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EXHIBIT 10.2
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$25,000,000.00
CREDIT AGREEMENT
Among
3DX TECHNOLOGIES INC.
as Borrower,
THE FINANCIAL INSTITUTIONS
NAMED IN THIS CREDIT AGREEMENT
as Banks,
and
NATIONSBANK OF TEXAS, N.A.
as Agent
December 18, 1997
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Computation of Time Periods . . . . . . . . . . . . . . . . 15
Section 1.03. Accounting Terms; Changes in GAAP . . . . . . . . . . . . . 15
Section 1.04. Types of Advances . . . . . . . . . . . . . . . . . . . . . 15
Section 1.05. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE II CREDIT FACILITIES
Section 2.01. Commitment for Advances . . . . . . . . . . . . . . . . . . 16
Section 2.02. Borrowing Bases . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.03. Method of Borrowing . . . . . . . . . . . . . . . . . . . . 19
Section 2.04. Prepayment of Advances . . . . . . . . . . . . . . . . . . 21
Section 2.05. Repayment of Advances . . . . . . . . . . . . . . . . . . . 24
Section 2.06. Letters of Credit . . . . . . . . . . . . . . . . . . . . . 24
Section 2.07. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.08. Interest . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.09. Payments and Computations . . . . . . . . . . . . . . . . . 32
Section 2.10. Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . 33
Section 2.11. Breakage Costs . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.12. Increased Costs . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE III CONDITIONS OF LENDING
Section 3.01. Conditions Precedent to Credit Agreement . . . . . . . . . 39
Section 3.02. Conditions Precedent to All Borrowings . . . . . . . . . . 40
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.01. Corporate Existence; Subsidiaries . . . . . . . . . . . . . 40
Section 4.02. Corporate Power . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.03. Authorization and Approvals . . . . . . . . . . . . . . . . 41
Section 4.04. Enforceable Obligations . . . . . . . . . . . . . . . . . . 41
Section 4.05. Financial Statements . . . . . . . . . . . . . . . . . . . 42
Section 4.06. True and Complete Disclosure . . . . . . . . . . . . . . . 42
Section 4.07. Litigation . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.08. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 43
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Section 4.09. Investment Company Act . . . . . . . . . . . . . . . . . . 43
Section 4.10. Public Utility Holding Company Act . . . . . . . . . . . . 43
Section 4.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 4.12. Pension Plans . . . . . . . . . . . . . . . . . . . . . . . 43
Section 4.13. Condition of Property; Casualties . . . . . . . . . . . . . 44
Section 4.14. No Burdensome Restrictions; No Defaults . . . . . . . . . . 44
Section 4.15. Environmental Condition . . . . . . . . . . . . . . . . . . 44
Section 4.16. Permits, Licenses, Etc. . . . . . . . . . . . . . . . . . . 45
Section 4.17. Gas Contracts . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE V AFFIRMATIVE COVENANTS
Section 5.01. Compliance with Laws, Etc. . . . . . . . . . . . . . . . . 46
Section 5.02. Maintenance of Insurance . . . . . . . . . . . . . . . . . 46
Section 5.03. Preservation of Corporate Existence, Etc. . . . . . . . . . 46
Section 5.04. Payment of Taxes, Etc. . . . . . . . . . . . . . . . . . . 47
Section 5.05. Visitation Rights . . . . . . . . . . . . . . . . . . . . . 47
Section 5.06. Reporting Requirements . . . . . . . . . . . . . . . . . . 47
Section 5.07. Maintenance of Property . . . . . . . . . . . . . . . . . . 51
Section 5.08. New Subsidiaries . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VI NEGATIVE COVENANTS
Section 6.01. Liens, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 6.02. Debts, Guaranties, and Other Obligations . . . . . . . . . 54
Section 6.03. Agreements Restricting Liens and Distributions . . . . . . 54
Section 6.04. Merger or Consolidation; Asset Sales . . . . . . . . . . . 55
Section 6.05. Restricted Payments . . . . . . . . . . . . . . . . . . . . 56
Section 6.06. Investments . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.07. Limitation on Speculative Hedging . . . . . . . . . . . . . 56
Section 6.08. Affiliate Transactions . . . . . . . . . . . . . . . . . . 56
Section 6.09. Compliance with ERISA . . . . . . . . . . . . . . . . . . . 57
Section 6.10. Maintenance of Ownership of Subsidiaries . . . . . . . . . 57
Section 6.11 Sale-and-Leaseback . . . . . . . . . . . . . . . . . . . . 57
Section 6.12. Change of Business . . . . . . . . . . . . . . . . . . . . 57
Section 6.13. Current Ratio . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.14. Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VII REMEDIES
Section 7.01. Events of Default . . . . . . . . . . . . . . . . . . . . . 58
Section 7.02. Optional Acceleration of Maturity . . . . . . . . . . . . . 61
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Section 7.03. Automatic Acceleration of Maturity . . . . . . . . . . . . 62
Section 7.04. Right of Set-off . . . . . . . . . . . . . . . . . . . . . 62
Section 7.05. Actions Under Credit Documents . . . . . . . . . . . . . . 62
Section 7.06. Non-exclusivity of Remedies . . . . . . . . . . . . . . . . 63
ARTICLE VIII THE AGENT AND THE ISSUING BANK
Section 8.01. Authorization and Action . . . . . . . . . . . . . . . . . 63
Section 8.02. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . 63
Section 8.03. The Agent and Its Affiliates . . . . . . . . . . . . . . . 64
Section 8.04. Bank Credit Decision . . . . . . . . . . . . . . . . . . . 64
Section 8.05. Indemnification . . . . . . . . . . . . . . . . . . . . . . 64
Section 8.06. Successor Agent and Issuing Bank . . . . . . . . . . . . . 65
ARTICLE IX MISCELLANEOUS
Section 9.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . 66
Section 9.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . 66
Section 9.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . 66
Section 9.04. Costs and Expenses . . . . . . . . . . . . . . . . . . . . 67
Section 9.05. Binding Effect . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.06. Bank Assignments and Participations . . . . . . . . . . . . 67
Section 9.07. Indemnification . . . . . . . . . . . . . . . . . . . . . . 70
Section 9.08. Execution in Counterparts . . . . . . . . . . . . . . . . . 70
Section 9.09. Survival of Representations, Etc . . . . . . . . . . . . . 70
Section 9.10. Severability . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.11. Business Loans . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.13. Confidentiality . . . . . . . . . . . . . . . . . . . . . . 71
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EXHIBITS:
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Guaranty
Exhibit D-1 - Form of Revolving A Note
Exhibit D-2 - Form of Revolving B Note
Exhibit E - Form of Notice of Borrowing
Exhibit F - Form of Notice of Conversion or Continuation
Exhibit G - Form of Letter of Credit Application
Exhibit H - Form of Borrower's Counsel Opinion
SCHEDULES:
Schedule 1 - Borrower, Agent, and Bank Information
Schedule 4.07 - Existing Litigation
Schedule 4.15(a) - Existing Environmental Concerns
Schedule 4.15(b) - Designated Environmental Sites
Schedule 6.01 - Permitted Existing Liens
Schedule 6.02 - Permitted Existing Debt
Schedule 6.08 - Affiliated Transactions
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CREDIT AGREEMENT
This Credit Agreement dated as of December 18, 1997 is among 3DX
Technologies Inc., a Delaware corporation, the Banks (as defined below), and
NationsBank of Texas, N.A., as Agent for the Banks.
The Borrower, the Banks, and the Agent agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings (unless otherwise
indicated, such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"Acceptable Security Interest" means a Lien which (a) exists in favor
of the Agent for the benefit of the Agent and the Banks and (b) is superior to
all Liens or rights of any other Person in the Property encumbered thereby,
except to the extent that the rights of another Person are permitted hereunder.
"Adjusted Base Rate" means, for any day, the fluctuating rate per
annum of interest equal to the greater of (a) the Base Rate in effect on such
day and (b) the Federal Funds Rate in effect on such day plus 1.00%.
"Adjusted Net Income" means, for any Person and for any period of its
determination, the Adjusted Net Income of such Person determined in accordance
with GAAP consistently applied, but excluding any gains and losses on sales and
retirements of assets and any noncash write-down of assets.
"Advances" means any Revolving A Advance or Revolving B Advance.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such Person or any Subsidiary of such Person.
The term "control" (including the terms "controlled by" or "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of Voting Securities, by contract, or otherwise.
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"Agent" means NationsBank of Texas, N.A., in its capacity as an agent
pursuant to Article VIII and any successor agent pursuant to Section 8.06.
"Agent's Fee Letter" has the meaning specified in Section 2.07(b).
"Agreement" means this Credit Agreement, as the same may be amended,
supplemented, and otherwise modified from time to time.
"Applicable Lending Office" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of a Base Rate Advance and such
Bank's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
"Applicable Margin" means the following percentages for the following
Classes and Types of Advances:
Applicable Margin Applicable Margin
Base Rate Advances Eurodollar Rate Advances
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Revolving A Advances 0.00% 2.00%
Revolving B Advances 2.00% 4.00%
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and an Eligible Assignee, and accepted by the Agent, in
substantially the form of the attached Exhibit A.
"Banks" means the lenders listed on the signature pages of this
Agreement and each Eligible Assignee that shall become a party to this
Agreement pursuant to Section 9.06.
"Base Rate" means a fluctuating interest rate per annum as shall be in
effect from time to time equal to the rate of interest publicly announced by
NationsBank of Texas, N.A., as its base rate, whether or not the Borrower has
notice thereof.
"Base Rate Advance" means an Advance which bears interest as provided
in Section 2.08(a).
"Borrower" means 3DX Technologies Inc., a Delaware corporation.
"Borrowing" means any Revolving A Borrowing or Revolving B Borrowing.
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"Borrowing Bases" means the Revolving A Borrowing Base and the
Revolving B Borrowing Base.
"Business Day" means a day of the year on which banks are not required
or authorized to close in Dallas, Texas and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on by
banks in the London interbank market.
"Capital Leases" means, as applied to any Person, any lease of any
Property by such Person as lessee which would, in accordance with GAAP, be
required to be classified and accounted for as a capital lease on the balance
sheet of such Person.
"Cash Collateral Account" means a special interest bearing cash
collateral account pledged to the Agent for the ratable benefit of the Banks
containing cash deposited pursuant to Section 2.04(b) or (c), 2.05(b), 7.02(b),
or 7.03(b) to be maintained at the Agent's office in accordance with Section
2.06(h) and bear interest or be invested in the Agent's reasonable discretion.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, state and local analogs, and all rules
and regulations and requirements thereunder in each case as now or hereafter in
effect.
"Class" has the meaning set forth in Section 1.04.
"Code" means the Internal Revenue Code of 1986, as amended, and any successor
statute.
"Commitments" means, as to any Bank, its Revolving A Commitment and
its Revolving B Commitment.
"Compliance Certificate" means a compliance certificate in the form of
the attached Exhibit B signed by a Responsible Officer of the Borrower.
"Controlled Group" means all members of a controlled group of
corporations and all trades (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.
"Convert," "Conversion," and "Converted" each refers to a conversion
of Advances of one Type into Advances of another Type pursuant to Section
2.03(b).
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"Credit Documents" means this Agreement, the Notes, the Letter of
Credit Documents, the Guaranties, the Security Documents, any Hedge Agreements
entered into with a Bank, and each other agreement, instrument, or document
executed at any time in connection with this Agreement.
"Debt," for any Person, means without duplication:
(a) indebtedness of such Person for borrowed money, including,
without limitation, obligations under letters of credit and agreements relating
to the issuance of letters of credit or acceptance financing;
(b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(c) obligations of such Person to pay the deferred purchase price
of property or services;
(d) obligations of such Person as lessee under Capital Leases;
(e) obligations of such Person under direct or indirect guaranties
in respect of, and obligations (contingent or otherwise) of such Person to
purchase or otherwise acquire, or otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of others of the kinds referred to
in clauses (a) through (d) above;
(f) indebtedness or obligations of others of the kinds referred to
in clauses (a) through (e) secured by any Lien on or in respect of any Property
of such Person; and
(g) all liabilities of such Person in respect of unfunded vested
benefits under any Plan.
"Default" means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
"Dollar Equivalent" means for all purposes of this Agreement, the
equivalent in another currency of an amount in Dollars to be determined by
reference to the rate of exchange quoted by NationsBank of Texas, N.A., at
10:00 a.m. (Dallas, Texas, time) on the date of determination, for the spot
purchase in the foreign exchange market of such amount of Dollars with such
other currency.
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"Dollars" and "$" mean lawful money of the United States of America.
"Domestic Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" opposite its name on
Schedule 1 or such other office of such Bank as such Bank may from time to time
specify to the Borrower and the Agent.
"Effective Date" means the date on which each of the conditions
precedent in Section 3.01 have been met or waived.
"Eligible Assignee" means any commercial bank organized under the laws
of any country which is a member of the Organization for Economic Cooperation
and Development and having primary capital (or its equivalent) of not less than
$250,000,000.00 (or its Dollar Equivalent) and approved by the Agent in its
sole discretion and the Borrower, which approval by the Borrower will not be
unreasonably withheld.
"Environment" shall have the meanings set forth in 43 U.S.C. Section
9601(8).
"Environmental Claim" means any third party (including governmental
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree, consent agreement or notice of potential or actual
responsibility or violation (including claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of employees) which seeks to impose liability under any
Environmental Law.
"Environmental Law" means all Legal Requirements arising from,
relating to, or in connection with the Environment, health, or safety,
including without limitation CERCLA, relating to (a) pollution, contamination,
injury, destruction, loss, protection, cleanup, reclamation or restoration of
the Environment or other natural resources; (b) solid, gaseous or liquid waste
generation, treatment, processing, recycling, reclamation, cleanup, storage,
disposal or transportation; (c) exposure to pollutants, contaminants,
hazardous, or toxic substances, materials or wastes; (d) the safety or health
of employees; or (e) the manufacture, processing, handling, transportation,
distribution in commerce, use, storage or disposal of hazardous, or toxic
substances, materials or wastes.
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"Environmental Permit" means any permit, license, order, approval or
other authorization issued under an Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Federal Reserve Board (or any successor), as in effect from
time to time.
"Eurodollar Lending Office" means, with respect to any Bank, the
office of such Bank specified as its "Eurodollar Lending Office" opposite its
name on Schedule 1 (or, if no such office is specified, its Domestic Lending
Office) or such other office of such Bank as such Bank may from time to time
specify to the Borrower and the Agent.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Rate Advance, the interest rate per annum (rounded upward to the nearest 1/100
of 1% per annum) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days before the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "Eurodollar Rate" shall mean, for the Interest
Period for each Eurodollar Rate Advance, the interest rate per annum (rounded
upward to the nearest 1/100 of 1% per annum) appearing on Reuters Screen LIBO
page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days before the first day
of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
page, the applicable rate shall be the arithmetic mean of all such rates.
"Eurodollar Rate Advance" means an Advance which bears interest as
provided in Section 2.08(b).
"Eurodollar Rate Reserve Percentage" of any Bank for the Interest
Period for any Eurodollar Rate Advance means the reserve percentage applicable
during such Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for such Bank
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.
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"Event of Default" has the meaning specified in Section 7.01.
"Expiration Date" means, with respect to any Letter of Credit, the
date on which such Letter of Credit will expire or terminate in accordance with
its terms.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for any such day
on such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any of its successors.
"Financial Statements" means the balance sheet and statements of
income, retained earnings and cash flow dated December 31, 1996 referred to in
Section 4.05, copies of which have been delivered to the Agent and the Banks.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, applied on a basis consistent with the
requirements of Section 1.03.
"Governmental Authority" means any foreign governmental authority, the
United States of America, any state of the United States of America and any
subdivision of any of the foregoing, and any agency, department, commission,
board, authority or instrumentality, bureau or court having jurisdiction over
any Bank, the Borrower, or the Borrower's Subsidiaries or any of their
respective Properties.
"Guaranties" means each Guaranty in favor of the Agent for the ratable
benefit of the Banks in the form of the attached Exhibit C executed by a
Guarantor as required by Section 5.08, as the same may be amended,
supplemented, or otherwise modified from time to time.
"Guarantors" means each of the Borrower's Subsidiaries who hereafter
executes a Guaranty under Section 5.08.
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"Hazardous Substance" means the substances identified as such pursuant
to CERCLA and those regulated as such under any other Environmental Law,
including without limitation pollutants, contaminants, petroleum, petroleum
products, radionuclides, radioactive materials, and medical and infectious
waste.
"Hazardous Waste" means the substances regulated as such pursuant to
any Environmental Law.
"Hedge Agreement" means (a) an interest hedge, rate swap, or cap, or
similar arrangement between the Borrower or any of its Subsidiaries and a
financial institution providing for the exchange of nominal interest
obligations or the cap of the interest rate on the Advances made under this
Agreement or (b) any forward sales arrangement, call, option, price swap, or
other similar transaction entered into by the Borrower or any of its
Subsidiaries to protect against fluctuations in prices or rates.
"Interest Period" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such Advance
or the date of the Conversion of any Base Rate Advance into such an Advance and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below or by Section 2.03 and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below or by Section 2.03. The duration of each such Interest Period
shall be one, two, three, or six months, in each case as the Borrower may, upon
notice received by the Agent not later than 10:00 a.m. (Dallas, Texas, time)
on, the third Business Day prior to the first day of such Interest Period
select; provided, however, that:
(a) the Borrower may not select any Interest Period for any
Advance which ends after the Maturity Date;
(b) the Borrower may not select any Interest Period after the
Termination Date which ends after any principal repayment date unless, after
giving effect to such selection, the aggregate unpaid principal amount of the
Advances that are Base Rate Advances and that are Eurodollar Rate Advances
having Interest Periods which end on or before such principal repayment date
shall be at least equal to the amount of Advances due and payable on or before
such date;
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(c) Interest Periods commencing on the same date for Advances
comprising part of the same Borrowing shall be of the same duration;
(d) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, provided that
if such extension would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day; and
(e) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month.
"Interim Financial Statements" means the unaudited balance sheet and
statements of income and cash flow dated as of September 30, 1997, referred to
in Section 4.05.
"Issuing Bank" means NationsBank of Texas, N.A., and any successor
issuing bank pursuant to Section 8.06.
"Legal Requirement" means any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or official interpretation of
any of the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, including, but not limited to, Regulations G, T, U, and
X.
"Letter of Credit" means, individually, any letter of credit issued by
the Issuing Bank which is subject to this Agreement and "Letters of Credit"
means all such letters of credit collectively.
"Letter of Credit Application" means the Issuing Bank's standard form
letter of credit application for either a commercial or standby letter of
credit, as the case may be, which has been executed by the Borrower and
accepted by the Issuing Bank in connection with the issuance of a Letter of
Credit, which form or forms as of the date of this Agreement are in the form of
the attached Exhibit G, as the same may be amended, supplemented, and otherwise
modified from time to time.
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"Letter of Credit Documents" means all Letters of Credit, Letter of
Credit Applications, and agreements, documents, and instruments entered into in
connection with or relating thereto.
"Letter of Credit Exposure" means, at any time, the sum of (a) the
aggregate undrawn maximum face amount of each Letter of Credit at such time
plus (b) the aggregate unpaid amount of all Reimbursement Obligations at such
time.
"Letter of Credit Obligations" means any obligations of the Borrower
under this Agreement in connection with the Letters of Credit, including the
Reimbursement Obligations.
