Exhibit 2
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AMENDED AND RESTATED CREDIT AGREEMENT
BETWEEN
SOUTHWESTERN EAGLE L.L.C.
AND
BANK ONE, TEXAS, NATIONAL ASSOCIATION
June 1, 1999
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REVOLVING LINE OF CREDIT OF UP TO $50,000,000
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Additional Defined Terms. . . . . . . . . . . . . . . . . . . . . . .1
1.3 Undefined Financial Accounting Terms. . . . . . . . . . . . . . . . 11
1.4 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.5 Articles and Sections . . . . . . . . . . . . . . . . . . . . . . . 11
1.6 Number and Gender . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.7 Incorporation of Exhibits . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE II TERMS OF FACILITY
2.1 Revolving Line of Credit. . . . . . . . . . . . . . . . . . . . . . 12
2.2 Use of Loan Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 12
2.3 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.4 Repayment of Loans and Interest . . . . . . . . . . . . . . . . . . 13
2.5 Outstanding Amounts . . . . . . . . . . . . . . . . . . . . . . . . 13
2.6 Time, Place, and Method of Payments . . . . . . . . . . . . . . . . 13
2.7 Borrowing Base Determinations . . . . . . . . . . . . . . . . . . . 13
2.8 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . 14
2.9 Voluntary Prepayments of Loans. . . . . . . . . . . . . . . . . . . 14
2.10 Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.11 Engineering Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.12 Facility Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.13 Loans to Satisfy Obligations of Borrower. . . . . . . . . . . . . . 15
2.14 Security Interest in Accounts; Right of Offset. . . . . . . . . . . 15
2.15 General Provisions Relating to Interest . . . . . . . . . . . . . . 15
2.16 Letters in Lieu of Transfer Orders. . . . . . . . . . . . . . . . . 16
2.17 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE III CONDITIONS
3.1 Receipt of Loan Documents and Other Items . . . . . . . . . . . . . 17
3.2 Each Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.1 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 Partnership Existence . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Valid and Binding Obligations . . . . . . . . . . . . . . . . . . . 21
4.5 Security Instruments. . . . . . . . . . . . . . . . . . . . . . . . 21
4.6 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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4.7 Scope and Accuracy of Financial Statements. . . . . . . . . . . . . 21
4.8 No Material Misstatements . . . . . . . . . . . . . . . . . . . . . 22
4.9 Liabilities, Litigation, and Restrictions . . . . . . . . . . . . . 22
4.10 Authorizations; Consents. . . . . . . . . . . . . . . . . . . . . . 22
4.11 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . 22
4.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.13 Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . . 22
4.14 Compliance with Federal Reserve Regulations . . . . . . . . . . . . 23
4.15 Investment Company Act Compliance . . . . . . . . . . . . . . . . . 23
4.16 Public Utility Holding Company Act Compliance . . . . . . . . . . . 23
4.17 Proper Filing of Tax Returns; Payment of Taxes Due. . . . . . . . . 23
4.18 Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.19 Gas Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.20 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 24
4.21 Casualties or Taking of Property. . . . . . . . . . . . . . . . . . 24
4.22 Locations of Borrower . . . . . . . . . . . . . . . . . . . . . . . 24
4.23 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V AFFIRMATIVE COVENANTS
5.1 Maintenance and Access to Records . . . . . . . . . . . . . . . . . 24
5.2 Quarterly Financial Statements; Compliance Certificates . . . . . . 25
5.3 Annual Financial Statements . . . . . . . . . . . . . . . . . . . . 25
5.4 Oil and Gas Reserve Reports . . . . . . . . . . . . . . . . . . . . 25
5.5 Title Opinions; Title Defects . . . . . . . . . . . . . . . . . . . 26
5.6 Notices of Certain Events . . . . . . . . . . . . . . . . . . . . . 26
5.7 Letters in Lieu of Transfer Orders; Division Orders . . . . . . . . 27
5.8 Additional Information. . . . . . . . . . . . . . . . . . . . . . . 27
5.9 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . 27
5.10 Payment of Assessments and Charges. . . . . . . . . . . . . . . . . 27
5.11 Maintenance of Limited Liability Company Existence and Good
Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.12 Payment of Notes; Performance of Obligations. . . . . . . . . . . . 28
5.13 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 28
5.14 Initial Fees and Expenses of Counsel to Lender. . . . . . . . . . . 28
5.15 Subsequent Fees and Expenses of Lender. . . . . . . . . . . . . . . 28
5.16 Operation of Oil and Gas Properties . . . . . . . . . . . . . . . . 29
5.17 Maintenance and Inspection of Properties. . . . . . . . . . . . . . 29
5.18 Maintenance of Insurance. . . . . . . . . . . . . . . . . . . . . . 29
5.19 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.20 Borrower's Year 2000 Compliance . . . . . . . . . . . . . . . . . . 30
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ARTICLE VI NEGATIVE COVENANTS
6.1 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.2 Contingent Obligations. . . . . . . . . . . . . . . . . . . . . . . 31
6.3 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.4 Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.5 Leasebacks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.6 Loans or Advances . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.7 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.8 Dividends and Distributions . . . . . . . . . . . . . . . . . . . . 32
6.9 Changes in Company Structure. . . . . . . . . . . . . . . . . . . . 32
6.10 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . 33
6.11 Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.12 Plan Obligations. . . . . . . . . . . . . . . . . . . . . . . . . 33
6.13 Tangible Net Worth. . . . . . . . . . . . . . . . . . . . . . . . 33
6.14 General Administrative Expenses. . . . . . . . . . . . . . . . . . 33
6.15 Current Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII EVENTS OF DEFAULT
7.1 Enumeration of Events of Default. . . . . . . . . . . . . . . . . . 33
7.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VIII MISCELLANEOUS
8.1 Transfers; Participations . . . . . . . . . . . . . . . . . . . . . 36
8.2 Survival of Representations, Warranties, and Covenants. . . . . . . 36
8.3 Notices and Other Communications. . . . . . . . . . . . . . . . . . 36
8.4 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . 37
8.5 Rights of Third Parties . . . . . . . . . . . . . . . . . . . . . . 37
8.6 Renewals; Extensions. . . . . . . . . . . . . . . . . . . . . . . . 37
8.7 No Waiver; Rights Cumulative. . . . . . . . . . . . . . . . . . . . 38
8.8 Survival Upon Unenforceability. . . . . . . . . . . . . . . . . . . 38
8.9 Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . 38
8.10 Controlling Agreement . . . . . . . . . . . . . . . . . . . . . . . 38
8.11 Disposition of Collateral . . . . . . . . . . . . . . . . . . . . . 38
8.12 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.13 JURISDICTION AND VENUE. . . . . . . . . . . . . . . . . . . . . . . 39
8.14 WAIVER OF RIGHTS TO JURY TRIAL. . . . . . . . . . . . . . . . . . . 39
8.15 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.16 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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LIST OF EXHIBITS
Exhibit I - Form of Note
Exhibit II - Form of Borrowing Request
Exhibit III - Form of Compliance Certificate
Exhibit IV - Form of Opinion of Counsel
Exhibit V - Disclosures
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is made and entered
into this 1st day of June, 1999, by and between SOUTHWESTERN EAGLE L.L.C., a
Louisiana limited liability company (the "BORROWER"), and BANK ONE, TEXAS,
NATIONAL ASSOCIATION, national banking association (the "LENDER").
W I T N E S S E T H:
In consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows, amending and restating
in its entirety the Letter Loan Agreement dated November 26, 1997, as amended
by First Amendment dated May 25, 1998 and Second Amendment dated July 28,
1998.
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 TERMS DEFINED ABOVE. As used in this Credit Agreement,
the terms "BORROWER" "GUARANTORS" and "LENDER" shall have the meaning
assigned to them hereinabove.
1.2 ADDITIONAL DEFINED TERMS. As used in this Credit
Agreement, each of the following terms shall have the meaning assigned
thereto in this Section, unless the context otherwise requires:
"AFFILIATE" shall mean any Person directly or indirectly
controlling, or under common control with, the Borrower and
includes any Subsidiary of the Borrower and any "affiliate" of the
Borrower within the meaning of Reg. Section 240.12b-2 of the
Securities Exchange Act of 1934, as amended, with "control," as
used in this definition, meaning possession, directly or
indirectly, of the power to direct or cause the direction of
management, policies or action through ownership of voting
securities, contract, voting trust, or membership in management or
in the group appointing or electing management or otherwise
through formal or informal arrangements or business relationships.
"AGREEMENT" shall mean this Credit Agreement, as it may be
amended, supplemented, or restated from time to time.
"AVAILABLE COMMITMENT" shall mean, at any time, an amount
equal to the remainder, if any, of (a) the Borrowing Base in
effect at such time MINUS (b) the Loan Balance at such time.
"BASE RATE" shall mean the interest rate announced or
published by the Lender from time to time as its general reference
rate of interest, which Base Rate shall change upon any change in
such announced or published general reference interest rate and
which Base Rate may not be the lowest interest rate charged by the
Lender.
"BORROWING BASE" shall mean, at any time, the amount
determined by the Lender in accordance with Section 2.7 and then
in effect.
"BORROWING REQUEST" shall mean each written request, in
substantially the form attached hereto as Exhibit II, by the
Borrower to the Lender for a borrowing or prepayment pursuant to
Sections 2.1 or 2.9, each of which shall:
(a) be signed by a Responsible Officer of the
Borrower;
(b) specify the amount requested or prepaid
and the date of the borrowing or prepayment (which
shall be a Business Day); and
(c) be delivered to the Lender no later than
11:00 a.m., Central Standard or Daylight Savings
Time, as the case may be, on the Business Day of the
requested borrowing or prepayment.
"BUSINESS DAY" shall mean a day other than a Saturday,
Sunday, legal holiday for commercial banks under the laws of the
State of Texas, or any other day when banking is suspended in the
State of Texas.
"CASH FLOW" shall mean net income plus interest,
depreciation, and other non-cash charges, less non-cash income.
"CLOSING DATE" shall mean the effective date of this
Agreement.
"COLLATERAL" shall mean the Mortgaged Properties and any
other Property now or at any time used or intended as security for
the payment or performance of all or any portion of the
Obligations.
"COMMITMENT" shall mean the obligation of the Lender,
subject to applicable provisions of this Agreement, to make Loans
to or for the benefit of the Borrower pursuant to Section 2.1.
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"COMMITMENT FEE" shall mean each fee payable to the Lender
by the Borrower pursuant to Section 2.10.
"COMMITMENT PERIOD" shall mean the period from and
including the Closing Date to but not including the Commitment
Termination Date.
"COMMITMENT TERMINATION DATE" shall mean August 25, 2000.
"COMMONLY CONTROLLED ENTITY" shall mean any Person which is
under common control with the Borrower or the Guarantors within
the meaning of Section 4001 of ERISA.
"COMPLIANCE CERTIFICATE" shall mean each certificate,
substantially in the form attached hereto as Exhibit III, executed
by a Responsible Officer of the Borrower and furnished to the
Lender from time to time in accordance with Sections 5.2 and 5.3.
"CONTINGENT OBLIGATION" shall mean, as to any Person, any
obligation of such Person guaranteeing or in effect guaranteeing
any Indebtedness, leases, dividends, or other obligations of any
other Person (for purposes of this definition, a "PRIMARY
OBLIGATION") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person,
regardless of whether such obligation is contingent, (a) to
purchase any primary obligation or any Property constituting
direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any primary obligation,
or (ii) to maintain working or equity capital of any other Person
in respect of any primary obligation, or otherwise to maintain the
net worth or solvency of any other Person, (c) to purchase
Property, securities or services primarily for the purpose of
assuring the owner of any primary obligation of the ability of the
Person primarily liable for such primary obligation to make
payment thereof, or (d) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect
thereof, with the amount of any Contingent Obligation being deemed
to be equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made
or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such
Person in good faith.
"CURRENT ASSETS" shall mean all assets which would, in
accordance with GAAP, be included as current assets on a balance
sheet of the Borrower as of the date of calculation.
3
"CURRENT LIABILITIES" shall mean all liabilities which
would, in accordance with GAAP, be included as current liabilities
on a balance sheet of the Borrower as of the date of calculation.
"DEBT SERVICE" shall mean an amount equal to (i) 1/6 of the
Loan Balance at the end of any fiscal quarter, plus actual
interest payments on such Loan Balance made during such quarter,
plus (ii) actual principal and interest payments on indebtedness
other than payments made under this Agreement during such quarter.
"DEFAULT" shall mean any event or occurrence which with the
lapse of time or the giving of notice or both would become an
Event of Default.
"DEFAULT RATE" shall mean a per annum interest rate equal
to the Base Rate plus five percent (5%), but in no event exceeding
the Highest Lawful Rate.
"DOLLARS" and "$" shall mean dollars in lawful currency of
the United States of America.
"ENGINEERING FEE" shall mean each fee payable to the Lender
by the Borrower pursuant to Section 2.11.
"ENVIRONMENTAL COMPLAINT" shall mean any written or oral
complaint, order, directive, claim, citation, notice of
environmental report or investigation, or other notice by any
Governmental Authority or any other Person with respect to (a) air
emissions, (b) spills, releases, or discharges to soils, any
improvements located thereon, surface water, groundwater, or the
sewer, septic, waste treatment, storage, or disposal systems
servicing any Property of the Borrower or the Guarantors, (c)
solid or liquid waste disposal, (d) the use, generation, storage,
transportation, or disposal of any Hazardous Substance, or (e)
other environmental, health, or safety matters affecting any
Property of the Borrower or the Guarantors or the business
conducted thereon.
"ENVIRONMENTAL LAWS" shall mean (a) the following federal
laws as they may be cited, referenced, and amended from time to
time: the Clean Air Act, the Clean Water Act, the Safe Drinking
Water Act, the Comprehensive Environmental Response, Compensation
and Liability Act, the Endangered Species Act, the Resource
Conservation and Recovery Act, the Occupational Safety and Health
Act, the Hazardous Materials Transportation Act, the Superfund
Amendments and Reauthorization Act, and the Toxic Substances
Control Act; (b) any and all equivalent environmental statutes of
any state in which Property of the Borrower is situated, as they
may be cited, referenced and amended from time to time; (c) any
rules or regulations promulgated under or adopted pursuant to the
above federal and state laws; and (d) any other equivalent
federal, state, or local statute
4
or any requirement, rule, regulation, code, ordinance, or order
adopted pursuant thereto, including, without limitation, those
relating to the generation, transportation, treatment, storage,
recycling, disposal, handling, or release of Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations
thereunder and interpretations thereof.
"EVENT OF DEFAULT" shall mean any of the events specified
in Section 7.1.
"FACILITY FEE" shall mean the fee payable to the Lender by
the Borrower pursuant to Section 2.12.
"FINAL MATURITY" shall mean August 25, 2000.
