related Person to put up money,
assets, letters of credit or other security against the event of its
nonperformance prior to actual default by such Related Person in
performing its obligations thereunder other than deposits made by
Borrower to satisfy minimum margin requirements in an aggregate amount
not to exceed $5,000,000 outstanding at any time, (4) each such
contract shall be with Agent, any Lender or a counterparty or have a
guarantor of the obligation of the counterparty who, at the time the
contract is made, has long-term obligations rated AA or Aa2 or better,
respectively, by Standard & Poor's Corporation or Xxxxx'x Investors
Services, Inc. (or a successor credit rating agency) and (5) promptly
after entering into such contract if requested by Agent but in any
event on a monthly basis, Borrower gives written notice of such fact to
Agent and all Lenders. As used herein, the term "Projected Oil and Gas
Production" means the projected production of oil and/or gas (measured
by volume unit or BTU equivalent, not sales price) for the term of the
contracts or a particular month, as applicable, from properties and
interests owned by any Related Person which are located in or offshore
of the United States and which have attributable to them proved oil or
gas reserves and, with respect to Borrower, as reflected in the most
recent report delivered pursuant to Section 5.1(b)(iv), after deducting
projected production from any properties or interests sold or under
contract for sale that had been included in such report and after
adding projected production from any properties or interests owned by
Borrower that had not been reflected in such report but that are
reflected in a separate or supplemental reports meeting the
requirements of such Section 5.1(b)(iv) and otherwise satisfactory to
Agent. Notwithstanding the foregoing, in the event that the aggregate
monthly production covered by all contracts entered into with the
purpose and effect of fixing prices on oil and/or gas expected to be
produced by the Related Persons (determined, in the case of contracts
that are not settled on a monthly basis, by a monthly proration
acceptable to Agent) for a period of six consecutive months equals, in
the aggregate for such six month period, seventy-five percent (75%) of
the Related Persons' aggregate
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Projected Oil and Gas Production anticipated to be sold in the ordinary
course of the Related Persons' businesses during such six month period,
Borrower will notify Agent and each Lender in writing of such fact at
least fifteen (15) days prior to the beginning of such six month
period; and
(f) upon prior written notice to Agent and all Lenders,
contracts entered into with the purpose and effect of fixing interest
rates on a principal amount of indebtedness of Borrower that is
accruing interest at a variable rate, provided that (1) the aggregate
notional amount of such contracts never exceeds seventy-five percent
(75%) of the anticipated outstanding principal balance of the
indebtedness of Borrower to be hedged by such contracts or an average
of such principal balances calculated using a generally accepted method
of matching interest swap contracts to declining principal balances,
(2) the floating rate index of each such contract generally matches the
index used to determine the floating rates of interest on the
corresponding indebtedness of Borrower to be hedged by such contract
and (3) each such contract shall be with Agent, any Lender or a
counterparty or have a guarantor of the obligation of the counterparty
who, at the time the contract is made, has long-term obligations rated
AA or Aa2 or better, respectively, by Standard & Poor's Corporation or
Xxxxx'x Investors Services, Inc. (or a successor credit rating agency).
"PERSON" means an individual, corporation, partnership, association,
joint stock company, trust or trustee thereof, estate or executor thereof,
unincorporated organization or joint venture, court or governmental unit or any
agency or subdivision thereof, or any other legally recognizable entity.
"PROHIBITED LIEN" means any Lien not expressly allowed under Section
5.2(b).
"QUALIFIED PROPERTIES" means at the particular time in question those
oil and gas properties and interests (a) which are owned by Borrower (b) which
are located in or offshore the United States, (c) which have attributable to
them proved oil or gas reserves, and (d) to the extent requested by Agent (i)
which are subject to Security Documents securing the Obligations that constitute
and create legal, valid and duly perfected first deed of trust or mortgage liens
in such properties and interests and first priority assignments of and security
interests in the oil and gas attributable to such properties and interests and
the proceeds thereof, free and clear of all Prohibited Liens, and (ii) for which
Agent has received favorable title opinions from legal counsel acceptable to it
with respect to each of such properties and interests, based upon abstract or
record examinations to dates acceptable to Agent and (A) stating that Borrower
has good and defensible title to such properties and interests, (B) confirming
the requirements provided for in subsection (d)(i) of this definition, and (C)
covering such other matters as Agent may request.
"RATE ELECTION" has the meaning given it in Section 2.4.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.
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"RELATED PERSON" means any of Borrower, each Subsidiary of Borrower and
each Guarantor.
"REQUEST FOR ADVANCE" means a written or telephonic request, or a
written confirmation, made by Borrower which meets the requirements of Section
2.2.
"REQUIRED LENDERS" means at any time Lenders the Percentage Shares of
which aggregate at least eighty-five percent (85%).
"RESERVE PERCENTAGE" means, on any day with respect to each particular
Fixed Rate Portion in a Tranche, the maximum reserve requirement, as determined
by Agent (including without limitation any basic, supplemental, marginal,
emergency or similar reserves), expressed as a percentage and rounded to the
next higher 0.01%, which would then apply to member banks of the Federal Reserve
System. If such reserve requirement shall change after the date hereof, Borrower
shall be promptly notified thereof and the Reserve Percentage shall be
automatically increased or decreased, as the case may be, from time to time as
of the effective time of each such change in such reserve requirement.
"SECOND RENEWAL NOTES" has the meaning given it in the Recitals to this
Agreement.
"SECOND RESTATED AGREEMENT" has the meaning given it in the Recitals to
this Agreement.
"SECURITY DOCUMENTS" means all security agreements, deeds of trust,
mortgages, chattel mortgages, pledges, guaranties, financing statements,
continuation statements, extension agreements and other agreements or
instruments now, heretofore, or hereafter delivered by any Related Person to
Agent in connection with this Agreement or any transaction contemplated hereby
to secure or guarantee the payment of any part of the Obligations or the
performance of any Related Person's other duties and obligations under the Loan
Documents.
"SENIOR SUBORDINATED NOTES" means collectively the 2006 Senior
Subordinated Notes and the 2007 Senior Subordinated Notes.
"SUBORDINATED DEBT" means collectively the Debt evidenced by the 2006
Senior Subordinated Notes and the 2007 Senior Subordinated Notes.
"SUBORDINATED DEBT DOCUMENTS" means collectively the 1996 Indenture and
the 1997 Indenture, and the Senior Subordinated Notes issued thereunder.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person.
"TERMINATION DATE" means March 31, 2002.
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"TERMINATION EVENT" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of any Related Person or
of any Affiliate of any Related Person from an ERISA Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA,
or (c) the filing of a notice of intent to terminate any ERISA Plan or the
treatment of any ERISA Plan amendment as a termination under Section 4041 of
ERISA, or (d) the institution of proceedings to terminate any ERISA Plan by the
Pension Benefit Guaranty Corporation under Section 4042 of ERISA, or (e) any
other event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
ERISA Plan.
"TRANCHE" has the meaning given it in Section 2.4.
"2007 SENIOR SUBORDINATED NOTES" means the 8.5% Senior Subordinated
Notes due 2007 in an original principal amount not to exceed $200,000,000 issued
by Borrower pursuant to the 1997 Indenture.
"2006 SENIOR SUBORDINATED NOTES" means the 9.5% Senior Subordinated
Notes due 2006 in an original principal amount not to exceed $175,000,000 issued
by Borrower pursuant to the 1996 Indenture.
"YEAR 2000 PROBLEM" has the meaning given it in Section 4.1(n).
Section 1.2. EXHIBITS AND SCHEDULES; ADDITIONAL DEFINITIONS. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes.
Section 1.3. AMENDMENT OF DEFINED INSTRUMENTS. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in this
Agreement which refer to a particular agreement, instrument or document also
refer to and include all renewals, extensions, modifications, amendments and
restatements of such agreement, instrument or document, provided that nothing
contained in this section shall be construed to authorize any such renewal,
extension, modification, amendment or restatement.
Section 1.4. REFERENCES AND TITLES. All references in this Agreement to
Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar
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phrases refer only to the sections or subsections hereof in which such phrases
occur. The word "or" is not exclusive, and the word "including" (in its various
forms) means "including without limitation". Pronouns in masculine, feminine and
neuter genders shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa, unless
the context otherwise requires.
Section 1.5. CALCULATIONS AND DETERMINATIONS. All calculations under
the Loan Documents of fees and of interest shall be made on the basis of actual
days elapsed (including the first day but excluding the last) and a year of 360
days. Each determination by Agent or a Lender of amounts to be paid under
Sections 2.13 through 2.18 or any other matters which are to be determined
hereunder by Agent or a Lender (such as any Eurodollar Rate, Fixed Rate,
Business Day, Interest Period, or Reserve Percentage) shall, in the absence of
manifest error, be conclusive and binding. Unless otherwise expressly provided
herein or unless Required Lenders otherwise consent all financial statements and
reports furnished to Agent or any Lender hereunder shall be prepared and all
financial computations and determinations pursuant hereto shall be made in
accordance with GAAP.
ARTICLE II - THE LOANS
Section 2.1. ADVANCES. Each Lender hereby agrees to renew and extend
the principal indebtedness evidenced by the Existing Note held by it on the
terms and conditions provided herein and in the other Loan Documents (such
outstanding indebtedness, if any, being herein called the "INITIAL ADVANCE") and
subject to the terms and conditions hereof, each Lender agrees to make advances
to Borrower (herein, together with the Initial Advance, collectively called such
Lender's "ADVANCES") upon request from time to time during the Commitment Period
so long as (a) each Advance by such Lender does not exceed such Lender's
Percentage Share of the aggregate amount of Advances then requested from all
Lenders, and (b) the aggregate amount of such Lender's Advances made, plus such
Lender's Percentage Share of all outstanding LC Obligations, does not exceed
such Lender's Percentage Share of the Borrowing Base in effect as of the date on
which the requested Advance is to be made. Each Advance hereunder shall be made
by Lenders on a pro-rata basis in accordance with their respective Percentage
Shares. The aggregate amount of all Advances requested of all Lenders in any
Request for Advance must be greater than or equal to $100,000 or must equal the
unadvanced portions of the Borrowing Base or the Maximum Loan Amount, as
applicable. The obligation of Borrower to repay to each Lender the aggregate
amount of all Advances made by such Lender (herein called such Lender's "LOAN"),
together with interest accruing in connection therewith, shall be evidenced by a
single renewal promissory note (herein called such Lender's "Note") made by
Borrower payable to the order of such Lender in the form of EXHIBIT A with
appropriate insertions. Any reference herein to "the making of the Loan" or
words of similar import shall be deemed to be a reference to the renewal of the
Existing Notes by Lenders and the making of subsequent Advances by Lenders as
described above. The amount of principal owing on any Lender's Note at any given
time shall be the aggregate amount of all Advances theretofore made by such
Lender minus all payments of principal theretofore received by such Lender on
such Note. Interest on each Note shall accrue and be due and payable as provided
herein and therein. During the Commitment Period, Borrower may, at its option,
from time to time, request Advances, prepay
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Loans in whole or in part, and reborrow amounts so paid up to the lesser of the
Borrowing Base or the Maximum Loan Amount in effect at the time of reborrowing,
all in accordance with the terms and conditions hereof. On the Termination Date
the outstanding principal balance of, and all accrued interest owing on, the
Notes shall be due and payable in full.
Section 2.2. REQUESTS FOR ADVANCES. Borrower must give to Agent at
least three Business Days' prior written notice, or telephonic notice promptly
confirmed in writing, of any requested Advances, after which Agent shall give
each Lender notice thereof within twenty-four hours of Agent's receipt of such
requested Advances. Each such written request or confirmation must be made in
the form and substance of the "Request for Advance" attached hereto as EXHIBIT
B, duly completed. Each such telephonic request shall be deemed a
representation, warranty, acknowledgment and agreement by Borrower as to the
matters which are required to be set out in such written confirmation. If all
conditions precedent to such Advances have been met, each Lender will on the
date requested promptly remit to Agent at Agent's office in New York, New York
the amount of such Lender's Advance in immediately available funds, and upon
receipt of such funds, unless to its actual knowledge any conditions precedent
to such Advances have been neither met nor waived as provided herein, Agent
shall promptly make the Advances available to Borrower. Each Request for Advance
shall be irrevocable and binding on Borrower. Unless Agent shall have received
prompt notice from a Lender that such Lender will not make available to Agent
such Lender's Advance, Agent may in its discretion assume that such Lender has
made such Advance available to Agent in accordance with this section and Agent
may if it chooses, in reliance upon such assumption, make such Advance available
to Borrower. If and to the extent such Lender shall not so make its Advance
available to Agent, such Lender and Borrower severally agree to pay or repay to
Agent within three days after demand the amount of such Advance together with
interest thereon, for each day from the date such amount is made available to
Borrower until the date such amount is paid or repaid to Agent, at the Federal
Funds Rate; provided that Agent shall first notify such Lender and if Agent does
not receive such Lender's Advance immediately upon receipt of such notice, then
Borrower shall pay such amount within three (3) days after demand therefor is
made upon Borrower. The failure of any Lender to make any Advance to be made by
it hereunder shall not relieve any other Lender of its obligation hereunder, if
any, to make its Advance, but no Lender shall be responsible for the failure of
any other Lender to make any Advance to be made by such other Lender.
Section 2.3. USE OF PROCEEDS. Borrower shall use all funds from
Advances made after the date hereof for the exploration, acquisition and
development of oil and gas reserves and to provide working capital for other
general business purposes related to the nature of the business currently being
conducted by Borrower. In no event shall the funds from any Advance be used
directly or indirectly by any Person for personal, family, household or
agricultural purposes or for the purpose, whether immediate, incidental or
ultimate, of purchasing, acquiring or carrying any "margin stock" or any "margin
securities" (as such terms are defined respectively in Regulation U and
Regulation G promulgated by the Board of Governors of the Federal Reserve
System) or to extend credit to others directly or indirectly for the purpose of
purchasing or carrying any such margin stock or margin securities. Borrower
represents and warrants to Lender that Borrower is not engaged
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principally, or as one of Borrower's important activities, in the business of
extending credit to others for the purpose of purchasing or carrying such margin
stock or margin securities.
Section 2.4. RATE ELECTIONS. Borrower may from time to time designate
all or any portions of the Loans (including any yet to be made Advances which
are to be made prior to or at the beginning of the designated Interest Period
but excluding any portions of the Loans which are required to be repaid prior to
the end of the designated Interest Period) as a "Tranche", which term refers to
a set of Fixed Rate Portions with identical Interest Periods and with each
Lender participating in such Tranche in accordance with its Percentage Share.
Without the consent of Majority Lenders, Borrower may make no such election
during the continuance of a Default, and Borrower may make such an election with
respect to already existing Fixed Rate Portions only if such election will take
effect at or after the termination of the Interest Period applicable thereto.
Each election by Borrower of a Tranche shall:
(a) Be made in writing in the form and substance of the "Rate
Election" attached hereto as EXHIBIT C, duly completed;
(b) Specify the aggregate amount of the Loans which Borrower
desires to designate as such Tranche, the first day of the Interest
Period which is to apply thereto, and the length of such Interest
Period; and
(c) Be received by Agent not later than 10:00 a.m., New York,
New York time, on the third Business Day preceding the first day of the
specified Interest Period.
Within twenty-four hours of its receipt of any such election (herein called a
"RATE ELECTION") which meets the requirements of this section, Agent shall
notify each Lender thereof. Each Rate Election shall be irrevocable. Borrower
may make no Rate Election which does not specify an Interest Period complying
with the definition of "Interest Period" in Section 1.1, and the aggregate
amount of the Tranche elected in any Rate Election must be $1,000,000 or a
higher integral multiple of $1,000,000. Upon the termination of each Interest
Period the portion of each Loan within the related Tranche shall, unless the
subject of a new Rate Election then taking effect, automatically become a part
of the Base Rate Portion of such Loan and become subject to all provisions of
the Loan Documents governing such Base Rate Portion. Borrower shall have no more
than five (5) Tranches in effect at any time.
Section 2.5. COMMITMENT AND FACILITY FEES. In consideration of each
Lender's commitment to make Advances up to the amount of the Borrowing Base in
effect from time to time, Borrower will pay to Agent for the account of each
Lender a commitment fee determined on a daily basis by applying a rate of
three-eighths of one percent (0.375%) per annum to such Lender's Percentage
Share of the unused portion of the Borrowing Base on each day during the
Commitment Period, determined for each such day by deducting from the Borrowing
Base the aggregate unpaid principal balance of the Loans and outstanding LC
Obligations at the end of such day. In addition, Borrower will pay to Agent for
the account of each Lender a facility fee determined on a daily basis by
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applying a rate of one-eighth of one percent (0.125%) per annum to such Lender's
Percentage Share of the excess, if any, of the Maximum Loan Amount over the
Borrowing Base on each day during the Commitment Period, determined for each
such day by deducting from the Maximum Loan Amount the Borrowing Base in effect
at the end of such day. The commitment fee and the facility fee payable
hereunder shall be due and payable in arrears on the last day of each Fiscal
Quarter and at the end of the Commitment Period.
Section 2.6. UP-FRONT FEES. Borrower hereby agrees to pay the following
up-front fees on the Effective Date:
(a) Each "Lender" under the Existing Agreement that is a
Lender hereunder shall be paid a fee of $10,000 in consideration for
increasing its share (on a dollar basis) of the Maximum Loan Amount
hereunder.
(b) Each "Lender" under the Existing Agreement that is a
Lender hereunder shall be paid a fee equal to one quarter of one
percent (0.25%) of the difference between (i) such Lender's share (on a
dollar basis) of the Maximum Loan Amount (as defined herein) and (ii)
such Lender's share (on a dollar basis) of the Maximum Loan Amount (as
defined in the Existing Agreement).