"Lien" means any mortgage, lien, pledge, charge, deed of trust,
security interest, or encumbrance to secure or provide for the payment of any
obligation of any Person, whether arising by contract, operation of law, or
otherwise (including, without limitation, the interest of a vendor or lessor
under any conditional sale agreement, Capital Lease, or other title retention
agreement).
"Liquid Investments" means:
(a) 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 from the date of acquisition;
(b) commercial paper of a domestic issuer rated at the date of
acquisition not less than P1 by Xxxxx'x Investor Service, Inc., or A1 by
Standard & Poor's Corporation;
(c) certificates of deposit, demand deposits, Eurodollar time
deposits, overnight bank deposits, and bankers' acceptances, with maturities of
no more than 180 days from the date of acquisition, issued by any Bank or any
bank or trust company organized under the laws of the United States or any
state thereof whose deposits are insured by the Federal Deposit Insurance
Corporation, and having capital and surplus aggregating at least
$500,000,000.00;
(d) repurchase agreements secured by debt securities of the type
described in part (a) above, the market value of which, including accrued
interest, is not less than 100% of the amount of the repurchase agreement, with
maturities of no more than one year from the date of acquisition, issued by or
acquired from or through any Bank or any bank or trust company organized under
the laws of the United States or any state thereof and having capital and
surplus aggregating at least $500,000,000.00; and
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(e) the Xxxxxxx Xxxxx Institutional Fund or other similar
institutional money market mutual fund having total assets in excess of
$1,000,000,000.00.
"Majority Banks" means, at any time, Banks holding at least 66-2/3% of
the then aggregate unpaid principal amount of the Notes held by the Banks and
the Letter of Credit Exposure of the Banks at such time, but in no event less
than two Banks at any time when there are three or more Banks; provided that if
no such principal amount or Letter of Credit Exposure is then outstanding,
"Majority Banks" shall mean Banks having at least 66-2/3% of the aggregate
amount of the Revolving Commitments at such time, but in no event less than two
Banks at any time when there are three or more Banks.
"Material Adverse Change" means (a) a material adverse change in the
business, financial condition, or results of operations of the Borrower and its
Subsidiaries (taken as a whole), or (b) the occurrence and continuance of any
event or circumstance which could reasonably be expected (i) to have a material
adverse effect on the Borrower's or any Guarantor's ability to perform its
obligations under this Agreement, any Note, any Guaranty, or any other Credit
Document or (ii) to cause a Default.
"Material Contracts" means, with respect to any Oil and Gas Property,
all of the material contracts affecting the maintenance and operation of, or
the Borrower or its Subsidiaries' title to such Oil and Gas Properties,
including all operating agreements and all farm-out or farm-in agreements.
"Maturity Date" means the earlier of (a) June 30, 2002 or (b) the
earlier termination in whole of the Revolving Commitments pursuant to Section
2.01(e) or Article VII.
"Maximum Rate" means the maximum nonusurious interest rate under
applicable law.
"Mortgages" means any mortgages, deeds of trust, or other security
instruments granting or purporting to grant Acceptable Security Interests in
the Oil and Gas Properties of the Borrower and its Subsidiaries, as the same
may be amended, supplemented, or otherwise modified from time to time.
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"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
"Net Worth" means, for any Person that is a corporation and as of any
date of its determination, the consolidated total assets of such Person less
the total liabilities of such Person, determined in accordance with GAAP
consistently applied.
"Note" means a Revolving A Note or a Revolving B Note.
"Notice of Borrowing" means a notice of borrowing in the form of the
attached Exhibit E signed by a Responsible Officer of the Borrower.
"Notice of Conversion or Continuation" means a notice of conversion or
continuation in the form of the attached Exhibit F signed by a Responsible
Officer of the Borrower.
"Obligations" means all principal, interest, fees, reimbursements,
indemnifications, and other amounts payable by the Borrower to the Agent or the
Banks under the Credit Documents.
"Oil and Gas Properties" means 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 overriding royalty and royalty
interests, leasehold estate interests, net profits interests, production
payment interests and mineral fee interests, together with contracts executed
in connection therewith and incidental rights belonging thereto.
"Oil and Gas Reserve Report" means each engineering report covering
the Borrower's consolidated Oil and Gas Properties provided to the Agent
pursuant to Section 5.06(c).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means the Liens permitted to exist pursuant to
Section 6.01.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability corporation or company,
limited liability partnership, trust, unincorporated association, joint venture
or other entity, or a government or any political subdivision or agency thereof
or any trustee, receiver, custodian or similar official.
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"Plan" means an employee benefit plan (other than a Multiemployer
Plan) maintained for employees of the Borrower or any member of the Controlled
Group and covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code.
"Property" of any Person means any property or assets (whether real,
personal, or mixed, tangible or intangible) of such Person.
"Pro Rata Share" means, with respect to any Bank, either (a) the ratio
(expressed as a percentage) of such Bank's Commitments at such time to the
aggregate Commitments at such time or (b) if the Commitments have been
terminated, the ratio (expressed as a percentage) of such Bank's aggregate
outstanding Advances and Letter of Credit Exposure at such time to the
aggregate outstanding Advances and Letter of Credit Exposure of all the Banks
at such time.
"Register" has the meaning set forth in paragraph (c) of Section 9.06.
"Regulations G, T, U, and X" mean Regulations G, T, U, and X of the
Federal Reserve Board, as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"Reimbursement Obligations" means all of the obligations of the
Borrower to reimburse the Issuing Bank for amounts paid by the Issuing Bank
under Letters of Credit as established by the Letter of Credit Applications and
Section 2.06(d).
"Release" shall have the meaning set forth in CERCLA or under any
other Environmental Law.
"Reportable Event" shall have the meaning set forth in Title IV of
ERISA.
"Response" shall have the meaning set forth in CERCLA or under any
other Environmental Law.
"Responsible Officer" means, with respect to any Person, such Person's
Chief Executive Officer, President, Chief Financial Officer, Chief Accounting
Officer, and Vice Presidents.
"Restricted Payment" means, with respect to any Person, any dividends
or other distributions (in cash, property, or otherwise) on, or any payment for
the purchase,
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redemption, or other acquisition of, any shares of any capital stock of such
Person, other than dividends payable in such Person's stock.
"Revolving A Advance" means any advance by a Bank to the Borrower as
part of a Revolving A Borrowing and refers to a Base Rate Advance or a
Eurodollar Rate Advance.
"Revolving B Advance" means any advance by a Bank to the Borrower as
part of a Revolving B Borrowing and refers to a Base Rate Advance or a
Eurodollar Rate Advance.
"Revolving A Borrowing" means, subject to Sections 2.03(c)(ii) and
2.04(e), a borrowing consisting of simultaneous Revolving A Advances of the
same Type made by each Bank pursuant to Section 2.03(a), continued by each Bank
pursuant to Section 2.03(b), or Converted by each Bank to Revolving A Advances
of a different Type pursuant to Section 2.03(b).
"Revolving B Borrowing" means, subject to Sections 2.03(c)(ii) and
2.04(e), a borrowing consisting of simultaneous Revolving B Advances of the
same Type made by each Bank pursuant to Section 2.03(a), continued by each Bank
pursuant to Section 2.03(b), or Converted by each Bank to Revolving B Advances
of a different Type pursuant to Section 2.03(b).
"Revolving A Borrowing Base" means, for any date of its determination
by the Majority Banks or all of the Banks, as the case may be, in accordance
with Section 2.02, the lending value of the Borrower's and its Subsidiaries'
Oil and Gas Properties as of such date, allocated to the Revolving A Borrowing
Base pursuant to Section 2.02(g).
"Revolving B Borrowing Base" means, for any date of its determination
by the Majority Banks or all of the Banks, as the case may be, in accordance
with Section 2.02, the lending value of the Borrower's and its Subsidiaries'
Oil and Gas Properties as of such date, allocated to the Revolving B Borrowing
Base pursuant to Section 2.02(g).
"Revolving A Commitment" means, for any Bank, the amount set opposite
such Bank's name on the signature pages hereof as its Revolving A Commitment,
or if such Bank has entered into any Assignment and Acceptance, as set forth
for such Bank as its Revolving A Commitment in the Register maintained by the
Agent pursuant to Section 9.06(c), as such amount may be reduced or terminated
pursuant to Article VII.
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"Revolving B Commitment" means, for any Bank, the amount set opposite
such Bank's name on the signature pages hereof as its Revolving B Commitment,
or if such Bank has entered into any Assignment and Acceptance, as set forth
for such Bank as its Revolving B Commitment in the Register maintained by the
Agent pursuant to Section 9.06(c), as such amount may be reduced or terminated
pursuant to Article VII.
"Revolving A Note" means a promissory note of the Borrower payable to
the order of any Bank, in substantially the form of the attached Exhibit D-1,
evidencing indebtedness of the Borrower to such Bank resulting from Revolving A
Advances owing to such Bank.
"Revolving B Note" means a promissory note of the Borrower payable to
the order of any Bank, in substantially the form of the attached Exhibit D-2,
evidencing indebtedness of the Borrower to such Bank resulting from Revolving B
Advances owing to such Bank.
"Security Documents" means the Mortgages and any other documents
creating or purporting to create Liens in favor of the Agent securing the
repayment of the Obligations.
"Subsidiary" of a Person means any corporation or other entity of
which more than 50% of the outstanding capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or similar governing body of such corporation or other entity
(irrespective of whether at such time capital stock or other ownership
interests of any other class or classes of such corporation or other entity
shall or might have voting power upon the occurrence of any contingency) is at
the time directly or indirectly owned by such Person, by such Person and one or
more Subsidiaries of such Person or by one or more Subsidiaries of such Person.
"Tax Group" has the meaning set forth in Section 4.11.
"Termination Date" means December 31, 2000.
"Termination Event" means (a) a Reportable Event described in Section
4043 of ERISA and the regulations issued thereunder (other than a Reportable
Event not subject to the provision for 30-day notice to the PBGC under such
regulations), (b) the withdrawal of the Borrower or any of its Affiliates from
a Plan during a plan year in
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which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, (c) the filing of a notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under Section 4041(c) of ERISA,
(d) the institution of proceedings to terminate a Plan by the PBGC, or (e) any
other event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Plan.
"Type" has the meaning set forth in Section 1.04.
"Voting Securities" means with respect to any corporation, capital
stock of the corporation having general voting power under ordinary
circumstances to elect directors of such corporation (irrespective of whether
at the time stock of any other class or classes shall have or might have
special voting power or rights by reason of the happening of any contingency).
Section 1.02. Computation of Time Periods. In this Agreement in
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each means "to but excluding".
Section 1.03. Accounting Terms; Changes in GAAP.
(a) All accounting terms not specifically defined in this
Agreement shall be construed in accordance with GAAP applied on a consistent
basis with those applied in the preparation of the Financial Statements.
(b) Unless otherwise indicated, all financial statements of the
Borrower, all calculations for compliance with covenants in this Agreement and
all calculations of any amounts to be calculated under the definitions in
Section 1.01 shall be based upon the consolidated accounts of the Borrower and
its Subsidiaries in accordance with GAAP (or in compliance with the regulations
promulgated by the United States Securities and Exchange Commission regarding
financial reporting) and consistent with the principles applied in preparing
the Financial Statements.
Section 1.04. Types of Advances. Advances are distinguished by
"Type." The "Type" of an Advance refers to the determination whether such
Advance is a Eurodollar Rate Advance or Base Rate Advance. Borrowings and
Advances are also distinguished by "Class." The "Class" of a Borrowing or an
Advance refers to the determination whether such Borrowing or Advance is a
Revolving A Borrowing or a Revolving B Borrowing or a Revolving A Advance or a
Revolving B Advance, as applicable.
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Section 1.05. Miscellaneous. Article, Section, Schedule, and
Exhibit references are to Articles and Sections of and Schedules and Exhibits
to this Agreement, unless otherwise specified.
ARTICLE II
CREDIT FACILITIES
Section 2.01. Commitment for Advances.
(a) Revolving A Advances. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make Revolving A Advances
to the Borrower from time to time on any Business Day during the period from
the date of this Agreement until the Termination Date in an aggregate
outstanding amount up to but not to exceed an amount equal to the lesser of
(i)(A) such Bank's Revolving A Commitment minus (B) the outstanding principal
amount of such Bank's Revolving B Advances minus (C) such Bank's Pro Rata Share
of the Letter of Credit Exposure and (ii)(A) such Bank's Pro Rata Share of the
Revolving A Borrowing Base minus (B) such Bank's Pro Rata Share of the Letter
of Credit Exposure.
(b) Revolving B Advances. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make Revolving B Advances
to the Borrower from time to time on any Business Day during the period from
the date of this Agreement until the Termination Date in an aggregate
outstanding amount up to but not to exceed an amount equal to the lesser of
(i)(A) such Bank's Revolving B Commitment minus (B) the outstanding principal
amount of such Bank's Revolving A Advances minus (C) such Bank's Pro Rata Share
of the Letter of Credit Exposure and (ii) such Bank's Pro Rata Share of the
Revolving B Borrowing Base.
(c) Amount of Borrowing. Each Borrowing shall, in the case of
Borrowings consisting of Base Rate Advances, be in an aggregate amount not less
than $200,000.00 and in integral multiples of $100,000.00 in excess thereof,
and in the case of Borrowings consisting of Eurodollar Rate Advances, be in an
aggregate amount not less than $200,000.00 or in integral multiples of
$100,000.00 in excess thereof, and in each case shall consist of Advances of
the same Type made on the same day by the Banks ratably according to their
respective Commitments.
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(d) Reborrowing. Within the limits of each Bank's Commitment, and
subject to the terms of this Agreement, the Borrower may from time to time
borrow, prepay, and reborrow Advances.
(e) Reduction of Commitment. The Borrower shall have the right,
upon at least three Business Days' irrevocable notice to the Agent, to
terminate in whole or reduce ratably in part the unused portion of the
Revolving A Commitments or the Revolving B Commitments from time to time;
provided that each partial reduction of the Revolving A Commitments or the
Revolving B Commitments shall be in the aggregate amount of $2,500,000.00 or in
integral multiples of $500,000.00 in excess thereof. Any reduction or
termination of the Revolving A Commitments or Revolving B Commitments pursuant
to this Section 2.01(e) shall be permanent, with no obligation of the Banks to
reinstate such Commitments.
(f) Notes. The indebtedness of the Borrower to each Bank
resulting from the Revolving A Advances owing to such Bank shall be evidenced
by a Revolving A Note of the Borrower in the maximum principal amount of such
Bank's Revolving A Commitment. The indebtedness of the Borrower to each Bank
resulting from the Revolving B Advances owing to such Bank shall be evidenced
by a Revolving B Note of the Borrower in the maximum principal amount of such
Bank's Revolving B Commitment.
Section 2.02. Borrowing Bases.
(a) The Revolving A Borrowing Base as of the date of this
Agreement has been set by the Majority Banks and acknowledged by the Borrower
as $3,000,000.00.
(b) The Revolving B Borrowing Base as of the date of this
Agreement has been set by the Majority Banks and acknowledged by the Borrower
as $2,000,000.00.
(c)(i) From the date hereof through the Maturity Date, so long as the
Majority Banks have allocated any value to the Revolving B Borrowing
Base, and subject to the further provisions of this Section 2.02, the
Borrowing Bases shall be subject to a quarterly redetermination by the
Majority Banks within 30 days after the receipt of each Oil and Gas
Reserve Report scheduled to be provided to the Agent pursuant to
Sections 5.06(c)(i) and (c)(ii)(A) on the basis of information,
including such Oil and Gas Reserve Reports, supplied by Borrower
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in compliance with the provisions of this Agreement, including such
additional data concerning pricing, quantities of production,
purchasers of production, and other information and engineering and
geological data with respect thereto as the Agent or any Bank may
reasonably request, together with all other information then available
to the Agent and the Banks.
(ii) If the Majority Banks have not allocated any value to
the Revolving B Borrowing Base, the Revolving A Borrowing Base shall
be subject to a semi-annual redetermination by the Majority Banks
within 30 days after the receipt of each Oil and Gas Reserve Report
scheduled to be provided to the Agent pursuant to Sections 5.06(c)(i)
and (c)(ii)(B) on the basis of information, including such Oil and Gas
Reserve Reports, supplied by Borrower in compliance with the
provisions of this Agreement, including such additional data
concerning pricing, quantities of production, purchasers of
production, and other information and engineering and geological data
with respect thereto as the Agent or any Bank may reasonably request,
together with all other information then available to the Agent and
the Banks.
(iii) Notwithstanding the foregoing, the Majority Banks
may, in the exercise of their good faith discretion, make
redeterminations of the Borrowing Bases from time to time on the basis
of information then available to the Agent and the Banks regarding the
Borrower's Oil and Gas Properties, but only one such redetermination
may be made during any fiscal year.
(d) The Borrower may request the Majority Banks to redetermine the
Borrowing Bases by providing a written request to the Agent, but only one such
request may be made during any fiscal year of the Borrower. In connection with
any such request, the Borrower shall provide the Agent and the Banks with an
interim reserve report prepared by the Borrower together with such other
information, including additional data concerning pricing, quantities of
production, purchasers of production, and other information and engineering and
geological data, as the Agent or any Bank may reasonably request. Within 30
days following the receipt of such interim reserve report and other
information, the Majority Banks shall make a redetermination of the Borrowing
Bases.
(e) Upon its redetermination of the Borrowing Bases, each Bank
shall notify the Agent in writing of the Revolving A Borrowing Base and
Revolving B Borrowing Base it has approved, and the Agent shall in turn notify
the Borrower of such redetermination. Until the Borrower receives such
notification from the Agent, the
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most recently established Revolving A Borrowing Base and Revolving B Borrowing
Base shall remain in effect, and thereafter the new Revolving A Borrowing Base
and Revolving B Borrowing Base as set forth in such notification shall be in
effect.
(f) The Borrowing Bases shall represent the determination by the
Majority Banks in their sole discretion, of the loan value of the Borrower's
and its Subsidiaries' Oil and Gas Properties subject to an Acceptable Security
Interest and the allocation between the Revolving A Borrowing Base and the
Revolving B Borrowing Base of such loan values, but the Majority Banks shall
make their determination in accordance with the applicable definitions and
provisions herein contained, each such Bank's standard policies regarding
energy lending, industry lending practices, consultation with the Agent and the
other Banks (but without requiring the approval thereof), and consideration for
the nature of the facilities established hereunder. The Borrower acknowledges
that the determination of the Borrowing Bases contains an equity cushion
(market value in excess of loan value), which is acknowledged by Borrower to be
essential for the adequate protection of the Agent and the Banks.
(g) The Borrower shall also have the right to reduce either or
both of the Borrowing Bases once during the period from October 1 to March 31
and once during the period from April 1 to September 30 during each year by
providing the Agent 30 days advance written notice of such reduction. The
Agent shall promptly send to each Bank a copy of such notice and such reduction
shall be effective on the date of the Agent's receipt of such notice.
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Section 2.03. Method of Borrowing.