"FINANCIAL STATEMENTS" shall mean statements of the
financial condition of the Borrower and/or the Guarantors as at
the point in time and for the period indicated and consisting of
at least a balance sheet and related statements of operations,
common stock and other stockholders' equity, and cash flows for
the Borrower and, when required by applicable provisions of this
Agreement to be audited, accompanied by the unqualified
certification of a nationally-recognized firm of independent
certified public accountants or other independent certified public
accountants acceptable to the Lender and footnotes to any of the
foregoing, all of which shall be prepared in accordance with GAAP
consistently applied and in comparative form with respect to the
corresponding period of the preceding fiscal period.
"FLOATING RATE" shall mean an interest rate per annum equal
to the Base Rate from time to time in effect plus one-half percent
(1/2%), but in no event exceeding the Highest Lawful Rate.
"GAAP" shall mean generally accepted accounting principles
established by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants and in effect
in the United States from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any nation, country,
commonwealth, territory, government, state, county, parish,
municipality, or other political subdivision and any entity
exercising executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to government.
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"GUARANTORS" shall mean Southwestern Production Corp., a
Colorado corporation, Xxxxx X. Xxxxxxxx, Xxxxxxx Xxxxxx White, X.
Xxxxxx White, Jr., X. Xxxxxx White, III, Xxxxx Xxxxx and Xxxxxxxxx
Xxxxxxxx.
"GUARANTIES" shall mean the Guaranties dated the Closing
Date executed by the Guarantors in favor of the Lender,
guaranteeing the payment and performance of the Obligations, as it
may be ratified, amended, restated, or supplemented from time to
time. Such Guaranties are Limited Guaranties as to Xxxxx
Xxxxxxxx, Xxxxxxx Xxxxxx White, X. Xxxxxx White, Jr., X. Xxxxxx
White, III, Xxxxx Xxxxx and Xxxxxxxxx Xxxxxxxx.
"HAZARDOUS SUBSTANCES" shall mean flammables, explosives,
radioactive materials, hazardous wastes, asbestos, or any material
containing asbestos, polychlorinated biphenyls (PCBs), toxic
substances or related materials, petroleum, petroleum products,
associated oil or natural gas exploration, production, and
development wastes, or any substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes," or "toxic
substances" under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, the Superfund
Amendments and Reauthorization Act, as amended, the Hazardous
Materials Transportation Act, as amended, the Resource
Conservation and Recovery Act, as amended, the Toxic Substances
Control Act, as amended, or any other law or regulation now or
hereafter enacted or promulgated by any Governmental Authority.
"HIGHEST LAWFUL RATE" shall mean the maximum non-usurious
interest rate, if any (or, if the context so requires, an amount
calculated at such rate), that at any time or from time to time
may be contracted for, taken, reserved, charged, or received under
applicable laws of the State of Texas or the United States of
America, whichever authorizes the greater rate, as such laws are
presently in effect or, to the extent allowed by applicable law,
as such laws may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than such laws now allow.
"INDEBTEDNESS" shall mean, as to any Person, without
duplication, (a) all liabilities (excluding reserves for deferred
income taxes, deferred compensation liabilities, and other
deferred liabilities and credits) which in accordance with GAAP
would be included in determining total liabilities as shown on the
liability side of a balance sheet, (b) all obligations of such
Person evidenced by bonds, debentures, promissory notes, or
similar evidences of indebtedness, (c) all other indebtedness of
such Person for borrowed money, and (d) all obligations of others,
to the extent any such obligation is secured by a Lien on the
assets of such Person (whether or not such Person has assumed or
become liable for the obligation secured by such Lien).
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"INSOLVENCY PROCEEDING" shall mean application (whether
voluntary or instituted by another Person) for or the consent to
the appointment of a receiver, trustee, conservator, custodian, or
liquidator of any Person or of all or a substantial part of the
Property of such Person, or the filing of a petition (whether
voluntary or instituted by another Person) commencing a case under
Title 11 of the United States Code, seeking liquidation,
reorganization, or rearrangement or taking advantage of any
bankruptcy, insolvency, debtor's relief, or other similar law of
the United States, the State of Texas, or any other jurisdiction.
"INTELLECTUAL PROPERTY" shall mean patents, patent
applications, trademarks, tradenames, copyrights, technology,
know-how, and processes.
"INVESTMENT" in any Person shall mean any stock, bond,
note, or other evidence of Indebtedness, or any other security
(other than current trade and customer accounts) of, investment or
partnership interest in or loan to, such Person.
"LIEN" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner
of such Property, whether such interest is based on common law,
statute, or contract, and including, but not limited to, the lien
or security interest arising from a mortgage, ship mortgage,
encumbrance, pledge, security agreement, conditional sale or trust
receipt, or a lease, consignment, or bailment for security
purposes (other than true leases or true consignments), liens of
mechanics, materialmen, and artisans, maritime liens and
reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Property which secure an
obligation owed to, or a claim by, a Person other than the owner
of such Property (for the purpose of this Agreement, the Borrower
shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement,
financing lease, or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person
for security purposes), and the filing or recording of any
financing statement or other security instrument in any public
office.
"LIMITATION PERIOD" shall mean any period while any amount
remains owing on the Note and interest on such amount, calculated
at the applicable interest rate, plus any fees or other sums
payable under any Loan Document and deemed to be interest under
applicable law, would exceed the amount of interest which would
accrue at the Highest Lawful Rate.
"LOAN" shall mean any loan made by the Lender to or for the
benefit of the Borrower pursuant to this Agreement.
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"LOAN BALANCE" shall mean, at any time, the outstanding
principal balance of the Note at such time.
"LOAN DOCUMENTS" shall mean this Agreement, the Note, the
Guaranty,, the Security Instruments, and all other documents and
instruments now or hereafter delivered pursuant to the terms of or
in connection with this Agreement, the Note, the Guaranty, or the
Security Instruments, and all renewals and extensions of,
amendments and supplements to, and restatements of, any or all of
the foregoing from time to time in effect.
"MATERIAL ADVERSE EFFECT" shall mean (a) any adverse effect
on the business, operations, properties, condition (financial or
otherwise), or prospects of the Borrower, or the Guarantors which
increases the risk that any of the Obligations will not be repaid
as and when due, or (b) any adverse effect upon the Collateral.
"MORTGAGED PROPERTIES" shall mean all Oil and Gas
Properties of the Borrower subject to a perfected first-priority
Lien in favor of the Lender, subject only to Permitted Liens, as
security for the Obligations.
"NET INCOME" shall mean, for any relevant accounting
period, the net income of the Borrower for such period, determined
in accordance with GAAP.
"NOTE" shall mean the promissory note of the Borrower, in
the form attached hereto as Exhibit I, together with all renewals,
extensions for any period, increases, and rearrangements thereof.
"OBLIGATIONS" shall mean, without duplication, (a) all
Indebtedness evidenced by the Note, (b) the obligation of the
Borrower for the payment of Commitment Fees, Facility Fees, and
Engineering Fees, (c) the obligations of the Guarantors under the
Guaranty, (d) all other obligations and liabilities of the
Borrower or the Guarantors to the Lender, (e) all obligations and
liabilities of the Borrower to the Lender, now existing or
hereafter incurred under, arising out of or in connection with the
ISDA Master Agreement, dated as of February 17, 1999, between the
Borrower and the Lender, now existing or hereafter incurred,
under, arising out of or in connection with any Loan Document, and
to the extent that any of the foregoing includes or refers to the
payment of amounts deemed or constituting interest, only so much
thereof as shall have accrued, been earned and which remains
unpaid at each relevant time of determination.
"OIL AND GAS PROPERTIES" shall mean fee, leasehold, or
other interests in or under mineral estates or oil, gas, and other
liquid or gaseous hydrocarbon leases with respect to Properties
situated in the United States or offshore from any State of the
United States, including, without limitation, overriding royalty
and royalty
8
interests, leasehold estate interests, net profits interests,
production payment interests, and mineral fee interests, together
with contracts executed in connection therewith and all tenements,
hereditaments, appurtenances and Properties appertaining, belonging,
affixed, or incidental thereto.
"PERMITTED LIENS" shall mean (a) Liens for taxes,
assessments, or other governmental charges or levies not yet due
or which (if foreclosure, distraint, sale, or other similar
proceedings shall not have been initiated) are being contested in
good faith by appropriate proceedings, and such reserve as may be
required by GAAP shall have been made therefor, (b) Liens in
connection with workers' compensation, unemployment insurance or
other social security (other than Liens created by Section 4068 of
ERISA), old-age pension, or public liability obligations which are
not yet due or which are being contested in good faith by
appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, (c) Liens in favor of vendors,
carriers, warehousemen, repairmen, mechanics, workmen,
materialmen, construction, or similar Liens arising by operation
of law in the ordinary course of business in respect of
obligations which are not yet due or which are being contested in
good faith by appropriate proceedings, if such reserve as may be
required by GAAP shall have been made therefor, (d) Liens in favor
of operators and non-operators under joint operating agreements or
similar contractual arrangements arising in the ordinary course of
the business of the Borrower or the Guarantors to secure amounts
owing, which amounts are not yet due or are being contested in
good faith by appropriate proceedings, if such reserve as may be
required by GAAP shall have been made therefor, (e) Liens under
production sales agreements, division orders, operating
agreements, and other agreements customary in the oil and gas
business for processing, producing, and selling hydrocarbons
securing obligations not constituting Indebtedness and provided
that such Liens do not secure obligations to deliver hydrocarbons
at some future date without receiving full payment therefor within
90 days of delivery, (f) easements, rights of way, restrictions,
and other similar encumbrances, and minor defects in the chain of
title which are customarily accepted in the oil and gas financing
industry, none of which interfere with the ordinary conduct of the
business of the Borrower or materially detract from the value or
use of the Property to which they apply, and (h) Liens in favor of
the Lender and other Liens expressly permitted under the Security
Instruments.
"PERSON" shall mean an individual, corporation,
partnership, trust, unincorporated organization, government, any
agency or political subdivision of any government, or any other
form of entity.
"PLAN" shall mean, at any time, any employee benefit plan
which is covered by ERISA and in respect of which the Borrower,
the Guarantors, or any Commonly Controlled Entity is (or, if such
plan were terminated at such time,
9
would under Section 4069 of ERISA be deemed to be) an "employer"
as defined in Section 3(5) of ERISA.
"PRINCIPAL OFFICE" shall mean the principal office of the
Lender in Houston, Texas, presently located at 000 Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxx 00000.
"PROPERTY" shall mean any interest in any kind of property
or asset, whether real, personal or mixed, tangible or intangible.
"REGULATION D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, as the same may be
amended or supplemented from time to time.
"REGULATORY CHANGE" shall mean the passage, adoption,
institution, or amendment of any federal, state, local, or foreign
Requirement of Law (including, without limitation, Regulation D),
or any interpretation, directive, or request (whether or not
having the force of law) of any Governmental Authority or monetary
authority charged with the enforcement, interpretation, or
administration thereof, occurring after the Closing Date and
applying to a class of banks including the Lender.
"RELEASE OF HAZARDOUS SUBSTANCES" shall mean any emission,
spill, release, disposal, or discharge, except in accordance with
a valid permit, license, certificate, or approval of the relevant
Governmental Authority, of any Hazardous Substance into or upon
(a) the air, (b) soils or any improvements located thereon, (c)
surface water or groundwater, or (d) the sewer or septic system,
or the waste treatment, storage, or disposal system servicing any
Property of the Borrower or the Guarantors.
"REQUIREMENT OF LAW" shall mean, as to any Person, the
certificate or articles of incorporation and by-laws or other
organizational or governing documents of such Person, and any
applicable law, treaty, ordinance, order, judgment, rule, decree,
regulation, or determination of an arbitrator, court, or other
Governmental Authority, including, without limitation, rules,
regulations, orders, and requirements for permits, licenses,
registrations, approvals, or authorizations, in each case as such
now exist or may be hereafter amended and are applicable to or
binding upon such Person or any of its Property or to which such
Person or any of its Property is subject.
"RESERVE REPORT" shall mean each report delivered to the
Lender pursuant to Section 5.4.
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"RESPONSIBLE OFFICER" shall mean, as to any Person, its
Manager, President, Chief Executive Officer or any Vice President.
"SECURITY INSTRUMENTS" shall mean the security instruments
executed and delivered in satisfaction of the condition set forth
in Section 3.1(f), and all other documents and instruments at any
time executed as security for all or any portion of the
Obligations, as such instruments may be amended, restated, or
supplemented from time to time.
"SUBSIDIARY" shall mean, as to any Person, a corporation of
which shares of stock having ordinary voting power (other than
stock having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or
other managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such
Person.
"SUPERFUND SITE" shall mean those sites listed on the
Environmental Protection Agency National Priority List and
eligible for remedial action or any comparable state registries or
list in any state of the United States.
"TANGIBLE NET WORTH" shall mean (a) total assets, as would
be reflected on a balance sheet of the Borrower prepared in
accordance with GAAP, exclusive of Intellectual Property,
experimental or organization expenses, franchises, licenses,
permits, and other intangible assets, unamortized underwriters'
debt discount and expenses, and goodwill minus (b) total
liabilities, as would be reflected on a balance sheet of the
Borrower prepared in accordance with GAAP.
"TRANSFEREE" shall mean any Person to which the Lender has
sold, assigned, transferred, or granted a participation in any of
the Obligations, as authorized pursuant to Section 8.1, and any
Person acquiring, by purchase, assignment, transfer, or
participation, from any such purchaser, assignee, transferee, or
participant, any part of such Obligations.
"UCC" shall mean the Uniform Commercial Code as from time
to time in effect in the State of Texas.
1.3 UNDEFINED FINANCIAL ACCOUNTING TERMS. Undefined
financial accounting terms used in this Agreement shall be defined according
to GAAP at the time in effect.
1.4 REFERENCES. References in this Agreement to Exhibit,
Article, or Section numbers shall be to Exhibits, Articles, or Sections of
this Agreement, unless expressly stated to the contrary. References in this
Agreement to "hereby," "herein," "hereinafter," "hereinabove," "hereinbelow,"
"hereof," "hereunder" and words of similar import shall be to this Agreement
in
11
its entirety and not only to the particular Exhibit, Article, or Section in
which such reference appears.
1.5 ARTICLES AND SECTIONS. This Agreement, for convenience
only, has been divided into Articles and Sections; and it is understood that
the rights and other legal relations of the parties hereto shall be
determined from this instrument as an entirety and without regard to the
aforesaid division into Articles and Sections and without regard to headings
prefixed to such Articles or Sections.
1.6 NUMBER AND GENDER. Whenever the context requires,
reference herein made to the single number shall be understood to include the
plural; and likewise, the plural shall be understood to include the singular.
Definitions of terms defined in the singular or plural shall be equally
applicable to the plural or singular, as the case may be, unless otherwise
indicated. Words denoting sex shall be construed to include the masculine,
feminine and neuter, when such construction is appropriate; and specific
enumeration shall not exclude the general but shall be construed as
cumulative.
1.7 INCORPORATION OF EXHIBITS. The Exhibits attached to
this Agreement are incorporated herein and shall be considered a part of this
Agreement for all purposes.