(c) Each Lender hereunder that is not a "Lender" under the
Existing Agreement shall be paid a fee equal to one quarter of one
percent (0.25%) of such Lender's share (on a dollar basis) of the
Maximum Loan Amount.
Section 2.7. AGENT'S FEES. In addition to all other amounts due to
Agent under the Loan Documents, Borrower will pay the fees separately agreed to
between Borrower and Agent in that certain fee letter of even date herewith
between Borrower and Agent.
Section 2.8. OPTIONAL PREPAYMENTS. Borrower may, upon three Business
Days' notice to Agent, at any time and from time to time and without premium or
penalty prepay the Notes, in whole or in part, so long as the aggregate amount
of all partial prepayments of principal concurrently paid on the Notes equals
$100,000 or any higher integral multiple of $100,000, and so long as Borrower
does not prepay any Fixed Rate Portion. Each partial prepayment of principal
made after the end of the Commitment Period shall be applied to the regular
installments of principal due under the Notes in the direct order of their
maturities. Each prepayment of principal under this section shall be accompanied
by all interest then accrued and unpaid on the principal amount so prepaid. Any
principal or interest prepaid pursuant to this section shall be in addition to,
and not in lieu of, all payments otherwise required to be paid under the Loan
Documents at the time of such prepayment.
Section 2.9. MANDATORY PREPAYMENTS. If the aggregate unpaid principal
balance of the Loans, together with all outstanding LC Obligations, ever exceed
the Borrowing Base, Borrower shall, within forty-five (45) days after Agent
gives notice of such fact to Borrower, either (i) prepay the principal of the
Loans in an amount at least equal to such excess or (ii) grant a first priority
Lien in
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favor of Agent on its additional oil and gas properties or other assets
acceptable to Majority Lenders with a collateral value satisfactory to Majority
Lenders in their sole discretion. Each prepayment of principal under this
section shall be accompanied by all interest then accrued and unpaid on the
principal amount so prepaid and each prepayment of principal under this section
after the Termination Date shall proportionately reduce each remaining regular
installment of principal due under the Notes so that such reduced payment shall
be equal to the product obtained by multiplying each such payment by a fraction
(i) the numerator of which shall equal the amount of the outstanding Loans on
the date of such prepayment after giving effect to such prepayment and (ii) the
denominator of which shall equal the amount of the outstanding Loans on the date
of such prepayment before giving effect to such prepayment. Any principal or
interest prepaid pursuant to this section shall be in addition to, and not in
lieu of, all payments otherwise required to be paid under the Loan Documents at
the time of such prepayment. In the event Borrower fails to make such prepayment
or provide additional Collateral acceptable to Majority Lenders within the time
period set forth above, such failure shall constitute an Event of Default
hereunder without any further notice to Borrower or the availability of any
additional Grace Period.
Section 2.10. PAYMENTS TO LENDERS. Borrower will make each payment
which it owes under the Loan Documents to Agent for the account of the Lender to
whom such payment is owed. Each such payment must be received by Agent not later
than 12:00 p.m., Noon, New York, New York time, on the date such payment becomes
due and payable, in lawful money of the United States of America and in
immediately available funds. Any payment received by Agent after such time will
be deemed to have been made on the next following Business Day. Should any such
payment become due and payable on a day other than a Business Day, the due date
of such payment shall be extended to the next succeeding Business Day, and, in
the case of a payment of principal or past due interest, interest shall accrue
and be payable thereon for the period of such extension as provided in the Loan
Document under which such payment is due. Each payment under a Loan Document
shall be due and payable at the place provided therein and, if no specific place
of payment is provided, shall be due and payable at the place of payment of
Agent's Note. When Agent collects or receives money on account of the
Obligations, Agent shall promptly distribute all money so collected or received,
and Lenders shall apply all such money they receive from Agent, as follows:
(a) first, for the payment of all Obligations which are then
due (and if such money is insufficient to pay all such Obligations,
first to any reimbursements due Agent under Section 5.1(i) or (j) and
then to the partial payment of all other Obligations then due in
proportion to the amounts thereof, or as Lenders shall otherwise
agree);
(b) then for the prepayment of amounts owing under the Loan
Documents (other than principal on the Notes) but only if so
specifically requested by Borrower;
(c) then for the prepayment of principal on the Notes,
together with accrued and unpaid interest on the principal so prepaid;
and
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(d) last, after full repayment of the Notes, for the payment
or prepayment of any other Obligations.
All payments applied to principal or interest on any Note shall be applied first
to any interest then due and payable, then to principal then due and payable,
and last to any prepayment of principal and interest in compliance with Section
2.8. All distributions of amounts described in any of subsections (a) (unless
for reimbursements due Agent under Section 5.1(i) or (j)), (b), (c) or (d) above
shall be made by Agent pro rata to Agent and each Lender then owed Obligations
described in such subsection in proportion to all amounts owed to Agent and all
Lenders which are described in such subsection.
Section 2.11. INITIAL BORROWING BASE. During the period from the date
hereof to the first Determination Date the Borrowing Base shall be $250,000,000.
Section 2.12. SUBSEQUENT DETERMINATIONS OF BORROWING BASE. By April 1
and October 1 of each year, on each date on which Borrower requests that the
Borrowing Base be redetermined (which request shall not be made more than two
times during any Fiscal Year) and within fifteen (15) days of each date on which
Agent, on behalf of Majority Lenders, requests that the Borrowing Base be
redetermined, Borrower shall furnish to each Lender all information, reports and
data which Agent has then requested concerning the Qualified Properties and the
reserves and production relating thereto, together with the Engineering Report
described in Section 5.1(b)(iv). Within thirty (30) days after receiving such
information, reports and data, or as promptly thereafter as practicable,
Majority Lenders shall agree upon an amount for the Borrowing Base and Agent
shall by notice to Borrower designate such amount as the new Borrowing Base
available to Borrower hereunder during the period beginning on and including the
date such notice is sent (herein called a "DETERMINATION DATE") and continuing
until but not including the next date as of which the Borrowing Base is
redetermined. A Determination Date may (but need not) occur during the period
beginning on the date on which a Request for Advance is submitted and ending on
the date on which such Advances are to be made. If Borrower does not furnish all
such information, reports and data by the date specified in the first sentence
of this section, Agent may nonetheless designate the Borrowing Base at any
amount which Majority Lenders determine and may redesignate the Borrowing Base
from time to time thereafter until each Lender receives all such information,
reports and data, whereupon Majority Lenders shall designate a new Borrowing
Base as described above. Each determination of the Borrowing Base shall be made
by Majority Lenders in the exercise of their sole discretion in accordance with
the then current standards and practices of Lenders for similar oil and gas
loans taking into account such factors as Lenders may deem appropriate,
including, without limitation, (i) the nature and extent of the oil and gas
reserves attributable to the oil and gas properties of Borrower and the
anticipated timing and extent of net operating income therefrom, (ii) any
litigation or other proceedings or facts, including, without limitation, defects
in or uncertainties as to Borrower's title to such oil and gas properties or
encumbrances on the title to such oil and gas properties or encumbrances on the
Qualified Properties, that may affect the value of any of such oil and gas
properties and (iii) the amount of Debt or other obligations, if any, of
Borrower and its Subsidiaries. Each such determi nation shall be binding on and
non-reviewable by Borrower and no Lender shall
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be required to disclose to Borrower its standards and practices for oil and gas
loans. It is expressly understood that Lenders and Agent have no obligation to
agree upon or designate the Borrowing Base at any particular amount, whether in
relation to the Maximum Loan Amount or otherwise, and that Lenders' commitments
to advance funds hereunder are determined by reference to the Borrowing Base
from time to time in effect, which Borrowing Base shall be used to the extent
permitted by law and regulatory authorities for the purposes of Section 2.13. If
Borrower requests Majority Lenders to redetermine the Borrowing Base at any date
in addition to the redetermination dates provided above, upon the consent of
Majority Lenders to such redetermination, Borrower shall within five (5) days
after receipt of such consent pay each Lender a redetermination fee in the
amount of $5,000 for each such redetermination.
Section 2.13. CAPITAL REIMBURSEMENT. If either (a) the introduction or
implementation of or the compliance with any change in or in the interpretation
of any law, rule or regulation, or (b) the introduction or implementation of or
the compliance with any request, directive or guideline from any central bank or
other governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by any
Lender or any corporation controlling any Lender so that the same is increased
from that currently required in an amount a Lender deems material in its sole
discretion, then, such Lender shall promptly notify Borrower and Lender in
writing of the happening of such event and thereafter, upon demand by such
Lender, Borrower will pay to Agent for the benefit of such Lender, from time to
time as specified by such Lender, such additional amount or amounts which such
Lender shall determine to be appropriate to compensate such Lender or any
corporation controlling such Lender in light of such circumstances, to the
extent that such Lender reasonably determines that the amount of any such
capital would be increased or the rate of return on any such capital would be
reduced by or in whole or in part based on the existence of the face amount of
such Lender's Loan or commitments under this Agreement.
Section 2.14. INCREASED COST OF FIXED RATE PORTIONS. If any applicable
domestic or foreign law, treaty, rule or regulation (whether now in effect or
hereinafter enacted or promulgated, including Regulation D) or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law):
(a) shall change the basis of taxation of payments to any
Lender of any principal, interest, or other amounts attributable to any
Fixed Rate Portion or otherwise due under this Agreement in respect of
any Fixed Rate Portion (other than franchise taxes or taxes imposed on
the overall net income of such Lender or any lending office of such
Lender by any jurisdiction in which such Lender or any such lending
office is located); or
(b) shall change, impose, modify, apply or deem applicable any
reserve, special deposit or similar requirements in respect of any
Fixed Rate Portion of any Lender (excluding those for which such Lender
is fully compensated pursuant to adjustments made in the definition of
Fixed Rate) or against assets of, deposits with or for the account of,
or credit extended by, such Lender; or
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(c) shall impose on any Lender or the interbank eurocurrency
deposit market any other condition affecting any Fixed Rate Portion,
the result of which is to increase the cost to any Lender of funding or
maintaining any Fixed Rate Portion or to reduce the amount of any sum
receivable by any Lender in respect of any Fixed Rate Portion by an
amount deemed by such Lender to be material, so that any of the
foregoing is increased from that currently required in an amount a
Lender deems material in its sole discretion, then such Lender shall
promptly notify Agent and Borrower in writing of the happening of such
event and (i) Borrower shall upon demand pay to Agent for the account
of such Lender such additional amount or amounts as will compensate
such Lender for such event (on an after-tax basis) and (ii) Borrower
may elect, by giving to Agent and such Lender not less than three
Business Days' notice, to convert all (but not less than all) of any
such Fixed Rate Portion into a part of the Base Rate Portion.
Section 2.15. TRANSFER OF LOANS AND PARTICIPATIONS. Each Lender will
(and will cause its participants to), if an event occurs that makes Section 2.13
or 2.14 applicable, upon the written request of Borrower, use reasonable efforts
to transfer the affected Loan or Loans or participations therein to an Affiliate
of such Lender, provided that such transfer would not, in the sole discretion of
such Lender, be disadvantageous to such Lender in any manner (except for the
disadvantage of not being a Lender). A Lender may from time to time transfer any
Loan to any Affiliate of such Lender and shall give notice to Borrower and Agent
of such transfer provided that no such transfer will be made if it would render
applicable the provisions of Section 2.13 or 2.14.
Section 2.16. AVAILABILITY. If (a) any change in applicable laws,
treaties, rules or regulations or in the interpretation or administration
thereof of or in any jurisdiction whatsoever, domestic or foreign, shall make it
unlawful or impracticable for any Lender to fund or maintain Fixed Rate
Portions, or shall materially restrict the authority of any Lender to purchase
or take offshore deposits of dollars (i.e., "eurodollars"), or (b) any Lender
determines that matching deposits appropriate to fund or maintain any Fixed Rate
Portion are not available to it, or (c) any Lender determines that the formula
for calculating the Fixed Rate does not fairly reflect the cost to such Lender
of making or maintaining loans based on such rate, then, such Lender shall
promptly notify Borrower and Agent in writing of the happening of such event ,
and upon notice by such Lender to Borrower and Agent, Borrower's right to elect
Fixed Rate Portions of such Lender's Loan shall be suspended to the extent and
for the duration of such illegality, impracticability or restriction and all
Fixed Rate Portions of such Lender's Loan (or portions thereof) which are then
outstanding or are then the subject of any Rate Election and which cannot
lawfully or practicably be maintained or funded shall immediately become or
remain part of the Base Rate Portion of such Lender's Loan. Borrower agrees to
indemnify Agent and each Lender and hold it harmless against all costs,
expenses, claims, penalties, liabilities and damages applicable to the Loans
which may result from any such change in law, treaty, rule, regulation,
interpretation or administration.
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Section 2.17. FUNDING LOSSES. In addition to its other obligations
hereunder, Borrower will indemnify Agent and each Lender against, and reimburse
Agent and each Lender on demand for, any loss or expense incurred or sustained
by Agent or such Lender (including without limitation any loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by a Lender to fund or maintain Fixed Rate Portions or Advances), as a
result of (a) any payment or prepayment (whether authorized or required
hereunder or otherwise) of all or a portion of a Fixed Rate Portion on a day
other than the day on which the applicable Interest Period ends, (b) any payment
or prepayment, whether required hereunder or otherwise, of a Loan made after the
delivery, but before the effective date, of a Rate Election, if such payment or
prepayment prevents such Rate Election from becoming fully effective, (c) the
failure of any Advance to be made or of any Rate Election to become effective
due to any condition precedent not being satisfied or due to any other action or
inaction of any Related Person, or (d) any conversion (whether authorized or
required hereunder or otherwise) of all or any portion of any Fixed Rate Portion
into a Base Rate Portion or into a different Fixed Rate Portion on a day other
than the day on which the applicable Interest Period ends.
Section 2.18. REIMBURSABLE TAXES. Borrower covenants and agrees that:
(a) Borrower will indemnify Agent and each Lender against and
reimburse Agent and each Lender for all present and future income,
stamp and other taxes, levies, costs and charges whatsoever imposed,
assessed, levied or collected on or in respect of this Agreement or any
Fixed Rate Portions (whether or not legally or correctly imposed,
assessed, levied or collected), excluding, however, any taxes imposed
on or measured by the overall net income of Agent or such Lender or any
lending office of Agent or such Lender by any jurisdiction in which
Agent or such Lender or any such lending office is located (all such
non-excluded taxes, levies, costs and charges being collectively called
"Reimbursable Taxes" in this sec tion). Such indemnification shall be
on an after-tax basis, taking into account any income taxes imposed on
the amounts paid as indemnity. Such Lender shall promptly notify
Borrower and Agent in writing of the happening of such event giving
rise to a claim for Reimbursable Taxes.
(b) All payments on account of the principal of, and interest
on, each Lender's Loan and each Lender's Note, and all other amounts
payable by Borrower to Agent and each Lender hereunder, shall be made
in full without set-off or counterclaim and shall be made free and
clear of and without deductions or withholdings of any nature by reason
of any Reimbursable Taxes, all of which will be for the account of
Borrower. In the event of Borrower being compelled by law or other
regulations to make any such deduction or withholding from any payment
to Agent or any Lender, Borrower shall pay on the due date of such
payment, by way of additional interest, such additional amounts as are
needed to cause the amount receivable by Agent or such Lender after
such deduction or withholding to equal the amount which would have been
receivable in the absence of such deduction or withholding. If Borrower
should make any deduction or withholding as aforesaid, Borrower shall
within 60 days thereafter forward to Agent or such Lender, if
reasonably available, an official receipt or other official document
evidencing payment of such deduction or withholding.
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(c) If Borrower is ever required to pay or notified of the
possible liability for any Reimbursable Tax with respect to any Fixed
Rate Portion, Borrower may elect, by giving to Agent and each Lender
not less than three Business Days' notice, to convert all (but not less
than all) of any such Fixed Rate Portion into a part of the Base Rate
Portion, but such election shall not diminish Borrower's obligation to
pay all accrued Reimbursable Taxes.
(d) Agent or any Lender shall, at Borrower's expense, take
such action as Borrower may reasonably request in writing with respect
to such asserted liability, and if requested by Borrower and upon the
prior payment to Agent or any Lender by Borrower of an amount equal to
such Reimbursable Tax, shall make payment of such Reimbursable Tax
under protest, if payment under protest is necessary in order to
contest the claim for Reimbursable Taxes. If contest is made, Agent or
any Lender shall, at Borrower's expense, take such action as Borrower
may reasonably request to contest the claim for Reimbursable Taxes and
shall, if requested, permit Borrower to file a claim or prosecute an
action to contest the claim for Reimbursable Taxes and to recover any
payment made under protest. Such Lender shall remit to Borrower the
full amount of all taxes paid by Borrower and refunded to Lender by any
applicable authority.
Notwithstanding the above or any conflicting or inconsistent
provisions in the Loan Documents, no Related Person shall pay or
indemnify Agent or any Lender for:
(i) Reimbursable Taxes incurred for a failure by
Agent or any Lender to comply with any information (including
certificates, reports, and documents) or filing requirement
which is required by law as a precondition to exemption or
other relief from such tax; or
(ii) Reimbursable Taxes imposed upon the transfer by
Agent or any Lender of all or any part of its right, title or
interest in any Note or Loan Document, including but not
limited to participations.