(a) Notice. Each Borrowing shall be made pursuant to a Notice of
Borrowing (or by telephone notice promptly confirmed in writing by a Notice of
Borrowing), given not later than 10:00 a.m. (Dallas, Texas, time) (i) on the
third Business Day before the date of the proposed Borrowing, in the case of a
Eurodollar Rate Borrowing or (ii) on the Business Day of the proposed
Borrowing, in the case of a Base Rate Borrowing, by the Borrower to the Agent,
which shall in turn give to each Bank prompt notice of such proposed Borrowing
by telecopier or telex. Each Notice of a Borrowing shall be given by
telecopier or telex, confirmed immediately in writing specifying the
information required therein. In the case of a proposed Borrowing comprised of
Eurodollar Rate Advances, the Agent shall promptly notify each Bank of the
applicable interest rate under Section 2.08(b). Each Bank shall, before 10:00
a.m. (Dallas, Texas, time) on the date of such Borrowing, make available for
the account of its Applicable Lending Office to the Agent at its address
referred to in Section 9.02, or such other location as the Agent may specify by
notice to the Banks, in same day funds, such Bank's Pro Rata Share of such
Borrowing. After the Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Agent shall make such funds
available to the Borrower at its account with the Agent.
(b) Conversions and Continuations. The Borrower may elect to
Convert or continue any Borrowing under this Section 2.03 by delivering an
irrevocable Notice of Conversion or Continuation to the Agent at the Agent's
office no later than 10:00 a.m. (Dallas, Texas, time) (i) on the date which is
at least three Business Days in advance of the proposed Conversion or
continuation date in the case of a Conversion to or a continuation of a
Borrowing of the same Class comprised of Eurodollar Rate Advances and (ii) on
the Business Day of the proposed conversion date in the case of a Conversion to
a Borrowing of the same Class comprised of Base Rate Advances. Each such
Notice of Conversion or Continuation shall be in writing or by telex or
telecopier confirmed immediately in writing specifying the information required
therein. Promptly after receipt of a Notice of Conversion or Continuation
under this Section, the Agent shall provide each Bank with a copy thereof and,
in the case of a Conversion to or a Continuation of a Borrowing comprised of
Eurodollar Rate Advances, notify each Bank of the applicable interest rate
under Section 2.08(b).
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(c) Certain Limitations. Notwithstanding anything in paragraphs
(a) and (b) above:
(i) at no time shall there be more than five Interest
Periods applicable to outstanding Eurodollar Rate Advances;
(ii) if any Bank shall, at least one Business Day before
the date of any requested Borrowing, Conversion, or continuation,
notify the Agent that the introduction of, any change in, or any
change in the interpretation of any law or regulation makes it
unlawful, or that any central bank or other Governmental Authority
asserts that it is unlawful, for such Bank or its Eurodollar Lending
Office to perform its obligations under this Agreement to make
Eurodollar Rate Advances or to fund or maintain Eurodollar Rate
Advances, the right of the Borrower to select Eurodollar Rate Advances
from such Bank shall be suspended until such Bank shall notify the
Agent that the circumstances causing such suspension no longer exist,
and the Advance made by such Bank in respect of such Borrowing,
Conversion, or continuation shall be a Base Rate Advance;
(iii) if the Agent is unable to determine the Eurodollar
Rate for Eurodollar Rate Advances comprising any requested Borrowing,
the right of the Borrower to select Eurodollar Rate Advances for such
Borrowing or for any subsequent Borrowing shall be suspended until the
Agent shall notify the Borrower and the Banks that the circumstances
causing such suspension no longer exist, and each Advance comprising
such Borrowing shall be a Base Rate Advance;
(iv) if the Majority Banks shall, at least one Business
Day before the date of any requested Borrowing, notify the Agent that
the Eurodollar Rate for Eurodollar Rate Advances comprising such
Borrowing will not adequately reflect the cost to such Banks of making
or funding their respective Eurodollar Rate Advances, as the case may
be, for such Borrowing, the right of the Borrower to select Eurodollar
Rate Advances for such Borrowing or for any subsequent Borrowing shall
be suspended until the Agent shall notify the Borrower and the Banks
that the circumstances causing such suspension no longer exist, and
each Advance comprising such Borrowing shall be a Base Rate Advance;
and
(v) if the Borrower shall fail to select the duration or
continuation of any Interest Period for any Eurodollar Rate Advances
in accordance with the
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provisions contained in the definition of "Interest Period" in Section
1.01 and paragraph (b) above, the Agent shall forthwith so notify the
Borrower and the Banks and such Advances shall be made available to
the Borrower on the date of such Borrowing as Base Rate Advances or,
if an existing Advance, Convert into Base Rate Advances.
(d) Notices Irrevocable. Each Notice of Borrowing and Notice of
Conversion or Continuation shall be irrevocable and binding on the Borrower.
In the case of any Borrowing which the related Notice of Borrowing specifies is
to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each
Bank against any loss, out-of-pocket cost, or expense incurred by such Bank as
a result of any failure by the Borrower to fulfill on or before the date
specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article III including, without limitation, any loss
(including any loss of anticipated profits), cost, or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by such Bank to fund the Advance to be made by such Bank as part of such
Borrowing when such Advance, as a result of such failure, is not made on such
date.
(e) Agent Reliance. Unless the Agent shall have received notice
from a Bank before the date of any Borrowing that such Bank shall not make
available to the Agent such Bank's Pro Rata Share of such Borrowing, the Agent
may assume that such Bank has made its Pro Rata Share of such Borrowing
available to the Agent on the date of such Borrowing in accordance with
paragraph (a) of this Section 2.03 and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Bank shall not have so made its Pro Rata Share
of such Borrowing available to the Agent, such Bank and the Borrower severally
agree to immediately repay to the Agent on demand such corresponding amount,
together with interest on such amount, for each day from the date such amount
is made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, the interest rate applicable on such
day to Advances comprising such Borrowing and (ii) in the case of such Bank,
the Federal Funds Rate for such day. If such Bank shall repay to the Agent
such corresponding amount and interest as provided above, such corresponding
amount so repaid shall constitute such Bank's Advance as part of such Borrowing
for purposes of this Agreement even though not made on the same day as the
other Advances comprising such Borrowing.
(f) Bank Obligations Several. The failure of any Bank to make the
Advance to be made by it as part of any Borrowing shall not relieve any other
Bank of its obligation, if any, to make its Advance on the date of such
Borrowing. No Bank shall
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be responsible for the failure of any other Bank to make the Advance to be made
by such other Bank on the date of any Borrowing.
Section 2.04. Prepayment of Advances.
(a) Optional. The Borrower may prepay Advances, after giving by
10:00 a.m. (Dallas, Texas, time) (i) in the case of Eurodollar Rate Advances,
at least two Business Days' or (ii) in the case of Base Rate Advances, same
Business Day's, irrevocable prior written notice to the Agent stating the
proposed date and aggregate principal amount of such prepayment. If any such
notice is given, the Borrower shall prepay Advances comprising part of the same
Borrowing in whole or ratably in part in an aggregate principal amount equal to
the amount specified in such notice, together with accrued interest to the date
of such prepayment on the principal amount prepaid and amounts, if any,
required to be paid pursuant to Section 2.11 as a result of such prepayment
being made on such date; provided, however, that each partial prepayment with
respect to: (A) any Borrowing comprised of Base Rate Advances shall be made in
$100,000.00 multiples and in an aggregate principal amount such that after
giving effect thereto such Borrowing shall have a principal amount outstanding
of at least $200,000.00 and (B) any Borrowing comprised of Eurodollar Rate
Advances shall be made in $100,000.00 multiples and in an aggregate principal
amount such that after giving effect thereto such Borrowing shall have a
principal amount outstanding of at least $200,000.00. Full prepayments of any
Borrowing are permitted without restriction of amounts. Optional prepayments
shall be first applied to reduce the aggregate unpaid principal amount of
Revolving B Advances and, after the Revolving B Advances have been repaid in
full, to reduce the aggregate unpaid principal amount of the Revolving A
Advances.
(b) Borrowing Base Deficiency. (i) If the aggregate outstanding
amount of Revolving A Advances plus the Letter of Credit Exposure ever exceeds
the Revolving A Borrowing Base or (ii) if the aggregate outstanding amount of
Revolving B Advances ever exceeds the Revolving B Borrowing Base, the Borrower
shall, within ten days after receipt of written notice of such condition from
the Agent, elect by written notice to the Agent to take one or more of the
following actions to remedy the Borrowing Base deficiency:
(i) prepay the applicable Advances and, in the case of a
Revolving A Borrowing Base deficiency, if the Revolving A Advances
have been repaid in full, make deposits into the Cash Collateral
Account to provide cash collateral for the Letter of Credit Exposure,
such that the applicable Borrowing Base deficiency is cured within ten
days after the Borrower's written election;
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(ii) add additional Oil and Gas Properties subject to an
Acceptable Security Interest acceptable to the Majority Banks to the
Borrowing Bases such that the applicable Borrowing Base deficiency is
cured within 30 days after the Borrower's written election ; or
(iii) pay the deficiency in six equal monthly installments
in amounts sufficient for the prepayment of applicable Advances and,
in the case of a Revolving A Borrowing Base deficiency, if the
Advances have been repaid in full, make deposits into the Cash
Collateral Account to provide cash collateral for the Letter of Credit
Exposure such that the Revolving A Borrowing Base deficiency is
eliminated in a period satisfactory to the Majority Banks, but in no
event to exceed six months, by irrevocably dedicating an amount of the
monthly cash flow from the Borrower's and its Subsidiaries' Oil and
Gas Properties to the prepayment of the applicable Advances and, if
applicable, cash collateralization of the Letter of Credit Exposure.
Each prepayment pursuant to this Section 2.04(b) shall be accompanied by
accrued interest on the amount prepaid to the date of such prepayment and
amounts, if any, required to be paid pursuant to Section 2.11 as a result of
such prepayment being made on such date.
(c) Reduction of Commitments. On the date of each reduction of
the aggregate Commitments pursuant to Section 2.01(e), the Borrower agrees to
make a prepayment in respect of the outstanding amount of the Advances and the
Letter of Credit Exposure to the extent, if any, that the aggregate unpaid
principal amount of all Advances plus the Letter of Credit Exposure exceeds the
Commitments, as so reduced. Any amount paid under the preceding sentence in
respect of Letter of Credit Exposure shall be held as cash collateral under
Section 2.06(g). Each prepayment pursuant to this Section 2.04(c) shall be
accompanied by accrued interest on the amount prepaid to the date of such
prepayment and amounts, if any, required to be paid pursuant to Section 2.11 as
a result of such prepayment being made on such date.
(d) Equity Issuances. The Borrower shall repay the Revolving B
Advances by an amount equal to 75% of the net cash proceeds (after offering
expenses) received by the Borrower from the sale of any of the Borrower's
capital stock (other than any common stock sold in connection with sales to its
consultants, employees or directors pursuant to any employee or director stock
option plan, employee compensation
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arrangement, or other employee benefit plan), upon receipt of such proceeds,
whether at closing of such sale or thereafter. Each prepayment pursuant to
this Section 2.04(d) shall be accompanied by accrued interest on the amount
prepaid to the date of such prepayment and amounts, if any, required to be paid
pursuant to Section 2.11 as a result of such prepayment being made on such
date.
(e) Illegality. If any Bank shall notify the Agent and the
Borrower that the introduction of, any change in, or any change in the
interpretation of any law or regulation makes it unlawful, or that any central
bank or other governmental authority asserts that it is unlawful for such Bank
or its Eurodollar Lending Office to perform its obligations under this
Agreement to maintain any Eurodollar Rate Advances of such Bank then
outstanding hereunder, (i) the Borrower shall, no later than 10:00 a.m.
(Dallas, Texas, time), (A) if not prohibited by law, on the last day of the
Interest Period for each outstanding Eurodollar Rate Advance made by such Bank
or (B) if required by such notice, on the second Business Day following its
receipt of such notice, prepay all of the Eurodollar Rate Advances made by such
Bank then outstanding, together with accrued interest on the principal amount
prepaid to the date of such prepayment and amounts, if any, required to be paid
pursuant to Section 2.11 as a result of such prepayment being made on such
date, (ii) such Bank shall simultaneously make a Base Rate Advance to the
Borrower on such date in an amount equal to the aggregate principal amount of
the Eurodollar Rate Advances prepaid to such Bank, and (iii) the right of the
Borrower to select Eurodollar Rate Advances from such Bank for any subsequent
Borrowing shall be suspended until such Bank giving notice referred to above
shall notify the Agent that the circumstances causing such suspension no longer
exist; provided that, each Bank represents and warrants to the Borrower that as
of the later of (i) the Closing Date or (ii) the date on which it shall have
executed an Assignment and Acceptance pursuant to Section 9.06(a), it has no
knowledge that it would be unlawful for such Bank or its Eurodollar Lending
Office to make Eurodollar Rate Advances as contemplated by this Agreement.
(f) No Additional Right; Ratable Prepayment. The Borrower shall
have no right to prepay any principal amount of any Advance except as provided
in this Section 2.04, and all notices given pursuant to this Section 2.04 shall
be irrevocable and binding upon the Borrower. Each payment of any Advance
pursuant to this Section 2.04 shall be made in a manner such that all Advances
comprising part of the same Borrowing are paid in whole or ratably in part.
(g) Application. Each prepayment of Advances after the
Termination Date shall be applied to the scheduled principal installments in
the inverse order of their maturity.
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Section 2.05. Repayment of Advances.
(a) The Borrower shall repay to the Agent for the ratable benefit
of the Banks the outstanding principal amount of each Advance on the Maturity
Date.
(b) After the Termination Date, the Borrower shall repay to the
Agent for the ratable benefit of the Banks the outstanding principal amount of
the Revolving A Advances and Revolving B Advances pro rata based on the
outstanding principal amount of the Revolving A Advances and Revolving B
Advances on the Termination Date or, if the Advances have been repaid in full
and any Letters of Credit remain outstanding, provide cash collateral for the
Letter of Credit Exposure in equal installments equal to 1/6 of the outstanding
principal amount of the Advances on the Termination Date. Each of the first
five of such installments shall be due on the last Business Day of each fiscal
quarter beginning with the fiscal quarter ending December 31, 2000 and the last
installment shall be due on the Maturity Date.
Section 2.06. Letters of Credit.
(a) Commitment. (i) From time to time from the date of this
Agreement until the Termination Date, at the request of the Borrower, the
Issuing Bank shall, on the terms and conditions hereinafter set forth, issue,
increase, or extend the expiration date of Letters of Credit for the account of
the Borrower on any Business Day, and (ii) from the Termination Date until
three months before the Maturity Date, at the request of the Borrower, the
Issuing Bank shall, on the terms and conditions hereinafter set forth, extend
the expiration date of Letters of Credit for the account of the Borrower on any
Business Day.
(b) Certain Requirements. No Letter of Credit shall be issued,
increased, or extended:
(i) unless such issuance, increase, extension or
conversion would not cause the Letter of Credit Exposure to exceed the
lesser of (A) $1,000,000.00 or (B) the lesser of (1) the aggregate
Revolving A Commitments less the aggregate outstanding principal
amount of all Advances or (2) the Revolving A Borrowing Base less the
aggregate outstanding principal amount of all Revolving A Advances;
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(ii) unless such Letter of Credit has an Expiration Date
not later than the earlier of (A) 12 months after the date of issuance
thereof (or, if extendable beyond such period, unless such Letter of
Credit is cancelable upon at least 30 days' notice given by the
Issuing Bank to the beneficiary of such Letter of Credit) or (B) the
Maturity Date;
(iii) unless such Letter of Credit Documents are in form
and substance acceptable to the Issuing Bank in its sole discretion;
(iv) unless such Letter of Credit is a standby letter of
credit not supporting the repayment of indebtedness for borrowed money
of any Person; and
(v) unless the Borrower has delivered to the Issuing Bank
a completed and executed Letter of Credit Application.
(c) Participations. Upon the date of the issuance or increase of
a Letter of Credit, the Issuing Bank shall be deemed to have sold to each other
Bank and each other Bank shall have been deemed to have purchased from the
Issuing Bank a participation in the related Letter of Credit Obligations equal
to such Bank's Pro Rata Share at such date, and such sale and purchase shall
otherwise be in accordance with the terms of this Agreement. The Issuing Bank
shall promptly notify each such participant Bank by telex, telephone, or
telecopy of each Letter of Credit issued, increased, or extended and the actual
dollar amount of such Bank's participation in such Letter of Credit.
(d) Issuing. Each Letter of Credit shall be issued, increased, or
extended pursuant to a Letter of Credit Application (or by telephone notice
promptly confirmed in writing by a Letter of Credit Application), given not
later than 10:00 a.m. (Dallas, Texas, time) on the fifth Business Day before
the date of the proposed issuance, increase, or extension of the Letter of
Credit, and the Agent shall give to each Bank prompt notice of thereof by
telex, telephone, or telecopy. Each Letter of Credit Application shall be
given by telecopier or telex, confirmed immediately in writing, specifying the
information required therein. After the Agent's receipt of such Letter of
Credit Application and upon fulfillment of the applicable conditions set forth
in Article III, the Agent shall issue, increase, or extend such Letter of
Credit for the account of the Borrower. Each Letter of Credit Application
shall be irrevocable and binding on the Borrower.
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(e) Reimbursement. The Borrower hereby agrees to pay on demand to
the Issuing Bank an amount equal to any amount paid by the Issuing Bank under
any Letter of Credit. In the event the Issuing Bank makes a payment pursuant
to a request for draw presented under a Letter of Credit and such payment is
not promptly reimbursed by the Borrower upon demand, the Issuing Bank shall
give the Agent notice of the Borrower's failure to make such reimbursement and
the Agent shall promptly notify each Bank of the amount necessary to reimburse
the Issuing Bank. Upon such notice from the Agent, each Bank shall promptly
reimburse the Issuing Bank for such Bank's Pro Rata Share of such amount. To
the extent that the Revolving A Borrowing Base exceeds the sum of all
outstanding Revolving A Advances, such reimbursement shall be deemed for all
purposes of this Agreement to be a Revolving A Advance to the Borrower
transferred at the Borrower's request to the Issuing Bank; then, the remainder
of such reimbursement shall be deemed for all purposes of this Agreement to be
a Revolving B Advance to the Borrower transferred at the Borrower's request to
the Issuing Bank. If such reimbursement is not made by any Bank to the Issuing
Bank on the same day on which the Agent notifies such Bank to make
reimbursement to the Issuing Bank hereunder, such Bank shall pay interest on
its Pro Rata Share thereof to the Issuing Bank at a rate per annum equal to the
Federal Funds Rate. The Borrower hereby unconditionally and irrevocably
authorizes, empowers, and directs the Agent and the Banks to record and
otherwise treat such reimbursements to the Issuing Bank as Base Rate Advances
under a Borrowing requested by the Borrower to reimburse the Issuing Bank which
have been transferred to the Issuing Bank at the Borrower's request.
(f) Obligations Unconditional. The obligations of the Borrower
under this Agreement in respect of each Letter of Credit shall be unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of
this Agreement under all circumstances, including, without limitation, the
following circumstances:
(i) any lack of validity or enforceability of any Letter
of Credit Documents;
(ii) any amendment or waiver of, or any consent to,
departure from any Letter of Credit Documents;
(iii) the existence of any claim, set-off, defense, or
other right which the Borrower may have at any time against any
beneficiary or transferee of such Letter of Credit (or any Persons for
whom any such beneficiary or any such transferee may be acting), the
Issuing Bank, or any other person or entity,
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whether in connection with this Agreement, the transactions
contemplated in this Agreement or in any Letter of Credit Documents, or
any unrelated transaction;
(iv) any statement or any other document presented under
such Letter of Credit proving to be forged, fraudulent, invalid, or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect to the extent the Issuing Bank would not be
liable therefor pursuant to the following paragraph (g); or
(v) payment by the Issuing Bank under such Letter of
Credit against presentation of a draft or certificate which does not
comply with the terms of such Letter of Credit;
provided, however, that nothing contained in this paragraph (f) shall be deemed
to constitute a waiver of any remedies of the Borrower in connection with the
Letters of Credit or the Borrower's rights under Section 2.06(g) below.
