EXHIBIT 10(k)
CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1996
AMONG
SANTA FE ENERGY RESOURCES, INC.,
THE BANKS SIGNATORY HERETO
THE CHASE MANHATTAN BANK
AS ADMINISTRATIVE AGENT
AND
ABN AMRO BANK N.V.
AS CO-AGENT
TABLE OF CONTENTS
Section 1. DEFINITIONS AND ACCOUNTING MATTERS........................1
1.1. CERTAIN DEFINED TERMS.....................................1
1.2. ACCOUNTING TERMS AND DETERMINATIONS......................21
1.3. TYPES OF LOANS...........................................22
Section 2. COMMITMENTS..............................................22
2.1. LOANS....................................................22
2.2. LETTERS OF CREDIT........................................23
2.3 BORROWING BASE AND AVAILABLE BORROWING BASE..............25
2.4 BORROWING BASE DEFICIENCIES..............................26
2.5. TERMINATIONS, REDUCTIONS AND CHANGES OF COMMITMENTS......26
2.6. FEES.....................................................26
2.7. AFFILIATES; LENDING OFFICES..............................27
2.8. SEVERAL OBLIGATIONS......................................27
2.9. NOTES....................................................27
2.10. USE OF PROCEEDS..........................................28
Section 3. BORROWINGS AND PREPAYMENTS...............................28
3.1. BORROWINGS...............................................28
3.2. PREPAYMENTS..............................................28
Section 4. PAYMENTS OF PRINCIPAL AND INTEREST.......................29
4.1. REPAYMENT OF LOANS AND REIMBURSEMENT OBLIGATIONS.........29
4.2. INTEREST.................................................29
4.3. SELECTION OF INTEREST RATES..............................29
Section 5. PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS, ETC..........30
5.1. PAYMENTS.................................................30
5.2. PRO RATA TREATMENT.......................................31
5.3. COMPUTATIONS.............................................31
5.4. MINIMUM AND MAXIMUM AMOUNTS..............................31
5.5. CERTAIN ACTIONS, NOTICES, ETC............................32
5.6. NON-RECEIPT OF FUNDS BY THE AGENT........................33
5.7. SHARING OF PAYMENTS, ETC.................................33
Section 6. YIELD PROTECTION AND ILLEGALITY..........................34
6.1. ADDITIONAL COSTS.........................................34
6.2. LIMITATION ON TYPES OF LOANS.............................36
6.3. ILLEGALITY...............................................36
6.4. SUBSTITUTE ALTERNATE BASE RATE LOANS.....................37
6.5. COMPENSATION.............................................38
6.6. ADDITIONAL COSTS IN RESPECT OF LETTERS OF CREDIT.........38
6.7. CAPITAL ADEQUACY.........................................40
Section 7. CONDITIONS PRECEDENT.....................................41
7.1. INITIAL CONDITIONS PRECEDENT.............................41
7.2. ALL LOANS AND LETTERS OF CREDIT..........................42
7.3. CONVERSIONS AND CONTINUATIONS OF EURODOLLAR LOANS........43
Section 8. REPRESENTATIONS AND WARRANTIES...........................44
8.1. CORPORATE EXISTENCE......................................44
8.2. INFORMATION..............................................44
8.3. LITIGATION; COMPLIANCE...................................44
8.4. NO BREACH................................................45
8.5. NECESSARY ACTION.........................................45
8.6. APPROVALS................................................45
8.7. REGULATIONS G, T, U AND X................................45
8.8. ERISA....................................................46
8.9. TAXES....................................................46
8.10. SUBSIDIARIES.............................................46
8.11. INVESTMENT COMPANY ACT...................................47
8.12. PUBLIC UTILITY HOLDING COMPANY ACT; FEDERAL POWER ACT....47
8.13. ENVIRONMENTAL MATTERS....................................47
8.14. TITLE....................................................48
Section 9. COVENANTS................................................48
9.1. FINANCIAL STATEMENTS AND CERTIFICATES....................48
9.2. INSPECTION OF PROPERTY...................................51
9.3. COMPLIANCE WITH ENVIRONMENTAL LAWS.......................51
9.4. PAYMENT OF TAXES.........................................52
9.5. MAINTENANCE OF INSURANCE.................................52
9.6. RESTRICTED PAYMENTS......................................52
9.7. INDEBTEDNESS, LIEN AND OTHER RESTRICTIONS................54
9.8. ISSUANCE OF STOCK BY RESTRICTED SUBSIDIARIES.............61
9.9. CAPITALIZATION...........................................61
9.10. INTEREST COVERAGE........................................61
9.11. SENIOR TOTAL DEBT; SPECIAL DEBT..........................61
9.12. RESTRICTED AND UNRESTRICTED SUBSIDIARIES.................62
Section 10. DEFAULTS.................................................62
10.1. EVENTS OF DEFAULT........................................62
Section 11. THE AGENT................................................66
11.1. APPOINTMENT, POWERS AND IMMUNITIES.......................66
11.2. RELIANCE BY AGENT........................................66
11.3. DEFAULTS.................................................66
11.4. RIGHTS AS A BANK.........................................67
11.5. INDEMNIFICATION..........................................67
11.6. NON-RELIANCE ON THE AGENT AND OTHER BANKS................68
11.7. FAILURE TO ACT...........................................68
11.8. RESIGNATION OR REMOVAL OF THE AGENT......................68
Section 12. MISCELLANEOUS............................................69
12.1. WAIVER...................................................69
12.2. NOTICES..................................................69
12.3. EXPENSES.................................................69
12.4. INDEMNIFICATION..........................................70
12.5. AMENDMENTS, ETC..........................................71
12.6. SUCCESSORS AND ASSIGNS...................................72
12.7. SURVIVAL; TERMINATION; REINSTATEMENT.....................75
12.8. LIMITATION OF INTEREST...................................75
12.9. CAPTIONS.................................................76
12.10. COUNTERPARTS.............................................76
12.11. GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL.....................................76
12.12. CONFIDENTIALITY..........................................77
12.13. ENTIRE AGREEMENT.........................................77
12.14. CONSTRUCTION.............................................78
12.15. SEVERABILITY.............................................78
12.16. SFER MRI LOANS...........................................78
12.17. EXISTING CREDIT FACILITY TERMINATED......................78
PRICING SCHEDULE
APPENDIX I
EXHIBITS:
A - Form of Note
B - Form of Request for Extension of Credit
C - Form of Assignment Agreement
D -Form of Application
E - Form of Rate Designation Notice
SCHEDULES:
I - Restricted and Unrestricted Subsidiaries
II - Liens and Total Debt and Guaranties
III - Opinion of Xxxxxxx & Xxxxx L.L.P.
IV - Opinion of Xxxxx X. Xxxxx
V - Subordination Provisions
VI - Jurisdictions for which Certificates are to be Provided
CREDIT AGREEMENT
This Credit Agreement (as amended, modified, supplemented or restated
from time to time, this "AGREEMENT") dated as of November 13, 1996, is by and
among SANTA FE ENERGY RESOURCES, INC. (the "COMPANY"), a Delaware corporation;
each of the financial institutions which is or may from time to time become a
party hereto (individually a "BANK" and collectively the "BANKS"); ABN AMRO BANK
N.V. as Co-Agent (in such capacity, the "CO- AGENT"); and THE CHASE MANHATTAN
BANK ("CHASE"), a New York banking corporation, as Administrative Agent for the
Banks (in such capacity, together with any other Person who becomes the Agent
pursuant to SECTION 11.8, the "AGENT").
AGREEMENTS.
The parties agree as follows:
Section 1. DEFINITIONS AND ACCOUNTING MATTERS.
1.1. CERTAIN DEFINED TERMS. As used in this Agreement or the other
Credit Documents, the following terms shall have the following meanings:
"ADDITIONAL COSTS" shall have the meaning ascribed to such term in
SECTION 6.1.
"ADJUSTED EBITDA" shall mean, for any period, EBITDA for such period
minus the aggregate of all Restricted Distributions made by the Company and the
Restricted Subsidiaries in such period.
"AFFILIATE" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person; and with respect to an individual, "AFFILIATE" shall
also mean any individual related to such individual by blood or marriage. As
used in this definition, "CONTROLS", "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH" shall mean the possession, directly or indirectly, of power to direct or
cause the direction of the management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
"AGENT" shall have the meaning ascribed to such term in the introduction.
"AGGREGATE COMMITMENT" shall mean the total of all Commitments of all Banks.
"AGREEMENT" shall have the meaning ascribed to such term in the introduction.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next higher 1/100%) equal to the greater of (a)
the Prime Rate in effect on such
day or (b) the Fed Funds Rate in effect for such day plus 1/2%. Any change in
the Alternate Base Rate due to a change in the Fed Funds Rate or the Prime Rate
shall be effective on the effective date of such change in the Fed Funds Rate or
the Prime Rate. If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Fed Funds Rate for any reason, including the inability or failure
of the Agent to obtain sufficient bids or publications in accordance with the
terms hereof, the Alternate Base Rate shall be the Prime Rate until the
circumstances giving rise to such inability no longer exist.
"ALTERNATE BASE RATE LOANS" shall mean Loans which bear interest at a
rate based upon the Alternate Base Rate.
"APPLICABLE ENVIRONMENTAL LAWS" shall mean all applicable environmental
or pollution-control Legal Requirements governing, without limitation,
wastewater effluent, solid and hazardous waste or substances, and air emissions,
together with any applicable requirements for conducting, on a timely basis,
reporting, record-keeping, periodic tests and monitoring for contamination of
ground water, surface water, air and land and for biological toxicity of the
aforesaid, including, without limitation, the Resource Conservation and Recovery
Act of 1976, The Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (as amended by the Superfund Amendments and
Reauthorization Act), the Emergency Planning and Community Right-to-Know Act,
the Toxic Substances Control Act, the Solid Waste Disposal Act, the Safe
Drinking Water Act, the Hazardous Materials Transportation Act, the Clean Air
Act, the Clean Water Act, the Oil Pollution Act, and the Federal Insecticide,
Fungicide and Rodenticide Act, in each case as amended from time to time.
"APPLICABLE LENDING OFFICE" shall mean, for each Bank and for each Type
of Loan, the lending office of such Bank (or of an Affiliate of such Bank)
designated for such Type of Loan below its name on the signature pages hereof or
such other office of such Bank (or of an Affiliate of such Bank) as such Bank
may from time to time specify to the Agent and the Company as the office by
which its Loans of such Type are to be made and/or issued and maintained.
"APPLICABLE MARGIN" shall mean (a) on any day during any Margin Period,
with respect to any Eurodollar Loan, the percent per annum determined for each
day during such Margin Period according to the Pricing Schedule; (b) on any day
during any Margin Period, with respect to any Letter of Credit, the percent per
annum determined for each day during such Margin Period according to the Pricing
Schedule; and (c) if no Margin Period is in effect, the rate determined from
time to time according to SECTION 4.3(B).
"APPLICATION" shall mean an application for a letter of credit
substantially in the form of EXHIBIT D.
"ASSET SALE OF PETROLEUM PROPERTIES" shall mean any transfer, sale or
other disposition (including pursuant to any consolidation or merger) by the
Company or any Restricted Subsidiary in any single transaction or series of
transactions of (a) shares of capital stock or other ownership
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interests of a Restricted Subsidiary which owns Petroleum Properties or (b) any
Petroleum Properties; PROVIDED, HOWEVER, that the term "Asset Sale of Petroleum
Properties" shall not include (i) a transfer, sale or other disposition of
Hydrocarbons in the ordinary course of the oil and gas production or marketing
operations conducted by the Company and the Restricted Subsidiaries; (ii) any
transfer, sale or other disposition effected in connection with the Monterey
Transactions; or (iii) the transfer, sale or other disposition of any capital
stock or Petroleum Properties by the Company to a Restricted Subsidiary or by a
Restricted Subsidiary to the Company or by a Restricted Subsidiary to a
Restricted Subsidiary.
"ASSIGNMENT AGREEMENT" shall mean an Assignment and Acceptance Agreement
substantially in the form of EXHIBIT C.
"ATTRIBUTABLE DEBT" shall mean the lesser of (a) the fair market value
of the assets sold pursuant to any Sale and Leaseback Transaction (which
determination shall be based upon a written opinion (the cost of which shall be
borne exclusively by the Company) as to valuation from an independent valuation
expert selected by the Company) or (b) the present value (discounted according
to GAAP at the interest rate implicit in the lease) of the obligations of the
lessee for rental payments during the term of any lease constituting a part of
such Sale and Leaseback Transaction; PROVIDED, that no Attributable Debt shall
be assigned to Sale and Leaseback Transactions of the type described in SECTION
9.7(E)(2).
"AVAILABLE BORROWING BASE" shall mean the lesser of (a) the Aggregate
Commitment and (b) the Borrowing Base minus Other Liabilities.
"BANKS" shall have the meaning ascribed to such term in the
introduction.
"BOARD" shall mean the Board of Governors of the Federal Reserve System
of the United States or any entity succeeding to all or part of its functions.
"BORROWING BASE" shall mean, as of the most recent determination
pursuant to this Agreement and continuing until the next determination of a
Borrowing Base in accordance with this Agreement, the amount of Total Debt which
the Agent (with the consent of the Required Banks) shall determine in its sole
discretion (using its normal and customary oil and gas lending practices) can be
supported by the proved producing and proved non-producing oil and gas reserves
of the Company and the Restricted Subsidiaries, based on the Most Recent
Engineering Report and the Most Recent Other Liabilities Report.
"BORROWING BASE DEFICIENCY" shall mean at any time the amount, if any,
by which the sum of (a) the aggregate outstanding principal balance of the Notes
and (if the Available Borrowing Base at such time shall be determined by
reference to the Aggregate Commitment as provided in CLAUSE (A) of the
definition of "Available Borrowing Base") the SFER MRI Loans at such time PLUS
(b) the aggregate Letter of Credit Liabilities at such time shall exceed the
Available Borrowing Base then in effect.
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"BUSINESS DAY" shall mean any day other than a day on which commercial
banks are authorized or required to close in New York, New York, and where such
term is used in the definition of "QUARTERLY DATE" or, if such day relates to a
borrowing of, a payment or prepayment of principal of or interest on, or an
Interest Period for, a Eurodollar Loan or a notice by the Company with respect
to any such borrowing, payment, prepayment or Interest Period, which is also a
day on which dealings in Dollar deposits are carried out in the relevant
Eurodollar interbank market.
"BUSINESS ENTITY" shall mean a corporation, partnership, limited
partnership, limited liability company, joint stock association, business trust
or other separate business entity.
"CAPITAL GAINS" shall mean gains (net of expenses and income taxes
applicable thereto) in excess of losses resulting from the sale, conversion or
other disposition of capital assets (I.E., assets other than current assets).
"CAPITALIZATION" shall mean the aggregate of stockholders equity of the
Company and the Restricted Subsidiaries as shown on the most recent balance
sheet furnished pursuant to SECTION 9.1(A) OR (B) and Total Debt of the Company
and the Restricted Subsidiaries.
"CAPITALIZED LEASE OBLIGATION" shall mean any rental obligation which,
under GAAP, is or will be required to be capitalized on the books of the Company
or any Restricted Subsidiary, taken at the amount thereof accounted for as
indebtedness (net of interest expense) in accordance with GAAP.
"CHANGE OF CONTROL" shall mean (a) any change so that any Person (or any
Persons acting together which would constitute a Group), together with any
Affiliates or Related Persons thereof, other than Permitted Holders, shall at
any time either (1) Beneficially Own more than 50% of the aggregate voting power
of all classes of Voting Stock of the Company or (2) succeed in having
sufficient of its or their nominees elected to the Board of Directors of the
Company such that such nominees, when added to any existing director remaining
on the Board of Directors of the Company after such election who is an Affiliate
or Related Person of such Person or Group, shall constitute a majority of the
Board of Directors of the Company; or (b) the Company shall convey, exchange,
transfer or otherwise dispose of all or substantially all of its assets except
as permitted by SECTION 9.7(E); PROVIDED that the Monterey Transactions shall
not constitute a Change of Control. As used herein (a) "BENEFICIALLY OWN" shall
mean beneficially own as defined in Rule 13d-3 of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), or any successor provision thereto; (b)
"GROUP" shall mean a "group" for purposes of Section 13(d) of the Exchange Act;
(c) "RELATED PERSON" of any Person shall mean any other Person owning (1) 5% or
more of the outstanding common stock of such Person or (2) 5% or more of the
Voting Stock of such Person, and (d) "VOTING STOCK" of any Person shall mean
capital stock of such Person which ordinarily has voting power for the election
of directors (or persons performing similar functions) of such Person, whether
at all times or only so long as no senior class of securities has such voting
power by reason of any contingency.
4
"CHASE" shall have the meaning ascribed to such term in the
introduction.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, together with all publicly available written regulations,
rulings and interpretations thereof or thereunder by the Internal Revenue
Service or any entity succeeding to all or part of its functions.
"COMBINED GROUP" shall mean the Company and the Restricted Subsidiaries.
"COMMITMENT" shall mean, as to any Bank, the obligation, if any, of such
Bank to extend credit to the Company in the form of Loans and Letter of Credit
Liabilities in an aggregate principal amount at any one time outstanding up to
but not exceeding the amount set forth opposite such Bank's name on the
signature pages hereof under the caption "Commitment" or in its Assignment
Agreement (as the same may be reduced from time to time or terminated pursuant
to SECTION 2.5 or modified pursuant to SECTION 12.6).
"COMMITMENT FEE" shall have the meaning ascribed to such term in SECTION
2.6.
"COMMITMENT PERCENTAGE" shall mean, as to any Bank at any time, the
percentage equivalent of a fraction, the numerator of which is such Bank's
Commitment at such time and the denominator of which is the Aggregate Commitment
at such time.
"COMPANY" shall have the meaning ascribed to such term in the
introduction.
"COMPANY REPORT" shall mean one or more reports, in form satisfactory to
the Agent and the Required Banks, prepared by petroleum engineers employed by
the Company or its Subsidiaries, which shall evaluate (i) at least 85% of the
present value of the producing and non-producing proved oil and gas reserves of
the Company and the Restricted Subsidiaries evaluated in the Most Recent
Engineering Report and (ii) any other properties as to which the Company has
conducted successful exploration activities subsequent to the Most Recent
Engineering Report, in each case effective as of the immediately preceding July
1. Each Company Report shall set forth production, drilling and acquisition
information and other information requested by the Agent and shall be based upon
updated economic assumptions acceptable to the Agent.
"CONSOLIDATED NET EARNINGS" shall mean consolidated gross revenues
(including Capital Gains) of the Company and the Restricted Subsidiaries less
all operating and non-operating expenses of the Company and the Restricted
Subsidiaries including all charges of a proper character (including current and
deferred taxes on income, provision for taxes on unremitted foreign earnings
which are included in gross revenues, and current additions to reserves), but
not including in gross revenues any gains resulting from write-up of assets, any
equity of the Company or any Restricted Subsidiary in the unremitted earnings of
any Person which is not a Restricted Subsidiary, any earnings of any Person
acquired by the Company or any Restricted Subsidiary through purchase, merger or
consolidation or otherwise for any year prior to the year
5
of acquisition, or any deferred credit representing the excess of equity in any
Restricted Subsidiary at the date of acquisition over the cost of the investment
in such Restricted Subsidiary; all determined in accordance with GAAP.
"CONSOLIDATED NET WORTH" shall mean, at any date, the consolidated
stockholders' equity of the Company and the Restricted Subsidiaries MINUS (to
the extent included in the calculation of consolidated shareholders' equity) the
aggregate amount of Investments in Unrestricted Subsidiaries, all determined in
accordance with the last sentence of the definition of "Investment" and GAAP.
"CONTINUATION" shall have the meaning ascribed to such term in SECTION
4.3.
"CONVERSION" shall have the meaning ascribed to such term in SECTION
4.3.
"COVER" for Letter of Credit Liabilities shall be effected by paying to
the Agent immediately available funds in the amount of such Letter of Credit
Liabilities, such amount to be held by the Agent until such time as such Letter
of Credit Liabilities expire according to their terms or become Letter of Credit
Advances, whereupon the Agent may use such funds to repay such Letter of Credit
Advances.
"CREDIT DOCUMENTS" shall mean this Agreement, the Notes, all
Applications, all Letters of Credit, the Notice of Entire Agreement, and all
instruments, certificates and agreements now or hereafter executed or delivered
to the Agent or any Bank pursuant to any of the foregoing.
"DEFAULT" shall mean an Event of Default or an event, circumstance or
condition which with notice or lapse of time or both would, unless cured or
waived, become an Event of Default; PROVIDED that a Borrowing Base Deficiency
shall not be a Default so long as the Company complies with SECTION 2.4.
"EBITDA" shall mean for any period Consolidated Net Earnings for such
period (calculated, for purposes of this definition only, without taking into
account extraordinary items under GAAP or capital gains or capital losses), plus
the aggregate amounts deducted in deter mining Consolidated Net Earnings in
respect of (a) all provisions for any federal, state or other income taxes made
by the Company and the Restricted Subsidiaries during such period; (b) Fixed
Charges of the Company and the Restricted Subsidiaries during such period; (c)
depreciation, depletion and amortization charges of the Company and the
Restricted Subsidiaries for such period, and (d) all other non-cash charges of
the Company and the Restricted Subsidiaries for such period, all determined in
accordance with GAAP; PROVIDED, HOWEVER, that EBITDA shall mean, for any
calculation, $47,500,000, $31,800,000, $35,200,000 and $39,700,000 for the
fiscal quarters ended December 31, 1995, March 31, 1996, June 30, 1996 and
September 30, 1996, respectively; PROVIDED FURTHER, that on and after the
Financial Statement Delivery Date for the fiscal quarter ended December 31,
1996, EBITDA for the fiscal quarter ended December 31, 1996, shall be
$16,200,000.00 plus EBITDA (determined in accordance with the first clause of
6
this sentence) for the two months ended December 31, 1996.
"ELIGIBLE ASSIGNEE" shall mean (a) a commercial bank organized or
licensed under the laws of the United States of America, or a state thereof, and
having total assets in excess of $1,000,000,000, (b) a commercial bank organized
under the laws of any other country which is a member of the OECD, or a
political subdivision of any such country, and having total assets in excess of
$1,000,000,000; provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country that also is
a member of the OECD, and (c) a finance company, insurance company, other
financial institution or fund, acceptable to the Agent and the Company, which is
regularly engaged in making, purchasing or investing in loans and having total
assets in excess of $1,000,000,000.
"ENVIRONMENTAL CLAIM" shall mean any claim, demand, action, cause of
action, suit, judgment, Governmental or private investigation or proceeding
relating to remediation or compliance with Applicable Environmental Laws, or any
proceeding or lien, whether threatened, sought, brought or imposed, that seeks
to recover costs, damages, punitive damages, expenses, fines, criminal
liability, judgments, response costs, investigative and monitoring costs,
abatement costs, attorney's fees, expert's fees or consultant's fees, or seeks
to impose liability regarding the Company or any of its Subsidiaries, or any of
their sites or properties for violations of Applicable Environmental Laws or for
pollution, contamination, investigation, preservation, protection, remediation
or clean up of the air, surface water, ground water, soil or wetlands, or
otherwise in relation to the use, storage, generation, release, handling or
disposal of materials and substances that are regulated by or subject to
Applicable Environmental Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, or any successor statute, and all rules,
regulations and interpretations by the Internal Revenue Service or the
Department of Labor, or any entity succeeding to all or part of their respective
functions.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) which is a member of a group of which the Company is a member and
which is under common control with the Company within the meaning of the
regulations under Section 414 of the Code.
"EURODOLLAR LOANS" shall mean Loans which bear interest at a rate based
on a rate referred to in the definition of "EURODOLLAR RATE".
"EURODOLLAR RATE" shall mean, for any Interest Period for any Eurodollar
Loan, the rate per annum (rounded upwards, if necessary, to the nearest 1/100%)
determined by the Agent based upon rates quoted at approximately 10:00 a.m.
(local time in the relevant Eurodollar interbank market) (or as soon thereafter
as practicable) on the day two Business Days prior to the first day of such
Interest Period for the offering by Chase to leading dealers in such Eurodollar
interbank market of Dollar deposits for delivery on the first day of such
Interest Period, in immediately available funds and having a term comparable to
such Interest Period and in an amount
7
comparable to the principal amountof the respective Eurodollar Loan to which
such Interest Period relates. Each determination of the Eurodollar Rate shall be
conclusive and binding, absent manifest error, and may be computed using any
reasonable averaging and attribution method.
"EXISTING CREDIT FACILITY" shall mean the Second Amended and Restated
Revolving Credit Agreement dated as of April 1, 1995, by and among the Company;
Texas Commerce Bank National Association as the Agent; Texas Commerce Bank
National Association and NationsBank of Texas, N.A. as Co-Agents; and the
financial institutions from time to time party thereto.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
SECTION 10.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
entity succeeding to any or all of its functions.
"FED FUNDS RATE" shall mean, for any day, 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) on the
succeeding 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 the day of such transactions received by the Agent from three
federal funds brokers of recognized standing selected by it.
"FINANCIAL STATEMENT DELIVERY DATE" shall mean the date on which the
quarterly or annual financial statements of the Company are delivered pursuant
to SECTION 9.1(A) or SECTION 9.1(B), as the case may be.
"FIXED CHARGES" shall mean (without duplication) for any period the sum
of interest expense in respect of all Total Debt of the Person for which the
determination is made, including imputed interest expense in respect of
Capitalized Lease Obligations; PROVIDED, that Fixed Charges shall mean, for any
calculation, $3,400,000 for each of the fiscal quarters ended December 31, 1995,
March 31, 1996, June 30, 1996 and September 30, 1996, respectively; PROVIDED
FURTHER, that Fixed Charges of the Combined Group for the fiscal quarter ended
December 31, 1996, shall be $1,100,000 plus Fixed Charges (determined in
accordance with the first clause of this sentence) of the Combined Group for the
two months ended December 31, 1996.
"GAAP" shall mean, as to a particular Person, such accounting practice
as, in the opinion of the independent accountants of recognized national
standing regularly retained by such Person and acceptable to the Agent, conforms
at the time to United States generally accepted accounting principles,
consistent with those applied in the preparation of the financial statements
referred to in SECTION 8.2(A), together with changes with which the Company's
independent auditors concur and which are noted in the financial statements
provided pursuant to SECTION 9.1(B).