ARTICLE II
TERMS OF FACILITY
2.1 REVOLVING LINE OF CREDIT. (a) Upon the terms and
conditions (including, without limitation, the right of the Lender to decline
to make any Loan so long as any Default or Event of Default exists) and
relying on the representations and warranties contained in this Agreement,
the Lender agrees, during the Commitment Period, to make Loans, in
immediately available funds at the Principal Office, to or for the benefit of
the Borrower, from time to time on any Business Day designated by the
Borrower following receipt by the Lender of a Borrowing Request; provided,
however, no Loan shall exceed the then existing Available Commitment.
(b) Subject to the terms of this Agreement, during the
Commitment Period, the Borrower may borrow, repay, and reborrow such funds.
Except for prepayments made pursuant to Section 2.8, each borrowing and
prepayment of principal of Loans shall be in an amount at least equal to
$50,000. Each borrowing or prepayment shall be deemed a separate borrowing
or prepayment for purposes of the foregoing.
(c) The Loans shall be made and maintained at the Principal
Office and shall be evidenced by the Note.
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2.2 USE OF LOAN PROCEEDS. Proceeds of all Loans shall be
used for general company purposes of the Borrower, including, without
limitation, costs of acquiring, exploring on and developing Oil and Gas
Properties and general working capital needs.
2.3 INTEREST. Subject to the terms of this Agreement
(including, without limitation, Section 2.15), interest on the Loans shall
accrue and be payable at a rate per annum equal to the Floating Rate.
Interest on all Loans shall be computed on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed (including the first day
but excluding the last day) during the period for which payable. Interest
provided for herein shall be calculated on unpaid sums actually advanced and
outstanding pursuant to the terms of this Agreement and only for the period
from the date or dates of such advances until repayment. Notwithstanding the
foregoing, interest on past-due principal and, to the extent permitted by
applicable law, past-due interest, shall accrue at the Default Rate, computed
on the basis of a year of 365 or 366 days, as the case may be, and actual
days elapsed (including the first day but excluding the last day) during the
period for which payable, and shall be payable upon demand by the Lender at
any time as to all or any portion of such interest.
2.4 REPAYMENT OF LOANS AND INTEREST. Accrued and unpaid
interest on the aggregate outstanding Loan Balance shall be due and payable
monthly commencing on the first day of May, 1999, and continuing on the first
day of each calendar month thereafter while any amount of the Loan Balance
remains outstanding, the payment in each instance to be the amount of
interest which has accrued and remains unpaid in respect of the Loan Balance.
The Loan Balance, together with all accrued and unpaid interest thereon,
shall be due and payable on the Commitment Termination Date.
2.5 OUTSTANDING AMOUNTS. The outstanding principal balance
of the Note reflected by the notations by the Lender on its records shall be
deemed rebuttably presumptive evidence of the principal amount owing on the
Note. The liability for payment of principal and interest evidenced by the
Note shall be limited to principal amounts actually advanced and outstanding
pursuant to this Agreement and interest on such amounts calculated in
accordance with this Agreement.
2.6 TIME, PLACE, AND METHOD OF PAYMENTS. All payments
required pursuant to this Agreement or the Note shall be made in lawful money
of the United States of America and in immediately available funds, shall be
deemed received by the Lender on the next Business Day following receipt if
such receipt is after 2:00 p.m., Central Standard or Daylight Savings Time,
as the case may be, on any Business Day, and shall be made at the Principal
Office. Except as provided to the contrary herein, if the due date of any
payment hereunder or under the Note would otherwise fall on a day which is
not a Business Day, such date shall be extended to the next succeeding
Business Day, and interest shall be payable for any principal so extended for
the period of such extension.
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2.7 BORROWING BASE DETERMINATIONS. (a) The Borrowing Base
as of the Closing Date is acknowledged by the Borrower and the Lender to be
$22,000,000.
(b) The Borrowing Base shall be redetermined semi-annually on
the basis of information supplied by the Borrower in compliance with the
provisions of this Agreement, including, without limitation, Reserve Reports,
and all other information available to the Lender. In addition, the Lender
shall, in the normal course of business following a request of the Borrower,
redetermine the Borrowing Base. Notwithstanding the foregoing, the Lender
may at its discretion redetermine the Borrowing Base at any time and from
time to time.
(c) Upon each determination of the Borrowing Base by the
Lender, the Lender shall notify the Borrower orally (confirming such notice
promptly in writing) of such determination, and the Borrowing Base so
communicated to the Borrower shall become effective upon such written
notification and shall remain in effect until the next subsequent
determination of the Borrowing Base.
(d) The Borrowing Base shall represent the determination by the
Lender, in accordance with the applicable definitions and provisions herein
contained and its customary lending practices for loans of this nature, of
the value, for loan purposes, of the Mortgaged Properties, subject, in the
case of any increase in the Borrowing Base, to the credit approval process of
the Lender. Furthermore, the Borrower acknowledges that the determination of
the Borrowing Base contains an equity cushion (market value in excess of loan
value), which is acknowledged by the Borrower to be essential for the
adequate protection of the Lender.
2.8 MANDATORY PREPAYMENTS. If at any time the Loan Balance
exceeds the Borrowing Base then in effect, the Borrower shall, within 30 days
of notice from the Lender of such occurrence, (a) prepay, or make
arrangements acceptable to the Lender for the prepayment of, the amount of
such excess for application on the Loan Balance, (b) provide additional
collateral, of character and value satisfactory to the Lender in its sole
discretion, to secure the Obligations by the execution and delivery to the
Lender of security instruments in form and substance satisfactory to the
Lender, or (c) effect any combination of the alternatives described in
clauses (a) and (b) of this Section and acceptable to the Lender in its sole
discretion.
2.9 VOLUNTARY PREPAYMENTS OF LOANS. Subject to applicable
provisions of this Agreement, the Borrower shall have the right at any time
or from time to time to prepay Loans without prepayment penalty provided,
however, (a) the Borrower shall pay all accrued and unpaid interest on the
amounts prepaid, and (b) no such prepayment shall serve to postpone the
repayment when due of any Obligation.
2.10 COMMITMENT FEE. In addition to interest on the Note as
provided herein and all other fees payable hereunder and to compensate the
Lender for maintaining funds available, the Borrower shall pay to the Lender,
in immediately available funds, on the first day of May, 1999, and on the
first day of each third calendar month thereafter during the Commitment
Period,
14
a fee in the amount of one-half percent (1/2%) per annum, calculated on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed (including the first day but excluding the last day), on the average
daily amount of the Available Commitment during the preceding quarterly
period.
2.11 ENGINEERING FEE. In addition to interest on the Note as
provided herein and all other fees payable hereunder and to compensate the
Lender for the costs of evaluating the Mortgaged Properties and reviewing the
Reserve Reports, the Borrower shall pay to the Lender, in immediately
available funds, on the date of each redetermination of the Borrowing Base,
an engineering fee in the amount of $5,000.
2.12 FACILITY FEE. In addition to interest on the Note as
provided herein and all other fees payable hereunder and to compensate the
Lender for the costs of the extension of credit hereunder, the Borrower shall
pay to the Lender on the Closing Date, in immediately available funds, a
facility fee in the amount of $10,000. The Borrower shall pay to the Lender,
in immediately available funds, one-half percent (1/2%) of any future
increase in the Borrowing Base within three days from the date Borrower is
notified in writing of the increase in the Borrowing Base.
2.13 LOANS TO SATISFY OBLIGATIONS OF BORROWER. The Lender
may, but shall not be obligated to, make Loans for the benefit of the
Borrower and apply proceeds thereof to the satisfaction of any condition,
warranty, representation, or covenant of the Borrower or the Guarantors
contained in this Agreement or any other Loan Document. Any such Loan shall
be evidenced by the Note and shall be made at the Floating Rate.
2.14 SECURITY INTEREST IN ACCOUNTS; RIGHT OF OFFSET. As
security for the payment and performance of the Obligations, the Borrower
hereby transfers, assigns, and pledges to the Lender and grants to the Lender
a security interest in all funds of the Borrower now or hereafter or from
time to time on deposit with the Lender, with such interest of the Lender to
be retransferred, reassigned, and/or released by the Lender, as the case may
be, at the expense of the Borrower upon payment in full and complete
performance by the Borrower of all Obligations. All remedies as secured
party or assignee of such funds shall be exercisable by the Lender upon the
occurrence of any Event of Default, regardless of whether the exercise of any
such remedy would result in any penalty or loss of interest or profit with
respect to any withdrawal of funds deposited in a time deposit account prior
to the maturity thereof. Furthermore, the Borrower hereby grants to the
Lender the right, exercisable at such time as any Obligation shall mature,
whether by acceleration of maturity or otherwise, of offset or banker's lien
against all funds of the Borrower now or hereafter or from time to time on
deposit with the Lender, regardless of whether the exercise of any such
remedy would result in any penalty or loss of interest or profit with respect
to any withdrawal of funds deposited in a time deposit account prior to the
maturity thereof.
2.15 GENERAL PROVISIONS RELATING TO INTEREST. (a) It is the
intention of the parties hereto to comply strictly with the usury laws of the
State of Texas and the United States of
15
America. In this connection, there shall never be collected, charged, or
received on the sums advanced hereunder interest in excess of that which
would accrue at the Highest Lawful Rate. For purposes of Chapter 10 of
Subtitle 1 of Title 79, Texas Revised Civil Statutes, the Borrower agrees
that the Highest Lawful Rate shall be the "weekly ceiling" as defined in such
Section, provided that the Lender may also rely, to the extent permitted by
applicable laws of the State of Texas or the United States of America, on
alternative maximum rates of interest under other laws of the State of Texas
or the United States of America applicable to the Lender, if greater.
(b) Notwithstanding anything herein or in the Note to the
contrary, during any Limitation Period, the interest rate to be charged on
amounts evidenced by the Note shall be the Highest Lawful Rate, and the
obligation, if any, of the Borrower for the payment of fees or other charges
deemed to be interest under applicable law shall be suspended. During any
period or periods of time following a Limitation Period, to the extent
permitted by applicable laws of the State of Texas or the United States of
America, the interest rate to be charged hereunder shall remain at the
Highest Lawful Rate until such time as there has been paid to the Lender (i)
the amount of interest in excess of that accruing at the Highest Lawful Rate
that the Lender would have received during the Limitation Period had the
interest rate remained at the otherwise applicable rate, and (ii) all
interest and fees otherwise payable to the Lender but for the effect of such
Limitation Period.
(c) If, under any circumstances, the aggregate amounts paid on
the Note or under this Agreement or any other Loan Document include amounts
which by law are deemed interest and which would exceed the amount permitted
if the Highest Lawful Rate were in effect, the Borrower stipulates that such
payment and collection will have been and will be deemed to have been, to the
extent permitted by applicable laws of the State of Texas or the United
States of America, the result of mathematical error on the part of the
Borrower and the Lender; and the Lender shall promptly refund the amount of
such excess (to the extent only of such interest payments in excess of that
which would have accrued and been payable on the basis of the Highest Lawful
Rate) upon discovery of such error by the Lender or notice thereof from the
Borrower. In the event that the maturity of any Obligation is accelerated,
by reason of an election by the Lender or otherwise, or in the event of any
required or permitted prepayment, then the consideration constituting
interest under applicable laws may never exceed the Highest Lawful Rate; and
excess amounts paid which by law are deemed interest, if any, shall be
credited by the Lender on the principal amount of the Obligations, or if the
principal amount of the Obligations shall have been paid in full, refunded to
the Borrower.
(d) All sums paid, or agreed to be paid, to the Lender for the
use, forbearance and detention of the proceeds of any advance hereunder
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full term hereof until paid in full so
that the actual rate of interest is uniform but does not exceed the Highest
Lawful Rate throughout the full term hereof.
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2.16 LETTERS IN LIEU OF TRANSFER ORDERS. The Lender agrees
that none of the letters in lieu of transfer or division orders provided by
the Borrower pursuant to Section 3.1(f)(iii) or Section 5.7 will be sent to
the addressees thereof prior to the occurrence of an Event of Default, at
which time the Lender may, at its option and in addition to the exercise of
any of its other rights and remedies, send any or all of such letters.
2.17 POWER OF ATTORNEY. The Borrower hereby designates the
Lender as its agent and attorney-in-fact, to act in its name, place, and
stead for the purpose of completing and, upon the occurrence of an Event of
Default, delivering any and all of the letters in lieu of transfer orders
delivered by the Borrower to the Lender pursuant to Section 3.1(f)(iii) or
Section 5.7, including, without limitation, completing any blanks contained
in such letters and attaching exhibits thereto describing the relevant
Collateral. The Borrower hereby ratifies and confirms all that the Lender
shall lawfully do or cause to be done by virtue of this power of attorney and
the rights granted with respect to such power of attorney. This power of
attorney is coupled with the interests of the Lender in the Collateral, shall
commence and be in full force and effect as of the Closing Date and shall
remain in full force and effect and shall be irrevocable so long as any
Obligation remains outstanding or unpaid or any Commitment exists. The
powers conferred on the Lender by this appointment are solely to protect the
interests of the Lender under the Loan Documents and shall not impose any
duty upon the Lender to exercise any such powers. The Lender shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and shall not be responsible to the Borrower or any
other Person for any act or failure to act with respect to such powers,
except for gross negligence or willful misconduct.