ARTICLE 2A. - LETTERS OF CREDIT
Section 2A.1. LETTERS OF CREDIT. From time to time during the
Commitment Period, Borrower may request through Agent an Issuing Bank to issue,
in reliance on the agreements of Lenders set forth in Section 2A.2(b), letters
of credit (each herein called a "LETTER OF CREDIT") by means of an application
in the form of EXHIBIT E, appropriately completed and with a proposed form of
Letter of Credit attached. No Issuing Bank shall have any obligation whatsoever
to issue any such requested Letter of Credit, but any terms and provisions
hereof relating to Letters of Credit, shall be subject to the following
restrictions: (a) no Letter of Credit issued hereunder shall have an expiration
date later than the earlier of one year after the date of issuance thereof or
the end of the Commitment Period; (b) no Letter of Credit issued hereunder shall
be issued in an amount greater than $5,000,000 without the prior written consent
of Majority Lenders; (c) the LC Obligations shall never exceed $20,000,000 in
the aggregate outstanding at any one time; (d) Back-to-Back LC Obligations shall
never exceed $5,000,000 in the aggregate outstanding at any one time, and (e)
the sum of (i) the LC
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Obligations after giving effect to any request for the issuance of any Letter of
Credit plus (ii) the aggregate amount of the Loans then outstanding shall not
exceed the Borrowing Base. Neither Agent, Issuing Banks, Lenders nor Borrower
presently expect Letters of Credit to be applied for or issued hereunder on a
regular basis, and this section is included in this Agreement solely to
facilitate the application and issuance of any letter of credit which Borrower
hereafter, in its sole and absolute discretion, chooses to request and which
each Issuing Bank hereafter, in its sole and absolute discretion, chooses to
issue. Each Issuing Bank shall promptly notify Agent and each Lender of any
request by Borrower for the issuance of a Letter of Credit.
Section 2A.2. REIMBURSEMENT OF LETTERS OF CREDIT.
(a) REIMBURSEMENT BY BORROWER. Each payment by any Issuing Bank
pursuant to any Letter of Credit (whether in response to a draft, a demand for
payment, or otherwise), shall constitute a loan to and an obligation of
Borrower. Borrower hereby promises to pay to such Issuing Bank, or to such
Issuing Bank's order, at Issuing Bank's office at the address set forth for such
Issuing Bank on the signature pages hereto, on demand, any and all amounts paid
by such Issuing Bank pursuant to any and all Letters of Credit (such amount
being herein called the "MATURED LC OBLIGATIONS"). Borrower hereby promises to
pay to each Issuing Bank, or to each Issuing Bank's order, at the address set
forth for such Issuing Bank on the signature pages hereto, on demand, interest
at the Late Payment Rate on (a) any outstanding Matured LC Obligations and (b)
any fees or other amounts due with respect to Letters of Credit (to the extent
the same can legally bear interest). Borrower hereby promises to pay, when due,
all present and future taxes, levies, costs and charges whatsoever imposed,
assessed, levied or collected on, under or in respect of this Agreement or any
Letter of Credit and any payments of principal, interest or other amounts made
on or in respect of any thereof (excluding, however, franchise taxes and any
such taxes, levies, costs and charges imposed on or measured by the overall net
income of Issuing Bank). Borrower promises to indemnify each Issuing Bank
against, and to reimburse each Issuing Bank on demand for, any of the foregoing
taxes, levies, costs or charges paid by an Issuing Bank and any loss, liability,
claim or expense, including interest, penalties and legal fees, that an Issuing
Bank may incur because of or in connection with the failure of Borrower to make
any such payment of taxes, levies, costs or charges when due or any payment of
Matured LC Obligations when due. Borrower hereby acknowledges that each and
every LC Obligation shall constitute Obligations secured by and subject to the
terms of the Security Documents.
(b) REIMBURSEMENT BY LENDERS. Each Issuing Bank irrevocably agrees to
grant and hereby grants to each Lender, and, to induce each Issuing Bank to
issue Letters of Credit hereunder, each Lender irrevocably agrees to accept and
purchase from any Issuing Bank, on the terms and conditions hereinafter stated,
for such Lender's own account and risk an undivided interest equal to such
Lender's Percentage Share of any Issuing Bank's obligations and rights under
each Letter of Credit issued hereunder and the amount of each draft paid by any
Issuing Bank thereunder. In the event that Borrower should fail to pay any
Issuing Bank on demand the amount of any draft or other request for payment
drawn under or purporting to be drawn under a Letter of Credit as provided in
subsection (a) above and actually disbursed by Issuing Bank under a Letter of
Credit, each Lender shall, before 2:00 p.m. (New York City time) on the Business
Day any Issuing Bank shall have given notice to Lenders of Borrower's failure to
so pay such Issuing Bank, if such notice is given by
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10:00 a.m., New York City time (or on the Business Day immediately succeeding
the day such notice is given after 10:00 a.m., New York City time), pay to such
Issuing Bank at such Issuing Bank's offices at the address set forth for such
Issuing Bank on the signature pages hereto, in legal tender of the United States
of America, in same day funds, such Lender's Percentage Share of the amount of
such draft or other request for payment from Borrower plus interest on such
amount from the date such Issuing Bank shall have paid such draft or request for
payment to the date of such payment by such Lender at the Late Payment Rate.
Each Lender's obligation to reimburse each Issuing Bank pursuant to the terms of
this Section 2A.2(b) is irrevocable and unconditional. If any such amount
required to be paid by any Lender pursuant to this Section 2A.2(b) is not in
fact made available by such Lender to an Issuing Bank within three Business Days
after the date such payment is due, such Issuing Bank shall be entitled to
recover from such Lender, on demand, such amount with interest thereon
calculated from such due date at the Late Payment Rate. A written advice(s)
setting forth in reasonable detail the amounts owing under this Section 2A.2,
submitted by an Issuing Bank to Borrower from time to time, shall be conclusive,
absent manifest error, as to the amounts thereof. Whenever, at any time after an
Issuing Bank has made payment under any Letter of Credit, and has received from
any Lender its Percentage Share of such payment in accordance with this Section
2A.2(b), such Issuing Bank receives any payment related to such Letter of Credit
(whether directly from Borrower or otherwise, including proceeds of collateral
applied thereto by Issuing Bank), or any payment of interest on account thereof,
such Issuing Bank will distribute to such Lender its Percentage Share thereof;
PROVIDED, HOWEVER, that in the event that any such payment received by such
Issuing Bank shall be required to be returned by Issuing Bank, such Lender shall
return to such Issuing Bank the portion thereof previously distributed by such
Issuing Bank to it.
Section 2A.3. TRANSFEREES OF LETTERS OF CREDIT. Borrower agrees that if
any Letter of Credit provides that it is transferable, no Issuing Bank is under
any duty to determine the proper identity of anyone appearing as transferee of
such Letter of Credit, nor shall any Issuing Bank be charged with responsibility
of any nature or character for the validity or correctness of any transfer or
successive transfers. Subject to the provisions of Section 2A.5. payment by an
Issuing Bank to any purported transferee or transferees as determined by an
Issuing Bank is hereby authorized and approved, and Borrower further agrees to
hold each Issuing Bank and each Lender harmless and indemnified against any
liability or claim in connection with or arising out of the foregoing except in
the case of such Lender's gross negligence or willful misconduct..
Section 2A.4. EXTENSION OF MATURITY OF LETTERS OF CREDIT. Borrower
agrees that in the event of any extension of the maturity or time for
presentation of drafts or demands for payment or any other modification of the
terms of any Letter of Credit at the request of Borrower or by order of any
court or tribunal, with or without notification to others, or in the event of
any increase in the amount of any Letter of Credit at the request of Borrower or
by order of any court or tribunal, this Agreement shall be binding upon Borrower
with respect to the Letter of Credit so increased or otherwise modified, with
respect to drafts and demands for payment thereunder, and with respect to any
action taken in accordance with such extension, increase or other modification
by any Issuing Bank or by any bank which is a confirming bank or an advising
bank with respect to any Letter of Credit.
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Section 2A.5. RESTRICTION ON LIABILITY. No Issuing Bank nor any bank
which is a confirming bank or an advising bank with respect to any Letter of
Credit (in this section called a "CORRESPONDENT") shall be responsible for (a)
the use which may be made of any Letter of Credit or for any acts or omissions
of the users of any Letter of Credit; (b) the existence or nonexistence of a
default under any instrument secured or supported by any Letter of Credit or any
other event which gives rise to a right to call upon any Letter of Credit; (c)
the validity, sufficiency or genuineness of any document delivered in connection
with any Letter of Credit, even if such documents should in fact prove to be in
any or all respects invalid, fraudulent or forged; (d) except as specifically
required by any Letter of Credit, failure of any instrument to bear any
reference or adequate reference to any Letter of Credit, or failure of documents
to accompany any draft at negotiation or failure of any person to note the
amount of any draft on the reverse of any Letter of Credit or surrender or
takeup any Letter of Credit; or (e) errors, omissions, interruptions or delays
in transmission or delivery of any messages by mail, cable, telegraph, wireless
or otherwise. No Issuing Bank shall be responsible for any act, error, neglect
or default, omission, insolvency or failure in the business of any of the
correspondents or any refusal by an Issuing Bank or any of the correspondents to
pay or honor drafts drawn under any Letter of Credit because of any applicable
law, decree or edict, legal or illegal, of any governmental agency now or
hereafter enforced or for any matter beyond the control of an Issuing Bank. The
happening of any one or more of the contingencies referred to in the preceding
clauses of this paragraph shall not affect, impair or prevent the vesting of any
of the rights or powers of Issuing Banks and Lenders under this Agreement, or
the obligation of Borrower to make reimbursement. In furtherance and extension
and not in limitation of the specific provisions hereinabove set forth Borrower
agrees that any action, not contrary to the terms of any Letter of Credit issued
on its behalf, which is taken or omitted to be taken by any Issuing Bank or any
Lender or by any correspondent under or in connection with any Letter of Credit
shall be binding on Borrower and shall not put any Issuing Bank or any Lender or
any correspondent under any resulting liability to Borrower unless grossly
negligent or in breach of good faith.
Section 2A.6. NO DUTY TO INQUIRE. Borrower agrees that each Issuing
Bank is authorized and instructed to accept and pay drafts and demands for
payment under the Letters of Credit without requiring, and without
responsibility for, either at the time of acceptance or payment or thereafter,
the determination as to the existence of any event giving rise thereto or the
proper identity or authority of anyone appearing on behalf of the beneficiary of
any Letter of Credit. Borrower further agrees to hold each Issuing Bank and each
Lender harmless and indemnified against any liability or claim in connection
with or arising out of the foregoing except in the case of such Lender's gross
negligence or willful misconduct.
Section 2A.7. LETTER OF CREDIT FEES. In consideration of any issuance
by any Issuing Bank of Letters of Credit hereunder and of each Lender's
incurrence of a reimbursement obligation with respect to such Letters of Credit,
Borrower agrees to pay to Agent a Letter of Credit fee, for pro rata
distribution to each Lender in accordance with its Percentage Share, promptly
upon the issuance of each Letter of Credit (other than Back-to-Back Letters of
Credit), in an amount equal to the greater of (i) $500 or (ii) one percent
(1.0%) per annum of the face amount of such Letter of Credit. With
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respect to Back-to-Back Letters of Credit, Borrower agrees to pay to Agent a
Back-to-Back Letter of Credit fee, for pro rata distribution to each Lender in
accordance with its Percentage Share, promptly upon the issuance of each
Back-to-Back Letter of Credit, in an amount equal to the greater of (i)
one-eighth of one percent (0.125%) per annum of the face amount of such
Back-to-Back Letter of Credit or (ii) one percent (1.0%) per annum of the
difference between (a) the face amount of such Back-to-Back Letter of Credit and
(b) the face amount of the underlying Letter of Credit issued in favor of the
Issuing Bank to back the Back-to-Back Letter of Credit. Borrower shall also pay
to Agent for distribution to the Lender issuing any Letter of Credit a fee of
$250 immediately upon any drawing under any Letter of Credit.
Section 2A.8. ACCELERATION OF LC OBLIGATIONS. If the Loans, or any part
thereof, become immediately due and payable pursuant to Section 7.1 of this
Agreement, then all LC Obligations shall become immediately due and payable
without regard for actual drawings or payments on the Letters of Credit and
Borrower shall be obligated to pay Agent immediately an amount equal to the LC
Obligations. All amounts made due and payable by Borrower under this Section
2A.8 may be applied as Agent elects to any of the various LC Obligations then
due and payable; provided, however, that all such amounts applied by the Agent
to the LC Obligations shall be (a) first applied to the Matured LC Obligations,
and (b) second held by Agent as security for the remaining LC Obligations (in
this section all such amounts held as security for LC Obligations of Borrower
are collectively called "LC COLLATERAL") until such LC Obligations have either
(a) become Matured LC Obligations at which time the LC Collateral paid to Agent
shall be applied to such Matured LC Obligations, or (b) have expired undrawn at
which time an amount of the LC Collateral equal to such expired and undrawn LC
Obligation shall be promptly returned to Borrower. This Section 2A.8 shall not
limit or impair any rights which Agent or Lenders may have under any other
document or agreement relating to any Letter of Credit or LC Obligation,
including without limitation, any LC Application.
Section 2A.9. PURPOSES. Borrower shall request Letters of Credit for
the purpose of securing bonding obligations and plugging and abandonment
liabilities and for other general business purposes. In no event shall funds
advanced under any Letter of Credit be used directly or indirectly by any Person
for personal, family, household or agricultural purposes or for the purpose,
whether immediate, incidental or ultimate, of purchasing, acquiring or carrying
"margin stock" or any "margin securities" (as such terms are defined
respectively in Regulation U and Regulation G promulgated by the Board of
Governors of the Federal Reserve System) or to extend credit to others directly
or indirectly for the purpose of purchasing or carrying any such margin stock or
margin securities.
Section 2A.10. INCREASED COSTS FOR LETTERS OF CREDIT. If any change in
any applicable law or regulation or in the interpretation thereof by any court
or governmental authority charged with the administration thereof shall either
(a) impose, modify or apply any reserve, special deposit or similar requirement
against Letters of Credit issued by Issuing Bank or (b) impose on Agent, any
Lender or Issuing Bank any other condition regarding this Agreement or any
Letter of Credit, and the result of any event referred to in clause (a) or (b)
above shall be to increase the cost to Issuing Bank of issuing or maintaining a
Letter of Credit or materially affect the profitability to Issuing Bank of any
or all Letter of Credit transactions contemplated by this Agreement, then,
within two Business Days after demand by Issuing Bank, Borrower shall
immediately pay to Issuing Bank such additional amount or amounts as shall be
sufficient to compensate Issuing Bank for such increased cost. Issuing Bank will
promptly notify Borrower of any event of which Issuing Bank has knowledge
occurring after the date hereof which will entitle Issuing Bank to compensation
pursuant to this Section 2A.10;
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PROVIDED THAT failure by Issuing Bank to give such notice shall not adversely
affect the right of Issuing Bank to such compensation pursuant to this Section
2A.10.
ARTICLE III - CONDITIONS PRECEDENT TO LENDING
Section 3.1. DOCUMENTS TO BE DELIVERED. No Lender has any obligation to
renew and extend its loan under the Existing Agreement or make any Advance
hereunder unless Agent shall have received all of the following, at Agent's
office in New York, New York, duly executed and delivered and in form, substance
and date satisfactory to Agent:
(a) This Agreement and any other documents that Lenders are to
execute in connection herewith.
(b) Each Note.
(c) A Restated Subsidiary Guarantee made by each
Guarantor.
(d) Certain certificates of Borrower including:
(i) An "Omnibus Certificate" of the Secretary and of
the Chairman of the Board or President of Borrower and each
Guarantor, which shall contain the names and signatures of the
officers of such Person authorized to execute Loan Documents
on behalf of such Person and which shall certify to the truth,
correctness and completeness of the following exhibits
attached thereto: (1) a copy of resolutions duly adopted by
the Board of Directors of such Person and in full force and
effect at the time this Agreement is entered into, authorizing
the execution of the Loan Documents delivered or to be
delivered in connection herewith and the con summation of the
transactions contemplated therein, (2) a copy of the charter
documents of such Person and all amendments thereto, certified
by the appropriate official of such Person's state of
incorporation, and (3) a copy of any bylaws of such Person.
(ii) A "Compliance Certificate" of the Chairman of
the Board or President and of the chief financial officer of
Borrower, of even date herewith, in which such officers
certify to the satisfaction of the conditions set out in
subsections (a), (b), (c) and (d) of Section 3.2.
(e) A certificate (or certificates) of the due formation,
valid existence and good standing of each of Borrower and each
Subsidiary of Borrower that is a Guarantor in its respective state of
organization, issued by the appropriate authorities of such
jurisdiction.
(f) A favorable opinion of Xxxxxx X. Xxxxxx, General Counsel
for Borrower, substantially in the form set forth in EXHIBIT D.
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Section 3.2. ADDITIONAL CONDITIONS PRECEDENT. No Lender has any
obligation to renew and extend its Loan under the Existing Agreement or make any
Advance (including its first) unless the following conditions precedent have
been satisfied:
(a) All representations and warranties made by any Related
Person in any Loan Document shall be true on and as of the date of such
renewal or Advance (except to the extent that the facts upon which such
representations are based have been changed by the extension of credit
hereunder) as if such representations and warranties had been made as
of the date of such renewal or Advance.
(b) No Default shall have occurred and be continuing at the
date of such renewal or Advance.
(c) No material adverse change shall have occurred to
Borrower's Consolidated financial condition or businesses, or to the
aggregate value of the Collateral, since the date of this Agreement.
(d) Each Related Person shall have performed and complied with
all agreements and conditions required in the Loan Documents to be
performed or complied with by it on or prior to the date of such
renewal or Advance.