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"GOVERNMENTAL AUTHORITY" shall mean any sovereign governmental
authority, the United States of America, any State of the United States and any
political subdivision of any of the foregoing, and any agency, instrumentality,
department, commission, board, bureau, central bank, authority, court or other
tribunal, in each case whether executive, legislative, judicial, regulatory or
administrative, having jurisdiction over the Company, any of the Company's
Subsidiaries, any of their respective property, the Agent or any Bank.
"GUARANTY" shall mean and include, without limitation, any obligation of
the Company or a Restricted Subsidiary
(a) constituting a guaranty, endorsement (other than an endorsement of a
negotiable instrument for collection in the ordinary course of business) or
other contingent liability (whether direct or indirect) in connection with the
obligations, stock or dividends of any Person (other than the Company or a
Restricted Subsidiary);
(b) payable under any contract (other than the Tax Indemnification
Agreement and any other tax indemnification or tax sharing agreement) providing
for the making of loans, advances or capital contributions to any Person (other
than the Company or a Restricted Subsidiary), or for the purchase of any
property from any Person, in each case in order primarily to enable such Person
to maintain working capital, net worth or any other balance sheet condition or
to pay debts, dividends or expenses;
(c) payable under any contract for the purchase of materials, supplies
or other property or services (OTHER THAN any natural gas transportation
contract or any electrical, water supply, steam purchase, natural gas purchase
or other utility supply contract) if such contract (or any related document)
requires that payment for such materials, supplies or other property or services
shall be made regardless of whether or not delivery of such materials, supplies
or other property or services is ever made or tendered; PROVIDED that the
exceptions contained in this CLAUSE (C) shall not apply to any contract for the
purchase or transportation of natural gas where payment is required regardless
of whether the delivery of such natural gas is ever made or tendered, unless at
the time such contract is entered into the aggregate of such payments under such
contract and all such existing contracts would not exceed $10,000,000 in any
calendar year based on existing rates and automatic escalations in such rates
under such contracts.
(d) payable under any contract to rent or lease (as lessee) any real or
personal property (other than any oil and gas leases) if such contract (or any
related document) provides that the obligation to make payments thereunder is
absolute and unconditional under conditions not customarily found in commercial
leases then in general use or requires that the lessee purchase or otherwise
acquire securities or obligations of the lessor; or
(e) payable under any other contract which, in economic effect, is
substantially equivalent to a guarantee for any payment or performance of an
obligation of a Person other than the Company or a Restricted Subsidiary.
9
"HIGHEST LAWFUL RATE" shall mean, on any day, the maximum nonusurious
rate of interest permitted for that day by whichever of applicable federal or
state law permits the higher interest rate, stated as a rate per annum.
"HYDROCARBONS" shall mean crude oil, condensate, natural gas, natural
gas liquids and associated substances.
"INDEMNIFIED PERSON" shall mean the Agent (including the Agent in its
capacity as the Issuer), Chase, each of the Banks, each Affiliate of any such
Person, and their respective directors, officers, employees, agents and counsel.
"INDENTURE" shall mean the Indenture between the Company and The First
National Bank of Boston, as Trustee, dated as of May 25, 1994, providing for
issuance by the Company of its 11% Senior Subordinated Notes Due 2004 in the
aggregate principal amount of up to $100,000,000 (the "SENIOR SUBORDINATED
NOTES"), as amended and supplemented by the First Supplemental Indenture dated
as of October 18, 1996.
"INDEPENDENT ENGINEERING REPORT" shall mean a report prepared by an
Independent Petroleum Engineer which sets forth the gross and net volume of
Hydrocarbons projected to be produced from the Petroleum Properties, the Net
Proceeds of Production and the present net worth of the Net Proceeds of
Production, using assumptions provided by the Agent and the Required Banks
(through the Agent), in each case by calendar year, for the remaining economic
life of the Petroleum Properties. Each Independent Engineering Report shall also
contain a list of Petroleum Properties of the members of the Combined Group and
shall identify which of the Petroleum Properties covered thereby are "proved
developed producing", "proved developed non-producing" and "proved undeveloped"
(as defined in the "Definitions for Oil and Gas Reserves" as published by the
Society of Petroleum Engineers). Each such report shall be prepared in
accordance with established criteria generally accepted in the oil and gas
industry and standards customarily used by independent petroleum engineers well
regarded in the industry in making reserve determinations or appraisals, and
shall be based on such assumptions, estimates and projections as are fully
disclosed in such Independent Engineering Report.
"INDEPENDENT PETROLEUM ENGINEER" shall mean Xxxxx Xxxxx Company
Petroleum Engineers or another independent petroleum engineer retained by the
Company acceptable to the Required Banks.
"INTEREST PAYMENT DATE" shall mean with respect to any Eurodollar Loan
or Alternate Base Rate Loan, the last day of each Interest Period applicable
thereto; PROVIDED that in the case of a Eurodollar Loan with an Interest Period
of six months, the Interest Payment Dates shall be the days that would have been
the Interest Payment Dates for such Loan had two successive Interest Periods of
three months been applicable to such Loan.
10
"INTEREST PERIOD" shall mean:
(a) with respect to any Eurodollar Loan, the period commencing on (i)
the date such Loan is made or designated as, or the effective date of any
Conversion into, a Eurodollar Loan or (ii) in the case of a Continuation to a
successive Interest Period, the last day of the immediately preceding Interest
Period, and in each case ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as the Company may
select as provided in SECTION 4.3, except that each such Interest Period which
commences on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month shall end on the last Business Day of the
appropriate subsequent calendar month; and
(b) with respect to any Alternate Base Rate Loan, the period commencing
on the date such Loan is made as, or converted into, an Alternate Base Rate Loan
and on each Quarterly Date thereafter and ending on each next succeeding
Quarterly Date or, if earlier, the date such Loan is converted into a Eurodollar
Loan;
PROVIDED that (x) each Interest Period which would otherwise end on a day which
is not a Business Day shall end on the next succeeding Business Day unless, with
respect to Eurodollar Loans only, such next succeeding Business Day falls in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day; and (y) no Interest Period may be selected for any Loan
that ends later than the Termination Date. Interest shall accrue from and
including the first day of an Interest Period to but excluding the last day of
such Interest Period.
"INVESTMENT" shall mean any purchase or other acquisition of the stock,
obligations or securities of, or any interest in, or any capital contribution,
loan or advance to, or any Guaranty in respect of the obligations of any Person,
but in any event shall include as an investment in any Person the amount of all
Total Debt owed to any member of the Combined Group by such Person, and all
accounts receivable from such Person which are not current assets or did not
arise from sales to such Person in the ordinary course of business. As used
herein, any capital contribution of assets by the Company or any Restricted
Subsidiary shall be valued at the book value of such assets as reflected in the
consolidated financial statements of the Company and the Restricted Subsidiaries
as at the end of the quarter ending immediately prior to such contribution.
"ISSUER" shall mean the Agent in its capacity as the issuer of Letters
of Credit.
"LEGAL REQUIREMENT" shall mean any applicable law, statute, ordinance,
decree, requirement, order, judgment, rule, regulation (or official
interpretation by any Governmental Authority of any of the foregoing) of, and
the terms of any license or permit issued by, any Governmental Authority, in
each case as now or hereafter in effect.
"LETTER OF CREDIT" shall mean a letter of credit issued pursuant to
SECTION 2.2.
"LETTER OF CREDIT ADVANCES" shall mean all sums which are from time to
time paid by the
11
Agent pursuant to Letters of Credit, or any of them, together
with all other sums, fees, reimbursements or other obligations which are due to
the Agent pursuant to the Letters of Credit, or any of them.
"LETTER OF CREDIT FEE" shall mean, with respect to any Letter of Credit,
a fee equal to, for each day during the term thereof, the product of (a) the
Applicable Margin for Letters of Credit in effect on such day multiplied by (b)
the amount available on such day for drawings under such Letter of Credit.
"LETTER OF CREDIT LIABILITIES" shall mean, at any time, the sum of (a)
the aggregate undrawn amount of all Letters of Credit outstanding at such time
plus (b) the aggregate unpaid amount of all Letter of Credit Advances for which
the Agent shall not have been reimbursed and which remain unpaid at such time. .
"LIEN" shall mean any mortgage, pledge, security interest, collateral
assignment, encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing) and shall include conditional sale and other title
retention agreements, leases intended as security, and the filing of, or
agreement to give, any financing statement under the Uniform Commercial Code of
any jurisdiction or any other type of preferential arrangement.
"LOAN" shall mean a loan made pursuant to SECTION 2.1(A).
"MARGIN PERIOD" shall mean (a) the period commencing on the date of this
Agreement and ending on the earlier of (i) the first Financial Statement
Delivery Date and (ii) March 31, 1997, and (b) thereafter, each period beginning
on a Financial Statement Delivery Date and ending on the earlier of (x) the next
Financial Statement Delivery Date and (y) the date on which financial statements
are next required to be delivered pursuant to SECTION 9.1(A) OR (B).
"MATERIAL ADVERSE CHANGE" shall mean an occurrence of whatever nature
(including any adverse determination in any litigation, arbitration or
governmental investigation or proceeding), which after taking into account
actual insurance coverage and effective indemnification with respect to such
occurrence, (a) has a material adverse effect on the financial condition,
business, operations or properties of the Company and its Subsidiaries taken as
a whole and (b) impairs in any material respect either (1) the ability of the
Company to perform any of its obligations under the Credit Documents or (2) the
ability of the Agent and the Banks to enforce any of such obligations or any of
their rights and remedies under or in connection with the Credit Documents.
"MATURITY DATE" shall mean the earlier of (a) the date the principal
amount then outstanding of and accrued interest on the Loans, all Letter of
Credit Liabilities, all fees and all other amounts payable hereunder and under
the Notes become due and payable pursuant to SECTION 10.1 or (b) November 13,
2001.
"MONTEREY" shall mean Monterey Resources, Inc., a Delaware corporation.
12
"MONTEREY CREDIT AGREEMENT" shall mean that certain Credit Agreement
dated as of November 13, 1996, by and among Monterey, Chase as the Agent, and
the Banks from time to time party thereto, as in effect on the date hereof
without giving effect to any subsequent amendment, waiver or termination
thereof.
"MONTEREY TRANSACTIONS" shall mean the "Other Transactions" as such term
is defined in the Indenture.
"MOODY'S" shall mean Xxxxx'x Investors Service, Inc.
"MOST RECENT ENGINEERING REPORT" shall mean, as of any date of
determination, the most recent Independent Engineering Report delivered pursuant
to this Agreement on or before such date.
"MOST RECENT OTHER LIABILITIES REPORT" shall mean, as of any date of
determination, the most recent Other Liabilities Report delivered pursuant to
SECTION 9.1 on or before such date.
"NET PROCEEDS OF PRODUCTION" shall mean, for any period and for any
Person, (a) an amount of projected gross revenues received by or otherwise
credited to the account of such Person from the sale of Hydrocarbons produced
from the Petroleum Properties, subject to no entitlement of any other Person but
including appropriate adjustments for over- and under-produced status, during
such period as set forth in the Most Recent Engineering Report LESS (b) the
amount of projected royalties, overriding royalties, windfall profit,
production, ad valorem, severance and all other similar taxes, and operating and
capital expenditures required to be incurred during such period in order to
generate such gross revenues (but not including general and administrative
expenses or principal and interest payable with respect to Total Debt), as set
forth in the Most Recent Engineering Report.
"NOTES" shall mean the promissory notes of the Company evidencing the
Loans, substantially in the form of EXHIBIT A.
"NOTICE OF ENTIRE AGREEMENT" shall mean that certain Notice of Entire
Agreement and Release of Claims of even date herewith between the Company and
the Agent.
"OBLIGATIONS" shall mean, as at any date of determination thereof, the
sum of (a) the aggregate principal amount of Loans outstanding on such date PLUS
(b) the aggregate outstanding amount of all Letter of Credit Liabilities on such
date PLUS (c) all accrued and unpaid interest thereon PLUS (d) all fees and
other indebtedness of the Company to the Banks or the Agent in connection with
the Credit Documents on such date.
"OECD" shall mean the Organization for Economic Cooperation and
Development (or any successor).
13
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of
the Company by its Chief Executive Officer, President, Chief Financial Officer
or Treasurer.
"ORGANIZATIONAL DOCUMENTS" shall mean, with respect to a corporation,
the certificate of incorporation or articles of incorporation and bylaws of such
corporation; with respect to a partnership or a limited partnership, the
partnership agreement establishing such partnership; with respect to a limited
liability company, the regulations or limited liability company agreement; with
respect to a joint venture, the joint venture agreement establishing such joint
venture; and with respect to a trust, the instrument establishing such trust; in
each case including any and all modifications thereof as of the date of the
Credit Document referring to such Organizational Document.
"OTHER LETTERS OF CREDIT" shall mean all letters of credit issued for
the account of any member of the Combined Group, OTHER THAN AND EXCEPT FOR the
Letters of Credit.
"OTHER LIABILITIES" shall mean, at any time, the sum of (a) the
aggregate principal balance of the Total Debt of the Combined Group (including
SFER MRI Loans) at such time PLUS (b) all liabilities, contingent and otherwise,
in respect of Other Letters of Credit at such time; PROVIDED, HOWEVER, that
Other Liabilities shall never include the Obligations or the Senior Subordinated
Notes.
"OTHER LIABILITIES REPORT" shall mean a report in a form to be agreed on
by the Company and the Agent setting forth the aggregate Other Liabilities and
such other information with respect thereto as may from time to time be
reasonably requested by the Agent, certified as true and correct by the Chief
Executive Officer, President, the Chief Financial Officer or the Treasurer of
the Company.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED ENCUMBRANCES" shall mean:
(a) liens for taxes, assessments, levies or other governmental
charges not yet due and delinquent, and for taxes, assessments,
levies or other governmental charges already due, but the
validity of which is being contested by the Company in good faith
by appropriate proceedings diligently conducted for which
reserves have been established in accordance with GAAP;
(b) materialmen's, mechanics', repairmen's, employees', operators',
landlords' and other similar liens and charges incidental to the
conduct of the Company's business or the ownership of its
property which are not incurred in connection with the borrowing
of money or the obtaining of advances or credit (other than
advances or credit on open account, includable in current
liabilities, for goods and services in
14
the ordinary course of business and on terms and conditions which
are customary in the oil, gas and mineral exploration and
development business) or the guaranteeing of the obligations of
another Person, and which do not in the aggregate materially
detract from the value of the property covered thereby or
materially impair the use thereof in the operation of the
Company's business;
(c) royalties, overriding royalties, net profits interests,
production sharing interests, production payment interests,
carried interests and other burdens on production of a scope and
nature customary in the conduct of the Company's business;
(d) defects, imperfections and irregularities in title;
(e) liens, security interests, charges, claims and encumbrances that
arise under operating agreements or pooling and unitization
designations, declarations, orders and agreements and other
similar agreements of a scope and nature customary in the oil and
gas industry;
(f) the terms of concessions, production sharing agreements,
operating agreements, assignments, farmout agreements,
hydrocarbon sales, purchase, exchange and processing agreements,
area-of-mutual-interest agreements, gas balancing and deferred
production agreements, plant agreements, pipeline gathering and
transportation agreements, injection, repressuring and recycling
agreements, salt water or other disposal agreements, seismic or
geophysical permits and agreements, and other contracts, division
orders and agreements of a scope and nature customary in the oil
and gas industry;
(g) the right of third parties under oil and gas leases to take
production in kind;
(h) all liens, charges, claims, encumbrances, contracts and other
matters consented to in writing from time to time by the Agent;
(i) all rights to consent by, required notices to, and filings with
or other actions by governmental or tribal entities, if any, in
connection with the change of ownership or control of an interest
in federal, state, tribal or other foreign or domestic
governmental oil and gas leases or properties, if the same are
customarily obtained after such change of ownership or control,
but only insofar as such consents, notices, filings and other
actions are obtained within the time required under applicable
Legal Requirements;
(j) required third-party consents to assignments, to the extent they
could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect;
15
(k) liabilities for royalty suspense accounts, to the extent they
could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; and
(l) easements, rights-of-way and the like, incidental to the conduct
of the Company's business or the ownership of its property which
are not incurred in connection with the borrowing of money or
the obtaining of advances or credit (other than advances or
credit on open account, includable in current liabilities, for
goods and services in the ordinary course of business and on
terms and conditions which are customary in the oil, gas and
mineral exploration and development business) or the
guaranteeing of the obligations of another Person, and which do
not in the aggregate materially detract from the value of the
property covered thereby or materially impair the use thereof in
the operation of the Company's business;
PROVIDED that all Permitted Encumbrances shall not in the aggregate have a
Material Adverse Effect.
"PERSON" shall mean any individual, Business Entity, voluntary
association, trust, unincorporated organization, Governmental Authority or other
form of entity. The term "Person" shall not, however, mean or include an
arrangement that is not a separate legal entity, such as the legal arrangement
between two or more parties owning interests in the same property or unit.
"PETROLEUM PROPERTIES" shall mean all proved reserves of Hydrocarbons in
place which are (a) owned by a member of the Combined Group; (b) estimated to be
recoverable with reasonable certainty and are otherwise consistent with the
"Definitions for Oil and Gas Reserves" published by the Society of Petroleum
Engineers, and (c) covered in the Most Recent Engineering Report.
"PLAN" shall mean an employee benefit plan which is covered by ERISA
which is either (a) maintained by the Company or any ERISA Affiliate for
employees of the Company or such ERISA Affiliate or (b) a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which (i) the Company, (ii) any ERISA
Affiliate or (iii) any trade or business which was previously under common
control with the Company within the meaning of Section 414 of the Code (but only
with respect to such period of common control with the Company), has an
obligation to make contributions (or with respect to (iii) above, had an
obligation to make contributions during any portion of time that the limitations
period under Section 4301(f) of ERISA with respect to such obligation has not
expired).
"POST-DEFAULT RATE" shall mean a rate per annum on each day equal to the
lesser of (a) the sum of (i) 2% per annum PLUS (ii) the Alternate Base Rate as
in effect for that day or (b) the Highest Lawful Rate for that day.
16
"PRICING SCHEDULE" shall mean the schedule of that name attached to this
Agreement. As used in the Pricing Schedule, "TOTAL DEBT" shall mean the Total
Debt of the Company and the Restricted Subsidiaries at the end of the fiscal
quarter of the Company then most recently ended, and "ADJUSTED EBITDA" shall
mean Adjusted EBITDA of the Company and the Restricted Subsidiaries for the four
fiscal quarters ending with that fiscal quarter.
"PRIME RATE" shall mean, as of a particular date, the generally
applicable prime rate most recently determined by Chase. Without notice to the
Company or any other Person, the Prime Rate shall change automatically from time
to time as and in the amount by which said prime rate shall fluctuate. The prime
rate is a reference rate and may not necessarily represent the lowest or best
rate actually charged to any customer. Chase may make commercial loans or other
loans at rates of interest at, above or below the prime rate.
"PRINCIPAL OFFICE" shall mean the principal banking office of the Agent,
presently located at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"PROPER FORM" shall mean in form and substance satisfactory to the Agent
in its discretion.
"QUARTERLY DATES" shall mean the last day of each March, June, September
and December; PROVIDED that if any such date is not a Business Day, the relevant
Quarterly Date shall be the next succeeding Business Day.
"RATE DESIGNATION NOTICE" shall mean (a) in the case of a new Loan, the
Request for Extension of Credit with respect to such Loan and (b) in the case of
Conversions and Continuations, a notice in the form of EXHIBIT E, executed by an
authorized officer of the Company.
"REGULATION D" shall mean Regulation D of the Board as the same may be
amended or supplemented from time to time and any successor or other regulation
relating to reserve requirements.
"REGULATORY CHANGE" shall mean, with respect to any Bank, any change on
or after the date of this Agreement in any Legal Requirement (including
Regulation D) or the adoption or making on or after such date of any official
interpretation, directive or request applying to a class of banks including such
Bank under any Legal Requirement (whether or not having the force of law) by any
Governmental Authority charged with the interpretation or administration
thereof.
"REIMBURSEMENT OBLIGATIONS" shall mean, as at any date, the obligations
of the Company then outstanding to reimburse the Agent for Letter of Credit
Advances.
"REQUEST FOR EXTENSION OF CREDIT" shall mean a request for extension of
credit duly executed by the Chief Executive Officer, President, Chief Financial
Officer or Treasurer of the Company, or such other officer of the Company as its
Chief Financial Officer may from time to
17
time designate in a writing delivered to the Agent, appropriately
completed and substantially in the form of EXHIBIT B.
"REQUIRED BANKS" shall mean, at any time that no Obligations are
outstanding, Banks having equal to or greater than 66-2/3% of the Aggregate
Commitment, and at any time that Obligations are outstanding, Banks holding
equal to or greater than 66-2/3% of the aggregate amount of such Obligations.
"RESTRICTED DISTRIBUTION" shall mean, with respect to the Company and
the Restricted Subsidiaries, any payment of any dividend on any class of stock
of such Person or any other distribution on account of any class of stock or
other indicia of equity ownership of such Person, and any redemption, purchase
or acquisition, direct or indirect, of any shares of stock or other indicia of
equity ownership of such Person; PROVIDED, that Restricted Distributions shall
not include (x) dividends paid or declared by the Company or any of the
Restricted Subsidiaries in respect of stock thereof held by any Person, or
distributions made to any Person in stock of the Company or any Restricted
Subsidiary; (y) exchanges of stock of one or more classes of the Company or any
Restricted Subsidiary for common stock of the Company or such Restricted
Subsidiary, as the case may be, or for stock of the Company or such Restricted
Subsidiary, as the case may be, of the same class, except to the extent that
cash or other value is paid by the Company or a Restricted Subsidiary in such
exchange; or (z) dividends paid or declared in respect of stock held by, or
distributions made to, or redemptions, purchases or other acquisitions of stock
made from, the Company or a wholly-owned Restricted Subsidiary; PROVIDED
FURTHER, that "Restricted Distribution" shall mean, with respect to the Company
and the Restricted Subsidiaries, for any calculation, $1,958,000 for each of the
fiscal quarters ended December 31, 1995, March 31, 1996, June 30, 1996 and
September 30, 1996, respectively, and the Restricted Distributions of the
Company and the Restricted Subsidiaries for the fiscal quarter ended December
31, 1996, shall be $652,667.00 plus the Restricted Distributions (determined in
accordance with the first sentence of this definition) of the Combined Group for
the two months ended December 31, 1996. The term "stock" as used in this
definition shall include warrants, options to purchase stock and redeemable
rights.
"RESTRICTED SUBSIDIARY" shall mean each Subsidiary of the Company
designated as a Restricted Subsidiary on SCHEDULE I, as supplemented from time
to time by notice from the Company to the Agent, together with any Subsidiary of
the Company hereafter created or acquired and, at the time of creation or
acquisition, not designated by the Board of Directors of the Company as an
Unrestricted Subsidiary.
"SALE AND LEASEBACK TRANSACTION" shall mean any arrangement in which any
member of the Combined Group shall sell any building, equipment or surface real
property and thereafter enter into a lease as lessee of such building, equipment
or surface real property.
18
"SENIOR SUBORDINATED NOTES" shall have the meaning ascribed to such term
in the definition of "Indenture".
"SFP GROUP" shall mean Santa Fe Pacific Corporation and its successors,
and their affiliated group of corporations which together constitute an
affiliated group of corporations within the meaning of Section 1504(a) of the
Code.
"SFER MRI LOANS" shall mean the borrowings by the Company under the
Monterey Credit Agreement. At such time as such Loans are repaid in full and the
Company may no longer borrow under the Monterey Credit Agreement, all references
in this Agreement to "SFER MRI Loans" and the "Monterey Credit Agreement" shall
be deemed deleted and of no further force or effect.
"S&P" shall mean Standard & Poor's Ratings Group.
"SPECIAL DEBT" shall mean, at any time, the sum of (a) Attributable Debt
of the Company and the Restricted Subsidiaries outstanding at such time, (b) all
Total Debt of the Company and the Restricted Subsidiaries outstanding at such
time that is secured by a Lien permitted by SECTION 9.7(A)(11) on any property
or assets of the Company or any Restricted Subsidiary, and (c) all Total Debt of
the Restricted Subsidiaries (whether or not secured by any Lien) outstanding at
such time.
"SPIN-OFF" shall mean (a) the distribution by dividend to the
stockholders of Santa Fe Pacific Corporation of the shares of capital stock of
the Company owned by Santa Fe Pacific Corporation, which distribution was
commenced on December 4, 1990, and (b) the distribution by SFP Properties, Inc.
to Santa Fe Pacific Corporation of the capital stock of the Company that was
made December 27, 1989.
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the weighted average of the reserve percentages (including any
marginal, special, emergency, or supplemental reserves), expressed as a decimal,
actually required to be maintained by any Bank by the Board or any other
Governmental Authority to which any of the Banks is subject as required by
Regulation D during the applicable Interest Period for "eurocurrency
liabilities" (as such term is used in Regulation D) and any other reserves
actually required to be maintained by any Bank by reason of any Regulatory
Change against (a) any category of liabilities which includes deposits by
reference to which the Eurodollar Rate is to be determined as provided in the
definition of "Eurodollar Rate" or (b) any category of extensions of credit or
other assets which include Eurodollar Loans. Such reserve percentages shall
include, without limitation, those imposed under Regulation D. Statutory
Reserves shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage. Each determination of the Statutory Reserves
by the Agent shall be conclusive and binding, absent manifest error, and may be
made using any reasonable averaging and attribution method.
19
"SUBSIDIARY" shall mean, with respect to any Person, any Business Entity
of which 50% or more of the capital stock or other indicia of equity rights is
at the time directly or indirectly legally or beneficially owned or controlled
by such Person or by one or more of its Affiliates.