(g) Liability of Issuing Bank. The Borrower assumes all risks of
the acts or omissions of any beneficiary or transferee of any Letter of Credit
with respect to its use of such Letter of Credit. Neither the Issuing Bank nor
any of its officers or directors shall be liable or responsible for:
(i) the use which may be made of any Letter of Credit or
any acts or omissions of any beneficiary or transferee in connection
therewith;
(ii) the validity, sufficiency, or genuineness of
documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient,
fraudulent, or forged;
(iii) payment by the Issuing Bank against presentation of
documents which do not comply with the terms of a Letter of Credit,
including failure of any documents to bear any reference or adequate
reference to the relevant Letter of Credit; or
(iv) any other circumstances whatsoever in making or
failing to make payment under any Letter of Credit (INCLUDING THE
ISSUING BANK'S OWN NEGLIGENCE),
except that the Borrower shall have a claim against the Issuing Bank, and the
Issuing
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Bank shall be liable to the Borrower, to the extent of any direct, as
opposed to consequential, damages suffered by the Borrower which the Borrower
proves were caused by (A) the Issuing Bank's willful misconduct or gross
negligence in determining whether documents presented under a Letter of Credit
comply with the terms of such Letter of Credit or (B) the Issuing Bank's
willful failure to make lawful payment under any Letter of Credit after the
presentation to it of a draft and certificate strictly complying with the terms
and conditions of such Letter of Credit. In furtherance and not in limitation
of the foregoing, the Issuing Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
(h) Cash Collateral Account.
(i) If the Borrower is required to deposit funds in the
Cash Collateral Account pursuant to Section 2.04(b) or (c), 2.05(b),
7.02(b), or 7.03(b), then the Borrower and the Agent shall establish
the Cash Collateral Account and the Borrower shall execute any
documents and agreements, including the Agent's standard form
assignment of deposit accounts, that the Agent requests in connection
therewith to establish the Cash Collateral Account and grant the Agent
a first priority security interest in such account and the funds
therein. The Borrower hereby pledges to the Agent and grants the
Agent a security interest in the Cash Collateral Account, whenever
established, all funds held in the Cash Collateral Account from time
to time, and all proceeds thereof as security for the payment of the
Obligations.
(ii) So long as no Event of Default exists, (A) the Agent
may apply the funds held in the Cash Collateral Account only to the
reimbursement of any Letter of Credit Obligations and (B) the Agent
shall release to the Borrower at the Borrower's written request any
funds held in the Cash Collateral Account in an amount up to but not
exceeding the excess, if any (immediately prior to the release of any
such funds), of the total amount of funds held in the Cash Collateral
Account over the Letter of Credit Exposure. During the existence of
any Event of Default, the Agent may apply any funds held in the Cash
Collateral Account to the Obligations in any order determined by the
Agent, regardless of any Letter of Credit Exposure which may remain
outstanding. The Agent may in its sole discretion at any time release
to the Borrower any funds held in the Cash Collateral Account.
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(iii) The Agent shall exercise reasonable care in the
custody and preservation of any funds held in the Cash Collateral
Account and shall be deemed to have exercised such care if such funds
are accorded treatment substantially equivalent to that which the
Agent accords its own property, it being understood that the Agent
shall not have any responsibility for taking any necessary steps to
preserve rights against any parties with respect to any such funds.
Section 2.07. Fees.
(a) Commitment Fees.
(i) Subject to the following clause (ii), the Borrower
agrees to pay to the Agent for the account of each Bank a commitment
fee of .50% per annum on the average daily amount by which (A) (1) the
lesser of (I) such Bank's Pro Rata Share of the Revolving A Borrowing
Base and (II) such Bank's Commitment exceeds (2) the sum of (I) such
Bank's outstanding Revolving A Advances and (II) such Bank's Pro Rata
Share of the Letter of Credit Exposure and (B) (1) the lesser of (I)
such Bank's Pro Rata Share of the Revolving B Borrowing Base and (II)
such Bank's Revolving B Commitment exceeds (2) the outstanding
Revolving B Advances, from the Effective Date until the Termination
Date.
(ii) The Borrower may from time to time designate by
written notice to the Agent a portion of either Borrowing Base or
portions of both Borrowing Bases as inactive. The commitment fee for
the portion or portions declared inactive shall be .25% per annum;
provided that, if the Borrower at any time requests a Borrowing that
would use a portion of the Borrowing Bases designated as inactive, the
Borrower shall pay on the date of such Borrowing to the Agent for the
ratable benefit of the Banks, a fee equal to (A) .25% per annum times
(B) (1) the lesser of (I) 90 and (II) the number of days the portion
of the Borrowing Bases used as part of such Borrowing was designated
as inactive times (C) an amount equal to the portion of the inactive
Borrowing Bases used as part of such Borrowing.
(iii) The commitment fees shall be due and payable
quarterly in arrears on the last day of each March, June, September,
and December during the term of this Agreement and on the Termination
Date.
(b) Arrangement Fees. The Borrower agrees to pay to the Agent for
the benefit of the Agent the arrangement fee described in the letter dated
October 24, 1997, from the Agent to the Borrower (the "Agent's Fee Letter").
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(c) Engineering Fees. The Borrower agrees to pay to the Agent an
engineering fee of $5,000.00 on the date of each delivery of information
required under Section 5.06(c).
(d) Letter of Credit Fees. The Borrower agrees to pay to the
Agent for the pro rata benefit of the Banks a fee for each Letter of Credit
issued hereunder equal to 1.00% per annum on the face amount of such Letter of
Credit, but with minimum annual fee of $750.00 on each Letter of Credit. Each
such fee shall be payable annually in advance on the date of the issuance,
increase or extension of the Letter of Credit, but, in the case of an increase
or extension only, on the amount of such increase or for the period of such
extension.
Section 2.08. Interest. The Borrower shall pay interest on the
unpaid principal amount of each Advance made by each Bank from the date of such
Advance until such principal amount shall be paid in full, at the following
rates per annum:
(a) Base Rate Advances. If such Advance is a Base Rate Advance, a
rate per annum equal at all times to the Adjusted Base Rate in effect from time
to time plus the Applicable Margin in effect from time to time, payable in
arrears on the last day of March, June, September, and December and on the date
such Base Rate Advance shall be paid in full, provided that any amount of
principal which is not paid when due (whether at stated maturity, by
acceleration, or otherwise) shall bear interest from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate
per annum equal at all times to the Adjusted Base Rate in effect from time to
time plus the Applicable Margin plus 3.00% per annum.
(b) Eurodollar Rate Advances. If such Advance is a Eurodollar
Rate Advance, a rate per annum equal at all times during the Interest Period
for such Advance to the Eurodollar Rate for such Interest Period plus the
Applicable Margin in effect from time to time, payable on the last day of such
Interest Period, and, in the case of six-month Interest Periods, on the day
which occurs during such Interest Period three months from the first day of
such Interest Period, provided that any amount of principal which is not paid
when due (whether at stated maturity, by acceleration, or otherwise) shall bear
interest from the date on which such amount is due until such amount is paid in
full, payable on demand, at a rate per annum equal at all times to the Adjusted
Base Rate in effect from time to time plus the Applicable Margin plus 3.00% per
annum.
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(c) Additional Interest on Eurodollar Rate Advances. The Borrower
shall pay to each Bank, so long as any such Bank shall be required under
regulations of the Federal Reserve Board to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities,
additional interest on the unpaid principal amount of each Eurodollar Rate
Advance of such Bank, from the effective date of such Advance until such
principal amount is paid in full, at an interest rate per annum equal at all
times to the remainder obtained by subtracting (A) the Eurodollar Rate for the
Interest Period for such Advance from (B) the rate obtained by dividing such
Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage of such Bank for such Interest Period, payable on each date on which
interest is payable on such Advance. Such additional interest payable to any
Bank shall be determined by such Bank and notified to the Borrower through the
Agent (such notice to include the calculation of such additional interest,
which calculation shall be conclusive in the absence of manifest error).
(d) Usury.
(i) If, with respect to any Bank, the effective rate of
interest contracted for under the Credit Documents, including the
stated rates of interest and fees contracted for hereunder and any
other amounts contracted for under the Credit Documents which are
deemed to be interest, at any time exceeds the Maximum Rate, then the
outstanding principal amount of the loans made by such Bank hereunder
shall bear interest at a rate which would make the effective rate of
interest for such Bank under the Credit Documents equal the Maximum
Rate until the difference between the amounts which would have been
due at the stated rates and the amounts which were due at the Maximum
Rate (the "Lost Interest") has been recaptured by such Bank.
(ii) If, when the loans made hereunder are repaid in full,
the Lost Interest has not been fully recaptured by such Bank pursuant
to the preceding paragraph, then, to the extent permitted by law, for
the loans made hereunder by such Bank the interest rates charged under
Section 2.08 hereunder shall be retroactively increased such that the
effective rate of interest under the Credit Documents was at the
Maximum Rate since the effectiveness of this Agreement to the extent
necessary to recapture the Lost Interest not recaptured pursuant to
the preceding sentence and, to the extent allowed by law, the Borrower
shall pay to such Bank the amount of the Lost Interest remaining to be
recaptured by such Bank.
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(iii) NOTWITHSTANDING the foregoing or any other term in
this Agreement and the Credit Documents to the contrary, it is the
intention of each Bank and the Borrower to conform strictly to any
applicable usury laws. Accordingly, if any Bank contracts for,
charges, or receives any consideration which constitutes interest in
excess of the Maximum Rate, then any such excess shall be canceled
automatically and, if previously paid, shall at such Bank's option be
applied to the outstanding amount of the loans made hereunder by such
Bank or be refunded to the Borrower.
Section 2.09. Payments and Computations.
(a) Payment Procedures. The Borrower shall make each payment
under this Agreement and under the Notes not later than 10:00 a.m. (Dallas,
Texas, time) on the day when due in Dollars to the Agent at 000 Xxxx Xxxxxx,
00xx Xxxxx, Xxxxxx, Xxxxx 00000 (or such other location as the Agent shall
designate in writing to the Borrower), in same day funds. The Agent shall
promptly thereafter cause to be distributed like funds relating to the payment
of principal, interest or fees ratably (other than amounts payable solely to
the Agent, the Issuing Bank, or a specific Bank pursuant to Section 2.07(b),
2.08(c), 2.11, 2.12, 2.13, 8.05, or 9.07, but after taking into account
payments effected pursuant to Section 9.04) to the Banks for the account of
their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any Bank or the Issuing Bank to such
Bank for the account of its Applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement.
(b) Computations. All computations of interest based on the Base
Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as
the case may be, and all computations of interest based on the Eurodollar Rate
and the Federal Funds Rate and of fees shall be made by the Agent, on the basis
of a year of 360 days, in each case for the actual number of days (including
the first day, but excluding the last day) occurring in the period for which
such interest or fees are payable. Each determination by the Agent of an
interest rate or fee shall be conclusive and binding for all purposes, absent
manifest error.
(c) Non-Business Day Payments. Whenever any payment shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or fees, as the case
may be; provided, however,
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that if such extension would cause payment of interest on or principal of
Eurodollar Rate Advances to be made in the next following calendar month, such
payment shall be made on the next preceding Business Day.
(d) Agent Reliance. Unless the Agent shall have received written
notice from the Borrower prior to the date on which any payment is due to the
Banks that the Borrower shall not make such payment in full, the Agent may
assume that the Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such date an amount equal to the amount then due
such Bank. If and to the extent the Borrower shall not have so made such
payment in full to the Agent, each Bank shall repay to the Agent forthwith on
demand such amount distributed to such Bank, together with interest, for each
day from the date such amount is distributed to such Bank until the date such
Bank repays such amount to the Agent, at the Federal Funds Rate for such day.
Section 2.10. Sharing of Payments, Etc. If any Bank shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Advances or Letter of Credit
Obligations made by it in excess of its Pro Rata Share of payments on account
of the Advances or Letter of Credit Obligations obtained by all the Banks, such
Bank shall notify the Agent and forthwith purchase from the other Banks such
participations in the Advances made by them or Letter of Credit Obligations
held by them as shall be necessary to cause such purchasing Bank to share the
excess payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Bank, such purchase from each Bank shall be rescinded and such Bank shall repay
to the purchasing Bank the purchase price to the extent of such Bank's ratable
share (according to the proportion of (a) the amount of the participation sold
by such Bank to the purchasing Bank as a result of such excess payment to (b)
the total amount of such excess payment) of such recovery, together with an
amount equal to such Bank's ratable share (according to the proportion of (a)
the amount of such Bank's required repayment to the purchasing Bank to (b) the
total amount of all such required repayments to the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in respect of
the total amount so recovered. The Borrower agrees that any Bank so purchasing
a participation from another Bank pursuant to this Section 2.10 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Bank were the direct creditor of the Borrower in the amount of such
participation.
Section 2.11. Breakage Costs. If (a) any payment of principal of
any Eurodollar Rate Advance is made other than on the last day of the Interest
Period for
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such Advance, whether as a result of any payment pursuant to Section 2.04, the
acceleration of the maturity of the Notes pursuant to Article VII, or
otherwise, or (b) the Borrower fails to make a principal or interest payment
with respect to any Eurodollar Rate Advance on the date such payment is due and
payable, the Borrower shall, within 10 days of any written demand sent by any
Bank to the Borrower through the Agent accompanied by the certificate described
below, pay to the Agent for the account of such Bank any amounts required to
compensate such Bank for any additional losses, out-of-pocket costs or expenses
which it may reasonably incur as a result of such payment or nonpayment,
including, without limitation, any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by any Bank to fund or maintain such
Advance. Any Bank demanding payment under this Section 2.11 shall deliver to
the Borrower and the Agent a statement reasonably setting forth the amount and
manner of determining such loss, cost or expense, which statement shall be
conclusive and binding for all purposes, absent manifest error.
Section 2.12. Increased Costs.
(a) Eurodollar Rate Advances. If, due to either (i) the
introduction of, any change (other than any change by way of imposition or
increase of reserve requirements included in the Eurodollar Rate Reserve
Percentage) in, or any change in the interpretation of any law or regulation or
(ii) the compliance with any law or regulation or any guideline or request from
any central bank or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to any Bank of agreeing
to make or making, funding, or maintaining Eurodollar Rate Advances (other than
any increase in income, profits or franchise taxes), then the Borrower shall
from time to time, within 10 days after written demand by such Bank accompanied
by the below-described certificate (with a copy of such demand to the Agent),
immediately pay to the Agent for the account of such Bank additional amounts
sufficient to compensate such Bank for such increased cost. The Borrower will
not be responsible for paying any amounts pursuant to this Section 2.12(a)
accruing prior to 180 days prior to the receipt by the Borrower of the
certificate referred to in the preceding sentence; provided that if any law,
rule or regulation or any interpretation or administration thereof, or any
request or directive giving rise to such Bank's right to compensation under
this paragraph has retroactive effect, such Bank shall be entitled to claim
compensation under this paragraph for the period commencing on such date of
retroactive effect through the date of adoption or change or promulgation
thereof without regard to the foregoing limitation. A certificate identifying
with reasonable specificity the basis for and the amount of such increased cost
and detailing the
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calculation of such cost submitted to the Borrower and the Agent by such Bank
shall be conclusive and binding for all purposes, absent manifest error. Any
Bank claiming any additional amounts pursuant to this Section 2.12 shall use
its commercially reasonable efforts (consistent with its internal policies and
legal and regulatory restrictions) to avoid or minimize any additional amounts
that otherwise would be payable pursuant to this Section, including changing
the jurisdiction of its Applicable Lending Office if such change would
eliminate the amount of any such additional amounts which may thereafter
accrue; provided that no such change or action shall be required to be made or
taken if, in the reasonable judgment of such Bank, such change would be
disadvantageous to such Bank.
(b) Capital Adequacy. If any Bank or the Issuing Bank determines
in good faith that compliance with any law or regulation or any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law) affects or would affect the amount of capital required
or expected to be maintained by such Bank or the Issuing Bank or any
corporation controlling such Bank or the Issuing Bank and that the amount of
such capital is increased by or based upon the existence of such Bank's
commitment to lend or the Issuing Bank's commitment to issue the Letters of
Credit and other commitments of this type, then, upon 30 days' prior written
notice by such Bank or the Issuing Bank accompanied by the below-described
certificate (with a copy of any such demand to the Agent), the Borrower shall
immediately pay to the Agent for the account of such Bank or to the Issuing
Bank, as the case may be, from time to time as specified by such Bank or the
Issuing Bank, additional amounts sufficient to compensate such Bank or the
Issuing Bank, in light of such circumstances, (i) with respect to such Bank, to
the extent that such Bank reasonably determines such increase in capital to be
allocable to the existence of such Bank's commitment to lend under this
Agreement and (ii) with respect to the Issuing Bank, to the extent that the
Issuing Bank reasonably determines such increase in capital to be allocable to
the issuance or maintenance of the Letters of Credit. The Borrower will not be
responsible for paying any amounts pursuant to this Section 2.12(a) accruing
prior to 180 days prior to the receipt by the Borrower of the certificate
referred to in the preceding sentence; provided that if any law, rule or
regulation or any interpretation or administration thereof, or any request or
directive giving rise to such Bank's right to compensation under this paragraph
has retroactive effect, such Bank shall be entitled to claim compensation under
this paragraph for the period commencing on such date of retroactive effect
through the date of adoption or change or promulgation thereof without regard
to the foregoing limitation. A certificate as to such amounts and detailing
the calculation of such amounts submitted to the Borrower by such Bank or the
Issuing Bank shall be conclusive and binding for all purposes, absent manifest
error.
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(c) Letters of Credit. If any change in any law or regulation or
in the interpretation thereof by any court or administrative or Governmental
Authority charged with the administration thereof shall either (i) impose,
modify, or deem applicable any reserve, special deposit, or similar requirement
against letters of credit issued by, or assets held by, or deposits in or for
the account of, the Issuing Bank or (ii) impose on the Issuing Bank any other
condition regarding the provisions of this Agreement relating to the Letters of
Credit or any Letter of Credit Obligations, and the result of any event
referred to in the preceding clause (i) or (ii) shall be to increase the cost
to the Issuing Bank of issuing or maintaining any Letter of Credit (which
increase in cost shall be determined by the Issuing Bank's reasonable
allocation of the aggregate of such cost increases resulting from such event),
then, within 10 days after written demand by the Issuing Bank accompanied by
the below-described certificate, the Borrower shall pay to the Issuing Bank,
from time to time as specified by the Issuing Bank, additional amounts which
shall be sufficient to compensate the Issuing Bank for such increased cost.