(e) Neither the renewal of the Loans under the Existing
Agreement nor the making of such Advance shall be prohibited by any law
or any regulation or order of any court or governmental agency or
authority and shall not subject any Lender to any penalty or other
onerous condition under or pursuant to any such law, regulation or
order.
(f) Agent shall have received all documents and instruments
which Agent has then requested, in addition to those described in
Section 3.1 (including opinions of legal counsel for the Related
Persons and Agent; corporate documents and records; documents
evidencing governmental authorizations, consents, approvals, licenses
and exemptions; and certificates of public officials and of officers
and representatives of Borrower and other Persons), as to (i) the
accuracy and validity of or compliance with all representations,
warranties and covenants made by any of the Related Persons in this
Agreement and the other Loan Documents, (ii) the satisfaction of all
conditions contained herein or therein, and (iii) all other matters
pertaining hereto and thereto. All such additional documents and
instruments shall be satisfactory to Agent in form, substance and date.
(g) Borrower shall have paid the fees provided for in the
letter agreement of even date herewith between Agent and Borrower.
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ARTICLE IV - REPRESENTATIONS AND WARRANTIES
Section 4.1. BORROWER'S REPRESENTATIONS AND WARRANTIES. To confirm each
Lender's understanding concerning Borrower and Borrower's business, properties
and obligations and to induce Agent and each Lender to enter into this
Agreement, to renew and extend the loans under the Existing Facility, and to
make the Loans, Borrower represents and warrants to Agent and each Lender that:
(a) NO DEFAULT. Borrower is not in default in the performance
of any of the covenants and agreements contained herein. No event has
occurred and is continuing which constitutes a Default.
(b) ORGANIZATION AND GOOD STANDING. Each Related Person which
is a corporation or partnership is duly organized, validly existing and
in good standing under the laws of its state of organization, having
all corporate or partnership powers required to carry on its business
and enter into and carry out the transactions contemplated hereby. Each
such Related Person is duly qualified, in good standing, and authorized
to do business in all other jurisdictions within the United States
wherein the character of the properties owned or held by it or the
nature of the business transacted by it makes such qualification
necessary except where the failure to so qualify would not have any
material adverse effect on Borrower or its financial condition or
businesses. Each such Related Person has taken all actions and
procedures customarily taken in order to enter, for the purpose of
conducting business or owning property, each jurisdiction outside the
United States wherein the character of the properties owned or held by
it or the nature of the business transacted by it makes such actions
and procedures desirable.
(c) AUTHORIZATION. Each Related Person which is a corporation
or partnership has duly taken all corporate or partnership action
necessary to authorize the execution and delivery by it of the Loan
Documents to which it is a party and to authorize the consummation of
the transactions contemplated thereby and the performance of its
obligations thereunder. Borrower is duly authorized to borrow funds
hereunder.
(d) NO CONFLICTS OR CONSENTS. The execution and delivery by
the various Related Persons of the Loan Documents to which each is a
party, the performance by each of its obligations under such Loan
Documents, and the consummation of the transactions contemplated by the
various Loan Documents, do not and will not (i) conflict with any
provision of (1) any domestic or applicable foreign law, statute, rule
or regulation, (2) the articles or certificate of incorporation,
bylaws, charter, or partnership agreement or certificate of any Related
Person, or (3) any material agreement, judgment, license, order or
permit applicable to or binding upon any Related Person, (ii) result in
the acceleration of any Debt owed by any Related Person, or (iii)
result in or require the creation of any Lien upon any assets or
properties of any Related Person except as expressly contemplated in
the Loan Documents. Except as expressly contemplated in the Loan
Documents no consent, approval, authorization or order of, and no
notice to or filing with, any court or governmental authority or third
party is required in connection with the execution, delivery or
performance by any
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Related Person of any Loan Document or to consummate any transactions
contemplated by the Loan Documents.
(e) ENFORCEABLE OBLIGATIONS. This Agreement is, and the other
Loan Documents when duly executed and delivered will be, legal, valid
and binding obligations of each Related Person which is a party hereto
or thereto, enforceable in accordance with their terms except as such
enforcement may be limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors' rights
and by equitable principles.
(f) INITIAL FINANCIAL STATEMENTS. The Initial Financial
Statements fairly present Borrower's Consolidated financial position at
the date thereof and the Consolidated results of Borrower's operations
and Borrower's Consolidated cash flows for the period thereof. Since
the date of the Initial Financial Statements no material adverse change
has occurred in Borrower's financial condition or businesses or in
Borrower's Consolidated financial condition or businesses, except as
reflected in the Disclosure Schedule. All Initial Financial Statements
were prepared in accordance with GAAP.
(g) OTHER OBLIGATIONS AND RESTRICTIONS. No Related Person has
any outstanding Debt of any kind (including contingent obligations, tax
assessments, and unusual forward or long-term commitments) which is, in
the aggregate, material to Borrower or material with respect to
Borrower's Consolidated financial condition and not shown in the
Initial Financial Statements or disclosed in the Disclosure Schedule.
Except as shown in the Initial Financial Statements or disclosed in the
Disclosure Schedule, no Related Person is subject to or restricted by
any franchise, contract, deed, charter restriction, or other instrument
or restriction which is reasonably likely in the foreseeable future to
materially and adversely affect the businesses, properties, prospects,
operations, or financial condition of such Related Person or of
Borrower on a Consolidated basis.
(h) FULL DISCLOSURE. No certificate, statement or other
information delivered herewith or heretofore by any Related Person to
Agent or any Lender in connection with the negotiation of this
Agreement or in connection with any transaction contemplated hereby
contains any untrue statement of a material fact or, when all such
information is taken as a whole, omits to state any material fact known
to any Related Person (other than industry-wide risks normally
associated with the types of businesses conducted by the Related
Persons) necessary to make the statements contained herein or therein
not misleading as of the date made or deemed made. There is no fact
known to any Related Person (other than industry-wide risks normally
associated with the types of businesses conducted by the Related
Persons) that has not been disclosed to Agent and each Lender in
writing which could materially and adversely affect Borrower's
Consolidated properties, businesses, prospects or condition (financial
or otherwise). There are no statements or conclusions in any
Engineering Report which are based upon or include misleading
information or fail to take into account material information regarding
the matters reported therein, it being understood that each Engineering
Report is necessarily based upon professional opinions, estimates and
projections and that Borrower does not warrant that such opinions,
estimates and projections will ultimately prove to have been accurate.
Borrower has heretofore
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delivered to Agent and each Lender true, correct and complete copies of
the Initial Financial Statements and the Initial Engineering Report.
(i) LITIGATION. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (i) there are no actions,
suits or legal, equitable, arbitrative or administrative proceedings
pending, or to the knowledge of any Related Person threatened, against
any Related Person before any federal, state, municipal or other court,
department, commission, body, board, bureau, agency, or
instrumentality, domestic or foreign, which do or may reasonably be
expected to materially and adversely affect Borrower or, on a
Consolidated basis, Borrower and its properly Consolidated
subsidiaries, their ownership or use of any material part of their
assets or properties, their businesses or financial condition or
prospects, or the right or ability of any Related Person to enter into
the Loan Documents to which it is a party or to consummate the
transactions contemplated thereby or to perform its obligations
thereunder and (ii) there are no outstanding judgments, injunctions,
writs, rulings or orders by any such governmental entity against any
Related Person or any Related Person's stockholders, partners,
directors or officers which have or may have any such effect.
(j) ERISA LIABILITIES. All currently existing ERISA Plans are
listed in the Disclosure Materials. Except as disclosed in the Initial
Financial Statements or in the Disclosure Schedule, no Termination
Event has occurred with respect to any ERISA Plan and the Related
Persons are in compliance with ERISA in all material respects. No
Related Person is required to contribute to, or has any other absolute
or contingent liability in respect of, any "multiemployer plan" as
defined in Section 4001 of ERISA. Except as set forth in the Disclosure
Materials: (i) no "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code of 1986, as amended) exists
with respect to any ERISA Plan, whether or not waived by the Secretary
of the Treasury or his delegate, and (ii) the current value of each
ERISA Plan's benefits does not exceed the current value of such ERISA
Plan's assets available for the payment of such benefits by more than
$500,000.
(k) ENVIRONMENTAL AND OTHER LAWS. As used in this subsection:
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, "CERCLIS" means the
Comprehensive Environmental Response, Compensation and Liability
Information System List of the Environmental Protection Agency, and
"RELEASE" has the meaning given such term in 42 U.S.C. ss. 9601(22).
Except as set forth in the Disclosure Schedule:
(i) the Related Persons are conducting their
businesses in material compliance with all applicable federal,
state and local laws, including Environmental Laws.
(ii) to the best of the knowledge of the executive
officers of the Related Persons after due inquiry, none of the
operations of any Related Person is the subject of federal,
state or local investigation evaluating whether any material
remedial action is needed to respond to a release of any
Hazardous Materials into the environment.
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(iii) no Related Person (and to the best knowledge of
the executive officers of Borrower, no other Person) has filed
any notice under any federal, state or local law indicating
that any Related Person is responsible for a Release, or the
improper storage, of any material amount of Hazardous
Materials or any Hazardous Materials have been released, or
are improperly stored, upon any property of any Related
Person.
(iv) no Related Person otherwise has any known
material contingent liability in connection with a Release, or
the improper storage, of any Hazardous Materials.
(v) each Related Person has obtained authorizations
or has caused third party operators to represent that such
operators have obtained authorizations which are required
under all Environmental Laws, except to the extent failure to
have any such permit, license or authorization would not have
a material adverse effect on the financial condition,
operations, business or prospects of any Related Person.
(vi) each Related Person is in material compliance
with the terms and conditions of all permits, licenses and
authorizations described in clause (v) above, and is also in
material compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any
applicable Environmental Law or in any notice or demand letter
issued, entered, promulgated or approved thereunder, except to
the extent failure to comply would not have a material adverse
effect on the financial condition, operations, business or
prospect of any Related Person.
(vii) no Related Person has handled any Hazardous
Materials on any properties now or previously owned or leased
by any Related Person to an extent that such handling has, or
may reasonably be expected to have, a material adverse effect
on the financial condition, operations, business or prospects
of any Related Person; and to the best of the Related Person's
knowledge after reasonably prudent inquiry
(1) no PCBs are present at any properties now or
previously owned or leased by any Related
Person;
(2) no asbestos is present at any properties now
or previously owned or leased by any Related
Person;
(3) except for production, storage and shipment
of oil and gas production in the ordinary
course of Borrower's business, there are no
underground or above-ground storage tanks,
vessels, landfills, pits or lagoons for
Hazardous Materials, active or abandoned, at
any properties now or previously owned or
leased by any Related Person;
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(4) no Hazardous Materials have been Released,
in a reportable quantity, where such a
quantity has been established by statute,
ordinance, rule, regulation or order, at, on
or under any properties now or previously
owned or leased by any Related Person;
(5) no Hazardous Materials have been otherwise
Released at, on or under any properties now
or previously owned or leased by any Related
Person to an extent that such release has,
or may reasonably be expected to have, a
material adverse effect on the financial
condition, operations, business or prospects
of any Related Person;
(6) there has been no material release of or
contamination by any material or substance
contained or stored in any salt water
disposal pit, vessel, pond or lagoon, any
mud pit, or any other pit, pond, vessel or
lagoon used as a part of drilling or well
operations by any Related Person or for
which any Related Person may be responsible;
(7) no Related Person is responsible for the
release, clean up or remediation of any
naturally occurring radioactive material;
(8) no Related Person is the subject of or
responsible for any material pending or
threatened claims, suits, demands or
proceedings for personal injury, property
damage, Natural Resources Damages as used in
"CERCLA", remediation costs, environmental
restoration or remediation or any other form
of legal or equitable relief whatsoever
arising from or in any way connected with
the actual or alleged release or discharge
of or exposure to any substance or material
alleged to be toxic or hazardous.
(viii) no Related Person has transported or arranged
for the transportation of any Hazardous Material to any
location which is listed on the National Priorities List under
CERCLA, listed for possible inclusion on the National
Priorities List by the Environmental Protection Agency in
CERCLIS, or listed on any similar state list or which is the
subject of federal, state or local enforcement actions or
other investigations which may lead to claims against any
Related Person for clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including,
but not limited to, claims under CERCLA.
(ix) No Hazardous Material generated by any Related
Person has been recycled, treated, stored, disposed of or
released by any Related Person at any location other than
those listed in Disclosure Schedule.
(x) No oral or written notification of a Release of a
Hazardous Material has been filed by or, to the best of the
Related Persons' knowledge, on behalf of any Related Person,
and no property now or previously owned or leased by any
Related
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Person is listed, to the best of the Related Persons'
knowledge, or proposed for listing on the National Priority
list promulgated pursuant to CERCLA, in CERCLIS, or on any
similar state list of sites requiring investigation or
clean-up.
(xi) There are no Liens arising under or pursuant to
any Environmental Laws on any of the real properties or
properties owned or leased by any Related Person, and no
government actions have been taken or, to the best of the
Related Persons' knowledge after due inquiry, are in process
which could subject any of such properties to such Liens; nor
would any Related Person be required to place any notice or
restriction relating to the presence of Hazardous Materials at
any properties owned by it in any deed to such properties.
(xii) There have been no environmental
investigations, studies, audits, tests, reviews or other
analyses conducted by or which are in the possession of any
Related Person in relation to any properties or facility now
or previously owned or leased by any Related Person which have
not been made available to Agent.
(l) NAMES AND PLACES OF BUSINESS. Borrower has not been known
by, or used any other corporate, partnership, trade, or fictitious
name, except as disclosed in the Disclosure Schedule. Except as
otherwise indicated in the Disclosure Schedule, the chief executive
office and principal place of business of Borrower are (and for the
preceding five years have been) located at the address of Borrower set
out in the signature pages hereto. Except as indicated in the
Disclosure Schedule, Borrower has no other office or place of business.
(m) BORROWER'S SUBSIDIARIES. Borrower does not presently have
any Subsidiary or own any stock in any other corporation or association
except those listed in the Disclosure Schedule. Borrower is not a
member of any general or limited partnership, joint venture or
association of any type whatsoever except those listed in the
Disclosure Schedule. As of the date hereof Borrower owns, directly or
indirectly, the equity interest in each of its Subsidiaries which is
indicated in the Disclosure Schedule.
(n) TITLE TO PROPERTIES. Each Related Person has good record
and marketable title in fee simple to, or a valid leasehold interest in
(i) all of its drill sites and all of its properties where proven
reserves exist, and (ii) all of its real property (other than any real
property in which any Related Person has not, in accordance with
customary practice in oil and gas business, verified the marketability
and status of title or the validity of such leasehold interest), and
such good title to all its other property, and none of such property is
subject to any Lien except as expressly permitted by subsection 5.2(b).
(o) YEAR 2000 PROBLEM. Borrower and its Consolidated
Subsidiaries are currently reviewing the areas of their business and
operations which could be adversely affected by, and are developing a
program to address on a timely basis, the risk that certain computer
applications used by Borrower and its Consolidated Subsidiaries may be
unable to recognize and preform properly date-sensitive functions
involving dates prior to and after December 31, 1999 (the "YEAR 2000
PROBLEM"). The Year 2000 Problem will not result, and is not
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reasonably expected to result, in any material adverse effect on
Borrower and it Consolidated Subsidiaries, their ownership or use of
any material part of their assets or properties, their businesses or
financial condition or prospects, or their ability to perform their
obligations under the Loan Documents.
Section 4.2. REPRESENTATION BY LENDERS. Each Lender hereby represents
that it will acquire its Note for its own account in the ordinary course of its
commercial lending business; however, the disposition of such Lender's Note
shall at all times be and remain within its control and, in particular and
without limitation, such Lender may sell or otherwise transfer its Note, any
participation interest or other interest in its Note, or any of its other rights
and obligations under the Loan Documents.
ARTICLE V - COVENANTS OF BORROWER
Section 5.1. AFFIRMATIVE COVENANTS. To conform with the terms and
conditions under which each Lender is willing to have credit outstanding to
Borrower, and to induce Agent and each Lender to enter into this Agreement and
make the Loans, Borrower warrants, covenants and agrees that until the full and
final payment of the Obligations and the termination of this Agreement, unless
Majority Lenders have previously agreed otherwise:
(a) PAYMENT AND PERFORMANCE. Borrower will pay all amounts due
under the Loan Documents in accordance with the terms thereof and will
observe, perform and comply with every covenant, term and condition set
forth in the Loan Documents. Borrower will cause the other Related
Persons to observe, perform and comply with every such term, covenant
and condition.
(b) BOOKS, FINANCIAL STATEMENTS AND REPORTS. Each Related
Person will at all times maintain full and accurate books of account
and records. Borrower will maintain and will cause its Subsidiaries to
maintain a standard system of accounting and will furnish the following
statements and reports to Agent and each Lender at Borrower's expense:
(i) As soon as available, and in any event within
ninety (90) days after the end of each Fiscal Year, complete
Consolidated financial statements of Borrower together with
all notes thereto and the consolidating financial statements
prepared in connection with the preparation of such
Consolidated financial statements, all prepared in reasonable
detail in accordance with GAAP, together with an opinion,
based on an audit using generally accepted auditing standards,
by Price Waterhouse, or other independent certified public
accountants selected by Borrower and reasonably acceptable to
Majority Lenders, stating that such Consolidated financial
statements have been so prepared. These financial statements
shall contain a Con solidated and consolidating balance sheet
as of the end of such Fiscal Year and Consolidated and
consolidating statements of earnings, of cash flows, and of
changes in owners' equity for such Fiscal Year, each setting
forth in comparative form the corresponding figures for the
preceding Fiscal Year. In addition, within ninety (90) days
after the end of each Fiscal Year Borrower will furnish a
report signed by such
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accountants stating that they have read this Agreement,
containing calculations showing compliance (or non-compliance)
at the end of such Fiscal Year with the requirements of
Sections 5.2(k), 5.2(l), 5.2(m) and 5.2(n) and a calculation
of the Debt to Capitalization Ratio, and further stating that
in making the examination and reporting on the Consolidated
financial statements described above no knowledge was obtained
that any Default existed at the end of such Fiscal Year or at
the time of their report, or, if they did obtain knowledge
that a Default existed, specifying its nature and period of
existence.