"TAX ALLOCATION AGREEMENT" shall mean those nine certain agreements
among the SFP Group, dated as of January 1, 1990 unless otherwise specified in
this definition and styled as follows: (a) Agreement for the Allocation of the
Combined Utah Franchise Tax Liability; (b) Agreement for the Allocation of the
Combined Oregon Excise Tax Liability; (c) Agreement for the Allocation of the
Consolidated New Mexico Income Tax Liability; (d) Agreement for the Allocation
of the Combined Kansas Income Tax Liability; (e) Agreement for the Allocation of
the Combined Illinois Income Tax Liability; (f) Agreement for the Allocation of
the Combined California Franchise Tax Liability; (g) Agreement for the
Allocation of the Combined Arizona Income Tax Liability; (h) Agreement
Concerning Taxes, and (i) Agreement for the Allocation of the Consolidated
Federal Income Tax Liability Among the Members of the Santa Fe Southern Pacific
Corporation Affiliated Group, dated as of January 1, 1987.
"TAX INDEMNIFICATION AGREEMENT" shall mean any agreement pursuant to
which the Company agrees to indemnify Santa Fe Pacific Corporation or its
successor or any member of the SFP Group from and against any and all federal,
state or local taxes, interest, penalties or additions to tax imposed upon or
incurred by the SFP Group or any member thereof as a result of the Spin-Off to
the extent specified in any such agreement.
"TERMINATION DATE" shall mean the earlier of (a) the Maturity Date and
(b) the date the Commitments are terminated pursuant to SECTION 2.3.
"TOTAL DEBT" shall mean, as of any date and for any Person, without
duplication, (a) all obligations for borrowed money; (b) all obligations
evidenced by bonds, debentures, notes or other similar instruments; (c) all
obligations to pay the deferred purchase price of property or services, except
trade accounts payable arising in the ordinary course of business; (d) all
Capitalized Lease Obligations; (e) all obligations in respect of production
payments, proceeds production payments and similar financing arrangements; (f)
all reimbursement obligations with respect to letters of credit issued for the
account of such Person, including the Letter of Credit Liabilities; (g) all
obligations of the types described in CLAUSES (A) THROUGH (F) of this definition
(collectively, "ORDINARY DEBT") of another Person secured by a Lien on any
property of the Person as to which Total Debt is being determined, regardless of
whether such Ordinary Debt is assumed by such Person, and (h) all Ordinary Debt
of another Person guaranteed by such Person; PROVIDED, HOWEVER, that Total Debt
of the Combined Group shall not include (x) any obligation of the Company owing
to a wholly-owned Restricted Subsidiary which is subordinated to the Obligations
upon the terms set forth on SCHEDULE V, or (y) any obligation of a Restricted
Subsidiary owing to the Company or one or more other Restricted Subsidiaries.
"TYPE" shall have the meaning assigned to such term in SECTION 1.3.
20
"UNFUNDED LIABILITIES" shall mean, with respect to any Plan, at any
time, the amount (if any) by which (a) the present value of all benefits under
such Plan exceeds (b) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such Plan
(in accordance with GAAP), but only to the extent that such excess represents a
potential liability of the Company or any ERISA Affiliate to the PBGC or a Plan
under Title IV of ERISA.
"UNRESTRICTED SUBSIDIARY" shall mean Monterey and each other Subsidiary
of the Company designated as an Unrestricted Subsidiary on SCHEDULE I, as
supplemented from time to time by notice from the Company to the Agent, together
with any Subsidiary of the Company which is hereafter designated by the Board of
Directors of the Company as an Unrestricted Subsidiary.
"UNUSED COMMITMENT" shall mean, on any date, the difference of (a) the
lesser of (i) the Aggregate Commitment and (ii) the Borrowing Base MINUS (b) the
sum of (1) the aggregate outstanding principal balance of the Notes and the SFER
MRI Loans PLUS (2) the aggregate Letter of Credit Liabilities, all determined on
such date.
1.2. ACCOUNTING TERMS AND DETERMINATIONS. Except where specifically
otherwise provided:
(a) The symbol "$" and the word "dollars" shall mean lawful money of the
United States of America.
(b) Any accounting term not otherwise defined shall have the meaning
ascribed to it under GAAP.
(c) Unless otherwise expressly provided, any accounting concept and all
financial covenants shall be determined on a consolidated basis, and financial
measurements shall be computed without duplication.
(d) Wherever the term "including" or any of its correlatives appears in
the Credit Documents, it shall be read as if it were written "including (by way
of example and without limiting the generality of the subject or concept
referred to)".
(e) Wherever the word "herein" or "hereof" is used in any Credit
Document, it is a reference to that entire Credit Document and not just to the
subdivision of it in which the word is used.
(f) References in any Credit Document to Section numbers are references
to the Sections of such Credit Document.
21
(g) References in any Credit Document to Exhibits, Schedules, Annexes
and Appendices are to the Exhibits, Schedules, Annexes and Appendices to such
Credit Document, and they shall be deemed incorporated into such Credit Document
by reference.
(h) Except as otherwise provided herein, any term defined in the Credit
Documents which refers to a particular agreement, instrument or document shall
also mean, refer to and include all modifications, amendments, supplements,
restatements, renewals, extensions and substitutions of the same; PROVIDED that
nothing in this subsection shall be construed to authorize any such
modification, amendment, supplement, restatement, renewal, extension or
substitution except as may be permitted by other provisions of the Credit
Documents.
(i) All times of day used in the Credit Documents mean local time in New
York, New York.
(j) Defined terms may be used in the singular or plural, as the context
requires.
1.3. TYPES OF LOANS. Loans hereunder are distinguished by "Type". The
"Type" of a Loan refers to the determination whether such Loan is a Eurodollar
Loan or an Alternate Base Rate Loan.
Section 2. COMMITMENTS.
2.1. LOANS.
(a) Each Bank severally agrees, subject to the terms and conditions of
this Agreement, from time to time on or after the date hereof and prior to the
Termination Date, to make Loans to the Company in an aggregate principal amount
at any one time outstanding up to but not exceeding the lesser of (1) such
Bank's Commitment at such time and (2) such Bank's Commitment Percentage of the
Available Borrowing Base at such time, MINUS, in either case, such Bank's
Commitment Percentage of all Letter of Credit Liabilities and (if the Available
Borrowing Base at such time shall be determined by reference to the Aggregate
Commitment as provided in CLAUSE (A) of the definition of "Available Borrowing
Base") all SFER MRI Loans outstanding at such time (whether or not such Bank
shall in fact have advanced any SFER MRI Loan). Subject to the conditions
precedent in this Agreement, any Loan repaid prior to the Termination Date may
be reborrowed prior to the Termination Date pursuant to the terms of this
Agreement; PROVIDED, that any and all Loans shall be due and payable in full on
the Maturity Date.
(b) Notwithstanding anything in this Agreement to the contrary, (i) no
Bank shall be required to make Loans at any one time outstanding in an amount
which, together with such Bank's Commitment Percentage of outstanding Letter of
Credit Liabilities, shall exceed such Bank's Commitment MINUS such Bank's
Commitment Percentage of all SFER MRI Loans outstanding at such time (whether or
not such Bank shall in fact have advanced any SFER MRI
22
Loan), and (ii) if a Bank fails to make a Loan as and when required hereunder
and the Companysubsequently makes a repayment on the Notes, such repayment shall
be split among the non-defaulting Banks ratably in accordance with their
respective Commitment Percentages (computed without regard to the Commitment
Percentage of the defaulting Bank) until each Bank has its Commitment Percentage
of all outstanding Loans. Any balance of such repayment shall be divided among
all Banks in accordance with their respective Commitment Percentages.
2.2. LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, the Company
shall have the right to utilize the Available Borrowing Base from time to time
prior to the Termination Date by obtaining the issuance by the Issuer of letters
of credit for the account of the Company in such amounts and in favor of such
beneficiaries as the Company from time to time shall request; PROVIDED, that in
no event shall the Issuer have any obligation to issue any Letter of Credit if
(1) the face amount of such Letter of Credit PLUS any additional Letter of
Credit Liabilities at such time would exceed $30,000,000 (as adjusted downward
from time to time to the extent the Available Borrowing Base is reduced below
$30,000,000), (2) the aggregate amount of Loans (and SFER MRI Loans) and Letter
of Credit Liabilities outstanding at such time would exceed the Available
Borrowing Base, (3) such Letter of Credit would have an expiry date later than
the earlier of (x) one year from the date thereof or (y) the Termination Date,
(4) such Letter of Credit is not in Proper Form, (5) the Company has not
executed and delivered to the Issuer an Application and such other customary
instruments and agreements relating to such Letter of Credit as the Issuer shall
have reasonably requested, or (6) a Default has occurred and is continuing. The
Company promises to pay to the Agent for the account of each Bank, on demand,
each Letter of Credit Advance, together with interest thereon at (i) prior to
the third Business Day following each such Letter of Credit Advance, the
Alternate Base Rate, and (ii) on and after such third Business Day, the
Post-Default Rate. All rights, powers, benefits and privileges of this Agreement
with respect to the Notes, all security therefor and guaranties thereof and all
restrictions, provisions for repayment or acceleration and all other covenants,
warranties, representations and agreements contained in the Credit Documents
with respect to the Notes shall apply to each Letter of Credit Advance.
Upon the date of the issuance of a Letter of Credit, the Issuer shall be
deemed, without further action by any party to this Agreement, to have sold to
each Bank, and each Bank shall be deemed, without further action by any party to
this Agreement, to have purchased from the Issuer, a participation, to the
extent of such Bank's Commitment Percentage, in such Letter of Credit and the
related Letter of Credit Liabilities. Any Letter of Credit with an expiry date
after the Termination Date shall be fully Covered or shall be backed by a letter
of credit in Proper Form issued by an issuer acceptable to the Issuer in its
sole discretion.
(b) The following additional provisions shall apply to each Letter of
Credit:
(1) The Company shall give the Agent at least three Business
Days' irrevocable
23
prior notice (effective upon receipt) specifying the date such Letter of Credit
is to be issued, describing the proposed terms of such Letter of Credit and the
nature of thetransaction proposed to be supported thereby, and shall furnish
such additional information regarding such transaction as the Agent may request.
Upon receipt of such notice the Agent shall promptly notify each Bank of the
contents thereof and of such Bank's Commitment Percentage of the amount of such
proposed Letter of Credit.
(2) On each day during the period commencing with the issuance of
any Letter of Credit and until such Letter of Credit shall have expired or been
terminated, the Commitment of each Bank shall be deemed to be utilized for all
purposes of this Agreement in an amount equal to such Bank's Commitment
Percentage of the sum of (i) the undrawn amount of such Letter of Credit PLUS
(ii) the unpaid amount of all Letter of Credit Advances with respect to such
Letter of Credit.
(3) Upon receipt from the beneficiary of any Letter of Credit of
any demand for payment thereunder, the Issuer shall promptly notify the Company
and each Bank as to the amount to be paid as a result of such demand and the
payment date. If at any time the Issuer shall have made a payment to a
beneficiary of a Letter of Credit in respect of a drawing or in respect of an
acceptance created in connection with a drawing under such Letter of Credit,
each Bank will pay to the Agent immediately upon demand by the Agent at any time
during the period commencing after such payment until reimbursement thereof in
full by the Company, an amount equal to such Bank's Commitment Percentage of
such payment, together with interest on such amount for each day from the date
of demand for such payment (or, if such demand is made after 12:00 noon on such
date, from the next succeeding Business Day) to the date of payment by such Bank
of such amount at a rate of interest per annum equal to the Fed Funds Rate for
such day.
(4) The Company shall be irrevocably and unconditionally
obligated forthwith to reimburse the Issuer for the account of each Bank for any
amount paid by it upon any drawing under any Letter of Credit, without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly WAIVED by the Company to the extent not prohibited by law. Such
reimbursement may, subject to satisfaction of the conditions in SECTION 7 and to
the existence of sufficient Available Borrowing Base (after adjustment in the
same to reflect the elimination of the corresponding Letter of Credit Liability)
be made by borrowing of Loans. The Issuer will pay to each Bank such Bank's
Commitment Percentage of all amounts received from the Company for application
in payment, in whole or in part, of the Reimbursement Obligation in respect of
any Letter of Credit, but only to the extent such Bank has made payment to the
Issuer in respect of such Letter of Credit pursuant to CLAUSE (3) above.
(5) The Company will pay to the Agent at the Principal Office for
the account of each Bank the Letter of Credit Fee on such Bank's Commitment
Percentage of the amount available for drawings under each Letter of Credit, in
each case for the period from and including the date of issuance of each such
Letter of Credit to and including the date of expiration or
24
termination thereof, such Letter of Credit Fees to be paid in arrears on the
Quarterly Dates and on the Termination Date. The Agent will pay to each Bank,
promptly after receiving any payment in respect of Letter of Credit Fees
referred to in this CLAUSE (5), anamount equal to such Bank's Commitment
Percentage of such Letter of Credit Fee. The aggregate Letter of Credit Fee for
any Letter of Credit is subject to a minimum of $600 per annum.
(6) The Company shall pay to the Agent for the account of the
Issuer, in arrears on each Quarterly Date and on the Termination Date, a
fronting fee for each Letter of Credit equal to 1/8 of 1% per annum times the
face amount of such Letter of Credit, in each case for the period from and
including the date of issuance of such Letter of Credit to and including the
date of expiration or termination thereof.
(c) Each Letter of Credit shall be subject to the Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 (and any subsequent revision thereof approved by a
Congress of the International Chamber of Commerce) and, to the extent not
inconsistent therewith, the laws of the State of New York.
(d) To the extent that any provision of any Application is contrary to
or inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall control.
2.3 BORROWING BASE AND AVAILABLE BORROWING BASE.
(a) The initial Borrowing Base shall be $225,000,000. Within 30 days
after receipt of each Independent Engineering Report, the Agent shall, subject
to the approval of the Required Banks, determine the Borrowing Base and shall
notify the Company in writing of the amount of the Borrowing Base. Such
Borrowing Base shall be the Borrowing Base from the date of such notification
until the date of the next determination of the Borrowing Base in accordance
with this Agreement. Each determination of the Borrowing Base shall be made by
the Agent (subject to the approval of the Required Banks) in its sole discretion
using its normal and customary oil and gas lending practices, based on the Most
Recent Engineering Report furnished by the Company.
(b) Upon any Asset Sale of Petroleum Properties which causes the
aggregate net proceeds from the sale of all Petroleum Properties subject to
Asset Sales of Petroleum Properties since the effective date of the Most Recent
Engineering Report to exceed $20,000,000, the Agent may, and shall at the
request of the Required Banks, redetermine the Borrowing Base in accordance with
the procedures described in this Agreement on the basis of the information with
respect to the remaining Petroleum Properties set forth in the Most Recent
Engineering Report. The Company shall provide the Agent with all such
information as the Agent may reasonably request and shall otherwise cooperate in
good faith with and assist the Agent and the Required Banks in any such
determination.
(c) The initial Available Borrowing Base shall be $150,000,000. Upon
each receipt by the Agent of an Other Liabilities Report, and upon each
determination of the Borrowing Base,
25
the Agent shall redetermine the Available Borrowing Base.
(d) In addition to the determinations of the Borrowing Base provided for
elsewhere in this SECTION 2.3, each of the Company or the Required Banks may, in
their sole discretion, require the Agent to determine the Borrowing Base one
additional time in each 12-month period. Such additional determination shall be
in accordance with the procedures described in this Agreement on the basis of
the information with respect to the Petroleum Properties at the time of such
determination set forth in (at the option of the Person requiring the
determination) a new Independent Engineering Report or the Most Recent
Engineering Report. The Company shall provide the Agent with all such
information as the Agent may reasonably request and shall otherwise cooperate in
good faith with and assist the Agent and the Required Banks in any such
redetermination.
2.4 BORROWING BASE DEFICIENCIES. Should there exist at any time a
Borrowing Base Deficiency (other than a Borrowing Base Deficiency resulting in
whole or in part from an Asset Sale of Petroleum Properties, the effects of
which are addressed in SECTION 3.2(B)(2), the Agent may, but shall not be
obligated to (unless requested to do so by the Required Banks), notify the
Company in writing of such deficiency. Within 90 days after the giving of such
notice, the Company shall make a prepayment on the Loans or take such other
steps as may be approved by the Agent, or a combination thereof, so that the
Available Borrowing Base is increased by an amount equal to at least 50% of such
Borrowing Base Deficiency. Within 180 days after the giving of such notice, the
Company shall make a prepayment on the Loans or take such other steps as may be
approved by the Agent, or a combination thereof, so that the Borrowing Base
Deficiency is eliminated.
2.5. TERMINATIONS, REDUCTIONS AND CHANGES OF COMMITMENTS.
(a) On the Termination Date, all Commitments shall be terminated in
their entirety.
(b) The Company shall have the right to terminate or reduce the unused
portion of the Aggregate Commitment at any time or from time to time; PROVIDED
that (i) the Company shall give notice of each such termination or reduction to
the Agent as provided in SECTION 5.5; (ii) each such partial reduction shall be
in an integral multiple of $5,000,000, and (iii) the Company may not cause the
Aggregate Commitment to be less than the aggregate principal amount of the Loans
(including SFER MRI Loans, if any) and Letter of Credit Liabilities then
outstanding (after giving effect to any concurrent repayment of the Loans and
reduction of Letter of Credit Liabilities).
(c) No reduction in or termination of the Aggregate Commitment pursuant
to this SECTION 2.3 may be reinstated without the written approval of the Agent
and all Banks.
2.6. FEES. In consideration of the Commitments, the Company shall pay to
the Agent for the account of each Bank in accordance with its Commitment
Percentage commitment fees (the "COMMITMENT FEES") (a) for each Margin Period
from the date of this Agreement to and including
26
the date such Bank's Commitment is terminated at a rate per annum for such
Margin Period determined in accordance with the Pricing Schedule and (b) if no
Margin Period is in effect, the rate set forth for commitment fees in Level IV
of the Pricing Schedule. The Commitment Fees shall be computed for each day and
shall be based on such Bank's Commitment Percentage of the Unused Commitment for
such day. Accrued Commitment Fees shall be due in arrears on the date of the
initial Loans, within three days after demand therefor on or about the Quarterly
Dates, and within three days after demand therefor on or about the Termination
Date. Upon receipt, the Agent shall disburse such fees to the Banks in
accordance with their respective Commitment Percentages. All past due Commitment
Fees shall bear interest at the Post-Default Rate.
2.7. AFFILIATES; LENDING OFFICES.
(a) Any Bank may, if it so elects, fulfill its Commitment as to any
Eurodollar Loan by causing a branch, foreign or otherwise, or Affiliate of such
Bank to make such Loan and may transfer and carry such Loan at, to or for the
account of any branch office or Affiliate of such Bank; PROVIDED that in such
event, for the purposes of this Agreement, such Loan shall be deemed to have
been made by such Bank and the obligation of the Company to repay such Loan
shall nevertheless be to such Bank and shall be deemed to be held by such Bank,
to the extent of such Loan, for the account of such branch or Affiliate.
(b) Notwithstanding any provision of this Agreement to the contrary,
each Bank shall be entitled to fund and maintain its funding of all or any part
of its Loans in any manner it sees fit, it being understood, however, that for
the purposes of this Agreement all determinations shall be made as if such Bank
had actually funded and maintained each Eurodollar Loan during each Interest
Period through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the applicable Eurodollar
Rate for such Interest Period.
2.8. SEVERAL OBLIGATIONS. The failure of any Bank to make any Loan to be
made by it on the date specified therefor shall not relieve any other Bank of
its obligation to make its Loan on such date, but neither the Agent nor any Bank
shall be responsible for the failure of any other Bank to make a Loan to be made
by such other Bank.
2.9. NOTES. The Loans made by each Bank shall be evidenced by a single
Note of the Company in substantially the form of EXHIBIT A (each, together with
all renewals, extensions, modifications and replacements thereof and
substitutions therefor, a "NOTE") payable to the order of such Bank in a
principal amount equal to the Commitment of such Bank as originally in effect
and otherwise duly completed. Each Bank is hereby authorized by the Company to
endorse on the schedule (or a continuation thereof) attached to the Note of such
Bank, to the extent applicable, the date, amount and Type of each Loan made by
such Bank to the Company hereunder, and each Continuation thereof, each
Conversion of all or a portion thereof to another Type, the date and amount of
each payment or prepayment of principal thereof received by such Bank and, in
the case of Eurodollar Loans, the length of each Interest Period; PROVIDED that
any
27
failure by such Bank to make any such endorsement shall not affect the
obligations of the Company under such Note or this Agreement in respect of such
Loan.
2.10. USE OF PROCEEDS. The proceeds of the Loans shall be used and the
Letters of Credit shall be issued for working capital and for general corporate
purposes of the Company and may not be utilized (a) to pay dividends other than
usual dividends in the ordinary course of business or (b) for the buyout or
acquisition of any Person unless the board of directors of such Person has first
approved such buyout or acquisition.
Section 3. BORROWINGS AND PREPAYMENTS.
3.1. BORROWINGS. The Company shall give the Agent notice of each
borrowing to be made under this Agreement as provided in SECTION 5.5. Each
borrowing shall be in an amount of $1,000,000 or any integral multiple thereof.
Not later than 2:00 p.m. on the date specified for each such borrowing, each
Bank shall make available the amount of the Loan, if any, to be made by it on
such date to the Agent, at its Principal Office, in immediately available funds,
for the account of the Company. The amounts so received by the Agent shall,
subject to the terms and conditions of this Agreement, be made available to the
Company by depositing the same, in immediately available funds, in an account
designated by the Company and maintained with the Agent at its Principal Office.
3.2. PREPAYMENTS.
(a) OPTIONAL PREPAYMENTS. Except as provided in this SECTION 3.2 or in
SECTION 5 or 6, the Company shall have the right to prepay, on any Business Day,
in whole or in part, without the payment of any penalty or fee, Loans at any
time or from time to time; PROVIDED that the Company shall give the Agent notice
of each such prepayment as provided in SECTION 5.5. Eurodollar Loans may be
prepaid on the last day of an Interest Period applicable thereto and may not be
otherwise prepaid unless prepayment is accompanied by payment of all
compensation required by SECTION 6.5.
(b) MANDATORY PREPAYMENTS.
(1) The Company shall from time to time on demand by the Agent
prepay the Loans (or SFER MRI Loans, if any) or reduce Letter of Credit
Liabilities in such amounts as shall be necessary so that at all times the
aggregate outstanding principal amount of the Loans (and SFER Loans, if any) and
the aggregate Letter of Credit Liabilities shall not exceed the Available
Borrowing Base. Any such payment shall be allocated between Loans and Letter of
Credit Liabilities and, if to Letter of Credit Liabilities, first to
Reimbursement Obligations and then to other obligations as the Company may
elect.
(2) Concurrently with any Asset Sale of Petroleum Properties
which would cause the aggregate amount of such Asset Sales of Petroleum
Properties since the effective date
28
of the last calculation of the Borrowing Base to exceed $20,000,000, the Agent
may, and shall at the request of the Required Banks, redetermine the Borrowing
Base and the Available Borrowing Base in each case to the effective date of such
Asset Sale of Petroleum Properties on the basis of the Most Recent Engineering
Report and the Most Recent Other Liabilities Report. If a Borrowing Base
Deficiency exists as a result of any such redetermination, the Company shall
prepay on the Business Day following the date of such Asset Sale of Petroleum
Properties an amount equal to the lesser of (x) the net proceeds of all such
Asset Sales of Petroleum Properties not previously prepaid and (y) the amount of
the Borrowing Base Deficiency, for application to the unpaid principal balance
of the Notes. Should the payment of the net proceeds of all such Asset Sales of
Petroleum Properties not previously prepaid not eliminate the Borrowing Base
Deficiency, SECTION 2.4 shall apply.
(3) The Company shall maintain records of all Asset Sales of
Petroleum Properties and shall otherwise maintain books and records which enable
it to comply, and to demonstrate to the Agent on request compliance, with the
obligations of the Company in this SECTION 3.2(B).
Section 4. PAYMENTS OF PRINCIPAL AND INTEREST.
4.1. REPAYMENT OF LOANS AND REIMBURSEMENT OBLIGATIONS. The Company will
pay to the Agent for the account of each Bank the principal of each Loan made by
such Bank on the Maturity Date and the amount of each Reimbursement Obligation
forthwith upon its incurrence. The amount of any Reimbursement Obligation may,
if the applicable conditions precedent specified in SECTION 7 (other than any
Default resulting solely from the nonpayment of such Reimbursement Obligation)
have been satisfied, be paid with the proceeds of Loans.
4.2. INTEREST. Subject to SECTIONS 12.8 AND 4.3(B), the Company will pay
to the Agent for the account of each Bank interest on the unpaid principal
amount of each Loan made by such Bank for the period commencing on the date of
such Loan to but excluding the date such Loan shall be paid in full, at the
lesser of (1) the following rates per annum:
(A) if such Loan is an Alternate Base Rate Loan, the Alternate Base
Rate; or
(B) if such Loan is a Eurodollar Loan, the applicable Eurodollar
Rate PLUS the Applicable Margin for Eurodollar Loans;
or (2) the Highest Lawful Rate.
4.3. SELECTION OF INTEREST RATES.
(a) Subject to SECTION 6 and SECTION 12.8, the Company shall have the
right, by giving a Rate Designation Notice to the Agent as provided in SECTION
5.5, to designate any Loan as a Loan of a particular Type, to convert (a
"CONVERSION") any Loan (in whole or in part) into a Loan
29
of another Type or to continue (a "CONTINUATION") any Loan (in whole or in part)
as a Loan of the same Type. The records of the Agent with respect to interest
rate designations, Interest Periods and the amount of Loans to which they are
applicable shall be binding and conclusive, absent manifest error. Loans shall
be Alternate Base Rate Loans except where the Company has complied with all
requirements of this Agreement for the designation, Conversion or Continuation
of such Loan as a Eurodollar Loan. Interest on the amount of each Loan shall
accrue on the amount of that Loan and from the date it is made. Any such notice
of designation, Conversion or Continuation shall specify the new Interest
Period. In the event the Company fails to so give such notice prior to the end
of any Interest Period for any Eurodollar Loan, such Loan shall become an
Alternate Base Rate Loan on the last day of such Interest Period. No more than
10 Eurodollar Interest Periods shall be in effect at any time. Except as
otherwise provided in this Agreement, each such designation, Conversion or
Continuation shall apply to all Notes ratably in accordance with their
respective principal balances. If any Bank assigns an interest in its Note when
any Eurodollar Loan is outstanding with respect thereto, the assignee shall have
its ratable interest in such Eurodollar Loan.