ARTICLE III
CONDITIONS
The obligations of the Lender to enter into this Agreement and
to make Loans are subject to the satisfaction of the following conditions
precedent:
3.1 RECEIPT OF LOAN DOCUMENTS AND OTHER ITEMS. The Lender
shall have no obligation under this Agreement unless and until all matters
incident to the consummation of the transactions contemplated herein,
including, without limitation, the review by the Lender or its counsel of the
title of the Borrower to its Oil and Gas Properties, which are pledged
subsequent to July 28, 1998, shall be satisfactory to the Lender, and the
Lender shall have received, reviewed, and approved the following documents
and other items, appropriately executed when necessary and, where applicable,
acknowledged by one or more authorized officers of the Borrower, all in form
and substance satisfactory to the Lender and dated, where applicable, of even
date herewith or a date prior thereto and acceptable to the Lender:
(a) multiple counterparts of this Agreement and the
Guaranty, as requested by the Lender;
17
(b) the Note;
(c) copies of the Articles of Organization and Certificate
of Organization and all amendments thereto and the bylaws and all
amendments thereto of the Borrower, accompanied by a certificate
issued by the manager of the Borrower, to the effect that each
such copy is correct and complete;
(d) certificates of incumbency and signatures of the
manager of the Borrower who is authorized to execute Loan
Documents on behalf of the Borrower, each such certificate being
executed by the manager of the Borrower;
(e) copies of company resolutions approving the Loan
Documents and authorizing the transactions contemplated herein and
therein, duly adopted by the members of the Borrower, accompanied
by certificates of the manager of the Borrower to the effect that
such copies are true and correct copies of resolutions duly
adopted at a meeting or by unanimous consent of the members of the
Borrower and that such resolutions constitute all the resolutions
adopted with respect to such transactions, have not been amended,
modified, or revoked in any respect, and are in full force and
effect as of the date of such certificate;
(f) multiple counterparts, as requested by the Lender, of
the following Security Instruments creating, evidencing,
perfecting, and otherwise establishing Liens in favor of the
Lender in and to the Collateral:
(i) Ratification of and Amendment to Mortgage, Deed
of Trust, Indenture, Security Agreement, Assignment of
Production, and Financing Statement from the Borrower covering
certain designated Oil and Gas Properties of the Borrower and
all improvements, personal property, and fixtures related thereto;
(ii) Financing Statements from the Borrower, as debtor,
constituent to the instrument described in clause (i) above;
(iii) undated letters, in form and substance satisfactory
to the Lender, from the Borrower to each purchaser of production
and disburser of the proceeds of production from or attributable
to the Mortgaged Properties, together with additional letters with
the addressees left blank, authorizing and directing the
addressees to make future payments attributable to production
from the Mortgaged Properties directly to the Lender;
(g) unaudited Financial Statements of the Borrower and the
Guarantors as of December 31, 1998;
18
(h) certificates dated as of a recent date from the
Secretary of State or other appropriate Governmental Authority
evidencing the existence or qualification and good standing of the
Borrower in its jurisdiction of formation and in any other
jurisdictions where it does business;
(i) results of searches of the UCC Records of the Secretary
of State of the States of Colorado and Louisiana from a source
acceptable to the Lender and reflecting no Liens against any of
the Collateral as to which perfection of a Lien is accomplished by
the filing of a financing statement other than in favor of the
Lender;
(j) confirmation, acceptable to the Lender, of the title of
the Borrower to the Mortgaged Properties, free and clear of Liens
other than Permitted Liens;
(k) all operating, lease, sublease, royalty, sales,
exchange, processing, farmout, bidding, pooling, unitization,
communitization, and other agreements relating to the Mortgaged
Properties requested by the Lender;
(l) engineering reports covering the Mortgaged Properties;
(m) certificates evidencing the insurance coverage required
pursuant to Section 5.18; and
(n) such other agreements, documents, instruments,
opinions, certificates, waivers, consents, and evidence as the
Lender may reasonably request.
3.2 EACH LOAN. In addition to the conditions precedent
stated elsewhere herein, the Lender shall not be obligated to make any Loan
unless:
(a) the Borrower shall have delivered to the Lender a
Borrowing Request at least the requisite time prior to the
requested date for the relevant Loan and each statement or
certification made in such Borrowing Request shall be true and
correct in all material respects on the requested date for such
Loan;
(b) no Event of Default or Default shall exist or will
occur as a result of the making of the requested Loan;
(c) if requested by the Lender, the Borrower shall have
delivered evidence satisfactory to the Lender substantiating any
of the matters contained in this Agreement which are necessary to
enable the Borrower to qualify for such Loan;
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(d) the Lender shall have received, reviewed, and approved
such additional documents and items as described in Section 3.1 as
may be requested by the Lender with respect to such Loan;
(e) no event shall have occurred which, in the reasonable
opinion of the Lender, could have a Material Adverse Effect;
(f) each of the representations and warranties contained in
this Agreement shall be true and correct and shall be deemed to be
repeated by the Borrower as if made on the requested date for such
Loan;
(g) the Guaranty and all of the Security Instruments shall
be in full force and effect and provide to the Lender the security
intended thereby;
(h) neither the consummation of the transactions
contemplated hereby nor the making of such Loan shall contravene,
violate, or conflict with any Requirement of Law;
(i) the Borrower shall hold full legal title to the
Collateral and be the sole beneficial owner thereof;
(j) the Lender shall have received the payment of all
Engineering Fees, Facility Fees, and other fees payable to the
Lender hereunder and reimbursement from the Borrower, or special
legal counsel for the Lender shall have received payment from the
Borrower, for (i) all reasonable fees and expenses of counsel to
the Lender for which the Borrower is responsible pursuant to
applicable provisions of this Agreement and for which invoices
have been presented as of or prior to the date of the relevant
Loan, and (ii) estimated fees charged by filing officers and other
public officials incurred or to be incurred in connection with the
filing and recordation of any Security Instruments, for which
invoices have been presented as of or prior to the date of the
requested Loan; and
(k) all matters incident to the consummation of the
transactions hereby contemplated shall be satisfactory to the
Lender.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make
the Loans, the Borrower represents and warrants to the Lender (which
representations and warranties shall survive the delivery of the Note) that:
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4.1 DUE AUTHORIZATION. The execution and delivery by the
Borrower of this Agreement and the borrowings hereunder, the execution and
delivery by the Borrower of the Note, the repayment of the Note and interest
and fees provided for in the Note and this Agreement, the execution and
delivery of the Security Instruments by the Borrower and the performance of
all obligations of the Borrower under the Loan Documents are within the power
of the Borrower, have been duly authorized by all necessary corporate action
by the Borrower, and do not and will not (a) require the consent of any
Governmental Authority, (b) contravene or conflict with any Requirement of
Law, (c) contravene or conflict with any indenture, instrument, or other
agreement to which the Borrower is a party or by which any Property of the
Borrower may be presently bound or encumbered, or (d) result in or require
the creation or imposition of any Lien in, upon or of any Property of the
Borrower under any such indenture, instrument, or other agreement, other than
the Loan Documents.
4.2 EXISTENCE. The Borrower is a limited liability company
duly organized, legally existing, and in good standing under the laws of the
State of Louisiana and is duly qualified as a foreign limited liability
company and is in good standing in all jurisdictions wherein the ownership of
Property or the operation of its business necessitates same, other than those
jurisdictions wherein the failure to so qualify will not have a Material
Adverse Effect.
4.3 VALID AND BINDING OBLIGATIONS. All Loan Documents to
which the Borrower is a party, when duly executed and delivered by the
Borrower, will be the legal, valid, and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms.
4.4 SECURITY INSTRUMENTS. The provisions of each Security
Instrument are effective to create in favor of the Lender, a legal, valid,
and enforceable Lien in all right, title, and interest of the Borrower in the
Collateral described therein, which Liens, assuming the accomplishment of
recording and filing in accordance with applicable laws prior to the
intervention of rights of other Persons, shall constitute fully perfected
first-priority Liens on all right, title, and interest of the Borrower in the
Collateral described therein.
4.5 TITLE TO ASSETS. The Borrower has good and indefeasible
title to all of its Properties, free and clear of all Liens except Permitted
Liens.
4.6 SCOPE AND ACCURACY OF FINANCIAL STATEMENTS. The
Financial Statements of the Borrower as of December 31, 1998, present fairly
the financial position and results of operations and cash flows of the
Borrower in accordance with GAAP as at the relevant point in time or for the
period indicated, as applicable. No event or circumstance has occurred since
December 31, 1998, which could reasonably be expected to have a Material
Adverse Effect.
4.7 NO MATERIAL MISSTATEMENTS. No information, exhibit,
statement, or report furnished to the Lender by or at the direction of the
Borrower in connection with this Agreement
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contains any material misstatement of fact or omits to state a material fact
or any fact necessary to make the statements contained therein not
misleading as of the date made or deemed made.
4.8 LIABILITIES, LITIGATION, AND RESTRICTIONS. Other than
as listed under the heading "Liabilities" on Exhibit IV attached hereto, the
Borrower has no liabilities, direct, or contingent, which may materially and
adversely affect its business or operations or its ownership of the
Collateral. Except as set forth under the heading "Litigation" on Exhibit IV
hereto, no litigation or other action of any nature affecting the Borrower is
pending before any Governmental Authority or, to the best knowledge of the
Borrower, threatened against or affecting the Borrower which might reasonably
be expected to result in any impairment of its ownership of any Collateral or
have a Material Adverse Effect. To the best knowledge of the Borrower, after
due inquiry, no unusual or unduly burdensome restriction, restraint or hazard
exists by contract, Requirement of Law, or otherwise relative to the business
or operations of the Borrower or the ownership and operation of the
Collateral other than such as relate generally to Persons engaged in business
activities similar to those conducted by the Borrower.
4.9 AUTHORIZATIONS; CONSENTS. Except as expressly
contemplated by this Agreement, no authorization, consent, approval,
exemption, franchise, permit, or license of, or filing with, any Governmental
Authority or any other Person is required to authorize or is otherwise
required in connection with the valid execution and delivery by the Borrower
of the Loan Documents or any instrument contemplated hereby, the repayment by
the Borrower of the Note and interest and fees provided in the Note and this
Agreement, or the performance by the Borrower of the Obligations.
4.10 COMPLIANCE WITH LAWS. The Borrower and its Property,
including, without limitation, the Mortgaged Property, are in compliance with
all applicable Requirements of Law, including, without limitation,
Environmental Laws, the Natural Gas Policy Act of 1978, as amended, and
ERISA, except to the extent non-compliance with any such Requirements of Law
could not reasonably be expected to have a Material Adverse Effect.
4.11 ERISA. The Borrower does not maintain nor has it
maintained any Plan. The Borrower does not currently contribute to or have
any obligation to contribute to or otherwise have any liability with respect
to any Plan.
4.12 ENVIRONMENTAL LAWS. To the best knowledge and belief of
the Borrower, except as would not have a Material Adverse Effect, or as
described on Exhibit IV under the heading "Environmental Matters:"
(a) no Property of the Borrower is currently on or has ever
been on, or is adjacent to any Property which is on or has ever
been on, any federal or state list of Superfund Sites;
22
(b) no Hazardous Substances have been generated,
transported, and/or disposed of by the Borrower at a site which
was, at the time of such generation, transportation, and/or
disposal, or has since become, a Superfund Site;
(c) except in accordance with applicable Requirements of
Law or the terms of a valid permit, license, certificate, or
approval of the relevant Governmental Authority, no Release of
Hazardous Substances by the Borrower or from, affecting, or
related to any Property of the Borrower or adjacent to any
Property of the Borrower has occurred; and
(d) no Environmental Complaint has been received by the
Borrower.
4.13 COMPLIANCE WITH FEDERAL RESERVE REGULATIONS. No
transaction contemplated by the Loan Documents is in violation of any
regulations promulgated by the Board of Governors of the Federal Reserve
System, including, without limitation, Regulations G, T, U, or X.
4.14 INVESTMENT COMPANY ACT COMPLIANCE. The Borrower is not,
nor is the Borrower directly or indirectly controlled by or acting on behalf
of any Person which is, an "investment company" or an "affiliated person" of
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
4.15 PUBLIC UTILITY HOLDING COMPANY ACT COMPLIANCE. The
Borrower is not a "holding company," or an "affiliate" of a "holding company"
or of a "subsidiary company" of a "holding company," within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
4.16 PROPER FILING OF TAX RETURNS; PAYMENT OF TAXES DUE. The
Borrower has duly and properly filed its United States income tax return and
all other tax returns which are required to be filed and has paid all taxes
due except such as are being contested in good faith and as to which adequate
provisions and disclosures have been made. The respective charges and
reserves on the books of the Borrower with respect to taxes and other
governmental charges are adequate.
4.17 REFUNDS. Except as described on Exhibit IV under the
heading "Refunds," no orders of, proceedings pending before, or other
requirements of, the Federal Energy Regulatory Commission, the Texas Railroad
Commission, or any Governmental Authority exist which could result in the
Borrower being required to refund any material portion of the proceeds
received or to be received from the sale of hydrocarbons constituting part of
the Mortgaged Property.
4.18 GAS CONTRACTS. Except as described on Exhibit IV under
the heading "Gas Contracts," the Borrower (a) is not obligated in any
material respect by virtue of any prepayment made under any contract
containing a "take-or-pay" or "prepayment" provision or under any
23
similar agreement to deliver hydrocarbons produced from or allocated to any
of the Mortgaged Property at some future date without receiving full payment
therefor within 90 days of delivery, and (b) has not produced gas, in any
material amount, subject to, and neither the Borrower nor any of the
Mortgaged Properties is subject to, balancing rights of third parties or
subject to balancing duties under governmental requirements, except as to
such matters for which the Borrower has established monetary reserves
adequate in amount to satisfy such obligations and has segregated such
reserves from other accounts.
4.19 INTELLECTUAL PROPERTY. The Borrower owns or is licensed
to use all Intellectual Property necessary to conduct all business material
to its condition (financial or otherwise), business, or operations as such
business is currently conducted. No claim has been asserted or is pending by
any Person with the respect to the use of any such Intellectual Property or
challenging or questioning the validity or effectiveness of any such
Intellectual Property; and the Borrower knows of no valid basis for any such
claim. The use of such Intellectual Property by the Borrower does not
infringe on the rights of any Person, except for such claims and
infringements as do not, in the aggregate, give rise to any material
liability on the part of the Borrower.
4.20 CASUALTIES OR TAKING OF PROPERTY. Except as disclosed
on Exhibit IV under the heading "Casualties," since December 31, 1998,
neither the business nor any Property of the Borrower has been materially
adversely affected as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of Property, or cancellation of contracts, permits, or
concessions by any Governmental Authority, riot, activities of armed forces,
or acts of God.
4.21 LOCATIONS OF BORROWER. The principal place of business
and chief executive office of the Borrower is located at the address of the
Borrower set forth in Section 8.3 or at such other location as the Borrower
may have, by proper written notice hereunder, advised the Lender, provided
that such other location is within a state in which appropriate financing
statements from the Borrower in favor of the Lender have been filed.
4.22 SUBSIDIARIES. The Borrower has no Subsidiaries.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any
Commitment exists, the Borrower shall:
5.1 MAINTENANCE AND ACCESS TO RECORDS. Keep adequate
records, in accordance with GAAP, of all its transactions so that at any
time, and from time to time, its true and complete
24
financial condition may be readily determined, and promptly following the
reasonable request of the Lender, make such records available for inspection
by the Lender and, at the expense of the Borrower, allow the Lender to make
and take away copies thereof.
5.2 QUARTERLY FINANCIAL STATEMENTS; COMPLIANCE CERTIFICATES.
Deliver to the Lender, (a) on or before the 45th day after the close of each
of the first three quarterly periods of each fiscal year of the Borrower, a
copy of the unaudited Financial Statements of the Borrower as at the close of
such quarterly period and from the beginning of such fiscal year to the end
of such period, such Financial Statements to be certified by the manager of
the Borrower as having been prepared in accordance with GAAP consistently
applied and as a fair presentation of the condition of the Borrower, subject
to changes resulting from normal year-end audit adjustments, and (b) on or
before the 45th day after the close of each fiscal quarter, with the
exception of the last fiscal quarter, a Compliance Certificate.
5.3 ANNUAL FINANCIAL STATEMENTS. Deliver to the Lender, on
or before the 120th day after the close of each fiscal year of the Borrower,
a copy of the annual audited Financial Statements of the Borrower and a
Compliance Certificate. The Guarantors shall also deliver to the Lender on
or before the 120th day of each year end a copy of the annual Financial
Statements of the Guarantors, including income statement, balance sheet
(including contingent liabilities) and cash flow statement.