(ii) As soon as available, and in any event within
forty-five (45) days after the end of the first three Fiscal
Quarters in each Fiscal Year, Borrower's unaudited
Consolidated and consolidating balance sheet as of the end of
such Fiscal Quarter and Consolidated and consolidating
statements of Borrower's earnings and cash flows for the
period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter, all in reasonable detail and
prepared in accordance with GAAP, subject to changes resulting
from normal year-end and audit adjustments. In addition
Borrower will, together with each such set of financial
statements and each set of financial statements furnished
under subsection (i) of this section, furnish a certificate in
the form of EXHIBIT F signed by the chief financial officer of
Borrower stating that such financial statements are accurate
and complete in all material respects, stating that he has
reviewed the Loan Documents, containing calculations showing
compliance (or non-compliance) at the end of such Fiscal
Quarter with the requirements of Sections 5.2(k), 5.2(l),
5.2(m) and 5.2(n) and a calculation of the Debt to
Capitalization Ratio, and stating that no Default exists at
the end of such Fiscal Quarter or at the time of such
certificate or specifying the nature and period of existence
of any such Default.
(iii) Promptly upon their becoming available, copies
of all financial statements, reports, notices and proxy
statements sent by any Related Person to its stockholders and
all registration statements, periodic reports and other
statements and schedules filed by any Related Person with any
securities exchange, the Securities and Exchange Commission or
any similar governmental authority.
(iv) By April 1 of each year, an engineering report
prepared or reviewed by independent petroleum engineers chosen
by Borrower and reasonably acceptable to Majority Lenders,
concerning all oil and gas properties and interests relating
to proven oil or gas reserves owned by Borrower. In addition
to the annual report required pursuant to the preceding
sentence, Borrower will by October 1 of each year, unless
previously waived in writing by Majority Lenders, furnish to
Agent and each Lender, at Borrower's expense, an additional
engineering report prepared by Borrower, concerning all oil
and gas properties and interests relating to proven oil or gas
reserves owned by Borrower; provided that Borrower shall have
no obligation to furnish more than one such additional report
in any Fiscal Year. Each report shall be satisfactory to Agent
and shall contain information and analysis comparable in scope
to that contained in the Initial Engineering Report. Each
report shall
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distinguish (or shall be delivered together with a certificate
from an appropriate officer of Borrower which distinguishes)
those properties treated in the report which are Collateral
from those properties treated in the report which are not
Collateral.
(v) As soon as available, and in any event within
forty-five (45) days after the end of each month, Borrower's
internal financial summaries for such month, subject to
adjustments resulting from the final closing of such month's
books, together with all other financial information requested
by Agent.
(vi) As soon as available, and in any event within
thirty (30) days after the end of each Fiscal Year, Borrower
shall deliver to Agent an environmental compliance certificate
signed by the president or chief executive officer of Borrower
in the form attached hereto as EXHIBIT G. Further, if
requested by Agent, Borrower shall permit and cooperate with
an environmental and safety review made in connection with the
operations of Borrower's oil and gas properties one time
during each Fiscal Year beginning with the Fiscal Year 1996,
by Pilko & Associates or other consultants jointly selected by
Agent and Borrower which review shall, if requested by Agent,
be arranged and supervised by environmental legal counsel for
Agent, all at Borrower's cost and expense. The consultant
shall render a verbal or written report to both Agent and
Borrower, as specified by Agent, based upon such review at
Borrower's cost and expense.
(vii) Concurrently with the annual renewal of
Borrower's insurance policies, Borrower shall, if requested by
Agent in writing, cause a certificate or report to be issued
by Xxxxxxx X. Xxxxx, CPCU, ARM or other insurance consultants
satisfactory to Agent certifying that Borrower's insurance for
the next succeeding year after such renewal (or for such
longer period for which such insurance is in effect) complies
with the provisions of this Agreement and the Security
Documents.
(viii) If, at the time of any redetermination of the
Borrowing Base or at any time during a Fiscal Quarter, the
aggregate value of gas attributable to "over-produced" status
under gas balancing arrangements exceeds $10,000,000 (without
giving effect to any offsetting of "under-produced" gas), then
(a) concurrently with the information furnished to Lenders in
connection with each such redetermination of the Borrowing
Base pursuant to the provisions of Section 2.12 and (b) as
soon as available, and in any event within forty-five (45)
days after the end of such Fiscal Quarter, an internally
prepared report concerning all gas properties and interests of
Borrower which are "over-produced" under gas balancing
arrangements. This report shall be satisfactory to Agent and
shall distinguish (or shall be delivered together with a
certificate from an appropriate officer of Borrower which
distinguishes) those properties treated in the report which
are Collateral from those properties treated in the report
which are not Collateral.
(c) OTHER INFORMATION AND INSPECTIONS. Each Related Person
will furnish to Agent and each Lender any information which Agent may
from time to time reasonably request in
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writing concerning any covenant, provision or condition of the Loan
Documents or any matter in connection with the Related Persons'
businesses and operations. Each Related Person will permit
representatives appointed by Agent (including independent accountants,
agents, attorneys, appraisers and any other Persons) to visit and
inspect any of such Related Person's property, including its books of
account, other books and records, and any facilities or other business
assets, and to make extra copies therefrom and photocopies and
photographs thereof, and to write down and record any information such
representatives obtain, and each Related Person shall permit Agent or
its representatives to investigate and verify the accuracy of the
information furnished to Agent or any Lender in connection with the
Loan Documents and to discuss all such matters with its officers,
employees and representatives. Each of Agent and Lenders, and their
respective successors and assigns, agrees that, except upon the
occurrence and during the continuance of a Default, it will take all
reasonable steps to keep confidential any confidential or proprietary
information given to it by any Related Person, provided, however, that
this restriction shall not apply to information which (i) has at the
time in question entered the public domain, or (ii) is required to be
disclosed by law or by any order, rule or regulation (whether valid or
invalid) of any court or governmental agency or authority, and provided
further that Agent and each Lender may disclose proprietary or
confidential information (a) to Agent's or any Lender's Affiliates,
auditors, attorneys, or agents or (b) to any other Lender or to any
purchaser or prospective purchaser of participations or other interests
in any Loan or Note, provided that Agent or such Lender, as the case
may be, shall request such other Lender, purchaser or prospective
purchaser to agree to be bound by the confidentiality provisions
contained in this Section 5.1(c).
(d) NOTICE OF MATERIAL EVENTS AND CHANGE OF ADDRESS. Borrower
will promptly notify Agent and each Lender:
(i) of any material adverse change in Borrower's
financial condition or Borrower's Consolidated financial
condition or in the aggregate value of the Collateral,
(ii) of the occurrence of any Default of which
Borrower has knowledge,
(iii) of the acceleration of the maturity of any Debt
owed by any Related Person or of any default by any Related
Person under any indenture, mortgage, agreement, contract or
other instrument to which any of them is a party or by which
any of them or any of their properties is bound, if such
acceleration or default might have a material adverse effect
upon Borrower's Consolidated financial condition or on the
value of any material part of the Collateral,
(iv) of the occurrence of any Termination Event,
(v) of any claim of $1,000,000 or more, any notice of
potential liability under any Environmental Laws which could
reasonably be expected to exceed such amount, any claim, suit,
demand or proceeding for personal injury, property damage,
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Natural Resources Damages as used in "CERCLA", remediation
costs, environmental restoration or remediation or any other
form of legal or equitable relief whatsoever arising from or
in any way connected with the actual or alleged release or
discharge of or exposure to any substance or material alleged
to be toxic or hazardous which could reasonably be expected to
exceed such amount, or any other material adverse claim
asserted against any Related Person or with respect to any
Related Person's properties, and
(vi) of the filing of any suit or proceeding against
any Related Person in which an adverse decision could have a
material adverse effect upon any Related Person's financial
condition, business or operations or on the value of any
Collateral.
Upon the occurrence of any of the foregoing the Related Persons will
take all necessary or appropriate steps to remedy promptly any such
material adverse change, Default, acceleration, default or Termination
Event, to protect against any such adverse claim, to defend any such
suit or proceeding, and to resolve all controversies on account of any
of the foregoing. Borrower will also notify Agent and Agent's counsel
in writing at least twenty Business Days prior to the date that any
Related Person changes its name or the location of its chief executive
office or principal place of business or the place where it keeps its
books and records concerning the Collateral, furnishing with such
notice any necessary financing statement amendments or requesting Agent
and its counsel to prepare the same.
(e) MAINTENANCE OF PROPERTIES. Each Related Person will
maintain, preserve, protect, and keep all Collateral and all other
material assets used or useful in the conduct of its business in good
condition (subject to the repair and/or replacement in the ordinary
course of business and events of casualty and force majeure) and in
material compliance with all applicable laws, rules and regulations,
and will from time to time make all repairs, renewals and replacements
needed to enable the business and operations carried on in connection
therewith to be promptly and advantageously conducted at all times.
(f) MAINTENANCE OF EXISTENCE AND QUALIFICATIONS. Each Related
Person which is a corporation or partnership will maintain and preserve
its corporate or partnership existence and its rights and franchises in
full force and effect and will qualify to do business as a foreign
corporation or partnership in all states or jurisdictions where
required by applicable law, except where the failure so to qualify will
not have any material adverse effect on Borrower.
(g) PAYMENT OF TRADE DEBT, TAXES, ETC. Each Related Person
will (i) timely (giving effect to any proper extensions) file all
required tax returns; (ii) timely pay all taxes, assessments, and other
governmental charges or levies imposed upon it or upon its income,
profits or property; (iii) within sixty (60) days after the same
becomes due pay all Debt owed by it on ordinary trade terms to vendors,
suppliers and other Persons providing goods and services used by it in
the ordinary course of its business; (iv) pay and discharge when due
all other Debt now or hereafter owed by it; and (v) maintain
appropriate accruals and reserves for all of the foregoing Debt in
accordance with GAAP. Each Related Person may, however,
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delay paying or discharging any such taxes, assessments, charges,
levies and/or Debt so long as it is in good faith contesting the
validity or amount thereof by appropriate proceedings and has set aside
on its books adequate reserves therefor to the extent required by GAAP.
(h) INSURANCE. Each Related Person will keep or cause to be
kept insured by financially sound and reputable insurers its property
in accordance with Schedule 2. Borrower will maintain the additional
insurance coverage as described in the respective Security Documents.
Upon demand by Agent any insurance policies covering Collateral shall
be endorsed (i) to provide for payment of property losses to Agent as
its interests may appear, (ii) to provide that such policies may not be
canceled or reduced or affected in any material manner for any reason
without thirty days' prior notice to Agent, (iii) to provide for any
other matters specified in any applicable Security Document or which
Agent may reasonably require; and (iv) to provide for insurance against
fire, casualty and any other hazards normally insured against, in the
amount of the full value (less a reasonable deductible not to exceed
amounts customary in the industry for similarly situated businesses and
properties) of the property insured. Each Related Person shall at all
times maintain insurance against its liability for injury to persons or
property in accordance with Schedule 2, which insurance shall be by
financially sound and reputable insurers. Without limiting the
foregoing, each Related Person shall at all time maintain liability
insurance in the amounts set out on Schedule 2.
(i) PAYMENT OF EXPENSES. Borrower will, subject to the terms
of the fee letter of even date herewith between Borrower and Agent,
promptly (and in any event, within 30 days after any invoice or other
statement or notice) pay (a) all reasonable attorneys' fees and other
legal expenses incurred by or on behalf of Agent in connection with (i)
the negotiation, preparation, execution and delivery of the Loan
Documents, and any and all consents, waivers or other documents or
instruments relating thereto, (ii) the filing, recording, refiling and
re-recording of any Loan Documents and any other documents or
instruments or further assurances required to be filed or recorded or
refiled or re-recorded by the terms of any Loan Document, (iii) the
borrowings hereunder and other action reasonably required in the course
of administration hereof, (iv) the defense or enforcement of the Loan
Documents or the defense of Agent's or any Lender's exercise of their
rights thereunder, (v) monitoring or confirming (or preparation or
negotiation of any document related to) Borrower's compliance with any
covenants or conditions contained in this Agreement or in any Loan
Document, and (vi) the enforcement of this Section 5.1(i); and (b)
except as otherwise provided in Section 5.1(g) above, all transfer,
stamp, mortgage, documentary or other similar taxes, assessments or
charges levied by any governmental or revenue authority in respect of
this Agreement or any of the other Loan Documents or any other document
referred to herein or therein. In addition to the foregoing, upon the
occurrence and continuance of an Event of Default and until all of the
Obligations have been paid in full, Borrower will also pay or reimburse
Agent for all reasonable fees and expenses of Agent's (1) outside
counsel, (2) reserve engineers and (3) consultants engaged in
connection with the Loan Documents.
(j) PERFORMANCE ON BORROWER'S BEHALF. If any Related Person
fails to pay any taxes, expenses, attorneys' fees or other amounts it
is required to pay under any Loan Document,
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Agent may, upon five (5) days prior written notice to Borrower, pay the
same; provided, however, that if Borrower is contesting any such amount
in accordance with the terms of the Loan Documents and gives Agent
written notice thereof at least one (1) day prior to the date contained
in Agent's notice to Borrower on which Agent intends to pay such
amount, Agent will refrain from making such payment for so long as
Borrower is contesting such amount in accordance with the terms of the
Loan Documents. If any Related Person fails to pay any insurance
premiums it is required to pay under any Loan Document, Agent may pay
the same. Notwithstanding the foregoing, Agent may pay any taxes,
expenses, attorneys' fees, premiums or other amounts required to be
paid by any Related Person under any Loan Document to prevent the
attachment of any lien on any of such Related Person's assets. Borrower
shall immediately reimburse Agent for any payment made hereunder and
each amount paid by Agent shall constitute an Obligation owed hereunder
which is due and payable on the date such amount is paid by Agent.
(k) INTEREST. Borrower hereby promises to Agent and Lenders to
pay interest at the Late Payment Rate on all Obligations which Borrower
has in this Agreement promised to pay (including Obligations to pay
fees or to reimburse or indemnify Agent or any Lender) and which are
not paid when due or within any applicable grace period.
(l) COMPLIANCE WITH AGREEMENTS AND LAW. Each Related Person
will perform all material obligations it is required to perform under
the terms of each indenture, mortgage, deed of trust, security
agreement, lease, franchise, agreement, contract or other instrument or
obligation to which it is a party or by which it or any of its
properties is bound. Each Related Person will conduct its business and
affairs in material compliance with all laws, regulations, and order
applicable thereto.
(m) ENVIRONMENTAL MATTERS; ENVIRONMENTAL REVIEWS.
(i) Each Related Person will comply with all
Environmental Laws now or hereafter applicable to such Related
Person and shall obtain or cause third-party operators to
represent that they have obtained, at or prior to the time
required by applicable Environmental Laws, all environmental,
health and safety permits, licenses and other authorizations
necessary for its operations and will maintain such
authorizations in full force and effect. Without limiting the
foregoing, Borrower will, as recommended by Pilko and
Associates, Inc. or such other environmental consultant
jointly selected by Agent and Borrower, promptly develop and
carry out a plan of action to plug abandoned xxxxx, as
discovered, as required to be plugged under applicable
governmental requirements, that are not expected to be
returned to service.
(ii) Borrower will promptly furnish to Agent all
written notices of violation, orders, claims, demands,
notices, citations, complaints, penalty assessments, suits or
other proceedings received by Borrower or of which it has
notice, which involve or could reasonably be expected to
involve asserted damages in excess of $100,000, pending or
threatened against any Related Person, by any
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person, firm, or public or governmental authority with respect
to any alleged violation of or non-compliance with any
Environmental Laws, any alleged personal injury, property
damages, Natural Resources Damages as used in "CERCLA",
remediation costs, environmental restoration or remediation or
any other form of legal or equitable relief whatsoever arising
from or in any way connected with the actual or alleged
release or discharge of or exposure to any substance or
material alleged to be toxic or hazardous or any permits,
licenses or authorizations in connec tion with its ownership
or use of its properties or the operation of its business,
regardless of where conducted.
(iii) Borrower will promptly furnish to Agent all
requests for information, notices of claim, demand letters,
and other notifications, received by Borrower in connection
with its ownership or use of its properties or the conduct of
its business, relating to potential responsibility with
respect to any investigation or clean-up of Hazardous Material
at any location, or with respect to any alleged personal
injury, property damages, Natural Resources Damages as used in
"CERCLA", remediation costs, environmental restoration or
remediation or any other form of legal or equitable relief
whatsoever arising from or in any way connected with the
actual or alleged release or discharge of or exposure to any
substance or material alleged to be toxic or hazardous.
(n) EVIDENCE OF COMPLIANCE. Each Related Person will furnish
to each Lender at such Related Person's or Borrower's expense all
evidence which Agent from time to time reasonably requests in writing
as to the accuracy and validity of or compliance with all
representations, warranties and covenants made by any Related Person in
the Loan Documents, the satisfaction of all conditions contained
therein, and all other matters pertaining thereto.