(b) Notwithstanding the foregoing but subject to SECTION 12.8, the
Company will pay to the Agent for the account of each Bank interest (i) except
as otherwise provided in CLAUSE (II) or CLAUSE (III) of this SECTION 4.3(B), at
a rate per annum 2% above the otherwise applicable rate on any principal of any
Loan made by such Bank, for the period commencing on the first day on which any
Event of Default exists and continuing through and including the date no Event
of Default exists and is continuing; (ii) at the rate provided in SECTION 2.2
for unpaid Letter of Credit Advances, and (iii) at the Post-Default Rate for any
other amount due under the Credit Documents which is not paid in full when due
(whether at stated maturity, by acceleration, or otherwise) (but, if such amount
is interest, only to the extent legally enforceable).
(c) Accrued interest shall be due and payable on the applicable Interest
Payment Dates, except that (1) accrued interest pursuant to SECTION 4.3(B) shall
be due and payable from time to time on demand of the Agent or the Required
Banks (through the Agent), (2) accrued interest on any amount converted from one
Type of Loan to another Type of Loan shall be paid on the amount so converted at
the time of such Conversion, and (3) accrued interest on any Eurodollar Loan
paid or prepaid shall be due at the time of such payment or prepayment.
Section 5. PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS, ETC.
5.1. PAYMENTS.
(a) Except to the extent otherwise provided in this Agreement, all
payments of principal of or interest on the Loans, of Reimbursement Obligations
and of other amounts to be made by the Company under the Credit Documents shall
be made in dollars, in immediately available funds, to the Agent at its
Principal Office (or in the case of a successor Agent, at the principal office
of such successor Agent in the United States), not later than 12:00 noon on the
date on which such payment shall become due, and each such payment made after
such time on
30
such due date shall be deemed to have been made on the next succeeding Business
Day. The Agent or any Bank for whose account any such payment is made may (but
shall not be obligated to) debit the amount of any such payment which is not
made by such time to any ordinary deposit account of the Company with the Agent
or such Bank, as the case may be.
(b) The Company shall, at the time it makes each payment under this
Agreement or any other Credit Document, specify to the Agent the Loans or other
amounts payable by the Company to which such payment is to be applied (and in
the event that it fails so to specify, such payment shall be applied as the
Agent may designate to the Loans or other amounts then due and payable);
PROVIDED that if no Loans or other amounts are then due and payable or an Event
of Default has occurred and is continuing, the Agent may apply any payment to
the Obligations in such order as it may elect in its sole discretion, but
subject to the other terms and conditions of this Agreement, including SECTION
5.2. Each payment received by the Agent under this Agreement or any other Credit
Document for the account of a Bank shall be paid promptly to such Bank in
immediately available funds for the account of such Bank's Applicable Lending
Office.
(c) If the due date of any payment under this Agreement or any other
Credit Document falls on a day which is not a Business Day, the due date for
such payment (except as otherwise provided in the definition of "Interest
Period") shall be extended to the next succeeding Business Day and interest
shall be payable for any principal so extended for the period of such extension
at the rate in effect on such due date.
5.2. PRO RATA TREATMENT. Except to the extent otherwise provided herein,
(a) each borrowing from the Banks hereunder, each payment of Commitment Fees and
other fees and each termination or reduction of the Aggregate Commitment under
SECTION 2.3 shall be made PRO RATA according to the Banks' respective Commitment
Percentages; (b) except as otherwise provided in this Agreement, each payment by
the Company of principal of or interest on Loans of a particular Type shall be
made to the Agent for the account of the Banks PRO RATA according to the Banks'
respective Commitment Percentages; and (c) the Banks (other than the Issuer)
shall purchase from the Issuer participations in each Letter of Credit and its
related Letter of Credit Liabilities PRO RATA according to the Banks' respective
Commitment Percentages.
5.3. COMPUTATIONS. Interest based on the Alternate Base Rate (to the
extent determined by reference to the Prime Rate), and fees hereunder, will be
computed on the basis of 365 (or 366) days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable. All other interest and fees shall be computed on the basis of a year of
360 days and actual days elapsed (including the first day but excluding the last
day) occurring in the period for which payable, unless the effect of so
computing shall be to cause the rate of interest to exceed the Highest Lawful
Rate (in which event interest and fees shall be calculated on the basis of the
actual number of days elapsed in a year composed of 365 or 366 days, as the case
may be).
5.4. MINIMUM AND MAXIMUM AMOUNTS. Except for prepayments made pursuant
to
31
SECTION 3.2(B), each borrowing and repayment of principal of Loans, each
optional partial prepayment and each designation, Continuation or Conversion of
Type shall be in an aggregate principal amount equal to $1,000,000 or an
integral multiple thereof (borrowings or prepayments of Loans of different Types
or, in the case of Eurodollar Loans, having different Interest Periods at the
same time hereunder, to be deemed separate borrowings and prepayments for
purposes of the foregoing, one for each Type or Interest Period), and each
termination or reduction of the Aggregate Commitment shall be in an aggregate
principal amount equal to $5,000,000 or an integral multiple thereof. Upon any
mandatory prepayment that would reduce Eurodollar Loans having the same Interest
Period to less than $1,000,000, such Eurodollar Loans shall automati cally be
converted into Alternate Base Rate Loans. Each issuance of a Letter of Credit
shall be in a face amount of at least $25,000.
5.5. CERTAIN ACTIONS, NOTICES, ETC. Notices to the Agent of any
termination or reduction of the Aggregate Commitment, of prepayments of Loans
and of the duration of Interest Periods, each Request for Extension of Credit
and each Rate Designation Notice shall be irrevocable and shall be effective
only if received by the Agent not later than 12:00 noon (1:00 p.m. in the case
of a Request for Extension of Credit or Rate Designation Notice related to a
Eurodollar Loan) on the day that is the applicable number of Business Days prior
to the date of the relevant termination, reduction, issuance, borrowing and/or
prepayment specified below:
NUMBER OF BUSINESS
DAYS PRIOR
NOTICE
------------------
Termination or reduction
of Aggregate Commitment ........................... 5
Borrowing or prepayment
of or Conversion into
Alternate Base Rate Loans ......................... same day
Borrowing or prepayment
of or Conversion into or
Continuation of Eurodollar ........................
Loans 3
Issuance of Letter of Credit ...................... 3
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Prepayments required
pursuant to SECTION 3.2(b) ........................ 1
Each such notice of reduction shall specify the amount to which the Aggregate
Commitment is to be reduced. Each such notice of prepayment or Request for
Extension of Credit shall specify the amount and Type of such Loans to be
borrowed or prepaid (subject to SECTIONS 3.2 and 5.4), the date of borrowing or
prepayment (which shall be a Business Day) and, in the case of Eurodollar Loans,
the duration of the Interest Period therefor (subject to the definition of
"Interest Period"). Each Rate Designation Notice with respect to a Conversion of
a Loan (or portion thereof) shall specify the amount and Type of the Loan (or
portion thereof) being converted, the amount and Type of Loan into which such
Loan is being converted (subject to SECTION 5.4), the date for Conversion (which
shall be a Business Day) and, unless such Loan is being converted into an
Alternate Base Rate Loan, the duration (subject to the definition of "Interest
Period") of the Interest Period therefor which is to commence as of the last day
of the then current Interest Period therefor (or the date of Conversion, if such
Loan is being converted from an Alternate Base Rate Loan). Each Rate Designation
Notice with respect to a Continuation of a Loan (or portion thereof) as the same
Type of Loan shall specify the amount and Type of such Loan (or portion thereof)
being continued (subject to SECTION 5.4) and the duration (subject to the
definition of "Interest Period") of the Interest Period therefor which is to
commence as of the last day of the then current Interest Period therefor. The
Agent shall promptly notify the Banks of the contents of each such notice,
Request for Extension of Credit, or Rate Designation Notice. Notice of any
prepayment having been given, the principal amount specified in such notice,
together with interest thereon to the date of prepayment, shall be due and
payable on such prepayment date.
5.6. NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Agent shall have been
notified by a Bank prior to 2 p.m. on the date on which such Bank is to make
payment to the Agent of the proceeds of a Loan (or the payment of any amount by
such Bank to reimburse the Issuer for a drawing under any Letter of Credit) to
be made by it hereunder or by the Company prior to the date on which the Company
is to make a payment to the Agent for the account of the Agent, the Issuer or
one or more of the Banks, as the case may be (such Bank or the Company being
herein called the "PAYOR" and such payment being herein called the "REQUIRED
PAYMENT"), which notice shall be effective upon receipt, that the Payor does not
intend to make the Required Payment to the Agent, the Agent may assume that the
Required Payment has been made and may, in reliance upon such assumption (but
shall not be required to), make the amount thereof available to the intended
recipient on the date that such Required Payment is to be made. If the Payor is
the Company and the Company has not in fact made the Required Payment to the
Agent on or before such date, the Banks, ratably in proportion to their
respective Commitment Percentages, shall, on demand, repay to the Agent the
amount made available by the Agent, together with interest thereon from the date
such amount was so made available by the Agent until the date the Agent recovers
such amount at a rate per annum equal to the Fed Funds Rate for the first three
days after demand and thereafter at the Fed Funds Rate plus 2%. (If the Payor is
the Company, the provisions of SECTION 2.2(A) AND SECTION 4.3(B) shall also
apply.) If the Payor is a Bank and such Bank has not in fact made the Required
Payment to the Agent on or before such date, such Bank
33
shall, on demand, pay to the Agent the amount made available by the Agent on
behalf of such Bank, together with interest thereon from the date such amount
was so made available by the Agent until the date the Agent recovers such amount
at a rate per annum equal to the Fed Funds Rate for each of the first three days
after demand and for each day thereafter at the Fed Funds Rate plus 2%.
5.7. SHARING OF PAYMENTS, ETC. If a Bank or any participant of a Bank
shall obtain payment of any principal of or interest on any Loan made by it
under this Agreement or of any Reimbursement Obligation or other obligation to
it under this Agreement, through the exercise of any right of set-off, banker's
lien, counterclaim or similar right, or otherwise, such Bank or participant
shall promptly purchase from the other Banks participations in the Loans made or
Reimbursement Obligations or other obligations held by the other Banks in such
amounts, and make such other adjustments from time to time as shall be equitable
to the end that all the Banks and participants shall share the benefit of such
payment (net of any expenses which may be incurred by such Bank or its
participant in obtaining or preserving such benefit) PRO RATA in accordance with
the respective amounts then due to each of them. To such end all the Banks and
their participants shall make appropriate adjustments among themselves (by the
resale of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Company agrees, to the fullest extent it may
effectively do so under applicable law, that any Person so purchasing a
participation in the Obligations may exercise all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Bank were a direct holder of Loans, Reimbursement Obligations or
other obligations in the amount of such participation. Nothing in this Agreement
shall require any Bank to exercise any such right or shall affect the right of
any Bank to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Company.
Section 6. YIELD PROTECTION AND ILLEGALITY.
6.1. ADDITIONAL COSTS.
(a) Subject to SECTION 12.8, the Company shall pay to the Agent, on
demand, for the account of such Bank, from time to time such amounts as any Bank
may reasonably determine to be necessary to compensate it for any costs incurred
by such Bank which such Bank reasonably determines are attributable to its
making or maintaining any Eurodollar Loan hereunder or its obligation to make or
maintain any such Loan hereunder, or any reduction in any amount receivable by
such Bank hereunder in respect of any of such Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"ADDITIONAL COSTS"), in each case resulting from any Regulatory Change which:
(1) subjects such Bank (or makes it apparent that such Bank is
subject) to any tax (including any United States interest equalization tax),
levy, impost, duty, charge or fee (collectively, "TAXES"), or any deduction or
withholding for any Taxes on or from the payment due under any Eurodollar Loan
or other amounts due hereunder, other than income and franchise
34
taxes of the jurisdiction (or any subdivision thereof) in which such Bank has an
office or its Applicable Lending Office; or
(2) changes the basis of taxation of any amounts payable to such
Bank under this Agreement or its Note in respect of any of such Loans, other
than changes which affect taxes measured by or imposed on the overall net income
or franchise taxes of such Bank or of its Applicable Lending Office for any of
such Loans by the jurisdiction (or any subdivision thereof) in which such Bank
has an office or such Applicable Lending Office; or
(3) imposes or modifies or increases or deems applicable any
Statutory Reserves or any other reserve, special deposit or similar requirement
(including any such requirement imposed by the Board) relating to any extensions
of credit or other assets of, or any deposits with or other liabilities of, such
Bank or loans made by such Bank, or against any other funds, obligations or
other property owned or held by such Bank; or
(4) imposes any other condition affecting this Agreement (or any
of such extensions of credit or liabilities).
Each Bank will notify the Company through the Agent of any event occurring after
the date of this Agreement which will entitle such Bank to compensation pursuant
to this SECTION 6.1 as promptly as practicable after it obtains knowledge
thereof and determines to request such compensation, and (if so requested by the
Company through the Agent) will designate a different available Applicable
Lending Office for the Eurodollar Loans of such Bank or take such other action
as the Company may reasonably request if such designation or action is
consistent with the internal policy of such Bank and legal and regulatory
restrictions, can be undertaken at no additional cost, will avoid the need for,
or reduce the amount of, such compensation and will not, in the sole opinion of
such Bank, be disadvantageous to such Bank (PROVIDED that such Bank shall have
no obligation so to designate an Applicable Lending Office located in the United
States of America). Each Bank will furnish the Company with a statement setting
forth the basis and amount of each request by such Bank for compensation under
this SECTION 6.1, with each such statement to cover amounts accruing under this
SECTION 6.1 with respect to a period beginning not earlier than 120 days from
the date thereof and using any reasonable averaging and attribution methods.
(b) Without limiting the effect of the foregoing provisions of this
SECTION 6.1, in the event that, by reason of any Regulatory Change, any Bank
either (1) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes Eurodollar
Loans or (2) becomes subject to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if such Bank so elects by notice
to the Company (with a copy to the Agent), the obligation of such Bank to make
Eurodollar Loans hereunder shall be suspended until the date such Regulatory
Change ceases to be in effect (in which case the provisions of SECTION 6.4 shall
be applicable).
35
(c) Determinations and allocations by any Bank for purposes of this
SECTION 6.1 of the effect of any Regulatory Change on its costs of maintaining
its obligations to make Loans or of making or maintaining Eurodollar Loans or on
amounts receivable by it in respect of Eurodollar Loans, and of the additional
amounts required to compensate such Bank in respect of any Additional Costs,
shall be conclusive, absent manifest error, and may be made using any reasonable
averaging and attribution methods.
(d) In the event any Bank shall seek compensation pursuant to this
SECTION 6.1, the Company may give notice to such Bank (with copies to the Agent)
that it wishes to seek one or more Eligible Assignees (which may be one or more
of the Banks) to purchase and assume the Commitment, Loans, Note, Letter of
Credit Liabilities and interests in this Agreement of such Bank. Each Bank
requesting compensation pursuant to this SECTION 6.1 agrees to sell its
Commitment, Loans, Note, Letter of Credit Liabilities and interests in this
Agreement pursuant to SECTION 12.6 (without recourse, representation or warranty
except as provided in SECTION 12.6) to any such Eligible Assignee for an amount
equal to (x) the sum of the outstanding unpaid principal of and accrued interest
on such Loans, Note and Letter of Credit Advances, plus (y) in the case of the
Issuer, Cover for the face amount of all undrawn Letter of Credit Liabilities
plus (z) all other fees and amounts (including any compensation claimed by such
Bank under this SECTION 6.1) owing to such Bank under the Credit Documents,
calculated, in each case, to the date on which such Commitment, Loans, Note,
Letter of Credit Liabilities and interests are purchased, whereupon such Bank
shall have no further Commitment or other obligation to the Company under this
Agreement or any other Credit Document in respect of matters arising after the
consummation of such purchase, but shall continue to be entitled to the benefit
of, and subject to any obligations incurred by it under, this Agreement and the
other Credit Documents in respect of matters occurring during the time it was a
Bank under this Agreement.
6.2. LIMITATION ON TYPES OF LOANS. Anything in this Agreement to the
contrary notwithstanding, if, with respect to any Eurodollar Loans:
(a) the Agent determines (which determination shall be conclusive absent
manifest error) that quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Rate" in SECTION 1.1 are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining the rate of interest for such Loans for Interest Periods therefor as
provided in this Agreement; or
(b) the Required Banks determine (which determination shall be
conclusive absent manifest error) and notify the Agent that the relevant rates
of interest referred to in the definition of "Eurodollar Rate" in SECTION 1.1
upon the basis of which the rates of interest for such Loans are to be
determined do not accurately reflect the cost to such Banks of making or
maintaining such Loans for any proposed Interest Periods therefor; or
(c) the Agent determines (which determination shall be conclusive absent
manifest error) that by reason of circumstances affecting the Eurodollar
interbank market generally,
36
deposits in dollars in the relevant Eurodollar interbank market are not being
offered for the applicable Interest Period and in an amount equal to the amount
of the Eurodollar Loan requested by the Company;
the Agent shall promptly notify the Company and each Bank thereof, and, so long
as such condition remains in effect, the Banks shall be under no obligation to
make Eurodollar Loans (but shall maintain until the end of the Interest Period
then in effect the Eurodollar Loans then outstanding).
6.3. ILLEGALITY. Notwithstanding any other provision of this Agreement
to the contrary, if by reason of (x) the adoption or effectiveness of any
applicable Legal Requirement, or any change in any applicable Legal Requirement
or in the interpretation or administration thereof by any Governmental
Authority, or compliance by any Bank with any request or directive (whether or
not having the force of law) of any central bank or other Governmental Authority
or (y) circumstances affecting the relevant Eurodollar interbank market or the
position of a Bank therein, it shall at any time be unlawful or impracticable in
the sole discretion of a Bank for such Bank or its Applicable Lending Office to
(a) honor its obligation to permit the establishment of Eurodollar Loans
hereunder or (b) maintain Eurodollar Loans hereunder, then such Bank through the
Agent shall promptly notify the Company thereof, and the obligation of such Bank
to establish or maintain Eurodollar Loans hereunder shall be suspended until
such time as such Bank may again establish and maintain Eurodollar Loans, in
which case the provisions of SECTION 6.4 shall be applicable. Before giving such
notice pursuant to this SECTION 6.3, such Bank will designate a different
available Applicable Lending Office for the Eurodollar Loans of such Bank or
take such other action as the Company may reasonably request if such designation
or action is consistent with the internal policy of such Bank and legal and
regulatory restrictions, can be undertaken at no additional cost, will avoid the
need to suspend such Bank's obligation to make Eurodollar Loans hereunder and
will not, in the sole opinion of such Bank, be disadvantageous to such Bank
(PROVIDED that such Bank shall have no obligation so to designate an Applicable
Lending Office located in the United States of America).
In the event any Bank shall seek to invoke the benefits of this SECTION
6.3, the Company may give notice to such Bank (with copies to the Agent) that it
wishes to seek one or more Eligible Assignees (which may be one or more of the
Banks) to purchase and assume the Commitment, Loans, Note, Letter of Credit
Liabilities and interests in this Agreement of such Bank. Each Bank requesting
to invoke the benefits of this SECTION 6.3 agrees to sell its Commitment, Loans,
Note, Letter of Credit Liabilities and interests in this Agreement pursuant to
SECTION 12.6 (without recourse, representation or warranty except as provided in
SECTION 12.6) to any such Eligible Assignee for an amount equal to (x) the sum
of the outstanding unpaid principal of and accrued interest on such Loans, Note
and Letter of Credit Advances, plus (y) in the case of the Issuer, Cover for the
face amount of all undrawn Letter of Credit Liabilities, plus (z) all other fees
and amounts owing to such Bank under the Credit Documents, calculated, in each
case, to the date on which such Commitment, Loans, Note, Letter of Credit
Liabilities and interests are purchased, whereupon such Bank shall have no
further Commitment or other
37
obligation to the Company hereunder or any other Credit Document in respect of
matters arising after the consummation of the purchase, but shall continue to be
entitled to the benefit of, and subject to any obligation incurred by it under,
this Agreement and the other Credit Documents in respect of matters occurring
during the time it was a Bank under this Agreement.
6.4. SUBSTITUTE ALTERNATE BASE RATE LOANS. If the obligation of any Bank to make
or maintain Eurodollar Loans shall be suspended pursuant to SECTION 6.1, 6.2 or
6.3, all Loans which would otherwise be made by such Bank as Eurodollar Loans
shall be made instead as Alternate Base Rate Loans (and, if an event referred to
in SECTION 6.1(B) or 6.3 has occurred and such Bank so requests by notice to the
Company with a copy to the Agent, each Eurodollar Loan of such Bank then
outstanding shall be automatically converted into an Alternate Base Rate Loan on
the date specified by such Bank in such notice which shall be the last day of
the current Interest Period with respect to such Eurodollar Loan or on such
earlier date as required by law) and, to the extent that such Eurodollar Loans
are so made as (or converted into) Alternate Base Rate Loans, all payments of
principal which would otherwise be applied to such Eurodollar Loans shall be
applied instead to such Alternate Base Rate Loans.
6.5. COMPENSATION. Subject to SECTION 12.8, the Company shall pay to the
Agent for the account of each Bank, within two Business Days after demand
therefor by such Bank through the Agent, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Bank) to compensate it for any
loss, cost or expense incurred by it as a result of:
(a) any payment, prepayment or Conversion of a Eurodollar Loan made by
such Bank on a date other than the last day of an Interest Period for such Loan;
or
(b) any failure by the Company to borrow a Eurodollar Loan to be made by
such Bank on the date for such borrowing specified in the relevant notice of
borrowing under SECTION 5.5 or to convert an Alternate Base Rate Loan into a
Eurodollar Loan on such date after giving notice of such Conversion or to
continue a Eurodollar Loan after giving notice of such Continuation; or
(c) any payment, prepayment or Conversion of a Eurodollar Loan required
by any provision of this Agreement or otherwise made or deemed made on a date
other than the last day of an Interest Period for such Eurodollar Loan; or
(d) any cessation of the Eurodollar Rate to apply to any Loan or any
part thereof;
including, in each case, any actual loss or expense sustained or incurred or to
be sustained or incurred in liquidating or employing deposits acquired to effect
or maintain such Eurodollar Loan or any part thereof. Such compensation shall
include an amount equal to the excess, if any, as reasonably determined by each
Bank, of (1) its cost of obtaining the funds for the Loan being paid, prepaid or
converted or not borrowed, converted or continued (assumed to be the applicable
Eurodollar Rate) for the period from the date of such payment, prepayment or
Conversion or failure to borrow, convert or continue to the last day of the
Interest Period for such Loan (or, in
38
the case of a failure to borrow, convert or continue the Interest Period for
such Loan which would have commenced on the date of such failure to borrow,
convert or continue) over (2) the amount of interest (as reasonably determined
by such Bank) that would be realized by such Bank in reemploying the funds so
paid, prepaid or converted or not borrowed, converted or continued for such
period or Interest Period, as the case may be. Each determination of the amount
of such compensation by a Bank shall be conclusive and binding, absent manifest
error, and may be computed using any reasonable averaging and attribution
method.
6.6. ADDITIONAL COSTS IN RESPECT OF LETTERS OF CREDIT. If as a result of
any Regulatory Change there shall be imposed, modified or deemed applicable any
tax, reserve, special deposit or similar requirement against or with respect to
or measured by reference to Letters of Credit issued or to be issued under this
Agreement or participations in such Letters of Credit, and the result shall be
to increase the cost to the Issuer or any Bank of issuing or maintaining any
Letter of Credit or any participation therein, or reduce any amount receivable
by the Issuer or any Bank in respect of any Letter of Credit or any
participation therein (which increase in cost, or reduction in amount
receivable, shall be the result of such Issuer's or such Bank's reasonable
allocation of the aggregate of such increases or reductions resulting from such
event), such Issuer or such Bank shall notify the Company through the Agent, and
upon demand therefor by such Issuer or such Bank through the Agent, the Company
(subject to SECTION 12.8) shall pay to the Issuer or such Bank, from time to
time as specified by the Issuer or such Bank, such additional amounts as shall
be sufficient to compensate the Issuer or such Bank for such increased costs or
reductions in amount. Before making such demand pursuant to this SECTION 6.6,
the Issuer or such Bank will designate a different available Applicable Lending
Office for the Letter of Credit or participation or take such other action as
the Company may request, if such designation or action will avoid the need for,
or reduce the amount of, such compensation and will not, in the sole opinion of
the Issuer or such Bank, be disadvantageous to the Issuer or such Bank. A
statement as to such increased costs or reductions in amount incurred by the
Issuer or such Bank, submitted by the Issuer or such Bank to the Company, shall
cover amounts accruing under this SECTION 6.6 with respect to a period beginning
not earlier than 120 days from the date thereof, shall be conclusive as to the
amount thereof, absent manifest error, and may be prepared using any reasonable
averaging and attribution method.
In the event any Bank shall seek compensation pursuant to this SECTION
6.6, the Company may give notice to such Bank (with copies to the Agent) that it
wishes to seek one or more Eligible Assignees (which may be one or more of the
Banks) to purchase and assume the Commitment, Loans, Note, Letter of Credit
Liabilities and interests in this Agreement of such Bank. Each Bank requesting
compensation pursuant to this SECTION 6.6 each agrees to sell its Commitment,
Loans, Note, Letter of Credit Liabilities and interests in this Agreement
pursuant to SECTION 12.6 (without recourse, representation or warranty except as
provided in SECTION 12.6) to any such Eligible Assignee for an amount equal to
(x) the sum of the outstanding unpaid principal of and accrued interest on such
Loans, Note and Letter of Credit Advances, plus (y) all other fees and amounts
(including any compensation claimed by such Bank under this SECTION 6.6) owing
to such Bank under the Credit Documents, calculated, in each case, to the date
such
39
Commitment, Loans, Note, Letter of Credit Liabilities and interests in this
Agreement are purchased, whereupon such Bank shall have no further Commitment or
other obligation to the Company under this Agreement or any other Credit
Document in respect of matters arising after the consummation of such purchase,
but shall continue to be entitled to the benefit of, and subject to any
obligation incurred by it under, this Agreement and the other Credit Documents
in respect of matters occurring during the time it was a Bank under this
Agreement.