The Borrower will not be responsible for paying any amounts pursuant to this
Section 2.12(a) accruing prior to 180 days prior to the receipt by the Borrower
of the certificate referred to in the preceding sentence; provided that if any
law, rule or regulation or any interpretation or administration thereof, or any
request or directive giving rise to such Bank's right to compensation under
this paragraph has retroactive effect, such Bank shall be entitled to claim
compensation under this paragraph for the period commencing on such date of
retroactive effect through the date of adoption or change or promulgation
thereof without regard to the foregoing limitation. A certificate as to such
increased cost incurred by the Issuing Bank, as a result of any event mentioned
in clause (i) or (ii) above, and detailing the calculation of such increased
costs submitted by the Issuing Bank to the Borrower, shall be conclusive and
binding for all purposes, absent manifest error.
Section 2.13. Taxes.
(a) No Deduction for Certain Taxes. Any and all payments by the
Borrower shall be made, in accordance with Section 2.09, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Bank, the Issuing Bank, and the Agent, taxes
imposed on its income, and franchise taxes imposed on it, by the jurisdiction
under the laws of which such Bank, the Issuing Bank, or the Agent (as the case
may be) is organized or any political subdivision of the jurisdiction (all such
non-excluded taxes, levies, imposts, deductions, charges,
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withholdings and liabilities being hereinafter referred to as "Taxes") and, in
the case of each Bank and the Issuing Bank, Taxes by the jurisdiction of such
Bank's Applicable Lending Office or any political subdivision of such
jurisdiction. If the Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable to any Bank, the Issuing Bank, or the
Agent, (i) the sum payable shall be increased as may be necessary so that,
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.13), such Bank, the Issuing Bank,
or the Agent (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made; provided, however, that if the
Borrower's obligation to deduct or withhold Taxes is caused solely by such
Bank's, the Issuing Bank's, or the Agent's failure to provide the forms
described in paragraph (d) of this Section 2.13 and such Bank, the Issuing
Bank, or the Agent could have provided such forms, no such increase shall be
required; (ii) the Borrower shall make such deductions; and (iii) the Borrower
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) Other Taxes. In addition, within 10 days after written
demand, the Borrower agrees to pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement, the Notes, or the other Credit
Documents (hereinafter referred to as "Other Taxes").
(c) Indemnification. THE BORROWER INDEMNIFIES EACH BANK, THE
ISSUING BANK, AND THE AGENT FOR THE FULL AMOUNT OF TAXES OR OTHER TAXES
(INCLUDING, WITHOUT LIMITATION, ANY TAXES OR OTHER TAXES IMPOSED BY ANY
JURISDICTION ON AMOUNTS PAYABLE UNDER THIS SECTION 2.13) PAID BY SUCH BANK, THE
ISSUING BANK, OR THE AGENT (AS THE CASE MAY BE) AND ANY LIABILITY (INCLUDING
INTEREST AND EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR
NOT SUCH TAXES OR OTHER TAXES WERE CORRECTLY OR LEGALLY ASSERTED. EACH PAYMENT
REQUIRED TO BE MADE BY THE BORROWER IN RESPECT OF THIS INDEMNIFICATION SHALL BE
MADE TO THE AGENT FOR THE BENEFIT OF ANY PARTY CLAIMING SUCH INDEMNIFICATION
WITHIN 30 DAYS FROM THE DATE THE BORROWER RECEIVES WRITTEN DEMAND THEREFOR FROM
THE AGENT ON BEHALF OF ITSELF AS AGENT, THE ISSUING BANK, OR ANY SUCH BANK. IF
ANY BANK, THE AGENT, OR THE ISSUING BANK RECEIVES A REFUND IN
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RESPECT OF ANY TAXES PAID BY THE BORROWER UNDER THIS PARAGRAPH (C), SUCH BANK,
THE AGENT, OR THE ISSUING BANK, AS THE CASE MAY BE, SHALL PROMPTLY PAY TO THE
BORROWER THE BORROWER'S SHARE OF SUCH REFUND.
(d) Foreign Bank Withholding Exemption. Each Bank and Issuing
Bank that is not incorporated under the laws of the United States of America or
a state thereof agrees that it shall deliver to the Borrower and the Agent (i)
two duly completed copies of United States Internal Revenue Service Form 1001
or 4224 or successor applicable form, as the case may be, certifying in each
case that such Bank is entitled to receive payments under this Agreement and
the Notes payable to it, without deduction or withholding of any United States
federal income taxes, (ii) if applicable, an Internal Revenue Service Form W-8
or W-9 or successor applicable form, as the case may be, to establish an
exemption from United States backup withholding tax, and (iii) any other
governmental forms which are necessary or required under an applicable tax
treaty or otherwise by law to reduce or eliminate any withholding tax, which
have been reasonably requested by the Borrower. Each Bank which delivers to
the Borrower and the Agent a Form 1001 or 4224 and Form W-8 or W-9 pursuant to
the next preceding sentence further undertakes to deliver to the Borrower and
the Agent two further copies of the said letter and Form 1001 or 4224 and Form
W-8 or W-9, or successor applicable forms, or other manner of certification, as
the case may be, on or before the date that any such letter or form expires or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent letter and form previously delivered by it to the Borrower and the
Agent, and such extensions or renewals thereof as may reasonably be requested
by the Borrower and the Agent certifying in the case of a Form 1001 or 4224
that such Bank is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes. If an
event (including without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any delivery required by the preceding
sentence would otherwise be required which renders all such forms inapplicable
or which would prevent any Bank from duly completing and delivering any such
letter or form with respect to it and such Bank advises the Borrower and the
Agent that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax, and in the case of a Form W-8
or W-9, establishing an exemption from United States backup withholding tax,
such Bank shall not be required to deliver such letter or forms. The Borrower
shall withhold tax at the rate and in the manner required by the laws of the
United States with respect to payments made to a Bank failing to timely provide
the requisite Internal Revenue Service forms.
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Section 2.14. Replacement of Bank. If at any time (a) any of the
provisions of Sections 2.11, 2.12 or 2.13 become applicable to and are utilized
by any Bank so as to cause the Borrower to pay any material amount to such Bank
under any such Section, (b) any Bank gives a notice pursuant to Section
2.03(c)(i) or 2.03(c)(iv), or (c) a Bank becomes a Nonconsenting Bank (as
hereinafter defined), the Borrower shall have the right to replace such Bank
with another Person; provided that (i) such new Person shall be acceptable to
the Agent and such new Person shall execute an Assignment and Acceptance, (ii)
the Borrower shall have no right to replace the Agent in its capacity as a
Bank, (iii) neither the Agent, nor any Bank, shall have any obligation to the
Borrower to find such other Person, and (iv) in the event of a replacement of a
Nonconsenting Bank or a Bank utilizing Section 2.03, 2.11, 2.12 or 2.13, in
order for the Borrower to be entitled to replace such a Bank, such replacement
must take place no later than 180 days after (A) the date the Nonconsenting
Bank shall notify Borrower and the Agent of its failure to agree to any
requested consent, waiver or other modification, (B) the Bank demanded payment
under Section 2.11, 2.12 or 2.13, as applicable, or (C) the Bank gave notice
under Section 2.03. Each Bank (other than the Agent) agrees to its replacement
at the option of the Borrower pursuant to this Section 2.14 and in accordance
with Section 9.06; provided that the successor Bank shall purchase without
recourse such Bank's interest in the Obligations of the Borrower to such Bank
for cash in an aggregate amount equal to aggregate unpaid principal thereof,
all unpaid interest accrued thereon, all unpaid commitment fees accrued for the
account of such Bank, any breakage costs incurred by the selling Bank because
of the prepayment of any Eurodollar Rate Advances, all other fees (if any)
applicable thereto and all other amounts then owing to such Bank hereunder or
under any other Credit Document and the Borrower and its Subsidiaries shall
execute a release addressed to such Bank releasing such Bank from all claims
arising in connection with the Credit Documents. In the event that (x) the
Borrower or Agent has requested a Bank to consent to a departure or waiver of
any of the provisions of the Credit Documents or to agree to any other
modification thereto, (y) the consent, waiver or other modification in question
requires the agreement of the Majority Banks or Banks, as the case may be, in
accordance with the terms of Section 9.01 and (z) Banks holding at least 80% of
the unpaid principal amounts outstanding under the Notes (or if no such amounts
are outstanding, 80% of the Pro Rata Percentages) have agreed to such consent,
waiver or other modification, then any Bank who does not agree to such consent,
waiver or other modification shall be deemed a Nonconsenting Bank.
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ARTICLE III
CONDITIONS OF LENDING
Section 3.01. Conditions Precedent to Credit Agreement. The
obligation of each Bank to make its initial Advance as part of the initial
Borrowing and of the Issuing Bank to issue the initial Letters of Credit are
subject to the conditions precedent that:
(a) Documentation. On or before the day on which the initial
Borrowing is made or the initial Letters of Credit are issued, the Agent shall
have received the following duly executed by all the parties thereto, in form
and substance satisfactory to the Agent and the Banks, and, where applicable,
in sufficient copies for each Bank:
(i) This Agreement and the Notes;
(ii) A favorable opinion of the Borrower's counsel, dated
as of the Effective Date and substantially in the form of the attached
Exhibit H covering the matters discussed in such Exhibit and such
other matters as any Bank through the Agent may reasonably request;
(iii) A certificate of the Secretary or an Assistant
Secretary of the Borrower certifying the existence of the Borrower, a
certificate of good standing for the Borrower, the certificate of
incorporation of the Borrower, the bylaws of the Borrower, the
resolutions of the Board of Directors of the Borrower authorizing this
Agreement and related transactions, and the incumbency and signatures
of the officers of the Borrower authorized to execute this Agreement
and related documents;
(iv) Mortgages, deeds of trust, financing statements, or
other security instruments granting an Acceptable Security Interest in
the Borrower's and its Subsidiaries' Oil and Gas Properties with a
loan value of at least 80% of the Borrowing Bases;
(v) Title opinions prepared by counsel approved by the
Agent in form and substance satisfactory to the Agent evidencing that
the Borrower's and its Subsidiaries' Oil and Gas Properties with a
loan value of at least 90% of the Borrowing Bases and are unencumbered
except for title exceptions approved by the Agent;
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(vi) All Material Contracts affecting any of the Oil and
Gas Properties described in the foregoing clauses (iv) and (v); and
(vii) Such other documents, certificates, letters in lieu
of transfer orders, opinions of Borrower's counsel, agreements, and
lien searches as the Agent may reasonably request.
(b) Payment of Fees. On the date of this Agreement, the Borrower
shall have paid the fees required by Section 2.07(b) and (c) and all costs and
expenses which have been invoiced and are payable pursuant to Section 9.04.
Section 3.02. Conditions Precedent to All Borrowings. The
obligation of each Bank to make an Advance on the occasion of each Borrowing
and of the Issuing Bank to issue, increase, or extend any Letter of Credit
shall be subject to the further conditions precedent that on the date of such
Borrowing or the issuance, increase, or extension of such Letter of Credit the
following statements shall be true (and each of the giving of the applicable
Notice of Borrowing or Letter of Credit Application and the acceptance by the
Borrower of the proceeds of such Borrowing or the issuance, increase, or
extension of such Letter of Credit shall constitute a representation and
warranty by the Borrower that on the date of such Borrowing, the issuance,
increase, or extension of such Letter of Credit, such statements are true):
(a) the representations and warranties contained in Article IV,
the Security Documents, and the Guaranties are correct in all material respects
on and as of the date of such Borrowing or the date of the issuance, increase,
or extension of such Letter of Credit, before and after giving effect to such
Borrowing or to the issuance, increase, or extension of such Letter of Credit
and to the application of the proceeds from such Borrowing, as though made on
and as of such date and
(b) no Default has occurred and is continuing or would result from
such Borrowing or from the application of the proceeds therefrom, from the
issuance, increase, or extension of such Letter of Credit.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
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Section 4.01. Corporate Existence; Subsidiaries. The Borrower is a
corporation duly organized, validly existing, and in good standing under the
laws of Delaware and in good standing and qualified to do business in each
jurisdiction where its ownership or lease of property or conduct of its
business requires such qualification and where a failure to be qualified could
reasonably be expected to cause a Material Adverse Change. Each Guarantor is a
corporation duly organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation and in good standing and qualified to
do business in each jurisdiction where its ownership or lease of property or
conduct of its business requires such qualification and where a failure to be
qualified could reasonably be expected to cause a Material Adverse Change. The
Borrower has no Subsidiaries other than Subsidiaries which have executed a
Guaranty in compliance with Section 5.08.
Section 4.02. Corporate Power. The execution, delivery, and
performance by the Borrower of this Agreement, the Notes, and the other Credit
Documents to which it is a party and by the Guarantors of the Guaranties and
the consummation of the transactions contemplated hereby and thereby (a) are
within the Borrower's and the Guarantor's corporate powers, (b) have been duly
authorized by all necessary corporate action, (c) do not contravene (i) the
Borrower's or any Guarantor's certificate or articles, as the case may be, of
incorporation or by-laws or (ii) any law or any contractual restriction binding
on or affecting the Borrower or any Guarantor, and (d) will not result in or
require the creation or imposition of any Lien prohibited by this Agreement.
At the time of each Borrowing, such Borrowing and the use of the proceeds of
such Borrowing will be within the Borrower's corporate xxxxxx, xxxx have been
duly authorized by all necessary corporate action, (a) will not contravene (i)
the Borrower's certificate of incorporation or by-laws or (ii) any law or any
contractual restriction binding on or affecting the Borrower and (b) will not
result in or require the creation or imposition of any Lien prohibited by this
Agreement.
Section 4.03. Authorization and Approvals. Except for the
recording and filing of the instruments identified in Section 3.01(a)(iv), no
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority is required for the due execution, delivery, and
performance by the Borrower of this Agreement, the Notes, or the other Credit
Documents to which the Borrower is a party or by each Guarantor of its Guaranty
or the consummation of the transactions contemplated thereby. At the time of
each Borrowing, no authorization or approval or other action by, and no notice
to or filing with, any Governmental Authority will be required for such
Borrowing or the use of the proceeds of such Borrowing.
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Section 4.04. Enforceable Obligations. This Agreement, the Notes,
and the other Credit Documents to which the Borrower is a party have been duly
executed and delivered by the Borrower and the Guaranties have been duly
executed and delivered by the Guarantors. Each Credit Document is the legal,
valid, and binding obligation of the Borrower and each Guarantor which is a
party to it enforceable against the Borrower and each such Guarantor in
accordance with its terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium, or similar law
affecting creditors' rights generally and by general principles of equity.
Section 4.05. Financial Statements. The audited consolidated
balance sheet of the Borrower and its Subsidiaries as at December 31, 1996, and
the related audited consolidated statements of income, cash flow, and retained
earnings of the Borrower and its Subsidiaries for the fiscal year then ended,
copies of which have been furnished to each Bank, and the consolidated balance
sheet of the Borrower and its Subsidiaries as at September 30, 1997, and the
related consolidated statements of income and cash flow of the Borrower and its
Subsidiaries for the nine months then ended, copies of which have been
furnished to the Agent, fairly present, subject, in the case of the balance
sheet as at September 30, 1997, and said statements of income and cash flow for
the nine months then ended, to year-end audit adjustments, the consolidated
financial condition of the Borrower and its Subsidiaries as at such dates and
the consolidated results of the operations of the Borrower and its Subsidiaries
for the periods ended on such dates, and such consolidated balance sheets and
consolidated statements of income, cash flow, and retained earnings were
prepared in accordance with GAAP (or in compliance with the regulations
promulgated by the United States Securities and Exchange Commission). Since
the date of the Financial Statements, no Material Adverse Change has occurred.
Section 4.06. True and Complete Disclosure. All factual
information (excluding estimates, projections and pro forma financial
information) heretofore or contemporaneously furnished by or on behalf of the
Borrower or any of its Subsidiaries in writing to any Bank or the Agent for
purposes of or in connection with this Agreement, any other Credit Document or
any transaction contemplated hereby or thereby is (taken as a whole) true and
accurate in all material respects on the date as of which such information is
dated or certified and does not contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements contained
therein not misleading as of the date of this Agreement. All projections,
estimates, and pro forma financial information furnished by the Borrower were
prepared on the basis of assumptions, data, information, tests, or conditions
believed to be reasonable at the time such projections, estimates, and pro
forma financial information were furnished. This Section 4.06 shall supersede
paragraph 3 of the Agent's Fee Letter.
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Section 4.07. Litigation. Set forth on Schedule 4.07 is an
accurate description of all of the Borrower's and its Subsidiaries' pending
litigation existing on the date of this Agreement which could reasonably be
expected to cause a Material Adverse Change. There is no pending or, to the
best knowledge of the Borrower, threatened action or proceeding against the
Borrower or any of its Subsidiaries before any court, Governmental Authority or
arbitrator, which could reasonably be expected to cause a Material Adverse
Change or which purports to affect the legality, validity, binding effect, or
enforceability of this Agreement, any Note, or any other Credit Document.
Section 4.08. Use of Proceeds. All Advances and Letters of Credit
shall be used to finance the exploration for, and development and production
of, of oil and gas properties and for general corporate purposes of the
Borrower and its Subsidiaries, but in no event for the payment of dividends or
other distributions or advances to the shareholders of the Borrower. The
Borrower is not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U). No
proceeds of any Advance will be used to purchase or carry any margin stock in
violation of Regulation G, T, U or X.
Section 4.09. Investment Company Act. Neither the Borrower nor any
of its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 4.10. Public Utility Holding Company Act. Neither the
Borrower nor any of its Subsidiaries is a "holding company," or a "subsidiary
company" of 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.
Section 4.11. Taxes. Proper and accurate (in all material
respects) federal, state, local, and foreign tax returns, reports and
statements required to be filed (after giving effect to any extension granted
in the time of filing) by or on behalf of the Borrower, its Subsidiaries, or
any member of the Controlled Group (hereafter collectively called the "Tax
Group") have been duly filed on a timely basis or appropriate extensions have
been obtained with appropriate governmental agencies in all jurisdictions in
which such returns, reports, and statements are required to be filed, except
where the failure to so file would not be reasonably expected to cause a
Material Adverse Change; and all taxes (which are material in amount) and other
impositions due and payable have been timely
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paid prior to the date on which any fine, penalty, interest, late charge, or
loss may be added thereto for non-payment thereof, except where contested in
good faith by appropriate proceedings. The reserves for accrued taxes reflected
in the financial statements delivered to the Banks under this Agreement are
adequate in the aggregate for the payment of all unpaid taxes, whether or not
disputed, for the period ended as of the date thereof and for any period prior
thereto, and for which the Tax Group may be liable in its own right, as
withholding agent or as a transferee of the assets of, or successor to, any
Person, except for such taxes or reserves therefor, the failure to pay or
provide for which does not and could not cause a Material Adverse Change. Timely
payment of all material sales and use taxes required by applicable law has been
made by the Borrower and all other members of the Tax Group.
Section 4.12. Pension Plans. All Plans are in compliance with all
applicable provisions of ERISA and the Code, except to the extent any
noncompliance would not result in a Material Adverse Change. No Termination
Event has occurred with respect to any Plan. No "accumulated funding
deficiency" (as defined in Section 302 of ERISA) has occurred with respect to
any Plan. Neither the Borrower nor any member of the Controlled Group has had
a complete or partial withdrawal from any Multiemployer Plan for which there is
any withdrawal liability that could reasonably be expected to cause a Material
Adverse Change. As of the most recent valuation date applicable thereto,
neither the Borrower nor any member of the Controlled Group would become
subject to any liability under ERISA if the Borrower or any member of the
Controlled Group has received notice that any Multiemployer Plan is insolvent
or in reorganization.