(o) FOREIGN QUALIFICATION. Within sixty (60) days after the
date of this Agreement, Borrower shall deliver to Agent certificates of
Borrower's good standing and due qualification to do business, issued
by appropriate officials in any states in which Borrower owns property
subject to Security Documents.
Section 5.2. NEGATIVE COVENANTS. To conform with the terms and
conditions under which each Lender is willing to have credit outstanding to
Borrower, and to induce Agent and each Lender to enter into this Agreement and
make the Loans, Borrower warrants, covenants and agrees that until the full and
final payment of the Obligations and the termination of this Agreement, unless
Majority Lenders have previously agreed otherwise:
(a) RESTRICTED DEBT. No Related Person shall create, incur,
assume or suffer to exist (i) any Debt for borrowed money or for the
deferred purchase price of property or services (other than current
trade liabilities which is 60 days or less past due and which is
incurred in the ordinary course of business and payable in accordance
with customary practices) or which is evidenced by a note, bond,
debenture or similar instrument, (ii) any obligations of such Related
Person under any leases of property, real or personal, with respect to
which the
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obligations of the lessee are required in accordance with GAAP to be
capitalized on a balance sheet of the lessee (other than leases of
equipment which are made in the ordinary course of business), (iii) any
obligations of such Related Person in respect of letters of credit and
acceptances issued or created for the account of such Related Person,
(iv) any liabilities secured by any Lien on any property owned by such
Related Person even though such Related Person has not assumed or
otherwise become liable for the payment thereof, (v) any obligations
arising under futures contracts, swap contracts, or similar speculative
agreements (other than option contracts giving such Related Person the
right - and not the duty - to buy or sell goods expected to be bought
or sold by such Related Person in the ordinary course of its business,
so long as such Related Person has no obligation other than the initial
payment in full of the purchase price for the option), (vi) any
obligations arising under conditional sales or other title retention
agreements, (vii) any obligations owing under direct or indirect
guaranties of Debt of any other Person or constituting obligations to
purchase or acquire or to otherwise protect or insure a creditor
against loss in respect of Debt of any other Person (such as
obligations under working capital maintenance agreements, agreements to
keep-well, or agreements to purchase Debt, assets, goods, securities or
services), but excluding endorsements in the ordinary course of
business of negotiable instruments in the course of collection, (viii)
any obligations with respect to payments received in consideration of
oil, gas, or other minerals yet to be acquired or produced at the time
of payment (including obligations under "take-or-pay" contracts to
deliver gas in return for payments already received and the
undischarged balance of any production payment created by such Related
Person or for the creation of which such Related Person directly or
indirectly received payment), or (ix) any obligations to deliver goods
or services in consideration of advance payments therefor, except:
(1) Debt in respect of the Loans, the Notes, and
other Obligations of Borrower under this Agreement;
(2) Debt on account of trade credit or other accounts
payable incurred in the ordinary course of business;
(3) Debt outstanding on the date of this Agreement
and listed on Schedule 3 hereto, provided that the amount of
any such Debt may not be increased;
(4) Debt of Borrower owing to any Guarantor and Debt
of any Guarantor owing to Borrower;
(5) Debt arising under contracts entered into in
accordance with subsections (e) and (f) of the definition of
Permitted Investments;
(6) guaranties by any Related Person of Debt of any
other Related Person, which Debt is expressly permitted
pursuant to the provisions of this Section 5.2(a);
(7) Debt evidenced by the 2006 Senior Subordinated
Notes; provided that (i) the 2006 Senior Subordinated Notes
shall not be repurchased or redeemed in
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whole or in part prior to their stated maturity date, whether
at the option of Borrower or pursuant to a mandatory
redemption requirement under the 1996 Indenture; (ii) the
principal amount of such Debt shall not be increased,
refinanced, or refunded prior to its stated maturity date;
(iii) the interest rate thereon shall not be increased above
its stated rate; (iv) any prepayment charges, fees, expenses
or other amounts payable with respect to such Debt shall not
be increased; and (v) such Debt shall not be defeased in whole
or in part by Borrower pursuant to an election under Article 8
of the 0000 Xxxxxxxxx or otherwise; and
(8) Debt evidenced by the 2007 Senior Subordinated
Notes; provided that (i) the 2007 Senior Subordinated Notes
shall not be repurchased or redeemed in whole or in part prior
to their stated maturity date, whether at the option of
Borrower or pursuant to a mandatory redemption requirement
under the 1997 Indenture; (ii) the principal amount of such
Debt shall not be increased, refinanced, or refunded prior to
its stated maturity date; (iii) the interest rate thereon
shall not be increased above its stated rate; (iv) any
prepayment charges, fees, expenses or other amounts payable
with respect to such Debt shall not be increased; and (v) such
Debt shall not be defeased in whole or in part by Borrower
pursuant to an election under Article 8 of the 1997 Indenture
or otherwise.
(b) LIMITATION ON LIENS. No Related Person shall create,
incur, assume or suffer to exist any Lien upon any of their respective
properties, assets or revenues, whether now owned or hereafter
acquired, except for:
(i) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided
that adequate reserves with respect thereto are maintained on
the books of such Related Person in conformity with GAAP;
(ii) carriers', warehousemen's, lessors', mechanics',
materialmen's, repairmen's or other like Liens arising in the
ordinary course of business which are not overdue for a period
of more than 60 days or which are being contested in good
faith by appropriate proceedings; provided that adequate
reserves with respect thereto are maintained on the books of
such Related Person in conformity with GAAP;
(iii) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance
carriers under insurance or self-insurance arrangements;
(iv) deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance
bonds, and other obligations of a like nature incurred in the
ordinary course of business;
(v) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not
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substantial in amount and which do not in any case materially
detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business
of the relevant Related Person;
(vi) Liens in existence on the date of this Agreement
listed on Schedule 4, securing Debt permitted by subsection
5.2(a)(3), provided that no such Lien is spread to cover any
additional property after the date of this Agreement and that
the amount of Debt secured thereby is not increased;
(vii) Liens which arise pursuant to the specific
terms of any license, joint operating agreement, unitization
agreement or other similar agreement evidencing the interest
of the relevant Person in any oil and gas producing property,
provided that such Lien is not securing any Debt other than
Debt incurred in connection with the specific terms of any
such license, joint operating agreement, unitization agreement
or other similar agreement;
(viii) Liens which arise pursuant to leases of
equipment entered into in the ordinary course of business,
provided that such Lien is not securing any Debt other than
Debt incurred in connection with the specific terms of such
equipment lease; and
(ix) Liens created pursuant to the Security Documents
or otherwise contemplated by this Agreement or the other Loan
Documents.
(c) LIMITATION ON MERGERS. No Related Person will merge or
consolidate with or into any other business entity. Any Subsidiary of
Borrower may, however, be merged into or consolidated with (i) another
Subsidiary of Borrower, so long as a Guarantor is the surviving
business entity, or (ii) Borrower, so long as Borrower is the surviving
business entity.
(d) LIMITATION ON SALES OF PROPERTY. No Related Person will
sell, transfer, lease, exchange, alienate or dispose of any of its
material assets or properties or any material interest therein except,
to the extent not otherwise forbidden under the Security Documents:
(i) equipment or other assets which are worthless or
obsolete or which are replaced by equipment or similar assets
of equal suitability and value.
(ii) inventory (including oil and gas sold as
produced and seismic data) which is sold in the ordinary
course of business on ordinary trade terms.
(iii) oil and gas properties which are sold for fair
consideration not to exceed $15,000,000 in the aggregate in
any calendar year during the term of this Agreement; provided,
however, that Borrower may sell for fair consideration oil and
gas properties in excess of $15,000,000 in the aggregate
during any calendar year so long as within five (5) days of
consummation of any such sale all such sale proceeds
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(net of reasonable costs incurred in connection with such
sale) shall be prepaid to Agent as a mandatory prepayment of
the outstanding principal balance of the Notes, which proceeds
shall reduce the Borrowing Base by an amount determined by
Majority Lenders in their sole discretion to be attributable
to the oil and gas properties sold.
Neither Borrower nor any of Borrower's Subsidiaries will sell, transfer
or otherwise dispose of capital stock of any of Borrower's Subsidiaries
except that any Subsidiary of Borrower may sell or issue its own
capital stock to the extent not otherwise prohibited hereunder. No
Related Person will discount, sell, pledge or assign any notes payable
to it, accounts receivable or future income except to the extent
expressly permitted under the Loan Documents.
(e) LIMITATION ON DIVIDENDS AND REDEMPTIONS. No Related Person
will declare or pay any dividends on, or make any other distribution in
respect of, any class of its capital stock or any partnership or other
interest in it, nor will any Related Person directly or indirectly make
any capital contribution to or purchase, redeem, acquire or retire any
shares of the capital stock of or partnership interests in any Related
Person (whether such interests are now or hereafter issued, outstanding
or created), or cause or permit any reduction or retirement of the
capital stock of any Related Person, except:
(i) such dividends, distributions, contributions,
purchases, redemptions, acquisitions, retirements or
reductions may be made by any Related Person without
limitation to Borrower and to Guarantors which are
Subsidiaries of Borrower, and
(ii) Borrower may make distributions to its
shareholders in any Fiscal Year which, in the aggregate
together with all other dividends and distributions made by
Borrower during such Fiscal Year and all Consolidated income
taxes incurred by Borrower during the immediately preceding
Fiscal Year and actually paid by Borrower, do not exceed sixty
percent (60%) of the Consolidated net income of Borrower
calculated in accordance with GAAP before income taxes and
non-cash extraordinary items for the immediately preceding
Fiscal Year; PROVIDED THAT at the time of each such
distribution, (a) the Borrowing Base exceeds the aggregate
unpaid principal balance of the Loans, (b) no amounts are due
and owing under the Loan Documents and (c) no Default or Event
of Default has occurred and is continuing or would arise as a
result of the making of such distribution.
(f) LIMITATION ON INVESTMENTS AND NEW BUSINESSES. No Related
Person will (i) make any expenditure or commitment or incur any
obligation or enter into or engage in any transaction except in the
ordinary course of business, (ii) engage directly or indirectly in any
business or conduct any operations except in connection with or
incidental to its present businesses and operations, (iii) make any
acquisitions of or capital contributions to or other investments in any
Person, or be a party to or in any manner be liable on any forward,
future, swap or hedging contract, other than Permitted Investments, or
(iv) make any significant
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acquisitions or investments in any properties other than oil and gas
properties which are expressly permitted hereunder.
(g) LIMITATION ON CREDIT EXTENSIONS. Except for Permitted
Investments, no Related Person will extend credit, make advances or
make loans other than normal and prudent extensions of credit to
customers buying goods and services in the ordinary course of business,
which extensions shall not be for longer periods than those extended by
similar businesses operated in a normal and prudent manner.
(h) TRANSACTIONS WITH AFFILIATES. Neither Borrower nor any of
its Subsidiaries will engage in any material transaction with any of
its Affiliates on terms which are less favorable to it than those which
would have been obtainable at the time in arm's-length dealing with
Persons other than such Affiliates, provided that such restriction
shall not apply to transactions among Borrower and its Subsidiaries.
(i) CERTAIN CONTRACTS; AMENDMENTS; MULTIEMPLOYER ERISA PLANS.
Except as expressly provided for in the Loan Documents, no Related
Person will, directly or indirectly, enter into, create, or otherwise
allow to exist any contract or other consensual restriction on the
ability of any Subsidiary of Borrower to: (i) pay dividends or make
other distributions to Borrower, (ii) to redeem equity interests held
in it by Borrower, (iii) to repay loans and other indebtedness owing by
it to Borrower, or (iv) to transfer any of its assets to Borrower. No
Related Person will enter into any "take-or-pay" contract or other
contract or arrangement for the purchase of goods or services which
obligates it to pay for such goods or service regardless of whether
they are delivered or furnished to it. No Related Person will amend or
permit any amendment to any contract or lease which releases,
qualifies, limits, makes contingent or otherwise detrimentally affects
the rights and benefits of Agent or any Lender under or acquired
pursuant to any Security Documents. No Related Person will incur any
obligation to contribute to any "multiemployer plan" as defined in
Section 4001 of ERISA. No Related Person will amend or modify or permit
any amendment or modification to any contract or instrument governing
the Debt evidenced by the 2006 Senior Subordinated Notes or the 2007
Senior Subordinated Notes the effect of which would be to change any of
the material terms of such contract or instrument, including without
limitation, any amendment or modification that (i) would increase the
amount of, or shorten the maturity of, any payment of any principal
amount of the 2006 Senior Subordinated Notes or the 2007 Senior
Subordinated Notes; (ii) would change the terms of subordination of
such Debt to the Obligations; or (iii) would be, in the opinion of
Majority Lenders, materially more burdensome to Borrower than the
obligations and requirements imposed by the 2006 Senior Subordinated
Notes and the 1996 Indenture or the 2007 Senior Subordinated Notes and
the 1997 Indenture, as the case may be.
(j) FISCAL YEAR. No Related Person will change its fiscal
year.
(k) CURRENT RATIO. The ratio of Borrower's Consolidated
Current Assets to Borrower's Consolidated Current Liabilities will
never be less than 1.0 to 1.0. For purposes of this subsection,
Borrower's Consolidated Current Liabilities will be calculated without
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including any payments of principal on the Note which are required to
be repaid within one year from the time of calculation. For purposes of
this subsection, until the date which is one year and one day before
the Termination Date, Borrower's Consolidated current assets shall be
increased by an amount equal to the lesser of (i) the amount of
available credit under the Borrowing Base at the time of such
calculation or (ii) $25,000,000; PROVIDED that for purposes of
determining compliance with this Section 5.2(k) as of March 31, 1998,
Borrower's Current Assets shall be deemed to be increased by the amount
of $25,000,000.
(l) FIXED CHARGE COVERAGE RATIO. The ratio of Borrower's
Consolidated Cash Flow for any Fiscal Quarter to Borrower's
Consolidated Fixed Charges for such Fiscal Quarter will never be less
than 1.5 to 1.0.
(m) INTEREST COVERAGE. The ratio of Borrower's Consolidated
Cash Flow for any Fiscal Quarter to Borrower's Interest Expense for
such Fiscal Quarter will never be less than 2.5 to 1.0.
(n) TANGIBLE NET WORTH. Borrower's Consolidated Tangible Net
Worth will never be less than $120,000,000.
ARTICLE VI - SECURITY
Section 6.1. THE SECURITY. The Obligations will be secured by the
Security Documents heretofore or hereafter delivered by any Related Person and
accepted by Agent.
Section 6.2. AGREEMENT TO DELIVER SECURITY DOCUMENTS. Borrower agrees
to deliver and to cause its Subsidiaries to deliver, to further secure the
Obligations whenever requested by Agent in its sole and absolute discretion,
deeds of trust, mortgages, chattel mortgages, security agreements, financing
statements and other Security Documents in form and substance satisfactory to
Agent for the purpose of granting, confirming, and perfecting first and prior
liens or security interests in any real or personal property now owned or
hereafter acquired by Borrower or any Guarantor.
Section 6.3. PERFECTION AND PROTECTION OF SECURITY INTERESTS AND LIENS.
Borrower will from time to time deliver to Agent any financing statements,
continuation statements, extension agreements and other documents, properly
completed and executed (and acknowledged when required) by the Related Persons
in form and substance satisfactory to Agent, which Agent requests for the
purpose of perfecting, confirming, or protecting any Liens or other rights in
Collateral securing any Obligations.
Section 6.4. BANK ACCOUNTS; OFFSET. To secure the repayment of the
Obligations Borrower hereby grants to Agent and each Lender a security interest,
a lien, and a right of offset, each of which shall be in addition to all other
interests, liens, and rights of Agent or any Lender at common law, under the
Loan Documents, or otherwise, and each of which shall be upon and against (a)
any and all moneys, securities or other property (and the proceeds therefrom) of
Borrower now or hereafter held or received by or in transit to Agent or any
Lender from or for the account of Borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, (b) any and all deposits
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(general or special, time or demand, provisional or final) of Borrower with
Agent or any Lender, and (c) any other credits and claims of Borrower at any
time existing against Agent or any Lender, including claims under certificates
of deposit. At any time and from time to time after the occurrence of any
Default, each of Agent and Lenders is hereby authorized to foreclose upon, or to
offset against the Obligations then due and payable (in either case without
notice to Borrower), any and all items hereinabove referred to. The remedies of
foreclosure and offset are separate and cumulative, and either may be exercised
independently of the other without regard to procedures or restrictions
applicable to the other.
Section 6.5. GUARANTIES OF BORROWER'S SUBSIDIARIES. Each Subsidiary of
Borrower now existing or created, acquired or coming into existence after the
date hereof shall, promptly upon request by Agent, execute and deliver to Agent
an absolute and unconditional guaranty of the timely repayment of the
Obligations and the due and punctual performance of the obligations of Borrower
hereunder, which guaranty shall be satisfactory to Agent in form and substance.
Borrower will cause each of its Subsidiaries to deliver to Agent, simultaneously
with its delivery of such a guaranty, written evidence satisfactory to Agent and
its counsel that such Subsidiary has taken all corporate or partnership action
necessary to duly approve and authorize its execution, delivery and performance
of such guaranty and any other documents which it is required to execute.