In the event any Issuer shall seek compensation pursuant to this SECTION
6.6, the Company may give notice to such Issuer (with copies to the Agent) that
it wishes another of the Banks to become the Issuer for future Letters of Credit
(including any Letters of Credit which the Company may arrange to substitute for
any Letter of Credit issued by the retiring Issuer), whereupon such retiring
Issuer shall have no further obligation to issue Letters of Credit, but shall
continue to be entitled to the benefit of, and subject to any obligation
incurred by it under, this Agreement and the other Credit Documents in respect
of matters occurring and Letters of Credit issued during the time it was the
Issuer under this Agreement. Notwithstanding its retirement, the retiring Issuer
shall continue to be entitled to reimbursement of any and all Letter of Credit
Advances made by it under each Letter of Credit issued by it. All fees and other
amounts (including any compensation claimed by the retiring Issuer under this
SECTION 6.6) owing to the retiring Issuer under the Credit Documents shall be
paid to the retiring Issuer at the time of its retirement as Issuer, and the
retiring Issuer shall continue to be the Issuer for all purposes of this
Agreement with respect to any outstanding Letters of Credit theretofore issued
by it.
6.7. CAPITAL ADEQUACY. If any Bank shall have determined that
(a) the adoption after the date of this Agreement or the effectiveness
after the date of this Agreement (regardless of whether previously announced) of
any applicable Legal Requirement or treaty regarding capital adequacy, or
(b) any change after the date of this Agreement in any existing or
future Legal Requirement or treaty regarding capital adequacy, or
(c) any change after the date of this Agreement in the interpretation or
administration of any existing or future Legal Requirement or treaty regarding
capital adequacy by any Governmental Authority or comparable agency charged with
the interpretation or administration thereof, or
(d) compliance by any Bank (or its Applicable Lending Office) with any
request or directive after the date of this Agreement regarding capital adequacy
(whether or not having the force of law) of any such Governmental Authority or
comparable agency has or would have the effect of reducing the rate of return on
the capital of such Bank (or any holding company of which such Bank is a part)
as a consequence of its obligations under this Agreement and the other Credit
Documents to a level below that which such Bank or holding company could have
achieved but for such adoption, change or compliance by an amount deemed by such
Bank or holding company
40
to be material, then, from time to time, on demand by such Bank (with a copy to
the Agent), the Company (subject to SECTION 12.8) shall pay to such Bank such
additional amount or amounts as will compensate such Bank or holding company for
such reduction. The certificate of any Bank setting forth such amount or amounts
as shall be necessary to compensate it and the basis therefor shall cover
amounts accruing under this SECTION 6.7 with respect to a period beginning not
earlier than 120 days from the date thereof and shall be conclusive and binding,
absent manifest error. The Company shall pay the amount shown as due on any such
certificate upon delivery of such certificate. In preparing such certificate, a
Bank may take into consideration such Bank's and such holding company's policies
with respect to capital adequacy, employ such assumptions and allocations of
costs and expenses as it shall in good xxxxx xxxx reasonable, and use any
reasonable averaging and attribution method.
In the event any Bank shall seek compensation pursuant to this SECTION
6.7, the Company may give notice to such Bank (with copies to the Agent) that it
wishes to seek one or more Eligible Assignees (which may be one or more of the
Banks) to purchase and assume the Commitment, Loans, Note, Letter of Credit
Liabilities and interests in this Agreement of such Bank. Each Bank requesting
compensation pursuant to this SECTION 6.7 agrees to sell its Commitment, Loans,
Note, Letter of Credit Liabilities and interests in this Agreement pursuant to
SECTION 12.6 (without recourse, representation or warranty except as provided in
SECTION 12.6) to any such Eligible Assignee for an amount equal to (x) the sum
of the outstanding unpaid principal of and accrued interest on such Loans, Note
and Letter of Credit Advances, plus (y) in the case of the Issuer, Cover for the
face amount of all undrawn Letter of Credit Liabilities, plus (z) all other fees
and amounts (including any compensation claimed by such Bank under this SECTION
6.7) owing to such Bank under the Credit Documents, calculated, in each case, to
the date on which such Commitment, Loans, Note, Letter of Credit Liabilities and
interests are purchased, whereupon such Bank shall have no further Commitment or
other obligation to the Company under this Agreement or any other Credit
Document in respect of matters arising after the consummation of such purchase,
but shall continue to be entitled to the benefit of, and subject to any
obligation incurred by it under, this Agreement and the other Credit Documents
in respect of matters occurring during the time it was a Bank under this
Agreement.
Section 7. CONDITIONS PRECEDENT.
7.1. INITIAL CONDITIONS PRECEDENT. The obligation of each Bank to make
its initial Loan to the Company pursuant to this Agreement and the obligation of
the Issuer to issue the first Letter of Credit pursuant to this Agreement are
each subject to the following conditions precedent, each of which shall have
been fulfilled or waived in the discretion of the Agent:
(a) CORPORATE ACTION AND STATUS. The Agent shall have received copies of
the Organizational Documents of the Company certified by the Secretary of the
Company, and resolutions of the Board of Directors of the Company, certified by
the Secretary of the Company, for all corporate action taken by the Company
authorizing the execution, delivery and performance of the Credit Documents to
which the Company is a party, together with such certificates as may
41
beappropriate to demonstrate the existence, qualification and good standing of
and payment of taxes by each member of the Combined Group in each jurisdiction
in which such qualification is required to make true the representations
contained in SECTION 8.1.
(b) INCUMBENCY. The Company shall have delivered to the Agent a
certificate in respect of the name and signature of each officer who (i) is
authorized to sign on its behalf the applicable Credit Documents to which the
Company is a party and (ii) will, until replaced by another officer or officers
duly authorized for that purpose, act as its representative for the purposes of
signing documents and giving notices and other communications in connection with
this Agreement and the other Credit Documents. The Agent and each Bank may
conclusively rely on such certificates until they receive notice in writing from
the Company to the contrary.
(c) NOTES. The Agent shall have received the appropriate Note of the
Company for each Bank, duly completed and executed.
(d) CREDIT DOCUMENTS. The Company shall have duly executed and delivered
the other Credit Documents to which it is a party, and each such Credit Document
shall be in Proper Form. Each such Credit Document shall be in substantially the
form furnished to the Banks prior to their execution of this Agreement, together
with such changes therein as the Agent may approve in its discretion. The
Company shall have paid to the Agent all fees and expenses in the amounts
previously agreed upon in writing among the Company and the Agent and all
amounts due under SECTION 12.3.
(e) OPINION OF COUNSEL TO THE COMPANY. The Agent shall have received the
opinions of Xxxxxxx & Xxxxx L.L.P. and of Xxxxx X. Xxxxx, counsel to the
Company, substantially in the forms of SCHEDULES III and IV, respectively.
(f) COUNTERPARTS. The Agent shall have received counterparts of each of
the Credit Documents duly executed and delivered by or on behalf of each of the
parties thereto (or, in the case of any Bank as to which the Agent shall not
have received such a counterpart, the Agent shall have received evidence
satisfactory to it of the execution and delivery by such Bank of a counterpart
hereof).
(g) CONSENTS. The Agent shall have received evidence satisfactory to it
in its discretion that all consents of each Governmental Authority and of each
other Person, if any, required in connection with the Loans and Letters of
Credit or the execution, delivery and performance of the Credit Documents have
been received and remain in full force and effect.
(h) OTHER DOCUMENTS. The Agent shall have received such other documents
consistent with the terms of this Agreement and relating to the transactions
contemplated hereby as the Agent may reasonably request.
(i) TERMINATION OF EXISTING CREDIT FACILITY. The Agent shall have
received evidence
42
satisfactory to it in its discretion that the Company has terminated the
Existing Credit Facility; the Company shall have repaid all borrowings
thereunder, and all commitments thereunder shall have terminated.
(j) SENIOR SUBORDINATED DEBT. The Agent shall have received evidence
satisfactory to it in its discretion that the aggregate principal amount of
Total Debt outstanding pursuant to the Indenture does not exceed $100,000,000.
All provisions and payments required by this SECTION 7.1 are subject to
the provisions of SECTION 12.8.
7.2. ALL LOANS AND LETTERS OF CREDIT. The obligation of each Bank to
make any Loan (including its initial Loan) to be made by it hereunder and the
obligation of the Issuer to issue any Letter of Credit (including the first
Letter of Credit) are each subject to the additional conditions precedent that,
as of the date of such Loan or such issuance, and after giving effect thereto:
(a) for each Loan which is not a Conversion or a Continuation, no
Default shall have occurred and be continuing and no Borrowing Base Deficiency
shall exist;
(b) for each Loan which is not a Conversion or a Continuation, and for
each Letter of Credit, there shall have been no Material Adverse Change since
the date of this Agreement;
(c) for each Loan which is not a Conversion or a Continuation, and for
each Letter of Credit, all representations and warranties made in each Credit
Document shall be true and correct in all material respects on and as of the
date of the making of such Loan or the issuance of such Letter of Credit, with
the same force and effect as if made on and as of such date (except as the same
are expressly stated in the Credit Documents to be made only as of a specific
earlier date, in which case the same shall have been true and correct in all
material respects as of such earlier date);
(d) except for Loans and Letters of Credit made or issued on the date of
this Agreement, the Company shall have delivered to the Agent a Request for
Extension of Credit (and, in the case of a Letter of Credit, a completed
Application) within the time specified in SECTION 5.5; and
(e) the making of such Loan or the issuance of such Letter of Credit
shall not be prohibited by, or subject the Agent or such Bank to any penalty
under, any Legal Requirement applicable to the Agent or such Bank.
The borrowing of the initial Loans and the issuance of the initial
Letter of Credit under this Agreement and each Request for Extension of Credit
in respect of each Loan and each Letter of Credit by the Company hereunder shall
constitute and include a representation and warranty by the Company to the
effect set forth in SUBSECTIONS (A) through (C) (if applicable) of this SECTION
43
7.2 (both as of the date of such notice and, unless the Company otherwise
notifies the Agent prior to the date of such borrowing or issuance, as of the
date of such borrowing or issuance). Except in the case of Loans and Letters of
Credit made or issued on the date hereof, such representation and warranty shall
be accompanied by a certificate of the Chief Executive Officer, President, Chief
Financial Officer or Treasurer of the Company setting forth in reasonable detail
the calculations of the Company in making such representation and warranty.
7.3. CONVERSIONS AND CONTINUATIONS OF EURODOLLAR LOANS. The obligation
of each of the Banks to convert any Alternate Base Rate Loan into a Eurodollar
Loan or to continue any Eurodollar Loan for a new Interest Period is subject to
the conditions precedent that on the date of such Conversion or Continuation and
after giving effect thereto (a) no Default shall have occurred and be
continuing, (b) the Company shall have delivered to the Agent a Rate Designation
Notice within the time specified in SECTION 5.5, and (c) such Conversion or
Continuation shall not be prohibited by, or subject such Bank to any penalty
under, any Legal Requirement applicable to such Bank. The acceptance of the
benefits of such Conversion or Continuation shall constitute a representation
and warranty by the Company to each of the Banks to the effect set forth in
CLAUSE (A).
Section 8. REPRESENTATIONS AND WARRANTIES. To induce the Agent and the
Banks to enter into this Agreement and to extend credit under it, the Company
represents and warrants (such representations and warranties to survive any
investigation, the making of the Loans and the issuance of the Letters of
Credit) to the Banks and the Agent as follows:
8.1. CORPORATE EXISTENCE. Each member of the Combined Group (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite power and authority, and
has all licenses, permits, authorizations, consents and approvals necessary, to
own its property and carry on its business as now being conducted, and (c) is
qualified to do business, and is in good standing, in all jurisdictions in which
any of the Petroleum Properties which it owns are located or the nature of the
business conducted by it makes such qualification necessary or advisable, unless
the failure to be so qualified or in good standing would not individually or in
the aggregate have a material adverse effect on the business, financial
condition or results of operations of the Combined Group taken as a whole.
8.2. INFORMATION.
(a) The most recent consolidated balance sheet of the Company and its
Subsidiaries and the related consolidated statements of operations, changes in
financial position and cash flows for the period then ended, together with the
respective notes thereto, delivered to each of the Banks in accordance with the
provisions of SECTION 9.1(A) or (B), as the case may be (the latest of such
financial statements and the notes thereto being referred to herein as the "MOST
RECENT FINANCIAL STATEMENTS"), fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of such
date and their consolidated results of operations for the period then ended in
conformity with GAAP.
44
(b) Since the date of this Agreement, there has been no Material Adverse
Change.
8.3. LITIGATION; COMPLIANCE. Except as disclosed in writing to the Banks
prior to the date hereof, there are no legal or arbitral proceedings or any
proceedings by or before any Governmental Authority now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any of
its Subsidiaries which, if adversely determined, would cause a Material Adverse
Change. The Company and its Subsidiaries comply in all material respects with
all applicable material (based on the Company and its Subsidiaries taken as a
whole) Legal Requirements (other than the Applicable Environmental Laws,
representations and warranties regarding which are found in SECTION 8.13).
Neither the Company nor any of its Subsidiaries is in default in any material
respect under, or in violation of, any material (based on the Company and its
Subsidiaries taken as a whole) judgment, order or decree of any Governmental
Authority.
8.4. NO BREACH. None of the execution and delivery of the Credit
Documents, the consummation of the transactions therein contemplated or
compliance with the terms and provisions thereof will conflict with or result in
a breach of, or require any consent that has not been obtained under, the
Organizational Documents of the Company or any of its Subsidiaries or any
material Legal Requirement (including any securities law, rule or regulation)
applicable to the Company or any of its Subsidiaries or (except for the Liens
permitted by this Agreement) result in the creation or imposition of any Lien
upon any of the revenues or property of the Company or any of its Subsidiaries.
Such execution, delivery, consummation and compliance do not and will not
conflict with or result in a breach of any material agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound or to which any of them is subject, or
constitute a default under any such agreement or instrument.
8.5. NECESSARY ACTION. The Company has all necessary power and authority
to execute, deliver and perform its obligations under the Credit Documents and
the documentation relating to the Monterey Transactions and to consummate the
transactions contemplated therein. The execution, delivery and performance of
the Credit Documents by the Company and the consummation by the Company of the
transactions contemplated therein have been duly authorized by all necessary
action on the part of the Company. The Credit Documents have been duly and
validly executed and delivered by the Company and constitute the legal, valid
and binding obligations of the Company, enforceable in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to the enforcement of creditors' rights generally
and by general equitable principles.
8.6. APPROVALS. All authorizations, approvals and consents of, and all
filings and registrations with, all Governmental Authorities, the holders of the
Senior Subordinated Notes and each other Person necessary for the execution,
delivery or performance of any Credit Document or the consummation by the
Company of the transactions contemplated therein or for the validity or
enforceability thereof have been obtained and are in full force and effect.
45
8.7. REGULATIONS G, T, U AND X. Neither the Company nor any agent acting
on its behalf has taken or will take any action which might cause this
Agreement, the Loans or the Notes to violate Regulations G, T, U or X or any
other regulation of the Board or to violate the Securities Exchange Act of 1934,
as amended, in each case as in effect now or as the same may hereafter be in
effect. No portion of the Loans shall be drawn or used for any purpose which
would cause this Agreement, the Notes or the Loans to be "purpose credit" under
Regulation U of the Board. The parties acknowledge that neither the Agent nor
any Bank is relying upon as collateral any margin stock, whether issued by the
Company, currently owned by the Company or any Restricted Subsidiary or intended
to be acquired by the Company or any Restricted Subsidiary. The Company warrants
and covenants that it shall not take any action that would result, in the
absence of the application of the following sentence, in any credit that may be
(or that may have been) advanced under this Agreement being classified as
purpose credit directly or indirectly secured by margin stock within the meaning
of Regulation U. Notwithstanding any term contained in this Agreement to the
contrary, if any purpose credit extended or deemed to be extended under this
Agreement should nevertheless ever be deemed to be indirectly secured by margin
stock, then, during such time that such condition exists: (i) the Company
(without regard to any restriction contained in the Credit Documents) may sell,
pledge or otherwise dispose of the Excess Portion of margin stock (and the
exercise of such right shall not constitute cause for accelerating the maturity
of the Obligations); and (ii) the Company shall not utilize any of its assets
that are not margin stock to acquire any margin stock directly or indirectly. As
used in this SECTION 8.7: (A) "REGULATION U" means those regulations concerning
credit provided by banks for the purpose of purchasing or carrying margin stock
set forth at Part 211 of Volume 12 of the Code of Federal Regulations, as the
same may be amended from time to time; (B) "INDIRECTLY SECURED" and "PURPOSE
CREDIT" shall have the meanings ascribed to those phrases in Section 221.2 of
Regulation U; (iii) "EXCESS PORTION OF MARGIN STOCK" means that portion of the
margin stock directly or indirectly owned by the Company (and, where the value
of all margin stock so owned by the Company exceeds the Regulation U Limit, the
Company shall promptly identify to the Agent the particular shares from among
them which shall be included in such portion exceeding the Regulation U Limit)
that has a value, when added to the value all other margin stock indirectly
securing the credit extended under this Agreement, that would cause the total
value of the margin stock indirectly securing the credit to exceed the
Regulation U Limit; and (iv) "REGULATION U LIMIT" means that amount equal to
twenty-five (25%) of the value of the Company's properties or assets that are
then subject to any restriction in this Agreement on the disposition thereof or
the creation of Liens thereon.
8.8. ERISA. The Company and each ERISA Affiliate have fulfilled their
contribution obligations under each Plan subject to Title IV of ERISA and have
fulfilled their obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan subject to Title IV of ERISA, and in all other
regards with respect to each Plan are in material compliance with the applicable
provisions of ERISA, the Code, and all other applicable laws, regulations and
rules, to the extent that noncompliance with such provisions would result in a
Material Adverse Change. The Company has no knowledge of any event with respect
to each Plan which could result in a Material Adverse Change.
46
8.9. TAXES. Each of the Company and its Subsidiaries has filed all
United States federal income tax returns and all other material tax returns
which are required to be filed by it and has paid all taxes due pursuant to such
returns or pursuant to any assessment received by it, except to the extent the
same may be contested in good faith by appropriate proceedings diligently
conducted for which adequate reserves have been established in accordance with
GAAP. The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of taxes and other governmental charges, as made on a
periodic basis, are adequate.
8.10. SUBSIDIARIES. SCHEDULE I as supplemented from time to time by
notice from the Company to the Agent is a complete and correct list of all
Subsidiaries of the Company. All shares or other indicia of equity interest of
the Restricted Subsidiaries directly or indirectly owned by the Company are free
and clear of Liens (except Permitted Encumbrances and Liens permitted by SECTION
9.7(A)(7)), and all such shares are validly issued, fully paid and
non-assessable.
8.11. INVESTMENT COMPANY ACT. No member of the Combined Group is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or directly or indirectly controlled by or acting on behalf of any
Person which is an "investment company", within the meaning of said Act.
8.12. PUBLIC UTILITY HOLDING COMPANY ACT; FEDERAL POWER ACT. No member
of the Combined Group is a "public utility company", or an "affiliate" or a
"subsidiary company" of a "public utility company", or a "holding company", or
an "affiliate" or a "subsidiary company" of a "holding company" or of a
"subsidiary company" of a "holding company," as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended, or a "public utility" as
such term is defined in the Federal Power Act, as amended.
8.13. ENVIRONMENTAL MATTERS. Except as disclosed in writing to the Agent
prior to the date hereof, the Company and its Subsidiaries, and the plants and
sites of each, have complied with all Applicable Environmental Laws, except, in
any such case, where such failure to so comply would not result in a Material
Adverse Change. Without limiting the generality of the preceding sentence,
neither the Company nor any of its Subsidiaries has received notice of or has
actual knowledge of any actual or claimed or asserted failure so to comply with
Applicable Environmental Laws or of any other Environmental Claim which alone or
together with all other such failures or Environmental Claims is material and
would result in a Material Adverse Change. Except as disclosed in writing to the
Agent prior to the date hereof, neither the Company nor any of its Subsidiaries
nor their plants or other sites manage, generate or dispose of, or during their
respective period of use, ownership, occupancy or operation by the Company or
its Subsidiaries have managed, generated, released or disposed of, any hazardous
wastes, solid wastes, petroleum substances, hazardous substances, hazardous
materials, toxic substances or toxic pollutants, as those terms are used or
defined in the Applicable Environmental Laws, in material violation of or in a
manner which would result in liability under the Applicable Environmental Laws
or any other applicable Legal Requirement, or in a manner which would result in
an Environmental Claim except where such noncompliance or liability or
Environmental Claim would not result in
47
a Material Adverse Change. The representation and warranty contained in this
SECTION 8.13 is based in its entirety upon (a) current interpretations and
enforcement policies that have been publicly disseminated and are used by
Governmental Authorities charged with the enforcement of the Applicable
Environmental Laws or which apply to the Company or any of its Subsidiaries with
respect to any property or sites in a particular jurisdiction and (b) current
levels of publicly disseminated scientific knowledge concerning the detection
of, and the health and environmental risks associated with the discharge of,
substances and pollutants regulated pursuant to the Applicable Environmental
Laws.
8.14. TITLE.
(a) Each member of the Combined Group has good and defensible title to
the oil, gas and mineral properties shown as owned by it and included in the
Most Recent Engineering Report furnished to the Banks.
(b) Such properties and facilities are free and clear of all Liens,
except Permitted Encumbrances and other Liens permitted hereby.
(c) All oil, gas and mineral leases and leasehold estates, gas purchase
and sales contracts and other agreements comprising or relating to any of such
properties are valid and subsisting and in full force and effect, except for
those leases, estates, contracts, easements, rights-of-way and agreements which
are in the aggregate not material to oil, gas and mineral properties included in
the Most Recent Engineering Report furnished to the Banks, taken as a whole.
(d) All rights, permits, easements, servitudes and rights-of-way,
failure to have or maintain which would materially interfere with the
development, maintenance and operation of such properties so as to cause a
Material Adverse Change, have been obtained and are in full force and effect.
Section 9. COVENANTS. The Company covenants to and agrees with the Banks
and the Agent that until the termination of this Agreement pursuant to SECTION
12.7:
9.1. FINANCIAL STATEMENTS AND CERTIFICATES. The Company will deliver in
duplicate:
(a) to each Bank, as soon as practicable and in any event within 45 days
after the end of each quarterly period (other than the last quarterly period) in
each fiscal year, consolidated and consolidating statements of operations,
stockholders' equity and cash flows of the Company and its Subsidiaries for the
period from the beginning of the then-current fiscal year to the end of such
quarterly period, and a consolidated and consolidating balance sheet of the
Company and its Subsidiaries as of the end of such quarterly period, setting
forth (1) as to each account affected thereby, all eliminating entries for the
Unrestricted Subsidiaries as a group and (2) the resulting consolidated and
consolidating figures for the Company and the Restricted Subsidiaries, and
48
setting forth in each case in comparative form figures as of the end of and for
the corresponding period in the preceding fiscal year, all in reasonable detail
and unaudited but certified by an authorized financial officer of the Company as
fairly presenting the financial position and results of operations of the
Company and its Subsidiaries as of the date thereof and the period then ended,
subject to changes resulting from year-end adjustments;
(b) to each Bank, as soon as practicable and in any event within 90 days
after the end of each fiscal year, consolidated and consolidating statements of
operations, stockholders' equity and cash flows of the Company and its
Subsidiaries for such year, and a consolidated and consolidating balance sheet
of the Company and its Subsidiaries as of the end of such fiscal year,
setting forth (1) as to each account affected thereby, all eliminating entries
for the Unrestricted Subsidiaries as a group and (2) the resulting consolidating
figures for the Company and the Restricted Subsidiaries, and setting forth in
each case in comparative form corresponding consolidating figures from the
preceding annual audit, all in reasonable detail and which shall be reported on
by Price Waterhouse LLP or other independent public accountants of recognized
national standing selected by the Company whose report shall (A) contain an
opinion that shall be unqualified as to the scope or limitations imposed by the
Company and shall not be subject to any other material qualification and (B)
state that such financial statements present fairly, in all material respects,
the financial position of the Company and its Subsidiaries at the dates
indicated and their cash flows and the results of their operations and the
changes in their financial position for the periods indicated in conformity with
GAAP, and shall be accompanied by a report of such independent public
accountants stating that (W) such audit was made for the purpose of forming an
opinion on the consolidated financial statements taken as a whole; (X) the
consolidating information set forth therein is presented for purposes of
additional analysis rather than to present the financial position, results of
operations and cash flows of the individual companies; (Y) such consolidating
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements, and (Z) in such independent public
accountants' opinion, such consolidating information is fairly stated in all
material respects in relation to the consolidated financial statements taken as
a whole, with such changes thereto as such accountants reasonably determine to
be appropriate under the circumstances;
(c) to each Bank, promptly upon transmission thereof, copies of all
financial statements, proxy statements, notices and reports as it shall send to
its public stockholders and copies of all registration statements (without
exhibits, and other than registration statements and reports relating to
employee benefit or compensation plans) and all reports which it files with the
Securities and Exchange Commission (or any governmental body or agency
succeeding to any or all of the functions of the Securities and Exchange
Commission);
(d) to each Bank, promptly upon receipt thereof, a copy of each other
report submitted to the Company or any of its Subsidiaries by independent
accountants in connection with any annual, interim or special audit made by them
of the books of the Company or any such Subsidiary;
49
(e) to each Bank, as soon as practicable and in any event within 15 days
after any executive officer of the Company obtains knowledge (1) of any Default
or any condition or event which, in the opinion of management of the Company,
would cause a Material Adverse Change (to the extent affecting the Company and
its Subsidiaries in a materially different manner or extent than the oil and gas
industry generally); (2) that any Person has given any notice to the Company or
any of its Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in SECTION 10.1(B) or (M);
(3) of the institution of any litigation involving claims against the Company or
any of its Subsidiaries equal to or greater than $5,000,000 with respect to any
single cause of action or of any adverse determination in any court proceeding
in any litigation involving a potential liability to the Company or any of its
Subsidiaries equal to or greater than $5,000,000 with respect to any single
cause of action which makes the likelihood of an adverse determination in such
litigation against the Company or such Subsidiary substantially more probable;
and (4) of any regulatory proceeding which, if determined adversely to the
Company, would cause a Material Adverse Change (to the extent affecting the
Company and its Subsidiaries in a materially different manner or extent than the
oil and gas industry generally), an Officer's Certificate specifying the nature
and period of existence of any such Default, condition or event, or specifying
the notice given or action taken by such Person and the nature of any such
claimed Default, event or condition, or specifying the details of such
proceeding, litigation or dispute and, in each case, what action the Company and
any affected Subsidiary has taken, is taking or proposes to take with respect
thereto;
(f) to each Bank, (1) promptly after the filing or receiving thereof,
copies of all annual reports and such other material reports and notices which
the Company or any ERISA Affiliate files under ERISA with the Internal Revenue
Service, the PBGC, the U.S. Department of Labor or any entity succeeding to any
or all of their respective functions with respect to a Plan that is subject to
Title IV of ERISA; (2) promptly upon acquiring knowledge of any "reportable
event" (as defined in Section 4043 of ERISA) or of any "prohibited transaction,"
as such term is defined in the Code or ERISA, in connection with any Plan which
may result in a Material Adverse Change, a statement executed by the President
or Chief Financial Officer of the Company or the applicable ERISA Affiliate,
setting forth the details thereof and the action which the Company or the ERISA
Affiliate proposes to take with respect thereto and, when known, any action
taken by the PBGC, the Internal Revenue Service, the U.S. Department of Labor
(or any entity succeeding to any or all of the functions of any such entity)
with respect thereto; (3) promptly after the filing or receiving thereof by the
Company or any ERISA Affiliate, any notice of the institution of any proceedings
or other actions which may result in the termination of any Plan or notice of
complete or partial withdrawal liability under Title IV of ERISA, and (4) each
request for waiver of the funding standards or extension of the amortization
periods required by Sections 303 and 304 of ERISA or Section 412 of the Code
promptly after the request is submitted by the Company or any ERISA Affiliate,
to the Secretary of the Treasury, the U.S. Department of Labor or the Internal
Revenue Service (or any entity succeeding to any or all of the functions of any
such entity), as the case may be;
(g) to each Bank, as soon as available but in no event later than
February 28 of each
50
year, an Independent Engineering Report reflecting data as
of December 31 of the prior year and, upon the request of the Agent promptly
after June 30 of each year, but in no event later than September 1 of each year,
a Company Report;
(h) to the Agent, no later than the first Quarterly Date after the
formation or acquisition of any Subsidiary of the Company, notice of such
formation or acquisition stating the name, jurisdiction of organization,
percentage owned by the Company, whether such Subsidiary is a Restricted
Subsidiary or an Unrestricted Subsidiary, and other relevant information;
(i) to the Agent, (i) on or before each Quarterly Date, (ii) at any time
the aggregate amount of Other Liabilities reported in the Most Recent Other
Liabilities Report shall exceed the aggregate amount of Other Liabilities
reported in the immediately preceding Other Liabilities Report by $10,000,000 or
more, (iii) concurrently with each Request for Extension of Credit, and (iv)
whenever the Company shall desire, an Other Liabilities Report; and
(j) with reasonable promptness, such other information respecting the
business, financial condition or results of operations of the Company or any of
its Subsidiaries as the Agent or any Bank may reasonably request.