Section 4.13. Condition of Property; Casualties. The Borrower and
each of the Guarantors has good and marketable title to all of its material
Properties as is customary in the oil and gas industry in all material
respects, free and clear of all Liens except for Permitted Liens. The material
Properties used or to be used in the continuing operations of the Borrower and
each of its Subsidiaries are in good repair, working order and condition,
ordinary wear and tear excepted. Since the date of the Financial Statements,
neither the business nor the material properties of the Borrower and each of
its Subsidiaries, taken as a whole, has been materially and 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 a
Governmental Authority, riot, activities of armed forces, or acts of God or of
any public enemy.
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Section 4.14. No Burdensome Restrictions; No Defaults. Neither the
Borrower nor any of its Subsidiaries is a party to any indenture, loan, or
credit agreement or any lease or other agreement or instrument or subject to
any charter or corporate restriction or provision of applicable law or
governmental regulation which could reasonably be expected to cause a Material
Adverse Change. The Borrower and the Guarantors are not in default under or
with respect to any contract, agreement, lease, or other instrument to which
the Borrower or any Guarantor is a party and which could reasonably be expected
to cause a Material Adverse Change. No Default has occurred and is continuing.
Section 4.15. Environmental Condition.
(a) Permits, Etc. Except as set forth on Schedule 4.15(a), the
Borrower and its Subsidiaries (i) have obtained all Environmental Permits
necessary for the ownership and operation of their respective Properties and
the conduct of their respective businesses, except where such failure to obtain
could not reasonably be expected to cause a Material Adverse Change; (ii) are
in compliance with all terms and conditions of such Environmental Permits and
with all other requirements of applicable Environmental Laws, except where such
failure to comply could not reasonably be expected to cause a Material Adverse
Change; (iii) have not received notice of any material violation or alleged
violation of any Environmental Law or Environmental Permit; and (iv) are not
subject to any actual or contingent Environmental Claim which could reasonably
be expected to cause a Material Adverse Change.
(b) Certain Liabilities. Except as set forth on Schedule 4.15(b),
to the Borrower's actual knowledge, none of the present or previously owned or
operated Properties of the Borrower or of any of its present or former
Subsidiaries, wherever located, (i) has been placed on or proposed to be placed
on the National Priorities List, the Comprehensive Environmental Response
Compensation Liability Information System list, or their state or local
analogs; (ii) is subject to a Lien, arising under or in connection with any
Environmental Laws, that attaches to any revenues or to any Property owned or
operated by the Borrower or any of its Subsidiaries, wherever located, which
could reasonably be expected to cause a Material Adverse Change; or (iii) has
been the site of any Release of Hazardous Substances or Hazardous Wastes from
present or past operations which has caused at the site or at any third-party
site any condition that has resulted in or could reasonably be expected to
result in the need for Response that would cause a Material Adverse Change.
(c) Certain Actions. Without limiting the foregoing (i) all
necessary notices have been properly filed, and no further action is required
under current Environmental
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Law as to each Response or other restoration or remedial project undertaken by
the Borrower, or its present or former Subsidiaries on any of their presently
or formerly owned or operated Properties and (ii) the present and, to the
Borrower's best knowledge, future liability, if any, of the Borrower and its
Subsidiaries which could reasonably be expected to arise in connection with
requirements under Environmental Laws will not result in a Material Adverse
Change.
Section 4.16. Permits, Licenses, Etc. The Borrower and its
Subsidiaries possess all permits, licenses, patents, patent rights or licenses,
trademarks, trademark rights, trade names rights and copyrights which are
required to the conduct of its business, except where such failure to possess
would not reasonably be expected to cause a Material Adverse Change. The
Borrower and its Subsidiaries manage and operate their business in accordance
with all applicable Legal Requirements and good industry practices, except
where such failure to manage or operate would not reasonably be expected to
cause a Material Adverse Change.
Section 4.17. Gas Contracts. Neither the Borrower nor any of its
Subsidiaries, as of the date hereof, (a) is 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 similar agreement to deliver
hydrocarbons produced from or allocated to any of the Borrower's consolidated
Oil and Gas Properties at some future date without receiving full payment
therefor at the time of delivery, or (b) has produced gas, in any material
amount, subject to, and none of the Borrower's consolidated Oil and Gas
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 or its relevant Subsidiary has established monetary reserves
adequate in amount in accordance with GAAP to satisfy such obligations and has
segregated such reserves from its other accounts.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall
remain unpaid, any Letter of Credit shall remain outstanding, or any Bank shall
have any Commitment hereunder, the Borrower agrees, unless the Majority Banks
shall otherwise consent in writing, to comply with the following covenants.
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Section 5.01. Compliance with Laws, Etc. The Borrower shall
comply, and cause each of its Subsidiaries to comply, with all Legal
Requirements, except where such failure to comply could not reasonably be
expected to cause a Material Adverse Change. Without limiting the generality
and coverage of the foregoing, the Borrower shall comply, and shall cause each
of its Subsidiaries to comply with all Environmental Laws and all laws,
regulations, or directives with respect to equal employment opportunity and
employee safety in all jurisdictions in which the Borrower, or any of its
Subsidiaries do business, except where such failure to comply could not
reasonably be expected to cause a Material Adverse Change; provided, however,
that this Section 5.01 shall not prevent the Borrower, or any of its
Subsidiaries from, in good faith and with reasonable diligence, contesting the
validity or application of any such laws or regulations by appropriate legal
proceedings.
Section 5.02. Maintenance of Insurance. The Borrower shall
maintain, and cause each of its Subsidiaries to maintain, insurance with
responsible and reputable insurance companies or associations in such amounts
and covering such risks as are usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which the
Borrower or such Subsidiary operates, provided that the Borrower or such
Subsidiary may self-insure to the extent and in the manner normal for similarly
situated companies of like size, type and financial condition that are part of
a group of companies under common control.
Section 5.03. Preservation of Corporate Existence, Etc. The
Borrower shall preserve and maintain, and cause each of its Subsidiaries to
preserve and maintain, its corporate existence, rights, franchises, and
privileges in the jurisdiction of its incorporation, and qualify and remain
qualified, and cause each such Subsidiary to qualify and remain qualified, as a
foreign corporation in each jurisdiction in which qualification is necessary or
desirable in view of its business and operations or the ownership of its
properties, and, in each case, where failure to qualify or preserve and
maintain its rights and franchises could reasonably be expected to cause a
Material Adverse Change; provided, however, that nothing herein contained shall
prevent any transaction permitted by Section 6.04.
Section 5.04. Payment of Taxes, Etc. The Borrower shall pay and
discharge, and cause each of its Subsidiaries to pay and discharge, before the
same shall become delinquent, (a) all taxes, assessments, and governmental
charges or levies imposed upon it or upon its income or profits or Property
that are material in amount, prior to the date on which penalties attach
thereto and (b) all lawful claims that are material in amount which, if unpaid,
might by law become a Lien upon its Property; provided, however,
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that neither the Borrower nor any such Subsidiary shall be required to pay or
discharge any such tax, assessment, charge, levy, or claim which is being
contested in good faith and by appropriate proceedings, and with respect to
which reserves in conformity with GAAP have been provided.
Section 5.05. Visitation Rights. At any reasonable time and from
time to time, upon reasonable notice, the Borrower shall, and shall cause its
Subsidiaries to, permit the Agent and any Bank or any of its agents or
representatives thereof, to (a) examine and make copies of and abstracts from
the records and books of account of, and visit and inspect at its reasonable
discretion the properties of, the Borrower and any such Subsidiary, and (b)
discuss the affairs, finances and accounts of the Borrower and any such
Subsidiary with any of their respective officers or directors; provided
however, the Agent or the Bank for whose benefit such inspection and visitation
is made assumes sole responsibility for the condition of any property of the
Borrower or its Subsidiaries so visited and inspected, the access and egress
thereto, and any vice or defect therein or thereon, and assumes all
responsibility for and hereby releases and indemnifies the Borrower, its
Affiliates, and their officers, directors, employees, and agents against any
claim for damage or injury to or by the Agent or such Bank (or the
representatives thereof) or to the Borrower's or its Subsidiaries' property
which may be occasioned by such inspection and visitation of the Borrower's or
its Subsidiaries' property.
Section 5.06. Reporting Requirements. The Borrower shall furnish
to the Agent and each Bank:
(a) Annual Financials. As soon as available and in any event not
later than 105 days after the end of each fiscal year of the Borrower, a copy
of the annual audit report for such year for the Borrower and its Subsidiaries,
including therein consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal year and consolidated statements of
income, cash flows, and retained earnings of the Borrower and its Subsidiaries
for such fiscal year, in each case certified by Xxxxxx Xxxxxxxx LLP or other
independent certified public accountants of national standing and including any
management letters delivered by such accountants to the Borrower in connection
with such audit together with a certificate of such accounting firm to the
Agent and the Banks stating that, in the course of the regular audit of the
business of the Borrower and its Subsidiaries, which audit was conducted by
such accounting firm in accordance with generally accepted auditing standards,
such accounting firm has obtained no knowledge that a Default has occurred and
is continuing, or if, in the opinion of such accounting firm, a Default has
occurred and is continuing, a statement as to the nature thereof, together with
a Compliance Certificate executed by the Chief Financial Officer or Chief
Accounting Officer of the Borrower;
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(b) Quarterly Financials. As soon as available and in any event
not later than 60 days after the end of each of the first three quarters of
each fiscal year of the Borrower, the unaudited consolidated balance sheet of
Borrower and its Subsidiaries as of the end of such quarter and the
consolidated statements of income and cash flows of the Borrower and its
Subsidiaries for the period commencing at the end of the previous year and
ending with the end of such quarter, all in reasonable detail and duly
certified with respect to such consolidated statements (subject to year-end
audit adjustments) by the Chief Financial Officer or Chief Accounting Officer
of the Borrower as having been prepared in accordance with GAAP (or in
compliance with the regulations promulgated by the United States Securities and
Exchange Commission), together with a Compliance Certificate executed by the
Chief Financial Officer or Chief Accounting Officer of the Borrower;
(c) Oil and Gas Reserve Reports.
(i) As soon as available but in any event on or before
March 31 of each year, an engineering report in form and substance
meeting the requirements of the Securities and Exchange Commission for
financial reporting purposes, certified by Xxxxx Xxxxx Company or
other firm of independent consulting petroleum engineers approved by
the Agent, as fairly setting forth (A) the proved, producing, and
probable shut in, behind pipe, depleted and undeveloped oil and gas
reserves (separately classified as such) attributable to the
Borrower's consolidated Oil and Gas Properties as of the last day of
the previous year, (B) the aggregate present value, determined on the
basis of stated pricing assumptions, of the future Adjusted Net Income
with respect to such Oil and Gas Properties, discounted at a stated
per annum discount rate, and (C) projections of the annual rate of
production, gross income, and Adjusted Net Income with respect to such
Oil and Gas Properties;
(ii)(A) So long as the Majority Banks have allocated any
value to the Revolving B Borrowing Base, as soon as available but in
any event on or before June 30, September 30, and December 31 of each
year beginning with December 31, 1997, an internal engineering report
in form and substance satisfactory to the Agent setting forth (1) the
proved, producing, and probable shut in, behind pipe, depleted and
undeveloped oil and gas reserves (separately classified as such)
attributable to the Borrower's consolidated Oil and Gas Properties as
of the last day of the calendar quarter immediately preceding such
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date, (2) the aggregate present value, determined on the basis of
stated pricing assumptions, of the future net income with respect to
such Oil and Gas Properties, discounted at a stated per annum discount
rate, and (3) projections of the annual rate of production, gross
income, and net income with respect to such Oil and Gas Properties and
(B) If the Majority Banks have not allocated any
value to the Revolving B Borrowing Base, then as soon as available but
in any event on or before September 30 of each year an internal
engineering report in form and substance satisfactory to the Agent
setting forth (1) the proved, producing, and probable shut in, behind
pipe, depleted and undeveloped oil and gas reserves (separately
classified as such) attributable to the Borrower's consolidated Oil
and Gas Properties as of June 30 of such year, (2) the aggregate
present value, determined on the basis of stated pricing assumptions,
of the future net income with respect to such Oil and Gas Properties,
discounted at a stated per annum discount rate, and (3) projections of
the annual rate of production, gross income, and net income with
respect to such Oil and Gas Properties; and
(iii) The Agent and the Banks acknowledge that the Oil and
Gas Reserve Reports contain certain proprietary information including
geological and geophysical data, maps, models, and interpretations
necessary for determining the Borrowing Bases and the creditworthiness
of the Borrower and the Guarantors. The Agent and the Banks agree to
maintain the confidentiality of such information except as required by
law. The Agent and the Banks may share such information with Eligible
Assignees of their interests under this Agreement if such Eligible
Assignees agree to maintain the confidentiality of such information;
(d) Defaults. As soon as possible and in any event within 10 days
after the occurrence of each Default known to a Responsible Officer of the
Borrower or any of its Subsidiaries which is continuing on the date of such
statement, a statement of the Chief Financial Officer of the Borrower setting
forth the details of such Default and the actions which the Borrower has taken
and proposes to take with respect thereto;
(e) Securities Law Filings. Except as provided in paragraphs (a)
and (b) above, promptly and in any event within 15 days after the sending or
filing thereof, copies of all (i) Registration Statements (other than the
exhibits thereto) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents), and which the Borrower or any of its Subsidiaries sends to or
files with the United States Securities and Exchange
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Commission or (ii) financial statements, proxy statements, reports and other
documents it sends to the shareholders of the Borrower;
(f) Termination Events. As soon as possible and in any event (i)
within 30 days after the Borrower or any member of the Controlled Group knows
or has reason to know that any Termination Event described in clause (a) of the
definition of Termination Event with respect to any Plan has occurred, and (ii)
within 10 Business Days after the Borrower or any of its Affiliates knows or
has reason to know that any other Termination Event with respect to any Plan
has occurred, a statement of the Chief Financial Officer of the Borrower
describing such Termination Event and the action, if any, which the Borrower or
such Affiliate proposes to take with respect thereto;
(g) Termination of Plans. Promptly and in any event within five
Business Days after receipt thereof by the Borrower or any member of the
Controlled Group from the PBGC, copies of each notice received by the Borrower
or any such member of the Controlled Group of the PBGC's intention to terminate
any Plan or to have a trustee appointed to administer any Plan;
(h) Other ERISA Notices. Promptly and in any event within five
Business Days after receipt thereof by the Borrower or any member of the
Controlled Group from a Multiemployer Plan sponsor, a copy of each notice
received by the Borrower or any member of the Controlled Group concerning the
imposition of withdrawal liability exceeding $100,000.00 annually pursuant to
Section 4202 of ERISA;
(i) Environmental Notices. Promptly and in any event within five
Business Days after the receipt thereof by the Borrower or any of its
Subsidiaries, a copy of any form of notice, summons or citation received from
the EPA, or any other Governmental Authority, concerning (i) violations or
alleged violations of Environmental Laws, which seeks to impose liability
therefor, (ii) any action or omission on the part of the Borrower or any of its
present or former Subsidiaries in connection with Hazardous Waste or Hazardous
Substances which could reasonably result in the imposition of liability
therefor, including without limitation any notice of potential responsibility
under CERCLA, or (iii) concerning the filing of a Lien upon, against or in
connection with the Borrower, its present or former Subsidiaries, or any of
their leased or owned Property, wherever located;
(j) Other Governmental Notices. Promptly and in any event within
five Business Days after receipt thereof by the Borrower or any Subsidiary, a
copy of any notice, summons, citation, or proceeding seeking to modify in any
material respect, revoke, or suspend any material contract, license, or
agreement with any Governmental Authority;
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(k) Material Changes. Prompt written notice of any condition or
event of which the Borrower has knowledge, which condition or event has
resulted or may reasonably be expected to result in (i) a Material Adverse
Change or (ii) a breach of or noncompliance with any material term, condition,
or covenant of any material contract to which the Borrower or any of its
Subsidiaries is a party or by which they or their properties may be bound;
(l) Disputes, Etc. Prompt written notice of the commencement of
any litigation, legal, administrative or arbitral proceeding, investigation or
other action against the Borrower, or any of its Subsidiaries which, if
adversely determined, could reasonably be expected to cause a Material Adverse
Change, or any material labor controversy of which the Borrower or any of its
Subsidiaries has knowledge resulting in or reasonably considered to be likely
to result in a strike against the Borrower or any of its Subsidiaries; and
(m) Other Information. Such other information respecting the
business or Properties, or the condition or operations, financial or otherwise,
of the Borrower, or any of its Subsidiaries, as any Bank through the Agent may
from time to time reasonably request. The Agent agrees to provide the Banks
with copies of any material notices and information delivered solely to the
Agent pursuant to the terms of this Agreement.
Section 5.07. Maintenance of Property. Borrower shall, and shall
cause each of its Subsidiaries to, maintain their owned, leased, or operated
material property, equipment, buildings, and fixtures in good condition and
repair, ordinary wear and tear excepted; and shall abstain from, cause each of
its Subsidiaries to abstain from, and not knowingly or willfully permit the
commission of waste or other injury, destruction, or loss of natural resources,
or the occurrence of pollution, contamination, or any other condition in, on,
or about the owned or operated property involving the Environment that could
reasonably be expected to result in Response activities the costs of which
would exceed the accrual established by Borrower or by any of its Subsidiaries
for those purposes.
Section 5.08. New Subsidiaries. Upon the creation of any
Subsidiary after the date of this Agreement, the Borrower shall cause such
Subsidiary to execute and deliver to the Agent (a) a Guaranty with such changes
as the Agent may reasonably request; (b) such Security Documents as the Agent
may request to grant an Acceptable Security
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Interest in such Subsidiary's Oil and Gas Properties; and (c) evidence of
corporate authority to enter into such Guaranty and Security Documents as the
Agent may reasonably request, including, without limitation, a legal opinion
regarding the enforceability of such Guaranty.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Note or any amount under any Credit Document shall
remain unpaid, any Letter of Credit shall remain outstanding, or any Bank shall
have any Commitment, the Borrower agrees, unless the Majority Banks otherwise
consent in writing, to comply with the following covenants.