Section 6.6. PRODUCTION PROCEEDS. Notwithstanding that, by the terms of
certain of the Security Documents, Borrower and certain of the Related Persons
are and will be assigning to Agent and Lenders all of the proceeds of production
from the oil and gas properties constituting Collateral (the "Production
Proceeds"), so long as no Event of Default has occurred Borrower and such
Related Persons may continue to receive from the purchasers of production all
such Production Proceeds, subject, however, to the Liens created under the
Security Documents, which Liens are hereby affirmed and ratified. Upon the
occurrence of a Default, Agent and the Lenders shall have the right to obtain
possession of all Production Proceeds then held by Borrower or such Related
Persons and to receive directly from the purchasers of production all other
Production Proceeds. Upon the occurrence of an Event of Default, Agent and
Lenders may exercise all other rights and remedies granted under the Security
Documents. In no case shall any failure, whether purposed or inadvertent, by
Agent or Lenders to collect directly any such Production Proceeds constitute in
any way a waiver, remission or release of any of their rights under the Security
Documents, nor shall any release of any Production Proceeds by Agent or Lenders
to Borrower or such Related Persons constitute a waiver, remission, or release
of any other Production Proceeds or of any rights of Agent or Lenders to collect
other Production Proceeds thereafter.
ARTICLE VII - EVENTS OF DEFAULT AND REMEDIES
Section 7.1. EVENTS OF DEFAULT. Each of the following events
constitutes an Event of Default under this Agreement:
(a) Any Related Person fails to pay any Obligation when due
and payable, whether at a date for the payment of a fixed installment
or as a contingent or other payment becomes due and payable or as a
result of acceleration or otherwise; provided that with respect to any
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failure to pay interest on any of the Obligations when due and payable,
such failure shall not constitute an Event of Default hereunder if
remedied within three (3) days after such interest first becomes due
and payable;
(b) Any "default" or "event of default" occurs under any Loan
Document which defines either such term, and the same is not remedied
within the applicable period of grace (if any) provided in such Loan
Document;
(c) Any Related Person fails (other than as referred to in
subsections (a) and (b) above) to duly observe, perform or comply with
any covenant, agreement, condition or provision of any Loan Document,
and such failure is not remedied within the applicable Grace Period;
(d) Any representation or warranty previously, presently or
hereafter made in writing by or on behalf of any Related Person in any
Loan Document shall prove to have been false or incorrect in any
material respect on any date on or as of which made, or any Loan
Document at any time ceases to be valid, binding and enforceable as
warranted in Section 4.1(e) for any reason other than its release or
subordination by Agent;
(e) Any Related Person fails to duly observe, perform or
comply with any agreement with any Person or any term or condition of
any instrument (including the Subordinated Debt Documents), if such
agreement or instrument is materially significant to Borrower or to Bor
rower and its subsidiaries on a Consolidated basis or materially
significant to Guarantor, and such failure is not remedied within the
applicable period of grace (if any) provided in such agreement or
instrument;
(f) Any Related Person (i) fails to pay any portion, when such
portion is due, of the Subordinated Debt, (ii) fails to pay any
portion, when such portion is due, of any of its other Debt in excess
of $500,000, or (iii) breaches or defaults in the performance of any of
the Subordinated Debt Documents or any other agreement or instrument by
which the Subordinated Debt or any such other Debt is issued,
evidenced, governed, or secured, and any such failure, breach or
default is not waived and continues beyond any applicable period of
grace provided therefor;
(g) Any of the principal indebtedness evidenced by the
Subordinated Debt Documents becomes due prior to its stated maturity
date (by acceleration or otherwise) or Borrower or any holder of the
Subordinated Debt exercises any right of repurchase or redemption with
respect thereto;
(h) Either (i) any "accumulated funding deficiency" (as
defined in Section 412(a) of the Internal Revenue Code of 1986, as
amended) in excess of $100,000 exists with respect to any ERISA Plan,
whether or not waived by the Secretary of the Treasury or his delegate,
or (ii) any Termination Event occurs with respect to any ERISA Plan and
the then current value of such ERISA Plan's benefit liabilities exceeds
the then current value of such ERISA Plan's assets available for the
payment of such benefit liabilities by more than $100,000 (or
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in the case of a Termination Event involving the withdrawal of a
substantial employer, the withdrawing employer's proportionate share of
such excess exceeds such amount);
(i) Any Related Person:
(A) suffers the entry against it of a judgment,
decree or order for relief by a court of competent
jurisdiction in an involuntary proceeding commenced under any
applicable bankruptcy, insolvency or other similar law of any
jurisdiction now or hereafter in effect, including the federal
Bankruptcy Code, as from time to time amended, or has any such
proceeding commenced against it which remains undismissed for
a period of sixty days; or
(B) commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in
effect, including the federal Bankruptcy Code, as from time to
time amended; or applies for or consents to the entry of an
order for relief in an involuntary case under any such law; or
makes a general assignment for the benefit of creditors; or
fails generally to pay (or admits in writing its inability to
pay) its debts as such debts become due; or takes corporate or
other action to authorize any of the foregoing; or
(C) suffers the appointment of or taking possession
by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of all or a substantial part
of its assets or of any part of the Collateral in a proceeding
brought against or initiated by it, and such appointment or
taking possession is neither made ineffective nor discharged
within sixty days after the making thereof, or such
appointment or taking possession is at any time consented to,
requested by, or acquiesced to by it; or
(D) suffers the entry against it of a final judgment
for the payment of money in excess of $1,000,000, unless the
same is discharged within thirty days after the date of entry
thereof or an appeal or appropriate proceeding for review
thereof is taken within such period and a stay of execution
pending such appeal is obtained; or
(E) suffers a writ or warrant of attachment or any
similar process to be issued by any court against all or any
substantial part of its assets or any part of the Collateral,
and such writ or warrant of attachment or any similar process
is not stayed or released within sixty days after the entry or
levy thereof or after any stay is vacated or set aside;
(j) For any reason a Change of Control shall occur; and
(k) Any material adverse change occurs in Borrower's
individual or Consolidated financial condition or businesses or
operations.
Upon the occurrence of an Event of Default described in subsection (i)(A),
(i)(B) or (i)(C) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and
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payable, without demand, presentment, notice of demand or of dishonor and
nonpayment, protest, notice of protest, notice of intention to accelerate,
declaration or notice of acceleration, or any other notice or declaration of any
kind, all of which are hereby expressly waived by Borrower and each Related
Person who at any time ratifies or approves this Agreement. During the
continuance of any other Event of Default, Agent at any time and from time to
time may (and upon written instructions from Majority Lenders, Agent shall),
without notice to Borrower or any other Related Person, declare any or all of
the Obligations immediately due and payable, and all such Obligations shall
thereupon be immediately due and payable, without demand, presentment, notice of
demand or of dishonor and nonpayment, protest, notice of protest, notice of
intention to accelerate, declaration or notice of acceleration, or any other
notice or declaration of any kind, all of which are hereby expressly waived by
Borrower and each Related Person who at any time ratifies or approves this
Agreement. After any such acceleration (whether automatic or due to any
declaration by Agent), any obligation of any Lender to make any further Advances
shall be permanently terminated. The term "Grace Period", as used herein with
respect to a Default or an Event of Default for which a Grace Period is
expressly provided, means the period beginning on the date of the related
Default and ending thirty days after written notice of such Default is given by
Agent to Borrower, provided that (i) no Grace Period shall ever apply to any
Default under Sections 5.1(d)(ii) or 5.2 and (ii) no Grace Period shall apply to
any other Default if Borrower has not given notice of such Default to Agent as
required in Section 5.1(d)(ii) prior to Agent's giving notice thereof to
Borrower or Agent's exercising any of its rights or remedies in connection
therewith.
Section 7.2. REMEDIES. If any Default shall occur and be continuing,
each Lender may protect and enforce its rights under the Loan Documents by any
appropriate proceedings, including proceedings for specific performance of any
covenant or agreement contained in any Loan Document, and each Lender may
enforce the payment of any Obligations due it or enforce any other legal or
equitable right which it may have; provided, however, that without the prior
written consent of Required Lenders, no Lender shall have the right to enforce
any of its rights or remedies under the Security Documents or otherwise with
respect to any of the Collateral and, in the event any Lender obtains such prior
written consent, such Lender shall notify Agent and Agent shall, on behalf of
such Lender, seek to enforce such Lender's rights and remedies under the
Security Documents. All rights, remedies and powers conferred upon Agent and
Lenders under the Loan Documents shall be deemed cumulative and not exclusive of
any other rights, remedies or powers available under the Loan Documents or at
law or in equity.
SECTION 7.3. INDEMNITY. EACH RELATED PERSON AGREES TO INDEMNIFY AGENT
AND EACH LENDER, UPON DEMAND, FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS,
SUITS, SETTLEMENTS, COSTS, EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES
OF ATTORNEYS, ACCOUNTANTS, EXPERTS AND ADVISORS) OF ANY KIND OR NATURE
WHATSOEVER (IN THIS SECTION COLLECTIVELY CALLED "LIABILITIES AND COSTS") WHICH
TO ANY EXTENT (IN WHOLE OR IN PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST AGENT OR SUCH LENDER GROWING OUT OF, RESULTING FROM OR IN ANY OTHER WAY
ASSOCIATED WITH ANY OF THE COLLATERAL, THE LOAN DOCUMENTS AND THE TRANSACTIONS
AND EVENTS
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(INCLUDING THE ENFORCEMENT OR DEFENSE THEREOF) AT ANY TIME ASSOCIATED THEREWITH
OR CONTEMPLATED THEREIN (INCLUDING ANY VIOLATION OR NONCOMPLIANCE WITH ANY
ENVIRONMENTAL LAWS BY ANY RELATED PERSON OR ANY ALLEGED PERSONAL INJURY,
PROPERTY DAMAGES, NATURAL RESOURCES DAMAGES AS USED IN "CERCLA", REMEDIATION
COSTS, ENVIRONMENTAL RESTORATION OR REMEDIATION OR ANY OTHER FORM OF LEGAL OR
EQUITABLE RELIEF WHATSOEVER SOUGHT AGAINST ANY RELATED PERSON, AGENT OR ANY
LENDER ARISING FROM OR IN ANY WAY CONNECTED WITH THE ACTUAL OR ALLEGED RELEASE
OR DISCHARGE OF OR EXPOSURE TO ANY SUBSTANCE OR MATERIAL ALLEGED TO BE TOXIC OR
HAZARDOUS OR ANY OTHER LIABILITIES OR DUTIES OF ANY RELATED PERSON, AGENT OR ANY
LENDER WITH RESPECT TO HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE
ENVIRONMENT). THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH
LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN
PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT OR ANY LENDER,
PROVIDED ONLY THAT NEITHER AGENT NOR ANY LENDER SHALL BE ENTITLED UNDER THIS
SECTION TO RECEIVE INDEMNIFICATION FOR THAT PORTION, IF ANY, OF ANY LIABILITIES
AND COSTS WHICH IS PROXIMATELY CAUSED BY ITS OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, AS DETERMINED IN A FINAL JUDGMENT. IF ANY PERSON (INCLUDING ANY
RELATED PERSON OR ANY OF THEIR AFFILIATES) EVER ALLEGES SUCH GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT BY AGENT OR ANY LENDER, THE INDEMNIFICATION PROVIDED FOR IN
THIS SECTION SHALL NONETHELESS BE PAID UPON DEMAND, SUBJECT TO LATER ADJUSTMENT
OR REIMBURSEMENT, UNTIL SUCH TIME AS A COURT OF COMPETENT JURISDICTION ENTERS A
FINAL JUDGMENT AS TO THE EXTENT AND EFFECT OF THE ALLEGED GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. AS USED IN THIS SECTION THE TERMS "AGENT" AND "LENDER" SHALL
REFER NOT ONLY TO THE PERSONS DESIGNATED AS SUCH IN SECTION 1.1 BUT ALSO TO EACH
DIRECTOR, OFFICER, AGENT, ATTORNEY, EMPLOYEE, REPRESENTATIVE AND AFFILIATE OF
SUCH PERSON.
ARTICLE VIII - AGENT
Section 8.1. APPOINTMENT AND AUTHORITY. Each Lender hereby irrevocably
authorizes Agent, and Agent hereby undertakes, to receive on behalf of the
Lenders payments of principal, interest and other amounts due hereunder as
specified herein and to take all other actions and to exercise on behalf of the
Lenders such powers under the Loan Documents as are specifically delegated to
Agent by the terms hereof or thereof, together with all other powers reasonably
incidental thereto. The relationship of Agent to Lenders is only that of one
commercial bank acting as administrative agent for others, and nothing in the
Loan Documents shall be construed to constitute Agent a trustee or other
fiduciary for any holder of any of the Notes or of any participation therein nor
to impose on Agent duties and obligations other than those expressly provided
for in the Loan Documents. With respect to any matters not expressly provided
for in the Loan Documents and any matters which the
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Loan Documents place within the discretion of Agent, Agent shall not be required
to exercise any discretion or take any action, and it may request instructions
from Lenders with respect to any such matter, in which case it shall be required
to act or to refrain from acting (and shall be fully protected and free from
liability to all Lenders in so acting or refraining from acting) upon the
instructions of Majority Lenders (including itself), provided, however, that
Agent shall not be required to take any action which exposes it to a risk of
personal liability that it considers unreasonable or which is contrary to the
Loan Documents or to applicable law. Upon receipt by Agent from Borrower of any
communication calling for action on the part of Lenders or upon notice from any
Lender to Agent of any Default or Event of Default, Agent shall promptly notify
each Lender thereof.
Section 8.2. AGENT'S RELIANCE, ETC. Neither Agent nor any of its
directors, officers, agents, attorneys, or employees shall be liable for any
action taken or omitted to be taken by any of them under or in connection with
the Loan Documents, including their negligence of any kind, except that each
shall be liable for its own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, Agent (a) may treat the payee of any
Note as the holder thereof until Agent receives written notice of the assignment
or transfer thereof in accordance with this Agreement, signed by such payee and
in form satisfactory to Agent; (b) may consult with legal counsel (including
counsel for Borrower), independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations made
in or in connection with the Loan Documents; (d) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of the Loan Documents on the part of any Related Person
or to inspect the property (including the books and records) of any Related
Person; (e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of any
Loan Document or any instrument or document furnished in connection therewith;
(f) may rely upon the representations and warranties of the Related Persons and
the Lenders in exercising its powers hereunder; and (g) shall incur no liability
under or in respect of the Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (including any telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
Person or Persons.
Section 8.3. LENDERS' CREDIT DECISIONS. Each Lender acknowledges that
it has, independently and without reliance upon Agent or any other Lender, made
its own analysis of Borrower and the transactions contemplated hereby and its
own independent decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents.
SECTION 8.4. INDEMNIFICATION. EACH LENDER AGREES TO INDEMNIFY AGENT (TO
THE EXTENT NOT REIMBURSED BY BORROWER WITHIN TEN (10) DAYS AFTER DEMAND) FROM
AND AGAINST SUCH LENDER'S PERCENTAGE SHARE OF ANY AND ALL LIABILITIES,
OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS,
SUITS, SETTLEMENTS,
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COSTS, EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES OF ATTORNEYS,
ACCOUNTANTS, EXPERTS AND ADVISORS) OF ANY KIND OR NATURE WHATSOEVER (IN THIS
SECTION COLLECTIVELY CALLED "LIABILITIES AND COSTS") WHICH TO ANY EXTENT (IN
WHOLE OR IN PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST AGENT
GROWING OUT OF, RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED WITH ANY OF THE
COLLATERAL, THE LOAN DOCUMENTS AND THE TRANSACTIONS AND EVENTS (INCLUDING THE
ENFORCEMENT THEREOF) AT ANY TIME ASSOCIATED THEREWITH OR CONTEMPLATED THEREIN
(INCLUDING ANY VIOLATION OR NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAWS BY ANY
PERSON OR ANY ALLEGED PERSONAL INJURY, PROPERTY DAMAGES, NATURAL RESOURCES
DAMAGES AS USED IN "CERCLA", REMEDIATION COSTS, ENVIRONMENTAL RESTORATION OR
REMEDIATION OR ANY OTHER FORM OF LEGAL OR EQUITABLE RELIEF WHATSOEVER SOUGHT
AGAINST ANY PERSON ARISING FROM OR IN ANY WAY CONNECTED WITH THE ACTUAL OR
ALLEGED RELEASE OR DISCHARGE OF OR EXPOSURE TO ANY SUBSTANCE OR MATERIAL ALLEGED
TO BE TOXIC OR HAZARDOUS OR ANY OTHER LIABILITIES OR DUTIES OF ANY PERSON WITH
RESPECT TO HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT). THE
FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS
ARE IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT
ACT OR OMISSION OF ANY KIND BY AGENT, PROVIDED ONLY THAT NO LENDER SHALL BE
OBLIGATED UNDER THIS SECTION TO INDEMNIFY AGENT FOR THAT PORTION, IF ANY, OF ANY
LIABILITIES AND COSTS WHICH IS PROXIMATELY CAUSED BY AGENT'S OWN INDIVIDUAL
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AS DETERMINED IN A FINAL JUDGMENT.
CUMULATIVE OF THE FOREGOING, EACH LENDER AGREES TO REIMBURSE AGENT PROMPTLY UPON
DEMAND FOR SUCH LENDER'S PERCENTAGE SHARE OF ANY COSTS AND EXPENSES TO BE PAID
TO AGENT BY BORROWER UNDER SECTION 5.1(I) TO THE EXTENT THAT AGENT IS NOT TIMELY
REIMBURSED FOR SUCH EXPENSES BY BORROWER AS PROVIDED IN SUCH SECTION. AS USED IN
THIS SECTION THE TERM "AGENT" SHALL REFER NOT ONLY TO THE PERSON DESIGNATED AS
SUCH IN SECTION 1.1 BUT ALSO TO EACH DIRECTOR, OFFICER, AGENT, ATTORNEY,
EMPLOYEE, REPRESENTATIVE AND AFFILIATE OF SUCH PERSON.