Additionally, the Company will deliver to each Bank:
(x) Together with each delivery of financial statements required by
SUBSECTION (A) above, an Officer's Certificate demonstrating (with applicable
computations in reasonable detail) compliance by the Company and the Restricted
Subsidiaries with the provisions of SECTIONS 9.6, 9.7(B), 9.7(C)(2) and (3),
9.7(D), 9.7(E), 9.7(F), 9.9, 9.10 and 9.11 as at the date of the balance sheet
included in such financial statements and stating that at the date of such
Officer's Certificate there exists no Default, or, if any Default exists,
specifying the nature and period of existence thereof and what action the
Company proposes to take with respect thereto; and
(y) Together with each delivery of financial statements required by
SUBSECTION (B) above, a certificate of such accountants stating that, in
conducting the audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards they have obtained no
knowledge of any Default arising under SECTION 10.1(A), (B) or (I) or any
Default arising under SECTION 10.1(D) that occurs as result of the breach or
violation by the Company or the Restricted Subsidiaries of SECTIONS 9.6, 9.7(A)
9.7(B), (C), (D), (E), (F), or (G), 9.8, 9.9, 9.10 or 9.11 or, if they have
obtained knowledge of any such Default, specifying the nature and period of
existence thereof. Such accountants, however, shall not be liable to the Agent
or any Bank by reason of their failure to obtain knowledge of any such Default
which would not be disclosed in the course of an audit conducted in accordance
with generally accepted auditing standards.
9.2. INSPECTION OF PROPERTY. The Company will permit, and cause each of
its Subsidiaries to permit, any Person designated in writing by any Bank, at
such Bank's expense and risk, to visit and inspect any of the properties of the
Company and its Subsidiaries; and also to
51
examine the corporate books and financial records of the Company and its
Subsidiaries and to make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of such Persons with the executive officers of
the Company and its Subsidiaries, the petroleum reserve engineers employed by
the Company and its Subsidiaries and the Company's independent public
accountants, all at such reasonable times, with a representative of the Company
present and as often as such Bank may reasonably request, and will assist such
Person or Persons in all such activities.
9.3. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company will, and will
cause each of its Subsidiaries and each of its Affiliates that are controlled by
the Company or its Subsidiaries to, comply in a timely fashion with, or operate
pursuant to valid waivers of the provisions of, all Applicable Environmental
Laws, except where non-compliance would neither (a) result in a Material Adverse
Change nor (b) subject the Agent or any Bank to any liability for such
non-compliance (PROVIDED that the Company shall not be in default of this CLAUSE
(B) if the Company indemnifies each of the Agent, Banks or any of them subjected
to such liability and provides collateral to secure such indemnification, all to
the extent required by the Person subjected to such liability in its sole and
unfettered discretion). THE COMPANY AGREES TO INDEMNIFY AND HOLD THE AGENT AND
EACH BANK, AND THEIR RESPECTIVE OFFICERS, AGENTS AND EMPLOYEES HARMLESS FROM ANY
LOSS, LIABILITY, CLAIM OR EXPENSE WHICH ANY SUCH PERSON MAY INCUR OR SUFFER AS A
RESULT OF A BREACH BY THE COMPANY OR ITS SUBSIDIARIES OR AFFILIATES, AS THE CASE
MAY BE, OF THIS COVENANT. The Company shall not be deemed to have breached or
violated this SECTION 9.3 if the Company or the applicable Subsidiary or
Affiliate, as the case may be, is challenging in good faith by appropriate
proceedings diligently pursued, and subject to the indemnification obligations
of this SECTION 9.3, the application or enforcement of any such Applicable
Environmental Laws for which adequate reserves have been established in
accordance with GAAP.
9.4. PAYMENT OF TAXES. The Company will, and will cause each of its
Subsidiaries to, pay, or have paid on its behalf, before the same become
delinquent all taxes, assessments and governmental charges imposed upon it or
upon its property, except to the extent contested in good faith by appropriate
proceedings diligently conducted for which adequate reserves have been
established in accordance with GAAP.
9.5. MAINTENANCE OF INSURANCE. The Company and each of its Subsidiaries
will carry and maintain insurance (subject to self-insurance in the maximum
amount of $10,000,000, customary deductibles and retentions) in at least such
amounts and against such liabilities and hazards and by such methods as
customarily maintained by other companies operating similar businesses and,
together with each delivery of financial statements required by SECTION 9.1(B)
will deliver to the Agent for each Bank an Officer's Certificate specifying the
details of such insurance in effect. Upon the request of the Agent or any Bank,
the Company shall promptly deliver to the Agent one or more current certificates
of the insurer or insurers providing the insurance required by this SECTION 9.5
to the effect that such insurance may not be canceled, reduced or affected in
52
any manner without 30 days' prior written notice to the Agent.
9.6. RESTRICTED PAYMENTS. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, (i) declare or pay any
dividend on, or make any distribution on or in respect of, its Capital Stock or
Redeemable Stock (including any such payment (other than payments solely in its
Capital Stock or in options, warrants or other rights to purchase its Capital
Stock) in connection with any merger or consolidation involving the Company),
except dividends or distributions payable solely in its Capital Stock or in
options, warrants or other rights to purchase such Capital Stock and except
dividends or distributions payable solely to the Company or any Restricted
Subsidiary, (ii) purchase, redeem or otherwise acquire for value any Capital
Stock or Redeemable Stock of the Company or any Restricted Subsidiary held by
Persons other than the Company or any Restricted Subsidiary; (iii) make any
principal payment on, or redeem, purchase, repurchase, defease or otherwise
acquire or retire for value prior to any scheduled repayment, scheduled sinking
fund payment or other scheduled maturity, any Indebtedness that is subordinated
in right of payment to the Obligations or (iv) make any Investment in any Person
(any such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or investment being referred to in this SECTION
9.6 as a "RESTRICTED PAYMENT"), unless at the time of and after giving effect to
the proposed Restricted Payment (a) no Default or Event of Default or Borrowing
Base Deficiency shall have occurred and be continuing under this Agreement, (b)
the Company could Incur at least $1.00 of additional Indebtedness under SECTION
9.7(B) and (c) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the board of directors of the Company, whose
determination shall be evidenced by a resolution of such board) declared or made
since the Recalculation Date would not exceed, without duplication, the sum of
(1) 50% of the Consolidated Adjusted Net Income accrued during the period
(treated as one accounting period) from the quarter end on or before the
Recalculation Date to the end of the Company's most recent fiscal quarter
immediately preceding such proposed Restricted Payment (or, if such Consolidated
Adjusted Net Income shall be a deficit, minus 50% of such deficit), (2) the
aggregate net proceeds, including cash and the Fair Market Value of Property
other than cash, received by the Company from the issue or sale of its Capital
Stock (including pursuant to the exercise of options or warrants or the making
of any equity contribution by stockholders of the Company subsequent to the
Recalculation Date (other than an issuance or sale to a Subsidiary of the
Company or any employee stock ownership plan or other trust established by the
Company or any of its Subsidiaries)), (3) the amount by which the Indebtedness
of the Company or any Restricted Subsidiary is reduced on the Company's balance
sheet upon the conversion or exchange (other than by a Subsidiary of the
Company), subsequent to the Recalculation Date of any Indebtedness or Redeemable
Stock of the Company or any Restricted Subsidiary into or for Capital Stock of
the Company (less the amount of any cash (other than cash distributed in payment
of interest on such Indebtedness accrued and unpaid to the date of such
conversion or exchange) or other property distributed by the Company or any
Restricted Subsidiary upon such conversion or exchange) and (4) $50 million.
Any payments made pursuant to CLAUSES (A) through (F) of the definition
of "Permitted
53
Investment" shall be excluded for purposes of any calculation of
the aggregate amount of Restricted Payments. Any payments made pursuant to
CLAUSES (G), (H) AND (I) of the definition of "Permitted Investment" shall be
included for purposes of any calculation of the aggregate amount of Restricted
Payments.
The foregoing limitations will not prevent the Company or any Restricted
Subsidiary from (a) paying a dividend on its Capital Stock within 60 days after
declaration thereof if, on the declaration date, such dividend could have been
paid in compliance with this SECTION 9.6 and declared without creating any Total
Debt which would cause a breach of SECTION 9.11 or (b) making Permitted
Investments so long as no Default or Event of Default shall have occurred and be
continuing. Furthermore, notwithstanding anything to the contrary in this
Agreement, no payment under any of the Monterey Transactions shall constitute a
Restricted Payment except any payment of greater than $100 million with respect
to the Preferred Stock Purchases.
As used in this SECTION 9.6 only, the following terms shall have the
meanings ascribed to them in the Indenture in effect on the date of this
Agreement, without giving effect to any subsequent amendment, waiver or
termination thereof: "Capital Stock", "Consolidated Adjusted Net Income", "Fair
Market Value", "Incur", "Indebtedness", "Investment", "Permitted Investment",
"Preferred Stock Purchases", ""Recalculation Date" and "Redeemable Stock" (and
all other defined terms used in any thereof). The text of these terms is set
forth on APPENDIX I.
9.7. INDEBTEDNESS, LIEN AND OTHER RESTRICTIONS. The Company will not and
will not permit any Restricted Subsidiary to:
(a) LIENS. Create, assume or suffer to exist any Lien upon any of its
properties or assets, whether now owned or hereafter acquired, except Permitted
Encumbrances and
(1) Liens for taxes or assessments or other governmental charges
or levies not yet due or which are being actively contested in good faith by
appropriate proceedings;
(2) Liens (including mechanics' and materialmen's liens, landlord
liens, easements, rights-of-way or the like) incidental to the conduct of its
business or the ownership of its property and assets which are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than advances or credit on open account, includable in current
liabilities, for goods and services in the ordinary course of business and on
terms and conditions which are customary in the oil, gas and mineral exploration
and development business) or the guaranteeing of the obligations of another
Person, and which do not in the aggregate materially detract from the value of
its property or assets or materially impair the use thereof in the operation of
its business;
(3) Liens for lessor's royalties, overriding royalties, net
profits interests, carried interests, reversionary interests and other similar
burdens, production sales contracts, division orders, contracts for the sale,
purchase, exchange, or processing of hydrocarbons, unitization and
54
pooling designations, declarations, orders and agreements, operating agreements,
agreements of development, area of mutual interest agreements, gas balancing or
deferred production agreements, processing agreements, plant agreements,
pipeline gathering and transportation agreements, injection, repressuring and
recycling agreements, salt water or other disposal agreements, seismic or
geophysical permits or agreements, and other agreements which are customary in
the oil, gas and mineral exploration and development business or in the business
of processing gas and gas condensate production for the extraction of products
therefrom, if the net cumulative effect of such burdens does not operate to
reduce the net revenue interest of any oil and gas properties to less than (A)
the "Net Revenue Interest" set forth in the Most Recent Engineering Report for
those oil and gas properties included in the Most Recent Engineering Report or
(B) the net revenue interest so acquired for those oil and gas properties
acquired after the date of the Most Recent Engineering Report; PROVIDED that
such Liens are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than advances or credit on open account,
includable in current liabilities, for goods and services in the ordinary course
of business and on terms and conditions which are customary in the oil, gas and
mineral exploration and development business) or the guaranteeing of the
obligations of another Person;
(4) Liens described in SCHEDULE II securing Total Debt of the Company or
a Restricted Subsidiary set forth in SCHEDULE II;
(5) Liens existing on any real property of any Person at the time
such Person becomes a Restricted Subsidiary, or any Liens existing prior to the
time of acquisition upon any real property acquired by the Company or any
Restricted Subsidiary through purchase, merger or consolidation or otherwise,
whether or not the obligation secured by such Lien is assumed by the Company or
such Restricted Subsidiary; PROVIDED that except as otherwise permitted by
SECTION 9.7(A), any such Lien (A) shall not encumber any other property of the
Company or any Restricted Subsidiary and (B) shall not have been created or
modified in any respect in anticipation of such Person's becoming a Restricted
Subsidiary or in anticipation of the acquisition by the Company or any
Restricted Subsidiary of the real property subject thereto (other than to
reflect the assumption of such Lien or other ministerial acts relating thereto);
(6) Liens placed on property at the time of acquisition,
construction, development or improvement thereof, or created in respect of such
property within six months after the time of acquisition thereof or the
commencement of construction, development or improvement thereof, as the case
may be, to secure all or a portion of (or to secure Total Debt incurred to pay
all or a portion of) the purchase price of such acquisition, or the cost of such
construction, development or improvement, as the case may be; PROVIDED that (A)
such property is not and shall not thereby become encumbered in an amount in
excess of the lesser of the cost or fair market value thereof; (B) except as
otherwise permitted in SECTION 9.7(A), any such Lien shall not encumber any
other property of the Company or a Restricted Subsidiary, and (C) any such Lien
shall not encumber property of the Company or a Restricted Subsidiary for the
purpose of securing an obligation of the Company or a Restricted Subsidiary or
securing a Guaranty by the Company or any Restricted Subsidiary in connection
with the sale, exchange, transfer or other
55
disposition by the Company or a Restricted Subsidiary of net profits interests;
PROVIDED that the Company or a Restricted Subsidiary may assign all or part of
the proceeds of production of property in which a net profits interest has been
granted to secure its obligation to make net profits interests payments
therefrom; and PROVIDED FURTHER that any such Lien shall not encumber any other
property of the Company or any Restricted Subsidiary;
(7) Liens on the capital stock of a Restricted Subsidiary
acquired after the Commencement Date by the Company or a Restricted Subsidiary
and created or assumed contemporaneously with such acquisition, to secure Total
Debt assumed or incurred to finance all or a part of the purchase price of such
acquisition;
(8) Liens on the capital stock of an Unrestricted Subsidiary;
(9) Liens on property of the Company or a Restricted Subsidiary
to secure Total Debt assumed or incurred in the form of Capitalized Lease
Obligations or industrial revenue bonds, pollution control bonds or similar
tax-exempt financings; PROVIDED that any such Lien shall not encumber any
property of the Company or a Restricted Subsidiary other than the property the
acquisition or construction of which is financed or refinanced, in whole or in
part, with proceeds from such Total Debt;
(10) any Lien renewing or extending any Lien permitted by CLAUSES
(4), (5), (6), (7), (8), or (9) above; PROVIDED that the principal amount of the
Total Debt secured thereby is not increased and such Lien is not extended to
other property; and
(11) other Liens on any property of the Company or a Restricted
Subsidiary securing any Debt of the Company or a Restricted Subsidiary permitted
by the last sentence of SECTION 9.11.
(b) INDEBTEDNESS. Create, incur, suffer or permit to exist, or assume or
enter into any Total Debt or any Guaranty, whether direct, indirect, absolute,
contingent or otherwise, EXCEPT: (a) Total Debt under the Credit Documents and
the SFER MRI Loans; (b) Total Debt secured by Liens permitted by SECTION 9.7(A);
(c) the Senior Subordinated Notes; (d) Total Debt in respect of Other Letters of
Credit; (e) bonds or surety obligations required by any Governmental Authority
in connection with the operation of the property of the Company and its
Subsidiaries; (f) Total Debt or Guaranties to and among the Company and the
Restricted Subsidiaries or Guaranties of Total Debt of the Company and the
Restricted Subsidiaries; (g) other Total Debt having a weighted average life to
maturity of not less than seven years from the date of issuance thereof and
subject to terms (including representations, warranties, covenants and defaults
and events of default) no more restrictive (as determined by the Agent in its
sole discretion) with respect to the issuer thereof than the terms of the Credit
Documents; and (h) unsecured Total Debt or Guaranties in an aggregate amount at
any time outstanding not to exceed $25,000,000.
Notwithstanding anything to the contrary in this SECTION 9.7(B), no
member of the
56
Combined Group shall create, incur or assume any Total Debt or
Guaranty if to do so would cause or enlarge a Borrowing Base Deficiency or
violate any other provision of this Agreement.
(c) SALE OF LESS THAN SUBSTANTIALLY ALL ASSETS. Sell, exchange, transfer
or otherwise dispose of part, but less than all or substantially all, of their
respective assets unless
(1) such sale, exchange, transfer or other disposition is made in
the ordinary course of business (including abandonments, farm-ins, farm-outs,
leases and subleases of developed or undeveloped properties owned or held by the
Company or any Restricted Subsidiary that are made or entered into in the
ordinary course of business, but EXCLUDING, however, any sale of net profits
interests in developed oil and gas properties); or
(2) after giving effect to such sale, exchange, transfer or other
disposition, (A) the aggregate net book value of (i) all assets of the Company
and the Restricted Subsidiaries (including the sale of net profits interests in
developed oil and gas properties) sold, exchanged, transferred or otherwise
disposed of (on a consolidated basis) (but excluding assets sold, exchanged,
transferred or otherwise disposed of in the ordinary course of business pursuant
to SECTION 9.7(C)(1)) during the period of 12 consecutive months immediately
preceding such sale, exchange, transfer or other disposition and (ii) the assets
of all Restricted Subsidiaries, the stock of which have been sold or otherwise
disposed of pursuant to SECTION 9.7(D)(2)(A) during such 12-month period shall
not exceed 10% of the consolidated total assets of the Company and the
Restricted Subsidiaries as of the end of the fiscal quarter immediately
preceding or coinciding with such sale, exchange, transfer or other disposition,
and (B) the assets described in the foregoing CLAUSE (A) shall not have
contributed more than 10% of EBITDA of the Company and the Restricted
Subsidiaries for the four most recently completed fiscal quarters taken as a
single accounting period; or
(3) after giving effect to such sale, exchange, transfer or other
disposition, (A) the aggregate net book value of (i) all assets of the Company
and the Restricted Subsidiaries (including the sale of net profits interests in
developed oil and gas properties) sold, exchanged, transferred or otherwise
disposed of (on a consolidated basis) (but excluding assets sold, exchanged,
transferred or otherwise disposed of pursuant to SECTION 9.7(C)(1) and (2))
during the period of 12 consecutive months immediately preceding such sale,
exchange, transfer or other disposition and (ii) the assets of all Restricted
Subsidiaries, the stock of which has been sold or otherwise disposed of pursuant
to SECTION 9.7(D)(2)(B) during such 12-month period, shall not exceed 10% of the
consolidated total assets of the Company and the Restricted Subsidiaries as of
the end of the fiscal quarter immediately preceding or coinciding with such
sale, exchange, transfer or other disposition; (B) the assets described in the
foregoing CLAUSE (A) shall not have contributed more than 10% of EBITDA for the
four most recently completed fiscal quarters taken as a single accounting
period, and (C) within six months after such sale, exchange, transfer or other
disposition, the net proceeds thereof are applied toward, or the exchange
results in, (1) the acquisition by the Company or a Restricted Subsidiary of (i)
assets which have an aggregate fair market value at least equal to the net
proceeds received by the Company and the Restricted
57
Subsidiaries from such sale, exchange, transfer or other disposition; (ii) if
the assets so sold, exchanged, transferred or otherwise disposed of were located
in the United States of America or Canada, the assets acquired are located in
the United States of America or Canada, and (iii) the assets so acquired are of
a type usual and customary in the oil and gas business; PROVIDED that no Liens
shall at any time exist on the assets so acquired which secure any Total Debt
except as permitted by SECTION 9.7(A)(1), (2), (3) OR (11) or (2) the prepayment
of an aggregate principal amount of all Obligations plus accrued interest
thereon in accordance with this Agreement or the payment of an aggregate
principal amount of other Total Debt (other than Total Debt subordinate in right
of payment to the Obligations) plus accrued interest and premium, if any, in
either case in an amount at least equal to the aggregate net proceeds that the
Company or a Restricted Subsidiary receives from the sale, exchange, transfer or
other disposition of such assets.
(d) SALE OF STOCK OF RESTRICTED SUBSIDIARIES. Sell or otherwise dispose
of, or part with control of, any shares of stock of any Restricted Subsidiary,
except (1) to the Company or another wholly-owned Restricted Subsidiary and (2)
that all shares of stock of any Restricted Subsidiary at the time owned by the
Company and all Restricted Subsidiaries may be sold as an entirety for a cash
consideration which represents the fair market value (as determined in good
faith by the Board of Directors of the Company) at the time of sale of the
shares of stock so sold; PROVIDED that for purposes of this exception:
(A) (i) the net book value of the assets of such Restricted
Subsidiary together with (x) the net book value of the assets of any other
Restricted Subsidiary the stock of which was sold during the preceding 12-month
period and (y) the net book value of the assets of the Company and all
Restricted Subsidiaries sold, exchanged, transferred or otherwise disposed of
pursuant to SECTION 9.7(C)(2) during the preceding 12-month period, does not
represent more than 10% of the consolidated total assets of the Company and the
Restricted Subsidiaries as of the end of the fiscal quarter immediately
preceding or coinciding with such sale, exchange, transfer or other disposition
and (ii) the earnings of such Restricted Subsidiary together with (x) the
earnings of any other Restricted Subsidiary the stock of which was sold or
otherwise disposed of pursuant to the exception described in this CLAUSE (A)
during the preceding 12-month period and (y) the earnings attributable to the
assets sold, exchanged, transferred or otherwise disposed of pursuant to SECTION
9.7(C)(2) during such 12-month period, do not represent more than 10% of EBITDA
for the four most recently completed fiscal quarters taken as a single
accounting period; and PROVIDED FURTHER that, at the time of such sale, such
Restricted Subsidiary shall not own, directly or indirectly, any shares of stock
of the Company or any other Restricted Subsidiary unless all of the shares of
stock of such other Restricted Subsidiary owned, directly or indirectly, by the
Company and all Restricted Subsidiaries are simultaneously being sold as
permitted by the exception described in this CLAUSE (A); or
(B) (i) the net book value of the assets of such Restricted
Subsidiary together with (x) the net book value of the assets of any other
Restricted Subsidiary the stock of which was sold during the preceding 12-month
period (but excluding stock sold pursuant to SECTION 9.7(D)(A)) and (y) the net
book value of the assets of the Company and any Restricted Subsidiary sold,
58
exchanged, transferred or otherwise disposed of pursuant to SECTION 9.7(C)(3)
during the preceding 12-month period, does not represent more than 10% of the
consolidated total assets of the Company and the Restricted Subsidiaries as of
the end of the fiscal quarter immediately preceding or coinciding with such
sale, exchange, transfer or other disposition; (ii) the earnings of such
Restricted Subsidiary together with (x) the earnings of any other Restricted
Subsidiary the stock of which was sold or otherwise disposed of pursuant to the
exception described in this CLAUSE (B) during the preceding 12-month period and
(y) the earnings attributable to the assets sold, exchanged, transferred or
otherwise disposed of pursuant to SECTION 9.7(C)(3) during such 12-month period,
do not represent more than 10% of EBITDA for the four most recently completed
fiscal quarters taken as a single accounting period, and (iii) within six months
after such sale or other disposition, the proceeds thereof are applied toward
(i) the acquisition by the Company or a Restricted Subsidiary of (1) assets
which have an aggregate fair market value at least equal to the net proceeds
received by the Company and the Restricted Subsidiaries from
such sale or other disposition and (2) the assets so acquired are of a type
usual and customary in the oil and gas business; PROVIDED that no Liens shall at
any time exist on the assets so acquired which secure any Total Debt except as
permitted by SECTION 9.7(A)(1), (2), (3) OR (11), or (ii) the prepayment of an
aggregate principal amount of all Obligations in accordance with this Agreement
or the payment of an aggregate principal amount of other Total Debt (other than
Total Debt subordinate in right of payment to the Obligations) plus accrued
interest and premium, if any, in either case in an amount at least equal to the
aggregate net proceeds that the Company or a Restricted Subsidiary receives from
the sale or other disposition; and PROVIDED FURTHER that, at the time of such
sale or other disposition, such Restricted Subsidiary shall not own, directly or
indirectly, (y) any shares of stock of the Company or any other Restricted
Subsidiary unless all of the shares of stock of such other Restricted Subsidiary
owned, directly or indirectly, by the Company and all Restricted Subsidiaries
are simultaneously being sold as permitted by the exception described in this
CLAUSE (B).