Section 6.01. Liens, Etc. The Borrower shall not create, assume,
incur, or suffer to exist, or permit any of its Subsidiaries to create, assume,
incur, or suffer to exist, any Lien on or in respect of any of its Property
whether now owned or hereafter acquired, or assign any right to receive income,
except that the Borrower and its Subsidiaries may create, incur, assume, or
suffer to exist:
(a) Liens securing the Obligations;
(b) Liens specified in the attached Schedule 6.01 on the Property
owned by the Borrower and its Subsidiaries which is specified therein securing
only the Debt disclosed to be secured by such Liens therein, and any Liens
extending such existing Liens, if the amount of Debt secured thereby is not
increased;
(c) Liens securing purchase money indebtedness permitted under
Section 6.02(d), provided that each such Lien encumbers only the property
acquired in connection with the creation of any such purchase money
indebtedness, and any receivables, contract rights and similar intangibles
related thereto and proceeds thereof;
(d) Liens for taxes, assessments, or other governmental charges or
levies not yet due or that (provided 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;
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(e) 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
that are not yet due or that are being contested in good faith by appropriate
proceedings, provided such reserve as may be required by GAAP shall have been
made therefor;
(f) Liens to operators and non-operators under joint operating
agreements arising in the ordinary course of the business of the Borrower or
the relevant Subsidiary 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;
(g) easements, rights-of-way, restrictions, and other similar
encumbrances, and minor defects in the chain of title that are customarily
accepted in the oil and gas financing industry, none of which interfere with
the ordinary conduct of the business of Borrower or the relevant Subsidiary or
materially detract from the value or use of the Property to which they apply;
(h) Liens of record under terms and provisions of the leases, unit
agreements, assignments, and other transfer of title documents in the chain of
title under which the Borrower or the relevant Subsidiary acquired the
Property, which have been disclosed to the Agent before the date of this
Agreement or before the date of acquisition;
(i) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (i) in connection with
workers' compensation, unemployment insurance and other types of social
security or retirement benefits, or (ii) to secure the performance of tenders,
statutory obligations, bids, leases, performance and return-of-money bonds and
other similar obligations, in each case not incurred or made in connection with
the borrowing of money, the obtaining of advances or credit or the payment of
the deferred purchase price of property;
(j) any attachment Lien, judgment Lien or other similar Lien
arising in connection with court proceedings; provided that (i) the execution
or other enforcement of such Lien is effectively stayed and the claims secured
thereby are being actively contested in good faith and by appropriate
proceedings diligently conducted and effective to prevent the forfeiture or
sale of any property of the Borrower or any Subsidiary or any interference with
the ordinary use thereof by the Borrower or Subsidiary and (ii) such reserve or
other appropriate provision, if any, in the amounts and of the types as shall
be required by GAAP (or in the absence of any such
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requirement, as shall be reasonably adequate for the purpose) shall have been
made therefor on the books and records of the Borrower and its Subsidiaries;
(k) any Lien existing on any property acquired by the Borrower or
any Subsidiary at the time such property is so acquired (whether or not the
Debt secured thereby shall have been assumed), provided that (i) no such Lien
shall have been created or assumed in contemplation of such acquisition of
property, and (ii) each such Lien shall extend solely to the item or items of
property so acquired and, if required by the terms of the instrument originally
creating such Lien, other property that is an improvement to or is acquired for
specific use in connection with such acquired property;
(l) deposits of cash to secure insurance in the ordinary course of
business;
(m) banker's liens arising by operation of law, but not liens
securing borrowed money; and
(n) UCC protective filings with respect to personal property
leased by the Borrower or a Subsidiary in the ordinary course of business.
Section 6.02. Debts, Guaranties, and Other Obligations. The
Borrower shall not, and shall not permit any of its Subsidiaries to, create,
assume, suffer to exist, or in any manner become or be liable in respect of,
any Debt except:
(a) Debt of the Borrower and its Subsidiaries under the Credit
Documents;
(b) Debt of the Borrower existing on the date of this Agreement
and disclosed in the attached Schedule 6.02 and any extensions, rearrangements,
and modifications thereof which do not increase the principal amount thereof or
the interest rate charged thereon above a market rate of interest;
(c) Debt for borrowed money owed by any wholly-owned Subsidiary of
the Borrower to the Borrower;
(d) Debt existing in connection with Property acquired by the
Borrower after the date of this Agreement not to exceed $100,000.00 in
outstanding principal amount (excluding gas balancing liabilities assumed in
the acquisition of Oil and Gas Properties); and
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(e) Debt in the form of obligations for the deferred purchase
price of property or services incurred in the ordinary course of business which
are either (i) not yet due and payable, (ii) are being contested in good faith
by appropriate proceedings and for which adequate reserves in accordance with
GAAP have been established, (iii) which has been outstanding for less than 90
days since the invoice date, or (iv) which has been outstanding for more than
90 days since the original invoice date, in an aggregate amount not to exceed
$200,000.00;
(f) Debt in connection with the Borrower's production swap hedging
program permitted by Section 6.07;
(g) Debt subordinated to the Obligations, on terms and in form and
substance satisfactory to the Banks; and
(h) contingent obligations incurred to satisfy bonding
requirements imposed by any governmental regulatory agency or body not to
exceed, in the aggregate, $100,000.
Section 6.03. Agreements Restricting Liens and Distributions. The
Borrower shall not, nor shall it permit any of its Subsidiaries to, enter into
any agreement (other than a Credit Document) which (a) except with respect to
specific Property encumbered to secure payment of Debt related to such
Property, imposes restrictions upon the creation or assumption of any Lien upon
its Properties, revenues or assets, whether now owned or hereafter acquired or
(b) limits Restricted Payments to or any advance by any of the Borrower's
Subsidiaries to the Borrower.
Section 6.04. Merger or Consolidation; Asset Sales. The Borrower
shall not, and shall not permit any of its Subsidiaries to:
(a) merge or consolidate with or into any other Person, except
that the Borrower may merge with any of its wholly-owned Subsidiaries and any
of the Borrower's wholly-owned Subsidiaries may merge with another of the
Borrower's wholly-owned Subsidiaries, provided that immediately after giving
effect to any such proposed transaction no Default would exist and, in the case
of any such merger to which the Borrower is a party, the Borrower is the
surviving corporation or
(b) sell, lease, transfer, or otherwise dispose of any of its Oil
and Gas Property (other than to the Borrower or a Subsidiary), except:
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(i) transactions as to which the net proceeds of sale of
Oil and Gas Properties (with such net proceeds being the aggregate
proceeds thereof received or to be received by the Borrower or any
Subsidiary of the Borrower, without deduction for any portion thereof
to be received by the Borrower or such Subsidiary at a later date, but
less the reasonable expenses thereof to the Borrower or such
Subsidiary, and less current and deferred taxes attributable to such
sale, including income taxes, if any, after allocation of appropriate
tax basis pursuant to the Code, and less the amount necessary to
satisfy any indebtedness of the Borrower or any Subsidiary of the
Borrower, payment of which is secured by a lien on the assets or
properties which are the subject of such transaction) resulting from
such transactions do not exceed $500,000 singly or in the aggregate
during any fiscal year;
(ii) sales or transfers of hydrocarbons in the ordinary
course of business;
(iii) farmouts or other similar transactions, including any
assignments made pursuant thereto, entered into in the ordinary course
of business, which lead to or encourage the exploration or development
of the Oil and Gas Properties, provided, that such transactions do
not, individually or in the aggregate, reduce the Borrower's working
interests in its proved reserves as indicated in the most recent
reserve report in any significant respect;
(iv) sales or transfers of Oil and Gas Properties made in
arm's length transactions at not less than fair market price, the
entire net proceeds of which are used to make prepayments on the
Advances in accordance with the provisions of this Agreement;
(v) sales of or dispositions of unproductive, surplus,
obsolete or worn equipment or inventory; and
(vi) abandonment of Oil and Gas Properties not capable of
producing hydrocarbons in paying quantities.
Section 6.05. Restricted Payments. The Borrower shall not, and
shall not permit any of its Subsidiaries to, make or pay any Restricted Payment
other than Restricted Payments from a Subsidiary of the Borrower to the
Borrower.
Section 6.06. Investments. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make or permit to exist any loans, advances,
or capital contributions to, or make any investment in, or purchase or commit
to purchase any stock or other securities or evidences of indebtedness of or
interests in any Person, except:
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(a) Liquid Investments;
(b) trade and customer accounts receivable which are for goods
furnished or services rendered in the ordinary course of business and are
payable in accordance with customary trade terms;
(c) ordinary course of business contributions, loans, or advances
to, or investments in, (i) a directly or indirectly wholly-owned Subsidiary of
the Borrower or (ii) the Borrower;
(d) oil and gas farm-ins, oil and gas development joint ventures
and limited partnerships, and similar transactions, in each case in the
ordinary course of business; and
(e) investments not permitted by clauses (a) through (d) above in
an aggregate outstanding amount not to exceed $500,000.00.
Section 6.07. Limitation on Speculative Hedging. The Borrower
shall not, and shall not permit any of its Subsidiaries to, purchase, assume,
or hold a speculative position in any commodities market or futures market.
Borrower (a) may establish and continue a production swap hedging program
policy to reduce price risk on quantities less than its total expected
production and may in connection therewith enter into Hedge Agreements
regarding oil and gas prices and (b) may enter into Hedge Agreements for
interest rates in the ordinary course of business.
Section 6.08. Affiliate Transactions. Except as expressly
permitted elsewhere in this Agreement or otherwise approved in writing by the
Agent, and except as required or contemplated under the partnership agreements
existing on the date of this Agreement between the Borrower and its
Subsidiaries and their Affiliates as described in Schedule 6.08, the Borrower
shall not, and shall not permit any of its Subsidiaries to, make, directly or
indirectly: (a) any investment in any Affiliate (other than a wholly-owned
Subsidiary of the Borrower); (b) any transfer, sale, lease, assignment, or
other disposal of any assets to any such Affiliate or any purchase or
acquisition of assets from any such Affiliate; or (c) any arrangement or other
transaction directly or indirectly with or for the benefit of any such
Affiliate (including without limitation, guaranties and assumptions of
obligations of an Affiliate); provided that the Borrower and its Subsidiaries
may enter into any arrangement or other transaction with any such
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Affiliate providing for the leasing of property, the rendering or receipt of
services or the purchase or sale of inventory and other assets in the ordinary
course of business if the monetary or business consideration arising therefrom
would be substantially as advantageous to the Borrower and its Subsidiaries as
the monetary or business consideration which it would obtain in a comparable
arm's length transaction with a Person not such an Affiliate.
Section 6.09. Compliance with ERISA. The Borrower shall not, and
shall not permit any of its Subsidiaries to, (a) terminate, or permit any
Affiliate to terminate, any Plan so as to result in any material (in the
opinion of the Majority Banks) liability of the Borrower or any of its
Affiliates to the PBGC or (b) permit to exist any occurrence of any Reportable
Event, or any other event or condition, which presents a material (in the
opinion of the Majority Banks) risk of such a termination by the PBGC of any
Plan.
Section 6.10. Maintenance of Ownership of Subsidiaries. Except as
permitted by Section 6.04, the Borrower shall not, and shall not permit any of
its Subsidiaries to, sell or otherwise dispose of any shares of capital stock
of any of the Borrower's Subsidiaries or permit any Subsidiary to issue, sell,
or otherwise dispose of any shares of its capital stock or the capital stock of
any of the Borrower's Subsidiaries.
Section 6.11 Sale-and-Leaseback. The Borrower shall not, nor
shall it permit any of its Subsidiaries to, sell or transfer to a Person (other
than the Borrower or a Subsidiary of the Borrower) any property, whether now
owned or hereafter acquired, if at the time or thereafter the Borrower or a
Subsidiary of the Borrower shall lease as lessee such property or any part
thereof or other property which the Borrower or a Subsidiary of the Borrower
intends to use for substantially the same purpose as the property sold or
transferred except such transactions (a) incident to transactions permitted by
Section 6.04(b) and (b) from which arise lease obligations and other rental
obligations not exceeding $100,000.00 during any fiscal year of the Borrower.
Section 6.12. Change of Business. The Borrower shall not, nor
shall it permit any of its Subsidiaries to, materially change the character of
their business as presently and normally conducted or materially engage in any
type of business not related to their business as presently and normally
conducted.
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Section 6.13. Current Ratio.
(a) So long as the Majority Banks have allocated any value to the
Revolving B Borrowing Base, the Borrower shall not permit the ratio of the
Borrower's consolidated current assets to the Borrower's consolidated current
liabilities to be less than 1.35 to 1.00 as of the last day of any fiscal
quarter.
(b) If the Majority Banks have not allocated any value to the
Revolving B Borrowing Base, the Borrower shall not permit the ratio of the
Borrower's consolidated current assets to the Borrower's consolidated current
liabilities to be less than 1.00 to 1.00 as of the last day of any fiscal
quarter.
(c) On any date for the calculation of the Borrower's current
ratio before the Termination Date, the Borrowing Bases on such date minus the
aggregate outstanding Advances on such date shall be added to the Borrower's
consolidated current assets.
Section 6.14. Net Worth. The Borrower shall not permit the
consolidated Net Worth of the Borrower, as of the last day of each fiscal
quarter, to be less than the sum of (a) $24,000,000.00 plus (b) an amount equal
to 50% of the cumulative consolidated quarterly Adjusted Net Income of the
Borrower from June 30, 1997, through the end of such fiscal quarter, but
excluding consolidated Adjusted Net Income for any fiscal quarter in which
consolidated Adjusted Net Income is not positive plus (c) an amount equal to
75% of the net cash proceeds (after offering expenses) from any sale of stock
or other equity interests in the Borrower since September 30, 1997.
ARTICLE VII
REMEDIES
Section 7.01. Events of Default. The occurrence of any of the
following events shall constitute an "Event of Default" under any Credit
Document:
(a) Payment. The Borrower shall fail to pay when due (i) any
interest or fees payable hereunder or under the Notes within five days after
the same becomes due and payable or (ii) any principal, reimbursements,
indemnifications, or other amounts (other than interest and fees described in
clause (i)) payable hereunder or under any other Credit Document within one
Business Day after the same becomes due and payable;
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(b) Representation and Warranties. Any representation or warranty
made or deemed to be made (i) by the Borrower in this Agreement or in any other
Credit Document or (ii) by any Subsidiary of the Borrower in any Credit
Document shall prove to have been incorrect in any material respect when made
or deemed to be made;
(c) Covenant Breaches. (i) The Borrower shall (A) fail to perform
or observe any covenant contained in Section 5.01, 5.02, 5.05, 5.07, or 5.08 or
in Article VI of this Agreement, (B) fail to perform or observe any covenant
contained in Section 5.06 if such failure shall remain unremedied for 15 days,
or (C) fail to perform or observe any other term or covenant set forth in this
Agreement or in any other Credit Document which is not covered by clause (i)(A)
or (B) above or any other provision of this Section 7.01 if such failure shall
remain unremedied for 30 days after the earlier of written notice of such
default shall have been given to such Person by the Agent or any Bank or such
Person's actual knowledge of such default or (ii) any Guarantor shall fail to
perform or observe any covenant contained in its Guaranty;
(d) Cross-Defaults. (i) The Borrower or any of its Subsidiaries
shall fail to pay any principal of or premium or interest on its Debt which is
outstanding in a principal amount of at least $100,000.00 individually or when
aggregated with all such Debt of the Borrower or its Subsidiaries so in default
(but excluding Debt evidenced by the Notes) when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating to such
Debt; (ii) any other event shall occur or condition shall exist under any
agreement or instrument relating to Debt which is outstanding in a principal
amount of at least $100,000.00 individually or when aggregated with all such
Debt of the Borrower and its Subsidiaries so in default, and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or (iii) any such Debt
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated maturity
thereof;
(e) Insolvency. The Borrower or any of its Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against the Borrower or any of its Subsidiaries seeking to adjudicate it as
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
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debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against the Borrower or any such Subsidiary, either such proceeding
shall remain undismissed for a period of 60 days or any of the actions sought
in such proceeding shall occur; or the Borrower or any of its Subsidiaries
shall take any corporate action to authorize any of the actions set forth above
in this paragraph (e);
(f) Judgments. Any judgment or order for the payment of money in
excess of $50,000.00 (net of insurance proceeds which have been paid on which
the insurance carrier has assented to pay) shall be rendered against the
Borrower or any of its Subsidiaries and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or order or (ii)
there shall be any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
(g) Termination Events. Any Termination Event with respect to a
Plan shall have occurred, and, 30 days after notice thereof shall have been
given to the Borrower by the Agent, (i) such Termination Event shall not have
been corrected; (ii) the then present value of such Plan's vested benefits
exceeds the then current value of assets accumulated in such Plan by more than
the amount of $100,000.00 (or in the case of a Termination Event involving the
withdrawal of a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA), the withdrawing employer's proportionate share of such excess shall
exceed such amount); and (iii) the Termination Event could reasonably be
expected to result in liability of the Borrower in an aggregate amount
exceeding $100,000.00;
(h) Plan Withdrawals. The Borrower or any member of the
Controlled Group as employer under a Multiemployer Plan shall have made a
complete or partial withdrawal from such Multiemployer Plan and the plan
sponsor of such Multiemployer Plan shall have notified such withdrawing
employer that such employer has incurred a withdrawal liability in an annual
amount exceeding $100,000.00;
(i) Borrowing Base. Any failure to cure any Borrowing Base
deficiency in accordance with Section 2.04, including any failure of the
dedicated cash flow from the production of the Borrower's and its Subsidiaries'
Oil and Gas Properties to cure the Borrowing Base deficiency within the time
period specified by and in accordance with Section 2.04(b);
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(j) Guaranties. Any provision of any Guaranty shall for any
reason cease to be valid and binding on the applicable Guarantor or the
applicable Guarantor shall so state in writing;
(k) Security Documents. Any Security Document shall at any time
and for any reason cease to create the Lien on the property purported to be
subject to such agreement in accordance with the terms of such agreement, or
cease to be in full force and effect, or shall be contested by the Borrower or
any Guarantor; or
(l) Change of Control. (i) As a result of one or more
transactions after the date of this Agreement, any "person" or "group" of
persons shall have "beneficial ownership" of more than 25% of the outstanding
common stock of the Borrower (within the meaning of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder), provided that the relationships among the officers and
directors of the Borrower and among the respective shareholders of the Borrower
on the date of this Agreement shall not be deemed to constitute all or any
combination of them as a "group" or (ii) during any period of 12 consecutive
months, beginning with and after the date of this Agreement, individuals who at
the beginning of such 12-month period were directors of the Borrower shall
cease for any reason to constitute a majority of the board of directors of the
Borrower at any time during such period.
Section 7.02. Optional Acceleration of Maturity. If any Event of
Default (other than an Event of Default pursuant to paragraph (e) of Section
7.01) shall have occurred and be continuing, then, and in any such event,
(a) the Agent (i) shall at the request, or may with the consent,
of the Majority Banks, by notice to the Borrower, declare the obligation of
each Bank and the Issuing Bank to make extensions of credit hereunder,
including making Advances and issuing Letters of Credit, to be terminated,
whereupon the same shall forthwith terminate, and (ii) shall at the request, or
may with the consent, of the Majority Banks, by notice to the Borrower, declare
all principal, interest, fees, reimbursements, indemnifications, and all other
amounts payable under this Agreement, the Notes, and the other Credit Documents
to be forthwith due and payable, whereupon all such amounts shall become and be
forthwith due and payable in full, without notice of intent to demand, demand,
presentment for payment, notice of nonpayment, protest, notice of protest,
grace, notice of dishonor, notice of intent to accelerate, notice of
acceleration, and all other notices, all of which are hereby expressly waived
by the Borrower;
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(b) the Borrower shall, on demand of the Agent at the request or
with the consent of the Majority Banks, deposit with the Agent into the Cash
Collateral Account an amount of cash equal to the Letter of Credit Exposure as
security for the Obligations; and
(c) the Agent shall at the request of, or may with the consent of,
the Majority Banks proceed to enforce its rights and remedies under the
Security Documents, the Guaranties, and any other Credit Document for the
ratable benefit of the Banks by appropriate proceedings.