5.4 OIL AND GAS RESERVE REPORTS. (a) Deliver to the Lender
no later than April 1 of each year during the term of this Agreement,
engineering reports in form and substance satisfactory to the Lender prepared
by or under the supervision of the chief petroleum engineer of the Borrower
as fairly and accurately setting forth (i) the proven and producing, shut-in,
behind-pipe, and undeveloped oil and gas reserves (separately classified as
such) attributable to the Mortgaged Properties as of January 1 of the year
for which such reserve reports are furnished, (ii) the aggregate present
value of the future net income with respect to such Mortgaged Properties,
discounted at a stated per annum discount rate of proven and producing
reserves, (iii) projections of the annual rate of production, gross income,
and net income with respect to such proven and producing reserves, and (iv)
information with respect to the "take-or-pay," "prepayment," and
gas-balancing liabilities of the Borrower.
(b) Deliver to the Lender no later than October 1 of each year
during the term of this Agreement, engineering reports in form and substance
satisfactory to the Lender prepared by or under the supervision of the chief
petroleum engineer of the Borrower evaluating the Mortgaged Properties as of
July 1 of the year for which such reserve reports are furnished and updating
the information provided in the reports pursuant to Section 5.4(a).
(c) Each of the reports provided pursuant to this Section shall
be submitted to the Lender together with additional data concerning pricing,
quantities of production from the Mortgaged Properties, volumes of production
sold, purchasers of production, gross revenues,
25
expenses, and such other information and engineering and geological data with
respect thereto as the Lender may reasonably request.
5.5 TITLE OPINIONS; TITLE DEFECTS. Promptly upon the
request of the Lender, furnish to the Lender title opinions, in form and
substance and by counsel satisfactory to the Lender, or other confirmation of
title acceptable to the Lender, covering Oil and Gas Properties constituting
not less than 90% of the value, determined by the Lender in its sole
discretion, of the Mortgaged Properties; and promptly, but in any event
within 60 days after notice by the Lender of any defect, material in the
opinion of the Lender in value, in the title of the Borrower to any of its
Oil and Gas Properties, clear such title defects, and, in the event any such
title defects are not cured in a timely manner, pay all related costs and
fees incurred by the Lender to do so.
5.6 NOTICES OF CERTAIN EVENTS. Deliver to the Lender,
immediately upon having knowledge of the occurrence of any of the following
events or circumstances, a written statement with respect thereto, signed by
a Responsible Officer of the Borrower and setting forth the relevant event or
circumstance and the steps being taken by the Borrower or the Guarantors with
respect to such event or circumstance:
(a) any Default or Event of Default;
(b) any default or event of default under any contractual
obligation of the Borrower or the Guarantors, or any litigation,
investigation, or proceeding between the Borrower or the
Guarantors and any Governmental Authority which, in either case,
if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding involving the Borrower or
the Guarantors as a defendant or in which any Property of the
Borrower or the Guarantors is subject to a claim and in which the
amount involved is $100,000 or more and which is not covered by
insurance or in which injunctive or similar relief is sought;
(d) the receipt by the Borrower of any Environmental
Complaint;
(e) any actual, proposed, or threatened testing or other
investigation by any Governmental Authority or other Person
concerning the environmental condition of, or relating to, any
Property of the Borrower or adjacent to any Property of the
Borrower following any allegation of a violation of any
Requirement of Law;
(f) any Release of Hazardous Substances by the Borrower or
from, affecting, or related to any Property of the Borrower or
adjacent to any Property of the Borrower except in accordance with
applicable Requirements of Law or the terms of a valid permit,
license, certificate, or approval of the relevant Governmental
Authority, or the violation of any Environmental Law, or the
26
revocation, suspension, or forfeiture of or failure to renew, any
permit, license, registration, approval, or authorization which
could reasonably be expected to have a Material Adverse Effect;
(g) the change in identity or address of any Person
remitting to the Borrower proceeds from the sale of hydrocarbon
production from or attributable to any Mortgaged Property;
(h) any change in the manager of the Borrower; and
(i) any other event or condition which could reasonably be
expected to have a Material Adverse Effect.
5.7 LETTERS IN LIEU OF TRANSFER ORDERS; DIVISION ORDERS.
Promptly upon request by the Lender at any time and from time to time, and
without limitation on the rights of the Lender pursuant to Sections 2.16 and
2.17, execute such letters in lieu of transfer orders, in addition to the
letters signed by the Borrower and delivered to the Lender in satisfaction of
the condition set forth in Section 3.1(f)(iii) and/or division and/or
transfer orders as are necessary or appropriate to transfer and deliver to
the Lender proceeds from or attributable to any Mortgaged Property.
5.8 ADDITIONAL INFORMATION. Furnish to the Lender, promptly
upon the request of the Lender, such additional financial or other
information concerning the assets, liabilities, operations, and transactions
of the Borrower as the Lender may from time to time request; and notify the
Lender not less than ten Business Days prior to the occurrence of any
condition or event that may change the proper location for the filing of any
financing statement or other public notice or recording for the purpose of
perfecting a Lien in any Collateral, including, without limitation, any
change in its name or the location of its principal place of business or
chief executive office; and upon the request of the Lender, execute such
additional Security Instruments as may be necessary or appropriate in
connection therewith.
5.9 COMPLIANCE WITH LAWS. Except to the extent the failure
to comply or cause compliance would not have a Material Adverse Effect,
comply with all applicable Requirements of Law, including, without
limitation, (a) the Natural Gas Policy Act of 1978, as amended, (b) ERISA,
(c) Environmental Laws, and (d) all permits, licenses, registrations,
approvals, and authorizations (i) related to any natural or environmental
resource or media located on, above, within, in the vicinity of, related to
or affected by any Property of the Borrower, (ii) required for the
performance of the operations of the Borrower, or (iii) applicable to the
use, generation, handling, storage, treatment, transport, or disposal of any
Hazardous Substances; and cause all employees, crew members, agents,
contractors, subcontractors, and future lessees (pursuant to appropriate
lease provisions) of the Borrower, while such Persons are acting within the
scope of their relationship with the Borrower, to comply with all such
Requirements of Law as may be necessary or appropriate to enable the Borrower
to so comply.
27
5.10 PAYMENT OF ASSESSMENTS AND CHARGES. Pay all taxes,
assessments, governmental charges, rent, and other Indebtedness which, if
unpaid, might become a Lien against the Property of the Borrower, except any
of the foregoing being contested in good faith and as to which adequate
reserve in accordance with GAAP has been established or unless failure to pay
would not have a Material Adverse Effect.
5.11 MAINTENANCE OF LIMITED LIABILITY COMPANY EXISTENCE AND
GOOD STANDING. Maintain its limited liability company existence or
qualification and good standing in its jurisdictions of formation and in all
jurisdictions wherein the Property now owned or hereafter acquired or
business now or hereafter conducted necessitates same.
5.12 PAYMENT OF NOTES; PERFORMANCE OF OBLIGATIONS. Pay the
Note according to the reading, tenor, and effect thereof, as modified hereby,
and do and perform every act and discharge all of its other Obligations.
5.13 FURTHER ASSURANCES. Promptly cure any defects in the
execution and delivery of any of the Loan Documents and all agreements
contemplated thereby, and execute, acknowledge, and deliver such other
assurances and instruments as shall, in the opinion of the Lender, be
necessary to fulfill the terms of the Loan Documents.
5.14 INITIAL FEES AND EXPENSES OF COUNSEL TO LENDER. Upon
request by the Lender, promptly reimburse the Lender for all reasonable fees
and expenses of Xxxxxxx Xxxxxx L.L.P., special counsel to the Lender, in
connection with the preparation of this Agreement and all documentation
contemplated hereby, the satisfaction of the conditions precedent set forth
herein, the filing and recordation of Security Instruments, and the
consummation of the transactions contemplated in this Agreement.
5.15 SUBSEQUENT FEES AND EXPENSES OF LENDER. Upon request by
the Lender, promptly reimburse the Lender (to the fullest extent permitted by
law) for all amounts reasonably expended, advanced, or incurred by or on
behalf of the Lender to satisfy any obligation of the Borrower under any of
the Loan Documents; to collect the Obligations; to ratify, amend, restate, or
prepare additional Loan Documents, as the case may be; for the filing and
recordation of Security Instruments; to enforce the rights of the Lender
under any of the Loan Documents; and to protect the Properties or business of
the Borrower, including, without limitation, the Collateral, which amounts
shall be deemed compensatory in nature and liquidated as to amount upon
notice to the Borrower by the Lender and which amounts shall include, but not
be limited to (a) all court costs, (b) reasonable attorneys' fees, (c)
reasonable fees and expenses of auditors and accountants incurred to protect
the interests of the Lender, (d) fees and expenses incurred in connection
with the participation by the Lender as a member of the creditors' committee
in a case commenced under any Insolvency Proceeding, (e) fees and expenses
incurred in connection with lifting the automatic stay prescribed in Section
362 Title 11 of the United States Code, and (f) fees and expenses incurred in
connection with any action pursuant to Section 1129 Title 11 of the United
States Code all reasonably incurred by the Lender in connection with the
collection of any sums due under the
28
Loan Documents, together with interest at the per annum interest rate equal
to the Floating Rate, calculated on a basis of a calendar year of 365 or 366
days, as the case may be, counting the actual number of days elapsed, on each
such amount from the date of notification that the same was expended,
advanced, or incurred by the Lender until the date it is repaid to the
Lender, with the obligations under this Section surviving the non-assumption
of this Agreement in a case commenced under any Insolvency Proceeding and
being binding upon the Borrower and/or a trustee, receiver, custodian, or
liquidator of the Borrower appointed in any such case.
5.16 OPERATION OF OIL AND GAS PROPERTIES. Develop, maintain,
and operate its Oil and Gas Properties in a prudent and workmanlike manner in
accordance with industry standards.
5.17 MAINTENANCE AND INSPECTION OF PROPERTIES. Maintain all
of its tangible Properties in good repair and condition, ordinary wear and
tear excepted; make all necessary replacements thereof and operate such
Properties in a good and workmanlike manner; and permit any authorized
representative of the Lender to visit and inspect, at the expense of the
Borrower, any tangible Property of the Borrower.
5.18 MAINTENANCE OF INSURANCE. Maintain insurance with
respect to its Properties and businesses against such liabilities,
casualties, risks, and contingencies as is customary in the relevant industry
and sufficient to prevent a Material Adverse Effect, all such insurance to be
in amounts and from insurers acceptable to the Lender, maintained by
Borrower, naming the Lender as loss payee, and, upon any renewal of any such
insurance and at other times upon request by the Lender, furnish to the
Lender evidence, satisfactory to the Lender, within 30 days of the Closing
Date of the maintenance of such insurance. The Lender shall have the right
to collect, and the Borrower hereby assigns to the Lender, any and all monies
that may become payable under any policies of insurance relating to business
interruption or by reason of damage, loss, or destruction of any of the
Collateral. In the event of any damage, loss, or destruction for which
insurance proceeds relating to business interruption or Collateral exceed
$100,000, the Lender may, at its option, apply all such sums or any part
thereof received by it toward the payment of the Obligations, whether matured
or unmatured, application to be made first to interest and then to principal,
and shall deliver to the Borrower the balance, if any, after such application
has been made. In the event of any such damage, loss, or destruction for
which insurance proceeds are $ $100,000 or less, provided that no Default or
Event of Default has occurred and is continuing, the Lender shall deliver any
such proceeds received by it to the Borrower. In the event the Lender
receives insurance proceeds not attributable to Collateral or business
interruption, the Lender shall deliver any such proceeds to the Borrower.
5.19 INDEMNIFICATION. INDEMNIFY AND HOLD THE LENDER AND ITS
SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT, AND
AFFILIATES AND EACH TRUSTEE FOR THE BENEFIT OF THE LENDER UNDER ANY SECURITY
INSTRUMENT HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES,
LIABILITIES, FINES, PENALTIES, CHARGES, ADMINISTRATIVE AND JUDICIAL
PROCEEDINGS AND ORDERS, JUDGMENTS,
29
REMEDIAL ACTIONS, REQUIREMENTS AND ENFORCEMENT ACTIONS OF ANY KIND, AND ALL
COSTS AND EXPENSES INCURRED IN CONNECTION THEREWITH (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS' FEES AND EXPENSES), ARISING DIRECTLY OR INDIRECTLY, IN
WHOLE OR IN PART, FROM (A) THE PRESENCE OF ANY HAZARDOUS SUBSTANCES ON,
UNDER, OR FROM ANY PROPERTY OF THE BORROWER, WHETHER PRIOR TO OR DURING THE
TERM HEREOF, (B) ANY ACTIVITY CARRIED ON OR UNDERTAKEN ON OR OFF ANY PROPERTY
OF THE BORROWER, WHETHER PRIOR TO OR DURING THE TERM HEREOF, AND WHETHER BY
THE BORROWER OR ANY PREDECESSOR IN TITLE, EMPLOYEE, AGENT, CONTRACTOR, OR
SUBCONTRACTOR OF THE BORROWER OR ANY OTHER PERSON AT ANY TIME OCCUPYING OR
PRESENT ON SUCH PROPERTY, IN CONNECTION WITH THE HANDLING, TREATMENT,
REMOVAL, STORAGE, DECONTAMINATION, CLEANUP, TRANSPORTATION, OR DISPOSAL OF
ANY HAZARDOUS SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR UNDER SUCH
PROPERTY, (C) ANY RESIDUAL CONTAMINATION ON OR UNDER ANY PROPERTY OF THE
BORROWER, (D) ANY CONTAMINATION OF ANY PROPERTY OR NATURAL RESOURCES ARISING
IN CONNECTION WITH THE GENERATION, USE, HANDLING, STORAGE, TRANSPORTATION OR
DISPOSAL OF ANY HAZARDOUS SUBSTANCES BY THE BORROWER OR ANY EMPLOYEE, AGENT,
CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER WHILE SUCH PERSONS ARE ACTING
WITHIN THE SCOPE OF THEIR RELATIONSHIP WITH THE BORROWER, IRRESPECTIVE OF
WHETHER ANY OF SUCH ACTIVITIES WERE OR WILL BE UNDERTAKEN IN ACCORDANCE WITH
APPLICABLE REQUIREMENTS OF LAW, OR (E) THE PERFORMANCE AND ENFORCEMENT OF ANY
LOAN DOCUMENT OR ANY OTHER ACT OR OMISSION IN CONNECTION WITH OR RELATED TO
ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING,
WITHOUT LIMITATION, ANY OF THE FOREGOING IN THIS SECTION ARISING FROM
NEGLIGENCE, WHETHER SOLE OR CONCURRENT, ON THE PART OF THE LENDER OR ANY OF
ITS SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT,
OR AFFILIATES OR ANY TRUSTEE FOR THE BENEFIT OF THE LENDER UNDER ANY SECURITY
INSTRUMENT; WITH THE FOREGOING INDEMNITY SURVIVING SATISFACTION OF ALL
OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
5.20 BORROWER'S YEAR 2000 COMPLIANCE.
(A) Furnish such additional information, statements and
other reports with respect to Borrower's activities, course of action and
progress towards becoming Year 2000 Compliant as Lender may request from time
to time.