(e) MERGER AND SALE OF ALL OR SUBSTANTIALLY ALL ASSETS. Convey,
exchange, transfer or otherwise dispose of all or a substantial part of its
assets (I.E., assets which could not otherwise be disposed of pursuant to
SECTION 9.7(C)(2) or (3)) to any Person; or merge or consolidate with or into
any other Person or, except that
(1) any wholly-owned Restricted Subsidiary may merge with the
Company (PROVIDED that the Company shall be the continuing or surviving
corporation) or with any one or more other wholly-owned Restricted Subsidiaries;
(2) any Restricted Subsidiary may sell, exchange, transfer or otherwise
dispose of any of its assets to the Company or to a wholly-owned Restricted
Subsidiary;
(3) any Restricted Subsidiary may sell, exchange, transfer or
otherwise dispose of all or substantially all of its assets subject to the
conditions and provisions specified in SECTIONS 9.7(C)(2) and (3);
59
(4) any Restricted Subsidiary may merge into or consolidate with
any Person which does not thereupon become a Restricted Subsidiary, subject to
the conditions and provi sions specified in SECTION 9.7(D) with respect to a
sale or other disposition of the stock of such Restricted Subsidiary;
(5) any Restricted Subsidiary may permit any Person to be merged
into such Restricted Subsidiary or may consolidate with or merge into a Person
which thereupon becomes a Restricted Subsidiary; PROVIDED that immediately after
any such merger or consolidation, no Default shall have occurred and be
continuing;
(6) the Company may permit any Person to be merged into the
Company (such that the Company shall be the continuing or surviving
corporation); and
(7) the Company may permit any corporation to consolidate with
the Company and the Company may merge into any solvent corporation organized
under the laws of the United States of America or any state thereof and having
at least 80% of its consolidated assets located in the United States of America
and Canada which expressly assumes in writing the due and punctual performance
of the obligations of the Company under the Credit Documents, to the same extent
as if such successor or transferee corporation had originally executed the
Credit Documents in the place of the Company (it being agreed that such
assumption shall, upon the request of any Bank and at the expense of such
successor corporation, be evidenced by the exchange of such Bank's Note for
another Note executed by such successor corporation, with such changes in
phraseology and form as may be appropriate but in substance of like terms as the
Note surrendered for such exchange and of like unpaid principal amount, and that
each Note executed pursuant to this Agreement after such assumption shall be
executed by and in the name of such successor corporation);
PROVIDED that for purposes of SECTIONS 9.7(E)(6) and (7) immediately after such
merger or consolidation, and after giving effect thereto, (x) such successor
Person could incur at least $1.00 of additional Total Debt without violation of
SECTION 9.11, and (y) no Default shall have occurred and be continuing. As soon
as practicable, and in any event at least 75 days prior to the proposed
consummation date of any merger or consolidation described in SECTION 9.7(E)(7),
the Company shall give written notice thereof to each Bank describing in
reasonable detail the proposed transaction, the date on which it is proposed to
be consummated and the identity, jurisdiction of organization, and geographic
composition of assets of the proposed successor corporation.
(f) SALE AND LEASEBACK. Enter into any Sale and Leaseback Transaction
unless:
(1) the net sales proceeds received by the Company or a
Restricted Subsidiary in respect of the assets sold pursuant to such Sale and
Leaseback Transaction are greater than or equal to the fair market value of the
assets sold (which determination shall be based upon a written opinion (the cost
of which shall be borne exclusively by the Company) as to valuation from an
independent valuation expert selected by the Company) and such proceeds are
concurrently
60
applied to (A) the purchase, acquisition, development or construction of assets
having a value at least equal to such net proceeds, and to be used in the
Company's or such Restricted Subsidiary's business; PROVIDED that no Liens shall
at any time exist on such assets which secure any Total Debt except as permitted
by SECTION 9.7(a)(1), (2), (3) OR (11); (B) the prepayment in accordance with
this Agreement of any aggregate principal amount of all the Obligations (plus
accrued interest and premium, if any) at least equal to the amount of such net
proceeds; or (C) the payment of other Total Debt (other than Total Debt
subordinate in right of payment to the Obligations) in an aggregate principal
amount at least equal to the amount of such net sales proceeds; or
(2) the Sale and Leaseback Transaction involves the sale of assets by
the Company to a wholly-owned Restricted Subsidiary or by a Restricted
Subsidiary to the Company or to another wholly-owned Restricted Subsidiary;
PROVIDED that if the Company is the seller under any such Sale and Leaseback
Transaction, its lease obligations thereunder shall be subord inated to the
Obligations upon terms set forth on SCHEDULE V.
(g) TRANSACTIONS WITH AFFILIATES. Except for the Monterey Transactions,
directly or indirectly purchase, acquire or lease any property from, or sell,
transfer or lease any property to, or otherwise deal with, in the ordinary
course of business or otherwise, (1) any Affiliate (except any employee
compensation benefit plan or any Restricted Subsidiary) or (2) any Person (other
than a Restricted Subsidiary) in which an Affiliate or the Company (directly or
indirectly) owns, beneficially or of record, 5% or more of the outstanding
voting stock or similar equity interest, except that (A) any Affiliate may be a
director, officer or employee of the Company or any Restricted Subsidiary and
may be paid reasonable compensation in connection therewith and (B) acts and
transactions that would otherwise be prohibited by this subsection may be
performed or engaged in if upon terms not less favorable to the Company or any
Restricted Subsidiary than if no relationship described in CLAUSES (1) and (2)
above existed. With respect to any capital contribution to, or transaction with,
a Subsidiary, the requirement that the transaction be on "terms not less
favorable to the Company or any Restricted Subsidiary than if no relationship
described in CLAUSES (1) and (2) above existed" shall be satisfied if such
transaction is fair, from a financial point of view, to the Company or such
Restricted Subsidiary.
(h) TAX CONSOLIDATION. Except as provided for in the Tax Allocation
Agreement or the Spin Off Tax Indemnification Agreement, the Company will not,
and will not permit any of its Subsidiaries to, file or consent to the filing of
any consolidated income tax return with any Person unless such other Person
shall have agreed in writing with the Company that the Company's or such
Subsidiary's liability with respect to taxes as a result of the filing of any
such consolidated income tax return with such Person shall not be materially
greater, nor the receipt of any tax benefits materially less, than they would
have been had the Company and its Subsidiaries continued to file a consolidated
income tax return with the Company as the parent corporation.
9.8. ISSUANCE OF STOCK BY RESTRICTED SUBSIDIARIES. The Company will not
permit any Restricted Subsidiary (either directly or indirectly, by the issuance
of rights or options for, or securities convertible into, such shares) to issue,
sell or otherwise dispose of any shares of any
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authorized but unissued or treasury class of such Restricted Subsidiary's stock
(other than directors' qualifying shares) except to the Company or another
Restricted Subsidiary.
9.9. CAPITALIZATION. The Company will not permit the ratio of Total Debt
of the Combined Group to Capitalization to exceed 0.60.
9.10. INTEREST COVERAGE. The Company will not permit the ratio of (a)
EBITDA for the four fiscal quarters then most recently ended to (b) Fixed
Charges on Total Debt of the Combined Group for that period to be less than 3.00
to 1.00.
9.11. SENIOR TOTAL DEBT; SPECIAL DEBT. The Company will not at any time
create, incur, assume or suffer to exist any Total Debt of the Combined Group
PARI PASSU with the Obligations other than such Total Debt of the Combined Group
which does not at any time exceed the product of (a) 3.00 times (b) Adjusted
EBITDA for the four consecutive fiscal quarters then most recently ended. The
Company will not at any time create, incur, assume or suffer to exist any
Special Debt that would cause the aggregate principal amount of Special Debt to
exceed 15% of Consolidated Net Worth.
9.12. RESTRICTED AND UNRESTRICTED SUBSIDIARIES. The Board of Directors
of the Company may designate any Subsidiary of the Company or any Restricted
Subsidiary to be an Unrestricted Subsidiary if (a) the Subsidiary to be so
designated does not own any capital stock, redeemable stock or Total Debt of, or
own or hold any Lien on any property of, the Company or any other Restricted
Subsidiary of the Company, (b) the Subsidiary to be so designated is not
obligated by any Total Debt or Lien that, if in default, would result (with the
passage of time or notice or otherwise) in a default on any Total Debt of the
Company or any Restricted Subsidiary, and (c) either (A) the Subsidiary to be so
designated has total assets of $1,000 or less, or (B) such designation is
effective immediately upon such Person's becoming a Subsidiary of the Company or
of a Restricted Subsidiary. Unless so designated as an Unrestricted Subsidiary,
any Person that becomes a Subsidiary of the Company or any Restricted Subsidiary
will be classified as a Restricted Subsidiary. Except as provided in the first
sentence of this SECTION 9.12, no Restricted Subsidiary may be redesignated as
an Unrestricted Subsidiary. An Unrestricted Subsidiary may not be redesignated
as a Restricted Subsidiary. Any designation by the Board of Directors of the
Company will be evidenced to the Agent by promptly filing with the Agent a copy
of the resolution of such Board giving effect to such designation and an
Officer's Certificate certifying that such designation complies with this
SECTION 9.12.
Section 10. DEFAULTS.
10.1. EVENTS OF DEFAULT. If one or more of the following events (herein
called "EVENTS OF DEFAULT") shall occur and be continuing:
(a) the Company shall fail to pay any principal of any Loan,
Reimbursement Obligation, fee or other principal amount payable hereunder or
under any other Credit Document,
62
or any SFER MRI Loan, as and when due, or shall fail to pay any interest on any
amount hereunder or under any other Credit Document or any SFER MRI Loan for
more than three days after the date due; or
(b) any member of the Combined Group shall default in any payment of
principal of or interest on any other obligation for money borrowed (or any
Capitalized Lease Obligation, any obligation under a conditional sale or other
title retention agreement, any obligation issued or assumed as full or partial
payment for property whether or not secured by a purchase money mortgage or any
obligation under notes payable or drafts accepted representing extensions of
credit) beyond any period of grace provided with respect thereto; or any member
of the Combined Group shall fail to perform or observe any other agreement, term
or condition contained in any agreement under which any such obligation is
created (or if any other event thereunder or under any such agreement shall
occur and be continuing) and the effect of such failure or other event is to
cause, or to permit the holder or holders of such obligation (or a trustee on
behalf of such holder or holders) to cause, such obligation to become due prior
to any stated maturity; or any member of the Combined Group shall fail to pay
any Guaranty relating to Total Debt for borrowed money in accordance with its
terms; PROVIDED, in each case, that the aggregate amount of all obligations as
to which such a payment default shall occur and be continuing or such a failure
or other event causing or permitting acceleration shall occur and be continuing
shall exceed $10,000,000; and PROVIDED, FURTHER that a default for purposes of
this SECTION 10.1(B) shall not be deemed to exist by reason of the acceleration
of the maturity of any such obligation solely by reason of a default in the
performance of a term or condition in any agreement or instrument under or by
which such obligation is created, evidenced or secured, which term or condition
restricts the right of the Company or any other Person to sell, pledge or
otherwise dispose of any margin stock (as such term is defined in Regulation U
of the Board) held by the Company or such other Person; or
(c) any representation or warranty made by the Company or any of its
officers in any Credit Document or in any other writing furnished to the Agent
or any Bank in connection with any Credit Document shall prove to have been
false or misleading in any material respect on the date as of which it was made;
or
(d) the Company shall default in the performance of any of its
obligations under SECTIONS 9.6 through 9.11; or
(e) the Company shall default in the performance of any of its
obligations in any Credit Document other than those specified elsewhere in this
SECTION 10.1 and such default shall not be remedied within 30 days after any
executive officer of the Company obtains actual knowledge thereof; or
(f) any member of the Combined Group shall make an assignment for the
benefit of creditors; generally fail to pay its debts as such debts become due;
or admit in writing its inability to generally pay its debts as such debts
become due; or
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(g) a Governmental Authority shall enter any decree or order for relief
in respect of any member of the Combined Group under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, whether now or
hereafter in effect (herein called the "BANKRUPTCY LAW"); or
(h) any member of the Combined Group shall petition or apply for or
consent to the appointment of, or taking possession by, a trustee, receiver,
custodian, sequestrator, liquidator or other similar official of or for itself
or any substantial part of its assets, or shall commence a voluntary case under
any Bankruptcy Law or any proceedings (other than proceedings for the voluntary
liquidation and dissolution of a Restricted Subsidiary) relating to any member
of the Combined Group under any Bankruptcy Law; or
(i) any such petition or application referred to in SECTION 10.1(H)
shall be filed, or any such proceeding referred to in SECTION 10.1(H) shall be
commenced, against any member of the Combined Group and such member of the
Combined Group by any act shall indicate its approval thereof, consent thereto
or acquiescence therein; or an order, judgment or decree shall be entered
appointing any such trustee, receiver, custodian, liquidator or similar
official, or approving the petition in any such proceedings, and such order,
judgment or decree shall remain unstayed and in effect for more than 60
consecutive days; or
(j) any order, judgment or decree shall be entered in any proceedings
against any member of the Combined Group decreeing the dissolution or
liquidation of any member of the Combined Group and such order, judgment or
decree shall remain unstayed and in effect for more than the appeal time
provided by law; or
(k) any order, judgment or decree shall be entered in any proceedings
against any member of the Combined Group decreeing a split-up of such member of
the Combined Group which requires (1) the divestiture of assets which exceed, or
the divestiture of the stock of a Restricted Subsidiary whose assets exceed, 10%
of the consolidated total assets of the Company and the Restricted Subsidiaries
as of the end of the fiscal quarter immediately preceding or coinciding with
such divestiture or (2) the divestiture of assets or stock of a Restricted
Subsidiary which shall have contributed more than 10% of EBITDA for the four
most recently completed fiscal quarters, and such order, judgment or decree
shall remain unstayed and in effect for more than 60 consecutive days; or
(l) any judgment or order, or series of judgments or orders, for the
payment of money in an amount in excess of $10,000,000 shall be rendered against
any member of the Combined Group and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within the appeal time provided by law from the date of
entry thereof, or such member of the Combined Group shall not, within said
appeal time, or such longer period during which execution of the same shall have
been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
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(m) the Company or any ERISA Affiliate shall fail to pay when due any
amount or amounts aggregating in excess of $10,000,000 which it shall have
become liable to pay with respect to any Plan; or notice of intent to terminate
a Plan or Plans (other than a multiemployer plan under Section 4001(a)(3) of
ERISA) having aggregate Unfunded Liabilities in excess of $10,000,000 shall be
filed under Title IV of ERISA by the Company or any ERISA Affiliate, any plan
administrator or any combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to be
appointed to administer any Plan or Plans (other than a multiemployer plan under
Section 4001(a)(3) of ERISA) having aggregate Unfunded Liabilities in excess of
$10,000,000 or a proceeding shall be instituted by a fiduciary of any such Plan
or Plans against the Company or any ERISA Affiliate to enforce Section 515 or
4219(c)(5) of ERISA; or the Company or any ERISA Affiliate shall incur a
complete or partial withdrawal liability under Title IV of ERISA in an annual
amount in excess of $2,000,000 (and in the aggregate $10,000,000 in connection
with any Plan; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Plan or Plans having aggregate
Unfunded Liabilities in excess of $10,000,000 must be terminated; or there shall
occur any event or condition that might reasonably constitute grounds for the
termination of any Plan or Plans having aggregate Unfunded Liabilities in excess
of $10,000,000 or with respect to such Plan or Plans either the imposition of
any liability in excess of $10,000,000 (other than contributions in the ordinary
course) or any Lien provided under Section 4068 of ERISA securing an amount in
excess of $10,000,000 on any property of the Company or any ERISA Affiliate;
PROVIDED, HOWEVER, that any amounts owing by the Company pursuant to the ERISA
Indemnification Agreement between Santa Fe Pacific Corporation or its successor
and the Company shall be deducted from the dollar threshold amounts set forth
above in determining whether any such condition or event constitutes an Event of
Default under this paragraph; or
(n) one or more demands for payment is made upon the Company by Santa Fe
Pacific Corporation or its successor or any other Person pursuant to the Tax
Indemnification Agreement and such demands exceed $5,000,000 in the aggregate;
or
(o) any Default or Event of Default, as defined in Appendix A to the
Monterey Credit Agreement, shall occur; or
(p) any Change of Control shall occur;
THEREUPON: (I) the Agent may (and, if directed by the Required Banks, shall) do
any or all of the following: (a) declare the Commitments terminated (whereupon
the Commitments shall be terminated); (b) terminate any Letter of Credit
pursuant to which such termination is permitted; (c) declare the unpaid amount
of the Loans (principal and accrued and unpaid interest) and all Reimbursement
Obligations, fees and other amounts payable under the Credit Documents to be
forthwith due and payable, whereupon such amounts shall be and become
immediately due and payable, without notice (including notice of acceleration
and notice of intent to accelerate), presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly WAIVED by the Company
to the extent permitted by law; PROVIDED that in the case of the
65
occurrence of an Event of Default with respect to the Company referred to in
SECTION 10.1(G) through (I), the Commitments shall be automatically terminated
and the unpaid amount of the Loans (principal and accrued and unpaid interest)
and all Reimbursement Obligations, fees and all other amounts payable under the
Credit Documents shall be and become automatically and immediately due and
payable, without notice (including notice of intent to accelerate and to the
extent permitted by the law, notice of acceleration) and without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly WAIVED by the Company; and (d) require Cover for all Letter of Credit
Liabilities; (II) each Bank may exercise its rights of offset against each
account and all other property of the Company in the possession of such Bank,
which right is hereby granted by the Company to the Banks; and (III) the Agent
and each Bank may exercise any and all other rights available to them pursuant
to the Credit Documents, at law and in equity.
Section 11. THE AGENT.
11.1. APPOINTMENT, POWERS AND IMMUNITIES. Each Bank hereby irrevocably
appoints and authorizes the Agent to act as its agent under the Credit Documents
with such powers as are specifically delegated to the Agent by the terms
thereof, together with such other powers as are reasonably incidental thereto.
The Agent (which term as used in this SECTION 11 shall include reference to its
Affiliates and its own and its Affiliates' officers, directors, employees and
agents) (a) shall have no duties or responsibilities except those expressly set
forth in the Credit Documents and shall not by reason of any Credit Document be
a trustee or fiduciary for any Bank; (b) shall not be responsible to any Bank
for any recitals, statements, representations or warranties contained in any
Credit Document, or in any certificate or other document referred to or provided
for in, or received by any of them under, any Credit Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of any
Credit Document or any other document referred to or provided for therein or any
property covered thereby or for any failure by the Company or any other Person
to perform any of its obligations thereunder; (c) shall not be required to
initiate or conduct any enforcement, litigation or collection proceedings
hereunder or under any Credit Document except to the extent requested by the
Required Banks (and SECTION 11.7 shall apply), and (d) shall not be responsible
to any Bank for any action taken or omitted to be taken by it under any Credit
Document or any other document or instrument referred to or provided for therein
or in connection therewith, including any such action pursuant to its own
negligence, except for its own gross negligence or willful misconduct. The Agent
may employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. Without in any way limiting any of the foregoing, each
Bank acknowledges that the Agent shall have no greater responsibility in the
operation of the Letters of Credit than is specified in the Uniform Customs and
Practice of Documentary Credits (1993 Revision, International Chamber of
Commerce Publication No. 500).
11.2. RELIANCE BY AGENT. The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, facsimile, telegram or cable)
66
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel (which may be counsel for the Company), independent accountants
and other experts selected by the Agent. As to any matters not expressly
provided for by any Credit Document, the Agent shall in all cases be fully
protected in acting, or in refraining from acting, in accordance with
instructions of the Required Banks, and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks.
11.3. DEFAULTS. The Agent shall not be deemed to have knowledge of the
occurrence of a Default (other than the nonpayment of Loans, Reimbursement
Obligations, Commitment Fee or Letter of Credit Fee) unless it has received
notice from a Bank or the Company specifying such Default and stating that such
notice is a "Notice of Default". In the event that the Agent receives such a
notice of the occurrence of a Default, the Agent shall give prompt notice
thereof to the Banks (and shall give each Bank prompt notice of each such
nonpayment). The Agent shall (subject to SECTIONS 11.7 and 12.5) take such
action with respect to such Default as shall be directed by all Banks or the
Required Banks, as appropriate, and within its rights under the Credit Documents
and at law or in equity; PROVIDED that, unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, permitted hereby with respect
to such Default as it shall deem advisable in the best interests of the Banks
and within its rights under the Credit Documents, at law or in equity, and shall
be fully protected in doing so.
11.4. RIGHTS AS A BANK. With respect to its Commitment, Loans and Letter
of Credit Liabilities, Chase in its capacity as a Bank hereunder shall have the
same rights and powers under the Credit Documents as any other Bank and may
exercise the same as though it were not acting as the Agent, and the term "Bank"
or "Banks" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. The Agent may (without having to account therefor to
any Bank) accept deposits from, lend money to and generally engage in any kind
of banking, trust, letter of credit, agency or other business with the Company
(and any of its Affiliates) as if it were not acting as the Agent, and the Agent
may accept fees and other consideration from the Company and its Affiliates (in
addition to the fees heretofore agreed to between the Company and the Agent) for
services in connection with this Agreement or otherwise without having to
account for the same to the Banks. Without limiting the rights and remedies of
the Banks specifically set forth herein, no other Bank by virtue of being a Bank
hereunder shall have any interest in any such activities, any present or future
guaranty by or for the account of the Company, any present or future offset
exercised by the Agent in respect of any such other activities, or any present
or future property at any time taken as security for any such other activities;
PROVIDED, HOWEVER, that if any payment in respect of such guaranties or such
property or the proceeds thereof shall be applied to the Obligations, each Bank
shall be entitled to share in such application PRO RATA according to its portion
of the Obligations.
11.5. INDEMNIFICATION. THE BANKS SHALL INDEMNIFY THE AGENT AND EACH
OTHER INDEMNIFIED PERSON (TO THE EXTENT NOT REIMBURSED
67
UNDER SECTION 12.3 OR 12.4, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE COMPANY
UNDER SAID SECTIONS 12.3 AND 12.4), RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE
COMMITMENT PERCENTAGES, FOR ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS
OF ANY KIND AND NATURE WHATSOEVER (INCLUDING THE CONSEQUENCES OF THE NEGLIGENCE
OF THE AGENT OR ANY OTHER INDEMNIFIED PERSON) WHICH MAY BE IMPOSED ON, INCURRED
BY OR ASSERTED AGAINST THE AGENT OR ANY INDEMNIFIED PERSON IN ANY WAY RELATING
TO OR ARISING OUT OF ANY CREDIT DOCUMENT (AS DEFINED HEREIN) OR ANY OTHER
DOCUMENTS CONTEMPLATED BY OR REFERRED TO THEREIN OR THE TRANSACTIONS
CONTEMPLATED BY ANY CREDIT DOCUMENT (INCLUDING THE COSTS AND EXPENSES WHICH THE
COMPANY IS OBLIGATED TO PAY UNDER SECTIONS 12.3 AND 12.4 BUT EXCLUDING, UNLESS A
DEFAULT HAS OCCURRED AND IS CON TINUING, NORMAL ADMINISTRATIVE COSTS AND
EXPENSES INCIDENT TO THE PERFORMANCE OF ITS DUTIES UNDER THE CREDIT DOCUMENT) OR
THE ENFORCEMENT OF ANY OF THE TERMS OF ANY CREDIT DOCUMENT OR OF ANY SUCH OTHER
DOCUMENTS; PROVIDED THAT NO BANK SHALL BE LIABLE FOR ANY OF THE FOREGOING TO THE
EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PARTY
TO BE INDEMNIFIED. The obligations of the Banks under this SECTION 11.5 shall
survive the termination of this Agreement.
11.6. NON-RELIANCE ON THE AGENT AND OTHER BANKS. Each Bank agrees that
it has received current financial information with respect to the Company and
its Subsidiaries and that it has, independently and without reliance on the
Agent or any other Bank and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Company and decision to
enter into this Agreement and that it will, 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 analysis and
decisions in taking or not taking action under the Credit Documents. The Agent
shall not be required to keep itself informed as to the performance or
observance by the Company of any Credit Document or any other document referred
to or provided for therein or to inspect the property or books of the Company or
any other Person. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent under
the Credit Documents, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Company (or any of its Affiliates) which
may come into the possession of the Agent.
11.7. FAILURE TO ACT. Except for action expressly required of the Agent
under the Credit Documents, the Agent shall in all cases be fully justified in
failing or refusing to act under the Credit Documents unless it shall have
received further assurances to its satisfaction by the Banks of their
indemnification obligations under SECTION 11.5 against any and all liability and
expense
68
which may be incurred by it by reason of taking or continuing to take
any such action.
11.8. RESIGNATION OR REMOVAL OF THE AGENT. Subject to the appointment
and acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving notice thereof to the Banks and the Company, and the Agent
may be removed at any time with or without cause by the Required Banks. Upon any
such resignation or removal, the Required Banks shall have the right to appoint
a successor Agent. If no successor Agent shall have been so appointed by the
Required Banks and shall have accepted such appointment within 30 days after the
retiring Agent's giving of notice of resignation or the Required Banks' removal
of the retiring Agent, the retiring Agent may, on behalf of the Banks, appoint a
successor Agent. Any successor Agent shall be a bank which has an office in the
United States and a combined capital and surplus of at least $250,000,000 and
with its deposits insured by the FDIC. Upon the acceptance of any such
appointment, the successor Agent shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Credit
Documents. Such successor Agent shall promptly specify its Principal Office
referred to in SECTIONS 3.1 and 5.1 by notice
to the Company and the Banks. After any retiring Agent's resignation or removal
hereunder as the Agent, the provisions of this SECTION 11 shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent.