Section 7.03. Automatic Acceleration of Maturity. If any Event of
Default pursuant to paragraph (e) of Section 7.01 shall occur,
(a) (i) the obligation of each Bank and the Issuing Bank to make
extensions of credit hereunder, including making Advances and issuing Letters
of Credit, shall terminate, and (ii) all principal, interest, fees,
reimbursements, indemnifications, and all other amounts payable under this
Agreement, the Notes, and the other Credit Documents shall become and be
forthwith due and payable in full, without notice of intent to demand, demand,
presentment for payment, notice of nonpayment, protest, notice of protest,
grace, notice of dishonor, notice of intent to accelerate, notice of
acceleration, and all other notices, all of which are hereby expressly waived
by the Borrower;
(b) the Borrower shall deposit with the Agent into the Cash
Collateral Account an amount of cash equal to the outstanding Letter of Credit
Exposure as security for the Obligations; and
(c) the Agent shall at the request of, or may with the consent of,
the Majority Banks proceed to enforce its rights and remedies under the
Security Documents, the Guaranties, and any other Credit Document for the
ratable benefit of the Banks by appropriate proceedings.
Section 7.04. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Agent and each Bank is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Agent or such Bank to or for the credit or the account of the
Borrower against any and all of the obligations of
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the Borrower now or hereafter existing under this Agreement, the Notes held by
the Agent or such Bank, and the other Credit Documents, irrespective of whether
or not the Agent or such Bank shall have made any demand under this Agreement,
such Notes, or such other Credit Documents, and although such obligations may
be unmatured. The Agent and each Bank agree to promptly notify the Borrower
after any such set-off and application made by the Agent or such Bank, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Agent and each Bank under this
Section 7.04 are in addition to any other rights and remedies (including,
without limitation, other rights of set-off) which the Agent or such Bank may
have.
Section 7.05. Actions Under Credit Documents. Following an Event
of Default, the Agent shall at the request, or may with the consent, of the
Majority Banks, take any and all actions permitted under the other Credit
Documents, including enforcing it rights under the Security Documents and the
Guaranties for the ratable benefit of the Banks.
Section 7.06. Non-exclusivity of Remedies. No remedy conferred
upon the Agent is intended to be exclusive of any other remedy, and each remedy
shall be cumulative of all other remedies existing by contract, at law, in
equity, by statute or otherwise.
ARTICLE VIII
THE AGENT AND THE ISSUING BANK
Section 8.01. Authorization and Action. Each Bank hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof and of the other Credit Documents, together with such powers as
are reasonably incidental thereto. As to any matters not expressly provided
for by this Agreement or any other Credit Document (including, without
limitation, enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Banks, and such
instructions shall be binding upon all Banks and all holders of Notes;
provided, however, that the Agent shall not be required to take any action
which exposes the Agent to personal liability or which is contrary to this
Agreement, any other Credit Document, or applicable law.
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Section 8.02. Agent's Reliance, Etc. Neither the Agent nor any of
its directors, officers, agents, or employees shall be liable to any Bank for
any action taken or omitted to be taken (INCLUDING THE AGENT'S OWN NEGLIGENCE)
by it or them under or in connection with this Agreement or the other Credit
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (a) may
treat the payee of any Note as the holder thereof until the Agent receives
written notice of the assignment or transfer thereof signed by such payee and
in form satisfactory to the Agent; (b) may consult with legal counsel
(including counsel for the Borrower), independent public accountants, and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants, or experts; (c) makes no warranty or representation to any Bank
and shall not be responsible to any Bank for any statements, warranties, or
representations made in or in connection with this Agreement or the other
Credit Documents; (d) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
this Agreement or any other Credit Document on the part of the Borrower or its
Subsidiaries or to inspect the property (including the books and records) of
the Borrower or its Subsidiaries; (e) shall not be responsible to any Bank for
the due execution, legality, validity, enforceability, genuineness,
sufficiency, or value of this Agreement or any other Credit Document; and (f)
shall incur no liability under or in respect of this Agreement or any other
Credit Document by acting upon any notice, consent, certificate, or other
instrument or writing (which may be by telecopier or telex) believed by it to
be genuine and signed or sent by the proper party or parties.
Section 8.03. The Agent and Its Affiliates. With respect to its
Commitments, the Advances made by it and the Notes issued to it, the Agent
shall have the same rights and powers under this Agreement as any other Bank
and may exercise the same as though it were not the Agent. The term "Bank" or
"Banks" shall, unless otherwise expressly indicated, include the Agent in its
individual capacity. The Agent and its Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in any
kind of business with, the Borrower or any of its Subsidiaries, and any Person
who may do business with or own securities of the Borrower or any such
Subsidiary, all as if the Agent were not an agent hereunder and without any
duty to account therefor to the Banks.
Section 8.04. Bank Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other Bank and
based on the
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Financial Statements and the Interim Financial Statements and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it shall, independently and without reliance upon the Agent
or any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
Section 8.05. Indemnification. THE BANKS SEVERALLY AGREE TO
INDEMNIFY THE AGENT AND THE ISSUING BANK AND EACH AFFILIATE THEREOF AND THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS (TO THE EXTENT NOT
REIMBURSED BY THE BORROWER), ACCORDING TO THEIR RESPECTIVE PRO RATA SHARES FROM
AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE
AGENT AND THE ISSUING BANK IN ANY WAY RELATING TO OR ARISING OUT OF THIS
AGREEMENT OR ANY ACTION TAKEN OR OMITTED BY THE AGENT OR THE ISSUING BANK UNDER
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT (INCLUDING THE AGENT'S AND THE
ISSUING BANK'S OWN NEGLIGENCE), PROVIDED THAT NO BANK SHALL BE LIABLE FOR ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS RESULTING FROM THE AGENT'S
AND THE ISSUING BANK'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT
LIMITATION OF THE FOREGOING, EACH BANK AGREES TO REIMBURSE THE AGENT PROMPTLY
UPON DEMAND FOR ITS RATABLE SHARE OF ANY OUT-OF-POCKET EXPENSES (INCLUDING
COUNSEL FEES) INCURRED BY THE AGENT IN CONNECTION WITH THE PREPARATION,
EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR ENFORCEMENT
(WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL
ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT, TO THE EXTENT THAT THE AGENT IS NOT REIMBURSED FOR SUCH
BY THE BORROWER.
Section 8.06. Successor Agent and Issuing Bank. The Agent or the
Issuing Bank may resign at any time by giving written notice thereof to the
Banks and the
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Borrower and may be removed at any time with or without cause by the Majority
Banks upon receipt of written notice from the Majority Banks to such effect.
Upon receipt of notice of any such resignation or removal, the Majority Banks
shall have the right to appoint a successor Agent or Issuing Bank only with the
consent of the Borrower, which consent shall not be unreasonably withheld. If
no successor Agent or Issuing Bank shall have been so appointed by the Majority
Banks with the consent of the Borrower, and shall have accepted such
appointment, within 30 days after the retiring Agent's or Issuing Bank's giving
of notice of resignation or the Majority Banks' removal of the retiring Agent
or Issuing Bank, then the retiring Agent or Issuing Bank may, on behalf of the
Banks and the Borrower, appoint a successor Agent or Issuing Bank, which shall
be, in the case of a successor agent, a commercial bank organized under the
laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $500,000,000.00 and, in the case of
the Issuing Bank, a Bank. Upon the acceptance of any appointment as Agent or
Issuing Bank by a successor Agent or Issuing Bank, such successor Agent or
Issuing Bank shall thereupon succeed to and become vested with all the rights,
powers, privileges, and duties of the retiring Agent or Issuing Bank, and the
retiring Agent or Issuing Bank shall be discharged from its duties and
obligations under this Agreement and the other Credit Documents, except that
the retiring Issuing Bank shall remain the Issuing Bank with respect to any
Letters of Credit outstanding on the effective date of its resignation or
removal and the provisions affecting the Issuing Bank with respect to such
Letters of Credit shall inure to the benefit of the retiring Issuing Bank until
the termination of all such Letters of Credit. After any retiring Agent's or
Issuing Bank's resignation or removal hereunder as Agent or Issuing Bank, the
provisions of this Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent or Issuing Bank under
this Agreement and the other Credit Documents.
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ARTICLE IX
MISCELLANEOUS
Section 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement, the Notes, or any other Credit Document, nor
consent to any departure by the Borrower or any Guarantor therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Majority Banks and the Borrower, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver, or consent shall, unless
in writing and signed by all the Banks, do any of the following: (a) waive any
of the conditions specified in Section 3.01 or 3.02, (b) increase the Revolving
A Commitment or the Revolving B Commitment of the Banks, (c) reduce the
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder or under any other Credit Document, (d) postpone any date fixed for
any payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder or extend the Termination Date or the Maturity Date,
(e) change the percentage of Banks which shall be required for the Banks or any
of them to take any action hereunder or under any other Credit Document, (f)
amend Section 2.10 or this Section 9.01, (g) amend the definition of "Majority
Banks," (h) release any Guarantor from its obligations under any Guaranty, or
(i) release any collateral securing the Obligations; and provided, further,
that no amendment, waiver or consent shall, unless in writing and signed by the
Agent or the Issuing Bank in addition to the Banks required above to take such
action, affect the rights or duties of the Agent or the Issuing Bank, as the
case may be, under this Agreement or any other Credit Document.
Section 9.02. Notices, Etc. All notices and other communications
shall be in writing (including, without limitation, telecopy or telex) and
mailed by certified mail, return receipt requested, telecopied, telexed, hand
delivered, or delivered by a nationally recognized overnight courier, at the
address for the appropriate party specified in Schedule 1 or at such other
address as shall be designated by such party in a written notice to the other
parties. All such notices and communications shall, when so mailed,
telecopied, telexed, or hand delivered or delivered by a nationally recognized
overnight courier, be effective when received if mailed, when telecopy
transmission is completed, when confirmed by telex answer-back, or when
delivered by such messenger or courier, respectively, except that notices and
communications to the Agent pursuant to Article II or VIII shall not be
effective until received by the Agent.
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Section 9.03. No Waiver; Remedies. No failure on the part of any
Bank, the Agent, or the Issuing Bank to exercise, and no delay in exercising,
any right hereunder or under any Note shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 9.04. Costs and Expenses. The Borrower agrees to pay
within 30 days after written demand (a) all reasonable out-of-pocket costs and
expenses of the Agent in connection with the preparation, execution, delivery,
administration, modification, and amendment of this Agreement, the Notes, the
Guaranties, and the other Credit Documents including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Agent with
respect to advising the Agent as to its rights and responsibilities under this
Agreement, and (b) all out-of-pocket costs and expenses, if any, of the Agent,
the Issuing Bank, and each Bank (including, without limitation, reasonable
counsel fees and expenses of the Agent, the Issuing Bank, and each Bank) in
connection with the enforcement (whether through negotiations, legal
proceedings, or otherwise) of this Agreement, the Notes, the Guaranties, and
the other Credit Documents.
Section 9.05. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower and the Agent, and
when the Agent shall have, as to each Bank, either received a counterpart
hereof executed by such Bank or been notified by such Bank that such Bank has
executed it and thereafter shall be binding upon and inure to the benefit of
the Borrower, the Agent, the Issuing Bank, and each Bank and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights or delegate its duties under this Agreement or any interest
in this Agreement without the prior written consent of each Bank.
Section 9.06. Bank Assignments and Participations.
(a) Assignments. Any Bank may assign to one or more Eligible
Assignees all or any portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
Advances owing to it, the Notes held by it, and the participation interest in
the Letter of Credit Obligations held by it); provided, however, that (i) each
such assignment shall be of a constant, and not a varying, percentage of all of
such Bank's rights and obligations under this Agreement, (ii) the amount of the
Commitments and Advances of such Bank being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall be, if to an entity other than a Bank,
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not less than $5,000,000.00 and shall be an integral multiple of $1,000,000.00,
(iii) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with the Notes subject to such assignment, and (iv) each
Eligible Assignee (other than the Eligible Assignee of the Agent) shall pay to
the Agent a $2,500 administrative fee. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least three
Business Days after the execution thereof, (A) the assignee thereunder shall be
a party hereto for all purposes and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder and (B) such Bank
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of
such Bank's rights and obligations under this Agreement, such Bank shall cease
to be a party hereto).
(b) Term of Assignments. By executing and delivering an
Assignment and Acceptance, the Bank thereunder and the assignee thereunder
confirm to and agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such Bank makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency of value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Bank makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the Guarantors or the performance or observance by the Borrower or
the Guarantors of any of their obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 4.05 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such Bank, or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and (vi) such
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assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed
by it as a Bank.
(c) The Register. The Agent shall maintain at its address
referred to in Section 9.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Banks and the Commitments of, and principal amount of the
Advances owing to, each Bank from time to time (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent, the Issuing Bank, and the Banks
may treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Bank at any reasonable time and from time
to time upon reasonable prior notice.
(d) Procedures. Upon its receipt of an Assignment and Acceptance
executed by a Bank and an Eligible Assignee, together with the Notes subject to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of the attached Exhibit A, (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt notice thereof to the Borrower.
Within five Business Days after its receipt of such notice, the Borrower shall
execute and deliver to the Agent in exchange for the surrendered Notes (A) a
new Revolving A Note to the order of such Eligible Assignee in an amount equal
to the Revolving A Commitment assumed by it pursuant to such Assignment and
Acceptance and a new Revolving B Note to the order of such Eligible Assignee in
an amount equal to the outstanding principal amount of the Revolving B
Commitment assigned to such Eligible Assignee and (B) if such Bank has retained
any Revolving A Commitment hereunder, a new Revolving A Note to the order of
such Bank in an amount equal to the Revolving A Commitment retained by it
hereunder and a new Revolving B Note to the order of such Bank in an amount
equal to the outstanding principal amount of the Revolving B Commitment
retained by such Bank. Such new Notes shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the attached Exhibit D-1 and D-2, respectively.
(e) Participations. Each Bank may sell participations to one or
more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the Advances owing to it, its participation
interest in the Letter of Credit Obligations, and the Notes held by it);
provided, however, that (i) such Bank's obligations under this
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Agreement (including, without limitation, its Commitments to the Borrower
hereunder) shall remain unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) such Bank shall remain the holder of any such Notes for all
purposes of this Agreement, (iv) the Borrower, the Agent, and the Issuing Bank
and the other Banks shall continue to deal solely and directly with such Bank
in connection with such Bank's rights and obligations under this Agreement, and
(v) such Bank shall not require the participant's consent to any matter under
this Agreement or any other Credit Document, except for change in the principal
amount of the Notes, reductions in fees or interest, releasing any collateral,
or extending the Termination Date or the Maturity Date. The Bank selling any
such participation shall give notice thereof to the Borrower, identifying the
participant and the amount of such participation. The Borrower hereby agrees
that participants shall have the same rights under Sections 2.11, 2.12,
2.13(c), and 9.07 as a Bank to the extent of their respective participations
provided that no participant shall be entitled to recover under the
aforedescribed provisions an amount in excess of the proportionate share which
such participant holds of the original aggregate principal amount hereunder to
which the assigning Bank would otherwise be entitled.
(f) Disclosure. Any Bank may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 9.06, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrower furnished to such Bank
by or on behalf of the Borrower; provided that, prior to any such disclosure,
the assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any confidential information relating to the
Borrower received by it from such Bank and such assignee or participant shall
agree to be subject to the provisions of Section 9.13 hereof.
Section 9.07. Indemnification. THE BORROWER SHALL INDEMNIFY THE
AGENT, THE BANKS, THE ISSUING BANK, AND EACH AFFILIATE THEREOF AND THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS FROM, AND DISCHARGE,
RELEASE, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, OR DAMAGES WHICH MAY BE IMPOSED ON, INCURRED BY, OR
ASSERTED AGAINST THEM IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT
OR ANY ACTION TAKEN OR OMITTED BY THEM UNDER THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT (INCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES, OR EXPENSE
INCURRED BY REASON OF THE PERSON BEING
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INDEMNIFIED'S OWN NEGLIGENCE), BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES,
CLAIMS, DAMAGES, OR EXPENSES INCURRED BY REASON OF THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED.
Section 9.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
Section 9.09. Survival of Representations, Etc. All
representations and warranties contained in this Agreement or made in writing
by or on behalf of the Borrower in connection herewith shall survive the
execution and delivery of this Agreement and the Credit Documents, the making
of the Advances and any investigation made by or on behalf of the Banks, none
of which investigations shall diminish any Bank's right to rely on such
representations and warranties. All obligations of the Borrower provided for
in Sections 2.11, 2.12, 2.13(c), 9.04, and 9.07 and all of the obligations of
the Banks in Section 8.05 shall survive any termination of this Agreement and
repayment in full of the Obligations.
Section 9.10. Severability. In case one or more provisions of this
Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality,
and enforceability of the remaining provisions contained herein or therein
shall not be affected or impaired thereby.
Section 9.11. Business Loans. The Borrower warrants and represents
that the Loans evidenced by the Notes are and shall be for business,
commercial, investment, or other similar purposes and not primarily for
personal, family, household, or agricultural use, as such terms are used in
Chapter One ("Chapter One") of the Texas Credit Code. At all such times, if
any, as Chapter One shall establish a Maximum Rate, the Maximum Rate shall be
the "indicated rate ceiling" (as such term is defined in Chapter One) from time
to time in effect.
Section 9.12. Governing Law. This Agreement, the Notes and the
other Credit Documents shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas. Without limiting the intent of
the parties set forth above, (a) Chapter 15, Subtitle 3, Title 79, of the
Revised Civil Statutes of Texas, 1925, as amended (relating to revolving loans
and revolving tri-party accounts), shall not apply to this Agreement, the
Notes, or the transactions contemplated hereby and (b) to the
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extent that any Bank may be subject to Texas law limiting the amount of
interest payable for its account, such Bank shall utilize the indicated
(weekly) rate ceiling from time to time in effect as provided in Article
5069-1.04 of the Revised Civil Statutes of Texas, as amended. Each Letter of
Credit shall be governed by the Uniform Customs and Practice for Documentary
Credits, International Chamber of Commerce Publication No. 500 (1993 version).
Section 9.13. Confidentiality. The Agent and the Banks shall use
their best efforts to keep confidential any proprietary information of the
Borrower or any Subsidiary identified in writing by the Borrower as being
proprietary and confidential; provided that the Agent or any Bank may disclose
any such information (a) to enable it to comply with any governmental
requirement applicable to it, (b) in connection with the defense of any
litigation or other proceeding brought against it arising out of the
transactions contemplated by this Agreement and the other Credit Documents, (c)
in connection with the enforcement of the rights and remedies of the Agent and
the Banks under any Credit Document, (d) to its legal counsel and independent
certified public accountants, and (e) as set forth in Section 9.06(f).
THE BORROWER, THE BANKS, THE ISSUING BANK AND THE AGENT HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER CREDIT
DOCUMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND IRREVOCABLY
SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF XXXXXX COUNTY, TEXAS,
AND THE SOUTHERN DISTRICT OF TEXAS FOR THE RESOLUTION OF ANY DISPUTES UNDER
THIS AGREEMENT AND THE CREDIT DOCUMENTS, AND HEREBY IRREVOCABLY WAIVE ANY CLAIM
THAT SUCH JURISDICTION IS IMPRACTICAL OR INCONVENIENT.
THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THIS
AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES 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.
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EXECUTED as of the date first above written.
BORROWER:
3DX TECHNOLOGIES INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
AGENT:
NATIONSBANK OF TEXAS, N.A.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
BANK:
NATIONSBANK OF TEXAS, N.A.
REVOLVING A COMMITMENT By:
------------------------------------------
$25,000,000.00 Name:
----------------------------------------
REVOLVING B COMMITMENT Title:
$25,000,000.00
TOTAL REVOLVING A COMMITMENTS
$25,000,000.00
TOTAL REVOLVING B COMMITMENTS
$25,000,000.00
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