(B) In the event of any change in circumstances that causes
or will likely cause any of Borrower's representations and warranties with
respect to its being or becoming Year 2000 Compliant to no longer be true
(hereinafter, referred to as a "Change in Circumstances") then Borrower shall
promptly, and in any event within ten (10) days of receipt of information
regarding
30
a Change in Circumstances, provide Lender with written notice (the "Notice")
that describes in reasonable detail the Change in Circumstances and how such
Change in Circumstances caused or will likely cause Borrower's
representations and warranties with respect to being or becoming Year 2000
Compliant to no longer be true. Borrower shall, within ten (10) days of a
request, also provide Lender with any additional information Lender requests
of Borrower in connection with the Notice and/or a Change in Circumstances.
(C) Give any representative of Lender access during all
business hours to, and permit such representative to examine, copy or make
excerpts from, any and all books, records and documents in the possession of
Borrower and relating to its affairs, and to inspect any of the properties
and Systems of Borrower, and to project test the Systems to determine if they
are Year 2000 Compliant in an integrated environment, all at the sole cost
and expense of Lender.
5.21 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE REPORTS.
Deliver to the Lender on or before the 45th day after the close of each
quarterly period of each fiscal year of the Borrower , accounts receivable
and accounts payable reports for all receivables and payables reflecting the
amount and date of each receivable or payable.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any
Commitment exists, the Borrower will not:
6.1 INDEBTEDNESS. Create, incur, assume, or suffer to exist
any Indebtedness, whether by way of loan or otherwise; provided, however, the
foregoing restriction shall not apply to (a) the Obligations, (b) unsecured
accounts payable incurred in the ordinary course of business, which are not
unpaid in excess of 60 days beyond invoice date or are being contested in
good faith and as to which such reserve as is required by GAAP has been made,
(c) crude oil, natural gas, or other hydrocarbon floor, collar, cap, price
protection, or swap agreements, in form and substance and with a Person
acceptable to the Lender, provided that (i) each commitment issued under such
agreement must also be approved by the Lender, (ii) such agreements shall not
be entered into with respect to Mortgaged Properties constituting more than
75% of the present value of estimated future net revenues, computed using a
discount factor of 10%, of all proved developed producing Mortgaged
Properties, and (iii) that the floor prices in such agreements are not less
than the prices used by the Lender in its most recent Borrowing Base
determination, and (d) interest rate swap or other financial hedging
agreements, in form and substance and with a Person acceptable to the Lender.
6.2 CONTINGENT OBLIGATIONS. Create, incur, assume, or
suffer to exist any Contingent Obligation; provided, however, the foregoing
restriction shall not apply to (a)
31
performance guarantees and performance surety or other bonds provided in the
ordinary course of business, or (b) trade credit incurred or operating leases
entered into in the ordinary course of business.
6.3 LIENS. Create, incur, assume, or suffer to exist any
Lien on any of its Oil and Gas Properties or any other Property, whether now
owned or hereafter acquired; provided, however, the foregoing restrictions
shall not apply to Permitted Liens.
6.4 SALES OF ASSETS. Without the prior written consent of
the Lender, sell, transfer, or otherwise dispose of, in one or any series of
transactions, assets, whether now owned or hereafter acquired. Provided,
however, the foregoing restriction shall not apply to (a) the sale of
hydrocarbons or inventory in the ordinary course of business provided that no
contract for the sale of hydrocarbons shall obligate the Borrower to deliver
hydrocarbons produced from any of the Mortgaged Property at some future date
without receiving full payment therefor within 90 days of delivery, (b) the
sale or other disposition of Property destroyed, lost, worn out, damaged, or
having only salvage value or no longer used or useful in the business of the
Borrower.
6.5 LEASEBACKS. Enter into any agreement to sell or
transfer any Property and thereafter rent or lease as lessee such Property or
other Property intended for the same use or purpose as the Property sold or
transferred.
6.6 LOANS OR ADVANCES. Make or agree to make or allow to
remain outstanding any loans or advances to any Person; provided, however,
the foregoing restrictions shall not apply to (a) advances or extensions of
credit in the form of accounts receivable incurred in the ordinary course of
business and upon terms common in the industry for such accounts receivable,
or (b) advances to employees of the Borrower for the payment of expenses in
the ordinary course of business.
6.7 INVESTMENTS. Acquire Investments in, or purchase or
otherwise acquire all or substantially all of the assets of, any Person;
provided, however, the foregoing restriction shall not apply to the purchase
or acquisition of (a) Oil and Gas Properties, (b) Investments in the form of
(i) debt securities issued or directly and fully guaranteed or insured by the
United States Government or any agency or instrumentality thereof, with
maturities of no more than one year, (ii) commercial paper of a domestic
issuer rated at the date of acquisition at least P-2 by Xxxxx'x Investor
Service, Inc. or A-2 by Standard & Poor's Corporation and with maturities of
no more than one year from the date of acquisition, or (iii) repurchase
agreements covering debt securities or commercial paper of the type permitted
in this Section, certificates of deposit, demand deposits, eurodollar time
deposits, overnight bank deposits and bankers' acceptances, with maturities
of no more than one year from the date of acquisition, issued by or acquired
from or through the Lender or any bank or trust company organized under the
laws of the United States or any state thereof and having capital surplus and
undivided profits aggregating at least $100,000,000, (c) other short-term
Investments similar in nature and degree of risk to those described in clause
(b) of this Section, (d) money-market funds, or (e) stock listed on Exhibit V.
32
6.8 DIVIDENDS AND DISTRIBUTIONS. Declare, pay, or make,
whether in cash or Property of the Borrower, any dividend or distribution on,
or purchase, redeem, or otherwise acquire for value, any membership share.
6.9 CHANGES IN COMPANY STRUCTURE. Issue or agree to issue
additional membership, in one or any series of transactions; enter into any
transaction of consolidation, merger, or amalgamation; liquidate, wind up, or
dissolve (or suffer any liquidation or dissolution).
6.10 TRANSACTIONS WITH AFFILIATES. Directly or indirectly,
enter into any transaction (including the sale, lease, or exchange of
Property or the rendering of service) with any of its Affiliates, other than
upon fair and reasonable terms no less favorable than could be obtained in an
arm's length transaction with a Person which was not an Affiliate.
6.11 LINES OF BUSINESS. Expand, on its own or through any
Subsidiary, into any line of business other than those in which the Borrower
is engaged as of the date hereof.
6.12 PLAN OBLIGATIONS. Assume or otherwise become subject to
an obligation to contribute to or maintain any Plan or acquire any Person
which has at any time had an obligation to contribute to or maintain any Plan.
6.13 TANGIBLE NET WORTH. Permit Tangible Net Worth, as of
the close of any fiscal quarter to be less than $1,000,000, beginning with
the quarter ending June 30, 1999, plus 50% of positive Net Income thereafter.
6.14 GENERAL ADMINISTRATIVE EXPENSES. Permit, as of the
close of any fiscal quarter, general and administrative expenses to exceed
$225,000 for such quarter, beginning with the quarter ending June 30, 1999.
6.15 CASH FLOW COVERAGE. Permit, at the close of any fiscal
quarter, the ratio of Cash Flow to Debt Service to be less than 1.00 to 1.00,
beginning with the quarter ending June 30, 1999, by annualizing the Cash Flow
for the immediately preceding two quarters, increasing to 1.10 to 1.00 at
September 30, 1999, by annualizing the Cash Flow for the immediately
preceding three quarters, and increasing to 1.20 to 1.00 at December 31,
1999, for the immediately preceding four quarters. Thereafter, the test
shall be conducted on a rolling four quarter basis at the end of every fiscal
quarter.
ARTICLE VII
EVENTS OF DEFAULT
7.1 ENUMERATION OF EVENTS OF DEFAULT. Any of the following
events shall constitute an Event of Default:
33
(a) default shall be made in the payment when due of any
installment of principal or interest under this Agreement or the
Note or in the payment when due of any fee or other sum payable
under any Loan Document and such default as to interest or fees
only shall have continued for three days;
(b) default shall be made by the Borrower or the Guarantors
in the due observance or performance of any of their respective
obligations under the Loan Documents, and such default shall
continue for 30 days after the earlier of notice thereof to the
Borrower by the Lender or knowledge thereof by the Borrower;
(c) any representation or warranty made by the Borrower or
the Guarantors in any of the Loan Documents proves to have been
untrue in any material respect or any representation, statement
(including Financial Statements), certificate, or data furnished
or made to the Lender in connection herewith proves to have been
untrue in any material respect as of the date the facts therein
set forth were stated or certified;
(d) default shall be made by the Borrower or the Guarantors
(as principal or guarantor or other surety) in the payment or
performance of any bond, debenture, note, or other Indebtedness or
under any credit agreement, loan agreement, indenture, promissory
note, or similar agreement or instrument executed in connection
with any of the foregoing, and such default shall remain
unremedied for in excess of the period of grace, if any, with
respect thereto;
(e) the Borrower shall be unable to satisfy any condition
or cure any circumstance specified in Article III, the
satisfaction or curing of which is precedent to the right of the
Borrower to obtain a Loan and such inability shall continue for a
period in excess of 30 days;
(f) either the Borrower or the Guarantors shall (i) apply
for or consent to the appointment of a receiver, trustee, or
liquidator of it or all or a substantial part of its assets, (ii)
file a voluntary petition commencing an Insolvency Proceeding,
(iii) make a general assignment for the benefit of creditors,
(iv) be unable, or admit in writing its inability, to pay its
debts generally as they become due, or (v) file an answer
admitting the material allegations of a petition filed against it
in any Insolvency Proceeding;
(g) an order, judgment, or decree shall be entered against
either the Borrower or the Guarantors by any court of competent
jurisdiction or by any other duly authorized authority, on the
petition of a creditor or otherwise, granting relief in any
Insolvency Proceeding or approving a petition seeking
reorganization or an arrangement of its debts or appointing a
receiver, trustee, conservator, custodian,
34
or liquidator of it or all or any substantial part of its assets, and
such order, judgment, or decree shall not be dismissed or stayed within
60 days;
(h) the levy against any significant portion of the
Property of the Borrower or the Guarantors, or any execution,
garnishment, attachment, sequestration, or other writ or similar
proceeding which is not permanently dismissed or discharged within
30 days after the levy;
(i) a final and non-appealable order, judgment, or decree
shall be entered against the Borrower or the Guarantors for money
damages and/or Indebtedness due in an amount in excess of $200,000
not covered by insurance, and such order, judgment, or decree
shall not be dismissed or stayed within 60 days;
(j) any charges are filed or any other action or proceeding
is instituted by any Governmental Authority against either the
Borrower or the Guarantors under the Racketeering Influence and
Corrupt Organizations Statute (18 U.S.C. Section 1961 ET SEQ.),
the result of which could be the forfeiture or transfer of any
material Property of the Borrower or the Guarantors subject to a
Lien in favor of the Lender without (i) satisfaction or provision
for satisfaction of such Lien, or (ii) such forfeiture or transfer
of such Property being expressly made subject to such Lien;
(k) either the Borrower or the Guarantors shall have (i)
concealed, removed, or diverted, or permitted to be concealed,
removed, or diverted, any part of its Property, with intent to
hinder, delay, or defraud its creditors or any of them, (ii) made
or suffered a transfer of any of its Property which may be
fraudulent under any bankruptcy, fraudulent conveyance, or similar
law, (iii) made any transfer of its Property to or for the benefit
of a creditor at a time when other creditors similarly situated
have not been paid, or (iv) shall have suffered or permitted,
while insolvent, any creditor to obtain a Lien upon any of its
Property through legal proceedings or distraint which is not
vacated within 30 days from the date thereof;
(l) any Security Instrument shall for any reason not, or
cease to, create valid and perfected first-priority Liens against
the Collateral purportedly covered thereby; or
(m) the occurrence of a Material Adverse Effect and the
same shall remain unremedied for in excess of 30 days after notice
given by the Lender.
7.2 REMEDIES. (a) Upon the occurrence of an Event of
Default specified in Sections 7.1(f) or 7.1(g), immediately and without
notice, (i) all Obligations shall automatically become immediately due and
payable, without presentment, demand, protest, notice of protest, default, or
dishonor, notice of intent to accelerate maturity, notice of acceleration of
maturity, or other notice of any kind, except as may be provided to the
contrary elsewhere herein, all of which
35
are hereby expressly waived by the Borrower; (ii) the Commitment shall
immediately cease and terminate unless and until reinstated by the Lender in
writing; and (iii) the Lender is hereby authorized at any time and from time
to time, without notice to the Borrower (any such notice being expressly
waived by the Borrower), to set-off and apply any and all deposits (general
or special, time or demand, provisional or final) held by the Lender and any
and all other indebtedness at any time owing by the Lender to or for the
credit or account of the Borrower against any and all of the Obligations
although such Obligations may be unmatured.
(b) Upon the occurrence of any Event of Default other than
those specified in Sections 7.1(f) or 7.1(g), (i) the Lender may, by notice
to the Borrower, declare all Obligations immediately due and payable, without
presentment, demand, protest, notice of protest, default, or dishonor, notice
of intent to accelerate maturity, notice of acceleration of maturity, or
other notice of any kind, except as may be provided to the contrary elsewhere
herein, all of which are hereby expressly waived by the Borrower; (ii) the
Commitment shall immediately cease and terminate unless and until reinstated
by the Lender in writing; and (iii) the Lender is hereby authorized at any
time and from time to time, without notice to the Borrower (any such notice
being expressly waived by the Borrower), to set-off and apply any and all
deposits (general or special, time or demand, provisional or final) held by
the Lender and any and all other indebtedness at any time owing by the Lender
to or for the credit or account of the Borrower against any and all of the
Obligations although such Obligations may be unmatured.
(c) Upon the occurrence of any Event of Default, the Lender
may, in addition to the foregoing in this Section, exercise any or all of its
rights and remedies provided by law or pursuant to the Loan Documents.
ARTICLE VIII
MISCELLANEOUS
8.1 TRANSFERS; PARTICIPATIONS. The Lender may, at any time,
sell, transfer, assign, or grant participations in the Obligations or any
portion thereof; and the Lender may forward to each Transferee and
prospective Transferee all documents and information relating to such
Obligations, whether furnished by the Borrower or otherwise obtained, as the
Lender determines necessary or desirable. The Borrower agrees that each
Transferee, regardless of the nature of any transfer to it, may exercise all
rights (including, without limitation, rights of set-off) with respect to the
portion of the Obligations held by it as fully as if such Transferee were the
direct holder thereof, subject to any agreements between such Transferee and
the transferor to such Transferee.
8.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS.
All representations and warranties of the Borrower and all covenants and
agreements herein made shall survive the execution and delivery of the Note
and the Security Instruments and shall remain in force and effect so long as
any Obligation is outstanding or any Commitment exists.