Section 12. MISCELLANEOUS.
12.1. WAIVER. No waiver of any Default shall be a waiver of any other
Default. No failure on the part of the Agent or any Bank to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under any Credit Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege thereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided in the Credit Documents are
cumulative and not exclusive of any remedies provided by law or in equity.
12.2. NOTICES. All notices and other communications provided for in the
Credit Documents (including any modifications of, or waivers or consents under,
this Agreement) shall be in writing and (a) delivered against receipt therefor,
(b) sent by overnight courier (such as Federal Express), charges prepaid, (c)
mailed by registered or certified mail, return receipt requested, postage
prepaid, or (d) given or made by telegraph, telecopy (confirmed by mail), cable
or other writing, in each case addressed to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party, at such other address as shall be designated by such party
in a notice to the Company and the Agent given in accordance with this SECTION
12.2. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when delivered; on the Business Day
following delivery to an overnight courier; when transmitted before 5 p.m. on a
Business Day by telecopier or delivered to the telegraph or cable office (when
transmitted after 5 p.m. on a Business Day, at 9 a.m. on the next Business Day);
or on the second Business Day after its deposit in the mails;
69
PROVIDED, HOWEVER, that notices required or permitted by SECTION 5.5 shall be
effective only when actually received by the Agent. Actual notice shall always
be effective.
12.3. EXPENSES. Whether or not any Loan is ever made or any Letter of
Credit ever issued, the Company shall pay or reimburse on demand each of the
Banks and the Agent for paying: (a) the reasonable fees and expenses of Liddell,
Sapp, Zivley, Hill & XxXxxx, L.L.P., special counsel to the Agent, in connection
with (1) the preparation, execution and delivery of the Credit Documents
(including exhibits and schedules) and the making of the Loans and the issuance
of Letters of Credit hereunder and (2) any modification, supplement or waiver of
any of the terms of any Credit Document; (b) all reasonable out-of-pocket costs
and expenses of the Banks or the Agent (including costs of preparing an
Independent Engineering Report and reasonable counsels' fees) in connection with
any Event of Default or the enforcement of any Credit Document; (c) all
transfer, stamp, documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect of any Credit
Document or any other document referred to therein; (d) all costs, expenses,
taxes, assessments and other charges incurred in connection with any filing or
registration contemplated by any Credit
Document or any document referred to therein; and (e) reasonable expenses of due
diligence and syndication, and mutually agreed advertising and marketing costs.
12.4. INDEMNIFICATION.
(I) TO THE FULLEST EXTENT PERMITTED BY LAW, THE COMPANY SHALL INDEMNIFY
THE AGENT (INCLUDING THE AGENT WHEN ACTING AS ISSUER OF LETTERS OF CREDIT), EACH
BANK AND EACH OTHER INDEMNIFIED PERSON FROM, AND HOLD EACH OF THEM HARMLESS
AGAINST, ANY AND ALL LOSSES, LIABILITIES, COSTS, EXPENSES, CLAIMS OR DAMAGES TO
WHICH ANY OF THEM MAY BECOME SUBJECT, REGARDLESS OF AND INCLUDING LOSSES,
LIABILITIES, COSTS, EXPENSES, CLAIMS AND DAMAGES ARISING FROM THE NEGLIGENCE OF
THE AGENT OR THE BANKS OR ANY OTHER INDEMNIFIED PERSON, INSOFAR AS SUCH LOSSES,
LIABILITIES, COSTS, EXPENSES, CLAIMS OR DAMAGES ARISE OUT OF OR IN CONNECTION
WITH (A) ANY ACTUAL OR PROPOSED USE BY THE COMPANY OF THE PROCEEDS OF ANY
EXTENSION OF CREDIT UNDER THIS AGREEMENT; (B) ANY BREACH BY THE COMPANY OF ANY
CREDIT DOCUMENT (AS DEFINED HEREIN); (C) ANY VIOLATION BY THE COMPANY OR ANY OF
ITS SUBSIDIARIES OF ANY LEGAL REQUIREMENT, INCLUDING, WITHOUT LIMITATION,
APPLICABLE ENVIRONMENTAL LAWS; (D) ANY ENVIRONMENTAL CLAIMS OR (E) ANY
INVESTIGATION, LITIGATION OR OTHER PROCEEDING (INCLUDING ANY THREATENED
INVESTIGATION OR PROCEEDING) RELATING TO ANY OF THE FOREGOING, AND THE COMPANY
SHALL REIMBURSE EACH INDEMNIFIED PERSON, UPON DEMAND, FOR ANY EXPENSES
(INCLUDING REASONABLE LEGAL FEES) INCURRED IN CONNECTION WITH ANY SUCH
INVESTIGATION OR PROCEEDING; BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS,
DAMAGES, COSTS OR EXPENSES INCURRED BY
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SUCH INDEMNIFIED PERSON BY REASON OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF ANY INDEMNIFIED PERSON.
(II) TO THE FULLEST EXTENT PERMITTED BY LAW, THE COMPANY SHALL INDEMNIFY
THE AGENT (INCLUDING THE AGENT WHEN ACTING AS ISSUER OF LETTERS OF CREDIT), AND
EACH OTHER INDEMNIFIED PERSON FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY
AND ALL LOSSES, LIABILITIES, COSTS, EXPENSES, CLAIMS OR DAMAGES TO WHICH ANY OF
THEM MAY BECOME SUBJECT, REGARDLESS OF AND INCLUDING LOSSES, LIABILITIES, COSTS,
EXPENSES, CLAIMS AND DAMAGES ARISING FROM THE NEGLIGENCE OF THE AGENT OR THE
BANKS OR ANY OTHER INDEMNIFIED PERSON, IN CONNECTION WITH THE EXECUTION AND
DELIVERY OR TRANSFER OF OR PAYMENT OR FAILURE TO PAY UNDER ANY LETTER OF CREDIT,
INCLUDING, WITHOUT LIMITATION, ANY CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS
OR EXPENSES WHICH THE AGENT, OR SUCH OTHER INDEMNIFIED PERSON, AS THE CASE MAY
BE, MAY INCUR (WHETHER INCURRED AS A RESULT OF ITS OWN NEGLIGENCE OR OTHERWISE)
BY REASON OF OR IN CONNECTION WITH THE FAILURE OF ANY OTHER BANK (WHETHER AS A
RESULT OF ITS OWN NEGLIGENCE OR OTHERWISE) TO FULFILL OR COMPLY WITH ITS
OBLIGATIONS TO THE AGENT OR ANY BANK, AS THE CASE MAY BE, WITH RESPECT TO SUCH
LETTER OF CREDIT HEREUNDER (BUT NOTHING HEREIN CONTAINED SHALL AFFECT THE RIGHTS
THE COMPANY MAY HAVE AGAINST SUCH DEFAULTING BANK); BUT EXCLUDING ANY SUCH
LOSSES, LIABILITIES, CLAIMS, DAMAGES, COSTS OR EXPENSES INCURRED BY SUCH
INDEMNIFIED PERSON BY REASON OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
ANY INDEMNIFIED PERSON.
(III) The obligation of the Company to provide indemnification under
this SECTION 12.4 for fees and expenses of counsel shall be limited to the
reasonable fees and expenses of one counsel in each jurisdiction representing
all of the Persons entitled to such indemnification, except to the extent that,
in the reasonable judgment of any such Indemnified Person, the existence of
actual or potential conflicts of interest make representation of all of such
indemnified Persons by the same counsel inappropriate; in such a case, the
Person exercising such judgment shall be indemnified for the reasonable fees and
expenses of its separate counsel to the extent provided in this SECTION 12.4
without giving effect to the first clause of this sentence. Nothing in this
SECTION 12.4 is intended to limit the obligations of the Company under any other
provision of this Agreement.
12.5. AMENDMENTS, ETC. No amendment or waiver of any provision of any
Credit Document, nor any consent to any departure by the Company therefrom,
shall in any event be effective unless the same shall be agreed or consented to
by the Required Banks and the Company, as appropriate, and each such waiver or
consent shall be effective only in the specific instance
71
and for the specific purpose for which given; PROVIDED that no amendment, waiver
or consent shall, unless in writing and signed by each Bank affected thereby, do
any of the following: (a) increase the Commitment of any of the Banks or subject
any Bank to any additional obligation; (b) reduce the principal of, or interest
on, any Loan, Reimbursement Obligation, fee or other sum to be paid under any
Credit Document; (c) postpone any scheduled date fixed for any payment of
principal of, or interest on, any Loan, Reimbursement Obligation, fee or other
sum to be paid under any Credit Document; (d) change the percentage of the
Aggregate Commitment, or of the aggregate unpaid principal amount of any of the
Loans, or the number of Banks, which shall be required for the Banks or any of
them to take any action under this Agreement or any other Credit Document; or
(e) change any provision contained in SECTIONS 2.3, 5.2, 5.7, 6, 12.3 or 12.4 or
this SECTION 12.5. Anything in this SECTION 12.5 to the contrary, no amendment,
waiver or consent shall be made with respect to SECTION 11 without the consent
of the Agent.
12.6. SUCCESSORS AND ASSIGNS.
(a) This Agreement and the other Credit Documents shall be
binding upon and inure to the benefit of the Company, the Agent and the Banks
and their respective successors and assigns. The Company may not assign or
transfer any of its rights or obligations under any of the Credit Documents
without the prior written consent of all of the Banks.
(b) Each Bank may sell participations to any Person in all or
part of its Loans, Reimbursement Obligations, Note and Commitment, in which
event, without limiting the foregoing, the provisions of SECTION 6 shall inure
to the benefit of each purchaser of a participation and the PRO RATA treatment
of payments, as described in SECTION 5.2, shall be determined as if such Bank
had not sold such participation. In the event any Bank shall sell any
participation, (1) the Company, the Agent and the other Banks shall continue to
deal solely and directly with such selling Bank in connection with such selling
Bank's rights and obligations under the Credit Documents (including the Note
held by such selling Bank); (2) such Bank shall retain the sole right and
responsibility to enforce the obligations of the Company under the Credit
Documents, including the right to approve any amendment, modification or waiver
of any provision of this Agreement or any other Credit Document other than
amendments, modifications or waivers with respect to (A) any fees payable
hereunder to the Banks and (B) the amount of principal or the rate of interest
payable on, or the dates fixed for the scheduled repayment of principal of, the
Loans, Reimbursement Obligations and other sums to be paid to the Banks under
the Credit Documents, and (3) the Company agrees, to the fullest extent it may
effectively do so under applicable law, that any participant of a Bank may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such participant were a direct
holder of Loans and Reimbursement Obligations if such Bank has previously given
notice of the sale of such participation to the Company.
(c) Each Bank may assign to one or more Banks or Eligible
Assignees all or a portion of its interests, rights and obligations under this
Agreement and the other Credit Documents (including all or a portion of its
Commitment and the same portion of the Loans and
72
Letter of Credit Advances at the time owing to it and of its outstanding Letter
of Credit Liabilities at the time and the Note held by it); PROVIDED THAT (1)
other than in the case of an assignment to a Person at least 50% owned by the
assignor Bank, or by a common parent of both, or to another Bank, the Agent and
the Company must give their respective prior written consent, which consent will
not be unreasonably withheld; (2) the aggregate amount of the Commitment, Loans
and outstanding Letter of Credit Liabilities of the assigning Bank subject to
each such assignment (determined as of the date the Assignment Agreement with
respect to such assignment is delivered to the Agent) shall in no event be less
than $10,000,000 (or $1,000,000 in the case of an assignment between Banks)
(except for certain exceptions approved by the Company and the Agent or where
all of a Bank's Commitment, Loans and outstanding Letter of Credit Liabilities
are being assigned) and shall be in an amount that is an integral multiple of
$1,000,000 (except for certain exceptions approved by the Company and the Agent
or where all of a Bank's Commitment, Loans and outstanding Letter of Credit
Liabilities are being assigned); and (3) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording in its
records, an Assignment Agreement with blanks appropriately completed, together
with the Note subject to such assignment and a processing and recordation fee of
$2,500 (for which the Company shall have no liability except in the case of
assignments required by the Company pursuant to SECTION 6.1, 6.3, 6.6 or 6.7, in
which case such fee shall be paid by the Company). Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment Agreement, which shall be at least five Business Days after
the date of execution thereof (unless otherwise agreed by the parties thereto
and the Agent), (A) the assignee thereunder shall be a party to this Agreement
and, to the extent provided in such Assignment Agreement, have the rights and
obligations of a Bank under the Credit Documents, and (B) the Bank making such
assignment shall, to the extent provided in such Assignment Agreement, be
released from its obligations under this Agreement and the other Credit
Documents (and, in the case of an Assignment Agreement covering all or the
remaining portion of an assigning Bank's rights and obligations under this
Agreement, such Bank shall cease to be a party hereto) but shall be entitled to
the benefit of this Agreement and the other Credit Documents for matters
occurring during the time it was a Bank under this Agreement.
(d) By executing and delivering an Assignment Agreement, the
assigning Bank and the assignee thereunder confirm to and agree with each other
and the other parties to this Agreement as follows: (1) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such
assigning Bank makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with any Credit Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Credit Document; (2)
such assigning Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or the
performance or observance by the Company of any of its obligations under any
Credit Document; (3) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements of the Company
previously delivered by the Company in accordance herewith and such other
documents and information as it has deemed appropriate to make its own
73
credit analysis and decision to enter into such Assignment Agreement; (4) such
assignee will, independently and without reliance upon the Agent, such assigning
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 the Credit Documents; (5) such assignee
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Credit Documents as are delegated to the Agent
by the terms hereof, together with such powers as are reasonably incidental
thereto, and (6) such assignee agrees that it will perform in accordance with
their terms all obligations that by the terms of the Credit Documents are
required to be performed by it as a Bank.
(e) The Agent shall maintain at its office a copy of each Assignment
Agreement delivered to it and a record of the names and addresses of the Banks
and the Commitment of, and the principal amount of the Loans and Letter of
Credit Advances owing to, and the outstanding Letter of Credit Liabilities of,
each Bank from time to time. The entries in such record shall be conclusive, in
the absence of manifest error, and the Company, the Agent and the Banks may
treat each Person the name of which is recorded therein as a Bank hereunder for
all purposes of the Credit Documents. Such records shall be available for
inspection by the Company or any Bank at any reasonable time and from time to
time upon reasonable prior notice.
(f) Upon its receipt of an Assignment Agreement executed by an
assigning Bank and the assignee thereunder together with the Note subject to
such assignment, any required consent to such assignment and the fee payable in
respect thereto, the Agent shall, if such Assignment Agreement has been
completed with blanks appropriately filled, (1) accept such Assignment
Agreement; (2) record the information contained therein in its records, and (3)
give prompt notice thereof to the Company. Contemporaneously with the receipt by
the Agent of an Assignment Agreement, the Company, at its own expense, shall
execute and deliver to the Agent in exchange for each surrendered Note a new
Note payable to the order of such assignee in an amount equal to the Commitment
and/or Loans assumed by it pursuant to such Assignment Agreement and, if the
assigning Bank has retained any Commitment and/or Loans hereunder, a new Note
payable to the order of the assignor Bank in an amount equal to the Commitment
and/or Loans retained by it. Such new Notes shall be in an aggregate face amount
equal to the face amount of each surrendered Note, shall be dated the effective
date of such Assignment Agreement and shall otherwise be in substantially the
form of the surrendered Note. Thereafter, the surrendered Note shall be marked
canceled and returned to the Company.
(g) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this SECTION
12.6, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Company furnished to such Bank by or
on behalf of the Company.
(h) Notwithstanding anything herein to the contrary, each Bank
may pledge and assign all or any portion of its rights and interests under the
Credit Documents to any Federal Reserve Bank. No such assignment shall release
the assigning Bank from its obligations
74
hereunder.
(i) All transfers of any interest in any Note hereunder shall be
in compliance with all federal and state securities laws, if applicable.
Notwithstanding the foregoing sentence, however, the parties to this Agreement
do not intend that any transfer under this SECTION 12.6 be construed as a
"purchase" or "sale" of a "security" within the meaning of any applicable
federal or state securities laws.
(j) Notwithstanding any other provision of this SECTION 12.6
(except SUBSECTION (H)), Chase and its Affiliates may not make any assignment of
their rights hereunder which would reduce their aggregate Commitment Percentages
below 10%.
12.7. SURVIVAL; TERMINATION; REINSTATEMENT.
(a) In addition to the other provisions of the Credit Documents
expressly stated to survive the termination of this Agreement, the obligations
of the Company under SECTIONS 6, 12.3 and 12.4 and the last sentence of this
SECTION 12.7 and the obligations of the Banks under SECTIONS 11.5, 12.8 and
12.12 shall survive the termination of this Agreement.
(b) This Agreement shall terminate upon (i) the full and final
payment of all Notes and Reimbursement Obligations, (ii) the expiry of all
Letters of Credit, (iii) the termination of all Commitments and (iv) the payment
of all non-contingent amounts due under the Credit Documents. Notwithstanding
the foregoing, if all conditions to the termination of this Agreement set forth
in this SECTION 12.7(B) shall have been satisfied other than the expiry of all
Letters of Credit, and all outstanding Letters of Credit shall have been fully
Covered or shall be backed by a letter of credit in Proper Form issued by an
issuer acceptable to the Issuer in its sole discretion, the Company shall in
such event no longer be required to comply with SECTION 9.
(c) If at any time all or any part of any payment previously
applied by the Agent or any Bank to any Loan, Reimbursement Obligation or other
sum hereunder is or must be returned by or recovered from the Agent or such Bank
for any reason (including the order of any bankruptcy court), to the extent
permitted by law, the Credit Documents shall automatically be reinstated to the
same effect as if such prior application had not been made, and the Company
shall indemnify the Agent or such Bank against, and save and hold the Agent and
such Bank harmless from, any required return by or recovery from the Agent or
such Bank of any such payment because of its being deemed preferential under any
applicable Legal Requirement or for any other reason.
12.8. LIMITATION OF INTEREST. The parties to the Credit Documents intend
to strictly comply with all applicable laws, including applicable usury laws.
Accordingly, the provisions of this SECTION 12.8 shall govern and control over
every other provision of any Credit Document which conflicts or is inconsistent
with this SECTION 12.8, even if such provision declares that it controls. To the
maximum extent permitted by applicable law, (a) any non-principal payment shall
75
be characterized as an expense or as compensation for something other than the
use, forbearance or detention of money and not as interest and (b) all interest
at any time contracted for, taken, reserved, retained, charged or received shall
be amortized, prorated, allocated and spread, in equal parts, during the full
term of the Loans and the Commitments. In no event shall the Company or any
other Person be obligated to pay, or the Agent or any Bank have any right or
privilege to reserve, take, receive or retain, any interest in excess of the
maximum amount of nonusurious interest permitted under applicable law. If the
term of any of the Notes is shortened by reason of acceleration of maturity as a
result of any Default or by any other cause, or by reason of any required or
permitted prepayment, and if for that (or any other) reason the Agent or any
Bank at any time, including the stated maturity, is owed or receives (and/or has
reserved, taken or received) interest in excess of interest calculated at the
Highest Lawful Rate, then and in any such event all of any such excess interest
shall be canceled automatically as of the date of such acceleration, prepayment
or other event which produces the excess, and, if such excess interest has been
paid to the Agent or such Bank, it shall be credited PRO TANTO against the
then-outstanding principal balance of the Company's obligations to the Agent or
such Bank, effective as of the date or dates when the event occurs which causes
it to be excess interest, until such excess is exhausted or all of such
principal has been fully paid and satisfied, whichever occurs first, and any
remaining balance of such excess shall be promptly refunded to its payor.
12.9. CAPTIONS. Captions and section headings appearing in the Credit
Documents are included solely for convenience and shall not be considered in
construing the Credit Documents.
12.10. COUNTERPARTS. Each Credit Document may be executed in any number
of identical counterparts, and by the parties on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts together shall constitute but one
and the same agreement.
12.11. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(A) EXCEPT TO THE EXTENT OTHERWISE SPECIFIED IN THE CREDIT DOCUMENTS,
EACH CREDIT DOCUMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK (TO THE EXTENT PERMITTED BY LAW, OTHER THAN ITS
CONFLICT OF LAW RULES) AND THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA. ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND THE COMPANY HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. THE
COMPANY HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION
SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 0000 XXXXXXXX, XXX XXXX, XXX XXXX
00000 AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT
76
AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE
OF ANY AND ALL LEGAL PROCESS, SUMMONSES, NOTICES AND DOCUMENTS WHICH MAY BE
SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE,
APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH OR THE COMPANY
DESIRES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT, THE COMPANY AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK, NEW YORK ON THE TERMS
AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT UNDER THIS
AGREEMENT. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE COMPANY AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE
TO BECOME EFFECTIVE TEN DAYS AFTER SUCH MAILING. NOTHING IN THIS AGREEMENT SHALL
AFFECT THE RIGHT OF THE AGENT, ANY BANK OR THE HOLDER OF ANY NOTE TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO THE EXTENT PERMITTED BY LAW
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE TO PROCEED AGAINST THE COMPANY IN ANY
OTHER JURISDICTION.
(B) TO THE EXTENT PERMITTED BY LAW, EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE IN ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
BROUGHT IN THE NEW YORK COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
(C) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED BY ANY CREDIT DOCUMENT.
12.12. CONFIDENTIALITY. Each Bank agrees to exercise its best efforts to
keep any information delivered or made available by the Company to it (including
any information obtained pursuant to SECTION 9.1) which is clearly indicated to
be confidential information, confidential from anyone other than Persons
employed or retained by such Bank who are or are expected to become engaged in
evaluating, approving, structuring or administering the Loans or the Letters of
Credit; PROVIDED that nothing herein shall prevent any Bank from disclosing such
information (a) to any other Bank, (b) pursuant to subpoena or upon the order of
any court or administrative
77
agency, (c) upon the request or demand of any regulatory agency or authority
having jurisdiction over such Bank, (d) which has been publicly disclosed, (e)
to the extent reasonably required in connection with any litigation to which the
Agent, any Bank, or their respective Affiliates may be a party, (f) to the
extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Credit Document, (g) to such Bank's legal counsel
and independent auditors and (h) to any actual or proposed participant or
assignee of all or part of its rights hereunder which has agreed in writing to
be bound by the provisions of this SECTION 12.12. Each Bank will promptly notify
the Company of any information that it is required or requested to deliver
pursuant to CLAUSE (B) OR (C) of this SECTION 12.12 and, if the Company is not a
party to any such litigation, CLAUSE (E) of this SECTION 12.12.
12.13. ENTIRE AGREEMENT. This Agreement and the other Credit Documents
embody the entire agreement among the parties with respect to their subject
matter and supersede all prior proposals, agreements and understandings related
to the subject matter of this Agreement and the other Credit Documents.
12.14. CONSTRUCTION. The parties agree that this Agreement and the other
Credit Documents were negotiated agreements and accordingly no presumption shall
attach based on the identity of the drafting party.
12.15. SEVERABILITY. Whenever possible, each provision of the Credit
Documents shall be interpreted in such manner as to be effective and valid under
applicable law. If any provision of any Credit Document shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions of such Credit Document
shall not be affected or impaired thereby.
12.16. SFER MRI LOANS. The Banks acknowledge and agree that the Company
may have up to $20,000,000 in SFER MRI Loans outstanding at any time and that
such SFER MRI Loans shall be due and payable no later than December 31, 1996.
Such SFER MRI Loans shall be PARI PASSU with the Obligations. The Banks consent
to Chase's serving as Agent under the Monterey Credit Agreement, WAIVE any
conflict of interest in connection therewith, and agree that Chase may exercise
its rights and remedies as the Agent under this Agreement and under the Monterey
Credit Agreement and at law, all as Chase may in its sole discretion deem
appropriate.
12.17. EXISTING CREDIT FACILITY TERMINATED. By their execution and
delivery hereof, the Company and the other parties to the Existing Credit
Facility terminate the Existing Credit Facility (except for the portions thereof
which are stated therein to survive the termination thereof).
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IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed and delivered.
SANTA FE ENERGY RESOURCES, INC.,
a Delaware corporation
By: /s/ XXXXX X. XXXXX
Xxxxx X. Xxxxx
Chairman of the Board, President
and Chief Executive Officer
Address for Notices:
Santa Fe Energy Resources, Inc.
0000 Xxxxx Xxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Treasurer
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THE CHASE MANHATTAN BANK,
individually and as Administrative Agent
By: /s/ XXXXXX XXXXXX
Xxxxxx Xxxxxx, Vice President
Address for Notices:
Domestic and Eurodollar
Lending Offices: The Chase Manhattan Bank
c/o Texas Commerce Bank National
Association
707 Xxxxxx, 5 TCBN-86
COMMITMENT: $100,000,000 Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
The Chase Manhattan Bank
1 Chase Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. X'Xxxxx,
Operations Officer
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COMMITMENT: ABN AMRO BANK N.V., Individually and
as Co-Agent
$50,000,000
By: ABN AMRO NORTH AMERICA, INC.
By: /s/ XXXXXXX X. XXXXX
Name: Xxxxxxx X. Xxxxx
Title: Vice President and Director
By: /s/ H. XXXX XXXXXX
Name: H. Xxxx Xxxxxx
Title: Vice President and Director
Address for Notices:
Domestic and Eurodollar
Lending Offices:
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PRICING SCHEDULE
APPENDIX I
EXHIBITS:
A - Form of Note
B - Form of Request for Extension of Credit
C - Form of Assignment Agreement
D - Form of Application
E - Form of Rate Designation Notice
SCHEDULES:
I - Restricted and Unrestricted Subsidiaries
II - Liens and Total Debt and Guaranties
III - Opinion of Xxxxxxx & Xxxxx L.L.P.
IV - Opinion of Xxxxx X. Xxxxx
V - Subordination Provisions
VI - Jurisdictions for which Certificates are to be Provided
82