Section 8.5. RIGHTS AS LENDER. In its capacity as a Lender, Agent shall
have the same rights and obligations as any Lender and may exercise such rights
as though it were not Agent. Agent may accept deposits from, lend money to, act
as Trustee under indentures of, and generally engage in any kind of business
with any of the Related Persons or their Affiliates, all as if it were not Agent
hereunder and without any duty to account therefor to any other Lender.
Section 8.6. SHARING OF SET-OFFS AND OTHER PAYMENTS. Each of Agent and
Lender agrees that if it shall, whether through the exercise of rights under
Security Documents or rights of banker's lien, set off, or counterclaim against
Borrower or otherwise, obtain payment of a portion of the aggregate Obligations
owed to it which, taking into account all distributions made by Agent under
Section
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2.10, causes Agent or such Lender to have received more than it would have
received had such payment been received by Agent and distributed pursuant to
Section 2.10, then (a) it shall be deemed to have simultaneously purchased and
shall be obligated to purchase interests in the Obligations as necessary to
cause Agent and all Lenders to share all payments as provided for in Section
2.10, and (b) such other adjustments shall be made from time to time as shall be
equitable to ensure that Agent and all Lenders share all payments of Obligations
as provided in Section 2.10; provided, however, that nothing herein contained
shall in any way affect the right of Agent or any Lender to obtain payment
(whether by exercise of rights of banker's lien, set-off or counterclaim or
otherwise) of indebtedness other than the Obligations. Borrower expressly
consents to the foregoing arrangements and agrees that any holder of any such
interest or other participation in the Obligations, whether or not acquired
pursuant to the foregoing arrangements, may to the fullest extent permitted by
law exercise any and all rights of banker's lien, set-off, or counterclaim as
fully as if such holder were a holder of the Obligations in the amount of such
interest or other participation. If all or any part of any funds transferred
pursuant to this section is thereafter recovered from the seller under this
section which received the same, the purchase provided for in this section shall
be deemed to have been rescinded to the extent of such recovery, together with
interest, if any, if interest is required pursuant to court order to be paid on
account of the possession of such funds prior to such recovery.
Section 8.7. INVESTMENTS. Whenever Agent in good faith determines that
it is uncertain about how to distribute to Lenders any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lenders about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Agent is otherwise required to invest funds
pending distribution to Lenders, Agent shall invest such funds pending
distribution; all interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to the same
Persons as such investment. All moneys received by Agent for distribution to
Lenders (other than to the Person who is Agent in its separate capacity as a
Lender) shall be held by Agent pending such distribution solely as Agent for
such Lenders, and Agent shall have no equitable title to any portion thereof.
Section 8.8. BENEFIT OF ARTICLE VIII. The provisions of this Article
(other than the following Section 8.9) are intended solely for the benefit of
Agent and Lenders, and no Related Person shall be entitled to rely on any such
provision or assert any such provision in a claim or defense against Agent or
any Lender. Agent and Lenders may waive or amend such provisions as they desire
without any prior notice to or consent of Borrower or any Related Person.
Section 8.9. RESIGNATION. Agent may resign at any time by giving ten
(10) days' prior written notice thereof to Lenders and Borrower. Each such
notice shall set forth the date of such resignation. Upon any such resignation
Required Lenders shall have the right to appoint a successor Agent. Except as
provided in the following sentence, a successor must be appointed for any
retiring Agent, and such Agent's resignation shall only become effective when
such successor accepts such appointment. If, within thirty days after the date
of the retiring Agent's resignation, no successor Agent has been appointed and
has accepted such appointment, then the retiring Agent may appoint a successor
Agent, which shall be a domestic or foreign commercial bank organized or
licensed to conduct a banking or trust business under the laws of the United
States of America or of any state
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thereof. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any
retiring Agent's resignation hereunder the provisions of this Article VIII shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under the Loan Documents.
ARTICLE IX - MISCELLANEOUS
Section 9.1. WAIVERS AND AMENDMENTS. No failure or delay (whether by
course of conduct or otherwise) by Agent or any Lender in exercising any right,
power or remedy which Agent or such Lender may have under any of the Loan
Documents shall operate as a waiver thereof or of any other right, power or
remedy, nor shall any single or partial exercise by Agent or such Lender of any
such right, power or remedy preclude any other or further exercise thereof or of
any other right, power or remedy. No waiver of any provision of any Loan
Document and no consent to any departure therefrom shall ever be effective
unless it is in writing and signed as provided below in this section, and then
such waiver or consent shall be effective only in the specific instances and for
the purposes for which given and to the extent specified in such writing. No
notice to or demand on any Related Person shall in any case of itself entitle
any Related Person to any other or further notice or demand in similar or other
circumstances. This Agreement and the other Loan Documents set forth the entire
understanding between the parties hereto with respect to the transactions
contemplated herein and therein and supersede all prior discussions and
understandings with respect to the subject matter hereof and thereof, and no
waiver, consent, release, modification or amendment of or supplement to this
Agreement or the other Loan Documents shall be valid or effective against any
party hereto unless the same is in writing and signed by (i) if such party is
Borrower, by Borrower, (ii) if such party is Agent, by Agent and (iii) if such
party is a Lender, by such Lender, or if all Lenders, by Agent on behalf of
Lenders with the written consent of Majority Lenders. Notwithstanding the
foregoing or anything to the contrary herein, Agent shall not, without the prior
consent of each individual Lender, release, subordinate or impair any Collateral
or any Lien securing the Obligations or execute and deliver on behalf of such
Lender any waiver or amendment which would: (1) waive any of the conditions
specified in Article III (provided that Agent may in its discretion withdraw any
request it has made under Section 3.2(f)), (2) increase the Percentage Share of
such Lender or subject such Lender to any additional obligations, (3) reduce any
fees hereunder, or the principal of, or interest on, such Lender's Note, (4)
postpone any date fixed for any payment of any fees hereunder, or principal of,
or interest on, such Lender's Note, (5) amend the definition herein of "Majority
Lenders" or "Required Lenders" or otherwise change the aggregate amount of
Percentage Shares which is required for Agent, Lenders or any of them to take
any particular action under the Loan Documents, (6) release Borrower from its
obligation to pay such Lender's Note or Guarantor from its guaranty of such
payment, (7) amend Section 2.12 hereof, or (8) amend this Section 9.1.
SECTION 9.2. GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE EXTENT
THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN DOCUMENT,
THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE UNDER THE LAWS
OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
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AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE LAWS OF THE UNITED
STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. BORROWER
HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST BORROWER WITH RESPECT
TO THIS AGREEMENT, THE NOTE OR ANY OF THE LOAN DOCUMENTS MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK AS AGENT AND LENDERS MAY ELECT, AND, BY EXECUTION
AND DELIVERY HEREOF, BORROWER ACCEPTS AND CONSENTS FOR ITSELF AND IN RESPECT TO
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS AND AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY
AGENT AND LENDERS IN WRITING, WITH RESPECT TO ANY ACTION OR PROCEEDING BROUGHT
BY IT AGAINST AGENT AND LENDERS AND ANY QUESTIONS RELATING TO USURY. BORROWER
AGREES THAT SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK SHALL APPLY TO THE LOAN DOCUMENTS AND WAIVES ANY RIGHT TO STAY
OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE SAID COURTS ON THE BASIS
OF FORUM NON CONVENIENS. IN FURTHERANCE OF THE FOREGOING, BORROWER HEREBY
IRREVOCABLY DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, 0000 XXXXXXXX, XXX
XXXX, XXX XXXX, AS AGENT OF BORROWER TO RECEIVE SERVICE OF ALL PROCESS BROUGHT
AGAINST BORROWER WITH RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT IN NEW
YORK, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT. COPIES OF ANY SUCH PROCESS SO SERVED SHALL
ALSO, IF PERMITTED BY LAW, BE SENT BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS
SET FORTH BELOW, BUT THE FAILURE OF BORROWER TO RECEIVE SUCH COPIES SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS AS AFORESAID. BORROWER SHALL
FURNISH TO AGENT AND LENDERS A CONSENT OF CT CORPORATION SYSTEM AGREEING TO ACT
HEREUNDER PRIOR TO THE DATE OF THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF AGENT AND LENDERS TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR SHALL LIMIT THE RIGHT OF AGENT AND LENDERS TO BRING PROCEEDINGS AGAINST
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. IF FOR ANY REASON CT
CORPORATION SYSTEM SHALL RESIGN OR OTHERWISE CEASE TO ACT AS AGENT, BORROWER
HEREBY IRREVOCABLY AGREES TO (A) IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT
ACCEPTABLE TO AGENT AND LENDERS TO SERVE IN SUCH CAPACITY AND, IN SUCH EVENT,
SUCH NEW AGENT SHALL BE DEEMED TO BE SUBSTITUTED FOR CT CORPORATION SYSTEM FOR
ALL PURPOSES HEREOF AND (B) PROMPTLY DELIVER TO AGENT AND LENDERS THE WRITTEN
CONSENT (IN FORM AND SUBSTANCE SATISFACTORY TO AGENT AND LENDERS) OF SUCH NEW
AGENT AGREEING TO SERVE IN SUCH CAPACITY.
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Section 9.3. LIMITATION ON INTEREST. Agent, Lenders, the Related
Persons and the other parties to the Loan Documents intend to contract in strict
compliance with applicable usury law from time to time in effect. In furtherance
thereof such persons stipulate and agree that none of the terms and provisions
contained in the Loan Documents shall ever be construed to provide for interest
in excess of the maximum amount of interest permitted to be charged by
applicable law from time to time in effect. Neither any Related Person nor any
present or future guarantors, endorsers, or other Persons hereafter becoming
liable for payment of any Obligation shall ever be liable for unearned interest
thereon or shall ever be required to pay interest thereon in excess of the
maximum amount that may be lawfully charged under applicable law from time to
time in effect, and the provisions of this section shall control over all other
provisions of the Loan Documents which may be in conflict or apparent conflict
herewith. Agent and Lenders expressly disavow any intention to charge or collect
excessive unearned interest or finance charges in the event the maturity of any
Obligation is accelerated. If (a) the maturity of any Obligation is accelerated
for any reason, (b) any Obligation is prepaid and as a result any amounts held
to constitute interest are determined to be in excess of the legal maximum, or
(c) Agent or any Lender or any other holder of any or all of the Obligations
shall otherwise collect moneys which are determined to constitute interest which
would otherwise increase the interest on any or all of the Obligations to an
amount in excess of that permitted to be charged by applicable law then in
effect, then all such sums determined to constitute interest in excess of such
legal limit shall, without penalty, be promptly applied to reduce the then
outstanding principal of the related Obligations or, at Agent's or such Lender's
or holder's option, promptly returned to Borrower or the other payor thereof
upon such determination. In determining whether or not the interest paid or
payable, under any specific circumstance, exceeds the maximum amount permitted
under applicable law, Agent, Lenders and the Related Persons (and any other
payors thereof) shall to the greatest extent permitted under applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (ii) exclude voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the instruments evidencing the
Obligations in accordance with the amounts outstanding from time to time
thereunder and the maximum legal rate of interest from time to time in effect
under applicable law in order to lawfully charge the maximum amount of interest
permitted under applicable law. As used in this section the term "applicable
law" means the laws of the State of New York or the laws of the United States of
America, whichever laws allow the greater interest, as such laws now exist or
may be changed or amended or come into effect in the future.
Section 9.4. TERMINATION; LIMITED SURVIVAL. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
written notice delivered to Agent to terminate this Agreement. Upon receipt by
Agent of such a notice, if no Obligations are then owing this Agreement and all
other Loan Documents shall thereupon be terminated and the parties thereto
released from all prospective obligations thereunder. Notwithstanding the
foregoing or anything herein to the contrary, any waivers or admissions made by
any Related Person in any Loan Document, any Obligations under Sections 2.14
through 2.18, and any obligations which any Person may have to indemnify or pay
accrued compensation to Agent or any Lender shall survive any termination of
this Agreement or any other Loan Document. At the request and expense of
Borrower, Agent shall prepare and execute all necessary instruments to reflect
and effect such
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termination of the Loan Documents. Agent is hereby authorized to execute all
such instruments on behalf of all Lenders, without the joinder of or further
action by any Lender.
Section 9.5. NOTICES. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Agent may give telephonic notices to Lenders), and shall be deemed
sufficiently given or furnished if delivered by personal delivery, by telecopy
or telex, by delivery service with proof of delivery, or by registered or
certified United States mail, postage prepaid, to Borrower and the Related
Persons at the address of Borrower specified on the signature pages hereto, and
to Agent and the other Lenders at their addresses specified on the signature
pages hereto (unless changed by similar notice in writing given by the
particular Person whose address is to be changed). Any such notice or
communication shall be deemed to have been given (a) in the case of personal
delivery or delivery service, as of the date of first attempted delivery at the
address provided herein, (b) in the case of telecopy or telex, upon receipt, or
(c) in the case of registered or certified United States mail, three days after
deposit in the mail; provided, however, that no Request for Advance or Rate
Election shall become effective until actually received by Agent.
Section 9.6. SEVERABILITY. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable law.
Section 9.7. COUNTERPARTS. This Agreement may be separately executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
SECTION 9.8. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. TO THE EXTENT
PERMITTED BY LAW, AGENT, LENDERS AND BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER, OR
IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
SUCH PERSONS OR BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR AGENT'S
AND LENDERS' ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. EACH OF
BORROWER, AGENT AND LENDERS HEREBY FURTHER (A) CERTIFIES THAT NO PARTY HERETO
NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (B) ACKNOWLEDGES THAT IT
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
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Section 9.9. RESTATEMENT. This Agreement restates and amends the
Existing Agreement in its entirety, effective as of the date hereof, and all of
the terms and provisions hereof shall supersede the terms and provisions
thereof. It is the intention of the parties hereto that the Debt evidenced by
the Existing Agreement and the Existing Notes, together with all liens and
security interests granted by Borrower in favor of the Existing Lenders in
connection therewith, is to be carried forward pursuant to the terms contained
herein and in the other Loan Documents. The Notes are being executed and given
in partial renewal and restatement of (but not in extinguishment or novation of)
the Existing Notes.
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IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
Borrower
FORCENERGY INC (FORMERLY KNOWN AS FORCENERGY
GAS EXPLORATION, INC.)
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxx, Vice President
Address:
0000 X.X. 0xx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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ING (U.S.) CAPITAL CORPORATION (FORMERLY
KNOWN AS INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION), AGENT AND LENDER
SHARE OF
PERCENTAGE MAXIMUM
SHARE LOAN AMOUNT
----------- ------------
By: /s/ X. Xxxx Grant
------------------------------------
18.00 $45,000,000 X. Xxxx Xxxxx, Senior Vice President
Address:
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: X. Xxxx Grant
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Telex: TRT 177792
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DEN NORSKE BANK ASA, LENDER
SHARE OF
PERCENTAGE MAXIMUM
SHARE LOAN AMOUNT
----------- ------------
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
18.00% $45,000,000 Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
By: /s/ J. Xxxxxx Xxxxxx
------------------------------------
Name: J. Xxxxxx Xxxxxx
Title: Vice President
Address:
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Customer Service Dept.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Telex: WU426357
with a copy to:
Xxxxx X. Xxxxxx
Den Norske Bank AS
Representative Office
Three Xxxxx Center
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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MEESPIERSON CAPITAL CORP., LENDER
SHARE OF
PERCENTAGE MAXIMUM
SHARE LOAN AMOUNT
By: /s/ Xxxxx Xxxxxx
------------------------------------
16.00% $40,000,000 Xxxxx Xxxxxx, Managing Director
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, Managing Director
For funding or operational instructions:
MeesPierson Capital Corp.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
For notices and other communications:
MeesPierson Capital Corp.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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BANK OF SCOTLAND, LENDER
SHARE OF
PERCENTAGE MAXIMUM
SHARE LOAN AMOUNT
---------- ------------
By: /s/ Xxxxx Xxxx Tat
------------------------------------
18.00% $45,000,000 Name: Xxxxx Xxxx Tat
Title: Vice President
Address:
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx Tat
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Telex: 6801012 ubiforn
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HIBERNIA NATIONAL BANK, LENDER
SHARE OF
PERCENTAGE MAXIMUM
SHARE LOAN AMOUNT
---------- -----------
By: /s/ Xxxx Xxxxxxxxxx
------------------------------------
12.00% $30,000,000 Name: Xxxx Xxxxxxxxxx
Title: Banking Officer
000 Xxxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx XxXxxx
Telephone: 000.000.0000
Telecopy: 504.533.5434
Telex:
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PNC BANK, NATIONAL ASSOCIATION,
LENDER
SHARE OF
PERCENTAGE MAXIMUM
SHARE LOAN AMOUNT
---------- -----------
By: /s/ Xxxx X. Way
------------------------------------
10.00% $25,000,000 Name: Xxxx X. Way
Title: Assistant Vice President
Address for Notices:
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Telephone: 000.000.0000
Telecopy: 000.000.0000
Telex:
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CREDIT AGRICOLE INDOSUEZ, LENDER
SHARE OF
PERCENTAGE MAXIMUM
SHARE LOAN AMOUNT
----------- ------------
By: /s/ Xxxx Xxxxxx
------------------------------------
8.00% $20,000,000 Name: Xxxx Xxxxxx
Title: Senior Vice President &
Branch Manager
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
Address: 00 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Telex:
with a copy to:
Xxxxx Kenzeak
Credit Agricole Indosuez
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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