36
8.3 NOTICES AND OTHER COMMUNICATIONS. Except as to verbal
notices expressly authorized herein, which verbal notices shall be confirmed
in writing, all notices, requests, and communications hereunder shall be in
writing (including by telecopy). Unless otherwise expressly provided herein,
any such notice, request, demand, or other communication shall be deemed to
have been duly given or made when delivered by hand, or, in the case of
delivery by mail, when deposited in the mail, certified mail, return receipt
requested, postage prepaid, or, in the case of telecopy notice, when receipt
thereof is acknowledged orally or by written confirmation report, addressed
as follows:
(a) if to the Lender, to:
Bank One, Texas, National Association
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Energy Group, 6th Floor
(or for notice by mail, to:
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Energy Group, 6th Floor
Telecopy: (000) 000-0000
(b) if to the Borrower, to:
Southwestern Eagle L.L.C.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Xx.
Telecopy: (000) 000-0000
Any party may, by proper written notice hereunder to the
others, change the individuals or addresses to which such notices to it shall
thereafter be sent.
8.4 PARTIES IN INTEREST. Subject to applicable restrictions
contained herein, all covenants and agreements herein contained by or on
behalf of the Borrower or the Lender shall be binding upon and inure to the
benefit of the Borrower or the Lender, as the case may be, and their
respective legal representatives, successors, and assigns.
8.5 RIGHTS OF THIRD PARTIES. All provisions herein are
imposed solely and exclusively for the benefit of the Lender and the
Borrower. No other Person shall have any right, benefit, priority, or
interest hereunder or as a result hereof or have standing to require
satisfaction of provisions hereof in accordance with their terms, and any or
all of such provisions may be freely waived in whole or in part by the Lender
at any time if in its sole discretion it deems it advisable to do so.
37
8.6 RENEWALS; EXTENSIONS. All provisions of this Agreement
relating to the Note shall apply with equal force and effect to each
promissory note hereafter executed which in whole or in part represents a
renewal or extension of any part of the Indebtedness of the Borrower under
this Agreement, the Note, or any other Loan Document.
8.7 NO WAIVER; RIGHTS CUMULATIVE. No course of dealing on
the part of the Lender, its officers or employees, nor any failure or delay
by the Lender with respect to exercising any of its rights under any Loan
Document shall operate as a waiver thereof. The rights of the Lender under
the Loan Documents shall be cumulative and the exercise or partial exercise
of any such right shall not preclude the exercise of any other right. The
making of any Loan shall not constitute a waiver of any of the covenants,
warranties, or conditions of the Borrower contained herein. In the event the
Borrower is unable to satisfy any such covenant, warranty, or condition, the
making of any Loan shall not have the effect of precluding the Lender from
thereafter declaring such inability to be an Event of Default as hereinabove
provided.
8.8 SURVIVAL UPON UNENFORCEABILITY. In the event any one or
more of the provisions contained in any of the Loan Documents or in any other
instrument referred to herein or executed in connection with the Obligations
shall, for any reason, be held to be invalid, illegal, or unenforceable in
any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision of any Loan Document or of any other instrument
referred to herein or executed in connection with such Obligations.
8.9 AMENDMENTS; WAIVERS. Neither this Agreement nor any
provision hereof may be amended, waived, discharged, or terminated orally,
but only by an instrument in writing signed by the party against whom
enforcement of the amendment, waiver, discharge, or termination is sought.
8.10 CONTROLLING AGREEMENT. In the event of a conflict
between the provisions of this Agreement and those of any other Loan
Document, the provisions of this Agreement shall control.
8.11 DISPOSITION OF COLLATERAL. Notwithstanding any term or
provision, express or implied, in any of the Security Instruments, the
realization, liquidation, foreclosure, or any other disposition on or of any
or all of the Collateral shall be in the order and manner and determined in
the sole discretion of the Lender; provided, however, that in no event shall
the Lender violate applicable law or exercise rights and remedies other than
those provided in such Security Instruments or otherwise existing at law or
in equity.
8.12 GOVERNING LAW. THIS AGREEMENT, AND THE NOTE AND THE
GUARANTY SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW; PROVIDED, HOWEVER,
THAT CHAPTER 345
38
OF THE TEXAS FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN
ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL NOT APPLY.
8.13 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH
RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF,
RELATED TO, OR FROM THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
LITIGATED, AT THE SOLE DISCRETION AND ELECTION OF THE LENDER, IN COURTS
HAVING SITUS IN HOUSTON, XXXXXX COUNTY, TEXAS. THE BORROWER HEREBY SUBMITS
TO THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED IN HOUSTON,
XXXXXX COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR
CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE
LENDER IN ACCORDANCE WITH THIS SECTION.
8.14 WAIVER OF RIGHTS TO JURY TRIAL. THE BORROWER AND THE
LENDER HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY, AND
UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT RELATES TO OR ARISES OUT
OF ANY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS
OF THE LENDER IN THE ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHERWISE WITH RESPECT THERETO. THE
PROVISIONS OF THIS SECTION ARE A MATERIAL INDUCEMENT FOR THE LENDER ENTERING
INTO THIS AGREEMENT.
8.15 ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE
AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND
SHALL SUPERSEDE ANY PRIOR AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT HEREOF, INCLUDING, WITHOUT
LIMITATION, THE CORRESPONDENCE DATED MARCH 31, 1999, FROM THE LENDER TO THE
BORROWER. FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER WRITTEN
LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES
THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG SUCH PARTIES.
8.16 COUNTERPARTS. For the convenience of the parties, this
Agreement may be executed in multiple counterparts, each of which for all
purposes shall be deemed to be an original, and all such counterparts shall
together constitute but one and the same Agreement.
39
IN WITNESS WHEREOF, this Agreement is deemed executed effective
as of the date first above written.
BORROWER:
SOUTHWESTERN EAGLE L.L.C.
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
---------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Manager
LENDER:
BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By: /s/ Xxxxxxxx Xxxxxxx
---------------------------------
Xxxxxxxx Xxxxxxx
Vice President
40
EXHIBIT I
FORM OF NOTE
PROMISSORY NOTE
$50,000,000 Houston, Texas June 1, 1999
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned ("MAKER")
promises to pay to the order of BANK ONE, TEXAS, NATIONAL ASSOCIATION
("PAYEE"), at its banking quarters in Houston, Xxxxxx County, Texas, the sum
of FIFTY MILLION DOLLARS ($50,000,000), or so much thereof as may be advanced
against this Note pursuant to the Credit Agreement dated of even date
herewith by and between Maker and Payee (as amended, restated, or
supplemented from time to time, the "CREDIT AGREEMENT"), together with
interest at the rates and calculated as provided in the Credit Agreement.
Reference is hereby made to the Credit Agreement for matters
governed thereby, including, without limitation, certain events which will
entitle the holder hereof to accelerate the maturity of all amounts due
hereunder. Capitalized terms used but not defined in this Note shall have
the meanings assigned to such terms in the Credit Agreement.
This Note is issued pursuant to, is the "Note" under, and is
payable as provided in the Credit Agreement. Subject to compliance with
applicable provisions of the Credit Agreement, Maker may at any time pay the
full amount or any part of this Note without the payment of any premium or
fee, but such payment shall not, until this Note is fully paid and satisfied,
excuse the payment as it becomes due of any payment on this Note provided for
in the Credit Agreement.
Without being limited thereto or thereby, this Note is secured
by the Security Instruments.
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE
STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO
CONFLICTS OF LAW; PROVIDED, HOWEVER, THAT CHAPTER 345 OF THE TEXAS FINANCE
CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING
TRIPARTY ACCOUNTS) SHALL NOT APPLY TO THIS NOTE.
SOUTHWESTERN EAGLE L.L.C.
By:
---------------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Manager
I-i
EXHIBIT II
FORM OF BORROWING REQUEST
BANK ONE, TEXAS, NATIONAL ASSOCIATION
000 XXXXXX
XXXXXXX, XXXXX 00000
Attention: Energy Group, 6th Floor
Re: Amended and Restated Credit Agreement dated as of June 1,
1999, by and between SOUTHWESTERN EAGLE L.L.C., and BANK
ONE, TEXAS, NATIONAL ASSOCIATION, (as amended, restated, or
supplemented from time to time, the "CREDIT AGREEMENT")
Ladies and Gentlemen:
Pursuant to the Credit Agreement, the Borrower hereby requests
a Loan on the date and in the amount as follows:
Amount: $
Requested funding date: , 19
The undersigned certifies that she is the ___________ of the
Borrower, has obtained all consents necessary, and as such she is authorized
to execute this request on behalf of the Borrower. The undersigned further
certifies, represents, and warrants on behalf of the Borrower that the
Borrower is entitled to receive the requested Loan under the terms and
conditions of the Credit Agreement.
Each capitalized term used but not defined herein shall have
the meaning assigned to such term in the Credit Agreement.
Very truly yours,
SOUTHWESTERN EAGLE L.L.C.
By:
----------------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Manager
II-i
EXHIBIT III
FORM OF COMPLIANCE CERTIFICATE
__________, 00__
XXXX XXX, XXXXX, NATIONAL ASSOCIATION
000 XXXXXX
XXXXXXX, XXXXX 00000
Attention: Energy Group, 6th Floor
Re: Amended and Restated Credit Agreement dated as of June 1,
1999, by and between SOUTHWESTERN EAGLE L.L.C., and BANK
ONE, TEXAS, NATIONAL ASSOCIATION, (as amended, restated, or
supplemented from time to time, the "CREDIT AGREEMENT")
Ladies and Gentlemen:
Pursuant to applicable requirements of the Credit Agreement,
the undersigned, as a Responsible Officer of the Borrower, hereby certifies
to you the following information as true and correct as of the date hereof or
for the period indicated, as the case may be:
1. To the best of the knowledge of the undersigned, no Default or
Event of Default exists as of the date hereof or has occurred since the
date of our previous certification to you, if any.
1. To the best of the knowledge of the undersigned, the following
Defaults or Events of Default exist as of the date hereof or have
occurred since the date of our previous certification to you, if any, and
the actions set forth below are being taken to remedy such circumstances:
2. The compliance of the Borrower with the financial covenants of the
Credit Agreement, as of the close of business on ___________________, is
evidenced by the following:
6.13 TANGIBLE NET WORTH. Permit Tangible Net Worth, as of
the close of any fiscal quarter to be less than $1,000,000, beginning with
the quarter ending June 30, 1999, plus 50% of positive Net Income thereafter.
ACTUAL
6.14 GENERAL ADMINISTRATIVE EXPENSES. Permit, as of the
close of any fiscal quarter, general and administrative expenses to exceed
$225,000 for such quarter, beginning with the quarter ending June 30, 1999.
III-i
ACTUAL
6.15 CASH FLOW COVERAGE. Permit, at the close of any fiscal
quarter, the ratio of Cash Flow to Debt Service to be less than 1.00 to 1.00,
beginning with the quarter ending June 30, 1999, by annualizing the Cash Flow
for the immediately preceding two quarters, increasing to 1.10 to 1.00 at
September 30, 1999, by annualizing the Cash Flow for the immediately
preceding three quarters, and increasing to 1.20 to 1.00 at December 31,
1999, for the immediately preceding four quarters. Thereafter, the test
shall be conducted on a rolling four quarter basis at the end of every fiscal
quarter.
ACTUAL
3. No Material Adverse Effect has occurred since the date of the
Financial Statements dated as of ______________________.
Each capitalized term used but not defined herein shall have
the meaning assigned to such term in the Credit Agreement.
Very truly yours,
SOUTHWESTERN EAGLE L.L.C.
By:
--------------------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Manager
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EXHIBIT IV
DISCLOSURES
Section 4.9 LIABILITIES
LITIGATION
Section 4.13 ENVIRONMENTAL MATTERS
Section 4.18 REFUNDS
Section 4.19 GAS CONTRACTS
Section 4.21 CASUALTIES
Section 4.23 SUBSIDIARIES
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FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
between
SOUTHWESTERN EAGLE L.L.C.
("BORROWER")
and
BANK ONE, TEXAS, NATIONAL ASSOCIATION
("LENDER")
Effective as of
June 25, 1999
-------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Terms Defined Above . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Terms Defined in Agreement. . . . . . . . . . . . . . . . . . . . . .1
1.3 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.4 Articles and Sections . . . . . . . . . . . . . . . . . . . . . . . .2
1.5 Number and Gender . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.6 Incorporation of Exhibit. . . . . . . . . . . . . . . . . . . . . . .2
1.7 Negotiated Transaction. . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II. AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.1 Amendment of Section 1.2. . . . . . . . . . . . . . . . . . . . . . .2
2.2 Addition of Section 2.1A. . . . . . . . . . . . . . . . . . . . . . .3
2.3 Amendment to Section 2.2. . . . . . . . . . . . . . . . . . . . . . .4
2.4 Amendment to Section 2.4. . . . . . . . . . . . . . . . . . . . . . .4
2.5 Amendment of Section 2.8. . . . . . . . . . . . . . . . . . . . . . .4
2.6 Amendment of Section 2.15. . . . . . . . . . . . . . . . . . . . . .4
2.7 Amendment of Section 7.1(a) . . . . . . . . . . . . . . . . . . . . .4
2.8 Addition of Exhibit VI. . . . . . . . . . . . . . . . . . . . . . . .4
2.9 Amendment of Table of Contents. . . . . . . . . . . . . . . . . . . .4
ARTICLE III. CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.1 Receipt of Documents. . . . . . . . . . . . . . . . . . . . . . . . .5
3.2 Accuracy of Representations and Warranties. . . . . . . . . . . . . .5
3.3 Matters Satisfactory to Lender. . . . . . . . . . . . . . . . . . . .5
ARTICLE IV. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . .6
ARTICLE V. RATIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
ARTICLE VI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
6.1 Scope of Amendment. . . . . . . . . . . . . . . . . . . . . . . . . .6
6.2 Agreement as Amended. . . . . . . . . . . . . . . . . . . . . . . . .6
6.3 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . .6
6.4 Rights of Third Parties . . . . . . . . . . . . . . . . . . . . . . .6
6.5 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . .6
6.6 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.7 JURISDICTION AND VENUE. . . . . . . . . . . . . . . . . . . . . . . .7
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FIRST AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"FIRST AMENDMENT") is made and entered into effective as of June 25, 1999, by
and between SOUTHWESTERN EAGLE L.L.C., a Louisiana limited liability company
(the "BORROWER"), and BANK ONE, TEXAS, NATIONAL ASSOCIATION, a national
banking association (the "LENDER").
W I T N E S S E T H:
WHEREAS, the Borrower and the Lender did execute and exchange
counterparts of that certain Amended and Restated Credit Agreement dated June
1, 1999 (the "AGREEMENT"), to which reference is here made for all purposes;
WHEREAS, the Borrower and the Lender are desirous of amending the
Agreement in the particulars hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties to the Agreement, as set forth therein, and the
mutual covenants and agreements of the parties hereto, as set forth in this
First Amendment, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1 TERMS DEFINED ABOVE. As used herein, each of the terms
"AGREEMENT," "BORROWER," "LENDER", and "FIRST AMENDMENT," shall have the
meaning assigned to such term hereinabove.
1.2 TERMS DEFINED IN AGREEMENT. As used herein, each term
defined in the Agreement shall have the meaning assigned thereto in the
Agreement, unless expressly provided herein to the contrary.
1.3 REFERENCES. References in this First Amendment to
Schedule, Exhibit, Article, or Section numbers shall be to Schedules,
Exhibits, Articles, or Sections of this First Amendment, unless expressly
stated to the contrary. References in this First Amendment to "hereby,"
"herein," "hereinafter," "hereinabove," "hereinbelow," "hereof," "hereunder"
and words of similar import shall be to this First Amendment in its entirety
and not only to the particular Schedule, Exhibit, Article, or Section in
which such reference appears. Except as otherwise indicated, references in
this First Amendment to statutes, sections, or regulations are to be
construed as including all statutory or regulatory provisions consolidating,
amending, replacing, succeeding, or supplementing the statute, section, or
regulation referred to. References in this First Amendment to "writing"
include printing, typing, lithography, facsimile reproduction, and other
means of reproducing words in a
tangible visible form. References in this First Amendment to agreements and
other contractual instruments shall be deemed to include all exhibits and
appendices attached thereto and all subsequent amendments and other
modifications to such instruments, but only to the extent such amendments and
other modifications are not prohibited by the terms of this First Amendment.
References in this First Amendment to Persons include their respective
successors and permitted assigns.
1.4 ARTICLES AND SECTIONS. This First Amendment, for
convenience only, has been divided into Articles and Sections; and it is
understood that the rights and other legal relations of the parties hereto
shall be determined from this instrument as an entirety and without regard to
the aforesaid division into Articles and Sections and without regard to
headings prefixed to such Articles or Sections.
1.5 NUMBER AND GENDER. Whenever the context requires,
reference herein made to the single number shall be understood to include the
plural; and likewise, the plural shall be understood to include the singular.
Definitions of terms defined in the singular or plural shall be equally
applicable to the plural or singular, as the case may be, unless otherwise
indicated. Words denoting sex shall be construed to include the masculine,
feminine and neuter, when such construction is appropriate; and specific
enumeration shall not exclude the general but shall be construed as
cumulative.
1.6 INCORPORATION OF EXHIBIT. The Exhibit attached to this
First Amendment is incorporated herein and shall be considered a part of this
First Amendment for all purposes.
1.7 NEGOTIATED TRANSACTION. Each party to this First
Amendment affirms to the other that it has had the opportunity to consult,
and discuss the provisions of this First Amendment with, independent counsel
and fully understands the legal effect of each provision.
ARTICLE II.
AMENDMENTS
The Borrower and the Lender hereby amend the Agreement in the
following particulars:
2.1 AMENDMENT OF SECTION 1.2. Section 1.2 of the Agreement
is hereby amended as follows:
The following definitions are added to such Section 1.2 or
amended, as the case may be, to read as follows:
"LOAN BALANCE" shall mean, at any time, the
outstanding principal balance of the Note and the
Term Note at such time.
"LOAN DOCUMENTS" shall mean this Agreement, the
Note, the Term Note, the Security Instruments, the
Guaranties, the Term Loan Guaranties, and all other
documents and instruments now or hereafter
2
delivered pursuant to the terms of or in connection
with this Agreement, the Note, the Term Note, the
Security Instruments, the Guaranties or the Term Loan
Guaranties, and all renewals and extensions of,
amendments and supplements to, and restatements of,
any or all of the foregoing from time to time in
effect.
"OBLIGATIONS" shall mean, without duplication, (a)
all Indebtedness evidenced by the Note and the Term
Note, (b) the obligation of the Borrower for the
payment of Commitment Fees, Facility Fees, and
Engineering Fees, and (c) all other obligations and
liabilities of the Borrower to the Lender, now
existing or hereafter incurred, under, arising out
of or in connection with any Loan Document, and to
the extent that any of the foregoing includes or
refers to the payment of amounts deemed or
constituting interest, only so much thereof as shall
have accrued, been earned and which remains unpaid
at each relevant time of determination."
"TERM LOAN GUARANTIES" shall mean the Guaranty
Agreements dated June 28, 1999 executed by each of
the Term Loan Guarantors and guaranteeing, on a
joint and several basis, payment when due of the
portion of the Loan Balance evidenced by the Term
Note and accrued and unpaid interest on such portion
of the Loan Balance, as the same may be ratified,
amended, restated, or supplemented from time to
time.
"TERM LOAN GUARANTORS" shall mean, collectively,
Xxxxx X. Xxxxxxxx, Xx., X. Xxxxxx White, Jr., Hunter
White, III, and Xxxxxxx Xxxxxx White.
"TERM NOTE" shall mean the promissory note of the
Borrower, in the form attached hereto as Exhibit VI,
together with all renewals, extensions for any
period, increases, and rearrangements thereof.
"TERM NOTE MATURITY" shall mean June 25, 2000.
2.2 ADDITION OF SECTION 2.1A. The Agreement is amended to add
a new Section 2.1A thereto to read as follows:
"2.1A TERM LOAN. (a) Upon the terms and conditions and
relying on the representations and warranties of the Borrower
contained in this Agreement, the Lender agrees to make a loan to
the Borrower on June 25, 1999 in the amount of $2,216,625. Such
Loan shall be evidenced by the Term Note."
(b) The portion of the Loan Balance evidenced by the
Term Note shall bear interest at the Floating Rate and accrued and
unpaid interest on the portion of
3
the Loan Balance evidenced by the Term Note shall be due and payable
monthly commencing on the first day of August, 1999, and continuing on
the first day of each calendar month thereafter, until the Term Note
Maturity and at the Term Note Maturity.
(c) The outstanding Loan Balance evidenced by the Term
Note and reflected by the notations by the Lender on its records
shall be deemed rebuttably presumptive evidence of the principal
amount owing on the Term Note.
(d) The full amount of the Loan Balance then evidenced
by the Term Note shall be due and payable in full at the Term Note
Maturity.
2.3 AMENDMENT TO SECTION 2.2. Section 2.2 of the Agreement
is amended to add the following at the end of the sentence constituting such
Section 2.2 and immediately preceding the period at the end of such sentence:
"; provided, however, that proceeds of the Loan
evidenced by the Term Note may be used to acquire or
refinance the cost to the Borrower of acquiring
shares of the outstanding capital stock of Patina
Oil & Gas Corporation."
2.4 AMENDMENT TO SECTION 2.4. Section 2.4 of the Agreement
is amended to add the words "portion of the" preceding, and to add the words
"evidenced by the Note" following, the words "Loan Balance" each place such
words appear in such Section 2.4.
2.5 AMENDMENT OF SECTION 2.8. Section 2.8 of the Agreement
is amended to add the words "evidenced by the Note" following the words "Loan
Balance" each place such words appear in such Section 2.8.
2.6 AMENDMENT OF SECTION 2.15. Section 2.15 of the
Agreement is amended to add the words "or the Term Note" following the words
"Note" each place such word appears in such Section 2.15.
2.7 AMENDMENT OF SECTION 7.1(a). Section 7.1(a) of the
Agreement is amended and the words "or the Term Note" following the word
"Note" each place such word appears in such Section 7.1(a) and to add the
words "or the Term Loan Guarantors" following the word "Guarantors" each
place such word appears in such Section 7.1(a).
2.8 ADDITION OF EXHIBIT VI. A new Exhibit VI, in the form
of Exhibit VI attached to this First Amendment, is added to the Agreement
2.9 AMENDMENT OF TABLE OF CONTENTS. The Table of Contents
to the Agreement is amended as necessary to give effect to this First
Amendment and to reflect that there is a Section 5.21 of the Agreement with
the heading "Accounts Receivable and Accounts Payable Reports".
4
ARTICLE III.
CONDITIONS
The obligation of the Lender to make the Loan to the Borrower to be
evidenced by the Term Note is subject to the fulfillment of the following
conditions precedent:
3.1 RECEIPT OF DOCUMENTS. The Lender shall have received,
reviewed, and approved the following documents and other items, appropriately
executed when necessary and in form and substance satisfactory to the Lender:
(a) multiple counterparts of this First Amendment, as
requested by the Lender;
(b) the Term Note;
(c) Ratification of and Amendment to Security
Instruments;
(d) a pledge and/or security agreement(s) covering the
shares of the capital stock of Patina Oil & Gas Corporation
acquired or refinanced with the Loan to the Borrower pursuant to
the provisions of Section 2.1A of the Agreement;
(e) a Collateral Maintenance Agreement relating to
marketable securities pledged to the Lender as security for the
Obligations;
(f) a Form U-1 as prescribed by the Board of Governors
of the Federal Reserve System relating to the shares of capital
stock of Patina Oil & Gas Corporation acquired or refinanced with
the Loan to the Borrower pursuant to the provisions of Section
2.1A of the Agreement;
(g) the Term Loan Guaranties;
(h) a Notice of Final Agreement; and
(i) such other agreements, documents, items,
instruments, opinions, certificates, waivers, consents, and
evidence as the Lender may reasonably request.
3.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties by the Borrower contained in Article IV of the
Agreement shall be true and correct.
3.3 MATTERS SATISFACTORY TO LENDER. All matters incident to
the consummation of the transactions contemplated by the First Amendment
shall be satisfactory to the Lender and its legal counsel.
5
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
The Borrower hereby expressly re-makes, in favor of the Lender,
all of the representations and warranties by the Borrower set forth in
Article IV of the Agreement, and represents and warrants that all such
representations and warranties remain true and unbreached.
ARTICLE V.
RATIFICATION
Each of the parties hereto does hereby adopt, ratify, and
confirm the Agreement and the other Loan Documents, in all things in
accordance with the terms and provisions thereof, as amended by this First
Amendment.
ARTICLE VI.
MISCELLANEOUS
6.1 SCOPE OF AMENDMENT. The scope of this First Amendment
is expressly limited to the matters addressed herein and this First Amendment
shall not operate as a waiver of any past, present, or future breach,
Default, or Event of Default under the Agreement, except to the extent, if
any, that any such breach, Default, or Event of Default is remedied by the
effect of this First Amendment.
6.2 AGREEMENT AS AMENDED. All references to the Agreement
in any document heretofore or hereafter executed in connection with the
transactions contemplated in the Agreement shall be deemed to refer to the
Agreement as amended by this First Amendment.
6.3 PARTIES IN INTEREST. All provisions of this First
Amendment shall be binding upon and shall inure to the benefit of the
Borrower, the Lender and their respective successors and assigns.
6.4 RIGHTS OF THIRD PARTIES. All provisions herein are
imposed solely and exclusively for the benefit of the Lender and the
Borrower, and no other Person shall have standing to require satisfaction of
such provisions in accordance with their terms and any or all of such
provisions may be freely waived in whole or in part by the Lender at any time
if in its sole discretion it deems it advisable to do so.
6.5 ENTIRE AGREEMENT. THIS FIRST AMENDMENT CONSTITUTES THE
ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT
HEREOF AND SUPERSEDES ANY PRIOR AGREEMENT, WHETHER WRITTEN OR ORAL, BETWEEN
SUCH PARTIES REGARDING THE SUBJECT HEREOF. FURTHERMORE IN THIS REGARD, THIS
FIRST AMENDMENT, THE AGREEMENT, THE NOTE, THE TERM NOTE, THE SECURITY
INSTRUMENTS, AND THE OTHER WRITTEN DOCUMENTS REFERRED TO IN THE AGREEMENT OR
EXECUTED IN CONNECTION WITH OR AS SECURITY FOR THE NOTE AND THE
6
TERM NOTE REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES
THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
6.6 GOVERNING LAW. THIS FIRST AMENDMENT, THE AGREEMENT AND
THE NOTE AND THE TERM NOTE SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF TEXAS. THE PARTIES ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT AND THE NOTE
AND THE TERM NOTE AND THE TRANSACTIONS CONTEMPLATED HEREBY BEAR A NORMAL,
REASONABLE, AND SUBSTANTIAL RELATIONSHIP TO THE STATE OF TEXAS.
6.7 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH
RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF,
RELATED TO, OR FROM THIS FIRST AMENDMENT, THE AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE LITIGATED IN COURTS HAVING SITUS IN XXXXXX COUNTY, TEXAS.
EACH OF THE BORROWER AND THE LENDER HEREBY SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE, OR FEDERAL COURT LOCATED IN XXXXXX COUNTY, TEXAS, AND HEREBY
WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE
OF ANY LITIGATION BROUGHT AGAINST IT BY THE BORROWER OR THE LENDER IN
ACCORDANCE WITH THIS SECTION.
IN WITNESS WHEREOF, this First Amendment to Credit Agreement is
executed effective the date first hereinabove written.
BORROWER:
SOUTHWESTERN EAGLE L.L.C.
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
---------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Manager
7
LENDER:
BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By: /s/ Xxxxxxxx Xxxxxxx
---------------------------------
Xxxxxxxx Xxxxxxx
Vice President
8
EXHIBIT VI
[FORM OF TERM NOTE]
TERM PROMISSORY NOTE
(this "Term Note")
$2,216,625.00 Houston, Texas June 25, 1999
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned ("MAKER")
promises to pay to the order of Bank One, Texas, National Association
("PAYEE"), at its banking quarters in Houston, Xxxxxx County, Texas, the sum
of TWO MILLION TWO HUNDRED SIXTEEN THOUSAND SIX HUNDRED TWENTY-FIVE AND
NO/100 DOLLARS ($2,216,625.00), as provided in the Credit Agreement dated
June 1, 1999, as amended, by and between Maker and Payee (as amended,
restated, or supplemented from time to time, the "CREDIT AGREEMENT"),
together with interest at the rates and calculated as provided in the Credit
Agreement.
Reference is hereby made to the Credit Agreement for matters
governed thereby, including, without limitation, certain events which will
entitle the holder hereof to accelerate the maturity of all amounts due
hereunder. Capitalized terms used but not defined in this Term Note shall
have the meanings assigned to such terms in the Credit Agreement.
This Term Note is issued pursuant to, is the "Term Note" under,
and is payable as provided in the Credit Agreement. Subject to compliance
with applicable provisions of the Credit Agreement, Maker may at any time pay
the full amount or any part of this Term Note without the payment of any
premium or fee, but such payment shall not, until this Term Note is fully
paid and satisfied, excuse the payment as it becomes due of any payment on
this Term Note provided for in the Credit Agreement.
Without being limited thereto or thereby, this Term Note is
secured by the Security Instruments.
THIS TERM NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF
THE STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO
CONFLICTS OF LAW; PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL STATUTES,
ARTICLE 5069, CHAPTER 15 (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN
ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL NOT APPLY TO THIS TERM NOTE.
SOUTHWESTERN EAGLE L.L.C.
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
--------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Manager
VI-i
